Press Release: Gaylord Entertainment
November 8, 2001
NASHVILLE, TN -- Gaylord Entertainment (NYSE:GET) yesterday reported its financial results for the third quarter
and nine months of 2001. In addition to reporting earnings, the Company announced it is in discussions with various
parties that may lead to the divestiture of Word Entertainment, its Christian music label. This potential sale
will result in a further streamlining of the company's operations and allow the management team to focus their
attention on the more profitable hospitality and entertainment businesses.
Commenting on the third quarter, Colin Reed, chief executive officer of Gaylord Entertainment said, ``The third
quarter was one of great challenge and accomplishment for Gaylord Entertainment. We operated our business through
a very tough economic environment and are generally pleased with the results. In addition, we have made substantial
progress in refocusing the business on sustainable and profitable areas, recruiting an experienced and capable
management team and reorganizing the company's operating structure. At this stage, we are anticipating solid fourth
quarter results.''
Third Quarter Results
Revenues for the third quarter of 2001 were $75.1 million, a decrease of $7.9 million from the $83.0 million recorded
in the third quarter of 2000. Revenues for the hospitality and attractions segment were $58.8 million in the third
quarter of 2001, a decrease of $3.2 million from the $62.0 million of revenues in the third quarter of 2000. Music,
media and entertainment revenues were $16.3 million in the third quarter of 2001 as compared to revenues of $21.0
million in the third quarter of 2000, reflecting a revenue decrease of $4.7 million.
EBITDA (operating income plus depreciation and amortization), excluding hotel pre-opening costs, was $6.4 million
in the third quarter of 2001 compared with EBITDA of $1.5 million in the third quarter of 2000. The hospitality
and attractions segment EBITDA, excluding hotel pre-opening expenses, decreased to $12.8 million in the third quarter
of 2001 from $17.8 million in the third quarter of 2000. EBITDA of the music, media and entertainment segment increased
to $0.9 million in the third quarter of 2001 from an EBITDA loss of $8.6 million in the third quarter of 2000.
Operating losses, excluding hotel pre-opening costs, were $4.0 million in the third quarter of 2001 compared to
operating losses of $10.1 million in the third quarter of 2000. The operating income of the hospitality and attractions
segment, excluding hotel pre-opening expenses, decreased to $5.9 million in the third quarter of 2001 as compared
to $11.2 million in the third quarter of 2000. The operating losses in the music, media and entertainment segment
decreased by $11.6 million to $0.9 million in the third quarter of 2001 as compared to operating losses of $12.5
million in the third quarter of 2000.
Net loss per diluted share was $1.35 in the third quarter of 2001, compared with a net loss per diluted share of
$0.57 in the third quarter of 2000.
Year-to-Date
Results Revenues for the first nine months of 2001 were $237.3 million, a decrease of $11.7 million from the $249.0
million recorded in the first nine months of 2000. Revenues for the hospitality and attractions segment were $175.7
million in the first nine months of 2001, a decrease of $10.5 million from the $186.2 million of revenues in the
first nine months of 2000. Music, media and entertainment revenues were $61.5 million in the first nine months
of 2001 as compared to revenues of $62.8 million in the first nine months of 2000, reflecting a decrease of $1.3
million.
EBITDA (operating income plus depreciation and amortization), excluding hotel pre-opening costs and nonrecurring
items, was $23.1 million in the first nine months of 2001 compared with EBITDA of $8.1 million in the first nine
months of 2000. The hospitality and attractions segment EBITDA, excluding hotel pre-opening expenses, decreased
to $40.4 million in the first nine months of 2001 from $51.7 million in the first nine months of 2000. EBITDA of
the music, media and entertainment segment increased to $3.9 million in the first nine months of 2001 from an EBITDA
loss of $21.3 million in the first nine months of 2000.
Operating losses, excluding hotel pre-opening costs and nonrecurring items, were $8.0 million in the first nine
months of 2001 compared to operating losses of $26.4 million in the first nine months of 2000. The operating income
of the hospitality and attractions segment, excluding hotel pre-opening expenses, decreased to $19.9 million in
the first nine months of 2001 as compared to $31.8 million in the first nine months of 2000. The operating losses
in the music, media and entertainment segment decreased by $30.0 million to $1.8 million in the first nine months
of 2001 as compared to operating losses of $31.8 million in the first nine months of 2000.
Net loss per diluted share was $0.73 in the first nine months of 2001, compared with a net loss per diluted share
of $1.45 in the first nine months of 2000.
Hospitality and Attractions
For the third quarter, RevPAR at the Gaylord Opryland Nashville was $92.88, down 14.2% from 2000 levels. Prior
to the attacks on the World Trade Center and the Pentagon, the Company's Hospitality segment was on track to post
favorable results. At the Gaylord Opryland Nashville, the Company recorded RevPAR for the month of July of $107.99
a 4.8% increase over 2000. August RevPAR was up 5.3% over the same period in 2000 to $111.46.
Effects of September 11.
As a result of the attacks the Company received numerous group cancellations, over 95% of which were for bookings
in the months of September and October. Many of these groups have rebooked for dates in the next twelve months.
RevPAR for September was $57.44 a 50.2% decrease from 2000 levels.
Bookings for Gaylord Opryland Nashville and Gaylord Palms in Kissimmee, Florida slowed during the month of September,
but the company did not experience any cancellations of 2002 bookings as a result of the September 11 attacks.
``The events of September 11 had a significant impact on our results in the hospitality segment during September.
However, we are encouraged by our performance in October, which, despite lingering cancellations, resulted in occupancy
of 68.8% and RevPAR of $107.46. With the cancellations behind us, we are expecting a strong November and December,''
stated David Kloeppel, chief financial officer of Gaylord.
Music and Entertainment
The Music and Entertainment segment (excluding the results from Word Entertainment, which are reported in discontinued
operations) produced solid results in the third quarter. EBITDA increased to $0.9 million from a loss of $8.6 million
in 2000. Year-to-date EBITDA was $3.8 million compared to a loss of $21.3 million in 2000. Results in 2001 benefited
from the closure of unprofitable businesses in late 2000 such as Gaylord Digital and the Company's startup country
music record label Creative Content Administration, and strong performances from Acuff-Rose Music Publishing and
The Grand Ole Opry.
On the performance of the Music and Entertainment segment, Mr. Kloeppel stated, ``Our properties barely missed
a beat in the third quarter. Of note, Acuff-Rose Music Publishing, with its impressive line-up of writers and unique
music catalog, produced impressive results. The Grand Ole Opry experienced a slowdown the week of the attacks,
but rebounded quickly and delivered another solid quarter.''
Corporate and Other
In its efforts to transform the company, Gaylord also announced that it is investigating the sale of two additional
businesses.
``We have continued our strategic and financial review of all of our businesses to ensure our shareholders' capital
is being utilized in the most efficient manner. Consequently, we are holding discreet discussions with selected
parties regarding the potential disposition of Word Entertainment, our Christian music label, and GET Management,
our artist management business. We will make no further announcements related to these investments until a definitive
agreement is signed or alternative courses of actions are outlined,'' stated Mr. Reed.
As a result of the early adoption of Statement of Financial Accounting Standards (``SFAS'') No. 144, ``Accounting
for the Impairment or Disposal of Long-Lived Assets,'' the Company is reporting the Word business as discontinued
operations along with previously announced divestitures, including the Gaylord cable networks and the businesses
sold to The Oklahoma Publishing Company in March 2001. SFAS No. 144 broadens the presentation of discontinued operations
to include a component of an entity (rather than a segment of a business). The results of operations of these businesses,
including any gain or loss on disposal, have been reflected as discontinued operations, net of taxes, in the consolidated
financial results. The assets and liabilities of these businesses are reflected as discontinued operations in the
condensed consolidated balance sheets. A pretax loss of $29 million has been recognized related to the impairment
of the assets of Word in the third quarter of 2001.
The Company has recently also undertaken a restructuring, reducing layers of management and allowing for a direct
reporting relationship between the operating businesses and the CEO.
Mr. Reed commented, ``Last week we announced a restructuring which would flatten the organizational structure and
save the company approximately $8 million annually. We believe we now have the right structure and team in place
to build Gaylord into a profitable growth company.''
As well as undertaking the restructuring, the company has strengthened the management team at Corporate Magic,
its corporate meeting and entertainment production company. ``Corporate Magic offers great synergies with our hospitality
business. With these new additions to the management team we now have the appropriate balance of creative, management,
and financial talent to grow this business,'' said Mr. Reed.
Outlook
Looking forward, Mr. Reed said, ``We are making substantial progress along our strategic game plan unveiled over
the summer. Today's announcements reflect the direction and focus of the new Gaylord. Our strategy is clear; we
will build a company that leverages the strength of its Gaylord Hotels hospitality brand to be the premier meetings
and convention hotel organization in the industry, with a dedicated focus on high levels of customer satisfaction.
We will also grow those entertainment businesses which have demonstrated a foundation or a strong brand on which
to build a profitable and sustainable business such as the Grand Ole Opry.''
Mr. Reed continued, ``We have taken the necessary steps to position the company for success: We completed a $210
million financing, put in place an experienced and empowered management team and reorganized the company to allow
for more efficient decision-making and a single company focus. We are poised for growth and are very excited about
our future. The opening of the Gaylord Palms Resort and Convention Center in Kissimmee, Florida which is on schedule
to open February 2, 2002 will certainly be the highlight of our 2002.''
``My outlook for this company and its future remains very optimistic,'' Colin Reed commented in closing.
Gaylord Entertainment held a conference call to discuss this release yesterday at 10:00 a.m. eastern time. Investors
will have the opportunity to listen to a replay of the conference call over the Internet at www.gaylordentertainment.com
and at www.streetevents.com through the end of business on December 7,
2001.
This press release contains statements as to the company's beliefs and expectations of the outcome of future events
that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks and uncertainties that could cause actual results to differ materially from the
statements made. These include the risks and uncertainties associated with economic conditions affecting the hospitality
business generally, the timing of the opening of new hotel facilities, the ability to successfully complete the
potential divestitures described herein, and the ability to consummate the financing for new developments described
herein. Other factors that could cause operating and financial results to differ are described in the filings made
from time to time by Gaylord Entertainment with the Securities and Exchange Commission.
Gaylord Entertainment does not undertake any obligation to release publicly any revisions to forward-looking statements
made by it to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated
events.
Gaylord Entertainment Company is a diversified hospitality and entertainment company headquartered in Nashville,
Tenn., and its stock is traded on the New York Stock Exchange (symbol: GET). Among its businesses are the Gaylord
Hotels, the Grand Ole Opry, Acuff-Rose Music Publishing, Word Entertainment and WSM Radio.
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL RESULTS
(Amounts in thousands, except per share data)
Three Months Ended
September 30,
---------------------- %
2001 2000 chg
--------- --------- -----
Revenues
Hospitality and attractions $ 58,774 $ 61,997 (5.2)
Music, media and entertainment 16,332 21,031 (22.3)
Corporate and other 24 - -
--------- --------- -----
Total revenues 75,130 83,028 (9.5)
========= ========= =====
EBITDA (a)
Hospitality and attractions (b) 9,627 16,408 (41.3)
Music, media and entertainment 902 (8,601) -
Corporate and other (7,327) (7,715) 5.0
--------- --------- -----
Total EBITDA 3,202 92 -
========= ========= =====
Operating income (loss)
Hospitality and attractions (b) 2,730 9,864 (72.3)
Music, media and entertainment (924) (12,524) 92.6
Corporate and other (8,925) (8,844) (0.9)
Nonrecurring items (c) - - -
--------- --------- -----
Total operating loss (7,119) (11,504) 38.1
Interest expense (9,039) (6,554) (37.9)
Interest income 1,309 1,185 10.5
Unrealized loss on Viacom stock (189,802) - -
Unrealized gain on derivatives 168,300 - -
Other (204) 384 -
--------- --------- -----
Income (loss) before taxes,
discontinued operations and
accounting change (36,555) (16,489) (121.7)
Income taxes (12,066) (4,990) (141.8)
--------- --------- -----
Income (loss) before
discontinued operations and
accounting change (24,489) (11,499) (113.0)
Discontinued operations, net (20,672) (7,551) (173.8)
Accounting change, net - - -
--------- --------- -----
Net income (loss) $ (45,161) $ (19,050) (137.1)
========= ========= =====
Net income (loss) per
share - basic $ (1.35) $ (0.57) (136.8)
========= ========= =====
Average shares outstanding 33,558 33,405 0.5
========= ========= =====
Net income (loss) per
share - diluted $ (1.35) $ (0.57) (136.8)
========= ========= =====
Average shares outstanding 33,558 33,405 0.5
========= ========= =====
Nine Months Ended
September 30,
------------------------ %
2001 2000 chg
---------- ---------- ------
Revenues
Hospitality and attractions $ 175,676 $ 186,195 (5.6)
Music, media and entertainment 61,547 62,775 (2.0)
Corporate and other 73 - -
---------- ---------- ------
Total revenues 237,296 248,970 (4.7)
========== ========== ======
EBITDA (a)
Hospitality and attractions (b) 32,961 47,605 (30.8)
Music, media and entertainment 3,893 (21,316) -
Corporate and other (21,263) (22,275) 4.5
---------- ---------- ------
Total EBITDA 15,591 4,014 288.4
========== ========== ======
Operating income (loss)
Hospitality and attractions (b) 12,396 27,727 (55.3)
Music, media and entertainment (1,771) (31,730) 94.4
Corporate and other (26,051) (26,476) 1.6
Nonrecurring items (c) (9,084) - -
---------- ---------- ------
Total operating loss (24,510) (30,479) 19.6
Interest expense (29,957) (19,147) (56.5)
Interest income 4,550 3,107 46.4
Unrealized loss on Viacom stock (105,397) - -
Unrealized gain on derivatives 141,219 - -
Other 6,205 59 -
---------- ---------- ------
Income (loss) before taxes,
discontinued operations and
accounting change (7,890) (46,460) 83.0
Income taxes (2,605) (15,332) 83.0
---------- ---------- ------
Income (loss) before
discontinued operations and
accounting change (5,285) (31,128) 83.0
Discontinued operations, net (31,219) (17,206) (81.4)
Accounting change, net 11,909 - -
---------- ---------- ------
Net income (loss) $ (24,595) $ (48,334) 49.1
========== ========== ======
Net income (loss) per
share - basic $ (0.73) $ (1.45) 49.7
========== ========== ======
Average shares outstanding 33,501 33,369 0.4
========== ========== ======
Net income (loss) per
share - diluted $ (0.73) $ (1.45) 49.7
========== ========== ======
Average shares outstanding 33,501 33,369 0.4
========== ========== ======
(a) Operating income plus depreciation, amortization and nonrecurring
items.
(b) Includes hotel preopening costs of $3,153 and $1,369,
respectively, for the three months ended September 30, 2001 and
2000, and $7,461 and $4,098, respectively, for the nine months
ended September 30, 2001 and 2000.
(c) Includes an impairment charge of $11,388 offset by the reversal of
a restructuring accrual of $2,304.
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2001 and 2000
(Amounts in thousands)
2001 2000
---------- ----------
ASSETS
Current assets:
Cash - unrestricted $ 40,868 $ 31,058
Cash - restricted 25,432 3,960
Trade receivables 30,036 39,754
Current assets of
discontinued operations 48,500 103,529
Other current assets 45,337 68,696
---------- ----------
Total current assets 190,173 246,997
Property and equipment, net of
accumulated depreciation 933,295 713,244
Intangible assets, net of
accumulated amortization 20,365 64,020
Investments 455,686 737,868
Long-term notes receivable 18,794 17,823
Fair value of derivative assets 206,160 -
Long-term deferred financing costs 139,921 63,678
Long-term assets of discontinued
operations 73,267 144,305
Other long-term assets 35,763 34,264
---------- ----------
Total assets $2,073,424 $2,022,199
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt $ 8,004 $ 3,500
Accounts payable and accrued
liabilities 108,246 88,572
Current liabilities of
discontinued operations 20,092 50,471
---------- ----------
Total current liabilities 136,342 142,543
Secured forward exchange contract 613,054 613,054
Long-term debt 362,994 -
Deferred income taxes 180,662 289,914
Fair value of derivative
liabilities 46,619 -
Long-term liabilities of
discontinued operations 4,487 20,386
Other long-term liabilities 38,805 42,842
Minority interest 1,746 1,656
Stockholders' equity 688,715 911,804
---------- ----------
Total liabilities and
stockholders' equity $2,073,424 $2,022,199
========== ==========
---------------------------------------------
Contact:
Gaylord Entertainment, Nashville
Media Contact:
Karen Spacek, 615/316-6552
kspacek@gaylordentertainment.com
or
Investor Contact:
David Kloeppel, 615/316-6101
dkloeppel@gaylordentertainment.com