11. Commitments and Contingencies

Capital Leases

In the accompanying consolidated balance sheets, the following amounts of assets under capitalized lease agreements are included as shown and the related obligations are included in debt (amounts in thousands):


	2014			2013
Property and equipment	$	4,367		$	3,736
Prepaid expenses and other assets		130			130
Accumulated depreciation		(2,584	)		(2,377	)

Net assets under capital leases	$	1,913		$	1,489

Operating Leases

Rental expense for operating leases was $14.7 million, $14.1 million, and $16.2 million for 2014, 2013 and 2012, respectively. Non-cash lease expense for 2014, 2013, and 2012 was $5.5 million, $5.6 million and $5.7 million, respectively, as discussed below.

Future minimum cash lease commitments under all non-cancelable leases in effect at December 31, 2014 are as follows (amounts in thousands):


	Capital			Operating
	Leases			Leases
2015	$	409		$	5,097
2016		46			4,704
2017		46			4,279
2018		46			4,348
2019		46			4,579
Years thereafter		842			604,801

Total minimum lease payments		1,435		$	627,808

Less amount representing interest		(380	)

Total present value of minimum payments		1,055
Less current portion of obligations		(377	)

Long-term obligations	$	678

The Company entered into a 75-year operating lease agreement during 1999 for 65.3 acres of land located in Osceola County, Florida for the development of Gaylord Palms. The lease requires the Company to make annual base lease payments, which were approximately $3.8 million in 2014. The lease agreement provides for an annual 3% escalation of base rent. The terms of this lease require that the Company recognize lease expense on a straight-line basis, which resulted in an annual base lease expense of approximately $9.4 million for 2014, 2013, and 2012. This rent included approximately $5.5 million, $5.6 million, and $5.7 million of non-cash expenses during 2014, 2013, and 2012, respectively. At the end of the 75-year lease term, the Company may extend the operating lease to January 31, 2101, at which point the buildings and fixtures will be transferred to the lessor. The Company also records contingent rental expense based upon net revenues associated with the Gaylord Palms operations. The Company recorded $2.0 million, $1.9 million, and $2.0 million of contingent rental expense related to the Gaylord Palms in 2014, 2013, and 2012, respectively.

Other Commitments and Contingencies

As discussed in Note 7, the Company’s qualified retirement plan incurred increased lump-sum distributions during 2013, partially due to the transfer of a large number of the retirement plan participants at Gaylord Opryland to Marriott in connection with the REIT conversion, which resulted in an increase in the number of participants eligible for distributions. In 2013, the Pension Benefit Guaranty Corporation (“PBGC”) notified the Company that due to a purported cessation of management operations at the Company as a result of the management transition to Marriott, the Company may be required, pursuant to §4062(e) of ERISA, to take certain actions regarding the plan, including possibly accelerating funding or providing security for future plan liabilities. The Company responded to the PBGC, stating the reasons that it does not believe that the Company’s REIT conversion represents a cessation of management operations, and contesting any liability vigorously. The PBGC, which had indicated that it did not agree with the Company’s position, had previously announced a moratorium on this type of enforcement action through December 31, 2014.

On December 16, 2014, the 2015 Federal Consolidated and Further Continuing Omnibus Appropriations Act (the “Appropriations Act”) became law. The Appropriations Act included provisions amending the applicability of ERISA §4062(e) to certain business transactions and modifying the enforcement mechanisms available to the PBGC in the event that ERISA §4062(e) did apply. Based on the advice of its professional advisors, the Company believes that the provisions of the Appropriations Act eliminates any basis for any PBGC enforcement action under ERISA §4062(e) as a result of the purported cessation of management operations at Gaylord Opryland in connection with the REIT conversion.

The Company is self-insured up to a stop loss for certain losses relating to workers’ compensation claims and general liability claims through September 30, 2012, and for certain losses related to employee medical benefits through December 31, 2012. The Company’s insurance program has subsequently transitioned to a low or no deductible program. The Company has purchased stop-loss coverage in order to limit its exposure to any significant levels of claims relating to workers’ compensation, employee medical benefits and general liability for which it is self-insured.

The Company has entered into employment agreements with certain officers, which provides for severance payments upon certain events, including after a change of control.

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.