Restructuring Charges

For the quarter ended March 31, 2014, we incurred $1.7 million of restructuring charges in connection with our broad profitability improvement program. The following are the 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 first quarter of 2014, we continued 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 in 2013, primarily from our international markets, resulting in 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.

For the quarter ended March 31, 2014, we did not incur significant restructuring exit costs associated with this initiative. We expect to incur restructuring exit costs of approximately $0.5 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, 2014		Accruals			Payments		Ending Balance March 31, 2014		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred⁽¹⁾
Termination benefits	$	8,315	$	(203	)	$	1,323	$	6,789	$	9,435	$	353
Contract termination costs	126		5			59		$	72	4,147		—
Other related costs	1,397		142			244		$	1,295	4,521		121
Total	$	9,838	$	(56	)	$	1,626	$	8,156	$	18,103	$	474


(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 incurred approximately $5.7 million of other costs during the quarter ended March 31, 2014 that primarily consisted of call center transition costs and accelerated depreciation on leasehold improvements and were classified within Marketing, selling and administrative expenses and Depreciation and amortization expenses in our consolidated statements of comprehensive income (loss). We expect to incur an additional amount for such costs of approximately $1.2 million through the end of 2014.

Pullmantur Restructuring

Restructuring Exit Costs

A second initiative relates to Pullmantur’s focus on its cruise business and its expansion in Latin America. Activities related to this initiative include the opening of a Latin American regional office to place operating management closer to this market and the sale of Pullmantur's non-core businesses. This resulted in the elimination of approximately 100 Pullmantur shore-side positions 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. During the first quarter of 2014, we continued with activities related to this initiative.

As a result of these actions, we incurred restructuring exit costs of $1.8 million for the quarter ended March 31, 2014, which are reported within Restructuring charges in our consolidated statements of comprehensive income (loss). We expect to incur additional restructuring exit costs of approximately $4.9 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, 2014		Accruals		Payments		Ending Balance March 31, 2014		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred⁽²⁾
Termination benefits	$	3,910	$	1,338	$	518	$	4,730	$	5,248	$	263
Contract termination costs	847		—		—		$	847	847		(848		)
Other related costs	516		454		—		$	970	970		5,444
Total	$	5,273	$	1,792	$	518	$	6,547	$	7,065	$	4,859


(2)	These amounts relate to restructuring exit costs associated with our Pullmantur restructuring.

In connection with this initiative, we incurred approximately $1.2 million of other costs during the quarter ended March 31, 2014 associated with the opening of a Latin American regional office that was classified within Marketing, selling and administrative expenses in our consolidated statements of comprehensive income (loss). We expect to incur an additional amount for such costs of approximately $0.6 million through the end of 2014.

Sale of Pullmantur Non-core Businesses

As part of our Pullmantur related initiatives, on March 31, 2014, Pullmantur sold the majority of its interest in its non-core businesses. These non-core businesses included Pullmantur’s land-based tour operations, travel agency and 49% interest in its air business. In connection with the sale agreement, we retained a 19% interest in each of the non-core businesses and retained the aircraft which will be dry leased to Pullmantur Air. Consistent with our Pullmantur reporting two-month lag period, we will report the impact of the sale in our second quarter of 2014. We expect to incur a net loss resulting from the sale of Pullmantur's non-core businesses ranging from approximately $6.0 million to $9.0 million during the second quarter of 2014 related to this transaction, which we anticipate will be classified within Other operating expenses in our consolidated statements of comprehensive income (loss). See Note 1. General for information on the basis on which we prepare our consolidated financial statements.

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 during 2013. These businesses continued to meet the criteria to be classified as held for sale as of March 31, 2014. Assets and liabilities held for sale are not material to our consolidated balance sheets.

We have significant continuing involvement with the sold businesses and, as a result, these businesses did not meet the criteria for discontinued operations reporting.