Restructuring Charges

Pullmantur Right-sizing Strategy

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 and second quarters 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, the redeployment of Pullmantur’s Empress to the Royal Caribbean International brand and personnel reorganization in Pullmantur's headquarters. The closure of the Brazil office and the personnel reorganization resulted in the recognition of a liability for one-time termination benefits during the six months ended June 30, 2016. We also incurred contract termination costs related to the closure of the Brazil office.

As a result of these actions, we incurred restructuring exit costs of $1.8 million and $2.1 million for the quarter and six months ended June 30, 2016, respectively, which are reported within Restructuring charges in our consolidated statements of comprehensive income (loss).

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



	Beginning Balance January 1, 2016		Accruals		Payments		Ending Balance June 30, 2016		Cumulative Charges Incurred
Termination benefits	$	—	$	2,067	$	621	$	1,446	$	2,067
Contract termination costs		—		68		19		49		68
Total	$	—	$	2,135	$	640	$	1,495	$	2,135

In connection with this strategy, we incurred approximately $0.7 million and $3.6 million of other costs during the quarter and six months ended June 30, 2016, respectively, 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, Depreciation and amortization expenses and Marketing, selling and administrative expenses in our consolidated statements of comprehensive income (loss).

In July 2016, we sold 51% of our interest in Pullmantur and CDF Croisières de France. Refer to Note 1. General for further information regarding this sales transaction.

Other Restructuring Initiatives

During the second quarter of 2016, we moved forward with certain other initiatives, including the closing of an international office in Brazil related to the Royal Caribbean International brand and personnel reorganization in our corporate offices. These initiatives resulted in restructuring costs of $2.6 million for both the quarter and six months ended June 30, 2016. The restructuring costs are mainly due to the recognition of a liability for one-time termination benefits. Through the remainder of 2016, we may incur additional immaterial costs as it relates to the restructuring at our corporate and international offices.

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



	Beginning Balance January 1, 2016		Accruals		Payments		Ending Balance June 30, 2016		Cumulative Charges Incurred
Termination benefits	$	—	$	2,580	$	56	$	2,524	$	2,580
Contract termination costs		—		15		—		15		15
Total	$	—	$	2,595	$	56	$	2,539	$	2,595