Business Context and Reporting Period
This filing is the 2011 Form 10-K of Gaylord Entertainment Company, not Ryman Hospitality Properties, Inc. It covers the fiscal year ended December 31, 2011, with quarterly data provided for the fourth quarter ended December 31, 2011. The company operated hospitality, Opry and Attractions, and Corporate and Other segments. Hospitality generated approximately 93% of 2011 revenue.
The business primarily consisted of four Gaylord convention resorts, the Radisson Hotel at Opryland, the Grand Ole Opry, Ryman Auditorium, the General Jackson Showboat, Gaylord Springs Golf Links, the Wildhorse Saloon, and WSM-AM.
Financial Performance and Key Metrics
| Metric | 2011 | 2010 | Change |
|---|---|---|---|
| Total revenue | $952.1 million | $770.0 million | 23.7% |
| Operating income (loss) | $79.5 million | $(66.0) million | Improved |
| Income from continuing operations | $10.1 million | $(92.2) million | Improved |
| Net income (loss) | $10.2 million | $(89.1) million | Improved |
| Diluted EPS | $0.20 | $(1.89) | Improved |
| Operating margin | 8.4% | (8.6)% | Improved |
| Cash flow from operating activities | $153.9 million | $139.5 million | 10.4% |
| Capital expenditures | $132.6 million | $194.6 million | Lower |
- Hospitality revenue was $886.6 million, up 22.6%, and Hospitality operating income was $130.9 million, up 42.8%.
- Hospitality occupancy was 72.2%, ADR was $167.27, RevPAR was $120.77, and Total RevPAR was $304.58.
- Net definite room nights booked increased 9.0% to 1.452 million.
- Gaylord Texan performed strongly, with revenue up 5.3%, occupancy of 75.7%, ADR up 8.2%, and RevPAR up 13.2%.
- Gaylord National weakened, with revenue down 7.5%, occupancy down to 68.8%, and Total RevPAR down 7.5%, primarily because of lower association and governmental group demand.
- As of December 31, 2011, total assets were $2.56 billion, total debt was $1.07 billion, and stockholders’ equity was $1.05 billion.
- Unrestricted cash was $44.4 million, and availability under the senior credit facility was $317.0 million. Working capital was negative $25.3 million, partly because deferred revenue represented customer deposits that did not require future cash repayment.
- The company paid no common stock dividends and did not presently intend to pay dividends.
Fourth Quarter 2011
| Metric | Fourth Quarter 2011 | Fourth Quarter 2010 |
|---|---|---|
| Revenue | $269.4 million | $213.3 million |
| Operating income (loss) | $19.8 million | $(27.6) million |
| Net income (loss) | $5.1 million | $(32.8) million |
| Diluted EPS | $0.10 | $(0.69) |
Material Changes Versus the Prior Comparable Period
- Results improved substantially because Gaylord Opryland and affected Nashville attractions were closed for portions of 2010 following the May 2010 Nashville Flood but operated for the full year in 2011.
- 2010 included $42.3 million of net flood-related casualty loss and $55.3 million of preopening costs. Comparable 2011 charges were $1.2 million and $0.4 million, respectively.
- Gaylord Opryland revenue increased $178.5 million in 2011, while revenue at the other hotels declined $14.8 million in aggregate.
- Gaylord Opryland occupancy increased 7.4 percentage points and ADR increased 6.3% compared with the period it was open in 2010. Outside-the-room revenue increased 18.6%.
- Gaylord Palms revenue declined 4.8%, reflecting lower-rated group business and disruption from room renovations and construction of new amenities.
- Opry and Attractions revenue increased 39.4% to $65.4 million as Nashville attractions returned to normal operations.
- The company refinanced its prior $1.0 billion credit facility with a $925 million senior secured facility in August 2011, extended maturity to 2015, and repaid $100.0 million of borrowings.
- Cash interest expense declined to $55.8 million from $65.6 million, while weighted-average borrowing costs declined to 6.3% from 6.8%.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management reported stabilization in group travel, higher occupancy, increased outside-the-room spending, and lower cancellation and attrition levels than in 2009. It continued to face pressure on near-term room rates but reported improved rates for future bookings.
- No formal quantitative revenue, earnings, or margin guidance was provided. Management stated that it expected 2012 capital spending to focus primarily on maintenance, completion of Gaylord Palms projects, and planning for the proposed Aurora development.
- The planned Aurora, Colorado resort was estimated at approximately $800 million, with 1,500 rooms and 400,000 square feet of meeting and exhibition space. Construction was targeted for 2013, subject to approvals, incentives, financing, and board approval; no material financial commitment had been made at year-end.
- A proposed Mesa, Arizona development remained uncertain and lacked financing plans. The filing also described potential expansions at existing properties without firm commitments.
- In January 2012, the company announced a proposed 50/50 joint venture with Dollywood for an approximately $50 million water and snow park adjacent to Gaylord Opryland. The project remained subject to definitive agreements, infrastructure approvals, and other contingencies.
- Debt maturities included $512.2 million in 2014, consisting of the $360.0 million convertible notes and $152.2 million of 6.75% senior notes, and $600.0 million under the credit facility in 2015. The company stated that it would need to refinance significant obligations.
- The $925 million credit facility required compliance with leverage, tangible net worth, fixed-charge coverage, and debt-service coverage tests. The company reported compliance with all debt covenants at year-end.
- Interest-rate exposure was material: a 100-basis-point increase in LIBOR would have increased annual interest expense by approximately $6.0 million on the $600.0 million outstanding credit-facility balance.
- Flood risk remained significant at Gaylord Opryland because of its location in the Cumberland River flood plain. The company increased flood insurance coverage to $150.0 million and began approximately $17.0 million of levee enhancements.
- The company had a potential maximum contribution obligation of approximately $23.8 million related to guarantees associated with former Hawaii hotel joint ventures, although no liability was recorded.
- Other notable items included a $4.7 million fourth-quarter depreciation charge for disposed Gaylord Palms assets, a $2.6 million non-cash charge for vacation benefits accrued in prior periods, pension underfunding of $30.3 million, and $14.1 million of unrecognized tax benefits.
- The company discontinued Corporate Magic in 2010; 2011 discontinued-operations income was only $0.1 million.
Most Important Facts for Investors to Verify
- Issuer identity: confirm whether the intended filing is Gaylord Entertainment Company or Ryman Hospitality Properties, Inc.; the provided filing is for Gaylord Entertainment Company.
- Comparability: assess 2011 performance excluding the significant 2010 flood disruption and related casualty and reopening charges.
- Debt refinancing: verify the company’s ability to refinance the $512.2 million due in 2014 and $600.0 million credit-facility maturity in 2015.
- Liquidity: reconcile $44.4 million of unrestricted cash, $317.0 million of borrowing availability, negative working capital, and expected capital expenditures.
- Property trends: monitor Gaylord National’s government and association demand, Gaylord Palms’ renovation-related disruption, and sustained recovery at Gaylord Opryland.
- Development commitments: verify approvals, funding, guarantees, and final obligations for the Aurora, Mesa, and Dollywood-related projects.
- Flood and operating risks: review insurance limits, levee enhancements, uninsured exposure, and the effect of natural disasters on operations and cash flow.