Seaworld Entertainment’S New President and Chief Executive OCer
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® To Our Shareholders It is an honor to write my first shareholder letter as SeaWorld Entertainment’s new President and Chief Executive Ocer. I have worked in the theme park business for nearly 20 years, so I know how great this Company is, and it is a privilege to lead this team. We operate some of the industry’s best theme parks. Our operations, animal care and guest service are world-class. And, just as they have for more than 50 years, millions of guests continue to visit our parks every year, not only to have fun, but to learn about and connect with our animals and the natural world we share. My job now is to build on that foundation while consistently improving and innovating in a competitive environment. I look forward to leading our outstanding team as we build on our strategy and position the Company for the future. Clearly, 2014 did not meet our expectations and was not without its challenges. Despite these head- winds, I know that our entire team continues to focus on creating personal, educational and memorable experiences that appeal to our guests. In 2014, we paid more than $72 million in dividends and repurchased $66 million of our own stock. In fact, since the initial public oering two years ago, SeaWorld Entertainment, Inc. has delivered more than $200 million in value to our shareholders through dividends and share repurchases. Furthermore, under our current Board authorization, we have $235 million available for future share repurchases. In the fourth quarter, we saw early signs of progress with a sequential improvement in attendance trends from the previous quarter. As we move into 2015, we have launched our new national marketing and reputation campaigns. We remain vigilant in our support of the SeaWorld brands, communicating the facts, which are on our side. At our parks, we will continue to introduce innovative new attractions and exciting new events – experiences I believe our guests will love. With the early signs of improvement in business trends, our new marketing and reputation initiatives and great new guest experiences and attractions, we feel a sense of momentum. We look forward to building on it as 2015 progresses. Sincerely, Joel Manby, President and Chief Executive Ocer Our parks... Over our more than 50-year history, we have built a diversified portfolio of 11 destination and regional theme parks that are grouped in key markets across the United States, many of which showcase our one-of-a-kind zoological collection of approximately 89,000 marine and terrestrial animals. Our theme parks feature a diverse array of rides, shows and other attractions with broad demographic appeal, which deliver memorable experiences and a strong value proposition for our guests. Our commitment... Caring for our community and the natural world we share is a core part of our corporate identity and resonates with our guests. As one of the world’s foremost zoological organizations and a global leader in animal welfare, training, husbandry and veterinary care, we are committed to helping protect and preserve the environment. In collaboration with the government and other members of accredited stranding networks, we operate one of the world’s most respected programs to rescue ill and injured marine animals, with the goal to rehabilitate and return them back to the wild. Through 2014, our animal experts have helped more than 24,000 ill, injured, orphaned and abandoned animals. ® UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 or ‘ 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 (I.R.S. Employer incorporation or organization) 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) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $0.01 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È 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 È No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes È No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. È Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ (Do not check if a smaller reporting company) Smaller reporting company ‘ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, was $1,914,102,285 based upon the closing price of the registrant’s common stock, par value $0.01 per share, reported for such date on the New York Stock Exchange. For purposes of this computation, shares of the registrant’s common stock held by each executive officer and director and each person known to the registrant to own 10% or more of the outstanding voting power of the registrant have been excluded in that such persons are affiliates. This determination of affiliate status is not a determination for other purposes. The registrant had outstanding 89,230,648 shares of Common Stock, par value $0.01 per share as of February 23, 2015. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission relating to the 2015 Annual Meeting of Stockholders, which statement will be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, are incorporated by reference into Part III of this report. [THIS PAGE INTENTIONALLY LEFT BLANK] SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2014 TABLE OF CONTENTS Page No. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PART I. Item 1. Business 3 Item 1A. Risk Factors 21 Item 1B. Unresolved Staff Comments 35 Item 2. Properties 36 Item 3. Legal Proceedings 36 Item 4. Mine Safety Disclosures 37 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. Selected Financial Data 41 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 43 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 63 Item 8. Financial Statements and Supplementary Data 64 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 64 Item 9A. Controls and Procedures 64 Item 9B. Other Information 65 PART III. Item 10. Directors, Executive Officers and Corporate Governance 67 Item 11. Executive Compensation 67 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 67 Item 13. Certain Relationships and Related Transactions and Director Independence 67 Item 14. Principal Accounting Fees and Services 67 PART IV. Item 15. Exhibits, Financial Statement Schedules 68 Signatures 69 [THIS PAGE INTENTIONALLY LEFT BLANK] Unless otherwise noted or the context otherwise requires, (i) references to the “Company,” “SeaWorld,” “we,” “our” or “us” in this Annual Report on Form 10-K refer to SeaWorld Entertainment, Inc. and its consolidated subsidiaries, (ii) references to “Blackstone” refer to certain investment funds affiliated with The Blackstone Group L.P., (iii) references to the “Partnerships” refer, collectively, as applicable, to either (a) ten limited partnerships owned by affiliates of Blackstone and certain co-investors, through SW Delaware L.P. (f/k/a SW Cayman L.P.), SW Delaware A L.P. (f/k/a SW Cayman A L.P.), SW Delaware B L.P.