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 ~~87,831,235~~84,198,886 shares of Common Stock, par value $0.01 per share as of ~~August 2, 2018.~~May 3, 2019.

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.federal securities laws. 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”~~“targeted,” “goal” 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, ~~2017~~2018 (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. 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 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 our license agreement with Sesame 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.

	June 30,			December 31,			March 31,			December 31,
	2018			2017			2019			2018
Assets
Current assets:
Cash and cash equivalents	$	33,452		$	33,178		$	51,860		$	34,073
Accounts receivable, net		72,558			38,400			58,692			57,980
Inventories		39,769			30,887			42,724			35,814
Prepaid expenses and other current assets		17,317			16,310			19,567			18,700
Total current assets		163,096			118,775			172,843			146,567
Property and equipment, at cost		3,042,910			2,952,074			3,116,688			3,057,038
Accumulated depreciation		(1,343,446	)		(1,276,833	)		(1,399,115	)		(1,365,006	)
Property and equipment, net		1,699,464			1,675,241			1,717,573			1,692,032
Goodwill, net		66,278			66,278			66,278			66,278
Trade names/trademarks, net		159,071			159,802			157,975			158,343
Other intangible assets, net		14,476			14,896			120			14,120
Right of use assets-operating								145,807			—
Deferred tax assets, net		40,955			32,820			30,177			23,527
Other assets		20,154			17,970
Other assets, net								15,421			14,735
Total assets	$	2,163,494		$	2,085,782		$	2,306,194		$	2,115,602
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	131,149		$	100,573		$	140,567		$	120,024
Current maturities of long-term debt		23,707			38,707			80,505			45,505
Operating lease obligations								4,118			—
Accrued salaries, wages and benefits		22,337			14,554			19,228			20,966
Deferred revenue		157,986			79,554			151,253			101,110
Dividends payable		124			470
Other accrued liabilities		32,701			19,612			29,065			23,066
Total current liabilities		368,004			253,470			424,736			310,671
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
Long-term debt, net of debt issuance costs of $6,206 and $6,641 as of March 31, 2019 and December 31, 2018, respectively								1,491,702			1,494,679
Long-term operating lease obligations								128,119			—
Deferred tax liabilities, net								—			10,711
Other liabilities		31,743			41,237			35,217			34,347
Total liabilities		1,893,813			1,798,316			2,079,774			1,850,408
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)
Stockholders’ Equity:
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
Preferred stock, $0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at March 31, 2019 and December 31, 2018								—			—
Common stock, $0.01 par value—authorized, 1,000,000,000 shares; 93,748,617 and 93,400,929 shares issued at March 31, 2019 and December 31, 2018, respectively								937			934
Additional paid-in capital		653,714			641,324			664,141			663,834
Accumulated other comprehensive income (loss)		3,797			(5,076	)
Accumulated other comprehensive income								220			2,284
Accumulated deficit		(233,890	)		(194,837	)		(185,975	)		(148,955	)
Treasury stock, at cost (6,519,773 shares at June 30, 2018 and December 31, 2017)		(154,871	)		(154,871	)
Treasury stock, at cost (10,174,589 shares at March 31, 2019 and December 31, 2018)								(252,903	)		(252,903	)
Total stockholders’ equity		269,681			287,466			226,420			265,194
Total liabilities and stockholders’ equity	$	2,163,494		$	2,085,782		$	2,306,194		$	2,115,602

See accompanying notes to unaudited condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2018

2017

2018

2017

Net revenues:

Admissions

$
225,806

$
224,951

$
355,809

$
340,040

Food, merchandise and other

166,115

148,799

253,278

220,067

Total revenues

391,921

373,750

609,087

560,107

Costs and expenses:

Cost of food, merchandise and other revenues

31,899

29,061

48,950

43,544

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

Restructuring and other separation costs

3,691

—

12,526

—

Depreciation and amortization

40,018

39,500

78,448

78,367

Total costs and expenses

336,711

596,314

620,024

859,406

Operating income (loss)

55,210

(222,564
)

(10,937
)

(299,299
)
Other (income) expense, net

(42
)

83

21

(3
)
Interest expense

20,561

19,452

40,474

37,713

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

—

123

—

8,143

Income (loss) before income taxes

34,691

(242,222
)

(51,432
)

(345,152
)
Provision for (benefit from) income taxes

11,994

(66,372
)

(11,285
)

(108,173
)
Net income (loss)

$
22,697

$
(175,850
)

$
(40,147
)

$
(236,979
)
Other comprehensive income (loss):

Unrealized gain (loss) on derivatives, net of tax

2,476

(706
)

9,967

1,698

Comprehensive income (loss)

$
25,173

$
(176,556
)

$
(30,180
)

$
(235,281
)
Income (loss) per share:

Net income (loss) per share, basic

$
0.26

$
(2.05
)

$
(0.47
)

$
(2.77
)
Net income (loss) per share, diluted

$
0.26

$
(2.05
)

$
(0.47
)

$
(2.77
)
Weighted average common shares outstanding:

Basic

86,399

85,745

86,305

85,560

Diluted

86,885

85,745

86,305

85,560

	For the Three Months Ended March 31,
	2019			2018
Net revenues:
Admissions	$	128,913		$	130,003
Food, merchandise and other		91,662			87,163
Total revenues		220,575			217,166
Costs and expenses:
Cost of food, merchandise and other revenues		17,213			17,051
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $1,357 and $1,563 for the three months ended March 31, 2019 and 2018, respectively)		149,885			155,473
Selling, general and administrative expenses (includes equity compensation of $1,841 and $5,982 for the three months ended March 31, 2019 and 2018, respectively)		42,764			63,524
Restructuring and other separation costs		2,566			8,835
Depreciation and amortization		39,450			38,430
Total costs and expenses		251,878			283,313
Operating loss		(31,303	)		(66,147	)
Other expense, net		27			63
Interest expense		20,797			19,913
Loss before income taxes		(52,127	)		(86,123	)
Benefit from income taxes		(15,107	)		(23,279	)
Net loss	$	(37,020	)	$	(62,844	)
Other comprehensive loss:
Unrealized (loss) income on derivatives, net of tax		(2,064	)		7,491
Comprehensive loss	$	(39,084	)	$	(55,353	)
Loss per share:
Net loss per share, basic	$	(0.44	)	$	(0.73	)
Net loss per share, diluted	$	(0.44	)	$	(0.73	)
Weighted average common shares outstanding:
Basic		83,354			86,209
Diluted		83,354			86,209

See accompanying notes to unaudited condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN 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			Shares of Common Stock Issued			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Treasury Stock, at Cost			Total Stockholders' Equity
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	)		—			—
Balance at December 31, 2018																							93,400,929		$	934		$	663,834		$	(148,955	)	$	2,284		$	(252,903	)	$	265,194
Equity-based compensation		—			—			13,437			—			—			—			13,437			—			—			3,198			—			—			—			3,198
Unrealized gain on derivatives, net of tax expense of $3,692		—			—			—			—			9,967			—			9,967
Unrealized loss on derivatives, net of tax benefit of $744																							—			—			—			—			(2,064	)		—			(2,064	)
Vesting of restricted shares		495,206			5			(5	)		—			—			—			—			440,646			4			(4	)		—			—			—			—
Shares withheld for tax withholdings		(137,024	)		(1	)		(2,268	)		—			—			—			(2,269	)		(132,886	)		(1	)		(3,605	)		—			—			—			(3,606	)
Exercise of stock options		64,590			1			1,184			—			—			—			1,185			39,928			—			715			—			—			—			715
Adjustments to previous dividend declarations		—			—			42			—			—			—			42			—			—			3			—			—			—			3
Net loss		—			—			—			(40,147	)		—			—			(40,147	)		—			—			—			(37,020	)		—			—			(37,020	)
Balance at June 30, 2018		93,060,175		$	931		$	653,714		$	(233,890	)	$	3,797		$	(154,871	)	$	269,681
Balance at March 31, 2019																							93,748,617		$	937		$	664,141		$	(185,975	)	$	220		$	(252,903	)	$	226,420

	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, 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		—			—			7,545			—			—			—			7,545
Unrealized loss on derivatives, net of tax expense of $2,774		—			—			—			—			7,491			—			7,491
Vesting of restricted shares		360,092			4			(4	)		—			—			—			—
Shares withheld for tax withholdings		(108,432	)		(1	)		(1,633	)		—			—			—			(1,634	)
Exercise of stock options		484			—			7			—			—			—			7
Adjustments to previous dividend declarations		—			—			47			—			—			—			47
Net loss		—			—			—			(62,844	)		—			—			(62,844	)
Balance at March 31, 2018		92,889,547		$	929		$	647,286		$	(256,587	)	$	1,321		$	(154,871	)	$	238,078

See accompanying notes to unaudited condensed consolidated financial statements.

	For the Six Months Ended June 30,						For the Three Months Ended March 31,
	2018			2017			2019			2018
Cash Flows From Operating Activities:
Net loss	$	(40,147	)	$	(236,979	)	$	(37,020	)	$	(62,844	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment charges		—			269,332
Depreciation and amortization		78,448			78,367			39,450			38,430
Amortization of debt issuance costs and discounts		2,311			2,467			899			1,157
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	)
Loss on sale or disposal of assets, net								45			396
Deferred income tax benefit								(16,606	)		(23,817	)
Equity-based compensation		13,437			16,020			3,198			7,545
Changes in assets and liabilities:
Accounts receivable		(43,858	)		(23,037	)		(2,329	)		(21,218	)
Inventories		(8,882	)		(9,544	)		(6,964	)		(6,761	)
Prepaid expenses and other current assets		(558	)		2,674			(628	)		(3,141	)
Right of use assets-operating								1,189			—
Accounts payable and accrued expenses		22,487			25,755			1,715			16,540
Accrued salaries, wages and benefits		7,783			(8,204	)		(1,737	)		5,729
Deferred revenue		87,724			72,278			51,697			62,162
Other accrued liabilities		13,050			(4,800	)		5,498			5,879
Operating lease obligations								(1,061	)		—
Other assets and liabilities		(809	)		2,056			342			260
Net cash provided by operating activities		126,814			88,303			37,688			20,317
Cash Flows From Investing Activities:
Capital expenditures		(97,372	)		(103,175	)		(47,937	)		(45,822	)
Other investing activities		(477	)		—			50			—
Net cash used in investing activities		(97,849	)		(103,175	)		(47,887	)		(45,822	)
Cash Flows From Financing Activities:
Proceeds from issuance of debt		—			998,306
Repayments of long-term debt		(11,854	)		(1,015,056	)		(3,877	)		(5,927	)
Proceeds from draw on revolving credit facility		55,000			80,649
Proceeds from draws on revolving credit facility								55,000			45,000
Repayments of revolving credit facility		(70,000	)		(65,000	)		(20,000	)		(5,000	)
Debt issuance costs		—			(15,390	)
Dividends paid to stockholders		(304	)		(1,502	)		(58	)		(287	)
Payment of tax withholdings on equity-based compensation through shares withheld		(2,269	)		(1,470	)		(3,606	)		(1,634	)
Exercise of stock options		1,185			11			715			7
Net cash used in financing activities		(28,242	)		(19,452	)
Other financing activities								(168	)		—
Net cash provided by financing activities								28,006			32,159
Change in Cash and Cash Equivalents, including Restricted Cash		723			(34,324	)		17,807			6,654
Cash and Cash Equivalents, including Restricted Cash—Beginning of period		33,997			69,378			35,007			33,997
Cash and Cash Equivalents, including Restricted Cash—End of period	$	34,720		$	35,054		$	52,814		$	40,651
Supplemental Disclosures of Noncash Investing and Financing Activities
Capital expenditures in accounts payable	$	32,715		$	33,132		$	49,620		$	32,744
Dividends declared, but unpaid	$	124		$	665		$	23		$	136

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. The Company operates SeaWorld theme parks in Orlando, Florida; San Antonio, Texas; and San Diego, ~~California,~~California; and Busch Gardens theme parks in Tampa, ~~Florida,~~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 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, ~~2017~~2018 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, ~~2017~~2018 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, ~~2018~~2019 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 and liabilities, 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.

Restricted cash is recorded in other current assets in the accompanying unaudited condensed consolidated balance sheets. Restricted cash consists primarily of funds received from strategic partners for use in approved marketing and promotional activities.

During the three and six months ended June 30, 2018, the Company recorded approximately $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 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 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 revenue and cash flows arising from customer contracts. Total revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) 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 practical expedient available to public companies under ASC 606, admission products with similar characteristics are analyzed using a portfolio approach for each separate park as the Company expects that the effects on the consolidated financial statements of applying this guidance to the portfolio does not differ materially from applying the guidance to individual contracts within the portfolio. For single-day tickets, the Company recognizes revenue at a point in time, upon admission to the park. Annual passes, season passes or other multi-day or multi-park passes allow guests access to specific parks over a specified time period. For these pass and multi-use products, revenue is deferred and recognized over the terms of the admission product based on estimated 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 the pass and recognized ratably based on each admission into the theme 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.

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, 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,~~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 entered into a Park Exclusivity~~Company’s performance 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 criteriaexpected 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 $1.3in future periods. At both March 31, 2019 and December 31, 2018, $10.0 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~~ liabilities in the accompanying unaudited condensed consolidated ~~statements~~balance sheets related to the Company’s international agreement, as discussed in the following section, which the Company expects to recognize over the term of ~~comprehensive income (loss). See further discussion in Note 9–Related Party Transactions.~~the respective license agreement beginning when substantially all of the services have been performed, which is expected to be upon opening.

9The following table reflects the Company’s deferred revenue balance as of March 31, 2019 and December 31, 2018:

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~~$4.1 million and $3.8 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.~~March 31, 2019 and December 31, 2018, respectively. 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.~~performed. 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 June 30,~~In March 2017, the Company ~~determined~~entered into a ~~triggering event occurred that required~~Park Exclusivity and Concept Design Agreement and a Center Concept and Preliminary Design Support Agreement (collectively, the “ZHG Agreements”) with Zhonghong Holding, Co. Ltd. (“Zhonghong Holding”), an ~~interim goodwill impairment test~~affiliate of ZHG Group, to provide design, support and advisory services for ~~its SeaWorld Orlando reporting unit. Based on the test results,~~various potential projects and grant exclusive rights in China, Taiwan, Hong Kong and Macau through December 2019. In April 2019, the Company ~~concluded that~~terminated the ~~SeaWorld Orlando reporting unit’s goodwill as~~ZHG Agreements for non-payment of ~~June 30, 2017 was fully impaired and recorded a non-cash goodwill impairment charge of $269.3 million in its unaudited condensed consolidated statement of comprehensive income (loss) during~~undisputed amounts owed. For the three ~~and six~~ months ended ~~June 30, 2017. Fair value for~~March 31, 2019 and 2018, the ~~SeaWorld Orlando reporting unit was determined using the income approach~~Company recorded approximately $1.7 million and ~~represented a Level 3 fair value measurement measured on a non-recurring basis~~$1.3 million, respectively, in ~~the fair value hierarchy due to the Company’s use of internal projections~~food, merchandise and ~~unobservable measurement inputs. The remaining goodwill balance of $66.3 million as of June 30, 2018 and December 31, 2017 on~~other revenue in the accompanying unaudited condensed consolidated ~~balance sheets relates~~statements of comprehensive loss related to the ~~Company’s Discovery Cove reporting unit.~~ ZHG Agreements. See Note 10–Related-Party Transactions for additional disclosures.

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

~~In February 2018,~~On January 1, 2019, the ~~FASB issued~~Company adopted Accounting Standards ~~Update~~Codification (“~~ASU”~~ASC”) ~~2018-02,~~842, ~~Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification~~Leases. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right of ~~Certain Tax Effects from Accumulated Other Comprehensive Income.~~ ~~This ASU gives companies~~use assets and corresponding lease liabilities on the ~~option~~balance sheet. The new guidance requires the Company to ~~reclassify~~continue to ~~retained earnings any tax effects related to items in accumulated other comprehensive income~~classify leases as either operating or ~~loss that are stranded due to~~financing, with classification affecting 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 financial statements have not yet been issued and apply it either (1)~~pattern of expense recognition in the ~~period of adoption or (2) retrospectively to each period in which the~~ income tax effects of the 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 whether they elect to reclassify stranded amounts. Companies arestatement. The Company is 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. The Company adopted ASC 842 using a modified retrospective method that did not require the prior period information to be restated. ASC 842 also provides a number of optional provisions, known as practical expedients, which companies may elect to adopt to facilitate implementation. The Company elected a package of practical expedients which, among other items, precludes the Company from needing to reassess 1) whether any expired or existing contracts are or contain leases, 2) the lease classification of any expired or existing leases, and 3) initial direct costs for any existing leases. The Company elected not ~~they elected~~ to ~~reclassify~~implement the ~~tax effects~~practical expedient related to hindsight to determine lease terms. Due to the ~~Tax Act as well as their policy~~implementation of selected practical expedients, there was no cumulative effect adjustment to beginning retained earnings. See Note 7–Leases for releasing income tax effects from accumulated other comprehensive income or loss. The guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual reporting periods with early adoption permitted. additional disclosures.

On January 1, 2019, the Company also adopted the following Accounting Standards Updates (“ASUs”) which had no material impact on its unaudited condensed consolidated financial statements or disclosures:

~~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 right-of-use assets and lease liabilities on the balance sheet for certain types of leases. 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 with early adoption permitted. The Company is evaluating the timing of adoption of this guidance and currently expects to adopt this ASU on January 1, 2019. The Company is still evaluating its lease arrangements and the impact of this ASU on its consolidated financial 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, 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.

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

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2018

2017

2018

2017

Net
Income

Shares

Per
Share
Amount

Net
Loss

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

$
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

486

—

—

—

Diluted earnings (loss) per share

$
22,697

86,885

$
0.26

$
(175,850
)

85,745

$
(2.05
)

$
(40,147
)

86,305

$
(0.47
)

$
(236,979
)

85,560

$
(2.77
)

	For the Three Months Ended March 31,
	2019								2018
	Net Loss			Shares		Per Share Amount			Net Loss			Shares		Per Share Amount
	(In thousands, except per share amounts)
Basic loss per share	$	(37,020	)		83,354	$	(0.44	)	$	(62,844	)		86,209	$	(0.73	)
Effect of dilutive incentive-based awards					—								—
Diluted loss per share	$	(37,020	)		83,354	$	(0.44	)	$	(62,844	)		86,209	$	(0.73	)

In accordance with the Earnings Per Share Topic of the ASC, basic ~~earnings (loss)~~loss per share is computed by dividing net ~~income (loss)~~loss by the weighted average number of shares of common stock outstanding during the period (excluding treasury stock and unvested restricted stock). Shares of unvested restricted stock are eligible to receive ~~dividends,~~dividends; if ~~any;~~any, however, dividend rights will be forfeited if the award does not vest. Accordingly, only vested shares of ~~formerly~~outstanding 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)~~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~~1,893,000 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~~4,495,000 potentially dilutive shares excluded from the computation of diluted loss per share during the three months ended ~~June 30, 2017,~~March 31, 2019 and 2018, respectively, 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 awards of approximately ~~1,950,000~~2,295,000 and ~~2,570,000~~2,730,000 as of ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively, are considered contingently issuable shares and are excluded from the calculation of diluted ~~earnings (loss)~~loss per share until the performance measure criteria is met as of the end of the reporting period.

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 six~~ months ended ~~June 30,~~March 31, 2019 and 2018 was ~~34.6%~~29.0% and ~~21.9%~~27.0%, respectively, and differs from ~~the recently enacted~~the effective statutory federal income tax rate of ~~21%~~21.0% primarily due to state income taxes and other permanent items primarily related to nondeductible settlement and equity-based compensation. The Company’s consolidated effective tax rate for the three and six months ended June 30, 2017 was 27.4% and 31.3%, respectively, and differs from th~~e previously effective statutory federal income tax rate of 35%~~ ~~primarily due to state income taxes and other permanent items, primarily related to nondeductible goodwill impairment and equity-based compensation.~~ items.

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.

Other accrued liabilities at March 31, 2019 and December ~~22, 2017,~~31, 2018, consisted of the ~~United States enacted the Tax Act which makes significant modifications~~following:

As of March 31, 2019 and December 31, 2018, other liabilities above include $11.5 million related 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. The Company has calculated the impact of the Tax Act~~EZPay plan legal settlement (see further discussion in ~~accordance with its current interpretation~~Note 11–Commitments and ~~available guidance, particularly as it relates to the future deductibility of executive compensation items and state conformity to the Tax Act.~~Contingencies).

~~Other accrued liabilities at June 30, 2018~~Long-term debt, net, as of March 31, 2019 and December 31, ~~2017,~~2018 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 June 30, 2018 and December 31, 2017 consisted of the following:~~

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~~October 31, ~~2017,~~2018, SEA entered into a refinancing amendment, Amendment No. 89 (the ~~“Amendment”), to its Existing~~“Amended Credit Agreement. 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 (the “Term B-3 Loans”), with a principal amount equal to $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 $753.6 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 and replaced them with a new tranche with an aggregate commitment amount of $210.0 million (the “Revolving Credit Facility”Agreement”).

In connection with the issuance of the Term B-5 Loans, SEA recorded a discount of $5.0 million and debt issuance costs of $0.04 million during the six months ended June 30, 2017. Additionally, SEA wrote-off debt issuance costs of $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 six months ended June 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 ~~June 30, 2018,~~March 31, 2019, the Senior Secured Credit Facilities consisted of ~~$985.8 million~~$1.52 billion 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,~~ and ~~the~~a $210.0 million ~~Revolving~~revolving credit facility (the “Revolving Credit ~~Facility,~~Facility”), of which $65.0 million was ~~not drawn upon~~outstanding as of ~~June 30, 2018. The 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.2019. The outstanding balance ~~under~~on the Revolving Credit Facility was included in current maturities of long-term debt in the accompanying unaudited condensed consolidated balance ~~sheet~~sheets as of March 31, 2019 and December 31, ~~2017~~2018, 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~~ Subsequent to ~~1.0%~~March 31, 2019, SEA repaid a net of ~~the original principal amount of the Term B-2 Loans on May 14, 2013, with the balance due~~$40.0 million on the ~~final maturity date of May 14, 2020.~~ Revolving Credit Facility.

The Term B-5 Loans amortize in equal quarterly installments in an aggregate annual amount equal to ~~1.0%~~1.015% of the original principal amount of the Term B-5 Loans outstanding on ~~March 31, 2017,~~the Effective Date, with the balance ~~due~~payable on the final maturity ~~date of March 31, 2024.~~date. SEA may voluntarily repay amounts outstanding under the Senior Secured Credit Facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans.

SEA is also 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 $6.3 million based on its excess cash flow calculation as of December 31, 2016. Approximately $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 $2.8 million was applied as a voluntary prepayment to the Term B-2 Loans in the three months ended June 30, 2017. There were no mandatory prepayments made during the three or six months ended June 30, 2018.

As of ~~June 30, 2018,~~March 31, 2019, SEA had approximately $21.3 million of outstanding letters of credit and $65.0 million outstanding on its Revolving Credit Facility leaving ~~approximately $188.7~~$123.7 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 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 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.

14The Amended Credit Agreement removed all previous financial covenants on the Term B-5 Loans. The Revolving Credit Facility requires that the Company comply with a springing maximum first lien secured leverage ratio of 6.25x to be tested as of the last day of any fiscal quarter, solely to the extent that on such date the aggregate amount of funded loans and letters of credit (excluding undrawn letters of credit in an amount not to exceed $30.0 million and cash collateralized letters of credit) under the Revolving Credit Facility exceeds an amount equal to 35% of the then outstanding commitments under the Revolving Credit Facility.

As of March 31, 2019, SEA was in compliance with all covenants contained in the documents governing the Senior Secured Credit Facilities.

The Senior Secured Credit Facilities permit restricted payments in an aggregate amount per annum equal to the sum of (A) $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) $95.0 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, $95.0 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, $65.0 million.

As of ~~June 30, 2018,~~March 31, 2019, the total net leverage ratio as calculated under the Senior Secured Credit Facilities was ~~4.35~~3.51 to 1.00, which ~~results~~would result in the Company having a ~~$120~~approximately $185.0 million available capacity for restricted payments. However, the available capacity for restricted payments ~~in 2018. The amount available for dividend declarations, share repurchases and certain other restricted payments under the covenant restrictions in the debt agreements adjusts~~is recalculated at the beginning of each quarter, or upon declaration of a restricted payment, as set forth ~~above. The total net leverage ratio as calculated under~~in the ~~Senior Secured Credit Facilities is not permitted to be greater than 5.75 to 1.00 as of the last day of any fiscal quarter.~~credit agreement.

Long-term debt ~~as of June 30, 2018~~at March 31, 2019 is repayable as follows, and does not include the impact of any future voluntary ~~prepayments:~~prepayments. The outstanding balance under the Revolving Credit Facility is included in current maturities of long-term debt in the accompanying unaudited condensed consolidated balance sheet as of March 31, 2019.

As of ~~June 30, 2018,~~March 31, 2019, the Company has five interest rate swap agreements (the “Interest Rate Swap Agreements”) which effectively fix the interest rate on the 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; 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 BBA LIBOR; and have interest settlement dates occurring on the last day of March, June, September ~~December, March~~ and ~~June~~December through maturity.

SEA designated the Interest Rate Swap Agreements above as qualifying cash flow hedge accounting relationships as further discussed in Note 7–8–Derivative Instruments and Hedging Activities 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 ~~$43.7~~$20.1 million and ~~$48.5~~$24.0 million in the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. Cash paid for interest in the ~~six~~three months ended ~~June 30,~~March 31, 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~~

The Company adopted ASC 842, Leases, as of January 1, 2019 using the modified retrospective approach and elected the “Comparatives Under 840 Option” allowing the Company to not recast comparative periods in the ~~six~~period of adoption but present those periods under historical requirements of ASC 840. The Company has land, warehouse and office space, and equipment leases which are classified as either operating or financing obligations.

Under the provisions of ASC 842, right to use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Lease terms may include options to renew when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the term of the operating lease.

The present value of future minimum lease payments is calculated using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate, which reflects the rate of interest the Company would pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. As most of the Company’s leases do not provide an implicit rate, the Company uses incremental borrowing rates based on the information available at commencement date in determining the present value of the lease payments. In calculating the incremental borrowing rates, the Company considered recent ratings from credit agencies, recent trading prices on the Company’s debt, and current lease demographic information. The Company used the incremental borrowing rates on December 31, 2018 for newly recognized operating leases that commenced prior to that date. The Company applies the incremental borrowing rates at a portfolio level based on lease terms.

The Company has elected not to recognize on the balance sheet leases with an initial and expected term of 12 months ~~ended June 30, 2017 includes $12.9 million relating~~or less, instead lease expense is recognized for these short-term leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed upon adoption of ASC 842, the Company has elected to combine lease and non-lease components for each class of underlying asset based on a practical expedient permitted under ASC 842.

Some of the Company’s leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or a purchase option reasonably certain of exercise.

Certain of the Company’s lease agreements include rental payments based on a percentage of sales over contractual levels and others include rental payments adjusted periodically for inflation. These variable lease payments are typically recognized when the underlying event occurs and are included in operating expenses in the Company's unaudited condensed consolidated statements of comprehensive loss in the same line item as the expense arising from fixed lease payments. The Company’s lease agreements do not contain any material residual value guarantees, material restrictive covenants or material variable lease costs other than those described below related to the Company’s ~~fourth quarter 2016 interest payable~~land lease.

The Company has a land lease which consists of a long-term lease with the City of San Diego covering approximately 190 acres, including approximately 17 acres of water in Mission Bay Park, California (the “Premises”). Under the terms of the lease, the Premises must be used as a marine park facility and related uses. In addition, the Company may not operate another marine park facility within a radius of 560 miles from the City of San Diego. The annual rent under the lease is variable and calculated on ~~its Senior Secured Credit Facilities~~the basis of a specified percentage of the Company’s gross income from the Premises, or the minimum yearly rent, whichever is greater. The current lease term for the Premises ends in June 2048 with a corresponding lease liability being amortized using an estimated incremental borrowing rate of 8.2%. The minimum yearly rent is adjusted every three years to an amount equal to 80% of the average accounting year rent actually paid for the three previous years. The current minimum yearly rent is approximately $10.4 million, which ~~was paid~~is subject to adjustment on January ~~3, 2017.~~1, 2020. Actual payments may vary from the annual straight-line minimum base rent based on shift of seasonal performance results. Rent payments related to the Premises for the three months ended March 31, 2019 were approximately $1.7 million. Upon adoption of ASC 842, the Company also reclassified a favorable lease asset net balance of $14.0 million related to the Premises from other intangible assets, net, to right of use assets-operating on the accompanying unaudited condensed consolidated balance sheet as of March 31, 2019.

7.The tables below present the lease balances and their classification on the accompanying unaudited condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018:

The table below presents the lease costs and their classification on the accompanying unaudited condensed consolidated statements of comprehensive loss for the three months ended March 31, 2019:

In addition to the operating lease costs above, short term rent expense for the three months ended March 31, 2019 was approximately $0.8 million and is included in operating expenses and selling, general and administrative expenses on the accompanying unaudited condensed consolidated statements of comprehensive loss.

	Operating leases
Years Ending December 31,	Land lease			Other operating leases			Total operating leases			Financing leases
	(In thousands)
Remainder of 2019	$	7,801		$	3,109		$	10,910		$	622
2020		10,401			3,824			14,225			825
2021		10,401			3,478			13,879			332
2022		10,401			2,497			12,898			208
2023		10,401			1,954			12,355			204
2024		10,401			1,740			12,141			201
Thereafter		244,431			2,993			247,424			2,593
Total lease payments		304,237			19,595			323,832			4,985
Less: Imputed Interest		(188,224	)		(3,371	)		(191,595	)		(959	)
Present value of lease liabilities	$	116,013		$	16,224		$	132,237		$	4,026

Operating lease payments include approximately $8.2 million related to options to extend lease terms that are reasonably certain of being exercised.

The table below presents the future minimum lease payments for long-term non-cancellable operating and financing leases under ASC 840 as of December 31, 2018:

The table below presents the weighted average remaining lease terms and applicable discount rates as of March 31, 2019:

The table below presents the cash flows and supplemental information associated with the Company’s leasing activities for the three months ended March 31, 2019:

All long-lived assets, including right to use assets associated with leases, 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. The measurement of an impairment loss to be recognized is based upon the difference between the estimated fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis.

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 ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, 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 six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

As of ~~June 30, 2018,~~March 31, 2019, the Company has five Interest Rate Swap Agreements that mature on May 14, 2020, which effectively fix the interest rate on LIBOR-indexed interest payments associated with $1.0 billion of SEA’s outstanding long-term debt.

The interest rate swap agreements are designated as cash flow hedges of interest rate risk. The changes in the fair value of derivatives designated and that qualify as cash flow hedges isare recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive 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 ~~$1.1~~$0.5 million will be reclassified as a reduction to interest ~~income.~~expense.

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 ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017:~~2018:

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

The table below presents the pretax effect of the Company’s derivative financial instruments onin the unaudited condensed consolidated statements of comprehensive ~~income (loss)~~loss for the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 and ~~2017:~~2018:

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.

The following table reflects the changes in accumulated other comprehensive income (loss) for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, 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 ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018. The fair value of the term loans as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 approximate their carrying value, excluding unamortized debt issuance costs and discounts, due in part 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 six~~ months ended ~~June 30, 2018.~~March 31, 2019. 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 ~~June 30, 2018:~~March 31, 2019:

	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		June 30,		Liabilities		Inputs		Inputs		March 31,
	(Level 1)		(Level 2)		(Level 3)		2018		(Level 1)		(Level 2)		(Level 3)		2019
Assets:	(In thousands)								(In thousands)
Derivative financial instruments ^(a)	$	—	$	5,201	$	—	$	5,201	$	—	$	301	$	—	$	301
Liabilities:
Long-term obligations ^(b)	$	—	$	1,533,192	$	—	$	1,533,192	$	—	$	1,584,513	$	—	$	1,584,513

There were no transfers between Levels 1, 2 or 3 during the year ended December 31, ~~2017. The Company did not have any assets measured on a recurring basis at fair value as of December 31, 2017.~~2018. 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, ~~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)		2017		(Level 1)		(Level 2)		(Level 3)		2018
Assets:									(In thousands)
Derivative financial instruments ^(a)									$	—	$	3,109	$	—	$	3,109
Liabilities:	(In thousands)
Derivative financial instruments ^(a)	$	—	$	8,455	$	—	$	8,455
Long-term obligations ^(b)	$	—	$	1,560,046	$	—	$	1,560,046	$	—	$	1,553,389	$	—	$	1,553,389

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 ZHG Transaction, Sellers reimbursed the Company for approximately $4.0 million of related costs and expenses incurred by the Company during fiscal year 2017.

In March 24, 2017, the Company entered into the ZHG Agreements with Zhonghong Holding, an affiliate of ~~ZHG Group.~~ Zhonghong Zhuoye Group Co., Ltd., who at the time owned approximately 21% of the outstanding shares of the Company. See Note 1–Description of Business and Basis of Presentation for further details. In ~~exchange for providing services under~~April 2019, the Company terminated the ZHG Agreements for non-payment of undisputed amounts owed. For the three months ended March 31, 2019 and 2018, 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 basis over the contractual term of the agreements includingrecorded approximately ~~$2.5~~$1.7 million and $1.3 million, respectively, in ~~the six months ended June 30, 2018~~food, merchandise and ~~2017, respectively. As of June 30, 2018, a receivable related to the ZHG Agreements of approximately $1.5 million was included in accounts receivable~~other revenue in the accompanying unaudited condensed consolidated ~~balance sheet. See further discussion~~statements of comprehensive loss related to the ZHG ~~Agreements in Note 1–Description~~Agreements.

In a Schedule 13D filed on May 8, 2017, Sun Wise (UK), Co., Ltd, a private limited company incorporated under the laws of England and Wales and an affiliate to the ZHG Group (“SunWise”), reported beneficial ownership of 19,452,063 shares (the “Pledged Shares”) of the ~~Business~~Company’s common stock, as well as its pledge of such shares related to certain loan obligations of SunWise. Subsequent to March 31, 2019, Lord Central Opportunity V Limited, as security agent (the “Security Agent”) for PA Eminent Opportunity VI Limited (a controlled affiliate of PAG (f/k/a Pacific Alliance Group) and ~~Basis~~China Huarong International Holdings Limited (together, the “Lenders”), advised the Company that the Lenders have notified SunWise of ~~Presentation.~~a default under its loan obligations, the Lenders have foreclosed on the Pledged Shares and, accordingly, the Pledged Shares have been transferred to the name of the Security Agent (the “Transfer”).

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 ~~and~~to 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 ~~17,~~27, 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, which~~complaint. On March 31, 2016, the Court granted ~~on March 31, 2016.~~the motions to dismiss the amended complaint, in its entirety, without prejudice. 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. The~~defendants and no longer brings claims based on the prospectuses and registration statements. On September 30, 2016, the Court ~~later~~ denied athe renewed motion to dismiss the Second Amended Complaint. In

On May 19, 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 now complete and, on April 15, 2019, Defendants filed a motion for summary judgment. Also on April 15, 2019, Defendants filed motions to exclude each of Plaintiffs’ three expert witnesses and Plaintiffs filed motions to exclude two of Defendants’ expert witnesses. The trial is currently ~~ongoing with the trial~~ scheduled for September 10, 2019.

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 June 14, 2018, a lawsuit captioned Highfields Capital I LP et ~~al.~~el v. SeaWorld Entertainment, Inc. et ~~al.,~~el, Case No. 3:18-cv-01276-L-BLM, was filed in the United States District Court in the Southern District of California against the Company and certain of the Company’s former and present executive officers (collectively, the “Defendants”). The plaintiffs, which are investment funds managed by a common adviser (collectively, the “Plaintiffs”) allege, among other things, that the Defendants made false and misleading statements, in violation of the federal securities laws and Florida common law, regarding the impact of the documentary Blackfish on SeaWorld’s business. The complaint further alleges that such statements were made to induce Plaintiffs to purchase common stock of the Company at artificially-inflated prices and that Plaintiffs suffered investment losses as a result. The Plaintiffs are seeking unspecified compensatory damages and other relief. On October 19, 2018, Defendants moved for partial dismissal of the complaint. On February 7, 2019, the Court granted Defendants’ motion and dismissed Plaintiffs’ Florida state law claims as well as federal securities law claims based on the Company’s second quarter 2013 earnings statements. The Company believes that the 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 inof 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. The case is currently stayed in favor of the securities class action captioned Baker v. SeaWorld Entertainment, Inc., et al. 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., (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 $5.0 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. Such actions were subsequently dismissed or consolidated with the Hall Matter described above.

The Company filed a motion to dismiss the entirety of the plaintiffs’ Second Consolidated Amended Complaint (“SAC”) with prejudice on February 25, 2016. The Court 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 on June 10, 2016. The appeal has been fully briefed and argued and the Company awaits the Court’s decision. Lawsuit

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., Civil Case No. 15-cv-02172-JSW, (the “Anderson Matter”). The putative class consisted of all consumers within California who, within the past four years, purchased tickets to SeaWorld San Diego. The 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 and orca plush purchasers with intent to deceive and mislead the plaintiffs and purported class members. The complaint seeks ~~actual damages,~~restitution, equitable relief, attorneys’ fees and costs. Based on plaintiffs’ definition of the class, the amount in controversy ~~exceeds~~could have exceeded $5.0 million ~~but~~assuming the class became certified. The liability exposure is ~~speculative.~~speculative though. On May 14, 2015, the Company removed the case to the United States District Court for the Northern District of California.

The Company filed a motion for summary judgment on October 30, 2017 which the Court granted in part and denied in part. ~~All three named plaintiffs continue to have claims for individual restitution and injunctive relief. The case is in the preliminary stages of discovery.~~ On May 23, 2018, the ~~Plaintiffs~~plaintiffs represented to the Court that they will not file a motion for class certification. The case is no longer a class action. All three named plaintiffs continue to have claims for individual restitution in a nominal amount and injunctive relief. Trial is currently scheduled for October 2019.

A court-mandated mediation is scheduled for May 17, 2019. The Company believes that the ~~above-described lawsuits are~~lawsuit is without merit and intends to defend ~~these lawsuits~~the lawsuit 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., The case, captioned Jason Herman, Joey Kratt, and Christina Lancaster, as individuals and on behalf of all others similarly situated, v. SeaWorld Parks & Entertainment, Inc. ~~The~~case no: 8:14-cv-03028-MSS-JSS, was certified as a class action ~~currently consists of~~in 2018. The Court certified a class action on two claims for relief -- breach of contract ~~unjust enrichment~~ and violation of federal Electronic Funds Transfer Act, 15 U.S.C. section 1693 et ~~seq~~.seq. on behalf of three individual plaintiffs ~~as well as on behalf of a~~and 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 into a common fund, plus certain administrative costs and expenses associated with the proposed settlement. ~~The proposed settlement is still subject to further documentation and court approval.~~On April 29, 2019, the Court entered an order approving the final settlement. The Company has accrued $11.5 million related to this ~~proposed~~ settlement in other accrued liabilities as of ~~June 30,~~March 31, 2019 and December 31, 2018 on the 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)~~(“APHIS”), the U.S. Department of Labor’s Occupational Safety and Health Administration ~~(OSHA)~~(“OSHA”), the California Occupational Safety and Health Administration ~~(Cal-OSHA)~~(“Cal-OSHA”), the Florida Fish & Wildlife Commission ~~(FWC)~~(“FWC”), the Equal Employment Opportunity Commission ~~(EEOC)~~(“EEOC”), the Internal Revenue Service ~~(IRS),~~(“IRS”) the U.S. Department of Justice ~~(DOJ)~~(“DOJ”) and the Securities and Exchange Commission ~~(SEC)~~(“SEC”).

~~On April 6, 2018, the Company received a written “Wells” notice~~Other than those matters discussed above, from the SEC relating to a previously disclosed investigation by the SEC. The Wells notice indicated 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. No individual currently employed by the Company has received a Wells notice.

A Wells notice is not a formal allegation or a finding of wrongdoing by the 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. federal securities laws. The Wells notice also stated that the Staff’s recommendation may involve various civil or administrative actions or proceedings, and 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 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, the potential charges against the Company arising out of the SEC’s investigation. The Company has 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 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 document the proposed settlement, which 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.

~~From~~ time to time, various parties 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. 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; (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. ~~The~~As of March 31, 2019, the Company estimates the combined ~~future~~remaining obligations for ~~all of~~ these commitments could be up to approximately ~~$105.0~~$60.0 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,~~March 27, 2019, the Company ~~announced that it plans to open~~opened a new Sesame Land in SeaWorld ~~Orlando in Spring of 2019.~~Orlando.

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.

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. The Company recognizes the impact of forfeitures as they occur. The Company has granted stock options, time-vesting restricted shares ~~time-vesting restricted stock~~and units ~~time-vesting deferred stock units,~~and performance-vesting restricted shares and ~~performance-vesting restricted stock~~ units.

Total equity compensation expense was ~~$5.9~~$3.2 million and ~~$13.4~~$7.5 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~respectively, and $11.9 million and $16.0 million~~respectively. Equity compensation expense for the three ~~and six~~ months ended ~~June 30, 2017, respectively.~~March 31, 2018 includes approximately $4.5 million related to certain equity awards which were accelerated to vest in the first quarter of 2018 in connection with the departure of certain executives as required by their respective employment agreements. See Note 14–Restructuring and Other Separation Costs for further details. 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~~loss.

The activity related to the Company’s time-vesting and performance-vesting awards during the three ~~and six~~ months ended ~~June 30, 2018, includes approximately $1.0 million and $5.5 million, respectively,~~March 31, 2019 is as follows:

						Performance-Vesting Restricted shares/units
	Time-Vesting Restricted shares/units					Bonus Performance Restricted units					Long-Term Incentive Performance Restricted shares/units
	Shares/Units			Weighted Average Grant Date Fair Value per Share/Unit		Units			Weighted Average Grant Date Fair Value per Unit		Shares/Units			Weighted Average Grant Date Fair Value per Share/Unit
Outstanding at December 31, 2018		901,704		$	17.34		560,710		$	15.06		1,155,486		$	15.82
Granted		47,772		$	25.70		224,928		$	25.70		1,233,742		$	25.70
Vested		(87,079	)	$	17.12		(319,868	)	$	15.06		(27,877	)	$	15.24
Forfeited		(121,518	)	$	16.33		(246,678	)	$	15.32		(285,428	)	$	18.11
Outstanding at March 31, 2019		740,879		$	18.07		219,092		$	25.70		2,075,923		$	21.39

The activity related to ~~certain equity~~the Company’s stock option 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 forduring 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~~March 31, 2019 is as ~~of June 30, 2018 was approximately $30.2 million, which is expected to be recognized over the respective service periods.~~ follows:

The ~~activity related to the Company’s time-vesting and performance-vesting awards~~weighted average grant date fair value of stock options granted during the ~~six~~three 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~~March 31, 2019 was $8.45. Key weighted-average assumptions utilized in the ~~Company’s~~Black-Scholes Option Pricing Model for stock ~~option awards~~options granted during the ~~six~~three months ended ~~June 30, 2018 is as follows:~~March 31, 2019 were:

The Company has reserved 15,000,000 shares of common stock for issuance under ~~the~~its Omnibus Incentive Plan (the “Omnibus Incentive Plan”), of which approximately ~~9,330,000~~8,520,000 shares are available for future issuance as of ~~June 30, 2018.~~March 31, 2019.

~~The~~During the three months end March 31, 2019, the Company granted performance-vesting restricted units (the “Bonus Performance Restricted Units”) in accordance with its annual bonus plan for ~~2018~~2019 (the ~~“2018~~“2019 Bonus Plan”). The 2019 Bonus Plan provides for bonus awards payable 50% in cash and 50% in ~~performance-vesting restricted units (the “Bonus~~Bonus Performance Restricted ~~Units”)~~Units and is based upon the Company’s achievement of specified performance goals, ~~with respect to Fiscal 2018,~~ as defined by the ~~2018~~2019 Bonus ~~Plan.~~Plan, with respect to the year ended December 31, 2019 (the “Fiscal 2019”). The total number of ~~shares~~units eligible to vest into shares of stock is based on the level of achievement of the targets for Fiscal ~~2018~~2019 which ranges from 0% (if below threshold performance) ~~and~~ up to ~~150%~~200% (at or above maximum performance). ~~Bonus Performance Restricted Units representing the total units that could be earned under the maximum performance level of achievement were granted during the six months ended June 30, 2018.~~

The Company also had an annual bonus plan for the fiscal year ended December 31, ~~2017~~2018 (“Fiscal ~~2017”~~2018”), under which certain employees were eligible to vest in ~~performance-vesting restricted shares (the “Bonus~~Bonus Performance Restricted ~~Shares”)~~Units based upon the Company’s achievement of certain performance goals with respect to Fiscal ~~2017.~~2018. Based on the Company’s actual Fiscal ~~2017~~2018 results, ~~approximately 9,000~~a portion of these Bonus Performance Restricted ~~Shares~~Units vested in the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and the ~~remainder~~remaining forfeited in accordance with their terms.

~~The~~During the three months ended March 31, 2019, the Company granted long-term incentive plan ~~grants~~awards for ~~2018~~2019 (the ~~“2018~~“2019 Long-Term Incentive Grant”) which were comprised of ~~1/3 time-vesting restricted units~~nonqualified stock options (the “Long-Term Incentive ~~Time Restricted Units”~~Options”) and ~~2/3~~ performance-vesting restricted units (the “Long-Term Incentive Performance Restricted Units”) (collectively, the “Long-Term Incentive Awards”).

~~Certain~~Awards for 2019, 2020 and 2021 combined were granted to certain employees during the three months ended March 31, 2019. The Company does not expect additional Long-Term Incentive ~~Time Restricted Units~~Awards to be granted ~~under~~to these employees until the ~~2018~~ earlier of 2022 or in the year when the Company’s three-year performance goal is achieved, if sooner than fiscal year 2021.

Long-Term Incentive Options vest over ~~five~~three 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 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.

~~Other Long-Term Incentive Time Restricted Units granted under the 2018 Long-Term Incentive Grant vest over three years, with all of the 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 ~~units~~options is recognized using the straight line ~~method over the three year vesting period.~~ method.

The Long-Term Incentive Performance Restricted Units ~~granted under the 2018 Long-Term Incentive Plan~~ are expected to vest following the end of the three-year performance period beginning on January 1, ~~2018~~2019 and ending on December 31, ~~2020~~2021 based upon the Company’s achievement of specified performance goals for Fiscal ~~2020,~~2021, as defined by the ~~2018~~2019 Long-Term Incentive Grant. The total number of Long-Term Incentive Performance Restricted Units eligible to vest will be based on the level of achievement of the performance goals and ranges from 0% (if below threshold performance) ~~and~~ up to ~~200%~~100% (for attarget 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.~~

~~The 2018 Long-Term Incentive Grant provides additional incentive for early~~Upon achievement of the ~~Adjusted EBITDA target as follows: if~~performance goals, only 50% of the ~~Company’s Fiscal 2020 Adjusted EBITDA target is~~award for a given level of performance will vest, with the remaining 50% subject to a one-year performance test period. The goal achieved ~~in 2018, 30% of target~~ must be met again or exceeded the next fiscal year before the remaining units are earned.

Long-Term Incentive ~~Performance~~Time Restricted Units ~~will be earned and delivered in 2019; if~~

During the ~~Company’s Fiscal 2020 Adjusted EBITDA target is achieved in~~three months ended March 31, 2019, ~~20%~~the Company also granted time-restricted units which vest over three years to certain employees, with one-third vesting on each anniversary of ~~target Long-Term Incentive Performance Restricted Units will be earned and delivered in 2020, in each case~~the date of grant, subject to continued employment through the ~~overall maximum award of 200% of target. Long-Term Incentive Performance Restricted Units representing~~applicable vesting date. Equity compensation expense is recognized using the ~~total units that could be earned under the maximum performance level of achievement were granted during the six months ended June 30, 2018.~~straight line method.

The Company also has outstanding ~~Long-Term Incentive Time Restricted~~long-term incentive time restricted shares, ~~Long-Term Incentive Performance Restricted~~long-term incentive performance restricted shares and ~~Long-Term Incentive Options~~long-term incentive options granted under previous long-term incentive plan grants. During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, a portion of the previously granted ~~Long-Term Incentive Performance Restricted Shares~~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~~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 for its performance-vesting restricted awards ratably over the related performance period, if the performance condition is probable of being achieved. Based on the Company’s progress towards its respective performance goals, a portion of its performance-vesting restricted awards are considered probable of vesting as of ~~June 30, 2018;~~March 31, 2019; therefore, equity compensation expense ~~includes approximately $3.2 million and $5.3 million related to performance-vesting restricted awards in the three and six months ended June 30, 2018, respectively.~~has been recorded accordingly. If the probability of vesting related to these awards changes in a subsequent period, all equity compensation expense related to those awards that would have been recorded over the requisite service period had the awards been considered probable at the new percentage from inception, will be recorded as a cumulative catch-up at such subsequent date. ~~Total unrecognized equity compensation expense 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 right to receive one share of the Company’s common stock one year after the respective director leaves the Board.

The Company had awarded under its previous incentive plans certain performance-vesting restricted shares (the “2.75x Performance Restricted shares”). During the first quarter of 2017, the Company modified the 2.75x Performance Restricted shares to vest 60% upon the closing of the ZHG Transaction on May 8, 2017 (see Note 9–Related-Party Transactions). The remaining outstanding unvested 2.75x Performance Restricted shares continued to be eligible to vest in accordance with their terms if the Seller had received additional proceeds from the Buyer sufficient to satisfy a 2.75x cumulative return multiple in the twelve month period following the

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

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 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 $8.4 million upon closing of the ZHG Transaction and paid cash accumulated dividends of approximately $1.3 million in the three months ended June 30, 2017.

As of ~~June 30, 2018, 93,060,175~~March 31, 2019, 93,748,617 shares of common stock were issued onin the accompanying unaudited condensed consolidated balance sheet, which excludes ~~1,284,595~~627,989 unvested shares of common stock and ~~1,913,229~~2,407,905 unvested restricted stock units held by certain participants in the Company’s equity compensation plans (see Note ~~11–~~12–Equity-Based Compensation) and includes ~~6,519,773~~10,174,589 shares of treasury stock held by the Company.

In 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, investments in new attractions, debt repayments or share repurchases.

As of June 30, 2018, the Company had approximately $0.1 million recorded as dividends payable in the accompanying unaudited condensed consolidated balance sheet related to unvested time restricted shares and unvested performance restricted shares with a performance condition considered probable of being 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.

The Board ~~has~~had previously authorized ~~the~~a share repurchase program of up to $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. Through December 31, 2018, the Company had repurchased an aggregate of $158.0 million under the Share Repurchase Program. On February 22, 2019, the Board approved a replenishment to the Share Repurchase Program bringing the total amount available for future purchases back up to $250.0 million, which is the remaining authorization as of March 31, 2019. There were no share repurchases under the Share Repurchase Program during the three months ended March 31, 2019 or 2018.

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,~~trading windows and available liquidity, 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 $190.0 million for future repurchases under the Share Repurchase Program as of June 30, 2018. There were no share repurchases during the three and six months ended June 30, 2018 and 2017.

~~Restructuring Programs~~The Company is committed to continuous improvement and regularly evaluates operations to ensure it is properly organized for performance and efficiency. As a result, during the three months ended March 31, 2019, the Company recorded approximately $2.6 million in pre-tax charges primarily consisting of severance and other termination benefits related to positions eliminated in 2019, which is included in restructuring and other separation costs in the accompanying unaudited condensed consolidated statements of comprehensive loss.

In August 7, 2018, the Company announced 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~~involved the elimination of approximately 125 positions during the third quarter of 2018 across the Company’s theme parks and its corporate headquarters. As a result, during the ~~three and six months~~year ended ~~June 30,~~December 31, 2018, the Company recorded approximately ~~$1.8~~$5.5 million in pre-tax restructuring charges primarily related to 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).~~loss. The Company ~~expects to incur an additional $4.0 million in pre-tax restructuring charges in the third quarter of 2018 related to severance and other benefits associated with the 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 involved the elimination of approximately 350 positions across all of the Company’s theme parks and corporate headquarters. As a result, the Company recorded $5.2 million in pre-tax restructuring and other related costs associated with the 2017 Restructuring Program during fiscal year 2017. The Company doeswill not ~~expect to~~ incur any additional costs associated with the ~~2017~~2018 Restructuring Program as all continuing service obligations were completed as of December 31, ~~2017.~~2018.

~~The 2018 and 2017 Restructuring Program~~Related activity for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 was as follows:

The remaining ~~combined~~ liability as of ~~June 30, 2018~~March 31, 2019 relates to restructuring and other related costs to be paid as contractually obligated by December 31, ~~2018~~2019 and is included in accrued salaries, wages and benefits in the accompanying unaudited condensed consolidated balance sheet.

~~Restructuring~~For the three months ended March 31, 2018, 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~~separated from ~~their respective positions~~the Company 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,~~severance-related benefits, in accordance with his employment agreement. Certain other executives who separated from the Company during the first ~~six months~~quarter of 2018 also received ~~severance related~~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)~~loss for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018.

Additionally, during the three ~~and six~~ months ended ~~June 30,~~March 31, 2018, certain unvested 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,~~of approximately $4.5 million during the three months ended March 31, 2018, which is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of comprehensive ~~income (loss).~~loss. See Note ~~11–~~12–Equity-Based Compensation for further details.

Item 2. Management’s Discussion and ~~Anal~~Analy~~ysis~~sis 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.~~2018. 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, Discovery Cove, Sesame Place and Sea Rescue. Over our more than 50-year history, we have ~~built~~developed a diversified portfolio of 12 highly differentiated theme parks and water parks that are grouped in key markets across the United States. Many of our parks showcase our one-of-a-kind zoological collection and ~~all of our parks~~ feature a diverse array of thrill and family rides, shows, educational demonstrations and/or other attractions with broad demographic appeal which deliver memorable experiences and a strong value proposition for our guests.

Our revenues are driven primarily by attendance in our theme parks and the level of per capita spending for admission and per capita spending for culinary, merchandise and other in-park products. We define attendance as the number of guest visits. Attendance drives admissions revenue as well as total in-park spending. Admissions revenue primarily consists of single-day tickets, annual or season passes (collectively referred to as season passes) or other multi-day or multi-park admission products. The level of attendance in 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 domestic and international guests, marketing and sales efforts, consumer confidence and external perceptions of our brands and reputation, among other factors beyond our control. Attendance patterns have significant seasonality, driven by the timing of holidays, school vacations and weather conditions; in addition, several of our theme parks are seasonal and only open for part of the year.

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~~“Results of ~~Operations~~”Operations” section which follows. For other factors affecting our revenues, see the “~~Risk Factors~~”“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.

The level of attendance in 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 domestic and international guests, marketing and sales efforts, awareness of park offerings, consumer confidence and external perceptions of our brands and reputation, among other factors beyond our control. Attendance patterns on a quarterly basis have significant seasonality, driven by the timing of holidays, school vacations, calendar shifts in the number of weekend days in a quarter and weather conditions; in addition, seven of our theme parks are seasonal and only open for part of the year.

We believe attendance in recent years was impacted by a variety of factors at some of our parks, including the external perceptions of our brands and reputation, which also impacted relationships with some of our business partners. Given current attendance results, we do not believe these factors have had a significant impact on our current attendance trends; however, we continuously monitor our external perceptions, making strategic marketing and sales adjustments as necessary, to address these or any other items that could impact attendance.

The principal costs of our operations are employee ~~salaries~~wages 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.~~levels, among other factors.

~~In 2016, following a fundamental review of our cost structure, we announced a comprehensive cost optimization program that was originally expected~~We continue 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 identified and are executing on $50.0 million in cost savings opportunities and 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”) focusedfocus on reducing costs, improving operating margins and streamlining our management structure to create efficiencies ~~and~~to better align with our strategic business objectives. ~~The 2018 Restructuring Program involves the elimination~~We remain committed to continuous improvement and regularly evaluate operations to ensure we are properly organized for performance and efficiency. As part of ~~approximately 125 positions~~these ongoing efforts, during the ~~third quarter of fiscal year 2018 across our theme parks and corporate headquarters. As a result,~~three months ended March 31, 2019, we recorded ~~$1.8~~approximately $2.6 million in pre-tax ~~restructuring~~ charges ~~related to this program in the second quarter~~primarily consisting 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 related to positions eliminated in 2019, which is included in restructuring and other separation costs in the accompanying unaudited condensed consolidated statements of comprehensive loss included elsewhere in this Quarterly Report on Form 10-Q. For the three months ended March 31, 2018, restructuring and other separation costs also includes severance and other employment expenses ~~incurred in connection with~~for certain executives who separated from the ~~2018 Restructuring Program.~~Company during 2018. See Note ~~13–~~14–Restructuring ~~Programs~~ and Other Separation Costs to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

For other 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.

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 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 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 and between the first and fourth quarters due to the timing of holiday breaks around 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.

~~License Agreement~~In a Schedule 13D filed on May 8, 2017, Sun Wise (UK), Co., Ltd, a private limited company incorporated under the laws of England and Wales and an affiliate to the ZHG Group (“SunWise”), reported beneficial ownership of 19,452,063 shares (the “Pledged Shares”) of the Company’s common stock, as well as its pledge of such shares related to certain loan obligations of SunWise. Lord Central Opportunity V Limited, as security agent (the “Security Agent”) for PA Eminent Opportunity VI Limited (a controlled affiliate of PAG (f/k/a Pacific Alliance Group) and China Huarong International Holdings Limited (together, the “Lenders”), have advised the Company that the Lenders notified SunWise of a default under its loan obligations, the Lenders have foreclosed on the Pledged Shares and, accordingly, the Pledged Shares have been transferred to the name of the Security Agent (the “Transfer”).

On May ~~16,~~3, 2019, in connection with the Transfer and in accordance with the stockholders agreement, dated March 24, 2017, ~~SeaWorld Parks~~among the Company, ZHG and ~~Entertainment, Inc.~~Zhonghong Zhuoye Group Co., ~~a wholly-owned subsidiary~~Ltd. (the “Stockholders Agreement”), the Board of Directors (the “Board”) of the Company ~~entered into~~requested the resignation of Yongli Wang, a ~~License~~director designee of ZHG. Mr. Wang resigned from the Board on May 3, 2019. Mr. Wang has served as a director of the Company since 2017. Yoshi Maruyama, the Company’s Chairman of the Board, was also a director designee of ZHG prior to May 3, 2019. The Board has determined that Yoshi Maruyama’s extensive experience and skill set make him a valuable member of the Board and asked Mr. Maruyama to remain in his current role as Chairman of the Board, although ZHG’s board nomination rights under the Stockholders Agreement ~~(the “License Agreement”)~~have terminated.

For further discussion on the Transfer, see our Current Report on Form 8-K, filed 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~~SEC on May ~~2, 2018, we announced that we plan to open the new Sesame Land in SeaWorld Orlando in Spring of~~6, 2019.

Effective February 18, 2019, our Board appointed Gustavo (“Gus”) Antorcha to serve as Chief Executive Officer of the Company and John T. Reilly to serve as Chief Operating Officer of the Company. Effective on March 31, 2019, Mr. Reilly resigned from his position of Chief Operating Officer.

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 ~~Board of Directors.~~Board. In connection with his departure, the Former CEO received severance-related ~~expenses~~benefits in accordance with his employment ~~agreement.~~

agreement dated March 16, 2015. 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 for the three months ended March 31, 2018 in the accompanying unaudited condensed consolidated statements of comprehensive ~~income (loss).~~loss included elsewhere in this Quarterly Report on Form 10-Q.

Additionally, ~~during the first six months of 2018,~~ certain equity awards were accelerated to vest in 2018 in connection with the departure of specific executives as required by their respective employment agreements. As a result, ~~the Company~~we recorded incremental non-cash equity compensation expense of approximately $4.5 million related to these awards, which is included in selling, general and administrative expenses for the three months ended March 31, 2018 in the accompanying unaudited condensed consolidated statements of comprehensive ~~income (loss).~~loss. See Note ~~13–~~14–Restructuring ~~Programs~~ and Other Separation Costs and Note ~~11–~~12–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 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 planning and design of the Middle East Project, with funding received from our partner in the Middle East expected to offset our internal expenses. SeaWorld Abu Dhabi is expected to ~~open by~~be completed in 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.

In March 2017, we 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~~ZHG Group, ~~Co., Ltd.,~~ to provide design, support and advisory services for various potential projects and ~~granting~~grant exclusive rights in China, Taiwan, Hong Kong and Macau (the “Territory”)~~. Under~~ through December 2019. In April 2019, we terminated the ~~terms~~ZHG Agreements for non-payment of undisputed amounts owed. For the ~~ECDA,~~three months ended March 31, 2019 and 2018, we ~~will work with Zhonghong Holding~~recorded approximately $1.7 million and ~~a top theme park design company, to create~~$1.3 million, respectively, in food, merchandise and ~~produce concept designs and development analysis for theme parks, water parks and interactive parks~~other revenue 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. See Note 9–Related Party Transactions to ouraccompanying unaudited condensed consolidated ~~financial~~ statements ~~included elsewhere in this Quarterly Report on Form 10-Q for further details.~~of comprehensive loss related to the ZHG Agreements.

For a discussion of certain risks associated with our international 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.

The following discussion provides an analysis of our operating results for the three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017.~~2018. 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 ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~

The following table presents key operating and financial information for the three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017:~~2018:

	For the Three Months Ended												For the Three Months Ended
	June 30,						Variance						March 31,						Variance
	2018			2017			$			%			2019			2018			$			%
Summary Financial Data:	(Dollars in thousands, except per capita data)												(In thousands, except per capita data and %)
Net revenues:
Admissions	$	225,806		$	224,951		$	855			0.4	%	$	128,913		$	130,003		$	(1,090	)		(0.8	%)
Food, merchandise and other		166,115			148,799			17,316			11.6	%		91,662			87,163			4,499			5.2	%
Total revenues		391,921			373,750			18,171			4.9	%		220,575			217,166			3,409			1.6	%
Costs and expenses:
Cost of food, merchandise and other revenues		31,899			29,061			2,838			9.8	%		17,213			17,051			162			1.0	%
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
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $1,357 and $1,563 for the three months ended March 31, 2019 and 2018, respectively)														149,885			155,473			(5,588	)		(3.6	%)
Selling, general and administrative expenses (includes equity compensation of $1,841 and $5,982 for the three months ended March 31, 2019 and 2018, respectively)														42,764			63,524			(20,760	)		(32.7	%)
Restructuring and other separation costs		3,691			—			3,691		ND				2,566			8,835			(6,269	)		(71.0	%)
Depreciation and amortization		40,018			39,500			518			1.3	%		39,450			38,430			1,020			2.7	%
Total costs and expenses		336,711			596,314			(259,603	)		(43.5	%)		251,878			283,313			(31,435	)		(11.1	%)
Operating income (loss)		55,210			(222,564	)		277,774		NM
Operating loss														(31,303	)		(66,147	)		34,844			52.7	%
Other expense, net		(42	)		83			(125	)	NM				27			63			(36	)		(57.1	%)
Interest expense		20,561			19,452			1,109			5.7	%		20,797			19,913			884			4.4	%
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
Loss before income taxes														(52,127	)		(86,123	)		33,996			39.5	%
Benefit from income taxes														(15,107	)		(23,279	)		8,172			35.1	%
Net Loss													$	(37,020	)	$	(62,844	)	$	25,824			41.1	%
Other data:
Attendance		6,414			6,122			292			4.8	%		3,340			3,224			116			3.6	%
Total revenue per capita	$	61.10		$	61.05		$	0.05			0.1	%	$	66.04		$	67.36		$	(1.32	)		(2.0	%)

Admissions revenue. Admissions revenue for the three months ended ~~June 30, 2018 increased $0.9~~March 31, 2019 decreased $1.1 million, or ~~0.4%~~0.8%, to ~~$225.8~~$128.9 million as compared to ~~$225.0~~$130.0 million for the three months ended ~~June 30, 2017.~~March 31, 2018. The ~~increase in admissions revenue~~decrease was primarily a result of ~~an overall increase in attendance of approximately 292,000 guests, or 4.8%, which was largely offset by~~ a decline in ~~admission~~admissions per capita partially offset by improved attendance. Admission per capita decreased by 4.3% to $38.60 for the first quarter of 2019 compared to $40.32 in the prior year quarter. The decline primarily results from the continued implementation of new pricing strategies and visitation mix, primarily related to the shift of Easter and spring break into the second quarter and increased season pass mix during the quarter. The Easter and spring break shift decreased the percentage of tourist visitation during the quarter, which generally comes with higher admissions per capita. The increased season pass mix generally drives higher total revenue, but lower admissions per capita. Attendance increased by 116,000, or 3.6%, when compared to the prior year quarter. We believe ~~the improved~~the increased attendance results from a combination of factors including improved marketing and communication initiatives, new pricing strategies ~~new marketing and communications initiatives~~ and the positive reception of our new rides and compelling attractions and events. ~~These factors were partially offset~~Attendance was negatively impacted during the quarter by ~~negative impacts from~~ unfavorable weather ~~in the quarter~~at some of our parks and the ~~earlier~~later timing of ~~the~~ Easter ~~holiday in 2018, which impacted the timing of~~and 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~~These negative impacts on attendance were partially offset by ~~a decrease~~an extra weekend day in ~~admission per capita. Admission per capita decreased by 4.2% to $35.21 for~~March and the ~~second quarter~~timing of ~~2018 compared to $36.74~~school holiday break schedules 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.~~early January.

Food, merchandise and other revenue. Food, merchandise and other revenue for the three months ended ~~June 30, 2018~~March 31, 2019 increased ~~$17.3~~$4.5 million, or ~~11.6%~~5.2%, to ~~$166.1~~$91.7 million as compared to ~~$148.8~~$87.2 million for the three months ended ~~June 30, 2017. The~~March 31, 2018, primarily as a result of the increase ~~results from~~in attendance, along with an increase in in-park per capita ~~spending along with the impact of increased attendance.~~spending. In-park per capita spending increased by ~~6.5%~~1.5% to ~~$25.90~~$27.44 in the ~~second~~first quarter of ~~2018~~2019 compared to ~~$24.31~~$27.04 in the ~~second~~first quarter of ~~2017.~~2018. In-park per capita spending improved primarily due to the increased sales of in-park ~~products, including culinary and~~experiences, among other ~~in-park offerings.~~factors.

Costs of food, merchandise and other revenues. Costs of food, merchandise and other revenues for the three months ended ~~June 30, 2018~~March 31, 2019 increased ~~by $2.8~~$0.2 million, or ~~9.8%~~1.0%, to ~~$31.9~~$17.2 million as compared to ~~$29.1~~$17.1 million for the three months ended ~~June 30, 2017.~~March 31, 2018, primarily due to the increase in volume. These costs represent ~~19.2%~~18.8% and ~~19.5%~~19.6% of the related revenue earned for the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

Operating expenses. Operating expenses for the three months ended ~~June 30, 2018 increased slightly by $0.8~~March 31, 2019 decreased $5.6 million, or ~~0.4%~~3.6%, to ~~$190.1~~$149.9 million as compared to ~~$189.3~~$155.5 million for the three months ended ~~June 30, 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~~March 31, 2018. The decrease primarily results from a reduction in ~~the prior year quarter.~~labor costs. Operating expenses were ~~48.5%~~68.0% of total revenues for the ~~three months ended June 30, 2018~~first quarter of 2019 compared to ~~50.6%~~71.6% for the ~~three months ended June 30, 2017.~~prior year quarter. 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 expenses. Selling, general and administrative expenses for the three months ended ~~June 30, 2018 increased $1.9~~March 31, 2019 decreased $20.8 million, or ~~2.7%~~32.7%, to ~~$71.0~~$42.8 million as compared to ~~$69.2~~$63.5 million for the three months ended ~~June 30, 2017.~~March 31, 2018. The ~~increase~~decrease primarily relates to ~~an increase~~the following: (i) a decrease in ~~marketing and~~ legal costs ~~partially offset by~~largely related to an $8.1 million legal settlement accrual which was recorded in the first quarter of 2018; (ii) a ~~decline~~decrease of $4.1 million in non-cash equity compensation expense, primarily related to equity awards which were accelerated in the first quarter of 2018 in connection with the departure of certain executives; and ~~salary costs. The increase~~(iii) a decrease in ~~legal~~ costs ~~primarily relates~~resulting largely from our cost savings initiatives and, to a ~~proposed settlement accrual~~lesser extent, the timing of ~~$4.0 million recorded in 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.~~expenses. See Note ~~10–~~11–Commitments and Contingencies and Note ~~11–~~12–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial ~~statements for further details.~~statements. As a percentage of total revenue, selling, general and administrative expenses were ~~18.1%~~19.4% in the ~~three months ended June 30, 2018~~first quarter of 2019 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 our SeaWorld Orlando reporting unit~~29.3% in the prior year quarter. ~~See Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statements.~~

Restructuring and other separation costs. Restructuring and other separation costs for the three months ended ~~June 30,~~March 31, 2019 primarily relates to severance and other expenses for positions which were eliminated in 2019. Restructuring and other separation costs for the three months ended March 31, 2018 primarily relates to severance and other employment expenses for certain ~~employees~~executives whose employment terminated during the ~~second~~first quarter of 2018. In particular, in connection with his departure and in accordance with his employment agreement, our Former CEO received a lump sum cash payment of approximately $6.7 million in severance related expenses. Also in March 2018, ~~and also includes $1.8 million~~certain other executives received severance related tobenefits in accordance with the ~~2018 Restructuring Program.~~terms of the relevant employment agreement or company plan, as applicable. See Note ~~13–~~14–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 three months ended ~~June 30, 2018~~March 31, 2019 increased ~~$0.5~~$1.0 million, or ~~1.3%~~2.7%, to ~~$40.0~~$39.5 million as compared to ~~$39.5~~$38.4 million for the three months ended ~~June 30, 2017.~~March 31, 2018.

Interest expense. Interest expense for the three months ended ~~June 30, 2018~~March 31, 2019 increased ~~$1.1~~$0.9 million, or ~~5.7%~~4.4%, to ~~$20.6~~$20.8 million as compared to ~~$19.5~~$19.9 million for the three months ended June 30, 2017. The increase primarily relates to increased LIBOR rates when compared to the prior year period. 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 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 June 30, 2018 was $12.0 million compared to a benefit from income taxes of $66.4 million for the three months ended June 30, 2017. The change primarily resulted from pretax income in the second quarter of 2018 compared to a significant pretax loss in the second quarter of 2017, due primarily to the goodwill impairment charge taken in that quarter. Our consolidated effective tax rate was 34.6% for the three months ended June 30, 2018 compared to 27.4% for the three months ended June 30, 2017. The effective tax rate 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 Tax Act reduction in the corporate federal tax rate from 35% to 21% ~~effective January 1, 2018~~.

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

For the Six Months Ended

June 30,

Variance

2018

2017

$

%

Summary Financial Data:

(Dollars in thousands, except per capita data)

Net revenues:

Admissions

$
355,809

$
340,040

$
15,769

4.6
%
Food, merchandise and other

253,278

220,067

33,211

15.1
%
Total revenues

609,087

560,107

48,980

8.7
%
Costs and expenses:

Cost of food, merchandise and other revenues

48,950

43,544

5,406

12.4
%
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
)

NM

Restructuring and other separation costs

12,526

—

12,526

ND

Depreciation and amortization

78,448

78,367

81

0.1
%
Total costs and expenses

620,024

859,406

(239,382
)

(27.9
%)
Operating loss

(10,937
)

(299,299
)

288,362

96.3
%
Other income, net

21

(3
)

24

NM

Interest expense

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
)

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

$
(40,147
)

$
(236,979
)

$
196,832

83.1
%
Other data:

Attendance

9,638

8,928

710

8.0
%
Total revenue per capita

$
63.20

$
62.74

$
0.46

0.7
%

~~Admissions revenue~~. Admissions revenue for the six months ended June 30, 2018 increased $15.8 million, or 4.6%, to $355.8 million as compared to $340.0 million for the six months ended June 30, 2017. The increase in admissions revenue was primarily a result of an increase in attendance of approximately 710,000 guests, or 8.0%, partially offset by a decrease in admissions per capita when compared to the first half of 2017. ~~We believe the improved attendance results from a combination of factors including new pricing strategies,~~ ~~new marketing and communications initiatives and the anticipation and reception of our new rides, attractions and events.~~ ~~These factors were partially offset by negative impacts from 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 an increase in in-park per capita spending of 6.6%, as discussed below, which was largely offset by a decrease in admission per capita. Admission per capita decreased by 3.1% to $36.92 in the six months ended June 30, 2018 compared to $38.09 in the six months ended June 30, 2017. The decline primarily results 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 six months ended June 30, 2018 increased $33.2 million, or 15.1%, to $253.3 million as compared to $220.1 million for the six months ended June 30, 2017. The increase results from an increase in attendance along with improvement in in-park per capita spending. In-park per capita spending increased by 6.6% to $26.28 in the six months ended June 30, 2018 compared to $24.65 in the six months ended June 30, 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 six months ended June 30, 2018 increased $5.4 million, or 12.4%, to $49.0 million as compared to $43.5 million for the six months ended June 30, 2017. These costs represent 19.3% and 19.8% of the related revenue earned for the six months ended June 30, 2018 and 2017, respectively.

~~Operating expenses.~~ Operating expenses for the six months ended June 30, 2018 decreased $1.0 million, or 0.3%, to $345.6 million as compared to $346.6 million for the six months ended June 30, 2017. Operating expenses for the six months ended June 30, 2018 also includes $7.7 million related to non-cash fixed asset write-offs, compared to $0.9 million in the prior year period. Operating expenses were 56.7% of total revenues for the six months ended June 30, 2018 compared to 61.9% for the six 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 six months ended June 30, 2018 increased $13.0 million, or 10.7%, to $134.5 million as compared to $121.6 million for the six months ended June 30, 2017. The increase primarily relates to an increase in marketing and legal costs partially offset by a decrease in equity compensation expense and salary costs due in part to cost savings initiatives. The increase in legal costs largely relates to a legal settlement accrual of $8.1 million recorded in the first quarter of 2018 and a proposed settlement accrual of $4.0 million recorded in the second quarter of 2018 (see Note 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 22.1% in the six months ended June 30, 2018 compared to 21.7% in the six months ended June 30, 2017.

~~Goodwill impairment charges.~~ Goodwill impairment charges for the six months ended June 30, 2017 relates to the full impairment of the goodwill related to our SeaWorld Orlando reporting unit in the 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 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 first half ofMarch 31, 2018. Restructuring and 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 six months ended June 30, 2018 increased $2.8 million, or 7.3%, to $40.5 million as compared to $37.7 million for the six months ended June 30, 2017.~~ The increase primarily relates to increased LIBOR rates and the impact of Amendment 8No. 9 to our Senior Secured Credit Facilities entered into on ~~March~~October 31, ~~2017,~~2018, partially offset by the impact of interest rate swap agreements. 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.

~~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 six months ended June 30, 2017 primarily relates to a write-off of discounts and debt issuance costs resulting from 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 income taxes. ~~The benefit~~Benefit from income taxes in the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 was ~~$11.3~~$15.1 million compared to ~~a benefit of $108.2~~$23.3 million for the ~~six~~three months ended ~~June 30, 2017. The change primarily resulted from a significant decrease in pretax loss in the first six months of 2018 compared to the first six months of 2017.~~March 31, 2018. Our consolidated effective tax rate was ~~21.9%~~29.0% for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 compared to ~~31.3%~~27.0% for the ~~six~~three months ended ~~June 30, 2017.~~ March 31, 2018. The ~~estimated annual~~ effective tax rate ~~decreased~~ increased primarily 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~~including equity-based compensation ~~partially offset by an increase in projected annual state tax 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 or~~ share repurchases. As of ~~June 30, 2018,~~March 31, 2019, we had a working capital ratio (defined as current assets divided by current liabilities) of 0.4, 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.

As market conditions warrant and subject to our contractual restrictions and liquidity position, we, our affiliates and/or our stockholders, may from time to time 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 purchases may be funded by incurring new debt, including additional borrowings under the Senior Secured Credit 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.

Our Board ~~has~~had previously 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.

Through December 31, 2018, we had repurchased an aggregate of $158.0 million under the Share Repurchase Program. On February 22, 2019, our Board authorized a replenishment to the Share Repurchase Program bringing the total amount authorized for future share repurchases back up to $250.0 million. The number of shares to be purchased and the timing of purchases will be based on ~~the level of~~ our ~~cash balances,~~trading windows and available liquidity, 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 June 30, 2018.~~ There were no share repurchases during the three ~~and six~~ months ended ~~June 30, 2018.~~March 31, 2019. See Note ~~12–~~13–Stockholders’ Equity in our notes to the unaudited condensed consolidated financial statements for further details.

As of ~~June 30, 2018,~~March 31, 2019, we have five interest rate swap agreements ~~(“the Interest~~(the “Interest Rate Swap Agreements”) which effectively fix the interest rate on ~~the~~ 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 7–8–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:

Net cash provided by operating activities was ~~$126.8~~$37.7 million during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 as compared to ~~$88.3~~$20.3 million during the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018. The ~~increase~~change in net cash provided by operating activities was primarily impacted by 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 ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 consisted ~~primarily~~ of capital expenditures of ~~$97.4~~$47.9 million largely related to ~~future~~2019 attractions.

Net cash used in investing activities during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 consisted ~~primarily~~ of ~~$103.2~~$45.8 million of capital expenditures largely related to attractions that opened in ~~2017.~~ 2018.

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 provided by financing activities during the three months ended March 31, 2019 results primarily from net draws of $35.0 million on our revolving credit facility, partially offset net repayments on long-term debt of $3.9 million. Net cash used in financing activities during the ~~six~~three months ended ~~June 30,~~March 31, 2018 results primarily from net ~~repayments~~draws of ~~$15.0~~$40.0 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~~partially offset net repayments on long-term debt of $16.8 million, $15.4 million of debt issuance costs paid in connection with Amendment No. 8 to our Senior Secured Credit Facilities, as defined below, and $1.5 million in cash dividends paid, partially offset by net draws of $15.6 million on our revolving credit facility.$5.9 million. See Note 6–Long-term Debt in our notes to the unaudited condensed consolidated financial statements for further details.

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~~October 31, ~~2017,~~2018, SEA entered into a refinancing amendment, Amendment No. 89 with SEA as the borrower, JPMorgan Chase Bank, N.A., as successor administrative agent, successor collateral agent, L/C issuer and swing line lender and the other agents and lenders from time to time (the ~~“Amendment”~~“Amended Credit Agreement”), to the existing Senior Secured Credit Facilities.

As of ~~June 30, 2018,~~March 31, 2019, our Senior Secured Credit Facilities consisted of ~~$985.8 million~~$1.52 billion 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~~ along with a $210.0 million ~~senior secured~~ Revolving Credit Facility, of which $65.0 million was ~~not~~ drawn upon as of ~~June 30, 2018. The~~March 31, 2019. Subsequent to March 31, 2019, SEA repaid a net of $40.0 million on the Revolving Credit ~~Facility will mature on the earlier~~Facility. Additionally, as 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 June 30, 2018,2019, SEA had approximately $21.3 million of outstanding letters of credit, leaving approximately ~~$188.7~~$123.7 million available for ~~borrowing.~~borrowing under the Revolving Credit Facility.

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~~March 31, 2019, we were in compliance with all covenants in the credit agreement governing the Senior Secured Credit Facilities.

The Amended Credit Agreement removed all previous financial covenants on the Term B-5 Loans. The Revolving Credit Facility requires that SEA comply with a springing maximum first lien secured leverage ratio of 6.25x to be tested as of the last day of any fiscal quarter, solely to the extent that on such date the aggregate amount of funded loans and letters of credit ~~agreement governing~~(excluding undrawn letters of credit in an amount not to exceed $30.0 million and cash collateralized letters of credit) under the Revolving Credit Facility exceeds an amount equal to 35% of the then outstanding commitments under the Revolving Credit Facility. Additionally, the definition of Adjusted EBITDA was amended to include the following items which had previously been added back on a limited basis: (i) add-backs of certain unusual items on a pre-tax basis which were previously added back on an after-tax basis only and (ii) unlimited add-backs primarily related to business optimization, development and strategic initiative costs which were previously limited to $15.0 million in any fiscal year. The Amended Credit Agreement also replaces the previous $10.0 million limitation on estimated cost savings with a limitation of 25% of the latest twelve months Adjusted EBITDA, calculated before estimated cost savings and increases the realization limit for estimated cost savings, operating expense reductions and synergies to 18 months.

As of March 31, 2019, the total leverage ratio as calculated under our Senior Secured Credit Facilities ~~provides~~was 3.51 to 1.00. The Company’s total leverage ratio is calculated by dividing total net debt by the last twelve months Adjusted EBITDA plus $21.4 million in estimated cost savings which have been identified based on certain specified actions the Company has taken, including restructurings and cost savings initiatives.

See Note 6–Long-Term Debt to the unaudited condensed consolidated financial statements 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). further details.

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”. 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, subject to certain limitations. Adjusted EBITDA as defined in the Senior Secured Credit Facilities is consistent with our reported Adjusted EBITDA.

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 June 30, 2018, the Total Leverage Ratio as calculated under the Senior Secured Credit Facilities was 4.35 to 1.00, which resulted in a $120 million capacity for restricted payments in 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.

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 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 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 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, as defined in the Amended Credit Agreement, to net (loss) income ~~(loss)~~ for the periods indicated:

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

	For the Three Months Ended March 31,						Last Twelve Months Ended March 31,
	2019			2018			2019
	(Unaudited, in thousands)
Net (loss) income	$	(37,020	)	$	(62,844	)	$	70,612
(Benefit from) provision for income taxes		(15,107	)		(23,279	)		26,087
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs^(a)		—			—			8,150
Interest expense		20,797			19,913			81,798
Depreciation and amortization		39,450			38,430			161,975
Equity-based compensation expense ^(b)		3,198			7,545			17,805
Loss on impairment or disposal of assets and certain non-cash expenses ^(c)		109			395			18,576
Business optimization, development and strategic initiative costs ^(d)		5,108			11,466			23,102
Certain investment costs and other taxes^(e)		50			178			3,225
Other adjusting items ^(f)		(169	)		10,494			4,067
Adjusted EBITDA^(g)	$	16,416		$	2,298		$	415,397
Items added back to Adjusted EBITDA, after cost savings, as defined in the Amended Credit Agreement:
Estimated cost savings^(h)								21,400
Adjusted EBITDA, after cost savings ⁽ⁱ⁾							$	436,797

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2018

2017

2018

2017

(Unaudited, in thousands)

Net income (loss)

$
22,697

$
(175,850
)

$
(40,147
)

$
(236,979
)
Provision for (benefit from) income taxes

11,994

(66,372
)

(11,285
)

(108,173
)
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs^(a)

—

123

—

8,143

Interest expense

20,561

19,452

40,474

37,713

Depreciation and amortization

40,018

39,500

78,448

78,367

Goodwill impairment charges^(b)

—

269,332

—

269,332

Equity-based compensation expense ^(c)

5,892

11,906

13,437

16,020

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)

5,430

2,112

13,509

2,112

Adjusted EBITDA

$
117,619

$
104,221

$
117,502

$
73,858

Prior to the Amended Credit Agreement, the credit agreement governing the Company’s Senior Secured Credit Facilities limited the amount of certain add-backs as described in footnotes (d), (f) and (i) below. The Adjusted EBITDA for all periods above reflects the current definitions in the Amended Credit Agreement. The following table reconciles the Adjusted EBITDA calculation as previously defined prior to the Amended Credit Agreement to the Adjusted EBITDA calculation as defined in the Amended Credit Agreement. This table is presented as supplemental information only:
	For the Three Months Ended March 31, 2018
	(Unaudited, in thousands)
Adjusted EBITDA (as previously defined)	$	(117	)
Certain expenses over previous credit agreement limit ^(d)		—
Taxes related to other adjusting items not previously added back^(f)		2,415
Adjusted EBITDA (as defined in the Amended Credit Agreement)	$	2,298

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~~Prior to the Amended Credit Agreement, due to limitations under the credit agreement governing our Senior Secured Credit Facilities, the amount which the Company was able to add back to Adjusted EBITDA for these costs, was limited to $15.0 million in any fiscal year. The Company did not have any costs exceeding this limit in 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.March 31, 2018.

Prior to the Amended Credit Agreement, these items were excluded on an after-tax basis only, as such, the Adjusted EBITDA calculation for the three months ended March 31, 2018 previously reported did not reflect related taxes of approximately $2.4 million.

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

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 ~~February 28, 2018, except as disclosed in Note 1–Description of the Business and Basis of Presentation~~ ~~in our notes to the unaudited condensed consolidated financial statements, related to the adoption of Accounting Standards Codification, Topic 606,~~ March 1, 2019~~Revenue from Contracts with Customers.~~.

We had no off-balance sheet arrangements as of ~~June 30, 2018.~~March 31, 2019.

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 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.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive ~~income (loss)~~loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive ~~income (loss)~~loss related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, our estimate is that an additional ~~$1.1~~$0.5 million will be reclassified as a reduction of interest ~~income.~~expense.

After considering the impact of interest rate swap agreements, at ~~June 30, 2018,~~March 31, 2019, approximately $1.0 billion of our outstanding long-term debt represents fixed-rate debt and approximately ~~$533.2~~$519.5 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 one month LIBOR on our variable-rate debt would lead to an increase of approximately ~~$5.7~~$5.6 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. Effective on January 1, 2019, we adopted Accounting Standards Codification (“ASC”) 842, Leases, which resulted in recording lease liabilities and right-of-use assets on our unaudited condensed consolidated balance sheet. As a result of this adoption, we implemented changes to our internal control activities and processes related to our lease commitments. These changes included implementing a new lease management software, establishing certain controls over financial reporting relating to leases and revising existing lease accounting policies and procedures. See Note 2–Recent Accounting Pronouncements and Note 7–Leases in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. There have been no other 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–~~11–Commitments and Contingencies under the caption “Legal Proceedings” 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 ~~February 28, 2018, except as set forth in our Quarterly Report on Form 10-Q for the quarterly period ended~~ March ~~31, 2018, as filed on May 9, 2018, and as noted below and~~1, 2019, except to the extent factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors.

~~Financial distress experienced by our strategic partners or other counterparties could have an adverse impact on us.~~

We are party to numerous contracts of varying durations. Certain of our 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.

Although we attempt to assess the creditworthiness of our strategic partners and other contract counterparties, there can be no assurance that our assessments will be accurate or that there will not be a rapid or unanticipated deterioration in the 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 subject to their own operating, market and regulatory risks, and 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 be unable to collect all, or even a significant portion, of amounts owed to us. Contracts with 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 inherently uncertain, and it is possible that we may receive little to no recovery on account of such claim. Accordingly, significant strategic partner and other counterparty defaults and bankruptcy filings could have a 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 inability or unwillingness to perform or adhere to contractual arrangements could have a material adverse impact on our 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 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 operate our business.

We are subject to allegations, claims and legal actions arising in the 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 litigation. The Company is also 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), 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 subpoena in connection with an investigation by the 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 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 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 be materially adversely affected. Even the successful defense of legal proceedings may cause us to incur 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 third-party groups and 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 portion of our 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 multiple ticket resellers could have a negative impact on our results of operations.

~~We may not realize the benefits of acquisitions or other strategic initiatives.~~

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 to develop SeaWorld Abu Dhabi, a 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 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 will be able to achieve the cost savings, grow our business or realize operational efficiencies. See further discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations―Principal Factors Affecting Our Results of Operations―Costs and Expenses” included elsewhere in this Quarterly Report on Form 10-Q.

The Company had no unregistered sales of equity securities during the ~~second~~first quarter of ~~2018.~~2019. 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⁾

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

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⁾
January 1, 2019	January 31, 2019		1,837	$	23.88		—	$	91,967,699
February 1, 2019	February 28, 2019		104,589	$	27.24		—		250,000,000
March 1, 2019	March 31, 2019		26,460	$	26.96		—		250,000,000
			132,886				—	$	250,000,000

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	☐


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SEAS	New York Stock Exchange

		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)~~Loss	4

	Unaudited Condensed Consolidated ~~Statement~~Statements 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	2625

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3734

Item 4.	Controls and Procedures	3835

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	3936

Item 1A.	Risk Factors	3936

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4136

Item 3.	Defaults Upon Senior Securities	4136

Item 4.	Mine Safety Disclosures	4136

Item 5.	Other Information	4236

Item 6.	Exhibits	42
		37
	Signatures	4338

	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

	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

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2018			2017			2018			2017
Net revenues:
Admissions	$	225,806		$	224,951		$	355,809		$	340,040
Food, merchandise and other		166,115			148,799			253,278			220,067
Total revenues		391,921			373,750			609,087			560,107
Costs and expenses:
Cost of food, merchandise and other revenues		31,899			29,061			48,950			43,544
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
Restructuring and other separation costs		3,691			—			12,526			—
Depreciation and amortization		40,018			39,500			78,448			78,367
Total costs and expenses		336,711			596,314			620,024			859,406
Operating income (loss)		55,210			(222,564	)		(10,937	)		(299,299	)
Other (income) expense, net		(42	)		83			21			(3	)
Interest expense		20,561			19,452			40,474			37,713
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs		—			123			—			8,143
Income (loss) before income taxes		34,691			(242,222	)		(51,432	)		(345,152	)
Provision for (benefit from) income taxes		11,994			(66,372	)		(11,285	)		(108,173	)
Net income (loss)	$	22,697		$	(175,850	)	$	(40,147	)	$	(236,979	)
Other comprehensive income (loss):
Unrealized gain (loss) on derivatives, net of tax		2,476			(706	)		9,967			1,698
Comprehensive income (loss)	$	25,173		$	(176,556	)	$	(30,180	)	$	(235,281	)
Income (loss) per share:
Net income (loss) per share, basic	$	0.26		$	(2.05	)	$	(0.47	)	$	(2.77	)
Net income (loss) per share, diluted	$	0.26		$	(2.05	)	$	(0.47	)	$	(2.77	)
Weighted average common shares outstanding:
Basic		86,399			85,745			86,305			85,560
Diluted		86,885			85,745			86,305			85,560

Years Ending December 31:	(In thousands)
2018	$	11,853
2019		23,707
Years Ending December 31,			(In thousands)
Remainder of 2019			$	76,629
2020		536,763		15,505
2021		9,983		15,505
2022		9,983		15,505
2023				15,505
Thereafter		940,903		1,445,864
Total	$	1,533,192	$	1,584,513

		March 31,
Leases	Classification	2019
Assets		(In thousands)
Operating leases	Right of use assets - operating	$	145,807
Financing leases	Other assets, net		3,990
Total lease assets		$	149,797
Liabilities
Current
Operating leases	Operating lease obligations		4,118
Financing leases	Other accrued liabilities		693
Noncurrent
Operating leases	Long-term operating lease obligations		128,119
Financing leases	Other liabilities		3,333
Total lease liabilities		$	136,263

Lease Cost	Classification	(In thousands)
Operating lease cost	Operating expenses	$	2,758
Operating lease cost	Selling, general and administrative expenses		137
Financing lease cost
Amortization of leased assets	Depreciation and amortization		184
Interest on lease liabilities	Interest expense		40
Net lease cost		$	3,119

Lease term and discount rate
Weighted average remaining lease term (years)
Operating leases	26.41
Financing leases	14.19
Weighted average discount rate
Operating leases	8.10	%
Financing leases	4.19	%

Other Information	(In thousands)
Operating cash flows from operating leases	$	2,764
Operating cash flows from financing leases	$	40
Financing cash flows from financing leases	$	168
Right of use assets obtained in exchange for financing lease obligations	$	1,230
Right of use assets obtained in exchange for operating lease obligations	$	133,297

	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	)

	Three Months Ended March 31,
	2019			2018
Derivatives in Cash Flow Hedging Relationships:	(In thousands)
(Loss) gain related to effective portion of derivatives recognized in accumulated other comprehensive loss	$	(1,953	)	$	12,116
Loss related to effective portion of derivatives reclassified from accumulated other comprehensive loss to interest expense	$	(855	)	$	(1,851	)

	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

Accumulated other comprehensive income (loss) (In thousands):			Income (Losses) on Cash Flow Hedges
Accumulated other comprehensive income at December 31, 2018			$	2,284
Other comprehensive loss before reclassifications	(1,435	)
Amounts reclassified from accumulated other comprehensive income to interest expense	(629	)
Unrealized loss on derivatives, net of tax				(2,064	)
Accumulated other comprehensive income at March 31, 2019			$	220

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2018		764,577		$	18.05
Granted		430,390		$	25.70
Forfeited		(55,379	)	$	19.36
Expired		(8,593	)	$	18.52
Exercised		(39,928	)	$	17.90
Outstanding at March 31, 2019		1,091,067		$	21.00		7.85	$	5,188
Exercisable at March 31, 2019		556,676		$	18.28		6.47	$	4,163

						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		—			—

Risk-free interest rate	2.48	%
Expected volatility ^(a)	28.50	%
Expected dividend yield	0.00	%
Expected life (years) ^(b)	6.00

	2018 Restructuring Program		2017 Restructuring Program
Severance and Other Employment Expenses	(In thousands)
Liability as of December 31, 2017	$	—	$	1,234
Payments made		—		(807	)
Costs incurred		1,750		—
Liability as of June 30, 2018	$	1,750	$	427

	2019 Restructuring and other Separation Costs		2018 Restructuring Program
	(In thousands)
Liability as of December 31, 2018	$	—	$	537
Costs incurred		2,566		—
Payments made		—		(159	)
Liability as of March 31, 2019	$	2,566	$	378

	For the Six Months Ended
	June 30,						Variance
	2018			2017			$			%
Summary Financial Data:	(Dollars in thousands, except per capita data)
Net revenues:
Admissions	$	355,809		$	340,040		$	15,769			4.6	%
Food, merchandise and other		253,278			220,067			33,211			15.1	%
Total revenues		609,087			560,107			48,980			8.7	%
Costs and expenses:
Cost of food, merchandise and other revenues		48,950			43,544			5,406			12.4	%
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	)	NM
Restructuring and other separation costs		12,526			—			12,526		ND
Depreciation and amortization		78,448			78,367			81			0.1	%
Total costs and expenses		620,024			859,406			(239,382	)		(27.9	%)
Operating loss		(10,937	)		(299,299	)		288,362			96.3	%
Other income, net		21			(3	)		24		NM
Interest expense		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	)	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	$	(40,147	)	$	(236,979	)	$	196,832			83.1	%
Other data:
Attendance		9,638			8,928			710			8.0	%
Total revenue per capita	$	63.20		$	62.74		$	0.46			0.7	%

Exhibit No.		Description

~~10.1~~10.1†*		~~Sixth Amended~~Form of Performance Stock Unit Grant Notice and ~~Restated Outside Director Compensation Policy, effective April 11,~~Restricted Stock Unit Agreement (Senior Leadership Team Executive Employees – Performance-Based Restricted Stock Units)

10.2†*		Form of Option Grant Notice and Option Agreement (Tier 2– Time-Based Options)

10.3†*		Form of Performance Stock Unit Grant Notice and Restricted Stock Unit Agreement (Employees – Annual Incentive Plan Award)

10.4†*		Offer Letter of Employment, Agreed and Accepted the 2nd day of June, 2018, between SeaWorld Entertainment, Inc. and Walter Bogumil

10.5†*		Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement between SeaWorld Entertainment, Inc. and Gustavo Antorcha, dated March 14, 2019

10.6†*		Performance Stock Unit Grant Notice and Restricted Stock Unit Agreement between SeaWorld Entertainment, Inc. and Gustavo Antorcha, dated March 14, 2019

10.7†*		Option Grant Notice and Option Agreement between SeaWorld Entertainment, Inc. and Gustavo Antorcha, dated March 14, 2019

10.8		Letter Agreement, dated May 3, 2019, between Sun Wise (UK) Co., LTD and SeaWorld Entertainment, Inc. (incorporated by reference to Exhibit ~~10.4~~10.1 to the ~~Company’s Quarterly~~Registrant’s Current Report on Form ~~10-Q~~8-K filed on May ~~9, 2018~~6, 2019 (File No. 001-35883))

10.9		Letter Agreement, dated May 3, 2019, between Lord Central Opportunity V Limited and SeaWorld Entertainment, Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 6, 2019 (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.~~Document

101.SCH*		XBRL Taxonomy Extension Schema ~~Document.~~Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase ~~Document.~~Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase ~~Document.~~Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase ~~Document.~~Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase ~~Document.~~Document

		SEAWORLD ENTERTAINMENT, INC.
		(Registrant)
Date: May 8, 2019
~~Date: August 7, 2018~~		By: /s/ Marc G. Swanson
		~~Marc G. Swanson~~
Date: May 8, 2019		Marc. G. Swanson Chief Financial Officer
		(Principal Financial Officer)

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