SeaWorld Entertainment, Inc. (Form: 10-Q, Received: 05/08/2019 06:48:23)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35883

SeaWorld Entertainment, Inc.

(Exact name of registrant as specified in its charter)

Delaware

27-1220297

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

9205 South Park Center Loop, Suite 400

Orlando, Florida 32819

(Address of principal executive offices) (Zip Code)

(407) 226-5011

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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

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

The registrant had outstanding 84,198,886 shares of Common Stock, par value $0.01 per share as of May 3, 2019.

Securities registered pursuant to Section 12(b) of the Act:


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

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

		Page No.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		1

PART I.	FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements

	Unaudited Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of Comprehensive Loss	4

	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37
	Signatures	38

SPECIAL NOTE REGARDING FO RWARD-LOOKING STATEMENTS

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

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “Annual Report on Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”), as such risk factors may be updated from time to time in our periodic filings with the SEC, including this report, and are accessible on the SEC’s website at www.sec.gov, including the following:

•

complex federal and state regulations governing the treatment of animals, which can change, and claims and lawsuits and attempts to generate negative publicity associated with our business by activist groups;

•

activist and other third-party groups and/or media can pressure governmental agencies, vendors, partners, and/or regulators, bring actions in the courts or create negative publicity about us;

•

various factors beyond our control adversely affecting attendance and guest spending at our theme parks, including the potential spread of travel-related health concerns including pandemics and epidemics, natural disasters, weather, foreign exchange rates, consumer confidence, travel related concerns, and governmental actions;

•

incidents or adverse publicity concerning our theme parks;

•

a decline in discretionary consumer spending or consumer confidence;

•

a significant portion of revenues are generated in the States of Florida, California and Virginia and the Orlando market, and any risks affecting such markets, such as natural disasters, severe weather and travel-related disruptions or incidents;

•

seasonal fluctuations in operating results;

•

inability to compete effectively in the highly competitive theme park industry;

•

interactions between animals and our employees and our guests at attractions at our theme parks;

•

animal exposure to infectious disease;

•

high fixed cost structure of theme park operations;

•

changing consumer tastes and preferences;

•

cyber security risks and failure to maintain the integrity of internal or guest data;

•

increased labor costs and employee health and welfare benefits;

•

inability to grow our business or fund theme park capital expenditures;

•

adverse litigation judgments or settlements;

•

inability to protect our intellectual property or the infringement on intellectual property rights of others;

•

the loss of licenses and permits required to exhibit animals or the violation of laws and regulations;

•

loss of key personnel;

•

unionization activities or labor disputes;

•

inability to meet workforce needs;

•

inability to realize the benefits of developments, restructurings, acquisitions or other strategic initiatives, and the impact of the costs associated with such activities;

•

inability to maintain certain commercial licenses;

•

restrictions in our debt agreements limiting flexibility in operating our business;

•

inability to retain our current credit ratings;

•

our substantial leverage;

•

changes in the method for determining LIBOR and the potential replacement of LIBOR may affect our cost of capital;

•

inadequate insurance coverage;

•

inability to purchase or contract with third party manufacturers for rides and attractions;

•

inadequate insurance coverage;

•

environmental regulations, expenditures and liabilities;

•

suspension or termination of any of our business licenses, including by legislation at federal, state or local levels;

•

delays, restrictions or inability to obtain or maintain permits;

•

financial distress of strategic partners or other counterparties;

•

changes to immigration, foreign trade, investments or other policies;

•

inability to realize the full value of our intangible assets;

•

changes in tax laws;

•

tariffs or other trade restrictions;

•

actions of activist stockholders;

•

the ability of Hill Path Capital LP or other large stockholders to significantly influence our decisions;

•

changes or declines in our stock price, as well as the risk that securities analysts could downgrade our stock or our sector; and

•

risks associated with our capital allocation plans and share repurchases, including the risk that our share repurchase program could increase volatility and fail to enhance stockholder value.

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

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

Website and Social Media Disclosure

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

Trademarks, Service Marks and Trade Names

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

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

PART I — FINANCI AL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	March 31,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	51,860		$	34,073
Accounts receivable, net		58,692			57,980
Inventories		42,724			35,814
Prepaid expenses and other current assets		19,567			18,700
Total current assets		172,843			146,567
Property and equipment, at cost		3,116,688			3,057,038
Accumulated depreciation		(1,399,115	)		(1,365,006	)
Property and equipment, net		1,717,573			1,692,032
Goodwill, net		66,278			66,278
Trade names/trademarks, net		157,975			158,343
Other intangible assets, net		120			14,120
Right of use assets-operating		145,807			—
Deferred tax assets, net		30,177			23,527
Other assets, net		15,421			14,735
Total assets	$	2,306,194		$	2,115,602
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	140,567		$	120,024
Current maturities of long-term debt		80,505			45,505
Operating lease obligations		4,118			—
Accrued salaries, wages and benefits		19,228			20,966
Deferred revenue		151,253			101,110
Other accrued liabilities		29,065			23,066
Total current liabilities		424,736			310,671
Long-term debt, net of debt issuance costs of $6,206 and $6,641 as of March 31, 2019 and December 31, 2018, respectively		1,491,702			1,494,679
Long-term operating lease obligations		128,119			—
Deferred tax liabilities, net		—			10,711
Other liabilities		35,217			34,347
Total liabilities		2,079,774			1,850,408
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Preferred stock, $0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at March 31, 2019 and December 31, 2018		—			—
Common stock, $0.01 par value—authorized, 1,000,000,000 shares; 93,748,617 and 93,400,929 shares issued at March 31, 2019 and December 31, 2018, respectively		937			934
Additional paid-in capital		664,141			663,834
Accumulated other comprehensive income		220			2,284
Accumulated deficit		(185,975	)		(148,955	)
Treasury stock, at cost (10,174,589 shares at March 31, 2019 and December 31, 2018)		(252,903	)		(252,903	)
Total stockholders’ equity		226,420			265,194
Total liabilities and stockholders’ equity	$	2,306,194		$	2,115,602

See accompanying notes to unaudited condensed consolidated financial statements.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS

(In thousands, except per share amounts)

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

See accompanying notes to unaudited condensed consolidated financial statements.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(In thousands, except 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
Balance at December 31, 2018		93,400,929		$	934		$	663,834		$	(148,955	)	$	2,284		$	(252,903	)	$	265,194
Equity-based compensation		—			—			3,198			—			—			—			3,198
Unrealized loss on derivatives, net of tax benefit of $744		—			—			—			—			(2,064	)		—			(2,064	)
Vesting of restricted shares		440,646			4			(4	)		—			—			—			—
Shares withheld for tax withholdings		(132,886	)		(1	)		(3,605	)		—			—			—			(3,606	)
Exercise of stock options		39,928			—			715			—			—			—			715
Adjustments to previous dividend declarations		—			—			3			—			—			—			3
Net loss		—			—			—			(37,020	)		—			—			(37,020	)
Balance at March 31, 2019		93,748,617		$	937		$	664,141		$	(185,975	)	$	220		$	(252,903	)	$	226,420

	Shares of Common Stock Issued			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Treasury Stock, at Cost			Total Stockholders' Equity
Balance at December 31, 2017		92,637,403		$	926		$	641,324		$	(194,837	)	$	(5,076	)	$	(154,871	)	$	287,466
Impact of adoption of ASU 2018-02		—			—			—			1,094			(1,094	)		—			—
Equity-based compensation		—			—			7,545			—			—			—			7,545
Unrealized loss on derivatives, net of tax expense of $2,774		—			—			—			—			7,491			—			7,491
Vesting of restricted shares		360,092			4			(4	)		—			—			—			—
Shares withheld for tax withholdings		(108,432	)		(1	)		(1,633	)		—			—			—			(1,634	)
Exercise of stock options		484			—			7			—			—			—			7
Adjustments to previous dividend declarations		—			—			47			—			—			—			47
Net loss		—			—			—			(62,844	)		—			—			(62,844	)
Balance at March 31, 2018		92,889,547		$	929		$	647,286		$	(256,587	)	$	1,321		$	(154,871	)	$	238,078

See accompanying notes to unaudited condensed consolidated financial statements.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Three Months Ended March 31,
	2019			2018
Cash Flows From Operating Activities:
Net loss	$	(37,020	)	$	(62,844	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		39,450			38,430
Amortization of debt issuance costs and discounts		899			1,157
Loss on sale or disposal of assets, net		45			396
Deferred income tax benefit		(16,606	)		(23,817	)
Equity-based compensation		3,198			7,545
Changes in assets and liabilities:
Accounts receivable		(2,329	)		(21,218	)
Inventories		(6,964	)		(6,761	)
Prepaid expenses and other current assets		(628	)		(3,141	)
Right of use assets-operating		1,189			—
Accounts payable and accrued expenses		1,715			16,540
Accrued salaries, wages and benefits		(1,737	)		5,729
Deferred revenue		51,697			62,162
Other accrued liabilities		5,498			5,879
Operating lease obligations		(1,061	)		—
Other assets and liabilities		342			260
Net cash provided by operating activities		37,688			20,317
Cash Flows From Investing Activities:
Capital expenditures		(47,937	)		(45,822	)
Other investing activities		50			—
Net cash used in investing activities		(47,887	)		(45,822	)
Cash Flows From Financing Activities:
Repayments of long-term debt		(3,877	)		(5,927	)
Proceeds from draws on revolving credit facility		55,000			45,000
Repayments of revolving credit facility		(20,000	)		(5,000	)
Dividends paid to stockholders		(58	)		(287	)
Payment of tax withholdings on equity-based compensation through shares withheld		(3,606	)		(1,634	)
Exercise of stock options		715			7
Other financing activities		(168	)		—
Net cash provided by financing activities		28,006			32,159
Change in Cash and Cash Equivalents, including Restricted Cash		17,807			6,654
Cash and Cash Equivalents, including Restricted Cash—Beginning of period		35,007			33,997
Cash and Cash Equivalents, including Restricted Cash—End of period	$	52,814		$	40,651
Supplemental Disclosures of Noncash Investing and Financing Activities
Capital expenditures in accounts payable	$	49,620		$	32,744
Dividends declared, but unpaid	$	23		$	136

See accompanying notes to unaudited condensed consolidated financial statements.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

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

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC. The unaudited condensed consolidated balance sheet as of December 31, 2018 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K.

In the opinion of management, such unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations for the year ending December 31, 2019 or any future period due to the seasonal nature of the Company’s operations. Based upon historical results, the Company typically generates its highest revenues in the second and third quarters of each year and incurs a net loss in the first and fourth quarters, in part because seven of its theme parks are only open for a portion of the year.

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

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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions include, but are not limited to, the accounting for self-insurance, deferred tax assets and liabilities, deferred revenue, equity compensation and the valuation of goodwill and other indefinite-lived intangible assets. Actual results could differ from those estimates.

Segment Reporting

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

Restricted Cash

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

	March 31,		December 31,
	2019		2018
	(In thousands)
Cash and cash equivalents	$	51,860	$	34,073
Restricted cash, included in other current assets		954		934
Total cash, cash equivalents and restricted cash	$	52,814	$	35,007

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

Admissions revenue primarily consists of single-day tickets, annual or season passes or other multi-day or multi-park admission products. For single-day tickets, the Company recognizes revenue at a point in time, upon admission to the park. Annual passes, season passes or other multi-day or multi-park passes allow guests access to specific parks over a specified time period. For these pass and multi-use products, revenue is deferred and recognized over the terms of the admission product based on estimated redemption rates for similar products and is adjusted periodically. The Company estimates a redemption rate using historical and forecasted growth rates and attendance trends by park for similar products. Attendance trends factor in seasonality and are adjusted based on actual trends periodically. Revenue is recognized on a pro-rata basis based on the estimated allocated selling price of the admission product. For multi-day admission products, revenue is allocated based on the number of visits included in the pass and recognized ratably based on each admission into the theme park.

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

Deferred revenue primarily includes revenue associated with pass products and contract liability balances related to licensing and international agreements collected in advance of the Company’s performance and expected to be recognized in future periods. At both March 31, 2019 and December 31, 2018, $10.0 million is included in other liabilities in the accompanying unaudited condensed consolidated balance sheets related to the Company’s international agreement, as discussed in the following section, which the Company expects to recognize over the term of the respective license agreement beginning when substantially all of the services have been performed, which is expected to be upon opening.

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

	March 31,		December 31,
	2019		2018
	(In thousands)
Deferred revenue, including long-term portion	$	161,253	$	111,181
Less: Deferred revenue, long-term portion, included in other liabilities		10,000		10,071
Deferred revenue, short-term portion	$	151,253	$	101,110

International Agreements

The Company has received $10.0 million in deferred revenue recorded in other liabilities related to a nonrefundable payment received from a partner in connection with a potential project in the Middle East (the “Middle East Project”) to provide certain services pertaining to the planning and design of the Middle East Project, with funding received expected to offset internal expenses. Approximately $4.1 million and $3.8 million of costs incurred related to the Middle East Project are recorded in other assets in the accompanying unaudited condensed consolidated balance sheet as of March 31, 2019 and December 31, 2018, respectively. The Company has recognized an asset for the costs incurred to fulfill the contract as the costs are specifically identifiable, enhance resources that will be used to satisfy performance obligations in the future and are expected to be recovered. The related deferred revenue and expense will begin to be recognized when substantially all of the services have been performed. The Company continually monitors performance on the contract and will make adjustments, if necessary. The Middle East Project is subject to various conditions, including, but not limited to, the parties completing the design development and there is no assurance that the Middle East Project will be completed or advance to the next stages.

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 Zhonghong Holding, Co. Ltd. (“Zhonghong Holding”), an affiliate of ZHG Group, to provide design, support and advisory services for various potential projects and grant exclusive rights in China, Taiwan, Hong Kong and Macau through December 2019. In April 2019, the Company terminated the ZHG Agreements for non-payment of undisputed amounts owed. For the three months ended March 31, 2019 and 2018, the Company recorded approximately $1.7 million and $1.3 million, respectively, in food, merchandise and other revenue in the accompanying unaudited condensed consolidated statements of comprehensive loss related to the ZHG Agreements. See Note 10–Related-Party Transactions for additional disclosures.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. 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

On January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) 842, Leases. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right of use assets and corresponding lease liabilities on the balance sheet. The new guidance requires the Company to continue to classify leases as either operating or financing, with classification affecting the pattern of expense recognition in the income statement. The Company is also required to disclose qualitative and quantitative information about leasing arrangements to enable financial statement users to assess the amount, timing and uncertainty of cash flows arising from leases. The Company adopted ASC 842 using a modified retrospective method that did not require the prior period information to be restated. ASC 842 also provides a number of optional provisions, known as practical expedients, which companies may elect to adopt to facilitate implementation. The Company elected a package of practical expedients which, among other items, precludes the Company from needing to reassess 1) whether any expired or existing contracts are or contain leases, 2) the lease classification of any expired or existing leases, and 3) initial direct costs for any existing leases. The Company elected not to implement the practical expedient related to hindsight to determine lease terms. Due to the implementation of selected practical expedients, there was no cumulative effect adjustment to beginning retained earnings. See Note 7–Leases for additional disclosures.

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

•

ASU 2018-09, Codification Improvements

•

ASU 2018-13, Fair Value Measurement (Topic 820)

•

ASU 2018 - 15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

•

ASU 2018-16 , Derivatives and Hedging—Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

During 2018, the Company adopted the following ASUs:

•

ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities - This ASU aims to improve reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and simplify the application of the hedge accounting guidance. For cash flow and net investment hedges existing as of the adoption date, the guidance requires a cumulative-effect adjustment as of the beginning of the fiscal year that an entity adopts the amendments; however, the presentation and disclosure guidance should be applied prospectively. The impact of the adoption was not material to the Company’s unaudited condensed consolidated financial statements; as a result, no cumulative effect adjustment to beginning retained earnings was required. See Note 8 – Derivative Instruments and Hedging Activities for additional disclosure.

•

ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income - This ASU gives companies the option to reclassify to retained earnings any tax effects related to items in accumulated other comprehensive income or loss that are stranded due to the Tax Cuts and Jobs Act (the “Tax Act”). Companies are required to disclose whether or not they elected to reclassify the tax effects related to the Tax Act as well as their policy for releasing income tax effects from accumulated other comprehensive income or loss. The Company elected to early adopt the ASU on January 1, 2018 and applied the amendments in the period of adoption. As a result, the Company reclassified $1.1 million of “stranded” tax effects of the Tax Act from accumulated other comprehensive income (loss) to accumulated deficit in the accompanying unaudited condensed consolidated balance sheet and the accompanying unaudited condensed consolidated statements of changes in stockholders’ equity.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. LOSS PER SHARE

Loss per share is computed as follows:

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

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

Diluted loss per share is determined using the treasury stock method based on the dilutive effect of unvested restricted stock and certain shares of common stock that are issuable upon exercise of stock options. There were approximately 1,893,000 and 4,495,000 potentially dilutive shares excluded from the computation of diluted loss per share during the three months ended March 31, 2019 and 2018, respectively, as their effect would have been anti-dilutive due to the Company’s net loss in those periods. The Company’s outstanding performance-vesting restricted awards of approximately 2,295,000 and 2,730,000 as of March 31, 2019 and 2018, respectively, are considered contingently issuable shares and are excluded from the calculation of diluted loss per share until the performance measure criteria is met as of the end of the reporting period.

4. INCOME TAXES

Income tax expense or benefit is recognized based on the Company’s estimated annual effective tax rate which is based upon the tax rate expected for the full calendar year applied to the pretax income or loss of the interim period. The Company’s consolidated effective tax rate for the three months ended March 31, 2019 and 2018 was 29.0% and 27.0%, respectively, and differs from th e effective statutory federal income tax rate of 21.0% primarily due to state income taxes and other permanent items.

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

5. OTHER ACCRUED LIABILITIES

Other accrued liabilities at March 31, 2019 and December 31, 2018, consisted of the following:

	March 31,		December 31,
	2019		2018
	(In thousands)
Self-insurance reserve	$	6,895	$	6,895
Accrued property taxes		2,910		—
Accrued interest		1,095		490
Dividends		23		84
Other		18,142		15,597
Total other accrued liabilities	$	29,065	$	23,066

As of March 31, 2019 and December 31, 2018, other liabilities above include $11.5 million related to the EZPay plan legal settlement (see further discussion in Note 11–Commitments and Contingencies).

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. LONG-TERM DEBT

Long-term debt, net, as of March 31, 2019 and December 31, 2018 consisted of the following:

	March 31,			December 31,
	2019			2018
	(In thousands)
Term B-5 Loans (effective interest rate of 5.50% and 5.52% at March 31, 2019 and December 31, 2018, respectively)	$	1,519,513		$	1,523,389
Revolving credit facility (effective interest rate of 5.16% and 5.17% at March 31, 2019 and December 31, 2018, respectively)		65,000			30,000
Total long-term debt		1,584,513			1,553,389
Less discounts		(6,100	)		(6,564	)
Less debt issuance costs		(6,206	)		(6,641	)
Less current maturities		(80,505	)		(45,505	)
Total long-term debt, net	$	1,491,702		$	1,494,679

SEA is the borrower under the senior secured credit facilities as amended pursuant to a credit agreement dated as of December 1, 2009, as the same may be amended, restated, supplemented or modified from time to time (the “Senior Secured Credit Facilities”). On October 31, 2018, SEA entered into a refinancing amendment, Amendment No. 9 (the “Amended Credit Agreement”).

Senior Secured Credit Facilities

As of March 31, 2019, the Senior Secured Credit Facilities consisted of $1.52 billion in Term B-5 Loans which will mature on March 31, 2024 and a $210.0 million revolving credit facility (the “Revolving Credit Facility”), of which $65.0 million was outstanding as of March 31, 2019. The outstanding balance on the Revolving Credit Facility was included in current maturities of long-term debt in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018, due to the Company’s intent to repay the borrowings within the following twelve month period. Subsequent to March 31, 2019, SEA repaid a net of $40.0 million on the Revolving Credit Facility.

The Term B-5 Loans amortize in equal quarterly installments in an aggregate annual amount equal to 1.015% of the original principal amount of the Term B-5 Loans outstanding on the Effective Date, with the balance payable on the final maturity date. SEA may voluntarily repay amounts outstanding under the Senior Secured Credit Facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans. SEA is also required to prepay the outstanding Term B-5 Loans, subject to certain exceptions, under certain circumstances, as defined in the Senior Secured Credit Facilities.

As of March 31, 2019, SEA had approximately $21.3 million of outstanding letters of credit and $65.0 million outstanding on its Revolving Credit Facility leaving $123.7 million available for borrowing.

Restrictive Covenants

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

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

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

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As of March 31, 2019, the total net leverage ratio as calculated under the Senior Secured Credit Facilities was 3.51 to 1.00, which would result in the Company having approximately $185.0 million available capacity for restricted payments. However, the available capacity for restricted payments is recalculated at the beginning of each quarter, or upon declaration of a restricted payment, as set forth in the credit agreement.

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

Years Ending December 31,	(In thousands)
Remainder of 2019	$	76,629
2020		15,505
2021		15,505
2022		15,505
2023		15,505
Thereafter		1,445,864
Total	$	1,584,513

Interest Rate Swap Agreements

As of March 31, 2019, the Company has five interest rate swap agreements (the “Interest Rate Swap Agreements”) which effectively fix the interest rate on the LIBOR-indexed interest payments associated with $1.0 billion of SEA’s outstanding long-term debt. The Interest Rate Swap Agreements became effective on September 30, 2016; have a total notional amount of $1.0 billion; mature on May 14, 2020; require the Company to pay a weighted-average fixed rate of 2.45% per annum; provide that the Company receives a variable rate of interest based upon the greater of 0.75% or the BBA LIBOR; and have interest settlement dates occurring on the last day of March, June, September and December through maturity.

SEA designated the Interest Rate Swap Agreements above as qualifying cash flow hedge accounting relationships as further discussed in Note 8–Derivative Instruments and Hedging Activities which follows.

Cash paid for interest relating to the Senior Secured Credit Facilities and the Interest Rate Swap Agreements, net of amounts capitalized, as applicable, was $20.1 million and $24.0 million in the three months ended March 31, 2019 and 2018, respectively. Cash paid for interest in the three months ended March 31, 2018, includes $5.1 million relating to the Company’s fourth quarter 2017 interest payable on its Senior Secured Credit Facilities which was paid on January 5, 2018.

7. LEASES

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

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

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

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

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		December 31,
Leases	Classification	2018
Assets		(In thousands)
Favorable lease asset	Other intangible assets, net	$	13,961
Capital leases	Property and equipment, at cost		3,066
Capital leases, accumulated depreciation	Accumulated depreciation		(122	)
Total lease assets			16,905
Liabilities
Current
Capital leases	Other accrued liabilities	$	143
Noncurrent
Capital leases	Other liabilities		2,822
Total lease liabilities		$	2,965

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

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

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

The table below presents the Company’s lease maturities as of March 31, 2019:

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

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

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Years Ending December 31,	Operating leases		Financing leases
	(In thousands)
2019	$	16,578	$	231
2020		14,179		226
2021		13,111		220
2022		11,416		208
2023		10,479		204
Thereafter		265,234		2,794
Total lease payments	$	330,997		3,883
Less: Interest				(918	)
Total principal payable on financing leases			$	2,965

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

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

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

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

All long-lived assets, including right to use assets associated with leases, are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. The measurement of an impairment loss to be recognized is based upon the difference between the estimated fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis.

8. 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 the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings. The Company does not speculate using derivative instruments.

As of March 31, 2019 and December 31, 2018, the Company did not have any derivatives outstanding that were not designated in hedge accounting relationships.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. During the three months ended March 31, 2019 and 2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

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

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

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

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the unaudited condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018:

Asset Derivatives

As of March 31, 2019

As of December 31, 2018

Balance Sheet

Location

Fair Value

Balance Sheet

Location

Fair Value

Derivatives designated as hedging instruments:

(In thousands)

Interest rate swap agreements

Other assets

301

Other assets

3,109

Total derivatives designated as hedging instruments

301

3,109

Tabular Disclosure of the Effect of Derivative Instruments on the Statements of Comprehensive Loss

The table below presents the pretax effect of the Company’s derivative financial instruments in the unaudited condensed consolidated statements of comprehensive loss for the three months ended March 31, 2019 and 2018:

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

Credit Risk-Related Contingent Features

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

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Changes in Accumulated Other Comprehensive Income (Loss)

The following table reflects the changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2019, net of tax:

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

9. FAIR VALUE MEASUREMENTS

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

Level 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.

The Company has determined that the majority of the inputs used to value its derivative financial instruments using the income approach fall within Level 2 of the fair value hierarchy. The Company uses readily available market data to value its derivatives, such as interest rate curves and discount factors. ASC 820, Fair Value Measurement also requires consideration of credit risk in the valuation. The Company uses a potential future exposure model to estimate this credit valuation adjustment (“CVA”). The inputs to the CVA are largely based on observable market data, with the exception of certain assumptions regarding credit worthiness which make the CVA a Level 3 input. Based on the magnitude of the CVA, it is not considered a significant input and the derivatives are classified as Level 2. Of the Company’s long-term obligations, the Term B-5 Loans are classified in Level 2 of the fair value hierarchy as of March 31, 2019 and December 31, 2018. The fair value of the term loans as of March 31, 2019 and December 31, 2018 approximate their carrying value, excluding unamortized debt issuance costs and discounts, due in part to the variable nature of the underlying interest rates and the frequent intervals at which such interest rates are reset.

There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2019. The following table presents the Company’s estimated fair value measurements and related classifications for assets and liabilities measured on a recurring basis as of March 31, 2019:

	Quoted Prices in
	Active Markets		Significant
	for Identical		Other		Significant
	Assets and		Observable		Unobservable		Balance at
	Liabilities		Inputs		Inputs		March 31,
	(Level 1)		(Level 2)		(Level 3)		2019
Assets:	(In thousands)
Derivative financial instruments ^(a)	$	—	$	301	$	—	$	301
Liabilities:
Long-term obligations ^(b)	$	—	$	1,584,513	$	—	$	1,584,513

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(a)	Reflected at fair value in the unaudited condensed consolidated balance sheet as other assets of $0.3 million as of March 31, 2019.

(b)	Reflected at carrying value, net of unamortized debt issuance costs and discounts, in the unaudited condensed consolidated balance sheet as current maturities of long-term debt of $80.5 million and long-term debt of $1.492 billion as of March 31, 2019.

There were no transfers between Levels 1, 2 or 3 during the year ended December 31, 2018. The following table presents the Company’s estimated fair value measurements and related classifications for liabilities measured on a recurring basis as of December 31, 2018:

	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)		2018
Assets:	(In thousands)
Derivative financial instruments ^(a)	$	—	$	3,109	$	—	$	3,109
Liabilities:
Long-term obligations ^(b)	$	—	$	1,553,389	$	—	$	1,553,389

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

(b)	Reflected at carrying value, net of unamortized debt issuance costs and discounts, in the unaudited condensed consolidated balance sheet as current maturities of long-term debt of $45.5 million and long-term debt of $1.495 billion as of December 31, 2018.

10. RELATED-PARTY TRANSACTIONS

On March 24, 2017, the Company entered into the ZHG Agreements with Zhonghong Holding, an affiliate of Zhonghong Zhuoye Group Co., Ltd., who at the time owned approximately 21% of the outstanding shares of the Company. See Note 1 – Description of Business and Basis of Presentation for further details. In April 2019, the Company terminated the ZHG Agreements for non-payment of undisputed amounts owed. For the three months ended March 31, 2019 and 2018, the Company recorded approximately $1.7 million and $1.3 million, respectively, in food, merchandise and other revenue in the accompanying unaudited condensed consolidated statements of comprehensive loss related to the ZHG Agreements.

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

11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Securities Class Action Lawsuit

On September 9, 2014, a purported stockholder class action lawsuit consisting of purchasers of the Company’s common stock during the periods between April 18, 2013 to August 13, 2014, captioned Baker v. SeaWorld Entertainment, Inc., et al., Case No. 14-CV-02129-MMA (KSC), was filed in the U.S. District Court for the Southern District of California against the Company, the Chairman of the Company’s Board, certain of its executive officers and Blackstone. On February 27, 2015, Court-appointed Lead Plaintiffs, Pensionskassen For Børne- Og Ungdomspædagoger and Arkansas Public Employees Retirement System, together with additional plaintiffs, Oklahoma City Employee Retirement System and Pembroke Pines Firefighters and Police Officers Pension Fund (collectively, “Plaintiffs”), filed an amended complaint against the Company, the Chairman of the Company’s Board, certain of its

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

executive officers, Blackstone, and underwriters of the initial public offering and secondary public offerings. The amended complaint alleges, among other things, that the prospectus and registration statements filed contained materially false and mis leading information in violation of the federal securities laws and seeks unspecified compensatory damages and other relief. Plaintiffs contend that defendants knew or were reckless in not knowing that Blackfish was impacting SeaWorld’s business at the ti me of each public statement. On May 29, 2015, the Company and the other defendants filed motions to dismiss the amended complaint. On March 31, 2016, the Court granted the motions to dismiss the amended complaint, in its entirety, without prejudice. On M ay 31, 2016, Plaintiffs filed a second amended consolidated class action complaint (“Second Amended Complaint”), which, among other things, no longer names the Company’s Board or underwriters as defendants and no longer brings claims based on the prospectu ses and registration statements. On September 30, 2016, the Court denied the renewed motion to dismiss the Second Amended Complaint.

On May 19, 2017, Plaintiffs filed a motion for class certification, which the Court granted on November 29, 2017. On December 13, 2017, Defendants filed a petition for permission to appeal the Court’s class certification order with the United States Court of Appeals for the Ninth Circuit, which was denied on June 28, 2018. Discovery is now complete and, on April 15, 2019, Defendants filed a motion for summary judgment. Also on April 15, 2019, Defendants filed motions to exclude each of Plaintiffs’ three expert witnesses and Plaintiffs filed motions to exclude two of Defendants’ expert witnesses. The trial is currently scheduled for September 10, 2019. The Company believes that the class action lawsuit is without merit and intends to defend the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of this lawsuit.

On June 14, 2018, a lawsuit captioned Highfields Capital I LP et el v. SeaWorld Entertainment, Inc. et el, Case No. 3:18-cv-01276-L-BLM, was filed in the United States District Court in the Southern District of California against the Company and certain of the Company’s former and present executive officers (collectively, the “Defendants”). The plaintiffs, which are investment funds managed by a common adviser (collectively, the “Plaintiffs”) allege, among other things, that the Defendants made false and misleading statements, in violation of the federal securities laws and Florida common law, regarding the impact of the documentary Blackfish on SeaWorld’s business. The complaint further alleges that such statements were made to induce Plaintiffs to purchase common stock of the Company at artificially-inflated prices and that Plaintiffs suffered investment losses as a result. The Plaintiffs are seeking unspecified compensatory damages and other relief. On October 19, 2018, Defendants moved for partial dismissal of the complaint. On February 7, 2019, the Court granted Defendants’ motion and dismissed Plaintiffs’ Florida state law claims as well as federal securities law claims based on the Company’s second quarter 2013 earnings statements. The Company believes that the lawsuit is without merit and intends to defend the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of this lawsuit.

Shareholder Derivative Lawsuit

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

On March 30, 2015, the plaintiff filed an amended complaint against the same set of defendants. The amended complaint alleges, among other things, that the defendants breached their fiduciary duties, aided and abetted breaches of fiduciary duties, violated Florida Blue Sky laws and were unjustly enriched by (i) including materially false and misleading information in the prospectus and registration statements; and (ii) causing the Company to repurchase certain shares of its common stock from certain shareholders at an alleged artificially inflated price. The Company does not maintain any direct exposure to loss in connection with this shareholder derivative lawsuit as the lawsuit does not assert any claims against the Company. The Company’s status as a “Nominal Defendant” in the action reflects the fact that the lawsuit is maintained by the named plaintiff on behalf of the Company and that the plaintiff seeks damages on the Company’s behalf. The case is currently stayed in favor of the securities class action captioned Baker v. SeaWorld Entertainment, Inc., et al. described above.

Consumer Lawsuit

On April 13, 2015, a purported class action was filed in the Superior Court of the State of California for the City and County of San Francisco against SeaWorld Parks & Entertainment, Inc., captioned Marc Anderson, et. al., v. SeaWorld Parks & Entertainment, Inc. Civil Case No. 15-cv-02172-JSW, (the “Anderson Matter”). The putative class consisted of all consumers within California who, within the past four years, purchased tickets to SeaWorld San Diego. The complaint (as amended) alleges causes of action under the California False Advertising Law, California Unfair Competition Law and California CLRA. Plaintiffs’ claims are based on their allegations that the Company misrepresented the physical living conditions and care and treatment of its orcas, resulting in confusion or misunderstanding among ticket and orca plush purchasers with intent to deceive and mislead the plaintiffs and purported class members. The complaint seeks restitution, equitable relief, attorneys’ fees and costs. Based on plaintiffs’ definition of the class, the amount in controversy could have exceeded $5.0 million assuming the class became certified. The liability exposure is speculative though. On May 14, 2015, the Company removed the case to the United States District Court for the Northern District of California.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company filed a motion for summary judgment on October 30, 2017 which the Co urt granted in part and denied in part. On May 23, 2018, the plaintiffs represented to the Court that they will not file a motion for class certification. The case is no longer a class action. All three named plaintiffs continue to have claims for indiv idual restitution in a nominal amount and injunctive relief. Trial is currently scheduled for October 2019. A court-mandated mediation is scheduled for May 17, 2019. The Company believes that the lawsuit is without merit and intends to defend the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of these lawsuits.

EZPay Plan Class Action Lawsuit

On December 3, 2014, a purported class action lawsuit was filed in the United States District Court for the Middle District of Florida, Tampa Division against SeaWorld Parks & Entertainment, Inc. The case, captioned Jason Herman, Joey Kratt, and Christina Lancaster, as individuals and on behalf of all others similarly situated, v. SeaWorld Parks & Entertainment, Inc. case no: 8:14-cv-03028-MSS-JSS, was certified as a class action in 2018. The Court certified a class action on two claims for relief -- breach of contract and violation of federal Electronic Funds Transfer Act, 15 U.S.C. section 1693 et seq. on behalf of three individual plaintiffs and two classes: (i) individuals in the states of Florida, Texas, Virginia and California who paid for an annual pass through EZ pay in “less than twelve months,” had their passes automatically renewed and did not use the renewed passes after the first year or were not issued a full refund of payments made after the twelfth payment; and (ii) all of these same individuals who used debit cards.

In April 2018, the Company reached a preliminary agreement in principle to settle this matter for a payment of $11.5 million into a common fund, plus certain administrative costs and expenses associated with the proposed settlement. On April 29, 2019, the Court entered an order approving the final settlement. The Company has accrued $11.5 million related to this settlement in other accrued liabilities as of March 31, 2019 and December 31, 2018 on the accompanying unaudited condensed consolidated balance sheet.

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 Fl orida 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.

License Commitments

On May 16, 2017, SEA entered into a License Agreement (the “License Agreement”) with Sesame Workshop (“Sesame”), a New York not-for-profit corporation. SEA’s principal commitments pursuant to the License Agreement include: (i) opening a new Sesame Place theme park no later than mid-2021 in a location to be determined; (ii) building a new Sesame Land in SeaWorld Orlando by fall 2022; (iii) investing in minimum annual capital and marketing thresholds; and (iv) providing support for agreed upon sponsorship and charitable initiatives. As of March 31, 2019, the Company estimates the combined remaining obligations for these commitments could be up to approximately $60.0 million over the remaining term of the agreement. After the opening of the second Standalone Park (counting the existing Sesame Place Standalone Park in Langhorne, Pennsylvania), SEA will have the option to build additional Standalone Parks in the Sesame Territory within agreed upon timelines. The License Agreement has an initial term through December 31, 2031, with an automatic additional 15 year extension plus a five year option added to the term of the License Agreement from December 31st of the year of each new Standalone Park opening. On March 27, 2019, the Company opened a new Sesame Land in SeaWorld Orlando.

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

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Anheuser-Busch, Incorporated 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 adverti sing 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 relat ed to the use of the marks.

12. EQUITY-BASED COMPENSATION

In accordance with ASC 718, Compensation-Stock Compensation , the Company measures the cost of employee services rendered in exchange for share-based compensation based upon the grant date fair market value. The cost is recognized over the requisite service period, which is generally the vesting period unless service or performance conditions require otherwise. The Company recognizes the impact of forfeitures as they occur. The Company has granted stock options, time-vesting restricted shares and units and performance-vesting restricted shares and units.

Total equity compensation expense was $3.2 million and $7.5 million for the three months ended March 31, 2019 and 2018, respectively. Equity compensation expense for the three months ended March 31, 2018 includes approximately $4.5 million related to certain equity awards which were accelerated to vest in the first quarter of 2018 in connection with the departure of certain executives as required by their respective employment agreements. See Note 14–Restructuring and Other Separation Costs for further details. Equity compensation expense is included in selling, general and administrative expenses and in operating expenses in the accompanying unaudited condensed consolidated statements of comprehensive loss.

The activity related to the Company’s time-vesting and performance-vesting awards during the three months ended March 31, 2019 is as follows:

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

The activity related to the Company’s stock option awards during the three months ended March 31, 2019 is as follows:

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

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2019 was $8.45. Key weighted-average assumptions utilized in the Black-Scholes Option Pricing Model for stock options granted during the three months ended March 31, 2019 were:

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

(a)	Due to the Company’s limited history as a public company, the volatility for the Company’s stock at the date of each grant was estimated using the average volatility calculated for a peer group, which is based upon daily price observations over the estimated term of options granted.

( b)	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 its Omnibus Incentive Plan (the “Omnibus Incentive Plan”), of which approximately 8,520,000 shares are available for future issuance as of March 31, 2019.

Bonus Performance Restricted Awards

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

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

Long-Term Incentive Awards

During the three months ended March 31, 2019, the Company granted long-term incentive plan awards for 2019 (the “2019 Long-Term Incentive Grant”) which were comprised of nonqualified stock options (the “Long-Term Incentive Options”) and performance-vesting restricted units (the “Long-Term Incentive Performance Restricted Units”) (collectively, the “Long-Term Incentive Awards”). Long-Term Incentive Awards for 2019, 2020 and 2021 combined were granted to certain employees during the three months ended March 31, 2019. The Company does not expect additional Long-Term Incentive Awards to be granted to these employees until the earlier of 2022 or in the year when the Company’s three-year performance goal is achieved, if sooner than fiscal year 2021.

Long-Term Incentive Options

Long-Term Incentive Options vest over three years, with one-third vesting on each anniversary of the date of grant, subject to continued employment through the applicable vesting date. Equity compensation expense for these options is recognized using the straight line method.

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, 2019 and ending on December 31, 2021 based upon the Company’s achievement of specified performance goals for Fiscal 2021, as defined by the 2019 Long-Term Incentive Grant. The total number of Long-Term Incentive Performance Restricted Units eligible to vest will be based on the level of achievement of the performance goals and ranges from 0% (if below threshold performance) up to 100% (for target or above performance). Upon achievement of the performance goals, only 50% of the award for a given level of performance will vest, with the remaining 50% subject to a one-year performance test period. The goal achieved must be met again or exceeded the next fiscal year before the remaining units are earned.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Long-Term Incentive Time Restricted Units

During the three months ended March 31, 2019, the Company also granted time-restricted units which vest over three years to certain employees, with one-third vesting on each anniversary of the date of grant, subject to continued employment through the applicable vesting date. Equity compensation expense is recognized using the straight line method.

Other

The Company also has outstanding long-term incentive time restricted shares, long-term incentive performance restricted shares and long-term incentive options granted under previous long-term incentive plan grants. During the three months ended March 31, 2019, a portion of the previously granted long-term incentive performance restricted shares related to completed performance periods vested, with the remainder forfeiting in accordance with their terms. The remaining outstanding long-term incentive performance restricted shares are eligible to vest based upon the Company’s achievement of pre-established performance goals for the respective performance period, as defined.

The Company recognizes equity compensation expense for its performance-vesting restricted awards ratably over the related performance period, if the performance condition is probable of being achieved. Based on the Company’s progress towards its respective performance goals, a portion of its performance-vesting restricted awards are considered probable of vesting as of March 31, 2019; therefore, equity compensation expense has been recorded accordingly. If the probability of vesting related to these awards changes in a subsequent period, all equity compensation expense related to those awards that would have been recorded over the requisite service period had the awards been considered probable at the new percentage from inception, will be recorded as a cumulative catch-up at such subsequent date.

13. STOCKHOLDERS’ EQUITY

As of March 31, 2019, 93,748,617 shares of common stock were issued in the accompanying unaudited condensed consolidated balance sheet, which excludes 627,989 unvested shares of common stock and 2,407,905 unvested restricted stock units held by certain participants in the Company’s equity compensation plans (see Note 12–Equity-Based Compensation) and includes 10,174,589 shares of treasury stock held by the Company.

Share Repurchase Program

The Board had previously authorized a share repurchase program of up to $250.0 million of the Company’s common stock (the “Share Repurchase Program”). Under the Share Repurchase Program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. Through December 31, 2018, the Company had repurchased an aggregate of $158.0 million under the Share Repurchase Program. On February 22, 2019, the Board approved a replenishment to the Share Repurchase Program bringing the total amount available for future purchases back up to $250.0 million, which is the remaining authorization as of March 31, 2019. There were no share repurchases under the Share Repurchase Program during the three months ended March 31, 2019 or 2018.

The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time. The number of shares to be purchased and the timing of purchases will be based on the Company’s trading windows and available liquidity, general business and market conditions, and other factors, including legal requirements, debt covenant restrictions and alternative investment opportunities.

14. RESTRUCTURING 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 three months ended March 31, 2019, the Company recorded approximately $2.6 million in pre-tax charges primarily consisting of severance and other termination benefits related to positions eliminated in 2019, which is included in restructuring and other separation costs in the accompanying unaudited condensed consolidated statements of comprehensive loss.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In August 2018, the Company announced a restructuring program (the “2018 Restructuring Program”) focused on reducing costs, improving operating margins and streamlining its management structure to create efficiencies and better align with its strategic bus iness objectives. The 2018 Restructuring Program involved the elimination of approximately 125 positions during the third quarter of 2018 across the Company’s theme parks and its corporate headquarters. As a result, during the year ended December 31, 2018 , the Company recorded approximately $5.5 million in pre-tax restructuring charges primarily related to severance and other termination benefits, which is included in restructuring and other separation costs in the accompanying unaudited condensed consolid ated statements of comprehensive loss. The Company will not incur any additional costs associated with the 2018 Restructuring Program as all continuing service obligations were completed as of December 31, 2018.

Related activity for the three months ended March 31, 2019 was as follows:

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

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

Other

For the three months ended March 31, 2018, r estructuring and other separation costs also includes severance and other employment expenses for certain executives who separated from the Company during 2018. In particular, on February 27, 2018, the Company announced that its President and Chief Executive Officer (the “Former CEO”) had stepped down from his position and resigned as a member of the Board. In connection with his departure, the Former CEO received a lump sum cash payment of approximately $6.7 million in severance-related benefits, in accordance with his employment agreement. Certain other executives who separated from the Company during the first quarter of 2018 also received severance-related benefits in accordance with the terms of their respective employment agreements or relevant company plan, as applicable. These severance expenses are included in restructuring and other separation costs in the accompanying unaudited condensed consolidated statements of comprehensive loss for the three months ended March 31, 2018.

Additionally, during the three months ended March 31, 2018, certain unvested equity awards were accelerated to vest in connection with the departure of specific executives as required by their respective employment agreements. As a result, the Company recorded non-cash equity compensation expense of approximately $4.5 million during the three months ended March 31, 2018, which is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of comprehensive loss. See Note 12–Equity-Based Compensation for further details.

Item 2. Management’s Discussion and Analy sis of Financial Condition and Results of Operations

The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion should also be read in conjunction with our consolidated financial statements and related notes thereto, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2018. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

Business Overview

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

Principal Factors and Trends Affecting Our Results of Operations

Revenues

Our revenues are driven primarily by attendance in our theme parks and the level of per capita spending for admission and per capita spending for culinary, merchandise and other in-park products. We define attendance as the number of guest visits. Attendance drives admissions revenue as well as total in-park spending. Admissions revenue primarily consists of single-day tickets, annual or season passes (collectively referred to as season passes) or other multi-day or multi-park admission products.

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

•

Admission Per Capita. We calculate admission per capita as total admissions revenue divided by total attendance. Admission per capita is primarily driven by ticket pricing, the admissions product mix and the park attendance mix, among other factors. The admissions product mix, also referred to as the visitation mix, is defined as the mix of attendance by ticket category such as single day, multi-day, annual passes or complimentary tickets and the park attendance mix is defined as the mix of theme parks visited. The mix of guests (such as local or tourists) can also impact visitation mix as tourists generally purchase higher admission per capita products. The mix of theme parks visited can impact admission per capita based on the theme park’s respective pricing which on average is lower for our water parks compared to our other theme parks.

•

In-Park Per Capita Spending. We calculate in-park per capita spending as total food, merchandise and other revenue divided by total attendance. Food, merchandise and other revenue primarily consists of culinary, merchandise and other in-park products and also includes other miscellaneous revenue not necessarily generated in our parks, which is not significant in the periods presented, including revenue related to our international agreements. In-park per capita spending is primarily driven by pricing changes, penetration levels (percentage of guests purchasing), new product offerings, the mix of guests and the mix of in-park spending, among other factors.

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

Attendance

The level of attendance in our theme parks is a function of many factors, including affordability, the opening of new attractions and shows, competitive offerings, weather, fluctuations in foreign exchange rates and global and regional economic conditions, travel patterns of both our domestic and international guests, marketing and sales efforts, awareness of park offerings, consumer confidence and external perceptions of our brands and reputation, among other factors beyond our control. Attendance patterns on a quarterly basis have significant seasonality, driven by the timing of holidays, school vacations, calendar shifts in the number of weekend days in a quarter and weather conditions; in addition, seven of our theme parks are seasonal and only open for part of the year.

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

Costs and Expenses

The principal costs of our operations are employee wages and benefits, advertising, maintenance, animal care, utilities and insurance. Factors that affect our costs and expenses include competitive wage pressures including minimum wage legislation, commodity prices, costs for construction, repairs and maintenance, other inflationary pressures and attendance levels, among other factors.

We continue to focus on reducing costs, improving operating margins and streamlining our management structure to create efficiencies to better align with our strategic business objectives. We remain committed to continuous improvement and regularly evaluate operations to ensure we are properly organized for performance and efficiency. As part of these ongoing efforts, during the three months ended March 31, 2019, we recorded approximately $2.6 million in pre-tax charges primarily consisting of severance and other termination benefits related to positions eliminated in 2019, which is included in restructuring and other separation costs in the accompanying unaudited condensed consolidated statements of comprehensive loss included elsewhere in this Quarterly Report on Form 10-Q. For the three months ended March 31, 2018, restructuring and other separation costs also includes severance and other employment expenses for certain executives who separated from the Company during 2018. See Note 14–Restructuring and Other Separation Costs to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

For other factors affecting our costs and expenses, see the “ Risk Factors ” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC.

Seasonality

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

Recent Developments

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

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

For further discussion on the Transfer, see our Current Report on Form 8-K, filed with the SEC on May 6, 2019.

Leadership Changes

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

On February 26, 2018, Joel K. Manby (the “Former CEO”) stepped down from his position as President and Chief Executive Officer of the Company and resigned as a member of our Board. In connection with his departure, the Former CEO received severance-related benefits in accordance with his employment agreement dated March 16, 2015. Certain other executives who separated from the Company during 2018 also received severance-related benefits in accordance with the terms of their respective employment agreements or relevant company plan, as applicable. These expenses are included in restructuring and other separation costs for the three months ended March 31, 2018 in the accompanying unaudited condensed consolidated statements of comprehensive loss included elsewhere in this Quarterly Report on Form 10-Q.

Additionally, certain equity awards were accelerated to vest in 2018 in connection with the departure of specific executives as required by their respective employment agreements. As a result, we recorded incremental non-cash equity compensation expense of approximately $4.5 million related to these awards, which is included in selling, general and administrative expenses for the three months ended March 31, 2018 in the accompanying unaudited condensed consolidated statements of comprehensive loss. See Note 14–Restructuring and Other Separation Costs and Note 12–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

International Development Strategy

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

In March 2017, we entered into a Park Exclusivity and Concept Design Agreement (the “ECDA”) and a Center Concept and Preliminary Design Support Agreement (the “CDSA”) (collectively, the “ZHG Agreements”) with Zhonghong Holding, Co. Ltd. (“Zhonghong Holding”), an affiliate of ZHG Group, to provide design, support and advisory services for various potential projects and grant exclusive rights in China, Taiwan, Hong Kong and Macau (the “Territory”) through December 2019. In April 2019, we terminated the ZHG Agreements for non-payment of undisputed amounts owed. For the three months ended March 31, 2019 and 2018, we recorded approximately $1.7 million and $1.3 million, respectively, in food, merchandise and other revenue in the accompanying unaudited condensed consolidated statements of comprehensive loss related to the ZHG Agreements.

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

Results of Operations

The following discussion provides an analysis of our operating results for the three months ended March 31, 2019 and 2018. This data should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Comparison of the Three Months Ended March 31, 2019 and 2018

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

	For the Three Months Ended
	March 31,						Variance
	2019			2018			$			%
Summary Financial Data:	(In thousands, except per capita data and %)
Net revenues:
Admissions	$	128,913		$	130,003		$	(1,090	)		(0.8	%)
Food, merchandise and other		91,662			87,163			4,499			5.2	%
Total revenues		220,575			217,166			3,409			1.6	%
Costs and expenses:
Cost of food, merchandise and other revenues		17,213			17,051			162			1.0	%
Operating expenses (exclusive of depreciation and amortization shown separately below and includes equity compensation of $1,357 and $1,563 for the three months ended March 31, 2019 and 2018, respectively)		149,885			155,473			(5,588	)		(3.6	%)
Selling, general and administrative expenses (includes equity compensation of $1,841 and $5,982 for the three months ended March 31, 2019 and 2018, respectively)		42,764			63,524			(20,760	)		(32.7	%)
Restructuring and other separation costs		2,566			8,835			(6,269	)		(71.0	%)
Depreciation and amortization		39,450			38,430			1,020			2.7	%
Total costs and expenses		251,878			283,313			(31,435	)		(11.1	%)
Operating loss		(31,303	)		(66,147	)		34,844			52.7	%
Other expense, net		27			63			(36	)		(57.1	%)
Interest expense		20,797			19,913			884			4.4	%
Loss before income taxes		(52,127	)		(86,123	)		33,996			39.5	%
Benefit from income taxes		(15,107	)		(23,279	)		8,172			35.1	%
Net Loss	$	(37,020	)	$	(62,844	)	$	25,824			41.1	%
Other data:
Attendance		3,340			3,224			116			3.6	%
Total revenue per capita	$	66.04		$	67.36		$	(1.32	)		(2.0	%)

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

Food, merchandise and other revenue. Food, merchandise and other revenue for the three months ended March 31, 2019 increased $4.5 million, or 5.2%, to $91.7 million as compared to $87.2 million for the three months ended March 31, 2018, primarily as a result of the increase in attendance, along with an increase in in-park per capita spending. In-park per capita spending increased by 1.5% to $27.44 in the first quarter of 2019 compared to $27.04 in the first quarter of 2018. In-park per capita spending improved primarily due to the increased sales of in-park experiences, among other factors.

Costs of food, m erchandise and other revenues. Costs of food, merchandise and other revenues for the three months ended March 31, 2019 increased $0.2 million, or 1.0%, to $17.2 million as compared to $17.1 million for the three months ended March 31, 2018 , primarily due to the increase in volume. These costs represent 18.8% and 19.6% of the related revenue earned for the three months ended March 31, 2019 and 2018, respectively.

Operating expenses. Operating expenses for the three months ended March 31, 2019 decreased $5.6 million, or 3.6%, to $149.9 million as compared to $155.5 million for the three months ended March 31, 2018. The decrease primarily results from a reduction in labor costs. Operating expenses were 68.0% of total revenues for the first quarter of 2019 compared to 71.6% for the prior year quarter. The decrease as a percent of total revenue results primarily from a focus on cost efficiencies and the impact of cost savings initiatives.

Selling, general and administrative expenses . Selling, general and administrative expenses for the three months ended March 31, 2019 decreased $20.8 million, or 32.7%, to $42.8 million as compared to $63.5 million for the three months ended March 31, 2018. The decrease primarily relates to the following: (i) a decrease in legal costs largely related to an $8.1 million legal settlement accrual which was recorded in the first quarter of 2018; (ii) a decrease of $4.1 million in non-cash equity compensation expense, primarily related to equity awards which were accelerated in the first quarter of 2018 in connection with the departure of certain executives; and (iii) a decrease in costs resulting largely from our cost savings initiatives and, to a lesser extent, the timing of certain expenses. See Note 11–Commitments and Contingencies and Note 12–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial statements. As a percentage of total revenue, selling, general and administrative expenses were 19.4% in the first quarter of 2019 compared to 29.3% in the prior year quarter.

Restructuring and other separation costs. Restructuring and other separation costs for the three months ended March 31, 2019 primarily relates to severance and other expenses for positions which were eliminated in 2019. Restructuring and other separation costs for the three months ended March 31, 2018 primarily relates to severance and other employment expenses for certain executives whose employment terminated during the first quarter of 2018. In particular, in connection with his departure and in accordance with his employment agreement, our Former CEO received a lump sum cash payment of approximately $6.7 million in severance related expenses. Also in March 2018, certain other executives received severance related benefits in accordance with the terms of the relevant employment agreement or company plan, as applicable. See Note 14–Restructuring and Other Separation Costs in our notes to the unaudited condensed consolidated financial statements.

Depreciation and amortization. Depreciation and amortization expense for the three months ended March 31, 2019 increased $1.0 million, or 2.7%, to $39.5 million as compared to $38.4 million for the three months ended March 31, 2018.

Interest expense. Interest expense for the three months ended March 31, 2019 increased $0.9 million, or 4.4%, to $20.8 million as compared to $19.9 million for the three months ended March 31, 2018. The increase primarily relates to increased LIBOR rates and the impact of Amendment No. 9 to our Senior Secured Credit Facilities entered into on October 31, 2018, partially offset by the impact of interest rate swap agreements. See Note 6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements and the “ Our Indebtedness ” section which follows for further details.

Benefit from income taxes. Benefit from income taxes in the three months ended March 31, 2019 was $15.1 million compared to $23.3 million for the three months ended March 31, 2018. Our consolidated effective tax rate was 29.0% for the three months ended March 31, 2019 compared to 27.0% for the three months ended March 31, 2018. The effective tax rate increased primarily due to permanent items including equity-based compensation .

Liquidity and Capital Resources

Overview

Our principal sources of liquidity are cash generated from operations, funds from borrowings and existing cash on hand. Our principal uses of cash include the funding of working capital obligations, debt service, investments in theme parks (including capital projects), and could also include share repurchases. As of March 31, 2019, we had a working capital ratio (defined as current assets divided by current liabilities) of 0.4, due in part to a significant deferred revenue balance from revenues paid in advance for our theme park admissions products and high turnover of in-park products that results in a limited inventory balance. We typically operate with a working capital ratio less than 1 and we expect that we will continue to do so in the future. Our cash flow from operations, along with our revolving credit facilities, have allowed us to meet our liquidity needs.

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

Share Repurchases

Our Board had previously authorized a share repurchase program of up to $250.0 million of our common stock (the “Share Repurchase Program”). Under the Share Repurchase Program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time.

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

Other

As of March 31, 2019, we have five interest rate swap agreements (the “Interest Rate Swap Agreements”) which effectively fix the interest rate on LIBOR-indexed interest payments associated with $1.0 billion of SEA’s outstanding long-term debt. The Interest Rate Swap Agreements became effective on September 30, 2016; have a total notional amount of $1.0 billion; and mature on May 14, 2020. See Note 6 – Long-Term Debt and Note 8 – Derivative Instruments and Hedging Activities to our unaudited condensed consolidated financial statements for further details.

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

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

	For the Three Months Ended March 31,
	2019			2018
	(In thousands)
Net cash provided by operating activities	$	37,688		$	20,317
Net cash used in investing activities		(47,887	)		(45,822	)
Net cash provided by financing activities		28,006			32,159
Net increase in cash and cash equivalents, including restricted cash	$	17,807		$	6,654

Cash Flows from Operating Activities

Net cash provided by operating activities was $37.7 million during the three months ended March 31, 2019 as compared to $20.3 million during the three months ended March 31, 2018. The change in net cash provided by operating activities was primarily impacted by improved operating performance.

Cash Flows from Investing Activities

Investing activities consist principally of capital investments we make in our theme parks for future attractions and infrastructure. Net cash used in investing activities during the three months ended March 31, 2019 consisted of capital expenditures of $47.9 million largely related to 2019 attractions. Net cash used in investing activities during the three months ended March 31, 2018 consisted of $45.8 million of capital expenditures largely related to attractions that opened in 2018.

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

Cash Flows from Financing Activities

Net cash provided by financing activities during the three months ended March 31, 2019 results primarily from net draws of $35.0 million on our revolving credit facility, partially offset net repayments on long-term debt of $3.9 million. Net cash used in financing activities during the three months ended March 31, 2018 results primarily from net draws of $40.0 million on our revolving credit facility, partially offset net repayments on long-term debt of $5.9 million. See Note 6–Long-term Debt in our notes to the unaudited condensed consolidated financial statements for further details.

Our Indebtedness

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

Senior Secured Credit Facilities

SeaWorld Parks & Entertainment, Inc. (“SEA”) is the borrower under our senior secured credit facilities (the “Senior Secured Credit Facilities”) pursuant to a credit agreement dated as of December 1, 2009, by and among SEA, as borrower, Bank of America, N.A., as administrative agent, collateral agent, letter of credit issuer and swing line lender and the other agents and lenders party thereto, as the same may be amended, restated, supplemented or modified from time to time. On October 31, 2018, SEA entered into a refinancing amendment, Amendment No. 9 with SEA as the borrower, JPMorgan Chase Bank, N.A., as successor administrative agent, successor collateral agent, L/C issuer and swing line lender and the other agents and lenders from time to time (the “Amended Credit Agreement”), to the existing Senior Secured Credit Facilities.

As of March 31, 2019, our Senior Secured Credit Facilities consisted of $1.52 billion in Term B-5 Loans which will mature on March 31, 2024, along with a $210.0 million Revolving Credit Facility, of which $65.0 million was drawn upon as of March 31, 2019. Subsequent to March 31, 2019, SEA repaid a net of $40.0 million on the Revolving Credit Facility. Additionally, as of March 31, 2019, SEA had approximately $21.3 million of outstanding letters of credit, leaving approximately $123.7 million available for borrowing under the Revolving Credit Facility.

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

Covenant Compliance

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

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

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

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

Adjusted EBITDA

Under the credit agreement governing the Senior Secured Credit Facilities, our ability to engage in activities such as incurring additional indebtedness, making investments, refinancing certain indebtedness, paying dividends and entering into certain merger transactions is governed, in part, by our ability to satisfy tests based on “Adjusted EBITDA”. The Senior Secured Credit Facilities defines “Adjusted EBITDA” as net income before interest expense, income tax expense, depreciation and amortization, as further adjusted to exclude certain unusual, non-cash, and other items permitted in calculating covenant compliance under the Senior Secured Credit Facilities, subject to certain limitations. Adjusted EBITDA as defined in the Senior Secured Credit Facilities is consistent with our reported Adjusted EBITDA. We believe that the presentation of Adjusted EBITDA is appropriate as it eliminates the effect of certain non-cash and other items not necessarily indicative of a company’s underlying operating performance. We use Adjusted EBITDA in connection with certain components of our executive compensation program. In addition, investors, lenders, financial analysts and rating agencies have historically used EBITDA related measures in our industry, along with other measures, to estimate the value of a company, to make informed investment decisions and to evaluate companies in the industry. In addition, the presentation of Adjusted EBITDA provides additional information to investors about the calculation of, and compliance with, certain financial covenants in the Senior Secured Credit Facilities. Adjusted EBITDA is a material component of these covenants.

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

The following table reconciles Adjusted EBITDA, as defined in the Amended Credit Agreement, to net (loss) income for the periods indicated:

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

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

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

(a)	Reflects the write-off of $8.2 million in debt issuance costs incurred on the Term B-5 Loans during the twelve months ended March 31, 2019. See Note 6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements for further details.

(b)

Reflects non-cash equity compensation expenses associated with the grants of equity compensation. For the three months ended March 31, 2018 and the twelve months ended March 31, 2019, includes approximately $4.5 million and $1.0 million, respectively, related to equity awards which were accelerated in connection with the departure of certain executives, as required by their respective employment agreements (see Note 12–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial statements for further details).

(c)	Reflects primarily non-cash expenses related to miscellaneous fixed asset disposals and impairments. For the twelve months ended March 31, 2019, includes approximately $10.9 million associated with certain rides and equipment which were removed from service.

(d)

For the three months ended March 31, 2019, reflects business optimization, development and other strategic initiative costs primarily related to $2.6 million of severance and other employment costs associated with positions eliminated and $2.3 million of third party consulting costs. For the three months ended March 31, 2018, reflects business optimization, development and other strategic initiative costs primarily related to $8.8 million of severance and other employment costs associated with the departure of certain executives during the first quarter of 2018 as well as $2.0 million of third party consulting costs. For the twelve months ended March 31, 2019, reflects business optimization, development and other strategic initiative costs primarily related to $11.1 million of severance and other employment costs which includes costs associated with the departure of certain executives during 2018 and other costs related primarily to restructuring programs and $11.1 million of third party consulting costs. See Note 14–Restructuring and Other Separation Costs in our notes to the unaudited condensed consolidated financial statements for further details.

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

(e)	For the twelve months ended March 31, 2019, includes a loss of approximately $2.8 million relating to expenses incurred and fees associated with the termination of an agreement in September 2018.

(f)

Reflects the impact of expenses, net of insurance recoveries and adjustments, incurred primarily related to certain legal matters, which we are permitted to exclude under the credit agreement governing our Senior Secured Credit Facilities due to the unusual nature of the items. For the three months ended March 31, 2018 and the twelve months ended March 31, 2019, also includes $8.1 million and $4.0 million, respectively, related to legal settlements. See Note 11–Commitments and Contingencies in our notes to the unaudited condensed consolidated financial statements for further details.

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

(g)

Adjusted EBITDA is defined as net (loss) income before income tax expen se, interest expense, depreciation and amortization, as further adjusted to exclude certain non-cash, and other items permitted in calculating covenant compliance under the credit agreement governing the Company’s Senior Secured Credit Facilities. The Adju sted EBITDA presentation for the prior periods has been changed to conform with the current period presentation. In particular, the Adjusted EBITDA calculation was changed to conform with the changes made to its definition in the Amended Credit Agreement. Prior to the Amended Credit Agreement, the credit agreement governing our Senior Secured Credit Facilities limited the amount of certain add-backs as described in footnotes (d) and (f) above.

(h)

The Senior Secured Credit Facilities permits the Company’s calculation of certain covenants to be based on Adjusted EBITDA, as defined above, for the last twelve month period further adjusted for net annualized estimated savings the Company expects to realize over the following 18 month period related to certain specified actions, including restructurings and cost savings initiatives. These estimated savings are calculated net of the amount of actual benefits realized during such period. These estimated savings are a non-GAAP Adjusted EBITDA add-back item only as defined in the Amended Credit Agreement and does not impact the Company’s reported GAAP net (loss) income. The Amended Credit Agreement limits the amount of such estimated savings which may be reflected to 25% of Adjusted EBITDA, calculated for the last twelve months before the impact of these estimated cost savings. Prior to the Amended Credit Agreement, the credit agreement limited the amount of such estimated savings which could be reflected in the calculation of Adjusted EBITDA to $10.0 million for any four consecutive fiscal quarters calculated as the amount the Company expected to realize over the following 12 month period.

(i)	The Senior Secured Credit Facilities permits the Company’s calculation of certain covenants to be based on Adjusted EBITDA, as defined above, for the last twelve month period further adjusted for net annualized estimated savings as described in footnote (h) above.

Contractual Obligations

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

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, revenues and expenses, and disclosure of contingencies during the reporting period. Significant estimates and assumptions include the valuation and useful lives of long-lived tangible and intangible assets, the valuation of goodwill and other indefinite-lived intangible assets, the accounting for income taxes, the accounting for self-insurance and revenue recognition. Actual results could differ from those estimates. The critical accounting estimates associated with these policies are described in our Annual Report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These critical accounting policies include impairment of long-lived assets, goodwill and other indefinite-lived intangible assets, accounting for income taxes, self-insurance reserves, and revenue recognition. There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K, filed on March 1, 2019 .

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of March 31, 2019.

Recently Issued Financial Accounting Standards

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Inflation

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

Interest Rate Risk

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

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

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

After considering the impact of interest rate swap agreements, at March 31, 2019, approximately $1.0 billion of our outstanding long-term debt represents fixed-rate debt and approximately $519.5 million represents variable-rate debt. Assuming an average balance on our revolving credit borrowings of approximately $40.0 million, a hypothetical 100 bps increase in one month LIBOR on our variable-rate debt would lead to an increase of approximately $5.6 million in annual cash interest costs due to the impact of our fixed-rate swap agreements.

Item 4. 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. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Our principal executive officer and principal financial officer have concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management as of the end of the fiscal quarter covered by this Quarterly Report, that our disclosure controls and procedures were effective to accomplish their objectives at a reasonable assurance level.

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. Effective on January 1, 2019, we adopted Accounting Standards Codification (“ASC”) 842, Leases , which resulted in recording lease liabilities and right-of-use assets on our unaudited condensed consolidated balance sheet. As a result of this adoption, we implemented changes to our internal control activities and processes related to our lease commitments. These changes included implementing a new lease management software, establishing certain controls over financial reporting relating to leases and revising existing lease accounting policies and procedures. See Note 2–Recent Accounting Pronouncements and Note 7–Leases in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. There have been no other changes in our internal control over financial reporting during the fiscal quarter covered by this Quarterly Report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHE R INFORMATION

Item 1. Legal Proceedings

See Note 11–Commitments and Contingencies under the caption “Legal Proceedings” in our notes to the unaudited condensed consolidated financial statements for further details concerning our legal proceedings.

I tem 1A. Risk Factors

There have been no material changes to the risk factors set forth in Item 1A. to Part I of our Annual Report on Form 10-K, as filed on March 1, 2019, except to the extent factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors.

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

The Company had no unregistered sales of equity securities during the first quarter of 2019. The following table sets forth information with respect to shares of our common stock purchased by the Company during the periods indicated:

Period Beginning	Period Ended	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
January 1, 2019	January 31, 2019		1,837	$	23.88		—	$	91,967,699
February 1, 2019	February 28, 2019		104,589	$	27.24		—		250,000,000
March 1, 2019	March 31, 2019		26,460	$	26.96		—		250,000,000
			132,886				—	$	250,000,000

(1)

All purchases were made pursuant to the Company’s Omnibus Incentive Plan, under which participants may satisfy tax withholding obligations incurred upon the vesting of restricted stock by requesting the Company to withhold shares with a value equal to the amount of the withholding obligation.

(2)

The Company’s Board of Directors had previously authorized a share repurchase program of up to $250.0 million of the Company’s common stock (the “Share Repurchase Program”). Under the Share Repurchase Program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. Through December 31, 2018, the Company had repurchased an aggregate of $158.0 million under the Share Repurchase Program. On February 22, 2019, the Board approved a replenishment to the Share Repurchase Program bringing the total amount available for future purchases back up to $250.0 million, which is the remaining authorization as of March 31, 2019.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. 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 6. Exhibits

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

Exhibit No.		Description

10.1†*		Form of Performance Stock Unit Grant Notice and Restricted Stock Unit Agreement (Senior Leadership Team Executive Employees – Performance-Based Restricted Stock Units)

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

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

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

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

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

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

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

10.9		Letter Agreement, dated May 3, 2019, between Lord Central Opportunity V Limited and SeaWorld Entertainment, Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 6, 2019 (File No. 001-35883))

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

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

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

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


101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

†	Identifies exhibits that consist of a management contract or compensatory plan or arrangement

*	Filed herewith

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.

SIGNATURES

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

		SEAWORLD ENTERTAINMENT, INC.
		(Registrant)
Date: May 8, 2019		By: /s/ Marc G. Swanson
Date: May 8, 2019		Marc. G. Swanson Chief Financial Officer (Principal Financial Officer) By: /s/ Elizabeth C. Gulacsy
		Elizabeth C. Gulacsy
		Chief Accounting Officer
		(Principal Accounting Officer)

Exhibit 10.1

FORM OF
Performance STOCK UNIT GRANT NOTICE
UNDER THE
SeaWorld Entertainment, Inc.
2017 OMNIBUS INCENTIVE PLAN

(Senior Leadership Team – Performance-Based Restricted Stock Units)

SeaWorld Entertainment, Inc., a Delaware corporation (the “ Company ”), pursuant to its 2017 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “ Plan ”), hereby grants to the Participant set forth below, the maximum number of Restricted Stock Units set forth below. The Restricted Stock Units are subject to all of the terms and conditions as set forth herein, in the Restricted Stock Unit Agreement (attached hereto or previously provided to the Participant in connection with a prior grant), and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Participant :

[ Insert Participant Name ]

Date of Grant :

[ Date of Grant ], 2019

Performance Period:

The period commencing on January 1, 2019 and ending on (x) December 31, 2021 (the “ Performance Period ”) and the period of time commencing on January 1, 2022 and ending on December 31, 2022 (the “ Extended Performance Period ”).

Number of

Restricted Stock Units :

[ Insert No. of Restricted Stock Units Granted ]

Vesting Schedule :

The Restricted Stock Units shall vest at such times and in such amounts as set forth in Exhibit A to the Restricted Stock Unit Agreement.

* **

THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS RESTRICTED STOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTED STOCK UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS RESTRICTED STOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN.

SeaWorld Entertainment, Inc. Participant ¹

________________________________ ________________________________
By: [●][ Insert Participant Name ]
Title: [●]

¹	To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.

RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
SeaWorld Entertainment, Inc.
2017 Omnibus INCENTIVE PLAN

Pursuant to the Restricted Stock Unit Grant Notice (the “ Grant Notice ”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Restricted Stock Unit Agreement (this “ Restricted Stock Unit Agreement ”) and the SeaWorld Entertainment, Inc. 2017 Omnibus Incentive Plan, as it may be amended and restated from time to time, (the “ Plan ”) SeaWorld Entertainment, Inc., a Delaware corporation, (the “ Company ”) and the Participant agree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.

1. Grant of Restricted Stock Units . Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Participant the number of Restricted Stock Units provided in the Grant Notice (with each Restricted Stock Unit representing an unfunded, unsecured right to receive one share of Common Stock). The Company may make one or more additional grants of Restricted Stock Units to the Participant under this Restricted Stock Unit Agreement by providing the Participant with a new Grant Notice, which may also include any terms and conditions differing from this Restricted Stock Unit Agreement to the extent provided therein. The Company reserves all rights with respect to the granting of additional Restricted Stock Units hereunder and makes no implied promise to grant additional Restricted Stock Units.

2. Vesting . Subject to the conditions contained herein and in the Plan, the Restricted Stock Units shall vest as provided in Exhibit A attached hereto.

3. Settlement of Restricted Stock Units . The provisions of Section 9(d)(ii) of the Plan are incorporated herein by reference and made a part hereof and, in accordance therewith, any vested Restricted Stock Units shall be settled in shares of Common Stock as soon as reasonably practicable (and, in any event, within two and one-half months) following the expiration of the applicable Vesting Restricted Period. With respect to any Restricted Stock Unit, the period of time on and prior to the applicable Vesting Date (as defined in Exhibit A attached hereto) in which such Restricted Stock Unit is subject to vesting shall be its Vesting Restricted Period. Notwithstanding anything in this Restricted Stock Unit Agreement to the contrary, the Company shall have no obligation to issue or transfer any shares of Common Stock as contemplated by this Restricted Stock Unit Agreement unless and until such issuance or transfer complies with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares of Common Stock are listed for trading.

4. Treatment of Restricted Stock Units Upon Termination . The provisions of Section 9(b) of the Plan are incorporated herein by reference and made a part hereof. In the event the Participant undergoes a Termination, the treatment of the unvested Restricted Stock Units shall be as set forth in Exhibit A attached hereto.

5. Company; Participant .

(a) The term “Company” as used in this Restricted Stock Unit Agreement with reference to employment shall include the Company and its Subsidiaries.

(b) Whenever the word “Participant” is used in any provision of this Restricted Stock Unit Agreement under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom the Restricted Stock Units may be transferred by will

or by the laws of descent and distribution, the word “Participant” shall be deemed to include such person or persons.

6. Non-Transferability . The Restricted Stock Units are not transferable by the Participant (unless such transfer is specifically required pursuant to a domestic relations order or by applicable law) except to Permitted Transferees in accordance with Section 15(b) of the Plan. Except as otherwise provided herein, no assignment or transfer of the Restricted Stock Units, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Restricted Stock Units shall terminate and become of no further effect.

7. Rights as Stockholder; Dividend Equivalents . The Participant shall have no rights as a stockholder with respect to any share of Common Stock underlying a Restricted Stock Unit (including no rights with respect to voting or to receive dividends or dividend equivalents) unless and until the Participant shall have become the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which the Participant shall become the holder of record or the beneficial owner thereof. The Restricted Stock Units shall be entitled to be credited with dividend equivalent payments upon the payment by the Company of dividends on shares of Common Stock. Such dividend equivalents will be provided in shares of Common Stock having a Fair Market Value on the date that the Restricted Stock Units are settled equal to the amount of such applicable dividends, and shall be payable at the same time as the Restricted Stock Units are settled in accordance with Section 3 above. In the event that any Restricted Stock Unit is forfeited by its terms, the Participant shall have no right to dividend equivalent payments in respect of such forfeited Restricted Stock Units.

8. Tax Withholding . The provisions of Section 15(d) of the Plan are incorporated herein by reference and made a part hereof.

9. Notice . Every notice or other communication relating to this Restricted Stock Unit Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Corporate Secretary, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.

10. No Right to Continued Service . This Restricted Stock Unit Agreement does not confer upon the Participant any right to continue as an employee or service provider to the Service Recipient or any other member of the Company Group.

11. Binding Effect . This Restricted Stock Unit Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

any such waiver, alteration, amendment or modification is consented to on the Company’s behalf by the Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

13. Clawback/Repayment . This Restricted Stock Unit Agreement shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time; and (ii) applicable law. In addition, if the Participant receives any amount in excess of what the Participant should have received under the terms of this Restricted Stock Unit Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant shall be required to repay any such excess amount to the Company.

14. Restrictive Covenants; Detrimental Activity .

(a) Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees, in Participant’s capacity as an equity (and/or equity-based Award) holder in the Company, to the provisions of Appendix A to this Restricted Stock Unit Agreement (the “ Restrictive Covenants ”). Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 1 of Appendix A (or a material breach or material threatened breach of any of the provisions of Section 2 of Appendix A of this Restricted Stock Unit Agreement) would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to cease making any payments or providing any benefit otherwise required by this Restricted Stock Unit Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Notwithstanding the foregoing and Appendix A , the provisions of Section 1(a)(i), (ii), (iii) and (iv)(B) of Appendix A shall not apply to the Participant if Participant’s principal place of employment is located in the State of California. The Restricted Stock Units granted hereunder shall be subject to Participant’s continued compliance with such restrictions. For the avoidance of doubt, the Restrictive Covenants contained in this Restricted Stock Unit Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.

(b) Notwithstanding anything to the contrary contained herein or in the Plan, if the Participant has engaged in or engages in any Detrimental Activity, as determined by the Committee (including, without limitation, a breach of any of the covenants contained in Appendix A to this Agreement), then the Committee may, in its sole discretion, take actions permitted under the Plan, including, but not limited to: (i) cancelling any and all Restricted Stock Units, or (ii) requiring that the Participant forfeit any gain realized on the vesting of the Restricted Stock Units, and repay such gain to the Company.

15. Right to Offset . The provisions of Section 15(x) of the Plan are incorporated herein by reference and made a part hereof.

hereby submits to the exclusive jurisdiction of and venue in the courts of Delaware. THE PARTICIPANT IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTICIPANT IN RESPECT OF THE PARTICIPANT’S RIGHTS OR OBLIGATIONS HEREUNDER.

17. Plan . The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Restricted Stock Unit Agreement (including the Grant Notice), the Plan shall govern and control.

18. Section 409A . It is intended that the Restricted Stock Units granted hereunder shall be exempt from Section 409A of the Code pursuant to the “short-term deferral” rule applicable to such section, as set forth in the regulations or other guidance published by the Internal Revenue Service thereunder.

Exhibit A

1. Vesting of Restricted Stock Units .

(a) Definitions .

(i) The “ Adjusted EBITDA ” shall mean the Adjusted EBITDA which is publicly disclosed in (or otherwise calculated in a manner consistent with) the Company’s earnings release for the applicable fiscal year or as otherwise determined by the Compensation Committee of the Board.

(ii) The “ Adjusted EBITDA Target ” shall mean an Adjusted EBITDA target for the Performance Period, determined by the Committee during the first 90 days of the Performance Period.

(iii) The “ Adjusted EBITDA Threshold ” shall mean an Adjusted EBITDA threshold for the Performance Period, determined by the Committee during the first 90 days of the Performance Period.

(iv) The “ Base Period NOPAT ” means NOPAT for the year immediately preceding the beginning of the Performance Period.

(v) The “ Cumulative Cash CAPEX ” means the aggregate “Cash Capital” expenditures as reported on the Company’s Statement of Cash Flows during the Performance Period and Extended Performance Period, as applicable.

(vi) The “ Cumulative NOPAT ” means the aggregate NOPAT during the Performance Period and Extended Performance Period, as applicable.

(vii) The “ Depreciation & Amortization ” means as defined by U.S. GAAP and reported on the Company’s Income Statement (NOPAT components will be adjusted for non-cash gains or losses of an unusual or infrequent type).

(viii) The “ NOPAT ” means Adjusted EBITDA less Depreciation & Amortization (both NOPAT components will be adjusted for non-cash gains or losses of an unusual or infrequent type).

(ix) The “Number of Restricted Stock Units” provided on the Grant Notice will be eligible to be earned based on the following performance metrics: 75% Adjusted EBITDA Component (as set forth in Section 1(b)(A) below); and 25% ROIC Component and shall herein be referred to as the “ Restricted Stock Units ”.

(x) The “ ROIC Multiple ” shall mean 100% if the ROIC Target is achieved and 75% if the ROIC Target is not achieved, in each case, for the period beginning on the first day of the Performance Period through the applicable Vesting Date.

(xi) The “ ROIC Target ” shall mean a projected ROIC target for the Performance Period and Extended Performance Period, as applicable, determined by the Committee in the first 90 days of the Performance Period. For purposes of this Exhibit A, the term “ROIC” means the Company’s return on invested capital over the Performance Period and Extended Performance Period, as applicable, calculated as follows:

Appendix A – 1

(Cumulative NOPAT – (Base Period NOPAT * 3))

Cumulative Cash CAPEX

(xii) The “ Vesting Date ” shall mean each of the dates the Company publicly discloses the Adjusted EBITDA in the Company’s earnings release for each of the 2019, 2020, 2021 and 2022 fiscal years, which date shall not be later than March 15 in the year following the end of the applicable fiscal year.

(b) Vesting and EBITDA Targets . Subject to Section 2 of this Exhibit A and provided the Participant has not undergone a Termination on or prior to the applicable Vesting Date:

(A) (x) twenty-five percent (25%) of the Restricted Stock Units multiplied by the ROIC Multiple will vest upon the Company’s achievement in respect of any fiscal year of at least the Adjusted EBITDA Threshold but less than the Adjusted EBITDA Target on or prior to the end of the Performance Period and (y) an additional twenty-five percent (25%) of the Restricted Stock Units multiplied by the ROIC Multiple will vest upon the Company’s achievement of at least the Adjusted EBITDA Threshold (i) in the fiscal year immediately following the fiscal year in which clause (x) was achieved and (ii) on or prior to the end of the Extended Performance Period; and

(B) (x) fifty percent (50%) of the Restricted Stock Units multiplied by the ROIC Multiple will vest upon the Company’s achievement in respect of any fiscal year of at least the Adjusted EBITDA Target on or prior to the end of the Performance Period (less any amounts that vested pursuant to clause (A) above) and (y) one-hundred percent (100%) of the Restricted Stock Units multiplied by the ROIC Multiple will vest, to the extent not already vested, upon the Company’s achievement of at least the Adjusted EBITDA Target (i) in the fiscal year immediately following a fiscal year in which at least the Adjusted EBITDA Target was achieved and (ii) on or prior to the end of the Extended Performance Period.

Notwithstanding the foregoing:

(i) in no event will the aggregate vesting pursuant to clauses (A)(x), (A)(y) and (B)(x) above result in vesting of more than fifty percent (50%) of the Restricted Stock Units; and

(ii) to the extent the ROIC Multiple changes on a subsequent Vesting Date when Restricted Stock Units actually vest pursuant to this Section 1(b), if any (the “ Final ROIC Multiple ”), the number of Restricted Stock Units that vest on such subsequent Vesting Date shall be increased or decreased to adjust for the number of Restricted Stock Units that previously vested on prior Vesting Dates at the higher or lower ROIC Multiple, as applicable, such that the aggregate number of Restricted Stock Units vested shall correspond to the Final ROIC Multiple.

In connection with the foregoing, the Company’s Chief Financial Officer shall certify in writing to the Committee the Adjusted EBITDA and the ROIC following the end of each applicable fiscal year of the Performance Period and Extended Performance Period, as applicable.

Appendix A – 2

(c) Any remaining unvested Restricted Stock Units that do not become vested in accordance with preceding Section 1(b) (if any) shall immediately be forfeited by the Participant for no consideration as of the Vesting Date(s) in fiscal year 2021 and/or 2022, as applicable.

2. Treatment of Restricted Stock Units Upon a Change in Control .

(a) Notwithstanding Section 1 of this Exhibit A , in the event of a Change in Control that occurs during the Participant’s employment and prior to the end of the Performance Period or Extended Performance Period, as applicable, the Board shall vest a number of unvested Restricted Stock Units equal to the Specified Number (as defined below) on the date of the first anniversary of the Change in Control, solely based on Participant’s continued employment with the Company through such date (and without regard to the conditions set forth in Section 1 of this Exhibit A ). Any remaining unvested Restricted Stock Units that remain eligible to vest, after taking this Section 2(a) into account, that do not become vested pursuant to the preceding sentence (if any) shall remain outstanding and eligible to vest in accordance with the terms hereof, subject to adjustments permitted by the Plan; provided, that, to the extent this Award is not assumed or substituted on terms no less favorable than set forth herein the cash value (as of the date of the Change in Control) of any such unvested Restricted Stock Units that would have otherwise been eligible to vest but for the Change in Control shall vest on the first anniversary of the date of the Change in Control (the “ Unvested Value ”), solely based on Participant’s continued employment with the Company through such date. For the avoidance of doubt, except as set forth in Section 2(b) hereof, no Restricted Stock Units shall be eligible to vest on or following a Change in Control until the first anniversary of such Change in Control.

(b) Notwithstanding anything to the contrary in Section 9 of the Plan, in the event of (i) Participant’s Termination by the Company other than for Cause (or due to death or Disability) or (ii) Participant’s Termination by the Participant for Good Reason, in each case, in the twelve (12) months immediately following a Change in Control, to the extent outstanding and unvested at such time, the Specified Number set forth in Section 2(c) hereof and/or the Unvested Value, if applicable, shall vest as of such Termination. Any remaining unvested Restricted Stock Units (including any assumed or substituted awards) or the Unvested Value that do not become vested pursuant to the preceding sentence (if any) shall immediately be forfeited by the Participant for no consideration as of the date of such Termination. For purposes of this Exhibit A, “Good Reason” shall mean without Participant’s consent, (i) a material diminution in Participant’s title, duties, or responsibilities, (ii) a material reduction in Participant’s base salary (other than an across the board reduction, applicable to other senior executives of the Company), or (iii) the relocation of Participant’s principal place of employment by more than fifty (50) miles from the Participant’s current location; provided that the Participant must provide the Company fifteen (15) days’ written notice setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective, must be provided to the Company within sixty (60) days of the Participant’s knowledge (whether actual or constructive, including, without limitation, knowledge that Executive would have reasonably obtained after making due and appropriate inquiry) of such event. During such fifteen (15) day notice period, the Company shall have a cure right (if curable), and if not cured within such period, the Participant’s termination will be effective upon the expiration of such cure period.

(c) For purposes of this Exhibit A , the term “ Specified Number ” shall mean a number of unvested Restricted Stock Units equal to (x) 0% to 100% of the unvested Restricted Stock Units, based on the Committee’s determination, and the Board’s approval, in good faith, that the Company is on track (as of a date prior to the Change in Control) to achieve (based on the Company’s trailing twelve months EBITDA and the price paid per share of Common Stock in connection with the Change in Control) either the Adjusted EBITDA Threshold or the Adjusted EBITDA Target (subject to the ROIC Multiple, as determined by the Committee in good faith) plus (y) the difference between (i) the amount of Restricted Stock Units that would have vested on the next Vesting Date based on actual performance in accordance

Appendix A – 3

with Section 1(b) hereof, if any, less (ii) the amount of Restricted Stock Units that the Board vests in accordance with clause (x) hereof, if any; provided that such amount shall not be less than zero. Notwithstanding the foregoing, in the event of Participant’s Termination prior to next applicable Vesting Date following a Change in Control, the Specified Number shall not include the additional vesting of any Restricted Stock Units pursuant to clause (y) immediately above.

3. Treatment of Restricted Stock Units Upon Certain Termination .

(a) In the event of Participant’s Termination for any reason on or prior to the Vesting Date other than under circumstances described in Sections 2(b) or 3(b) of this Exhibit A , all unvested Restricted Stock Units shall be forfeited by the Participant for no consideration as of the date of such Termination.

(b) Notwithstanding anything to the contrary in Section 9 of the Plan, in the event of the Participant’s Termination due to death or Disability on or prior to the last day of the Performance Period or the Extended Performance Period, as applicable, to the extent outstanding and unvested at such time, a number of Restricted Stock Units equal to (i) the product of (x) the D&D Specified Number (as defined below) multiplied by (y) a fraction, the numerator of which is equal to the number of completed months that have elapsed in the Performance Period (and Extended Performance Period, as applicable) through and including the date of such Termination and the denominator of which is equal to 36 (or 48, to the extent any Restricted Stock Units are eligible to vest during such Extended Performance Period based on actual performance), (rounded up to the nearest whole number) less (ii) the number of Restricted Stock Units vested prior to the Participant’s Termination, shall vest as of the last possible Vesting Date, in accordance with Section 1 above. Any remaining unvested Restricted Stock Units that do not become vested pursuant to the preceding sentence (if any) shall immediately be forfeited by the Participant for no consideration as of the last possible Vesting Day, in accordance with Section 1 above. For purposes of this paragraph, the term “D&D Specified Number” shall mean the aggregate number of Restricted Stock Units that would have vested (or did vest prior to the Termination) in accordance with Section 1 of this Exhibit A if the Termination was on or following the end of the Performance Period or Extended Performance Period, as applicable. For the avoidance of doubt, any such award which vests under this Section 3(b) will be settled in accordance with Section 3 of the Restricted Stock Unit Agreement following the last possible Vesting Date.

Appendix A – 4

Appendix A

Restrictive Covenants

Non-Competition; Non-Solicitation; Non-Disparagement .

(a) Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:

(i) During Participant’s employment with the Company or its Subsidiaries (the “ Employment Term ”) and for a period of two years following the date Participant ceases to be employed by the Company or its Subsidiaries (the “ Restricted Period ”), Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“ Person ”), directly or indirectly solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Participant (or Participant’s direct reports) had personal contact or dealings on behalf of the Company during the one-year period preceding Participant’s termination of employment.

(ii) During the Employment Term and for a period of one year following the date Participant ceases to be employed by the Company or its Subsidiaries (and, solely with respect to subclause (d) below, for the full Restricted Period), Participant will not directly or indirectly:

(A) engage in the Business in any geographical area that is within 300 miles of any geographical area where the Restricted Group engages in the Business, including the greater metropolitan areas of Orlando, Florida, Tampa, Florida, San Diego, California, Chula Vista, California, San Antonio, Texas, Williamsburg, Virginia and Philadelphia/Langhorne, Pennsylvania;

(B) enter the employ of, or render any services to, a Core Competitor, except where such employment or services do not relate in any manner to the Business;

(C) acquire a financial interest in, or otherwise become actively involved with, any Person engaged in the Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or

(D) intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.

(iii) Notwithstanding anything to the contrary in this Appendix A, Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Core Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (i) is not a controlling person of, or a member of a group which controls, such person and (ii) does not, directly or indirectly, own 2% or more of any class of securities of such Person.

(iv) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:

Appendix A – 5

(A) solicit or encourage any employee of the Restricted Group to leave the employment of the Restricted Group;

(B) hire any executive-level employee who was employed by the Restricted Group as of the date of Participant’s termination of employment with the Company or who left the employment of the Restricted Group coincident with, or within one year prior to or after, the termination of Participant’s employment with the Company; or

(ii) For purposes of this Appendix A:

(A) “ Restricted Group ” shall mean, collectively, the Company and its Subsidiaries and, to the extent engaged in the Business, their respective Affiliates.

(B) “ Business ” shall mean, collectively, the location-based entertainment business and the entertainment and theme park business.

(C) “ Core Competitor ” shall mean Walt Disney Parks and Resorts, Universal Parks and Resorts, Six Flags, Inc., Cedar Fair Entertainment Company and Merlin Entertainments Group Ltd., Herschend Family Entertainment, Parques Reunidos and each of their respective Affiliates.

(b) Non-Disparagement . Participant will not at any time (whether during or after Participant’s Employment Term) make public or private statements or public or private comments intended to be (or having the effect of being) of defamatory or disparaging nature regarding (including, without limitation, any statements or comments, whether in person, radio, television, film, social media or otherwise, that are (i) likely to be harmful to the business, business reputation or personal reputation of and (ii) for, on behalf of or in association with any trade, industry, activist or other advocacy group that has, at any time, made adverse or critical statements in relation to) the Company or any of its Subsidiaries or Affiliates or any of their respective businesses, shareholders, members, partners, employees, agents, officers, directors or contractors (it being understood that comments made in Participant’s good faith performance of Participant’s duties hereunder shall not be deemed disparaging or defamatory for purposes of this paragraph). Notwithstanding anything in this section 1(b), the Participant shall be permitted to (x) provide a reasonable and truthful response to or statement to defend Participant against any public statement made by the Company that is incorrect or disparages such person, to the extent necessary to correct or refute such public statement and (y) provide truthful testimony in any legal proceeding or process.

(c) It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Section 1 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

Appendix A – 6

(d) The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.

(e) The provisions of Section 1 hereof shall survive the termination of Participant’s employment for any reason, including but not limited to, any termination other than for Cause (except as otherwise set forth in Section 1 hereof).

(f) The provisions of Section 1(a)(i), (ii), (iii) and (iv)(B) hereof shall not apply if Participant’s principal place of employment is in the state of California.

2. Confidentiality; Intellectual Property .

(a) Confidentiality .

(i) Participant will not at any time (whether during or after Participant’s Employment Term) (x) retain or use for the benefit, purposes or account of Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company (other than its professional advisers who are bound by confidentiality obligations or otherwise in performance of Participant’s duties under Participant’s employment and pursuant to customary industry practice), any non-public, proprietary or confidential information —including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals, safety, zoological and/or animal training or care practices, protocols, policies or procedures — concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.

(ii) “ Confidential Information ” shall not include any information that is (a) generally known to the industry or the public other than as a result of Participant’s breach of this covenant; (b) made legitimately available to Participant by a third party without breach of any confidentiality obligation of which Participant has knowledge; or (c) required by law to be disclosed; provided that with respect to subsection (c) Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.

(iii) Except as required by law, Participant will not disclose to anyone, other than Participant’s family (it being understood that, in this Restricted Stock Unit Agreement, the term “family” refers to Participant, Participant’s spouse, children, parents and spouse’s parents) and advisors, the existence or contents of this Restricted Stock Unit Agreement; provided that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Restricted Stock Unit Agreement (or, if the Company publicly discloses summaries or excerpts of this Restricted Stock Unit Agreement, to the extent so disclosed).

Appendix A – 7

(iv) Upon termination of Participant’s employment with the Company for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.

(v) Nothing in this Restricted Stock Unit Agreement shall prohibit or impede Participant from communicating, cooperating, or filing a complaint with any U.S. federal, state, or local governmental or law enforcement branch, agency, or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state, or local law or regulation, or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation, provided that in each case such communications and disclosures are consistent with applicable law. Participant understands and acknowledges that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Participant understands and acknowledges further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. Moreover, Participant is not required to give prior notice to (or get prior authorization from) the Company regarding any such communication or disclosure. Notwithstanding the foregoing, under no circumstance will Participant be authorized to disclose any information covered by attorney-client privilege or attorney work product of any member of the Company Group without prior written consent of Company’s General Counsel or other officer designated by the Company.

(b) Intellectual Property .

(i) If Participant has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“ Works ”), either alone or with third parties, prior to Participant’s employment by the Company, that are relevant to or implicated by such employment (“ Prior Works ”), Participant hereby grants the Company a perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.

Appendix A – 8

resources (“ Company Works ”), Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.

(iii) Participant shall take all reasonably requested actions and execute all reasonably requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason, after reasonable attempt, to secure Participant’s signature on any document for this purpose, then Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Participant’s agent and attorney in fact, to act for and in Participant’s behalf and stead to execute any documents and to do all other lawfully permitted acts required in connection with the foregoing.

(iv) Participant shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Participant shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Participant, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest. Participant acknowledges that the Company may amend any such policies and guidelines from time to time, and that Participant remains at all times bound by their most current version from time to time previously disclosed to Participant.

(v) The provisions of Section 2 hereof shall survive the termination of Participant’s employment for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).

3. Permitted Disclosure . Nothing in this Appendix A shall prohibit or impede a Participant from communicating, cooperating or filing a complaint with any United States federal, state or local governmental or law enforcement branch, agency or entity (collectively, a “ Governmental Entity ”) with respect to possible violations of any United States federal, state or local law or regulation, or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation, provided that in each case such communications and disclosures are consistent with applicable law. Each Participant understands and acknowledges that (i) an individual shall not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made (A) in confidence to a U.S. federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal, and (ii) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. A Participant does not need to give prior notice to (or get prior authorization from) the Company regarding any such communication or disclosure. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is a Participant authorized to disclose any information covered by attorney-client privilege or attorney

Appendix A – 9

work product or trade secrets of any member of the Company Group without prior written consent of the Company’s Board of Directors or other officer designed by the Company’s Board of Directors.

Appendix A – 10

Exhibit 10.2

FORM OF
OPTION GRANT NOTICE
UNDER THE
SeaWorld Entertainment, Inc.
2017 OMNIBUS INCENTIVE PLAN
(Tier 2– Time-Based Options)

SeaWorld Entertainment, Inc., a Delaware corporation (the “ Company ”), pursuant to its 2017 Omnibus Incentive Plan (the “ Plan ”), hereby grants to the Participant set forth below the number of Options (each Option representing the right to purchase one share of Common Stock) set forth below, at an Exercise Price per share as set forth below. The Options are subject to all of the terms and conditions as set forth herein, in the Option Agreement (attached hereto or previously provided to the Participant in connection with a prior grant), and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Participant :

[ Insert Name of Participant ]

Date of Grant :

[ Insert date of grant ], 2019

Number of Options :

[ Insert number of shares subject to the Option ]

Exercise Price :

[ Insert Exercise Price per share ]

Option Period Expiration Date :

Ten (10) years from the Date of Grant.

Type of Option :

Nonqualified Stock Option

Vesting Schedule :

Provided the Participant has not undergone a Termination at the time of the applicable vesting date (or event), 1/3 of the Options will vest on each of the first three anniversaries of the Date of Grant. Notwithstanding the foregoing, upon a Change in Control, all unvested Options shall remain outstanding and shall vest upon the one year anniversary of the date of the Change in Control, provided the Participant has not undergone a Termination prior to such vesting date. Further, upon a Termination (i) by the Company without Cause (other than due to death or Disability) or (ii) by the Participant, for Good Reason, in each case, within the twelve (12) months immediately following a Change in Control, all unvested Options shall vest immediately upon such Termination. For purposes of this Option Grant Notice “Good Reason” shall mean without Participant’s consent, (i) a material diminution in Participant’s title, duties, or responsibilities, (ii) a material reduction in Participant’s base salary (other than an across the board reduction, applicable to other senior executives of the Company), or (iii) the relocation of Participant’s principal place of

employment by more than fifty (50) miles from the Participant’s current location; provided that the Participant must provide the Company fifteen (15) days’ written notice setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective, must be provided to the Company within sixty (60) days of the Participant’s knowledge (whether actual or constructive, including, without limitation, knowledge that Executive would have reasonably obtained after making due and appropriate inquiry) of such event. During such fifteen (15) day notice period, the Company shall have a cure right (if curable), and if not cured within such period, the Participant’s termination will be effec tive upon the expiration of such cure period.

* **

THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS OPTION GRANT NOTICE, THE OPTION AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF OPTIONS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS OPTION GRANT NOTICE, THE OPTION AGREEMENT AND THE PLAN.

SeaWorld Entertainment, Inc. Participant ¹

________________________________ ________________________________
By: [ Insert Name Participant ]
Title:

¹	To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.

OPTION AGREEMENT
UNDER THE
SeaWorld Entertainment, Inc.
2017 OMNIBUS INCENTIVE PLAN

Pursuant to the Option Grant Notice (the “ Grant Notice ”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Option Agreement (this “ Option Agreement ”) and the SeaWorld Entertainment, Inc. 2017 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “ Plan ”), SeaWorld Entertainment, Inc., a Delaware corporation (the “ Company ”), and the Participant agree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.

1. Grant of Option . Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Participant the number of Options provided in the Grant Notice (with each Option representing the right to purchase one share of Common Stock), at an Exercise Price per share as provided in the Grant Notice. The Company may make one or more additional grants of Options to the Participant under this Option Agreement by providing the Participant with a new Grant Notice, which may also include any terms and conditions differing from this Option Agreement to the extent provided therein. The Company reserves all rights with respect to the granting of additional Options hereunder and makes no implied promise to grant additional Options.

2. Vesting . Subject to the conditions contained herein and in the Plan, the Options shall vest as provided in the Grant Notice.

3. Exercise of Options Following Termination . The provisions of Section 7(c)(ii) of the Plan are incorporated herein by reference and made a part hereof. In the event of (A) the Participant’s Termination by the Company for Cause, all outstanding Options shall immediately terminate and expire, (B) the Participant’s Termination due to death or Disability a number of Options equal to (x) the number of Options subject to the Grant Notice that would have vested on the next vesting date as if there was no Termination multiplied by (y) a fraction (i) the numerator of which is the number of days elapsed from the last vesting date (or Date of Grant, if no vesting date has occurred) through the date of such Termination and (ii) the denominator of which is 365 (or 366, as applicable) (rounded up to the nearest whole number), shall vest, and each outstanding vested Option shall remain exercisable for one (1) year thereafter (but in no event beyond the expiration of the Option Period) and (C) the Participant’s Termination for any other reason each outstanding unvested Option shall immediately terminate and expire, and each outstanding vested Option shall remain exercisable for ninety (90) days thereafter (but in no event beyond the expiration of the Option Period).

4. Method of Exercising Options . The Options may not be exercised until such Options become vested. The vested Options may be exercised by the delivery of notice of the number of Options that are being exercised accompanied by payment in full of the Exercise Price applicable to the Options so exercised. Such notice shall be delivered either (x) in writing to the Company at its principal office or at such other address as may be established by the Committee, to the attention of the Corporate Secretary; or (y) to a third-party plan administrator as may be arranged for by the Company or the Committee from time to time for purposes of the

administration of outstanding Opt ions under the Plan, in the case of either (x) or (y), as communicated to the Participant by the Company from time to time. Payment of the aggregate Exercise Price may be made using any of the methods described in Section 7(d)(i) or (ii) of the Plan; prov ided , that the Participant shall obtain written consent from the Committee prior to the use of the method described in Section 7(d)(ii)(A) of the Plan.

5. Issuance of Shares . Following the exercise of an Option hereunder, as promptly as practical after receipt of such notification and full payment of such Exercise Price and any required income or other tax withholding amount (as provided in Section 9 hereof), the Company shall issue or transfer, or cause such issue or transfer, to the Participant the number of shares with respect to which the Options have been so exercised, and shall either (a) deliver, or cause to be delivered, to the Participant a certificate or certificates therefor, registered in the Participant’s name or (b) cause such shares to be credited to the Participant’s account at the third-party plan administrator.

6. Company; Participant .

(a) The term “Company” as used in this Option Agreement with reference to employment shall include the Company and its Subsidiaries.

(b) Whenever the word “Participant” is used in any provision of this Option Agreement under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom the Options may be transferred by will or by the laws of descent and distribution, the word “Participant” shall be deemed to include such person or persons.

7. Non-Transferability . The Options are not transferable by the Participant except to Permitted Transferees in accordance with Section 15(b) of the Plan. Except as otherwise provided herein, no assignment or transfer of the Options, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Options shall terminate and become of no further effect.

8. Rights as Stockholder . The Participant or a Permitted Transferee of the Options shall have no rights as a stockholder with respect to any share of Common Stock covered by an Option until the Participant shall have become the holder of record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or other rights in respect of such share of Common Stock for which the record date is prior to the date upon which the Participant shall become the holder of record or the beneficial owner thereof.

9. Tax Withholding . The provisions of Section 15(d) of the Plan are incorporated herein by reference and made a part hereof.

10. Notice . Every notice or other communication relating to this Option Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided;

provided that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Corporate Secretary, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the pro cedures established by such third-party plan administrator and communicated to the Participant from time to time.

11. No Right to Continued Service . This Option Agreement does not confer upon the Participant any right to continue as an employee or service provider to the Company.

12. Binding Effect . This Option Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

13. Waiver and Amendments . Except as otherwise set forth in Section 13 of the Plan, any waiver, alteration, amendment or modification of any of the terms of this Option Agreement shall be valid only if made in writing and signed by the parties hereto; provided , however, that any such waiver, alteration, amendment or modification is consented to on the Company’s behalf by the Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

14. Clawback/Repayment . This Option Agreement shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time; and (ii) applicable law. In addition, if the Participant receives any amount in excess of what the Participant should have received under the terms of this Option Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant shall be required to repay any such excess amount to the Company.

15. Restrictive Covenants; Clawback/Forfeiture .

Option Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Notwithstanding the foregoing an d Appendix A , the provisions of Section 1(a)(i), (ii), (iii) and (iv)(B) of Appendix A shall not apply to the Participant if Participant’s principal place of employment is located in the State of California. The Options granted (and the shares that may be issued upon exercise of the Options) hereunder shall be subject to Participant’s continued compliance with such restrictions. For the avoidance of doubt, the Restrictive Covenants contained in this Option Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.

(b) Notwithstanding anything to the contrary contained herein or in the Plan, if the Participant has engaged in or engages in any Detrimental Activity, as determined by the Committee (including, without limitation, a breach of any of the covenants contained in Appendix A to this Option Agreement), then the Committee may, in its sole discretion, take actions permitted under the Plan, including: (i) cancel the Options, or (ii) require that the Participant forfeit any gain realized on the exercise of the Options, and repay such gain to the Company.

16. Right to Offset . The provisions of Section 15(x) of the Plan are incorporated herein by reference and made a part hereof.

17. Governing Law . This Option Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Notwithstanding anything contained in this Option Agreement, the Grant Notice or the Plan to the contrary, if any suit or claim is instituted by the Participant or the Company relating to this Option Agreement, the Grant Notice or the Plan, the Participant hereby submits to the exclusive jurisdiction of and venue in the courts of Delaware. THE PARTICIPANT IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTICIPANT IN RESPECT OF THE PARTICIPANT’S RIGHTS OR OBLIGATIONS HEREUNDER.

18. Plan . The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Option Agreement (including the Grant Notice), the Plan shall govern and control.

Appendix A

Restrictive Covenants

Non-Competition; Non-Solicitation; Non-Disparagement .

(a) Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:

(ii) During the Employment Term and for a period of one year following the date Participant ceases to be employed by the Company or its Subsidiaries (and, solely with respect to subclause (d) below, the full Restricted Period), Participant will not directly or indirectly:

(A) engage in the Business in any geographi cal area that is within 300 miles of any geographical area where the Restricted Group engages in the Business, including the greater metropolitan areas of Orlando, Florida, Tampa, Florida, San Diego, California, Chula Vista, California, San Antonio, Texas, Williamsburg, Virginia and Philadelphia/Langhorne, Pennsylvania;

(B) enter the employ of, or render any services to, a Core Competitor, except where such employment or services do not relate in any manner to the Business;

(D) intentionally and adversely interfere w ith, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.

(iv) During the Restricted Period, Pa rticipant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:

(A) solicit or encourage any employee of the Restricted Group to leave the employment of the Restricted Group;

(B) hire any e xecutive-level employee who was employed by the Restricted Group as of the date of Participant’s termination of employment with the Company or who left the employment of the Restricted Group coincident with, or within one year prior to or after, the termination of Participant’s employment with the Company; or

(ii) For purposes of this Appendix A:

(A) “ Restricted Group ” shall mean, collectively, the Company and its Subsidiaries and, to the extent engaged in the Business, their respective Affiliates.

(B) “ Business ” shall mean, collectively, the location-based entertainment business and the entertainment and theme park business.

(c) It is expressly understood and agreed that although Participant and the Company consider the r estrictions contained in this Section 1 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

(d) The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of compete nt jurisdiction on the Company’s application for injunctive relief.

(f) The provisions of Section 1(a)(i), (ii), (iii) and (iv)(B) hereof shall not apply if Participant’s principal place of employment is in the state of California.

2. Confidentiality; Intellectual Property .

(a) Confidentiality .

(i) Participant will not at any time (whether during or after Participant’s Employment Term) (x) retain or use for the benefit, purposes or account of Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, t ransfer or provide access to any Person outside the Company (other than its professional advisers who are bound by confidentiality obligations or otherwise in performance of Participant’s duties under Participant’s employment and pursuant to customary industry practice), any non-public, proprietary or confidential information —including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals, safety, zoological and/or animal training or care practices, protocols, policies or procedures — concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.

(iii) Except as required by law, Participant will not disclose to anyone, other than Participant’s family (it being understood that, in this Option Agreement, the term “family” re fers to Participant, Participant’s spouse, children, parents and spouse’s parents) and advisors, the existence or contents of this Option Agreement; provided that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Option Agreement (or, if the Company publicly discloses summaries or excerpts of this Option Agreement, to the extent so disclosed).

(iv) Upon termination of Particip ant’s employment with the Company for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or

intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium ( including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company prop erty) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.

(v) Nothing in this Option Agreement shall prohibit or imped e Participant from communicating, cooperating, or filing a complaint with any U.S. federal, state, or local governmental or law enforcement branch, agency, or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state, or local law or regulation, or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation, provided that in each case such communications and disclosures are consistent with applicable law. Participant understands and acknowledges that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Participant understands and acknowledges further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. Moreover, Participant is not required to give prior notice to (or get prior authorization from) the Company regarding any such communication or disclosure. Notwithstanding the foregoing, under no circumstance will Participant be authorized to disclose any information covered by attorney-client privilege or attorney work product of any member of the Company Group without prior written consent of Company’s General Counsel or other officer designated by the Company.

(b) Intellectual Property .

(i) If Participant has created, invented, designed, developed, contri buted to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“ Works ”), either alone or with third parties, prior to Participant’s employment by the Company, that are relevant to or implicated by such employment (“ Prior Works ”), Participant hereby grants the Company a perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.

per mitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such r ights does not vest originally in the Company.

(iii) Participant shall take all reasonably requested actions and execute all reasonably requested documents (including any licenses or assignments required by a government contract) at the Company’s expense ( but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason, after reasonable attempt, to secure Participant’s signature on any document for this purpose, then Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Participant’s agent and attorney in fact, to act for and in Participant’s behalf and stead to execute any documents and to do all other lawfully permitted acts required in connection with the foregoing.

(v) The provisions of Section 2 hereof shall survive the termination of Participant’s employment for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).

Exhibit 10.3

FORM OF
Performance STOCK UNIT GRANT NOTICE
UNDER THE
SeaWorld Entertainment, Inc.
2017 OMNIBUS INCENTIVE PLAN

(Employees – Annual Incentive Plan Award)

SeaWorld Entertainment, Inc., a Delaware corporation (the “ Company ”), pursuant to its 2017 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “ Plan ”), hereby grants to the Participant set forth below, the number of Restricted Stock Units set forth below. The Restricted Stock Units are subject to all of the terms and conditions as set forth herein, in the Restricted Stock Unit Agreement (attached hereto or previously provided to the Participant in connection with a prior grant), and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Participant :

[ Insert Participant Name ]

Date of Grant :

[ Insert Date of Grant ], 2019

Performance Period:

The period commencing on January 1, 2019 and ending on December 31, 2019 (the “ Performance Period ”).

Number of

Restricted Stock Units :

[ Insert No. of Restricted Stock Units Granted ]

Vesting Schedule :

The Restricted Stock Units shall vest at such times and in such amounts as set forth in Exhibit A to the Restricted Stock Unit Agreement.

Performance Components


Performance Component	Performance Component Percentage (i.e Weighting*)	Metric Defined in Exhibit A, Section:
SEAS Adjusted EBITDA	50%	1(b)(A)
SEAS Total Revenue	10%	1(b)(B)
SEAS Free Cash Flow	10%	1(b)(C)
Individual Objectives	20%	1(b)(D)
Discretionary	10%	1(b)(E)
TOTAL	100%

* If a performance metric is part of a group of metrics, the Performance Component Weighting is

calculated by multiplying the weight of the individual sub-component times the weight for the total group of metrics. “ Discretionary ” and “ Individual Objectives ” are not subject to the Adjusted EBITDA Component threshold set forth in Section 1(c) of Exhibit A hereto but remain subject to the Structure Cost Goals set forth in Section 1(c) of Exhibit A .

* *

SeaWorld Entertainment, Inc. Participant ¹

________________________________ ________________________________
By: [ Insert Participant Name ]
Title:

¹	To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.

[ Signature Page to Restricted Stock Unit Award ]

RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
SeaWorld Entertainment, Inc.
2017 Omnibus INCENTIVE PLAN

Pursuant to the Restricted Stock Unit Grant Notice (the “ Grant Notice ”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Restricted Stock Unit Agreement (this “ Restricted Stock Unit Agreement ”) and the SeaWorld Entertainment, Inc. 2017 Omnibus Incentive Plan, as it may be amended and restated from time to time, (the “ Plan ”), SeaWorld Entertainment, Inc., a Delaware corporation, (the “ Company ”) and the Participant agree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.

1. Grant of Restricted Stock Units . Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Participant the number of Restricted Stock Units provided in the Grant Notice (with each Restricted Stock Unit representing, and deemed for bookkeeping purposes to be equivalent to, an unfunded, unsecured right to receive up to two shares of Common Stock). The Company may make one or more additional grants of Restricted Stock Units to the Participant under this Restricted Stock Unit Agreement by providing the Participant with a new Grant Notice, which may also include any terms and conditions differing from this Restricted Stock Unit Agreement to the extent provided therein. The Company reserves all rights with respect to the granting of additional Restricted Stock Units hereunder and makes no implied promise to grant additional Restricted Stock Units.

2. Vesting . Subject to the conditions contained herein and in the Plan, the Restricted Stock Units shall vest as provided in Exhibit A attached hereto.

3. Settlement of Restricted Stock Units . The provisions of Section 9(d)(ii) of the Plan are incorporated herein by reference and made a part hereof, provided that, any vested Restricted Stock Units shall be settled (i) in shares of Common Stock (i.e., up to two shares of Common Stock for each Restricted Stock Unit), or (ii) if, and only if, in excess of the Number of Restricted Stock Units (i.e., more than two shares of Common Stock for each Restricted Stock Unit) set forth on the Grant Notice, at the election of the Committee, in cash, in each case, as soon as reasonably practicable and, in any event, by the fifteenth day of the third month following the expiration of the applicable Restricted Period. With respect to any Restricted Stock Unit, the period of time on and prior to the Vesting Date (as defined in Exhibit A attached hereto) in which such Restricted Stock Unit is subject to vesting shall be its Restricted Period. Notwithstanding anything in this Restricted Stock Unit Agreement to the contrary, the Company shall have no obligation to issue or transfer any shares of Common Stock as contemplated by this Restricted Stock Unit Agreement unless and until such issuance or transfer complies with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares of Common Stock are listed for trading.

5. Company; Participant .

(a) The term “ Company ” as used in this Restricted Stock Unit Agreement with reference to employment shall include the Company and its Subsidiaries.

(b) Whenever the word “ Participant ” is used in any provision of this Restricted Stock Unit

Agreement under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom the Restricted Stock Units may be transferred by will or by the laws of descent and distribution, the word “ Participant ” shall be deemed to include such person or persons.

8. Tax Withholding . The provisions of Section 15(d) of the Plan are incorporated herein by reference and made a part hereof.

11. Binding Effect . This Restricted Stock Unit Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

12. Waiver and Amendments . Except as otherwise set forth in Section 14 of the Plan,

any waiver, alteration, amendment or modification of any of the terms of this Restricted Stock Unit Agreement shall be valid only if made in writing and signed by the parties hereto; provided, however , that any such waiver, alteration, amendment or modification is consented to on the Company’s behalf by the Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

13. Clawback/Repayment . This Restricted Stock Unit Agreement shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time and (ii) applicable law. In addition, if the Participant receives any amount in excess of what the Participant should have received under the terms of this Restricted Stock Unit Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant shall be required to repay any such excess amount to the Company.

14. Detrimental Activity . Notwithstanding anything to the contrary contained herein or in the Plan, if the Participant has engaged in or engages in any Detrimental Activity, as determined by the Committee, then the Committee may, in its sole discretion, take actions permitted under the Plan, including, but not limited to, (i) cancelling any and all Restricted Stock Units, or (ii) requiring that the Participant forfeit any gain realized on the vesting of the Restricted Stock Units and repay such gain to the Company.

15. Right to Offset . The provisions of Section 15(x) of the Plan are incorporated herein by reference and made a part hereof.

13. Governing Law . This Restricted Stock Unit Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Notwithstanding anything contained in this Restricted Stock Unit Agreement, the Grant Notice or the Plan to the contrary, if any suit or claim is instituted by the Participant or the Company relating to this Restricted Stock Unit Agreement, the Grant Notice or the Plan, the Participant hereby submits to the exclusive jurisdiction of and venue in the courts of Delaware. THE PARTICIPANT IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTICIPANT IN RESPECT OF THE PARTICIPANT’S RIGHTS OR OBLIGATIONS HEREUNDER.

14. Plan . The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Restricted Stock Unit Agreement (including the Grant Notice), the Plan shall govern and control.

15. Section 409A . It is intended that the Restricted Stock Units granted hereunder shall be exempt from Section 409A of the Code pursuant to the “short-term deferral” rule applicable to such section, as set forth in the regulations or other guidance published by the Internal Revenue Service thereunder.

Exhibit A

1. Vesting of Restricted Stock Units .

(a) The Performance Period shall mean the period from January 1, 2019 to December 31, 2019. Up to two shares of Common Stock per each Restricted Stock Unit provided on the Grant Notice will be eligible to be earned based on the performance metrics set forth on the Grant Notice. For each Restricted Stock Unit provided on the Grant Notice, a number of shares of Common Stock equal to one Restricted Stock Unit multiplied by the Total Earned Amount Percentage (as defined below, and at maximum, two shares per one Restricted Stock Unit) will be eligible to be earned based on the performance metrics set forth in the Grant Notice; provided that the actual payout as a percentage of the Number of Restricted Stock Units begins at 0% and increases indefinitely; provided that performance above 200% (i.e., the Total Earned Amount Percentage exceeds 200%) may, at the Committee’s election, result in payout in cash, rather than shares of Common Stock, for any achievement above 200%. The actual payout shall be determined pursuant to Section 1(b) below at the end of the Performance Period and the Earned Amount (as defined below) will be eligible to become vested pursuant to Section 1(c) below. The Adjusted EBITDA Component, the Total Revenue Component, the Free Cash Flow Component, Discretionary Component and/or the Individual Objectives Component as set forth on the Grant Notice shall collectively be referred to herein as the “ Performance Components ” and the applicable portion of the Number of Restricted Stock Units shall each be referred to herein as the applicable “ Performance Component Percentage ”.

(b) During the first 90 days of the Performance Period, the Committee will determine:

(A) Adjusted EBITDA Component . A projected Adjusted EBITDA target for the Performance Period (the “ Adjusted EBITDA Target ”). For purposes of this Exhibit A, the term “ Adjusted EBITDA ” shall mean the Adjusted EBITDA which is publicly disclosed in (or otherwise calculated in a manner consistent with) the Company’s earnings release for the applicable fiscal year during the Performance Period.

(B) Total Revenue Component . A projected Net Revenue for the Performance Period (the “ Revenue Target ”). For purposes of this Exhibit A, the term “ Net Revenue ” shall mean the Company’s or applicable park(s) net revenue, as reported in (or otherwise calculated in a manner consistent with) the Company’s Form 10-Ks and Form 10-Qs as filed with the U.S. Securities and Exchange Commission for the fiscal year during the Performance Period.

(C) Free Cash Flow Component . A projected Free Cash Flow target for the Performance Period (the “ Free Cash Flow Target ”). For purposes of this Exhibit A, the term “ Free Cash Flow ” shall mean Adjusted EBITDA – Capital Expenditures. For purposes of this Exhibit A , the term “ Capital Expenditures ” shall mean the Company’s capital expenditures, as reported in (or otherwise calculated in a manner consistent with) the Company’s Form 10-Ks and Form 10-Qs as filed with the U.S. Securities and Exchange Commission for the fiscal year during the Performance Period plus any capital expenditures accrued at the end of the Performance Period less any capital expenditures paid during the performance period that were accrued prior to the beginning of the Performance Period.

(D) Individual Objective Component . A projected Individual Objective target for the Performance Period (the “ Individual Objective Target ”). For purposes of this Exhibit A, the term “ Individual Objective ” shall be as determined by the Committee; provided that any payout shall be capped at 100% of the applicable Performance Component Percentage.

(E) Discretionary Component . The discretionary component shall be purely discretionary and determined by the Committee; provided that any payout shall be capped at 100% of the applicable Performance Component Percentage.

In connection with the foregoing, the Company’s Chief Financial Officer shall certify in writing to the Committee the Adjusted EBITDA, the Net Revenue, Free Cash Flow, Capital Expenditures and Individual Objective.

Following the completion of the Performance Period, the Committee will determine the “Actual Performance Percentage” for each Performance Component by calculating for the applicable Performance Component the percentage by which the Adjusted EBITDA, Net Revenue, Free Cash Flow and Individual Objective Component, as applicable, met or exceeded the Adjusted EBITDA Target, Revenue Target, Free Cash Flow Target and Individual Objective Target, respectively. The number of Restricted Stock Units that will be earned with respect to each Performance Component will be based on each percentage determined by applying the following calculation (each, an “ Earned Amount Percentage ”): (i) the “ Percentage of Restricted Stock Units Earned ” (right hand column) based on the achievement of the Actual Performance Percentage (left hand column) as set forth in the tables below multiplied by (ii) the applicable Performance Component Percentage (i.e., weighting) set forth in the table on the Grant Notice; provided, that, with respect to the Individual Objective Component and the Discretionary Component, the Percentage of Restricted Stock Units Earned will be determined by the Committee and range from 0% to 100% for each such Performance Component.


Actual Performance Percentage for the Adjusted EBITDA Component and Free Cash Flow Component*	Percentage of Restricted Stock Units Earned for the Adjusted EBITDA Component and Free Cash Flow Component
Actual Performance Percentage less than 87.5%	0%
Actual Performance Percentage greater than or equal to 87.5%	25%
Actual Performance Percentage greater than or equal to 91.7%	75%
Actual Performance Percentage greater than or equal to 100%	125%
Actual Performance Percentage equal to 110%	150%
Actual Performance Percentage equal to 120%	175%
Actual Performance Percentage equal to 130%	200%
Actual Performance Percentage greater than 130%	No maximum

* For an Actual Performance Percentage at least equal to 87.5% which falls in between the levels set forth in the table above, the Committee shall apply straight-line interpolation to determine the Earned Amount Percentage for the applicable Performance Component, provided that the Earned Amount Percentage shall increase indefinitely beyond 200% proportionally to the linear increase between 175% and 200%.


Actual Performance Percentage for the Total Revenue Component**	Percentage of Restricted Stock Units Earned for the Total Revenue Component
Actual Performance Percentage less than 95%	0%
Actual Performance Percentage greater than or equal to 95%	50%
Actual Performance Percentage greater than or equal to 98.5%	100%


Actual Performance Percentage greater than or equal to 100%	100%
Actual Performance Percentage equal to 105%	150%
Actual Performance Percentage equal to 110%	200%
Actual Performance Percentage greater than 110%	No maximum

** For an Actual Performance Percentage at least equal to 95% which falls in between the levels set forth in the table above, the Committee shall apply straight-line interpolation to determine the Earned Amount Percentage for the applicable Performance Component, provided that the Earned Amount Percentage shall increase indefinitely beyond 200% proportionally to the linear increase between 150% and 200%.

The sum of the Earned Amount Percentages for each Performance Component is referred to as the “ Total Earned Amount Percentage ” and when multiplied by the Number of Restricted Stock Units, it is referred to as the “ Total Earned Amount ”. A number of Restricted Stock Units equal to the Total Earned Amount will be eligible to vest pursuant to Section 1(c) below.

Example:

The following example is for illustrative purposes only and does not guarantee any level of performance or results. In addition, the Participant’s Performance Component Percentages may be different than the percentages noted below. The following assumes the Number of Restricted Stock Units equals 10.

Performance ComponentPerformance Component Percentage (i.e Weighting*)Percentage of Restricted Stock Units EarnedEarned Amount PercentagesSEAS Adjusted EBITDA50%100%50.00%SEAS Total Revenue10%150%15.00%SEAS Free Cash Flow10%125%12.50%Individual Objectives20%100%20.00%Discretionary10%100%10.00%Total:100%Total Earned Amount Percentage:107.50%

Total Earned Amount: Number of Restricted Stock Units (10) x 1.075 = 10.75 Restricted Stock Units/shares of Common Stock

(c) Provided the Participant has not undergone a Termination on or prior to the Vesting Date (as defined below), the number of Restricted Stock Units set forth immediately above shall vest and the restrictions on such Restricted Stock Units shall lapse on the date (the “ Vesting Date ”) the Committee determines the Actual Performance Percentages of the Performance Period and the Company publicly discloses the Adjusted EBITDA for the Performance Period in the Company’s earnings release which date shall not be later than March 15 in the year following the end of the Performance Period. Any remaining unvested Restricted Stock Units that do not become vested in accordance with preceding sentence (if any) shall immediately be forfeited by the Participant for no consideration as of the Vesting Date. Notwithstanding anything contained in this Restricted Stock Unit Agreement, the Grant Notice or the Plan to the contrary, (i) no Restricted Stock Units, other than with respect to the Individual Object Component and the Discretionary Component, shall vest in the event the Actual Performance Percentage for the Adjusted EBITDA Component is less than 87.5% and, in such event, all other

Restricted Stock Units shall immediately be forfeited to the Company by the Participant for no consideration as of the Vesting Date and (ii) the aggregate number of Restricted Stock Units that vest shall be reduced by twenty five (25%) to the extent the Structural Cost Goal is not achieved. For purposes of this Exhibit A, the term “ Structural Cost Goal ” shall mean a reduction in structural costs of the Company by $90,000,000 during the Performance Period, subject to fixed and variable cost pressures as determined by the Committee.

2. Treatment of Restricted Stock Units Upon Termination .

Except as otherwise set forth in any applicable employment agreement or severance plan or agreement, in the Event of Participant’s Termination for any reason on or prior to the Vesting Date, all unvested Restricted Stock Units shall be forfeited by the Participant for no consideration as of the date of such Termination.

Exhibit 10.4

RE: Offer Letter of Employment

Dear Walter:

This letter confirms the offer of employment made to you for the position of Chief Strategy Officer of SeaWorld Entertainment, Inc. (the “Company”).  The purpose of this offer letter (“Letter Agreement”) is to describe the general terms and conditions of your employment with the Company.  If you accept this offer, your employment with the Company will begin on June 18, 2018 (“Start Date”), and you will work at the Company’s headquarters located at 9205 South Park Center Loop, Orlando, Florida.  You will report directly to the Chief Executive Officer.

Base Salary
Your annualized base salary will be $350,000.00, less applicable taxes, deductions and withholdings, paid semi-monthly in accordance with the Company’s regular payroll practices.  Your base salary is intended to compensate you for all hours worked and is subject to annual review.  The Company’s regularly scheduled pay days are the 15 ^th and the last day of the month.

Annual Incentive Bonus Plan
If you decide to join us, you will be eligible to participate in the annual incentive bonus plan, as adopted by the Company from time to time (“Annual Bonus Plan”), with a target annual incentive bonus of 80% of your base salary, less applicable taxes, deductions and withholdings, payable in case and/or stock in the Company’s sole discretion.  Any payments made to you for bonus year 2018 will be pro-rated based on your Start Date.  Target incentives do not constitute a promise of payment.   Any actual bonus paid will be subject to the terms and conditions of the Annual Bonus Plan and contingent upon the level of achievement of Company performance objectives as established by the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) for such fiscal year and, to the extent applicable, the assessment of your individual performance goals for such fiscal year.  To qualify for an incentive bonus, you must remain continuously employed by the Company through the date that the incentive bonus is paid.

Initial One-Time Equity Award
On the Start Date, subject to Compensation Committee approval, you will receive an initial equity award.  This award will consist of a number of Performance Share Units (“PSUs”) equal to $1 million in value and a number of Restricted Share Units (“RSUs”) with a value equal to $2.25 million.   The actual number of PSUs and RSUs will be determined by taking the value of each respective grant and dividing it by the average closing price of SEAS stock during the ten (10) trading days immediately prior to but not including the Start Date, which will be the effective date of each of the grants.  The PSUs vest if SEA achieves its 2018 LTI goal of $500 million Adjusted EBITDA in 2020, subject to your continued employment.  The RSUs shall vest in three equal annual installments over the first three anniversaries of the date of grant so long as you remain employed by the Company through such dates.  The terms will be outlined in greater detail in your definitive binding grant agreements.

Subsequent Participation in the Company’s Long-Term Equity Incentive Plan
Your eligibility to participate in the long-term equity incentive plan, as adopted by the Company from time to time, will commence with the performance cycle that begins in 2019. It is anticipated that a new performance cycle will begin each year in January. Your target annual opportunity under the long-term incentive plan is 150 % of your base salary, subject to vesting and other terms and conditions of both the Company's standard stock award agreement and the Company's equity incentive plan (more detail to be provided to you).

Relocation Assistance
To assist with your relocation to the Orlando area and any associated expenses, you will receive a one-time lump sum cash payment of $25,000, less any applicable taxes, deductions and withholdings, payable within 30 days of your Start Date. Other than the lump sum payment referenced above, no additional relocation assistance will be provided.

Severance
As a senior leader of the Company, you will be eligible to receive severance benefits comparable to other executives at your level under the Company’s Key Employee Severance Plan, as in effect from time to time (the “Plan”) (more

detail to be provided to you) . The Company reserves the right to terminate or amend the Plan at any time.

Health & Welfare Benefits
The Company provides a very competitive benefits package for eligible employees. Eligible employees may participate in the Company’s health insurance benefits (medical, dental and vision), life insurance, short - term and long - term disability, 401(k) Plan, and the Flexible Spending Plan (Healthcare Reimbursement Account and/or Dependent Care Reimbursement Account). Please refer to plan documents for eligibility. The Company reserves the right to eliminate or modify its benefits at any time .

Vacation
On the Start Date, you will receive two (2) weeks (or 10 days) of paid vacation, immediately available for use in accordance with the Company’s Vacation Policy. On January 1, 2019, and on January 1 of each subsequent year of employment, you will be eligible to receive annual grants of paid vacation in accordance with the eligibility schedule contained in the Company’s Vacation Policy (H.R. 0150).

Business Expenses

The Company will reimburse you for all actual, necessary and reasonable business expenses you incur in the course of the Company’s business in accordance with the Company’s expense policies, as in effect from time to time.

Proprietary Agreement and No Conflict with Prior Agreement

During the course of your employment, it is likely that you will become knowledgeable about confidential and/or proprietary information related to the operations, products and services of the Company and its affiliates. Similarly, you may have confidential or proprietary information from prior employers that should not be used or disclosed to anyone at the Company. Therefore, you will be required to read, complete, and sign the Company’s standard Intellectual Property & Confidentiality Agreement. In addition, the Company insists that you comply with any existing and/or continuing contractual obligations that you may have with your former employers. By signing this Letter Agreement, you represent that your employment with the Company shall not breach any agreement you have with any third party.

Obligations

During your employment, you must devote your full business efforts and time to the Company. This obligation, however, will not preclude your from engaging in appropriate civic, charitable or religious activities or, with the consent of the Company’s Board of Directors, from serving on the boards of directors of companies that are not competitors to the Company as long as the activities do not materially interfere or conflict with your responsibilities to or your ability to perform your duties of employment at the Company. Any outside activities must be in compliance with and approved if required by the Company’s Code of Business Conduct and Ethics or its Corporate Governance Guidelines.

Employment At-Will

No provision of this Letter Agreement will be construed to create an express or implied employment contract or promise of employment for any specific period of time. Your employment with the Company is at-will and may be terminated by you or the Company at any time for any reason (or for no reason) with or without advanced notice, subject to your eligibility for severance payments under the Key Employee Severance Plan, as in effect from time to time.

Internal Company Policies

The Company is committed to providing a positive work environment and conducting business ethically. During your employment with the Company, you will be expected to abide by all of the Company’s internal policies and procedures, including, but not limited to, the Company’s Code of Business Conduct and Ethics and its Corporate Governance Guidelines, and to conduct your business activities at all times with the highest legal, ethical and professional standards.

Entire Agreement

This Letter Agreement and the referenced documents and agreements constitute the entire agreement between you and The Company with respect to the subject matter hereof and supersede any and all prior or contemporaneous oral

or written representations, understandings, agreements, or communications between you and the Company concerning those matters.

Pre-Employment Screening Contingencies
This Letter Agreement is contingent upon your successful completion of our pre-employment checks, which may include a criminal background screen and reference check. In addition, on or prior to your Start Date you will be required to provide the Company with appropriate documentation to verify your work authorization to work in the United States. The Company cannot employ anyone who cannot provide documentation showing that they are legally authorized to work in the United States.

Disputes and Arbitration

The Company uses a Dispute Resolution Program ("DRP") for all employment-related disputes, the last step of which is final and binding arbitration. The DRP will be a term and condition of your employment and your exclusive remedy for any employment claims you may have. By accepting employment with the Company you agree to submit all claims to the DRP.

Counterparts

This Offer Letter may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

Governing Law; Waiver of Jury Trial

THIS LETTER AGREEMENT IS GOVERNED BY AND IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF FLORIDA WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS. THIS LETTER AGREEMENT CONTRAINS A BINDING ARBITRATION CLAUSE. EACH PARTY TO THIS LETTER AGREEMENT ALSO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THIS LETTER AGREEMENT.

We look forward to having you join our team! Please indicate your acceptance of this offer by signing where indicated below and returning an executed copy of this Letter Agreement to me at your earliest convenience.

Sincerely,

/s/ John Reilly

John Reilly

Interim Chief Executive Officer

Agreed and Accepted this 2nd day of June, 2018.

_/s/ Walter Bogumil _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Walter Bogumil

Exhibit 10.5

RESTRICTED STOCK UNIT GRANT NOTICE
UNDER THE
SeaWorld Entertainment, Inc.
2017 OMNIBUS INCENTIVE PLAN

(Chief Executive Officer – Time-Based Restricted Stock Units)

SeaWorld Entertainment, Inc., a Delaware corporation (the “ Company ”), pursuant to its 2017 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “ Plan ”), hereby grants to the Participant set forth below, the number of Restricted Stock Units set forth below. The Restricted Stock Units are subject to all of the terms and conditions as set forth herein, in the Restricted Stock Unit Agreement (attached hereto or previously provided to the Participant in connection with a prior grant), and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Participant :

Gustavo Antorcha

Date of Grant :

March 14, 2019

Number of

Restricted Stock Units :

38,389

Vesting Schedule :

Provided the Participant has not undergone a Termination prior to each applicable vesting date, 1/3 of the Restricted Stock Units shall vest, on each of the first three anniversaries of the Date of Grant.

* **

SeaWorld Entertainment, Inc. Participant

/s/Kathleen Liever /s/Gustavo Antorcha
By: Kathleen LieverGustavo Antorcha
Title: Senior Vice President, Human Resources

[ Signature Page to Restricted Stock Unit Award ]

RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
SeaWorld Entertainment, Inc.
2017 Omnibus INCENTIVE PLAN

Pursuant to the Restricted Stock Unit Grant Notice (the “ Grant Notice ”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Restricted Stock Unit Agreement (this “ Restricted Stock Unit Agreement ”) and the SeaWorld Entertainment, Inc. 2017 Omnibus Incentive Plan, as it may be amended and restated from time to time (the “ Plan ”), SeaWorld Entertainment, Inc., a Delaware corporation, (the “ Company ”) and the Participant agree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.

2. Vesting . Subject to the conditions contained herein and in the Plan, the Restricted Stock Units shall vest as provided in the Grant Notice.

3. Settlement of Restricted Stock Units . The provisions of Section 9(d)(ii) of the Plan are incorporated herein by reference and made a part hereof and, in accordance therewith, any vested Restricted Stock Units shall be settled in shares of Common Stock as soon as reasonably practicable (and, in any event, within two and one-half months) following the expiration of the applicable Restricted Period. With respect to any Restricted Stock Unit, the period of time on and prior to the applicable vesting date in which such Restricted Stock Unit is subject to vesting shall be its Restricted Period. Notwithstanding anything in this Restricted Stock Unit Agreement to the contrary, the Company shall have no obligation to issue or transfer any shares of Common Stock as contemplated by this Restricted Stock Unit Agreement unless and until such issuance or transfer complies with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares of Common Stock are listed for trading.

4. Treatment of Restricted Stock Units Upon Termination .

(a) The provisions of Section 9(b) of the Plan are incorporated herein by reference and made a part hereof. In the event of the Participant’s Termination (A) by the Company other than for Cause or by the Participant for Good Reason (as defined in that certain Executive Employment Agreement between the Participant and the Company dated as of February 4, 2019, as may be amended from time to time), the outstanding Restricted Stock Units shall become fully vested and the restrictions thereon shall immediately lapse as of the date of such Termination or (B) due to death or Disability a number of Restricted Stock Units equal to (x) the number of Restricted Stock Units subject to the Grant Notice that would have vested on the next vesting date as if there was no Termination multiplied by (y) a fraction (i) the numerator of which is the number of days elapsed from the last vesting date (or Date of Grant, if no vesting date has occurred) through the date of such Termination and (ii) the denominator of which is 365 (or 366, as applicable) (rounded up to the nearest whole number), shall vest and the restrictions thereon shall immediately laps as of the date of such Termination.

(b) If the Participant undergoes a Termination other than under circumstances described in Section 4(a), then all unvested shares of Restricted Stock Units shall be forfeited to the Company by the Participant for no consideration as of the date of such Termination.

5. Company; Participant .

(a) The term “ Company ” as used in this Restricted Stock Unit Agreement with reference to employment shall include the Company and its Subsidiaries.

(b) Whenever the word “ Participant ” is used in any provision of this Restricted Stock Unit Agreement under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom the Restricted Stock Units may be transferred by will or by the laws of descent and distribution, the word “ Participant ” shall be deemed to include such person or persons.

(c) The term “Qualified Retirement” as used in this Restricted Stock Unit Agreement shall mean the Participant undergoes a Termination (other than when grounds existed for a termination for Cause at the time thereof) when the Participant is at least age 55 with a combination of age and service years with the Company of at least 65.

8. Tax Withholding . The provisions of Section 15(d) of the Plan are incorporated herein by reference and made a part hereof.

Secretary, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.

11. Binding Effect . This Restricted Stock Unit Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

12. Waiver and Amendments . Except as otherwise set forth in Section 14 of the Plan, any waiver, alteration, amendment or modification of any of the terms of this Restricted Stock Unit Agreement shall be valid only if made in writing and signed by the parties hereto; provided, however , that any such waiver, alteration, amendment or modification is consented to on the Company’s behalf by the Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

14. Restrictive Covenants; Detrimental Activity .

(b) Notwithstanding anything to the contrary contained herein or in the Plan, if the Participant has engaged in or engages in any Detrimental Activity, as determined by the Committee (including, without limitation, a breach of any of the covenants contained in Appendix A to this Restricted Stock Unit Agreement), then the Committee may, in its sole discretion, take actions permitted under the Plan, including, but not limited to: (i) cancelling any and all Restricted Stock Units, or (ii) requiring that the Participant forfeit any gain realized on the vesting of the Restricted Stock Units, and repay such gain to the Company.

15. Right to Offset . The provisions of Section 15(x) of the Plan are incorporated herein by reference and made a part hereof.

16. Governing Law . This Restricted Stock Unit Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Notwithstanding anything contained in this Restricted Stock Unit Agreement, the Grant Notice or the Plan to the contrary, if any suit or claim is instituted by the Participant or the Company relating to this Restricted Stock Unit Agreement, the Grant Notice or the Plan, the Participant hereby submits to the exclusive jurisdiction of and venue in the courts of Delaware. THE PARTICIPANT IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTICIPANT IN RESPECT OF THE PARTICIPANT’S RIGHTS OR OBLIGATIONS HEREUNDER.

Appendix A

Restrictive Covenants

Non-Competition; Non-Solicitation; Non-Disparagement .

(a) Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:

(ii) During the Restricted Period, Participant will not directly or indirectly:

(B) enter the employ of, or render any services to, a Core Competitor, except where such employment or services do not relate in any manner to the Business;

(iv) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:

(A) solicit or encourage any employee of the Restricted Group to leave the employment of the Restricted Group;

A-1

(ii) For purposes of this Appendix A:

(A) “ Restricted Group ” shall mean, collectively, the Company and its Subsidiaries and, to the extent engaged in the Business, their respective Affiliates.

(B) “ Business ” shall mean, collectively, the location-based entertainment business and the entertainment and theme park business.

(b) Non-Disparagement . Participant will not at any time (whether during or after Participant’s Employment Term) make public or private statements or public or private comments intended to be (or having the effect of being) of defamatory or disparaging nature regarding (including, without limitation, any statements or comments, whether in person, radio, television, film, social media or otherwise, that are (i) likely to be harmful to the business, business reputation or personal reputation of and (ii) for, on behalf of or in association with any trade, industry, activist or other advocacy group that has, at any time, made adverse or critical statements in relation to) the Company or any of its Subsidiaries or Affiliates or any of their respective businesses, shareholders, members, partners, employees, agents, officers, directors or contractors (it being understood that comments made in Participant’s good faith performance of Participant’s duties hereunder shall not be deemed disparaging or defamatory for purposes of this paragraph). Notwithstanding anything in this section 1(c), the Participant shall be permitted to (x) provide a reasonable and truthful response to or statement to defend Participant against any public statement made by the Company that is incorrect or disparages such person, to the extent necessary to correct or refute such public statement and (y) provide truthful testimony in any legal proceeding or process.

A-2

(f) The provisions of Section 1(a)(i), (ii), (iii) and (iv)(B) hereof shall not apply if Participant’s principal place of employment is in the state of California.

2. Confidentiality; Intellectual Property .

(a) Confidentiality .

A-3

Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.

(b) Intellectual Property .

(ii) If Participant creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Participant’s employment by the Company and within the scope of such employment and with the use of any the Company resources (“ Company Works ”), Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and

A-4

related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.

(v) The provisions of Section 2 hereof shall survive the termination of Participant’s employment for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).

A-5

Exhibit 10.6

Performance STOCK UNIT GRANT NOTICE
UNDER THE
SeaWorld Entertainment, Inc.
2017 OMNIBUS INCENTIVE PLAN

(Chief Executive Officer – Performance-Based Restricted Stock Units)

Participant :

Gustavo Antorcha

Date of Grant :

March 14, 2019

Performance Period:

Number of

Restricted Stock Units :

287,924

Vesting Schedule :

The Restricted Stock Units shall vest at such times and in such amounts as set forth in Exhibit A to the Restricted Stock Unit Agreement.

* **

SeaWorld Entertainment, Inc. Participant

/s/Kathleen Liever /s/ Gustavo Antorcha
By: Kathleen LieverGustavo Antorcha
Title: Senior Vice President, Human Resources

RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
SeaWorld Entertainment, Inc.
2017 Omnibus INCENTIVE PLAN

2. Vesting . Subject to the conditions contained herein and in the Plan, the Restricted Stock Units shall vest as provided in Exhibit A attached hereto.

5. Company; Participant .

(a) The term “Company” as used in this Restricted Stock Unit Agreement with reference to employment shall include the Company and its Subsidiaries.

or persons.

8. Tax Withholding . The provisions of Section 15(d) of the Plan are incorporated herein by reference and made a part hereof.

11. Binding Effect . This Restricted Stock Unit Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

14. Restrictive Covenants; Detrimental Activity .

15. Right to Offset . The provisions of Section 15(x) of the Plan are incorporated herein by reference and made a part hereof.

IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTICIPANT IN RESPECT OF THE PARTICIPANT’S RIGHTS OR OBLIGATIONS HEREUNDER.

Exhibit A

1. Vesting of Restricted Stock Units .

(a) Definitions .

(i)

The “ Adjusted EBITDA ” shall mean the Adjusted EBITDA which is publicly disclosed in (or otherwise calculated in a manner consistent with) the Company’s earnings release for the applicable fiscal year or as otherwise determined by the Compensation Committee of the Board.

(ii)

The “ Adjusted EBITDA Target ” shall mean an Adjusted EBITDA target for the Performance Period, determined by the Committee during the first 90 days of the Performance Period.

(iii)

The “ Adjusted EBITDA Threshold ” shall mean an Adjusted EBITDA threshold for the Performance Period, determined by the Committee during the first 90 days of the Performance Period.

(iv)

The “ Base Period NOPAT ” means NOPAT for the year immediately preceding the beginning of the Performance Period.

(v)

The “ Cumulative Cash CAPEX ” means the aggregate “Cash Capital” expenditures as reported on the Company’s Statement of Cash Flows during the Performance Period and Extended Performance Period, as applicable.

(vi)

The “ Cumulative NOPAT ” means the aggregate NOPAT during the Performance Period and Extended Performance Period, as applicable.

(vii)

The “ Depreciation & Amortization ” means as defined by U.S. GAAP and reported on the Company’s Income Statement (NOPAT components will be adjusted for non-cash gains or losses of an unusual or infrequent type).

(viii)

The “NOPAT” means Adjusted EBITDA less Depreciation & Amortization (both NOPAT components will be adjusted for non-cash gains or losses of an unusual or infrequent type).

(ix)

The “Number of Restricted Stock Units” provided on the Grant Notice will be eligible to be earned based on the following performance metrics: 75% Adjusted EBITDA Component (as set forth in Section 1(b)(A) below); and 25% ROIC Component and shall herein be referred to as the “ Restricted Stock Units ”.

(x)

The “ ROIC Multiple ” shall mean 100% if the ROIC Target is achieved and 75% if the ROIC Target is not achieved, in each case, for the period beginning on the first day of the Performance Period through the applicable Vesting Date.

(xi)

The “ ROIC Target ” shall mean a projected ROIC target for the Performance Period and Extended Performance Period, as applicable, determined by the Committee in the first 90 days of the Performance Period. For purposes of this Exhibit A, the term “ROIC” means the Company’s return on invested capital over the Performance Period and Extended Performance Period, as applicable,

Appendix A – 1

calculated as follows:

(Cumulative NOPAT – (Base Period NOPAT * 3))

Cumulative Cash CAPEX

(xii)

The “ Vesting Date ” shall mean each of the dates the Company publicly discloses the Adjusted EBITDA in the Company’s earnings release for each of the 2019, 2020, 2021 and 2022 fiscal years, which date shall not be later than March 15 in the year following the end of the applicable fiscal year.

(b) Vesting and EBITDA Targets . Subject to Section 2 of this Exhibit A and provided the Participant has not undergone a Termination on or prior to the applicable Vesting Date:

Notwithstanding the foregoing:

(i) in no event will the aggregate vesting pursuant to clauses (A)(x), (A)(y) and (B)(x) above result in vesting of more than fifty percent (50%) of the Restricted Stock Units; and

Appendix A – 2

2. Treatment of Restricted Stock Units Upon a Change in Control .

(a) Notwithstanding Section 1 of this Exhibit A , in the event (x) of a Change in Control that occurs during the Participant’s employment and prior to the end of the Performance Period or Extended Performance Period, as applicable, and (y) the Board determines, in its sole discretion after consultation with Participant, that the Company is on track (as of a date prior to the Change in Control) to achieve either the Adjusted EBITDA Threshold or the Adjusted EBITDA Target for the year of such Change in Control (subject to the ROIC Multiple, as determined by the Board in good faith), the Board shall vest (and the restrictions thereon shall immediately lapse), to the extent outstanding and unvested at such time, at least a number of unvested Restricted Stock Units equal to the Specified Number (as defined below) on the date of the Change in Control, solely based on Participant’s continued employment with the Company through such Change in Control (and without regard to the conditions set forth in Section 1 of this Exhibit A ). Any remaining unvested Restricted Stock Units that do not become vested pursuant to the preceding sentence (if any) shall immediately be forfeited to the Company by the Participant for no consideration as of the Change in Control unless otherwise determined by the Committee.

(b) For purposes of this Exhibit A , the term “ Specified Number ” shall mean a pro-rata portion equal to (x) the number of Restricted Stock Units that would have been earned at the end of the fiscal year in which a Change in Control occurs, in accordance with Section 1 of this Exhibit A , based solely on the Board’s determination of performance as set forth in Section 2(a) of this Exhibit A , multiplied by (y) a fraction (i) the numerator of which is the number of days elapsed in the applicable fiscal year through the date of the Change in Control and (ii) the denominator of which is 365 (or 366, as applicable).

3. Treatment of Restricted Stock Units Upon Certain Termination .

(a) In the event of Participant’s Termination for any reason on or prior to the Vesting Date other than under circumstances described in Section 3(b) of this Exhibit A , all unvested Restricted Stock Units shall be forfeited by the Participant for no consideration as of the date of such Termination.

(b) Notwithstanding anything to the contrary in Section 9 of the Plan,

(A) in the event of (i) Participant’s Termination by the Company other than for Cause (or due to death or Disability) or (ii) Participant’s Termination by the Participant for Good Reason (if, and as, such term is defined in any employment agreement between the Participant and the Company in place as of the date of such Termination), in each case, in the second half of any fiscal year that occurs prior to the last day of the Performance Period or the Extended Performance Period, as applicable, to the extent outstanding and unvested at such time, a number of Restricted Stock Units (if any) equal to (x) the actual number of Restricted Stock Units that would have been earned at the end of the fiscal year in which such Termination occurs, in accordance with Section 1 of this Exhibit A , as if Participant was still employed, multiplied by (y) a fraction (A) the numerator of which is the number of days elapsed in the applicable fiscal year through the date of such Termination and (B) the denominator of which is 365 (or 366, as applicable) (rounded up to the nearest whole number), shall vest (and the restrictions thereon shall immediately lapse) as of the next applicable Vesting Date. Any remaining unvested Restricted Stock Units that do not become vested pursuant to the preceding sentence (if any) shall immediately be forfeited by the Participant for no consideration as of the date of such Vesting Date referenced in the preceding sentence.

Appendix A – 3

(B) in the event of the Participant’s Termination due to death or Disability on or prior to the last day of the Performance Period or the Extended Performance Period, as applicable, to the extent outstanding and unvested at such time, a number of Restricted Stock Units equal to (i) the product of (x) the D&D Specified Number (as defined below) multiplied by (y) a fraction, the numerator of which is equal to the number of completed months that have elapsed in the Performance Period (and Extended Performance Period, as applicable) through and including the date of such Termination and the denominator of which is equal to 36 (or 48, to the extent any Restricted Stock Units are eligible to vest during such Extended Performance Period based on actual performance), (rounded up to the nearest whole number) less (ii) the number of Restricted Stock Units vested prior to the Participant’s Termination, shall vest (and the restrictions thereon shall immediately lapse) as of the last possible Vesting Date, in accordance with Section 1 above. Any remaining unvested Restricted Stock Units that do not become vested pursuant to the preceding sentence (if any) shall immediately be forfeited by the Participant for no consideration as of the last possible Vesting Day, in accordance with Section 1 above. For purposes of this paragraph, the term “D&D Specified Number” shall mean the aggregate number of Restricted Stock Units that would have vested (or did vest prior to the Termination) in accordance with Section 1 of this Exhibit A if the Termination was on or following the end of the Performance Period or Extended Performance Period, as applicable. For the avoidance of doubt, any such award which vests under this Section 3(b) will be settled in accordance with Section 3 of the Restricted Stock Unit Agreement following the last possible Vesting Date.

Appendix A – 4

Appendix A

Restrictive Covenants

Non-Competition; Non-Solicitation; Non-Disparagement .

(a) Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:

(ii) During the Restricted Period, Participant will not directly or indirectly:

(B) enter the employ of, or render any services to, a Core Competitor, except where such employment or services do not relate in any manner to the Business;

(iv) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:

(A) solicit or encourage any employee of the Restricted Group to leave the employment of the Restricted Group;

Appendix A – 5

(ii) For purposes of this Appendix A:

(A) “ Restricted Group ” shall mean, collectively, the Company and its Subsidiaries and, to the extent engaged in the Business, their respective Affiliates.

(B) “ Business ” shall mean, collectively, the location-based entertainment business and the entertainment and theme park business.

Appendix A – 6

(f) The provisions of Section 1(a)(i), (ii), (iii) and (iv)(B) hereof shall not apply if Participant’s principal place of employment is in the state of California.

2. Confidentiality; Intellectual Property .

(a) Confidentiality .

Appendix A – 7

(b) Intellectual Property .

Appendix A – 8

related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.

(v) The provisions of Section 2 hereof shall survive the termination of Participant’s employment for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).

Appendix A – 9

Exhibit 10.7

OPTION GRANT NOTICE
UNDER THE
SeaWorld Entertainment, Inc.
2017 OMNIBUS INCENTIVE PLAN
(Chief Executive Officer – Time-Based Options)

Participant :

Gustavo Antorcha

Date of Grant :

March 14, 2019

Number of Options :

115,169

Exercise Price :

$25.70

Option Period Expiration Date :

Ten (10) years from the Date of Grant.

Type of Option :

Nonqualified Stock Option

Vesting Schedule :

Provided the Participant has not undergone a Termination at the time of the vesting date (or event), 100% of the Options will vest on the third anniversary of the Date of Grant (the “ Vesting Date ”), or, if earlier, (x) on the date of determination of the Company’s achievement of at least the Adjusted EBITDA Target (as defined and determined in accordance with the Participant’s Performance-Based Restricted Stock Units award agreement granted on or about the Date of Grant)with respect to any fiscal year completed prior to the Vesting Date or (y) upon a Change in Control.

* **

SeaWorld Entertainment, Inc. Participant

/s/ Kathleen Liever /s/ Gustavo Antorcha
By: Kathleen LieverGustavo Antorcha
Title: Senior Vice President, Human Resources

OPTION AGREEMENT
UNDER THE
SeaWorld Entertainment, Inc.
2017 OMNIBUS INCENTIVE PLAN

2. Vesting . Subject to the conditions contained herein and in the Plan, the Options shall vest as provided in the Grant Notice.

3. Exercise of Options Following Termination . The provisions of Section 7(c)(ii) of the Plan are incorporated herein by reference and made a part hereof. In the event of (A) the Participant’s Termination by the Company for Cause, all outstanding Options shall immediately terminate and expire, (B) the Participant’s Termination due to death or Disability a number of Options equal to (x) the actual number of Options subject to the Grant Notice multiplied by (y) a fraction (i) the numerator of which is the number of completed months elapsed from the Date of Grant through the date of such Termination and (ii) the denominator of which is 36 (rounded up to the nearest whole number), shall vest, and each outstanding vested Option shall remain exercisable for one (1) year thereafter (but in no event beyond the expiration of the Option Period) and (C) the Participant’s Termination for any other reason each outstanding unvested Option shall immediately terminate and expire, and each outstanding vested Option shall remain exercisable for ninety (90) days thereafter (but in no event beyond the expiration of the Option Period).

communicated to the Participant by the Company from time to time. Payment of the aggregate Exercise Price may be made using any of the methods described in Section 7(d)(i) or (ii) of the Plan; provided , that the Participant shall obtain written consent from the Committee prior to the use of the method described in Section 7(d)(ii)(A) of the Plan.

6. Company; Participant .

(a) The term “Company” as used in this Option Agreement with reference to employment shall include the Company and its Subsidiaries.

9. Tax Withholding . The provisions of Section 15(d) of the Plan are incorporated herein by reference and made a part hereof.

communications by the Participant to the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Corporate Secretary, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.

11. No Right to Continued Service . This Option Agreement does not confer upon the Participant any right to continue as an employee or service provider to the Company.

12. Binding Effect . This Option Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

15. Restrictive Covenants; Clawback/Forfeiture .

restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Notwithstanding the foregoing and Appendix A , the provisions of Section 1(a)(i), (ii), (iii) and (iv)(B) of Appendix A shall not apply to the Participant if Participant’s principal place of employment is located in the State of California. The Options granted (and the shares that may be issued upon exercise of the Options) hereunder shall be subject to Participant’s continued compliance with such restrictions. For the avoidance of doubt, the Restrictive Covenants contained in this Option Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.

(b) Notwithstanding anything to the contrary contained herein or in the Plan, if the Participant has engaged in or engages in any Detrimental Activity, as determined by the Committee (including, without limitation, a breach of any of the covenants contained in Appendix A to this Option Agreement), then the Committee may, in its sole discretion, take actions permitted under the Plan, including: (i) cancel the Options, or (ii) require that the Participant forfeit any gain realized on the exercise of the Options, and repay such gain to the Company.

16. Right to Offset . The provisions of Section 15(x) of the Plan are incorporated herein by reference and made a part hereof.

Appendix A

Restrictive Covenants

Non-Competition; Non-Solicitation; Non-Disparagement .

(a) Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:

(ii) During the Restricted Period, Participant will not directly or indirectly:

(B) enter the employ of, or render any services to, a Core Competitor, except where such employment or services do not relate in any manner to the Business;

(iv) During the Restricted Period, Participant will not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:

(A) solicit or encourage any employee of the Restricted Group to leave the employment of the Restricted Group;

(ii) For purposes of this Appendix A:

(A) “ Restricted Group ” shall mean, collectively, the Company and its Subsidiaries and, to the extent engaged in the Business, their respective Affiliates.

(B) “ Business ” shall mean, collectively, the location-based entertainment business and the entertainment and theme park business.

(f) The provisions of Section 1(a)(i), (ii), (iii) and (iv)(B) hereof shall not apply if Participant’s principal place of employment is in the state of California.

2. Confidentiality; Intellectual Property .

(a) Confidentiality .

(iii) Except as required by law, Participant will not disclose to anyone, other than Participant’s family (it being understood that, in this Option Agreement, the term “family” refers to Participant, Participant’s spouse, children, parents and spouse’s parents) and advisors, the existence or contents of this Option Agreement; provided that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Option Agreement (or, if the Company publicly discloses summaries or excerpts of this Option Agreement, to the extent so disclosed).

memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.

(v) Nothing in this Option Agreement shall prohibit or impede Participant from communicating, cooperating, or filing a complaint with any U.S. federal, state, or local governmental or law enforcement branch, agency, or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state, or local law or regulation, or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation, provided that in each case such communications and disclosures are consistent with applicable law. Participant understands and acknowledges that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Participant understands and acknowledges further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. Moreover, Participant is not required to give prior notice to (or get prior authorization from) the Company regarding any such communication or disclosure. Notwithstanding the foregoing, under no circumstance will Participant be authorized to disclose any information covered by attorney-client privilege or attorney work product of any member of the Company Group without prior written consent of Company’s General Counsel or other officer designated by the Company.

(b) Intellectual Property .

(v) The provisions of Section 2 hereof shall survive the termination of Participant’s employment for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).

Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Gustavo (“Gus”) Antorcha, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 of SeaWorld Entertainment, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2019	Signature:	/s/ Gustavo (“Gus”) Antorcha
		Gustavo (“Gus”) Antorcha
		Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Marc G. Swanson, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 of SeaWorld Entertainment, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2019	Signature:	/s/ Marc G. Swanson
		Marc G. Swanson
		Chief Financial Officer
		(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SeaWorld Entertainment, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gustavo (“Gus”) Antorcha, Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: May 8, 2019

/s/ Gustavo (“Gus”) Antorcha

Gustavo (“Gus”) Antorcha

Chief Executive Officer

(Principal Executive Officer )

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SeaWorld Entertainment, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marc G. Swanson, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: May 8, 2019

/s/ Marc G. Swanson

Marc G. Swanson

Chief Financial Officer

(Principal Financial Officer)