Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had outstanding ~~90,436,452~~87,831,235 shares of Common Stock, par value $0.01 per share as of ~~November 3, 2017.~~

In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position and our business outlook, business trends and other information, may be forward-looking statements. Words such as “might,” “will,” “may,” “should,” “estimates,” “expects,” “continues,” “contemplates,” “anticipates,” “projects,” “plans,” “potential,” “predicts,” “intends,” “believes,” “forecasts,” “future,” “targeted” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the “Annual Report on Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”), and under “Part II, Item 1A., Risk Factors” in this Quarterly Report on Form 10-Q, as such risk factors may be updated from time to time in our periodic filings with the SEC, including this report, and are accessible on the SEC’s website at www.sec.gov, including the following:

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to ~~you or to our business.~~you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date of this Quarterly Report on Form 10-Q or as of the date they were made or as otherwise specified herein and, except as required by applicable law, we undertake no obligation to ~~publicly~~ update any forward-looking statement, whether as a result of new information, future developments or otherwise.

All references to “we,” “us,” “our,” “Company” or “SeaWorld” in this Quarterly Report on Form 10-Q mean SeaWorld Entertainment, Inc., its subsidiaries and affiliates.

We use our websites (www.seaworldentertainment.com and www.seaworldinvestors.com) and our corporate Twitter account (@SeaWorld) as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about SeaWorld when you enroll your e-mail address by visiting the “E-mail Alerts” section of our website at www.seaworldinvestors.com. The contents of our website and social media channels are not, however, a part of this Quarterly Report on Form 10-Q.

We own or have rights to use a number of registered and common law trademarks, service marks and trade names in connection with our business in the United States and in certain foreign jurisdictions, including SeaWorld Entertainment, SeaWorld Parks & Entertainment, SeaWorld^®, Shamu^®, Busch Gardens^®, Aquatica^®, Discovery Cove^®, Sea Rescue^® and other names and marks that identify our theme parks, characters, rides, attractions and other businesses. In addition, we have certain rights to use Sesame Street^® marks, characters and related indicia through ~~certain~~our license ~~agreements~~agreement with Sesame ~~Workshop (f/k/a Children’s Television Workshop).Solely~~Workshop.

Solely for convenience, the trademarks, service marks, and trade names referred to hereafter in this Quarterly Report on Form 10-Q are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. This Quarterly Report on Form 10-Q may contain additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this Quarterly Report on Form 10-Q are, to our knowledge, the property of their respective owners.

	September 30,			December 31,			June 30,			December 31,
	2017			2016			2018			2017
Assets
Current assets:
Cash and cash equivalents	$	52,342		$	68,958		$	33,452		$	33,178
Accounts receivable, net		49,378			36,726			72,558			38,400
Inventories		32,300			28,684			39,769			30,887
Prepaid expenses and other current assets		13,512			19,324			17,317			16,310
Total current assets		147,532			153,692			163,096			118,775
Property and equipment, at cost		2,934,915			2,828,446			3,042,910			2,952,074
Accumulated depreciation		(1,253,400	)		(1,161,631	)		(1,343,446	)		(1,276,833	)
Property and equipment, net		1,681,515			1,666,815			1,699,464			1,675,241
Goodwill, net		66,278			335,610			66,278			66,278
Trade names/trademarks, net		160,168			161,264			159,071			159,802
Other intangible assets, net		15,520			18,008			14,476			14,896
Deferred tax assets, net		31,820			22,114			40,955			32,820
Other assets		19,246			21,268			20,154			17,970
Total assets	$	2,122,079		$	2,378,771		$	2,163,494		$	2,085,782
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	93,762		$	87,680
Accounts payable and accrued expenses							$	131,149		$	100,573
Current maturities of long-term debt		23,707			51,713			23,707			38,707
Accrued salaries, wages and benefits		22,416			21,010			22,337			14,554
Deferred revenue		93,923			78,891			157,986			79,554
Dividends payable		505			908			124			470
Other accrued expenses		23,490			23,410
Other accrued liabilities								32,701			19,612
Total current liabilities		257,803			263,612			368,004			253,470
Long-term debt, net of debt issuance costs of $9,766 and $9,702 as of September 30, 2017 and December 31, 2016, respectively		1,508,334			1,531,069
Deferred tax liabilities, net		7,229			70,033
Long-term debt, net of debt issuance costs of $7,639 and $9,045 as of June 30, 2018 and December 31, 2017, respectively								1,494,066			1,503,609
Other liabilities		49,207			52,842			31,743			41,237
Total liabilities		1,822,573			1,917,556			1,893,813			1,798,316
Commitments and contingencies (Note 10)
Stockholders’ Equity:
Preferred stock, $0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at September 30, 2017 and December 31, 2016		—			—
Common stock, $0.01 par value—authorized, 1,000,000,000 shares; 92,550,001 and 91,861,054 shares issued at September 30, 2017 and December 31, 2016, respectively		926			919
Preferred stock, $0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at June 30, 2018 and December 31, 2017								—			—
Common stock, $0.01 par value—authorized, 1,000,000,000 shares; 93,060,175 and 92,637,403 shares issued at June 30, 2018 and December 31, 2017, respectively								931			926
Additional paid-in capital		637,837			621,343			653,714			641,324
Accumulated other comprehensive loss		(9,990	)		(13,694	)
(Accumulated deficit) retained earnings		(174,396	)		7,518
Treasury stock, at cost (6,519,773 shares at September 30, 2017 and December 31, 2016)		(154,871	)		(154,871	)
Accumulated other comprehensive income (loss)								3,797			(5,076	)
Accumulated deficit								(233,890	)		(194,837	)
Treasury stock, at cost (6,519,773 shares at June 30, 2018 and December 31, 2017)								(154,871	)		(154,871	)
Total stockholders’ equity		299,506			461,215			269,681			287,466
Total liabilities and stockholders’ equity	$	2,122,079		$	2,378,771		$	2,163,494		$	2,085,782

See accompanying notes to unaudited condensed consolidated financial statements.

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016		2017			2016			2018			2017			2018			2017
Net revenues:
Admissions	$	264,967		$	294,605	$	605,007		$	655,510		$	225,806		$	224,951		$	355,809		$	340,040
Food, merchandise and other		172,745			190,713		392,812			421,185			166,115			148,799			253,278			220,067
Total revenues		437,712			485,318		997,819			1,076,695			391,921			373,750			609,087			560,107
Costs and expenses:
Cost of food, merchandise and other revenues		31,988			35,854		75,532			81,768			31,899			29,061			48,950			43,544
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $976 and $505 for the three months ended September 30, 2017 and 2016, respectively, and $5,830 and $10,371 for the nine months ended September 30, 2017 and 2016, respectively)		194,802			198,754		541,395			570,480
Selling, general and administrative (includes equity compensation of $2,269 and $2,040 for the three months ended September 30, 2017 and 2016, respectively and $13,435 and $24,225 for the nine months ended September 30, 2017 and 2016, respectively)		54,770			57,148		176,340			196,534
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $2,667 and $3,918 for the three months ended June 30, 2018 and 2017, respectively, and $4,230 and $4,854 for the six months ended June 30, 2018 and 2017, respectively)													190,100			189,269			345,573			346,593
Selling, general and administrative (includes equity compensation of $3,225 and $7,988 for the three months ended June 30, 2018 and 2017, respectively, and $9,207 and $11,166 for the six months ended June 30, 2018 and 2017, respectively)													71,003			69,152			134,527			121,570
Goodwill impairment charges		—			—		269,332			—			—			269,332			—			269,332
Restructuring and other related costs		5,100			—		5,100			112
Restructuring and other separation costs													3,691			—			12,526			—
Depreciation and amortization		42,230			40,921		120,597			156,677			40,018			39,500			78,448			78,367
Total costs and expenses		328,890			332,677		1,188,296			1,005,571			336,711			596,314			620,024			859,406
Operating income (loss)		108,822			152,641		(190,477	)		71,124			55,210			(222,564	)		(10,937	)		(299,299	)
Other (income) expense, net		(108	)		72		(111	)		48			(42	)		83			21			(3	)
Interest expense		20,160			15,137		57,873			44,297			20,561			19,452			40,474			37,713
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs		—			—		8,143			—			—			123			—			8,143
Income (loss) before income taxes		88,770			137,432		(256,382	)		26,779			34,691			(242,222	)		(51,432	)		(345,152	)
Provision for (benefit from) income taxes		33,736			71,777		(74,437	)		27,405			11,994			(66,372	)		(11,285	)		(108,173	)
Net income (loss)	$	55,034		$	65,655	$	(181,945	)	$	(626	)	$	22,697		$	(175,850	)	$	(40,147	)	$	(236,979	)
Other comprehensive income (loss):
Unrealized gain (loss) on derivatives, net of tax		2,006			1,489		3,704			(12,232	)		2,476			(706	)		9,967			1,698
Comprehensive income (loss)	$	57,040		$	67,144	$	(178,241	)	$	(12,858	)	$	25,173		$	(176,556	)	$	(30,180	)	$	(235,281	)
Income (loss) per share:
Net income (loss) per share, basic	$	0.64		$	0.77	$	(2.12	)	$	(0.01	)	$	0.26		$	(2.05	)	$	(0.47	)	$	(2.77	)
Net income (loss) per share, diluted	$	0.64		$	0.77	$	(2.12	)	$	(0.01	)	$	0.26		$	(2.05	)	$	(0.47	)	$	(2.77	)
Weighted average common shares outstanding:
Basic		86,012			85,290		85,712			84,787			86,399			85,745			86,305			85,560
Diluted		86,284			85,447		85,712			84,787			86,885			85,745			86,305			85,560
Cash dividends declared per share:
Cash dividends declared per share	$	—		$	0.10	$	—		$	0.73

See accompanying notes to unaudited condensed consolidated financial statements.

	Shares of Common Stock Issued			Common Stock			Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Treasury Stock, at Cost			Total Stockholders' Equity			Shares of Common Stock Issued			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Treasury Stock, at Cost			Total Stockholders' Equity
Balance at December 31, 2016		91,861,054		$	919		$	621,343		$	7,518		$	(13,694	)	$	(154,871	)	$	461,215
Balance at December 31, 2017																							92,637,403		$	926		$	641,324		$	(194,837	)	$	(5,076	)	$	(154,871	)	$	287,466
Impact of adoption of ASU 2018-02																							—			—			—			1,094			(1,094	)		—			—
Equity-based compensation		—			—			19,265			—			—			—			19,265			—			—			13,437			—			—			—			13,437
Unrealized gain on derivatives, net of tax expense of $2,465		—			—			—			—			3,704			—			3,704
Unrealized gain on derivatives, net of tax expense of $3,692																							—			—			—			—			9,967			—			9,967
Vesting of restricted shares		782,637			8			(8	)		—			—			—			—			495,206			5			(5	)		—			—			—			—
Shares withheld for tax withholdings		(94,280	)		(1	)		(1,612	)		—			—			—			(1,613	)		(137,024	)		(1	)		(2,268	)		—			—			—			(2,269	)
Exercise of stock options		590			—			11			—			—			—			11			64,590			1			1,184			—			—			—			1,185
Accumulated cash dividends related to performance shares which vested during the period		—			—			(1,270	)		—			—			—			(1,270	)
Adjustments to previous dividend declarations		—			—			108			31			—			—			139			—			—			42			—			—			—			42
Net loss		—			—			—			(181,945	)		—			—			(181,945	)		—			—			—			(40,147	)		—			—			(40,147	)
Balance at September 30, 2017		92,550,001		$	926		$	637,837		$	(174,396	)	$	(9,990	)	$	(154,871	)	$	299,506
Balance at June 30, 2018																							93,060,175		$	931		$	653,714		$	(233,890	)	$	3,797		$	(154,871	)	$	269,681

See accompanying notes to unaudited condensed consolidated financial statements.

For the Nine Months Ended September 30,

2017

2016

Cash Flows From Operating Activities:

Net loss

$
(181,945
)

$
(626
)
Adjustments to reconcile net loss to net cash provided by operating activities:

Goodwill impairment charges

269,332

—

Depreciation and amortization

120,597

156,677

Amortization of debt issuance costs and discounts

3,611

3,999

Loss on early extinguishment of debt and write-off of discounts and debt issuance costs

8,143

—

Loss on sale or disposal/impairment of assets

9,353

6,823

Loss on derivatives

—

1

Deferred income tax (benefit) provision

(74,437
)

27,405

Equity-based compensation

19,265

34,596

Changes in assets and liabilities:

Accounts receivable

(17,448
)

(14,447
)
Inventories

(4,233
)

(2,218
)
Prepaid expenses and other current assets

6,452

5,086

Accounts payable

5,327

(2,762
)
Accrued salaries, wages and benefits

1,406

4,587

Deferred revenue

19,867

21,736

Other accrued expenses

(451
)

7,771

Other assets and liabilities

2,940

10,243

Net cash provided by operating activities

187,779

258,871

Cash Flows From Investing Activities:

Capital expenditures

(139,638
)

(135,496
)
Change in restricted cash

(717
)

(624
)
Other investing activities

1,515

—

Net cash used in investing activities

(138,840
)

(136,120
)
Cash Flows From Financing Activities:

Proceeds from the issuance of debt

998,306

—

Repayment of long-term debt

(1,020,983
)

(12,637
)
Proceeds from draw on revolving credit facility

80,649

85,000

Repayment of revolving credit facility

(105,000
)

(100,000
)
Debt issuance costs

(15,390
)

—

Dividends paid to stockholders

(1,535
)

(56,756
)
Payment of tax withholdings on equity-based compensation through shares withheld

(1,613
)

(1,604
)
Exercise of stock options

11

82

Net cash used in financing activities

(65,555
)

(85,915
)
Change in Cash and Cash Equivalents

(16,616
)

36,836

Cash and Cash Equivalents—Beginning of period

68,958

18,971

Cash and Cash Equivalents—End of period

$
52,342

$
55,807

Supplemental Disclosures of Noncash Investing and Financing Activities

Capital expenditures in accounts payable

$
19,835

$
10,872

Dividends declared, but unpaid

$
505

$
9,467

	For the Six Months Ended June 30,
	2018			2017
Cash Flows From Operating Activities:
Net loss	$	(40,147	)	$	(236,979	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment charges		—			269,332
Depreciation and amortization		78,448			78,367
Amortization of debt issuance costs and discounts		2,311			2,467
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs		—			8,143
Loss on sale or disposal of assets		7,651			1,948
Deferred benefit from income tax		(11,823	)		(108,173	)
Equity-based compensation		13,437			16,020
Changes in assets and liabilities:
Accounts receivable		(43,858	)		(23,037	)
Inventories		(8,882	)		(9,544	)
Prepaid expenses and other current assets		(558	)		2,674
Accounts payable and accrued expenses		22,487			25,755
Accrued salaries, wages and benefits		7,783			(8,204	)
Deferred revenue		87,724			72,278
Other accrued liabilities		13,050			(4,800	)
Other assets and liabilities		(809	)		2,056
Net cash provided by operating activities		126,814			88,303
Cash Flows From Investing Activities:
Capital expenditures		(97,372	)		(103,175	)
Other investing activities		(477	)		—
Net cash used in investing activities		(97,849	)		(103,175	)
Cash Flows From Financing Activities:
Proceeds from issuance of debt		—			998,306
Repayments of long-term debt		(11,854	)		(1,015,056	)
Proceeds from draw on revolving credit facility		55,000			80,649
Repayments of revolving credit facility		(70,000	)		(65,000	)
Debt issuance costs		—			(15,390	)
Dividends paid to stockholders		(304	)		(1,502	)
Payment of tax withholdings on equity-based compensation through shares withheld		(2,269	)		(1,470	)
Exercise of stock options		1,185			11
Net cash used in financing activities		(28,242	)		(19,452	)
Change in Cash and Cash Equivalents, including Restricted Cash		723			(34,324	)
Cash and Cash Equivalents, including Restricted Cash—Beginning of period		33,997			69,378
Cash and Cash Equivalents, including Restricted Cash—End of period	$	34,720		$	35,054
Supplemental Disclosures of Noncash Investing and Financing Activities
Capital expenditures in accounts payable	$	32,715		$	33,132
Dividends declared, but unpaid	$	124		$	665

See accompanying notes to unaudited condensed consolidated financial statements.

SeaWorld Entertainment, Inc., through its wholly-owned subsidiary, SeaWorld Parks & Entertainment, Inc. (“SEA”) (collectively, the “Company”), owns and operates twelve theme parks within the United States. Prior to its initial public offering in April 2013, the Company was owned by ten limited partnerships (the “Partnerships” or the “Seller”), ultimately owned by affiliates of The Blackstone Group L.P. (“Blackstone”) and certain co-investors.

On ~~May 8, 2017~~ an affiliate of Zhonghong Zhuoye Group Co., Ltd. (“ZHG Group”), Sun Wise (UK) Co., LTD (“ZHG” or “Buyer”) acquired approximately 21% of the outstanding shares of common stock of the Company (the “Sale”) from Seller, pursuant to a Stock Purchase Agreement between ZHG and Seller (the “Stock Purchase Agreement”). ~~See further discussion in Note 9–Related-Party Transactions and Note 12–Stockholders’ Equity.~~

The Company operates SeaWorld theme parks in Orlando, Florida; San Antonio, Texas; and San Diego, California, and Busch Gardens theme parks in Tampa, Florida, and Williamsburg, Virginia. The Company operates water park attractions in Orlando, Florida (Aquatica); San Antonio, Texas (Aquatica); San Diego, California (Aquatica); Tampa, Florida (Adventure Island); and Williamsburg, Virginia (Water Country USA). The Company also operates a reservations-only theme park ~~offering interaction with marine animals~~ in Orlando, Florida (Discovery Cove) and a seasonal park in Langhorne, Pennsylvania (Sesame Place).

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, ~~2016~~2017 included in the Company’s Annual Report on Form 10-K filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, ~~2016~~2017 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K.

In the opinion of management, such unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations for the year ending December 31, ~~2017~~2018 or any future period due to the seasonal nature of the Company’s operations. Based upon historical results, the Company typically generates its highest revenues in the second and third quarters of each year and incurs a net loss in the first and fourth quarters, in part because seven of its theme parks are only open for a portion of the year.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, including SEA. All intercompany accounts have been eliminated in consolidation.

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions include, but are not limited to, the accounting for self-insurance, deferred tax assets, deferred revenue, equity compensation and the valuation of goodwill and other indefinite-lived intangible assets. Actual results could differ from those estimates.

The Company maintains discrete financial information for each of its twelve theme parks, which is used by the Chief Operating Decision Maker (“CODM”), identified as the Chief Executive Officer, as a basis for allocating resources. Each theme park has been identified as an operating segment and meets the criteria for aggregation due to similar economic characteristics. In addition, all of the theme parks provide similar products and services and share similar processes for delivering services. The theme parks have a high degree of similarity in the workforces and target similar consumer groups. Accordingly, based on these economic and operational similarities and the way the CODM monitors and makes decisions affecting the operations, the Company has concluded that its operating segments may be aggregated and that it has one reportable segment.

During the three months ended September 30, 2017, following a contractual dispute, the Company amended an existing agreement relating to the use of certain animals. As a result of this amendment, which reduced the expected futureRestricted cash ~~flows related to the agreement, the Company recognized an impairment loss of approximately $7,800 which~~ is ~~included~~recorded in ~~operating expenses~~other current assets in the accompanying unaudited condensed consolidated ~~statement~~balance sheets. Restricted cash consists primarily of ~~comprehensive income (loss)~~funds received from strategic partners for use in approved marketing and promotional activities.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017. See further discussion in the “Impairment of Long-Lived Assets”~~ ~~section which follows.~~

During the first quarter of 2016, the Company made a decision to remove deep-water lifting floors from the orca habitats at each of its three SeaWorld theme parks. As a result, during the nine months ended September 30, 2016,2018, the Company recorded approximately ~~$33,700~~$7.3 million and $7.7 million, respectively, in asset write-offs primarily associated with certain rides and equipment.

Effective January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers, using the modified retrospective transition method. The adoption of ~~accelerated depreciation related~~ASC 606 did not have a material impact on the Company’s existing or new contracts as of January 1, 2018; therefore, no cumulative adjustment to beginning retained earnings was required as a result of adoption.

ASC 606 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contracts with customers; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the ~~disposal~~performance obligations in the contract; and (v) recognize revenue when or as the company satisfies the performance obligations. ASC 606 also requires additional disclosure about the nature, amount, timing and uncertainty of ~~these lifting floors, which is included~~revenue and cash flows arising from customer contracts. Total revenues in ~~depreciation and amortization expense in~~ the accompanying unaudited condensed consolidated statements of comprehensive income (loss)~~. During~~ are presented net of sales-related taxes collected from guests and remitted or payable to government taxing authorities.

Admissions revenue primarily consists of single-day tickets, annual or season passes or other multi-day or multi-park admission products. As allowed by the nine months ended September 30, 2016, the Company also recorded approximately $6,400 in asset write-offs, which is included in operating expenses in the accompanying unaudited condensed consolidated statement of comprehensive income (loss), associatedpractical expedient available to public companies under ASC 606, admission products with ~~its previously disclosed orca habitat expansion (the “Blue World Project”)~~similar characteristics are analyzed using a portfolio approach for each separate park as the Company ~~made a decision~~expects that the effects on the consolidated financial statements of applying this guidance to the portfolio does not ~~move forward with~~differ materially from applying the ~~Blue World Project as originally designed and planned.~~

~~The~~guidance to individual contracts within the portfolio. For single-day tickets, the Company recognizes revenue at a point in time, upon admission ~~into a park for single day tickets and when products are received by customers for merchandise, culinary~~to the park. Annual passes, season passes or other ~~in-park spending.~~multi-day or multi-park passes allow guests access to specific parks over a specified time period. For ~~season passes~~these pass and ~~other~~ multi-use ~~admission~~ products, ~~deferred~~ revenue is ~~recorded~~deferred and ~~the related revenue is~~ recognized over the terms of the admission product ~~and its~~based on estimated ~~usage. Deferred revenue includes a current and long-term portion~~redemption rates for similar products and is adjusted periodically. The Company estimates a redemption rate using historical and forecasted growth rates and attendance trends by park for similar products. Attendance trends factor in seasonality and are adjusted based on actual trends periodically. Revenue is recognized on a pro-rata basis based on the estimated allocated selling price of the admission product. For multi-day admission products, revenue is allocated based on the number of visits included in ~~deferred revenue~~the pass and ~~other liabilities, respectively, in~~recognized ratably based on each admission into the accompanying unaudited condensed consolidated balance sheets. As of September 30, 2017 and December 31, 2016, other liabilities also includes $10,000 in deferred revenue related to nonrefundable funds received from a partner in connection with a potential project in the Middle East (the “Middle East Project”) to provide certain services pertaining to the planning and design of the Middle East Project, with funding received expected to offset internal expenses. Approximately $2,900 of costs incurred related to the Middle East Project are recorded in other assets in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2017. The Middle East Project is subject to various conditions, including, but not limited to, the parties completing the design development and there is no assurance that the Middle East Project will be completed or advance to the next stages.

On March 24, 2017, the Company entered into a Park Exclusivity and Concept Design Agreement (the “ECDA”) and a Center Concept & Preliminary Design Support Agreement (the “CDSA”) (collectively, the “ZHG Agreements”) with Zhonghong Holding, Co. Ltd. (“Zhonghong Holding”), an affiliate of ZHG Group, to provide design, support and advisory services for various potential projects and granting exclusive rights in China, Taiwan, Hong Kong and Macau (the “Territory”). ~~Under the terms of the ECDA, the Company will work with Zhonghong Holding and a top~~ theme park design company, to create and produce concept designs and development analysis for theme parks, water parks and interactive parks in the Territory. Under the terms of the CDSA, the Company will provide guidance, support, input, and expertise relating to the initial strategic planning, concept and preliminary design of Zhonghong Holding’s family entertainment and other similar centers. The Company recognizes revenue under the ZHG Agreements on a straight line basis over the contractual term of the agreement including approximately $2,600 in the nine months ended September 30, 2017. ~~See further discussion in Note 9–Related-Party Transactions.~~park.

The Company has also entered into agreements with certain external theme park, zoo and other attraction operators to jointly market and sell single and multi-use admission products. These joint products allow admission to both a Company park and an external park, zoo or other attraction. The agreements with the external partners specify the allocation of revenue to the Company from any jointly sold products. Whether the Company or the external partner sells the product, the Company’s portion of revenue is deferred until the first time the product is redeemed at one of its parks and recognized over its related use in a manner consistent with the Company’s own admission products. ~~The~~

Additionally, the Company barters theme park admission products and sponsorship opportunities for advertising, employee recognition awards, and various other services. The fair value of the products or services is recognized into admissions revenue and related expenses at the time of the exchange and approximates the estimated fair value first of the goods or services provided then received, ~~or provided,~~ whichever is more readily determinable. Amounts included within admissions revenue with an offset to either selling, general and administrative expenses or operating expenses in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) related to bartered ticket transactions were $5.7 million and $8.6 million, respectively, for the three and six months ended June 30, 2018, and $6.5 million and $11.0 million, respectively, for the three and six months ended June 30, 2017.

Deferred revenue primarily includes revenue associated with pass products and contract liability balances related to licensing and international agreements collected in advance of the Company’s performance and expected to be recognized in future periods. At June 30, 2018, $10.5 million is included in other liabilities in the accompanying unaudited condensed consolidated balance sheets related to the long-term portion of deferred revenue, of which $10.0 million relates to the Company’s international agreement, as discussed in the following section, which the Company expects to recognize over the term of the respective license agreement beginning when substantially all of the services have been performed, which is expected to be upon opening.

The following table reflects the changes in deferred revenue for the six months ended June 30, 2018 and 2017:

In accordance with the practical expedient available to public companies under ASC 606, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed. Additionally, the Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses.

Food, merchandise and other revenue primarily consists of culinary, merchandise and other in-park products and also includes other miscellaneous revenue which is not significant in the periods presented, including revenue related to the Company’s international agreements as discussed below. The Company recognizes revenue for food, merchandise and other in-park products when the related products or services are received by the guests. Certain admission products may also include bundled products at the time of purchase, such as culinary or merchandise items. The Company conducts an analysis of bundled products to identify separate distinct performance obligations that are material in the context of the contract. For those products that are determined to be distinct performance obligations and material in the context of the contract, the Company allocates a portion of the transaction price to each distinct performance obligation using each performance obligation’s standalone price. If the bundled product is related to a pass product and offered over time, revenue will be recognized over time accordingly.

In March 2017, the Company entered into a Park Exclusivity and Concept Design Agreement (the “ECDA”) and a Center Concept and Preliminary Design Support Agreement (the “CDSA”) (collectively, the “ZHG Agreements”) with Zhonghong Holding, Co. Ltd. (“Zhonghong Holding”), an affiliate of Zhonghong Zhuoye Group Co., Ltd. (“ZHG Group”), a related party, to provide design, support and advisory services for various potential projects and grant exclusive rights in China, Taiwan, Hong Kong and Macau (the “Territory”). The Company analyzed the ZHG Agreements under ASC 606 and determined that the agreements should be combined for accounting purposes and the respective performance obligations should be combined into a single performance obligation which meets the criteria to be recognized over time. Additionally, the services related to the agreements are provided ratably over the contract term, as such, the Company recognizes revenue under the ZHG Agreements on a straight line basis over the contractual term of the agreements including approximately $1.3 million and $2.5 million in the three and six months ended June 30, 2018, respectively, which is included in food, merchandise and other revenue in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). See further discussion in Note 9–Related Party Transactions.

The Company has also received $10.0 million in deferred revenue recorded in other liabilities related to a nonrefundable payment received from a partner in connection with a potential project in the Middle East (the “Middle East Project”) to provide certain services pertaining to the planning and design of the Middle East Project, with funding received expected to offset internal expenses. Approximately $3.5 million of costs incurred related to the Middle East Project are recorded in other assets in the accompanying unaudited condensed consolidated balance sheet as of June 30, 2018. The Company has recognized an asset for the costs incurred to fulfill the contract as the costs are specifically identifiable, enhance resources that will be used to satisfy performance obligations in the future and are expected to be recovered. The related deferred revenue and expense will begin to be recognized when substantially all of the services have been performed, which is expected to be upon opening of the park. The Company continually monitors performance on the contract and will make adjustments, if necessary. The Middle East Project is subject to various conditions, including, but not limited to, the parties completing the design development and there is no assurance that the Middle East Project will be completed or advance to the next stages.

Goodwill and other indefinite-lived intangible assets are not amortized, but instead reviewed for impairment at least annually on December 1, and as of an interim date should factors or indicators become apparent that would require an interim test, with ongoing recoverability based on applicable reporting unit overall financial performance and consideration of significant events or changes in the overall business environment or macroeconomic conditions. Such events or changes in the overall business environment could include, but are not limited to, significant negative trends or unanticipated changes in the competitive or macroeconomic environment.

As of ~~January 1,~~June 30, 2017, ~~the Company elected to adopt Accounting Standards Update (“ASU”) 2017-04,~~ ~~Intangible–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,~~ ~~for any interim or annual goodwill impairment tests. See further discussion in Note 2–Recent Accounting Pronouncements.~~

In assessing goodwill for impairment, the Company may choose to initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company considers several factors, including macroeconomic conditions, industry and market conditions, overall financial performance of the reporting unit, changes in management, strategy or customers, and relevant reporting unit specific events such as a change in the carrying amount of net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, and the testing of recoverability of a significant asset group within a reporting unit. If the qualitative assessment is not conclusive, then a quantitative impairment analysis for goodwill is performed at the reporting unit level. The Company may also choose to perform this quantitative impairment analysis instead of the qualitative analysis. The quantitative impairment analysis compares the fair value of the reporting unit, determined using the income and/or market approach, to its recorded amount. If the recorded amount exceeds the fair value, then a goodwill impairment charge is recorded for the difference up to the recorded amount of goodwill.

The determination of fair value in the Company’s goodwill impairment analysis is based on an estimate of fair value for each reporting unit utilizing known and estimated inputs at the evaluation date. Some of those inputs include, but are not limited to, estimates of future revenue and expense growth, estimated market multiples, expected capital expenditures, income tax rates, and costs of invested capital.

Due to financial performance particularly late in the second quarter of 2017 at the Company’s SeaWorld Orlando park, driven primarily by a decline in U.S. domestic and international attendance at the park, the Company determined a triggering event occurred that required an interim goodwill impairment test for its SeaWorld Orlando reporting ~~unit as of June 30, 2017.~~unit. Based on ~~financial performance and~~ the ~~resulting impact on projections of future cash flows for this reporting unit,~~test results, the Company concluded that the SeaWorld Orlando reporting unit’s goodwill as of June 30, 2017 was fully impaired and recorded a non-cash goodwill impairment charge of ~~$269,332~~$269.3 million in its unaudited condensed consolidated statement of comprehensive income (loss) during the ~~nine~~three and six months ended ~~September~~June 30, 2017. Fair value for the SeaWorld Orlando reporting unit was determined using the income approach and ~~represents~~represented a Level 3 fair value measurement measured on a non-recurring basis in the fair value hierarchy due to the Company’s use of internal projections and unobservable measurement inputs.

~~The changes in the carrying amount of goodwill for the nine months ended September 30, 2017 are as follows:~~

The remaining goodwill balance of ~~$66,278~~$66.3 million as of ~~September~~June 30, 2018 and December 31, 2017 on the accompanying unaudited condensed consolidated balance sheets relates to the Company’s Discovery Cove reporting unit. The Company determined that an interim impairment test of its Discovery Cove reporting unit was not necessary during 2017 as a triggering event had not occurred for this reporting unit and the estimated fair value as of December 1, 2016, the most recent annual impairment test for this reporting unit, substantially exceeded its carrying value.

The Company’s other indefinite-lived intangible assets consist of certain trade names/trademarks and other intangible assets which, after considering legal, regulatory, contractual, and other competitive and economic factors, are determined to have indefinite lives and are valued annually using the relief from royalty method. Significant estimates required in this valuation method include estimated future revenues impacted by the trade names/trademarks, royalty rate by park, and appropriate discount rates. Projections are based on management’s best estimates given recent financial performance, market trends, strategic plans, brand awareness, operating characteristics by park, and other available information. As of June 30, 2017, based on financial performance, an interim impairment assessment of certain trade names/trademarks with a combined balance of $93,000 related to the SeaWorld brand was performed and the Company calculated that the estimated fair value of the trade names/trademarks exceeded their carrying values by 12% to 19%. Based on these assessments, the Company determined there was no impairment as the estimated fair values of these trade names/trademarks were in excess of their carrying values.

Given the current macroeconomic environment and the uncertainties regarding the related impact on financial performance, there can be no assurance that the estimates and assumptions made for purposes of the interim impairment testing will prove to be accurate predictions of the future. If the Company’s assumptions particularly concerning its SeaWorld brand reporting units, including its projections of future cash flows and financial performance, assumed royalty rates, as well as the economic outlook are not achieved, the Company may be required to record impairment charges on its indefinite-lived intangible assets in future periods, whether in connection with the Company’s next annual impairment testing in the fourth quarter of 2017, or on an interim basis, if any such change constitutes a triggering event outside of the quarter when the Company regularly performs its annual indefinite-lived intangible assets impairment test. It is not possible at this time to determine if any such additional future impairment charge would result or, if it does,~~whether such charge would be material.~~

All long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. An impairment loss may be recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset. The measurement of the impairment loss to be recognized is based upon the difference between the fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available (generally a theme park).

During the three months ended June 30, 2017, the Company considered the goodwill impairment of its SeaWorld Orlando reporting unit as an indicator of impairment related to the long-lived assets associated with this park. Accordingly, these assets were evaluated for impairment prior to completing the goodwill impairment analysis and the Company concluded that no impairment of other long-lived assets had occurred for its SeaWorld Orlando park as of June 30, 2017.

~~As discussed in the “Property and Equipment~~–~~Net”~~ section above, during the three months ended September 30, 2017, following a contractual dispute, the Company amended an existing agreement relating to the use of certain animals. As a result of this amendment, which reduced the expected future cash flows related to the agreement, the Company recognized an impairment loss of approximately $7,800 which is included in operating expenses in the accompanying unaudited condensed consolidated statement of comprehensive income (loss) for the three and nine months ended September 30, 2017.

The Company reviews new accounting pronouncements as they are issued or proposed by the Financial Accounting Standards Board (“FASB”).

In ~~January 2017,~~February 2018, the FASB issued Accounting Standards Update (“ASU”) ~~2017-04,~~2018-02, ~~Intangible–Goodwill and~~Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other ~~(Topic 350): Simplifying the Test for Goodwill Impairment~~Comprehensive Income. . This ASU ~~removes step two from~~gives companies the ~~goodwill impairment test,~~option to reclassify to retained earnings any tax effects related to items in accumulated other comprehensive income or loss that are stranded due to the Tax Cuts and Jobs Act (the “Tax Act”). Companies are able to early adopt this ASU in any interim or annual period for which ~~requires a hypothetical purchase price allocation. A goodwill impairment charge would now be determined based on~~financial statements have not yet been issued and apply it either (1) in the ~~comparison~~period of adoption or (2) retrospectively to each period in which the income tax effects of the ~~fair value~~Tax Act related to items in accumulated other comprehensive income or loss are recognized. When adopted, the ASU requires all entities to make new disclosures, regardless of ~~a reporting unit~~whether they elect to ~~its carrying value,~~reclassify stranded amounts. Companies are required to disclose whether or not they elected to ~~exceed~~reclassify the ~~carrying amount of goodwill. This~~tax effects related to the Tax Act as well as their policy for releasing income tax effects from accumulated other comprehensive income or loss. The guidance is effective ~~starting with a company’s interim or~~for annual ~~goodwill impairment tests in fiscal years~~reporting periods beginning after December 15, 2019 and must be applied on a prospective basis. Early adoption is permitted for interim or annual impairment tests performed after January 1, 2017. The Company elected to adopt ASU 2017-04 as of January 1, 2017 and followed this guidance during its interim impairment test performed during the second quarter of 2017. See Note 1–Description of the Business and Basis of Presentation for further discussion.

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting.~~ This ASU simplifies several aspects of the accounting for share-based payment transactions (Topic 718) including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as the classification of related amounts within the statement of cash flows and the classification of awards as either equity or liabilities. This guidance is effective for fiscal years,2018, and interim periods within those ~~years, beginning after December 15, 2016. The Company adopted this ASU effective~~annual reporting periods with early adoption permitted. On January 1, ~~2017. ASU 2016-09 requires a policy election to either estimate~~2018, the ~~number of awards that are expected to vest or account for forfeitures as they occur. The~~ Company elected to ~~change its policy~~early adopt the ASU and applied the amendments in the period of adoption. As a result, the Company reclassified $1.1 million of “stranded” tax effects of the Tax Act from accumulated other comprehensive income (loss) to recognize the impact of forfeitures as they occur and determined the cumulative impact of this change was not material as of January 1, 2017. ASU 2016-09 also requires cash paid by an employer when directly withholding shares for tax withholding purposes to be classified as a financing activity and excess tax benefits to be classified as an operating activityaccumulated deficit in the accompanying unaudited condensed consolidated ~~statement~~balance sheet and the accompanying unaudited condensed consolidated statements of cash flows, which does not differ from the Company’s historical treatment of these items. Additionally, ASU 2016-09 requires the tax effects of exercised or vested awards to be treated as discrete itemschanges in ~~the reporting period in which they occur, which was applied prospectively, beginning January 1, 2017 by the Company.~~

~~(In thousands, except share~~stockholders’ equity. See Note 7–Derivative Instruments and ~~per share amounts)~~

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815)–: Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 aims to improve reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and simplify the application of the hedge accounting guidance. This ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those annual reporting periods with early adoption permitted. For cash flow and net investment hedges existing as of the adoption date, the guidance requires a cumulative-effect adjustment as of the beginning of the fiscal year that an entity adopts the amendments; however, the presentation and disclosure guidance should be applied prospectively. The Company ~~is currently assessing~~adopted ASU 2017-12 during the second quarter of 2018. The impact of ~~this ASU~~the adoption was not material to ~~its~~the Company’s unaudited condensed consolidated financial ~~statements~~statements; as a result, no

cumulative effect adjustment to beginning retained earnings was required. See Note 7–Derivative Instruments and ~~does not expect a material impact. However, the new ASU may impact the Company’s presentation and disclosures.~~Hedging Activities for additional disclosure.

In May 2017, the FASB issued ASU 2017-09, Compensation–Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU was issued to provide clarity and reduce diversity in practice regarding the application of guidance on the modification of equity awards. The ASU states that an entity should account for the effects of a modification unless all of the following are met: the fair value, vesting conditions and the classification of the instrument as equity or liability of the modified award is the same as that of the original award immediately before such award is modified. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual reporting periods with early adoption permitted and should be applied prospectively to an award modified on or after the adoption date. The Company ~~plans to adopt~~adopted this standard on January 1, 2018. The adoption of ASU ~~prospectively but does~~2017-17 did not ~~expect~~have a material impact ~~upon adoption to its~~on the Company’s unaudited condensed consolidated financial statements as the Company historically has accounted for all modifications in accordance with Topic 718 and has not been subject to the exception described under this ASU.

In November 2016, the FASB issued ASU 2016-18, Restricted Cash–a Consensus of the FASB Emerging Issues Task Force. This ASU ~~aims~~requires companies to ~~reduce the diversity in practice of the presentation of changes or transfers in~~include restricted cash ~~flows on~~balances with cash and cash equivalent balances in the statement of cash flows. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling beginning and ending total amounts on the statement of cash flows for the period. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual reporting periods with early adoption permitted, and should be applied using a retrospective transition method. The Company ~~plans to adopt~~adopted this ~~ASU~~standard on January 1, 2018 using athe retrospective transition ~~method but does not expect a material impact upon~~method. The adoption of ASU 2016-18 decreased net cash used in investing activities and increased cash, cash equivalents and restricted cash by $0.8 million when compared to ~~its~~the previously reported amounts in the accompanying unaudited condensed consolidated ~~statements~~statement of cash flows ~~or unaudited condensed consolidated balance sheets.~~for the six months ended June 30, 2017.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 simplifies the income tax accounting of intra-entity transfers of an asset other than inventory by requiring an entity to recognize the income tax effect when the transfer occurs. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods and early adoption is permitted. The Company ~~does~~adopted this standard on January 1, 2018 using a modified retrospective transition method. The adoption of ASU 2016-16 did not ~~expect~~have a material impact ~~upon adoption of this ASU~~ on ~~its~~the Company’s unaudited condensed consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. This ASU provides guidance on the presentation and classification of eight specific cash flow issues that previously resulted in diversity in practice. The ASU ~~will be~~is effective for annual periods beginning after December 15, 2017 and interim periods ~~therein, with early adoption permitted and should be applied~~therein. The Company adopted this standard on January 1, 2018 using a retrospective transition ~~method.~~method to each period presented. The ~~Company has~~adoption of ASU 2016-15 did not ~~yet adopted this ASU but does not expect~~have a material impact ~~to its~~on the Company’s unaudited condensed consolidated statements of cash flows.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. Under this ASU and subsequently issued amendments, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration expected to be received. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. The Company adopted this standard and subsequently issued amendments on January 1, 2018, using the modified retrospective transition method. The adoption of ASU 2014-09 and its subsequently issued amendments did not have a material impact on the Company’s existing or new contracts as of January 1, 2018; therefore, no cumulative adjustment to beginning retained earnings was required as a result of adoption. See Note 1 “Description of the Business and Basis of Presentation” subtopic “Revenue Recognition” for additional disclosure.

On February 25, 2016, the FASB issued ASU 2016-02, Leases. This ASU establishes a new lease accounting model that, for many companies, eliminates the concept of operating leases and requires entities to record ~~lease~~right-of-use assets and lease liabilities on the balance sheet for certain types of leases. ~~Under this ASU, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements.~~ Lessees and lessors are also required to disclose qualitative and quantitative information about leasing arrangements to enable financial statement users to assess the amount, timing and uncertainty of cash flows arising from leases. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The ASU will be effective for annual periods beginning after December 15, 2018, and interim periods ~~therein. Early~~therein with early adoption ~~will be permitted for all entities. The provisions of the ASU are to be applied using a modified retrospective approach.~~permitted. The Company ~~has not yet adopted~~is evaluating the timing of adoption of this guidance and currently expects to adopt this ASU ~~and~~on January 1, 2019. The Company is ~~currently~~still evaluating its lease arrangements and the impact of this ASU on its ~~unaudited condensed~~ consolidated financial ~~statements. Upon adoption of this ASU,~~statements and related disclosures. Based on its initial review, the Company expects its San Diego land lease, among other operating leases, to be recorded as a right-of-use asset with a corresponding lease ~~liability.~~liability, which could have a material effect on the Company’s consolidated balance sheet. The Company does not expect the adoption of this ASU to have a material effect on its consolidated statements of comprehensive income (loss) or cash flows. For more information regarding the Company’s commitments under long-term operating leases requiring annual minimum lease payments, refer to Note 15-Commitments and Contingencies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605,~~ ~~Revenue Recognition~~. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,~~ which defers the effective date to annual reporting periods beginning after December 15, 2017 using one of two transition methods, either retrospective or a modified retrospective transition method which calculates a cumulative-effect adjustment as of the date of adoption, with earlier adoption permitted for annual periods beginning after December 15, 2016. During 2016, the FASB issued four updates to the revenue recognition guidance (Topic 606), ASU 2016-08, ~~Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net),~~ ~~ASU 2016-10,~~ ~~Identifying Performance Obligations and Licensing, ASU 2016-12,~~ ~~Narrow-Scope Improvements and Practical Expedients~~ ~~and ASU 2016-20,~~ ~~Technical Corrections and Improvements.~~ The Company plans to adopt this guidance in the first quarter of 2018 using a modified retrospective transition method; however, it does not expect a cumulative effect adjustment, if any, to be material. The Company has been closely monitoring developments related to this new standard and continues to evaluate its impact on accounting and disclosure requirements as well as on its licensing and international agreements.

The Company has completed an assessment of its key revenue streams as they relate to the new standard. In particular, the Company analyzed the potential impact of the new standard on its accounting for annual and season pass products, multi-day pass products and other promotional ticket offerings which at times are sold with entitlements or other bundled products. Based on its analysis to date, the Company does not expect significant changes to its current accounting policies and practices to apply the requirements under the new standard. The Company does not anticipate a material impact on the timing of revenue recognition upon adoption nor on the classification of revenue. The Company does expect an impact on revenue recognition disclosures which will include additional detail on the methods used to recognize revenue and how the methods are applied as well as significant assumptions used to allocate the transaction price and estimate the standalone selling price of promised goods or services.

Earnings (loss) per share is computed as follows (in thousands, except per share data):

																													For the Three Months Ended June 30,														For the Six Months Ended June 30,
	For the Three Months Ended September 30,												For the Nine Months Ended September 30,																2018						2017								2018								2017
	2017						2016						2017								2016								Net Income		Shares		Per Share Amount		Net Loss			Shares		Per Share Amount			Net Loss			Shares		Per Share Amount			Net Loss			Shares		Per Share Amount
	Net Income		Shares		Per Share Amount		Net Income		Shares		Per Share Amount		Net Loss			Shares		Per Share Amount			Net Loss			Shares		Per Share Amount			(In thousands, except per share amounts)
Basic earnings (loss) per share	$	55,034		86,012	$	0.64	$	65,655		85,290	$	0.77	$	(181,945	)		85,712	$	(2.12	)	$	(626	)		84,787	$	(0.01	)	$	22,697		86,399	$	0.26	$	(175,850	)		85,745	$	(2.05	)	$	(40,147	)		86,305	$	(0.47	)	$	(236,979	)		85,560	$	(2.77	)
Effect of dilutive incentive-based awards				272						157							—								—							486							—								—								—
Diluted earnings (loss) per share	$	55,034		86,284	$	0.64	$	65,655		85,447	$	0.77	$	(181,945	)		85,712	$	(2.12	)	$	(626	)		84,787	$	(0.01	)	$	22,697		86,885	$	0.26	$	(175,850	)		85,745	$	(2.05	)	$	(40,147	)		86,305	$	(0.47	)	$	(236,979	)		85,560	$	(2.77	)

In accordance with the Earnings Per Share Topic of the ~~Accounting Standards Codification (“ASC”),~~ASC, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period (excluding treasury stock and unvested restricted stock). ~~The shares~~Shares of unvested restricted stock are eligible to receive ~~dividends;~~dividends, if any; however, dividend rights will be forfeited if the award does not vest. Accordingly, only vested shares of ~~outstanding~~formerly restricted stock are included in the calculation of basic earnings per share. The weighted average number of repurchased shares during the period, if any, which are held as treasury stock, are excluded from shares of common stock outstanding.

Diluted earnings (loss) per share is determined using the treasury stock method based on the dilutive effect of unvested restricted shares, restricted stock units and certain shares of common stock that are issuable upon exercise of stock options. During the three months ended June 30, 2018, there were approximately 2,023,000 anti-dilutive shares of common stock excluded from the computation of diluted earnings per share. There were approximately 3,882,000 and 5,178,000 potentially dilutive shares excluded from the computation of diluted loss per share during the six months ended June 30, 2018 and 2017, respectively, and approximately 5,435,000 potentially dilutive shares excluded from the computation of diluted loss per share during the three months ended June 30, 2017, as their effect would have been anti-dilutive due to the Company’s net loss in those periods. The Company’s outstanding performance-vesting restricted ~~share~~ awards of approximately 1,950,000 and 2,570,000 as of June 30, 2018 and 2017, respectively, are considered contingently issuable shares and are excluded from the calculation of diluted earnings (loss) per share until the performance measure criteria is met as of the end of the reporting period. During the three months ended September 30, 2017 and 2016, there were approximately 4,180,000 and 4,374,000 anti-dilutive shares of common stock, respectively, excluded from the computation of diluted earnings per share. During the nine months ended September 30, 2017 and 2016, the Company excluded potentially dilutive shares of approximately 5,137,000 and 4,811,000, respectively, as their effect would have been anti-dilutive due to the Company’s net loss during those periods.

Income tax expense or benefit is recognized based on the Company’s estimated annual effective tax rate which is based upon the tax rate expected for the full calendar year applied to the pretax income or loss of the interim period. The Company’s consolidated effective tax rate for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~38.0%~~34.6% and ~~29.0%~~21.9%, ~~respectively. The income tax rate for the three months ended September 30, 2017~~respectively, and differs from the recently enacted statutory federal income tax rate of 21% primarily due to state income ~~taxes. The income tax rate for the nine months ended September 30, 2017 differs from the statutory federal income tax rate~~taxes and other permanent items primarily ~~due~~related to nondeductible ~~goodwill impairment~~settlement and equity-based ~~compensation recorded in the second quarter of 2017.~~compensation. The Company’s consolidated effective tax rate for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 was ~~52.2%~~27.4% and ~~102.3%~~31.3%, ~~respectively. The income tax rate for the three months ended September 30, 2016~~respectively, and differs from the previously effective statutory federal income tax rate of 35% primarily due to ~~the impacts of~~state income taxes and other permanent items, ~~on the limited pretax income projected for the year. The income tax rate for the nine months ended September 30, 2016 differs from the statutory federal income rate~~ primarily ~~due~~related to nondeductible goodwill impairment and equity-based compensation that was recorded in the first quarter of 2016 due to certain performance-vesting restricted shares which vested on April 1, 2016 (see further discussion in Note 11–Equity- Based Compensation), and state income taxes.compensation.

The Company has determined that there are no positions currently taken that would rise to a level requiring an amount to be recorded or disclosed as an unrecognized tax benefit. If such positions do arise, it is the Company’s intent that any interest or penalty amount related to such positions will be recorded as a component of the income tax provision (benefit) in the applicable period.

~~During~~On December 22, 2017, the ~~three months ended June 30, 2017, an ownership shift~~United States enacted the Tax Act which makes significant modifications to the provisions of ~~more than 50 percent as defined by~~ the Internal Revenue Code, (“IRC”) Section 382 occurred. The Company determined that, while an ownership shift occurred and limits were determined under Section 382 and the regulations and guidance thereunder, the applicable limits wouldincluding but not impair the value or anticipated use of the Company’s federal and state net operating losses. Although realization is not assured, management believes it is more likely than not that any limitation under IRC Section 382 will not impair the realizability of the deferred incomelimited to a corporate tax ~~assets related~~rate decrease from 35% to ~~federal and state tax net operating loss carryforwards.~~

On October 18, 2017, the Pennsylvania Supreme Court held in Nextel Communications of Mid-Atlantic, Inc. v. Commonwealth that the net loss carryover deduction allowed for purposes of the Pennsylvania corporate net income tax violates the Uniformity Clause of the Pennsylvania Constitution. As a result the current law in Pennsylvania that places a fixed dollar limitation on the net loss carryover deduction was struck down, while retaining a percentage limitation on the net loss carryover deduction.

21% effective January 1, 2018. The Company has ~~assessed~~calculated the impact of ~~this case on~~the Tax Act in accordance with its current interpretation and available positive and negative evidence to determine whether sufficient future taxable income in Pennsylvania will be generated to permit use of the existing deferred tax assets related to Pennsylvania net loss carryover. Based on this evaluation, the Company has determined that in the fourth quarter of 2017 a valuation allowance of approximately $3,400 will be recorded to recognize only the portion of the deferred tax asset relatedguidance, particularly as it relates to the ~~Pennsylvania net loss carryover that is more likely than not to be realized. The amount~~future deductibility of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if negative evidence is no longer present due to changes in the tax law in Pennsylvania.

~~Other accrued expenses at September 30, 2017~~executive compensation items and ~~December 31, 2016, consisted of the following:~~

~~As of December 31, 2016, accrued interest above includes $12,904 relating~~state conformity to the Company’s fourth quarter 2016 interest payable on its Term B-2 Loans, Term B-3 Loans and Terminated Revolving Credit Facility, which was paid on January 3, 2017. See further discussion in Note 6–Long-Term Debt.Tax Act.

Other accrued liabilities at June 30, 2018 and December 31, 2017, consisted of the following:

As of June 30, 2018, other liabilities above include $11.5 million and $4.0 million related to proposed legal settlements, both further described in Note 10–Commitments and Contingencies. As of December 31, 2017, accrued interest above includes $5.1 million relating to the Company’s fourth quarter 2017 interest payable on its Term B-2 Loans, which was paid on January 5, 2018.

Long-term debt as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 consisted of the following:

	September 30,			December 31,			June 30,			December 31,
	2017			2016			2018			2017
Term B-5 Loans (effective interest rate of 4.33% at September 30, 2017)	$	993,314		$	—
Term B-2 Loans (effective interest rate of 3.58% and 3.26% at September 30, 2017 and December 31, 2016, respectively)		557,658			1,327,850
Term B-3 Loans (effective interest rate of 4.33% at December 31, 2016)		—			245,800
Revolving credit facility		—			24,351
							(In thousands)
Term B-5 Loans (effective interest rate of 5.09% and 4.69% at June 30, 2018 and December 31, 2017, respectively)							$	985,827		$	990,819
Term B-2 Loans (effective interest rate of 4.34% and 3.94% at June 30, 2018 and December 31, 2017, respectively)								547,365			554,227
Revolving credit facility (effective interest rate of 4.24% at December 31, 2017)								—			15,000
Total long-term debt		1,550,972			1,598,001			1,533,192			1,560,046
Less discounts		(9,165	)		(5,517	)		(7,780	)		(8,685	)
Less debt issuance costs		(9,766	)		(9,702	)		(7,639	)		(9,045	)
Less current maturities		(23,707	)		(51,713	)		(23,707	)		(38,707	)
Total long-term debt, net	$	1,508,334		$	1,531,069		$	1,494,066		$	1,503,609

SEA is the borrower under the senior secured credit facilities, as amended pursuant to a credit agreement (the “Existing Credit Agreement”) dated as of December 1, 2009, as the same may be amended, restated, supplemented or modified from time to time (the “Senior Secured Credit Facilities”). On March 31, 2017, SEA entered into a refinancing amendment, Amendment No. 8 (the “Amendment”), to its Existing Credit Agreement. In connection with the Amendment, SEA borrowed ~~$998,306~~$998.3 million of additional term loans (the “Term B-5 Loans”) of which the proceeds, along with cash on hand, were used to redeem all of the then outstanding principal of the Term B-3 loans (the “Term B-3 Loans”), with a principal amount equal to ~~$244,713~~$244.7 million and a portion of the outstanding principal of the Term B-2 loans (the “Term B-2 Loans”), with a principal amount equal to ~~$753,593,~~$753.6 million, and pay other fees, costs and expenses in connection with the Amendment and related transactions. Additionally, pursuant to the Amendment, SEA terminated the existing revolving credit commitments ~~(the “Terminated Revolving Credit Facility”)~~ and replaced them with a new tranche with an aggregate commitment amount of ~~$210,000~~$210.0 million (the ~~“New Revolving~~“Revolving Credit Facility”).

In connection with the issuance of the Term B-5 Loans, SEA recorded a discount of ~~$4,992~~$5.0 million and debt issuance costs of ~~$44~~$0.04 million during the ~~nine~~six months ended ~~September~~June 30, 2017. Additionally, SEA wrote-off debt issuance costs of ~~$7,987,~~$8.0 million, which is included in loss on early extinguishment of debt and write-off of discounts and debt issuances costs in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) during the ~~nine~~six months ended September 30, 2017. Such loss on early extinguishment of debt and write-off of discounts and debt issuance costs also includes $33 related to a write-off of discounts and debt issuance costs resulting from a mandatory prepayment of debt on March 30, 2017 and $123 related to a write-off of discounts and debt issuance costs resulting from a voluntary prepayment of debt during the nine months ended SeptemberJune 30, 2017. See discussion in the Senior Secured Credit Facilities section which follows for further information.

Debt issuance costs and discounts are amortized to interest expense using the effective interest method over the term of the related debt and are included in long-term debt, net, in the accompanying unaudited condensed consolidated balance sheets. Unamortized debt issuance costs and discounts for the Term B-5 Loans, Term B-2 Loans and Revolving Credit Facility were $10.9 million, $2.6 million and $1.9 million, respectively, at June 30, 2018. Unamortized debt issuance costs and discounts for the Term B-5 Loans, Term B-2 Loans and Revolving Credit Facility were $11.9 million, $3.3 million and $2.5 million, respectively, at December 31, 2017.

As of June 30, 2018, SEA was in compliance with all covenants contained in the documents governing the Senior Secured Credit Facilities.

As of ~~September~~June 30, ~~2017,~~2018, the Senior Secured Credit Facilities consisted of ~~$557,658~~$985.8 million in Term B-5 Loans which will mature on March 31, 2024, $547.4 million in Term B-2 Loans which will mature on May 14, 2020, ~~$993,314 in Term B-5 Loans which will mature on March 31, 2024~~ and ~~a $210,000 New~~the $210.0 million Revolving Credit Facility, which was not drawn upon as of ~~September~~June 30, ~~2017.~~2018. The ~~New~~ Revolving Credit Facility will mature on the earlier of (a) March 31, 2022 and (b) the 91st day prior to the earlier of (1) the maturity of the Term B-2 Loans with an aggregate principal amount greater than ~~$50,000~~$50.0 million and (2) the maturity date of any indebtedness incurred to refinance the Term B-2 ~~loans~~Loans with an aggregate principal amount greater than ~~$50,000.~~$50.0 million. The outstanding balance under the ~~Terminated~~ Revolving Credit Facility was included in current maturities of long-term debt in the accompanying unaudited condensed consolidated balance sheet as of December 31, ~~2016~~2017 due to the Company’s intent to repay the borrowings within the following twelve month period.

The Term B-2 Loans amortize in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the Term B-2 Loans on May 14, 2013, with the balance due on the final maturity date of May 14, 2020. ~~Beginning with the fiscal quarter ended June 30, 2017, the~~The Term B-5 Loans amortize in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the Term B-5 Loans on March 31, 2017, with the balance due on the final maturity date of March 31, 2024. SEA may voluntarily repay amounts outstanding under the Senior Secured Credit Facilities at any time without premium or penalty, other than ~~a prepayment premium on voluntary prepayments of the Term B-5 Loans in connection with certain repricing transactions on or prior to September 30, 2017 and~~ customary “breakage” costs with respect to LIBOR loans.

SEA is required to prepay the outstanding Term B-2 Loans and Term B-5 Loans, subject to certain exceptions, with

Notwithstanding any of the foregoing, each lender of term loans has the right to reject its pro rata share of mandatory prepayments described above, in which case SEA may retain the amounts so rejected. The foregoing mandatory prepayments will be applied pro rata to installments of term loans in direct order of maturity. During the first quarter of 2017, the Company made a mandatory prepayment of approximately ~~$6,300~~$6.3 million based on its excess cash flow calculation as of December 31, 2016. Approximately ~~$3,500~~$3.5 million of the mandatory prepayment was accepted by the lenders and applied ratably to the Term B-2 and Term B-3 Loans prior to the Amendment on March 31, 2017, and the remainder of ~~$2,800~~$2.8 million was applied as a voluntary prepayment to the Term B-2 Loans in the three months ended June 30, 2017.

~~SEA may also increase and/~~ There were no mandatory prepayments made during the three or add one or more incremental term loan facilities to the Senior Secured Credit Facilities and/or increase commitments under the New Revolving Credit Facility in an aggregate principal amount of up to $350,000. SEA may also incur additional incremental term loans provided that, among other things, on a pro forma basis after giving effect to the incurrence of such incremental term loans, the First Lien Secured Leverage Ratio, as defined in the Senior Secured Credit Facilities, is no greater than 3.50 to 1.00.

The obligations under the Senior Secured Credit Facilities are fully, unconditionally and irrevocably guaranteed by the Company, any subsidiary of the Company that directly or indirectly owns 100% of the issued and outstanding equity interests of SEA, and, subject to certain exceptions, each of SEA’s existing and future material domestic wholly-owned subsidiaries. The Senior Secured Credit Facilities are collateralized by first priority or equivalent security interests, subject to certain exceptions, in (i) all the capital stock of, or other equity interests in, SEA and substantially all of SEA’s direct or indirect material wholly-owned domestic subsidiaries and 65% of the capital stock of, or other equity interests in, any “first tier” foreign subsidiaries and (ii) certain tangible and intangible assets of SEA and the Company.

The Term B-5 Loans were initially borrowed in an aggregate principal amount of $998,306 on March 31, 2017 in connection with the Amendment. Borrowings of Term B-5 Loans under the Senior Secured Credit Facilities bear interest, at SEA’s option, at a rate equal to an applicable margin over either (a) a base rate determined by reference to the higher of (1) the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. as its “prime rate” and (2) the federal funds rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the British Bankers Association (“BBA”) LIBOR Rate, or the successor thereto if the BBA is no longer making a LIBOR rate available for the interest period relevant to such borrowing. The Term B-5 Loans applicable margin must be adjusted for any Incremental Term Loan (as defined in the Senior Secured Credit Facilities) margin that is more than 50 basis points per annum greater so that the Term B-5 Loans margin is not less than the Incremental Term Loan margin by more than 50 basis points. The applicable margin for the Term B-5 Loans is 2.00%, in the case of base rate loans, and 3.00%, in the case of LIBOR rate loans, subject to a base rate floor of 1.75% and a LIBOR floor of 0.75%.

The Term B-2 Loans were initially borrowed in an aggregate principal amount of $1,405,000. Borrowings under the Senior Secured Credit Facilities bear interest, at SEA’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. as its “prime rate” and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate based on the BBA LIBOR rate, or the successor thereto if the BBA is no longer making a LIBOR rate available, for the interest period relevant to such borrowing. The applicable margin for the Term B-2 Loans is 1.25%, in the case of base rate loans, and 2.25%, in the case of LIBOR rate loans, subject to a base rate floor of 1.75% and a LIBOR floor of 0.75%. The applicable margin for the Term B-2 Loans (under either a base rate or LIBOR rate) is subject to one 25 basis point step-down upon achievement by SEA of a total net leverage ratio equal to or less than 3.25 to 1.00.

Borrowings of loans in the New Revolving Credit Facility under the Senior Secured Credit Facilities bear interest at a rate equal to an applicable margin over either, at SEA’s option, (a) a base rate determined by reference to the higher of the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. as its “prime rate”, in each case, plus an applicable margin equal to 1.75% and (2) the federal funds rate plus 1/2 of 1% or (b) a LIBOR rate based on the BBA LIBOR rate or the successor thereto if the BBA is no longer making a LIBOR rate available, for the interest period relevant to such borrowing (provided in no event shall such LIBOR rate with respect to the borrowings be less than 0.0% per annum). The applicable margin for borrowings under the New Revolving Credit Facility is 1.75%, in the case of base rate loans, and 2.75%, in the case of LIBOR rate loans. The applicable margin for borrowings under the New Revolving Credit Facility are subject to one 25 basis point step-down upon achievement by SEA of certain corporate credit ratings.

In addition to paying interest on outstanding principal under the Senior Secured Credit Facilities, SEA is required to pay a commitment fee to the lenders under the New Revolving Credit Facility in respect of the unutilized commitments thereunder at a rate of 0.50% per annum. SEA is also required to pay customary letter of credit fees.six months ended June 30, 2018.

As of ~~September~~June 30, ~~2017,~~2018, SEA had approximately ~~$19,050~~$21.3 million of outstanding letters of credit, leaving ~~$190,950~~approximately $188.7 million available for borrowing.

The Senior Secured Credit Facilities contain a number of customary negative covenants. Such covenants, among other things, restrict, subject to certain exceptions, the ability of SEA and its restricted subsidiaries to incur additional indebtedness; ~~make capital expenditures;~~ make guarantees; create liens on assets; enter into sale and leaseback transactions; engage in mergers or consolidations; sell assets; make fundamental changes; pay dividends and distributions or repurchase SEA’s capital stock; make investments, loans and advances, including acquisitions; engage in certain transactions with affiliates; make changes in the nature of the business; and make prepayments of junior debt. The Senior Secured Credit Facilities also contain covenants requiring SEA to ~~maintain specified maximum~~limit annual capital expenditures, and maintain a maximum total net leverage ratio and a minimum interest coverage ratio. All of the net assets of SEA and its consolidated subsidiaries are restricted and there are no unconsolidated subsidiaries of SEA.

The Company’s ability to comply with these and other provisions of its existing debt agreements is dependent on its future performance, which is subject to many factors, some of which are beyond the Company’s control. Although the Company is currently in compliance with its debt covenants, its declining performance has resulted in leverage ratios closer to the ratios established in its debt agreements. As a result, there is an increased risk regarding future compliance should the Company’s operating performance continue to deteriorate. The breach of any of these covenants or non-compliance with any of the financial ratios and tests could result in an event of default under the existing debt agreements, which, if not cured or waived, could result in acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross-acceleration or cross-default provisions.14

The Senior Secured Credit Facilities permit restricted payments in an aggregate amount per annum equal to the sum of (A) ~~$25,000~~$25.0 million plus (B) an amount, if any, equal to (1) if the total net leverage ratio on a pro forma basis after giving effect to the payment of any such restricted payment, is no greater than 3.50 to 1.00, an unlimited amount, (2) if the total net leverage ratio on a pro forma basis after giving effect to the payment of any such restricted payment is no greater than 4.00 to 1.00 and greater than 3.50 to 1.00, the greater of (a) ~~$95,000~~$95.0 million and (b) 7.50% of Market Capitalization (as defined in the Senior Secured Credit Facilities), (3) if the total net leverage ratio on a pro forma basis after giving effect to the payment of any such restricted payment is no greater than 4.50 to 1.00 and greater than 4.00 to 1.00, ~~$95,000~~$95.0 million and (4) if the total net leverage ratio on a pro forma basis after giving effect to the payment of any such restricted payment is no greater than 5.00 to 1.00 and greater than 4.50 to 1.00, ~~$65,000.~~$65.0 million.

As of ~~September~~June 30, ~~2017,~~2018, the total net leverage ratio as calculated under the Senior Secured Credit Facilities was ~~4.93~~4.35 to 1.00, which results in the Company having a ~~$90,000~~$120 million capacity for restricted payments in ~~2017, provided that the total net leverage ratio does not exceed 5.75 to 1.00, measured quarterly on a pro forma basis after giving effect to any such restricted payment. However, the~~2018. The amount available for dividend declarations, share repurchases and certain other restricted payments under the covenant restrictions in the debt agreements adjusts at the beginning of each quarter, as set forth above.

~~As of September 30, 2017, SEA was in compliance with all covenants contained in the documents governing~~ The total net leverage ratio as calculated under the Senior Secured Credit ~~Facilities.~~Facilities is not permitted to be greater than 5.75 to 1.00 as of the last day of any fiscal quarter.

Long-term debt as of ~~September~~June 30, ~~2017~~2018 is repayable as ~~follows:~~follows, and does not include the impact of any future voluntary prepayments:

Years Ending December 31,
2017	$	5,926
Years Ending December 31:			(In thousands)
2018		23,707	$	11,853
2019		23,707		23,707
2020		536,763		536,763
2021		9,983		9,983
2022				9,983
Thereafter		950,886		940,903
Total	$	1,550,972	$	1,533,192

As of ~~September~~June 30, ~~2017,~~2018, the Company has five interest rate swap agreements ~~(“the Interest~~(the “Interest Rate Swap Agreements”) which effectively fix the interest rate on ~~the three month~~ LIBOR-indexed interest payments associated with ~~$1,000,000~~$1.0 billion of SEA’s outstanding long-term debt. The Interest Rate Swap Agreements became effective on September 30, 2016; have a total notional amount of ~~$1,000,000;~~$1.0 billion; mature on May 14, 2020; require the Company to pay a weighted-average fixed rate of 2.45% per annum; provide that the Company receives a variable rate of interest based upon the greater of 0.75% or the ~~three month~~ BBA LIBOR; and have interest settlement dates occurring on the last day of September, December, March and June through maturity.

SEA designated the Interest Rate Swap Agreements above as qualifying cash flow hedge accounting relationships as further discussed in Note 7–Derivative Instruments and Hedging Activities ~~that~~which follows.

Cash paid for interest relating to the Senior Secured Credit Facilities and the Interest Rate Swap Agreements, net of amounts capitalized, as applicable was ~~$69,408~~$43.7 million and ~~$42,521~~$48.5 million in the ~~nine~~six months ended ~~September~~June 30, 2018 and 2017, ~~and 2016,~~ respectively. Cash paid for interest in the ~~nine~~six months ended ~~September~~June 30, 2018 includes $5.1 million relating to the Company’s fourth quarter 2017 interest payable on its Senior Secured Credit Facilities which was paid on January 5, 2018. Cash paid for interest in the six months ended June 30, 2017 includes ~~$12,904~~$12.9 million relating to the Company’s fourth quarter 2016 interest payable on its Senior Secured Credit Facilities which was paid on January 3, 2017.

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings. The Company does not speculate using derivative instruments.

As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the Company did not have any derivatives outstanding that were not designated in hedge accounting relationships.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. ~~On September~~

As of June 30, ~~2016,~~2018, the ~~Company’s four~~Company has five Interest Rate Swap Agreements ~~with a combined notional value of $1,250,000 matured in accordance with their terms and~~that mature on May 14, 2020, which effectively fix the ~~five~~ interest rate ~~forward swap agreements~~on LIBOR-indexed interest payments associated with ~~a combined notional value~~$1.0 billion of ~~$1,000,000 became effective.~~ SEA’s outstanding long-term debt.

The interest rate swap agreements ~~were~~are designated as cash flow hedges of interest rate risk.

The ~~effective portion of~~ changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive ~~loss~~income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2017, there was no ineffectiveness on cash flow hedges. During the three and nine months ended September 30, 2016, an immaterial loss related to the ineffective portion was recognized in other expense (income), net, on the accompanying unaudited condensed consolidated statements of comprehensive income (loss). Amounts reported in accumulated other comprehensive ~~loss~~income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates that an additional ~~$9,037~~$1.1 million will be reclassified as ~~an increase to~~ interest ~~expense.~~income.

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the unaudited condensed consolidated balance sheets as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

	Liability Derivatives			Liability Derivatives			Asset Derivatives			Liability Derivatives
	As of September 30, 2017			As of December 31, 2016			As of June 30, 2018			As of December 31, 2017
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:							(In thousands)
Interest rate swap agreements	Other liabilities	$	16,639	Other liabilities	$	22,808	Other assets	$	5,201	Other liabilities	$	8,455
Total derivatives designated as hedging instruments		$	16,639		$	22,808		$	5,201		$	8,455

Tabular Disclosure of the Effect of Derivative Instruments on the Statements of Comprehensive Income (Loss):

The table below presents the pretax effect of the Company’s derivative financial instruments on the unaudited condensed consolidated statements of comprehensive income (loss) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016:~~2017:

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. As of September 30, 2017, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $17,336. As of September 30, 2017, the Company has posted no collateral related to these agreements. If the Company had breached any of these provisions at September 30, 2017, it could have been required to settle its obligations under the agreements at their termination value of $17,336.

The following table reflects the changes in accumulated other comprehensive ~~loss~~income (loss) for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, net of ~~tax:~~tax:

Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement is required to be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity. The standard describes three levels of inputs that may be used to measure fair value:

Level 2- Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company has determined that the majority of the inputs used to value its derivative financial instruments using the income approach fall within Level 2 of the fair value hierarchy. The Company uses readily available market data to value its derivatives, such as interest rate curves and discount factors. ASC 820, Fair Value Measurement, also requires consideration of credit risk in the valuation. The Company uses a potential future exposure model to estimate this credit valuation adjustment (“CVA”). The inputs to the CVA are largely based on observable market data, with the exception of certain assumptions regarding credit worthiness which make the CVA a Level 3 input. Based on the magnitude of the CVA, it is not considered a significant input and the derivatives are classified as Level 2. Of the Company’s long-term obligations, the Term B-2 Loans and Term B-5 Loans are classified in Level 2 of the fair value hierarchy as of ~~September~~June 30, ~~2017~~2018 and ~~the Term B-2 and Term B-3 Loans were classified in Level 2 of the fair value hierarchy as of~~ December 31, ~~2016.~~2017. The fair value of the term loans as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 approximate their carrying value, excluding unamortized debt issuance costs and discounts, due to the variable nature of the underlying interest rates and the frequent intervals at which such interest rates are reset.

There were no transfers between Levels 1, 2 or 3 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017. The Company did not have any assets measured on a recurring basis at fair value as of September 30, 2017.~~2018. The following table presents the Company’s estimated fair value measurements and related classifications for assets and liabilities measured on a recurring basis as of ~~September~~June 30, ~~2017:~~

	Quoted Prices in								Quoted Prices in
	Active Markets		Significant						Active Markets		Significant
	for Identical		Other		Significant				for Identical		Other		Significant
	Assets and		Observable		Unobservable		Balance at		Assets and		Observable		Unobservable		Balance at
	Liabilities		Inputs		Inputs		September 30,		Liabilities		Inputs		Inputs		June 30,
	(Level 1)		(Level 2)		(Level 3)		2017		(Level 1)		(Level 2)		(Level 3)		2018
Assets:									(In thousands)
Derivative financial instruments ^(a)									$	—	$	5,201	$	—	$	5,201
Liabilities:
Derivative financial instruments ^(a)	$	—	$	16,639	$	—	$	16,639
Long-term obligations ^(b)	$	—	$	1,550,972	$	—	$	1,550,972	$	—	$	1,533,192	$	—	$	1,533,192

There were no transfers between Levels 1, 2 or 3 during the year ended December 31, ~~2016.~~2017. The Company did not have any assets measured on a recurring basis at fair value as of December 31, ~~2016.~~2017. The following table presents the Company’s estimated fair value measurements and related classifications for liabilities measured on a recurring basis as of December 31, ~~2016:~~2017:

	Quoted Prices in								Quoted Prices in
	Active Markets		Significant						Active Markets		Significant
	for Identical		Other		Significant				for Identical		Other		Significant
	Assets and		Observable		Unobservable		Balance at		Assets and		Observable		Unobservable		Balance at
	Liabilities		Inputs		Inputs		December 31,		Liabilities		Inputs		Inputs		December 31,
	(Level 1)		(Level 2)		(Level 3)		2016		(Level 1)		(Level 2)		(Level 3)		2017
Liabilities:									(In thousands)
Derivative financial instruments ^(a)	$	—	$	22,808	$	—	$	22,808	$	—	$	8,455	$	—	$	8,455
Long-term obligations ^(b)	$	—	$	1,598,001	$	—	$	1,598,001	$	—	$	1,560,046	$	—	$	1,560,046

On May 8, 2017 an affiliate of ZHG Group, Sun Wise (UK) Co., LTD (“ZHG” or “Buyer”) acquired approximately 21% of the outstanding shares of common stock of the Company (the “ZHG Transaction”) from several limited partnerships (the “Seller”) ultimately owned by affiliates of the Blackstone Group L.P. (“Blackstone”) and certain co-investors, pursuant to a stock purchase agreement between ZHG and Seller (the “Stock Purchase Agreement”). In connection with the ~~Sale, which closed on May 8, 2017, during the nine months ended September 30, 2017,~~ZHG Transaction, Sellers reimbursed the Company for approximately ~~$4,000~~$4.0 million of related costs and expenses incurred by the ~~Company.~~Company during fiscal year 2017.

OnIn March ~~24,~~ 2017, the Company entered into the ZHG Agreements with ~~Zhonghong Holding,~~ an affiliate of ZHG Group. In exchange for providing services under the ZHG Agreements, the Company is expected to receive fees as well as a travel stipend per year through 2019. The Company recognizes revenue under the ZHG Agreements on a ~~straight line~~straight-line basis over the contractual term of the ~~agreements. Revenue recognized~~agreements including approximately $2.5 million and $1.3 million in the ~~nine~~six months ended ~~September~~June 30, 2018 and 2017, ~~was approximately $2,600~~respectively. As of June 30, 2018, a receivable related to ~~these agreements.~~ the ZHG Agreements of approximately $1.5 million was included in accounts receivable in the accompanying unaudited condensed consolidated balance sheet. See further discussion ~~regarding~~related to the ~~Sale~~ZHG Agreements in Note 1–Description of the Business and Basis of ~~Presentation~~ ~~and Note 12–Stockholders’ Equity.~~

As of December 31, 2016, approximately $25,000 aggregate principal amount of Term B-2 Loans were owned by affiliates of Blackstone. The Company makes voluntary and mandatory principal repayments as well as periodic principal and interest payments on such debt in accordance with its terms from time to time. There were no debt amounts owned by affiliates of the Company as of September 30, 2017. See Note 6–Long-Term Debt for further discussion.

On September 9, 2014, a purported stockholder class action lawsuit consisting of purchasers of the Company’s common stock during the periods between April 18, 2013 toand August 13, 2014, captioned Baker v. SeaWorld Entertainment, Inc., et al.~~, Case No. 14-CV-02129-MMA (KSC)~~, was filed in the U.S. District Court for the Southern District of California against the Company, the Chairman of the Company’s Board, certain of its executive officers and Blackstone. On February ~~27,~~17, 2015, Court-appointed Lead Plaintiffs, Pensionskassen For Bø~~rne-~~ rne―Og Ungdomspædagoger and Arkansas Public Employees Retirement System, together with additional plaintiffs, Oklahoma City Employee Retirement System and Pembroke Pines Firefighters and Police Officers Pension Fund (collectively, “Plaintiffs”), then filed an amended complaint against the Company, the Chairman of the Company’s Board, certain of its executive officers, Blackstone, and underwriters of the initial public offering and secondary public offerings. The amended complaint alleges, among other things, that the prospectus and registration statements filed contained materially false and misleading information in violation of the federal securities laws and seeks unspecified compensatory damages and other relief. Plaintiffs contend that defendants knew or were reckless in not knowing that Blackfish was impacting SeaWorld’s business at the time of each public statement. On May 29, 2015, the Company and the other defendants filed motions to dismiss the amended ~~complaint. On March 31, 2016,~~complaint, which the Court granted ~~the motions to dismiss the amended complaint, in its entirety, without prejudice.~~on March 31, 2016. On May 31, 2016, Plaintiffs filed a second amended consolidated class action complaint (“Second Amended Complaint”), which, among other things, no longer names the Company’s Board or underwriters as defendants. ~~On June 29, 2016, the remaining defendants filed~~The Court later denied a renewed motion to dismiss the Second Amended Complaint. ~~On September 30, 2016,~~In May 2017, Plaintiffs filed a motion for class certification which the Court granted on November 29, 2017. On December 13, 2017, Defendants filed a petition for permission to appeal the Court’s class certification order with the United States Court of Appeals for the Ninth Circuit, which was denied on June 28, 2018. Discovery is currently ongoing with the ~~motion to dismiss. On October 28, 2016, defendants filed their Answer to the Second Amended Complaint. Written discovery has been propounded by both sides but no depositions have been~~trial scheduled ~~to date.~~ for 2019.

On ~~March 2, 2017, following~~June 14, 2018, a ~~case management conference held on March 1, 2017,~~lawsuit captioned Highfields Capital I LP et al. v. SeaWorld Entertainment, Inc. et al., was filed in the United States District Court entered a scheduling order, which provided that fact discovery be completed by October 20, 2017. The scheduling order also provided deadlines for expert discovery and other pretrial deadlines, with a trial datein the Southern District of September 18, 2018. On March 6, 2017, the Court entered an amended scheduling order providing that Plaintiff must file its motion for class certification by May 19, 2017. On March 31, 2017, Plaintiffs filed a motion to compel discoveryCalifornia against the Company and ~~Blackstone. A hearing on~~certain of the ~~motion was held on April 18, 2017. Following~~Company’s former and present executive officers (collectively, the ~~hearing, Plaintiff’s motion was granted in part and denied in part. On May 19, 2017, Plaintiffs filed their motion for class certification and on July 27, 2017 defendants filed~~“Defendants”). The plaintiffs, which are investment funds managed by a ~~brief in opposition to~~common adviser (collectively, the motion, and a hearing on the motion is set for November 13, 2017. On August 25, 2017, the United States filed a motion to intervene and partially stay discovery and, on September 6, the Court stayed depositions through November 30. On September 8, 2017, the Court entered an order modifying the scheduling order, which provided,“Plaintiffs”) allege, among other things, that ~~fact discovery be completed by January 22, 2018. On September 11, 2017,~~ the ~~Court issued an order~~Defendants made false and misleading statements in violation of the federal securities laws regarding the impact of the documentary Blackfish on SeaWorld’s business. The complaint further ~~revising~~alleges that such statements were made to induce Plaintiffs to purchase common stock of the ~~schedule~~Company at artificially-inflated prices and ~~set~~that Plaintiffs suffered investment losses as a ~~trial date for December 4, 2018.~~result. The Plaintiffs are seeking unspecified compensatory damages and other relief. The Company believes that the ~~class action~~ lawsuit is without merit and intends to defend the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of this lawsuit.

On December 8, 2014, a putative derivative lawsuit captioned Kistenmacher v. Atchison, et al., ~~Civil Action No. 10437,~~ was filed in the Court of Chancery ofin the State of Delaware against, among others, the Chairman of the Company’s Board, certain of the Company’s executive officers, directors and shareholders, and Blackstone. The Company is a “Nominal Defendant” in the lawsuit.

On March 30, 2015, the plaintiff filed an amended complaint against the same set of defendants. The amended complaint alleges, among other things, that the defendants breached their fiduciary duties, aided and abetted breaches of fiduciary duties, violated Florida Blue Sky laws and were unjustly enriched by (i) including materially false and misleading information in the prospectus and registration statements; and (ii) causing the Company to repurchase certain shares of its common stock from certain shareholders at an alleged artificially inflated price. The Company does not maintain any direct exposure to loss in connection with this shareholder derivative lawsuit as the lawsuit does not assert any claims against the Company. The Company’s status as a “Nominal Defendant” in the action reflects the fact that the lawsuit is maintained by the named plaintiff on behalf of the Company and that the plaintiff seeks damages on the Company’s behalf. On May 21, 2015, the defendants filed a motion to stay the lawsuit pending resolution of the Company’s securities class action lawsuit. On September 21, 2015, the Court granted the motion and ordered that the derivative action to beThe case is currently stayed in favor of the securities class action captioned Baker v. SeaWorld Entertainment, Inc., et al., Case No. 14-CV-02129-MMA (KSC). On March 15, 2017, plaintiff moved to lift the stay entered by the court on September 21, 2015. Defendants filed a brief in opposition to plaintiff’s motion on May 23, 2017. On September 12, 2017, following oral argument, the Court denied plaintiff’s motion. described above.

On March 25, 2015, a purported class action was filed in the United States District Court for the Southern District of California against the Company, captioned Holly Hall v. SeaWorld Entertainment, Inc., ~~Case No. 3:15-cv-00600-CAB-RBB~~ (the “Hall Matter”). The complaint identifies three putative classes consisting of all consumers nationwide who at any time during the four-year period preceding the filing of the original complaint, purchased an admission ticket, a membership or a SeaWorld “experience” that includes an “orca experience” from the SeaWorld amusement park in San Diego, California, Orlando, Florida or San Antonio, Texas respectively. The complaint alleges causes of action under California Unfair Competition Law, California Consumers Legal Remedies Act (“CLRA”), California False Advertising Law, California Deceit statute, Florida Unfair and Deceptive Trade Practices Act, Texas Deceptive Trade Practices Act, as well as claims for Unjust Enrichment. Plaintiffs’ claims are based on their allegations that the Company misrepresented the physical living conditions and care and treatment of its orcas, resulting in confusion or misunderstanding among ticket purchasers, and omitted material facts regarding its orcas with intent to deceive and mislead the plaintiff and purported class members. The complaint further alleges that the specific misrepresentations heard and relied upon by Holly Hall in purchasing her SeaWorld tickets concerned the circumstances surrounding the death of a SeaWorld trainer. The complaint seeks actual damages, equitable relief, attorney’s fees and costs. Plaintiffs claim that the amount in controversy exceeds ~~$5,000,~~$5.0 million, but the liability exposure is speculative until the size of the class is determined (if certification is granted at all).

In addition, four other purported class actions were filed against the Company and its affiliates. ~~The first three~~Such actions were filed on April 9, 2015, April 16, 2015 and April 17, 2015, respectively, in the following federal courts: (i) the United States District Court for the Middle District of Florida, captioned Joyce Kuhl v. SeaWorld LLC et al., 6:15-cv-00574-ACC-GJK (the “Kuhl Matter”), (ii) the United States District Court for the Southern District of California, captioned Jessica Gaab, et. al. v. SeaWorld Entertainment, Inc., Case No. 15:cv-842-CAB-RBB (the “Gaab Matter”), and (iii) the United States District Court for the Western District of Texas, captioned Elaine Salazar Browne v. SeaWorld of Texas LLC et al., 5:15-cv-00301-XR (the “Browne Matter”). On May 1, 2015, the Kuhl Matter and Browne Matter were voluntarilysubsequently dismissed without prejudice by the respective plaintiffs. On May 7, 2015, plaintiffs Kuhl and Browne re-filed their claims, along with a new plaintiff, Valerie Simo, in the United States District Court for the Southern District of California in an action captioned Valerie Simo et al. v. SeaWorld Entertainment, Inc., Case No. 15: cv-1022-CAB-RBB (the “Simo Matter”). All four of these cases, in essence, reiterate the claims made and relief sought in the Hall Matter.

~~On August 7, 2015, the Gaab Matter and Simo Matter were~~or consolidated with the Hall Matter and the plaintiffs filed a First Consolidated Amended Complaint (“FAC”) on August 21, 2015. The FAC pursued the same seven causes of action as the original Hall complaint, and added a request for punitive damages pursuant to the California CLRA.

The Company moved to dismiss the FAC in its entirety, and its motion was granted on December 24, 2015. The United States District Court for the Southern District of California granted dismissal with prejudice as to the California CLRA claim, the portion of California Unfair Competition Law claim premised on the CLRA claim, all claims for injunctive relief, and on all California claims premised solely on alleged omissions by the Company. The United States District Court for the Southern District of California granted leave to amend as to the remainder of the complaint. On January 25, 2016, plaintiffs filed their Second Consolidated Amended Complaint (“SAC”). The SAC pursues the same causes of action as the FAC, except for the California CLRA, which, as noted above, was dismissed with prejudice.described above.

The Company filed a motion to dismiss the entirety of the ~~SAC~~plaintiffs’ Second Consolidated Amended Complaint (“SAC”) with prejudice on February 25, 2016. The ~~United States District~~ Court ~~for the Southern District of California~~ granted the Company’s motion to dismiss the entire SAC with prejudice and entered judgment for the Company on May 13, 2016. Plaintiffs filed their notice of appeal to the United States Court of Appeals for the Ninth Circuit ~~(the “Ninth Circuit”)~~ on June 10, 2016. The appeal has been fully briefed and ~~is awaiting an oral argument date. The Ninth Circuit has stated that it may hear~~argued and the ~~argument in February, March, or April 2018.~~Company awaits the Court’s decision.

On April 13, 2015, a purported class action was filed in the Superior Court of the State of California for the City and County of San Francisco against SeaWorld Parks & Entertainment, Inc., captioned Marc Anderson, et. al., v. SeaWorld Parks & Entertainment, Inc., ~~Case No. CGC-15-545292~~ (the “Anderson Matter”). The putative class ~~consists~~consisted of all consumers within California who, within the past four years, purchased tickets to SeaWorld San Diego. ~~On May 11, 2015, the plaintiffs filed a First Amended Class Action Complaint (the “First Amended Complaint”).~~ The ~~First Amended Complaint~~complaint (as amended) alleges causes of action under the California False Advertising Law, California Unfair Competition Law and California CLRA. Plaintiffs’ claims are based on their allegations that the Company misrepresented the physical living conditions and care and treatment of its orcas, resulting in confusion or misunderstanding among ticket ~~purchasers,~~ and ~~omitted material facts regarding its orcas~~orca plush purchasers with intent to deceive and mislead the ~~plaintiff~~plaintiffs and purported class members. The ~~First Amended Complaint~~complaint seeks actual damages, equitable relief, attorneys’ fees and costs. Based on plaintiffs’ definition of the class, the amount in controversy exceeds ~~$5,000,~~$5.0 million, but the liability exposure is ~~speculative until the size of the class is determined (if certification is granted at all).~~speculative. On May 14, 2015, the Company removed the case to the United States District Court for the Northern District of ~~California, Case No. 15: cv-2172-SC.~~California.

~~On May~~ 19 2015, the plaintiffs filed a motion to remand. On September 18, 2015, the Company filed a motion to dismiss the First Amended Complaint in its entirety. The motion was fully briefed. On September 24, 2015, the United States District Court for the Northern District of California denied plaintiffs’ motion to remand. On October 5, 2015, plaintiffs filed a motion for leave to file a motion for reconsideration of this order, and contemporaneously filed a petition for permission to appeal to the Ninth Circuit, which the Company opposed. On October 14, 2015, the United States District Court for the Northern District of California granted plaintiffs’ motion for leave. Plaintiffs’ motion for reconsideration was fully briefed. On January 12, 2016, the United States District Court for the Northern District of California granted in part and denied in part the motion for reconsideration, and refused to remand the case. On January 22, 2016, plaintiffs filed a petition for permission to appeal the January 12, 2016 order to the Ninth Circuit, which the Company opposed. On April 7, 2016, the Ninth Circuit denied both of plaintiffs’ petitions for permission to appeal and the plaintiffs filed a motion for leave to file a Second Amended Class Action Complaint (“Second Amended Complaint”), seeking to add two additional plaintiffs and make various pleading adjustments. The Company opposed the motion. On August 1, 2016, the United States District Court for the Northern District of California court issued an order granting in part the Company’s motion to dismiss and granting plaintiffs leave to file an amended complaint by August 22, 2016, which they filed.

The ~~Second Amended Complaint likewise asserted causes of action based~~Company filed a motion for summary judgment on October 30, 2017 which the California False Advertising Law, California Unfair Competition Law and California CLRA. Essentially plaintiffs allege there were fraudulent representations made by the Company about the health of its orcas that ultimately induced consumers to purchase admission tickets to SeaWorld parks and in some cases, plush toys while in the parks. The Company moved to dismiss this on various grounds.

~~On November 7, 2016, the United States District~~ Court ~~for the Northern District of California issued an order granting~~granted in part and ~~denying~~denied in ~~part, the Company’s motion~~part. All three named plaintiffs continue to ~~dismiss. The United States District Court~~have claims for the Northern District of California found that one named plaintiff failed to allege reliance on any specific statements so those claims, in their entirety, have been dismissed. In addition, the United States District Court for the Northern District of California determined that plaintiffs did not allege any misrepresentations made about the plush toy purchases, which disposes of the CLRA claims based on the toys. The United States District Court for the Northern District of California also found that certain plaintiff’s conversation with SeaWorld’s trainers was not “advertising,”individual restitution and ~~dismissed the false advertising claim and Unfair Competition Law claim premised on it.~~

Plaintiffs filed a Third Amended Class Action Complaint on November 22, 2016. The Company moved to dismiss portions of that pleading, but the motion to dismiss was denied. What remains at this point are plaintiff's claims under California's Unfair Competition Law, False Advertising Law and the CLRA based on the purchase of tickets; plaintiff's California Unfair Competition Law and False Advertising Law claims based on the purchase of plush toys; and plaintiff's claims under California's Unfair Competition Law based on the purchase of plush toys.injunctive relief. The case is in the preliminary stages of ~~discovery, with briefing on~~discovery. On May 23, 2018, the Plaintiffs represented to the Court that they will not file a motion for class ~~certification~~certification. Trial is currently scheduled for ~~March through June 2018, and fact discovery currently set to close on June 22, 2018.~~October 2019.

The Company believes that ~~these consumer class action~~the above-described lawsuits are without merit and intends to defend these lawsuits vigorously; however, there can be no assurance regarding the ultimate outcome of these lawsuits.

On December 3, 2014, a purported class action lawsuit was filed in the United States District Court for the Middle District of Florida, Tampa Division against SeaWorld Parks & Entertainment, Inc., captioned Jason Herman, Joey Kratt, and Christina Lancaster, as individuals and on behalf of all others similarly situated, v. SeaWorld Parks & Entertainment, Inc. ~~Case no: 8:14-cv-03028-MSS-JSS.~~ The ~~complaint alleges a single breach~~certified class action currently consists of contract claim involving the Company’s EZPay Plan which affords customers the ability to pay for annual passes through monthly installments. The plaintiff alleges the Company automatically renewed passes beyond the initial term in violation of the terms and conditions of the parties’ contract which provided in part: “Except for any passes paid in less than twelve months, THIS CONTRACT WILL RENEW AUTOMATICALLY ON A MONTH-TO-MONTH BASIS until I terminate it.” On January 21, 2015, plaintiffs amended their complaint to includetwo claims for breach of contract, unjust enrichment and violation of federal Electronic Funds Transfer Act, 15 U.S.C. section 1693 et seq. on behalf of three individual plaintiffs as well as on behalf of a two classes: (i) individuals in the states of Florida, Texas, Virginia and California who paid for an annual pass through EZ pay in “less than twelve months,” had their passes automatically renewed and did not use the renewed passes after the first year or were not issued a full refund of payments made after the twelfth payment; and (ii) all of these same individuals who used debit cards.

In April 2018, the Company reached a preliminary agreement in principle to settle this matter for a payment of $11.5 million, plus certain administrative costs and expenses associated with the proposed settlement. The proposed settlement is still subject to further documentation and court approval. The Company has ~~always considered the plaintiffs’ argument~~accrued $11.5 million related to ~~be without merit and believes it has defenses to the action. The parties engaged~~this proposed settlement in ~~significant discovery and a motion was filed by the plaintiffs for certification~~other accrued liabilities as of the class. In addition, plaintiffs filed a motion for summary judgment and defendant in turn filed for motion for partial summary judgment. The Company anticipated the United States District Court for the Middle District of Florida would schedule a hearing on class certification first, determine whether a class should be certified, send notice to the certified class, and then entertain the respective motions for summary judgment.

However, on March 10, 2017, the United States District Court for the Middle District of Florida issued an order granting plaintiffs’ motion for certification of the class without a hearing and included in the order findings that the contract is unambiguous and that it means that the Company could not auto-renew the contract term if the customer paid in less than 365 days.

With regard to the order granting certification, on March 24, 2017, the Company filed a Rule 23(f) petition with the United States Court of Appeals for the Eleventh Circuit seeking interlocutory review of such order. While the Rule 23(f) petition was pending, on April 17, 2017, the United States District Court for the Middle District of Florida issued another order, this time granting plaintiff’s motion for summary judgment as to liability and denying the Company’s motion for partial summary judgment. The United States District Court for the Middle District of Florida decided that the Company breached the contract by failing to terminate the contract once the passes were paid in full. No determination of damages was made nor has the court entered any final judgment.

~~On May 15, 2017, a three-judge panel of the United States Court of Appeals for the Eleventh Circuit denied the Company’s Rule 23(f) petition~~June 30, 2018 on the grounds that the April 17, 2017 summary judgment order of the United States District Court for the Middle District of Florida constituted a “final judgment” and therefore the Company could appeal the final judgment. The United States Court of Appeals for the Eleventh Circuit did not address any of the arguments on the merits. The Company moved for reconsideration of the order of the United States Court of Appeals for the Eleventh Circuit and filed a notice of appeal of the “final judgment” determination that same day. The Company had two related proceedings pending with the United States Court of Appeals for the Eleventh Circuit – (i) the motion for reconsideration of the denial of the Company’s Rule 23(f) petition and (ii) the appeal of the “final judgment” determination with respect to the April 17, 2017 summary judgment order of the United States District Court for the Middle District of Florida. On August 28, 2017, the Eleventh Circuit issued an order dismissing the final appeal for lack of jurisdiction and remanded the case to the District Court. A trial on damages will most likely be held in May or June of 2018. The Company intends to continue to defend the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of this lawsuit. accompanying unaudited condensed consolidated balance sheet.

The Company is a party to various other claims and legal proceedings arising in the normal course of business. In addition, from time to time, the Company is subject to audits, inspections and investigations by, or receives requests for information from, various federal and state regulatory agencies, including, but not limited to, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS), the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA), the California Occupational Safety and Health Administration (Cal-OSHA), the Florida Fish & Wildlife Commission (FWC), the Equal Employment Opportunity Commission (EEOC), the Internal Revenue Service (IRS), the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). ~~For example, in June 2017,~~

On April 6, 2018, the Company received a ~~subpoena in connection with an~~written “Wells” notice from the SEC relating to a previously disclosed investigation by the ~~U.S. Department~~SEC. The Wells notice indicated that staff (the “Staff”) of ~~Justice concerning disclosures and public statements~~the SEC has made a preliminary determination to recommend to the SEC that a civil enforcement action or administrative proceeding be brought against the Company. No individual currently employed by the Company and certain executives and/or individuals on or before August 2014, including those regarding the impact of the “Blackfish” documentary, and trading in the Company’s securities. The Company also has received ~~subpoenas from~~a Wells notice.

A Wells notice is not a formal allegation or a finding of wrongdoing by the ~~staff~~Company. The Wells notice issued to the Company stated that the proposed action against the Company would allege violations of certain provisions of the U.S. ~~Securities~~federal securities laws. The Wells notice also stated that the Staff’s recommendation may involve various civil or administrative actions or proceedings, and ~~Exchange Commission~~may seek remedies that include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest and civil money penalties. The Company continues to cooperate with the SEC and responded through a Wells submission (the “Submission”) to the SEC setting forth the reasons why the Company believes no action should be commenced against it.

Following the Submission, the Company engaged in ~~connection~~discussions with the Staff regarding a possible negotiated resolution of these ~~matters. On June 16, 2017,~~matters and reached an agreement in principle with the ~~Company’s Board~~Staff to settle, without admitting or denying, the potential charges against the Company arising out of ~~Directors formed a Special Committee comprised of independent directors with respect to these inquiries. The Special Committee has engaged counsel to advise and assist~~ the ~~Committee.~~SEC’s investigation. The Company has ~~cooperated with these government inquiries~~recorded an estimated liability of $4.0 million related to this matter, which is included in other accrued liabilities as of June 30, 2018 and ~~intends~~in selling, general and administrative expenses for the three and six months ended June 30, 2018 on the accompanying unaudited condensed consolidated financial statements. The Company and the Staff are working to ~~continue~~document the proposed settlement, which is subject to ~~cooperate with~~approval by the SEC and there is no assurance that the settlement will be finalized and/or approved by the SEC or that any ~~government requests~~final settlement will not have different or ~~inquiries.~~additional terms.

From time to time, various parties ~~may~~ also bring other lawsuits against the Company. Matters where an unfavorable outcome to the Company is probable and which can be reasonably estimated are accrued. Such accruals, which are not material for any period presented, are based on information known about the matters, the Company’s estimate of the outcomes of such matters, and the Company’s experience in contesting, litigating and settling similar matters. Matters that are considered reasonably possible to result in a material loss are not accrued for, but an estimate of the possible loss or range of loss is disclosed, if such amount or range can be determined. At this time, management does not expect any such known claims, legal proceedings or regulatory matters to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

On May 16, 2017, SEA entered into a License Agreement (the “License Agreement”) with Sesame Workshop (“Sesame”), a New York not-for-profit corporation. The License Agreement supersedes the previous two license agreements and extends SEA’s status as Sesame’s exclusive theme park partner in the United States, Puerto Rico and the U.S. Virgin Islands (the “Territory”), and provides for the payment of certain royalty payments based on gross receipts for stand-alone theme parks (“Standalone Parks”) and license fees and merchandise royalties for Sesame themed areas within SEA theme parks (“Sesame Lands”). Sesame will retain the right to develop certain family entertainment centers subject to certain restrictions including size, number, types of attractions and geographic location. SEA’s principal commitments pursuant to the License Agreement include: (i) opening a new Sesame Place theme park no later than mid-2021 in a location to be ~~determined within the Territory;~~determined; (ii) building a new Sesame Land in SeaWorld Orlando by fall 2022; (iii) investing in minimum annual capital and marketing thresholds; and (iv) providing support for agreed upon sponsorship and charitable ~~initiatives, including Sesame’s annual gala event.~~initiatives. The Company estimates the combined future obligations for all of these commitments could be up to approximately ~~$150,000~~$105.0 million over the remaining term of the agreement. After the opening of the second Standalone Park (counting the existing Sesame Place Standalone Park in Langhorne, Pennsylvania), SEA will have the option to build additional Standalone Parks in the Sesame Territory within agreed upon timelines. The License Agreement has an initial term through December 31, 2031, with an automatic additional 15 year extension plus a five year option added to the term of the License Agreement from December 31st of the year of each new Standalone Park opening. On May 2, 2018, the Company announced that it plans to open a new Sesame Land in SeaWorld Orlando in Spring of 2019.

Pursuant to the License Agreement with Sesame Workshop, the Company pays a specified annual license fee, as well as a specified royalty based on revenues earned in connection with sales of licensed products, all food and beverage items utilizing the licensed elements and any events utilizing such elements if a separate fee is paid for such event.

~~SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES~~Anheuser-Busch, Incorporated (“ABI”) has granted the Company a perpetual, exclusive, worldwide, royalty-free license to use the Busch Gardens trademark and certain related domain names in connection with the operation, marketing, promotion and advertising of certain of the Company’s theme parks, as well as in connection with the production, use, distribution and sale of merchandise sold in connection with such theme parks. Under the license, the Company is required to indemnify ABI against losses related to the use of the marks.

In accordance with ASC 718, Compensation-Stock Compensation, the Company measures the cost of employee services rendered in exchange for share-based compensation based upon the grant date fair market value. The cost is recognized over the requisite service period, which is generally the vesting period unless service or performance conditions require otherwise. ~~Effective January 1, 2017, in accordance with its adoption of ASU 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting,~~ ~~the~~The Company ~~elected to recognize~~recognizes the impact of forfeitures as they ~~occur (see further discussion in Note 2–Recent Accounting Pronouncements).~~occur. The Company has granted stock options, time-vesting restricted ~~share awards~~shares, time-vesting restricted stock units, time-vesting deferred stock units, performance-vesting restricted shares and performance-vesting restricted ~~share awards. The Company used the Black-Scholes Option Pricing Model to value its~~ stock options. The Company used the closing stock price on the date of grant to value its time-vesting restricted share awards granted in 2013 and subsequent years and its performance-vesting restricted share awards granted in 2015 and subsequent years. units.

Total equity compensation expense was ~~$3,245~~$5.9 million and ~~$19,265~~$13.4 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017. Total equity compensation expense was $2,545~~2018, respectively, and ~~$34,596~~$11.9 million and $16.0 million for the three and ~~nine~~six months ended ~~September 30, 2016. Equity compensation expense for the nine months ended September~~June 30, 2017, includes approximately $8,400 related to certain of the Company’s performance-vesting restricted shares (the “2.75x Performance Restricted shares”) for which a portion vested on May 8, 2017 with the closing of the Sale. Equity compensation expense for the nine months ended September 30, 2016 includes $27,516 related to certain of the Company’s performance-vesting restricted shares (the “2.25x Performance Restricted shares”) which became probable of vesting and vested on April 1, 2016. See ~~2.25x and 2.75x Performance Restricted Shares and Equity Plan Modification~~ ~~section which follows for further details.~~respectively. Equity compensation expense is included in selling, general and administrative expenses and in operating expenses in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). Equity compensation expense for the three and six months ended June 30, 2018, includes approximately $1.0 million and $5.5 million, respectively, related to certain equity awards which were accelerated to vest in connection with the departure of certain executives as required by their respective employment agreements (see Note 13–Restructuring Programs and Other Separation Costs for further details). In addition, equity compensation expense for the three and six months ended June 30, 2017, includes approximately $8.4 million related to certain of the Company’s performance-vesting restricted shares which vested in the second quarter of 2017 (see the 2.75x Performance Restricted shares section which follows for further details). Total unrecognized equity compensation expense for all equity compensation awards probable of vesting as of ~~September~~June 30, ~~2017~~2018 was approximately ~~$33,400~~$30.2 million, which is expected to be recognized over the respective service periods.

~~The activity related to the Company’s time-vesting and performance-vesting share awards during the nine months ended September 30, 2017 is as follows:~~

Performance-Vesting Restricted shares

Time-Vesting
Restricted shares

Bonus Performance
Restricted shares

Long-Term
Incentive
Performance
Restricted shares

2.75x Performance
Restricted shares

Shares

Weighted
Average
Grant Date
Fair Value
per Share

Shares

Weighted
Average
Grant Date
Fair Value
per Share

Shares

Weighted
Average
Grant Date
Fair Value
per Share

Shares

Weighted
Average
Grant Date
Fair Value
per Share

Outstanding at
December 31, 2016

1,323,025

$
17.47

451,289

$
17.88

212,369

$
18.43

1,310,726

$
8.19

Granted

1,185,276

$
17.25

912,986

$
18.16

791,108

$
18.57

—

—

Vested

(327,489
)

$
18.06

—

—

—

—

(455,148
)

$
13.24

Forfeited

(216,588
)

$
17.88

(506,811
)

$
17.92

(110,052
)

$
18.74

(227,285
)

$
13.06

Outstanding at
September 30, 2017

1,964,224

$
17.19

857,464

$
18.15

893,425

$
18.51

628,293

$
3.75

~~The activity related to the Company’s stock option awards during the nine months ended September 30, 2017 is as follows:~~

The activity related to the Company’s time-vesting and performance-vesting awards during the six months ended June 30, 2018 is as follows:

						Performance-Vesting Restricted Awards
	Time-Vesting Restricted Awards					Bonus Performance Restricted Awards					Long-Term Incentive Performance Restricted Awards					2.75x Performance Restricted shares
	Shares/Units			Weighted Average Grant Date Fair Value per Award		Shares/Units			Weighted Average Grant Date Fair Value per Award		Shares/Units			Weighted Average Grant Date Fair Value per Award		Shares			Weighted Average Grant Date Fair Value per Share
Outstanding at December 31, 2017		1,852,512		$	17.09		805,245		$	18.09		864,572		$	18.50		616,793		$	3.56
Granted		345,310		$	17.35		707,981		$	14.66		1,171,733		$	15.04		—			—
Vested		(416,121	)	$	18.00		(69,221	)	$	18.07		(9,010	)	$	18.79		—			—
Forfeited		(538,345	)	$	17.79		(798,368	)	$	17.82		(718,464	)	$	17.81		(616,793	)	$	3.56
Outstanding at June 30, 2018		1,243,356		$	16.56		645,637		$	14.66		1,308,831		$	15.78		—			—

The activity related to the Company’s stock option awards during the six months ended June 30, 2018 is as follows:

~~Prior to June 14, 2017, the~~The Company ~~had~~has reserved 15,000,000 shares of common stock for issuance under the ~~Company’s 2013~~ Omnibus Incentive Plan (the ~~“2013 Omnibus~~“Omnibus Incentive Plan”)~~. On June 14, 2017 (the “Approval Date”)~~, ~~the stockholders~~ of ~~the Company approved the 2017 Omnibus Incentive Plan (the “2017 Omnibus Incentive Plan”) and all~~which approximately 9,330,000 shares that were previously available for issuance under the 2013 Omnibus Incentive Plan transferred to the 2017 Omnibus Incentive Plan and were authorized for future issuance. No new awards may be granted under the 2013 Omnibus Incentive Plan (although awards made under the 2013 Omnibus Incentive Plan prior to the Approval Date will remain outstanding in accordance with their terms) and no new or additional shares of common stock were authorized under the 2017 Omnibus Incentive Plan.

The 2017 Omnibus Incentive Plan is administered by the Compensation Committee of the Board, and provides that the Company may grant equity incentive awards to eligible employees, directors, consultants or advisors in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based and performance compensation awards. In the event any award expires or is canceled, forfeited, or terminated, without issuance to the participant, the unissued shares may be granted again under the 2017 Omnibus Incentive Plan. In no event will shares (i) tendered or withheld for the payment of the exercise price or withholding taxes, (ii) not issued upon the settlement of a stock appreciation right that settle (or could settle) in shares of common stock or (iii) shares purchased on the open market with cash proceeds from the exercise of options again become available for other awards under the 2017 Omnibus Incentive Plan.

~~As of September 30, 2017, there were 7,269,698 shares of common stock~~are available for future issuance ~~under the Company’s 2017 Omnibus Incentive Plan.~~

~~As part~~as of the Company’s annual compensation-setting process and in accordance with the Company’s Equity Award Grant Policy (the “Equity Grant Policy”), on December 7, 2016 the Compensation Committee approved an annual bonus plan (the “2017 Bonus Plan”) for the fiscal year ending December 31, 2017 (“Fiscal 2017”).June 30, 2018.

The ~~2017~~annual bonus plan for 2018 (the “2018 Bonus ~~Plan~~Plan”) provides for bonus awards payable 50% in cash and 50% in performance-vesting restricted ~~shares~~units (the “Bonus Performance Restricted ~~shares”~~Units”) and is based upon the Company’s achievement of specified performance goals with respect to Fiscal ~~2017 Adjusted EBITDA (weighted at 50%), Total Revenue (weighted at 30%) and Adjusted EBITDA Margin (weighted at 20%).~~2018, as defined by the 2018 Bonus Plan. The total number of shares eligible to vest is based on the level of achievement of the targets for Fiscal ~~2017~~2018 which ranges from 0% (if below threshold performance)~~, to 30% (for threshold performance), to 100% (for target performance)~~ and up to ~~200%~~150% (at or above maximum performance). For actual performance between the specified threshold, target and maximum levels, the resulting weighted payment will be adjusted on a linear basis. Pursuant to the Equity Grant Policy, on March 3, 2017, the Company granted 888,235 Bonus Performance Restricted ~~shares under its 2017 Bonus Plan which represented~~Units representing the total ~~shares~~units that could be earned under the maximum performance level of ~~achievement. Subsequent grants~~achievement were ~~made on July 11, 2017 and on October 10, 2017 to newly hired bonus-eligible employees based on their hire date and/or to certain newly promoted employees.~~granted during the six months ended June 30, 2018.

The Company also had an annual bonus plan ~~(the “2016 Bonus Plan”)~~ for the fiscal year ended December 31, ~~2016~~2017 (“Fiscal ~~2016”~~2017”), under which certain employees were eligible to ~~receive a bonus with respect to Fiscal 2016, payable 50%~~vest in ~~cash and 50% in Bonus~~performance-vesting restricted shares (the “Bonus Performance Restricted ~~shares~~Shares”) based upon the Company’s achievement of certain performance goals with respect to Fiscal ~~2016 Adjusted EBITDA.~~2017. Based on the Company’s actual Fiscal ~~2016 Adjusted EBITDA~~2017 results, ~~no equity compensation expense was recorded in 2016 related to the 2016 Bonus Plan and all~~approximately 9,000 of ~~the outstanding shares forfeited in the first quarter of 2017.~~

~~In accordance with ASC 718,~~ ~~Compensation-Stock Compensation~~, equity compensation expense is recorded on shares probable of vesting. Based on the Company’s progress during the nine months ended September 30, 2017 towards its performance goals for Fiscal 2017, a portion of the outstandingthese Bonus Performance Restricted ~~shares~~Shares vested in the six months ended June 30, 2018 and the remainder forfeited in accordance with their terms.

The long-term incentive plan grants for 2018 (the “2018 Long-Term Incentive Grant”) were ~~considered probable~~comprised of ~~vesting as of September 30, 2017; therefore, equity compensation expense has been recorded related to shares considered probable of vesting. If~~1/3 time-vesting restricted units (the “Long-Term Incentive Time Restricted Units”) and 2/3 performance-vesting restricted units (the “Long-Term Incentive Performance Restricted Units”) (collectively, the probability of vesting related to these shares changes in a subsequent period, equity compensation expense that would have been recorded over the requisite service period had the shares been considered probable at the new percentage from inception, will be recorded as a cumulative catch-up at such subsequent date.“Long-Term Incentive Awards”).

~~The 2017 Long-Term Incentive Grant is comprised of time-vesting restricted shares (the “Long-Term Incentive~~ Time Restricted shares”) and performance-vesting restricted shares (the “Long-Term Incentive Performance Restricted shares”) (collectively, the “Long-Term Incentive Awards”). The 2017 Long-Term Incentive Grant did not include nonqualified stock options (the “Long-Term Incentive Options”). Additionally, in order to address the lack of retention value of outstanding equity awards held by certain of the Company’s executives, the Compensation Committee also approved an early grant of the time-vesting restricted shares portion of the 2018 annual equity award in the first quarter of Fiscal 2017 (the “Early 2018 Grant”). Pursuant to the Equity Grant Policy, the Long-Term Incentive Awards related to the 2017 Long-Term Incentive Grant and the time-vesting restricted shares related to the Early 2018 Grant were granted on March 3, 2017.Units

The Board had also approved long-term incentive plan grants (the “2016 Long-Term Incentive Grant” and the “2015 Long-Term Incentive Grant”) for Fiscal 2016 and Fiscal 2015, respectively, comprised of Long-Term Incentive Options,Certain Long-Term Incentive Time Restricted ~~shares and Long-Term Incentive Performance Restricted shares to certain of the Company’s management and executive officers.~~

~~For certain executives, the Long-Term Incentive Time Restricted shares~~Units granted under the ~~2017~~2018 Long-Term Incentive ~~Grant and the time-vesting restricted shares granted under the Early 2018~~ Grant vest over five years, with one-third vesting on each of the third, fourth and fifth anniversaries of the date of grant, subject to continued employment through the applicable vesting date. Equity compensation expense for these ~~shares~~units is recognized using the straight line method with one-third recognized over the initial three year vesting period and the remaining two-thirds recognized over the remaining vesting period.

~~For other employees, the~~Other Long-Term Incentive Time Restricted ~~shares~~Units granted under the ~~2017~~2018 Long-Term Incentive Grant vest over three years, with all of the ~~shares~~units vesting on the third anniversary of the date of grant, subject to continued employment through the applicable vesting date. Equity compensation expense for these ~~shares~~units is recognized using the straight line method over the three year vesting period.

The Long-Term Incentive Time Restricted shares granted under the 2016 and 2015 Long-Term Incentive Grant vest ratably over four years from the date of grant (25% per year), subject to continued employment through the applicable vesting date. Equity compensation expense is recognized using the straight line method over the four year vesting period.

The Long-Term Incentive Performance Restricted ~~shares~~Units granted under the ~~2017~~2018 Long-Term Incentive Plan are expected to vest following the end of the ~~three year~~three-year performance period beginning on January 1, ~~2017~~2018 and ending on December 31, ~~2019~~2020 based upon the Company’s achievement of ~~pre-established~~specified performance goals ~~with respect to Adjusted EBITDA (weighted at 50%), Total Revenue (weighted at 30%) and Return on Invested Capital (weighted at 20%)~~ for ~~the three-year performance period,~~Fiscal 2020, as defined by the ~~2017~~2018 Long-Term Incentive Grant. The total number of Long-Term Incentive Performance Restricted ~~shares~~Units eligible to vest will be based on the level of achievement of the performance goals and ranges from 0% (if below threshold performance)~~, to 50% (for threshold performance), to 100% (for target performance),~~ and up to 200% (for at or above maximum performance). For actual performance between the specified threshold, target and maximum levels, the resulting vesting percentage will be adjusted on a linear basis. ~~Pursuant to~~

The 2018 Long-Term Incentive Grant provides additional incentive for early achievement of the ~~Equity Grant Policy,~~Adjusted EBITDA target as follows: if the Company’s Fiscal 2020 Adjusted EBITDA target is achieved in 2018, 30% of ~~September 30, 2017, the Company had granted 587,947~~target Long-Term Incentive Performance Restricted ~~shares, net~~Units will be earned and delivered in 2019; if the Company’s Fiscal 2020 Adjusted EBITDA target is achieved in 2019, 20% of ~~forfeitures, under its 2017~~target Long-Term Incentive ~~Plan which represented~~Performance Restricted Units will be earned and delivered in 2020, in each case subject to the overall maximum award of 200% of target. Long-Term Incentive Performance Restricted Units representing the total ~~shares~~units that could be earned under the maximum performance level of ~~achievement. Equity~~achievement were granted during the six months ended June 30, 2018.

The Company also has outstanding Long-Term Incentive Time Restricted shares, Long-Term Incentive Performance Restricted shares and Long-Term Incentive Options granted under previous long-term incentive plan grants. During the six months ended June 30, 2018, a portion of the previously granted Long-Term Incentive Performance Restricted Shares related to completed performance periods vested, with the remainder forfeiting in accordance with their terms. The remaining outstanding Long-Term Incentive Performance Restricted Shares are eligible to vest based upon the Company’s achievement of pre-established performance goals for the respective performance period, as defined.

The Company recognizes equity compensation expense ~~is recognized~~for its performance-vesting restricted awards ratably over the ~~three year~~related performance period, if the performance condition is probable of being ~~achieved, beginning on the date of grant and through December 31, 2019.~~achieved. Based on the Company’s progress towards its respective performance goals, ~~for Fiscal 2017, none~~a portion of ~~the Long-Term Incentive Performance Restricted shares related to the Fiscal 2017 performance period~~its performance-vesting restricted awards are considered probable of vesting as of ~~September~~June 30, ~~2017;~~2018; therefore, no equity compensation expense ~~has been recorded~~includes approximately $3.2 million and $5.3 million related to ~~these shares.~~performance-vesting restricted awards in the three and six months ended June 30, 2018, respectively. If the probability of vesting related to these ~~shares~~awards changes in a subsequent period, all equity compensation expense related to those ~~shares~~awards that would have been recorded over the requisite service period had the ~~shares~~awards been considered probable at the new percentage from inception, will be recorded as a cumulative catch-up at such subsequent date.

The Long-Term Incentive Performance Restricted shares granted under the 2016 and 2015 Long-Term Incentive Grant vest following the end of a three year performance period beginning on January 1 of the fiscal year in which the award was granted and ending on December 31 of the third fiscal year based upon the Company’s achievement of certain performance goals with respect to Adjusted EBITDA for each respective fiscal year performance period. The total number of shares eligible to vest is based on the level of achievement of the Adjusted EBITDA target for each fiscal year in the performance period which ranges from 0% (if below threshold performance), to 50% (for threshold performance), to 100% (for target performance), and up to 200% (at or above maximum performance). For actual performance between the specified threshold, target, and maximum levels, the resulting vesting percentage is adjusted on a linear basis. Total shares earned (approximately 33% are eligible to be earned per year), based on the actual performance percentage for each performance year, will vest on the date the Company’s Compensation Committee determines the actual performance percentage for the third fiscal year (the “Determination Date”) in the performance period if the employee has not terminated prior to the last day of such fiscal year. Additionally, all unearned shares will forfeit immediately as of the Determination Date.

The Adjusted EBITDA target for each fiscal year is set in the first quarter of each respective year, at which time the grant date and the grant-date fair value for accounting purposes related to that performance year is established based on the closing price of the Company’s stock on such date plus any accumulated dividends earned since the date of the initial award. Equity compensation expense is recognized ratably for each fiscal year, if the performance condition is probable of being achieved, beginning on the date of grant and through December 31 of the third fiscal year in the performance period.

As of September 30, 2017, the Company had awarded 411,547 Long-Term Incentive Performance Restricted shares, net of forfeitures, under the 2016 and 2015 Long-Term Incentive Plans which represents the total shares that could be earned under the maximum performance level of achievement for all three performance periods combined. For accounting purposes, the performance goals for the respective performance periods must be established for a grant date to be determined. As such, since the performance goal for Fiscal 2017 was established in the first quarter of 2017, for accounting purposes, 137,183 of the Long-Term Incentive Performance Restricted shares awarded under the 2016 and 2015 Long-Term Incentive Plans, net of forfeitures, have a grant date in 2017. As of September 30, 2017, 106,069 Long-Term Incentive Performance Restricted shares, net of forfeitures, which were awarded under the 2016 Long-Term Incentive Plan relate to the fiscal year ending December 31, 2018 (“Fiscal 2018”) performance period. The performance target for the Fiscal 2018 performance period has not yet been set and will be determined by the Compensation Committee during the first quarter of 2018, at which time, for accounting purposes, the grant date and respective grant-date fair value will be determined for these shares.

Based on the Company’s actual Adjusted EBITDA for Fiscal 2016 and 2015, the threshold performance level for Fiscal 2016 and the maximum performance level for Fiscal 2015 was not met; as such all of the Long-Term Incentive Performance Restricted shares related to Fiscal 2016 and a portion related to Fiscal 2015 are not considered probable of vesting as of September 30, 2017 and are expected to forfeit on their respective Determination Date.

Total unrecognized equity compensation expense ~~related~~for all outstanding performance-vesting restricted awards not probable of vesting was approximately $10.7 million as of June 30, 2018.

During the three months ended June 30, 2018, the Company granted approximately 46,000 deferred stock units (“DSUs”) to certain members of its Board of Directors (the “Board”). Each DSU represents the Fiscal 2018 performance period has not been determined as the grant date and grant-date fair value for these awards have not yet occurred for accounting purposes, as such no expense has been recorded relatedright to ~~this performance period.~~

The Long-Term Incentive Options vest ratably over four years from the date of grant (25% per year), subject to continued employment through the applicable vesting date and will expire 10 years from the date of grant or earlier if the employee’s service terminates. The options have an exercise price perreceive one share ~~equal to the closing price~~ of the Company’s common stock onone year after the ~~date of grant. Equity compensation expense is recognized using~~respective director leaves the ~~straight line method for each tranche over the four year vesting period.~~Board.

~~2.25x and~~ 2.75x Performance Restricted Shares ~~and Equity Plan Modification~~

The Company ~~has~~had awarded under ~~both its Omnibus Incentive Plan and~~ its previous incentive ~~plan (the “Pre-IPO Incentive Plan”)~~plans certain performance-vesting restricted shares (the ~~“2.25x and 2.75x~~“2.75x Performance Restricted shares”).

Based on cash proceeds previously received by certain investment funds affiliated with Blackstone from the Company’s initial public offering and subsequent secondary offerings of stock, the Company’s repurchases of shares and the cumulative dividends paid by the Company through April 1, 2016, the vesting conditions on the Company’s previously outstanding 2.25x Performance Restricted shares were satisfied with the Company’s dividend payment to such investment funds affiliated with Blackstone on April 1, 2016. Accordingly, during the three months ended March 31, 2016, upon declaration of the dividend, the 2.25x Performance Restricted shares were considered probable of vesting and all of the related equity compensation expense and accumulated dividends were recognized in the accompanying unaudited condensed consolidated financial statements. On April 1, 2016, upon payment of the dividend to such investment funds affiliated with Blackstone, all previously outstanding 1,370,821 2.25x Performance Restricted shares vested and the related accumulated dividends of $3,400 were paid.

During the first quarter of 2017, the Company modified the 2.75x Performance Restricted shares to vest 60% upon the closing of the ~~Sale, and eight of the Company’s senior executives and the Company’s Chairman of the Board, individually agreed to forfeit the~~ZHG Transaction on May 8, 2017 (see Note 9–Related-Party Transactions). The remaining 40% of their outstanding 2.75x Performance Restricted shares at such time. In addition, in accordance with his Separation and Consulting Agreement which contractually obligates the Company to apply any modifications to his outstanding 2.75x Performance Restricted shares, the Company’s former President and Chief Executive Officer’s outstanding 2.75x Performance Restricted shares were also modified to vest in 60% of his 2.75x Performance Restricted shares upon closing of the sale and forfeit the other 40% at such time. Under the terms of the Stock Purchase Agreement, if in certain circumstances the Buyer acquires a majority of the Company’s then outstanding common shares prior to the one-year anniversary of the closing of the Sale, then the Buyer is required as a condition to the closing of the acquisition that results in such majority ownership, to pay to the Seller, in respect of each share of common stock sold to the Buyer at the closing of the Sale, the excess, if any, of the highest price per share paid by the Buyer for shares of the Company’s common stock over $23.00 (the “Additional Payment”). As such, for all other plan participants, any outstanding unvested 2.75x Performance Restricted shares ~~will continue~~continued to be eligible to vest in accordance with their terms if the Seller ~~receives an Additional Payment~~had received additional proceeds from the Buyer sufficient to satisfy ~~the~~a 2.75x cumulative return multiple in the twelve month period following the

closing of the ~~Sale.~~ZHG Transaction. The period expired on May 8, 2018, as such, these shares forfeited in the three months ended June 30, 2018.

~~The Sale was considered a liquidity event and was subject to customary closing conditions (including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act).~~ As the modification discussed above was based on a liquidity event, for accounting purposes, the 2.75x Performance Restricted shares were not considered probable of vesting until such time the ~~Sale~~ZHG Transaction was consummated. In accordance with the guidance in ASC 718, Compensation-Stock Compensation, as the 2.75x Performance Restricted shares were not considered probable of vesting before or after the date of modification, the Company used the respective modification date fair value to record equity compensation expenses related to the modified shares when the liquidity event occurred. As a result, the Company recognized non-cash equity compensation expense related to all of the 2.75x Performance Restricted shares of approximately ~~$8,400~~$8.4 million upon closing of the ~~Sale on May 8, 2017~~ZHG Transaction and paid cash accumulated dividends of approximately ~~$1,300~~$1.3 million in ~~the second quarter of 2017.~~

~~During~~ the three months ended ~~September~~June 30, 2017, the Company granted 214,580 time-vesting restricted shares (the “Retention Awards”) to certain officers and employees of the Company. For the Retention Awards, 170,601 time-vesting restricted shares will vest 50% on each of the two anniversaries of the date of grant, 15,000 time-vesting restricted shares will vest 100% on the first anniversary of the date of grant, 23,979 will vest 100% on October 11, 2018 and 5,000 time-vesting restricted shares will vest 100% on March 31, 2018, subject to continued employment through the vesting date.

In accordance with the Company’s Fourth Amended and Restated Outside Director Compensation Policy, on June 14, 2017, 56,232 time-vesting restricted shares were granted to the non-employee directors of the Company’s Board of which vest 100% on the day before the next Annual Stockholders Meeting, subject to the outside directors’ continued service on the Board through such vesting date.2017.

As of ~~September~~June 30, ~~2017, 92,550,001~~2018, 93,060,175 shares of common stock were issued on the accompanying unaudited condensed consolidated balance sheet, which excludes ~~4,449,475~~1,284,595 unvested shares of common stock and 1,913,229 unvested restricted stock units held by certain participants in the Company’s equity compensation plans (see Note 11–Equity-Based Compensation) and includes 6,519,773 shares of treasury stock held by the Company.

Prior to September 19, 2016, the Board had a policy to pay, subject to legally available funds, regular quarterly dividends. The payment and timing of cash dividends was within the discretion of the Board and depended on many factors, including, but not limited to, the Company’s results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in its debt agreements and in any preferred stock, business prospects and other factors that the Board deemed relevant. On September 19, 2016, the Board suspended the Company’s then existing quarterly dividend policy to allow greater flexibility to deploy capital to opportunities that offer the greatest long term returns to shareholders, such as, but not limited to, ~~share repurchases,~~ investments in new attractions, debt repayments or ~~debt repayments.~~share repurchases.

~~During the nine months ended September 30, 2016, the Board declared or paid quarterly cash dividends to all common stockholders of record as follows:~~

As of ~~September~~June 30, ~~2017,~~2018, the Company had ~~$505 of cash dividends~~approximately $0.1 million recorded as dividends payable in the accompanying unaudited condensed consolidated balance sheet ~~which relates~~related to unvested time restricted shares and unvested performance restricted shares with a performance condition considered probable of being ~~achieved as of September 30, 2017.~~achieved. These shares, which were granted prior to the dividend suspension, carry dividend rights and therefore the dividends accumulate and will be paid as the shares vest in accordance with the underlying equity compensation grants. These dividend rights will be forfeited if the shares do not vest.

During the nine months ended September 30, 2017, accumulated cash dividends of $1,535 related to previous dividend declarations were paid to certain equity plan participants upon vesting of restricted shares, including approximately $1,300 related to certain 2.75x Performance Restricted shares which vested upon closing of the Sale on May 8, 2017 (see Note 11–Equity-Based Compensation for further details). The Company expects that for tax purposes all of these dividends will be treated as a return of capital to stockholders. Distributions that qualify as a return of capital are not considered “dividends” for tax purposes only.

~~In 2014, the~~The Board has authorized the repurchase of up to ~~$250,000~~$250.0 million of the Company’s common stock (the “Share Repurchase Program”). Under the Share Repurchase Program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time. The number of shares to be purchased and the timing of purchases will be based on the level of the Company’s cash balances, general business and market conditions, and other factors, including legal requirements, debt covenant restrictions and alternative investment opportunities.

The Company has remaining authorization for up to ~~$190,000~~$190.0 million for future repurchases under the Share Repurchase Program as of ~~September~~June 30, ~~2017.~~2018. There were no share repurchases during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016.~~2017.

On ~~March 24, 2017,~~August 7, 2018, the Company announced ~~that an affiliate~~a new restructuring program (the “2018 Restructuring Program”) focused on reducing costs, improving operating margins and streamlining its management structure to create efficiencies and better align with its strategic business objectives. The 2018 Restructuring Program involves the elimination of ~~ZHG Group entered into an agreement to acquire~~ approximately ~~21%~~125 positions during the third quarter of 2018 across the ~~outstanding shares of common stock of~~Company’s theme parks and its corporate headquarters. As a result, during the three and six months ended June 30, 2018, the Company ~~from Seller, pursuant~~recorded approximately $1.8 million in pre-tax restructuring charges primarily related to ~~a Stock Purchase Agreement. On May 8, 2017, upon closing~~severance and other termination benefits, which is included in restructuring and other separation costs in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). The Company expects to incur an additional $4.0 million in pre-tax restructuring charges in the ~~Sale, ZHG paid Seller $23.00 per share for the Company’s common stock acquired by ZHG in accordance~~third quarter of 2018 related to severance and other benefits associated with the terms of the Stock Purchase Agreement. The Company is not a party to the Stock Purchase Agreement, has no obligations thereunder and did not independently verify any arrangements between Seller and ZHG, but is a party to certain other agreements~~, a Park Exclusivity and Concept Design Agreement and a Center Concept & Preliminary Design Support Agreement,~~ ~~entered into in connection with the Sale~~ ~~(see Note 1–Description of the Business and Basis of Presentation and Note 9–Related-Party Transactions).~~2018 Restructuring Program.

In October 2017, the Company executed a restructuring program in an effort to reduce costs, increase efficiencies, reduce duplication of functions and improve the Company’s operations (the “2017 Restructuring Program”). The 2017 Restructuring Program ~~involves~~involved the elimination of approximately 350 positions by the end of the fourth quarter of 2017 across certain of the Company’s theme parks and corporate headquarters. As a result, during the three months ended September 30, 2017, the Company recorded $5,100 in pre-tax restructuring and other related costs associated primarily with estimated severance and other termination benefits related to the 2017 Restructuring Program. Severance and other termination benefits are provided under an ongoing benefit arrangement as defined by ASC 712, ~~Compensation-Nonretirement Postemployment Benefits,~~ ~~and, accordingly, the liability was recorded in accrued salaries, wages, and benefits on the accompanying unaudited condensed consolidated balance sheet as of September 30, 2017.~~

In December 2016, the Company committed to and implemented a restructuring program in an effort to reduce costs, increase efficiencies, reduce duplication of functions and improve the Company’s operations (the “2016 Restructuring Program”). The 2016 Restructuring Program involved the elimination of approximately 320 positions across all of the Company’s theme parks and corporate headquarters. As a result, the Company recorded ~~$8,904~~$5.2 million in pre-tax restructuring and other related costs associated with the ~~2016~~2017 Restructuring Program during ~~the three months ended December 31, 2016.~~fiscal year 2017. The Company does not expect to incur any additional costs associated with the ~~2016~~2017 Restructuring Program as all continuing service obligations were completed as of December 31, ~~2016.~~2017.

The ~~2017~~2018 and ~~2016~~2017 Restructuring Program activity for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was as follows:

									2018 Restructuring Program		2017 Restructuring Program
Severance and Other Employment Expenses	2016 Restructuring Program			2017 Restructuring Program		Total			(In thousands)
Liability as of December 31, 2016	$	7,842		$	—	$	7,842
Liability as of December 31, 2017									$	—	$	1,234
Payments made										—		(807	)
Costs incurred		—			5,100		5,100			1,750		—
Reduction in estimated expenses		(572	)		—		(572	)
Payments made		(6,941	)		—		(6,941	)
Liability as of September 30, 2017	$	329		$	5,100	$	5,429
Liability as of June 30, 2018									$	1,750	$	427

The remaining combined liability as of ~~September~~June 30, ~~2017 under the 2016 Restructuring Program~~2018 relates to restructuring and other related costs to be paid as contractually obligated by December 31, ~~2017~~2018 and is included in accrued salaries, wages and benefits in the accompanying unaudited condensed consolidated balance sheet.

Restructuring and other separation costs for the three and six months ended June 30, 2018 also includes severance and other employment expenses for certain executives who stepped down from their respective positions during the first six months of 2018. In particular, on February 27, 2018, the Company announced that its President and Chief Executive Officer (the “Former CEO”) had stepped down from his position and resigned as a member of the Board. In connection with his departure, the Former CEO received a lump sum cash payment of approximately $6.7 million in severance related expenses, in accordance with his employment agreement. Certain other executives who separated from the Company during the first six months of 2018 also received severance related benefits of approximately $3.8 million in accordance with the terms of their respective employment agreements or relevant company plan, as applicable. These severance expenses are included in restructuring and other separation costs in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2018.

Additionally, during the three and six months ended June 30, 2018, certain equity awards were accelerated to vest in connection with the departure of specific executives as required by their respective employment agreements. As a result, the Company recorded incremental non-cash equity compensation expense related to these awards, which is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). See Note 11–Equity-Based Compensation for further details.

Item 2. Management’s Discussion and ~~Analysis~~Analysis of Financial Condition and Results of Operations

The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion should also be read in conjunction with our consolidated financial statements and related notes thereto, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2017. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

We are a leading theme park and entertainment company providing experiences that matter and inspiring guests to protect animals and the wild wonders of our world. We own or license a portfolio of globally recognized brands, including SeaWorld, Busch Gardens, Aquatica, Sesame Place and Sea Rescue. Over our more than 50-year history, we have built a diversified portfolio of 12 ~~destination~~highly differentiated theme parks and ~~regional theme~~water parks that are grouped in key markets across the United ~~States, many~~States. Many of ~~which~~our parks showcase our one-of-a-kind zoological ~~collection. Our theme~~collection and all of our parks feature a diverse array of thrill and family rides, shows, ~~and~~educational demonstrations and/or other attractions with broad demographic appeal which deliver memorable experiences and a strong value proposition for our guests.

~~During the three months ended September 30, 2017, we hosted approximately 7.6 million guests~~Principal Factors Affecting Our Results of Operations

Our revenues are driven primarily by attendance in our theme parks ~~including approximately 0.8 million international guests, generated total revenues~~and the level of ~~$437.7 million~~per capita spending for admission and net income of $55.0 million. During the nine months ended September 30, 2017, we hosted approximately 16.5 million guests in our theme parks, including approximately 1.8 million international guests, generated total revenues of $997.8 million and incurred a net loss of $181.9 million, inclusive of a non-cash goodwill impairment charge of $269.3 million. See Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statementsper capita spending for ~~further details relating to the non-cash goodwill impairment charge.~~

Our results for the first nine months of 2017 reflect a decline in U.S. domestic (defined as guests outside of a 300 mile radius to our parks) and international attendance, largely impacting our Orlando and San Diego parks. In addition, SeaWorld San Diego was further impacted by a decline in attendance from the Southern California market. These factors were partially offset by improved attendance from guests within a 300 mile radius for our Orlando and San Antonio markets. Results, particularly for the third quarter of 2017, were also adversely impacted by the effects of Hurricane Irma which caused park closures in Orlando and Tampa, and to a lesser extent, the effects of Hurricane Harvey, which caused park closures and travel disruptions in Texas as well as weather impacts in Virginia. See further discussion in the “―~~Trends Affecting Our Results of Operations”~~ ~~section below.~~

In November 2015 we introduced a three year, five-point plan to stabilize our business and to drive sustainable growth. This strategic plan encompasses five key points which include (i) providing experiences that matter; (ii) delivering distinct guest experiences that are fun and meaningful; (iii) pursuing organic and strategic revenue growth; (iv) addressing the challenges we face; and (v) financial discipline.

During the first nine months of 2017, we have seen some success in certain elements of our plan as attendance from our 300 mile and in guests has increased in our Orlando and San Antonio markets and season pass sales to date are up in all markets outside of California. However, as we announced last quarter, based on recent business trends, we are adjusting our five-point plan to specifically address current challenges, particularly in our Orlando and San Diego parks. These adjustments include increasing our planned investment in national advertising, developing a new national marketing campaign emphasizing our distinct experiences and reinvesting in our reputation campaign to target public perceptions nationally, but particularly in our California markets. During the third quarter, we began implementing these targeted actions by finalizing our new “From Park to Planet” national advertising and marketing campaign. We launched the campaign in our California market in October 2017 and plan to launch it nationwide in early 2018. The campaign, which has received early positive feedback, conveys our commitment to making a positive impact on the planet’s animals and oceans. The ad was named the top “Breakthrough Ad of Q3 for 2017” by Ace Metrix, a leading marketing research firm, and ranked as the single highest-rated travel ad in the history of its hospitality database, which dates back to 2010. During the third quarter we also introduced a new promotional “SoCal Pass” product in our San Diego park.

Our cost optimization efforts for the first nine months of the year have been meaningful and we are on schedule to achieve our targeted $40.0 million in net cost savings by the end of 2018. Additionally, during the quarter ended September 30, 2017, we identified an additional $25.0 million in potential cost savings opportunities. As a part of this effort, in October 2017, we executed a new restructuring program to reduce costs, increase efficiencies, reduce duplication of functions and improve our operations (the “2017 Restructuring Program”). The 2017 Restructuring Program involved the elimination of approximately 350 positions by the end of the fourth quarter of 2017 across certain of our theme parks and corporate headquarters. As a result, during the three months ended September 30, 2017, we recorded $5.1 million in pre-tax restructuring charges related to estimated severanceculinary, merchandise and other termination benefits incurred in connection with the 2017 Restructuring Program. See Note 13–Restructuring Programs in our notes to the unaudited condensed consolidated financial statements for further details.

Separately, we continue to progress on our partnership with Miral Asset Management LLC (“Miral”) to develop SeaWorld Abu Dhabi and with Zhonghong Holding Co., Ltd. (“Zhonghong Holding”) to provide design, support and advisory services for various potential projects ~~in China, Taiwan, Hong Kong and Macau. See the~~ ~~“―Recent Developments―International Development Strategy”~~ section below. We have also entered into a new license agreement with Sesame Workshop to extend our status as Sesame Workshop’s exclusive theme park partner in the United States, Puerto Rico, and the U.S. Virgin Islands (the “Territory”), with the second Sesame Place theme park scheduled to open no later than mid-2021. After the opening of the second Sesame Place, we will have the option to build additional Sesame Place theme parks in the Territory (see the ~~“―Recent Developments―License Agreement”~~ ~~section below).~~

in-park products. We define attendance as the number of guest ~~visits to our theme parks.~~visits. Attendance drives admissions revenue as well as total in-park spending. Admissions revenue primarily consists of single-day tickets, annual or season passes or other multi-day or multi-park admission products. The level of attendance atin our theme parks is a function of many factors, including affordability, the opening of new attractions and shows, competitive offerings, weather, fluctuations in foreign exchange rates and global and regional economic conditions, travel patterns of both our ~~U.S.~~ domestic and international guests, marketing and sales efforts, consumer confidence and external perceptions of our brands and reputation, among other factors beyond our ~~control including the potential spread of contagious diseases.~~control. Attendance patterns have significant seasonality, driven by the timing of holidays, school vacations and weather ~~conditions. Attendance consists~~conditions; in addition, several of ~~local guests~~our theme parks are seasonal and ~~other guests who live within 300 miles from our respective park locations, U.S. domestic guests outside~~only open for part of the ~~300 mile radius to the park locations and international guests.~~

Total revenue per capita, defined as total revenue divided by total attendance, consists of admission per capita and in-park per capita spending:

See further discussion in the “Results of Operations” section which follows. For other factors affecting our revenues, see the “Risk Factors” section of our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, as such risk factors may be updated from time to time in our periodic filings with the SEC.

~~Trends Affecting Our Results~~The principal costs of ~~Operations~~our operations are employee salaries and benefits, advertising, maintenance, animal care, utilities and insurance. Factors that affect our costs and expenses include competitive wage pressures including minimum wage legislation, commodity prices, costs for construction, repairs and maintenance, other inflationary pressures and attendance levels.

In ~~March~~ 2016, following a fundamental review of our cost structure, we announced a comprehensive cost optimization program that was originally expected to provide $40.0 million in savings by the end of 2018, which we have now realized. On August 6, 2018, we announced that we have ~~ended all orca breeding~~identified and ~~the orcas currently~~are executing on $50.0 million in ~~our care will be the last generation of orcas at SeaWorld (the “Orca Announcement”). We also announced that we will introduce new, inspiring, natural orca encounters~~cost savings opportunities and ~~phase out our current theatrical shows, as~~are actively working to find additional cost savings opportunities. As part of these efforts, on August 7, 2018, we implemented a new restructuring program (the “2018 Restructuring Program”) focused on reducing costs, improving operating margins and streamlining our ~~ongoing commitment~~management structure to ~~education, marine science research,~~create efficiencies and ~~rescue~~better align with our strategic business objectives. The 2018 Restructuring Program involves the elimination of marine animals. These programs will focus on orca enrichment, exercise, and overall health. This change began in our SeaWorld San Diego park in May of 2017, and is planned to be at all three SeaWorld parks by 2019. In conjunction with the Orca Announcement, the orca habitat expansion we previously disclosed (the “Blue World Project”), as originally designed and planned, will not move forward and we will spend significantly less capital than the originally proposed Blue World Project. The “new” SeaWorld will maintain our unique value proposition of providing experiences that matter, and inspiring guests to protect animals and the wild wonders of our world. We have implemented an integrated marketing plan designed to attract new and repeat guests to the “new” SeaWorld with its unique blend of compelling animal experiences and new rides and attractions for the whole family.

Our ability to attract and retain customers depends, in part, upon the external perceptions of our brands and reputation. Adverse publicity concerning our business generally could harm our brands, reputation and results of operations. The considerable expansion in the use of social media over recent years has amplified the impact of negative publicity. Public perception issues are a barrier to visitation for our SeaWorld-branded parks which have also been the target of negative media attention concerning the orcas in our care, particularly in the state of California. We believe we experienced demand pressures in 2014 and 2015 in California, due to such media attention. We introduced a number of initiatives, including marketing and reputation campaigns to address public perceptions, share facts and correct misinformation. We believe those efforts had a positive impact on public perceptions and on our reputation as we saw improvement in our attendance and revenue trends in California in 2016. Towards the latter half of 2016, we largely reduced our reputation campaigns as we believed public perceptions had improved. However, attendance in 2017 at our SeaWorld San Diego park has since deteriorated.

We believe the decline in attendance particularly at our SeaWorld San Diego park partly results from public perception issues which have resurfaced since we reduced marketing spend on our national reputation campaign. We are addressing these challenges by relaunching our reputation campaign and increasing our marketing efforts nationally, but particularly in our Southern California market to once again address public perceptions, share facts and correct misinformation. Duringapproximately 125 positions during the third quarter of 2017, we finalized our new “From Park to Planet” national advertising and marketing campaign. We launched the campaign in our California market in October 2017 and plan to launch it nationwide in early 2018. The campaign, which has received early positive feedback, conveys our commitment to making a positive impact on the planet’s animals and oceans. During the third quarter we also introduced a new promotional “SoCal Pass” product in our San Diego park.

Total attendance for the first nine months of 2017 declined by approximately 1.1 million guests, or 6.2%, compared to the first nine months of 2016. Attendance was primarily impacted by an overall decline in U.S. domestic and international attendance, which was largely concentrated at our parks in Orlando and San Diego. In addition, SeaWorld San Diego was further impacted by a decline in attendance from the Southern California market which we believe was partly due to public perception issues as discussed above. These factors were partially offset by improved attendance from guests within a 300 mile radius for our Orlando and San Antonio markets which we believe is partly due to the success of our new attractions when compared to the priorfiscal year period. Attendance, particularly for the third quarter of 2017, was also adversely impacted by the effects of Hurricane Irma which caused park closures in Orlando and Tampa, and to a lesser extent, the effects of Hurricane Harvey which caused park closures and travel disruptions in Texas as well as weather impacts in Virginia. We believe the decline in U.S. domestic attendance, particularly in Orlando, results primarily from ~~the combined impact of reduced national advertising~~ and competitive pressures. To address the decline in U.S. domestic attendance, we launched a new national media campaign, introduced targeted national offers and repositioned our messaging to increase emphasis on our new attractions to the U.S. domestic market.

Throughout 2017 we have experienced a decline in international attendance from multiple markets, with a plurality of that decline coming from the United Kingdom. We believe these declines are due partly to the strengthening of the U.S. dollar against a variety of foreign currencies; in addition, we believe competitive pressures may also be impacting international attendance in our Orlando market. The June 2016 announcement of the Referendum of the United Kingdom's Membership of the European Union (referred to as Brexit) introduced additional volatility and uncertainty in global stock markets and currency exchange rates which has also had an impact on our international attendance from the United Kingdom. Attendance from the United Kingdom declined by 28% in the third quarter of 2017, compared to the prior year third quarter, and by 21% for the first nine months of 2017 compared to the same period in 2016. Historically, attendance from the United Kingdom represents approximately 5% of our total annual attendance.

Latin America attendance for the third quarter of 2017 was down 11% when compared to the third quarter of 2016 and for the first nine months of 2017 was down 6% when compared to the first nine months of 2016. Economic factors, particularly in Brazil, indicate that the Latin America market may not rebound in the near future. Fluctuations in foreign currency exchange rates impact our business due to the effect a strong dollar has on international tourist spending.

Looking ahead, we are adjusting our five-point plan to address current challenges, particularly in our Orlando and San Diego parks. These adjustments include increasing our planned investment in national advertising, developing a new national marketing campaign emphasizing our distinct experiences and reinvesting in our reputation messaging to target public perceptions nationally, but particularly in our California markets. Our cost optimization efforts for the first nine months of the year have been meaningful and we are on schedule to achieve our previously announced targeted $40.0 million in net cost savings by the end of 2018. Additionally, during the quarter ended September 30, 2017, we identified an additional $25.0 million in potential cost savings opportunities. As a part of this effort, in October 2017, we executed the 2017 Restructuring Program to reduce costs, increase efficiencies, reduce duplication of functions and improve our operations. The 2017 Restructuring Program involved the elimination of approximately 350 positions by the end of the fourth quarter of 20172018 across ~~certain of~~ our theme parks and corporate headquarters. As a result, ~~during the three months ended September 30, 2017,~~ we recorded ~~$5.1~~$1.8 million in pre-tax restructuring charges related to ~~estimated~~this program in the second quarter of 2018 and we expect to record an additional $4.0 million in the third quarter of 2018 which relates to severance and other ~~termination benefits~~expenses incurred in connection with the ~~2017~~2018 Restructuring Program. See Note 13–Restructuring Programs inand Other Separation Costs to our ~~notes to the~~ unaudited condensed consolidated financial statements ~~for further details.~~

~~We also continue to work with a leading consulting firm~~included elsewhere in an effort to enhance our pricing capabilities and capitalize on what we believe are meaningful total revenue per capita opportunities. We plan to work together on revenue enhancement and pricing with a goal of increasing our total revenue per capita.

Both attendance and total revenue per capita at our theme parks are key drivers of our revenue and profitability, and reductions in either can materially adversely affect our business, financial condition, results of operations and cash flows.

The License Agreement extends our status as Sesame Workshop’s exclusive theme park partner in the Territory, with the second Sesame Place theme park scheduled to open no later than mid-2021 in a U.S. location to be determined. After the opening of the second Sesame Place, we will have the option to build additional Sesame Place theme parks in the Territory. The agreement also makes it possible for ~~Sesame Street~~ ~~characters to continue to appear at the existing distinct~~ ~~Sesame Street~~ ~~lands inside our two Busch Gardens theme parks and SeaWorld theme parks in San Diego and San Antonio, as well as a new~~ ~~Sesame Street~~ ~~land to be built in SeaWorld Orlando by fall 2022.~~

On July 16, 2015, Senator Dianne Feinstein (D-CA) offered an amendment to the Fiscal Year 2016 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies spending bill during consideration of the bill by the full Committee on Appropriations. The amendment directed the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (“APHIS”) to issue updated regulations for the display of marine mammals in domestic zoos and aquaria within six months of enactment. While that amendment was not included in the final Fiscal Year 2016 Omnibus Appropriations Bill, APHIS released a proposed rule on February 3, 2016 to amend the Animal Welfare Act regulations concerning the humane handling, care and treatment of marine mammals in captivity (the “Proposed APHIS Regulations”). The Proposed APHIS Regulations were subject to public comment which ended on May 4, 2016. We submitted a comment letter to APHIS on the final date for comments, expressing our views on the Proposed APHIS Regulations. The full impact of the Proposed APHIS Regulations on our business will not be known until the Proposed APHIS Regulations are finalized.

On October 8, 2015, the California Coastal Commission approved the Blue World Project in San Diego, but attached certain conditions to its approval. Those conditions included, among other things, a prohibition against breeding orcas or transporting orcas to or from the habitat. On December 29, 2015, we filed a lawsuit against the California Coastal Commission on the grounds that the California Coastal Commission decision was outside the scope of its authority in imposing such conditions because it does not have jurisdiction over orcas, which are regulated under federal law. As a result of the Orca Announcement, on April 18, 2016, we sent a letter to the California Coastal Commission requesting to formally withdraw our coastal development permit application for the Blue World Project habitat and discuss dismissal of the pending litigation since our legal challenge to the proposed conditions is no longer warranted. On July 27, 2016, we filed a request for dismissal to dismiss our lawsuit against the California Coastal Commission. On October 17, 2016, we sent a letter to the California Coastal Commission objecting to the approval of the proposed revised findings for the Blue World Project. We stated that the adoption of the revised findings was not warranted or needed because of the Orca Announcement and recent changes in California law. On November 4, 2016, the California Coastal Commission voted in the affirmative to reverse findings on the Blue World Project.

On November 16, 2015, Representative Adam Schiff (D-CA) introduced the Orca Responsibility and Care Advancement Act (the “ORCA Act”) and reintroduced the ORCA Act on March 23, 2017. The reintroduced bill has been referred to the House Natural Resources and Agriculture Committees. It is unclear whether this bill will be enacted into law, but if enacted, this bill would amend the Marine Mammal Protection Act of 1972 and the Animal Welfare Act to prohibit the breeding, the taking (wild capture), and the import or export of orcas for the purposes of public display. The reintroduced bill would prohibit the transport of orcas from one park to another but does allow for transport to a “marine mammal sanctuary” and attempts to officially define the term “sanctuary” in law.

On April 5, 2016, following the Orca Announcement, a California lawmaker reintroduced the California Orca Protection Act which is a bill that he originally proposed in March 2014. The bill proposed in 2014 would have ended all captive breeding and display of orcas in California. Additionally, that bill would have required that all orcas in California be retired to sea pens and/or sanctuaries. That bill was referred to interim study after its first public hearing in 2014. The reintroduced bill proposed in April 2016 seeks to primarily codify the Orca Announcement in California. On August 26, 2016, this bill was enacted into law and (i) codified the end of captive breeding programs and the export and import of genetic materials for orcas in California, (ii) prohibits the import or export of new orcas into or out of California, (iii) permits the transfer of orcas currently in California among existing SeaWorld facilities and (iv) requires educational presentations of orcas in California. As discussed above, the new orca programs we are developing will be consistent with these standards and began in our San Diego park in 2017 and will be in our other SeaWorld parks by 2019. On November 4, 2016, the California Coastal Commission granted approval to permit the renovation of the existing backdrop at the orca habitat at our San Diego park. This approval allows us to continually develop our new orca program in our San Diego park.

On February 8, 2016, the San Diego City Council put a proposal on the June 7, 2016 primary ballot for voters to decide whether the city of San Diego should have a higher minimum wage than the $10 per hour required by the State of California. The proposal was approved by San Diego voters and, beginning on July 11, 2016, the city’s minimum wage was increased to $10.50 and was increased again to $11.50 on January 1, 2017. Two years later in January 2019, annual increases to the San Diego minimum wage based on the consumer price index will be implemented. For a discussion of certain risks associated with the San Diego minimum wage increases, see “Risk Factors” in our AnnualQuarterly Report on Form ~~10-K, including “Risks Related to Our Business and Our Industry—Increased labor~~10-Q for further details.

For other factors affecting our costs and ~~employee health and welfare benefits may negatively impact our operations.”~~

For a discussion of certain risks associated with federal and state regulations governing the treatment of animals, see “Risk Factors” in our Annual Report on Form 10-K, including “Risks Related to Our Business and Our Industry—We are subject to complex federal and state regulations governing the treatment of animals, which can change, and to claims and lawsuits by activist groups before government regulators and in the courts.”

We believe that in addition to the growth potential that exists domestically, our brands can also have significant appeal in certain international markets. We are currently assessing these opportunities while maintaining a conservative and disciplined approach towards the execution of our international development strategy. Thus far, we have identified our international market priorities as well as our international partners within select markets. The market priorities were developed based on a specific set of criteria to ensure we expand our brands into the most attractive markets.

In December 2016, we announced our partnership with Miral to develop SeaWorld Abu Dhabi, a first-of-its-kind marine life themed park on Yas Island (the “Middle East Project”). As part of this partnership, we are providing certain services pertaining to the planning and design of the Middle East Project, with funding received from our partner in the Middle East expected to offset our internal expenses.

This next generation SeaWorld Abu Dhabi will also introduce the United Arab Emirates’ (“UAE”) first dedicated marine life research, rescue, rehabilitation and return center with world-class facilities and resources for the care and conservation of local marine life. Planned to open ahead of the marine life themed park, the facility will provide an important resource for UAE nationals and residents looking to develop or enhance expertise in marine life sciences and will serve as a hub for collaboration with local and international environmental organizations and projects.

SeaWorld Abu Dhabi will be the first new SeaWorld theme park without orcas, and will integrate up-close animal experiences, mega attractions and a world class aquarium, bringing the latest technology in visitor engagement. SeaWorld Abu Dhabi is expected to open by 2022. The Middle East Project is subject to various conditions, including, but not limited to, the parties completing the design development and there is no assurance that the Middle East Project will be completed or advance to the next stage.

~~On March 24, 2017, we announced that~~ an affiliate of Zhonghong Zhuoye Group Co., Ltd. (“ZHG Group”) entered into an agreement to acquire approximately 21% of the outstanding shares of common stock of the Company (the “Sale”) from affiliates of The Blackstone Group L.P. (“Seller”), pursuant to a Stock Purchase Agreement between ZHG and Seller (the “Stock Purchase Agreement”). The Sale closed on May 8, 2017. Also on March 24, 2017, we entered into a Park Exclusivity and Concept Design Agreement (the “ECDA”) and a Center Concept & Preliminary Design Support Agreement (the “CDSA”) with Zhonghong Holding, an affiliate of ZHG Group, to provide design, support and advisory services for various potential projects and granting exclusive rights in China, Taiwan, Hong Kong and Macau (the “Territory”). Under the terms of the ECDA, we will work with Zhonghong Holding and a top theme park design company, to create and produce concept designs and development analysis for theme parks, water parks and interactive parks in the Territory. Under the terms of the CDSA, we will provide guidance, support, input, and expertise relating to the initial strategic planning, concept and preliminary design of Zhonghong Holding’s family entertainment and other similar centers.

~~For a discussion of certain risks associated with our international development strategy,~~expenses, see the ~~“Risk Factors”~~“Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the ~~SEC,~~SEC.

Total attendance increased in the first half of 2018 by approximately 710,000 guests, or 8.0%, compared to the first half of 2017. We believe the improved attendance results from a combination of factors including the impact of new strategic pricing strategies, new marketing and communications initiatives and the anticipation and reception of our new rides, attractions and events.

As mentioned under “Principle Factors Affecting our Results of Operations”, attendance trends can be impacted by a variety of factors, including the external perceptions of our brands and reputation, which we believe in ~~Part II, Item 1A. “Risk Factors”~~recent years impacted attendance at some of our parks. Negative publicity can also impact our relationships with our business partners and ticket resellers. For example, in July we were informed that one of our ticket resellers in the United Kingdom will discontinue selling SeaWorld-branded tickets beginning in July 2019. Although we do not expect this ~~report.~~decision to have a significant impact on our business nor do we currently consider this to be a material trend, we continue to monitor any such items that could impact attendance trends. As a reminder, historically, aggregate attendance from the United Kingdom represents approximately 5% of our total annual attendance.

The theme park industry is seasonal in nature. Historically, we generate the highest revenues in the second and third quarters of each year, in part because seven of our theme parks are only open for a portion of the year. Approximately two-thirds of our attendance and revenues are generated in the second and third quarters of the year and we typically incur a net loss in the first and fourth quarters. The percent mix of revenues by quarter is relatively constant each year, but revenues can shift between the first and second quarters due to the timing of Easter and spring break holidays orand between the first and fourth quarters due to the timing of Christmas and New Year. Even for our five theme parks open year-round, attendance patterns have significant seasonality, driven by holidays, school vacations and weather conditions. ~~One~~

On May 16, 2017, SeaWorld Parks and Entertainment, Inc., a wholly-owned subsidiary of the Company, entered into a License Agreement (the “License Agreement”) with Sesame Workshop (“Sesame”), a New York not-for-profit corporation. Among other commitments, the agreement makes it possible for a new Sesame Street land to be built in SeaWorld Orlando by Fall 2022. On May 2, 2018, we announced that we plan to open the new Sesame Land in SeaWorld Orlando in Spring of 2019.

On February 26, 2018, Joel K. Manby (the “Former CEO”) stepped down from his position as President and Chief Executive Officer of the Company and resigned as a member of our ~~goals~~Board of Directors. In connection with his departure, the Former CEO received severance-related expenses in accordance with his employment agreement.

Certain other executives who separated from the Company during the first half of 2018 also received severance-related benefits in accordance with the terms of their respective employment agreements or relevant company plan, as applicable. These expenses are included in restructuring and other separation costs in the accompanying unaudited condensed consolidated statements of comprehensive income (loss).

Additionally, during the first six months of 2018, certain equity awards were accelerated to vest in connection with the departure of specific executives as required by their respective employment agreements. As a result, the Company recorded incremental non-cash equity compensation expense related to these awards, which is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). See Note 13–Restructuring Programs and Other Separation Costs and Note 11–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes significant modifications to the provisions of the Internal Revenue Code, including but not limited to a corporate tax rate decrease from 35% to 21% effective January 1, 2018. We have calculated the impact of the Tax Act in accordance with our understanding and available guidance, particularly as it relates to the future deductibility of executive compensation items and state conformity to the Tax Act. As such, these assumptions may change as further clarification and guidance is provided by taxing authorities. See Note 4–Income Taxes in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We believe that in addition to the growth potential that exists domestically, our brands can also have significant appeal in certain international markets. We continue to ~~generate cash flow throughout~~make progress in our partnership with Miral Asset Management LLC to develop SeaWorld Abu Dhabi, a first-of-its-kind marine life themed park on Yas Island (the “Middle East Project”). As part of this partnership, we are providing certain services pertaining to the ~~year~~planning and design of the Middle East Project, with funding received from our partner in the Middle East expected to ~~maximize profitability~~offset our internal expenses. SeaWorld Abu Dhabi is expected to open by 2022. The Middle East Project is subject to various conditions, including, but not limited to, the parties completing the design development and ~~minimize~~there is no assurance that the ~~effects~~Middle East Project will be completed or advance to the next stage.

In March 2017, we entered into a Park Exclusivity and Concept Design Agreement (the “ECDA”) and a Center Concept & Preliminary Design Support Agreement (the “CDSA”) with Zhonghong Holding, an affiliate of ~~seasonality,~~Zhonghong Zhuoye Group Co., Ltd., to provide design, support and advisory services for various potential projects and granting exclusive rights in ~~particular at our~~China, Taiwan, Hong Kong and Macau (the “Territory”). Under the terms of the ECDA, we will work with Zhonghong Holding and a top theme park design company, to create and produce concept designs and development analysis for theme parks, that are open year-round. In recent years, we have begun to drive attendance during non-peak times by offering a variety of seasonal programs and events, such as shows for kids, special food and concert series, and Halloween and Christmas events. In addition, during seasonally slow times, operating costs are controlled by reducing operating hours and show schedules. Employment levels required for peak operations are met largely through part-time and seasonal hiring.

~~Our revenues are driven primarily by attendance in our theme~~water parks and interactive parks in the ~~level~~Territory. Under the terms of ~~per capita spending for admission~~the CDSA, we will provide guidance, support, input, and expertise relating to the ~~theme parks~~initial strategic planning, concept and ~~per capita spending inside the theme parks for culinary, merchandise~~preliminary design of Zhonghong Holding’s family entertainment and other ~~in-park experiences. The level~~similar centers. See Note 9–Related Party Transactions to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

For a discussion of ~~attendance in~~certain risks associated with our theme parks is a function of many factors, including the opening of new attractions and shows, competitive offerings, weather, fluctuations in foreign exchange rates and global and regional economic conditions, travel patterns of both our U.S. domestic and international guests, consumer confidence and other factors beyond our control, including the potential spread of contagious diseases. Admission per capita is driven by ticket pricing, the admissions product mix and the park attendance mix. In-park per capita spending is driven by pricing changes, penetration levels (percentage of guests purchasing), new product offerings, the mix of guests (such as local, U.S. domestic or international guests) and the mix of in-park spending. For other factors affecting our revenues,development strategy, see the “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the ~~SEC, and in Part II, Item 1A. “Risk Factors” in this report.~~

In addition to the theme parks, we are also involved in entertainment, media and consumer product businesses that leverage our intellectual property. While these businesses currently do not represent a material percentage of our revenue, they are important strategic drivers in terms of consumer awareness and brand building.

The principal costs of our operations are employee salaries and benefits, advertising, maintenance, animal care, utilities and insurance. Factors that affect our costs and expenses include minimum wage legislation, competitive wage pressures, commodity prices, costs for construction, repairs and maintenance, other inflationary pressures and attendance levels. A large portion of our expenses is relatively fixed because the costs for full-time employees, advertising, maintenance, animal care, utilities and insurance do not vary significantly with attendance. For factors affecting our costs and expenses, see the “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC, and in Part II, Item 1A. “Risk Factors” in this report.

Due to financial performance, particularly late in the second quarter of 2017 at our SeaWorld Orlando park which was driven primarily by a decline in U.S. domestic and international attendance at that park, we determined a triggering event had occurred that required an interim goodwill impairment test for our SeaWorld Orlando reporting unit. Based on the results of the interim goodwill impairment test as of June 30, 2017, we determined that the SeaWorld Orlando reporting unit’s goodwill was fully impaired and recorded a non-cash goodwill impairment charge of $269.3 million in our unaudited condensed consolidated statement of comprehensive income (loss) during the nine months ended September 30, 2017. See Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statements for further details.

Following a fundamental review of our cost structure, in 2016, we announced a comprehensive cost optimization program that was expected to reduce costs by approximately $65.0 million, with a targeted $40.0 million in net savings by the end of 2018. As part of this program, in December 2016, we committed to and implemented a restructuring program in an effort to reduce costs, increase efficiencies, reduce duplication of functions and improve operations (the “2016 Restructuring Program”). The 2016 Restructuring Program involved the elimination of approximately 320 positions by the end of the fourth quarter of fiscal year 2016 across our theme parks and our headquarters. Additionally, during the quarter ended September 30, 2017, we identified an additional $25.0 million in potential cost savings opportunities. As a part of these efforts, in October 2017, we executed the 2017 Restructuring Program to reduce costs, increase efficiencies, reduce duplication of functions and improve our operations. The 2017 Restructuring Program involved the elimination of approximately 350 positions by the end of the fourth quarter of 2017 across certain of our theme parks and corporate headquarters. As a result, during the three months ended September 30, 2017, we recorded $5.1 million in pre-tax restructuring charges related to estimated severance and other termination benefits incurred in connection with the 2017 Restructuring Program. See Note 13–Restructuring Programs in our notes to the unaudited condensed consolidated financial statements for further details.

During the nine months ended September 30, 2017, we recognized $8.4 million of equity compensation expense related to certain performance-vesting restricted shares (the “2.75x Performance Restricted shares”) which partially vested on May 8, 2017 with the closing of the Sale. During the nine months ended September 30, 2016, we recognized $27.5 million of equity compensation expense related to certain performance-vesting restricted shares (the “2.25x Performance Restricted shares”) which vested in April 2016. See Note 11–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial statements for further details.

During the three months ended September 30, 2017, following a contractual dispute, we amended an existing agreement relating to the use of certain animals. As a result of this amendment, we recognized an impairment loss of approximately $7.8 million related to the associated long-lived assets. See Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statements for further details.

During the first quarter of 2016, we removed deep-water lifting floors from the orca habitats at each of our three SeaWorld-branded theme parks. The deep-water lifting floors were intended as another safety tool for conducting in-water training in the deeper pools. The lifting floors located in the medical pools, where our orca in-water training currently takes place, were not affected. That training will continue as an essential part of our overall safety program. Having safely and successfully conducted in-water training in the medical pools for almost 4 years, our safety and zoological professionals determined that the deep-water lifting floors in the deeper pools were no longer needed. This change provides more space for the animals, and increases the time that the deep-water pool is available by eliminating downtime for maintenance and cleaning. As a result, during the first nine months of 2016, we recorded $33.7 million of accelerated depreciation related to the disposal of these lifting floors, which is included in depreciation and amortization expense in the accompanying unaudited condensed consolidated statement of comprehensive income (loss) for the nine months ended September 30, 2016. During the nine months ended September 30, 2016, we also recorded approximately $6.4 million in asset write-offs associated with the Blue World Project.

We barter theme park admission products for advertising and various other products and services. The fair value of the admission products is recognized into admissions revenue and related expenses at the time of the exchange and approximates the estimated fair value of the goods or services received or provided, whichever is more readily determinable.SEC.

The following discussion provides an analysis of our operating results for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016.~~2017. This data should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Comparison of the Three Months Ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017

The following table presents key operating and financial information for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016:~~2017:

	For the Three Months Ended											For the Three Months Ended
	September 30,					Variance						June 30,						Variance
	2017			2016		$			%			2018			2017			$			%
Summary Financial Data:	(In thousands, except per capita data and %)											(Dollars in thousands, except per capita data)
Net revenues:
Admissions	$	264,967		$	294,605	$	(29,638	)		(10.1	%)	$	225,806		$	224,951		$	855			0.4	%
Food, merchandise and other		172,745			190,713		(17,968	)		(9.4	%)		166,115			148,799			17,316			11.6	%
Total revenues		437,712			485,318		(47,606	)		(9.8	%)		391,921			373,750			18,171			4.9	%
Costs and expenses:
Cost of food, merchandise and other revenues		31,988			35,854		(3,866	)		(10.8	%)		31,899			29,061			2,838			9.8	%
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $976 and $505 for the three months ended September 30, 2017 and 2016, respectively)		194,802			198,754		(3,952	)		(2.0	%)
Selling, general and administrative (includes equity compensation of $2,269 and $2,040 for the three months ended September 30, 2017 and 2016, respectively)		54,770			57,148		(2,378	)		(4.2	%)
Restructuring and other related costs		5,100			—		5,100		ND
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $2,667 and $3,918 for the three months ended June 30, 2018 and 2017, respectively)													190,100			189,269			831			0.4	%
Selling, general and administrative (includes equity compensation of $3,225 and $7,988 for the three months ended June 30, 2018 and 2017, respectively)													71,003			69,152			1,851			2.7	%
Goodwill impairment charges													—			269,332			(269,332	)	NM
Restructuring and other separation costs													3,691			—			3,691		ND
Depreciation and amortization		42,230			40,921		1,309			3.2	%		40,018			39,500			518			1.3	%
Total costs and expenses		328,890			332,677		(3,787	)		(1.1	%)		336,711			596,314			(259,603	)		(43.5	%)
Operating income		108,822			152,641		(43,819	)		(28.7	%)
Other (income) expense, net		(108	)		72		(180	)	NM
Operating income (loss)													55,210			(222,564	)		277,774		NM
Other expense, net													(42	)		83			(125	)	NM
Interest expense		20,160			15,137		5,023			33.2	%		20,561			19,452			1,109			5.7	%
Income before income taxes		88,770			137,432		(48,662	)		(35.4	%)
Provision for income taxes		33,736			71,777		(38,041	)		(53.0	%)
Net income	$	55,034		$	65,655	$	(10,621	)		(16.2	%)
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs													—			123			(123	)	NM
Income (loss) before income taxes													34,691			(242,222	)		276,913		NM
Provision for (benefit from) income taxes													11,994			(66,372	)		78,366		NM
Net income (loss)												$	22,697		$	(175,850	)	$	198,547		NM
Other data:
Attendance		7,609			8,341		(732	)		(8.8	%)		6,414			6,122			292			4.8	%
Total revenue per capita	$	57.52		$	58.18	$	(0.66	)		(1.1	%)	$	61.10		$	61.05		$	0.05			0.1	%

Admissions revenue. Admissions revenue for the three months ended ~~September~~June 30, ~~2017 decreased $29.6~~2018 increased $0.9 million, or ~~10.1%~~0.4%, to ~~$265.0~~$225.8 million as compared to ~~$294.6~~$225.0 million for the three months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease~~increase in admissions revenue was primarily a result of ~~a decline~~an overall increase in attendance of approximately ~~732,000~~292,000 guests, or ~~8.8%. Attendance in the third quarter~~4.8%, which was ~~primarily impacted~~largely offset by a decline in U.S. domestic and international attendance, largely concentrated at our parks in Orlando and San Diego. In addition, SeaWorld San Diego was further impacted by a decline in attendance from the Southern California market. Attendance for the third quarter was also adversely impacted by the effects of Hurricane Irma in Florida, which caused park closures in Orlando and Tampa, and to a lesser extent, the effects of Hurricane Harvey, which caused park closures and travel disruptions in Texas as well as weather impacts in Virginia. admission per capita. We believe the ~~decline in U.S. domestic~~improved attendance ~~particularly in Orlando, results primarily from~~ ~~the combined impact of reduced national advertising and~~ ~~competitive pressures. We believe the decline in attendance at our SeaWorld San Diego park partly~~ results from ~~public perception issues which have resurfaced since we reduced~~a combination of factors including new pricing strategies, new marketing ~~spend on~~and communications initiatives and the reception of our national reputation campaign. Admission per capita decreased by 1.4% to $34.82 for the third quarter of 2017 compared to $35.32 in the prior year quarter. The decrease results primarily from the mix of guests, including a higher mix of season pass attendancenew rides, attractions and ~~free promotional ticket offerings along with the impact of less barter revenue when compared to the third quarter of 2016.~~ events. These factors were partially offset by ~~price increases~~negative impacts from unfavorable weather in the quarter and the earlier timing of the Easter holiday in 2018, which impacted the timing of spring break for a number of schools from our key markets. Total revenue per capita increased, when compared to the prior year period, primarily due to an increase in in-park per capita spending of 6.5%, as discussed below, which was largely offset by a decrease in admission ~~products.~~per capita. Admission per capita decreased by 4.2% to $35.21 for the second quarter of 2018 compared to $36.74 in the prior year quarter. Among other factors, the decline results primarily from the impact of new pricing strategies and visitation mix when compared to the prior year period.

Food, merchandise and other revenue. Food, merchandise and other revenue for the three months ended ~~September~~June 30, ~~2017 decreased $18.0~~2018 increased $17.3 million, or ~~9.4%~~11.6%, to ~~$172.7~~$166.1 million as compared to ~~$190.7~~$148.8 million for the three months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease relates primarily to the decline in attendance for the quarter and was also slightly impacted by a decline~~increase results from an increase in in-park per capita ~~spending.~~spending along with the impact of increased attendance. In-park per capita spending ~~declined~~increased by ~~0.7%~~6.5% to ~~$22.70~~$25.90 in the ~~third~~second quarter of ~~2017~~2018 compared to ~~$22.86~~$24.31 in the ~~third~~second quarter of ~~2016.~~ 2017. In-park per capita spending improved primarily due to the increased sales of in-park products, including culinary and other in-park offerings.

Costs of food, merchandise and other revenues. Costs of food, merchandise and other revenues for the three months ended ~~September~~June 30, ~~2017 decreased~~2018 increased by ~~$3.9~~$2.8 million, or ~~10.8%~~9.8%, to ~~$32.0~~$31.9 million as compared to ~~$35.9~~$29.1 million for the three months ended ~~September~~June 30, ~~2016.~~2017. These costs represent ~~18.5%~~19.2% and ~~18.8%~~19.5% of the related revenue earned for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

Operating expenses. Operating expenses for the three months ended ~~September~~June 30, ~~2017 decreased $4.0~~2018 increased slightly by $0.8 million, or ~~2.0%~~0.4%, to ~~$194.8~~$190.1 million as compared to ~~$198.8~~$189.3 million for the three months ended ~~September~~June 30, ~~2016.~~2017. Operating expenses for the three months ended June 30, 2018 also includes $7.3 million related to non-cash fixed asset write-offs, compared to $0.7 million in the prior year quarter. Operating expenses were 48.5% of total revenues for the three months ended June 30, 2018 compared to 50.6% for the three months ended June 30, 2017. The decrease as a percent of total revenue results primarily from a focus on cost efficiencies and the impact of cost savings initiatives.

Selling, general and administrative. Selling, general and administrative expenses for the three months ended June 30, 2018 increased $1.9 million, or 2.7%, to $71.0 million as compared to $69.2 million for the three months ended June 30, 2017. The increase primarily relates to an increase in marketing and legal costs, partially offset by a decline in equity compensation expense and salary costs. The increase in legal costs primarily relates to a ~~decline~~proposed settlement accrual of $4.0 million recorded in ~~direct labor costs partly~~the second quarter of 2018. The decrease in equity compensation expense of $4.8 million largely relates to certain performance shares which vested in the second quarter of 2017. See Note 10–Commitments and Contingencies and Note 11–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial statements for further details. As a percentage of total revenue, selling, general and administrative expenses were 18.1% in the three months ended June 30, 2018 compared to 18.5% in the three months ended June 30, 2017.

Goodwill impairment charges. Goodwill impairment charges for the three months ended June 30, 2017 relates to the full impairment of the goodwill related to ~~cost savings initiatives which included a reduction~~our SeaWorld Orlando reporting unit in ~~headcount resulting from~~ the 2016 Restructuring Program along with a reduction in other costs due to cost savings initiatives and a decline in volume. These factors were partially offset by an increase in asset write-offs and impairments primarily related to $7.8 million of impairment of certain long-lived assets.prior year quarter. See Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial ~~statements for further details. Operating expenses were 44.5% of total revenues for the three months ended September 30, 2017 compared to 41.0% for the three months ended September 30, 2016.~~

~~Selling, general and administrative~~. Selling, general and administrative expenses for the three months ended September 30, 2017 decreased $2.4 million, or 4.2%, to $54.8 million as compared to $57.1 million for the three months ended September 30, 2016. The decline primarily relates to reduced barter expense of approximately $4.8 million and a decrease of $1.4 million in marketing costs when compared to the third quarter of 2016. These factors were partially offset by an increase of $3.9 million in other professional expenses primarily related to legal costs. As a percentage of total revenue, selling, general and administrative expenses were 12.5% in the three months ended September 30, 2017 compared to 11.8% in the three months ended September 30, 2016.statements.

Restructuring ~~charges~~ and other ~~related~~separation costs. Restructuring ~~charges~~ and other ~~related~~separation costs for the three months ended ~~September~~June 30, ~~2017 represent estimated~~2018 primarily relates to severance and other ~~termination benefits associated with~~employment expenses for certain ~~positions that were eliminated in~~employees whose employment terminated during the ~~fourth~~second quarter of ~~2017 as a result of~~2018 and also includes $1.8 million related to the ~~2017~~2018 Restructuring Program. See Note 13–13–Restructuring ~~Charges~~Programs and Other Separation Costs in our notes to the unaudited condensed consolidated financial ~~statements for further details.~~statements.

Depreciation and amortization. Depreciation and amortization expense for the three months ended ~~September~~June 30, ~~2017~~2018 increased ~~$1.3~~$0.5 million, or ~~3.2%~~1.3%, to ~~$42.2~~$40.0 million as compared to ~~$40.9~~$39.5 million for the three months ended ~~September~~June 30, ~~2016. The slight increase in depreciation and amortization expense is primarily a result of the impact of new asset additions, partially offset by asset retirements and fully depreciated assets.~~2017.

Interest expense. Interest expense for the three months ended ~~September~~June 30, ~~2017~~2018 increased ~~$5.0~~$1.1 million, or ~~33.2%~~5.7%, to ~~$20.2~~$20.6 million as compared to ~~$15.1~~$19.5 million for the three months ended ~~September~~June 30, ~~2016.~~2017. The increase primarily relates to increased LIBOR rates when compared to the impact of the refinancing amendment, Amendment No. 8 (the “Amendment”), to our existing senior secured credit facilities (the “Senior Secured Credit Facilities”) along with the impact of interest rate swap agreements which became effective in September of 2016. These interest rate swap agreements effectively fixed the interest rate at 2.45% on $1.0 billion of variable-rate long-term debt. prior year period. See Note 6–6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements and the “Our Indebtedness” section which follows for further details on our long-term debt.

Loss on early extinguishment of debt and write-off of discounts and debt issuance costs. Loss on early extinguishment of debt and write-off of discounts and debt issuance costs of $0.1 million for the three months ended June 30, 2017 primarily relates to a write-off of discounts and debt issuance costs resulting from a voluntary prepayment of debt. See Note 6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements and the “Our Indebtedness” section which follows for further details.

Provision for (benefit from) income taxes. The provision for income taxes in the three months ended ~~September~~June 30, ~~2017~~2018 was ~~$33.7~~$12.0 million compared to ~~$71.8~~a benefit from income taxes of $66.4 million for the three months ended ~~September~~June 30, ~~2016.~~2017. The change primarily resulted from ~~a significant decrease in~~ pretax income in the ~~third~~second quarter of 2018 compared to a significant pretax loss in the second quarter of 2017, ~~along with a decrease~~due primarily to the goodwill impairment charge taken in ~~our consolidated effective tax rate.~~that quarter. Our consolidated effective tax rate was ~~38.0%~~34.6% for the three months ended ~~September~~June 30, ~~2017~~2018 compared to ~~52.2%~~27.4% for the three months ended ~~September~~June 30, ~~2016.~~2017. The ~~estimated annual~~ effective tax rate ~~decreased~~increased due to changes in permanent items primarily related to nondeductible goodwill impairment and equity-based compensation and was partially offset by a decrease primarily due to the ~~impacts~~Tax Act reduction in ~~2016 of non-deductible expenses on~~ the ~~limited pretax income projected for the year ended December 31, 2016.~~ corporate federal tax rate from 35% to 21% effective January 1, 2018.

Comparison of the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017

The following table presents key operating and financial information for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016:~~2017:

	For the Nine Months Ended												For the Six Months Ended
	September 30,						Variance						June 30,						Variance
	2017			2016			$			%			2018			2017			$			%
Summary Financial Data:	(In thousands, except per capita data and %)												(Dollars in thousands, except per capita data)
Net revenues:
Admissions	$	605,007		$	655,510		$	(50,503	)		(7.7	%)	$	355,809		$	340,040		$	15,769			4.6	%
Food, merchandise and other		392,812			421,185			(28,373	)		(6.7	%)		253,278			220,067			33,211			15.1	%
Total revenues		997,819			1,076,695			(78,876	)		(7.3	%)		609,087			560,107			48,980			8.7	%
Costs and expenses:
Cost of food, merchandise and other revenues		75,532			81,768			(6,236	)		(7.6	%)		48,950			43,544			5,406			12.4	%
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $5,830 and $10,371 for the nine months ended September 30, 2017 and 2016, respectively)		541,395			570,480			(29,085	)		(5.1	%)
Selling, general and administrative (includes equity compensation of $13,435 and $24,225 for the nine months ended September 30, 2017 and 2016, respectively)		176,340			196,534			(20,194	)		(10.3	%)
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $4,230 and $4,854 for the six months ended June 30, 2018 and 2017, respectively)														345,573			346,593			(1,020	)		(0.3	%)
Selling, general and administrative (includes equity compensation of $9,207 and $11,166 for the six months ended June 30, 2018 and 2017, respectively)														134,527			121,570			12,957			10.7	%
Goodwill impairment charges		269,332			—			269,332		ND				—			269,332			(269,332	)	NM
Restructuring and other related costs		5,100			112			4,988		NM
Restructuring and other separation costs														12,526			—			12,526		ND
Depreciation and amortization		120,597			156,677			(36,080	)		(23.0	%)		78,448			78,367			81			0.1	%
Total costs and expenses		1,188,296			1,005,571			182,725			18.2	%		620,024			859,406			(239,382	)		(27.9	%)
Operating (loss) income		(190,477	)		71,124			(261,601	)	NM
Other (income) expense, net		(111	)		48			(159	)	NM
Operating loss														(10,937	)		(299,299	)		288,362			96.3	%
Other income, net														21			(3	)		24		NM
Interest expense		57,873			44,297			13,576			30.6	%		40,474			37,713			2,761			7.3	%
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs		8,143			—			8,143		ND				—			8,143			(8,143	)	NM
(Loss) income before income taxes		(256,382	)		26,779			(283,161	)	NM
(Benefit from) provision for income taxes		(74,437	)		27,405			(101,842	)	NM
Loss before income taxes														(51,432	)		(345,152	)		293,720			85.1	%
Benefit from income taxes														(11,285	)		(108,173	)		96,888			89.6	%
Net loss	$	(181,945	)	$	(626	)	$	(181,319	)	NM			$	(40,147	)	$	(236,979	)	$	196,832			83.1	%
Other data:
Attendance		16,537			17,622			(1,085	)		(6.2	%)		9,638			8,928			710			8.0	%
Total revenue per capita	$	60.34		$	61.10		$	(0.76	)		(1.2	%)	$	63.20		$	62.74		$	0.46			0.7	%

Admissions revenue. Admissions revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased $50.5~~2018 increased $15.8 million, or ~~7.7%~~4.6%, to ~~$605.0~~$355.8 million as compared to ~~$655.5~~$340.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease~~increase in admissions revenue was primarily a result of ~~a decline~~an increase in attendance of ~~6.2%~~approximately 710,000 guests, or 8.0%, ~~and, to a lesser extent,~~partially offset by a decrease ~~of 1.6%~~ in admissions per capita when compared to the first ~~nine months~~half of ~~2016. Total~~2017. We believe the improved attendance ~~for~~results from a combination of factors including new pricing strategies, new marketing and communications initiatives and the ~~first nine months~~anticipation and reception of ~~2017 declined by approximately 1.1 million guests compared to the first nine months of 2016. Attendance was primarily impacted by an overall decline in U.S. domestic~~our new rides, attractions and international attendance, which was largely concentrated at our parks in Orlando and San Diego. In addition, SeaWorld San Diego was further impacted by a decline in attendance from the Southern California market. events. These factors were partially offset by ~~improved attendance~~negative impacts from ~~guests within a 300 mile radius for our Orlando and San Antonio markets which we believe is partly~~unfavorable weather in the first half of 2018 compared to the same period in 2017. Total revenue per capita increased when compared to the prior year period primarily due to ~~the success~~an increase in in-park per capita spending of ~~our new attractions. Attendance, particularly for the third quarter of 2017,~~6.6%, as discussed below, which was ~~also adversely impacted~~largely offset by ~~the effects of Hurricane Irma which caused park closures~~a decrease in Orlando and Tampa, and to a lesser extent, the effects of Hurricane Harvey which caused park closures and travel disruptions in Texas as well as weather impacts in Virginia. We believe the decline in U.S. domestic attendance, particularly in Orlando, results primarily from ~~the combined impact of reduced national advertising and~~ competitive pressures. We believe the decline in attendance at our SeaWorld San Diego park partly results from public perception issues which have resurfaced since we reduced marketing spend on our national reputation campaign.admission per capita. Admission per capita decreased by ~~1.6%~~3.1% to ~~$36.59~~$36.92 in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to ~~$37.20~~$38.09 in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease~~decline primarily results from the ~~mix of guests, including a higher mix of season pass attendance and free promotional ticket offerings along with the~~ impact of ~~less barter revenue~~new pricing strategies and visitation mix when compared to the prior year period. ~~These factors were partially offset by price increases in our admission products when compared to the first nine months of 2016.~~

Food, merchandise and other revenue. Food, merchandise and other revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased $28.4~~2018 increased $33.2 million, or ~~6.7%~~15.1%, to ~~$392.8~~$253.3 million as compared to ~~$421.2~~$220.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. This decrease~~2017. The increase results from ~~the decline~~an increase in attendance ~~and, to a lesser extent, a 0.6% decrease~~along with improvement in in-park per capita spending. In-park per capita spending increased by 6.6% to ~~$23.75~~$26.28 in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to ~~$23.90~~$24.65 in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. In-park per capita spending improved primarily due to the increased sales of in-park products, particularly culinary among other in-park offerings.

Costs of food, merchandise and other revenues. Costs of food, merchandise and other revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased $6.2~~2018 increased $5.4 million, or ~~7.6%~~12.4%, to ~~$75.5~~$49.0 million as compared to ~~$81.8~~$43.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. These costs represent ~~19.2%~~19.3% and ~~19.4%~~19.8% of the related revenue earned for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

Operating expenses. Operating expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 decreased ~~$29.1~~$1.0 million, or ~~5.1%~~0.3%, to ~~$541.4~~$345.6 million as compared to ~~$570.5~~$346.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. The decrease primarily relates~~2017. Operating expenses for the six months ended June 30, 2018 also includes $7.7 million related to ~~a decline of approximately $17.0~~non-cash fixed asset write-offs, compared to $0.9 million in ~~direct labor costs partly related to cost savings initiatives which included a reduction in headcount resulting from~~ the 2016 Restructuring Program and a reduction in equity compensation expense of approximately $4.5 million along with a reduction in other costs due to cost savings initiatives. These factors were partially offset by an increase of $2.1 million in asset write-offs and impairments primarily related to $7.8 million of impairment of certain long-lived assets in 2017 compared to asset write-offs of $6.4 million in 2016 associated with the Blue World Project. See Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statements for further details. The decrease in equity compensation expense largely related to $9.0 million of incremental expense in the first quarter of 2016 associated with the 2.25x Performance Restricted shares which vested on April 1, 2016 compared to incremental equity compensation expense recorded in the second quarter of 2017 of $2.8 million associated with the 2.75x Performance Restricted shares which partially vested on May 8, 2017 (see Note 11–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial statements for further details).prior year period. Operating expenses were ~~54.3%~~56.7% of total revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to ~~53.0%~~61.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The decrease as a percent of total revenue results primarily from a focus on cost efficiencies and the impact of cost savings initiatives.

Selling, general and administrative. Selling, general and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased $20.2~~2018 increased $13.0 million, or ~~10.3%~~10.7%, to ~~$176.3~~$134.5 million as compared to ~~$196.5~~$121.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease~~increase primarily relates to an increase in marketing and legal costs partially offset by a ~~decline~~decrease in equity compensation expense ~~of $10.8 million along with a decrease of approximately $7.5 million in marketing~~and salary costs due in part to ~~a reduction~~cost savings initiatives. The increase in ~~reputation and national media campaigns. The decline in equity compensation expense~~legal costs largely relates to ~~$18.5~~a legal settlement accrual of $8.1 million ~~of incremental expense~~recorded in the first quarter of ~~2016 associated with the 2.25x Performance Restricted shares which vested on April 1, 2016 compared to incremental equity compensation expense~~2018 and a proposed settlement accrual of $4.0 million recorded in the second quarter of ~~2017 of $5.6 million associated with the 2.75x Performance Restricted shares which partially vested on May 8, 2017~~2018 (see Note ~~11–Equity-Based Compensation~~10–Commitments and Contingencies in our notes to the unaudited condensed consolidated financial statements for further details). As a percentage of total revenue, selling, general and administrative expenses were ~~17.7%~~22.1% in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to ~~18.3%~~21.7% in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017.

Goodwill impairment charges. Goodwill impairment charges for the ~~nine~~six months ended ~~September~~June 30, 2017 relates to the full impairment of the goodwill ~~for~~related to our SeaWorld Orlando reporting ~~unit.~~ ~~Due to financial performance,~~ ~~particularly late~~unit in the ~~second quarter of 2017~~ which was driven primarily by a decline in U.S. domestic and international attendance in the Orlando market, we determined a triggering event had occurred that required an interim goodwill impairment test for our SeaWorld Orlando reporting unit.prior year period. See ~~Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statements for further details.~~

~~Restructuring and other related costs.~~ Restructuring and other related costs for the nine months ended September 30, 2017 represent estimated severance and other termination benefits associated with certain positions which were eliminated in the fourth quarter of 2017 as a result of the 2017 Restructuring Program. Restructuring and other related costs for the nine months ended September 30, 2016 represent severance associated with certain positions that were eliminated in the first quarter of 2016. ~~See Note 13–Restructuring Charges in our notes to the unaudited condensed consolidated financial statements for further details.~~

~~Depreciation and amortization.~~ Depreciation and amortization expense for the nine months ended September 30, 2017 decreased $36.1 million, or 23.0%, to $120.6 million as compared to $156.7 million for the nine months ended September 30, 2016. The decrease is primarily related to $33.7 million in accelerated deprecation incurred in the first half of 2016 due to the disposal of deep-water lifting floors from our orca habitats (see Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statements for further ~~details). The remaining decrease~~details.

Restructuring and other separation costs. Restructuring and other separation costs for the six months ended June 30, 2018 primarily relates to approximately $6.7 million in severance and other employment expenses for our Former CEO and also includes severance and other employment expenses of approximately $3.8 million for other employees whose employment terminated during the ~~impact~~first half of ~~asset retirements~~2018. Restructuring and ~~fully depreciated assets, partially offset by new asset additions.~~other separation costs also include approximately $1.8 million related to the 2018 Restructuring Program. See Note 13–Restructuring Programs and Other Separation Costs in our notes to the unaudited condensed consolidated financial statements.

Depreciation and amortization. Depreciation and amortization expense for the six months ended June 30, 2018 was relatively flat when compared to the six months ended June 30, 2017.

Interest expense. Interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 increased ~~$13.6~~$2.8 million, or ~~30.6%~~7.3%, to ~~$57.9~~$40.5 million as compared to ~~$44.3~~$37.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The increase primarily relates to increased LIBOR rates and the impact of Amendment 8 to our Senior Secured Credit Facilities entered into on March 31, 2017, partially offset by the impact of interest rate swap agreements which became effective in September of 2016 along with the impact of the Amendment. The interest rate swap agreements effectively fixed the interest rate at 2.45% on $1.0 billion of variable-rate long-term debt. agreements. See Note 6–6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements and the “Our Indebtedness” section which follows for further details.

Loss on early extinguishment of debt and write-off of discounts and debt issuance costs. Loss on early extinguishment of debt and write-off of discounts and debt issuance costs of $8.1 million for the ~~nine~~six months ended ~~September~~June 30, 2017 primarily relates to a write-off of discounts and debt issuance costs resulting from ~~the~~ Amendment 8 to our Senior Secured Credit Facilities entered into on March 31, 2017. See Note 6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements and the “Our Indebtedness” section which follows for further details.

(Benefit ~~from) provision for~~from income taxes. The benefit from income taxes in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$74.4~~$11.3 million compared to a ~~provision~~benefit of ~~$27.4~~$108.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The change primarily resulted from a significant decrease in pretax loss in the first ~~nine~~six months of ~~2017~~2018 compared to ~~pretax income in~~ the first ~~nine~~six months of ~~2016 and was also impacted by a decrease in the estimated annual effective tax rate.~~2017. Our consolidated effective tax rate was ~~29.0%~~21.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to ~~102.3%~~31.3% for the ~~nine~~six months ended ~~September~~June 30, ~~2016. For the nine months ended September 30, 2017, the~~2017. The estimated annual effective tax rate ~~was reduced for~~decreased due to the Tax Act reduction in the corporate federal tax rate from 35% to 21% effective January 1, 2018 and a decrease in permanent items primarily related to nondeductible goodwill impairment and equity-based compensation, ~~and the goodwill impairment charge due to a significant pretax loss projected for 2017. For the nine months ended September 30, 2016, significant nondeductible equity-based compensation resulted in~~partially offset by an increase ~~to the~~in projected annual state tax ~~rate due to projected pretax income.~~expense.

Our principal sources of liquidity are cash generated from operations, funds from borrowings and existing cash on hand. Our principal uses of cash include the funding of working capital obligations, debt service, investments in theme parks (including capital projects), and could also include common stock dividends ~~and~~or share repurchases. As of ~~September~~June 30, ~~2017,~~2018, we had a working capital ~~deficit~~ratio (defined as current assets divided by current liabilities) of approximately $110.3 million. Partially as a result of the seasonal nature of our business, we typically operate with a working capital deficit and we expect that we will continue to have working capital deficits in the future. The working capital deficits are0.4, due in part to a significant deferred revenue balance from revenues paid in advance for our theme park admissions products and high turnover of in-park products that results in a limited inventory balance. We typically operate with a working capital ratio less than 1 and we expect that we will continue to do so in the future. Our cash flow from operations, along with our revolving credit facilities, have allowed us to meet our liquidity ~~needs while maintaining a working capital deficit.~~needs.

As market conditions warrant and subject to our contractual restrictions and liquidity position, we, our affiliates and/or our ~~major~~ stockholders, ~~including ZHG Group and its affiliates,~~ may from time to time ~~repurchase~~purchase our outstanding equity and/or debt securities, including our outstanding bank loans in privately negotiated or open market transactions, by tender offer or otherwise. Any such ~~repurchases~~purchases may be funded by incurring new debt, including additional borrowings under the Senior Secured Credit ~~Facilities, defined below.~~Facilities. Any new debt may also be secured debt. We may also use available cash on our balance sheet. The amounts involved in any such transactions, individually or in the aggregate, may be material. Further, since some of our debt may trade at a discount to the face amount among current or future syndicate members, any such purchases may result in our acquiring and retiring a substantial amount of any particular series, with the attendant reduction in the trading liquidity of any such series. Depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider other financing transactions, the proceeds of which could be used to refinance our indebtedness or for other purposes.

Prior to September 2016, the Board had a policy to pay, subject to legally available funds, a regular quarterly dividend. The payment and timing of cash dividends was within the discretion of the Board and depended on many factors, including, but not limited to, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that the Board deemed relevant. In September 2016, the Board suspended the Company’s quarterly dividend policy to allow greater flexibility to deploy capital to opportunities that offer the greatest long-term returns to shareholders such as, but not limited to, share repurchases, investments in new attractions or debt repayments.

During the nine months ended September 30, 2017, accumulated cash dividends of $1.5 million related to previous dividend declarations were paid to certain equity plan participants upon vesting of restricted shares, including approximately $1.3 million related to certain performance-vesting restricted shares (the “2.75x Performance Restricted shares”), which vested upon the closing of the Sale on May 8, 2017. The Company expects that for tax purposes, all of these dividends will be treated as a return of capital to stockholders.

Due to the March 14, 2016 dividend declaration, certain performance-vesting restricted shares (the “2.25x Performance Restricted shares”) held by some of our equity plan participants vested on April 1, 2016. We recognized $27.5 million of equity compensation expense and recorded and paid approximately $3.4 million of accumulated dividends related to these 2.25x Performance Restricted shares during the nine months ended September 30, 2016.

See Note 11–Equity-Based Compensation and Note 12–Stockholders’ Equity in our notes to the unaudited condensed consolidated financial statements for further details on our dividend activity and the “Covenant Compliance” section which follows for further details on covenants that could restrict our ability to make certain restricted payments, including dividend payments and share repurchases.

Our Board has authorized a share repurchase program of up to $250.0 million of our common stock (the “Share Repurchase Program”). Under the Share Repurchase Program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time. The number of shares to be purchased and the timing of purchases will be based on the level of our cash balances, general business and market conditions, and other factors, including legal requirements, debt covenant restrictions and alternative investment opportunities.

Pursuant to the Share Repurchase Program, we have approximately up to $190.0 million authorized and available for future repurchases as of ~~September~~June 30, ~~2017.~~2018. There were no share repurchases during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016.~~2018. See Note 12–Stockholders’ Equity in our notes to the unaudited condensed consolidated financial statements for further details.

As of ~~September~~June 30, ~~2017 the Company has~~2018, we have five interest rate swap agreements (“the Interest Rate Swap Agreements”) which effectively fix the interest rate on the ~~three month~~ LIBOR-indexed interest payments associated with $1.0 billion of SEA’s outstanding long-term debt. The Interest Rate Swap Agreements became effective on September 30, 2016; have a total notional amount of $1.0 billion; and mature on May 14, 2020. See Note 6–6–Long-Term Debt and Note 7–7–Derivative Instruments and Hedging Activities to our unaudited condensed consolidated financial statements for further details.

We believe that existing cash and cash equivalents, cash flow from operations, and available borrowings under our revolving credit facility will be adequate to meet the capital expenditures and working capital requirements of our operations for at least the next 12 months.

The following table presents a summary of our cash flows provided by (used in) operating, investing, and financing activities for the periods indicated:

	For the Nine Months Ended September 30,						For the Six Months Ended June 30,
	2017			2016			2018			2017
	(In thousands)						(In thousands)
Net cash provided by operating activities	$	187,779		$	258,871		$	126,814		$	88,303
Net cash used in investing activities		(138,840	)		(136,120	)		(97,849	)		(103,175	)
Net cash used in financing activities		(65,555	)		(85,915	)		(28,242	)		(19,452	)
Net (decrease) increase in cash and cash equivalents	$	(16,616	)	$	36,836
Net increase (decrease) in cash and cash equivalents, including restricted cash							$	723		$	(34,324	)

Net cash provided by operating activities was ~~$187.8~~$126.8 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 as compared to ~~$258.9~~$88.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~change~~increase in net cash provided by operating activities was primarily impacted by ~~a decline in~~improved operating performance.

Investing activities consist principally of capital investments we make in our theme parks for future attractions and infrastructure. Net cash used in investing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 consisted primarily of capital expenditures of ~~$139.6~~$97.4 million largely related to future attractions.

Net cash used in investing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 consisted primarily of ~~$135.5~~$103.2 million of capital expenditures largely related to attractions that opened in 2017.

The amount of our capital expenditures may be affected by general economic and financial conditions, among other things, including restrictions imposed by our borrowing arrangements. We generally expect to fund our capital expenditures through our operating cash flow.

Net cash used in financing activities during the ~~nine~~six months ended ~~September~~June 30, 2018 results primarily from net repayments of $15.0 million on our revolving credit facility and $11.9 million on our long-term debt.

Net cash used in financing activities during the six months ended June 30, 2017 results primarily from net repayments on long-term debt of ~~$22.7~~$16.8 million, ~~net repayments of $24.4 million on our revolving credit facility and~~ $15.4 million of debt issuance costs paid in connection with Amendment No. 8 to our Senior Secured Credit Facilities, as defined ~~below.~~below, and $1.5 million in cash dividends paid, partially offset by net draws of $15.6 million on our revolving credit facility. See Note 6–Long-term Debt in our notes to the unaudited condensed consolidated financial statements for further details.

Net cash used in financing activities during the nine months ended September 30, 2016 was primarily attributable to a net repayment of $15.0 million on our revolving credit facility, $56.8 million in cash dividends paid to common stockholders and $12.6 million paid on our Term B-2 and Term B-3 Loans under the Senior Secured Credit Facilities, as defined below.

The Company is a holding company and conducts its operations through its subsidiaries, which have incurred or guaranteed indebtedness as described below.

SeaWorld Parks & Entertainment, Inc. (“SEA”) is the borrower under our senior secured credit facilities (the “Senior Secured Credit Facilities”) pursuant to a credit agreement dated as of December 1, 2009, by and among SEA, as borrower, Bank of America, N.A., as administrative agent, collateral agent, letter of credit issuer and swing line lender and the other agents and lenders party thereto, as the same may be amended, restated, supplemented or modified from time to time. On March 31, 2017, SEA entered into a refinancing amendment, Amendment No. 8 (the “Amendment”), to the existing Senior Secured Credit Facilities.

In connection with the Amendment, SEA borrowed $998.3 million of additional term loans (the “Term B-5 Loans”) of which the proceeds, along with cash on hand, were used to redeem all of the then outstanding principal of the Term B-3 Loans, with a principal amount equal to $244.7 million, and a portion of the then outstanding principal of the Term B-2 Loans, with a principal amount equal to $753.6 million, and pay other fees, costs and expenses in connection with the Amendment and related transactions. Additionally, pursuant to the Amendment, SEA terminated the existing revolving credit commitments (the “Terminated Revolving Credit Facility”) and replaced them with a new tranche with an aggregate commitment amount of $210.0 million (the “New Revolving Credit Facility”). In connection with the Amendment, SEA recorded discounts and debt issuance costs of approximately $5.0 million. Additionally, SEA wrote-off debt issuance costs of approximately $8.0 million, which is included in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) as loss on extinguishment of debt and write-off of discounts and debt issuances costs during the nine months ended September 30, 2017. Such loss on early extinguishment of debt and write-off of discounts and debt issuance costs also includes approximately $0.1 million related to a write-off of discount and debt issuance costs resulting from a voluntary prepayment of debt during the nine months ended September 30, 2017.

As of ~~September~~June 30, ~~2017,~~2018, our Senior Secured Credit Facilities consisted of ~~$557.7~~$985.8 million in Term B-5 Loans which will mature on March 31, 2024 and $547.4 million in Term B-2 Loans which will mature on May 14, 2020 ~~and $993.3 million in Term B-5 Loans which will mature on March 31, 2024~~ along with a $210.0 million senior secured ~~New~~ Revolving Credit Facility, which was not drawn upon as of ~~September~~June 30, ~~2017.~~2018. The ~~New~~ Revolving Credit Facility will mature on the earlier of (a) March 31, 2022 and (b) the 91st day prior to the earlier of (1) the maturity of the Term B-2 Loans with an aggregate principal amount greater than $50.0 million and (2) the maturity date of any indebtedness incurred to refinance the Term B-2 Loans with an aggregate principal amount greater than $50.0 million. As of ~~September~~June 30, ~~2017,~~2018, SEA had approximately ~~$19.1~~$21.3 million of outstanding letters of credit, leaving approximately ~~$190.9~~$188.7 million available for borrowing.

See Note 6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements for further details concerning our long-term debt.

As of June 30, 2018, SEA was in compliance with all covenants in the credit agreement governing the Senior Secured Credit Facilities.

The credit agreement governing the Senior Secured Credit Facilities provides for certain events of default which, if any of them were to occur, would permit or require the principal of and accrued interest, if any, on the loans under the Senior Secured Credit Facilities to become or be declared due and payable (subject, in some cases, to specified grace periods).

Under the credit agreement governing the Senior Secured Credit Facilities, our ability to engage in activities such as incurring additional indebtedness, making investments, refinancing certain indebtedness, paying dividends and entering into certain merger transactions is governed, in part, by our ability to satisfy tests based on Adjusted EBITDA. Adjusted EBITDA is not a recognized term under accounting principles generally accepted in the United States of America (“GAAP”). See further discussion in Adjusted EBITDA section which follows.

The Senior Secured Credit Facilities defines “Adjusted EBITDA” as net income before interest expense, income tax expense, depreciation and amortization, as further adjusted to exclude certain unusual, non-cash, and other items permitted in calculating covenant compliance under the Senior Secured Credit ~~Facilities.~~Facilities, subject to certain limitations. Adjusted EBITDA as defined in the Senior Secured Credit Facilities is consistent with our reported Adjusted EBITDA.

On March 31, 2017, the Amendment amended the definition of Adjusted EBITDA to (i) increase the cap on add-backs to Adjusted EBITDA for severance costs and other restructuring charges from $10.0 million in any period of four consecutive fiscal quarters to $15.0 million in any fiscal year and (ii) remove the $30.0 million aggregate cap for add-backs to Adjusted EBITDA for cost savings and other synergies in connection with initiatives that do not result from acquisitions or dispositions.

The Senior Secured Credit Facilities contain a number of covenants that, among other things, restrict our ability and the ability of our restricted subsidiaries to, among other things, make certain restricted payments (as defined in the Senior Secured Credit Facilities), including dividend payments and share repurchases. See Note 6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements for further details concerning the calculation of the Total Leverage Ratio (as defined in the Senior Secured Credit Facilities). As of ~~September~~June 30, ~~2017,~~2018, the Total Leverage Ratio as calculated under the Senior Secured Credit Facilities was ~~4.93~~4.35 to 1.00, which ~~results~~resulted in a ~~$90.0~~$120 million capacity for restricted payments in ~~the year ending December 31, 2017.~~2018. The amount available for share repurchases and certain other restricted payments under the covenant restrictions in the debt agreements adjusts at the beginning of each quarter as set forth in Note 6–Long-Term Debt to the unaudited condensed consolidated financial statements.

As of September 30, 2017, we were in compliance with all covenants in the credit agreement governing the Senior Secured Credit Facilities. Our ability to comply with these and other provisions of our existing debt agreements is dependent on our future performance, which is subject to many factors, some of which are beyond our control. The breach of any of these covenants or non-compliance with any of the financial ratios and tests could result in an event of default under our existing debt agreements, which, if not cured or waived, could result in acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross-acceleration or cross-default provisions.

We believe that the presentation of Adjusted EBITDA is appropriate as it eliminates the effect of certain non-cash and other items not necessarily indicative of a company’s underlying operating performance. The presentation of Adjusted EBITDA provides additional information to investors about the calculation of, and compliance with, certain financial covenants and other relevant metrics in the credit agreement governing the Senior Secured Credit Facilities. Adjusted EBITDA is a material component of these covenants. We use Adjusted EBITDA in connection with certain components of our executive compensation program. In addition, investors, lenders, financial analysts and rating agencies have historically used ~~EBITDA-related~~EBITDA related measures in our industry, along with other measures, to estimate the value of a company, to make informed investment decisions and to evaluate companies in the industry. In addition, the presentation of Adjusted EBITDA also provides additional information to investors about the calculation of, and compliance with, certain financial covenants in the Senior Secured Credit Facilities. Adjusted EBITDA is a material component of these covenants.

Adjusted EBITDA is not a recognized term under ~~GAAP, and~~accounting principles generally accepted in the United States of America (“GAAP”), should not be considered in isolation or as a substitute for a measure of our financial performance prepared in accordance with GAAP and is not indicative of income from operations as determined under GAAP. Adjusted EBITDA and other non-GAAP financial measures have limitations which should be considered before using these measures to evaluate our financial performance. Adjusted EBITDA, as presented by us, may not be comparable to similarly titled measures of other companies due to varying methods of calculation.

The following table reconciles Adjusted EBITDA to net income (loss) for the periods indicated:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,						For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2017		2016			2017			2016			2018		2017			2018			2017
	(Unaudited, in thousands)											(Unaudited, in thousands)
Net income (loss)	$	55,034	$	65,655		$	(181,945	)	$	(626	)	$	22,697	$	(175,850	)	$	(40,147	)	$	(236,979	)
Provision for (benefit from) income taxes		33,736		71,777			(74,437	)		27,405			11,994		(66,372	)		(11,285	)		(108,173	)
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs^(a)		—		—			8,143			—			—		123			—			8,143
Interest expense		20,160		15,137			57,873			44,297			20,561		19,452			40,474			37,713
Depreciation and amortization		42,230		40,921			120,597			156,677			40,018		39,500			78,448			78,367
Goodwill impairment charges^(b)		—		—			269,332			—			—		269,332			—			269,332
Equity-based compensation expense ^(c)		3,245		2,545			19,265			34,596			5,892		11,906			13,437			16,020
Other non-cash expenses ^(d)		7,814		1			8,727			6,645
Other business optimization costs ^(e)		6,732		103			9,834			1,939
Loss on impairment or disposal of assets ^(d)													7,256		696			7,651			913
Business optimization, development and strategic initiative costs ^(e)													3,535		3,240			15,000			6,292
Certain investment costs and franchise taxes													236		82			415			118
Other adjusting items^(f)		1,024		(117	)		4,332			2,705			5,430		2,112			13,509			2,112
Other items ^(g)		2,351		—			4,463			233
Adjusted EBITDA	$	172,326	$	196,022		$	246,184		$	273,871		$	117,619	$	104,221		$	117,502		$	73,858

The credit agreement governing our Senior Secured Credit Facilities limits the amount of certain add-backs as described in footnotes (e), (f) and (g) below. The following table summarizes the add-backs not included in Adjusted EBITDA calculation above due to limitations in our credit agreement:

For the three and six months ended June 30, 2017, reflects business optimization, development and other strategic initiative costs primarily composed of: (i) $1.0 million and $2.7 million, respectively, of third party consulting costs and (ii) $2.2 million and $3.2 million, respectively, of product and intellectual property development costs.

There have been no material changes to our contractual obligations from those previously disclosed in our Annual Report on Form ~~10-K~~10-K.

except as set forth in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, as filed on May 9, 2017 and our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, as filed on August 9, 2017.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, revenues and expenses, and disclosure of contingencies during the reporting period. Significant estimates and assumptions include the valuation and useful lives of long-lived tangible and intangible assets, the valuation of goodwill and other indefinite-lived intangible assets, the accounting for income taxes, the accounting for self-insurance and revenue recognition. Actual results could differ from those estimates. The critical accounting estimates associated with these policies are described in our Annual Report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These critical accounting policies include property and equipment, impairment of long-lived assets, goodwill and other indefinite-lived intangible assets, accounting for income taxes, self-insurance reserves, and revenue recognition. There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K, filed on ~~March 1, 2017,~~February 28, 2018, except as ~~noted below.~~

Goodwill and other indefinite-lived intangible assets are reviewed for impairment annually, and as of an interim date should factors or indicators become apparent that would require an interim test, for ongoing recoverability based on applicable reporting unit performance and consideration of significant events or changesdisclosed in the overall business environment or macroeconomic conditions. Such events or changes in the overall business environment could include, but are not limited to, significant negative trends or unanticipated changes in the competitive or macroeconomic environment.

In assessing goodwill for impairment, we may choose to initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We consider several factors, including macroeconomic conditions, industry and market conditions, overall financial performanceNote 1–Description of the ~~reporting unit, changes~~Business and Basis of Presentation in management, strategy or customers, and relevant reporting unit specific events such as a change in the carrying amount of net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, and the testing of recoverability of a significant asset group within a reporting unit. If the qualitative assessment is not conclusive, then a quantitative impairment analysis for goodwill is performed at the reporting unit level. We may also choose to perform this quantitative impairment analysis instead of the qualitative analysis. The quantitative impairment analysis compares the fair value of the reporting unit, determined using the income and market approach, to its recorded amount. If the recorded amount exceeds the fair value, then a goodwill impairment charge is recorded for the difference upour notes to the ~~recorded amount of goodwill.~~

Significant judgments required in this testing process may include projecting future cash flows, determining appropriate discount rates and other assumptions. Projections are based on management’s best estimates given recentunaudited condensed consolidated financial performance, market trends, strategic plans and other available information which in recent years have been materially accurate. Although not currently anticipated, changes in these estimates and assumptions could materially affect the determination of fair value or impairment. It is possible that our assumptions about future performance, as well as the economic outlook and related conclusions regarding the valuation of our assets, could change adversely, which may result in impairment that would have a material effect on our financial position and results of operations in future periods.

~~Interim Impairment Test~~statements—Due to financial performance particularly late in the second quarter of 2017 at our SeaWorld Orlando park, driven primarily by a decline in U.S. domestic and international attendance at the park, we determined a triggering event occurred during the second quarter of 2017 that required an interim goodwill impairment test for our SeaWorld Orlando reporting unit, which has goodwill recorded of $269.3 million. Based on the results of the interim goodwill impairment test as of June 30, 2017, we determined that the SeaWorld Orlando reporting unit goodwill was fully impaired. A key assumption utilized in the goodwill analysis was a weighted average cost of capital of 9%.

Our other indefinite-lived intangible assets consist of certain trade names/trademarks and other intangible assets which, after considering legal, regulatory, contractual, and other competitive and economic factors, are determined to have indefinite lives and are valued annually using the relief from royalty method. Significant estimates required in this valuation method include estimated future revenues impacted by the trade names/trademarks, royalty rate by park, and appropriate discount rates. Projections are based on management’s best estimates given recent financial performance, market trends, strategic plans, brand awareness, operating characteristics by park, and other available information which in recent years have been materially accurate. Changes in these estimates and assumptions could materially affect the fair value determination used in the assessment of impairment.

~~As of June 30, 2017, based on recent financial performance, an interim impairment assessment of certain trade names/trademarks~~, related to the ~~SeaWorld brand was performed. Based on these assessments, there was no impairment as the estimated fair value~~adoption of trade names/trademarks were in excess of their carrying values. As of June 30, 2017, we calculated that the estimated fair value of the trade names/trademarks exceeded their carrying values by 12% to 19%. Key assumptions utilized in the analysis were a discount rate of 11.0% and an estimated royalty rate of 3%.

All long-lived assets, including property and equipment and finite-lived intangible assets, are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. Assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available.

~~The impairment indicators considered important that may trigger an impairment review, if significant, include the following:~~

~~An impairment loss may be recognized when estimated undiscounted future cash flows expected to result~~Accounting Standards Codification, Topic 606, Revenue from the use of the asset, including disposition, are less than the carrying value of the asset. The measurement of the impairment loss to be recognized is based upon the difference between the fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis. In order to determine if an asset has been impaired, the determination of both undiscounted and discounted future cash flows requires management to make significant estimates and consider an anticipated course of action as of the balance sheet date. Subsequent changes in estimated undiscounted and discounted future cash flows arising from changes in anticipated actions could impact the determination of whether impairment exists. During the three months ended June 30, 2017, we considered the goodwill impairment of our SeaWorld Orlando reporting unit as an indicator of impairment related to the long-lived assets associatedContracts with this park. Accordingly, these assets were evaluated for impairment prior to completing the goodwill valuation and we concluded that no impairment of other long-lived assets had occurred for our SeaWorld Orlando park as of June 30, 2017.

During the three months ended September 30, 2017, we amended an existing agreement relating to the use of certain animals. As a result of this amendment, which reduced the expected future cash flows related to the agreement, we recognized an impairment loss of approximately $7.8 million.Customers.

We had no off-balance sheet arrangements as of ~~September~~June 30, ~~2017.~~2018.

Refer to Note 2–Recent Accounting Pronouncements in our notes to the unaudited condensed consolidated financial statements for further details.

The impact of inflation has affected, and will continue to affect, our operations significantly. Our costs of food, merchandise and other revenues are influenced by inflation and fluctuations in global commodity prices. In addition, costs for construction, repairs and maintenance are all subject to inflationary pressures.

We are exposed to market risks from fluctuations in interest rates, and to a lesser extent on currency exchange rates, from time to time, on imported rides and equipment. The objective of our financial risk management is to reduce the potential negative impact of interest rate and foreign currency exchange rate fluctuations to acceptable levels. We do not acquire market risk sensitive instruments for trading purposes.

We manage interest rate risk ~~using~~through the use of a combination of fixed-rate long-term debt and interest rate swaps that fix a portion of our variable-rate long-term debt.

After considering the impact of interest rate swap agreements, at ~~September~~June 30, ~~2017,~~2018, approximately $1.0 billion of our outstanding long-term debt represents fixed-rate debt and approximately ~~$550.9~~$533.2 million represents variable-rate debt. Assuming an average balance on our revolving credit borrowings of approximately $40.0 million, a hypothetical 100 bps increase in ~~3 month~~ LIBOR on our variable-rate debt would lead to an increase of approximately ~~$5.9~~$5.7 million in annual cash interest costs due to the impact of our fixed-rate swap agreements.

Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Our principal executive officer and principal financial officer have concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management as of the end of the fiscal quarter covered by this Quarterly Report, that our disclosure controls and procedures were effective to accomplish their objectives at a reasonable assurance level.

Regulations under the Exchange Act require public companies, including our Company, to evaluate any change in our “internal control over financial reporting” as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. There have been no changes in our internal control over financial reporting during the fiscal quarter covered by this Quarterly Report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

See Note 10–Commitments and Contingencies in our notes to the unaudited condensed consolidated financial statements for further details concerning our legal proceedings.

There have been no material changes to the risk factors set forth in Item 1A. to Part I of our Annual Report on Form 10-K, as filed on ~~March 1, 2017,~~February 28, 2018, except as set forth in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2017,~~2018, as filed on May 9, ~~2017, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, as filed on August 9, 2017~~2018, and as noted below and except to the extent factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors.

~~Risks Related to Our Business and Our Industry~~Financial distress experienced by our strategic partners or other counterparties could have an adverse impact on us.

We ~~could be adversely impacted by actions~~are party to numerous contracts of ~~activist stockholders, and such activism could impact the value~~varying durations. Certain of our ~~securities.~~agreements are comprised of a mixture of firm and non-firm commitments, varying tenures and varying renewal terms, among other terms. There can be no guarantee that, upon the expiration of our contracts, we will be able to renew such contracts on terms as favorable to us, or at all.

~~We have recently seen certain investors increase their ownership positions in~~Although we attempt to assess the creditworthiness of our ~~common stock~~strategic partners and ~~the frequency and scope of their communications with us regarding our business, and~~other contract counterparties, there can be no assurance that ~~these stockholders’ interests align with~~ our ~~business~~assessments will be accurate or ~~the interests of our other stockholders. For example, Hill Path Capital LP and affiliated entities filed with the SEC an Amendment No. 4 to its Schedule 13D reporting~~ that ~~such persons had accumulated~~there will not be a total of 13,163,464 shares of the Company’s common stock, which represents approximately 14.5% of the Company’s total outstanding shares of common stock. In the Schedule 13D, Hill Path Capital LP stated, among other things, that they may suggest changesrapid or unanticipated deterioration in the ~~Company’s business, operations, capital structure, capital allocation, corporate governance~~creditworthiness of any such strategic partner or contract counterparty. Financial distress experienced by our strategic partners or other counterparties could have an adverse impact in the event such parties are unable to pay us for the services we provide or otherwise fulfill their contractual obligations.

We are exposed to the risk of loss in the event of non-performance by such strategic partners or other counterparties. Some of these counterparties may be highly leveraged and ~~other strategic matters. While we continually~~subject to their own operating, market and ~~actively engage with stockholders, including Hill Path Capital LP,~~regulatory risks, and consider their views on business and strategy, stockholder activism consumes a significant amount of management’s attention and other company resources and diverts the attention of management and our employees from our business. We recently added to our board of directors a member affiliated with one of our major stockholders, Hill Path Capital LP. In addition, we have entered into a cooperation agreement with Hill Path Capital LP with a view to working collaboratively to build long-term stockholder value. However,some are experiencing, or may experience in the future, severe financial problems that have had or may have a significant impact on their creditworthiness. For example, in April 2018, it was reported that an affiliate of ZHG Group was experiencing financial distress. The inability of affiliates of ZHG Group to pay amounts due to us or otherwise fulfill their obligations to us under their agreements with us, including the ECDA and/or the CDSA, could have an adverse impact on us. In addition, the sale or transfer of our common stock owned by affiliates of ZHG Group, or the perception that such sales or transfers could occur, could harm the prevailing market price of shares of our common stock.

We cannot provide any assurance that our strategic partners and other contractual counterparties will not become financially distressed or that such financially distressed strategic partners or counterparties will not default on their obligations to us or file for bankruptcy or other creditor protection. If one of such strategic partners or counterparties files for bankruptcy or other creditor protection, we may ~~have disagreements~~be unable to collect all, or even a significant portion, of amounts owed to us. Contracts with ~~activist stockholders~~such strategic partners or counterparties could also be subject to renegotiation or rejection under applicable provisions of bankruptcy laws. If any such contract is rejected, we would be left with a general unsecured claim against such contract counterparty’s bankruptcy estate. The recovery rate on general unsecured claims is speculative and ~~the actions~~inherently uncertain, and it is possible that we may receive little to no recovery on account of ~~activist stockholders, including potential proxy contests,~~such claim. Accordingly, significant strategic partner and other counterparty defaults and bankruptcy filings could ~~be costly and time consuming, and~~ have a ~~potential~~material adverse effect on our business, financial position, results of operations or cash flows.

Any material nonpayment or nonperformance from our contract counterparties due to ~~disrupt~~inability or unwillingness to perform or adhere to contractual arrangements could have a material adverse impact on our ~~operations. Such activities~~business, results of operations, financial condition and ability to make cash distributions to its shareholders. Furthermore, in the case of financially distressed strategic partners, such events might otherwise force such strategic partners to curtail their commercial relationships with us, which could ~~also interfere with~~have a material adverse effect on our results of operations, financial condition, and cash flows.

Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved in the normal course of our business could reduce our profits or limit our ability to ~~execute~~operate our ~~strategic plan~~business.

We are subject to allegations, claims and ~~our long term growth. The perceived uncertainties as to our future direction caused by activist~~legal actions ~~could affect~~arising in the ~~market price~~ordinary course of our business, which may include claims by third parties, including guests who visit our theme parks, our employees or regulators. We are currently subject to securities ~~result in the loss of potential business opportunities~~litigation. The Company is also subject to audits, inspections and ~~make it more difficult to attract~~investigations by, or receives requests for information from, various federal and ~~retain qualified personnel, board members and business partners. In addition, any interference with our annual meeting process,~~state regulatory agencies, including, but not limited to, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS), the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA), the California Occupational Safety and Health Administration (Cal-OSHA), state departments of labor, the Florida Fish & Wildlife Commission (FWC), the Equal Employment Opportunity Commission (EEOC), the Internal Revenue Service (IRS), the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). From time to time, various parties may also bring lawsuits against the Company.

For example, in June 2017, the Company received a ~~proxy contest for~~subpoena in connection with an investigation by the ~~election~~DOJ concerning certain disclosures and public statements made by the Company and certain individuals on or before August 2014 and trading in the Company’s securities. The Company also has received subpoenas from the staff of ~~directors at~~the SEC in connection with these matters. In addition, in April 2018, the Company received a written “Wells” notice from the SEC indicating that staff (the “Staff”) of the SEC has made a preliminary determination to recommend to the SEC that a civil enforcement action or administrative proceeding be brought against the Company. The Company continues to cooperate with the SEC and responded through a Wells submission (the “Submission”) to the SEC setting forth the reasons why the Company believes no action should be commenced against it. Following the Submission, the Company engaged in discussions with the Staff regarding a possible negotiated resolution of these matters and reached an agreement in principle with the Staff to settle, without admitting or denying, all potential charges against the Company arising out of the SEC’s investigation. In the second quarter of 2018, the Company recorded an estimated liability of $4.0 million related to this matter. The proposed settlement is subject to approval by the SEC and there is no assurance that the settlement will be finalized and/or approved by the SEC or that any final settlement will not have different or additional terms.

We discuss the Wells notice, securities litigation and other litigation to which we are subject in greater detail in Note 10–Commitments and Contingencies to our ~~annual meeting,~~unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

The outcome of many of these proceedings cannot be predicted. If any proceedings, audits, inspections or investigations were to be determined adversely against us or resulted in legal actions, claims, regulatory proceedings, enforcement actions, or judgments, fines, or settlements involving a payment of material sums of money, or if injunctive relief were issued against us, our business, financial condition and results of operations could ~~require~~be materially adversely affected. Even the successful defense of legal proceedings may cause us to incur ~~significant~~substantial legal costs and may divert management’s attention and resources.

We may be unable to purchase or contract with third-party manufacturers for our theme park rides and attractions, or construction delays may occur and impact attraction openings.

We may be unable to purchase or contract with third parties to build high quality rides and attractions and to continue to service and maintain those rides and attractions at competitive or beneficial prices, or to provide the replacement parts needed to maintain the operation of such rides. In addition, if our third-party suppliers’ financial condition deteriorates or they go out of business, we may not be able to obtain the full benefit of manufacturer warranties or indemnities typically contained in our contracts or may need to incur greater costs for the maintenance, repair, replacement or insurance of these assets.

We may also incur unanticipated construction delays in completing capital projects which could adversely affect ride or attraction opening dates which could impact our attendance or revenues. Further, when rides and/or attractions have downtime and/or closures, our attendance or revenue could be adversely affected.

We are subject to scrutiny by activist and other ~~advisory fees~~third-party groups and ~~proxy solicitation expenses~~media who can pressure governmental agencies, vendors, partners, and/or regulators, bring action in the courts or create negative publicity about us.

From time to time, animal activist and other third-party groups may make claims before government agencies, bring lawsuits against us, and/or attempt to generate negative publicity associated with our business. Such activities sometimes are based on allegations that we do not properly care for some of our animals. On other occasions, such activities are specifically designed to change existing law or enact new law in order to impede our ability to retain, exhibit, acquire or breed animals. While we seek to structure our operations to comply with all applicable federal and state laws and vigorously defend ourselves when sued, there are no assurances as to the outcome of future claims and lawsuits that could be brought against us. Even if not successful, these lawsuits can require deployment of company resources.

Negative publicity created by activists or the media could adversely affect our reputation and results of operations. At times, activists and other third-party groups have also attempted to generate negative publicity related to our relationships with our business partners, such as corporate sponsors, promotional partners, vendors, ticket resellers and others. These activities have led some ticket resellers to stop selling SeaWorld-branded tickets. In addition, we have experienced increased media attention since 2014 extending to our relationships with some of our business partners, including recent attempts in the first quarter of 2018 by animal activists to generate negative publicity related to our relationships with ticket resellers in the United Kingdom, which resulted in a ticket reseller advising us that it has decided to cease selling SeaWorld-branded tickets beginning in July 2019. Although sales from any particular ticket reseller may not constitute a significant ~~time and attention by management and~~portion of our ~~board~~ticket sales, we will attempt to find alternative distribution channels. However, there can be no assurance that we will be successful or that those channels will be as successful or not have additional costs. If we are unable to find cost effective alternative distribution channels, the loss of ~~directors.~~multiple ticket resellers could have a negative impact on our results of operations.

Our business strategy may include selective expansion, both domestically and internationally, through acquisitions of assets or other strategic initiatives, such as joint ventures, that allow us to profitably expand our business and leverage our brands. For example, on December 13, 2016, we announced our partnership with Miral Asset Management LLC ~~(the “Miral Partnership”)~~ to develop SeaWorld Abu Dhabi, a ~~first-of-its-kind~~first-of-its- kind marine life themed park on Yas Island. In addition, on March 24, 2017, we entered into a Park Exclusivity and Concept Design Agreement (“ECDA”) and a Center Concept & Preliminary Design Support Agreement (“CDSA”) with an affiliate of ZHG Group to provide design, support and advisory services for various potential projects and granting exclusive rights in China, Taiwan,

Hong Kong and Macau. There is no assurance that the Miral ~~Partnership~~partnership or any other expansion effort for our business, including without limitation the ECDA and the CDSA, will be successful. Any international transactions and partnerships are subject to additional risks, including foreign and U.S. regulations on the import and export of animals, the impact of economic fluctuations in economies outside of the United States, difficulties and costs of staffing and managing foreign operations due to distance, language and cultural differences, as well as political instability and lesser degree of legal protection in certain jurisdictions, currency exchange fluctuations and potentially adverse tax consequences of overseas operations. In addition, the success of any acquisitions depends on effective integration of acquired businesses and assets into our operations, which is subject to risks and uncertainties, including realization of anticipated synergies and cost savings, the ability to retain and attract personnel, the diversion of management’s attention from other business concerns, and undisclosed or potential legal liabilities of acquired businesses or assets.

The Company has a strategic plan to grow revenue and Adjusted EBITDA and, from time to time, identifies and executes on cost reduction opportunities. There can be no assurances that we communicated our roadmap to stabilize our business to drive sustainable growth. This plan encompasses five key points which include (i) providing experiences that matter; (ii) delivering distinct guest experiences that are fun and meaningful; (iii) pursuing organic and strategic revenue growth; (iv) addressing the challenges we face; and (v) financial discipline. As part of our five-point plan, on December 6, 2016, we committed to and implemented a restructuring program to reduce costs, increase efficiencies, reduce duplication of functions and improve the Company’s operations (the “2016 Restructuring Program”). The 2016 Restructuring Program was part of our previously announced comprehensive cost optimization program that was expected to reduce costs by approximately $65.0 million, with a targeted $40.0 million in net savings by the end of 2018. The 2016 Restructuring Program involved the elimination of approximately 320 positions by the end of the fourth quarter of fiscal year 2016 across our twelve theme parks and our headquarters. As a result of declining revenue in first half of 2017, to address the challenges identified in the second quarter, we are adjusting our approach, particularly in our San Diego and Orlando markets. These adjustments include increasing our planned investment in national advertising, developing a new national marketing campaign emphasizing our distinct experiences and reinvesting in our reputation campaign to target public perceptions nationally, but particularly in our California markets. While our cost optimization efforts for the first half of the year have been meaningful and we are on schedule to achieve our targeted $40.0 million in net cost savings by the end of 2018, during the quarter ended September 30, 2017, we identified an additional $25.0 million in potential cost savings opportunities. As part of this additional cost savings effort, we executed a new restructuring program in October 2017 that involved the elimination of approximately 350 positions by the end of the fourth quarter of 2017 across certain of our theme parks and corporate headquarters. Any of these strategies to drive sustainable growth in our business may be unsuccessful and we may notwill be able to achieve the ~~targeted~~ cost savings, or grow our ~~business.~~

~~Our existing debt agreements contain, and future debt agreements may contain, restrictions that may limit our flexibility in operating our business.~~

Our existing debt agreements contain, and documents governing our future indebtedness may contain, numerous financial and operating covenants that limit the discretion of management with respect to certain business matters. These covenants place restrictions on, among other things, our ability to incur additional indebtedness, pay dividends and other distributions, make capital expenditures, make certain loans, investments and other restricted payments, enter into agreements restricting our subsidiaries’ ability to pay dividends, engage in certain transactions with stockholders or affiliates, sell certain assets or engage in mergers, acquisitions and other business combinations, amend or otherwise alter the terms of our indebtedness, alter the business that we conduct, guarantee indebtedness or incur other contingent obligations and create liens. Our existing debt agreements also require, and documents governing our future indebtedness may require, us to meet certain financial ratios and tests. Our ability to comply with these and other provisions of the existing debt agreements is dependent on our future performance, which will be subject to many factors, some of which are beyond our control. The breach of any of these covenants or non-compliance with any of these financial ratios and tests could result in an event of default under the existing debt agreements, which, if not cured or waived, could result in acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross-acceleration or cross-default provisions. We discuss certain key covenants and financial ratios to which we are subject under our debt agreements in greater detailrealize operational efficiencies. See further discussion under the caption “~~Restrictive Covenants”~~ ~~in Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and under “Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations―Principal Factors Affecting Our ~~Indebtedness―Covenant Compliance”. Although we currently are in compliance with our debt agreements, if our operating~~Results of Operations―Costs and financial performance deteriorates, there would be an increased risk regarding future compliance with our debt covenants. Additionally, variable rate indebtedness subjects us to the risk of higher interest rates, which could cause our future debt service obligations to increase significantly.

~~Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets.~~

~~Moody’s and Standard & Poor’s routinely evaluate our debt and have given us ratings on our Senior Secured Credit Facilities. These ratings are based on a number of factors, which~~Expenses” included their assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow and earnings. Due to changes in these factors and market conditions, we may not be able to maintain our current credit ratings, which could adversely affect our cost of funds and related margins, liquidity and access to capital markets.

For example, as of January 1, 2017, our Senior Secured Credit Facilities were rated by Standard and Poor’s Financial Services (corporate credit rated B+ with a negative outlook and the Senior Secured Credit Facilities rated BB-) and Moody’s Investors Service (corporate family rated B1 with a stable outlook and the Senior Secured Credit Facilities rated B1). In August 2017, these credit rating agencies lowered their ratings and, since that adjustment, we have been rated by Standard and Poor’s Financial Services (corporate credit rated B with a negative outlook and the Senior Secured Credit Facilities rated B) and Moody’s Investors Service (corporate family rated B2 with a negative outlook and the Senior Secured Credit Facilities rated B2). We disclose these ratings to enhance the understanding of our sources of liquidity and the effects of these ratings on our costs of funds and related margins, liquidity and access to capital markets. Our borrowing costs depend, in part, on our credit ratings and any further actions taken by these credit rating agencies to lower our credit ratings, as described above, will likely increase our borrowing costs.

~~Various factors beyond our control could adversely affect attendance and guest spending patterns at our theme parks.~~

Various factors beyond our control could adversely affect attendance and guest spending patterns at our theme parks. These factors could also affect our suppliers, vendors, insurance carriers and other contractual counterparties. Such factors include:

Any one or more of these factors could adversely affect attendance and total per capita spending at our theme parks, which could materially adversely affect our business, financial condition and results of operations. For example, throughout 2017 we have experienced a decline in international attendance from multiple markets, with a plurality of that decline coming from the United Kingdom. We believe these declines are due partly to the strengthening of the U.S. dollar against a variety of foreign currencies; in addition, we believe competitive pressures may also be impacting international attendance in our Orlando market. The June 2016 announcement of the Referendum of the United Kingdom's Membership of the European Union (referred to as Brexit) introduced additional volatility and uncertainty in global stock markets and currency exchange rates which has also had an impact on our international attendance from the United Kingdom. Historically, attendance from the United Kingdom represents approximately 5% of our total annual attendance. Latin America attendance is also down from historical levels. Economic factors, particularly in Brazil, indicate that the Latin America market may not rebound in the near future. Fluctuations in foreign currency exchange rates impact our business due to the effect a strong dollar has on international tourist spending. In addition, demand for our parks is highly dependent on the general environment for travel and tourism, which can be significantly adversely affected by extreme weather events. Any of such events could have a material adverse effect on our business, financial condition, or results of operations. For example, attendance at our parks in the third quarter of 2017 was negatively impacted by Hurricane Irma in September 2017, which caused park closures in Tampa and Orlando, and, to a lesser extent, Hurricane Harvey in August 2017.

~~Incidents or adverse publicity concerning our theme parks or the theme park industry generally could harm our brands or reputation as well as negatively impact our revenues and profitability.~~

Our brands and our reputation are among our most important assets. Our ability to attract and retain guests depends, in part, upon the external perceptions of the Company, the quality of our theme parks and services and our corporate and management integrity. The operation of theme parks involves the risk of accidents, illnesses, environmental incidents and other incidents which may negatively affect the perception of guest and employee safety, health, security and guest satisfaction and which could negatively impact our brands or reputation and our business and results of operations. An accident or an injury at any of our theme parks or at theme parks operated by competitors, particularly an accident or an injury involving the safety of guests and employees, that receives media attention, is the topic of a book, film, documentary or is otherwise the subject of public discussions, may harm our brands or reputation, cause a loss of consumer confidence in the Company, reduce attendance at our theme parks and negatively impact our results of operations. Such incidents have occurred in the past and may occur in the future. In addition, other types of adverse publicity concerning our business or the theme park industry generally could harm our brands, reputation and results of operations. The considerable expansion in the use of social media over recent years has compounded the impact of negative publicity. Public perception issues are a barrier to visitation for our SeaWorld-branded parks which have also been the target of negative media attention concerning the orcas in our care, particularly in the state of California.

A significant portion of our revenues are generated in the States of Florida, California and Virginia and in the Orlando market. Any risks affecting such markets, such as natural disasters and travel-related disruptions or incidents, may materially adversely affect our business, financial condition and results of operations.

Approximately 57%, 18% and 13% of our revenues in 2016 were generated in the States of Florida, California and Virginia, respectively. In addition, our revenues and results of operations depend significantly on the results of our Orlando theme parks. The Orlando theme park market is extremely competitive, with a high concentration of theme parks operated by several companies.

~~Any risks described~~elsewhere in this Quarterly Report on Form 10-Q, such as the occurrence of natural disasters and travel-related disruptions or incidents, affecting the States of Florida, California and Virginia generally or our Orlando theme parks in particular may materially adversely affect our business, financial condition or results of operations, especially if they have the effect of decreasing attendance at our theme parks or, in extreme cases, cause us to close any of our theme parks for any period of time. For example, in 2016, Florida was impacted by Tropical Storm Colin and both Florida and Virginia were impacted by Hurricanes Hermine and Matthew, which caused physical damage and power outages in various parts of Florida and Virginia. Although we attempted to manage our exposure to such events by implementing our hurricane preparedness plan, our theme parks located in Orlando and Tampa, Florida and in Williamsburg, Virginia experienced closures as a result of these storms. In addition, attendance at our parks in the third quarter of 2017 was negatively impacted by Hurricane Irma in September 2017, which caused park closures in Tampa and Orlando, and, to a lesser extent, Hurricane Harvey in August 2017, which caused park closures and travel disruptions in Texas as well as weather impacts in Virginia.10-Q.

Our stock price may change significantly, and you may not be able to sell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.

The trading price of our common stock has been, and is likely to continue to be, volatile. Since our IPO in April 2013 through September 30, 2017, our common stock price has ranged from $12.10 to $38.92. In addition to the risk factors discussed in this Quarterly Report on Form 10-Q, the trading price of our common stock may be adversely affected due to a number of factors, many of which are beyond or control, including:

~~Issuer Purchases~~The Company had no unregistered sales of ~~Equity Securities~~

equity securities during the second quarter of 2018. The following table sets forth information with respect to shares of our common stock purchased by the Company during the periods indicated:

Period Beginning

Period Ended

Total Number
of Shares
Purchased⁽¹⁾

Average
Price Paid
per Share

Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs

Maximum Number
(or Approximate
Dollar Value) of
Shares that May
Yet Be Purchased
Under the Plans
or Programs⁽²⁾

July 1, 2017

July 31, 2017

1,812

$
16.27

—

$
190,000,035

August 1, 2017

August 31, 2017

59

$
16.27

—

190,000,035

September 1, 2017

September 30, 2017

9,178

$
12.22

—

190,000,035

11,049

—

$
190,000,035

Period Beginning	Period Ended	Total Number of Shares Purchased⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs⁽²⁾
April 1, 2018	April 30, 2018		—		—		—	$	190,000,035
May 1, 2018	May 31, 2018		—		—		—		190,000,035
June 1, 2018	June 30, 2018		28,592	$	22.22		—		190,000,035
			28,592				—	$	190,000,035

On September 12, 2017, the Company’s Board of Directors (the “Board”) elected Yoshikazu Maruyama to serve as its Chairperson and Donald C. Robinson to serve as its independent Lead Director, in each case effective October 9, 2017. In addition, effective September 12, 2017: the Nominating and Corporate Governance Committee of the Board is comprised of William Gray, Donald C. Robinson and Ronald Bension, with Donald C. Robinson serving as the chair; the Compensation Committee of the Board is comprised of William Gray, Thomas E. Moloney, and Deborah M. Thomas, with Thomas E. Moloney serving as the chair; and the Audit Committee of the Board is comprised of Ronald Bension, Thomas E. Moloney and Deborah M. Thomas, with Deborah M. Thomas serving as the chair. Additionally, on September 7, 2017, each of David F. D’Alessandro, Judith A. McHale and Ellen O. Tauscher notified the Board of their respective decisions to resign from their positions as members of the Board, effective as of October 9, 2017. Their resignations are not in connection with any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

On November 5, 2017, the Company and Hill Path Capital LP (“Hill Path”) entered into a Cooperation Agreement (the “Cooperation Agreement”) and certain related agreements described below. Pursuant to the Cooperation Agreement, on November 5, 2017, the Board appointed Scott I. Ross (the “Designee”) to the Board and the recently created Revenue Committee, increasing the total Board to 9 members. The Revenue Committee is a new board committee for the development, articulation and execution of the Company’s short-term and long-term revenue-growth strategies. In accordance with the Company’s Outside Director Compensation Policy, the Designee’s compensation for his services as a non-employee director will be consistent with that of the Company’s other non-employee directors, subject to pro-ration to reflect the commencement date of his service on the Board.

On November 5, 2017 the Company also entered into an Undertaking Agreement (the “Undertaking Agreement”) which permits the Designee to provide information to certain personnel of Hill Path and certain of Hill Path’s advisors as described therein. The undertakings of Hill Path and the Designee pursuant to the Undertaking Agreement are effective for 12 months following the date on which there is no director serving on the Board who is designated by Hill Path. The Company also entered into a side letter with Hill Path that provides if it obtains any requisite Board approval or the consent of SunWise (UK) Co. LTD (“ZHG”), the Company will execute and deliver to Hill Path a form of registration rights agreement (the “Registration Rights Agreement”). The Registration Rights Agreement will provide that following the date that is one day after the expiration of the Company’s advance notice period for the nomination of directors at the 2018 Annual Meeting and provided that Hill Path has not submitted any nominations for the election of directors in accordance with the Company’s advance notice period as set forth in the Company’s Second Amended and Restated Bylaws, the Hill Path entities will have limited shelf registration rights with respect to their common stock (including certain demand underwritten offering rights and piggyback registration rights). The Registration Rights Agreement also will require the Company to pay certain expenses relating to such registration and indemnify the Hill Path entities against certain liabilities under the Securities Act of 1933, as amended.

On August 6, 2017, the Board appointed Marc G. Swanson to serve as the Company’s Chief Financial Officer and Treasurer and Elizabeth C. Gulacsy to serve as the Company’s Chief Accounting Officer, in each case effective August 7, 2017. Mr. Swanson succeeded Peter J. Crage.

On October 11, 2017, the Board amended and restated the Company’s Corporate Governance Guidelines (the “Guidelines”), effective immediately. A copy of the Guidelines is available in the investor relations section of our website at ~~www.seaworldinvestors.com.~~

Our policy governing transactions in our securities by our directors, officers and employees permits such persons to adopt stock trading plans pursuant to Rule 10b5-1 promulgated by the SEC under the Exchange Act. Our directors, officers and employees have in the past and may from time to time establish such stock trading plans. We do not undertake any obligation to disclose, or to update or revise any disclosure regarding, any such plans and specifically do not undertake to disclose the adoption, amendment, termination or expiration of any such plans.

The following is a list of all exhibits filed or furnished as part of this report:

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Large accelerated filer	☒		Accelerated filer	☐

Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐

			Emerging growth company	☐

		Page No.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		1

PART I.	FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements

	Unaudited Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	4

	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3226

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4937

Item 4.	Controls and Procedures	5038

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	5139

Item 1A.	Risk Factors	5139

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5541

Item 3.	Defaults Upon Senior Securities	5541

Item 4.	Mine Safety Disclosures	5541

Item 5.	Other Information	5642

Item 6.	Exhibits	5742

	Signatures	43

	2018			2017
	(In thousands)
Deferred revenue, including long-term portion as of January 1,	$	90,437		$	89,400
Additions		487,511			440,220
Revenue recognized during the period		(407,440	)		(370,222	)
Other adjustments		(2,047	)		(3,085	)
Deferred revenue, including long-term portion as of June 30,		168,461			156,313
Less: Deferred revenue, long-term portion, included in other liabilities		10,475			10,559
Deferred revenue, short-term portion as of June 30,	$	157,986		$	145,754

	September 30,		December 31,
	2017		2016
Accrued property taxes	$	11,229	$	2,193
Accrued interest		558		13,631
Self-insurance reserve		7,184		7,191
Other		4,519		395
Total other accrued expenses	$	23,490	$	23,410

	June 30,		December 31,
	2018		2017
	(In thousands)
Accrued property taxes	$	6,948	$	1,280
Accrued interest		579		6,078
Self-insurance reserve		7,123		7,084
Other		18,051		5,170
Total other accrued expenses	$	32,701	$	19,612

	SeaWorld Orlando			Discovery Cove		Total
Gross carrying amount at December 31, 2016	$	269,332		$	66,278	$	335,610
Accumulated impairment loss at December 31, 2016		—			—		—
Net carrying amount at December 31, 2016		269,332			66,278		335,610
Goodwill impairment charge		(269,332	)		—		(269,332	)
Net carrying amount at September 30, 2017	$	—		$	66,278	$	66,278

	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Derivatives in Cash Flow Hedging Relationships:
Gain (loss) related to effective portion of derivatives recognized in accumulated other comprehensive loss	$	6,298		$	1,612	$	16,066		$	(25,276	)
(Loss) gain related to effective portion of derivatives reclassified from accumulated other comprehensive loss to interest expense	$	(2,957	)	$	880	$	(9,897	)	$	2,546
Loss related to ineffective portion of derivatives recognized in other (income) expense, net	$	—		$	—	$	—		$	(1	)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Derivatives in Cash Flow Hedging Relationships:	(In thousands)
Gain related to effective portion of derivatives recognized in accumulated other comprehensive income (loss)	$	3,777		$	2,130		$	15,893		$	9,768
(Loss) related to effective portion of derivatives reclassified from accumulated other comprehensive income (loss) to interest expense	$	(383	)	$	(3,305	)	$	(2,234	)	$	(6,941	)

Accumulated other comprehensive loss:	(Losses) Gains on Cash Flow Hedges
Accumulated other comprehensive loss at December 31, 2016	$	(13,694	)
Other comprehensive income before reclassifications		9,646
Amounts reclassified from accumulated other comprehensive loss to interest expense		(5,942	)
Unrealized gain on derivatives, net of tax		3,704
Accumulated other comprehensive loss at September 30, 2017	$	(9,990	)

	Gains (Losses) on Cash Flow Hedges
Accumulated other comprehensive income (loss):	(In thousands)
Accumulated other comprehensive loss at December 31, 2017	$	(5,076	)
Effects of adoption of ASU 2018-02	$	(1,094	)
Other comprehensive income before reclassifications		11,597
Amounts reclassified from accumulated other comprehensive income to interest expense		(1,630	)
Unrealized gain on derivatives, net of tax		9,967
Accumulated other comprehensive income at June 30, 2018	$	3,797

						Performance-Vesting Restricted shares
	Time-Vesting Restricted shares					Bonus Performance Restricted shares					Long-Term Incentive Performance Restricted shares					2.75x Performance Restricted shares
	Shares			Weighted Average Grant Date Fair Value per Share		Shares			Weighted Average Grant Date Fair Value per Share		Shares			Weighted Average Grant Date Fair Value per Share		Shares			Weighted Average Grant Date Fair Value per Share
Outstanding at December 31, 2016		1,323,025		$	17.47		451,289		$	17.88		212,369		$	18.43		1,310,726		$	8.19
Granted		1,185,276		$	17.25		912,986		$	18.16		791,108		$	18.57		—			—
Vested		(327,489	)	$	18.06		—			—		—			—		(455,148	)	$	13.24
Forfeited		(216,588	)	$	17.88		(506,811	)	$	17.92		(110,052	)	$	18.74		(227,285	)	$	13.06
Outstanding at September 30, 2017		1,964,224		$	17.19		857,464		$	18.15		893,425		$	18.51		628,293		$	3.75

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2016		3,441,900		$	18.67
Forfeited		(353,449	)	$	17.98
Expired		(43,592	)	$	18.81
Exercised		(590	)	$	18.67
Outstanding at September 30, 2017		3,044,269		$	18.75		7.90	$	—
Exercisable at September 30, 2017		1,262,329		$	18.95		7.78	$	—

Record Date	Payment Date	Cash Dividend per Common Share
January 15, 2016	January 22, 2016	$	0.21
March 14, 2016 ^(a)	April 1, 2016	$	0.21
June 20, 2016 ^(a)	July 1, 2016	$	0.21
September 29, 2016	October 7, 2016	$	0.10

	•	~~rumors and market speculation involving us or other companies in our industry, particularly with respect to strategic transactions;~~
	•	~~announcements relating to litigation;~~

Exhibit No.		Description

10.1†*		~~Form of Restricted Stock Award Agreement (Outside Director Initial/Annual Award) – 2017 Omnibus Incentive Plan~~
~~10.2~~†*		~~Form of Restricted Stock Grant Notice and Restricted Stock Agreement (Special Retention Grant ―Time-Based Shares) – 2017 Omnibus Incentive Plan~~
~~10.3~~†*		~~Form of Restricted Stock Grant Notice and Restricted Stock Agreement (Employees―Annual Incentive Plan Award) – 2017 Omnibus Incentive Plan~~
~~10.4~~†*		~~Fifth~~Sixth Amended and Restated Outside Director Compensation Policy, effective ~~October~~April 11, ~~2017~~
~~10.5~~†*		~~Incentive Compensation Clawback Policy, effective October 11, 2017~~2018 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on May 9, 2018 (File No. 001-35883))
31.1*		Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		XBRL Instance Document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.


†		Identifies exhibits that consist of a management contract or compensatory plan or arrangement.
*		Filed herewith.

		SEAWORLD ENTERTAINMENT, INC.
		(Registrant)

Date: ~~November 8, 2017~~August 7, 2018		By: /s/ Marc G. Swanson
		Marc G. Swanson
		Chief Financial Officer
		(Principal Financial Officer)

Date: ~~November 8, 2017~~August 7, 2018		By: /s/ Elizabeth C. Gulacsy
		Elizabeth C. Gulacsy
		Chief Accounting Officer
		(Principal Accounting Officer)