<PAGE>   1

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1999

                                                     REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
                                    FORM S-1

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
                   MIAMI CRUISELINE SERVICES HOLDINGS I B.V.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                 <C>                                 <C>
          THE NETHERLANDS                          5947                             98-0193197
  (STATE OR OTHER JURISDICTION OF      (PRIMARY STANDARD INDUSTRIAL              (I.R.S. EMPLOYER
  INCORPORATION OR ORGANIZATION)        CLASSIFICATION CODE NUMBER)             IDENTIFICATION NO.)
</TABLE>

                         STRAWINSKYLAAN 3105, 7TH FLOOR
                       1077 ZX AMSTERDAM, THE NETHERLANDS
                               (31) 20-44-211-25
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
                   MIAMI CRUISELINE SERVICES HOLDINGS I B.V.
                       C/O BERKSHIRE CRUISE HOLDINGS LLC
                                ONE BOSTON PLACE
                        BOSTON, MASSACHUSETTS 02108-4401
                           ATTENTION: JOEL E. CUTLER
                                 (617) 227-0050
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)
                            ------------------------
                                   COPIES TO:

<TABLE>
<S>                                                  <C>
                  DAVID C. CHAPIN                                      STEPHEN L. BURNS
                 JANE D. GOLDSTEIN                                 CRAVATH, SWAINE & MOORE
                    ROPES & GRAY                                      825 EIGHTH AVENUE
              ONE INTERNATIONAL PLACE                           NEW YORK, NEW YORK 10019-7475
          BOSTON, MASSACHUSETTS 02110-2624                              (212) 474-1000
                   (617) 951-7000
</TABLE>

                            ------------------------
     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

     If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                            ------------------------
                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
                                                                     PROPOSED
                                                                     MAXIMUM                 AMOUNT OF
                   TITLE OF EACH CLASS OF                           AGGREGATE               REGISTRATION
                SECURITIES TO BE REGISTERED                     OFFERING PRICE(1)               FEE
--------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                      <C>
Common Shares, par value EUR .01 nominal value..............       $125,000,000               $34,750
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee in
    accordance with Rule 457(a) under the Securities Act of 1933.
                            ------------------------
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

               SUBJECT TO COMPLETION, DATED                , 1999

                                                 Shares

                            STARBOARD CORPORATE LOGO

                                 Common Shares
                               ------------------

     We(1) are selling                common shares, and the selling
shareholders are selling                common shares. We will not receive any
of the proceeds from the common shares sold by the selling shareholders.

     The underwriter has an option to purchase a maximum of
additional shares to cover over-allotments of shares.

     Prior to this offering, there has been no public market for the common
shares. The initial public offering price of the common shares is expected to be
between $       and $       per share. Our common shares have been approved for
listing on The Nasdaq Stock Market's National Market under the symbol "CRUZ".

     INVESTING IN THE COMMON SHARES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 7.

<TABLE>
<CAPTION>
                                                    UNDERWRITING       PROCEEDS TO       PROCEEDS TO
                                       PRICE TO    DISCOUNTS AND     STARBOARD CRUISE      SELLING
                                        PUBLIC      COMMISSIONS          SERVICES        SHAREHOLDERS
                                       --------    --------------    ----------------    ------------
<S>                                    <C>         <C>               <C>                 <C>
Per Share............................     $             $                  $                  $
Total................................  $              $                  $                 $
</TABLE>

     Delivery of the common shares will be made on or about                ,
1999.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                           CREDIT SUISSE FIRST BOSTON

             The date of this prospectus is                , 1999.
-------------------------

(1) Prior to the effectiveness of the registration statement of which this
    prospectus is a part, we will change our name from Miami Cruiseline Services
    Holdings I B.V. to Starboard Cruise Services N.V.
<PAGE>   3

                                    [PHOTOS]

                                        i
<PAGE>   4

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
PROSPECTUS SUMMARY....................    1
SUMMARY PRO FORMA FINANCIAL AND OTHER
  DATA................................    3
SUMMARY FINANCIAL AND OTHER DATA......    5
RISK FACTORS..........................    7
FORWARD-LOOKING STATEMENTS -- MARKET
  DATA................................   16
USE OF PROCEEDS.......................   17
DIVIDEND POLICY.......................   17
CAPITALIZATION........................   18
DILUTION..............................   19
UNAUDITED PRO FORMA CONDENSED
  STATEMENTS OF OPERATIONS............   20
SELECTED FINANCIAL DATA...............   28
MANAGEMENT'S DISCUSSION AND ANALYSIS
  OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.......................   30
BUSINESS..............................   39
MANAGEMENT............................   51
</TABLE>

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
PRINCIPAL AND SELLING SHAREHOLDERS....   61
CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONS........................   63
DESCRIPTION OF CAPITAL STOCK..........   66
SHARE CERTIFICATES AND TRANSFER.......   70
DESCRIPTION OF CERTAIN INDEBTEDNESS...   72
SHARES ELIGIBLE FOR FUTURE SALE.......   75
TAXATION..............................   78
UNDERWRITING..........................   86
NOTICE TO CANADIAN RESIDENTS..........   88
LEGAL MATTERS.........................   89
EXPERTS...............................   89
CHANGE IN ACCOUNTANTS.................   90
WHERE YOU CAN FIND MORE INFORMATION...   90
SERVICE OF PROCESS AND ENFORCEMENT OF
  CIVIL LIABILITIES...................   91
INDEX TO FINANCIAL STATEMENTS.........  F-1
</TABLE>

                               ------------------

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
                               ------------------

     THESE SECURITIES MAY ONLY BE OFFERED, SOLD, TRANSFERRED OR DELIVERED,
WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS (INCLUDING LEGAL ENTITIES)
ESTABLISHED, DOMICILED OR RESIDENT OUTSIDE THE NETHERLANDS. THE APPLICABLE
REQUIREMENTS OF THE LAW OF ANY JURISDICTION IN WHICH PERSONS (INCLUDING LEGAL
PERSONS) TO WHOM THE OFFER IS DIRECTED ARE ESTABLISHED, DOMICILED OR RESIDENT
HAVE BEEN AND WILL BE COMPLIED WITH. A STATEMENT TO THIS EFFECT HAS BEEN
SUBMITTED TO THE DUTCH SECURITIES BOARD (STICHTING TOEZICHT EFFECTENVERKEER)
PURSUANT TO ARTICLE 3, PARA. 2 UNDER (c) OF THE EXEMPTION REGULATION PURSUANT TO
THE DUTCH ACT ON THE SUPERVISION OF THE SECURITIES TRADE 1995.
                               ------------------

     "Onboard Media" and the trademarks listed under "Business -- Intellectual
Property" are our trademarks. All other trademarks and service marks used in
this prospectus are the property of their respective owners.
                               ------------------

                     DEALER PROSPECTUS DELIVERY OBLIGATION

     UNTIL                , 1999 (25 DAYS AFTER THE COMMENCEMENT OF THIS
OFFERING), ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN
ACTING AS AN UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

                                       ii
<PAGE>   5

                               PROSPECTUS SUMMARY

     The following summary contains basic information about Starboard Cruise
Services and this offering. It may not contain all the information that may be
important to you. You should read this entire prospectus, including the
financial data and related notes, and the documents to which we have referred
you before making an investment decision. The terms "Starboard Cruise Services,"
"we," "our," and "us," as used in this prospectus refer to Starboard Cruise
Services N.V. and its subsidiaries unless the context otherwise requires. Except
as otherwise noted, all information in this prospectus assumes no exercise of
the underwriter's over-allotment option and assumes the occurrence of the 250
for 1 common share split which will occur immediately prior to the offering.

     This prospectus contains forward looking statements which involve risks and
uncertainties. Starboard Cruise Services' actual results could differ materially
from those anticipated in these forward-looking statements as the result of
certain factors, including those set forth under "Risk Factors" and elsewhere in
this prospectus. See "Forward Looking Statements -- Market Data".

                           STARBOARD CRUISE SERVICES

     We are the world's leading provider of duty-free retail shops on cruise
ships and the leading provider of customized media and art auction programs to
the cruise industry. We deliver our services to 100 ships representing 26 cruise
lines worldwide, including industry leaders such as Carnival Cruise Line,
Celebrity Cruises, Costa Cruises, Cunard Line, Disney Cruise Line, Holland
America Line, Norwegian Cruise Lines, P&O Cruises, Renaissance Cruise Lines,
Royal Caribbean International and Seabourn Cruise Line. In general, we provide
our cruise-based services on an exclusive basis on the ships we service pursuant
to multi-year contracts. In addition to cruise-based services, we also operate
land-based services that complement our cruise-based business. In our land-based
services we operate duty-free retail shops at airport locations in Miami and
Fort Lauderdale, Florida, sell wholesale duty-free goods to cruise lines and
caterers serving cruise lines, and provide customized publications and videos to
hotels and resorts. For the year ended December 31, 1998, we generated pro forma
net sales of $281.2 million and EBITDA of $18.1 million. Our cruise-based
services generated $213.6 million of pro forma net sales and our land-based
services generated $67.6 million of pro forma net sales during the same period.

     The passenger cruise industry has grown substantially. According to Cruise
Lines International Association (CLIA), approximately 5.4 million North American
passengers took cruises in 1998, an increase of 4.0 million from 1.4 million in
1980, representing a compound annual growth rate of approximately 8.0%. The
number of cruise ships increased 20% from 120 ships in 1993 to 144 ships as of
January 1, 1999, with the number of berths growing 32% from approximately
104,000 to 137,000 over the same period. According to CLIA and Cruise Industry
News, the number of ships is expected to grow 32% from 144 as of January 1, 1999
to 190 in 2003, with the number of berths growing 48% from approximately 137,000
to 203,000 over the same period, representing larger berth capacity of the ships
entering the market. In addition, new ships, which are generally larger,
typically contain significantly more retail space. Because of the increase in
retail selling space and the strong relationship of overall cruise demand to
demand for our services, we expect to grow along with the overall growth of the
cruise industry.

     As the leader in each of the markets for our core services, we believe that
we are well positioned to benefit from these cruise industry trends. We believe
that our leading market positions are a result of the scale advantages we have
achieved in our core services. Our strong relationships with cruise lines and
our established reputation within the industry also contributes to our market
strength. In
                                        1
<PAGE>   6

addition, we believe our experienced management and shipboard team and our
expertise in merchandising to cruise customers are further competitive
advantages. Our strategy is to:

     -  Expand with our cruise line customers as they grow and continue to build
        new and often larger ships. We currently have contracts with our
        customers giving us the opportunity to provide service to 27 of the 36
        cruise ships that are currently under contract or construction;

     -  Increase the number of services we provide to our existing cruise
        customers. Currently, almost all of the major cruise lines use at least
        one of our cruise-based services and only four cruise lines use all of
        our services, providing future opportunities to cross sell our services
        to our cruise line customers;

     -  Continue to improve our merchandising. By improving product mix and
        continuing to tailor our service offerings for individual cruise lines
        and itineraries, we seek to increase our revenue generated per passenger
        day; and

     -  Expand our service offerings. We plan to work with our cruise line
        customers to develop and offer additional services on cruise ships.

     Our principal executive office is located at Strawinskylaan 3105, 7th
Floor, 1077 ZX Amsterdam, The Netherlands. Our telephone number is
31-20-44-211-25.

                                  THE OFFERING

Common shares offered by Starboard
Cruise Services.....................                  shares

Common shares offered by Selling
Shareholders........................                  shares

Common shares outstanding after the
offering............................                  shares(1)

Use of proceeds.....................     We expect to use the net proceeds from
                                         the offering to repay a portion of our
                                         indebtedness, to fund payments that are
                                         to be made in connection with this
                                         offering, including a capital tax due
                                         in The Netherlands and a deferred
                                         payment to a customer, and for general
                                         corporate purposes, including working
                                         capital requirements and the funding of
                                         strategic investments or future
                                         acquisitions. See "Use of Proceeds".

Nasdaq National Market symbol.......     "CRUZ".
---------------
(1) Except as otherwise indicated, all information in this prospectus:

     - assumes no exercise of the underwriter's over-allotment option;

     - excludes 1,000,000 shares subject to options outstanding as of July 31,
       1999 at a weighted average price of $1.925 per share under the 1998 Stock
       Option Plan; and

     - assumes an effective 250 for 1 common share split to be completed prior
       to the effectiveness of this offering by a 50 for 1 share split followed
       immediately by a 5 for 1 stock dividend.

     Please see "Capitalization" for a more complete discussion regarding our
outstanding shares, options and related matters.
                                        2
<PAGE>   7

                   SUMMARY PRO FORMA FINANCIAL AND OTHER DATA

     We have presented below the unaudited pro forma financial data for
Starboard Cruise Services (formerly Miami Cruiseline Services Holdings I B.V.)
which have been derived from the unaudited pro forma condensed statements of
operations included elsewhere in this prospectus. The pro forma statement of
operations and other data for the year ended December 31, 1998 give effect to
this offering and the acquisitions detailed under "Unaudited Pro Forma Condensed
Statements of Operations" as if they occurred on January 1, 1998. The pro forma
statement of operations data and other data for the six months ended June 30,
1999 give effect to this offering as if it had occurred on January 1, 1998. The
pro forma balance sheet at June 30, 1999 has been prepared as if this offering
had occurred on such date. This data should be read in conjunction with
"Unaudited Pro Forma Condensed Statements of Operations", "Selected Financial
Data", "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements and the notes thereto
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                                                SIX MONTHS
                                                              YEAR ENDED           ENDED
                                                           DECEMBER 31, 1998   JUNE 30, 1999
                                                           -----------------   -------------
                                                             (DOLLARS IN THOUSANDS EXCEPT
                                                                      SHARE DATA)
<S>                                                        <C>                 <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................     $   281,151       $   138,258
Cost of sales............................................         120,917            56,888
                                                              -----------       -----------
Gross profit.............................................         160,234            81,370
Selling, general and administrative expenses.............         146,149            75,857
Amortization of intangibles..............................           5,232             2,750
                                                              -----------       -----------
Income from operations...................................           8,853             2,763
Interest expense.........................................           2,996             1,249
Interest income..........................................             972               228
Other expense............................................              10                --
                                                              -----------       -----------
Income before provision for income taxes and minority
  interest...............................................           6,819             1,742
Provision for income taxes...............................           1,529               228
Minority interest........................................             776                71
                                                              -----------       -----------
Net income(a)............................................     $     4,514       $     1,443
                                                              ===========       ===========
PER SHARE DATA:
Basic and diluted net income per share...................     $      0.15       $      0.05
                                                              ===========       ===========
Pro forma basic and diluted weighted average shares......      29,726,250        30,476,250
                                                              ===========       ===========
</TABLE>

                                        3
<PAGE>   8

<TABLE>
<CAPTION>
                                                                                SIX MONTHS
                                                              YEAR ENDED           ENDED
                                                           DECEMBER 31, 1998   JUNE 30, 1999
                                                           -----------------   -------------
                                                            (DOLLARS AND PASSENGER DAYS IN
                                                                THOUSANDS EXCEPT SHARE
                                                                         DATA)
<S>                                                        <C>                 <C>
OTHER DATA:
EBITDA(b)................................................      $ 18,086         $     7,486
Net income plus amortization of intangibles..............        10,123               4,193
Diluted net income plus amortization of intangibles per
  share..................................................          0.34                0.14
Capital expenditures.....................................           901                 572
Total ships served (at end of period)....................            95                 100
Ships served by cruise ship retail stores (at end of
  period)................................................            75                  82
Cruise ship retail stores passenger days.................        18,438              14,346
</TABLE>

<TABLE>
<CAPTION>
                                                                                JUNE 30,
                                                                                  1999
                                                                             --------------
                                                                             (IN THOUSANDS)
<S>                                                          <C>             <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................................       $    361
Total assets.............................................................        194,020
Long-term debt...........................................................         26,536
Total shareholders' equity(a)............................................        131,314
</TABLE>

-------------------------
(a) Net income does not include an extraordinary charge of approximately $7.0
    million related to a prepayment fee in connection with the payment of $28.3
    million of our senior subordinated notes which we will record in the quarter
    in which the offering is consummated. This amount has been charged against
    pro forma shareholders' equity.

(b) EBITDA is defined as income from operations before depreciation and
    amortization. EBITDA is presented because we believe that EBITDA is a widely
    accepted financial indicator of an entity's ability to incur and service
    debt. EBITDA should not be considered by an investor as an alternative to
    net income or income from operations, as an indicator of our operating
    performance or other combined operations or cash flow data prepared in
    accordance with generally accepted accounting principles, or as an
    alternative to cash flows as a measure of liquidity. Our computation of
    EBITDA may differ from similarly titled computations of other companies.
                                        4
<PAGE>   9

                        SUMMARY FINANCIAL AND OTHER DATA

     We have presented below the summary consolidated financial data for
Starboard Cruise Services for the period from September 10, 1998 through
December 31, 1998 and for our predecessor entity, Greyhound Leisure Services,
for each of the two years in the period ended December 31, 1997 and the period
from January 1, 1998 through September 17, 1998, which have been derived from
the audited consolidated financial statements of Starboard Cruise Services and
Greyhound Leisure Services included elsewhere in this prospectus. The summary
consolidated financial data for Starboard Cruise Services for the six-month
period ended June 30, 1999, has been derived from the unaudited consolidated
financial statements of Starboard Cruise Services included elsewhere in this
prospectus, which includes all adjustments that we consider necessary for a fair
presentation of the financial position and results of operations for such
period. Operating results for the six-month period ended June 30, 1999 are not
indicative of the results that may be expected for the entire year. This data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and the notes thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                  PREDECESSOR                      STARBOARD CRUISE SERVICES
                                    ----------------------------------------   ----------------------------------
                                        YEAR ENDED           PERIOD FROM          PERIOD FROM
                                       DECEMBER 31,        JANUARY 1, 1998     SEPTEMBER 10, 1998    SIX MONTHS
                                    -------------------        THROUGH              THROUGH             ENDED
                                      1996       1997     SEPTEMBER 17, 1998   DECEMBER 31, 1998    JUNE 30, 1999
                                    --------   --------   ------------------   ------------------   -------------
                                                      (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<S>                                 <C>        <C>        <C>                  <C>                  <C>
STATEMENT OF OPERATIONS DATA:
Net sales.........................  $179,799   $188,498        $135,603           $    71,061        $   138,258
Cost of sales.....................    72,860     76,828          54,290                30,139             56,888
                                    --------   --------        --------           -----------        -----------
Gross profit......................   106,939    111,670          81,313                40,922             81,370
Selling, general and
  administrative expenses.........    96,712    101,067          73,993                36,373             75,857
Amortization of intangibles.......        --         --              --                 1,525              2,750
                                    --------   --------        --------           -----------        -----------
Income from operations............    10,227     10,603           7,320                 3,024              2,763
Interest expense, net.............      (113)      (205)           (417)               (2,671)            (5,819)
                                    --------   --------        --------           -----------        -----------
Income (loss) before provision for
  income taxes and minority
  interest........................    10,114     10,398           6,903                   353             (3,056)
Provision for income taxes........     2,936      2,941           2,249                   359                186
Minority interest.................     1,706        957             594                   182                 71
                                    --------   --------        --------           -----------        -----------
Net income (loss).................  $  5,472   $  6,500        $  4,060           $      (188)       $    (3,313)
                                    ========   ========        ========           ===========        ===========
PER SHARE DATA:
Basic and diluted net income
  (loss) per share................  $  5,472      6,500           4,060           $     (0.01)       $     (0.11)
Basic and diluted weighted average
  shares outstanding..............     1,000      1,000           1,000            23,250,000         24,000,000
</TABLE>

                                        5
<PAGE>   10

<TABLE>
<CAPTION>
                                                  PREDECESSOR                      STARBOARD CRUISE SERVICES
                                    ----------------------------------------   ----------------------------------
                                        YEAR ENDED           PERIOD FROM          PERIOD FROM
                                       DECEMBER 31,        JANUARY 1, 1998     SEPTEMBER 10, 1998    SIX MONTHS
                                    -------------------        THROUGH              THROUGH             ENDED
                                      1996       1997     SEPTEMBER 17, 1998   DECEMBER 31, 1998    JUNE 30, 1999
                                    --------   --------   ------------------   ------------------   -------------
                                             (DOLLARS AND PASSENGER DAYS IN THOUSANDS EXCEPT SHARE DATA)
<S>                                 <C>        <C>        <C>                  <C>                  <C>
OTHER DATA:
Net income (loss) plus
  amortization of intangibles.....  $  5,472   $  6,500        $  4,060           $     1,337        $      (563)
Diluted net income (loss) plus
  amortization of intangibles per
  share...........................        --         --              --           $      0.06        $     (0.02)
Capital expenditures..............  $  4,016   $  4,353        $    625           $       141        $       573
Total ships served (at end of
  period).........................        59         68              73                    95                100
Ships served by cruise ship retail
  stores (at end of period).......        40         41              46                    75                 82
Cruise ship retail stores
  passenger
  days............................    16,805     17,044          13,106                 5,331             14,346
</TABLE>

<TABLE>
<CAPTION>
                                                                 PREDECESSOR      STARBOARD CRUISE SERVICES
                                                              -----------------   --------------------------
                                                                DECEMBER 31,
                                                              -----------------    DECEMBER 31,    JUNE 30,
                                                               1996      1997          1998          1999
                                                              -------   -------   --------------   ---------
                                                                              (IN THOUSANDS)
<S>                                                           <C>       <C>       <C>              <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $   522   $   262      $  4,124      $    361
Total assets................................................   56,998    59,262       191,540       194,020
Total debt..................................................       --        --       112,888       110,588
Total shareholders' equity..................................   14,383    15,148        45,982        42,669
</TABLE>

                                        6
<PAGE>   11

                                  RISK FACTORS

     You should carefully consider the risks described below and the other
information in this prospectus, including our financial statements and related
notes, before you purchase any common shares.

     This prospectus contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements are usually accompanied by words
such as "believes," "anticipates," "plans," "expects" and similar expressions.
Our actual results may differ materially from the results discussed in the
forward-looking statements because of factors such as the Risk Factors discussed
below. See "Forward-Looking Statements -- Market Data".

RISKS RELATED TO OUR MARKET AND OUR CUSTOMERS

OUR BUSINESS IS DEPENDENT ON THE CRUISE INDUSTRY -- IF THE DEMAND FOR CRUISE
VACATIONS DECREASES, WE MAY BE ADVERSELY AFFECTED.

     We generate our revenues primarily from services provided to cruise ship
passengers, such as cruise-based duty-free retail services, customized media and
art auctions. As a result, the cruise industry's ability to attract passengers
affects both our financial results of operations and our ability to develop our
business. We cannot be sure that the cruise industry will continue to enjoy the
same level of popularity or growth that it has in the past.

     The cruise industry is subject to several potential risks. For example,
because cruise lines compete for consumer disposable leisure spending with other
vacation alternatives, such as land-based resort or sightseeing vacations, the
demand for cruise vacations could be adversely affected by shifts in vacation
patterns or increased competition from other vacation alternatives. A general
downturn in economic conditions could also adversely affect demand for leisure
travel, including demand for cruise vacations. Moreover, cruise lines operate
throughout the world, including geographic regions that from time to time
experience political and civil unrest and armed hostilities, which can adversely
affect demand for cruise vacations. Demand for cruise vacations could also be
affected negatively by publicized operational, safety, health, litigation or
other problems related to cruises. Severe weather conditions at port or at sea
and disruptions in airline service that restrict passengers' ability to reach
their port of embarkation could reduce the number of cruise passengers as well.
In addition, the cruise industry currently relies heavily on various regulatory
exemptions in a number of jurisdictions. Changes in tax exemptions under Section
883 of the U.S. Internal Revenue Code, which exempt a substantial portion of
cruise line income from U.S. taxation and are currently being debated in
Congress, or changes in U.S. labor regulations regarding shipboard employees
could adversely affect the cruise industry. If such changes are made, cruise
lines may be required to raise prices or cut costs, possibly affecting demand
for cruise vacations and the availability of financing for new vessels. Any of
these events could negatively affect demand for cruise vacations, demand for our
services, our revenues or our margins and, as a result, have a material adverse
effect on our results of operations and ability to implement our business plan.

A FEW CRUISE COMPANIES ACCOUNT FOR A SIGNIFICANT PORTION OF OUR REVENUES -- IF
ANY LARGE CRUISE OPERATOR CEASES TO USE OUR SERVICES, WE WOULD LIKELY LOSE A
SOURCE OF A SUBSTANTIAL PORTION OF OUR REVENUES.

     According to the Cruise Line Industry Association (CLIA), Carnival
Corporation (including its affiliates Carnival Cruise Lines, Costa Cruises,
Cunard Line, Holland America Line, Seabourn Cruise Line and Windstar Cruises),
Royal Caribbean Cruises Ltd. (including its affiliates Royal Caribbean
International and Celebrity Cruises), Princess Cruise Lines and Norwegian Cruise
Lines accounted for 82% of cruise industry berths as of January 1, 1999. For the
first half of 1999, 57% of our net sales came from our two largest individual
cruise line customers, and we expect a significant portion

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<PAGE>   12

of our net sales will continue to be derived from a limited number of customers.
If any of these companies ceases to use our services, significantly reduces its
use of our services during or at the end of a contract period, or experiences
materially negative changes in its business, the negative impact on our
operational results and ability to implement our strategy would be substantial.
See "Business -- Industry Overview".

WE WILL NEED TO RENEW OR EXTEND OUR CONTRACTS WITH OUR CUSTOMERS IN THE
FUTURE -- IF OUR CUSTOMERS DO NOT EXERCISE THEIR RENEWAL OPTIONS UNDER THE
CONTRACTS OR DO NOT OTHERWISE RENEW THE CONTRACTS AFTER THEY EXPIRE, WE COULD
LOSE A SUBSTANTIAL PORTION OF OUR SALES.

     Our ability to provide duty-free retail services on cruise ships and in
airports is based primarily on concession contracts with cruise operators and
airports. Our services to provide customized media and art auctions are also
contract-based. Contracts to provide duty-free retail and other cruise-based
services to cruise lines accounting for 9% of our net sales for the six months
ended June 30, 1999 expire by December 31, 2000, cruise line contracts
accounting for 8% of our net sales expire by December 31, 2001, and cruise line
contracts accounting for 54% of our net sales expire by December 31, 2002, in
each case excluding renewal options under the contracts and in each case without
giving effect to our recently executed multi-year contract with Royal Caribbean
International. In addition, our Miami airport contract expires in November 2000
with the airport having five one-year renewal options. We cannot be sure that
our customers will exercise their renewal options under the contracts or that
they will otherwise renew their contractual relationships with us once these
contracts, including all renewal periods, expire. Generally, a cruise line may
terminate these contracts early if we breach our agreements and may reduce the
number of ships covered by each contract by removing ships from service. Some
cruise lines have other termination rights including, for example, termination
upon a specified change of control or termination upon 12 months' notice.

WE ARE REQUIRED TO MAKE MINIMUM PAYMENTS UNDER MANY OF OUR CONTRACTS
IRRESPECTIVE OF THE VOLUME OF OUR SALES -- OUR SALES MIGHT NOT BE SUFFICIENT TO
MEET OUR MINIMUM PAYMENT REQUIREMENTS.

     Our contracts to provide duty-free retail services on cruise ships
generally require us to pay cruise lines the greater of a percentage of revenue
or a minimum per passenger per day amount. Some media and art auction contracts
also require minimum payments, regardless of the revenues we generate under
those contracts. As a result, we could be required to pay a greater percentage
of sales to the cruise lines than we currently pay or we could be forced to pay
costs which our sales are not sufficient to cover. A reduction in our sales
could cause minimum payments to require a larger percentage of our cash flow,
limiting the cash available for other required uses or causing us to default on
our minimum payment obligations. See "Business -- Contracts".

OUR PRIMARY CUSTOMERS HAVE BECOME LARGER -- THEIR INCREASED SIZE AND MARKET
SHARE MAY GIVE THEM THE ABILITY TO NEGOTIATE MORE FAVORABLE TERMS IN THEIR
CONTRACTS WITH US.

     Large cruise lines have expanded their scale through acquisitions and by
building additional ships. These cruise lines may seek more favorable terms in
their contractual relationships with us. Changes in contract terms that are more
favorable to these large customers could have a material adverse effect on our
business. See "Business -- Industry Overview".

WE FACE COMPETITION FOR PASSENGER SPENDING AND FOR CRUISE LINE CONCESSIONS FROM
A VARIETY OF SOURCES -- THIS COMPETITION MAY MAKE IT DIFFICULT FOR US TO
MAINTAIN OUR CURRENT POSITION IN THE MARKET OR TO CONTINUE TO GROW.

     We compete with alternative passenger activities both on cruise ships and
at ports of call and with retail shopping venues not located on cruise ships or
in airports. We also compete with other

                                        8
<PAGE>   13

companies that provide services similar to ours and with cruise lines that
provide these services themselves. Cruise vacations offer passengers a variety
of other ways to spend their time and money during a cruise besides retail
shopping in our on-board shops, shopping with on-shore retailers with whom we
contract or attending the art auctions we provide. These alternatives include
spas, shore excursions, gambling casinos, bars and sports. Moreover, many
alternatives are provided without additional cost to passengers. Furthermore, as
some cruise lines currently perform these services themselves, we cannot assure
you that other cruise lines will not decide in the future to provide the
services themselves. In addition, new competitors, some of whom may have access
to greater financial and other resources than we do, could enter the industry in
the future. See "Business -- Competition".

RISKS RELATED TO OUR OPERATIONS

WE ARE DEPENDENT ON OUR SENIOR EXECUTIVES AND KEY PERSONNEL -- IF WE LOSE SOME
OR ALL OF OUR SENIOR EXECUTIVES OR KEY PERSONNEL, WE MAY NOT BE ABLE TO FIND
APPROPRIATE REPLACEMENTS ON A TIMELY BASIS AND OUR BUSINESS COULD BE ADVERSELY
AFFECTED.

     Our success will continue to depend to a significant extent on our
executive team, key management personnel and other key personnel. Many of our
executives have strong relationships with the cruise lines which we consider
important to our business. We have entered into employment agreements with four
of our executive officers, but we cannot be certain that they will remain able
and willing to continue service with us. We do not have employment agreements
with any other key employees. As we continue to grow and expand our business,
our success will also depend on our ability to retain current management and to
attract additional qualified management personnel to our executive team and
other key positions. We cannot guarantee that we will continue to find a
sufficient number of qualified individuals required for our business.

OUR INDEBTEDNESS RESTRICTS OUR FLEXIBILITY -- OUR CURRENT AND FUTURE
INDEBTEDNESS COULD LIMIT OUR FLEXIBILITY, ADVERSELY AFFECT OUR FINANCIAL HEALTH
AND LIMIT OUR ABILITY TO PLAN FOR OR RESPOND TO CHANGES IN OUR BUSINESS.

     To finance our 1998 acquisitions, we incurred substantial indebtedness.
After a portion of the proceeds from this offering of common shares is used to
repay existing indebtedness, we will still owe approximately $26.5 million in
principal amount of indebtedness. We may also seek to incur additional
indebtedness when we feel the opportunities to do so are favorable and when the
proceeds of such indebtedness are needed to finance growth opportunities. Our
level of debt could have consequences for our business, including:

     -  we will be required to dedicate a portion of our cash flow from
        operations to repayment of debt, limiting the availability of cash for
        other purposes;

     -  we may have limited flexibility in planning for, or reacting to, changes
        in our business and industry;

     -  we will be limited by financial and other restrictive covenants in our
        credit arrangements in our borrowing of additional funds; and

     -  a failure to comply with the covenants under which we borrow our
        indebtedness could result in an event of default. If an event of default
        occurs and was not cured or waived, it could result in a substantial
        amount of our indebtedness becoming immediately due and payable.

     We cannot guarantee that we will be able to generate enough cash flow from
operations or that we will be able to obtain enough capital to service our
current or future debt or fund our planned capital expenditures. In addition, we
may need to refinance indebtedness on or before maturity. We

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<PAGE>   14

cannot guarantee, however, that we would be able to refinance our indebtedness
on commercially reasonable terms or at all.

AS A HOLDING COMPANY, WE REQUIRE DIVIDENDS FROM OUR SUBSIDIARIES TO MEET CASH
REQUIREMENTS OR PAY DIVIDENDS -- IF OUR SUBSIDIARIES ARE UNABLE TO DIVIDEND CASH
TO US WHEN WE NEED IT, WE MAY BE UNABLE TO PAY DIVIDENDS, MAKE DISTRIBUTIONS OR
SATISFY OBLIGATIONS UNDER RELEVANT DEBT INSTRUMENTS.

     Each of Starboard Cruise Services and its subsidiary holding companies is a
holding company with no business operations of its own. The only significant
assets of each holding company are the outstanding capital shares of its
subsidiaries, through which the holding companies indirectly conduct all of our
business operations. Accordingly, the only source of cash to pay dividends or
make other distributions on our capital stock or to pay interest on our
outstanding indebtedness is distributions relating to our, and our holding
company subsidiaries', ownership interest in our operating subsidiaries from the
net earnings and cash flow generated by such operating subsidiaries. We
currently expect that the earnings and cash flow of our operating subsidiaries
will be retained and used by them in their operations, and used to service the
respective debt obligations of our subsidiaries. Even if we did determine to
make a distribution in respect of the capital stock of those subsidiaries, there
can be no assurance that those subsidiaries will generate sufficient cash flow
to pay such a dividend or distribute such funds, or that applicable law and
contractual restrictions, including negative covenants contained in any debt
instruments of such subsidiaries, would permit such dividends or distributions.
The terms of our debt instruments restrict our subsidiaries' ability to pay
dividends or to make distributions. Moreover, the subsidiaries are permitted
under the terms of the relevant debt instruments to incur additional
indebtedness that may further restrict or prohibit the making of distributions,
the payment of dividends or the making of loans by such subsidiaries to
Starboard Cruise Services. See "-- Our Indebtedness Restricts Our Flexibility"
and "Description of Certain Indebtedness".

WE MAY FAIL TO EFFECTIVELY INTEGRATE ACQUIRED COMPANIES -- IF WE ARE UNABLE TO
EFFECTIVELY INTEGRATE RECENT AND FUTURE ACQUISITIONS, OUR BUSINESS MAY BE
ADVERSELY AFFECTED OR WE MAY NOT REALIZE ALL THE BENEFITS OF THESE ACQUISITIONS.

     We must integrate our recent and future acquisitions for the efficient
operation of our business. We cannot guarantee that this integration will be
completed or that, if it is completed, it will be completed in a timely fashion.
Failure to adequately integrate our business could have a material adverse
effect on our results of operations.

DEMAND FOR OUR SERVICES IS SEASONAL -- AS A RESULT, OUR OPERATING RESULTS AND
REVENUES MAY FLUCTUATE DUE TO SEASONAL FACTORS, AND WE MAY NOT BE ABLE TO
GENERATE SUFFICIENT REVENUES TO COVER OUR EXPENSES DURING SOME PORTIONS OF THE
YEAR.

     Demand for our services is seasonal. This may cause fluctuations in our
revenues and operating results. Net sales have historically been lower during
the third quarter when there are fewer cruises in the Caribbean. Seasonality may
continue to affect our results of operations and, if our expenses increase
during these periods, we might not generate enough revenue to offset these
expenses. The impact of our seasonality would increase if we lost major
contracts to service Alaskan or European cruises during the summer months.

YEAR 2000 COMPLIANCE PROBLEMS COULD AFFECT OUR OPERATIONS -- IF OUR COMPUTER
SYSTEMS, AND THOSE OF OTHERS ON WHOM WE RELY, DO NOT ACHIEVE YEAR 2000
COMPLIANCE, WE MAY SUFFER FINANCIAL AND OTHER HARMS.

     We have reviewed and planned to ensure that our computer and network
systems, and those of parties on whom we rely, are Year 2000 compliant. We have
audited our software, undertaken

                                       10
<PAGE>   15

significant changes to our information systems, and initiated formal
communications with our major suppliers and customers. We cannot guarantee that
our conversions, or those of our major suppliers and customers, will be
completed in a timely fashion. Our systems are critical to our management of
shipboard inventory, our merchandising, decisions about purchasing and
restocking, our delivery of goods from our airport duty-free stores, and our
tracking of on-ship results. We also depend upon the on-ship systems of those
customers whose on-board point-of-sale systems we use and upon our suppliers
whose readiness is critical to maintaining our supply. We cannot be sure that we
will not experience material, unanticipated negative consequences, including
material costs caused by undetected errors or defects in our or others' systems.
Such problems could have a material adverse effect on our results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000" and "Business -- Information Systems".

CURRENTLY WE OPERATE OUR ART AUCTION BUSINESS WITH A SINGLE SUPPLIER -- WE COULD
BE ADVERSELY AFFECTED IF OUR ART AUCTION SERVICES SUPPLIER FAILS TO PROVIDE
SERVICES TO US.

     We conduct our art auction business pursuant to a contract with a single
supplier. Our supplier is responsible for much of the fulfillment for our art
programs. Our supplier has the right under the contract to elect not to provide
service on certain vessels subject to contractual notice periods for those
cruise lines with whom we have agreements. Because we currently do not maintain
relationships with other suppliers, we cannot guarantee that, in the event our
supplier elects not to service new customers or breaches its obligations, we
will be able to arrange an adequate alternative source of supply on a timely
basis for art and auctioneers. See "Business -- Suppliers".

RISKS RELATED TO THIS OFFERING

THE VALUE OF YOUR INVESTMENT WILL BE DILUTED -- UPON THE COMPLETION OF THIS
OFFERING, YOU WILL INCUR AN IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BASIC
VALUE OF YOUR INVESTMENT IN OUR COMPANY.

     If you purchase shares in this offering, you will be paying more per share
than existing shareholders or individuals who acquired shares by exercising
options granted before this offering. As a result, the value of your investment
based on the value of our net tangible assets, as recorded on our books, will be
$          less than the amount you will pay for our common shares in this
offering. In addition, the total amount of our capital will be less than what it
would be if all of the existing shareholders and optionees had paid the same
amount per share as you will pay in this offering. See "Dilution".

WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE PROCEEDS OF THIS
OFFERING -- WE MAY NOT USE THE PROCEEDS EFFECTIVELY AND, AS A RESULT, COULD
REDUCE THE VALUE OF YOUR INVESTMENT IN OUR COMPANY.

     Our management will have significant flexibility in applying any remaining
net proceeds of this offering, and investors will not have the opportunity to
evaluate the economic, financial and other relevant material that we will
consider in determining the application of net proceeds. If we do not apply the
funds we receive effectively, we may forego profit opportunities, lose
significant business opportunities or sustain losses that could reduce the value
of an investment in our company. See "Use of Proceeds".

OUR EXISTING SHAREHOLDERS WILL BE ELIGIBLE TO SELL UNREGISTERED SHARES AFTER
THIS OFFERING -- FUTURE SALES OF SHARES WHICH HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES LAWS COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON SHARES.

     The market price of our common shares could decline as a result of sales by
our existing shareholders of shares which have not been registered under the
securities laws after this offering or

                                       11
<PAGE>   16

the perception that these sales could occur. These sales also might make it
difficult for us to sell equity securities in the future at a time and at a
price that we deem appropriate.

     There will be                shares of common stock outstanding immediately
after the closing of this offering, of which                will not have been
registered under the securities laws in this offering. Of those unregistered
shares,           will be freely transferable without restrictions or further
registration under the Securities Act, except for any shares held by our
"affiliates" as that term is defined in Rule 144 under the Securities Act and
except that our officers, directors and substantially all of our shareholders
have entered into lock-up agreements restricting transfer for a period of 180
days following the date of this prospectus. The remaining
unregistered common shares outstanding will be "restricted securities" as
defined in Rule 144. These shares may be sold in the future without registration
under the Securities Act to the extent permitted by Rule 144 or an exemption
under the Securities Act. See "Shares Eligible for Future Sale".

OUR EXISTING SHAREHOLDERS WILL CONTINUE TO HAVE SIGNIFICANT INFLUENCE OVER OUR
BUSINESS AFTER THIS OFFERING -- OUR EXISTING SHAREHOLDERS WILL HAVE SIGNIFICANT
INFLUENCE OVER MANAGEMENT, OUR BOARDS AND MATTERS REQUIRING A SHAREHOLDER VOTE,
AND THEIR INTERESTS MAY DIFFER FROM YOURS.

     Our directors, executive officers and affiliated shareholders currently own
approximately 84% of our outstanding common shares and after the offering will
own      % of our outstanding common shares. Accordingly, these directors,
officers and affiliated shareholders will have significant influence in managing
our company and determining the outcome of any corporate transaction or other
matter submitted to the shareholders for approval, including mergers,
consolidations and the sale of all or substantially all of our assets. These
shareholders will also have the power to prevent or cause a change in control.
The interests of these shareholders may differ from the interests of other
shareholders.

THERE IS CURRENTLY NO ACTIVE TRADING MARKET FOR OUR SHARES -- AS A RESULT, OUR
SHARE PRICE MAY EXPERIENCE SIGNIFICANT FLUCTUATIONS AND COULD DROP UNEXPECTEDLY.

     There is currently no public market for our common shares and we cannot
assure you that an active trading market will develop or be sustained after this
offering. The initial public offering price will be determined through
negotiation between us and representatives of the underwriters and may not be
indicative of the market price for our common shares after this offering.

     The market price of our common shares could fluctuate significantly as a
result of:

     - variations in our operating results which may cause us to fail to meet
       analysts' or investors' expectations;

     - general economic and stock market conditions;

     - changes in financial estimates by securities analysts;

     - changes in business or regulatory conditions affecting us;

     - announcements by us or our competitors of technological innovations or
       new products or services; and

     - trading of our common shares.

     Other companies in our industry and the cruise industry have experienced
fluctuating stock prices, and we are likely to experience such fluctuation as
well. In addition, the stock market itself has from time to time experienced
significant price and volume fluctuations that have affected the market prices
for securities in our industry. As a result, investors in our common shares may

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<PAGE>   17

experience a decrease in the value of their shares regardless of our operating
performance or prospects.

ANTITAKEOVER PROVISIONS IN OUR ARTICLES OF ASSOCIATION COULD HAVE EFFECTS THAT
CONFLICT WITH THE INTERESTS OF OUR SHAREHOLDERS -- PROVISIONS OF OUR ARTICLES OF
ASSOCIATION COULD MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO ACQUIRE CONTROL OF
US EVEN IF SUCH A CHANGE IN CONTROL WOULD BE BENEFICIAL TO YOU.

     Our Articles of Association provide for the boards which direct our company
to have a staggered membership. With our staggered boards, board members would
only be subject to reelection every three years. Such a provision could delay
the ability of a third party to exercise control over our company.

     Our Articles also provide for the possible issuance of preference shares.
Preference shares may be issued pursuant to a resolution of one of our boards
without any further shareholder action pursuant to a delegation to issue shares
from the general meeting of shareholders to that board for a renewable period of
five years. The issuance of preference shares may deter or prevent a takeover
attempt, including an attempt that might result in a premium over the market
price for our shares.

     Pursuant to a renewable five year delegation by the general meeting of
shareholders, one of our boards also may grant a call option on preference
shares, which will not exceed 100% of all our other outstanding shares, to an
independent foundation (referred to under Netherlands law as a stichting) to be
established under Netherlands law. In the event of an actual or threatened
hostile takeover bid, the foundation may exercise this option. The issuance of
such preference shares could therefore inhibit a change of control. See
"Description of Capital Stock".

RISKS RELATED TO U.S. AND INTERNATIONAL REGULATION

WE WILL LIKELY BE CLASSIFIED AS A CONTROLLED FOREIGN CORPORATION AND AS A
FOREIGN PERSONAL HOLDING COMPANY -- AS A RESULT, AS A SHAREHOLDER, YOU MAY HAVE
TO PAY U.S. TAXES ON OUR INCOME.

     We expect to be classified for U.S. federal income tax purposes law as a
controlled foreign corporation, or CFC, after this offering. If we are deemed a
CFC for an uninterrupted period of at least 30 days during a taxable year, any
U.S. person owning 10% (by voting power) of our shares will be required to
include in gross income its pro rata share of certain types of our income
(generally passive income) to the extent of our earnings and profits for the
year (as determined for U.S. federal income tax purposes), but will not have to
include these amounts in income when they are distributed. Based on our current
plans, we do not expect to have any earnings and profits in the foreseeable
future and thus do not expect to have income subject to current inclusion under
these CFC rules. U.S. shareholders owning less than 10% of our voting power will
not be affected if we are a CFC. We also expect to be classified as a foreign
personal holding company. If we are a foreign personal holding company in any
taxable year, each U.S. person who held our shares on the last day of the year
would be required to include in gross income such person's pro rata share of our
undistributed foreign personal holding company income (generally taxable income
of the foreign personal holding company with certain adjustments, including a
deduction for dividends paid), even if no cash dividend were paid to the U.S.
shareholder. Based on our current plans, we do not expect to have any
undistributed foreign personal holding company income in the foreseeable future.
U.S. persons who acquire our shares from a decedent would not benefit from a
step-up of the tax basis to fair market value upon the transferor's death. See
"Taxation -- Controlled Foreign Corporations" and "-- Foreign Personal Holding
Companies".

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<PAGE>   18

THE CRUISE LINE INDUSTRY IS SUBJECT TO BOTH U.S. AND INTERNATIONAL
REGULATIONS -- THESE REGULATIONS COULD ADVERSELY AFFECT THE CRUISE LINES WITH
WHICH WE HAVE AGREEMENTS AND, AS A RESULT, MAY AFFECT OUR ABILITY TO CONDUCT
BUSINESS.

     The cruise industry is subject to significant United States and
international regulation. Regulations pertaining to financial responsibility,
environmental matters and passenger safety, among other things, can be
burdensome and place heavy constraints on how those in the cruise industry
conduct their business. For example, passenger safety standards adopted as part
of the Safety of Life at Sea Convention by the International Maritime
Organization have been phased in, and additional standards are required to be
phased in by 2010 with respect to vessel structural requirements. These
standards have resulted in the cruise lines retiring some vessels and could
otherwise adversely affect some cruise lines, including those cruise lines with
which we have contracts. Moreover, changes in the regulatory environment in the
future could have other adverse effects on the cruise industry, impacting cruise
lines with which we have concession agreements.

WE ARE SUBJECT TO CUSTOMS AND OTHER COMPLEX REGULATIONS -- FAILURE TO COMPLY
WITH REGULATIONS REGARDING OUR HANDLING AND SHIPMENT OF GOODS COULD ADVERSELY
AFFECT OUR BUSINESS.

     Our operations are subject to customs, import/export, alcohol and tobacco
regulation in the U.S. and abroad. These regulations govern the manner in which
we take title to, store, ship and sell our merchandise. A failure to comply with
these regulations could result in fines, delays in providing products or
revocation of licenses and permits. Any of these results could have a material
adverse effect on our business.

RISKS RELATED TO FOREIGN LAW

PROVISIONS IN OUR ARTICLES OF ASSOCIATION LIMIT THE LIABILITY OF OUR
DIRECTORS -- YOU MAY FIND IT DIFFICULT TO PURSUE LEGAL REMEDIES AGAINST OUR
DIRECTORS IF YOU BELIEVE YOU HAVE A CLAIM AGAINST THEM.

     Both our Articles of Association and our corporate affairs are governed by
Dutch corporate law. As a result, the rights of our shareholders and the
responsibilities of the boards which direct our affairs are distinct from those
established under the statutes or judicial precedent in U.S. jurisdictions.
Therefore, our public shareholders might find it more difficult to protect their
interests against actions by members of our boards or large shareholders than
they would as shareholders of a corporation incorporated in the United States.

     Under our Articles of Association, once the general meeting of shareholders
adopts our annual accounts, the members of our boards will be discharged from
liability to our company, and consequently its shareholders, with respect to the
performance of their duties during the respective financial year to the extent
the actions they have taken during the year are evident to shareholders from a
review of the annual accounts or otherwise communicated to them. This is the
case unless the general meeting of shareholders explicitly reserves its rights
when approving the financial statements. See "Description of Capital
Stock -- Adoption of Annual Accounts and Discharge of Management Liability".

THE LAW OF THE NETHERLANDS GOVERNS THE STANDARD FOR LIABILITY OF OUR
DIRECTORS -- DUTCH LAW PROVIDES FOR A LOWER STANDARD OF DIRECTOR LIABILITY THAN
UNDER U.S. LAW. AS A SHAREHOLDER, IT MAY BE MORE DIFFICULT FOR YOU TO BRING A
LEGAL ACTION AGAINST OUR DIRECTORS THAN IF WE WERE A U.S. COMPANY.

     The interpretation of Dutch law may provide for a lower standard of
director liability or responsibility than under U.S. law. Traditional concepts
under U.S. law such as "duty of loyalty", "duty of care", and "fiduciary
responsibility" may be interpreted and applied differently in The Netherlands
than under the laws of jurisdictions such as Delaware more familiar to U.S.
investors. In addition, under Dutch law, directors may take into consideration
corporate interests other than the

                                       14
<PAGE>   19

best interest of shareholders. You may find that the law of The Netherlands
provides you with a lower level of protection and fewer opportunities to pursue
remedies than that to which you may be accustomed in U.S. jurisdictions. See
"-- Provisions in Our Articles of Association Limit the Liability of Our
Directors".

JUDGMENTS OF U.S. COURTS ARE NOT DIRECTLY ENFORCEABLE IN THE NETHERLANDS -- AS A
RESULT, YOU MAY FIND IT MORE DIFFICULT TO PROTECT YOUR RIGHTS THAN IF WE WERE A
U.S. COMPANY.

     Judgments of U.S. courts, including judgments against us, our directors or
our officers that are predicated on the civil liability provisions of the
federal securities laws of the U.S., are not directly enforceable in The
Netherlands. Even if you prevail on a claim in a U.S. court, you may find it
difficult to enforce your rights in The Netherlands. See "Service of Process and
Enforcement of Civil Liabilities".

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<PAGE>   20

                    FORWARD-LOOKING STATEMENTS--MARKET DATA

     Many statements made in this prospectus under the captions "Prospectus
Summary", "Risk Factors", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business", and elsewhere, are
forward-looking statements that are not based on historical facts. Because these
forward-looking statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including those
discussed under "Risk Factors".

     This prospectus contains market data related to our business and the cruise
line industry. This market data includes projections that are based on a number
of assumptions. The assumptions include that:

     - the announced and/or planned increases in berth capacity will actually be
       introduced into service;

     - the cruise line industry will continue to operate at the same or at a
       greater level of capacity utilization; and

     - prospective passengers will continue to take cruises and will continue to
       spend on duty-free shopping, port shopping and art at the same or at a
       greater rate as they have in the past.

     If any one or more of the foregoing assumptions turns out to be incorrect,
actual results may differ from projections based on these assumptions. The
cruise line industry and demand for the services we provide to the cruise lines
may not grow over the next five years at the rates projected by this market
data, or at all. The failure of these markets and demand for our services to
grow at their projected rates may have a material adverse effect on our
business, results of operations, our financial condition and the market price of
our common shares.

     The forward-looking statements made in this prospectus relate only to
events as of the date on which the statements are made. We undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which the statements is made or to reflect the
occurrence of unanticipated events.

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                                USE OF PROCEEDS

     We estimate that we will receive net proceeds of approximately $96.7
million (approximately $          million if the underwriter's over-allotment
option is exercised in full) from the sale of the common shares offered by us,
assuming an initial public offering price of $          , after deducting the
estimated underwriting discounts and commissions and offering expenses payable
by us. We will not receive any proceeds from the sales of shares by the selling
shareholders.

     We intend to use approximately $88.1 million of the net proceeds of the
offering to discharge a portion of the indebtedness we incurred in connection
with the acquisitions of our predecessor, Greyhound Leisure Services, and the
Onboard Group and the acquisition of certain of the assets of Nuance Global
Ships. Under the terms of our senior credit facility, we are required, in
connection with this offering, to use a portion of the net proceeds to repay
$42.3 million of our outstanding term loans of $67.5 million plus accrued
interest. The outstanding term loans bear interest at variable rates that range
from 2.25% to 3.50% over the applicable reserve adjusted Eurodollar rate and
have a maturity date of September 17, 2003.

     In addition, we are required to repay our outstanding senior subordinated
notes and our outstanding junior subordinated note. The senior subordinated
notes were issued to various lenders in the aggregate principal amount of $25.2
million. The senior subordinated notes bear interest at a rate of 15% and have a
maturity date of September 15, 2006. Under the terms of the senior subordinated
notes, we must repay the outstanding principal, all accrued interest and a
prepayment fee prior to repaying the junior subordinated note we issued to Viad
Corp. in connection with our acquisition of Greyhound Leisure Services from Viad
Corp. This junior subordinated note, in aggregate principal amount of $10.0
million, bears interest at a rate of 12% and has a maturity date of May 15,
2009. Under the terms of the junior subordinated note, we are required to use
the net proceeds from this offering to pay off the note and all accrued
interest.

     We also intend to use approximately $8.6 million to fund payments that are
to be made in connection with this offering. These payments include the
prepayment fee on our senior subordinated notes, a capital tax of 1% of the
gross proceeds of this offering to the company due in The Netherlands and a
contingent payment due to a customer upon the occurrence of an initial public
offering or a change of control event.

     We expect that the balance of the net proceeds, if any, will be used for
general corporate purposes, including the funding of working capital
requirements and strategic investments or acquisitions. Our management will have
significant flexibility in applying the remaining balance of net proceeds of the
offering after repaying the indebtedness and funding the payments that are to be
made in connection with this offering. Pending any use, the net proceeds of this
offering may be invested in short-term, interest bearing securities or used to
pay down indebtedness under our revolving credit facility. Under the terms of
the senior credit facility we have the ability to reborrow the amounts we repay
on our revolving loans.

                                DIVIDEND POLICY

     We have not in the past declared or paid a cash dividend on our common
shares and we do not intend to do so in the foreseeable future. Instead, we
intend to retain earnings to finance future operations and expansions, and to
reduce indebtedness. The payment of dividends by us to holders of our common
shares is restricted by our senior credit facility. As a result, we do not
intend to pay cash dividends in the foreseeable future.

                                       17
<PAGE>   22

                                 CAPITALIZATION

     The following tables sets forth our capitalization as of June 30, 1999 and
gives effect to the 250 for 1 common share split which will occur immediately
before this offering:

     - on an actual basis; and

     - on a pro forma basis to give effect to this offering (assuming no
       exercise of the underwriter's over-allotment option).

     This data should be read in conjunction with "Unaudited Pro Forma Condensed
Statements of Operations", "Selected Financial Data", "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and the notes thereto included elsewhere in
this prospectus.

<TABLE>
<CAPTION>
                                                                   JUNE 30, 1999
                                                              -----------------------
                                                               ACTUAL      PRO FORMA
                                                              ---------    ----------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>          <C>
Current portion of long-term debt and accrued expense.......  $ 11,248      $     --
                                                              ========      ========
Long-term debt, less current maturities:
  Revolving credit facility.................................  $  7,900      $  1,356
  Term note.................................................    56,786        25,180
  Senior subordinated notes(a)..............................    28,262            --
  Junior subordinated note(b)...............................    10,985            --
                                                              --------      --------
     Total long-term debt...................................   114,647        26,536
Minority interest...........................................     4,326         4,326
Shareholders' equity:
  Common shares, EUR .01 par value; on an actual and pro
     forma basis, 120,000,000 shares authorized and
     24,000,000 shares issued and outstanding; and on a pro
     forma basis, 30,476,190 shares issued and
     outstanding(c).........................................       240           305
  Additional paid in capital................................    45,930       141,490
  Accumulated deficit(d)....................................    (3,501)      (10,481)
                                                              --------      --------
     Total shareholders' equity.............................    42,669       131,314
                                                              --------      --------
          Total capitalization..............................  $161,642      $162,176
                                                              ========      ========
</TABLE>

-------------------------
(a) Includes $3,074 of accrued interest.

(b) Includes $985 of accrued interest.

(c) The number of common shares to be outstanding after this offering is based
    on the number of shares outstanding as of June 30, 1999 and does not assume
    the exercise of the underwriter's over-allotment option. Also, it does not
    include 1,000,000 shares subject to options outstanding as of June 30, 1999
    at a weighted average exercise price of $1.925 per share.

(d) Pro forma accumulated deficit includes an extraordinary charge of
    approximately $7.0 million related to a prepayment fee in connection with
    the payment of $28.3 million of our senior subordinated notes which we will
    record in the quarter in which the offering is consummated.

                                       18
<PAGE>   23

                                    DILUTION

     Dilution is the amount by which the offering price paid by purchasers of
the common shares in this offering exceeds the net tangible book value per share
of common shares immediately after the completion of this offering. Net tangible
book value per share is determined at any date by dividing the amount equal to
the total book value of our tangible assets less the sum of total liabilities
plus minority interest by the number of common shares outstanding at that date.

     After giving effect to the issuance and sale of the common shares offered
by us (assuming no exercise of the underwriter's over-allotment) and after
deducting the estimated underwriting discount and offering expenses payable by
us, our pro forma net tangible book value as of June 30, 1999 would have been
$     , or $     per share, after giving effect to the 250 for 1 common share
split which will occur immediately before this offering. This represents an
immediate increase in pro forma net tangible book value of $     per share to
existing shareholders and an immediate dilution of $     per share to new
investors purchasing shares in this offering. If the initial offering price is
higher or lower, the dilution to the new investors will be greater or less,
respectively. The following table illustrates this per share dilution.

<TABLE>
<S>                                                 <C>         <C>
Assumed initial public offering price per share...              $
Net tangible book value per share at June 30,
  1999............................................  $
Increase in net tangible book value attributable
  to new investors................................
                                                    --------
Pro forma net tangible book value per share after
  this offering...................................
                                                                --------
Dilution per share to new investors...............              $
                                                                ========
</TABLE>

                            ------------------------

     The following table summarizes, on a pro forma basis as of June 30, 1999,
the difference between the number of common shares purchased from us, the
aggregate cash consideration paid to us and the average price per share paid by
existing shareholders and new investors purchasing common shares in this
offering. The calculation below is based on an assumed initial public offering
price of $  per share, before deducting the estimated underwriting discount and
offering expenses payable by us:

<TABLE>
<CAPTION>
                                    SHARES PURCHASED      TOTAL CONSIDERATION
                                   -------------------    -------------------    AVERAGE PRICE
                                    NUMBER     PERCENT     AMOUNT     PERCENT      PER SHARE
                                   --------    -------    --------    -------    -------------
<S>                                <C>         <C>        <C>         <C>        <C>
Existing shareholders............                   %     $                %       $
New investors....................
                                   --------      ---      --------      ---        --------
     Total.......................                100%     $             100%       $
                                   ========      ===      ========      ===        ========
</TABLE>

     If the underwriter exercises its over-allotment option in full, the
following would occur:

     -  the number of common shares held by existing shareholders will decrease
        to           , or approximately      % of the total number of common
        shares outstanding; and

     -  the number of common shares held by new public investors will be
        increased to           , or approximately      % of the total number of
        common shares outstanding after this offering.

     This discussion and table assume no exercise of any options to acquire
shares outstanding as of June 30, 1999 and gives effect to the 250 for 1 common
share split which will occur immediately before this offering. As of June 30,
1999, there were options outstanding to purchase a total of 1,000,000 common
shares with a weighted average exercise price of $1.925 per share. To the extent
that any of these options are exercised, there will be further dilution to new
investors. See "Capitalization".

                                       19
<PAGE>   24

             UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS

             INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS REVIEW REPORT

     We have reviewed the pro forma adjustments reflecting the transaction
described in the notes and the introduction to the unaudited pro forma condensed
statements of operations and the application of those adjustments to the
historical amounts in the unaudited pro forma condensed statement of operations
of Starboard Cruise Services N.V. (formerly Miami Cruiseline Services Holdings I
B.V.) for the six months ended June 30, 1999. The historical condensed statement
of operations is derived from the historical unaudited financial statements of
Starboard Cruise Services N.V. appearing elsewhere herein. Such pro forma
adjustments are based on management's assumptions described in the notes and the
introduction. Our review was conducted in accordance with standards established
by the American Institute of Certified Public Accountants.

     A review is substantially less in scope than an examination, the objective
of which is the expression of an opinion on management's assumptions, the pro
forma adjustments, and the application of those adjustments to historical
financial information. Accordingly, we do not express such an opinion on the pro
forma adjustments or the application of such adjustments to the pro forma
financial information for the six months ended June 30, 1999.

     The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transaction occurred at an earlier date. However, the pro forma condensed
statement of operations is not necessarily indicative of the results of
operations or related effects on financial position that would have been
attained had the above-mentioned transaction actually occurred earlier.

     Based on our review, nothing came to our attention that caused us to
believe that management's assumptions do not provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transaction described in the notes and the introduction to the unaudited pro
forma financial data, that the related pro forma adjustments do not give
appropriate effect to those assumptions, or that the pro forma column does not
reflect the proper application of those adjustments to the historical financial
statement amounts in the pro forma condensed statement of operations for the six
month period ended June 30, 1999.

Miami, Florida
August 18, 1999

     The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts and the name change described in Note 14
to the Starboard Cruise Services N.V. consolidated financial statements.

                                          /s/ ERNST & YOUNG LLP
Miami, Florida
August 18, 1999

                                       20
<PAGE>   25

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     We have examined the pro forma adjustments reflecting the transactions
described in the notes and the introduction to the unaudited pro forma condensed
statement of operations and the application of those adjustments to the
historical amounts in the accompanying unaudited pro forma condensed statement
of operations of Starboard Cruise Services N.V. (formerly Miami Cruiseline
Services Holdings I B.V.) for the year ended December 31, 1998. The historical
condensed statement of operations is derived from the historical financial
statements of Starboard Cruise Services N.V., Greyhound Leisure Services, the
Onboard Group and Nuance Global Ships which were audited by us, appearing
elsewhere herein. Such pro forma adjustments are based on management's
assumptions described in the notes and the introduction. Our examination was
made in accordance with standards established by the American Institute of
Certified Public Accountants and, accordingly, included such procedures as we
considered necessary in the circumstances.

     The objective of this unaudited pro forma condensed statement of operations
is to show what the significant effects on the historical financial information
might have been had the transactions occurred at an earlier date. However, the
unaudited pro forma condensed statement of operations is not necessarily
indicative of the results of operations or related effects on financial position
that would have been attained had the above-mentioned transactions actually
occurred earlier.

     In our opinion, management's assumptions provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transactions described in the notes and the introduction to the unaudited pro
forma condensed statement of operations, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma column reflects the
proper application of those adjustments to the historical financial statement
amounts in the unaudited pro forma condensed statement of operations for the
year ended December 31, 1998.

Miami, Florida
August 18, 1999

     The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts and the name change described in Note 14
to the Starboard Cruise Services N.V. consolidated financial statements.

                                          /s/  ERNST & YOUNG LLP

Miami, Florida
August 18, 1999

                                       21
<PAGE>   26

INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS

     The following unaudited pro forma condensed statement of operations for the
six-month period ended June 30, 1999 has been derived from the historical
financial statements of Starboard Cruise Services and gives effect to this
offering (assuming no exercise of the underwriter's over-allotment option) as if
it had occurred at the beginning of the period. The unaudited pro forma
condensed statement of operations for the year ended December 31, 1998 was
derived from the historical financial statements of Starboard Cruise Services
and the historical financial statements of Greyhound Leisure Services, the
Onboard Group and Nuance Global Ships which were acquired by Starboard Cruise
Services and gives effect to the acquisitions and this offering (assuming no
exercise of the underwriter's over-allotment option) as if they had occurred at
the beginning of the period. The acquisitions and the related adjustments are
described below and in the accompanying notes.

     Our company was formed on September 10, 1998 in order to acquire our
predecessor entity, Greyhound Leisure Services. On September 17, 1998, we
acquired 100% of the issued and outstanding shares of the capital stock of our
predecessor entity for $96.6 million. The purchase price consisted of $81.5
million in cash, a $10.0 million junior subordinated note due May 15, 2009 and
approximately $5.1 million of acquisition costs. Subsequently, on September 17,
1998, we acquired all of the outstanding shares of capital stock of the Onboard
Group. The purchase price consisted primarily of cash, which included certain
assumed indebtedness paid by us at closing and 5,912,500 of our common shares.
On December 15, 1998, we (through one of our wholly-owned subsidiaries) acquired
certain assets and assumed certain liabilities of Nuance Global Ships in
exchange for cash. The aggregate purchase price for the Onboard Group and Nuance
was approximately $64.4 million, including acquisition costs of approximately
$2.3 million.

     The acquisitions we made were accounted for using the purchase method of
accounting. The purchase method of accounting allocated the aggregate purchase
price plus transaction costs to the assets acquired and the liabilities assumed
based on their respective fair values. The excess of purchase price over the
fair value of tangible and identifiable intangible assets acquired, net of
liabilities assumed, has been recorded as goodwill. Our management believes that
the preliminary allocations set forth herein are reasonable. The allocations set
forth herein are subject to revision as additional information becomes
available, and such revised allocations could differ from those set forth
herein.

     The unaudited pro forma condensed statements of operations are based upon
currently available information and assumptions and estimates which our
management believes are reasonable. The unaudited pro forma condensed statements
of operations do not purport to represent what the results of operations of
Starboard Cruise Services would actually have been had the acquisitions or the
offering in fact occurred on the dates indicated or to project the results of
operations for any future period or date. You should read the unaudited pro
forma condensed statements of operations in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations", other
financial information included in this prospectus, and with our consolidated
financial statements and related notes and the audited financial statements and
the related notes of the companies we acquired included elsewhere in this
prospectus.

                                       22
<PAGE>   27

             UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

                           STARBOARD CRUISE SERVICES
                         SIX MONTHS ENDED JUNE 30, 1999

<TABLE>
<CAPTION>
                                                                    OFFERING     PRO FORMA FOR
                                                     HISTORICAL    ADJUSTMENTS     OFFERING
                                                     -----------   -----------   -------------
                                                     (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<S>                                                  <C>           <C>           <C>
Net sales..........................................  $   138,258     $    --      $   138,258
Cost of sales......................................       56,888                       56,888
                                                     -----------     -------      -----------
Gross profit.......................................       81,370                       81,370
Selling, general and administrative expenses.......       75,857          --           75,857
Amortization of intangibles........................        2,750          --            2,750
                                                     -----------     -------      -----------
Income from operations.............................        2,763                        2,763
Interest expense...................................        6,047      (4,798)(a)        1,249
Interest income....................................          228                          228
                                                     -----------     -------      -----------
(Loss) income before provision for income taxes and
  minority interest................................       (3,056)      4,798            1,742
Provision for income taxes.........................          186          42(b)           228
Minority interest..................................           71          --               71
                                                     -----------     -------      -----------
Net (loss) income..................................  $    (3,313)    $ 4,756      $     1,443(c)
                                                     ===========     =======      ===========
Pro forma basic and diluted net (loss) income per
  share (d)........................................  $     (0.14)                 $      0.05
                                                     ===========                  ===========
Pro forma basic and diluted weighted average
  shares...........................................   24,000,000                   30,476,250
                                                     ===========                  ===========
</TABLE>

      See Notes to Unaudited Pro Forma Condensed Statements of Operations

                                       23
<PAGE>   28

             UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

                           STARBOARD CRUISE SERVICES
                          YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
                            STARBOARD
                             CRUISE                          PRO FORMA                        PRO FORMA
                            SERVICES     ACQUISITION            FOR           OFFERING       FOR OFFERING
                           COMBINED(E)   ADJUSTMENTS        ACQUISITIONS     ADJUSTMENTS   AND ACQUISITIONS
                           -----------   -----------      ----------------   -----------   ----------------
                                               (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<S>                        <C>           <C>              <C>                <C>           <C>
Net sales................  $  281,151      $    --            $281,151         $    --       $   281,151
Cost of sales............     120,917           --             120,917                           120,917
                           -----------     -------            --------         -------       -----------
Gross profit.............     160,234           --             160,234                           160,234
Selling, general and
  administrative
  expenses...............     151,262       (5,113)(f)         146,149              --           146,149

Amortization of
  intangibles............       1,528        3,704(g)            5,232              --             5,232
                           -----------     -------            --------         -------       -----------
Income from operations...       7,444        1,409               8,853                             8,853
Interest expense.........       3,848        8,335(h)           12,183          (9,187)(a)         2,996
Interest income..........         972           --                 972              --               972
Other expense............          10           --                  10              --                10
                           -----------     -------            --------         -------       -----------
Income (loss) before
  provision for income
  taxes and minority
  interest...............       4,558       (6,926)             (2,368)          9,187             6,819
Provision (benefit) for
  income taxes...........       2,780       (3,630)(b)            (850)          2,379(b)          1,529
Minority interest........         776           --                 776              --               776
                           -----------     -------            --------         -------       -----------
Net income (loss)........  $    1,002      $(3,296)           $ (2,294)        $ 6,808       $     4,514(d)
                           ===========     =======            ========         =======       ===========
Pro forma basic and
  diluted net income per
  share(c)...............                                                                    $      0.15
                                                                                             ===========
Pro forma basic and
  diluted weighted
  average shares.........                                                                     29,726,250
                                                                                             ===========
</TABLE>

      See Notes to Unaudited Pro Forma Condensed Statements of Operations

                                       24
<PAGE>   29

        NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS

(a) Represents a reduction in interest expense in connection with the
    anticipated use of net proceeds to repay $88,111 of long term debt as
    follows:

<TABLE>
<CAPTION>
                                                                                              REDUCTION IN
                                                                                            INTEREST EXPENSE
                                                                                        -------------------------
                        PRINCIPAL      PRINCIPAL                                                       SIX MONTHS
                       OUTSTANDING    OUTSTANDING     USE OF                  ANNUAL     YEAR ENDED      ENDED
                       DECEMBER 31,    JUNE 30,     PROCEEDS TO   INTEREST   INTEREST   DECEMBER 31,    JUNE 30,
                           1998          1999       REPAY DEBT      RATE     EXPENSE        1998          1999
                       ------------   -----------   -----------   --------   --------   ------------   ----------
<S>                    <C>            <C>           <C>           <C>        <C>        <C>            <C>
Revolving Credit
  Facility...........    $ 10,200      $  7,900       $ 6,544       7.81%    $   797       $  601        $  256
Term Note............      67,500        67,500        42,320       7.94%      5,360        3,385         1,680
Senior Subordinated
  Notes..............      25,188        28,262        28,262      15.00%      3,956        3,956         2,189
Junior Subordinated
  Note...............      10,000        10,985        10,985      12.00%      1,245        1,245           673
                         --------      --------       -------                -------       ------        ------
                         $112,888      $114,647       $88,111                $11,358       $9,187(1)     $4,798(1)
                         ========      ========       =======                =======       ======        ======
</TABLE>

-------------------------
(1) Includes $178 and $45 of compounded interest related to the senior
    subordinated notes and the junior subordinated note, respectively.

(b) Reflects increase (decrease) to the provision for income taxes associated
    with the following:

<TABLE>
<CAPTION>
                                                                 OFFERING ADJUSTMENTS
                                                 ACQUISITION    -----------------------
                                                 ADJUSTMENTS                     SIX
                                                 ------------                   MONTHS
                                                  YEAR ENDED     YEAR ENDED     ENDED
                                                 DECEMBER 31,   DECEMBER 31,   JUNE 30,
                                                     1998           1998         1999
                                                 ------------   ------------   --------
<S>                                              <C>            <C>            <C>
Provision for income taxes as if each Onboard
  Group company was a C-corporation and accrued
  taxes at the statutory rate of 38.5%.........    $   822         $   --        $--
Tax effect of the pro forma adjustments........     (2,376)         2,379         42
Effect of non-U.S. tax rates...................     (2,076)            --         --
                                                   -------         ------        ---
Pro forma adjustments..........................    $(3,630)        $2,379        $42
                                                   =======         ======        ===
</TABLE>

(c) Does not include an extraordinary charge of approximately $7.0 million
    related to a prepayment fee in connection with the payment of $28.3 million
    of our senior subordinated notes which we will record in the quarter in
    which the offering is consummated.

(d) Pro forma basic and diluted net income per share was computed by dividing
    pro forma net income by the pro forma weighted average number of common
    shares outstanding after giving effect to dilutive stock options for the
    diluted computations and the issuance of                shares in connection
    with this offering. Retroactive restatement has been made to share and per
    share amounts for the 50 for 1 common share split and the 5 for 1 stock
    dividend which will occur immediately before this offering.

                                       25
<PAGE>   30
  NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS -- CONTINUED

(e) The historical results of operations for each of the entities we acquired
    are included in our company's historical results of operations for the
    period from their respective dates of acquisition through the end of the
    period presented. The historical results of operations presented for each of
    the acquired entities are their respective pre-acquisition results of
    operations. Set forth below are the respective dates of incorporation or
    acquisition:

<TABLE>
<CAPTION>
COMPANY                                                      DATE
-------                                                      ----
<S>                                                 <C>
Starboard Cruise Services.........................  September 10, 1998
                                                    (date of incorporation)
Greyhound Leisure Services (predecessor)..........  September 17, 1998
Onboard Group.....................................  September 17, 1998
Nuance Global Ships...............................  December 15, 1998
</TABLE>

The historical pro forma combined statements of operations for the year ended
December 31, 1998 are as follows:

<TABLE>
<CAPTION>
                                                    GREYHOUND                           STARBOARD
                                  HISTORICAL         LEISURE                             CRUISE
                               STARBOARD CRUISE     SERVICES      ONBOARD               SERVICES
                                   SERVICES       (PREDECESSOR)    GROUP    NUANCE(1)   COMBINED
                               ----------------   -------------   -------   ---------   ---------
<S>                            <C>                <C>             <C>       <C>         <C>
Net sales....................      $71,061          $135,603      $13,205    $61,282    $281,151
Cost of sales................       30,139            54,290        8,012     28,476     120,917
                                   -------          --------      -------    -------    --------
Gross profit.................       40,922            81,313        5,193     32,806     160,234
Selling, general and
  administrative expenses....       36,373            73,993        3,169     37,727     151,262
Amortization of
  intangibles................        1,525                --            3         --       1,528
                                   -------          --------      -------    -------    --------
Income (loss) from
  operations.................        3,024             7,320        2,021     (4,921)      7,444
Interest expense.............        3,156               674           18         --       3,848
Interest income..............          485               257          141         89         972
Other expense................           --                --           10         --          10
                                   -------          --------      -------    -------    --------
Income (loss) before
  provision for income taxes
  and minority interest......          353             6,903        2,134     (4,832)      4,558
Provision for income taxes...          359             2,249           --        172       2,780
Minority interest............          182               594           --         --         776
                                   -------          --------      -------    -------    --------
Net income (loss)............      $  (188)         $  4,060      $ 2,134    $(5,004)   $  1,002
                                   =======          ========      =======    =======    ========
</TABLE>

(1) The historical statement of operations for Nuance represents the audited
    statement of operations of Nuance for the period from December 26, 1997
    through September 24, 1998 combined with the unaudited statement of
    operations of Nuance for the period from September 25, 1998 through December
    15, 1998 (the date we acquired Nuance). The unaudited interim period
    statement of operations includes estimates inherent in preparing interim
    financial statements and is included in the Combined Historical Statements
    of Operations for Nuance for informational purposes only.

(f) In connection with the Nuance acquisitions several executive and
    administrative positions were either eliminated or replaced with new
    individuals or certain compensation packages were restructured. In addition,
    certain intercompany charges from Nuance Global Ships' former parent Nuance
    Global Traders related to corporate overhead, including legal, audit,
    treasury and risk

                                       26
<PAGE>   31
  NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS -- CONTINUED

assessment, were eliminated. Also a pension plan related to Greyhound Leisure
Services was eliminated in connection with that acquisition. On a stand-alone
     basis, the decrease in selling, general and administrative expenses is as
     follows:

<TABLE>
<CAPTION>
                                                    YEAR ENDED
                                                 DECEMBER 31, 1998
                                            ---------------------------
                                            NUANCE   GREYHOUND   TOTAL
                                            ------   ---------   ------
<S>                                         <C>      <C>         <C>
Executive positions, net..................  $ 852     $   --     $  852
Former parent company overhead charges,
  net.....................................  1,385         --      1,385
Elimination of duplicate facilities.......  2,074         --      2,074
Elimination of pension plan...............     --        802        802
                                            ------    ------     ------
                                            $4,311    $  802     $5,113
                                            ======    ======     ======
</TABLE>

(g) Reflects an increase to amortization of goodwill related to the acquisitions
    of Greyhound Leisure Services and the Onboard Group and an increase to
    amortization of cruise line contracts related to the acquisition of
    Greyhound Leisure Services. Goodwill aggregating approximately $97.2 million
    is being amortized over 25 years. Cruise line contracts valued at
    approximately $5.4 million are being amortized over three to five years.
    Incremental amortization of goodwill is as follows:

<TABLE>
<CAPTION>
                                                        ANNUAL       AMOUNT    INCREMENTAL
                                          GOODWILL   AMORTIZATION   RECORDED     AMOUNT
                                          --------   ------------   --------   -----------
<S>                                       <C>        <C>            <C>        <C>
Greyhound Leisure Services..............  $55,900       $2,236       $  653      $1,583
Onboard Group...........................   41,300        1,652          482       1,170
                                          -------       ------       ------      ------
                                          $97,200       $3,888       $1,135      $2,753
                                          =======       ======       ======      ======
</TABLE>

     Incremental amortization of cruise line contracts is as follows:

<TABLE>
<CAPTION>
                                                         ANNUAL       AMOUNT    INCREMENTAL
                                     CONTRACT VALUE   AMORTIZATION   RECORDED     AMOUNT
                                     --------------   ------------   --------   -----------
<S>                                  <C>              <C>            <C>        <C>
Greyhound Leisure Services.........      $5,400          $1,341        $390       $  951
                                         ======          ======        ====       ======
</TABLE>

     The total incremental amortization is as follows:

<TABLE>
<S>                                  <C>              <C>            <C>        <C>
Goodwill.....................................................................     $2,753
Cruise line contracts........................................................        951
                                                                                  ------
                                                                                  $3,704
                                                                                  ======
</TABLE>

(h) Represents additional interest expense related to the acquisitions of
    Greyhound Leisure Services, the Onboard Group and Nuance. Incremental
    interest expense is as follows:

<TABLE>
<CAPTION>
                                    PRINCIPAL    INTEREST        ANNUAL        INTEREST   INCREMENTAL
                                   OUTSTANDING     RATE     INTEREST EXPENSE   RECORDED     AMOUNT
                                   -----------   --------   ----------------   --------   -----------
<S>                                <C>           <C>        <C>                <C>        <C>
Term Note........................   $ 67,500       7.94%        $ 5,360         $1,491      $3,869
Revolving Credit Facility........     10,200       7.81%            797             84         713
Senior Subordinated Notes........     25,188      15.00%          3,956          1,149       2,807
Junior Subordinated Note.........     10,000      12.00%          1,245            299         946
                                    --------                    -------         ------      ------
                                    $112,888                    $11,358         $3,023      $8,335(1)
                                    ========                    =======         ======      ======
</TABLE>

-------------------------
(1) Includes $178 and $45 of compounded interest related to the senior
    subordinated notes and the junior subordinated note, respectively.

                                       27
<PAGE>   32

                            SELECTED FINANCIAL DATA

     We have presented below the selected historical consolidated financial data
for Starboard Cruise Services for the period from September 10, 1998 through
December 31, 1998 and as of December 31, 1998 and for our predecessor entity,
Greyhound Leisure Services, for the period from January 1, 1998 through
September 17, 1998, for each of the three years in the period ended December 31,
1997 and as of December 31, 1997 which have been derived from the audited
consolidated financial statements of Starboard Cruise Services and Greyhound
Leisure Services included elsewhere in this prospectus. The historical financial
and data for our predecessor entity, Greyhound Leisure Services, as of December
31, 1996 and 1997 and as of and for the year ended December 31, 1995 have been
derived from the audited financial statements of Greyhound Leisure Services
which are not included in this prospectus. The selected historical consolidated
financial and other data for Starboard Cruise Services for the six months ended
June 30, 1999 and as of June 30, 1999 and Greyhound Leisure Services for the six
months ended June 30, 1998 and the year ended December 31, 1994 and as of
December 31, 1994 have been derived from the respective unaudited consolidated
financial statements of Starboard Cruise Services and Greyhound Leisure Services
which include adjustments which our management considers necessary for a fair
presentation of the financial position and results of operations for these
periods. Operating results for the six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the entire year.
The results of operations for the six months ended June 30, 1999 for Starboard
Cruise Services are not comparable to the six months ended June 30, 1998 for
Greyhound Leisure Services due to, among other things, the acquisitions
completed on or after September 17, 1998. Results of operations of these
acquired businesses are included in Starboard Cruise Services consolidated
financial statements after the date of acquisition for the period after
September 17, 1998. This data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations-Results
of Operations" and the consolidated financial statements and related notes and
other financial information included elsewhere in this prospectus.
<TABLE>
<CAPTION>

                                                                               PREDECESSOR
                                                                           -------------------
                                              PREDECESSOR
                               -----------------------------------------       PERIOD FROM
                                        YEAR ENDED DECEMBER 31,              JANUARY 1, 1998
                               -----------------------------------------         THROUGH
                                 1994       1995       1996       1997     SEPTEMBER 17, 1998
                               --------   --------   --------   --------   -------------------
                                          (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<S>                            <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATION DATA:
Net sales....................  $137,723   $136,262   $179,799   $188,498        $135,603
Cost of sales................    58,559     58,064     72,860     76,828          54,290
                               --------   --------   --------   --------        --------
Gross profit.................    79,164     78,198    106,939    111,670          81,313
Selling, general and
  administrative expenses....    70,706     69,420     96,712    101,067          73,993
Amortization of
  intangibles................        --         --         --         --              --
                               --------   --------   --------   --------        --------
Income from operations.......     8,458      8,778     10,227     10,603           7,320
Interest expense.............       575         56        625        766             674
Interest income..............         2        206        512        561             257
                               --------   --------   --------   --------        --------
Income (loss) before
  provision for income taxes
  and minority interest......     7,885      8,928     10,114     10,398           6,903
Provisions for income
  taxes......................     2,844      3,138      2,936      2,941           2,249
Minority interest............       777        861      1,706        957             594
                               --------   --------   --------   --------        --------
Net income (loss)............  $  4,264   $  4,929   $  5,472   $  6,500        $  4,060
                               ========   ========   ========   ========        ========
PER SHARE DATA:
Basic and diluted net income
  (loss) per share...........  $  4,264   $  4,929   $  5,472   $  6,500        $  4,060
Basic and diluted weighted
  average shares
  outstanding................     1,000      1,000      1,000      1,000           1,000

<CAPTION>
                                  PERIOD FROM
                               SEPTEMBER 10, 1998
                                                      SIX MONTHS ENDED JUNE 30,
                                                    ------------------------------
                                                       1998             1999
                                    THROUGH         -----------   ----------------
                               DECEMBER 31, 1998
                                STARBOARD CRUISE                  STARBOARD CRUISE
                                    SERVICES                          SERVICES
                                  (SUCCESSOR)       PREDECESSOR     (SUCCESSOR)
                               ------------------   -----------   ----------------
                                    (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<S>                            <C>                  <C>           <C>
STATEMENT OF OPERATION DATA:
Net sales....................     $    71,061         $94,398       $   138,258
Cost of sales................          30,139          37,770            56,888
                                  -----------         -------       -----------
Gross profit.................          40,922          56,628            81,370
Selling, general and
  administrative expenses....          36,373          51,112            75,857
Amortization of
  intangibles................           1,525              --             2,750
                                  -----------         -------       -----------
Income from operations.......           3,024           5,516             2,763
Interest expense.............           3,156             421             6,047
Interest income..............             485             128               228
                                  -----------         -------       -----------
Income (loss) before
  provision for income taxes
  and minority interest......             353           5,223            (3,056)
Provisions for income
  taxes......................             359           1,437               186
Minority interest............             182             514                71
                                  -----------         -------       -----------
Net income (loss)............     $      (188)        $ 3,272       $    (3,313)
                                  ===========         =======       ===========
PER SHARE DATA:
Basic and diluted net income
  (loss) per share...........     $     (0.01)        $ 3,272       $     (0.14)
Basic and diluted weighted
  average shares
  outstanding................      23,250,000           1,000        24,000,000
</TABLE>

                                       28
<PAGE>   33

<TABLE>
<CAPTION>
                                                                                                            SUCCESSOR
                                                                                                            STARBOARD
                                                                    PREDECESSOR                               CRUISE
                                                      ---------------------------------------                SERVICES
                                                                   DECEMBER 31,                  --------------------------------
                                                      ---------------------------------------    DECEMBER 31,        JUNE 30,
                                                       1994       1995      1996       1997          1998              1999
                                                      -------    ------    -------    -------    ------------    ----------------
                                                                                    (IN THOUSANDS)
<S>                                                   <C>        <C>       <C>        <C>        <C>             <C>
BALANCE SHEET DATA:
Cash and cash equivalents...........................  $    --    $1,768    $   522    $   262      $  4,124          $    361
Current assets......................................   35,976    41,551     41,379     42,425        76,476            82,269
Total assets........................................   40,555    54,414     56,998     59,262       191,540           194,020
Total debt..........................................       --        --         --         --       112,888           110,588
Total shareholders' equity..........................   13,549    13,490     14,383     15,148        45,982            42,669
</TABLE>

                                       29
<PAGE>   34

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion contains forward-looking statements that involve
risks and uncertainties. Starboard Cruise Services' actual results could differ
materially from those discussed in the forward-looking statements as a result of
certain factors including those set forth under "Risk Factors" and elsewhere in
this prospectus. The following discussion and analysis should be read in
conjunction with the "Selected Financial Data" and the consolidated financial
statements and related notes thereto appearing elsewhere in this prospectus.

GENERAL

     Starboard Cruise Services is the leading provider of on-board duty-free
retail services to the cruise industry, operating 232 duty-free retail stores
aboard 82 ships serving 21 cruise lines. We are also the cruise industry's
leading provider of enhanced cruise services including our port lecture series,
customized in-cabin publications and on-board art auctions. We deliver our
services to the largest cruise lines in the industry including Carnival
Corporation (and its affiliated cruise lines), Norwegian Cruise Line and Royal
Caribbean Ltd. (and its affiliated cruise lines), among others. In most cases,
we are the exclusive provider of our services on ships we serve and we have
developed long-standing, strong relationships with our cruise line customers.
Our cruise-based business accounted for 77% of net sales for the first six
months of 1999. Net sales from our land-based operations accounted for 23% of
net sales for the first six months of 1999.

     Net Sales.  Net sales represents our gross revenues less credits and
adjustments. Our cruise-based services consist of duty-free retail stores,
in-cabin publications and video, port lecturing services and on-board art
auctions and provided most of Starboard Cruise Services' net sales. Our
land-based media and retail business consists of airport duty-free retail stores
and hotel and resort publications and provided the remainder of our net sales.
For the year ended December 31, 1998, calculated on a pro forma basis to reflect
our 1998 acquisitions, 76% of our total net sales were contributed by the
cruise-based business and 24% of net sales were contributed by the land-based
businesses.

     Our cruise-based duty-free retail stores accounted for 68.1% of Starboard
Cruise Services total historical net sales in 1998 and 69.6% for the first six
months of 1999 while our other cruise-based services accounted for 7.9% and 7.0%
for the same periods, respectively.

     We believe that our understanding of the cruise passengers' buying habits,
ability to source products at low cost points and innovative merchandising, and
sales techniques and our success of adding new ships allowed us to maintain a
7.2% annual net sales growth rate in our cruise-based duty-free retail business
from 1996 to 1998.

     The majority of our land-based net sales are provided by the 21 duty-free
retail stores we operate in the Miami and Fort Lauderdale airports with a
smaller percentage contributed by the publications and videos we develop for
land-based leisure destinations including Las Vegas hotels and resorts in the
Caribbean. Net sales for the airport duty-free operations have grown 6.6% per
year since 1995 and are primarily correlated to the number of international
passengers traveling through the Miami and Fort Lauderdale airports each year.

     Starboard Cruise Services has recently entered into a new, multi-year
contract with Royal Caribbean Ltd. to operate the on-board duty-free retail
shops aboard the 11 existing and five Royal Caribbean International vessels
under contract. The contract provides us with the option to operate duty-free
stores on all new vessels launched during the contract term. As a result of this
new contract, we will operate duty-free retail stores on almost every major
cruise line in the industry. The

                                       30
<PAGE>   35

commencement of this new contract increases our number of duty-free passenger
berths by 28% from approximately 83,000 berths as of June 30, 1999 to
approximately 105,000 berths as of November 1999.

     Cost of Sales.  The principal elements constituting our cost of sales
include the cost of product sold in the cruise-based and airport duty-free
retail shops and the rent paid to the cruise lines associated with the port
lecturing businesses. We believe our cost of sales for the duty-free stores are
some of the lowest in the industry due to the large scale purchasing power that
comes as a result of operating over 232 duty-free retail stores aboard 82 ships
and 21 airport duty-free stores. We also source and purchase private label logo
items worldwide, which allows us to provide high quality merchandise at higher
margins. We expect that our cost of sales for products sold through the duty-
free stores will remain at the same level or decrease slightly in the future as
our purchasing power and buying expertise continue to improve.

     Selling, General and Administration.  The principal elements constituting
our selling, general and administrative expenses include the percentage rent
paid to the cruise lines and airport authority for the duty-free shops,
warehousing costs, and general administration such as salaries, sales efforts,
and overhead. The rents paid to the cruise lines and airport authority are based
on a percentage of our net sales, or a minimum payment, and reflect the largest
percentage of our selling, general and administrative expenses and are based on
long-term contracts with our cruise line customers. All of our cruise line
contracts call for percentage rents on an annual basis during the contract term.

     Our warehousing costs include the cost of operating our 120,000 sq. ft.
bonded, duty-free warehouse in Miami, Florida. The warehouse is used to service
operations at both airports and to replenish the cruise lines duty-free shops
when they dock in Miami and Fort Lauderdale. Our warehouse is also used as a
staging area to replenish vessels in over 40 ports worldwide. General
administration costs include the salaries, benefits and general overhead costs
associated with employing approximately 1,200 employees and operating facilities
in Miami and Miami Beach, warehouse operations at both airports and offices in
Southampton, England.

     On September 17, 1998, we acquired our Predecessor, Greyhound Leisure
Services. Concurrent with the acquisition, we acquired the Onboard Group and on
December 15, 1998, we purchased the business of Nuance Global Ships. At the time
of the Nuance acquisition, Nuance operated 90 duty-free retail stores on 28
ships with 9 cruise lines, including Celebrity Cruises, Cunard Line, Holland
America Line and Seabourn Cruise Line. Prior to our acquisition, the Nuance
business was unprofitable. In the six months following the acquisition, we have
focused on improving the merchandising mix, retraining the sales force,
increasing per passenger day revenues reducing redundant overhead costs to
increase profitability to levels consistent with our existing fleet of cruise-
based duty-free retail stores.

     Our results of operations for the six months ended June 30, 1999 are
compared to the results of our Predecessor for the six months ended June 30,
1998. Our 1998 results of operations, presented on a pro forma basis to give
effect to our 1998 acquisitions, are compared to the results of operations of
our Predecessor for the year ended December 31, 1997. The results of operations
for our Predecessor, however, do not include the results of operations for that
period of the On Board Group business (port lecturing, publications and art
auctions) or the Nuance business, each of which was acquired in our 1998
acquisitions. As a result, we believe our period to period comparisons may not
be indicative of the historical and future operations of our business.

                                       31
<PAGE>   36

RESULTS OF OPERATIONS

     The following table sets forth our results of operations based on the
percentage relationship of certain items to revenues during the period shown.

<TABLE>
<CAPTION>
                                             PREDECESSOR               STARBOARD CRUISE SERVICES
                                    ------------------------------   ------------------------------
                                      YEAR ENDED                     PRO FORMA YEAR
                                     DECEMBER 31,     SIX MONTHS         ENDED         SIX MONTHS
                                    --------------       ENDED        DECEMBER 31,        ENDED
                                    1996     1997    JUNE 30, 1998        1998        JUNE 30, 1999
                                    -----    -----   -------------   --------------   -------------
<S>                                 <C>      <C>     <C>             <C>              <C>
Net sales.........................  100.0%   100.0%      100.0%          100.0%           100.0%
Cost of sales.....................   40.5     40.8        40.0            43.0             41.1
     Gross profit.................   59.5     59.2        60.0            57.0             58.9
Selling, general and
  administrative expenses.........   53.8     53.6        54.2            51.9             54.9
Amortization of intangibles.......     --       --          --             1.9              2.0
                                    -----    -----       -----           -----            -----
Income from operations............    5.7%     5.6%        5.8%            3.3%             2.0%
</TABLE>

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 OF STARBOARD CRUISE SERVICES TO SIX
MONTHS ENDED JUNE 30, 1998 OF OUR PREDECESSOR.

     Net Sales.  Our net sales were $138.3 million for the six months ended June
30, 1999, an increase of $43.9 million or 46.5%, from $94.4 million for our
Predecessor during the same period of the prior year. Net sales increased by
$41.2 million or 43.6% due to sales related to the operations of the Onboard
Group and Nuance. Excluding the Onboard Group and Nuance, net sales increased by
$2.7 million or 2.9% primarily due to an increase in sales in our cruise-based
retail stores which were partially offset by a decrease in net sales of the
land-based services.

     Cruise-based duty-free retail net sales were $96.2 million for six months
ended June 30, 1999, an increase of $35.8 million or 59.3%, from $60.4 million
for our Predecessor during the same period of the prior year. Approximately
$31.0 million of the increase was attributable to a 70% increase in duty-free
retail passenger days from approximately 8.4 million in June 30, 1998 to
approximately 14.3 million in June 30, 1999. The increase in passenger days was
attributable to the number of new ships added increasing from 40 to 82 during
the same period as a result of the Nuance acquisition and additions to the
existing fleet. Our net sales for the six months ended June 30, 1999 included
other cruise-based services with net sales of $10.2 million. Our Predecessor did
not perform these cruise-based services reflected through the Onboard Group
during the same period of the prior year.

     Land-based services net sales were $31.1 million for the six months ended
June 30, 1999, a decrease of $2.0 million or 6.0%, from $33.1 million for the
same period of the prior year. This decrease was primarily attributable to the
decreased passenger traffic at Miami Airport due to poor economic conditions in
Latin America and to a lesser extent our discontinuation of certain product
categories in the Florida Export Warehouse business.

     Gross Profit.  Gross profit was $81.4 million for the six months ended June
30, 1999, an increase of $24.8 million from $56.6 million for the same period of
the prior year. The acquisitions of Nuance and the Onboard Group were the
primary contributors to the increase in results of operations. Our cost of sales
for the six-month period ending June 30, 1999 as a percentage of net sales was
relatively flat versus the same period of 1998, reflecting our ability to
decrease the previously higher cost of sales attributable to the Nuance
business.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses were $75.9 million for the six months ended June 30,
1999; an increase of $24.8 million from $51.1

                                       32
<PAGE>   37

million during the same period for our Predecessor for the six months ended June
30, 1998. Approximately $19.7 million of the increase was attributable to the
expenses related to the acquisitions of the Onboard Group and Nuance. Excluding
the effect of these acquisitions, selling, general and administrative expense
increased by $5.1 million primarily due to increases in rent expense with cruise
line customers. As a percentage of net sales, selling, general and
administrative expenses increased to 54.9% for the six months ended June 30,
1999 from 54.2% for the same period of the prior year.

     Income from Operations.  Income from operations was $2.8 million for the
six-month period ended June 30, 1999, a decrease of $2.7 million from $5.5
million for our Predecessor for the six months ended June 30, 1998. The majority
of the decrease was attributable to the increase of amortization of intangibles
resulting from amortization of goodwill and contracts. As a percentage of net
sales, income from operations decreased to 2.0% for the six-month period ending
June 30, 1999 compared to 5.8% for the same period of 1998.

     Minority Interest.  Costs reported as minority interest are attributable
solely to our duty-free retail operations at the Miami International and Fort
Lauderdale airports. Due to FAA regulations, we work with four DBE
(Disadvantaged Business Entities) partners at the Miami airport and with one DBE
at the Fort Lauderdale airport who earn a percentage of income before provision
for income taxes and after-tax earnings, respectively. For the six months ended
June 30, 1999, minority interest expense were approximately $0.1 million, a
decrease of $0.4 million compared to the six-month period ended June 30, 1998.

     Interest Expense.  Interest expense was $6.0 million for the six months
ended June 30, 1999 reflecting an increase of $5.6 million from $0.4 million for
the same period of the prior year, primarily due to our increased indebtedness
resulting from the debt incurred to acquire our Predecessor, the Onboard Group
and Nuance.

     Provision for Income Taxes.  Income taxes for the six months ended June 30,
1999, were provided at an effective tax rate of (0.6)% a decrease from a 27.5%
effective tax rate during the same period of the prior year. Our effective tax
rate decreased significantly primarily due to a net loss during this period.

     Net Income (Loss).  Net losses for the six months ended June 30, 1999 were
$3.3 million, a decrease of $6.6 million from net income of $3.3 million from
the same period of the prior year. The decrease in net income was primarily the
result of the increased interest expense and amortization of intangibles
associated with the acquisitions of the Onboard Group and Nuance.

COMPARISON OF STARBOARD CRUISE SERVICES PRO FORMA FOR ACQUISITIONS FOR THE YEAR
ENDED DECEMBER 31, 1998 TO OUR PREDECESSOR FOR THE YEAR ENDED DECEMBER 31, 1997.

     Net Sales.  Our net sales, calculated on a pro forma basis to include our
1998 acquisitions, were $281.2 million for the year ended December 31, 1998,
reflecting an increase of $92.7 million or 49.2%, from actual net sales of our
Predecessor of $188.5 million for the year ended December 31, 1997. Net sales,
calculated on a pro forma basis to include our 1998 acquisitions, increased by
$74.5 million or 39.5% primarily due to the operations of the Onboard Group and
Nuance combined with the growth in the Predecessor business.

     Cruise-based retail store net sales calculated on a pro forma basis were
$191.5 million for the year ended December 31, 1998, an increase of $72.5
million or 60.9%, from $119.0 million for our Predecessor for the year ended
December 31, 1997. Approximately $61.3 million, or 84.6%, of the increase in
cruise-based retail pro forma 1998 net sales from the 1997 Predecessor was
attributable to the operations of Nuance. Excluding this acquisition, cruise
ship retail store pro forma 1998 net sales increased by $11.2 million or 15.4%
compared to our Predecessor for 1997 which was primarily

                                       33
<PAGE>   38

attributable to an increase in the number of ships served which increased to 48
during 1998 from 42 for 1997 excluding acquisitions.

     Land-based services pro forma net sales were $67.6 million for the year
ended December 31, 1998, an increase of $2.1 million or 3.2%, from $65.5 million
for our Predecessor in 1997. Approximately $0.7 million of the increase was
attributable to the operations of the Onboard Group's land-based publishing
business. Excluding the Onboard Group, net sales related to land-based services
net sales increased $1.6 million primarily due to increased passenger traffic in
Miami Airport duty-free shops.

     Gross Profit.  Our gross profit calculated on a pro forma basis to reflect
our 1998 acquisitions was $160.2 million for the year ended December 31, 1998,
an increase from $111.7 million for our Predecessor in 1997. The increase in
gross profit was attributable primarily to the results of the operations of
Nuance and the Onboard Group. As a percentage of net sales, our pro forma cost
of sales for the period ending December 31, 1998 increased to 43.0% from 40.8%
for the period ending December 31, 1997, reflecting the higher cost of sales
attributable to Nuance operations and the inclusion of the Onboard Group's rent
expense in cost of sales.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses were $146.1 million on a pro forma basis to reflect our
1998 acquisitions for the year ended December 31, 1998, an increase from $101.1
million for our Predecessor for the year ended December 31, 1997. Approximately
$40.9 million of the increase was attributable to the selling, general and
administrative expenses related to the operations of the Onboard Group and
Nuance. Excluding the Onboard Group and Nuance, pro forma selling, general and
administrative expense increased by $4.1 million primarily due to higher sales
volume. As a percentage of net sales, pro forma selling, general and
administrative expenses decreased to 51.9% for 1998 from 53.6% for 1997. The
decrease was primarily driven by the increase in net sales attributed to the
operations of Nuance and comparatively lower levels of incremental overhead.

     Income from Operations.  Income from operations on a pro forma basis to
reflect our 1998 acquisitions was $8.9 million for the year ended December 31,
1998, a decrease of $1.7 million from $10.6 million for our Predecessor in 1997.
This decrease is attributable to net operating losses associated with our 1998
acquisitions and the related amortization of intangibles partially offset by a
reduction in selling, general and administrative expenses as a percentage of our
net sales and improvement in our gross profit percentage in the operations of
our predecessor for that period.

     Minority Interest.  Minority interest on a pro forma basis to reflect our
1998 acquisitions of $0.8 million for the year ended December 31, 1998 decreased
$0.1 million from $0.9 for our Predecessor in 1997. The lower expense was
primarily due to the elimination of an interest in a joint venture.

     Interest Expense.  Interest expense on a pro forma basis to reflect our
1998 acquisitions of $12.2 million for the year ended December 31, 1998
increased $12.0 million from $0.2 million for our Predecessor in 1997. The
higher interest expense was primarily due to a higher average debt balance
resulting from the debt incurred to acquire the Onboard Group and Nuance.

     Provision for Income Taxes.  The provision for income taxes calculated on a
pro forma basis to reflect our 1998 acquisitions for the year ended December 31,
1998, was at an effective tax rate of 22.4% an increase from a 31.2% effective
tax rate during the same period of the prior year for our Predecessor.

     Net Income (Loss).  Net loss on a pro forma basis to reflect our 1998
acquisitions was $2.3 million for the year ended December 31, 1998, a decrease
of $8.8 million from net income of $6.5

                                       34
<PAGE>   39

million for 1997 for our Predecessor. The decrease in net income was the result
of the factors stated above.

COMPARISON OF OUR PREDECESSOR FOR THE YEAR ENDED DECEMBER 31, 1997 TO OUR
PREDECESSOR FOR THE YEAR ENDED DECEMBER 31, 1996

     Net Sales.  Net sales of our Predecessor were $188.5 million for 1997, an
increase of $8.7 million or 4.8% from $179.8 million for 1996. Cruise-based
duty-free retail store sales increased to $119.0 million in 1997, or 5.0%, from
$113.3 million in 1996, primarily due to an increase in the number of ships
served. During 1997 our passenger days of 17.0 million increased 0.2 million
from 16.8 million on the same number of ships due to higher capacity utilization
rates and shorter cruise itineraries by the cruise lines. Cruise-based store
revenue per passenger day increased by 3.6% from $6.74 to $6.98 during 1997 from
1996 primarily due to improved merchandizing mix and sales techniques.
Land-based airport duty-free net sales increased by $3.2 million in 1997 from
1996 primarily due to an increase in the number of international travelers using
the Miami International Airport.

     Gross Profit.  Gross profit was $111.7 million for 1997, an increase of
$4.8 million from $106.9 million for 1996. As a percentage of net sales, gross
profit decreased to 59.2% for 1997 from 59.5% for 1996. The decrease was
primarily attributable to a slightly higher cost of sales in the duty-free
shops.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses were $101.1 million for 1997, an increase from $96.7
million for 1996. As a percentage of net sales, selling, general and
administrative expenses decreased to 53.6% for 1997 from 53.8% for 1996.
Controlling overhead costs as the company grew was the primary reason for the
decrease.

     Income from Operations.  Income from operations was $10.6 million for 1997,
an increase from $10.2 million for 1996. Income from operations as a percentage
of net sales decreased to 5.6% in 1997 from 5.7% in 1996. The decrease was
primarily attributable to the factors described in gross profit above.

     Minority Interest.  Minority interest expense of $0.9 million for 1997
decreased $0.7 million compared to 1996 due to higher depreciation levels at the
Miami International Airport which decreased minority interest.

     Interest Expense.  Interest expense of $0.8 million for 1997 was $0.1
million higher than interest expense of $0.6 million for 1996. The higher
interest expense was primarily due to a higher average debt balance in 1997
resulting from expenses associated with remodeling the Miami Airport.

     Provision for Income Taxes.  The provision for income taxes for 1997 was at
an effective tax rate of 28.3%, a decrease from 34.9% due to the implementation
of certain state tax planning strategies.

     Net Income (Loss).  Net income was $6.5 million for 1997, an increase of
$1.09 million from $5.5 million for 1996. The increase in net income was the
result of the factors stated above.

LIQUIDITY AND CAPITAL RESOURCES

     As of June 30, 1999, we had cash and cash equivalents of $0.4 million,
compared to $4.1 million, $0.3 million, and $0.5 million as of December 31, 1998
(pro forma for acquisitions), 1997 (Predecessor) and 1996 (Predecessor),
respectively. Since September 17, 1998, we have funded our operations and the
acquisitions of our Predecessor, the Onboard Group and Nuance through cash flows
from operations and the proceeds of borrowings under our senior credit facility
and the issuance of senior subordinated notes and a junior subordinated note, as
well as equity funded by our current

                                       35
<PAGE>   40

shareholders and management. Our senior credit facility consists of a term loan
and revolver. As of June 30, 1999, the outstanding principal balance on our term
loan was $67.5 million and the outstanding balance under our revolver was $7.9
million. Also as of June 30, 1999, we had $28.3 million of senior subordinated
notes outstanding and $10.9 million of the junior subordinated note outstanding.
We expect to repay the entire balance of our junior subordinated note and senior
subordinated notes with the proceeds of this offering. We also expect to repay
$42.3 million of our term loan. In addition, we may repay a portion of our
revolving credit facility, under which we have the ability to reborrow any
amounts we repay on our revolving loans. For a description of the terms of our
credit facility, see "Description of Certain Indebtedness".

     For the years ended December 31, 1998, 1997 (Predecessor), 1996
(Predecessor), and for Starboard Cruise Services for the six months ended June
30, 1999, net cash provided by (used for operations) was $10.3 million, $4.2
million, $7.7 million and $0.7 million, respectively, provided primarily through
cash from operations. As a holding company, our cash needs are satisfied,
subject to restrictive covenants under our debt instruments, by distributions
from our subsidiaries' cash flow from operations.

     We are continually evaluating the appearance of both our cruise-based and
land-based duty-free retail shops and upgrading them as appropriate. We
currently anticipate capital expenditures for the foreseeable future of
approximately $2.0 million annually as new ships are brought on line.

     We believe that the net proceeds from this offering, together with our
current cash, anticipated cash flow from operations and available borrowing,
will be sufficient to meet our anticipated cash needs for working capital and
capital expenditures for at least the next 12 months following the offering.
There can be no assurance that we can generate sufficient cash flow from
operations in the future, that anticipated revenue growth will be realized or
that future borrowings or equity financings will be available in an amount
sufficient to service our indebtedness and fund operations. In addition, any
future unanticipated needs (such as acquisitions or additional capital
expenditures) may require additional equity or debt financing.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement
Number 133, Accounting for Derivative Instruments and Hedging Activities. We
expect to adopt the new statement effective January 1, 2001. The statement will
require us to recognize all derivatives on our balance sheet at fair value. We
do not anticipate that the adoption of the statement will have a significant
effect on our results of operations or financial position.

SEASONALITY

     Seasonal factors affect our business. Excluding the effects of the addition
of new ships, which can occur during different points of the year, we generate
the majority of our business during the winter months when there are more
Caribbean cruises. Net sales have historically been lower during the third
quarter when there are fewer cruises in the Caribbean. The effects of
seasonality on our business are partially offset by our provision of services to
Alaskan and European cruises during the summer months.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     On January 28, 1997, the SEC adopted new rules (Securities Act Release No.
7386) that require disclosure about the policies used to account for derivatives
and certain quantitative and qualitative information about market risk
exposures. Market risk generally represents the risk of loss that may result
from the potential change in the value of a financial instrument as a result of
fluctuations in interest rates and market prices. We have not traded or
otherwise transacted in

                                       36
<PAGE>   41

derivatives nor do we expect to in the future. We have established policies,
procedures and internal processes governing our management of market risks in
the normal course of our business operations.

  Interest Rate Risk

     The fair market value of long-term fixed interest rate debt is subject to
interest rate risk. Generally, the fair market value of fixed interest rate debt
will increase as interest rates fall and decrease as interest rates rise. The
interest rate changes affect the fair market value but do not impact earnings or
cash flows. The estimated fair value of our long-term debt at June 30, 1999 was
$110.6 million. The effect of an immediate 10% change in interest rates would
not have a material impact on our future operating results or cash flows. Fair
values were determined from quoted market prices.

  Foreign Currency Exchange Risk

     A substantial portion of our sales are denominated in U.S. dollars and as a
result, we have relatively little exposure to foreign currency exchange risk
with respect to sales made. We do not use forward exchange contracts to hedge
exposures denominated in foreign currencies or any other derivative financial
instruments for trading or speculative purposes. The effect of an immediate 10%
change in exchange rates would not have a material impact on our future
operating results or cash flows.

YEAR 2000

     The Year 2000 issue arose because many existing computer programs use only
the last two digits to refer to a year. As a result, computer programs may not
properly recognize a year that begins with "20" instead of the familiar "19". If
not corrected, many businesses are at risk for possible computer application
miscalculations or systems failures causing disruptions in business operations.
These risks are commonly referred to as the "Y2K risks".

     We utilize software and related technologies that may be affected by the
date change in the year 2000. We initiated a significant upgrade of our
information systems in 1997 in order to improve our operating efficiencies and
address Y2K risks at the same time. Through this effort, implemented over a
multi-year period, we believe that by the end of 1999, we will have modified or
replaced any portion of our software necessary to cause our computer systems to
function properly with respect to the dates in the year 2000 and thereafter.

     We have initiated a formal project for communicating with and are in the
process of surveying our cruise line customers and major third party suppliers
of services and products in order to assess their Y2K risks that may have a
material adverse effect on our results of operations.

     We depend on the point-of-sale systems of ten cruise lines to maintain
inventory and to provide sales data which we use to make merchandising
decisions. We have been advised by six of our cruise line customers that they
are in the process of upgrading their respective point-of-sale systems on which
we depend and that they expect to have their respective point-of-sale systems
Year 2000 compliant by the end of 1999.

     We believe that our biggest risks related to the Year 2000 issue are
potential system failures of cruise line customers, major third party suppliers
and other third parties over whom we exert no control. The most reasonably
likely source of Y2K risk with respect to our cruise line customers would be the
disruption of transportation channels that deliver passengers to cruise ships.
The disruption of transportation channels could also impede our ability to
deliver our products to intended

                                       37
<PAGE>   42

points of sale or the ability of our staff to report to the ships to which they
are assigned. Our business also faces possible disruption in the event that
point-of-sale systems on those cruise ships where we rely on the cruise ship
operator's system do not function properly. These problems could impede our
ability to maintain proper inventory or effectively use sales data to make
merchandising decisions.

     We do not believe that there are contingency plans that we can effect that
can mitigate the risk of cruise line passengers being unable to reach cruise
ships as a result of any transportation disruption. We are in the process of
developing a contingency plan that would allow us to have available product
inventories sufficient for distribution to our intended points of sale in the
event a transportation disruption impairs our ability to obtain delivery of our
products. In addition, we intend to develop a schedule of deployment of our
shipboard staff to minimize the effect of any transportation disruption that
could occur around January 1, 2000. These contingency plans are subject to
uncertainties. We cannot guarantee that any estimate of the level, impact or
duration of Year 2000 non-compliance by our customers or suppliers will be
accurate, or that our contingency plans will be sufficient to mitigate these
risks.

     In the event that any of our cruise line customers or major third party
suppliers do not successfully achieve Year 2000 compliance for their own
operations in a timely manner, our business or operations could be adversely
affected. The magnitude of any adverse effect cannot be quantified at this time
because of variables such as the type and importance of cruise line customers or
major third party suppliers, the unknown level and duration of noncompliance by
these customers and suppliers (and their customers and suppliers), the possible
effect on our operations, and our ability to respond to any non-compliance.

     Our costs for making us Year 2000 compliant have been included in our
historical financial statements and are expensed as incurred. We have not
budgeted for any additional costs to address Y2K risks and currently anticipate
that any such costs will not be material and will be expensed as incurred.
However, in view of the uncertainties relating to the Year 2000 compliant status
of our customers and suppliers, we cannot guarantee that our cost of dealing
with the Y2K risks will be consistent with the foregoing estimate or that the
Y2K risks will not materially adversely affect our future operations.

     The information presented above sets forth the steps that we have taken to
address the Y2K risks. The above discussion of our efforts and expectations
relating to Year 2000 compliance is forward-looking. You are cautioned that
forward-looking statements contained in this discussion should be read in
conjunction with our disclosure under the heading "Forward-Looking Statements --
Market Data".

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<PAGE>   43

                                    BUSINESS

GENERAL

     We are the world's leading provider of duty-free retail shops on cruise
ships and the leading provider of customized media and art auctions to the
cruise industry. We deliver our services to 100 ships representing 26 cruise
lines worldwide, including industry leaders such as Carnival Cruise Line,
Celebrity Cruises, Costa Cruises, Crystal Cruises, Cunard Line, Disney Cruise
Line, Holland America Line, Norwegian Cruise Lines, P&O Cruises, Renaissance
Cruise Lines and Royal Caribbean International. In general, we provide our
cruise-based services on an exclusive basis on the ships we service pursuant to
multi-year cruise line contracts. In addition to cruise-based services, we also
operate land-based services that complement our cruise line related business.
Our land-based services are operating duty-free retail shops at airport
locations in Miami and Fort Lauderdale, Florida, selling wholesale duty-free
goods to cruise lines and caterers serving cruise lines, and providing
customized media programs to land-based hotels and resorts. For the year ended
December 31, 1998, we generated pro forma net sales and EBITDA of $281.2 million
and $18.1 million, respectively. Our cruise-based services generated $213.6
million of net sales and our land-based services generated $67.6 million in net
sales.

     Our duty-free retail stores on cruise ships are the core of our
cruise-based services. Generally, our cruise line retail stores are prominently
located onboard cruise ships and are the only places on board the ship where
cruise line passengers can purchase items such as cruise ship logo apparel and
items, fashion apparel, perfume, fine gifts, accessories and jewelry, and in
bulk alcohol and tobacco on cruise ships. In addition to our cruise ship retail
store business, we offer our customized media programs to the cruise lines. In
port lecturing, we hold lectures on the shopping, recreational and cultural
highlights in various ports of call. In customized publications, we produce
cruise line passenger magazines which are customized for port destinations.
These "port publications" contain articles describing cruise destinations and
advertising from local and international businesses such as Gucci and Rolex. In
our art auction services, we conduct art auctions for cruise line passengers
during cruises. We believe that as the cruise lines launch new, larger ships we
will have the opportunity to increase our net sales from service offerings. The
following table sets forth the number of ships we currently service with our
retail and other cruise-based services as well as the number (based on industry
announcements) of future ships to which we have the right to provide service
under our contracts.

                   SHIPS SERVED BY STARBOARD CRUISE SERVICES

<TABLE>
<CAPTION>
                                                                  STARBOARD       STARBOARD CRUISE
                                           STARBOARD CRUISE        CRUISE         SERVICES: OTHER
                                           SERVICES: TOTAL    SERVICES: CRUISE-     CRUISE-BASED
                                            SHIPS SERVICED     BASED RETAIL(1)      SERVICES(2)      INDUSTRY(3)
                                           ----------------   -----------------   ----------------   -----------
<S>                                        <C>                <C>                 <C>                <C>
Number of ships in service as of June 30,
  1999...................................         100                 82                 46              144
Total ships in service by December 31,
  1999 (industry estimates)..............         118                 99                 49              155
Total ships in service by December 31,
  2003 (industry estimates)..............         127                118                 59              190
                                                 ----                ---                 --              ---
</TABLE>

---------------
(1) Includes existing ships as of the relevant date which Starboard Cruise
    Services provides, or has the right under contract to provide service upon
    ship introduction, with duty-free retail services under its contracts.
    Includes 11 existing Royal Caribbean International Ships under contract for
    service commencing November 1999.

(2) Includes existing ships as of the relevant date which Starboard Cruise
    Services provides, or has the right under contract to provide service upon
    ship introduction, with other cruise-based services (port publications, port
    lecturing and art auctions) under its contracts.

(3) Includes the number of ships to be added into service over these time
    periods in the global cruise line industry, as reported by CLIA and Cruise
    Industry News.

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<PAGE>   44

     Our services are designed to further both our company and the cruise lines'
mutual goals of increasing sources of revenue while enhancing the cruise
passenger's overall vacation experience. Our services are also designed to be
complementary. From on-board, duty-free shopping to in-port shopping stimulated
by our lectures and magazines to buying art at sea, we present shopping as
entertainment during the entire cruise experience. We believe our approach of
working together with our cruise line customers to enhance our service offerings
and increase passenger purchases, and therefore revenues to cruise lines, has
enabled us to develop strong and mutually beneficial relationships with the
cruise lines.

INDUSTRY OVERVIEW

- Growth of the Cruise Industry.  The passenger cruise industry has grown
  substantially. According to Cruise Lines International Association (CLIA),
  approximately 5.4 million North American passengers took cruises in 1998, an
  increase of 4.0 million from 1.4 million in 1980, representing a compound
  annual growth rate of approximately 8.0%. The number of cruise ships increased
  20% from 120 ships in 1993 to 144 ships as of January 1, 1999, with the number
  of berths growing 32% from approximately 104,000 to 137,000 over the same
  period. According to CLIA and Cruise Industry News, the number of ships are
  expected to grow 32% from 144 as of January 1, 1999 to 190 in 2003 with the
  number of berths growing 48% from approximately 137,000 to 203,000 over the
  same period, representing larger berth capacity of the ships entering the
  market. Because of the strong relationship of overall cruise demand to demand
  for our services, we expect to grow along with the overall growth of the
  cruise industry.

- Expansion of Service Offerings and Outsourcing.  In an effort to expand
  entertainment options for passengers and increase revenues generated by
  passengers, cruise line operators have introduced new on-board and on-shore
  services, activities and themes. While introducing new product and service
  offerings, many cruise line operators have increasingly focused on their core
  business and outsourced a range of services. Cruise lines now contract with
  outside providers which offer industry expertise for a range of services,
  including on-board duty-free retail shopping, art auctions, port lecturing,
  in-cabin media and video, health clubs, spa services, photography,
  telecommunications services, and shore-side, fully arranged excursions and
  tourist activities. We believe our leadership in providing a variety of
  outsourced services effectively positions us to become a provider of
  additional services in the future.

- New Ships With Larger Entertainment Spaces.  Recently built cruise ships and
  new cruise ships under construction are generally larger than existing ships
  and have also been designed with the intent of increasing service revenues
  through expanded and strategically located retail and service offering areas.
  For example, the latest cruise ships designed by Carnival Cruise Lines,
  Celebrity Cruises and Royal Caribbean International have as much as 5,000 to
  8,000 square feet of dedicated retail space, representing as much as three to
  four square feet of retail space per passenger, more than double the current
  average of one to two square feet of retail space per passenger on existing,
  smaller vessels. These larger retail formats have generated in excess of
  approximately $9.00 in revenues per passenger per day compared to the
  approximate $5.00 average on earlier generation ships. In addition to
  increased retail space, Carnival Cruise Line, Celebrity Cruises, Crystal
  Cruises and Royal Caribbean International are testing new retail formats,
  including dedicated art galleries on their ships.

- Change in Passenger Profiles and Vacation Patterns.  Cruise line passengers
  are increasingly affluent and employed, as baby-boomers make up a larger
  portion of the cruise lines' customer base and retirees a smaller percentage.
  The increasing percentage of baby boomers has benefitted the cruise line
  industry because they generally spend a larger percentage of their income on
  leisure travel than older demographic groups. In addition, a larger percentage
  of the population is experiencing cruise vacations. According to CLIA, while
  only 3.6% of U.S. residents had cruised by 1986, 11.3% of them had taken a
  cruise vacation by 1998.

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<PAGE>   45

COMPETITIVE STRENGTHS

We believe that the following competitive strengths contribute to our position
as the leading provider of our core services and serve as a foundation for our
business and growth strategy.

- Market Leadership and Scale Advantage.  We are the leading provider of
  on-board duty-free retailing, port lecturing, customized media, and art
  auctions to the cruise industry. We currently deliver our services to 100
  ships, representing 26 cruise lines. We believe that our market leading
  position and experience in providing these services have enabled us to develop
  an infrastructure which gives us a scale advantage over smaller providers or
  cruise lines who do not outsource the services we provide.

-- Duty-free Retail.  In our duty-free retail operations, we believe that we
   have achieved a competitive advantage in purchasing, where we purchase items
   for both our cruise line and airport retail stores in large quantities at
   competitive prices; in logistics, where we deliver over 50,000 items (SKU's)
   to more than 40 ports of call, often with an eight hour window to restock
   vessels and in compliance with a range of customs and import regulations; and
   in merchandising, where our experience with cruise line passengers permits us
   to tailor our retail and other service offerings for specific cruise lines,
   passenger profiles, destinations, voyage lengths and seasons.

-- Port Lecturing.  In port lecturing, we have developed relationships with
   retailers at over 300 shops in over 70 ports of call, and we have established
   an infrastructure to manage the monitoring and collection of revenues,
   guarantee issues and returns.

-- Port Publications.  In publishing, we have a proprietary body of content
   which allows us to produce cruise line-specific and port-specific magazines
   for over 70 ports of call.

-- Art Auctions.  In art auctions, we are able to source a supply of a variety
   of artwork from numerous artists and are able to sell and arrange delivery
   for an average of over 3,500 pieces of artwork each week.

  Corporate wide, we have demonstrated our ability to recruit, hire, train and
  maintain employees and independent contractors in approximately 700 on-ship
  positions worldwide.

       We believe our experience, expertise and scale advantage enables us to
  provide our services with an efficiency and quality which makes outsourcing to
  us more attractive for cruise lines than providing the services themselves or
  outsourcing to one of our competitors.

- Strong Relationships with Cruise Lines.  We have been providing services to
  cruise lines since 1963 and have long-term relationships with the major cruise
  operators. Currently, we provide at least one of our core services to almost
  every major cruise line and our customers account for over 75% of cruise ship
  berths. Our relationships with the largest two cruise corporations, Carnival
  Corporation and Royal Caribbean Cruises Ltd. date back to 1993 and 1984
  respectively. Our offices and our customs-bonded warehouse, located in Miami,
  Florida, also enable us to maintain close contact with many major cruise lines
  headquartered in Miami. We work closely with the cruise lines in designing new
  retail areas of ships, in making and tracking merchandising decisions, in
  creating logo apparel and souvenirs and in developing new service concepts. In
  only three instances have we ever lost an existing account. In each of these
  cases, we reacquired the account and currently serve these customers.

- Established Reputation.  We have been on the forefront of providing cruise
  lines with innovative on-board duty-free retailing since 1963 and customized
  media services since 1990. Working with the cruise lines we service, we helped
  transform on-board shopping into an entertainment venue for passengers and
  improved the merchandising and sales of on-board duty-free goods by creating
  special sales events, daily special themes and, when available, cross
  promotion of our offerings through our customized media services. We also
  worked with the cruise lines to formalize the port lecturing industry,
  solidifying relationships with on-shore retailers to provide competitively
  priced shopping, as well as service and product guarantees for cruise
  passengers. In addition, we helped

                                       41
<PAGE>   46

develop art auctions to create a further entertainment option during time at
sea. We believe our role in developing these markets has helped establish our
position as a market leader and enhanced our reputation in the industry.

- Experienced Management Team.  We are led by a management team with significant
  experience in the cruise industry and each of our core service offerings. Our
  senior management executives from Greyhound Leisure Services include
  executives with a mix of cruise industry retail expertise, with key managers
  having significant experience at the company, and recently added executives
  bringing significant retail and other expertise. Our two senior executives
  from the Onboard Group include its founder and a key executive who has been
  with Onboard Media since 1990, the year the business was established. Both
  have over ten years of experience in the cruise-based services industry.

- Merchandising Expertise.  Operating on-board duty-free retail stores differs
  from operating traditional retail stores primarily in the merchandising
  approach and in the space, delivery, international customs and restocking
  constraints we face. To meet the broad on-board shopping demands of cruise
  passengers, we present a wide variety of products including attractive private
  labels and strong designer brands such as Gucci, Cartier, Gear, Lladro, Tag
  Heuer and Fossil in an environment targeted to meet the varying tastes of the
  wide variety of customers across different segments of the industry, from the
  smallest luxury ships to the largest cruise ships. At the same time, we face
  constraints in storage and display space and the need to tailor shop
  inventories to different cruise line atmospheres, varying demographic cruise
  market segments and changing seasons and itineraries. Through years of
  providing on-board duty-free retail services, we have developed expertise at
  retailing on cruise ships. Our buyers and district managers have been with us
  for an average of over ten years and have helped us establish an institutional
  knowledge base to manage the challenges of on-board retailing. We believe our
  experience in addressing these challenges and our familiarity with buying
  patterns on various cruise lines, ship layouts, and travel routes provides us
  with a competitive advantage. We also believe our decade of experience in
  presenting port shopping and recreational opportunities to passengers as well
  as our experience providing entertaining art auctions provides us a further
  advantage in merchandising our services to passengers.

GROWTH STRATEGY

- Maintain and Expand With Our Cruise Line Customers As They Grow.  We intend to
  maintain our relationship with our customers by continuing to provide high
  quality service and innovation leadership. We are well positioned to continue
  to grow as our cruise line customers grow. According to the Cruise Industry
  News, cruise line operators will add 46 ships over the next four years. We
  currently have contracts to provide our services to approximately 27 of these
  ships. In addition to increases in the number of ships, we expect that newer
  ships will be generally larger, carry more passengers and have substantially
  more retail, entertainment and service space. The additional space and
  increased emphasis on on-board retail and other services will provide us with
  the opportunity to increase our revenue per passenger per day due to increased
  selection, the establishment of more boutique stores, larger designated art
  galleries and other innovations in our merchandising.

- Expand Services to Existing Cruise Line Customers.  Consistent with our
  strategy in forming our company, we plan to expand the breadth of use of our
  services among our current customers. We have strong customer relationships
  with most cruise lines and currently serve cruise lines which account for over
  75% of industry berth capacity. We believe this strong position provides an
  opportunity to translate our high quality service in one service offering into
  use of our other core service areas. Currently, almost all of the major cruise
  lines use at least one of our cruise-related services, while only four cruise
  lines use all of our services, providing future opportunities to cross sell
  additional services to our cruise line customers. By continuing to build on
  our relationships and

                                       42
<PAGE>   47

  highlighting our leadership, dependability and creativity in each of our core
  services, we expect to increase the number of services used by our customers.

- Continue to Improve Merchandising.  We believe that through improvements in
  our product mix and presentation we can continue to increase per passenger per
  day spending in our cruise-based duty-free stores. By ensuring we have
  attractive, targeted items in our stores, we intend to generate further
  improvements in our per passenger per day revenues in duty-free retailing. In
  promotions, we intend to continue to be sure we have better and more
  effectively presented port shops, restaurants and cultural highlights in our
  lectures and publications. In art auctions, we will continue to seek to be
  innovative in our selection and presentation of art, such as our recent
  introduction of virtual galleries and test marketing of sports memorabilia. To
  accomplish this, we expect to continue to work with cruise lines to understand
  emerging passenger profiles and to design stores, lectures and auctions and
  tailor merchandising on each ship to correspond with the vessel's overall
  image and marketing strategy. We also plan to introduce theme and specialty
  stores to address the evolving passenger base. Moreover, through our
  experience and close relationships with cruise lines, we believe we can
  quickly develop and implement appropriate new merchandising concepts. For
  example, we recently began conducting special bazaars of local products on
  some cruise itineraries, an idea we implemented within six months of its
  development.

- Improve and Expand Service Offerings.  We have the opportunity to improve our
  performance by finding better ways to deliver our services and expanding the
  range of services we offer. For example, recently we began expanding our port
  lecturing programs to provide service in Europe and Alaska. Coordinating with
  our cruise line customers, we intend to identify other additional services to
  help cruise lines enhance the cruise experience for passengers and increase
  on-board revenues. In addition, we expect to expand our cruise-based services
  to select land-based opportunities. For example, we have extended our cruise
  line publishing business to provide magazines to theme hotels and resorts such
  as Sandals and select Las Vegas hotels including Caesars Palace, MGM Grand,
  New York, New York and Venetian. We plan to continue to evaluate and pursue
  appropriate cruise line and land-based business opportunities, including our
  recent agreement to sell cruise logo items over the Internet with a major
  client, which are complementary to our core strengths and where we believe we
  can develop a competitive advantage.

OUR CUSTOMERS

     We provide services both to the cruise lines and their passengers. It is
therefore important that our service offerings are attractive to both groups,
providing business value to the cruise operators and an enhanced experience to
their passengers. We service almost every major North American cruise line and
provide services to most other major cruise lines worldwide. We currently
provide our services to 100 ships, representing 26 cruise lines, to which we
are, with limited exceptions, the exclusive provider of a service on board each
ship to which we provide that service. Moreover, we are the only operator of
duty-free retail stores on all ships controlled by Carnival Corporation
(including Carnival Cruise Lines, Costa Cruises, Cunard Line, Holland America
Line, Seabourn Cruise Line and Windstar Cruises). Commencing in November 1999,
we have contracted to be the only provider of duty-free retailing, as well as
the port lecturing, in-cabin media and art auctions we have already serviced, to
ships owned by Royal Caribbean Cruises Ltd. (including Royal Caribbean
International and Celebrity Cruises). We also provide our services to a wide
variety of other leading cruise lines around the world. Under our contracts with
many cruise lines we service, we have the opportunity to offer our services on
new ships as they are introduced, in some cases with respect to specified ships
or classes of ships and, in other cases, on any new ships introduced.

                                       43
<PAGE>   48

The cruise lines we service and the service offerings provided to each of them
are detailed in the following chart. Cruise-based duty-free retailing accounted
for 69.6% of our revenues for the six months ended June 30, 1999, while other
cruise-related services accounted for 7.0%.

                        SERVICE OFFERINGS BY CRUISE LINE

<TABLE>
<CAPTION>
CRUISE LINES                      DUTY-FREE RETAIL    PORT LECTURING    PUBLISHING    ART AUCTIONS
------------                      ----------------    --------------    ----------    ------------
<S>                               <C>                 <C>               <C>           <C>
Canaveral Cruise Lines                   X
Carnival Cruise Lines                    X                  -               -              X
Celebrity Cruises                        X                  X               X              X
Commodore Cruise Lines                   X                  -                              -
Costa Cruises(a)                         X                  X               X              X
Crystal Cruises                          -                  X               X              X
Cunard Line                              X                  -                              X
Delphin/Blacksea Shipping                X
Discovery Cruise Line                    X
Disney Cruise Line                       -                  X               X
Festival Cruises                         X
Holland America Line(b)                  X                  -               -              X
Norwegian Cruise Lines(c)                X                  -               -              -
P&O Cruises                              X
Premier Cruises                          X
Princess Cruises                         -                  -               -              -
Radisson Seven Seas                      X
Regal Cruise Lines                       X
Renaissance Cruise Lines                 X                  -
Royal Caribbean International(d)         X                  X               X              X
Royal Olympic Cruises                    -                  X
Seabourn Cruise Line                     X
Silver Sea Cruises                       X                  -
Star Cruises                             X
Sun Cruises                              -                  X               X              X
Topaz                                    X
Windstar Cruises                         X
</TABLE>

-------------------------
NOTE:  X denotes service provided by Starboard Cruise Services

       -   denotes service provided by competitor or cruise line itself
           Where no provider is listed on the chart, the cruise line does not
           offer the specified services.

       (a) We provide publishing to Costa Cruises in connection with its
           Caribbean cruises but not with respect to its European cruises. We
           continue to provide services to Costa Cruises under the terms of a
           contract which has expired.

       (b) Fine Art Sales, Inc. also provides art auction services to Holland
           America Line.

       (c) Duty-Free.com provides retail services to one Norwegian Cruise Line
           ship.

       (d) Duty-free retail services to Royal Caribbean International will
           commence November 1999 pursuant to a contract executed July 1999.

                                       44
<PAGE>   49

CRUISE SHIP SERVICES

  On-Board Duty-Free Retailing

     We are the world's largest operator of duty-free retail stores on cruise
ships. As of June 30, 1999 we operated 232 stores on 82 ships, representing 21
cruise lines. An additional 62 stores on 12 ships are under contract for service
commencing in November 1999 and our contracts allow us to provide these services
on an additional 26 ships announced to be in service by December 31, 2004.
Cruise line passengers generally enjoy shopping during vacations and during days
at sea on a cruise vacation our shops often provide the only shopping
opportunity. In our cruise ship stores we sell a wide variety of quality
merchandise, such as logo apparel and souvenirs, jewelry, watches, perfume,
cosmetics, fashion apparel, crystal and fine gifts, leather goods, electronics,
snacks, toiletries, books, liquor, cigarettes, sundries and cruise-related
items. We sell both duty-free and duty-paid merchandise and carry both private
label and well-known branded items, with a focus on high quality, high margin
products. Cruise-based duty-free retailing accounted for approximately 70% of
our net sales for the six months ended June 30, 1999.

     Superior merchandising is one key to the success of our cruise-based
duty-free retail operations. We pursue a strategy of offering a broad assortment
of high-quality, classic styles, while maintaining attractive pricing. We tailor
our merchandising to offer each cruise line a distinctive presentation, matching
its customer profile and adapting to changes in seasonal itineraries. Through
fashion shows and other events, we have worked with our cruise line customers to
turn cruise-based shopping into entertainment. We also have enhanced our
merchandising through the use of themes and daily specials, with daily store
display changes planned around the theme of the promoted daily features. We
employ a team of designers to work closely with cruise ship operators to design
the stores and the flow and location of display areas within stores to conform
to our marketing standards. The stores are designed and fixtured to create a
distinctive environment and store associates are trained to maintain high
standards of visual presentation and customer service. This approach allows us
to maintain a uniform appearance throughout our store base in terms of
merchandise display and location on the selling floor, and to maintain our
standards for maximizing usage and productivity of selling space. We believe our
operating philosophy is a competitive advantage, evidenced by the improved
performance of the operations we acquired from Nuance Global Ships in December
1998.

     We expect recent changes in ship design to have a positive impact on our
duty-free retail merchandising strategy. Newer vessels generally have larger
retail stores in high traffic locations. On these newer ships we will generally
have more square footage than we average on existing ships, from which we expect
to generate higher revenues per passenger than on traditional vessels. We
currently expect increased space availability on new ships will enable us to
create larger store formats, product and brand-specific boutiques, and more
sophisticated store-within-a-store arrangements. These large retail formats have
generated up to approximately $9.00 in revenues per passenger per day compared
to the $5.00 average on earlier generation ships. As new ships are launched, we
expect our store mix to shift increasingly to the larger format. We anticipate
that this will allow us to expand our offerings and create an even more exciting
shopping experience on board.

  Port Lecturing

     We are the leading provider of port lecturing services to cruise lines. We
provide our port lecturing services to 25 ships representing seven lines and our
contracts allow us to provide these services on an additional eight ships
announced to be in service by December 2003. Many cruise line passengers have
limited knowledge of shopping opportunities in ports of call and are concerned
about the quality and authenticity of merchandise they purchase. Our port
lecturers provide cruise passengers with recommendations for shopping in ports
of call for a variety of items ranging from fine jewelry, watches and crystal to
souvenir T-shirts. For cruise line passengers our service provides a

                                       45
<PAGE>   50

greater sense of comfort with the on-shore shops we recommend because our
lecturers are identified with the cruise lines and because of a 100% quality and
authenticity guarantee provided as part of the port lecturing service. Under our
guarantee, we provide passengers and cruise lines the service of managing
returns with the retailers. We believe this comfort is important to many
passengers' decision to visit and purchase items from the on-shore shops we
recommend.

     We have established contractual relationships with over 300 retailers in
over 70 ports of call around the world. In exchange for participation in the
port lecture program, retailers enter into a contract with us to pay either a
flat fee or a commission based on gross sales generated by the cruise line
passengers. Additionally, our contracts generally require on-shore merchants to
guarantee the quality and authenticity of products and accept our returns for a
set period of time so that we do not bear the risk of losses related to
passenger returns. Cruise lines find contracting for this service attractive
because it permits us to offer a valuable service to cruise line passengers,
assists cruise lines in capturing a portion of passenger revenues spent on shore
and frees them from tracking sales volume, collecting revenues, arranging
contracts, and handling and guaranteeing returns.

  Customized Publications and Videos

     We supply in-cabin cruise line publications (also known as port magazines)
and in-room videos to several cruise lines. We provide our customized
publication and video services to 24 ships representing six cruise lines. Our
contracts allow us to provide these services on an additional eight ships
announced to be in service by December 2003. Our magazines feature articles on
port destinations, as well as paid advertisements from on-shore retailers and
international advertisers. We deliver new, high quality magazine publications
bi-annually or annually, depending on itineraries, in the fall and spring. Our
magazines are customized by cruise line, as well as by port destination. We
consider the highly tailored nature of our magazines to be a competitive
advantage and believe it enhances their usefulness to the passenger. As with the
port lectures, our magazines provide customers with valuable information on
shopping and other recreational opportunities in new destinations. Our
publications provide retailers and other businesses a focused target audience of
immediate potential customers. We also produce videos on port destinations, as
well as training and safety videos for the cruise lines. Furthermore, we provide
similar publications and videos to a limited number of other resorts with a
destination vacation environment, primarily Las Vegas hotels and Sandals
resorts. In addition to magazines, we provide one-time, special "Inaugural"
publications to commemorate the launch of a new ship. In 1998 we published 35
different editions of publications for cruise lines and hotels.

  Art Auctions and Sales

     We are the leader in providing art auctions on board cruise ships. We
provide our art auction services on 41 ships representing eight cruise lines and
our contracts allow us to provide these services on an additional 12 ships
announced to be in service by December 2003. We contract with the cruise lines
to hold auctions aboard each ship and offer passengers an opportunity to bid for
quality artwork ranging in price from $100 to $10,000. For many passengers, this
is often the first opportunity to participate in an art auction. We carry a
broad selection of over 4,000 pieces of artwork from numerous artists. We are
test-marketing items like sports memorabilia and continue to update our art
selection to respond to passenger demand. We also have recently opened "virtual
galleries" on the ships to give passengers a retail opportunity to view artwork
on computer generated galleries and purchase pieces from a selection of over
4,000 works. The virtual gallery concept brings us the opportunity to sell
passengers a wider selection of artwork than has typically been available on any
one ship. We arrange the guaranteed express mailing of the artwork directly to
the passenger's home after the cruise to avoid transportation difficulties for
the passenger. We currently sell an average of

                                       46
<PAGE>   51

3,500 pieces of artwork each week and provide these auctions and sales through
our supplier, a leading art curator, who sources and ships the art, and helps
provide qualified auctioneers.

LAND-BASED SERVICES

     We pioneered the concept of duty-free retailing in the United States with
our shops at the Miami International Airport, where we have been the sole
duty-free operator since 1958 and currently operate 19 stores with over 33,000
square feet of retail space. The Miami airport is the fourth largest airport in
the United States, after Hawaii, Los Angeles and San Francisco based on
duty-free retail sales. In 1998, 827,500 of the 7.8 million international
travelers using the Miami airport shopped at our duty-free stores. We also have
operated duty-free stores in the Fort Lauderdale-Hollywood International Airport
since 1990. This operation is smaller, with two stores totaling 2,500 square
feet. We have recently refurbished the stores in both of these airports
introducing state-of-the-art lighting, wood paneling and generous use of marble
to showcase such fine designer brands as Ferragamo, Gucci, Tag Heuer and Fendi.
In addition, four of the stores in Miami were recently converted from
full-service to semi-self service, which resulted in an increase in sales in
these stores of up to 50%. Our Miami and Fort Lauderdale airport stores serve as
a base for our cruise line business and enable us to increase the overall volume
of our duty-free purchases. In addition, through our "Florida Export Warehouse"
business, we sell wholesale duty-free liquor and cigarettes to cruise lines and
catering companies for resale on cruise lines directly.

CONTRACTS

     All of our services are provided pursuant to contracts with cruise lines,
hotels, resorts or airports. Our cruise line contracts for duty-free retail
services generally give us the exclusive right to sell most retail products
on-board cruise ships in return for a payment based on a percentage of gross
sales or a minimum dollar amount per passenger day. Many of the contracts
include all of a cruise line's existing ships as well as specified new ships
currently scheduled or under construction and some include all new ships
introduced during the contract by a cruise line. Under our contracts, the
individual terms of which we negotiate with each cruise line, we generally agree
to provide duty-free retail services and take responsibility for the inventory
to be sold and the management of the shops. The cruise lines generally assume
responsibility for shop capital expenditures, construction and improvement to
the stores. We provide design assistance to ensure that the stores meet our
merchandising standards. Our on-ship duty-free retail concession agreements are
generally for three to five years, with provisions for extension or renewal.
Since 1963, we have only lost two existing duty-free retail contracts when the
cruise lines customer decided to provide their own retail operations. Since
then, we reacquired both accounts and have contracts to provide their on-ship
duty-free services.

     Contracts to provide port lecturing, customized publication and art auction
services to the cruise lines are of varying length, from one to five years. Our
port lecturing and publications contracts permit us to provide these services on
cruise ships, in return for which we solicit advertising, manage collections and
returns, provide the magazines and lectures and pay the cruise lines a set
percentage of revenues from on-shore retailers and international advertisers, in
some cases with a minimum guarantee. In art auctions, we contract with the
cruise lines to provide art sales and art auctions on cruise ships and, with our
supplier, provide the art, conduct the auctions and manage the logistics of
shipping art to the passenger. We pay a percentage of revenues to the cruise
lines. With some of our promotion and art auction contracts, we have agreed to
pay the cruise lines a minimum payment.

     Contracts with cruise lines accounting for 9% of our net sales for the six
months ended June 30, 1999 expire by December 31, 2000, cruise line contracts
accounting for an additional 8% of our net sales expire by December 31, 2001,
and cruise line contracts accounting for 54% of our revenues

                                       47
<PAGE>   52

expire by December 31, 2002, in each case excluding renewal options under the
contracts and in each case without giving effect to our recently executed
contract with Royal Caribbean International.

     We provide our airport services under concession contracts with the two
airports, under which we pay a percentage of revenues as rent, subject to
certain minimums. Our contract with Miami International Airport expires in
November 2000 and our contract with Fort Lauderdale International Airport
expires on August 30, 2002. Both are subject to renewal options. We have
operated the Miami International Airport contract since 1958 and the Fort
Lauderdale International Airport contract since 1990.

SUPPLIERS

     Because of the scale of our retail purchases, we believe that we are able
to purchase duty-free and duty-paid merchandise at competitive or preferred
rates. We purchase our goods from numerous vendors, including manufacturers and
distributors. We do not have any significant long-term or exclusive purchase
commitments and we believe that alternative sources of supply are available for
each category of merchandise we purchase.

     A major supplier, with whom we have a long-term relationship, supplies the
artwork sold in our art auctions. This supplier has long-term agreements with
many popular commercial artists, which allows it to maintain a constant source
of artwork. Our contract with this supplier renews automatically for successive
two year periods and the supplier has agreed not to compete with us in providing
art auction services on cruise lines for two years after it terminates the
contract.

EMPLOYEES

     As of June 30, 1999 we had a total of approximately 1200 employees and 25
independent contractors. Of these employees, 500 worked in our Miami offices and
warehouse and 700 worked on ships or in offices abroad. Shipboard employees are
employed outside the United States and are typically recruited from European
countries. Approximately 50 of our warehouse employees at our Greyhound Leisure
Services headquarters in Miami are subject to a collective bargaining agreement
that runs through June 30, 2001.

FACILITIES

     We have office space in Miami and Miami Beach, Florida and Southampton,
England and a 120,000 square foot warehouse, located just six miles from Miami
International Airport and 12 miles from Miami Seaport. As of June 30, 1999, we
operated 232 retail shops aboard 82 cruise ships, which operate in international
waters, 19 shops in the Miami International Airport and two shops in the Fort
Lauderdale-Hollywood International Airport. Our Miami office space and warehouse
is occupied under a lease expiring on December 31, 2002 at an aggregate annual
rental expense of approximately $650,000. We have the option of extending this
lease for another five years after December 31, 2002. Our Miami Beach office
space is occupied under leases expiring April 30, 2006 at an aggregate rental
expense of approximately $250,000 per year.

INFORMATION SYSTEMS

     We have developed a sophisticated system for collecting and tracking
inventory information. Our systems are integrated to accept point-of-sale
information from the various cruise line point-of-sale systems. When a cruise
line does not have its own system, we use our own point-of-sale system. Many
cruise lines have their own systems to facilitate "cashless" purchasing during a
cruise. Our merchandising department is provided with weekly information from
our employees on the cruise ships to track inventory, sales and gross margin
data. We utilize this data in conjunction with

                                       48
<PAGE>   53

information from the cruise lines about anticipated passenger profiles, voyage
routes and durations to make market-driven decisions about replenishing our
on-ship stores.

     We also have developed a system to track and test port sales subject to our
port lecturing contracts by cruise line and port of call. In addition, with our
art auction supplier, we have a system providing us with the ability to track
on-board art sales and ship the art directly to the customer's home quickly.

     Our airport duty-free operations are structured to comply with U.S. customs
regulations which restrict passengers from taking duty-free purchases with them
from a duty-free store. Our systems arrange for the delivery of duty-free
purchases to passengers in the departure area where purchases may be retrieved
by passengers within 30 minutes prior to their departure.

COMPETITION

     Our primary competition in providing services on cruise ships is from
cruise lines which provide the services themselves. Princess Cruises is the
largest cruise line to provide the shopping on its ships. We also compete with
other operators such as Harding Brothers Duty-Free Ltd. for the right to provide
duty-free services on the cruise ships. Our competition in offering port
lecturing and publishing includes Panoff Publishing, Inc. and International
Voyager Media and cruise lines which do not outsource these services. Carnival
Cruise Lines is the largest cruise line providing its own port lecturing while
almost all of the major cruise lines outsource their publishing. Our competition
in providing art auctions includes a variety of other providers such as David
Morgan and Fine Art Sales Inc. and some in-house operations. Our main competitor
in providing airport duty-free services is Duty Free Shoppers, Inc.

GOVERNMENT REGULATION

     We are subject to various national and local laws and regulations affecting
the operation of our business. The operation of our warehouse, our shipment of
goods and the operation of our shops is subject to the customs and import/export
laws of the United States and of other jurisdictions and regulation by the
Bureau of Alcohol, Tobacco and Firearms as well as by state authorities. Our
airport duty-free operations must comply with federal and local laws relating to
disadvantaged business ownership.

INTELLECTUAL PROPERTY

     We own a number of licenses, trademarks, service marks and trade names in
the United States. Our principal trademarks include Mistral, Maritime Spa &
Salon and Tara Vanessa. We have applied for trademarks with respect to the names
Club Nautique, Onboard Media, Escapades, Destinations, Explore!, Land & Sea,
Buongiorno, Cruising in Style, Shopping in Paradise and Marinaio. We have also
filed trademark applications for Escapades in Jamaica, Antigua, Barbados, the
Bahamas, and St. Lucia. The Escapades trademark has been registered in Turks &
Caicos. We use the name "Greyhound" and associated marks under a royalty free,
perpetual license agreement with Greyhound Lines, Inc. This agreement provides
for exclusive usage within our duty-free business and non-exclusive use in other
businesses. In addition, from time to time we use several other marks and trade
names under licenses for the purpose of providing and selling logo items and
other goods in our duty-free stores and for the purpose of creating our
publications.

LEGAL PROCEEDINGS

     Starboard Cruise Services is not a party to any material legal proceedings.

                                       49
<PAGE>   54

OUR HISTORY

     Starboard Cruise Services is a holding company formed in September 1998 to
acquire Greyhound Leisure Services, Inc., the leading provider of duty-free
cruise line and airport shopping operations, which was founded in 1958, and then
the Onboard Group (Onboard Media, Inc., Cruise Management International, Inc.
and Boxer Media, Inc.), the leading provider of port lecturing services,
on-board art auctions, customized publications and in-cabin media. We acquired
the on-ship duty-free retail business of Nuance Global Ships, on December 15,
1998, expanding our business by an additional 29 ships, including several ships
of Celebrity Cruises, Cunard Line, the Holland-America Line and Norwegian Cruise
Lines. We will convert from a private limited liability company (besloten
vennootschap met beperkte aansprakelijkheid or B.V.) to a public limited
liability company (naamloze vennootschap or N.V.) and change our name from Miami
Cruiseline Services Holdings I B.V. to Starboard Cruise Services N.V. effective
immediately prior to this offering.

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<PAGE>   55

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     Our executive officers and directors and their respective ages and
positions as of the date of this prospectus are as follows:

<TABLE>
<CAPTION>
NAME                                   AGE                        POSITION HELD
----                                   ---                        -------------
<S>                                    <C>   <C>
Joel E. Cutler.......................  41    Chairman of the Board, Chief Executive Officer and
                                             Managing Director
J. P. Miquel.........................  60    President and Chief Executive Officer of Greyhound
                                             Leisure Services and Managing Director
Philip L. Levine.....................  37    President and Chief Executive Officer of Onboard Media
                                             and Cruise Management International and Managing
                                               Director
Jerry Chafetz........................  42    Senior Vice President of Onboard Media and Cruise
                                               Management International and Managing Director
William J. Fitzgerald................  41    Acting Interim Chief Financial Officer
Bradley M. Bloom(1)..................  46    Supervisory Director
David P. Fialkow(1)..................  40    Supervisory Director
Steven S. Fischman...................  58    Supervisory Director
Randy Peeler(2)......................  34    Supervisory Director
Leonard A. Schlesinger(1)(2).........  47    Supervisory Director
</TABLE>

-------------------------

(1) Member of Compensation Committee.

(2) Member of Audit Committee.

     JOEL E. CUTLER has served as the Chairman of the Board and Chief Executive
Officer since September 1998. He has been the Co-Chairman and Co-Managing Member
of F.C. Capital Partners LLC, a private equity firm, since 1998. He has also
been an officer and principal of Alliance Development Group, Inc., a company
which creates loyalty and enhancement programs for partners in the retail and
banking industries, since 1994 and Retail Growth ATM Systems, LLC, the leading
ATM provider to the shopping mall industry, since 1997. He was the Co-Chief
Executive Officer of National Leisure Group from 1987 to 1996, a company he
co-founded with David P. Fialkow in 1987. While he was Co-Chief Executive
Officer, National Leisure Group grew to be one of the largest leisure travel
companies and cruise sellers in the U.S., developing endorsement travel programs
for major banks, credit card companies and retailers. National Leisure Group was
sold in 1995. From 1984 to 1987, he served as an executive of The Interface
Group, a national trade exhibition company (Comdex) and New England's largest
tour company (GWV). He is a member of the board of directors of General
Catalysts LLC. He earned a B.A. from Colby College and a J.D. from Boston
College Law School.

     J. P. MIQUEL has served as a Managing Director of our company since
September 1998 and has been the President and Chief Executive Officer of
Greyhound Leisure Services since March 1984. Mr. Miquel joined Greyhound Corp.
in 1977 and served as President and Director of Operations -- Europe from 1978
to 1983 and Vice President -- Special Markets from 1983 to 1984. In 1984, he
became President and Chief Executive Officer of Greyhound Leisure Services, Inc.
While at Greyhound Leisure Services, Mr. Miquel was also President and Chief
Executive Officer of Premier Cruise Lines, a cruise ship business previously
operated by Viad Corp. He earned a B.S. in Hotel/ Restaurant Management from the
Hotel and Restaurant College in France and a certificate of post-

                                       51
<PAGE>   56

graduate study in Business Management from the University of Brussels, Belgium.
He is very active in various industry and trade organizations and served as the
president of the French-American Chamber of Commerce of Miami/Fort Lauderdale in
1996.

     PHILIP L. LEVINE has served as a Managing Director of our company since
September 1998 and has been President and Chief Executive Officer of Onboard
Media since its founding in 1990. He has also been President and Chief Executive
Officer of Cruise Management International since its founding in March 1995 and
of Boxer Media since its founding in November 1996. From 1988 to 1989, he was
employed by Carnival Cruise Lines, Inc. where he helped develop and expand its
in-house port lecturing program. He founded Onboard Media in order to
professionalize the port lecturing business and develop an industry
communications infrastructure for on-shore merchants to reach cruise line
passengers. He serves as a director of Colonial Bank South Florida Region. He
earned a B.A. from the University of Michigan and is actively involved in the
cruise line industry. He is currently a member of the Florida Caribbean Cruise
Association, the Caribbean Hotel Association, the Presidents Club of University
of Michigan and the Historical Steamship Society and was appointed to the
Mayor's Special Economic Council in Miami Beach. He is an associate member of
The International Council of Cruise Lines (ICCL) and a Member of the Founder's
Club of the Mount Sinai Hospital.

     JERRY CHAFETZ has served as a Managing Director of our company since
September 1998 and has been Senior Vice President of Onboard Media since 1990.
He has also been Senior Vice President of Cruise Management International since
its founding in March 1995 and of Boxer Media since its founding in November
1996. Prior to joining Onboard, Mr. Chafetz founded and operated Chafetz
Jewelers, which was sold in 1989. He earned a B.S. from Arizona State University
and is actively involved in the cruise line industry. He is currently on the
board of governors of the Miami Beach Chamber of Commerce and a member of the
Greater Miami Convention and Visitors Bureau and the Florida Caribbean Cruise
and Caribbean Hotel Association.

     WILLIAM J. FITZGERALD has served as Acting Interim Chief Financial Officer
of our company and Cruise Line Holdings Co. since August 4, 1999. He has been
Senior Vice President and Chief Financial Officer of F.C. Capital Partners LLC
since 1998, Alliance Development Group, Inc. since 1996, and Retail Growth ATM
Systems, LLC since 1996. He currently serves as a director of several privately
held companies. From 1990 to 1996, he served as Vice President and Treasurer of
HMK Enterprises Group, Inc., and Watermill Ventures, a Boston, Massachusetts
based private equity investment firm specializing in revitalizing
underperforming companies in dynamic industries. From 1985 to 1990, he was with
KPMG Peat Marwick. He earned a B.A. from The College Of The Holy Cross and a
J.D. from Suffolk University Law School, is a C.P.A. and is admitted to practice
law in Massachusetts.

     BRADLEY M. BLOOM has served as a Supervisory Director of our company since
1999 and served as Managing Director from September 1998 until 1999. Since its
founding in 1986, he has been a Managing Director of Berkshire Partners LLC, a
private equity firm that manages five investment funds with total capital of
$1.6 billion. He serves as a director of several privately held companies.
Before founding Berkshire Partners in 1986, he was a partner of the Thomas H.
Lee Company for seven years and spent two years with the First National Bank of
Boston. He earned an A.B. from Harvard College and an M.B.A. from Harvard
Business School.

     DAVID P. FIALKOW has served as a Supervisory Director of our company since
1999 and served as a Managing Director from September 1998 until 1999. He has
been the Co-Chairman and Co-Managing Director of F.C. Capital Partners LLC, a
private equity firm, since 1998. He has also been the co-founder, Chief
Executive Officer and principal of Alliance Development Group, Inc., a company
which creates loyalty and enhancement programs for partners in the retail and
banking industries, since 1994. He has also been an officer and principal of
Retail Growth ATM Systems, LLC since 1996 and General Catalysts LLC, a private
equity firm he co-founded to invest in on-line commerce, content and
entertainment companies, since 1999. He was Co-Chief Executive Officer of

                                       52
<PAGE>   57

National Leisure Group from 1987 to 1996, a company he co-founded with Joel E.
Cutler in 1987. While he was Co-Chief Executive Officer, National Leisure Group
became one of the largest leisure travel companies and cruise sellers in the
U.S. Mr. Fialkow earned a B.A. from Colgate University and a J.D. from Boston
College Law School.

     STEVEN S. FISCHMAN has served as a Supervisory Director of our company
since 1999 and served as a Managing Director from September 1998 until 1999.
Since 1992, he has been the President of New England Development, the largest
mall developer in New England. Since 1992, he has also been Vice Chairman of
WellsPark Group which develops, owns and manages shopping centers and other
commercial properties. From 1968 to 1992, he was an attorney at Goulston &
Storrs in Boston with a specialization in real estate development and finance.
While at Goulston & Storrs, he represented developers and owners of all types of
real estate and investors in real estate, including shopping centers, hotels,
office projects, housing projects and industrial properties.

     RANDY PEELER has served as a Supervisory Director of our company since 1999
and served as a Managing Director from September 1998 until 1999. He is a Vice
President of Berkshire Partners LLC, a private equity investment firm, where he
has been employed since 1996. From 1994 to 1996, he was responsible for new
business ventures at Health Advances, a healthcare industry consulting firm.
From 1993 to 1994, he served as Chief of Staff to the Assistant Secretary for
Economic Policy at the U.S. Department of the Treasury. Prior to that, he was a
consultant with Cannon Associates. Mr. Peeler serves as a director of Holmes
Products Corporation and Weigh-Tronix, Inc. Mr. Peeler earned a B.A. from Duke
University and an M.B.A. from Harvard Business School.

     LEONARD A. SCHLESINGER has served as a Supervisory Director of our company
since 1999 and served as a Managing Director from September 1998 until 1999.
Since October 1998, he has served as Senior Vice President for Development,
Counselor to the President and Professor of Sociology and Public Policy at Brown
University. From 1988 to 1998 and 1978 to 1985, he served as a member of the
faculty of the Harvard Business School, lastly as the George F. Baker, Jr.
Professor of Business Administration and the Chair of the Service Management
Area. From 1985 to 1988, he served as Executive Vice President and Chief
Operating Officer of Au Bon Pain Co., Inc., a chain of french bakery cafes. He
currently serves as a director of The Limited, Inc., Borders Group, Inc., GC
Companies and Pegasystems, Inc.

     Our Managing Directors and Supervisory Directors are each divided into
three classes. These classes hold their seats for three-year terms, with one
class of directors expiring in each successive year at the annual general
meeting. Messrs.              will be in the class of directors whose term
expires at the 2000 general meeting of our shareholders. Messrs.
will be in the class of directors whose term expires at the 2001 annual general
meeting of our shareholders. Messrs.              will be in the class of
directors whose term expires at the 2002 annual general meeting of our
shareholders. At each annual general meeting of our shareholders, successors to
the class of directors whose term expires at such meeting will be appointed.

     At present, all Managing Directors and Supervisory Directors are appointed
and serve until the expiration of their respective three year term of office or
their resignation, death or removal, with or without cause by the shareholders,
or in the case of Supervisory Directors, also upon reaching the mandatory
retirement age of 72. All of the Managing and Supervisory Directors listed above
were elected pursuant to the Shareholders Agreement. See "Certain Relationships
and Related Transactions -- Shareholders Agreement". There are no family
relationships between our directors or executive officers. Our executive
officers are appointed by, and serve at the discretion of, the Management Board,
subject to the approval of the Combined Board. See "Description of Capital
Stock -- Election and Tenure of Managing and Supervisory Directors".

                                       53
<PAGE>   58

SUPERVISORY BOARD

     Under Netherlands law and our Articles of Association, the Supervisory
Board (Raad van Commissarissen) supervises the Management Board (Directie) in
the management of our company. Under the laws of The Netherlands, Supervisory
Directors cannot at the same time be Managing Directors of the same company. The
primary responsibility of the Supervisory Board is to supervise the policies
pursued by the Management Board and the general course of affairs of the company
and its business and to advise the Management Board. In fulfilling their duties,
the members of the Supervisory Board are required to act in the best interests
of the company, its business and all its stakeholders.

     Pursuant to our Articles of Association, the Supervisory Board consists of
such number of members as may be determined by the general meeting of
shareholders. The members of the Supervisory Board are appointed by the general
meeting of shareholders from binding nominations made by the Combined Board.
Under Netherlands law, the shareholders may eliminate the binding effect of such
nomination by a two-thirds of quorum vote. Resolutions of the Supervisory Board
require the approval of a majority of its members. The Supervisory Board meets
each time this is deemed necessary by one of its members or at the request of
the Management Board or Combined Board. Every retiring supervisory director may
be reappointed, provided that such Supervisory Director has not attained the age
of 72. A member of the Supervisory Board must retire not later than on the day
of the general meeting of shareholders held in the fiscal year in which such
member reaches the age of 72. See "-- Combined Board".

     A member of the Supervisory Board may at any time be suspended or removed
by the general meeting of shareholders pursuant to a two-thirds of quorum vote
of the general meeting of shareholders unless the removal is proposed by
resolution of the Combined Board, in which case a simple majority vote of the
general meeting of shareholders is required. Members of the Supervisory Board
may receive such compensation as may be determined by the general meeting of
shareholders. See "Description of Capital Stock -- Election and Tenure of
Managing and Supervisory Directors".

MANAGEMENT BOARD

     The management of our company is entrusted to the Management Board under
the supervision of the Supervisory Board. Our Articles of Association provide
that certain actions of the Management Board shall be subject to the approval of
the Supervisory Board.

     The Management Board consists of such number of members as may be
determined by the general meeting of shareholders. In addition, the general
meeting of shareholders appoints the members of the management board from
binding nominations made by the Combined Board. Under Netherlands law, the
shareholders may eliminate the binding effect of such nominations by a two-
thirds of quorum vote.

     The general meeting of shareholders has the power to suspend or dismiss
members of the Management Board pursuant to a two-thirds of quorum vote of the
general meeting of shareholders unless the removal is proposed by resolution of
the Combined Board, in which case a simple majority vote of the general meeting
is required. If a member of the Management Board is temporarily prevented from
acting, the remaining members of the Management Board shall temporarily be
responsible for the management of the company. If all members of the Management
Board are prevented from acting, a person appointed by the Supervisory Board
(who may be a member of the Supervisory Board) will be temporarily responsible
for the management of the company. The compensation and other terms and
provisions of employment of the members of the Management Board are determined
by the Supervisory Board. See "Description of Capital Stock -- Election and
Tenure of Managing and Supervisory Directors".

                                       54
<PAGE>   59

COMBINED BOARD

     Our Articles of Association provide for specified powers to be exercised by
the Supervisory Board and Management Board acting together as a Combined Board.
The members of the Combined Board are all the members of the Supervisory and
Management Boards, whose right to participate in the Combined Board is by virtue
of their position, as the case may be, as a member of the Supervisory Board or a
member of the Management Board.

AUDIT COMMITTEE

     The Audit Committee consists of Leonard A. Schlesinger and Randy Peeler.
The Audit Committee reviews with our independent auditor the scope and timing of
its audit services, the auditor's report on our financial statements following
the completion of its audit and our policies and procedures with respect to
internal accounting and financial controls. The Audit Committee will also make
annual recommendations to the general meeting of shareholders concerning the
appointment of independent auditors for the ensuing years.

COMPENSATION COMMITTEE -- INTERLOCKS AND INSIDER PARTICIPATION

     The Compensation Committee consists of Bradley M. Bloom, David P. Fialkow
and Leonard A. Schlesinger. The Compensation Committee reviews and evaluates the
salaries, supplemental compensation and benefits of our employees, and makes
recommendations concerning these matters to the Combined Board. The compensation
arrangements for each of our executive officers was established pursuant to the
terms of employment agreements between us and each executive officer. The terms
of the employment agreements were established in connection with our acquisition
of Greyhound Leisure Services and the Onboard Group pursuant to arms-length
negotiations between members of the Compensation Committee and each executive
officer.

     Mr. Bloom is a member of Berkshire Partners LLC and Mr. Peeler is one of
its employees. We paid Berkshire Partners LLC a financing and structuring fee of
$1.25 million plus its expenses of approximately $169,000 in connection with our
acquisitions of Greyhound Leisure Services and the Onboard Group and it is
entitled to receive fees for specific services under the Shareholders Agreement.
See "Certain Relationships and Related Transactions -- Shareholders Agreement".

     Messrs. Fialkow and Cutler are each a Co-Chairman and Co-Managing Member of
F.C. Capital Partners LLC and Mr. Fitzgerald, our Interim Acting Chief Financial
Officer, is one of its employees. Through Berkshire Cruise Holdings LLC, we paid
F.C. Capital Partners LLC a financing and structuring fee $250,000 plus its
expenses of approximately $59,000 in connection with our acquisitions of
Greyhound Leisure Services and the Onboard Group. In addition, in lieu of paying
a salary to Mr. Cutler we agreed to enter into a consulting agreement as of
January 1, 1999 with F.C. Capital Partners LLC pursuant to which it receives an
annual fee of $200,000 plus reasonable out-of-pocket expenses for Mr. Cutler's
services and for the occasional services of some of its employees. We also
agreed to enter into a separate consulting agreement as of August 4, 1999 with
F.C. Capital Partners LLC for Mr. Fitzgerald's services. The agreement provides
for the payment of $12,500 per month, a pro rata portion of a $60,000 annual
performance-based bonus, benefits costs and reasonable fees and expenses in lieu
of salary for Mr. Fitzgerald. Messrs. Fialkow and Cutler are each a Co-Chairman
and Co-Managing Member of F.C. Capital Partners LLC and Mr. Fitzgerald is one of
its employees. See "Management -- Consulting Agreement with F.C. Capital
Partners LLC".

     In connection with the acquisitions of Greyhound Leisure Services and the
Onboard Group, we entered into a Management Agreement with Berkshire Cruise
Holdings LLC to provide consulting and management services. In exchange for
these services, Berkshire Cruise Holdings LLC was entitled to an annual
management fee of $400,000 (payable monthly) plus reasonable out-of-pocket
expenses. The Management Agreement has an initial term of five years, subject to
automatic one

                                       55
<PAGE>   60

year extensions unless we or Berkshire Cruise Holdings LLC provides written
notice of termination. We paid fees to Berkshire Cruise Holdings LLC under the
Management Agreement of $116,000 for the period from September 10, 1998 through
December 31, 1998. Berkshire Cruise Holdings LLC holds over 62% percent of our
outstanding common shares and as such may have the power to direct or cause the
direction of our management and policies. In connection with our January 1, 1999
consulting agreement with F.C. Capital Partners LLC, we will amend the
Management Agreement, to reduce the annual management fee to $200,000. Messrs.
Bloom, Fialkow, Schlesinger, Cutler, Fischman and Peeler each has a direct or an
indirect interest in Berkshire Cruise Holdings LLC. Messrs. Bloom Cutler,
Fialkow and Peeler are also each a member of the Board of Managers and an
officer of Berkshire Cruise Holdings LLC.

DIRECTOR COMPENSATION

     Directors serving on the Supervisory Board and the Management Board are
currently not entitled to receive any compensation for serving on the boards.
Directors are reimbursed for their out-of-pocket expenses incurred with such
services.

EMPLOYMENT AGREEMENTS

     We, through our subsidiaries, Cruise Line Holdings Co. and Greyhound
Leisure Services, have entered into an employment agreement with J. P. Miquel.
We, through our subsidiaries, Cruise Line Holdings Co. and the Onboard Group,
have also entered into employment agreements with Philip L. Levine and Jerry
Chafetz. Under their respective employment agreements, Messrs. Miquel, Levine
and Chafetz will receive:

     - an annual salary of (which may be increased from time to time):

<TABLE>
<CAPTION>
                       NAME                          ANNUAL SALARY
                       ----                          -------------
<S>                                                  <C>
J. P. Miquel.......................................    $300,000
Philip L. Levine...................................    $250,000
Jerry Chafetz......................................    $250,000
</TABLE>

     - participation in any bonus plan established by us; and

     - certain fringe benefits.

     The term of Mr. Miquel's employment is for three years beginning on
September 17, 1998 but may be terminated earlier by us with or without cause,
upon death or continued disability or by Mr. Miquel on 60 days' notice. The term
of Mr. Levine's and Mr. Chafetz's employment continues until terminated by us
with or without cause, upon their respective death or continued disability or by
them on 60 days' notice.

     If the executive's employment is terminated without "cause" or within 18
months of a change of control (as defined in the employment agreements) or due
to a material diminution in the executive's position, duties or authority,
Greyhound Leisure Services or the Onboard Group, as the case may be, will
provide the executive with severance pay for 12 months and cover the cost of
health insurance. In addition, Greyhound Leisure Services or the Onboard Group,
as the case may be, will pay the executive any bonus to which he is entitled,
pro-rated to the date of termination. If the executive is terminated for "cause"
or if the executive resigns, the executive is only entitled to receive his
salary through the date of termination. If the executive resigns, Greyhound
Leisure Services or the Onboard Group, as the case may be, will pay him his
salary for the 60 day notice period even if we accept his

                                       56
<PAGE>   61

resignation prior to the expiration of the notice period. Under each employment
agreement, the executive has agreed not to:

     - compete with us or our subsidiaries during the period in which he is
       employed with us and for 12 months thereafter;

     - solicit or hire any of our or our subsidiaries' employees during the
       period in which he is employed with us and for 12 months thereafter;

     - solicit any customer, including any customers whose business we have
       actively sought within the 12 months preceding his termination, or any
       other entity or independent contractor who provides services to us or our
       subsidiaries during the period in which he is employed with us and for 12
       months thereafter; and

     - disclose any confidential information during the period in which he is
       employed and for all times thereafter.

     Under the terms of each employment agreement, the executive has also agreed
to disclose to us and Greyhound Leisure Services or the Onboard Group, as the
case may be, any intellectual property that is applicable to our business and to
assign such intellectual property to Greyhound Leisure Services or the Onboard
Group, as the case may be.

CONSULTING AGREEMENT WITH F.C. CAPITAL PARTNERS LLC FOR JOEL E. CUTLER'S
SERVICES

     In lieu of paying Joel E. Cutler, our Chairman and Chief Executive Officer,
a salary, we have agreed to enter into a consulting agreement dated as of
January 1, 1999 with F.C. Capital Partners LLC to provide consulting and
management advisory services, including Mr. Cutler's services as Chief Executive
Officer and for the occasional services of some of its employees. Mr. Cutler is
a Co-Chairman and Co-Managing Member of F.C. Capital Partners LLC. In exchange
for these services, F.C. Capital Partners LLC will receive an annual management
fee of $200,000 plus reasonable out of pocket expenses. The Consulting Agreement
will have an initial term of two years, subject to automatic one-year extensions
unless we or F.C. Capital Partners LLC provide written notice of termination. It
will also provide that F.C. Capital Partners LLC and Mr. Cutler will not compete
with us, solicit or hire our employees, or solicit our customers for services in
our line of business during the period of the engagement and for 12 months
thereafter. Mr. Cutler and F.C. Capital Partners LLC will also not disclose
confidential information during or after the engagement. Prior to entering into
the consulting agreement with F.C. Capital Partners LLC, Mr. Cutler's services
have been provided to us pursuant to our management agreement with Berkshire
Cruise Holdings LLC.

CONSULTING AGREEMENT WITH F.C. CAPITAL PARTNERS LLC FOR WILLIAM J. FITZGERALD'S
SERVICES

     In lieu of paying William J. Fitzgerald, our Acting Interim Chief Financial
Officer, a salary, we have agreed to enter into a consulting agreement with F.C.
Capital Partners LLC dated as of August 4, 1999 for the provision of additional
management advisory services, including Mr. Fitzgerald's services as Acting
Interim Chief Financial Officer of the Company and its Cruise Line Holdings Co.
subsidiary. Mr. Fitzgerald is an officer of F.C. Capital Partners LLC. In
exchange for Mr. Fitzgerald's services, we have agreed to pay F.C. Capital
Partners LLC a monthly consulting fee of $12,500, a portion of an annual $60,000
performance based bonus, pro rated based on the number of months of Mr.
Fitzgerald's engagement, and reasonable out of pocket expenses. We will also
reimburse F.C. Capital Partners LLC for Mr. Fitzgerald's specified benefits
during the term of the engagement. We may terminate the engagement for Mr.
Fitzgerald's services at any time on 30 days' notice. Under the agreement, Mr.
Fitzgerald is subject to the non-competition, non-solicitation and
confidentiality restrictions applicable to F.C. Capital Partners LLC.

                                       57
<PAGE>   62

SEPARATION AGREEMENT WITH JORGE A. FERNANDEZ

     As of September 30, 1999 Jorge A. Fernandez has resigned as Senior Vice
President -- Finance and Chief Financial Officer of two of our subsidiaries,
Greyhound Leisure Services and Cruise Line Holdings Co. In our separation
agreement, we have agreed, among other things, to continue to pay his annual
salary of $150,000 through September 30, 2000 and his bonus through December 31,
1999 and to continue some of his benefits until, at the latest, December 31,
2001. In addition, we agreed to accelerate the vesting of a portion of his
options.

EXECUTIVE COMPENSATION

     Summary Compensation Table.  The following table shows the total
compensation paid or accrued during the fiscal year ended December 31, 1998
(September 10, 1998 through December 31, 1998) to our chief executive officer
and our four other most highly compensated officers after giving effect to the
250 for 1 common share split which will occur immediately before this offering.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                 LONG-TERM
                                                                               COMPENSATION
                                                                              ---------------
                                      ANNUAL COMPENSATION                      COMMON SHARES
                                      -------------------    OTHER ANNUAL       UNDERLYING       ALL OTHER
    NAME AND PRINCIPAL POSITION        SALARY     BONUS      COMPENSATION     OPTIONS(NUMBER)   COMPENSATION
    ---------------------------       --------   --------   ---------------   ---------------   ------------
<S>                                   <C>        <C>        <C>               <C>               <C>
Joel E. Cutler(a)...................  $ 58,000         --            --                --               --
  Chairman and Chief Executive
  Officer
J. P. Miquel........................  $ 86,400   $ 13,584            --           250,000               --
  President and Chief Executive
  Officer of Greyhound Leisure
  Services
Philip Levine.......................  $ 72,000         --            --                --               --
  President and Chief Executive
  Officer of Onboard Media and
  Cruise Management International
Jerry Chafetz.......................  $ 72,000         --            --           250,000               --
  Senior Vice President of Onboard
  Media and Cruise Management
  International
Jorge A. Fernandez(b)...............  $ 43,200   $  6,336            --            62,500               --
</TABLE>

-------------------------
(a) In lieu of a salary to Mr. Cutler, F.C. Capital Partners LLC, of which Mr.
    Cuther is Co-Chairman and Co-Managing Member, received a consulting fee from
    Berkshire Cruise Holdings LLC in the amount of $58,000.

(b) Mr. Fernandez resigned as of September 30, 1999.

OPTION GRANTS IN LAST FISCAL YEAR

     The following table sets forth grants of options to acquire shares of
Starboard Cruise Services for our chief executive officer and our four other
most highly compensated officers for the fiscal year ended December 31, 1998
after giving effect to the 250 for 1 common share split which will occur
immediately before this offering. We have never granted any stock appreciation
rights. The potential realizable value is calculated based on the term of the
option at its time of grant. It is calculated assuming that the fair market
value of common shares on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated share
price. These numbers are calculated based on the requirements of the Securities
and Exchange Commission. By including these

                                       58
<PAGE>   63

values in this prospectus, we do not intend to forecast the possible
appreciation in our share price nor to establish a present value of these
options.

<TABLE>
<CAPTION>
                                                INDIVIDUAL GRANTS                          POTENTIAL REALIZABLE
                         ---------------------------------------------------------------     VALUE AT ASSUMED
                                             % OF TOTAL                                   ANNUAL RATES OF STOCK
                          COMMON SHARES        OPTIONS                                      PRICE APPRECIATION
                           UNDERLYING          GRANTED        EXERCISE OR                   FOR OPTION TERM(B)
                         OPTIONS GRANTED   TO EMPLOYEES IN   BASE PRICE PER   EXPIRATION  ----------------------
NAME                        (NUMBER)         FISCAL YEAR         SHARE         DATE(A)       5%           10%
----                     ---------------   ---------------   --------------   ----------  ---------    ---------
<S>                      <C>               <C>               <C>              <C>         <C>          <C>
Joel E. Cutler.........           --              --                 --               --        --           --
J. P. Miquel...........      250,000(c)         26.3%            $1.925        9/17/2008  $302,593     $766,829
Philip Levine..........           --              --                 --               --        --           --
Jerry Chafetz..........      250,000(c)         26.3%            $1.925        9/17/2008  $302,593     $766,829
Jorge A.
  Fernandez(d).........       62,500             6.6%            $1.925       12/21/2008  $ 75,648     $191,707
</TABLE>

-------------------------
(a) Options expire on the earlier of 60 days after the date of termination (or
    such longer period as the Combined Board may determine) or the date
    indicated above.

(b) At an annual rate of appreciation of 5% per year for the option term, the
    price of the common share would be approximately $3.14. At an annual rate of
    appreciation of 10% per year for the option term, the price of the common
    share would be approximately $4.99.

(c) 83,500 shares vest on September 17, 1999 and 83,250 shares vest on each
    September 17, 2000 and September 17, 2001.

(d) Mr. Fernandez resigned as of September 30, 1999.

FISCAL YEAR-END OPTION VALUES

     The following table sets forth information concerning the value realized
upon exercise of options during 1998 and the number and value of unexercised
options held by our chief executive officer and our four other highly
compensated officers for the fiscal year ended at December 31, 1998 after giving
effect to the 250 for 1 common share split which will occur immediately before
this offering. There was no public trading market for the common shares as of
December 31, 1998. Accordingly, the values set forth below have been calculated
on the basis of the fair market value as of December 31, 1998 of the shares
underlying the options of $1.925 per share, less the applicable exercise price
per share, multiplied by the number of shares underlying the options.

<TABLE>
<CAPTION>
                                                                            VALUE OF UNEXERCISED
                                      UNDERLYING UNEXERCISED OPTIONS        IN-THE-MONEY OPTIONS
                                            AT FISCAL-YEAR-END               AT FISCAL-YEAR-END
                                      ------------------------------    ----------------------------
                                      EXERCISABLE     UNEXERCISABLE     EXERCISABLE    UNEXERCISABLE
NAME                                    (NUMBER)         (NUMBER)           ($)             ($)
----                                  ------------    --------------    -----------    -------------
<S>                                   <C>             <C>               <C>            <C>
Joel E. Cutler......................      --                  --            --               --
J. P. Miquel........................      --             250,000            --                0
Philip L. Levine....................      --                  --            --               --
Jerry Chafetz.......................      --             250,000            --                0
Jorge A. Fernandez(a)...............      --              62,500            --                0
</TABLE>

-------------------------
(a) Mr. Fernandez resigned as of September 30, 1999.

1998 STOCK OPTION PLAN

     Our 1998 Stock Option Plan was adopted by our shareholders in September
1998 and subsequently amended by our shareholders and Board of Managers. It is
administered by the Management Board and Supervisory Board meeting together as a
Combined Board. A total of

                                       59
<PAGE>   64

1,000,000 common shares have been authorized for issuance under the 1998 Stock
Option Plan, subject to an automatic increase by      % each year, and the
Combined Board has been authorized to issue options for those shares. To date,
we have entered into option agreements with employees for the purchase of all
1,000,000 common shares under the plan.

     Under the Plan, the Combined Board may for a period of ten years cause the
company to enter into option agreements with eligible individuals employed by or
providing service to Starboard Cruise Services to acquire shares at an exercise
price determined by the Combined Board. Employees, directors, consultants and
advisers are all eligible to receive options under the 1998 Stock Option Plan.

     The Combined Board has complete discretion to determine which eligible
individuals are to receive option grants, the time of those grants, the number
of shares granted pursuant to options (subject to a 500,000 per individual limit
and an aggregate limit of 1,000,000) the status of any granted option as an
incentive stock option or a non-statutory stock option under U.S. tax laws, the
vesting schedule to be in effect for the option grant, the latest date on which
an option may be exercised (which in no case will be later than ten years from
the date the option is granted) and the elimination of statutory preemptive
rights upon any issuance of options or underlying shares.

     The option agreements entered into under the 1998 Stock Option Plan provide
that the exercise price for the shares is to be paid in cash.

     In the event of an acquisition of Starboard Cruise Services, whether by
merger, stock purchase or asset sale, each option which is not to be assumed by
the successor corporation or replaced by a replacement award will automatically
accelerate in full and become vested. The accelerated awards will then terminate
upon the consummation of the merger, stock sale or asset sale.

     The Combined Board has the authority to effect the cancellation of
outstanding options, with the consent of the participant, and cause the company
to enter into another option agreement with such participant for the same or
another number of shares.

     The Combined Board may amend or terminate the 1998 Stock Option Plan at any
time, subject to any required shareholder approval and without the consent of
any grantees so long as such parties are not adversely affected.

                                       60
<PAGE>   65

                       PRINCIPAL AND SELLING SHAREHOLDERS

     The following table sets forth certain information regarding the beneficial
ownership of our common shares as of July 31, 1999 and as adjusted to reflect
the sale of the shares offered hereby (assuming no exercise of the underwriter's
over-allotment option) by (i) each person who is known by us to own beneficially
more than five percent (5%) of our outstanding common shares, (ii) our chief
executive and our four other most highly compensated officers for the fiscal
year ended December 31, 1998, and (iii) all directors and executive officers as
a group. This table gives effect to the 250 for 1 common share split which will
occur immediately before this offering. Unless otherwise indicated below, to our
knowledge, all persons listed below have sole voting and investment power with
respect to their common shares, except to the extent authority is shared by
spouses under applicable law.

     Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. The address for those listed below is c/o Berkshire
Cruise Holdings LLC, One Boston Place, Boston, Massachusetts 02108-4401. Except
as indicated by footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power with respect to
all common shares shown as beneficially owned by them. The number of common
shares outstanding used in calculating the percentage for each listed person
includes the common shares underlying options held by such persons that are
exercisable within 60 days of July 31, 1999, but excludes common shares
underlying options held by any other person. Percentage of beneficial ownership
is based on 24,217,000 common shares outstanding as of July 31, 1999, and
common shares outstanding after completion of this offering.

<TABLE>
<CAPTION>
                                                                                  PERCENTAGE OF
                                     SHARES                      SHARES           COMMON SHARES
                                  BENEFICIALLY     SHARES     BENEFICIALLY     BENEFICIALLY OWNED
                                     OWNED         BEING         OWNED        ---------------------
                                    PRIOR TO      OFFERED      AFTER THE      PRIOR TO    AFTER THE
                                    OFFERING       HEREBY       OFFERING      OFFERING    OFFERING
    NAME OF BENEFICIAL OWNER      ------------    --------    ------------    --------    ---------
<S>                               <C>             <C>         <C>             <C>         <C>
Principal and Selling
  Shareholders:
Berkshire Cruise Holdings
  LLC(a)........................   14,990,250                                    62%           %

Executive Officers and
  Directors:
Joel E. Cutler(b)...............   14,990,250                                    62%           %
J.P. Miquel(c)..................      343,250                                     *           *
Philip L. Levine................    4,434,250                                    18%           %
Jerry Chafetz(d)................      379,250                                     *           *
Jorge A. Fernandez(e)...........      128,000                                     *           *
Bradley M. Bloom(f).............   14,990,250                                    62%           %
David P. Fialkow(b).............   14,990,250                                    62%           %
Steven S. Fischman(g)...........           --                                    --          --
Randy Peeler(f).................   14,990,250                                    62%           %
Leonard A. Schlesinger(h).......           --                                    --          --
All Executive Officers and
  Directors as a group (11)
  persons.......................   20,275,000                                    84%           %
</TABLE>

                                       61
<PAGE>   66

-------------------------
 *   Less than one percent.

(a)  Berkshire Fund IV, L.P., Berkshire Fund V, L.P. and Berkshire Investors
     LLC, which are all affiliated with Berkshire Partners LLC, together hold a
     controlling interest in Berkshire Cruise Holdings LLC, and may therefore be
     deemed to have the power to vote or dispose of the common shares held
     directly by Berkshire Cruise Holdings LLC. Berkshire Fund IV, L.P.,
     Berkshire Fund V, L.P. and Berkshire Investors LLC disclaim beneficial
     ownership of any such shares in which they do not have a pecuniary
     interest.

(b)  Includes 14,990,250 common shares held by Berkshire Cruise Holdings LLC.
     Messrs. Cutler and Fialkow are each a member of the Board of Managers and
     an officer of Berkshire Cruise Holdings LLC. They are each a Co-Managing
     Member and Co-Chairman of F.C. Cruise Holdings LLC, which is, in turn, a
     member of Berkshire Cruise Holdings LLC. They are also limited partners of
     Berkshire Fund IV, L.P. Messrs. Cutler and Fialkow disclaim beneficial
     ownership of any common shares in which they do not have a pecuniary
     interest.

(c)  Includes 83,500 common shares that may be acquired upon exercise of
     outstanding options that vest on September 17, 1999.

(d)  Includes 83,500 common shares that may be acquired upon exercise of
     outstanding options that vest on September 17, 1999.

(e)  Mr. Fernandez resigned as of September 30, 1999. Includes 50,000 common
     shares that may be acquired upon exercise of outstanding options.

(f)   Includes 14,990,250 common shares held by Berkshire Cruise Holdings LLC.
      Messrs. Bloom and Peeler are each a member of the Board of Managers of and
      an officer of Berkshire Cruise Holdings LLC. Berkshire Fund IV, L.P.,
      Berkshire Fund V, L.P. and Berkshire Investors together hold a controlling
      interest in Berkshire Cruise Holdings LLC, and may therefore be deemed to
      have the power to vote or dispose of the common shares held directly by
      Berkshire Cruise Holdings LLC. Messrs. Bloom and Peeler are each members
      of Fourth Berkshire Associates LLC, the general partner of the Berkshire
      Fund IV; members of Fifth Berkshire Associates LLC, the general partner of
      Berkshire Fund V; and members of Berkshire Investors LLC. Mr. Bloom is
      also a Managing Director of each Fourth Berkshire Associates LLC, Fifth
      Berkshire Associates LLC and Berkshire Investors LLC. Messrs. Bloom and
      Peeler disclaim beneficial ownership of any common shares in which they do
      not have a pecuniary interest.

(g)  Mr. Fischman indirectly holds an interest in Berkshire Cruise Holdings LLC
     but does not have or share voting or investment power with respect to
     common shares directly beneficially held by Berkshire Cruise Holdings LLC.

(h)  Mr. Schlesinger is a member of Berkshire Cruise Holdings LLC but does not
     have or share voting or investment power with respect to common shares
     directly beneficially held by Berkshire Cruise Holdings LLC.

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                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SHAREHOLDERS AGREEMENT

     In connection with our capitalization and the acquisition of Greyhound
Leisure Services and the Onboard Group, all of our shareholders entered into a
Shareholders Agreement. All shareholders who subsequently acquired our shares
also entered into the Shareholder Agreement. Berkshire Cruise Holdings LLC is a
party to this Agreement. Each of our Supervisory Directors and Mr. Cutler has
either a direct or indirect interest in Berkshire Cruise Holdings LLC. This
Shareholders Agreement:

     - Requires all shareholders to vote in favor of transfers which the
       Shareholders Agreement permits, to vote against transfers which the
       Shareholders Agreement prohibits, to vote to set the number of directors
       at a number specified by a majority of the voting interest of shares
       originally issued to Berkshire Cruise Holdings LLC, to vote for directors
       specified by three groups of shareholders (i.e., the management
       investors, the subscriber investors and Berkshire Cruise Holdings LLC),
       to vote to cause one of our subsidiaries to purchase the shares of New
       York Life Insurance Company, The Northwestern Mutual Life Insurance
       Company and American Home Assurance Company under their Put Agreements
       and to approve changes to our Articles of Association in the event of a
       public offering.

     - Grants shareholders a right of first refusal on the sale of shares by any
       other shareholder, subject to limited exceptions;

     - Grants shareholders a "tag along" right on the sale of any shares by any
       other shareholder. For example, if one shareholder wanted to sell 50% of
       its shares, other shareholders would have the right to have 50% of their
       shares included in the same sale, subject to pro rata reductions if all
       the shares desired to be sold could not be included in the sale. There
       are limited exceptions to these tag along rights;

     - Grants Berkshire Cruise Holdings LLC (or affiliated successors to its
       share ownership) the right to require other shareholders to sell their
       shares in a transaction in which all Berkshire Cruise Holdings LLC shares
       are sold;

     - Grants Starboard Cruise Services the right to repurchase shares from any
       employee shareholder at the termination of employment;

     - Grants all shareholders preemptive rights over most issuances of equity
       securities (including issuances to strategic investors, issuances to
       employees up to 5% and a public offering) with limited exceptions; and

     - Grants demand registration rights to three groups of shareholders and
       "piggyback" registration rights to all shareholders.

     Except for the registration rights, the Shareholders Agreement provisions
listed above will terminate upon the consummation of this offering.

     The Shareholders Agreement also provides that Berkshire Partners LLC or a
designated affiliate (as defined in the Shareholders Agreement) is entitled to
an investment banking fee of a percentage of any future financing it arranges
following the acquisitions of Greyhound Leisure Services and the Onboard Group.
The acquisition of our predecessor, Greyhound Leisure Services, and the
subsequent acquisition of Onboard Group were arranged by Berkshire Partners LLC.
The Shareholders Agreement provides further that Berkshire Partners LLC or a
designated affiliate is entitled to an annual management fee of $400,000 per
year. In connection with this annual management fee, we have entered into a
management agreement with Berkshire Cruise Holdings LLC and F.C. Capital
Partners LLC. See "-- Management and Consulting Agreements". The Shareholders
Agreement also required us to pay Berkshire Partners LLC a $1.5 million fee upon
the closing of the acquisition of

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Greyhound Leisure Services. We paid this fee pursuant to the Fee Agreements our
subsidiary, Cruise Line Holdings Co., entered into with Berkshire Partners LLC
and F.C. Capital Partners LLC. See "Management -- Compensation
Committee -- Interlocks and Insider Participation".

MANAGEMENT EQUITY HOLDINGS

     Joel E. Cutler, our Chairman and Chief Executive Officer, and William J.
Fitzgerald, our Acting Interim Chief Financial Officer, each have an indirect
interest in Berkshire Cruise Holdings LLC. See " -- Shareholders Agreement".

     In connection with our capitalization, J.P. Miquel, a Managing Director and
executive officer, entered into a Management Stock Subscription Agreement dated
September 15, 1998 with us, which provided for the sale of 259,750 common shares
(as adjusted for the 250 for 1 common share split which will occur immediately
before this offering) at an aggregate purchase price of $500,000. On this same
date, also in connection with our capitalization, Berkshire Partners LLC on
behalf of certain members of the management of Greyhound Leisure Services
purchased 415,750 common shares for an aggregate purchase price of $800,000.
Under a Purchase and Sale Agreement, dated November 4, 1998, Jorge A. Fernandez,
a former executive officer, purchased 78,000 common shares from Berkshire
Partners LLC.

     In addition, in connection with the acquisition of the Onboard Group as
part of the consideration for the shares of these companies, we issued (through
a series of transaction involving our subsidiaries) 4,434,250 common shares to
Philip L. Levine, a director and executive officer, and 295,750 common shares to
Jerry Chafetz, a Managing Director and executive officer, (in each case as
adjusted for the 250 for 1 common share split which will occur immediately
before this offering).

PUT AGREEMENTS

     New York Life Insurance Company, The Northwestern Mutual Life Insurance
Company and American Home Assurance Company have each purchased 833,250 common
shares. These shareholders have also purchased from one of our subsidiaries 15%
senior subordinated notes in the aggregate amount of $25.2 million. As an
inducement for these shareholders to purchase our senior subordinated notes, the
subsidiary entered into a Put Agreement with each of them. Under the Put
Agreements, these shareholders may cause the subsidiary at any time to
repurchase all, or any portion, of their common shares at a price equal to their
cost of the shares, or approximately $1.925 per share (as adjusted for share
splits and dividends). The put right, or the right to cause the subsidiary to
repurchase these common shares, will expire on September 15, 2006 or, if
earlier, upon the happening of specified liquidity events. These liquidity
events include a public offering of at least 25% of our shares, subject to some
conditions, the sale of all our common shares to a non-affiliate or the sale of
the subsidiary to a non-affiliate (whether accomplished by a sale of shares, a
sale of substantially all of its assets or a merger). Under the Put Agreements,
the subsidiary is required to give these shareholders written notice of the
occurrence of a liquidity event and they may exercise their put rights within 20
days following delivery of such notice. The Put Agreements will terminate upon
the expiration of the notice period related to this offering. While this
offering will trigger the put rights under the Put Agreements, we do not expect
that these shareholders will exercise their respective put rights.

LEASE ARRANGEMENT WITH MEDIA HOLDINGS

     Through our subsidiaries, Onboard Media and Cruise Management
International, we have an agreement with Media Holdings, Ltd. for the lease of
an office building. Media Holdings is owned directly or indirectly by two of our
managing directors and executive officers, Philip Levine and Jerry Chafetz, and
by several of our shareholders. The term of the lease is from April 30, 1996
through

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April 30, 2006 and requires annual rental payments of $250,000 subject to annual
adjustments plus occupancy costs, including property taxes, utilities and
repairs and maintenance. For the period from September 18, 1998 through December
31, 1998, we made payments to Media Holdings, Ltd. amounting to approximately
$66,563.

MANAGEMENT AND CONSULTING AGREEMENTS

     In connection with the acquisition of Greyhound Leisure Services and the
On-Board Group, we entered into a Management Agreement with Berkshire Cruise
Holdings LLC which we intend to amend as of January 1, 1999. At the time of this
amendment, we will also enter into the consulting agreement with F.C. Capital
Partners LLC for Joel E. Cutler's services. For information regarding our
consulting agreements with our directors and executive officers, please see
"Management -- Consulting Agreement with F.C. Capital Partners LLC for Joel E.
Cutler's Services", "Management -- Consulting Agreement with F.C. Capital
Partners LLC for William J. Fitzgerald's Services" and
"Management -- Compensation Committee -- Interlocks and Insider Participation".

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                          DESCRIPTION OF CAPITAL STOCK

GENERAL

     We were incorporated under the laws of The Netherlands as a private limited
liability company (besloten vennootschap met beperkte aansprakelijkheid or B.V.)
by a deed dated September 10, 1998, as amended. Our shareholders, pursuant to a
unanimous written consent, resolved to amend and restate our Articles of
Association to become a public limited liability company (naamloze vennootschap
or N.V.). We have our corporate seat in Amsterdam, The Netherlands, with our
principal executive offices at Strawinskylaan 3105, 7th Floor, 1077 ZX
Amsterdam, The Netherlands. We are registered under no. 33305952 with the trade
register at the Chamber of Commerce in Amsterdam, The Netherlands. Provisions of
our Articles of Association (a copy of which, together with an English
translation, has been included as an exhibit to the Registration Statement of
which this prospectus forms a part) and selected provisions of Dutch law are
summarized below. The following summary does not purport to be complete and is
qualified in its entirety by reference to the Articles of Association and such
law. The full text of our Articles of Association is available, in the Dutch and
English languages, at the address referred to above.

SHARE CAPITAL

     After giving effect to the 250 for 1 common share split which will occur
immediately before this offering, our authorized share capital is 120,000,000
shares, consisting of 120,000,000 common and preferred shares, each with a par
value of EUR .01. As of July 31, 1999, 24,000,000 common shares were
outstanding, assuming the share split had already taken place, and there were 21
shareholders of record. Shares may be issued only in registered form.

DIVIDENDS

     Our Combined Board may decide to add the profits made in any financial year
to our reserves. Out of our share premium reserve and other reserves available
for shareholder distributions under Dutch law, the Combined Board may declare
distributions. In the event preference shares are issued, such shares would have
a preferential dividend before distributions on the common shares. We may not
pay dividends if the payment would reduce shareholders' equity below the paid-up
portion of the share capital, plus the reserves statutorily required to be
maintained. Upon the proposal of the Combined Board, the Management Board may
resolve to pay out interim dividends, subject to certain provisions of Dutch
law. The Management Board, upon the proposal of the Combined Board, may resolve
to pay a dividend in whole or in part in the form of common shares or other
assets. Dividends which have not been claimed within five years after becoming
payable shall be forfeited to the benefit of the company.

     We have not in the past declared or paid a cash dividend on our shares and
we do not intend to do so in the foreseeable future. Instead, we intend to
retain earnings to finance future operations and expansions, and to reduce
indebtedness. The payment of dividends by us to holders of our shares is
restricted by our senior credit facility. In the event that dividends are
declared, however, we expect that we would pay such dividends in U.S. dollars,
although we may declare dividends in other currencies. We will pay dividends on
shares to the person in whose name the shares are registered at the date fixed
for that purpose by the Management Board.

SHAREHOLDER MEETINGS AND VOTING RIGHTS

     Each shareholder has the right to attend general meetings of shareholders,
either in person or represented by a person holding a written proxy, to address
shareholder meetings, and to exercise voting rights, subject to the provisions
of the Articles of Association and applicable Dutch law. Our

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annual general meeting of shareholders will be held within six months after the
close of each financial year, in the municipality in which we have our official
seat, presently in Amsterdam, The Netherlands. Unless our Articles of
Association or the laws of The Netherlands otherwise require, resolutions of
general meetings of shareholders occurring outside Amsterdam are valid if the
entire share capital is present or represented (unless there are other persons,
such as pledgees or usufructuaries, that have rights to attend shareholders
meetings). We will hold extraordinary general meetings of shareholders as often
as the Combined Board deems necessary, or upon the written request of one or
more shareholders representing not less than 10% of the issued shares to the
Management Board specifying in detail the matters to be addressed at the
meeting.

     We will give notice of each meeting of shareholders by mail to registered
holders of our shares and other persons who by law are entitled to attend
meetings, at the address of each shareholder or other person as set forth in the
shareholder register at least 15 days before the meeting.

     Each share entitles its holder to cast one vote. Unless otherwise required
by the Articles of Association or Dutch law, resolutions of general meetings of
shareholders require the approval of an absolute majority of the votes cast.

ELECTION AND TENURE OF MANAGING DIRECTORS AND SUPERVISING DIRECTORS; POWER TO
REPRESENT AND BIND THE ISSUER.

     Our Management Board is entrusted with the management of our company. Our
Supervisory Board supervises and advises the Management Board. The Management
Board will have one or more members and the Supervisory Board will have one or
more members. The Supervisory Board and the Management Board vacancies will be
filled by a vote of shareholders at the first general meeting after such vacancy
occurs or is created. The Supervisory Board and the Management Board members are
appointed by the general meeting of shareholders from binding nominations for
each vacancy made by the Combined Board. Under the law of The Netherlands and
the Articles of Association, the shareholders may eliminate the binding effect
of nominations by a resolution passed by two-thirds of the votes cast at a
meeting of shareholders at which more than half of the issued capital of the
company is represented. The members of the Supervisory Board and Management
Board are each divided into three classes. These classes hold their seats for
three year terms, with one class of directors expiring in each successive year.

     Our Supervisory Directors and Managing Directors serve until the expiration
of their respective three year terms of office or their resignation, death or
removal, with or without cause, by the shareholders or, in the case of
Supervisory Directors, also upon reaching the mandatory retirement age of 72.
See "Management".

     The executive power of our company resides in the members of the Management
Board acting together. For purposes of representation of the company, members of
our Management Board have been divided into Class A and Class B members. Any
Class A member may represent the company individually. Any Class B member may
represent the company together with a Class A member. The Management Board may
execute (i) a power of attorney granting certain of our officers the power to
bind us individually on certain administrative day-to-day matters and (ii) a
power of attorney to our transfer agent and registrar to acknowledge transfers
of common shares. In addition, the Management Board, subject to approval of the
Combined Board, may designate any person to represent the company.

     Our Articles of Association provide that the Management Board and
Supervisory Board shall meet together in a Combined Meeting as the Combined
Board to approve actions requiring approval by the Combined Board. The Combined
Board shall meet as often as the Supervisory Board or Management Board shall
request.

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ADOPTION OF ANNUAL ACCOUNTS AND DISCHARGE OF MANAGEMENT LIABILITY

     The Management Board must prepare our annual accounts within five months
after the end of each fiscal year (unless the general meeting of shareholders
has extended this period by a maximum of six additional months by reason of
special circumstances). Within six months after the end of such financial year
(or within such additional time as is approved by our shareholders), the
Management Board must present the annual accounts to the general meeting of
shareholders, accompanied by the annual report.

     Adoption of our annual accounts by the general meeting of shareholders
discharges the members of the Management Board and the Supervisory Board from
liability in respect of the exercise of their duties during the financial year
concerned to the extent the actions taken by the boards during the year are
evident to the stockholders from a review of the annual accounts or otherwise
communicated to the shareholders, unless an explicit reservation is made by the
general meeting of shareholders and without prejudice to the provisions of Dutch
law relating to liability of members of supervisory boards and management boards
upon bankruptcy of a company pursuant to Sections 138 and 139 and Sections 140
and 149 of Book 2 of the Dutch Civil Code.

LIQUIDATION RIGHTS

     In the event of our dissolution and winding up, the assets remaining after
payment of all liabilities shall be distributed among the shareholders in
proportion to the par value of their share holdings and in accordance with the
relevant provisions of Dutch law.

ISSUE OF COMMON SHARES; PREEMPTIVE RIGHTS

     Until the fifth anniversary of the vote to convert into an N.V., the
Combined Board has the power to issue shares and grant share options, and to
determine the terms and conditions of share issuances and option issuances
pursuant to a delegation of power from the general meeting of shareholders. Each
time it expires, this delegation may be renewed for a maximum of five years.

     Unless limited or excluded by the general meeting of shareholders, each
holder of our common shares has a pro rata preemptive right to subscribe for any
newly issued common shares unless payment must be made other than in cash. The
general meeting of shareholders has the power to limit or exclude preemptive
rights in connection with new issuances of shares, and may authorize the
Combined Board, for a period of no more than five years, to limit or exclude
preemptive rights (if the Combined Board has been simultaneously designated as
having the authority to issue shares). The shareholders have delegated such
rights to the Combined Board until the fifth anniversary of the vote to convert
into an N.V. Each time it expires, this delegation may be renewed for a maximum
of five years.

ISSUE OF PREFERENCE SHARES; GRANT OF CALL OPTION

     Until the fifth anniversary of the vote to convert into an N.V., the
Combined Board has the power to issue preference shares pursuant to a delegation
of power from the general meeting of shareholders. Each time it expires, this
delegation may be renewed for a maximum of five years. The Combined Meeting may
grant a call option on preference shares, which will not exceed 100% of all
outstanding shares to an independent foundation established under Netherlands
law. See "Risk Factors -- Antitakeover Provisions in Our Articles of Association
Could Have Effects That Conflict with the Interests of Our Shareholders".

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ACQUISITION OF SHARES

     We may acquire shares in our own share capital, subject to certain
provisions of Dutch law and of our Articles of Association, if (i) the general
meeting of shareholders has given the Management Board authorization to do so
(which authorization shall be valid for no more than 18 months, and shall
specify the number of shares that may be acquired or the permitted price range);
(ii) our shareholder capital, reduced by the acquisition price, is not less than
the sum of the paid and called-up share capital and the reserves to be
maintained pursuant to Dutch law or the Articles of Association; (iii) the par
value of the shares that we and our subsidiaries already hold does not exceed
one-tenth of our issued share capital; and (iv) the Combined Board has proposed
such acquisition to the Management Board. Shares that we hold may not be voted
and may not participate in any distribution of profits or distribution of
surplus assets after liquidation. We may only acquire shares for a consideration
within the limits set by the general meeting.

CANCELLATION OF SHARES

     With the prior approval of the general meeting of shareholders, we may
cancel shares that we hold, provided that the cancellation may not cause the
paid up portion of the share capital to be reduced to less than one-fifth of the
authorized capital, and subject to certain statutory provisions.

AMENDMENT OF THE ARTICLES OF ASSOCIATION

     The general meeting of shareholders may resolve to amend the Articles of
Association at the proposal of, or with the prior approval of, the Combined
Board.

LIMITATIONS ON RIGHT TO HOLD OR VOTE SHARES

     There are currently no limitations imposed by Dutch law or by our Articles
of Association on the right of non-resident holders to hold or vote on their
shares.

LIABILITY OF DIRECTORS AND OFFICERS

     Our Articles of Association provide that we will, to the fullest extent
permitted by the law of The Netherlands, as amended from time to time,
indemnify, and may advance expenses to, each of our now acting and former
members of the Supervisory Board, members of the Management Board and officers,
whenever any such person is made a party, or threatened to be made a party, in
any action, suit or proceeding by reason of his or her service with us. Our
Articles of Association also provide that we may purchase and maintain
directors' and officers' liability insurance. We have obtained directors' and
officers' liability insurance in amounts we believe to be reasonable.

     We have also entered into indemnity agreements with Philip L. Levine and
Jerry Chafetz. The agreements provide that we will, to the fullest extent
permitted by law, indemnify Philip L. Levine and Jerry Chafetz, as the case may
be, if he is made a party, or threatened to be made a party, in any action, suit
or proceeding by reason of his service with us.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for our common shares will be The Bank of
New York.

LISTING

     Our common shares have been approved for listing on The Nasdaq Stock
Market's National Market under the trading symbol "CRUZ".

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                        SHARE CERTIFICATES AND TRANSFER

     Our common shares are available only in a form recorded in the name of the
holder in our share register. The transfer agent for our common shares, The Bank
of New York, maintains the book-entry share register for our shares which can be
traded in the U.S. in New York, New York. The registry of our shares which
cannot be traded in the U.S. without being entered in book entry form in our
U.S. register is held in The Netherlands by us or on our behalf. All of the
common shares to be sold in this offering will be initially represented by a
single global certificate held through Depositary Trust Corporation, or DTC, and
registered with the The Bank of New York, our New York transfer agent and
registrar, in the name of Cede & Co., the nominee of DTC. The common shares
listed in this offering will trade on The Nasdaq Stock Market's National Market.

     Persons who are not DTC participants may beneficially own common shares
held by DTC only through direct or indirect participants in DTC. So long as Cede
& Co., as the nominee of DTC, is the registered owner of the listed common
shares, Cede & Co., for all purposes will be considered the shareholder of
record. Because the beneficial owner of shares is not the registered owner, any
person owning a beneficial interest in the listed shares must rely on the
procedures of DTC and, if such person is not a participant in DTC, the
procedures of the DTC participant through which such person owns its interest
(i.e., such person's broker), to exercise any rights of a shareholder. We
understand that, under existing industry practice, in the event that you desire
to take any action with respect to shares registered to Cede & Co. in which you
hold a beneficial interest that Cede & Co., as the shareholder, is entitled to
take, Cede & Co. would authorize the participants through which you hold your
beneficial interest to take such action, and the participants would authorize
you to take such action or would otherwise act on your behalf upon your
instructions. Our listed common shares which may be traded on the Nasdaq may be
transferred on our books at the office of the New York transfer agent and
registrar. Certificates representing such tradable listed shares may be
exchanged or transferred at such office for certificates representing our common
listed shares of other authorized denominations. Such certificates, if not held
by our transfer agent or a DTC participant, will need to be returned to the DTC
System in order to trade such shares. Under Dutch law, the transfer of
registered shares requires a written instrument of transfer and written
acknowledgment by us of such transfer. Transfers of beneficial ownership made
through the DTC system will not require such an instrument.

     Although DTC has agreed to the procedures provided below in order to
facilitate transfers of our common shares among participants of DTC, DTC is
under no obligation to perform or continue to perform such procedures and such
procedures may be modified or discontinued at any time. We will not have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.

     DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of section 17A of the Exchange
Act. DTC was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. DTC participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations such as the
underwriters of this offering. Indirect access to the DTC system also is
available to indirect DTC participants such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a DTC
participant, either directly or indirectly.

     Because DTC can only act on behalf of DTC participants, who in turn act on
behalf of indirect DTC participants and certain banks, the ability of an owner
of a beneficial interest in the listed shares

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to pledge such interest to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of such interest, may be
limited by the lack of a definitive certificate for such interest. The laws of
some jurisdictions require that certain persons take physical delivery of
securities in definitive form. Consequently, the ability to transfer beneficial
interests in the listed shares to such persons may be limited. In addition,
beneficial owners of the listed shares through the DTC system will receive
dividend payments only through DTC participants.

     Investors who hold their shares through DTC will follow the settlement
practices applicable to U.S. corporate common shares, including for secondary
trading. The securities custody accounts of investors will be credited with
their holdings against payment of U.S. dollars in same-day funds on the
settlement date. To the extent you elect to remove your shares from the DTC
system, you will be charged a per share fee by our transfer agent for the
issuance of new certificates and the trading of such certificates will require a
separate written instrument of transfer and acknowledgment by the company. These
fees and requirements are not applicable for transfers of beneficial interests
within the DTC system, although brokerage or trading fees may apply.

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                      DESCRIPTION OF CERTAIN INDEBTEDNESS

CREDIT FACILITY

     Our subsidiaries entered into a five-year senior credit facility on
September 17, 1998 with Credit Suisse First Boston, NationsBank, N.A. and
various other banks and financial institutions and have amended the credit
facility on four subsequent dates. The subsidiaries entered into the credit
facility to finance our acquisition of Greyhound Leisure Services and the
subsequent acquisitions of the Onboard Group and the assets of Nuance Global
Ships as well as for other general corporate purposes. The credit facility
consists of term loans in an aggregate principal amount of $67.5 million and a
revolving credit facility of up to $35 million. The revolving credit facility
includes a sub-facility or up to $15 million for the issuance of letters of
credit. Direct borrowings under the revolving credit facility are subject to an
availability calculation based on the eligible borrowing base. At June 30, 1999,
there was $12.1 million of outstanding letters of credit and $12.1 million of
unused borrowing capacity under the revolving credit facility.

     Borrowings under the credit facility will bear interest at variable rates
(based on one of the subsidiary's leverage ratio as defined in the credit
facility) and may be maintained as Eurodollar loans or Alternate Base Rate loans
(defined in the credit facility, respectively) at the borrower's option.
Eurodollar loans bear interest at 2.25% to 3.5% in excess over the applicable
reserve adjusted Eurodollar Rate (as defined in the credit facility) and
Alternative Base Rate loans bear interest at 1% to 2.5% in excess of Credit
Suisse First Boston's base rate (as defined in the credit facility).

     The amounts borrowed under the revolving credit facility may be repaid and
reborrowed. The term loans under the facility will mature on September 17, 2003
with required prepayments beginning on August 31, 1999. We are required to use
50% of the net cash proceeds of some equity issuances including this offering
after paying off the junior subordinated note issued to Viad Corp. to repay the
term loans. In addition, we are required to use 100% of the net cash proceeds
from asset sales or the issuance of some indebtedness to repay the term loans.
All revolving loans incurred under the credit facility will mature on September
17, 2003.

     Our subsidiary that incurred the indebtedness is required to pay the
lenders under the credit facility a commitment fee, which ranges from 0.375% to
0.5% per annum based on its leverage ratio, payable on a quarterly basis in
arrears, on the average daily unused portion of the credit facility during the
preceding quarter. The subsidiary also is required to pay the lenders a standby
letter of credit participation fee based on the average daily aggregate undrawn
amount of all outstanding letters of credit during the preceding quarter (but
excluding any trade letters of credit in an aggregate face amount up to $2
million) at a rate equal to the applicable percentage used to determine the
interest rate on revolving credit borrowings comprised of Eurodollar loans. The
subsidiary is also required to pay the lenders a trade letter of credit
participation fee based on the average daily aggregate undrawn amount of all
outstanding trade letters of credit during the preceding quarter (but excluding
trade letters of credit to the extent the face amount exceeds $2 million) at a
rate equal to the excess of the applicable percentage used to determine the
interest rate on revolving credit borrowings comprised of Eurodollar loans over
1.25%. In addition, there is a fronting fee equal to 0.25% per annum on the
aggregate outstanding face amount of all outstanding letters of credit. In
connection with the credit facility, the subsidiary is also required to pay
Credit Suisse First Boston an administrative agent fee.

     The credit facility provides that all indebtedness is guaranteed and
secured by the tangible and intangible assets and the capital stock of each of
our subsidiaries, plus any present and future subsidiary guarantor.

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     The credit facility contains certain covenants limiting, among other
things, additional debt, additional liens, dividends and distributions,
transactions with affiliates, mergers and consolidations, liquidations and
dissolutions, sales of assets, dividends, capital expenditures, investments,
loans and advances, prepayments and modifications of debt instruments and other
matters customarily restricted in such agreements. Under the terms of the credit
facility, the subsidiary that incurred the indebtedness is required to compute
financial ratios and certify as to other covenants on a quarterly or periodic
basis. The credit facility also contains customary events of default, such as
payment defaults, breaches of representations and warranties, covenant defaults,
events of bankruptcy and insolvency, failure of any guaranty or security
document supporting the credit facility to be in full force and effect, change
of control of the parent of the subsidiary that incurred the indebtedness (as
defined in the credit facility) and change of ownership in the shares of the
subsidiary that incurred the indebtedness.

     The foregoing summary of the material provisions of the credit facility, as
amended, is qualified in its entirety by reference to all of the provisions of
the credit facility, which has been filed as an exhibit to the registration
statement of which this prospectus forms a part. See "Where You Can Find More
Information".

SENIOR SUBORDINATED NOTES

     In connection with our acquisition of Greyhound Leisure Services and the
Onboard Group, one of our subsidiaries issued 15% senior subordinated notes in
an aggregate principal amount of $25.2 million to the following parties, each of
whom is also a shareholder in our company: New York Life Insurance Company, The
Northwestern Mutual Life Insurance Company and American Home Assurance Company.
The senior subordinated notes are due September 15, 2006 and are senior
subordinated unsecured obligations of the subsidiary. The interest on the senior
subordinated notes is payable semiannually in arrears, may be capitalized for
the first three years and is payable in cash beginning in the fourth year. The
senior subordinated notes are also subject to a cash payment commencing on March
15, 2004 in the event the accrued and unpaid interest exceeds a certain amount.
In the event that this cash payment is required, the holders of the notes may
require the subsidiary to purchase up to $10 million of principal of the senior
subordinated notes at a premium of 5.25%. Fifty percent (50%) of the then
outstanding principal amount of the senior subordinated notes will mature on
September 15, 2005, with the balance due September 15, 2006.

     The mandatory prepayment of the junior subordinated note upon this offering
will require the prepayment of the senior subordinated notes. We intend to use a
portion of the net proceeds from this offering to repay the senior subordinated
notes, all accrued interest and all prepayment fees. Before September 15, 2001,
the senior subordinated notes may be prepaid in the event of specific qualifying
events, including this offering. After September 15, 2001, the senior
subordinated notes may be prepaid at any time. Upon prepayment, the subsidiary
is required to repay the outstanding principal and all accrued interest plus a
prepayment compensation fee. In the event of a prepayment before September 15,
2001, if the principal amount of the payment is equal to 50% or less of the
outstanding principal of the senior subordinated notes, the prepayment
compensation fee is a percentage ranging from 10.5% to 14% of the prepaid
principal based on the date of the payment. If the principal amount of the
payment is greater than 50% of the outstanding principal immediately before the
payment of the senior subordinated notes, the prepayment compensation fee is the
sum of (a) a percentage ranging from 10.5% to 14% (based on the date of the
payment) of 50% of the principal amount of the notes outstanding immediately
prior to the payment and (b) the excess of the present value of the then
remaining scheduled payments of principal and interest that would have been
payable (using a specified discount rate) over the prepaid principal calculated
with respect to any principal being repaid in excess of 50% of the principal
amount outstanding immediately before

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<PAGE>   78

the payment. For prepayments on or after September 15, 2001, the prepayment
compensation fee is a percentage ranging from 1.75% to 8.75%.

     Upon a change in control (as defined in the Senior Subordinated Note
Agreement), each holder of the senior subordinated notes will have the right to
require the subsidiary to repurchase the notes at 101% of the principal amount
thereof plus accrued and unpaid interest to the repurchase date. The Senior
Subordinated Note Agreement also contains covenants that, among other things,
limit (1) consolidations, mergers or transfers of assets, (2) payment of
dividends on and redemptions of capital stock by the subsidiary and its
subsidiaries, (3) incurrence of additional debt by our subsidiaries, (4)
prepayments of other debt, including the junior subordinated note and (5)
transactions with affiliates.

     In connection with the issuance of the senior subordinated notes, the
issuing subsidiary has entered into a put agreement with each of the holders of
the notes. See "Certain Relationships and Related Transactions -- Put
Agreements".

     The foregoing summary of the material provisions of the senior subordinated
notes is qualified in its entirety by reference to all of the provisions of the
senior subordinated notes, which has been filed as an exhibit to the
registration statement of which this prospectus forms a part. See "Where You Can
Find More Information".

JUNIOR SUBORDINATED NOTE

     We, through one of our subsidiaries, issued to Viad Corp. a 12% junior
subordinated note in an aggregate principal amount of $10 million in connection
with our acquisition of Greyhound Leisure Services from Viad. The junior
subordinated note is due May 15, 2009 and is a junior subordinated unsecured
obligation of the subsidiary. The interest on the junior subordinated note is
payable semiannually commencing March 1, 1999 and the interest payments may be
capitalized through maturity of the note with some exceptions. The terms of the
note provide that the subsidiary will be obligated to make a cash payment after
March 1, 2004 in the event the accrued and unpaid interest exceeds a certain
amount. The terms of the junior subordinated note require mandatory prepayment
upon the consummation of an initial public offering or upon a change of control
(as defined under the terms of note.) We intend to use the net proceeds from
this offering to repay the junior subordinated note and all accrued interest.

     The foregoing summary of the material provisions of the junior subordinated
note is qualified in its entirety by reference to all of the provisions of the
junior subordinated note, which has been filed as an exhibit to the registration
statement of which this prospectus forms a part. See "Where You Can Find More
Information".

PERFORMANCE AND SURETY BONDS

     From time to time, we provide performance and surety bonds to various
parties, including government agencies, in connection with our bonded
warehouses, our importing and exporting activities and the performance of our
various contractual obligations. As of July 31, 1999, we had outstanding
performance and surety bonds in the aggregate amount of approximately
$6,728,000.

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                        SHARES ELIGIBLE FOR FUTURE SALE

     Sales of substantial amounts of our common shares in the public market
could adversely affect prevailing market prices of our common shares.
Furthermore, since no shares held by our existing shareholders will be available
for sale shortly after this offering because of the contractual and legal
restrictions on resale described below, sales of substantial amounts of common
shares in the public market after these restrictions lapse could adversely
affect the prevailing market price and our ability to raise equity capital in
the future.

     Upon completion of this offering, we will have outstanding an aggregate of
     common shares, assuming no exercise of the underwriter's over-allotment
option and no exercise of outstanding options. Of these shares, all of the
shares sold in this offering will be freely tradable without restriction or
further registration under the Securities Act, unless the shares are purchased
by "affiliates" as that term is defined in Rule 144 under the Securities Act.
The remaining      common shares held by existing shareholders are "restricted
securities". Restricted sections may be sold in the public market following
registration or pursuant to an exemption from registration under Rule 144
promulgated under the Securities Act, which rules are summarized below.

LOCK-UP AGREEMENTS

     All of our officers, directors and a majority of our shareholders have
signed lock-up agreements under which they agreed not to transfer or dispose of,
directly or indirectly, or hedge any common shares or any securities convertible
into or exercisable or exchangeable for shares of common shares, for a period of
180 days after the date of this prospectus. Transfers or dispositions can be
made sooner with the prior written consent of Credit Suisse First Boston.

     Subject to the provisions of Rule 144, 144(k) and 701, restricted shares
totaling      will be available for sale in the public market, subject in the
case of shares held by affiliates to the volume restrictions contained in those
rules,   days after the date of this prospectus.

RULE 144

     In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common shares for at least one year, including the holding period of any prior
owner other than an affiliate, would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of:

     - 1% of the number of common shares then outstanding, which will equal
       approximately      shares immediately after this offering; or

     - the average weekly trading volume of the common shares of the Nasdaq
       National Market during the four calendar weeks preceding the filing of a
       notice on Form 144 with respect to such sale.

     Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us.

RULE 144(k)

     Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at anytime during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell those shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.

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RULE 701

     In general, under Rule 701 of the Securities Act as currently in effect,
each of our employees, consultants or advisors who purchases shares from us
pursuant to securities, prior to our public offering, issued under a
compensatory stock plan or other written agreement is eligible to resell such
shares 90 days after the effective date of this offering in reliance on Rule
144, but without compliance with some of the restrictions, including the holding
period, contained in Rule 144.

REGISTRATION RIGHTS

     The parties to the Shareholders Agreement have rights to have their shares
registered after this offering. The Shareholder Agreement provides that some of
our shareholders have demand registration rights. Holders of at least 25% of the
shares originally issued in connection with the formation of our company have
the right, exercisable between the first and fifth anniversaries of this
offering and subject to various conditions, to require us to register any or all
of their common shares under the Securities Act on Form S-1 on three occasions
at our expense. In addition, if we are able to file a registration statement on
Form S-3, the holders of at least 25% of the shares originally issued in
connection with the acquisition of the Onboard Group and the holders of at least
25% of the shares originally issued in connection with the issuance of the
senior subordinated notes each have the right, exercisable between the first and
fifth anniversaries of this offering and subject to various conditions, to
require us to register any or all of their common shares under the Securities
Act on Form S-1 on two occasions at our expense. In addition, if we are able to
file a registration statement on Form S-3, the holders of at least 25% of the
shares originally issued in connection with the issuance of the senior
subordinated notes are entitled to an additional registration subject to
specific restrictions and limitations.

     The Shareholder Agreement also provides for "piggyback" registration
rights. The piggyback registration rights provide that any holder of registrable
shares subject to the Shareholders Agreement may request the inclusion of such
shares at our expense whenever we propose to register (whether for our account
or for the account of any holder of our common shares) any shares on a form
which would permit the registration of registrable shares for sale to the public
in a public offering other than in a registration made in conjunction with an
offering relating to an employee benefit plan or dividend reinvestment plan or
an acquisition or merger. In addition, the piggyback registration rights do not
apply in an initial public offering unless the holders of the shares originally
issued in connection with the formation of our company sell their common shares,
in which case the holders of the shares originally issued in connection with the
acquisition of the Onboard Group and the holders of the shares originally issued
in connection with the issuance of the senior subordinated notes may also sell
their common shares.

     In connection with any registration of registrable securities under the
Shareholders Agreement, we have agreed to indemnify each seller, any controlling
person (and their respective director or indirect partners, advisory board
members, directors, officers, trustees, members and shareholders) and each other
person who controls any such seller or holder, against various liabilities,
including liabilities under the Securities Act and Exchange Act. In addition,
all parties to the Shareholders Agreement have agreed not to transfer any
shares, except for some permitted transfers under the Shareholders Agreement,
for a period beginning seven days prior to the effective date of any
registration statement and continuing for a period of 180 days thereafter.

STOCK PLANS

     Promptly after this offering, we intend to file a registration statement
under the Securities Act covering                common shares reserved for
issuance under our 1998 Stock Option Plan. This registration statement is
expected to be filed as soon as practicable after the effective date of this
offering.

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     At July 31, 1999, options to purchase 1,000,000 shares were issued and
outstanding under our 1998 Stock Option Plan and otherwise. All of these shares
will be eligible for sale in the public market from time to time, commencing 90
days after the effective date of this offering, subject to vesting provisions,
Rule 144 volume limitations applicable to our affiliates and, in the case of
some of the options, the expiration of lock-up agreements.

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                                    TAXATION

NETHERLANDS TAXATION

     Each investor should consult his or her own tax advisor with respect to the
tax consequences of an investment in our common shares. The discussion of
certain Netherlands taxes set forth below is included for general information
only and does not address every potential tax consequence of an investment in
common shares under the laws of The Netherlands. The following summary of Dutch
tax considerations is limited to the tax implications for an individual or
corporate owner of common shares who owns less than 10% of the voting power of
our company, a "holder of common shares".

WITHHOLDING TAX

     Dividends distributed by our company generally are subject to a Netherlands
withholding tax imposed at a rate of 25%. The expression "dividends distributed
by the company" as used in this section includes, among other things, the
following:

          (i) distributions in cash or in kind, deemed and constructive
     distributions and repayments of paid-in capital not recognized as capital
     for Netherlands dividend withholding tax purposes;

          (ii) liquidation proceeds, proceeds of redemption of common shares or,
     as a general rule, consideration for the repurchase of common shares by our
     company in excess of the average paid-in capital recognized as capital for
     Netherlands dividend withholding tax purposes;

          (iii) the par value of shares issued to a holder of common shares or
     an increase of the par value of common shares, as the case may be, to the
     extent that it does not appear that a contribution, recognized for
     Netherlands dividend withholding tax purposes, has been made or will be
     made; and

          (iv) partial repayment of paid-in capital, recognized for Netherlands
     dividend withholding tax purposes, if and to the extent that there are net
     profits (zuivere winst), unless the general meeting of shareholders of the
     company has resolved in advance to make such repayment and provided that
     the par value of the common shares concerned has been reduced by an equal
     amount by way of an amendment of the Articles of Association.

     If a holder of common shares is resident in a country other than The
Netherlands and if a double taxation convention is in effect between The
Netherlands and such country, such holder of common shares may, depending on the
terms of such double taxation convention, be eligible for a full or partial
exemption from, or refund of, Netherlands dividend withholding tax. Prospective
investors in common shares should consult their own advisors to determine
whether they are entitled to the benefits of a double taxation convention and,
if so, what procedures must be followed in order to claim those benefits.

     Residents of the United States that qualify for, and comply with the
procedures for claiming, benefits under the income tax convention between The
Netherlands and the United States, known as the U.S./NL Income Tax Treaty,
generally are eligible for a reduction of Netherlands withholding tax on
dividend income to 15%. A holder of common shares may qualify for benefits under
the U.S./ NL Income Tax Treaty if the holder (i) is the beneficial owner of the
dividends; (ii) is a resident of the United States as defined for purposes of
the U.S./NL Income Tax Treaty; (iii) does not carry on a business in The
Netherlands through a permanent establishment situated in The Netherlands, or
does not perform independent personal services from a fixed base situated in The
Netherlands and the holding in respect of which the dividends are paid forms
part of the business property of such permanent establishment or pertains to
such fixed base; and (iv) is entitled to the benefits of the U.S./NL Income Tax
Treaty pursuant to the limitation on benefits provision (Article 26) of the
U.S./NL Income Tax Treaty. The U.S./NL Income Tax Treaty provides, if certain
conditions are

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met, an exemption from taxation for dividends received by exempt pension trusts
and exempt organizations, as defined therein. Except in the case of exempt
organizations (as defined in Article 36 of the U.S./NL Income Tax Treaty), the
reduced dividend withholding rate can be applied at source upon payment of the
dividends, provided that the proper Dutch forms have been filed in advance of
the payment.

TAXES ON INCOME AND CAPITAL GAINS

     A holder of common shares will not be subject to Netherlands taxes on
income or capital gains in respect of dividends distributed by us or in respect
of any gain realized on the disposal of common shares (other than the
withholding tax described above), provided that:

          (i) such holder is neither resident nor deemed to be resident in The
     Netherlands; and

          (ii) such holder does not have an enterprise or an interest in an
     enterprise that is, in whole or in part, carried on through a permanent
     establishment or a permanent representative in The Netherlands and to which
     enterprise or part of an enterprise, as the case may be, the common shares
     belong or are attributable; and

          (iii) such holder does not have a substantial interest or a deemed
     substantial interest in the company or, in the event that such holder does
     have or is deemed to have such interest, it forms part of the assets of an
     enterprise; and

          (iv) such holder is not entitled to a share in the profits of an
     enterprise that is effectively managed in the Netherlands, other than
     through ownership of securities or through employment, to which enterprise
     the common shares belong or are attributable.

     Common shares will generally not form part of a substantial interest if the
holder of such shares, alone or together with his spouse, certain other
relatives (including foster children) and/or certain persons sharing his or her
household, does not own, whether directly or indirectly: (a) at least five
percent of the issued share capital of any class of shares of our company; (b)
option rights to acquire shares in our company representing at least five
percent of the issued share capital of any class of shares of our company; or
(c) profit participating certificates entitling the holder to at least five
percent of the annual profit of our company, or entitling the holder to at least
five percent of the liquidation proceeds upon liquidation of our company. A
deemed substantial interest is, for example, present if part of a substantial
interest has been disposed of, or is deemed to have been disposed of, on a
non-recognition basis. If there is any doubt whether the "substantial interest"
regulations may apply, each prospective holder of common shares should consult
his or her tax advisor regarding the tax consequences of such holding.

NET WEALTH TAX

     A holder of common shares will not be subject to Netherlands net wealth tax
in respect of the common shares provided that such holder is not an individual
or, if he or she is an individual, provided that:

          (i) such holder is neither resident nor deemed to be resident in The
     Netherlands; and

          (ii) such holder does not have an enterprise or an interest (other
     than as a shareholder) in an enterprise that is, in whole or in part,
     carried on through a permanent establishment or a permanent representative
     in The Netherlands and to which enterprise or part of an enterprise, as the
     case may be, the common shares belong or are attributable; and

          (iii) such holder is not entitled to a share in the profits of an
     enterprise that is effectively managed in The Netherlands, other than
     through ownership of securities or through employment, to which enterprise
     the common shares belong or are attributable.

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GIFT AND INHERITANCE TAXES

     No gift or inheritance taxes will arise in The Netherlands with respect to
an acquisition of common shares by way of a gift by, or on the death of, a
holder of common shares who is neither resident nor deemed to be resident in The
Netherlands, unless:

          (i) such holder at the time of the gift has or at the time of his
     death (a) had an enterprise or an interest (other than as a shareholder) in
     an enterprise that is or was, in whole or in part, carried on through a
     permanent establishment or a permanent representative in The Netherlands
     and to which enterprise or part of an enterprise, as the case may be, the
     common shares belong or are attributable, or (b) was entitled to a share in
     the profits of an enterprise that is effectively managed in The
     Netherlands, other than through ownership of securities or through
     employment, to which enterprise the common shares belong or are
     attributable; or

          (ii) in the case of a gift of common shares by an individual who at
     the time of the gift was neither resident nor deemed to be resident in The
     Netherlands, such individual dies within 180 days after the date of gift,
     while being resident or deemed to be resident in The Netherlands.

     For purposes of Netherlands gift and inheritance tax, an individual who
holds the Netherlands nationality will be deemed to be resident in The
Netherlands if he or she has been resident in The Netherlands at any time during
the ten years preceding the date of the gift or death. For purposes of
Netherlands gift tax, an individual will be deemed to be resident in The
Netherlands if he or she has been resident in The Netherlands at any time during
the twelve months preceding the date of the gift. Applicable tax treaties may
override deemed residency.

CAPITAL TAX PAYABLE BY THE COMPANY

     Netherlands capital tax will be payable by our company at the rate of one
percent of any contribution to the capital of the company.

OTHER TAXES AND DUTIES

     No Netherlands registration tax, stamp duty or any other similar
documentary tax or duty other than court fees will be payable in The Netherlands
in respect of or in connection with the subscription, issue, placement,
allotment or delivery of the common shares.

UNITED STATES TAXATION

     The following discussion summarizes certain U.S. federal tax consequences
of the acquisition, ownership and disposition of common shares by a U.S.
Holder -- that is, a beneficial owner of common shares that is (i) a citizen or
resident of the United States, a corporation organized under the laws of the
United States or any state thereof or the District of Columbia, or any person
that will otherwise be subject to U.S. federal income tax on a net income basis
in respect of its worldwide income, and (ii) holds such common shares as a
capital asset. This summary is based upon current U.S. law and U.S. Internal
Revenue Service practice, and the U.S./NL Income Tax Treaty currently in effect
as of the date of this prospectus, all of which are subject to change at any
time, possibly with retroactive effect.

     This summary does not address the tax consequences to a U.S. Holder (i)
that is resident in The Netherlands for Netherlands tax purposes, (ii) whose
holding of common shares is effectively connected with a permanent establishment
in The Netherlands through which such U.S. Holder carries on business activities
or, in the case of an individual who performs independent personal services,
with a fixed base situated therein, or (iii) that alone or together with certain
related persons, owns directly or indirectly, 10% or more of the total combined
voting power of all classes of our

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outstanding voting stock or the total value of our outstanding stock (except as
discussed below under "Controlled Foreign Corporations"). This summary also does
not address the tax treatment of U.S. Holders that may be subject to special tax
rules, such as banks, tax-exempt entities, insurance companies, securities
dealers, investors liable for alternative minimum tax, persons that hold common
shares as part of an integrated investment (including a "straddle") comprised of
common shares and one or more other positions, and persons whose functional
currency is not the U.S. dollar. In addition, this discussion assumes that any
dividends will be payable, and sales and exchanges of common shares will be
effected, in U.S. dollars.

     YOU SHOULD CONSULT YOUR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF OUR SHARES IN YOUR PARTICULAR SITUATION,
INCLUDING THE EFFECT OF ANY U.S., STATE, LOCAL OR FOREIGN TAX LAWS.

TAXATION OF DIVIDENDS

     We do not expect to pay dividends on our common shares in the foreseeable
future. Distributions made with respect to common shares (including amounts
withheld in respect of Dutch withholding tax) will constitute dividends for U.S.
federal income tax purposes to the extent paid out of our current or accumulated
earnings and profits as determined for U.S. federal income tax purposes.
Generally, dividends we pay will not be eligible for the dividends-received
deduction allowed to corporate shareholders under the U.S. Internal Revenue
Code.

     Distributions, if any, in excess of our current and accumulated earnings
and profits will constitute a non-taxable return of capital to a U.S. Holder to
the extent of the U.S. Holder's tax basis in the common shares and will be
applied against and reduce the tax basis in the common shares. To the extent
that such distributions are in excess of a U.S. Holder's tax basis in the common
shares, the distributions will constitute capital gain.

     Subject to certain complex limitations and the discussion below, the Dutch
withholding tax imposed on dividends paid to a U.S. Holder will be treated for
U.S. tax purposes as a foreign income tax that may be claimed as a foreign tax
credit against the U.S. federal income tax liability of the U.S. Holder. In
general, we are required to remit the Dutch withholding tax imposed on dividends
paid to a U.S. Holder to the Dutch tax authorities. However, under certain
circumstances we may be allowed to reduce the amount that is required to be
remitted to the Dutch tax authorities by the lesser of (i) three percent of the
portion of the dividend paid by us that is subject to the Dutch dividend
withholding tax and (ii) three percent of the dividends and profit
distributions, before deduction of foreign withholding taxes, received by us
from qualifying foreign subsidiaries in the current calendar year (up to the
date of the distribution by us) and the two preceding calendar years, to the
extent that such dividends and profit distributions have not yet been taken into
account for purposes of establishing the above-mentioned reduction. To the
extent that dividend distributions are made on the common shares, we expect to
fund them with dividends received from our subsidiaries organized outside The
Netherlands. Any amount that is withheld by us but that is not required to be
remitted to any taxation authorities in the Netherlands likely would not qualify
as a creditable tax for U.S. foreign tax credit purposes. If we distribute
dividends, they will generally constitute foreign source "passive income" for
purposes of computing allowable foreign tax credits for U.S. tax purposes.
Foreign tax credits allowable with respect to foreign source income in certain
income categories cannot exceed the U.S. federal income tax otherwise payable
with respect to foreign source taxable income in such category. The consequences
of the separate limitation calculation will depend on the nature and sources of
each U.S. Holder's income and the deductions allocable thereto.

     We will likely be a "United States-owned foreign corporation" within the
meaning of sec. 904(g) under the Internal Revenue Code. As a result, for
purposes of the U.S. foreign tax credit limitation, all or a portion of any
dividend we pay may be treated as U.S. source dividend income, unless less

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than 10% of our earnings and profits for the taxable year consists of U.S.
source income (including dividends and royalties, if any, we receive from
subsidiaries). A "United States-owned foreign corporation" means any foreign
corporation that is 50% or more owned (by vote or value) by "United States
persons" (as defined in sec. 7701 (a)(30) under the Internal Revenue Code). The
U.S. source portion of a dividend would be determined by multiplying the amount
of such dividend by the percentage of U.S. source earnings and profits out of
our total earnings and profits for the taxable year in which the dividend is
paid. A U.S. Holder may elect under sec. 904(g)(10) of the Internal Revenue Code
to treat the portion of any dividend deemed to be U.S. source as foreign source
dividend income provided that the foreign tax credit limitation is applied
separately to such dividend income.

TAXATION OF CAPITAL GAINS

     A U.S. Holder will, upon the sale or exchange of common shares, recognize a
gain or a loss for U.S. federal income tax purposes in an amount equal to the
difference between the amount realized and the U.S. Holder's adjusted tax basis
in the common shares. Such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the common shares were held for more than one
year. For a U.S. Holder, under most circumstances, gain or loss from the sale or
exchange of common shares will be treated as U.S. source gain or loss for
foreign tax credit purposes.

CONTROLLED FOREIGN CORPORATIONS

     We will likely be a controlled foreign corporation, or CFC, which is a
foreign corporation that on any day of its taxable year is owned, directly,
indirectly or by attribution, more than 50%, by vote or by value, by "United
States Shareholders." For this purpose, a "United States Shareholder" is a
United States person (as defined in sec. 957(c) of the Internal Revenue Code)
who owns, directly, indirectly or by attribution, at least 10% of the total
combined voting power of all shares entitled to vote of the foreign corporation.

     In the event that we were determined to have been a CFC for an
uninterrupted period of at least 30 days during our taxable year, and you are
one of our United States Shareholders, you must include in income for your
taxable year in which or with which our taxable year ends, the total of (i) your
pro rata share of our subpart F income for such taxable year (subpart F income
includes in general, dividends, interest, royalties and rents (other than
royalties and rents derived in the active conduct of a business and not received
from a related person) annuities, income from some transactions with or effected
on behalf of related parties and various other types of income), (ii) your pro
rata share of our previously excluded subpart F income withdrawn from
investments in less developed countries for such year, (iii) your pro rata share
of our previously excluded subpart F income from foreign base company shipping
operations for such year, and (iv) your pro rata share of our increase in
earnings invested in U.S. property for such year. In the event that we are a
CFC, amounts distributed to United States Shareholders will not be includible in
income for U.S. tax purposes to the extent that the amounts have been previously
taken into income by such United States Shareholders. The tax basis in shares
held by a United States Shareholder will be increased by any amount included in
income, and decreased by any amounts distributed but excluded from income,
pursuant to the above rules. A United States Shareholder that sells shares in a
foreign corporation that is a CFC or that has been a CFC during the preceding
five (5) years must recharacterize gain on the sale of such shares as dividend
income to the extent of the shareholder's pro rata share of the corporation's
earnings and profits for the shareholder's holding period during which the
corporation was a CFC.

     Even if we are a CFC, if you are a United States person (as defined in sec.
957(c) of the Internal Revenue Code) who owns less than 10% of the total
combined voting power of all classes of our

                                       82
<PAGE>   87

shares entitled to vote, directly, indirectly, and by attribution, you will not
be taxed on our undistributed income and do not recharacterize gain as dividend
income by virtue of the fact that we are a CFC. Distributions to such
shareholders will be taxed under the ordinary rules relating to the taxation of
corporate distributions and sales of stock (see above), except to the extent
that our income would be taxable to such shareholders under the rules for a
foreign personal holding company or a passive foreign investment company, as
each of these in defined for U.S. tax purposes (see below).

FOREIGN PERSONAL HOLDING COMPANIES

     Starboard Cruise Services or any of our non-U.S. subsidiaries generally
will be classified as a "foreign personal holding company", or FPHC, if in any
taxable year (i) a group of five or fewer individuals who are U.S. citizens or
residents own (directly, indirectly or by attribution) more than 50% (by vote or
by value) of our shares (such persons hereafter referred to as a "U.S. group")
and (ii) at least 60% (reduced to 50% in years subsequent to the first year of
FPHC status) of our gross income or the gross income of the applicable non-U.S.
subsidiary consists of certain passive income for purposes of the FPHC rules
(generally including dividends, interest, royalties, rents, and gains from
securities and certain commodities transactions).

     If we or any of our subsidiaries are or become a FPHC, each U.S. Holder of
common shares (including a U.S. corporation) who held such shares on the last
day of our or our subsidiary's taxable year, or, if earlier, the last day of its
taxable year on which a U.S. group existed with respect to us or our subsidiary,
would be required to include in gross income as a deemed dividend such U.S.
Holder's pro rata portion of our or our subsidiary's undistributed foreign
personal holding company income (generally, our taxable income or the taxable
income of our subsidiary, with certain adjustments, including a deduction for
dividends paid), up to and including the last day of the year or on which the
U.S. group existed, even if no cash dividend were paid to the U.S. Holder. In
such case, if we were a FPHC, a U.S. Holder would be entitled to increase its
tax basis in our common shares by the amount of the deemed dividend. If one of
our subsidiaries were a FPHC, it is not clear that a U.S. Holder would be
afforded similar relief.

     Upon completion of the offering, five or fewer U.S. citizens or residents
likely will be deemed to own more than 50% of our outstanding shares for
purposes of the FPHC ownership test. In addition, we expect Starboard Cruise
Services, but none of our operating subsidiaries, to satisfy the FPHC gross
income test. However, based on our current plans, we do not expect to have any
undistributed foreign personal holding company income (generally taxable income
with certain adjustments, including a deduction for dividends paid) because we
do not expect to have any taxable income (as determined for U.S. federal income
tax purposes) in the foreseeable future and thus do not currently expect that
our shareholders would be required to include any amounts in gross income as a
deemed dividend as a result of our being a FPHC.

     If we are a FPHC, a U.S. person who acquires common shares from a decedent
would be denied the step-up of tax basis of such shares to fair market value on
the decedent's date of death which otherwise would have been available and
instead would have a tax basis equal to the lower of fair market value or the
decedent's basis.

PASSIVE FOREIGN INVESTMENT COMPANIES

     We may be classified as a "passive foreign investment company", or PFIC,
for U.S. federal income tax purposes if certain tests are met. We will be a PFIC
with respect to a U.S. Holder if, for any taxable year in which the U.S. Holder
held common shares, either (i) 75% or more of our gross income for the taxable
year is passive income or (ii) the average value of our assets during the
taxable year which produce passive income or which are held for the production
of passive income is

                                       83
<PAGE>   88

at least 50% of the average value of all of our assets for such year. Unless we
were to elect to apply the asset test using the average adjusted tax bases of
our assets (as determined for purposes of computing earnings and profits) during
the taxable year, the asset test would be applied using the average fair market
value of our assets. For this purpose, passive income means, in general,
dividends, interest, royalties, rents (other than rents and royalties derived in
the active conduct of a trade or business and not received from a related
person), annuities and gains from assets which would produce such income, other
than the sale of inventory.

     For the purpose of the PFIC tests, if a foreign corporation owns, directly
or indirectly, at least 25% by value of the stock of another corporation, the
foreign corporation is treated as owning its proportionate share of the assets
of the other corporation, and as if it had received directly its proportionate
share of the income of such other corporation. The effect of this special
provision with respect to us and our direct and indirect subsidiaries is that
we, for purposes of the income and asset tests described above, will be treated
as owning directly our proportionate share (presently 100%) of the assets of our
subsidiaries and of receiving directly our proportionate share of each of those
companies' income, if any, so long as we own, directly or indirectly, at least
25% by value of the particular company's stock or shares. Income of our
subsidiaries that does not constitute "passive income" as discussed above will
be treated as other than passive income of Starboard Cruise Services for
purposes of the PFIC rules.

     Common shares held by a U.S. Holder will be treated as stock in a PFIC if,
at any time during the holding period of the U.S. Holder with respect to such
common shares, the company was a PFIC and the U.S. Holder did not elect to
recognize gain as of the last day of the last taxable year for which the company
was a PFIC.

     If we were to be classified as a PFIC, a U.S. Holder would be subject to an
interest charge on taxes deemed deferred by such U.S. Holder on receipt of
certain "excess distributions" by us to the U.S. Holder and on recognition of
gain on disposition of any common shares by the U.S. Holder (which distributions
and the portion of such gains not attributable to the current taxable year or to
years before we were a PFIC would be taxable at the maximum ordinary income
rates in effect for each year to which the amounts are allocated with the
remainder taxable as ordinary income at the current rates then applicable to the
holder). The foregoing will not apply if either (a) we were to agree to comply
with certain reporting requirements, and the U.S. Holder were to elect to be
currently taxable on such U.S. Holder's pro rata share of our earnings and
profits (excluding net capital gain) and net capital gains for each year (at
ordinary and long-term capital gains rates, respectively), ("a QEF election"),
even if no distributions were received (although such U.S. Holder may elect to
defer payment of tax on certain undistributed income until such amounts are
distributed or the holder disposes of the shares, subject to an interest charge)
or (b) the U.S. Holder made an election to mark-to-market its common shares as
of the close of each taxable year. If a mark-to-market election were made, the
U.S. Holder would include in income each year an amount equal to the excess, if
any, of the fair market value of the PFIC stock over the U.S. Holder's adjusted
basis in such stock. The U.S. Holder also would be allowed a deduction for the
excess, if any, of the adjusted basis of the PFIC stock over its fair market
value, to the extent of net mark-to-market gains previously included in income
by such U.S. Holder with respect to such stock. If a mark-to-market election
were made, the amount included in income and any gain on the sale of such stock
would be treated as ordinary income.

     If we were both a CFC and a PFIC, and you were a United States Shareholder
(as described above), you would continue to be subject to the CFC current income
inclusion rules described above, but would not also be subject to the PFIC
provisions. The PFIC provisions would still apply to U.S. Holders that were not
United States Shareholders.

                                       84
<PAGE>   89

     We do not expect to be classified as a PFIC. However, we cannot assure you
that we will not become a PFIC in the future. If we were classified as a PFIC,
we cannot assure you that we would satisfy the reporting requirements necessary
to permit a U.S. Holder to make a QEF election.

     As noted above, some U.S. tax consequences turn on the composition of our
income and that of our subsidiaries. The tax law is not entirely clear as to the
proper classification of all relevant types of income which we and our
subsidiaries may realize. Accordingly, there can be no assurance that our
management's expectations described above will be fulfilled.

INFORMATION REPORTING AND BACKUP WITHHOLDING

     Some U.S. Holders may be subject to information reporting and backup
withholding with respect to dividends on, or the proceeds from the disposition
of, our common shares. In order to avoid backup withholding of 31% on amounts
received, U.S. Holders may be required to provide their taxpayer identification
number and comply with certain other requirements concerning information
reporting; or otherwise qualify for an exemption. Any amounts withheld will be
allowed as a credit against or refund of such holder's U.S. federal income tax
liability, provided that the required information is furnished to the IRS.

                                       85
<PAGE>   90

                                  UNDERWRITING

     Under the terms and subject to the conditions contained in an underwriting
agreement dated                , 1999 we and the selling shareholders have
agreed to sell to the underwriters named below, for whom Credit Suisse First
Boston Corporation is acting as a representative, the following respective
numbers of common shares:

<TABLE>
<CAPTION>
                                                                 NUMBER
                                                                   OF
                        UNDERWRITER                              SHARES
                        -----------                             --------
<S>                                                             <C>
Credit Suisse First Boston Corporation......................
                                                                --------

     Total..................................................
                                                                ========
</TABLE>

     The underwriting agreement provides that the underwriters are obligated to
purchase all the common shares in the offering if any are purchased, other than
those shares covered by the over-allotment option described below. The
underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common shares may be terminated.

     We and the selling shareholders have granted to the underwriters a 30-day
option to purchase on a pro rata basis up to           additional shares from us
and an aggregate of           additional shares from the selling shareholders at
the initial public offering price less the underwriting discounts and
commissions. The option may be exercised only to cover any over-allotments of
common shares.

     The underwriters propose to offer the common shares initially at the public
offering price on the cover page of this prospectus and to selling group members
at that price less a concession of $     per share. The underwriters and selling
group members may allow a discount of $     per share on sales to other
broker/dealers. After the initial public offering, the public offering price and
concession and discount to broker/dealers may be changed by the representatives.

     The following table summarizes the compensation and estimated expenses we
and the selling shareholders will pay.

<TABLE>
<CAPTION>
                                                 PER SHARE                           TOTAL
                                      -------------------------------   -------------------------------
                                         WITHOUT            WITH           WITHOUT            WITH
                                      OVER-ALLOTMENT   OVER-ALLOTMENT   OVER-ALLOTMENT   OVER-ALLOTMENT
                                      --------------   --------------   --------------   --------------
<S>                                   <C>              <C>              <C>              <C>
Underwriting discounts and
  commissions paid by us............     $                $                $                $
Expenses payable by us..............     $                $                $                $
Underwriting discounts and
  commissions paid by selling
  shareholders......................     $                $                $                $
Expenses payable by selling
  shareholders......................     $                $                $                $
</TABLE>

     The underwriters have informed us that they do not expect sales to
discretionary accounts to exceed 5% of the common shares being offered.

                                       86
<PAGE>   91

     We, each of our officers, directors and our other shareholders have agreed
that we will not offer, sell, contract to sell, announce our intention to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the Securities
Act of 1933 relating to any additional common shares or securities convertible
into or exchangeable or exercisable for any of our common shares without the
prior written consent of Credit Suisse First Boston Corporation for a period of
180 days after the date of this prospectus, except in our case issuances
pursuant to the exercise of employee stock options outstanding on the date
hereof.

     We and the selling shareholders have agreed to indemnify the underwriters
against liabilities under the Securities Act, or contribute to payments which
the underwriters may be required to make in respect thereof.

     Our common shares have been approved for listing on The Nasdaq Stock
Market's National Market.

     In connection with the acquisitions of our predecessor, Greyhound Leisure
Services, and the Onboard Group and the acquisition of certain of the assets of
Nuance Global Ships, we entered into a five-year credit facility on September
17, 1998 with Credit Suisse First Boston, New York branch and various other
banks and financial institutions in order to finance the acquisitions. Under the
credit facility, we are required to pay Credit Suisse First Boston, New York
branch certain fees, including a commitment fee and administrative agent fee.
See "Description of Certain Indebtedness". In addition, from time to time,
certain of the underwriters have provided advisory and investment banking
services to us, for which customary compensation has been received. It is
expected that such underwriters will continue to provide such services to us in
the future.

     Prior to this offering, there has been no public market for our common
shares. The initial public offering price will be negotiated between us and the
underwriters. Among the factors to be considered in such negotiations are:

     - the history of, and prospects for, our company and the industry in which
       we compete;

     - the past and present financial performance of our company;

     - an assessment of our management;

     - the present state of our development;

     - the prospects for our future earnings;

     - the prevailing market conditions of applicable U.S. securities markets at
       the time of this offering; and

     - market valuations of publicly traded companies that we and the
       underwriters believe to be comparable to our company.

     The representatives, on behalf of the underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.

     - Over-allotment involves syndicate sales in excess of the offering size,
       which creates a syndicate short position.

     - Stabilizing transactions permit bids to purchase the underlying security
       so long as the stabilizing bids do not exceed a specified maximum.

     - Syndicate covering transactions involve purchases of the common shares in
       the open market after the distribution has been completed in order to
       cover syndicate short positions.

                                       87
<PAGE>   92

     - Penalty bids permit the representatives to reclaim a selling concession
       from a syndicate member when the common shares originally sold by such
       syndicate member are purchased in a syndicate covering transaction to
       cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the common stock to be higher than it would otherwise be
in the absence of such transactions. These transactions may be effected on
Nasdaq or otherwise and, if commenced, may be discontinued at any time.

                          NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

     The distribution of our common shares in Canada is being made only on a
private placement basis exempt from the requirement that we and the selling
shareholders prepare and file a prospectus with the securities regulatory
authorities in each province where trades of our common shares are effected.
Accordingly, any resale of our common shares in Canada must be made in
accordance with applicable securities laws which will vary depending on the
relevant jurisdiction and which may require resales to be made in accordance
with available statutory exemptions or under a discretionary exemption granted
by the applicable Canadian securities regulatory authority. Purchasers are
advised to seek legal advice prior to any resale of our common shares.

REPRESENTATIONS OF PURCHASERS

     Each purchaser of our common shares in Canada who receives a purchase
confirmation will be deemed to represent to us, the selling shareholders and the
dealers from whom such purchase confirmation is received that:

     - such purchaser is entitled under applicable provincial securities laws to
       purchase our common shares without the benefit of a prospectus qualified
       under such securities laws;

     - where required by law, that such purchaser is purchasing as principal and
       not as agent; and

     - such purchaser has reviewed the text above under "Resale Restrictions".

RIGHTS OF ACTION (ONTARIO PURCHASERS)

     The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

     All of our directors and officers as well as the experts named herein and
the selling shareholders may be located outside of Canada and, as a result, it
may not be possible for Canadian purchasers to effect service of process within
Canada upon the issuer or such persons. All or a substantial portion of the
assets of the issuer and such persons may be located outside of Canada and, as a
result, it may not be possible to satisfy a judgment against the issuer or such
persons in Canada or to enforce a judgment obtained in Canadian courts against
such issuer or persons outside of Canada.

                                       88
<PAGE>   93

NOTICE TO BRITISH COLUMBIA RESIDENTS

     A purchaser of our common shares to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
common shares acquired by such purchaser through this offering. Such report must
be in the form attached to British Columbia Securities Commission Blanket Order
BOR #95/17, a copy of which may be obtained from us. Only one such report must
be filed in respect of our common shares acquired on the same date and under the
same prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

     Canadian purchasers of our common shares should consult their own legal and
tax advisors with respect to the tax consequences of an investment in our common
shares in their particular circumstances and with respect to the eligibility of
our common shares for investment by the purchaser under relevant Canadian
legislation.

                                 LEGAL MATTERS

     The validity of the common shares offered hereby will be passed upon for us
by Stibbe Simont Monahan Duhot, Amsterdam, The Netherlands, as Netherlands
counsel. Other legal matters in connection with the offering made hereby will be
passed upon for us by Ropes & Gray, Boston, Massachusetts. The underwriters have
been represented by Cravath, Swaine & Moore, New York, New York. An investment
partnership composed of members of Ropes & Gray has an indirect equity interest
in Starboard Cruise Services.

                                    EXPERTS

     Ernst & Young LLP, independent certified public accountants, have audited
our consolidated financial statements and schedule at December 31, 1998 and for
the period from September 10, 1998 (date of inception) through December 31,
1998, as set forth in their reports. We have included our consolidated financial
statements and schedule in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's reports, given on their authority
as experts in accounting and auditing.

     Ernst & Young LLP, independent certified public accountants, have audited
the consolidated financial statements of Greyhound Leisure Services and
subsidiaries for the period from January 1, 1998 through September 17, 1998, as
set forth in their report. We have included the consolidated financial
statements of Greyhound Leisure Services and subsidiaries in the prospectus and
elsewhere in the registration statement in reliance on Ernst & Young LLP's
reports, given on their authority as experts in accounting and auditing.

     The consolidated financial statements of Greyhound Leisure Services and
subsidiaries at December 31, 1997 and for the two years in the period ended
December 31, 1997 included in this prospectus and the related financial
statement schedule included elsewhere in the registration statement have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein and elsewhere in the registration statement, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.

     Ernst & Young LLP, independent certified public accountants, have audited
the combined financial statements of Onboard Media, Cruise Management
International and Boxer Media for the period from January 1, 1998 through
September 17, 1998, as set forth in their report. Goldstein Schechter Price
Lucas Horwitz & Co., P.A., independent certified public accountants, have
audited the combined financial statements of Onboard Media, Cruise Management
International and Boxer

                                       89
<PAGE>   94

Media at December 31, 1997 and for each of the two years in the period ended
December 31, 1997, as set forth in their report. We have included the combined
financial statements of Onboard Media, Cruise Management International and Boxer
Media in the prospectus and elsewhere in the registration statement in reliance
on Ernst & Young LLP's and Goldstein Schechter Price Lucas Horwitz & Co., P.A.'s
reports, given on their authority as experts in accounting and auditing.

     Ernst & Young LLP, independent certified public accountants, have audited
the financial statements of Nuance Global Ships for the period from January 1,
1998 through September 24, 1998 as set forth in their report. We have included
the financial statements of Nuance Global Ships in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.

     Ernst & Young LLP, independent certified public accountants, have examined
the pro forma adjustments to the historical financial statements of our company,
Greyhound Leisure Services and subsidiaries, Onboard Media, Cruise Management
International and Boxer Media, and Nuance Global Ships for the year ended
December 31, 1998 appearing in the unaudited pro forma condensed statement of
operations in the prospectus, as set forth in their report. We have included the
unaudited pro forma condensed statement of operations in the prospectus in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.

                             CHANGE IN ACCOUNTANTS

     Deloitte & Touche LLP were the independent accountants to our predecessor
entity, Greyhound Leisure Services, and its parent, Viad Corp. Because Deloitte
& Touche LLP had been engaged by Viad Corp., following our acquisition of
Greyhound Leisure Services from Viad Corp., Deloitte & Touche LLP no longer
served as the independent accountants to Greyhound Leisure Services. Prior to
our acquisition of Greyhound Leisure Services, we engaged Ernst & Young LLP to
provide specific accounting services to our company. On November 18, 1999, we
sent out requests for proposals for independent accounting services to several
accounting firms including Deloitte & Touche LLP and Ernst & Young LLP. Each of
those firms, along with other accounting firms, submitted proposals to us. In
December, 1998, we engaged Ernst & Young LLP as independent accountants to our
company including our subsidiaries. The decision to engage Ernst & Young LLP was
approved by our Board of Managers.

     We believe, and have been advised by Deloitte & Touche LLP that it concurs
in such belief, that, for the period from January 1, 1996 through September 17,
1998, Greyhound Leisure Services and Deloitte & Touche LLP did not have any
disagreement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of Deloitte & Touche LLP, would have caused it to
make reference in connection with its report on Greyhound Leisure Services'
consolidated financial statements to the subject matter of the disagreement. The
reports of Deloitte & Touche LLP on Greyhound Leisure Services' consolidated
financial statements for each of the two fiscal years in the period ended
December 31, 1997 did not contain an adverse opinion or a disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles. During those years and for the period from January 1, 1998 through
September 17, 1998, there were no "reportable events" within the meaning of Item
302(a)(1)(v) of Regulation S-K promulgated under the Securities Act.

                      WHERE YOU CAN FIND MORE INFORMATION

     We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including exhibits and schedules thereto) under the
Securities Act with respect to the common shares to be sold in this offering.
This prospectus, which constitutes a part of the registration

                                       90
<PAGE>   95

statement, does not contain all of the information set forth in the registration
statement or the exhibits and schedules which are part of the registration
statement. For further information with respect to Starboard Cruise Services and
the common shares, reference is made to the registration statement and the
exhibits and schedules thereto.

     You may read and copy all or any portion of the registration statement or
any reports, statements or other information in Starboard Cruise Services' files
in the Commission's public reference room at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C., 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can
request copies of these documents upon payment of a duplicating fee, by writing
to the Commission. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Starboard Cruise
Services' Commission filings, including the registration statement, will also be
available to you on the Commission's Internet site (http://www.sec.gov).

     We intend to furnish our shareholders with annual reports containing
financial statements audited by our independent auditors and to make available
to our shareholders quarterly reports containing unaudited financial data for
the first three quarters of each fiscal year.

     We will also comply with our obligations under the law of The Netherlands
to prepare annual financial statements complying with Dutch corporate law and
file our financial statements at the Commercial Register of The Chamber of
Commerce and Industry in Amsterdam, The Netherlands.

            SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

     We are a limited liability company (naamloze vennootschap or N.V.)
organized under the laws of The Netherlands. All or a substantial portion of our
assets are located outside the United States. As a result, it may not be
possible for investors to enforce against us in United States courts judgments
predicated upon the civil liability provisions of the federal securities laws of
the United States. We have been advised by our Netherlands counsel, Stibbe
Simont Monahan Duhot, that the United States and The Netherlands do not
currently have a treaty providing for reciprocal recognition and enforcement of
judgments (other than arbitration awards) in civil and commercial matters. In
the opinion of such counsel, a final judgment for the payment of money rendered
by any federal or state court in the United States based on civil liability,
whether or not predicated solely upon the federal securities laws of the United
States, would not be directly enforceable in The Netherlands. However, if the
party in whose favor such final judgment is rendered brings a new suit in a
competent court in The Netherlands, such party may submit to a Netherlands court
the final judgment that has been rendered in the United States. If a Netherlands
court finds that the jurisdiction of the federal or state court in the United
States has been based on the grounds that are internationally acceptable and
that proper legal procedures and elementary principles of fair trial have been
observed, the court in The Netherlands would, under current practice, give
binding effect to the final judgment that has been rendered in a defended action
in the United States unless such judgment contravenes The Netherlands' public
policy.

                                       91
<PAGE>   96

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                           <C>
Starboard Cruise Services N.V.
Unaudited Consolidated Balance Sheet at June 30, 1999.......  F-3
Unaudited Consolidated Statements of Operations for the six
  months ended June 30, 1998 and 1999.......................  F-4
Unaudited Consolidated Statement of Shareholders' Equity for
  the six months ended June 30, 1999........................  F-5
Unaudited Consolidated Statements of Cash Flows for the six
  months ended June 30, 1998 and 1999.......................  F-6
Notes to Unaudited Consolidated Financial Statements........  F-7
Report of Ernst & Young LLP, Independent Certified Public
  Accountants...............................................  F-9
Consolidated Balance Sheet as of December 31, 1998..........  F-10
Consolidated Statements of Operations for the period from
  September 10, 1998 (date of incorporation) through
  December 31, 1998.........................................  F-11
Consolidated Statements of Shareholders' Equity for the
  period from September 10, 1998 (date of incorporation)
  through December 31, 1998.................................  F-12
Consolidated Statements of Cash Flows for the period from
  September 10, 1998 (date of incorporation) through
  December 31, 1998.........................................  F-13
Notes to Consolidated Financial Statements..................  F-15
Greyhound Leisure Services, Inc. and Subsidiaries
Report of Ernst & Young LLP, Independent Certified Public
  Accountants...............................................  F-27
Report of Deloitte & Touche LLP, Independent Auditors.......  F-28
Consolidated Balance Sheet as of December 31, 1997..........  F-29
Consolidated Statements of Income for the years ended
  December 31, 1996 and 1997 and for the period from January
  1, 1998 through September 17, 1998........................  F-30
Consolidated Statements of Stockholder's Equity for the
  years ended December 31, 1996 and 1997 and for the period
  from January 1, 1998 through September 17, 1998...........  F-31
Consolidated Statements of Cash Flows for the years ended
  December 31, 1996 and 1997 and for the period from January
  1, 1998 through September 17, 1998........................  F-32
Notes to Consolidated Financial Statements..................  F-33
</TABLE>

                                       F-1
<PAGE>   97
<TABLE>
<S>                                                           <C>
On Board Media, Inc., Cruise Management International, Inc.
  and Boxer Media, Inc.
Report of Ernst & Young LLP, Independent Certified Public
  Accountants...............................................  F-41
Combined Statement of Income for the period from January 1,
  1998 through September 17, 1998...........................  F-42
Combined Statement of Cash Flows for the period from January
  1, 1998 through September 17, 1998........................  F-43
Notes to Combined Financial Statements......................  F-44
Report of Goldstein Schechter Price Lucas Horwitz & Co.,
  P.A., Independent Certified Public Accountants............  F-48
Combined Balance Sheet as of December 31, 1997..............  F-49
Combined Statements of Income for the years ended December
  31, 1996 and 1997.........................................  F-50
Combined Statements of Changes in Stockholders' Equity for
  the years ended December 31, 1996 and 1997................  F-51
Combined Statements of Cash Flows for the years ended
  December 31, 1996 and 1997................................  F-52
Notes to Combined Financial Statements......................  F-54
Nuance Global Ships, Inc.
Report of Ernst & Young LLP, Independent Certified Public
  Accountants...............................................  F-60
Consolidated Statement of Operations and Accumulated Deficit
  for the period from December 26, 1997 through September
  24, 1998..................................................  F-61
Consolidated Statement of Cash Flows for the period from
  December 26, 1997 through September 24, 1998..............  F-62
Notes to Financial Statements...............................  F-63
</TABLE>

                                       F-2
<PAGE>   98

                         STARBOARD CRUISE SERVICES N.V.

                           CONSOLIDATED BALANCE SHEET
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  JUNE 30,
                                                                    1999
                                                                ------------
<S>                                                             <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................    $    360,562
  Trade accounts receivable, net of allowance for doubtful
     accounts of $557,770...................................      13,217,109
  Inventories, net..........................................      63,981,155
Prepaid expenses and other current assets...................       4,709,862
                                                                ------------
Total current assets........................................      82,268,688
Property and equipment, net.................................       7,394,971
Investment in unconsolidated subsidiary.....................       1,143,780
Other assets................................................         246,892
Notes receivable from minority interest holders.............       1,416,177
Intangible assets, net......................................      98,764,782
                                                                ------------
Total assets................................................    $194,019,974
                                                                ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................    $ 13,532,909
  Accrued expenses..........................................      20,491,838
  Current portion of long-term debt.........................      10,714,284
  Deferred revenue..........................................       1,416,177
  Due to affiliates.........................................         100,002
  Deferred income taxes.....................................         895,314
                                                                ------------
Total current liabilities...................................      47,150,524
Long term-debt, net of current portion......................      99,874,168
Minority interest...........................................       4,326,432
Commitments and contingencies
Shareholders' equity:
  Common stock, EUR .01 par value; 50,000,000 authorized
     shares; 24,000,000 issued and outstanding shares.......          49,920
  Additional paid-in capital................................      46,120,070
  Accumulated deficit.......................................      (3,501,140)
                                                                ------------
Total shareholders' equity..................................      42,668,850
                                                                ------------
Total liabilities and shareholders' equity..................    $194,019,974
                                                                ============
</TABLE>

See accompanying notes.

                                       F-3
<PAGE>   99

                         STARBOARD CRUISE SERVICES N.V.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED JUNE 30,
                                                              -----------------------------
                                                                  1998             1999
                                                              -------------    ------------
                                                              (PREDECESSOR)
<S>                                                           <C>              <C>
Net sales...................................................   $94,397,639     $138,258,164
Cost of sales...............................................    37,770,106       56,887,519
                                                               -----------     ------------
Gross profit................................................    56,627,533       81,370,645
Selling, general and administrative expenses................    51,111,548       75,856,706
Amortization of intangibles.................................            --        2,750,499
                                                               -----------     ------------
Total expenses..............................................    51,111,548       78,607,205
                                                               -----------     ------------
Income from operations......................................     5,515,985        2,763,440
Other (income) expense:
  Interest expense..........................................       421,454        6,047,679
  Interest income...........................................      (128,282)        (228,582)
                                                               -----------     ------------
Total other expense.........................................       293,172        5,819,097
                                                               -----------     ------------
Income (loss) before provision for income taxes and minority
  interest..................................................     5,222,813       (3,055,657)
Provision for income taxes..................................     1,437,255          186,151
Minority interest...........................................       513,645           71,451
                                                               -----------     ------------
Net income (loss)...........................................   $ 3,271,913       (3,313,259)
                                                               ===========     ============
Basic and diluted net (loss) per share......................                   $      (0.14)
                                                                               ============
Basic and diluted weighted average shares...................                     24,000,000
                                                                               ============
</TABLE>

See accompanying notes.

                                       F-4
<PAGE>   100

                         STARBOARD CRUISE SERVICES N.V.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                  COMMON STOCK       ADDITIONAL                      TOTAL
                              --------------------     PAID-IN      RETAINED     SHAREHOLDERS'
                                SHARES     AMOUNT      CAPITAL       DEFICIT        EQUITY
                              ----------   -------   -----------   -----------   -------------
<S>                           <C>          <C>       <C>           <C>           <C>
Balance at December 31,
  1998......................  24,000,000   $49,920   $46,120,070   $  (187,881)   $45,982,109
Net loss (unaudited)........          --        --            --    (3,313,259)    (3,313,259)
                              ----------   -------   -----------   -----------    -----------
Balance at June 30, 1999
  (unaudited)...............  24,000,000   $49,920   $46,120,070   $(3,501,140)   $42,668,850
                              ==========   =======   ===========   ===========    ===========
</TABLE>

See accompanying notes.

                                       F-5
<PAGE>   101

                         STARBOARD CRUISE SERVICES N.V.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED JUNE 30,
                                                              -----------------------------
                                                                  1998             1999
                                                              -------------    ------------
                                                              (PREDECESSOR)
<S>                                                           <C>              <C>
OPERATING ACTIVITIES
Net income (loss)...........................................   $ 3,271,913     $ (3,313,259)
Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
  Depreciation..............................................     1,735,395        1,978,514
  Amortization of intangible assets.........................            --        2,750,499
  Provision for shrinkage reserve...........................      (120,399)         427,075
  Deferred income taxes.....................................    (1,005,106)         442,348
  Provision for bad debts...................................           488          (68,591)
  Changes in operating assets and liabilities, net of assets
     acquired and liabilities assumed:
  Accounts receivable.......................................      (776,054)       1,642,631
  Inventory.................................................     2,337,878      (12,386,825)
  Prepaid expenses and other current assets.................      (345,150)         829,738
  Notes receivables from minority interest..................         1,335          (16,670)
  Investment in unconsolidated subsidiary...................        (9,021)        (127,304)
  Other assets..............................................            --         (246,892)
  Intangible assets.........................................            --         (453,958)
  Due to affiliates.........................................       669,827          (16,665)
  Accounts payable..........................................    (4,016,460)       4,695,298
  Accrued expenses..........................................       364,135        3,330,444
  Deferred revenue..........................................       441,579         (257,465)
  Minority interest.........................................       513,639           71,447
                                                               -----------     ------------
Net cash provided by (used in) operating activities.........     3,063,999         (719,635)
INVESTING ACTIVITIES
Purchases of property and equipment.........................      (499,672)        (572,922)
Disposals of property and equipment.........................       129,845            1,033
Payments to minority shareholders...........................      (256,229)        (172,105)
                                                               -----------     ------------
Net cash used in investing activities.......................      (626,056)        (743,994)
FINANCING ACTIVITIES
Repayments on the line of credit............................            --       (2,300,000)
Dividends paid to Viad......................................    (2,700,000)              --
                                                               -----------     ------------
Net cash used in financing activities.......................    (2,700,000)      (2,300,000)
Net decrease in cash and cash equivalents...................      (262,057)    $ (3,763,629)
Cash and cash equivalents, beginning of period..............       262,057        4,124,191
                                                               -----------     ------------
Cash and cash equivalents, end of period....................   $        --     $    360,562
                                                               ===========     ============
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid during the period.............................   $   508,149     $  3,028,125
                                                               ===========     ============
Cash paid to Viad for income taxes..........................     1,369,797               --
                                                               ===========     ============
Income taxes paid during the period.........................   $        --     $    345,000
                                                               ===========     ============
</TABLE>

See accompanying notes.

                                       F-6
<PAGE>   102

                         STARBOARD CRUISE SERVICES N.V.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1. BASIS OF PRESENTATION

     The accompanying unaudited consolidated condensed financial statements of
Starboard Cruise Services N.V. and subsidiaries (formerly Miami Cruiseline
Services Holdings I B.V.) (the "Company") for the periods indicated herein have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission and in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the six months
ended June 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. The consolidated financial
statements include the accounts of the Company and all majority owned
subsidiaries over which the Company has control. All significant intercompany
accounts and transactions have been eliminated. The interim financial statements
for the six months ended June 30, 1998 are the financial statements of the
Company's predecessor, Greyhound Leisure Services, Inc. For further information,
refer to the Company's 1998 consolidated financial statements and notes thereto.

     The Company experiences seasonality in its quarterly results of operations
as a result of fluctuations in the demand for cruises. Historically, the demand
has been greater during the summer months.

2. ACQUISITIONS

     On September 17, 1998, the Company acquired 100% of the issued and
outstanding shares of the capital stock of GLSI for a purchase price of
approximately $96.6 million. The purchase price, which is subject to net asset
balance adjustments, consisted of approximately $81.5 million in cash, a $10.0
million Junior Subordinated Note due May 15, 2009 and approximately $5.1 million
of acquisition costs. The GLSI acquisition was accounted for using the purchase
method of accounting and, accordingly, the purchase price was allocated to the
assets acquired and the liabilities assumed based on estimates of their
underlying fair values. The fair value of net assets acquired, including
approximately $5.4 million allocated to acquired cruise line contracts, was
approximately $40.7 million. The excess purchase price over the fair value of
the assets acquired of approximately $55.9 million has been classified as
goodwill and is being amortized over 25 years. The allocation of the purchase
price is preliminary pending finalization of estimates. The GLSI acquisition was
primarily financed through a $63.0 million term loan, a $2.5 million drawdown on
a $35.0 million revolver loan, and $25.2 million of senior subordinated notes
(see Note 3).

     On September 17, 1998, the Company acquired 100% of the issued and
outstanding shares of the capital stock of On-Board Media Group for a purchase
price of approximately $47.0 million. The purchase price consisted of
approximately $33.3 million in cash, which includes approximately $3.3 million
of assumed indebtedness paid by the Company at closing, 5,912,500 shares of the
Company's common stock valued at approximately $11.4 million and approximately
$2.3 million of acquisition costs. The On-Board Media Group acquisition was
accounted for using the purchase method of accounting and, accordingly, the
purchase price was allocated to the assets acquired and the liabilities assumed
based on estimates of their underlying fair values. The fair value of net assets
acquired was approximately $5.7 million. The excess purchase price over the fair
value of the assets acquired of

                                       F-7
<PAGE>   103
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2.  ACQUISITIONS (CONTINUED)
approximately $41.3 million has been classified as goodwill and is being
amortized over 25 years. The allocation of the purchase price is preliminary
pending finalization of estimates.

     On December 15, 1998, Starboard entered into an Asset Purchase Agreement
with Nuance Global Traders Ltd. for the purchase of certain of the assets and
assumption of certain liabilities of Nuance Global Traders, an operator of duty
free stores on cruise ships, for a purchase price of approximately $17.4 million
in cash (the Nuance acquisition). The Nuance acquisition was accounted for using
the purchase method of accounting and, accordingly, the purchase price was
allocated to the assets acquired and liabilities assumed based on estimates of
their underlying fair value. The fair value of net assets acquired was
approximately $17.4 million. The allocation of the purchase price is preliminary
pending finalization of estimates.

3. LONG-TERM DEBT

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                JUNE 30,
                                                                  1999
                                                              ------------
<S>                                                           <C>
Term Note bearing interest at a variable rate (8.00% at June
  30, 1999). Interest payable quarterly.....................  $ 67,500,000
$35.0 million revolving credit facility bearing interest at
  LIBOR plus 2.75% (8.57% at June 30, 1999); expiring
  September 17, 2003. Interest payable semi-annually........     7,900,000
Senior subordinated notes bearing interest at 15%; due
  September 17, 2006. Interest payable semi-annually........    25,188,452
Junior subordinated notes bearing interest at 12%; due May
  15, 2009. Interest payable quarterly......................    10,000,000
                                                              ------------
Total.......................................................   110,588,452
Less current portion........................................   (10,714,284)
                                                              ------------
                                                              $ 99,874,168
                                                              ============
</TABLE>

                                       F-8
<PAGE>   104

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Starboard Cruise Services N.V.
and Subsidiaries

     We have audited the accompanying consolidated balance sheet of Starboard
Cruise Services N.V. and subsidiaries (formerly Miami Cruiseline Services
Holdings I B.V.) as of December 31, 1998 and the related consolidated statements
of operations, shareholders' equity and cash flows for the period from September
10, 1998 (date of incorporation) through December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Starboard
Cruise Services N.V. and subsidiaries at December 31, 1998, and the consolidated
results of their operations and their cash flows for the period from September
10, 1998 (date of incorporation) through December 31, 1998, in conformity with
generally accepted accounting principles.

Miami, Florida
March 22, 1999, except as to Note 14, as to
which the date is September   , 1999

     The foregoing report is in the form that will be signed upon completion of
the restatement of capital accounts and the name change described in Note 14 to
the consolidated financial statements.

                                          /s/ ERNST & YOUNG LLP

Miami, Florida
August 18, 1999

                                       F-9
<PAGE>   105

                         STARBOARD CRUISE SERVICES N.V.

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $  4,124,191
  Trade accounts receivable, net of allowance for doubtful
     accounts of $626,361...................................    14,791,149
  Inventories, net..........................................    52,021,405
  Prepaid expenses and other current assets.................     5,539,600
                                                              ------------
Total current assets........................................    76,476,345
Property and equipment, net.................................     8,801,596
Investment in unconsolidated subsidiary.....................     1,016,476
Notes receivable from minority interest holders.............     4,184,191
Intangible assets, net......................................   101,061,323
                                                              ------------
Total assets................................................  $191,539,931
                                                              ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  8,837,611
  Accrued expenses..........................................    17,161,394
  Current portion of long-term debt.........................     5,357,142
  Deferred revenue..........................................     1,673,642
  Due to affiliates.........................................       116,667
  Deferred income taxes.....................................       452,966
                                                              ------------
Total current liabilities...................................    33,599,422
Long term-debt, net of current portion......................   107,531,310
Minority interest...........................................     4,427,090
Commitments and contingencies
Shareholders' equity:
  Common shares EUR $.01 par value; 120,000,000 authorized
     shares; 24,000,000 issued and outstanding shares.......       240,000
  Additional paid-in capital................................    45,929,990
  Accumulated deficit.......................................      (187,881)
                                                              ------------
Total shareholders' equity..................................    45,982,109
                                                              ------------
Total liabilities and shareholders' equity..................  $191,539,931
                                                              ============
</TABLE>

See accompanying notes.

                                      F-10
<PAGE>   106

                         STARBOARD CRUISE SERVICES N.V.

                      CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                 PERIOD FROM
                                                                SEPTEMBER 10,
                                                                1998 (DATE OF
                                                                INCORPORATION)
                                                                   THROUGH
                                                                 DECEMBER 31,
                                                                     1998
                                                                --------------
<S>                                                             <C>
Net sales...................................................     $71,061,304
Cost of sales...............................................      30,139,145
                                                                 -----------
Gross profit................................................      40,922,159
Selling, general and administrative expenses................      36,372,811
Amortization of intangibles.................................       1,525,266
                                                                 -----------
Total expenses..............................................      37,898,077
                                                                 -----------
Income from operations......................................       3,024,082
Other (income) expense:
  Interest expense..........................................       3,156,404
  Interest income...........................................        (485,462)
                                                                 -----------
Total other expense.........................................       2,670,942
                                                                 -----------
Income before provision for income taxes and minority
  interest..................................................         353,140
Provision for income taxes..................................         359,195
Minority interest...........................................         181,826
                                                                 -----------
Net loss....................................................     $  (187,881)
                                                                 ===========
Basic and diluted net loss per share........................     $     (0.01)
                                                                 ===========
Basic and diluted weighted average shares...................      23,250,000
                                                                 ===========
</TABLE>

See accompanying notes.

                                      F-11
<PAGE>   107

                         STARBOARD CRUISE SERVICES N.V.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                          COMMON STOCK        ADDITIONAL                      TOTAL
                                      ---------------------     PAID-IN     ACCUMULATED   SHAREHOLDERS'
                                        SHARES      AMOUNT      CAPITAL       DEFICIT        EQUITY
                                      ----------   --------   -----------   -----------   -------------
<S>                                   <C>          <C>        <C>           <C>           <C>
Initial capitalization..............  10,000,000   $100,000   $   (79,200)   $      --     $   (79,200)
  Issuance of common stock..........   8,087,500     80,875    34,689,315           --      34,770,190
  Common Stock issued in connection
     with the Onboard Media Group
     acquisition....................   5,912,500     39,125    11,319,875           --      11,379,000
  Net loss..........................          --         --            --     (187,881)       (187,881)
                                      ----------   --------   -----------    ---------     -----------
  Balance at December 31, 1998......  24,000,000   $240,000   $45,929,990    $(187,881)    $45,982,109
                                      ==========   ========   ===========    =========     ===========
</TABLE>

See accompanying notes.

                                      F-12
<PAGE>   108

                         STARBOARD CRUISE SERVICES N.V.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   PERIOD FROM
                                                                SEPTEMBER 10, 1998
                                                                     (DATE OF
                                                                  INCORPORATION)
                                                                     THROUGH
                                                                DECEMBER 31, 1998
                                                                ------------------
<S>                                                             <C>
OPERATING ACTIVITIES
Net loss....................................................      $    (187,881)
Adjustments to reconcile net loss to net cash provided by
  operating activities:
  Depreciation..............................................          1,055,826
  Amortization of intangible assets.........................          1,525,266
  Provision for inventory obsolescence and shrinkage
     reserve................................................            (61,342)
  Deferred income taxes.....................................            452,966
  Provision for bad debts...................................            108,363
  Changes in operating assets and liabilities, net of assets
     acquired and liabilities assumed:
     Accounts receivable....................................         (1,992,402)
     Inventory..............................................          1,107,784
     Prepaid expenses and other current assets..............         (1,566,882)
     Notes receivables from minority interest holders.......           (420,391)
     Investment in unconsolidated subsidiary................            (21,000)
     Accounts payable.......................................             93,634
     Accrued expenses.......................................          8,958,320
     Deferred revenue.......................................         (2,890,842)
     Minority interest......................................            181,826
                                                                  -------------
Net cash provided by operating activities...................          6,343,245
INVESTING ACTIVITIES
Purchases of property and equipment.........................           (141,334)
Disposals of property and equipment.........................              3,997
Acquisition of GLSI, net of cash acquired...................        (96,604,851)
Acquisition of Onboard Media Group, net of cash acquired....        (35,635,181)
Proceeds from redemptions of marketable securities..........             63,184
Dissolution of minority interest in European Cruise Shops...         (3,017,562)
Acquisition of Nuance Global Traders........................        (17,396,307)
                                                                  -------------
Net cash used in investing activities.......................       (152,728,054)
FINANCING ACTIVITIES
Borrowings under line of credit.............................        112,888,452
Repayments on the line of credit............................         (1,000,100)
Payments to minority shareholders...........................            (97,445)
Due to affiliates...........................................          3,927,103
Proceeds from issuance of common stock......................         34,790,990
                                                                  -------------
Net cash provided by financing activities...................        150,509,000
Net increase in cash and cash equivalents...................          4,124,191
Cash and cash equivalents, beginning of period..............                 --
                                                                  -------------
Cash and cash equivalents, end of period....................      $   4,124,191
                                                                  =============
</TABLE>

                                      F-13
<PAGE>   109
                         STARBOARD CRUISE SERVICES N.V.

              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                   PERIOD FROM
                                                                SEPTEMBER 10, 1998
                                                                     (DATE OF
                                                                  INCORPORATION)
                                                                     THROUGH
                                                                DECEMBER 31, 1998
                                                                ------------------
<S>                                                             <C>
SUPPLEMENTAL NONCASH DISCLOSURE OF INVESTING ACTIVITY
Common stock issued in connection with the Onboard Media
  Group acquisition.........................................      $  11,379,000
                                                                  =============
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid during the period.............................      $     390,396
                                                                  =============
Income taxes paid during the period.........................      $      75,000
                                                                  =============
</TABLE>

See accompanying notes.

                                      F-14
<PAGE>   110

                         STARBOARD CRUISE SERVICES N.V.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

1. ORGANIZATION AND NATURE OF BUSINESS

  Organization

     Starboard Cruise Services N.V., (formerly Miami Cruiseline Services
Holdings I B.V.) a Netherlands corporation, was incorporated on September 10,
1998 for the purpose of effecting certain acquisitions through a series of
intermediary holding companies, Miami Cruiseline Services Holdings II B.V.
(Holdings II), Miami Cruiseline Services Holdings III B.V.(Holdings III) and
Cruiseline Holdings Co. (CLH).

     On September 17, 1998, pursuant to a Share Purchase Agreement dated as of
July 31, 1998, among VIAD Corp. and CLH, CLH acquired all of the outstanding
shares of Greyhound Leisure Services, Inc. a wholly owned subsidiary of VIAD
Corp. (the GLSI acquisition) (see Note 3).

     On September 17, 1998, pursuant to the Stock Subscription and Exchange
Agreement dated as of August 27, 1998, among Holdings I and Phillip Levine,
Jerry Chafetz and several Trusts, Holdings I acquired all of the outstanding
shares of Onboard Media, Cruise Management International and Boxer Media, Inc.
(collectively, the Onboard Media Group) (the Onboard Media Group acquisition)
(see Note 3).

  Nature of Business

     GLSI operates duty free stores on cruise ships and has several duty free
boutiques and stores at Miami International Airport and Ft. Lauderdale/Hollywood
International Airport. At December 31, 1998, GLSI operated 230 retail stores on
80 cruise ships, 19 retail stores at Miami International Airport and two retail
stores in Ft. Lauderdale/Hollywood International Airport. Onboard Media Group
sells advertising in books, magazines and videos which are published for hotels
and cruise lines primarily in the United States, Mexico and the Caribbean.
Onboard Media Group also sells promotional advertising which is delivered to
cruise passengers through a live on-board promotion programs (port lecturing).
In addition, Onboard Media Group also administers art auctions aboard various
cruise ships.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

     The consolidated financial statements include the accounts of Starboard
Cruise Services N.V., its wholly owned subsidiaries (Holdings II, Holdings III,
CLH, GLSI, Onboard Media Group, and Starboard Holdings Ltd. (Starboard
Holdings)), and a 66% owned subsidiary (collectively herein, the Company). All
significant intercompany accounts and transactions have been eliminated in
consolidation.

  Cash and Cash Equivalents

     The Company defines as cash equivalents all highly liquid investments with
a maturity of three months or less at the time of purchase.

  Accounts Receivable

     The Company's accounts receivable are due primarily from cruise line
companies. Approximately 18% of the accounts receivable balance at December 31,
1998 is due from one customer. Settlement

                                      F-15
<PAGE>   111
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of amounts due from the cruise line companies occurs upon completion of each
voyage. The Company's policy is not to require collateral on accounts
receivable. Credit losses are provided for in the financial statements and have
been within management's expectations.

  Inventories

     Inventories, which consist primarily of duty-free merchandise, are stated
at the lower of cost or market determined on a first-in, first-out basis.

  Property and Equipment

     Property and equipment is stated at cost. Depreciation is computed by use
of the straight-line method over the estimated useful life of vehicles,
furniture, fixtures and equipment, which ranges from 2 to 7 years. Leasehold
costs and improvements are amortized over the lesser of their estimated useful
lives or the remaining lease terms.

  Intangible Assets

     Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                       AMORTIZATION
                                                          PERIOD       DECEMBER 31,
                                                         (YEARS)           1998
                                                       ------------    ------------
<S>                                                    <C>             <C>
Contracts............................................    3-5           $  5,362,000
Goodwill.............................................    25              97,224,589
                                                                       ------------
                                                                        102,586,589
Accumulated amortization.............................                    (1,525,266)
                                                                       ------------
                                                                       $101,061,323
                                                                       ============
</TABLE>

     Goodwill represents the excess of purchase price over the fair value of net
assets acquired. Goodwill, net of accumulated amortization, totaled $96,090,302
at December 31, 1998. Other identifiable intangibles, comprised of cruise line
contracts, are being amortized over a period of three to five years. These
intangibles, net of accumulated amortization, totaled $4,971,021 at December 31,
1998.

     The carrying value of goodwill is reviewed by the Company's management if
the facts and circumstances suggest that it may be impaired. If this review
indicates that these costs will not be recoverable, as determined based on the
expected undiscounted cash flows of the entity to which the goodwill is
associated over the remaining amortization period, the carrying value of
goodwill would be reduced by the estimated shortfall of cash flows.

  Deferred Revenue and Revenue Recognition

     Deferred revenue reflects advertising revenue which has been sold in
advance of the publication of the related books, magazines and videos. Revenue
is recognized upon publication of the related books, magazines and videos.

     Revenue from retail product sales is recorded upon customer purchase.

                                      F-16
<PAGE>   112
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Income Taxes

     The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred
income tax assets and liabilities are determined based upon differences between
the financial statement and income tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred income tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
of the tax assets will not be realized.

  Accounting for Stock-Based Compensation

     SFAS No. 123, Accounting for Stock-Based Compensation, became effective
January 1, 1996. The new standard defines a fair value method of accounting for
issuance of stock options and other equity instruments. Under the fair value
method, compensation cost is measured at the grant date based on the fair value
of the award and is recognized over the service period, which is usually the
vesting period. Pursuant to SFAS No. 123, companies are encouraged, but not
required to adopt the fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees (APB Opinion 25), but are required to disclose in a
note to the consolidated financial statements pro forma net income as if the
Company had applied the new method of accounting.

     The Company applies APB Opinion 25 and Related Interpretations in
accounting for its employee stock-based transactions and has complied with the
disclosure requirements of SFAS No. 123.

  Comprehensive Income

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
Reporting Comprehensive Income. SFAS No. 130 establishes standards for reporting
and display of comprehensive income and its components in financial statements.
The adoption of SFAS No. 130 had no impact on the Company's net loss or
stockholders' equity. There are no other components of comprehensive loss other
than the Company's net loss for the period from September 10, 1998 (date of
incorporation) through December 31, 1998 (period ended December 31, 1998).

  Use of Estimates

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

  Loss Per Share

     Basic and diluted loss per share (see Note 13) was computed by dividing net
loss by the weighted average number of shares of common stock. Common stock
equivalents were antidilutive and therefore were not included in the computation
of weighted average shares used in computing diluted loss per share.

                                      F-17
<PAGE>   113
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. ACQUISITIONS

     On September 17, 1998, the Company acquired 100% of the issued and
outstanding shares of the capital stock of GLSI for a purchase price of
approximately $96.6 million. The purchase price, which is subject to net asset
balance adjustments, consisted of approximately $81.5 million in cash, a $10.0
million Junior Subordinated Note due May 15, 2009 and approximately $5.1 million
of acquisition costs. The GLSI acquisition was accounted for using the purchase
method of accounting and, accordingly, the purchase price was allocated to the
assets acquired and the liabilities assumed based on estimates of their
underlying fair values. The fair value of net assets acquired, including
approximately $5.4 million allocated to acquired cruise line contracts, was
approximately $40.7 million. The excess purchase price over the fair value of
the assets acquired of approximately $55.9 million has been classified as
goodwill and is being amortized over 25 years. The allocation of the purchase
price is preliminary pending finalization of estimates. The GLSI acquisition was
primarily financed through a $63.0 million term loan, a $2.5 million drawdown on
a $35.0 million revolver loan, $10 million Note due to Viad, and $25.0 million
of senior subordinated notes (see Note 6).

     On September 17, 1998, the Company acquired 100% of the issued and
outstanding shares of the capital stock of Onboard Media Group for a purchase
price of approximately $47.0 million. The purchase price consisted of
approximately $33.3 million in cash, which includes approximately $3.3 million
of assumed indebtedness paid by the Company at closing, 5,912,500 shares of the
Company's common stock valued at approximately $11.4 million and approximately
$2.3 million of acquisition costs. The Onboard Media Group acquisition was
accounted for using the purchase method of accounting and, accordingly, the
purchase price was allocated to the assets acquired and the liabilities assumed
based on estimates of their underlying fair values. The fair value of net assets
acquired was approximately $5.7 million. The excess purchase price over the fair
value of the assets acquired of approximately $41.3 million has been classified
as goodwill and is being amortized over 25 years. The allocation of the purchase
price is preliminary pending finalization of estimates.

     On December 15, 1998, Starboard Holdings entered into an Asset Purchase
Agreement with Nuance Global Traders Ltd. for the purchase of certain of the
assets and assumption of certain liabilities of Nuance Global Traders Ltd., an
operator of duty free stores on cruise ships, for a purchase price of
approximately $17.4 million in cash (the Nuance acquisition). The Nuance
acquisition was accounted for using the purchase method of accounting and,
accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based on estimates of their underlying fair values. The fair
value of net assets acquired was approximately $17.4 million. The allocation of
the purchase price is preliminary pending finalization of estimates.

                                      F-18
<PAGE>   114
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. ACQUISITIONS (CONTINUED)
     Summary unaudited pro forma results of operations for the year ended
December 31, 1998 for the acquisitions discussed above, as if such acquisitions
had occurred on January 1, 1998 is as follows (dollars in thousands, except per
share data):

<TABLE>
<CAPTION>
                                                               YEAR ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
Net sales...................................................   $  281,151
Loss before income taxes and minority interest..............       (2,368)
Net loss....................................................       (2,294)
Basic and diluted net loss per share........................   $    (0.10)
Basic and diluted weighted average shares...................   23,250,000
</TABLE>

     These unaudited pro forma results of operations for the year ended December
31, 1998 do not purport to represent what the Company's actual results of
operations would have been if the acquisitions had occurred on January 1, 1998
and should not serve as a forecast of the Company's operating results for future
periods. The pro forma adjustments are based solely on the available information
and certain assumptions that management believes are reasonable. Management
believes the full impact of potential cost savings has not been reflected in the
pro forma results presented above, although there can be no assurances such cost
savings will be achieved. Subsequent adjustments may be necessary upon final
determination of the allocation of the purchase prices.

4. NOTES RECEIVABLE FROM MINORITY INTEREST HOLDERS

     The notes receivable from minority interest holders mature on November 30,
2000 and accrue interest, payable quarterly, at the prime rate (7.75% at
December 31, 1998). The loans are secured by the minority interest holders'
equity interest in a subsidiary.

5. PROPERTY AND EQUIPMENT

     The following is a summary of property and equipment:

<TABLE>
<CAPTION>
                                                         ESTIMATED
                                                        USEFUL LIVES    DECEMBER 31,
                                                         (IN YEARS)         1998
                                                        ------------    ------------
<S>                                                     <C>             <C>
Vehicles..............................................        5         $    36,768
Furniture, fixtures, and equipment....................      2-7           5,525,691
Leasehold improvements................................      2-7           4,294,963
                                                                        -----------
                                                                          9,857,422
Accumulated depreciation..............................                   (1,055,826)
                                                                        -----------
                                                                        $ 8,801,596
                                                                        ===========
</TABLE>

                                      F-19
<PAGE>   115
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
Term Note bearing interest at a variable rate (7.94% at
  December 31, 1998). Interest payable quarterly............  $ 67,500,000
$35.0 million revolving credit facility bearing interest at
  LIBOR plus 2.75% (7.81% at December 31, 1998); expiring
  September 17, 2003. Interest payable semi-annually........    10,200,000
Senior subordinated notes bearing interest at 15%; due
  September 17, 2006. Interest payable semi-annually........    25,188,452
Junior subordinated notes bearing interest at 12%; due May
  15, 2009. Interest payable quarterly......................    10,000,000
                                                              ------------
Total debt..................................................   112,888,452
Less current portion........................................    (5,357,142)
                                                              ------------
Total long-term debt........................................  $107,531,310
                                                              ============
</TABLE>

     On September 17, 1998, Holdings II and Holdings III entered into a credit
agreement with several banks to extend term loans in an aggregate principal
amount of $63.0 million (the Term Note) and obtain borrowings under a Revolving
Credit Facility. The Term Note was increased to $67.5 million on December 15,
1998. The Term Note bears interest at a variable rate based on the Company's
leverage ratio (as defined at December 31, 1998). The Term Note expires on
September 17, 2003 with quarterly principal payments beginning on August 31,
1999, in an amount equal to a certain percentage of the outstanding principal
amount (as defined). The proceeds from the Term Note were used to fund portions
of the GLSI acquisition and the Nuance acquisition.

     The Revolving Credit Facility provides for aggregate borrowings of up to
$35 million and issuances of letters of credit of up to $15 million. Direct
borrowings under the Revolving Credit Facility are subject to an availability
calculation based on the eligible borrowing base. The Revolving Credit Facility
matures on September 17, 2003. Based on the availability calculation,
approximately $17.8 million of additional borrowings were available under this
credit facility at December 31, 1998. Outstanding letters of credit under the
credit facility for the purpose of purchasing inventory amounted to
approximately $98,000 at December 31, 1998.

     The Term Note and the Revolving Credit Facility contain covenants that
among other things, restrict the payments of dividends and restrict additional
indebtedness and obligations, and require the Company to maintain certain
minimum financial ratios. This credit agreement is guaranteed by each of the
subsidiaries of the Company and is collaterized by substantially all of the
assets of the Company.

     In connection with the GLSI and Onboard Media Group acquisitions (see Note
3), Holdings II entered into a debt securities purchase agreement with several
financial institutions to issue approximately $25.2 million in aggregate
principal amount of its 15% Senior subordinated notes due September 15, 2006
(the Notes). The interest on the Senior subordinated notes is payable
semiannually in arrears, may be capitalized for the first three years and is
payable in cash beginning

                                      F-20
<PAGE>   116
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT (CONTINUED)
in the fourth year. The Senior subordinated notes are also subject to a cash
payment commencing on March 15, 2004 in the event the accrued and unpaid
interest exceeds a certain amount. In the event that this cash payment is
required, the holders of the Senior subordinated notes may require Holdings II
to purchase up to $10 million of principal of the Senior subordinated notes at a
premium of 5.25%. Fifty percent of the then outstanding principal amount of the
Senior subordinated notes will mature on September 15, 2005, with the balance
due September 15, 2006.

     The Company's subsidiary, Holdings II, entered into a Put Agreement with
the Senior Subordinated Note holders. Under the Put Agreements, these
shareholders may cause Holdings II at any time to repurchase all, or any
portion, of their common shares at a price equal to their cost of the shares, or
approximately $1.925 per share (as adjusted for share splits and dividends). The
put right, or the right to cause Holdings II to repurchase these common shares,
will expire on September 15, 2006 or, if earlier, upon the occurrence of certain
events.

     Upon a Change of Control as defined in the Notes, the Company would be
required to offer to repurchase the Notes at a purchase price equal to 101% of
the aggregate principal amount plus accrued and unpaid interest thereon.

     The Notes contain certain financial and operational covenants and customary
events of default, including, among others, payment defaults and default in the
performance of other covenants, breach of representations or warranties,
cross-default to other indebtedness, certain bankruptcy or ERISA defaults, the
entry of certain judgments against the Company or any subsidiary, and any
security interest or guarantees that cease to be in effect.

     The proceeds from the Notes were used to fund a portion of the acquisition
price of GLSI and On Board Media Group.

     In connection with the GLSI acquisition (see Note 3), Holdings II, provided
to VIAD Corp. 12% Junior Subordinated Notes due May 15, 2009 (Junior Notes)
which were issued in an aggregate principal amount of $10 million and are junior
subordinated unsecured obligations of Holdings II. The interest on the Junior
Notes is payable semiannually commencing March 1, 1999 and the interest payments
may be capitalized through maturity of the notes with some exceptions. Upon a
change of control as defined in the Junior Notes agreement or consummation of an
initial public offering, the Company would be required to prepay the Junior
Notes at a price equal to 100% of the aggregate principal amount plus accrued
and unpaid interest thereon.

                                      F-21
<PAGE>   117
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT (CONTINUED)
     Scheduled maturities on long-term debt during the next five years are as
follows:

<TABLE>
<S>                                                           <C>
Year ending December 31:
  1999......................................................  $  5,357,000
  2000......................................................    11,786,000
  2001......................................................    15,000,000
  2002......................................................    18,214,000
  2003......................................................    17,143,000
  Thereafter................................................    45,388,000
                                                              ------------
Total.......................................................  $112,888,000
                                                              ============
</TABLE>

7. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts of cash and cash equivalents, short-term investments,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of their short duration to maturity.

     The carrying amounts of long-term debt approximate the fair value of the
Company's long-term debt at December 31, 1998. The fair value of long-term debt
is estimated based on the quoted market prices for the same issues or on current
rates offered to the Company for debt of the same remaining maturities. The
estimated fair value of long-term debt and the bank borrowings under the credit
agreement approximated its carrying value. Because judgment is required in
interpreting market data to develop estimates of fair value, the estimates are
not necessarily indicative of the amounts that could be realized or would be
paid in a current market exchange. The effect of using different market
assumptions or estimation methodologies may be material to the estimated fair
value amounts.

8. INCOME TAXES

     The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
                                                              PERIOD ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
CURRENT
U.S. Federal................................................   $ 372,290
State.......................................................      56,736
Foreign.....................................................      67,000
                                                               ---------
Total.......................................................     496,026
DEFERRED
U.S. Federal................................................    (136,831)
                                                               ---------
Total.......................................................   $ 359,195
                                                               =========
</TABLE>

                                      F-22
<PAGE>   118
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES (CONTINUED)
     The differences between the reported provision from income taxes and income
taxes computed at the U.S. statutory federal income tax rate are as follows:

<TABLE>
<CAPTION>
                                                              PERIOD ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
Income tax expense computed at the U.S. statutory rate of
  34%.......................................................    $ 58,247
State taxes, net of federal benefit.........................      37,446
Effect of non-U.S. operations and tax rates.................      78,161
Non-deductible items........................................     200,203
Other, net..................................................     (14,862)
                                                                --------
Total.......................................................    $359,195
                                                                ========
</TABLE>

     Significant components of the Company's net deferred income taxes are as
follows:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
Deferred income tax assets:
  Allowance for bad debts...................................   $  15,367
  Miscellaneous accruals....................................      35,258
                                                               ---------
Total current deferred income tax asset.....................      50,625
Deferred income tax liabilities:
  Depreciation and amortization.............................     (61,243)
  Cash to accrual conversion................................    (442,348)
                                                               ---------
Net deferred income tax liabilities.........................   $(452,966)
                                                               =========
</TABLE>

9. STOCK OPTION PLAN

     On September 15, 1998, the Company adopted the 1998 Stock Option Plan (the
Plan) which provides for the granting of incentive and non-incentive stock
options to purchase shares of the Company's common stock to officers, directors
and key employees responsible for the direction and management of the Company
and to non-employee consultants and independent contractors. The Company is
authorized to grant options for up to 1,000,000 common shares under the Plan, of
which 950,000 common shares have been granted as of December 31, 1998. The
vesting period of the incentive stock options granted are established by the
Management Board of the Company (the Board). Of the 950,000 options granted,
500,000 vest ratably over a three year period and 450,000 vest ratably over a
four year period, with the vesting beginning on the first anniversary of the
date of grant. The exercise price of common stock purchasable under a stock
option shall be determined by the Board at the time of grant but shall not be
less than 100% of the fair market value of the underlying stock; nor shall the
exercise price be less, in the case of an original issue of authorized stock,
than par value. The exercise price of the options granted is $1.925 per share,
which was determined by the Board to be the fair value at the date of grant.

                                      F-23
<PAGE>   119
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. STOCK OPTION PLAN (CONTINUED)
     The Company has adopted the disclosure only provisions of SFAS No. 123.
Accordingly, no compensation cost has been recognized for the plan. Had
compensation cost for the Plan been determined based on the fair value at the
date of grant in 1998 consistent with the provisions of SFAS No. 123, the
Company's net loss would have been increased to the pro forma amount indicated
below:

<TABLE>
<CAPTION>
                                                              PERIOD ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
Net loss -- as reported.....................................   $(187,881)
Net loss -- pro forma.......................................    (198,802)
Basic and diluted net loss per share -- pro forma...........   $   (0.01)
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
the Minimum Value fair value model with the following weighted-average
assumptions used for the 1998 grants: dividend yield of 0.0%, risk-free interest
rate of 6%, and average expected life of 3.5 years.

     The weighted average fair value of options granted for 1998 is $0.36 per
share. At December 31, 1998, the weighted average exercise price of the options
outstanding is $1.925, and the weighted average remaining contractual life of
those options is 9.75 years.

10. RELATED PARTY TRANSACTIONS

     Berkshire Cruise Holdings LLC provides the Company with certain
administrative services for an annual management fee of approximately $400,000.
The Company paid Berkshire Cruise Holdings approximately $116,000 for the period
ended December 31, 1998.

     The Onboard Media Group has an agreement with Media Holdings, Ltd. for the
lease of an office building. Media Holdings, Ltd. is a limited partnership which
is owned by certain shareholders of the Company. The term of the lease is from
April 30, 1996 through April 30, 2006 and requires annual rental payments of
$250,000 plus occupancy costs which include property taxes, utilities, and
repairs and maintenance. The Company made payments to Media Holdings, Ltd.
amounting to approximately $66,563 for the period ended December 31, 1998.

11. SIGNIFICANT CUSTOMERS

     Sales to certain customers, each constituting 10% or more of the total
sales, were approximately $20,848,000 for the period ended December 31, 1998.

12. COMMITMENTS AND CONTINGENCIES

     The Company leases office, warehouse facilities and retail stores under non
cancelable operating leases. The leases for the retail stores provide for
additional rentals contingent upon increases in the operating expenses of the
lessors. In addition, the Company pays concession fees, calculated as a
percentage of sales, for certain store leases. Certain of the Company's leases
contain scheduled rent increases during the term of the leases. Rent expense,
including contingent rent and concession fees, was approximately $23.0 million
for the period ended December 31, 1998.

                                      F-24
<PAGE>   120
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12.  COMMITMENTS AND CONTINGENCIES (CONTINUED)
     Future minimum lease payments under these operating leases at December 31,
1998 are as follows:

<TABLE>
<S>                                                             <C>
Year ending December 31:
  1999......................................................    $ 5,317,000
  2000......................................................      4,864,000
  2001......................................................        915,000
  2002......................................................        915,000
  2003......................................................        266,000
  Thereafter................................................        621,000
                                                                -----------
Total.......................................................    $12,898,000
                                                                ===========
</TABLE>

     Future minimum lease payments do not include a minimum annual guarantee of
$10,268,000, subject to adjustment under certain circumstances, through 2000
under an airport duty-free concession agreement.

     The Company is a party to litigation matters and claims, which are in the
normal course of its operations. While the results of litigation and claims
cannot be predicted with certainty, management believes that the final outcome
of such matters will not have a material adverse effect on the Company's
consolidated financial position.

     The Onboard Media Group has executed contracts with various cruise lines
and hotels which grant it the exclusive right to publish and sell advertising in
books, magazines and videos, and to conduct live on-board promotion programs and
art auctions on cruise ships. The contracts range from several months to five
years and require various guaranteed minimum payments. Obligations for
guaranteed minimum payments under such contracts as of December 31, 1998 are as
follows:

<TABLE>
<S>                                                             <C>
Year ending December 31:
  1999......................................................    $ 8,027,000
  2000......................................................      6,394,000
  2001......................................................      3,663,000
  2002......................................................      3,593,000
  2003......................................................        180,000
                                                                -----------
Total.......................................................    $21,857,000
                                                                ===========
</TABLE>

     Total cruise line fees and magazine royalties under the above agreements
amounted to $2,661,000 for the period ended December 31, 1998.

     Outstanding surety bonds, principally related to importation of products,
amounted to $6,728,000 at December 31, 1998.

                                      F-25
<PAGE>   121
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. LOSS PER SHARE

     The following table sets forth the computation of basic and diluted net
loss per share:

<TABLE>
<CAPTION>
                                                               PERIOD FROM
                                                              SEPTEMBER 10,
                                                              1998 (DATE OF
                                                              INCORPORATION)
                                                                 THROUGH
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
<S>                                                           <C>
Numerator:
Net loss....................................................   $  (187,881)
Denominator:
  Denominator for basic and diluted net loss per
     share -- weighted average shares.......................    23,250,000
Basic and diluted net loss per share........................   $     (0.01)
</TABLE>

14. SUBSEQUENT EVENT

     On              , 1999, the Company's shareholders approved an amendment to
its Articles of Association, which among other things, converts the Company from
a B.V. to an N.V., changes the Company's name from Miami Cruiseline Services
Holdings I. B.V. to Starboard Cruise Services N.V., increases the Company's
authorized share capital to 120,000,000 shares each with a par value of EUR .01
and effects a 50 for 1 share split. Immediately after the effectiveness of the
amendment, the Company will issue a 5 for 1 share dividend. The effectiveness of
the amendment and share dividend will take place immediately prior to the
consummation of the Company's initial public offering. All common share and per
common share amounts have been adjusted for all periods to reflect the share
split and share dividend.

                                      F-26
<PAGE>   122

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholder
Greyhound Leisure Services, Inc.
  and Subsidiary

     We have audited the accompanying consolidated statements of income,
stockholder's equity and cash flows of Greyhound Leisure Services, Inc. and
subsidiaries (a wholly-owned subsidiary of Viad Corp.) for the period from
January 1, 1998 through September 17, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations, stockholder's equity and
cash flows of Greyhound Leisure Services, Inc. and subsidiaries for the period
from January 1, 1998 through September 17, 1998, in conformity with generally
accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

Miami, Florida
May 7, 1999

                                      F-27
<PAGE>   123

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
  Greyhound Leisure Services, Inc.

We have audited the accompanying consolidated balance sheet of Greyhound Leisure
Services, Inc., and subsidiaries (the "Company"), a wholly owned subsidiary of
Viad Corp., as of December 31, 1997, and the related consolidated statements of
income, stockholder's equity and cash flows for each of the two years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
1997, and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP

Miami, Florida
July 31, 1998

                                      F-28
<PAGE>   124

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                           CONSOLIDATED BALANCE SHEET
                               DECEMBER 31, 1997
               (IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<S>                                                           <C>
ASSETS
Current assets:
  Cash......................................................  $   262
  Accounts receivable, net of allowance for doubtful
     accounts of $327.......................................    6,108
  Inventories...............................................   32,907
  Deferred income taxes.....................................    2,122
  Prepaid expenses and other current assets.................    1,026
                                                              -------
Total current assets........................................   42,425
Property and equipment:
  Furniture, fixtures and other equipment...................   10,681
  Leasehold improvements....................................    8,632
  Accumulated depreciation..................................   (9,762)
                                                              -------
Total property and equipment, net...........................    9,551
Loans receivable from minority interest shareholders........    3,771
Other assets................................................    1,028
Deferred income taxes.......................................    2,487
                                                              -------
Total assets................................................  $59,262
                                                              =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Accounts payable..........................................  $10,528
  Accrued expenses..........................................    3,129
  Due to Viad...............................................   11,171
  Other current liabilities.................................    1,750
                                                              -------
Total current liabilities...................................   26,578
Other liabilities and deferred items........................   10,405
Minority interest...........................................    7,131
Commitments and contingencies (Note 8)
Stockholder's equity:
  Common stock, $100 par value, 3,000 shares authorized;
     1,000 shares issued and outstanding....................      100
  Additional paid-in capital................................   12,918
  Retained earnings.........................................    2,285
  Treasury stock -- 400 shares at cost......................     (155)
                                                              -------
Total stockholder's equity..................................   15,148
                                                              -------
Total liabilities and stockholder's equity..................  $59,262
                                                              =======
</TABLE>

See accompanying notes

                                      F-29
<PAGE>   125

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                       CONSOLIDATED STATEMENTS OF INCOME
               (IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                   PERIOD FROM
                                                                                 JANUARY 1, 1998
                                                     YEAR ENDED DECEMBER 31,         THROUGH
                                                     ------------------------     SEPTEMBER 17,
                                                        1996          1997            1998
                                                     ----------    ----------    ---------------
<S>                                                  <C>           <C>           <C>
Net sales..........................................   $179,799      $188,498        $135,603
Cost of sales......................................     72,860        76,828          54,290
                                                      --------      --------        --------
Gross profit.......................................    106,939       111,670          81,313
Selling, general and administrative expenses.......     96,712       101,067          73,993
                                                      --------      --------        --------
Income from operations.............................     10,227        10,603           7,320
Other (income) expense:
  Interest expense.................................        625           766             674
  Interest income..................................       (512)         (561)           (257)
                                                      --------      --------        --------
Total other expense................................        113           205             417
                                                      --------      --------        --------
Income before provision for income taxes and
  minority interest................................     10,114        10,398           6,903
Provision for income taxes.........................      2,936         2,941           2,249
Minority interest..................................      1,706           957             594
                                                      --------      --------        --------
Net income.........................................   $  5,472      $  6,500        $  4,060
                                                      ========      ========        ========
Basic and diluted net income per common share......   $  5,472      $  6,500        $  4,060
                                                      ========      ========        ========
Basic and diluted weighted average shares
  outstanding......................................      1,000         1,000           1,000
                                                      ========      ========        ========
</TABLE>

See accompanying notes.

                                      F-30
<PAGE>   126

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                     COMMON STOCK     ADDITIONAL                             TOTAL
                                    ---------------    PAID-IN     RETAINED   TREASURY   STOCKHOLDERS'
                                    SHARES   AMOUNT    CAPITAL     EARNINGS    STOCK        EQUITY
                                    ------   ------   ----------   --------   --------   -------------
<S>                                 <C>      <C>      <C>          <C>        <C>        <C>
Balance at December 31, 1995......     1      $100     $12,918     $   627     $(155)       $13,490
  Net income......................    --        --          --       5,472        --          5,472
  Capital distribution............    --        --          --      (4,579)       --         (4,579)
                                      --      ----     -------     -------     -----        -------
Balance at December 31, 1996......     1       100      12,918       1,520      (155)        14,383
  Net income......................    --        --          --       6,500        --          6,500
  Capital distribution............    --        --          --      (5,735)       --         (5,735)
                                      --      ----     -------     -------     -----        -------
Balance at December 31, 1997......     1       100      12,918       2,285      (155)        15,148
  Net income......................    --        --          --       4,060        --          4,060
  Capital contribution............    --        --      16,630          --        --         16,630
  Capital distribution............    --        --          --      (2,700)       --         (2,700)
                                      --      ----     -------     -------     -----        -------
Balance at September 17, 1998.....     1      $100     $29,548     $ 3,645     $(155)       $33,138
                                      ==      ====     =======     =======     =====        =======
</TABLE>

See accompanying notes.

                                      F-31
<PAGE>   127

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   PERIOD FROM
                                                    YEAR ENDED DECEMBER 31,      JANUARY 1, 1998
                                                    ------------------------         THROUGH
                                                       1996          1997       SEPTEMBER 17, 1998
                                                    ----------    ----------    ------------------
<S>                                                 <C>           <C>           <C>
OPERATING ACTIVITIES
Net income........................................   $ 5,472       $ 6,500           $ 4,060
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization...................     1,628         2,746             2,461
  Provision for inventory obsolence and shrinkage
     reserve......................................        --            --              (106)
  Deferred income taxes...........................      (284)          757               372
  Provision for doubtful accounts receivable......        76            43               114
  Other...........................................     1,102           276                --
  Changes in operating assets and liabilities:
     Accounts receivable..........................    (1,746)          506              (237)
     Inventories..................................       797        (2,434)             (978)
     Prepaid expenses and other current assets....      (256)          314              (601)
     Other assets.................................        --          (131)               --
     Loans receivables from minority interest
       shareholders...............................        --            --                 7
     Investment in unconsolidated subsidiary......        --            --                33
     Accounts payable.............................       561        (2,902)           (2,021)
     Accrued expenses.............................        --            --               121
     Other current liabilities....................       140            29                --
     Other liabilities and deferred items.........       211        (1,461)              229
                                                     -------       -------           -------
Net cash provided by operating activities.........     7,701         4,243             3,454
INVESTING ACTIVITIES
Purchases of property and equipment...............    (4,016)       (4,353)             (625)
Other.............................................        --            98                --
                                                     -------       -------           -------
Net cash used in investing activities.............    (4,016)       (4,255)             (625)
FINANCING ACTIVITIES
Due to/from Viad, net.............................      (352)        5,487              (346)
Capital distribution..............................    (4,579)       (5,735)           (2,700)
                                                     -------       -------           -------
Net cash used in financing activities.............    (4,931)         (248)           (3,046)
                                                     -------       -------           -------
Net decrease in cash and cash equivalents.........    (1,246)         (260)             (217)
Cash and cash equivalents, beginning of period....     1,768           522               262
                                                     -------       -------           -------
Cash and cash equivalents, end of period..........   $   522       $   262           $    45
                                                     =======       =======           =======
SUPPLEMENTAL CASH FLOW DISCLOSURE
Income taxes paid during the period...............   $    --       $    --           $ 1,370
                                                     =======       =======           =======
Cash paid to Viad for income taxes................   $ 2,952       $ 3,745           $    --
                                                     =======       =======           =======
</TABLE>

See accompanying notes

                                      F-32
<PAGE>   128

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

  Nature of Business

     Greyhound Leisure Services, Inc. and subsidiaries (GLSI) operate duty free
stores on cruise ships and operate several duty free boutiques and stores at
Miami International Airport and Ft. Lauderdale/Hollywood International Airport.
At September 17, 1998, GLSI operated 120 retail stores on 40 cruise ships, 19
retail stores at Miami International Airport and two retail stores in Ft.
Lauderdale/Hollywood International Airport. GLSI was a wholly owned subsidiary
of Viad Corp ("Viad"). (See Note 10.)

  Basis of Presentation

     The accompanying financial statements include costs allocated to GLSI by
Viad for certain functions and services they performed centrally. All
allocations and estimates were based on assumptions Viad's management believed
were reasonable in the circumstances. These allocations and estimates are not
necessarily indicative of the costs and expenses that would have resulted if
GLSI had been operated as a separate entity. See Note 7 for a description of the
functions and services and the amounts allocated.

     Certain reclassifications were made to the prior years' financial
statements to conform with the current period presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

     The consolidated financial statements at December 31, 1997 include the
accounts of GLSI, a 66% owned subsidiary and another majority-owned subsidiary,
which was dissolved in May 1998. All significant intercompany accounts and
transactions have been eliminated in consolidation.

  Cash and Cash Equivalents

     The Company defines as cash equivalents all highly liquid investments with
a maturity of three months or less at the time of purchase.

  Accounts Receivable

     The Company's accounts receivable are due primarily from cruise line
companies. Approximately 33% of the accounts receivable balance at December 31,
1997 is due from two customers. Settlement of amounts due from the cruise line
companies occurs upon completion of each voyage. The Company's policy is not to
require collateral on accounts receivable. Credit losses are provided for in the
financial statements and have been within management's expectations.

  Inventories

     Inventories, which consist primarily of duty-free merchandise, are stated
at the lower of cost or market determined on a first-in, first-out basis.

                                      F-33
<PAGE>   129
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Property and Equipment

     Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed by use of the straight-line method over the estimated
useful life of vehicles, furniture, fixtures and equipment, which ranges from 5
to 7 years. Leasehold costs and improvements are amortized over the lesser of
their estimated useful lives or the remaining lease terms.

  Earnings Per Share

     Basic earnings per share is computed based on the weighted average number
of common shares outstanding and diluted earnings per share is computed based on
the weighted average number of common and potential common shares outstanding.
There were no potential common shares outstanding.

  Revenue Recognition

     Revenue from retail product sales is recorded upon customer purchase.

  Income Taxes

     The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred
income tax assets and liabilities are determined based upon differences between
the financial statement and income tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred income tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
of the deferred income tax assets will not be realized.

  Comprehensive Income

     In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in financial
statements. The adoption of SFAS No. 130 had no impact on the Company as it had
no elements of comprehensive income.

  Use of Estimates

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

  Impairment of Long-Lived Assets

     The Company reviews the carrying values of its long-lived assets and
identifiable intangibles for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of assets to be held and used
may not be recoverable. For assets to be held and used, if the sum of the
expected future undiscounted cash flows is less than the carrying amount of the
asset, an

                                      F-34
<PAGE>   130
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
impairment loss should be recognized, measured as the amount by which the
carrying amount exceeds the fair value of the asset. The Company reports any
long-lived assets and certain identifiable intangibles to be disposed of at the
lower of carrying amount or fair value less cost to sell.

3. LOANS RECEIVABLE FROM MINORITY INTEREST SHAREHOLDERS

     The loans receivable from minority interest holders mature on November 30,
2000 and accrue interest, payable quarterly, at the prime rate (8.50% at
December 31, 1997). The loans are secured by the minority interest holders'
equity interest in a subsidiary.

     Other Assets at December 31, 1997 consisted of the following (in
thousands):

<TABLE>
<S>                                                           <C>
Investment in unconsolidated affiliate, accounted for using
  the equity method.........................................  $  981
Intangible pension asset....................................      47
                                                              ------
                                                              $1,028
                                                              ======
</TABLE>

4. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts of cash and cash equivalents, short-term investments,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of their short duration to maturity.

5. INCOME TAXES

     The Company files a consolidated federal and various state income tax
returns with Viad and other eligible subsidiaries of Viad. A verbal intercompany
tax agreement requires the Company to pay Viad an amount which approximates the
income tax it would pay if it were filing separate consolidated income tax
returns. In addition, Viad credits the Company for an allocated portion of the
state income tax savings which Viad and its subsidiaries realize upon filing
combined or consolidated income tax returns in certain states.

     Deferred income tax assets (liabilities) included in the consolidated
balance sheet at December 31, 1997 related to the following (in thousands):

<TABLE>
<CAPTION>
                                                               1997
                                                              ------
<S>                                                           <C>
Pension, compensation and other employee benefits...........  $3,506
Self-insurance reserve......................................     423
Reserve for inventory obsolescence and shrinkage............     757
Deferred state income taxes.................................     282
Bad debt reserve............................................      78
Depreciation................................................    (112)
Other.......................................................    (325)
                                                              ------
Deferred income taxes.......................................  $4,609
                                                              ======
</TABLE>

                                      F-35
<PAGE>   131
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES (CONTINUED)
     The provision for income taxes for the years ended December 31, 1996 and
1997 and the period from January 1, 1998 through September 17, 1998 consisted of
the following (in thousands):

<TABLE>
<CAPTION>
                                                                       PERIOD FROM
                                                     YEAR ENDED        JANUARY 1,
                                                    DECEMBER 31,      1998 THROUGH
                                                  ----------------    SEPTEMBER 17,
                                                   1996      1997         1998
                                                  ------    ------    -------------
<S>                                               <C>       <C>       <C>
Current:
  Federal.......................................  $3,135    $2,089       $2,490
  State.........................................      85        95          131
                                                  ------    ------       ------
                                                   3,220     2,184        2,621
Deferred........................................    (284)      757         (372)
                                                  ------    ------       ------
  Provision for income taxes....................  $2,936    $2,941       $2,249
                                                  ======    ======       ======
</TABLE>

     A reconciliation of the provision for income taxes and the amount that
would be computed using statutory federal income tax rates for the years ended
December 31, 1996 and 1997 and for the period from January 1, 1998 through
September 17, 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                        PERIOD FROM
                                                        YEAR ENDED       JANUARY 1,
                                                       DECEMBER 31,     1998 THROUGH
                                                      ---------------   DECEMBER 31,
                                                       1996     1997        1998
                                                      ------   ------   ------------
<S>                                                   <C>      <C>      <C>
Income tax at statutory federal income tax rate of
  35%...............................................  $2,943   $3,304      $2,145
Tax effect of:
  State income taxes, net of federal benefit........      30       33         217
  Other.............................................     (37)    (396)       (113)
                                                      ------   ------      ------
  Provision for income taxes........................  $2,936   $2,941      $2,249
                                                      ======   ======      ======
</TABLE>

6. OTHER LIABILITIES AND DEFERRED ITEMS

     Other liabilities and deferred items at December 31, 1997 consisted of the
following (in thousands):

<TABLE>
<S>                                                           <C>
Accrued pension and other postretirement benefits costs.....  $ 6,913
Insurance liability.........................................    1,374
Deferred compensation.......................................    1,282
Other.......................................................      836
                                                              -------
                                                              $10,405
                                                              =======
</TABLE>

                                      F-36
<PAGE>   132
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. RELATED PARTY TRANSACTIONS

     Viad provided the Company certain corporate general and administrative
services including legal, treasury and finance. Fees allocated to the Company
related to such services aggregated $517,000, $529,000 and $510,000 for the
years ended December 31, 1996 and 1997 and for the period from January 1, 1998
through September 17, 1998, respectively. Management believes that these
allocations are reasonable. These amounts are not necessarily indicative of the
costs that the Company would have incurred as a stand-alone entity.

     Viad manages cash and financing requirements of all its business units. The
Company's available cash is swept into the Viad account and the Company's cash
requirements are paid from the Viad account, as needed. Interest expense
reflected in the consolidated statements of income is charged by Viad based on
the prime lending rate but does not necessarily reflect the interest expense the
Company would have incurred as a stand-alone entity. Because Viad manages the
cash and financing requirements of the Company, it is not practicable to
estimate cash paid for interest.

     On September 16, 1998 Viad forgave and converted $16,630,000 due from the
Company into equity. Included in this conversion was approximately $9.3 million
of liabilities related to various Viad sponsored pension and post-retirement
benefit plans which effective August 31, 1998 were assumed by Viad (see Note
10). Such conversion represents a noncash transaction and accordingly is
excluded from the statement of cash flows for the period from January 1, 1998
through September 17, 1998.

8. COMMITMENTS AND CONTINGENCIES

     The Company leases office, warehouse facilities and retail stores under non
cancelable operating leases. The leases for the retail stores provide for
additional rentals contingent upon increases in the operating expenses of the
lessors. In addition, the Company pays concession fees, calculated as a
percentage of sales, for certain store leases. Certain of the Company's leases
contain scheduled rent increases during the term of the leases. Rent expense,
including contingent rent and concession fees, was approximately $61,105,000,
$65,264,000 and $48,034,000 respectively, for the years ended December 31, 1996
and 1997 and the period from January 1, 1998 through September 17, 1998.

     Future minimum lease payments under these operating leases at December 31,
1997 are as follows (in thousands):

<TABLE>
<S>                                                      <C>
1998...................................................  $ 4,746
1999...................................................    4,705
2000...................................................    4,729
2001...................................................      609
2002...................................................      609
                                                         -------
                                                         $15,398
                                                         =======
</TABLE>

     Net operating lease rentals and future minimum rental payments do not
include a minimum annual guarantee of $9,600,000, subject to adjustment under
certain circumstances, through 2000 under an airport duty-free concession
agreement.

     Outstanding letters of credit, principally related to purchases of
inventory, amounted to approximately $600,000 at December 31, 1997.

                                      F-37
<PAGE>   133
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
     The Company is a party to litigation matters and claims, which are in the
normal course of its operations. While the results of litigation and claims
cannot be predicted with certainty, management believes that the final outcome
of such matters will not have a material adverse effect on the Company's
consolidated financial position.

9. PENSION AND OTHER BENEFITS

  Pension Benefits

     The Company is a participating employer in the Viad Companies Retirement
Income Plan. The plan administrator is Viad Corp.

     The plan is a noncontributory defined benefit pension plan covering all
employees who meet certain age and length of service requirements. Benefits are
based on final average compensation and years of credited service. It is the
Company's policy to fund the minimum required contribution for the year.

     The Greyhound Leisure Services, Inc. Supplemental Executive Retirement Plan
(SERP) is a nonqualified plan which provides postretirement income to eligible
employees selected by the Viad Board of Directors such that SERP will be
eligible for exemption under Parts Two, Three and Four of Title I of the
Employee Retirement Income Security Act of 1974. Pension expense is calculated
based on establishing a reserve, which will accumulate at the valuation rate of
interest, less any benefit payments actually made.

     Net periodic pension cost for the years ended December 31, 1996 and 1997
for all of the Company's plans included the following components (in thousands):

<TABLE>
<CAPTION>
                                                              1996    1997
                                                              ----    ----
<S>                                                           <C>     <C>
Service cost -- benefits earned during the year.............  $306    $326
Interest cost on projected benefit obligation...............   332     366
Actual return on plan assets................................  (296)   (670)
Net amortization and deferral...............................   111     448
Other items, primarily defined contribution and
  multiemployer plans.......................................   154     181
                                                              ----    ----
Net pension cost............................................  $607    $651
                                                              ====    ====
</TABLE>

     Weighted average assumptions used were:

<TABLE>
<CAPTION>
                                                              1996    1997
                                                              ----    ----
<S>                                                           <C>     <C>
Discount rate of obligation.................................  8.0%    7.5%
                                                              ===     ===
Rate of increase in compensation levels.....................  5.0%    4.5%
                                                              ===     ===
Long-term rate of return on assets..........................  9.5%    9.5%
                                                              ===     ===
</TABLE>

                                      F-38
<PAGE>   134
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. PENSION AND OTHER BENEFITS (CONTINUED)
     The following table indicates the plans' funded status and amounts
recognized in the Company's consolidated balance sheet at December 31, 1997 (in
thousands):

<TABLE>
<CAPTION>
                                                         UNDERFUNDED        OVERFUNDED
                                                            PLANS             PLANS
                                                        (ACCUMULATED         (ASSETS
                                                          BENEFITS            EXCEED
                                                           EXCEED          ACCUMULATED
                                                           ASSETS)          BENEFITS)
                                                       ---------------    --------------
<S>                                                    <C>                <C>
Actuarial present value of benefit obligations:
Vested benefit obligation............................      $ 1,298            $3,215
                                                           =======            ======
Accumulated benefit obligation.......................      $ 1,318            $3,431
                                                           =======            ======
Projected benefit obligation.........................      $ 1,612            $3,790
Market value of plan assets, primarily equity and
  fixed income securities............................           --             3,737
                                                           -------            ------
Plan assets under projected benefit obligation.......       (1,612)              (53)
Unrecognized net transition gain.....................           (7)              (52)
Unrecognized prior service cost......................          280               (18)
Unrecognized net (gain) loss from experience
  differences........................................           68               (69)
Additional minimum liability.........................          (47)               --
                                                           -------            ------
Accrued pension cost.................................      $(1,318)           $ (192)
                                                           =======            ======
</TABLE>

POST RETIREMENT BENEFITS OTHER THAN PENSIONS

     The Company has unfunded defined benefit postretirement plans that provide
medical and life insurance for eligible employees, retirees and dependents.

     The status of such medical and life insurance plans as of December 31, 1997
is as follows (in thousands):

<TABLE>
<S>                                                           <C>
Accumulated postretirement benefit obligation:
  Retirees..................................................  $1,235
  Fully-eligible active plan participants...................   1,807
  Other active plan participants............................   2,447
                                                               5,489
Unrecognized prior service cost.............................      (9)
Unrecognized net loss from experience differences...........     (77)
                                                              ------
  Accrued postretirement benefit cost.......................  $5,403
                                                              ======
Discount rate for obligation................................    7.5%
                                                              ======
</TABLE>

                                      F-39
<PAGE>   135
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. PENSION AND OTHER BENEFITS (CONTINUED)
     The assumed health care cost trend rate used in measuring the 1997
accumulated postretirement benefit obligation was 10%, gradually declining to 5%
by the year 2002 and remaining at that level thereafter for retirees below age
65, and 7.5%, gradually declining to 5% by the year 2002 and remaining at that
level thereafter for retirees above age 65.

     A one-percent-point increase in the assumed health care cost trend rate for
each year would increase the accumulated postretirement benefit obligation as of
December 31, 1997 by approximately 16% and the ongoing annual expense by
approximately 19%.

     The net periodic postretirement benefit cost for the years ended December
31, 1996 and 1997 includes the following components (in thousands):

<TABLE>
<CAPTION>
                                                              1996    1997
                                                              ----    ----
<S>                                                           <C>     <C>
Service cost benefits earned during the period..............  $225    $299
Interest cost on accumulated postretirement benefit
  obligation................................................   273     364
Net amortization and deferral...............................  (104)    (46)
                                                              ----    ----
Net periodic postretirement benefit cost....................  $394    $617
                                                              ====    ====
</TABLE>

     The Plans discussed above were assumed by Viad effective September 16,
1998. The Company incurred approximately $802,000 of benefit costs related to
such Plans for the period from January 1, 1998 through September 17, 1998. The
assumptions used in connection with recognizing such costs were not
significantly different than the assumptions used for the year ended December
31, 1997.

10. SUBSEQUENT EVENT

     On September 17, 1998, pursuant to a Share Purchase Agreement dated as of
July 31, 1998, among Viad and Cruiseline Holdings Co. (CLH), CLH acquired all of
the outstanding shares of the Company.

                                      F-40
<PAGE>   136

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Stockholders and
Board of Directors
Onboard Media, Inc.
Cruise Management International, Inc.
Boxer Media, Inc.

     We have audited the accompanying combined statements of operations and cash
flows of Onboard Media, Inc., Cruise Management International, Inc., and Boxer
Media, Inc. for the period from January 1, 1998 through September 17, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined results of operations and cash flows of
Onboard Media, Inc., Cruise Management International, Inc., and Boxer Media,
Inc. for the period January 1, 1998 through September 17, 1998, in conformity
with generally accepted accounting principles.

                                                 /s/ ERNST & YOUNG LLP

Miami, Florida
April 27, 1999

                                      F-41
<PAGE>   137

                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

                          COMBINED STATEMENT OF INCOME
             PERIOD FROM JANUARY 1, 1998 THROUGH SEPTEMBER 17, 1998

<TABLE>
<S>                                                           <C>
Net sales...................................................  $13,204,983
Cost of sales...............................................    8,011,718
                                                              -----------
Gross profit................................................    5,193,265
Selling, general and administrative expenses................    3,034,384
Depreciation and amortization...............................      137,409
                                                              -----------
Total expenses..............................................    3,171,793
                                                              -----------
Income from operations......................................    2,021,472
Other (income) expense:
  Interest expense..........................................       18,096
  Interest and dividend income..............................     (140,987)
  Other expense.............................................       10,148
                                                              -----------
Total other income..........................................     (112,743)
                                                              -----------
Net income..................................................    2,134,215
Pro forma provision for income taxes (unaudited)............      822,000
                                                              -----------
Pro forma net income (unaudited)............................  $ 1,312,215
                                                              ===========
</TABLE>

See accompanying notes.

                                      F-42
<PAGE>   138

                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

                        COMBINED STATEMENT OF CASH FLOWS
             PERIOD FROM JANUARY 1, 1998 THROUGH SEPTEMBER 17, 1998

<TABLE>
<S>                                                           <C>
OPERATING ACTIVITIES
Net income..................................................  $2,134,215
Adjustments to reconcile net income to net cash flows
  provided by operating activities:
  Depreciation and amortization.............................     137,409
  Provision for bad debts...................................      22,065
  Changes in operating assets and liabilities:
     Trade accounts receivable..............................   1,114,788
     Due from stockholders..................................    (471,544)
     Other receivables......................................     160,984
     Work in process........................................    (426,203)
     Advances to cruise lines...............................  (3,013,000)
     Prepaid expenses and other current assets..............     (14,465)
     Accounts payable and accrued expenses..................   1,042,174
     Other current liabilities -- related party.............      23,427
     Deferred revenue.......................................   3,164,765
     Due to art gallery.....................................   1,613,254
     Due to cruise lines....................................     786,027
                                                              ----------
Net cash provided by operating activities...................   6,273,896
INVESTING ACTIVITY
Purchases of property and equipment.........................    (127,522)
                                                              ----------
Net cash used in investing activity.........................    (127,522)
FINANCING ACTIVITIES
Payment of current portion of long-term debt -- related
  party.....................................................    (183,750)
Proceeds from line of credit................................   1,000,000
Payment of line of credit...................................    (700,000)
Payment of subscription receivable..........................         100
Dividends...................................................  (5,947,661)
                                                              ----------
Net cash used in financing activities.......................  (5,831,311)
Net increase in cash........................................     315,063
Cash at beginning of period.................................     433,853
                                                              ----------
Cash at end of period.......................................  $  748,916
                                                              ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid during the period.............................  $   11,725
                                                              ==========
Net change in unrealized loss on marketable securities......  $  (55,168)
                                                              ==========
</TABLE>

See accompanying notes.

                                      F-43
<PAGE>   139

                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                               SEPTEMBER 17, 1998

1. ORGANIZATION AND NATURE OF BUSINESS

     Onboard Media, Inc., Cruise Management International, Inc., and Boxer
Media, Inc. (collectively the Companies) are Florida corporations.

     Onboard Media, Inc. sells advertising in books, magazines, and videos which
are published and distributed to hotels and cruise lines primarily in the United
States, Mexico, and the Caribbean. Onboard Media, Inc. also sells promotional
advertising which is delivered to cruise passengers through a live on-board
promotions program (port lecturing).

     Cruise Management International, Inc. administers art auctions aboard
various cruise ships. The art auction program is administered in collaboration
with an art gallery which provides the art and conducts the auctions.

     Boxer Media, Inc. performs marketing services for certain Onboard Media,
Inc. publications.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Combination

     The Companies' combined financial statements include the accounts of
Onboard Media, Inc., Cruise Management International, Inc., and Boxer Media,
Inc. All significant intercompany accounts and transactions have been eliminated
in combination.

  Revenue Recognition

     Revenue is recognized upon publication of the related books, magazines, and
videos.

  Advertising Expense

     The Companies expense advertising costs as incurred. Advertising expense
was $81,086 for the period from January 1, 1998 through September 17, 1998
(period ended September 17, 1998.)

  Property and Equipment

     Property and equipment are stated at cost. Depreciation is computed by use
of the straight-line method over the estimated useful lives of office technology
and equipment which range from 5-10 years. Leasehold improvements are amortized
over the lesser of their estimated useful lives or the remaining lease term.

  Marketable Securities

     The Companies account for investments using Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities (SFAS No. 115). Under this standard, the Companies have
classified their marketable securities as available-for-sale. Accordingly, these
marketable securities are stated at fair value with unrealized gains and losses
reported in a component of comprehensive income in the combined statement of
stockholders' equity.

                                      F-44
<PAGE>   140
                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Income Taxes

     The Companies, with the consent of their stockholders, have elected under
the Internal Revenue Code to be taxed as S corporations. In lieu of corporate
income taxes, the stockholders of S corporations are taxed on their
proportionate share of the Companies' income.

     The proforma provision for income taxes represents a provision for income
taxes as if the Company had operated as a subchapter C corporation.

  Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

3. CONCENTRATION OF CREDIT RISKS

     The Companies earned commissions of approximately $1,036,000 from two
cruise lines under common ownership which approximated 76% of total commissions
for the period ended September 17, 1998.

     The Companies have an exclusive, multi-year agreement with one art gallery
to provide all of the art and conduct all of the auctions aboard the cruise
ships. The Companies do not anticipate any interruptions in the agreement with
the gallery. However, in the event that the agreement is disrupted for any
reason, management believes that a similar agreement could be obtained with
another gallery.

4. PROPERTY AND EQUIPMENT

     Depreciation expense for the period ended through September 17, 1998 was
$134,173.

5. RELATED PARTY TRANSACTIONS

     The Companies entered into a lease with a limited partnership which is
owned by certain shareholders of the Companies. The lease commenced on April 30,
1996 and is for a term of ten years (see Note 6).

6. COMMITMENTS AND CONTINGENCIES

     The Companies have executed contracts with various cruise lines and hotels
which grant them the exclusive right to publish and sell advertising in books,
magazines and videos and to conduct live on-board promotions programs on the
cruise ships. The contracts range from one to six years and

                                      F-45
<PAGE>   141
                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
require various guaranteed minimum payments. Obligations for guaranteed minimum
payments under such contracts as of September 17, 1998 are as follows:

<TABLE>
<S>                                                             <C>
1998 (September 18 through December 31).....................    $ 1,260,750
1999........................................................      7,010,000
2000........................................................      6,249,000
2001........................................................      3,557,500
2002........................................................      3,500,000
2003........................................................        180,000
                                                                -----------
                                                                $21,757,250
                                                                ===========
</TABLE>

     Total cruise line fees and magazine royalties under the above agreements
amounted to $6,106,556 for the period ended September 17, 1998.

  Stockholder Agreement

     In 1994, the Companies entered into an agreement with two of their
stockholders. The agreement provides one of the Companies' stockholders a base
minimum salary of $100,000 annually subject to $25,000 annual increases and
contains a noncompete clause for the term of the agreement and for two years
thereafter. The agreement provides another stockholder of the Companies a base
minimum annual consulting fee of $6,000 subject to $6,250 annual increases and
contains a noncompete clause for the term of the agreement and for an indefinite
period of time thereafter. The total salary and consulting fees paid to these
stockholders for the period ended September 17, 1998 was $127,885 and $16,667,
respectively.

  Operating leases

     During 1996, the Company entered into a 10 year operating lease agreement
with a limited partnership which is owned by certain shareholders of Companies.
Rental payments including sales tax are $22,188 per month. In addition, the
lease requires the Company to pay all operating costs associated with the
building. Rent expense and operating costs including sales tax paid to the
partnership under this agreement was $198,688 for the period of January 1, 1998
through September 17, 1998. Future minimum lease payments including sales tax as
of September 17, 1998 are as follows:

<TABLE>
<S>                                                           <C>
1998 (September 18 through December 31).....................  $   76,177
1999........................................................     266,250
2000........................................................     266,250
2001........................................................     266,250
2002........................................................     266,250
2003........................................................     266,250
Thereafter..................................................     621,250
                                                              ----------
                                                              $2,028,677
                                                              ==========
</TABLE>

                                      F-46
<PAGE>   142
                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. RETIREMENT PLAN

     The Companies have a qualified retirement plan for all eligible employees
under Section 401(k) of the Internal Revenue Code. Under the plan, the
Companies' contribution for any year is determined at the discretion of the
Board of Directors; however, in no event may elective deferrals exceed a
specific dollar amount determined by the Internal Revenue Service. Total
contributions made to the 401(k) plan were approximately $26,236 for the period
ended September 17, 1998.

8. IMPACT OF YEAR 2000 -- UNAUDITED

     The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any computer programs
that have time sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations, causing disruptions of operations, including, but not limited
to, a temporary inability to process transactions, send invoices, or engage in
similar normal business activities.

     The Companies have developed and are in the process of implementing a
comprehensive Year 2000 plan which is intended to ensure that the Year 2000
issue will not pose significant operational problems for its computer systems.
Both the development of this plan and its implementation, which is ongoing, are
being conducted by the Companies' personnel under the supervision of a third
party consultant. Management of the Companies expects that its Year 2000 plan
will successfully identify and rectify any potential computer system
deficiencies by its expected completion date in July, 1999. As a result,
management believes that no materially significant adverse consequences
regarding the Year 2000 issue will be encountered by the Companies.

9. SUBSEQUENT EVENT

     On September 17, 1998, pursuant to a Stock Subscription and Exchange
Agreement dated as of August 27, 1998, among Cruiseline Holdings Co. (CLH) and
Philip Levine, Jerry Chafetz and several trusts, CLH acquired all of the
outstanding common stock of the Companies.

                                      F-47
<PAGE>   143

                          INDEPENDENT AUDITORS' REPORT

The Stockholders and
Board of Directors
On-Board Media, Inc. and affiliates

     We have audited the accompanying combined balance sheet of On-Board Media,
Inc. and affiliates (the "Company") as of December 31, 1997 and the related
combined statements of income, changes in stockholders' equity and cash flows
for the years ended December 31, 1996 and 1997. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of On-Board Media, Inc.
and affiliates as of December 31, 1997 and the results of their operations and
their cash flows for the years ended December 31, 1996 and 1997 in conformity
with generally accepted accounting principles.

                            /s/ GOLDSTEIN SCHECHTER PRICE LUCAS HORWITZ & CO.,
                            P.A.

Miami, Florida
May 20, 1998

                                      F-48
<PAGE>   144

                      ON-BOARD MEDIA, INC. AND AFFILIATES

                             COMBINED BALANCE SHEET
                               DECEMBER 31, 1997

<TABLE>
<S>                                                             <C>
                                  ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................    $   433,853
  Trade accounts receivable, net of allowance for doubtful
     accounts of $57,100....................................      7,170,724
  Due from affiliates.......................................         12,613
  Due from stockholder......................................         64,267
  Other receivables.........................................        255,679
  Prepaid expenses and other current assets.................      1,329,763
                                                                -----------
          Total Current Assets..............................      9,266,899
                                                                -----------
PROPERTY AND EQUIPMENT, NET.................................        794,048
                                                                -----------
OTHER ASSETS:
  Organization costs, net...................................          1,044
  Marketable securities.....................................        118,351
  Other assets..............................................         10,352
                                                                -----------
          Total Other Assets................................        129,747
                                                                -----------
          TOTAL ASSETS......................................    $10,190,694
                                                                ===========
                   LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt, related party..........    $   183,750
  Accounts payable and accrued expenses.....................        425,283
  Due to art gallery........................................      1,749,560
  Deferred revenue..........................................      1,399,720
  Line of credit............................................        700,100
                                                                -----------
          Total Current Liabilities.........................      4,458,413
                                                                -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
  Common stock..............................................          1,600
  Additional paid-in capital................................        129,500
  Retained earnings.........................................      5,609,821
  Accumulated other comprehensive loss......................         (8,540)
                                                                -----------
                                                                  5,732,381
  Less subscriptions receivable.............................           (100)
                                                                -----------
          Total Stockholders' Equity........................      5,732,281
                                                                -----------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........    $10,190,694
                                                                ===========
</TABLE>

See Accompanying Notes to Combined Financial Statements

                                      F-49
<PAGE>   145

                      ON-BOARD MEDIA, INC. AND AFFILIATES

                         COMBINED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

<TABLE>
<CAPTION>
                                                                 1996           1997
                                                              -----------    -----------
<S>                                                           <C>            <C>
NET SALES...................................................  $14,060,959    $18,292,148
COST OF PRODUCTS SOLD.......................................    9,549,008     10,978,575
                                                              -----------    -----------
GROSS PROFIT................................................    4,511,951      7,313,573
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................    3,297,208      3,805,404
AMORTIZATION OF INTANGIBLES.................................      585,931          5,447
                                                              -----------    -----------
                                                                3,883,139      3,810,851
INCOME FROM OPERATIONS BEFORE OTHER INCOME (EXPENSE)........      628,812      3,502,722
OTHER INCOME (EXPENSE):
  Interest expense..........................................      (75,504)       (50,044)
  Interest income...........................................       97,603        142,270
  Loss on sale of property and equipment....................      (34,782)            --
  Write-off of loans to affiliate...........................      (13,294)            --
  Gain on sale of marketable securities.....................           --         68,419
                                                              -----------    -----------
                                                                  (25,977)       160,645
                                                              -----------    -----------
NET INCOME..................................................      602,835      3,663,367
PRO FORMA PROVISION FOR INCOME TAXES (unaudited)............      232,000      1,410,000
                                                              -----------    -----------
PRO FORMA NET INCOME (unaudited)............................  $   370,835    $ 2,253,367
                                                              ===========    ===========
</TABLE>

See Accompanying Notes to Combined Financial Statements

                                      F-50
<PAGE>   146

                      ON-BOARD MEDIA, INC. AND AFFILIATES

             COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

<TABLE>
<CAPTION>
                                     SHARES
                                 ---------------                        ACCUMULATED
                                  COMMON STOCK                             OTHER
                                 ---------------                       COMPREHENSIVE
                                           NON-             PAID-IN       (LOSS)        RETAINED    COMPREHENSIVE
                                 VOTING   VOTING   AMOUNT   CAPITAL       INCOME        EARNINGS       INCOME         TOTAL
                                 ------   ------   ------   --------   -------------   ----------   -------------   ----------
<S>                              <C>      <C>      <C>      <C>        <C>             <C>          <C>             <C>
BALANCE -- January 1, 1996.....    850      --     $  850   $ 30,150       ($7,002)    $2,392,696    $       --     $2,416,694
COMPREHENSIVE
  INCOME:
  Net Income...................                                                           602,835       602,835        602,835
  Changes in unrealized gain in
     marketable securities.....                                             16,329                       16,329         16,329
                                                                                                     ----------
                                                                                                     $  619,164
                                                                                                     ==========
DIVIDEND DISTRIBUTIONS.........                                                          (712,982)                    (712,982)
SURRENDERED STOCK..............   (137)              (137)      (650)                                                     (787)
REPLACEMENT STOCK ISSUED.......    713      74        787    100,000                                                   100,787
ISSUANCE OF STOCK..............    100                100                                                                  100
                                 -----      --     ------   --------      --------     ----------                   ----------
BALANCE -- January 1, 1997.....  1,526      74      1,600    129,500         9,327      2,282,549                    2,422,976
COMPREHENSIVE
  INCOME:
  Net Income...................                                                         3,663,167     3,663,367      3,663,367
  Changes in unrealized loss in
     marketable securities.....                                            (17,867)                     (17,867)       (17,867)
                                                                                                     ----------
                                                                                                     $3,645,500
                                                                                                     ==========
DIVIDEND DISTRIBUTIONS.........                                                          (336,095)                    (336,095)
                                 -----      --     ------   --------      --------     ----------                   ----------
BALANCE -- December 31, 1997...  1,526      74     $1,600   $129,500       ($8,540)    $5,609,821                   $5,732,381
                                 =====      ==     ======   ========      ========     ==========                   ==========
</TABLE>

See Accompanying Notes to Combined Financial Statements

                                      F-51
<PAGE>   147

                      ON-BOARD MEDIA, INC. AND AFFILIATES

                       COMBINED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

<TABLE>
<CAPTION>
                                                                 1996           1997
                                                              -----------    -----------
<S>                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................  $   602,835    $ 3,663,367
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Amortization...........................................      585,932          5,447
     Depreciation...........................................       99,455        158,343
     Write-off of loans to affiliate........................       13,294             --
     Loss on sale of marketable securities..................           --        (68,419)
     Loss on sale of property and equipment.................       34,782             --
     Write-off of receivables...............................           --         72,543
     Provision for bad debt.................................           --         16,248
     Compensation for stock issuance........................      100,000             --
  Changes in operating assets and liabilities:
     Trade accounts receivable, net of allowance for
      doubtful accounts.....................................   (1,917,655)    (1,751,354)
     Other receivables......................................           --       (255,679)
     Prepaid expenses and other current assets..............     (455,661)      (729,984)
     Other assets...........................................       (5,200)         5,965
     Accounts payable and accrued expenses..................      294,662       (182,259)
     Due to art gallery.....................................      680,943        725,928
     Other current liabilities..............................       17,046        (17,046)
     Deferred revenue.......................................      952,844       (353,150)
                                                              -----------    -----------
       Total Adjustments....................................      400,442     (2,373,417)
                                                              -----------    -----------
  Net Cash Provided by Operating Activities.................    1,003,277      1,289,950
                                                              -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Loans to affiliates.......................................      (55,635)        27,002
  Loans to stockholders.....................................           --        (64,267)
  Purchases of marketable securities........................       (3,547)      (366,338)
  Proceeds from sale of marketable securities...............           --        415,290
  Proceeds from sale of property and equipment..............        2,549             --
  Purchases of property and equipment.......................     (567,383)      (293,003)
                                                              -----------    -----------
       Net Cash Used in Investing Activities................     (624,016)      (281,316)
                                                              -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of long-term debt, related party..................     (245,000)      (245,000)
  Proceeds from line of credit..............................      750,000        700,000
  Payment of line of credit.................................           --       (749,900)
  Payment of note payable...................................           --       (200,000)
  Proceeds from borrowings from affiliates..................        5,104             --
  Payments of due to affiliates.............................           --         (5,104)
  Change in subscriptions receivable........................        9,900             --
  Distributions.............................................     (712,982)      (336,095)
  Issuance of common stock..................................          100             --
                                                              -----------    -----------
       Net Cash Used in Financing Activities................     (192,878)      (836,099)
                                                              -----------    -----------
</TABLE>

                                      F-52
<PAGE>   148
                      ON-BOARD MEDIA, INC. AND AFFILIATES

                COMBINED STATEMENTS OF CASH FLOWS -- (CONTINUED)
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

<TABLE>
<CAPTION>
                                                                 1996           1997
                                                              -----------    -----------
<S>                                                           <C>            <C>
NET INCREASE IN CASH........................................      186,383        172,535
CASH:
  Beginning of year.........................................       74,935        261,318
                                                              -----------    -----------
  End of year...............................................  $   261,318    $   433,853
                                                              ===========    ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid.............................................  $    78,189    $    54,008
                                                              ===========    ===========
  Net change in unrealized holding (loss) gain on available
     for sale securities....................................  $   (16,329)   $   (17,867)
                                                              ===========    ===========
</TABLE>

See Accompanying Notes to Combined Financial Statements

                                      F-53
<PAGE>   149

                      ON-BOARD MEDIA, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1997

NOTE 1 -- THE COMPANY

     On-Board Media, Inc. and affiliates (the "Company"), sells advertising in
books, magazines, and videos which are published and distributed to hotels and
cruise ships primarily in the United States, Mexico, and the Caribbean. The
Company also sells promotional advertising which is delivered to cruise
passengers through a live on-board promotions program ("port lecturing").

     In addition, the Company administers art auctions aboard various cruise
ships primarily in the Caribbean and Mexico. The Company has contracts with
various cruise lines which grant the Company the exclusive right to administer
these art auctions. The Company has a contract with an art gallery which
provides the art and conducts the auctions.

     The accompanying combined financial statements include the accounts of
On-board, Media, Inc., Cruise Management International, Inc. and Boxer Media,
Inc.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Combination -- The accompanying combined financial statements
include the accounts of the companies listed in Note 1, all of which have common
control. All significant intercompany transactions have been eliminated in the
combination.

     Cash and Cash Equivalents -- All highly liquid investments with a maturity
of three months or less from the date of purchase are considered cash
equivalents. The Company maintains its cash in bank deposit accounts which, at
times, exceed federally insured limits. The amount in excess of insured limits
was approximately $221,000 at December 31, 1997. In addition during the year
ended December 31, 1997, the Company maintained two other bank accounts which
are not insured by the Federal Deposit Insurance Corporation. The federally
uninsured amount was approximately $2,829,000 at December 31, 1997. The Company
has not experienced any losses in such accounts. The Company's management
believes that the Company is not exposed to any significant credit risk on its
cash balances.

     Trade Accounts Receivable -- The Company's policy is not to require
collateral on trade accounts receivable, which includes port lecturing,
publishing and video receivables. Trade accounts receivable includes
approximately $1,281,000 of receivables at December 31, 1997 which are related
to unpublished books, magazines and videos.

     Work-in-Process -- Publication and video costs are deferred along with the
corresponding revenue until the related publications and videos are published.
Work-in-process amounted to $217,377 at December 31, 1997 and is included in
prepaid expenses and other current assets.

     Deferred Revenue and Revenue Recognition -- Deferred revenue reflects
advertising revenue which has been sold in advance of the publication of the
related books, magazines, and videos. Revenue is recognized upon publication of
the related books, magazines, and videos.

     Due from Cruise Lines and Due to Art Gallery -- The cruise lines collect
all of the revenues from art auction sales made on their cruise ships and submit
the proceeds to the Company net of the cruise lines' fees. The Company then
remits the balance due to the art gallery after deducting its commission, which
is recorded as revenues in the appropriate period. In addition, the cruise lines
may retain additional contractual fees at a higher revenue-sharing rate. Such
additional fees are expended when incurred (see Note 7). Due from cruise lines
amount to $1,697,006 at December 31, 1997 and is included in trade accounts
receivable.

                                      F-54
<PAGE>   150
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     Property and Equipment -- Property and equipment are stated at cost.
Depreciation expense has been recorded by the Company utilizing the
straight-line method over the assets estimated useful lives.

     The estimated useful lives for depreciation are as follows:

<TABLE>
<S>                                                          <C>
Office and technology equipment............................   5 - 7 years
Leasehold improvements.....................................  5 - 10 years
</TABLE>

     Marketable Securities -- The Company's investment in marketable equity
securities is classified as available for sale and is recorded at fair market
value. Unrealized holding gains and losses are reported as a separate component
of stockholders' equity.

     Income Taxes -- The Company has elected to be treated as an S corporation
whereby the profits and losses of the Company are passed directly to the
stockholders for inclusion in their individual tax returns. Therefore, no
provision for income taxes is reflected in the accompanying combined financial
statements.

     The Pro Forma provision for income taxes represents a provision for income
taxes as if the Company had operated as a subchapter C corporation.

     Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions. Those estimates and assumptions affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at December 31, 1997 and the reported amounts of revenues
and expenses during the years ended December 31, 1996 and 1997. Actual results
could differ from those estimates.

     Recently Adopted Accounting Pronouncement -- The Company adopted SFAS No.
130, "Reporting Comprehensive Income" on December 31, 1997. The Company reported
comprehensive income in its combined statement of changes in stockholders'
equity. The adoption of SFAS No. 130 resulted in revised and additional
disclosures but had no effect on the financial position or results of operations
of the Company.

NOTE 3 -- CONCENTRATIONS

     At December 31, 1997, the Company's trade accounts receivable concentrated
approximately in the following geographic regions:

<TABLE>
<CAPTION>
                                                              1997
                                                              ----
<S>                                                           <C>
Caribbean...................................................   66%
United States...............................................   23
Other.......................................................   11
                                                              ---
                                                              100%
                                                              ===
</TABLE>

     In addition, the Company has earned commissions of approximately $485,000
and $870,000 from one cruise line which approximated 49% and 55% of total
commissions for the years ended December 31, 1996 and 1997, respectively. This
same cruise line's balance of approximately

                                      F-55
<PAGE>   151
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 -- CONCENTRATIONS (CONTINUED)
$1,147,500 due to the Company at December 31, 1997 represents approximately 68%
of the total due from all cruise lines (included in trade accounts receivable).

     The Company has an exclusive, multi-year agreement with one art gallery to
provide all of the art and conduct all of the auctions aboard the cruise ships.
The Company does not anticipate any interruptions in the agreement with the
gallery. However, in the event that the agreement was disrupted for any reason,
management believes that a similar agreement could be obtained with another art
gallery.

NOTE 4 -- PROPERTY AND EQUIPMENT

     At December 31, 1997 property and equipment consisted of the following:

<TABLE>
<S>                                                           <C>
Office and technology equipment.............................  $  865,763
Leasehold improvements......................................     257,257
                                                              ----------
                                                               1,123,020
Less accumulated depreciation...............................     328,972
                                                              ----------
                                                              $  794,048
                                                              ==========
</TABLE>

     Depreciation expense for the years ended December 31, 1996 and 1997 was
$99,455 and $158,343, respectively.

NOTE 5 -- MARKETABLE SECURITIES

     The Company has a cash management program which provides for the investment
of excess cash balances in marketable securities. These marketable securities
consist primarily of equity securities from various public companies traded
overseas and in the United States.

     The Company has adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities" and,
therefore, marketable securities are adjusted to fair value which at December
31, 1997 is as follows:

<TABLE>
<S>                                                           <C>
Marketable securities, at cost..............................  $126,891
Unrealized loss.............................................    (8,540)
                                                              --------
Fair value..................................................  $118,351
                                                              ========
</TABLE>

     The Company sold $415,290 of marketable securities at a gain of $68,419
during the year ended December 31, 1997. No marketable securities were sold
during the year ended December 31, 1996.

                                      F-56
<PAGE>   152
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 -- COMMON STOCK

     A summary of common stock is as follows:

<TABLE>
<CAPTION>
                               ONBOARD                CRUISE
                             MEDIA, INC.            MANAGEMENT
                           ----------------    INTERNATIONAL, INC.
                                      NON-     --------------------       BOXER
                           VOTING    VOTING    VOTING    NON-VOTING    MEDIA, INC.    COMBINED
                           ------    ------    ------    ----------    -----------    --------
<S>                        <C>       <C>       <C>       <C>           <C>            <C>
Total Value..............  $  713    $   37    $  713      $   37        $   100       $1,600
                           ======    ======    ======      ======        =======       ======
Par value per share......  $    1    $    1    $    1      $    1        $     1
Authorized shares........   1,000     1,000     1,000       1,000         10,000
Shares issued and
  outstanding............     713        37       713          37            100
</TABLE>

NOTE 7 -- ART AUCTION FEES

     The Company entered into a four-year agreement with a cruise line which
commenced in July 1996 and called for a higher revenue-sharing percentage to the
cruise line during the first nine months of the agreement, up to a predetermined
maximum amount. The Company recorded this increase in revenue-sharing percentage
as art auction fees in the amount of $47,812 and $104,276 included in cost of
products sold for the years ended December 31, 1996 and 1997, respectively.

NOTE 8 -- RELATED PARTY TRANSACTIONS

     Due from Affiliates -- The Company made advances to affiliated entities
which are related through common ownership. These advances are due on demand and
bear interest at 7% per annum and amounted to $12,613 at December 31, 1997.

     Due from Stockholder -- The amount due from stockholder arises from
non-interest bearing short-term cash advances. The outstanding balance of these
advances at December 31, 1997 amounted to $64,267.

     Common Stock -- During 1996, the majority stockholder of the Company
returned 137 shares of stock to the Company which then concurrently issued 787
shares to a senior executive of the Company, the value of which was recorded as
compensation.

     Note Payable -- related party  -- At December 31, 1996, the Company had a
$200,000 note payable to a member of the majority stockholder's immediate
family. Interest on this note was payable quarterly at 10% per annum. Interest
expense for the year ended December 31, 1997 was $11,288. On July 25, 1997, the
note was paid in full.

     Long-Term Debt -- related party -- See Note 10.

     Operating Lease -- The Company entered into an agreement with a partnership
related through common ownership to lease its administrative offices. The lease
commenced on April 30, 1996 and is for a term of ten years (Note 12).

NOTE 9 -- LINE OF CREDIT

     The Company has available a $750,000 line of credit with a bank. The line
of credit is collateralized by all of On-Board Media, Inc.'s assets and is
personally guaranteed by one of the

                                      F-57
<PAGE>   153
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9 -- LINE OF CREDIT (CONTINUED)
Company's stockholders. Interest is payable on a monthly basis at the bank's
base rate of 8.5% per annum.

NOTE 10 -- LONG-TERM DEBT -- RELATED PARTY

     The Company has an outstanding balance of $183,750 on a note payable to a
partnership owned by one of the stockholders of the Company at December 31,
1997. The note matures on September 1, 1998 and is payable $61,250 quarterly,
plus interest at 10%.The note is collateralized by substantially all of On-Board
Media, Inc.'s assets and the principal stockholder's stock in On-Board Media,
Inc. The loan is also guaranteed by an affiliate related through common
ownership. Interest expense, relating to this note was $52,960 and $32,003 for
the years ended December 31, 1996 and 1997, respectively.

NOTE 11 -- STOCK-BASED COMPENSATION

     On October 19, 1996, a senior executive of the Company received 37.5 shares
of stock, which are fully vested as compensation. The fair market value of the
stock of $100,000 was computed by management as of October 19, 1996 and was
recorded as a contribution to capital.

NOTE 12 -- COMMITMENTS AND CONTINGENCIES

     Contractual agreements -- The Company has executed contracts with various
cruise lines and hotels which grant it the exclusive right to publish and sell
advertising in books, magazines and videos and to conduct live on-board
promotions programs on the cruise ships. The contracts range from 1 to 6 years
and require various guaranteed minimum payments.

     Obligations for guaranteed minimum payments under such contracts as of
December 31, 1997 are as follows:

<TABLE>
<S>                                                  <C>
1998.............................................    $ 3,499,250
1999.............................................      3,921,500
2000.............................................      2,787,500
2001.............................................         97,500
2002.............................................         50,000
                                                     -----------
                                                     $10,355,750
                                                     ===========
</TABLE>

     Total cruise line fees and magazine royalties under the above agreements
amounted to approximately $6,603,000 and $7,598,000 for the years ended December
31, 1996 and 1997, respectively.

     The Company has executed contracts with various cruise lines which grant it
the exclusive right to administer art auctions on the cruise ships. The
contracts range from several months to more than 4 years and require various
guaranteed minimum payments during the first few years of the

                                      F-58
<PAGE>   154
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
agreements. Obligations for guaranteed minimum payments under such contracts as
of December 31, 1997 are as follows:

<TABLE>
<S>                                                     <C>
1998..................................................  $530,500
1999..................................................    85,000
2000..................................................     4,000
                                                        --------
                                                        $619,500
                                                        ========
</TABLE>

     Total art auction fees under the above agreements are included in cost of
products sold and amounted to approximately $627,000 and $183,000 for the years
ended December 31, 1996 and 1997, respectively.

     Stockholder Agreement -- In 1994 the Company entered into an agreement with
two of its stockholders. The agreement provides one of the Company's
stockholders a base minimum salary of $100,000 annually subject to $25,000
annual increases and contains a non-compete clause for the term of the agreement
and for two years thereafter. The agreement provides another stockholder of the
Company a base minimum annual consulting fee of $6,000 subject to $6,250 annual
increases and contains a non-compete clause for the term of the agreement and
for an indefinite period of time thereafter. The total salary and consulting
fees paid to these stockholders was $21,208 and $156,616 for the years ended
December 31, 1996 and 1997, respectively.

     Operating leases -- During 1996, the Company entered into a 10-year
operating lease agreement with a partnership related through common control for
its administrative offices. Rental payments, including sales tax, are
approximately $22,000 per month. In addition, the lease requires the Company to
pay all operating costs associated with the building. The Company, along with
one of its stockholders, are guarantors on the $1.5 million mortgage associated
with this building.

     Future minimum lease payments, including sales tax, as of December 31, 1997
are as follows:

<TABLE>
<S>                                                   <C>
1998................................................  $  259,750
1999................................................     259,750
2000................................................     259,750
2001................................................     259,750
2002................................................     259,750
Thereafter..........................................     865,833
                                                      ----------
                                                      $2,164,583
                                                      ==========
</TABLE>

     Rent expense and operating costs, including sales tax, was approximately
$196,000 and $419,000 for the years ended December 31, 1996 and 1997,
respectively.

     Retirement Plan -- The Company has a qualified retirement plan for all
eligible employees under sec. 401 of the Internal Revenue Code. Under the plan,
the Company's contribution for any year is determined at the discretion of the
Board of Directors; however, in no event may elective deferrals exceed a
specific dollar amount determined by the Internal Revenue Service. Total
contributions made to the 401(K) plan were $0 and $21,793 for the years ended
December 31, 1996 and 1997, respectively.

                                      F-59
<PAGE>   155

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Nuance Global Ships, Inc.

     We have audited the accompanying statements of operations and cash flows of
Nuance Global Ships, Inc. (a wholly owned subsidiary of Nuance Global Traders
Inc.) for the period from December 26, 1997 through September 24, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Nuance
Global Ships, Inc. for the period from December 26, 1997 through September 24,
1998, in conformity with generally accepted accounting principles.

                                             /s/ ERNST & YOUNG LLP
Miami, Florida
July 16, 1999

                                      F-60
<PAGE>   156

                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
                         PERIOD FROM DECEMBER 26, 1997
                           THROUGH SEPTEMBER 24, 1998

<TABLE>
<S>                                                             <C>
Net sales...................................................    $ 52,209,630
Cost of sales...............................................      25,001,906
                                                                ------------
Gross profit................................................      27,207,724
Selling, general and administrative expenses................      30,914,258
                                                                ------------
Loss from operations........................................      (3,706,534)
Other (income) expense:
  Management fee to Nuance Global Traders Inc...............         566,000
  Interest income...........................................         (82,770)
Total other expense.........................................         483,230
Loss before income taxes....................................      (4,189,764)
Provision for income taxes..................................         172,460
                                                                ------------
Net loss....................................................    $ (4,362,224)
                                                                ============
Retained earnings at beginning of year......................    $ 15,338,713
Distribution to parent......................................     (12,280,825)
                                                                ------------
Accumulated deficit at end of year..........................    $ (1,304,346)
                                                                ============
</TABLE>

See accompanying notes.

                                      F-61
<PAGE>   157

                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                            STATEMENT OF CASH FLOWS
                         PERIOD FROM DECEMBER 26, 1997
                           THROUGH SEPTEMBER 24, 1998

<TABLE>
<S>                                                             <C>
OPERATING ACTIVITIES
Net loss....................................................    $(4,362,224)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation and amortization.............................        350,127
  Provision for shrinkage reserve...........................         71,977
  Deferred income taxes.....................................          2,247
  Changes in operating assets and liabilities:
     Accounts receivable....................................       (581,893)
     Notes receivable.......................................        418,128
     Inventory..............................................     (4,516,754)
     Prepaid expenses and other current assets..............         80,487
     Accounts payable.......................................        268,998
     Accrued expenses.......................................     (1,343,537)
                                                                -----------
  Net cash used in operating activities.....................     (9,612,444)
INVESTING ACTIVITIES
Purchases of property and equipment.........................       (281,136)
Proceeds from sale of property and equipment................        448,784
                                                                -----------
Net cash provided by investing activities...................        167,648
                                                                -----------
FINANCING ACTIVITIES:
  Due to affiliates, net....................................      6,962,019
                                                                -----------
Net cash provided by financing activities...................      6,962,019
Net decrease in cash and cash equivalents...................     (2,482,777)
Cash and cash equivalents, beginning of period..............      3,033,881
                                                                -----------
Cash and cash equivalents, end of period....................    $   551,104
                                                                ===========
SUPPLEMENTAL NON-CASH DISCLOSURE
Assets transferred from affiliate...........................    $   552,314
                                                                ===========
</TABLE>

See accompanying notes.

                                      F-62
<PAGE>   158

                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                         NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

  Nature of Business

     Nuance Global Ships, Inc. (the Company), a Florida corporation and a wholly
owned subsidiary of Nuance Global Traders Inc., operates duty free retail stores
on cruise ships.

  Basis of Presentation

     The cruise ship operations for the period from December 26, 1997 through
June 25, 1998 were included in the consolidated accounts of Nuance Global
Traders (USA), Inc., a California corporation and a wholly owned subsidiary of
Nuance Global Traders Inc., and were not presented as a separate reporting
entity. Accordingly, the cruise ship operations for the period from December 26,
1997 through June 25, 1998 included in the accompanying financial statements
were carved out of Nuance Global Traders (USA) Inc.'s historical accounting
records. The cruise ship operations for the period from June 26, 1998 through
September 24, 1998 were included in the accounts of Nuance Global Ships, Inc.
and presented as a separate reporting entity.

     The accompanying financial statements include costs allocated to Nuance
Global Ships, Inc. by Nuance Global Traders Inc. for certain functions and
services they performed centrally. All allocations and estimates were based on
assumptions Nuance Global Traders Inc.'s management believed were reasonable in
the circumstances. These allocations and estimates are not necessarily
indicative of the costs and expenses that would have resulted if Nuance Global
Ships, Inc. had operated as a separate entity. See Note 4 for a description of
the functions and services and the amounts allocated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Accounts Receivable

     Settlement of amounts due from the cruise line companies occurs upon
completion of each voyage. Credit losses are provided for in the financial
statements and have been within management's expectations.

  Property and Equipment

     Depreciation is computed by use of the straight-line method over the
estimated useful life of vehicles, furniture, fixtures and equipment, which
ranges from 3 to 5 years.

  Revenue Recognition

     Revenue from retail product sales is recorded upon customer purchase.

  Income Taxes

     The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred
income tax assets and liabilities are determined based upon differences between
the financial statement and income tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of

                                      F-63
<PAGE>   159
                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
management, it is more likely than not that some portion of the income tax
assets will not be realized.

  Advertising Expense

     The Company expenses advertising costs as incurred. Advertising expense for
the period from December 26, 1997 through September 24, 1998 (period ended
September 24, 1998) amounted to approximately $17,000.

  Comprehensive Income

     In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in financial
statements. SFAS No. 130 is effective for fiscal years beginning after December
15, 1997. The adoption of SFAS No. 130 had no impact on the Company's net loss.
There are no other components of comprehensive loss other than the Company's net
loss for the period ended September 24, 1998.

  Use of Estimates

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

3. INCOME TAXES

     The United States and foreign components of (loss) income before income
taxes are as follows:

<TABLE>
<CAPTION>
                                                             PERIOD ENDED
                                                             SEPTEMBER 24,
                                                                 1998
                                                             -------------
<S>                                                          <C>
U.S........................................................   $(4,910,774)
Foreign....................................................       721,010
                                                              -----------
Total......................................................   $(4,189,764)
                                                              ===========
</TABLE>

     The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
                                                             PERIOD ENDED
                                                             SEPTEMBER 24,
                                                                 1998
                                                             -------------
<S>                                                          <C>
U.S........................................................    $     --
Foreign....................................................     172,460
                                                               --------
Total......................................................    $172,460
                                                               ========
</TABLE>

                                      F-64
<PAGE>   160
                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     The differences between the reported provision from income taxes and income
taxes computed at the U.S. statutory federal income tax rate are as follows:

<TABLE>
<CAPTION>
                                                             PERIOD ENDED
                                                             SEPTEMBER 24,
                                                                 1998
                                                             -------------
<S>                                                          <C>
Income tax expense computed at the U.S. statutory rate of
  34%......................................................   $(1,424,520)
State income taxes, net of federal impact..................      (251,386)
Increase in valuation allowance............................     1,848,366
                                                              -----------
Total......................................................   $   172,460
                                                              ===========
</TABLE>

4. RELATED PARTY TRANSACTIONS

     Nuance Global Traders Inc. provided the Company with certain corporate
general and administrative services including legal, treasury and finance fees
paid to Nuance Global Traders Inc. for such services aggregated approximately
$1,407,000 for the period ended September 24, 1998, of this amount, $566,000 is
classified as a management fee. The remainder is included in selling, general
and administrative expenses.

5. COMMITMENTS AND CONTINGENCIES

     The Company leases office, warehouse facilities and retail stores under
non-cancelable operating leases. The leases for the retail stores provide for
additional rentals contingent upon increases in the operating expenses of the
lessors. In addition, the Company pays concession fees, calculated as a
percentage of sales, for certain store leases. Certain of the Company's leases
contain scheduled rent increases during the term of the leases. Rent expense,
including contingent rent and concession fees, were approximately $19,880,000
for the period ended September 24, 1998.

6. SUBSEQUENT EVENT

     On December 15, 1998, pursuant to an Asset Purchase Agreement, among
Starboard Holdings LTD (Starboard) and Nuance Global Traders Ltd., the parent
company of Nuance Global Traders, Inc., Starboard acquired certain assets and
assumed certain liabilities of Nuance Global Ships, Inc.

                                      F-65
<PAGE>   161

                            STARBOARD CORPORATE LOGO
<PAGE>   162

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the various expenses to be paid solely by
the Registrant in connection with the sale and distribution of the securities
being registered, other than the underwriting discounts and commissions. All
amounts shown are estimates, except the Securities and Exchange Commission
registration fee and the National Association of Securities Dealers, Inc. filing
fee.

<TABLE>
<CAPTION>
                            ITEM                              AMOUNT
                            ----                              -------
<S>                                                           <C>
SEC Registration Fee........................................  $34,750
NASD Filing Fee.............................................   13,000
Nasdaq National Market Listing Fee..........................        *
Blue Sky Fees and Expenses (including attorney's fees and
  expenses).................................................        *
Transfer Agent and Registrar Fees...........................        *
Accounting Fees and Expenses................................        *
Legal Fees and Expenses.....................................        *
Printing Expenses...........................................        *
Miscellaneous...............................................        *
                                                              -------
     Total..................................................  $     *
                                                              =======
</TABLE>

-------------------------
* To be provided by Amendment.

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The Registrant's Amended and Restated Articles of Association provides for
the indemnification of members of the Supervisory Board and Management Board and
officers to the fullest extent permitted by the law of The Netherlands.

     The Registrant has entered into indemnity agreements with Philip L. Levine
and Jerry Chafetz. The agreements provide that the Registrant will, to fullest
extent permitted by law, indemnify Philip L. Levine and Jerry Chafetz, as the
case may be, if he is made a party, or threatened to be made a party, in any
action, suit or proceeding by reason of his service with the Registrant.

     The Registrant has also obtained directors' and officers' liability
insurance in amounts that it believes are reasonable under the circumstances.

     In connection with any registration of registrable securities under the
Shareholders Agreement, the Registrant has agreed to indemnify each seller, any
controlling person (and their respective director or indirect partners, advisory
board members, directors, officers, trustees, members and shareholders) and each
other person who controls any such seller or holder, against various
liabilities, including liabilities under the Securities Act and Exchange Act.

                                      II-1
<PAGE>   163

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

     During the last three years, the Registrant has issued the following
securities without registration under the Securities Act of 1933 as amended (the
"Securities Act") (in each case, except for the issuance described in paragraph
9, giving effect to the 250 for 1 common share split):

     1. On September 10, 1998, the Registrant issued and sold 10,000,000 of its
        common shares and on September 17, 1998 issued and sold 4,912,250 of its
        common shares to our initial investor for an aggregate of $28,700,000.

     2. On September 17, 1998, the Registrant issued and sold 2,499,750 of its
        common shares to lenders of subordinated debt for an aggregate of
        $4,811,548.

     3. On September 17, 1998, the Registrant issued and sold 259,750 of its
        common shares to a management employee for an aggregate of $500,000.

     4. On September 17, 1998, the Registrant issued and sold 415,750 common
        shares to an affiliate of our initial investor purchasing on behalf of
        management employees for an aggregate of $800,000.

     5. On September 17, 1998, the Registrant issued 5,912,500 of its common
        shares to the former shareholders of Onboard Media, Inc., Cruise
        Management International, Inc. and Boxer Media, Inc. in connection with
        the acquisition of these three companies.

     6. On September 17, 1998, the Registrant granted options for no
        consideration to purchase an aggregate of 500,000 shares at an exercise
        price of $1.925 to two employees pursuant to the 1998 Stock Option Plan.

     7. On December 21, 1998, the Registrant granted options for no
        consideration to purchase an aggregate of 450,000 common shares to 19
        employees at an exercise price of $1.925 per share pursuant to the 1998
        Stock Option Plan.

     8. On February 25, 1999, the Registrant granted options for no
        consideration to purchase an aggregate of 50,000 common shares to two
        employees at an exercise price of $1.925 per share pursuant to the 1998
        Stock Option Plan.

     9. On                , 1999, pursuant to an amendment to its Articles of
        Association, the Registrant effected a 50 for 1 share split, followed
        immediately by a 5 for 1 stock dividend.

     The common shares issued pursuant to paragraphs 1 through 5 above were
issued in reliance on the exemption from registration under Section 4(2) of the
Securities Act as a transaction not involving a public offering.

     The options issued pursuant to paragraphs 6 through 8 above, and any shares
issued upon the exercise of such options, were issued in reliance on the
exemption from registration under Section 4(2) of the Securities Act as a
transaction not involving a public offering.

     The common shares issued pursuant to paragraph 9 were issued in a
transaction not involving a "sale" under the Securities Act.

                                      II-2
<PAGE>   164

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     The following is a list of exhibits filed as a part of this registration
statement.

     (a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<C>      <S>
  *1.1   Form of Underwriting Agreement.
  *3.1   Amended and Restated Articles of Association of the Company
         and English translation.
  *4.1   Specimen Certificate for Common Shares.
   4.2   12% Junior Subordinated Note issued to Viad Corp.
   4.3   Note Agreement, dated as of September 17, 1998, among Miami
         Cruiseline Services Holdings II, New York Life Insurance
         Company, American Home Assurance Company and The
         Northwestern Mutual Life Insurance Company with Form of
         Senior Subordinated Note.+
   4.4   Debt Securities Purchase Agreement, dated as of September
         17, 1998, among Miami Cruiseline Services Holdings II, New
         York Life Insurance Company, American Home Assurance Company
         and The Northwestern Mutual Life Insurance Company.+
  *5.1   Opinion of Stibbe Simont Monahan Duhot.
  10.1   Share Purchase Agreement, dated July 31, 1998, between
         Cruise Line Holdings Co. and Viad Corp.+
  10.2   Stock Subscription and Exchange Agreement, dated as of
         August 27, 1998, among Cruise Line Holdings Co., Philip L.
         Levine, Jerry Chafetz and the other stockholders named
         therein.+
  10.3   Asset Purchase Agreement, dated December 15, 1998, between
         Starboard Holdings Ltd. and Nuance Global Traders.+
  10.4   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., Greyhound Leisure Services
         and J.P. Miquel.
  10.5   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., the Onboard Group and
         Philip L. Levine.
  10.6   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., the Onboard Group and Jerry
         Chafetz.
 *10.7   Separation Agreement, dated August 3, 1999, between Miami
         Cruiseline Services and Jorge Fernandez.+
 *10.8   Consulting Agreement, dated as of January 1, 1999, between
         Miami Cruiseline Services and F.C. Capital Partners LLC.
 *10.9   Consulting Agreement, dated as of August 4, 1999, between
         Miami Cruiseline Services, Cruiseline Holdings Co. and F.C.
         Capital Partners LLC.
 *10.10  1998 Stock Option Plan.
  10.11  Shareholders Agreement, dated as of September 17, 1998,
         among Miami Cruiseline Services, Berkshire Cruise Holdings
         LLC and other investors listed on the signature pages
         thereto with Joinder Agreements, dated as of November 13,
         1998.+
  10.12  Indemnity Agreement, dated September 15, 1998, between Miami
         Cruiseline Services and Philip Levine.
  10.13  Indemnity Agreement, dated September 15, 1998, between Miami
         Cruiseline Services and Jerry Chafetz.
</TABLE>

                                      II-3
<PAGE>   165

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<C>      <S>
 *10.14  Management Agreement, dated as of September 17, 1998,
         between Miami Cruiseline Services and Berkshire Cruise
         Holdings LLC, as amended by Amendment, dated January 1,
         1999.
  10.15  Fee letter, dated as of September 17, 1998, between
         Cruiseline Holdings Co. and Berkshire Partners LLC.
  10.16  Fee letter, dated as of September 17, 1998, between
         Cruiseline Holdings Co. and F.C. Capital Partners LLC.
 *10.17  Lease, dated July 10, 1996, between MICC Venture and
         Greyhound Leisure Services.+
 *10.18  Lease, dated April 16, 1996, as amended, between Media
         Holdings, Ltd. and Onboard Media.
 *10.19  Lease, dated April 16, 1996, between Media Holdings, Ltd.
         and Cruise Management International.
 *10.20  Amendment to Lease, dated September 17, 1998, between Media
         Holdings, Ltd. and Onboard Media and Cruise Management
         International.
 *10.21  Credit Agreement, dated as of September 17, 1998, among
         Miami Cruiseline Services Holdings III, Miami Cruiseline
         Services Holdings II, Credit Suisse First Boston,
         NationsBank, N.A., First Source Financial, Inc. and the
         lenders named therein., as amended by First Amendment to the
         Credit Agreement, dated October 6, 1998, Second Amendment to
         the Credit Agreement, dated November 30, 1998, Third
         Amendment to the Credit Agreement, dated March 30, 1999.+
  10.22  Form of Put Agreement with Miami Cruiseline Services
         Holdings II B.V.
  10.23  Joint Venture Agreement for Operation of Miami Airport Duty
         Free Joint Venture, dated August 31, 1995, by and among,
         Greyhound Leisure Services, Century Duty Free, Inc., Media
         Consultants, Inc., Maria J. Argudin and Bayside Company
         Stores as amended by First Addendum, dated October 25, 1995.
  10.24  Concession Agreement for Operation of Nonexclusive Duty and
         Tax Free Concession, Terminal Building, Miami International
         Airport between Board of County Commissioners of Dade
         County, Florida and Miami Airport Duty Free Joint Venture.+
*#10.25  Agreement, dated April 11, 1996, between Cruise Management
         and Park West at Sea, Inc., as amended by Letter Agreement,
         dated June 11, 1998 [other Amendments].
*#10.26  Concession Agreement, dated November 23, 1992, by and
         between Carnival Cruise Lines, Inc. and Greyhound Leisure
         Services as amended by Letter Agreement dated January 4,
         1993, Addendum #1, dated January 12, 1993, and Addendum #2,
         dated March 3, 1999.
*#10.27  Concession Agreement, dated July 15, 1999, between Royal
         Caribbean Cruise Lines and Starboard Holdings Ltd.
*#10.28  Concession Agreement, dated February 25, 1998, between
         Holland America Line-Westours, Inc. and Greyhound Leisure
         Services.
*#10.29  Concession Agreement, dated January 18, 1996, between
         Holland America-Westours, Inc. and Allders International
         (USA), Inc., as amended by Amendment, dated March 5, 1999,
         between Holland America-Westours, Inc. and Starboard
         Holdings Ltd.
*#10.30  Concession Agreement, dated January 18, 1996, between
         Holland America-Westours, Inc. and Allders International
         (USA), Inc., as amended by Amendment to Concession
         Agreement, dated December 15, 1998, between Holland
         America-Westours, Inc. and Starboard Holdings Ltd.
</TABLE>

                                      II-4
<PAGE>   166

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<C>      <S>
  21.1   Subsidiaries.
 *23.1   Consent of Stibbe Simont Monahan Duhot (Exhibit 5.1).
  23.2   Consent of Ernst & Young LLP.
  23.3   Consent of Ernst & Young LLP.
  23.4   Consent of Deloitte & Touche LLP.
  23.5   Consent of Goldstein Schechter Price Lucas Horwitz & Co.,
         P.A.
  24.1   Power of Attorney (please see signature page).
  27.1   Financial Data Schedule.
  99.1   Letter from Deloitte & Touche LLP regarding change in
         accountants.
</TABLE>

---------------
*  To be filed by Amendment.

#  Confidential treatment request as to certain portions. The term "confidential
   treatment" and the mark "#" as used throughout this exhibit means that
   material has been omitted and separately filed with the Commission.

+ The Registrant agrees to furnish supplementally to the Commission a copy of
  any omitted schedule or exhibit to such agreement upon request by the
  Commission.

     (b) Financial Statement Schedules

<TABLE>
<CAPTION>
                                                              INDEX
                                                              -----
<S>                                                           <C>
Report of Independent Certified Public Accountants..........   S-1
Report of Independent Certified Public Accountants..........   S-2
Schedule II -- Valuation and Qualifying Accounts............   S-3
</TABLE>

     All other schedules for which provision is made in the applicable
accounting regulations of the Commission are not required under the related
instructions, are inapplicable or not material, or the information called for
thereby is otherwise included in the financial statements and therefore has been
omitted.

ITEM 17.  UNDERTAKINGS

     (a) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.

     (b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item
14 -- Indemnification of Directors and Officers" above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

                                      II-5
<PAGE>   167

     (c) The undersigned Registrant hereby undertakes that:

          (1) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.

          (2) For the purposes of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.

                                      II-6
<PAGE>   168

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, Massachusetts on
this 19th day of August, 1999.

                                          Miami Cruiseline Services Holdings I
                                          B.V.

                                          By: /s/ JOEL E. CUTLER
                                            ------------------------------------
                                              Joel E. Cutler
                                              Chief Executive Officer

                               POWER OF ATTORNEY

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby authorizes Joel E. Cutler and Bradley M. Bloom, and each of them, with
full power to them, to execute in the name and on behalf of such person any
amendment (including any post-effective amendment) to this Registration
Statement (or any other registration statement for the same offering that is to
be effective upon filing pursuant to Rule 462(b) under the Securities Act) and
to file the same, with exhibits thereto, and other documents in connection
therewith, making such changes in this Registration Statement as the person(s)
so acting deems appropriate, and appoints each of such persons, each with full
power of substitution, attorney-in-fact to sign any amendment (including any
post-effective amendment) to this Registration Statement (or any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act) and to file the same, with
exhibits thereto, and other documents in connection therein.

<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                    DATE
                     ---------                                    -----                    ----
<S>                                                  <C>                              <C>

/s/ JOEL E. CUTLER                                   Chairman of the Board and Chief  August 19, 1999
---------------------------------------------------    Executive Officer
Joel E. Cutler

/s/ WILLIAM J. FITZGERALD                            Acting Interim Chief Financial   August 19, 1999
---------------------------------------------------    Officer (Principal Financial
William J. Fitzgerald                                  Officer and Accounting
                                                       Officer)

/s/ BRADLEY M. BLOOM                                 Class A Managing Director        August 19, 1999
---------------------------------------------------
Bradley M. Bloom

/s/ RANDY PEELER                                     Class A Managing Director        August 19, 1999
---------------------------------------------------
Randy Peeler
</TABLE>

                                      II-7
<PAGE>   169

<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                    DATE
                     ---------                                    -----                    ----
<S>                                                  <C>                              <C>
/s/ JERRY CHAFETZ                                    Class B Managing Director        August 19, 1999
---------------------------------------------------
Jerry Chafetz

/s/ DAVID P. FIALKOW                                 Class B Managing Director        August 19, 1999
---------------------------------------------------
David P. Fialkow

/s/ STEVEN S. FISCHMAN                               Class B Managing Director        August 19, 1999
---------------------------------------------------
Steven S. Fischman

/s/ PHILIP L. LEVINE                                 Class B Managing Director        August 19, 1999
---------------------------------------------------
Philip L. Levine

/s/ J. P. MIQUEL                                     Class B Managing Director        August 19, 1999
---------------------------------------------------
J. P. Miquel

/s/ LEONARD A. SCHLESINGER                           Class B Managing Director        August 19, 1999
---------------------------------------------------
Leonard A. Schlesinger

Registrant's Agent for Service in the United States:

/s/ JOEL E. CUTLER                                                                    August 19, 1999
---------------------------------------------------
Joel E. Cutler
</TABLE>

                                      II-8
<PAGE>   170

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     We have audited the consolidated financial statements of Greyhound Leisure
Services, Inc. and subsidiaries as of December 31, 1997, and for each of the two
years in the period ended December 31, 1997, and have issued our report thereon
dated July 31, 1999, (included elsewhere in this Registration Statement). Our
audits also included the financial schedule listed in Item 16(b) of this
Registration Statement. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.

     In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

                                          /s/ DELOITTE & TOUCHE LLP

Miami, Florida
July 31, 1999

                                       S-1
<PAGE>   171

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     We have audited the consolidated financial statements of Starboard Cruise
Services N.V. (formerly Miami Cruiseline Services Holdings I.B.V.) as of
December 31, 1998, and for the period from September 10, 1998 through December
31, 1998, and have issued our report thereon dated March 22, 1999, except as to
Note 14 as to which the date is September   , 1999 (included elsewhere in this
Registration Statement). Our audit also included the financial statement
schedule listed in Item 16(b) of this Registration Statement. This schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion based on our audit.

     In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

Miami, Florida
August 18, 1999

     The foregoing report is in the form that will be signed upon completion of
the restatement of capital accounts and the name change described in Note 14 to
the consolidated financial statements.

                                          /s/ ERNST & YOUNG LLP

Miami, Florida
August 18, 1999

                                       S-2
<PAGE>   172

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                         STARBOARD CRUISE SERVICES N.V.

<TABLE>
<CAPTION>
                                                          ADDITIONS
                                                   ------------------------
                                      BALANCE AT   CHARGED TO   CHARGED TO                 BALANCE AT
                                      BEGINNING    COSTS AND       OTHER                     END OF
DESCRIPTION                            OF YEAR      EXPENSES    ACCOUNTS(A)   DEDUCTIONS      YEAR
-----------                           ----------   ----------   -----------   ----------   ----------
<S>                                   <C>          <C>          <C>           <C>          <C>
PREDECESSOR:
Year ended December 31, 1996
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $357,698     $ 75,600     $     --      $113,853     $319,445
                                       ========     ========     ========      ========     ========
Year Ended December 31, 1997
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $319,445     $ 43,274     $     --      $ 35,450     $327,269
                                       ========     ========     ========      ========     ========
Period Ended September 17, 1998
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $327,269     $114,564     $     --      $     --     $441,833
                                       ========     ========     ========      ========     ========
SUCCESSOR:
Period Ended December 31, 1998
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $     --     $108,363     $520,071      $  2,073     $626,361
                                       ========     ========     ========      ========     ========
Six Months Ended June 30, 1999
  (unaudited)
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $626,361     $ 48,373     $     --      $116,964     $557,770
                                       ========     ========     ========      ========     ========
</TABLE>

-------------------------

(a) Acquired in connection with the Greyhound Leisure Services, Inc. and the
    Onboard Group acquisitions.

                                       S-3
<PAGE>   173

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<C>      <S>
  *1.1   Form of Underwriting Agreement.
  *3.1   Amended and Restated Articles of Association of the Company
         and English translation.
  *4.1   Specimen Certificate for Common Shares.
   4.2   12% Junior Subordinated Note issued to Viad Corp.
   4.3   Note Agreement, dated as of September 17, 1998, among Miami
         Cruiseline Services Holdings II, New York Life Insurance
         Company, American Home Assurance Company and The
         Northwestern Mutual Life Insurance Company with Form of
         Senior Subordinated Note.+
   4.4   Debt Securities Purchase Agreement, dated as of September
         17, 1998, among Miami Cruiseline Services Holdings II, New
         York Life Insurance Company, American Home Assurance Company
         and The Northwestern Mutual Life Insurance Company.+
  *5.1   Opinion of Stibbe Simont Monahan Duhot.
  10.1   Share Purchase Agreement, dated July 31, 1998, between
         Cruise Line Holdings Co. and Viad Corp.+
  10.2   Stock Subscription and Exchange Agreement, dated as of
         August 27, 1998, among Cruise Line Holdings Co., Philip L.
         Levine, Jerry Chafetz and the other stockholders named
         therein.+
  10.3   Asset Purchase Agreement, dated December 15, 1998, between
         Starboard Holdings Ltd. and Nuance Global Traders.+
  10.4   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., Greyhound Leisure Services
         and J.P. Miquel.
  10.5   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., the Onboard Group and
         Philip L. Levine.
  10.6   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., the Onboard Group and Jerry
         Chafetz.
 *10.7   Separation Agreement, dated August 3, 1999, between Miami
         Cruiseline Services and Jorge Fernandez.+
 *10.8   Consulting Agreement, dated January 1, 1999, between Miami
         Cruiseline Services and F.C. Capital Partners LLC.
 *10.9   Consulting Agreement, dated August 4, 1999, between Miami
         Cruiseline Services, Cruiseline Holdings Co. and F.C.
         Capital Partners LLC.
 *10.10  1998 Stock Option Plan.
  10.11  Shareholders Agreement, dated as of September 17, 1998,
         among Miami Cruiseline Services, Berkshire Cruise Holdings
         LLC and other investors listed on the signature pages
         thereto with Joinder Agreements, dated as of November 13,
         1998.+
  10.12  Indemnity Agreement, dated September 15, 1998, between Miami
         Cruiseline Services and Philip Levine.
  10.13  Indemnity Agreement, dated September 15, 1998, between Miami
         Cruiseline Services and Jerry Chafetz.
 *10.14  Management Agreement, dated as of September 17, 1998,
         between Miami Cruiseline Services and Berkshire Cruise
         Holdings LLC as amended by Amendment, dated January 1, 1999.
</TABLE>
<PAGE>   174

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<C>      <S>
  10.15  Fee letter, dated as of September 17, 1998, between
         Cruiseline Holdings Co. and Berkshire Partners LLC.
  10.16  Fee letter, dated as of September 17, 1998, between
         Cruiseline Holdings Co. and F.C. Capital Partners LLC.
 *10.17  Lease, dated July 10, 1996, between MICC Venture and
         Greyhound Leisure Services.+
 *10.18  Lease, dated April 16, 1996, as amended, between Media
         Holdings, Ltd. and Onboard Media.
 *10.19  Lease, dated April 16, 1996, between Media Holdings, Ltd.
         and Cruise Management International.
 *10.20  Amendment to Lease, dated September 17, 1998, between Media
         Holdings, Ltd. and Onboard Media and Cruise Management
         International.
 *10.21  Credit Agreement, dated as of September 17, 1998, among
         Miami Cruiseline Services Holdings III, Miami Cruiseline
         Services Holdings II, Credit Suisse First Boston,
         NationsBank, N.A., First Source Financial, Inc. and the
         lenders named therein., as amended by First Amendment to the
         Credit Agreement, dated October 6, 1998, Second Amendment to
         the Credit Agreement, dated November 30, 1998, Third
         Amendment to the Credit Agreement, dated March 30, 1999.+
  10.22  Form of Put Agreement with Miami Cruiseline Services
         Holdings II B.V.
  10.23  Joint Venture Agreement for Operation of Miami Airport Duty
         Free Joint Venture, dated August 31, 1995, by and among,
         Greyhound Leisure Services, Century Duty Free, Inc., Media
         Consultants, Inc., Maria J. Argudin and Bayside Company
         Stores as amended by First Addendum, dated October 25, 1995.
  10.24  Concession Agreement for Operation of Nonexclusive Duty and
         Tax Free Concession, Terminal Building, Miami International
         Airport between Board of County Commissioners of Dade
         County, Florida and Miami Airport Duty Free Joint Venture.+
*#10.25  Agreement, dated April 11, 1996, between Cruise Management
         and Park West at Sea, Inc., as amended by Letter Agreement,
         dated June 11, 1998 [other Amendments].
*#10.26  Concession Agreement, dated November 23, 1992, by and
         between Carnival Cruise Lines, Inc. and Greyhound Leisure
         Services as amended by Letter Agreement dated January 4,
         1993, Addendum #1, dated January 12, 1993, and Addendum #2,
         dated March 3, 1999.
*#10.27  Concession Agreement, dated July 15, 1999, between Royal
         Caribbean Cruise Lines and Starboard Holdings Ltd.
*#10.28  Concession Agreement, dated February 25, 1998, between
         Holland America Line-Westours, Inc. and Greyhound Leisure
         Services.
*#10.29  Concession Agreement, dated January 18, 1996, between
         Holland America-Westours, Inc. and Allders International
         (USA), Inc., as amended by Amendment, dated March 5, 1999,
         between Holland America-Westours, Inc. and Starboard
         Holdings Ltd.
*#10.30  Concession Agreement, dated January 18, 1996, between
         Holland America-Westours, Inc. and Allders International
         (USA), Inc., as amended by Amendment to Concession
         Agreement, dated December 15, 1998, between Holland
         America-Westours, Inc. and Starboard Holdings Ltd.
  21.1   Subsidiaries.
 *23.1   Consent of Stibbe Simont Monahan Duhot (Exhibit 5.1).
  23.2   Consent of Ernst & Young LLP.
</TABLE>
<PAGE>   175

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<C>      <S>
  23.3   Consent of Ernst & Young LLP.
  23.4   Consent of Deloitte & Touche LLP.
  23.5   Consent of Goldstein Schechter Price Lucas Horwitz & Co.,
         P.A.
  24.1   Power of Attorney (please see signature page).
  27.1   Financial Data Schedule.
  99.1   Letter from Deloitte & Touche LLP regarding change in
         accountants.
</TABLE>

---------------
*  To be filed by Amendment.

#  Confidential treatment request as to certain portions. The term "confidential
   treatment" and the mark "#" as used throughout this exhibit means that
   material has been omitted and separately filed with the Commission.

+ The Registrant agrees to furnish supplementally to the Commission a copy of
  any omitted schedule or exhibit to such agreement upon request by the
  Commission.
[{"type": "S-1", "sequence": "1", "description": "MIAMI CRUISELINE SERVICES HOLDINGS I B.V.", "secsgml_size_bytes": 583177}]
{"company-data": {"conformed-name": "MIAMI CRUISELINE SERVICES HOLDINGS I B V", "cik": "0001092906", "assigned-sic": "", "irs-number": "980193197", "state-of-incorporation": "P8", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-85595", "film-number": "99696322"}, "business-address": {"street1": "C/O BERKSHIRE CRUISE HOLDINGS LLC", "street2": "ONE BOSTON PLACE", "city": "BOSTON", "state": "MA", "zip": "02108-4401", "phone": "6172270050"}, "mail-address": {"street1": "C/O BERKSHIRE CRUISE HOLDINGS LLC", "street2": "ONE BOSTON PLACE", "city": "BOSTON", "state": "MA", "zip": "02108-4401"}}
1

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1999

                                                     REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
                                    FORM S-1

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
                   MIAMI CRUISELINE SERVICES HOLDINGS I B.V.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
THE NETHERLANDS                          5947                             98-0193197
  (STATE OR OTHER JURISDICTION OF      (PRIMARY STANDARD INDUSTRIAL              (I.R.S. EMPLOYER
  INCORPORATION OR ORGANIZATION)        CLASSIFICATION CODE NUMBER)             IDENTIFICATION NO.)
STRAWINSKYLAAN 3105, 7TH FLOOR
                       1077 ZX AMSTERDAM, THE NETHERLANDS
                               (31) 20-44-211-25
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
                   MIAMI CRUISELINE SERVICES HOLDINGS I B.V.
                       C/O BERKSHIRE CRUISE HOLDINGS LLC
                                ONE BOSTON PLACE
                        BOSTON, MASSACHUSETTS 02108-4401
                           ATTENTION: JOEL E. CUTLER
                                 (617) 227-0050
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)
                            ------------------------
                                   COPIES TO:
DAVID C. CHAPIN                                      STEPHEN L. BURNS
                 JANE D. GOLDSTEIN                                 CRAVATH, SWAINE & MOORE
                    ROPES & GRAY                                      825 EIGHTH AVENUE
              ONE INTERNATIONAL PLACE                           NEW YORK, NEW YORK 10019-7475
          BOSTON, MASSACHUSETTS 02110-2624                              (212) 474-1000
                   (617) 951-7000
------------------------
     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

     If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                            ------------------------
                        CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
                                                                     PROPOSED
                                                                     MAXIMUM                 AMOUNT OF
                   TITLE OF EACH CLASS OF                           AGGREGATE               REGISTRATION
                SECURITIES TO BE REGISTERED                     OFFERING PRICE(1)               FEE
--------------------------------------------------------------------------------------------------------------
Common Shares, par value EUR .01 nominal value..............       $125,000,000               $34,750
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee in
    accordance with Rule 457(a) under the Securities Act of 1933.
                            ------------------------
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

               SUBJECT TO COMPLETION, DATED                , 1999

                                                 Shares

                            STARBOARD CORPORATE LOGO

                                 Common Shares
                               ------------------

     We(1) are selling                common shares, and the selling
shareholders are selling                common shares. We will not receive any
of the proceeds from the common shares sold by the selling shareholders.

     The underwriter has an option to purchase a maximum of
additional shares to cover over-allotments of shares.

     Prior to this offering, there has been no public market for the common
shares. The initial public offering price of the common shares is expected to be
between $       and $       per share. Our common shares have been approved for
listing on The Nasdaq Stock Market's National Market under the symbol "CRUZ".

     INVESTING IN THE COMMON SHARES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 7.
UNDERWRITING       PROCEEDS TO       PROCEEDS TO
                                       PRICE TO    DISCOUNTS AND     STARBOARD CRUISE      SELLING
                                        PUBLIC      COMMISSIONS          SERVICES        SHAREHOLDERS
                                       --------    --------------    ----------------    ------------
Per Share............................     $             $                  $                  $
Total................................  $              $                  $                 $
Delivery of the common shares will be made on or about                ,
1999.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                           CREDIT SUISSE FIRST BOSTON

             The date of this prospectus is                , 1999.
-------------------------

(1) Prior to the effectiveness of the registration statement of which this
    prospectus is a part, we will change our name from Miami Cruiseline Services
    Holdings I B.V. to Starboard Cruise Services N.V.
3

                                    [PHOTOS]

                                        i
4

                               TABLE OF CONTENTS
PAGE
                                        ----
PROSPECTUS SUMMARY....................    1
SUMMARY PRO FORMA FINANCIAL AND OTHER
  DATA................................    3
SUMMARY FINANCIAL AND OTHER DATA......    5
RISK FACTORS..........................    7
FORWARD-LOOKING STATEMENTS -- MARKET
  DATA................................   16
USE OF PROCEEDS.......................   17
DIVIDEND POLICY.......................   17
CAPITALIZATION........................   18
DILUTION..............................   19
UNAUDITED PRO FORMA CONDENSED
  STATEMENTS OF OPERATIONS............   20
SELECTED FINANCIAL DATA...............   28
MANAGEMENT'S DISCUSSION AND ANALYSIS
  OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.......................   30
BUSINESS..............................   39
MANAGEMENT............................   51
PAGE
                                        ----
PRINCIPAL AND SELLING SHAREHOLDERS....   61
CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONS........................   63
DESCRIPTION OF CAPITAL STOCK..........   66
SHARE CERTIFICATES AND TRANSFER.......   70
DESCRIPTION OF CERTAIN INDEBTEDNESS...   72
SHARES ELIGIBLE FOR FUTURE SALE.......   75
TAXATION..............................   78
UNDERWRITING..........................   86
NOTICE TO CANADIAN RESIDENTS..........   88
LEGAL MATTERS.........................   89
EXPERTS...............................   89
CHANGE IN ACCOUNTANTS.................   90
WHERE YOU CAN FIND MORE INFORMATION...   90
SERVICE OF PROCESS AND ENFORCEMENT OF
  CIVIL LIABILITIES...................   91
INDEX TO FINANCIAL STATEMENTS.........  F-1
------------------

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
                               ------------------

     THESE SECURITIES MAY ONLY BE OFFERED, SOLD, TRANSFERRED OR DELIVERED,
WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS (INCLUDING LEGAL ENTITIES)
ESTABLISHED, DOMICILED OR RESIDENT OUTSIDE THE NETHERLANDS. THE APPLICABLE
REQUIREMENTS OF THE LAW OF ANY JURISDICTION IN WHICH PERSONS (INCLUDING LEGAL
PERSONS) TO WHOM THE OFFER IS DIRECTED ARE ESTABLISHED, DOMICILED OR RESIDENT
HAVE BEEN AND WILL BE COMPLIED WITH. A STATEMENT TO THIS EFFECT HAS BEEN
SUBMITTED TO THE DUTCH SECURITIES BOARD (STICHTING TOEZICHT EFFECTENVERKEER)
PURSUANT TO ARTICLE 3, PARA. 2 UNDER (c) OF THE EXEMPTION REGULATION PURSUANT TO
THE DUTCH ACT ON THE SUPERVISION OF THE SECURITIES TRADE 1995.
                               ------------------

     "Onboard Media" and the trademarks listed under "Business -- Intellectual
Property" are our trademarks. All other trademarks and service marks used in
this prospectus are the property of their respective owners.
                               ------------------

                     DEALER PROSPECTUS DELIVERY OBLIGATION

     UNTIL                , 1999 (25 DAYS AFTER THE COMMENCEMENT OF THIS
OFFERING), ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN
ACTING AS AN UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

                                       ii
5

                               PROSPECTUS SUMMARY

     The following summary contains basic information about Starboard Cruise
Services and this offering. It may not contain all the information that may be
important to you. You should read this entire prospectus, including the
financial data and related notes, and the documents to which we have referred
you before making an investment decision. The terms "Starboard Cruise Services,"
"we," "our," and "us," as used in this prospectus refer to Starboard Cruise
Services N.V. and its subsidiaries unless the context otherwise requires. Except
as otherwise noted, all information in this prospectus assumes no exercise of
the underwriter's over-allotment option and assumes the occurrence of the 250
for 1 common share split which will occur immediately prior to the offering.

     This prospectus contains forward looking statements which involve risks and
uncertainties. Starboard Cruise Services' actual results could differ materially
from those anticipated in these forward-looking statements as the result of
certain factors, including those set forth under "Risk Factors" and elsewhere in
this prospectus. See "Forward Looking Statements -- Market Data".

                           STARBOARD CRUISE SERVICES

     We are the world's leading provider of duty-free retail shops on cruise
ships and the leading provider of customized media and art auction programs to
the cruise industry. We deliver our services to 100 ships representing 26 cruise
lines worldwide, including industry leaders such as Carnival Cruise Line,
Celebrity Cruises, Costa Cruises, Cunard Line, Disney Cruise Line, Holland
America Line, Norwegian Cruise Lines, P&O Cruises, Renaissance Cruise Lines,
Royal Caribbean International and Seabourn Cruise Line. In general, we provide
our cruise-based services on an exclusive basis on the ships we service pursuant
to multi-year contracts. In addition to cruise-based services, we also operate
land-based services that complement our cruise-based business. In our land-based
services we operate duty-free retail shops at airport locations in Miami and
Fort Lauderdale, Florida, sell wholesale duty-free goods to cruise lines and
caterers serving cruise lines, and provide customized publications and videos to
hotels and resorts. For the year ended December 31, 1998, we generated pro forma
net sales of $281.2 million and EBITDA of $18.1 million. Our cruise-based
services generated $213.6 million of pro forma net sales and our land-based
services generated $67.6 million of pro forma net sales during the same period.

     The passenger cruise industry has grown substantially. According to Cruise
Lines International Association (CLIA), approximately 5.4 million North American
passengers took cruises in 1998, an increase of 4.0 million from 1.4 million in
1980, representing a compound annual growth rate of approximately 8.0%. The
number of cruise ships increased 20% from 120 ships in 1993 to 144 ships as of
January 1, 1999, with the number of berths growing 32% from approximately
104,000 to 137,000 over the same period. According to CLIA and Cruise Industry
News, the number of ships is expected to grow 32% from 144 as of January 1, 1999
to 190 in 2003, with the number of berths growing 48% from approximately 137,000
to 203,000 over the same period, representing larger berth capacity of the ships
entering the market. In addition, new ships, which are generally larger,
typically contain significantly more retail space. Because of the increase in
retail selling space and the strong relationship of overall cruise demand to
demand for our services, we expect to grow along with the overall growth of the
cruise industry.

     As the leader in each of the markets for our core services, we believe that
we are well positioned to benefit from these cruise industry trends. We believe
that our leading market positions are a result of the scale advantages we have
achieved in our core services. Our strong relationships with cruise lines and
our established reputation within the industry also contributes to our market
strength. In
                                        1
6

addition, we believe our experienced management and shipboard team and our
expertise in merchandising to cruise customers are further competitive
advantages. Our strategy is to:

     -  Expand with our cruise line customers as they grow and continue to build
        new and often larger ships. We currently have contracts with our
        customers giving us the opportunity to provide service to 27 of the 36
        cruise ships that are currently under contract or construction;

     -  Increase the number of services we provide to our existing cruise
        customers. Currently, almost all of the major cruise lines use at least
        one of our cruise-based services and only four cruise lines use all of
        our services, providing future opportunities to cross sell our services
        to our cruise line customers;

     -  Continue to improve our merchandising. By improving product mix and
        continuing to tailor our service offerings for individual cruise lines
        and itineraries, we seek to increase our revenue generated per passenger
        day; and

     -  Expand our service offerings. We plan to work with our cruise line
        customers to develop and offer additional services on cruise ships.

     Our principal executive office is located at Strawinskylaan 3105, 7th
Floor, 1077 ZX Amsterdam, The Netherlands. Our telephone number is
31-20-44-211-25.

                                  THE OFFERING

Common shares offered by Starboard
Cruise Services.....................                  shares

Common shares offered by Selling
Shareholders........................                  shares

Common shares outstanding after the
offering............................                  shares(1)

Use of proceeds.....................     We expect to use the net proceeds from
                                         the offering to repay a portion of our
                                         indebtedness, to fund payments that are
                                         to be made in connection with this
                                         offering, including a capital tax due
                                         in The Netherlands and a deferred
                                         payment to a customer, and for general
                                         corporate purposes, including working
                                         capital requirements and the funding of
                                         strategic investments or future
                                         acquisitions. See "Use of Proceeds".

Nasdaq National Market symbol.......     "CRUZ".
---------------
(1) Except as otherwise indicated, all information in this prospectus:

     - assumes no exercise of the underwriter's over-allotment option;

     - excludes 1,000,000 shares subject to options outstanding as of July 31,
       1999 at a weighted average price of $1.925 per share under the 1998 Stock
       Option Plan; and

     - assumes an effective 250 for 1 common share split to be completed prior
       to the effectiveness of this offering by a 50 for 1 share split followed
       immediately by a 5 for 1 stock dividend.

     Please see "Capitalization" for a more complete discussion regarding our
outstanding shares, options and related matters.
                                        2
7

                   SUMMARY PRO FORMA FINANCIAL AND OTHER DATA

     We have presented below the unaudited pro forma financial data for
Starboard Cruise Services (formerly Miami Cruiseline Services Holdings I B.V.)
which have been derived from the unaudited pro forma condensed statements of
operations included elsewhere in this prospectus. The pro forma statement of
operations and other data for the year ended December 31, 1998 give effect to
this offering and the acquisitions detailed under "Unaudited Pro Forma Condensed
Statements of Operations" as if they occurred on January 1, 1998. The pro forma
statement of operations data and other data for the six months ended June 30,
1999 give effect to this offering as if it had occurred on January 1, 1998. The
pro forma balance sheet at June 30, 1999 has been prepared as if this offering
had occurred on such date. This data should be read in conjunction with
"Unaudited Pro Forma Condensed Statements of Operations", "Selected Financial
Data", "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements and the notes thereto
included elsewhere in this prospectus.
SIX MONTHS
                                                              YEAR ENDED           ENDED
                                                           DECEMBER 31, 1998   JUNE 30, 1999
                                                           -----------------   -------------
                                                             (DOLLARS IN THOUSANDS EXCEPT
                                                                      SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Net sales................................................     $   281,151       $   138,258
Cost of sales............................................         120,917            56,888
                                                              -----------       -----------
Gross profit.............................................         160,234            81,370
Selling, general and administrative expenses.............         146,149            75,857
Amortization of intangibles..............................           5,232             2,750
                                                              -----------       -----------
Income from operations...................................           8,853             2,763
Interest expense.........................................           2,996             1,249
Interest income..........................................             972               228
Other expense............................................              10                --
                                                              -----------       -----------
Income before provision for income taxes and minority
  interest...............................................           6,819             1,742
Provision for income taxes...............................           1,529               228
Minority interest........................................             776                71
                                                              -----------       -----------
Net income(a)............................................     $     4,514       $     1,443
                                                              ===========       ===========
PER SHARE DATA:
Basic and diluted net income per share...................     $      0.15       $      0.05
                                                              ===========       ===========
Pro forma basic and diluted weighted average shares......      29,726,250        30,476,250
                                                              ===========       ===========
3
8
SIX MONTHS
                                                              YEAR ENDED           ENDED
                                                           DECEMBER 31, 1998   JUNE 30, 1999
                                                           -----------------   -------------
                                                            (DOLLARS AND PASSENGER DAYS IN
                                                                THOUSANDS EXCEPT SHARE
                                                                         DATA)
OTHER DATA:
EBITDA(b)................................................      $ 18,086         $     7,486
Net income plus amortization of intangibles..............        10,123               4,193
Diluted net income plus amortization of intangibles per
  share..................................................          0.34                0.14
Capital expenditures.....................................           901                 572
Total ships served (at end of period)....................            95                 100
Ships served by cruise ship retail stores (at end of
  period)................................................            75                  82
Cruise ship retail stores passenger days.................        18,438              14,346
JUNE 30,
                                                                                  1999
                                                                             --------------
                                                                             (IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents................................................       $    361
Total assets.............................................................        194,020
Long-term debt...........................................................         26,536
Total shareholders' equity(a)............................................        131,314
-------------------------
(a) Net income does not include an extraordinary charge of approximately $7.0
    million related to a prepayment fee in connection with the payment of $28.3
    million of our senior subordinated notes which we will record in the quarter
    in which the offering is consummated. This amount has been charged against
    pro forma shareholders' equity.

(b) EBITDA is defined as income from operations before depreciation and
    amortization. EBITDA is presented because we believe that EBITDA is a widely
    accepted financial indicator of an entity's ability to incur and service
    debt. EBITDA should not be considered by an investor as an alternative to
    net income or income from operations, as an indicator of our operating
    performance or other combined operations or cash flow data prepared in
    accordance with generally accepted accounting principles, or as an
    alternative to cash flows as a measure of liquidity. Our computation of
    EBITDA may differ from similarly titled computations of other companies.
                                        4
9

                        SUMMARY FINANCIAL AND OTHER DATA

     We have presented below the summary consolidated financial data for
Starboard Cruise Services for the period from September 10, 1998 through
December 31, 1998 and for our predecessor entity, Greyhound Leisure Services,
for each of the two years in the period ended December 31, 1997 and the period
from January 1, 1998 through September 17, 1998, which have been derived from
the audited consolidated financial statements of Starboard Cruise Services and
Greyhound Leisure Services included elsewhere in this prospectus. The summary
consolidated financial data for Starboard Cruise Services for the six-month
period ended June 30, 1999, has been derived from the unaudited consolidated
financial statements of Starboard Cruise Services included elsewhere in this
prospectus, which includes all adjustments that we consider necessary for a fair
presentation of the financial position and results of operations for such
period. Operating results for the six-month period ended June 30, 1999 are not
indicative of the results that may be expected for the entire year. This data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and the notes thereto included elsewhere in this prospectus.
PREDECESSOR                      STARBOARD CRUISE SERVICES
                                    ----------------------------------------   ----------------------------------
                                        YEAR ENDED           PERIOD FROM          PERIOD FROM
                                       DECEMBER 31,        JANUARY 1, 1998     SEPTEMBER 10, 1998    SIX MONTHS
                                    -------------------        THROUGH              THROUGH             ENDED
                                      1996       1997     SEPTEMBER 17, 1998   DECEMBER 31, 1998    JUNE 30, 1999
                                    --------   --------   ------------------   ------------------   -------------
                                                      (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Net sales.........................  $179,799   $188,498        $135,603           $    71,061        $   138,258
Cost of sales.....................    72,860     76,828          54,290                30,139             56,888
                                    --------   --------        --------           -----------        -----------
Gross profit......................   106,939    111,670          81,313                40,922             81,370
Selling, general and
  administrative expenses.........    96,712    101,067          73,993                36,373             75,857
Amortization of intangibles.......        --         --              --                 1,525              2,750
                                    --------   --------        --------           -----------        -----------
Income from operations............    10,227     10,603           7,320                 3,024              2,763
Interest expense, net.............      (113)      (205)           (417)               (2,671)            (5,819)
                                    --------   --------        --------           -----------        -----------
Income (loss) before provision for
  income taxes and minority
  interest........................    10,114     10,398           6,903                   353             (3,056)
Provision for income taxes........     2,936      2,941           2,249                   359                186
Minority interest.................     1,706        957             594                   182                 71
                                    --------   --------        --------           -----------        -----------
Net income (loss).................  $  5,472   $  6,500        $  4,060           $      (188)       $    (3,313)
                                    ========   ========        ========           ===========        ===========
PER SHARE DATA:
Basic and diluted net income
  (loss) per share................  $  5,472      6,500           4,060           $     (0.01)       $     (0.11)
Basic and diluted weighted average
  shares outstanding..............     1,000      1,000           1,000            23,250,000         24,000,000
5
10
PREDECESSOR                      STARBOARD CRUISE SERVICES
                                    ----------------------------------------   ----------------------------------
                                        YEAR ENDED           PERIOD FROM          PERIOD FROM
                                       DECEMBER 31,        JANUARY 1, 1998     SEPTEMBER 10, 1998    SIX MONTHS
                                    -------------------        THROUGH              THROUGH             ENDED
                                      1996       1997     SEPTEMBER 17, 1998   DECEMBER 31, 1998    JUNE 30, 1999
                                    --------   --------   ------------------   ------------------   -------------
                                             (DOLLARS AND PASSENGER DAYS IN THOUSANDS EXCEPT SHARE DATA)
OTHER DATA:
Net income (loss) plus
  amortization of intangibles.....  $  5,472   $  6,500        $  4,060           $     1,337        $      (563)
Diluted net income (loss) plus
  amortization of intangibles per
  share...........................        --         --              --           $      0.06        $     (0.02)
Capital expenditures..............  $  4,016   $  4,353        $    625           $       141        $       573
Total ships served (at end of
  period).........................        59         68              73                    95                100
Ships served by cruise ship retail
  stores (at end of period).......        40         41              46                    75                 82
Cruise ship retail stores
  passenger
  days............................    16,805     17,044          13,106                 5,331             14,346
PREDECESSOR      STARBOARD CRUISE SERVICES
                                                              -----------------   --------------------------
                                                                DECEMBER 31,
                                                              -----------------    DECEMBER 31,    JUNE 30,
                                                               1996      1997          1998          1999
                                                              -------   -------   --------------   ---------
                                                                              (IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $   522   $   262      $  4,124      $    361
Total assets................................................   56,998    59,262       191,540       194,020
Total debt..................................................       --        --       112,888       110,588
Total shareholders' equity..................................   14,383    15,148        45,982        42,669
6
11

                                  RISK FACTORS

     You should carefully consider the risks described below and the other
information in this prospectus, including our financial statements and related
notes, before you purchase any common shares.

     This prospectus contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements are usually accompanied by words
such as "believes," "anticipates," "plans," "expects" and similar expressions.
Our actual results may differ materially from the results discussed in the
forward-looking statements because of factors such as the Risk Factors discussed
below. See "Forward-Looking Statements -- Market Data".

RISKS RELATED TO OUR MARKET AND OUR CUSTOMERS

OUR BUSINESS IS DEPENDENT ON THE CRUISE INDUSTRY -- IF THE DEMAND FOR CRUISE
VACATIONS DECREASES, WE MAY BE ADVERSELY AFFECTED.

     We generate our revenues primarily from services provided to cruise ship
passengers, such as cruise-based duty-free retail services, customized media and
art auctions. As a result, the cruise industry's ability to attract passengers
affects both our financial results of operations and our ability to develop our
business. We cannot be sure that the cruise industry will continue to enjoy the
same level of popularity or growth that it has in the past.

     The cruise industry is subject to several potential risks. For example,
because cruise lines compete for consumer disposable leisure spending with other
vacation alternatives, such as land-based resort or sightseeing vacations, the
demand for cruise vacations could be adversely affected by shifts in vacation
patterns or increased competition from other vacation alternatives. A general
downturn in economic conditions could also adversely affect demand for leisure
travel, including demand for cruise vacations. Moreover, cruise lines operate
throughout the world, including geographic regions that from time to time
experience political and civil unrest and armed hostilities, which can adversely
affect demand for cruise vacations. Demand for cruise vacations could also be
affected negatively by publicized operational, safety, health, litigation or
other problems related to cruises. Severe weather conditions at port or at sea
and disruptions in airline service that restrict passengers' ability to reach
their port of embarkation could reduce the number of cruise passengers as well.
In addition, the cruise industry currently relies heavily on various regulatory
exemptions in a number of jurisdictions. Changes in tax exemptions under Section
883 of the U.S. Internal Revenue Code, which exempt a substantial portion of
cruise line income from U.S. taxation and are currently being debated in
Congress, or changes in U.S. labor regulations regarding shipboard employees
could adversely affect the cruise industry. If such changes are made, cruise
lines may be required to raise prices or cut costs, possibly affecting demand
for cruise vacations and the availability of financing for new vessels. Any of
these events could negatively affect demand for cruise vacations, demand for our
services, our revenues or our margins and, as a result, have a material adverse
effect on our results of operations and ability to implement our business plan.

A FEW CRUISE COMPANIES ACCOUNT FOR A SIGNIFICANT PORTION OF OUR REVENUES -- IF
ANY LARGE CRUISE OPERATOR CEASES TO USE OUR SERVICES, WE WOULD LIKELY LOSE A
SOURCE OF A SUBSTANTIAL PORTION OF OUR REVENUES.

     According to the Cruise Line Industry Association (CLIA), Carnival
Corporation (including its affiliates Carnival Cruise Lines, Costa Cruises,
Cunard Line, Holland America Line, Seabourn Cruise Line and Windstar Cruises),
Royal Caribbean Cruises Ltd. (including its affiliates Royal Caribbean
International and Celebrity Cruises), Princess Cruise Lines and Norwegian Cruise
Lines accounted for 82% of cruise industry berths as of January 1, 1999. For the
first half of 1999, 57% of our net sales came from our two largest individual
cruise line customers, and we expect a significant portion

                                        7
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of our net sales will continue to be derived from a limited number of customers.
If any of these companies ceases to use our services, significantly reduces its
use of our services during or at the end of a contract period, or experiences
materially negative changes in its business, the negative impact on our
operational results and ability to implement our strategy would be substantial.
See "Business -- Industry Overview".

WE WILL NEED TO RENEW OR EXTEND OUR CONTRACTS WITH OUR CUSTOMERS IN THE
FUTURE -- IF OUR CUSTOMERS DO NOT EXERCISE THEIR RENEWAL OPTIONS UNDER THE
CONTRACTS OR DO NOT OTHERWISE RENEW THE CONTRACTS AFTER THEY EXPIRE, WE COULD
LOSE A SUBSTANTIAL PORTION OF OUR SALES.

     Our ability to provide duty-free retail services on cruise ships and in
airports is based primarily on concession contracts with cruise operators and
airports. Our services to provide customized media and art auctions are also
contract-based. Contracts to provide duty-free retail and other cruise-based
services to cruise lines accounting for 9% of our net sales for the six months
ended June 30, 1999 expire by December 31, 2000, cruise line contracts
accounting for 8% of our net sales expire by December 31, 2001, and cruise line
contracts accounting for 54% of our net sales expire by December 31, 2002, in
each case excluding renewal options under the contracts and in each case without
giving effect to our recently executed multi-year contract with Royal Caribbean
International. In addition, our Miami airport contract expires in November 2000
with the airport having five one-year renewal options. We cannot be sure that
our customers will exercise their renewal options under the contracts or that
they will otherwise renew their contractual relationships with us once these
contracts, including all renewal periods, expire. Generally, a cruise line may
terminate these contracts early if we breach our agreements and may reduce the
number of ships covered by each contract by removing ships from service. Some
cruise lines have other termination rights including, for example, termination
upon a specified change of control or termination upon 12 months' notice.

WE ARE REQUIRED TO MAKE MINIMUM PAYMENTS UNDER MANY OF OUR CONTRACTS
IRRESPECTIVE OF THE VOLUME OF OUR SALES -- OUR SALES MIGHT NOT BE SUFFICIENT TO
MEET OUR MINIMUM PAYMENT REQUIREMENTS.

     Our contracts to provide duty-free retail services on cruise ships
generally require us to pay cruise lines the greater of a percentage of revenue
or a minimum per passenger per day amount. Some media and art auction contracts
also require minimum payments, regardless of the revenues we generate under
those contracts. As a result, we could be required to pay a greater percentage
of sales to the cruise lines than we currently pay or we could be forced to pay
costs which our sales are not sufficient to cover. A reduction in our sales
could cause minimum payments to require a larger percentage of our cash flow,
limiting the cash available for other required uses or causing us to default on
our minimum payment obligations. See "Business -- Contracts".

OUR PRIMARY CUSTOMERS HAVE BECOME LARGER -- THEIR INCREASED SIZE AND MARKET
SHARE MAY GIVE THEM THE ABILITY TO NEGOTIATE MORE FAVORABLE TERMS IN THEIR
CONTRACTS WITH US.

     Large cruise lines have expanded their scale through acquisitions and by
building additional ships. These cruise lines may seek more favorable terms in
their contractual relationships with us. Changes in contract terms that are more
favorable to these large customers could have a material adverse effect on our
business. See "Business -- Industry Overview".

WE FACE COMPETITION FOR PASSENGER SPENDING AND FOR CRUISE LINE CONCESSIONS FROM
A VARIETY OF SOURCES -- THIS COMPETITION MAY MAKE IT DIFFICULT FOR US TO
MAINTAIN OUR CURRENT POSITION IN THE MARKET OR TO CONTINUE TO GROW.

     We compete with alternative passenger activities both on cruise ships and
at ports of call and with retail shopping venues not located on cruise ships or
in airports. We also compete with other

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companies that provide services similar to ours and with cruise lines that
provide these services themselves. Cruise vacations offer passengers a variety
of other ways to spend their time and money during a cruise besides retail
shopping in our on-board shops, shopping with on-shore retailers with whom we
contract or attending the art auctions we provide. These alternatives include
spas, shore excursions, gambling casinos, bars and sports. Moreover, many
alternatives are provided without additional cost to passengers. Furthermore, as
some cruise lines currently perform these services themselves, we cannot assure
you that other cruise lines will not decide in the future to provide the
services themselves. In addition, new competitors, some of whom may have access
to greater financial and other resources than we do, could enter the industry in
the future. See "Business -- Competition".

RISKS RELATED TO OUR OPERATIONS

WE ARE DEPENDENT ON OUR SENIOR EXECUTIVES AND KEY PERSONNEL -- IF WE LOSE SOME
OR ALL OF OUR SENIOR EXECUTIVES OR KEY PERSONNEL, WE MAY NOT BE ABLE TO FIND
APPROPRIATE REPLACEMENTS ON A TIMELY BASIS AND OUR BUSINESS COULD BE ADVERSELY
AFFECTED.

     Our success will continue to depend to a significant extent on our
executive team, key management personnel and other key personnel. Many of our
executives have strong relationships with the cruise lines which we consider
important to our business. We have entered into employment agreements with four
of our executive officers, but we cannot be certain that they will remain able
and willing to continue service with us. We do not have employment agreements
with any other key employees. As we continue to grow and expand our business,
our success will also depend on our ability to retain current management and to
attract additional qualified management personnel to our executive team and
other key positions. We cannot guarantee that we will continue to find a
sufficient number of qualified individuals required for our business.

OUR INDEBTEDNESS RESTRICTS OUR FLEXIBILITY -- OUR CURRENT AND FUTURE
INDEBTEDNESS COULD LIMIT OUR FLEXIBILITY, ADVERSELY AFFECT OUR FINANCIAL HEALTH
AND LIMIT OUR ABILITY TO PLAN FOR OR RESPOND TO CHANGES IN OUR BUSINESS.

     To finance our 1998 acquisitions, we incurred substantial indebtedness.
After a portion of the proceeds from this offering of common shares is used to
repay existing indebtedness, we will still owe approximately $26.5 million in
principal amount of indebtedness. We may also seek to incur additional
indebtedness when we feel the opportunities to do so are favorable and when the
proceeds of such indebtedness are needed to finance growth opportunities. Our
level of debt could have consequences for our business, including:

     -  we will be required to dedicate a portion of our cash flow from
        operations to repayment of debt, limiting the availability of cash for
        other purposes;

     -  we may have limited flexibility in planning for, or reacting to, changes
        in our business and industry;

     -  we will be limited by financial and other restrictive covenants in our
        credit arrangements in our borrowing of additional funds; and

     -  a failure to comply with the covenants under which we borrow our
        indebtedness could result in an event of default. If an event of default
        occurs and was not cured or waived, it could result in a substantial
        amount of our indebtedness becoming immediately due and payable.

     We cannot guarantee that we will be able to generate enough cash flow from
operations or that we will be able to obtain enough capital to service our
current or future debt or fund our planned capital expenditures. In addition, we
may need to refinance indebtedness on or before maturity. We

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cannot guarantee, however, that we would be able to refinance our indebtedness
on commercially reasonable terms or at all.

AS A HOLDING COMPANY, WE REQUIRE DIVIDENDS FROM OUR SUBSIDIARIES TO MEET CASH
REQUIREMENTS OR PAY DIVIDENDS -- IF OUR SUBSIDIARIES ARE UNABLE TO DIVIDEND CASH
TO US WHEN WE NEED IT, WE MAY BE UNABLE TO PAY DIVIDENDS, MAKE DISTRIBUTIONS OR
SATISFY OBLIGATIONS UNDER RELEVANT DEBT INSTRUMENTS.

     Each of Starboard Cruise Services and its subsidiary holding companies is a
holding company with no business operations of its own. The only significant
assets of each holding company are the outstanding capital shares of its
subsidiaries, through which the holding companies indirectly conduct all of our
business operations. Accordingly, the only source of cash to pay dividends or
make other distributions on our capital stock or to pay interest on our
outstanding indebtedness is distributions relating to our, and our holding
company subsidiaries', ownership interest in our operating subsidiaries from the
net earnings and cash flow generated by such operating subsidiaries. We
currently expect that the earnings and cash flow of our operating subsidiaries
will be retained and used by them in their operations, and used to service the
respective debt obligations of our subsidiaries. Even if we did determine to
make a distribution in respect of the capital stock of those subsidiaries, there
can be no assurance that those subsidiaries will generate sufficient cash flow
to pay such a dividend or distribute such funds, or that applicable law and
contractual restrictions, including negative covenants contained in any debt
instruments of such subsidiaries, would permit such dividends or distributions.
The terms of our debt instruments restrict our subsidiaries' ability to pay
dividends or to make distributions. Moreover, the subsidiaries are permitted
under the terms of the relevant debt instruments to incur additional
indebtedness that may further restrict or prohibit the making of distributions,
the payment of dividends or the making of loans by such subsidiaries to
Starboard Cruise Services. See "-- Our Indebtedness Restricts Our Flexibility"
and "Description of Certain Indebtedness".

WE MAY FAIL TO EFFECTIVELY INTEGRATE ACQUIRED COMPANIES -- IF WE ARE UNABLE TO
EFFECTIVELY INTEGRATE RECENT AND FUTURE ACQUISITIONS, OUR BUSINESS MAY BE
ADVERSELY AFFECTED OR WE MAY NOT REALIZE ALL THE BENEFITS OF THESE ACQUISITIONS.

     We must integrate our recent and future acquisitions for the efficient
operation of our business. We cannot guarantee that this integration will be
completed or that, if it is completed, it will be completed in a timely fashion.
Failure to adequately integrate our business could have a material adverse
effect on our results of operations.

DEMAND FOR OUR SERVICES IS SEASONAL -- AS A RESULT, OUR OPERATING RESULTS AND
REVENUES MAY FLUCTUATE DUE TO SEASONAL FACTORS, AND WE MAY NOT BE ABLE TO
GENERATE SUFFICIENT REVENUES TO COVER OUR EXPENSES DURING SOME PORTIONS OF THE
YEAR.

     Demand for our services is seasonal. This may cause fluctuations in our
revenues and operating results. Net sales have historically been lower during
the third quarter when there are fewer cruises in the Caribbean. Seasonality may
continue to affect our results of operations and, if our expenses increase
during these periods, we might not generate enough revenue to offset these
expenses. The impact of our seasonality would increase if we lost major
contracts to service Alaskan or European cruises during the summer months.

YEAR 2000 COMPLIANCE PROBLEMS COULD AFFECT OUR OPERATIONS -- IF OUR COMPUTER
SYSTEMS, AND THOSE OF OTHERS ON WHOM WE RELY, DO NOT ACHIEVE YEAR 2000
COMPLIANCE, WE MAY SUFFER FINANCIAL AND OTHER HARMS.

     We have reviewed and planned to ensure that our computer and network
systems, and those of parties on whom we rely, are Year 2000 compliant. We have
audited our software, undertaken

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significant changes to our information systems, and initiated formal
communications with our major suppliers and customers. We cannot guarantee that
our conversions, or those of our major suppliers and customers, will be
completed in a timely fashion. Our systems are critical to our management of
shipboard inventory, our merchandising, decisions about purchasing and
restocking, our delivery of goods from our airport duty-free stores, and our
tracking of on-ship results. We also depend upon the on-ship systems of those
customers whose on-board point-of-sale systems we use and upon our suppliers
whose readiness is critical to maintaining our supply. We cannot be sure that we
will not experience material, unanticipated negative consequences, including
material costs caused by undetected errors or defects in our or others' systems.
Such problems could have a material adverse effect on our results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000" and "Business -- Information Systems".

CURRENTLY WE OPERATE OUR ART AUCTION BUSINESS WITH A SINGLE SUPPLIER -- WE COULD
BE ADVERSELY AFFECTED IF OUR ART AUCTION SERVICES SUPPLIER FAILS TO PROVIDE
SERVICES TO US.

     We conduct our art auction business pursuant to a contract with a single
supplier. Our supplier is responsible for much of the fulfillment for our art
programs. Our supplier has the right under the contract to elect not to provide
service on certain vessels subject to contractual notice periods for those
cruise lines with whom we have agreements. Because we currently do not maintain
relationships with other suppliers, we cannot guarantee that, in the event our
supplier elects not to service new customers or breaches its obligations, we
will be able to arrange an adequate alternative source of supply on a timely
basis for art and auctioneers. See "Business -- Suppliers".

RISKS RELATED TO THIS OFFERING

THE VALUE OF YOUR INVESTMENT WILL BE DILUTED -- UPON THE COMPLETION OF THIS
OFFERING, YOU WILL INCUR AN IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BASIC
VALUE OF YOUR INVESTMENT IN OUR COMPANY.

     If you purchase shares in this offering, you will be paying more per share
than existing shareholders or individuals who acquired shares by exercising
options granted before this offering. As a result, the value of your investment
based on the value of our net tangible assets, as recorded on our books, will be
$          less than the amount you will pay for our common shares in this
offering. In addition, the total amount of our capital will be less than what it
would be if all of the existing shareholders and optionees had paid the same
amount per share as you will pay in this offering. See "Dilution".

WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE PROCEEDS OF THIS
OFFERING -- WE MAY NOT USE THE PROCEEDS EFFECTIVELY AND, AS A RESULT, COULD
REDUCE THE VALUE OF YOUR INVESTMENT IN OUR COMPANY.

     Our management will have significant flexibility in applying any remaining
net proceeds of this offering, and investors will not have the opportunity to
evaluate the economic, financial and other relevant material that we will
consider in determining the application of net proceeds. If we do not apply the
funds we receive effectively, we may forego profit opportunities, lose
significant business opportunities or sustain losses that could reduce the value
of an investment in our company. See "Use of Proceeds".

OUR EXISTING SHAREHOLDERS WILL BE ELIGIBLE TO SELL UNREGISTERED SHARES AFTER
THIS OFFERING -- FUTURE SALES OF SHARES WHICH HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES LAWS COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON SHARES.

     The market price of our common shares could decline as a result of sales by
our existing shareholders of shares which have not been registered under the
securities laws after this offering or

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the perception that these sales could occur. These sales also might make it
difficult for us to sell equity securities in the future at a time and at a
price that we deem appropriate.

     There will be                shares of common stock outstanding immediately
after the closing of this offering, of which                will not have been
registered under the securities laws in this offering. Of those unregistered
shares,           will be freely transferable without restrictions or further
registration under the Securities Act, except for any shares held by our
"affiliates" as that term is defined in Rule 144 under the Securities Act and
except that our officers, directors and substantially all of our shareholders
have entered into lock-up agreements restricting transfer for a period of 180
days following the date of this prospectus. The remaining
unregistered common shares outstanding will be "restricted securities" as
defined in Rule 144. These shares may be sold in the future without registration
under the Securities Act to the extent permitted by Rule 144 or an exemption
under the Securities Act. See "Shares Eligible for Future Sale".

OUR EXISTING SHAREHOLDERS WILL CONTINUE TO HAVE SIGNIFICANT INFLUENCE OVER OUR
BUSINESS AFTER THIS OFFERING -- OUR EXISTING SHAREHOLDERS WILL HAVE SIGNIFICANT
INFLUENCE OVER MANAGEMENT, OUR BOARDS AND MATTERS REQUIRING A SHAREHOLDER VOTE,
AND THEIR INTERESTS MAY DIFFER FROM YOURS.

     Our directors, executive officers and affiliated shareholders currently own
approximately 84% of our outstanding common shares and after the offering will
own      % of our outstanding common shares. Accordingly, these directors,
officers and affiliated shareholders will have significant influence in managing
our company and determining the outcome of any corporate transaction or other
matter submitted to the shareholders for approval, including mergers,
consolidations and the sale of all or substantially all of our assets. These
shareholders will also have the power to prevent or cause a change in control.
The interests of these shareholders may differ from the interests of other
shareholders.

THERE IS CURRENTLY NO ACTIVE TRADING MARKET FOR OUR SHARES -- AS A RESULT, OUR
SHARE PRICE MAY EXPERIENCE SIGNIFICANT FLUCTUATIONS AND COULD DROP UNEXPECTEDLY.

     There is currently no public market for our common shares and we cannot
assure you that an active trading market will develop or be sustained after this
offering. The initial public offering price will be determined through
negotiation between us and representatives of the underwriters and may not be
indicative of the market price for our common shares after this offering.

     The market price of our common shares could fluctuate significantly as a
result of:

     - variations in our operating results which may cause us to fail to meet
       analysts' or investors' expectations;

     - general economic and stock market conditions;

     - changes in financial estimates by securities analysts;

     - changes in business or regulatory conditions affecting us;

     - announcements by us or our competitors of technological innovations or
       new products or services; and

     - trading of our common shares.

     Other companies in our industry and the cruise industry have experienced
fluctuating stock prices, and we are likely to experience such fluctuation as
well. In addition, the stock market itself has from time to time experienced
significant price and volume fluctuations that have affected the market prices
for securities in our industry. As a result, investors in our common shares may

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experience a decrease in the value of their shares regardless of our operating
performance or prospects.

ANTITAKEOVER PROVISIONS IN OUR ARTICLES OF ASSOCIATION COULD HAVE EFFECTS THAT
CONFLICT WITH THE INTERESTS OF OUR SHAREHOLDERS -- PROVISIONS OF OUR ARTICLES OF
ASSOCIATION COULD MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO ACQUIRE CONTROL OF
US EVEN IF SUCH A CHANGE IN CONTROL WOULD BE BENEFICIAL TO YOU.

     Our Articles of Association provide for the boards which direct our company
to have a staggered membership. With our staggered boards, board members would
only be subject to reelection every three years. Such a provision could delay
the ability of a third party to exercise control over our company.

     Our Articles also provide for the possible issuance of preference shares.
Preference shares may be issued pursuant to a resolution of one of our boards
without any further shareholder action pursuant to a delegation to issue shares
from the general meeting of shareholders to that board for a renewable period of
five years. The issuance of preference shares may deter or prevent a takeover
attempt, including an attempt that might result in a premium over the market
price for our shares.

     Pursuant to a renewable five year delegation by the general meeting of
shareholders, one of our boards also may grant a call option on preference
shares, which will not exceed 100% of all our other outstanding shares, to an
independent foundation (referred to under Netherlands law as a stichting) to be
established under Netherlands law. In the event of an actual or threatened
hostile takeover bid, the foundation may exercise this option. The issuance of
such preference shares could therefore inhibit a change of control. See
"Description of Capital Stock".

RISKS RELATED TO U.S. AND INTERNATIONAL REGULATION

WE WILL LIKELY BE CLASSIFIED AS A CONTROLLED FOREIGN CORPORATION AND AS A
FOREIGN PERSONAL HOLDING COMPANY -- AS A RESULT, AS A SHAREHOLDER, YOU MAY HAVE
TO PAY U.S. TAXES ON OUR INCOME.

     We expect to be classified for U.S. federal income tax purposes law as a
controlled foreign corporation, or CFC, after this offering. If we are deemed a
CFC for an uninterrupted period of at least 30 days during a taxable year, any
U.S. person owning 10% (by voting power) of our shares will be required to
include in gross income its pro rata share of certain types of our income
(generally passive income) to the extent of our earnings and profits for the
year (as determined for U.S. federal income tax purposes), but will not have to
include these amounts in income when they are distributed. Based on our current
plans, we do not expect to have any earnings and profits in the foreseeable
future and thus do not expect to have income subject to current inclusion under
these CFC rules. U.S. shareholders owning less than 10% of our voting power will
not be affected if we are a CFC. We also expect to be classified as a foreign
personal holding company. If we are a foreign personal holding company in any
taxable year, each U.S. person who held our shares on the last day of the year
would be required to include in gross income such person's pro rata share of our
undistributed foreign personal holding company income (generally taxable income
of the foreign personal holding company with certain adjustments, including a
deduction for dividends paid), even if no cash dividend were paid to the U.S.
shareholder. Based on our current plans, we do not expect to have any
undistributed foreign personal holding company income in the foreseeable future.
U.S. persons who acquire our shares from a decedent would not benefit from a
step-up of the tax basis to fair market value upon the transferor's death. See
"Taxation -- Controlled Foreign Corporations" and "-- Foreign Personal Holding
Companies".

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THE CRUISE LINE INDUSTRY IS SUBJECT TO BOTH U.S. AND INTERNATIONAL
REGULATIONS -- THESE REGULATIONS COULD ADVERSELY AFFECT THE CRUISE LINES WITH
WHICH WE HAVE AGREEMENTS AND, AS A RESULT, MAY AFFECT OUR ABILITY TO CONDUCT
BUSINESS.

     The cruise industry is subject to significant United States and
international regulation. Regulations pertaining to financial responsibility,
environmental matters and passenger safety, among other things, can be
burdensome and place heavy constraints on how those in the cruise industry
conduct their business. For example, passenger safety standards adopted as part
of the Safety of Life at Sea Convention by the International Maritime
Organization have been phased in, and additional standards are required to be
phased in by 2010 with respect to vessel structural requirements. These
standards have resulted in the cruise lines retiring some vessels and could
otherwise adversely affect some cruise lines, including those cruise lines with
which we have contracts. Moreover, changes in the regulatory environment in the
future could have other adverse effects on the cruise industry, impacting cruise
lines with which we have concession agreements.

WE ARE SUBJECT TO CUSTOMS AND OTHER COMPLEX REGULATIONS -- FAILURE TO COMPLY
WITH REGULATIONS REGARDING OUR HANDLING AND SHIPMENT OF GOODS COULD ADVERSELY
AFFECT OUR BUSINESS.

     Our operations are subject to customs, import/export, alcohol and tobacco
regulation in the U.S. and abroad. These regulations govern the manner in which
we take title to, store, ship and sell our merchandise. A failure to comply with
these regulations could result in fines, delays in providing products or
revocation of licenses and permits. Any of these results could have a material
adverse effect on our business.

RISKS RELATED TO FOREIGN LAW

PROVISIONS IN OUR ARTICLES OF ASSOCIATION LIMIT THE LIABILITY OF OUR
DIRECTORS -- YOU MAY FIND IT DIFFICULT TO PURSUE LEGAL REMEDIES AGAINST OUR
DIRECTORS IF YOU BELIEVE YOU HAVE A CLAIM AGAINST THEM.

     Both our Articles of Association and our corporate affairs are governed by
Dutch corporate law. As a result, the rights of our shareholders and the
responsibilities of the boards which direct our affairs are distinct from those
established under the statutes or judicial precedent in U.S. jurisdictions.
Therefore, our public shareholders might find it more difficult to protect their
interests against actions by members of our boards or large shareholders than
they would as shareholders of a corporation incorporated in the United States.

     Under our Articles of Association, once the general meeting of shareholders
adopts our annual accounts, the members of our boards will be discharged from
liability to our company, and consequently its shareholders, with respect to the
performance of their duties during the respective financial year to the extent
the actions they have taken during the year are evident to shareholders from a
review of the annual accounts or otherwise communicated to them. This is the
case unless the general meeting of shareholders explicitly reserves its rights
when approving the financial statements. See "Description of Capital
Stock -- Adoption of Annual Accounts and Discharge of Management Liability".

THE LAW OF THE NETHERLANDS GOVERNS THE STANDARD FOR LIABILITY OF OUR
DIRECTORS -- DUTCH LAW PROVIDES FOR A LOWER STANDARD OF DIRECTOR LIABILITY THAN
UNDER U.S. LAW. AS A SHAREHOLDER, IT MAY BE MORE DIFFICULT FOR YOU TO BRING A
LEGAL ACTION AGAINST OUR DIRECTORS THAN IF WE WERE A U.S. COMPANY.

     The interpretation of Dutch law may provide for a lower standard of
director liability or responsibility than under U.S. law. Traditional concepts
under U.S. law such as "duty of loyalty", "duty of care", and "fiduciary
responsibility" may be interpreted and applied differently in The Netherlands
than under the laws of jurisdictions such as Delaware more familiar to U.S.
investors. In addition, under Dutch law, directors may take into consideration
corporate interests other than the

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best interest of shareholders. You may find that the law of The Netherlands
provides you with a lower level of protection and fewer opportunities to pursue
remedies than that to which you may be accustomed in U.S. jurisdictions. See
"-- Provisions in Our Articles of Association Limit the Liability of Our
Directors".

JUDGMENTS OF U.S. COURTS ARE NOT DIRECTLY ENFORCEABLE IN THE NETHERLANDS -- AS A
RESULT, YOU MAY FIND IT MORE DIFFICULT TO PROTECT YOUR RIGHTS THAN IF WE WERE A
U.S. COMPANY.

     Judgments of U.S. courts, including judgments against us, our directors or
our officers that are predicated on the civil liability provisions of the
federal securities laws of the U.S., are not directly enforceable in The
Netherlands. Even if you prevail on a claim in a U.S. court, you may find it
difficult to enforce your rights in The Netherlands. See "Service of Process and
Enforcement of Civil Liabilities".

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                    FORWARD-LOOKING STATEMENTS--MARKET DATA

     Many statements made in this prospectus under the captions "Prospectus
Summary", "Risk Factors", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business", and elsewhere, are
forward-looking statements that are not based on historical facts. Because these
forward-looking statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including those
discussed under "Risk Factors".

     This prospectus contains market data related to our business and the cruise
line industry. This market data includes projections that are based on a number
of assumptions. The assumptions include that:

     - the announced and/or planned increases in berth capacity will actually be
       introduced into service;

     - the cruise line industry will continue to operate at the same or at a
       greater level of capacity utilization; and

     - prospective passengers will continue to take cruises and will continue to
       spend on duty-free shopping, port shopping and art at the same or at a
       greater rate as they have in the past.

     If any one or more of the foregoing assumptions turns out to be incorrect,
actual results may differ from projections based on these assumptions. The
cruise line industry and demand for the services we provide to the cruise lines
may not grow over the next five years at the rates projected by this market
data, or at all. The failure of these markets and demand for our services to
grow at their projected rates may have a material adverse effect on our
business, results of operations, our financial condition and the market price of
our common shares.

     The forward-looking statements made in this prospectus relate only to
events as of the date on which the statements are made. We undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which the statements is made or to reflect the
occurrence of unanticipated events.

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                                USE OF PROCEEDS

     We estimate that we will receive net proceeds of approximately $96.7
million (approximately $          million if the underwriter's over-allotment
option is exercised in full) from the sale of the common shares offered by us,
assuming an initial public offering price of $          , after deducting the
estimated underwriting discounts and commissions and offering expenses payable
by us. We will not receive any proceeds from the sales of shares by the selling
shareholders.

     We intend to use approximately $88.1 million of the net proceeds of the
offering to discharge a portion of the indebtedness we incurred in connection
with the acquisitions of our predecessor, Greyhound Leisure Services, and the
Onboard Group and the acquisition of certain of the assets of Nuance Global
Ships. Under the terms of our senior credit facility, we are required, in
connection with this offering, to use a portion of the net proceeds to repay
$42.3 million of our outstanding term loans of $67.5 million plus accrued
interest. The outstanding term loans bear interest at variable rates that range
from 2.25% to 3.50% over the applicable reserve adjusted Eurodollar rate and
have a maturity date of September 17, 2003.

     In addition, we are required to repay our outstanding senior subordinated
notes and our outstanding junior subordinated note. The senior subordinated
notes were issued to various lenders in the aggregate principal amount of $25.2
million. The senior subordinated notes bear interest at a rate of 15% and have a
maturity date of September 15, 2006. Under the terms of the senior subordinated
notes, we must repay the outstanding principal, all accrued interest and a
prepayment fee prior to repaying the junior subordinated note we issued to Viad
Corp. in connection with our acquisition of Greyhound Leisure Services from Viad
Corp. This junior subordinated note, in aggregate principal amount of $10.0
million, bears interest at a rate of 12% and has a maturity date of May 15,
2009. Under the terms of the junior subordinated note, we are required to use
the net proceeds from this offering to pay off the note and all accrued
interest.

     We also intend to use approximately $8.6 million to fund payments that are
to be made in connection with this offering. These payments include the
prepayment fee on our senior subordinated notes, a capital tax of 1% of the
gross proceeds of this offering to the company due in The Netherlands and a
contingent payment due to a customer upon the occurrence of an initial public
offering or a change of control event.

     We expect that the balance of the net proceeds, if any, will be used for
general corporate purposes, including the funding of working capital
requirements and strategic investments or acquisitions. Our management will have
significant flexibility in applying the remaining balance of net proceeds of the
offering after repaying the indebtedness and funding the payments that are to be
made in connection with this offering. Pending any use, the net proceeds of this
offering may be invested in short-term, interest bearing securities or used to
pay down indebtedness under our revolving credit facility. Under the terms of
the senior credit facility we have the ability to reborrow the amounts we repay
on our revolving loans.

                                DIVIDEND POLICY

     We have not in the past declared or paid a cash dividend on our common
shares and we do not intend to do so in the foreseeable future. Instead, we
intend to retain earnings to finance future operations and expansions, and to
reduce indebtedness. The payment of dividends by us to holders of our common
shares is restricted by our senior credit facility. As a result, we do not
intend to pay cash dividends in the foreseeable future.

                                       17
22

                                 CAPITALIZATION

     The following tables sets forth our capitalization as of June 30, 1999 and
gives effect to the 250 for 1 common share split which will occur immediately
before this offering:

     - on an actual basis; and

     - on a pro forma basis to give effect to this offering (assuming no
       exercise of the underwriter's over-allotment option).

     This data should be read in conjunction with "Unaudited Pro Forma Condensed
Statements of Operations", "Selected Financial Data", "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and the notes thereto included elsewhere in
this prospectus.
JUNE 30, 1999
                                                              -----------------------
                                                               ACTUAL      PRO FORMA
                                                              ---------    ----------
                                                              (DOLLARS IN THOUSANDS)
Current portion of long-term debt and accrued expense.......  $ 11,248      $     --
                                                              ========      ========
Long-term debt, less current maturities:
  Revolving credit facility.................................  $  7,900      $  1,356
  Term note.................................................    56,786        25,180
  Senior subordinated notes(a)..............................    28,262            --
  Junior subordinated note(b)...............................    10,985            --
                                                              --------      --------
     Total long-term debt...................................   114,647        26,536
Minority interest...........................................     4,326         4,326
Shareholders' equity:
  Common shares, EUR .01 par value; on an actual and pro
     forma basis, 120,000,000 shares authorized and
     24,000,000 shares issued and outstanding; and on a pro
     forma basis, 30,476,190 shares issued and
     outstanding(c).........................................       240           305
  Additional paid in capital................................    45,930       141,490
  Accumulated deficit(d)....................................    (3,501)      (10,481)
                                                              --------      --------
     Total shareholders' equity.............................    42,669       131,314
                                                              --------      --------
          Total capitalization..............................  $161,642      $162,176
                                                              ========      ========
-------------------------
(a) Includes $3,074 of accrued interest.

(b) Includes $985 of accrued interest.

(c) The number of common shares to be outstanding after this offering is based
    on the number of shares outstanding as of June 30, 1999 and does not assume
    the exercise of the underwriter's over-allotment option. Also, it does not
    include 1,000,000 shares subject to options outstanding as of June 30, 1999
    at a weighted average exercise price of $1.925 per share.

(d) Pro forma accumulated deficit includes an extraordinary charge of
    approximately $7.0 million related to a prepayment fee in connection with
    the payment of $28.3 million of our senior subordinated notes which we will
    record in the quarter in which the offering is consummated.

                                       18
23

                                    DILUTION

     Dilution is the amount by which the offering price paid by purchasers of
the common shares in this offering exceeds the net tangible book value per share
of common shares immediately after the completion of this offering. Net tangible
book value per share is determined at any date by dividing the amount equal to
the total book value of our tangible assets less the sum of total liabilities
plus minority interest by the number of common shares outstanding at that date.

     After giving effect to the issuance and sale of the common shares offered
by us (assuming no exercise of the underwriter's over-allotment) and after
deducting the estimated underwriting discount and offering expenses payable by
us, our pro forma net tangible book value as of June 30, 1999 would have been
$     , or $     per share, after giving effect to the 250 for 1 common share
split which will occur immediately before this offering. This represents an
immediate increase in pro forma net tangible book value of $     per share to
existing shareholders and an immediate dilution of $     per share to new
investors purchasing shares in this offering. If the initial offering price is
higher or lower, the dilution to the new investors will be greater or less,
respectively. The following table illustrates this per share dilution.
Assumed initial public offering price per share...              $
Net tangible book value per share at June 30,
  1999............................................  $
Increase in net tangible book value attributable
  to new investors................................
                                                    --------
Pro forma net tangible book value per share after
  this offering...................................
                                                                --------
Dilution per share to new investors...............              $
                                                                ========
------------------------

     The following table summarizes, on a pro forma basis as of June 30, 1999,
the difference between the number of common shares purchased from us, the
aggregate cash consideration paid to us and the average price per share paid by
existing shareholders and new investors purchasing common shares in this
offering. The calculation below is based on an assumed initial public offering
price of $  per share, before deducting the estimated underwriting discount and
offering expenses payable by us:
SHARES PURCHASED      TOTAL CONSIDERATION
                                   -------------------    -------------------    AVERAGE PRICE
                                    NUMBER     PERCENT     AMOUNT     PERCENT      PER SHARE
                                   --------    -------    --------    -------    -------------
Existing shareholders............                   %     $                %       $
New investors....................
                                   --------      ---      --------      ---        --------
     Total.......................                100%     $             100%       $
                                   ========      ===      ========      ===        ========
If the underwriter exercises its over-allotment option in full, the
following would occur:

     -  the number of common shares held by existing shareholders will decrease
        to           , or approximately      % of the total number of common
        shares outstanding; and

     -  the number of common shares held by new public investors will be
        increased to           , or approximately      % of the total number of
        common shares outstanding after this offering.

     This discussion and table assume no exercise of any options to acquire
shares outstanding as of June 30, 1999 and gives effect to the 250 for 1 common
share split which will occur immediately before this offering. As of June 30,
1999, there were options outstanding to purchase a total of 1,000,000 common
shares with a weighted average exercise price of $1.925 per share. To the extent
that any of these options are exercised, there will be further dilution to new
investors. See "Capitalization".

                                       19
24

             UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS

             INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS REVIEW REPORT

     We have reviewed the pro forma adjustments reflecting the transaction
described in the notes and the introduction to the unaudited pro forma condensed
statements of operations and the application of those adjustments to the
historical amounts in the unaudited pro forma condensed statement of operations
of Starboard Cruise Services N.V. (formerly Miami Cruiseline Services Holdings I
B.V.) for the six months ended June 30, 1999. The historical condensed statement
of operations is derived from the historical unaudited financial statements of
Starboard Cruise Services N.V. appearing elsewhere herein. Such pro forma
adjustments are based on management's assumptions described in the notes and the
introduction. Our review was conducted in accordance with standards established
by the American Institute of Certified Public Accountants.

     A review is substantially less in scope than an examination, the objective
of which is the expression of an opinion on management's assumptions, the pro
forma adjustments, and the application of those adjustments to historical
financial information. Accordingly, we do not express such an opinion on the pro
forma adjustments or the application of such adjustments to the pro forma
financial information for the six months ended June 30, 1999.

     The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transaction occurred at an earlier date. However, the pro forma condensed
statement of operations is not necessarily indicative of the results of
operations or related effects on financial position that would have been
attained had the above-mentioned transaction actually occurred earlier.

     Based on our review, nothing came to our attention that caused us to
believe that management's assumptions do not provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transaction described in the notes and the introduction to the unaudited pro
forma financial data, that the related pro forma adjustments do not give
appropriate effect to those assumptions, or that the pro forma column does not
reflect the proper application of those adjustments to the historical financial
statement amounts in the pro forma condensed statement of operations for the six
month period ended June 30, 1999.

Miami, Florida
August 18, 1999

     The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts and the name change described in Note 14
to the Starboard Cruise Services N.V. consolidated financial statements.

                                          /s/ ERNST & YOUNG LLP
Miami, Florida
August 18, 1999

                                       20
25

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     We have examined the pro forma adjustments reflecting the transactions
described in the notes and the introduction to the unaudited pro forma condensed
statement of operations and the application of those adjustments to the
historical amounts in the accompanying unaudited pro forma condensed statement
of operations of Starboard Cruise Services N.V. (formerly Miami Cruiseline
Services Holdings I B.V.) for the year ended December 31, 1998. The historical
condensed statement of operations is derived from the historical financial
statements of Starboard Cruise Services N.V., Greyhound Leisure Services, the
Onboard Group and Nuance Global Ships which were audited by us, appearing
elsewhere herein. Such pro forma adjustments are based on management's
assumptions described in the notes and the introduction. Our examination was
made in accordance with standards established by the American Institute of
Certified Public Accountants and, accordingly, included such procedures as we
considered necessary in the circumstances.

     The objective of this unaudited pro forma condensed statement of operations
is to show what the significant effects on the historical financial information
might have been had the transactions occurred at an earlier date. However, the
unaudited pro forma condensed statement of operations is not necessarily
indicative of the results of operations or related effects on financial position
that would have been attained had the above-mentioned transactions actually
occurred earlier.

     In our opinion, management's assumptions provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transactions described in the notes and the introduction to the unaudited pro
forma condensed statement of operations, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma column reflects the
proper application of those adjustments to the historical financial statement
amounts in the unaudited pro forma condensed statement of operations for the
year ended December 31, 1998.

Miami, Florida
August 18, 1999

     The foregoing report is in the form that will be signed upon the completion
of the restatement of capital accounts and the name change described in Note 14
to the Starboard Cruise Services N.V. consolidated financial statements.

                                          /s/  ERNST & YOUNG LLP

Miami, Florida
August 18, 1999

                                       21
26

INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS

     The following unaudited pro forma condensed statement of operations for the
six-month period ended June 30, 1999 has been derived from the historical
financial statements of Starboard Cruise Services and gives effect to this
offering (assuming no exercise of the underwriter's over-allotment option) as if
it had occurred at the beginning of the period. The unaudited pro forma
condensed statement of operations for the year ended December 31, 1998 was
derived from the historical financial statements of Starboard Cruise Services
and the historical financial statements of Greyhound Leisure Services, the
Onboard Group and Nuance Global Ships which were acquired by Starboard Cruise
Services and gives effect to the acquisitions and this offering (assuming no
exercise of the underwriter's over-allotment option) as if they had occurred at
the beginning of the period. The acquisitions and the related adjustments are
described below and in the accompanying notes.

     Our company was formed on September 10, 1998 in order to acquire our
predecessor entity, Greyhound Leisure Services. On September 17, 1998, we
acquired 100% of the issued and outstanding shares of the capital stock of our
predecessor entity for $96.6 million. The purchase price consisted of $81.5
million in cash, a $10.0 million junior subordinated note due May 15, 2009 and
approximately $5.1 million of acquisition costs. Subsequently, on September 17,
1998, we acquired all of the outstanding shares of capital stock of the Onboard
Group. The purchase price consisted primarily of cash, which included certain
assumed indebtedness paid by us at closing and 5,912,500 of our common shares.
On December 15, 1998, we (through one of our wholly-owned subsidiaries) acquired
certain assets and assumed certain liabilities of Nuance Global Ships in
exchange for cash. The aggregate purchase price for the Onboard Group and Nuance
was approximately $64.4 million, including acquisition costs of approximately
$2.3 million.

     The acquisitions we made were accounted for using the purchase method of
accounting. The purchase method of accounting allocated the aggregate purchase
price plus transaction costs to the assets acquired and the liabilities assumed
based on their respective fair values. The excess of purchase price over the
fair value of tangible and identifiable intangible assets acquired, net of
liabilities assumed, has been recorded as goodwill. Our management believes that
the preliminary allocations set forth herein are reasonable. The allocations set
forth herein are subject to revision as additional information becomes
available, and such revised allocations could differ from those set forth
herein.

     The unaudited pro forma condensed statements of operations are based upon
currently available information and assumptions and estimates which our
management believes are reasonable. The unaudited pro forma condensed statements
of operations do not purport to represent what the results of operations of
Starboard Cruise Services would actually have been had the acquisitions or the
offering in fact occurred on the dates indicated or to project the results of
operations for any future period or date. You should read the unaudited pro
forma condensed statements of operations in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations", other
financial information included in this prospectus, and with our consolidated
financial statements and related notes and the audited financial statements and
the related notes of the companies we acquired included elsewhere in this
prospectus.

                                       22
27

             UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

                           STARBOARD CRUISE SERVICES
                         SIX MONTHS ENDED JUNE 30, 1999
OFFERING     PRO FORMA FOR
                                                     HISTORICAL    ADJUSTMENTS     OFFERING
                                                     -----------   -----------   -------------
                                                     (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
Net sales..........................................  $   138,258     $    --      $   138,258
Cost of sales......................................       56,888                       56,888
                                                     -----------     -------      -----------
Gross profit.......................................       81,370                       81,370
Selling, general and administrative expenses.......       75,857          --           75,857
Amortization of intangibles........................        2,750          --            2,750
                                                     -----------     -------      -----------
Income from operations.............................        2,763                        2,763
Interest expense...................................        6,047      (4,798)(a)        1,249
Interest income....................................          228                          228
                                                     -----------     -------      -----------
(Loss) income before provision for income taxes and
  minority interest................................       (3,056)      4,798            1,742
Provision for income taxes.........................          186          42(b)           228
Minority interest..................................           71          --               71
                                                     -----------     -------      -----------
Net (loss) income..................................  $    (3,313)    $ 4,756      $     1,443(c)
                                                     ===========     =======      ===========
Pro forma basic and diluted net (loss) income per
  share (d)........................................  $     (0.14)                 $      0.05
                                                     ===========                  ===========
Pro forma basic and diluted weighted average
  shares...........................................   24,000,000                   30,476,250
                                                     ===========                  ===========
See Notes to Unaudited Pro Forma Condensed Statements of Operations

                                       23
28

             UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

                           STARBOARD CRUISE SERVICES
                          YEAR ENDED DECEMBER 31, 1998
STARBOARD
                             CRUISE                          PRO FORMA                        PRO FORMA
                            SERVICES     ACQUISITION            FOR           OFFERING       FOR OFFERING
                           COMBINED(E)   ADJUSTMENTS        ACQUISITIONS     ADJUSTMENTS   AND ACQUISITIONS
                           -----------   -----------      ----------------   -----------   ----------------
                                               (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
Net sales................  $  281,151      $    --            $281,151         $    --       $   281,151
Cost of sales............     120,917           --             120,917                           120,917
                           -----------     -------            --------         -------       -----------
Gross profit.............     160,234           --             160,234                           160,234
Selling, general and
  administrative
  expenses...............     151,262       (5,113)(f)         146,149              --           146,149

Amortization of
  intangibles............       1,528        3,704(g)            5,232              --             5,232
                           -----------     -------            --------         -------       -----------
Income from operations...       7,444        1,409               8,853                             8,853
Interest expense.........       3,848        8,335(h)           12,183          (9,187)(a)         2,996
Interest income..........         972           --                 972              --               972
Other expense............          10           --                  10              --                10
                           -----------     -------            --------         -------       -----------
Income (loss) before
  provision for income
  taxes and minority
  interest...............       4,558       (6,926)             (2,368)          9,187             6,819
Provision (benefit) for
  income taxes...........       2,780       (3,630)(b)            (850)          2,379(b)          1,529
Minority interest........         776           --                 776              --               776
                           -----------     -------            --------         -------       -----------
Net income (loss)........  $    1,002      $(3,296)           $ (2,294)        $ 6,808       $     4,514(d)
                           ===========     =======            ========         =======       ===========
Pro forma basic and
  diluted net income per
  share(c)...............                                                                    $      0.15
                                                                                             ===========
Pro forma basic and
  diluted weighted
  average shares.........                                                                     29,726,250
                                                                                             ===========
See Notes to Unaudited Pro Forma Condensed Statements of Operations

                                       24
29

        NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS

(a) Represents a reduction in interest expense in connection with the
    anticipated use of net proceeds to repay $88,111 of long term debt as
    follows:
REDUCTION IN
                                                                                            INTEREST EXPENSE
                                                                                        -------------------------
                        PRINCIPAL      PRINCIPAL                                                       SIX MONTHS
                       OUTSTANDING    OUTSTANDING     USE OF                  ANNUAL     YEAR ENDED      ENDED
                       DECEMBER 31,    JUNE 30,     PROCEEDS TO   INTEREST   INTEREST   DECEMBER 31,    JUNE 30,
                           1998          1999       REPAY DEBT      RATE     EXPENSE        1998          1999
                       ------------   -----------   -----------   --------   --------   ------------   ----------
Revolving Credit
  Facility...........    $ 10,200      $  7,900       $ 6,544       7.81%    $   797       $  601        $  256
Term Note............      67,500        67,500        42,320       7.94%      5,360        3,385         1,680
Senior Subordinated
  Notes..............      25,188        28,262        28,262      15.00%      3,956        3,956         2,189
Junior Subordinated
  Note...............      10,000        10,985        10,985      12.00%      1,245        1,245           673
                         --------      --------       -------                -------       ------        ------
                         $112,888      $114,647       $88,111                $11,358       $9,187(1)     $4,798(1)
                         ========      ========       =======                =======       ======        ======
-------------------------
(1) Includes $178 and $45 of compounded interest related to the senior
    subordinated notes and the junior subordinated note, respectively.

(b) Reflects increase (decrease) to the provision for income taxes associated
    with the following:
OFFERING ADJUSTMENTS
                                                 ACQUISITION    -----------------------
                                                 ADJUSTMENTS                     SIX
                                                 ------------                   MONTHS
                                                  YEAR ENDED     YEAR ENDED     ENDED
                                                 DECEMBER 31,   DECEMBER 31,   JUNE 30,
                                                     1998           1998         1999
                                                 ------------   ------------   --------
Provision for income taxes as if each Onboard
  Group company was a C-corporation and accrued
  taxes at the statutory rate of 38.5%.........    $   822         $   --        $--
Tax effect of the pro forma adjustments........     (2,376)         2,379         42
Effect of non-U.S. tax rates...................     (2,076)            --         --
                                                   -------         ------        ---
Pro forma adjustments..........................    $(3,630)        $2,379        $42
                                                   =======         ======        ===
(c) Does not include an extraordinary charge of approximately $7.0 million
    related to a prepayment fee in connection with the payment of $28.3 million
    of our senior subordinated notes which we will record in the quarter in
    which the offering is consummated.

(d) Pro forma basic and diluted net income per share was computed by dividing
    pro forma net income by the pro forma weighted average number of common
    shares outstanding after giving effect to dilutive stock options for the
    diluted computations and the issuance of                shares in connection
    with this offering. Retroactive restatement has been made to share and per
    share amounts for the 50 for 1 common share split and the 5 for 1 stock
    dividend which will occur immediately before this offering.

                                       25
30
  NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS -- CONTINUED

(e) The historical results of operations for each of the entities we acquired
    are included in our company's historical results of operations for the
    period from their respective dates of acquisition through the end of the
    period presented. The historical results of operations presented for each of
    the acquired entities are their respective pre-acquisition results of
    operations. Set forth below are the respective dates of incorporation or
    acquisition:
COMPANY                                                      DATE
-------                                                      ----
Starboard Cruise Services.........................  September 10, 1998
                                                    (date of incorporation)
Greyhound Leisure Services (predecessor)..........  September 17, 1998
Onboard Group.....................................  September 17, 1998
Nuance Global Ships...............................  December 15, 1998
The historical pro forma combined statements of operations for the year ended
December 31, 1998 are as follows:
GREYHOUND                           STARBOARD
                                  HISTORICAL         LEISURE                             CRUISE
                               STARBOARD CRUISE     SERVICES      ONBOARD               SERVICES
                                   SERVICES       (PREDECESSOR)    GROUP    NUANCE(1)   COMBINED
                               ----------------   -------------   -------   ---------   ---------
Net sales....................      $71,061          $135,603      $13,205    $61,282    $281,151
Cost of sales................       30,139            54,290        8,012     28,476     120,917
                                   -------          --------      -------    -------    --------
Gross profit.................       40,922            81,313        5,193     32,806     160,234
Selling, general and
  administrative expenses....       36,373            73,993        3,169     37,727     151,262
Amortization of
  intangibles................        1,525                --            3         --       1,528
                                   -------          --------      -------    -------    --------
Income (loss) from
  operations.................        3,024             7,320        2,021     (4,921)      7,444
Interest expense.............        3,156               674           18         --       3,848
Interest income..............          485               257          141         89         972
Other expense................           --                --           10         --          10
                                   -------          --------      -------    -------    --------
Income (loss) before
  provision for income taxes
  and minority interest......          353             6,903        2,134     (4,832)      4,558
Provision for income taxes...          359             2,249           --        172       2,780
Minority interest............          182               594           --         --         776
                                   -------          --------      -------    -------    --------
Net income (loss)............      $  (188)         $  4,060      $ 2,134    $(5,004)   $  1,002
                                   =======          ========      =======    =======    ========
(1) The historical statement of operations for Nuance represents the audited
    statement of operations of Nuance for the period from December 26, 1997
    through September 24, 1998 combined with the unaudited statement of
    operations of Nuance for the period from September 25, 1998 through December
    15, 1998 (the date we acquired Nuance). The unaudited interim period
    statement of operations includes estimates inherent in preparing interim
    financial statements and is included in the Combined Historical Statements
    of Operations for Nuance for informational purposes only.

(f) In connection with the Nuance acquisitions several executive and
    administrative positions were either eliminated or replaced with new
    individuals or certain compensation packages were restructured. In addition,
    certain intercompany charges from Nuance Global Ships' former parent Nuance
    Global Traders related to corporate overhead, including legal, audit,
    treasury and risk

                                       26
31
  NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS -- CONTINUED

assessment, were eliminated. Also a pension plan related to Greyhound Leisure
Services was eliminated in connection with that acquisition. On a stand-alone
     basis, the decrease in selling, general and administrative expenses is as
     follows:
YEAR ENDED
                                                 DECEMBER 31, 1998
                                            ---------------------------
                                            NUANCE   GREYHOUND   TOTAL
                                            ------   ---------   ------
Executive positions, net..................  $ 852     $   --     $  852
Former parent company overhead charges,
  net.....................................  1,385         --      1,385
Elimination of duplicate facilities.......  2,074         --      2,074
Elimination of pension plan...............     --        802        802
                                            ------    ------     ------
                                            $4,311    $  802     $5,113
                                            ======    ======     ======
(g) Reflects an increase to amortization of goodwill related to the acquisitions
    of Greyhound Leisure Services and the Onboard Group and an increase to
    amortization of cruise line contracts related to the acquisition of
    Greyhound Leisure Services. Goodwill aggregating approximately $97.2 million
    is being amortized over 25 years. Cruise line contracts valued at
    approximately $5.4 million are being amortized over three to five years.
    Incremental amortization of goodwill is as follows:
ANNUAL       AMOUNT    INCREMENTAL
                                          GOODWILL   AMORTIZATION   RECORDED     AMOUNT
                                          --------   ------------   --------   -----------
Greyhound Leisure Services..............  $55,900       $2,236       $  653      $1,583
Onboard Group...........................   41,300        1,652          482       1,170
                                          -------       ------       ------      ------
                                          $97,200       $3,888       $1,135      $2,753
                                          =======       ======       ======      ======
Incremental amortization of cruise line contracts is as follows:
ANNUAL       AMOUNT    INCREMENTAL
                                     CONTRACT VALUE   AMORTIZATION   RECORDED     AMOUNT
                                     --------------   ------------   --------   -----------
Greyhound Leisure Services.........      $5,400          $1,341        $390       $  951
                                         ======          ======        ====       ======
The total incremental amortization is as follows:
Goodwill.....................................................................     $2,753
Cruise line contracts........................................................        951
                                                                                  ------
                                                                                  $3,704
                                                                                  ======
(h) Represents additional interest expense related to the acquisitions of
    Greyhound Leisure Services, the Onboard Group and Nuance. Incremental
    interest expense is as follows:
PRINCIPAL    INTEREST        ANNUAL        INTEREST   INCREMENTAL
                                   OUTSTANDING     RATE     INTEREST EXPENSE   RECORDED     AMOUNT
                                   -----------   --------   ----------------   --------   -----------
Term Note........................   $ 67,500       7.94%        $ 5,360         $1,491      $3,869
Revolving Credit Facility........     10,200       7.81%            797             84         713
Senior Subordinated Notes........     25,188      15.00%          3,956          1,149       2,807
Junior Subordinated Note.........     10,000      12.00%          1,245            299         946
                                    --------                    -------         ------      ------
                                    $112,888                    $11,358         $3,023      $8,335(1)
                                    ========                    =======         ======      ======
-------------------------
(1) Includes $178 and $45 of compounded interest related to the senior
    subordinated notes and the junior subordinated note, respectively.

                                       27
32

                            SELECTED FINANCIAL DATA

     We have presented below the selected historical consolidated financial data
for Starboard Cruise Services for the period from September 10, 1998 through
December 31, 1998 and as of December 31, 1998 and for our predecessor entity,
Greyhound Leisure Services, for the period from January 1, 1998 through
September 17, 1998, for each of the three years in the period ended December 31,
1997 and as of December 31, 1997 which have been derived from the audited
consolidated financial statements of Starboard Cruise Services and Greyhound
Leisure Services included elsewhere in this prospectus. The historical financial
and data for our predecessor entity, Greyhound Leisure Services, as of December
31, 1996 and 1997 and as of and for the year ended December 31, 1995 have been
derived from the audited financial statements of Greyhound Leisure Services
which are not included in this prospectus. The selected historical consolidated
financial and other data for Starboard Cruise Services for the six months ended
June 30, 1999 and as of June 30, 1999 and Greyhound Leisure Services for the six
months ended June 30, 1998 and the year ended December 31, 1994 and as of
December 31, 1994 have been derived from the respective unaudited consolidated
financial statements of Starboard Cruise Services and Greyhound Leisure Services
which include adjustments which our management considers necessary for a fair
presentation of the financial position and results of operations for these
periods. Operating results for the six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the entire year.
The results of operations for the six months ended June 30, 1999 for Starboard
Cruise Services are not comparable to the six months ended June 30, 1998 for
Greyhound Leisure Services due to, among other things, the acquisitions
completed on or after September 17, 1998. Results of operations of these
acquired businesses are included in Starboard Cruise Services consolidated
financial statements after the date of acquisition for the period after
September 17, 1998. This data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations-Results
of Operations" and the consolidated financial statements and related notes and
other financial information included elsewhere in this prospectus.
PREDECESSOR
                                                                           -------------------
                                              PREDECESSOR
                               -----------------------------------------       PERIOD FROM
                                        YEAR ENDED DECEMBER 31,              JANUARY 1, 1998
                               -----------------------------------------         THROUGH
                                 1994       1995       1996       1997     SEPTEMBER 17, 1998
                               --------   --------   --------   --------   -------------------
                                          (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
STATEMENT OF OPERATION DATA:
Net sales....................  $137,723   $136,262   $179,799   $188,498        $135,603
Cost of sales................    58,559     58,064     72,860     76,828          54,290
                               --------   --------   --------   --------        --------
Gross profit.................    79,164     78,198    106,939    111,670          81,313
Selling, general and
  administrative expenses....    70,706     69,420     96,712    101,067          73,993
Amortization of
  intangibles................        --         --         --         --              --
                               --------   --------   --------   --------        --------
Income from operations.......     8,458      8,778     10,227     10,603           7,320
Interest expense.............       575         56        625        766             674
Interest income..............         2        206        512        561             257
                               --------   --------   --------   --------        --------
Income (loss) before
  provision for income taxes
  and minority interest......     7,885      8,928     10,114     10,398           6,903
Provisions for income
  taxes......................     2,844      3,138      2,936      2,941           2,249
Minority interest............       777        861      1,706        957             594
                               --------   --------   --------   --------        --------
Net income (loss)............  $  4,264   $  4,929   $  5,472   $  6,500        $  4,060
                               ========   ========   ========   ========        ========
PER SHARE DATA:
Basic and diluted net income
  (loss) per share...........  $  4,264   $  4,929   $  5,472   $  6,500        $  4,060
Basic and diluted weighted
  average shares
  outstanding................     1,000      1,000      1,000      1,000           1,000
PERIOD FROM
                               SEPTEMBER 10, 1998
                                                      SIX MONTHS ENDED JUNE 30,
                                                    ------------------------------
                                                       1998             1999
                                    THROUGH         -----------   ----------------
                               DECEMBER 31, 1998
                                STARBOARD CRUISE                  STARBOARD CRUISE
                                    SERVICES                          SERVICES
                                  (SUCCESSOR)       PREDECESSOR     (SUCCESSOR)
                               ------------------   -----------   ----------------
                                    (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
STATEMENT OF OPERATION DATA:
Net sales....................     $    71,061         $94,398       $   138,258
Cost of sales................          30,139          37,770            56,888
                                  -----------         -------       -----------
Gross profit.................          40,922          56,628            81,370
Selling, general and
  administrative expenses....          36,373          51,112            75,857
Amortization of
  intangibles................           1,525              --             2,750
                                  -----------         -------       -----------
Income from operations.......           3,024           5,516             2,763
Interest expense.............           3,156             421             6,047
Interest income..............             485             128               228
                                  -----------         -------       -----------
Income (loss) before
  provision for income taxes
  and minority interest......             353           5,223            (3,056)
Provisions for income
  taxes......................             359           1,437               186
Minority interest............             182             514                71
                                  -----------         -------       -----------
Net income (loss)............     $      (188)        $ 3,272       $    (3,313)
                                  ===========         =======       ===========
PER SHARE DATA:
Basic and diluted net income
  (loss) per share...........     $     (0.01)        $ 3,272       $     (0.14)
Basic and diluted weighted
  average shares
  outstanding................      23,250,000           1,000        24,000,000
28
33
SUCCESSOR
                                                                                                            STARBOARD
                                                                    PREDECESSOR                               CRUISE
                                                      ---------------------------------------                SERVICES
                                                                   DECEMBER 31,                  --------------------------------
                                                      ---------------------------------------    DECEMBER 31,        JUNE 30,
                                                       1994       1995      1996       1997          1998              1999
                                                      -------    ------    -------    -------    ------------    ----------------
                                                                                    (IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents...........................  $    --    $1,768    $   522    $   262      $  4,124          $    361
Current assets......................................   35,976    41,551     41,379     42,425        76,476            82,269
Total assets........................................   40,555    54,414     56,998     59,262       191,540           194,020
Total debt..........................................       --        --         --         --       112,888           110,588
Total shareholders' equity..........................   13,549    13,490     14,383     15,148        45,982            42,669
29
34

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion contains forward-looking statements that involve
risks and uncertainties. Starboard Cruise Services' actual results could differ
materially from those discussed in the forward-looking statements as a result of
certain factors including those set forth under "Risk Factors" and elsewhere in
this prospectus. The following discussion and analysis should be read in
conjunction with the "Selected Financial Data" and the consolidated financial
statements and related notes thereto appearing elsewhere in this prospectus.

GENERAL

     Starboard Cruise Services is the leading provider of on-board duty-free
retail services to the cruise industry, operating 232 duty-free retail stores
aboard 82 ships serving 21 cruise lines. We are also the cruise industry's
leading provider of enhanced cruise services including our port lecture series,
customized in-cabin publications and on-board art auctions. We deliver our
services to the largest cruise lines in the industry including Carnival
Corporation (and its affiliated cruise lines), Norwegian Cruise Line and Royal
Caribbean Ltd. (and its affiliated cruise lines), among others. In most cases,
we are the exclusive provider of our services on ships we serve and we have
developed long-standing, strong relationships with our cruise line customers.
Our cruise-based business accounted for 77% of net sales for the first six
months of 1999. Net sales from our land-based operations accounted for 23% of
net sales for the first six months of 1999.

     Net Sales.  Net sales represents our gross revenues less credits and
adjustments. Our cruise-based services consist of duty-free retail stores,
in-cabin publications and video, port lecturing services and on-board art
auctions and provided most of Starboard Cruise Services' net sales. Our
land-based media and retail business consists of airport duty-free retail stores
and hotel and resort publications and provided the remainder of our net sales.
For the year ended December 31, 1998, calculated on a pro forma basis to reflect
our 1998 acquisitions, 76% of our total net sales were contributed by the
cruise-based business and 24% of net sales were contributed by the land-based
businesses.

     Our cruise-based duty-free retail stores accounted for 68.1% of Starboard
Cruise Services total historical net sales in 1998 and 69.6% for the first six
months of 1999 while our other cruise-based services accounted for 7.9% and 7.0%
for the same periods, respectively.

     We believe that our understanding of the cruise passengers' buying habits,
ability to source products at low cost points and innovative merchandising, and
sales techniques and our success of adding new ships allowed us to maintain a
7.2% annual net sales growth rate in our cruise-based duty-free retail business
from 1996 to 1998.

     The majority of our land-based net sales are provided by the 21 duty-free
retail stores we operate in the Miami and Fort Lauderdale airports with a
smaller percentage contributed by the publications and videos we develop for
land-based leisure destinations including Las Vegas hotels and resorts in the
Caribbean. Net sales for the airport duty-free operations have grown 6.6% per
year since 1995 and are primarily correlated to the number of international
passengers traveling through the Miami and Fort Lauderdale airports each year.

     Starboard Cruise Services has recently entered into a new, multi-year
contract with Royal Caribbean Ltd. to operate the on-board duty-free retail
shops aboard the 11 existing and five Royal Caribbean International vessels
under contract. The contract provides us with the option to operate duty-free
stores on all new vessels launched during the contract term. As a result of this
new contract, we will operate duty-free retail stores on almost every major
cruise line in the industry. The

                                       30
35

commencement of this new contract increases our number of duty-free passenger
berths by 28% from approximately 83,000 berths as of June 30, 1999 to
approximately 105,000 berths as of November 1999.

     Cost of Sales.  The principal elements constituting our cost of sales
include the cost of product sold in the cruise-based and airport duty-free
retail shops and the rent paid to the cruise lines associated with the port
lecturing businesses. We believe our cost of sales for the duty-free stores are
some of the lowest in the industry due to the large scale purchasing power that
comes as a result of operating over 232 duty-free retail stores aboard 82 ships
and 21 airport duty-free stores. We also source and purchase private label logo
items worldwide, which allows us to provide high quality merchandise at higher
margins. We expect that our cost of sales for products sold through the duty-
free stores will remain at the same level or decrease slightly in the future as
our purchasing power and buying expertise continue to improve.

     Selling, General and Administration.  The principal elements constituting
our selling, general and administrative expenses include the percentage rent
paid to the cruise lines and airport authority for the duty-free shops,
warehousing costs, and general administration such as salaries, sales efforts,
and overhead. The rents paid to the cruise lines and airport authority are based
on a percentage of our net sales, or a minimum payment, and reflect the largest
percentage of our selling, general and administrative expenses and are based on
long-term contracts with our cruise line customers. All of our cruise line
contracts call for percentage rents on an annual basis during the contract term.

     Our warehousing costs include the cost of operating our 120,000 sq. ft.
bonded, duty-free warehouse in Miami, Florida. The warehouse is used to service
operations at both airports and to replenish the cruise lines duty-free shops
when they dock in Miami and Fort Lauderdale. Our warehouse is also used as a
staging area to replenish vessels in over 40 ports worldwide. General
administration costs include the salaries, benefits and general overhead costs
associated with employing approximately 1,200 employees and operating facilities
in Miami and Miami Beach, warehouse operations at both airports and offices in
Southampton, England.

     On September 17, 1998, we acquired our Predecessor, Greyhound Leisure
Services. Concurrent with the acquisition, we acquired the Onboard Group and on
December 15, 1998, we purchased the business of Nuance Global Ships. At the time
of the Nuance acquisition, Nuance operated 90 duty-free retail stores on 28
ships with 9 cruise lines, including Celebrity Cruises, Cunard Line, Holland
America Line and Seabourn Cruise Line. Prior to our acquisition, the Nuance
business was unprofitable. In the six months following the acquisition, we have
focused on improving the merchandising mix, retraining the sales force,
increasing per passenger day revenues reducing redundant overhead costs to
increase profitability to levels consistent with our existing fleet of cruise-
based duty-free retail stores.

     Our results of operations for the six months ended June 30, 1999 are
compared to the results of our Predecessor for the six months ended June 30,
1998. Our 1998 results of operations, presented on a pro forma basis to give
effect to our 1998 acquisitions, are compared to the results of operations of
our Predecessor for the year ended December 31, 1997. The results of operations
for our Predecessor, however, do not include the results of operations for that
period of the On Board Group business (port lecturing, publications and art
auctions) or the Nuance business, each of which was acquired in our 1998
acquisitions. As a result, we believe our period to period comparisons may not
be indicative of the historical and future operations of our business.

                                       31
36

RESULTS OF OPERATIONS

     The following table sets forth our results of operations based on the
percentage relationship of certain items to revenues during the period shown.
PREDECESSOR               STARBOARD CRUISE SERVICES
                                    ------------------------------   ------------------------------
                                      YEAR ENDED                     PRO FORMA YEAR
                                     DECEMBER 31,     SIX MONTHS         ENDED         SIX MONTHS
                                    --------------       ENDED        DECEMBER 31,        ENDED
                                    1996     1997    JUNE 30, 1998        1998        JUNE 30, 1999
                                    -----    -----   -------------   --------------   -------------
Net sales.........................  100.0%   100.0%      100.0%          100.0%           100.0%
Cost of sales.....................   40.5     40.8        40.0            43.0             41.1
     Gross profit.................   59.5     59.2        60.0            57.0             58.9
Selling, general and
  administrative expenses.........   53.8     53.6        54.2            51.9             54.9
Amortization of intangibles.......     --       --          --             1.9              2.0
                                    -----    -----       -----           -----            -----
Income from operations............    5.7%     5.6%        5.8%            3.3%             2.0%
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 OF STARBOARD CRUISE SERVICES TO SIX
MONTHS ENDED JUNE 30, 1998 OF OUR PREDECESSOR.

     Net Sales.  Our net sales were $138.3 million for the six months ended June
30, 1999, an increase of $43.9 million or 46.5%, from $94.4 million for our
Predecessor during the same period of the prior year. Net sales increased by
$41.2 million or 43.6% due to sales related to the operations of the Onboard
Group and Nuance. Excluding the Onboard Group and Nuance, net sales increased by
$2.7 million or 2.9% primarily due to an increase in sales in our cruise-based
retail stores which were partially offset by a decrease in net sales of the
land-based services.

     Cruise-based duty-free retail net sales were $96.2 million for six months
ended June 30, 1999, an increase of $35.8 million or 59.3%, from $60.4 million
for our Predecessor during the same period of the prior year. Approximately
$31.0 million of the increase was attributable to a 70% increase in duty-free
retail passenger days from approximately 8.4 million in June 30, 1998 to
approximately 14.3 million in June 30, 1999. The increase in passenger days was
attributable to the number of new ships added increasing from 40 to 82 during
the same period as a result of the Nuance acquisition and additions to the
existing fleet. Our net sales for the six months ended June 30, 1999 included
other cruise-based services with net sales of $10.2 million. Our Predecessor did
not perform these cruise-based services reflected through the Onboard Group
during the same period of the prior year.

     Land-based services net sales were $31.1 million for the six months ended
June 30, 1999, a decrease of $2.0 million or 6.0%, from $33.1 million for the
same period of the prior year. This decrease was primarily attributable to the
decreased passenger traffic at Miami Airport due to poor economic conditions in
Latin America and to a lesser extent our discontinuation of certain product
categories in the Florida Export Warehouse business.

     Gross Profit.  Gross profit was $81.4 million for the six months ended June
30, 1999, an increase of $24.8 million from $56.6 million for the same period of
the prior year. The acquisitions of Nuance and the Onboard Group were the
primary contributors to the increase in results of operations. Our cost of sales
for the six-month period ending June 30, 1999 as a percentage of net sales was
relatively flat versus the same period of 1998, reflecting our ability to
decrease the previously higher cost of sales attributable to the Nuance
business.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses were $75.9 million for the six months ended June 30,
1999; an increase of $24.8 million from $51.1

                                       32
37

million during the same period for our Predecessor for the six months ended June
30, 1998. Approximately $19.7 million of the increase was attributable to the
expenses related to the acquisitions of the Onboard Group and Nuance. Excluding
the effect of these acquisitions, selling, general and administrative expense
increased by $5.1 million primarily due to increases in rent expense with cruise
line customers. As a percentage of net sales, selling, general and
administrative expenses increased to 54.9% for the six months ended June 30,
1999 from 54.2% for the same period of the prior year.

     Income from Operations.  Income from operations was $2.8 million for the
six-month period ended June 30, 1999, a decrease of $2.7 million from $5.5
million for our Predecessor for the six months ended June 30, 1998. The majority
of the decrease was attributable to the increase of amortization of intangibles
resulting from amortization of goodwill and contracts. As a percentage of net
sales, income from operations decreased to 2.0% for the six-month period ending
June 30, 1999 compared to 5.8% for the same period of 1998.

     Minority Interest.  Costs reported as minority interest are attributable
solely to our duty-free retail operations at the Miami International and Fort
Lauderdale airports. Due to FAA regulations, we work with four DBE
(Disadvantaged Business Entities) partners at the Miami airport and with one DBE
at the Fort Lauderdale airport who earn a percentage of income before provision
for income taxes and after-tax earnings, respectively. For the six months ended
June 30, 1999, minority interest expense were approximately $0.1 million, a
decrease of $0.4 million compared to the six-month period ended June 30, 1998.

     Interest Expense.  Interest expense was $6.0 million for the six months
ended June 30, 1999 reflecting an increase of $5.6 million from $0.4 million for
the same period of the prior year, primarily due to our increased indebtedness
resulting from the debt incurred to acquire our Predecessor, the Onboard Group
and Nuance.

     Provision for Income Taxes.  Income taxes for the six months ended June 30,
1999, were provided at an effective tax rate of (0.6)% a decrease from a 27.5%
effective tax rate during the same period of the prior year. Our effective tax
rate decreased significantly primarily due to a net loss during this period.

     Net Income (Loss).  Net losses for the six months ended June 30, 1999 were
$3.3 million, a decrease of $6.6 million from net income of $3.3 million from
the same period of the prior year. The decrease in net income was primarily the
result of the increased interest expense and amortization of intangibles
associated with the acquisitions of the Onboard Group and Nuance.

COMPARISON OF STARBOARD CRUISE SERVICES PRO FORMA FOR ACQUISITIONS FOR THE YEAR
ENDED DECEMBER 31, 1998 TO OUR PREDECESSOR FOR THE YEAR ENDED DECEMBER 31, 1997.

     Net Sales.  Our net sales, calculated on a pro forma basis to include our
1998 acquisitions, were $281.2 million for the year ended December 31, 1998,
reflecting an increase of $92.7 million or 49.2%, from actual net sales of our
Predecessor of $188.5 million for the year ended December 31, 1997. Net sales,
calculated on a pro forma basis to include our 1998 acquisitions, increased by
$74.5 million or 39.5% primarily due to the operations of the Onboard Group and
Nuance combined with the growth in the Predecessor business.

     Cruise-based retail store net sales calculated on a pro forma basis were
$191.5 million for the year ended December 31, 1998, an increase of $72.5
million or 60.9%, from $119.0 million for our Predecessor for the year ended
December 31, 1997. Approximately $61.3 million, or 84.6%, of the increase in
cruise-based retail pro forma 1998 net sales from the 1997 Predecessor was
attributable to the operations of Nuance. Excluding this acquisition, cruise
ship retail store pro forma 1998 net sales increased by $11.2 million or 15.4%
compared to our Predecessor for 1997 which was primarily

                                       33
38

attributable to an increase in the number of ships served which increased to 48
during 1998 from 42 for 1997 excluding acquisitions.

     Land-based services pro forma net sales were $67.6 million for the year
ended December 31, 1998, an increase of $2.1 million or 3.2%, from $65.5 million
for our Predecessor in 1997. Approximately $0.7 million of the increase was
attributable to the operations of the Onboard Group's land-based publishing
business. Excluding the Onboard Group, net sales related to land-based services
net sales increased $1.6 million primarily due to increased passenger traffic in
Miami Airport duty-free shops.

     Gross Profit.  Our gross profit calculated on a pro forma basis to reflect
our 1998 acquisitions was $160.2 million for the year ended December 31, 1998,
an increase from $111.7 million for our Predecessor in 1997. The increase in
gross profit was attributable primarily to the results of the operations of
Nuance and the Onboard Group. As a percentage of net sales, our pro forma cost
of sales for the period ending December 31, 1998 increased to 43.0% from 40.8%
for the period ending December 31, 1997, reflecting the higher cost of sales
attributable to Nuance operations and the inclusion of the Onboard Group's rent
expense in cost of sales.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses were $146.1 million on a pro forma basis to reflect our
1998 acquisitions for the year ended December 31, 1998, an increase from $101.1
million for our Predecessor for the year ended December 31, 1997. Approximately
$40.9 million of the increase was attributable to the selling, general and
administrative expenses related to the operations of the Onboard Group and
Nuance. Excluding the Onboard Group and Nuance, pro forma selling, general and
administrative expense increased by $4.1 million primarily due to higher sales
volume. As a percentage of net sales, pro forma selling, general and
administrative expenses decreased to 51.9% for 1998 from 53.6% for 1997. The
decrease was primarily driven by the increase in net sales attributed to the
operations of Nuance and comparatively lower levels of incremental overhead.

     Income from Operations.  Income from operations on a pro forma basis to
reflect our 1998 acquisitions was $8.9 million for the year ended December 31,
1998, a decrease of $1.7 million from $10.6 million for our Predecessor in 1997.
This decrease is attributable to net operating losses associated with our 1998
acquisitions and the related amortization of intangibles partially offset by a
reduction in selling, general and administrative expenses as a percentage of our
net sales and improvement in our gross profit percentage in the operations of
our predecessor for that period.

     Minority Interest.  Minority interest on a pro forma basis to reflect our
1998 acquisitions of $0.8 million for the year ended December 31, 1998 decreased
$0.1 million from $0.9 for our Predecessor in 1997. The lower expense was
primarily due to the elimination of an interest in a joint venture.

     Interest Expense.  Interest expense on a pro forma basis to reflect our
1998 acquisitions of $12.2 million for the year ended December 31, 1998
increased $12.0 million from $0.2 million for our Predecessor in 1997. The
higher interest expense was primarily due to a higher average debt balance
resulting from the debt incurred to acquire the Onboard Group and Nuance.

     Provision for Income Taxes.  The provision for income taxes calculated on a
pro forma basis to reflect our 1998 acquisitions for the year ended December 31,
1998, was at an effective tax rate of 22.4% an increase from a 31.2% effective
tax rate during the same period of the prior year for our Predecessor.

     Net Income (Loss).  Net loss on a pro forma basis to reflect our 1998
acquisitions was $2.3 million for the year ended December 31, 1998, a decrease
of $8.8 million from net income of $6.5

                                       34
39

million for 1997 for our Predecessor. The decrease in net income was the result
of the factors stated above.

COMPARISON OF OUR PREDECESSOR FOR THE YEAR ENDED DECEMBER 31, 1997 TO OUR
PREDECESSOR FOR THE YEAR ENDED DECEMBER 31, 1996

     Net Sales.  Net sales of our Predecessor were $188.5 million for 1997, an
increase of $8.7 million or 4.8% from $179.8 million for 1996. Cruise-based
duty-free retail store sales increased to $119.0 million in 1997, or 5.0%, from
$113.3 million in 1996, primarily due to an increase in the number of ships
served. During 1997 our passenger days of 17.0 million increased 0.2 million
from 16.8 million on the same number of ships due to higher capacity utilization
rates and shorter cruise itineraries by the cruise lines. Cruise-based store
revenue per passenger day increased by 3.6% from $6.74 to $6.98 during 1997 from
1996 primarily due to improved merchandizing mix and sales techniques.
Land-based airport duty-free net sales increased by $3.2 million in 1997 from
1996 primarily due to an increase in the number of international travelers using
the Miami International Airport.

     Gross Profit.  Gross profit was $111.7 million for 1997, an increase of
$4.8 million from $106.9 million for 1996. As a percentage of net sales, gross
profit decreased to 59.2% for 1997 from 59.5% for 1996. The decrease was
primarily attributable to a slightly higher cost of sales in the duty-free
shops.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses were $101.1 million for 1997, an increase from $96.7
million for 1996. As a percentage of net sales, selling, general and
administrative expenses decreased to 53.6% for 1997 from 53.8% for 1996.
Controlling overhead costs as the company grew was the primary reason for the
decrease.

     Income from Operations.  Income from operations was $10.6 million for 1997,
an increase from $10.2 million for 1996. Income from operations as a percentage
of net sales decreased to 5.6% in 1997 from 5.7% in 1996. The decrease was
primarily attributable to the factors described in gross profit above.

     Minority Interest.  Minority interest expense of $0.9 million for 1997
decreased $0.7 million compared to 1996 due to higher depreciation levels at the
Miami International Airport which decreased minority interest.

     Interest Expense.  Interest expense of $0.8 million for 1997 was $0.1
million higher than interest expense of $0.6 million for 1996. The higher
interest expense was primarily due to a higher average debt balance in 1997
resulting from expenses associated with remodeling the Miami Airport.

     Provision for Income Taxes.  The provision for income taxes for 1997 was at
an effective tax rate of 28.3%, a decrease from 34.9% due to the implementation
of certain state tax planning strategies.

     Net Income (Loss).  Net income was $6.5 million for 1997, an increase of
$1.09 million from $5.5 million for 1996. The increase in net income was the
result of the factors stated above.

LIQUIDITY AND CAPITAL RESOURCES

     As of June 30, 1999, we had cash and cash equivalents of $0.4 million,
compared to $4.1 million, $0.3 million, and $0.5 million as of December 31, 1998
(pro forma for acquisitions), 1997 (Predecessor) and 1996 (Predecessor),
respectively. Since September 17, 1998, we have funded our operations and the
acquisitions of our Predecessor, the Onboard Group and Nuance through cash flows
from operations and the proceeds of borrowings under our senior credit facility
and the issuance of senior subordinated notes and a junior subordinated note, as
well as equity funded by our current

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40

shareholders and management. Our senior credit facility consists of a term loan
and revolver. As of June 30, 1999, the outstanding principal balance on our term
loan was $67.5 million and the outstanding balance under our revolver was $7.9
million. Also as of June 30, 1999, we had $28.3 million of senior subordinated
notes outstanding and $10.9 million of the junior subordinated note outstanding.
We expect to repay the entire balance of our junior subordinated note and senior
subordinated notes with the proceeds of this offering. We also expect to repay
$42.3 million of our term loan. In addition, we may repay a portion of our
revolving credit facility, under which we have the ability to reborrow any
amounts we repay on our revolving loans. For a description of the terms of our
credit facility, see "Description of Certain Indebtedness".

     For the years ended December 31, 1998, 1997 (Predecessor), 1996
(Predecessor), and for Starboard Cruise Services for the six months ended June
30, 1999, net cash provided by (used for operations) was $10.3 million, $4.2
million, $7.7 million and $0.7 million, respectively, provided primarily through
cash from operations. As a holding company, our cash needs are satisfied,
subject to restrictive covenants under our debt instruments, by distributions
from our subsidiaries' cash flow from operations.

     We are continually evaluating the appearance of both our cruise-based and
land-based duty-free retail shops and upgrading them as appropriate. We
currently anticipate capital expenditures for the foreseeable future of
approximately $2.0 million annually as new ships are brought on line.

     We believe that the net proceeds from this offering, together with our
current cash, anticipated cash flow from operations and available borrowing,
will be sufficient to meet our anticipated cash needs for working capital and
capital expenditures for at least the next 12 months following the offering.
There can be no assurance that we can generate sufficient cash flow from
operations in the future, that anticipated revenue growth will be realized or
that future borrowings or equity financings will be available in an amount
sufficient to service our indebtedness and fund operations. In addition, any
future unanticipated needs (such as acquisitions or additional capital
expenditures) may require additional equity or debt financing.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement
Number 133, Accounting for Derivative Instruments and Hedging Activities. We
expect to adopt the new statement effective January 1, 2001. The statement will
require us to recognize all derivatives on our balance sheet at fair value. We
do not anticipate that the adoption of the statement will have a significant
effect on our results of operations or financial position.

SEASONALITY

     Seasonal factors affect our business. Excluding the effects of the addition
of new ships, which can occur during different points of the year, we generate
the majority of our business during the winter months when there are more
Caribbean cruises. Net sales have historically been lower during the third
quarter when there are fewer cruises in the Caribbean. The effects of
seasonality on our business are partially offset by our provision of services to
Alaskan and European cruises during the summer months.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     On January 28, 1997, the SEC adopted new rules (Securities Act Release No.
7386) that require disclosure about the policies used to account for derivatives
and certain quantitative and qualitative information about market risk
exposures. Market risk generally represents the risk of loss that may result
from the potential change in the value of a financial instrument as a result of
fluctuations in interest rates and market prices. We have not traded or
otherwise transacted in

                                       36
41

derivatives nor do we expect to in the future. We have established policies,
procedures and internal processes governing our management of market risks in
the normal course of our business operations.

  Interest Rate Risk

     The fair market value of long-term fixed interest rate debt is subject to
interest rate risk. Generally, the fair market value of fixed interest rate debt
will increase as interest rates fall and decrease as interest rates rise. The
interest rate changes affect the fair market value but do not impact earnings or
cash flows. The estimated fair value of our long-term debt at June 30, 1999 was
$110.6 million. The effect of an immediate 10% change in interest rates would
not have a material impact on our future operating results or cash flows. Fair
values were determined from quoted market prices.

  Foreign Currency Exchange Risk

     A substantial portion of our sales are denominated in U.S. dollars and as a
result, we have relatively little exposure to foreign currency exchange risk
with respect to sales made. We do not use forward exchange contracts to hedge
exposures denominated in foreign currencies or any other derivative financial
instruments for trading or speculative purposes. The effect of an immediate 10%
change in exchange rates would not have a material impact on our future
operating results or cash flows.

YEAR 2000

     The Year 2000 issue arose because many existing computer programs use only
the last two digits to refer to a year. As a result, computer programs may not
properly recognize a year that begins with "20" instead of the familiar "19". If
not corrected, many businesses are at risk for possible computer application
miscalculations or systems failures causing disruptions in business operations.
These risks are commonly referred to as the "Y2K risks".

     We utilize software and related technologies that may be affected by the
date change in the year 2000. We initiated a significant upgrade of our
information systems in 1997 in order to improve our operating efficiencies and
address Y2K risks at the same time. Through this effort, implemented over a
multi-year period, we believe that by the end of 1999, we will have modified or
replaced any portion of our software necessary to cause our computer systems to
function properly with respect to the dates in the year 2000 and thereafter.

     We have initiated a formal project for communicating with and are in the
process of surveying our cruise line customers and major third party suppliers
of services and products in order to assess their Y2K risks that may have a
material adverse effect on our results of operations.

     We depend on the point-of-sale systems of ten cruise lines to maintain
inventory and to provide sales data which we use to make merchandising
decisions. We have been advised by six of our cruise line customers that they
are in the process of upgrading their respective point-of-sale systems on which
we depend and that they expect to have their respective point-of-sale systems
Year 2000 compliant by the end of 1999.

     We believe that our biggest risks related to the Year 2000 issue are
potential system failures of cruise line customers, major third party suppliers
and other third parties over whom we exert no control. The most reasonably
likely source of Y2K risk with respect to our cruise line customers would be the
disruption of transportation channels that deliver passengers to cruise ships.
The disruption of transportation channels could also impede our ability to
deliver our products to intended

                                       37
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points of sale or the ability of our staff to report to the ships to which they
are assigned. Our business also faces possible disruption in the event that
point-of-sale systems on those cruise ships where we rely on the cruise ship
operator's system do not function properly. These problems could impede our
ability to maintain proper inventory or effectively use sales data to make
merchandising decisions.

     We do not believe that there are contingency plans that we can effect that
can mitigate the risk of cruise line passengers being unable to reach cruise
ships as a result of any transportation disruption. We are in the process of
developing a contingency plan that would allow us to have available product
inventories sufficient for distribution to our intended points of sale in the
event a transportation disruption impairs our ability to obtain delivery of our
products. In addition, we intend to develop a schedule of deployment of our
shipboard staff to minimize the effect of any transportation disruption that
could occur around January 1, 2000. These contingency plans are subject to
uncertainties. We cannot guarantee that any estimate of the level, impact or
duration of Year 2000 non-compliance by our customers or suppliers will be
accurate, or that our contingency plans will be sufficient to mitigate these
risks.

     In the event that any of our cruise line customers or major third party
suppliers do not successfully achieve Year 2000 compliance for their own
operations in a timely manner, our business or operations could be adversely
affected. The magnitude of any adverse effect cannot be quantified at this time
because of variables such as the type and importance of cruise line customers or
major third party suppliers, the unknown level and duration of noncompliance by
these customers and suppliers (and their customers and suppliers), the possible
effect on our operations, and our ability to respond to any non-compliance.

     Our costs for making us Year 2000 compliant have been included in our
historical financial statements and are expensed as incurred. We have not
budgeted for any additional costs to address Y2K risks and currently anticipate
that any such costs will not be material and will be expensed as incurred.
However, in view of the uncertainties relating to the Year 2000 compliant status
of our customers and suppliers, we cannot guarantee that our cost of dealing
with the Y2K risks will be consistent with the foregoing estimate or that the
Y2K risks will not materially adversely affect our future operations.

     The information presented above sets forth the steps that we have taken to
address the Y2K risks. The above discussion of our efforts and expectations
relating to Year 2000 compliance is forward-looking. You are cautioned that
forward-looking statements contained in this discussion should be read in
conjunction with our disclosure under the heading "Forward-Looking Statements --
Market Data".

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                                    BUSINESS

GENERAL

     We are the world's leading provider of duty-free retail shops on cruise
ships and the leading provider of customized media and art auctions to the
cruise industry. We deliver our services to 100 ships representing 26 cruise
lines worldwide, including industry leaders such as Carnival Cruise Line,
Celebrity Cruises, Costa Cruises, Crystal Cruises, Cunard Line, Disney Cruise
Line, Holland America Line, Norwegian Cruise Lines, P&O Cruises, Renaissance
Cruise Lines and Royal Caribbean International. In general, we provide our
cruise-based services on an exclusive basis on the ships we service pursuant to
multi-year cruise line contracts. In addition to cruise-based services, we also
operate land-based services that complement our cruise line related business.
Our land-based services are operating duty-free retail shops at airport
locations in Miami and Fort Lauderdale, Florida, selling wholesale duty-free
goods to cruise lines and caterers serving cruise lines, and providing
customized media programs to land-based hotels and resorts. For the year ended
December 31, 1998, we generated pro forma net sales and EBITDA of $281.2 million
and $18.1 million, respectively. Our cruise-based services generated $213.6
million of net sales and our land-based services generated $67.6 million in net
sales.

     Our duty-free retail stores on cruise ships are the core of our
cruise-based services. Generally, our cruise line retail stores are prominently
located onboard cruise ships and are the only places on board the ship where
cruise line passengers can purchase items such as cruise ship logo apparel and
items, fashion apparel, perfume, fine gifts, accessories and jewelry, and in
bulk alcohol and tobacco on cruise ships. In addition to our cruise ship retail
store business, we offer our customized media programs to the cruise lines. In
port lecturing, we hold lectures on the shopping, recreational and cultural
highlights in various ports of call. In customized publications, we produce
cruise line passenger magazines which are customized for port destinations.
These "port publications" contain articles describing cruise destinations and
advertising from local and international businesses such as Gucci and Rolex. In
our art auction services, we conduct art auctions for cruise line passengers
during cruises. We believe that as the cruise lines launch new, larger ships we
will have the opportunity to increase our net sales from service offerings. The
following table sets forth the number of ships we currently service with our
retail and other cruise-based services as well as the number (based on industry
announcements) of future ships to which we have the right to provide service
under our contracts.

                   SHIPS SERVED BY STARBOARD CRUISE SERVICES
STARBOARD       STARBOARD CRUISE
                                           STARBOARD CRUISE        CRUISE         SERVICES: OTHER
                                           SERVICES: TOTAL    SERVICES: CRUISE-     CRUISE-BASED
                                            SHIPS SERVICED     BASED RETAIL(1)      SERVICES(2)      INDUSTRY(3)
                                           ----------------   -----------------   ----------------   -----------
Number of ships in service as of June 30,
  1999...................................         100                 82                 46              144
Total ships in service by December 31,
  1999 (industry estimates)..............         118                 99                 49              155
Total ships in service by December 31,
  2003 (industry estimates)..............         127                118                 59              190
                                                 ----                ---                 --              ---
---------------
(1) Includes existing ships as of the relevant date which Starboard Cruise
    Services provides, or has the right under contract to provide service upon
    ship introduction, with duty-free retail services under its contracts.
    Includes 11 existing Royal Caribbean International Ships under contract for
    service commencing November 1999.

(2) Includes existing ships as of the relevant date which Starboard Cruise
    Services provides, or has the right under contract to provide service upon
    ship introduction, with other cruise-based services (port publications, port
    lecturing and art auctions) under its contracts.

(3) Includes the number of ships to be added into service over these time
    periods in the global cruise line industry, as reported by CLIA and Cruise
    Industry News.

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     Our services are designed to further both our company and the cruise lines'
mutual goals of increasing sources of revenue while enhancing the cruise
passenger's overall vacation experience. Our services are also designed to be
complementary. From on-board, duty-free shopping to in-port shopping stimulated
by our lectures and magazines to buying art at sea, we present shopping as
entertainment during the entire cruise experience. We believe our approach of
working together with our cruise line customers to enhance our service offerings
and increase passenger purchases, and therefore revenues to cruise lines, has
enabled us to develop strong and mutually beneficial relationships with the
cruise lines.

INDUSTRY OVERVIEW

- Growth of the Cruise Industry.  The passenger cruise industry has grown
  substantially. According to Cruise Lines International Association (CLIA),
  approximately 5.4 million North American passengers took cruises in 1998, an
  increase of 4.0 million from 1.4 million in 1980, representing a compound
  annual growth rate of approximately 8.0%. The number of cruise ships increased
  20% from 120 ships in 1993 to 144 ships as of January 1, 1999, with the number
  of berths growing 32% from approximately 104,000 to 137,000 over the same
  period. According to CLIA and Cruise Industry News, the number of ships are
  expected to grow 32% from 144 as of January 1, 1999 to 190 in 2003 with the
  number of berths growing 48% from approximately 137,000 to 203,000 over the
  same period, representing larger berth capacity of the ships entering the
  market. Because of the strong relationship of overall cruise demand to demand
  for our services, we expect to grow along with the overall growth of the
  cruise industry.

- Expansion of Service Offerings and Outsourcing.  In an effort to expand
  entertainment options for passengers and increase revenues generated by
  passengers, cruise line operators have introduced new on-board and on-shore
  services, activities and themes. While introducing new product and service
  offerings, many cruise line operators have increasingly focused on their core
  business and outsourced a range of services. Cruise lines now contract with
  outside providers which offer industry expertise for a range of services,
  including on-board duty-free retail shopping, art auctions, port lecturing,
  in-cabin media and video, health clubs, spa services, photography,
  telecommunications services, and shore-side, fully arranged excursions and
  tourist activities. We believe our leadership in providing a variety of
  outsourced services effectively positions us to become a provider of
  additional services in the future.

- New Ships With Larger Entertainment Spaces.  Recently built cruise ships and
  new cruise ships under construction are generally larger than existing ships
  and have also been designed with the intent of increasing service revenues
  through expanded and strategically located retail and service offering areas.
  For example, the latest cruise ships designed by Carnival Cruise Lines,
  Celebrity Cruises and Royal Caribbean International have as much as 5,000 to
  8,000 square feet of dedicated retail space, representing as much as three to
  four square feet of retail space per passenger, more than double the current
  average of one to two square feet of retail space per passenger on existing,
  smaller vessels. These larger retail formats have generated in excess of
  approximately $9.00 in revenues per passenger per day compared to the
  approximate $5.00 average on earlier generation ships. In addition to
  increased retail space, Carnival Cruise Line, Celebrity Cruises, Crystal
  Cruises and Royal Caribbean International are testing new retail formats,
  including dedicated art galleries on their ships.

- Change in Passenger Profiles and Vacation Patterns.  Cruise line passengers
  are increasingly affluent and employed, as baby-boomers make up a larger
  portion of the cruise lines' customer base and retirees a smaller percentage.
  The increasing percentage of baby boomers has benefitted the cruise line
  industry because they generally spend a larger percentage of their income on
  leisure travel than older demographic groups. In addition, a larger percentage
  of the population is experiencing cruise vacations. According to CLIA, while
  only 3.6% of U.S. residents had cruised by 1986, 11.3% of them had taken a
  cruise vacation by 1998.

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COMPETITIVE STRENGTHS

We believe that the following competitive strengths contribute to our position
as the leading provider of our core services and serve as a foundation for our
business and growth strategy.

- Market Leadership and Scale Advantage.  We are the leading provider of
  on-board duty-free retailing, port lecturing, customized media, and art
  auctions to the cruise industry. We currently deliver our services to 100
  ships, representing 26 cruise lines. We believe that our market leading
  position and experience in providing these services have enabled us to develop
  an infrastructure which gives us a scale advantage over smaller providers or
  cruise lines who do not outsource the services we provide.

-- Duty-free Retail.  In our duty-free retail operations, we believe that we
   have achieved a competitive advantage in purchasing, where we purchase items
   for both our cruise line and airport retail stores in large quantities at
   competitive prices; in logistics, where we deliver over 50,000 items (SKU's)
   to more than 40 ports of call, often with an eight hour window to restock
   vessels and in compliance with a range of customs and import regulations; and
   in merchandising, where our experience with cruise line passengers permits us
   to tailor our retail and other service offerings for specific cruise lines,
   passenger profiles, destinations, voyage lengths and seasons.

-- Port Lecturing.  In port lecturing, we have developed relationships with
   retailers at over 300 shops in over 70 ports of call, and we have established
   an infrastructure to manage the monitoring and collection of revenues,
   guarantee issues and returns.

-- Port Publications.  In publishing, we have a proprietary body of content
   which allows us to produce cruise line-specific and port-specific magazines
   for over 70 ports of call.

-- Art Auctions.  In art auctions, we are able to source a supply of a variety
   of artwork from numerous artists and are able to sell and arrange delivery
   for an average of over 3,500 pieces of artwork each week.

  Corporate wide, we have demonstrated our ability to recruit, hire, train and
  maintain employees and independent contractors in approximately 700 on-ship
  positions worldwide.

       We believe our experience, expertise and scale advantage enables us to
  provide our services with an efficiency and quality which makes outsourcing to
  us more attractive for cruise lines than providing the services themselves or
  outsourcing to one of our competitors.

- Strong Relationships with Cruise Lines.  We have been providing services to
  cruise lines since 1963 and have long-term relationships with the major cruise
  operators. Currently, we provide at least one of our core services to almost
  every major cruise line and our customers account for over 75% of cruise ship
  berths. Our relationships with the largest two cruise corporations, Carnival
  Corporation and Royal Caribbean Cruises Ltd. date back to 1993 and 1984
  respectively. Our offices and our customs-bonded warehouse, located in Miami,
  Florida, also enable us to maintain close contact with many major cruise lines
  headquartered in Miami. We work closely with the cruise lines in designing new
  retail areas of ships, in making and tracking merchandising decisions, in
  creating logo apparel and souvenirs and in developing new service concepts. In
  only three instances have we ever lost an existing account. In each of these
  cases, we reacquired the account and currently serve these customers.

- Established Reputation.  We have been on the forefront of providing cruise
  lines with innovative on-board duty-free retailing since 1963 and customized
  media services since 1990. Working with the cruise lines we service, we helped
  transform on-board shopping into an entertainment venue for passengers and
  improved the merchandising and sales of on-board duty-free goods by creating
  special sales events, daily special themes and, when available, cross
  promotion of our offerings through our customized media services. We also
  worked with the cruise lines to formalize the port lecturing industry,
  solidifying relationships with on-shore retailers to provide competitively
  priced shopping, as well as service and product guarantees for cruise
  passengers. In addition, we helped

                                       41
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develop art auctions to create a further entertainment option during time at
sea. We believe our role in developing these markets has helped establish our
position as a market leader and enhanced our reputation in the industry.

- Experienced Management Team.  We are led by a management team with significant
  experience in the cruise industry and each of our core service offerings. Our
  senior management executives from Greyhound Leisure Services include
  executives with a mix of cruise industry retail expertise, with key managers
  having significant experience at the company, and recently added executives
  bringing significant retail and other expertise. Our two senior executives
  from the Onboard Group include its founder and a key executive who has been
  with Onboard Media since 1990, the year the business was established. Both
  have over ten years of experience in the cruise-based services industry.

- Merchandising Expertise.  Operating on-board duty-free retail stores differs
  from operating traditional retail stores primarily in the merchandising
  approach and in the space, delivery, international customs and restocking
  constraints we face. To meet the broad on-board shopping demands of cruise
  passengers, we present a wide variety of products including attractive private
  labels and strong designer brands such as Gucci, Cartier, Gear, Lladro, Tag
  Heuer and Fossil in an environment targeted to meet the varying tastes of the
  wide variety of customers across different segments of the industry, from the
  smallest luxury ships to the largest cruise ships. At the same time, we face
  constraints in storage and display space and the need to tailor shop
  inventories to different cruise line atmospheres, varying demographic cruise
  market segments and changing seasons and itineraries. Through years of
  providing on-board duty-free retail services, we have developed expertise at
  retailing on cruise ships. Our buyers and district managers have been with us
  for an average of over ten years and have helped us establish an institutional
  knowledge base to manage the challenges of on-board retailing. We believe our
  experience in addressing these challenges and our familiarity with buying
  patterns on various cruise lines, ship layouts, and travel routes provides us
  with a competitive advantage. We also believe our decade of experience in
  presenting port shopping and recreational opportunities to passengers as well
  as our experience providing entertaining art auctions provides us a further
  advantage in merchandising our services to passengers.

GROWTH STRATEGY

- Maintain and Expand With Our Cruise Line Customers As They Grow.  We intend to
  maintain our relationship with our customers by continuing to provide high
  quality service and innovation leadership. We are well positioned to continue
  to grow as our cruise line customers grow. According to the Cruise Industry
  News, cruise line operators will add 46 ships over the next four years. We
  currently have contracts to provide our services to approximately 27 of these
  ships. In addition to increases in the number of ships, we expect that newer
  ships will be generally larger, carry more passengers and have substantially
  more retail, entertainment and service space. The additional space and
  increased emphasis on on-board retail and other services will provide us with
  the opportunity to increase our revenue per passenger per day due to increased
  selection, the establishment of more boutique stores, larger designated art
  galleries and other innovations in our merchandising.

- Expand Services to Existing Cruise Line Customers.  Consistent with our
  strategy in forming our company, we plan to expand the breadth of use of our
  services among our current customers. We have strong customer relationships
  with most cruise lines and currently serve cruise lines which account for over
  75% of industry berth capacity. We believe this strong position provides an
  opportunity to translate our high quality service in one service offering into
  use of our other core service areas. Currently, almost all of the major cruise
  lines use at least one of our cruise-related services, while only four cruise
  lines use all of our services, providing future opportunities to cross sell
  additional services to our cruise line customers. By continuing to build on
  our relationships and

                                       42
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  highlighting our leadership, dependability and creativity in each of our core
  services, we expect to increase the number of services used by our customers.

- Continue to Improve Merchandising.  We believe that through improvements in
  our product mix and presentation we can continue to increase per passenger per
  day spending in our cruise-based duty-free stores. By ensuring we have
  attractive, targeted items in our stores, we intend to generate further
  improvements in our per passenger per day revenues in duty-free retailing. In
  promotions, we intend to continue to be sure we have better and more
  effectively presented port shops, restaurants and cultural highlights in our
  lectures and publications. In art auctions, we will continue to seek to be
  innovative in our selection and presentation of art, such as our recent
  introduction of virtual galleries and test marketing of sports memorabilia. To
  accomplish this, we expect to continue to work with cruise lines to understand
  emerging passenger profiles and to design stores, lectures and auctions and
  tailor merchandising on each ship to correspond with the vessel's overall
  image and marketing strategy. We also plan to introduce theme and specialty
  stores to address the evolving passenger base. Moreover, through our
  experience and close relationships with cruise lines, we believe we can
  quickly develop and implement appropriate new merchandising concepts. For
  example, we recently began conducting special bazaars of local products on
  some cruise itineraries, an idea we implemented within six months of its
  development.

- Improve and Expand Service Offerings.  We have the opportunity to improve our
  performance by finding better ways to deliver our services and expanding the
  range of services we offer. For example, recently we began expanding our port
  lecturing programs to provide service in Europe and Alaska. Coordinating with
  our cruise line customers, we intend to identify other additional services to
  help cruise lines enhance the cruise experience for passengers and increase
  on-board revenues. In addition, we expect to expand our cruise-based services
  to select land-based opportunities. For example, we have extended our cruise
  line publishing business to provide magazines to theme hotels and resorts such
  as Sandals and select Las Vegas hotels including Caesars Palace, MGM Grand,
  New York, New York and Venetian. We plan to continue to evaluate and pursue
  appropriate cruise line and land-based business opportunities, including our
  recent agreement to sell cruise logo items over the Internet with a major
  client, which are complementary to our core strengths and where we believe we
  can develop a competitive advantage.

OUR CUSTOMERS

     We provide services both to the cruise lines and their passengers. It is
therefore important that our service offerings are attractive to both groups,
providing business value to the cruise operators and an enhanced experience to
their passengers. We service almost every major North American cruise line and
provide services to most other major cruise lines worldwide. We currently
provide our services to 100 ships, representing 26 cruise lines, to which we
are, with limited exceptions, the exclusive provider of a service on board each
ship to which we provide that service. Moreover, we are the only operator of
duty-free retail stores on all ships controlled by Carnival Corporation
(including Carnival Cruise Lines, Costa Cruises, Cunard Line, Holland America
Line, Seabourn Cruise Line and Windstar Cruises). Commencing in November 1999,
we have contracted to be the only provider of duty-free retailing, as well as
the port lecturing, in-cabin media and art auctions we have already serviced, to
ships owned by Royal Caribbean Cruises Ltd. (including Royal Caribbean
International and Celebrity Cruises). We also provide our services to a wide
variety of other leading cruise lines around the world. Under our contracts with
many cruise lines we service, we have the opportunity to offer our services on
new ships as they are introduced, in some cases with respect to specified ships
or classes of ships and, in other cases, on any new ships introduced.

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The cruise lines we service and the service offerings provided to each of them
are detailed in the following chart. Cruise-based duty-free retailing accounted
for 69.6% of our revenues for the six months ended June 30, 1999, while other
cruise-related services accounted for 7.0%.

                        SERVICE OFFERINGS BY CRUISE LINE
CRUISE LINES                      DUTY-FREE RETAIL    PORT LECTURING    PUBLISHING    ART AUCTIONS
------------                      ----------------    --------------    ----------    ------------
Canaveral Cruise Lines                   X
Carnival Cruise Lines                    X                  -               -              X
Celebrity Cruises                        X                  X               X              X
Commodore Cruise Lines                   X                  -                              -
Costa Cruises(a)                         X                  X               X              X
Crystal Cruises                          -                  X               X              X
Cunard Line                              X                  -                              X
Delphin/Blacksea Shipping                X
Discovery Cruise Line                    X
Disney Cruise Line                       -                  X               X
Festival Cruises                         X
Holland America Line(b)                  X                  -               -              X
Norwegian Cruise Lines(c)                X                  -               -              -
P&O Cruises                              X
Premier Cruises                          X
Princess Cruises                         -                  -               -              -
Radisson Seven Seas                      X
Regal Cruise Lines                       X
Renaissance Cruise Lines                 X                  -
Royal Caribbean International(d)         X                  X               X              X
Royal Olympic Cruises                    -                  X
Seabourn Cruise Line                     X
Silver Sea Cruises                       X                  -
Star Cruises                             X
Sun Cruises                              -                  X               X              X
Topaz                                    X
Windstar Cruises                         X
-------------------------
NOTE:  X denotes service provided by Starboard Cruise Services

       -   denotes service provided by competitor or cruise line itself
           Where no provider is listed on the chart, the cruise line does not
           offer the specified services.

       (a) We provide publishing to Costa Cruises in connection with its
           Caribbean cruises but not with respect to its European cruises. We
           continue to provide services to Costa Cruises under the terms of a
           contract which has expired.

       (b) Fine Art Sales, Inc. also provides art auction services to Holland
           America Line.

       (c) Duty-Free.com provides retail services to one Norwegian Cruise Line
           ship.

       (d) Duty-free retail services to Royal Caribbean International will
           commence November 1999 pursuant to a contract executed July 1999.

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CRUISE SHIP SERVICES

  On-Board Duty-Free Retailing

     We are the world's largest operator of duty-free retail stores on cruise
ships. As of June 30, 1999 we operated 232 stores on 82 ships, representing 21
cruise lines. An additional 62 stores on 12 ships are under contract for service
commencing in November 1999 and our contracts allow us to provide these services
on an additional 26 ships announced to be in service by December 31, 2004.
Cruise line passengers generally enjoy shopping during vacations and during days
at sea on a cruise vacation our shops often provide the only shopping
opportunity. In our cruise ship stores we sell a wide variety of quality
merchandise, such as logo apparel and souvenirs, jewelry, watches, perfume,
cosmetics, fashion apparel, crystal and fine gifts, leather goods, electronics,
snacks, toiletries, books, liquor, cigarettes, sundries and cruise-related
items. We sell both duty-free and duty-paid merchandise and carry both private
label and well-known branded items, with a focus on high quality, high margin
products. Cruise-based duty-free retailing accounted for approximately 70% of
our net sales for the six months ended June 30, 1999.

     Superior merchandising is one key to the success of our cruise-based
duty-free retail operations. We pursue a strategy of offering a broad assortment
of high-quality, classic styles, while maintaining attractive pricing. We tailor
our merchandising to offer each cruise line a distinctive presentation, matching
its customer profile and adapting to changes in seasonal itineraries. Through
fashion shows and other events, we have worked with our cruise line customers to
turn cruise-based shopping into entertainment. We also have enhanced our
merchandising through the use of themes and daily specials, with daily store
display changes planned around the theme of the promoted daily features. We
employ a team of designers to work closely with cruise ship operators to design
the stores and the flow and location of display areas within stores to conform
to our marketing standards. The stores are designed and fixtured to create a
distinctive environment and store associates are trained to maintain high
standards of visual presentation and customer service. This approach allows us
to maintain a uniform appearance throughout our store base in terms of
merchandise display and location on the selling floor, and to maintain our
standards for maximizing usage and productivity of selling space. We believe our
operating philosophy is a competitive advantage, evidenced by the improved
performance of the operations we acquired from Nuance Global Ships in December
1998.

     We expect recent changes in ship design to have a positive impact on our
duty-free retail merchandising strategy. Newer vessels generally have larger
retail stores in high traffic locations. On these newer ships we will generally
have more square footage than we average on existing ships, from which we expect
to generate higher revenues per passenger than on traditional vessels. We
currently expect increased space availability on new ships will enable us to
create larger store formats, product and brand-specific boutiques, and more
sophisticated store-within-a-store arrangements. These large retail formats have
generated up to approximately $9.00 in revenues per passenger per day compared
to the $5.00 average on earlier generation ships. As new ships are launched, we
expect our store mix to shift increasingly to the larger format. We anticipate
that this will allow us to expand our offerings and create an even more exciting
shopping experience on board.

  Port Lecturing

     We are the leading provider of port lecturing services to cruise lines. We
provide our port lecturing services to 25 ships representing seven lines and our
contracts allow us to provide these services on an additional eight ships
announced to be in service by December 2003. Many cruise line passengers have
limited knowledge of shopping opportunities in ports of call and are concerned
about the quality and authenticity of merchandise they purchase. Our port
lecturers provide cruise passengers with recommendations for shopping in ports
of call for a variety of items ranging from fine jewelry, watches and crystal to
souvenir T-shirts. For cruise line passengers our service provides a

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greater sense of comfort with the on-shore shops we recommend because our
lecturers are identified with the cruise lines and because of a 100% quality and
authenticity guarantee provided as part of the port lecturing service. Under our
guarantee, we provide passengers and cruise lines the service of managing
returns with the retailers. We believe this comfort is important to many
passengers' decision to visit and purchase items from the on-shore shops we
recommend.

     We have established contractual relationships with over 300 retailers in
over 70 ports of call around the world. In exchange for participation in the
port lecture program, retailers enter into a contract with us to pay either a
flat fee or a commission based on gross sales generated by the cruise line
passengers. Additionally, our contracts generally require on-shore merchants to
guarantee the quality and authenticity of products and accept our returns for a
set period of time so that we do not bear the risk of losses related to
passenger returns. Cruise lines find contracting for this service attractive
because it permits us to offer a valuable service to cruise line passengers,
assists cruise lines in capturing a portion of passenger revenues spent on shore
and frees them from tracking sales volume, collecting revenues, arranging
contracts, and handling and guaranteeing returns.

  Customized Publications and Videos

     We supply in-cabin cruise line publications (also known as port magazines)
and in-room videos to several cruise lines. We provide our customized
publication and video services to 24 ships representing six cruise lines. Our
contracts allow us to provide these services on an additional eight ships
announced to be in service by December 2003. Our magazines feature articles on
port destinations, as well as paid advertisements from on-shore retailers and
international advertisers. We deliver new, high quality magazine publications
bi-annually or annually, depending on itineraries, in the fall and spring. Our
magazines are customized by cruise line, as well as by port destination. We
consider the highly tailored nature of our magazines to be a competitive
advantage and believe it enhances their usefulness to the passenger. As with the
port lectures, our magazines provide customers with valuable information on
shopping and other recreational opportunities in new destinations. Our
publications provide retailers and other businesses a focused target audience of
immediate potential customers. We also produce videos on port destinations, as
well as training and safety videos for the cruise lines. Furthermore, we provide
similar publications and videos to a limited number of other resorts with a
destination vacation environment, primarily Las Vegas hotels and Sandals
resorts. In addition to magazines, we provide one-time, special "Inaugural"
publications to commemorate the launch of a new ship. In 1998 we published 35
different editions of publications for cruise lines and hotels.

  Art Auctions and Sales

     We are the leader in providing art auctions on board cruise ships. We
provide our art auction services on 41 ships representing eight cruise lines and
our contracts allow us to provide these services on an additional 12 ships
announced to be in service by December 2003. We contract with the cruise lines
to hold auctions aboard each ship and offer passengers an opportunity to bid for
quality artwork ranging in price from $100 to $10,000. For many passengers, this
is often the first opportunity to participate in an art auction. We carry a
broad selection of over 4,000 pieces of artwork from numerous artists. We are
test-marketing items like sports memorabilia and continue to update our art
selection to respond to passenger demand. We also have recently opened "virtual
galleries" on the ships to give passengers a retail opportunity to view artwork
on computer generated galleries and purchase pieces from a selection of over
4,000 works. The virtual gallery concept brings us the opportunity to sell
passengers a wider selection of artwork than has typically been available on any
one ship. We arrange the guaranteed express mailing of the artwork directly to
the passenger's home after the cruise to avoid transportation difficulties for
the passenger. We currently sell an average of

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3,500 pieces of artwork each week and provide these auctions and sales through
our supplier, a leading art curator, who sources and ships the art, and helps
provide qualified auctioneers.

LAND-BASED SERVICES

     We pioneered the concept of duty-free retailing in the United States with
our shops at the Miami International Airport, where we have been the sole
duty-free operator since 1958 and currently operate 19 stores with over 33,000
square feet of retail space. The Miami airport is the fourth largest airport in
the United States, after Hawaii, Los Angeles and San Francisco based on
duty-free retail sales. In 1998, 827,500 of the 7.8 million international
travelers using the Miami airport shopped at our duty-free stores. We also have
operated duty-free stores in the Fort Lauderdale-Hollywood International Airport
since 1990. This operation is smaller, with two stores totaling 2,500 square
feet. We have recently refurbished the stores in both of these airports
introducing state-of-the-art lighting, wood paneling and generous use of marble
to showcase such fine designer brands as Ferragamo, Gucci, Tag Heuer and Fendi.
In addition, four of the stores in Miami were recently converted from
full-service to semi-self service, which resulted in an increase in sales in
these stores of up to 50%. Our Miami and Fort Lauderdale airport stores serve as
a base for our cruise line business and enable us to increase the overall volume
of our duty-free purchases. In addition, through our "Florida Export Warehouse"
business, we sell wholesale duty-free liquor and cigarettes to cruise lines and
catering companies for resale on cruise lines directly.

CONTRACTS

     All of our services are provided pursuant to contracts with cruise lines,
hotels, resorts or airports. Our cruise line contracts for duty-free retail
services generally give us the exclusive right to sell most retail products
on-board cruise ships in return for a payment based on a percentage of gross
sales or a minimum dollar amount per passenger day. Many of the contracts
include all of a cruise line's existing ships as well as specified new ships
currently scheduled or under construction and some include all new ships
introduced during the contract by a cruise line. Under our contracts, the
individual terms of which we negotiate with each cruise line, we generally agree
to provide duty-free retail services and take responsibility for the inventory
to be sold and the management of the shops. The cruise lines generally assume
responsibility for shop capital expenditures, construction and improvement to
the stores. We provide design assistance to ensure that the stores meet our
merchandising standards. Our on-ship duty-free retail concession agreements are
generally for three to five years, with provisions for extension or renewal.
Since 1963, we have only lost two existing duty-free retail contracts when the
cruise lines customer decided to provide their own retail operations. Since
then, we reacquired both accounts and have contracts to provide their on-ship
duty-free services.

     Contracts to provide port lecturing, customized publication and art auction
services to the cruise lines are of varying length, from one to five years. Our
port lecturing and publications contracts permit us to provide these services on
cruise ships, in return for which we solicit advertising, manage collections and
returns, provide the magazines and lectures and pay the cruise lines a set
percentage of revenues from on-shore retailers and international advertisers, in
some cases with a minimum guarantee. In art auctions, we contract with the
cruise lines to provide art sales and art auctions on cruise ships and, with our
supplier, provide the art, conduct the auctions and manage the logistics of
shipping art to the passenger. We pay a percentage of revenues to the cruise
lines. With some of our promotion and art auction contracts, we have agreed to
pay the cruise lines a minimum payment.

     Contracts with cruise lines accounting for 9% of our net sales for the six
months ended June 30, 1999 expire by December 31, 2000, cruise line contracts
accounting for an additional 8% of our net sales expire by December 31, 2001,
and cruise line contracts accounting for 54% of our revenues

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expire by December 31, 2002, in each case excluding renewal options under the
contracts and in each case without giving effect to our recently executed
contract with Royal Caribbean International.

     We provide our airport services under concession contracts with the two
airports, under which we pay a percentage of revenues as rent, subject to
certain minimums. Our contract with Miami International Airport expires in
November 2000 and our contract with Fort Lauderdale International Airport
expires on August 30, 2002. Both are subject to renewal options. We have
operated the Miami International Airport contract since 1958 and the Fort
Lauderdale International Airport contract since 1990.

SUPPLIERS

     Because of the scale of our retail purchases, we believe that we are able
to purchase duty-free and duty-paid merchandise at competitive or preferred
rates. We purchase our goods from numerous vendors, including manufacturers and
distributors. We do not have any significant long-term or exclusive purchase
commitments and we believe that alternative sources of supply are available for
each category of merchandise we purchase.

     A major supplier, with whom we have a long-term relationship, supplies the
artwork sold in our art auctions. This supplier has long-term agreements with
many popular commercial artists, which allows it to maintain a constant source
of artwork. Our contract with this supplier renews automatically for successive
two year periods and the supplier has agreed not to compete with us in providing
art auction services on cruise lines for two years after it terminates the
contract.

EMPLOYEES

     As of June 30, 1999 we had a total of approximately 1200 employees and 25
independent contractors. Of these employees, 500 worked in our Miami offices and
warehouse and 700 worked on ships or in offices abroad. Shipboard employees are
employed outside the United States and are typically recruited from European
countries. Approximately 50 of our warehouse employees at our Greyhound Leisure
Services headquarters in Miami are subject to a collective bargaining agreement
that runs through June 30, 2001.

FACILITIES

     We have office space in Miami and Miami Beach, Florida and Southampton,
England and a 120,000 square foot warehouse, located just six miles from Miami
International Airport and 12 miles from Miami Seaport. As of June 30, 1999, we
operated 232 retail shops aboard 82 cruise ships, which operate in international
waters, 19 shops in the Miami International Airport and two shops in the Fort
Lauderdale-Hollywood International Airport. Our Miami office space and warehouse
is occupied under a lease expiring on December 31, 2002 at an aggregate annual
rental expense of approximately $650,000. We have the option of extending this
lease for another five years after December 31, 2002. Our Miami Beach office
space is occupied under leases expiring April 30, 2006 at an aggregate rental
expense of approximately $250,000 per year.

INFORMATION SYSTEMS

     We have developed a sophisticated system for collecting and tracking
inventory information. Our systems are integrated to accept point-of-sale
information from the various cruise line point-of-sale systems. When a cruise
line does not have its own system, we use our own point-of-sale system. Many
cruise lines have their own systems to facilitate "cashless" purchasing during a
cruise. Our merchandising department is provided with weekly information from
our employees on the cruise ships to track inventory, sales and gross margin
data. We utilize this data in conjunction with

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information from the cruise lines about anticipated passenger profiles, voyage
routes and durations to make market-driven decisions about replenishing our
on-ship stores.

     We also have developed a system to track and test port sales subject to our
port lecturing contracts by cruise line and port of call. In addition, with our
art auction supplier, we have a system providing us with the ability to track
on-board art sales and ship the art directly to the customer's home quickly.

     Our airport duty-free operations are structured to comply with U.S. customs
regulations which restrict passengers from taking duty-free purchases with them
from a duty-free store. Our systems arrange for the delivery of duty-free
purchases to passengers in the departure area where purchases may be retrieved
by passengers within 30 minutes prior to their departure.

COMPETITION

     Our primary competition in providing services on cruise ships is from
cruise lines which provide the services themselves. Princess Cruises is the
largest cruise line to provide the shopping on its ships. We also compete with
other operators such as Harding Brothers Duty-Free Ltd. for the right to provide
duty-free services on the cruise ships. Our competition in offering port
lecturing and publishing includes Panoff Publishing, Inc. and International
Voyager Media and cruise lines which do not outsource these services. Carnival
Cruise Lines is the largest cruise line providing its own port lecturing while
almost all of the major cruise lines outsource their publishing. Our competition
in providing art auctions includes a variety of other providers such as David
Morgan and Fine Art Sales Inc. and some in-house operations. Our main competitor
in providing airport duty-free services is Duty Free Shoppers, Inc.

GOVERNMENT REGULATION

     We are subject to various national and local laws and regulations affecting
the operation of our business. The operation of our warehouse, our shipment of
goods and the operation of our shops is subject to the customs and import/export
laws of the United States and of other jurisdictions and regulation by the
Bureau of Alcohol, Tobacco and Firearms as well as by state authorities. Our
airport duty-free operations must comply with federal and local laws relating to
disadvantaged business ownership.

INTELLECTUAL PROPERTY

     We own a number of licenses, trademarks, service marks and trade names in
the United States. Our principal trademarks include Mistral, Maritime Spa &
Salon and Tara Vanessa. We have applied for trademarks with respect to the names
Club Nautique, Onboard Media, Escapades, Destinations, Explore!, Land & Sea,
Buongiorno, Cruising in Style, Shopping in Paradise and Marinaio. We have also
filed trademark applications for Escapades in Jamaica, Antigua, Barbados, the
Bahamas, and St. Lucia. The Escapades trademark has been registered in Turks &
Caicos. We use the name "Greyhound" and associated marks under a royalty free,
perpetual license agreement with Greyhound Lines, Inc. This agreement provides
for exclusive usage within our duty-free business and non-exclusive use in other
businesses. In addition, from time to time we use several other marks and trade
names under licenses for the purpose of providing and selling logo items and
other goods in our duty-free stores and for the purpose of creating our
publications.

LEGAL PROCEEDINGS

     Starboard Cruise Services is not a party to any material legal proceedings.

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OUR HISTORY

     Starboard Cruise Services is a holding company formed in September 1998 to
acquire Greyhound Leisure Services, Inc., the leading provider of duty-free
cruise line and airport shopping operations, which was founded in 1958, and then
the Onboard Group (Onboard Media, Inc., Cruise Management International, Inc.
and Boxer Media, Inc.), the leading provider of port lecturing services,
on-board art auctions, customized publications and in-cabin media. We acquired
the on-ship duty-free retail business of Nuance Global Ships, on December 15,
1998, expanding our business by an additional 29 ships, including several ships
of Celebrity Cruises, Cunard Line, the Holland-America Line and Norwegian Cruise
Lines. We will convert from a private limited liability company (besloten
vennootschap met beperkte aansprakelijkheid or B.V.) to a public limited
liability company (naamloze vennootschap or N.V.) and change our name from Miami
Cruiseline Services Holdings I B.V. to Starboard Cruise Services N.V. effective
immediately prior to this offering.

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                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     Our executive officers and directors and their respective ages and
positions as of the date of this prospectus are as follows:
NAME                                   AGE                        POSITION HELD
----                                   ---                        -------------
Joel E. Cutler.......................  41    Chairman of the Board, Chief Executive Officer and
                                             Managing Director
J. P. Miquel.........................  60    President and Chief Executive Officer of Greyhound
                                             Leisure Services and Managing Director
Philip L. Levine.....................  37    President and Chief Executive Officer of Onboard Media
                                             and Cruise Management International and Managing
                                               Director
Jerry Chafetz........................  42    Senior Vice President of Onboard Media and Cruise
                                               Management International and Managing Director
William J. Fitzgerald................  41    Acting Interim Chief Financial Officer
Bradley M. Bloom(1)..................  46    Supervisory Director
David P. Fialkow(1)..................  40    Supervisory Director
Steven S. Fischman...................  58    Supervisory Director
Randy Peeler(2)......................  34    Supervisory Director
Leonard A. Schlesinger(1)(2).........  47    Supervisory Director
-------------------------

(1) Member of Compensation Committee.

(2) Member of Audit Committee.

     JOEL E. CUTLER has served as the Chairman of the Board and Chief Executive
Officer since September 1998. He has been the Co-Chairman and Co-Managing Member
of F.C. Capital Partners LLC, a private equity firm, since 1998. He has also
been an officer and principal of Alliance Development Group, Inc., a company
which creates loyalty and enhancement programs for partners in the retail and
banking industries, since 1994 and Retail Growth ATM Systems, LLC, the leading
ATM provider to the shopping mall industry, since 1997. He was the Co-Chief
Executive Officer of National Leisure Group from 1987 to 1996, a company he
co-founded with David P. Fialkow in 1987. While he was Co-Chief Executive
Officer, National Leisure Group grew to be one of the largest leisure travel
companies and cruise sellers in the U.S., developing endorsement travel programs
for major banks, credit card companies and retailers. National Leisure Group was
sold in 1995. From 1984 to 1987, he served as an executive of The Interface
Group, a national trade exhibition company (Comdex) and New England's largest
tour company (GWV). He is a member of the board of directors of General
Catalysts LLC. He earned a B.A. from Colby College and a J.D. from Boston
College Law School.

     J. P. MIQUEL has served as a Managing Director of our company since
September 1998 and has been the President and Chief Executive Officer of
Greyhound Leisure Services since March 1984. Mr. Miquel joined Greyhound Corp.
in 1977 and served as President and Director of Operations -- Europe from 1978
to 1983 and Vice President -- Special Markets from 1983 to 1984. In 1984, he
became President and Chief Executive Officer of Greyhound Leisure Services, Inc.
While at Greyhound Leisure Services, Mr. Miquel was also President and Chief
Executive Officer of Premier Cruise Lines, a cruise ship business previously
operated by Viad Corp. He earned a B.S. in Hotel/ Restaurant Management from the
Hotel and Restaurant College in France and a certificate of post-

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graduate study in Business Management from the University of Brussels, Belgium.
He is very active in various industry and trade organizations and served as the
president of the French-American Chamber of Commerce of Miami/Fort Lauderdale in
1996.

     PHILIP L. LEVINE has served as a Managing Director of our company since
September 1998 and has been President and Chief Executive Officer of Onboard
Media since its founding in 1990. He has also been President and Chief Executive
Officer of Cruise Management International since its founding in March 1995 and
of Boxer Media since its founding in November 1996. From 1988 to 1989, he was
employed by Carnival Cruise Lines, Inc. where he helped develop and expand its
in-house port lecturing program. He founded Onboard Media in order to
professionalize the port lecturing business and develop an industry
communications infrastructure for on-shore merchants to reach cruise line
passengers. He serves as a director of Colonial Bank South Florida Region. He
earned a B.A. from the University of Michigan and is actively involved in the
cruise line industry. He is currently a member of the Florida Caribbean Cruise
Association, the Caribbean Hotel Association, the Presidents Club of University
of Michigan and the Historical Steamship Society and was appointed to the
Mayor's Special Economic Council in Miami Beach. He is an associate member of
The International Council of Cruise Lines (ICCL) and a Member of the Founder's
Club of the Mount Sinai Hospital.

     JERRY CHAFETZ has served as a Managing Director of our company since
September 1998 and has been Senior Vice President of Onboard Media since 1990.
He has also been Senior Vice President of Cruise Management International since
its founding in March 1995 and of Boxer Media since its founding in November
1996. Prior to joining Onboard, Mr. Chafetz founded and operated Chafetz
Jewelers, which was sold in 1989. He earned a B.S. from Arizona State University
and is actively involved in the cruise line industry. He is currently on the
board of governors of the Miami Beach Chamber of Commerce and a member of the
Greater Miami Convention and Visitors Bureau and the Florida Caribbean Cruise
and Caribbean Hotel Association.

     WILLIAM J. FITZGERALD has served as Acting Interim Chief Financial Officer
of our company and Cruise Line Holdings Co. since August 4, 1999. He has been
Senior Vice President and Chief Financial Officer of F.C. Capital Partners LLC
since 1998, Alliance Development Group, Inc. since 1996, and Retail Growth ATM
Systems, LLC since 1996. He currently serves as a director of several privately
held companies. From 1990 to 1996, he served as Vice President and Treasurer of
HMK Enterprises Group, Inc., and Watermill Ventures, a Boston, Massachusetts
based private equity investment firm specializing in revitalizing
underperforming companies in dynamic industries. From 1985 to 1990, he was with
KPMG Peat Marwick. He earned a B.A. from The College Of The Holy Cross and a
J.D. from Suffolk University Law School, is a C.P.A. and is admitted to practice
law in Massachusetts.

     BRADLEY M. BLOOM has served as a Supervisory Director of our company since
1999 and served as Managing Director from September 1998 until 1999. Since its
founding in 1986, he has been a Managing Director of Berkshire Partners LLC, a
private equity firm that manages five investment funds with total capital of
$1.6 billion. He serves as a director of several privately held companies.
Before founding Berkshire Partners in 1986, he was a partner of the Thomas H.
Lee Company for seven years and spent two years with the First National Bank of
Boston. He earned an A.B. from Harvard College and an M.B.A. from Harvard
Business School.

     DAVID P. FIALKOW has served as a Supervisory Director of our company since
1999 and served as a Managing Director from September 1998 until 1999. He has
been the Co-Chairman and Co-Managing Director of F.C. Capital Partners LLC, a
private equity firm, since 1998. He has also been the co-founder, Chief
Executive Officer and principal of Alliance Development Group, Inc., a company
which creates loyalty and enhancement programs for partners in the retail and
banking industries, since 1994. He has also been an officer and principal of
Retail Growth ATM Systems, LLC since 1996 and General Catalysts LLC, a private
equity firm he co-founded to invest in on-line commerce, content and
entertainment companies, since 1999. He was Co-Chief Executive Officer of

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National Leisure Group from 1987 to 1996, a company he co-founded with Joel E.
Cutler in 1987. While he was Co-Chief Executive Officer, National Leisure Group
became one of the largest leisure travel companies and cruise sellers in the
U.S. Mr. Fialkow earned a B.A. from Colgate University and a J.D. from Boston
College Law School.

     STEVEN S. FISCHMAN has served as a Supervisory Director of our company
since 1999 and served as a Managing Director from September 1998 until 1999.
Since 1992, he has been the President of New England Development, the largest
mall developer in New England. Since 1992, he has also been Vice Chairman of
WellsPark Group which develops, owns and manages shopping centers and other
commercial properties. From 1968 to 1992, he was an attorney at Goulston &
Storrs in Boston with a specialization in real estate development and finance.
While at Goulston & Storrs, he represented developers and owners of all types of
real estate and investors in real estate, including shopping centers, hotels,
office projects, housing projects and industrial properties.

     RANDY PEELER has served as a Supervisory Director of our company since 1999
and served as a Managing Director from September 1998 until 1999. He is a Vice
President of Berkshire Partners LLC, a private equity investment firm, where he
has been employed since 1996. From 1994 to 1996, he was responsible for new
business ventures at Health Advances, a healthcare industry consulting firm.
From 1993 to 1994, he served as Chief of Staff to the Assistant Secretary for
Economic Policy at the U.S. Department of the Treasury. Prior to that, he was a
consultant with Cannon Associates. Mr. Peeler serves as a director of Holmes
Products Corporation and Weigh-Tronix, Inc. Mr. Peeler earned a B.A. from Duke
University and an M.B.A. from Harvard Business School.

     LEONARD A. SCHLESINGER has served as a Supervisory Director of our company
since 1999 and served as a Managing Director from September 1998 until 1999.
Since October 1998, he has served as Senior Vice President for Development,
Counselor to the President and Professor of Sociology and Public Policy at Brown
University. From 1988 to 1998 and 1978 to 1985, he served as a member of the
faculty of the Harvard Business School, lastly as the George F. Baker, Jr.
Professor of Business Administration and the Chair of the Service Management
Area. From 1985 to 1988, he served as Executive Vice President and Chief
Operating Officer of Au Bon Pain Co., Inc., a chain of french bakery cafes. He
currently serves as a director of The Limited, Inc., Borders Group, Inc., GC
Companies and Pegasystems, Inc.

     Our Managing Directors and Supervisory Directors are each divided into
three classes. These classes hold their seats for three-year terms, with one
class of directors expiring in each successive year at the annual general
meeting. Messrs.              will be in the class of directors whose term
expires at the 2000 general meeting of our shareholders. Messrs.
will be in the class of directors whose term expires at the 2001 annual general
meeting of our shareholders. Messrs.              will be in the class of
directors whose term expires at the 2002 annual general meeting of our
shareholders. At each annual general meeting of our shareholders, successors to
the class of directors whose term expires at such meeting will be appointed.

     At present, all Managing Directors and Supervisory Directors are appointed
and serve until the expiration of their respective three year term of office or
their resignation, death or removal, with or without cause by the shareholders,
or in the case of Supervisory Directors, also upon reaching the mandatory
retirement age of 72. All of the Managing and Supervisory Directors listed above
were elected pursuant to the Shareholders Agreement. See "Certain Relationships
and Related Transactions -- Shareholders Agreement". There are no family
relationships between our directors or executive officers. Our executive
officers are appointed by, and serve at the discretion of, the Management Board,
subject to the approval of the Combined Board. See "Description of Capital
Stock -- Election and Tenure of Managing and Supervisory Directors".

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SUPERVISORY BOARD

     Under Netherlands law and our Articles of Association, the Supervisory
Board (Raad van Commissarissen) supervises the Management Board (Directie) in
the management of our company. Under the laws of The Netherlands, Supervisory
Directors cannot at the same time be Managing Directors of the same company. The
primary responsibility of the Supervisory Board is to supervise the policies
pursued by the Management Board and the general course of affairs of the company
and its business and to advise the Management Board. In fulfilling their duties,
the members of the Supervisory Board are required to act in the best interests
of the company, its business and all its stakeholders.

     Pursuant to our Articles of Association, the Supervisory Board consists of
such number of members as may be determined by the general meeting of
shareholders. The members of the Supervisory Board are appointed by the general
meeting of shareholders from binding nominations made by the Combined Board.
Under Netherlands law, the shareholders may eliminate the binding effect of such
nomination by a two-thirds of quorum vote. Resolutions of the Supervisory Board
require the approval of a majority of its members. The Supervisory Board meets
each time this is deemed necessary by one of its members or at the request of
the Management Board or Combined Board. Every retiring supervisory director may
be reappointed, provided that such Supervisory Director has not attained the age
of 72. A member of the Supervisory Board must retire not later than on the day
of the general meeting of shareholders held in the fiscal year in which such
member reaches the age of 72. See "-- Combined Board".

     A member of the Supervisory Board may at any time be suspended or removed
by the general meeting of shareholders pursuant to a two-thirds of quorum vote
of the general meeting of shareholders unless the removal is proposed by
resolution of the Combined Board, in which case a simple majority vote of the
general meeting of shareholders is required. Members of the Supervisory Board
may receive such compensation as may be determined by the general meeting of
shareholders. See "Description of Capital Stock -- Election and Tenure of
Managing and Supervisory Directors".

MANAGEMENT BOARD

     The management of our company is entrusted to the Management Board under
the supervision of the Supervisory Board. Our Articles of Association provide
that certain actions of the Management Board shall be subject to the approval of
the Supervisory Board.

     The Management Board consists of such number of members as may be
determined by the general meeting of shareholders. In addition, the general
meeting of shareholders appoints the members of the management board from
binding nominations made by the Combined Board. Under Netherlands law, the
shareholders may eliminate the binding effect of such nominations by a two-
thirds of quorum vote.

     The general meeting of shareholders has the power to suspend or dismiss
members of the Management Board pursuant to a two-thirds of quorum vote of the
general meeting of shareholders unless the removal is proposed by resolution of
the Combined Board, in which case a simple majority vote of the general meeting
is required. If a member of the Management Board is temporarily prevented from
acting, the remaining members of the Management Board shall temporarily be
responsible for the management of the company. If all members of the Management
Board are prevented from acting, a person appointed by the Supervisory Board
(who may be a member of the Supervisory Board) will be temporarily responsible
for the management of the company. The compensation and other terms and
provisions of employment of the members of the Management Board are determined
by the Supervisory Board. See "Description of Capital Stock -- Election and
Tenure of Managing and Supervisory Directors".

                                       54
59

COMBINED BOARD

     Our Articles of Association provide for specified powers to be exercised by
the Supervisory Board and Management Board acting together as a Combined Board.
The members of the Combined Board are all the members of the Supervisory and
Management Boards, whose right to participate in the Combined Board is by virtue
of their position, as the case may be, as a member of the Supervisory Board or a
member of the Management Board.

AUDIT COMMITTEE

     The Audit Committee consists of Leonard A. Schlesinger and Randy Peeler.
The Audit Committee reviews with our independent auditor the scope and timing of
its audit services, the auditor's report on our financial statements following
the completion of its audit and our policies and procedures with respect to
internal accounting and financial controls. The Audit Committee will also make
annual recommendations to the general meeting of shareholders concerning the
appointment of independent auditors for the ensuing years.

COMPENSATION COMMITTEE -- INTERLOCKS AND INSIDER PARTICIPATION

     The Compensation Committee consists of Bradley M. Bloom, David P. Fialkow
and Leonard A. Schlesinger. The Compensation Committee reviews and evaluates the
salaries, supplemental compensation and benefits of our employees, and makes
recommendations concerning these matters to the Combined Board. The compensation
arrangements for each of our executive officers was established pursuant to the
terms of employment agreements between us and each executive officer. The terms
of the employment agreements were established in connection with our acquisition
of Greyhound Leisure Services and the Onboard Group pursuant to arms-length
negotiations between members of the Compensation Committee and each executive
officer.

     Mr. Bloom is a member of Berkshire Partners LLC and Mr. Peeler is one of
its employees. We paid Berkshire Partners LLC a financing and structuring fee of
$1.25 million plus its expenses of approximately $169,000 in connection with our
acquisitions of Greyhound Leisure Services and the Onboard Group and it is
entitled to receive fees for specific services under the Shareholders Agreement.
See "Certain Relationships and Related Transactions -- Shareholders Agreement".

     Messrs. Fialkow and Cutler are each a Co-Chairman and Co-Managing Member of
F.C. Capital Partners LLC and Mr. Fitzgerald, our Interim Acting Chief Financial
Officer, is one of its employees. Through Berkshire Cruise Holdings LLC, we paid
F.C. Capital Partners LLC a financing and structuring fee $250,000 plus its
expenses of approximately $59,000 in connection with our acquisitions of
Greyhound Leisure Services and the Onboard Group. In addition, in lieu of paying
a salary to Mr. Cutler we agreed to enter into a consulting agreement as of
January 1, 1999 with F.C. Capital Partners LLC pursuant to which it receives an
annual fee of $200,000 plus reasonable out-of-pocket expenses for Mr. Cutler's
services and for the occasional services of some of its employees. We also
agreed to enter into a separate consulting agreement as of August 4, 1999 with
F.C. Capital Partners LLC for Mr. Fitzgerald's services. The agreement provides
for the payment of $12,500 per month, a pro rata portion of a $60,000 annual
performance-based bonus, benefits costs and reasonable fees and expenses in lieu
of salary for Mr. Fitzgerald. Messrs. Fialkow and Cutler are each a Co-Chairman
and Co-Managing Member of F.C. Capital Partners LLC and Mr. Fitzgerald is one of
its employees. See "Management -- Consulting Agreement with F.C. Capital
Partners LLC".

     In connection with the acquisitions of Greyhound Leisure Services and the
Onboard Group, we entered into a Management Agreement with Berkshire Cruise
Holdings LLC to provide consulting and management services. In exchange for
these services, Berkshire Cruise Holdings LLC was entitled to an annual
management fee of $400,000 (payable monthly) plus reasonable out-of-pocket
expenses. The Management Agreement has an initial term of five years, subject to
automatic one

                                       55
60

year extensions unless we or Berkshire Cruise Holdings LLC provides written
notice of termination. We paid fees to Berkshire Cruise Holdings LLC under the
Management Agreement of $116,000 for the period from September 10, 1998 through
December 31, 1998. Berkshire Cruise Holdings LLC holds over 62% percent of our
outstanding common shares and as such may have the power to direct or cause the
direction of our management and policies. In connection with our January 1, 1999
consulting agreement with F.C. Capital Partners LLC, we will amend the
Management Agreement, to reduce the annual management fee to $200,000. Messrs.
Bloom, Fialkow, Schlesinger, Cutler, Fischman and Peeler each has a direct or an
indirect interest in Berkshire Cruise Holdings LLC. Messrs. Bloom Cutler,
Fialkow and Peeler are also each a member of the Board of Managers and an
officer of Berkshire Cruise Holdings LLC.

DIRECTOR COMPENSATION

     Directors serving on the Supervisory Board and the Management Board are
currently not entitled to receive any compensation for serving on the boards.
Directors are reimbursed for their out-of-pocket expenses incurred with such
services.

EMPLOYMENT AGREEMENTS

     We, through our subsidiaries, Cruise Line Holdings Co. and Greyhound
Leisure Services, have entered into an employment agreement with J. P. Miquel.
We, through our subsidiaries, Cruise Line Holdings Co. and the Onboard Group,
have also entered into employment agreements with Philip L. Levine and Jerry
Chafetz. Under their respective employment agreements, Messrs. Miquel, Levine
and Chafetz will receive:

     - an annual salary of (which may be increased from time to time):
NAME                          ANNUAL SALARY
                       ----                          -------------
J. P. Miquel.......................................    $300,000
Philip L. Levine...................................    $250,000
Jerry Chafetz......................................    $250,000
- participation in any bonus plan established by us; and

     - certain fringe benefits.

     The term of Mr. Miquel's employment is for three years beginning on
September 17, 1998 but may be terminated earlier by us with or without cause,
upon death or continued disability or by Mr. Miquel on 60 days' notice. The term
of Mr. Levine's and Mr. Chafetz's employment continues until terminated by us
with or without cause, upon their respective death or continued disability or by
them on 60 days' notice.

     If the executive's employment is terminated without "cause" or within 18
months of a change of control (as defined in the employment agreements) or due
to a material diminution in the executive's position, duties or authority,
Greyhound Leisure Services or the Onboard Group, as the case may be, will
provide the executive with severance pay for 12 months and cover the cost of
health insurance. In addition, Greyhound Leisure Services or the Onboard Group,
as the case may be, will pay the executive any bonus to which he is entitled,
pro-rated to the date of termination. If the executive is terminated for "cause"
or if the executive resigns, the executive is only entitled to receive his
salary through the date of termination. If the executive resigns, Greyhound
Leisure Services or the Onboard Group, as the case may be, will pay him his
salary for the 60 day notice period even if we accept his

                                       56
61

resignation prior to the expiration of the notice period. Under each employment
agreement, the executive has agreed not to:

     - compete with us or our subsidiaries during the period in which he is
       employed with us and for 12 months thereafter;

     - solicit or hire any of our or our subsidiaries' employees during the
       period in which he is employed with us and for 12 months thereafter;

     - solicit any customer, including any customers whose business we have
       actively sought within the 12 months preceding his termination, or any
       other entity or independent contractor who provides services to us or our
       subsidiaries during the period in which he is employed with us and for 12
       months thereafter; and

     - disclose any confidential information during the period in which he is
       employed and for all times thereafter.

     Under the terms of each employment agreement, the executive has also agreed
to disclose to us and Greyhound Leisure Services or the Onboard Group, as the
case may be, any intellectual property that is applicable to our business and to
assign such intellectual property to Greyhound Leisure Services or the Onboard
Group, as the case may be.

CONSULTING AGREEMENT WITH F.C. CAPITAL PARTNERS LLC FOR JOEL E. CUTLER'S
SERVICES

     In lieu of paying Joel E. Cutler, our Chairman and Chief Executive Officer,
a salary, we have agreed to enter into a consulting agreement dated as of
January 1, 1999 with F.C. Capital Partners LLC to provide consulting and
management advisory services, including Mr. Cutler's services as Chief Executive
Officer and for the occasional services of some of its employees. Mr. Cutler is
a Co-Chairman and Co-Managing Member of F.C. Capital Partners LLC. In exchange
for these services, F.C. Capital Partners LLC will receive an annual management
fee of $200,000 plus reasonable out of pocket expenses. The Consulting Agreement
will have an initial term of two years, subject to automatic one-year extensions
unless we or F.C. Capital Partners LLC provide written notice of termination. It
will also provide that F.C. Capital Partners LLC and Mr. Cutler will not compete
with us, solicit or hire our employees, or solicit our customers for services in
our line of business during the period of the engagement and for 12 months
thereafter. Mr. Cutler and F.C. Capital Partners LLC will also not disclose
confidential information during or after the engagement. Prior to entering into
the consulting agreement with F.C. Capital Partners LLC, Mr. Cutler's services
have been provided to us pursuant to our management agreement with Berkshire
Cruise Holdings LLC.

CONSULTING AGREEMENT WITH F.C. CAPITAL PARTNERS LLC FOR WILLIAM J. FITZGERALD'S
SERVICES

     In lieu of paying William J. Fitzgerald, our Acting Interim Chief Financial
Officer, a salary, we have agreed to enter into a consulting agreement with F.C.
Capital Partners LLC dated as of August 4, 1999 for the provision of additional
management advisory services, including Mr. Fitzgerald's services as Acting
Interim Chief Financial Officer of the Company and its Cruise Line Holdings Co.
subsidiary. Mr. Fitzgerald is an officer of F.C. Capital Partners LLC. In
exchange for Mr. Fitzgerald's services, we have agreed to pay F.C. Capital
Partners LLC a monthly consulting fee of $12,500, a portion of an annual $60,000
performance based bonus, pro rated based on the number of months of Mr.
Fitzgerald's engagement, and reasonable out of pocket expenses. We will also
reimburse F.C. Capital Partners LLC for Mr. Fitzgerald's specified benefits
during the term of the engagement. We may terminate the engagement for Mr.
Fitzgerald's services at any time on 30 days' notice. Under the agreement, Mr.
Fitzgerald is subject to the non-competition, non-solicitation and
confidentiality restrictions applicable to F.C. Capital Partners LLC.

                                       57
62

SEPARATION AGREEMENT WITH JORGE A. FERNANDEZ

     As of September 30, 1999 Jorge A. Fernandez has resigned as Senior Vice
President -- Finance and Chief Financial Officer of two of our subsidiaries,
Greyhound Leisure Services and Cruise Line Holdings Co. In our separation
agreement, we have agreed, among other things, to continue to pay his annual
salary of $150,000 through September 30, 2000 and his bonus through December 31,
1999 and to continue some of his benefits until, at the latest, December 31,
2001. In addition, we agreed to accelerate the vesting of a portion of his
options.

EXECUTIVE COMPENSATION

     Summary Compensation Table.  The following table shows the total
compensation paid or accrued during the fiscal year ended December 31, 1998
(September 10, 1998 through December 31, 1998) to our chief executive officer
and our four other most highly compensated officers after giving effect to the
250 for 1 common share split which will occur immediately before this offering.

                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                                               COMPENSATION
                                                                              ---------------
                                      ANNUAL COMPENSATION                      COMMON SHARES
                                      -------------------    OTHER ANNUAL       UNDERLYING       ALL OTHER
    NAME AND PRINCIPAL POSITION        SALARY     BONUS      COMPENSATION     OPTIONS(NUMBER)   COMPENSATION
    ---------------------------       --------   --------   ---------------   ---------------   ------------
Joel E. Cutler(a)...................  $ 58,000         --            --                --               --
  Chairman and Chief Executive
  Officer
J. P. Miquel........................  $ 86,400   $ 13,584            --           250,000               --
  President and Chief Executive
  Officer of Greyhound Leisure
  Services
Philip Levine.......................  $ 72,000         --            --                --               --
  President and Chief Executive
  Officer of Onboard Media and
  Cruise Management International
Jerry Chafetz.......................  $ 72,000         --            --           250,000               --
  Senior Vice President of Onboard
  Media and Cruise Management
  International
Jorge A. Fernandez(b)...............  $ 43,200   $  6,336            --            62,500               --
-------------------------
(a) In lieu of a salary to Mr. Cutler, F.C. Capital Partners LLC, of which Mr.
    Cuther is Co-Chairman and Co-Managing Member, received a consulting fee from
    Berkshire Cruise Holdings LLC in the amount of $58,000.

(b) Mr. Fernandez resigned as of September 30, 1999.

OPTION GRANTS IN LAST FISCAL YEAR

     The following table sets forth grants of options to acquire shares of
Starboard Cruise Services for our chief executive officer and our four other
most highly compensated officers for the fiscal year ended December 31, 1998
after giving effect to the 250 for 1 common share split which will occur
immediately before this offering. We have never granted any stock appreciation
rights. The potential realizable value is calculated based on the term of the
option at its time of grant. It is calculated assuming that the fair market
value of common shares on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated share
price. These numbers are calculated based on the requirements of the Securities
and Exchange Commission. By including these

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63

values in this prospectus, we do not intend to forecast the possible
appreciation in our share price nor to establish a present value of these
options.
INDIVIDUAL GRANTS                          POTENTIAL REALIZABLE
                         ---------------------------------------------------------------     VALUE AT ASSUMED
                                             % OF TOTAL                                   ANNUAL RATES OF STOCK
                          COMMON SHARES        OPTIONS                                      PRICE APPRECIATION
                           UNDERLYING          GRANTED        EXERCISE OR                   FOR OPTION TERM(B)
                         OPTIONS GRANTED   TO EMPLOYEES IN   BASE PRICE PER   EXPIRATION  ----------------------
NAME                        (NUMBER)         FISCAL YEAR         SHARE         DATE(A)       5%           10%
----                     ---------------   ---------------   --------------   ----------  ---------    ---------
Joel E. Cutler.........           --              --                 --               --        --           --
J. P. Miquel...........      250,000(c)         26.3%            $1.925        9/17/2008  $302,593     $766,829
Philip Levine..........           --              --                 --               --        --           --
Jerry Chafetz..........      250,000(c)         26.3%            $1.925        9/17/2008  $302,593     $766,829
Jorge A.
  Fernandez(d).........       62,500             6.6%            $1.925       12/21/2008  $ 75,648     $191,707
-------------------------
(a) Options expire on the earlier of 60 days after the date of termination (or
    such longer period as the Combined Board may determine) or the date
    indicated above.

(b) At an annual rate of appreciation of 5% per year for the option term, the
    price of the common share would be approximately $3.14. At an annual rate of
    appreciation of 10% per year for the option term, the price of the common
    share would be approximately $4.99.

(c) 83,500 shares vest on September 17, 1999 and 83,250 shares vest on each
    September 17, 2000 and September 17, 2001.

(d) Mr. Fernandez resigned as of September 30, 1999.

FISCAL YEAR-END OPTION VALUES

     The following table sets forth information concerning the value realized
upon exercise of options during 1998 and the number and value of unexercised
options held by our chief executive officer and our four other highly
compensated officers for the fiscal year ended at December 31, 1998 after giving
effect to the 250 for 1 common share split which will occur immediately before
this offering. There was no public trading market for the common shares as of
December 31, 1998. Accordingly, the values set forth below have been calculated
on the basis of the fair market value as of December 31, 1998 of the shares
underlying the options of $1.925 per share, less the applicable exercise price
per share, multiplied by the number of shares underlying the options.
VALUE OF UNEXERCISED
                                      UNDERLYING UNEXERCISED OPTIONS        IN-THE-MONEY OPTIONS
                                            AT FISCAL-YEAR-END               AT FISCAL-YEAR-END
                                      ------------------------------    ----------------------------
                                      EXERCISABLE     UNEXERCISABLE     EXERCISABLE    UNEXERCISABLE
NAME                                    (NUMBER)         (NUMBER)           ($)             ($)
----                                  ------------    --------------    -----------    -------------
Joel E. Cutler......................      --                  --            --               --
J. P. Miquel........................      --             250,000            --                0
Philip L. Levine....................      --                  --            --               --
Jerry Chafetz.......................      --             250,000            --                0
Jorge A. Fernandez(a)...............      --              62,500            --                0
-------------------------
(a) Mr. Fernandez resigned as of September 30, 1999.

1998 STOCK OPTION PLAN

     Our 1998 Stock Option Plan was adopted by our shareholders in September
1998 and subsequently amended by our shareholders and Board of Managers. It is
administered by the Management Board and Supervisory Board meeting together as a
Combined Board. A total of

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64

1,000,000 common shares have been authorized for issuance under the 1998 Stock
Option Plan, subject to an automatic increase by      % each year, and the
Combined Board has been authorized to issue options for those shares. To date,
we have entered into option agreements with employees for the purchase of all
1,000,000 common shares under the plan.

     Under the Plan, the Combined Board may for a period of ten years cause the
company to enter into option agreements with eligible individuals employed by or
providing service to Starboard Cruise Services to acquire shares at an exercise
price determined by the Combined Board. Employees, directors, consultants and
advisers are all eligible to receive options under the 1998 Stock Option Plan.

     The Combined Board has complete discretion to determine which eligible
individuals are to receive option grants, the time of those grants, the number
of shares granted pursuant to options (subject to a 500,000 per individual limit
and an aggregate limit of 1,000,000) the status of any granted option as an
incentive stock option or a non-statutory stock option under U.S. tax laws, the
vesting schedule to be in effect for the option grant, the latest date on which
an option may be exercised (which in no case will be later than ten years from
the date the option is granted) and the elimination of statutory preemptive
rights upon any issuance of options or underlying shares.

     The option agreements entered into under the 1998 Stock Option Plan provide
that the exercise price for the shares is to be paid in cash.

     In the event of an acquisition of Starboard Cruise Services, whether by
merger, stock purchase or asset sale, each option which is not to be assumed by
the successor corporation or replaced by a replacement award will automatically
accelerate in full and become vested. The accelerated awards will then terminate
upon the consummation of the merger, stock sale or asset sale.

     The Combined Board has the authority to effect the cancellation of
outstanding options, with the consent of the participant, and cause the company
to enter into another option agreement with such participant for the same or
another number of shares.

     The Combined Board may amend or terminate the 1998 Stock Option Plan at any
time, subject to any required shareholder approval and without the consent of
any grantees so long as such parties are not adversely affected.

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65

                       PRINCIPAL AND SELLING SHAREHOLDERS

     The following table sets forth certain information regarding the beneficial
ownership of our common shares as of July 31, 1999 and as adjusted to reflect
the sale of the shares offered hereby (assuming no exercise of the underwriter's
over-allotment option) by (i) each person who is known by us to own beneficially
more than five percent (5%) of our outstanding common shares, (ii) our chief
executive and our four other most highly compensated officers for the fiscal
year ended December 31, 1998, and (iii) all directors and executive officers as
a group. This table gives effect to the 250 for 1 common share split which will
occur immediately before this offering. Unless otherwise indicated below, to our
knowledge, all persons listed below have sole voting and investment power with
respect to their common shares, except to the extent authority is shared by
spouses under applicable law.

     Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. The address for those listed below is c/o Berkshire
Cruise Holdings LLC, One Boston Place, Boston, Massachusetts 02108-4401. Except
as indicated by footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power with respect to
all common shares shown as beneficially owned by them. The number of common
shares outstanding used in calculating the percentage for each listed person
includes the common shares underlying options held by such persons that are
exercisable within 60 days of July 31, 1999, but excludes common shares
underlying options held by any other person. Percentage of beneficial ownership
is based on 24,217,000 common shares outstanding as of July 31, 1999, and
common shares outstanding after completion of this offering.
PERCENTAGE OF
                                     SHARES                      SHARES           COMMON SHARES
                                  BENEFICIALLY     SHARES     BENEFICIALLY     BENEFICIALLY OWNED
                                     OWNED         BEING         OWNED        ---------------------
                                    PRIOR TO      OFFERED      AFTER THE      PRIOR TO    AFTER THE
                                    OFFERING       HEREBY       OFFERING      OFFERING    OFFERING
    NAME OF BENEFICIAL OWNER      ------------    --------    ------------    --------    ---------
Principal and Selling
  Shareholders:
Berkshire Cruise Holdings
  LLC(a)........................   14,990,250                                    62%           %

Executive Officers and
  Directors:
Joel E. Cutler(b)...............   14,990,250                                    62%           %
J.P. Miquel(c)..................      343,250                                     *           *
Philip L. Levine................    4,434,250                                    18%           %
Jerry Chafetz(d)................      379,250                                     *           *
Jorge A. Fernandez(e)...........      128,000                                     *           *
Bradley M. Bloom(f).............   14,990,250                                    62%           %
David P. Fialkow(b).............   14,990,250                                    62%           %
Steven S. Fischman(g)...........           --                                    --          --
Randy Peeler(f).................   14,990,250                                    62%           %
Leonard A. Schlesinger(h).......           --                                    --          --
All Executive Officers and
  Directors as a group (11)
  persons.......................   20,275,000                                    84%           %
61
66

-------------------------
 *   Less than one percent.

(a)  Berkshire Fund IV, L.P., Berkshire Fund V, L.P. and Berkshire Investors
     LLC, which are all affiliated with Berkshire Partners LLC, together hold a
     controlling interest in Berkshire Cruise Holdings LLC, and may therefore be
     deemed to have the power to vote or dispose of the common shares held
     directly by Berkshire Cruise Holdings LLC. Berkshire Fund IV, L.P.,
     Berkshire Fund V, L.P. and Berkshire Investors LLC disclaim beneficial
     ownership of any such shares in which they do not have a pecuniary
     interest.

(b)  Includes 14,990,250 common shares held by Berkshire Cruise Holdings LLC.
     Messrs. Cutler and Fialkow are each a member of the Board of Managers and
     an officer of Berkshire Cruise Holdings LLC. They are each a Co-Managing
     Member and Co-Chairman of F.C. Cruise Holdings LLC, which is, in turn, a
     member of Berkshire Cruise Holdings LLC. They are also limited partners of
     Berkshire Fund IV, L.P. Messrs. Cutler and Fialkow disclaim beneficial
     ownership of any common shares in which they do not have a pecuniary
     interest.

(c)  Includes 83,500 common shares that may be acquired upon exercise of
     outstanding options that vest on September 17, 1999.

(d)  Includes 83,500 common shares that may be acquired upon exercise of
     outstanding options that vest on September 17, 1999.

(e)  Mr. Fernandez resigned as of September 30, 1999. Includes 50,000 common
     shares that may be acquired upon exercise of outstanding options.

(f)   Includes 14,990,250 common shares held by Berkshire Cruise Holdings LLC.
      Messrs. Bloom and Peeler are each a member of the Board of Managers of and
      an officer of Berkshire Cruise Holdings LLC. Berkshire Fund IV, L.P.,
      Berkshire Fund V, L.P. and Berkshire Investors together hold a controlling
      interest in Berkshire Cruise Holdings LLC, and may therefore be deemed to
      have the power to vote or dispose of the common shares held directly by
      Berkshire Cruise Holdings LLC. Messrs. Bloom and Peeler are each members
      of Fourth Berkshire Associates LLC, the general partner of the Berkshire
      Fund IV; members of Fifth Berkshire Associates LLC, the general partner of
      Berkshire Fund V; and members of Berkshire Investors LLC. Mr. Bloom is
      also a Managing Director of each Fourth Berkshire Associates LLC, Fifth
      Berkshire Associates LLC and Berkshire Investors LLC. Messrs. Bloom and
      Peeler disclaim beneficial ownership of any common shares in which they do
      not have a pecuniary interest.

(g)  Mr. Fischman indirectly holds an interest in Berkshire Cruise Holdings LLC
     but does not have or share voting or investment power with respect to
     common shares directly beneficially held by Berkshire Cruise Holdings LLC.

(h)  Mr. Schlesinger is a member of Berkshire Cruise Holdings LLC but does not
     have or share voting or investment power with respect to common shares
     directly beneficially held by Berkshire Cruise Holdings LLC.

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67

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SHAREHOLDERS AGREEMENT

     In connection with our capitalization and the acquisition of Greyhound
Leisure Services and the Onboard Group, all of our shareholders entered into a
Shareholders Agreement. All shareholders who subsequently acquired our shares
also entered into the Shareholder Agreement. Berkshire Cruise Holdings LLC is a
party to this Agreement. Each of our Supervisory Directors and Mr. Cutler has
either a direct or indirect interest in Berkshire Cruise Holdings LLC. This
Shareholders Agreement:

     - Requires all shareholders to vote in favor of transfers which the
       Shareholders Agreement permits, to vote against transfers which the
       Shareholders Agreement prohibits, to vote to set the number of directors
       at a number specified by a majority of the voting interest of shares
       originally issued to Berkshire Cruise Holdings LLC, to vote for directors
       specified by three groups of shareholders (i.e., the management
       investors, the subscriber investors and Berkshire Cruise Holdings LLC),
       to vote to cause one of our subsidiaries to purchase the shares of New
       York Life Insurance Company, The Northwestern Mutual Life Insurance
       Company and American Home Assurance Company under their Put Agreements
       and to approve changes to our Articles of Association in the event of a
       public offering.

     - Grants shareholders a right of first refusal on the sale of shares by any
       other shareholder, subject to limited exceptions;

     - Grants shareholders a "tag along" right on the sale of any shares by any
       other shareholder. For example, if one shareholder wanted to sell 50% of
       its shares, other shareholders would have the right to have 50% of their
       shares included in the same sale, subject to pro rata reductions if all
       the shares desired to be sold could not be included in the sale. There
       are limited exceptions to these tag along rights;

     - Grants Berkshire Cruise Holdings LLC (or affiliated successors to its
       share ownership) the right to require other shareholders to sell their
       shares in a transaction in which all Berkshire Cruise Holdings LLC shares
       are sold;

     - Grants Starboard Cruise Services the right to repurchase shares from any
       employee shareholder at the termination of employment;

     - Grants all shareholders preemptive rights over most issuances of equity
       securities (including issuances to strategic investors, issuances to
       employees up to 5% and a public offering) with limited exceptions; and

     - Grants demand registration rights to three groups of shareholders and
       "piggyback" registration rights to all shareholders.

     Except for the registration rights, the Shareholders Agreement provisions
listed above will terminate upon the consummation of this offering.

     The Shareholders Agreement also provides that Berkshire Partners LLC or a
designated affiliate (as defined in the Shareholders Agreement) is entitled to
an investment banking fee of a percentage of any future financing it arranges
following the acquisitions of Greyhound Leisure Services and the Onboard Group.
The acquisition of our predecessor, Greyhound Leisure Services, and the
subsequent acquisition of Onboard Group were arranged by Berkshire Partners LLC.
The Shareholders Agreement provides further that Berkshire Partners LLC or a
designated affiliate is entitled to an annual management fee of $400,000 per
year. In connection with this annual management fee, we have entered into a
management agreement with Berkshire Cruise Holdings LLC and F.C. Capital
Partners LLC. See "-- Management and Consulting Agreements". The Shareholders
Agreement also required us to pay Berkshire Partners LLC a $1.5 million fee upon
the closing of the acquisition of

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Greyhound Leisure Services. We paid this fee pursuant to the Fee Agreements our
subsidiary, Cruise Line Holdings Co., entered into with Berkshire Partners LLC
and F.C. Capital Partners LLC. See "Management -- Compensation
Committee -- Interlocks and Insider Participation".

MANAGEMENT EQUITY HOLDINGS

     Joel E. Cutler, our Chairman and Chief Executive Officer, and William J.
Fitzgerald, our Acting Interim Chief Financial Officer, each have an indirect
interest in Berkshire Cruise Holdings LLC. See " -- Shareholders Agreement".

     In connection with our capitalization, J.P. Miquel, a Managing Director and
executive officer, entered into a Management Stock Subscription Agreement dated
September 15, 1998 with us, which provided for the sale of 259,750 common shares
(as adjusted for the 250 for 1 common share split which will occur immediately
before this offering) at an aggregate purchase price of $500,000. On this same
date, also in connection with our capitalization, Berkshire Partners LLC on
behalf of certain members of the management of Greyhound Leisure Services
purchased 415,750 common shares for an aggregate purchase price of $800,000.
Under a Purchase and Sale Agreement, dated November 4, 1998, Jorge A. Fernandez,
a former executive officer, purchased 78,000 common shares from Berkshire
Partners LLC.

     In addition, in connection with the acquisition of the Onboard Group as
part of the consideration for the shares of these companies, we issued (through
a series of transaction involving our subsidiaries) 4,434,250 common shares to
Philip L. Levine, a director and executive officer, and 295,750 common shares to
Jerry Chafetz, a Managing Director and executive officer, (in each case as
adjusted for the 250 for 1 common share split which will occur immediately
before this offering).

PUT AGREEMENTS

     New York Life Insurance Company, The Northwestern Mutual Life Insurance
Company and American Home Assurance Company have each purchased 833,250 common
shares. These shareholders have also purchased from one of our subsidiaries 15%
senior subordinated notes in the aggregate amount of $25.2 million. As an
inducement for these shareholders to purchase our senior subordinated notes, the
subsidiary entered into a Put Agreement with each of them. Under the Put
Agreements, these shareholders may cause the subsidiary at any time to
repurchase all, or any portion, of their common shares at a price equal to their
cost of the shares, or approximately $1.925 per share (as adjusted for share
splits and dividends). The put right, or the right to cause the subsidiary to
repurchase these common shares, will expire on September 15, 2006 or, if
earlier, upon the happening of specified liquidity events. These liquidity
events include a public offering of at least 25% of our shares, subject to some
conditions, the sale of all our common shares to a non-affiliate or the sale of
the subsidiary to a non-affiliate (whether accomplished by a sale of shares, a
sale of substantially all of its assets or a merger). Under the Put Agreements,
the subsidiary is required to give these shareholders written notice of the
occurrence of a liquidity event and they may exercise their put rights within 20
days following delivery of such notice. The Put Agreements will terminate upon
the expiration of the notice period related to this offering. While this
offering will trigger the put rights under the Put Agreements, we do not expect
that these shareholders will exercise their respective put rights.

LEASE ARRANGEMENT WITH MEDIA HOLDINGS

     Through our subsidiaries, Onboard Media and Cruise Management
International, we have an agreement with Media Holdings, Ltd. for the lease of
an office building. Media Holdings is owned directly or indirectly by two of our
managing directors and executive officers, Philip Levine and Jerry Chafetz, and
by several of our shareholders. The term of the lease is from April 30, 1996
through

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April 30, 2006 and requires annual rental payments of $250,000 subject to annual
adjustments plus occupancy costs, including property taxes, utilities and
repairs and maintenance. For the period from September 18, 1998 through December
31, 1998, we made payments to Media Holdings, Ltd. amounting to approximately
$66,563.

MANAGEMENT AND CONSULTING AGREEMENTS

     In connection with the acquisition of Greyhound Leisure Services and the
On-Board Group, we entered into a Management Agreement with Berkshire Cruise
Holdings LLC which we intend to amend as of January 1, 1999. At the time of this
amendment, we will also enter into the consulting agreement with F.C. Capital
Partners LLC for Joel E. Cutler's services. For information regarding our
consulting agreements with our directors and executive officers, please see
"Management -- Consulting Agreement with F.C. Capital Partners LLC for Joel E.
Cutler's Services", "Management -- Consulting Agreement with F.C. Capital
Partners LLC for William J. Fitzgerald's Services" and
"Management -- Compensation Committee -- Interlocks and Insider Participation".

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                          DESCRIPTION OF CAPITAL STOCK

GENERAL

     We were incorporated under the laws of The Netherlands as a private limited
liability company (besloten vennootschap met beperkte aansprakelijkheid or B.V.)
by a deed dated September 10, 1998, as amended. Our shareholders, pursuant to a
unanimous written consent, resolved to amend and restate our Articles of
Association to become a public limited liability company (naamloze vennootschap
or N.V.). We have our corporate seat in Amsterdam, The Netherlands, with our
principal executive offices at Strawinskylaan 3105, 7th Floor, 1077 ZX
Amsterdam, The Netherlands. We are registered under no. 33305952 with the trade
register at the Chamber of Commerce in Amsterdam, The Netherlands. Provisions of
our Articles of Association (a copy of which, together with an English
translation, has been included as an exhibit to the Registration Statement of
which this prospectus forms a part) and selected provisions of Dutch law are
summarized below. The following summary does not purport to be complete and is
qualified in its entirety by reference to the Articles of Association and such
law. The full text of our Articles of Association is available, in the Dutch and
English languages, at the address referred to above.

SHARE CAPITAL

     After giving effect to the 250 for 1 common share split which will occur
immediately before this offering, our authorized share capital is 120,000,000
shares, consisting of 120,000,000 common and preferred shares, each with a par
value of EUR .01. As of July 31, 1999, 24,000,000 common shares were
outstanding, assuming the share split had already taken place, and there were 21
shareholders of record. Shares may be issued only in registered form.

DIVIDENDS

     Our Combined Board may decide to add the profits made in any financial year
to our reserves. Out of our share premium reserve and other reserves available
for shareholder distributions under Dutch law, the Combined Board may declare
distributions. In the event preference shares are issued, such shares would have
a preferential dividend before distributions on the common shares. We may not
pay dividends if the payment would reduce shareholders' equity below the paid-up
portion of the share capital, plus the reserves statutorily required to be
maintained. Upon the proposal of the Combined Board, the Management Board may
resolve to pay out interim dividends, subject to certain provisions of Dutch
law. The Management Board, upon the proposal of the Combined Board, may resolve
to pay a dividend in whole or in part in the form of common shares or other
assets. Dividends which have not been claimed within five years after becoming
payable shall be forfeited to the benefit of the company.

     We have not in the past declared or paid a cash dividend on our shares and
we do not intend to do so in the foreseeable future. Instead, we intend to
retain earnings to finance future operations and expansions, and to reduce
indebtedness. The payment of dividends by us to holders of our shares is
restricted by our senior credit facility. In the event that dividends are
declared, however, we expect that we would pay such dividends in U.S. dollars,
although we may declare dividends in other currencies. We will pay dividends on
shares to the person in whose name the shares are registered at the date fixed
for that purpose by the Management Board.

SHAREHOLDER MEETINGS AND VOTING RIGHTS

     Each shareholder has the right to attend general meetings of shareholders,
either in person or represented by a person holding a written proxy, to address
shareholder meetings, and to exercise voting rights, subject to the provisions
of the Articles of Association and applicable Dutch law. Our

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annual general meeting of shareholders will be held within six months after the
close of each financial year, in the municipality in which we have our official
seat, presently in Amsterdam, The Netherlands. Unless our Articles of
Association or the laws of The Netherlands otherwise require, resolutions of
general meetings of shareholders occurring outside Amsterdam are valid if the
entire share capital is present or represented (unless there are other persons,
such as pledgees or usufructuaries, that have rights to attend shareholders
meetings). We will hold extraordinary general meetings of shareholders as often
as the Combined Board deems necessary, or upon the written request of one or
more shareholders representing not less than 10% of the issued shares to the
Management Board specifying in detail the matters to be addressed at the
meeting.

     We will give notice of each meeting of shareholders by mail to registered
holders of our shares and other persons who by law are entitled to attend
meetings, at the address of each shareholder or other person as set forth in the
shareholder register at least 15 days before the meeting.

     Each share entitles its holder to cast one vote. Unless otherwise required
by the Articles of Association or Dutch law, resolutions of general meetings of
shareholders require the approval of an absolute majority of the votes cast.

ELECTION AND TENURE OF MANAGING DIRECTORS AND SUPERVISING DIRECTORS; POWER TO
REPRESENT AND BIND THE ISSUER.

     Our Management Board is entrusted with the management of our company. Our
Supervisory Board supervises and advises the Management Board. The Management
Board will have one or more members and the Supervisory Board will have one or
more members. The Supervisory Board and the Management Board vacancies will be
filled by a vote of shareholders at the first general meeting after such vacancy
occurs or is created. The Supervisory Board and the Management Board members are
appointed by the general meeting of shareholders from binding nominations for
each vacancy made by the Combined Board. Under the law of The Netherlands and
the Articles of Association, the shareholders may eliminate the binding effect
of nominations by a resolution passed by two-thirds of the votes cast at a
meeting of shareholders at which more than half of the issued capital of the
company is represented. The members of the Supervisory Board and Management
Board are each divided into three classes. These classes hold their seats for
three year terms, with one class of directors expiring in each successive year.

     Our Supervisory Directors and Managing Directors serve until the expiration
of their respective three year terms of office or their resignation, death or
removal, with or without cause, by the shareholders or, in the case of
Supervisory Directors, also upon reaching the mandatory retirement age of 72.
See "Management".

     The executive power of our company resides in the members of the Management
Board acting together. For purposes of representation of the company, members of
our Management Board have been divided into Class A and Class B members. Any
Class A member may represent the company individually. Any Class B member may
represent the company together with a Class A member. The Management Board may
execute (i) a power of attorney granting certain of our officers the power to
bind us individually on certain administrative day-to-day matters and (ii) a
power of attorney to our transfer agent and registrar to acknowledge transfers
of common shares. In addition, the Management Board, subject to approval of the
Combined Board, may designate any person to represent the company.

     Our Articles of Association provide that the Management Board and
Supervisory Board shall meet together in a Combined Meeting as the Combined
Board to approve actions requiring approval by the Combined Board. The Combined
Board shall meet as often as the Supervisory Board or Management Board shall
request.

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ADOPTION OF ANNUAL ACCOUNTS AND DISCHARGE OF MANAGEMENT LIABILITY

     The Management Board must prepare our annual accounts within five months
after the end of each fiscal year (unless the general meeting of shareholders
has extended this period by a maximum of six additional months by reason of
special circumstances). Within six months after the end of such financial year
(or within such additional time as is approved by our shareholders), the
Management Board must present the annual accounts to the general meeting of
shareholders, accompanied by the annual report.

     Adoption of our annual accounts by the general meeting of shareholders
discharges the members of the Management Board and the Supervisory Board from
liability in respect of the exercise of their duties during the financial year
concerned to the extent the actions taken by the boards during the year are
evident to the stockholders from a review of the annual accounts or otherwise
communicated to the shareholders, unless an explicit reservation is made by the
general meeting of shareholders and without prejudice to the provisions of Dutch
law relating to liability of members of supervisory boards and management boards
upon bankruptcy of a company pursuant to Sections 138 and 139 and Sections 140
and 149 of Book 2 of the Dutch Civil Code.

LIQUIDATION RIGHTS

     In the event of our dissolution and winding up, the assets remaining after
payment of all liabilities shall be distributed among the shareholders in
proportion to the par value of their share holdings and in accordance with the
relevant provisions of Dutch law.

ISSUE OF COMMON SHARES; PREEMPTIVE RIGHTS

     Until the fifth anniversary of the vote to convert into an N.V., the
Combined Board has the power to issue shares and grant share options, and to
determine the terms and conditions of share issuances and option issuances
pursuant to a delegation of power from the general meeting of shareholders. Each
time it expires, this delegation may be renewed for a maximum of five years.

     Unless limited or excluded by the general meeting of shareholders, each
holder of our common shares has a pro rata preemptive right to subscribe for any
newly issued common shares unless payment must be made other than in cash. The
general meeting of shareholders has the power to limit or exclude preemptive
rights in connection with new issuances of shares, and may authorize the
Combined Board, for a period of no more than five years, to limit or exclude
preemptive rights (if the Combined Board has been simultaneously designated as
having the authority to issue shares). The shareholders have delegated such
rights to the Combined Board until the fifth anniversary of the vote to convert
into an N.V. Each time it expires, this delegation may be renewed for a maximum
of five years.

ISSUE OF PREFERENCE SHARES; GRANT OF CALL OPTION

     Until the fifth anniversary of the vote to convert into an N.V., the
Combined Board has the power to issue preference shares pursuant to a delegation
of power from the general meeting of shareholders. Each time it expires, this
delegation may be renewed for a maximum of five years. The Combined Meeting may
grant a call option on preference shares, which will not exceed 100% of all
outstanding shares to an independent foundation established under Netherlands
law. See "Risk Factors -- Antitakeover Provisions in Our Articles of Association
Could Have Effects That Conflict with the Interests of Our Shareholders".

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ACQUISITION OF SHARES

     We may acquire shares in our own share capital, subject to certain
provisions of Dutch law and of our Articles of Association, if (i) the general
meeting of shareholders has given the Management Board authorization to do so
(which authorization shall be valid for no more than 18 months, and shall
specify the number of shares that may be acquired or the permitted price range);
(ii) our shareholder capital, reduced by the acquisition price, is not less than
the sum of the paid and called-up share capital and the reserves to be
maintained pursuant to Dutch law or the Articles of Association; (iii) the par
value of the shares that we and our subsidiaries already hold does not exceed
one-tenth of our issued share capital; and (iv) the Combined Board has proposed
such acquisition to the Management Board. Shares that we hold may not be voted
and may not participate in any distribution of profits or distribution of
surplus assets after liquidation. We may only acquire shares for a consideration
within the limits set by the general meeting.

CANCELLATION OF SHARES

     With the prior approval of the general meeting of shareholders, we may
cancel shares that we hold, provided that the cancellation may not cause the
paid up portion of the share capital to be reduced to less than one-fifth of the
authorized capital, and subject to certain statutory provisions.

AMENDMENT OF THE ARTICLES OF ASSOCIATION

     The general meeting of shareholders may resolve to amend the Articles of
Association at the proposal of, or with the prior approval of, the Combined
Board.

LIMITATIONS ON RIGHT TO HOLD OR VOTE SHARES

     There are currently no limitations imposed by Dutch law or by our Articles
of Association on the right of non-resident holders to hold or vote on their
shares.

LIABILITY OF DIRECTORS AND OFFICERS

     Our Articles of Association provide that we will, to the fullest extent
permitted by the law of The Netherlands, as amended from time to time,
indemnify, and may advance expenses to, each of our now acting and former
members of the Supervisory Board, members of the Management Board and officers,
whenever any such person is made a party, or threatened to be made a party, in
any action, suit or proceeding by reason of his or her service with us. Our
Articles of Association also provide that we may purchase and maintain
directors' and officers' liability insurance. We have obtained directors' and
officers' liability insurance in amounts we believe to be reasonable.

     We have also entered into indemnity agreements with Philip L. Levine and
Jerry Chafetz. The agreements provide that we will, to the fullest extent
permitted by law, indemnify Philip L. Levine and Jerry Chafetz, as the case may
be, if he is made a party, or threatened to be made a party, in any action, suit
or proceeding by reason of his service with us.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for our common shares will be The Bank of
New York.

LISTING

     Our common shares have been approved for listing on The Nasdaq Stock
Market's National Market under the trading symbol "CRUZ".

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                        SHARE CERTIFICATES AND TRANSFER

     Our common shares are available only in a form recorded in the name of the
holder in our share register. The transfer agent for our common shares, The Bank
of New York, maintains the book-entry share register for our shares which can be
traded in the U.S. in New York, New York. The registry of our shares which
cannot be traded in the U.S. without being entered in book entry form in our
U.S. register is held in The Netherlands by us or on our behalf. All of the
common shares to be sold in this offering will be initially represented by a
single global certificate held through Depositary Trust Corporation, or DTC, and
registered with the The Bank of New York, our New York transfer agent and
registrar, in the name of Cede & Co., the nominee of DTC. The common shares
listed in this offering will trade on The Nasdaq Stock Market's National Market.

     Persons who are not DTC participants may beneficially own common shares
held by DTC only through direct or indirect participants in DTC. So long as Cede
& Co., as the nominee of DTC, is the registered owner of the listed common
shares, Cede & Co., for all purposes will be considered the shareholder of
record. Because the beneficial owner of shares is not the registered owner, any
person owning a beneficial interest in the listed shares must rely on the
procedures of DTC and, if such person is not a participant in DTC, the
procedures of the DTC participant through which such person owns its interest
(i.e., such person's broker), to exercise any rights of a shareholder. We
understand that, under existing industry practice, in the event that you desire
to take any action with respect to shares registered to Cede & Co. in which you
hold a beneficial interest that Cede & Co., as the shareholder, is entitled to
take, Cede & Co. would authorize the participants through which you hold your
beneficial interest to take such action, and the participants would authorize
you to take such action or would otherwise act on your behalf upon your
instructions. Our listed common shares which may be traded on the Nasdaq may be
transferred on our books at the office of the New York transfer agent and
registrar. Certificates representing such tradable listed shares may be
exchanged or transferred at such office for certificates representing our common
listed shares of other authorized denominations. Such certificates, if not held
by our transfer agent or a DTC participant, will need to be returned to the DTC
System in order to trade such shares. Under Dutch law, the transfer of
registered shares requires a written instrument of transfer and written
acknowledgment by us of such transfer. Transfers of beneficial ownership made
through the DTC system will not require such an instrument.

     Although DTC has agreed to the procedures provided below in order to
facilitate transfers of our common shares among participants of DTC, DTC is
under no obligation to perform or continue to perform such procedures and such
procedures may be modified or discontinued at any time. We will not have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.

     DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of section 17A of the Exchange
Act. DTC was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. DTC participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations such as the
underwriters of this offering. Indirect access to the DTC system also is
available to indirect DTC participants such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a DTC
participant, either directly or indirectly.

     Because DTC can only act on behalf of DTC participants, who in turn act on
behalf of indirect DTC participants and certain banks, the ability of an owner
of a beneficial interest in the listed shares

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to pledge such interest to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of such interest, may be
limited by the lack of a definitive certificate for such interest. The laws of
some jurisdictions require that certain persons take physical delivery of
securities in definitive form. Consequently, the ability to transfer beneficial
interests in the listed shares to such persons may be limited. In addition,
beneficial owners of the listed shares through the DTC system will receive
dividend payments only through DTC participants.

     Investors who hold their shares through DTC will follow the settlement
practices applicable to U.S. corporate common shares, including for secondary
trading. The securities custody accounts of investors will be credited with
their holdings against payment of U.S. dollars in same-day funds on the
settlement date. To the extent you elect to remove your shares from the DTC
system, you will be charged a per share fee by our transfer agent for the
issuance of new certificates and the trading of such certificates will require a
separate written instrument of transfer and acknowledgment by the company. These
fees and requirements are not applicable for transfers of beneficial interests
within the DTC system, although brokerage or trading fees may apply.

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                      DESCRIPTION OF CERTAIN INDEBTEDNESS

CREDIT FACILITY

     Our subsidiaries entered into a five-year senior credit facility on
September 17, 1998 with Credit Suisse First Boston, NationsBank, N.A. and
various other banks and financial institutions and have amended the credit
facility on four subsequent dates. The subsidiaries entered into the credit
facility to finance our acquisition of Greyhound Leisure Services and the
subsequent acquisitions of the Onboard Group and the assets of Nuance Global
Ships as well as for other general corporate purposes. The credit facility
consists of term loans in an aggregate principal amount of $67.5 million and a
revolving credit facility of up to $35 million. The revolving credit facility
includes a sub-facility or up to $15 million for the issuance of letters of
credit. Direct borrowings under the revolving credit facility are subject to an
availability calculation based on the eligible borrowing base. At June 30, 1999,
there was $12.1 million of outstanding letters of credit and $12.1 million of
unused borrowing capacity under the revolving credit facility.

     Borrowings under the credit facility will bear interest at variable rates
(based on one of the subsidiary's leverage ratio as defined in the credit
facility) and may be maintained as Eurodollar loans or Alternate Base Rate loans
(defined in the credit facility, respectively) at the borrower's option.
Eurodollar loans bear interest at 2.25% to 3.5% in excess over the applicable
reserve adjusted Eurodollar Rate (as defined in the credit facility) and
Alternative Base Rate loans bear interest at 1% to 2.5% in excess of Credit
Suisse First Boston's base rate (as defined in the credit facility).

     The amounts borrowed under the revolving credit facility may be repaid and
reborrowed. The term loans under the facility will mature on September 17, 2003
with required prepayments beginning on August 31, 1999. We are required to use
50% of the net cash proceeds of some equity issuances including this offering
after paying off the junior subordinated note issued to Viad Corp. to repay the
term loans. In addition, we are required to use 100% of the net cash proceeds
from asset sales or the issuance of some indebtedness to repay the term loans.
All revolving loans incurred under the credit facility will mature on September
17, 2003.

     Our subsidiary that incurred the indebtedness is required to pay the
lenders under the credit facility a commitment fee, which ranges from 0.375% to
0.5% per annum based on its leverage ratio, payable on a quarterly basis in
arrears, on the average daily unused portion of the credit facility during the
preceding quarter. The subsidiary also is required to pay the lenders a standby
letter of credit participation fee based on the average daily aggregate undrawn
amount of all outstanding letters of credit during the preceding quarter (but
excluding any trade letters of credit in an aggregate face amount up to $2
million) at a rate equal to the applicable percentage used to determine the
interest rate on revolving credit borrowings comprised of Eurodollar loans. The
subsidiary is also required to pay the lenders a trade letter of credit
participation fee based on the average daily aggregate undrawn amount of all
outstanding trade letters of credit during the preceding quarter (but excluding
trade letters of credit to the extent the face amount exceeds $2 million) at a
rate equal to the excess of the applicable percentage used to determine the
interest rate on revolving credit borrowings comprised of Eurodollar loans over
1.25%. In addition, there is a fronting fee equal to 0.25% per annum on the
aggregate outstanding face amount of all outstanding letters of credit. In
connection with the credit facility, the subsidiary is also required to pay
Credit Suisse First Boston an administrative agent fee.

     The credit facility provides that all indebtedness is guaranteed and
secured by the tangible and intangible assets and the capital stock of each of
our subsidiaries, plus any present and future subsidiary guarantor.

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     The credit facility contains certain covenants limiting, among other
things, additional debt, additional liens, dividends and distributions,
transactions with affiliates, mergers and consolidations, liquidations and
dissolutions, sales of assets, dividends, capital expenditures, investments,
loans and advances, prepayments and modifications of debt instruments and other
matters customarily restricted in such agreements. Under the terms of the credit
facility, the subsidiary that incurred the indebtedness is required to compute
financial ratios and certify as to other covenants on a quarterly or periodic
basis. The credit facility also contains customary events of default, such as
payment defaults, breaches of representations and warranties, covenant defaults,
events of bankruptcy and insolvency, failure of any guaranty or security
document supporting the credit facility to be in full force and effect, change
of control of the parent of the subsidiary that incurred the indebtedness (as
defined in the credit facility) and change of ownership in the shares of the
subsidiary that incurred the indebtedness.

     The foregoing summary of the material provisions of the credit facility, as
amended, is qualified in its entirety by reference to all of the provisions of
the credit facility, which has been filed as an exhibit to the registration
statement of which this prospectus forms a part. See "Where You Can Find More
Information".

SENIOR SUBORDINATED NOTES

     In connection with our acquisition of Greyhound Leisure Services and the
Onboard Group, one of our subsidiaries issued 15% senior subordinated notes in
an aggregate principal amount of $25.2 million to the following parties, each of
whom is also a shareholder in our company: New York Life Insurance Company, The
Northwestern Mutual Life Insurance Company and American Home Assurance Company.
The senior subordinated notes are due September 15, 2006 and are senior
subordinated unsecured obligations of the subsidiary. The interest on the senior
subordinated notes is payable semiannually in arrears, may be capitalized for
the first three years and is payable in cash beginning in the fourth year. The
senior subordinated notes are also subject to a cash payment commencing on March
15, 2004 in the event the accrued and unpaid interest exceeds a certain amount.
In the event that this cash payment is required, the holders of the notes may
require the subsidiary to purchase up to $10 million of principal of the senior
subordinated notes at a premium of 5.25%. Fifty percent (50%) of the then
outstanding principal amount of the senior subordinated notes will mature on
September 15, 2005, with the balance due September 15, 2006.

     The mandatory prepayment of the junior subordinated note upon this offering
will require the prepayment of the senior subordinated notes. We intend to use a
portion of the net proceeds from this offering to repay the senior subordinated
notes, all accrued interest and all prepayment fees. Before September 15, 2001,
the senior subordinated notes may be prepaid in the event of specific qualifying
events, including this offering. After September 15, 2001, the senior
subordinated notes may be prepaid at any time. Upon prepayment, the subsidiary
is required to repay the outstanding principal and all accrued interest plus a
prepayment compensation fee. In the event of a prepayment before September 15,
2001, if the principal amount of the payment is equal to 50% or less of the
outstanding principal of the senior subordinated notes, the prepayment
compensation fee is a percentage ranging from 10.5% to 14% of the prepaid
principal based on the date of the payment. If the principal amount of the
payment is greater than 50% of the outstanding principal immediately before the
payment of the senior subordinated notes, the prepayment compensation fee is the
sum of (a) a percentage ranging from 10.5% to 14% (based on the date of the
payment) of 50% of the principal amount of the notes outstanding immediately
prior to the payment and (b) the excess of the present value of the then
remaining scheduled payments of principal and interest that would have been
payable (using a specified discount rate) over the prepaid principal calculated
with respect to any principal being repaid in excess of 50% of the principal
amount outstanding immediately before

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the payment. For prepayments on or after September 15, 2001, the prepayment
compensation fee is a percentage ranging from 1.75% to 8.75%.

     Upon a change in control (as defined in the Senior Subordinated Note
Agreement), each holder of the senior subordinated notes will have the right to
require the subsidiary to repurchase the notes at 101% of the principal amount
thereof plus accrued and unpaid interest to the repurchase date. The Senior
Subordinated Note Agreement also contains covenants that, among other things,
limit (1) consolidations, mergers or transfers of assets, (2) payment of
dividends on and redemptions of capital stock by the subsidiary and its
subsidiaries, (3) incurrence of additional debt by our subsidiaries, (4)
prepayments of other debt, including the junior subordinated note and (5)
transactions with affiliates.

     In connection with the issuance of the senior subordinated notes, the
issuing subsidiary has entered into a put agreement with each of the holders of
the notes. See "Certain Relationships and Related Transactions -- Put
Agreements".

     The foregoing summary of the material provisions of the senior subordinated
notes is qualified in its entirety by reference to all of the provisions of the
senior subordinated notes, which has been filed as an exhibit to the
registration statement of which this prospectus forms a part. See "Where You Can
Find More Information".

JUNIOR SUBORDINATED NOTE

     We, through one of our subsidiaries, issued to Viad Corp. a 12% junior
subordinated note in an aggregate principal amount of $10 million in connection
with our acquisition of Greyhound Leisure Services from Viad. The junior
subordinated note is due May 15, 2009 and is a junior subordinated unsecured
obligation of the subsidiary. The interest on the junior subordinated note is
payable semiannually commencing March 1, 1999 and the interest payments may be
capitalized through maturity of the note with some exceptions. The terms of the
note provide that the subsidiary will be obligated to make a cash payment after
March 1, 2004 in the event the accrued and unpaid interest exceeds a certain
amount. The terms of the junior subordinated note require mandatory prepayment
upon the consummation of an initial public offering or upon a change of control
(as defined under the terms of note.) We intend to use the net proceeds from
this offering to repay the junior subordinated note and all accrued interest.

     The foregoing summary of the material provisions of the junior subordinated
note is qualified in its entirety by reference to all of the provisions of the
junior subordinated note, which has been filed as an exhibit to the registration
statement of which this prospectus forms a part. See "Where You Can Find More
Information".

PERFORMANCE AND SURETY BONDS

     From time to time, we provide performance and surety bonds to various
parties, including government agencies, in connection with our bonded
warehouses, our importing and exporting activities and the performance of our
various contractual obligations. As of July 31, 1999, we had outstanding
performance and surety bonds in the aggregate amount of approximately
$6,728,000.

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                        SHARES ELIGIBLE FOR FUTURE SALE

     Sales of substantial amounts of our common shares in the public market
could adversely affect prevailing market prices of our common shares.
Furthermore, since no shares held by our existing shareholders will be available
for sale shortly after this offering because of the contractual and legal
restrictions on resale described below, sales of substantial amounts of common
shares in the public market after these restrictions lapse could adversely
affect the prevailing market price and our ability to raise equity capital in
the future.

     Upon completion of this offering, we will have outstanding an aggregate of
     common shares, assuming no exercise of the underwriter's over-allotment
option and no exercise of outstanding options. Of these shares, all of the
shares sold in this offering will be freely tradable without restriction or
further registration under the Securities Act, unless the shares are purchased
by "affiliates" as that term is defined in Rule 144 under the Securities Act.
The remaining      common shares held by existing shareholders are "restricted
securities". Restricted sections may be sold in the public market following
registration or pursuant to an exemption from registration under Rule 144
promulgated under the Securities Act, which rules are summarized below.

LOCK-UP AGREEMENTS

     All of our officers, directors and a majority of our shareholders have
signed lock-up agreements under which they agreed not to transfer or dispose of,
directly or indirectly, or hedge any common shares or any securities convertible
into or exercisable or exchangeable for shares of common shares, for a period of
180 days after the date of this prospectus. Transfers or dispositions can be
made sooner with the prior written consent of Credit Suisse First Boston.

     Subject to the provisions of Rule 144, 144(k) and 701, restricted shares
totaling      will be available for sale in the public market, subject in the
case of shares held by affiliates to the volume restrictions contained in those
rules,   days after the date of this prospectus.

RULE 144

     In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common shares for at least one year, including the holding period of any prior
owner other than an affiliate, would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of:

     - 1% of the number of common shares then outstanding, which will equal
       approximately      shares immediately after this offering; or

     - the average weekly trading volume of the common shares of the Nasdaq
       National Market during the four calendar weeks preceding the filing of a
       notice on Form 144 with respect to such sale.

     Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us.

RULE 144(k)

     Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at anytime during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell those shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.

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RULE 701

     In general, under Rule 701 of the Securities Act as currently in effect,
each of our employees, consultants or advisors who purchases shares from us
pursuant to securities, prior to our public offering, issued under a
compensatory stock plan or other written agreement is eligible to resell such
shares 90 days after the effective date of this offering in reliance on Rule
144, but without compliance with some of the restrictions, including the holding
period, contained in Rule 144.

REGISTRATION RIGHTS

     The parties to the Shareholders Agreement have rights to have their shares
registered after this offering. The Shareholder Agreement provides that some of
our shareholders have demand registration rights. Holders of at least 25% of the
shares originally issued in connection with the formation of our company have
the right, exercisable between the first and fifth anniversaries of this
offering and subject to various conditions, to require us to register any or all
of their common shares under the Securities Act on Form S-1 on three occasions
at our expense. In addition, if we are able to file a registration statement on
Form S-3, the holders of at least 25% of the shares originally issued in
connection with the acquisition of the Onboard Group and the holders of at least
25% of the shares originally issued in connection with the issuance of the
senior subordinated notes each have the right, exercisable between the first and
fifth anniversaries of this offering and subject to various conditions, to
require us to register any or all of their common shares under the Securities
Act on Form S-1 on two occasions at our expense. In addition, if we are able to
file a registration statement on Form S-3, the holders of at least 25% of the
shares originally issued in connection with the issuance of the senior
subordinated notes are entitled to an additional registration subject to
specific restrictions and limitations.

     The Shareholder Agreement also provides for "piggyback" registration
rights. The piggyback registration rights provide that any holder of registrable
shares subject to the Shareholders Agreement may request the inclusion of such
shares at our expense whenever we propose to register (whether for our account
or for the account of any holder of our common shares) any shares on a form
which would permit the registration of registrable shares for sale to the public
in a public offering other than in a registration made in conjunction with an
offering relating to an employee benefit plan or dividend reinvestment plan or
an acquisition or merger. In addition, the piggyback registration rights do not
apply in an initial public offering unless the holders of the shares originally
issued in connection with the formation of our company sell their common shares,
in which case the holders of the shares originally issued in connection with the
acquisition of the Onboard Group and the holders of the shares originally issued
in connection with the issuance of the senior subordinated notes may also sell
their common shares.

     In connection with any registration of registrable securities under the
Shareholders Agreement, we have agreed to indemnify each seller, any controlling
person (and their respective director or indirect partners, advisory board
members, directors, officers, trustees, members and shareholders) and each other
person who controls any such seller or holder, against various liabilities,
including liabilities under the Securities Act and Exchange Act. In addition,
all parties to the Shareholders Agreement have agreed not to transfer any
shares, except for some permitted transfers under the Shareholders Agreement,
for a period beginning seven days prior to the effective date of any
registration statement and continuing for a period of 180 days thereafter.

STOCK PLANS

     Promptly after this offering, we intend to file a registration statement
under the Securities Act covering                common shares reserved for
issuance under our 1998 Stock Option Plan. This registration statement is
expected to be filed as soon as practicable after the effective date of this
offering.

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     At July 31, 1999, options to purchase 1,000,000 shares were issued and
outstanding under our 1998 Stock Option Plan and otherwise. All of these shares
will be eligible for sale in the public market from time to time, commencing 90
days after the effective date of this offering, subject to vesting provisions,
Rule 144 volume limitations applicable to our affiliates and, in the case of
some of the options, the expiration of lock-up agreements.

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                                    TAXATION

NETHERLANDS TAXATION

     Each investor should consult his or her own tax advisor with respect to the
tax consequences of an investment in our common shares. The discussion of
certain Netherlands taxes set forth below is included for general information
only and does not address every potential tax consequence of an investment in
common shares under the laws of The Netherlands. The following summary of Dutch
tax considerations is limited to the tax implications for an individual or
corporate owner of common shares who owns less than 10% of the voting power of
our company, a "holder of common shares".

WITHHOLDING TAX

     Dividends distributed by our company generally are subject to a Netherlands
withholding tax imposed at a rate of 25%. The expression "dividends distributed
by the company" as used in this section includes, among other things, the
following:

          (i) distributions in cash or in kind, deemed and constructive
     distributions and repayments of paid-in capital not recognized as capital
     for Netherlands dividend withholding tax purposes;

          (ii) liquidation proceeds, proceeds of redemption of common shares or,
     as a general rule, consideration for the repurchase of common shares by our
     company in excess of the average paid-in capital recognized as capital for
     Netherlands dividend withholding tax purposes;

          (iii) the par value of shares issued to a holder of common shares or
     an increase of the par value of common shares, as the case may be, to the
     extent that it does not appear that a contribution, recognized for
     Netherlands dividend withholding tax purposes, has been made or will be
     made; and

          (iv) partial repayment of paid-in capital, recognized for Netherlands
     dividend withholding tax purposes, if and to the extent that there are net
     profits (zuivere winst), unless the general meeting of shareholders of the
     company has resolved in advance to make such repayment and provided that
     the par value of the common shares concerned has been reduced by an equal
     amount by way of an amendment of the Articles of Association.

     If a holder of common shares is resident in a country other than The
Netherlands and if a double taxation convention is in effect between The
Netherlands and such country, such holder of common shares may, depending on the
terms of such double taxation convention, be eligible for a full or partial
exemption from, or refund of, Netherlands dividend withholding tax. Prospective
investors in common shares should consult their own advisors to determine
whether they are entitled to the benefits of a double taxation convention and,
if so, what procedures must be followed in order to claim those benefits.

     Residents of the United States that qualify for, and comply with the
procedures for claiming, benefits under the income tax convention between The
Netherlands and the United States, known as the U.S./NL Income Tax Treaty,
generally are eligible for a reduction of Netherlands withholding tax on
dividend income to 15%. A holder of common shares may qualify for benefits under
the U.S./ NL Income Tax Treaty if the holder (i) is the beneficial owner of the
dividends; (ii) is a resident of the United States as defined for purposes of
the U.S./NL Income Tax Treaty; (iii) does not carry on a business in The
Netherlands through a permanent establishment situated in The Netherlands, or
does not perform independent personal services from a fixed base situated in The
Netherlands and the holding in respect of which the dividends are paid forms
part of the business property of such permanent establishment or pertains to
such fixed base; and (iv) is entitled to the benefits of the U.S./NL Income Tax
Treaty pursuant to the limitation on benefits provision (Article 26) of the
U.S./NL Income Tax Treaty. The U.S./NL Income Tax Treaty provides, if certain
conditions are

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met, an exemption from taxation for dividends received by exempt pension trusts
and exempt organizations, as defined therein. Except in the case of exempt
organizations (as defined in Article 36 of the U.S./NL Income Tax Treaty), the
reduced dividend withholding rate can be applied at source upon payment of the
dividends, provided that the proper Dutch forms have been filed in advance of
the payment.

TAXES ON INCOME AND CAPITAL GAINS

     A holder of common shares will not be subject to Netherlands taxes on
income or capital gains in respect of dividends distributed by us or in respect
of any gain realized on the disposal of common shares (other than the
withholding tax described above), provided that:

          (i) such holder is neither resident nor deemed to be resident in The
     Netherlands; and

          (ii) such holder does not have an enterprise or an interest in an
     enterprise that is, in whole or in part, carried on through a permanent
     establishment or a permanent representative in The Netherlands and to which
     enterprise or part of an enterprise, as the case may be, the common shares
     belong or are attributable; and

          (iii) such holder does not have a substantial interest or a deemed
     substantial interest in the company or, in the event that such holder does
     have or is deemed to have such interest, it forms part of the assets of an
     enterprise; and

          (iv) such holder is not entitled to a share in the profits of an
     enterprise that is effectively managed in the Netherlands, other than
     through ownership of securities or through employment, to which enterprise
     the common shares belong or are attributable.

     Common shares will generally not form part of a substantial interest if the
holder of such shares, alone or together with his spouse, certain other
relatives (including foster children) and/or certain persons sharing his or her
household, does not own, whether directly or indirectly: (a) at least five
percent of the issued share capital of any class of shares of our company; (b)
option rights to acquire shares in our company representing at least five
percent of the issued share capital of any class of shares of our company; or
(c) profit participating certificates entitling the holder to at least five
percent of the annual profit of our company, or entitling the holder to at least
five percent of the liquidation proceeds upon liquidation of our company. A
deemed substantial interest is, for example, present if part of a substantial
interest has been disposed of, or is deemed to have been disposed of, on a
non-recognition basis. If there is any doubt whether the "substantial interest"
regulations may apply, each prospective holder of common shares should consult
his or her tax advisor regarding the tax consequences of such holding.

NET WEALTH TAX

     A holder of common shares will not be subject to Netherlands net wealth tax
in respect of the common shares provided that such holder is not an individual
or, if he or she is an individual, provided that:

          (i) such holder is neither resident nor deemed to be resident in The
     Netherlands; and

          (ii) such holder does not have an enterprise or an interest (other
     than as a shareholder) in an enterprise that is, in whole or in part,
     carried on through a permanent establishment or a permanent representative
     in The Netherlands and to which enterprise or part of an enterprise, as the
     case may be, the common shares belong or are attributable; and

          (iii) such holder is not entitled to a share in the profits of an
     enterprise that is effectively managed in The Netherlands, other than
     through ownership of securities or through employment, to which enterprise
     the common shares belong or are attributable.

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GIFT AND INHERITANCE TAXES

     No gift or inheritance taxes will arise in The Netherlands with respect to
an acquisition of common shares by way of a gift by, or on the death of, a
holder of common shares who is neither resident nor deemed to be resident in The
Netherlands, unless:

          (i) such holder at the time of the gift has or at the time of his
     death (a) had an enterprise or an interest (other than as a shareholder) in
     an enterprise that is or was, in whole or in part, carried on through a
     permanent establishment or a permanent representative in The Netherlands
     and to which enterprise or part of an enterprise, as the case may be, the
     common shares belong or are attributable, or (b) was entitled to a share in
     the profits of an enterprise that is effectively managed in The
     Netherlands, other than through ownership of securities or through
     employment, to which enterprise the common shares belong or are
     attributable; or

          (ii) in the case of a gift of common shares by an individual who at
     the time of the gift was neither resident nor deemed to be resident in The
     Netherlands, such individual dies within 180 days after the date of gift,
     while being resident or deemed to be resident in The Netherlands.

     For purposes of Netherlands gift and inheritance tax, an individual who
holds the Netherlands nationality will be deemed to be resident in The
Netherlands if he or she has been resident in The Netherlands at any time during
the ten years preceding the date of the gift or death. For purposes of
Netherlands gift tax, an individual will be deemed to be resident in The
Netherlands if he or she has been resident in The Netherlands at any time during
the twelve months preceding the date of the gift. Applicable tax treaties may
override deemed residency.

CAPITAL TAX PAYABLE BY THE COMPANY

     Netherlands capital tax will be payable by our company at the rate of one
percent of any contribution to the capital of the company.

OTHER TAXES AND DUTIES

     No Netherlands registration tax, stamp duty or any other similar
documentary tax or duty other than court fees will be payable in The Netherlands
in respect of or in connection with the subscription, issue, placement,
allotment or delivery of the common shares.

UNITED STATES TAXATION

     The following discussion summarizes certain U.S. federal tax consequences
of the acquisition, ownership and disposition of common shares by a U.S.
Holder -- that is, a beneficial owner of common shares that is (i) a citizen or
resident of the United States, a corporation organized under the laws of the
United States or any state thereof or the District of Columbia, or any person
that will otherwise be subject to U.S. federal income tax on a net income basis
in respect of its worldwide income, and (ii) holds such common shares as a
capital asset. This summary is based upon current U.S. law and U.S. Internal
Revenue Service practice, and the U.S./NL Income Tax Treaty currently in effect
as of the date of this prospectus, all of which are subject to change at any
time, possibly with retroactive effect.

     This summary does not address the tax consequences to a U.S. Holder (i)
that is resident in The Netherlands for Netherlands tax purposes, (ii) whose
holding of common shares is effectively connected with a permanent establishment
in The Netherlands through which such U.S. Holder carries on business activities
or, in the case of an individual who performs independent personal services,
with a fixed base situated therein, or (iii) that alone or together with certain
related persons, owns directly or indirectly, 10% or more of the total combined
voting power of all classes of our

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outstanding voting stock or the total value of our outstanding stock (except as
discussed below under "Controlled Foreign Corporations"). This summary also does
not address the tax treatment of U.S. Holders that may be subject to special tax
rules, such as banks, tax-exempt entities, insurance companies, securities
dealers, investors liable for alternative minimum tax, persons that hold common
shares as part of an integrated investment (including a "straddle") comprised of
common shares and one or more other positions, and persons whose functional
currency is not the U.S. dollar. In addition, this discussion assumes that any
dividends will be payable, and sales and exchanges of common shares will be
effected, in U.S. dollars.

     YOU SHOULD CONSULT YOUR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF OUR SHARES IN YOUR PARTICULAR SITUATION,
INCLUDING THE EFFECT OF ANY U.S., STATE, LOCAL OR FOREIGN TAX LAWS.

TAXATION OF DIVIDENDS

     We do not expect to pay dividends on our common shares in the foreseeable
future. Distributions made with respect to common shares (including amounts
withheld in respect of Dutch withholding tax) will constitute dividends for U.S.
federal income tax purposes to the extent paid out of our current or accumulated
earnings and profits as determined for U.S. federal income tax purposes.
Generally, dividends we pay will not be eligible for the dividends-received
deduction allowed to corporate shareholders under the U.S. Internal Revenue
Code.

     Distributions, if any, in excess of our current and accumulated earnings
and profits will constitute a non-taxable return of capital to a U.S. Holder to
the extent of the U.S. Holder's tax basis in the common shares and will be
applied against and reduce the tax basis in the common shares. To the extent
that such distributions are in excess of a U.S. Holder's tax basis in the common
shares, the distributions will constitute capital gain.

     Subject to certain complex limitations and the discussion below, the Dutch
withholding tax imposed on dividends paid to a U.S. Holder will be treated for
U.S. tax purposes as a foreign income tax that may be claimed as a foreign tax
credit against the U.S. federal income tax liability of the U.S. Holder. In
general, we are required to remit the Dutch withholding tax imposed on dividends
paid to a U.S. Holder to the Dutch tax authorities. However, under certain
circumstances we may be allowed to reduce the amount that is required to be
remitted to the Dutch tax authorities by the lesser of (i) three percent of the
portion of the dividend paid by us that is subject to the Dutch dividend
withholding tax and (ii) three percent of the dividends and profit
distributions, before deduction of foreign withholding taxes, received by us
from qualifying foreign subsidiaries in the current calendar year (up to the
date of the distribution by us) and the two preceding calendar years, to the
extent that such dividends and profit distributions have not yet been taken into
account for purposes of establishing the above-mentioned reduction. To the
extent that dividend distributions are made on the common shares, we expect to
fund them with dividends received from our subsidiaries organized outside The
Netherlands. Any amount that is withheld by us but that is not required to be
remitted to any taxation authorities in the Netherlands likely would not qualify
as a creditable tax for U.S. foreign tax credit purposes. If we distribute
dividends, they will generally constitute foreign source "passive income" for
purposes of computing allowable foreign tax credits for U.S. tax purposes.
Foreign tax credits allowable with respect to foreign source income in certain
income categories cannot exceed the U.S. federal income tax otherwise payable
with respect to foreign source taxable income in such category. The consequences
of the separate limitation calculation will depend on the nature and sources of
each U.S. Holder's income and the deductions allocable thereto.

     We will likely be a "United States-owned foreign corporation" within the
meaning of sec. 904(g) under the Internal Revenue Code. As a result, for
purposes of the U.S. foreign tax credit limitation, all or a portion of any
dividend we pay may be treated as U.S. source dividend income, unless less

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than 10% of our earnings and profits for the taxable year consists of U.S.
source income (including dividends and royalties, if any, we receive from
subsidiaries). A "United States-owned foreign corporation" means any foreign
corporation that is 50% or more owned (by vote or value) by "United States
persons" (as defined in sec. 7701 (a)(30) under the Internal Revenue Code). The
U.S. source portion of a dividend would be determined by multiplying the amount
of such dividend by the percentage of U.S. source earnings and profits out of
our total earnings and profits for the taxable year in which the dividend is
paid. A U.S. Holder may elect under sec. 904(g)(10) of the Internal Revenue Code
to treat the portion of any dividend deemed to be U.S. source as foreign source
dividend income provided that the foreign tax credit limitation is applied
separately to such dividend income.

TAXATION OF CAPITAL GAINS

     A U.S. Holder will, upon the sale or exchange of common shares, recognize a
gain or a loss for U.S. federal income tax purposes in an amount equal to the
difference between the amount realized and the U.S. Holder's adjusted tax basis
in the common shares. Such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the common shares were held for more than one
year. For a U.S. Holder, under most circumstances, gain or loss from the sale or
exchange of common shares will be treated as U.S. source gain or loss for
foreign tax credit purposes.

CONTROLLED FOREIGN CORPORATIONS

     We will likely be a controlled foreign corporation, or CFC, which is a
foreign corporation that on any day of its taxable year is owned, directly,
indirectly or by attribution, more than 50%, by vote or by value, by "United
States Shareholders." For this purpose, a "United States Shareholder" is a
United States person (as defined in sec. 957(c) of the Internal Revenue Code)
who owns, directly, indirectly or by attribution, at least 10% of the total
combined voting power of all shares entitled to vote of the foreign corporation.

     In the event that we were determined to have been a CFC for an
uninterrupted period of at least 30 days during our taxable year, and you are
one of our United States Shareholders, you must include in income for your
taxable year in which or with which our taxable year ends, the total of (i) your
pro rata share of our subpart F income for such taxable year (subpart F income
includes in general, dividends, interest, royalties and rents (other than
royalties and rents derived in the active conduct of a business and not received
from a related person) annuities, income from some transactions with or effected
on behalf of related parties and various other types of income), (ii) your pro
rata share of our previously excluded subpart F income withdrawn from
investments in less developed countries for such year, (iii) your pro rata share
of our previously excluded subpart F income from foreign base company shipping
operations for such year, and (iv) your pro rata share of our increase in
earnings invested in U.S. property for such year. In the event that we are a
CFC, amounts distributed to United States Shareholders will not be includible in
income for U.S. tax purposes to the extent that the amounts have been previously
taken into income by such United States Shareholders. The tax basis in shares
held by a United States Shareholder will be increased by any amount included in
income, and decreased by any amounts distributed but excluded from income,
pursuant to the above rules. A United States Shareholder that sells shares in a
foreign corporation that is a CFC or that has been a CFC during the preceding
five (5) years must recharacterize gain on the sale of such shares as dividend
income to the extent of the shareholder's pro rata share of the corporation's
earnings and profits for the shareholder's holding period during which the
corporation was a CFC.

     Even if we are a CFC, if you are a United States person (as defined in sec.
957(c) of the Internal Revenue Code) who owns less than 10% of the total
combined voting power of all classes of our

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shares entitled to vote, directly, indirectly, and by attribution, you will not
be taxed on our undistributed income and do not recharacterize gain as dividend
income by virtue of the fact that we are a CFC. Distributions to such
shareholders will be taxed under the ordinary rules relating to the taxation of
corporate distributions and sales of stock (see above), except to the extent
that our income would be taxable to such shareholders under the rules for a
foreign personal holding company or a passive foreign investment company, as
each of these in defined for U.S. tax purposes (see below).

FOREIGN PERSONAL HOLDING COMPANIES

     Starboard Cruise Services or any of our non-U.S. subsidiaries generally
will be classified as a "foreign personal holding company", or FPHC, if in any
taxable year (i) a group of five or fewer individuals who are U.S. citizens or
residents own (directly, indirectly or by attribution) more than 50% (by vote or
by value) of our shares (such persons hereafter referred to as a "U.S. group")
and (ii) at least 60% (reduced to 50% in years subsequent to the first year of
FPHC status) of our gross income or the gross income of the applicable non-U.S.
subsidiary consists of certain passive income for purposes of the FPHC rules
(generally including dividends, interest, royalties, rents, and gains from
securities and certain commodities transactions).

     If we or any of our subsidiaries are or become a FPHC, each U.S. Holder of
common shares (including a U.S. corporation) who held such shares on the last
day of our or our subsidiary's taxable year, or, if earlier, the last day of its
taxable year on which a U.S. group existed with respect to us or our subsidiary,
would be required to include in gross income as a deemed dividend such U.S.
Holder's pro rata portion of our or our subsidiary's undistributed foreign
personal holding company income (generally, our taxable income or the taxable
income of our subsidiary, with certain adjustments, including a deduction for
dividends paid), up to and including the last day of the year or on which the
U.S. group existed, even if no cash dividend were paid to the U.S. Holder. In
such case, if we were a FPHC, a U.S. Holder would be entitled to increase its
tax basis in our common shares by the amount of the deemed dividend. If one of
our subsidiaries were a FPHC, it is not clear that a U.S. Holder would be
afforded similar relief.

     Upon completion of the offering, five or fewer U.S. citizens or residents
likely will be deemed to own more than 50% of our outstanding shares for
purposes of the FPHC ownership test. In addition, we expect Starboard Cruise
Services, but none of our operating subsidiaries, to satisfy the FPHC gross
income test. However, based on our current plans, we do not expect to have any
undistributed foreign personal holding company income (generally taxable income
with certain adjustments, including a deduction for dividends paid) because we
do not expect to have any taxable income (as determined for U.S. federal income
tax purposes) in the foreseeable future and thus do not currently expect that
our shareholders would be required to include any amounts in gross income as a
deemed dividend as a result of our being a FPHC.

     If we are a FPHC, a U.S. person who acquires common shares from a decedent
would be denied the step-up of tax basis of such shares to fair market value on
the decedent's date of death which otherwise would have been available and
instead would have a tax basis equal to the lower of fair market value or the
decedent's basis.

PASSIVE FOREIGN INVESTMENT COMPANIES

     We may be classified as a "passive foreign investment company", or PFIC,
for U.S. federal income tax purposes if certain tests are met. We will be a PFIC
with respect to a U.S. Holder if, for any taxable year in which the U.S. Holder
held common shares, either (i) 75% or more of our gross income for the taxable
year is passive income or (ii) the average value of our assets during the
taxable year which produce passive income or which are held for the production
of passive income is

                                       83
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at least 50% of the average value of all of our assets for such year. Unless we
were to elect to apply the asset test using the average adjusted tax bases of
our assets (as determined for purposes of computing earnings and profits) during
the taxable year, the asset test would be applied using the average fair market
value of our assets. For this purpose, passive income means, in general,
dividends, interest, royalties, rents (other than rents and royalties derived in
the active conduct of a trade or business and not received from a related
person), annuities and gains from assets which would produce such income, other
than the sale of inventory.

     For the purpose of the PFIC tests, if a foreign corporation owns, directly
or indirectly, at least 25% by value of the stock of another corporation, the
foreign corporation is treated as owning its proportionate share of the assets
of the other corporation, and as if it had received directly its proportionate
share of the income of such other corporation. The effect of this special
provision with respect to us and our direct and indirect subsidiaries is that
we, for purposes of the income and asset tests described above, will be treated
as owning directly our proportionate share (presently 100%) of the assets of our
subsidiaries and of receiving directly our proportionate share of each of those
companies' income, if any, so long as we own, directly or indirectly, at least
25% by value of the particular company's stock or shares. Income of our
subsidiaries that does not constitute "passive income" as discussed above will
be treated as other than passive income of Starboard Cruise Services for
purposes of the PFIC rules.

     Common shares held by a U.S. Holder will be treated as stock in a PFIC if,
at any time during the holding period of the U.S. Holder with respect to such
common shares, the company was a PFIC and the U.S. Holder did not elect to
recognize gain as of the last day of the last taxable year for which the company
was a PFIC.

     If we were to be classified as a PFIC, a U.S. Holder would be subject to an
interest charge on taxes deemed deferred by such U.S. Holder on receipt of
certain "excess distributions" by us to the U.S. Holder and on recognition of
gain on disposition of any common shares by the U.S. Holder (which distributions
and the portion of such gains not attributable to the current taxable year or to
years before we were a PFIC would be taxable at the maximum ordinary income
rates in effect for each year to which the amounts are allocated with the
remainder taxable as ordinary income at the current rates then applicable to the
holder). The foregoing will not apply if either (a) we were to agree to comply
with certain reporting requirements, and the U.S. Holder were to elect to be
currently taxable on such U.S. Holder's pro rata share of our earnings and
profits (excluding net capital gain) and net capital gains for each year (at
ordinary and long-term capital gains rates, respectively), ("a QEF election"),
even if no distributions were received (although such U.S. Holder may elect to
defer payment of tax on certain undistributed income until such amounts are
distributed or the holder disposes of the shares, subject to an interest charge)
or (b) the U.S. Holder made an election to mark-to-market its common shares as
of the close of each taxable year. If a mark-to-market election were made, the
U.S. Holder would include in income each year an amount equal to the excess, if
any, of the fair market value of the PFIC stock over the U.S. Holder's adjusted
basis in such stock. The U.S. Holder also would be allowed a deduction for the
excess, if any, of the adjusted basis of the PFIC stock over its fair market
value, to the extent of net mark-to-market gains previously included in income
by such U.S. Holder with respect to such stock. If a mark-to-market election
were made, the amount included in income and any gain on the sale of such stock
would be treated as ordinary income.

     If we were both a CFC and a PFIC, and you were a United States Shareholder
(as described above), you would continue to be subject to the CFC current income
inclusion rules described above, but would not also be subject to the PFIC
provisions. The PFIC provisions would still apply to U.S. Holders that were not
United States Shareholders.

                                       84
89

     We do not expect to be classified as a PFIC. However, we cannot assure you
that we will not become a PFIC in the future. If we were classified as a PFIC,
we cannot assure you that we would satisfy the reporting requirements necessary
to permit a U.S. Holder to make a QEF election.

     As noted above, some U.S. tax consequences turn on the composition of our
income and that of our subsidiaries. The tax law is not entirely clear as to the
proper classification of all relevant types of income which we and our
subsidiaries may realize. Accordingly, there can be no assurance that our
management's expectations described above will be fulfilled.

INFORMATION REPORTING AND BACKUP WITHHOLDING

     Some U.S. Holders may be subject to information reporting and backup
withholding with respect to dividends on, or the proceeds from the disposition
of, our common shares. In order to avoid backup withholding of 31% on amounts
received, U.S. Holders may be required to provide their taxpayer identification
number and comply with certain other requirements concerning information
reporting; or otherwise qualify for an exemption. Any amounts withheld will be
allowed as a credit against or refund of such holder's U.S. federal income tax
liability, provided that the required information is furnished to the IRS.

                                       85
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                                  UNDERWRITING

     Under the terms and subject to the conditions contained in an underwriting
agreement dated                , 1999 we and the selling shareholders have
agreed to sell to the underwriters named below, for whom Credit Suisse First
Boston Corporation is acting as a representative, the following respective
numbers of common shares:
NUMBER
                                                                   OF
                        UNDERWRITER                              SHARES
                        -----------                             --------
Credit Suisse First Boston Corporation......................
                                                                --------

     Total..................................................
                                                                ========
The underwriting agreement provides that the underwriters are obligated to
purchase all the common shares in the offering if any are purchased, other than
those shares covered by the over-allotment option described below. The
underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common shares may be terminated.

     We and the selling shareholders have granted to the underwriters a 30-day
option to purchase on a pro rata basis up to           additional shares from us
and an aggregate of           additional shares from the selling shareholders at
the initial public offering price less the underwriting discounts and
commissions. The option may be exercised only to cover any over-allotments of
common shares.

     The underwriters propose to offer the common shares initially at the public
offering price on the cover page of this prospectus and to selling group members
at that price less a concession of $     per share. The underwriters and selling
group members may allow a discount of $     per share on sales to other
broker/dealers. After the initial public offering, the public offering price and
concession and discount to broker/dealers may be changed by the representatives.

     The following table summarizes the compensation and estimated expenses we
and the selling shareholders will pay.
PER SHARE                           TOTAL
                                      -------------------------------   -------------------------------
                                         WITHOUT            WITH           WITHOUT            WITH
                                      OVER-ALLOTMENT   OVER-ALLOTMENT   OVER-ALLOTMENT   OVER-ALLOTMENT
                                      --------------   --------------   --------------   --------------
Underwriting discounts and
  commissions paid by us............     $                $                $                $
Expenses payable by us..............     $                $                $                $
Underwriting discounts and
  commissions paid by selling
  shareholders......................     $                $                $                $
Expenses payable by selling
  shareholders......................     $                $                $                $
The underwriters have informed us that they do not expect sales to
discretionary accounts to exceed 5% of the common shares being offered.

                                       86
91

     We, each of our officers, directors and our other shareholders have agreed
that we will not offer, sell, contract to sell, announce our intention to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the Securities
Act of 1933 relating to any additional common shares or securities convertible
into or exchangeable or exercisable for any of our common shares without the
prior written consent of Credit Suisse First Boston Corporation for a period of
180 days after the date of this prospectus, except in our case issuances
pursuant to the exercise of employee stock options outstanding on the date
hereof.

     We and the selling shareholders have agreed to indemnify the underwriters
against liabilities under the Securities Act, or contribute to payments which
the underwriters may be required to make in respect thereof.

     Our common shares have been approved for listing on The Nasdaq Stock
Market's National Market.

     In connection with the acquisitions of our predecessor, Greyhound Leisure
Services, and the Onboard Group and the acquisition of certain of the assets of
Nuance Global Ships, we entered into a five-year credit facility on September
17, 1998 with Credit Suisse First Boston, New York branch and various other
banks and financial institutions in order to finance the acquisitions. Under the
credit facility, we are required to pay Credit Suisse First Boston, New York
branch certain fees, including a commitment fee and administrative agent fee.
See "Description of Certain Indebtedness". In addition, from time to time,
certain of the underwriters have provided advisory and investment banking
services to us, for which customary compensation has been received. It is
expected that such underwriters will continue to provide such services to us in
the future.

     Prior to this offering, there has been no public market for our common
shares. The initial public offering price will be negotiated between us and the
underwriters. Among the factors to be considered in such negotiations are:

     - the history of, and prospects for, our company and the industry in which
       we compete;

     - the past and present financial performance of our company;

     - an assessment of our management;

     - the present state of our development;

     - the prospects for our future earnings;

     - the prevailing market conditions of applicable U.S. securities markets at
       the time of this offering; and

     - market valuations of publicly traded companies that we and the
       underwriters believe to be comparable to our company.

     The representatives, on behalf of the underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.

     - Over-allotment involves syndicate sales in excess of the offering size,
       which creates a syndicate short position.

     - Stabilizing transactions permit bids to purchase the underlying security
       so long as the stabilizing bids do not exceed a specified maximum.

     - Syndicate covering transactions involve purchases of the common shares in
       the open market after the distribution has been completed in order to
       cover syndicate short positions.

                                       87
92

     - Penalty bids permit the representatives to reclaim a selling concession
       from a syndicate member when the common shares originally sold by such
       syndicate member are purchased in a syndicate covering transaction to
       cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the common stock to be higher than it would otherwise be
in the absence of such transactions. These transactions may be effected on
Nasdaq or otherwise and, if commenced, may be discontinued at any time.

                          NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

     The distribution of our common shares in Canada is being made only on a
private placement basis exempt from the requirement that we and the selling
shareholders prepare and file a prospectus with the securities regulatory
authorities in each province where trades of our common shares are effected.
Accordingly, any resale of our common shares in Canada must be made in
accordance with applicable securities laws which will vary depending on the
relevant jurisdiction and which may require resales to be made in accordance
with available statutory exemptions or under a discretionary exemption granted
by the applicable Canadian securities regulatory authority. Purchasers are
advised to seek legal advice prior to any resale of our common shares.

REPRESENTATIONS OF PURCHASERS

     Each purchaser of our common shares in Canada who receives a purchase
confirmation will be deemed to represent to us, the selling shareholders and the
dealers from whom such purchase confirmation is received that:

     - such purchaser is entitled under applicable provincial securities laws to
       purchase our common shares without the benefit of a prospectus qualified
       under such securities laws;

     - where required by law, that such purchaser is purchasing as principal and
       not as agent; and

     - such purchaser has reviewed the text above under "Resale Restrictions".

RIGHTS OF ACTION (ONTARIO PURCHASERS)

     The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

     All of our directors and officers as well as the experts named herein and
the selling shareholders may be located outside of Canada and, as a result, it
may not be possible for Canadian purchasers to effect service of process within
Canada upon the issuer or such persons. All or a substantial portion of the
assets of the issuer and such persons may be located outside of Canada and, as a
result, it may not be possible to satisfy a judgment against the issuer or such
persons in Canada or to enforce a judgment obtained in Canadian courts against
such issuer or persons outside of Canada.

                                       88
93

NOTICE TO BRITISH COLUMBIA RESIDENTS

     A purchaser of our common shares to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
common shares acquired by such purchaser through this offering. Such report must
be in the form attached to British Columbia Securities Commission Blanket Order
BOR #95/17, a copy of which may be obtained from us. Only one such report must
be filed in respect of our common shares acquired on the same date and under the
same prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

     Canadian purchasers of our common shares should consult their own legal and
tax advisors with respect to the tax consequences of an investment in our common
shares in their particular circumstances and with respect to the eligibility of
our common shares for investment by the purchaser under relevant Canadian
legislation.

                                 LEGAL MATTERS

     The validity of the common shares offered hereby will be passed upon for us
by Stibbe Simont Monahan Duhot, Amsterdam, The Netherlands, as Netherlands
counsel. Other legal matters in connection with the offering made hereby will be
passed upon for us by Ropes & Gray, Boston, Massachusetts. The underwriters have
been represented by Cravath, Swaine & Moore, New York, New York. An investment
partnership composed of members of Ropes & Gray has an indirect equity interest
in Starboard Cruise Services.

                                    EXPERTS

     Ernst & Young LLP, independent certified public accountants, have audited
our consolidated financial statements and schedule at December 31, 1998 and for
the period from September 10, 1998 (date of inception) through December 31,
1998, as set forth in their reports. We have included our consolidated financial
statements and schedule in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's reports, given on their authority
as experts in accounting and auditing.

     Ernst & Young LLP, independent certified public accountants, have audited
the consolidated financial statements of Greyhound Leisure Services and
subsidiaries for the period from January 1, 1998 through September 17, 1998, as
set forth in their report. We have included the consolidated financial
statements of Greyhound Leisure Services and subsidiaries in the prospectus and
elsewhere in the registration statement in reliance on Ernst & Young LLP's
reports, given on their authority as experts in accounting and auditing.

     The consolidated financial statements of Greyhound Leisure Services and
subsidiaries at December 31, 1997 and for the two years in the period ended
December 31, 1997 included in this prospectus and the related financial
statement schedule included elsewhere in the registration statement have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein and elsewhere in the registration statement, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.

     Ernst & Young LLP, independent certified public accountants, have audited
the combined financial statements of Onboard Media, Cruise Management
International and Boxer Media for the period from January 1, 1998 through
September 17, 1998, as set forth in their report. Goldstein Schechter Price
Lucas Horwitz & Co., P.A., independent certified public accountants, have
audited the combined financial statements of Onboard Media, Cruise Management
International and Boxer

                                       89
94

Media at December 31, 1997 and for each of the two years in the period ended
December 31, 1997, as set forth in their report. We have included the combined
financial statements of Onboard Media, Cruise Management International and Boxer
Media in the prospectus and elsewhere in the registration statement in reliance
on Ernst & Young LLP's and Goldstein Schechter Price Lucas Horwitz & Co., P.A.'s
reports, given on their authority as experts in accounting and auditing.

     Ernst & Young LLP, independent certified public accountants, have audited
the financial statements of Nuance Global Ships for the period from January 1,
1998 through September 24, 1998 as set forth in their report. We have included
the financial statements of Nuance Global Ships in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.

     Ernst & Young LLP, independent certified public accountants, have examined
the pro forma adjustments to the historical financial statements of our company,
Greyhound Leisure Services and subsidiaries, Onboard Media, Cruise Management
International and Boxer Media, and Nuance Global Ships for the year ended
December 31, 1998 appearing in the unaudited pro forma condensed statement of
operations in the prospectus, as set forth in their report. We have included the
unaudited pro forma condensed statement of operations in the prospectus in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.

                             CHANGE IN ACCOUNTANTS

     Deloitte & Touche LLP were the independent accountants to our predecessor
entity, Greyhound Leisure Services, and its parent, Viad Corp. Because Deloitte
& Touche LLP had been engaged by Viad Corp., following our acquisition of
Greyhound Leisure Services from Viad Corp., Deloitte & Touche LLP no longer
served as the independent accountants to Greyhound Leisure Services. Prior to
our acquisition of Greyhound Leisure Services, we engaged Ernst & Young LLP to
provide specific accounting services to our company. On November 18, 1999, we
sent out requests for proposals for independent accounting services to several
accounting firms including Deloitte & Touche LLP and Ernst & Young LLP. Each of
those firms, along with other accounting firms, submitted proposals to us. In
December, 1998, we engaged Ernst & Young LLP as independent accountants to our
company including our subsidiaries. The decision to engage Ernst & Young LLP was
approved by our Board of Managers.

     We believe, and have been advised by Deloitte & Touche LLP that it concurs
in such belief, that, for the period from January 1, 1996 through September 17,
1998, Greyhound Leisure Services and Deloitte & Touche LLP did not have any
disagreement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of Deloitte & Touche LLP, would have caused it to
make reference in connection with its report on Greyhound Leisure Services'
consolidated financial statements to the subject matter of the disagreement. The
reports of Deloitte & Touche LLP on Greyhound Leisure Services' consolidated
financial statements for each of the two fiscal years in the period ended
December 31, 1997 did not contain an adverse opinion or a disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles. During those years and for the period from January 1, 1998 through
September 17, 1998, there were no "reportable events" within the meaning of Item
302(a)(1)(v) of Regulation S-K promulgated under the Securities Act.

                      WHERE YOU CAN FIND MORE INFORMATION

     We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including exhibits and schedules thereto) under the
Securities Act with respect to the common shares to be sold in this offering.
This prospectus, which constitutes a part of the registration

                                       90
95

statement, does not contain all of the information set forth in the registration
statement or the exhibits and schedules which are part of the registration
statement. For further information with respect to Starboard Cruise Services and
the common shares, reference is made to the registration statement and the
exhibits and schedules thereto.

     You may read and copy all or any portion of the registration statement or
any reports, statements or other information in Starboard Cruise Services' files
in the Commission's public reference room at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C., 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can
request copies of these documents upon payment of a duplicating fee, by writing
to the Commission. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Starboard Cruise
Services' Commission filings, including the registration statement, will also be
available to you on the Commission's Internet site (http://www.sec.gov).

     We intend to furnish our shareholders with annual reports containing
financial statements audited by our independent auditors and to make available
to our shareholders quarterly reports containing unaudited financial data for
the first three quarters of each fiscal year.

     We will also comply with our obligations under the law of The Netherlands
to prepare annual financial statements complying with Dutch corporate law and
file our financial statements at the Commercial Register of The Chamber of
Commerce and Industry in Amsterdam, The Netherlands.

            SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

     We are a limited liability company (naamloze vennootschap or N.V.)
organized under the laws of The Netherlands. All or a substantial portion of our
assets are located outside the United States. As a result, it may not be
possible for investors to enforce against us in United States courts judgments
predicated upon the civil liability provisions of the federal securities laws of
the United States. We have been advised by our Netherlands counsel, Stibbe
Simont Monahan Duhot, that the United States and The Netherlands do not
currently have a treaty providing for reciprocal recognition and enforcement of
judgments (other than arbitration awards) in civil and commercial matters. In
the opinion of such counsel, a final judgment for the payment of money rendered
by any federal or state court in the United States based on civil liability,
whether or not predicated solely upon the federal securities laws of the United
States, would not be directly enforceable in The Netherlands. However, if the
party in whose favor such final judgment is rendered brings a new suit in a
competent court in The Netherlands, such party may submit to a Netherlands court
the final judgment that has been rendered in the United States. If a Netherlands
court finds that the jurisdiction of the federal or state court in the United
States has been based on the grounds that are internationally acceptable and
that proper legal procedures and elementary principles of fair trial have been
observed, the court in The Netherlands would, under current practice, give
binding effect to the final judgment that has been rendered in a defended action
in the United States unless such judgment contravenes The Netherlands' public
policy.

                                       91
96

                         INDEX TO FINANCIAL STATEMENTS
Starboard Cruise Services N.V.
Unaudited Consolidated Balance Sheet at June 30, 1999.......  F-3
Unaudited Consolidated Statements of Operations for the six
  months ended June 30, 1998 and 1999.......................  F-4
Unaudited Consolidated Statement of Shareholders' Equity for
  the six months ended June 30, 1999........................  F-5
Unaudited Consolidated Statements of Cash Flows for the six
  months ended June 30, 1998 and 1999.......................  F-6
Notes to Unaudited Consolidated Financial Statements........  F-7
Report of Ernst & Young LLP, Independent Certified Public
  Accountants...............................................  F-9
Consolidated Balance Sheet as of December 31, 1998..........  F-10
Consolidated Statements of Operations for the period from
  September 10, 1998 (date of incorporation) through
  December 31, 1998.........................................  F-11
Consolidated Statements of Shareholders' Equity for the
  period from September 10, 1998 (date of incorporation)
  through December 31, 1998.................................  F-12
Consolidated Statements of Cash Flows for the period from
  September 10, 1998 (date of incorporation) through
  December 31, 1998.........................................  F-13
Notes to Consolidated Financial Statements..................  F-15
Greyhound Leisure Services, Inc. and Subsidiaries
Report of Ernst & Young LLP, Independent Certified Public
  Accountants...............................................  F-27
Report of Deloitte & Touche LLP, Independent Auditors.......  F-28
Consolidated Balance Sheet as of December 31, 1997..........  F-29
Consolidated Statements of Income for the years ended
  December 31, 1996 and 1997 and for the period from January
  1, 1998 through September 17, 1998........................  F-30
Consolidated Statements of Stockholder's Equity for the
  years ended December 31, 1996 and 1997 and for the period
  from January 1, 1998 through September 17, 1998...........  F-31
Consolidated Statements of Cash Flows for the years ended
  December 31, 1996 and 1997 and for the period from January
  1, 1998 through September 17, 1998........................  F-32
Notes to Consolidated Financial Statements..................  F-33
F-1
97
On Board Media, Inc., Cruise Management International, Inc.
  and Boxer Media, Inc.
Report of Ernst & Young LLP, Independent Certified Public
  Accountants...............................................  F-41
Combined Statement of Income for the period from January 1,
  1998 through September 17, 1998...........................  F-42
Combined Statement of Cash Flows for the period from January
  1, 1998 through September 17, 1998........................  F-43
Notes to Combined Financial Statements......................  F-44
Report of Goldstein Schechter Price Lucas Horwitz & Co.,
  P.A., Independent Certified Public Accountants............  F-48
Combined Balance Sheet as of December 31, 1997..............  F-49
Combined Statements of Income for the years ended December
  31, 1996 and 1997.........................................  F-50
Combined Statements of Changes in Stockholders' Equity for
  the years ended December 31, 1996 and 1997................  F-51
Combined Statements of Cash Flows for the years ended
  December 31, 1996 and 1997................................  F-52
Notes to Combined Financial Statements......................  F-54
Nuance Global Ships, Inc.
Report of Ernst & Young LLP, Independent Certified Public
  Accountants...............................................  F-60
Consolidated Statement of Operations and Accumulated Deficit
  for the period from December 26, 1997 through September
  24, 1998..................................................  F-61
Consolidated Statement of Cash Flows for the period from
  December 26, 1997 through September 24, 1998..............  F-62
Notes to Financial Statements...............................  F-63
F-2
98

                         STARBOARD CRUISE SERVICES N.V.

                           CONSOLIDATED BALANCE SHEET
                                  (UNAUDITED)
JUNE 30,
                                                                    1999
                                                                ------------
ASSETS
Current assets:
  Cash and cash equivalents.................................    $    360,562
  Trade accounts receivable, net of allowance for doubtful
     accounts of $557,770...................................      13,217,109
  Inventories, net..........................................      63,981,155
Prepaid expenses and other current assets...................       4,709,862
                                                                ------------
Total current assets........................................      82,268,688
Property and equipment, net.................................       7,394,971
Investment in unconsolidated subsidiary.....................       1,143,780
Other assets................................................         246,892
Notes receivable from minority interest holders.............       1,416,177
Intangible assets, net......................................      98,764,782
                                                                ------------
Total assets................................................    $194,019,974
                                                                ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................    $ 13,532,909
  Accrued expenses..........................................      20,491,838
  Current portion of long-term debt.........................      10,714,284
  Deferred revenue..........................................       1,416,177
  Due to affiliates.........................................         100,002
  Deferred income taxes.....................................         895,314
                                                                ------------
Total current liabilities...................................      47,150,524
Long term-debt, net of current portion......................      99,874,168
Minority interest...........................................       4,326,432
Commitments and contingencies
Shareholders' equity:
  Common stock, EUR .01 par value; 50,000,000 authorized
     shares; 24,000,000 issued and outstanding shares.......          49,920
  Additional paid-in capital................................      46,120,070
  Accumulated deficit.......................................      (3,501,140)
                                                                ------------
Total shareholders' equity..................................      42,668,850
                                                                ------------
Total liabilities and shareholders' equity..................    $194,019,974
                                                                ============
See accompanying notes.

                                       F-3
99

                         STARBOARD CRUISE SERVICES N.V.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
                                                              -----------------------------
                                                                  1998             1999
                                                              -------------    ------------
                                                              (PREDECESSOR)
Net sales...................................................   $94,397,639     $138,258,164
Cost of sales...............................................    37,770,106       56,887,519
                                                               -----------     ------------
Gross profit................................................    56,627,533       81,370,645
Selling, general and administrative expenses................    51,111,548       75,856,706
Amortization of intangibles.................................            --        2,750,499
                                                               -----------     ------------
Total expenses..............................................    51,111,548       78,607,205
                                                               -----------     ------------
Income from operations......................................     5,515,985        2,763,440
Other (income) expense:
  Interest expense..........................................       421,454        6,047,679
  Interest income...........................................      (128,282)        (228,582)
                                                               -----------     ------------
Total other expense.........................................       293,172        5,819,097
                                                               -----------     ------------
Income (loss) before provision for income taxes and minority
  interest..................................................     5,222,813       (3,055,657)
Provision for income taxes..................................     1,437,255          186,151
Minority interest...........................................       513,645           71,451
                                                               -----------     ------------
Net income (loss)...........................................   $ 3,271,913       (3,313,259)
                                                               ===========     ============
Basic and diluted net (loss) per share......................                   $      (0.14)
                                                                               ============
Basic and diluted weighted average shares...................                     24,000,000
                                                                               ============
See accompanying notes.

                                       F-4
100

                         STARBOARD CRUISE SERVICES N.V.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
COMMON STOCK       ADDITIONAL                      TOTAL
                              --------------------     PAID-IN      RETAINED     SHAREHOLDERS'
                                SHARES     AMOUNT      CAPITAL       DEFICIT        EQUITY
                              ----------   -------   -----------   -----------   -------------
Balance at December 31,
  1998......................  24,000,000   $49,920   $46,120,070   $  (187,881)   $45,982,109
Net loss (unaudited)........          --        --            --    (3,313,259)    (3,313,259)
                              ----------   -------   -----------   -----------    -----------
Balance at June 30, 1999
  (unaudited)...............  24,000,000   $49,920   $46,120,070   $(3,501,140)   $42,668,850
                              ==========   =======   ===========   ===========    ===========
See accompanying notes.

                                       F-5
101

                         STARBOARD CRUISE SERVICES N.V.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
                                                              -----------------------------
                                                                  1998             1999
                                                              -------------    ------------
                                                              (PREDECESSOR)
OPERATING ACTIVITIES
Net income (loss)...........................................   $ 3,271,913     $ (3,313,259)
Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
  Depreciation..............................................     1,735,395        1,978,514
  Amortization of intangible assets.........................            --        2,750,499
  Provision for shrinkage reserve...........................      (120,399)         427,075
  Deferred income taxes.....................................    (1,005,106)         442,348
  Provision for bad debts...................................           488          (68,591)
  Changes in operating assets and liabilities, net of assets
     acquired and liabilities assumed:
  Accounts receivable.......................................      (776,054)       1,642,631
  Inventory.................................................     2,337,878      (12,386,825)
  Prepaid expenses and other current assets.................      (345,150)         829,738
  Notes receivables from minority interest..................         1,335          (16,670)
  Investment in unconsolidated subsidiary...................        (9,021)        (127,304)
  Other assets..............................................            --         (246,892)
  Intangible assets.........................................            --         (453,958)
  Due to affiliates.........................................       669,827          (16,665)
  Accounts payable..........................................    (4,016,460)       4,695,298
  Accrued expenses..........................................       364,135        3,330,444
  Deferred revenue..........................................       441,579         (257,465)
  Minority interest.........................................       513,639           71,447
                                                               -----------     ------------
Net cash provided by (used in) operating activities.........     3,063,999         (719,635)
INVESTING ACTIVITIES
Purchases of property and equipment.........................      (499,672)        (572,922)
Disposals of property and equipment.........................       129,845            1,033
Payments to minority shareholders...........................      (256,229)        (172,105)
                                                               -----------     ------------
Net cash used in investing activities.......................      (626,056)        (743,994)
FINANCING ACTIVITIES
Repayments on the line of credit............................            --       (2,300,000)
Dividends paid to Viad......................................    (2,700,000)              --
                                                               -----------     ------------
Net cash used in financing activities.......................    (2,700,000)      (2,300,000)
Net decrease in cash and cash equivalents...................      (262,057)    $ (3,763,629)
Cash and cash equivalents, beginning of period..............       262,057        4,124,191
                                                               -----------     ------------
Cash and cash equivalents, end of period....................   $        --     $    360,562
                                                               ===========     ============
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid during the period.............................   $   508,149     $  3,028,125
                                                               ===========     ============
Cash paid to Viad for income taxes..........................     1,369,797               --
                                                               ===========     ============
Income taxes paid during the period.........................   $        --     $    345,000
                                                               ===========     ============
See accompanying notes.

                                       F-6
102

                         STARBOARD CRUISE SERVICES N.V.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1. BASIS OF PRESENTATION

     The accompanying unaudited consolidated condensed financial statements of
Starboard Cruise Services N.V. and subsidiaries (formerly Miami Cruiseline
Services Holdings I B.V.) (the "Company") for the periods indicated herein have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission and in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the six months
ended June 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. The consolidated financial
statements include the accounts of the Company and all majority owned
subsidiaries over which the Company has control. All significant intercompany
accounts and transactions have been eliminated. The interim financial statements
for the six months ended June 30, 1998 are the financial statements of the
Company's predecessor, Greyhound Leisure Services, Inc. For further information,
refer to the Company's 1998 consolidated financial statements and notes thereto.

     The Company experiences seasonality in its quarterly results of operations
as a result of fluctuations in the demand for cruises. Historically, the demand
has been greater during the summer months.

2. ACQUISITIONS

     On September 17, 1998, the Company acquired 100% of the issued and
outstanding shares of the capital stock of GLSI for a purchase price of
approximately $96.6 million. The purchase price, which is subject to net asset
balance adjustments, consisted of approximately $81.5 million in cash, a $10.0
million Junior Subordinated Note due May 15, 2009 and approximately $5.1 million
of acquisition costs. The GLSI acquisition was accounted for using the purchase
method of accounting and, accordingly, the purchase price was allocated to the
assets acquired and the liabilities assumed based on estimates of their
underlying fair values. The fair value of net assets acquired, including
approximately $5.4 million allocated to acquired cruise line contracts, was
approximately $40.7 million. The excess purchase price over the fair value of
the assets acquired of approximately $55.9 million has been classified as
goodwill and is being amortized over 25 years. The allocation of the purchase
price is preliminary pending finalization of estimates. The GLSI acquisition was
primarily financed through a $63.0 million term loan, a $2.5 million drawdown on
a $35.0 million revolver loan, and $25.2 million of senior subordinated notes
(see Note 3).

     On September 17, 1998, the Company acquired 100% of the issued and
outstanding shares of the capital stock of On-Board Media Group for a purchase
price of approximately $47.0 million. The purchase price consisted of
approximately $33.3 million in cash, which includes approximately $3.3 million
of assumed indebtedness paid by the Company at closing, 5,912,500 shares of the
Company's common stock valued at approximately $11.4 million and approximately
$2.3 million of acquisition costs. The On-Board Media Group acquisition was
accounted for using the purchase method of accounting and, accordingly, the
purchase price was allocated to the assets acquired and the liabilities assumed
based on estimates of their underlying fair values. The fair value of net assets
acquired was approximately $5.7 million. The excess purchase price over the fair
value of the assets acquired of

                                       F-7
103
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2.  ACQUISITIONS (CONTINUED)
approximately $41.3 million has been classified as goodwill and is being
amortized over 25 years. The allocation of the purchase price is preliminary
pending finalization of estimates.

     On December 15, 1998, Starboard entered into an Asset Purchase Agreement
with Nuance Global Traders Ltd. for the purchase of certain of the assets and
assumption of certain liabilities of Nuance Global Traders, an operator of duty
free stores on cruise ships, for a purchase price of approximately $17.4 million
in cash (the Nuance acquisition). The Nuance acquisition was accounted for using
the purchase method of accounting and, accordingly, the purchase price was
allocated to the assets acquired and liabilities assumed based on estimates of
their underlying fair value. The fair value of net assets acquired was
approximately $17.4 million. The allocation of the purchase price is preliminary
pending finalization of estimates.

3. LONG-TERM DEBT

     Long-term debt consists of the following:
JUNE 30,
                                                                  1999
                                                              ------------
Term Note bearing interest at a variable rate (8.00% at June
  30, 1999). Interest payable quarterly.....................  $ 67,500,000
$35.0 million revolving credit facility bearing interest at
  LIBOR plus 2.75% (8.57% at June 30, 1999); expiring
  September 17, 2003. Interest payable semi-annually........     7,900,000
Senior subordinated notes bearing interest at 15%; due
  September 17, 2006. Interest payable semi-annually........    25,188,452
Junior subordinated notes bearing interest at 12%; due May
  15, 2009. Interest payable quarterly......................    10,000,000
                                                              ------------
Total.......................................................   110,588,452
Less current portion........................................   (10,714,284)
                                                              ------------
                                                              $ 99,874,168
                                                              ============
F-8
104

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Starboard Cruise Services N.V.
and Subsidiaries

     We have audited the accompanying consolidated balance sheet of Starboard
Cruise Services N.V. and subsidiaries (formerly Miami Cruiseline Services
Holdings I B.V.) as of December 31, 1998 and the related consolidated statements
of operations, shareholders' equity and cash flows for the period from September
10, 1998 (date of incorporation) through December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Starboard
Cruise Services N.V. and subsidiaries at December 31, 1998, and the consolidated
results of their operations and their cash flows for the period from September
10, 1998 (date of incorporation) through December 31, 1998, in conformity with
generally accepted accounting principles.

Miami, Florida
March 22, 1999, except as to Note 14, as to
which the date is September   , 1999

     The foregoing report is in the form that will be signed upon completion of
the restatement of capital accounts and the name change described in Note 14 to
the consolidated financial statements.

                                          /s/ ERNST & YOUNG LLP

Miami, Florida
August 18, 1999

                                       F-9
105

                         STARBOARD CRUISE SERVICES N.V.

                           CONSOLIDATED BALANCE SHEET
DECEMBER 31,
                                                                  1998
                                                              ------------
ASSETS
Current assets:
  Cash and cash equivalents.................................  $  4,124,191
  Trade accounts receivable, net of allowance for doubtful
     accounts of $626,361...................................    14,791,149
  Inventories, net..........................................    52,021,405
  Prepaid expenses and other current assets.................     5,539,600
                                                              ------------
Total current assets........................................    76,476,345
Property and equipment, net.................................     8,801,596
Investment in unconsolidated subsidiary.....................     1,016,476
Notes receivable from minority interest holders.............     4,184,191
Intangible assets, net......................................   101,061,323
                                                              ------------
Total assets................................................  $191,539,931
                                                              ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  8,837,611
  Accrued expenses..........................................    17,161,394
  Current portion of long-term debt.........................     5,357,142
  Deferred revenue..........................................     1,673,642
  Due to affiliates.........................................       116,667
  Deferred income taxes.....................................       452,966
                                                              ------------
Total current liabilities...................................    33,599,422
Long term-debt, net of current portion......................   107,531,310
Minority interest...........................................     4,427,090
Commitments and contingencies
Shareholders' equity:
  Common shares EUR $.01 par value; 120,000,000 authorized
     shares; 24,000,000 issued and outstanding shares.......       240,000
  Additional paid-in capital................................    45,929,990
  Accumulated deficit.......................................      (187,881)
                                                              ------------
Total shareholders' equity..................................    45,982,109
                                                              ------------
Total liabilities and shareholders' equity..................  $191,539,931
                                                              ============
See accompanying notes.

                                      F-10
106

                         STARBOARD CRUISE SERVICES N.V.

                      CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM
                                                                SEPTEMBER 10,
                                                                1998 (DATE OF
                                                                INCORPORATION)
                                                                   THROUGH
                                                                 DECEMBER 31,
                                                                     1998
                                                                --------------
Net sales...................................................     $71,061,304
Cost of sales...............................................      30,139,145
                                                                 -----------
Gross profit................................................      40,922,159
Selling, general and administrative expenses................      36,372,811
Amortization of intangibles.................................       1,525,266
                                                                 -----------
Total expenses..............................................      37,898,077
                                                                 -----------
Income from operations......................................       3,024,082
Other (income) expense:
  Interest expense..........................................       3,156,404
  Interest income...........................................        (485,462)
                                                                 -----------
Total other expense.........................................       2,670,942
                                                                 -----------
Income before provision for income taxes and minority
  interest..................................................         353,140
Provision for income taxes..................................         359,195
Minority interest...........................................         181,826
                                                                 -----------
Net loss....................................................     $  (187,881)
                                                                 ===========
Basic and diluted net loss per share........................     $     (0.01)
                                                                 ===========
Basic and diluted weighted average shares...................      23,250,000
                                                                 ===========
See accompanying notes.

                                      F-11
107

                         STARBOARD CRUISE SERVICES N.V.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
COMMON STOCK        ADDITIONAL                      TOTAL
                                      ---------------------     PAID-IN     ACCUMULATED   SHAREHOLDERS'
                                        SHARES      AMOUNT      CAPITAL       DEFICIT        EQUITY
                                      ----------   --------   -----------   -----------   -------------
Initial capitalization..............  10,000,000   $100,000   $   (79,200)   $      --     $   (79,200)
  Issuance of common stock..........   8,087,500     80,875    34,689,315           --      34,770,190
  Common Stock issued in connection
     with the Onboard Media Group
     acquisition....................   5,912,500     39,125    11,319,875           --      11,379,000
  Net loss..........................          --         --            --     (187,881)       (187,881)
                                      ----------   --------   -----------    ---------     -----------
  Balance at December 31, 1998......  24,000,000   $240,000   $45,929,990    $(187,881)    $45,982,109
                                      ==========   ========   ===========    =========     ===========
See accompanying notes.

                                      F-12
108

                         STARBOARD CRUISE SERVICES N.V.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM
                                                                SEPTEMBER 10, 1998
                                                                     (DATE OF
                                                                  INCORPORATION)
                                                                     THROUGH
                                                                DECEMBER 31, 1998
                                                                ------------------
OPERATING ACTIVITIES
Net loss....................................................      $    (187,881)
Adjustments to reconcile net loss to net cash provided by
  operating activities:
  Depreciation..............................................          1,055,826
  Amortization of intangible assets.........................          1,525,266
  Provision for inventory obsolescence and shrinkage
     reserve................................................            (61,342)
  Deferred income taxes.....................................            452,966
  Provision for bad debts...................................            108,363
  Changes in operating assets and liabilities, net of assets
     acquired and liabilities assumed:
     Accounts receivable....................................         (1,992,402)
     Inventory..............................................          1,107,784
     Prepaid expenses and other current assets..............         (1,566,882)
     Notes receivables from minority interest holders.......           (420,391)
     Investment in unconsolidated subsidiary................            (21,000)
     Accounts payable.......................................             93,634
     Accrued expenses.......................................          8,958,320
     Deferred revenue.......................................         (2,890,842)
     Minority interest......................................            181,826
                                                                  -------------
Net cash provided by operating activities...................          6,343,245
INVESTING ACTIVITIES
Purchases of property and equipment.........................           (141,334)
Disposals of property and equipment.........................              3,997
Acquisition of GLSI, net of cash acquired...................        (96,604,851)
Acquisition of Onboard Media Group, net of cash acquired....        (35,635,181)
Proceeds from redemptions of marketable securities..........             63,184
Dissolution of minority interest in European Cruise Shops...         (3,017,562)
Acquisition of Nuance Global Traders........................        (17,396,307)
                                                                  -------------
Net cash used in investing activities.......................       (152,728,054)
FINANCING ACTIVITIES
Borrowings under line of credit.............................        112,888,452
Repayments on the line of credit............................         (1,000,100)
Payments to minority shareholders...........................            (97,445)
Due to affiliates...........................................          3,927,103
Proceeds from issuance of common stock......................         34,790,990
                                                                  -------------
Net cash provided by financing activities...................        150,509,000
Net increase in cash and cash equivalents...................          4,124,191
Cash and cash equivalents, beginning of period..............                 --
                                                                  -------------
Cash and cash equivalents, end of period....................      $   4,124,191
                                                                  =============
F-13
109
                         STARBOARD CRUISE SERVICES N.V.

              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
PERIOD FROM
                                                                SEPTEMBER 10, 1998
                                                                     (DATE OF
                                                                  INCORPORATION)
                                                                     THROUGH
                                                                DECEMBER 31, 1998
                                                                ------------------
SUPPLEMENTAL NONCASH DISCLOSURE OF INVESTING ACTIVITY
Common stock issued in connection with the Onboard Media
  Group acquisition.........................................      $  11,379,000
                                                                  =============
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid during the period.............................      $     390,396
                                                                  =============
Income taxes paid during the period.........................      $      75,000
                                                                  =============
See accompanying notes.

                                      F-14
110

                         STARBOARD CRUISE SERVICES N.V.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

1. ORGANIZATION AND NATURE OF BUSINESS

  Organization

     Starboard Cruise Services N.V., (formerly Miami Cruiseline Services
Holdings I B.V.) a Netherlands corporation, was incorporated on September 10,
1998 for the purpose of effecting certain acquisitions through a series of
intermediary holding companies, Miami Cruiseline Services Holdings II B.V.
(Holdings II), Miami Cruiseline Services Holdings III B.V.(Holdings III) and
Cruiseline Holdings Co. (CLH).

     On September 17, 1998, pursuant to a Share Purchase Agreement dated as of
July 31, 1998, among VIAD Corp. and CLH, CLH acquired all of the outstanding
shares of Greyhound Leisure Services, Inc. a wholly owned subsidiary of VIAD
Corp. (the GLSI acquisition) (see Note 3).

     On September 17, 1998, pursuant to the Stock Subscription and Exchange
Agreement dated as of August 27, 1998, among Holdings I and Phillip Levine,
Jerry Chafetz and several Trusts, Holdings I acquired all of the outstanding
shares of Onboard Media, Cruise Management International and Boxer Media, Inc.
(collectively, the Onboard Media Group) (the Onboard Media Group acquisition)
(see Note 3).

  Nature of Business

     GLSI operates duty free stores on cruise ships and has several duty free
boutiques and stores at Miami International Airport and Ft. Lauderdale/Hollywood
International Airport. At December 31, 1998, GLSI operated 230 retail stores on
80 cruise ships, 19 retail stores at Miami International Airport and two retail
stores in Ft. Lauderdale/Hollywood International Airport. Onboard Media Group
sells advertising in books, magazines and videos which are published for hotels
and cruise lines primarily in the United States, Mexico and the Caribbean.
Onboard Media Group also sells promotional advertising which is delivered to
cruise passengers through a live on-board promotion programs (port lecturing).
In addition, Onboard Media Group also administers art auctions aboard various
cruise ships.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

     The consolidated financial statements include the accounts of Starboard
Cruise Services N.V., its wholly owned subsidiaries (Holdings II, Holdings III,
CLH, GLSI, Onboard Media Group, and Starboard Holdings Ltd. (Starboard
Holdings)), and a 66% owned subsidiary (collectively herein, the Company). All
significant intercompany accounts and transactions have been eliminated in
consolidation.

  Cash and Cash Equivalents

     The Company defines as cash equivalents all highly liquid investments with
a maturity of three months or less at the time of purchase.

  Accounts Receivable

     The Company's accounts receivable are due primarily from cruise line
companies. Approximately 18% of the accounts receivable balance at December 31,
1998 is due from one customer. Settlement

                                      F-15
111
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of amounts due from the cruise line companies occurs upon completion of each
voyage. The Company's policy is not to require collateral on accounts
receivable. Credit losses are provided for in the financial statements and have
been within management's expectations.

  Inventories

     Inventories, which consist primarily of duty-free merchandise, are stated
at the lower of cost or market determined on a first-in, first-out basis.

  Property and Equipment

     Property and equipment is stated at cost. Depreciation is computed by use
of the straight-line method over the estimated useful life of vehicles,
furniture, fixtures and equipment, which ranges from 2 to 7 years. Leasehold
costs and improvements are amortized over the lesser of their estimated useful
lives or the remaining lease terms.

  Intangible Assets

     Intangible assets consist of the following:
AMORTIZATION
                                                          PERIOD       DECEMBER 31,
                                                         (YEARS)           1998
                                                       ------------    ------------
Contracts............................................    3-5           $  5,362,000
Goodwill.............................................    25              97,224,589
                                                                       ------------
                                                                        102,586,589
Accumulated amortization.............................                    (1,525,266)
                                                                       ------------
                                                                       $101,061,323
                                                                       ============
Goodwill represents the excess of purchase price over the fair value of net
assets acquired. Goodwill, net of accumulated amortization, totaled $96,090,302
at December 31, 1998. Other identifiable intangibles, comprised of cruise line
contracts, are being amortized over a period of three to five years. These
intangibles, net of accumulated amortization, totaled $4,971,021 at December 31,
1998.

     The carrying value of goodwill is reviewed by the Company's management if
the facts and circumstances suggest that it may be impaired. If this review
indicates that these costs will not be recoverable, as determined based on the
expected undiscounted cash flows of the entity to which the goodwill is
associated over the remaining amortization period, the carrying value of
goodwill would be reduced by the estimated shortfall of cash flows.

  Deferred Revenue and Revenue Recognition

     Deferred revenue reflects advertising revenue which has been sold in
advance of the publication of the related books, magazines and videos. Revenue
is recognized upon publication of the related books, magazines and videos.

     Revenue from retail product sales is recorded upon customer purchase.

                                      F-16
112
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Income Taxes

     The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred
income tax assets and liabilities are determined based upon differences between
the financial statement and income tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred income tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
of the tax assets will not be realized.

  Accounting for Stock-Based Compensation

     SFAS No. 123, Accounting for Stock-Based Compensation, became effective
January 1, 1996. The new standard defines a fair value method of accounting for
issuance of stock options and other equity instruments. Under the fair value
method, compensation cost is measured at the grant date based on the fair value
of the award and is recognized over the service period, which is usually the
vesting period. Pursuant to SFAS No. 123, companies are encouraged, but not
required to adopt the fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees (APB Opinion 25), but are required to disclose in a
note to the consolidated financial statements pro forma net income as if the
Company had applied the new method of accounting.

     The Company applies APB Opinion 25 and Related Interpretations in
accounting for its employee stock-based transactions and has complied with the
disclosure requirements of SFAS No. 123.

  Comprehensive Income

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
Reporting Comprehensive Income. SFAS No. 130 establishes standards for reporting
and display of comprehensive income and its components in financial statements.
The adoption of SFAS No. 130 had no impact on the Company's net loss or
stockholders' equity. There are no other components of comprehensive loss other
than the Company's net loss for the period from September 10, 1998 (date of
incorporation) through December 31, 1998 (period ended December 31, 1998).

  Use of Estimates

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

  Loss Per Share

     Basic and diluted loss per share (see Note 13) was computed by dividing net
loss by the weighted average number of shares of common stock. Common stock
equivalents were antidilutive and therefore were not included in the computation
of weighted average shares used in computing diluted loss per share.

                                      F-17
113
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. ACQUISITIONS

     On September 17, 1998, the Company acquired 100% of the issued and
outstanding shares of the capital stock of GLSI for a purchase price of
approximately $96.6 million. The purchase price, which is subject to net asset
balance adjustments, consisted of approximately $81.5 million in cash, a $10.0
million Junior Subordinated Note due May 15, 2009 and approximately $5.1 million
of acquisition costs. The GLSI acquisition was accounted for using the purchase
method of accounting and, accordingly, the purchase price was allocated to the
assets acquired and the liabilities assumed based on estimates of their
underlying fair values. The fair value of net assets acquired, including
approximately $5.4 million allocated to acquired cruise line contracts, was
approximately $40.7 million. The excess purchase price over the fair value of
the assets acquired of approximately $55.9 million has been classified as
goodwill and is being amortized over 25 years. The allocation of the purchase
price is preliminary pending finalization of estimates. The GLSI acquisition was
primarily financed through a $63.0 million term loan, a $2.5 million drawdown on
a $35.0 million revolver loan, $10 million Note due to Viad, and $25.0 million
of senior subordinated notes (see Note 6).

     On September 17, 1998, the Company acquired 100% of the issued and
outstanding shares of the capital stock of Onboard Media Group for a purchase
price of approximately $47.0 million. The purchase price consisted of
approximately $33.3 million in cash, which includes approximately $3.3 million
of assumed indebtedness paid by the Company at closing, 5,912,500 shares of the
Company's common stock valued at approximately $11.4 million and approximately
$2.3 million of acquisition costs. The Onboard Media Group acquisition was
accounted for using the purchase method of accounting and, accordingly, the
purchase price was allocated to the assets acquired and the liabilities assumed
based on estimates of their underlying fair values. The fair value of net assets
acquired was approximately $5.7 million. The excess purchase price over the fair
value of the assets acquired of approximately $41.3 million has been classified
as goodwill and is being amortized over 25 years. The allocation of the purchase
price is preliminary pending finalization of estimates.

     On December 15, 1998, Starboard Holdings entered into an Asset Purchase
Agreement with Nuance Global Traders Ltd. for the purchase of certain of the
assets and assumption of certain liabilities of Nuance Global Traders Ltd., an
operator of duty free stores on cruise ships, for a purchase price of
approximately $17.4 million in cash (the Nuance acquisition). The Nuance
acquisition was accounted for using the purchase method of accounting and,
accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based on estimates of their underlying fair values. The fair
value of net assets acquired was approximately $17.4 million. The allocation of
the purchase price is preliminary pending finalization of estimates.

                                      F-18
114
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. ACQUISITIONS (CONTINUED)
     Summary unaudited pro forma results of operations for the year ended
December 31, 1998 for the acquisitions discussed above, as if such acquisitions
had occurred on January 1, 1998 is as follows (dollars in thousands, except per
share data):
YEAR ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
Net sales...................................................   $  281,151
Loss before income taxes and minority interest..............       (2,368)
Net loss....................................................       (2,294)
Basic and diluted net loss per share........................   $    (0.10)
Basic and diluted weighted average shares...................   23,250,000
These unaudited pro forma results of operations for the year ended December
31, 1998 do not purport to represent what the Company's actual results of
operations would have been if the acquisitions had occurred on January 1, 1998
and should not serve as a forecast of the Company's operating results for future
periods. The pro forma adjustments are based solely on the available information
and certain assumptions that management believes are reasonable. Management
believes the full impact of potential cost savings has not been reflected in the
pro forma results presented above, although there can be no assurances such cost
savings will be achieved. Subsequent adjustments may be necessary upon final
determination of the allocation of the purchase prices.

4. NOTES RECEIVABLE FROM MINORITY INTEREST HOLDERS

     The notes receivable from minority interest holders mature on November 30,
2000 and accrue interest, payable quarterly, at the prime rate (7.75% at
December 31, 1998). The loans are secured by the minority interest holders'
equity interest in a subsidiary.

5. PROPERTY AND EQUIPMENT

     The following is a summary of property and equipment:
ESTIMATED
                                                        USEFUL LIVES    DECEMBER 31,
                                                         (IN YEARS)         1998
                                                        ------------    ------------
Vehicles..............................................        5         $    36,768
Furniture, fixtures, and equipment....................      2-7           5,525,691
Leasehold improvements................................      2-7           4,294,963
                                                                        -----------
                                                                          9,857,422
Accumulated depreciation..............................                   (1,055,826)
                                                                        -----------
                                                                        $ 8,801,596
                                                                        ===========
F-19
115
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT

     Long-term debt consists of the following:
DECEMBER 31,
                                                                  1998
                                                              ------------
Term Note bearing interest at a variable rate (7.94% at
  December 31, 1998). Interest payable quarterly............  $ 67,500,000
$35.0 million revolving credit facility bearing interest at
  LIBOR plus 2.75% (7.81% at December 31, 1998); expiring
  September 17, 2003. Interest payable semi-annually........    10,200,000
Senior subordinated notes bearing interest at 15%; due
  September 17, 2006. Interest payable semi-annually........    25,188,452
Junior subordinated notes bearing interest at 12%; due May
  15, 2009. Interest payable quarterly......................    10,000,000
                                                              ------------
Total debt..................................................   112,888,452
Less current portion........................................    (5,357,142)
                                                              ------------
Total long-term debt........................................  $107,531,310
                                                              ============
On September 17, 1998, Holdings II and Holdings III entered into a credit
agreement with several banks to extend term loans in an aggregate principal
amount of $63.0 million (the Term Note) and obtain borrowings under a Revolving
Credit Facility. The Term Note was increased to $67.5 million on December 15,
1998. The Term Note bears interest at a variable rate based on the Company's
leverage ratio (as defined at December 31, 1998). The Term Note expires on
September 17, 2003 with quarterly principal payments beginning on August 31,
1999, in an amount equal to a certain percentage of the outstanding principal
amount (as defined). The proceeds from the Term Note were used to fund portions
of the GLSI acquisition and the Nuance acquisition.

     The Revolving Credit Facility provides for aggregate borrowings of up to
$35 million and issuances of letters of credit of up to $15 million. Direct
borrowings under the Revolving Credit Facility are subject to an availability
calculation based on the eligible borrowing base. The Revolving Credit Facility
matures on September 17, 2003. Based on the availability calculation,
approximately $17.8 million of additional borrowings were available under this
credit facility at December 31, 1998. Outstanding letters of credit under the
credit facility for the purpose of purchasing inventory amounted to
approximately $98,000 at December 31, 1998.

     The Term Note and the Revolving Credit Facility contain covenants that
among other things, restrict the payments of dividends and restrict additional
indebtedness and obligations, and require the Company to maintain certain
minimum financial ratios. This credit agreement is guaranteed by each of the
subsidiaries of the Company and is collaterized by substantially all of the
assets of the Company.

     In connection with the GLSI and Onboard Media Group acquisitions (see Note
3), Holdings II entered into a debt securities purchase agreement with several
financial institutions to issue approximately $25.2 million in aggregate
principal amount of its 15% Senior subordinated notes due September 15, 2006
(the Notes). The interest on the Senior subordinated notes is payable
semiannually in arrears, may be capitalized for the first three years and is
payable in cash beginning

                                      F-20
116
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT (CONTINUED)
in the fourth year. The Senior subordinated notes are also subject to a cash
payment commencing on March 15, 2004 in the event the accrued and unpaid
interest exceeds a certain amount. In the event that this cash payment is
required, the holders of the Senior subordinated notes may require Holdings II
to purchase up to $10 million of principal of the Senior subordinated notes at a
premium of 5.25%. Fifty percent of the then outstanding principal amount of the
Senior subordinated notes will mature on September 15, 2005, with the balance
due September 15, 2006.

     The Company's subsidiary, Holdings II, entered into a Put Agreement with
the Senior Subordinated Note holders. Under the Put Agreements, these
shareholders may cause Holdings II at any time to repurchase all, or any
portion, of their common shares at a price equal to their cost of the shares, or
approximately $1.925 per share (as adjusted for share splits and dividends). The
put right, or the right to cause Holdings II to repurchase these common shares,
will expire on September 15, 2006 or, if earlier, upon the occurrence of certain
events.

     Upon a Change of Control as defined in the Notes, the Company would be
required to offer to repurchase the Notes at a purchase price equal to 101% of
the aggregate principal amount plus accrued and unpaid interest thereon.

     The Notes contain certain financial and operational covenants and customary
events of default, including, among others, payment defaults and default in the
performance of other covenants, breach of representations or warranties,
cross-default to other indebtedness, certain bankruptcy or ERISA defaults, the
entry of certain judgments against the Company or any subsidiary, and any
security interest or guarantees that cease to be in effect.

     The proceeds from the Notes were used to fund a portion of the acquisition
price of GLSI and On Board Media Group.

     In connection with the GLSI acquisition (see Note 3), Holdings II, provided
to VIAD Corp. 12% Junior Subordinated Notes due May 15, 2009 (Junior Notes)
which were issued in an aggregate principal amount of $10 million and are junior
subordinated unsecured obligations of Holdings II. The interest on the Junior
Notes is payable semiannually commencing March 1, 1999 and the interest payments
may be capitalized through maturity of the notes with some exceptions. Upon a
change of control as defined in the Junior Notes agreement or consummation of an
initial public offering, the Company would be required to prepay the Junior
Notes at a price equal to 100% of the aggregate principal amount plus accrued
and unpaid interest thereon.

                                      F-21
117
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT (CONTINUED)
     Scheduled maturities on long-term debt during the next five years are as
follows:
Year ending December 31:
  1999......................................................  $  5,357,000
  2000......................................................    11,786,000
  2001......................................................    15,000,000
  2002......................................................    18,214,000
  2003......................................................    17,143,000
  Thereafter................................................    45,388,000
                                                              ------------
Total.......................................................  $112,888,000
                                                              ============
7. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts of cash and cash equivalents, short-term investments,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of their short duration to maturity.

     The carrying amounts of long-term debt approximate the fair value of the
Company's long-term debt at December 31, 1998. The fair value of long-term debt
is estimated based on the quoted market prices for the same issues or on current
rates offered to the Company for debt of the same remaining maturities. The
estimated fair value of long-term debt and the bank borrowings under the credit
agreement approximated its carrying value. Because judgment is required in
interpreting market data to develop estimates of fair value, the estimates are
not necessarily indicative of the amounts that could be realized or would be
paid in a current market exchange. The effect of using different market
assumptions or estimation methodologies may be material to the estimated fair
value amounts.

8. INCOME TAXES

     The components of the provision for income taxes are as follows:
PERIOD ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
CURRENT
U.S. Federal................................................   $ 372,290
State.......................................................      56,736
Foreign.....................................................      67,000
                                                               ---------
Total.......................................................     496,026
DEFERRED
U.S. Federal................................................    (136,831)
                                                               ---------
Total.......................................................   $ 359,195
                                                               =========
F-22
118
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES (CONTINUED)
     The differences between the reported provision from income taxes and income
taxes computed at the U.S. statutory federal income tax rate are as follows:
PERIOD ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
Income tax expense computed at the U.S. statutory rate of
  34%.......................................................    $ 58,247
State taxes, net of federal benefit.........................      37,446
Effect of non-U.S. operations and tax rates.................      78,161
Non-deductible items........................................     200,203
Other, net..................................................     (14,862)
                                                                --------
Total.......................................................    $359,195
                                                                ========
Significant components of the Company's net deferred income taxes are as
follows:
DECEMBER 31,
                                                                  1998
                                                              ------------
Deferred income tax assets:
  Allowance for bad debts...................................   $  15,367
  Miscellaneous accruals....................................      35,258
                                                               ---------
Total current deferred income tax asset.....................      50,625
Deferred income tax liabilities:
  Depreciation and amortization.............................     (61,243)
  Cash to accrual conversion................................    (442,348)
                                                               ---------
Net deferred income tax liabilities.........................   $(452,966)
                                                               =========
9. STOCK OPTION PLAN

     On September 15, 1998, the Company adopted the 1998 Stock Option Plan (the
Plan) which provides for the granting of incentive and non-incentive stock
options to purchase shares of the Company's common stock to officers, directors
and key employees responsible for the direction and management of the Company
and to non-employee consultants and independent contractors. The Company is
authorized to grant options for up to 1,000,000 common shares under the Plan, of
which 950,000 common shares have been granted as of December 31, 1998. The
vesting period of the incentive stock options granted are established by the
Management Board of the Company (the Board). Of the 950,000 options granted,
500,000 vest ratably over a three year period and 450,000 vest ratably over a
four year period, with the vesting beginning on the first anniversary of the
date of grant. The exercise price of common stock purchasable under a stock
option shall be determined by the Board at the time of grant but shall not be
less than 100% of the fair market value of the underlying stock; nor shall the
exercise price be less, in the case of an original issue of authorized stock,
than par value. The exercise price of the options granted is $1.925 per share,
which was determined by the Board to be the fair value at the date of grant.

                                      F-23
119
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. STOCK OPTION PLAN (CONTINUED)
     The Company has adopted the disclosure only provisions of SFAS No. 123.
Accordingly, no compensation cost has been recognized for the plan. Had
compensation cost for the Plan been determined based on the fair value at the
date of grant in 1998 consistent with the provisions of SFAS No. 123, the
Company's net loss would have been increased to the pro forma amount indicated
below:
PERIOD ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
Net loss -- as reported.....................................   $(187,881)
Net loss -- pro forma.......................................    (198,802)
Basic and diluted net loss per share -- pro forma...........   $   (0.01)
The fair value of each option grant is estimated on the date of grant using
the Minimum Value fair value model with the following weighted-average
assumptions used for the 1998 grants: dividend yield of 0.0%, risk-free interest
rate of 6%, and average expected life of 3.5 years.

     The weighted average fair value of options granted for 1998 is $0.36 per
share. At December 31, 1998, the weighted average exercise price of the options
outstanding is $1.925, and the weighted average remaining contractual life of
those options is 9.75 years.

10. RELATED PARTY TRANSACTIONS

     Berkshire Cruise Holdings LLC provides the Company with certain
administrative services for an annual management fee of approximately $400,000.
The Company paid Berkshire Cruise Holdings approximately $116,000 for the period
ended December 31, 1998.

     The Onboard Media Group has an agreement with Media Holdings, Ltd. for the
lease of an office building. Media Holdings, Ltd. is a limited partnership which
is owned by certain shareholders of the Company. The term of the lease is from
April 30, 1996 through April 30, 2006 and requires annual rental payments of
$250,000 plus occupancy costs which include property taxes, utilities, and
repairs and maintenance. The Company made payments to Media Holdings, Ltd.
amounting to approximately $66,563 for the period ended December 31, 1998.

11. SIGNIFICANT CUSTOMERS

     Sales to certain customers, each constituting 10% or more of the total
sales, were approximately $20,848,000 for the period ended December 31, 1998.

12. COMMITMENTS AND CONTINGENCIES

     The Company leases office, warehouse facilities and retail stores under non
cancelable operating leases. The leases for the retail stores provide for
additional rentals contingent upon increases in the operating expenses of the
lessors. In addition, the Company pays concession fees, calculated as a
percentage of sales, for certain store leases. Certain of the Company's leases
contain scheduled rent increases during the term of the leases. Rent expense,
including contingent rent and concession fees, was approximately $23.0 million
for the period ended December 31, 1998.

                                      F-24
120
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12.  COMMITMENTS AND CONTINGENCIES (CONTINUED)
     Future minimum lease payments under these operating leases at December 31,
1998 are as follows:
Year ending December 31:
  1999......................................................    $ 5,317,000
  2000......................................................      4,864,000
  2001......................................................        915,000
  2002......................................................        915,000
  2003......................................................        266,000
  Thereafter................................................        621,000
                                                                -----------
Total.......................................................    $12,898,000
                                                                ===========
Future minimum lease payments do not include a minimum annual guarantee of
$10,268,000, subject to adjustment under certain circumstances, through 2000
under an airport duty-free concession agreement.

     The Company is a party to litigation matters and claims, which are in the
normal course of its operations. While the results of litigation and claims
cannot be predicted with certainty, management believes that the final outcome
of such matters will not have a material adverse effect on the Company's
consolidated financial position.

     The Onboard Media Group has executed contracts with various cruise lines
and hotels which grant it the exclusive right to publish and sell advertising in
books, magazines and videos, and to conduct live on-board promotion programs and
art auctions on cruise ships. The contracts range from several months to five
years and require various guaranteed minimum payments. Obligations for
guaranteed minimum payments under such contracts as of December 31, 1998 are as
follows:
Year ending December 31:
  1999......................................................    $ 8,027,000
  2000......................................................      6,394,000
  2001......................................................      3,663,000
  2002......................................................      3,593,000
  2003......................................................        180,000
                                                                -----------
Total.......................................................    $21,857,000
                                                                ===========
Total cruise line fees and magazine royalties under the above agreements
amounted to $2,661,000 for the period ended December 31, 1998.

     Outstanding surety bonds, principally related to importation of products,
amounted to $6,728,000 at December 31, 1998.

                                      F-25
121
                         STARBOARD CRUISE SERVICES N.V.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. LOSS PER SHARE

     The following table sets forth the computation of basic and diluted net
loss per share:
PERIOD FROM
                                                              SEPTEMBER 10,
                                                              1998 (DATE OF
                                                              INCORPORATION)
                                                                 THROUGH
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
Numerator:
Net loss....................................................   $  (187,881)
Denominator:
  Denominator for basic and diluted net loss per
     share -- weighted average shares.......................    23,250,000
Basic and diluted net loss per share........................   $     (0.01)
14. SUBSEQUENT EVENT

     On              , 1999, the Company's shareholders approved an amendment to
its Articles of Association, which among other things, converts the Company from
a B.V. to an N.V., changes the Company's name from Miami Cruiseline Services
Holdings I. B.V. to Starboard Cruise Services N.V., increases the Company's
authorized share capital to 120,000,000 shares each with a par value of EUR .01
and effects a 50 for 1 share split. Immediately after the effectiveness of the
amendment, the Company will issue a 5 for 1 share dividend. The effectiveness of
the amendment and share dividend will take place immediately prior to the
consummation of the Company's initial public offering. All common share and per
common share amounts have been adjusted for all periods to reflect the share
split and share dividend.

                                      F-26
122

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholder
Greyhound Leisure Services, Inc.
  and Subsidiary

     We have audited the accompanying consolidated statements of income,
stockholder's equity and cash flows of Greyhound Leisure Services, Inc. and
subsidiaries (a wholly-owned subsidiary of Viad Corp.) for the period from
January 1, 1998 through September 17, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations, stockholder's equity and
cash flows of Greyhound Leisure Services, Inc. and subsidiaries for the period
from January 1, 1998 through September 17, 1998, in conformity with generally
accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

Miami, Florida
May 7, 1999

                                      F-27
123

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
  Greyhound Leisure Services, Inc.

We have audited the accompanying consolidated balance sheet of Greyhound Leisure
Services, Inc., and subsidiaries (the "Company"), a wholly owned subsidiary of
Viad Corp., as of December 31, 1997, and the related consolidated statements of
income, stockholder's equity and cash flows for each of the two years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
1997, and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP

Miami, Florida
July 31, 1998

                                      F-28
124

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                           CONSOLIDATED BALANCE SHEET
                               DECEMBER 31, 1997
               (IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
Current assets:
  Cash......................................................  $   262
  Accounts receivable, net of allowance for doubtful
     accounts of $327.......................................    6,108
  Inventories...............................................   32,907
  Deferred income taxes.....................................    2,122
  Prepaid expenses and other current assets.................    1,026
                                                              -------
Total current assets........................................   42,425
Property and equipment:
  Furniture, fixtures and other equipment...................   10,681
  Leasehold improvements....................................    8,632
  Accumulated depreciation..................................   (9,762)
                                                              -------
Total property and equipment, net...........................    9,551
Loans receivable from minority interest shareholders........    3,771
Other assets................................................    1,028
Deferred income taxes.......................................    2,487
                                                              -------
Total assets................................................  $59,262
                                                              =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Accounts payable..........................................  $10,528
  Accrued expenses..........................................    3,129
  Due to Viad...............................................   11,171
  Other current liabilities.................................    1,750
                                                              -------
Total current liabilities...................................   26,578
Other liabilities and deferred items........................   10,405
Minority interest...........................................    7,131
Commitments and contingencies (Note 8)
Stockholder's equity:
  Common stock, $100 par value, 3,000 shares authorized;
     1,000 shares issued and outstanding....................      100
  Additional paid-in capital................................   12,918
  Retained earnings.........................................    2,285
  Treasury stock -- 400 shares at cost......................     (155)
                                                              -------
Total stockholder's equity..................................   15,148
                                                              -------
Total liabilities and stockholder's equity..................  $59,262
                                                              =======
See accompanying notes

                                      F-29
125

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                       CONSOLIDATED STATEMENTS OF INCOME
               (IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
PERIOD FROM
                                                                                 JANUARY 1, 1998
                                                     YEAR ENDED DECEMBER 31,         THROUGH
                                                     ------------------------     SEPTEMBER 17,
                                                        1996          1997            1998
                                                     ----------    ----------    ---------------
Net sales..........................................   $179,799      $188,498        $135,603
Cost of sales......................................     72,860        76,828          54,290
                                                      --------      --------        --------
Gross profit.......................................    106,939       111,670          81,313
Selling, general and administrative expenses.......     96,712       101,067          73,993
                                                      --------      --------        --------
Income from operations.............................     10,227        10,603           7,320
Other (income) expense:
  Interest expense.................................        625           766             674
  Interest income..................................       (512)         (561)           (257)
                                                      --------      --------        --------
Total other expense................................        113           205             417
                                                      --------      --------        --------
Income before provision for income taxes and
  minority interest................................     10,114        10,398           6,903
Provision for income taxes.........................      2,936         2,941           2,249
Minority interest..................................      1,706           957             594
                                                      --------      --------        --------
Net income.........................................   $  5,472      $  6,500        $  4,060
                                                      ========      ========        ========
Basic and diluted net income per common share......   $  5,472      $  6,500        $  4,060
                                                      ========      ========        ========
Basic and diluted weighted average shares
  outstanding......................................      1,000         1,000           1,000
                                                      ========      ========        ========
See accompanying notes.

                                      F-30
126

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                                 (IN THOUSANDS)
COMMON STOCK     ADDITIONAL                             TOTAL
                                    ---------------    PAID-IN     RETAINED   TREASURY   STOCKHOLDERS'
                                    SHARES   AMOUNT    CAPITAL     EARNINGS    STOCK        EQUITY
                                    ------   ------   ----------   --------   --------   -------------
Balance at December 31, 1995......     1      $100     $12,918     $   627     $(155)       $13,490
  Net income......................    --        --          --       5,472        --          5,472
  Capital distribution............    --        --          --      (4,579)       --         (4,579)
                                      --      ----     -------     -------     -----        -------
Balance at December 31, 1996......     1       100      12,918       1,520      (155)        14,383
  Net income......................    --        --          --       6,500        --          6,500
  Capital distribution............    --        --          --      (5,735)       --         (5,735)
                                      --      ----     -------     -------     -----        -------
Balance at December 31, 1997......     1       100      12,918       2,285      (155)        15,148
  Net income......................    --        --          --       4,060        --          4,060
  Capital contribution............    --        --      16,630          --        --         16,630
  Capital distribution............    --        --          --      (2,700)       --         (2,700)
                                      --      ----     -------     -------     -----        -------
Balance at September 17, 1998.....     1      $100     $29,548     $ 3,645     $(155)       $33,138
                                      ==      ====     =======     =======     =====        =======
See accompanying notes.

                                      F-31
127

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
PERIOD FROM
                                                    YEAR ENDED DECEMBER 31,      JANUARY 1, 1998
                                                    ------------------------         THROUGH
                                                       1996          1997       SEPTEMBER 17, 1998
                                                    ----------    ----------    ------------------
OPERATING ACTIVITIES
Net income........................................   $ 5,472       $ 6,500           $ 4,060
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization...................     1,628         2,746             2,461
  Provision for inventory obsolence and shrinkage
     reserve......................................        --            --              (106)
  Deferred income taxes...........................      (284)          757               372
  Provision for doubtful accounts receivable......        76            43               114
  Other...........................................     1,102           276                --
  Changes in operating assets and liabilities:
     Accounts receivable..........................    (1,746)          506              (237)
     Inventories..................................       797        (2,434)             (978)
     Prepaid expenses and other current assets....      (256)          314              (601)
     Other assets.................................        --          (131)               --
     Loans receivables from minority interest
       shareholders...............................        --            --                 7
     Investment in unconsolidated subsidiary......        --            --                33
     Accounts payable.............................       561        (2,902)           (2,021)
     Accrued expenses.............................        --            --               121
     Other current liabilities....................       140            29                --
     Other liabilities and deferred items.........       211        (1,461)              229
                                                     -------       -------           -------
Net cash provided by operating activities.........     7,701         4,243             3,454
INVESTING ACTIVITIES
Purchases of property and equipment...............    (4,016)       (4,353)             (625)
Other.............................................        --            98                --
                                                     -------       -------           -------
Net cash used in investing activities.............    (4,016)       (4,255)             (625)
FINANCING ACTIVITIES
Due to/from Viad, net.............................      (352)        5,487              (346)
Capital distribution..............................    (4,579)       (5,735)           (2,700)
                                                     -------       -------           -------
Net cash used in financing activities.............    (4,931)         (248)           (3,046)
                                                     -------       -------           -------
Net decrease in cash and cash equivalents.........    (1,246)         (260)             (217)
Cash and cash equivalents, beginning of period....     1,768           522               262
                                                     -------       -------           -------
Cash and cash equivalents, end of period..........   $   522       $   262           $    45
                                                     =======       =======           =======
SUPPLEMENTAL CASH FLOW DISCLOSURE
Income taxes paid during the period...............   $    --       $    --           $ 1,370
                                                     =======       =======           =======
Cash paid to Viad for income taxes................   $ 2,952       $ 3,745           $    --
                                                     =======       =======           =======
See accompanying notes

                                      F-32
128

               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

  Nature of Business

     Greyhound Leisure Services, Inc. and subsidiaries (GLSI) operate duty free
stores on cruise ships and operate several duty free boutiques and stores at
Miami International Airport and Ft. Lauderdale/Hollywood International Airport.
At September 17, 1998, GLSI operated 120 retail stores on 40 cruise ships, 19
retail stores at Miami International Airport and two retail stores in Ft.
Lauderdale/Hollywood International Airport. GLSI was a wholly owned subsidiary
of Viad Corp ("Viad"). (See Note 10.)

  Basis of Presentation

     The accompanying financial statements include costs allocated to GLSI by
Viad for certain functions and services they performed centrally. All
allocations and estimates were based on assumptions Viad's management believed
were reasonable in the circumstances. These allocations and estimates are not
necessarily indicative of the costs and expenses that would have resulted if
GLSI had been operated as a separate entity. See Note 7 for a description of the
functions and services and the amounts allocated.

     Certain reclassifications were made to the prior years' financial
statements to conform with the current period presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

     The consolidated financial statements at December 31, 1997 include the
accounts of GLSI, a 66% owned subsidiary and another majority-owned subsidiary,
which was dissolved in May 1998. All significant intercompany accounts and
transactions have been eliminated in consolidation.

  Cash and Cash Equivalents

     The Company defines as cash equivalents all highly liquid investments with
a maturity of three months or less at the time of purchase.

  Accounts Receivable

     The Company's accounts receivable are due primarily from cruise line
companies. Approximately 33% of the accounts receivable balance at December 31,
1997 is due from two customers. Settlement of amounts due from the cruise line
companies occurs upon completion of each voyage. The Company's policy is not to
require collateral on accounts receivable. Credit losses are provided for in the
financial statements and have been within management's expectations.

  Inventories

     Inventories, which consist primarily of duty-free merchandise, are stated
at the lower of cost or market determined on a first-in, first-out basis.

                                      F-33
129
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Property and Equipment

     Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed by use of the straight-line method over the estimated
useful life of vehicles, furniture, fixtures and equipment, which ranges from 5
to 7 years. Leasehold costs and improvements are amortized over the lesser of
their estimated useful lives or the remaining lease terms.

  Earnings Per Share

     Basic earnings per share is computed based on the weighted average number
of common shares outstanding and diluted earnings per share is computed based on
the weighted average number of common and potential common shares outstanding.
There were no potential common shares outstanding.

  Revenue Recognition

     Revenue from retail product sales is recorded upon customer purchase.

  Income Taxes

     The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred
income tax assets and liabilities are determined based upon differences between
the financial statement and income tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred income tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
of the deferred income tax assets will not be realized.

  Comprehensive Income

     In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in financial
statements. The adoption of SFAS No. 130 had no impact on the Company as it had
no elements of comprehensive income.

  Use of Estimates

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

  Impairment of Long-Lived Assets

     The Company reviews the carrying values of its long-lived assets and
identifiable intangibles for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of assets to be held and used
may not be recoverable. For assets to be held and used, if the sum of the
expected future undiscounted cash flows is less than the carrying amount of the
asset, an

                                      F-34
130
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
impairment loss should be recognized, measured as the amount by which the
carrying amount exceeds the fair value of the asset. The Company reports any
long-lived assets and certain identifiable intangibles to be disposed of at the
lower of carrying amount or fair value less cost to sell.

3. LOANS RECEIVABLE FROM MINORITY INTEREST SHAREHOLDERS

     The loans receivable from minority interest holders mature on November 30,
2000 and accrue interest, payable quarterly, at the prime rate (8.50% at
December 31, 1997). The loans are secured by the minority interest holders'
equity interest in a subsidiary.

     Other Assets at December 31, 1997 consisted of the following (in
thousands):
Investment in unconsolidated affiliate, accounted for using
  the equity method.........................................  $  981
Intangible pension asset....................................      47
                                                              ------
                                                              $1,028
                                                              ======
4. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts of cash and cash equivalents, short-term investments,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of their short duration to maturity.

5. INCOME TAXES

     The Company files a consolidated federal and various state income tax
returns with Viad and other eligible subsidiaries of Viad. A verbal intercompany
tax agreement requires the Company to pay Viad an amount which approximates the
income tax it would pay if it were filing separate consolidated income tax
returns. In addition, Viad credits the Company for an allocated portion of the
state income tax savings which Viad and its subsidiaries realize upon filing
combined or consolidated income tax returns in certain states.

     Deferred income tax assets (liabilities) included in the consolidated
balance sheet at December 31, 1997 related to the following (in thousands):
1997
                                                              ------
Pension, compensation and other employee benefits...........  $3,506
Self-insurance reserve......................................     423
Reserve for inventory obsolescence and shrinkage............     757
Deferred state income taxes.................................     282
Bad debt reserve............................................      78
Depreciation................................................    (112)
Other.......................................................    (325)
                                                              ------
Deferred income taxes.......................................  $4,609
                                                              ======
F-35
131
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES (CONTINUED)
     The provision for income taxes for the years ended December 31, 1996 and
1997 and the period from January 1, 1998 through September 17, 1998 consisted of
the following (in thousands):
PERIOD FROM
                                                     YEAR ENDED        JANUARY 1,
                                                    DECEMBER 31,      1998 THROUGH
                                                  ----------------    SEPTEMBER 17,
                                                   1996      1997         1998
                                                  ------    ------    -------------
Current:
  Federal.......................................  $3,135    $2,089       $2,490
  State.........................................      85        95          131
                                                  ------    ------       ------
                                                   3,220     2,184        2,621
Deferred........................................    (284)      757         (372)
                                                  ------    ------       ------
  Provision for income taxes....................  $2,936    $2,941       $2,249
                                                  ======    ======       ======
A reconciliation of the provision for income taxes and the amount that
would be computed using statutory federal income tax rates for the years ended
December 31, 1996 and 1997 and for the period from January 1, 1998 through
September 17, 1998 are as follows (in thousands):
PERIOD FROM
                                                        YEAR ENDED       JANUARY 1,
                                                       DECEMBER 31,     1998 THROUGH
                                                      ---------------   DECEMBER 31,
                                                       1996     1997        1998
                                                      ------   ------   ------------
Income tax at statutory federal income tax rate of
  35%...............................................  $2,943   $3,304      $2,145
Tax effect of:
  State income taxes, net of federal benefit........      30       33         217
  Other.............................................     (37)    (396)       (113)
                                                      ------   ------      ------
  Provision for income taxes........................  $2,936   $2,941      $2,249
                                                      ======   ======      ======
6. OTHER LIABILITIES AND DEFERRED ITEMS

     Other liabilities and deferred items at December 31, 1997 consisted of the
following (in thousands):
Accrued pension and other postretirement benefits costs.....  $ 6,913
Insurance liability.........................................    1,374
Deferred compensation.......................................    1,282
Other.......................................................      836
                                                              -------
                                                              $10,405
                                                              =======
F-36
132
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. RELATED PARTY TRANSACTIONS

     Viad provided the Company certain corporate general and administrative
services including legal, treasury and finance. Fees allocated to the Company
related to such services aggregated $517,000, $529,000 and $510,000 for the
years ended December 31, 1996 and 1997 and for the period from January 1, 1998
through September 17, 1998, respectively. Management believes that these
allocations are reasonable. These amounts are not necessarily indicative of the
costs that the Company would have incurred as a stand-alone entity.

     Viad manages cash and financing requirements of all its business units. The
Company's available cash is swept into the Viad account and the Company's cash
requirements are paid from the Viad account, as needed. Interest expense
reflected in the consolidated statements of income is charged by Viad based on
the prime lending rate but does not necessarily reflect the interest expense the
Company would have incurred as a stand-alone entity. Because Viad manages the
cash and financing requirements of the Company, it is not practicable to
estimate cash paid for interest.

     On September 16, 1998 Viad forgave and converted $16,630,000 due from the
Company into equity. Included in this conversion was approximately $9.3 million
of liabilities related to various Viad sponsored pension and post-retirement
benefit plans which effective August 31, 1998 were assumed by Viad (see Note
10). Such conversion represents a noncash transaction and accordingly is
excluded from the statement of cash flows for the period from January 1, 1998
through September 17, 1998.

8. COMMITMENTS AND CONTINGENCIES

     The Company leases office, warehouse facilities and retail stores under non
cancelable operating leases. The leases for the retail stores provide for
additional rentals contingent upon increases in the operating expenses of the
lessors. In addition, the Company pays concession fees, calculated as a
percentage of sales, for certain store leases. Certain of the Company's leases
contain scheduled rent increases during the term of the leases. Rent expense,
including contingent rent and concession fees, was approximately $61,105,000,
$65,264,000 and $48,034,000 respectively, for the years ended December 31, 1996
and 1997 and the period from January 1, 1998 through September 17, 1998.

     Future minimum lease payments under these operating leases at December 31,
1997 are as follows (in thousands):
1998...................................................  $ 4,746
1999...................................................    4,705
2000...................................................    4,729
2001...................................................      609
2002...................................................      609
                                                         -------
                                                         $15,398
                                                         =======
Net operating lease rentals and future minimum rental payments do not
include a minimum annual guarantee of $9,600,000, subject to adjustment under
certain circumstances, through 2000 under an airport duty-free concession
agreement.

     Outstanding letters of credit, principally related to purchases of
inventory, amounted to approximately $600,000 at December 31, 1997.

                                      F-37
133
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
     The Company is a party to litigation matters and claims, which are in the
normal course of its operations. While the results of litigation and claims
cannot be predicted with certainty, management believes that the final outcome
of such matters will not have a material adverse effect on the Company's
consolidated financial position.

9. PENSION AND OTHER BENEFITS

  Pension Benefits

     The Company is a participating employer in the Viad Companies Retirement
Income Plan. The plan administrator is Viad Corp.

     The plan is a noncontributory defined benefit pension plan covering all
employees who meet certain age and length of service requirements. Benefits are
based on final average compensation and years of credited service. It is the
Company's policy to fund the minimum required contribution for the year.

     The Greyhound Leisure Services, Inc. Supplemental Executive Retirement Plan
(SERP) is a nonqualified plan which provides postretirement income to eligible
employees selected by the Viad Board of Directors such that SERP will be
eligible for exemption under Parts Two, Three and Four of Title I of the
Employee Retirement Income Security Act of 1974. Pension expense is calculated
based on establishing a reserve, which will accumulate at the valuation rate of
interest, less any benefit payments actually made.

     Net periodic pension cost for the years ended December 31, 1996 and 1997
for all of the Company's plans included the following components (in thousands):
1996    1997
                                                              ----    ----
Service cost -- benefits earned during the year.............  $306    $326
Interest cost on projected benefit obligation...............   332     366
Actual return on plan assets................................  (296)   (670)
Net amortization and deferral...............................   111     448
Other items, primarily defined contribution and
  multiemployer plans.......................................   154     181
                                                              ----    ----
Net pension cost............................................  $607    $651
                                                              ====    ====
Weighted average assumptions used were:
1996    1997
                                                              ----    ----
Discount rate of obligation.................................  8.0%    7.5%
                                                              ===     ===
Rate of increase in compensation levels.....................  5.0%    4.5%
                                                              ===     ===
Long-term rate of return on assets..........................  9.5%    9.5%
                                                              ===     ===
F-38
134
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. PENSION AND OTHER BENEFITS (CONTINUED)
     The following table indicates the plans' funded status and amounts
recognized in the Company's consolidated balance sheet at December 31, 1997 (in
thousands):
UNDERFUNDED        OVERFUNDED
                                                            PLANS             PLANS
                                                        (ACCUMULATED         (ASSETS
                                                          BENEFITS            EXCEED
                                                           EXCEED          ACCUMULATED
                                                           ASSETS)          BENEFITS)
                                                       ---------------    --------------
Actuarial present value of benefit obligations:
Vested benefit obligation............................      $ 1,298            $3,215
                                                           =======            ======
Accumulated benefit obligation.......................      $ 1,318            $3,431
                                                           =======            ======
Projected benefit obligation.........................      $ 1,612            $3,790
Market value of plan assets, primarily equity and
  fixed income securities............................           --             3,737
                                                           -------            ------
Plan assets under projected benefit obligation.......       (1,612)              (53)
Unrecognized net transition gain.....................           (7)              (52)
Unrecognized prior service cost......................          280               (18)
Unrecognized net (gain) loss from experience
  differences........................................           68               (69)
Additional minimum liability.........................          (47)               --
                                                           -------            ------
Accrued pension cost.................................      $(1,318)           $ (192)
                                                           =======            ======
POST RETIREMENT BENEFITS OTHER THAN PENSIONS

     The Company has unfunded defined benefit postretirement plans that provide
medical and life insurance for eligible employees, retirees and dependents.

     The status of such medical and life insurance plans as of December 31, 1997
is as follows (in thousands):
Accumulated postretirement benefit obligation:
  Retirees..................................................  $1,235
  Fully-eligible active plan participants...................   1,807
  Other active plan participants............................   2,447
                                                               5,489
Unrecognized prior service cost.............................      (9)
Unrecognized net loss from experience differences...........     (77)
                                                              ------
  Accrued postretirement benefit cost.......................  $5,403
                                                              ======
Discount rate for obligation................................    7.5%
                                                              ======
F-39
135
               GREYHOUND LEISURE SERVICES, INC. AND SUBSIDIARIES
                   (A WHOLLY-OWNED SUBSIDIARY OF VIAD CORP.)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. PENSION AND OTHER BENEFITS (CONTINUED)
     The assumed health care cost trend rate used in measuring the 1997
accumulated postretirement benefit obligation was 10%, gradually declining to 5%
by the year 2002 and remaining at that level thereafter for retirees below age
65, and 7.5%, gradually declining to 5% by the year 2002 and remaining at that
level thereafter for retirees above age 65.

     A one-percent-point increase in the assumed health care cost trend rate for
each year would increase the accumulated postretirement benefit obligation as of
December 31, 1997 by approximately 16% and the ongoing annual expense by
approximately 19%.

     The net periodic postretirement benefit cost for the years ended December
31, 1996 and 1997 includes the following components (in thousands):
1996    1997
                                                              ----    ----
Service cost benefits earned during the period..............  $225    $299
Interest cost on accumulated postretirement benefit
  obligation................................................   273     364
Net amortization and deferral...............................  (104)    (46)
                                                              ----    ----
Net periodic postretirement benefit cost....................  $394    $617
                                                              ====    ====
The Plans discussed above were assumed by Viad effective September 16,
1998. The Company incurred approximately $802,000 of benefit costs related to
such Plans for the period from January 1, 1998 through September 17, 1998. The
assumptions used in connection with recognizing such costs were not
significantly different than the assumptions used for the year ended December
31, 1997.

10. SUBSEQUENT EVENT

     On September 17, 1998, pursuant to a Share Purchase Agreement dated as of
July 31, 1998, among Viad and Cruiseline Holdings Co. (CLH), CLH acquired all of
the outstanding shares of the Company.

                                      F-40
136

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Stockholders and
Board of Directors
Onboard Media, Inc.
Cruise Management International, Inc.
Boxer Media, Inc.

     We have audited the accompanying combined statements of operations and cash
flows of Onboard Media, Inc., Cruise Management International, Inc., and Boxer
Media, Inc. for the period from January 1, 1998 through September 17, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined results of operations and cash flows of
Onboard Media, Inc., Cruise Management International, Inc., and Boxer Media,
Inc. for the period January 1, 1998 through September 17, 1998, in conformity
with generally accepted accounting principles.

                                                 /s/ ERNST & YOUNG LLP

Miami, Florida
April 27, 1999

                                      F-41
137

                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

                          COMBINED STATEMENT OF INCOME
             PERIOD FROM JANUARY 1, 1998 THROUGH SEPTEMBER 17, 1998
Net sales...................................................  $13,204,983
Cost of sales...............................................    8,011,718
                                                              -----------
Gross profit................................................    5,193,265
Selling, general and administrative expenses................    3,034,384
Depreciation and amortization...............................      137,409
                                                              -----------
Total expenses..............................................    3,171,793
                                                              -----------
Income from operations......................................    2,021,472
Other (income) expense:
  Interest expense..........................................       18,096
  Interest and dividend income..............................     (140,987)
  Other expense.............................................       10,148
                                                              -----------
Total other income..........................................     (112,743)
                                                              -----------
Net income..................................................    2,134,215
Pro forma provision for income taxes (unaudited)............      822,000
                                                              -----------
Pro forma net income (unaudited)............................  $ 1,312,215
                                                              ===========
See accompanying notes.

                                      F-42
138

                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

                        COMBINED STATEMENT OF CASH FLOWS
             PERIOD FROM JANUARY 1, 1998 THROUGH SEPTEMBER 17, 1998
OPERATING ACTIVITIES
Net income..................................................  $2,134,215
Adjustments to reconcile net income to net cash flows
  provided by operating activities:
  Depreciation and amortization.............................     137,409
  Provision for bad debts...................................      22,065
  Changes in operating assets and liabilities:
     Trade accounts receivable..............................   1,114,788
     Due from stockholders..................................    (471,544)
     Other receivables......................................     160,984
     Work in process........................................    (426,203)
     Advances to cruise lines...............................  (3,013,000)
     Prepaid expenses and other current assets..............     (14,465)
     Accounts payable and accrued expenses..................   1,042,174
     Other current liabilities -- related party.............      23,427
     Deferred revenue.......................................   3,164,765
     Due to art gallery.....................................   1,613,254
     Due to cruise lines....................................     786,027
                                                              ----------
Net cash provided by operating activities...................   6,273,896
INVESTING ACTIVITY
Purchases of property and equipment.........................    (127,522)
                                                              ----------
Net cash used in investing activity.........................    (127,522)
FINANCING ACTIVITIES
Payment of current portion of long-term debt -- related
  party.....................................................    (183,750)
Proceeds from line of credit................................   1,000,000
Payment of line of credit...................................    (700,000)
Payment of subscription receivable..........................         100
Dividends...................................................  (5,947,661)
                                                              ----------
Net cash used in financing activities.......................  (5,831,311)
Net increase in cash........................................     315,063
Cash at beginning of period.................................     433,853
                                                              ----------
Cash at end of period.......................................  $  748,916
                                                              ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid during the period.............................  $   11,725
                                                              ==========
Net change in unrealized loss on marketable securities......  $  (55,168)
                                                              ==========
See accompanying notes.

                                      F-43
139

                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                               SEPTEMBER 17, 1998

1. ORGANIZATION AND NATURE OF BUSINESS

     Onboard Media, Inc., Cruise Management International, Inc., and Boxer
Media, Inc. (collectively the Companies) are Florida corporations.

     Onboard Media, Inc. sells advertising in books, magazines, and videos which
are published and distributed to hotels and cruise lines primarily in the United
States, Mexico, and the Caribbean. Onboard Media, Inc. also sells promotional
advertising which is delivered to cruise passengers through a live on-board
promotions program (port lecturing).

     Cruise Management International, Inc. administers art auctions aboard
various cruise ships. The art auction program is administered in collaboration
with an art gallery which provides the art and conducts the auctions.

     Boxer Media, Inc. performs marketing services for certain Onboard Media,
Inc. publications.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Combination

     The Companies' combined financial statements include the accounts of
Onboard Media, Inc., Cruise Management International, Inc., and Boxer Media,
Inc. All significant intercompany accounts and transactions have been eliminated
in combination.

  Revenue Recognition

     Revenue is recognized upon publication of the related books, magazines, and
videos.

  Advertising Expense

     The Companies expense advertising costs as incurred. Advertising expense
was $81,086 for the period from January 1, 1998 through September 17, 1998
(period ended September 17, 1998.)

  Property and Equipment

     Property and equipment are stated at cost. Depreciation is computed by use
of the straight-line method over the estimated useful lives of office technology
and equipment which range from 5-10 years. Leasehold improvements are amortized
over the lesser of their estimated useful lives or the remaining lease term.

  Marketable Securities

     The Companies account for investments using Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities (SFAS No. 115). Under this standard, the Companies have
classified their marketable securities as available-for-sale. Accordingly, these
marketable securities are stated at fair value with unrealized gains and losses
reported in a component of comprehensive income in the combined statement of
stockholders' equity.

                                      F-44
140
                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Income Taxes

     The Companies, with the consent of their stockholders, have elected under
the Internal Revenue Code to be taxed as S corporations. In lieu of corporate
income taxes, the stockholders of S corporations are taxed on their
proportionate share of the Companies' income.

     The proforma provision for income taxes represents a provision for income
taxes as if the Company had operated as a subchapter C corporation.

  Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

3. CONCENTRATION OF CREDIT RISKS

     The Companies earned commissions of approximately $1,036,000 from two
cruise lines under common ownership which approximated 76% of total commissions
for the period ended September 17, 1998.

     The Companies have an exclusive, multi-year agreement with one art gallery
to provide all of the art and conduct all of the auctions aboard the cruise
ships. The Companies do not anticipate any interruptions in the agreement with
the gallery. However, in the event that the agreement is disrupted for any
reason, management believes that a similar agreement could be obtained with
another gallery.

4. PROPERTY AND EQUIPMENT

     Depreciation expense for the period ended through September 17, 1998 was
$134,173.

5. RELATED PARTY TRANSACTIONS

     The Companies entered into a lease with a limited partnership which is
owned by certain shareholders of the Companies. The lease commenced on April 30,
1996 and is for a term of ten years (see Note 6).

6. COMMITMENTS AND CONTINGENCIES

     The Companies have executed contracts with various cruise lines and hotels
which grant them the exclusive right to publish and sell advertising in books,
magazines and videos and to conduct live on-board promotions programs on the
cruise ships. The contracts range from one to six years and

                                      F-45
141
                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
require various guaranteed minimum payments. Obligations for guaranteed minimum
payments under such contracts as of September 17, 1998 are as follows:
1998 (September 18 through December 31).....................    $ 1,260,750
1999........................................................      7,010,000
2000........................................................      6,249,000
2001........................................................      3,557,500
2002........................................................      3,500,000
2003........................................................        180,000
                                                                -----------
                                                                $21,757,250
                                                                ===========
Total cruise line fees and magazine royalties under the above agreements
amounted to $6,106,556 for the period ended September 17, 1998.

  Stockholder Agreement

     In 1994, the Companies entered into an agreement with two of their
stockholders. The agreement provides one of the Companies' stockholders a base
minimum salary of $100,000 annually subject to $25,000 annual increases and
contains a noncompete clause for the term of the agreement and for two years
thereafter. The agreement provides another stockholder of the Companies a base
minimum annual consulting fee of $6,000 subject to $6,250 annual increases and
contains a noncompete clause for the term of the agreement and for an indefinite
period of time thereafter. The total salary and consulting fees paid to these
stockholders for the period ended September 17, 1998 was $127,885 and $16,667,
respectively.

  Operating leases

     During 1996, the Company entered into a 10 year operating lease agreement
with a limited partnership which is owned by certain shareholders of Companies.
Rental payments including sales tax are $22,188 per month. In addition, the
lease requires the Company to pay all operating costs associated with the
building. Rent expense and operating costs including sales tax paid to the
partnership under this agreement was $198,688 for the period of January 1, 1998
through September 17, 1998. Future minimum lease payments including sales tax as
of September 17, 1998 are as follows:
1998 (September 18 through December 31).....................  $   76,177
1999........................................................     266,250
2000........................................................     266,250
2001........................................................     266,250
2002........................................................     266,250
2003........................................................     266,250
Thereafter..................................................     621,250
                                                              ----------
                                                              $2,028,677
                                                              ==========
F-46
142
                              ONBOARD MEDIA, INC.
                     CRUISE MANAGEMENT INTERNATIONAL, INC.
                               BOXER MEDIA, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. RETIREMENT PLAN

     The Companies have a qualified retirement plan for all eligible employees
under Section 401(k) of the Internal Revenue Code. Under the plan, the
Companies' contribution for any year is determined at the discretion of the
Board of Directors; however, in no event may elective deferrals exceed a
specific dollar amount determined by the Internal Revenue Service. Total
contributions made to the 401(k) plan were approximately $26,236 for the period
ended September 17, 1998.

8. IMPACT OF YEAR 2000 -- UNAUDITED

     The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any computer programs
that have time sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations, causing disruptions of operations, including, but not limited
to, a temporary inability to process transactions, send invoices, or engage in
similar normal business activities.

     The Companies have developed and are in the process of implementing a
comprehensive Year 2000 plan which is intended to ensure that the Year 2000
issue will not pose significant operational problems for its computer systems.
Both the development of this plan and its implementation, which is ongoing, are
being conducted by the Companies' personnel under the supervision of a third
party consultant. Management of the Companies expects that its Year 2000 plan
will successfully identify and rectify any potential computer system
deficiencies by its expected completion date in July, 1999. As a result,
management believes that no materially significant adverse consequences
regarding the Year 2000 issue will be encountered by the Companies.

9. SUBSEQUENT EVENT

     On September 17, 1998, pursuant to a Stock Subscription and Exchange
Agreement dated as of August 27, 1998, among Cruiseline Holdings Co. (CLH) and
Philip Levine, Jerry Chafetz and several trusts, CLH acquired all of the
outstanding common stock of the Companies.

                                      F-47
143

                          INDEPENDENT AUDITORS' REPORT

The Stockholders and
Board of Directors
On-Board Media, Inc. and affiliates

     We have audited the accompanying combined balance sheet of On-Board Media,
Inc. and affiliates (the "Company") as of December 31, 1997 and the related
combined statements of income, changes in stockholders' equity and cash flows
for the years ended December 31, 1996 and 1997. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of On-Board Media, Inc.
and affiliates as of December 31, 1997 and the results of their operations and
their cash flows for the years ended December 31, 1996 and 1997 in conformity
with generally accepted accounting principles.

                            /s/ GOLDSTEIN SCHECHTER PRICE LUCAS HORWITZ & CO.,
                            P.A.

Miami, Florida
May 20, 1998

                                      F-48
144

                      ON-BOARD MEDIA, INC. AND AFFILIATES

                             COMBINED BALANCE SHEET
                               DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................    $   433,853
  Trade accounts receivable, net of allowance for doubtful
     accounts of $57,100....................................      7,170,724
  Due from affiliates.......................................         12,613
  Due from stockholder......................................         64,267
  Other receivables.........................................        255,679
  Prepaid expenses and other current assets.................      1,329,763
                                                                -----------
          Total Current Assets..............................      9,266,899
                                                                -----------
PROPERTY AND EQUIPMENT, NET.................................        794,048
                                                                -----------
OTHER ASSETS:
  Organization costs, net...................................          1,044
  Marketable securities.....................................        118,351
  Other assets..............................................         10,352
                                                                -----------
          Total Other Assets................................        129,747
                                                                -----------
          TOTAL ASSETS......................................    $10,190,694
                                                                ===========
                   LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt, related party..........    $   183,750
  Accounts payable and accrued expenses.....................        425,283
  Due to art gallery........................................      1,749,560
  Deferred revenue..........................................      1,399,720
  Line of credit............................................        700,100
                                                                -----------
          Total Current Liabilities.........................      4,458,413
                                                                -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
  Common stock..............................................          1,600
  Additional paid-in capital................................        129,500
  Retained earnings.........................................      5,609,821
  Accumulated other comprehensive loss......................         (8,540)
                                                                -----------
                                                                  5,732,381
  Less subscriptions receivable.............................           (100)
                                                                -----------
          Total Stockholders' Equity........................      5,732,281
                                                                -----------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........    $10,190,694
                                                                ===========
See Accompanying Notes to Combined Financial Statements

                                      F-49
145

                      ON-BOARD MEDIA, INC. AND AFFILIATES

                         COMBINED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
1996           1997
                                                              -----------    -----------
NET SALES...................................................  $14,060,959    $18,292,148
COST OF PRODUCTS SOLD.......................................    9,549,008     10,978,575
                                                              -----------    -----------
GROSS PROFIT................................................    4,511,951      7,313,573
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................    3,297,208      3,805,404
AMORTIZATION OF INTANGIBLES.................................      585,931          5,447
                                                              -----------    -----------
                                                                3,883,139      3,810,851
INCOME FROM OPERATIONS BEFORE OTHER INCOME (EXPENSE)........      628,812      3,502,722
OTHER INCOME (EXPENSE):
  Interest expense..........................................      (75,504)       (50,044)
  Interest income...........................................       97,603        142,270
  Loss on sale of property and equipment....................      (34,782)            --
  Write-off of loans to affiliate...........................      (13,294)            --
  Gain on sale of marketable securities.....................           --         68,419
                                                              -----------    -----------
                                                                  (25,977)       160,645
                                                              -----------    -----------
NET INCOME..................................................      602,835      3,663,367
PRO FORMA PROVISION FOR INCOME TAXES (unaudited)............      232,000      1,410,000
                                                              -----------    -----------
PRO FORMA NET INCOME (unaudited)............................  $   370,835    $ 2,253,367
                                                              ===========    ===========
See Accompanying Notes to Combined Financial Statements

                                      F-50
146

                      ON-BOARD MEDIA, INC. AND AFFILIATES

             COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
SHARES
                                 ---------------                        ACCUMULATED
                                  COMMON STOCK                             OTHER
                                 ---------------                       COMPREHENSIVE
                                           NON-             PAID-IN       (LOSS)        RETAINED    COMPREHENSIVE
                                 VOTING   VOTING   AMOUNT   CAPITAL       INCOME        EARNINGS       INCOME         TOTAL
                                 ------   ------   ------   --------   -------------   ----------   -------------   ----------
BALANCE -- January 1, 1996.....    850      --     $  850   $ 30,150       ($7,002)    $2,392,696    $       --     $2,416,694
COMPREHENSIVE
  INCOME:
  Net Income...................                                                           602,835       602,835        602,835
  Changes in unrealized gain in
     marketable securities.....                                             16,329                       16,329         16,329
                                                                                                     ----------
                                                                                                     $  619,164
                                                                                                     ==========
DIVIDEND DISTRIBUTIONS.........                                                          (712,982)                    (712,982)
SURRENDERED STOCK..............   (137)              (137)      (650)                                                     (787)
REPLACEMENT STOCK ISSUED.......    713      74        787    100,000                                                   100,787
ISSUANCE OF STOCK..............    100                100                                                                  100
                                 -----      --     ------   --------      --------     ----------                   ----------
BALANCE -- January 1, 1997.....  1,526      74      1,600    129,500         9,327      2,282,549                    2,422,976
COMPREHENSIVE
  INCOME:
  Net Income...................                                                         3,663,167     3,663,367      3,663,367
  Changes in unrealized loss in
     marketable securities.....                                            (17,867)                     (17,867)       (17,867)
                                                                                                     ----------
                                                                                                     $3,645,500
                                                                                                     ==========
DIVIDEND DISTRIBUTIONS.........                                                          (336,095)                    (336,095)
                                 -----      --     ------   --------      --------     ----------                   ----------
BALANCE -- December 31, 1997...  1,526      74     $1,600   $129,500       ($8,540)    $5,609,821                   $5,732,381
                                 =====      ==     ======   ========      ========     ==========                   ==========
See Accompanying Notes to Combined Financial Statements

                                      F-51
147

                      ON-BOARD MEDIA, INC. AND AFFILIATES

                       COMBINED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
1996           1997
                                                              -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................  $   602,835    $ 3,663,367
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Amortization...........................................      585,932          5,447
     Depreciation...........................................       99,455        158,343
     Write-off of loans to affiliate........................       13,294             --
     Loss on sale of marketable securities..................           --        (68,419)
     Loss on sale of property and equipment.................       34,782             --
     Write-off of receivables...............................           --         72,543
     Provision for bad debt.................................           --         16,248
     Compensation for stock issuance........................      100,000             --
  Changes in operating assets and liabilities:
     Trade accounts receivable, net of allowance for
      doubtful accounts.....................................   (1,917,655)    (1,751,354)
     Other receivables......................................           --       (255,679)
     Prepaid expenses and other current assets..............     (455,661)      (729,984)
     Other assets...........................................       (5,200)         5,965
     Accounts payable and accrued expenses..................      294,662       (182,259)
     Due to art gallery.....................................      680,943        725,928
     Other current liabilities..............................       17,046        (17,046)
     Deferred revenue.......................................      952,844       (353,150)
                                                              -----------    -----------
       Total Adjustments....................................      400,442     (2,373,417)
                                                              -----------    -----------
  Net Cash Provided by Operating Activities.................    1,003,277      1,289,950
                                                              -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Loans to affiliates.......................................      (55,635)        27,002
  Loans to stockholders.....................................           --        (64,267)
  Purchases of marketable securities........................       (3,547)      (366,338)
  Proceeds from sale of marketable securities...............           --        415,290
  Proceeds from sale of property and equipment..............        2,549             --
  Purchases of property and equipment.......................     (567,383)      (293,003)
                                                              -----------    -----------
       Net Cash Used in Investing Activities................     (624,016)      (281,316)
                                                              -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of long-term debt, related party..................     (245,000)      (245,000)
  Proceeds from line of credit..............................      750,000        700,000
  Payment of line of credit.................................           --       (749,900)
  Payment of note payable...................................           --       (200,000)
  Proceeds from borrowings from affiliates..................        5,104             --
  Payments of due to affiliates.............................           --         (5,104)
  Change in subscriptions receivable........................        9,900             --
  Distributions.............................................     (712,982)      (336,095)
  Issuance of common stock..................................          100             --
                                                              -----------    -----------
       Net Cash Used in Financing Activities................     (192,878)      (836,099)
                                                              -----------    -----------
F-52
148
                      ON-BOARD MEDIA, INC. AND AFFILIATES

                COMBINED STATEMENTS OF CASH FLOWS -- (CONTINUED)
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
1996           1997
                                                              -----------    -----------
NET INCREASE IN CASH........................................      186,383        172,535
CASH:
  Beginning of year.........................................       74,935        261,318
                                                              -----------    -----------
  End of year...............................................  $   261,318    $   433,853
                                                              ===========    ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid.............................................  $    78,189    $    54,008
                                                              ===========    ===========
  Net change in unrealized holding (loss) gain on available
     for sale securities....................................  $   (16,329)   $   (17,867)
                                                              ===========    ===========
See Accompanying Notes to Combined Financial Statements

                                      F-53
149

                      ON-BOARD MEDIA, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1997

NOTE 1 -- THE COMPANY

     On-Board Media, Inc. and affiliates (the "Company"), sells advertising in
books, magazines, and videos which are published and distributed to hotels and
cruise ships primarily in the United States, Mexico, and the Caribbean. The
Company also sells promotional advertising which is delivered to cruise
passengers through a live on-board promotions program ("port lecturing").

     In addition, the Company administers art auctions aboard various cruise
ships primarily in the Caribbean and Mexico. The Company has contracts with
various cruise lines which grant the Company the exclusive right to administer
these art auctions. The Company has a contract with an art gallery which
provides the art and conducts the auctions.

     The accompanying combined financial statements include the accounts of
On-board, Media, Inc., Cruise Management International, Inc. and Boxer Media,
Inc.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Combination -- The accompanying combined financial statements
include the accounts of the companies listed in Note 1, all of which have common
control. All significant intercompany transactions have been eliminated in the
combination.

     Cash and Cash Equivalents -- All highly liquid investments with a maturity
of three months or less from the date of purchase are considered cash
equivalents. The Company maintains its cash in bank deposit accounts which, at
times, exceed federally insured limits. The amount in excess of insured limits
was approximately $221,000 at December 31, 1997. In addition during the year
ended December 31, 1997, the Company maintained two other bank accounts which
are not insured by the Federal Deposit Insurance Corporation. The federally
uninsured amount was approximately $2,829,000 at December 31, 1997. The Company
has not experienced any losses in such accounts. The Company's management
believes that the Company is not exposed to any significant credit risk on its
cash balances.

     Trade Accounts Receivable -- The Company's policy is not to require
collateral on trade accounts receivable, which includes port lecturing,
publishing and video receivables. Trade accounts receivable includes
approximately $1,281,000 of receivables at December 31, 1997 which are related
to unpublished books, magazines and videos.

     Work-in-Process -- Publication and video costs are deferred along with the
corresponding revenue until the related publications and videos are published.
Work-in-process amounted to $217,377 at December 31, 1997 and is included in
prepaid expenses and other current assets.

     Deferred Revenue and Revenue Recognition -- Deferred revenue reflects
advertising revenue which has been sold in advance of the publication of the
related books, magazines, and videos. Revenue is recognized upon publication of
the related books, magazines, and videos.

     Due from Cruise Lines and Due to Art Gallery -- The cruise lines collect
all of the revenues from art auction sales made on their cruise ships and submit
the proceeds to the Company net of the cruise lines' fees. The Company then
remits the balance due to the art gallery after deducting its commission, which
is recorded as revenues in the appropriate period. In addition, the cruise lines
may retain additional contractual fees at a higher revenue-sharing rate. Such
additional fees are expended when incurred (see Note 7). Due from cruise lines
amount to $1,697,006 at December 31, 1997 and is included in trade accounts
receivable.

                                      F-54
150
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     Property and Equipment -- Property and equipment are stated at cost.
Depreciation expense has been recorded by the Company utilizing the
straight-line method over the assets estimated useful lives.

     The estimated useful lives for depreciation are as follows:
Office and technology equipment............................   5 - 7 years
Leasehold improvements.....................................  5 - 10 years
Marketable Securities -- The Company's investment in marketable equity
securities is classified as available for sale and is recorded at fair market
value. Unrealized holding gains and losses are reported as a separate component
of stockholders' equity.

     Income Taxes -- The Company has elected to be treated as an S corporation
whereby the profits and losses of the Company are passed directly to the
stockholders for inclusion in their individual tax returns. Therefore, no
provision for income taxes is reflected in the accompanying combined financial
statements.

     The Pro Forma provision for income taxes represents a provision for income
taxes as if the Company had operated as a subchapter C corporation.

     Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions. Those estimates and assumptions affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at December 31, 1997 and the reported amounts of revenues
and expenses during the years ended December 31, 1996 and 1997. Actual results
could differ from those estimates.

     Recently Adopted Accounting Pronouncement -- The Company adopted SFAS No.
130, "Reporting Comprehensive Income" on December 31, 1997. The Company reported
comprehensive income in its combined statement of changes in stockholders'
equity. The adoption of SFAS No. 130 resulted in revised and additional
disclosures but had no effect on the financial position or results of operations
of the Company.

NOTE 3 -- CONCENTRATIONS

     At December 31, 1997, the Company's trade accounts receivable concentrated
approximately in the following geographic regions:
1997
                                                              ----
Caribbean...................................................   66%
United States...............................................   23
Other.......................................................   11
                                                              ---
                                                              100%
                                                              ===
In addition, the Company has earned commissions of approximately $485,000
and $870,000 from one cruise line which approximated 49% and 55% of total
commissions for the years ended December 31, 1996 and 1997, respectively. This
same cruise line's balance of approximately

                                      F-55
151
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 -- CONCENTRATIONS (CONTINUED)
$1,147,500 due to the Company at December 31, 1997 represents approximately 68%
of the total due from all cruise lines (included in trade accounts receivable).

     The Company has an exclusive, multi-year agreement with one art gallery to
provide all of the art and conduct all of the auctions aboard the cruise ships.
The Company does not anticipate any interruptions in the agreement with the
gallery. However, in the event that the agreement was disrupted for any reason,
management believes that a similar agreement could be obtained with another art
gallery.

NOTE 4 -- PROPERTY AND EQUIPMENT

     At December 31, 1997 property and equipment consisted of the following:
Office and technology equipment.............................  $  865,763
Leasehold improvements......................................     257,257
                                                              ----------
                                                               1,123,020
Less accumulated depreciation...............................     328,972
                                                              ----------
                                                              $  794,048
                                                              ==========
Depreciation expense for the years ended December 31, 1996 and 1997 was
$99,455 and $158,343, respectively.

NOTE 5 -- MARKETABLE SECURITIES

     The Company has a cash management program which provides for the investment
of excess cash balances in marketable securities. These marketable securities
consist primarily of equity securities from various public companies traded
overseas and in the United States.

     The Company has adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities" and,
therefore, marketable securities are adjusted to fair value which at December
31, 1997 is as follows:
Marketable securities, at cost..............................  $126,891
Unrealized loss.............................................    (8,540)
                                                              --------
Fair value..................................................  $118,351
                                                              ========
The Company sold $415,290 of marketable securities at a gain of $68,419
during the year ended December 31, 1997. No marketable securities were sold
during the year ended December 31, 1996.

                                      F-56
152
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 -- COMMON STOCK

     A summary of common stock is as follows:
ONBOARD                CRUISE
                             MEDIA, INC.            MANAGEMENT
                           ----------------    INTERNATIONAL, INC.
                                      NON-     --------------------       BOXER
                           VOTING    VOTING    VOTING    NON-VOTING    MEDIA, INC.    COMBINED
                           ------    ------    ------    ----------    -----------    --------
Total Value..............  $  713    $   37    $  713      $   37        $   100       $1,600
                           ======    ======    ======      ======        =======       ======
Par value per share......  $    1    $    1    $    1      $    1        $     1
Authorized shares........   1,000     1,000     1,000       1,000         10,000
Shares issued and
  outstanding............     713        37       713          37            100
NOTE 7 -- ART AUCTION FEES

     The Company entered into a four-year agreement with a cruise line which
commenced in July 1996 and called for a higher revenue-sharing percentage to the
cruise line during the first nine months of the agreement, up to a predetermined
maximum amount. The Company recorded this increase in revenue-sharing percentage
as art auction fees in the amount of $47,812 and $104,276 included in cost of
products sold for the years ended December 31, 1996 and 1997, respectively.

NOTE 8 -- RELATED PARTY TRANSACTIONS

     Due from Affiliates -- The Company made advances to affiliated entities
which are related through common ownership. These advances are due on demand and
bear interest at 7% per annum and amounted to $12,613 at December 31, 1997.

     Due from Stockholder -- The amount due from stockholder arises from
non-interest bearing short-term cash advances. The outstanding balance of these
advances at December 31, 1997 amounted to $64,267.

     Common Stock -- During 1996, the majority stockholder of the Company
returned 137 shares of stock to the Company which then concurrently issued 787
shares to a senior executive of the Company, the value of which was recorded as
compensation.

     Note Payable -- related party  -- At December 31, 1996, the Company had a
$200,000 note payable to a member of the majority stockholder's immediate
family. Interest on this note was payable quarterly at 10% per annum. Interest
expense for the year ended December 31, 1997 was $11,288. On July 25, 1997, the
note was paid in full.

     Long-Term Debt -- related party -- See Note 10.

     Operating Lease -- The Company entered into an agreement with a partnership
related through common ownership to lease its administrative offices. The lease
commenced on April 30, 1996 and is for a term of ten years (Note 12).

NOTE 9 -- LINE OF CREDIT

     The Company has available a $750,000 line of credit with a bank. The line
of credit is collateralized by all of On-Board Media, Inc.'s assets and is
personally guaranteed by one of the

                                      F-57
153
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9 -- LINE OF CREDIT (CONTINUED)
Company's stockholders. Interest is payable on a monthly basis at the bank's
base rate of 8.5% per annum.

NOTE 10 -- LONG-TERM DEBT -- RELATED PARTY

     The Company has an outstanding balance of $183,750 on a note payable to a
partnership owned by one of the stockholders of the Company at December 31,
1997. The note matures on September 1, 1998 and is payable $61,250 quarterly,
plus interest at 10%.The note is collateralized by substantially all of On-Board
Media, Inc.'s assets and the principal stockholder's stock in On-Board Media,
Inc. The loan is also guaranteed by an affiliate related through common
ownership. Interest expense, relating to this note was $52,960 and $32,003 for
the years ended December 31, 1996 and 1997, respectively.

NOTE 11 -- STOCK-BASED COMPENSATION

     On October 19, 1996, a senior executive of the Company received 37.5 shares
of stock, which are fully vested as compensation. The fair market value of the
stock of $100,000 was computed by management as of October 19, 1996 and was
recorded as a contribution to capital.

NOTE 12 -- COMMITMENTS AND CONTINGENCIES

     Contractual agreements -- The Company has executed contracts with various
cruise lines and hotels which grant it the exclusive right to publish and sell
advertising in books, magazines and videos and to conduct live on-board
promotions programs on the cruise ships. The contracts range from 1 to 6 years
and require various guaranteed minimum payments.

     Obligations for guaranteed minimum payments under such contracts as of
December 31, 1997 are as follows:
1998.............................................    $ 3,499,250
1999.............................................      3,921,500
2000.............................................      2,787,500
2001.............................................         97,500
2002.............................................         50,000
                                                     -----------
                                                     $10,355,750
                                                     ===========
Total cruise line fees and magazine royalties under the above agreements
amounted to approximately $6,603,000 and $7,598,000 for the years ended December
31, 1996 and 1997, respectively.

     The Company has executed contracts with various cruise lines which grant it
the exclusive right to administer art auctions on the cruise ships. The
contracts range from several months to more than 4 years and require various
guaranteed minimum payments during the first few years of the

                                      F-58
154
                      ON-BOARD MEDIA, INC. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
agreements. Obligations for guaranteed minimum payments under such contracts as
of December 31, 1997 are as follows:
1998..................................................  $530,500
1999..................................................    85,000
2000..................................................     4,000
                                                        --------
                                                        $619,500
                                                        ========
Total art auction fees under the above agreements are included in cost of
products sold and amounted to approximately $627,000 and $183,000 for the years
ended December 31, 1996 and 1997, respectively.

     Stockholder Agreement -- In 1994 the Company entered into an agreement with
two of its stockholders. The agreement provides one of the Company's
stockholders a base minimum salary of $100,000 annually subject to $25,000
annual increases and contains a non-compete clause for the term of the agreement
and for two years thereafter. The agreement provides another stockholder of the
Company a base minimum annual consulting fee of $6,000 subject to $6,250 annual
increases and contains a non-compete clause for the term of the agreement and
for an indefinite period of time thereafter. The total salary and consulting
fees paid to these stockholders was $21,208 and $156,616 for the years ended
December 31, 1996 and 1997, respectively.

     Operating leases -- During 1996, the Company entered into a 10-year
operating lease agreement with a partnership related through common control for
its administrative offices. Rental payments, including sales tax, are
approximately $22,000 per month. In addition, the lease requires the Company to
pay all operating costs associated with the building. The Company, along with
one of its stockholders, are guarantors on the $1.5 million mortgage associated
with this building.

     Future minimum lease payments, including sales tax, as of December 31, 1997
are as follows:
1998................................................  $  259,750
1999................................................     259,750
2000................................................     259,750
2001................................................     259,750
2002................................................     259,750
Thereafter..........................................     865,833
                                                      ----------
                                                      $2,164,583
                                                      ==========
Rent expense and operating costs, including sales tax, was approximately
$196,000 and $419,000 for the years ended December 31, 1996 and 1997,
respectively.

     Retirement Plan -- The Company has a qualified retirement plan for all
eligible employees under sec. 401 of the Internal Revenue Code. Under the plan,
the Company's contribution for any year is determined at the discretion of the
Board of Directors; however, in no event may elective deferrals exceed a
specific dollar amount determined by the Internal Revenue Service. Total
contributions made to the 401(K) plan were $0 and $21,793 for the years ended
December 31, 1996 and 1997, respectively.

                                      F-59
155

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Nuance Global Ships, Inc.

     We have audited the accompanying statements of operations and cash flows of
Nuance Global Ships, Inc. (a wholly owned subsidiary of Nuance Global Traders
Inc.) for the period from December 26, 1997 through September 24, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Nuance
Global Ships, Inc. for the period from December 26, 1997 through September 24,
1998, in conformity with generally accepted accounting principles.

                                             /s/ ERNST & YOUNG LLP
Miami, Florida
July 16, 1999

                                      F-60
156

                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
                         PERIOD FROM DECEMBER 26, 1997
                           THROUGH SEPTEMBER 24, 1998
Net sales...................................................    $ 52,209,630
Cost of sales...............................................      25,001,906
                                                                ------------
Gross profit................................................      27,207,724
Selling, general and administrative expenses................      30,914,258
                                                                ------------
Loss from operations........................................      (3,706,534)
Other (income) expense:
  Management fee to Nuance Global Traders Inc...............         566,000
  Interest income...........................................         (82,770)
Total other expense.........................................         483,230
Loss before income taxes....................................      (4,189,764)
Provision for income taxes..................................         172,460
                                                                ------------
Net loss....................................................    $ (4,362,224)
                                                                ============
Retained earnings at beginning of year......................    $ 15,338,713
Distribution to parent......................................     (12,280,825)
                                                                ------------
Accumulated deficit at end of year..........................    $ (1,304,346)
                                                                ============
See accompanying notes.

                                      F-61
157

                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                            STATEMENT OF CASH FLOWS
                         PERIOD FROM DECEMBER 26, 1997
                           THROUGH SEPTEMBER 24, 1998
OPERATING ACTIVITIES
Net loss....................................................    $(4,362,224)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation and amortization.............................        350,127
  Provision for shrinkage reserve...........................         71,977
  Deferred income taxes.....................................          2,247
  Changes in operating assets and liabilities:
     Accounts receivable....................................       (581,893)
     Notes receivable.......................................        418,128
     Inventory..............................................     (4,516,754)
     Prepaid expenses and other current assets..............         80,487
     Accounts payable.......................................        268,998
     Accrued expenses.......................................     (1,343,537)
                                                                -----------
  Net cash used in operating activities.....................     (9,612,444)
INVESTING ACTIVITIES
Purchases of property and equipment.........................       (281,136)
Proceeds from sale of property and equipment................        448,784
                                                                -----------
Net cash provided by investing activities...................        167,648
                                                                -----------
FINANCING ACTIVITIES:
  Due to affiliates, net....................................      6,962,019
                                                                -----------
Net cash provided by financing activities...................      6,962,019
Net decrease in cash and cash equivalents...................     (2,482,777)
Cash and cash equivalents, beginning of period..............      3,033,881
                                                                -----------
Cash and cash equivalents, end of period....................    $   551,104
                                                                ===========
SUPPLEMENTAL NON-CASH DISCLOSURE
Assets transferred from affiliate...........................    $   552,314
                                                                ===========
See accompanying notes.

                                      F-62
158

                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                         NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

  Nature of Business

     Nuance Global Ships, Inc. (the Company), a Florida corporation and a wholly
owned subsidiary of Nuance Global Traders Inc., operates duty free retail stores
on cruise ships.

  Basis of Presentation

     The cruise ship operations for the period from December 26, 1997 through
June 25, 1998 were included in the consolidated accounts of Nuance Global
Traders (USA), Inc., a California corporation and a wholly owned subsidiary of
Nuance Global Traders Inc., and were not presented as a separate reporting
entity. Accordingly, the cruise ship operations for the period from December 26,
1997 through June 25, 1998 included in the accompanying financial statements
were carved out of Nuance Global Traders (USA) Inc.'s historical accounting
records. The cruise ship operations for the period from June 26, 1998 through
September 24, 1998 were included in the accounts of Nuance Global Ships, Inc.
and presented as a separate reporting entity.

     The accompanying financial statements include costs allocated to Nuance
Global Ships, Inc. by Nuance Global Traders Inc. for certain functions and
services they performed centrally. All allocations and estimates were based on
assumptions Nuance Global Traders Inc.'s management believed were reasonable in
the circumstances. These allocations and estimates are not necessarily
indicative of the costs and expenses that would have resulted if Nuance Global
Ships, Inc. had operated as a separate entity. See Note 4 for a description of
the functions and services and the amounts allocated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Accounts Receivable

     Settlement of amounts due from the cruise line companies occurs upon
completion of each voyage. Credit losses are provided for in the financial
statements and have been within management's expectations.

  Property and Equipment

     Depreciation is computed by use of the straight-line method over the
estimated useful life of vehicles, furniture, fixtures and equipment, which
ranges from 3 to 5 years.

  Revenue Recognition

     Revenue from retail product sales is recorded upon customer purchase.

  Income Taxes

     The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred
income tax assets and liabilities are determined based upon differences between
the financial statement and income tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of

                                      F-63
159
                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
management, it is more likely than not that some portion of the income tax
assets will not be realized.

  Advertising Expense

     The Company expenses advertising costs as incurred. Advertising expense for
the period from December 26, 1997 through September 24, 1998 (period ended
September 24, 1998) amounted to approximately $17,000.

  Comprehensive Income

     In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in financial
statements. SFAS No. 130 is effective for fiscal years beginning after December
15, 1997. The adoption of SFAS No. 130 had no impact on the Company's net loss.
There are no other components of comprehensive loss other than the Company's net
loss for the period ended September 24, 1998.

  Use of Estimates

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.

3. INCOME TAXES

     The United States and foreign components of (loss) income before income
taxes are as follows:
PERIOD ENDED
                                                             SEPTEMBER 24,
                                                                 1998
                                                             -------------
U.S........................................................   $(4,910,774)
Foreign....................................................       721,010
                                                              -----------
Total......................................................   $(4,189,764)
                                                              ===========
The components of the provision for income taxes are as follows:
PERIOD ENDED
                                                             SEPTEMBER 24,
                                                                 1998
                                                             -------------
U.S........................................................    $     --
Foreign....................................................     172,460
                                                               --------
Total......................................................    $172,460
                                                               ========
F-64
160
                           NUANCE GLOBAL SHIPS, INC.
                         (A WHOLLY OWNED SUBSIDIARY OF
                          NUANCE GLOBAL TRADERS INC.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     The differences between the reported provision from income taxes and income
taxes computed at the U.S. statutory federal income tax rate are as follows:
PERIOD ENDED
                                                             SEPTEMBER 24,
                                                                 1998
                                                             -------------
Income tax expense computed at the U.S. statutory rate of
  34%......................................................   $(1,424,520)
State income taxes, net of federal impact..................      (251,386)
Increase in valuation allowance............................     1,848,366
                                                              -----------
Total......................................................   $   172,460
                                                              ===========
4. RELATED PARTY TRANSACTIONS

     Nuance Global Traders Inc. provided the Company with certain corporate
general and administrative services including legal, treasury and finance fees
paid to Nuance Global Traders Inc. for such services aggregated approximately
$1,407,000 for the period ended September 24, 1998, of this amount, $566,000 is
classified as a management fee. The remainder is included in selling, general
and administrative expenses.

5. COMMITMENTS AND CONTINGENCIES

     The Company leases office, warehouse facilities and retail stores under
non-cancelable operating leases. The leases for the retail stores provide for
additional rentals contingent upon increases in the operating expenses of the
lessors. In addition, the Company pays concession fees, calculated as a
percentage of sales, for certain store leases. Certain of the Company's leases
contain scheduled rent increases during the term of the leases. Rent expense,
including contingent rent and concession fees, were approximately $19,880,000
for the period ended September 24, 1998.

6. SUBSEQUENT EVENT

     On December 15, 1998, pursuant to an Asset Purchase Agreement, among
Starboard Holdings LTD (Starboard) and Nuance Global Traders Ltd., the parent
company of Nuance Global Traders, Inc., Starboard acquired certain assets and
assumed certain liabilities of Nuance Global Ships, Inc.

                                      F-65
161

                            STARBOARD CORPORATE LOGO
162

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the various expenses to be paid solely by
the Registrant in connection with the sale and distribution of the securities
being registered, other than the underwriting discounts and commissions. All
amounts shown are estimates, except the Securities and Exchange Commission
registration fee and the National Association of Securities Dealers, Inc. filing
fee.
ITEM                              AMOUNT
                            ----                              -------
SEC Registration Fee........................................  $34,750
NASD Filing Fee.............................................   13,000
Nasdaq National Market Listing Fee..........................        *
Blue Sky Fees and Expenses (including attorney's fees and
  expenses).................................................        *
Transfer Agent and Registrar Fees...........................        *
Accounting Fees and Expenses................................        *
Legal Fees and Expenses.....................................        *
Printing Expenses...........................................        *
Miscellaneous...............................................        *
                                                              -------
     Total..................................................  $     *
                                                              =======
-------------------------
* To be provided by Amendment.

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The Registrant's Amended and Restated Articles of Association provides for
the indemnification of members of the Supervisory Board and Management Board and
officers to the fullest extent permitted by the law of The Netherlands.

     The Registrant has entered into indemnity agreements with Philip L. Levine
and Jerry Chafetz. The agreements provide that the Registrant will, to fullest
extent permitted by law, indemnify Philip L. Levine and Jerry Chafetz, as the
case may be, if he is made a party, or threatened to be made a party, in any
action, suit or proceeding by reason of his service with the Registrant.

     The Registrant has also obtained directors' and officers' liability
insurance in amounts that it believes are reasonable under the circumstances.

     In connection with any registration of registrable securities under the
Shareholders Agreement, the Registrant has agreed to indemnify each seller, any
controlling person (and their respective director or indirect partners, advisory
board members, directors, officers, trustees, members and shareholders) and each
other person who controls any such seller or holder, against various
liabilities, including liabilities under the Securities Act and Exchange Act.

                                      II-1
163

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

     During the last three years, the Registrant has issued the following
securities without registration under the Securities Act of 1933 as amended (the
"Securities Act") (in each case, except for the issuance described in paragraph
9, giving effect to the 250 for 1 common share split):

     1. On September 10, 1998, the Registrant issued and sold 10,000,000 of its
        common shares and on September 17, 1998 issued and sold 4,912,250 of its
        common shares to our initial investor for an aggregate of $28,700,000.

     2. On September 17, 1998, the Registrant issued and sold 2,499,750 of its
        common shares to lenders of subordinated debt for an aggregate of
        $4,811,548.

     3. On September 17, 1998, the Registrant issued and sold 259,750 of its
        common shares to a management employee for an aggregate of $500,000.

     4. On September 17, 1998, the Registrant issued and sold 415,750 common
        shares to an affiliate of our initial investor purchasing on behalf of
        management employees for an aggregate of $800,000.

     5. On September 17, 1998, the Registrant issued 5,912,500 of its common
        shares to the former shareholders of Onboard Media, Inc., Cruise
        Management International, Inc. and Boxer Media, Inc. in connection with
        the acquisition of these three companies.

     6. On September 17, 1998, the Registrant granted options for no
        consideration to purchase an aggregate of 500,000 shares at an exercise
        price of $1.925 to two employees pursuant to the 1998 Stock Option Plan.

     7. On December 21, 1998, the Registrant granted options for no
        consideration to purchase an aggregate of 450,000 common shares to 19
        employees at an exercise price of $1.925 per share pursuant to the 1998
        Stock Option Plan.

     8. On February 25, 1999, the Registrant granted options for no
        consideration to purchase an aggregate of 50,000 common shares to two
        employees at an exercise price of $1.925 per share pursuant to the 1998
        Stock Option Plan.

     9. On                , 1999, pursuant to an amendment to its Articles of
        Association, the Registrant effected a 50 for 1 share split, followed
        immediately by a 5 for 1 stock dividend.

     The common shares issued pursuant to paragraphs 1 through 5 above were
issued in reliance on the exemption from registration under Section 4(2) of the
Securities Act as a transaction not involving a public offering.

     The options issued pursuant to paragraphs 6 through 8 above, and any shares
issued upon the exercise of such options, were issued in reliance on the
exemption from registration under Section 4(2) of the Securities Act as a
transaction not involving a public offering.

     The common shares issued pursuant to paragraph 9 were issued in a
transaction not involving a "sale" under the Securities Act.

                                      II-2
164

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     The following is a list of exhibits filed as a part of this registration
statement.

     (a) Exhibits
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
*1.1   Form of Underwriting Agreement.
  *3.1   Amended and Restated Articles of Association of the Company
         and English translation.
  *4.1   Specimen Certificate for Common Shares.
   4.2   12% Junior Subordinated Note issued to Viad Corp.
   4.3   Note Agreement, dated as of September 17, 1998, among Miami
         Cruiseline Services Holdings II, New York Life Insurance
         Company, American Home Assurance Company and The
         Northwestern Mutual Life Insurance Company with Form of
         Senior Subordinated Note.+
   4.4   Debt Securities Purchase Agreement, dated as of September
         17, 1998, among Miami Cruiseline Services Holdings II, New
         York Life Insurance Company, American Home Assurance Company
         and The Northwestern Mutual Life Insurance Company.+
  *5.1   Opinion of Stibbe Simont Monahan Duhot.
  10.1   Share Purchase Agreement, dated July 31, 1998, between
         Cruise Line Holdings Co. and Viad Corp.+
  10.2   Stock Subscription and Exchange Agreement, dated as of
         August 27, 1998, among Cruise Line Holdings Co., Philip L.
         Levine, Jerry Chafetz and the other stockholders named
         therein.+
  10.3   Asset Purchase Agreement, dated December 15, 1998, between
         Starboard Holdings Ltd. and Nuance Global Traders.+
  10.4   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., Greyhound Leisure Services
         and J.P. Miquel.
  10.5   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., the Onboard Group and
         Philip L. Levine.
  10.6   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., the Onboard Group and Jerry
         Chafetz.
 *10.7   Separation Agreement, dated August 3, 1999, between Miami
         Cruiseline Services and Jorge Fernandez.+
 *10.8   Consulting Agreement, dated as of January 1, 1999, between
         Miami Cruiseline Services and F.C. Capital Partners LLC.
 *10.9   Consulting Agreement, dated as of August 4, 1999, between
         Miami Cruiseline Services, Cruiseline Holdings Co. and F.C.
         Capital Partners LLC.
 *10.10  1998 Stock Option Plan.
  10.11  Shareholders Agreement, dated as of September 17, 1998,
         among Miami Cruiseline Services, Berkshire Cruise Holdings
         LLC and other investors listed on the signature pages
         thereto with Joinder Agreements, dated as of November 13,
         1998.+
  10.12  Indemnity Agreement, dated September 15, 1998, between Miami
         Cruiseline Services and Philip Levine.
  10.13  Indemnity Agreement, dated September 15, 1998, between Miami
         Cruiseline Services and Jerry Chafetz.
II-3
165
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
*10.14  Management Agreement, dated as of September 17, 1998,
         between Miami Cruiseline Services and Berkshire Cruise
         Holdings LLC, as amended by Amendment, dated January 1,
         1999.
  10.15  Fee letter, dated as of September 17, 1998, between
         Cruiseline Holdings Co. and Berkshire Partners LLC.
  10.16  Fee letter, dated as of September 17, 1998, between
         Cruiseline Holdings Co. and F.C. Capital Partners LLC.
 *10.17  Lease, dated July 10, 1996, between MICC Venture and
         Greyhound Leisure Services.+
 *10.18  Lease, dated April 16, 1996, as amended, between Media
         Holdings, Ltd. and Onboard Media.
 *10.19  Lease, dated April 16, 1996, between Media Holdings, Ltd.
         and Cruise Management International.
 *10.20  Amendment to Lease, dated September 17, 1998, between Media
         Holdings, Ltd. and Onboard Media and Cruise Management
         International.
 *10.21  Credit Agreement, dated as of September 17, 1998, among
         Miami Cruiseline Services Holdings III, Miami Cruiseline
         Services Holdings II, Credit Suisse First Boston,
         NationsBank, N.A., First Source Financial, Inc. and the
         lenders named therein., as amended by First Amendment to the
         Credit Agreement, dated October 6, 1998, Second Amendment to
         the Credit Agreement, dated November 30, 1998, Third
         Amendment to the Credit Agreement, dated March 30, 1999.+
  10.22  Form of Put Agreement with Miami Cruiseline Services
         Holdings II B.V.
  10.23  Joint Venture Agreement for Operation of Miami Airport Duty
         Free Joint Venture, dated August 31, 1995, by and among,
         Greyhound Leisure Services, Century Duty Free, Inc., Media
         Consultants, Inc., Maria J. Argudin and Bayside Company
         Stores as amended by First Addendum, dated October 25, 1995.
  10.24  Concession Agreement for Operation of Nonexclusive Duty and
         Tax Free Concession, Terminal Building, Miami International
         Airport between Board of County Commissioners of Dade
         County, Florida and Miami Airport Duty Free Joint Venture.+
*#10.25  Agreement, dated April 11, 1996, between Cruise Management
         and Park West at Sea, Inc., as amended by Letter Agreement,
         dated June 11, 1998 [other Amendments].
*#10.26  Concession Agreement, dated November 23, 1992, by and
         between Carnival Cruise Lines, Inc. and Greyhound Leisure
         Services as amended by Letter Agreement dated January 4,
         1993, Addendum #1, dated January 12, 1993, and Addendum #2,
         dated March 3, 1999.
*#10.27  Concession Agreement, dated July 15, 1999, between Royal
         Caribbean Cruise Lines and Starboard Holdings Ltd.
*#10.28  Concession Agreement, dated February 25, 1998, between
         Holland America Line-Westours, Inc. and Greyhound Leisure
         Services.
*#10.29  Concession Agreement, dated January 18, 1996, between
         Holland America-Westours, Inc. and Allders International
         (USA), Inc., as amended by Amendment, dated March 5, 1999,
         between Holland America-Westours, Inc. and Starboard
         Holdings Ltd.
*#10.30  Concession Agreement, dated January 18, 1996, between
         Holland America-Westours, Inc. and Allders International
         (USA), Inc., as amended by Amendment to Concession
         Agreement, dated December 15, 1998, between Holland
         America-Westours, Inc. and Starboard Holdings Ltd.
II-4
166
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
21.1   Subsidiaries.
 *23.1   Consent of Stibbe Simont Monahan Duhot (Exhibit 5.1).
  23.2   Consent of Ernst & Young LLP.
  23.3   Consent of Ernst & Young LLP.
  23.4   Consent of Deloitte & Touche LLP.
  23.5   Consent of Goldstein Schechter Price Lucas Horwitz & Co.,
         P.A.
  24.1   Power of Attorney (please see signature page).
  27.1   Financial Data Schedule.
  99.1   Letter from Deloitte & Touche LLP regarding change in
         accountants.
---------------
*  To be filed by Amendment.

#  Confidential treatment request as to certain portions. The term "confidential
   treatment" and the mark "#" as used throughout this exhibit means that
   material has been omitted and separately filed with the Commission.

+ The Registrant agrees to furnish supplementally to the Commission a copy of
  any omitted schedule or exhibit to such agreement upon request by the
  Commission.

     (b) Financial Statement Schedules
INDEX
                                                              -----
Report of Independent Certified Public Accountants..........   S-1
Report of Independent Certified Public Accountants..........   S-2
Schedule II -- Valuation and Qualifying Accounts............   S-3
All other schedules for which provision is made in the applicable
accounting regulations of the Commission are not required under the related
instructions, are inapplicable or not material, or the information called for
thereby is otherwise included in the financial statements and therefore has been
omitted.

ITEM 17.  UNDERTAKINGS

     (a) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.

     (b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item
14 -- Indemnification of Directors and Officers" above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

                                      II-5
167

     (c) The undersigned Registrant hereby undertakes that:

          (1) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.

          (2) For the purposes of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.

                                      II-6
168

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, Massachusetts on
this 19th day of August, 1999.

                                          Miami Cruiseline Services Holdings I
                                          B.V.

                                          By: /s/ JOEL E. CUTLER
                                            ------------------------------------
                                              Joel E. Cutler
                                              Chief Executive Officer

                               POWER OF ATTORNEY

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby authorizes Joel E. Cutler and Bradley M. Bloom, and each of them, with
full power to them, to execute in the name and on behalf of such person any
amendment (including any post-effective amendment) to this Registration
Statement (or any other registration statement for the same offering that is to
be effective upon filing pursuant to Rule 462(b) under the Securities Act) and
to file the same, with exhibits thereto, and other documents in connection
therewith, making such changes in this Registration Statement as the person(s)
so acting deems appropriate, and appoints each of such persons, each with full
power of substitution, attorney-in-fact to sign any amendment (including any
post-effective amendment) to this Registration Statement (or any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act) and to file the same, with
exhibits thereto, and other documents in connection therein.
SIGNATURE                                    TITLE                    DATE
                     ---------                                    -----                    ----
/s/ JOEL E. CUTLER                                   Chairman of the Board and Chief  August 19, 1999
---------------------------------------------------    Executive Officer
Joel E. Cutler

/s/ WILLIAM J. FITZGERALD                            Acting Interim Chief Financial   August 19, 1999
---------------------------------------------------    Officer (Principal Financial
William J. Fitzgerald                                  Officer and Accounting
                                                       Officer)

/s/ BRADLEY M. BLOOM                                 Class A Managing Director        August 19, 1999
---------------------------------------------------
Bradley M. Bloom

/s/ RANDY PEELER                                     Class A Managing Director        August 19, 1999
---------------------------------------------------
Randy Peeler
II-7
169
SIGNATURE                                    TITLE                    DATE
                     ---------                                    -----                    ----
/s/ JERRY CHAFETZ                                    Class B Managing Director        August 19, 1999
---------------------------------------------------
Jerry Chafetz

/s/ DAVID P. FIALKOW                                 Class B Managing Director        August 19, 1999
---------------------------------------------------
David P. Fialkow

/s/ STEVEN S. FISCHMAN                               Class B Managing Director        August 19, 1999
---------------------------------------------------
Steven S. Fischman

/s/ PHILIP L. LEVINE                                 Class B Managing Director        August 19, 1999
---------------------------------------------------
Philip L. Levine

/s/ J. P. MIQUEL                                     Class B Managing Director        August 19, 1999
---------------------------------------------------
J. P. Miquel

/s/ LEONARD A. SCHLESINGER                           Class B Managing Director        August 19, 1999
---------------------------------------------------
Leonard A. Schlesinger

Registrant's Agent for Service in the United States:

/s/ JOEL E. CUTLER                                                                    August 19, 1999
---------------------------------------------------
Joel E. Cutler
II-8
170

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     We have audited the consolidated financial statements of Greyhound Leisure
Services, Inc. and subsidiaries as of December 31, 1997, and for each of the two
years in the period ended December 31, 1997, and have issued our report thereon
dated July 31, 1999, (included elsewhere in this Registration Statement). Our
audits also included the financial schedule listed in Item 16(b) of this
Registration Statement. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.

     In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

                                          /s/ DELOITTE & TOUCHE LLP

Miami, Florida
July 31, 1999

                                       S-1
171

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     We have audited the consolidated financial statements of Starboard Cruise
Services N.V. (formerly Miami Cruiseline Services Holdings I.B.V.) as of
December 31, 1998, and for the period from September 10, 1998 through December
31, 1998, and have issued our report thereon dated March 22, 1999, except as to
Note 14 as to which the date is September   , 1999 (included elsewhere in this
Registration Statement). Our audit also included the financial statement
schedule listed in Item 16(b) of this Registration Statement. This schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion based on our audit.

     In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

Miami, Florida
August 18, 1999

     The foregoing report is in the form that will be signed upon completion of
the restatement of capital accounts and the name change described in Note 14 to
the consolidated financial statements.

                                          /s/ ERNST & YOUNG LLP

Miami, Florida
August 18, 1999

                                       S-2
172

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                         STARBOARD CRUISE SERVICES N.V.
ADDITIONS
                                                   ------------------------
                                      BALANCE AT   CHARGED TO   CHARGED TO                 BALANCE AT
                                      BEGINNING    COSTS AND       OTHER                     END OF
DESCRIPTION                            OF YEAR      EXPENSES    ACCOUNTS(A)   DEDUCTIONS      YEAR
-----------                           ----------   ----------   -----------   ----------   ----------
PREDECESSOR:
Year ended December 31, 1996
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $357,698     $ 75,600     $     --      $113,853     $319,445
                                       ========     ========     ========      ========     ========
Year Ended December 31, 1997
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $319,445     $ 43,274     $     --      $ 35,450     $327,269
                                       ========     ========     ========      ========     ========
Period Ended September 17, 1998
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $327,269     $114,564     $     --      $     --     $441,833
                                       ========     ========     ========      ========     ========
SUCCESSOR:
Period Ended December 31, 1998
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $     --     $108,363     $520,071      $  2,073     $626,361
                                       ========     ========     ========      ========     ========
Six Months Ended June 30, 1999
  (unaudited)
  Deducted from asset accounts:
     Allowance for doubtful
       accounts.....................   $626,361     $ 48,373     $     --      $116,964     $557,770
                                       ========     ========     ========      ========     ========
-------------------------

(a) Acquired in connection with the Greyhound Leisure Services, Inc. and the
    Onboard Group acquisitions.

                                       S-3
173

                                 EXHIBIT INDEX
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
*1.1   Form of Underwriting Agreement.
  *3.1   Amended and Restated Articles of Association of the Company
         and English translation.
  *4.1   Specimen Certificate for Common Shares.
   4.2   12% Junior Subordinated Note issued to Viad Corp.
   4.3   Note Agreement, dated as of September 17, 1998, among Miami
         Cruiseline Services Holdings II, New York Life Insurance
         Company, American Home Assurance Company and The
         Northwestern Mutual Life Insurance Company with Form of
         Senior Subordinated Note.+
   4.4   Debt Securities Purchase Agreement, dated as of September
         17, 1998, among Miami Cruiseline Services Holdings II, New
         York Life Insurance Company, American Home Assurance Company
         and The Northwestern Mutual Life Insurance Company.+
  *5.1   Opinion of Stibbe Simont Monahan Duhot.
  10.1   Share Purchase Agreement, dated July 31, 1998, between
         Cruise Line Holdings Co. and Viad Corp.+
  10.2   Stock Subscription and Exchange Agreement, dated as of
         August 27, 1998, among Cruise Line Holdings Co., Philip L.
         Levine, Jerry Chafetz and the other stockholders named
         therein.+
  10.3   Asset Purchase Agreement, dated December 15, 1998, between
         Starboard Holdings Ltd. and Nuance Global Traders.+
  10.4   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., Greyhound Leisure Services
         and J.P. Miquel.
  10.5   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., the Onboard Group and
         Philip L. Levine.
  10.6   Employment Agreement, dated as of September 17, 1998, by and
         between Cruiseline Holdings Co., the Onboard Group and Jerry
         Chafetz.
 *10.7   Separation Agreement, dated August 3, 1999, between Miami
         Cruiseline Services and Jorge Fernandez.+
 *10.8   Consulting Agreement, dated January 1, 1999, between Miami
         Cruiseline Services and F.C. Capital Partners LLC.
 *10.9   Consulting Agreement, dated August 4, 1999, between Miami
         Cruiseline Services, Cruiseline Holdings Co. and F.C.
         Capital Partners LLC.
 *10.10  1998 Stock Option Plan.
  10.11  Shareholders Agreement, dated as of September 17, 1998,
         among Miami Cruiseline Services, Berkshire Cruise Holdings
         LLC and other investors listed on the signature pages
         thereto with Joinder Agreements, dated as of November 13,
         1998.+
  10.12  Indemnity Agreement, dated September 15, 1998, between Miami
         Cruiseline Services and Philip Levine.
  10.13  Indemnity Agreement, dated September 15, 1998, between Miami
         Cruiseline Services and Jerry Chafetz.
 *10.14  Management Agreement, dated as of September 17, 1998,
         between Miami Cruiseline Services and Berkshire Cruise
         Holdings LLC as amended by Amendment, dated January 1, 1999.
174
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
10.15  Fee letter, dated as of September 17, 1998, between
         Cruiseline Holdings Co. and Berkshire Partners LLC.
  10.16  Fee letter, dated as of September 17, 1998, between
         Cruiseline Holdings Co. and F.C. Capital Partners LLC.
 *10.17  Lease, dated July 10, 1996, between MICC Venture and
         Greyhound Leisure Services.+
 *10.18  Lease, dated April 16, 1996, as amended, between Media
         Holdings, Ltd. and Onboard Media.
 *10.19  Lease, dated April 16, 1996, between Media Holdings, Ltd.
         and Cruise Management International.
 *10.20  Amendment to Lease, dated September 17, 1998, between Media
         Holdings, Ltd. and Onboard Media and Cruise Management
         International.
 *10.21  Credit Agreement, dated as of September 17, 1998, among
         Miami Cruiseline Services Holdings III, Miami Cruiseline
         Services Holdings II, Credit Suisse First Boston,
         NationsBank, N.A., First Source Financial, Inc. and the
         lenders named therein., as amended by First Amendment to the
         Credit Agreement, dated October 6, 1998, Second Amendment to
         the Credit Agreement, dated November 30, 1998, Third
         Amendment to the Credit Agreement, dated March 30, 1999.+
  10.22  Form of Put Agreement with Miami Cruiseline Services
         Holdings II B.V.
  10.23  Joint Venture Agreement for Operation of Miami Airport Duty
         Free Joint Venture, dated August 31, 1995, by and among,
         Greyhound Leisure Services, Century Duty Free, Inc., Media
         Consultants, Inc., Maria J. Argudin and Bayside Company
         Stores as amended by First Addendum, dated October 25, 1995.
  10.24  Concession Agreement for Operation of Nonexclusive Duty and
         Tax Free Concession, Terminal Building, Miami International
         Airport between Board of County Commissioners of Dade
         County, Florida and Miami Airport Duty Free Joint Venture.+
*#10.25  Agreement, dated April 11, 1996, between Cruise Management
         and Park West at Sea, Inc., as amended by Letter Agreement,
         dated June 11, 1998 [other Amendments].
*#10.26  Concession Agreement, dated November 23, 1992, by and
         between Carnival Cruise Lines, Inc. and Greyhound Leisure
         Services as amended by Letter Agreement dated January 4,
         1993, Addendum #1, dated January 12, 1993, and Addendum #2,
         dated March 3, 1999.
*#10.27  Concession Agreement, dated July 15, 1999, between Royal
         Caribbean Cruise Lines and Starboard Holdings Ltd.
*#10.28  Concession Agreement, dated February 25, 1998, between
         Holland America Line-Westours, Inc. and Greyhound Leisure
         Services.
*#10.29  Concession Agreement, dated January 18, 1996, between
         Holland America-Westours, Inc. and Allders International
         (USA), Inc., as amended by Amendment, dated March 5, 1999,
         between Holland America-Westours, Inc. and Starboard
         Holdings Ltd.
*#10.30  Concession Agreement, dated January 18, 1996, between
         Holland America-Westours, Inc. and Allders International
         (USA), Inc., as amended by Amendment to Concession
         Agreement, dated December 15, 1998, between Holland
         America-Westours, Inc. and Starboard Holdings Ltd.
  21.1   Subsidiaries.
 *23.1   Consent of Stibbe Simont Monahan Duhot (Exhibit 5.1).
  23.2   Consent of Ernst & Young LLP.
175
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
23.3   Consent of Ernst & Young LLP.
  23.4   Consent of Deloitte & Touche LLP.
  23.5   Consent of Goldstein Schechter Price Lucas Horwitz & Co.,
         P.A.
  24.1   Power of Attorney (please see signature page).
  27.1   Financial Data Schedule.
  99.1   Letter from Deloitte & Touche LLP regarding change in
         accountants.
---------------
*  To be filed by Amendment.

#  Confidential treatment request as to certain portions. The term "confidential
   treatment" and the mark "#" as used throughout this exhibit means that
   material has been omitted and separately filed with the Commission.

+ The Registrant agrees to furnish supplementally to the Commission a copy of
  any omitted schedule or exhibit to such agreement upon request by the
  Commission.