SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One) | ||
[X] | Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 | |
For the fiscal year ended December 31, 2001 | ||
or |
||
[ ] | Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 | |
For the transition period from _______________ to _______________ |
Commission File No.: 1-13079
GAYLORD ENTERTAINMENT COMPANY
401(K) SAVINGS PLAN
(Full title of the plan)
GAYLORD ENTERTAINMENT COMPANY
ONE GAYLORD DRIVE
NASHVILLE, TENNESSEE 37214
(Name of the issuer of the securities held pursuant to the plan
and the address of its principal executive office)
GAYLORD ENTERTAINMENT COMPANY
401(K) SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2001 AND 2000
TABLE OF CONTENTS
Reports of Independent Auditors |
1 | ||||
Audited Financial Statements |
|||||
Statements of Net Assets Available for Benefits |
3 | ||||
Statement of Changes in Net Assets Available for Benefits |
4 | ||||
Notes to Financial Statements |
5 | ||||
Supplemental Schedule |
|||||
Schedule H, Line 4i Schedule of Assets (Held at End of Year) |
11 |
Reports of Independent Auditors
To the Benefits Trust Committee
Gaylord Entertainment Company 401(k) Savings Plan
We have audited the accompanying statement of net assets available for benefits of the Gaylord Entertainment Company 401(k) Savings Plan as of December 31, 2001, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
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In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2001, and the changes in its net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States.
Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2001 is presented for the purpose of additional analysis and is not a required part of the financial statements, but is supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plans management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the financial statements as of and for the year ended December 31, 2001, and in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
June 25, 2002
Nashville, Tennessee
The following is a copy of the audit report previously issued by Arthur Andersen LLP in connection with the Plans filing on Form 11-K for the year ended December 31, 2000. This audit report has not been reissued by Arthur Andersen LLP in connection with this filing on Form 11-K. See exhibit 99 for further discussion.
To the Benefits Trust Committee of the
Gaylord Entertainment Company 401(k) Savings Plan:
We have audited the accompanying statement of net assets available for benefits of the Gaylord Entertainment Company 401(k) Savings Plan as of December 31, 2000 and 1999, and the related statement of changes in net assets available for benefits for the years then ended. These financial statements and the schedule referred to below are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Gaylord Entertainment Company 401(k) Savings Plan as of December 31, 2000 and 1999, and the changes in its net assets available for benefits for the
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years then ended, in conformity with accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held at end of year (Schedule 1) is presented for the purpose of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plans management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Nashville, Tennessee
June 18, 2001
Gaylord Entertainment Company 401(k) Savings Plan
Statements of Net Assets Available for Benefits
(In thousands)
December 31, | |||||||||
2001 | 2000 | ||||||||
Assets |
|||||||||
Investments, at fair value |
$ | 63,926 | $ | 71,006 | |||||
Cash |
378 | 688 | |||||||
Interest and dividend income receivable |
8 | 8 | |||||||
Total assets |
64,312 | 71,702 | |||||||
Liabilities |
|||||||||
Accrued administrative expenses |
6 | 20 | |||||||
Total liabilities |
6 | 20 | |||||||
Net assets available for benefits |
$ | 64,306 | $ | 71,682 | |||||
See accompanying notes.
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Gaylord Entertainment Company 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
(In thousands)
Additions to net assets |
|||||
Contributions: |
|||||
Participants |
$ | 4,105 | |||
Employer, net of forfeitures |
1,498 | ||||
Total contributions |
5,603 | ||||
Investment income: |
|||||
Interest |
275 | ||||
Dividends |
1,453 | ||||
Total investment income |
1,728 | ||||
Total additions |
7,331 | ||||
Deductions from net assets |
|||||
Benefits paid to participants |
8,458 | ||||
Net depreciation in fair value of investments |
6,072 | ||||
Administrative expenses and other |
177 | ||||
Total deductions |
14,707 | ||||
Net decrease |
(7,376 | ) | |||
Net assets available for benefits at beginning of year |
71,682 | ||||
Net assets available for benefits at end of year |
$ | 64,306 | |||
See accompanying notes.
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Gaylord Entertainment Company 401(k) Savings Plan
Notes to Financial Statements
December 31, 2001
1. Description of Plan
The following summary of the Gaylord Entertainment Company 401(k) Savings Plan (the Plan) is provided for general information purposes. Participants should refer to the Plan document for more complete information.
Purpose of the Plan
The Plan was established on October 1, 1980, to encourage and assist employees of Gaylord Entertainment Company (the Company), in adopting a regular savings program and to help provide additional security for their retirement. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
The Plan has been amended and restated on January 1, 1995, April 1, 1996, January 1, 1997, January 1, 2001 and January 1, 2002. As part of the April 1, 1996 amendment and restatement, the Plan became the Gaylord Entertainment Company 401(k) Savings Plan. The amendments effective January 1, 1997, had no significant effect on the Plan other than to clarify terms used in the original Plan document. The amendment effective January 1, 2001 eliminated all payment options other than a lump sum payment option. Amendments subsequent to December 31, 2001 are discussed further in Note 7.
Eligibility
An employee is eligible to participate in the Plan upon the earliest of January 1, April 1, July 1 or October 1 (the entry dates) as of which such employee has completed one year of eligible service, which includes one thousand hours of service during an eligibility computation period, as defined by the Plan, and attained the age of twenty-one years. Classes of employees excluded from participation in the Plan include: (1) certain employees covered by collective bargaining agreements, (2) casual employees, (3) leased employees, (4) hourly employees who were hired on an on-call basis and (5) non-resident, non-United States citizens.
Participation in the Plan is voluntary. In order to participate, an eligible employee must apply for participation on the Plans application for enrollment at least twenty days prior to the entry date on which the employee desires to begin participation.
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1. Description of Plan (continued)
Contributions
A participant may elect to make tax deferred contributions in amounts between one and twenty percent of his or her compensation through regular payroll deferrals. The Company makes a contribution to the Plan in an amount equal to fifty percent of the first six percent of the participants compensation that a participant contributes to the Plan.
Vesting
Participants are immediately vested in their contributions including rollover contributions plus earnings thereon. Participants vest in the Company contributions portion of their accounts plus earnings thereon beginning at forty percent after completion of two years of service as defined by the Plan, increasing by twenty percent with each additional year of service. As such, participants with five or more years of service are fully vested in their entire account balances. Participants retiring at the normal retirement age or becoming permanently and totally disabled, as defined by the Plan, are fully vested in their entire account balances.
Forfeitures
The forfeited balances of terminated participants nonvested accounts are used to reduce future employer contributions. During 2001, $168,998 was forfeited by terminated employees. At December 31, 2001 and 2000, there were $71,876 and $23,032, respectively, of unallocated forfeitures included in net assets that were held in suspense.
Investment Options
Participants may direct the investments of all contributions and prior account balances into funds established by the Plan. During 2001, participants allocated their investments in 1% increments in eight investment options.
Distributions
Participants may withdraw their vested account balances upon retirement, death, disability, termination of employment, or early retirement. Participants can choose to have the amount of their vested account balances either paid to them in lump sum or rolled over directly into another qualified plan or individual retirement account. Participants with vested account balances less than $5,000 automatically receive lump sum distributions.
In the event of financial hardship (as defined by the Plan) or where a participant has attained the age of 59-1/2 years, a participant may elect, while still in the employment of the Company, to withdraw all or part of their vested balance amount. A participant may receive a hardship withdrawal only after obtaining the maximum number of loans to which they are entitled. Cases of financial hardship are reviewed and approved by the Plans recordkeeper in accordance with
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1. Description of Plan (continued)
the applicable provisions of ERISA. A participant may elect at any time to withdraw amounts that were contributed to the Plan as a rollover contribution (subject to certain limitations of the Plan).
Trustee
The assets of the Plan are administered under the terms of a trust agreement between the Company and Charles Schwab Trust Company (the Trustee).
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to terminate the Plan at any time subject to the provisions of ERISA. In the event the Plan is terminated, participants vest fully in their account balances.
Administrative Expenses
Substantially all administrative expenses of the Plan, which include investment manager and Trustee fees, are paid by the Plan participants based on a flat dollar fee plus an asset-based fee or actual expenditures of the Plan.
Participant Loans
A participant may borrow from their fund account a minimum of $1,000 up to a maximum of $50,000 or 50% of his or her vested account balance. Loans are repayable through payroll deductions over periods ranging up to 60 months unless the loan is to be used to acquire, construct or substantially reconstruct the participants principal residence. Each loan bears an interest rate of prime plus 2% and is fixed over the life of the note. A participant may have no more than three loans outstanding at any time. Loans in default at the end of the Plan year are deemed to be distributions.
Voting Rights
Each participant is entitled to exercise voting rights attributable to the shares of Company common stock allocated to his or her account and is notified by the transfer agent, SunTrust Bank, prior to the time such rights are to be exercised.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of accounting.
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2. Summary of Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Plans management to make estimates that affect the amounts reported in the accompanying financial statements and notes. Actual results could differ from these estimates.
Investment Valuation and Income Recognition
The Plans investments are stated at fair value, which equals the quoted market price on the last business day of the Plan year. Shares of registered investment companies are valued at quoted market prices which represent the net asset values of shares held by the Plan at year end. Shares of collective trust fund investments are valued at market value which derives its value from the underlying investments which are at contract value. Shares of Company stock are valued at the last reported sales price on the last business day of the Plan year. Participant loans are valued at their outstanding balances, which approximate fair value.
Interest income is recorded as earned on the accrual basis. Dividend income is recorded on the ex-dividend date.
3. Investments
As of December 31, 2001 and 2000, the following investments were in excess of 5% of net assets (in thousands):
2001 | 2000 | |||||||
Dodge and Cox Balanced Fund |
$ | 17,513 | $ | 15,887 | ||||
Schwab S & P 500 Fund |
17,133 | 21,824 | ||||||
Gartmore Morley Stable Value Fund |
12,417 | 11,934 | ||||||
Janus Enterprise Fund |
5,718 | 8,581 | ||||||
American AAdvantage International Equity Fund |
* | 3,902 |
* | This investment is not greater than 5% of net assets |
During 2001, the Plans investments (including investments purchased, sold as well as held during the year) appreciated (depreciated) in fair value by $(6,072) as follows (in thousands):
2001 | ||||
Mutual funds |
$ | (7,102 | ) | |
Interest in collective trust funds |
697 | |||
Shares of Gaylord Entertainment Company- common stock |
333 | |||
$ | (6,072 | ) | ||
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4. Income Tax Status
The Plan has received its latest determination letter from the Internal Revenue Service dated December 3, 1997 stating that the Plan is qualified under section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Subsequent to the issuance of the determination letter, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator has indicated that it will take the necessary steps, if any, to maintain the Plans qualified status.
5. Reconciliation of Financial Statements to Form 5500
The financial statements of the Plan, as prepared under accounting principles generally accepted in the United States, include distributions to participants as deductions when paid. The Department of Labor requires that amounts allocated to participants who have elected to withdraw from the Plan, but have not yet been paid, be recorded as a liability on the Form 5500.
The following is a reconciliation of the net assets available for benefits and benefits payable at December 31, 2001 and 2000, per the financial statements to the Form 5500 (in thousands):
Net Assets Available | ||||||||||||||||
Benefits Payable | for Benefits | |||||||||||||||
2001 | 2000 | 2001 | 2000 | |||||||||||||
Per the financial statements |
$ | | $ | | $ | 64,306 | $ | 71,682 | ||||||||
Amounts allocated to withdrawing participants |
74 | 153 | (74 | ) | (153 | ) | ||||||||||
Per the Form 5500 |
$ | 74 | $ | 153 | $ | 64,232 | $ | 71,529 | ||||||||
The following is a reconciliation of benefits paid to participants for the year ended December 31, 2001, per the accompanying financial statements to the Form 5500 (in thousands):
2001 | ||||
Per the financial statements |
$ | 8,458 | ||
Add: Amounts allocated to withdrawing participants at end of year |
74 | |||
Deduct: Amounts allocated to withdrawing participants at beginning of year |
(153 | ) | ||
Per the Form 5500 |
$ | 8,379 | ||
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6. Parties-In-Interest
The Plan invests in shares of a mutual fund managed by Charles Schwab Investment Management. As Charles Schwab Trust Company acts as trustee of the Plan, transactions in this mutual fund qualify as party-in-interest. In addition, the Plan invests in common stock of the Company. At December 31, 2001 and 2000, the Plan held 91,253 and 88,253 shares, respectively, which represented less than 1% of the outstanding shares of the Company at that date.
7. Subsequent Event
On January 1, 2002, the Plan was amended as follows:
Participants may contribute to the Plan in amounts between one and forty percent of their compensation. The Company, regardless of the amount a participant contributes, will contribute a minimum of two percent of each participants salary monthly and may, at its discretion, contribute up to an additional two percent annually (Discretionary Contribution).
Additionally, participants become eligible for the Plan after ninety days of service and can vest in Company contributions and Discretionary Contributions at twenty five percent after completing each year of service, as defined by the Plan, until fully vested.
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Gaylord Entertainment Company 401(k) Savings Plan
EIN: 73-0664379 Plan No.: 002
Schedule H, Line 4i Schedule of Assets (Held at End of Year)
December 31, 2001
(in thousands)
(c) | ||||||||
Description of Investments | ||||||||
(b) | Including | (e) | ||||||
Identity of Issuer, Borrower, | Maturity Date, Rate of Interest, | Current | ||||||
(a) | Lessor, or Similar Party | Collateral, Par or Maturity Value | Value | |||||
Dodge and Cox Funds | Balanced Fund | $ | 17,513 | |||||
* | Schwab Funds | S&P 500 Fund | 17,133 | |||||
Gartmore Morley Capital Management, Inc. | Morley Stable Value Fund | 12,417 | ||||||
Janus | Enterprise Fund | 5,718 | ||||||
American AAdvantage | International
Equity Fund-Plan Class |
3,112 | ||||||
* | Gaylord Entertainment Company | Common stock, 91,253 shares | 2,245 | |||||
PIMCO Funds | Total Return Fund | 2,069 | ||||||
RS Funds Participant Loans |
Emerging Growth Fund Interest rates ranging from |
1,583 | ||||||
7.00% to 11.50% | 2,136 | |||||||
$ | 63,926 | |||||||
* | Represents a party-in-interest |
Column (d) is not included as investments are participant directed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator of the Gaylord Entertainment Company 401(k) Savings Plan has duly caused this annual report to be signed on its behalf by the undersigned hereto duly authorized.
GAYLORD ENTERTAINMENT COMPANY 401(k) SAVINGS PLAN |
||
By: |
Benefits Trust Committee for the Gaylord Entertainment Company 401(k) Savings Plan |
|
Date: June 28, 2002 | By: | /s/ Kim D. Cannon |
|
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Kimberly Cannon Chairperson of the Gaylord Entertainment Company 401(k) Savings Plan Benefits Trust Committee |
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INDEX TO EXHIBITS
Number | Description | Page | ||||
23 | Consent of Independent Public Accountants | 14 | ||||
99 | Notice Regarding Consent of Arthur Andersen LLP | 15 |
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EXHIBIT 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (No. 333-37051) pertaining to the Gaylord Entertainment Company 401(k) Savings Plan of our report dated June 25, 2002, with respect to the financial statements and supplemental schedule of the Gaylord Entertainment Company 401(k) Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2001. /s/ Ernst & Young LLP Nashville, Tennessee June 25, 2002 14
EXHIBIT 99 NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP Section 11(a) of the Securities Act provides that if part of a registration statement at the time it becomes effective contains an untrue statement of a material fact, or omits a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring a security pursuant to such registration statement (unless it is proved that at the time of such acquisition such person knew of such untruth or omission) may assert a claim against, among others, an accountant who has consented to be named as having certified any part of the registration statement or as having prepared any report for use in connection with the registration statement. Prior to the date of this Form 11-K, which is incorporated by reference into Gaylord Entertainment Company's filings on Form S-8 No. 333-37051, on June 14, 2002, the Gaylord Entertainment Company 401(k) Savings Plan dismissed Arthur Andersen LLP as its independent auditors. On June 14, 2002, the Gaylord Entertainment Company 401(k) Savings Plan appointed Ernst & Young LLP to replace Arthur Andersen LLP as the independent auditor of the Plan. After reasonable efforts, the Plan has been unable to obtain Arthur Andersen's current written consent to the incorporation by reference into the Gaylord Entertainment Company's filings on Form S-8 No. 333-37051 of its audit reports with respect to the Plan's financial statements as of December 31, 2000 and for the year then ended. The consent of Arthur Andersen LLP was filed last year when the Plan's financial statements for December 31, 2000 were initially filed. Under these circumstances, Rule 437a under the Securities Act permits the Plan to file this Form 11-K without a current written consent from Arthur Andersen LLP. However, as a result, Arthur Andersen LLP may not have any liability under Section 11(a) of the Securities Act for any untrue statements of a material fact contained in the financial statements audited by Arthur Andersen LLP or any omissions of a material fact required to be stated therein to the extent that a current written consent would have been required. Accordingly, Plan participants may be limited in their ability to assert a claim against Arthur Andersen LLP under Section 11(a) of the Securities Act because it has not currently consented to the incorporation by reference of its previously issued report into Gaylord Entertainment Company's filing on Form S-8 No. 333-37051. 15