UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2011

or

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

Commission file number 1-13079

GAYLORD ENTERTAINMENT COMPANY

(Exact name of registrant as specified in its charter)

Delaware		73-0664379
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

One Gaylord Drive
Nashville, Tennessee 37214
(Address of principal executive offices)
(Zip Code)

(615) 316-6000

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 þ No o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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 þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding as of July 31, 2011
Common Stock, $.01 par value		48,401,015 shares

 

 

GAYLORD ENTERTAINMENT COMPANY

FORM 10-Q

For the Quarter Ended June 30, 2011

INDEX

		Page
Part I — Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Operations — For the Three Months and Six Months Ended June 30, 2011 and 2010			3
Condensed Consolidated Balance Sheets — June 30, 2011 and December 31, 2010			4
Condensed Consolidated Statements of Cash Flows — For the Six Months Ended June 30, 2011 and 2010			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			51
Item 4. Controls and Procedures			53
Part II — Other Information
Item 1. Legal Proceedings			53
Item 1A. Risk Factors			53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			55
Item 3. Defaults Upon Senior Securities			55
Item 5. Other Information			55
Item 6. Exhibits			55
SIGNATURES			56
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Part I — FINANCIAL INFORMATION

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Revenues		$	236,775			$	183,879			$	457,513			$	398,360
Operating expenses:
Operating costs			132,746				104,746				266,624				235,301
Selling, general and administrative			43,048				36,288				86,126				78,190
Casualty loss			469				31,347				468				31,347
Preopening costs			41				6,240				41				6,240
Depreciation and amortization			29,271				25,951				58,328				53,022
Operating income (loss)			31,200				(20,693	)			45,926				(5,740	)
Interest expense, net of amounts capitalized			(21,377	)			(20,480	)			(42,186	)			(40,595	)
Interest income			3,316				3,286				6,489				6,508
Income from unconsolidated companies			152				190				325				117
Net gain on extinguishment of debt			—				100				—				1,299
Other gains and (losses), net			141				(147	)			(50	)			(160	)
Income (loss) before income taxes and discontinued operations			13,432				(37,744	)			10,504				(38,571	)
Provision (benefit) for income taxes			4,799				(11,697	)			3,832				(10,722	)
Income (loss) from continuing operations			8,633				(26,047	)			6,672				(27,849	)
Income from discontinued operations, net of income taxes			4				3,327				8				3,279
Net income (loss)		$	8,637			$	(22,720	)		$	6,680			$	(24,570	)
Basic income (loss) per share:
Income (loss) from continuing operations		$	0.18			$	(0.55	)		$	0.14			$	(0.59	)
Income from discontinued operations, net of income taxes			0.00				0.07				0.00				0.07
Net income (loss)		$	0.18			$	(0.48	)		$	0.14			$	(0.52	)
Fully diluted income (loss) per share:
Income (loss) from continuing operations		$	0.17			$	(0.55	)		$	0.13			$	(0.59	)
Income from discontinued operations, net of income taxes			0.00				0.07				0.00				0.07
Net income (loss)		$	0.17			$	(0.48	)		$	0.13			$	(0.52	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)

		June 30,				December 31,
		2011				2010
ASSETS
Current assets:
Cash and cash equivalents — unrestricted		$	111,363			$	124,398
Cash and cash equivalents — restricted			1,150				1,150
Trade receivables, less allowance of $660 and $882, respectively			48,977				31,793
Estimated fair value of derivative assets			—				22
Deferred income taxes			5,934				6,495
Other current assets			47,594				48,992
Total current assets			215,018				212,850
Property and equipment, net of accumulated depreciation			2,197,076				2,201,445
Notes receivable, net of current portion			143,773				142,651
Long-term deferred financing costs			10,007				12,521
Other long-term assets			49,780				51,065
Long-term assets of discontinued operations			408				401
Total assets		$	2,616,062			$	2,620,933
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations		$	190			$	58,574
Accounts payable and accrued liabilities			145,110				175,343
Estimated fair value of derivative liabilities			1,749				12,475
Current liabilities of discontinued operations			327				357
Total current liabilities			147,376				246,749
Long-term debt and capital lease obligations, net of current portion			1,165,156				1,100,641
Deferred income taxes			110,238				101,140
Other long-term liabilities			141,290				142,200
Long-term liabilities of discontinued operations			451				451
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding			—				—
Common stock, $.01 par value, 150,000 shares authorized, 48,397 and 48,144 shares issued and outstanding, respectively			484				481
Additional paid-in capital			924,553				916,359
Treasury stock of 385 shares, at cost			(4,599	)			(4,599	)
Retained earnings			152,280				145,600
Accumulated other comprehensive loss			(21,167	)			(28,089	)
Total stockholders’ equity			1,051,551				1,029,752
Total liabilities and stockholders’ equity		$	2,616,062			$	2,620,933

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2011 and 2010
(Unaudited)
(In thousands)

		2011				2010
Cash Flows from Operating Activities:
Net income (loss)		$	6,680			$	(24,570	)
Amounts to reconcile net income (loss) to net cash flows provided by operating activities:
Income from discontinued operations, net of taxes			(8	)			(3,279	)
Income from unconsolidated companies			(325	)			(117	)
Loss on assets damaged in flood			—				41,541
Loss on disposals of long-lived assets			40				281
Provision for deferred income taxes			3,076				24,560
Depreciation and amortization			58,328				53,022
Amortization of deferred financing costs			2,635				2,638
Amortization of discount on convertible notes			6,216				5,722
Stock-based compensation expense			4,826				3,534
Net gain on extinguishment of debt			—				(1,299	)
Changes in:
Trade receivables			(17,184	)			1,257
Interest receivable			1,951				1,663
Insurance proceeds receivable			—				(30,000	)
Income tax receivable			—				(26,323	)
Accounts payable and accrued liabilities			(22,580	)			(7,546	)
Other assets and liabilities			(4,005	)			5,148
Net cash flows provided by operating activities — continuing operations			39,650				46,232
Net cash flows (used in) provided by operating activities — discontinued operations			(28	)			729
Net cash flows provided by operating activities			39,622				46,961
Cash Flows from Investing Activities:
Purchases of property and equipment			(61,413	)			(19,855	)
Collection of notes receivable			2,465				4,021
Other investing activities			2,183				130
Net cash flows used in investing activities — continuing operations			(56,765	)			(15,704	)
Net cash flows used in investing activities — discontinued operations			—				(1,422	)
Net cash flows used in investing activities			(56,765	)			(17,126	)
Cash Flows from Financing Activities:
Repurchases of senior notes			—				(26,965	)
Proceeds from exercise of stock option and purchase plans			4,193				1,675
Other financing activities, net			(85	)			(1,272	)
Net cash flows provided by (used in) financing activities — continuing operations			4,108				(26,562	)
Net cash flows provided by financing activities — discontinued operations			—				—
Net cash flows provided by (used in) financing activities			4,108				(26,562	)
Net change in cash and cash equivalents			(13,035	)			3,273
Cash and cash equivalents — unrestricted, beginning of period			124,398				180,029
Cash and cash equivalents — unrestricted, end of period		$	111,363			$	183,302

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION:

The condensed consolidated financial statements include the accounts of Gaylord Entertainment Company and its subsidiaries (the “Company”) and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the financial information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2010 filed with the SEC. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim periods have been included. All adjustments are of a normal, recurring nature. The results of operations for such interim periods are not necessarily indicative of the results for the full year because of seasonal and short-term variations.

2. NEWLY ISSUED ACCOUNTING STANDARDS:

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-06, Topic 820, “Fair Value Measurements and Disclosures,” to require more detailed disclosures regarding transfers in and out of Level 1 and Level 2 fair value measurements, including the amounts and reasons for the transfers. Level 3 fair value measurements should present separate information about purchases, sales, issuances and settlements. In addition, this ASU requires that a reporting entity should provide fair value measurement disclosures for each class of assets and liabilities, defined as a subset of assets or liabilities within a line item in the statement of financial position, as well as disclosures about the valuation techniques and inputs used to measure fair value in either Level 2 or Level 3. The Company adopted the remaining disclosure requirements of this ASU in the first quarter of 2011, and the adoption did not have a material impact on the Company’s consolidated financial statements.

In May 2011, the FASB issued ASU No. 2011-04, Topic 820, “Fair Value Measurements,” to clarify existing guidance and to require more detailed disclosures relating to Level 3 fair value measurements. In addition, this ASU requires that a reporting entity should provide the hierarchy classification for items whose fair value is not recorded on the balance sheet but is disclosed in the footnotes. The Company will adopt this ASU in the first quarter of 2012 and does not expect this adoption to have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Topic 220, “Comprehensive Income,” to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either instance, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The Company will adopt this ASU in the first quarter of 2012 and does not expect this adoption to have a material impact on the Company’s consolidated financial statements.

3. NASHVILLE FLOOD:

As more fully discussed in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2010 filed with the SEC, on May 3, 2010, Gaylord Opryland, the Grand Ole Opry, certain of the Company’s Nashville-based attractions, and certain of the Company’s corporate offices experienced significant flood damage as a result of the historic flooding of the Cumberland River (collectively, the “Nashville Flood”). Substantially all of the affected properties reopened in the second half of 2010; however, the Company will continue to have various flood-related expenses during 2011 as it completes the remaining flood-related projects. The Company has segregated all costs and insurance proceeds related to the Nashville Flood from normal operations and reported those amounts as casualty loss or preopening costs in the accompanying condensed consolidated statements of operations.

Casualty Loss

Casualty loss in the accompanying condensed consolidated statements of operations for the respective periods was comprised of the following (in thousands):

		Three Months Ended June 30, 2011
		Hospitality				Opry and Attractions				Corporate and Other				Total
Site remediation		$	—			$	277			$	—			$	277
Non-capitalized repairs of buildings and equipment			—				2				—				2
Other			—				31				159				190
Net casualty loss		$	—			$	310			$	159			$	469

		Six Months Ended June 30, 2011
		Hospitality				Opry and Attractions				Corporate and Other				Total
Site remediation		$	(179	)		$	285			$	(41	)		$	65
Non-capitalized repairs of buildings and equipment			—				4				13				17
Other			6				52				328				386
Net casualty loss		$	(173	)		$	341			$	300			$	468

		Three Months and Six Months Ended June 30, 2010
		Hospitality				Opry and Attractions				Corporate and Other				Insurance Proceeds				Total
Site remediation		$	11,924			$	2,391			$	562			$	—			$	14,877
Impairment of property and equipment			30,244				5,163				6,134				—				41,541
Other asset write-offs			1,846				1,106				—				—				2,952
Non-capitalized repairs of buildings and equipment			1,406				1,494				66				—				2,966
Continuing costs during shut-down period			15,957				2,194				629				—				18,780
Other			117				77				37				—				231
Insurance proceeds			—				—				—				(50,000	)			(50,000	)
Net casualty loss		$	61,494			$	12,425			$	7,428			$	(50,000	)		$	31,347

All costs directly related to remediating the affected properties are included in casualty loss. Lost profits from the interruption of the various businesses are not reflected in the above tables.

Preopening Costs

The Company expenses the costs associated with start-up activities and organization costs associated with its development of hotels and significant attractions as incurred. As a result of the extensive damage to Gaylord Opryland and the Grand Ole Opry House and the extended period in which these properties were closed, the Company incurred costs associated with the redevelopment and reopening of these facilities through the date of reopening. The Company has included all costs directly related to redeveloping and reopening the affected properties, as well as all continuing operating costs other than depreciation and amortization incurred from June 10, 2010 (the date at which the Company determined that the remediation was substantially complete) through the date of reopening, as preopening costs in the accompanying condensed consolidated statement of operations.

4. DISCONTINUED OPERATIONS:

During the second quarter of 2010, in a continued effort to focus on its core Gaylord Hotels and Opry and Attractions businesses, the Company committed to a plan of disposal of its Corporate Magic business. On June 1, 2010, the Company completed the sale of Corporate Magic through the transfer of all of its equity interests in Corporate Magic, Inc. in exchange for a note receivable which was recorded at its fair value of $0.4 million. During the three months and six months ended June 30, 2010, the Company recognized a pretax gain of $0.6 million related to the sale of Corporate Magic, as well as a permanent tax benefit of $3.2 million related to the sale.

5. INCOME PER SHARE:

The weighted average number of common shares outstanding is calculated as follows (in thousands):

		Three Months Ended June 30,								Six Months Ended June 30,
		2011				2010				2011				2010
Weighted average shares outstanding			48,370				47,098				48,296				47,055
Effect of dilutive stock-based compensation			723				—				783				—
Effect of convertible notes			1,851				—				2,494				—
Effect of common stock warrants			—				—				350				—
Weighted average shares outstanding — assuming dilution			50,944				47,098				51,923				47,055

For the three months and six months ended June 30, 2010, the effect of dilutive stock-based compensation awards was the equivalent of approximately 569,000 and 484,000 shares, respectively, of common stock outstanding. Because the Company had a loss from continuing operations in the three months and six months ended June 30, 2010, these incremental shares were excluded from the computation of dilutive earnings per share for those periods as the effect of their inclusion would have been anti-dilutive.

The Company had stock-based compensation awards outstanding with respect to approximately 960,000 and 2,012,000 shares of common stock as of June 30, 2011 and 2010, respectively, that could potentially dilute earnings per share in the future but were excluded from the computation of diluted earnings per share for the three months ended June 30, 2011 and 2010, respectively, as the effect of their inclusion would have been anti-dilutive.

The Company had stock-based compensation awards outstanding with respect to approximately 955,000 and 2,293,000 shares of common stock as of June 30, 2011 and 2010, respectively, that could potentially dilute earnings per share in the future but were excluded from the computation of diluted earnings per share for the six months ended June 30, 2011 and 2010, respectively, as the effect of their inclusion would have been anti-dilutive.

As discussed in Note 9, and more fully in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2010, in 2009 the Company issued 3.75% Convertible Senior Notes (the “Convertible Notes”) due 2014. It is the Company’s intention to settle the face value of the Convertible Notes in cash upon conversion/maturity. Any conversion spread associated with the conversion/maturity of the Convertible Notes may be settled in cash or shares of the Company’s common stock. The effect of potentially issuable shares under this conversion spread for the three months ended June 30, 2010 was the equivalent of approximately 257,000 shares of common stock outstanding. Because the Company had a loss from continuing operations in the three months ended June 30, 2010, these incremental shares were excluded from the computation of dilutive earnings per share for that period as the effect of their inclusion would have been anti-dilutive.

In connection with the issuance of these notes, the Company sold common stock purchase warrants to counterparties affiliated with the initial purchasers of the Convertible Notes. The initial strike price of these warrants is $32.70 per share of the Company’s common stock and the warrants cover an aggregate of approximately 13.2 million shares of the Company’s common stock, subject to anti-dilution adjustments. If the average closing price of the Company’s stock during a reporting period exceeds this strike price, these warrants will be dilutive. The warrants may only be settled in shares of the Company’s common stock.

6. COMPREHENSIVE INCOME (LOSS):

Comprehensive income (loss) is as follows for the respective periods (in thousands):

		Three Months Ended
		June 30,
		2011				2010
Net income (loss)		$	8,637			$	(22,720	)
Unrealized (loss) gain on natural gas swaps, net of deferred taxes of $(20) and $105			(36	)			162
Unrealized gain on interest rate swaps, net of deferred taxes of $1,982 and $1,577			3,549				2,758
Other			—				(32	)
Comprehensive income (loss)		$	12,150			$	(19,832	)

		Six Months Ended
		June 30,
		2011				2010
Net income (loss)		$	6,680			$	(24,570	)
Unrealized gain (loss) on natural gas swaps, net of deferred taxes of $2 and $0			4				(4	)
Unrealized gain on interest rate swaps, net of deferred taxes of $3,818 and $2,029			6,880				3,570
Other			38				(44	)
Comprehensive income (loss)		$	13,602			$	(21,048	)

A rollforward of the amounts included in accumulated other comprehensive loss related to the fair value of financial derivative instruments that qualify for hedge accounting, net of taxes, for the six months ended June 30, 2011 is as follows (in thousands):

		Interest Rate				Natural Gas				Total
		Derivatives				Derivatives				Derivatives
Balance at December 31, 2010		$	(7,860	)		$	(145	)		$	(8,005	)
2011 changes in fair value, net of deferred taxes			6,880				4				6,884
Reclassification to earnings			—				—				—
Balance at June 30, 2011		$	(980	)		$	(141	)		$	(1,121	)

7. PROPERTY AND EQUIPMENT:

Property and equipment of continuing operations at June 30, 2011 and December 31, 2010 is recorded at cost and summarized as follows (in thousands):

		June 30,				December 31,
		2011				2010
Land and land improvements		$	221,444			$	214,989
Buildings			2,259,109				2,241,813
Furniture, fixtures and equipment			510,674				482,011
Construction in progress			48,005				51,843
			3,039,232				2,990,656
Accumulated depreciation			(842,156	)			(789,211	)
Property and equipment, net		$	2,197,076			$	2,201,445

8. NOTES RECEIVABLE:

In connection with the development of the Gaylord National Resort and Convention Center (“Gaylord National”), the Company is currently holding two issuances of bonds and receives the debt service thereon, which is payable from tax increments, hotel taxes and special hotel rental taxes generated from the development of the Gaylord National. The Company is recording the amortization of discount on these notes receivable as interest income over the life of the notes.

During the three months ended June 30, 2011 and 2010, the Company recorded interest income of $3.2 million on these bonds, which included in each period $3.1 million of interest that accrued on the bonds and $0.1 million related to amortization of the discount on the bonds.

During the six months ended June 30, 2011 and 2010, the Company recorded interest income of $6.3 million and $6.4 million, respectively, on these bonds, which included in each period $6.2 million of interest that accrued on the bonds and $0.1 million related to amortization of the discount on the bonds. The Company received payments of $10.7 million and $11.8 million during the six months ended June 30, 2011 and 2010, respectively, relating to these notes receivable.

9. DEBT:

The Company’s debt and capital lease obligations related to continuing operations at June 30, 2011 and December 31, 2010 consisted of (in thousands):

		June 30,				December 31,
		2011				2010
$1.0 Billion Credit Facility, interest at 3-month LIBOR plus 2.50% or bank’s base rate plus 0.50%, maturing July 25, 2012		$	700,000			$	700,000
Convertible Senior Notes, interest at 3.75%, maturing October 1, 2014, net of unamortized discount of $47,233 and $53,449			312,767				306,551
Senior Notes, interest at 6.75%, maturing November 15, 2014			152,180				152,180
Capital lease obligations			399				484
Total debt			1,165,346				1,159,215
Less amounts due within one year			(190	)			(58,574	)
Total long-term debt		$	1,165,156			$	1,100,641

The above decrease in amounts due within one year results from the Convertible Notes meeting a condition for convertibility as of December 31, 2010, but not as of June 30, 2011. As of June 30, 2011, the Company was in compliance with all of its covenants related to its debt.

As further discussed in Note 17, on August 1, 2011, the Company refinanced its $1.0 billion credit facility.

Convertible Senior Notes

In 2009, the Company issued $360 million of the Convertible Notes. The Convertible Notes are convertible, under certain circumstances as described in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2010 filed with the SEC, at the holder’s option, into shares of the Company’s common stock, at an initial conversion rate of 36.6972 shares of common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $27.25 per share. The Company may elect, at its option, to deliver shares of its common stock, cash or a combination of cash and shares of its common stock in satisfaction of its obligations upon conversion of the Convertible Notes.

Concurrently with the offering of the Convertible Notes, the Company entered into convertible note hedge transactions with respect to its common stock (the “Purchased Options”) with counterparties affiliated with the initial purchasers of the Convertible Notes, for purposes of reducing the potential dilutive effect upon conversion of the Convertible Notes. The initial strike price of the Purchased Options is $27.25 per share of the Company’s common stock (the same as the initial conversion price of the Convertible Notes) and is subject to certain customary adjustments. The Purchased Options entitle the Company to purchase, subject to anti-dilution adjustments substantially similar to the Convertible Notes, approximately 13.2 million shares of common stock. The Company may settle the Purchased Options in shares, cash or a combination of cash and shares, at the Company’s option.

Separately and concurrently with entering into the Purchased Options, the Company also entered into warrant transactions whereby it sold warrants to each of the hedge counterparties entitling them to acquire, subject to anti-dilution adjustments, up to approximately 13.2 million shares of common stock at an initial exercise price of $32.70 per share. The warrants may only be settled in shares of the Company’s common stock.

10. DERIVATIVE FINANCIAL INSTRUMENTS:

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk and commodity price risk. Interest rate swaps are entered into to manage interest rate risk associated with portions of the Company’s variable rate borrowings. Natural gas price swaps are entered into to manage the price risk associated with forecasted purchases of natural gas and electricity used by the Company’s hotels. The Company designates its interest rate swaps as cash flow hedges of variable rate borrowings and its natural gas price swaps as cash flow hedges of forecasted purchases of natural gas and electricity. All of the Company’s derivatives are held for hedging purposes. The Company does not engage in speculative transactions, nor does it hold or issue financial instruments for trading purposes. All of the counterparties to the Company’s derivative agreements are financial institutions with at least investment grade credit ratings.

Cash Flow Hedging Strategy

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) (“OCI”) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “interest expense” when the hedged transactions are interest cash flows associated with variable rate debt). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, or ineffectiveness, if any, is recognized in the statement of operations during the current period.

The interest rate swap agreement utilized by the Company at June 30, 2011 effectively modified the Company’s exposure to interest rate risk by converting $500.0 million, or 71%, of the Company’s variable rate debt outstanding under the term loan portion of the Company’s $1.0 billion credit facility to a weighted average fixed rate of 3.94% plus the applicable margin on these borrowings, thus reducing the impact of interest rate changes on future interest expense. This agreement involved the receipt of variable rate amounts in exchange for fixed rate interest payments through July 25, 2011, without an exchange of the underlying principal amount. The critical terms of the swap agreements matched the critical terms of the borrowings under the term loan portion of the $1.0 billion credit facility. Therefore, the Company designated these interest rate swap agreements as cash flow hedges. As the terms of these derivatives match the terms of the underlying hedged items, there was no gain (loss) from ineffectiveness recognized in income on derivatives.

The Company has entered into natural gas price swap contracts to manage the price risk associated with a portion of the Company’s forecasted purchases of natural gas and electricity used by the Company’s hotels. The objective of the hedge is to reduce the variability of cash flows associated with the forecasted purchases of these commodities. At June 30, 2011, the Company had 18 variable to fixed natural gas price swap contracts that mature from July 2011 to December 2011 with an aggregate notional amount of approximately 515,000 dekatherms. The Company has designated these natural gas price swap contracts as cash flow hedges. The Company assesses the correlation of the terms of these derivatives with the terms of the underlying hedged items on a quarterly basis.

During 2010, the Company entered into natural gas price swap contracts to manage the price risk associated with a portion of the forecasted purchases of natural gas to be used at Gaylord Opryland. As a result of the Nashville Flood discussed above, the majority of these purchases were not going to be made while the hotel was closed. During June 2010, the Company terminated the contracts for that period and recorded the resulting gains in other gains and losses in the accompanying condensed consolidated statement of operations for the three months and six months ended June 30, 2010.

The fair value of the Company’s derivative instruments based upon quotes, with appropriate adjustments for non-performance risk of the parties to the derivative contracts, at June 30, 2011 and December 31, 2010 is as follows (in thousands):

		Asset Derivatives								Liability Derivatives
						December 31,								December 31,
		June 30, 2011				2010				June 30, 2011				2010
Derivatives designated as hedging instruments:
Interest rate swaps		$	—			$	—			$	1,529			$	12,227
Natural gas swaps			—				22				220				248
Total derivatives designated as hedging instruments		$	—			$	22			$	1,749			$	12,475

The effect of derivative instruments on the statement of operations for the respective periods is as follows (in thousands):

		Amount of Gain (Loss)
		Recognized in OCI on Derivative												Amount Reclassified from
Derivatives in		(Effective Portion)												Accumulated OCI into Income
Cash Flow		Three Months				Three Months								Three Months				Three Months
Hedging		Ended June				Ended June				Location of Amount Reclassified from				Ended June				Ended June
Relationships		30, 2011				30, 2010				Accumulated OCI into Income				30, 2011				30, 2010
Interest rate swaps		$	5,531			$	4,334			Interest expense, net of amounts capitalized				$	—			$	—
Natural gas swaps			(56	)			177			Other gains (losses), net					—				(89	)
Total		$	5,475			$	4,511			Total				$	—			$	(89	)

		Amount of Gain (Loss)
		Recognized in OCI on Derivative												Amount Reclassified from
Derivatives in		(Effective Portion)												Accumulated OCI into Income
Cash Flow		Six Months				Six Months								Six Months				Six Months
Hedging		Ended June				Ended June				Location of Amount Reclassified from				Ended June				Ended June
Relationships		30, 2011				30, 2010				Accumulated OCI into Income				30, 2011				30, 2011
Interest rate swaps		$	10,698			$	5,598			Interest expense, net of amounts capitalized				$	—			$	—
Natural gas swaps			6				(93	)		Other gains (losses), net					—				(89	)
Total		$	10,704			$	5,505			Total				$	—			$	(89	)

Derivatives Not						Amount of Loss Recognized in Income on Derivative
Designated as						Three Months				Three Months				Six Months				Six Months
Hedging		Location of Loss Recognized in Income on				Ended June 30,				Ended June 30,				Ended June 30,				Ended June 30,
Instruments		Derivatives				2011				2010				2011				2010
Natural gas swaps		Other gains and (losses), net				$	—			$	202			$	—			$	202

11. STOCK PLANS:

In addition to grants of stock options to its directors and employees, the Company’s 2006 Omnibus Incentive Plan (the “Plan”) permits the award of restricted stock and restricted stock units (“Restricted Stock Awards”). The fair value of Restricted Stock Awards is determined based on the market price of the Company’s stock at the date of grant. The Company generally records compensation expense equal to the fair value of each Restricted Stock Award granted over the vesting period.

During the six months ended June 30, 2011, the Company granted 186,470 Restricted Stock Awards with time-

based vesting and a weighted-average grant-date fair value of $34.02 per award. Additionally, the Company granted 67,400 Restricted Stock Awards to certain members of its management team which may vest in 2014. The number of awards that will ultimately vest will be based on Company performance relative to the annual budgets approved by the Company’s board of directors. The Company will not begin recognizing compensation cost for these awards until the fourth quarter of 2012 when the 2013 budget is approved and the key terms and conditions of the awards will be deemed to be established and a grant date will have occurred.

At June 30, 2011 and December 31, 2010, Restricted Stock Awards of 622,050 and 471,894 shares, respectively, were outstanding.

The compensation cost that has been charged against pre-tax income for all of the Company’s stock-based compensation plans was $2.5 million and $1.9 million for the three months ended June 30, 2011 and 2010, respectively, and $4.8 million and $3.5 million for the six months ended June 30, 2011 and 2010, respectively.

12. RETIREMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSION PLANS:

Net periodic pension expense reflected in the accompanying condensed consolidated statements of operations included the following components for the respective periods (in thousands):

		Three months ended								Six months ended
		June 30,								June 30,
		2011				2010				2011				2010
Interest cost		$	1,209			$	1,188			$	2,417			$	2,376
Expected return on plan assets			(1,334	)			(1,197	)			(2,667	)			(2,394	)
Amortization of net actuarial loss			619				519				1,238				1,038
Total net periodic pension expense		$	494			$	510			$	988			$	1,020

Net postretirement benefit expense reflected in the accompanying condensed consolidated statements of operations included the following components for the respective periods (in thousands):

		Three months ended								Six months ended
		June 30,								June 30,
		2011				2010				2011				2010
Service cost		$	15			$	17			$	29			$	34
Interest cost			257				243				515				487
Amortization of net gain			—				(3	)			—				(6	)
Amortization of curtailment gain			(61	)			(61	)			(122	)			(122	)
Total net postretirement benefit expense		$	211			$	196			$	422			$	393

13. INCOME TAXES:

The Company’s effective tax rate as applied to pre-tax income (loss) was 36% and 31% for the three months ended June 30, 2011 and 2010, respectively. The Company’s increased effective tax rate during the 2011 period was due primarily to changes in federal and state valuation allowances in each period.

The Company’s effective tax rate as applied to pre-tax income (loss) was 36% and 28% for the six months ended June 30, 2011 and 2010, respectively. Under the Patient Protection and Affordable Care Act, which became law on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010, which became law on March 30, 2010, the Company and other companies that receive a subsidy under Medicare Part D to provide retiree prescription drug coverage will no longer receive a Federal income tax

deduction for the expenses incurred in connection with providing the subsidized coverage to the extent of the subsidy received. Because future anticipated retiree health care liabilities and related subsidies were already reflected in the Company’s financial statements, this change required the Company to reduce the value of the related tax benefits recognized in its financial statements during the period the law was enacted. As a result, the Company recorded a one-time, non-cash tax charge of $0.8 million during the six months ended June 30, 2010 to reflect the impact of this change. This charge, as well as changes in the Company’s valuation allowances during each period, resulted in the change to the effective tax rate noted above.

As of June 30, 2011 and December 31, 2010, the Company had $16.0 million and $19.0 million of unrecognized tax benefits, respectively, of which $9.0 million would affect the Company’s effective tax rate if recognized. These liabilities are recorded in other long-term liabilities in the accompanying condensed consolidated balance sheets. The Company estimates the overall decrease in unrecognized tax benefits in the next twelve months will be approximately $14.1 million, mainly due to the expiration of various statutes of limitations. As of June 30, 2011 and December 31, 2010, the Company had accrued $2.0 million and $1.9 million, respectively, of interest and $0.1 million of penalties related to uncertain tax positions.

14. COMMITMENTS AND CONTINGENCIES:

On June 21, 2011, the Company announced its plans to develop a resort and convention hotel in Aurora, Colorado, located approximately 25 minutes from downtown Denver. The Aurora development, which is expected to feature 1,500 guest rooms and 400,000 square feet of exhibition and meeting space, will be located on 85 acres in LNR Property CPI Fund’s High Point Master Plan Development. The project is expected to cost approximately $800 million and will be funded by the Company, potential joint venture partners and the tax incentives that are being provided as a result of an agreement between the Company and the city of Aurora, and is contingent on receiving required governmental approvals, incentives, and final approval by the Company’s board of directors. The Company expects to break ground on construction in mid-to-late 2012 and expects the resort to be open for business in mid-to-late 2015. At this time, the Company has not made any material financial commitments in connection with this development.

On September 3, 2008, the Company announced it had entered into a land purchase agreement with DMB Mesa Proving Grounds LLC, an affiliate of DMB Associates, Inc. (“DMB”), to create a resort and convention hotel at the Mesa Proving Grounds in Mesa, Arizona, which is located approximately 30 miles from downtown Phoenix. The DMB development is planned to host an urban environment that features a Gaylord resort property, a retail development, a golf course, office space, residential offerings and significant other mixed-use components. The Company’s purchase agreement includes the purchase of 100 acres of real estate within the 3,200-acre Mesa Proving Grounds. The project is contingent on the finalization of entitlements and incentives, and final approval by the Company’s board of directors. The Company made an initial deposit of a portion of the land purchase price upon execution of the agreement with DMB, and additional deposit amounts are due upon the occurrence of various development milestones, including required governmental approvals of the entitlements and incentives. These deposits are refundable to the Company upon a termination of the agreement with DMB during a specified due diligence period, except in the event of a breach of the agreement by the Company. The timing of this development is uncertain, and the Company has not made any financing plans or, except as described above, made any commitments in connection with the proposed development.

The Company is considering other potential hotel sites throughout the country. The timing and extent of any of these development projects is uncertain, and the Company has not made any commitments, received any government approvals or made any financing plans in connection with these development projects.

Through joint venture arrangements with two private real estate funds managed by DB Real Estate Opportunities Group, the Company previously invested in minority ownership interests in two joint ventures which were formed to own and operate hotels in Hawaii. As part of the joint venture arrangements, the Company entered into contribution agreements with the majority owners, which owners had guaranteed certain

recourse liabilities under third-party loans to the joint ventures. The guarantees of the joint venture loans guaranteed each of the subsidiaries’ obligations under its third party loans for as long as those loans remain outstanding (i) in the event of certain types of fraud, breaches of environmental representations or warranties, or breaches of certain “special purpose entity” covenants by the subsidiaries, or (ii) in the event of bankruptcy or reorganization proceedings of the subsidiaries. The Company agreed that, in the event a majority owner is required to make any payments pursuant to the terms of these guarantees of joint venture loans, it will contribute to the majority owner an amount based on its proportional commitment in the applicable joint venture. The Company estimates that the maximum potential amount for which the Company could be liable under the contribution agreements is $23.8 million, which represents its pro rata share of the $121.2 million of total debt that is subject to the guarantees. As of June 30, 2011, the Company had not recorded any liability in the condensed consolidated balance sheet associated with the contribution agreements.

On February 22, 2005, the Company concluded the settlement of litigation with Nashville Hockey Club Limited Partnership (“NHC”), which owned the Nashville Predators NHL hockey team. At the closing of the settlement, NHC redeemed all of the Company’s outstanding limited partnership units in the Predators, and the Naming Rights Agreement between the Company and NHC was terminated. In addition, pursuant to a Consent Agreement among the Company, the National Hockey League and owners of NHC, the Company’s guaranty described below has been limited as described below.

In connection with the Company’s execution of an Agreement of Limited Partnership with NHC on June 25, 1997, the Company, its subsidiary CCK, Inc., Craig Leipold, Helen Johnson-Leipold (Mr. Leipold’s wife) and Samuel C. Johnson (Mr. Leipold’s father-in-law) entered into a guaranty agreement executed in favor of the National Hockey League (NHL). This agreement provides for a continuing guarantee of the following obligations for as long as either of these obligations remains outstanding: (i) all obligations under the expansion agreement between NHC and the NHL; and (ii) all operating expenses of NHC. The maximum potential amount which the Company and CCK, collectively, could be liable under the guaranty agreement is $15.0 million, although the Company and CCK would have recourse against the other guarantors if required to make payments under the guarantee. In connection with the legal settlement with the Nashville Predators consummated on February 22, 2005, this guaranty has been limited so that the Company is not responsible for any debt, obligation or liability of NHC that arises from any act, omission or circumstance occurring after the date of the legal settlement. As of June 30, 2011, the Company had not recorded any liability in the condensed consolidated balance sheet associated with this guarantee.

The Company has purchased stop-loss coverage in order to limit its exposure to any significant levels of claims relating to workers’ compensation, employee medical benefits and general liability for which it is self-insured.

The Company has entered into employment agreements with certain officers, which provides for severance payments upon certain events, including certain terminations in connection with a change of control.

The Company, in the ordinary course of business, is involved in certain legal actions and claims on a variety of matters. It is the opinion of management that such legal actions will not have a material effect on the results of operations, financial condition or liquidity of the Company.

15. FAIR VALUE MEASUREMENTS:

The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of June 30, 2011, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. These included the Company’s derivative instruments related to interest rates and natural gas prices and investments held in conjunction with the Company’s non-qualified contributory deferred compensation plan.

The Company’s interest rate and natural gas derivative instruments consist of over-the-counter swap contracts, which are not traded on a public exchange. See Note 10 for further information on the Company’s derivative instruments and hedging activities. The Company determines the fair values of these swap contracts based on quotes, with appropriate adjustments for any significant impact of non-performance risk of the parties to the swap contracts. Therefore, the Company has categorized these swap contracts as Level 2. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of derivative contracts it holds.

The investments held by the Company in connection with its deferred compensation plan consist of mutual funds traded in an active market. The Company determined the fair value of these mutual funds based on the net asset value per unit of the funds or the portfolio, which is based upon quoted market prices in an active market. Therefore, the Company has categorized these investments as Level 1. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of investments it holds.

The Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2011, were as follows (in thousands):

						Markets for				Observable				Unobservable
		June 30,				Identical Assets				Inputs				Inputs
		2011				(Level 1)				(Level 2)				(Level 3)
Deferred compensation plan investments		$	13,422			$	13,422			$	—			$	—
Total assets measured at fair value		$	13,422			$	13,422			$	—			$	—
Variable to fixed natural gas swaps, net		$	220			$	—			$	220			$	—
Variable to fixed interest rate swaps			1,529				—				1,529				—
Total liabilities measured at fair value		$	1,749			$	—			$	1,749			$	—

The remainder of the assets and liabilities held by the Company at June 30, 2011 are not required to be measured at fair value. The carrying value of certain of these assets and liabilities do not approximate fair value, as described below.

As further discussed in Note 8, in connection with the development of Gaylord National, the Company received two notes receivable from Prince George’s County, Maryland which had an aggregate carrying value of $130.4 million as of June 30, 2011. The aggregate fair value of these notes receivable, based upon current

market interest rates of notes receivable with comparable market ratings and current expectations about the timing of debt service payments under the notes, was approximately $162 million as of June 30, 2011.

As shown in Note 9, at June 30, 2011, the Company had $700.0 million in borrowings outstanding under the $1.0 Billion Credit Facility that accrue interest at a rate of LIBOR plus 2.50%. Because the margin of 2.50% is fixed, the carrying value of borrowings outstanding do not approximate fair value. The fair value of the $700.0 million in borrowings outstanding under the $1.0 Billion Credit Facility, based upon the present value of cash flows discounted at current market interest rates, was approximately $682 million as of June 30, 2011.

As more fully discussed in Note 9, the Company has outstanding $360.0 million in aggregate principal amount of Convertible Notes due 2014 that accrue interest at a fixed rate of 3.75%. The carrying value of these notes on June 30, 2011 was $312.8 million, net of discount. The fair value of the Convertible Notes, based upon the present value of cash flows discounted at current market interest rates, was approximately $334 million as of June 30, 2011.

As shown in Note 9, the Company has outstanding $152.2 million in aggregate principal amount of senior notes due 2014 that accrue interest at a fixed rate of 6.75% (the “Senior Notes”). The fair value of these notes, based upon quoted market prices, was $152.9 million as of June 30, 2011.

The carrying amount of short-term financial instruments held by the Company (cash, short-term investments, trade receivables, accounts payable and accrued liabilities) approximates fair value due to the short maturity of those instruments. The concentration of credit risk on trade receivables is minimized by the large and diverse nature of the Company’s customer base.

16. FINANCIAL REPORTING BY BUSINESS SEGMENTS:

The Company’s continuing operations are organized into three principal business segments:

	•		Hospitality, which includes the Gaylord Opryland Resort and Convention Center, the Gaylord Palms Resort and Convention Center, the Gaylord Texan Resort and Convention Center, the Gaylord National Resort and Convention Center and the Radisson Hotel at Opryland, as well as the Company’s interest in a joint venture;
	•		Opry and Attractions, which includes the Grand Ole Opry, WSM-AM, and the Company’s Nashville-based attractions; and
	•		Corporate and Other, which includes the Company’s corporate expenses.

The following information from continuing operations is derived directly from the segments’ internal financial reports used for corporate management purposes (amounts in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Revenues:
Hospitality		$	218,173			$	172,920			$	427,515			$	376,615
Opry and Attractions			18,569				10,930				29,936				21,691
Corporate and Other			33				29				62				54
Total		$	236,775			$	183,879			$	457,513			$	398,360
Depreciation and amortization:
Hospitality		$	25,291			$	22,443			$	50,566			$	45,662
Opry and Attractions			1,340				1,058				2,672				2,420
Corporate and Other			2,640				2,450				5,090				4,940
Total		$	29,271			$	25,951			$	58,328			$	53,022
Operating income (loss):
Hospitality		$	41,713			$	30,009			$	71,167			$	60,255
Opry and Attractions			3,866				1,018				3,223				254
Corporate and Other			(13,869	)			(14,133	)			(27,955	)			(28,662	)
Casualty loss			(469	)			(31,347	)			(468	)			(31,347	)
Preopening costs			(41	)			(6,240	)			(41	)			(6,240	)
Total operating income (loss)			31,200				(20,693	)			45,926				(5,740	)
Interest expense, net of amounts capitalized			(21,377	)			(20,480	)			(42,186	)			(40,595	)
Interest income			3,316				3,286				6,489				6,508
Income from unconsolidated companies			152				190				325				117
Net gain on extinguishment of debt			—				100				—				1,299
Other gains and (losses), net			141				(147	)			(50	)			(160	)
Income (loss) before income taxes and discontinued operations		$	13,432			$	(37,744	)		$	10,504			$	(38,571	)

17. SUBSEQUENT EVENTS:

On August 1, 2011, the Company refinanced the $1.0 Billion Credit Facility by entering into a $925 million senior secured credit facility by and among the Company, certain subsidiaries of the Company party thereto, as guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent (the “$925 Million Credit Facility”). The $925 Million Credit Facility consists of a $525.0 million senior secured revolving credit facility, of which $200.0 million was drawn at closing, and a $400.0 million senior secured term loan facility, which was fully funded at closing. The $925 Million Credit Facility matures on August 1, 2015 and will initially bear interest at an annual rate of LIBOR plus 2.25%, subject to adjustment as defined in the agreement. The purpose of the $925 Million Credit Facility is for working capital, capital expenditures, and other corporate purposes. As of June 30, 2011, the Company had $3.7 million in deferred financing costs associated with the $1.0 Billion Credit Facility, a portion of which will be written off during the third quarter of 2011 as a result of the refinancing.

18. INFORMATION CONCERNING GUARANTOR AND NON-GUARANTOR SUBSIDIARIES:

Not all of the Company’s subsidiaries have guaranteed the Company’s Convertible Notes and the Senior Notes. The Company’s Convertible Notes and Senior Notes are guaranteed on a senior unsecured basis by generally all of the Company’s significant active domestic subsidiaries (the “Guarantors”). Certain discontinued operations and inactive subsidiaries (the “Non-Guarantors”) do not guarantee the Company’s Convertible Notes and Senior Notes.

The following condensed consolidating financial information includes certain allocations of revenues and expenses based on management’s best estimates, which are not necessarily indicative of financial position, results of operations and cash flows that these entities would have achieved on a stand alone basis.

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2011

										Non-
(in thousands)		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Revenues		$	1,461			$	236,770			$	—			$	(1,456	)		$	236,775
Operating expenses:
Operating costs			—				132,746				—								132,746
Selling, general and administrative			4,050				38,998				—				—				43,048
Casualty loss			48				421				—				—				469
Preopening costs			—				41				—				—				41
Management fees			—				1,456				—				(1,456	)			—
Depreciation and amortization			1,002				28,269				—				—				29,271
Operating (loss) income			(3,639	)			34,839				—				—				31,200
Interest expense, net of amounts capitalized			(21,447	)			(30,542	)			(101	)			30,713				(21,377	)
Interest income			26,247				3,860				3,922				(30,713	)			3,316
Income from unconsolidated companies			—				152				—				—				152
Other gains and (losses), net			—				141				—				—				141
Income before income taxes			1,161				8,450				3,821				—				13,432
Provision for income taxes			(365	)			(3,290	)			(1,144	)			—				(4,799	)
Equity in subsidiaries’ earnings, net			7,841				—				—				(7,841	)			—
Income from continuing operations			8,637				5,160				2,677				(7,841	)			8,633
Income from discontinued operations, net of taxes			—				—				4				—				4
Net income		$	8,637			$	5,160			$	2,681			$	(7,841	)		$	8,637

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2010

										Non-
(in thousands)		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Revenues		$	1,682			$	183,872			$	—			$	(1,675	)		$	183,879
Operating expenses:
Operating costs			—				104,746				—				—				104,746
Selling, general and administrative			4,366				31,922				—				—				36,288
Casualty loss			3,800				27,547				—				—				31,347
Preopening costs			—				6,240				—				—				6,240
Management fees			—				1,675				—				(1,675	)			—
Depreciation and amortization			1,171				24,780				—				—				25,951
Operating loss			(7,655	)			(13,038	)			—				—				(20,693	)
Interest expense, net of amounts capitalized			(20,789	)			(29,131	)			(155	)			29,595				(20,480	)
Interest income			24,143				5,015				3,723				(29,595	)			3,286
Income from unconsolidated companies			—				190				—				—				190
Net gain on extinguishment of debt			100				—				—				—				100
Other gains and (losses), net			1				(148	)			—				—				(147	)
(Loss) income before income taxes			(4,200	)			(37,112	)			3,568				—				(37,744	)
Benefit (provision) for income taxes			1,436				11,013				(752	)			—				11,697
Equity in subsidiaries’ losses, net			(19,956	)			—				—				19,956				—
(Loss) income from continuing operations			(22,720	)			(26,099	)			2,816				19,956				(26,047	)
Income from discontinued operations, net of taxes			—				34				3,293				—				3,327
Net (loss) income		$	(22,720	)		$	(26,065	)		$	6,109			$	19,956			$	(22,720	)

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2011

										Non-
(in thousands)		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Revenues		$	2,936			$	457,529			$	—			$	(2,952	)		$	457,513
Operating expenses:
Operating costs			—				266,652				—				(28	)			266,624
Selling, general and administrative			8,342				77,784				—				—				86,126
Casualty loss			48				420				—				—				468
Preopening costs			—				41				—				—				41
Management fees			—				2,924				—				(2,924	)			—
Depreciation and amortization			2,029				56,299				—				—				58,328
Operating (loss) income			(7,483	)			53,409				—				—				45,926
Interest expense, net of amounts capitalized			(42,521	)			(60,526	)			(200	)			61,061				(42,186	)
Interest income			52,074				7,725				7,751				(61,061	)			6,489
Income from unconsolidated companies			—				325				—				—				325
Other gains and (losses), net			—				(50	)			—				—				(50	)
Income before income taxes			2,070				883				7,551				—				10,504
Provision for income taxes			(840	)			(399	)			(2,593	)			—				(3,832	)
Equity in subsidiaries’ earnings, net			5,450				—				—				(5,450	)			—
Income from continuing operations			6,680				484				4,958				(5,450	)			6,672
Income (loss) from discontinued operations, net of taxes			—				22				(14	)			—				8
Net income		$	6,680			$	506			$	4,944			$	(5,450	)		$	6,680

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2010

										Non-
(in thousands)		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Revenues		$	3,274			$	398,395			$	—			$	(3,309	)		$	398,360
Operating expenses:
Operating costs			—				235,311				—				(10	)			235,301
Selling, general and administrative			9,700				68,527				—				(37	)			78,190
Casualty loss			3,800				27,547				—				—				31,347
Preopening costs			—				6,240				—				—				6,240
Management fees			—				3,262				—				(3,262	)			—
Depreciation and amortization			2,455				50,567				—				—				53,022
Operating (loss) income			(12,681	)			6,941				—				—				(5,740	)
Interest expense, net of amounts capitalized			(41,254	)			(58,070	)			(155	)			58,884				(40,595	)
Interest income			48,211				9,823				7,358				(58,884	)			6,508
Income from unconsolidated companies			—				117				—				—				117
Net gain on extinguishment of debt			1,299				—				—				—				1,299
Other gains and (losses), net			4				(164	)			—				—				(160	)
(Loss) income before income taxes			(4,421	)			(41,353	)			7,203				—				(38,571	)
Benefit (provision) for income taxes			780				12,485				(2,543	)			—				10,722
Equity in subsidiaries’ losses, net			(20,929	)			—				—				20,929				—
(Loss) income from continuing operations			(24,570	)			(28,868	)			4,660				20,929				(27,849	)
Income from discontinued operations, net of taxes			—				34				3,245				—				3,279
Net (loss) income		$	(24,570	)		$	(28,834	)		$	7,905			$	20,929			$	(24,570	)