Goodwill

The carrying amount of goodwill attributable to our Royal Caribbean International and Pullmantur reporting units and the changes in such balances during the years ended December 31, 2015 and 2014 were as follows (in thousands):



	Royal Caribbean International			Pullmantur			Total
Balance at December 31, 2013	$	287,124		$	152,107		$	439,231
Foreign currency translation adjustment	(166		)	(18,523		)	(18,689		)
Balance at December 31, 2014	286,958			133,584			420,542
Impairment charge	—			(123,814		)	(123,814		)
Foreign currency translation adjustment	(194		)	(9,770		)	(9,964		)
Balance at December 31, 2015	$	286,764		$	—		$	286,764

During the fourth quarter of 2015, we performed our annual impairment review of goodwill for the Royal Caribbean International reporting unit. We elected to bypass the qualitative assessment and proceeded directly to step one of the two-step goodwill impairment test to corroborate the results of recent years' qualitative assessments. As a result of the test, we determined the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 90% resulting in no impairment to Royal Caribbean International goodwill.

Additionally, we performed an interim impairment evaluation of Pullmantur's goodwill in connection with the preparation of our financial statements during the quarter ended September 30, 2015. We estimated the fair value of the Pullmantur reporting unit using a probability-weighted discounted cash flow model. The estimation of future cash flows requires our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as assumptions regarding the cruise vacation industry’s competitive environment and general and economic business conditions, among other factors.

Pullmantur is a brand that historically targeted primarily the Spanish and Latin American markets. These markets have experienced significant volatility and the brand has adopted various changes to its operating strategy as a result. Most recently, in response to favorable economic expectations in Latin America, especially Brazil, management undertook a positioning of the brand to increase sourcing of guests and to deliver deployment for Latin American consumers; transferring newer and more efficient capacity to the brand; and selling Pullmantur’s non-core businesses to allow the brand to focus on the core cruise business.

However, the Latin American resurgence was short lived and the core Latin American economies, including Brazil, Mexico, Argentina and Venezuela, have regressed and their currencies have materially depreciated versus the US dollar. Most notably, the Brazilian Real devalued by approximately 22% relative to the US dollar during the third quarter of 2015.

In light of the increased challenges facing Pullmantur’s Latin American strategy, we made a decision to significantly change that strategy from growing the brand through vessel transfers to a right-sizing strategy during the third quarter of 2015. This right-sizing strategy includes reducing our exposure to Latin America, refocusing on the brand’s core market of Spain and, consequently, reducing the size of Pullmantur’s fleet. This strategic change includes a decision to redeploy Pullmantur’s Empress to the Royal Caribbean International brand as well as a decision to cancel the intended transfer of the Majesty of the Seas to Pullmantur. As we previously disclosed, the planned growth of the Pullmantur fleet through the transfer of vessels into the brand has been the most significant assumption within Pullmantur's projected cash flows supporting the recoverability of the Pullmantur reporting unit’s goodwill and trademarks and trade names. Our decision to reduce the size of Pullmantur’s fleet significantly decreases the cash flow projections which have been the basis of our impairment analysis.

During the third quarter of 2015, due to the previously described market conditions and our recent decision to reduce our exposure to Latin America, refocus on the brand’s core Spanish market and reduce the brand's overall capacity, we reviewed the two-step goodwill impairment test based on the updated cash flow projections. As a result of this analysis, we determined that the carrying value of the Pullmantur reporting unit exceeded its fair value. Accordingly, upon the completion of the two-step impairment test, we recognized a goodwill impairment charge of $123.8 million. The charge reflects the full carrying amount of the goodwill leaving Pullmantur with no goodwill on its books. This impairment charge was recognized in earnings during the third quarter of 2015 and is reported within Impairment of Pullmantur related assets within our consolidated statements of comprehensive income (loss). Refer to Note 14. Fair Value Measurements and Derivative Instruments for further discussion.

For the years ended December 31, 2014 and December 31, 2013, we did not record an impairment of goodwill for our reporting units. Accumulated goodwill impairment losses as of December 31, 2015 were $443.0 million attributable to our Pullmantur reporting unit.