11. LONG-TERM DEBT

Long-term debt as of December 31, 2014 and 2013 consisted of the following:


	2014			2013
Term B-2 Loans	$	1,352,438		$	1,397,975
Revolving credit agreement		—			—
Senior Notes		260,000			260,000

Total long-term debt		1,612,438			1,657,975
Less discounts		(8,985	)		(11,394	)
Less current maturities		(14,050	)		(14,050	)

Total long-term debt, net of current maturities	$	1,589,403		$	1,632,531

SEA is the borrower under the senior secured credit facilities, as amended pursuant to a credit agreement dated as of December 1, 2009 (“Senior Secured Credit Facilities”). Also, on December 1, 2009, SEA issued $400,000 aggregate principal amount of unsecured senior notes due December 1, 2016 (the “Senior Notes”).

Deferred financing costs, net of accumulated amortization and amounts written-off for early extinguishment of debt, were $20,003 and $27,453 as of December 31, 2014 and 2013, respectively. Deferred financing costs are amortized to interest expense using the effective interest method over the term of the Senior Secured Credit Facilities or the Senior Notes and are included in other assets in the accompanying consolidated balance sheets.

As of December 31, 2014, the Company was in compliance with all covenants in the provisions contained in the documents governing the Senior Secured Credit Facilities and in the indenture governing the Senior Notes.

Senior Secured Credit Facilities

As of December 31, 2014, the Senior Secured Credit Facilities consisted of a $1,352,438 senior secured term loan facility (the “Term B-2 Loans”), which will mature on May 14, 2020 and a $192,500 senior secured revolving credit facility (the “Revolving Credit Facility”), which was not drawn upon at December 31, 2014. The Revolving Credit Facility will mature on the earlier of (a) April 24, 2018 and (b) the 91st day prior to the earlier of (1) the maturity date of Senior Notes with an aggregate principal amount greater than $50,000 outstanding and (2) the maturity date of any indebtedness incurred to refinance any of the term loans or the Senior Notes.

SEA entered into Amendments No. 1, 2, 3, 4, 5 and 6 of the Senior Secured Credit Facilities effective on February 17, 2011, April 15, 2011, March 30, 2012, April 24, 2013, May 14, 2013 and August 9, 2013, respectively (collectively, the “Amendments”).

Revision of Previously Issued Financial Statements

In the third quarter of 2014, the Company conducted an internal review of its application of the guidance in ASC 470-50, Debt-Modifications and Extinguishments, to its accounting for certain debt transactions in 2013, 2012 and 2011. As a result of this review and analysis, the Company determined that it had incorrectly applied the accounting guidance in ASC 470-50 and inappropriately accounted for certain fees as a result of modifications related to the Amendments and prepayments in certain years.

In particular, for Amendment No. 1 in 2011, the Company determined that $1,074 should have been capitalized, $4,326 should have been expensed and $13,939 should have been written off and reflected as a loss on early extinguishment of debt and write-off of discounts and deferred financing costs. Additionally, for Amendment No. 2 and prepayments in 2011, the Company determined that $45 and $1,145, respectively, should have been written off and reflected as a loss on early extinguishment of debt and write-off of discounts and deferred financing costs. The cumulative impact of the corrections as of January 1, 2012 was an increase to accumulated deficit of $4,324.

For Amendment No. 3 in 2012, the Company determined that $10,789 should have been capitalized, $5,072 should have been expensed and $992 should have been written off and reflected as a loss on early extinguishment of debt and write-off of discounts and deferred financing costs. The Company also determined that for prepayments in 2012, fees and discounts of $1,061 should have been written off and reflected as a loss on early extinguishment of debt and write-off of discounts and deferred financing costs. The Company recorded a $5,265 reduction in income before taxes for the 2012 corrections, primarily related to the accounting for Amendment No. 3.

For Amendment No. 4 and Amendment No. 6 in 2013, the Company determined that the original accounting was appropriate and there were no corrections necessary. For Amendment No. 5 in 2013, the Company determined that $4,854 should have been capitalized, $3,871 should have been expensed and $8,121 should have been written off and reflected as a loss on early extinguishment of debt and write-off of discounts and deferred financing costs. Additionally, for prepayments in 2013, the Company determined that $856 should have been written off and reflected as a loss on early extinguishment of debt and write-off of discounts and deferred financing costs. The Company recorded an additional $2,152 in income before taxes for the 2013 corrections, primarily related to a reduction in interest expense due to the 2013 amortization impact of the corrections made in 2011, 2012 and 2013.

In accordance with ASC 250 (SEC Staff Accounting Bulletin 99, Assessing Materiality), the Company concluded that the correction of the errors was not material to any of its previously issued annual or interim financial statements. The Company has revised its previously issued financial statements contained in this Annual Report on Form 10-K to correct the effect of these immaterial errors for the corresponding periods.

The following table presents the impact of these corrections on affected consolidated balance sheet line items as of December 31, 2013:


	As of December 31, 2013
	As Previously Reported		Adjustments			As Revised
Selected Balance Sheet Data:
Other assets	$	40,753	$	(4,863	)	$	35,890

Total assets	$	2,582,273	$	(4,863	)	$	2,577,410

Long-term debt	$	1,627,183	$	5,348		$	1,632,531

Deferred tax liabilities, net	$	29,776	$	(4,106	)	$	25,670

Retained earnings	$	7,991	$	(6,105	)	$	1,886

Total stockholders’ equity	$	654,132	$	(6,105	)	$	648,027

Total liabilities and stockholders’ equity	$	2,582,273	$	(4,863	)	$	2,577,410

The following tables present the additional impact of the corrections for other previously issued annual periods as indicated:


	For the Year Ended December 31, 2013									For the Year Ended December 31, 2012
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Selected Statements of Comprehensive Income Data:
Operating expenses	$	739,989		$	3,333		$	743,322		$	726,509		$	4,073		$	730,582

Interest expense	$	93,536		$	(2,914	)	$	90,622		$	111,426		$	(861	)	$	110,565

Loss on early extinguishment of debt and write-off of discounts and deferred financing costs	$	32,429		$	(2,571	)	$	29,858		$	—		$	2,053		$	2,053

Income before income taxes	$	75,482		$	2,152		$	77,634		$	116,926		$	(5,265	)	$	111,661

Provision for income taxes	$	25,004		$	710		$	25,714		$	39,482		$	(2,042	)	$	37,440

Net income	$	50,478		$	1,442		$	51,920		$	77,444		$	(3,223	)	$	74,221

Earnings per share:
Net income per share, basic	$	0.58		$	0.01		$	0.59		$	0.94		$	(0.04	)	$	0.90
Net income per share, diluted	$	0.57		$	0.02		$	0.59		$	0.93		$	(0.04	)	$	0.89
Selected Statements of Cash Flows Data:
Net cash provided by operating activities	$	289,794		$	(3,333	)	$	286,461		$	303,513		$	(4,073	)	$	299,440

Net cash used in financing activities	$	(52,252	)	$	3,333		$	(48,919	)	$	(120,183	)	$	4,073		$	(116,110	)

The following tables present the impact of these corrections on the unaudited summary quarterly financial data for the previously issued quarterly periods as indicated (see also Note 21–Summary Quarterly Financial Data (Unaudited)):


	For the Three Months Ended March 31, 2013									For the Three Months Ended June 30, 2013
	As Previously Reported			Adjustments			As Revised			As Previously Reported			Adjustments			As Revised
Selected Summary Quarterly Financial Data:		*(Unaudited)*
Total revenues	$	238,610		$	—		$	238,610		$	411,292		$	—		$	411,292

Operating expenses	$	173,260		$	—		$	173,260		$	194,674		$	3,333		$	198,007

Operating (loss) income	$	(35,873	)	$	—		$	(35,873	)	$	30,980		$	(3,333	)	$	27,647

Interest expense	$	28,606		$	(610	)	$	27,996		$	22,926		$	(694	)	$	22,232

Loss on early extinguishment of debt and write-off of discounts and deferred financing costs	$	—		$	—		$	—		$	32,429		$	(2,571	)	$	29,858

Loss before income taxes	$	(64,406	)	$	610		$	(63,796	)	$	(24,268	)	$	(68	)	$	(24,336	)

Benefit from income taxes	$	(24,046	)	$	201		$	(23,845	)	$	(8,414	)	$	(22	)	$	(8,436	)

Net loss	$	(40,360	)	$	409		$	(39,951	)	$	(15,854	)	$	(46	)	$	(15,900	)

Loss per share:
Net loss per share, basic	$	(0.49	)	$	0.01		$	(0.48	)	$	(0.18	)	$	—		$	(0.18	)
Net loss per share, diluted	$	(0.49	)	$	0.01		$	(0.48	)	$	(0.18	)	$	—		$	(0.18	)


	For the Three Months Ended September 30, 2013							For the Three Months Ended December 31, 2013
	Reported		Adjustments			As Revised		Reported			Adjustments			As Revised
Selected Summary Quarterly Financial Data:		*(Unaudited)*
Total revenues	$	538,389	$	—		$	538,389	$	271,959		$	—		$	271,959

Operating expenses	$	202,625	$	—		$	202,625	$	169,430		$	—		$	169,430

Operating income	$	205,594	$	—		$	205,594	$	505		$	—		$	505

Interest expense	$	21,018	$	(807	)	$	20,211	$	20,986		$	(803	)	$	20,183

Loss on early extinguishment of debt and write-off of discounts and deferred financing costs	$	—	$	—		$	—	$	—		$	—		$	—

Income (loss) before income taxes	$	184,589	$	807		$	185,396	$	(20,433	)	$	803		$	(19,630	)

Provision for (benefit from) income taxes	$	64,390	$	266		$	64,656	$	(6,926	)	$	265		$	(6,661	)

Net income (loss)	$	120,199	$	541		$	120,740	$	(13,507	)	$	538		$	(12,969	)

Earnings (loss) per share:
Net income (loss) per share, basic	$	1.34	$	0.01		$	1.35	$	(0.15	)	$	0.01		$	(0.14	)
Net income (loss) per share, diluted	$	1.33	$	0.01		$	1.34	$	(0.15	)	$	0.01		$	(0.14	)


	For the Three Months Ended March 31, 2014									For the Three Months Ended June 30, 2014
	As Previously Reported			Adjustments			As Revised			As Previously Reported		Adjustments			As Revised
Selected Summary Quarterly Financial Data:		*(Unaudited)*
Total revenues	$	212,290		$	—		$	212,290		$	405,151	$	—		$	405,151

Operating expenses	$	167,912		$	—		$	167,912		$	189,190	$	—		$	189,190

Operating (loss) income	$	(59,408	)	$	—		$	(59,408	)	$	80,587	$	—		$	80,587

Interest expense	$	20,046		$	(342	)	$	19,704		$	20,638	$	(112	)	$	20,526

Loss on early extinguishment of debt and write-off of discounts and deferred financing costs	$	—		$	—		$	—		$	—	$	—		$	—

(Loss) income before income taxes	$	(79,471	)	$	342		$	(79,129	)	$	59,994	$	112		$	60,106

(Benefit from) provision for income taxes	$	(30,040	)	$	128		$	(29,912	)	$	22,658	$	42		$	22,700

Net (loss) income	$	(49,431	)	$	214		$	(49,217	)	$	37,336	$	70		$	37,406

(Loss) earnings per share:
Net (loss) income per share, basic	$	(0.56	)	$	—		$	(0.56	)	$	0.43	$	—		$	0.43
Net (loss) income per share, diluted	$	(0.56	)	$	—		$	(0.56	)	$	0.43	$	—		$	0.43

Term B-2 Loans

The Term B-2 Loans were initially borrowed in an aggregate principal amount of $1,405,000. Borrowings under the Senior Secured Credit Facilities bear interest, at SEA’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the Bank of America’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the British Bankers Association (“BBA”) LIBOR rate, or the successor thereto if the BBA is no longer making a LIBOR rate available, for the interest period relevant to such borrowing. The applicable margin for the Term B-2 Loans is 1.25%, in the case of base rate loans, and 2.25%, in the case of LIBOR rate loans, subject to a base rate floor of 1.75% and a LIBOR floor of 0.75%. The applicable margin for the Term B-2 Loans (under either a base rate or LIBOR rate) is subject to one 25 basis point step-down upon achievement by SEA of a certain total leverage ratio. At December 31, 2014, SEA selected the LIBOR rate (interest rate of 3.00% at December 31, 2014).

The applicable margin for borrowings under the Revolving Credit Facility is 1.75%, in the case of base rate loans, and 2.75%, in the case of LIBOR rate loans. The applicable margin (under either a base rate or LIBOR rate) is subject to one 25 basis point step-down upon achievement by SEA of certain corporate credit ratings. At December 31, 2014, SEA selected the LIBOR rate and achieved the corporate credit ratings for an applicable margin of 2.50%.

In addition to paying interest on outstanding principal under the Senior Secured Credit Facilities, SEA is required to pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The commitment fee rate is 0.50% per annum. SEA is also required to pay customary letter of credit fees.

The Term B-2 Loans amortize in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the Term B-2 Loans on May 14, 2013, with the first payment due and paid on September 30, 2013 and the balance due on the final maturity date of May 14, 2020. 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 may also increase and/or add one or more incremental term loan facilities to the Senior Secured Credit Facilities and/or increase commitments under the Revolving Credit Facility in an aggregate principal amount of up to $350,000. SEA may also incur additional incremental term loans provided that, among other things, on a pro forma basis after giving effect to the incurrence of such incremental term loans, the first lien secured leverage ratio, as defined in the Senior Secured Credit Facility, is no greater than 3.50 to 1.00.

SEA had no amounts outstanding at December 31, 2014 and 2013, relating to the Revolving Credit Facility. The revolving credit commitment includes up to $20,000 in short-term loans (five days in duration) and up to $50,000 in letters of credit. Any amounts borrowed under the short-term loans or as letters of credit reduce the total amount available under the revolving credit loan. All amounts outstanding under the revolving credit commitment are due on the Revolving Credit Facility maturity date, except for borrowings under the short term loans, which are payable within five business days of the original borrowing. As of December 31, 2014, the Company had approximately $18,100 of outstanding letters of credit, leaving approximately $174,400 available for borrowing.

SEA is required to prepay the outstanding Term B-2 loans, subject to certain exceptions, with:

•

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

•

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

•

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

Notwithstanding any of the foregoing, each lender of term loans has the right to reject its pro rata share of mandatory prepayments described above, in which case SEA may retain the amounts so rejected. The foregoing mandatory prepayments will be applied pro rata to installments of term loans in direct order of maturity. There were no mandatory prepayments during the years ended December 31, 2014 or 2013 since none of the events indicated above occurred during the year. On September 30, 2014, the Company made a voluntary principal repayment of approximately $31,500 on the Term B-2 Loans with available cash on hand.

The obligations under the Senior Secured Credit Facilities are fully, unconditionally and irrevocably guaranteed by the Company, any subsidiary of the Company that directly or indirectly owns 100% of the issued and outstanding equity interests of SEA, and, subject to certain exceptions, each of SEA’s existing and future material domestic wholly-owned subsidiaries. The Senior Secured Credit Facilities are collateralized by first priority or equivalent security interests, subject to certain exceptions, in (i) all the capital stock of, or other equity interests in, substantially all of the Company’s direct or indirect material domestic subsidiaries and 65% of the capital stock of, or other equity interests in, any “first tier” foreign subsidiaries and (ii) certain tangible and intangible assets of SEA and the Company. Certain financial, affirmative and negative covenants, including a maximum total net leverage ratio, minimum interest coverage ratio and maximum capital expenditures are included in the Senior Secured Credit Facilities. If an event of default occurs, the lenders under the Senior Secured Credit Facilities will be entitled to take various actions, including the acceleration of amounts due under the Senior Secured Credit Facilities and all actions permitted to be taken by a secured creditor.

Senior Notes

The Senior Notes accrue interest at a rate of 11.0% per annum. Interest is payable semi-annually in arrears. The obligations under the Senior Notes are guaranteed by the same entities as those that guarantee the Senior Secured Credit Facilities. On or after December 1, 2014, the Senior Notes may be redeemed at 105.5% and 102.75% of the principal balance beginning on December 1, 2014 and 2015, respectively.

In connection with the issuance of the Senior Notes in 2009, the holders of the Senior Notes received warrants to purchase 101,000 (not in thousands) Partnerships units for $100 (not in thousands) per unit. The Partnerships, in turn, received warrants to acquire 808,000 (not in thousands) shares of the Company’s common stock. The total value of the warrants at December 1, 2009 was $5,000 and was recorded by the Company as additional paid-in capital and a discount on the Senior Notes. The additional discount is being amortized to interest expense over the term of the Senior Notes. The unamortized discount at December 31, 2014 and 2013, of $1,369 and $2,083, respectively, is presented as a reduction of the carrying value of the Senior Notes in the accompanying consolidated financial statements.

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 nature of the business; and make prepayments of junior debt. The Senior Secured Credit Facilities also contain covenants requiring SEA to maintain specified maximum annual capital expenditures, a maximum total net leverage ratio and a minimum interest coverage ratio. All of the net assets of SEA and its consolidated subsidiaries are restricted and there are no unconsolidated subsidiaries of SEA.

The indenture governing the Senior Notes contain a number of covenants that, among other things, restrict SEA’s ability and the ability of its restricted subsidiaries to, among other things, dispose of certain assets; incur additional indebtedness; pay dividends; prepay subordinated indebtedness; incur liens; make capital expenditures; make investments or acquisitions; engage in mergers or consolidations; and engage in certain types of transactions with affiliates. These covenants are subject to a number of important limitations and exceptions.

The Senior Secured Credit Facilities and the indenture permit restricted payments in an aggregate amount per annum not to exceed the greater of (1) 6% of initial public offering net proceeds received by SEA or (2) (a) $90,000, so long as, on a pro forma basis (as defined in the applicable agreement) after giving effect to the payment of any such restricted payment, the Total Leverage Ratio, (as defined in the applicable agreement and calculated as of the end of the prior quarter), is no greater than 5.00 to 1.00 and greater than 4.50 to 1.00, (b) $120,000, so long as, on a pro forma basis after giving effect to the payment of any such restricted payment, the Total Leverage Ratio is no greater than 4.50 to 1.00 and greater than 4.00 to 1.00, (c) the greater of (A) $120,000 and (B) 7.5% of market capitalization, so long as, on a pro forma basis after giving effect to the payment of any such restricted payment, the Total Leverage Ratio is no greater than 4.00 to 1.00 and greater than 3.50 to 1.00 and (d) an unlimited amount, so long as, on a pro forma basis after giving effect to the payment of any such restricted payment, the Total Leverage Ratio is no greater than 3.50 to 1.00.

For the year ended December 31, 2014, the Company had a $120,000 capacity for restricted payments, calculated as set forth above. Through the third quarter of 2014, the Company had used approximately $104,900 of its available restricted payments capacity leaving an aggregate amount of approximately $15,100 available in the fourth quarter of 2014 to declare dividends or make other restricted payments. As a result, the Board elected to postpone the declaration of the Company’s fourth quarter 2014 dividend to January 2015 and instead authorized the repurchase of up to $15,000 of its common stock in December 2014. See Note 19–Stockholders’ Equity for further discussion on the Share Repurchase Program.

As of December 31, 2014, the Total Leverage Ratio as calculated under the Senior Notes was 4.48 to 1.00 and as calculated under the Senior Secured Credit Facilities was 4.25 to 1.00, which results in an estimated $120,000 capacity for restricted payments in the year ended December 31, 2015. This amount adjusts at the beginning of each quarter as set forth above.

Long-term debt at December 31, 2014, is repayable as follows, not including any possible prepayments described above:


Years Ending December 31,
2015	$	14,050
2016		274,050
2017		14,050
2018		14,050
2019		14,050
Thereafter		1,282,188

Total	$	1,612,438

Interest Rate Swap Agreements

On August 23, 2012, SEA executed two interest rate swap agreements (the “Interest Rate Swap Agreements”) to effectively fix the interest rate on $550,000 of the then existing Term B Loans. Each interest rate swap had a notional amount of $275,000; was scheduled to mature on September 30, 2016; required the Company to pay a fixed rate of interest of 1.247% per annum; entitled SEA to receive a variable rate of interest based upon three month BBA LIBOR; and had interest settlement dates occurring on the last day of December, March, June and September through maturity. SEA had designated such interest rate swap agreements as qualifying cash flow hedge accounting relationships.

As a result of an amendment to the Senior Secured Credit Facilities in May 2013, the Interest Rate Swap Agreements were restructured into two interest rate swaps. Each interest rate swap has a notional amount of $275,000; matures on September 30, 2016; requires the Company to pay a fixed rate of interest between 1.049% and 1.051% per annum; entitles SEA to receive a variable rate of interest based upon the greater of 0.75% or three month BBA LIBOR; and has interest settlement dates occurring on the last day of December, March, June and September through maturity.

In March 2014, the Company executed a new interest rate swap agreement to effectively fix the interest rate on $450,000 of the Term B-2 Loans. The new interest rate swap has an effective date of March 31, 2014; has a notional amount of $450,000; matures on September 30, 2016; requires the Company to pay a fixed rate of interest of 1.051% per annum; entitles SEA to receive a variable rate of interest based upon the greater of 0.75% or three month BBA LIBOR; and has interest settlement dates occurring on the last day of December, March, June and September through maturity.

SEA designated the interest rate swap agreements above as qualifying cash flow hedge accounting relationships as further discussed in Note 12–Derivative Instruments and Hedging Activities which follows.

Cash paid for interest relating to the Senior Secured Credit Facilities, the Senior Notes and the interest rate swap agreements was $74,933, $85,514 and $102,551 during the years ended December 31, 2014, 2013 and 2012, respectively.