NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION:
The following description of the Ryman Hospitality Properties, Inc. 401(k) Savings Plan (the Plan) provides only general information. Participants
should refer to the Plan document or Summary Plan Description for a more complete description of the Plans provisions.
General
Ryman (the Company or Employer) established the Plan, originally effective on October 1, 1980. The Plan is a profit sharing plan
with a cash or deferral arrangement available to qualifying employees of the Company. The Plan is intended to conform to and qualify under Sections 401 and 501 of the Internal Revenue Code of 1986, as amended (IRC). The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
Administration
The Benefits Trust Committee of the Plan is responsible for the administration and operation of the Plan. Lincoln Financial Group (the
Recordkeeper) has been retained to provide recordkeeping services for the Plan. Wilmington Trust Company (the Trustee) is responsible for the custody and management of the Plans assets.
Eligibility
An employee is eligible to
participate in the Plan the first day of the payroll period on or after the day such employee has completed three months of eligible service, as defined in the Plan, and attained the age of twenty-one. Classes of employees excluded from
participation in the Plan include: (1) certain employees covered by collective bargaining agreements, unless the agreement provides for plan participation, (2) casual employees, (3) leased employees, (4) hourly employees who were hired on an
on-call basis, (5) non-resident, non-United States citizens other than employees on a VISA which requires benefit coverage to be offered, such as H1B, H1B1, or Trade NAFTA, and employees who have an employment authorization card,
such as a green card, and (6) individuals classified as independent contractors. Effective January 1, 2016, on-call employees are eligible to participate in the Plan.
Contributions
Participants may contribute up to
40% of their annual compensation, subject to certain limitations, with the contributions and earnings thereon being nontaxable until withdrawn from the Plan. The Company makes matching contributions under the Plan equal to 100% of each
participants tax-deferred contributions which do not exceed 4% of the participants compensation.
The Company may also make a discretionary,
non-elective profit sharing contribution to the Plan; however, an annual contribution is not required. The non-elective contribution is available to all participants employed on the last day of the Plan year. No discretionary non-elective
contributions were made in 2015.
Participants direct the investment of their contributions and all Employer contributions into various investment options
offered by the Plan. At 12/31/15, the Plan offered a Company common stock fund, one common collective trust and twelve mutual funds as investment options for participants.
7
Participant Accounts
Each participant account is credited (charged) with the participants and the Companys contributions and an allocation of net investment earnings
(losses) and administrative expenses. Allocations of contributions are based on participant compensation, and allocations of net investment earnings (losses) are based on account balances as defined in the Plan document. The benefit to which a
participant is entitled is the benefit that can be provided from the participants vested account balance.
Vesting
Participants are immediately vested in their voluntary pre-tax contributions and any earnings or losses thereon. All participants are 100% vested in all
employer matching and profit sharing contributions.
Payment of Benefits
Upon termination of service due to death, disability, retirement or separation, a participant receives his or her vested account balance in a lump-sum
distribution or direct rollover into another qualified plan, individual retirement account, or other eligible employer plan. If the value of the vested account is greater than $5,000, the participant may elect to defer payment to a later date, but
not beyond the participants Required Beginning Date, as defined by the IRC. If the value of the vested account is not in excess of $5,000, the vested account will be payable in a single sum payment of the entire amount of the vested account.
The Plan administrator may, in accordance with a policy that does not discriminate among participants, establish periodic times when the Plan administrator will direct the distribution of such amounts without the request or approval of the
participant. In the event such distribution is greater than $1,000 (and not in excess of $5,000), if the participant does not elect to have the distribution paid directly to an eligible retirement plan specified by the participant in a direct
rollover or to receive the distribution directly, then the Plan administrator will pay the distribution in a direct rollover to an individual retirement plan designated by the Plan administrator.
In the event of financial hardship, as defined in the Plan document, or where a participant has attained the age of 59
1/2, a participant may elect, while still in the employment of the Company, to withdraw all or part of his or her vested balance (subject to limitations contained in the Plan). A participant may
receive a hardship withdrawal only after obtaining the maximum number of loans to which he or she is entitled under the Plan. Cases of financial hardship are reviewed and approved by the Recordkeeper in accordance with the applicable provisions of
the IRC. A participant may elect at any time to withdraw amounts that were contributed to the Plan as a rollover contribution, subject to certain limitations in the Plan document.
Forfeitures
Forfeitures are used to pay Plan
expenses. Any remaining forfeitures are then used to reduce future Company contributions. Forfeited amounts for the year ended December 31, 2015 were not material to the financial statements.
Notes Receivable from Participants
Each
participant may borrow up to a maximum amount equal to the lesser of $50,000, reduced by the amount, if any, of the highest balance of all outstanding loans to the participant during the one-year period ending on the day prior to the day on which
the loan in question is made, or 50% of his or her vested account balance. The minimum loan amount is $1,000. The loans are secured by the balances in the participants accounts and bear interest at the prime rate quoted in the Wall Street
Journal on the first day of the month in which the loan is made, plus 2%. The interest rate was 5.25% on all outstanding loans at December 31, 2015. The loans are repaid ratably through payroll deductions over a period of five years or less for a
general-purpose loan or over a period of ten years or less for a primary residence loan.
8
Voting Rights
Each participant is entitled to exercise voting rights attributable to the shares of the Companys common stock allocated to his or her account and is
notified by the transfer agent, Computershare, prior to the time such rights are to be exercised.
Administrative Expenses
Substantially all administrative expenses of the Plan are paid directly by the Plan.
Plan Termination
Although it has not expressed
any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of the IRC and ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The accompanying financial
statements have been prepared under the accrual method of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Plan management to
make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
The
Plans investments are valued at fair value in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification 820,
Fair Value Measurements
(ASC 820). These investment
values are discussed more fully in Note 3 below. Purchases and sales of investments are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual basis.
Payment of Benefits
Benefits are recorded when
paid.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent notes receivable from
participants are reclassified as distributions based upon the terms of the plan document.
Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to
the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants
account balances and the amounts reported in the statements of net assets available for benefits.
9
New Accounting Pronouncements
In May 2015, the FASB issued Accounting Standards Update 2015-07,
Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share
(or its Equivalent)
, (ASU 2015-07). ASU 2015-07 removes the requirement to categorize within the fair value hierarchy investments for which fair values are estimated using the net asset value practical expedient provided by ASC 820.
Disclosures about investments in certain entities that calculate net asset value per share are limited under ASU 2015-07 to those investments for which the entity has elected to estimate fair value using the net asset value practical expedient. ASU
2015-07 is effective for the Plan for fiscal years beginning after December 15, 2015, with retrospective application to all periods presented. Early adoption is permitted. The Plan retrospectively adopted this ASU in 2015, and this adoption did not
have a material impact on the Plans financial statements.
In July 2015, the FASB issued Accounting Standards Update 2015-12,
Plan Accounting:
Defined Benefit Pensoin Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965)
, (ASU 2015-12). ASU 2015-12 removes the previous requirements to measure fully benefit-responsive
investment contracts at fair value, and requires the measurement of these contracts at contract value. In addition, ASU 2015-12 eliminates the requirement to disclose individual investments which comprise 5% or more of total net assets available for
benefits, as well as the net appreciation or depreciation of fair values by type. ASU 2015-12 also requires plans to continue to disaggregate investments that are measured using fair value by type; however, plans are no longer required to also
disaggregate investments by nature, characteristics and risks. Furthermore, the disclosure of information about fair value measurements shall be provided by general type of plan asset. ASU 2015-12 is effective for the Plan for fiscal years beginning
after December 15, 2015, with retrospective application to all periods presented. Early adoption is permitted. The Plan retrospectively adopted this ASU in 2015, and this adoption did not have a material impact on the Plans financial
statements.
3. FAIR VALUE MEASUREMENTS:
The Plan
uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted
prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring the Plan to develop its own assumptions. The assets or
liabilitys fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and
minimize the use of unobservable inputs.
The following is a description of the valuation methodologies used for assets measured at fair value. There have
been no changes in the methodologies used at December 31, 2015 and 2014:
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Mutual funds valued at the net asset value (fair value) per unit (share) of the funds or the portfolio based upon quoted market prices in an active market.
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Common collective trust made up of investment contracts. The net asset value of the investment contracts is calculated by discounting the related cash flows based on current yields of similar instruments with
comparable durations. The Plan presents investments in collective trust funds that include benefit-responsive investment contracts at net asset value, which is considered a practical expedient to estimate fair value, in the statements of net assets
available for benefits.
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Common stock The Company stock fund consists of Company common stock that is valued at quoted market prices and interest-bearing cash, both of which approximate fair value. The Company common stock is valued at
the closing price reported on the active market on which the individual securities are traded.
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10
The methods described above may produce a fair value calculation that may not be indicative of net realizable
value or reflective of future fair values. Furthermore, while the Plans management believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine
fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table presents, by
level within the fair value hierarchy, the Plans assets at fair value at December 31, 2015 (in thousands):
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Level 1
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Level 2
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Level 3
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Total
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Mutual funds
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$
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54,247
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|
|
$
|
|
|
|
$
|
|
|
|
$
|
54,247
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|
Company stock fund
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|
|
2,968
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|
|
|
|
|
|
|
|
|
|
|
2,968
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total assets in the fair value hierarchy
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|
|
57,215
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|
|
|
|
|
|
|
|
|
|
|
57,215
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Investments measured at net asset value (a)
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|
|
|
|
|
|
|
|
|
|
|
|
|
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8,780
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Investments at fair value
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|
$
|
57,215
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
65,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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The following table presents, by level within the fair value hierarchy, the Plans assets at fair value at December 31,
2014 (in thousands):
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|
|
|
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|
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|
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|
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Level 1
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|
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Level 2
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|
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Level 3
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Total
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Mutual funds
|
|
$
|
59,605
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
59,605
|
|
Company stock fund
|
|
|
3,462
|
|
|
|
|
|
|
|
|
|
|
|
3,462
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total assets in the fair value hierarchy
|
|
|
63,067
|
|
|
|
|
|
|
|
|
|
|
|
63,067
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Investments measured at net asset value (a)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Investments at fair value
|
|
$
|
63,067
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
72,539
|
|
|
|
|
|
|
|
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|
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(a)
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The common collective trust is measured at net asset value as a practical expedient to estimate fair value and, therefore, has not been classified in the fair value hierarchy. The fair value amounts presented in this
table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the statements of net assets available for benefits.
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The following table summarizes the fair value of the Union Bond & Trust Company Stable Value Fund, a common collective trust, which is shown below at fair
value based on the net asset value per share practical expedient as of December 31, 2015 and 2014, respectively (in thousands):
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|
|
|
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December 31,
|
|
2015
|
|
2014
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Fair value
|
|
$8,780
|
|
$9,472
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Unfunded commitments
|
|
n/a
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|
n/a
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Redemption frequency
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|
Daily
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|
Daily
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Redemption notice period
|
|
30 days
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|
30 days
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11
4. INCOME TAX STATUS:
The Plan obtained a favorable determination letter on February 14, 2011, and an additional favorable determination letter on January 11, 2016, in which
the Internal Revenue Service (IRS) stated that the Plan, as then designed, was qualified and the trust established under the Plan was tax-exempt under Sections 40d1 and 501 of the IRC. The Plan administrator believes that the Plan is
being operated in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plans financial statements.
Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a
tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of
December 31, 2015 and 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing
jurisdictions; however, there are currently no audits for any tax periods in progress.
5. RELATED PARTY TRANSACTIONS:
All plan expenses (which consist of routine expenses) were paid to parties-in-interest. In addition, the Plan invests in the common stock of the Company. At
December 31, 2015 and 2014, the Plan held 0.1 million shares of common stock of the Company, which represented less than 1% of the outstanding shares of the Company at those dates. Additionally, the Plan holds notes receivable in the form of
participant loans and such transactions qualify as party-in-interest transactions.
Certain fees incurred by the Plan for investment management services
are netted within net depreciation in fair value of investments, as they are paid through revenue sharing, rather than as a direct payment from the Plan.
12