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.

Recent Events
Convertible Senior Notes. As more fully described under "Principal Debt Agreements," during September 2009, we issued $360 million, including the exercise of an overallotment option, of 3.75% Convertible Senior Notes (the "Convertible Notes"). The Convertible Notes have a maturity date of October 1, 2014, and interest is payable semiannually in cash in arrears on April 1 and October 1, beginning April 1, 2010. The Convertible Notes are convertible, under certain circumstances, at the holder's option, into shares of our common stock, at an initial conversion rate of 36.6972 shares of common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $27.25 per share.
Our net proceeds from the issuance of the Convertible Notes totaled approximately $317.1 million, after deducting discounts, commissions and offering expenses payable by us (including the net cost of the convertible note hedge transactions entered into in connection with the offering of the Convertible Notes, as described more fully below). The Convertible Notes are accounted for in accordance with generally accepted accounting principles, which require us to separately account for the liability (debt) and the equity (conversion option) components of the Convertible Notes in a manner that reflects our nonconvertible debt borrowing rate. Accordingly, we recorded a debt discount and corresponding increase to additional paid-in capital of approximately $68.0 million as of the date of issuance. We are amortizing the debt discount utilizing the effective interest method over the life of the Convertible Notes, which increases the effective interest rate of the Convertible Notes from its coupon rate of 3.75% to 8.46%. We incurred cash and non-cash interest expense of $0.1 million for the Convertible Notes in the three months and nine months ended September 30, 2009.
Concurrently with the offering of the Convertible Notes, we entered into convertible note hedge transactions with respect to our common stock (the "Purchased Options") with counterparties affiliated with the initial purchasers of the Convertible Notes, for purposes of reducing the potential dilutive effect upon conversion of the Convertible Notes. The initial strike price of the Purchased Options is $27.25 per share of our common stock (the same as the initial conversion price of the Convertible Notes) and is subject to certain customary adjustments. The Purchased Options cover, subject to anti-dilution adjustments substantially similar to the Convertible Notes, approximately 13.2 million shares of common stock. We may settle the Purchased Options in shares, cash or a combination of cash and shares, at our option. The cost of the Purchased Options was approximately $76.7 million, which was recorded as a reduction to additional paid-in capital. The Purchased Options will expire on October 1, 2014.
Separately and concurrently with entering into the Purchased Options, we also entered into warrant transactions whereby we sold warrants to each of the hedge counterparties to acquire, subject to anti-dilution adjustments, up to approximately 13.2 million shares of common stock at an initial exercise price of $32.70 per share. The aggregate proceeds from the warrant transactions were approximately $43.7 million, which was recorded as an increase to additional paid-in capital.
Common Stock Issuance. Concurrently with the offering and sale of the Convertible Notes discussed above, we also offered and sold 6.0 million shares of our common stock, par value $0.01 per share, at a price to the public of $21.80 per share. Our net proceeds, after deducting discounts, commissions and expenses, was approximately $125.3 million.
Repurchase of Senior Notes. During the nine months ended September 30, 2009, we repurchased $88.6 million in aggregate principal amount of our outstanding senior notes ($61.6 million of 8% Senior Notes and $27.0 million of 6.75% Senior Notes) for $64.5 million. After adjusting for accrued interest, deferred financing costs, and other costs, we recorded a pretax gain of $24.7 million as a result of the repurchases, which is recorded as a gain on extinguishment of debt in the accompanying financial information. 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.

On September 23, 2009, the Company commenced a cash tender offer for its outstanding 8% Senior Notes and a solicitation of consents from holders of the 8% Senior Notes to effect certain proposed amendments to the indenture governing these notes. On October 6, 2009, the Company received the requisite consents of holders representing at least a majority in principal amount of the 8% Senior Notes then outstanding, to enter into the Sixth Supplemental Indenture pursuant to the Company's previously announced consent solicitation with respect to the 8% Senior Notes. Following the expiration of the tender offer on October 21, 2009, $223.6 million aggregate principal amount of our outstanding 8% Senior Notes had been validly tendered and were repurchased by us pursuant to the terms of the tender offer. We have also called for redemption at a price of 102.667% of the principal amount thereof, plus accrued interest, on November 15, 2009, all remaining outstanding 8% Senior Notes. As a result, we anticipate we will record a loss on the extinguishment of debt of approximately $6 million during the fourth quarter of 2009.
Employee Severance Costs. In the nine months ended September 30, 2009, as part of our cost containment initiative, we eliminated approximately 475 employee positions, which included positions in all segments of the organization. As a result, we recognized approximately $7.3 million in severance costs in the nine months ended September 30, 2009. These costs are comprised of operating costs and selling, general and administrative costs of $3.0 million and $4.3 million, respectively, for the nine months ended September 30, 2009 in the accompanying financial information.
Impairment of Goodwill. In connection with the preparation of our financial statements for the third quarter of 2009, as a result of significant adverse changes in the business climate of a reporting unit within our Opry and Attractions segment, we determined that the goodwill of this reporting unit may be impaired and performed an interim impairment review on this goodwill. As a result, we recorded an impairment charge of $6.6 million during the three months and nine months ended September 30, 2009, to write down the carrying value of goodwill at the impaired reporting unit to its implied fair value of $0.3 million.
Agreements with Significant Stockholders. As discussed more fully above in Note 17 to the condensed consolidated financial statements for the nine months ended September 30, 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. ("GAMCO"). During the nine months ended September 30, 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 $1.0 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 Form 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 the remainder of 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 nine months ended September 30, 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 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 and nine months ended September 30, 2009 and 2008, our total revenues were divided among these business segments as follows:

                                     Three months ended         Nine months ended
                                       September 30,              September 30,
           Segment                    2009          2008         2009         2008
           Hospitality                 91.4 %       89.9 %        92.6 %      90.5 %
           Opry and Attractions         8.6 %       10.1 %         7.4 %       9.5 %
           Corporate and Other          0.0 %        0.0 %         0.0 %       0.0 %

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

• 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.

Selected Financial Information
The following table contains our unaudited selected summary financial data for
the three months and nine months ended September 30, 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).

                                                          Unaudited                                                       Unaudited
                                              Three Months ended September 30,                                 Nine Months ended September 30,
                                     2009             %              2008             %              2009             %              2008             %

Income Statement Data:
REVENUES:
Hospitality                        $ 182,021          91.4 %       $ 203,834          89.9 %       $ 583,173          92.6 %       $ 615,392          90.5 %
Opry and Attractions                  17,059           8.6 %          22,870          10.1 %          46,432           7.4 %          64,460           9.5 %
Corporate and Other                       20           0.0 %              29           0.0 %              70           0.0 %             385           0.1 %

Total revenues                       199,100         100.0 %         226,733         100.0 %         629,675         100.0 %         680,237         100.0 %

OPERATING EXPENSES:
Operating costs                      122,211          61.4 %         147,388          65.0 %         379,955          60.3 %         409,919          60.3 %
Selling, general and
administrative                        41,482          20.8 %          42,563          18.8 %         129,226          20.5 %         130,219          19.1 %
Preopening costs                           -           0.0 %             369           0.2 %               -           0.0 %          19,190           2.8 %
Impairment and other charges           6,586           3.3 %               -           0.0 %           6,586           1.0 %          12,031           1.8 %
Depreciation and amortization:
Hospitality                           25,876          13.0 %          26,483          11.7 %          75,414          12.0 %          70,729          10.4 %
Opry and Attractions                   1,127           0.6 %           1,160           0.5 %           3,510           0.6 %           3,729           0.5 %
Corporate and Other                    2,479           1.2 %           1,976           0.9 %           7,276           1.2 %           5,370           0.8 %

Total depreciation and
amortization                          29,482          14.8 %          29,619          13.1 %          86,200          13.7 %          79,828          11.7 %

Total operating expenses             199,761         100.3 %         219,939          97.0 %         601,967          95.6 %         651,187          95.7 %

OPERATING (LOSS) INCOME:
Hospitality                           18,823          10.3 %          18,012           8.8 %          77,851          13.3 %          95,167          15.5 %
Opry and Attractions                   2,149          12.6 %           2,935          12.8 %           1,949           4.2 %           5,138           8.0 %
Corporate and Other                  (15,047 )             (A)       (13,784 )             (A)       (45,506 )             (A)       (40,034 )             (A)
Preopening costs                           -               (B)          (369 )             (B)             -               (B)       (19,190 )             (B)
Impairment and other charges          (6,586 )             (B)             -               (B)        (6,586 )             (B)       (12,031 )             (B)

Total operating (loss) income           (661 )        -0.3 %           6,794           3.0 %          27,708           4.4 %          29,050           4.3 %
Interest expense, net of
amounts capitalized                  (18,676 )             (C)       (21,918 )             (C)       (55,505 )             (C)       (44,045 )             (C)
Interest income                        3,382               (C)         4,486               (C)        11,411               (C)         8,583               (C)
Gain (loss) income from
unconsolidated companies                  30               (C)           (75 )             (C)           147               (C)          (293 )             (C)
Gain on extinguishment of debt             -               (C)             -               (C)        24,726               (C)             -               (C)
Other gains and (losses), net            (84 )             (C)           904               (C)         3,420               (C)           954               (C)
Benefit (provision) for income
taxes                                  2,954               (C)         3,303               (C)       (11,315 )             (C)           945               (C)
Income (loss) from
discontinued operations, net             154               (C)           986               (C)           (15 )             (C)           767               (C)

Net (loss) income                  $ (12,901 )             (C)     $  (5,520 )             (C)     $     577               (C)     $  (4,039 )             (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.

Summary Financial Results
Results
The following table summarizes our financial results for the three months and
nine months ended September 30, 2009 and 2008 (in thousands, except percentages
and per share data):

                                                           Three Months                             Nine Months
                                                       Ended September 30,                      Ended September 30,
                                                                              %                                        %
                                                 2009          2008         Change        2009          2008        Change
Total revenues                                $ 199,100     $ 226,733        -12.2 %   $ 629,675     $ 680,237        -7.4 %
Total operating expenses                        199,761       219,939         -9.2 %     601,967       651,187        -7.6 %
Operating (loss) income                            (661 )       6,794       -109.7 %      27,708        29,050        -4.6 %
Net (loss) income                               (12,901 )      (5,520 )     -133.7 %         577        (4,039 )     114.3 %
Net (loss) income per share - fully diluted       (0.31 )       (0.14 )     -121.4 %        0.01         (0.10 )     110.0 %

Total Revenues
The decrease in our total revenues for the three months ended September 30, 2009, as compared to the three months ended September 30, 2008, is attributable to a decrease in our Hospitality segment revenues of $21.8 million for the 2009 period and a decrease in our Opry and Attractions segment revenue of $5.8 million for the 2009 period, as discussed more fully below.
The decrease in our total revenues for the nine months ended September 30, 2009, as compared to the nine months ended September 30, 2008, is attributable to a decrease in our Hospitality segment revenues of $32.2 million for the 2009 period and a decrease in our Opry and Attractions segment revenue of $18.0 million for the 2009 period, as discussed more fully below. Hospitality segment revenue in 2009 includes an additional $57.0 million in revenues associated with the Gaylord National, which opened in April 2008, which was more than offset by a $89.3 million decrease in revenues at our same-store Hospitality properties, as discussed more fully below. As used herein, same-store Hospitality properties exclude Gaylord National for all periods presented as a result of the fact that Gaylord National opened in April 2008. Total Operating Expenses
The decrease in our total operating expenses for the three months ended September 30, 2009, as compared to the same period in 2008, is primarily due to decreased Hospitality segment operating expenses associated with lower revenues, as discussed more fully below.
The decrease in our total operating expenses for the nine months ended September 30, 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 due to its opening in April 2008, decreased Hospitality segment operating expenses associated with lower revenues at our . . .