Gaylord Entertainment Reports Third Quarter 1999 Financial Results in Line With Previously Announced Expectations
Revenues for the third quarter of 1999 were $135.7 million, a 0.6% increase from the third quarter of 1998. Operating cash flow (operating income plus depreciation and amortization), excluding nonrecurring items, was $16.9 million compared to $22.6 million in the corresponding prior year period. The difference in operating cash flow was partially due to lower occupancy and room rates at the Opryland Hotel, start up expenses relating to GETdigitalmedia and increased costs and a change in the mix of products sold at Word Entertainment.
Terry E. London, President and Chief Executive Officer, remarked, "The Opryland Hotel results for the quarter were generally in line with our expectations, and operating cash flow at the hotel is still up year to date. We believe the hotel will have improved results for the fourth quarter, while the outlook for Word is somewhat less predictable due to the nature of its business. Our cable networks segment showed a positive comparison for the quarter, offset by the third quarter investment in our new Internet division, GETdigitalmedia, which contributed to the negative operating cash flow comparison overall.
"The investment in GETdigitalmedia is part of our ongoing strategy to use cash generated from our existing businesses to fund new long-term growth vehicles, including the two new hotels, country and Christian music assets, international cable networks and Internet entertainment and e-commerce businesses. We believe that each of these investments will strengthen our core hospitality, content and media assets, and bring us closer to achieving our long-term goal of creating a premiere entertainment company. Subsequent to the end of the quarter, we completed the divestiture of KTVT-TV in Dallas-Fort Worth. This transaction will result in an after tax gain in the fourth quarter of approximately $280 million, further strengthening our financial condition and our ability to finance the development of businesses that we expect will drive the Company's long-term growth."
Third quarter 1999 hospitality and attractions revenues declined 4.0% to $71.9 million compared to the corresponding prior year period, while operating cash flow declined 8.5% to $17.8 million. Revenues declined 5.9% to $51.5 million at the Opryland Hotel, which had an occupancy rate in the third quarter of 1999 of 73.7% compared with the 76.1% occupancy rate that was recorded in the third quarter of 1998. The average room rate at the hotel for the quarter was $137.09 compared to $141.83 in the corresponding prior year period. In addition, increased startup expenses for the Opryland Hospitality Group and a reduction in Nashville-area tourism also impacted third quarter 1999 results.
In the third quarter of 1999, excluding KTVT (which was acquired by CBS Corporation on October 12, 1999), broadcasting and music revenues increased 6.4% to $52.0 million from $48.9 million. The increase in revenues is primarily due to increased sales of distributed product at Word, and increased sales from new artists such as Sixpence None the Richer. Excluding KTVT, broadcasting and music operating cash flow for the third quarter of 1999 declined by $4.6 million, partially attributable to higher warehouse start-up, selling, and product costs at Word, a higher percentage of lower margin distributed product sales at Word, and start-up expenses for GETdigitalmedia of $1.1 million.
Third quarter 1999 revenues for the cable networks segment were $1.3 million, a 57.1% increase over revenues of $0.8 million recorded in the third quarter of 1998 due primarily to increased subscriber and advertising revenues in the Asia-Pacific region. Operating losses associated with the cable networks were $1.7 million in the third quarter of 1999 compared to prior year quarterly losses of $2.3 million.
Interest income for the third quarter of 1999 includes $2.0 million associated with a working capital settlement with CBS. The Company recorded a related $1.7 million reversal of merger costs during the quarter. These items relate to the acquisition by CBS of The Nashville Network and Country Music Television in 1997. The Company also incurred a restructuring charge of $3.1 million during the most recent quarter, related to severance costs and other employee expenses, most of which were incurred at the Opryland Hotel. The reversal of merger costs and restructuring charge are reflected in "Corporate and other" in the accompanying statement of financial results.
Gaylord Entertainment will hold a conference call to discuss this
release today at 4:15 p.m. Eastern time. Investors will have the
opportunity to listen to the conference call over the Internet through
http://www.streetfusion.com. To listen to the live call, please go to
the web site at least fifteen minutes early to register, download, and
install any necessary audio software. For those who cannot listen to
the live broadcast, a replay will be available shortly after the call
through the end of business on November 30, 1999.
Note: Certain matters discussed herein are forward looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, that involve risks and uncertainties, including
growth in the popularity of country music and country lifestyles;
growth in the popularity of Christian music and family values
lifestyles; the ability to control costs relating to the development
of the Opry Mills retail complex; the ability to integrate the
operations of acquired businesses into the Company's operations; the
advertising market in the United States in general and in the
Company's local television and radio markets in particular; the
perceived attractiveness of Nashville, Tennessee and the Company's
properties as a convention and tourist destination; the ability of the
Opryland Hospitality Group to successfully develop hotel properties in
other markets; consumer tastes and preferences for the Company's
programming and other entertainment offerings; competition; the impact
of weather on construction schedules; and consolidation in the
broadcasting and cable distribution industries. These risks and
uncertainties are detailed from time to time in the Company's SEC
reports, including the report on Form 10-K for the year ended
December 31, 1998.
Gaylord Entertainment, headquartered in Nashville, is a diversified entertainment company with operations in hospitality, attractions, music, entertainment, broadcasting and cable networks. Among its properties are WSM Radio and the Grand Ole Opry, the Opryland Hotel, Acuff-Rose Music Publishing, Word Entertainment, Country Music Television International, Z Music Television, the Wildhorse Saloon, the Ryman Auditorium, Cornerstone Sports, WWTN Radio and Opryland Productions.
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL RESULTS
(Amounts in thousands, except per share data)
Three Months Ended
September 30, %
----------------------
1999 1998 chg
------ ---- ----
Revenues
Hospitality and attractions $ 71,864 $ 74,846 (4.0)
Broadcasting and music, excl. KTVT 52,039 48,915 6.4
KTVT 10,485 10,301 1.8
Cable networks 1,323 842 57.1
--------- --------- ----
Total revenues 135,711 134,904 0.6
========= ========= ====
Operating cash flow (a)
Hospitality and attractions 17,754 19,412 (8.5)
Broadcasting and music, excl. KTVT 3,323 7,913 (58.0)
KTVT 2,430 2,294 5.9
Cable networks (1,214) (1,786) 32.0
Corporate and other (b) (6,716) (5,260) (27.7)
--------- --------- ----
Total operating cash flow 15,577 22,573 (31.0)
========= ========= ====
Operating income
Hospitality and attractions 10,149 12,039 (15.7)
Broadcasting and music, excl. KTVT 318 6,339 (95.0)
KTVT 1,662 1,705 (2.5)
Cable networks (1,702) (2,251) 24.4
Corporate and other (b) (8,258) (6,430) (28.4)
--------- --------- ----
Total operating income 2,169 11,402 (81.0)
Interest expense (4,268) (8,116) 47.4
Interest income (c) 2,875 6,519 (55.9)
Other 404 1,811 --
--------- --------- ----
Income before taxes 1,180 11,616 (89.8)
Income taxes 454 4,473 (89.9)
--------- --------- ----
Net income $ 726 $ 7,143 (89.8)
========= ========= ====
Net income per share (basic) $ 0.02 $ 0.22 (90.9)
========= ========= ====
Avg. shares outstanding (basic) 32,924 32,808 0.4
========= ========= ====
Net income per share (diluted) $ 0.02 $ 0.22 (90.9)
========= ========= ====
Avg. shares outstanding (diluted) 33,244 33,115 0.4
========= ========= ====
Nine Months Ended
September 30, %
-----------------------
1999 1998 chg
----- ---- ---
Revenues
Hospitality and attractions $ 213,583 $ 211,886 0.8
Broadcasting and music, excl. KTVT 126,037 115,313 9.3
KTVT 34,460 37,798 (8.8)
Cable networks 3,132 4,891 (36.0)
--------- --------- -----
Total revenues 377,212 369,888 2.0
========= ========= =====
Operating cash flow (a)
Hospitality and attractions 46,479 51,327 (9.4)
Broadcasting and music, excl. KTVT 4,624 12,473 (62.9)
KTVT 10,149 14,019 (27.6)
Cable networks (4,703) (6,573) 28.4
Corporate and other (b) (17,797) (14,771) (20.5)
--------- --------- -----
Total operating cash flow 38,752 56,475 (31.4)
========= ========= =====
Operating income
Hospitality and attractions 23,598 30,224 (21.9)
Broadcasting and music, excl. KTVT (2,601) 8,349 --
KTVT 8,049 12,391 (35.0)
Cable networks (6,152) (7,922) 22.3
Corporate and other (b) (21,948) (18,168) (20.8)
--------- --------- -----
Total operating income 946 24,874 (96.2)
Interest expense (11,286) (22,673) 50.2
Interest income (c) 4,269 19,463 (78.1)
Other 130,672 5,173 --
--------- --------- -----
Income before taxes 124,601 26,837 364.3
Income taxes 43,425 10,333 320.3
--------- --------- -----
Net income $ 81,176 $ 16,504 391.9
========= ========= =====
Net income per share (basic) $ 2.47 $ 0.50 394.0
========= ========= =====
Avg. shares outstanding (basic) 32,850 32,804 0.1
========= ========= =====
Net income per share (diluted) $ 2.45 $ 0.50 390.0
========= ========= =====
Avg. shares outstanding (diluted) 33,157 33,190 (0.1)
========= ========= =====
(a) Operating income plus depreciation and amortization
(b) 1999 amounts include restructuring charge of $3.1 million and an
offsetting reversal of merger costs of $1.7 million
(c) 1999 amounts include interest income associated with a working
capital settlement with CBS of $2.0 million
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1999 and 1998
(Amounts in thousands)
1999 1998
ASSETS
Current assets:
Cash $ 8,875 $ 13,909
Trade receivables 98,278 97,455
Other current assets 79,124 65,887
------- ------
Total current assets 186,277 177,251
Property and equipment, net of
accumulated depreciation 603,804 583,301
Intangible assets, net of
accumulated amortization 128,507 98,553
Investments 91,328 77,309
Long-term notes and interest
receivable 37,026 225,949
Other assets 39,010 51,386
------- ------
Total assets $1,085,952 $ 1,213,749
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of
long-term debt $ 1,125 $ 1,125
Accounts payable and
accrued liabilities 104,562 115,186
-------- -------
Total current liabilities 105,687 116,311
Long-term debt 302,201 500,839
Deferred income taxes 50,091 34,627
Other liabilities 33,315 32,289
Minority interest 2,231 12,660
Stockholders' equity 592,427 517,023
------- -------
Total liabilities and
stockholders' equity $1,085,952 $1,213,749
========== =========
--30--md/na*
CONTACT: Gaylord Entertainment Co., Nashville
Media Contact: Tom Adkinson
E-mail: tadkinson@gaylordentertainment.com
Telephone: 615/316-6302
or
Investor Contact: J. Russell Worsham
E-mail: rworsham@gaylordentertainment.com
Telephone: 615/316-6564
KEYWORD: TENNESSEE TEXAS
INDUSTRY KEYWORD: CABLE ENTERTAINMENT MUSIC TELEVISION/RADIO
TRAVEL EARNINGS