FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

(Mark One)

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

For the quarterly period ended September 30, 2008

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

Commission file number 1-13079

GAYLORD ENTERTAINMENT COMPANY

(Exact name of registrant as specified in its charter)

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

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

(615) 316-6000
(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 þ No o

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

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

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

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

Class		Outstanding as of November 1, 2008
Common Stock, $.01 par value		40,906,810 shares

 

 

GAYLORD ENTERTAINMENT COMPANY

FORM 10-Q

For the Quarter Ended September 30, 2008
INDEX

		Page
Part I — Financial Information
Item 1. Financial Statements.
Condensed Consolidated Statements of Operations — For the Three Months and Nine Months Ended September 30, 2008 and 2007			3
Condensed Consolidated Balance Sheets — September 30, 2008 and December 31, 2007			4
Condensed Consolidated Statements of Cash Flows — For the Nine Months Ended September 30, 2008 and 2007			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
Item 3. Quantitative and Qualitative Disclosures About Market Risk			60
Item 4. Controls and Procedures			61
Part II — Other Information
Item 1. Legal Proceedings			61
Item 1A. Risk Factors			61
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			61
Item 3. Defaults Upon Senior Securities			61
Item 4. Submission of Matters to a Vote of Security Holders			62
Item 5. Other Information			62
Item 6. Exhibits			62
SIGNATURES			62
EX-31.1
EX-31.2
EX-32.1

Part I — FINANCIAL INFORMATION

Item 1. — FINANCIAL STATEMENTS.

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2008				2007				2008				2007
Revenues		$	226,733			$	166,920			$	680,237			$	538,659
Operating expenses:
Operating costs			147,388				105,581				409,919				322,905
Selling, general and administrative			42,563				35,819				130,219				115,310
Preopening costs			369				3,926				19,190				10,101
Impairment and other charges			—				—				12,031				—
Depreciation and amortization			29,619				19,024				79,828				57,787
Operating income			6,794				2,570				29,050				32,556
Interest expense, net of amounts capitalized			(21,918	)			(3,125	)			(44,045	)			(35,513	)
Interest income			4,486				620				8,583				2,767
Unrealized gain on Viacom stock and CBS stock			—				—				—				6,358
Unrealized loss on derivatives			—				—				—				3,121
(Loss) income from unconsolidated companies			(75	)			(2	)			(293	)			1,011
Other gains and (losses), net			904				622				954				146,697
(Loss) income before (benefit) provision for income taxes			(9,809	)			685				(5,751	)			156,997
(Benefit) provision for income taxes			(3,303	)			(1,511	)			(945	)			60,528
(Loss) income from continuing operations			(6,506	)			2,196				(4,806	)			96,469
Income (loss) from discontinued operations, net of income taxes			986				(4,349	)			767				11,684
Net (loss) income		$	(5,520	)		$	(2,153	)		$	(4,039	)		$	108,153
Basic (loss) income per share:
(Loss) income from continuing operations		$	(0.16	)		$	0.05			$	(0.12	)		$	2.36
Income (loss) from discontinued operations, net of income taxes			0.02				(0.10	)			0.02				0.28
Net (loss) income		$	(0.14	)		$	(0.05	)		$	(0.10	)		$	2.64
Fully diluted (loss) income per share:
(Loss) income from continuing operations		$	(0.16	)		$	0.05			$	(0.12	)		$	2.28
Income (loss) from discontinued operations, net of income taxes			0.02				(0.10	)			0.02				0.28
Net (loss) income		$	(0.14	)		$	(0.05	)		$	(0.10	)		$	2.56

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

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

		September 30,				December 31,
		2008				2007
ASSETS
Current assets:
Cash and cash equivalents — unrestricted		$	47,041			$	23,592
Cash and cash equivalents — restricted			1,179				1,216
Trade receivables, less allowance of $1,661 and $468, respectively			60,615				31,371
Deferred income taxes			7,689				7,689
Other current assets			59,015				30,180
Current assets of discontinued operations			—				797
Total current assets			175,539				94,845
Property and equipment, net of accumulated depreciation			2,258,952				2,196,264
Notes receivable			143,057				—
Intangible assets, net of accumulated amortization			135				174
Goodwill			6,915				6,915
Indefinite lived intangible assets			1,480				1,480
Investments			3,880				4,143
Estimated fair value of derivative assets			1,503				2,043
Long-term deferred financing costs			20,694				14,621
Other long-term assets			36,159				16,382
Total assets		$	2,648,314			$	2,336,867
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations		$	2,006			$	2,058
Accounts payable and accrued liabilities			259,091				240,827
Estimated fair value of derivative liabilities			1,323				—
Current liabilities of discontinued operations			1,538				2,760
Total current liabilities			263,958				245,645
Long-term debt and capital lease obligations, net of current portion			1,280,779				979,042
Deferred income taxes			77,821				73,662
Estimated fair value of derivative liabilities			4,808				—
Other long-term liabilities			98,708				96,484
Long-term liabilities of discontinued operations			451				542
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding			—				—
Common stock, $.01 par value, 150,000 shares authorized, 40,900 and 41,236 shares issued and outstanding, respectively			409				413
Additional paid-in capital			709,334				721,196
Retained earnings			226,719				230,758
Accumulated other comprehensive loss			(14,673	)			(10,875	)
Total stockholders’ equity			921,789				941,492
Total liabilities and stockholders’ equity		$	2,648,314			$	2,336,867

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

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		2008				2007
Cash Flows from Operating Activities:
Net (loss) income		$	(4,039	)		$	108,153
Amounts to reconcile net (loss) income to net cash flows provided by operating activities:
Income from discontinued operations, net of taxes			(767	)			(11,684	)
Loss (income) from unconsolidated companies			293				(1,011	)
Impairment and other charges			12,031				—
Unrealized gain on Viacom stock and CBS stock and related derivatives, net			—				(9,479	)
Provision (benefit) for deferred income taxes			5,049				(47,587	)
Depreciation and amortization			79,828				57,787
Amortization of deferred financing costs			3,204				13,260
Write-off of deferred financing costs			1,476				1,192
Stock-based compensation expense			8,990				7,635
Excess tax benefit from stock-based compensation			(842	)			(1,974	)
Gain on sale of investment in Bass Pro			—				(140,313	)
Loss (gain) on sales of assets			276				(4,281	)
Changes in (net of acquisitions and divestitures):
Trade receivables			(29,244	)			(12,117	)
Accounts payable and accrued liabilities			47,909				10,336
Income taxes payable			(810	)			23,655
Other assets and liabilities			(24,865	)			(8,505	)
Net cash flows provided by (used in) operating activities — continuing operations			98,489				(14,933	)
Net cash flows (used in) provided by operating activities — discontinued operations			(482	)			17,250
Net cash flows provided by operating activities			98,007				2,317
Cash Flows from Investing Activities:
Purchases of property and equipment			(331,371	)			(454,501	)
Investment in unconsolidated companies			(30	)			(191	)
Proceeds from sale of investment in Bass Pro			—				221,527
Proceeds from sales of assets			36				5,071
Other investing activities			(16,692	)			(1,311	)
Net cash flows used in investing activities — continuing operations			(348,057	)			(229,405	)
Net cash flows provided by investing activities — discontinued operations			756				115,240
Net cash flows used in investing activities			(347,301	)			(114,165	)
Cash Flows from Financing Activities:
Net borrowings under credit facility			302,000				125,000
Purchases of Company’s common stock			(19,999	)			—
Deferred financing costs paid			(10,753	)			(3,883	)
Decrease in restricted cash and cash equivalents			37				116
Proceeds from exercise of stock option and purchase plans			1,632				12,047
Excess tax benefit from stock-based compensation			842				1,974
Other financing activities, net			(1,016	)			(762	)
Net cash flows provided by financing activities — continuing operations			272,743				134,492
Net cash flows used in financing activities — discontinued operations			—				(19,365	)
Net cash flows provided by financing activities			272,743				115,127
Net change in cash and cash equivalents			23,449				3,279
Cash and cash equivalents — unrestricted, beginning of period			23,592				35,356
Cash and cash equivalents — unrestricted, end of period		$	47,041			$	38,635

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

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION:

The condensed consolidated financial statements include the accounts of Gaylord Entertainment Company and its subsidiaries (the “Company”) and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the financial information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2007 filed with the SEC. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim periods have been included. All adjustments are of a normal, recurring nature. The results of operations for such interim periods are not necessarily indicative of the results for the full year.

2. NEWLY ISSUED ACCOUNTING STANDARDS:

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company adopted the provisions of SFAS 157 during the first quarter of 2008. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which provides a one year deferral of the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. Therefore, the Company has adopted the provisions of SFAS 157 with respect to its financial assets and liabilities only. The adoption of this statement did not have a material impact on the Company’s consolidated results of operations and financial condition. See Note 16 for additional disclosures.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No 87, 88, 106, and 132(R)” (“SFAS 158”). SFAS 158 requires plan sponsors of defined benefit pension and other postretirement benefit plans (collectively, “postretirement benefit plans”) to recognize the funded status of their postretirement benefit plans in the statement of financial position, measure the fair value of plan assets and benefit obligations as of the date of the fiscal year-end statement of financial position, and provide additional disclosures. On December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS 158. The effect of adopting SFAS 158 on the Company’s financial condition at December 31, 2006 has been included in the accompanying consolidated financial statements. SFAS 158’s provisions regarding the change in the measurement date of postretirement benefit plans is effective for fiscal years ending after December 15, 2008. The Company will adopt the measurement date provision in the fiscal year ending December 31, 2008. The Company does not expect the adoption of SFAS 158 to have a material impact on its consolidated financial position and results of operations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”). This statement establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It

also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. This statement is effective prospectively, except for certain retrospective disclosure requirements, for fiscal years beginning after December 15, 2008. The Company will adopt the provisions of this statement in the first quarter of 2009. The Company is assessing the potential impact of this statement on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) replaces SFAS No. 141, “Business Combinations” (“SFAS 141”), and applies to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 141(R) requires an acquirer, upon initially obtaining control of another entity, to recognize the assets, liabilities and any non-controlling interest in the acquiree at fair value as of the acquisition date. Contingent consideration is required to be recognized and measured at fair value on the date of acquisition rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt. SFAS 141(R) requires acquirers to expense acquisition-related costs as incurred rather than allocating such costs to the assets acquired and liabilities assumed, as was previously the case under SFAS 141. Under SFAS 141(R), the requirements of SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” would have to be met in order to accrue for a restructuring plan in purchase accounting. Pre-acquisition contingencies are to be recognized at fair value, unless it is a non-contractual contingency that is not likely to materialize, in which case, no amounts should be recognized in purchase accounting and, instead, that contingency would be subject to the probable and estimable recognition criteria of SFAS No. 5, “Accounting for Contingencies.” This statement is effective prospectively, except for certain retrospective adjustments to deferred tax balances, for fiscal years beginning after December 15, 2008. The Company will adopt the provisions of this statement in the first quarter of 2009. The Company is assessing the potential impact of this statement on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years beginning after November 15, 2008. The Company will adopt the provisions of this statement in the first quarter of 2009. The Company is currently assessing the impact that the adoption of SFAS 161 may have on the financial statements.

3. INCOME PER SHARE:

The weighted average number of common shares outstanding is calculated as follows:

		Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)		2008				2007				2008				2007
Weighted average shares outstanding			40,833				41,086				40,963				40,951
Effect of dilutive stock options			—				1,300				—				1,332
Weighted average shares outstanding — assuming dilution			40,833				42,386				40,963				42,283

For the three months and nine months ended September 30, 2008, the effect of dilutive stock options was the equivalent of approximately 443,000 and 473,000 shares, respectively, of common stock outstanding. Because the Company had a loss from continuing operations in the three months and nine months ended September 30, 2008, these incremental shares were excluded from the computation of dilutive earnings per share for those periods as the effect of their inclusion would have been anti-dilutive.

In addition, the Company has excluded approximately 2,350,000 and 2,274,000 shares from the computation of diluted earnings per share for the three months and nine months ended September 30, 2008, respectively, and approximately 463,000 and 426,000 shares for the three months and nine months ended September 30, 2007, respectively, as the effect of their inclusion would be anti-dilutive.

4. COMPREHENSIVE (LOSS) INCOME:

Comprehensive (loss) income is as follows for the three months and nine months of the respective periods:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(in thousands)		2008				2007				2008				2007
Net (loss) income		$	(5,520	)		$	(2,153	)		$	(4,039	)		$	108,153
Minimum pension liability, net of deferred income taxes			—				—				—				(95	)
Unrealized (loss) gain on natural gas swaps, net of deferred income taxes			(1,051	)			(1	)			(771	)			174
Unrealized loss on interest rate swaps, net of deferred income taxes			(4,580	)			—				(3,027	)			—
Comprehensive (loss) income		$	(11,151	)		$	(2,154	)		$	(7,837	)		$	108,232

5. PROPERTY AND EQUIPMENT:

Property and equipment of continuing operations at September 30, 2008 and December 31, 2007 is recorded at cost and summarized as follows:

		September 30,				December 31,
(in thousands)		2008				2007
Land and land improvements		$	197,564			$	167,745
Buildings			2,199,064				1,284,432
Furniture, fixtures and equipment			513,099				408,379
Construction in progress			38,410				949,776
			2,948,137				2,810,332
Accumulated depreciation			(689,185	)			(614,068	)
Property and equipment, net		$	2,258,952			$	2,196,264

Depreciation expense, including amortization of assets under capital lease obligations, of continuing operations was $28.1 million and $18.1 million for the three months ended September 30, 2008 and 2007, respectively, and was $76.0 million and $55.0 million for the nine months ended September 30, 2008 and 2007, respectively.

6. NOTES RECEIVABLE:

In connection with the development of Gaylord National, Prince George’s County, Maryland issued three series of bonds. The first bond issuance, with a face value of $65 million, was issued by Prince George’s County, Maryland (“the County”) in April 2005 to support the cost of infrastructure being constructed by the project developer, such as roads, water and sewer lines. The second bond issuance, with a face value of $95 million (“Series A Bond”), was issued by the County in April 2005 and placed into escrow until substantial completion of the convention center and 1,500 rooms within the hotel. The Series A Bond and the third bond issuance, with a face value of $50 million (“Series B Bond”), were delivered to the Company upon substantial completion and opening of the Gaylord National on April 2, 2008.

The Company is currently holding the Series A Bond and Series B Bond and receiving the debt service thereon, which is payable from tax increments, hotel taxes and special hotel rental taxes generated from the development. Accordingly, during the second quarter of 2008, the Company calculated the present value of the

future debt service payments from the Series A Bond and Series B Bond based on prevailing market interest rates at the time the bonds were delivered to the Company and recorded a note receivable and offset to property and equipment in the amounts of $93.8 million and $38.3 million, respectively, in the accompanying condensed consolidated balance sheet. The Company also calculated the present value of the interest that had accrued on the Series A Bond between its date of issuance and delivery to the Company based on prevailing market interest rates at the time the bond was delivered to the Company and recorded a note receivable and offset to property and equipment in the amount of $18.3 million in the accompanying condensed consolidated balance sheet. The Company is recording the amortization of discount on these notes receivable as interest income over the life of the notes.

During the three months and nine months ended September 30, 2008, the Company recorded interest income of $4.1 million and $7.5 million, respectively, on these bonds, which included $3.2 million and $6.2 million, respectively, of interest that accrued on the bonds subsequent to their delivery to the Company and $0.9 million and $1.3 million, respectively, related to amortization of the discount on the bonds.

7. IMPAIRMENT AND OTHER CHARGES:

The Company entered into an Agreement of Purchase and Sale dated as of November 19, 2007 (the “Purchase Agreement”) with LCWW Partners, a Texas joint venture, and La Cantera Development Company, a Delaware corporation (collectively, “Sellers”), to acquire the assets related to the Westin La Cantera Resort, located in San Antonio, Texas (the “La Cantera Resort”). The Purchase Agreement also provided for the Company’s purchase of approximately 90 acres of undeveloped land adjacent to the resort property.

On January 21, 2008, the Company entered into an amendment (the “Amendment”) with Sellers to the Purchase Agreement. The Amendment extended the closing date under the Purchase Agreement to April 30, 2008 (prior to the Amendment, the closing date was scheduled to occur no later than January 31, 2008). The Amendment also provided that the $10.0 million deposit (the “Deposit”) previously paid by the Company to an escrow agent under the Purchase Agreement, which was recorded in property and equipment in the accompanying consolidated balance sheet as of December 31, 2007, would be released to Sellers, and that the Deposit would be non-refundable to the Company except in connection with the voluntary and intentional default by Sellers in their obligations to be performed on the closing date.

The Amendment conditioned the closing of the transactions under the Purchase Agreement on the Company arranging financing satisfactory to the Company in its sole discretion in order to fund the transaction. On April 15, 2008, as permitted by the Amendment, the Company terminated the Purchase Agreement on the basis that the Company did not obtain satisfactory financing. Pursuant to the terms of the Purchase Agreement and the Amendment, the Company forfeited the $10.0 million deposit previously paid to Sellers. As a result, the Company recorded an impairment charge of $12.0 million during the nine months ended September 30, 2008 to write off the deposit, as well as certain transaction-related expenses that were also capitalized in connection with the potential acquisition.

8. DISCONTINUED OPERATIONS:

The Company has reflected the following business as discontinued operations, consistent with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”) and Accounting Principles Board (“APB”) Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, and Unusual and Infrequently Occurring Events and Transactions” (“APB 30”). The results of operations, net of taxes, and the carrying value of the assets and liabilities of these businesses have been reflected in the accompanying condensed consolidated financial statements as discontinued operations in accordance with SFAS 144 for all periods presented.

ResortQuest

During the second quarter of 2007, the Company committed to a plan of disposal of its ResortQuest business. On May 31, 2007, the Company completed the sale of its ResortQuest Hawaii operations through the transfer of all of its equity interests in its ResortQuest Hawaii subsidiaries (“ResortQuest Hawaii”) to Vacation Holdings Hawaii, Inc., an affiliated company of Interval International, for $109.1 million in cash, prior to giving effect to a purchase price adjustment based on the working capital of ResortQuest Hawaii as of the closing. The Company retained its 19.9% ownership interest in RHAC Holdings, LLC and its 18.1% ownership interest in Waipouli Holdings LLC, which ownership interests were excluded from this transaction. The Company recognized a pretax gain of $50.0 million related to the sale of ResortQuest Hawaii during 2007.

On June 1, 2007, the Company completed the sale of the remainder of the operations of its ResortQuest subsidiary through the transfer of all of its capital stock in its ResortQuest Mainland subsidiary (“ResortQuest Mainland”) to BEI-RZT Corporation, a subsidiary of Leucadia National Corporation, for $35.0 million, prior to giving effect to certain purchase price adjustments, including a purchase price adjustment based on the working capital of ResortQuest Mainland as of the closing. The Company recognized a pretax loss of $59.5 million related to the sale of ResortQuest Mainland in 2007.

The following table reflects the results of operations of businesses accounted for as discontinued operations for the three months and nine months ended September 30, 2008 and 2007:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(in thousands)		2008				2007				2008				2007
Revenues:
ResortQuest		$	—			$	—			$	—			$	91,228
Operating income (loss):
ResortQuest		$	717			$	(1,663	)		$	(216	)		$	(3,685	)
Restructuring charges			—				(138	)			(262	)			(210	)
Total operating income (loss)			717				(1,801	)			(478	)			(3,895	)
Interest expense			—				—				—				(8	)
Interest income			—				—				—				309
Other gains and (losses):
ResortQuest			(43	)			(2,034	)			749				(8,803	)
Other			—				—				50				—
Income (loss) before (benefit) provision for income taxes			674				(3,835	)			321				(12,397	)
(Benefit) provision for income taxes			(312	)			514				(446	)			(24,081	)
Income (loss) from discontinued operations		$	986			$	(4,349	)		$	767			$	11,684

The assets and liabilities of the discontinued operations presented in the accompanying condensed consolidated balance sheets are comprised of:

		September 30,				December 31,
(in thousands)		2008				2007
Current assets:
Prepaid expenses		$	—			$	106
Other current assets			—				691
Total current assets			—				797
Total long-term assets			—				—
Total assets		$	—			$	797
Current liabilities:
Accounts payable and accrued liabilities		$	1,538			$	2,760
Total current liabilities			1,538				2,760
Other long-term liabilities			451				542
Total long-term liabilities			451				542
Total liabilities		$	1,989			$	3,302

9. DEBT:

Long-term debt and capitalized lease obligations at September 30, 2008 and December 31, 2007 consisted of the following:

		September 30,				December 31,
(in thousands)		2008				2007
$1.0 Billion Credit Facility, interest and maturity as described below		$	700,000			$	398,000
Senior Notes, interest at 8.00%, maturing November 15, 2013			350,000				350,000
Senior Notes, interest at 6.75%, maturing November 15, 2014			225,000				225,000
Nashville Predators Promissory Note, interest at 6.00%, maturing October 5, 2010			3,000				3,000
Capital lease obligations			3,282				3,101
Fair value hedge effective for 8.00% Senior Notes			1,503				1,999
Total debt			1,282,785				981,100
Less amounts due within one year			(2,006	)			(2,058	)
Total long-term debt		$	1,280,779			$	979,042

$1.0 Billion Credit Facility

Prior to its refinancing on July 25, 2008, the Company had in place an Amended and Restated Credit Agreement by and among the Company, certain subsidiaries of the Company party thereto, as guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent (the “$1.0 Billion Credit Facility”). The $1.0 Billion Credit Facility was effective March 23, 2007 and represented an increase of the Company’s previous $600.0 million credit facility.

The $1.0 Billion Credit Facility consisted of the following components: (a) a $300.0 million senior secured revolving credit facility, which included a $50.0 million letter of credit sublimit and a $30.0 million sublimit for swingline loans, and (b) a $700.0 million senior secured delayed draw term loan facility, which could be drawn on in one or more advances during its term. The $1.0 Billion Credit Facility also included an accordion feature that allowed the Company to increase it by a total of up to $100.0 million, subject to securing additional commitments from existing lenders or new lending institutions. The revolving loan, letters of credit and term loan were set to mature on March 9, 2010. At the Company’s election, the revolving loans and the term loans bore interest at an annual rate of LIBOR plus an applicable margin ranging from 1.25% to 1.75% or the lending banks’ base rate plus an applicable margin ranging from 0.00% to 0.50%, subject to adjustments based on the Company’s borrowing base leverage. As further discussed in Note 10, the Company entered into interest rate swaps with respect to $403.0 million aggregate principal amount of borrowings under the delayed draw term loan facility to convert the variable rate on those borrowings to a fixed weighted average interest rate of 2.98% plus the applicable margin on these borrowings during the term of the swap agreements. Interest on the Company’s borrowings was payable quarterly, in arrears, for base rate loans and at the end of each interest rate period for LIBOR rate-based loans. Principal was payable in full at maturity. The Company was required to pay a commitment fee ranging from 0.125% to 0.35% per year of the average unused portion of the $1.0 Billion Credit Facility.

On July 25, 2008, the Company refinanced the $1.0 Billion Credit Facility by entering into a Second Amended and Restated Credit Agreement (the “New $1.0 Billion Credit Facility”) by and among the Company, certain subsidiaries of the Company party thereto, as guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent. The New $1.0 Billion Credit Facility consists of the following components: (a) $300.0 million senior secured revolving credit facility, which includes a $50.0 million letter of credit sublimit and a $30.0 million sublimit for swingline loans, and (b) a $700.0 million senior secured term loan facility. The term loan facility was fully funded at closing. The New $1.0 Billion Credit Facility also includes an accordion feature that will allow the Company to increase the New $1.0 Billion Credit Facility by a total of up to $400.0 million in no more than three occasions, subject to securing additional commitments from existing lenders or new lending institutions. The revolving loan, letters of credit, and term loan mature on July 25, 2012. At the Company’s election, the revolving loans and the term loans will bear interest at an annual rate of LIBOR plus 2.50% or a base rate (the higher of the lead bank’s prime rate and the federal funds rate) plus 0.50%. As further discussed in Note 10, the Company entered into interest rate swaps with respect to $500.0 million aggregate principal amount of borrowings under the term loan portion to convert the variable rate on those borrowings to a fixed weighted average interest rate of 3.94% plus the applicable margin on these borrowings during the term of the swap agreements. Interest on the Company’s borrowings is payable quarterly, in arrears, for base rate loans and at the end of each interest rate period for LIBOR rate-based loans. Principal is payable in full at maturity. The Company will be required to pay a commitment fee of 0.25% per year of the average unused portion of the New $1.0 Billion Credit Facility.

The purpose of the New $1.0 Billion Credit Facility is for working capital, capital expenditures, the financing of the remaining costs and expenses related to the construction of the Gaylord National hotel, and other corporate purposes.

The New $1.0 Billion Credit Facility is (i) secured by a first mortgage and lien on the real property and related personal and intellectual property of the Company’s Gaylord Opryland hotel, Gaylord Texan hotel, Gaylord Palms hotel and Gaylord National hotel, and pledges of equity interests in the entities that own such properties and (ii) guaranteed by each of the four wholly owned subsidiaries that own the four hotels. Advances are subject to a 55% borrowing base, based on the appraisal value of the hotel properties (reduced to 50% in the event a hotel property is sold).

In addition, the New $1.0 Billion Credit Facility 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 New $1.0 Billion Credit Facility are as follows:

	•		The Company must maintain a consolidated funded indebtedness to total asset value ratio as of the end of each calendar quarter of not more than 65%.
	•		The Company must maintain a consolidated tangible net worth of not less than the sum of $600.0 million, increased on a cumulative basis as of the end of each calendar quarter, commencing with the calendar quarter ending March 31, 2005, by an amount equal to (i) 75% of consolidated net income (to the extent positive) for the calendar quarter then ended, plus (ii) 75% of the proceeds received by the Company or any of the Company’s subsidiaries in connection with any equity issuance.
	•		The Company must maintain a minimum consolidated fixed charge coverage ratio, as defined in the agreement, of not less than 2.00 to 1.00.
	•		The Company 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 New $1.0 Billion Credit Facility, the commitments under the New $1.0 Billion Credit Facility may be terminated and the principal amount outstanding under the New $1.0 Billion Credit Facility, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable. The New $1.0 Billion Credit Facility is cross-defaulted to the Company’s other indebtedness.

As a result of the refinancing of the $1.0 Billion Credit Facility, the Company wrote off $1.3 million of deferred financing costs, which is included in interest expense in the accompanying condensed consolidated statements of operations for the three months and nine months ended September 30, 2008.

As of September 30, 2008, the Company was in compliance with all of its covenants related to its debt. There can be no assurance that the Company will be in compliance with these covenants in the future. As of September 30, 2008, $700.0 million of borrowings were outstanding under the $1.0 Billion Credit Facility, and the lending banks had issued $10.7 million of letters of credit under the facility for the Company, which left $289.3 million of availability under the credit facility (subject to the satisfaction of debt incurrence tests under the indentures governing our senior notes).

10. DERIVATIVE FINANCIAL INSTRUMENTS:

The Company utilizes derivative financial instruments to manage risk exposure to changes in the variable interest rate on portions of its variable rate debt, changes in the value of portions of its fixed rate debt, and changes in the prices at which the Company purchases natural gas.

Variable Rate Debt

On February 26, 2008, the Company entered into a series of forward-starting interest rate swaps with a combined notional amount of $403.0 million to convert the variable rate on $403.0 million aggregate principal amount of borrowings under the delayed draw term loan portion of the Company’s $1.0 Billion Credit Facility to a fixed rate to manage the Company’s exposure to changes in interest rates on these borrowings. On July 25, 2008, the Company terminated these interest rate swaps in connection with its refinancing of the $1.0 Billion Credit Facility. Based upon dealer quotes, the fair value of these interest rate swaps was a $1.3 million asset as of the termination date. Accordingly, the Company received $1.3 million in cash from the termination of these

swaps, which was recorded as other gains in the accompanying condensed consolidated statements of operations for the three months and nine months ended September 30, 2008.

In connection with the refinancing of the $1.0 Billion Credit Facility, the Company entered into a new series of forward-starting interest rate swaps with a combined notional amount of $500.0 million to effectively convert the variable rate on $500.0 million aggregate principal amount of borrowings under the term loan portion of the Company’s New $1.0 Billion Credit Facility to a fixed rate to manage the Company’s exposure to changes in interest rates on these borrowings. Under these swap agreements, which expire on various dates through July 25, 2011, the Company receives a variable rate equal to 3-month LIBOR and pays a weighted average fixed rate of 3.94% during the term of the swap agreements. The critical terms of the swap agreements match the critical terms of the borrowings under the term loan portion of the Company’s $1.0 Billion Credit Facility. The Company designated these interest rate swaps as cash flow hedges. As of September 30, 2008, the Company determined that, based upon dealer quotes, the fair value of these interest rate swap agreements was a $4.8 million liability. The Company recorded a derivative liability of $4.8 million and accumulated other comprehensive loss, net of tax, of $3.0 million.

The Company recorded no ineffectiveness through operations related to any of these interest rate swaps during the three months or nine months ended September 30, 2008.

Fixed Rate Debt

Upon issuance of the Company’s 8% Senior Notes in November 2003, the Company entered into two interest rate swap agreements with a combined notional amount of $125.0 million to convert the fixed rate on $125.0 million of the 8% Senior Notes to a variable rate in order to access the lower borrowing costs that were available on floating-rate debt. Under these swap agreements, which mature on November 15, 2013, the Company receives a fixed rate of 8% and pays a variable rate, in arrears, equal to six-month LIBOR plus 2.95%. The terms of the swap agreement mirror the terms of the 8% Senior Notes, including semi-annual settlements on the 15^th of May and November each year. Under the provisions of SFAS 133, as amended, changes in the fair value of this interest rate swap agreement must be offset against the corresponding change in fair value of the 8% Senior Notes through earnings. The Company has determined that there will not be an ineffective portion of this fair value hedge and, therefore, no impact on earnings. As of September 30, 2008 and December 31, 2007, the Company determined that, based upon dealer quotes, the fair value of these interest rate swap agreements was $1.5 million and $2.0 million, respectively. The Company recorded a derivative asset and an offsetting increase in the balance of the 8% Senior Notes accordingly.

Natural Gas Risk Management

The Company uses variable to fixed natural gas price swap contracts to manage unanticipated changes in natural gas and electricity prices. The contracts are based on forecasted usage of natural gas measured in dekatherms.

The Company has designated the variable to fixed natural gas price swap contracts as cash flow hedges. The Company values the outstanding contracts based on pricing provided by a financial institution and reviewed by the Company, with the offset applied to other comprehensive income, net of applicable income taxes, and earnings for any hedge ineffectiveness. Any gain or loss is reclassified from other comprehensive income and recognized in operating costs in the same period or periods during which the hedged transaction affects earnings.

At September 30, 2008, the Company had ten variable to fixed natural gas price swap contracts that mature from October 2008 to June 2009 with an aggregate notional amount of approximately 803,000 dekatherms. The fair value of these swap contracts, based upon dealer quotes, was a $1.3 million liability as of September 30, 2008. The Company recorded a derivative liability and an offsetting decrease in accumulated other

comprehensive income, net of applicable income taxes, accordingly. At December 31, 2007, the Company had variable to fixed natural gas price swap contracts that matured from January 2008 to July 2008 with an aggregate notional amount of approximately 601,000 dekatherms. The fair value of these contracts was $45,000. The Company recorded a derivative asset and an offsetting increase in accumulated other comprehensive income, net of applicable income taxes, accordingly.

The ineffective portion of the derivative is recognized in other gains and losses within the accompanying condensed consolidated statements of operations and was not significant for the periods reported. The amount that the Company anticipates that will be reclassified out of accumulated other comprehensive loss and into earnings in the next twelve months is a loss of approximately $1.3 million.

Viacom Stock and CBS Stock

Prior to May 2007, the Company held a secured forward exchange contract (“SFEC”) with an affiliate of Credit Suisse First Boston with respect to its investment in Viacom, Inc. Class B common stock (“Viacom Stock”) and CBS Corporation Class B common stock (“CBS Stock”). During May 2007, the SFEC matured and the Company delivered all of the Viacom Stock and CBS Stock to Credit Suisse First Boston in full satisfaction of the $613.1 million debt obligation under the SFEC. As a result, the debt obligation, Viacom Stock, CBS Stock, put option, call option, and deferred financing costs related to the SFEC were removed from the consolidated balance sheet. For the nine months ended September 30, 2007, the Company recorded net pretax gains in the Company’s condensed consolidated statement of operations of $3.1 million related to the increase in the fair value of the derivatives associated with the SFEC.

11. SUPPLEMENTAL CASH FLOW DISCLOSURES:

Cash paid for interest related to continuing operations for the three months and nine months ended September 30, 2008 and 2007 was comprised of:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(in thousands)		2008				2007				2008				2007
Debt interest paid		$	3,443			$	2,019			$	41,888			$	37,392
Deferred financing costs paid			10,753				—				10,753				3,883
Capitalized interest			(340	)			(2,019	)			(15,950	)			(27,063	)
Cash interest paid, net of capitalized interest		$	13,856			$	—			$	36,691			$	14,212

Total capitalized interest for the three months ended September 30, 2007 was $12.8 million. Net income taxes (refunded) paid were ($5.9) million and $84.1 million for the nine months ended September 30, 2008 and 2007, respectively.

As further discussed in Note 6, the Company received two bonds from Prince George’s County, Maryland during the second quarter of 2008 in connection with the development of Gaylord National. The receipt of these bonds is reflected as an increase in notes receivable and decrease in property and equipment of $150.4 million in the accompanying condensed consolidated statement of cash flows.

The Company’s net cash flows provided by investing activities — discontinued operations for the nine months ended September 30, 2007 primarily consist of cash proceeds received from the sale of discontinued operations.

12. STOCK PLANS:

The Company’s 2006 Omnibus Incentive Plan (the “2006 Plan”) permits the grant of stock options, restricted stock, and restricted stock units to its directors and employees. The Company records compensation expense equal to the fair value of each stock option award granted on a straight line basis over the option’s vesting period. The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing formula. At September 30, 2008 and December 31, 2007, there were 3,791,369 and 3,668,728 shares, respectively, of the Company’s common stock reserved for future issuance pursuant to the exercise of outstanding stock options.

The 2006 Plan also provides for the award of restricted stock and restricted stock units (“Restricted Stock Awards”). The fair value of Restricted Stock Awards is determined based on the market price of the Company’s stock at the date of grant. The Company records compensation expense equal to the fair value of each Restricted Stock Award granted over the vesting period. At September 30, 2008 and December 31, 2007, Restricted Stock Awards of 133,276 and 95,630 shares, respectively, were outstanding.

Under its Performance Accelerated Restricted Stock Unit Program (“PARSUP”) pursuant to the 2006 Plan, the Company granted selected executives and other key employees restricted stock units, the vesting of which occurred upon the earlier of February 2008 or the achievement of various company-wide performance goals. The fair value of PARSUP awards was determined based on the market price of the Company’s stock at the date of grant. The Company recorded compensation expense equal to the fair value of each PARSUP award granted on a straight line basis over a period beginning on the grant date and ending February 2008. All PARSUP awards vested in February 2008, but certain recipients elected to defer receipt of their vested PARSUP awards. At September 30, 2008 and December 31, 2007, PARSUP awards of 178,000 and 521,000 shares were outstanding.

Under its long term incentive plan for key executives (“LTIP”) pursuant to the 2006 Plan, in February 2008 the Company granted selected executives and other key employees 449,500 restricted stock units (“LTIP Restricted Stock Units”) and 650,000 stock options (“LTIP Stock Options”), which will replace annual grants of stock based compensation awards to these employees over the next three years. The LTIP Restricted Stock Units cliff vest at the end of their four-year term. The number of LTIP Restricted Stock Units that vest will be determined at the end of their term based on the achievement of various company-wide performance goals. The Company expects that the performance goals will be achieved and all of the LTIP Restricted Stock Units granted will vest at the end of their term. The Company is recording compensation expense equal to the fair value of all LTIP Restricted Stock Units granted on a straight-line basis over the vesting period. If there are any changes in the expected achievement of the performance goals, the Company will adjust compensation expense accordingly. The fair value of the LTIP Restricted Stock Units was determined based on the market price of the Company’s stock at the date of grant. The LTIP Stock Options, which vest two to four years from the date of grant and have a term of ten years, were granted with an exercise price of $38.00, while the market price of the Company’s common stock on the grant date was $31.02. As a result of this market condition, the Company is recording compensation expense equal to the fair value of each LTIP Stock Option granted on a straight-line basis over the requisite service period for each separately vesting portion of the award. At September 30, 2008 LTIP Restricted Stock Units and LTIP Stock Options of 449,500 and 650,000 shares, respectively, were outstanding.

The compensation cost that has been charged against pre-tax income for all of the Company’s stock-based compensation plans was $2.9 million and $2.6 million for the three months ended September 30, 2008 and 2007, respectively, and $9.0 million and $7.6 million for the nine months ended September 30, 2008 and 2007, respectively.

13. RETIREMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSION PLANS:

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

		Three months ended								Nine months ended
		September 30,								September 30,
		2008				2007				2008				2007
Service cost		$	64			$	60			$	192			$	180
Interest cost			1,306				1,220				3,918				3,660
Expected return on plan assets			(1,204	)			(1,094	)			(3,612	)			(3,282	)
Amortization of net actuarial loss			296				564				888				1,692
Amortization of prior service cost			1				1				3				3
Total net periodic pension expense		$	463			$	751			$	1,389			$	2,253

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

		Three months ended								Nine months ended
		September 30,								September 30,
		2008				2007				2008				2007
Service cost		$	22			$	27			$	66			$	81
Interest cost			300				284				900				852
Amortization of net actuarial loss			—				10				—				30
Amortization of net prior service cost			—				(24	)			—				(72	)
Amortization of curtailment gain			(61	)			(61	)			(183	)			(183	)
Total net postretirement benefit expense		$	261			$	236			$	783			$	708

14. INCOME TAXES:

The Company’s effective tax rate as applied to pre-tax (loss) income was 34% and (221%) for the three months ended September 30, 2008 and 2007, respectively. The Company’s increased effective tax rate during the three months ended September 30, 2008, as compared to the same period in 2007, was due primarily to the impact of permanent differences relative to pretax (loss) income for each period, including adjustments related to the filing of the Company’s 2006 Federal income tax return, as well as the tax effect of intercompany interest charged to ResortQuest International, Inc. during the three months ended September 30, 2007.

The Company’s effective tax rate as applied to pre-tax (loss) income was 16% and 39% for the nine months ended September 30, 2008 and 2007, respectively. The Company’s decreased effective tax rate during the nine months ended September 30, 2008, as compared to the same period in 2007, was due primarily to the tax effect of a statutory state rate change, as well as the impact of permanent differences relative to pretax income for each period.

As of September 30, 2008 and December 31, 2007, the Company had $13.2 million and $15.1 million of unrecognized tax benefits, respectively, of which $6.4 million and $7.5 million, respectively, would affect the Company’s effective tax rate if recognized. The decrease in the liability is due to a change in estimate related to tax positions taken in prior years in addition to positions taken in the current year. These liabilities are recorded in other long-term liabilities in the accompanying condensed consolidated balance sheets. It is expected that the unrecognized tax benefits will change in the next twelve months; however, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company.

15. COMMITMENTS AND CONTINGENCIES:

On February 23, 2005, the Company acquired approximately 42 acres of land and related land improvements in Prince George’s County, Maryland for approximately $29 million on which the Company has developed the Gaylord National Resort & Convention Center (“Gaylord National”). Gaylord National was substantially completed and opened in April 2008. Approximately $17 million of the cost of the land was paid in the first quarter of 2005, and an additional $2 million was paid upon substantial completion of Gaylord National in April 2008. The Company paid an additional $7.3 million of the cost of the land, net of certain adjustments to the original purchase price, in October 2008 after the completion of certain development milestones. The remaining $2 million of the cost of the land, which is subject to downward adjustment based on the completion of certain remaining development milestones, is expected to be paid within the next six to nine months. The project was originally planned to include a 1,500 room hotel, but the Company expanded the planned hotel to a total of 2,000 rooms. In connection with this expansion, the Company paid an additional $8 million in April 2008 for land improvements related to the expanded facility. The Company entered into commitments for various expenditures in connection with its Gaylord National development, including for the purchase of land, furniture, fixtures, and equipment, and procuring services in connection with the development. The Company entered into several agreements with a general contractor and other suppliers for the provision of certain construction services at the site. Construction costs exceeded the Company’s initial estimates from 2004. These increased costs are attributable to: (a) construction materials price escalation that occurred over the past four years; (b) increased cost of construction labor in the Washington, D.C. marketplace due to historically low unemployment and a high degree of construction activity; (c) the Company’s 500-room expansion and related additional meeting space, and the acceleration of its construction so that the expansion opened concurrently with the original project; and (d) enhancements to the project design. As of September 30, 2008, the Company has spent approximately $986.8 million (excluding $66.1 million of capitalized interest and $48.6 million in preopening costs) on this project and has accrued an additional $76.4 million in the accompanying condensed consolidated balance sheet.

On October 10, 2008, the Company’s wholly-owned subsidiary Gaylord National, LLC initiated litigation against Perini/Tompkins Joint Venture, the general contractor for the Gaylord National project, claiming that the Company (1) is owed approximately $60.0 million from Perini/Tompkins Joint Venture in connection with the construction of the Gaylord National project, and (2) the general contractor is responsible for liens and notices to owner filed by subcontractors and suppliers. In addition, in mid-September, Perini/Tompkins Joint Venture filed suit against Gaylord National, LLC claiming that the general contractor is owed an additional $80.0 million in connection with the Gaylord National project. The Company believes that Perini’s lawsuit was filed at this time in part because the applicable statutory period for making construction-related lien claims was about to expire.

As the Company has previously disclosed, the Company has been in negotiations with the general contractor to close out the contract and to resolve final payments due subcontractors and suppliers in connection with the Gaylord National project. The Company believes a significant portion of the amounts claimed by the general contractor are not owed by the Company because the amounts being claimed were covered by the guaranteed maximum price portion of the construction contract. The Company intends to continue to negotiate with the general contractor to resolve the dispute over the close-out of the construction of the Gaylord National project. However, if negotiations are not successful, the Company intends to vigorously prosecute its litigation against the general contractor in order to protect its rights under the contract and to ensure that any final resolution is consistent with the terms of the construction contract. Since the amount of any final payment will be recorded as an increase to property and equipment on the Company’s consolidated balance sheet, the Company believes that the resolution of the amount of the final payment will not have a material adverse effect on the Company’s results of operations.

On September 3, 2008, the Company announced it had entered into a land purchase agreement with DMB Mesa Proving Grounds LLC, an affiliate of DMB Associates, Inc. (“DMB”), to create a resort and convention hotel at

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

On July 25, 2006, the Unified Port of San Diego Board of Commissioners and the City of Chula Vista approved a non-binding letter of intent with the Company, outlining the general terms of our development of a 1,500 to 2,000 room convention hotel in Chula Vista, California. The parties recently extended the termination date for the non-binding letter of intent to December 31, 2008, and the parties continue to discuss the terms under which the Company would develop and operate the convention hotel project. If the parties can reach a final agreement, such agreement would be subject to a number of closing conditions and approvals, including but not limited to approval by the California Coastal Commission. At this time, the Company is unable to predict whether such approvals would be forthcoming.

In August 2008, a union-affiliated pension fund filed a purported derivative and class action complaint in Tennessee state court alleging that the directors of the Company breached their fiduciary duties by adopting a shareholder rights plan, which is further described in Note 17. Subsequently, the plaintiffs purported to dismiss their state court action, and they re-filed it in federal court. On October 27, 2008, the Company (as the nominal defendant) filed a motion to dismiss this lawsuit claiming, among other things, that the plaintiff failed to make the required pre-suit demand on the Company and that the allegations fail to state a claim for breach of fiduciary duty. We believe that the allegations contained in the complaint are without merit and intend to defend the action vigorously.

Through a joint venture arrangement with RREEF Global Opportunities Fund II, LLC, a private real estate fund managed by DB Real Estate Opportunities Group (“RREEF”), the Company holds an 18.1% ownership interest in Waipouli Holdings, LLC, which it acquired in exchange for its initial capital contribution of $3.8 million to Waipouli Holdings, LLC in 2006. Through a wholly-owned subsidiary, Waipouli Owner, LLC, Waipouli Holdings, LLC owns the 311-room ResortQuest Kauai Beach at Makaiwa Hotel and related assets located in Kapaa, Hawaii (“the Kauai Hotel”). Waipouli Owner, LLC financed the purchase of the Kauai Hotel in 2006 by entering into a series of loan transactions with Morgan Stanley Mortgage Capital, Inc. (the “Kauai Hotel Lender”) consisting of a $52.0 million senior loan secured by the Kauai Hotel, an $8.2 million senior mezzanine loan secured by the ownership interest of Waipouli Owner, LLC, and an $8.2 million junior mezzanine loan secured by the ownership interest of Waipouli Owner, LLC (collectively, the “Kauai Hotel Loans”). In connection with Waipouli Owner, LLC’s execution of the Kauai Hotel Loans, RREEF entered into three separate Guaranties of Recourse Obligations with the Kauai Hotel Lender whereby it guaranteed Waipouli Owner, LLC’s obligations under the Kauai Hotel Loans for as long as those loans remain outstanding (i) in the event of certain types of fraud, breaches of environmental representations or warranties, or breaches of certain “special purpose entity” covenants by Waipouli Owner, LLC, or (ii) in the event of bankruptcy or reorganization proceedings of Waipouli Owner, LLC. As a part of the joint venture arrangement and simultaneously with the closing of the purchase of the Kauai Hotel, the Company entered into a Contribution Agreement with RREEF, whereby the Company agreed that, in the event that RREEF is required to make any payments pursuant to the terms of these guarantees, it will contribute to RREEF an amount equal to its pro rata share of any such guaranty payments. The Company estimates that the maximum potential amount that the Company could be liable for under this contribution agreement is $12.4 million, which represents 18.1% of the

$68.4 million of total debt that Waipouli Owner, LLC owes to the Kauai Hotel Lender as of September 30, 2008. As of September 30, 2008, the Company had not recorded any liability in the condensed consolidated balance sheet associated with this guarantee. The Company retained its ownership interest in Waipouli Holdings, LLC after the sale of ResortQuest Hawaii.

Through a joint venture arrangement with G.O. IB-SIV US, a private real estate fund managed by DB Real Estate Opportunities Group (“IB-SIV”), the Company holds a 19.9% ownership interest in RHAC Holdings, LLC, which it acquired in exchange for its initial capital contribution of $4.7 million to RHAC Holdings, LLC in 2005. Through a wholly-owned subsidiary, RHAC, LLC, RHAC Holdings LLC owns the 716-room Aston Waikiki Beach Hotel and related assets located in Honolulu, Hawaii (“the Waikiki Hotel”). RHAC, LLC financed the purchase of the Waikiki Hotel by entering into a series of loan transactions with Greenwich Capital Financial Products, Inc. (the “Waikiki Hotel Lender”) consisting of a $70.0 million senior loan secured by the Waikiki Hotel and a $16.3 million mezzanine loan secured by the ownership interest of RHAC, LLC (collectively, the “Waikiki Hotel Loans”). On September 29, 2006, RHAC, LLC refinanced the Waikiki Hotel Loans with the Waikiki Hotel Lender, which resulted in the mezzanine loan increasing from $16.3 million to $34.9 million. In connection with RHAC, LLC’s execution of the Waikiki Hotel Loans, IB-SIV, entered into two separate Guaranties of Recourse Obligations with the Waikiki Hotel Lender whereby it guaranteed RHAC, LLC’s obligations under the Waikiki Hotel Loans for as long as those loans remain outstanding (i) in the event of certain types of fraud, breaches of environmental representations or warranties, or breaches of certain “special purpose entity” covenants by RHAC, LLC, or (ii) in the event of bankruptcy or reorganization proceedings of RHAC, LLC. As a part of the joint venture arrangement and simultaneously with the closing of the purchase of the Waikiki Hotel, the Company entered into a Contribution Agreement with IB-SIV, whereby the Company agreed that, in the event that IB-SIV is required to make any payments pursuant to the terms of these guarantees, it will contribute to IB-SIV an amount equal to 19.9% of any such guaranty payments. The Company estimates that the maximum potential amount for which the Company could be liable under this contribution agreement is $20.9 million, which represents 19.9% of the $104.9 million of total debt that RHAC, LLC owes to the Waikiki Hotel Lender as of September 30, 2008. As of September 30, 2008, the Company had not recorded any liability in the condensed consolidated balance sheet associated with this guarantee. The Company retained its ownership interest in RHAC Holdings, LLC after the sale of ResortQuest Hawaii.

On February 22, 2005, the Company concluded the settlement of litigation with Nashville Hockey Club Limited Partnership (“NHC”), which owned the Nashville Predators NHL hockey team, over (i) NHC’s obligation to redeem the Company’s ownership interest, and (ii) the Company’s obligations under the Nashville Arena Naming Rights Agreement dated November 24, 1999. Under the Naming Rights Agreement, which had a 20-year term through 2018, the Company was required to make annual payments to NHC, beginning at $2,050,000 in 1999 and with a 5% escalation each year thereafter, and to purchase a minimum number of tickets to Predators games each year. At the closing of the settlement, NHC redeemed all of the Company’s outstanding limited partnership units in the Predators pursuant to a Purchase Agreement dated February 22, 2005, effectively terminating the Company’s ownership interest in the Predators. In addition, the Naming Rights Agreement was cancelled pursuant to the Acknowledgment of Termination of Naming Rights Agreement. As a part of the settlement, the Company made a one-time cash payment to NHC of $4 million and issued to NHC a 5-year, $5 million promissory note bearing interest at 6% per annum. The note is payable at $1 million per year for 5 years. The Company’s obligation to pay the outstanding amount under the note shall terminate immediately if, at any time before the note is paid in full, the Predators cease to be an NHL team playing their home games in Nashville, Tennessee. In addition, pursuant to a Consent Agreement among the Company, the National Hockey League and owners of NHC, the Company’s guaranty described below has been limited as described below.

In connection with the Company’s execution of an Agreement of Limited Partnership with NHC on June 25, 1997, the Company, its subsidiary CCK, Inc., Craig Leipold, Helen Johnson-Leipold (Mr. Leipold’s wife) and Samuel C. Johnson (Mr. Leipold’s father-in-law) entered into a guaranty agreement executed in favor of the National Hockey League (NHL). This agreement provides for a continuing guarantee of the following

obligations for as long as either of these obligations remains outstanding: (i) all obligations under the expansion agreement between NHC and the NHL; and (ii) all operating expenses of NHC. The maximum potential amount which the Company and CCK, collectively, could be liable under the guaranty agreement is $15.0 million, although the Company and CCK would have recourse against the other guarantors if required to make payments under the guarantee. In connection with the legal settlement with the Nashville Predators consummated on February 22, 2005, this guaranty has been limited so that the Company is not responsible for any debt, obligation or liability of NHC that arises from any act, omission or circumstance occurring after the date of the legal settlement. As of September 30, 2008, the Company had not recorded any liability in the condensed consolidated balance sheet associated with this guarantee.

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

16. FAIR VALUE MEASUREMENTS:

In September 2006, the FASB issued Statement No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements. The Company adopted the provisions of SFAS 157 during the first quarter of 2008. Although the adoption of SFAS 157 did not materially impact its financial condition, results of operations, or cash flow, the Company is now required to provide additional disclosures as part of its financial statements.

SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, 2008, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. These included the Company’s derivative instruments related to interest rates and natural gas prices.

The Company’s interest rate and natural gas derivative instruments consist of over-the-counter (“OTC”) swap contracts, which are not traded on a public exchange. See Note 10 for further information on the Company’s derivative instruments and hedging activities. The Company determines the fair values of these swap contracts based on quotes by counterparties to these contracts. Therefore, the Company has categorized these swap contracts as Level 2. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of derivative contracts it holds.

The Company’s assets and liabilities measured at fair value on a recurring basis subject to the disclosure requirements of SFAS 157 at September 30, 2008, were as follows (in thousands):

						Markets for				Observable				Unobservable
		September 30,				Identical Assets				Inputs				Inputs
		2008				(Level 1)				(Level 2)				(Level 3)
Fixed to variable interest rate swaps		$	1,503			$	—			$	1,503			$	—
Total assets measured at fair value		$	1,503			$	—			$	1,503			$	—
Variable to fixed natural gas swaps		$	1,323			$	—			$	1,323			$	—
Variable to fixed interest rate swaps			4,808				—				4,808				—
Total liabilities measured at fair value		$	6,131			$	—			$	6,131			$	—

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment to FASB Statement No. 115,” which permits entities to choose to measure eligible items at fair value at specified election dates. The Company has elected not to apply the fair value option to any of its financial instruments, so the adoption of this statement did not have a material impact on its consolidated financial position and results of operations.

17. STOCKHOLDERS’ EQUITY:

Shareholder Rights Plan

On August 12, 2008, the Company’s Board of Directors (the “Board”) adopted a shareholder rights plan, as set forth in the Rights Agreement dated as of August 12, 2008, by and between the Company and Computershare Trust Company, N.A., as rights agent (the “Rights Agreement”). Pursuant to the terms of the Rights Agreement, the Board declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock, par value $.01 per share. The dividend was payable on August 25, 2008 to the shareholders of record as of the close of business on August 25, 2008.

The Rights initially trade with, and are inseparable from, the Company’s common stock. The Rights are evidenced only by the balances indicated in the book-entry account system of the transfer agent for the Company’s common stock or, in the case of certificated shares, the certificates that represent such shares of common stock. New Rights will accompany any new shares of common stock the Company issues after August 25, 2008 until the earlier of the Distribution Date, the redemption date or the final expiration date of the Rights Agreement, each as described below.

Each Right will allow its holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock (“Preferred Share”) for $95.00, once the Rights become exercisable. This portion of a Preferred Share will give the shareholder approximately the same dividend, voting, and liquidation rights as would one share of common stock. Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights.

The Rights will not be exercisable until the earlier of the following (the “Distribution Date”):

	•		10 days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 15% or more of the Company’s outstanding common stock; or
	•		10 business days (or a later date determined by the Board before any person or group becomes an Acquiring Person) after a person or group begins a tender or exchange offer which, if completed, would result in that person or group becoming an Acquiring Person.

Until the Distribution Date, the balances in the book-entry accounting system of the transfer agent for the Company’s common stock or, in the case of certificated shares, common stock certificates, will evidence the Rights, and any transfer of shares of common stock will constitute a transfer of Rights. After the Distribution Date, the Rights will separate from the common stock and will be evidenced solely by Rights certificates that the Company will mail to all eligible holders of common stock. Any Rights held by an Acquiring Person or any associate or affiliate thereof will be void and may not be exercised.

If a person or group becomes an Acquiring Person, each Right will generally entitle the holder, except the Acquiring Person or any associate or affiliate thereof, to acquire, for the exercise price of $95.00 per Right (subject to adjustment as provided in the Rights Agreement), shares of the Company’s common stock (or, in certain circumstances, Preferred Shares) having a market value equal to twice the Right’s then-current exercise price. In addition, if, after a person or group becomes an Acquiring Person, the Company is later acquired in a merger or similar transaction after the Distribution Date, each Right will generally entitle the holder, except the Acquiring Person or any associate or affiliate thereof, to acquire, for the exercise price of $95.00 per Right (subject to adjustment as provided in the Rights Agreement), shares of the acquiring corporation having a market value equal to twice the Right’s then-current exercise price.

Each one one-hundredth of a Preferred Share, if issued:

	•		will not be redeemable;
	•		will entitle holders to quarterly dividend payments of $.01 per one one-hundredth of a share, or an amount equal to the dividend paid on one share of common stock, whichever is greater;
	•		will entitle holders upon liquidation either to receive $1 per one one-hundredth of a share or an amount equal to the payment made on one share of common stock, whichever is greater;
	•		will have the same voting power as one share of common stock; and
	•		if shares of the Company’s common stock are exchanged via merger, consolidation, or a similar transaction, will entitle holders to a per share payment equal to the payment made on one share of common stock.

The value of one one-hundredth of a Preferred Share will generally approximate the value of one share of common stock.

The Rights will expire on August 12, 2011, unless previously redeemed, or such later date as determined by the Board (so long as such determination is made prior to the earlier of the Distribution Date or August 12, 2011).

The Board may redeem the Rights for $.001 per Right at any time prior to 10 days after such time that any person or group becomes an Acquiring Person. If the Board redeems any Rights, it must redeem all of the Rights. Once the Rights are redeemed, the only right of the holders of Rights will be to receive the redemption price of $.001 per Right. The redemption price will be adjusted if the Company has a stock split or stock dividends of the Company’s common stock.

After a person or group becomes an Acquiring Person, but before an Acquiring Person owns 50% or more of the Company’s outstanding common stock, the Board may extinguish the Rights by exchanging one share of

common stock or an equivalent security for each Right, other than Rights held by the Acquiring Person and its associates and affiliates.

The Board may adjust the purchase price of the Preferred Shares, the number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split, a reclassification of the Preferred Shares or common stock.

The terms of the Rights Agreement may be amended by the Board without the consent of the holders of the Rights. However, the Board may not amend the Rights Agreement to lower the threshold at which a person or group becomes an Acquiring Person to below 10% of the Company’s outstanding common stock. In addition, the Board may not cause a person or group to become an Acquiring Person by lowering this threshold below the percentage interest that such person or group already owns. After a person or group becomes an Acquiring Person, the Board may not amend the Rights Agreement in a way that adversely affects holders of the Rights.

Stock Repurchase Program

On February 7, 2008, the Company announced that the Board approved a stock repurchase program to repurchase up to $80 million of the Company’s common stock. This program is intended to be implemented through purchases made from time to time in the open market in accordance with applicable SEC requirements. The timing, prices and sizes of purchases will depend upon prevailing stock prices, general economic and market conditions and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the repurchase program may be suspended at any time at the Company’s discretion. During the three months and nine months ended September 30, 2008, the Company repurchased 0 and 656,700 shares, respectively, of its common stock at a weighted average purchase price of $30.42 per share.

18. FINANCIAL REPORTING BY BUSINESS SEGMENTS:

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

	•		Hospitality, which includes the Gaylord Opryland Resort and Convention Center, the Gaylord Palms Resort and Convention Center, the Gaylord Texan Resort and Convention Center, the Radisson Hotel at Opryland and, commencing in April 2008, the Gaylord National Resort and Convention Center;
	•		Opry and Attractions, which includes the Grand Ole Opry, WSM-AM, and the Company’s Nashville attractions; and
	•		Corporate and Other, which includes the Company’s ownership interests in certain entities, as well as its corporate expenses.

The following information from continuing operations is derived directly from the segments’ internal financial reports used for corporate management purposes. As further discussed in Note 8, the Company disposed of its ResortQuest segment during the second quarter of 2007. The results of operations of the ResortQuest segment have been reflected as discontinued operations for all periods presented.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(in thousands)		2008				2007				2008				2007
Revenues:
Hospitality		$	203,834			$	146,523			$	615,392			$	481,392
Opry and Attractions			22,870				20,344				64,460				57,108
Corporate and Other			29				53				385				159
Total		$	226,733			$	166,920			$	680,237			$	538,659
Depreciation and amortization:
Hospitality		$	26,483			$	16,318			$	70,729			$	49,005
Opry and Attractions			1,160				1,200				3,729				4,180
Corporate and Other			1,976				1,506				5,370				4,602
Total		$	29,619			$	19,024			$	79,828			$	57,787
Operating income (loss):
Hospitality		$	18,012			$	15,986			$	95,167			$	76,871
Opry and Attractions			2,935				3,000				5,138				5,138
Corporate and Other			(13,784	)			(12,490	)			(40,034	)			(39,352	)
Preopening costs			(369	)			(3,926	)			(19,190	)			(10,101	)
Impairment and other charges			—				—				(12,031	)			—
Total operating income			6,794				2,570				29,050				32,556
Interest expense, net of amounts capitalized			(21,918	)			(3,125	)			(44,045	)			(35,513	)
Interest income			4,486				620				8,583				2,767
Unrealized gain on Viacom stock and CBS stock			—				—				—				6,358
Unrealized gain on derivatives			—				—				—				3,121
(Loss) income from unconsolidated companies			(75	)			(2	)			(293	)			1,011
Other gains and (losses), net			904				622				954				146,697
(Loss) income before (benefit) provision for income taxes		$	(9,809	)		$	685			$	(5,751	)		$	156,997

19. INFORMATION CONCERNING GUARANTOR AND NON-GUARANTOR SUBSIDIARIES:

Not all of the Company’s subsidiaries have guaranteed the 8% Senior Notes and 6.75% Senior Notes. The 8% Senior Notes and 6.75% Senior Notes are guaranteed on a senior unsecured basis by generally all of the Company’s active domestic subsidiaries (the “Guarantors”). The Company’s investment in joint ventures and certain discontinued operations and inactive subsidiaries (the “Non-Guarantors”) do not guarantee the 8% Senior Notes and 6.75% Senior Notes.

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

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

For the Three Months Ended September 30, 2008

										Non-
(in thousands)		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Revenues		$	2,224			$	226,726			$	—			$	(2,217	)		$	226,733
Operating expenses:
Operating costs			—				147,362				—				26				147,388
Selling, general and administrative			5,239				37,350				—				(26	)			42,563
Management fees			—				2,217				—				(2,217	)			—
Preopening costs			—				369				—				—				369
Depreciation and amortization			1,388				28,231				—				—				29,619
Operating(loss)income			(4,403	)			11,197				—				—				6,794
Interest expense, net of amounts capitalized			(22,420	)			(37,851	)			(109	)			38,462				(21,918	)
Interest income			8,482				29,896				4,570				(38,462	)			4,486
Loss from unconsolidated companies			—				(75	)			—				—				(75	)
Other gains and (losses), net			1,136				(232	)			—				—				904
(Loss) income before (benefit) provision for income taxes			(17,205	)			2,935				4,461				—				(9,809	)
(Benefit) provision for income taxes			(166	)			(3,587	)			450				—				(3,303	)
Equity in subsidiaries’ earnings, net			(11,519	)			—				—				11,519				—
(Loss) income from continuing operations			(5,520	)			6,522				4,011				(11,519	)			(6,506	)
(Loss) income from discontinued operations, net of taxes			—				(1	)			987				—				986
Net(loss)income		$	(5,520	)		$	6,521			$	4,998			$	(11,519	)		$	(5,520	)

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

For the Three Months Ended September 30, 2007

										Non-
(in thousands)		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Revenues		$	8			$	166,912			$	—			$	—			$	166,920
Operating expenses:
Operating costs			—				105,581				—				—				105,581
Selling, general and administrative			2,792				33,027				—				—				35,819
Preopening costs			—				3,926				—				—				3,926
Depreciation and amortization			1,364				17,660				—				—				19,024
Operating(loss)income			(4,148	)			6,718				—				—				2,570
Interest expense, net of amounts capitalized			(15,872	)			(29,536	)			1,551				40,732				(3,125	)
Interest income			3,112				33,669				4,571				(40,732	)			620
Loss from unconsolidated companies			—				(2	)			—				—				(2	)
Other gains and (losses), net			(20	)			(21	)			663				—				622
(Loss) income before (benefit) provision for income taxes			(16,928	)			10,828				6,785				—				685
(Benefit) provision for income taxes			(5,399	)			2,409				1,479				—				(1,511	)
Equity in subsidiaries’ earnings, net			(9,376	)			—				—				9,376				—
(Loss) income from continuing operations			(2,153	)			8,419				5,306				(9,376	)			2,196
Loss from discontinued operations, net of taxes			—				—				(4,349	)			—				(4,349	)
Net(loss)income		$	(2,153	)		$	8,419			$	957			$	(9,376	)		$	(2,153	)

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

For the Nine Months Ended September 30, 2008

										Non-
(in thousands)		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Revenues		$	8,060			$	680,452			$	—			$	(8,275	)		$	680,237
Operating expenses:
Operating costs			36				410,200				—				(317	)			409,919
Selling, general and administrative			13,537				116,856				—				(174	)			130,219
Management fees			—				7,784				—				(7,784	)			—
Preopening costs			—				19,190				—				—				19,190
Impairment and other charges			12,031				—				—				—				12,031
Depreciation and amortization			4,135				75,693				—				—				79,828
Operating(loss)income			(21,679	)			50,729				—				—				29,050
Interest expense, net of amounts capitalized			(60,025	)			(101,002	)			(348	)			117,330				(44,045	)
Interest income			22,204				89,321				14,388				(117,330	)			8,583
Loss from unconsolidated companies			—				(293	)			—				—				(293	)
Other gains and (losses), net			1,131				(177	)			—				—				954
(Loss) income before (benefit) provision for income taxes			(58,369	)			38,578				14,040				—				(5,751	)
(Benefit) provision for income taxes			(17,669	)			12,494				4,230				—				(945	)
Equity in subsidiaries’ earnings, net			(36,661	)			—				—				36,661				—
(Loss) income from continuing operations			(4,039	)			26,084				9,810				(36,661	)			(4,806	)
Income from discontinued operations, net of taxes			—				31				736				—				767
Net(loss)income		$	(4,039	)		$	26,115			$	10,546			$	(36,661	)		$	(4,039	)

GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

For the Nine Months Ended September 30, 2007

										Non-
(in thousands)		Issuer				Guarantors				Guarantors				Eliminations				Consolidated
Revenues		$	19			$	538,715			$	—			$	(75	)		$	538,659
Operating expenses:
Operating costs			—				322,937				—				(32	)			322,905
Selling, general and administrative			12,959				102,394				—				(43	)			115,310
Preopening costs			—				10,101				—				—				10,101
Depreciation and amortization			4,352				53,435				—				—				57,787
Operating(loss)income			(17,292	)			49,848				—				—				32,556
Interest expense, net of amounts capitalized			(62,497	)			(89,258	)			(12,415	)			128,657				(35,513	)
Interest income			20,878				97,319				13,227				(128,657	)			2,767
Unrealized gain on Viacom stock and CBS stock			6,358				—				—				—				6,358
Unrealized gain on derivatives			3,121				—				—				—				3,121
(Loss) income from unconsolidated companies			—				(683	)			1,694				—				1,011
Other gains and (losses), net			5,610				111				140,976				—				146,697
(Loss) income before (benefit) provision for income taxes			(43,822	)			57,337				143,482				—				156,997
(Benefit) provision for income taxes			(13,617	)			16,679				57,466				—				60,528
Equity in subsidiaries’ earnings, net			(138,358	)			—				—				138,358				—
Income from continuing operations			108,153				40,658				86,016				(138,358	)			96,469
Income from discontinued operations, net of taxes			—				—				11,684				—				11,684
Net income		$	108,153			$	40,658			$	97,700			$	(138,358	)		$	108,153