What changed in this filing

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Item 9A. Controls and Procedures

2021-02-26 compared with 2020-02-27 · 570 added, 674 removed, 1036 unchanged (55% of the section changed)

9 unchanged sentences

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 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 3–Recent Accounting Pronouncements and Note 14–Leases in our notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

There have been no other changes in our internal control over financial reporting during the fiscal year covered by this Annual Report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that certain employees worked remotely due to the COVID-19 related park closures and some continue to work on a remote basis.

We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

There have been no changes in our internal control over financial reporting during the fiscal year covered by this Annual Report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

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Other Information

On February 25, 2020, the Company’s Board of Directors approved a modification (the “Modification”) to certain outstanding performance-vesting restricted stock units granted to certain individuals, including, without limitation, Marc Swanson, the Company’s Chief Financial Officer and Treasurer, G.

Anthony (Tony) Taylor, the Company’s Chief Legal Officer, General Counsel and Corporate Secretary, Walter Bogumil, the Company’s Chief Strategy Officer and Dr.

Christopher (Chris) Dold, the Company’s Chief Zoological Officer (each an “NEO” and, collectively, the “NEOs”) in 2019 (the “2019 LTIP Performance Awards”), the terms of which were previously disclosed in the Company’s definitive proxy statement on Schedule 14A relating to the Company’s 2019 annual meeting of stockholders.

The Company approved the Modification to the 2019 LTIP Performance Awards in light of the subsequent performance-vesting restricted stock units award granted to the Company’s new Chief Executive Officer (the “CEO Performance Awards”) at the time of the commencement of his employment with the Company, in order better align the terms of the 2019 LTIP Performance Awards held by the NEOs with those of the CEO Performance Awards.

The CEO Performance Awards have a three-year performance period consisting of the 2020-2022 calendar years (or, extended through the end of the 2023 calendar year, as applicable);

however, the 2019 LTIP Performance Awards contained a three-year performance period consisting of the 2019-2021 calendar years (or, extended through the end of the 2022 calendar year, as applicable).

Upon review of the awards the Compensation Committee of the Board determined it was preferable to align the 2019 LTIP Performance Awards with the CEO Performance Awards and put everyone on the same remaining performance cycle with aligned performance metrics.

Pursuant to the Modification, the threshold and target performance goals were revised to align with the CEO Performance Awards threshold and target performance goals and the performance period was extended through calendar year 2022 (or, the end of the 2023 calendar year, as applicable) consistent with the CEO Performance Awards.

There was no incremental equity compensation expense under Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”) associated with the modification of the NEOs’ awards on the date of modification.

The Company will use the respective modification date fair value to record equity compensation expense related to these awards when and if they become probable of vesting in a future period, in accordance with ASC Topic 718.

Rule 10b5-1 Plans

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The information required by this item will be included in our definitive proxy statement to be filed not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K and is incorporated herein by reference.

Security Ownership of Certain Beneficial Ow ners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table provides information about our Equity Compensation Plan as of December 31, 2020:

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Consolidated Balance Sheets

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Changes in Stockholders’ (Deficit) Equity

Consolidated Statements of Cash Flows

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Description of the Registrant’s Securities

Indenture, dated as of April 30, 2020, among SeaWorld Parks & Entertainment, Inc., SeaWorld Entertainment, Inc., the other guarantors from time to time party thereto and Wilmington Trust, National Association, as trustee and collateral agent.

(incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on April 30, 2020 (File No.

Indenture, dated as of August 5, 2020, among SeaWorld Parks & Entertainment, Inc., SeaWorld Entertainment, Inc., the other guarantors from time to time party thereto and Wilmington Trust, National Association, as trustee and collateral agent.

(incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on August 5, 2020 (File No.

Amendment No.

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2013 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement on Form S-1 filed on February 12, 2013 (File No.

Form of Restricted Stock Grant and Acknowledgment (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1 filed on March 25, 2013 (File No.

Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.40 to the Registrant’s Registration Statement on Form S-1 filed on April 8, 2013 (File No.

Form of Restricted Stock Grant Notice and Restricted Stock Agreement (Employees—Time-Based Shares) (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (File No.

Form of Option Grant Notice and Option Agreement (Employees—Time-Based Options) (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (File No.

Form of Restricted Stock Grant Notice and Restricted Stock Agreement (Employees—Performance-Based Shares) (incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (File No.

Form of Restricted Stock Agreement (Outside Director Award) (incorporated by reference to Exhibit 10.49 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2016 (File No.

Form of Restricted Stock Award Agreement (Outside Director Annual Award) (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 (File No.

Second Amended & Restated Stock Ownership Guidelines, adopted January 18, 2017 (incorporated by reference to Exhibit 10.56 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No.

Third Amended & Restated Stock Ownership Guidelines, adopted February 19, 2020

Amended and Restated Key Employee Severance Plan, effective March 1, 2017 (incorporated by reference to Exhibit 10.57 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No.

Form of Restricted Stock Award Agreement (Outside Director Initial/Annual Award) – 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No.

Form of Restricted Stock Grant Notice and Restricted Stock Agreement (Special Retention Grant ―Time-Based Shares) – 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No.

Form of Restricted Stock Grant Notice and Restricted Stock Agreement (Employees―Annual Incentive Plan Award) – 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No.

Incentive Compensation Clawback Policy, effective October 11, 2017(incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No.

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Form of Performance Stock Unit Grant Notice and Performance Stock Unit Agreement (Employees – Performance-Based Restricted Stock Units) (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (File No.

Sixth Amended and Restated Outside Director Compensation Policy, effective April 11, 2018 (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (File No.

Form of Deferred Stock Unit Grant Notice and Deferred Stock Unit Agreement (Non-Employee Directors) (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (File No.

Stockholders Agreement, dated as of March 24, 2017, by and among SeaWorld Entertainment, Inc., Sun Wise (UK) Co., Ltd.

and, solely for purposes of Section 4.3 thereof, Zhonghong Zhuoye Group Co., Ltd.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 24, 2017 (File No.

Registration Rights Agreement, dated as of March 24, 2017, by and between SeaWorld Entertainment, Inc.

and Sun Wise (UK) Co., Ltd.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on March 24, 2017 (File No.

Form of Restricted Stock Grant Notice and Restricted Stock Agreement (Employees―Annual Incentive Plan Award) (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No.

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(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2017 (File No.

Undertaking Agreement, dated November 5, 2017, among Scott Ross, Hill Path Capital LP and SeaWorld Entertainment, Inc.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on November 7, 2017 (File No.

Side Letter, dated November 5, 2017, between SeaWorld Entertainment, Inc.

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(incorporated by reference to Exhibit 99.4 to the Registrant’s Current Report on Form 8-K filed on March 24, 2017 (File No.

Employment Agreement, dated February 4, 2019, between SeaWorld Entertainment, Inc.

and Gustavo Antorcha (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 5, 2019 (File No.

Option Grant Notice and Option Agreement between SeaWorld Entertainment, Inc.

and Gustavo Antorcha, dated March 14, 2019 (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 10-Q filed on May 8, 2019 (File No.

Performance Stock Unit Grant Notice and Restricted Stock Unit Agreement between SeaWorld Entertainment, Inc.

and Gustavo Antorcha, dated March 14, 2019 (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 10-Q filed on May 8, 2019 (File No.

Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement between SeaWorld Entertainment, Inc.

and Gustavo Antorcha, dated March 14, 2019 (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 10-Q filed on May 8, 2019 (File No.

Offer Letter of Employment, Agreed and Accepted the 2nd day of June, 2018, between SeaWorld Entertainment, Inc.

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Form of Performance Stock Unit Grant Notice and Restricted Stock Unit Agreement (Senior Leadership Team Executive Employees – Performance-Based Restricted Stock Units) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 10-Q filed on May 8, 2019 (File No.

Seventh Amended and Restated Outside Director Compensation Policy, effective June 12, 2019 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 13, 2019 (File No.

Amended and Restated Undertaking Agreement, dated May 27, 2019, by and among SeaWorld Entertainment, Inc.

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(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 28, 2019 (File No.

Share Repurchase Agreement, dated as of May 27, 2019, by and among SeaWorld Entertainment, Inc.

and Lord Central Opportunity V Limited (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 28, 2019 (File No.

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.

Letter Agreement, dated May 3, 2019, between Sun Wise (UK) Co., LTD and SeaWorld Entertainment, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 6, 2019 (File No.

Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (2019 Time-Based Restricted Stock Units) (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q-K filed on November 7, 2019 (File No.

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and Sergio Rivera (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2019 (File No.

Performance Stock Unit Grant Notice and Restricted Stock Unit Agreement between SeaWorld Entertainment, Inc.

and Sergio Rivera, dated November 11, 2019

Option Grant Notice and Option Agreement between SeaWorld Entertainment, Inc.

and Sergio Rivera, dated November 11, 2019

Time-based Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement between SeaWorld Entertainment, Inc.

and Sergio Rivera, dated November 11, 2019

Form of Restricted Stock Unit Award Agreement (Outside Director)

Amendment No.

10, dated as of March 10, 2020, to the Credit Agreement, dated as of December 1, 2009, among SeaWorld Parks & Entertainment, Inc., the several banks and other financial institutions or entities from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., as L/C issuer and swing line lender and the other parties thereto.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 11, 2020 (File No.

Amendment No.

11, dated as of April 19, 2020, to the Credit Agreement, dated as of December 1, 2009, among SeaWorld Parks & Entertainment, Inc., the several banks and other financial institutions or entities from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., as L/C issuer and swing line lender and the other parties thereto.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2020 (File No.

First-Lien Intercreditor Agreement, dated as of April 30, 2020, among SeaWorld Parks & Entertainment, Inc., the other grantors from time to time party thereto, JPMorgan Chase Bank, N.A., as collateral agent for the Credit Agreement Secured Parties (as defined therein), JPMorgan Chase Bank, N.A.

as authorized representative for the Credit Agreement Secured Parties, Wilmington Trust, National Association, as collateral agent for the Initial Additional First-Lien Secured Parties (as defined therein), Wilmington Trust, National Association, as authorized representative for the Initial Additional First-Lien Secured Parties and each additional authorized representative from time to time party thereto.

(incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Security Agreement, dated as of April 30, 2020, among SeaWorld Parks & Entertainment, Inc., SeaWorld Entertainment, Inc., the other grantors from time to time party thereto and Wilmington Trust, National Association, as collateral agent.

(incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Pledge Agreement, dated as of April 30, 2020, among SeaWorld Entertainment, Inc.

and Wilmington Trust, National Association, as collateral agent.

(incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2020 (File No.

Copyright Security Agreement, dated as of April 30, 2020, by SeaWorld Parks & Entertainment, Inc., Sea World LLC and SeaWorld Parks & Entertainment LLC, in favor of Wilmington Trust, National Association, as collateral agent.

(incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2020 (File No.

Patent Security Agreement, dated as of April 30, 2020, by SeaWorld Parks & Entertainment, Inc., in favor of Wilmington Trust, National Association, as collateral agent.

(incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2020 (File No.

Trademark Security Agreement, dated as of April 30, 2020, by SeaWorld Parks & Entertainment, Inc., Sea World LLC and SeaWorld Parks & Entertainment LLC, and in favor of Wilmington Trust, National Association, as collateral agent.

(incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2020 (File No.

Form of 2020 Letter Amendment to Performance Stock Unit Award Agreement.

(incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2020 (File No.

Amendment No.

12, dated as of July 29, 2020, to the Credit Agreement, dated as of December 1, 2009, among SeaWorld Parks & Entertainment, Inc., the several banks and other financial institutions or entities from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., as L/C issuer and swing line lender and the other parties thereto.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Intercreditor Agreement, dated as of August 5, 2020, among JPMORGAN CHASE BANK, N.A., as Credit Agreement Agent, WILMINGTON TRUST, NATIONAL ASSOCIATION, as First Priority Notes Collateral Agent, each Other First Priority Lien Obligations Agent from time to time party hereto, each in its capacity as First Lien Agent, WILMINGTON TRUST, NATIONAL ASSOCIATION, solely in its capacity as Trustee and Second Priority Collateral Agent and each collateral agent for any Future Second Lien Indebtedness from time to time party hereto, each in its capacity as Second Priority Agent.

incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Second Lien Security Agreement, dated as of August 5, 2020, among the Grantors and Wilmington Trust, National Association, as Collateral Agent for the Secured Parties.

incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Second Lien Pledge Agreement, dated as of August 5, 2020, among SeaWorld Entertainment, Inc.

and Wilmington Trust, National Association, as collateral agent.

incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Copyright Security Agreement, dated as of August 5, 2020, by SeaWorld Parks & Entertainment, Inc., Sea World LLC and SeaWorld Parks & Entertainment LLC, in favor of Wilmington Trust, National Association, as collateral agent.

incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Patent Security Agreement, dated as of August 5, 2020, by SeaWorld Parks & Entertainment, Inc., in favor of Wilmington Trust, National Association, as collateral agent.

incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Trademark Security Agreement, dated as of August 5, 2020, by SeaWorld Entertainment, Inc., Sea World LLC and SeaWorld Parks & Entertainment LLC, and in favor of Wilmington Trust, National Association, as collateral agent.

incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (Non-Employee Directors)

List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K filed on February 26, 2016 (File No.

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February 26, 2021

/s/ SERGIO (SERGE) RIVERA

Sergio (Serge) Rivera

Chief Executive Officer, Director

Interim Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/S/ SERGIO (SERGE) RIVERA

February 26, 2021

Chief Executive Officer, Director

Sergio (Serge) Rivera

(Principal Executive Officer)

February 27, 2020

Chief Financial Officer (Principal Financial Officer)

Interim Chief Executive Officer (Principal Executive Officer)

/S/ ELIZABETH C.

February 26, 2021

Chief Accounting Officer (Principal Accounting Officer)

Interim Chief Financial Officer and Chief Accounting Officer (Principal Financial and Accounting Officer)

/S/ RONALD BENSION

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February 26, 2021

/S/ TIMOTHY J.

February 26, 2021

/S/ CHARLES KOPPELMAN

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February 26, 2021

/S/ KIMBERLY K.

February 26, 2021

SEAWORLD ENTERTAINMENT, INC.

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Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2019, 2018 and 2017

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2019, 2018 and 2017

Consolidated Statements of Comprehensive (Loss) Income (for the Years Ended December 31, 2020, 2019 and 2018

Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the Years Ended December 31, 2020, 2019 and 2018

Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018

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We have audited the accompanying consolidated balance sheets of SeaWorld Entertainment, Inc.

and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive (loss) income, changes in stockholders’ (deficit) equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

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Change in Accounting Principle

As discussed in Note 3 to the financial statements, effective January 1, 2019, the Company adopted Financial Accounting Standards Board Topic Accounting Standards Codification 842 —Leases , using the modified retrospective approach.

Effective January 1, 2019, the Company adopted Financial Accounting Standards Board Topic Accounting Standards Codification 842 —Leases , using the modified retrospective approach.

Basis for Opinion

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinions on the critical audit matters or on the accounts or disclosures to which it relates.

Revenue Recognition—Deferred Revenue Related to Annual and Season Admission Pass Products—Refer to Note 2 and Note 4 to the consolidated financial statements

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Attendance trends factor in seasonality and are adjusted based on actual trends periodically.

As a result of the temporary park closures due to the COVID-19 pandemic, the Company upgraded some of their pass products and extended pass expiration dates for at least the equivalent period the related parks were closed which were considered in the estimated redemption and recognition patterns.

Revenue is recognized on a pro rata basis based on the estimated allocated selling price of the admission product.

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We tested the effectiveness of management’s controls over revenue recognition related to annual and season admission pass products, including controls over actual and forecasted attendance used in the models.

We evaluated management’s ability to accurately forecast expected attendance by comparing actual results to management’s historical forecasts.

We evaluated the reasonableness of the current-year attendance forecasts compared to prior-year actual results, considering recent trends in the Company’s attendance.

We tested the mathematical accuracy and appropriateness of management’s deferred revenue models and timing of recognition.

We developed an independent expectation of the deferred revenue balances, related to annual and season admission pass products, comparing such expectation to the recorded amount.

We evaluated management’s ability to accurately forecast expected attendance by comparing actual results to management’s historical forecasts on a quarterly basis.

We evaluated the reasonableness of the current-year attendance forecasts compared to historical results, considering recent trends in the Company’s attendance.

We tested the mathematical accuracy and appropriateness of management’s deferred revenue models and timing of recognition, including changes to the model to account for pass extensions as a result of park closures.

We detail tested the deferred revenue balances, related to annual and season admission pass products.

Further, we evaluated the reasonableness of the expected future relief of the deferred balances, in particularly with respect to the impact of COVID-19 and pass product upgrades and extensions.

/s/ Deloitte & Touche LLP

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Property and equipment, net

Goodwill, net

Trade names/trademarks, net

Right of use assets-operating leases

Other intangible assets, net

Deferred tax assets, net

Other assets, net

Liabilities and Stockholders’ Equity

Liabilities and Stockholders’ (Deficit) Equity

Current liabilities:

Accounts payable and accrued expenses

Current maturities of long-term debt, including revolving credit facility of $ 50,000 and $ 30,000 as of December 31, 2019 and 2018, respectively

Operating lease obligations

Current maturities of long-term debt

Operating lease liabilities

Accrued salaries, wages and benefits

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Total current liabilities

Long-term debt, net of debt issuance costs of $ 4,966 and $ 6,641

as of December 31, 2019 and 2018, respectively

Long-term operating lease obligations

Long-term debt, net

Long-term operating lease liabilities

Deferred tax liabilities, net

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Commitments and contingencies (Note 15)

Stockholders’ Equity:

Stockholders’ (Deficit) Equity:

Preferred stock, $ 0.01 par value—authorized, 100,000,000 shares, no shares

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Additional paid-in capital

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Accumulated deficit

Treasury stock, at cost ( 16,260,248 and 15,790,463 shares at December 31, 2020 and 2019, respectively)

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total stockholders’ (deficit) equity

Total liabilities and stockholders’ (deficit) equity

See accompanying notes to consolidated financial statements.

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands, except per share amounts)

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Selling, general and administrative expenses

Goodwill impairment charge

Severance and other separation costs

1 unchanged sentence

Total costs and expenses

Operating income (loss)

Operating (loss) income

Other expense (income), net

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of discounts and debt issuance costs

Income (loss) before income taxes

Provision for (benefit from) income taxes

Net income (loss)

Other comprehensive (loss) income:

Unrealized (loss) gain on derivatives, net of tax

Comprehensive income (loss)

Earnings (loss) per share:

Earnings (loss) per share, basic

Earnings (loss) per share, diluted

(Loss) income before income taxes

(Benefit from) provision for income taxes

Net (loss) income

Other comprehensive income (loss):

Unrealized gain (loss) on derivatives, net of tax

Comprehensive (loss) income

(Loss) earnings per share:

(Loss) earnings per share, basic

(Loss) earnings per share, diluted

Weighted average common shares outstanding:

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY

(In thousands, except per share and share amounts)

Earnings (Accumulated Deficit)

(Accumulated Deficit)

Comprehensive

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Stockholders'

(Deficit) Equity

Balance at December 31, 2017

Impact of adoption of ASU 2018-02

Equity-based compensation

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Exercise of stock options

Accumulated cash dividends related to

performance shares which vested during the

Adjustments to previous dividend declarations

Repurchase of 3,654,816 shares of treasury stock, at cost

Balance at December 31, 2018

Impact of adoption of ASU 2018-02

Equity-based compensation

Unrealized gain on derivatives, net of

tax expense of $ 3,111

Unrealized loss on derivatives, net of

tax benefit of $ 1,421

Vesting of restricted shares

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Equity-based compensation

Unrealized loss on derivatives, net of

tax benefit of $ 1,421

Unrealized gain on derivatives, net of

tax expense of $ 572

Vesting of restricted shares

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Cash Flows From Operating Activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by

Net (loss) income

Adjustments to reconcile net (loss) income to net cash (used in) provided by

operating activities:

Goodwill impairment charge

Depreciation and amortization

Amortization of debt issuance costs and discounts

Loss on impairment or disposal of assets, net

Loss on early extinguishment of debt and write-off

of discounts and debt issuance costs

Deferred income tax provision (benefit)

Deferred income tax (benefit) provision

Equity-based compensation

Other including loss on impairment or disposal of assets, net

Changes in assets and liabilities:

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Other accrued liabilities

Right-of-use assets and operating lease obligations

Right-of-use assets and operating lease liabilities

Other assets and liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash Flows From Investing Activities:

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Cash Flows From Financing Activities:

Proceeds from the issuance of debt

Proceeds from the issuance of debt, net

Repayments of long-term debt

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Other financing activities

Net cash used in financing activities

Net cash provided by (used in) financing activities

Change in Cash and Cash Equivalents, including Restricted Cash

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Capital expenditures in accounts payable and accrued expenses

Other financing arrangements

See accompanying notes to consolidated financial statements.

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The Company also operates a reservations-only theme park in Orlando, Florida (Discovery Cove) and a seasonal theme park in Langhorne, Pennsylvania (Sesame Place).

During each of the years ended December 31, 2019, 2018 and 2017 approximately 57 % of the Company’s revenues were generated in the State of Florida.

Historically more than 50 % of the Company’s revenues were generated in the State of Florida which exposes the Company to risks affecting the Florida market, such as natural disasters, severe weather or other incidents.

During the year ended December 31, 2020, more than 70 % of the Company’s revenues were generated in the State of Florida, due in part to the temporary park closures and limited operations as a result of the COVID-19 pandemic.

See Impact of Global COVID-19 Pandemic section which follows for further discussion on factors impacting 2020 revenues.

Impact of Global COVID-19 Pandemic

In response to the COVID-19 pandemic, and in compliance with government restrictions, the Company temporarily closed all of its theme parks effective March 16, 2020.

Beginning in June 2020, the Company began the phased reopening of some of its parks with enhanced health, safety and sanitizing measures, capacity limitations, modified/limited operations, reduced hours and/or reduced operating days.

In particular, on June 6, its Aquatica water park in Texas reopened;

on June 11, all five of its Florida parks reopened;

on June 19, its SeaWorld park in Texas reopened;

on July 24, its Sesame Place park in Pennsylvania reopened;

on August 5, its Busch Gardens park in Virginia reopened and on August 28, its SeaWorld park in California reopened on a limited basis, following the State of California’s guidance for reopening zoos.

In compliance with revised state governmental restrictions issued late in the fourth quarter in California, the Company once again closed its SeaWorld park in California effective December 7, 2020.

The Company was unable to open its Aquatica water park in California and its Water Country USA water park in Virginia for the 2020 operating season.

Additionally, during the third quarter, the State of Virginia had a state mandated capacity restriction of 1,000 guests at a time which significantly restricted attendance for the Company’s Busch Gardens park in that state.

On October 29, 2020, the State of Virginia revised its theme park guidance and modified the methodology for calculating capacity at theme parks.

As a result, capacity at this park increased from 1,000 guests to approximately 4,000 guests at a time.

On January 15, 2021, while the Company’s SeaWorld park in California park remained closed, the Company introduced a limited time drive-through only experience for guests at this park.

Subsequently, based on updated state government guidance issued in January 2021, the Company has since reopened its SeaWorld park in California on February 6, 2021 on a limited basis, once again following California guidance for reopening zoos.

The Company continues to monitor guidance from, and engage with, federal, state and local authorities and may adjust its plans accordingly.

Since the COVID-19 pandemic began, the Company has taken proactive measures for the safety of its guests, employees and animals, to manage costs and expenditures, and to maximize liquidity in response to the temporary park closures and limited reopenings related to the COVID-19 pandemic.

Some of these measures included, but are not limited to:

(i) increased its revolving credit commitments on March 10th;

(ii) issued $ 227.5 million in first-priority senior secured notes and $ 500.0 million in second-priority senior secured notes to raise additional capital and further enhance available liquidity;

(iii) entered into amendments to its existing senior secured credit facilities to amend financial covenants;

(iv) furloughed approximately 95% of its employees upon closing all of its parks;

(v) obtained payroll tax credits and deferred certain social security payroll taxes under the CARES act;

(vi) temporarily reduced executive officers’ base salary by 20% through November 2020;

(vii) eliminated and/or deferred all non-essential operating expenses at all of its parks and corporate headquarters while the parks were closed and actively managing operating expenses;

(viii) eliminated substantially all advertising and marketing spend while the parks were closed and strategically managing marketing spend as parks reopened;

(ix) substantially reduced or deferred all capital expenditures starting in March 2020 (other than minimal essential capital expenditures) when the parks were closed and postponed the opening of rides that were still under construction and scheduled to open in 2020;

(x) worked with certain of its vendors and other business partners to manage, defer, and/or abate certain costs and payments and;

(xi) added additional levels of review and approval for payments and cash disbursements which remains in place.

Concurrent with the reopening of some of its parks, the Company began to prudently bring some employees back from furlough.

employees remain on furlough while others have been transitioned from a furloughed status to a permanent layoff.

See Note 21–Severance and Other Separation Costs for additional disclosure.

The COVID-19 pandemic, resulting park closures and limited park reopenings have had, and are likely to continue to have, a material impact on the Company’s financial results.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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 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.

Significant estimates and assumptions include, but are not limited to, the accounting for self-insurance, deferred tax assets and liabilities, deferred revenue, equity compensation, the valuation of goodwill and other indefinite-lived intangible assets as well as reviews for potential impairment of long-lived assets.

Estimates are based on various factors including current and historical trends, as well as other pertinent company and industry data.

The Company regularly evaluates this information to determine if it is necessary to update the basis for its estimates and to adjust for known changes.

Actual results could differ from those estimates.

Based on the uncertainty relating to the COVID-19 pandemic, including but not limited to the extent, duration and impact of park closures, limited park reopenings, capacity limitations due to social distancing guidelines, public sentiment on social gatherings, travel and attendance patterns, potential supply chain disruptions and additional actions which could be taken by government authorities to manage the pandemic, the Company is not certain of the ultimate impact the COVID-19 pandemic could have on its estimates, business or results of operations.

Cash and Cash Equivalents

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The Company is not exposed to a significant concentration of credit risk.

The Company records an allowance on trade accounts receivable with an offset to the provision for bad debt for estimated uncollectible receivables, based on the amount and status of past-due accounts, contractual terms of the receivables and the Company’s history of uncollectible accounts.

For all periods presented, the provision for bad debt was immaterial related to these accounts.

The Company also records an allowance on amounts due from monthly installment arrangements based on historical default rates.

As of December 31, 2019 and 2018, the Company recorded $ 12.1 million and $ 14.7 million, respectively, as an allowance on its installment arrangements with a corresponding reduction to deferred revenue.

The Company records an allowance on trade accounts receivable with an offset to the provision for bad debt for estimated credit losses expected based on its history of uncollectable accounts.

For all periods presented,

the provision for bad debt was immaterial.

The Company also records an allowance for estimated credit losses on amounts due from monthly installment arrangements based on historical defaul t rates.

As of December 31, 2020 and 201 9 , the Company recorded $ 6.7 million and $ 12.1 million, respectively, as an allowance on its installment arrangements , which is included in accounts rec ei vable, net, in the accompanying consolidated balance sheets, with a corresponding reduction to deferred revenue.

Inventories are accounted for using the weighted average cost method and are stated at the lower of cost or net realizable value.

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Certain costs related to animals exhibited in the theme parks are capitalized and amortized over their estimated lives ( 1 - 50 years ).

All costs to maintain animals are expensed as incurred, including in-house animal breeding costs, as they are immaterial to the consolidated financial statements.

All costs to care for animals are expensed as incurred.

Construction in progress assets consist primarily of new rides, attractions and infrastructure improvements that have not yet been placed in service.

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Accumulated amortization was $ 11.2 million and $ 9.5 million as of December 31, 2020 and 2019, respectively.

Amortization expense of capitalized computer system development costs during the years ended December 31, 2019, 2018 and 2017 was $ 2.2 million, $ 3.7 million and $ 3.5 million, respectively, and is recorded in depreciation and amortization in the accompanying consolidated statements of comprehensive income (loss).

Amortization expense of capitalized computer system development costs during the years ended December 31, 2020, 2019 and 2018 was $ 1.7 million, $ 2.2 million and $ 3.7 million, respectively, and is recorded in depreciation and amortization in the accompanying consolidated statements of comprehensive (loss) income.

Systems reengineering costs do not meet the proper criteria for capitalization and are expensed as incurred.

Impairment of Long-Lived Assets

All long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable.

An impairment loss may be recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset.

The measurement of the impairment loss to be recognized is based upon the difference between the estimated fair value and the carrying amounts of the assets.

Fair value is generally determined based upon a discounted cash flow analysis.

In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available (generally a theme park).

See further discussion in Note 8–Property and Equipment, Net.

Goodwill and Other Indefinite-Lived Intangible Assets

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See Note 9–Goodwill, Trade Names/Trademarks and Other Intangible Assets, Net, for further details.

During the year ended December 31, 2020, due to the temporary park closures effective March 16, 2020 and the limited park reopenings resulting from the COVID-19 pandemic discussed previously, the Company identified triggering events and qualitatively evaluated its goodwill and other indefinite-lived intangible assets for further impairment analysis.

These qualitative evaluations included certain judgements and assumptions related to the impact of the temporary park closures, the extent and duration of capacity limitations, the expected attendance levels and number of operating days/hours and the significant excess of historical fair values over carrying values and determined that, no further impairment analysis was warranted.

As such, the Company did no t record an impairment of goodwill and other indefinite-lived intangible assets during the year ended December 31, 2020.

If the Company’s assumptions, including those around the impact of the COVID-19 pandemic and its projections of future cash flows and financial performance, as well as the economic outlook are not achieved, the Company may be required to record impairment charges in future periods, whether in connection with the Company’s next annual impairment testing, or on an interim basis, if any such change constitutes a triggering event outside of the quarter when the Company regularly performs its annual impairment test.

It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

Impairment of Long-Lived Assets

All long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable.

An impairment loss may be recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset.

The measurement of the impairment loss to be recognized is based upon the difference between the estimated fair value and the carrying amounts of the assets.

As discussed above, during the year ended December 31, 2020, due to the impact from the COVID-19 pandemic, the Company identified triggering events and qualitatively evaluated certain long-lived assets, including its right of use assets, for further impairment analysis.

Using similar assumptions as discussed above, the Company determined that, based on the significant excess estimated undiscounted cash flows over carrying values, there was no impairment of other long-lived assets.

Fair value is generally determined based upon a discounted cash flow analysis.

In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available (generally a theme park).

See further discussion in Note 8–Property and Equipment, Net.

Self-Insurance Reserves

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The Company accounts for treasury stock on the trade date under the cost method.

Treasury stock at December 31, 2019 and 2018 is recorded as a reduction to stockholders’ equity as the Company does not currently intend to retire the treasury stock held.

See further discussion of the Company’s share repurchase program in Note 20–Stockholders’ Equity.

Treasury stock at December 31, 2020 and 2019 is recorded as a reduction to stockholders’ (deficit) equity as the Company does not currently intend to retire the treasury stock held.

See further discussion of the Company’s share repurchase program in Note 20–Stockholders’ (Deficit) Equity.

Revenue Recognition

The Company has adopted Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers, which is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The Company records revenue in accordance with Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers, which 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:

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ASC 606 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts.

Revenue is recorded net of sales-related taxes collected from guests and remitted or payable to government taxing authorities.

Admissions Revenue

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, which the Company adopted, 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.

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 ASC 606 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.

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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.

Due to the temporary park closures, capacity limitations and product extensions in 2020, the Company evaluated the estimates and assumptions used in its future estimated redemption rates for these products based on forecasted and actual attendance patterns.

Attendance trends factor in seasonality and are adjusted based on actual trends periodically, including to reflect recent trends.

Revenue is recognized on a pro-rata basis based on the estimated allocated selling price of the admission product.

For active pass products purchased under monthly installment arrangements that have extended beyond their initial commitment term, revenue is recognized monthly as payments are received.

For active pass products purchased under monthly installment arrangements that have extended beyond their initial commitment term and have transitioned to a month to month basis, revenue is recognized monthly as payments are received, with the exception of payments received during the temporary park closures (see further discussion which follows).

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.

As a result of the temporary park closures due to the COVID-19 pandemic, the Company upgraded some of its pass products and extended pass expiration dates for at least the equivalent period the related parks were closed.

As a result, the Company adjusted its estimated redemption and recognition patterns related to its admission products to reflect the fact that there was no attendance during the park closures and accordingly the Company did not recognize revenue from these admission products while the parks were closed.

For passes under installment plans that have transitioned to a month to month basis, payments received during the closure period are recorded as deferred revenue and are recognized as revenue once the respective park reopens, which may not necessarily reflect attendance patterns for these guests.

Accordingly, for these passes, the Company temporarily paused monthly charges when the related parks reopened for the equivalent period the respective parks were closed.

The Company has estimated future redemption and recognition patterns for admission pass products , which impacts the timing of when revenue is recognized on these products .

Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic.

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.

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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 of the goods or services provided or received, whichever is more readily determinable.

For the years ended December 31, 2019, 2018 and 2017, amounts included within admissions revenue with an offset to either selling, general and administrative expenses or operating expenses in the accompanying consolidated statements of comprehensive income (loss) related to bartered ticket transactions were $ 16.2 million, $ 16.6 million and $ 20.8 million, respectively.

In accordance with the practical expedients available to public companies under ASC 606 which the accounting standards provide to simplify compliance, 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 in the accompanying consolidated statements of comprehensive income (loss).

The Company has also elected not to adjust consideration for the effects of financing components in the form of installment purchase plans as the period between when the Company transfers the promised service to the customer and when the customer pays for that service generally does not exceed one year.

For the years ended December 31, 2020, 2019 and 2018, amounts included within admissions revenue with an offset to either selling, general and administrative expenses or operating expenses in the accompanying consolidated statements of comprehensive (loss) income related to bartered ticket transactions were $ 4.7 million, $ 16.2 million and $ 16.6 million, respectively.

Food, Merchandise and Other Revenue

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Advertising production costs are deferred and expensed the first time the advertisement is shown.

Other advertising and media costs are expensed as incurred and for the years ended December 31, 2019, 2018 and 2017, totaled approximately $ 138.3 million, $ 127.5 million and $ 118.0 million, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss).

Other advertising and media costs are expensed as incurred and for the years ended December 31, 2020, 2019 and 2018, totaled approximately $ 48.1 million, $ 138.3 million and $ 127.5 million, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income.

Equity-Based Compensation

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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 equity compensation expense for its performance-vesting restricted awards ratably over the related performance period if the performance condition is probable of being achieved.

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, is recorded as a cumulative catch-up at such subsequent date.

The Company recognizes the impact of forfeitures as they occur.

The Company grants time-vesting restricted shares and units, time-vesting deferred stock units, performance-vesting restricted shares and units, and stock options.

The Company uses the closing stock price on the date of grant to value its time-vesting restricted share awards and its performance-vesting restricted share awards.

The Company uses the closing stock price on the date of grant to value its time-vesting and performance-vesting restricted share awards.

The Company uses the Black-Scholes Option Pricing Model to value stock options at the date of grant.

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The Company accounts for exit or disposal of activities in accordance with ASC 420, Exit or Disposal Cost Obligations if the one-time benefit arrangements are not part of an ongoing benefit arrangement or an individual deferred compensation contract.

Nonretirement postemployment benefits that are part of an ongoing benefit arrangement or an individual deferred compensation contract are accounted for in accordance with ASC 712, Compensation-Nonretirement Postemployment Benefits .

Nonretirement post-employment benefits that are part of an ongoing benefit arrangement or an individual deferred compensation contract are accounted for in accordance with ASC 712, Compensation-Nonretirement Postemployment Benefits .

The Company defines a business restructuring as an exit or disposal activity that includes but is not limited to a program which is planned and controlled by management and materially changes either the scope of a business or the manner in which that business is conducted.

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See further discussion in Note 21–Severance and Other Separation Costs.

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 period of adoption but present those periods under historical requirements of ASC 840.

Under the provisions of ASC 842, right of 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, the Company’s incremental borrowing rate, which reflects the rate of interest it 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.

The Company leases land, warehouse and office space, and equipment, which are classified as either operating or finance leases.

Under the provisions of ASC 842, lease liabilities and right of use assets are recognized at the lease commencement date on the basis of the present value of the future lease payments, with the right of use being adjusted by any prepaid or accrued rent, lease incentives, and initial direct costs.

The lease term for each lease includes the noncancelable period plus any periods subject to an option for renewal when it is reasonably certain that the Company will exercise that option.

The subsequent measurement of a lease is dependent on whether the lease is classified as an operating or finance lease.

Operating leases have a straight-line expense pattern that is recognized as either operating expenses or selling, general, and administrative expenses in the consolidated statements of comprehensive (loss) income.

Finance leases have a front-loaded expense recognition pattern that is comprised of amortization expense and interest expense that is included in depreciation and amortization and interest expense in the consolidated statements of comprehensive (loss) income.

The Company initially evaluates the classification of its leases as of the lease commencement date and reevaluates the classification of its leases upon the occurrence of certain lease remeasurement events and when there is a lease modification that is not accounted for as a separate contract.

The present value of future lease payments is calculated using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate, which reflects the rate of interest it 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 the lease commencement date, liability remeasurement date, or lease modification 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 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.

The Company has elected the short-term lease recognition exemption by which it is not required to recognize on the balance sheet leases with an initial lease term of 12 months or less, with the lease expense for these short-term leases recognized 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 the available practical expedient to not separate the non-lease components from the related lease component, accounting for the combined components as a single lease component.

The short-term lease recognition exemption and the practical expedient to not separate the lease and non-lease components was elected for each class of underlying asset as 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 ten years or more.

The exercise of lease renewal options is at the Company’s sole discretion and the inclusion of the renewal options in the lease term would only occur when the Company concludes it is reasonably certain of exercising the option(s).

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 consolidated statements of comprehensive income (loss) in the same line item as the expense arising from fixed lease payments.

These variable lease payments are typically recognized when the underlying event occurs and are included in operating expenses in the Company’s consolidated statements of comprehensive (loss) income 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 in Note 14–Leases related to the Company’s land lease.

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Previously recorded benefits that no longer meet the more likely than not threshold are charged to earnings in the period that the determination is made.

Interest and penalties accrued related to unrecognized tax benefits are charged to the provision for (benefit from) income taxes in the accompanying consolidated statements of comprehensive income (loss).

Interest and penalties accrued related to unrecognized tax benefits are charged to the (benefit from) provision for income taxes in the accompanying consolidated statements of comprehensive (loss) income.

See further discussion in Note 13–Income Taxes.

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Segment Reporting

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.

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Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of, and gains and losses on, derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

During 2018, the Company has adopted ASU 2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities , which aims to improve reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and simplify the application of the hedge accounting guidance.

See further discussion in Note 3 – Recent Accounting Pronouncements.

As required by ASC 815, the Company records all derivatives on the balance sheet at fair value as either assets or liabilities.

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Recently Implemented Accounting Standards

On January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) 842, Leases .

The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right of use assets and corresponding lease liabilities on the balance sheet.

The new guidance requires the Company to continue to classify leases as either operating or financing, with classification affecting the pattern of expense recognition in the income statement.

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 to implement the practical expedient related to hindsight to determine lease terms.

Due to the implementation of selected practical expedients, there was no cumulative effect adjustment to beginning retained earnings.

See Note 14–Leases for additional disclosures.

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

ASU 2018-09, Codification Improvements, clarifies, corrects and makes minor improvements to a wide variety of topics in the ASC.

The amendments make the ASC easier to understand and apply by eliminating inconsistencies and providing clarifications.

ASU 2018-13, Fair Value Measurement (Topic 820) , eliminates certain disclosures related to the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy.

The ASU also adds new disclosure requirements for Level 3 measurements.

ASU 2018 - 15 , Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, generally aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The ASU also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements.

ASU 2018-16, Derivatives and Hedging—Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes , expands the list of United States benchmark interest rates permitted in the application of hedge accounting.

The amendments in this ASU allow use of the Overnight Index Swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) as a U.S.

benchmark interest rate for hedge accounting purposes under Topic 815, Derivatives and Hedging .

During the year ended December 31, 2018, the Company also adopted the following ASUs:

ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, gives companies the option to reclassify to retained earnings any tax effects related to items in accumulated other comprehensive income or loss that are stranded due to the Tax Cuts and Jobs Act (the “Tax Act”).

Companies are required to disclose whether or not they elected to reclassify the tax effects related to the Tax Act as well as their policy for releasing income tax effects from accumulated other comprehensive income or loss.

The Company elected to early adopt the ASU on January 1, 2018 and applied the amendments in the period of adoption.

As a result, the Company reclassified $ 1.1 million of “stranded” tax effects of the Tax Act from accumulated other comprehensive income (loss) to accumulated deficit in the accompanying consolidated balance sheet and the accompanying consolidated statements of changes in stockholders’ equity.

See Note 12 – Derivative Instruments and Hedging Activities for additional disclosure .

ASU 2014-09, Revenue from Contracts with Customers (Topic 606), supersedes the revenue recognition requirements in Topic 605, Revenue Recognition .

Under this ASU and subsequently issued amendments, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration expected to be received.

The Company adopted this standard and subsequently issued amendments on January 1, 2018, using the modified retrospective transition method.

The adoption of ASU 2014-09 and its subsequently issued amendments did not have a material impact on the Company’s existing or new contracts as of January 1, 2018;

therefore, no cumulative adjustment to beginning retained earnings was required as a result of adoption.

See Note 2 – Summary of Significant Accounting Policies subtopic “ Revenue Recognition ” and Note 4 – Revenues for additional disclosure.

Additionally, during the year ended December 31, 2018, the Company also adopted the following ASUs which had no material impact on its consolidated financial statements or disclosures:

ASU 2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities, aims to improve reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and simplify the application of the hedge accounting guidance.

See Note 12 – Derivative Instruments and Hedging Activities for additional disclosure.

ASU 2017-09, Compensation–Stock Compensation (Topic 718):

Scope of Modification Accounting, provides clarity and reduces diversity in practice regarding the application of guidance on the modification of equity awards.

ASU 2016-18, Restricted Cash–a Consensus of the FASB Emerging Issues Task Force, requires companies to include restricted cash balances with cash and cash equivalent balances in the statement of cash flows.

The Company adopted this standard on January 1, 2018 using the retrospective transition method.

ASU 2016-16, Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other Than Inventory, simplifies the income tax accounting of intra-entity transfers of an asset other than inventory by requiring an entity to recognize the income tax effect when the transfer occurs.

The Company adopted this standard on January 1, 2018 using a modified retrospective transition method.

ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, provides guidance on the presentation and classification of eight specific cash flow issues that previously resulted in diversity in practice.

The Company adopted this standard on January 1, 2018 using a retrospective transition method for each period presented.

Effective January 1, 2018, the Company adopted ASC 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.

The Company recognizes revenue upon admission into a park for single day tickets and when products are received by customers for merchandise, culinary or other in-park spending.

For annual or season passes and other multi-use admission products, deferred revenue is recorded and the related revenue is recognized over the terms of the admission product and its estimated redemption rates, which is adjusted periodically.

Total revenues in the accompanying consolidated statements of comprehensive income (loss) are recorded net of sales-related taxes collected from guests and remitted or payable to government taxing authorities.

See further discussion in Note 2–Summary of Significant Accounting Policies- Revenue Recognition .

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 satisfying its performance obligations and is expected to be recognized in future periods.

During the year ended December 31, 2020, the Company adopted the following Accounting Standards Updates (“ASUs”) which had no material impact on its consolidated financial statements or disclosures:

FASB Staff Q&A :

On April 10, 2020, the FASB staff issued FASB Staff Q&A-Topic 842 and Topic 840:

Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic which stated that entities may elect to account for lease concessions related to the effects of the COVID-19 pandemic as though the rights and obligations for those concessions existed as of the commencement of the contract rather than as a lease modification.

Lessees may make the election for any lessor-provided lease concession related to the impact of the COVID-19 pandemic as long as the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee.

The Company has made such election.

The Company has received immaterial rent concessions and has not entered into any lease modifications for the year ended

December 31, 2020 .

As such, this election did not have a material impact on the Company’s consolidated financial statements nor the related disclosures.

ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) , This ASU requires the immediate recognition of estimated credit losses expected to occur over the life of financial assets rather than the current incurred loss impairment model that recognizes losses when a probability threshold is met.

ASU 2016-13 is effective for annual periods beginning after December 15, 2019 and interim periods within those fiscal years.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements or disclosures.

Recently Issued Accounting Standards

The Company is currently evaluating the impact of the following recently issued ASUs:

ASU 2020-04, Reference Rate Reform (Topic 848) , provides optional transition guidance to ease the potential accounting burden associated with transitioning away from the London Interbank Offered Rate (“LIBOR”), with optional expedients related to the application of GAAP to contracts, hedging relationships and other transactions affected by reference rate reform.

The provisions of this ASU are effective upon issuance and can be applied prospectively through December 31, 2022.

Companies can apply this ASU immediately, but application is through December 31, 2020.

The Company is evaluating the impact of LIBOR on its existing contracts but does not expect that this ASU will have a material impact on its consolidated financial statements or related disclosures.

ASU 2019-12, Simplifying the Accounting for Income Taxes , simplifies various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities.

ASU 2019-12 is effective for the Company beginning January 1, 2021.

Early adoption requires adoption of all amendments in the same period.

Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The Company is currently evaluating ASU 2019-12 but does not expect that this ASU will have a material impact on its consolidated financial statements or related disclosures.

Deferred revenue primarily includes revenue associated with pass products, admission or in-park products or services with a future intended use date and contract liability balances related to licensing and international agreements collected in advance of the Company satisfying its performance obligations and is expected to be recognized in future periods.

At December 31, 2020 and 2019, $ 13.4 million and $ 10.0 million, respectively, is included in other liabilities in the accompanying consolidated balance sheets related to the long-term portion of deferred revenue, which primarily relates to the Company’s international agreement, as discussed in the following section.

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Deferred revenue, short-term portion

All of the $ 101.1 million of deferred revenue, short term portion, balance outstanding as of January 1, 2019 was recognized as revenue during the year ended December 31, 2019.

The change in deferred revenue as of December 31, 2019 compared to the prior period primarily relates to additional pass product sales during the year ended December 31, 2019, offset by revenue recognized during 2019.

The majority of the deferred revenue, short term portion, balance outstanding as of January 1, 2020 was recognized as revenue during the year ended December 31, 2020, with approximately 5 % remaining as deferred revenue as of December 31, 2020 due to product extensions.

The increase in deferred revenue as of December 31, 2020 compared to December 31, 2019 primarily relates to extensions provided on some of the Company’s admission products due to the COVID-19 temporary park closures.

International Agreements

The Company has received $ 10.0 million in deferred revenue recorded in other liabilities related to a nonrefundable payment received from a partner in connection with a 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.

The Company expects to receive additional funds from its partner related to agreed upon services and reimbursements of costs incurred by the Company on behalf of the Middle East Project.

Approximately $ 5.9 million and $ 5.0 million of costs incurred related to the Middle East Project are recorded in other assets in the accompanying consolidated balance sheet as of December 31, 2020 and 2019, respectively.

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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.

Construction for the Middle East Project is on track and scheduled to be completed by the end of 2022.

There is no assurance that the Middle East Project will be completed or open to the public.

In March 2017, the Company entered into a Park Exclusivity and Concept Design Agreement and a Center Concept and Preliminary Design Support Agreement (collectively, the “ZHG Agreements”) with an affiliate of Zhonghong Zhuoye Group Co., Ltd.

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In April 2019, the Company terminated the ZHG Agreements for non-payment of undisputed amounts owed.

As of December 31, 2018, approximately $ 2.4 million was recorded in deferred revenue related to the ZHG Agreements in the accompanying consolidated balance sheets.

For the years ended December 31, 2019, 2018 and 2017 , the Company recorded revenue related to the ZHG Agreements of approximately $ 1.7 million, $ 5.1 million and $ 3.9 million, respectively, which is included in food, merchandise and other revenue in the accompanying consolidated statements of comprehensive income (loss).

See Note 17–Related-Party Transactions for further details.

EARNINGS (LOSS) PER SHARE

Earnings (loss) per share is computed as follows:

For the years ended December 31, 2019 and 2018 , the Company recorded revenue related to the ZHG Agreements of approximately $ 1.7 million and $ 5.1 million, respectively, which is included in food, merchandise and other revenue in the accompanying consolidated statements of comprehensive (loss) income.

There were no amounts recorded as revenue related to the ZHG Agreements in the year ended December 31, 2020 See Note 17–Related-Party Transactions for further details.

(LOSS) EARNINGS PER SHARE

(Loss) earnings per share is computed as follows:

Year Ended December 31,

(In thousands, except per share amounts)

Basic earnings (loss) per share

Basic (loss) earnings per share

Effect of dilutive

incentive-based awards

Diluted earnings (loss) per share

In accordance with the Earnings Per Share Topic of the ASC, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period (excluding treasury stock and unvested restricted stock awards).

Diluted (loss) earnings per share

In accordance with the Earnings Per Share Topic of the ASC, basic (loss) earnings per share is computed by dividing net (loss) income by the weighted average number of shares of common stock outstanding during the period (excluding treasury stock and unvested restricted stock awards).

Unvested restricted stock awards are eligible to receive dividends, if any;

however, dividend rights will be forfeited if the award does not vest.

Accordingly, only vested shares of formerly restricted stock are included in the calculation of basic earnings per share.

Accordingly, only vested shares of formerly restricted stock are included in the calculation of basic (loss) earnings per share.

The weighted average number of repurchased shares during the period, if any, which are held as treasury stock, are excluded from shares of common stock outstanding.

Diluted earnings (loss) per share is determined using the treasury stock method based on the dilutive effect of certain unvested restricted stock awards and certain shares of common stock that are issuable upon exercise of stock options.

During the years ended December 31, 2019 and 2018, there were approximately 305,000 and 1,299,000 anti-dilutive shares of common stock excluded from the computation of diluted earnings per share, respectively.

Diluted (loss) earnings per share is determined using the treasury stock method based on the dilutive effect of certain unvested restricted stock awards and certain shares of common stock that are issuable upon exercise of stock options.

During the year ended December 31, 2020, there were approximately 2,253,000 potentially dilutive shares of common stock excluded from the computation of diluted loss per share as their effect would have been anti-dilutive due to the Company’s net loss in the period.

The Company’s outstanding performance-vesting restricted stock awards are considered contingently issuable shares and are excluded from the calculation of diluted earnings per share until the performance measure criteria is met as of the end of the reporting period.

For the years ended December 31, 2019, 2018 and 2017, approximately 247,000 , 364,000 , and 78,000 performance-vesting restricted stock awards had met their performance criteria as of the end of the reporting periods, respectively, and are therefore included in the calculation of diluted earnings per share.

For the years ended December 31, 2019 and 2018, approximately 247,000 and 364,000 performance-vesting restricted stock awards had met their performance criteria for their respective performance years as of the end of the reporting periods, respectively, and are therefore included in the calculation of diluted earnings per share.

See further discussion in Note 19–Equity-Based Compensation.

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Total prepaid expenses and other current assets

As of December 31, 2019, insurance recoveries above relates to insurance proceeds expected to be received from the Company’s insurance carriers related to a legal settlement.

As of December 31, 2019, insurance recoveries above related to insurance proceeds expected to be received from the Company’s insurance carriers related to a legal settlement.

The Company’s insurance carriers paid the insurance proceeds during the first quarter of 2020.

See further details in Note 10–Other Accrued Liabilities and Note 15–Commitments and Contingencies.

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Depreciation expense was approximately $ 148.0 million, $ 156.2 million, and $ 155.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

For the year ended December 31, 2019, the Company recorded approximately $ 2.7 million in fixed asset write-offs, which is included in operating expenses in the accompanying consolidated statement of comprehensive income (loss).

For the year ended December 31, 2018, the Company recorded approximately $ 10.9 million in fixed asset disposals associated with certain rides and equipment which were removed from service during 2018, which is included in operating expenses in the accompanying consolidated statement of comprehensive income (loss).

During 2017, the Company amended an existing agreement relating to the use of certain animals, which reduced the expected future cash flows related to the agreement.

As a result, the Company recognized an impairment loss of approximately $ 7.8 million, which is included in operating expenses in the accompanying consolidated statement of comprehensive income (loss) for the year ended December 31, 2017.

GOODWILL, TRADE NAMES/TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET

For the years ended December 31, 2020 and 2019, the Company recorded approximately $ 6.7 million and $ 2.7 million, respectively, in fixed asset write-offs, which is included in operating expenses in the accompanying consolidated statement of comprehensive (loss) income.

See Note 1–Description of the Business, Impact of Global COVID-19 Pandemic , for further details regarding proactive measures the Company has taken starting in March 2020 relating to its capital expenditures including delaying the opening of certain new rides.

GOODWILL AND TRADE NAMES/TRADEMARKS, NET

Goodwill, Net

Goodwill, net, at December 31, 2020 and 2019 relates to the Company’s Discovery Cove reporting unit.

The Company performed a qualitative assessment at December 1, 2019 and 2018, and concluded that further evaluation was unnecessary.

During 2017, due to financial performance particularly late in the second quarter of 2017 at the Company’s SeaWorld Orlando park, the Company determined a triggering event occurred that required an interim goodwill impairment test for its SeaWorld Orlando reporting unit.

Based on financial performance and the resulting impact on projections of future cash flows for this reporting unit at that time, the Company concluded in 2017 that the goodwill related to the SeaWorld Orlando reporting unit was fully impaired and, as a result, recorded a non-cash goodwill impairment charge of $ 269.3 million in the accompanying consolidated statement of comprehensive income (loss) during the year ended December 31, 2017.

The estimated fair value for the SeaWorld Orlando reporting unit was determined using the income approach and represents a Level 3 fair value measurement measured on a non-recurring basis in the fair value hierarchy due to the Company’s use of internal projections and unobservable measurement inputs.

The Company performed an annual qualitative assessment at December 1, 2020 and 2019 and concluded that further evaluation was unnecessary.

Trade Names/Trademarks, Net

The Company performed a qualitative assessment for its other indefinite-lived intangible assets at December 1, 2019 and 2018 and concluded that further evaluation was unnecessary.

Trade names/trademarks, net, at December 31, 2019, consisted of the following:

(In thousands)

Trade names/trademarks - indefinite lives

Trade names/trademarks- finite lives

Total trade names/trademarks, net

Trade names/trademarks, net, at December 31, 2018 , consisted of the following:

At December 1, 2020, the Company performed a quantitative assessment over certain trade names/trademarks with a combined balance of $ 111.9 million related to its SeaWorld brand.

Based on its assessment, the Company determined the estimated fair value exceeded its carrying value and therefore no impairment had occurred.

The Company performed a qualitative assessment for its remaining other indefinite-lived intangible assets at December 1, 2020 and all of its other indefinite-lived intangible assets at December 1, 2019 and concluded that further evaluation was unnecessary.

Trade names/trademarks, net, at December 31, 2020 and 2019, consisted of the following:

(In thousands)

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Total trade names/trademarks, net

Other Intangible Assets, Net

As of December 31, 2019, other intangible assets, net, consisted of other indefinite-lived intangible assets with a gross and net carrying amount of $ 0.5 million.

During the year ended December 31, 2019, the Company wrote-off fully amortized intangible assets with an aggregate book value and accumulated amortization of $ 22.8 million, which related to reseller agreements and a non-compete agreement.

Other intangible assets, net, at December 31, 2018, consisted of the following:

(In thousands)

Favorable lease asset

Reseller agreements

Non-compete agreement

Other intangible assets - indefinite lives

Total other intangible assets, net

Upon adoption of ASC 842, Leases , on January 1, 2019, the Company reclassified the favorable lease asset above from other intangible assets, net, to right of use assets-operating leases in the accompanying consolidated balance sheet.

See further details in Note 14 – Leases.

Total amortization expense was approximately $ 1.4 million, $ 2.2 million and $ 4.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.

OTHER ACCRUED LIABILITIES

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(In thousands)

Self-insurance reserve

Accrued interest

Accrued property taxes

Accrued taxes

Self-insurance reserve

Accrued legal settlements

Total other accrued liabilities

As of December 31, 2019, accrued legal settlements above is related to a proposed settlement, which is subject to court approval.

The Company has recorded a receivable of $ 32.9 million in prepaid expenses and other current assets for insurance proceeds expected to be received from its insurance carriers related to this case.

As of December 31, 2020, accrued interest above primarily relates to interest associated with the Company’s second-priority senior secured notes issued in August 2020, for which interest is paid bi-annually in February and August and the first-priority senior secured notes issued in April 2020, for which interest is paid bi-annually in November and May.

See further discussion in Note 11–Long-Term Debt.

As of December 31, 2019, accrued legal settlements above is related to a previously disclosed legal settlement which was paid, net of insurance proceeds, during the year ended December 31, 2020.

As of December 31, 2019, the Company had recorded a receivable of $ 32.9 million in prepaid expenses and other current assets for insurance proceeds from its insurance carriers related to this case.

See further details in Note 7–Prepaid Expenses and Other Current Assets and Note 15–Commitments and Contingencies.

As of December 31, 2018, accrued legal settlements above includes $ 11.5 million related to the EZPay plan lawsuit legal settlement, which was funded during the year ended December 31, 2019.

See further details in Note 15–Commitments and Contingencies.

LONG-TERM DEBT

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at December 31, 2020 and 2019, respectively)

Revolving credit facility (effective interest rate of 4.35 % and

5.17 % at December 31, 2019 and 2018, respectively)

Revolving credit facility (effective interest rate of 4.35 %

at December 31, 2019)

Second-Priority Senior Notes (interest rate of 9.50 %)

Senior Notes (interest rate of 8.75 %)

Total long-term debt

Less discounts

Less debt issuance costs

Less current maturities, including revolving credit facility

discounts and debt issuance costs

current maturities, including revolving credit facility at December 31, 2019

Total long-term debt, net

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”).

Senior Secured Credit Facilities

SEA is the borrower under the senior secured credit facilities, as amended pursuant to a credit agreement (the “Amended 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 10, 2020, SEA entered into an amendment, Amendment No.

10 (the “Amendment No.

10”) to its Amended Credit Agreement.

Pursuant to Amendment No.

10, SEA increased the revolving credit commitments available under the Amended Credit Agreement from $ 210.0 million to an aggregate of $ 332.5 million.

On April 19, 2020 and on July 29, 2020, respectively, SEA entered into Amendment No.

11, (the “Amendment No.

11”) and Amendment No.

12, (the “Amendment No.

12”) to its Amended Credit Agreement to amend certain provisions therein.

On October 31, 2018, SEA entered into a refinancing amendment, Amendment No.

9 (the “Amended Credit Agreement”), to its Existing Credit Agreement.

In connection with the Amended Credit Agreement, SEA borrowed $ 543.9 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-2 loans, and pay other fees, costs and expenses in connection with the Amended Credit Agreement and related transactions.

Additionally, pursuant to the Amended Credit Agreement, SEA terminated the then existing revolving credit commitments and replaced them with a new tranche of revolving credit commitments with an aggregate commitment amount of $ 210.0 million (the “Revolving Credit Facility”).

In connection with the issuance of the Term B-5 Loans and as a result of the Amended Credit Agreement, SEA recorded a discount of $ 0.7 million during the year ended December 31, 2018.

Additionally, SEA wrote-off debt issuance costs of $ 8.2 million, which is included in loss on early extinguishment of debt and write-off of discounts and debt issuances costs in the accompanying consolidated statement of comprehensive income (loss) during the year ended December 31, 2018.

On March 31, 2017, SEA entered into Amendment No.

9 (the “Amendment No.

8”) to its Existing Credit Agreement, as a result of Amendment No.

8 in 2017, SEA recorded a discount of $ 5.0 million and immaterial debt issuance costs during the year ended December 31, 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 consolidated statement of comprehensive income (loss) during the year ended December 31, 2017.

See discussion in the Senior Secured Credit Facilities section which follows for further information.

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

Senior Secured Credit Facilities

As of December 31, 2019, the Senior Secured Credit Facilities consisted of $ 1.508 billion in Term B-5 Loans which will mature on March 31, 2024 and a $ 210.0 million Revolving Credit Facility, of which $ 50.0 million was outstanding as of December 31, 2019.

9”), to its Amended Credit Agreement.

In connection with Amendment No.

9, SEA borrowed $ 543.9 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-2 loans, and pay other fees, costs and expenses in connection with Amendment No.

9 and related transactions.

Additionally, pursuant to Amendment No.

9, SEA terminated the then existing revolving credit commitments and replaced them with a new tranche of revolving credit commitments with an aggregate commitment amount of $ 210.0 million (the “Revolving Credit Facility”).

As of December 31, 2020, the Senior Secured Credit Facilities consisted of $ 1.492 billion in Term B-5 Loans which will mature on March 31, 2024 and a $ 332.5 million revolving credit facility (the “Revolving Credit Facility”), which was not drawn upon as of December 31, 2020.

The Revolving Credit Facility will mature on October 31, 2023 .

The outstanding balance on the Revolving Credit Facility was included in current maturities of long-term debt in the accompanying consolidated balance sheets as of December 31, 2019 and 2018 due to the Company’s intent to repay the borrowings within the following twelve month period.

Subsequent to December 31, 2019, SEA borrowed an additional $ 45.0 million on the Revolving Credit Facility for general working capital purposes.

The Term B-5 Loans amortize in equal quarterly installments, commencing with the fiscal quarter ending December 31, 2018, in aggregate annual amounts equal to 1.015 % of the original principal amount of the Term B-5 Loans outstanding on the Effective Date, with the balance payable on the final maturity date.

The outstanding balance on the Revolving Credit Facility as of December 31, 2019 was included in current maturities of long-term debt in the accompanying consolidated balance sheets due to the Company’s intent to repay the borrowings within the following twelve month period.

The Term B-5 Loans amortize in equal quarterly installments in aggregate annual amounts equal to 1.015 % of the original principal amount of the Term B-5 Loans outstanding on October 31, 2018, with the balance payable on the final maturity 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-5 Loans, subject to certain exceptions, with

50 % of SEA’s annual “excess cash flow” (with step-downs to 25 % and 0 %, as applicable, based upon achievement by SEA of a certain secured total leverage ratio), subject to certain exceptions;

100 % of the net cash proceeds of certain non-ordinary course asset sales or other dispositions subject to reinvestment rights and certain exceptions;

100 % of the net cash proceeds of any incurrence of debt by SEA or any of its restricted subsidiaries, other than debt permitted to be incurred or issued under the Senior Secured Credit Facilities.

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 then outstanding Term B-2 and Term B-3 loans prior to Amendment No.

8 on March 31, 2017, and the remainder of $ 2.8 million was applied as a voluntary prepayment to the then outstanding Term B-2 loans in the second quarter of 2017.

SEA is also required to prepay the outstanding Term B-5 Loans, subject to certain exceptions, under certain circumstances, as defined in the Senior Secured Credit Facilities.

There were no mandatory prepayments made during the years ended December 31, 2020, 2019 and 2018.

SEA may go to market to increase and/or add one or more incremental term loan facilities to the Senior Secured Credit Facilities and/or increase commitments under the Revolving Credit Facility in an aggregate principal amount of up to $ 350.0 million.

SEA may also incur additional incremental term loans provided that, among other things, on a pro forma basis after giving effect to the incurrence of such incremental term loans, the First Lien Secured Leverage Ratio, as defined in the Senior Secured Credit Facilities, is no greater than 3.50 to 1.00.

The obligations under the Senior Secured Credit Facilities are fully, unconditionally and irrevocably guaranteed by the Company, any subsidiary of the Company that directly or indirectly owns 100 % of the issued and outstanding equity interests of SEA, and, subject to certain exceptions, each of SEA’s existing and future material domestic wholly-owned subsidiaries.

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SEA is also required to pay customary letter of credit fees.

As of December 31, 2019, SEA had approximately $ 20.4 million of outstanding letters of credit and $ 50.0 million outstanding on its Revolving Credit Facility, leaving approximately $ 139.6 million available for borrowing under the Revolving Credit Facility.

As of December 31, 2020, SEA had approximately $ 21.2 million of outstanding letters of credit, leaving approximately $ 311.3 million available for borrowing under the Revolving Credit Facility.

First-Priority Senior Secured Notes

On April 30, 2020, SEA closed on a private offering of $ 227.5 million aggregate principal amount of 8.750 % first-priority senior secured notes due 2025 (the “Senior Notes”).

The Senior Notes mature on May 1, 2025 and have interest payment dates of May 1 and November 1 with the first interest payment paid on November 2, 2020 .

On or after May 1, 2022, SEA may redeem the Senior Notes at its option, in whole at any time or in part from time to time, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if redeemed during the 12-month period commencing on May 1 of the years as follows:

(i) in 2022 at 104.375 %;

(ii) in 2023 at 102.188 %;

and (iii) in 2024 and thereafter at 100 %.

SEA may also redeem in the aggregate (at a redemption price expressed as a percentage of principal amount thereof):

(i) 100 % of the Senior Notes after certain events constituting a change of control at a redemption price of 101 %, plus accrued and unpaid interest, if any, to, but excluding, the redemption date and (ii) up to 40% of the original aggregate principal amount of the Senior Notes with amounts equal to the net cash proceeds of certain equity offerings at a redemption price of 108.375 %, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The Senior Notes are fully and unconditionally guaranteed by the Company, any subsidiary of the Company that directly or indirectly owns 100% of the issued and outstanding equity interests of SEA, and subject to certain exceptions, each of SEA’s subsidiaries that guarantees SEA’s existing senior secured credit facilities.

Second-Priority Senior Secured Notes

On August 5, 2020, SEA closed on a private offering of $ 500.0 million aggregate principal amount of 9.500 % second-priority senior secured notes due 2025 (the “Second-Priority Senior Notes”).

Net of expenses related to the offering of the Second-Priority Senior Notes and Amendment No.

12, the Company used a portion of the proceeds from the issuance of the Second-Priority Senior Notes to repay the then outstanding borrowings of $ 311.0 million under the Revolving Credit Facility.

The Second-Priority Senior Notes mature on August 1, 2025 and have interest payment dates of February 1 and August 1 with the first interest payment due on February 1, 2021 .

On or after February 1, 2022, SEA may redeem the Second-Priority Senior Notes at its option, in whole at any time or in part from time to time, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if redeemed during the 12-month period commencing on February 1 of the years as follows:

(i) in 2022 at 104.75 %;

(ii) in 2023 at 102.375 %;

and (iii) in 2024 and thereafter at 100 %.

SEA may also redeem in the aggregate (at a redemption price expressed as a percentage of principal amount thereof):

(i) 100 % of the Second-Priority Senior Notes after certain events constituting a change of control at a redemption price of 101 %, plus accrued and unpaid interest, if any, to, but excluding, the redemption date and (ii) up to 40 % of the original aggregate principal amount of the Second-Priority Senior Notes with amounts equal to the net cash proceeds of certain equity offerings at a redemption price of 109.50 %, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

At any time prior to February 1, 2022, SEA may, (i) during the twelve month period commencing on the issue date and (ii) during the period subsequent to such twelve month period and prior to February 1, 2022, redeem in each period up to 10.0 % of the initial aggregate principal amount of the Second-Priority Senior Notes at a redemption price equal to 103 % of the aggregate principal amount of the Second-Priority Senior Notes to be redeemed plus accrued and unpaid interest, if any, to but excluding the redemption date;

provided, that if SEA does not redeem 10.0% of the initial aggregate principal amount of Second-Priority Senior Notes during the twelve month period commencing on the issue date, SEA may, in the subsequent period prior to February 1, 2022, redeem the Second-Priority Senior Notes in an amount that does not exceed 10.0% of the initial aggregate principal amount plus the difference between (x) 10.0% of the initial aggregate principal amount and (y) the aggregate principal amount of Second-Priority Senior Notes that were redeemed in such twelve month period .

The Second-Priority Senior Notes are fully and unconditionally guaranteed by the Company, any subsidiary of the Company that directly or indirectly owns 100% of the issued and outstanding equity interests of SEA, and subject to certain exceptions, each of SEA’s subsidiaries that guarantees SEA’s existing senior secured credit facilities.

Discounts and Debt Issuance Costs

In connection with the issuance of the Senior Notes and Second-Priority Senior Notes, and as a result of Amendment No.

10, Amendment No.

11 and Amendment No.

12, SEA recorded discounts and fees of approximately $ 21.9 million, of which approximately $ 13.8 million were paid directly to lenders, during the year ended December 31, 2020.

In connection with the issuance of the Term B-5 Loans and as a result of the Amendment No.

9, SEA recorded a discount of $ 0.7 million during the year ended December 31, 2018.

Additionally, SEA wrote-off debt issuance costs of $ 8.2 million, which is included in loss on early extinguishment of debt and write-off of discounts and debt issuances costs in the accompanying consolidated statement of comprehensive (loss) income during the year ended December 31, 2018.

Restrictive Covenants

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All of the net assets of SEA and its consolidated subsidiaries are restricted and there are no unconsolidated subsidiaries of SEA.

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 net leverage ratio of 6.25 x 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.

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 December 31, 2019, the total net leverage ratio as calculated under the Senior Secured Credit Facilities was 3.24 to 1.00.

The available capacity for restricted payments is recalculated at the beginning of each quarter, or upon declaration of a restricted payment, as set forth in the credit agreement.

During the year ended December 31, 2019, the Company used approximately $ 150.0 million of its then available restricted payments capacity for a share repurchase (see Note 17–Related-Party Transactions and Note 20–Stockholders’ Equity for further details).

The Revolving Credit Facility requires that the Company comply with a springing maximum first lien secured leverage ratio of 6.25 x 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.

Pursuant to Amendment No.

12, among other terms, SEA will be exempt from complying with its first lien secured leverage ratio covenant through the end of 2021, after which SEA will be required to comply with such covenant starting in the first quarter of 2022.

For purposes of calculating compliance with such covenant, unless a Triggering Event occurs (as defined in Amendment No.

12), beginning with the first quarter of 2022, to the extent trailing Adjusted EBITDA (as defined in Amendment No.

12) for the second, third or fourth quarters of 2021 would have otherwise been included in the calculation of such covenant, in lieu of using actual Adjusted EBITDA for such periods, Adjusted EBITDA for such applicable periods will be deemed to be actual Adjusted EBITDA (as defined in Amendment No.

12) for the corresponding quarter of 2019.

In addition, SEA will be required to comply with a quarterly minimum liquidity test (defined as unrestricted cash and cash equivalents and available commitments under the Revolving Credit Facility) of not less than $ 75.0 million until the earlier of September 30, 2022 or the date on which the Company elects to use the actual Adjusted EBITDA for purposes of calculating its financial maintenance covenant.

SEA will also be restricted from paying certain dividends or making other restricted payments through the third quarter of 2022 unless certain conditions are met.

As of December 31, 2020, SEA was in compliance with all covenants contained in the documents governing the Senior Secured Credit Facilities.

Long-term debt at December 31, 2020, is repayable as follows and does not include the impact of any future voluntary prepayments:

The outstanding balance under the Revolving Credit Facility is included below based on the Company’s intent to repay the borrowings within the next twelve months:

Years Ending December 31,

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Interest Rate Swap Agreements

As of December 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 through May 14, 2020.

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 to swap counterparties;

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 December, March, June and September through maturity.

The Company previously had five interest rate swap agreements (the “Interest Rate Swap Agreements”) which effectively fixed 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 expired on May 14, 2020 .

SEA designated the Interest Rate Swap Agreements above as qualifying cash flow hedge accounting relationships as further discussed in Note 12–Derivative Instruments and Hedging Activities which follows.

Cash paid for interest relating to the Senior Secured Credit Facilities and Interest Rate Swap Agreements, net of amounts capitalized, as applicable, was $ 80.5 million, $ 82.5 million and $ 80.6 million during the years ended December 31, 2019, 2018 and 2017, respectively.

Cash paid for interest during the year ended December 31, 2017 excludes $ 5.1 million related to the fourth quarter interest payment on its Senior Secured Credit Facilities which was paid on January 5, 2018.

Cash paid for interest relating to the Senior Secured Credit Facilities, Senior Notes and Interest Rate Swap Agreements, net of amounts capitalized, as applicable, was $ 73.7 million, $ 80.5 million and $ 82.5 million during the years ended December 31, 2020, 2019 and 2018, respectively.

See Note 10–Other Accrued Liabilities for accrued interest included in the accompanying consolidated balance sheets as of December 31, 2020 and 2019.

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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 manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and at times through the use of derivative financial instruments.

Specifically, the Company has previously entered 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 December 31, 2019 and 2018, the Company did no t have any derivatives outstanding that were not designated in hedge accounting relationships.

In May 2020, the Company’s Interest Rate Swap Agreements expired, as such, the Company did no t have any derivative instruments outstanding as of December 31, 2020.

As of December 31, 2019, the Company did no t have any derivatives outstanding that were not designated in hedge accounting relationships.

Cash Flow Hedges of Interest Rate Risk

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 years ended December 31, 2019, 2018 and 2017, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

As of December 31, 2019 and 2018, the Company had 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 through May 14, 2020.

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 are recorded in accumulated other comprehensive (loss) income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

Amounts reported in accumulated other comprehensive (loss) income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

Through the expiration date of May 14, 2020 , the Company estimates that an additional $ 2.2 million will be reclassified as an increase to interest expense.

The Company’s objectives in using interest rate derivatives were to add stability to interest expense and to manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily used interest rate swaps at times as part of its interest rate risk management strategy.

During the years ended December 31, 2020, 2019 and 2018, such derivatives were used to hedge a portion of the variable cash flows associated with existing variable-rate debt.

The Interest Rate Swap Agreements were 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 were recorded in accumulated other comprehensive income (loss) and were subsequently reclassified into earnings in the period that the hedged forecasted transaction affected earnings.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives were reclassified to interest expense as interest payments were made on the Company’s variable-rate debt.

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 in the accompanying consolidated balance sheets as of December 31, 2019 and 2018:

The Company did not have any derivative financial instruments outstanding as of December 31, 2020.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the accompanying consolidated balance sheet as of December 31, 2019:

Liability Derivatives

Asset Derivatives

As of December 31, 2019

As of December 31, 2018

Balance Sheet

Derivatives designated as hedging instruments:

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Derivative instruments are valued according to the methodology outlined in Note 2–Summary of Significant Accounting Policies.

The Company has determined that its derivatives fall within Level 2 of the fair value hierarchy as discussed in Note–16 Fair Value Measurements.

The unrealized gain or loss on derivatives is recorded net of a tax benefit of $ 1.4 million and a tax expense of $ 3.1 million for the years ended December 31, 2019 and 2018, respectively, and is included in the accompanying consolidated statements of changes in stockholders’ equity and the consolidated statements of comprehensive income (loss).

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

The table below presents the pre-tax effect of the Company’s derivative financial instruments in the accompanying consolidated statements of comprehensive income (loss) for the years ended December 31, 2019 and 2018:

The Company determined that its derivatives fell within Level 2 of the fair value hierarchy as discussed in Note–16 Fair Value Measurements.

The unrealized gain or loss on derivatives was recorded net of tax expense of $ 0.5 million and a tax benefit of $ 1.4 million for the years ended December 31, 2020 and 2019, respectively, and is included in the accompanying consolidated statements of changes in stockholders’ (deficit) equity and the consolidated statements of comprehensive (loss) income.

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

The table below presents the pre-tax effect of the Company’s derivative financial instruments in the accompanying consolidated statements of comprehensive (loss) income for the years ended December 31, 2020 and 2019:

(In thousands)

Derivatives in Cash Flow Hedging Relationships:

(Loss) gain recognized in accumulated other comprehensive (loss) income

Loss reclassified from accumulated other comprehensive (loss) income to interest expense

Credit Risk-Related Contingent Features

In relation to its Interest Rate Swap Agreements, the Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

As of December 31, 2019, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 2.2 million.

As of December 31, 2019, the Company has posted no collateral related to these agreements.

If the Company had breached any of these provisions at December 31, 2019, it could have been required to settle its obligations under the agreements at their termination value of $ 2.2 million.

Changes in Accumulated Other Comprehensive (Loss) Income

The following table reflects the changes in accumulated other comprehensive (loss) income for the years ended December 31, 2019 and 2018, net of tax:

Accumulated other comprehensive (loss) income (In thousands):

Gains (Losses) on

(Loss) gain recognized in accumulated other comprehensive loss

Amounts reclassified from accumulated other comprehensive income (loss) to interest expense

Changes in Accumulated Other Comprehensive Income (Loss)

The following table reflects the changes in accumulated other comprehensive income (loss), net of tax for the years ended December 31, 2020 and 2019:

Accumulated other comprehensive income (loss) (In thousands):

(Losses) Gains on

Cash Flow Hedges

Accumulated other comprehensive loss at December 31, 2017

Effects of adoption of ASU 2018-02

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income to interest expense

Unrealized gain on derivatives, net of tax

Accumulated other comprehensive income at December 31, 2018

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income to interest expense

Unrealized loss on derivatives, net of tax

Amounts reclassified from accumulated other comprehensive income (loss) to interest expense

Change in other comprehensive income (loss), net of tax

Accumulated other comprehensive loss at December 31, 2019

For the years ended December 31, 2019, 2018 and 2017, the provision for (benefit from) income taxes is comprised of the following:

Current income tax provision (benefit)

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other comprehensive loss to interest expense

Change in other comprehensive income (loss), net of tax

Accumulated other comprehensive income (loss) at December 31, 2020

For the years ended December 31, 2020, 2019 and 2018, the (benefit from) provision for income taxes is comprised of the following:

Current income tax provision

(In thousands)

Total current income tax provision

Deferred income tax provision (benefit):

Total deferred income tax provision (benefit)

Total income tax provision (benefit)

The deferred income tax provision (benefit) represents the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Deferred income tax (benefit) provision:

Total deferred income tax (benefit) provision

Total income tax (benefit) provision

The deferred income tax (benefit) provision represents the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Cash paid for income taxes totaled $ 0.5 million, $ 1.4 million and $ 0.8 million, for the years ended December 31, 2020, 2019 and 2018, respectively.

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Lease obligations

Interest limitation

Total deferred income tax assets

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Right of use assets

Cash flow hedge

Total deferred income tax liabilities

Net deferred income tax (liabilities) assets

Net deferred income tax assets (liabilities)

The Company files federal, state and provincial income tax returns in various jurisdictions with varying statute of limitation expiration dates.

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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 in the applicable period.

The Company has federal tax net operating loss carryforwards of approximately $ 659.1 million as of December 31, 2019 and state net operating loss carryforwards spread across various jurisdictions with a combined total of approximately $ 849.0 million as of December 31, 2019.

The Company has federal tax net operating loss carryforwards of approximately $ 1.0 billion as of December 31, 2020 and state net operating loss carryforwards spread across various jurisdictions with a combined total of approximately $ 1.2 billion as of December 31, 2020.

These net operating loss carryforwards, if not used to reduce taxable income in future periods, will begin to expire in 2029 , for both federal and state tax purposes.

Realization of the deferred income tax assets, primarily arising from these net operating loss carryforwards and charitable contribution carryforwards, is dependent upon generating sufficient taxable income prior to expiration of the carryforwards, which may include the reversal of deferred tax liability components.

Due to the uncertainty of realizing the benefit from the deferred tax asset recorded for state net operating loss carryforwards, as of December 31, 2019 and 2018, the Company has recorded a valuation allowance of approximately $ 5.2 million and $ 2.8 million, net of federal tax benefit, respectively, on the deferred tax assets related to those state net operating losses.

During 2017, an ownership shift of more than 50 percent as defined by the Internal Revenue Code (“IRC”) Section 382 occurred.

The Company determined that, while an ownership shift occurred and limits were determined under Section 382 and the regulations and guidance thereunder, the applicable limits would not impair the value or anticipated use of the Company’s federal and state net operating losses.

Although realization is not assured, after consideration of the current valuation allowance related to state net operating loss carryforwards, management believes it is more likely than not that any limitation under IRC Section 382 will not impair the realizability of the net deferred income tax assets related to federal and state tax net operating loss carryforwards.

However, the annual limitations may impact the timeframe over which the net operating loss carryforwards can be used, potentially impacting the cash tax liabilities in a future period.

The Company believes it is more likely than not that some of its deferred tax assets will not be realized.

Therefore, the Company has recorded a valuation allowance of approximately $ 39.5 million for federal net operating loss carryforwards, approximately $ 7.1 million for federal tax credits and approximately $ 4.0 million for federal and state charitable contributions as of December 31, 2020.

Separately, the Company has recorded a valuation allowance of approximately $ 15.0 million and $ 5.2 million, net of federal tax benefit, on the deferred tax assets related to state net operating loss carryforwards as of December 31, 2020 and 2019, respectively.

The Company’s valuation allowances, in part, rely on estimates and assumptions related to future financial performance.

Given the macroeconomic environment related to the COVID-19 pandemic and the uncertainties regarding the related impact on financial performance, the Company’s valuation allowances may need to be adjusted in the future.

The reconciliation between the statutory income tax rate and the Company’s effective income tax provision (benefit) rate for the years ended December 31, 2020, 2019 and 2018, is as follows:

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Equity-based compensation

Goodwill impairment

Remeasurement of deferred income tax liabilities resulting from Tax Cuts and Jobs Act

Impact of state rate changes

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Valuation allowance - state

Income tax provision (benefit)

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 as of January 1, 2018.

The Company’s net deferred tax assets and liabilities were revalued at the newly enacted U.S.

corporate rate in the year of enactment.

The Company has land, warehouse and office space, and equipment leases which are classified as either operating or financing obligations.

The Company’s land lease 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 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 minimum yearly rent through December 31, 2019 was approximately $ 10.4 million.

On January 1, 2020, the minimum annual rent payment was recalculated in accordance with the lease agreement and remained unchanged.

Actual payments may vary from the annual straight-line minimum base rent based on a shift of seasonal performance results.

Valuation allowance - federal

Income tax (benefit) provision

The Company leases land, warehouse and office space, and equipment, which are classified as either operating or finance leases.

The Company’s most significant lease is a long-term land lease with the City of San Diego covering approximately 190 acres, including approximately 17 acres of water in Mission Bay Park, California (the “Premises”).

While there are no financial restrictions or covenants imposed by the Premises lease, there are certain operational restrictions in that the Premises must be used as a marine park facility and the Company may not operate another marine park facility within 560 miles of the City of San Diego.

The lease term for the Premises ends in June 2048 and the annual rent under the lease is variable and calculated on the basis of a specified percentage of the Company’s gross income from the Premises, (the “Percentage Rent”), or the minimum yearly rent (the “Minimum Rent”), whichever is greater.

The required annual rent payments for the Premises is adjusted every three years to an amount equal to 80 % of the average accounting year rent actually paid for the three previous years, with the annual minimum rent calculated as $ 10.4 million through each of the years ended December 31, 2020 and 2019.

The annual rent payments may vary from the base rent due to a shift of seasonal performance results.

Rent payments related to the Premises for the years ended December 31, 2020, 2019 and 2018 were approximately $ 0.5 million, $ 10.5 million and $ 11.2 million, respectively.

Upon adoption of ASC 842, the Company also reclassified a favorable lease asset net balance of approximately $ 14.0 million related to the Premises from other intangible assets, net, to right of use assets-operating in the accompanying consolidated balance sheet as of December 31, 2019.

The Company’s gross income from the Premises was significantly impacted during the year ended December 31, 2020 due to the temporary park closures, limited reopenings, modified operations and capacity restrictions resulting from the impact of the COVID-19 pandemic and related government restrictions in San Diego.

As a result, the Company deferred $ 1.6 million of the Percentage Rent related to the year ended December 31, 2020, and an additional $ 8.3 million related to the Minimum Rent for the year ended December 31, 2020.

As such, approximately $ 9.9 million is included in accounts payable and accrued expenses on the accompanying consolidated balance sheet as of December 31, 2020 related to this lease.

Operating lease liabilities and long-term operating lease liabilities on the accompanying consolidated balance sheet as of December 31, 2020 and the lease maturities as of December 31, 2020 are not adjusted for these deferred payments.

Subsequent to December 31, 2020, the Company remitted the amounts owed for Percentage Rent of approximately $ 1.6 million.

The tables below present the lease balances and their classification in the accompanying consolidated balance sheets as of December 31, 2020 and 2019:

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Right of use assets - operating

Financing leases

Finance leases

Other assets, net

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Operating leases

Operating lease obligations

Financing leases

Operating lease liabilities

Finance leases

Other accrued liabilities

Operating leases

Long-term operating lease obligations

Financing leases

Other liabilities

Total lease liabilities

Classification

(In thousands)

Favorable lease asset

Other intangible assets, net

Capital leases

Property and equipment, at cost

Capital leases, accumulated depreciation

Accumulated depreciation

Total lease assets

Capital leases

Other accrued liabilities

Capital leases

Long-term operating lease liabilities

Finance leases

Other liabilities

Total lease liabilities

The table below presents the lease costs and their classification in the accompanying consolidated statements of comprehensive income (loss) for the year ended December 31, 2019:

The table below presents the lease costs and their classification in the accompanying consolidated statements of comprehensive (loss) income for the years ended December 31, 2020 and 2019:

Classification

December 31, 2019

(In thousands)

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Selling, general and administrative expenses

Financing lease cost

Finance lease cost

Amortization of leased assets

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Net lease cost

In addition to the operating lease costs above, short term rent expense for the year ended December 31, 2019 was approximately $ 4.2 million and is included in operating expenses and selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss).

In addition to the operating lease costs above, short-term rent expense for the years ended December 31, 2020 and 2019 were approximately $ 2.1 million and $ 4.2 million, respectively, and variable rent expense for the years ended December 31, 2020 and 2019 were $ 4.9 million and $ 5.3 million, respectively.

The short-term and variable rent expense amounts are included in operating expenses and selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income.

The table below presents the Company’s lease maturities as of December 31, 2020:

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Total operating leases

Financing leases

Finance leases

(In thousands)

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Imputed interest

Present value of lease liabilities

Operating lease costs include approximately $ 7.2 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:

Years Ending December 31,

Operating leases

Financing leases

(In thousands)

Total lease payments

Total principal payable on financing leases

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

Lease liabilities

The table below presents the weighted average remaining lease terms and applicable discount rates as of December 31, 2020 and 2019:

Weighted average remaining lease term (years):

Operating leases

Financing leases

Finance leases

Weighted average discount rate:

Operating leases

Financing leases

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

Cash paid for amounts included in the measurement of lease liabilities:

Finance leases

The table below presents the cash flows and supplemental information associated with the Company’s leasing activities for the years ended December 31, 2020 and 2019:

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Operating cash flows from financing leases

Financing cash flows from financing leases

Right of use assets obtained in exchange for lease obligations:

Financing leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Right of use assets obtained in exchange for lease liabilities:

Finance leases

Operating leases

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At December 31, 2020, excluding certain amounts related to the License Agreement with Sesame Workshop as described below, additional capital payments of approximately $ 72.0 million are necessary to complete these projects.

The majority of these projects are expected to be completed in 2021.

The majority of these projects are expected to be completed in 2021 or 2022.

License Agreements

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In October 2019, the Company announced that it will convert Aquatica San Diego into its second Sesame Place Standalone Park in the spring of 2021.

While construction will begin in the fall of 2019, it is not expected to impact Aquatica San Diego’s 2020 operating schedule.

ABI has granted the Company a perpetual, exclusive, worldwide, royalty-free license to use the Busch Gardens trademark and certain related domain name s 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 li cense, the Company is required to indemnify ABI against losses related to the use of the marks.

While construction began in the fall of 2019, it was temporarily paused due to the COVID-19 pandemic.

The Company currently expects to open this park in 2022.

As a result, depending on governmental restrictions in the state of California, the Company expects to reopen its Aquatica San Diego park in 2021 for its operating season.

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.

Legal Proceedings

Securities Class Action Lawsuits

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 to August 13, 2014, captioned Baker v.

The Company received final court approval of settlement of a purported stockholder class action lawsuit consisting of purchasers of the Company’s common stock during the periods between April 18, 2013 and 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, 2015, Court-appointed Lead Plaintiffs, Pensionskassen For Børne- 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”), filed an amended complaint against the Company, the Chairman of the Company’s Board, certain of its directors, 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 the film Blackfish was impacting SeaWorld’s business at the time of each public statement.

On May 31, 2016, Plaintiffs filed a second amended consolidated class action complaint, which, among other things, no longer names the Company’s Board or underwriters as defendants.

On February 11, 2020, the Company announced that it had entered into a settlement agreement relating to this case.

The proposed settlement, which is subject to certain conditions, including court approval, requires the Company to pay $ 65.0 million for claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as the costs of administration and legal fees and expenses.

The proposed settlement does not include or constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the Company or any defendant.

There can be no assurance that the proposed settlement agreement will be approved by the court.

During the year ended December 31, 2019, the Company recorded $ 32.1 million of legal settlement charges, net of insurance recoveries, related to this case, which is included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss).

14-CV-02129-MMA (KSC).

The settlement required the Company to pay $ 65.0 million for

claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as the costs of administration and legal fees and expenses.

The settlement does not include or constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the Company or any defendant.

During the year ended December 31, 2019, the Company recorded $ 32.1 million of legal settlement charges, net of insurance recoveries, related to this case.

The full settlement amount was funded during the year ended December 31, 2020.

On June 14, 2018, a lawsuit captioned Highfields Capital I LP et al v.

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et al, 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 film Blackfish on SeaWorld’s business.

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.

The plaintiffs, which are investment funds managed by a common adviser 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 film 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.

The Plaintiffs have indicated to the Company they believe the damages are in the range of $ 30 million to $ 35 million before considering interest.

On October 19, 2018, Defendants moved for partial dismissal of the complaint.

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On May 1, 2019, Defendants filed their answer to Plaintiffs’ complaint.

On July 1, 2019, the parties filed a joint motion for a stay of all proceedings in the case pending the resolution of the motion for summary judgment filed by Defendants in the related securities class action captioned Baker v.

SeaWorld Entertainment, Inc., et al.

described above.

The parties are in the process of completing discovery and will then have the opportunity to file any summary judgment motions per a scheduling order the Court issued which contemplates briefing into the summer and the fall.

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.

While there can be no assurance regarding the ultimate outcome of this lawsuit , the Company believes that any potential loss would not be material.

Shareholder Derivative Lawsuit

On December 8, 2014, a putative derivative lawsuit captioned Kistenmacher v.

The Company received final court approval of a settlement of a putative derivative lawsuit captioned Kistenmacher v.

Atchison, et al., Civil Action No.

10437, was filed in the Court of Chancery of the State of Delaware against, among others, the Chairman of the Company’s Board, certain of the Company’s executive officers, directors and shareholders, and Blackstone.

The Company is a “Nominal Defendant” in the lawsuit.

On March 30, 2015, the plaintiff filed an amended complaint against the same set of defendants.

The amended complaint alleges, among other things, that the defendants breached their fiduciary duties, aided and abetted breaches of fiduciary duties, violated Florida Blue Sky laws and were unjustly enriched by (i) including materially false and misleading information in the prospectus and registration statements;

and (ii) causing the Company to repurchase certain shares of its common stock from certain shareholders at an alleged artificially inflated price.

The Company does not maintain any direct exposure to loss in connection with this shareholder derivative lawsuit as the lawsuit does not assert any claims against the Company.

The Company’s status as a “Nominal Defendant” in the action reflects the fact that the lawsuit is maintained by the named plaintiff on behalf of the Company and that the plaintiff seeks damages on the Company’s behalf.

On February 11, 2020, the Company announced that it had entered into a binding agreement for the settlement of this case.

Pursuant to the agreement, the Company received $ 12.5 million of insurance proceeds from its insurers which can be used for general corporate purposes and will adopt certain corporate governance modifications.

The final settlement of the matter remains subject to a formal agreement and court approval.

There can be no assurance that the final settlement agreement will be executed or that such agreement will be approved by the court.

In the first quarter of 2020, the Company expects to record a legal settlement gain of $ 12.5 million related to insurance proceeds received.

10437 that was filed in the Court of Chancery of the State of Delaware against, among others, the then Chairman of the Company’s Board, certain of the Company’s executive officers, directors and shareholders, and Blackstone.

The Company was a “Nominal Defendant” in the lawsuit.

Pursuant to the settlement, the Company received $ 12.5 million of insurance proceeds from its insurers and adopted certain corporate governance modifications.

During the year ended December 31, 2020, the Company recorded a legal settlement gain of $ 12.5 million related to insurance proceeds received in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income.

Consumer Lawsuit

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Civil Case No.

15-cv-02172-JSW, (the “Anderson Matter”).

15-cv-02172-JSW.

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 killer whales, 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 restitution, equitable relief, attorneys’ fees and costs.

Based on plaintiffs’ definition of the class, the amount in controversy could have exceeded $ 5.0 million assuming the class became certified.

The liability exposure is 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.

On May 23, 2018, the 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.

The complaint (as amended) alleged causes of action under the California False Advertising Law, California Unfair Competition Law and California CLRA.

The complaint sought restitution, equitable relief, attorneys’ fees and costs.

The case was dismissed and refiled in the United States District Court for the Northern District of California.

The plaintiffs did not file a motion for class certification.

The case was prosecuted by certain plaintiffs for individual restitution in a nominal amount and injunctive relief.

The Court bifurcated the trial of the case into two phases:

the plaintiffs’ standing to sue and the merits of their claims.

The standing trial is scheduled for March 9, 2020, after which the Court will determine if there needs to be a trial on the merits which currently is scheduled for April 27, 2020.

Pre-trial motions and mediation proceedings are continuing.

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.

EZPay Plan Class Action Lawsuit

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.

8:14-cv-03028-MSS-JSS was certified as a class action in 2018.

The Court certified a class action on two claims for relief -- breach of contract and violation of federal Electronic Funds Transfer Act, 15 U.S.C.

section 1693 et seq.

on behalf of three individual plaintiffs 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.

At a fairness hearing held April 18, 2019, the Court approved the settlement.

On April 29, 2019, the Court entered an order approving the final settlement.

The Company has funded the $ 11.5 million settlement and is working with a class action administrator to facilitate the settlement in accordance with the terms of the settlement agreement.

Before the first phase of the trial, plaintiff Anderson dismissed all claims against the Company.

The standing trial with regard to the remaining plaintiffs took place in March of 2020.

On October 13, 2020, the Court ruled that the remaining plaintiffs have no standing to sue and judgment was entered in favor of the Company.

Plaintiffs have elected not to appeal this decision and the time to do so has passed.

Other lawsuits

On or about October 9, 2018, the Company received a demand letter from attorneys representing 19 former employees who claim that the terms of their respective separation agreements entitle them to certain favorable modifications made to certain performance-vesting restricted shares issued under the Company’s 2013 Omnibus Incentive Plan (the “Plan”).

The parties attended non-binding mediation on October 27, 2020.

The claims were not resolved.

On November 9, 2020, the Company filed in the Court of Chancery of the State of Delaware an action for declaratory judgment seeking a declaration that the threatened claims of the former employees are time-barred and without merit.

In response, the defendant former employees filed a motion to dismiss or in the alternative to stay and compel arbitration.

The parties are currently discussing participation in an arbitration.

In terms of potential exposure, the value of the total shares at issue for these 19 former employees depends largely upon the Company’s current share price, which fluctuates daily.

Approximately 300,000 shares are at issue.

The Company believes that the former employees’ claims are without merit and intends to defend vigorously its positions.

While there can be no assurance regarding the ultimate outcome of this matter, the Company believes that any potential loss would not be material.

Other Matters

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In connection with the settlement, without admitting or denying the substantive allegations in the SEC’s complaint, the Company agreed to the entry of a final judgment ordering the Company to pay a civil penalty of $ 4.0 million and enjoining the Company from violation of certain provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 and certain rules thereunder.

The settlement is recorded in selling, general and administrative expenses for the year ended December 31, 2018 in the Company’s consolidated statements of comprehensive income (loss).

The settlement is recorded in selling, general and administrative expenses for the year ended December 31, 2018 in the Company’s consolidated statements of comprehensive (loss) income.

Other than those matters discussed above, from time to time, various parties also bring other lawsuits against the Company.

Matters where an unfavorable outcome to the Com pany is probable and which can be reasonably estimated are accrued.

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.

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FAIR VALUE MEASUREMENTS

The Company has determined that of its long-term obligations, the Term B-5 Loans are classified in Level 2 of the fair value hierarchy as of December 31, 2020 and 2019, and the Senior Notes and Second-Priority Senior Notes are classified in Level 1 of the fair value hierarchy as of December 31, 2020.

The fair value of the Term B-5 Loans approximate their carrying value, excluding unamortized debt issuance costs and discounts, due to the variable nature of the underlying interest rates and the frequent intervals at which such interest rates are reset.

The fair value of the Senior Notes and Second-Priority Senior Notes was determined using quoted prices in active markets for identical instruments.

See Note 11–Long-Term Debt.

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.

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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.

Based on the magnitude of the CVA, it was not considered a significant input and the derivatives were classified as Level 2 as of December 31, 2019.

The Company did no t have any derivative financial instruments outstanding as of December 31, 2020.

See Note 12 – Derivative Instruments and Hedging Activities.

Of the Company’s long-term obligations, the Term B-5 Loans are classified in Level 2 of the fair value hierarchy as of December 31, 2019 and 2018.

The fair value of the term loans as of December 31, 2019 and 2018 approximate their carrying value, excluding unamortized debt issuance costs and discounts, due to the variable nature of the underlying interest rates and the frequent intervals at which such interest rates are reset.

See Note 11–Long-Term Debt.

The Company did no t have any assets measured on a recurring basis at fair value at December 31, 2020.

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, 2019:

The following table presents the Company’s estimated fair value measurements and related classifications for liabilities measured on a recurring basis at fair or carrying value as of December 31, 2020:

Quoted Prices in

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(In thousands)

Derivative financial instruments (a)

Long-term obligations (b)

Reflected at fair value in the consolidated balance sheet as other liabilities of $ 2.2 million as of December 31, 2019.

Long-term obligations (a)

Reflected at carrying value, net of unamortized debt issuance costs and discounts, in the consolidated balance sheet as current maturities of long-term debt of $ 15.5 million and long-term debt of $ 2.177 billion as of December 31, 2020 .

There were no transfers between Levels 1, 2 or 3 during the year ended December 31, 2018.

The following table presents the Company’s estimated fair value measurements and related classifications for assets and liabilities measured on a recurring basis as of December 31, 2018:

The Company did no t have any assets measured on a recurring basis at fair value at December 31, 2019.

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, 2019:

Quoted Prices in

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Long-term obligations (b)

Reflected at fair value in the consolidated balance sheet as other assets of $ 3.1 million as of December 31, 2018.

Reflected at fair value in the consolidated balance sheet as other liabilities of $ 2.2 million as of December 31, 2019.

Reflected at carrying value, net of unamortized debt issuance costs and discounts, in the consolidated balance sheet as current maturities of long-term debt of $ 65.5 million and long-term debt of $ 1.483 billion as of December 31, 2019.

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ZHG Transaction

On May 8, 2017 an affiliate of Zhonghong Zhuoye Group Co., Ltd., Sun Wise (UK) Co., LTD (“Sun Wise”) acquired approximately 21 % of the then outstanding shares of common stock of the Company (the “ZHG Transaction”) from certain affiliates of Blackstone (“Sellers”).

Subsequent to the ZHG Transaction, Blackstone did not own any remaining shares of the Company.

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 the year ended December 31, 2017.

As a result of the ZHG Transaction, Sun Wise held beneficial ownership of 19,452,063 shares (the “Pledged Shares”) of the Company’s common stock.

Sun Wise had pledged such shares in connection with certain loan obligations of Sun Wise.

Sun Wise subsequently defaulted on such loan obligations and, as a result, 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”) foreclosed on the Pledged Shares and, accordingly, the Pledged Shares were transferred to a security agent for the Lenders (the “Security Agent”) on May 3, 2019.

As previously disclosed, Sun Wise (UK) Co., LTD., an affiliate to the ZHG Group (“Sun Wise”), previously held beneficial ownership of 19,452,063 shares (the “Pledged Shares”) of the Company’s common stock, which Sun Wise pledged in connection with certain loan obligations of Sun Wise.

Sun Wise subsequently defaulted on such loan obligations and, as a result, certain of its lenders (together, the “Lenders”) foreclosed on the Pledged Shares.

The Pledged Shares were transferred to a security agent for the Lenders (the “Security Agent”), on May 3, 2019.

On May 27, 2019, the Security Agent entered into a share repurchase agreement with the Company pursuant to which the Security Agent agreed to sell and the Company agreed to purchase 5,615,874 of the Pledged Shares held by the Security Agent at a price per share equal to $ 26.71 (the “SEAS Repurchase”) for a total cost of approximately $ 150.0 million.

The SEAS Repurchase closed on May 30, 2019 .

On May 27, 2019, the Security Agent also entered into a stock purchase agreement with Hill Path Capital LP (“Hill Path”) and certain of its affiliates pursuant to which the Security Agent agreed to sell and certain affiliates of Hill Path agreed to purchase, in the aggregate, 13,214,000 of the Pledged Shares held by the Security Agent at a price per share equal to $ 26.71 (the “HP Purchase”).

Also on May 27, 2019, the Security Agent also entered into a stock purchase agreement with Hill Path Capital LP (“Hill Path”) and certain of its affiliates pursuant to which the Security Agent agreed to sell and certain affiliates of Hill Path agreed to purchase, in the aggregate, 13,214,000 of the Pledged Shares held by the Security Agent at a price per share equal to $ 26.71 (the “HP Purchase”).

The purchase closed on May 30, 2019 , at which time, Hill Path’s ownership percentage increased to 34.6 %.

See Note 20 – Stockholder’s Equity for further details.

See Note 20 – Stockholders’ (Deficit) Equity for further details.

ZHG Agreements

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In April 2019, the Company terminated the ZHG Agreements for non-payment of undisputed amounts owed.

As of December 31, 2018, a receivable related to the ZHG Agreements of approximately $ 1.5 million was included in accounts receivable in the accompanying consolidated balance sheets.

See Note 4–Revenues for further details including amounts recorded as revenue related to the ZHG Agreements.

Hill Path Capital LP Agreements

On November 5, 2017 , the Company and Hill Path entered into a Cooperation Agreement (the “Cooperation Agreement”) and certain related agreements.

Under the terms of the Cooperation Agreement, the Company paid Hill Path $ 0.5 million during the fourth quarter of 2017 to reimburse for fees and expenses incurred in connection with the negotiation and execution of the Cooperation Agreement.

Pursuant to the Cooperation Agreement, on November 5, 2017, the Company’s Board appointed a designee from Hill Path to the Board and the Revenue Committee of the Board, immediately following the execution of the Cooperation Agreement.

On May 27, 2019, in connection with the HP Purchase, the Company concurrently entered into a stockholders agreement, a registration rights and the Amended and Restated Undertaking Agreement with Hill Path (collectively, the “HP Agreements”).

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During 2019 and 2018, the plan was a qualified automatic contributions arrangement, which automatically enrolled employees, once eligible, unless they opted out.

The Company made matching cash contributions subject to certain restrictions, structured as a 100 % match on the first 1 % contributed by the employee and a 50 % match on the next 5 % contributed by the employee.

Effective January 1, 2020, the plan removed the automatic contributions arrangement and amended the matching cash contributions structure going forward to be a 50 % match on the first 4 % of eligible pay contributed by the employee.

Employer matching contributions for the years ended December 31, 2019, 2018 and 2017, totaled $ 7.5 million, $ 7.6 million and $ 7.9 million, respectively, and is included in selling, general and administrative expenses and in operating expenses in the accompanying consolidated statements of comprehensive income (loss).

Effective January 1, 2020, the plan removed the automatic contributions arrangement.

Through December 31, 2019, the Company made matching cash contributions subject to certain restrictions, structured as a 100 % match on the first 1 % contributed by the employee and a 50 % match on the next 5 % contributed by the employee.

Effective January 1, 2020, the plan amended the matching cash contributions structure going forward to be a 50 % match on the first 4 % of eligible pay contributed by the employee.

In April 2020, the Company matching contribution was temporarily suspended in response to the COVID-19 pandemic.

Employer matching contributions for the years ended December 31, 2020, 2019 and 2018, totaled $ 1.3 million, $ 7.5 million and $ 7.6 million, respectively, and is included in selling, general and administrative expenses and in operating expenses in the accompanying consolidated statements of comprehensive (loss) income.

EQUITY-BASED COMPENSATION

Equity compensation expense is included in operating expenses and in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss) as follows:

For the Year Ended December 31,

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Total equity compensation expense

Equity compensation expense for the year ended December 31, 2020, includes the reversal of expense related to certain performance vesting restricted units which were no longer considered probable of vesting and also includes the reversal of expense related to outstanding unvested equity awards previously held by the Company’s former chief executive officer which were forfeited in connection with his departure.

See Previous Long-term Incentive Awards section which follows for further details.

Equity compensation expense for the year ended December 31, 2018, includes approximately $ 5.5 million related to equity awards which were accelerated to vest in connection with the departure of certain executives as required by their respective employment agreements (see Note 21–Severance and Other Separation Costs for further details).

Equity compensation expense for the year ended December 31, 2017 includes approximately $ 8.4 million related to certain of the Company’s performance-vesting restricted shares (see the 2.75x Performance Restricted shares section which follows for further details).

Total unrecognized equity compensation expense for all equity compensation awards probable of vesting as of December 31, 2020 was approximately $ 16.3 million, which is expected to be recognized over a weighted-average period of 1.1 years.

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Outstanding at December 31, 2020

The total intrinsic value of stock options exercised during the years ended December 31, 2019 and 2018 was approximately $ 2.4 million and $ 1.7 million, respectively and immaterial during the year ended December 31, 2017.

The total intrinsic value of stock options exercised during the years ended December 31, 2020, 2019 and 2018 was approximately $ 1.3 million, $ 2.4 million and $ 1.7 million, respectively.

The activity related to the Company’s stock option awards during the year ended December 31, 2020 was as follows:

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Risk-free interest rate

Expected volatility (a)

Expected volatility

Expected dividend yield

Expected life (years) (b)

Prior to April 2019, due to the Company’s limited history as a public company, the volatility for the Company’s stock was estimated using the average volatility calculated for a peer group, which was based upon daily price observations over the estimated term of options granted.

Expected life (years) ( a )

The expected life was estimated using the simplified method, as the Company does not have sufficient historical exercise data due to the limited period of time its common stock has been publicly traded.

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.

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.

Omnibus Incentive Plan

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Bonus Performance Restricted Awards

During the year ended December 31, 2019, the Company granted performance-vesting restricted units (the “Bonus Performance Restricted Awards”) in accordance with its annual bonus plan for 2019 (the “2019 Bonus Plan”).

The 2019 Bonus Plan provides for bonus awards payable 50 % in cash and 50 % in Bonus Performance Restricted Awards and is based upon the Company’s achievement of specified performance goals, as defined by the 2019 Bonus Plan, with respect to the year ended December 31, 2019 (the “Fiscal 2019”).

The total number of units eligible to vest into shares of stock is based on the level of achievement of the targets for Fiscal 2019 which ranges from 0 % (if below threshold performance) and up to 200 % (at or above maximum performance).

Separately, on October 3, 2019, in connection with its regular review of compensation matters, the Compensation Committee of the Board, approved certain equity awards designed to recognize employees for their contribution and continued expected contribution to the Company and its goals (the “October 2019 Grant”).

A portion of these awards were in the form of performance-vesting restricted units which are eligible to vest based on achievement of specific performance goals with respect to Fiscal 2019.

In accordance with ASC 718, Compensation-Stock Compensation , equity compensation expense is recorded on shares probable of vesting.

Based on the Company’s actual Fiscal 2019 results with respect to specific performance goals, a portion of the outstanding performance-vesting restricted awards related to the Fiscal 2019 performance goals were considered probable of vesting as of December 31, 2019;

therefore, equity compensation expense has been recorded related to these awards.

These awards are expected to vest in accordance with their terms, at which time any unearned units will forfeit.

The Company also had an annual bonus plan for the year ended December 31, 2018 (the “Fiscal 2018”), under which certain employees were eligible to vest in performance-vesting restricted units based upon the Company’s achievement of specified performance goals with respect to Fiscal 2018.

Due to the impact of the COVID-19 pandemic and related temporary park closures, the Company did not adopt an annual bonus plan for the year ended December 31, 2020.

The Company had an annual bonus plan for the year ended December 31, 2019 (the “Fiscal 2019”), under which certain employees were eligible to vest in performance-vesting restricted units based upon the Company’s achievement of specified performance goals with respect to Fiscal 2019.

Based on the Company’s actual Fiscal 2019 results, a portion of these units vested in the year ended December 31, 2020 and the remainder forfeited in accordance with their terms.

A portion of these awards were in the form of performance-vesting restricted units which were eligible to vest based on achievement of specific performance goals with respect to Fiscal 2019.

Based on the Company’s actual Fiscal 2019 results, a portion of these units vested in the first quarter of 2020, another portion will vest in the first quarter of 2021 based on the employee’s continued employment on such vesting date and the remainder forfeited in accordance with their terms.

2020 Long-Term Incentive Awards

During the year ended December 31, 2019, the Company granted long-term incentive plan awards for 2019 (the “2019 Long-Term Incentive Grant”) which were comprised of nonqualified stock options (the “Long-Term Incentive Options”) and performance-vesting restricted units (the “Long-Term Incentive Performance Restricted Units”) (collectively, the “Long-Term Incentive Awards”).

Long-Term Incentive Awards for 2019, 2020 and 2021 combined were granted to certain employees during the year ended December 31, 2019.

Long-Term Incentive Options

The Long-Term Incentive Options generally vest over three years , with one-third vesting on each anniversary of the date of grant, subject to continued employment through the applicable vesting date.

Equity compensation expense for these options is recognized for each tranche over the three year vesting period using the straight line method.

During the year ended December 31, 2020, the Company granted long-term incentive plan awards to certain employees.

These grants were comprised of nonqualified stock options (the “Long-Term Incentive Options”) and performance-vesting restricted units (the “Long-Term Incentive Performance Restricted Units”).

The nonqualified stock options generally vest ratably over two or three years , subject to continued employment through the applicable vesting date.

Equity compensation expense for these options is recognized for each tranche over the vesting period using the straight-line method.

Upon stock option exercises, authorized but unissued shares are issued by the Company.

Long-Term Incentive Performance Restricted Units

The Long-Term Incentive Performance Restricted Units originally granted in 2019 (the “2019 LTIP Performance Awards”) contained a three-year performance period consisting of the 2019-2021 calendar years (or, extended through the end of the 2022 calendar year, as applicable) and were eligible to vest based upon the Company’s achievement of specific performance goals for the performance period, as defined by the 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) up to 100 % (for target or above performance).

The performance-vesting restricted units granted in 2020 contain a performance period through calendar year 2022 (or, the end of the 2023 calendar year, as applicable), and are otherwise consistent with the terms of the modified 2019 LTIP Performance Awards as discussed further below.

Equity compensation expense has not yet been recorded related to these awards.

Other Long-Term Incentive Awards

During the year ended December 31, 2020, the Company also granted time-vesting restricted units to certain employees which generally vest over three years , with one-third vesting on each anniversary of the date of grant, subject to continued employment through the applicable vesting date.

Separately, during the year ended December 31, 2020, in connection with a review of compensation matters, the Compensation Committee of the Board of Directors approved grants of approximately 1.2 million restricted stock units designed to recognize certain employees for their contributions and continued expected contributions to the Company and its long term goals during the COVID-19 pandemic.

The restricted stock units will vest 50 % on each of the first two anniversaries of the grant date, subject to the recipient’s continued employment on each such vesting date.

Previous Long-Term Incentive Awards

The Company also has outstanding time-vesting restricted awards (the “Long-Term Incentive Time Restricted Awards”), performance-vesting restricted awards (the “Long-Term Incentive Performance Restricted Awards”) and nonqualified stock options granted under previous long-term incentive plan grants.

During the year ended December 31, 2020, a portion of the previously granted Long-Term Incentive Performance Restricted Awards related to completed performance periods vested, with the remainder forfeiting in accordance with their terms.

The remaining outstanding Long-Term Incentive Performance Restricted Awards related to future performance periods are eligible to vest based upon the Company’s achievement of pre-established performance goals for the respective performance period, as defined.

Based on the Company’s actual results for 2020, the previously granted Long-Term Incentive Performance Restricted Awards related to the performance period which ended on December 31, 2020 are expected to forfeit in the first quarter of 2021.

The Company previously granted long-term incentive performance restricted units in 2019 (the “2019 LTIP Performance Awards”) which contained a three-year performance period consisting of the 2019-2021 calendar years (or, extended through the end of the 2022 calendar year, as applicable) and were eligible to vest based upon the Company’s achievement of specific performance goals for the performance period, as defined.

The total number of 2019 LTIP Performance Awards eligible to vest will be based on the level of achievement of the performance goals and ranges from 0 % (if below threshold performance) up to 100 % (for target or above performance).

Upon achievement of the performance goals, only 50% of the award for a given level of performance will vest, with the remaining 50% subject to a one-year performance test period.

The goal achieved must be met again or exceeded the next fiscal year before the remaining units are earned.

In November 2019, certain performance-vesting restricted stock units were granted to the Company’s new Chief Executive Officer (the “CEO Performance Awards”).

The CEO Performance Awards have a three-year performance period consisting of the 2020-2022 calendar years (or, extended through the end of the 2023 calendar year, as applicable) which are eligible to vest based upon the Company’s achievement of specific performance goals for the performance period, as defined by the CEO Performance Awards.

In November 2019, certain performance-vesting restricted stock units were granted to the Company’s previous Chief Executive Officer (the “CEO Performance Awards”).

The CEO Performance Awards had a three-year performance period consisting of the 2020-2022 calendar years (or, extended through the end of the 2023 calendar year, as applicable) which were eligible to vest based upon the Company’s achievement of specific performance goals for the performance period, as defined by the CEO Performance Awards.

The performance period and the performance goals for the CEO Performance Awards differed from those of the 2019 LTIP Performance Awards, as such, o n February 25, 2020, the Board approved a modification (the “Modification”) to the 2019 LTIP Performance Awards in order to better align its terms with those of the CEO Performance Awards.

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Equity compensation expense has not yet been recorded related to these awards.

Equity compensation expense has not yet been recorded related to these awards as the performance goals are not yet considered probable of achievement.

The Company will use the respective modification date fair value to record equity compensation expense related to the Modification awards when and if they become probable of vesting in a future period, in accordance with the guidance in ASC 718, Compensation-Stock Compensation .

Other Long-Term Incentive Awards

During the year ended December 31, 2019, the Company also granted time-vesting restricted units which vest over three years to certain employees, with one-third vesting on each anniversary of the date of grant, subject to continued employment through the applicable vesting date.

Separately, as part of the October 2019 Grant, time-vesting restricted units were also granted which will vest 50 % on each of the first two anniversaries of the grant date, subject to the recipient’s continued employment on each such vesting date.

Equity compensation expense related to these awards is recognized using the straight line method.

Previous Long-Term Incentive Awards

The Company also has outstanding time-vesting restricted awards (the “Long-Term Incentive Time Restricted Awards”), performance-vesting restricted awards (the “Long-Term Incentive Performance Restricted Awards”) and Long-Term Incentive Options granted under previous long-term incentive plan grants.

During the year ended December 31, 2019, a portion of the previously granted Long-Term Incentive Performance Restricted Awards related to completed performance periods vested, with the remainder forfeiting in accordance with their terms.

Based on the Company’s actual results for 2019, a portion of the previously granted Long-Term Incentive Performance Restricted Awards related to the performance period which ended on December 31, 2019 are expected to vest in the first quarter of 2020, with the remainder forfeiting in accordance with their terms.

2.75x Performance Restricted Shares

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 certain 2.75x Performance Restricted shares to vest 60 % upon the closing of the ZHG Transaction on May 8, 2017 (see Note 17–Related-Party Transactions).

The remaining outstanding unvested 2.75x Performance Restricted shares forfeited in the second quarter of 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 expense related to the modified shares when the liquidity event occurred.

As a result, during the year ended December 31, 2017, the Company recognized non-cash equity compensation expense related to all of the 2.75x Performance Restricted shares of approximately $ 8.4 million and paid cash accumulated dividends related to previous dividend declarations of approximately $ 1.3 million.

During the year ended December 31, 2020, the Company granted equity awards to its non-employee members of its Board which will vest on the day before the Company’s next annual meeting.

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Upon vesting, each RSU will be converted into one share of the Company’s common stock.

STOCKHOLDERS’ EQUITY

Additionally, during the year ended December 31, 2020, the Company granted equity awards in the form of RSUs which vested immediately to each eligible Board member in lieu of quarterly cash payments related to the director’s annual retainers.

STOCKHOLDERS’ (DEFICIT) EQUITY

As of December 31, 2020, 94,652,248 shares of common stock were issued in the accompanying consolidated balance sheet, which includes 16,260,248 shares of treasury stock held by the Company (see Share Repurchase Program discussion below), but excludes 101,135 unvested shares of common stock and 3,082,378 unvested restricted stock units held by certain participants in the Company’s equity compensation plans (see Note 19–Equity-Based Compensation).

Share Repurchase Program

The Board previously authorized the repurchase of up to $ 250.0 million of the Company’s common stock (the “Share Repurchase Program”).

The Board had previously authorized the repurchase 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.

The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time.

During the year ended December 31, 2020, prior to the COVID-19 temporary park closures, the Company completed a share repurchase of 469,785 shares for an aggregate total of approximately $ 12.4 million, leaving approximately $ 237.6 million available under the Share Repurchase Program as of December 31, 2020.

In connection with Amendment No.

12 to the Company’s Amended Credit Agreement, the Company is restricted from paying any dividends or making restricted payments, including share repurchases, through the third quarter of 2022 unless certain conditions are met ( see Note 11–Long-Term Debt).

During the year ended December 31, 2019, the Company completed a share repurchase of 5,615,874 shares (see discussion relating to the SEAS Repurchase in Note 17–Related Party Transactions for further details).

On August 2, 2019, the Company’s Board approved a replenishment to the Share Repurchase Program of $ 150.0 million, bringing the total amount authorized for future share repurchases back up to $ 250.0 million.

As of December 31, 2019, $ 250.0 million remained available for future share repurchases.

The number of shares to be purchased and the timing of purchases will be based on the Company’s trading windows and available liquidity, general business and market conditions and other factors, including legal requirements and alternative opportunities.

During the year ended December 31, 2018, the Company repurchased a total of 3,654,816 shares of common stock at a total cost of approximately $ 98.0 million.

No shares were repurchased by the Company during the year ended December 31, 2017.

All shares repurchased pursuant to the Share Repurchase Program, along with shares repurchased directly from selling stockholders concurrently with previous secondary offerings, are recorded as treasury stock at a total cost of $ 402.9 million and $ 252.9 million as of December 31, 2019 and 2018, respectively, and are reflected as a reduction to stockholders’ equity in the accompanying consolidated statements of changes in stockholders’ equity.

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.

For the year ended December 31, 2017, approximately $ 1.5 million of accumulated dividends were paid related to shares which vested during the respective year and is reflected in other financing activities in the accompanying consolidated statements of cash flows.

These shares, which were granted prior to the dividend suspension, carried dividend rights and therefore the dividends accumulated and were paid when the shares vested in accordance with the underlying equity compensation grants.

Accumulated dividends paid for the years ended December 31, 2019 and 2018 were not material.

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 Company’s trading windows and available liquidity, general business and market conditions, and other factors, including legal requirements, debt covenant restrictions and alternative investment opportunities.

All shares repurchased pursuant to the Share Repurchase Program, along with shares repurchased directly from selling stockholders concurrently with previous secondary offerings, are recorded as treasury stock at a total cost of $ 415.3 million and $ 402.9 million as of December 31, 2020 and 2019, respectively, and are reflected as a reduction to stockholders’ (deficit) equity in the accompanying consolidated statements of changes in stockholders’ (deficit) equity.

SEVERANCE AND OTHER SEPARATION COSTS

In September 2020, the Company committed to a plan of termination (the “2020 Restructuring Program”) primarily impacting some of the Company’s previously furloughed salaried, full-time and part-time employees.

Substantially all of the impacted employees were furloughed as part of the Company’s efforts to reduce operating expenses and adjust cash flows in light of business circumstances associated with the COVID-19 pandemic.

Due to the sudden and unforeseeable economic impacts of the pandemic on the Company’s business operations, that were not reasonably foreseeable at the time of the temporary furloughs, the Company transitioned certain park and corporate personnel from a furloughed status to a permanent layoff.

As a result, during the year ended December 31, 2020, the Company recorded approximately $ 2.7 million in pre-tax restructuring charges primarily related to severance and other termination benefits related to the 2020 Restructuring Program, which is included in severance and other separation costs in the accompanying consolidated statements of comprehensive (loss) income.

Currently, some of the Company’s employees at certain parks remain on furlough.

The Company continues to monitor the impact of the COVID-19 pandemic and may adjust its plans accordingly.

As of December 31, 2020, the remaining liability, which primarily relates to severance and other separation costs incurred as part of the 2020 Restructuring Program to be paid as contractually obligated by December 31, 2021, is included in accrued salaries, wages and benefits in the accompanying consolidated balance sheets.

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 year ended December 31, 2019, the Company recorded approximately $ 4.2 million in pre-tax charges primarily consisting of severance and other termination benefits, which is included in severance and other separation costs in the accompanying consolidated statements of comprehensive income (loss).

As of December 31, 2019, a liability of $ 0.4 million, which primarily relates to severance and other separation costs to be paid as contractually obligated by December 31, 2020, is included in accrued salaries, wages and benefits in the accompanying consolidated balance sheets.

In August 2018, the Company announced a 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 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 year ended December 31, 2018, the Company recorded approximately $ 5.5 million in pre-tax restructuring charges primarily related to severance and other termination benefits, which is included in severance and other separation costs in the accompanying consolidated statements of comprehensive income (loss).

The Company will not incur any additional costs associated with the 2018 Restructuring Program as all continuing service obligations were completed as of December 31, 2018 .

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 by the end of the fourth quarter of 2017 across certain of the Company’s theme parks and corporate headquarters.

As a result, during the year ended December 31, 2017, the Company recorded approximately $ 5.2 million in pre-tax restructuring charges primarily related to severance and other termination benefits, which is included in severance and other separation costs in the accompanying consolidated statements of comprehensive income (loss).

The Company will not incur any additional costs associated with the 2018 Restructuring Program as all continuing service obligations were completed as of December 31, 2018.

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Certain other executives who separated from the Company during the first half of 2018 also received severance-related benefits of approximately $ 3.8 million in accordance with the terms of their respective employment agreements or relevant company plan, as applicable.

These severance expenses are included in severance and other separation costs in the accompanying consolidated statements of comprehensive income (loss) for the year ended December 31, 2018.

These severance expenses are included in severance and other separation costs in the accompanying consolidated statements of comprehensive (loss) income for the year ended December 31, 2018.

Additionally, during the year ended December 31, 2018, certain equity awards were accelerated to vest in connection with the departure of specific executives as required by their respective employment agreements.

As a result, the Company recorded incremental non-cash equity compensation expense related to these awards, which is included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss).

See Note 19–Equity-Based Compensation for further details.

SUMMARY QUARTERLY FINANCIAL DATA (UNAUDITED)

Unaudited summary quarterly financial data for the years ended December 31, 2019 and 2018 was as follows:

(Unaudited, in thousands, except per share amounts)

Total revenues

Operating (loss) income

Net (loss) income

(Loss) earnings per share:

(Loss) earnings per share, basic

(Loss) earnings per share, diluted

(Unaudited, in thousands, except per share amounts)

Total revenues

Operating (loss) income

Net (loss) income

(Loss) earnings per share:

(Loss) earnings per share, basic

(Loss) earnings per share, diluted

During the first quarter of 2019, the Company recorded $ 2.6 million of pre-tax expenses associated with separation-related costs.

See Note 21–Severance and Other Separation Costs for further details.

During the second quarter of 2019, the Company recorded $ 4.3 million of pre-tax expenses associated with a previously disclosed transfer of shares and HP Agreements.

See Note 17–Related-Party Transactions for further details.

During the fourth quarter of 2019, the Company recorded $ 32.1 million of pre-tax expenses associated with a legal settlement accrual, net of insurance recoveries.

See Note 15–Commitments and Contingencies for further details.

During the first quarter of 2018, the Company recorded $ 21.5 million of pre-tax expenses associated with separation-related costs and a legal settlement accrual.

See Note 15–Commitments and Contingencies and Note 21–Severance and Other Separation Costs for further details.

During the second quarter of 2018, the Company recorded $ 8.7 million of pre-tax expenses associated with separation-related costs and a legal settlement accrual.

See Note 15–Commitments and Contingencies and Note 21–Severance and Other Separation Costs for further details.

The Company also recorded approximately $ 4.5 million in fixed asset disposals associated with certain rides and equipment which were removed from service during the quarter.

See Note 8–Property and Equipment, Net for further details.

During the third quarter of 2018, the Company recorded $ 3.9 million in severance and other separation costs primarily related to severance costs and other termination benefits.

See Note 21–Severance and Other Separation Costs for further details.

The Company also recorded approximately $ 3.8 million in fixed asset disposals associated with certain rides and equipment which were removed from service during the quarter.

See Note 8–Property and Equipment, Net for further details.

During the fourth quarter of 2018, the Company recorded a loss on early extinguishment of debt and write-off of discounts and debt issuance costs of $ 8.2 million related the Amended Credit Agreement.

See Note 11–Long-Term Debt for further details.

The Company also recorded approximately $ 2.5 million in fixed asset disposals associated with certain rides and equipment which were removed from service during the quarter.

See Note 8–Property and Equipment, Net for further details.

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.

Schedule I-Registrant’s Condensed Financial Statements

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Investment in wholly-owned subsidiary

Liabilities and Stockholders’ Equity

Liabilities and Stockholders’ (Deficit) Equity

Current Liabilities:

Dividends payable

Loss in excess of investment in wholly-owned subsidiary

Other accrued liabilities

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Commitments and contingencies

Stockholders’ Equity:

Stockholders’ (Deficit) Equity:

Preferred stock, $ 0.01 par value—authorized, 100,000,000 shares, no shares

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Additional paid-in capital

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Accumulated deficit

Treasury stock, at cost ( 15,790,463 and 10,174,589 shares at December 31, 2019

and 2018, respectively)

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

Treasury stock, at cost ( 16,260,248 and 15,790,463 shares at December 31, 2020 and 2019, respectively)

Total stockholders’ (deficit) equity

Total Liabilities and Stockholders’ (Deficit) Equity

See accompanying notes to condensed financial statements.

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PARENT COMPANY ONLY

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

For the Year Ended December 31,

Equity in net income (loss) of subsidiary

Net income (loss)

Equity in other comprehensive (loss) income of subsidiary

Comprehensive income (loss)

Equity in net (loss) income of subsidiary

Net (loss) income

Equity in other comprehensive income (loss) of subsidiary

Comprehensive (loss) income

See accompanying notes to condensed financial statements.

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Cash Flows From Operating Activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by (used

in) operating activities:

Equity in net (income) loss of subsidiary

Dividends forfeited from subsidiary-return on capital, net of forfeitures

Net cash used in operating activities

Equity in net loss (income) of subsidiary

Net cash provided by (used in) operating activities

Cash Flows From Investing Activities:

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Capital contributed to subsidiary from exercises of stock options

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash Flows From Financing Activities:

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Dividends paid to common stockholders

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Change in Cash and Cash Equivalents

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Dividends from subsidiary- return of capital, for purchase of treasury stock

Dividends declared, but unpaid

See accompanying notes to condensed financial statements.

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Parent completed an initial public offering in April 2013.

In May 2017, an affiliate of Zhonghong Zhuoye Group Co., Ltd., Sun Wise (UK) Co., LTD.

(“Sun Wise”) acquired approximately 21 % of the then outstanding shares of common stock of the Company (the “ZHG Transaction”) from certain affiliates of Blackstone.

Subsequent to the ZHG Transaction, Blackstone did not own any remaining shares of the Company.

See further discussion relating to subsequent ownership changes in Note 17–Related-Party Transactions in the accompanying consolidated financial statements.

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However, under the terms of SEA’s various debt agreements, SEA’s ability to pay dividends or lend to the Parent is restricted, except that SEA may pay specified amounts to the Parent to fund the payment of the Parent’s tax obligations.

The COVID-19 pandemic materially impacted operations for SEA for the year ended December 31, 2020.

See further discussion relating to the impact of the COVID-19 pandemic in Note 1–Description of the Business in the accompanying consolidated financial statements.

BASIS OF PRESENTATION

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These parent company only financial statements should be read in conjunction with the consolidated financial statements.

SEA is the borrower under the senior secured credit facilities, (the “Senior Secured Credit Facilities”) under 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.

On October 31, 2018, SEA entered into a refinancing amendment, Amendment No.

9 (the “Amended Credit Agreement”), to its Existing Credit Agreement.

In connection with the Amended Credit Agreement, SEA borrowed 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-2 loans.

Additionally, pursuant to the Amended Credit Agreement, SEA terminated the existing revolving credit commitments and replaced them with a new tranche of revolving credit commitments (the “Revolving Credit Facility”).

On March 31, 2017, SEA entered into a refinancing amendment, Amendment No.

8 (the “Amendment No.

8”), to its Existing Credit Agreement and borrowed additional term loans of which the proceeds, along with cash on hand, were used to redeem all of the then outstanding Term B-3 loans and a portion of then outstanding principal of the Term B-2 loans.

See further discussion in Note 11–Long-Term Debt of the accompanying consolidated financial statements.

SEA is the borrower under the senior secured credit facilities, (the “Senior Secured Credit Facilities”) under a credit agreement (the “Amended Credit Agreement”) dated as of December 1, 2009, as the same may be amended, restated, supplemented or modified from time to time.

On April 30, 2020, SEA closed on a private offering of $ 227.5 million aggregate principal amount of 8.750 % first-priority senior secured notes due 2025 (the “Senior Notes”).

On August 5, 2020, SEA closed on a private offering of $ 500.0 million aggregate principal amount of 9.500 % second-priority senior secured notes due 2025 (the “Second-Priority Senior Notes”).

Under the terms of the Senior Secured Credit Facilities, the obligations of SEA are fully, unconditionally and irrevocably guaranteed by Parent, any subsidiary of Parent that directly or indirectly owns 100 % of the issued and outstanding equity interest of SEA, and subject to certain exceptions, each of SEA’s existing and future material domestic wholly-owned subsidiaries (collectively, the “Guarantors”).

The Senior Notes and Second-Priority Senior Notes are fully and unconditionally guaranteed by Parent, any subsidiary of Parent that directly or indirectly owns 100 % of the issued and outstanding equity interests of SEA, and subject to certain exceptions, each of SEA’s subsidiaries that guarantees SEA’s existing senior secured credit facilities.

See Note 11–Long-Term Debt of the accompanying consolidated financial statements for further details .

DIVIDENDS FROM SUBSIDIARY

In 2016, SEA’s Board of Directors (the “Board”) had a policy to pay, subject to legally available funds, regular quarterly cash dividends to the Parent (defined as a restricted payment in the Senior Secured Credit Facilities) and the Parent’s Board had a policy to pay regular quarterly cash dividends to its stockholders.

In September 2016, both SEA’s Board and the Parent’s Board suspended the quarterly dividend policy to allow greater flexibility to deploy capital, when possible, 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.

During the years ended December 31, 2019 and 2018, SEA paid dividends to the Parent of approximately $ 150.0 million and $ 98.0 million, respectively.

The dividends were in the form of payments that SEA made for share repurchases at the Parent level (see Note 5–Stockholders’ Equity which follows).

During the years ended December 31, 2019, 2018 and 2017, Parent paid accumulated dividends, net of forfeitures, related to shares that carried dividend rights which vested during the respective year.

See further discussion in Note 20–Stockholders’ Equity of the accompanying consolidated financial statements.

STOCKHOLDERS’ EQUITY

During the years ended December 31, 2020, 2019 and 2018, SEA paid dividends to the Parent of approximately $ 12.4 million, $ 150.0 million and $ 98.0 million, respectively.

The dividends were in the form of payments that SEA made for share repurchases at the Parent level (see Note 5–Stockholders’ (Deficit) Equity which follows).

During the years ended December 31, 2020, 2019 and 2018, Parent paid accumulated dividends, net of forfeitures, related to shares that carried dividend rights from previous dividend declarations which vested during the respective year.

STOCKHOLDERS’ (DEFICIT) EQUITY

Omnibus Incentive Plan

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The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time.

During the year ended December 31, 2019, the Parent repurchased a total of 5,615,874 shares of common stock at a total cost of $ 150.0 million.

On August 2, 2019 the Parent’s Board approved a replenishment to the Share Repurchase Program of $ 150.0 million, bringing the total amount authorized for future share repurchases back up to $ 250.0 million as of December 31, 2019.

The number of shares to be purchased and the timing of purchases will be based on the Parent’s trading windows and available liquidity, general business and market conditions and other factors, including legal requirements and alternative opportunities.

During the year ended December 31, 2020, prior to the COVID-19 temporary park closures, the Parent repurchased a total of 469,785 shares of common stock at a total cost of $ 12.4 million , leaving approximately $ 237.6 million available under the Share Repurchase Program as of December 31, 2020 .

In connection with Amendment No.

12 to the SEA’s Amended Credit Agreement, the Parent is restricted from paying any dividends or making restricted payments, including share repurchases, through the third quarter of 2022 unless certain conditions are met.

See further discussion in Note 11–Long-Term Debt of the accompanying consolidated financial statements.

During the year ended December 31, 2019, the Parent repurchased a total of 5,615,874 shares of common stock at a total cost of approximately $ 150.0 million.

There were no share repurchases during the year ended December 31, 2017.

All shares repurchased pursuant to the Share Repurchase Program, along with shares repurchased directly from selling stockholders concurrently with previous secondary offerings, are recorded as treasury stock at a total cost of $ 402.9 million and $ 252.9 million as of the years ended December 31, 2019 and 2018, respectively, and are reflected as a reduction to stockholders’ equity in the accompanying condensed balance sheets.

See further discussion in Note 20–Stockholders’ Equity of the accompanying consolidated financial statements.

During the year ended December 31, 2018, the Parent repurchased a total of 3,654,816 shares of common stock at a total cost of approximately $ 98.0 million.

All shares repurchased pursuant to the Share Repurchase Program, along with shares repurchased directly from selling stockholders concurrently with previous secondary offerings, are recorded as treasury stock at a total cost of $ 415.3 million and $ 402.9 million as of the years ended December 31, 2020 and 2019, respectively, and are reflected as a reduction to stockholders’ (deficit) equity in the accompanying condensed balance sheets.

See further discussion in Note 20–Stockholders’ (Deficit) Equity of the accompanying consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures