Restructuring and Related Charges

9 Months Ended

Sep. 30, 2013

Note 11. Restructuring and Related Charges

We are in the process of implementing a broad profitability improvement program aimed at improving our returns on invested capital by increasing revenues and reducing expenses.

There are numerous initiatives in connection with this program that are at different stages of implementation.

One of those initiatives relates to realizing economies of scale and improving service delivery to our travel partners and guests by restructuring and consolidating our global sales, marketing and general and administrative structure. During the third quarter of 2013, we moved forward with activities related to this initiative. The activities 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, primarily from our international markets, and recognition of a liability for one-time termination benefits during the third 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 charges of $12.2 million in the third quarter of 2013 and $13.9 million for the nine months ended September 30, 2013 which are classified as Restructuring and related charges in our consolidated statements of comprehensive income (loss). We expect to incur additional restructuring and related charges of approximately $8.6 million, through the end of 2014, to complete this initiative.

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

	Beginning Balance July 1, 2013		Accruals		Payments		Ending Balance September 30, 2013		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred(1)
Termination benefits	$	—	$	10,004	$	387	$	9,617	$	10,004	$	1,687
Contract termination costs		—	200		—		$	200		200		3,761
Other related costs		796	2,040		675		$	2,161		3,718		3,167
Total	$	796	$	12,244	$	1,062	$	11,978	$	13,922	$	8,615

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

In connection with this initiative, we expect to incur approximately $8 million of costs through the end of 2014, incremental to the amounts reported in the table above. These costs will primarily consist of call center transition costs and accelerated depreciation on leasehold improvements and will be classified in Marketing, selling and administrative expenses and Depreciation and amortization expenses, respectively, in our consolidated statements of comprehensive income (loss).

In addition, we continue to evaluate various other initiatives in furtherance of our profitability improvement program. If we elect to move forward with one or more of these initiatives, we may incur additional charges, some of which may be material.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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