Restructuring Charges Restructuring Charges

3 Months Ended

Mar. 31, 2016

Pullmantur's strategy over the last several years had focused both on its core cruise market in Spain and on expansion throughout Latin America, especially Brazil. However, due to significant and increased challenges facing Pullmantur's Latin American operations, in 2015, we decided to significantly change our strategy from growing the brand through vessel transfers to a right-sizing strategy. 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.

During the first quarter of 2016, we moved forward with activities related to this right-sizing strategy. The activities included the closing of Pullmantur's regional head office in Brazil and the redeployment of Pullmantur’s Empress to the Royal Caribbean International brand. The closure of the Brazil office resulted in the recognition of a liability for one-time termination benefits during the first quarter of 2016. We also incurred contract termination costs related to this activity.

As a result of these actions, we incurred restructuring exit costs of $0.3 million for the quarter ended March 31, 2016, which are reported within Restructuring charges in our consolidated statements of comprehensive income (loss). We expect to incur additional restructuring exit costs of approximately $2.3 million, through the end of 2016, to implement our right-sizing strategy.

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



	Beginning Balance January 1, 2016		Accruals		Payments		Ending Balance March 31, 2016		Cumulative Charges Incurred
Termination benefits	$	—	$	237	$	—	$	237	$	237
Contract termination costs		—		68		—		68		68
Other related costs		—		—		—		—		—
Total	$	—	$	305	$	—	$	305	$	305

In connection with this strategy, we incurred approximately $2.9 million of other costs during the quarter ended March 31, 2016 that primarily consisted of costs associated with the redeployment of Pullmantur's Empress to the Royal Caribbean International brand that were reported within Cruise operating expenses and Depreciation and amortization expenses in our consolidated statements of comprehensive income (loss). We expect to incur additional other costs of $1.9 million, through the end of 2016, to implement our right-sizing strategy.