Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10‑Q

FORM10-Q

(Mark One)

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

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

For the quarterly period ended September 30, 20172018

or

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

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

Commission file number1-13079 1‑13079

RYMAN HOSPITALITY PROPERTIES, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

    

73-0664379

Delaware73-0664379

(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 316‑6000

(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-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 ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule12b-2 12b‑2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

Large accelerated filerAccelerated filer
Non-accelerated filer☐  Smaller reporting company
Emerging growth company

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 12b‑2 of the Exchange Act). ☐ Yes ☒ No

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

Indicate 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 October 31, 20172018

Common Stock, par value $.01

51,196,251

51,333,386 shares

 

 

 


RYMAN HOSPITALITY PROPERTIES, INC.

FORM10-Q 10‑Q

For the Quarter Ended September 30, 20172018

INDEX

 

Page

Page

Part I- Financial Information

3

Item 1. Financial StatementsStatements.

3

Condensed Consolidated Balance Sheets (Unaudited) - September 30, 20172018 and December 31, 20162017

3

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - For the Three Months and Nine Months Ended September 30, 20172018 and 20162017

4

Condensed Consolidated Statements of Cash Flows (Unaudited) - For the Nine Months Ended September 30, 20172018 and 20162017

5

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

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

25

24

Item 3. Quantitative and Qualitative Disclosures About Market RiskRisk.

48

46

Item 4. Controls and ProceduresProcedures.

49

47

Part II- Other Information

47

Item 1. Legal ProceedingsProceedings.

49

47

Item 1A. Risk FactorsFactors.

49

47

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

49

48

Item 3. Defaults Upon Senior SecuritiesSecurities.

49

48

Item 4. Mine Safety DisclosuresDisclosures.

49

48

Item 5. Other InformationInformation.

49

48

Item 6. ExhibitsExhibits.

50

48

SIGNATURES

51

49

2


Part I – FINANCIAL INFORMATION

Item 1. – FINANCIAL STATEMENTS.

RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

    

September 30, 

    

December 31, 

 

 

2018

 

2017

ASSETS:

 

 

  

 

 

  

Property and equipment, net of accumulated depreciation

 

$

2,126,764

 

$

2,065,657

Cash and cash equivalents - unrestricted

 

 

86,025

 

 

57,557

Cash and cash equivalents - restricted

 

 

38,372

 

 

21,153

Notes receivable

 

 

108,696

 

 

111,423

Investment in Gaylord Rockies joint venture

 

 

89,403

 

 

88,685

Trade receivables, less allowance of $820 and $651, respectively

 

 

80,595

 

 

57,520

Deferred income tax assets, net

 

 

40,449

 

 

50,117

Prepaid expenses and other assets

 

 

74,341

 

 

72,116

Total assets

 

$

2,644,645

 

$

2,524,228

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY:

 

 

  

 

 

  

Debt and capital lease obligations

 

$

1,693,427

 

$

1,591,392

Accounts payable and accrued liabilities

 

 

214,711

 

 

179,649

Dividends payable

 

 

44,668

 

 

42,129

Deferred management rights proceeds

 

 

174,784

 

 

177,057

Other liabilities

 

 

159,560

 

 

155,845

Commitments and contingencies

 

 

  

 

 

  

Stockholders' equity:

 

 

  

 

 

  

Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding

 

 

 —

 

 

 —

Common stock, $.01 par value, 400,000 shares authorized, 51,333 and 51,198 shares issued and outstanding, respectively

 

 

513

 

 

512

Additional paid-in capital

 

 

898,845

 

 

896,759

Treasury stock of 579 and 567 shares, at cost

 

 

(14,195)

 

 

(13,253)

Accumulated deficit

 

 

(504,577)

 

 

(479,170)

Accumulated other comprehensive loss

 

 

(23,091)

 

 

(26,692)

Total stockholders' equity

 

 

357,495

 

 

378,156

Total liabilities and stockholders' equity

 

$

2,644,645

 

$

2,524,228

 

   September 30,  December 31, 
   2017  2016 

ASSETS:

   

Property and equipment, net of accumulated depreciation

  $2,044,443  $1,998,012 

Cash and cash equivalents - unrestricted

   62,672   59,128 

Cash and cash equivalents - restricted

   14,703   22,062 

Notes receivable

   150,493   152,882 

Investment in Gaylord Rockies joint venture

   88,378   70,440 

Trade receivables, less allowance of $611 and $629, respectively

   56,684   47,818 

Prepaid expenses and other assets

   75,129   55,411 
  

 

 

  

 

 

 

Total assets

  $2,492,502  $2,405,753 
  

 

 

  

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

   

Debt and capital lease obligations

  $1,566,754  $1,502,554 

Accounts payable and accrued liabilities

   198,290   163,205 

Dividends payable

   41,866   39,404 

Deferred management rights proceeds

   177,815   180,088 

Deferred income tax liabilities, net

   969   1,469 

Other liabilities

   155,412   151,036 

Commitments and contingencies

   

Stockholders’ equity:

   

Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding

   —     —   

Common stock, $.01 par value, 400,000 shares authorized, 51,196 and 51,017 shares issued and outstanding, respectively

   512   510 

Additionalpaid-in capital

   894,883   893,102 

Treasury stock of 541 shares, at cost

   (11,542  (11,542

Accumulated deficit

   (511,798  (491,805

Accumulated other comprehensive loss

   (20,659  (22,268
  

 

 

  

 

 

 

Total stockholders’ equity

   351,396   367,997 
  

 

 

  

 

 

 

Total liabilities and stockholders’ equity

  $2,492,502  $2,405,753 
  

 

 

  

 

 

 

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

3


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2018

    

2017

    

2018

    

2017

Revenues:

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

$

103,181

 

$

100,534

 

$

332,490

 

$

314,577

Food and beverage

 

 

118,496

 

 

104,437

 

 

392,488

 

 

359,047

Other hotel revenue

 

 

27,563

 

 

24,619

 

 

81,129

 

 

73,493

Entertainment

 

 

43,009

 

 

35,134

 

 

108,446

 

 

92,427

Total revenues

 

 

292,249

 

 

264,724

 

 

914,553

 

 

839,544

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

 

29,563

 

 

27,575

 

 

88,550

 

 

83,962

Food and beverage

 

 

67,305

 

 

62,649

 

 

211,677

 

 

200,091

Other hotel expenses

 

 

74,350

 

 

72,299

 

 

226,965

 

 

220,073

Management fees, net

 

 

6,558

 

 

4,708

 

 

22,323

 

 

16,417

Total hotel operating expenses

 

 

177,776

 

 

167,231

 

 

549,515

 

 

520,543

Entertainment

 

 

31,327

 

 

22,651

 

 

80,947

 

 

61,637

Corporate

 

 

7,212

 

 

7,909

 

 

23,181

 

 

22,786

Preopening costs

 

 

300

 

 

877

 

 

3,972

 

 

1,587

Depreciation and amortization

 

 

30,994

 

 

28,546

 

 

89,655

 

 

83,862

Impairment and other charges

 

 

4,540

 

 

 —

 

 

4,540

 

 

 —

Total operating expenses

 

 

252,149

 

 

227,214

 

 

751,810

 

 

690,415

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

40,100

 

 

37,510

 

 

162,743

 

 

149,129

Interest expense

 

 

(19,220)

 

 

(16,621)

 

 

(55,574)

 

 

(49,640)

Interest income

 

 

2,678

 

 

2,957

 

 

8,197

 

 

8,874

Loss from joint ventures

 

 

(985)

 

 

(899)

 

 

(2,227)

 

 

(2,616)

Other gains and (losses), net

 

 

1,881

 

 

1,453

 

 

2,085

 

 

57

Income before income taxes

 

 

24,454

 

 

24,400

 

 

115,224

 

 

105,804

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

(1,863)

 

 

(530)

 

 

(9,748)

 

 

(2,022)

Net income

 

$

22,591

 

$

23,870

 

$

105,476

 

$

103,782

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per share

 

$

0.44

 

$

0.47

 

$

2.06

 

$

2.03

Fully diluted income per share

 

$

0.44

 

$

0.46

 

$

2.05

 

$

2.02

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.85

 

$

0.80

 

$

2.55

 

$

2.40

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income, net of taxes

 

$

26,030

 

$

25,434

 

$

109,077

 

$

105,391

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  2017  2016 

Revenues:

     

Rooms

  $100,534  $101,085  $314,577  $309,385 

Food and beverage

   104,437   113,100   359,047   362,550 

Other hotel revenue

   24,619   26,834   73,493   75,604 

Entertainment

   35,134   30,701   92,427   81,893 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

   264,724   271,720   839,544   829,432 

Operating expenses:

  ��  

Rooms

   27,575   28,371   83,962   82,492 

Food and beverage

   62,649   64,790   200,091   201,045 

Other hotel expenses

   72,119   73,331   219,580   219,510 

Management fees, net

   4,708   4,408   16,417   15,246 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total hotel operating expenses

   167,051   170,900   520,050   518,293 

Entertainment

   22,621   19,100   61,559   54,630 

Corporate

   9,220   8,447   24,324   22,315 

Preopening costs

   877   —     1,587   —   

Depreciation and amortization

   28,546   26,706   83,862   81,888 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating expenses

   228,315   225,153   691,382   677,126 
  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income

   36,409   46,567   148,162   152,306 

Interest expense

   (16,621  (15,947  (49,640  (48,002

Interest income

   2,957   2,965   8,874   9,116 

Loss from joint ventures

   (899  (638  (2,616  (2,086

Other gains and (losses), net

   2,554   2,468   1,024   2,288 
  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income taxes

   24,400   35,415   105,804   113,622 

Provision for income taxes

   (530  (1,822  (2,022  (2,352
  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

  $23,870  $33,593  $103,782  $111,270 
  

 

 

  

 

 

  

 

 

  

 

 

 

Basic income per share

  $0.47  $0.66  $2.03  $2.18 
  

 

 

  

 

 

  

 

 

  

 

 

 

Fully diluted income per share

  $0.46  $0.66  $2.02  $2.17 
  

 

 

  

 

 

  

 

 

  

 

 

 

Dividends declared per common share

  $0.80  $0.75  $2.40  $2.25 
  

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive income, net of taxes

  $25,434  $29,979  $105,391  $107,704 
  

 

 

  

 

 

  

 

 

  

 

 

 

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

4


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 

 

    

2018

    

2017

Cash Flows from Operating Activities:

 

 

  

 

 

  

Net income

 

$

105,476

 

$

103,782

Amounts to reconcile net income to net cash flows provided by operating activities:

 

 

  

 

 

  

Provision (benefit) for deferred income taxes

 

 

8,591

 

 

(500)

Depreciation and amortization

 

 

89,655

 

 

83,862

Amortization of deferred financing costs

 

 

4,237

 

 

3,958

Impairment and other charges

 

 

4,540

 

 

 —

Write-off of deferred financing costs

 

 

1,956

 

 

925

Stock-based compensation expense

 

 

5,824

 

 

4,954

Changes in:

 

 

 

 

 

  

Trade receivables

 

 

(22,975)

 

 

(8,865)

Accounts payable and accrued liabilities

 

 

34,679

 

 

31,994

Other assets and liabilities

 

 

(6,707)

 

 

(4,340)

Net cash flows provided by operating activities

 

 

225,276

 

 

215,770

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

  

 

 

  

Purchases of property and equipment

 

 

(132,804)

 

 

(127,148)

Investment in Gaylord Rockies joint venture

 

 

 —

 

 

(16,309)

Investment in other joint ventures

 

 

(2,199)

 

 

(6,819)

Purchase of remaining interest in Opry City Stage

 

 

(3,948)

 

 

 —

Other investing activities

 

 

(3,591)

 

 

(4,139)

Net cash flows used in investing activities

 

 

(142,542)

 

 

(154,415)

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

  

 

 

  

Net borrowings (repayments) under revolving credit facility

 

 

99,000

 

 

(235,900)

Borrowings under term loan A

 

 

 —

 

 

200,000

Borrowings under term loan B

 

 

 —

 

 

500,000

Repayments under term loan B

 

 

(2,500)

 

 

(392,500)

Deferred financing costs paid

 

 

(642)

 

 

(12,268)

Payment of dividends

 

 

(128,769)

 

 

(120,740)

Payment of tax withholdings for share-based compensation

 

 

(4,121)

 

 

(3,775)

Other financing activities

 

 

(15)

 

 

13

Net cash flows used in financing activities

 

 

(37,047)

 

 

(65,170)

 

 

 

 

 

 

 

Net change in cash, cash equivalents, and restricted cash

 

 

45,687

 

 

(3,815)

Cash, cash equivalents, and restricted cash, beginning of period

 

 

78,710

 

 

81,190

Cash, cash equivalents, and restricted cash, end of period

 

$

124,397

 

$

77,375

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash to balance sheet:

 

 

 

 

 

 

Cash and cash equivalents - unrestricted

 

$

86,025

 

$

62,672

Cash and cash equivalents - restricted

 

 

38,372

 

 

14,703

Cash, cash equivalents, and restricted cash, end of period

 

$

124,397

 

$

77,375

 

   Nine Months Ended 
   September 30, 
   2017  2016 

Cash Flows from Operating Activities:

   

Net income

  $103,782  $111,270 

Amounts to reconcile net income to net cash flows provided by operating activities:

   

Provision (benefit) for deferred income taxes

   (500  279 

Depreciation and amortization

   83,862   81,888 

Amortization of deferred financing costs

   3,958   3,647 

Write-off of deferred financing costs

   925   —   

Stock-based compensation expense

   4,954   4,594 

Changes in:

   

Trade receivables

   (8,865  (3,220

Accounts payable and accrued liabilities

   31,994   2,647 

Other assets and liabilities

   (4,340  (1,989
  

 

 

  

 

 

 

Net cash flows provided by operating activities

   215,770   199,116 
  

 

 

  

 

 

 

Cash Flows from Investing Activities:

   

Purchases of property and equipment

   (127,148  (84,557

Investment in Gaylord Rockies joint venture

   (16,309  (50,443

Investment in other joint ventures

   (6,819  (750

Proceeds from sale of Peterson LOI

   —     6,785 

(Increase) decrease in restricted cash and cash equivalents

   7,359   (3,517

Other investing activities

   (4,139  1,023 
  

 

 

  

 

 

 

Net cash flows used in investing activities

   (147,056  (131,459
  

 

 

  

 

 

 

Cash Flows from Financing Activities:

   

Net borrowings (repayments) under revolving credit facility

   (235,900  60,500 

Borrowings under term loan A

   200,000   —   

Borrowings under term loan B

   500,000   —   

Repayments under term loan B

   (392,500  (3,000

Deferred financing costs paid

   (12,268  —   

Repayment of note payable related to purchase of AC Hotel

   —     (6,000

Repurchase of Company stock for retirement

   —     (24,811

Payment of dividends

   (120,740  (112,900

Payment of tax withholdings for share-based compensation

   (3,775  (3,150

Other financing activities

   13   1,271 
  

 

 

  

 

 

 

Net cash flows used in financing activities

   (65,170  (88,090
  

 

 

  

 

 

 

Net change in cash and cash equivalents

   3,544   (20,433

Cash and cash equivalents - unrestricted, beginning of period

   59,128   56,291 
  

 

 

  

 

 

 

Cash and cash equivalents - unrestricted, end of period

  $62,672  $35,858 
  

 

 

  

 

 

 

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

5


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION:

On January 1, 2013, Ryman Hospitality Properties, Inc. (“Ryman”) and its subsidiaries (collectively with Ryman, the “Company”) began operating as a real estate investment trust (“REIT”) for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. The Company’s owned assets include a network of upscale, meetings-focused resorts that are managed by Marriott International, Inc. (“Marriott”) under the Gaylord Hotels brand. These resorts, which the Company refers to as the Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”) and the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”). The Company’s other owned hotel assets managed by Marriott include Gaylord Springs Golf Links (“Gaylord Springs”), the Wildhorse Saloon, the General Jackson Showboat (“General Jackson”), the Inn at Opryland, an overflow hotel adjacent to Gaylord Opryland, and the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), an overflow hotel adjacent to Gaylord National.

The Company also owns a 35% interest in a joint venture (the “Gaylord Rockies joint venture”) that is developing and operatesowns Gaylord Rockies Resort & Convention Center near Denver, Colorado (“Gaylord Rockies”), which is scheduled to open in late 2018 and will be managed by Marriott. On September 13, 2018, the Company entered into a purchase agreement (“Purchase Agreement”) with Aurora Convention Center Hotel Partners, LLC and certain affiliates of the other Gaylord Rockies joint venture partners to increase the Company’s ownership interest in the Gaylord Rockies joint venture to approximately 62.3% for a purchase price of approximately $242 million in cash. The Company expects the transaction to close by the end of 2018, subject to the satisfaction or waiver of the various closing conditions in the Purchase Agreement, including required consent of the Gaylord Rockies joint venture lender and Marriott, the release of certain guarantees and indemnities (which may involve the substitution of the Company on such guarantees and indemnities), no occurrence of any material casualty to Gaylord Rockies and other customary closing conditions. The Company has sufficient cash on hand and availability under its existing credit facility to finance the cash purchase price.

The Company also owns a number of media and entertainment assets, including the Grand Ole Opry, the legendary weekly showcase of country music’s finest performers; the Ryman Auditorium, the storied live music venue and former home of the Grand Ole Opry; andWSM-AM, the Opry’s radio home.home; Ole Red, a brand of Blake Shelton-themed bar, music venue and event spaces, with a flagship location in Nashville that opened in May 2018; and three Nashville-based assets managed by Marriott – Gaylord Springs Golf Links, the Wildhorse Saloon, and the General Jackson Showboat.

The Company also owns Opry City Stage, a four-level entertainment complex in Times Square that opened in December 2017 under a joint venture agreement for which the Company owned 50%. In the second quarter of 2018, the Company acquired the remaining 50% joint venture interest in Opry City Stage for a combination of $3.9 million in cash and the forgiveness of a note receivable previously due to the Company from the other joint venture partner of $7.9 million. Subsequent to the Company’s purchase of the remaining 50% joint venture interest, the Company determined that current ongoing operations were not meeting the revenue expectations from the time of purchase. In September 2018, the Company announced that it was temporarily suspending operations at Opry City Stage to appropriately reposition the venue and its operations. As a result, the Company performed an impairment assessment of the carrying amount of Opry City Stage assets based on the related estimated total future net cash flows and determined that an impairment charge of $4.5 million was warranted, which is reflected as impairment and other charges in the accompanying condensed consolidated statements of operations and comprehensive income.

The condensed consolidated financial statements include the accounts of Ryman and its subsidiaries 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 from this report pursuant to such rules and regulations. 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 Form10-K 10‑K for the year ended December 31, 2016.2017. 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,

6


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.

The Company conducts its business through an umbrella partnership REIT, in which substantially all of its assets are held by, and all of its operations are conducted through, RHP Hotel Properties, LP, a subsidiary operating partnership (the “Operating Partnership”) that the Company formed in connection with its REIT conversion. Ryman is the sole limited partner of the Operating Partnership and currently owns, either directly or indirectly, all of the partnership units of the Operating Partnership. RHP Finance Corporation, a Delaware corporation (“Finco”), was formed as a wholly-owned subsidiary of the Operating Partnership for the sole purpose of being aco-issuer of debt securities with the Operating Partnership. Neither Ryman nor Finco has any material assets, other than Ryman’s investment in the Operating Partnership and its 100%-owned subsidiaries. As 100%-owned subsidiaries of Ryman, neither the Operating Partnership nor Finco has any business, operations, financial results or other material information, other than the business, operations, financial results and other material information described in this Quarterly Report on Form10-Q 10‑Q and Ryman’s other reports, documents or other information filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended.

The Company principally operates, through its subsidiaries and its property managers, as applicable, in the following business segments: Hospitality, Entertainment, and Corporate and Other.

Newly Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)No. 2014-09,2014‑09, “Revenue from Contracts with Customers,” the core principle of which is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Under this guidance, companies will need to use more judgment and make more estimates than under today’sprevious guidance. These judgments may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The ASU is effective for the Company in the first quarter of 2018, and the Company plans to adopt this standard at that time using the modified retrospective approach. The Company has completed a revenue stream scoping process and has made significant progress toward completing its assessment of how the new ASU will impact the amount and timing of the various revenue streams recorded in its financial statements. While the Company is still finalizing the assessment in conjunction with Marriott, dueDue to the short-term,day-to-day nature of the Company’s hospitality and entertainment segment revenues, the pattern of revenue recognition did not change significantly upon adoption. The Company adopted this ASU in the first quarter of 2018 using the modified retrospective approach and has applied the standard to all contracts at the date of initial application. As such, prior period amounts have not been restated, and the Company recorded a transition adjustment to retained earnings of $0.1 million, which is not expectedreflected in the condensed consolidated balance sheet for September 30, 2018 included herein. See Note 2, “Revenues,” to change significantly.the condensed consolidated financial statements included herein for further disclosures.

In February 2016, the FASB issued ASUNo. 2016-02,2016‑02, “Leases,” that requires lessees to putrecord most leases on their balance sheet, but recognize expenses on their income statements in a manner similar to previous accounting. The ASU also eliminates the required use of bright-line tests for determining lease classification. The ASU is effective for the Company in the first quarter of 2019, and requires athe Company plans to adopt this standard at that time using the modified retrospective approach, with restatementa cumulative-effect adjustment, if any, to retained earnings in the period of prior periods.adoption. Prior period amounts will not be restated. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” both of which provide practical expedients that the Company intends to adopt. By adopting these practical expedients, the Company will not be required to reassess (i) whether an expired or existing contract meets the definition of a lease; (ii) the lease classification at the adoption date for existing leases; and (iii) whether costs previously capitalized as initial direct costs would continue to be amortized. The Company is evaluating its inventory of leases and determining the appropriate discount rates that will be used to determine the right-of-use assets and lease liabilities to be recorded, and the primary impact of the adoption willis estimated to be the inclusion of the Company’s75-year 75‑year ground lease at Gaylord Palms on its balance sheet. See Note 12, “Commitments and Contingencies,” to the consolidated financial statements included in the Company’s Annual Report on Form10-K 10‑K for the year ended December 31, 20162017 for a further disclosure of the Company’s outstanding leases.

In June 2016, the FASB issued ASUNo. 2016-13,2016‑13, “Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments,” which will change how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the current “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For trade and other receivables,held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-lookingforward-

7


looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The ASU is effective for the Company in the first quarter of 2020. The Company is currently evaluating the effects of this ASU on its financial statements, and such effects have not yet been determined.

In November 2016, the FASB issued ASU No. 2016‑18, “Restricted Cash,” which requires entities to disclose changes in the total of cash and restricted cash in the statement of cash flows. As a result, entities no longer present transfers between cash and restricted cash in the statement of cash flows, and present a reconciliation of the totals in the statement of cash flows to the related captions on the balance sheet. The Company adopted this ASU in the first quarter of 2018, and this adoption did not have a material impact on the Company’s financial statements. The prior period presentation has been updated to conform to the current year presentation.

In March 2017, the FASB issued ASUNo. 2017-07,2017‑07, “Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which will changechanges how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the cost of benefits in the income statement. Under the new guidance, the service cost component of net periodic benefit cost will beis presented in the same income statement line item(s)items as other employee compensation costs. In addition, the other components of net periodic benefit cost will beare presented separately from service cost and outside of operating income, which the Company has included in other gains and (losses), net in the accompanying condensed consolidated statements of operations and comprehensive income. The Company adopted this ASU is effective for the Company in the first quarter of 2018, and this adoption willdid not have a material impact on the Company’s financial statements.

The prior period presentation has been updated to conform to the current year presentation.

2. REVENUES:

2.Revenues from occupied hotel rooms are recognized over time as the daily hotel stay is provided to hotel groups and guests. Revenues from concessions, food and beverage sales, and group meeting services are recognized over the period or at the point in time those goods or services are delivered to the hotel group or guest. Revenues from ancillary services at the Company’s hotels, such as spa, parking, and transportation services, are generally recognized at the time the goods or services are provided. Cancellation fees and attrition fees, which are charged to groups when they do not fulfill the minimum number of room nights or minimum food and beverage spending requirements originally contracted for, are generally recognized as revenue in the period the Company determines it is probable that a significant reversal in the amount of revenue recognized will not occur, which is the period these fees are collected. The Company generally recognizes revenues from the Entertainment segment at the point in time that services are provided or goods are delivered or shipped to the customer, as applicable. Almost all of the Company’s revenues are either cash-based or, for meeting and convention groups who meet the Company’s credit criteria, billed and collected on a short-term receivables basis. The Company is required to collect certain taxes from customers on behalf of government agencies and remit these to the applicable governmental entity on a periodic basis. These taxes are collected from customers at the time of purchase, but are not included in revenue. The Company records a liability upon collection of such taxes from the customer and relieves the liability when payments are remitted to the applicable governmental agency.

8


The Company’s revenues disaggregated by major source are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel group rooms

 

$

69,258

 

$

66,758

 

$

241,804

 

$

228,122

Hotel transient rooms

 

 

33,923

 

 

33,776

 

 

90,686

 

 

86,455

Hotel food and beverage - banquets

 

 

82,742

 

 

69,820

 

 

280,729

 

 

251,362

Hotel food and beverage - outlets

 

 

35,754

 

 

34,617

 

 

111,759

 

 

107,685

Hotel other

 

 

27,563

 

 

24,619

 

 

81,129

 

 

73,493

Entertainment admissions/ticketing

 

 

19,215

 

 

19,167

 

 

51,282

 

 

47,465

Entertainment food and beverage

 

 

14,606

 

 

8,305

 

 

33,000

 

 

22,823

Entertainment retail and other

 

 

9,188

 

 

7,662

 

 

24,164

 

 

22,139

Total revenues

 

$

292,249

 

$

264,724

 

$

914,553

 

$

839,544

The Company’s Hospitality segment revenues disaggregated by location are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Gaylord Opryland

 

$

80,591

 

$

76,237

 

$

258,251

 

$

231,459

Gaylord Palms

 

 

38,901

 

 

37,238

 

 

147,071

 

 

139,619

Gaylord Texan

 

 

62,826

 

 

50,166

 

 

179,794

 

 

159,683

Gaylord National

 

 

60,304

 

 

58,936

 

 

200,747

 

 

195,388

AC Hotel

 

 

2,496

 

 

2,928

 

 

8,378

 

 

9,066

Inn at Opryland and other

 

 

4,122

 

 

4,085

 

 

11,866

 

 

11,902

Total Hospitality segment revenues

 

$

249,240

 

$

229,590

 

$

806,107

 

$

747,117

Almost all of the Company’s Entertainment segment revenues are concentrated in Nashville, Tennessee.

The Company records deferred revenues when cash payments are received in advance of its performance obligations, primarily related to advanced deposits on hotel rooms in its Hospitality segment and advanced ticketing in its Entertainment segment. At September 30, 2018 and December 31, 2017, the Company had $72.6 million and $51.2 million, respectively, in deferred revenues, which are included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. Of the amount outstanding at December 31, 2017, approximately $44.2 million was recognized in revenue during the nine months ended September 30, 2018.

3. INCOME PER SHARE:

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

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2018

    

2017

    

2018

    

2017

Weighted average shares outstanding - basic

 

51,325

 

51,191

 

51,281

 

51,131

Effect of dilutive stock-based compensation

 

194

 

185

 

195

 

200

Weighted average shares outstanding - diluted

 

51,519

 

51,376

 

51,476

 

51,331

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2017   2016   2017   2016 

Weighted average shares outstanding—basic

   51,191    51,004    51,131    51,009 

Effect of dilutive stock-based compensation

   185    266    200    270 
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding—diluted

   51,376    51,270    51,331    51,279 
  

 

 

   

 

 

   

 

 

   

 

 

 

3.

4. ACCUMULATED OTHER COMPREHENSIVE LOSS:

The Company’s balance in accumulated other comprehensive loss is composedcomprised of amounts related to the Company’s minimum pension liability. Duringliability and amounts related to an other-than-temporary impairment of a held-to-maturity investment with respect to the three monthsnotes receivable discussed in Note 6, “Notes Receivable,” to the condensed consolidated financial statements included herein, and Note 3, “Notes Receivable,” to the consolidated financial statements included in the

9


Company’s Annual Report on Form 10‑K for the year ended December 31, 2017. Changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2018 and 2017 consisted of the Company recorded $1.6 million in other comprehensive income, and during the three months and nine months ended September 30, 2016, the Company recorded $3.7 million in other comprehensive loss, which primarily represents the changes in the Company’s pension plan liability as described in Note 10.following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other-Than-

 

 

 

 

 

Minimum

 

Temporary

 

 

 

 

 

Pension

 

Impairment of

 

 

 

 

    

Liability

    

Investment

    

Total

Balance, December 31, 2017

 

$

(20,149)

 

$

(6,543)

 

$

(26,692)

Amounts reclassified from accumulated other comprehensive loss

 

 

4,429

 

 

249

 

 

4,678

Income tax expense

 

 

(1,077)

 

 

 —

 

 

(1,077)

Net other comprehensive income

 

 

3,352

 

 

249

 

 

3,601

Balance, September 30, 2018

 

$

(16,797)

 

$

(6,294)

 

$

(23,091)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other-Than-

 

 

 

 

 

Minimum

 

Temporary

 

 

 

 

 

Pension

 

Impairment of

 

 

 

 

    

Liability

    

Investment

    

Total

Balance, December 31, 2016

 

$

(22,268)

 

$

 —

 

$

(22,268)

Amounts reclassified from accumulated other comprehensive loss

 

 

1,609

 

 

 —

 

 

1,609

Income tax benefit

 

 

 —

 

 

 —

 

 

 —

Net other comprehensive income

 

 

1,609

 

 

 —

 

 

1,609

Balance, September 30, 2017

 

$

(20,659)

 

$

 —

 

$

(20,659)

4.

5. PROPERTY AND EQUIPMENT:

Property and equipment at September 30, 20172018 and December 31, 20162017 is recorded at cost and summarized as follows (in thousands):

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

    

2018

    

2017

Land and land improvements

 

$

268,521

 

$

267,051

Buildings

 

 

2,556,311

 

 

2,440,471

Furniture, fixtures and equipment

 

 

715,507

 

 

647,988

Construction-in-progress

 

 

99,887

 

 

138,702

 

 

 

3,640,226

 

 

3,494,212

Accumulated depreciation

 

 

(1,513,462)

 

 

(1,428,555)

Property and equipment, net

 

$

2,126,764

 

$

2,065,657

 

   September 30,   December 31, 
   2017   2016 

Land and land improvements

  $266,427   $266,053 

Buildings

   2,436,294    2,398,117 

Furniture, fixtures and equipment

   636,362    604,876 

Construction-in-progress

   106,245    50,273 
  

 

 

   

 

 

 
   3,445,328    3,319,319 

Accumulated depreciation

   (1,400,885   (1,321,307
  

 

 

   

 

 

 

Property and equipment, net

  $2,044,443   $1,998,012 
  

 

 

   

 

 

 

In June 2017, the Company entered into an agreement with the Industrial Development Board of the Metropolitan Government of Nashville and Davidson County (the “Board”) to implement a tax abatement plan related to Gaylord Opryland. The tax abatement plan provides for the capping of real property taxes for a period of eight years by legally transferring title to the Gaylord Opryland real property to the Board. The Board financed the acquisition of the Gaylord Opryland real property by issuing a $650 million industrial revenue bond to the Company. The Board then leased this property back to the Company. The Company is obligated to make lease payments equal to the debt service on the industrial revenue bond. No cash was exchanged and no cash will be exchanged in connection with the Company’s lease payments under the lease. The tax abatement period extends through the term of the lease, which coincides with the nine-year maturity of the bond. At any time, the Company has the option to repurchase the real property at a de minimis amount.

Due to the form of these transactions, the Company has not recorded the bond or the lease obligation associated with the sale lease-back transaction, and the cost of the Gaylord Opryland real property remains recorded on the balance sheet and is being depreciated over its estimated useful life.

5.6. NOTES RECEIVABLE:

As further discussed in the Company’s Annual Report on Form10-K 10‑K for the year ended December 31, 2016,2017, in connection with the development of Gaylord National, the Company is currently holding two issuances of governmental bonds and receives debt service and principle payments thereon, payable from property tax increments, hotel taxes and special hotel rental taxes generated from Gaylord National through the maturity date.dates of July 1, 2034 and September 1, 2037, respectively. The Company is recording the amortization of discount on these notes receivable asrecords interest income over the life of the notes.notes using the effective interest method.

During the three months ended September 30, 20172018 and 2016,2017, the Company recorded interest income of $2.9$2.6 million and $3.0$2.9 million, respectively, on these bonds. During the nine months ended September 30, 20172018 and 2016,2017, the Company recorded interest income of $8.7$7.9 million and $9.0$8.7 million, respectively, on these bonds. The Company received payments of $10.9 million and $11.1 million during each of the nine months ended September 30, 20172018 and 2016,2017, respectively, relating to these notes receivable. See additional discussion regarding

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7. DEBT:

The Company’s debt and capital lease obligations at September 30, 2018 and December 31, 2017 consisted of (in thousands):

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

    

2018

    

2017

$700 Million Revolving Credit Facility, interest at LIBOR plus 1.55%, maturing May 23, 2021, less unamortized deferred financing costs of $7,185 and $9,076

 

$

262,815

 

$

161,924

$200 Million Term Loan A, interest at LIBOR plus 1.50%, maturing May 23, 2022, less unamortized deferred financing costs of $1,305 and $1,557

 

 

198,695

 

 

198,443

$500 Million Term Loan B, interest at LIBOR plus 2.00%, maturing May 11, 2024, less unamortized deferred financing costs of $5,527 and $7,595

 

 

488,223

 

 

488,655

$350 Million Senior Notes, interest at 5.0%, maturing April 15, 2021, less unamortized deferred financing costs of $2,624 and $3,340

 

 

347,376

 

 

346,660

$400 Million Senior Notes, interest at 5.0%, maturing April 15, 2023, less unamortized deferred financing costs of $4,305 and $4,929

 

 

395,695

 

 

395,071

Capital lease obligations

 

 

623

 

 

639

Total debt

 

$

1,693,427

 

$

1,591,392

The majority of amounts due within one year consist of the fair valueamortization payments for the $500 million term loan B of these notes receivable1.0% of the original principal balance, as described in Note 14.the Company’s Annual Report on Form 10‑K for the year ended December 31, 2017.

6. INVESTMENT IN GAYLORD ROCKIES JOINT VENTURE:At September 30, 2018, the Company was in compliance with all of its covenants related to its outstanding debt.

In March 2016, certain subsidiaries of$500 Million Term Loan B

On June 26, 2018, the Company entered into an Amendment No. 2 (the “Amendment”) to the Company’s Fifth Amended and Restated Credit Agreement (as amended, the “Credit Agreement”). The Amendment reduces the applicable interest rate margins for borrowings under the term loan B to, at the Company’s option, either (i) LIBOR plus 2.00% or (ii) a seriesbase rate as set in the Credit Agreement. In addition, the Amendment extends the date of agreements with affiliatescommencement of RIDA Development Corporation (“RIDA”any excess cash flow payments by one year to December 31, 2019. The Amendment did not change the maturity dates existing under the Credit Agreement or result in any increase or decrease in outstanding borrowings.

As a result of the repricing of the term loan B, the Company wrote off $2.0 million of deferred financing costs during the nine months ended September 30, 2018, which is included in interest expense in the accompanying condensed consolidated statement of operations.

For descriptions of the Company’s other outstanding debt obligations, see “Principal Debt Agreements” within “Liquidity and Capital Resources” in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Quarterly Report on Form 10‑Q.

8. DEFERRED MANAGEMENT RIGHTS PROCEEDS:

On October 1, 2012, the Company consummated its agreement to sell the Gaylord Hotels brand (the “IP Rights”) and Ares Management, L.P. (“Ares”) with respectrights to an equity investment inmanage the Gaylord Rockies Resort & Convention CenterHotels properties (the “Management Rights”) to Marriott for $210.0 million in Aurora, Colorado (“cash. Effective October 1, 2012, Marriott assumed responsibility for managing the day-to-day operations of the Gaylord Rockies”), which is being developed by RIDA and Ares. The hotel will be managed by MarriottHotels properties pursuant to a long-term management contractagreement for each Gaylord Hotel property. The Company allocated $190.0 million of the purchase price to the Management Rights and $20.0 million to the IP Rights.

For financial accounting purposes, the amount related to the Management Rights was deferred and is expectedamortized on a straight line basis over the 65‑year term of the hotel management agreements, including extensions, as a reduction in management fee expense. The amount related to consistthe IP Rights was recognized into income as other gains and losses during 2012.

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9. STOCK PLANS:

1,500-roomDuring the nine months ended September 30, 2018, the Company granted resort hotel 0.1 million restricted stock units with over 485,000 square feeta weighted-average grant date fair value of exhibition, meeting,$pre-function71.91 per award. There were 0.3 million and outdoor space. 0.4 million restricted stock units outstanding at September 30, 2018 and December 31, 2017, respectively.

The hotel is expectedcompensation expense that has been charged against pre-tax income for all of the Company’s stock-based compensation plans was $1.9 million and $1.7 million for the three months ended September 30, 2018 and 2017, respectively, and $5.8 million and $5.0 million for the nine months ended September 30, 2018 and 2017, respectively.

10. PENSION 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

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2018

    

2017

    

2018

    

2017

Interest cost

 

$

808

 

$

891

 

$

2,422

 

$

2,706

Expected return on plan assets

 

 

(1,087)

 

 

(1,051)

 

 

(3,259)

 

 

(3,098)

Amortization of net actuarial loss

 

 

259

 

 

282

 

 

778

 

 

861

Net settlement loss

 

 

1,004

 

 

1,218

 

 

1,004

 

 

1,218

Total net periodic pension expense

 

$

984

 

$

1,340

 

$

945

 

$

1,687

As a result of increased lump-sum distributions from the Company’s qualified retirement plan during 2018 and 2017, net settlement losses of $1.0 million and $1.2 million were recognized in the three months and nine months ended September 30, 2018 and 2017, respectively.

In addition, the increase in lump-sum distributions required the Company to re-measure its liability under its pension plan as of September 30, 2018. As a result of the re-measurement, as well as an increase in the pension plan’s assumed discount rate from 3.3% at December 31, 2017 to 4.0% at September 30, 2018, the Company recorded a $3.4 million decrease in its liability under the pension plan and a corresponding decrease in accumulated other comprehensive loss in the accompanying condensed consolidated balance sheet at September 30, 2018.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2018

    

2017

    

2018

    

2017

Interest cost

 

$

24

 

$

27

 

$

72

 

$

81

Amortization of net actuarial loss

 

 

64

 

 

61

 

 

193

 

 

184

Amortization of prior service credit

 

 

(329)

 

 

(328)

 

 

(986)

 

 

(985)

Total net postretirement benefit income

 

$

(241)

 

$

(240)

 

$

(721)

 

$

(720)

11. INCOME TAXES:

The Company has elected to be completed in latetaxed as a REIT effective January 1, 2013, pursuant to the U.S. Internal Revenue Code of 1986, as amended. As a REIT, generally the Company will not be subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that it distributes to its stockholders. The Company will continue to be required to pay federal and state corporate income taxes on earnings of its taxable REIT subsidiaries (“TRSs”).

The Company recorded an income tax provision of $1.9 million and $0.5 million for the three months ended September 30, 2018 and 2017, respectively, and $9.7 million and $2.0 million for the nine months ended September 30, 2018 and 2017, respectively, related to the current period operations of the Company. These results differ from the

12


statutory rate primarily due to the REIT dividends paid deduction in both periods and the change in valuation allowance required at the TRSs for the nine months ended September 30, 2017.

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted and included a reduction to the U.S. federal corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. As discussed in SEC Staff Accounting Bulletin No. 118, the accounting for the TCJA should be completed within one year from enactment. As of September 30, 2018, the Company has a total estimated project costcompleted its accounting for all of approximately $800 million.the enactment-date income tax effects of the TCJA. During the nine months ended September 30, 2018, the Company has made no adjustments to the provisional amounts recorded at December 31, 2017.

At September 30, 2018 and December 31, 2017, the Company had no unrecognized tax benefits.

12. COMMITMENTS AND CONTINGENCIES:

The Company currently owns a 35% interest in a limited liability companyjoint venture that is developing and owns the real property comprising the hotel,Gaylord Rockies, which the Company purchased for a capital contribution of approximately $86.5 million, of which the final portion was fundedis expected to open in the first quarter of 2017. The Company also owns a 35% interest in a limited liability company which will lease the hotel from the property owner and assume the Marriott management agreement prior to the opening of the hotel.

A subsidiary of the Company is providing designated asset management services on behalf of the hotel during the construction period in exchange for a flat fee and after opening of the hotel in exchange for a fee based on the hotel’s gross revenues on an annual basis.

late 2018. In connection with the agreements,joint venture, the Company agreed to provide guarantees of the hotel’s construction loan, including a principal repayment guarantee of up to $21 million of the total $500 million principal amount of the construction loan previously obtained from a consortium of eight banks, with such amount reducing to $14 million and further reducing to $8.75 million upon the hotel’s satisfaction of designated debt service coverage requirements following completion and opening of the hotel. The Company has also provided a completion guarantee under the construction loan capped at its pro rata share of all costs necessary to complete the project within the time specified in the joint venture’s loan documents. Further, the Company has agreed to a guarantee capped at its pro rata share of the joint venture’s obligations under the construction loan prior to the hotel’s opening related to interest accruing under the construction loan and the operating expenses of the property (estimated pro rata share of interest prior to the hotel opening is $9.8 million). In addition to guarantees related to the construction loan, the Company agreed to provide a guarantee of the mezzanine debt related to the hotel including a payment guarantee capped at $8.75 million for which the Company is only liable in the event there is a casualty or condemnation event at the hotel and the construction lenders elect to apply those proceeds to the construction loan balance and release the construction loan guarantees and liens. The guarantee related to the mezzanine debt also includes an uncapped completion guarantee and an uncapped guarantee of the Gaylord Rockies joint venture’s obligations under the mezzanine loan prior to the hotel’s opening related to interest accruing under the mezzanine loan and the operating expenses of the property to the extent not already satisfied by the parties under the guarantees related to the construction loan. As of September 30, 2017,2018, the Company had not recorded any liability in the consolidated balance sheet associated with these guarantees.

7. DEBT:

The Company’s debt and capital lease obligations at September 30, 2017 and December 31, 2016 consisted of (in thousands):

   September 30,   December 31, 
   2017   2016 

$700 Million Revolving Credit Facility, terms as set forth below, less unamortized deferred financing costs of $9,696 and $5,267

  $136,804   $377,133 

$200 Million Term Loan A, terms as set forth below, less unamortized deferred financing costs of $1,641 and $0

   198,359    —   

$500 Million Term Loan B, terms as set forth below, less unamortized deferred financing costs of $7,860 and $0

   489,640    —   

$400 Million Term Loan B, interest at LIBOR plus 2.75%, originally maturing January 15, 2021, less unamortized deferred financing costs of $0 and $5,273

   —      384,727 

$350 Million Senior Notes, interest at 5.0%, maturing April 15, 2021, less unamortized deferred financing costs of $3,566 and $4,246

   346,434    345,754 

$400 Million Senior Notes, interest at 5.0%, maturing April 15, 2023, less unamortized deferred financing costs of $5,126 and $5,719

   394,874    394,281 

Capital lease obligations

   643    659 
  

 

 

   

 

 

 

Total debt

  $1,566,754   $1,502,554 
  

 

 

   

 

 

 

The majority of amounts due within one year consist of the amortization payments for the Term Loan B of 1.0% of the original principal balance, as described below.

At September 30, 2017, the Company was in compliance with all of its covenants related to its outstanding debt.

On May 11, 2017, the Company entered into a Fifth Amended and Restated Credit Agreement (the “Amended Credit Agreement”) among the Company, as a guarantor, the Operating Partnership, as borrower, certain other subsidiaries of the Company party thereto, as guarantors, certain subsidiaries of the Company party thereto, as pledgors, the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent, which amends and restates the Company’s existing credit facility. In addition, on May 23, 2017, the Company entered into an Amendment No. 1 (the “Amendment”) to the Amended Credit Agreement among the same parties. As amended, the Company’s credit facility consists of a $700.0 million senior secured revolving credit facility (the “Revolver”), a new $200.0 million senior secured term loan A (the “Term Loan A”), and an increased $500.0 million senior secured term loan B (the “Term Loan B”), each as discussed below.

Each of the Revolver, Term Loan A and Term Loan B is guaranteed by the Company, each of the four wholly-owned subsidiaries that own the Gaylord Hotels properties, and certain other of the Company’s subsidiaries. Each is secured by (i) a first mortgage lien on the real property of each of the Gaylord Hotels properties, (ii) pledges of equity interests in the Company’s subsidiaries that own the Gaylord Hotels properties, (iii) the personal property of the Company, the Operating Partnership and the subsidiaries that guarantee the Amended Credit Agreement and (iv) all proceeds and products from the Company’s Gaylord Hotels properties. Advances are subject to a 55% borrowing base, based on the appraisal value of the Gaylord Hotels properties (reduced to 50% in the event one of the Gaylord Hotel properties is sold).

In addition, each of the Revolver, Term Loan A and Term Loan B contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements.

If an event of default shall occur and be continuing under the Amended Credit Agreement, the commitments under the Amended Credit Agreement may be terminated and the principal amount outstanding under the Amended Credit Agreement, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.

$700 Million Revolving Credit Facility

Pursuant to the Amendment, the Company extended the maturity of the Revolver to May 23, 2021. Borrowings under the Revolver bear interest at an annual rate equal to, at the Company’s option, either (i) LIBOR plus the applicable margin ranging from 1.55% to 2.40%, dependent upon the Company’s funded debt to total asset value ratio (as defined in the Amended Credit Agreement) or (ii) a base rate as set in the Amended Credit Agreement. At September 30, 2017, the interest rate on the Revolver is LIBOR plus 1.55%. No additional amounts were borrowed under the Revolver at closing.

$200 Million Term Loan A

The Amendment also provides for the Term Loan A, which has a maturity date of May 23, 2022. Borrowings under the Term Loan A bear interest at an annual rate equal to, at the Company’s option, either (i) LIBOR plus the applicable margin ranging from 1.50% to 2.35%, dependent upon the Company’s funded debt to total asset value ratio (as defined in the Amended Credit Agreement) or (ii) a base rate as set in the Amended Credit Agreement. At September 30, 2017, the interest rate on the Term Loan A was LIBOR plus 1.50%. Amounts borrowed under the Term Loan A that are repaid or prepaid may not be reborrowed. At closing, the Company drew down on the Term Loan A in full and proceeds were used to pay down a portion of the Revolver.

$500 Million Term Loan B

Pursuant to the Amended Credit Agreement, the Company increased its original $400 million term loan B facility to a $500 million term loan B facility and extended the maturity to May 11, 2024. Borrowings under the Term Loan B bear interest at an annual rate equal to, at the Company’s option, either (i) LIBOR plus 2.25% or (ii) a base rate as set in the Amended Credit Agreement. At September 30, 2017, the interest rate on the Term Loan B was LIBOR plus 2.25%. The Term Loan B amortizes in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount of $500.0 million, with the balance due at maturity. Amounts borrowed under the Term Loan B that are repaid or prepaid may not be reborrowed. At closing, the Company drew down on the Term Loan B in full. Net proceeds, after the repayment of the original $400 million term loan B and certain transaction expenses payable at closing, were approximately $114.3 million and were used to pay down a portion of the Revolver.

8. DEFERRED MANAGEMENT RIGHTS PROCEEDS:

On October 1, 2012, the Company consummated its agreement to sell the Gaylord Hotels brand and rights to manage Gaylord Opryland, Gaylord Palms, Gaylord Texan and Gaylord National to Marriott for $210.0 million in cash. Effective October 1, 2012, Marriott assumed responsibility for managing theday-to-day operations of the Gaylord Hotels properties pursuant to a management agreement for each Gaylord Hotel property.

On October 1, 2012, the Company received $210.0 million in cash from Marriott in exchange for rights to manage the Gaylord Hotels properties (the “Management Rights”) and certain intellectual property (the “IP Rights”). The Company allocated $190.0 million of the purchase price to the Management Rights and $20.0 million to the IP Rights. The allocation was based on the Company’s estimates of the fair values for the respective components. The Company estimated the fair value of each component by constructing distinct discounted cash flow models.

For financial accounting purposes, the amount related to the Management Rights was deferred and is amortized on a straight line basis over the65-year term of the hotel management agreements, including extensions, as a reduction in management fee expense. The amount related to the IP Rights was recognized into income as other gains and losses during the fourth quarter of 2012.

9. STOCK PLANS:

During the nine months ended September 30, 2017, the Company granted 0.1 million restricted stock units with a weighted-average grant date fair value of $66.52 per award. There were 0.4 million and 0.5 million restricted stock units outstanding at September 30, 2017 and December 31, 2016, respectively.

The compensation expense that has been charged againstpre-tax income for all of the Company’s stock-based compensation plans was $1.7 million and $1.5 million for the three months ended September 30, 2017 and 2016, respectively, and $5.0 million and $4.6 million for the nine months ended September 30, 2017 and 2016, respectively.

10. PENSION 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   Nine Months Ended 
   September 30,   September 30, 
   2017   2016   2017   2016 

Interest cost

  $891   $966   $2,706   $2,896 

Expected return on plan assets

   (1,051   (1,021   (3,098   (3,061

Amortization of net actuarial loss

   282    307    861    921 

Net settlement loss

   1,218    1,567    1,218    1,567 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net periodic pension expense

  $1,340   $1,819   $1,687   $2,323 
  

 

 

   

 

 

   

 

 

   

 

 

 

As a result of increasedlump-sum distributions from the Company’s qualified retirement plan during 2017 and 2016, net settlement losses of $1.2 million and $1.6 million were recognized in the three months and nine months ended September 30, 2017 and 2016, respectively. These net settlement losses have been classified as corporate operating expenses in the accompanying condensed consolidated statements of operations.

In addition, the increase inlump-sum distributions required the Company tore-measure its liability under its pension plan as of September 30, 2017. As a result of there-measurement, partially offset by a decrease in the pension plan’s assumed discount rate from 3.7% at December 31, 2016 to 3.3% at September 30, 2017, the Company recorded a $0.3 million decrease in its liability under the pension plan and a corresponding decrease in accumulated other comprehensive loss in the accompanying condensed consolidated balance sheet at September 30, 2017.

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

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2017   2016   2017   2016 

Interest cost

  $27   $30   $81   $90 

Amortization of net actuarial loss

   61    60    184    181 

Amortization of prior service credit

   (328   (328   (985   (985
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net postretirement benefit income

  $(240  $(238  $(720  $(714
  

 

 

   

 

 

   

 

 

   

 

 

 

11. INCOME TAXES:

The Company elected to be taxed as a REIT effective January 1, 2013, pursuant to the U.S. Internal Revenue Code of 1986, as amended. As a REIT, generally the Company will not be subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that it distributes to its stockholders. The Company will, however, be subject to corporate income taxes onbuilt-in gains (the excess of fair market value over tax basis at January 1, 2013) that result from gains on the sale of certain assets occurring prior to January 1, 2018. In addition, the Company will continue to be required to pay federal and state corporate income taxes on earnings of its taxable REIT subsidiaries (“TRSs”).

The Company recorded an income tax provision of $0.5 million and $1.8 million for the three months ended September 30, 2017 and 2016, respectively, and $2.0 million and $2.4 million for the nine months ended September 30, 2017 and 2016, respectively, related to the current period operations of the Company. These results differ from the statutory rate primarily due to the REIT dividends paid deduction and the change in valuation allowance required at the TRSs.

At September 30, 2017 and December 31, 2016, the Company had no unrecognized tax benefits.

12. COMMITMENTS AND CONTINGENCIES:

The Company has entered into employment agreements with certain officers, which provide 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 actionscontingencies will not have a material effect on the results of operations, financial condition or liquiditystatements of the Company.

13. STOCKHOLDERS’ EQUITY:

Dividends

On February 28, 2017,23, 2018, the Company’s board of directors declared the Company’s first quarter 20172018 cash dividend in the amount of $0.80$0.85 per share of common stock, or an aggregate of approximately $40.9$43.6 million in cash, which was paid on April 14, 201716, 2018 to stockholders of record as of the close of business on March 31, 2017.30, 2018.

On June 9, 2017,18, 2018, the Company’s board of directors declared the Company’s second quarter 20172018 cash dividend in the amount of $0.80$0.85 per share of common stock, or an aggregate of approximately $41.0$43.6 million in cash, which was paid on July 14, 201716, 2018 to stockholders of record as of the close of business on June 19, 2017.29, 2018.

On September 18, 2017,17, 2018, the Company’s board of directors declared the Company’s third quarter 20172018 cash dividend in the amount of $0.80$0.85 per share of common stock, or an aggregate of approximately $41.0$43.6 million in cash, which was paid on October 13, 201715, 2018 to stockholders of record as of the close of business on September 29, 2017.28, 2018.

Previous Stock Repurchase Authorization

During the nine months ended September 30, 2016, the Company repurchased 0.5 million shares

13


14. 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.

At September 30, 20172018 and December 31, 2016,2017, the Company held certain assets that are required to be measured at fair value on a recurring basis. These included investments held in conjunction with the Company’snon-qualified contributory deferred compensation plan. These investments 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 the above valuation techniques in all periods presented and believes it has obtained the most accurate information available for each type of instrument.

The Company had no liabilities required to be measured at fair value at September 30, 20172018 and December 31, 2016.2017. The Company’s assets measured at fair value on a recurring basis at September 30, 20172018 and December 31, 2016,2017, were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Markets for

    

Observable

    

Unobservable

 

 

September 30, 

 

Identical Assets

 

Inputs

 

Inputs

 

 

2018

 

(Level 1)

 

(Level 2)

 

(Level 3)

Deferred compensation plan investments

 

$

26,148

 

$

26,148

 

$

 —

 

$

 —

Total assets measured at fair value

 

$

26,148

 

$

26,148

 

$

 —

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

      Markets for   Observable   Unobservable 

    

 

 

    

Markets for

    

Observable

    

Unobservable

  September 30,   Identical Assets   Inputs   Inputs 

 

December 31, 

 

Identical Assets

 

Inputs

 

Inputs

  2017   (Level 1)   (Level 2)   (Level 3) 

 

2017

 

(Level 1)

 

(Level 2)

 

(Level 3)

Deferred compensation plan investments

  $24,339   $24,339   $—     $—   

 

$

25,055

 

$

25,055

 

$

 —

 

$

 —

  

 

   

 

   

 

   

 

 

Total assets measured at fair value

  $24,339   $24,339   $—     $—   

 

$

25,055

 

$

25,055

 

$

 —

 

$

 —

  

 

   

 

   

 

   

 

 
      Markets for   Observable   Unobservable 
  December 31,   Identical Assets   Inputs   Inputs 
  2016   (Level 1)   (Level 2)   (Level 3) 

Deferred compensation plan investments

  $22,204   $22,204   $—     $—   
  

 

   

 

   

 

   

 

 

Total assets measured at fair value

  $22,204   $22,204   $—     $—   
  

 

   

 

   

 

   

 

 

The remainder of the assets and liabilities held by the Company at September 30, 20172018 are not required to be recorded at fair value. Thevalue, and the carrying value of certain of these assets and liabilities do not approximate fair value, as described below.

As further discussed in Note 5 and in the Company’s Annual Report on Form10-K for the year ended December 31, 2016, in connection with the development of Gaylord National, the Company received two bonds (“Series A Bond” and “Series B Bond”) from Prince George’s County, Maryland which had aggregate carrying values of $78.7 million and $71.8 million, respectively, at September 30, 2017. The maturity dates of the Series A Bond and the Series B Bond are July 1, 2034 and September 1, 2037, respectively. 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, which the Company considers as Level 3, the fair value of the Series A Bond, which has the senior claim to the cash flows supporting these bonds, approximated carrying value at September 30, 2017 and the fair value of the Series B Bond was approximately $54 million at September 30, 2017. While the fair value of the Series B Bond decreased to less than its carrying value during 2011 due to a change in the timing of the debt service payments, the Company has the intent and ability to hold this bond to maturity and expects to receive all debt service payments due under the note. Therefore, the Company does not consider the Series B Bond to be other than temporarily impaired at September 30, 2017.value.

15. FINANCIAL REPORTING BY BUSINESS SEGMENTS:

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

·

Hospitality, which includes Gaylord Opryland, Gaylord Palms, Gaylord Texan, Gaylord National, the Inn at Opryland, the AC Hotel, and the Company’s equity investment in the Gaylord Rockies joint venture;Rockies;

·

Entertainment, which includes the Grand Ole Opry, the Ryman Auditorium,WSM-AM, Ole Red, Opry City Stage, and the Company’s other attractionsNashville-based attractions; and media and entertainment businesses, as well as the Company’s investment in a joint venture associated with a Times Square restaurant and entertainment venue; and

·

Corporate and Other, which includes the Company’s corporate expenses.

14


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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2018

    

2017

    

2018

    

2017

Revenues:

 

 

  

 

 

  

 

 

  

 

 

  

Hospitality

 

$

249,240

 

$

229,590

 

$

806,107

 

$

747,117

Entertainment

 

 

43,009

 

 

35,134

 

 

108,446

 

 

92,427

Corporate and Other

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Total

 

$

292,249

 

$

264,724

 

$

914,553

 

$

839,544

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

  

 

 

  

 

 

  

 

 

  

Hospitality

 

$

27,946

 

$

26,061

 

$

81,379

 

$

76,786

Entertainment

 

 

2,613

 

 

1,965

 

 

6,885

 

 

5,465

Corporate and Other

 

 

435

 

 

520

 

 

1,391

 

 

1,611

Total

 

$

30,994

 

$

28,546

 

$

89,655

 

$

83,862

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

  

 

 

  

 

 

  

 

 

  

Hospitality

 

$

43,518

 

$

36,298

 

$

175,213

 

$

149,788

Entertainment

 

 

9,069

 

 

10,518

 

 

20,614

 

 

25,325

Corporate and Other

 

 

(7,647)

 

 

(8,429)

 

 

(24,572)

 

 

(24,397)

Preopening costs

 

 

(300)

 

 

(877)

 

 

(3,972)

 

 

(1,587)

Impairment and other charges

 

 

(4,540)

 

 

 —

 

 

(4,540)

 

 

 —

Total operating income

 

 

40,100

 

 

37,510

 

 

162,743

 

 

149,129

Interest expense

 

 

(19,220)

 

 

(16,621)

 

 

(55,574)

 

 

(49,640)

Interest income

 

 

2,678

 

 

2,957

 

 

8,197

 

 

8,874

Loss from joint ventures

 

 

(985)

 

 

(899)

 

 

(2,227)

 

 

(2,616)

Other gains and (losses), net

 

 

1,881

 

 

1,453

 

 

2,085

 

 

57

Income before income taxes

 

$

24,454

 

$

24,400

 

$

115,224

 

$

105,804

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2017   2016   2017   2016 

Revenues:

        

Hospitality

  $229,590   $241,019   $747,117   $747,539 

Entertainment

   35,134    30,701    92,427    81,893 

Corporate and Other

   —      —      —      —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $264,724   $271,720   $839,544   $829,432 
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization:

        

Hospitality

  $26,061   $24,401   $76,786   $75,051 

Entertainment

   1,965    1,637    5,465    4,845 

Corporate and Other

   520    668    1,611    1,992 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $28,546   $26,706   $83,862   $81,888 
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income:

        

Hospitality

  $36,478   $45,718   $150,281   $154,195 

Entertainment

   10,548    9,964    25,403    22,418 

Corporate and Other

   (9,740   (9,115   (25,935   (24,307

Preopening costs

   (877   —      (1,587   —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income

   36,409    46,567    148,162    152,306 

Interest expense

   (16,621   (15,947   (49,640   (48,002

Interest income

   2,957    2,965    8,874    9,116 

Loss from joint ventures

   (899   (638   (2,616   (2,086

Other gains and (losses), net

   2,554    2,468    1,024    2,288 
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

  $24,400   $35,415   $105,804   $113,622 
  

 

 

   

 

 

   

 

 

   

 

 

 

16. INFORMATION CONCERNING GUARANTOR ANDNON-GUARANTOR SUBSIDIARIES:

The $350 Million 5% Senior Notes and the $400 Million 5% Senior Notes were each issued by the Operating Partnership and Finco and are guaranteed on a senior unsecured basis by the Company, each of the Company’s four wholly-owned subsidiaries that own the Gaylord Hotels properties, and certain other of the Company’s subsidiaries, each of which guarantees the Operating Partnership’s Amended Credit Agreement (such subsidiary guarantors, together with the Company, the “Guarantors”). The subsidiary Guarantors are 100% owned, and the guarantees are full and unconditional and joint and several. Not all of the Company’s subsidiaries have guaranteed the Company’s $350 Million 5% Senior Notes and the $400 Million 5% Senior Notes.

The following condensed consolidating financial information includes certain allocations of 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.

15


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 20172018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Parent

    

 

 

    

 

 

    

Non-

    

 

 

    

 

 

(in thousands)

 

Guarantor

 

Issuer

 

Guarantors

 

Guarantors

 

Eliminations

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Property and equipment, net of accumulated depreciation

 

$

 —

 

$

 —

 

$

1,647,468

 

$

479,296

 

$

 —

 

$

2,126,764

Cash and cash equivalents - unrestricted

 

 

58

 

 

2,508

 

 

192

 

 

83,267

 

 

 —

 

 

86,025

Cash and cash equivalents - restricted

 

 

 —

 

 

 —

 

 

 —

 

 

38,372

 

 

 —

 

 

38,372

Notes receivable

 

 

 —

 

 

 —

 

 

 —

 

 

108,696

 

 

 —

 

 

108,696

Investment in Gaylord Rockies joint venture

 

 

 —

 

 

 —

 

 

 —

 

 

89,403

 

 

 —

 

 

89,403

Trade receivables, less allowance

 

 

 —

 

 

 —

 

 

 —

 

 

80,595

 

 

 —

 

 

80,595

Deferred income tax assets, net

 

 

 —

 

 

 —

 

 

(336)

 

 

40,785

 

 

 —

 

 

40,449

Prepaid expenses and other assets

 

 

230

 

 

58

 

 

 2

 

 

74,051

 

 

 —

 

 

74,341

Intercompany receivables, net

 

 

 —

 

 

 —

 

 

1,846,754

 

 

 —

 

 

(1,846,754)

 

 

 —

Investments

 

 

995,468

 

 

2,890,033

 

 

650,362

 

 

1,384,814

 

 

(5,920,677)

 

 

 —

Total assets

 

$

995,756

 

$

2,892,599

 

$

4,144,442

 

$

2,379,279

 

$

(7,767,431)

 

$

2,644,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Debt and capital lease obligations

 

$

 —

 

$

1,692,803

 

$

 —

 

$

624

 

$

 —

 

$

1,693,427

Accounts payable and accrued liabilities

 

 

82

 

 

22,793

 

 

5,376

 

 

186,460

 

 

 —

 

 

214,711

Dividends payable

 

 

44,668

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

44,668

Deferred management rights proceeds

 

 

 —

 

 

 —

 

 

 —

 

 

174,784

 

 

 —

 

 

174,784

Other liabilities

 

 

 —

 

 

 —

 

 

98,821

 

 

60,739

 

 

 —

 

 

159,560

Intercompany payables, net

 

 

593,511

 

 

969,127

 

 

 —

 

 

284,116

 

 

(1,846,754)

 

 

 —

Commitments and contingencies

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Stockholders’ equity:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Preferred stock

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Common stock

 

 

513

 

 

 1

 

 

 1

 

 

2,387

 

 

(2,389)

 

 

513

Additional paid-in-capital

 

 

898,845

 

 

542,991

 

 

2,835,468

 

 

2,093,818

 

 

(5,472,277)

 

 

898,845

Treasury stock

 

 

(14,195)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(14,195)

Accumulated deficit

 

 

(504,577)

 

 

(335,116)

 

 

1,204,776

 

 

(400,558)

 

 

(469,102)

 

 

(504,577)

Accumulated other comprehensive loss

 

 

(23,091)

 

 

 —

 

 

 —

 

 

(23,091)

 

 

23,091

 

 

(23,091)

Total stockholders' equity

 

 

357,495

 

 

207,876

 

 

4,040,245

 

 

1,672,556

 

 

(5,920,677)

 

 

357,495

Total liabilities and stockholders' equity

 

$

995,756

 

$

2,892,599

 

$

4,144,442

 

$

2,379,279

 

$

(7,767,431)

 

$

2,644,645

 

  Parent        Non-       
(in thousands) Guarantor  Issuer  Guarantors  Guarantors  Eliminations  Consolidated 

ASSETS:

      

Property and equipment, net of accumulated depreciation

 $—    $—    $1,626,061  $418,382  $—    $2,044,443 

Cash and cash equivalents—unrestricted

  130   311   522   61,709   —     62,672 

Cash and cash equivalents—restricted

  —     —     —     14,703   —     14,703 

Notes receivable

  —     —     —     150,493   —     150,493 

Investment in Gaylord Rockies joint venture

  —     —     —     88,378   —     88,378 

Trade receivables, less allowance

  —     —     —     56,684   —     56,684 

Prepaid expenses and other assets

  —     —     —     85,722   (10,593  75,129 

Intercompany receivables, net

  —     —     1,670,070   —     (1,670,070  —   

Investments

  979,917   2,886,063   647,247   768,523   (5,281,750  —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets

 $980,047  $2,886,374  $3,943,900  $1,644,594  $(6,962,413 $2,492,502 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

      

Debt and capital lease obligations

 $—    $1,566,110  $—    $644  $—    $1,566,754 

Accounts payable and accrued liabilities

  702   20,487   8,802   178,892   (10,593  198,290 

Dividends payable

  41,866   —     —     —     —     41,866 

Deferred management rights proceeds

  —     —     —     177,815   —     177,815 

Deferred income tax liabilities, net

  209   —     (201  961   —     969 

Other liabilities

  —     —     93,798   61,614   —     155,412 

Intercompany payables, net

  585,874   847,692   —     236,504   (1,670,070  —   

Commitments and contingencies

      

Stockholders’ equity:

      

Preferred stock

  —     —     —     —     —     —   

Common stock

  512   1   1   2,387   (2,389  512 

Additionalpaid-in-capital

  894,883   713,735   2,831,499   1,473,558   (5,018,792  894,883 

Treasury stock

  (11,542  —     —     —     —     (11,542

Accumulated deficit

  (511,798  (261,651  1,010,001   (467,122  (281,228  (511,798

Accumulated other comprehensive loss

  (20,659  —     —     (20,659  20,659   (20,659
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total stockholders’ equity

  351,396   452,085   3,841,501   988,164   (5,281,750  351,396 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total liabilities and stockholders’ equity

 $980,047  $2,886,374  $3,943,900  $1,644,594  $(6,962,413 $2,492,502 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

16


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 20162017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Parent

    

 

 

    

 

 

    

Non-

    

 

 

    

 

 

(in thousands)

 

Guarantor

 

Issuer

 

Guarantors

 

Guarantors

 

Eliminations

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Property and equipment, net of accumulated depreciation

 

$

 —

 

$

 —

 

$

1,640,274

 

$

425,383

 

$

 —

 

$

2,065,657

Cash and cash equivalents - unrestricted

 

 

38

 

 

759

 

 

36

 

 

56,724

 

 

 —

 

 

57,557

Cash and cash equivalents - restricted

 

 

 —

 

 

 —

 

 

 —

 

 

21,153

 

 

 —

 

 

21,153

Notes receivable

 

 

 —

 

 

 —

 

 

 —

 

 

111,423

 

 

 —

 

 

111,423

Investment in Gaylord Rockies joint venture

 

 

 —

 

 

 —

 

 

 —

 

 

88,685

 

 

 —

 

 

88,685

Trade receivables, less allowance

 

 

 —

 

 

 —

 

 

 —

 

 

57,520

 

 

 —

 

 

57,520

Deferred income tax assets, net

 

 

 —

 

 

 —

 

 

(301)

 

 

50,418

 

 

 —

 

 

50,117

Prepaid expenses and other assets

 

 

 —

 

 

 —

 

 

 5

 

 

72,111

 

 

 —

 

 

72,116

Intercompany receivables, net

 

 

 —

 

 

 —

 

 

1,717,157

 

 

 —

 

 

(1,717,157)

 

 

 —

Investments

 

 

1,006,461

 

 

2,890,032

 

 

651,006

 

 

1,364,814

 

 

(5,912,313)

 

 

 —

Total assets

 

$

1,006,499

 

$

2,890,791

 

$

4,008,177

 

$

2,248,231

 

$

(7,629,470)

 

$

2,524,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Debt and capital lease obligations

 

$

 —

 

$

1,590,753

 

$

 —

 

$

639

 

$

 —

 

$

1,591,392

Accounts payable and accrued liabilities

 

 

150

 

 

11,180

 

 

15,795

 

 

152,524

 

 

 —

 

 

179,649

Dividends payable

 

 

42,129

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

42,129

Deferred management rights proceeds

 

 

 —

 

 

 —

 

 

 —

 

 

177,057

 

 

 —

 

 

177,057

Other liabilities

 

 

 —

 

 

 —

 

 

95,078

 

 

60,767

 

 

 —

 

 

155,845

Intercompany payables, net

 

 

586,064

 

 

895,408

 

 

 —

 

 

235,685

 

 

(1,717,157)

 

 

 —

Commitments and contingencies

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Stockholders’ equity:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Preferred stock

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Common stock

 

 

512

 

 

 1

 

 

 1

 

 

2,387

 

 

(2,389)

 

 

512

Additional paid-in-capital

 

 

896,759

 

 

671,875

 

 

2,835,468

 

 

2,073,818

 

 

(5,581,161)

 

 

896,759

Treasury stock

 

 

(13,253)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(13,253)

Accumulated deficit

 

 

(479,170)

 

 

(278,426)

 

 

1,061,835

 

 

(427,954)

 

 

(355,455)

 

 

(479,170)

Accumulated other comprehensive loss

 

 

(26,692)

 

 

 —

 

 

 —

 

 

(26,692)

 

 

26,692

 

 

(26,692)

Total stockholders' equity

 

 

378,156

 

 

393,450

 

 

3,897,304

 

 

1,621,559

 

 

(5,912,313)

 

 

378,156

Total liabilities and stockholders' equity

 

$

1,006,499

 

$

2,890,791

 

$

4,008,177

 

$

2,248,231

 

$

(7,629,470)

 

$

2,524,228

 

  Parent        Non-       
(in thousands) Guarantor  Issuer  Guarantors  Guarantors  Eliminations  Consolidated 

ASSETS:

      

Property and equipment, net of accumulated depreciation

 $—    $—    $1,600,288  $397,724  $—    $1,998,012 

Cash and cash equivalents - unrestricted

  28   1,234   23   57,843   —     59,128 

Cash and cash equivalents - restricted

  —     —     —     22,062   —     22,062 

Notes receivable

  —     —     —     152,882   —     152,882 

Investment in Gaylord Rockies joint venture

  —     —     —     70,440   —     70,440 

Trade receivables, less allowance

  —     —     —     47,818   —     47,818 

Prepaid expenses and other assets

  460   42   5   55,407   (503  55,411 

Intercompany receivables, net

  —     —     1,640,220   —     (1,640,220  —   

Investments

  988,467   2,886,113   546,007   803,618   (5,224,205  —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets

 $988,955  $2,887,389  $3,786,543  $1,607,794  $(6,864,928 $2,405,753 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

      

Debt and capital lease obligations

 $—    $1,501,895  $—    $659  $—    $1,502,554 

Accounts payable and accrued liabilities

  740   8,152   11,863   142,940   (490  163,205 

Dividends payable

  39,404   —     —     —     —     39,404 

Deferred management rights proceeds

  —     —     —     180,088   —     180,088 

Deferred income tax liabilities, net

  828   —     573   68   —     1,469 

Other liabilities

  —     —     89,989   61,060   (13  151,036 

Intercompany payables, net

  579,986   752,852   —     307,382   (1,640,220  —   

Commitments and contingencies

      

Stockholders’ equity:

      

Preferred stock

  —     —     —     —     —     —   

Common stock

  510   1   1   2,387   (2,389  510 

Additionalpaid-in-capital

  893,102   835,294   2,827,692   1,410,611   (5,073,597  893,102 

Treasury stock

  (11,542  —     —     —     —     (11,542

Accumulated deficit

  (491,805  (210,805  856,425   (475,133  (170,487  (491,805

Accumulated other comprehensive loss

  (22,268  —     —     (22,268  22,268   (22,268
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total stockholders’ equity

  367,997   624,490   3,684,118   915,597   (5,224,205  367,997 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total liabilities and stockholders’ equity

 $988,955  $2,887,389  $3,786,543  $1,607,794  $(6,864,928 $2,405,753 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

17


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

For the Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent

 

 

 

 

 

 

 

Non-

 

 

 

 

 

 

(in thousands)

    

Guarantor

    

Issuer 

    

Guarantors 

    

Guarantors 

    

Eliminations 

    

Consolidated 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

$

 —

 

$

 —

 

$

 —

 

$

103,181

 

$

 —

 

$

103,181

Food and beverage

 

 

 —

 

 

 —

 

 

 —

 

 

118,496

 

 

 —

 

 

118,496

Other hotel revenue

 

 

 —

 

 

 —

 

 

76,592

 

 

32,691

 

 

(81,720)

 

 

27,563

Entertainment

 

 

 —

 

 

 —

 

 

 —

 

 

43,009

 

 

 —

 

 

43,009

Total revenues

 

 

 —

 

 

 —

 

 

76,592

 

 

297,377

 

 

(81,720)

 

 

292,249

Operating expenses:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

 

 —

 

 

 —

 

 

 —

 

 

29,563

 

 

 —

 

 

29,563

Food and beverage

 

 

 —

 

 

 —

 

 

 —

 

 

67,305

 

 

 —

 

 

67,305

Other hotel expenses

 

 

 —

 

 

 —

 

 

11,510

 

 

139,318

 

 

(76,478)

 

 

74,350

Management fees, net

 

 

 —

 

 

 —

 

 

 —

 

 

6,558

 

 

 —

 

 

6,558

Total hotel operating expenses

 

 

 —

 

 

 —

 

 

11,510

 

 

242,744

 

 

(76,478)

 

 

177,776

Entertainment

 

 

 —

 

 

 —

 

 

 —

 

 

31,327

 

 

 —

 

 

31,327

Corporate

 

 

63

 

 

410

 

 

 —

 

 

6,739

 

 

 —

 

 

7,212

Preopening costs

 

 

 —

 

 

 —

 

 

 —

 

 

300

 

 

 —

 

 

300

Corporate overhead allocation

 

 

2,873

 

 

 —

 

 

2,369

 

 

 —

 

 

(5,242)

 

 

 —

Depreciation and amortization

 

 

 —

 

 

 —

 

 

15,548

 

 

15,446

 

 

 —

 

 

30,994

Impairment and other charges

 

 

 —

 

 

 —

 

 

 —

 

 

4,540

 

 

 —

 

 

4,540

Total operating expenses

 

 

2,936

 

 

410

 

 

29,427

 

 

301,096

 

 

(81,720)

 

 

252,149

Operating income (loss)

 

 

(2,936)

 

 

(410)

 

 

47,165

 

 

(3,719)

 

 

 —

 

 

40,100

Interest expense

 

 

 —

 

 

(19,214)

 

 

 —

 

 

(6)

 

 

 —

 

 

(19,220)

Interest income

 

 

 —

 

 

 —

 

 

 —

 

 

2,678

 

 

 —

 

 

2,678

Loss from joint ventures

 

 

 —

 

 

 —

 

 

 —

 

 

(985)

 

 

 —

 

 

(985)

Other gains and (losses), net

 

 

 —

 

 

 —

 

 

 —

 

 

1,881

 

 

 —

 

 

1,881

Income (loss) before income taxes

 

 

(2,936)

 

 

(19,624)

 

 

47,165

 

 

(151)

 

 

 —

 

 

24,454

Provision for income taxes

 

 

 —

 

 

 —

 

 

(78)

 

 

(1,785)

 

 

 —

 

 

(1,863)

Equity in subsidiaries’ earnings, net

 

 

25,527

 

 

 —

 

 

 —

 

 

 —

 

 

(25,527)

 

 

 —

Net income (loss)

 

$

22,591

 

$

(19,624)

 

$

47,087

 

$

(1,936)

 

$

(25,527)

 

$

22,591

Comprehensive income (loss)

 

$

26,030

 

$

(19,624)

 

$

47,087

 

$

1,503

 

$

(28,966)

 

$

26,030

18


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

For the Three Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent

 

 

 

 

 

 

 

Non-

 

 

 

 

 

 

(in thousands)

    

Guarantor

    

Issuer 

    

Guarantors 

    

Guarantors 

    

Eliminations 

    

Consolidated 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

$

 —

 

$

 —

 

$

 —

 

$

100,534

 

$

 —

 

$

100,534

Food and beverage

 

 

 —

 

 

 —

 

 

 —

 

 

104,437

 

 

 —

 

 

104,437

Other hotel revenue

 

 

 —

 

 

 —

 

 

78,196

 

 

28,701

 

 

(82,278)

 

 

24,619

Entertainment

 

 

 —

 

 

 —

 

 

 —

 

 

35,134

 

 

 —

 

 

35,134

Total revenues

 

 

 —

 

 

 —

 

 

78,196

 

 

268,806

 

 

(82,278)

 

 

264,724

Operating expenses:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

 

 —

 

 

 —

 

 

 —

 

 

27,575

 

 

 —

 

 

27,575

Food and beverage

 

 

 —

 

 

 —

 

 

 —

 

 

62,649

 

 

 —

 

 

62,649

Other hotel expenses

 

 

 —

 

 

 —

 

 

11,177

 

 

139,209

 

 

(78,087)

 

 

72,299

Management fees, net

 

 

 —

 

 

 —

 

 

 —

 

 

4,708

 

 

 —

 

 

4,708

Total hotel operating expenses

 

 

 —

 

 

 —

 

 

11,177

 

 

234,141

 

 

(78,087)

 

 

167,231

Entertainment

 

 

 —

 

 

 —

 

 

 —

 

 

22,652

 

 

(1)

 

 

22,651

Corporate

 

 

101

 

 

424

 

 

 —

 

 

7,384

 

 

 —

 

 

7,909

Preopening costs

 

 

 —

 

 

 —

 

 

 —

 

 

877

 

 

 —

 

 

877

Corporate overhead allocation

 

 

2,339

 

 

 —

 

 

1,851

 

 

 —

 

 

(4,190)

 

 

 —

Depreciation and amortization

 

 

 —

 

 

 —

 

 

14,933

 

 

13,613

 

 

 —

 

 

28,546

Total operating expenses

 

 

2,440

 

 

424

 

 

27,961

 

 

278,667

 

 

(82,278)

 

 

227,214

Operating income (loss)

 

 

(2,440)

 

 

(424)

 

 

50,235

 

 

(9,861)

 

 

 —

 

 

37,510

Interest expense

 

 

 —

 

 

(16,614)

 

 

 —

 

 

(7)

 

 

 —

 

 

(16,621)

Interest income

 

 

 —

 

 

 —

 

 

 —

 

 

2,957

 

 

 —

 

 

2,957

Loss from joint ventures

 

 

 —

 

 

 —

 

 

 —

 

 

(899)

 

 

 —

 

 

(899)

Other gains and (losses), net

 

 

 —

 

 

 —

 

 

 —

 

 

1,453

 

 

 —

 

 

1,453

Income (loss) before income taxes

 

 

(2,440)

 

 

(17,038)

 

 

50,235

 

 

(6,357)

 

 

 —

 

 

24,400

(Provision) benefit for income taxes

 

 

 —

 

 

 —

 

 

590

 

 

(1,120)

 

 

 —

 

 

(530)

Equity in subsidiaries’ earnings, net

 

 

26,310

 

 

 —

 

 

 —

 

 

 —

 

 

(26,310)

 

 

 —

Net income (loss)

 

$

23,870

 

$

(17,038)

 

$

50,825

 

$

(7,477)

 

$

(26,310)

 

$

23,870

Comprehensive income (loss)

 

$

25,434

 

$

(17,038)

 

$

50,825

 

$

(5,913)

 

$

(27,874)

 

$

25,434

 

  Parent        Non-       
(in thousands) Guarantor  Issuer  Guarantors  Guarantors  Eliminations  Consolidated 

Revenues:

      

Rooms

 $—    $—    $—    $100,534  $—    $100,534 

Food and beverage

  —     —     —     104,437   —     104,437 

Other hotel revenue

  —     —     78,196   28,701   (82,278  24,619 

Entertainment

  —     —     —     35,134   —     35,134 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

  —     —     78,196   268,806   (82,278  264,724 

Operating expenses:

      

Rooms

  —     —     —     27,575   —     27,575 

Food and beverage

  —     —     —     62,649   —     62,649 

Other hotel expenses

  —     —     11,177   139,029   (78,087  72,119 

Management fees, net

  —     —     —     4,708   —     4,708 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total hotel operating expenses

  —     —     11,177   233,961   (78,087  167,051 

Entertainment

  —     —     —     22,622   (1  22,621 

Corporate

  101   424   —     8,695   —     9,220 

Preopening costs

  —     —     —     877   —     877 

Corporate overhead allocation

  2,339   —     1,851   —     (4,190  —   

Depreciation and amortization

  —     —     14,933   13,613   —     28,546 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating expenses

  2,440   424   27,961   279,768   (82,278  228,315 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income (loss)

  (2,440  (424  50,235   (10,962  —     36,409 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Interest expense

  —     (16,614  —     (7  —     (16,621

Interest income

  —     —     —     2,957   —     2,957 

Loss from joint ventures

  —     —     —     (899  —     (899

Other gains and (losses), net

  —     —     —     2,554   —     2,554 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income (loss) before income taxes

  (2,440  (17,038  50,235   (6,357  —     24,400 

(Provision) benefit for income taxes

  —     —     590   (1,120  —     (530

Equity in subsidiaries’ earnings, net

  26,310   —     —     —     (26,310  —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

 $23,870  $(17,038 $50,825  $(7,477 $(26,310 $23,870 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive income (loss)

 $25,434  $(17,038 $50,825  $(5,913 $(27,874 $25,434 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

19


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

For the ThreeNine Months Ended September 30, 20162018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Parent

    

 

 

    

 

 

    

Non-

    

 

 

    

 

 

(in thousands)

 

Guarantor

 

Issuer

 

Guarantors

 

Guarantors

 

Eliminations

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

$

 —

 

$

 —

 

$

 —

 

$

332,490

 

$

 —

 

$

332,490

Food and beverage

 

 

 —

 

 

 —

 

 

 —

 

 

392,488

 

 

 —

 

 

392,488

Other hotel revenue

 

 

 —

 

 

 —

 

 

229,608

 

 

95,305

 

 

(243,784)

 

 

81,129

Entertainment

 

 

 —

 

 

 —

 

 

 —

 

 

108,470

 

 

(24)

 

 

108,446

Total revenues

 

 

 —

 

 

 —

 

 

229,608

 

 

928,753

 

 

(243,808)

 

 

914,553

Operating expenses:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

 

 —

 

 

 —

 

 

 —

 

 

88,550

 

 

 —

 

 

88,550

Food and beverage

 

 

 —

 

 

 —

 

 

 —

 

 

211,677

 

 

 —

 

 

211,677

Other hotel expenses

 

 

 —

 

 

 —

 

 

34,387

 

 

421,846

 

 

(229,268)

 

 

226,965

Management fees, net

 

 

 —

 

 

 —

 

 

 —

 

 

22,323

 

 

 —

 

 

22,323

Total hotel operating expenses

 

 

 —

 

 

 —

 

 

34,387

 

 

744,396

 

 

(229,268)

 

 

549,515

Entertainment

 

 

 —

 

 

 —

 

 

 —

 

 

80,971

 

 

(24)

 

 

80,947

Corporate

 

 

188

 

 

1,135

 

 

 2

 

 

21,856

 

 

 —

 

 

23,181

Preopening costs

 

 

 —

 

 

 —

 

 

 —

 

 

3,972

 

 

 —

 

 

3,972

Corporate overhead allocation

 

 

7,983

 

 

 —

 

 

6,533

 

 

 —

 

 

(14,516)

 

 

 —

Depreciation and amortization

 

 

 —

 

 

 —

 

 

45,583

 

 

44,072

 

 

 —

 

 

89,655

Impairment and other charges

 

 

 —

 

 

 —

 

 

 —

 

 

4,540

 

 

 —

 

 

4,540

Total operating expenses

 

 

8,171

 

 

1,135

 

 

86,505

 

 

899,807

 

 

(243,808)

 

 

751,810

Operating income (loss)

 

 

(8,171)

 

 

(1,135)

 

 

143,103

 

 

28,946

 

 

 —

 

 

162,743

Interest expense

 

 

 —

 

 

(55,555)

 

 

 —

 

 

(19)

 

 

 —

 

 

(55,574)

Interest income

 

 

 —

 

 

 —

 

 

 —

 

 

8,197

 

 

 —

 

 

8,197

Loss from joint ventures

 

 

 —

 

 

 —

 

 

 —

 

 

(2,227)

 

 

 —

 

 

(2,227)

Other gains and (losses), net

 

 

 —

 

 

 —

 

 

 —

 

 

2,085

 

 

 —

 

 

2,085

Income (loss) before income taxes

 

 

(8,171)

 

 

(56,690)

 

 

143,103

 

 

36,982

 

 

 —

 

 

115,224

Provision for income taxes

 

 

 —

 

 

 —

 

 

(162)

 

 

(9,586)

 

 

 —

 

 

(9,748)

Equity in subsidiaries’ earnings, net

 

 

113,647

 

 

 —

 

 

 —

 

 

 —

 

 

(113,647)

 

 

 —

Net income (loss)

 

$

105,476

 

$

(56,690)

 

$

142,941

 

$

27,396

 

$

(113,647)

 

$

105,476

Comprehensive income (loss)

 

$

109,077

 

$

(56,690)

 

$

142,941

 

$

30,997

 

$

(117,248)

 

$

109,077

 

  Parent        Non-       
(in thousands) Guarantor  Issuer  Guarantors  Guarantors  Eliminations  Consolidated 

Revenues:

      

Rooms

 $—    $—    $—    $101,085  $—    $101,085 

Food and beverage

  —     —     —     113,100   —     113,100 

Other hotel revenue

  —     —     74,738   30,724   (78,628  26,834 

Entertainment

  46   —     —     30,701   (46  30,701 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

  46   —     74,738   275,610   (78,674  271,720 

Operating expenses:

      

Rooms

  —     —     —     28,371   —     28,371 

Food and beverage

  —     —     —     64,790   —     64,790 

Other hotel expenses

  —     —     10,860   137,101   (74,630  73,331 

Management fees, net

  —     —     —     4,408   —     4,408 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total hotel operating expenses

  —     —     10,860   234,670   (74,630  170,900 

Entertainment

  —     —     —     19,146   (46  19,100 

Corporate

  98   410   —     7,939   —     8,447 

Corporate overhead allocation

  2,278   —     1,720   —     (3,998  —   

Depreciation and amortization

  55   —     14,765   11,886   —     26,706 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating expenses

  2,431   410   27,345   273,641   (78,674  225,153 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income (loss)

  (2,385  (410  47,393   1,969   —     46,567 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Interest expense

  18   (16,444  119   360   —     (15,947

Interest income

  —     —     —     2,965   —     2,965 

Loss from joint ventures

  —     —     —     (638  —     (638

Other gains and (losses), net

  —     —     —     2,468   —     2,468 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income (loss) before income taxes

  (2,367  (16,854  47,512   7,124   —     35,415 

(Provision) benefit for income taxes

  (352  —     36   (1,506  —     (1,822

Equity in subsidiaries’ earnings, net

  36,312   —     —     —     (36,312  —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

 $33,593  $(16,854 $47,548  $5,618  $(36,312 $33,593 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive income (loss)

 $29,979  $(16,854 $47,548  $2,004  $(32,698 $29,979 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

20


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Parent

    

 

 

    

 

 

    

Non-

    

 

 

    

 

 

(in thousands)

    

Guarantor

 

Issuer 

    

Guarantors 

    

Guarantors 

    

Eliminations 

    

Consolidated 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

 —

 

$

 —

 

$

 —

 

$

314,577

 

$

 —

 

$

314,577

Food and beverage

 

 

 —

 

 

 —

 

 

 —

 

 

359,047

 

 

 —

 

 

359,047

Other hotel revenue

 

 

 —

 

 

 —

 

 

236,517

 

 

85,278

 

 

(248,302)

 

 

73,493

Entertainment

 

 

 —

 

 

 —

 

 

 —

 

 

92,451

 

 

(24)

 

 

92,427

Total revenues

 

 

 —

 

 

 —

 

 

236,517

 

 

851,353

 

 

(248,326)

 

 

839,544

Operating expenses:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Rooms

 

 

 —

 

 

 —

 

 

 —

 

 

83,962

 

 

 —

 

 

83,962

Food and beverage

 

 

 —

 

 

 —

 

 

 —

 

 

200,091

 

 

 —

 

 

200,091

Other hotel expenses

 

 

 —

 

 

 —

 

 

33,533

 

 

422,732

 

 

(236,192)

 

 

220,073

Management fees, net

 

 

 —

 

 

 —

 

 

 —

 

 

16,417

 

 

 —

 

 

16,417

Total hotel operating expenses

 

 

 —

 

 

 —

 

 

33,533

 

 

723,202

 

 

(236,192)

 

 

520,543

Entertainment

 

 

 —

 

 

 —

 

 

 —

 

 

61,661

 

 

(24)

 

 

61,637

Corporate

 

 

191

 

 

1,226

 

 

 2

 

 

21,367

 

 

 —

 

 

22,786

Preopening costs

 

 

 —

 

 

 —

 

 

 —

 

 

1,587

 

 

 —

 

 

1,587

Corporate overhead allocation

 

 

6,768

 

 

 —

 

 

5,342

 

 

 —

 

 

(12,110)

 

 

 —

Depreciation and amortization

 

 

 —

 

 

 —

 

 

44,617

 

 

39,245

 

 

 —

 

 

83,862

Total operating expenses

 

 

6,959

 

 

1,226

 

 

83,494

 

 

847,062

 

 

(248,326)

 

 

690,415

Operating income (loss)

 

 

(6,959)

 

 

(1,226)

 

 

153,023

 

 

4,291

 

 

 —

 

 

149,129

Interest expense

 

 

 —

 

 

(49,620)

 

 

 —

 

 

(20)

 

 

 —

 

 

(49,640)

Interest income

 

 

 —

 

 

 —

 

 

 —

 

 

8,874

 

 

 —

 

 

8,874

Loss from joint ventures

 

 

 —

 

 

 —

 

 

 —

 

 

(2,616)

 

 

 —

 

 

(2,616)

Other gains and (losses), net

 

 

 —

 

 

 —

 

 

 —

 

 

57

 

 

 —

 

 

57

Income (loss) before income taxes

 

 

(6,959)

 

 

(50,846)

 

 

153,023

 

 

10,586

 

 

 —

 

 

105,804

(Provision) benefit for income taxes

 

 

 —

 

 

 —

 

 

553

 

 

(2,575)

 

 

 —

 

 

(2,022)

Equity in subsidiaries’ earnings, net

 

 

110,741

 

 

 —

 

 

 —

 

 

 —

 

 

(110,741)

 

 

 —

Net income (loss)

 

$

103,782

 

$

(50,846)

 

$

153,576

 

$

8,011

 

$

(110,741)

 

$

103,782

Comprehensive income (loss)

 

$

105,391

 

$

(50,846)

 

$

153,576

 

$

9,620

 

$

(112,350)

 

$

105,391

 

   Parent         Non-       
(in thousands)  Guarantor  Issuer  Guarantors   Guarantors  Eliminations  Consolidated 

Revenues:

        

Rooms

  $—    $—    $—     $314,577  $—    $314,577 

Food and beverage

   —     —     —      359,047   —     359,047 

Other hotel revenue

   —     —     236,517    85,278   (248,302  73,493 

Entertainment

   —     —     —      92,451   (24  92,427 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total revenues

   —     —     236,517    851,353   (248,326  839,544 

Operating expenses:

        

Rooms

   —     —     —      83,962   —     83,962 

Food and beverage

   —     —     —      200,091   —     200,091 

Other hotel expenses

   —     —     33,533    422,239   (236,192  219,580 

Management fees, net

   —     —     —      16,417   —     16,417 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total hotel operating expenses

   —     —     33,533    722,709   (236,192  520,050 

Entertainment

   —     —     —      61,583   (24  61,559 

Corporate

   191   1,226   2    22,905   —     24,324 

Preopening costs

   —     —     —      1,587   —     1,587 

Corporate overhead allocation

   6,768   —     5,342    —     (12,110  —   

Depreciation and amortization

   —     —     44,617    39,245   —     83,862 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Total operating expenses

   6,959   1,226   83,494    848,029   (248,326  691,382 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Operating income (loss)

   (6,959  (1,226  153,023    3,324   —     148,162 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Interest expense

   —     (49,620  —      (20  —     (49,640

Interest income

   —     —     —      8,874   —     8,874 

Loss from joint ventures

   —     —     —      (2,616  —     (2,616

Other gains and (losses), net

   —     —     —      1,024   —     1,024 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Income (loss) before income taxes

   (6,959  (50,846  153,023    10,586   —     105,804 

(Provision) benefit for income taxes

   —     —     553    (2,575  —     (2,022

Equity in subsidiaries’ earnings, net

   110,741   —     —      —     (110,741  —   
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Net income (loss)

  $103,782  $(50,846 $153,576   $8,011  $(110,741 $103,782 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

Comprehensive income (loss)

  $105,391  $(50,846 $153,576   $9,620  $(112,350 $105,391 
  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

  

 

 

 

21


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOMECASH FLOWS

For the Nine Months Ended September 30, 20162018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Parent

    

 

 

    

 

    

Non-

    

 

 

    

 

 

(in thousands)

    

Guarantor

    

Issuer

    

Guarantors

    

Guarantor

    

Eliminations

    

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

132,910

 

$

(94,109)

 

$

56,336

 

$

130,139

 

$

 —

 

$

225,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 —

 

 

 —

 

 

(56,180)

 

 

(76,624)

 

 

 —

 

 

(132,804)

Investment in other joint ventures

 

 

 —

 

 

 —

 

 

 —

 

 

(2,199)

 

 

 —

 

 

(2,199)

Purchase of remaining interest in Opry City Stage

 

 

 —

 

 

 —

 

 

 —

 

 

(3,948)

 

 

 —

 

 

(3,948)

Other investing activities

 

 

 —

 

 

 —

 

 

 —

 

 

(3,591)

 

 

 —

 

 

(3,591)

Net cash used in investing activities

 

 

 —

 

 

 —

 

 

(56,180)

 

 

(86,362)

 

 

 —

 

 

(142,542)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowings under revolving credit facility

 

 

 —

 

 

99,000

 

 

 —

 

 

 —

 

 

 —

 

 

99,000

Repayments under term loan B

 

 

 —

 

 

(2,500)

 

 

 —

 

 

 —

 

 

 —

 

 

(2,500)

Deferred financing costs paid

 

 

 —

 

 

(642)

 

 

 —

 

 

 —

 

 

 —

 

 

(642)

Payment of dividends

 

 

(128,769)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(128,769)

Payment of tax withholdings for share-based compensation

 

 

(4,121)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(4,121)

Other financing activities

 

 

 —

 

 

 —

 

 

 —

 

 

(15)

 

 

 —

 

 

(15)

Net cash provided by (used in) financing activities

 

 

(132,890)

 

 

95,858

 

 

 —

 

 

(15)

 

 

 —

 

 

(37,047)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash, cash equivalents, and restricted cash

 

 

20

 

 

1,749

 

 

156

 

 

43,762

 

 

 —

 

 

45,687

Cash, cash equivalents, and restricted cash, beginning of period

 

 

38

 

 

759

 

 

36

 

 

77,877

 

 

 —

 

 

78,710

Cash, cash equivalents, and restricted cash, end of period

 

$

58

 

$

2,508

 

$

192

 

$

121,639

 

$

 —

 

$

124,397

 

   Parent        Non-       
(in thousands)  Guarantor  Issuer  Guarantors  Guarantors  Eliminations  Consolidated 

Revenues:

       

Rooms

  $—    $—    $—    $309,385  $—    $309,385 

Food and beverage

   —     —     —     362,550   —     362,550 

Other hotel revenue

   —     —     231,074   87,183   (242,653  75,604 

Entertainment

   194   —     —     81,867   (168  81,893 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

   194   —     231,074   840,985   (242,821  829,432 

Operating expenses:

       

Rooms

   —     —     —     82,492   —     82,492 

Food and beverage

   —     —     —     201,045   —     201,045 

Other hotel expenses

   —     —     32,749   417,510   (230,749  219,510 

Management fees, net

   —     —     —     15,246   —     15,246 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total hotel operating expenses

   —     —     32,749   716,293   (230,749  518,293 

Entertainment

   —     —     —     54,798   (168  54,630 

Corporate

   292   1,217   2   20,804   —     22,315 

Corporate overhead allocation

   6,748   —     5,156   —     (11,904  —   

Depreciation and amortization

   135   —     44,263   37,490   —     81,888 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating expenses

   7,175   1,217   82,170   829,385   (242,821  677,126 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income (loss)

   (6,981  (1,217  148,904   11,600   —     152,306 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Interest expense

   18   (48,896  254   622   —     (48,002

Interest income

   28   —     —    ��9,088   —     9,116 

Loss from joint ventures

   —     —     —     (2,086  —     (2,086

Other gains and (losses), net

   —     —     (87  2,375   —     2,288 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income (loss) before income taxes

   (6,935  (50,113  149,071   21,599   —     113,622 

Provision for income taxes

   (352  —     (54  (1,946  —     (2,352

Equity in subsidiaries’ earnings, net

   118,557   —     —     —     (118,557  —   
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

  $111,270  $(50,113 $149,017  $19,653  $(118,557 $111,270 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive income (loss)

  $107,704  $(50,113 $149,017  $16,087  $(114,991 $107,704 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

22


RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Parent

    

 

 

    

    

 

    

Non-

    

 

 

    

 

 

(in thousands)

    

Guarantor

    

Issuer

    

Guarantors

    

Guarantor

    

Eliminations

    

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

124,589

 

$

(60,255)

 

$

64,269

 

$

87,167

 

$

 —

 

$

215,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 —

 

 

 —

 

 

(63,770)

 

 

(63,378)

 

 

 —

 

 

(127,148)

Investment in Gaylord Rockies joint venture

 

 

 —

 

 

 —

 

 

 —

 

 

(16,309)

 

 

 —

 

 

(16,309)

Investment in other joint ventures

 

 

 —

 

 

 —

 

 

 —

 

 

(6,819)

 

 

 —

 

 

(6,819)

Other investing activities

 

 

 —

 

 

 —

 

 

 —

 

 

(4,139)

 

 

 —

 

 

(4,139)

Net cash used in investing activities

 

 

 —

 

 

 —

 

 

(63,770)

 

 

(90,645)

 

 

 —

 

 

(154,415)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net repayments under revolving credit facility

 

 

 —

 

 

(235,900)

 

 

 —

 

 

 —

 

 

 —

 

 

(235,900)

Borrowings under term loan A

 

 

 —

 

 

200,000

 

 

 —

 

 

 —

 

 

 —

 

 

200,000

Borrowings under term loan B

 

 

 —

 

 

500,000

 

 

 —

 

 

 —

 

 

 —

 

 

500,000

Repayments under term loan B

 

 

 —

 

 

(392,500)

 

 

 —

 

 

 —

 

 

 —

 

 

(392,500)

Deferred financing costs paid

 

 

 —

 

 

(12,268)

 

 

 —

 

 

 —

 

 

 —

 

 

(12,268)

Payment of dividends

 

 

(120,740)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(120,740)

Payment of tax withholdings for share-based compensation

 

 

(3,775)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(3,775)

Other financing activities

 

 

28

 

 

 —

 

 

 —

 

 

(15)

 

 

 —

 

 

13

Net cash provided by (used in) financing activities

 

 

(124,487)

 

 

59,332

 

 

 —

 

 

(15)

 

 

 —

 

 

(65,170)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash, cash equivalents, and restricted cash

 

 

102

 

 

(923)

 

 

499

 

 

(3,493)

 

 

 —

 

 

(3,815)

Cash, cash equivalents, and restricted cash, beginning of period

 

 

28

 

 

1,234

 

 

23

 

 

79,905

 

 

 —

 

 

81,190

Cash, cash equivalents, and restricted cash, end of period

 

$

130

 

$

311

 

$

522

 

$

76,412

 

$

 —

 

$

77,375

 

  Parent        Non-       
(in thousands) Guarantor  Issuer  Guarantors  Guarantors  Eliminations  Consolidated 

Net cash provided by (used in) operating activities

 $124,589  $(60,255 $64,269  $87,167  $—    $215,770 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Purchases of property and equipment

  —     —     (63,770  (63,378  —     (127,148

Investment in Gaylord Rockies joint venture

  —     —     —     (16,309  —     (16,309

Investment in other joint ventures

  —     —     —     (6,819  —     (6,819

Decrease in restricted cash and cash equivalents

  —     —     —     7,359   —     7,359 

Other investing activities

  —     —     —     (4,139  —     (4,139
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash used in investing activities

  —     —     (63,770  (83,286  —     (147,056
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net repayments under revolving credit facility

  —     (235,900  —     —     —     (235,900

Borrowings under term loan A

  —     200,000   —     —     —     200,000 

Borrowings under term loan B

  —     500,000   —     —     —     500,000 

Repayments under term loan B

  —     (392,500  —     —     —     (392,500

Deferred financing costs paid

  —     (12,268  —     —     —     (12,268

Payment of dividends

  (120,740  —     —     —     —     (120,740

Payment of tax withholdings for share-based compensation

  (3,775  —     —     —     —     (3,775

Other financing activities

  28   —     —     (15  —     13 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash provided by (used in) financing activities

  (124,487  59,332   —     (15  —     (65,170
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net change in cash and cash equivalents

  102   (923  499   3,866   —     3,544 

Cash and cash equivalents at beginning of period

  28   1,234   23   57,843   —     59,128 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash and cash equivalents at end of period

 $130  $311  $522  $61,709  $—    $62,672 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2016

 

   Parent        Non-        
(in thousands)  Guarantor  Issuer  Guarantors  Guarantors  Eliminations   Consolidated 

Net cash provided by (used in) operating activities

  $141,202  $(51,999 $23,151  $86,762  $—     $199,116 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Purchases of property and equipment

   (8,374  —     (23,304  (52,879  —      (84,557

Investment in Gaylord Rockies joint venture

   —     —     —     (50,443  —      (50,443

Investment in other joint ventures

   —     —     —     (750  —      (750

Proceeds from sale of Peterson LOI

   6,785   —     —     —     —      6,785 

Increase in restricted cash and cash equivalents

   —     —     —     (3,517  —      (3,517

Other investing activities

   —     —     28   995   —      1,023 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

   (1,589  —     (23,276  (106,594  —      (131,459
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Net repayments under revolving credit facility

   —     60,500   —     —     —      60,500 

Net borrowings under term loan B

   —     (3,000  —     —     —      (3,000

Repayment of note payable related to purchase of AC Hotel

   —     (6,000  —     —     —      (6,000

Repurchase of Company stock for retirement

   (24,811  —     —     —     —      (24,811

Payment of dividends

   (112,900  —     —     —     —      (112,900

Payment of tax withholdings for share-based compensation

   (3,150  —     —     —     —      (3,150

Other financing activities

   1,284   —     —     (13  —      1,271 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

   (139,577  51,500   —     (13  —      (88,090
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Net change in cash and cash equivalents

   36   (499  (125  (19,845  —      (20,433

Cash and cash equivalents at beginning of period

   23   1,578   158   54,532   —      56,291 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Cash and cash equivalents at end of period

  $59  $1,079  $33  $34,687  $—     $35,858 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

23


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Ryman Hospitality Properties, Inc. (“Ryman”) is a Delaware corporation that conducts its operations so as to maintain its qualification as a real estate investment trust (“REIT”) for federal income tax purposes. The Company conducts its business through an umbrella partnership REIT, in which substantially all of its assets are held by, and operations are conducted through, RHP Hotel Properties, LP, a subsidiary operating partnership (the “Operating Partnership”). RHP Finance Corporation, a Delaware corporation (“Finco”), was formed as a wholly-owned subsidiary of the Operating Partnership for the sole purpose of being aco-issuer of debt securities with the Operating Partnership. Neither Ryman nor Finco has any material assets, other than Ryman’s investment in the Operating Partnership and its 100%-owned subsidiaries. As 100%-owned subsidiaries of Ryman, neither the Operating Partnership nor Finco has any business, operations, financial results or other material information, other than the business, operations, financial results and other material information described in this Quarterly Report on Form10-Q 10‑Q and Ryman’s other reports, documents or other information filed with the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In this report, we use the terms, the “Company,” “we” or “our” to refer to Ryman Hospitality Properties, Inc. and its subsidiaries unless the context indicates otherwise.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report and our audited consolidated financial statements and related notes for the year ended December 31, 2016,2017, included in our Annual Report on Form10-K 10‑K that was filed with the SEC on February 28, 2017.27, 2018.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form10-Q 10‑Q contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not necessarily based on historical facts. Without limitation, you can identify these statements by the fact that they do not relate strictly to historical or current facts, and these statements may contain words such as “may,” “will,” “could,” “should,” “might,” “projects,” “expects,” “believes,” “anticipates,” “intends,” “plans,” “continue,” “estimate,” or “pursue,” or the negative or other variations thereof or comparable terms. In particular, they include statements relating to, among other things, future actions, strategies, future performance, the outcome of contingencies such as legal proceedings and future financial results. These also include statements regarding (i) the effect of our election to be taxed as a REIT for federal income tax purposes; (ii) the holding of ournon-qualifying REIT assets in one or more taxable REIT subsidiaries (“TRSs”); (iii) our announced dividend policy, including the frequency and amount of any dividend we may pay; (iv) potential growth opportunities, including future expansion of the geographic diversity of our existing asset portfolio through acquisitions and our investment in the joint venture (the “Gaylord Rockies joint venture”) that owns the Gaylord Rockies Resort & Convention Center in Aurora, Colorado (“Gaylord Rockies”); (v) the consummation of the proposed transaction to increase our ownership interest in the Gaylord Rockies joint venture (defined below); (v)venture; (vi) the anticipated opening of Gaylord Rockies; (vii) the Company’s future consolidation of the results of operations and debt of the Gaylord Rockies joint venture; (viii) Marriott International, Inc.’s (“Marriott”Marriott’s”) ability to effectively manage our hotels and other properties; (vi)(ix) our anticipated capital expenditures and investments; (vii)(x) the potential operating and financial restrictions imposed on our activities under existing and future financing agreements and other contractual arrangements with third parties, including management agreements with Marriott; and (viii)(xi) any other business or operational matters. We have based these forward-looking statements on our current expectations and projections about future events.

We caution the reader that forward-looking statements involve risks and uncertainties that cannot be predicted or quantified, and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, risks and uncertainties associated with the proposed transaction to increase our ownership interest in the Gaylord Rockies joint venture, including, but not limited to, the occurrence of any event, change or other circumstance that could delay the closing of the proposed transaction; the Company’s ability to utilize its existing borrowing capacity under the Company’s credit facility; certain conditions to closing, including obtaining any joint venture lender consent and finalization of joint venture agreements and the possibility that such

24


conditions to closing may not be met and the transaction may be terminated; and transaction costs which have been and may continue to be incurred related to the proposed transaction. Other factors that could cause results to differ include, but are not limited to, the risks and uncertainties associated with economic conditions affecting the hospitality business generally, the geographic concentration of our hotel properties, business levels at our hotels, the effect of our election to be taxed as a REIT for federal income tax purposes

commencing with the year ended December 31, 2013, our ability to remain qualified as a REIT, our ability to execute our strategic goals as a REIT, our ability to generate cash flows to support dividends, future board determinations regarding the timing and amount of dividends and changes to the dividend policy, our ability to borrow funds pursuant to our credit agreements and to refinance indebtedness, and those factors described in this Quarterly Report on Form 10-Q and our Annual Report on Form10-K 10‑K for the year ended December 31, 20162017 or described from time to time in our other reports filed with the SEC.

Any forward-looking statement made in this Quarterly Report on Form10-Q 10‑Q speaks only as of the date on which the statement is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements we make in this Quarterly Report on Form10-Q, 10‑Q, except as may be required by law.

Overview

We operate as a REIT for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. Our owned assets include a network of four upscale, meetings-focused resorts totaling 7,8118,114 rooms that are managed by Marriott under the Gaylord Hotels brand. These four resorts, which we refer to as our Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”) and the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”). Our other owned hotel assets managed by Marriott include Gaylord Springs Golf Links (“Gaylord Springs”), the Wildhorse Saloon, the General Jackson Showboat (“General Jackson”), the Inn at Opryland, a303-room 303‑room overflow hotel adjacent to Gaylord Opryland, and the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), a192-room 192‑room overflow hotel adjacent to Gaylord National. We also own a 35% interest in the Gaylord Rockies joint venture that is developing and owns Gaylord Rockies, which is scheduled to open in late 2018 and will be managed by Marriott. For more information regarding the Company’s announced intention to increase its ownership interest in the Gaylord Rockies joint venture, see “Gaylord Rockies Joint Venture” below.

We also own and operate media and entertainment assets including the Grand Ole Opry, the legendary weekly showcase of country music’s finest performers for over 90 years; the Ryman Auditorium, the storied live music venue and former home of the Grand Ole Opry located in downtown Nashville; andWSM-AM, the Opry’s radio home.home; Ole Red, a brand of Blake Shelton-themed bar, music venue and event spaces, with a flagship location in Nashville that opened in May 2018; Opry City Stage, a four-level entertainment complex in Times Square that opened in December 2017 under a joint venture agreement and of which we acquired the remaining 50% joint venture interest in the second quarter of 2018; and three Nashville-based assets managed by Marriott – Gaylord Springs Golf Links, the Wildhorse Saloon, and the General Jackson Showboat.

Each of our award-winning Gaylord Hotels properties incorporates not only high quality lodging, but also at least 400,000 square feet of meeting, convention and exhibition space, superb food and beverage options and retail and spa facilities within a single self-contained property. As a result, our Gaylord Hotels properties provide a convenient and entertaining environment for convention guests. Our Gaylord Hotels properties focus on the large group meetings market in the United States.

Marriott manages theday-to-day operations of our Gaylord Hotels properties, the Inn at Opryland, the AC Hotel, and certain of our Nashville attractions. As a result, we rely upon Marriott to generate occupancy and revenue levels at our hotel properties.

See “Cautionary Note Regarding Forward-Looking Statements” in this Item 2 and Item 1A, “Risk Factors,” in our Annual Report on Form10-K 10‑K for the year ended December 31, 20162017 for important information regarding forward-looking statements made in this report and risks and uncertainties we face.

Gaylord Rockies Resort & Convention CenterJoint Venture

As further discussed in Note 6 to the condensed consolidated financial statements included herein, in March 2016, certain subsidiaries of the CompanyOn September 13, 2018, we entered into a series of agreementspurchase agreement (“Purchase Agreement”) with Aurora Convention Center Hotel Partners, LLC and certain affiliates of RIDA Development Corporation (“RIDA”) and Ares Management, L.P. (“Ares”) with respectthe other Gaylord Rockies joint venture partners to an equity investmentincrease our ownership interest in the Gaylord Rockies Resort & Convention Center in Aurora, Colorado (“Gaylord Rockies”), which is being developed by RIDA and Ares. The hotel will be managed by an affiliate of Marriott pursuantjoint venture to approximately 62.3% for a long-term management contract and is expected to consist of a1,500-room resort hotel with over 485,000 square feet of exhibition, meeting,pre-function and outdoor space. The hotel is expected to be completed in late 2018 and has a total estimated project costpurchase price of approximately $800 million.$242 million

25


We acquired a 35% interest

in cash (the “Rockies Interest Purchase”), subject to the satisfaction or waiver of the various closing conditions in the project for a capital contribution of approximately $86.5 million, of whichPurchase Agreement, including the final portion was funded in the first quarter of 2017. The terms of our investment provide that we will have the ability to approve certain major decisions affecting the hotel, including, but not limited to, operating budgets, major capital expenditures, material transactions involving the hotel, and approval of designated hotel senior management. We also have a right of first offer to acquire the remainderrequired consent of the projectGaylord Rockies joint venture lender and designated rights to participate in any sales process with respect toMarriott, the project after exerciserelease of our first offer rights.

A subsidiarycertain guarantees and indemnities (which may involve the substitution of the Company is providing designated asset management services on behalfsuch guarantees and indemnities), no occurrence of the hotel during the construction period in exchange for a flat fee, and after opening of the hotel, in exchange for a fee based on the hotel’s gross revenues on an annual basis.

In connection with the agreements, we agreed to provide certain guarantees of the hotel’s construction loan and mezzanine debt. See Note 6 to the condensed consolidated financial statements included herein for additional discussion of these guarantees.

Gaylord Opryland Luxury Waterpark

In January 2017, we announced plans for a proposed $90 million investment to create a luxury indoor/outdoor waterpark adjacentany material casualty to Gaylord Opryland that is expected to open in 2018. The project includes approximately 111,000 square feet of indoor water attractionsRockies and activities over three levels and approximately 106,000 square feet of outdoor water amenities. The project will include areas for adults, children and families, as well as dining options and bars. The project will be funded withother customary closing conditions. We have sufficient cash on hand and borrowingsavailability under our revolvingexisting credit facility.facility to finance the cash purchase price. We expect the transaction to close by the end of 2018.

Dividend Policy

Pursuant to our current dividend policy, we plan to continue to pay a quarterly cash dividend to shareholders in an amount equal to an annualized payment of at least 50% of adjusted funds from operations (as defined by us) less maintenance capital expenditures or 100% of REIT taxable income, whichever is greater. On February 28, 2017,27, 2018, our board of directors declared our first quarter 20172018 cash dividend in the amount of $0.80$0.85 per share of common stock, or an aggregate of approximately $40.9$43.6 million in cash, which was paid on April 14, 201716, 2018 to stockholders of record as of the close of business on March 31, 2017.30, 2018. On June 9, 2017,18, 2018, our board of directors declared our second quarter 20172018 cash dividend in the amount of $0.80$0.85 per share of common stock, or an aggregate of approximately $41.0$43.6 million in cash, which was paid on July 14, 201716, 2018 to stockholders of record as of the close of business on June 19, 2017.29, 2018. On September 18, 2017,17, 2018, our board of directors declared our third quarter 20172018 cash dividend in the amount of $0.80$0.85 per share of common stock, or an aggregate of approximately $41.0$43.6 million in cash, which was paid on October 13, 201715, 2018 to stockholders of record as of the close of business on September 29, 2017.28, 2018. We currently plan to pay a quarterly cash dividend of $0.80$0.85 per share of common stock in January 2018.2019. The declaration, timing and amount of dividends will be determined by action of our board of directors. Our dividend policy may be altered at any time by our board of directors.

Credit Facility Refinancing

In May 2017, we refinanced our existing credit facility to (i) extend the maturity of our existing $700 million revolving credit facility to May 2021, (ii) upsize our existing $400 million term loan B to $500 million, improve its pricing, and extend the maturity to May 2024 and (iii) add a new $200 million term loan A that matures in May 2022. Net proceeds, after repayment of the existing term loan B and closing costs, were approximately $308.9 million and were used to pay down a portion of our revolving credit facility. See a detailed discussion of the refinanced terms of our credit facility under the “Principal Debt Agreements” section of “Liquidity and Capital Resources” below.

Our Strategic Plan

Our goal is to become the nation’s premier hospitality REIT for group-oriented meeting hotel assets in urban and resort markets.

Existing Hotel Property Design. Our hotelGaylord Hotels properties focus on the large group meetings market in the United States and incorporate meeting and exhibition space, signature guest rooms, food and beverage offerings, fitness and spa facilities and other attractions within a large hotel property so attendees’ needs are met in one location. This strategy creates a better experience for both meeting planners and guests, and has led to our current hotelGaylord Hotels properties claiming a place among the leading convention hotels in the country.

Expansion of Hotel Asset Portfolio. While our short-term capital allocation strategy has focused on returning capital to stockholders through the payment of dividends, part of our long-term growth strategy includes acquisitions of other hotels, particularly in the group meetings sector of the hospitality industry, either alone or through joint ventures or alliances with one or more third parties. We intend to pursue attractive investment opportunities which meet our acquisition parameters, specifically, group-oriented large hotels and overflow hotels with existing or potential leisure appeal. We are interested in highly accessible upper-upscale assets with over 400 hotel rooms in urban and resort group destination markets. We also consider assets that possess or are located near convention centers that present a repositioning opportunity and/or would significantly benefit from capital investment in additional rooms or meeting space. We plan to expand the geographic diversity of our existing asset portfolio through acquisitions. As a REIT, we do not view independent, large-scale development of resort and convention hotels as a part of our long-term growth strategy.

Leverage Brand Name Awareness. We believe the Grand Ole Opry is one of the most recognized entertainment brands in the United States. We promote the Grand Ole Opry name through various media, including ourWSM-AM radio station, the Internet and television, and through performances by the Grand Ole Opry’s members, many of whom are renowned country music artists. As such, we have alliances in place with multiple distribution partners in an effort to foster brand extension. We are continuously exploring additional products, such as television specials and retail products, through which we can capitalize on our brand affinity and awareness. To this end, we have invested in Opry City Stage, a four-level entertainment complex in Times Square, and four Blake Shelton-themed multi-level bar, music venue and event spaces in Nashville, Orlando, Gatlinburg, Tennessee, and Tishomingo, Oklahoma, named after the

26


Shelton hit “Ol’ Red.” We believe that licensing our brand for products may provide an opportunity to increase revenues and cash flow with relatively little capital investment. To this end, we are investing in the Opry City Stage, a joint venture to open a four-level entertainment complex in Times Square, as well as a Company-owned, Blake Shelton-themed five-level bar, music venue and event space in Nashville named after the Shelton hit “Ole Red.”

Our Current Operations

Our ongoing operations are organized into three principal business segments:

Hospitality, consisting of Gaylord Opryland, Gaylord Palms, Gaylord Texan, Gaylord National,

·

Hospitality, consisting of our Gaylord Hotels properties, the Inn at Opryland, the AC Hotel, and our investment in the Gaylord Rockies joint venture.

Entertainment, consisting of the Grand Ole Opry, the Ryman Auditorium,WSM-AM, our other attractions, media and entertainment businesses, and our investment in the Opry City Stage joint venture.

·

Entertainment, consisting of the Grand Ole Opry, the Ryman Auditorium, WSM-AM, Ole Red, Opry City Stage, and our other Nashville-based attractions.

·

Corporate and Other, consisting of our corporate expenses.

For the three months and nine months ended September 30, 20172018 and 2016,2017, our total revenues were divided among these business segments as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

Segment

    

2018

    

2017

    

2018

    

2017

    

Hospitality

 

85

%  

87

%  

88

%  

89

%

Entertainment

 

15

%  

13

%  

12

%  

11

%

Corporate and Other

 

 0

%  

 0

%  

 0

%  

 0

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 

Segment

  2017  2016  2017  2016 

Hospitality

   87  89  89  90

Entertainment

   13  11  11  10

Corporate and Other

   0  0  0  0

Key Performance Indicators

The operating results of our Hospitality segment are highly dependent on the volume of customers at our hotels and the quality of the customer mix at our hotels, which are managed by Marriott. These factors impact the price that Marriott can charge for our hotel rooms and other amenities, such as food and beverage and meeting space. The following key performance indicators are commonly used in the hospitality REIT industry:

·

hotel occupancy – a volume indicator;

·

average daily rate (“ADR”) – a price indicator calculated by dividing room revenue by the number of rooms sold;

·

Revenue per Available Room (“RevPAR”) –a summary measure of hotel results calculated by dividing room revenue by room nights available to guests for the period;

·

Total Revenue per Available Room (“Total RevPAR”) – a summary measure of hotel results calculated by dividing the sum of room, food and beverage and other ancillary service revenue by room nights available to guests for the period; and

Net Definite Group Room Nights Booked – a volume indicator which represents, on an aggregate basis, the total number of definite group bookings for future room nights at our hotel

·

Net Definite Group Room Nights Booked – a volume indicator which represents, on an aggregate basis, the total number of definite group bookings for future room nights at our Gaylord Hotels properties confirmed during the applicable period, net of cancellations.

Hospitality segment revenue from our occupied hotel rooms is recognized over time as earned on the close of business each daydaily hotel stay is provided to hotel groups and guests. Revenues from concessions, and food and beverage sales, and group meeting services are recognized over the period or at the point in time those goods or services are delivered to the group or hotel guest. Revenues from ancillary services at our hotels, such as spa, parking, and transportation services, are generally recognized at the time of sale.the goods or services are provided. Cancellation fees, as well as attrition fees that are charged to groups when they do not fulfill the minimum number of room nights or minimum food and beverage spending requirements originally contracted for, are generally recognized as revenue in the period theywe determine it is probable that a significant reversal in the amount of revenue recognized will not occur, which is the period these fees are collected.

27


Almost all of our Hospitality segment revenues are either cash-based or, for meeting and convention groups meetingwho meet our credit criteria, billed and collected on a short-term receivables basis. The hospitality industry is capital intensive, and we rely on the ability of our hotels to generate operating cash flow to repay debt financing and fund maintenance capital expenditures.

The results of operations of our Hospitality segment are affected by the number and type of group meetings and conventions scheduled to attend our hotels in a given period. A variety of factors can affect the results of any interim period, including the nature and quality of the group meetings and conventions attending our hotels during such period, which meetings and conventions have often been contracted for several years in advance, the level of attrition our hotels experience, and the level of transient business at our hotels during such period. We rely on Marriott, as the manager of our hotels, to manage these factors and to offset any identified shortfalls in occupancy.

28


Selected Financial Information

The following table contains our unaudited selected summary financial data for the three months and nine months ended September 30, 20172018 and 2016.2017. The table also shows the percentage relationships to total revenues and, in the case of segment operating income, its relationship to segment revenues (in thousands, except percentages).

      Unaudited        Unaudited    
   Three Months Ended September 30,  Nine Months Ended September 30, 
   2017  %  2016  %  2017  %  2016  % 

Income Statement Data:

         

REVENUES:

         

Rooms

  $100,534   38.0 $101,085   37.2 $314,577   37.5 $309,385   37.3

Food and beverage

   104,437   39.5  113,100   41.6  359,047   42.8  362,550   43.7

Other hotel revenue

   24,619   9.3  26,834   9.9  73,493   8.8  75,604   9.1

Entertainment

   35,134   13.3  30,701   11.3  92,427   11.0  81,893   9.9
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

   264,724   100.0  271,720   100.0  839,544   100.0  829,432   100.0
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

OPERATING EXPENSES:

         

Rooms

   27,575   10.4  28,371   10.4  83,962   10.0  82,492   9.9

Food and beverage

   62,649   23.7  64,790   23.8  200,091   23.8  201,045   24.2

Other hotel expenses

   72,119   27.2  73,331   27.0  219,580   26.2  219,510   26.5

Hotel management fees, net

   4,708   1.8  4,408   1.6  16,417   2.0  15,246   1.8

Entertainment

   22,621   8.5  19,100   7.0  61,559   7.3  54,630   6.6

Corporate

   9,220   3.5  8,447   3.1  24,324   2.9  22,315   2.7

Preopening costs

   877   0.3  —     0.0  1,587   0.2  —     0.0

Depreciation and amortization:

         

Hospitality

   26,061   9.8  24,401   9.0  76,786   9.1  75,051   9.0

Entertainment

   1,965   0.7  1,637   0.6  5,465   0.7  4,845   0.6

Corporate and Other

   520   0.2  668   0.2  1,611   0.2  1,992   0.2
  

 

 

   

 

 

   

 

 

   

 

 

  

Total depreciation and amortization

   28,546   10.8  26,706   9.8  83,862   10.0  81,888   9.9
  

 

 

   

 

 

   

 

 

   

 

 

  

Total operating expenses

   228,315   86.2  225,153   82.9  691,382   82.4  677,126   81.6
  

 

 

   

 

 

   

 

 

   

 

 

  

OPERATING INCOME:

         

Hospitality

   36,478   15.9  45,718   19.0  150,281   20.1  154,195   20.6

Entertainment

   10,548   30.0  9,964   32.5  25,403   27.5  22,418   27.4

Corporate and Other

   (9,740  (A  (9,115  (A  (25,935  (A  (24,307  (A

Preopening costs

   (877  (A  —     (A  (1,587  (A  —     (A
  

 

 

   

 

 

   

 

 

   

 

 

  

Total operating income

   36,409   13.8  46,567   17.1  148,162   17.6  152,306   18.4

Interest expense

   (16,621  (A  (15,947  (A  (49,640  (A  (48,002  (A

Interest income

   2,957   (A  2,965   (A  8,874   (A  9,116   (A

Loss from joint ventures

   (899  (A  (638  (A  (2,616  (A  (2,086  (A

Other gains and (losses), net

   2,554   (A  2,468   (A  1,024   (A  2,288   (A

Provision for income taxes

   (530  (A  (1,822  (A  (2,022  (A  (2,352  (A
  

 

 

   

 

 

   

 

 

   

 

 

  

Net income

  $23,870   (A $33,593   (A $103,782   (A $111,270   (A
  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

 

    

2018

    

%

    

2017

    

%

    

2018

    

%

    

2017

    

%

 

Income Statement Data:

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

REVENUES:

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

Rooms

 

$

103,181

 

35.3

%

$

100,534

 

38.0

%  

$

332,490

 

36.4

%

$

314,577

 

37.5

%

Food and beverage

 

 

118,496

 

40.5

%

 

104,437

 

39.5

%  

 

392,488

 

42.9

%

 

359,047

 

42.8

%

Other hotel revenue

 

 

27,563

 

9.4

%

 

24,619

 

9.3

%  

 

81,129

 

8.9

%

 

73,493

 

8.8

%

Entertainment

 

 

43,009

 

14.7

%

 

35,134

 

13.3

%  

 

108,446

 

11.9

%

 

92,427

 

11.0

%

Total revenues

 

 

292,249

 

100.0

%

 

264,724

 

100.0

%  

 

914,553

 

100.0

%

 

839,544

 

100.0

%

OPERATING EXPENSES:

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

Rooms

 

 

29,563

 

10.1

%

 

27,575

 

10.4

%  

 

88,550

 

9.7

%

 

83,962

 

10.0

%

Food and beverage

 

 

67,305

 

23.0

%

 

62,649

 

23.7

%  

 

211,677

 

23.1

%

 

200,091

 

23.8

%

Other hotel expenses

 

 

74,350

 

25.4

%

 

72,299

 

27.3

%  

 

226,965

 

24.8

%

 

220,073

 

26.2

%

Hotel management fees, net

 

 

6,558

 

2.2

%

 

4,708

 

1.8

%  

 

22,323

 

2.4

%

 

16,417

 

2.0

%

Entertainment

 

 

31,327

 

10.7

%

 

22,651

 

8.6

%  

 

80,947

 

8.9

%

 

61,637

 

7.3

%

Corporate

 

 

7,212

 

2.5

%

 

7,909

 

3.0

%  

 

23,181

 

2.5

%

 

22,786

 

2.7

%

Preopening costs

 

 

300

 

0.1

%

 

877

 

0.3

%  

 

3,972

 

0.4

%

 

1,587

 

0.2

%

Impairment and other charges

 

 

4,540

 

1.6

%

 

 —

 

 —

%

 

4,540

 

0.5

%

 

 —

 

 —

%

Depreciation and amortization:

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

Hospitality

 

 

27,946

 

9.6

%

 

26,061

 

9.8

%  

 

81,379

 

8.9

%

 

76,786

 

9.1

%

Entertainment

 

 

2,613

 

0.9

%

 

1,965

 

0.7

%  

 

6,885

 

0.8

%

 

5,465

 

0.7

%

Corporate and Other

 

 

435

 

0.1

%

 

520

 

0.2

%  

 

1,391

 

0.2

%

 

1,611

 

0.2

%

Total depreciation and amortization

 

 

30,994

 

10.6

%

 

28,546

 

10.8

%  

 

89,655

 

9.8

%

 

83,862

 

10.0

%

Total operating expenses

 

 

252,149

 

86.3

%

 

227,214

 

85.8

%  

 

751,810

 

82.2

%

 

690,415

 

82.2

%

OPERATING INCOME:

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

Hospitality

 

 

43,518

 

17.5

%

 

36,298

 

15.8

%  

 

175,213

 

21.7

%

 

149,788

 

20.0

%

Entertainment

 

 

9,069

 

21.1

%

 

10,518

 

29.9

%  

 

20,614

 

19.0

%

 

25,325

 

27.4

%

Corporate and Other

 

 

(7,647)

 

(A)  

 

 

(8,429)

 

(A)  

 

 

(24,572)

 

(A)  

 

 

(24,397)

 

(A)  

 

Preopening costs

 

 

(300)

 

(0.1)

 

 

(877)

 

(0.3)

 

 

(3,972)

 

(0.4)

 

 

(1,587)

 

(0.2)

 

Impairment and other charges

 

 

(4,540)

 

(1.6)

 

 

 —

 

 —

 

 

(4,540)

 

(0.5)

 

 

 —

 

 —

 

Total operating income

 

 

40,100

 

13.7

%

 

37,510

 

14.2

%  

 

162,743

 

17.8

%

 

149,129

 

17.8

%

Interest expense

 

 

(19,220)

 

(A)  

 

 

(16,621)

 

(A)  

 

 

(55,574)

 

(A)  

 

 

(49,640)

 

(A)  

 

Interest income

 

 

2,678

 

(A)  

 

 

2,957

 

(A)  

 

 

8,197

 

(A)  

 

 

8,874

 

(A)  

 

Loss from joint ventures

 

 

(985)

 

(A)  

 

 

(899)

 

(A)  

 

 

(2,227)

 

(A)  

 

 

(2,616)

 

(A)  

 

Other gains and (losses), net

 

 

1,881

 

(A)  

 

 

1,453

 

(A)  

 

 

2,085

 

(A)  

 

 

57

 

(A)  

 

Provision for income taxes

 

 

(1,863)

 

(A)  

 

 

(530)

 

(A)  

 

 

(9,748)

 

(A)  

 

 

(2,022)

 

(A)  

 

Net income

 

$

22,591

 

(A)  

 

$

23,870

 

(A)  

 

$

105,476

 

(A)  

 

$

103,782

 

(A)  

 


(A)

(A)

These amounts have not been shown as a percentage of revenue because they have no relationship to revenue.

29


Summary Financial Results

Results of Operations

The following table summarizes our financial results for the three months and nine months ended September 30, 20172018 and 20162017 (in thousands, except percentages and per share data):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

    

Total revenues

 

$

292,249

 

$

264,724

 

10.4

%  

$

914,553

 

$

839,544

 

8.9

%

Total operating expenses

 

 

252,149

 

 

227,214

 

11.0

%  

 

751,810

 

 

690,415

 

8.9

%

Operating income

 

 

40,100

 

 

37,510

 

6.9

%  

 

162,743

 

 

149,129

 

9.1

%

Net income

 

 

22,591

 

 

23,870

 

(5.4)

%  

 

105,476

 

 

103,782

 

1.6

%

Net income per share - fully diluted

 

 

0.44

 

 

0.46

 

(4.3)

%  

 

2.05

 

 

2.02

 

1.5

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017   2016   %
Change
  2017   2016   %
Change
 

Total revenues

  $264,724   $271,720    -2.6 $839,544   $829,432    1.2

Total operating expenses

   228,315    225,153    1.4  691,382    677,126    2.1

Operating income

   36,409    46,567    -21.8  148,162    152,306    -2.7

Net income

   23,870    33,593    -28.9  103,782    111,270    -6.7

Net income per share—fully diluted

   0.46    0.66    -30.3  2.02    2.17    -6.9

Total Revenues

The decreaseincrease in our total revenues for the three months ended September 30, 2017,2018, as compared to the same period in 2016,2017, is attributable to a $11.4 million decreaseincreases in our Hospitality segment revenues, partially offset by an increase in ourand Entertainment segment revenues of $4.4$19.7 million and $7.9 million, respectively, each as discussed more fully below. The increase in our total revenues for the nine months ended September 30, 2017,2018, as compared to the same period in 2016,2017, is attributable to an increase in our Entertainment segment revenues of $10.5 million, partially offset by a decreaseincreases in our Hospitality segment revenuesand Entertainment segment of $0.4$59.0 million and $16.0 million, respectively, each as discussed more fully below.

Total Operating Expenses

The increase in our total operating expenses for the three months ended September 30, 2017,2018, as compared to the same period in 2016,2017, is primarily the result of an increaseincreases in our Hospitality segment and Entertainment segment expenses of $3.5$10.5 million and $8.7 million, respectively, as well as an increase of $1.8 million in depreciation and amortization expense, partially offset by a decrease in our Hospitality segment expenses of $3.8$2.4 million and impairment and other charges of $4.5 million in the 2018 period, each as discussed more fully below. The increase in our total operating expenses for the nine months ended September 30, 2017,2018, as compared to the same period in 2016,2017, is primarily the result of an increaseincreases in our Entertainment segment, CorporateHospitality segment and HospitalityEntertainment segment expenses of $6.9 million, $2.0$29.0 million and $1.8$19.3 million, respectively, as well as an increaseincreases in depreciation and amortization expenses and preopening expenses of $2.0$5.8 million and $1.6$2.4 million, respectively, and impairment and other charges of $4.5 million in the 2018 period, each as discussed more fully below.

Net Income

The decrease in our net income to $23.9$22.6 million for the three months ended September 30, 2017,2018, as compared to $33.6$23.9 million for the same period in 2016,2017, was due to the changes in our revenues and operating expenses reflected above and the following factors, each as described more fully below:

A $1.3 million decrease in the provision for income taxes in the 2017

·

A $2.6 million increase in interest expense for the 2018 period.

A $0.7 million increase in interest expense for the 2017 period, due primarily to increased interest expense associated with our new term loan A and increased borrowings under our refinanced term loan B. These increases were partially offset by increased capitalized interest in the current

·

A $1.3 million increase in the provision for income taxes in the 2018 period.

The decreaseincrease in our net income to $103.8$105.5 million for the nine months ended September 30, 2017,2018, as compared to $111.3$103.8 million for the same period in 2016,2017, was due to the changes in our revenues and operating expenses reflected above and the following factors, each as described more fully below:

·

A $7.7 million increase in the provision for income taxes in the 2018 period.

·

A $5.9 million increase in interest expense for the 2018 period.

·

A $2.0 million increase in other gains and losses, net for the 2018 period.

30


 

A $1.6 million increase in interest expense, due primarily to the 2017 period including thewrite-off

A $1.3 million decrease in Other gains and losses, net, primarily due to the 2017 period including a loss on certain assets that were disposed of in our Entertainment and Corporate segments.

Factors and Trends Contributing to Performance

The most important factors and trends contributing to our performance during the three months and nine months ended September 30, 20172018 described herein were:

·

Increased outside-the-room spending at Gaylord Opryland (an increase of 13.8% and 13.0%, respectively) during each of the 2018 periods, as compared to the 2017 periods, primarily due to an increase in group business partially attributable to a prior year rooms renovation project. Gaylord Opryland also experienced increased occupancy (an increase of 2.7 points of occupancy) and ADR (an increase of 6.0%) during the nine-month 2018 period due to the increase in group business, as well as an increase in transient rates.

·

Increased occupied rooms (an increase of 22.0% and 9.4%, respectively) and outside-the-room spending (an increase of 27.0% and 13.4%, respectively) at Gaylord Texan during the 2018 periods, as compared to the 2017 periods, primarily due to increases in group business partially attributable to the recent rooms and meeting space expansion.

·

Increased ADR (an increase of 5.0% and 3.4%, respectively) at Gaylord Palms during the 2018 periods, as compared to the 2017 periods, due to an increase in both group and transient business, as well an increase in outside-the-room spending (an increase of 4.6% and 5.9%, respectively), due primarily to an increase in catering and increased collection of attrition and cancellation payments.

·

Increased outside-the-room spending (an increase of 6.1% and 5.1%, respectively) at Gaylord National during the 2018 periods, as compared to the 2017 periods, primarily due to an increase in group business.

·

Increased revenue for our Entertainment segment during the 2018 periods, as compared to the 2017 periods (an increase of 22.4% and 17.3%, respectively), due primarily to the opening of our flagship Ole Red location in Nashville in May 2018.

·

Increased expenses for our Entertainment segment during the 2018 periods, as compared to the 2017 periods (an increase of 38.3% and 31.3%, respectively), due primarily to the opening of our Ole Red Nashville location, as well as operating expenses for Opry City Stage being included in Entertainment expenses subsequent to our purchase of the remaining joint venture interest in the second quarter of 2018.

31


 

Decreasedoutside-the-room spending at Gaylord Opryland during the 2017 periods, as compared to the 2016 periods (a decrease of 9.4% and 1.8%, respectively), primarily due to a decrease in banquets, as well as a decrease in attrition and cancellation fee collections.

Decreased occupancy at Gaylord Texan during the 2017 periods, as compared to the 2016 periods (a decrease of 7.0 and 2.6 points of occupancy, respectively), due primarily to a decrease in groups.

Increased occupancy andoutside-the-room spending at Gaylord National during the nine-month 2017 period, as compared to the nine-month 2016 period. The increase in occupancy (an increase of 5.3 points of occupancy) is primarily the result of an increase in groups. The increase inoutside-the-room spending (an increase of 3.1%) is primarily attributable to an increase in banquets, including inauguration-related banquets.

Increased revenue for our Entertainment segment during the 2017 periods, as compared to the 2016 periods (an increase of 14.4% and 12.9%, respectively), due primarily to increased shows, attendance and ancillary business, such as tours and retail, at the Grand Ole Opry and Ryman Auditorium, and increased revenues at the Wildhorse Saloon, due primarily to increased business attributable to the achieved benefits of a 2016 renovation.

Increased attrition levels for the three-month 2017 period, as compared to the three-month 2016 period. Attrition for the three-month 2017 period was 15.5%, compared to 13.4% in the three-month 2016 period. The primary driver for this increase was Hurricane Irma and its impact on Gaylord Palms.

Decreased net definite group room nights booked during the 2017 periods, as compared to the 2016 periods (a decrease of 3.9% and 5.7%, respectively). The three-month 2017 decrease was primarily the result of the current period impact of Hurricane Irma on Gaylord Palms. The nine-month decrease was primarily the current period result of Hurricane Irma, as well as the future cancellation of an individual group that had booked 17 different meetings through 2025.

Operating Results – Detailed Segment Financial Information

Hospitality Segment

Total Segment Results.The following presents the financial results of our Hospitality segment for the three months and nine months ended September 30, 20172018 and 20162017 (in thousands, except percentages and performance metrics):

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  %
Change
  2017  2016  %
Change
 

Revenues:

       

Rooms

  $100,534  $101,085   -0.5 $314,577  $309,385   1.7

Food and beverage

   104,437   113,100   -7.7  359,047   362,550   -1.0

Other hotel revenue

   24,619   26,834   -8.3  73,493   75,604   -2.8
  

 

 

  

 

 

   

 

 

  

 

 

  

Total hospitality revenue

   229,590   241,019   -4.7  747,117   747,539   -0.1

Hospitality operating expenses:

       

Rooms

   27,575   28,371   -2.8  83,962   82,492   1.8

Food and beverage

   62,649   64,790   -3.3  200,091   201,045   -0.5

Other hotel expenses

   72,119   73,331   -1.7  219,580   219,510   0.0

Management fees, net

   4,708   4,408   6.8  16,417   15,246   7.7

Depreciation and amortization

   26,061   24,401   6.8  76,786   75,051   2.3
  

 

 

  

 

 

   

 

 

  

 

 

  

Total Hospitality operating expenses

   193,112   195,301   -1.1  596,836   593,344   0.6
  

 

 

  

 

 

   

 

 

  

 

 

  

Hospitality operating income (1)

  $36,478  $45,718   -20.2 $150,281  $154,195   -2.5
  

 

 

  

 

 

   

 

 

  

 

 

  

Hospitality performance metrics:

       

Occupancy

   75.5  75.5  0.0  75.0  74.6  0.5

ADR

  $174.20  $175.22   -0.6 $185.08  $182.46   1.4

RevPAR (2)

  $131.56  $132.32   -0.6 $138.73  $136.08   1.9

Total RevPAR (3)

  $300.45  $315.50   -4.8 $329.48  $328.79   0.2

Net Definite Group Room Nights Booked

   482,732   502,564   -3.9  1,179,521   1,251,086   -5.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 

 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

 

%

 

 

    

2018

 

2017

    

Change

    

    

2018

 

2017

    

Change

    

Revenues:

 

 

  

 

 

  

 

  

 

 

 

  

 

 

  

 

  

 

Rooms

 

$

103,181

 

$

100,534

 

2.6

%  

 

$

332,490

 

$

314,577

 

5.7

%

Food and beverage

 

 

118,496

 

 

104,437

 

13.5

%  

 

 

392,488

 

 

359,047

 

9.3

%

Other hotel revenue

 

 

27,563

 

 

24,619

 

12.0

%  

 

 

81,129

 

 

73,493

 

10.4

%

Total hospitality revenue

 

 

249,240

 

 

229,590

 

8.6

%  

 

 

806,107

 

 

747,117

 

7.9

%

Hospitality operating expenses:

 

 

  

 

 

  

 

 

 

 

 

  

 

 

  

 

 

 

Rooms

 

 

29,563

 

 

27,575

 

7.2

%  

 

 

88,550

 

 

83,962

 

5.5

%

Food and beverage

 

 

67,305

 

 

62,649

 

7.4

%  

 

 

211,677

 

 

200,091

 

5.8

%

Other hotel expenses

 

 

74,350

 

 

72,299

 

2.8

%  

 

 

226,965

 

 

220,073

 

3.1

%

Management fees, net

 

 

6,558

 

 

4,708

 

39.3

%  

 

 

22,323

 

 

16,417

 

36.0

%

Depreciation and amortization

 

 

27,946

 

 

26,061

 

7.2

%  

 

 

81,379

 

 

76,786

 

6.0

%

Total Hospitality operating expenses

 

 

205,722

 

 

193,292

 

6.4

%  

 

 

630,894

 

 

597,329

 

5.6

%

Hospitality operating income (1)

 

$

43,518

 

$

36,298

 

19.9

%  

 

$

175,213

 

$

149,788

 

17.0

%

Hospitality performance metrics:

 

 

  

 

 

  

 

 

 

 

 

  

 

 

  

 

 

 

Occupancy

 

 

73.2

%  

 

75.5

%  

(3.0)

%  

 

 

75.3

%  

 

75.0

%  

0.4

%

ADR

 

$

177.97

 

$

174.20

 

2.2

%  

 

$

191.13

 

$

185.08

 

3.3

%

RevPAR (2)

 

$

130.27

 

$

131.56

 

(1.0)

%  

 

$

143.97

 

$

138.73

 

3.8

%

Total RevPAR (3)

 

$

314.69

 

$

300.45

 

4.7

%  

 

$

349.04

 

$

329.48

 

5.9

%

Net Definite Group Room Nights Booked

 

 

339,294

 

 

482,732

 

(29.7)

%  

 

 

1,184,587

 

 

1,179,521

 

0.4

%


(1)

(1)

Hospitality segment operating income does not include the effectpreopening costs of $0.2 million of preopening costs in the nine-monththree months ended September 30, 2018 and $2.2 million and $0.2 million in the nine months ended September 30, 2018 and 2017, period.respectively. See discussion of preopening costs below.

(2)

(2)

We calculate Hospitality RevPAR by dividing room revenue by room nights available to guests for the period. Hospitality RevPAR is not comparable to similarly titled measures such as revenues.

(3)

(3)

We calculate Hospitality Total RevPAR by dividing the sum of room, food and beverage, and other ancillary services revenue (which equals Hospitality segment revenue) by room nights available to guests for the period. Hospitality Total RevPAR is not comparable to similarly titled measures such as revenues.

The decreaseincrease in total Hospitality segment revenue in the three months ended September 30, 2017,2018, as compared to the same period in 2016,2017, is primarily due to decreasesincreases of $5.0$12.7 million, $2.6$4.4 million, $2.3$1.7 million and $2.1$1.4 million at Gaylord Palms,Texan, Gaylord Opryland, Gaylord TexanPalms and Gaylord National, respectively. The decreaseincrease in total Hospitality segment revenue in the nine months ended September 30, 2017,2018, as compared to the same period in 2016,2017, is primarily due to decreasesincreases of $4.0$26.8 million, $2.8$20.1 million, $7.5 million and $2.6$5.4 million at Gaylord Palms,Opryland, Gaylord Texan, Gaylord Palms and Gaylord Opryland, respectively, partially offset by increases of $6.7 million and $1.6 million at Gaylord National, and the AC Hotel, respectively. See below for further discussion.

Total Hospitality segment revenues in the three months and nine months ended September 30, 20172018 include $2.4$3.2 million and $6.6$8.3 million, respectively, in attrition and cancellation fee collections, a decreasean increase of $1.2$0.9 million and $2.1$1.7 million, respectively, from the 20162017 periods.

32


The percentage of group versus transient business based on rooms sold for our Hospitality segment for the periods presented was approximately as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2018

    

2017

    

2018

    

2017

    

Group

 

70

%  

69

%  

75

%  

74

%

Transient

 

30

%  

31

%  

25

%  

26

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  2017  2016 

Group

   69  73  74  75

Transient

   31  27  26  25

Rooms operating expenses decreased slightly in the three months ended September 30, 2017, as compared to the same period in 2016. Rooms operating expenses increased in the three months and nine months ended September 30, 2017,2018, as compared to the same periodperiods in 2016,2017, due primarily to an increaseincreases at Gaylord National,Opryland and Gaylord Texan, as described below.

Food and beverage operating expenses decreasedincreased in the three months and nine months ended September 30, 2017,2018, as compared to the same periodperiods in 2016,2017, primarily attributabledue to a decreaseincreases at Gaylord Palms. The decrease in foodOpryland, Gaylord Texan and beverage operating expenses in the nine months ended September 30, 2017, as compared to the same period in 2016, is primarily attributable to decreases at Gaylord Palms and Gaylord Opryland, partially offset by an increase at Gaylord National, as described below.

Other hotel expenses for the three months and nine months ended September 30, 20172018 and 20162017 consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

    

Administrative employment costs

 

$

28,395

 

$

26,596

 

6.8

%  

$

84,790

 

$

80,501

 

5.3

%

Utilities

 

 

7,245

 

 

7,440

 

(2.6)

%  

 

20,418

 

 

20,768

 

(1.7)

%

Property taxes

 

 

8,593

 

 

8,312

 

3.4

%  

 

25,263

 

 

25,118

 

0.6

%

Other

 

 

30,117

 

 

29,951

 

0.6

%  

 

96,494

 

 

93,686

 

3.0

%

Total other hotel expenses

 

$

74,350

 

$

72,299

 

2.8

%  

$

226,965

 

$

220,073

 

3.1

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017   2016   %
Change
  2017   2016   %
Change
 

Administrative employment costs

  $26,416   $25,941    1.8 $80,008   $78,641    1.7

Utilities

   7,440    7,548    -1.4  20,768    20,682    0.4

Property taxes

   8,312    8,396    -1.0  25,118    24,050    4.4

Other

   29,951    31,446    -4.8  93,686    96,137    -2.5
  

 

 

   

 

 

    

 

 

   

 

 

   

Total other hotel expenses

  $72,119   $73,331    -1.7 $219,580   $219,510    0.0
  

 

 

   

 

 

    

 

 

   

 

 

   

Administrative employment costs include salaries and benefits for hotel administrative functions, including, among others, senior management, accounting, human resources, sales, conference services, engineering and security. Administrative employment costs increased during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017. The three-month 2018 increase is primarily due to slight increases at Gaylord OprylandTexan and Gaylord Palms, and the nine-month 2018 increase is primarily due to increases at Gaylord Texan and Gaylord National. Utility costs remained stabledecreased slightly during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016.2017. Property taxes were stableincreased during the three months ended September 30, 2017, as compared to the same period in 2016, and increased during the nine months ended September 30, 2017,2018, as compared to the same period in 2016,2017 periods, primarily due to increasesan increase at Gaylord Texan andrelated to the property’s recent expansion, partially offset by a decrease at Gaylord National due to increased property valuations.prior period tax settlements. Other expenses, which include supplies, advertising, maintenance costs and consulting costs, decreasedremained stable during the three months ended September 30, 2018 and increased during the nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, primarily as a result of various decreasesincreases at Gaylord Palms Gaylord Texan and Gaylord National, partially offset by various increases at Gaylord Opryland.

Each of our management agreements with Marriott requires us to pay Marriott a base management fee of approximately 2% of gross revenues from the applicable property for each fiscal year or portion thereof. Additionally, an incentive management fee is based on the profitability of our Gaylord Hotels properties calculated on a pooled basis. In the three months ended September 30, 20172018 and 2016,2017, we incurred $4.7$5.0 million and $4.8$4.7 million, respectively, and in the nine months ended September 30, 20172018 and 2016,2017, we incurred $15.1

$16.3 million and $15.0$15.1 million, respectively, related to base management fees for our Hospitality segment. In the three months ended September 30, 20172018 and 2016,2017, we also incurred $0.8$2.5 million and $0.3$0.8 million, respectively, and in the nine months ended September 30, 20172018 and 2016,2017, we incurred $3.6$8.5 million and $2.5$3.6 million, respectively, related to incentive management fees for our Hospitality segment. Management fees are presented throughout this Quarterly Report on Form10-Q 10‑Q net of the amortization of the $190.0 million in deferred management rights proceeds discussed in Note 8 to the accompanying condensed consolidated financial statements included herein.

33


Total Hospitality segment depreciation and amortization expense increased in the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016. The increase during the three-month 2017, period was primarily a result of an increasedue to increases at Gaylord OprylandTexan and the nine-month 2017 increase was primarily a result of the increase at Gaylord Opryland, partially offset by a decrease at Gaylord National, as described below.below.

Property-Level Results.The following presents the property-level financial results of our Hospitality segment for the three months and nine months ended September 30, 20172018 and 2016.2017.

Gaylord Opryland Results.The results of Gaylord Opryland for the three months and nine months ended September 30, 20172018 and 20162017 are as follows (in thousands, except percentages and performance metrics):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

    

Revenues:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Rooms

 

$

34,792

 

$

36,009

 

(3.4)

%  

$

111,956

 

$

101,956

 

9.8

%

Food and beverage

 

 

35,368

 

 

30,227

 

17.0

%  

 

116,519

 

 

101,899

 

14.3

%

Other hotel revenue

 

 

10,431

 

 

10,001

 

4.3

%  

 

29,776

 

 

27,604

 

7.9

%

Total revenue

 

 

80,591

 

 

76,237

 

5.7

%  

 

258,251

 

 

231,459

 

11.6

%

Operating expenses:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Rooms

 

 

9,224

 

 

8,715

 

5.8

%  

 

27,195

 

 

24,961

 

8.9

%

Food and beverage

 

 

19,271

 

 

17,315

 

11.3

%  

 

60,156

 

 

54,604

 

10.2

%

Other hotel expenses

 

 

22,401

 

 

22,702

 

(1.3)

%  

 

68,865

 

 

67,862

 

1.5

%

Management fees, net

 

 

2,772

 

 

1,766

 

57.0

%  

 

8,762

 

 

5,716

 

53.3

%

Depreciation and amortization

 

 

8,913

 

 

8,765

 

1.7

%  

 

26,450

 

 

25,235

 

4.8

%

Total operating expenses

 

 

62,581

 

 

59,263

 

5.6

%  

 

191,428

 

 

178,378

 

7.3

%

Performance metrics:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Occupancy

 

 

72.4

%  

 

76.9

%  

(5.9)

%  

 

75.4

%  

 

72.7

%  

3.7

%

ADR

 

$

180.77

 

$

176.13

 

2.6

%  

$

188.41

 

$

177.82

 

6.0

%

RevPAR

 

$

130.95

 

$

135.53

 

(3.4)

%  

$

142.00

 

$

129.32

 

9.8

%

Total RevPAR

 

$

303.32

 

$

286.93

 

5.7

%  

$

327.55

 

$

293.57

 

11.6

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  %
Change
  2017  2016  %
Change
 

Revenues:

       

Rooms

  $36,009  $34,414   4.6 $101,956  $102,121   -0.2

Food and beverage

   30,227   32,817   -7.9  101,899   103,237   -1.3

Other hotel revenue

   10,001   11,609   -13.9  27,604   28,704   -3.8
  

 

 

  

 

 

   

 

 

  

 

 

  

Total revenue

   76,237   78,840   -3.3  231,459   234,062   -1.1

Operating expenses:

       

Rooms

   8,715   8,801   -1.0  24,961   25,414   -1.8

Food and beverage

   17,315   17,513   -1.1  54,604   55,606   -1.8

Other hotel expenses

   22,520   21,949   2.6  67,369   66,003   2.1

Management fees, net

   1,766   1,460   21.0  5,716   5,125   11.5

Depreciation and amortization

   8,765   7,460   17.5  25,235   22,349   12.9
  

 

 

  

 

 

   

 

 

  

 

 

  

Total operating expenses

   59,081   57,183   3.3  177,885   174,497   1.9

Performance metrics:

       

Occupancy

   76.9  75.0  2.5  72.7  74.5  -2.4

ADR

  $176.13  $172.90   1.9 $177.82  $173.41   2.5

RevPAR

  $135.53  $129.63   4.6 $129.32  $129.27   0.0

Total RevPAR

  $286.93  $296.98   -3.4 $293.57  $296.28   -0.9

Rooms revenue and RevPAR increaseddecreased at Gaylord Opryland during the three months ended September 30, 2017,2018, as compared to the same period in 2016,2017, as the result of an increase in occupancy and ADR for transient. Rooms revenue and RevPAR were stable in the nine-month 2017 period, as an increase in ADR for both group and transient rates offset a decrease in occupancy for group room nights. Rooms revenue and RevPAR increased during the nine months ended September 30, 2018, as compared to the same period in 2017, as the result of increases in occupancy and ADR, due to increases in both group and transient.transient room nights and rates. Rooms revenue and RevPAR were negatively impacted during the 2017 periods by a rooms renovation project, which resulted in approximately 12,250 and 49,300 room nights out of service, respectively. The rooms renovation project was completed in September 2017. In addition, the three- and nine-month 2016 periods were also negatively impacted by a separate rooms renovation project that resulted in approximately 19,700 and 28,300 room nights out of serviceRooms expenses increased during the three-month and nine-month periods, respectively. Rooms expenses remained stable during the 20172018 periods, as compared to the same2017 periods, in 2016.primarily due to increased group commissions and compensation costs.

The decreaseincrease in food and beverage revenue at Gaylord Opryland during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, was primarily due to a decrease in banquets.increased catering revenue. Food and beverage expenses decreasedincreased in the 20172018 periods, as compared to the same2017 periods, in 2016, due to decreasedincreased variable costs associated with the decreaseincrease in revenue.revenue, partially offset by improved food, beverage, and labor margins.

Other hotel revenue decreasedincreased at Gaylord Opryland during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, primarily due to a decreasean increase in collections of attrition and cancellation fees.fee collections. The nine-month 2018 increase was also impacted by increased ancillary revenue, such as parking and resort fees associated with the increase in occupancy. Other hotel expenses decreased slightly in the three-month 2018 period, as compared to the 2017 period. Other hotel expenses increased in the 2017 periods,nine-month 2018 period, as compared to the same periods in 2016,2017 period, primarily due to increased utility costs due to an increase in rates.sales and marketing expenses.

Depreciation and amortization increased at Gaylord Opryland during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, primarily as a result of recent rooms renovations in both 2016 and 2017renovation projects that resulted in increased depreciable asset levels in 2017.levels.

34


Gaylord Palms Results.The results of Gaylord Palms for the three months and nine months ended September 30, 20172018 and 20162017 are as follows (in thousands, except percentages and performance metrics):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

    

Revenues:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Rooms

 

$

15,299

 

$

14,667

 

4.3

%  

$

56,990

 

$

54,526

 

4.5

%

Food and beverage

 

 

18,731

 

 

18,330

 

2.2

%  

 

74,380

 

 

71,635

 

3.8

%

Other hotel revenue

 

 

4,871

 

 

4,241

 

14.9

%  

 

15,701

 

 

13,458

 

16.7

%

Total revenue

 

 

38,901

 

 

37,238

 

4.5

%  

 

147,071

 

 

139,619

 

5.3

%

Operating expenses:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Rooms

 

 

3,939

 

 

3,572

 

10.3

%  

 

12,500

 

 

12,192

 

2.5

%

Food and beverage

 

 

10,961

 

 

11,292

 

(2.9)

%  

 

38,412

 

 

38,550

 

(0.4)

%

Other hotel expenses

 

 

15,227

 

 

13,821

 

10.2

%  

 

48,137

 

 

45,882

 

4.9

%

Management fees, net

 

 

981

 

 

692

 

41.8

%  

 

4,017

 

 

3,079

 

30.5

%

Depreciation and amortization

 

 

4,868

 

 

4,753

 

2.4

%  

 

14,456

 

 

14,307

 

1.0

%

Total operating expenses

 

 

35,976

 

 

34,130

 

5.4

%  

 

117,522

 

 

114,010

 

3.1

%

Performance metrics:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Occupancy

 

 

72.8

%  

 

73.3

%  

(0.7)

%  

 

78.6

%  

 

77.8

%  

1.0

%

ADR

 

$

161.31

 

$

153.62

 

5.0

%  

$

187.57

 

$

181.32

 

3.4

%

RevPAR

 

$

117.44

 

$

112.59

 

4.3

%  

$

147.43

 

$

141.05

 

4.5

%

Total RevPAR

 

$

298.62

 

$

285.85

 

4.5

%  

$

380.45

 

$

361.18

 

5.3

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  %
Change
  2017  2016  %
Change
 

Revenues:

       

Rooms

  $14,667  $14,445   1.5 $54,526  $51,724   5.4

Food and beverage

   18,330   22,677   -19.2  71,635   76,557   -6.4

Other hotel revenue

   4,241   5,085   -16.6  13,458   15,368   -12.4
  

 

 

  

 

 

   

 

 

  

 

 

  

Total revenue

   37,238   42,207   -11.8  139,619   143,649   -2.8

Operating expenses:

       

Rooms

   3,572   3,973   -10.1  12,192   11,787   3.4

Food and beverage

   11,292   12,741   -11.4  38,550   39,862   -3.3

Other hotel expenses

   13,821   15,202   -9.1  45,882   47,129   -2.6

Management fees, net

   692   802   -13.7  3,079   2,971   3.6

Depreciation and amortization

   4,753   4,773   -0.4  14,307   14,243   0.4
  

 

 

  

 

 

   

 

 

  

 

 

  

Total operating expenses

   34,130   37,491   -9.0  114,010   115,992   -1.7

Performance metrics:

       

Occupancy

   73.3  73.4  -0.1  77.8  77.8  0.0

ADR

  $153.62  $151.02   1.7 $181.32  $171.70   5.6

RevPAR

  $112.59  $110.88   1.5 $141.05  $133.63   5.6

Total RevPAR

  $285.85  $323.99   -11.8 $361.18  $371.11   -2.7

Rooms revenue and RevPAR increased at Gaylord Palms during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, due primarily to an increase in ADR for both 2017 periods for both group and transient rates, and an increase in transient occupancy for both 2017 periods.business. Rooms expenses decreased during the three-month 2017 period and increased during the nine-month 2017 period,2018 periods, as compared to the same2017 periods, in 2016. The three-month 2017 decrease was primarily due to decreased commission costs, and the nine-month 2017 increase was primarily due to increased commission costs.group commissions.

Food and beverage revenue decreasedincreased at Gaylord Palms during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, due primarily to a decrease in banquets from group cancellations related to Hurricane Irma in September 2017.increased catering revenue. Food and beverage expenses decreased slightly in the three months and nine months ended September 30, 2017,2018 periods, as compared to the same2017 periods, in 2016, primarily as a result of a decreasethe increase in variable costs associated with the decreaseincrease in revenue.revenue was offset by improved labor and food margins.

Other hotel revenue at Gaylord Palms decreasedincreased during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016. The three-month 2017, decrease is primarily the result of the 2016 period including the collection of a group contract settlement. The nine-month 2017 decrease is primarily due to decreased collection ofan increase in attrition and cancellation fees.fee collections. The nine-month 2018 period increase was also impacted by increased holiday programming revenue that continued into January 2018. Other hotel expenses decreasedincreased in the 20172018 periods, as compared to the same2017 periods, in 2016, primarily as a result of a decrease inincreased sales and marketing costs.expenses, as well as the prior periods including a one-time beneficial sales tax audit settlement.

Depreciation and amortization were stableincreased slightly at Gaylord Palms during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016.2017.

35


Gaylord Texan Results.The results of Gaylord Texan for the three months and nine months ended September 30, 20172018 and 20162017 are as follows (in thousands, except percentages and performance metrics):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

    

Revenues:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Rooms

 

$

23,463

 

$

19,178

 

22.3

%  

$

65,295

 

$

58,682

 

11.3

%

Food and beverage

 

 

32,205

 

 

25,289

 

27.3

%  

 

95,777

 

 

84,902

 

12.8

%

Other hotel revenue

 

 

7,158

 

 

5,699

 

25.6

%  

 

18,722

 

 

16,099

 

16.3

%

Total revenue

 

 

62,826

 

 

50,166

 

25.2

%  

 

179,794

 

 

159,683

 

12.6

%

Operating expenses:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Rooms

 

 

5,076

 

 

4,212

 

20.5

%  

 

13,999

 

 

12,792

 

9.4

%

Food and beverage

 

 

16,089

 

 

14,141

 

13.8

%  

 

47,391

 

 

44,151

 

7.3

%

Other hotel expenses

 

 

16,502

 

 

15,286

 

8.0

%  

 

47,360

 

 

44,959

 

5.3

%

Management fees, net

 

 

1,562

 

 

951

 

64.2

%  

 

5,335

 

 

3,434

 

55.4

%

Depreciation and amortization

 

 

6,581

 

 

5,175

 

27.2

%  

 

17,749

 

 

15,425

 

15.1

%

Total operating expenses

 

 

45,810

 

 

39,765

 

15.2

%  

 

131,834

 

 

120,761

 

9.2

%

Performance metrics:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Occupancy

 

 

76.2

%  

 

75.0

%  

1.6

%  

 

75.2

%  

 

75.7

%  

(0.7)

%

ADR

 

$

184.45

 

$

183.90

 

0.3

%  

$

190.99

 

$

187.80

 

1.7

%

RevPAR

 

$

140.59

 

$

137.96

 

1.9

%  

$

143.68

 

$

142.26

 

1.0

%

Total RevPAR

 

$

376.45

 

$

360.87

 

4.3

%  

$

395.63

 

$

387.11

 

2.2

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  %
Change
  2017  2016  %
Change
 

Revenues:

       

Rooms

  $19,178  $21,266   -9.8 $58,682  $61,621   -4.8

Food and beverage

   25,289   26,055   -2.9  84,902   85,038   -0.2

Other hotel revenue

   5,699   5,161   10.4  16,099   15,844   1.6
  

 

 

  

 

 

   

 

 

  

 

 

  

Total revenue

   50,166   52,482   -4.4  159,683   162,503   -1.7

Operating expenses:

       

Rooms

   4,212   4,482   -6.0  12,792   12,691   0.8

Food and beverage

   14,141   14,601   -3.2  44,151   44,398   -0.6

Other hotel expenses

   15,286   15,682   -2.5  44,959   45,293   -0.7

Management fees, net

   951   870   9.3  3,434   3,288   4.4

Depreciation and amortization

   5,175   5,060   2.3  15,425   15,090   2.2
  

 

 

  

 

 

   

 

 

  

 

 

  

Total operating expenses

   39,765   40,695   -2.3  120,761   120,760   0.0

Performance metrics:

       

Occupancy

   75.0  82.0  -8.5  75.7  78.3  -3.3

ADR

  $183.90  $186.55   -1.4 $187.80  $190.09   -1.2

RevPAR

  $137.96  $152.98   -9.8 $142.26  $148.84   -4.4

Total RevPAR

  $360.87  $377.54   -4.4 $387.11  $392.51   -1.4

Rooms revenue and RevPAR decreasedincreased at Gaylord Texan during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, due primarily to decreased occupancy due to a decreasean increase in ADR for group business and an increase in group occupancy. The 2018 periods were also positively impacted by additional room availability from the recently completed rooms partially attributable to Hurricane Harveyexpansion, as well as the absence of hurricane-related impacts that occurred in August 2017, and decreased ADR for both group and transient rates. Rooms expenses decreased during the three-month 2017 period, as compared to the same period in 2016, primarily due to decreased variable expenses associated with the decrease in occupancy.prior year. Rooms expenses increased during the nine-month 2017 period,2018 periods, as compared to the same period2017 periods, primarily due to an increase in 2016, as decreased variable expenses associated with the decrease in occupancy were offset by increased group commissions.

Food and beverage revenue decreasedincreased at Gaylord Texan during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, due primarily to decreasesan increase in both banquets and food and beverage outletcatering revenue. Food and beverage expenses decreasedincreased in the 20172018 periods, as compared to the same2017 periods, in 2016, primarily due to the decreaseincrease in variable costs associated with the decreaseincrease in revenue.revenue, partially offset by improved food and labor margins.

Other hotel revenue at Gaylord Texan increased during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, primarily as a result of anincreased ancillary revenue, such as parking and resort fees associated with the increase in attrition and cancellation fee collections.total room nights sold. Other hotel expenses decreasedincreased in the 20172018 periods, as compared to the same2017 periods, in 2016, due primarily to a decrease in salesincreased property tax and marketing expense, partially offset by an increase in property taxes due to an increased property valuation.expenses associated with the recent rooms and meeting space expansion.

Depreciation and amortization increased slightly at Gaylord Texan during the three months and nine months ended September 30, 2017,2018, as compared to the same2017 periods, primarily as a result of the recent rooms and meeting space expansion that resulted in 2016.

increased depreciable asset levels.

36


Gaylord National Results.The results of Gaylord National for the three months and nine months ended September 30, 20172018 and 20162017 are as follows (in thousands, except percentages and performance metrics):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

    

Revenues:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Rooms

 

$

24,489

 

$

25,181

 

(2.7)

%  

$

82,097

 

$

82,537

 

(0.5)

%

Food and beverage

 

 

30,799

 

 

29,177

 

5.6

%  

 

101,970

 

 

96,776

 

5.4

%

Other hotel revenue

 

 

5,015

 

 

4,578

 

9.5

%  

 

16,679

 

 

16,075

 

3.8

%

Total revenue

 

 

60,303

 

 

58,936

 

2.3

%  

 

200,746

 

 

195,388

 

2.7

%

Operating expenses:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Rooms

 

 

9,888

 

 

9,617

 

2.8

%  

 

30,564

 

 

29,798

 

2.6

%

Food and beverage

 

 

19,936

 

 

18,884

 

5.6

%  

 

62,746

 

 

59,957

 

4.7

%

Other hotel expenses

 

 

18,260

 

 

18,465

 

(1.1)

%  

 

56,252

 

 

55,161

 

2.0

%

Management fees, net

 

 

985

 

 

960

 

2.6

%  

 

3,348

 

 

3,244

 

3.2

%

Depreciation and amortization

 

 

6,891

 

 

6,701

 

2.8

%  

 

20,647

 

 

19,830

 

4.1

%

Total operating expenses

 

 

55,960

 

 

54,627

 

2.4

%  

 

173,557

 

 

167,990

 

3.3

%

Performance metrics:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Occupancy

 

 

71.9

%  

 

74.2

%  

(3.1)

%  

 

73.7

%  

 

75.1

%  

(1.9)

%

ADR

 

$

185.56

 

$

184.89

 

0.4

%  

$

204.35

 

$

201.77

 

1.3

%

RevPAR

 

$

133.36

 

$

137.13

 

(2.7)

%  

$

150.66

 

$

151.47

 

(0.5)

%

Total RevPAR

 

$

328.39

 

$

320.95

 

2.3

%  

$

368.40

 

$

358.57

 

2.7

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  %
Change
  2017  2016  %
Change
 

Revenues:

       

Rooms

  $25,181  $25,851   -2.6 $82,537  $79,253   4.1

Food and beverage

   29,177   30,298   -3.7  96,776   94,097   2.8

Other hotel revenue

   4,578   4,851   -5.6  16,075   15,355   4.7
  

 

 

  

 

 

   

 

 

  

 

 

  

Total revenue

   58,936   61,000   -3.4  195,388   188,705   3.5

Operating expenses:

       

Rooms

   9,617   9,752   -1.4  29,798   28,837   3.3

Food and beverage

   18,884   19,036   -0.8  59,957   58,563   2.4

Other hotel expenses

   18,465   18,503   -0.2  55,161   55,301   -0.3

Management fees, net

   960   999   -3.9  3,244   3,114   4.2

Depreciation and amortization

   6,701   6,462   3.7  19,830   21,423   -7.4
  

 

 

  

 

 

   

 

 

  

 

 

  

Total operating expenses

   54,627   54,752   -0.2  167,990   167,238   0.4

Performance metrics:

       

Occupancy

   74.2  72.4  2.5  75.1  69.8  7.6

ADR

  $184.89  $194.37   -4.9 $201.77  $207.48   -2.8

RevPAR

  $137.13  $140.78   -2.6 $151.47  $144.91   4.5

Total RevPAR

  $320.95  $332.19   -3.4 $358.57  $345.04   3.9

Rooms revenue and RevPAR decreased at Gaylord National during the three months and nine months ended September 30, 2017,2018, as compared to the same periodperiods in 2016,2017. The three-month 2018 decreases are due primarily to a decrease in transient occupancy and a decrease in ADR for group business. These decreases were partially offset by an increase in group occupancy and an increase in ADR for transient occupancy.business. The nine-month 2018 decreases are due to a decrease in both group and transient occupancy, partially offset by an increase in ADR for both group and transient business. Both periods were negatively impacted by Hurricane Florence in September 2018. Rooms revenue and RevPARexpenses increased at Gaylord National during the 2018 periods, as compared to the 2017 periods, primarily due to increased labor costs.

Food and beverage revenue increased at Gaylord National during the three months and nine months ended September 30, 2017,2018, as compared to the same periodperiods in 2016, due to2017, primarily as a result of an increase in group occupancy, partially offset by a decrease in transient ADR. The increase in group occupancybanquets. Food and beverage expenses increased in the nine-month 2017 period, as compared to 2016, was partially attributed to a large winter storm during the first quarter of 2016 that caused a decrease in 2016 occupancy. Rooms expenses decreased at Gaylord National during the three-month 2017 period,2018 periods, as compared to the same period in 2016, primarily due to2017 periods, as a decrease in commission cost. Rooms expenses at Gaylord Nationalresult of increased during the nine-month 2017 period, as compared to the same period in 2016, primarily due to the increase in variable costs associated with the increase in occupancy.revenue.

Food and beverageOther hotel revenue decreasedincreased at Gaylord National during the three months ended September 30, 2017,2018, as compared to the same period in 2016,2017, primarily as a result of a decrease in banquets. Food and beverage revenue increased at Gaylord National during the nine months ended September 30, 2017, as compareddue to the same period in 2016, primarily as a result of an increase in banquets, including inauguration-related banquets. Food and beverage expenses decreased in the three-month 2017 period, and increased in the nine-month 2017 period, as compared to the same periods in 2016, primarily due to the change in variable costs associated with the change in revenue.

Other hotel revenue decreased during the three months ended September 30, 2017, as compared to the same period in 2016, primarily due to a decrease in attrition and cancellation fee collections, partially offset by an increase in ancillary revenue, such as parking and resort fees, associated withas the increase in occupancy.prior year included several government groups, who, per standard government policy, do not pay a resort fee. Other hotel revenue increased during the nine months ended September 30, 2017,2018, as compared to the same period in 2016,2017, primarily due to an increase in ancillary revenue, partially offset by a decrease in attrition and cancellation fee collections. Other hotel expenses remained stabledecreased slightly in the 2017 periods,three-month 2018 period, as compared to the same periods2017 period, due to decreased property taxes due to prior period tax settlements and decreased maintenance costs. Other hotel expenses increased in 2016.the nine-month 2018 period, as compared to the 2017 period, due to an increase in sales and marketing expenses, partially offset by the decrease in property taxes.

Depreciation and amortization at Gaylord National increased during the three months and nine months ended September 30, 2017,2018, as compared to the same periodperiods in 2016,2017, primarily due to the completion of a new riverfront ballroom in 2017, and the resulting increase in depreciable asset levels. Depreciation and amortization decreased during the nine months ended September 30, 2017, as compared to the same period in 2016, primarily due to the increased depreciation as a result

37


Entertainment Segment

Total Segment Results.The following presents the financial results of our Entertainment segment for the three months and nine months ended September 30, 20172018 and 20162017 (in thousands, except percentages):

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017   2016   %
Change
  2017   2016   %
Change
 

Revenues

  $35,134   $30,701    14.4 $92,427   $81,893    12.9

Operating expenses

   22,621    19,100    18.4  61,559    54,630    12.7

Depreciation and amortization

   1,965    1,637    20.0  5,465    4,845    12.8
  

 

 

   

 

 

    

 

 

   

 

 

   

Operating income (1)

  $10,548   $9,964    5.9 $25,403   $22,418    13.3
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

    

Revenues

 

$

43,009

 

$

35,134

 

22.4

%  

$

108,446

 

$

92,427

 

17.3

%

Operating expenses

 

 

31,327

 

 

22,651

 

38.3

%  

 

80,947

 

 

61,637

 

31.3

%

Depreciation and amortization

 

 

2,613

 

 

1,965

 

33.0

%  

 

6,885

 

 

5,465

 

26.0

%

Operating income (1)

 

$

9,069

 

$

10,518

 

(13.8)

%  

$

20,614

 

$

25,325

 

(18.6)

%


(1)

(1)

Entertainment segment operating income does not include preopening costs of $0.1 million and $0.9 million in the effect of $0.9three months ended September 30, 2018 and 2017, respectively, and $1.7 million and $1.4 million of preopening costs in the nine months ended September 30, 2018 and 2017, periods, respectively. Entertainment segment operating income also does not include impairment and other charges of $4.5 million in the 2018 periods. See discussion of preopening coststhese items below.

Entertainment segment revenue increased during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, primarily due to increases at the Grandopening of our flagship Ole Red location in Nashville in May 2018, as well as revenue from Opry and Ryman Auditorium, dueCity Stage subsequent to increased shows and attendance and increased ancillary business such as tours and retail. Includedour purchase of the remaining 50% joint venture interest in the nine-month 2017 increase are increased revenues at the Wildhorse Saloon, due primarily to increased business attributable to the achieved benefitssecond quarter of a 2016 renovation.2018.

Entertainment operating expenses increased during the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, primarily as a result of the opening of our Ole Red Nashville location in May 2018, expenses associated with Opry City Stage subsequent to our purchase of the remaining 50% joint venture interest in the second quarter of 2018, and increased compensation and consulting costs, as well as increased variable costs associated with the increase in revenue.costs.

Entertainment depreciation expense increased in the three months and nine months ended September 30, 2017,2018, as compared to the same periods in 2016,2017, primarily due to an increase at the Wildhorse Saloon associated with increased depreciable asset levels as a result of the 2016 renovation.

opening of Ole Red Nashville that resulted in increased depreciable asset levels.

Corporate and Other Segment

Total Segment Results.The following presents the financial results of our Corporate and Other segment for the three months and nine months ended September 30, 20172018 and 20162017 (in thousands, except percentages):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

    

Operating expenses

 

$

7,212

 

$

7,909

 

(8.8)

%  

$

23,181

 

$

22,786

 

1.7

%

Depreciation and amortization

 

 

435

 

 

520

 

(16.3)

%  

 

1,391

 

 

1,611

 

(13.7)

%

Operating loss

 

$

(7,647)

 

$

(8,429)

 

9.3

%  

$

(24,572)

 

$

(24,397)

 

(0.7)

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  %
Change
  2017  2016  %
Change
 

Operating expenses

  $9,220  $8,447   9.2 $24,324  $22,315   9.0

Depreciation and amortization

   520   668   -22.2  1,611   1,992   -19.1
  

 

 

  

 

 

   

 

 

  

 

 

  

Operating loss

  $(9,740 $(9,115  6.9 $(25,935 $(24,307  6.7
  

 

 

  

 

 

   

 

 

  

 

 

  

Corporate and Other operating expenses, which consist primarily of costs associated with senior management salaries and benefits, legal, human resources, accounting, pension, information technology and other administrative costs, increaseddecreased in the three months ended September 30, 2018, as compared to the same period in 2017, primarily due to a decrease in employee benefit expense. Corporate and Other operating expenses increased in the nine months ended September 30, 2017,2018, as compared to the same periodsperiod in 2016,2017, primarily due to increased administrative and employment costs associated with supporting our growth initiatives within our Hospitality and Entertainment segments.

Corporate and Other depreciation and amortization expense decreased in the three months and nine months ended September 30, 2017,2018, as compared with the same periods in 2016.2017.

38


Operating Results – Preopening Costs

Preopening costs of $4.0 million during the nine months ended September 30, 2018 primarily include costs associated with an expansion of the guest rooms and convention space at Gaylord Texan, which opened in the second quarter of 2018, and costs associated with Ole Red Nashville, which opened in May 2018. Preopening costs of $0.9 million and $1.6 million during the three months and nine months ended September 30, 2017, respectively, include costs associated with a riverfront ballroom at Gaylord National, which opened in the second quarter of 2017, and costs associated with our various Entertainment segment projects.

Operating Results – Impairment and Other Charges

Impairment charges in the 2018 periods represent the impairment of a portion of our carrying value in Opry City Stage assets. Subsequent to our purchase of the remaining 50% joint venture interest in the second quarter of 2018, we determined that current ongoing operations were not meeting our revenue expectations from the time of purchase. In September 2018, we announced that we were temporarily suspending operations at Opry City Stage to appropriately reposition the venue and its operations. As a result, we performed an impairment assessment of the carrying amount of Opry City Stage assets based on the related estimated total future net cash flows and determined that an impairment charge of $4.5 million was warranted.

Non-Operating Results Affecting Net Income

General

The following table summarizes the other factors which affected our net income for the three months and nine months ended September 30, 20172018 and 20162017 (in thousands, except percentages):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

    

2018

    

2017

    

Change 

    

2018

    

2017

    

Change 

    

Interest expense

 

$

(19,220)

 

$

(16,621)

 

(15.6)

%  

$

(55,574)

 

$

(49,640)

 

(12.0)

%

Interest income

 

 

2,678

 

 

2,957

 

(9.4)

%  

 

8,197

 

 

8,874

 

(7.6)

%

Loss from joint ventures

 

 

(985)

 

 

(899)

 

(9.6)

%  

 

(2,227)

 

 

(2,616)

 

14.9

%

Other gains and (losses), net

 

 

1,881

 

 

1,453

 

29.5

%  

 

2,085

 

 

57

 

3,557.9

%

Provision for income taxes

 

 

(1,863)

 

 

(530)

 

(251.5)

%  

 

(9,748)

 

 

(2,022)

 

(382.1)

%

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
   2017  2016  %
Change
  2017  2016  %
Change
 

Interest expense

  $(16,621 $(15,947  4.2 $(49,640 $(48,002  3.4

Interest income

   2,957   2,965   -0.3  8,874   9,116   -2.7

Loss from joint ventures

   (899  (638  -40.9  (2,616  (2,086  -25.4

Other gains and (losses), net

   2,554   2,468   3.5  1,024   2,288   -55.2

Provision for income taxes

   (530  (1,822  70.9  (2,022  (2,352  14.0

Interest Expense

Interest expense increased $0.7$2.6 million during the three months and increased $5.9 million in the nine months ended September 30, 2017,2018, as compared to the same periodperiods in 2016,2017. The three-month 2018 increase is due primarily to increased borrowings under our revolving credit facility, as well as increased interest rates on our variable rate debt. The nine-month 2018 increase is due primarily to increased interest expense associatedincurred in connection with our new term loan A and increased borrowings under our refinanced term loan B. These increasesB, which were both refinanced in May 2017, and increased interest rates on our variable rate debt. This increase was partially offset by increased capitalized interest in the current period.

Interest expense increased $1.6 million during the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to thewrite-off of $0.9 million in deferred financing costs associated with the refinancing of our credit facility, as well as increased interest expense associated with our revolving credit facility due to higher average borrowings, our new term loan A and increased borrowings under our refinanced term loan B. These increases were partially offset by increased capitalized interest in the current year.

Cash interest expense increased $1.6$2.9 million to $16.9$19.7 million in the three months and increased $3.8$7.7 million to $49.1$56.8 million in the nine months ended September 30, 2017,2018, as compared to the same periods in 2016.2017. Non-cash interest expense, which includes amortization of deferred financing costs and debt discounts and thewrite-off of deferred financing costs, offset by capitalized interest, decreased $1.0$0.3 million to $(0.2)$(0.5) million in the three months and decreased $2.2$1.8 million to $0.5$(1.2) million in the nine months ended September 30, 2017,2018, as compared to the same periods in 2016.2017.

Our weighted average interest rate on our borrowings, excluding thewrite-off of $0.9 million in deferred financing costs during the nine-month 2017 period,and capitalized interest, was 4.5%4.9% and 4.2%4.5% for the three months ended September 30, 2018 and 2017, respectively, and 4.8% and 4.4% and 4.3% for the nine months ended September 30, 20172018 and 2016,2017, respectively.

39


Interest Income

Interest income for the three months and nine months ended September 30, 20172018 and 20162017 primarily includes amounts earned on the bonds that were received in connection with the development of Gaylord National, which we hold as notes receivable. See Note 6 to the accompanying condensed consolidated financial statements for additional discussion of interest income on these bonds.

Loss from Joint Ventures

The loss from joint ventures for the three months and nine months ended September 30, 20172018 and 20162017 primarily represents preopening expenses relatedincurred by our Gaylord Rockies joint venture, which is anticipated to joint ventures that we entered into related toopen in late 2018, as well as pre-opening expenses in the 2017 period, and losses incurred in the 2018 period, by our Opry City Stage joint venture in Times Square in New York City, andwhich opened in December 2017. We acquired the investmentremaining 50% joint venture interest in Gaylord Rockies. Opry City Stage is anticipatedin the second quarter of 2018. In addition, the nine-month 2018 period includes a gain of $2.8 million recognized from the re-measurement of the pre-existing Opry City Stage equity method investment prior to open in fourth quarter 2017,consolidation. In September 2018, we announced that we were temporarily suspending operations at Opry City Stage to appropriately reposition the venue and Gaylord Rockies is anticipated to open in late 2018.its operations.

Other Gains and (Losses), net

Other gains and (losses), net for the three months and nine months ended September 30, 20172018 and 20162017 primarily includes gains of $2.7 million and $2.6 million, and $2.5 millionrespectively, from a fund associated with the Gaylord National bonds to reimburse us for certain marketing and maintenance expenses. The These gains are partially offset by pension settlement losses associated with our defined benefit pension plan in the three months and nine months ended September 30, 2018 and 2017 of $1.0 million and $1.2 million, respectively. Other gains and (losses), net for the nine-month 2017 period also includes a loss on certain assets that were disposed of in our Entertainment and Corporate segments.

Provision for Income Taxes

As a REIT, we generally will not be subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that we distribute to our stockholders. We will however, be subject to corporate income taxes onbuilt-in gains (the excess of fair market value over tax basis at January 1, 2013) that result from gains on the sale of certain assets occurring prior to January 1, 2018. In addition, we will continue to be required to pay federal and state corporate income taxes on earnings of our TRSs.

For the three months ended September 30, 20172018 and 2016,2017, we recorded an income tax provision of $0.5$1.9 million and $1.8$0.5 million, respectively. For the nine months ended September 30, 20172018 and 2016,2017, we recorded an income tax provision of $2.0$9.7 million and $2.4$2.0 million, respectively. These results differ from the statutory rate primarily due to the REIT dividends paid deduction in both periods and the change in valuation allowance required at the TRSs.

TRSs for the 2017 periods.

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted and included a reduction to the U.S. federal corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. As discussed in SEC Staff Accounting Bulletin No. 118, the accounting for the TCJA should be completed within one year from enactment. As of September 30, 2018, we have completed our accounting for all of the enactment-date income tax effects of the TCJA. During the nine months ended September 30, 2018, we have made no adjustments to the provisional amounts recorded at December 31, 2017.

Liquidity and Capital Resources

Cash Flows From Operating Activities. Cash flow from operating activities is the principal source of cash used to fund our operating expenses, interest payments on debt, maintenance capital expenditures, and dividends to stockholders. During the nine months ended September 30, 2018, our net cash flows provided by operating activities were $225.3 million, primarily reflecting cash provided by our income before depreciation expense, amortization expense and other non-cash charges of approximately $220.3 million, and favorable changes in working capital of approximately $5.0 million. During the nine months ended September 30, 2017, our net cash flows provided by operating activities were $215.8 million, primarily reflecting cash provided by our income before depreciation expense, amortization expense and othernon-cash charges of approximately $197.0 million, and favorable changes in working capital of

40


approximately $18.8 million. The favorable changes in working capital in both periods primarily resulted from an increase in accounts payable and accrued liabilities primarily attributable to an increase in deferred revenues associated with our Christmas-related programs and an increase in accrued interest on our outstanding debt.debt, partially offset by an increase in trade receivables due to a seasonal change in the timing of payments received from corporate group customers at our Gaylord Hotels properties.

Cash Flows From Investing Activities. During the nine months ended September 30, 2016,2018, our net cash flows provided by operatingprimary uses of funds for investing activities were $199.1purchases of property and equipment, which totaled $132.8 million, and consisted primarily reflecting cash provided byof construction of the new waterpark at Gaylord Opryland, the expansion of the guest rooms and convention space at Gaylord Texan, construction of Ole Red Nashville, an expansion of the retail, ticketing and parking areas at the Grand Ole Opry House, and ongoing maintenance capital expenditures for our income before depreciation expense, amortization expense and othernon-cashexisting properties. charges of approximately $201.7 million, partially offset by unfavorable changes in working capital of approximately $2.6 million.

Cash Flows From Investing Activities.During the nine months ended September 30, 2017, our primary uses of funds for investing activities were purchases of property and equipment, which totaled $127.1 million, and our investment of $16.3 million in the Gaylord Rockies joint venture. Purchases of property and equipment consisted primarily of the expansion of the guest rooms and convention space at Gaylord Texan, the renovation of a portion of the guest rooms at Gaylord Opryland, the commencement of construction offor the new waterpark at Gaylord Opryland, a freestanding event ballroom and an expanded event space at Gaylord National, and ongoing maintenance capital expenditures for our existing properties.

During the nine months ended September 30, 2016, our primary uses of funds for investing activities were purchases of property and equipment, which totaled $84.6 million, our investment of $50.4 million in the Gaylord Rockies joint venture, and an increase in restricted cash and cash equivalents associated with the furniture, fixtures, and equipment (“FF&E”) reserve that we are obligated to maintain for future planned and emergency-related capital expenditures at the properties that Marriott manages for us. These uses of cash were partially offset by the receipt of $6.8 million in proceeds related to the sale of our rights in a letter of intent which entitled us to a portion of an economic interest in the income from the land underlying the new MGM casino project in National Harbor, Maryland. Purchases of property and equipment consisted primarily of the renovation of a portion of the guest rooms at Gaylord Opryland, the freestanding event ballroom and expanded event space at Gaylord National, the expansion of the guest rooms and convention space at Gaylord Texan, a renovation of the Wildhorse Saloon, and ongoing maintenance capital expenditures for our existing properties.

Cash Flows From Financing Activities. Our cash flows from financing activities primarily reflect the incurrence of debt, the repayment of long-term debt and the payment of cash dividends. During the nine months ended September 30, 2018, our net cash flows used in financing activities were approximately $37.0 million, primarily reflecting the payment of $128.8 million in cash dividends, partially offset by $99.0 million in net borrowings under our revolving credit facility.

During the nine months ended September 30, 2017, our net cash flows used in financing activities were approximately $65.2 million, primarily reflecting the repayment of $235.9 million under our refinanced revolving credit facility, the payment of $120.7 million in cash dividends and the payment of $12.3 million in deferred financing costs related to our refinanced credit facility. These uses of cash were partially offset by $200.0 million in borrowings under our new term loan A and $107.5 million in net borrowings under our refinanced term loan B.

During the nine months ended September 30, 2016, our net cash flows used in financing activities were approximately $88.1 million, primarily reflecting the payment of $112.9 million in cash dividends and the payment of $24.8 million to repurchase and retire 0.5 million shares of our common stock, partially offset by $57.5 million in net borrowings under our credit facility.

Liquidity

Liquidity

At September 30, 2017,2018, we had $62.7$86.0 million in unrestricted cash and $551.4$427.6 million available for borrowing under our revolving credit facility. During the nine months ended September 30, 2017,2018, we net borrowed $71.6$99.0 million under our revolving credit facility, incurred capital expenditures of $132.8million and paid cash dividends of $120.7 million, incurred capital expenditures of $127.1 million, invested $16.3 million in the Gaylord Rockies joint venture, and paid $12.3 million in deferred financing costs associated with the refinancing of our credit facility.$128.8 million. These net outflows were offset by cash flows from operating activities discussed above, resulting in the increase in our cash balance from December 31, 20162017 to September 30, 2017.2018.

We currently plan to pay a quarterly cash dividend of $0.80$0.85 per share in January 2018,2019, subject to determinations as to the timing and amount by our board of directors. We anticipate investing in our operations during the remainder of 20172018 by spending approximately $242 million to purchase an additional investment interest in the Gaylord Rockies joint venture and by spending between $60$45 million and $80$65 million in capital expenditures, which primarily includes ongoing maintenance capital of our current facilities and the expansionconstruction of the guest rooms and convention space at Gaylord Texan, and a luxury indoor/outdoor waterpark at Gaylord Opryland.

We believe that our cash on hand and cash from operations will be adequate to fund our general short-term commitments, as well as: (i) normal operating expenses, (ii) interest expense on long-term debt obligations, (iii) capital lease and operating lease obligations, and (iv) declared dividends. If our existing cash and cash from operations were inadequate to fund such items, as well as capital expenditures and our planned additional investment in the Gaylord Rockies joint venture, we could draw on our credit facility, subject to the satisfaction of covenants in the credit facility.

Our outstanding principal debt agreements, at September 30, 2017none of which mature prior to 2021, are described below. Based on current projections for compliance under our financial covenants contained in these agreements, we do not foresee a maturity issue prior to their scheduled maturity date.

At September 30, 2017,2018, we were in compliance with all covenants related to our outstanding debt.

41


Principal Debt Agreements

Credit Facility. On May 11, 2017, we entered into a Fifth Amended and Restated Credit Agreement (the “Amended Credit“Credit Agreement”) among the Company, as a guarantor, the Operating Partnership, as borrower, certain other subsidiaries of the Company party thereto, as guarantors, certain subsidiaries of the Company party thereto, as pledgors, the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent, which amendsamended and restatesrestated the Company’s existing credit facility. In addition, on May 23, 2017, we entered into an Amendment No. 1 (the “Amendment”“Amendment No. 1”) and on June 26, 2018, we entered into an Amendment No. 2 (the “Amendment No. 2”) to the Amended Credit Agreement among the same parties.parties, as discussed below. As amended, our credit facility consists of a $700.0 million senior secured revolving credit facility (the “Revolver”), a new $200.0 million senior secured term loan A (the “Term Loan A”), and an increaseda $500.0 million senior secured term loan B (the “Term Loan B”), each as discussed below.

Each of the Revolver, Term Loan A and Term Loan B is guaranteed by us, each of our four wholly-owned subsidiaries that own the Gaylord Hotels properties, and certain other of our other subsidiaries. Each is secured by (i) a first mortgage lien on the real property of each of our Gaylord Hotels properties, (ii) pledges of equity interests in our subsidiaries that own the Gaylord Hotels properties, (iii) our personal property and the personal property of the Operating Partnership and our guarantor subsidiaries and (iv) all proceeds and products from our Gaylord Hotels properties. Advances are subject to a 55% borrowing base, based on the appraisal value of the Gaylord Hotels properties (reduced to 50% in the event one of the Gaylord HotelHotels properties is sold).

In addition, each of the Revolver, Term Loan A and Term Loan B contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The material financial covenants, ratios or tests contained in the Amended Credit Agreement are as follows (and are unchanged from the previous credit agreement):

·

We must maintain a consolidated funded indebtedness to total asset value ratio as of the end of each calendar quarter of not more than .65 to 1.0.

·

We must maintain a consolidated tangible net worth (as defined in the Credit Agreement) of not less than $175 million plus 75% of the proceeds received by us or any of our subsidiaries in connection with any equity issuance.

·

We must maintain a consolidated fixed charge coverage ratio (as defined in the Credit Agreement) of not less than 1.50 to 1.00.

·

We must maintain a consolidated funded indebtedness to total asset value ratio as of the end of each calendar quarter of not more than .65 to 1.0.

We must maintain a consolidated tangible net worth (as defined in the Amended Credit Agreement) of not less than $175 million plus 75% of the proceeds received by us or any of our subsidiaries in connection with any equity issuance.

We must maintain a consolidated fixed charge coverage ratio (as defined in the Amended Credit Agreement) of not less than 1.50 to 1.00.

We must maintain an implied debt service coverage ratio (the ratio of adjusted net operating income to monthly principal and interest that would be required if the outstanding balance were amortized over 25 years at an assumed fixed rate) of not less than 1.60 to 1.00.

If an event of default shall occur and be continuing under the Amended Credit Agreement, the commitments under the Amended Credit Agreement may be terminated and the principal amount outstanding under the Amended Credit Agreement, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.

$700 Million Revolving Credit Facility. Pursuant to the Amendment No. 1, we extended the maturity of the Revolver to May 23, 2021, with two additionalsix-month extension options, at our election. Borrowings under the Revolver bear interest at an annual rate equal to, at our option, either (i) LIBOR plus the applicable margin ranging from 1.55% to 2.40%, dependent upon our funded debt to total asset value ratio (as defined in the Amended Credit Agreement) or (ii) a base rate as set in the Amended Credit Agreement. At September 30, 2017,2018, the interest rate on the Revolver was LIBOR plus 1.55%. Principal is payable in full at maturity. No additional amounts were borrowed under the Revolver at closing.

At September 30, 2017, $146.52018, $270.0 million of borrowings were outstanding under the Revolver, and the lending banks had issued $2.1$2.4 million of letters of credit under the Amended Credit Agreement, which left $551.4$427.6 million of availability under the Revolver (subject to the satisfaction of debt incurrence tests under the indentures governing our $350 million in aggregate principal amount of senior notes due 2021 (the “$350 Million 5% Senior Notes”) and $400 million in

42


aggregate principal amount of senior notes due 2023 (the “$400 Million 5% Senior Notes”), which we met at September 30, 2017)2018).

$200 Million Term Loan A Facility.The Amendment No. 1 also provides for the Term Loan A, which has a maturity date of May 23, 2022. Borrowings bear interest at an annual rate equal to, at our option, either (i) LIBOR plus the applicable margin ranging from 1.50% to 2.35%, dependent upon our funded debt to total asset value ratio (as defined in the Amended Credit Agreement) or (ii) a base rate as set in the Amended Credit Agreement. At September 30, 2017,2018, the interest rate on the Term Loan A was LIBOR plus 1.50%. Amounts borrowed under the Term Loan A that are repaid or prepaid may not be reborrowed. At closing, we drew down on the Term Loan A in full and proceeds were used to pay down a portion of the Revolver.

$500 Million Term Loan B Facility.In May 2017, as part of the Amended Credit Agreement discussed above, we increased the capacity under our previous $400 million term loan B to $500 million. The Term Loan B has a maturity date of May 11, 2024 and, prior to June 26, 2018, borrowings bearbore interest at an annual rate equal to, at our option, either (i) LIBOR plus 2.25% or (ii) a base rate as set in the AmendedCredit Agreement. On June 26, 2018, we entered into Amendment No. 2 that reduces the applicable interest rate margins for borrowings under the Term Loan B to, at our option, either (i) LIBOR plus 2.00% or (ii) a base rate as set in the Credit Agreement. At September 30, 2017,2018, the interest rate on the Term Loan B was LIBOR plus 2.25%2.00%. The Term Loan B amortizes in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount of $500.0 million, with the balance due at maturity. In addition, if for any fiscal year, there is Excess Cash Flow (as defined in the

Amended Credit Agreement), an additional principal amount is required. As a result of Amendment No. 2, the commencement date for any Excess Cash Flow payments has been extended to December 31, 2019. Amounts borrowed under the Term Loan B that are repaid or prepaid may not be reborrowed. At closing of Amendment No. 1, we drew down on the Term Loan B in full. Net proceeds, after the repayment of the original $400 million term loan B and certain transaction expenses payable at closing, were approximately $114.3 million and were used to pay down a portion of the Revolver. Amendment No. 2 did not change the maturity dates existing under the Credit Agreement or result in any increase or decrease in outstanding borrowings.

As a result of the repricing of the Term Loan B in 2018, we wrote off $2.0 million of deferred financing costs during the nine months ended September 30, 2018, which is included in interest expense in the accompanying condensed consolidated statement of operations. At September 30, 2018, $493.8 million in borrowings were outstanding under the Term Loan B.

$350 Million 5% Senior Notes.In 2013, the Operating Partnership and Finco completed the private placement of $350.0 million in aggregate principal amount of senior notes due 2021, which are guaranteed by the Company and its subsidiaries that guarantee the Amended Credit Agreement. The $350 Million 5% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors and U.S. Bank National Association as trustee. The $350 Million 5% Senior Notes have a maturity date of April 15, 2021 and bear interest at 5% per annum, payable semi-annually in cash in arrears on April 15 and October 15 of each year. The $350 Million 5% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness and senior in right of payment to future subordinated indebtedness, if any. The $350 Million 5% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $350 Million 5% Senior Notes will be effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $350 Million 5% Senior Notes.

The $350 Million 5% Senior Notes are redeemable, in whole or in part, at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 102.50%, 101.25%, and 100.00% beginning on April 15 of 2017, 2018 and 2019, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.date.

In connection with the issuance of the $350 Million 5% Senior Notes, we completed a registered offer to exchange the $350 Million 5% Senior Notes for registered notes with substantially identical terms as the $350 Million 5% Senior Notes in November 2013.

43


$400 Million 5% Senior Notes.In 2015, the Operating Partnership and Finco completed the private placement of $400.0 million in aggregate principal amount of senior notes due 2023. The $400 Million 5% Senior Notes are general unsecured senior obligations of the Company’s issuing subsidiaries and are guaranteed by the Company and its subsidiaries that guarantee the Amended Credit Agreement. The $400 Million 5% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors and U.S. Bank National Association as trustee. The $400 Million 5% Senior Notes have a maturity date of April 15, 2023 and bear interest at 5% per annum, payable semi-annually in cash in arrears on April 15 and October 15 of each year. The $400 Million 5% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment  with such subsidiaries’ existing and future senior unsecured indebtedness, including the $350 Million 5% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $400 Million 5% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $400 Million 5% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $400 Million 5% Senior Notes.

The issuing subsidiaries may redeem the $400 Million 5% Senior Notes before April 15, 2018, in whole or in part, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, if any, up to, but excluding, the applicable redemption date plus a make-whole redemption premium. The $400 Million 5%

Senior Notes will beare redeemable, in whole or in part, at any time on or after April 15, 2018 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 103.75%, 102.50%, 101.25%, and 100.00% beginning on April 15 of 2018, 2019, 2020, and 2021, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.date.

In connection with the issuance of the $400 Million 5% Senior Notes, we completed a registered offer to exchange the $400 Million 5% Senior Notes for registered notes with substantially identical terms as the $400 Million 5% Senior Notes in September 2015.

Additional Debt Limitations. Pursuant to the terms of the management agreements and pooling agreement with Marriott, we are subject to certain debt limitations described below.

The management agreements provide for the following limitations on indebtedness encumbering a hotel:

·

The aggregate principal balance of all mortgage and mezzanine debt encumbering the hotel shall be no greater than 75% of the fair market value of the hotel; and

·

The aggregate principal balance of all mortgage and mezzanine debt encumbering the hotel shall be no greater than 75% of the fair market value of the hotel; and

The ratio of (a) aggregate Operating Profit (as defined in the management agreement) in the 12 months prior to the closing on the mortgage or mezzanine debt to (b) annual debt service for the hotel shall equal or exceed 1.2:1; but is subject to the pooling agreement described below.

The pooled limitations on Secured Debt (as defined in the pooling agreement) are as follows:

·

The aggregate principal balance of all mortgage and mezzanine debt on Pooled Hotels (as defined in the pooling agreement), shall be no more than 75% of the fair market value of Pooled Hotels.

·

The ratio of (a) aggregate Operating Profit (as defined in the pooling agreement) of Pooled Hotels in the 12 months prior to closing on any mortgage or mezzanine debt to (b) annual debt service for the Pooled Hotels, shall equal or exceed 1.2:1.

The ratio of (a) aggregate Operating Profit (as defined in the pooling agreement) of Pooled Hotels in the 12 months prior to closing on any mortgage or mezzanine debt to (b) annual debt service for the Pooled Hotels, shall equal or exceed 1.2:1.

Off-Balance Sheet Arrangements

As described in Note 612 to our condensed consolidated financial statements included herein, we have invested in a joint venture that will buildis building and subsequently ownowns Gaylord Rockies. In connection with this investment, we agreed to provide guarantees of the hotel’s construction loan, including a principal repayment guaranty of up to $21 million of the total $500 million principal amount of the construction loan previously obtained from a consortium of eight banks, with such amount reducing to $14 million and further reducing to $8.75 million upon Gaylord Rockies’ satisfaction of designated debt

44


service coverage requirements following completion and opening of the hotel. We have also provided a completion guarantee under the construction loan capped at our pro rata share of all costs necessary to complete the project within the time specified in the senior loan documents. Further, we have agreed to a guaranty capped at our pro rata share of the joint venture’s obligations under the construction loan prior to the hotel’s opening related to interest accruing under the construction loan and the operating expenses of the property (estimated pro rata share of interest prior to the hotel opening is $9.8 million). In addition to guaranties related to the construction loan, we agreed to provide a guaranty of the mezzanine debt related to the hotel including a payment guaranty capped at $8.75 million for which we are only liable in the event there is a casualty or condemnation event at the hotel and the construction lenders elect to apply those proceeds to the construction loan balance and release the construction loan guaranties and liens. The guaranty related to the mezzanine debt also includes an uncapped completion guaranty and an uncapped guaranty of the joint venture’s obligations under the mezzanine loan prior to the hotel’s opening related to interest accruing under the mezzanine loan and the operating expenses of the property to the extent not already satisfied by the parties under the guaranties related to the construction loan. As of September 30, 2017,2018, we have not recorded any liability in the condensed consolidated balance sheet associated with these guarantees.

In addition, wewe enter into commitments under letters of credit, primarily for the purpose of securing our deductible obligations with our insurers, and lending banks under our Amended Credit Agreement had issued $2.1$2.4 million of letters of credit at September 30, 2017.2018. Except as set forth in these paragraphs, we do not have anyoff-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Commitments and Contractual Obligations

The following table summarizes our significant contractual obligations at September 30, 2017,2018, including long-term debt and operating and capital lease commitments (amounts in thousands):

       Payment due by Period 
   Total
amounts
   Less than           More than 

Contractual obligations

  committed   1 year   1-3 years   3-5 years   5 years 

Long-term debt (1)

  $1,594,000   $5,000   $10,000   $706,500   $872,500 

Capital leases

   643    20    43    46    534 

Operating leases (2)

   616,463    4,563    9,533    10,090    592,277 

Construction commitments (3)

   13,553    13,553    —      —      —   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total contractual obligations

  $2,224,659   $23,136   $19,576   $716,636   $1,465,311 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment due by Period

 

    

Total amounts

    

Less than

    

 

 

    

 

 

    

More than

Contractual obligations

 

committed

 

1 year

 

1-3 years

 

3-5 years

 

5 years

Long-term debt (1)

 

$

1,713,750

 

$

5,000

 

$

630,000

 

$

610,000

 

$

468,750

Capital leases

 

 

623

 

 

21

 

 

45

 

 

48

 

 

509

Operating leases (2)

 

 

676,924

 

 

7,504

 

 

16,273

 

 

17,336

 

 

635,811

Construction commitments (3)

 

 

37,222

 

 

37,222

 

 

 —

 

 

 —

 

 

 —

Total contractual obligations

 

$

2,428,519

 

$

49,747

 

$

646,318

 

$

627,384

 

$

1,105,070


(1)

(1)

Long-term debt commitments do not include approximately $327.2$306.9 million in interest payments projected to be due in future years (less than 1 year – $64.9$76.6 million;1-3 1‑3 years – $129.2$140.9 million;3-5 3‑5 years – $95.4$76.8 million; more than 5 years – $37.7$12.6 million) based on the stated interest rates on our fixed-rate debt and the rates in effect at September 30, 20172018 for our variable-rate debt. Variable rates, as well as outstanding principal balances, could change in future periods. See “Principal Debt Agreements” above for a discussion of our outstanding long-term debt. See “Supplemental Cash Flow Information” in Note 1 to the consolidated financial statements included in our Annual Report on Form10-K 10‑K for the year ended December 31, 20162017 for a discussion of the interest we paid during the fiscal years 2017, 2016 2015 and 2014.2015.

(2)

(2)

Total operating lease commitments of $616.5$676.9 million includes the75-year 75‑year operating lease agreement we entered into during 1999 for 65.3 acres of land located in Osceola County, Florida where Gaylord Palms is located.located, which we may extend until January 2101.

(3)

(3)

With respect to our properties that are operated under management agreements with Marriott, we are obligated to maintain an FF&E reserve account for future planned and emergency-related capital expenditures at these properties. The amount funded into each of these reserve accounts is determined pursuant to the management agreements and is generally 5.0% of the respective property’s total annual revenue. At September 30, 2017, $13.6 2018, $37.2million was held in FF&E reserve accounts for future capital expenditures at our properties. According to the terms of each management agreement with Marriott, the reserve funds are to be held by Marriott in a restricted cash

45


account. Although it is not required that such funds be expended in a given year, each management agreement provides any excess funds will carry over for use in future years.

The expected cash flows under our defined benefit pension plan, ournon-qualified retirement plan, ournon-qualified contributory deferred compensation plan and our defined benefit postretirement health care and life insurance plan are estimated based upon the best information currently available, but are not driven by contractual terms. Therefore, these obligations have been excluded from the contractual obligations table above. See Note 8 and Note 9 to the consolidated financial statements included in our Annual Report on Form10-K 10‑K for the year ended December 31, 20162017 for further discussion related to these obligations.

Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States. Certain of our accounting policies, including those related to revenue recognition, impairment of long-lived and other assets, stock-based compensation, depreciation and amortization, income taxes, pension and postretirement benefits other than pension plans, and legal contingencies, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from our estimates. For a discussion of our critical accounting policies and estimates, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements” presented in our Annual Report on Form10-K 10‑K for the year ended December 31, 2016.2017. There were no newly identified critical accounting policies in the first nine months of 20172018 nor were there any material changes to the critical accounting policies and estimates discussed in our Annual Report on Form10-K 10‑K for the year ended December 31, 2016.2017.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposures to market risk are from changes in interest rates and changes in asset values of investments that fund our pension plan.

Risk Related to Changes in Interest Rates

Borrowings outstanding under the Revolver bear interest at an annual rate of LIBOR plus 1.55%, subject to adjustment as described in the agreement.Credit Agreement. If LIBOR were to increase by 100 basis points, our annual interest cost on the $146.5$270.0 million in borrowings outstanding under the Revolver at September 30, 20172018 would increase by approximately $1.5$2.7 million.

Borrowings outstanding under our Term Loan A currently bear interest at an annual rate of LIBOR plus 1.50%, subject to adjustment as described in the agreement.Credit Agreement. If LIBOR were to increase by 100 basis points, our annual interest cost on the $200.0 million in borrowings outstanding under our Term Loan A at September 30, 20172018 would increase by approximately $2.0 million.

Borrowings outstanding under our Term Loan B currently bear interest at an annual rate of LIBOR plus 2.25%2.00%, subject to adjustment as described in the agreement.Credit Agreement. If LIBOR were to increase by 100 basis points, our annual interest cost on the $497.5$493.8 million in borrowings outstanding under our Term Loan B at September 30, 20172018 would increase by approximately $5.0$4.9 million.

Certain of our outstanding cash balances are occasionally invested overnight with high credit quality financial institutions. We do not have significant exposure to changing interest rates on invested cash at September 30, 2017.2018. As a result, the interest rate market risk implicit in these investments at September 30, 2017,2018, if any, is low.

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Risk Related to Changes in Asset Values that Fund our Pension Plans

The expected rates of return on the assets that fund our defined benefit pension plan are based on the asset allocation of the plan and the long-term projected return on those assets, which represent a diversified mix of equity securities, fixed income securities and cash. At September 30, 2017,2018, the value of the investments in the pension fundplan was $69.5$68.6 million, and an immediate 10% decrease in this value would have reduced the value of the investments in the pension fundplan by approximately $6.9 million.

ITEM 4. CONTROLS AND PROCEDURES.

The Company maintains disclosure controls and procedures, as defined in Rule13a-15(e) 13a‑15(e) promulgated under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

There has been no change in our internal control over financial reporting that occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is a party to certain litigation in the ordinary course, as described in Note 12, “Commitments and Contingencies,” to our condensed consolidated financial statements included herein and which our management deems immaterial and will not have a material effect on our results of operations, financial condition or liquidity.statements.

ITEM 1A. RISK FACTORS.

ThereExcept as otherwise described herein, there have been no material changes from the risk factors disclosed in ourPart I, Item 1A, “Risk Factors” as previously set forth in the Company’sFactors,” of our Annual Report on Form10-K 10‑K for the fiscal year ended December 31, 2016.2017.

We may fail to complete the Rockies Interest Purchase on a timely basis or at all.

Although we expect to complete the Rockies Interest Purchase by the end of 2018, the completion of the Rockies Interest Purchase is subject to closing conditions and there can be no assurance that the Rockies Interest Purchase will be completed on the anticipated schedule or at all. In particular, closing conditions involving third parties, such as the lender to the Gaylord Rockies joint venture and Marriott, may be difficult to satisfy and may not be satisfied on the anticipated schedule or at all. If we fail to consummate the Rockies Interest Purchase or should the completion of the Rockies Interest Purchase be significantly delayed, we will have incurred significant costs related to the Rockies Interest Purchase, such as costs for legal and accounting services, without realizing all or a portion of the intended economic benefits of the Rockies Interest Purchase. Even if we consummate the Rockies Interest Purchase, we may not realize the intended economic benefits. As a general matter, any failure to complete the Rockies Interest Purchase could have a negative impact on our business, results of operations or financial condition.

The consummation of the Rockies Interest Purchase will subject us to additional liability and risk.

Following the consummation of the Rockies Interest Purchase, and as a result of our increased ownership in the Gaylord Rockies joint venture, we will be subject to additional liability, including an expected increase in our obligations relating to various guarantees and environmental indemnities of the construction loan for the development and construction of Gaylord Rockies (as well as future financings). Additionally, we will be subject to increased risks related to the

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prevailing market conditions in the greater Denver area, as well as the general operating performance of Gaylord Rockies. The additional liabilities and risks associated with the completion of the Rockies Interest Purchase could have a material adverse effect on our business, financial condition and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Inapplicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Inapplicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Inapplicable.

ITEM 5. OTHER INFORMATION.

Inapplicable.

ITEM 6. EXHIBITS.

 

Exhibit
Number

Description

  3.1

2.1

Purchase Agreement, dated as of September 13, 2018, by and among Ryman Hospitality Properties, Inc., Aurora Convention Center Hotel Partners LLC, AREG Aurora CCH LLC, and RIDA Aurora LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed September 14, 2018).

3.1

Amended and Restated Certificate of Incorporation of Ryman Hospitality Properties, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form8-K 8‑K filed October 1, 2012).

3.2

Amended and Restated Bylaws of Ryman Hospitality Properties, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form8-K 8‑K filed October 1, 2012).

31.1*

Certification of Colin V. Reed pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

31.2*

Certification of Mark Fioravanti pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1**

Certification of Colin V. Reed and Mark Fioravanti pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

101*

The following materials from Ryman Hospitality Properties, Inc.’s Quarterly Report on Form10-Q 10‑Q for the quarterly period ended September 30, 2017,2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited) at September 30, 20172018 and December 31, 2016,2017, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three months and nine months ended September 30, 20172018 and 2016,2017, (iii) Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 20172018 and 2016,2017, and (iv) Notes to Condensed Consolidated Financial Statements (unaudited).


*     Filed herewith.

**   Furnished herewith.

 

*Filed herewith.
**Furnished herewith.

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SIGNATURES

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

 

RYMAN HOSPITALITY PROPERTIES, INC.

Date: November 7, 20172018

By:

/s/ Colin V. Reed

Colin V. Reed

Chairman of the Board of Directors and

Chief Executive Officer

(Principal Executive Officer)

By:

/s/ Mark Fioravanti

Mark Fioravanti

President and Chief Financial Officer

(Principal Financial Officer)

By:

/s/ Jennifer Hutcheson

Jennifer Hutcheson

Senior Vice President, andCorporate

Corporate

Controller

(Principal and Chief Accounting Officer)Officer

 

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