Summary of GAYLORD ENTERTAINMENT CO /DE

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report and our audited consolidated financial statements and related notes for the year ended December 31, 2008, appearing in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission ("SEC") on March 2, 2009.
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, those factors described in our Annual Report on Form 10-K for the year ended December 31, 2008 or described from time to time in our other reports filed with the SEC. 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. Overall Outlook
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. Recessionary conditions in the national economy have resulted in economic pressures on the hospitality industry generally, and on our Company's operations and expansion plans. In recent quarters, we have experienced declines in hotel occupancy, weakness in future bookings by our core large group customers, lower spending levels by groups and increased cancellation and attrition levels. We believe that corporate customers in particular are delaying meetings and events and seeking to minimize spending. While we have re-focused our marketing efforts on booking rooms in 2009 and 2010, rather than later years, there can be no assurance that we can achieve acceptable occupancy and revenue levels during continued periods of economic distress, in light of decreased demand. We cannot predict when or if hospitality demand and spending will return to favorable levels, but we anticipate that our future financial results and growth will be further harmed if the economic slowdown continues for a significant period or becomes worse.
In addition, as more fully described below in "Factors and Trends Contributing to Operating Performance" we have experienced an increase in groups not fulfilling the minimum number of room nights originally contracted for, or rooms attrition. We believe that our contracts with our group customers (which generally require minimum levels of rooms revenue and banquet and catering revenues) provide a level of protection against the effects of these increased levels of attrition. There can be no assurance, however, that a prolonged recession in the national economy would not have a continuing adverse effect on our results of operations.
See Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009, as well as Part II, Item 1A, "Risk Factors" below, for important information regarding forward-looking statements made in this report and risks and uncertainties we face.

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Recent Events
Repurchase of Senior Notes. During the three months ended March 31, 2009, we repurchased $59.9 million in aggregate principal amount of our outstanding senior notes ($39.9 million of 8% Senior Notes and $20.0 million of 6.75% Senior Notes) for $43.6 million, of which $6.4 million was accrued at March 31, 2009. After adjusting for accrued interest, deferred financing costs, and other costs, we recorded a pretax gain of $16.6 million as a result of the repurchases, which is recorded as a gain on extinguishment of debt in the accompanying financial information.
During April 2009, we repurchased $23.3 million in aggregate principal amount of our outstanding senior notes ($16.3 million of 8% Senior Notes and $7.0 million of 6.75% Senior Notes) for $16.3 million. After adjusting for accrued interest and deferred financing costs, we recorded a pretax gain of $7.4 million as a result of the repurchases, which will be recorded as a gain on extinguishment of debt in our consolidated statement of operations in the second quarter of 2009. We used available cash and borrowings under our revolving credit facility to finance the purchases and intend to consider additional repurchases of our senior notes from time to time depending on market conditions.
Employee Severance Costs. In the first quarter of 2009, as part of our cost containment initiative, we eliminated approximately 350 employee positions, which included positions in all segments of the organization. As a result, we recognized approximately $4.5 million in severance costs in the three months ended March 31, 2009. These costs are comprised of operating costs and selling, general and administrative costs of $2.8 million and $1.7 million, respectively, in the accompanying financial information.
Agreements with Significant Stockholders. As discussed more fully above in Note 17 to the condensed consolidated financial statements for the three months ended March 31, 2009, during the first quarter of 2009, we amended our shareholder rights plan, entered into a settlement agreement with TRT Holdings, Inc. ("TRT"), and entered into a letter agreement with GAMCO Asset Management, Inc. During the three months ended March 31, 2009, we incurred various costs in connection with reaching agreements with these stockholders, reimbursing certain expenses pursuant to the settlement agreement with TRT, and preparing for a proxy contest of $0.9 million. In addition, we incurred costs of $0.9 million in connection with the settlement of our shareholder rights plan litigation, as described in our Current Report on 8-K filed with the SEC on March 10, 2009. These costs are included in selling, general and administrative expense in the accompanying financial information.
Development Update
We have invested heavily in our operations in recent years, primarily in connection with the continued construction and improvement of the Gaylord Texan after it opened in 2004, continued improvements of the Gaylord Opryland, and the construction of the Gaylord National beginning in 2005 and continuing through 2008. Our investments in 2009 are expected to consist primarily of ongoing maintenance capital expenditures for our existing properties. We have determined that we will not make significant capital expenditures for new or existing properties until our expectations concerning the overall economy and hotel occupancy have stabilized.
As described above in Note 15 to our condensed consolidated financial statements for the three months ended March 31, 2009 and 2008 included herewith, we have entered into a land purchase agreement with respect to a potential hotel development in Mesa, Arizona.
We are also considering expansions at Gaylord Opryland, Gaylord Texan, and Gaylord Palms, as well as other potential hotel sites throughout the country. We have made no commitments to construct expansions of our current facilities or to build new facilities. We are closely monitoring the condition of the economy and

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availability of attractive financing. We are unable to predict at this time when we might make such commitments or commence construction of these proposed expansion projects.
Our Current Operations
Our ongoing operations are organized into three principal business segments:
• 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"), our Radisson Hotel at Opryland ("Radisson Hotel") and, commencing in April 2008, our Gaylord National Resort and Convention Center ("Gaylord National"), as well as our ownership interests in two joint ventures.

• Opry and Attractions, consisting of our Grand Ole Opry assets, WSM-AM and our Nashville attractions.

• Corporate and Other, consisting of our corporate expenses.

For the three months ended March 31, 2009 and 2008, our total revenues were divided among these business segments as follows:

                                              Three months ended
                                                  March 31,
                    Segment                    2009          2008
                    Hospitality                 94.5 %       91.1 %
                    Opry and Attractions         5.5 %        8.8 %
                    Corporate and Other          0.0 %        0.1 %

We generate a substantial portion of our revenues from our Hospitality segment. We believe that we are the only hospitality company whose stated primary focus is 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. 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); and

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• 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 and from concessions and food and beverage sales at the time of sale. Attrition fees, which are charged to groups when they do not fulfill the minimum number of room nights or minimum food and beverage spending requirements originally contracted for, as well as cancellation fees, are recognized as revenue in the period they are collected. 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.
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 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, the level of attrition we experience, and the level of transient business at our hotels during such period.

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Selected Financial Information
The following table contains our unaudited selected summary financial data for
the three months ended March 31, 2009 and 2008. The table also shows the
percentage relationships to total revenues and, in the case of segment operating
income (loss), its relationship to segment revenues (in thousands, except
percentages).

                                                                 Three Months ended March 31,
                                                    2009              %               2008              %
Income Statement Data:
REVENUES:
Hospitality                                       $ 200,647           94.5 %        $ 177,944           91.1 %
Opry and Attractions                                 11,644            5.5 %           17,116            8.8 %
Corporate and Other                                      28            0.0 %              175            0.1 %

Total revenues                                      212,319          100.0 %          195,235          100.0 %

OPERATING EXPENSES:
Operating costs                                     131,365           61.9 %          113,489           58.1 %
Selling, general and administrative                  44,861           21.1 %           39,541           20.3 %
Preopening costs                                          -            0.0 %           15,575            8.0 %
Impairment and other charges                              -            0.0 %           12,031            6.2 %
Depreciation and amortization:
Hospitality                                          24,589           11.6 %           18,261            9.4 %
Opry and Attractions                                  1,114            0.5 %            1,300            0.7 %
Corporate and Other                                   2,368            1.1 %            1,650            0.8 %

Total depreciation and amortization                  28,071           13.2 %           21,211           10.9 %

Total operating expenses                            204,297           96.2 %          201,847          103.4 %

OPERATING INCOME (LOSS):
Hospitality                                          26,151           13.0 %           35,492           19.9 %
Opry and Attractions                                 (2,508 )        -21.5 %           (1,044 )         -6.1 %
Corporate and Other                                 (15,621 )              (A)        (13,454 )              (A)
Preopening costs                                          -                (B)        (15,575 )              (B)
Impairment and other charges                              -                (B)        (12,031 )              (B)

Total operating income (loss)                         8,022            3.8 %           (6,612 )         -3.4 %
Interest expense, net of amounts capitalized        (18,600 )              (C)         (3,579 )              (C)
Interest income                                       3,846                (C)            324                (C)
Income from unconsolidated companies                    129                (C)            236                (C)
Gain on extinguishment of debt                       16,557                (C)              -                (C)
Other gains and (losses), net                          (150 )              (C)             59                (C)
(Provision) benefit for income taxes                 (6,286 )              (C)          2,724                (C)
Loss from discontinued operations, net                  (91 )              (C)           (458 )              (C)

Net income (loss)                                 $   3,427                (C)      $  (7,306 )              (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 months ended
March 31, 2009 and 2008 (in thousands, except percentages and per share data):

                                                              Three Months
                                                             Ended March 31,
                                                                                  %
                                                     2009          2008        Change
    Total revenues                                $ 212,319     $ 195,235         8.8 %
    Total operating expenses                        204,297       201,847         1.2 %
    Operating income (loss)                           8,022        (6,612 )     221.3 %
    Net income (loss)                                 3,427        (7,306 )     146.9 %
    Net income (loss) per share - fully diluted        0.08         (0.18 )     144.4 %

Total Revenues
The increase in our total revenues for the three months ended March 31, 2009, as compared to the three months ended March 31, 2008, is attributable to an increase in our Hospitality segment revenues (an increase of $22.7 million for the three months ended March 31, 2009, as compared to the same period in 2008). This increase in revenues is primarily due to the inclusion of $56.1 million in revenues associated with the Gaylord National, which opened in April 2008, although a $33.4 million decrease in revenues at our other Hospitality properties partially offset the impact of this increase in our total revenues, as discussed more fully below.
Total Operating Expenses
The slight increase in our total operating expenses for the three months ended March 31, 2009, as compared to the same period in 2008, is primarily due to a combination of increased Hospitality segment operating expenses associated with the Gaylord National and decreased Hospitality segment operating expenses associated with lower revenues at our other Hospitality properties, as discussed more fully below.
Operating Income
The increase in our operating income for the three months ended March 31, 2009, as compared to the same period in 2008, was due primarily to the absence, in 2009, of preopening costs primarily associated with the Gaylord National ($15.6 million in preopening costs in 2008) and impairment charges related to our termination of an agreement to purchase the Westin La Cantera resort ($12.0 million in impairment charges in 2008). A $9.3 million decrease in Hospitality segment operating income for the three months ended March 31, 2009, as compared to the same period in 2008, as more fully described below, served to decrease our operating income for the 2009 period.

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Net Income (Loss)
Our net income of $3.4 million for the three months ended March 31, 2009, as compared to a net loss of $7.3 million for the same period in 2008, was due to the increase in our operating income described above, as well as the following factors:
• A $15.0 million increase in our interest expense, net of amounts capitalized, for the three months ended March 31, 2009, as compared to the same period in 2008, due primarily to a $14.8 million decrease in capitalized interest, as described more fully below, which served to decrease our net income.

• A $16.6 million gain on the extinguishment of debt for the three months ended March 31, 2009 relating to the repurchase of a portion of our senior notes, described more fully below, which served to increase our net income.

• A provision for income taxes of $6.3 million for the three months ended March 31, 2009, as compared to a benefit for income taxes of $2.7 million for the same period in 2008, described more fully below, which served to decrease our net income.

• A $3.5 million increase in our interest income for the three months ended March 31, 2009, as compared to the same period in 2008, 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 opening of Gaylord National in April 2008 and resulting increased revenues (revenues of $56.1 million for the three months ended March 31, 2009) and operating expenses (operating expenses of $49.2 million for the three months ended March 31, 2009).

• Decreased same-store occupancy levels (a decrease of 16.2 percentage points of occupancy for the three months ended March 31, 2009 as compared to the same period in 2008) resulting from lower levels of group business during the period, combined with lower same-store ADR during this period (a decrease of 1.3% for the three months ended March 31, 2009 as compared to the same period in 2008). This combination resulted in decreased same-store RevPAR and Total RevPAR for the three months ended March 31, 2009, as compared to the same period in 2008.

• Increased attrition and cancellation levels for the three months ended March 31, 2009, as compared to the same period in 2008, which decreased our same-store operating income, RevPAR and Total RevPAR. Same-store attrition for the period was 16.7% of bookings, compared to 11.1% for the same period in 2008.

• The absence of preopening costs during the three months ended March 31, 2009, as compared to the same period in 2008, due to the opening of the Gaylord National hotel in April 2008, which increased our operating income for the current period.

• The absence of $12.0 million in impairment charges during the three months ended March 31, 2009, as compared to the same period in 2008, which increased our operating income for the current period.

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Operating Results - Detailed Segment Financial Information
Hospitality Segment
   Total Segment Results. The following presents the financial results of our
Hospitality segment for the three months ended March 31, 2009 and 2008 (in
thousands, except percentages and performance metrics):

                                                          Three Months
                                                        Ended March 31,
                                               2009          2008         % Change
      Hospitality revenue (1)                $ 200,647     $ 177,944           12.8 %
      Hospitality operating expenses:
      Operating costs                          120,080        99,543           20.6 %
      Selling, general and administrative       29,827        24,648           21.0 %
      Depreciation and amortization             24,589        18,261           34.7 %

      Total Hospitality operating expenses     174,496       142,452           22.5 %

      Hospitality operating income (2)       $  26,151     $  35,492          -26.3 %

      Hospitality performance metrics:
      Occupancy (6)                               61.3 %        77.3 %        -20.7 %
      ADR                                    $  184.96     $  173.75            6.5 %
      RevPAR (3) (6)                         $  113.32     $  134.34          -15.6 %
      Total RevPAR (4) (6)                   $  275.41     $  323.64          -14.9 %
      Net Definite Room Nights Booked (5)      107,000       402,000          -73.4 %

(1) Hospitality results and performance metrics include the results of our same-store Gaylord hotels and our Radisson Hotel for all periods presented and include the results of Gaylord National from the date it commenced normal operations in early April 2008.

(2) Hospitality operating income does not include the effect of preopening costs. See the discussion of preopening costs set forth below.

(3) 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.

(4) 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.

(5) Net Definite Room Nights Booked included 21,000 and 139,000 room nights for the three months ended March 31, 2009 and 2008, respectively, related to Gaylord National, which opened in April 2008. Net Definite
Room Nights
Booked for the
three months
ended
March 31, 2008
included
77,000 room
nights related
to the
proposed hotel
expansions.

(6) Excludes 5,171 room nights for the three months ended March 31, 2008 that were taken out of service as a result of a continued multi-year rooms renovation program at Gaylord Opryland. The rooms renovation program at Gaylord Opryland was completed in February 2008.

The increase in total Hospitality segment revenue in the three months ended March 31, 2009, as compared to the same period in 2008, is primarily due to the inclusion of revenues associated with the Gaylord National, which opened in April 2008. Same-store Hospitality segment revenue in the three months ended March 31,

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