Property and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment consists of the following (in thousands):

	2013			2012
Ships	$	20,858,553		$	20,855,606
Ship improvements	1,683,644			1,341,137
Ships under construction	563,676			169,274
Land, buildings and improvements, including leasehold improvements and port facilities	394,120			377,821
Computer hardware and software, transportation equipment and other	771,304			698,865
Total property and equipment	24,271,297			23,442,703
Less—accumulated depreciation and amortization	(6,753,545		)	(5,991,669		)
	$	17,517,752		$	17,451,034

Ships under construction include progress payments for the construction of new ships as well as planning, design, interest, commitment fees and other associated costs. We capitalized interest costs of $17.9 million, $13.3 million and $14.0 million for the years 2013, 2012 and 2011, respectively.

In 2013, our agreement with STX France S.A. to build the third Oasis-class ship for Royal Caribbean International became effective. Refer to Note 15. Commitments and Contingencies for further information. Pullmantur’s Atlantic Star, which has been out of operation since 2009, was transferred in the first quarter of 2013 to an affiliate of STX France S.A. as part of the consideration for the third Oasis-class ship. The Atlantic Star was transferred at carrying value, which approximated its fair value on the date of its transfer. The transfer did not result in a gain or a loss.

We review our long-lived assets for impairment whenever events or changes in circumstances indicate potential impairment. Due to an anticipated change in the nature of the cash flows to be generated by the Pullmantur aircraft, we reviewed the aircraft for impairment. We identified that the undiscounted future cash flows of the aircraft were less than their carrying value and recorded a restructuring related impairment charge of $13.5 million which is reported in Restructuring and related impairment charges in our consolidated statements of comprehensive income (loss) as of December 31, 2013.

Additionally, Pullmantur's non-core businesses met the accounting criteria to be classified as held for sale during the fourth quarter of 2013 which led to restructuring related impairment charges of $18.2 million to adjust the carrying value of property and equipment held for sale to its fair value, less cost to sell. The impairment charge is reported in Restructuring and related impairment charges in our consolidated statements of comprehensive income (loss). The remaining long-lived assets held for sale are not material. See Note 14. Fair Value Measurements and Derivative Instruments and Note 16. Restructuring and Related Impairment Charges for further discussion.

During 2012, the fair value of Pullmantur's aircraft were determined to be less than their carrying value and an impairment charge of $48.9 million was recognized in earnings during the fourth quarter of 2012 and was reported within Impairment of Pullmantur related assets within our consolidated statements of comprehensive income (loss).

During 2012, Pullmantur delivered Ocean Dream to an unrelated third party as part of a six year bareboat charter agreement. The charter agreement provides a renewal option exercisable by the unrelated third party for an additional four years. The charter agreement constitutes an operating lease and charter revenue is being recognized on a straight-line basis over the six year charter term. The charter revenue recognized during 2013 and 2012 was not material to our results of operations.