United Parks & Resorts Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. 55 In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. The design of any controls and procedures also is based on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Additionally, in designing disclosure controls and procedures, our management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Our management, with the participation of our principal executive officer and principal financial officer, have reviewed the effectiveness of our disclosure controls and procedures as of December 31, 2021 and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to a material weakness in internal control over financial reporting initially disclosed as of September 30, 2021 and described below. Notwithstanding the above, the control deficiency did not result in a material misstatement of any of the Company’s annual or interim consolidated financial statements. Further, management believes and has concluded that the consolidated financial statements for the prior periods and included in this report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America. Management’s Report on Internal Control over Financial Reporting As required by the SEC’s rules and regulations for the implementation of Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements in our consolidated financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013) . Based on our assessments and those criteria, management including our principal executive officer and principal financial officer, identified a material weakness within the Company’s control environment. Specifically, the Company does not have sufficient policies and procedures related to Board oversight of certain Board engagement within the Company’s control environment. Accordingly, our principal executive officer and principal financial officer concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2021. Changes in Internal Control over Financial Reporting 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. 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 pandemic. We are continually monitoring and assessing the COVID-19 pandemic 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 most recent quarter covered by this Annual Report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting, except for remediation efforts in connection with the material weakness as described above. 56 Status Update Management and our Board of Directors are committed to remediating this deficiency. Based upon a recommendation of the Audit Committee, the Board formed a committee (the “Committee”) to develop and execute on a remediation plan. The Committee and management are in the process of developing the remediation plan and have implemented the following: • Engaged independent consultants to advise the Board’s Committee as it relates to the deficiency. • Enhanced our evaluation of the control environment. Management and our Board are committed to taking appropriate steps to remediate the deficiency. Our remediation of the identified material weakness is ongoing and will require additional time to fully remediate. The material weakness cannot be considered remediated until remediation efforts have operated for a sufficient period of time and management has concluded, that the material weakness has been resolved. Additional remediation measures continue to be considered and will be implemented as appropriate. We will continue to assess the effectiveness of our remediation efforts in connection with our evaluations of internal control over financial reporting. Report of Independent Registered Public Accounting Firm The Company’s independent registered public accounting firm has issued a report on the Company’s internal control over financial reporting. This report appears on page F-4 in this Annual Report on Form 10-K. Item 9B. Other Information Rule 10b5-1 Plans Our policy governing transactions in our securities by our directors, officers and employees permits such persons to adopt stock trading plans pursuant to Rule 10b5-1 promulgated by the SEC under the Exchange Act. Our directors, officers and employees have in the past and may from time to time establish such stock trading plans. We do not undertake any obligation to disclose, or to update or revise any disclosure regarding, any such plans and specifically do not undertake to disclose the adoption, amendment, termination or expiration of any such plans. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III. Item 10. Directors, Executive Officers and Corporate Governance 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. Item 11. Executive Compensation 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. Item 12. 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, 2021: Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plan approved by security holders 488,434 $ 30.59 7,833,369 Equity compensation plan not approved by security holders — — — Total 488,434 $ 30.59 7,833,369 57 The remaining 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. Item 13. Certain Relationships and Related Transactions, and Director Independence 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. Item 14. Principal Accountant Fees and Services 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. 58 PART IV. Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this report: 1. Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets F-5 Consolidated Statements of Comprehensive Income (Loss) F-6 Consolidated Statements of Changes in Stockholders’ (Deficit) Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9 to F-35 2. Financial Statement Schedules Schedule I—Registrant’s Condensed Financial Statements F-36 to F-46 Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes herein. 3. Exhibits See the Exhibit Index beginning on page 60. 59 Exhibit Index Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation of SeaWorld Entertainment, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 24, 2013 (File No. 001-35883)) 3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of SeaWorld Entertainment, Inc., effective June 15, 2016 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 17, 2016 (File No. 001-35883)) 3.3 Third Amended and Restated Bylaws of SeaWorld Entertainment, Inc., effective June 14, 2017 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 16, 2017 (File No. 001-35883)) 4.1 Description of the Registrant’s Securities (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-35883)) 4.2 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. 001-35883)) 4.3 First Supplemental Indenture, dated as of April 26, 2021, among SeaWorld Parks & Entertainment, Inc., SeaWorld Entertainment, Inc., the other guarantors from time to time party thereto and Wilmington Trust, National Association, as trustee for the 8.750% First-Priority Senior Secured Notes Due 2025 (incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 7, 2021 (File No. 001-35883)) 4.4 Indenture, dated as of August 25, 2021, by and among SeaWorld Parks & Entertainment, Inc., the guarantors party thereto, and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on August 26, 2021 (File No. 001-35883)) 10.1 Restatement Agreement, dated as of August 25, 2021, by and among SeaWorld Parks & Entertainment, Inc., SeaWorld Entertainment, Inc., the subsidiary guarantors party thereto, the financial institutions list on the signature pages thereto, J.P. Morgan Chase Bank, N.A., as Administrative Agent, as Collateral Agent, as Issuing Bank and as Swingline Lender. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 26, 2021 (File No. 001-35883)) 10.2 Lease Amendment, dated January 9, 1978, by and between the City of San Diego and Sea World Inc. (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 filed on December 27, 2012 (File No. 333-185697)) 10.3 Lease Amendment, dated March 6, 1979, by and between the City of San Diego and Sea World Inc. (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1 filed on December 27, 2012 (File No. 333-185697)) 10.4 Lease Amendment, dated December 12, 1983, by and between the City of San Diego and Sea World Inc. (incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1 filed on December 27, 2012 (File No. 333-185697)) 10.5 Lease Amendment, dated June 24, 1985, by and between the City of San Diego and Sea World Inc. (incorporated by reference to Exhibit 10.21 to the Registrant’s Registration Statement on Form S-1 filed on December 27, 2012 (File No. 333-185697)) 10.6 Lease Amendment, dated September 22, 1986, by and between the City of San Diego and Sea World Inc. (incorporated by reference to Exhibit 10.22 to the Registrant’s Registration Statement on Form S-1 filed on December 27, 2012 (File No. 333-185697)) 10.7 Lease Amendment, dated June 29, 1998, by and between the City of San Diego and Sea World Inc. (incorporated by reference to Exhibit 10.23 to the Registrant’s Registration Statement on Form S-1 filed on December 27, 2012 (File No. 333-185697)) 60 Exhibit No. Description 10.8 Lease Amendment, dated July 9, 2002, by and between the City of San Diego and Sea World Inc. (incorporated by reference to Exhibit 10.24 to the Registrant’s Registration Statement on Form S-1 filed on December 27, 2012 (File No. 333-185697)) 10.9 Trademark License Agreement, dated December 1, 2009, by and between Anheuser-Busch Incorporated and Busch Entertainment LLC (incorporated by reference to Exhibit 10.25 to the Registrant’s Registration Statement on Form S-1 filed on December 27, 2012 (File No. 333-185697)) 10.10† 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. 333-185697)) 10.11† 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. 001-35883)) 10.12† Third Amended & Restated Stock Ownership Guidelines, adopted February 19, 2021 (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-35883)) 10.13† 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. 001-35883)) 10.14† 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. 001-35883)) 10.15 License Agreement, dated May 16, 2017, by and between Sesame Workshop and SeaWorld Parks & Entertainment, Inc. (Portions of this exhibit have been omitted pursuant to a request for confidential treatment) (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (File No. 001-35883)) 10.16 † SeaWorld Entertainment, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 16, 2017 (File No. 001-35883)) 10.17 † Form of Amendment #1 to Restricted Stock Grant and Acknowledgment and Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 14, 2017 (File No. 001-35883)) 10.18 † 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. 001-35883)) 10.19 Cooperation Agreement, dated November 5, 2017, between Hill Path Capital LP and SeaWorld Entertainment, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2017 (File No. 001-35883)) 10.20 Side Letter, dated November 5, 2017, between SeaWorld Entertainment, Inc. and Hill Path Capital LP (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on November 7, 2017 (File No. 001-35883)) 10.21† Offer Letter of Employment, Agreed and Accepted the 24th day of June, 2021, between SeaWorld Entertainment, Inc. and Tom Iven (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 10-Q filed on August 6, 2021 (File No. 001-35883)) 10.22† Form of Performance Stock Unit Grant Notice and Restricted Stock Unit Agreement (Employees – Annual Incentive Plan Award) (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 10-Q filed on May 8, 2019 (File No. 001-35883)) 61 Exhibit No. Description 10.23† Form of Option Grant Notice and Option Agreement (Tier 2– Time-Based Options) (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 10-Q filed on May 8, 2019 (File No. 001-35883)) 10.24† 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. 001-35883)) 10.25 Amended and Restated Undertaking Agreement, dated May 27, 2019, by and among SeaWorld Entertainment, Inc. and Hill Path Capital LP, Scott I. Ross and James P. Chambers (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on May 28, 2019 (File No. 001-35883)) 10.26 Registration Rights Agreement, dated May 27, 2019, between Hill Path Capital LP and certain of its affiliates and SeaWorld Entertainment, Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on May 28, 2019 (File No. 001-35883)) 10.27 Stockholders Agreement, dated May 27, 2019, between 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 May 28, 2019 (File No. 001-35883)) 10.28† 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. 001-35883)) 10.29 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. 001-35883)) 10.30 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. 001-35883)) 10.31 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. 001-35883)) 10.32 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. 001-35883)) 10.33 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. 001-35883)) 10.34 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. 001-35883)) 10.35† 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. 001-35883)) 62 Exhibit No. Description 10.36 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. 001-35883)) 10.37† Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (Non-Employee Directors) (incorporated by reference to Exhibit 10.65 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-35883)) 10.38† Form of Option Grant Notice and Option Agreement (Employees—Time-Based Options) (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 7, 2021 (File No. 001-35883)) 10.39† Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (Employees—Time-Based Restricted Stock Units) (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 7, 2021 (File No. 001-35883)) 10.40† 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 filed on May 7, 2021 (File No. 001-35883)) 10.41†* Eighth Amended and Restated Outside Director Compensation Policy, effective January 21, 2021 10.42†* Nineth Amended and Restated Outside Director Compensation Policy, effective December 31, 2021 10.43* Amendment 1 to License Agreement, dated May 16, 2017, by and between Sesame Workshop and SeaWorld Parks & Entertainment, Inc. (Portions of this exhibit have been omitted) 10.44* Amended and Restated Security Agreement dated as of August 25, 2021 among the Grantors identified herein and JPMorgan Chase Bank, N.A., as Collateral Agent 10.45* Amended & Restated Pledge Agreement dated as of August 25, 2021 between SeaWorld Entertainment, Inc. and JPMorgan Chase Bank, N.A. as Collateral Agent 10.46* Trademark Security Agreement, dated as of October 29, 2021, by Sea World LLC, a Delaware limited liability company (the “Grantor”), in favor of Wilmington Trust, National Association, in its capacity as collateral agent pursuant to the Indenture 10.47* Trademark Security Agreement, dated as of October 29, 2021, by Sea World LLC, a Delaware limited liability company, and SeaWorld Parks & Entertainment LLC, a Delaware limited liability company (each, a “Grantor” and collectively, the “Grantors”), in favor of JPMorgan Chase Bank, N.A., in its capacity as collateral agent pursuant to the Credit Agreement 21.1 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. 001-35883)) 23.1* Consent of Deloitte & Touche LLP 31.1* Certification of Annual Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Annual Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer Pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 63 Exhibit No. Description 32.2* Certification of Chief Financial Officer Pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101* Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K 104* Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set † * Identifies exhibits that consist of a management contract or compensatory plan or arrangement. Filed herewith. The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time. Item 16. Form 10-K Summary None. 64 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SeaWorld Entertainment, Inc. Date: February 28, 2022 By: /S/ MARC G. SWANSON Name: Marc G. Swanson Title: 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. Signature Date Capacity /S/ MARC G. SWANSON February 28, 2022 Chief Executive Officer (Principal Executive Officer) Marc G. Swanson /S/ ELIZABETH C. GULACSY February 28, 2022 Chief Financial Officer (Principal Financial Officer) Elizabeth C. Gulacsy /S/ CHRISTOPHER C. YARRIS February 28, 2022 Chief Accounting Officer (Principal Accounting Officer) Christopher C. Yarris /S/ RONALD BENSION February 28, 2022 Director Ronald Bension /S/ JAMES CHAMBERS February 28, 2022 Director James Chambers /S/ WILLIAM GRAY February 28, 2022 Director William Gray /S/ TIMOTHY J. HARTNETT February 28, 2022 Director Timothy J. Hartnett /S/ CHARLES KOPPELMAN February 28, 2022 Director Charles Koppelman /S/ YOSHIKAZU MARUYAMA February 28, 2022 Director Yoshikazu Maruyama /S/ THOMAS E. MOLONEY February 28, 2022 Director Thomas E. Moloney /S/ NEHA JOGANI NARANG February 28, 2022 Director Neha Jogani Narang /S/ SCOTT I. ROSS February 28, 2022 Director Scott I. Ross /S/ KIMBERLY K. SCHAEFER February 28, 2022 Director Kimberly K. Schaefer 65 SEAWORLD ENTERTAINMENT, INC. Index to Consolidated Financial Statements Page Number Reports of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-5 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021, 2020 and 2019 F-6 Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the Years Ended December 31, 2021, 2020 and 2019 F-7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019 F-8 Notes to Consolidated Financial Statements F-9 Schedule I—Registrant’s Condensed Financial Statements F-36 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of SeaWorld Entertainment, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of SeaWorld Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income (loss), changes in stockholders’ (deficit) equity, and cash flows, for each of the three years in the period ended December 31, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2022, expressed an adverse opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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. Revenue Recognition—Deferred Revenue Related to Annual and Season Admission Pass Products—Refer to Note 2 and Note 4 to the consolidated financial statements Critical Audit Matter Description The Company’s annual and seasonal admission pass products allow guests access to specific parks over a specified time period. Such revenue is deferred and recognized over the terms of the admission pass product based on estimated redemption rates for similar products and is adjusted periodically. The Company estimates redemption rates using historical and forecasted attendance trends by park. Attendance trends factor in seasonality and are adjusted based on actual trends periodically. Revenue is recognized on a pro rata basis based on the estimated allocated selling price of the admission product. The Company tracks and recognizes deferred revenue utilizing internally developed models. Auditing the attendance projections by park, which is the primary input used in the deferred revenue models, and the redemption rates calculated through the models, required extensive audit effort due to the complexity and manual nature of the models. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the attendance projections by park and the recognition of revenue from the deferred revenue related to annual and seasonal admission pass products included the following, among others: F-2 • We tested the effectiveness of management’s controls over revenue recognition related to annual and season admission pass products, including controls over actual and estimated attendance and the timing of deferred revenue relief . • We performed a retrospective review on the prior year forecasted attendance by comparing actual attendance results to management’s historical forecasts in order to evaluate management’s ability to forecast attendance and identify any past bias. • We evaluated the reasonableness of the current-year attendance forecasts compared to historical results, considering recent trends in the Company’s attendance. • We tested assumptions and inputs used in the deferred revenue pass models that are used to determine the deferred revenue balances related to and the revenue recognized from annual and seasonal admission pass products. • We tested the mathematical accuracy and appropriateness of management’s deferred revenue models and timing of revenue recognition. /s/ Deloitte & Touche LLP Tampa, Florida February 28, 2022 We have served as the Company’s auditor since 2009. F-3 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of SeaWorld Entertainment, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of SeaWorld Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021 of the Company and our report dated February 28, 2022, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Material Weakness A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management's assessment: The Company does not have sufficient policies and procedures related to Board oversight of certain Board engagement within the Company’s control environment. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2021, of the Company, and this report does not affect our report on such financial statements. /s/ Deloitte & Touche LLP Tampa, Florida February 28, 2022 F-4 SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) December 31, 2021 2020 Assets Current assets: Cash and cash equivalents $ 443,707 $ 433,909 Accounts receivable, net 76,948 30,410 Inventories 29,478 30,700 Prepaid expenses and other current assets 17,263 12,418 Total current assets 567,396 507,437 Property and equipment, at cost 3,385,308 3,272,705 Accumulated depreciation ( 1,740,144 ) ( 1,611,745 ) Property and equipment, net 1,645,164 1,660,960 Goodwill 66,278 66,278 Trade names/trademarks, net 157,000 157,000 Right of use assets-operating leases 132,217 136,572 Deferred tax assets, net 23,995 22,847 Other assets, net 18,266 15,264 Total assets $ 2,610,316 $ 2,566,358 Liabilities and Stockholders’ Deficit Current liabilities: Accounts payable and accrued expenses $ 134,311 $ 105,369 Current maturities of long-term debt 12,000 15,505 Operating lease liabilities 2,895 3,757 Accrued salaries, wages and benefits 22,156 10,781 Deferred revenue 154,793 130,759 Other accrued liabilities 45,811 50,950 Total current liabilities 371,966 317,121 Long-term debt, net 2,104,835 2,177,137 Long-term operating lease liabilities 117,046 120,144 Deferred tax liabilities, net 12,803 15,772 Other liabilities 37,582 41,987 Total liabilities 2,644,232 2,672,161 Commitments and contingencies (Note 15) Stockholders’ Deficit: Preferred stock, $ 0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at December 31, 2021 and 2020 — — Common stock, $ 0.01 par value—authorized, 1,000,000,000 shares; 95,541,992 and 94,652,248 shares issued at December 31, 2021 and 2020, respectively 955 946 Additional paid-in capital 711,474 680,360 Accumulated deficit ( 115,287 ) ( 371,800 ) Treasury stock, at cost ( 19,953,042 and 16,260,248 shares at December 31, 2021 and 2020, respectively) ( 631,058 ) ( 415,309 ) Total stockholders’ deficit ( 33,916 ) ( 105,803 ) Total liabilities and stockholders’ deficit $ 2,610,316 $ 2,566,358 See accompanying notes to consolidated financial statements. F-5 SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands, except per share amounts) Year Ended December 31, 2021 2020 2019 Net revenues: Admissions $ 851,891 $ 255,376 $ 802,834 Food, merchandise and other 651,839 176,403 595,410 Total revenues 1,503,730 431,779 1,398,244 Costs and expenses: Cost of food, merchandise and other revenues 114,287 36,712 108,953 Operating expenses (exclusive of depreciation and amortization shown separately below) 622,419 388,473 649,657 Selling, general and administrative expenses 184,871 94,885 261,701 Severance and other separation costs 1,531 2,826 4,176 Depreciation and amortization 148,660 150,546 160,557 Total costs and expenses 1,071,768 673,442 1,185,044 Operating income (loss) 431,962 ( 241,663 ) 213,200 Other expense, net 144 276 18 Interest expense 116,642 100,907 84,178 Loss on early extinguishment of debt and write-off of discounts and debt issuance costs 58,827 — — Income (loss) before income taxes 256,349 ( 342,846 ) 129,004 (Benefit from) provision for income taxes ( 164 ) ( 30,525 ) 39,528 Net income (loss) $ 256,513 $ ( 312,321 ) $ 89,476 Other comprehensive income (loss): Unrealized gain (loss) on derivatives, net of tax — 1,559 ( 3,843 ) Comprehensive income (loss) $ 256,513 $ ( 310,762 ) $ 85,633 Earnings (loss) per share: Earnings (loss) per share, basic $ 3.28 $ ( 3.99 ) $ 1.11 Earnings (loss) per share, diluted $ 3.22 $ ( 3.99 ) $ 1.10 Weighted average common shares outstanding: Basic 78,302 78,194 80,309 Diluted 79,575 78,194 81,044 See accompanying notes to consolidated financial statements. F-6 SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY (In thousands, except per share and share amounts) Shares of Common Stock Issued Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Treasury Stock, at Cost Total Stockholders' Equity (Deficit) Balance at January 1, 2019 93,400,929 $ 934 $ 663,834 $ ( 148,955 ) $ 2,284 $ ( 252,903 ) $ 265,194 Equity-based compensation — — 11,106 — — — 11,106 Unrealized loss on derivatives, net of tax benefit of $ 1,421 — — — — ( 3,843 ) — ( 3,843 ) Vesting of restricted shares 608,851 6 ( 6 ) — — — — Shares withheld for tax withholdings ( 176,673 ) ( 2 ) ( 4,839 ) — — — ( 4,841 ) Exercise of stock options 211,096 2 3,793 — — — 3,795 Adjustments to previous dividend declarations — — 5 — — — 5 Repurchase of 5,615,874 shares of treasury stock, at cost — — — — — ( 150,000 ) ( 150,000 ) Net income — — — 89,476 — — 89,476 Balance at December 31, 2019 94,044,203 940 673,893 ( 59,479 ) ( 1,559 ) ( 402,903 ) 210,892 Equity-based compensation — — 7,467 — — — 7,467 Unrealized gain on derivatives, net of tax expense of $ 572 — — — — 1,559 — 1,559 Vesting of restricted shares 609,286 6 ( 6 ) — — — — Shares withheld for tax withholdings ( 158,865 ) ( 2 ) ( 3,913 ) — — — ( 3,915 ) Exercise of stock options 157,624 2 2,918 — — — 2,920 Adjustments to previous dividend declarations — — 1 — — — 1 Repurchase of 469,785 shares of treasury stock, at cost — — — — — ( 12,406 ) ( 12,406 ) Net loss — — — ( 312,321 ) — — ( 312,321 ) Balance at December 31, 2020 94,652,248 $ 946 $ 680,360 $ ( 371,800 ) $ — $ ( 415,309 ) $ ( 105,803 ) Equity-based compensation — — 39,722 — — — 39,722 Vesting of restricted shares 888,406 9 ( 9 ) — — — — Shares withheld for tax withholdings ( 288,229 ) ( 3 ) ( 14,503 ) — — — ( 14,506 ) Exercise of stock options 289,567 3 5,904 — — — 5,907 Repurchase of 3,692,794 shares of treasury stock, at cost — — — — — ( 215,749 ) ( 215,749 ) Net income — — — 256,513 — — 256,513 Balance at December 31, 2021 95,541,992 $ 955 $ 711,474 $ ( 115,287 ) $ — $ ( 631,058 ) $ ( 33,916 ) See accompanying notes to consolidated financial statements. F-7 SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2021 2020 2019 Cash Flows From Operating Activities: Net income (loss) $ 256,513 $ ( 312,321 ) $ 89,476 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 148,660 150,546 160,557 Amortization of debt issuance costs and discounts 6,419 5,025 3,446 Loss on early extinguishment of debt and write-off of discounts and debt issuance costs 52,011 — — Deferred income tax (benefit) provision ( 4,117 ) ( 31,414 ) 37,998 Equity-based compensation 39,722 7,467 11,106 Other including loss on impairment or disposal of assets, net 5,816 6,046 4,616 Changes in assets and liabilities: Accounts receivable ( 58,927 ) 24,761 10,865 Inventories 644 2,267 721 Prepaid expenses and other current assets ( 2,424 ) 5,210 ( 27,359 ) Accounts payable and accrued expenses 20,050 1,640 2,733 Accrued salaries, wages and benefits 11,375 ( 4,718 ) ( 5,467 ) Deferred revenue 33,070 25,065 665 Other accrued liabilities ( 3,785 ) ( 422 ) 57,684 Right-of-use assets and operating lease liabilities 396 561 501 Other assets and liabilities ( 2,411 ) ( 442 ) 874 Net cash provided by (used in) operating activities 503,012 ( 120,729 ) 348,416 Cash Flows From Investing Activities: Capital expenditures ( 128,854 ) ( 109,175 ) ( 195,217 ) Other investing activities, net — — 24 Net cash used in investing activities ( 128,854 ) ( 109,175 ) ( 195,193 ) Cash Flows From Financing Activities: Proceeds from the issuance of debt, net 1,922,222 713,658 — Repayments of long-term debt ( 2,032,728 ) ( 15,505 ) ( 15,506 ) Proceeds from draw on revolving credit facility — 272,500 294,000 Repayments of revolving credit facility — ( 322,500 ) ( 274,000 ) Purchase of treasury stock ( 215,749 ) ( 12,406 ) ( 150,000 ) Payment of tax withholdings on equity-based compensation through shares withheld ( 14,506 ) ( 3,915 ) ( 4,841 ) Exercise of stock options 5,907 2,920 3,795 Debt issuance costs ( 23,272 ) ( 7,530 ) — Other financing activities ( 6,771 ) ( 3,018 ) ( 753 ) Net cash (used in) provided by financing activities ( 364,897 ) 624,204 ( 147,305 ) Change in Cash and Cash Equivalents, including Restricted Cash 9,261 394,300 5,918 Cash and Cash Equivalents, including Restricted Cash—Beginning of year 435,225 40,925 35,007 Cash and Cash Equivalents, including Restricted Cash—End of year $ 444,486 $ 435,225 $ 40,925 Supplemental Disclosures of Noncash Investing and Financing Activities Capital expenditures in accounts payable and accrued expenses $ 20,468 $ 12,544 $ 39,538 Other financing arrangements $ 4,239 $ 3,890 $ — See accompanying notes to consolidated financial statements. F-8 SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF THE BUSINESS SeaWorld Entertainment, Inc., through its wholly-owned subsidiary, SeaWorld Parks & Entertainment, Inc. (“SEA”) (collectively, the “Company”), owns and operates twelve theme parks within the United States. Prior to December 1, 2009, the Company did not have any operations. On December 1, 2009, the Company acquired all of the outstanding equity interest of Busch Entertainment LLC and affiliates from Anheuser Busch Companies, Inc. and Anheuser-Busch InBev SA/NV (“ABI”). The Company completed an initial public offering in April 2013. See further discussion relating to subsequent ownership changes in Note 17–Related-Party Transactions. The Company operates SeaWorld theme parks in Orlando, Florida; San Antonio, Texas; and San Diego, California, and Busch Gardens theme parks in Tampa, Florida, and Williamsburg, Virginia. The Company operates water park attractions in Orlando, Florida (Aquatica); San Antonio, Texas (Aquatica); San Diego, California, (Aquatica, which will be converted to a Sesame Place park in 2022); Tampa, Florida (Adventure Island); and Williamsburg, Virginia (Water Country USA). The Company also operates a reservations-only theme park in Orlando, Florida (Discovery Cove) and a theme park in Langhorne, Pennsylvania (Sesame Place). During the years ended December 31, 2021 and 2019, respectively, approximately 58 % and 57 % 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. Impact of Global COVID-19 Pandemic The Company’s results of operations for the years ended December 31, 2021 and 2020 were impacted by the global COVID-19 pandemic due in part to the following factors: (i) capacity limitations, modified/limited operations and/or temporary park closures which were in place for portions of the respective periods; (ii) decreased demand due to public concerns associated with the pandemic; (iii) restrictions on international travel and; (iv) a decline in both international and group-related attendance. 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 cleaning measures, capacity limitations and/or modified/limited operations, which at times included reduced hours and/or reduced operating days. By the end of August 2020, the Company had reopened 10 of its 12 parks on a limited basis. The Company was unable to reopen its Aquatica water park in California and its Water Country USA water park in Virginia for the 2020 operating season but opened both parks for their 2021 operating season. At the start of 2021, seven of the Company’s 12 parks were open but were operating with capacity limitations or modified/limited operations. By the end of the second quarter of 2021, all of the Company’s 12 parks were open, and operating without COVID-19 related capacity limitations. Due to the COVID-19 pandemic, the Company has taken a number of 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 the measures taken in 2020 included, but were not limited to: (i) increased its revolving credit commitments on March 10, 2020 prior to the temporary park closures; (ii) issued first-priority senior secured notes and second-priority senior secured notes in 2020 to raise additional capital and further enhance available liquidity at the time; (iii) entered into amendments to its existing senior secured credit facilities to amend financial covenants at the time; (iv) furloughed approximately 95% of its employees in 2020 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 managed operating expenses as parks reopened; (viii) eliminated substantially all advertising and marketing spend while the parks were closed and strategically managed 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 remained in place through 2021. The Company continuously monitors guidance from federal, state and local authorities and engages with governmental authorities as well as medical/scientific consultants. The Company may adjust its plans accordingly as laws change and new information and guidance becomes available. The COVID-19 pandemic has had, and may continue to have, a material impact on the Company’s financial results. F-9 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries, including SEA. All intercompany accounts have been eliminated in consolidation. Use of Estimates 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, the valuation of goodwill and other indefinite-lived intangible assets and 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 impact or timing of government restrictions, any future capacity limitations due to social distancing guidelines, public sentiment on social gatherings, travel and attendance patterns, travel restrictions, effectiveness and adoption of vaccines, the impact of new variants, 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 Cash and cash equivalents include cash held at financial institutions as well as operating cash onsite at each theme park to fund daily operations and amounts due from third-party credit card companies with settlement terms of less than four days . The amounts due from third-party credit card companies totaled $ 11.5 million and $ 4.9 million at December 31, 2021 and 2020, respectively. The cash balances in all accounts held at financial institutions are insured up to $ 250,000 by the Federal Deposit Insurance Corporation (“FDIC”) through December 31, 2021. At times, cash balances may exceed federally insured amounts and potentially subject the Company to a concentration of credit risk. Management believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions. From time to time, the Company may invest in certain highly liquid instruments with original maturities of three months or less. These instruments may include money market mutual funds, certificates of deposit or time deposits, among others, which may or may not qualify for FDIC insurance. The Company classifies any such instruments as cash and cash equivalents based on their short-term maturities. Restricted Cash Restricted cash is recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Restricted cash consists primarily of funds received from strategic partners for use in approved marketing and promotional activities. December 31, December 31, 2021 2020 (In thousands) Cash and cash equivalents $ 443,707 $ 433,909 Restricted cash, included in prepaid expenses and other current assets 779 1,316 Total cash, cash equivalents and restricted cash $ 444,486 $ 435,225 Accounts Receivable—Net Accounts receivable are reported at net realizable value and consist primarily of amounts due from customers for the sale of admission products, including amounts due for admissions products purchased on monthly installment arrangements. 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 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 default rates. As of December 31, 2021 and 2020, the Company recorded $ 17.7 million and $ 6.7 million, respectively, as an allowance on its installment arrangements, which is included in accounts receivable, net, in the accompanying consolidated balance sheets, with a corresponding reduction to deferred revenue. F-10 Inventories Inventories are accounted for using the weighted average cost method and are stated at the lower of cost or net realizable value. Inventories consist primarily of products for resale, including merchandise, culinary items and miscellaneous supplies. Obsolete or excess inventories are recorded at their estimated realizable value. Property and Equipment—Net Property and equipment are recorded at cost. The cost of ordinary or routine maintenance, repairs, spare parts and minor renewals is expensed as incurred. Development costs associated with new attractions and products are generally capitalized after necessary feasibility studies have been completed and final concept or contracts have been approved. The cost of assets is depreciated using the straight-line method based on the following estimated useful lives: Land improvements 10 - 40 years Buildings 5 - 40 years Rides, attractions and equipment 3 - 20 years Animals 1 - 50 years Certain costs related to animals exhibited in the theme parks are capitalized and amortized over their estimated lives ( 1 - 50 years ). 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. These assets are stated at cost and are not depreciated. Once construction of the assets is completed and placed into service, assets are reclassified to the appropriate asset class based on their nature and depreciated in accordance with the useful lives above. Debt interest is capitalized on all active construction projects. Total interest capitalized for the years ended December 31, 2021, 2020 and 2019 was $ 7.3 million, $ 6.3 million and $ 4.6 million, respectively. Computer System Development Costs The Company capitalizes computer system development costs that meet established criteria and, once placed in service, amortizes those costs to expense on a straight-line basis over five years . Total capitalized costs related to computer system development costs, net of accumulated amortization, were $ 1.5 million and $ 2.4 million as of December 31, 2021 and 2020, respectively, and are recorded in other assets in the accompanying consolidated balance sheets. Accumulated amortization was $ 12.4 million and $ 11.2 million as of December 31, 2021 and 2020, respectively. Amortization expense of capitalized computer system development costs during the years ended December 31, 2021, 2020 and 2019 was $ 1.4 million, $ 1.7 million and $ 2.2 million, respectively, and is recorded in depreciation and amortization in the accompanying consolidated statements of comprehensive income (loss). Systems reengineering costs do not meet the proper criteria for capitalization and are expensed as incurred. Goodwill and Other Indefinite-Lived Intangible Assets Goodwill and other indefinite-lived intangible assets are not amortized, but instead reviewed for impairment at least annually during the fourth quarter, and as of an interim date should factors or indicators become apparent that would require an interim test, with ongoing recoverability based on applicable reporting unit overall financial performance and consideration of significant events or changes in the overall business environment or macroeconomic conditions. Such events or changes in the overall business environment could include, but are not limited to, significant negative trends or unanticipated changes in the competitive or macroeconomic environment. In assessing goodwill for impairment, the Company may choose to initially evaluate qualitative factors to determine if it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. The Company considers several factors, including macroeconomic conditions, industry and market conditions, overall financial performance of the reporting unit, changes in management, strategy or customers, and relevant reporting unit specific events such as a change in the carrying amount of net assets, a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit, and the testing of recoverability of a significant asset group within a reporting unit. If the qualitative assessment is not conclusive, then a quantitative impairment analysis for goodwill is performed at the reporting unit level. The Company may also choose to perform this quantitative impairment analysis instead of the qualitative analysis. The quantitative impairment analysis compares the estimated fair value of the reporting unit, determined using the income and/or market approach, to its recorded amount. If the recorded amount exceeds the fair value, then a goodwill impairment charge is recorded for the difference up to the recorded amount of goodwill. The determination of fair value in the Company’s goodwill impairment analysis is based on an estimate of fair value for the relevant reporting unit utilizing known and estimated inputs at the evaluation date. Some of those inputs include, but are not limited to, estimates of future revenue and expense growth, estimated market multiples, expected capital expenditures, income tax rates and cost of invested cap ital. F-11 The Company’s other indefinite-lived intangible assets consist of certain trade names/trademarks and other intangible assets which, after considering legal, regulatory, contractual, and other competitive and economic factors, are determined to have indefinite lives and are valued using the relief from royalty method. Trade names/trademarks are combined by brand as a unit of accounting when testing for impairment as the brand represents the highest and best use of the asset and drives the Company’s marketing strategy and international license agreements. E stimates required in this valuation method include estimated future revenues impacted by the trade names/trademarks, royalty rates, and appropriate discount rates. Projections are based on management’s best estimates given recent financial performance, market trends, strategic plans, brand awareness, operating characteristics by park, and other available information. See Note 9–Goodwill and Trade Names/Trademarks, Net, for further details. 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. Self-Insurance Reserves Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period that are not covered by insurance. Reserves are established for both identified claims and incurred but not reported (“IBNR”) claims. Such amounts are accrued for when claim amounts become probable and estimable. Reserves for identified claims are based upon the Company’s historical claims experience and third-party estimates of settlement costs. Reserves for IBNR claims are based upon the Company’s claims data history, actuarially determined loss development factors and qualitative considerations such as claims management activities. The Company maintains self-insurance reserves for healthcare, auto, general liability and workers’ compensation claims. Total claims reserves were $ 30.5 million at December 31, 2021, of which $ 1.7 million is recorded in accrued salaries, wages and benefits, $ 8.2 million is recorded in other accrued liabilities and the remaining long-term portion is recorded in other liabilities in the accompanying consolidated balance sheets. Total claims reserves were $ 31.1 million at December 31, 2020, of which $ 1.8 million is recorded in accrued salaries, wages and benefits, $ 7.5 million is recorded in other accrued liabilities and the remaining long-term portion is recorded in other liabilities in the accompanying consolidated balance sheets. All reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary. Debt Issuance Costs Debt issuance costs are amortized to interest expense using the effective interest method over the term of the related debt and are included in long-term debt, net, in the accompanying consolidated balance sheets. See further discussion in Note 11–Long-Term Debt. Share Repurchase Program and Treasury Stock From time to time, the Company’s Board of Directors (the “Board”) may authorize share repurchases of common stock. Shares repurchased under Board authorizations are currently held in treasury for general corporate purposes. The Company accounts for treasury stock on the trade date under the cost method. Treasury stock at December 31, 2021 and 2020 is recorded as a reduction to stockholders’ (deficit) equity. See further discussion of the Company’s share repurchase program in Note 20–Stockholders’ (Deficit) Equity. Revenue Recognition 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: (i) identify the contracts with customers; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as the Company satisfies the performance obligations. ASC 606 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Revenue is recorded net of sales-related taxes collected from guests and remitted or payable to government taxing authorities. F-12 Admissions Revenue Admissions revenue primarily consists of single-day tickets, annual or season passes or other multi-day or multi-park admission products. 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. Annual passes, season passes or other multi-day or multi-park passes allow guests access to specific parks over a specified time period. For these pass and multi-use products, revenue is deferred and recognized over the terms of the admission product based on estimated redemption rates for similar products and is adjusted periodically. The Company estimates redemption rates using historical and forecasted attendance trends by park for similar products. Attendance trends factor in seasonality and are adjusted based on actual trends periodically. These estimated redemption rates impact the timing of when revenue is recognized on these products. Actual results could materially differ from these estimates based on actual attendance patterns. Revenue is recognized on a pro-rata basis based on the estimated allocated selling price of the admission product. For pass products purchased on an installment plan that have met their initial commitment period and have transitioned to a month to month basis, monthly charges are recognized as revenue as payments are received each month, with the exception of payments received during the temporary park closures in 2020 (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. In 2020, 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 on these 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 temporarily closed in 2020. For passes under installment plans that had transitioned to a month to month basis, the Company temporarily paused monthly charges when the related parks reopened for the equivalent period the respective parks were closed. Accordingly, payments received during the closure period were recorded as deferred revenue and recognized as revenue once the respective parks reopened in 2020, which may not have necessarily reflected attendance patterns for these guests. The Company has also entered into agreements with certain external theme park, zoo and other attraction operators to jointly market and sell single and multi-use admission products. These joint products allow admission to both a Company park(s) and an external park, zoo or other attraction. The agreements with the external partners specify the allocation of revenue to Company parks from any jointly sold products. Whether the Company or the external partner sells the product, the Company’s portion of revenue is deferred until the first time the product is redeemed at one of the Company’s parks and recognized over its related use in a manner consistent with the Company’s other admission products. Additionally, the Company barters theme park admission products and sponsorship opportunities for advertising, employee recognition awards, and various other services. The fair value of the products or services is recognized into admissions revenue and related expenses at the time of the exchange and approximates the estimated fair value of the goods or services provided or received, whichever is more readily determinable. For the years ended December 31, 2021, 2020 and 2019, 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 $ 13.6 million, $ 4.7 million and $ 16.2 million, respectively. Food, Merchandise and Other Revenue Food, merchandise and other revenue primarily consists of food and beverage, merchandise, parking and other in-park products and also includes other miscellaneous revenue which is not significant in the periods presented. The Company recognizes revenue for food and beverage, merchandise and other in-park products when the related products or services are received by the guests. Certain admission products may also include bundled products at the time of purchase, such as food and beverage or merchandise items. The Company conducts an analysis of bundled products to identify separate distinct performance obligations that are material in the context of the contract. For those products that are determined to be distinct performance obligations and material in the context of the contract, the Company allocates a portion of the transaction price to each distinct performance obligation using each performance obligation’s standalone price. If the bundled product is related to a pass product and offered over time, revenue will be recognized over time accordingly. See further discussion in Note 4–Revenues. Advertising and Promotional Costs 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, 2021, 2020 and 2019, totaled approximately $ 81.4 million, $ 48.1 million and $ 138.3 million, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss). F-13 Equity-Based Compensation In accordance with ASC 718, Compensation-Stock Compensation , the Company measures the cost of employee services rendered in exchange for equity-based compensation based upon the grant date fair market value. The cost is recognized over the requisite service period, which is generally the vesting period unless service or performance conditions require otherwise. The Company recognizes 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 and performance-vesting restricted share awards. The Company uses the Black-Scholes Option Pricing Model to value stock options at the date of grant. On occasion, the Company may modify the terms or conditions of an equity award for its employees. If an award is modified, the Company evaluates the type of modification in accordance with ASC 718 to determine the appropriate accounting. See further discussion in Note 19–Equity-Based Compensation. Restructuring Costs 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 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. Business restructuring charges may include (i) one-time termination benefits related to employee separations, (ii) contract termination costs and (iii) other related costs associated with exit or disposal activities. If the one-time benefit arrangements are not part of an ongoing benefit arrangement or an individual deferred compensation contract, a liability is recognized and measured at its fair value for one-time termination benefits once the plan of termination is communicated to affected employees and it meets all of the following criteria: (i) management commits to a plan of termination, (ii) the plan identifies the number of employees to be terminated and their job classifications or functions, locations and the expected completion date, (iii) the plan establishes the terms of the benefit arrangement and (iv) it is unlikely that significant changes to the plan will be made or the plan will be withdrawn. If the one-time benefit arrangements are part of an ongoing benefit arrangement or an individual deferred compensation contract, a liability is recognized and measured at its fair value when the following conditions are met: (i) the obligation is attributable to services already rendered; (ii) rights to those benefits accumulate; (iii) payment of the benefits is probable; and (iv) amount can be reasonably estimated. If these four conditions are not met, a liability is recognized when it is probable that a liability has been incurred and the amount can be reasonably estimated in accordance with ASC 450, Contingencies . Contract termination costs include costs to terminate a contract or costs that will continue to be incurred under the contract without benefit to the Company. A liability is recognized and measured at its fair value when the Company either terminates the contract or ceases using the rights conveyed by the contract. See further discussion in Note 21–Severance and Other Separation Costs. Leases 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, Leases, 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 income (loss). 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 income (loss). 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. F-14 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 applies the incremental borrowing rates at a portfolio level based on lease terms. In accordance with the short-term lease recognition exemption of ASC 842, the Company does not recognize on its balance sheet leases with an initial lease term of 12 months or less. Lease expense for these short-term leases is recognized on a straight-line basis over the lease term. 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. 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. 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. All long-lived assets, including right of use assets associated with leases, are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. The measurement of an impairment loss to be recognized is based upon the difference between the estimated fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis. See further discussion in Note 14–Leases. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is established for deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization is dependent on generating sufficient future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. Forecasted financial performance is not used as evidence until such time as the Company has cumulative pretax income for a rolling 36-month period. The Company evaluates its tax positions by determining if it is more likely than not a tax position is sustainable upon examination, based upon the technical merits of the position, before any of the benefit is recorded for financial statement purposes. The benefit is measured as the largest dollar amount of the position that is more likely than not to be sustained upon settlement. 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 (benefit from) provision for income taxes in the accompanying consolidated statements of comprehensive income (loss). See further discussion in Note 13–Income Taxes. Contingencies The Company accounts for contingencies in accordance with ASC 450, Contingencies . For loss contingencies, such as potential legal settlements, the Company records an estimated loss when payment is considered probable and the amount of loss is reasonably estimable. In assessing loss contingencies related to legal proceedings that are pending against the Company, the Company evaluates the perceived merits of the legal proceedings as well as the perceived merits of the amount of relief sought or expected to be sought therein. If a loss is considered probable but the best estimate of the loss can only be identified within a range and no specific amount within that range is more likely, then the minimum of the range is accrued. Legal and related professional services costs to defend litigation are expensed as incurred. Insurance recoveries related to potential claims are recognized up to the amount of the recorded liability when coverage is confirmed and the estimated recoveries are probable of payment. These recoveries are not netted against the related liabilities for financial statement presentation. Additionally, for any potential gain contingencies, the Company does not recognize the gain until the period that all contingencies have been resolved and the amounts are realizable. See further discussion in Note 15–Commitments and Contingencies. F-15 Fair Value Measurements Fair value is a market-based measurement, not an entity-specific measurement and is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. An entity is permitted to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company has not elected to use the fair value option for any of its financial assets and financial liabilities that are not already recorded at fair value. Carrying values of financial instruments classified as current assets and current liabilities approximate fair value, due to their short-term nature. Fair Value Hierarchy —As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity. Fair value is determined for assets and liabilities, based upon significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy: Level 1 —Quoted prices for identical instruments in active markets. Level 2 —Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 —Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable and include situations where there is little, if any, market activity for the asset or liability. Determination of Fair Value —If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest and currency rates. Assets or liabilities valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable. See further discussion in Note 16–Fair Value Measurements. 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”), as a basis for allocating resources and assessing performance. Each theme park has been identified as an operating segment and meets the criteria for aggregation due to similar economic characteristics. In addition, all of the theme parks provide similar products and services and share similar processes for delivering services. The theme parks have a high degree of similarity in the workforces and target similar consumer groups. Accordingly, based on these economic and operational similarities and the way the CODM monitors and makes decisions affecting the operations, the Company has concluded that its operating segments may be aggregated and that it has one reportable segment. Derivative Instruments and Hedging Activities ASC 815, Derivatives and Hedging , provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (i) how and why an entity uses derivative instruments, (ii) how the entity accounts for derivative instruments and related hedged items, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. 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. As required by ASC 815, the Company records all derivatives, if any, on the balance sheet at fair value as either assets or liabilities. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the changes in fair value of the derivative contract are recorded in accumulated other comprehensive income (loss), net of taxes, and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. F-16 Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. See further discussion in Note 12–Derivative Instruments and Hedging Activities. 3. RECENT ACCOUNTING PRONOUNCEMENTS The Company reviews new accounting pronouncements as they are issued or proposed by the Financial Accounting Standards Board (“FASB”). Recently Implemented Accounting Standards During the year ended December 31, 2021, the Company adopted the following Accounting Standards Updates (“ASUs”) which had no material impact on its consolidated financial statements or disclosures: • 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. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements or disclosure. • 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 was effective for the Company beginning January 1, 2021. 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 adoption of this ASU did not have a material impact on the Company’s consolidated financial statements or disclosures. 4. REVENUES 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, 2021 and 2020, $ 14.5 million and $ 13.4 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. The following table reflects the Company’s deferred revenue balance as of December 31, 2021 and 2020: 2021 2020 (In thousands) Deferred revenue, including long-term portion $ 169,333 $ 144,187 Less: Deferred revenue, long-term portion, included in other liabilities 14,540 13,428 Deferred revenue, short-term portion $ 154,793 $ 130,759 The majority of the deferred revenue, short term portion, balance outstanding as of January 1, 2021 was recognized as revenue during the year ended December 31, 2021. International Agreements The Company previously 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 to provide certain services pertaining to the planning and design of SeaWorld Abu Dhabi, a marine life theme park on Yas Island (the “Middle East Project”), with funding received expected to offset internal expenses. The Company also receives 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, including approximately $ 4.5 million and $ 1.9 million of additional deferred revenue recorded in other liabilities in the accompanying consolidated balance sheets at December 31, 2021 and 2020, respectively. Separately, the Company recognizes an asset for the costs incurred to fulfill the contract if the costs are specifically identifiable, enhance resources that will be used to satisfy performance obligations in the future and are expected to be recovered. As a result, approximately $ 9.6 million and $ 5.9 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, 2021 and 2020, respectively. The related deferred revenue and expense will begin to be recognized when substantially all of the services have been performed. The Company continually monitors performance on the contract and will make adjustments, if necessary. Construction for the Middle East Project is on track and scheduled to be completed by the end of 2022 . F-17 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. (“ZHG Group”), to provide design, support and advisory services for various potential projects and grant exclusive rights in China, Taiwan, Hong Kong and Macau. In April 2019, the Company terminated the ZHG Agreements for non-payment of undisputed amounts owed. For the year ended December 31, 2019 , the Company recorded revenue related to the ZHG Agreements of approximately $ 1.7 million, which is included in food, merchandise and other revenue in the accompanying consolidated statements of comprehensive income (loss). There were no amounts recorded as revenue related to the ZHG Agreements in the years ended December 31, 2021 and 2020. See Note 17–Related-Party Transactions for further details. 5. EARNINGS (LOSS) PER SHARE Earnings (loss) per share is computed as follows: Year Ended December 31, 2021 2020 2019 Net Income Shares Per Share Amount Net Loss Shares Per Share Amount Net Income Shares Per Share Amount (In thousands, except per share amounts) Basic earnings (loss) per share $ 256,513 78,302 $ 3.28 $ ( 312,321 ) 78,194 $ ( 3.99 ) $ 89,476 80,309 $ 1.11 Effect of dilutive incentive-based awards 1,273 — 735 Diluted earnings (loss) per share $ 256,513 79,575 $ 3.22 $ ( 312,321 ) 78,194 $ ( 3.99 ) $ 89,476 81,044 $ 1.10 In accordance with ASC 260, Earnings Per Share , 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). 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 (loss) 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, 2021 and 2019, there were approximately 146,000 and 305,000 anti-dilutive shares of common stock excluded from the computation of diluted earnings per share, respectively. 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, 2021 and 2019, approximately 352,000 and 247,000 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. 6. INVENTORIES Inventories as of December 31, 2021 and 2020 consisted of the following: 2021 2020 (In thousands) Merchandise $ 23,454 $ 26,044 Food and beverage 5,518 4,027 Other supplies 506 629 Total inventories $ 29,478 $ 30,700 F-18 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets as of December 31, 2021 and 2020 consisted of the following: 2021 2020 (In thousands) Prepaid insurance $ 5,319 $ 2,757 Prepaid marketing and advertising costs 824 1,175 Other 11,120 8,486 Total prepaid expenses and other current assets $ 17,263 $ 12,418 8. PROPERTY AND EQUIPMENT, NET The components of property and equipment, net as of December 31, 2021 and 2020, consisted of the following: 2021 2020 (In thousands) Land $ 286,200 $ 286,200 Land improvements 417,931 405,652 Buildings 753,209 737,231 Rides, attractions and equipment 1,665,122 1,547,786 Animals 142,017 142,307 Construction in progress 120,829 153,529 Less: accumulated depreciation ( 1,740,144 ) ( 1,611,745 ) Total property and equipment, net $ 1,645,164 $ 1,660,960 Depreciation expense was approximately $ 146.5 million, $ 148.0 million, and $ 156.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. For the years ended December 31, 2021, 2020 and 2019, the Company recorded approximately $ 6.6 million, $ 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 income (loss). 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. 9. GOODWILL AND TRADE NAMES/TRADEMARKS, NET Goodwill, Net Goodwill, net, at December 31, 2021 and 2020 relates to the Company’s Discovery Cove reporting unit. The Company performed an annual qualitative assessment in the fourth quarter of 2021 and 2020 and concluded that further evaluation was unnecessary. Trade Names/Trademarks, Net During the fourth quarter of 2021, the Company performed a qualitative assessment for its indefinite-lived intangible assets and concluded that further evaluation was unnecessary. During the fourth quarter of 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 in the fourth quarter of 2020 and concluded that further evaluation was unnecessary. Trade names/trademarks, net, at December 31, 2021 and 2020, consisted of the following: Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Value (In thousands) Trade names/trademarks - indefinite lives $ 157,000 $ — $ 157,000 Trade names/trademarks - finite lives 9.3 years 12,900 12,900 — Total trade names/trademarks, net $ 169,900 $ 12,900 $ 157,000 F-19 10. OTHER ACCRUED LIABILITIES Other accrued liabilities as of December 31, 2021 and 2020, consisted of the following: 2021 2020 (In thousands) Accrued interest $ 17,372 $ 23,422 Accrued taxes 784 10,518 Self-insurance reserve 8,210 7,540 Other 19,445 9,470 Total other accrued liabilities $ 45,811 $ 50,950 As of December 31, 2021, other accrued liabilities above includes approximately $ 10.9 million related to certain contractual liabilities arising from the temporary COVID-19 park closures. As of December 31, 2021, accrued interest above primarily relates to interest associated with the Company’s senior notes issued in August 2021, 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. 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 was paid bi-annually in February and August and the first-priority senior secured notes issued in April 2020. See further discussion in Note 11–Long-Term Debt. 11. LONG-TERM DEBT Long-term debt, net, as of December 31, 2021 and 2020 consisted of the following: 2021 2020 (In thousands) Term B Loans (effective interest rate of 3.50 %) $ 1,197,000 $ — Term B-5 Loans (effective interest rate of 3.75 %) — 1,492,378 Senior Notes due 2029 (interest rate of 5.25 %) 725,000 — First-Priority Senior Secured Notes due 2025 (interest rate of 8.75 %) 227,500 227,500 Second-Priority Senior Secured Notes due 2025 (interest rate of 9.50 %) — 500,000 Total long-term debt 2,149,500 2,219,878 Less: discounts and debt issuance costs ( 32,665 ) ( 27,236 ) Less: current maturities ( 12,000 ) ( 15,505 ) Total long-term debt, net $ 2,104,835 $ 2,177,137 Refinancing Transactions On August 25, 2021 (the “Closing Date”), SEA entered into a Restatement Agreement (the “Restatement Agreement”) pursuant to which SEA amended and restated its existing senior secured credit agreement dated as of December 1, 2009 (as amended, restated, supplemented or otherwise modified from time to time, and the senior secured credit facilities thereunder (the “Existing Secured Credit Facilities”), and, as amended and restated by the Restatement Agreement (the “Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement provides for senior secured financing of up to $ 1,585.0 million, consisting of: (i) a first lien term loan facility (the “Term Loan Facility” and the loans thereunder, the “Term B Loans”), in an aggregate principal amount of $ 1,200.0 million which was fully drawn on the Closing Date. The Term Loan Facility will mature on August 25, 2028 ; and (ii) a first lien revolving credit facility (the “Revolving Credit Facility” (and the loans thereunder, the “Revolving Loans”) and, together with the Term Loan Facility, the “Senior Secured Credit Facilities”), in an aggregate committed principal amount of $ 385.0 million, including both a letter of credit sub-facility and a swingline loan sub-facility. The Revolving Credit Facility will mature on August 25, 2026 . Also on August 25, 2021, SEA completed a private offering of $ 725.0 million aggregate principal amount of 5.250 % senior notes due 2029 (the “Senior Notes”). See Senior Notes section which follows for more details. F-20 The Company used proceeds of the Term B Loans drawn on the Closing Date, together with the proceeds from the offering of the Senior Notes and cash on hand, to redeem SEA’s then outstanding 9.500 % second-priority senior secured notes due 2025 (the “Second-Priority Senior Secured Notes”), to refinance the SEA’s Existing Secured Credit Facilities, and to pay related expenses of the offering and refinancing (collectively, the “Refinancing Transactions”). As a result of the Refinancing Transactions, on August 25, 2021, SEA terminated its Existing Secured Credit Facilities and associated Term B-5 Loans and repaid all of its related outstanding obligations in respect of principal, interest and fees. Prior to the Refinancing Transactions, on July 14, 2021, SEA completed a redemption of $ 50.0 million of its Second-Priority Senior Secured Notes and separately on August 25, 2021, SEA completed another redemption of $ 50.0 million of its Second-Priority Senior Secured Notes (collectively, the “Partial Redemptions”). Pursuant to the Partial Redemptions, the aggregate principal amount of the Second-Priority Senior Secured Notes were redeemed at a price equal to 103.000 % of the respective principal amounts thereof, plus accrued and unpaid interest thereon to, but excluding, the respective redemption dates. In connection with the Refinancing Transactions, SEA also redeemed the remaining $ 400.0 million of its Second-Priority Senior Secured Notes (the “Full Redemption”). Pursuant to the Full Redemption, all of the aggregate principal amount of the Second-Priority Senior Secured Notes were redeemed at a price equal to the sum of (a) 100.000 % of the outstanding principal amount of the Second-Priority Senior Secured Notes redeemed pursuant to the Full Redemption plus (b) approximately $ 34.3 million related to the Applicable Premium (as defined in the respective indenture), which is included in loss on early extinguishment of debt and write-off of discounts and debt issuance costs for the year ended December 31, 2021, plus (c) accrued and unpaid interest thereon to, but excluding, the redemption date. Discounts and Debt Issuance Costs In connection with the Refinancing Transactions, SEA recorded a discount of $ 12.0 million and debt issuance costs of $ 12.7 million, of which $ 2.8 million were paid directly to lenders, during the year ended December 31, 2021. Additionally, SEA wrote-off debt issuance costs and discounts of $ 21.5 million which is included in loss on early extinguishment of debt and write-off of discounts and debt issuance costs in the accompanying consolidated statement of comprehensive income (loss) for the year ended December 31, 2021. In connection with the issuance of the First-Priority Senior Secured Notes and Second-Priority Senior Secured Notes, and as a result of certain amendments in 2020 to SEA’s then existing senior secured credit agreement, as previously disclosed, 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. Senior Secured Credit Facilities Borrowings of the Term B Loans bear interest at a fluctuating rate per annum equal to, at the Company’s option, (i) a base rate equal to the higher of (a) the federal funds rate plus 1/2 of 1%, (b) the rate of interest quoted in the print edition of the Wall Street Journal, Money Rates Section as the prime rate as in effect from time to time and (c) one-month Adjusted LIBOR plus 1% per annum (provided that in no event shall such ABR rate with respect to the Term B Loans be less than 1.50% per annum) (“ ABR ”), in each case, plus an applicable margin of 2.00% or (ii) a LIBOR rate for the applicable interest period (provided that in no event shall such LIBOR rate with respect to the Term B Loans be less than 0.50% per annum) (“ LIBOR ”) plus an applicable margin of 3.00%. Borrowings of the Revolving Loans bear interest at a fluctuating rate per annum equal to, at the Company’s option, (i) ABR (provided that in no event shall such ABR rate with respect to the Revolving Loans be less than 1.00% per annum) plus an applicable margin equal to 1.75% or (ii) LIBOR (provided that in no event shall such LIBOR rate with respect to the Revolving Loans be less than 0.00%) plus an applicable margin of 2.75%. The applicable margin for borrowings of Revolving Loans are subject to one 25 basis point step-down upon achievement by the Company of certain corporate credit ratings. In addition to paying interest on the outstanding principal under the Senior Secured Credit Facilities, the Company is required to pay a commitment fee equal to 0.50 % per annum to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The Company will also be required to pay customary agency fees as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin for LIBOR rate borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee computed at a rate equal to 0.125 % per annum on the daily stated amount of each letter of credit. The Senior Secured Credit Facilities require scheduled amortization payments on the term loans in quarterly amounts equal to 0.25 % of the original principal amount of the Term B Loans, payable quarterly, with the balance to be paid at maturity. F-21 In addition, the Senior Secured Credit Facilities require the Company to prepay outstanding term loan borrowings, subject to certain exceptions, with: - beginning with the fiscal year ending on December 31, 2022, 50% (which percentage will be reduced to 25% and 0% if the Company satisfies certain net first lien senior secured leverage ratios) of annual excess cash flow, as defined under the Senior Secured Credit Facilities; - 100% of the net cash proceeds of all non-ordinary course asset sales or other non-ordinary course dispositions of property, in each case subject to certain exceptions and reinvestment rights; - 100% of the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the Senior Secured Credit Facilities. The Company may voluntarily repay outstanding loans under the Senior Secured Credit Facilities at any time, without prepayment premium or penalty, except in connection with a repricing event in respect of the term loans as described below, subject to customary “breakage” costs with respect to LIBOR rate loans. All borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including the absence of a default or event of default and the accuracy of representations and warranties in all material respects. All obligations under the Senior Secured Credit Facilities are unconditionally guaranteed by the Company on a limited-recourse basis and each of SEA’s existing and future direct and indirect wholly owned material domestic subsidiaries, subject to certain exceptions. The obligations are secured by a pledge of SEA’s capital stock directly held by the Company and substantially all of SEA’s assets and those of each guarantor (other than the Company), including a pledge of the capital stock of all entities directly held by SEA or the guarantors, in each case subject to exceptions. Such security interests consist of a first-priority lien with respect to the collateral. As of December 31, 2021, SEA had approximately $ 20.5 million of outstanding letters of credit, leaving approximately $ 364.5 million available under the Revolving Credit Facility, which was not drawn upon as of December 31, 2021. Senior Notes The Senior Notes will mature on August 15, 2029 . Interest on the Senior Notes will accrue at 5.250 % per annum and will be paid semi-annually, in arrears on February 15 and August 15 of each year, beginning February 15, 2022 . On or after August 15, 2024, SEA may redeem the Senior Notes, 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 August 15 of the years as follows: (i) in 2024 at 102.625 %; (ii) in 2025 at 101.313 %; and (iii) in 2026 and thereafter at 100 %. In addition, prior to August 15, 2024, SEA may redeem the Senior Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100 % of the principal amount of the Senior Notes redeemed, plus the “Applicable Premium” and accrued and unpaid interest, if any, to, but excluding, the redemption date. Notwithstanding the foregoing, subject to the provisions set forth in the Indenture, at any time and from time to time on or prior to August 15, 2024, SEA may redeem in the aggregate up to 40 % of the original aggregate principal amount of the Senior Notes (calculated after giving effect to any issuance of additional Senior Notes) in an aggregate amount equal to the net cash proceeds of one or more equity offerings at a redemption price equal to 105.250 %, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Additionally, upon the occurrence of specified change of control events, each holder will have the right to require SEA to repurchase all or any part of such holder’s notes at a purchase price in cash equal to 101 %. SEA’s obligations under the Senior Notes and related indenture are guaranteed, jointly and severally, on a senior secured basis, by the Guarantors, as defined, in accordance with the provisions of the indenture. 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 “First-Priority Senior Secured Notes”). The First-Priority Senior Secured 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 First-Priority Senior Secured 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 First-Priority Senior Secured 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 First-Priority Senior Secured Notes with amounts equal to the net cash proceeds of certain equity offerings at a redemption price of 108.750 %, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. F-22 The First-Priority Senior Secured 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 Second-Priority Senior Secured Notes. Net of expenses related to the offering of the Second-Priority Senior Secured Notes and an amendment to its then existing senior secured credit agreement, the Company used a portion of the proceeds from the issuance of the Second-Priority Senior Secured Notes to repay the then outstanding borrowings of $ 311.0 million under the Revolving Credit Facility. The Second-Priority Senior Secured Notes were scheduled to mature on August 1, 2025 and had interest payment dates of February 1 and August 1 with the first interest payment paid on February 1, 2021 . See additional discussion in the preceding Refinancing Transactions section regarding the full redemption of the Second-Priority Senior Secured Notes in 2021. Restrictive Covenants The Amended and Restated Credit Agreement governing the Senior Secured Credit Facilities and the indentures governing the Senior Notes and First-Priority Senior Secured Notes (collectively, the “Debt Agreements”), contain covenants that limit the ability of the Company, SEA and its restricted subsidiaries to, among other things: (i) incur additional indebtedness or issue certain preferred shares; (ii) make dividend payments on or make other distributions in respect of their capital stock or make other restricted payments; (iii) make certain investments; (iv) sell certain assets; (v) create or permit to exist dividend and/or payment restrictions affecting their restricted subsidiaries; (vi) create liens on assets; (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; and (viii) enter into certain transactions with their affiliates. These covenants are subject to a number of important limitations and exceptions and are based, in part on the Company’s ability to satisfy certain tests and engage in certain transactions based on Covenant Adjusted EBITDA. Covenant Adjusted EBITDA differs from Adjusted EBITDA due to certain adjustments permitted under the relevant agreements, including but not limited to estimated cost savings, recruiting and retention costs, public company compliance costs, litigation and arbitration costs and other costs and adjustments as permitted under the Debt Agreements. The Debt Agreements contain certain customary events of default, including relating to a change of control. If an event of default occurs, the lenders under the Debt Agreements will be entitled to take various actions, including the acceleration of amounts due under the Debt Agreements and all actions permitted to be taken by a secured creditor in respect of the collateral securing the Debt Agreements. The Revolving Credit Facility requires that the Company, commencing as of the last day of the first full fiscal quarter after the Closing Date and subject to a testing threshold, comply on a quarterly basis with a maximum net first lien senior secured leverage ratio of 6.25 to 1.00 . The testing threshold will be satisfied (and therefore the covenant must be complied with at the end of such quarter) if the aggregate amount of funded loans and issued letters of credit (excluding up to $ 30.0 million of undrawn letters of credit under the Revolving Credit Facility and letters of credit that are cash collateralized) under the Revolving Credit Facility on such date exceeds an amount equal to 35 % of the then-outstanding commitments under the Revolving Credit Facility. The Debt Agreements permit an unlimited capacity for restricted payments if the net total leverage ratio on a pro forma basis does not exceed 4.25 to 1.00 after giving effect to the payment of any such restricted payment. As of December 31, 2021, the net total leverage ratio as calculated under the Debt Agreements was 2.48 to 1.00. As of December 31, 2021, SEA was in compliance with all covenants contained in the documents governing the Debt Agreements. Long-term debt at December 31, 2021, is repayable as follows and does not include the impact of any future voluntary prepayments: Years Ending December 31, (In thousands) 2022 $ 12,000 2023 12,000 2024 12,000 2025 239,500 2026 12,000 Thereafter 1,862,000 Total $ 2,149,500 Interest Rate Swap Agreements 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. F-23 Cash paid for interest relating to the Second-Priority Senior Secured Notes, the Senior Secured Credit Facilities, the First-Priority Senior Secured Notes, and the Interest Rate Swap Agreements, net of amounts capitalized, as applicable, was $ 116.1 million, $ 73.7 million and $ 80.5 million during the years ended December 31, 2021, 2020 and 2019, respectively. See Note 10–Other Accrued Liabilities for accrued interest included in the accompanying consolidated balance sheets as of December 31, 2021 and 2020. 12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and 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, if any, 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. 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, 2021 and 2020. Cash Flow Hedges of Interest Rate Risk 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 and 2019, 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 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 year ended December 31, 2020: Year Ended December 31, 2020 (In thousands) Derivatives in Cash Flow Hedging Relationships: Loss recognized in accumulated other comprehensive income (loss) $ ( 370 ) Amounts reclassified from accumulated other comprehensive income (loss) to interest expense $ 2,501 Changes in Accumulated Other Comprehensive Income (Loss) The following table reflects the changes in accumulated other comprehensive income (loss), net of tax, for the year ended December 31, 2020: Accumulated other comprehensive income (loss) (In thousands): (Losses) Gains on Cash Flow Hedges Accumulated other comprehensive loss at December 31, 2019 ( 1,559 ) Other comprehensive loss before reclassifications ( 271 ) Amounts reclassified from accumulated other comprehensive loss to interest expense 1,830 Change in other comprehensive income (loss), net of tax 1,559 Accumulated other comprehensive income (loss) at December 31, 2020 $ — F-24 13. INCOME TAXES For the years ended December 31, 2021, 2020 and 2019, the (benefit from) provision for income taxes is comprised of the following: 2021 2020 2019 Current income tax provision (In thousands) Federal $ ( 31 ) $ ( 136 ) $ ( 77 ) State 3,984 1,020 1,580 Foreign — 5 27 Total current income tax provision 3,953 889 1,530 Deferred income tax (benefit) provision: Federal 345 ( 19,718 ) 21,825 State ( 4,462 ) ( 11,696 ) 16,173 Total deferred income tax (benefit) provision ( 4,117 ) ( 31,414 ) 37,998 Total income tax (benefit) provision $ ( 164 ) $ ( 30,525 ) $ 39,528 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 $ 5.9 million, $ 0.5 million and $ 1.4 million, for the years ended December 31, 2021, 2020 and 2019, respectively. The components of deferred income tax assets and liabilities as of December 31, 2021 and 2020 are as follows: 2021 2020 Deferred income tax assets: (In thousands) Acquisition and debt related costs $ 4,292 $ 4,128 Net operating losses 199,656 272,943 Goodwill impairment 53,677 53,887 Self-insurance 7,220 7,410 Deferred revenue 2,878 5,707 Restricted stock 9,509 2,826 Tax credits 10,718 10,577 Legal settlements 855 645 Lease obligations 29,410 29,943 Interest limitation 562 463 Charitable contributions 3,243 3,977 Other 6,115 2,084 Total deferred income tax assets 328,135 394,590 Valuation allowance ( 4,775 ) ( 65,617 ) Net deferred tax assets 323,360 328,973 Deferred income tax liabilities: Property and equipment ( 194,739 ) ( 211,729 ) Amortization - Goodwill ( 55,827 ) ( 51,435 ) Amortization - Other intangibles ( 29,482 ) ( 26,080 ) Right of use assets ( 29,004 ) ( 29,631 ) Other ( 3,116 ) ( 3,023 ) Total deferred income tax liabilities ( 312,168 ) ( 321,898 ) Net deferred income tax assets $ 11,192 $ 7,075 The Company files federal, state and provincial income tax returns in various jurisdictions with varying statute of limitation expiration dates. Under the tax statute of limitations applicable to the Internal Revenue Code of 1986, as amended (the “Code”), the Company is no longer subject to U.S. federal income tax examinations by the Internal Revenue Service for years before 2017. However, because the Company is carrying forward income tax attributes, such as net operating losses and tax credits from 2009 and subsequent years, these attributes can still be audited when utilized on returns filed in the future. The Company has determined that there are no positions currently taken that would rise to a level requiring an amount to be recorded or disclosed as an unrecognized tax benefit. If such positions do arise, it is the Company’s intent that any interest or penalty amount related to such positions will be recorded as a component of the income tax provision in the applicable period. F-25 The Company has federal tax net operating loss carryforwards of approximately $ 0.7 billion as of December 31, 2021 and state net operating loss carryforwards spread across various jurisdictions with a combined total of approximately $ 1.0 billion as of December 31, 2021. These net operating loss carryforwards, if not used to reduce taxable income in future periods, will begin to expire in 2030 and 2029 , for federal and state tax purposes, respectively. 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. Through December 31, 2020, approximately $ 65.6 million of valuation allowances were established for some of the Company’s deferred tax assets, which, based on its analysis at the time, the Company believed did not meet the “more likely than not” criteria and would expire before being realized in future periods. These valuation allowance s consisted of the following as of December 31, 2020: approximately $ 39.5 million for federal net operating loss carryforwards, approximately $ 7.1 million for federal tax credits, approximately $ 4.0 million for federal and state charitable contributions and approximately $ 15.0 million, net of federal tax benefit, for state net operating losses. Based on the Company’s assessment of the realizability of its deferred tax assets during the year ended December 31, 2021, which included a review of current and forecasted financial performance, the Company believes that some of these deferred tax assets now meet the “more likely than not” criteria and will be realized in future periods before they expire. As a result, the Company reversed its valuation allowances by approximately $ 60.8 million during the year ended December 31, 2021. As of December 31, 2021, the Company has a remaining valuation allowance of approximately $ 4.8 million, net of federal tax benefit, on the deferred tax assets related to state net operating loss carryforwards. 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 (benefit) provision rate for the years ended December 31, 2021, 2020 and 2019, is as follows: 2021 2020 2019 Amount % Amount % Amount % (In thousands) Income tax at federal statutory rates $ 53,833 21.00 % $ ( 71,998 ) 21.00 % $ 27,091 21.00 % State taxes, net of federal benefit 12,070 4.71 ( 15,816 ) 4.61 7,645 5.93 Equity-based compensation ( 8,051 ) ( 3.14 ) ( 485 ) 0.14 ( 1,776 ) ( 1.38 ) Tax credits ( 137 ) ( 0.05 ) ( 304 ) 0.09 ( 795 ) ( 0.62 ) Impact of state rate changes ( 753 ) ( 0.29 ) ( 3,906 ) 1.14 3,770 2.92 Officer's compensation limitation 3,437 1.34 95 ( 0.03 ) 434 0.34 Valuation allowance - state ( 13,756 ) ( 5.37 ) 10,450 ( 3.05 ) 2,455 1.90 Valuation allowance - federal ( 47,061 ) ( 18.36 ) 49,951 ( 14.57 ) — — Other 254 0.10 1,488 ( 0.43 ) 704 0.55 Income tax (benefit) provision $ ( 164 ) ( 0.06 ) % $ ( 30,525 ) 8.90 % $ 39,528 30.64 % 14. LEASES 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, 2021, 2020 and 2019. F-26 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, 20 2 1 , 20 20 and 201 9 were approximately $ 11.1 million (including approximately $ 1.6 million remitted in 2021 related to 2020 Percentage Rent) , $ 0.5 million and $ 10.5 million, respectively. 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. Due to these factors , the Company deferred a payment of $ 8.3 million related to the Minimum Rent for the year ended December 31, 2020 (the “2020 Minimum Rent Payment”) . As such, approximately $ 10.8 million and $ 9.9 million is included in accounts payable and accrued expenses on the accompanying consolidated balance sheet s as of December 31, 2021 and 2020 , respectively, primarily related to the 2020 Minimum Rent Payment , in addition to certain accrued fees as of December 31, 2021 and the timing of a Percentage Rent payment as of December 31, 2020. Operating lease liabilities and long-term operating lease liabilities on the accompanying consolidated balance sheet as of December 31, 202 1 and 2020 and the lease maturities as of December 31, 202 1 are not adjusted for these deferred payments. The tables below present the lease balances and their classification in the accompanying consolidated balance sheets as of December 31, 2021 and 2020: December 31, December 31, Classification 2021 2020 Assets: (In thousands) Operating leases Right of use assets - operating $ 132,217 $ 136,572 Finance leases Other assets, net 2,824 3,580 Total lease assets $ 135,041 $ 140,152 Liabilities: Current Operating leases Operating lease liabilities $ 2,895 $ 3,757 Finance leases Other accrued liabilities 486 820 Noncurrent Operating leases Long-term operating lease liabilities 117,046 120,144 Finance leases Other liabilities 2,453 2,899 Total lease liabilities $ 122,880 $ 127,620 The table below presents the lease costs and their classification in the accompanying consolidated statements of comprehensive income (loss) for the years ended December 31, 2021, 2020 and 2019: Classification 2021 2020 2019 (In thousands) Operating lease cost Operating expenses $ 13,200 $ 13,966 $ 14,528 Operating lease cost Selling, general and administrative expenses 415 425 445 Finance lease cost Amortization of leased assets Depreciation and amortization 817 844 742 Interest on lease liabilities Interest expense 123 176 146 Net lease cost $ 14,555 $ 15,411 $ 15,861 In addition to the operating lease costs above, short-term rent expense for the years ended December 31, 2021, 2020 and 2019 were approximately $ 2.7 million, $ 2.1 million and $ 4.2 million, respectively, and variable rent expense for the years ended December 31, 2021, 2020 and 2019 were $ 3.8 million, $ 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 income (loss). F-27 The table below presents the Company’s lease maturities as of December 31, 2021: Operating leases Years Ending December 31, Land lease Other operating leases Total operating leases Finance leases (In thousands) 2022 $ 10,401 $ 2,044 $ 12,445 $ 567 2023 10,401 1,621 12,022 242 2024 10,401 1,473 11,874 208 2025 10,401 1,274 11,675 201 2026 10,401 1,274 11,675 200 Thereafter 223,628 408 224,036 2,193 Total lease payments 275,633 8,094 283,727 3,611 Less: Imputed interest ( 162,645 ) ( 1,141 ) ( 163,786 ) ( 672 ) Lease liabilities $ 112,988 $ 6,953 $ 119,941 $ 2,939 The table below presents the weighted average remaining lease terms and applicable discount rates as of December 31, 2021 and 2020: 2021 2020 Weighted average remaining lease term (years): Operating leases 25.26 25.75 Finance leases 14.23 12.87 Weighted average discount rate: Operating leases 8.15 % 8.14 % Finance leases 3.37 % 3.76 % The table below presents the cash flows and supplemental information associated with the Company’s leasing activities for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 13,190 $ 3,938 $ 14,513 Operating cash flows from finance leases $ 123 $ 176 $ 146 Financing cash flows from finance leases $ 841 $ 806 $ 692 Right of use assets obtained in exchange for lease liabilities: Finance leases $ 32 $ 938 $ 1,285 Operating leases $ 143 $ — $ 133,297 15. COMMITMENTS AND CONTINGENCIES The Company has commenced construction of certain new theme park attractions and other projects under contracts with various third parties. As of December 31, 2021, excluding certain amounts related to the License Agreement with Sesame Workshop as described below, additional capital payments of approximately $ 181.6 million are necessary to complete these projects. The majority of these projects are expected to be completed in 2022 or 2023. License Agreements Pursuant to a license agreement (“License Agreement”) with Sesame Workshop, the Company pays a specified annual license fee, as well as a specified royalty based on revenues earned in connection with sales of licensed products, all food and beverage items utilizing the licensed elements and any events utilizing such elements if a separate fee is paid for such event. The Company’s principal commitments pursuant to the License Agreement include, among other items, the opening of a second stand-alone park (“Standalone Park”) no later than mid-2021 and minimum annual capital and marketing thresholds. After the opening of the second Standalone Park (counting the existing Sesame Place Standalone Park in Langhorne, Pennsylvania), the Company will have the option to build additional Standalone Parks in the defined territory within agreed upon timelines. The License Agreement has an initial term through December 31, 2031, with an automatic additional 15-year extension plus a five year option added to the term of the License Agreement from December 31st of the year of each new Standalone Park opening. As of December 31, 2021, the Company estimates F-28 the combined remaining liabilities and obligations for the License Agreement commitments could be up to approximately $ 30.0 million over the remaining term of the agreement. 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 began in the fall of 2019, it was temporarily paused due to the COVID-19 pandemic. The Company opened its Aquatica San Diego park for the 2021 operating season and currently expects to open this park rebranded as its second Sesame Place Standalone Park in March 2022. 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 Lawsuit On June 14, 2018, a lawsuit captioned Highfields Capital I LP et al v. SeaWorld Entertainment, Inc. et al, 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 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 have indicated to the Company they believe the damages are in the range of $ 30 million to $ 35 million before considering interest. In 2018, Defendants moved for partial dismissal of the complaint. In 2019, the Court granted Defendants’ motion and dismissed Plaintiffs’ Florida state law claims as well as federal securities law claims based on the Company’s second quarter 2013 earnings statements. The Court conducted settlement conferences which ended in impasse. The parties have completed discovery and each party has filed a summary judgment motion. The summary judgment motions as well as the Daubert motion filed by the Company are scheduled to be argued to the Court March 16, 2022. The Company believes that the lawsuit is without merit and intends to defend the lawsuit vigorously. While there can be no assurance regarding the ultimate outcome of this lawsuit , the Company believes that any potential loss would not be material. Other lawsuits In October 2018, the Company received a demand letter from attorneys representing certain 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 (the “Tranche 3 Shares”) issued under the Company’s 2013 Omnibus Incentive Plan (the “Plan”). In November 2020, the Company filed in the Court of Chancery of the State of Delaware an action for declaratory judgment seeking a determination 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 agreed to arbitrate whether the former employees’ claims are subject to arbitration. On October 21, 2021, the arbitrator determined that disputes related to the former employees’ claims for the vesting of the Tranche 3 Shares are governed by the forum selection clauses of the equity award amendments rather than the Company’s dispute resolution process. In terms of potential exposure, the value of the total shares at issue for these certain 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 The Company is a party to various other claims and legal proceedings arising in the normal course of business. In addition, from time to time the Company is subject to audits, inspections and investigations by, or receives requests for information from, various federal and state regulatory agencies, including, but not limited to, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (“APHIS”), the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”), the California Occupational Safety and Health Administration (“Cal-OSHA”), the Florida Fish & Wildlife Commission (“FWC”), the Equal Employment Opportunity Commission (“EEOC”), the Internal Revenue Service (“IRS”) the U.S. Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”). 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 Company is probable and which can be reasonably estimated are accrued. Such accruals, which are not material for any period presented, are based on information known about the matters, the Company’s estimate of the outcomes of such matters, and the Company’s experience in contesting, litigating and settling similar matters. Matters that are considered reasonably possible to result in a material loss are not accrued for, but an estimate of the possible loss or range of loss is disclosed, if such amount or range can be determined. At this time, management does not expect any such known claims, legal proceedings or regulatory matters to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. F-29 2020 Settled Matters In 2020, the Company received final court approval of a settlement for a previously disclosed stockholder class action lawsuit, captioned Baker v. SeaWorld Entertainment, Inc., et al . 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, in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss). The full settlement amount was funded during the year ended December 31, 2020. In 2020, the Company received final court approval of a settlement for a previously disclosed putative derivative lawsuit captioned Kistenmacher v. Atchison, et al. 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 income (loss). 16. FAIR VALUE MEASUREMENTS Of the Company’s long-term obligations as of December 31, 2021, the Term B Loans are classified in Level 2 of the fair value hierarchy and the First-Priority Senior Secured Notes and the Senior Notes are classified in Level 1 of the fair value hierarchy. Of the Company’s long-term obligations as of December 31, 2020, the Term B-5 Loans are classified in Level 2 of the fair value hierarchy and the First-Priority Senior Secured Notes and the Second-Priority Senior Secured Notes are classified in level 1 of the fair value hierarchy. The fair value of the Term B Loans and the Term B-5 Loans approximates 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 First-Priority Senior Secured Notes, Senior Notes, and Second-Priority Senior Secured Notes was determined using quoted prices in active markets for identical instruments. See Note 11–Long-Term Debt for further details. The Company did no t have any assets measured on a recurring basis at fair value as of December 31, 2021 and 2020. The Company maintains its long-term liabilities at carrying value, net of unamortized debt issuance costs and discounts, in the consolidated balance sheet. 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, 2021: Quoted Prices in Active Markets Significant for Identical Other Significant Assets and Observable Unobservable Balance at Liabilities Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2021 Liabilities: (In thousands) Long-term obligations (a) $ 977,594 $ 1,197,000 $ — $ 2,174,594 ( 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 $ 12.0 million and long-term debt of $ 2.105 billion as of December 31, 2021. 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, 2020: Quoted Prices in Active Markets Significant for Identical Other Significant Assets and Observable Unobservable Balance at Liabilities Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2020 Liabilities: (In thousands) Long-term obligations (a) $ 787,975 $ 1,492,378 $ — $ 2,280,353 ( 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. F-30 17. RELATED-PARTY TRANSACTIONS ZHG Transaction 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 . See Note 20 – Stockholders’ (Deficit) Equity for further details. Also on May 27, 2019, the Security Agent 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 %. ZHG Agreements As discussed in Note 4–Revenues, in March 2017, the Company entered into the ZHG Agreements. In April 2019, the Company terminated the ZHG Agreements for non-payment of undisputed amounts owed. See Note 4–Revenues for further details including amounts recorded as revenue related to the ZHG Agreements. Hill Path Capital LP Agreements 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”). Under the HP Agreements, the Company agreed to appoint up to three Hill Path director designees to its Board and Hill Path agreed to certain customary standstill obligations, restrictions regarding the manner of sale of shares, and equal treatment for any change in control transaction. In addition, Hill Path agreed that shares held in excess of 24.9 % generally would be voted consistent with the Board’s recommendations or consistent with the shares voted by the Company’s other stockholders. The Company also agreed to reimburse Hill Path for up to $ 250,000 of their expenses in connection with the HP Agreements. During the year ended December 31, 2019, the Company reimbursed Hill Path for $ 250,000 in expenses incurred. 18. RETIREMENT PLAN The Company sponsors a defined contribution plan, under Section 401(k) of the Internal Revenue Code. During 2019, the plan was a qualified automatic contributions arrangement, which automatically enrolled employees, once eligible, unless they opted out. 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 and has remained suspended through 2021. Employer matching contributions for the years ended December 31, 2020 and 2019, totaled $ 1.3 million and $ 7.5 million, respectively, and is included in selling, general and administrative expenses and in operating expenses in the accompanying consolidated statements of comprehensive income (loss). 19. 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, 2021 2020 2019 (In thousands) Equity compensation expense included in operating expenses $ 9,578 $ 522 $ 4,076 Equity compensation expense included in selling, general and administrative expenses 30,144 6,945 7,030 Total equity compensation expense $ 39,722 $ 7,467 $ 11,106 F-31 Equity compensation expense for the year ended December 31, 2021, includes the impact of certain prior year performance vesting restricted awards which were previously not considered probable of vesting. Equity compensation expense for the year ended December 31, 2020, includes the reversal of expense related to certain performance vesting restricted awards which at the time 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. Total unrecognized equity compensation expense for all equity compensation awards probable of vesting as of December 31, 2021 was approximately $ 29.0 million, which is expected to be recognized over a weighted-average period of 1.6 years. The total fair value of shares which vested during the years ended December 31, 2021, 2020 and 2019 was approximately $ 13.6 million, $ 12.7 million and $ 9.7 million, respectively. The weighted average grant date fair value per share of time-vesting and performance-vesting restricted awards granted during the years ended December 31, 2021, 2020 and 2019 were $ 52.12 , $ 15.85 and $ 26.55 per share, respectively. The activity related to the Company’s time-vesting and performance-vesting restricted awards during the year ended December 31, 2021 was as follows: Performance-Vesting Restricted Awards Time-Vesting Restricted Awards Bonus Performance Restricted Awards Long-Term Incentive Performance Restricted Awards Shares/Units Weighted Average Grant Date Fair Value per Award Shares/Units Weighted Average Grant Date Fair Value per Award Shares/Units Weighted Average Grant Date Fair Value per Award Outstanding at December 31, 2020 1,692,579 $ 14.18 23,298 $ 26.16 1,467,636 $ 23.38 Granted 243,573 $ 53.14 132,251 $ 51.64 232,954 $ 51.33 Vested ( 858,090 ) $ 15.03 ( 22,569 ) $ 26.16 ( 7,747 ) $ 14.66 Forfeited ( 140,042 ) $ 24.73 ( 21,725 ) $ 50.07 ( 702,840 ) $ 20.75 Outstanding at December 31, 2021 938,020 $ 21.94 111,255 $ 51.78 990,003 $ 31.90 The total intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019 was approximately $ 9.5 million, $ 1.3 million and $ 2.4 million, respectively. The activity related to the Company’s stock option awards during the year ended December 31, 2021 was as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2020 679,988 $ 21.51 Granted 177,688 $ 51.52 Forfeited ( 76,036 ) $ 37.61 Expired ( 3,639 ) $ 20.01 Exercised ( 289,567 ) $ 20.40 Outstanding at December 31, 2021 488,434 $ 30.59 7.08 $ 16,739 Exercisable at December 31, 2021 227,462 $ 21.61 5.41 $ 9,838 The weighted average grant date fair value of stock options granted during the year ended December 31, 2021 was $ 29.17 . Key weighted-average assumptions utilized in the Black-Scholes Option Pricing Model for stock options granted during the year ended December 31, 2021 were: Risk-free interest rate 1.10 % Expected volatility 61.22 % Expected dividend yield 0.00 % Expected life (years) ( a ) 6.13 F-32 ( 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. Omnibus Incentive Plan The Company has reserved 15,000,000 shares of common stock for issuance under the Company’s Omnibus Incentive Plan (the “Omnibus Incentive Plan”), of which approximately 7,830,000 are available for future issuance as of December 31, 2021. Bonus Performance Restricted Awards During the year ended December 31, 2021, the Company granted approximately 132,000 performance-vesting restricted units (the “Bonus Performance Restricted Awards”) in accordance with its annual bonus plan for 2021 (the “2021 Bonus Plan”). The 2021 Bonus Plan provides for bonus awards payable 50 % in cash and 50 % in performance-vesting restricted units (the “Bonus Performance Restricted Units”) and is based upon the Company’s achievement of specified performance goals, as defined by the 2021 Bonus Plan, with respect to the year ended December 31, 2021 (the “Fiscal 2021”). The total number of units eligible to vest into shares of stock is based on the level of achievement of the targets for Fiscal 2021 which ranges from 0 % (if below threshold performance), to 125 % (if at maximum performance) with opportunities to earn above 125% when achievement is above the maximum performance for certain metrics. 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 2021 results with respect to specific performance goals, a portion of the outstanding performance-vesting restricted awards related to the Fiscal 2021 performance goals were considered probable of vesting as of December 31, 2021; 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. Due to the impact of the COVID-19 pandemic, the Company did not have an annual bonus plan for the fiscal year ended December 31, 2020; however, based on a discretionary review of performance in light of the negative impact of the COVID-19 pandemic on the Company’s business, the Compensation Committee determined to make discretionary equity awards to the Company’s bonus eligible employees during the year ended December 31, 2021. These awards were paid entirely in restricted stock units that vest 50 % each on the first and second anniversaries of the date of grant. The Company also had previously granted performance-vesting restricted units which were eligible to vest based on the Company’s actual results for the year ended December 31, 2019. A portion of these units vested in 2020, and the remaining portion vested in 2021 based on the employee’s continued employment on such vesting date and the remainder forfeited in accordance with their terms. 2021 Long-Term Incentive Awards During the year ended December 31, 2021, the Company granted long-term incentive plan awards for 2021 (the “2021 Long-Term Incentive Grant”) which were comprised of approximately 157,000 nonqualified stock options (the “Long-Term Incentive Options”) and approximately 168,000 performance-vesting restricted units (the “Long-Term Incentive Performance Restricted Units”) (collectively, the “Long-Term Incentive Awards”). Long-Term Incentive Options The Long-Term Incentive Options vest over three years , with 20 % vesting on each of the first two anniversaries of the grant date and 60 % vesting on the third anniversary of the grant date, 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 are expected to vest following the end of the three-year performance period beginning on January 1, 2021 and ending on December 31, 2023 (the “Performance Period”) based upon the Company’s achievement of specified performance goals during the Performance Period. 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). Upon achievement of at least the threshold performance goals, only 25% to 50% of the award for a given level of performance will vest, with the remaining 50% subject to a one-year performance test period. Performance for the test period must meet or exceed at least 95 % of the prior year’s performance before up to the remaining 50 % of the units can be earned. The Company recognizes equity compensation expense for its performance-vesting restricted awards ratably over the related performance period, if the performance condition is likely to be achieved. If the probability of vesting related to 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 current assumptions been used since the grant date is recorded as a cumulative catch-up at such subsequent date. Based F-33 on the Company’s likely future achievement of respective performance goals as of December 31, 2021, equity compensation expense was recorded during the year ended December 31, 2021 related to the Long-Term Incentive Performance Restricted Units. Other Long-Term Incentive Awards During the year ended December 31, 2021, the Company also granted time-vesting restricted units to certain employees which generally vest over three years , with 20 % vesting on each of the first two anniversaries of the grant date and 60 % vesting on the third anniversary of the grant date , subject to continued employment through the applicable 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, 2021, 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. A portion of the outstanding Long-Term Incentive Performance Restricted Awards relate to performance restricted units (the “2019 LTIP Performance Awards”) which contain a four-year performance period consisting of the 2019-2022 calendar years (or, extended through the end of the 2023 calendar year, as applicable) and are eligible to vest based upon the Company’s achievement of specific performance goals for the performance period, as defined, with an opportunity to vest up to 50% of the award earlier if certain goals are achieved in any fiscal year during the performance period. 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, up to 50% of the award for a given level of performance will vest, with the remaining 50% subject to a one-year extended performance test period. The goal achieved must be met again or exceeded for the extended performance period before the remaining units are earned. Based on the Company’s results for fiscal year 2021, the Company expects to vest a portion of the 2019 LTIP Performance Awards in the first quarter of 2022. Other During the year ended December 31, 2021, 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. Each eligible Board member elected the form of their equity award as either deferred stock units (“DSUs”) or restricted stock units (“RSUs”). Each DSU granted in 2021 represents the right to receive one share of the Company’s common stock three months after the respective director leaves the Board. Upon vesting, each RSU will be converted into one share of the Company’s common stock. Additionally, during the year ended December 31, 2021, the Company granted equity awards in the form of RSUs or DSUs which vested immediately to each eligible Board member in lieu of quarterly cash payments related to the director’s annual retainers. 20. STOCKHOLDERS’ (DEFICIT) EQUITY As of December 31, 2021, 95,541,992 shares of common stock were issued in the accompanying consolidated balance sheet, which includes 19,953,042 shares of treasury stock held by the Company (see Share Repurchase Program discussion which follows), but excludes 50,862 unvested shares of common stock and 1,988,416 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 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. During the year ended December 31, 2021, the Company repurchased 3,692,794 shares for an aggregate total of approximately $ 215.7 million leaving approximately $ 21.8 million available under the Share Repurchase Program as of December 31, 2021. During the year ended December 31, 2020, prior to the COVID-19 temporary park closures, the Company repurchased 469,785 shares for an aggregate total of approximately $ 12.4 million. During the year ended December 31, 2019, the Company repurchased 5,615,874 shares (see discussion relating to the SEAS Repurchase in Note 17–Related Party Transactions for further details). 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 F-34 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, the SEAS Repurchase and shares repurchased directly from selling stockholders concurrently with previous secondary offerings, are recorded as treasury stock at a total cost of $ 631.1 million and $ 415.3 million as of December 31, 2021 and 2020, respectively, and are reflected as a reduction to stockholders’ (deficit) equity in the accompanying consolidated statements of changes in stockholders’ (deficit) equity. 21. SEVERANCE AND OTHER SEPARATION COSTS 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 years ended December 31, 2021 and 2019, the Company recorded approximately $ 1.5 million and $ 4.2 million, respectively, 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). 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 income (loss). The 2020 Restructuring Program activity for the years ended December 31, 2021 and 2020 was as follows: 2020 Restructuring Program (In thousands) Liability as of December 31, 2019 $ — Costs incurred 2,658 Payments made ( 2,513 ) Liability as of December 31, 2020 $ 145 Costs incurred — Payments made ( 145 ) Liability as of December 31, 2021 $ — F-35 Schedule I-Registrant’s Condensed Financial Statements SEAWORLD ENTERTAINMENT, INC. PARENT COMPANY ONLY CONDENSED BALANCE SHEETS (In thousands, except share and per share amounts) December 31, 2021 2020 Assets Current Assets: Cash $ 407 $ 455 Total current assets 407 455 Total assets $ 407 $ 455 Liabilities and Stockholders’ Deficit Current Liabilities: Loss in excess of investment in wholly-owned subsidiary $ 33,916 $ 105,803 Other accrued liabilities 407 455 Total current liabilities 34,323 106,258 Total liabilities 34,323 106,258 Commitments and contingencies Stockholders’ Deficit: Preferred stock, $ 0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at December 31, 2021 and 2020 — — Common stock, $ 0.01 par value—authorized, 1,000,000,000 shares; 95,541,992 and 94,652,248 shares issued at December 31, 2021 and 2020, respectively 955 946 Additional paid-in capital 711,474 680,360 Accumulated deficit ( 115,287 ) ( 371,800 ) Treasury stock, at cost ( 19,953,042 and 16,260,248 shares at December 31, 2021 and 2020, respectively) ( 631,058 ) ( 415,309 ) Total stockholders’ deficit ( 33,916 ) ( 105,803 ) Total Liabilities and Stockholders’ Deficit $ 407 $ 455 See accompanying notes to condensed financial statements. F-36 SEAWORLD ENTERTAINMENT, INC. PARENT COMPANY ONLY CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) For the Year Ended December 31, 2021 2020 2019 Equity in net income (loss) of subsidiary $ 256,513 $ ( 312,321 ) $ 89,476 Net income (loss) $ 256,513 $ ( 312,321 ) $ 89,476 Equity in other comprehensive income (loss) of subsidiary — 1,559 ( 3,843 ) Comprehensive income (loss) $ 256,513 $ ( 310,762 ) $ 85,633 See accompanying notes to condensed financial statements. F-37 SEAWORLD ENTERTAINMENT, INC. PARENT COMPANY ONLY CONDENSED STATEMENTS OF CASH FLOWS (In thousands) For the Year Ended December 31, 2021 2020 2019 Cash Flows From Operating Activities: Net income (loss) $ 256,513 $ ( 312,321 ) $ 89,476 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Equity in net (income) loss of subsidiary ( 256,513 ) 312,321 ( 89,476 ) Net cash provided by (used in) operating activities — — — Cash Flows From Investing Activities: Dividends forfeited from subsidiary- return of capital, net of forfeitures — ( 1 ) ( 5 ) Capital contributed to subsidiary from exercises of stock options ( 5,955 ) ( 2,621 ) ( 3,696 ) Net cash used in investing activities ( 5,955 ) ( 2,622 ) ( 3,701 ) Cash Flows From Financing Activities: Exercise of stock options 5,907 2,920 3,795 Dividends paid to common stockholders — ( 12 ) ( 61 ) Net cash provided by financing activities 5,907 2,908 3,734 Change in Cash and Cash Equivalents ( 48 ) 286 33 Cash and Cash Equivalents - Beginning of year 455 169 136 Cash and Cash Equivalents - End of year $ 407 $ 455 $ 169 Supplemental Disclosures of Noncash Financing Activities Dividends from subsidiary- return of capital, for purchase of treasury stock $ 215,749 12,406 150,000 See accompanying notes to condensed financial statements. F-38 SEAWORLD ENTERTAINMENT, INC. NOTES TO CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS 1. DESCRIPTION OF SEAWORLD ENTERTAINMENT, INC. SeaWorld Entertainment, Inc. (the “Parent”) was incorporated in Delaware on October 2, 2009. See further discussion in Note 1–Description of the Business and Note 17–Related-Party Transactions in the accompanying consolidated financial statements. The Parent has no operations or significant assets or liabilities other than its investment in SeaWorld Parks & Entertainment, Inc. (“SEA”), which owns and operates twelve theme parks within the United States. Accordingly, the Parent is dependent upon distributions from SEA to fund its obligations. 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 years ended December 31, 2021 and 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. 2. BASIS OF PRESENTATION The accompanying condensed financial statements (the “parent company only financial statements”) include the accounts of the Parent and its investment in SEA accounted for in accordance with the equity method and do not present the financial statements of the Parent and its subsidiary on a consolidated basis. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted since this information is included with the SeaWorld Entertainment, Inc. consolidated financial statements included elsewhere in this Annual Report on Form 10-K (the “consolidated financial statements”). These parent company only financial statements should be read in conjunction with the consolidated financial statements. 3. GUARANTEES SEA is the borrower under the senior secured credit facilities, (the “Senior Secured Credit Facilities”) under a credit agreement dated as of December 1, 2009 which was amended and restated on August 25, 2021 (the “Amended and Restated Credit Agreement”). On August 25, 2021, SEA completed a private offering of $ 725.0 million aggregate principal amount of 5.250 % senior notes due 2029 (the “Senior 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 “First-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 Secured Notes”), which were fully redeemed during the year ended December 31, 2021. 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”). SEA’s obligations under the Senior Notes and related indenture are guaranteed, jointly and severally, on a senior secured basis, by the Guarantors, as defined, in accordance with the provisions of the indenture. The First-Priority Senior Secured Notes are fully and unconditionally guaranteed by the Parent, any subsidiary of the 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 . 4. DIVIDENDS FROM SUBSIDIARY During the year ended December 31, 2021, SEA paid dividends to the Parent of approximately $ 215.7 million. The dividends were in the form of 3,692,794 shares of common stock repurchased by SEA. (see Note 5–Stockholders’ Deficit which follows). During the years ended December 31, 2020 and 2019, SEA paid dividends to the Parent of approximately $ 12.4 million and $ 150.0 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 which follows). During the years ended December 31, 2020 and 2019, Parent paid accumulated dividends, net of forfeitures, related to shares that carried dividend rights from previous dividend declarations which vested during the respective year. F-39 5. STOCKHOLDERS’ DEFICIT Omnibus Incentive Plan The Parent has reserved 15,000,000 shares of common stock for future issuance under the Omnibus Incentive Plan (the “Omnibus Incentive Plan”), of which approximately 7,830,000 are available for future issuance as of December 31, 2021. The Omnibus Incentive Plan is administered by the compensation committee of the Parent’s Board, and provides that the Parent may grant equity incentive awards to eligible employees, directors, consultants or advisors of the Parent or its subsidiary, SEA, in the form of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based and performance compensation awards. If an award under the Omnibus Incentive Plan expires or is canceled, forfeited, or terminated, without issuance to the participant, the unissued shares may be granted again under the Omnibus Incentive Plan. See further discussion in Note 19–Equity-Based Compensation of the accompanying consolidated financial statements. During the years ended December 31, 2021 and 2020, respectively, Parent transferred approximately $ 6.0 million and $ 2.6 million in proceeds received from the exercise of stock options to SEA as a capital contribution and increased its investment in SEA. Share Repurchase Program The Parent’s Board 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 Parent 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, 2021, the Parent repurchased 3,692,794 shares for an aggregate total of approximately $ 215.7 million leaving approximately $ 21.8 million available under the Share Repurchase Program as of December 31, 2021. During the year ended December 31, 2020, prior to the COVID-19 temporary park closures, the Parent repurchased 469,785 shares for an aggregate total of approximately $ 12.4 million. 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. 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 $ 631.1 million and $ 415.3 million as of the years ended December 31, 2021 and 2020, 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. F-40