Restructuring and Related Impairment Charges

For the year ended December 31, 2013, we incurred the following restructuring and related impairment charges in connection with our profitability initiatives (in thousands):



Restructuring exit costs	$	23,432
Impairment charges	33,514
Restructuring and related impairment charges	$	56,946

The following are the restructuring profitability initiatives that are at different stages of implementation.

Consolidation of Global Sales, Marketing, General and Administrative Structure

One of our profitability initiatives relates to restructuring and consolidation of our global sales, marketing and general and administrative structure. During the third quarter of 2013, we moved forward with activities related to this initiative, including the consolidation of most of our call centers located outside of the United States and the establishment of brand dedicated sales, marketing and revenue management teams in key priority markets. This resulted in the elimination of approximately 500 shore-side positions, primarily from our international markets, and recognition of a liability for one-time termination benefits during the year ended December 31, 2013. Additionally, we incurred contract termination costs and other related costs consisting of legal and consulting fees to implement this initiative.

As a result of these actions, we incurred restructuring exit costs of $18.2 million for the year ended December 31, 2013, which are reported in Restructuring and related impairment charges in our consolidated statements of comprehensive income (loss). We expect to incur additional restructuring exit costs of approximately $1.2 million, through the end of 2014, to complete this initiative.

The following table summarizes our restructuring exit costs related to the above initiative (in thousands):



	Beginning Balance January 1, 2013		Accruals		Payments		Ending Balance December 31, 2013		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred⁽¹⁾
Termination benefits	$	—	$	9,638	$	1,323	$	8,315	$	9,638	$	915
Contract termination costs		—		4,142		4,016	$	126		4,142		—
Other related costs		—		4,379		2,982	$	1,397		4,379		317
Total	$	—	$	18,159	$	8,321	$	9,838	$	18,159	$	1,232


(1)	These amounts relate to restructuring exit costs associated with our Global Sales, Marketing and General and Administrative restructuring and consolidation efforts. It does not include charges related to other initiatives.

In connection with this initiative, we also expect to incur approximately $5.2 million of other costs through the end of 2014 which will primarily consist of call center transition costs and accelerated depreciation on leasehold improvements and will be classified within Marketing, selling and administrative expenses and Depreciation and amortization expenses, respectively, in our consolidated statements of comprehensive income (loss).

Pullmantur Restructuring

Restructuring Exit Costs

A second initiative relates to Pullmantur’s focus on the cruise business and expansion in Latin America. During the fourth quarter of 2013, we moved forward with activities related to this initiative. The activities include the opening of a Pullmantur regional head office in Panama to place operating management closer to the Latin American market. This resulted in the elimination of approximately 100 Pullmantur shore-side positions and recognition of a liability for one-time termination benefits during the fourth quarter of 2013. Additionally, we incurred contract termination costs and other related costs consisting of legal and consulting fees to implement this initiative.

As a result of these actions, we incurred restructuring exit costs of $5.3 million for the year ended December 31, 2013, which are reported in Restructuring and related impairment charges in our consolidated statements of comprehensive income (loss). We expect to incur additional restructuring exit costs of approximately $9.2 million, through the end of 2014, to complete this initiative.

The following table summarizes our restructuring exit costs related to the above initiative (in thousands):



	Beginning Balance January 1, 2013		Accruals		Payments		Ending Balance December 31, 2013		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred⁽²⁾
Termination benefits	$	—	$	3,910	$	—	$	3,910	$	3,910	$	2,056
Contract termination costs		—		847		—	$	847		847		—
Other related costs		—		516		—	$	516		516		7,121
Total	$	—	$	5,273	$	—	$	5,273	$	5,273	$	9,177


(2)	These amounts relate to restructuring exit costs associated with our Pullmantur restructuring. It does not include any charges related to other initiatives.

In connection with this initiative, we also expect to incur approximately $7.5 million of other costs through the end of 2014 primarily related to the sale of the Pullmantur non-core businesses, which we anticipate will be classified in Other (expense) income in our consolidated statements of comprehensive income (loss).

Sale of Pullmantur Non-core Businesses

As part of our Pullmantur Restructuring, in December 2013, Pullmantur reached an agreement to sell the majority of its interest in its non-core businesses, the closing of which is subject to customary closing conditions. These non-core businesses include Pullmantur’s land-based tour operations, travel agency and its 49.0% interest in its air business. In connection with the agreement, we will retain a 19.0% interest in the non-core businesses and will retain the aircraft which will be dry leased to Pullmantur Air. The 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 $20.0 million to adjust the carrying value of assets held for sale to their 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). Assets and liabilities held for sale are not material to our consolidated balance sheets.

We expect to have significant continuing involvement after the sale of non-core businesses, and as a result, the non-core businesses did not meet the criteria for discontinued operations reporting. In addition, 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).

See Note 5. Property and Equipment and Note 14. Fair Value Measurements and Derivative Instruments for further discussion.