Restructuring Charges

For the quarter ended September 30, 2014 and September 30, 2013, we incurred $0.3 million and $12.2 million, respectively, and for the nine months ended September 30, 2014 and September 30, 2013, we incurred $2.0 million and $13.9 million, respectively, of restructuring charges in connection with our broad profitability improvement program. The following are the profitability initiatives.

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. Activities related to this initiative include 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 and nine months ended September 30, 2014, we incurred $1.2 million and $0.8 million, respectively, in restructuring exit costs associated with this initiative, which are reported within Restructuring charges in our consolidated statements of comprehensive income (loss). The costs incurred in the third quarter of 2014 related to discretionary bonus payments paid to persons whose positions were eliminated as part of our restructuring activities. For the quarter and nine months ended September 30, 2013, we incurred $12.2 million and $13.9 million, respectively, of restructuring exit costs associated with 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 September 30, 2014		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred
Termination benefits	$	8,315	$	647	$	6,991	$	1,971	$	10,285	$	—
Contract termination costs	$	126	8		59		$	75	4,150		—
Other related costs	$	1,397	150		244		$	1,303	4,529		500
Total	$	9,838	$	805	$	7,294	$	3,349	$	18,964	$	500

In connection with this initiative, we incurred approximately $7.4 million of other costs during the nine months ended September 30, 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). For the quarter ended September 30, 2014, we did not incur any additional other costs associated with this initiative. We do not expect to incur any further material restructuring exit or other additional costs related to this initiative.

Pullmantur Restructuring

Restructuring Exit Costs

In the fourth quarter of 2013, we moved forward with an initiative related to Pullmantur’s focus on its cruise business and its expansion in Latin America. Activities related to this initiative include the sale of Pullmantur's non-core businesses and placing 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 year ended December 31, 2013. In the second quarter of 2014, we elected not to execute the dismissal of approximately 30 of the positions which resulted in a partial reversal of the liability. 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 reversed $0.9 million and incurred $1.2 million of restructuring exit costs for the quarter and nine months ended September 30, 2014, respectively, which are reported within Restructuring charges in our consolidated statements of comprehensive income (loss). For the quarter ended September 30, 2014, we reversed contract termination costs and termination benefits to adjust for actual costs incurred.

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



	Beginning Balance January 1, 2014		Accruals			Payments		Ending Balance September 30, 2014		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred
Termination benefits	$	3,910	$	1,036		$	3,488	$	1,458	$	4,946	$	—
Contract termination costs	$	847	(607		)	—		$	240	240		—
Other related costs	$	516	725			855		$	386	1,241		1,080
Total	$	5,273	$	1,154		$	4,343	$	2,084	$	6,427	$	1,080

In connection with this initiative, we incurred approximately $1.3 million and $7.8 million of other costs during the quarter and nine months ended September 30, 2014, respectively, associated with placing operating management closer to the Latin American market that was classified within Marketing, selling and administrative expenses in our consolidated statements of comprehensive income (loss). We do not expect to incur any further material restructuring exit or other additional costs related to this initiative.

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 as well as 100% ownership of the aircraft which are being dry leased to Pullmantur Air. Consistent with our Pullmantur two-month lag reporting period, we reported the impact of the sale in the second quarter of 2014. See Note 1. General for information on the basis on which we prepare our consolidated financial statements and Note 6. Goodwill and Other Assets for the accounting of our 19% retained interest.

The sale resulted in a $0.8 million gain reported in the second quarter of 2014, inclusive of the release of cumulative translation adjustment losses, which is classified within Other operating expenses in our consolidated statements of comprehensive income (loss). As part of the sale, we agreed to maintain commercial and bank guarantees on behalf of the buyer for a maximum period of twelve months and extended a term loan facility to Nautalia due June 30, 2016. During the second quarter of 2014, we recorded the fair value of the guarantees and a loss reserve for the loan amount drawn, offsetting the gain recognized by $2.9 million. See Note 9. Changes in Accumulated Other Comprehensive Income (Loss) for further information on the release of the foreign currency translation losses.

The non-core businesses met the accounting criteria to be classified as held for sale during the fourth quarter of 2013 which resulted in restructuring related impairment charges of $20.0 million in 2013 to adjust the carrying value of assets held for sale to their fair value, less cost to sell. As of December 31, 2013, assets and liabilities held for sale were not material to our consolidated balance sheet and no longer exist as of September 30, 2014. The businesses did not meet the criteria for discontinued operations reporting as a result of our significant continuing involvement.