Gaylord Entertainment Company
Table of Contents

 
 
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 June 30, 2007
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-13079
GAYLORD ENTERTAINMENT COMPANY
(Exact name of registrant as specified in its charter)
     
Delaware   73-0664379
     
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
One Gaylord Drive
Nashville, Tennessee 37214
(Address of principal executive offices)
(Zip Code)
(615) 316-6000
(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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ          Accelerated filer o          Non-accelerated filer 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 July 31, 2007
     
Common Stock, $.01 par value   41,103,040 shares
 
 

 


 

GAYLORD ENTERTAINMENT COMPANY
FORM 10-Q
For the Quarter Ended June 30, 2007
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 Section 302 Certification for CEO
 Section 302 Certification for CFO
 Section 906 Certification for CEO & CFO

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Part I – FINANCIAL INFORMATION
Item 1. – FINANCIAL STATEMENTS.
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2007 and 2006
(Unaudited)
(In thousands, except per share data)
                 
    2007     2006  
Revenues
  $ 189,381     $ 177,087  
 
               
Operating expenses:
               
Operating costs
    108,771       105,426  
Selling, general and administrative
    38,691       37,869  
Preopening costs
    3,230       1,503  
Depreciation
    18,336       17,645  
Amortization
    967       903  
 
           
 
               
Operating income
    19,386       13,741  
 
               
Interest expense, net of amounts capitalized
    (13,611 )     (18,191 )
Interest income
    1,630       489  
Unrealized gain on Viacom stock and CBS stock
    9,147       602  
Unrealized (loss) gain on derivatives
    (6,448 )     3,939  
Income from unconsolidated companies
    2,931       3,047  
Other gains and (losses), net
    140,212       800  
 
           
 
               
Income before provision for income taxes
    153,247       4,427  
 
               
Provision for income taxes
    59,631       10,026  
 
           
 
               
Income (loss) from continuing operations
    93,616       (5,599 )
 
               
Gain from discontinued operations, net of income taxes
    13,226       438  
 
           
 
               
Net income (loss)
  $ 106,842     $ (5,161 )
 
           
 
               
Basic income (loss) per share:
               
Income (loss) from continuing operations
  $ 2.29     $ (0.14 )
Gain from discontinued operations, net of income taxes
    0.32       0.01  
 
           
Net income (loss)
  $ 2.61     $ (0.13 )
 
           
 
               
Fully diluted income (loss) per share:
               
Income (loss) from continuing operations
  $ 2.21     $ (0.14 )
Gain from discontinued operations, net of income taxes
    0.31       0.01  
 
           
Net income (loss)
  $ 2.52     $ (0.13 )
 
           
The accompanying notes are an integral part of these condensed consolidated financial statements.

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2007 and 2006
(Unaudited)
(In thousands, except per share data)
                 
    2007     2006  
Revenues
  $ 371,739     $ 359,394  
 
               
Operating expenses:
               
Operating costs
    217,324       212,875  
Selling, general and administrative
    79,491       73,506  
Preopening costs
    6,175       2,565  
Depreciation
    36,885       35,305  
Amortization
    1,878       1,811  
 
           
 
               
Operating income
    29,986       33,332  
 
               
Interest expense, net of amounts capitalized
    (32,388 )     (36,325 )
Interest income
    2,147       967  
Unrealized gain (loss) on Viacom stock and CBS stock
    6,358       (12,633 )
Unrealized gain on derivatives
    3,121       19,331  
Income from unconsolidated companies
    1,013       5,803  
Other gains and (losses), net
    146,075       1,460  
 
           
 
               
Income before provision for income taxes
    156,312       11,935  
 
               
Provision for income taxes
    62,039       13,016  
 
           
 
               
Income (loss) from continuing operations
    94,273       (1,081 )
 
               
Gain from discontinued operations, net of income taxes
    16,033       9,079  
 
           
 
               
Net income
  $ 110,306     $ 7,998  
 
           
 
               
Basic income per share:
               
Income (loss) from continuing operations
  $ 2.31     $ (0.03 )
Gain from discontinued operations, net of income taxes
    0.39       0.23  
 
           
Net income
  $ 2.70     $ 0.20  
 
           
 
               
Fully diluted income per share:
               
Income (loss) from continuing operations
  $ 2.23     $ (0.03 )
Gain from discontinued operations, net of income taxes
    0.38       0.23  
 
           
Net income
  $ 2.61     $ 0.20  
 
           
The accompanying notes are an integral part of these condensed consolidated financial statements.

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2007 and December 31, 2006
(Unaudited)
(In thousands)
                 
    June 30,     December 31,  
    2007     2006  
ASSETS
Current assets:
               
Cash and cash equivalents — unrestricted
  $ 62,337     $ 35,356  
Cash and cash equivalents — restricted
    1,212       1,266  
Short term investments
          394,913  
Trade receivables, less allowance of $551 and $881, respectively
    46,090       33,734  
Estimated fair value of derivative assets
          207,428  
Deferred financing costs
          10,461  
Deferred income taxes
    13,332        
Other current assets
    30,601       20,552  
Current assets of discontinued operations
    993       33,952  
 
           
Total current assets
    154,565       737,662  
 
           
 
               
Property and equipment, net of accumulated depreciation
    1,900,657       1,609,685  
Intangible assets, net of accumulated amortization
    202       228  
Goodwill
    6,915       6,915  
Indefinite lived intangible assets
    1,480       1,480  
Investments
    4,518       84,488  
Long-term deferred financing costs
    16,478       15,579  
Other long-term assets
    20,501       12,587  
Long-term assets of discontinued operations
          163,886  
 
           
Total assets
  $ 2,105,316     $ 2,632,510  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
               
Current portion of long-term debt and capital lease obligations
  $ 1,936     $ 1,991  
Secured forward exchange contract
          613,054  
Accounts payable and accrued liabilities
    204,396       165,108  
Income taxes payable
    113,383       315  
Deferred income taxes
          56,628  
Current liabilities of discontinued operations
    2,896       57,906  
 
           
Total current liabilities
    322,611       895,002  
 
           
 
               
Long-term debt and capital lease obligations, net of current portion
    690,675       753,562  
Deferred income taxes
    69,086       96,537  
Estimated fair value of derivative liabilities
    4,736       2,610  
Other long-term liabilities
    92,419       84,325  
Long-term liabilities of discontinued operations
    2,584       2,448  
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, 41,083 and 40,804 shares issued and outstanding, respectively
    411       408  
Additional paid-in capital
    710,320       694,941  
Retained earnings
    229,153       118,885  
Accumulated other comprehensive loss
    (16,679 )     (16,208 )
 
           
Total stockholders’ equity
    923,205       798,026  
 
           
Total liabilities and stockholders’ equity
  $ 2,105,316     $ 2,632,510  
 
           
The accompanying notes are an integral part of these condensed consolidated financial statements.

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2007 and 2006
(Unaudited)
(In thousands)
                 
    2007     2006  
Cash Flows from Operating Activities:
               
Net income
  $ 110,306     $ 7,998  
Amounts to reconcile net income to net cash flows provided by operating activities:
               
Gain from discontinued operations, net of taxes
    (16,033 )     (9,079 )
Income from unconsolidated companies
    (1,013 )     (5,803 )
Unrealized gain on Viacom stock and CBS stock and related derivatives
    (9,479 )     (6,698 )
(Benefit) provision for deferred income taxes
    (51,324 )     13,016  
Depreciation and amortization
    38,763       37,116  
Amortization of deferred financing costs
    12,253       14,866  
Write-off of deferred financing costs
    1,192        
Stock-based compensation expense
    5,066       3,429  
Excess tax benefit from stock-based compensation
    (1,444 )     (2,414 )
Gain on sale of investment in Bass Pro
    (140,313 )      
(Gain) loss on sales of assets
    (4,272 )     394  
Dividends received from investments in unconsolidated companies
          1,911  
Changes in (net of acquisitions and divestitures):
               
Trade receivables
    (12,356 )     (10,475 )
Accounts payable and accrued liabilities
    (13,493 )     (4,442 )
Income taxes payable
    112,080       (181 )
Other assets and liabilities
    (9,635 )     1,234  
 
           
Net cash flows provided by operating activities — continuing operations
    20,298       40,872  
Net cash flows provided by operating activities — discontinued operations
    21,613       38,117  
 
           
Net cash flows provided by operating activities
    41,911       78,989  
 
           
 
               
Cash Flows from Investing Activities:
               
Purchases of property and equipment
    (281,462 )     (98,861 )
Investment in unconsolidated companies
    (231 )     (4,817 )
Proceeds from sale of investment in Bass Pro
    221,527        
Proceeds from sales of assets
    5,035       61  
Other investing activities
    (708 )     (1,894 )
 
           
Net cash flows used in investing activities — continuing operations
    (55,839 )     (105,511 )
Net cash flows provided by (used in) investing activities — discontinued operations
    115,284       (9,722 )
 
           
Net cash flows provided by (used in) investing activities
    59,445       (115,233 )
 
           
 
               
Cash Flows from Financing Activities:
               
(Repayments) borrowings under credit facility
    (60,000 )     35,000  
Deferred financing costs paid
    (3,883 )      
Decrease (increase) in restricted cash and cash equivalents
    54       (21 )
Proceeds from exercise of stock option and purchase plans
    7,967       10,154  
Excess tax benefit from stock-based compensation
    1,444       2,414  
Other financing activities, net
    (592 )     (615 )
 
           
Net cash flows (used in) provided by financing activities — continuing operations
    (55,010 )     46,932  
Net cash flows used in financing activities — discontinued operations
    (19,365 )     (18,198 )
 
           
Net cash flows (used in) provided by financing activities
    (74,375 )     28,734  
 
           
 
               
Net change in cash and cash equivalents
    26,981       (7,510 )
Cash and cash equivalents — unrestricted, beginning of period
    35,356       45,776  
 
           
Cash and cash equivalents — unrestricted, end of period
  $ 62,337     $ 38,266  
 
           
The accompanying notes are an integral part of these condensed consolidated financial statements.

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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, 2006 filed with the SEC. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim period 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. INCOME PER SHARE:
The weighted average number of common shares outstanding is calculated as follows:
                                      
    Three Months Ended June 30,   Six Months Ended June 30,
(in thousands)   2007   2006   2007   2006
Weighted average shares outstanding
    40,961       40,592       40,882       40,453  
Effect of dilutive stock options
    1,383             1,403        
 
                               
Weighted average shares outstanding — assuming dilution
    42,344       40,592       42,285       40,453  
 
                               
For the three months and six months ended June 30, 2006, the effect of dilutive stock options was the equivalent of approximately 1,022,000 and 1,054,000 shares of common stock outstanding, respectively. Because the Company had a loss from continuing operations in the three months and six months ended June 30, 2006, these incremental shares were excluded from the computation of diluted earnings per share for those periods as the effect of their inclusion would have been anti-dilutive.

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3. COMPREHENSIVE INCOME (LOSS):
Comprehensive income (loss) is as follows for the three months and six months of the respective periods:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(in thousands)   2007     2006     2007     2006  
Net income (loss)
  $ 106,842     $ (5,161 )   $ 110,306     $ 7,998  
Minimum pension liability, net of deferred income taxes
    (14 )           (95 )      
Foreign currency translation, net of deferred income taxes
          20             20  
Unrealized (loss) gain on natural gas hedges, net of deferred income taxes
    (312 )           175        
 
                       
Comprehensive income (loss)
  $ 106,516     $ (5,141 )   $ 110,386     $ 8,018  
 
                       
4. INVESTMENTS:
Prior to May 31, 2007, the Company owned 13.0% of Bass Pro Group, LLC (“Bass Pro”), which is the owner of the Bass Pro Inc., Tracker Marine Boats and Big Cedar Lodge businesses. The Company accounted for this investment under the equity method of accounting in accordance with EITF Issue No. 03-16, Accounting for Investments in Limited Liability Companies, American Institute of Certified Public Accountants Statement of Position 78-9, Accounting for Investments in Real Estate Ventures, and EITF Abstracts Topic No. D-46, Accounting for Limited Partnership Investment.
On May 31, 2007, the Company completed the sale of all of its ownership interest in Bass Pro to Bass Pro for a purchase price of $222.0 million in cash. The Company recognized a pre-tax gain of $140.3 million from the sale of its interest in Bass Pro, which is recorded in other gains and losses in the accompanying condensed consolidated statements of operations. Net proceeds from the sale of $221.5 million were used to reduce the Company’s outstanding indebtedness. The Company’s Chief Executive Officer formerly served as a member of the board of managers of Bass Pro but resigned upon consummation of the sale.
Summary financial information for Bass Pro from which the Company’s equity method income is derived is as follows (in thousands):
                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2007   2006   2007   2006
Net sales
  $ 580,952     $ 536,089     $ 1,019,892     $ 1,017,016  
Gross profit
    201,923       177,054       395,442       345,611  
Net income
    23,607       28,538       22,664       39,137  
                 
    June 30,   December 31,
    2007   2006
Current assets
  $ 732,730     $ 705,676  
Noncurrent assets
    694,930       608,201  
Current liabilities
    530,742       534,287  
Noncurrent liabilities
    656,910       548,500  

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5. DISCONTINUED OPERATIONS:
The Company has reflected the following businesses 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 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. 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 No. 144 for all periods presented.
ResortQuest
During the third quarter of 2005, the Company committed to a plan of disposal of certain markets of its ResortQuest business that were considered to be inconsistent with the Company’s long term growth strategy. In connection with this plan of disposal, the Company recorded pre-tax restructuring charges of ($25,000) and $44,000 during the three months and six months ended June 30, 2006, respectively, related to employee severance benefits in the discontinued markets. The Company completed the sale of four of these markets in the fourth quarter of 2005, two of these markets in the first quarter of 2006, and the remaining two markets in the second quarter of 2006.
During the second quarter of 2006, the Company completed the sale of one additional market of its ResortQuest business that was not included in the plan of disposal described above, but was later determined to be inconsistent with the Company’s long term growth strategy. The Company did not record any restructuring charges in connection with the sale of this market.
During the second quarter of 2007, the Company committed to a plan of disposal of the remainder 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 $50.4 million in discontinued operations in the accompanying condensed consolidated statements of operations for the three months and six months ended June 30, 2007 related to the sale of ResortQuest Hawaii. In connection with the sale of ResortQuest Hawaii, the Company recorded pre-tax restructuring charges for employee severance benefits of $0.4 million for the three months and six months ended June 30, 2007, all of which was included in the pre-tax gain on the sale of ResortQuest Hawaii. Net proceeds from the sale of $108.1 million were used to reduce the Company’s outstanding indebtedness.
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 purchase price was paid by the delivery of a four-year promissory note in the principal amount of $8.0 million bearing interest at the annual rate of 10%, and the balance of the purchase price was paid in cash at closing. The Company recognized a pretax loss of $57.2 million in discontinued operations in the accompanying condensed consolidated statements of operations for the three months and six months ended June 30, 2007 related to the sale of ResortQuest Mainland. In connection with the sale of ResortQuest Mainland, the Company recorded pre-tax restructuring charges for employee severance benefits of $0.4 million for the three months and six months ended June 30, 2007, of which

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$0.3 million was included in the pretax loss on the sale of ResortQuest Mainland. Net cash proceeds from the sale of $9.0 million were used to reduce the Company’s outstanding indebtedness.
The following table reflects the results of operations of businesses accounted for as discontinued operations for the three months and six months ended June 30, 2007 and 2006:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(in thousands)   2007     2006     2007     2006  
Revenues:
                               
ResortQuest
  $ 33,745     $ 58,458     $ 91,228     $ 119,653  
 
                       
 
                               
Operating loss:
                               
ResortQuest
  $ (3,756 )   $ (1,919 )   $ (2,022 )   $ (52 )
Other
          6             6  
Restructuring charges
    (72 )     25       (72 )     (44 )
 
                       
 
                               
Total operating loss
    (3,828 )     (1,888 )     (2,094 )     (90 )
 
                               
Interest expense
    (7 )     169       (8 )     473  
Interest income
    163       252       309       486  
 
                               
Other gains and (losses):
                               
ResortQuest
    (6,586 )     66       (6,769 )     5,274  
Other
          25             6  
 
                       
 
                               
(Loss) income before benefit for income taxes
    (10,258 )     (1,376 )     (8,562 )     6,149  
 
                               
Benefit for income taxes
    (23,484 )     (1,814 )     (24,595 )     (2,930 )
 
                       
 
                               
Gain from discontinued operations
  $ 13,226     $ 438     $ 16,033     $ 9,079  
 
                       
Included in other gains and (losses) in the three months and six months ended June 30, 2007 is a pre-tax gain of $50.4 million on the sale of ResortQuest Hawaii and a pre-tax loss of $57.2 million on the sale of ResortQuest Mainland. Included in other gains and (losses) in the three months ended June 30, 2006 is a pre-tax gain of $0.3 million on the sale of certain ResortQuest markets. Included in other gains and (losses) in the six months ended June 30, 2006 is a pre-tax loss of $17,000 on the sale of certain ResortQuest markets, as well as a $5.4 million gain on the collection of a note receivable by ResortQuest that was previously considered uncollectible. The remaining gains and (losses) in the three months and six months ended June 30, 2007 and 2006 are primarily comprised of gains and losses on the sale of fixed assets and other assets. The benefit for income taxes for the three months and six months ended June 30, 2007 primarily relates to a permanent tax benefit recognized on the sales of ResortQuest Hawaii and ResortQuest Mainland. The benefit for income taxes for the three months and six months ended June 30, 2006 primarily resulted from the Company settling certain ResortQuest issues with the Internal Revenue Service related to periods prior to the acquisition of ResortQuest, as well as the writeoff of taxable goodwill associated with the ResortQuest markets sold in these periods.

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The assets and liabilities of the discontinued operations presented in the accompanying condensed consolidated balance sheets are comprised of:
                 
    June 30,     December 31,  
(in thousands)   2007     2006  
Current assets:
               
Cash and cash equivalents — unrestricted
  $ (12 )   $ 5,224  
Cash and cash equivalents — restricted
          14,459  
Trade receivables, net
    (9 )     5,715  
Prepaid expenses
          1,745  
Other current assets
    1,014       6,809  
 
           
Total current assets
    993       33,952  
 
           
 
               
Property and equipment, net of accumulated depreciation
          28,758  
Intangible assets, net of accumulated amortization
          22,460  
Goodwill
          80,416  
Indefinite lived intangible assets
          26,774  
Other long-term assets
          5,478  
 
           
Total long-term assets
          163,886  
 
           
 
               
Total assets
  $ 993     $ 197,838  
 
           
 
               
Current liabilities:
               
Current portion of long-term debt
  $     $ 43  
Accounts payable and accrued liabilities
    2,896       57,863  
 
           
Total current liabilities
    2,896       57,906  
 
           
 
               
Long-term debt
          10  
Other long-term liabilities
    2,584       2,438  
 
           
Total long-term liabilities
    2,584       2,448  
 
           
 
               
Total liabilities
  $ 5,480     $ 60,354  
 
           
6. OTHER OPERATING ITEMS:
In order to redevelop certain food and beverage operations at Gaylord Opryland Resort & Convention Center, the Company terminated the lease held by the third-party operator of the hotel’s food court during the first quarter of 2007. The Company paid the operator $2.9 million to terminate the lease, which was recorded as selling, general and administrative expense in the accompanying condensed consolidated statement of operations for the six months ended June 30, 2007.
Also during the first quarter of 2007, the Company sold the previously utilized corporate aircraft for net proceeds of $5.0 million in cash, which resulted in the Company recording a gain of $4.4 million in other gains and losses in the accompanying condensed consolidated statement of operations for the six months ended June 30, 2007.

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7. DEBT:
8% Senior Notes
On November 12, 2003, the Company completed its offering of $350 million in aggregate principal amount of senior notes due 2013 (the “8% Senior Notes”) in an institutional private placement. The Company filed an exchange offer registration statement on Form S-4 with the SEC with respect to the 8% Senior Notes and subsequently exchanged the existing senior notes for publicly registered senior notes with the same terms after the registration statement was declared effective in April 2004. The interest rate on these notes is 8%, although the Company has entered into fixed to variable interest rate swaps with respect to $125 million principal amount of the 8% Senior Notes, which swaps result in an effective interest rate of LIBOR plus 2.95% with respect to that portion of the 8% Senior Notes. The 8% Senior Notes, which mature on November 15, 2013, bear interest semi-annually in arrears on May 15 and November 15 of each year, starting on May 15, 2004. The 8% Senior Notes are redeemable, in whole or in part by the Company, at any time on or after November 15, 2008 at a designated redemption amount, plus accrued and unpaid interest. The 8% Senior Notes rank equally in right of payment with the Company’s other unsecured unsubordinated debt, but are effectively subordinated to all of the Company’s secured debt to the extent of the assets securing such debt. The 8% Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by generally all of the Company’s active domestic subsidiaries. In connection with the offering and subsequent registration of the 8% Senior Notes, the Company paid approximately $10.1 million in deferred financing costs. The net proceeds from the offering of the 8% Senior Notes, together with $22.5 million of the Company’s cash on hand, were used as follows:
    $275.5 million was used to repay the $150 million senior term loan portion and the $50 million subordinated term loan portion of a senior secured credit facility secured by the Company’s Florida and Texas hotel properties, as well as the remaining $66 million of a mezzanine loan secured by the equity interest in a wholly-owned subsidiary that owned Gaylord Opryland and to pay certain fees and expenses related to the ResortQuest acquisition; and
 
    $79.2 million was placed in escrow pending consummation of the acquisition of ResortQuest by the Company. On November 20, 2003, the $79.2 million together with $8.2 million of the available cash, was used to repay (i) ResortQuest’s senior notes and its credit facility, the principal amount of which aggregated $85.1 million at closing, and (ii) a related prepayment penalty.
The 8% Senior Notes indenture contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, capital expenditures, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The 8% Senior Notes are cross-defaulted to the Company’s other indebtedness.
6.75% Senior Notes
On November 30, 2004, the Company completed its offering of $225 million in aggregate principal amount of senior notes due 2014 (the “6.75% Senior Notes”) in an institutional private placement. In April 2005, the Company filed an exchange offer registration statement on Form S-4 with the SEC with respect to the 6.75% Senior Notes and subsequently exchanged the existing senior notes for publicly registered senior notes with the same terms after the registration statement was declared effective in May 2005. The interest rate of these notes is 6.75%. The 6.75% Senior Notes, which mature on November 15, 2014, bear interest semi-annually in cash in arrears on May 15 and November 15 of each year, starting on May 15, 2005. The 6.75% Senior Notes are redeemable, in whole or in part by the Company, at any time on or after November 15, 2009 at a designated redemption amount, plus accrued and unpaid interest. In addition, the Company may redeem up to 35% of the 6.75% Senior Notes before November 15, 2007 with the net cash proceeds from certain equity offerings. The

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6.75% Senior Notes rank equally in right of payment with the Company’s other unsecured unsubordinated debt, but are effectively subordinated to all of the Company’s secured debt to the extent of the assets securing such debt. The 6.75% Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by generally all of the Company’s active domestic subsidiaries. In connection with the offering of the 6.75% Senior Notes, the Company paid approximately $4.2 million in deferred financing costs. The net proceeds from the offering of the 6.75% Senior Notes, together with cash on hand, were used to repay a senior loan that was secured by a first mortgage lien on the assets of Gaylord Opryland and to provide capital for growth of the Company’s other businesses and other general corporate purposes. In addition, the 6.75% Senior Notes indenture contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, capital expenditures, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The 6.75% Senior Notes are cross-defaulted to the Company’s other indebtedness.
$600.0 Million Credit Facility
On March 10, 2005, the Company entered into a $600.0 million credit facility with Bank of America, N.A. acting as the administrative agent. This credit facility, which replaced a $100.0 million revolving 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 (b) a $300.0 million senior secured delayed draw term loan facility, which could be drawn on in one or more advances during its term. The credit facility also included an accordion feature that allowed the Company, on a one-time basis, to increase the credit facilities by a total of up to $300.0 million, subject to securing additional commitments from existing lenders or new lending institutions. The revolving loan, letters of credit and term loan mature on March 9, 2010. At the Company’s election, the revolving loans and the term loans had an interest rate of LIBOR plus 2% or the lending banks’ base rate plus 1%, subject to adjustments based on the Company’s financial performance. 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 0.25% to 0.50% per year of the average unused portion of the credit facility.
As a result of the refinancing of the $600.0 million credit facility, which is discussed below, the Company wrote off $1.2 million in deferred financing costs during the first quarter of 2007, which is included in interest expense in the accompanying condensed consolidated statement of operations.
$1.0 Billion Credit Facility
On March 23, 2007, the Company refinanced its $600.0 million credit facility by entering into 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 amended and restated credit facility (the “$1.0 Billion Credit Facility”) represents an increase of the Company’s previous $600.0 million credit facility, which is discussed above.
The $1.0 Billion Credit Facility consists of the following components: (a) 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 delayed draw term loan facility, which may be drawn on in one or more advances during its term. The $1.0 Billion Credit Facility also includes an accordion feature that will allow the Company to increase the $1.0 Billion Credit Facility 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 mature on March 9, 2010. At the Company’s election, the revolving loans and the term loans will bear 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. 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

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loans. Principal is payable in full at maturity. The Company is 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.
The purpose of the $1.0 Billion Credit Facility is for working capital and capital expenditures and the financing of the costs and expenses related to the continued construction of the Gaylord National hotel. Construction of the Gaylord National hotel is required to be substantially completed by October 31, 2008 (subject to customary force majeure provisions).
The $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 (which is in the process of being constructed, as described below) 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 60% 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 $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 $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 (i) following the closing date of the $1.0 Billion Credit Facility through the calendar quarter ending immediately prior to the first full quarter during which the Gaylord National hotel is substantially completed, of not more than 70% and (ii) for all calendar quarters thereafter, of not more than 65%.
 
    The Company must maintain a consolidated tangible net worth of not less than the sum of $550.0 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 of not less than 2.00 to 1.00 for all calendar quarters during the term hereof.
 
    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 interest rate equal to the then current seven year Treasury Note plus 0.25%) of not less than 1.60 to 1.00.
As of June 30, 2007, the Company was in compliance with all covenants. As of June 30, 2007, $115.0 million of borrowings were outstanding under the $1.0 Billion Credit Facility, and the lending banks had issued $13.3 million of letters of credit under the facility for the Company. The $1.0 Billion Credit Facility is cross-defaulted to our other indebtedness.
8. SECURED FORWARD EXCHANGE CONTRACT:
During May 2000, the Company entered into a seven-year secured forward exchange contract (“SFEC”) with an affiliate of Credit Suisse First Boston with respect to 10,937,900 shares of Viacom, Inc. Class B common stock. Effective January 3, 2006, Viacom, Inc. completed a transaction to separate Viacom, Inc. into two publicly

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traded companies named Viacom, Inc. and CBS Corporation by converting (i) each outstanding share of Viacom, Inc. Class A common stock into 0.5 shares of Viacom, Inc. Class A common stock and 0.5 shares of CBS Corporation Class A common stock and (ii) each outstanding share of Viacom Class B common stock into 0.5 shares of Viacom, Inc. Class B common stock and 0.5 shares of CBS Corporation Class B common stock. As a result of this transaction, the Company exchanged its 10,937,900 shares of Viacom, Inc. Class B common stock for 5,468,950 shares of Viacom, Inc. Class B common stock (“Viacom Stock”) and 5,468,950 shares of CBS Corporation Class B common stock (“CBS Stock”) effective January 3, 2006.
Prior to its maturity in May 2007, the seven-year SFEC had a notional amount of $613.1 million and required contract payments based upon a stated 5% rate. The Company’s obligation under the SFEC was collateralized by a security interest in the Company’s Viacom Stock and CBS Stock. The SFEC protected the Company against decreases in the combined fair market value of the Viacom Stock and CBS Stock below $56.05 per share by way of a put option; the SFEC also provided for participation in the increases in the combined fair market value of the Viacom Stock and CBS Stock in that the Company received 100% of the appreciation between $56.05 and $64.45 per share and, by way of a call option, 25.93% of the appreciation above $64.45 per share, as of March 31, 2007. The Company realized cash proceeds from the SFEC of $506.5 million, net of discounted prepaid contract payments and prepaid interest related to the first 3.25 years of the contract and transaction costs totaling $106.6 million. In October 2000, the Company prepaid the remaining 3.75 years of contract interest payments required by the SFEC of $83.2 million. As a result of the prepayment, the Company was not required to make any further contract interest payments during the seven-year term of the SFEC. Additionally, as a result of the prepayment, the Company was released from certain covenants of the SFEC, which related to sales of assets, additional indebtedness and liens. The Company recognized the prepaid contract payments and deferred financing charges associated with the SFEC as interest expense over the seven-year contract period using the effective interest method, which resulted in non-cash interest expense of $3.8 million and $6.7 million for the three months ended June 30, 2007 and 2006, respectively, and $10.5 million and $13.3 million for the six months ended June 30, 2007 and 2006, respectively.
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 as of June 30, 2007.
In accordance with the provisions of SFAS No. 133, as amended, certain components of the secured forward exchange contract are considered derivatives, as discussed in Note 9.
9. DERIVATIVE FINANCIAL INSTRUMENTS:
The Company utilizes derivative financial instruments to reduce certain of its interest rate risks and to manage risk exposure to changes in the value of portions of its fixed rate debt, as well as changes in the prices at which the Company purchases natural gas. Prior to May 2007, the Company also used derivative financial instruments to manage risk exposure to changes in the value of its Viacom Stock and CBS Stock.
Viacom Stock and CBS Stock
Upon adoption of SFAS No. 133, the Company valued the SFEC based on pricing provided by a financial institution and reviewed by the Company. The financial institution’s market prices are prepared on a mid-market basis by reference to proprietary models and do not reflect any bid/offer spread. As further discussed in Note 8, the SFEC matured in May 2007. For the three months and six months ended June 30, 2007, the Company recorded net pretax (losses) gains in the Company’s condensed consolidated statements of operations of ($6.4) million and $3.1 million, respectively, related to the (decrease) increase in the fair value of the derivatives associated with the SFEC. For the three months and six months ended June 30, 2006, the Company recorded net pretax gains in the Company’s condensed consolidated statements of operations of $3.9 million

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and $19.3 million, respectively, related to the increase in the fair value of the derivatives associated with the SFEC.
Fixed Rate Debt
Upon issuance of the 8% Senior Notes, 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 15th of May and November each year. Under the provisions of SFAS No. 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 June 30, 2007, the Company determined that, based upon dealer quotes, the fair value of these interest rate swap agreements was ($4.7) million. The Company has recorded a derivative liability and an offsetting reduction in the balance of the 8% Senior Notes accordingly. As of December 31, 2006, the Company determined that, based upon dealer quotes, the fair value of these interest rate swap agreements was ($2.3) million. The Company recorded a derivative liability and an offsetting reduction 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 June 30, 2007, the Company had variable to fixed natural gas price swap contracts that mature from July 2007 to September 2007 with an aggregate notional amount of approximately 231,000 dekatherms. The fair value of these contracts was ($17,000) as of June 30, 2007. The Company recorded a derivative liability and an offsetting decrease in accumulated other comprehensive loss, net of applicable income taxes, accordingly. At December 31, 2006, the Company had variable to fixed natural gas price swap contracts that matured from January 2007 to May 2007 with an aggregate notional amount of approximately 197,000 dekatherms. The fair value of these contracts was ($0.3) million. The Company recorded a derivative liability and an offsetting decrease in accumulated other comprehensive loss, 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 income and into earnings in the next twelve months is a loss of approximately $17,000.
10. SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest related to continuing operations for the three months and six months ended June 30, 2007 and 2006 was comprised of:

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    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(in thousands)   2007     2006     2007     2006  
Debt interest paid
  $ 28,497     $ 23,040     $ 35,373     $ 24,308  
Deferred financing costs paid
    202             3,883        
Capitalized interest
    (8,566 )     (2,030 )     (14,294 )     (3,452 )
 
                       
Cash interest paid, net of capitalized interest
  $ 20,133     $ 21,010     $ 24,962     $ 20,856  
 
                       
Income taxes paid were $0.7 million and $1.3 million for the six months ended June 30, 2007 and 2006, respectively.
11. GOODWILL AND INTANGIBLES:
The changes in the carrying amounts of goodwill by business segment for the six months ended June 30, 2007 are as follows (amounts in thousands):
                                         
                            Purchase    
    Balance as of   Impairment           Accounting   Balance as of
    December 31, 2006   Losses   Acquisitions   Adjustments   June 30, 2007
Hospitality
  $     $     $     $     $  
Opry and Attractions
    6,915                         6,915  
Corporate and Other
                             
     
Total
  $ 6,915     $     $     $     $ 6,915  
     
The carrying amount of indefinite-lived intangible assets not subject to amortization in continuing operations was $1.5 million at June 30, 2007 and December 31, 2006. The gross carrying amount of amortized intangible assets in continuing operations was $1.1 million at June 30, 2007 and December 31, 2006. The related accumulated amortization of amortized intangible assets in continuing operations was $0.9 million and $0.8 million at June 30, 2007 and December 31, 2006, respectively. The amortization expense related to intangible assets from continuing operations during the three months ended June 30, 2007 and 2006 was $13,000. The amortization expense related to intangible assets from continuing operations during the six months ended June 30, 2007 and 2006 was $26,000. The estimated amounts of amortization expense for the next five years are as follows (in thousands):
         
Year 1
  $ 60  
Year 2
    60  
Year 3
    50  
Year 4
    29  
Year 5
    3  
 
     
Total
  $ 202  
 
     
12. STOCK PLANS:
The Company has adopted, and the Company’s shareholders have approved, the 2006 Omnibus Incentive Plan (the “Plan”) to replace the Company’s 1997 Omnibus Stock Option and Incentive Plan. The Plan permits the grant of stock options, restricted stock, and restricted stock units to its directors and employees for up to 2,690,000 shares of common stock, which includes approximately 2,000,000 newly authorized shares and 690,000 shares that were authorized and available for grant under the Company’s 1997 plan. The Plan also

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provides that no more than 1,350,000 of those shares may be granted for awards other than options or stock appreciation rights. The Company believes that such awards better align the interests of its directors and employees with those of its shareholders. Stock option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant and generally expire ten years after the date of grant. Generally, stock options granted to non-employee directors are exercisable after one year from the date of grant, while options granted to employees are exercisable one to four years from the date of grant. 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 June 30, 2007 and December 31, 2006, there were 3,833,962 and 3,750,556 shares, respectively, of the Company’s common stock reserved for future issuance pursuant to the exercise of outstanding stock options under the Plan.
The Plan also provides for the award of restricted stock and restricted stock units (“Restricted Stock Awards”). Restricted Stock Awards granted to non-employee directors generally vest one year from the date of grant, with certain restrictions on transfer. Restricted Stock Awards granted to employees generally vest one to four years from the date of grant. 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 June 30, 2007 and December 31, 2006, Restricted Stock Awards of 112,680 and 84,900 shares, respectively, were outstanding.
Under its Performance Accelerated Restricted Stock Unit Program (“PARSUP”) pursuant to the Plan, the Company may also grant selected executives and other key employees restricted stock units, the vesting of which occurs upon the earlier of February 2008 or the achievement of various company-wide performance goals. The fair value of PARSUP awards are 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 PARSUP award granted on a straight line basis over a period beginning on the grant date and ending February 2008. At June 30, 2007 and December 31, 2006, PARSUP awards of 521,000 shares were outstanding.
The compensation cost that has been charged against pre-tax income for all of the Company’s stock-based compensation plans was $2.6 million and $2.1 million for the three months ended June 30, 2007 and 2006, respectively, and $5.0 million and $3.4 million for the six months ended June 30, 2007 and 2006, respectively.
The Company also has an employee stock purchase plan whereby substantially all employees are eligible to participate in the purchase of designated shares of the Company’s common stock. Participants in the plan purchase these shares at a price equal to 95% of the closing price at the end of each quarterly stock purchase period. The Company issued 2,331 and 3,453 shares of common stock at an average price per share of $50.96 and $41.46 pursuant to this plan during the three months ended June 30, 2007 and 2006, respectively.

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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 three months and six months ended June 30 (in thousands):
                                 
    Three months ended   Six months ended
    June 30,   June 30,
    2007   2006   2007   2006
Service cost
  $ 60     $ 47     $ 120     $ 94  
Interest cost
    1,220       1,215       2,440       2,430  
Expected return on plan assets
    (1,094 )     (1,058 )     (2,188 )     (2,116 )
Amortization of net actuarial loss
    564       748       1,128       1,496  
Amortization of prior service cost
    1       1       2       2  
         
Total net periodic pension expense
  $ 751     $ 953     $ 1,502     $ 1,906  
         
Net postretirement benefit expense reflected in the accompanying condensed consolidated statements of operations included the following components for the three months and six months ended June 30 (in thousands):
                                 
    Three months ended   Six months ended
    June 30,   June 30,
    2007   2006   2007   2006
Service cost
  $ 27     $ 47     $ 54     $ 95  
Interest cost
    284       258       568       516  
Amortization of net actuarial loss
    10             20        
Amortization of net prior service cost
    (24 )     (245 )     (48 )     (490 )
Amortization of curtailment gain
    (61 )     (61 )     (122 )     (122 )
         
Total net postretirement benefit expense
  $ 236     $ (1 )   $ 472     $ (1 )
         
14. INCOME TAXES:
The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”), as of January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As a result of adopting FIN 48, the Company recognized a net increase of $0.04 million in the liability for unrecognized tax benefits, which was accounted for as a decrease to the January 1, 2007 balance of retained earnings. As of January 1, 2007, the Company had $7.2 million of unrecognized tax benefits, of which none would affect the Company’s effective tax rate if recognized. As of June 30, 2007, the Company had $6.6 million of unrecognized tax benefits, which are recorded in other long-term liabilities in the accompanying condensed consolidated balance sheet. 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.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company recognized no interest or penalties related to uncertain tax positions in the accompanying

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consolidated statements of operations for the three months and six months ended June 30, 2007 and 2006. As of June 30, 2007, the Company has accrued no interest or penalties related to uncertain tax positions.
The tax years 2003-2006 remain open to examination by the major taxing jurisdictions to which the Company is subject.
As further discussed in Note 8, the SFEC matured in May 2007, which resulted in the Company recognizing a taxable gain of $390.6 million on the Viacom Stock and CBS Stock it received as a result of the sale of television station KTVT to CBS in 1999. The Company will be required to pay federal and state income taxes related to this gain during the year ended December 31, 2007. This tax liability, which is classified as a current liability in the accompanying condensed consolidated balance sheet as of June 30, 2007, is estimated to be $141.7 million (before federal and state net operating loss carryforwards and federal credit carryforwards).
As further discussed in Note 4, the Company completed the sale of all of its ownership interest in Bass Pro to Bass Pro for a purchase price of $222.0 million in cash on May 31, 2007, which resulted in the Company recognizing a taxable gain of $154.2 million. The Company will be required to pay federal and state income taxes related to this gain during the year ended December 31, 2007. This tax liability, which is classified as a current liability in the accompanying condensed consolidated balance sheet as of June 30, 2007, is estimated to be $59.0 million (before federal and state net operating loss carryforwards and federal credit carryforwards).
As further discussed in Note 5, the Company completed the sale of its ownership interest in the entities that comprised ResortQuest Hawaii for a purchase price of $109.1 million in cash on May 31, 2007 (prior to giving effect to a purchase price adjustment based on the working capital of ResortQuest Hawaii as of the closing), which resulted in the Company recognizing a taxable gain of $102.7 million. The Company will be required to pay federal and state income taxes related to this gain during the year ended December 31, 2007. This tax liability, which is classified as a current liability in the accompanying condensed consolidated balance sheet as of June 30, 2007, is estimated to be $36.5 million (before federal and state net operating loss carryforwards and federal credit carryforwards).
As further discussed in Note 5, the Company completed the sale of its ownership interest in the entities that comprised ResortQuest Mainland for a purchase price of $35.0 million in cash and note receivable on May 31, 2007 (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), which resulted in the Company recognizing a taxable loss of $171.1 million.
Due to the net impact of these transactions and the taxable income generated by its normal operations during 2007, the Company expects to incur a tax liability of approximately $113.7 million after the application of federal and state net operating loss carryforwards and federal credit carryforwards. The Company expects to pay $85.3 million of this liability on September 15, 2007 and the balance on December 15, 2007.
The Company’s effective tax rate as applied to pre-tax income was 39% and 226% for the three months ended June 30, 2007 and 2006, respectively, and was 40% and 109% for the six month ended June 30, 2007 and 2006, respectively. The Company’s lower effective tax rate during the three months and six months ended June 30, 2007, as compared to the same periods in 2006, was due primarily to the impact of permanent differences relative to pre-tax income for each of the respective periods.
15. NEWLY ISSUED ACCOUNTING STANDARDS:
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, to define fair value, establish a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America and expand disclosures about fair value measurements. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The

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Company will adopt the provisions of this statement beginning in the first quarter of 2008. The Company is assessing the impact the adoption of SFAS No. 157 will have on its financial position and results of operations.
In September 2006, the FASB issued FASB Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No 87, 88, 106, and 132(R)” (“Statement 158”). Statement 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 Statement 158. The effect of adopting Statement 158 on the Company’s financial condition at December 31, 2006 has been included in the accompanying condensed consolidated financial statements. Statement 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 is assessing the impact the adoption of the measurement date provision will have on its consolidated financial position and results of operations.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115,” which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company will adopt the provisions of this statement beginning in the first quarter of 2008. The Company is assessing the impact the adoption of SFAS No. 159 will have on its financial position and results of operations, if any.
16. 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 is developing the Gaylord National Resort & Convention Center. Approximately $17 million of this was paid in the first quarter of 2005, with the remainder payable upon completion of various phases of the project. The project was originally planned to include a 1,500 room hotel, but the Company has expanded the planned hotel to a total of 2,000 rooms. The Company currently expects to open the hotel in 2008. Prince George’s County, Maryland has approved three bond issues related to the development of this hotel project. The first bond issuance, in the amount of $65 million, was issued by Prince George’s County, Maryland 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, in the amount of $95 million, was issued by Prince George’s County, Maryland in April 2005 and placed into escrow until completion of the convention center and 1,500 rooms within the hotel, at which time the bonds will be released to the Company. In addition, on July 18, 2006, Prince George’s County, Maryland approved an additional $50 million of bonds, which will be issued to the Company upon completion of the entire project. The Company will initially hold the $95 million and $50 million bond issuances and receive the debt service thereon, which is payable from tax increment, hotel tax and special hotel rental taxes generated from the development. The Company has entered into several agreements with a general contractor and other suppliers for the provision of certain construction services at the site. As of June 30, 2007, the Company had committed to pay $809.3 million under those agreements for construction services and supplies and other construction-related costs ($299.2 million of which was outstanding as of such date). Construction costs to date have exceeded the Company’s initial estimates from 2004. These increased costs are attributable to: (a) construction materials price escalation that has occurred over the past three years; (b) increased cost of construction labor in the Washington, D.C. marketplace due to historically low unemployment and a high

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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 will open concurrently with the original project; and (d) enhancements to the project design. The Company currently estimates that the total cost of the project will be approximately $870 million, which includes the estimated construction costs for the expanded 2,000 room facility and excludes capitalized interest, pre-opening costs and the governmental economic incentives in connection with the Gaylord National hotel project. As of June 30, 2007, the Company has spent approximately $488.1 million (excluding capitalized interest and preopening costs) on this project.
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. During the second quarter of 2007 we notified the City of Chula Vista of our determination not to proceed with the development due to our inability to agree upon terms with local construction unions regarding the potential development. However, we are currently reviewing a counter proposal from the local construction unions and are in discussions with the City of Chula Vista and the Port Authority of San Diego with respect to the potential development.
The Company is considering other potential hotel sites throughout the country. The timing and extent of any of these development projects is uncertain, and the Company has not made any commitments, received any government approvals or made any financing plans in connection with these development projects.
On June 20, 2006, the Company entered into a joint venture arrangement with RREEF Global Opportunities Fund II, LLC, a private real estate fund managed by DB Real Estate Opportunities Group (“RREEF”), and acquired a 19.9% ownership interest in the joint venture, Waipouli Holdings, LLC, in exchange for the Company’s capital contribution of $3.8 million to Waipouli Holdings, LLC. On June 20, 2006, through a wholly-owned subsidiary named Waipouli Owner, LLC, Waipouli Holdings, LLC acquired the 311-room ResortQuest Kauai Beach at Makaiwa Hotel and related assets located in Kapaa, Hawaii (“the Kauai Hotel”) for an aggregate purchase price of $70.8 million. Waipouli Owner, LLC financed the purchase of the Kauai Hotel 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 October 2006, Waipouli Owner, LLC requested RREEF and the Company to make an additional capital contribution of $1.7 million to Waipouli Holdings, LLC to fund the purchase of the land on which the Kauai Hotel is built. The Company elected not to make the requested capital contribution, which diluted its ownership interest in Waipouli Holdings, LLC from 19.9% to 18.1% as of June 30, 2007. 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, on the one hand, or (ii) in the event of bankruptcy or reorganization proceedings of Waipouli Owner, LLC, on the other hand. 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 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 June 30, 2007. As of June 30, 2007, 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.
On May 31, 2005, the Company, through a wholly-owned subsidiary named RHAC, LLC, entered into an agreement to purchase the 716-room Aston Waikiki Beach Hotel and related assets located in Honolulu, Hawaii

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(“the Waikiki Hotel”) for an aggregate purchase price of $107.0 million. Simultaneously with this purchase, G.O. IB-SIV US, a private real estate fund managed by DB Real Estate Opportunities Group (“IB-SIV”), acquired an 80.1% ownership interest in the parent company of RHAC, LLC, RHAC Holdings, LLC, in exchange for its capital contribution of $19.1 million to RHAC Holdings, LLC. As a part of this transaction, the Company entered into a joint venture arrangement with IB-SIV and retained a 19.9% ownership interest in RHAC Holdings, LLC in exchange for its $4.7 million capital contribution to RHAC Holdings, LLC. 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, on the one hand, or (ii) in the event of bankruptcy or reorganization proceedings of RHAC, LLC, on the other hand. 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 June 30, 2007. As of June 30, 2007, the Company had not recorded any liability in the 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 owns 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, and the first payment was made on October 5, 2006. 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, if the Predators cease to be an NHL team playing its home games in Nashville after the first payment but prior to the second payment under the note (October 5, 2007), then in addition to the note being cancelled, the Predators will pay the Company $2 million. 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 any of these obligations remain outstanding: (i) all obligations under the expansion agreement between NHC and the NHL; and (ii) all operating expenses of NHC. The maximum potential amount

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which the Company and CCK, collectively, could be liable under the guaranty agreement is $15.0 million, although the Company and CCK would have recourse against the other guarantors if required to make payments under the guarantee. In connection with the legal settlement with the Nashville Predators consummated on February 22, 2005, this guaranty has been limited so that the Company is not responsible for any debt, obligation or liability of NHC that arises from any act, omission or circumstance occurring after the date of the legal settlement. As of June 30, 2007, 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.

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17. FINANCIAL REPORTING BY BUSINESS SEGMENTS:
The Company’s continuing operations are organized and managed based upon its products and services. 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 5, 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     Six Months Ended  
    June 30,     June 30,  
(in thousands)   2007     2006     2007     2006  
Revenues:
                               
Hospitality
  $ 168,408     $ 157,189     $ 334,869     $ 322,653  
Opry and Attractions
    20,922       19,819       36,764       36,584  
Corporate and Other
    51       79       106       157  
 
                       
Total
  $ 189,381     $ 177,087     $ 371,739     $ 359,394  
 
                       
 
                               
Depreciation and amortization:
                               
Hospitality
  $ 16,262     $ 16,026     $ 32,687     $ 32,166  
Opry and Attractions
    1,424       1,437       2,980       2,851  
Corporate and Other
    1,617       1,085       3,096       2,099  
 
                       
Total
  $ 19,303     $ 18,548     $ 38,763     $ 37,116  
 
                       
 
                               
Operating income (loss):
                               
Hospitality
  $ 33,323     $ 26,172     $ 60,885     $ 60,623  
Opry and Attractions
    3,144       1,556       2,138       185  
Corporate and Other
    (13,851 )     (12,484 )     (26,862 )     (24,911 )
Preopening costs
    (3,230 )     (1,503 )     (6,175 )     (2,565 )
 
                       
Total operating income
    19,386       13,741       29,986       33,332  
Interest expense, net of amounts capitalized
    (13,611 )     (18,191 )     (32,388 )     (36,325 )
Interest income
    1,630       489       2,147       967  
Unrealized gain (loss) on Viacom stock and CBS stock
    9,147       602       6,358       (12,633 )
Unrealized (loss) gain on derivatives
    (6,448 )     3,939       3,121       19,331  
Income from unconsolidated companies
    2,931       3,047       1,013       5,803  
Other gains and (losses), net
    140,212       800       146,075       1,460  
 
                       
Income before provision for income taxes
  $ 153,247     $ 4,427     $ 156,312     $ 11,935  
 
                       
                 
            December 31,  
    June 30, 2007     2006  
Identifiable assets:
               
Hospitality
  $ 1,845,035     $ 1,546,426  
Opry and Attractions
    83,370       79,814  
Corporate and Other
    175,918       808,432  
Discontinued operations
    993       197,838  
 
           
Total identifiable assets
  $ 2,105,316     $ 2,632,510  
 
           
18. 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 Bass Pro and certain discontinued operations (the “Non-Guarantors”) do not guarantee the 8% Senior Notes and 6.75% Senior Notes.
Prior to January 1, 2007, Grand Ole Opry, Ryman Auditorium, and WSM-AM were divisions of Gaylord Entertainment Company, Inc. (the “Issuer”), and were included in the balance sheet, results of operations and cash flows of the Issuer as of December 31, 2006 and for the three months and six months ended June 30, 2006

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in the consolidating financial information presented below. Effective January 1, 2007, the Company realigned certain of its operations, and Grand Ole Opry, Ryman Auditorium, and WSM-AM are now owned by a guarantor subsidiary. Therefore, the Company has classified the balance sheet, results of operations and cash flows of these operations as of June 30, 2007 and for the three months and six months ended June 30, 2007 with the Guarantors in the consolidating financial information presented below.
Prior to May 31, 2007, ResortQuest and its subsidiaries were guarantor subsidiaries and were included in the balance sheet, results of operations and cash flows of the Guarantors as of December 31, 2006 and for the three months and six months ended June 30, 2006 in the consolidating financial information presented below. As further discussed in Note 5, on May 31, 2007 and June 1, 2007, the Company sold ResortQuest and its subsidiaries and they were released from their guaranties of the 8% Senior Notes and 6.75% Senior Notes. Therefore, the Company has classified the balance sheet, results of operations and cash flows of ResortQuest and its subsidiaries as of June 30, 2007 and for the three months and six months ended June 30, 2007 with the Non-Guarantors in the consolidating financial information presented below.
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.

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 2007
                                         
                    Non-        
    Issuer   Guarantors   Guarantors   Eliminations   Consolidated
    (In thousands)
Revenues
  $ 5     $ 189,376     $     $     $ 189,381  
Operating expenses:
                                       
Operating costs
          108,771                   108,771  
Selling, general and administrative
    5,341       33,350                   38,691  
Preopening costs
          3,230                   3,230  
Depreciation
    1,018       17,318                   18,336  
Amortization
    501       466                   967  
             
Operating (loss) income
    (6,855 )     26,241                   19,386  
Interest expense, net of amounts capitalized
    (22,153 )     (23,846 )     (7,538 )     39,926       (13,611 )
Interest income
    11,036       26,114       4,406       (39,926 )     1,630  
Unrealized gain on Viacom stock and CBS stock
    9,147                         9,147  
Unrealized loss on derivatives
    (6,448 )                       (6,448 )
(Loss) income from unconsolidated companies
          (138 )     3,069             2,931  
Other gains and (losses), net
    (120 )     19       140,313             140,212  
             
(Loss) income before (benefit) provision for income taxes
    (15,393 )     28,390       140,250             153,247  
(Benefit) provision for income taxes
    (4,701 )     8,389       55,943             59,631  
Equity in subsidiaries’ (earnings) losses, net
    (117,534 )                 117,534        
             
Income from continuing operations
    106,842       20,001       84,307       (117,534 )     93,616  
Income from discontinued operations, net of taxes
                13,226             13,226  
     
Net income
  $ 106,842     $ 20,001     $ 97,533     $ (117,534 )   $ 106,842  
             

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 2006
                                         
                    Non-        
    Issuer   Guarantors   Guarantors   Eliminations   Consolidated
    (In thousands)
Revenues
  $ 17,732     $ 168,280     $     $ (8,925 )   $ 177,087  
Operating expenses:
                                       
Operating costs
    6,331       99,095                   105,426  
Selling, general and administrative
    11,572       26,297                   37,869  
Management fees
          8,925             (8,925 )      
Preopening costs
          1,503                       1,503  
Depreciation
    1,407       16,238                   17,645  
Amortization
    399       504                   903  
             
Operating (loss) income
    (1,977 )     15,718                   13,741  
Interest expense, net of amounts capitalized
    (20,675 )     (16,053 )     (1,455 )     19,992       (18,191 )
Interest income
    17,250       1,253       1,978       (19,992 )     489  
Unrealized gain on Viacom stock and CBS stock
    602                         602  
Unrealized loss on derivatives
    3,939                         3,939  
(Loss) income from unconsolidated companies
          (156 )     3,203             3,047  
Other gains and (losses), net
    933       (133 )                 800  
             
Income before (benefit) provision for income taxes
    72       629       3,726             4,427  
(Benefit) provision for income taxes
    (1,988 )     8,225       3,789             10,026  
Equity in subsidiaries’ (earnings) losses, net
    7,221                   (7,221 )      
             
Income from continuing operations
    (5,161 )     (7,596 )     (63 )     7,221       (5,599 )
Income from discontinued operations, net of taxes
          429       9             438  
             
Net income
  $ (5,161 )   $ (7,167 )   $ (54 )   $ 7,221     $ (5,161 )
             

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 2007
                                         
                    Non-        
    Issuer   Guarantors   Guarantors   Eliminations   Consolidated
    (In thousands)
Revenues
  $ 11     $ 371,803     $     $ (75 )   $ 371,739  
Operating expenses:
                                       
Operating costs
          217,356             (32 )     217,324  
Selling, general and administrative
    10,167       69,367             (43 )     79,491  
Preopening costs
          6,175                   6,175  
Depreciation
    2,000       34,885                   36,885  
Amortization
    988       890                   1,878  
             
Operating (loss) income
    (13,144 )     43,130                   29,986  
Interest expense, net of amounts capitalized
    (46,625 )     (59,722 )     (13,966 )     87,925       (32,388 )
Interest income
    17,766       63,650       8,656       (87,925 )     2,147  
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
          (681 )     1,694             1,013  
Other gains and (losses), net
    5,630       132       140,313             146,075  
             
(Loss) income before (benefit) provision for income taxes
    (26,894 )     46,509       136,697             156,312  
(Benefit) provision for income taxes
    (8,218 )     14,270       55,987             62,039  
Equity in subsidiaries’ (earnings) losses, net
    (128,982 )                 128,982        
             
Income from continuing operations
    110,306       32,239       80,710       (128,982 )     94,273  
Income from discontinued operations, net
                16,033             16,033  
             
Net income
  $ 110,306     $ 32,239     $ 96,743     $ (128,982 )   $ 110,306  
             

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 2006
                                         
                    Non-        
    Issuer   Guarantors   Guarantors   Eliminations   Consolidated
    (In thousands)
Revenues
  $ 33,430     $ 343,945     $     $ (17,981 )   $ 359,394  
Operating expenses:
                                       
Operating costs
    12,247       200,660             (32 )     212,875  
Selling, general and administrative
    23,127       50,478             (99 )     73,506  
Management fees
          17,850             (17,850 )      
Preopening costs
          2,565                   2,565  
Depreciation
    2,772       32,533                   35,305  
Amortization
    752       1,059                   1,811  
             
Operating (loss) income
    (5,468 )     38,800                   33,332  
Interest expense, net of amounts capitalized
    (40,690 )     (30,291 )     (2,766 )     37,422       (36,325 )
Interest income
    32,248       2,387       3,754       (37,422 )     967  
Unrealized loss on Viacom stock and CBS stock
    (12,633 )                       (12,633 )
Unrealized gain on derivatives
    19,331                         19,331  
(Loss) income from unconsolidated companies
          (2 )     5,805             5,803  
Other gains and (losses), net
    1,601       (141 )                 1,460  
             
(Loss) income before (benefit) provision for income taxes
    (5,611 )     10,753       6,793             11,935  
(Benefit) provision for income taxes
    (3,584 )     11,949       4,651             13,016  
Equity in subsidiaries’ (earnings) losses, net
    (10,025 )                 10,025        
             
Income (loss) from continuing operations
    7,998       (1,196 )     2,142       (10,025 )     (1,081 )
Income (loss) from discontinued operations, net
          9,083       (4 )           9,079  
             
Net income
  $ 7,998     $ 7,887     $ 2,138     $ (10,025 )   $ 7,998  
             

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
Condensed Consolidating Balance Sheet
June 30, 2007
                                         
                    Non-        
    Issuer   Guarantors   Guarantors   Eliminations   Consolidated
    (in thousands)
ASSETS
                                       
Current assets:
                                       
Cash and cash equivalents — unrestricted
  $ 58,052     $ 4,285     $     $     $ 62,337  
Cash and cash equivalents — restricted
    1,212                         1,212  
Short term investments
                             
Trade receivables, net
    3       46,087                   46,090  
Estimated fair value of derivative assets
                             
Deferred financing costs
                             
Deferred income taxes
    7,851       4,839       642             13,332  
Other current assets
    3,224       27,503             (126 )     30,601  
Intercompany receivables, net
          40,545       236,561       (277,106 )      
Current assets of discontinued operations
                  993             993  
             
Total current assets
    70,342       123,259       238,196       (277,232 )     154,565  
Property and equipment, net of accumulated depreciation
    70,905       1,829,752                   1,900,657  
Intangible assets, net of accumulated amortization
          202                   202  
Goodwill
          6,915                   6,915  
Indefinite lived intangible assets
          1,480                   1,480  
Investments
    1,852,261       335,148             (2,182,891 )     4,518  
Long-term deferred financing costs
    16,478                         16,478  
Other long-term assets
    13,709       6,791       1             20,501  
Long-term assets of discontinued operations
                             
             
Total assets
  $ 2,023,695     $ 2,303,547     $ 238,197     $ (2,460,123 )   $ 2,105,316  
     
 
                                       
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                       
Current liabilities:
                                       
Current portion of long-term debt and capital lease obligations
  $ 1,357     $ 579     $     $     $ 1,936  
Secured forward exchange contract
                             
Accounts payable and accrued liabilities
    27,211       176,635       841       (291 )     204,396  
Income taxes payable
    113,383                         113,383  
Deferred income taxes
                             
Intercompany payables, net
    217,685             59,421       (277,106 )      
Current liabilities of discontinued operations
                2,896             2,896  
             
Total current liabilities
    359,636       177,214       63,158       (277,397 )     322,611  
Long-term debt and capital lease obligations, net of current portion
    688,586       2,089                   690,675  
Deferred income taxes
    (24,766 )     85,889       7,963             69,086  
Estimated fair value of derivative liabilities
    4,736                         4,736  
Other long-term liabilities
    56,039       36,301       (86 )     165       92,419  
Long-term liabilities of discontinued operations
          (1 )     2,585             2,584  
Stockholders’ equity:
                                       
Preferred stock
                             
Common stock
    411       2,387       2       (2,389 )     411  
Additional paid-in capital
    710,320       2,257,385       6,980       (2,264,365 )     710,320  
Retained earnings
    245,412       (257,717 )     157,595       83,863       229,153  
Other stockholders’ equity
    (16,679 )                       (16,679 )
             
Total stockholders’ equity
    939,464       2,002,055       164,577       (2,182,891 )     923,205  
             
Total liabilities and stockholders’ equity
  $ 2,023,695     $ 2,303,547     $ 238,197     $ (2,460,123 )   $ 2,105,316  
     

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
Condensed Consolidating Balance Sheet
December 31, 2006
                                         
                    Non-        
    Issuer   Guarantors   Guarantors   Eliminations   Consolidated
    (in thousands)
ASSETS
                                       
Current assets:
                                       
Cash and cash equivalents — unrestricted
  $ 28,875     $ 6,481     $     $     $ 35,356  
Cash and cash equivalents — restricted
    1,223       43                   1,266  
Short term investments
    394,913                         394,913  
Trade receivables, net
    559       33,175                   33,734  
Estimated fair value of derivative assets
    207,428                         207,428  
Deferred financing costs
    10,461                         10,461  
Other current assets
    6,155       14,523             (126 )     20,552  
Intercompany receivables, net
    1,224,698             161,399       (1,386,097 )      
Current assets of discontinued operations
          33,952                   33,952  
             
Total current assets
    1,874,312       88,174       161,399       (1,386,223 )     737,662  
Property and equipment, net of accumulated depreciation
    96,247       1,513,438                   1,609,685  
Intangible assets, net of accumulated amortization
          228                   228  
Goodwill
          6,915                   6,915  
Indefinite lived intangible assets
    1,480                         1,480  
Investments
    338,465       21,714       79,521       (355,212 )     84,488  
Long-term deferred financing costs
    15,579                         15,579  
Other long-term assets
    6,667       5,920                   12,587  
Long-term assets of discontinued operations
          163,886                   163,886  
             
Total assets
  $ 2,332,750     $ 1,800,275     $ 240,920     $ (1,741,435 )   $ 2,632,510  
             
 
                                       
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                       
Current liabilities:
                                       
Current portion of long-term debt and capital lease obligations
  $ 1,351     $ 640     $     $     $ 1,991  
Secured forward exchange contract
    613,054                         613,054  
Accounts payable and accrued liabilities
    40,862       124,537             (291 )     165,108  
Income taxes payable
    315                         315  
Deferred income taxes
    94,297       (37,130 )     (539 )           56,628  
Intercompany payables, net
          1,512,208       (126,111 )     (1,386,097 )      
Current liabilities of discontinued operations
          57,381       525             57,906  
             
Total current liabilities
    749,879       1,657,636       (126,125 )     (1,386,388 )     895,002  
Long-term debt and capital lease obligations, net of current portion
    751,168       2,394                   753,562  
Deferred income taxes
    (19,673 )     110,967       5,243             96,537  
Estimated fair value of derivative liabilities
    2,610                         2,610  
Other long-term liabilities
    51,291       32,869             165       84,325  
Long-term liabilities of discontinued operations
          2,451       (3 )           2,448  
Stockholders’ equity:
                                     
Preferred stock
                             
Common stock
    408       2,387       2       (2,389 )     408  
Additional paid-in capital
    694,941       397,234       168,434       (565,668 )     694,941  
Retained earnings
    118,885       (406,214 )     193,369       212,845       118,885  
Other stockholders’ equity
    (16,759 )     551                     (16,208 )
             
Total stockholders’ equity
    797,475       (6,042 )     361,805       (355,212 )     798,026  
             
Total liabilities and stockholders’ equity
  $ 2,332,750     $ 1,800,275     $ 240,920     $ (1,741,435 )   $ 2,632,510  
             

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2007
                                         
                    Non-        
    Issuer   Guarantors   Guarantors   Eliminations   Consolidated
    (In thousands)
Net cash provided by (used in) continuing operating activities
  $ 86,053     $ 273,304     $ (339,059 )   $     $ 20,298  
Net cash provided by discontinued operating activities
                21,613             21,613  
             
Net cash provided by (used in) operating activities
    86,053       273,304       (317,446 )           41,911  
             
 
                                       
Purchases of property and equipment
    (6,407 )     (275,055 )                 (281,462 )
Investment in unconsolidated companies
          (231 )                 (231 )
Proceeds from sale of investment in Bass Pro
                221,527             221,527  
Proceeds from sale of assets
    5,015       20                   5,035  
Other investing activities
    (571 )     (137 )                 (708 )
             
Net cash (used in) provided by investing activities — continuing operations
    (1,963 )     (275,403 )     221,527             (55,839 )
Net cash provided by investing activities — discontinued operations
                115,284             115,284  
             
Net cash (used in) provided by investing activities
    (1,963 )     (275,403 )     336,811             59,445  
             
 
                                       
Repayments under credit facility
    (60,000 )                       (60,000 )
Deferred financing costs paid
    (3,883 )                       (3,883 )
Decrease in restricted cash and cash equivalents
    11       43                   54  
Proceeds from exercise of stock option and purchase plans
    7,967                         7,967  
Excess tax benefit from stock-based compensation
    1,444                         1,444  
Other financing activities, net
    (226 )     (366 )                 (592 )
             
Net cash used in financing activities — continuing operations
    (54,687 )     (323 )                 (55,010 )
Net cash used in financing activities — discontinued operations
                (19,365 )           (19,365 )
             
Net cash used in financing activities
    (54,687 )     (323 )     (19,365 )           (74,375 )
             
 
                                       
Net change in cash and cash equivalents
    29,403       (2,422 )                 26,981  
Cash and cash equivalents at beginning of year
    28,649       6,707                   35,356  
             
Cash and cash equivalents at end of year
  $ 58,052     $ 4,285     $     $     $ 62,337  
             

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GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2006
                                         
                    Non-        
    Issuer   Guarantors   Guarantors   Eliminations   Consolidated
    (In thousands)
Net cash (used in) provided by continuing operating activities
  $ (47,817 )   $ 88,689     $     $     $ 40,872  
Net cash provided by discontinued operating activities
          38,117                   38,117  
             
Net cash (used in) provided by operating activities
    (47,817 )     126,806                   78,989  
             
 
                                       
Purchases of property and equipment
    (5,866 )     (92,995 )                 (98,861 )
Investment in unconsolidated companies
          (4,817 )                 (4,817 )
Proceeds from sale of assets
          61                   61  
Other investing activities
    (1,425 )     (469 )                 (1,894 )
             
Net cash used in investing activities — continuing operations
    (7,291 )     (98,220 )                 (105,511 )
Net cash used in investing activities — discontinued operations
          (9,722 )                 (9,722 )
             
Net cash used in investing activities
    (7,291 )     (107,942 )                 (115,233 )
             
 
                                       
Borrowings under credit facility
    35,000                         35,000  
Increase in restricted cash and cash equivalents
    (21 )                       (21 )
Proceeds from exercise of stock option and purchase plans
    10,154                         10,154  
Excess tax benefit from stock-based compensation
    2,414                         2,414  
Other financing activities, net
    (206 )     (409 )                 (615 )
             
Net cash provided by (used in) financing activities — continuing operations
    47,341       (409 )                 46,932  
Net cash used in financing activities — discontinued operations
          (18,198 )                 (18,198 )
             
Net cash provided by (used in) financing activities
    47,341       (18,607 )                 28,734  
             
Net change in cash and cash equivalents
    (7,767 )     257                   (7,510 )
Cash and cash equivalents at beginning of year
    41,757       4,019                   45,776  
             
Cash and cash equivalents at end of year
  $ 33,990     $ 4,276     $     $     $ 38,266  
             

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Current Operations
Our current operations are organized into three principal businesses:
    Hospitality, consisting of our Gaylord Opryland Resort and Convention Center (“Gaylord Opryland”), our Gaylord Palms Resort and Convention Center (“Gaylord Palms”), our Gaylord Texan Resort and Convention Center (“Gaylord Texan”), and our Radisson Hotel at Opryland (“Radisson Hotel”).
 
    Opry and Attractions, consisting of our Grand Ole Opry assets, WSM-AM and our Nashville attractions.
 
    Corporate and Other, consisting of our ownership interests in certain entities and our corporate expenses.
For the three and six months ended June 30, 2007 and 2006, our total revenues were divided among these business segments as follows:
                                 
    Three Months   Six Months
    Ended June   Ended June
    30,   30,
Segment   2007   2006   2007   2006
Hospitality
    88.9 %     88.8 %     90.1 %     89.8 %
Opry and Attractions
    11.1 %     11.2 %     9.9 %     10.2 %
Corporate and Other
                     
We generate a substantial portion of our revenues from our Hospitality segment. We believe that we are the only hospitality company focused primarily on the large group meetings and conventions sector of the lodging market. Our strategy is to continue this focus by concentrating on our “All-in-One-Place” self-contained service offerings and by emphasizing customer rotation among our convention properties, while also offering additional entertainment opportunities to guests and target customers.
Our concentration in the hospitality industry, and in particular the large group meetings sector of the hospitality industry, exposes us to certain risks outside of our control. General economic conditions, particularly national and global economic conditions, can affect the number and size of meetings and conventions attending our hotels. Our business is also exposed to risks related to tourism, including terrorist attacks and other global events which affect levels of tourism in the United States and, in particular, the areas of the country in which our properties are located. Competition and the desirability of the locations in which our properties are located are also important risks to our business.
Recent Developments
Bass Pro. On May 31, 2007, we and our wholly owned subsidiary, Gaylord Hotels, Inc., completed the sale of all of our interest in Bass Pro (consisting of 43,333 common units) for a purchase price of $222.0 million pursuant to the terms of a Common Unit Repurchase Agreement, dated April 3, 2007. The purchase price was paid in cash in full at closing. Our Chief Executive Officer formerly served as a member of the board of managers of Bass Pro Group but resigned upon consummation of the sale. See “Non-Operating Results Affecting Net Income – Income from Unconsolidated Companies” below for a discussion of the results of our investment in Bass Pro prior to the date of disposal. See “Other Gains and (Losses)” below for a discussion of the recognized gain on the sale of our interest in Bass Pro.
ResortQuest. Following the closing of the sale of our interest in Bass Pro, on May 31, 2007, our wholly-owned subsidiary, ResortQuest International, Inc. (“RQI”), completed the sale of all of the equity interests of

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RQI Holdings, LLC (f/k/a RQI Holdings, Ltd.) and ResortQuest Real Estate of Hawaii, LLC (f/k/a ResortQuest Real Estate of Hawaii, Inc.) to Vacation Holdings Hawaii, Inc., an affiliated company of Interval International (“Vacation Holdings”), pursuant to the terms of a Stock Purchase Agreement dated as of April 18, 2007 (the “ResortQuest Hawaii Purchase Agreement”), by and among us, RQI, Vacation Holdings and Interval Acquisition Corp. The purchase price paid by Vacation Holdings was $109.1 million, prior to giving effect to a purchase price adjustment based on the working capital of the acquired entities as of the closing. The purchase price was paid in cash in full at closing. We retained our 19.9% ownership interest in RHAC Holdings, LLC and our 18.1% ownership interest in Waipouli Holdings LLC, as our ownership interests in these hotel ownership joint venture entities were excluded from this transaction.
Thereafter, on June 1, 2007, we and Gaylord Hotels entered into a Stock Purchase Agreement dated as of June 1, 2007 (the “ResortQuest Mainland Purchase Agreement”) with BEI-RZT Corporation, a subsidiary of Leucadia National Corporation (“BEI-RZT”). Pursuant to the terms of the ResortQuest Mainland Purchase Agreement, Gaylord Hotels completed the sale of all of the capital stock of RQI to BEI-RZT on June 1, 2007. The purchase price paid by BEI-RZT was $35.0 million, prior to giving effect to certain purchase price adjustments, including a purchase price adjustment based on the working capital of RQI as of the closing. The purchase price was paid by the delivery of a four-year promissory note in the principal amount of $8.0 million bearing interest at the annual rate of 10%, and the balance of the purchase price was paid in cash at closing.
As a result of the transactions described above, the results of operations of our ResortQuest business, net of taxes, are included in discontinued operations for all periods presented. See “Non-Operating Results Affecting Net Income—Gain from Discontinued Operations, Net of Income Taxes” below for a discussion of the results of operations of our ResortQuest business.
Key Performance Indicators
     The operating results of our Hospitality segment are highly dependent on the volume of customers at our hotels and the quality of the customer mix at our hotels. These factors impact the price we can charge for our hotel rooms and other amenities, such as food and beverage and meeting space. Key performance indicators related to revenue are:
    hotel occupancy (volume indicator)
 
    average daily rate (“ADR”) (price indicator)
 
    Revenue per Available Room (“RevPAR”) (a summary measure of hotel results calculated by dividing room sales by room nights available to guests for the period)
 
    Total Revenue per Available Room (“Total RevPAR”) (a summary measure of hotel results calculated by dividing the sum of room, food and beverage and other ancillary service revenue by room nights available to guests for the period)
 
    Net Definite Room Nights Booked (a volume indicator which represents the total number of definite bookings for future room nights at Gaylord hotels confirmed during the applicable period, net of cancellations)
We recognize Hospitality segment revenue from rooms as earned on the close of business each day when a stay occurs and from concessions and food and beverage sales at the time of sale. Almost all of our Hospitality segment revenues are either cash-based or, for meeting and convention groups meeting our credit criteria, billed and collected on a short-term receivables basis. Our industry is capital intensive, and we rely on the ability of our hotels to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide excess cash flow for future development.

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The results of operations of our Hospitality segment are affected by the number and type of group meetings and conventions scheduled to attend our hotels in a given period. We attempt to offset any identified shortfalls in occupancy by creating special events at our hotels to attract transient guests or offering incentives to groups in order to attract increased business during this period. A variety of factors can affect the results of any interim period, including the nature and quality of the group meetings and conventions attending our hotels during such period, which meetings and conventions have often been contracted for several years in advance, and the level of transient business at our hotels during such period.
Overall Outlook
We have invested heavily in our operations in the three and six months ended June 30, 2007 and the years ended December 31, 2006, 2005 and 2004, primarily in connection with the continued construction and ultimate opening of the Gaylord Texan in 2004 and the beginning of construction of the Gaylord National hotel project, described below, in 2005. Our investments in the balance of 2007 are expected to consist primarily of ongoing capital improvements for our existing properties and the continued construction of the Gaylord National.
On February 23, 2005, we acquired approximately 42 acres of land and related land improvements in Prince George’s County, Maryland (located in the Washington D.C. area) for approximately $29 million on which we are developing a hotel to be known as the Gaylord National Resort & Convention Center. Approximately $17 million of this was paid in the first quarter of 2005, with the remainder payable upon completion of various phases of the project. The project was originally planned to include a 1,500 room hotel; however, we have expanded the planned hotel to a total of 2,000 rooms. We currently expect to open the hotel in 2008.
Prince George’s County, Maryland has approved three bond issues related to the development of our hotel project. The first bond issuance, in the amount of $65 million, was issued by Prince George’s County, Maryland 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, in the amount of $95 million, was issued by Prince George’s County, Maryland in April 2005 and placed into escrow until completion of the convention center and 1,500 rooms within the hotel, at which time the bonds will be released to us. In addition, on July 18, 2006, Prince George’s County, Maryland approved an additional $50 million of bonds, which will be issued to us upon completion of the entire project. We will initially hold the $95 million and $50 million bond issuances and receive the debt service thereon, which is payable from tax increment, hotel tax and special hotel rental taxes generated from our development.
We have entered into several agreements with a general contractor and other suppliers for the provision of certain construction services at the site. The agreement with the general contractor (the Perini/Tompkins Joint Venture) is with our wholly-owned subsidiary, Gaylord National, LLC, and provides for the construction of a portion of the Gaylord National hotel project in a guaranteed maximum price format. As of June 30, 2007, we had committed to pay $809.3 million under this agreement and the other agreements for construction services and supplies and other construction related costs ($299.2 million of which was outstanding as of such date). Construction costs to date have exceeded our initial estimates from 2004. These increased costs are attributable to: (a) construction materials price escalation that has occurred over the past three 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) our 500-room expansion and related additional meeting space, and the acceleration of its construction so that the expansion will open concurrently with the original project; and (d) enhancements to the project design. We currently estimate that the total cost of the project will be approximately $870 million, which includes the estimated construction costs for the expanded 2,000 room facility and excludes approximately $53 million in capitalized interest, approximately $41 million in pre-opening costs and the governmental economic incentives. As of June 30, 2007, we have spent approximately $488.1 million (excluding capitalized interest and pre-opening costs) on the project. We intend to use proceeds of our $1.0 billion credit facility, cash flow from operations, and after completion, the proceeds of tax increment

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payments on the $145 million in government bonds described above, as well as additional debt financing, to fund the development and construction.
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 us, outlining the general terms of our development of a 1,500 to 2,000 room convention hotel in Chula Vista, California. During the second quarter of 2007 we notified the City of Chula Vista of our determination not to proceed with the development due to our inability to agree upon terms with local construction unions regarding the potential development. However, we are currently reviewing a counter proposal from the local construction unions and are in discussions with the City of Chula Vista and the Port Authority of San Diego with respect to the potential development.
We are also considering other potential hotel sites throughout the country. The timing and extent of any of these development projects is uncertain, and we have not made any commitments, received any government approvals or made any financing plans in connection with these development projects.

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Selected Financial Information
The following table contains our unaudited selected summary financial data for the three and six month periods ended June 30, 2007 and 2006. The table also shows the percentage relationships to total revenues and, in the case of segment operating income (loss), its relationship to segment revenues.
                                                                 
    Three Months ended June 30,     Six Months ended June 30,  
    2007     %     2006     %     2007     %     2006     %  
    (in thousands, except percentages)     (in thousands, except percentages)  
Income Statement Data:
                                                               
REVENUES:
                                                               
Hospitality
  $ 168,408       88.9 %   $ 157,189       88.8 %   $ 334,869       90.1 %   $ 322,653       89.8 %
Opry and Attractions
    20,922       11.1 %     19,819       11.2 %     36,764       9.9 %     36,584       10.2 %
Corporate and Other
    51       0.0 %     79       0.0 %     106       0.0 %     157       0.0 %
                     
Total revenues
    189,381       100.0 %     177,087       100.0 %     371,739       100.0 %     359,394       100.0 %
                     
OPERATING EXPENSES:
                                                               
Operating costs
    108,771       57.4 %     105,426       59.5 %     217,324       58.5 %     212,875       59.2 %
Selling, general and administrative
    38,691       20.4 %     37,869       21.4 %     79,491       21.4 %     73,506       20.5 %
Preopening costs
    3,230       1.7 %     1,503       0.8 %     6,175       1.7 %     2,565       0.7 %
Depreciation and amortization:
                                                               
Hospitality
    16,262       8.6 %     16,026       9.0 %     32,687       8.8 %     32,166       9.0 %
Opry and Attractions
    1,424       0.8 %     1,437       0.8 %     2,980       0.8 %     2,851       0.8 %
Corporate and Other
    1,617       0.9 %     1,085       0.6 %     3,096       0.8 %     2,099       0.6 %
 
                                                       
Total depreciation and amortization
    19,303       10.2 %     18,548       10.5 %     38,763       10.4 %     37,116       10.3 %
 
                                                       
Total operating expenses
    169,995       89.8 %     163,346       92.2 %     341,753       91.9 %     326,062       90.7 %
 
                                                       
OPERATING INCOME (LOSS):
                                                               
Hospitality
    33,323       19.8 %     26,172       16.7 %     60,885       18.2 %     60,623       18.8 %
Opry and Attractions
    3,144       15.0 %     1,556       7.9 %     2,138       5.8 %     185       0.5 %
Corporate and Other
    (13,851 )     (A )     (12,484 )     (A )     (26,862 )     (A )     (24,911 )     (A )
Preopening costs
    (3,230 )     (B )     (1,503 )     (B )     (6,175 )     (B )     (2,565 )     (B )
 
                                                       
Total operating income
    19,386       10.2 %     13,741       7.8 %     29,986       8.1 %     33,332       9.3 %
Interest expense, net of amounts capitalized
    (13,611 )     (C )     (18,191 )     (C )     (32,388 )     (C )     (36,325 )     (C )
Interest income
    1,630       (C )     489       (C )     2,147       (C )     967       (C )
Unrealized gain (loss) on Viacom stock and CBS stock and derivatives, net
    2,699       (C )     4,541       (C )     9,479       (C )     6,698       (C )
Income (loss) from unconsolidated companies
    2,931       (C )     3,047       (C )     1,013       (C )     5,803       (C )
Other gains and (losses), net
    140,212       (C )     800       (C )     146,075       (C )     1,460       (C )
(Provision) benefit for income taxes
    (59,631 )     (C )     (10,026 )     (C )     (62,039 )     (C )     (13,016 )     (C )
Gain (loss) on discontinued operations, net
    13,226       (C )     438       (C )     16,033       (C )     9,079       (C )
 
                                                       
Net (loss) income
  $ 106,842       (C )   $ (5,161 )     (C )   $ 110,306       (C )   $ 7,998       (C )
 
                                                       
 
(A)   These amounts have not been shown as a percentage of segment revenue because the Corporate and Other segment generates only minimal revenue.
 
(B)   These amounts have not been shown as a percentage of segment revenue because the Company does not associate them with any individual segment in managing the Company.
 
(C)   These amounts have not been shown as a percentage of total revenue because they have no relationship to total revenue.

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Summary Financial Results
Results
The following table summarizes our financial results for the three and six months ended June 30, 2007 and 2006:
                                                 
    Three Months           Six Months    
    Ended June 30,           Ended June 30,    
    2007   2006   % Change   2007   2006   % Change
    (In thousands, except per share data)
Total revenues
  $ 189,381     $ 177,087       6.9 %   $ 371,739     $ 359,394       3.4 %
Total operating expenses
  $ 169,995     $ 163,346       4.1 %   $ 341,753     $ 326,062       4.8 %
Operating income (loss)
  $ 19,386     $ 13,741       41.1 %   $ 29,986     $ 33,332       -10.0 %
Net income (loss)
  $ 106,842     $ (5,161 )     2170.2 %   $ 110,306     $ 7,998       1279.2 %
 
                                               
Net income (loss) per share — fully diluted
  $ 2.52     $ (0.13 )     2038.5 %   $ 2.61     $ 0.20       1205.0 %
Total Revenues
The increase in our total revenues for the three and six months ended June 30, 2007, as compared to the three and six months ended June 30, 2006, is primarily attributable to the increase in our Hospitality segment revenues (an increase of $11.2 million for the three months, and an increase of $12.2 million for the six months, ended June 30, 2007, as compared to the same periods in 2006), described more fully below.
Total Operating Expenses
The increase in our total operating expenses for the three and six months ended June 30, 2007, as compared to the three and six months ended June 30, 2006, is primarily due to increased Hospitality segment operating expenses associated with increased Hospitality segment revenues (excluding preopening costs, total Hospitality operating expenses increased $4.1 million for the three months, and $12.0 million for the six months, ended June 30, 2007 as compared to the same periods in 2006), described more fully below.
Operating Income
Three Months Ended June 30, 2007. Our operating income for the three months ended June 30, 2007 was $5.7 million higher than our operating income for the same period in 2006 due primarily to the increase in our Hospitality segment operating income, as described more fully below. Our operating income for the three months ended June 30, 2007 (as compared to the same period in 2006) was also impacted by increases in our Opry and Attractions segment operating income and preopening costs, each as described more fully below.
Six Months Ended June 30, 2007. The $3.3 million decrease in our operating income for the six months ended June 30, 2007, as compared to the same period in 2006, was due to a combination of stable Hospitality segment operating income and a $3.6 million increase in preopening costs, each as described more fully below. A $1.9 million increase in our Opry and Attractions segment operating income, also as described more fully below, served to offset the size of the reduction in our operating income.

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Net Income
Our net income for the three and six months ended June 30, 2007 (as compared to the same periods in 2006) was impacted by our operating income for the periods described above, as well as the following:
    An increase in our other gains and losses of $139.4 million for the three months, and $144.6 million for the six months, ended June 30, 2007 as compared to the same periods in 2006 due primarily to a $140.3 million pre-tax gain on the sale of our investment in Bass Pro, which served to increase our net income.
 
    An increase in our provision for income taxes of $49.6 million for the three months, and $49.0 million for the six months, ended June 30, 2007 as compared to the same periods in 2006 due to increased pre-tax income and other factors, described more fully below, which served to decrease our net income.
 
    An increase in our gain from discontinued operations of $12.8 million for the three months, and $7.0 million for the six months, ended June 30, 2007 as compared to the same periods in 2006 due primarily to the gain on the sale of our ResortQuest business (including the related tax benefit) and the results of our ResortQuest business prior to its sale, described more fully below, which served to increase our net income.
 
    A decrease in our interest expense, net of amounts capitalized, of $4.6 million for the three months, and $3.9 million for the six months, ended June 30, 2007 as compared to the same periods in 2006, described more fully below, which served to increase our net income.
Factors and Trends Contributing to Operating Performance
The most important factors and trends contributing to our operating performance during the periods described herein have been:
    The increased Hospitality segment revenues for the three and six months ended June 30, 2007 primarily resulting from relatively stable system-wide occupancy rates and improved average daily rate for these periods. This was a result of high-paying group business at each property, as discussed more fully below.
 
    Increased levels of food and beverage, banquet and catering revenues at our hotels for the three and six months ended June 30, 2007, which increased Total RevPAR at our hotels and supplemented the impact of improved ADR and RevPAR of the Hospitality segment during these periods. This was a result of increased spending by groups, as discussed more fully below.
Recently Adopted Accounting Standards
We adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”), as of January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. Results for prior periods have not been restated. As a result of adopting FIN 48, we recognized a net increase of $0.04 million in the liability for unrecognized tax benefits, which was accounted for as a decrease to the January 1, 2007 balance of retained earnings. As of January 1, 2007, we had $7.2 million of unrecognized tax benefits, of which none would affect our effective tax rate if recognized. As of June 30, 2007, we had $6.6 million of unrecognized tax benefits. The adoption of FIN 48 had no impact on our net income or earnings per share.

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Operating Results – Detailed Segment Financial Information
Hospitality Business Segment
Total Segment Results. The following table presents the financial results of our Hospitality segment for the three and six months ended June 30, 2007 and 2006:
                                                 
    Three Months             Six Months        
    Ended June 30,             Ended June 30,        
    2007     2006     % Change     2007     2006     % Change  
    (In thousands, except percentages and performance metrics)  
Hospitality revenue(1)
  $ 168,408     $ 157,189       7.1 %   $ 334,869     $ 322,653       3.8 %
Hospitality operating expenses:
                                               
Operating costs
    95,138       91,121       4.4 %     190,729       183,998       3.7 %
Selling, general and administrative
    23,685       23,870       -0.8 %     50,568       45,866       10.3 %
Depreciation and amortization
    16,262       16,026       1.5 %     32,687       32,166       1.6 %
 
                                       
Total Hospitality operating expenses
    135,085       131,017       3.1 %     273,984       262,030       4.6 %
 
                                       
Hospitality operating income (2)
  $ 33,323     $ 26,172       27.3 %   $ 60,885     $ 60,623       0.4 %
 
                                       
Hospitality performance metrics:
                                               
Occupancy(3)
    80.1 %     77.7 %     3.1 %     78.7 %     78.8 %     -0.1 %
ADR
  $ 162.49     $ 153.89       5.6 %   $ 165.01     $ 157.11       5.0 %
RevPAR(4)
  $ 130.18     $ 119.63       8.8 %   $ 129.91     $ 123.83       4.9 %
Total RevPAR(5)
  $ 310.36     $ 283.22       9.6 %   $ 309.10     $ 292.53       5.7 %
Net Definite Room
                                               
Nights Booked(6)
    514,000       455,000       13.0 %     871,000       706,000       23.4 %
 
(1)   Hospitality results and performance metrics include the results of our Radisson Hotel at Opryland.
 
(2)   Hospitality operating income does not include the effect of preopening costs. The discussion of pre-opening costs is set forth below.
 
(3)   Excludes 12,574 and 182 room nights that were taken out of service during the three months, and 20,907 and 1,313 room nights that were taken out of service during the six months, ended June 30, 2007 and 2006, respectively, as a result of a continued multi-year rooms renovation program at Gaylord Opryland.
 
(4)   We calculate Hospitality RevPAR by dividing room sales by room nights available to guests for the period. Hospitality RevPAR is not comparable to similarly titled measures such as revenues.
 
(5)   We calculate Hospitality Total RevPAR by dividing the sum of room sales, food and beverage, and other ancillary services (which equals Hospitality segment revenue) by room nights available to guests for the period. Hospitality Total RevPAR is not comparable to similarly titled measures such as revenues.
 
(6)   Net Definite Room Nights Booked included 100,000 and 74,000 room nights for the three months ended June 30, 2007 and 2006, respectively, and included 137,000 and 99,000 room nights for the six months ended June 30, 2007 and 2006, respectively, related to the Gaylord National.
Three Months Ended June 30, 2007. The increase in total Hospitality segment revenue in the three months ended June 30, 2007, as compared to the same periods in 2006, is due to improved system-wide occupancy (driven primarily by occupancy rate increases at Gaylord Opryland and Gaylord Texan), an increased average daily rate at each hotel and improved food and beverage and other ancillary revenues at each hotel, each as described more fully below.

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Hospitality segment operating expenses consist of direct operating costs, selling, general and administrative expenses, and depreciation and amortization expense. The increase in Hospitality segment operating expenses in the three months ended June 30, 2007, as compared to the same period in 2006, is due to increased Hospitality segment operating costs, described below.
Hospitality segment operating costs, which consist of direct costs associated with the daily operations of our hotels (primarily room, food and beverage and convention costs), increased in the three months ended June 30, 2007, as compared to the same period in 2006, due to the operating cost increases at each hotel described below.
Hospitality segment selling, general and administrative expenses, consisting of administrative and overhead costs, and Hospitality segment depreciation and amortization expense, remained relatively stable in the three months ended June 30, 2007, as compared to the same period in 2006.
Six Months Ended June 30, 2007. The increase in total Hospitality segment revenue in the six months ended June 30, 2007, as compared to the same periods in 2006, is due to a combination of relatively stable system-wide occupancy, an increased average daily rate at each hotel and improved food and beverage and other ancillary revenues at each hotel, described below.
The increase in Hospitality segment operating expenses in the six months ended June 30, 2007, as compared to the same period in 2006, is due to increased Hospitality segment operating costs and selling, general and administrative expenses, each as described below.
Hospitality segment operating costs, increased in the six months ended June 30, 2007, as compared to the same period in 2006, due to the operating cost increases at each hotel described below.
Hospitality segment selling, general and administrative expenses increased in the six months ended June 30, 2007, as compared to the same period in 2006, primarily due to increases at Gaylord Opryland and Gaylord Texan, each as discussed below.
Hospitality segment depreciation and amortization expense remained stable in the six months ended June 30, 2007, as compared to the same period in 2006.

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Property-Level Results. The following presents the property-level financial results for Gaylord Opryland, Gaylord Palms and Gaylord Texan for the three and six months ended June 30, 2007 and 2006.
Gaylord Opryland Results. The results of Gaylord Opryland for the three and six months ended June 30, 2007 and 2006 are as follows:
                                                 
    Three Months           Six Months    
    Ended June 30,           Ended June 30,    
    2007   2006   % Change   2007   2006   % Change
    (In thousands, except percentages and performance metrics)
Total revenues
  $ 71,371     $ 66,875       6.7 %   $ 134,726     $ 132,632       1.6 %
Operating expense data:
                                               
Operating costs
  $ 41,032     $ 39,451       4.0 %   $ 80,587     $ 79,329       1.6 %
Selling, general and administrative
  $ 9,251     $ 9,395       -1.5 %   $ 21,196     $ 18,100       17.1 %
Hospitality performance metrics:
                                               
Occupancy
    84.7 %     78.9 %     7.4 %     79.5 %     78.2 %     1.7 %
ADR
  $ 153.04     $ 143.52       6.6 %   $ 150.30     $ 143.16       5.0 %
RevPAR
  $ 129.69     $ 113.28       14.5 %   $ 119.42     $ 112.02       6.6 %
Total RevPAR
  $ 285.95     $ 255.26       12.0 %   $ 269.15     $ 254.99       5.6 %
The increase in Gaylord Opryland revenue and RevPAR in the three months ended June 30, 2007, as compared to the same period in 2006, is due to a combination of increased occupancy rates and ADR for the period, as the hotel experienced an increase in group business as well as an increase in the nightly rate paid by guests attending group meetings. Continued increases in the hotel’s food and beverage and other ancillary revenue due to higher group spending increased Total RevPAR.
The increase in Gaylord Opryland revenue, RevPAR, and Total RevPAR in the six months ended June 30, 2007, as compared to the same period in 2006, is due to a combination of slightly increased occupancy rates and ADR for the period, primarily attributable to higher nightly rates paid by guests attending group meetings, as well as cancellation and attrition fees received in the first quarter of 2007.
The increase in operating costs at Gaylord Opryland in the three and six months ended June 30, 2007, as compared to the same periods in 2006, was due to increased variable costs, such as labor expense, associated with the higher occupancy levels at the hotel, as well as increased cost of sales associated with the food and beverage, catering and other ancillary services revenues.
Selling, general and administrative expenses at Gaylord Opryland in the three months ended June 30, 2007, remained relatively stable as compared to the same period in 2006. A $2.9 million charge incurred in the first quarter of 2007 in connection with the early termination of the lease held by the third-party operator of the Gaylord Opryland food court, which is being renovated and remodeled as part of Gaylord Opryland’s food and beverage outlet improvement program, increased Gaylord Opryland’s selling, general and administrative expenses for the six months ended June 30, 2007.
The hotel’s results were impacted by the hotel’s multi-year room refurbishment program, as 12,574 and 182 room nights were taken out of service during the three months, and 20,907 and 1,313 room nights were taken out of service during the six months ended June 30, 2007 and 2006, respectively.

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          Gaylord Palms Results. The results of Gaylord Palms for the three and six months ended June 30, 2007 and 2006 are as follows:
                                                 
    Three Months           Six Months    
    Ended June 30,           Ended June 30,    
    2007   2006   % Change   2007   2006   % Change
    (In thousands, except percentages and performance metrics)
Total revenues
  $ 46,134     $ 45,077       2.3 %   $ 98,698     $ 95,893       2.9 %
Operating expense data:
                                               
Operating costs
  $ 25,811     $ 24,115       7.0 %   $ 52,927     $ 49,983       5.9 %
Selling, general and administrative
  $ 7,764     $ 8,175       -5.0 %   $ 15,943     $ 15,975       -0.2 %
Hospitality performance metrics:
                                               
Occupancy
    78.4 %     83.8 %     -6.4 %     81.1 %     84.4 %     -3.9 %
ADR
  $ 180.08     $ 175.53       2.6 %   $ 194.32     $ 184.32       5.4 %
RevPAR
  $ 141.23     $ 147.10       -4.0 %   $ 157.57     $ 155.62       1.3 %
Total RevPAR
  $ 360.58     $ 352.32       2.3 %   $ 387.83     $ 376.81       2.9 %
The increase in Gaylord Palms revenue and Total RevPAR for the three months ended June 30, 2007, as compared to the same period in 2006, was due to an increase in banquet revenue for the period, as group customers in 2007 held more banquet functions as compared to the 2006 quarter. A decrease in rooms revenue caused by lower occupancy rates served to partially offset the impact of the increased banquet revenues.
The increase in Gaylord Palms revenue for the six months ended June 30, 2007, as compared to the same period in 2006, was due to an increase in banquet revenue resulting from an increased number of banquet functions in the period, as compared to the prior year, as well as an increase in room revenue resulting from increased nightly room rates, partially offset by lower occupancy rates, as compared to the prior year.
Operating costs for the three and six months ended June 30, 2007, as compared to the same periods in 2006, increased due to higher variable costs, such as labor and cost of goods sold, associated with the increased number of banquet functions during the period, as well as higher property tax expense and increased levels of commission-based group meeting business.
Selling, general and administrative expense for the three and six months ended June 30, 2007, remained relatively stable as compared to the same periods in 2006.

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          Gaylord Texan Results. The results of the Gaylord Texan for the three and six months ended June 30, 2007 and 2006 are as follows:
                                                 
    Three Months           Six Months    
    Ended June 30,           Ended June 30,    
    2007   2006   % Change   2007   2006   % Change
    (In thousands, except percentages and performance metrics)
Total revenues
  $ 48,433     $ 42,883       12.9 %   $ 97,018     $ 89,769       8.1 %
Operating expense data:
                                               
Operating costs
  $ 27,191     $ 26,353       3.2 %   $ 55,061     $ 52,380       5.1 %
Selling, general and administrative
  $ 6,094     $ 5,842       4.3 %   $ 12,368     $ 10,921       13.2 %
Hospitality performance metrics:
                                               
Occupancy
    73.4 %     70.0 %     4.9 %     77.0 %     75.7 %     1.7 %
ADR
  $ 178.82     $ 166.05       7.7 %   $ 176.29     $ 169.34       4.1 %
RevPAR
  $ 131.29     $ 116.18       13.0 %   $ 135.68     $ 128.16       5.9 %
Total RevPAR
  $ 352.24     $ 311.88       12.9 %   $ 354.74     $ 328.23       8.1 %
Gaylord Texan revenue and RevPAR for the three months ended June 30, 2007, as compared to the same period in 2006, increased due to increased rooms revenue caused by a combination of increased occupancy and higher room rates paid by both transient and group meeting guests. An increase in food and beverage and other ancillary revenues, attributable to the new Glass Cactus entertainment venue and the increased hotel occupancy, also contributed to the increase in revenues and Total RevPAR for the period.
The increase in Gaylord Texan revenue for the six months ended June 30, 2007, as compared to the same period in 2006, was due to increased rooms revenue caused by a combination of increased group occupancy and higher room rates paid by group meeting guests. An increase in food and beverage and other ancillary revenues, attributable to the new Glass Cactus entertainment venue and the increased hotel occupancy, as well as increased parking and transportation revenues, also contributed to the increase in revenues and Total RevPAR for the period.
Operating costs for the three and six months ended June 30, 2007, as compared to the same period in 2006, increased due to increases in variable expenses, such as labor and cost of goods sold, associated with the increased rooms, food and beverage and other ancillary revenues. The addition of expenses associated with the Glass Cactus entertainment venue also served to increase operating costs in 2007, as compared to the prior periods in 2006.
Selling, general and administrative expenses for the three months ended June 30, 2007, as compared to the same period in 2006, remained relatively stable. Selling, general and administrative expenses for the six months ended June 30, 2007, as compared to the same period in 2006, increased due to increased sales and marketing expense as well as increased professional service fees.

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Opry and Attractions Segment
          The following presents the financial results of our Opry and Attractions segment for the three and six months ended June 30, 2007 and 2006:
                                                 
    Three Months             Six Months        
    Ended June 30,             Ended June 30,        
    2007     2006     % Change     2007     2006     % Change  
    (In thousands, except percentages)  
Total revenues
  $ 20,922     $ 19,819       5.6 %   $ 36,764     $ 36,584       0.5 %
Operating expense data:
                                               
Operating costs
    11,560       12,053       -4.1 %     22,222       24,340       -8.7 %
Selling, general and administrative
    4,794       4,773       0.4 %     9,424       9,208       2.3 %
Depreciation and amortization
    1,424       1,437       -0.9 %     2,980       2,851       4.5 %
 
                                       
Operating income (loss)
  $ 3,144     $ 1,556       102.1 %   $ 2,138     $ 185       1055.7 %
 
                                       
The increase in revenues in the Opry and Attractions segment for the three and six months ended June 30, 2007, as compared to the same periods in 2006, is primarily due to increased revenues at the Grand Ole Opry and our other attractions, which was partially offset by lower revenue at our Corporate Magic event planning business as a result of certain significant non-recurring events held by Corporate Magic clients during the 2006 periods.
The decrease in Opry and Attractions operating costs in the three and six months ended June 30, 2007, as compared to the same periods in 2006, is due primarily to lower production costs at our Corporate Magic event planning business as a result of certain significant non-recurring events held by Corporate Magic clients during the 2006 periods, partially offset by increased variable expenses associated with the increased revenues at the Grand Ole Opry and our other attractions described above. Opry and Attractions selling, general and administrative expenses in the three months and six months ended June 30, 2007, as compared to the same periods in 2006, remained stable.
Corporate and Other Business Segment
          The following presents the financial results of our Corporate and Other segment for the three and six months ended June 30, 2007 and 2006:
                                                 
    Three Months             Six Months        
    Ended June 30,             Ended June 30,        
    2007     2006     % Change     2007     2006     % Change  
    (In thousands, except percentages)  
Total revenues
  $ 51     $ 79       -35.4 %   $ 106     $ 157       -32.5 %
Operating expense data:
                                               
Operating costs
    2,073       2,252       -7.9 %     4,373       4,537       -3.6 %
Selling, general and administrative
    10,212       9,226       10.7 %     19,499       18,432       5.8 %
Depreciation and amortization
    1,617       1,085       49.0 %     3,096       2,099       47.5 %
 
                                       
Operating income (loss)
  $ (13,851 )   $ (12,484 )     -11.0 %   $ (26,862 )   $ (24,911 )     -7.8 %
 
                                       

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Corporate and Other segment revenue consists of rental income and corporate sponsorships.
Corporate and Other operating expenses are comprised of operating costs, selling, general and administrative expenses and depreciation and amortization expense. Corporate and Other operating costs, which consist primarily of costs associated with information technology, decreased slightly in the three and six months ended June 30, 2007 as compared to the same periods in 2006, due to a reduction in consulting costs. Corporate and Other selling, general and administrative expenses, which consist of senior management salaries and benefits, legal, human resources, accounting, pension and other administrative costs, increased in the three and six months ended June 30, 2007, as compared to the same periods in 2006, due mainly to higher employment expenses associated with an increase in headcount. Corporate and Other depreciation and amortization expense, which is primarily related to information technology equipment and capitalized electronic data processing software costs, increased in the three and six months ended June 30, 2007, as compared to the same periods in 2006, due to the purchase of a new corporate aircraft and additional information technology equipment and software.
Operating Results — Preopening costs
In accordance with AICPA SOP 98-5, “Reporting on the Costs of Start-Up Activities”, we expense the costs associated with start-up activities and organization costs as incurred. Preopening costs increased by $1.7 million to $3.2 million in the three months ended June 30, 2007 (as compared to $1.5 million in the three months ended June 30, 2006). Preopening costs increased by $3.6 million to $6.2 million in the six months ended June 30, 2007 (as compared to $2.6 million in the six months ended June 30, 2006). These costs were related to the construction of the Gaylord National.
Non-Operating Results Affecting Net Income
General
The following table summarizes the other factors which affected our net income for the three and six months ended June 30, 2007 and 2006:
                                                 
    Three Months           Six Months    
    Ended June 30,           Ended June 30,    
    2007   2006   % Change   2007   2006   % Change
    (In thousands, except percentages)
Interest expense, net of amounts capitalized
  $ (13,611 )   $ (18,191 )     25.2 %   $ (32,388 )   $ (36,325 )     10.8 %
Interest income
  $ 1,630     $ 489       233.3 %   $ 2,147     $ 967       122.0 %
Unrealized gain on Viacom stock and CBS stock and derivatives, net
  $ 2,699     $ 4,541       -40.6 %   $ 9,479     $ 6,698       41.5 %
Income from unconsolidated companies
  $ 2,931     $ 3,047       -3.8 %   $ 1,013     $ 5,803       -82.5 %
Other gains and losses, net
  $ 140,212     $ 800       17426.5 %   $ 146,075     $ 1,460       9905.1 %
Provision for income taxes
  $ 59,631     $ 10,026       494.8 %   $ 62,039     $ 13,016       376.6 %
Gain from discontinued operations, net of taxes
  $ 13,226     $ 438       2919.6 %   $ 16,033     $ 9,079       76.6 %

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Interest Expense, Net of Amounts Capitalized
Interest expense, net of amounts capitalized, decreased during the three months ended June 30, 2007, as compared to the same period in 2006, due primarily to a $6.5 million increase in capitalized interest and the maturity of the secured forward exchange contract, which is further described below, the effects of which were partially offset by the impact of higher average debt balances during 2007. Capitalized interest increased from $2.0 million during the three months ended June 30, 2006 to $8.6 million during the three months ended June 30, 2007 due to the construction of the Gaylord National. Interest expense, net of amounts capitalized, decreased during the six months ended June 30, 2007, as compared to the same period in 2006, due primarily to a $10.8 million increase in capitalized interest and the maturity of the secured forward exchange contract, which is further described below, the effects of which were partially offset by the impact of higher average debt balances during 2007 and the writeoff of $1.2 million in deferred financing costs in connection with the refinancing of our $600.0 million credit facility to increase the total capacity under that credit facility to $1.0 billion. Capitalized interest increased from $3.5 million during the six months ended June 30, 2006 to $14.3 million during the six months ended June 30, 2007 due to the construction of the Gaylord National. Our weighted average interest rate on our borrowings, including the interest expense associated with the secured forward exchange contract related to our Viacom stock and CBS stock investment and excluding the write-off of deferred financing costs during the period, was 7.0% and 6.5% for the three months ended June 30, 2007 and 2006, respectively, and was 6.8% and 6.5% for the six months ended June 30, 2007 and 2006, respectively. As further discussed in Note 8 to our condensed consolidated financial statements for the three and six months ended June 30, 2007 and 2006 included herewith, the secured forward exchange contract related to our Viacom stock and CBS stock investment resulted in non-cash interest expense of $3.8 million and $6.7 million for the three months ended June 30, 2007 and 2006, respectively, and $10.5 million and $13.3 million for the six months ended June 30, 2007 and 2006, respectively.
Interest Income
The increase in interest income during the three and six months ended June 30, 2007, as compared to the same periods in 2006, is due to higher cash balances invested in interest-bearing accounts in 2007 and increased short-term interest rates.
Unrealized Gain on Viacom Stock and CBS Stock and Derivatives, Net
In 2000 we entered into a seven-year secured forward exchange contract with an affiliate of Credit Suisse First Boston with respect to 10,937,900 shares of Viacom, Inc. Class B common stock. Effective January 1, 2001, we adopted the provisions of SFAS No. 133, as amended. Components of the secured forward exchange contract are considered derivatives as defined by SFAS No. 133.
Effective January 3, 2006, Viacom, Inc. completed a transaction to separate Viacom, Inc. into two publicly traded companies named Viacom, Inc. and CBS Corporation by converting (i) each outstanding share of Viacom, Inc. Class A common stock into 0.5 shares of Viacom, Inc. Class A common stock and 0.5 shares of CBS Corporation Class A common stock and (ii) each outstanding share of Viacom, Inc. Class B common stock into 0.5 shares of Viacom, Inc. Class B common stock and 0.5 shares of CBS Corporation Class B common stock. As a result of this transaction, the Company exchanged its 10,937,900 shares of Viacom, Inc. Class B common stock for 5,468,950 shares of Viacom, Inc. Class B common stock and 5,468,950 shares of CBS Corporation Class B common stock effective January 3, 2006.
In May 2007, the secured forward exchange contract 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 secured forward exchange contract were removed from the consolidated balance sheet as of June 30, 2007.

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For the three months ended June 30, 2007, we recorded a net pretax gain of $9.1 million related to the increase in fair value of the Viacom stock and CBS stock. For the three months ended June 30, 2007, we recorded a net pretax loss of $6.4 million related to the decrease in fair value of the derivatives associated with the secured forward exchange contract. This resulted in a net pretax gain of $2.7 million relating to the unrealized gain (loss) on Viacom stock and CBS stock and derivatives, net, for the three months ended June 30, 2007.
For the six months ended June 30, 2007, we recorded a net pretax gain of $6.4 million related to the increase in fair value of the Viacom stock and CBS stock. For the six months ended June 30, 2007, we recorded a net pretax gain of $3.1 million related to the increase in fair value of the derivatives associated with the secured forward exchange contract. This resulted in a net pretax gain of $9.5 million relating to the unrealized gain (loss) on Viacom stock and CBS stock and derivatives, net, for the six months ended June 30, 2007.
Income from Unconsolidated Companies
We account for our investments in Bass Pro, RHAC Holdings, LLC (the joint venture entity which owns the Aston Waikiki Beach Hotel) and Waipouli Holdings, LLC (the joint venture entity which owns the ResortQuest Kauai Beach at Makaiwa Hotel) under the equity method of accounting. Income from unconsolidated companies for the three months and six months ended June 30, 2007 and 2006 consisted of equity method income from these investments as follows:
                                                 
    Three Months             Six Months        
    Ended June 30,             Ended June 30,        
    2007     2006     % Change     2006     2005     % Change  
    (In thousands, except percentages)  
Bass Pro
  $ 3,069     $ 3,203       -4.2 %   $ 1,693     $ 5,805       -70.8 %
RHAC Holdings, LLC
    205       (148 )     100.0 %     (4 )     6       100.0 %
Waipouli Holdings, LLC
    (343 )     (8 )     100.0 %     (676 )     (8 )     100.0 %
 
                                       
Total:
  $ 2,931     $ 3,047       -3.8 %   $ 1,013     $ 5,803       -82.5 %
 
                                       
Bass Pro. Prior to May 31, 2007, we owned 13.0% of Bass Pro, the owner of the Bass Pro Inc., Tracker Marine Boats and Big Cedar Lodge businesses. On May 31, 2007, we completed the sale of all of our ownership interest in Bass Pro (consisting of 43,333 common units) to Bass Pro for a purchase price of $222.0 million in cash. We recognized a pre-tax gain of $140.3 million from the sale of our interest in Bass Pro, which is recorded in other gains and losses as more fully described below. We recorded equity method income from our investment in Bass Pro prior to the date of sale as shown above. Net proceeds from the sale of $221.5 million were used to reduce our outstanding indebtedness. Our Chief Executive Officer formerly served as a member of the board of managers of Bass Pro Group but resigned upon consummation of the sale.
RHAC Holdings, LLC (ResortQuest Waikiki Beach Hotel). On May 31, 2005, we, through a wholly-owned subsidiary, RHAC, LLC, entered into an agreement to purchase the 716-room Aston Waikiki Beach Hotel and related assets located in Honolulu, Hawaii (the “Waikiki Hotel”) for an aggregate purchase price of $107.0 million. Simultaneously with this purchase, G.O. IB-SIV US, a private real estate fund managed by DB Real Estate Opportunities Group (“IB-SIV”), acquired an 80.1% ownership interest in the parent company of RHAC, LLC, RHAC Holdings, LLC, in exchange for its capital contribution of $19.1 million to RHAC Holdings, LLC. As a part of this transaction, we entered into a joint venture arrangement with IB-SIV and retained a 19.9% ownership interest in RHAC Holdings, LLC in exchange for our $4.7 million capital contribution to RHAC Holdings, LLC. RHAC, LLC financed the purchase of the Waikiki Hotel by entering into a series of loan transactions with Greenwich Capital Financial Products, Inc. consisting of a $70.0 million loan secured by the Waikiki Hotel and a $16.3 million mezzanine loan secured by the ownership interest of RHAC,

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LLC. IB-SIV is the managing member of RHAC Holdings, LLC, but certain actions of RHAC Holdings, LLC initiated by IB-SIV require our approval as a member. In addition, under the joint venture arrangement, ResortQuest Hawaii (which we formerly owned) manages the hotel under a 20-year hotel management agreement from RHAC, LLC and ResortQuest Hawaii is responsible for the day-to-day operations of the Waikiki Hotel in accordance with RHAC, LLC’s business plan. We account for our investment in RHAC Holdings, LLC under the equity method of accounting.
Subsequent to its purchase by RHAC, LLC, the Waikiki Hotel was renamed the ResortQuest Waikiki Beach Hotel. During December 2005, RHAC, LLC sold the Mauka Tower, a 72-room hotel adjacent to the Waikiki Hotel. The Company received a cash distribution of $2.3 million from RHAC Holdings, LLC for its share of the proceeds from the sale. On September 29, 2006, RHAC, LLC refinanced the Waikiki Hotel loans with Greenwich Capital Financial Products, Inc., which resulted in the mezzanine loan increasing from $16.3 million to $34.9 million. RHAC, LLC used the proceeds from this refinancing primarily to fund a renovation project at the Waikiki Hotel.
      Waipouli Holdings, LLC (ResortQuest Kauai Beach at Makaiwa Hotel). On June 20, 2006, we entered into a joint venture with RREEF Global Opportunities Fund II, LLC, a private real estate fund managed by DB Real Estate Opportunities Group (“RREEF”), and acquired a 19.9% ownership interest in the joint venture, Waipouli Holdings, LLC, in exchange for our capital contribution of $3.8 million to Waipouli Holdings, LLC. On June 20, 2006, through a wholly-owned subsidiary named Waipouli Owner, LLC, Waipouli Holdings, LLC acquired the 311-room ResortQuest Kauai Beach at Makaiwa Hotel and related assets located in Kapaa, Hawaii (the “Kauai Hotel”) for an aggregate purchase price of $70.8 million. Waipouli Owner, LLC financed the purchase of the Kauai Hotel by entering into a series of loan transactions with Morgan Stanley Mortgage Capital, Inc. consisting of a $52.0 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. RREEF is the managing member of Waipouli Holdings, LLC, but certain actions initiated by RREEF require our approval as a member. In addition, under the joint venture arrangement, ResortQuest Hawaii (which we formerly owned) manages the hotel under a five-year hotel management agreement from Waipouli Owner, LLC and ResortQuest Hawaii is responsible for the day-to-day operations of the Kauai Hotel in accordance with Waipouli Owner, LLC’s business plan. We account for our investment in RHAC Holdings, LLC under the equity method of accounting.
In October 2006, Waipouli Owner, LLC requested RREEF and us to make an additional capital contribution of $1.7 million to Waipouli Holdings, LLC to fund the purchase of the land on which the Kauai Hotel is built. We elected not to make the requested capital contribution, which diluted our ownership interest in Waipouli Holdings, LLC from 19.9% to 18.1%.
Other Gains and (Losses)
Our other gains and (losses) for the three months ended June 30, 2007 primarily consisted of a $140.3 million gain on the sale of our interest in Bass Pro, which is further described above. Our other gains and (losses) for the six months ended June 30, 2007 primarily consisted of a $140.3 million gain on the sale of our interest in Bass Pro, a $1.2 million dividend distribution related to our investment in CBS stock, and a $4.4 million gain on the sale of the previously utilized corporate aircraft.
Our other gains and (losses) for the three months and six months ended June 30, 2006 primarily consisted of the receipt of dividend distributions related to our investment in CBS stock, a loss on the retirement of certain fixed assets and other miscellaneous income and expenses.

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Provision for Income Taxes
The effective tax rate as applied to pretax income from continuing operations differed from the statutory federal rate due to the following (as of June 30):
                                 
    Three Months   Six Months
    Ended June   Ended June
    30,   30,
    2007   2006   2007   2006
U.S. federal statutory rate
    35 %     35 %     35 %     35 %
State taxes (net of federal tax benefit and change in valuation allowance)
    1       1       1       (1 )
Adjustment to deferred tax liabilities due to state tax rate adjustment
    (3 )     0       (3 )     9  
Other
    6       190       7       66  
     
Effective tax rate
    39 %     226 %     40 %     109 %
     
Our effective tax rate for the three and six months ended June 30, 2007 decreased as compared to our effective tax rate for the three and six months ended June 30, 2006 due primarily to the impact of permanent differences relative to pre-tax income for each of the respective periods. The amount designated as Other for the three and six months ended June 30, 2006 in the table above is a result of a change in the annualized effective tax rate and its corresponding year to date effect coupled with the tax effect of interest charged to ResortQuest International, Inc. during the respective periods.
Gain from Discontinued Operations, Net of Income Taxes
We reflected the following businesses as discontinued operations in our financial results for the three and six months ended June 30, 2007 and 2006, consistent with the provisions of SFAS No. 144. The results of operations, net of taxes (prior to their disposal where applicable), and the estimated fair value of the assets and liabilities of these businesses have been reflected in our consolidated financial statements as discontinued operations in accordance with SFAS No. 144 for all periods presented.
ResortQuest. During the third quarter of 2005, we committed to a plan of disposal of certain markets of our ResortQuest business that were considered to be inconsistent with our long term growth strategy. In connection with this plan of disposal, we recorded pre-tax restructuring charges of ($25,000) and $44,000 during the three months and six months ended June 30, 2006, respectively, related to employee severance benefits in the discontinued markets. We completed the sale of four of these markets in the fourth quarter of 2005, two of these markets in the first quarter of 2006, and the remaining two markets in the second quarter of 2006.
During the second quarter of 2006, we completed the sale of one additional market of our ResortQuest business that was not included in the plan of disposal described above, but was later determined to be inconsistent with our long term growth strategy. We did not record any restructuring charges in connection with the sale of this market.
During the second quarter of 2007, we committed to a plan of disposal of the remainder of our 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. We retained our 19.9% ownership interest in RHAC Holdings, LLC and our 18.1% ownership interest in Waipouli Holdings LLC, which ownership interests were excluded from this transaction. We recognized a pretax gain of

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$50.4 million in discontinued operations in the accompanying condensed consolidated statements of operations for the three months and six months ended June 30, 2007 related to the sale of ResortQuest Hawaii. In connection with the sale of ResortQuest Hawaii, we recorded pre-tax restructuring charges for employee severance benefits of $0.4 million for the three months and six months ended June 30, 2007, all of which was included in the pre-tax gain on the sale of ResortQuest Hawaii. Net proceeds from the sale of $108.1 million were used to reduce our outstanding indebtedness.
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 purchase price was paid by the delivery of a four-year promissory note in the principal amount of $8.0 million bearing interest at the annual rate of 10%, and the balance of the purchase price was paid in cash at closing. We recognized a pretax loss of $57.2 million in discontinued operations in the accompanying condensed consolidated statements of operations for the three months and six months ended June 30, 2007 related to the sale of ResortQuest Mainland. In connection with the sale of ResortQuest Mainland, we recorded pre-tax restructuring charges for employee severance benefits of $0.4 million for the three months and six months ended June 30, 2007, of which $0.3 million was included in the pretax loss on the sale of ResortQuest Mainland. Net cash proceeds from the sale of $9.0 million were used to reduce our outstanding indebtedness.

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The following table reflects the results of operations of businesses accounted for as discontinued operations for the three months and six months ended June 30, 2007 and 2006:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(in thousands)   2007     2006     2007     2006  
Revenues:
                               
ResortQuest
  $ 33,745     $ 58,458     $ 91,228     $ 119,653  
 
                       
 
                               
Operating loss:
                               
ResortQuest
  $ (3,756 )   $ (1,919 )   $ (2,022 )   $ (52 )
Other
          6             6  
Restructuring charges
    (72 )     25       (72 )     (44 )
 
                       
 
                               
Total operating loss
    (3,828 )     (1,888 )     (2,094 )     (90 )
 
                               
Interest expense
    (7 )     169       (8 )     473  
Interest income
    163       252       309       486  
 
                               
Other gains and (losses):
                               
ResortQuest
    (6,586 )     66       (6,769 )     5,274  
Other
          25             6  
 
                       
 
                               
(Loss) income before benefit for income taxes
    (10,258 )     (1,376 )     (8,562 )     6,149  
 
                               
Benefit for income taxes
    (23,484 )     (1,814 )     (24,595 )     (2,930 )
 
                       
 
                               
Gain from discontinued operations
  $ 13,226     $ 438     $ 16,033     $ 9,079  
 
                       
Included in other gains and (losses) in the three months and six months ended June 30, 2007 is a pre-tax gain of $50.4 million on the sale of ResortQuest Hawaii and a pre-tax loss of $57.2 million on the sale of ResortQuest Mainland. Included in other gains and (losses) in the three months ended June 30, 2006 is a pre-tax gain of $0.3 million on the sale of certain ResortQuest markets. Included in other gains and (losses) in the six months ended June 30, 2006 is a pre-tax loss of $17,000 on the sale of certain ResortQuest markets, as well as a $5.4 million gain on the collection of a note receivable by ResortQuest that was previously considered uncollectible. The remaining gains and (losses) in the three months and six months ended June 30, 2007 and 2006 are primarily comprised of gains and losses on the sale of fixed assets and other assets. The benefit for income taxes for the three months and six months ended June 30, 2007 primarily relates to a permanent tax benefit recognized on the sale of ResortQuest Hawaii and ResortQuest Mainland. The benefit for income taxes for the three months and six months ended June 30, 2006 primarily results from settling certain ResortQuest issues with the Internal Revenue Service related to periods prior to the acquisition of ResortQuest, as well as the writeoff of taxable goodwill associated with the certain ResortQuest markets sold in these periods.

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Liquidity and Capital Resources
Cash Flows –Summary
Our cash flows consisted of the following during the six months ended June 30:
                 
    2007   2006
Operating Cash Flows:
               
Net cash flows provided by operating activities — continuing operations
  $ 20,298     $ 40,872  
Net cash flows provided by operating activities — discontinued operations
    21,613       38,117  
       
Net cash flows provided by operating activities
    41,911       78,989  
       
 
               
Investing Cash Flows:
               
Purchases of property and equipment
    (281,462 )     (98,861 )
Investments in unconsolidated companies
    (231 )     (4,817 )
Proceeds from sale of investment in Bass Pro
    221,527        
Proceeds from sales of assets
    5,035       61  
Other
    (708 )     (1,894 )
       
Net cash flows used in investing activities — continuing operations
    (55,839 )     (105,511 )
Net cash flows provided by (used in) investing activities — discontinued operations
    115,284       (9,722 )
       
Net cash flows provided by (used in) investing activities
    59,445       (115,233 )
       
 
               
Financing Cash Flows:
               
(Repayments) borrowings under credit facility
    (60,000 )     35,000  
Deferred financing costs paid
    (3,883 )      
Decrease (increase) in restricted cash and cash equivalents
    54       (21 )
Proceeds from exercise of stock options and purchase plans
    7,967       10,154  
Excess tax benefit from stock-based compensation
    1,444       2,414  
Other
    (592 )     (615 )
       
Net cash flows (used in) provided by financing activities — continuing operations
    (55,010 )     46,932  
Net cash flows used in financing activities — discontinued operations
    (19,365 )     (18,198 )
       
Net cash flows (used in) provided by financing activities
    (74,375 )     28,734  
       
 
               
Net change in cash and cash equivalents
  $ 26,981     $ (7,510 )
     
Cash Flows From Operating Activities. Cash flow from operating activities is the principal source of cash used to fund our operating expenses, interest payments on debt, and maintenance capital expenditures. During the six months ended June 30, 2007, our net cash flows provided by operating activities — continuing operations were $20.3 million, reflecting primarily our income from continuing operations before non-cash depreciation expense, amortization expense, income tax benefit, interest expense, gain on the Viacom stock and CBS stock and related derivatives, stock-based compensation expense, excess tax benefits from stock-based compensation, income from unconsolidated companies, and gains on the sales of our investment in Bass Pro and certain fixed assets of approximately ($56.3) million, offset by favorable changes in working capital of approximately $76.6 million. The favorable changes in working capital primarily resulted from the timing of payment of the tax liability incurred in connection with the maturity of the secured forward exchange contract and the sales of ResortQuest Hawaii, ResortQuest Mainland, and our investment in Bass Pro, as well as an increase in deferred revenues due to increased receipts of deposits on advance bookings of hotel rooms at Gaylord Opryland and Gaylord Palms. These favorable changes in working capital were partially offset by an increase in trade receivables due to a seasonal change in the timing of payments received from corporate group guests at Gaylord Opryland, Gaylord Palms, and Gaylord Texan, as well as the timing of payment of accrued interest, accrued

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property taxes, and accrued compensation and an increase in prepaid expenses due to the timing of payments made to renew our insurance contracts.
During the six months ended June 30, 2006, our net cash flows provided by operating activities — continuing operations were $40.9 million, reflecting primarily our income from continuing operations before non-cash depreciation expense, amortization expense, income tax provision, interest expense, gain on the Viacom stock and CBS stock and related derivatives, stock-based compensation expense, excess tax benefits from stock-based compensation, income from unconsolidated companies, dividends received from unconsolidated companies, and gain on sales of certain fixed assets of approximately $54.7 million, offset by unfavorable changes in working capital of approximately $13.9 million. The unfavorable changes in working capital primarily resulted from an increase in trade receivables due to a seasonal change in the timing of payments received from corporate group guests at Gaylord Opryland and Gaylord Palms, as well as the timing of payment of accrued property taxes, accrued compensation, and other accrued expenses. These favorable changes in working capital were partially offset by an increase in deferred revenues due to increased receipts of deposits on advance bookings of hotel rooms at Gaylord Opryland and Gaylord Palms.
     Cash Flows From Investing Activities. During the six months ended June 30, 2007, our primary uses of funds and investing activities were purchases of property and equipment, which totaled $281.5 million. Our capital expenditures during the six months ended June 30, 2007 included construction of $236.3 million at Gaylord National, as well as $24.1 million to refurbish guest rooms and renovate certain food and beverage outlets at Gaylord Opryland. During the six months ended June 30, 2007, we also received net cash proceeds of $221.5 million from the sale of our investment in Bass Pro and $5.0 million from the sales of certain fixed assets.
During the six months ended June 30, 2006, our primary uses of funds and investing activities were purchases of property and equipment, which totaled $98.9 million. Our capital expenditures during the six months ended June 30, 2006 included construction at Gaylord National of $67.4 million, approximately $17.4 million at the Gaylord Texan related to the construction of the new Glass Cactus entertainment complex, and approximately $6.1 million at Gaylord Opryland.
We currently project capital expenditures for the twelve months of 2007 to total approximately $609 million, which includes approximately $505 million related to the construction of the Gaylord National and approximately $64 million to refurbish guest rooms and renovate certain food and beverage outlets at Gaylord Opryland.
      Cash Flows From Financing Activities. Our cash flows from financing activities reflect primarily the issuance of debt and the repayment of long-term debt. During the six months ended June 30, 2007, our net cash flows used in financing activities were approximately $55.0 million, reflecting a $60.0 million net repayment on our $1.0 Billion Credit Facility and the payment of $3.9 million in deferred financing costs to refinance our $600.0 million credit facility, partially offset by $8.0 million in proceeds received from the exercise of stock options.
During the six months ended June 30, 2006, our net cash flows provided by financing activities – continuing operations were approximately $46.9 million, reflecting $35.0 million of borrowings under the $600.0 million credit facility and $10.2 million in proceeds received from the exercise of stock options.
Working Capital
As of June 30, 2007, we had total current assets of $154.6 million and total current liabilities of $322.6 million, which resulted in a working capital deficit of $168.0 million. A significant portion of our current liabilities consist of deferred revenues, which primarily represent deposits received on advance bookings of hotel rooms. These deferred revenue liabilities do not require future cash payments by us.

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Also, during 2007 we will be required to pay taxes on the taxable gains we recognized upon maturity of our secured forward exchange contract and on the sales of RQI and our investment in Bass Pro. Due to the net impact of these transactions and the taxable income generated by our normal operations during 2007, we expect to incur a tax liability of approximately $113.7 million after the application of federal and state net operating loss carryforwards and federal credit carryforwards. This tax liability is classified as a current liability in the accompanying condensed consolidated balance sheet as of June 30, 2007. We expect to pay $85.3 million of this liability during the third quarter of 2007 and the balance during the fourth quarter of 2007. We intend to finance the payment of this obligation through the use of internally generated funds and corporate borrowings.
We believe our current assets, cash flows from operating activities and availability under our $1.0 billion credit facility will be sufficient to repay our current liabilities as they become due.
Principal Debt Agreements
On March 23, 2007, we refinanced our credit facilities by entering into 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 amended and restated credit facility (the “$1.0 Billion Credit Facility”) represents an increase of our previous $600.0 million credit facility.
The $1.0 Billion Credit Facility consists of the following components: (a) 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 delayed draw term loan facility, which may be drawn on in one or more advances during its term. The $1.0 Billion Credit Facility also includes an accordion feature that will allow the Company to increase the $1.0 Billion Credit Facility 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 mature on March 9, 2010. At the Company’s election, the revolving loans and the term loans will bear 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. 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 is 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.
The purpose of the $1.0 Billion Credit Facility is for working capital and capital expenditures and the financing of the costs and expenses related to the continued construction of the Gaylord National hotel. Construction of the Gaylord National hotel is required to be substantially completed by October 31, 2008 (subject to customary force majeure provisions).
The $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 (in the process of being constructed) 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 60% 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 $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 $1.0 Billion Credit Facility are as follows:

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    The Company must maintain a consolidated funded indebtedness to total asset value ratio as of the end of each calendar quarter (i) following the closing date of the $1.0 Billion Credit Facility through the calendar quarter ending immediately prior to the first full quarter during which the Gaylord National hotel is substantially completed, of not more than 70% and (ii) for all calendar quarters thereafter, of not more than 65%.
 
    The Company must maintain a consolidated tangible net worth of not less than the sum of $550.0 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 of not less than 2.00 to 1.00 for all calendar quarters during the term hereof.
 
    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 interest rate equal to the then current seven year Treasury Note plus 0.25%) of not less than 1.60 to 1.00.
As of June 30, 2007, we were in compliance with all covenants. As of June 30, 2007, $115.0 million of borrowings were outstanding under our credit facility, and the lending banks had issued $13.3 million of letters of credit under the facility for us. The credit facility is cross-defaulted to our other indebtedness.
      8% Senior Notes. We have outstanding $350 million in aggregate principal amount of senior notes bearing an interest rate of 8% (the “8% Senior Notes”). We have also entered into interest rate swaps with respect to $125 million principal amount of the 8% Senior Notes which results in an effective interest rate of LIBOR plus 2.95% with respect to that portion of the notes. The 8% Senior Notes, which mature on November 15, 2013, bear interest semi- annually in cash in arrears on May 15 and November 15 of each year, starting on May 15, 2004. The 8% Senior Notes are redeemable, in whole or in part, at any time on or after November 15, 2008 at a designated redemption amount, plus accrued and unpaid interest. The 8% Senior Notes rank equally in right of payment with our other unsecured unsubordinated debt, but are effectively subordinated to all of our secured debt to the extent of the assets securing such debt. The 8% Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by generally all of our active domestic subsidiaries. In connection with the offering and subsequent registration of the 8% Senior Notes, we paid approximately $10.1 million in deferred financing costs. In addition, the 8% Senior Notes indenture contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, capital expenditures, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The 8% Senior Notes are cross-defaulted to our other indebtedness.
      6.75% Senior Notes. We also have outstanding $225 million in aggregate principal amount of senior notes bearing an interest rate of 6.75% (the “6.75% Senior Notes”). The 6.75% Senior Notes, which mature on November 15, 2014, bear interest semi-annually in cash in arrears on May 15 and November 15 of each year, starting on May 15, 2005. The 6.75% Senior Notes are redeemable, in whole or in part, at any time on or after November 15, 2009 at a designated redemption amount, plus accrued and unpaid interest. In addition, we may redeem up to 35% of the 6.75% Senior Notes before November 15, 2007 with the net cash proceeds from certain equity offerings. The 6.75% Senior Notes rank equally in right of payment with our other unsecured unsubordinated debt, but are effectively subordinated to all of our secured debt to the extent of the assets securing such debt. The 6.75% Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by generally all of our active domestic subsidiaries. In connection with the offering of

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the 6.75% Senior Notes, we paid approximately $4.2 million in deferred financing costs. In addition, the 6.75% Senior Notes indenture contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, capital expenditures, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The 6.75% Senior Notes are cross-defaulted to our other indebtedness.
Future Developments
As more fully described in “Overall Outlook” above, we are currently developing the Gaylord National Resort and Convention Center in Prince George’s County, Maryland.
Also, as described in “Overall Outlook” above, we are considering other potential hotel sites throughout the country including Chula Vista, California.
Commitments and Contractual Obligations
The following table summarizes our significant contractual obligations as of June 30, 2007, including long-term debt and operating and capital lease commitments (amounts in thousands):
                                         
    Total amounts   Less than                   After
Contractual obligations   committed   1 year   1-3 years   3-5 years   5 years
Long-term debt
  $ 690,000     $     $ 115,000     $     $ 575,000  
Capital leases
    3,330       936       1,286       1,108        
Promissory note payable to Nashville Predators
    4,000       1,000       2,000       1,000        
Construction commitments
    343,190       343,190                    
Operating leases (1)
    666,481       5,936       10,079       7,602       642,864  
Other
    525       175       350              
             
Total contractual obligations
  $ 1,707,526     $ 351,237     $ 128,715     $ 9,710     $ 1,217,864  
             
 
(1)   The total operating lease commitments of $666.5 million above include the 75-year operating lease agreement we entered into during 1999 for 65.3 acres of land located in Osceola County, Florida where Gaylord Palms is located.
The cash obligations in the table above do not include future cash obligations for interest associated with our outstanding long-term debt, capital lease obligations and promissory note payable to the Nashville Predators. See Note 10 to our condensed consolidated financial statements included herewith for a discussion of the interest we paid during the three and six months ended June 30, 2007 and 2006.
The cash obligations in the table above also do not include obligations to pay taxes on the taxable gains we recognized upon maturity of our secured forward exchange contract and on the sales of RQI and our investment in Bass Pro. Due to the net impact of these transactions and the taxable income generated by our normal operations during 2007, we expect to incur a tax liability of approximately $113.7 million after the application of federal and state net operating loss carryforwards and federal credit carryforwards. We expect to pay $85.3 million of this liability during the third quarter of 2007 and the balance during the fourth quarter of 2007. We intend to finance the payment of this obligation through the use of internally generated funds and corporate borrowings. A complete description of the secured forward exchange contract is contained in Note 8 to our condensed consolidated financial statements for the three months and six months ended June 30, 2007 and 2006 included herewith.

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The adoption of FIN 48 did not have a material impact on our contractual obligations, so obligations to pay taxes related to uncertain tax positions, if any, are not included in the cash obligations in the table above.
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States. Certain of our accounting policies, including those related to revenue recognition, impairment of long-lived assets and goodwill, restructuring charges, derivative financial instruments, income taxes, and retirement and postretirement benefits other than pension plans, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from our estimates. For a discussion of our critical accounting policies and estimates, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements presented in our 2006 Annual Report on Form 10-K. There were no newly identified critical accounting policies in the first or second quarters of 2007 nor were there any material changes to the critical accounting policies and estimates discussed in our 2006 Annual Report on Form 10-K.
Recently Issued Accounting Standards
For a discussion of recently issued accounting standards, see Note 15 to our condensed consolidated financial statements for the three and six months ended June 30, 2007 and 2006 included herewith.
Private Securities Litigation Reform Act
This quarterly report on Form 10-Q contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or “pursue,” or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings and future financial results. We have based these forward-looking statements on our current expectations and projections about future events.
We caution the reader that forward-looking statements involve risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described in our Annual Report on Form 10-K for the year ended December 31, 2006 or described from time to time in our other reports filed with the SEC (including this Quarterly Report on Form 10-Q under the heading “Risk Factors”):

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    the potential adverse effect of our debt on our cash flow and our ability to fulfill our obligations under our indebtedness and maintain adequate cash to finance our business;
 
    the availability of debt and equity financing on terms that are favorable to us;
 
    general economic and market conditions and economic and market conditions related to the hotel and large group meetings and convention industry; and
 
    the timing, budgeting and other factors and risks relating to new hotel development, including our ability to successfully complete the Gaylord National and to derive cash flow from its operations.
Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposures to market risk are from changes in interest rates and natural gas prices, and, prior to our disposal of such stock in May 2007, from changes in the value of our investment in Viacom stock and CBS stock.
Risk Related to a Change in Value of our Investment in Viacom Stock and CBS Stock
      Prior to January 3, 2006, we held an investment of 10.9 million shares of Viacom, Inc. Class B common stock, which was received as the result of the sale of television station KTVT to CBS in 1999 and the subsequent acquisition of CBS by Viacom in 2000.
      We entered into a secured forward exchange contract related to 10.9 million shares of the Viacom stock in 2000. Effective January 3, 2006, Viacom completed a transaction to separate Viacom into two publicly traded companies named Viacom, Inc. and CBS Corporation by converting (i) each outstanding share of Viacom, Inc. Class A common stock into 0.5 shares of Viacom, Inc. Class A common stock and 0.5 shares of CBS Corporation Class A common stock and (ii) each outstanding share of Viacom, Inc. Class B common stock into 0.5 shares of Viacom, Inc. Class B common stock and 0.5 shares of CBS Corporation Class B common stock. As a result of this transaction, we exchanged our 10,937,900 shares of Viacom, Inc. Class B common stock for 5,468,950 shares of Viacom, Inc. Class B common stock and 5,468,950 shares of CBS Corporation Class B common stock effective January 3, 2006.
Prior to its maturity in May 2007, the secured forward exchange contract protected us against decreases in the combined fair market value of the Viacom stock and CBS stock below $56.05 per share by way of a put option; the secured forward exchange contract also provided for participation in the increases in the combined fair market value of the Viacom stock and CBS stock in that we received 100% of the appreciation between $56.05 and $64.45 per share and, by way of a call option, 25.93% of the appreciation above $64.45 per share.
In 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 Company is no longer exposed to market risk from changes in the value of Viacom stock and CBS stock as of this date.

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Risk Related to Changes in Interest Rates
      Interest rate risk related to our indebtedness. We have exposure to interest rate changes primarily relating to outstanding indebtedness under our 8% Senior Notes and our $1.0 Billion Credit Facility.
      In conjunction with our offering of the 8% Senior Notes, we entered into an interest rate swap with respect to $125 million aggregate principal amount of our 8% Senior Notes. This interest rate swap, which has a term of ten years, effectively adjusts the interest rate of that portion of the 8% Senior Notes to LIBOR plus 2.95%. The interest rate swap on the 8% Senior Notes is deemed effective and therefore the hedge has been treated as an effective fair value hedge under SFAS No. 133. If LIBOR were to increase by 100 basis points, our annual interest cost on the 8% Senior Notes would increase by approximately $1.3 million.
      Borrowings outstanding under our $1.0 Billion Credit Facility bear interest at an annual rate at our election of either 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. If LIBOR were to increase by 100 basis points, our annual interest cost on borrowings outstanding under our $1.0 Billion Credit Facility as of June 30, 2007 would increase by approximately $1.2 million.
      Cash Balances. Certain of our outstanding cash balances are occasionally invested overnight with high credit quality financial institutions. We do not have significant exposure to changing interest rates on invested cash at June 30, 2007. As a result, the interest rate market risk implicit in these investments at June 30, 2007, if any, is low.
Risk Related to Changes in Natural Gas Prices
      As of June 30, 2007, we held three variable to fixed natural gas price swaps with respect to the purchase of 231,000 dekatherms of natural gas in order to fix the prices at which we purchase that volume of natural gas for our hotels. These natural gas price swaps, which have terms of up to three months, effectively adjust the price on that volume of purchases of natural gas to a weighted average price of $6.93 per dekatherm. These natural gas price swaps are deemed effective and therefore the hedges have been treated as an effective cash flow hedge under SFAS No. 133. If the forward price of natural gas futures contracts for delivery at the Henry Hub as of June 30, 2007 as quoted on the New York Mercantile Exchange was to increase or decrease by 5%, the derivative liability associated with the fair value of our natural gas swaps outstanding as of June 30, 2007 would have increased or decreased by $79,000.
Risks Related to Foreign Currency Exchange Rates
      Substantially all of our revenues are realized in U.S. dollars and are from customers in the United States. Therefore, we do not believe we have any significant foreign currency exchange rate risk. We do not hedge against foreign currency exchange rate changes and do not speculate on the future direction of foreign currencies.
Summary
      Based upon our overall market risk exposures at June 30, 2007, we believe that the effects of changes in interest rates and natural gas prices could be material to our consolidated financial position, results of operations or cash flows. However, we are no longer exposed to the risks associated with changes in the price of Viacom stock and CBS stock, and we believe that the effects of fluctuations in foreign currency exchange rates on our consolidated financial position, results of operations or cash flows would not be material.

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ITEM 4. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that materially affected, or are likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is a party to certain litigation, as described in Note 16 to our condensed consolidated financial statements for the three months ended June 30, 2007 and 2006 included herewith and which is incorporated herein by reference.
ITEM 1A. RISK FACTORS.
The risk factors disclosed in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 that relate to our operation of the ResortQuest business are no longer applicable to our future prospects as the result of the fact that we sold such business during the quarter ended June 30, 2007. Except for the risk factors set forth below and as set forth in the foregoing sentence, there have been no material changes to the risk factors disclosed in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.
          As a result of the sales of our ResortQuest business and Bass Pro equity interest, we are further dependent upon our Hospitality segment.
          During the second quarter of 2007, we completed the sales of our ResortQuest Mainland and ResortQuest Hawaii business, and the sale of our equity interest in Bass Pro. As a result of these transactions, we are now highly dependent on the success of our Hospitality segment. During the six months ended June 30, 2007, 90.1% of our total revenue from continuing operations was generated from our Hospitality segment. If we fail to successfully operate and/or develop our hotel and convention business, our overall financial condition and prospects could be adversely affected.
          We could become subject to claims in connection with the sales of our interests in ResortQuest Mainland, ResortQuest Hawaii and Bass Pro.
          In connection with the sales of our equity interests in ResortQuest Mainland, ResortQuest Hawaii and Bass Pro, we agreed to indemnify the purchasers of these interests for a number of matters, including the breach of our representations, warranties and covenants contained in the agreements related to those transactions. A material breach or inaccuracy of any of the representations, warranties and covenants in any of the agreements related to those transactions could lead to a claim against us. Any such claims could require us to pay

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substantial sums and incur related costs and expenses and could have a material adverse effect on our financial condition. In addition, we received a four-year promissory note in the principal amount of $8.0 million in connection with the sale of our ResortQuest Mainland business. Our ability to collect on such note may depend upon the ability of the purchaser of such business to generate sufficient cash flow from the operation of such business following the closing of such sale.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Inapplicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Inapplicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its Annual Meeting of Stockholders on May 3, 2007 (the “Annual Meeting”). The stockholders of the Company voted to elect nine directors. Each director must be elected annually. The following table sets forth the number of votes cast for and withheld/abstained with respect to each of the nominees:
                         
Nominee   For   Withhold   Total
E.K. Gaylord II
    34,971,530       3,790,126       38,761,656  
E. Gordon Gee
    34,270,489       4,491,168       38,761,657  
Ellen Levine
    35,277,471       3,484,186       38,761,657  
Ralph Horn
    35,256,190       3,505,467       38,761,657  
Michael J. Bender
    35,277,925       3,483,732       38,761,657  
R. Brad Martin
    35,230,917       3,530,740       38,761,657  
Michael D. Rose
    33,390,206       5,371,451       38,761,657  
Colin V. Reed
    35,251,815       3,509,842       38,761,657  
Michael I. Roth
    33,448,412       5,313,245       38,761,657  
At the Annual Meeting, our stockholders also ratified the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2007. The following table sets forth the number of votes for, votes against, votes abstaining and broker non-votes with respect to this item:
                 
            Broker    
For   Against   Abstain   Non-vote   Total
38,742,035
  13,231   6,388     38,761,654
ITEM 5. OTHER INFORMATION.
Inapplicable.
ITEM 6. EXHIBITS.
See Index to Exhibits following the Signatures page.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  GAYLORD ENTERTAINMENT COMPANY
 
 
Date: August 8, 2007  By:   /s/ Colin V. Reed    
   
Colin V. Reed 
 
   
Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer) 
 
 
     
  By:   /s/ David C. Kloeppel    
   
David C. Kloeppel 
 
   
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer) 
 
 
     
  By:   /s/ Rod Connor    
   
Rod Connor 
 
   
Senior Vice President and
Chief Administrative Officer
(Principal Accounting Officer) 
 

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INDEX TO EXHIBITS
     
EXHIBIT    
NUMBER   DESCRIPTION
 
   
2.1
  Common Unit Repurchase Agreement, dated as of April 3, 2007, by and among the Company, Gaylord Hotels, Inc., Bass Pro Group, LLC, and, for the limited purposes set forth therein, Colin Reed, David Kloeppel, American Sportsman Holdings Co., JLM Partners, LP, KB Capital Partners, LP and certain subsidiaries of Bass Pro Group, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated April 3, 2007 (File No. 1-13079)).
 
   
2.2
  Stock Purchase Agreement dated as of April 18, 2007 by and among Gaylord Entertainment Company, ResortQuest International, Inc., Vacation Holdings Hawaii, Inc., and Interval Acquisition Corp. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 19, 2007 (File No. 1-13079)).
 
   
10.1
  GMP Amendment No. 11 to the Agreement between Gaylord National, LLC and Perini/Tompkins Joint Venture, dated April 13, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 18, 2007 (File No. 1-13079)).
 
   
10.2
  GMP Amendment No. 12 to the Agreement between Gaylord National, LLC and Perini/Tompkins Joint Venture, dated April 13, 2007 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated April 18, 2007 (File No. 1-13079)).
 
   
10.3
  GMP Amendment No. 13 to the Agreement between Gaylord National, LLC and Perini/Tompkins Joint Venture, dated April 13, 2007 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated April 18, 2007 (File No. 1-13079)).
 
   
10.4
  GMP Amendment No. 14 to the Agreement between Gaylord National, LLC and Perini/Tompkins Joint Venture, dated May 8, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated May 11, 2007 (File No. 1-13079)).
 
   
10.5
  GMP Amendment No. 15 to the Agreement between Gaylord National, LLC and Perini/Tompkins Joint Venture, dated June 25, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 26, 2007 (File No. 1-13079)).
 
   
31.1
  Certification of Colin V. Reed pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
 
   
31.2
  Certification of David C. Kloeppel pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
 
   
32.1
  Certification of Colin V. Reed and David C. Kloeppel pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

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