2013 annual report
Dear
Fellow
Share-
holDerS
I am pleased to report to you that 2013
was a year of many successes for Viad
as we continued our focused initiatives
to operate more efficiently, expand
our client base and generate growth
in profits. Income before other items
increased by 15.6 percent to $1.26 per
share and segment operating income
increased 9.6 percent to $45.9 million
on a revenue decline of 5.1 percent.
I want to thank the entire Viad team for rising to the chal-
lenge to deliver solid year-on-year improvement despite
revenue headwinds from negative show rotation in the
Marketing & Events Group and massive flooding in Alberta,
Canada that temporarily hampered tourism in Banff and
Jasper during late June and early July. I am proud to work
with this team of dedicated professionals. I am also grate-
ful to Viad’s valued customers and to our knowledgeable
Board of Directors for their collective expertise and ongo-
ing support.
Our management team and Board are committed to
delivering enhanced value to our shareholders and to pru-
dently managing capital. At December 31, 2013, the bal-
ance sheet of the Company remained strong with cash
and equivalents totaling $45.8 million and very little debt.
Our strong balance sheet enabled us to return a total of
$81.3 million to our shareholders through the form of
special dividends that were paid in November 2013 and
February 2014. We were pleased to reward our loyal
shareholders with these significant payments.
Marketing & Events Group Highlights
Marketing & Events Group operating income increased
12.2 percent in 2013 despite a $64 million headwind as
a result of negative show rotation and work performed in
connection with the 2012 Summer Olympic Games. The
2013 full year operating margin increased to 2.4 percent
from 2 percent in 2012. Throughout the year, we con-
tinued to make progress in optimizing our U.S. service
For Lightfair 2013, Philips came to GES to design an exhibit that would mirror
the direction of their new marketing approach and company positioning to a
customer and integrated solutions oriented approach. This photo highlights the
Hospitality Segment where spaces can be dramatically changed using Philips’
new color changing products.
delivery network and we made measurable progress
with our labor management initiative as we reduced
our labor-to-revenue ratio by 70 basis points on U.S.
base same-shows, which follows a 50 basis point
reduction in 2012. Overall, U.S. segment operating
income nearly doubled to $11 million in 2013 versus
$5.6 million in 2012.
Our continued focus on business development also
paid off in 2013, with a number of key contract renew-
als with leading show organizers and corporate exhib-
itors, including Advanstar, Penton Media, ICSC, Bristol-
Myers Squibb, Novartis and Boehringer Ingelheim, to
name a few. These are representative examples of the
great work done by our sales, marketing, and service
teams to extend our relationships with current cus-
tomers and to win new business that bolsters our
market share.
GES partnered with Philips Lighting on an award-win-
ning, innovative project at LIGHTFAIR® International
(LFI), North America’s largest annual architectural and
commercial lighting trade show and conference. At LFI,
Philips moved from an individual brand focus to a cus-
tomer and integrated-solutions focus. To bring our cli-
ent’s vision to life, GES designers, brand architects and
marketers collaborated and helped Philips consolidate
40 brands with multiple exhibits into one, dynamic
3D experience that engaged each of their audiences.
GES created a variety of market-specific environments
where attendees experienced the products in settings
that replicated real-world conditions. Philips became
the must-see exhibit at LFI and won Best of Show and
GES’ work with Philips was also recognized by BtoB
and other trade magazines.
The international team also generated strong sales
momentum in 2013. Reinforcing our position as the
leader in the U.K. market, we secured a new four-year
contract with event organizer i2i Events Group that
is likely to be the largest exhibition services contract
ever signed in the U.K. Our office in Amsterdam con-
tinued to gain measurable traction by winning and pro-
ducing an extensive portfolio of events for UBM Live,
a leading business-to-business events organizer. And
PennWell Corporation, a leading international exhibi-
tions organizer, awarded GES a contract to provide
Our management team and Board
are committed to delivering enhanced
value to our shareholders…
services for all of its events in the Middle East in 2014
and 2015. This relationship brings to 50 the number of
shows that GES delivers in that high-growth market.
Travel & Recreation Group Highlights
Our Travel & Recreation Group delivered strong
results in 2013 with revenue growth of 3.8 percent,
a 7.7 percent increase in segment operating income
and a 70 basis point improvement in operating mar-
gin. Brewster, Glacier Park and Alaska Denali Travel all
posted higher revenue and operating income as com-
pared to 2012. We experienced greater visitation to
our attractions and higher occupancy at most of our
lodges and hotels during 2013.
In addition to delivering strong results in 2013, we also
crossed a significant milestone with the completion of
the Glacier Skywalk. After several years of planning
and construction, we are now preparing for its Grand
Opening in May 2014. The Glacier Skywalk is a great
example of the imagination and innovation put into
action by the Travel & Recreation team.
Operated by Brewster, this new attraction starts with a
cliff-edge walkway, offering an immersive, guided experi-
ence focusing on the unique ecology, geology, glaciology
and evolutionary history of the Columbia Icefield area.
The walkway leads to a glass-floored platform extend-
ing 30 meters over the Sunwapta Valley, with stunning
views of the glacial valley 280 meters below.
From concept to completion, innovation was required
in every aspect of this project. Because it was built
alongside the Icefields Parkway, which is an extreme
environment located within Jasper National Park, cre-
ative solutions had to be developed to bring the project
to life – from environmental preservation to construc-
tion of the massive, cliff-side structure and cantilevered
platform.
To complete the experience, Brewster enlisted the help
of GES’ award-winning design and production team to
design various interactive elements for the Skywalk.
Brewster knew the GES team would be able to apply
knowledge from working with both the attraction and
theme park industries to deliver meaningful content in
a unique and innovative way, and help create an edu-
cational and exciting experience for guests of all ages.
The Skywalk has already won a number of architec-
tural and engineering awards and we are see-
ing great interest from the media and travel
industry. I firmly believe that the Skywalk
will become one of the must-see, iconic natural attrac-
tions of North America. We are excited to unveil this
amazing experience to our guests.
2014 Outlook
We expect another year of significant profit growth in
2014, with particularly strong growth in our Marketing
& Events Group where we will benefit from positive
show rotation and continued progress with margin
improvement and business development initiatives. In
addition, we continue to actively seek other opportuni-
ties to enhance shareholder value through our review
of strategic options for the business.
We are excited with the opportunities ahead and to
make the most of these opportunities, we will continue
our intense focus on innovation aimed toward:
• Enhancing our customer and guest experiences;
• Creating profitable new products and services; and
• Simplifying and becoming more efficient at how we
deliver those products and services.
We firmly believe that innovation will help Viad drive
consistent value and is a key to ensuring that we con-
tinue to exceed customer expectations and win for our
shareholders. And, we remain committed to our value
of integrity and being “Always Honest” in everything we
do.
As always, we thank you, our loyal shareholders, for your
continued support as we work to enhance shareholder
value in 2014 and the years to come.
Sincerely,
Paul B. Dykstra
Chairman, President and Chief Executive Officer
The Glacier Skywalk is a great
example of the imagination and
innovation put into action by the
Travel & Recreation team.
The Glacier Skywalk attraction includes an interactive walkway and a thrilling
glass-floored observation platform positioned above the breathtaking Sunwapta
Valley in Jasper National Park. Opening May 1, 2014, the Glacier Skywalk will
give visitors a whole new way to connect with the peaks and glaciers that sur-
round them, and the waterfalls and glacial valley nearly 1,000 feet below them!
” financial HigHligHts
.
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Revenues
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Segment Operating Income
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Adjusted EBITDA1
(in millions)
Debt-to-Capital Ratio2
1 “Adjusted EBITDA” is defined by Viad as net income attributable to Viad before interest expense, income taxes, depreciation and amortization, impairment losses and recoveries,
changes in accounting principles and the effects of discontinued operations. For further discussion and a reconciliation of Adjusted EBITDA to net income, refer to “Non-GAAP
Measure” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the attached Form 10-K.
2 “Capital” is defined as total debt and capital lease obligations plus total stockholders’ equity.
VIAD TEAM VALUES
INTEGRITY
TEAM ACHIEVEMENT
TRUST and MUTUAL RESPECT
We do the right thing 100 percent of
the time and are committed to being
“Always Honest.”
We are committed to winning as a
team and to delivering strong value for
our shareholders and customers.
We earn and sustain the trust
of others through respect and
accountability.
INNOVATION and LEADERSHIP
ENVIRONMENT
We utilize our passion and creativity to
find new ways to contribute to our suc-
cess. We are all leaders. Each one of us
is an example for someone else.
We respect our environment and
conscientiously use our natural
resources.
We believe that living these values
will lead to … SUCCESS … and
winning at all we do!
As filed with the Securities and Exchange Commission on March 7, 2014
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(cid:58)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(cid:133)
For the transition period from to
Commission file number: 001-11015
Viad Corp
(Exact name of registrant as specified in its charter)
Delaware
State or other jurisdiction of
incorporation or organization
1850 North Central Avenue, Suite 1900
Phoenix, Arizona
(Address of principal executive offices)
36-1169950
(I.R.S. Employer
Identification No.)
85004-4565
(Zip Code)
Registrant’s telephone number, including area code:
(602) 207-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $1.50 par value
Name of each exchange
on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes (cid:58) No (cid:133)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes (cid:133) No (cid:58)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes (cid:58) No (cid:133)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files.) Yes (cid:58) No (cid:133)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-
K. (cid:133)
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer
(cid:133)
Non-accelerated filer
(cid:133)
Accelerated filer
Smaller reporting company
(cid:58)
(cid:133)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:133) No (cid:58)
The aggregate market value of the Common Stock (based on its closing price per share on such date) held by non-affiliates on the last business day of the
registrant’s most recently completed second fiscal quarter (June 30, 2013) was approximately $480 million.
Registrant had 20,324,136 shares of Common Stock ($1.50 par value) outstanding as of January 31, 2014.
Documents Incorporated by Reference
A portion of the Proxy Statement for the Annual Meeting of Shareholders of Viad Corp to be held May 22, 2014 is incorporated by reference into Part III of this
Annual Report.
INDEX
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Other.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Business ...............................................................................................................................................
Risk Factors .........................................................................................................................................
Unresolved Staff Comments ................................................................................................................
Properties .............................................................................................................................................
Legal Proceedings ................................................................................................................................
Mine Safety Disclosures ......................................................................................................................
Executive Officers of Registrant..........................................................................................................
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities ..................................................................................................................................
Selected Financial Data ........................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations ...............
Quantitative and Qualitative Disclosures About Market Risk .............................................................
Financial Statements and Supplementary Data ....................................................................................
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ..............
Controls and Procedures ......................................................................................................................
Other Information ................................................................................................................................
Directors, Executive Officers and Corporate Governance ...................................................................
Executive Compensation ......................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters .................................................................................................................................................
Certain Relationships and Related Transactions, and Director Independence .....................................
Principal Accounting Fees and Services ..............................................................................................
Exhibits, Financial Statement Schedules.............................................................................................
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Item 1. Business.
PART I
Viad Corp (together with its subsidiaries, “Viad” or the “Company”) derives its revenue from experiential services
provided primarily within the exhibition and events industry and the travel and recreation industry. Viad occupies leading
positions as a value-added service provider in many of the markets in which it competes. Viad serves clients predominantly in
the United States, Canada, the United Kingdom, Germany and the United Arab Emirates.
Viad operates two business groups:
Marketing & Events Group. The Marketing & Events Group specializes in all aspects of the design, planning and
production of face-to-face events, immersive environments and brand-based experiences for clients, including show
organizers, corporate brand marketers and retail shopping centers. The mission of the Marketing & Events Group is to create
the world’s most meaningful and memorable experiences for show organizers, brand marketers, event attendees and retail
shopping centers. Show organizers include for-profit and not-for-profit show owners as well as show management
companies. Corporate brand marketers include exhibitors and domestic and international corporations which want to promote
their brands, feature new products, services and innovations and build business relationships. Viad’s retail shopping center
customers include major developers, owners and management companies of shopping malls and lifestyle centers. In 2013,
Viad derived approximately 87 percent of its consolidated revenue from products and services provided by the Marketing &
Events Group.
Travel & Recreation Group. The Travel & Recreation Group generates its revenue from tourism products and
experiential services, including world-class attractions, hotel operations, transportation services and package tour operations
in and around Western Canada, Glacier National Park in Montana, Denali National Park and Preserve in Alaska and Waterton
Lakes National Park in Alberta, Canada. In 2013, Viad derived approximately 13 percent of its consolidated revenue from
services provided by the Travel & Recreation Group.
Viad’s two business groups are supported by Viad Corporate, which provides functional support in the areas of legal,
finance and accounting, internal auditing, information technology, insurance, corporate development, real estate and tax.
Recent Business Developments
In connection with the Company’s strategic review of opportunities to enhance shareholder value, the Company paid a
special cash dividend of $2.50 per share, or $50.8 million in the aggregate, on November 14, 2013. On February 14, 2014,
the Company paid a second special cash dividend of $1.50 per share, or $30.5 million in the aggregate. Although the
Company believes that the decision to pay the special dividends is an important step in the Company’s strategic review
process, management continues to explore and evaluate further opportunities to maximize value to Viad’s shareholders,
including a potential separation of its Travel & Recreation and Marketing & Events business groups. See “There can be no
assurances that management’s current strategic evaluation of opportunities to enhance shareholder value will result in a
transaction” and “Viad’s future payment of special dividends should not be relied upon as a way to realize any future gains on
an investment” under “Item 1A - Risk Factors” for a discussion of the risks related to the payment of dividends and
management’s evaluation of these strategic alternatives, which is incorporated herein by reference.
The Company continued to realize significant benefits and improved operating margins in 2013 through its Service
Delivery Network initiative. The goals of the Service Delivery Network initiative are to improve the efficiency and
performance of the Marketing & Events Group’s U.S. warehousing operations by lowering operating costs and invested
capital by taking measures that include reducing the physical footprint and overhead associated with its warehousing
facilities. In connection with this initiative, in August 2013, the Company sold the facility located in Teterboro, New Jersey
and the land upon which it is situated for $12.7 million (net of selling costs) after determining that the facility no longer met
the Company’s operational needs. The Company has reduced its U.S. facility footprint by approximately 1.2 million square
feet since 2008, and has realized annualized cost savings of $7.7 million through the end of 2013.
The Company also generated cash flow in early 2014 as a result of the expiration of the Company’s concession
contract with the U.S. National Park Service (the “Park Service”), under which Glacier Park operated lodging, tour and
transportation and other hospitality services. The cash payments received in January 2014 by the Company consisted of
payments totaling $25 million for the Company’s “possessory interest,” which generally means the value of the structures
acquired or constructed, fixtures installed and improvements made to the concession property at Glacier National Park during
1
the term of the concession contract. The Company anticipates a cash payment of approximately $5 million for the personal
property Glacier Park used at the facilities covered by the concession contract.
Over the past several years, Viad has made acquisitions and strategic investments to grow its business. Since 2011, the
Travel & Recreation Group has acquired one property in Banff National Park (the Banff International Hotel), two properties
near Glacier National Park (the St. Mary Lodge and Grouse Mountain Lodge), one property inside Denali National Park and
Preserve (Denali Backcountry Lodge) and one property near the entrance to Denali National Park and Preserve (Denali
Cabins).
On February 19, 2013, the Marketing & Events Group purchased the assets of Resource Creative Limited (“RCL”), a
United Kingdom-based company specializing in providing creative graphic services to the exhibition, events and retail
markets throughout the United Kingdom and continental Europe, for $647,000 (£420,000) in cash, subject to certain
adjustments, plus a deferred payment of up to approximately $278,000 (£180,000) to the seller. The deferred payment is
subject to achievement by RCL of certain net revenue targets between the acquisition date and December 31, 2014, and RCL
exceeded the first net revenue target for the period ended December 31, 2013 by approximately 37 percent.
In 2013, the Company nearly completed the construction of the Glacier Skywalk, a fully accessible, cliff-edge walkway
that leads to a glass-floored observation platform overlooking the Sunwapta Valley in close proximity to the Company’s
Columbia Icefield attraction in Jasper National Park, Alberta, Canada. Construction of the Glacier Skywalk was essentially
complete as of December 31, 2013, and Viad anticipates that the Glacier Skywalk will open in May 2014.
Reportable Segments
Within the two business groups, Viad’s organizational structure, operational decision-making authority, allocation of
resources and internal reporting are aligned into the following reportable business segments:
•
•
•
Marketing & Events U.S. segment;
Marketing & Events International segment and
Travel & Recreation Group segment.
No reportable segment has a client comprising more than 7.0 percent of that segment’s revenue, and no client
comprises more than 4.5 percent of Viad’s revenue. See “The failure of a large client to renew its services contract or the loss
of business from convention facilities could adversely impact revenue” under Item “1A - Risk Factors” for a discussion of the
risks related to Viad’s client relationships which is incorporated herein by reference.
Viad’s reportable business segments are described below.
Marketing & Events U.S. Segment
The Marketing & Events U.S. segment (the “U.S. segment”) is comprised of the domestic operations of Global
Experience Specialists, Inc. and affiliates (“GES”). During 2013, the U.S. segment provided services to over 1,300
exhibitions and events and more than 179,000 exhibitors. The U.S. segment has full-service operations in every major
exhibition market in the United States, including: Las Vegas, Nevada; Chicago, Illinois; Orlando, Florida; New York, New
York and Los Angeles, California. In each of these locations, the U.S. segment is a leading event marketing agency that
produces exhibitions, events, exhibits and retail environments, and services some of the most visible and influential events in
its industry.
This segment generates revenue from the following services:
Show Organizer Services. Under agreements with show organizers, the U.S. segment serves as the official services
contractor of an exhibition, which is also referred to as a “trade show,” “convention” or “show.” As the official services
contractor, the U.S. segment provides the following services to the show organizer: general event management; planning and
consultation; concept design; exhibition layout and design; graphics and design; online management tools; show traffic
analysis; marketing and strategy; carpeting and flooring; signage; decorating products and accessories; custom graphics;
overhead rigging; booth rigging; cleaning and temporary electrical, lighting and plumbing.
Exclusive Services Provided to Exhibitors. As the official services contractor, the U.S. segment is designated by the
show organizer as the exclusive provider of certain services offered to exhibitors participating in the exhibition. This
designation provides exhibitors with a single point of contact to facilitate a timely, safe and efficient move-in and move-out
2
of the exhibition and to facilitate an organized, professional during-show experience. The exclusive services offered by the
U.S. segment to exhibitors include: material handling services; overhead rigging; temporary electrical and plumbing and
cleaning.
Discretionary Services Provided to Exhibitors. In addition to the exclusive services offered to exhibitors, the U.S.
segment competes with other service providers to sell non-exclusive services to exhibitors, including: custom exhibit design
and construction; portable and “modular” exhibits and design; integrated marketing, including pre- and post-event
communications; multimedia services; event surveys; return on investment analysis; attendee and exhibit booth traffic
analysis; staff training; online management tools; logistics and freight-forwarding; storage and refurbishment of exhibits;
booth furnishings, carpeting and signage; in-house installation and dismantling and various other show services. The U.S.
segment offers these services, combined with complete event program management and planning, to corporate brand
marketers across all exhibitions and events in which they participate. The U.S. segment competes with other service
providers to offer these discretionary services to exhibitors, regardless of whether or not the U.S. segment is the official
services contractor of the exhibition.
Other Marketing Services. The U.S. segment also provides a variety of immersive, entertaining attractions and brand-
based experiences, sponsored events, mobile marketing and other branded entertainment and face-to-face marketing solutions
for clients and venues, including movie studios, leading consumer brand marketers, shopping malls and museums. In
addition, the U.S. segment offers retail clients complete turnkey services, including design, engineering, graphic production,
fabrication, warehousing, shipping and on-site installation of retail merchandising units, kiosks and holiday environments.
The U.S. segment also provides construction and installation services for permanent installations, including museum exhibits,
corporate lobbies, visitor centers, showrooms and retail interiors.
Competition. The U.S. segment generally competes in the exhibition and events industry on the basis of discernible
differences, value, quality, price, convenience and service. The primary Viad competitor in the domestic official services
contractor market is The Freeman Company (a private company); however, the U.S. segment encounters substantial
competition from a large number of providers. No competitor has significant market share in the other categories of offerings
of the U.S. segment. All known competitors of the U.S. segment are privately held companies which provide limited public
information concerning their operations.
Marketing & Events International Segment
The Marketing & Events International segment (the “International segment”) includes all foreign operations of the
Marketing & Events Group and consists of two operating segments: Canada and EMEA (Europe, Middle East and Asia). The
International segment offers services that are similar to those provided by the U.S. segment. These services are delivered by
Viad’s wholly-owned subsidiaries including: GES Exposition Services (Canada) Limited, Global Experience Specialists
(GES) Limited and affiliates, SDD Exhibitions Limited and GES GmbH & Co. KG.
During 2013, the International segment provided services to over 1,100 exhibitions and events and more than 38,000
exhibitors. The International segment has full-service operations at many of the most active and popular exhibition and event
destinations, including nine Canadian cities, six United Kingdom cities, one German city, two cities in the United Arab
Emirates and one city in the Netherlands. In each of these locations, the International segment is a leading service provider,
servicing some of the most visible and influential events in its industry.
On February 19, 2013, Viad acquired RCL. On April 4, 2013, the operations of RCL were relocated to GES’ existing
London-based operation at ExCeL London, where GES was appointed in 2013 to supply graphics to ExCeL London’s in-
house advertising sales agency, InVision.
Competition. The International segment generally competes on the basis of discernible differences, value, quality, price,
convenience and service. The International segment is the largest provider of exhibition and event services in the countries in
which it competes. The International segment encounters competition from a large number of providers of similar services.
Most of the competitors are privately held companies which provide limited public information concerning their operations.
Travel & Recreation Group Segment
Travel and recreation services are provided by Brewster Inc. (“Brewster”), Glacier Park, Inc. (“Glacier Park”) and
Alaskan Park Properties, Inc. (“Alaska Denali Travel”). Brewster and Alaska Denali Travel are wholly-owned subsidiaries of
Viad and Glacier Park is an 80 percent owned subsidiary of Viad.
3
Brewster
Brewster is a major tourism service operator in Western Canada, delivering tourism products that include world-class
hospitality services, attractions, inbound package tour operations and corporate and event management and transportation
services.
Hospitality. Brewster operates three hotels in Alberta: the Mount Royal Hotel and the Banff International Hotel, both of
which are located in the heart of Banff National Park in downtown Banff, Alberta, Canada, and the Glacier View Inn, which
is located on the Columbia Icefield between Lake Louise and Jasper. The hotels cater principally to leisure travelers.
Attractions. Brewster’s attractions include the Banff Gondola, the Columbia Icefield Glacier Adventure and the Banff
Lake Cruise operations. The Banff Gondola transports visitors to an elevation of over 7,000 feet above sea level to the top of
Sulphur Mountain in Banff, Alberta, Canada, offering an unobstructed view of the Canadian Rockies and overlooking the
town of Banff and the Bow Valley. The Columbia Icefield Glacier Adventure includes tours of the Athabasca Glacier on the
Columbia Icefield, and provides customers with an opportunity to experience one of the largest accumulations of ice and
snow south of the Arctic Circle. Icefield customers ride in an “Ice Explorer,” a unique vehicle specially designed for glacier
travel. Brewster also offers boat tours, small boat rentals and charter fishing on Lake Minnewanka, which is situated outside
of the town of Banff in the heart of the Canadian Rockies. In 2013, Viad continued construction of the Glacier Skywalk, a
1,312-foot guided interpretive walkway with a 98-foot glass-floored observation area overlooking the Sunwapta Valley in
close proximity to the Company’s Columbia Icefield attraction in Jasper National Park, Alberta, Canada. The construction is
now complete, and Viad anticipates that the Glacier Skywalk will open in May 2014.
Package Tour Operations and Corporate and Event Management. Brewster’s inbound package tour operations feature
year-round package tours throughout Canada. These packages include motorcoach, rail, self-drive automobile, ski and winter
touring and consist of both group and individual tours which may be custom designed at the time of booking. Brewster also
offers a full suite of corporate and event management services for meetings, conferences, incentive travel, sports and special
events. Event-related service offerings include staffing, off-site events, tours/activities, team building, housing, event
management, theme development, production and audio visual services.
Transportation Operations. Brewster’s transportation operations include charter motorcoach services, sightseeing,
scheduled services and airport shuttle service. Brewster operates a modern fleet of luxury motorcoaches, available for groups
of any size, for travel throughout the Canadian provinces of Alberta and British Columbia. In addition, Brewster provides
seasonal half- and full-day sightseeing tours from Calgary, Banff, Lake Louise and Jasper, Canada.
Brewster draws its customers from major markets including Canada, the United States, the United Kingdom,
Australia/New Zealand and Asia. Brewster markets directly to consumers, as well as through distribution channels that
include tour operators, tour wholesalers, destination management companies and retail travel agencies/organizations.
Brewster generated approximately 71 percent of the Travel & Recreation Group’s 2013 segment operating income.
Glacier Park
Glacier Park is an independent hotel owner and operator, with properties located in and around Waterton-Glacier
International Peace Park, which encompasses Glacier National Park in Montana, one of the most visited national parks in the
United States, and Waterton Lakes National Park in Alberta, Canada. Glacier Park provides lodging accommodations, food
and beverage services, retail operations and transportation services in and around Glacier and Waterton Lakes National Parks.
The operations of Glacier Park are predominately seasonal, typically running from late May until the end of September.
During the peak months of July and August, the occupancy level at Glacier Park’s lodges and motor inns typically exceeds 90
percent. During the “shoulder” months of June and September, occupancy typically exceeds 80 percent.
Individual travelers account for over 80 percent of Glacier Park’s customers, and the balance of its customers are tour
groups. Demographically, Glacier Park draws over 90 percent of its customers from the United States, with approximately 60
percent of the U.S. customers coming from the Northwest and Midwest regions.
Historic Lodges and Hotel Accommodations. Glacier Park owns and operates five properties, with accommodation
offerings varying from hikers’ cabins to hotel suites: St. Mary Lodge, a 115-room, full-service resort lodge located outside the
east entrance to Glacier National Park in St. Mary, Montana; Glacier Park Lodge, an historic lodge in East Glacier, Montana;
Grouse Mountain Lodge, a full-season lodge offering skiing in the winter and golf, hiking and other recreational activities,
located near Glacier National Park in Whitefish, Montana; the Prince of Wales Hotel in Waterton Lakes National Park,
4
Alberta, Canada, which is situated on land for which the Company has a 42-year ground lease with the Canadian government
running through January 31, 2052; and Motel Lake McDonald, an in-holding within Glacier National Park. In 2013, Glacier
Park also operated five other properties inside Glacier National Park under a concession contract with the Park Service,
which expired on December 31, 2013. See the “Concession Business” section below, and “Recent Business Developments”
section above, of this Item 1.
Concession Business. On December 31, 2013, Glacier Park’s concession contract with the Park Service to operate
lodging, tour and transportation and other hospitality services for Glacier National Park expired. Under the concession
contract, Glacier Park provided food and beverage services to lodging guests and park visitors and had retail operations,
including camp stores and retail shops, which catered to lodging guests and park visitors. Glacier Park also operated a fleet of
touring buses, which were used to conduct tours within Glacier and Waterton Lakes National Parks. Glacier Park generated
approximately 47 percent of its 2013 revenue through its concession contract for services provided within Glacier National
Park.
As referenced above, Glacier Park continues to generate revenue from the five properties it owns: (1) St. Mary Lodge in
St. Mary, Montana; (2) Glacier Park Lodge in East Glacier, Montana; (3) Grouse Mountain Lodge in Whitefish, Montana; (4)
Prince of Wales Hotel in Waterton Lakes National Park, Alberta; and (5) Motel Lake McDonald, which is located inside
Glacier National Park. Glacier Park also continues to operate the food and beverage services with respect to these five
properties and the retail shops located near Glacier National Park.
As shown in the table below, the five properties Glacier Park currently owns contain more than one-half of the rooms
that Glacier Park operated in 2013:
Owned Properties:
Glacier Park Lodge
Grouse Mountain Lodge
St. Mary Lodge
Prince of Wales Hotel
Motel Lake McDonald
Total
Concession Contract Properties:
Many Glacier Hotel
Swift Current Motor Inn
Lake McDonald Lodge
Rising Sun Motor Inn
Village Inn Motel
Total
Number of
Rooms
161
143
115
86
30
535
214
88
82
72
36
492
Glacier Park generated approximately 25 percent of the Travel & Recreation Group’s 2013 segment operating income.
Alaska Denali Travel
In September 2011, Alaska Denali Travel acquired Denali Backcountry Lodge, a property having 42 guest rooms on six
acres inside Denali National Park and Preserve, and Denali Cabins, with 46 guest cabins on six acres near the entrance to
Denali National Park and Preserve. Alaska Denali Travel provides food and beverage services with respect to these
properties, and operates day trips to its day trip lodge via the scenic park road, a package tours sales and marketing program
and daily motorcoach service between Anchorage and Denali National Park and Preserve. Alaska Denali Travel’s operating
season runs from June until the end of September.
Competition. The Travel & Recreation Group generally competes on the basis of location, uniqueness of facilities,
service, quality and price. Competition exists both locally and regionally in the package tour business, hotel and restaurant
business and charter service business.
5
Intellectual Property
Viad and its subsidiaries own or have the right to use registered trademarks and trademarks pending registration, used
in their businesses, including Global Experience Specialists & design®, GES®, GES Servicenter®, GES National Servicenter®,
GES MarketWorks®, HANG:RZ®, Trade Show Rigging TSR®, TSE Trade Show Electrical & design®, ethnoMetrics®,
eXPRESSO & design®, FIT®, DEXZ®, LUMA2 & design®, eco-sense and design®, and the trademarks in the 2012 Alaska
Denali Travel rebranding program, including Alaska Denali Travel, Alaska Denali Escapes, Denali Backcountry AdventureSM
Denali Backcountry LodgeSM and Denali CabinsSM. Viad and its subsidiaries also own or have the right to use many
registered trademarks and trademarks pending registration outside of the United States, including the Melville lion image®,
GES®, Maxim®, Showtech®, SDDRetail®, Brewster Travel Canada & design®, Brewster Attractions Explore & design®,
Brewster Hospitality Refresh & design® and escape.connect.refresh.explore®. United States trademark registrations are for a
term of 10 years and are renewable every 10 years as long as the trademarks are used in the regular course of business.
The Company owns patents that it believes provide competitive advantages in the marketplace for its exhibit and
exhibition services. Its patented technology relating to a modular structure having a load-bearing surface provides efficiencies
and cost savings in the design, manufacture, assembly, take down and maintenance of displays and exhibitions. Its patented
invention relating to a surface-covering installation tool and method not only reduces direct labor costs, but provides
improved worker safety. The Company also owns a number of design patents for its retail merchandising units. United States
utility patents are currently granted for a term of 20 years from the date a patent application is filed and United States design
patents are currently granted for a term of 14 years from the date granted. The Marketing & Events Group has extensive
design libraries with copyright protections and owns copyright registrations for a number of the designs within its design
libraries. Copyright protection for such work is 95 years from the date of publication or 120 years from creation, whichever is
shorter.
Although Viad believes that certain of its patents, trademarks and copyrights have substantial value, it does not believe
that the loss of any one of these patents, trademarks or copyrights would have a material adverse effect on its financial
condition or results of operations.
Government Regulation and Compliance
Compliance with legal requirements and government regulations represents a normal cost of doing business. The
principal regulations affecting the day-to-day businesses are rules and regulations relating to transportation (such as
regulations promulgated by the U.S. Department of Transportation and its state counterparts), employees (such as regulations
implemented by the Occupational Safety and Health Administration, equal employment opportunity laws, guidelines
implemented pursuant to the Americans with Disabilities Act and general federal and state employment laws), unionized
labor (such as guidelines imposed by the National Labor Relations Act) and U.S. and Canadian regulations relating to
national parks (such as regulations established by the U.S. Department of the Interior and the Park Service).
Some of Viad’s current and former businesses are subject to U.S. federal and state environmental regulations, including
laws enacted under the Comprehensive Environmental Response, Compensation and Liability Act, or its state law
counterparts. Compliance with federal, state and local environmental, health and safety provisions, including, but not limited
to, those regulating the discharge of materials into the environment and other actions relating to the environment have not
had, and are not expected to have, a material effect on Viad’s capital expenditures, competitive position, financial condition
or results of operations. See “Item 1A - Risk Factors - Liabilities relating to prior and discontinued operations may adversely
affect results of operations” for a discussion of the risks related to liabilities arising from the Company’s compliance with
federal, state and local environmental laws, which is incorporated herein by reference.
6
Employees
Viad’s businesses had approximately 3,630 employees as of December 31, 2013 as follows:
Marketing & Events Group
Travel & Recreation Group
Viad Corporate
Total
Approximate
Number of
Employees
Regular Full-Time
Employees Covered by
Collective Bargaining
Agreements
2,930
550
150
3,630
940
110
—
1,050
Viad believes that relations with its employees are satisfactory and that collective-bargaining agreements expiring in
2014 will be renegotiated in the ordinary course of business without a material adverse effect on Viad’s operations.
Viad Corporate provides management, financial and accounting, internal auditing, tax, administrative, information
technology, corporate development, legal and other services to its operating units and handles residual matters pertaining to
businesses previously discontinued or sold by the Company. Viad is governed by a Board of Directors comprised of eight
non-employee directors and one employee director, and has an executive management team consisting of seven executive
officers.
Seasonality
Exhibition and event activity varies significantly depending on the frequency and timing of shows (some shows are not
held each year and some may shift between quarters). The Marketing & Events U.S. segment generally reports its highest
revenue during the first quarter of each year, while the Marketing & Events International segment generally reports its
highest revenue during the second quarter of each year. The Travel & Recreation Group segment experiences peak activity
during the summer months and during 2013, 86 percent of its revenue was earned in the second and third quarters. Viad’s
average segment operating income during the past three years, as a percentage of the average full year’s segment operating
income during the past three years, was approximately 31 percent (first quarter), 28 percent (second quarter), 57 percent
(third quarter) and negative 16 percent (fourth quarter). See “Viad’s businesses are seasonal, which causes results of
operations to fluctuate and makes results of operations particularly sensitive to adverse events during peak periods” and
“Exhibition rotation impacts overall profitability and makes comparisons between periods difficult” under “Item 1A Risk
Factors,” which are incorporated herein by reference; see also Notes 20 and 23 of Notes to Consolidated Financial
Statements.
Financial Information about Restructuring Charges
Information regarding restructuring charges is provided in Note 17 of Notes to Consolidated Financial Statements.
Financial Information about Segments
Business segment financial information is provided in Note 20 of Notes to Consolidated Financial Statements.
Financial Information about Geographic Areas
Geographic area financial information is provided in Note 20 of Notes to Consolidated Financial Statements.
Available Information
Viad’s internet address is www.viad.com. Viad uses its web site as a routine channel for distribution of Company
information, press releases, financial information and corporate governance initiatives. Viad posts filings as soon as
reasonably practicable after they are electronically filed with, or furnished to, the U.S. Securities and Exchange Commission
(“SEC”), including Viad’s annual, quarterly and current reports, proxy statements, amendments to those reports or statements
and other information, as well as transactions in Viad securities by Viad’s directors and executive officers. All such postings
and filings are available on Viad’s web site free of charge. In addition, Viad’s web site allows interested persons to sign up to
automatically receive e-mail alerts when the Company posts news releases and financial information. The SEC’s web site,
www.sec.gov, contains reports, proxy and information statements and other information regarding issuers that file
electronically with the SEC. Such information also can be read and copied at the SEC’s public reference section, located in
7
Room 1580, 100 F Street N.E., Washington, D.C. 20549 and on the SEC’s internet site at www.sec.gov. Information regarding
the operation of the public reference section can be obtained by calling (800) SEC-0330. The content on any web site referred
to in this Form 10-K is not incorporated by reference in this Form 10-K unless expressly noted.
Viad’s web site, at http://viad.investorroom.com/, includes key information about the Company’s corporate governance
initiatives, including its Corporate Governance Guidelines, charters of the committees of the Board of Directors, Code of
Ethics and information concerning Viad’s directors and a method to communicate with them. Viad will make available in
print any of this information upon request to: Corporate Secretary, Viad Corp, 1850 North Central Avenue, Suite 1900,
Phoenix, Arizona 85004-4565.
Item 1A. Risk Factors.
Viad’s operating results are subject to known and unknown risks. As a result, past financial performance and historical
trends may not be reliable indicators of future performance.
There can be no assurances that management’s current strategic evaluation of opportunities to enhance shareholder
value will result in a transaction.
Viad’s Board of Directors authorized management to explore and evaluate opportunities to enhance shareholder value,
including a potential separation of its Travel & Recreation and Marketing & Events business groups. The Company engaged
J.P. Morgan Securities LLC as its financial advisor to assist in this evaluation process. No decision has been made to separate
the two business groups, and Viad cannot assure that it will identify and undertake a transaction that allows its shareholders to
realize an increase in the value of Viad’s stock or provide any guidance on the timing of any such action. Viad also cannot
assure that any potential transaction or other strategic alternative, if identified, evaluated and consummated, will provide
greater value to its shareholders than that reflected in the current stock price. Any potential transaction would be dependent
upon a number of factors that may be beyond Viad’s control, including, among other factors, the U.S. and global economic
and market conditions, industry trends, the interest of third parties in Viad’s businesses and the availability of financing to
potential buyers on reasonable terms.
Viad’s future payment of special dividends should not be relied upon as a way to realize any future gains on an
investment.
The Board of Directors generally declares and pays regular dividends to Viad’s shareholders on a quarterly basis and
also paid special dividends in November 2013 and February 2014. The decision to declare a special dividend and the amount,
timing and payment of any such dividend are at the sole discretion of the Board. Factors in any decision to declare a dividend
would include the amount of funds legally available and an evaluation of the Company’s financial condition, capital
requirements, future prospects and other factors deemed relevant by the Board. Accordingly, an investor should not rely on
the future payment of special dividends as a way to realize gains on their investment.
Viad’s businesses and operating results are adversely affected by deterioration in general economic conditions.
Viad’s businesses are sensitive to fluctuations in general economic conditions and are impacted by increases and
decreases in the cost of materials and operating supplies. Operating results for the Marketing & Events U.S. and International
segments depend largely on the number of exhibitions held and on the size of exhibitors’ marketing expenditures, which in
turn depend partly on the strength of particular industries in which exhibitors operate. The number and size of exhibitions
generally decrease when the economy weakens.
Further, many exhibitors’ marketing budgets are partly discretionary, and are frequently among the first expenditures
reduced by exhibitors when economic conditions deteriorate, resulting in reduced spending by exhibitors for the Company’s
services. Marketing expenditures often are not increased until economic conditions improve. As a result, during periods of
general economic weakness, the operating results for the Marketing & Events Group are adversely affected. Similarly, many
of the retail shopping mall and lifestyle center clients of the Marketing & Events Group may reduce marketing expenditures
when economic conditions deteriorate.
Revenues from the Travel & Recreation Group businesses depend largely on the amount of disposable income that
consumers have available for travel and vacations. This amount decreases during periods of weak general economic
conditions.
8
Viad’s results of operations are impacted by changes in foreign currency exchange rates.
Viad conducts foreign operations primarily in Canada, the United Kingdom and, to a lesser extent, in certain other
countries. The functional currency of Viad’s foreign subsidiaries is their local currency. Accordingly, for purposes of
consolidation, Viad translates the assets and liabilities of its foreign subsidiaries into U.S. dollars at the foreign exchange
rates in effect at the balance sheet date. The unrealized gains or losses resulting from the translation of these foreign
denominated assets and liabilities are included as a component of accumulated other comprehensive income in Viad’s
consolidated balance sheets. Significant fluctuations in foreign exchange rates relative to the U.S. dollar may result in
material changes to Viad’s net equity position reported in its consolidated balance sheets. Viad has not hedged its equity risk
arising from the translation of foreign denominated assets and liabilities.
In addition, for purposes of consolidation, the revenue, expenses and gains and losses related to Viad’s foreign
operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, Viad’s
consolidated results of operations are exposed to fluctuations in foreign exchange rates, even when the functional currency
amounts have not changed. Accordingly, fluctuations in the exchange rates affect overall profitability and historical period-to-
period comparisons. Viad has not hedged its net earnings exposure arising from the translation of its foreign operating results.
During 2013, $229.3 million of revenue and $9.1 million of segment operating income was derived through the
International segment. In addition, $81.9 million of 2013 revenue and $19.1 million of 2013 segment operating income
generated in the Travel & Recreation Group was derived through its Canadian operations. For this segment, Canadian
operations are largely dependent on foreign customer visitation, and accordingly, increases in the value of the Canadian dollar
as compared to other currencies could adversely affect customer volumes, and, therefore, revenue and segment operating
income in the Travel & Recreation Group.
Exhibition rotation impacts overall profitability and makes comparisons between periods difficult.
The business activities of the Marketing & Events Group are largely dependent upon the frequency, timing and location
of exhibitions and events. Some large exhibitions are not held annually (they may be held once every two or three years or
longer). Some large exhibitions may be held at a different time of year than when they have historically been held. In
addition, the same exhibition may be held in different locations in different years, and may result in Viad generating lower
margins in a given period if the exhibition shifts to a higher-cost city.
As a consequence of these factors, the operating results for these businesses may fluctuate significantly from quarter to
quarter or from year to year, making periodic comparisons difficult.
Viad’s businesses are adversely affected by disruptions in the travel industry, particularly those adversely affecting the
hotel and airline industries.
The success of Viad’s businesses depends largely on the ability and willingness of people, whether exhibitors,
exhibition attendees or others, to travel. Factors adversely affecting the travel industry as a whole, and particularly the airline
and hotel industries, generally also adversely affect Viad’s businesses and results of operations. Factors that could adversely
affect the travel industry as a whole include high or rising fuel prices, increased security and passport requirements, weather
conditions, airline accidents and international political instability and hostilities. Unexpected events of this nature, or other
events that may have an impact on the availability and pricing of air travel and accommodations, could adversely affect
Viad’s businesses and results of operations.
The failure of a large client to renew its services contract or the loss of business from convention facilities could
adversely impact revenue.
Although no single client accounts for more than 7.0 percent of the revenue of any of Viad’s reporting segments, the
Marketing & Events U.S. and International segments have a relatively small number of large exhibition show organizers and
large customer accounts. The loss of any of these large clients could adversely affect Viad’s results of operations.
In addition, revenue of the Marketing & Events Group may be significantly impacted if certain exhibition facilities
choose to in-source electrical, plumbing or other services. When the Marketing & Events Group is hired as the official
services contractor for an exhibition, the show organizer contractually grants an exclusive right to perform these electrical
and plumbing services, subject in each case to the exhibition facility’s option to in-source the services (either by performing
the services themselves or by hiring a separate service provider). Many exhibition facilities are under financial pressure as a
result of conditions generally affecting their industry, including an increased supply of exhibition space. As a result, some of
9
these facilities have sought to in-source all or a large portion of these services. If a large number of facilities with which the
Marketing & Events Group has these relationships moves these services in-house, Viad’s revenue and operating results could
be adversely affected.
Viad’s key businesses are relationship driven.
The business activities of the Marketing & Events U.S. and International segments are heavily focused on client
relationships, and, specifically, on the close collaboration and interaction with the client. These relationships require the
account team to become attuned to the client’s desires and expectations in order to provide top-quality service. Viad has in the
past lost, and may in the future lose, important clients (and corresponding revenue) if a key member of the account team were
to cease employment with the Company and take those customers to a competitor.
Completed acquisitions may not perform as anticipated or be integrated as planned.
Viad has acquired businesses and intends to continue to pursue opportunities to acquire businesses that complement,
enhance or expand Viad’s current businesses or offer growth opportunities to Viad. Any acquisition can involve a number of
risks, including: the failure to achieve the financial and strategic goals and other benefits from the acquisition; the inability to
successfully integrate the acquired business into Viad’s ongoing businesses; the inability to retain key personnel or customers
of the acquired business; the inability to successfully integrate financial reporting and internal control systems; the disruption
of Viad’s ongoing businesses and distraction of senior management and employees of Viad from other opportunities and
challenges due to the integration of the acquired business; and the potential existence of liabilities or contingencies not
disclosed to or known by Viad prior to closing the acquisition or not otherwise provided for through the purchase agreement.
Viad’s businesses are seasonal, which causes results of operations to fluctuate and makes results of operations
particularly sensitive to adverse events during peak periods.
The Marketing & Events U.S. segment generally reports its highest revenue during the first quarter of each year, while
the Marketing & Events International segment generally reports its highest revenue during the second quarter of each year.
The Travel & Recreation Group businesses are generally also seasonal, experiencing peak activity during the second and
third quarters. These quarters accounted for 86 percent of the segment’s 2013 revenue. Because of the seasonal nature of
Viad’s businesses, adverse events or conditions occurring during peak periods could adversely affect the operating results of
Viad’s businesses.
New capital projects may not be commercially successful.
From time to time, in an effort to seize opportunities that complement, enhance and expand its businesses, Viad pursues
new capital projects. Capital projects are subject to a number of risks, including unanticipated delays and cost overruns,
failure to achieve established financial and strategic goals and the inability to successfully integrate into Viad’s ongoing
businesses, as well as additional risks specific to a project. The occurrence of any of the events described above could prevent
a new capital project from performing in accordance with Viad’s commercial expectations and could have a material adverse
effect on its businesses and results of operations.
Transportation disruptions and increases in transportation costs could adversely affect Viad’s businesses and operating
results.
The Marketing & Events U.S. and International segments rely on independent transportation carriers to send materials
and exhibits to and from exhibitions, warehouse facilities and customer facilities. If they were unable to secure the services of
these independent transportation carriers at favorable rates, it could have a material adverse effect on these businesses and
their results of operations. In addition, disruption of transportation services because of weather-related problems, strikes,
lockouts or other events could adversely affect their ability to supply services to customers and could cause the cancellation
of exhibitions, which may have a material adverse effect on these businesses and operating results. Similarly, disruption of
transportation services could adversely affect the ability of the Marketing & Events Group to supply time-sensitive holiday-
themed exhibits and experiences to retail shopping mall and lifestyle center customers and could cause the cancellation of the
exhibits and experiences.
Union-represented labor creates an increased risk of work stoppages and higher labor costs.
A significant portion of Viad’s employees are unionized and Viad’s businesses are party to approximately 100
collective-bargaining agreements, with approximately one-third requiring renegotiation each year. If the results of labor
negotiations caused the Company to increase wages or benefits, which increases total labor costs, the increased costs could
10
either be absorbed (which would adversely affect operating margins) or passed on to customers, which may lead customers to
turn to other vendors in response to higher prices. In either event, Viad’s businesses and results of operations could be
adversely affected.
Moreover, if the Company were unable to reach an agreement with a union during the collective-bargaining process,
the union may strike or carry out other types of work stoppages. In such a circumstance, Viad might be unable to find
substitute workers with the necessary skills to perform many of the services, or may incur additional costs to do so, which
could adversely affect the Company’s businesses and results of operations.
Obligations to fund multi-employer pension plans to which Viad contributes may have an adverse impact on operating
results.
Viad’s businesses contribute to various multi-employer pension plans based on obligations arising under collective-
bargaining agreements covering its union-represented employees. Viad’s contributions to these multi-employer plans in 2013
and 2012 totaled $20.3 million and $20.7 million, respectively. Viad does not directly manage these multi-employer plans,
which are generally managed by boards of trustees. Based upon the information available to Viad from plan administrators,
management believes that several of these multi-employer plans are underfunded. The Pension Protection Act of 2006
requires pension plans underfunded at certain levels to reduce, over defined time periods, the underfunded status. In addition,
under current laws, the termination of a plan, or a voluntary withdrawal from a plan by Viad, or a shrinking contribution base
to a plan as a result of the insolvency or withdrawal of other contributing employers to such plan, would require Viad to make
payments to such plan for its proportionate share of the plan’s unfunded vested liabilities. Viad cannot determine at this time
the amount of additional funding, if any, it may be required to make to these plans. However, plan contribution increases, if
any, could have an adverse impact on Viad’s consolidated financial condition, results of operations and cash flows.
Viad competes in competitive industries and increased competition could negatively impact operating results.
Viad is engaged in a number of highly competitive industries. Competition in the exhibition and events industry and the
exhibits and experiential environments industries is driven by price and service quality, among other factors. To the extent
competitors seek to gain or retain their market presence through aggressive underpricing strategies, Viad may be required to
lower its prices and rates to avoid loss of related business, thereby adversely affecting operating results. In addition, if Viad is
unable to anticipate and respond as effectively as competitors to changing business conditions, including new technologies
and business models, Viad could lose market share to its competitors. If Viad were unable to meet the challenges presented by
the competitive environment, results of operations could be adversely affected.
Liabilities relating to prior and discontinued operations may adversely affect results of operations.
Viad and its predecessors have a corporate history spanning over eight decades and involving approximately 2,400
previous subsidiaries in diverse businesses, such as the manufacturing of locomotives, buses, industrial chemicals, fertilizers,
pharmaceuticals, leather, textiles, food and fresh meats. Some of these businesses used raw materials that have been, and may
continue to be, the subject of litigation. Moreover, some of the raw materials used and the waste produced by these
businesses have been and are the subject of U.S. federal and state environmental regulations, including laws enacted under
the Comprehensive Environmental Response, Compensation and Liability Act, or its state law counterparts. In addition, Viad
may incur other liabilities, resulting from indemnification claims involving sold subsidiaries, as well as from past operations
of predecessors or their subsidiaries. Although the Company believes it has adequate reserves and sufficient insurance
coverage to cover these future liabilities, results of operations could be materially affected if future events or proceedings
contradict current assumptions, and reserves or insurance become inadequate.
Terrorist attacks, natural disasters or other catastrophic events may have a negative effect on Viad’s business.
The occurrence of catastrophic events ranging from natural disasters (such as hurricanes and floods), health epidemics
or pandemics, acts of war or terrorism, or the prospect of these events could disrupt Viad’s businesses. Such catastrophic
events could impact the Marketing & Events Group’s production facilities, preventing the Company from timely completing
exhibit fabrication and other projects for customers, and also could cause a cancellation of exhibitions and other events held
in public venues or a disruption in the services the Company provides to its customers at convention centers, exhibition halls,
hotels and other public venues. Such catastrophic events also could adversely impact the Travel & Recreation Group
businesses, which are heavily dependent on the ability and willingness of its guests to travel. The guests serviced by the
Travel & Recreation Group tend to delay or postpone vacations if natural conditions differ from those that typically prevail at
competing lodges, resorts and attractions during a given season, and catastrophic events could impede the guests’ ability to
travel, interrupt the Company’s business operations and/or cause damage to the Company’s properties. If the conditions
11
arising from such events persist or worsen, Viad could experience continuing or increased adverse effects on its results of
operations and financial condition.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Viad’s businesses operate service or production facilities and maintain sales and service offices in the United States,
Canada, the United Kingdom, Germany, the United Arab Emirates and the Netherlands. The principal properties of Viad are
operated by the Marketing & Events Group, the Travel & Recreation Group and Viad Corporate as follows:
Marketing & Events U.S. Segment. In 2013, the Company continued taking steps to reduce the physical footprint and
overhead associated with the Marketing & Events Group’s U.S. warehousing facilities through its Service Delivery Network
initiative. These steps included the sale of a New Jersey facility and the underlying land after determining that the property no
longer met the Company’s operational needs. The goal of the Service Delivery Network initiative is to improve the efficiency
and performance of the Marketing & Events Group’s U.S. warehousing operations by lowering operating costs and invested
capital. Since 2008, the Company has reduced its U.S. facility footprint by approximately 1.2 million square feet, and has
realized annualized cost savings of $7.7 million through the end of 2013.
The Marketing & Events U.S. segment operates 15 offices and 27 multi-use facilities (manufacturing, sales and design,
office and/or warehouse and truck marshaling yards). The multi-use facilities vary in size up to approximately 592,100 square
feet. Two of the multi-use facilities are owned; all other properties are leased.
Marketing & Events International Segment. The Marketing & Events International segment operates five offices and 20
multi-use facilities, with two offices and nine multi-use facilities in Canada, seven multi-use facilities in the United Kingdom,
one office and two multi-use facilities in Germany, one office and two multi-use facilities in the United Arab Emirates and
one office in the Netherlands. The multi-use facilities vary in size up to approximately 133,600 square feet. One of the multi-
use facilities is owned; all other properties are leased.
Travel & Recreation Group Segment. The Travel & Recreation Group segment operates four offices, nine retail stores,
one bus terminal, four garages, an icefield tour facility, a gondola lift operation, a boat tour facility, 14 hotels/lodges
(including ancillary foodservice and recreational facilities) and 46 guest cabins. All of the facilities are in the United States or
Canada. The bus terminal, three garages and the boat tour facility are owned and one garage is leased. The icefield tour
facility and gondola lift operation are operated through lease agreements with Parks Canada and all other properties are
leased.
12
The Travel & Recreation Group owns nine hotels/lodges and 42 guest cabins. During 2013, the Travel & Recreation
Group also operated an additional five hotels/lodges and 12 retail stores pursuant to the Glacier Park concession contract. As
shown in the table below, the nine hotels and lodges and the guest cabins owned and operated by the Travel & Recreation
Group in 2013 accounted for 952 of the 1,444 rooms managed by the Travel & Recreation Group:
Owned Properties:
Banff International Hotel
Glacier Park Lodge
Grouse Mountain Lodge
Mount Royal Hotel
St. Mary Lodge
Prince of Wales Hotel
Denali Cabins
Denali Backcountry Lodge
Glacier View Inn
Motel Lake McDonald
Total
Concession Contract Properties:
Many Glacier Hotel
Lake McDonald Lodge
Swift Current Motor Inn
Rising Sun Motor Inn
Village Inn Motel
Total
Number of
Rooms
162
161
143
135
115
86
46
42
32
30
952
214
88
82
72
36
492
Viad Corporate. Viad Corporate operates the Company’s headquarters, which are leased and approximate 24,700 square
feet, and are located at 1850 North Central Avenue, Suite 1900 in Phoenix, Arizona 85004-4565.
Management believes that the Company’s facilities in the aggregate are adequate and suitable for their purposes and
that capacity is sufficient for current needs.
Item 3. Legal Proceedings.
Viad and certain subsidiaries are plaintiffs or defendants to various actions, proceedings and pending claims, some of
which involve, or may involve, compensatory, punitive or other damages. Litigation is subject to many uncertainties and it is
possible that some of the legal actions, proceedings or claims could be decided against Viad. Although the amount of liability
as of December 31, 2013 with respect to certain of these matters is not ascertainable, Viad believes that any resulting liability,
after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on Viad’s
business, financial condition or results of operations.
Viad is subject to various U.S. federal, state and foreign laws and regulations governing the prevention of pollution and
the protection of the environment in the jurisdictions in which Viad has or had operations. If the Company has failed to
comply with these environmental laws and regulations, civil and criminal penalties could be imposed and Viad could become
subject to regulatory enforcement actions in the form of injunctions and cease and desist orders. As is the case with many
companies, Viad also faces exposure for actual or potential claims and lawsuits involving environmental matters relating to
its past operations. Although it is a party to certain environmental disputes, Viad believes that any resulting liabilities, after
taking into consideration amounts already provided for and insurance coverage, will not have a material effect on the
Company’s financial condition or results of operations. See “Business - Government Regulation and Compliance” in Item 1;
see also Note 19 of Notes to Consolidated Financial Statements.
Item 4. Mine Safety Disclosures.
None.
13
Other. Executive Officers of Registrant.
The names, ages and positions of Viad’s executive officers as of the filing of this Annual Report are listed below:
Name
Paul B. Dykstra
Age Business Experience During the Past Five Years and Other Information
52
Deborah J. DePaoli
49
George N. Hines
41
Ellen M. Ingersoll
49
Thomas M. Kuczynski
49
G. Michael Latta
Steven W. Moster
51
44
Chairman, President and Chief Executive Officer of Viad since April 2008; prior
thereto, President and Chief Executive Officer since April 2006; prior thereto, Chief
Operating Officer since January 2006; prior thereto, President and Chief Executive
Officer of GES since January 2000; prior thereto, Executive Vice President-
International and Corporate Development of GES since 1999; and prior thereto,
Executive Vice President-General Manager or similar executive positions since
1994 with Travelers Express Company, Inc., a former subsidiary of Viad.
General Counsel and Secretary since May 2011; prior thereto, Deputy General
Counsel and Assistant Secretary since 2009; prior thereto, Assistant General
Counsel and Assistant Secretary since 2004; prior thereto, held other attorney
positions since joining Viad in 2000; prior thereto, Vice President and General
Counsel, Outings on the Links, Inc. since 1996; and prior thereto, Senior Associate
and various legal positions with Gallagher & Kennedy, P.A. since 1991.
Chief Information Officer since December 2009; prior thereto, Senior Vice
President and Transitioning Chief Information Officer of Stream Global Services,
Inc., a business process outsource provider, since October 2009; prior thereto,
Senior Vice President and Chief Information Officer of eTelecare Global Solutions,
Inc. (merged into Stream Global Services, Inc.) since August 2007; prior thereto,
Chief Information Officer of PeopleSupport, Inc., a business process outsource
provider, since December 2005; prior thereto, Executive Vice President, Operations
and Chief Technology Officer of ChaseCom Limited Partnership, a provider of
customer contact center services, since August 2004; prior thereto, Senior Manager-
Telecommunications Industry Practice of Deloitte Consulting LLP since April 2000;
and prior thereto, Manager-Telecommunications Industry Practice of Ernst & Young
LLP from July 1996 to March 2000.
Chief Financial Officer since July 2002; prior thereto, Vice President-Controller or
similar position since January 2002; prior thereto, Controller of CashX, Inc., a
service provider of stored value internet cards, from June 2001 through October
2001; prior thereto, Operations Finance Director of LeapSource, Inc., a provider of
business process outsourcing, since January 2000; and prior thereto, Vice President
and Controller of Franchise Finance Corporation of America since May 1992.
Chief Corporate Development & Strategy Officer since March 2008; prior thereto,
Senior Vice President, Corporate Development & Planning of The Nielsen
Company, a media and marketing information company, since August 2006; prior
thereto, Managing Director of The Pareto Group, a provider of strategic and
investment advisory services, since January 2004; and prior thereto, Vice President
of Penton Media, Inc., a business media firm producing magazines, trade shows,
conferences and electronic media, from January 1999 to October 2003.
Chief Accounting Officer-Controller since November 2002; prior thereto, Corporate
Controller or similar position for SpeedFam-IPEC, Inc., a semiconductor equipment
manufacturer, since October 1999; and prior thereto, Controller for Cardiac
Pathways Corporation, a medical device manufacturer, since September 1994.
Group President of the Marketing & Events Group since May 2011 and President of
GES since November 1, 2010; prior thereto, independent consultant providing
marketing and sales consultation services to 3 Day Blinds Corporation, a
manufacturer and retailer of custom window coverings, from April 2010 to August
2010; prior thereto, Executive Vice President-Chief Sales & Marketing Officer of
GES from January 2008 to February 2010; prior thereto, Executive Vice President -
Products and Services of GES from January 2005 to February 2010; prior thereto
Vice President-Products & Services Business of GES from January 2004 to January
2005; and prior thereto, Engagement Manager, Management Strategy Consulting
for McKinsey & Company from August 2000 to January 2004.
The term of office of the executive officers is until the next annual organization meeting of the Board of Directors of
Viad which is scheduled for May 22, 2014.
14
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
The principal market on which Viad’s common stock is traded is the New York Stock Exchange. The common stock
is also admitted for trading on the Chicago and National Exchanges. The following tables summarize the high and low
market prices as reported on the NYSE Euronext Composite Tape and the cash dividends declared for the two years ended
December 31:
SALES PRICE RANGE OF COMMON STOCK
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
February
May
August
October
November
December
Total
2013
2012
High
Low
High
Low
$
$
$
$
28.59 $
27.71 $
28.46 $
28.97 $
25.26 $
23.49 $
21.89 $
23.91 $
23.47 $
20.07 $
23.25 $
27.48 $
17.47
16.69
16.46
18.95
DIVIDENDS DECLARED ON COMMON STOCK
2013
2012
$
$
0.10 $
0.10
0.10
2.50
—
0.10
2.90 $
0.04
0.04
0.10
—
0.10
—
0.28
Quarterly dividends were paid on Viad’s common stock on the first business day of January, April, July and October.
In addition on January 24, 2014 and October 25, 2013, Viad announced that its Board of Directors declared special cash
dividends of $1.50 and $2.50 per share, respectively, to shareholders of record at the close of business on February 7, 2014
and November 7, 2013, respectively. The terms of Viad’s $130 million secured revolving credit facility, amended and
restated as of May 18, 2011, (the “Credit Facility”) restricted Viad from paying more than $10 million in dividends in the
aggregate in any calendar year. In December 2012, the Credit Facility was amended to change the limitation on restricted
payments. Unless the Company’s leverage ratio is greater than 1.50 to 1.00 or a default or an unmatured default exists,
additional dividends over the $10 million limitation, repurchase of shares and distributions on capital stock are allowed.
Viad expects that comparable quarterly cash dividends will continue to be paid in the future as approved by its Board of
Directors.
As of January 31, 2014, there were 7,165 shareholders of record of Viad’s common stock following the one-for-four
reverse stock split effective on July 1, 2004. There were also 608 shareholders of record as of January 31, 2014 that had not
converted pre-split shares into the post-split common stock. Accordingly, there were a total of 7,773 shareholders of record
as of January 31, 2014.
For information regarding security ownership of certain beneficial owners and management and related shareholder
matters, refer to Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters” in this Annual Report.
15
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing, for the five-year period ended December 31, 2013, the yearly percentage
change in the cumulative total shareholder return on Viad’s common stock to the cumulative total return of the Standard &
Poor’s SmallCap 600 Media Index, Standard & Poor’s SmallCap 600 Commercial Services & Supplies Index, Standard &
Poor’s SmallCap 600 Index, Russell 2000 Index and Standard & Poor’s 500 Index.
The graph below assumes $100 was invested on December 31, 2008 in Viad’s common stock, Standard & Poor’s
SmallCap 600 Media Index, Standard & Poor’s SmallCap 600 Commercial Services & Supplies Index, Standard & Poor’s
SmallCap 600 Index, Russell 2000 Index and Standard & Poor’s 500 Index with reinvestment of all dividends.
Comparison of Five-Year Cumulative Total Return
e
u
l
a
V
x
e
d
n
I
400
360
320
280
240
200
160
120
80
40
0
2008
2009
2010
2011
2012
2013
Period Ending
Viad Corp
Russell 2000
S&P 500
S&P SmallCap 600
S&P 600 Comm. Services & Supplies
S&P 600 Media Index
Year Ended December 31,
Viad Corp
$
S&P 500
$
Russell 2000
$
S&P SmallCap 600
$
S&P 600 Comm. Services & Supplies $
S&P 600 Media Index
$
2008
100.00 $
100.00 $
100.00 $
100.00 $
100.00 $
100.00 $
2009
84.20 $
126.45 $
127.09 $
125.52 $
126.20 $
170.62 $
2010
104.78 $
145.49 $
161.16 $
158.52 $
147.34 $
251.17 $
2011
72.48 $
148.56 $
154.43 $
160.12 $
128.83 $
194.05 $
2012
114.13 $
172.32 $
179.71 $
186.22 $
168.47 $
220.66 $
2013
130.31
228.12
249.47
263.15
241.61
358.90
Set forth below is a table showing the total number of shares of Viad’s common stock that were repurchased during
the fourth quarter of 2013 by Viad either on the open market as part of a repurchase program or from employees, former
employees and non-employee directors surrendering previously owned Viad common stock (outstanding shares) to pay the
taxes in connection with the vesting of restricted stock awards.
16
ISSUER PURCHASES OF EQUITY SECURITIES
Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Average Price Paid
Per Share ($)
Total Number of Shares
Purchased as Part of publicly
Announced Plans or Programs
—
—
—
Total Number of
Shares Purchased (#)
2,024
783
2,807
Period
November 2013
December 2013
Total
(1) Viad has announced the authorization of its Board of Directors to repurchase shares of the Company’s common stock
from time to time at prevailing market prices. No shares were repurchased on the open market during 2013. During
2012, Viad repurchased 23,183 shares for $526,000. As of December 31, 2013, 1,030,438 shares remain available for
repurchase. The authorization of the Board of Directors does not have an expiration date. In December 2012, the
Company’s $130 million Amended and Restated Credit Agreement dated as of May 18, 2011 was amended to remove
the limitation on share repurchases of $10 million in the aggregate per calendar year. This amendment allows share
repurchases unless the Company’s leverage ratio, as defined in the Credit Facility, is greater than 1.50 to 1.00 or a default
or an unmatured default, as defined in the Credit Facility, exists.
1,030,438
1,030,438
1,030,438
26.70
27.40
26.90
Under the Plans or Programs
(1)
17
Item 6. Selected Financial Data.
VIAD CORP
SELECTED FINANCIAL AND OTHER DATA
(in thousands, except for per share data)
Statement of Operations Data
Revenues:
Exhibition and event services
Exhibits and environments
Travel and recreation services(1),(2)
Total revenues
Income (loss) from continuing operations(3)
Income from discontinued operations(4)
Net income (loss)
Net income attributable to noncontrolling interest
Net income (loss) attributable to Viad
Diluted Income (Loss) per Common Share
Income (loss) from continuing operations attributable
to Viad common stockholders(3)
Income from discontinued operations attributable to
Viad common stockholders(4)
Net income (loss) attributable to Viad common
stockholders
Weighted-average outstanding and potentially dilutive
common shares
Basic Income (Loss) per Common Share
Income (loss) from continuing operations attributable
to Viad common stockholders(3)
Income from discontinued operations attributable to
Viad common stockholders(4)
Net income (loss) attributable to Viad common
stockholders
Weighted-average outstanding common shares
Dividends declared per common share
Balance Sheet Data at Year-End
Total assets
Total debt and capital lease obligations
Total stockholders’ equity
Noncontrolling interest
Other Data
Adjusted EBITDA(5)
$
$
$
$
$
$
$
$
$
$
2013
2012
2011
2010
2009
Year Ended December 31,
685,350 $
726,429 $
670,054 $
159,554
127,888
972,792 $
20,558 $
1,128
21,686
(131)
21,555 $
175,611
170,496
123,191
1,025,231 $
5,959 $
624
6,583
(686)
5,897 $
101,814
942,364 $
9,292 $
451
9,743
(533)
9,210 $
1.01 $
0.26 $
0.43 $
0.05
0.03
0.02
1.06 $
0.29 $
0.45 $
590,444 $
166,040
88,277
844,761 $
817 $
262
1,079
(636)
443 $
0.01
$
0.01
0.02
$
582,969
147,533
75,302
805,804
(104,808)
679
(104,129)
(582)
(104,711)
(5.28)
0.03
(5.25)
20,265
20,005
20,055
20,277
19,960
1.01 $
0.26 $
0.43 $
0.01
$
0.05
0.03
0.02
0.01
1.06 $
19,850
2.90 $
0.29 $
19,701
0.28 $
0.45 $
19,719
0.16 $
561,932 $
650,577 $
617,828 $
11,668
356,543
9,102
2,226
397,032
8,971
3,239
386,179
8,285
(5.28)
0.03
(5.25)
19,960
0.16
609,186
12,788
384,631
7,116
12,793
$
0.02
19,955
0.16 $
616,503 $
9,077
386,711
7,752
32,312 $
$
62,806 $
58,150 $
43,284 $
(1) 2011 amounts include an aggregate $9.7 million in revenue from Grouse Mountain Lodge, St. Mary Lodge and Denali
Backcountry Lodge and Denali Cabins which were acquired in January 2011, June 2011 and September 2011,
respectively.
(2) 2012 amounts include $5.2 million in revenue from the Banff International Hotel which was acquired in March 2012.
(3) Income from continuing operations include the following items (see Notes 5, 7, 15 and 17 of Notes to Consolidated
Financial Statements):
• Restructuring charges, net of tax of $2.7 million, $3.3 million, $2.5 million, $2.6 million and $8.7 million in 2013,
•
•
2012, 2011, 2010 and 2009, respectively.
Impairment charges, net of tax of $3.4 million, $268,000 and $98.2 million in 2013, 2010 and 2009, respectively.
Income tax expense of $13.4 million in 2012 representing a valuation allowance for certain deferred tax assets
associated with foreign tax credit carryforwards.
(4) The amounts relate to the sale of land and certain obligations associated with previously sold operations.
(5) See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion
of “Non-GAAP Measure.”
18
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with Viad Corp’s consolidated financial statements and related
notes. This discussion contains forward-looking statements that involve risks and uncertainties. Viad Corp’s actual results
could differ materially from those anticipated due to various factors discussed under “Risk Factors,” “Forward-Looking
Statements” and elsewhere in this Annual Report.
Overview
Viad Corp (“Viad” or the “Company”) operates in three reportable business segments: Marketing & Events U.S.,
Marketing & Events International and Travel & Recreation Group.
The Marketing & Events Group, comprised of Global Experience Specialists, Inc. and affiliates (“GES”), specializes in
all aspects of the design, planning and production of face-to-face events, immersive environments and brand-based
experiences for clients, including show organizers, corporate brand marketers and retail shopping centers. In addition, the
Marketing & Events Group provides a variety of immersive, entertaining attractions and brand-based experiences, sponsored
events, mobile marketing and other branded entertainment and face-to-face marketing solutions for clients and venues,
including shopping malls, movie studios, museums and leading consumer brands.
The Travel & Recreation Group segment consists of Brewster Inc. (“Brewster”), Glacier Park, Inc. (“Glacier Park”) and
Alaskan Park Properties, Inc. (“Alaska Denali Travel”). Brewster provides tourism products and experiential services in the
Canadian Rockies in Alberta and in other parts of Western Canada. Brewster’s operations include the Banff Gondola,
Columbia Icefield Glacier Adventure, motorcoach services, charter and sightseeing services, tour boat operations, inbound
package tour operations and hotel operations. During 2013, Glacier Park, an 80 percent owned subsidiary of Viad, operated
five lodges, three motor inns and one four-season resort hotel and provided food and beverage operations, retail operations
and tour and transportation services in and around Glacier National Park in Montana and Waterton Lake National Park in
Alberta, Canada. Glacier Park’s concession portion of its business with the U.S. National Park Service (the “Park Service”)
for Glacier National Park expired on December 31, 2013. Thereafter, the ongoing operations of Glacier Park will include:
Glacier Park Lodge in East Glacier, Montana; Grouse Mountain Lodge in Whitefish, Montana; St. Mary Lodge in St. Mary,
Montana; Motel Lake McDonald, an in-holding within Glacier National Park and the Prince of Wales Hotel in Waterton
Lakes National Park. Alaska Denali Travel operates the Denali Backcountry Lodge and Denali Cabins. In addition to lodging,
Alaska Denali Travel also provides food and beverage operations and package tour and transportation services in and around
Denali National Park and Preserve.
In December 2012, Viad announced that its Board of Directors authorized management to explore and evaluate
opportunities to enhance shareholder value, including a potential separation of its Travel & Recreation and Marketing &
Events business groups. Viad engaged J.P. Morgan Securities LLC as its financial advisor to assist in this evaluation process.
Financial Highlights
The following 2013 financial highlights are presented in accordance with accounting principles generally accepted in
the United States of America (“GAAP”):
Viad Corp (Consolidated)
•
•
•
•
•
•
•
Total revenues of $972.8 million, a decrease of 5.1 percent from 2012 revenues
Net income attributable to Viad of $21.6 million, as compared to $5.9 million in 2012
Diluted income per share of $1.06, as compared to $0.29 in 2012
Restructuring charges totaling $3.9 million primarily related to reorganization activities in the Marketing &
Events Group, comprised of the elimination of certain positions, as well as the elimination of certain positions
in the Travel & Recreation Group and at Viad Corporate
Income from discontinued operations of $1.1 million primarily related to the sale of land associated with
previously sold operations
Cash and cash equivalents were $45.8 million as of December 31, 2013
Debt was $11.7 million as of December 31, 2013
Marketing & Events U.S.
•
•
•
Revenues of $628.9 million, a decrease of 7.1 percent from 2012 revenues
Segment operating income of $11.0 million, as compared to $5.6 million in 2012
A gain of $4.8 million was recorded related to the sale of a facility and related land
19
Marketing & Events International
•
•
Revenues of $229.3 million, a decrease of 4.5 percent from 2012 revenues
Segment operating income of $9.1 million, as compared to $12.3 million in 2012
Travel & Recreation Group
•
•
•
Revenues of $127.9 million, an increase of 3.8 percent from 2012 revenues
Segment operating income of $25.8 million, as compared to $24.0 million in 2012
A goodwill impairment loss of $4.5 million was recorded at Glacier Park, of which $892,000 was allocated to
the noncontrolling interest
Non-GAAP Measure:
The following discussion includes a presentation of Adjusted EBITDA, which is utilized by management to measure
the profit and performance of Viad’s operations and to facilitate period-to-period comparisons. “Adjusted EBITDA” is
defined by Viad as net income attributable to Viad before interest expense, income taxes, depreciation and amortization,
impairment charges and recoveries, changes in accounting principles and the effects of discontinued operations. The
presentation of Adjusted EBITDA is supplemental to results presented under GAAP and may not be comparable to similarly
titled measures used by other companies. Adjusted EBITDA is considered a useful operating metric as potential variations
arising from taxes, depreciation, debt service costs, impairment charges and recoveries, changes in accounting principles and
the effects of discontinued operations are eliminated, thus resulting in an additional measure considered to be indicative of
Viad’s ongoing operations. This non-GAAP measure should be considered in addition to, but not as a substitute for, other
measures of financial performance reported in accordance with GAAP.
Management believes that the presentation of Adjusted EBITDA provides useful information to investors regarding
Viad’s results of operations for trending, analyzing and benchmarking the performance and value of Viad’s business.
Management uses Adjusted EBITDA primarily as a performance measure and believes that the GAAP financial measure most
directly comparable to this non-GAAP measure is net income attributable to Viad. Although Adjusted EBITDA is used as a
financial measure to assess the performance of the business, the use of Adjusted EBITDA is limited because it does not
consider material costs, expenses and other items necessary to operate the business. These items include debt service costs,
non-cash depreciation and amortization expense associated with long-lived assets, expenses related to U.S. federal, state,
local and foreign income taxes, impairment charges or recoveries, and the effects of accounting changes and discontinued
operations. Because Adjusted EBITDA does not consider the above items, a user of Viad’s financial information should
consider net income attributable to Viad as an important measure of financial performance because it provides a more
complete measure of the Company’s performance.
A reconciliation of net income attributable to Viad to Adjusted EBITDA is as follows:
(in thousands)
Net income attributable to Viad
Impairment charges
Interest expense
Income taxes
Depreciation and amortization
Income from discontinued operations
Adjusted EBITDA
2013
2012
2011
$
$
21,555 $
4,521
1,250
8,455
28,153
(1,128)
62,806 $
5,897 $
—
1,303
20,843
30,731
(624)
58,150 $
9,210
—
1,511
3,888
29,126
(451)
43,284
The increase in Adjusted EBITDA of $4.7 million from 2012 to 2013 was primarily due to higher segment operating
results at the Travel & Recreation Group, as well as lower corporate costs and restructuring charges. The increase in Adjusted
EBITDA of $14.9 million from 2011 to 2012 was primarily due to higher segment operating results at all operating segments,
partially offset by higher restructuring charges and corporate costs. See “Results of Operations” below for a discussion of
fluctuations.
20
Results of Operations:
2013 vs. 2012:
Revenues for 2013 decreased 5.1 percent to $972.8 million, as compared to $1.0 billion in 2012. Viad’s income from
continuing operations before income taxes was $29.1 million for 2013, as compared to $26.8 million in 2012. Impairment
losses for 2013 totaled $5.4 million, primarily related to the non-cash write-down of goodwill at Glacier Park of $4.5 million
and the write-off of certain assets within the Marketing & Events Group of $952,000. Net restructuring charges in 2013 were
$3.9 million, as compared to $4.9 million in 2012. The 2013 charges related to reorganization activities in the Marketing &
Events Group, comprised of the elimination of certain positions. In addition, restructuring charges related to the elimination
of certain positions in the Travel & Recreation Group and at Viad Corporate were also recorded in 2013. The 2012
restructuring charges primarily related to reorganization activities in the Marketing & Events Group, comprised of facility
consolidations, as well as the elimination of certain positions. The increase in operating results, despite revenue declines, was
primarily driven by continued same-show growth and focus on margin improvement at the Marketing & Events Group, as
well as expanded revenues at all three operating units within the Travel & Recreation Group.
Net income attributable to Viad for 2013 was $21.6 million, or $1.06 per diluted share, as compared to $5.9 million, or
$0.29 per diluted share, in 2012. In 2012, the Company recorded a non-cash charge of $13.4 million to income tax expense
representing a valuation allowance established for certain deferred tax assets associated with foreign tax credit carryforwards.
These results also include income from discontinued operations of $1.1 million, or $0.05 per diluted share, in 2013 and
$624,000, or $0.03 per diluted share, in 2012, both primarily related to the sale of land associated with previously sold
operations.
During 2013, foreign exchange rate variances resulted in decreases in revenues and segment operating income of $7.0
million and $1.0 million, respectively, as compared to 2012. Viad conducts its foreign operations primarily in Canada, the
United Kingdom, Germany and to a lesser extent in certain other countries.
The following table summarizes the effects of foreign exchange rate variances on revenues and segment operating
results from Viad’s significant international operations:
Revenues
Segment Operating Results
Weighted-Average
Exchange Rates
2013
2012
Effect of Rate
Variance
(in thousands)
Weighted-Average
Exchange Rates
2013
2012
Effect of Rate
Variance
(in thousands)
Marketing & Events Group:
Canada
United Kingdom
Germany
Travel & Recreation Group:
Canada
$
$
$
$
0.97 $
1.56 $
1.33 $
0.96 $
1.00 $
1.59 $
1.29 $
(2,103) $
(2,582) $
419 $
1.00 $
(2,756) $
0.99 $
1.57 $
1.33 $
0.96 $
1.04 $
1.60 $
1.27 $
(65)
(138)
(37)
1.00 $
(790)
Viad’s results were primarily impacted by the weakening of the Canadian dollar and British pound relative to the U.S.
dollar. Future changes in the exchange rates may impact overall expected profitability and historical period-to-period
comparisons when operating results are translated into U.S. dollars.
Marketing & Events Group. Revenues for the Marketing & Events U.S. segment were $628.9 million for 2013, down
7.1 percent, as compared to $676.8 million in 2012. The decrease was primarily due to negative show rotation of $54 million,
partially offset by base same-show revenue increases of 3.1 percent. Management defines base same-show revenues as
revenues derived from shows that the Company produced out of the same city during the same quarter in each year. Base
same-shows represented 46 percent of Marketing & Events U.S. segment revenues in 2013. The 2013 segment operating
income was $11.0 million, as compared to $5.6 million in 2012. The improved operating results were primarily due to lower
performance-based incentives, the third quarter gain on sale of a facility in New Jersey and ongoing efforts to drive operating
efficiencies.
The Company is continuing to execute against a number of margin improvement initiatives designed to more
effectively manage labor costs (the “Labor Management” initiative) and to reduce the physical footprint and the overhead
associated with the U.S. warehousing operation (the “Service Delivery Network” initiative). The focus of the Labor
Management initiative is on driving productivity gains through rigorous and strategic pre-show planning that reduces the
21
ratio of labor costs to revenues. Driving this measure down continues to be a primary focus for management and the benefits
are shown through a 70 basis point improvement in the variable labor-to-revenue ratio on a U.S. base same-show basis, as
compared to 2012. The Company is also working to develop new tools to support and systematize show site labor planning,
measurement and benchmarking. Through the Service Delivery Network initiative, the Company has reduced its U.S. facility
footprint by approximately 1.1 million square feet since 2008, with annualized cost savings of $7.7 million realized through
the end of 2013.
In connection with the Service Delivery Network initiative, Viad finalized plans to relocate the Marketing & Events
Group’s New Jersey operations as a result of the facility no longer meeting the operational needs of the Company. Viad sold
the facility and the land upon which it was situated for $12.7 million (net of selling costs) during the third quarter of 2013.
Management realized a pre-tax gain on the sale of $4.8 million during the third quarter of 2013, which is included in the U.S.
segment operating results and is partially offset by facility relocation costs during the fourth quarter of 2013.
Revenues for the Marketing & Events International segment were $229.3 million for 2013, down 4.5 percent, as
compared to $240.1 million in 2012. Segment operating income was $9.1 million in 2013, as compared to $12.3 million in
2012. As discussed above, period-to-period comparisons for this segment were affected by exchange rate variances, which
had an unfavorable impact on revenues of $4.3 million and segment operating income of $240,000, as compared to 2012.
Excluding exchange rate variances, 2013 revenues decreased by $6.6 million, or 2.7 percent, and segment operating income
decreased by $3.0 million, or 24.5 percent. These decreases were primarily driven by services provided for the 2012 London
Summer Olympics and Paralympic Games, partially offset by positive show rotation revenues of approximately $6 million.
Although the Marketing & Events Group has a diversified revenue base and long-term contracts for future shows, its
revenues are affected by general economic and industry-specific conditions. The prospects for individual shows tend to be
driven by the success of the industry related to those shows. In general, the exhibition and event industry is experiencing
modest improvement. Marketing & Events U.S. base same-show revenues have increased on a full year basis for 2011, 2012
and 2013.
For the 2014 full year, management expects U.S. base same-show revenues to increase at a low-to mid-single digit rate
and show rotation to have a net positive impact on full year revenue of approximately $55 million. Additionally, management
anticipates that foreign currency exchange rate variances versus 2013 will not have a meaningful impact on the Marketing &
Events Group’s 2014 full year revenues and segment operating income. Management remains focused on improving the
profitability of the Marketing & Events U.S. segment through continued integration and consolidation of operations to
increase capacity utilization and reduce costs. Additional restructuring charges may be incurred as further cost structure
improvements are made.
The Marketing & Events Group is subject to multiple collective-bargaining agreements that affect labor costs, about
one-third of which expire each year. The Company entered into new showsite and warehouse agreements with the Chicago
Teamsters Local 727, effective January 1, 2014, and those agreements contain provisions that allow the parties to re-open
negotiation of the agreements on pension-related issues. The Company has commenced discussions regarding those issues
with all relevant parties and is working diligently to resolve those issues in a manner that will be reasonable and equitable to
employees, customers, and shareholders. Although the Company’s labor relations are currently stable, disruptions pending the
outcome of the Local 727 negotiations could occur, as could with any collective bargaining agreement negotiation, with the
possibility of an adverse impact on the operating results of the Marketing & Events Group.
Travel & Recreation Group. Revenues for the Travel & Recreation Group segment were $127.9 million, up 3.8
percent, as compared to 2012 revenues of $123.2 million. Segment operating income was $25.8 million, up 7.7 percent from
2012 segment operating income of $24.0 million. Segment operating margins were 20.2 percent in 2013, as compared to 19.5
percent in 2012. As discussed above, period-to-period comparisons for this segment were affected by exchange rate
variances, which had an unfavorable impact on revenues of $2.8 million and segment operating income of $790,000, as
compared to 2012. Excluding exchange rate variances, 2013 revenues increased by $7.5 million, or 6.0 percent, and segment
operating income increased by $2.6 million, or 11.0 percent.
Results in 2013 were negatively impacted by extensive flooding that took place on June 20, 2013, in Alberta, Canada.
Major pieces of infrastructure in the province were affected and many roads became impassable, which temporarily restricted
access to Brewster’s hotel properties and attractions in the area. The provincial authorities were able to restore road access to
Banff for both commercial and private vehicles by June 26, 2013, ahead of the Canada Day holiday weekend. Management
started seeing more normalized occupancy and visitor traffic in August. Management estimates that the flooding had an
22
unfavorable impact on 2013 revenues of approximately $2 million. Brewster recovered well from the flooding that occurred
in late June and delivered solid growth for the full year across nearly all of its lines of business.
The following table provides Travel & Recreation Group revenues by line of business:
(in thousands)
Revenues:
Hospitality
Attractions
Package tours
Transportation
Intra-segment eliminations & other
Total
2013
2012
Change
$
$
54,828 $
38,956
18,950
17,247
(2,093)
127,888 $
51,969 $
38,141
18,805
16,858
(2,582)
123,191 $
2,859
815
145
389
489
4,697
5.5 %
2.1 %
0.8 %
2.3 %
(18.9 )%
3.8 %
The revenue growth from hospitality properties was primarily due to improved results at most of the lodges and hotels.
Glacier Park saw strong results, particularly at the Grouse Mountain Lodge, which was recently updated and refreshed. In
addition, the Banff International Hotel, which was acquired on March 7, 2012, benefited from a full first quarter contribution.
Management uses the following key business metrics to evaluate the Travel & Recreation Group hospitality business:
RevPAR, average daily rate (“ADR”) and occupancy. These metrics are commonly used in the hospitality industry to measure
performance.
RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable
Travel & Recreation Group hospitality properties during the period. Total rooms revenue does not include non-rooms
revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail
revenue. RevPAR measures the period-over-period change in rooms revenue for comparable hospitality properties. RevPAR
is affected by average daily rate and occupancy, which have different implications on profitability.
ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Travel &
Recreation Group hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality
properties are able to generate. Increases in ADR at hospitality properties lead to increases in rooms revenue with no
substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.
Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available
for all comparable Travel & Recreation Group hospitality properties during the period. Occupancy measures the utilization of
the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional
variable operating costs (including housekeeping services, utilities and room amenity costs), as well as lead to increased
ancillary non-rooms revenue (including food and beverage and retail revenue).
Management evaluates the performance of the Travel & Recreation Group attractions business utilizing the number of
passengers and total attraction revenue per passenger. The number of passengers allows management to assess the volume of
visitor activity at each attraction during the period. Total attraction revenue per passenger is calculated as total attraction
revenue divided by the total number of passengers at all Travel & Recreation Group attractions during the period. Total
attraction revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail
revenue. Total attraction revenue per passenger measures the total spend per visitor that attraction properties are able to
capture, which is important to the profitability of the attractions business.
The following table provides Travel & Recreation Group same-store key performance indicators. The same-store
metrics below indicate the performance of all Travel & Recreation Group properties that were owned by Viad and operating
at full capacity, considering seasonal closures, for the entirety of both periods presented. For Travel & Recreation Group
properties located in Canada, comparisons to the prior year are on a constant U.S. dollar basis, using the current year
quarterly average exchange rates for previous periods, to eliminate the positive or negative effects that result from translating.
Management believes that this same-store constant currency basis provides better comparability between reporting periods.
The same-store key performance indicators for hospitality properties presented below for 2013 exclude the rooms at the
Banff International Hotel (acquired in March 2012) that do not have comparable results for 2012.
23
Hospitality:
Room nights available
RevPAR
ADR
Occupancy
Attractions:
Passengers
Total attraction revenue per passenger
2013
2012
Change
211,746
120
164
73.1%
972,203
40
$
$
$
$
$
$
213,490
111
158
70.0%
960,305
38
(0.8 )%
8.1 %
3.8 %
3.1 %
1.2 %
5.3 %
Room nights available decreased in 2013 due to changes in seasonal opening dates of certain Glacier Park properties.
Management schedules opening dates to optimize profitability based on anticipated travel patterns, and forecasted occupancy
levels and operating expenses. The increase in RevPAR reflects improvement across most properties. The Grouse Mountain
Lodge experienced particularly strong growth in both ADR and occupancy driven by the Company’s refresh initiatives.
The number of passengers increased across all of the Travel & Recreation Group’s attractions, despite the flood impact.
Revenue per passenger increase was mainly driven by increased ticket prices at the Banff Gondola attraction.
During 2013, approximately 64 percent of revenues and 74 percent of segment operating income generated in the
Travel & Recreation Group segment were derived through its Canadian operations. These operations are largely affected by
foreign customer visitation, and, accordingly, increases in the value of the Canadian dollar, as compared to other currencies,
could adversely affect customer volumes, revenues and segment operating income for the Travel & Recreation Group.
Additionally, the Travel & Recreation Group is affected by consumer discretionary spending on tourism activities.
Management anticipates that foreign currency exchange rate variances versus 2013 will have an unfavorable impact on
the Travel & Recreation Group’s 2014 full year revenues of approximately $3 million. Also, management anticipates the four
acquisitions completed by Viad since the beginning of 2011 will generate approximately $27 million in revenues in 2014 with
an average Adjusted EBITDA margin (defined as Adjusted EBITDA divided by revenues) of more than 30 percent. By
leveraging economies of scale and scope and repositioning the acquired assets for higher returns, management expects to
grow this revenue base by three percent in 2014, with continued revenue growth and expanding Adjusted EBITDA margins in
future years.
Glacier Park operated the concession portion of its business under a concession contract with the U.S. National Park
Service (the “Park Service”) for Glacier National Park. On December 31, 2013, the concession contract expired. Upon
completion of the contract term, the Company received cash payments in January 2014 totaling $25 million for the
Company’s “possessory interest,” which generally means the value of the structures acquired or constructed, fixtures installed
and improvements made to the concession property at Glacier National Park during the term of the concession contract. The
Company anticipates a cash payment of approximately $5 million for the personal property Glacier Park used at the facilities
covered by the concession contract. Glacier Park generated approximately 47 percent of its 2013 revenues through its
concession contract for services provided within Glacier National Park.
Glacier Park continues to generate revenue from the five properties it owns: (1) St. Mary Lodge in St. Mary, Montana;
(2) Glacier Park Lodge in East Glacier, Montana; (3) Grouse Mountain Lodge in Whitefish, Montana; (4) the Prince of Wales
Hotel in Waterton Lakes National Park, Alberta; and (5) Motel Lake McDonald, which is located inside Glacier National
Park. Glacier Park also continues to operate the food and beverage services with respect to these properties and the retail
shops located near Glacier National Park. The five properties Glacier Park currently owns contain more than one-half of the
rooms that Glacier Park operated in 2013.
Based on the above, management revised its outlook for future revenues and earnings from Glacier Park and performed
an impairment evaluation of goodwill at the Glacier Park reporting unit. Based on this evaluation, the Company recorded a
non-cash impairment charge of $4.5 million representing all of the goodwill at Glacier Park, of which $892,000 related to the
noncontrolling interest.
As a result of the concession contract expiration, partially offset by continued organic growth at the five remaining
properties, management anticipates a full year revenue decline at Glacier Park of approximately $19 million. The majority of
the revenue impact will occur during the third quarter of 2014, with an approximate $3 million decline expected during the
24
second quarter. Management anticipates a reduction in Glacier Park’s segment operating income of approximately $3.5
million to $4 million in 2014. Due to the seasonal nature of the concession operations, management anticipates Glacier Park’s
third quarter operating income to be about $6 million lower than 2013, as this is when the concession properties run at full
capacity. During the first, second and fourth quarters of 2014, Glacier Park is expected to have favorable operating results,
primarily as a result of reduced overhead expenses and lower costs related to the opening and closing of the seasonal
properties.
The following table summarizes Viad’s actual results in comparison to pro forma information for Viad assuming that
Glacier Park did not operate the concession contract with the Park Service for Glacier National Park for the entirety of the
periods presented:
As Reported
Pro Forma Results
(in thousands)
Revenue
Depreciation and amortization
Segment operating income
2013
2012
$ 972,792 $ 1,025,231 $
28,615
45,891
30,731
41,862
2011
942,364 $
29,126
25,376
2012
2013
953,348 $ 1,006,645 $
27,973
41,911
30,138
38,190
2011
927,770
28,581
23,089
Corporate Activities. Corporate activities expense of $6.8 million in 2013 decreased from $9.4 million in 2012. This
decrease was primarily due to lower performance-based compensation expense in 2013, as well as higher costs in 2012
related to the amendment and restatement of the Company’s shareholder rights plan and higher legal costs related to
employee benefits associated with previously divested operations. These decreases were partially offset by 2013 costs related
to the Company’s strategic review process.
Corporate activities expense in 2014 is expected to approximate $9.5 million. The expected increase over 2013 is
primarily related to two reasons. First, the Company has exhausted the Viad common stock held in the leveraged Employee
Stock Ownership Plan feature of the Company’s 401(k) defined contribution plan (see Note 12) which has been used to fund
matching contributions to the Company’s 401(k) plan. Without the benefit of these low cost shares on which to provide a
matching contribution, beginning in 2014 Viad will fund 401(k) matching contributions from shares held in treasury which
have a higher cost to the Company. The second reason for the increase is related to an increase in performance-based
compensation expense.
Restructuring Charges. In 2013, Viad recorded net restructuring charges of $3.9 million, as compared to $4.9 million
in 2012. The 2013 charges primarily related to reorganization activities in the Marketing & Events Group, comprised of the
elimination of certain positions. In addition, restructuring charges related to the elimination of certain positions in the Travel
& Recreation Group and at Viad Corporate were also recorded in 2013.
Impairment Charges. As noted above, Viad recorded a non-cash goodwill impairment charge related to Glacier Park
of $4.5 million in 2013. Of the total amount, $892,000 of the goodwill impairment charge was allocated to the noncontrolling
interest at Glacier Park. In addition, in 2013, Viad recorded impairment charges of $952,000 related to the write-off of certain
assets within the Marketing & Events Group.
Income Taxes. The effective tax rate for 2013 was 29.5 percent, as compared to 77.8 percent for 2012. The high rate
for 2012, as compared to the statutory rate, was due to the charge to income tax expense of $13.4 million, representing a
valuation allowance for certain deferred tax assets associated with foreign tax credit carryforwards.
2012 vs. 2011:
Revenues for 2012 increased 8.8 percent to $1.0 billion, as compared to $942.4 million in 2011. Viad’s income from
continuing operations before income taxes was $26.8 million for 2012, as compared to $13.2 million in 2011. These increases
were primarily due to same-show growth, new business wins, positive show rotation revenue of approximately $16 million
from non-annual shows that took place during 2012 and continued focus on operating efficiencies at Viad’s Marketing &
Events Group, as well as the first peak season contributions from Alaska Denali Travel and the Banff International Hotel, the
newly renovated rooms at the Many Glacier Hotel and organic growth at the Company’s Travel & Recreation Group. Net
restructuring charges in 2012 were $4.9 million, as compared to $3.8 million in 2011, both primarily related to reorganization
activities in the Marketing & Events Group, comprised of facility consolidations, as well as the elimination of certain
positions.
25
Net income attributable to Viad for 2012 was $5.9 million, or $0.29 per diluted share, as compared to $9.2 million, or
$0.45 per diluted share, in 2011. These results include a charge to income tax expense of $13.4 million representing a
valuation allowance established for certain deferred tax assets associated with foreign tax credit carryforwards. These results
also include income from discontinued operations of $624,000, or $0.03 per diluted share, in 2012 primarily related to the
sale of land associated with previously sold operations and $451,000, or $0.02 per diluted share, in 2011 relating to
obligations associated with previously sold operations.
During 2012, foreign exchange rate variances resulted in decreases in revenues and segment operating income of $6.6
million and $886,000, respectively, as compared to 2011. Viad conducts its foreign operations primarily in Canada, the
United Kingdom, Germany and to a lesser extent in certain other countries.
The following table summarizes the effects of foreign exchange rate variances on revenues and segment operating
results from Viad’s significant international operations:
Revenues
Segment Operating Results
Weighted-Average
Exchange Rates
2012
2011
Effect of Rate
Variance
(in thousands)
Weighted-Average
Exchange Rates
2012
2011
Effect of Rate
Variance
(in thousands)
Marketing & Events Group:
Canada
United Kingdom
Germany
Travel & Recreation Group:
Canada
$
$
$
$
1.00 $
1.59 $
1.29 $
1.00 $
1.01 $
1.61 $
1.40 $
(954) $
(1,938) $
(1,733) $
1.02 $
(1,952) $
1.04 $
1.60 $
1.27 $
1.00 $
1.00 $
1.61 $
1.43 $
19
(72)
(107)
1.03 $
(726)
Viad’s results were impacted by the weakening of the Canadian dollar, British pound and Euro relative to the U.S.
dollar. Future changes in the exchange rates may impact overall expected profitability and historical period-to-period
comparisons when operating results are translated into U.S. dollars.
Marketing & Events Group. Revenues for the Marketing & Events U.S. segment were $676.8 million for 2012, up
7.2 percent, as compared to $631.4 million in 2011. The increase was primarily due to base same-show revenue increases of
6.5 percent and positive show rotation of approximately $21 million. Base same-shows represented 41.5 percent of
Marketing & Events U.S. segment revenues in 2012. The 2012 segment operating income was $5.6 million, as compared to a
loss of $6.3 million in 2011. The improved operating results were primarily due to an increase in revenues with a continued
focus on margin improvements, as well as ongoing efforts to drive operating efficiencies and control discretionary expenses.
Revenues for the Marketing & Events International segment were $240.1 million for 2012, up 9.8 percent, as compared
to $218.6 million in 2011. Segment operating income was $12.3 million in 2012, as compared to $11.4 million in 2011. As
discussed above, period-to-period comparisons for this segment were affected by exchange rate variances, which had an
unfavorable impact on revenues of $4.6 million and segment operating income of $160,000, as compared to 2011. Excluding
exchange rate variances, 2012 revenues increased by $26.1 million, or 11.9 percent, and operating income increased by $1.0
million, or 9.0 percent. These increases were primarily driven by services provided for the 2012 London Summer Olympics
and Paralympic Games, as well as increased demand and new show wins, partially offset by net negative show rotation
revenues of approximately $5 million.
Travel & Recreation Group. Revenues for the Travel & Recreation Group segment were $123.2 million, up 21.0
percent, as compared to 2011 revenues of $101.8 million. Segment operating income was $24.0 million, up 18.6 percent from
2011 segment operating income of $20.2 million. Segment operating margins were 19.5 percent in 2012, as compared to 19.8
percent in 2011. As discussed above, period-to-period comparisons for this segment were affected by exchange rate
variances, which had an unfavorable impact on revenues of $2.0 million and segment operating income of $726,000, as
compared to 2011. Excluding exchange rate variances, 2012 revenues increased by $23.3 million, or 22.9 percent, and
segment operating income increased by $4.5 million, or 22.2 percent. In addition to increased revenues, as discussed below,
operating results also reflect higher selling, general and administrative expenses, including costs related to additional
resources to support the Company’s growth strategy of “Refresh-Build-Buy.”
26
The following table provides Travel & Recreation Group revenues by line of business:
(in thousands)
Revenues:
Hospitality
Attractions
Package tours
Transportation
Intra-segment eliminations & other
Total
2012
2011
Change
$
$
51,969 $
38,141
18,805
16,858
(2,582)
123,191 $
38,003 $
34,243
17,409
14,782
(2,623)
101,814 $
13,966
3,898
1,396
2,076
41
21,377
36.7 %
11.4 %
8.0 %
14.0 %
(1.6 )%
21.0 %
Revenue growth from hospitality properties benefited from the initial peak season contributions from the Alaska Denali
Travel business (acquired in September 2011) and the Banff International Hotel (acquired in March 2012), with
approximately $11.9 million of incremental revenues. St. Mary Lodge and Grouse Mountain Lodge, both in their second year
as part of the Travel & Recreation Group in 2012 and renovated as part of the Company’s Refresh-Build-Buy strategy, also
increased revenue over 2011. Additionally, rooms that were under renovation at the Many Glacier Hotel in 2011 provided a
full revenue contribution in 2012.
The following table provides Travel & Recreation Group same-store key performance indicators. The same-store key
performance indicators for hospitality properties for 2012 exclude the rooms at the following properties that do not have
comparable results for 2011: Banff International Hotel (acquired March 2012), Denali Cabins (acquired September 2011),
Denali Backcountry Lodge (acquired September 2011), St. Mary Lodge (acquired June 2011) and Many Glacier Hotel
(rooms closed for renovation during 2011).
Hospitality:(1)
Room nights available
RevPAR
ADR
Occupancy
Attractions:
Passengers
Total attraction revenue per passenger
2012
2011
Change
169,011
95
146
64.8 %
$
$
169,034
93
142
65.9%
960,305
38
$
873,870
37
$
$
$
— %
2.2 %
2.8 %
(1.1 )%
9.9 %
2.7 %
(1) Grouse Mountain Lodge, acquired on January 5, 2011, is included in the same-store key performance indicators above.
Room nights available saw a slight decrease in 2012 primarily due to the change in seasonal opening and closing dates
of certain Glacier Park properties. RevPAR increased due to improved results, primarily driven by the Lake McDonald Lodge
and Glacier View Inn.
The number of passengers increased across all of the Travel & Recreation Group’s attractions. Revenue per passenger
increased mainly driven by increased ticket prices at the Banff Gondola attraction.
During 2012, approximately 65 percent of revenues and 77 percent of segment operating income generated in the
Travel & Recreation Group segment were derived through its Canadian operations. These operations are largely affected by
foreign customer visitation, and, accordingly, increases in the value of the Canadian dollar, as compared to other currencies,
could adversely affect customer volumes, revenues and segment operating income for the Travel & Recreation Group.
Additionally, the Travel & Recreation Group is affected by consumer discretionary spending on tourism activities.
Corporate Activities. Corporate activities expense of $9.4 million in 2012 increased from $7.7 million in 2011. This
increase was primarily due to costs related to the amendment and restatement of the Company’s shareholder rights plan as
well as increased performance-based compensation expense.
Restructuring Charges. In 2012, Viad recorded net restructuring charges of $4.9 million, as compared to $3.8 million
in 2011. These charges primarily related to reorganization activities in the Marketing & Events Group, comprised of facility
consolidations as well as the elimination of certain positions.
27
Income Taxes. The effective tax rate for 2012 was 77.8 percent, as compared to 29.5 percent for 2011. The high rate
for 2012, as compared to the statutory rate, was due to the charge to income tax expense of $13.4 million representing a
valuation allowance for certain deferred tax assets associated with foreign tax credit carryforwards.
Liquidity and Capital Resources
Cash and cash equivalents were $45.8 million as of December 31, 2013, as compared to $114.2 million as of
December 31, 2012, with the decrease primarily due to the payment of a $50.8 million special cash dividend in November
2013. During 2013, the Company generated net cash flows from operating activities of $6.1 million primarily driven by
operating results, mostly offset by changes in working capital. Management believes that Viad’s existing sources of
liquidity will be sufficient to fund operations and capital commitments for at least the next 12 months.
As of December 31, 2013, the Company had $41.5 million of its cash and cash equivalents held outside of the United
States. Of the total amount, $32.6 million was held in Canada, $5.4 million in the United Kingdom, $2.0 million in
Germany and $1.5 million in the United Arab Emirates. There were certain historical earnings related to its Canadian
operations which, if repatriated to the United States, would result in incremental income tax expense. The incremental tax
liability as of December 31, 2013 that would result assuming all foreign cash balances were repatriated to the United States
would be approximately $1.0 million.
Cash Flows
Operating Activities
(in thousands)
Net income
Depreciation and amortization
Other non-cash items
Changes in assets and liabilities
Net cash provided by operating activities
2013
2012
2011
$
$
21,686 $
28,615
14,209
(58,455)
6,055 $
6,583 $
30,731
32,482
(610 )
69,186 $
9,743
29,126
11,383
(15,516)
34,736
2013 - The two larger items in other non-cash items consisted of $5.2 million of share-based compensation expense
and $5.4 million of impairment charges. The changes in assets and liabilities primarily consisted of a $21.0 million
decrease in customer deposits, a $15.4 million decrease in accounts payable and a $11.7 million decrease in accrued
compensation.
2012 - Non-cash items primarily consisted of $11.3 million of deferred income taxes related to the valuation
allowance for foreign tax credit carryforwards and $7.2 million of share-based compensation expense. The changes in
assets and liabilities primarily consisted of a $4.7 million decrease in restructuring liabilities partially offset by a $4.3
million increase in accounts payable.
2011 - Non-cash items primarily consisted of $4.4 million of share-based compensation expense and $3.8 million of
restructuring charges. The changes in assets and liabilities primarily consisted of an $18.1 million increase in receivables
and a $3.9 million decrease in restructuring liabilities. This was partially offset by a $5.0 million increase in customer
deposits and a $4.6 million increase in accrued compensation.
Investing Activities
(in thousands)
Capital expenditures
Acquisition of businesses, net of cash acquired
Proceeds from sale of facility and related land
Proceeds from the sale of land - discontinued operations
Other
Net cash used in investing activities
2013
2012
2011
(36,119) $
(647)
12,696
1,645
464
(21,961) $
(27,675 ) $
(23,546 )
—
1,041
706
(49,474 ) $
(21,538)
(41,105)
—
—
440
(62,203)
$
$
2013 - Cash used in investing activities was driven by $36.1 million of capital expenditures primarily related to the
construction of the Glacier Skywalk at the Travel & Recreation Group as well as equipment and computer hardware at the
28
Marketing & Events U.S. segment. Partially offsetting this was $14.3 million of proceeds from the sale of a facility and
related land in the Marketing & Events Group and the sale of land from a discontinued operation.
In 2013, the Travel & Recreation Group paid $12.7 million in capital expenditures relating to the Glacier Skywalk.
Management projects that the Glacier Skywalk will generate approximately $4.5 million to $5 million in revenue and an
operating income margin of more than 50 percent in 2014.
In connection with the expiration of the Company’s concession contract at Glacier National Park, Viad received cash
payments in January 2014 totaling $25 million for its “possessory interest,” which generally means the value of the
structures acquired or constructed, fixtures installed and improvements made to the concession property during the term of
the concession contract. The Company anticipates a cash payment of approximately $5 million for the personal property
Glacier Park used at the facilities covered by the concession contract.
2012 - Cash used in investing activities primarily consisted of $27.7 million used for capital expenditures related to
the purchase of rental inventory, equipment and computer hardware and leasehold improvements at the Marketing &
Events U.S. segment as well as Glacier Skywalk construction costs and building and other improvements at the Travel &
Recreation Group, and $23.5 million used for the acquisition of the Banff International Hotel and related assets, net of cash
acquired.
During 2012, the Company began construction on the Glacier Skywalk, a 1,312-foot guided interpretive walkway
with a 98-foot glass-floored observation area overlooking the Sunwapta Valley in close proximity to the Company’s
Columbia Icefield attraction in Jasper National Park, Alberta, Canada. In 2012, the Travel & Recreation Group incurred
$8.9 million in capital expenditures relating to the Glacier Skywalk, with an accrued capital expenditure amount of $2.6
million as of December 31, 2012.
2011 - Cash used in investing activities primarily consisted of $41.1 million used for the acquisitions of Grouse
Mountain Lodge, St. Mary Lodge, and Denali Backcountry Lodge and Denali Cabins, net of cash acquired and $21.5
million used for capital expenditures related to the purchase of rental inventory, equipment and computer hardware
primarily at the Marketing & Events U.S. segment as well as building and other improvements at the Travel & Recreation
Group.
Financing Activities
(in thousands)
Payments on debt and capital lease obligations
Proceeds from borrowings
Dividends paid on common stock
Common stock purchased for treasury
Debt issuance costs
Other
Net cash used in financing activities
2013
2012
2011
$
$
(11,362) $
20,000
(58,914)
(1,328)
—
1,199
(50,405) $
(2,685 ) $
—
(4,454 )
(1,656 )
—
541
(8,254 ) $
(7,375)
—
(3,241)
(5,230)
(1,001)
350
(16,497)
2013 - Cash used in financing activities primarily consisted of $58.9 million used for payments of dividends on
common stock, partially offset by a net debt borrowing of $8.6 million. On January 24, 2014 and October 25, 2013, Viad
announced that its Board of Directors declared special cash dividends of $1.50 and $2.50 per share, respectively, to
shareholders of record at the close of business on February 7, 2014 and November 7, 2013, respectively.
2012 - Cash used in financing activities primarily consisted of $4.5 million used for payments of dividends on
common stock and $2.7 million used for payments on debt and capital lease obligations. In August 2012, Viad’s Board of
Directors approved a 150 percent increase in the quarterly dividend from $0.04 per share to $0.10 per share.
2011 - Cash used in financing activities primarily consisted of $7.4 million used for payments on debt and capital
lease obligations, $5.2 million used to purchase common stock for treasury and $3.2 million used for payments of
dividends on common stock.
29
Debt
Viad’s total debt as of December 31, 2013 and 2012 was $11.7 million and $2.2 million, respectively. The debt-to-
capital ratio was 0.032 to 1 and 0.006 to 1 as of December 31, 2013 and 2012, respectively. Capital is defined as total debt
and capital lease obligations plus total stockholders’ equity.
In May 2011, Viad entered into an amended and restated revolving credit agreement (the “Credit Facility”). The
Credit Facility provides for a $130 million revolving line of credit, which may be increased up to an additional $50 million
under certain circumstances. The term of the Credit Facility is five years (expiring on May 18, 2016) and borrowings are to
be used for general corporate purposes (including permitted acquisitions) and to support up to $50 million of letters of
credit. The lenders have a first perfected security interest in all of the personal property of Viad and GES, including 65
percent of the capital stock of top-tier foreign subsidiaries. As of December 31, 2013, Viad’s total debt of $11.7 million
consisted of $10.0 million of revolver borrowing on the Credit Facility and $1.7 million of capital lease obligations. As of
December 31, 2013, Viad had $118.7 million of capacity remaining under its Credit Facility reflecting outstanding letters
of credit of $1.3 million and the outstanding balance under the Credit Facility of $10.0 million.
Borrowings under the Credit Facility (of which GES is a guarantor) are indexed to the prime rate or the London
Interbank Offered Rate, plus appropriate spreads tied to Viad’s leverage ratio. Commitment fees and letters of credit fees
are also tied to Viad’s leverage ratio. The fees on the unused portion of the Credit Facility are currently 0.35 percent
annually.
The Credit Facility contains various affirmative and negative covenants that are customary for facilities of this type,
including a fixed-charge coverage ratio, leverage ratio and dividend and share repurchase limits. Significant other
covenants include limitations on: investments, additional indebtedness, sales/leases of assets, acquisitions, consolidations
or mergers and liens on property. As of December 31, 2013, Viad was in compliance with all covenants.
In December 2012, the Credit Facility was amended to remove the limitation on share repurchases of $10 million in
the aggregate per calendar year pursuant to certain conditions. The amendment allows share repurchases unless the
Company’s leverage ratio, as defined in the Credit Facility, is greater than 1.50 to 1.00 or a default or an unmatured default,
as defined in the Credit Facility, exists. The amendment also allows dividends to be declared and paid in excess of $10
million in the aggregate per calendar year, as well as distributions on its capital stock, as defined in the Credit Facility,
unless the Company’s leverage ratio, as defined in the Credit Facility, is greater than 1.50 to 1.00 or a default or an
unmatured default, as defined in the Credit Facility, exists.
Effective November 14, 2013, the Credit Facility was amended to remove the liquidity covenant that required Viad to
maintain at all times not less than $50 million of unrestricted cash and cash equivalent investments, as that term is defined
in the Credit Facility. With the amendment, the Credit Facility no longer requires any minimum amount of unrestricted
cash and cash equivalent investments.
Guarantees
As of December 31, 2013, Viad had certain obligations under guarantees to third parties on behalf of its subsidiaries.
These guarantees are not subject to liability recognition in the consolidated financial statements and relate to leased
facilities entered into by the Company’s subsidiary operations. The Company would generally be required to make
payments to the respective third parties under these guarantees in the event that the related subsidiary could not meet its
own payment obligations. The maximum potential amount of future payments that Viad would be required to make under
all guarantees existing as of December 31, 2013 would be $13.7 million. These guarantees relate to leased facilities and
expire through October 2017. There are no recourse provisions that would enable Viad to recover from third parties any
payments made under the guarantees. Furthermore, there are no collateral or similar arrangements whereby Viad could
recover payments.
Share Repurchases
Viad has announced the authorization of its Board of Directors to repurchase shares of the Company’s common stock
on the open market from time to time at prevailing market prices. No shares were repurchased on the open market during
2013. During 2012, Viad repurchased 23,183 shares for $526,000. As of December 31, 2013, 1,030,438 shares remain
available for repurchase. Additionally, during 2013 and 2012, the Company repurchased 50,156 shares for $1.3 million and
56,885 shares for $1.1 million, respectively, related to tax withholding requirements on share-based awards.
30
Contractual Obligations
The following table presents Viad’s contractual obligations as of December 31, 2013:
Payments due by period
Less than
1 year
1-3 years
3-5 years
More than
5 years
Total
$
(in thousands)
Operating leases
Pension and postretirement benefits(1)
Purchase obligations(2)
Capital lease obligations
Estimated interest payments
65,722
38,095
31,644
1,813
145
137,419
(1) Estimated contributions related to multi-employer benefit plans are excluded from the table above. See Note 16 of Notes
8,137 $
19,317
22
—
—
27,476 $
19,808 $
3,645
18,828
984
76
43,341 $
23,810 $
7,507
10,227
795
67
42,406 $
13,967 $
7,626
2,567
34
2
Total contractual cash obligations(3)
24,196 $
$
to Consolidated Financial Statements for disclosures regarding those obligations.
(2) Purchase obligations primarily represent payments due under various licensing agreements and commitments related to
consulting and other contracted services that are enforceable and legally binding and that specify all significant terms,
including open purchase orders.
(3) Aggregate self-insurance liabilities of $29.9 million are excluded from the table above as the timing and amounts of
future cash outflows are uncertain. See Note 8 of Notes to Consolidated Financial Statements.
Viad and certain of its subsidiaries are plaintiffs or defendants to various actions, proceedings and pending claims,
some of which involve, or may involve, compensatory, punitive or other damages. Litigation is subject to many
uncertainties and it is possible that some of the legal actions, proceedings or claims could be decided against Viad.
Although the amount of liability as of December 31, 2013 with respect to these matters is not ascertainable, Viad believes
that any resulting liability, after taking into consideration amounts already provided for and insurance coverage, will not
have a material effect on Viad’s business, financial position or results of operations.
Viad is subject to various U.S. federal, state and foreign laws and regulations governing the prevention of pollution
and the protection of the environment in the jurisdictions in which Viad has or had operations. If the Company has failed to
comply with these environmental laws and regulations, civil and criminal penalties could be imposed and Viad could
become subject to regulatory enforcement actions in the form of injunctions and cease and desist orders. As is the case with
many companies, Viad also faces exposure to actual or potential claims and lawsuits involving environmental matters
relating to its past operations. Although it is a party to certain environmental disputes, Viad believes that any resulting
liabilities, after taking into consideration amounts already provided for and insurance coverage, will not have a material
effect on the Company’s financial position, results of operations or liquidity. As of December 31, 2013, there was a
remaining environmental remediation liability of $5.0 million related to previously sold operations of which $353,000 is
included in the consolidated balance sheets under the caption “Other current liabilities” and $4.7 million under the caption
“Other deferred items and liabilities.”
Viad’s businesses contribute to various multi-employer pension plans based on obligations arising under collective-
bargaining agreements covering its union-represented employees. Viad’s contributions to these plans in 2013, 2012 and
2011 totaled $20.3 million, $20.7 million and $19.6 million, respectively. Based upon the information available to Viad
from plan administrators, management believes that several of these multi-employer plans are underfunded. The Pension
Protection Act of 2006 requires pension plans underfunded at certain levels to reduce, over defined time periods, the
underfunded status. In addition, under current laws, the termination of a plan, or a voluntary withdrawal from a plan by
Viad, or a shrinking contribution base to a plan as a result of the insolvency or withdrawal of other contributing employers
to such plan, would require Viad to make payments to such plan for its proportionate share of the plan’s unfunded vested
liabilities. As of December 31, 2013, the amount of additional funding, if any, that Viad would be required to make related
to multi-employer pension plans is not ascertainable.
Off-Balance Sheet Arrangements:
Viad does not have any “off-balance sheet” arrangements with unconsolidated special-purpose or other entities that
would materially affect the Company’s financial position, results of operations, liquidity or capital resources. Furthermore,
Viad does not have any relationships with special-purpose or other entities that provide off-balance sheet financing;
liquidity, market risk or credit risk support; or engage in leasing or other services that may expose the Company to liability
31
or risks of loss that are not reflected in Viad’s consolidated financial statements and related notes. See Notes 9, 18 and 19
of Notes to Consolidated Financial Statements.
Critical Accounting Policies and Estimates:
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the
reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities
in the consolidated financial statements. The SEC has defined a company’s most critical accounting policies as those that
are most important to the portrayal of a company’s financial position and results of operations, and that require a company
to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. Based on these criteria, Viad has identified and discussed with its audit committee the following
critical accounting policies and estimates pertaining to Viad, and the methodology and disclosures related to those
estimates:
Goodwill — Goodwill is not amortized, but tested for impairment at the reporting unit level on an annual basis on
October 31 of each year. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances
change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Viad’s
reporting units are defined, and goodwill is tested, at either an operating segment level or at the component level of an
operating segment, depending on various factors including: the internal reporting structure of the operating segment, the
level of integration among components, the sharing of assets and other resources among components and the benefits and
likely recoverability of goodwill by the component’s operations.
For impairment testing purposes, the goodwill related to the Marketing & Events U.S. segment is assigned to and
tested at the operating segment level, which represents all domestic operations of GES. Furthermore, the goodwill related
to the Marketing & Events International segment is assigned to and tested based on the segment’s geographical operations.
For the Marketing & Events International segment the reporting units are GES United Kingdom and GES Canada.
Brewster, Glacier Park and Alaska Denali Travel are considered reporting units for goodwill impairment testing purposes.
As of December 31, 2013, Viad had total goodwill of $129.5 million consisting of $85.3 million related to the
Marketing & Events Group and $44.2 million related to the Travel & Recreation Group. The following table summarizes
goodwill balances by reporting unit and segment as of December 31:
(in thousands)
Marketing & Events Group:
Marketing & Events U.S.
Marketing & Events International:
GES United Kingdom
GES Canada
Total Marketing & Events Group
Travel & Recreation Group:
Brewster
Alaska Denali Travel
Glacier Park
Total Travel & Recreation Group
Total Goodwill
2013
2012
$
62,686 $
62,686
14,049
8,562
85,297
41,062
3,184
—
44,246
129,543 $
13,894
9,160
85,740
44,435
3,184
4,461
52,080
137,820
$
Viad uses a discounted expected future cash flow methodology (income approach) in order to estimate the fair value
of its reporting units for purposes of goodwill impairment testing. The estimates and assumptions regarding expected future
cash flows, discount rates and terminal values require considerable judgment and are based on market conditions, financial
forecasts, industry trends and historical experience.
The most critical assumptions and estimates in determining the estimated fair value of its reporting units relate to the
amounts and timing of expected future cash flows for each reporting unit and the reporting unit cost of capital (discount
rate) applied to those cash flows. Furthermore, the assumed reporting unit cost of capital rates (discount rates) are
estimated using a build-up method based on the perceived risk associated with the cash flows pertaining to the specific
reporting unit. In order to assess the reasonableness of its fair value estimates, the Company performs a reconciliation of
the aggregate fair values of its reporting units to Viad’s market capitalization.
32
As noted above, the estimates and assumptions regarding expected future cash flows, discount rates and terminal
values require considerable judgment and are based on market conditions, financial forecasts, industry trends and historical
experience. These estimates, however, have inherent uncertainties and different assumptions could lead to materially
different results. As of December 31, 2013, Viad had aggregate goodwill of $129.5 million recorded in the consolidated
balance sheets. Furthermore, as a result of the Company’s most recent impairment analysis performed in October 2013, the
excess of the estimated fair value over the carrying value (expressed as a percentage of the carrying amounts) under step
one of the impairment test was 139 percent, 58 percent and 59 percent for each of the Marketing & Events Group reporting
units in the United States, the United Kingdom and Canada, respectively. For the Brewster and Alaska Denali Travel
reporting units, the excess of the estimated fair value over the carrying value was 54 percent and 15 percent, respectively,
as of the most recent impairment test. Significant reductions in the Company’s expected future revenues, operating income
or cash flow forecasts and projections, or an increase in reporting unit cost of capital, could trigger additional goodwill
impairment testing, which may result in impairment charges. See “Results of Operations” above and Note 7 of Notes to
Consolidated Financial Statements for a discussion of the goodwill impairment loss recorded during 2013 related to
Glacier Park.
Income taxes — Viad is required to estimate and record provisions for income taxes in each of the jurisdictions in
which the Company operates. Accordingly, the Company must estimate its actual current income tax liability, and assess
temporary differences arising from the treatment of items for tax purposes, as compared to the treatment for accounting
purposes. These differences result in deferred tax assets and liabilities which are included in Viad’s consolidated balance
sheets. The Company must assess the likelihood that deferred tax assets will be recovered from future taxable income and
to the extent that recovery is not likely, a valuation allowance must be established. The Company uses significant judgment
in forming a conclusion regarding the recoverability of its deferred tax assets and evaluates the available positive and
negative evidence to determine whether it is more-likely-than-not that its deferred tax assets will be realized in the future.
As of December 31, 2013 and 2012, Viad had gross deferred tax assets of $77.0 million and $82.2 million, respectively.
These deferred tax assets reflect the expected future tax benefits to be realized upon reversal of deductible temporary
differences, and the utilization of net operating loss and tax credit carryforwards.
The Company considered all available positive and negative evidence regarding the future recoverability of its
deferred tax assets, including the Company’s recent operating history, taxpaying history and future reversals of deferred tax
liabilities. The Company also evaluated its ability to utilize its foreign tax credits, given its recent utilization history. These
tax credits are subject to a 10-year carryforward period and begin to expire in 2019. Based on the Company’s assessment, it
was determined during the fourth quarter of 2012 that the weight of the evidence indicated that certain deferred tax assets
associated with foreign tax credit carryforwards no longer met the more-likely-than-not test regarding the realization of
those assets. As a result, the Company recorded a valuation allowance of $13.4 million related to all of its foreign tax credit
carryforwards. During 2013, the Company generated additional foreign tax credit carryforwards of $1.9 million for which
an additional valuation allowance was recorded. However, the Company also determined, due to the taxable income
associated with the Glacier Park possessory interest the Company received in the first quarter of 2014, it was more-likely-
than-not that a portion of its previously existing foreign tax credit carryforwards would be utilized. Therefore, during the
fourth quarter of 2013, the Company reversed $4.1 million of its valuation allowance related to those tax credits.
Accordingly, the Company recorded a net decrease to income tax expense of $2.2 million and a decrease of $300,000 to
deferred tax assets for a total decrease to income tax expense of $2.5 million related to changes in the valuation allowance
associated with its foreign tax credit carryforwards. As of December 31, 2013 and 2012, Viad had federal, state and foreign
net operating loss carryforwards of $96.0 million and $82.0 million, respectively, for which the Company had deferred tax
assets of $4.8 million and $1.8 million, respectively. The state and foreign net operating loss carryforwards expire on
various dates from 2014 through 2033. During 2013, the Company increased its valuation allowance related to state and
foreign net operating loss carryforwards by $329,000. As of December 31, 2013 and 2012, Viad had a valuation allowance
of $1.5 million and $1.2 million, respectively, related to those state and foreign deferred tax assets. With respect to all other
deferred tax assets, management believes that recovery from future taxable income is more-likely-than-not.
As noted above, Viad uses considerable judgment in forming a conclusion regarding the recoverability of its deferred
tax assets. As a result, there are inherent uncertainties regarding the ultimate realization of these assets, which is primarily
dependent on Viad’s ability to generate sufficient taxable income in future periods. In future periods, it is reasonably
possible that the relative weight of positive and negative evidence regarding the recoverability of Viad’s deferred tax assets
may change, which could result in a material increase or decrease in the Company’s valuation allowance. If such a change
in the valuation allowance were to occur, it would result in a material increase or decrease to income tax expense in the
period the assessment was made.
33
Insurance liabilities — Viad is self-insured up to certain limits for workers’ compensation, automobile, product and
general liability and property loss claims. The aggregate amount of insurance liabilities (up to the Company’s retention
limit) related to Viad’s continuing operations was $20.0 million as of December 31, 2013. Of this total, $12.5 million
related to workers’ compensation liabilities and the remaining $7.5 million related to general/auto liability claims. Viad has
also retained and provided for certain insurance liabilities in conjunction with previously sold businesses totaling $5.0
million as of December 31, 2013, primarily related to workers’ compensation liabilities. Provisions for losses for claims
incurred, including estimated claims incurred but not yet reported, are made based on Viad’s historical experience, claims
frequency and other factors. A change in the assumptions used could result in an adjustment to recorded liabilities. Viad has
purchased insurance for amounts in excess of the self-insured levels, which generally range from $200,000 to $500,000 on
a per claim basis. Viad does not maintain a self-insured retention pool fund as claims are paid from current cash resources
at the time of settlement. Viad’s net cash payments in connection with these insurance liabilities were $6.6 million, $5.6
million and $7.6 million in 2013, 2012 and 2011, respectively.
In addition, as of December 31, 2013, Viad has recorded insurance liabilities of $5.0 million related to continuing
operations in excess of the self-insured levels for which Viad remains the primary obligor. Of this total, $1.7 million related
to workers’ compensation liabilities and the remaining $3.3 million related to general liability claims. The Company has
presented these amounts as other deferred items and liabilities with a corresponding receivable in other investments and
assets.
Pension and postretirement benefits — Viad’s pension plans use traditional defined benefit formulas based on
years of service and final average compensation. Funding policies provide that payments to defined benefit pension trusts
shall be at least equal to the minimum funding required by applicable regulations. The Company presently anticipates
contributing $1.4 million to its funded pension plans and $942,000 to its unfunded pension plans in 2014.
Viad and certain of its subsidiaries have defined benefit postretirement plans that provide medical and life insurance
for certain eligible employees, retirees and dependents. The related postretirement benefit liabilities are recognized over the
period that services are provided by employees. In addition, Viad retained the obligations for these benefits for retirees of
certain sold businesses. While the plans have no funding requirements, Viad expects to contribute $950,000 to the plans in
2014.
The assumed health care cost trend rate used in measuring the December 31, 2013 accumulated postretirement
benefit obligation was 8.0 percent, declining one-half percent each year to the ultimate rate of 5.0 percent by the year 2019
and remaining at that level thereafter. The assumed health care cost trend rate used in measuring the December 31, 2012
accumulated postretirement benefit obligation was 8.5 percent, declining one-half percent each year to the ultimate rate of
5.0 percent by the year 2019 and remaining at that level thereafter.
A one-percentage-point increase in the assumed health care cost trend rate for each year would increase the
accumulated postretirement benefit obligation as of December 31, 2013 by approximately $1.5 million and the total of
service and interest cost components by approximately $113,000. A one-percentage-point decrease in the assumed health
care cost trend rate for each year would decrease the accumulated postretirement benefit obligation as of December 31,
2013 by approximately $1.3 million and the total of service and interest cost components by approximately $90,000.
The weighted-average assumptions used to determine the pension and postretirement benefit obligations as of
December 31 were as follows:
Domestic Plans
Funded Plans
Unfunded Plans
Postretirement
Benefit Plans
Foreign Plans
Discount rate
2012
2013
4.89% 4.11% 4.60% 3.80% 4.65% 3.85% 4.67% 4.06%
2012
2013
2013
2012
2013
2012
34
The weighted-average assumptions used to determine net periodic benefit cost were as follows:
Domestic Plans
Funded Plans
Unfunded Plans
Postretirement
Benefit Plans
Foreign Plans
Discount rate
Expected return on plan assets
2012
2013
2013
4.09% 4.93% 3.80% 4.75% 3.85% 4.70% 4.03% 4.65%
N/A 0.00% 4.65% 5.44% 5.45%
3.90% 4.20%
N/A
2012
2012
2013
2012
2013
The discount rates used in determining future pension and postretirement benefit obligations are based on rates
determined by actuarial analysis and management review, and reflect the estimated rates of return on a high-quality,
hypothetical bond portfolio whose cash flows match the timing and amounts of expected benefit payments. See Note 16 of
Notes to Consolidated Financial Statements.
Share-based compensation — Viad grants share-based compensation awards to officers, directors and certain key
employees pursuant to the 2007 Viad Corp Omnibus Incentive Plan which has a 10-year life and provides for the following
types of awards: (a) incentive and non-qualified stock options; (b) restricted stock and restricted stock units;
(c) performance units or performance shares; (d) stock appreciation rights; (e) cash-based awards and (f) certain other
stock-based awards.
Share-based compensation expense recognized in the consolidated financial statements in 2013, 2012 and 2011 was
$5.2 million, $7.2 million and $4.4 million, respectively. Furthermore, the total tax benefits related to such costs were $1.9
million, $2.6 million and $1.6 million in 2013, 2012 and 2011, respectively. No share-based compensation costs were
capitalized during 2013, 2012 or 2011.
The fair value of restricted stock and performance-based restricted stock awards are based on Viad’s stock price on
the date of grant. Liability-based awards are recorded at estimated fair value, based on the number of units expected to vest
and the level of achievement of predefined performance goals (where applicable) and are remeasured on each balance sheet
date based on Viad’s stock price until the time of settlement. Viad uses the Black-Scholes option pricing model for
purposes of determining the fair value of each stock option grant for which key assumptions are necessary. These
assumptions include Viad’s expected stock price volatility, the expected period of time the stock option will remain
outstanding, the expected dividend yield on Viad’s common stock and the risk-free interest rate. While the Company has
not granted stock options since 2010, changes in the assumptions could result in different estimates of the fair value of
stock option grants, and consequently impact Viad’s future results of operations. See Note 2 of Notes to Consolidated
Financial Statements.
Impact of Recent Accounting Pronouncements:
For a description of recently issued accounting pronouncements, including the expected dates of adoption and
estimated effects, if any, on Viad’s consolidated financial statements, see Note 1 of Notes to Consolidated Financial
Statements.
Forward-Looking Statements:
As provided by the safe harbor provision under the Private Securities Litigation Reform Act of 1995, Viad cautions
readers that, in addition to historical information contained herein, this Annual Report includes certain information,
assumptions and discussions that may constitute forward-looking statements. These forward-looking statements are not
historical facts, but reflect current estimates, projections, expectations, or trends concerning future growth, operating cash
flows, availability of short-term borrowings, consumer demand, new or renewal business, investment policies, productivity
improvements, ongoing cost reduction efforts, efficiency, competitiveness, legal expenses, tax rates and other tax matters,
foreign exchange rates and the realization of restructuring cost savings. Actual results could differ materially from those
discussed in the forward-looking statements. Viad’s businesses can be affected by a host of risks and uncertainties. Among
other things, natural disasters, gains and losses of customers, consumer demand patterns, labor relations, purchasing decisions
related to customer demand for exhibition and event services, existing and new competition, industry alliances, consolidation
and growth patterns within the industries in which Viad competes, acquisitions, capital allocations, adverse developments in
liabilities associated with discontinued operations and any deterioration in the economy and other risks discussed in Item 1A.,
“Risk Factors,” included in this Annual Report, may individually or in combination impact future results. In addition to
factors mentioned elsewhere, economic, competitive, governmental, technological, capital marketplace and other factors,
35
including terrorist activities or war, a pandemic health crisis and international conditions, could affect the forward-looking
statements in this Annual Report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Viad’s market risk exposures relate to fluctuations in foreign exchange rates, interest rates and certain commodity
prices. Foreign exchange risk is the risk that fluctuating exchange rates will adversely affect Viad’s financial condition or
results of operations. Interest rate risk is the risk that changing interest rates will adversely affect the earnings of Viad.
Commodity risk is the risk that changing prices will adversely affect results of operations.
Viad conducts its foreign operations primarily in Canada, the United Kingdom, Germany and to a lesser extent in
certain other countries. The functional currency of Viad’s foreign subsidiaries is their local currency. Accordingly, for
purposes of consolidation, Viad translates the assets and liabilities of its foreign subsidiaries into U.S. dollars at the foreign
exchange rates in effect at the balance sheet date. The unrealized gains or losses resulting from the translation of these foreign
denominated assets and liabilities are included as a component of accumulated other comprehensive income in Viad’s
consolidated balance sheets. As a result, significant fluctuations in foreign exchange rates relative to the U.S. dollar may
result in material changes to Viad’s net equity position reported in its consolidated balance sheets. Viad does not currently
hedge its equity risk arising from the translation of foreign denominated assets and liabilities. Viad had cumulative unrealized
foreign currency translation gains recorded in stockholders’ equity of $30.8 million and $42.2 million as of December 31,
2013 and 2012, respectively. During 2013 and 2012, an unrealized foreign currency translation loss of $11.3 million and a
gain of $7.5 million, respectively, were recorded in other comprehensive income.
In addition, for purposes of consolidation, the revenues, expenses, gains and losses related to Viad’s foreign operations
are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, Viad’s consolidated results of
operations are exposed to fluctuations in foreign exchange rates as the operating results of its foreign operations, when
translated, may vary from period-to-period, even when the functional currency amounts have not changed. Such fluctuations
may adversely impact overall expected profitability and historical period-to-period comparisons. Viad does not currently
hedge its net earnings exposure arising from the translation of its foreign operating results.
The following table summarizes the effect of foreign exchange rate variances on segment operating results from Viad’s
significant international operations:
Weighted-Average
Exchange Rates
2013
2012
Effect of Rate
Variance
(thousands)
Weighted-Average
Exchange Rates
2012
2011
Effect of Rate
Variance
(thousands)
Canadian Operations:
Marketing & Events Group
Travel & Recreation Group
United Kingdom Operations:
Marketing & Events Group
German Operations:
Marketing & Events Group
$
$
$
$
0.99 $
0.96 $
1.04 $
1.00 $
(65) $
(790) $
1.04 $
1.00 $
1.00 $
1.03 $
19
(726)
1.57 $
1.60 $
(138) $
1.60 $
1.61 $
(72)
1.33 $
1.27 $
(37) $
1.27 $
1.43 $
(107)
As the Canadian operations generated aggregate operating income in 2013, Viad’s segment operating income has been
unfavorably impacted by $855,000 from the strengthening of the Canadian dollar relative to the U.S. dollar. A hypothetical
change of 10 percent in the Canadian exchange rate would have resulted in a change to operating income of approximately
$2.0 million. As the United Kingdom operations generated aggregate operating income in 2013, Viad’s segment operating
income has been unfavorably impacted by $138,000 from the strengthening of the British pound relative to the U.S. dollar. A
hypothetical change of 10 percent in the British pound exchange rate would have resulted in a change to operating income of
approximately $828,000. As the German operations generated aggregate operating income in 2013, Viad’s segment operating
income has been unfavorably impacted by $37,000 from the strengthening of the Euro relative to the U.S. dollar. A
hypothetical change of 10 percent in the Euro would have resulted in a change to operating income of approximately
$126,000.
Viad is exposed to foreign exchange transaction risk as its foreign subsidiaries have certain revenue transactions
denominated in currencies other than the functional currency of the respective subsidiary. From time to time, Viad utilizes
forward contracts to mitigate the impact on earnings related to these transactions due to fluctuations in foreign exchange
rates. As of December 31, 2013 and 2012, Viad did not have any significant foreign currency forward contracts outstanding.
36
Viad is exposed to short-term interest rate risk on certain of its debt obligations. Viad currently does not use derivative
financial instruments to hedge cash flows for such obligations.
Viad’s subsidiaries have exposure to changing fuel prices. Periodically, Brewster enters into futures contracts with an
oil company to purchase two types of fuel and specifies the monthly total volume, by fuel product, to be purchased over the
agreed upon term of the contract, which is generally no longer than one year. The main objective of Viad’s risk policy related
to changing fuel prices is to reduce transaction exposure in order to mitigate the cash flow risk and protect profit margins.
There were no fuel contracts outstanding as of December 31, 2013 or 2012.
Item 8. Financial Statements and Supplementary Data.
Refer to Index to Financial Statements for required information.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief
Financial Officer of Viad, the effectiveness of the design and operation of disclosure controls and procedures has been
evaluated as of December 31, 2013, and, based on that evaluation, the Chief Executive Officer and Chief Financial Officer
have concluded that these disclosure controls and procedures are effective as of December 31, 2013. Disclosure controls and
procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the
SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in such reports is accumulated and communicated to management, including
the Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required
disclosure.
There were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2013 that
have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
Management’s report on internal control over financial reporting and the report of Viad’s independent registered public
accounting firm, Deloitte & Touche LLP, are provided in this Annual Report immediately prior to the Index to Financial
Statements.
Item 9B. Other Information.
None.
37
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
Information regarding directors of Viad, director nomination procedures, the Audit Committee of Viad’s Board of
Directors and compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, are included in the Proxy
Statement for the Annual Meeting of Shareholders of Viad to be held on May 22, 2014, under the captions “Election of
Directors,” “Board of Directors and Corporate Governance” and “Information on Stock Ownership,” and are incorporated
herein by reference. Information regarding executive officers of Viad is located in Part I, “Other - Executive Officers of
Registrant” of this Annual Report.
Viad has adopted a Code of Ethics for all directors, officers and employees of the Company and its subsidiaries. A copy
of the Company’s Code of Ethics is available at Viad’s website at www.viad.com/pdf/corpgovernance/CodeofEthics.pdf and is
also available without charge to any shareholder upon request by writing to: Viad Corp, 1850 North Central Avenue, Suite
1900, Phoenix, Arizona 85004-4565, Attention: Corporate Secretary.
Item 11. Executive Compensation.
Information regarding executive compensation is contained in the Proxy Statement for the Annual Meeting of
Shareholders of Viad to be held on May 22, 2014, under the captions “Compensation Discussion and Analysis,” “Board of
Directors and Corporate Governance” and “Executive Compensation,” and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information regarding security ownership of certain beneficial owners and management and information regarding
securities authorized for issuance under equity compensation plans are contained in the Proxy Statement for the Annual
Meeting of Shareholders of Viad to be held on May 22, 2014, under the captions “Executive Compensation” and
“Information on Stock Ownership,” and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information regarding director independence, and certain relationships and related transactions, is contained in the
Proxy Statement for the Annual Meeting of Shareholders of Viad to be held on May 22, 2014, under the caption “Board of
Directors and Corporate Governance,” and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
Information regarding principal accounting fees and services and the pre-approval policies and procedures for such fees
and services, as adopted by the Audit Committee of the Board of Directors, is contained in the Proxy Statement for the
Annual Meeting of Shareholders of Viad to be held on May 22, 2014, under the caption “Ratification of the Appointment of
Deloitte & Touche LLP as Viad’s Independent Public Accountants for 2014” and is incorporated herein by reference.
Item 15. Exhibits, Financial Statement Schedules.
PART IV
(a)
1. The financial statements listed in the accompanying Index to Financial Statements are filed as part of this
Annual Report.
2. The exhibits listed in the accompanying Exhibit Index are filed as part of this Annual Report.
(b)
Exhibits
See Exhibit Index.
(c)
Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts.
38
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, in Phoenix, Arizona, on
March 7, 2014.
SIGNATURES
VIAD CORP
By:
/s/ Paul B. Dykstra
Paul B. Dykstra
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the
following persons on behalf of Viad Corp and in the capacities and on the dates indicated:
Date: March 7, 2014
Date: March 7, 2014
Date: March 7, 2014
Date: March 7, 2014
39
Principal Executive Officer
By:
/s/ Paul B. Dykstra
Paul B. Dykstra
Chairman of the Board, President
and Chief Executive Officer
Principal Financial Officer
By:
/s/ Ellen M. Ingersoll
Ellen M. Ingersoll
Chief Financial Officer
Principal Accounting Officer
By:
/s/ G. Michael Latta
G. Michael Latta
Chief Accounting Officer—
Controller
Directors
Andrew B. Benett
Daniel Boggan Jr.
Isabella Cunningham
Richard H. Dozer
Edward E. Mace
Robert E. Munzenrider
Margaret E. Pederson
Albert M. Teplin
By:
/s/ Ellen M. Ingersoll
Ellen M. Ingersoll
Attorney-in-Fact
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Viad Corp (“Viad” or the “Company”) is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s
principal executive and principal financial officers and effected by the Company’s board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting principles generally accepted in the United States of America
and includes those policies and procedures that:
• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with accounting principles generally accepted in the United States of America, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management and directors of
the Company; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All
internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or
detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features
of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not
eliminate, this risk.
Management performed an assessment of the effectiveness of Viad’s internal control over financial reporting using the
criteria described in the “Internal Control - Integrated Framework (1992),” issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The objective of this assessment was to determine whether Viad’s internal
control over financial reporting was effective as of December 31, 2013.
Based on its assessment, management concluded that, as of December 31, 2013, Viad’s internal control over financial
reporting is effective based on those criteria.
Viad’s independent registered public accounting firm, Deloitte & Touche LLP, has issued a report relating to its audit of
the effectiveness of Viad’s internal control over financial reporting, which appears on the following page of this Annual
Report.
40
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders of
Viad Corp
Phoenix, Arizona
We have audited the internal control over financial reporting of Viad Corp and subsidiaries (the “Company”) as of
December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the
company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the
company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on
a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31,
2013 of the Company and our report dated March 7, 2014 expressed an unqualified opinion on those consolidated financial
statements and financial statement schedule.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Phoenix, Arizona
March 7, 2014
41
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheets ............................................................................................................................................... F-1
Consolidated Statements of Operations ............................................................................................................................... F-2
Consolidated Statements of Comprehensive Income .......................................................................................................... F-3
Consolidated Statements of Stockholders’ Equity............................................................................................................... F-4
Consolidated Statements of Cash Flows ............................................................................................................................. F-5
Notes to Consolidated Financial Statements ....................................................................................................................... F-6
Report of Independent Registered Public Accounting Firm................................................................................................ F-40
Schedule II – Valuation and Qualifying Accounts............................................................................................................... F-41
Page
42
VIAD CORP
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
Current assets
Assets
Cash and cash equivalents
Accounts receivable, net of allowance for doubtful accounts of $877 and $1,150,
respectively
Inventories
Deferred income taxes
Other current assets
Total current assets
Property and equipment, net
Other investments and assets
Deferred income taxes
Goodwill
Other intangible assets, net
Total Assets
Current liabilities
Liabilities and Stockholders’ Equity
Accounts payable
Other current liabilities
Current portion of long-term debt and capital lease obligations
Total current liabilities
Long-term capital lease obligations
Pension and postretirement benefits
Other deferred items and liabilities
Total liabilities
Commitments and contingencies
Stockholders’ equity
Viad Corp stockholders’ equity:
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares
issued
Additional capital
Retained deficit
Unearned employee benefits and other
Accumulated other comprehensive income (loss):
Unrealized gain on investments
Cumulative foreign currency translation adjustments
Unrecognized net actuarial loss and prior service credit, net
Common stock in treasury, at cost, 4,618,433 and 4,694,468 shares, respectively
Total Viad Corp stockholders’ equity
Noncontrolling interest
Total stockholders’ equity
Total Liabilities and Stockholders’ Equity
F-1
December 31,
2013
2012
$
45,821 $
114,171
61,197
27,993
20,577
17,142
172,730
190,330
35,026
29,823
129,543
4,480
561,932 $
40,941 $
73,489
10,903
125,333
765
30,672
48,619
205,389
37,402
590,862
(50,393 )
(21 )
429
30,847
(11,259 )
(250,426 )
347,441
9,102
356,543
561,932 $
62,756
35,656
26,301
15,534
254,418
197,298
32,416
26,104
137,820
2,521
650,577
57,995
107,684
1,347
167,026
879
37,812
47,828
253,545
37,402
593,862
(13,034)
(1,301)
275
42,158
(14,968)
(256,333)
388,061
8,971
397,032
650,577
$
$
$
VIAD CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Revenues:
Exhibition and event services
Exhibits and environments
Travel and recreation services
Total revenues
Costs and expenses:
Costs of services
Costs of products sold
Gain on sale of facility and related land
Corporate activities
Interest income
Interest expense
Restructuring charges
Goodwill impairment charge
Other impairment charges
Total costs and expenses
Income from continuing operations before income taxes
Income tax expense
Income from continuing operations
Income from discontinued operations
Net income
Net income attributable to noncontrolling interest
Net income attributable to Viad
Diluted income per common share:
Continuing operations attributable to Viad common stockholders
Discontinued operations attributable to Viad common stockholders
Net income attributable to Viad common stockholders
Weighted-average outstanding and potentially dilutive common shares
Basic income per common share:
Continuing operations attributable to Viad common stockholders
Discontinued operations attributable to Viad common stockholders
Net income attributable to Viad common stockholders
Weighted-average outstanding common shares
Dividends declared per common share
Amounts attributable to Viad common stockholders
Income from continuing operations
Income from discontinued operations
Net income
Year Ended December 31,
2013
2012
2011
$
$
$
$
$
$
$
$
$
685,350 $
159,554
127,888
972,792
773,931
157,745
(4,775)
6,755
(550)
1,234
3,891
4,461
952
943,644
29,148
8,590
20,558
1,128
21,686
(131)
21,555 $
1.01 $
0.05
1.06 $
20,265
1.01 $
0.05
1.06 $
19,850
2.90 $
20,427 $
1,128
21,555 $
726,429 $
175,611
123,191
1,025,231
818,837
164,532
—
9,408
(593 )
1,303
4,942
—
—
998,429
26,802
20,843
5,959
624
6,583
(686 )
5,897 $
0.26 $
0.03
0.29 $
20,005
0.26 $
0.03
0.29 $
19,701
0.28 $
5,273 $
624
5,897 $
670,054
170,496
101,814
942,364
752,679
164,309
—
7,682
(779)
1,511
3,782
—
—
929,184
13,180
3,888
9,292
451
9,743
(533)
9,210
0.43
0.02
0.45
20,055
0.43
0.02
0.45
19,719
0.16
8,759
451
9,210
See Notes to Consolidated Financial Statements.
F-2
VIAD CORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive income (loss):
Year Ended December 31,
2013
2012
2011
$
21,686 $
6,583 $
9,743
Unrealized gains (losses) on investments, net of tax expense (benefit)
of $96, $33 and $(36)
Unrealized foreign currency translation adjustments, net of tax
Amortization of net actuarial gain (loss), net of tax expense (benefit)
of $2,380, $(574) and $(709)
Amortization of prior service credit, net of tax expense (benefit) of
$(327), $(433) and $(487)
Comprehensive income
Comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to Viad
154
(11,311)
53
7,510
4,244
(1,311 )
(535)
14,238
(131)
14,107 $
(680 )
12,155
(686 )
11,469 $
$
(60)
(4,331)
(1,777)
(790)
2,785
(533)
2,252
See Notes to Consolidated Financial Statements.
F-3
(in thousands)
Balance, January 1, 2011
Net income
Dividends on common stock
Common stock purchased for treasury
Employee benefit plans
ESOP allocation adjustment
Share-based compensation—equity
awards
Tax deficiencies from share-based
compensation
Unrealized foreign currency translation
adjustment
Unrealized loss on investments
Amortization of prior service credit
Amortization of net actuarial loss
Other, net
Balance, December 31, 2011
Net income
Dividends on common stock
Common stock purchased for treasury
Employee benefit plans
ESOP allocation adjustment
Share-based compensation—equity
awards
Tax benefits from share-based
compensation
Unrealized foreign currency translation
adjustment
Unrealized gain on investments
Amortization of net actuarial loss
Amortization of prior service credit
Other, net
Balance, December 31, 2012
Net income
Dividends on common stock
Common stock purchased for treasury
Employee benefit plans
ESOP allocation adjustment
Share-based compensation—equity
awards
Tax benefits from share-based
compensation
Unrealized foreign currency translation
adjustment
Unrealized gain on investments
Amortization of net actuarial loss
Amortization of prior service credit
Other, net
VIAD CORP
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common
Additional
Stock
37,402 $ 606,902 $
Capital
$
(19,229) $
(4,433) $
Retained
Deficit
Unearned
Employee
Benefits
and Other
Accumulated
Other
Comprehensive
Income
Common
Stock in
Treasury
Total
Viad
Equity
Non-
Controlling
Interest
Total
Stockholders’
Equity
—
—
—
—
—
—
—
—
—
—
—
—
37,402
—
—
—
—
—
—
—
—
—
—
—
—
37,402
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(11,086)
—
3,688
(325)
—
—
—
—
9
9,210
(3,241)
—
—
—
—
—
—
—
—
—
4
—
—
—
—
1,490
—
—
—
—
—
—
(8)
599,188
(13,256)
(2,951)
—
—
—
(9,456)
—
4,036
96
—
—
—
—
(2)
593,862
—
—
—
(6,456)
—
3,053
404
—
—
—
—
(1)
5,897
(5,674)
—
—
—
—
—
—
—
—
—
(1)
(13,034)
21,555
(58,914)
—
—
—
—
—
—
—
—
—
—
(50,393) $
—
—
—
—
1,647
—
—
—
—
—
—
3
(1,301)
—
—
—
—
1,280
—
—
—
—
—
—
(21) $
—
—
28,851 $ (270,534) $ 378,959 $
—
—
(5,230)
11,381
—
9,210
(3,241 )
(5,230 )
295
1,490
—
—
—
—
—
(4,331)
(60)
(790)
(1,777)
—
21,893
—
—
—
—
—
—
—
7,510
53
(1,311)
(680)
—
27,465
—
—
—
—
—
—
—
—
—
—
—
—
—
1
(264,382)
—
—
(1,656)
9,704
—
3,688
(325 )
(4,331 )
(60 )
(790 )
(1,777 )
6
377,894
5,897
(5,674 )
(1,656 )
248
1,647
—
—
4,036
96
—
—
—
—
1
(256,333)
—
—
(1,328)
7,234
—
—
—
7,510
53
(1,311 )
(680 )
1
388,061
21,555
(58,914 )
(1,328 )
778
1,280
3,053
404
(11,311)
154
4,244
—
—
—
—
1
20,017 $ (250,426) $ 347,441 $
(11,311 )
154
4,244
(535 )
—
(535)
—
7,752 $
386,711
533
—
—
—
—
—
—
—
—
—
—
—
8,285
686
—
—
—
—
—
—
—
—
—
—
—
8,971
131
—
—
—
—
—
—
—
—
—
—
—
9,743
(3,241)
(5,230)
295
1,490
3,688
(325)
(4,331)
(60)
(790)
(1,777)
6
386,179
6,583
(5,674)
(1,656)
248
1,647
4,036
96
7,510
53
(1,311)
(680)
1
397,032
21,686
(58,914)
(1,328)
778
1,280
3,053
404
(11,311)
154
4,244
(535)
—
9,102 $
356,543
See Notes to Consolidated Financial Statements.
F-4
Balance, December 31, 2013
$
37,402 $ 590,862 $
VIAD CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities
Net income
$
Adjustments to reconcile net income to net cash provided by operating activities:
Year Ended December 31,
2013
2012
2011
21,686 $
6,583 $
9,743
Depreciation and amortization
Deferred income taxes
Income from discontinued operations
Restructuring charges
Impairment charges
Gain on sale of facility and related land
Gains on dispositions of property and other assets
Share-based compensation expense
Excess tax benefit from share-based compensation arrangements
Other non-cash items, net
Change in operating assets and liabilities (excluding the impact of
acquisitions):
Receivables
Inventories
Accounts payable
Restructuring liabilities
Accrued compensation
Customer deposits
Income taxes payable
Other assets and liabilities, net
Net cash provided by operating activities
Cash flows from investing activities
Capital expenditures
Acquisition of businesses, net of cash acquired
Proceeds from sale of facility and related land
Proceeds from sale of land—discontinued operations
Proceeds from dispositions of property and other assets
Proceeds from sale of short-term investments
Net cash used in investing activities
Cash flows from financing activities
Payments on debt and capital lease obligations
Proceeds from borrowings
Dividends paid on common stock
Common stock purchased for treasury
Debt issuance costs
Excess tax benefit from share-based compensation arrangements
Proceeds from exercise of stock options
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of cash flow information
Cash paid for income taxes
Cash paid for interest
Property and equipment acquired under capital leases
Property and equipment purchases in accounts payable and accrued
liabilities
$
$
$
$
$
28,615
1,404
(1,128)
3,891
5,413
(4,775)
(265)
5,221
(422)
4,870
1,246
7,663
(15,436)
(4,841)
(11,707)
(20,965)
218
(14,633)
6,055
(36,119)
(647)
12,696
1,645
464
—
(21,961)
(11,362)
20,000
(58,914)
(1,328)
—
422
777
(50,405)
(2,039)
(68,350)
114,171
45,821 $
8,498 $
1,006 $
832 $
3,204 $
30,731
11,274
(624 )
4,942
—
—
(206 )
7,232
(293 )
10,157
142
195
4,310
(4,694 )
1,631
926
467
(3,587 )
69,186
(27,675 )
(23,546 )
—
1,041
322
384
(49,474 )
(2,685 )
—
(4,454 )
(1,656 )
—
293
248
(8,254 )
2,337
13,795
100,376
114,171 $
8,386 $
1,103 $
1,011 $
4,822
$
29,126
(924)
(451)
3,782
—
—
(42)
4,413
(54)
4,659
(18,092)
3,729
4,372
(3,888)
4,563
4,950
(2,694)
(8,456)
34,736
(21,538)
(41,105)
—
—
440
—
(62,203)
(7,375)
—
(3,241)
(5,230)
(1,001)
54
296
(16,497)
(1,501)
(45,465)
145,841
100,376
10,213
1,088
1,327
2,585
See Notes to Consolidated Financial Statements.
F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
VIAD CORP
Note 1. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of Viad Corp (“Viad” or the “Company”) are prepared in conformity with
accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of Viad and all
of its subsidiaries. All intercompany account balances and transactions between Viad and its subsidiaries have been
eliminated in consolidation.
Nature of Business
Viad’s reportable segments consist of Marketing & Events U.S., Marketing & Events International and Travel &
Recreation Group.
Marketing & Events Group
The Marketing & Events Group, comprised of Global Experience Specialists, Inc. and affiliates (“GES”), specializes in
all aspects of the design, planning and production of face-to-face events, immersive environments and brand-based
experiences for clients, including show organizers, corporate brand marketers and retail shopping centers. In addition, the
Marketing & Events Group provides a variety of immersive, entertaining attractions and brand-based experiences, sponsored
events, mobile marketing and other branded entertainment and face-to-face marketing solutions for clients and venues,
including shopping malls, movie studios, museums and leading consumer brands.
Travel & Recreation Group
The Travel & Recreation Group segment consists of Brewster Inc. (“Brewster”), Glacier Park, Inc. (“Glacier Park”) and
Alaskan Park Properties, Inc. (“Alaska Denali Travel”). Brewster provides tourism services in the Canadian Rockies in
Alberta and in other parts of Western Canada. Brewster’s operations include the Banff Gondola, Columbia Icefield Glacier
Adventure, motorcoach services, charter and sightseeing services, tour boat operations, inbound package tour operations and
hotel operations. During 2013, Glacier Park, an 80 percent owned subsidiary of Viad, operated five lodges, three motor inns
and one four-season resort hotel and provided food and beverage operations, retail operations and tour and transportation
services in and around Glacier National Park in Montana and Waterton Lake National Park in Alberta, Canada. As discussed
in Note 7 below, Glacier Park’s concession portion of its business with the U.S. National Park Service (the “Park Service”)
for Glacier National Park expired on December 31, 2013. Thereafter, the ongoing operations of Glacier Park will include:
Glacier Park Lodge in East Glacier, Montana; Grouse Mountain Lodge in Whitefish, Montana; St. Mary Lodge in St. Mary,
Montana; Motel Lake McDonald, an in-holding within Glacier National Park and the Prince of Wales Hotel in Waterton
Lakes National Park, Alberta, Canada. Alaska Denali Travel operates Denali Backcountry Lodge and Denali Cabins. In
addition to lodging, Alaska Denali Travel also provides food and beverage operations and package tour and transportation
services in and around Denali National Park and Preserve.
Significant Accounting Policies
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
These estimates and assumptions include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
Fair value of Viad’s reporting units used to perform annual impairment testing of recorded goodwill;
Allowances for uncollectible accounts receivable;
Provisions for income taxes, including uncertain tax positions;
Valuation allowances related to deferred tax assets;
Liabilities for losses related to self-insured liability claims;
Liabilities for losses related to environmental remediation obligations;
Sublease income associated with restructuring liabilities;
Assumptions used to measure pension and postretirement benefit costs and obligations;
Assumptions used to determine share-based compensation costs under the fair value method and
Allocation of purchase price of acquired businesses.
Actual results could differ from these and other estimates.
F-6
Cash and Cash Equivalents. Viad considers all highly-liquid investments with remaining maturities when purchased of
three months or less to be cash equivalents. Viad’s cash and cash equivalents consist of cash and bank demand deposits, bank
time deposits and money market mutual funds. The Company’s investments in money market mutual funds are classified as
available-for-sale and carried at fair value.
Inventories. Inventories, which consist primarily of exhibit design and construction materials and supplies used in
providing convention show services, are stated at the lower of cost (first-in, first-out and specific identification methods) or
market.
Property and Equipment. Property and equipment are stated at cost, net of accumulated depreciation. Property and
equipment are depreciated using the straight-line method over the estimated useful lives of the assets: buildings, 15 to 40
years; equipment, 3 to 12 years; and leasehold improvements, over the shorter of the lease term or useful life. Property and
equipment are tested for potential impairment whenever events or changes in circumstances indicate that the carrying amount
of the long-lived asset may not be recoverable through undiscounted cash flows.
Capitalized Software. Viad capitalizes certain internal and external costs incurred in developing or obtaining internal
use software. Capitalized costs principally relate to costs incurred to purchase software from third parties, external direct
costs of materials and services, and certain payroll-related costs for employees directly associated with software projects once
application development begins. Costs associated with preliminary project activities, training and other post-implementation
activities are expensed as incurred. Capitalized software costs are amortized using the straight-line method over the estimated
useful lives of the software, ranging from three to ten years. These costs are included in the consolidated balance sheets under
the caption “Property and equipment, net.”
Goodwill. Goodwill is tested for impairment at the reporting unit level on an annual basis on October 31 of each year.
Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more-
likely-than-not reduce the fair value of a reporting unit below its carrying amount. Viad uses a discounted expected future
cash flow methodology (income approach) in order to estimate the fair value of its reporting units for purposes of goodwill
impairment testing. The estimates and assumptions regarding expected future cash flows, discount rates and terminal values
require considerable judgment and are based on market conditions, financial forecasts, industry trends and historical
experience. These estimates, however, have inherent uncertainties and different assumptions could lead to materially different
results.
Cash Surrender Value of Life Insurance. Viad has Company-owned life insurance contracts which are intended to
fund the cost of certain employee compensation and benefit programs. These contracts are carried at cash surrender value, net
of outstanding policy loans. The cash surrender value represents the amount of cash the Company could receive if the
policies were discontinued before maturity. The changes in the cash surrender value of the policies, net of insurance
premiums, are included as a component of “Costs of Services” in the consolidated statements of operations.
Self-Insurance Liabilities. Viad is self-insured up to certain limits for workers’ compensation, automobile, product and
general liability, property loss and medical claims. Viad has also retained certain liabilities related to workers’ compensation
and general liability insurance claims in conjunction with previously sold operations. Provisions for losses for claims
incurred, including estimated claims incurred but not yet reported, are made based on Viad’s prior historical experience,
claims frequency and other factors. Viad has purchased insurance for amounts in excess of the self-insured levels.
Environmental Remediation Liabilities. Viad has retained certain liabilities representing the estimated cost of
environmental remediation obligations primarily associated with previously sold operations. The amounts accrued primarily
consist of the estimated direct incremental costs, on an undiscounted basis, for contractor and other services related to
remedial actions and post-remediation site monitoring. Environmental remediation liabilities are recorded when the specific
obligation is considered probable and the costs are reasonably estimable. Subsequent recoveries from third parties, if any, are
recorded through discontinued operations when realized.
Fair Value of Financial Instruments. The carrying values of cash and cash equivalents, receivables and accounts
payable approximate fair value due to the short-term maturities of these instruments. The estimated fair value of debt
obligations is disclosed in Note 9.
Foreign Currency Translation. Viad conducts its foreign operations primarily in Canada, the United Kingdom,
Germany and to a lesser extent in certain other countries. The functional currency of Viad’s foreign subsidiaries is their local
currency. Accordingly, for purposes of consolidation, Viad translates the assets and liabilities of its foreign subsidiaries into
U.S. dollars at the foreign exchange rates in effect at the balance sheet date. The unrealized gains or losses resulting from the
F-7
translation of these foreign denominated assets and liabilities are included as a component of accumulated other
comprehensive income in Viad’s consolidated balance sheets. In addition, for purposes of consolidation, the revenues,
expenses and gains and losses related to Viad’s foreign operations are translated into U.S. dollars at the average foreign
exchange rates for the period.
Revenue Recognition. Viad recognizes revenue when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the sales price is fixed or determinable and collectability is reasonably assured. GES
derives revenues primarily by providing show services to exhibitors participating in exhibitions and events and from the
design, construction and refurbishment of exhibit booths and holiday themed environments. Service revenue is recognized at
the time services are performed. Exhibits and environments revenue is accounted for using the completed-contract method as
contracts are typically completed within 3 months of contract signing. The Travel & Recreation Group generates revenues
through its attractions, hotels and transportation and sightseeing services. Revenues are recognized at the time services are
performed.
Share-Based Compensation. Viad recognizes and measures compensation costs related to all share-based payment
awards using the fair value method of accounting. These awards generally include restricted stock, performance-based
restricted stock (“PBRS”), stock options and liability-based awards (including performance units, restricted stock units and
performance-based restricted stock units). These awards contain forfeiture and non-compete provisions.
The fair value of restricted stock and PBRS awards are based on Viad’s stock price on the date of grant. Viad issues
restricted stock and PBRS awards from shares held in treasury. Future vesting of restricted stock and PBRS is generally
subject to continued employment with Viad or its subsidiaries. Holders of restricted stock and PBRS have the right to receive
dividends and vote the shares, but may not sell, assign, transfer, pledge or otherwise encumber the stock, except to the extent
restrictions have lapsed.
Restricted stock awards vest between three and five years from the date of grant. Share-based compensation expense
related to restricted stock is recognized using the straight-line method over the requisite service period of approximately three
years except for certain awards with a five-year vesting period whereby expense is recognized based on an accelerated
multiple-award approach over a five-year period. For these awards, 40 percent of the shares vest on the third anniversary of
the grant and the remaining shares vest in 30 percent increments over the subsequent two anniversary dates.
Liability-based awards (including restricted stock units and PBRS units awarded to key employees at certain of the
Company’s Canadian operations) are recorded at estimated fair value, based on the number of units expected to vest and the
level of achievement of predefined performance goals (where applicable) and are remeasured on each balance sheet date
based on Viad’s stock price until the time of settlement. To the extent earned, liability-based awards are settled in cash based
on Viad’s stock price. Compensation expense related to liability-based awards is recognized ratably over the requisite service
period of approximately three years.
Share-based compensation expense related to PBRS awards is recognized based on an accelerated multiple-award
approach over the requisite service period of approximately three years. PBRS vests when certain incentive performance
targets established in the year of grant are achieved at target levels. PBRS is subject to a graded vesting schedule whereby
one third of the earned shares vest after the first year and the remaining earned shares vest in one-third increments each year
over the next two years on the first business day in January.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing
model. Share-based compensation expense related to stock option awards is recognized using the straight-line method over
the requisite service period of approximately five years. The exercise price of stock options is based on the market value of
Viad’s common stock at the date of grant.
Common Stock in Treasury. Common stock purchased for treasury is recorded at historical cost. Subsequent share
reissuances are primarily related to share-based compensation programs and recorded at weighted-average cost.
Income Per Common Share. Viad applies the two-class method in calculating income per common share as unvested
share-based payment awards that contain nonforfeitable rights to dividends are considered participating securities.
Accordingly, such securities are included in the earnings allocation in calculating income per share. Furthermore, Viad funds
its matching contributions to employees’ 401(k) accounts through the Company’s leveraged Employee Stock Ownership Plan
(“ESOP”) feature of the Company’s 401(k) defined contribution plan. ESOP shares are treated as outstanding for income per
share calculations.
F-8
Impact of Recent Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board (“FASB”) issued new guidance related to the reporting of
amounts reclassified out of accumulated other comprehensive income, which is codified in Accounting Standards
Codification (“ASC”) Topic 220. The new guidance requires entities to provide information about the amounts reclassified
out of accumulated other comprehensive income by component. In addition, entities are required to present significant
amounts reclassified out of other comprehensive income by the respective line items of net income in certain circumstances,
or otherwise cross-reference amounts to other disclosures. The adoption of this new guidance did not have an impact on
Viad’s financial condition or results of operations. See Note 14 for required disclosures.
In July 2013, the FASB issued new guidance related to the financial statement presentation of an unrecognized tax
benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists, which is codified in ASC
Topic 740. This new guidance is effective prospectively for fiscal years, and interim periods within those years, beginning
after December 15, 2013. Retrospective application is permitted. Management does not believe that this guidance will have
an impact on Viad’s financial condition or results of operations.
In January 2014, the FASB issued new guidance, which is codified in ASC Topic 853, related to the accounting for
service concession arrangements between a public-sector entity grantor and an operating entity under which the operating
entity operates the grantor’s infrastructure. The new guidance specifies that an entity should not account for a service
concession arrangement that is within its scope as a lease. Furthermore, the guidance also specifies that the infrastructure
used in a service concession arrangement should not be recognized as property, plant, and equipment of the operating entity.
The guidance is effective for annual periods and interim periods beginning after December 15, 2014. Viad has not yet
determined if the adoption of this new guidance will have a material impact on its financial condition or results of operations.
Note 2. Share-Based Compensation
Viad grants share-based compensation awards to officers, directors and certain key employees pursuant to the 2007
Viad Corp Omnibus Incentive Plan (the “2007 Plan”). The 2007 Plan has a 10-year life and provides for the following types
of awards: (a) incentive and non-qualified stock options; (b) restricted stock and restricted stock units; (c) performance units
or performance shares; (d) stock appreciation rights; (e) cash-based awards and (f) certain other stock-based awards. The
number of shares of common stock available for grant under the 2007 Plan is limited to 1.7 million shares plus shares
awarded under the 1997 Viad Corp Omnibus Incentive Plan (which terminated in May 2007) (the “1997 Plan”) that
subsequently cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards
to the extent the shares are exercised for, or settled in, vested and non-forfeited shares) up to an aggregate maximum of 1.5
million shares. As of December 31, 2013, there were 983,971 total shares available for future grant.
The following table summarizes share-based compensation expense:
(in thousands)
Restricted stock/PBRS
Performance unit incentive plan (“PUP”)
Restricted stock units/PBRS units
Stock options
Total share-based compensation before income tax benefit
Income tax benefit
Total share-based compensation, net of income tax benefit
2013
2012
2011
$
$
3,073 $
1,864
177
107
5,221
(1,936)
3,285 $
3,267 $
2,922
450
593
7,232
(2,574 )
4,658 $
3,042
714
120
537
4,413
(1,594)
2,819
In addition, $676,000, $253,000 and $124,000 of costs associated with share-based compensation were included in
restructuring expense in 2013, 2012 and 2011, respectively. Of the 2013 amount, $154,000 and $329,000 related to the
restricted stock units and PUP awards presented below, respectively. Similarly, of the 2012 amount, $94,000 related to PUP
awards. No share-based compensation costs were capitalized during 2013, 2012 or 2011.
On October 25, 2013, Viad announced that its Board of Directors declared a special cash dividend of $2.50 per share, or
$50.8 million in the aggregate, which was paid on November 14, 2013. In accordance with the mandatory provisions of the
2007 Plan and the 1997 Plan, the Human Resources Committee of Viad’s Board of Directors approved equitable adjustments
to outstanding long-term incentive awards of stock options and PUP awards issued pursuant to those plans in order to prevent
the special dividends from diluting the rights of participants under those plans. The equitable adjustments to the outstanding
stock options reduced the exercise price and increased the number of shares of common stock underlying such options. The
F-9
equitable adjustment to the PUP awards reflects the effect of the special dividends, but would be paid only if certain
performance goals are met at the end of the 3-year performance period.
Restricted Stock and PBRS. The following table summarizes restricted stock and PBRS activity:
Balance at January 1, 2011
Granted
Vested
Forfeited
Balance, December 31, 2011
Granted
Vested
Forfeited
Balance, December 31, 2012
Granted
Vested
Forfeited
Balance, December 31, 2013
Restricted Stock
PBRS
Shares
Weighted-Average
Grant Date
Fair Value
Shares
Weighted-Average
Grant Date
Fair Value
478,499 $
191,850
(91,212)
(7,115)
572,022
168,050
(219,571)
(4,150)
516,351
101,300
(166,320)
(20,432)
430,899
21.51
22.70
31.31
20.81
20.36
20.46
18.26
24.80
21.25
27.27
20.83
22.13
22.78
18,830 $
—
(18,414 )
—
416
—
(416 )
—
—
—
—
—
—
33.02
—
33.42
—
15.36
—
15.36
—
—
—
—
—
—
The grant date fair value of restricted stock which vested during 2013, 2012 and 2011 was $3.5 million, $4.0 million
and $2.9 million, respectively. The grant date fair value of PBRS which vested during 2012 and 2011 was $6,000 and
$615,000, respectively. No PBRS vested during 2013. As of December 31, 2013, the unamortized cost of all outstanding
stock awards was $3.2 million, which Viad expects to recognize in the consolidated financial statements over a weighted-
average period of approximately 1.7 years. During 2013, 2012 and 2011, the Company repurchased 50,156 shares for $1.3
million, 56,885 shares for $1.1 million and 28,627 shares for $679,000, respectively, related to tax withholding requirements
on vested share-based awards.
Liability-Based Awards. The following table summarizes the liability-based award activity:
Balance at January 1, 2011
Granted
Vested
Forfeited
Balance, December 31, 2011
Granted
Vested
Forfeited
Balance, December 31, 2012
Granted
Vested
Forfeited
Balance, December 31, 2013
PUP Awards
Restricted Stock Units
PBRS Units
Weighted-
Average
Grant Date
Fair Value
33.81
23.02
—
33.81
23.02
20.60
—
—
21.70
27.35
—
21.15
23.46
Units
102,960 $
95,500
—
(102,960)
95,500
115,100
—
—
210,600
93,100
—
(3,932)
299,768
Weighted-
Average
Grant Date
Fair Value
Weighted-
Average
Grant Date
Fair Value
Units
17.18
23.01
—
—
19.07
20.57
15.36
20.89
20.82
27.35
19.10
22.55
22.91
3,914 $
—
(1,958)
—
1,956
—
(1,956)
—
—
—
—
—
—
15.36
—
15.36
—
15.36
—
15.36
—
—
—
—
—
—
Units
26,050 $
12,550
—
—
38,600
15,850
(13,100)
(850)
40,500
8,600
(11,300)
(9,240)
28,560
F-10
As of December 31, 2013 and 2012, Viad had liabilities recorded of $5.9 million and $3.7 million, respectively, related
to PUP awards. There were no cash settlements of PUP awards during 2013 or 2012. As of December 31, 2013 and 2012,
Viad had aggregate liabilities recorded of $664,000 and $633,000, respectively, related to restricted stock unit liability
awards. In February 2013 and 2012, portions of the 2009 and 2010 restricted stock unit awards vested and cash payouts of
$300,000 and $257,000 were distributed, respectively. A portion of the 2009 PBRS unit awards vested effective
December 31, 2009 and cash payouts of $35,000 and $52,000 were distributed in January 2012 and 2011, respectively.
Stock Options. The following table summarizes stock option activity:
Options outstanding at January 1, 2011
Exercised
Forfeited or expired
Options outstanding at December 31, 2011
Exercised
Forfeited or expired
Options outstanding at December 31, 2012
Exercised
Forfeited or expired(1)
Award modification
Options outstanding at December 31, 2013
(1) This includes the reversal of previously canceled stock options.
Shares
763,794 $
(14,616)
(164,977)
584,201
(12,099)
(208,206)
363,896
(59,543)
(15,853)
25,823
314,323
Weighted-
Average
Exercise Price
23.38
20.14
23.88
23.32
19.41
25.81
22.03
19.42
40.45
N/A
19.79
Options
Exercisable
451,194
396,688
276,009
314,323
As of December 31, 2013, there were no unrecognized costs related to non-vested stock option awards. No stock
options were granted in 2013, 2012 or 2011. As previously discussed above, the equitable adjustments to the outstanding
stock options resulting from the special cash dividend paid on November 14, 2013 reduced the exercise price and increased
the number of shares of common stock underlying such options.
The following table summarizes information concerning stock options outstanding and exercisable as of December 31,
2013:
Options Outstanding
Options Exercisable
Range of Exercise Prices:
$17.62
$22.85
$31.03
$35.28
$17.62 to $35.28
Weighted-
Average
Remaining
Contractual Life
(in years)
5.7 $
1.9
1.2
0.1
5.1
Weighted-
Average
Exercise Price
17.62
22.85
31.03
35.28
19.79
Shares
262,788
10,895
22,118
18,522
314,323
Shares
Weighted-
Average
Exercise Price
17.62
22.85
31.03
35.28
19.79
262,788 $
10,895
22,118
18,522
314,323
Additional information pertaining to stock options is provided in the table below:
(in thousands)
Total intrinsic value of stock options outstanding
Total intrinsic value of stock options exercised
Fair value of stock options vested
Cash received from the exercise of stock options
Tax benefits (deficiencies) realized for tax deductions related to stock
option exercises and performance-based awards
$
$
$
$
$
2013
2012
2011
2,723 $
1,611 $
532 $
777 $
2,329 $
296 $
539 $
248 $
—
325
682
296
404 $
96
$
(325)
The aggregate intrinsic value of stock options outstanding in the table above represents the difference between Viad’s
closing stock price on December 31 of each year and the exercise price, multiplied by the number of in-the-money options.
F-11
The intrinsic value of stock options outstanding therefore changes based on changes in the fair market value of Viad’s
common stock.
Note 3. Acquisition of Businesses
On February 19, 2013, Viad acquired the assets of Resource Creative Limited (“RCL”) for $647,000 in cash, subject to
certain adjustments, plus a deferred payment of up to approximately $278,000, which is contingent upon RCL’s performance.
RCL is a United Kingdom-based company specializing in providing creative graphic services to the exhibition, events and
retail markets throughout the United Kingdom and continental Europe.
The final amounts assigned to the assets of RCL as of the acquisition date included: property and equipment of $72,000,
goodwill of $158,000 and other intangible assets of $695,000. In addition, a liability of $278,000 was recorded as of the
acquisition date related to the contingent consideration. The primary factor that contributed to a purchase price resulting in
the recognition of goodwill relates to future growth opportunities. The goodwill is deductible for tax purposes over a period
of 15 years. The amounts assigned to other intangible assets included: $564,000 of customer relationships and $131,000 of
noncompete agreements. The weighted-average amortization period related to the other intangible assets was 4.5 years. The
transaction costs related to the acquisition were insignificant. The results of operations of RCL have been included in Viad’s
consolidated financial statements from the date of acquisition.
In March 2012, Viad acquired the Banff International Hotel and related assets for $23.6 million in cash. The Banff
International Hotel is a 162-guest room hotel located in downtown Banff, Alberta, Canada and is operated by Brewster within
the Travel & Recreation Group. The following information represents the final amounts assigned to the assets and liabilities
of the Banff International Hotel as of the date of acquisition:
(in thousands)
Cash and cash equivalents
Accounts receivable
Other current assets
Property and equipment
Goodwill
Other intangible assets
Total assets acquired
Customer deposits
Other current liabilities
Total liabilities acquired
Purchase price
$
$
10
23
33
20,408
1,890
1,323
23,687
(64)
(67)
(131)
23,556
The goodwill recorded in connection with the transaction is included in the Travel & Recreation Group. The primary
factor that contributed to a purchase price resulting in the recognition of goodwill relates to future growth opportunities. The
goodwill is deductible for tax purposes pursuant to regulations in Canada. The amount assigned to other intangible assets
relates to an operating contract and customer relationships. The weighted-average amortization period related to the other
intangible assets was 7.7 years. The transaction costs related to the acquisition were insignificant. The results of operations of
the Banff International Hotel have been included in Viad’s consolidated financial statements from the date of acquisition.
In September 2011, Viad acquired the Denali Backcountry Lodge and Denali Cabins for $15.3 million in cash. Denali
Backcountry Lodge is a 42-guest room lodge located within Denali National Park and Preserve in Alaska and Denali Cabins
consist of 46 guest cabins near the entrance to Denali National Park and Preserve. These properties are operated by Alaska
Denali Travel within the Travel & Recreation Group. The Company recorded $3.2 million of goodwill in connection with the
transaction. The amount assigned to other intangible assets of $626,000 relates to customer relationships.
In June 2011, Viad acquired St. Mary Lodge (“St. Mary”) for $15.3 million in cash. St. Mary is a 115-guest room hotel
located outside of Glacier National Park’s east entrance and is operated by Glacier Park within the Travel & Recreation
Group. The Company recorded $3.1 million of goodwill in connection with the transaction. The amount assigned to other
intangible assets of $60,000 relates to a non-amortized business license.
In January 2011, Viad acquired Grouse Mountain Lodge for $10.5 million in cash. Grouse Mountain Lodge is located
in Whitefish, Montana and is operated by Glacier Park within the Travel & Recreation Group. The Company recorded $1.3
F-12
million of goodwill in connection with the transaction. The amount assigned to other intangible assets of $400,000 relates to a
non-amortized business license.
The following information represents the aggregate amounts assigned to the assets and liabilities of the acquisitions that
occurred during 2011:
(in thousands)
Cash and cash equivalents
Other current assets
Property and equipment
Goodwill
Other intangible assets
Total assets acquired
Customer deposits
Other current liabilities
Other long-term liabilities
Total liabilities acquired
Purchase price
$
$
30
870
32,905
7,645
1,086
42,536
(821)
(198)
(382)
(1,401)
41,135
The primary factor that contributed to the recognition of goodwill for the 2011 acquisitions relates to future growth
opportunities. The acquired goodwill is included in the Travel & Recreation Group and is deductible for tax purposes over a
period of 15 years. The transaction costs related to the acquisitions were insignificant. The results of operations of the
acquisitions have been included in Viad’s consolidated financial statements from the date of each acquisition. See Note 7 for
a discussion of impairment charges on goodwill.
The following table summarizes the unaudited pro forma results of operations attributable to Viad, assuming that the
acquisitions above had each been completed at the beginning of each year:
(in thousands, except per share data)
Revenue
Depreciation and amortization
Segment operating income
Income from continuing operations
Net income attributable to Viad
Diluted net income per share
Basic net income per share
Note 4. Inventories
$
2012
2013
973,039 $ 1,027,107 $
28,697
45,919
20,444
21,572
1.06
1.06
31,131
41,859
5,269
5,893
0.29
0.29
2011
956,570
30,648
28,602
10,674
11,125
0.45
0.45
The components of inventories as of December 31 were as follows:
(in thousands)
Raw materials
Work in process
Inventories
Note 5. Property and Equipment
2013
2012
$
$
14,825 $
13,168
27,993 $
16,422
19,234
35,656
In August 2013, Viad sold a facility and the land upon which it was situated within the Marketing & Events Group for
$12.7 million (net of selling costs). Viad recorded a gain on the sale of the facility and related land of $4.8 million.
F-13
Property and equipment as of December 31 consisted of the following:
(in thousands)
Land and land interests
Buildings and leasehold improvements
Equipment and other
Gross property and equipment
Accumulated depreciation
Property and equipment, net
2013
2012
$
$
23,646 $
139,889
294,409
457,944
(267,614 )
190,330 $
26,124
137,293
310,448
473,865
(276,567)
197,298
Included in the “Equipment and other” caption above are capitalized costs incurred in developing or obtaining internal
use software. The net carrying amount of capitalized software was $13.9 million and $14.2 million as of December 31, 2013
and 2012, respectively.
Included in the “Land and land interests” caption above are certain leasehold interests in land within the Travel &
Recreation Group for which the Company is considered to have perpetual use rights. The carrying amount of these leasehold
interests was $10.0 million and $10.6 million at December 31, 2013 and 2012, respectively. These land interests are not
subject to amortization.
Depreciation expense was $27.4 million, $30.0 million and $28.4 million for 2013, 2012 and 2011, respectively. During
2013, Viad recorded impairment charges of $952,000 at the Marketing & Events Group related to the write off of a touring
exhibition asset and amounts capitalized for internally developed software that is not anticipated to be put into use. These
impairment losses are included in the consolidated statements of operations under the caption “Other impairment charges.”
Note 6. Other Investments and Assets
As of December 31 other investments and assets consisted of the following:
(in thousands)
Cash surrender value of life insurance
Workers’ compensation insurance security deposits
Other
Total other investments and assets
Note 7. Goodwill and other Intangible Assets
2013
2012
$
$
19,690 $
3,350
11,986
35,026 $
19,142
3,350
9,924
32,416
In August 2013, Viad was notified by the Park Service that the concession contract for Glacier National Park,
commencing in 2014, was awarded to another concessionaire. As a result, management revised its outlook for future revenues
and earnings from Glacier Park and performed an impairment evaluation of goodwill at the Glacier Park reporting unit.
Based on this evaluation, the Company recorded a non-cash impairment charge of $4.5 million representing all goodwill at
the Glacier Park reporting unit, of which $892,000 related to the noncontrolling interest. The goodwill impairment loss is
included in the consolidated statements of operations under the caption “Goodwill impairment charge.”
The changes in the carrying amount of goodwill were as follows:
(in thousands)
Balance at January 1, 2012
Business acquisitions
Foreign currency translation adjustments
Balance at December 31, 2012
Goodwill impairment charge
Business acquisition
Foreign currency translation adjustments
Balance at December 31, 2013
Marketing &
Events U.S.
Marketing &
Events
International
Travel &
Recreation
Group
$
$
62,686 $
—
—
62,686
—
—
—
62,686 $
22,198 $
—
856
23,054
—
158
(601)
22,611 $
48,810 $
1,890
1,380
52,080
(4,461 )
—
(3,373 )
44,246 $
Total
133,694
1,890
2,236
137,820
(4,461)
158
(3,974)
129,543
F-14
The following table summarizes goodwill by reporting unit and segment as of December 31:
(in thousands)
Marketing & Events Group:
Marketing & Events U.S.
Marketing & Events International:
GES United Kingdom
GES Canada
Total Marketing & Events Group
Travel & Recreation Group:
Brewster
Alaska Denali Travel
Glacier Park
Total Travel & Recreation Group
Total Goodwill
2013
2012
$
62,686 $
62,686
14,049
8,562
85,297
41,062
3,184
—
44,246
129,543 $
13,894
9,160
85,740
44,435
3,184
4,461
52,080
137,820
$
For impairment testing purposes, the goodwill related to the Marketing & Events U.S. segment is assigned to and tested
at the operating segment level. Furthermore, the goodwill related to the Marketing & Events International segment is
assigned to and tested based on the segment’s geographical operations. For the Marketing & Events International segment the
reporting units are GES United Kingdom and GES Canada. Brewster, Glacier Park and Alaska Denali Travel are considered
reporting units for goodwill impairment testing purposes within the Travel & Recreation Group.
As a result of the Company’s most recent analysis performed in October 2013, the excess of the estimated fair values
over the carrying values (expressed as a percentage of the carrying amounts) under step one of the impairment test was 139
percent, 58 percent and 59 percent for each of the Marketing & Events Group reporting units in the United States, the United
Kingdom and Canada, respectively. For the Brewster and Alaska Denali Travel reporting units, the excess of the estimated
fair value over the carrying value was 54 percent and 15 percent, respectively, as of the most recent impairment test.
Significant reductions in the Company’s expected future revenues, operating income or cash flow forecasts and projections,
or an increase in reporting unit cost of capital, could trigger additional impairment testing, which may result in impairment
charges.
As of December 31, 2013, Viad had cumulative goodwill impairment charges of $229.7 million since the adoption of
the goodwill impairment testing provisions of ASC Topic 350.
A summary of other intangible assets as of December 31, 2013 is presented below:
(in thousands)
Amortized intangible assets:
Customer contracts and relationships
Other
Total amortized intangible assets
Unamortized intangible assets:
Business licenses
Total
Gross Carrying
Value
Accumulated
Amortization
Net Carrying
Value
$
$
5,537 $
1,280
6,817
460
7,277 $
(2,521) $
(276)
(2,797)
—
(2,797) $
3,016
1,004
4,020
460
4,480
F-15
A summary of other intangible assets as of December 31, 2012 is presented below:
(in thousands)
Amortized intangible assets:
Customer contracts and relationships
Other
Total amortized intangible assets
Unamortized intangible assets:
Business licenses
Total
Gross Carrying
Value
Accumulated
Amortization
Net Carrying
Value
$
$
3,594 $
959
4,553
460
5,013 $
(2,384) $
(108)
(2,492)
—
(2,492) $
1,210
851
2,061
460
2,521
Intangible asset amortization expense for 2013, 2012 and 2011 was $1.3 million, $693,000 and $772,000, respectively.
The weighted-average amortization period of customer contracts and relationships and other amortizable intangible assets is
approximately 5.2 years and 1.8 years, respectively. Estimated amortization expense related to amortized intangible assets for
future years is expected to be as follows:
(in thousands)
2014
2015
2016
2017
2018
Thereafter
Note 8. Accrued Liabilities and Other
As of December 31 other current liabilities consisted of the following:
(in thousands)
Continuing operations:
Customer deposits
Accrued compensation
Self-insured liability accrual
Accrued restructuring
Accrued employee benefit costs
Accrued dividends
Accrued sales and use taxes
Accrued foreign income taxes
Other
Total continuing operations
Discontinued operations:
Self-insured liability accrual
Environmental remediation liabilities
Other
Total discontinued operations
Total other current liabilities
$
$
$
$
$
$
996
795
671
553
442
563
2013
2012
29,207 $
15,113
7,603
3,877
2,751
2,192
1,609
565
9,573
72,490
469
353
177
999
73,489 $
50,172
25,067
8,501
4,084
3,132
2,053
3,179
28
9,998
106,214
527
571
372
1,470
107,684
$
$
F-16
As of December 31 other deferred items and liabilities consisted of the following:
(in thousands)
Continuing operations:
Self-insured liability accrual
Accrued compensation
Foreign deferred tax liability
Accrued restructuring
Other
Total continuing operations
Discontinued operations:
Environmental remediation liabilities
Self-insured liability accrual
Accrued income taxes
Other
Total discontinued operations
Total other deferred items and liabilities
Note 9. Debt
Long-term debt as of December 31 was as follows:
(in thousands, except interest rates)
Revolving credit agreement, 2.2% (2013) weighted-average interest rate at December 31,
2013
Capital lease obligations, 6.9% (2013) and 6.4% (2012) weighted-average interest rate at
December 31, due to 2017
Total debt
Current portion
Long-term capital lease obligations
2013
2012
17,316 $
8,349
1,989
1,919
7,552
37,125
4,666
4,489
1,085
1,254
11,494
48,619 $
15,579
8,061
2,024
3,140
6,734
35,538
4,745
5,188
1,053
1,304
12,290
47,828
2013
2012
10,000
$
—
1,668
11,668
(10,903 )
765 $
2,226
2,226
(1,347)
879
$
$
$
$
In May 2011, Viad entered into an amended and restated revolving credit agreement (the “Credit Facility”). The Credit
Facility provides for a $130 million revolving line of credit, which may be increased up to an additional $50 million under
certain circumstances. The term of the Credit Facility is five years (expiring on May 18, 2016) and borrowings are to be used
for general corporate purposes (including permitted acquisitions) and to support up to $50 million of letters of credit. The
lenders have a first perfected security interest in all of the personal property of Viad and GES, including 65 percent of the
capital stock of top-tier foreign subsidiaries. As of December 31, 2013, Viad’s total debt of $11.7 million consisted of a $10
million revolver borrowing on the Credit Facility and $1.7 million of capital lease obligations. As of December 31, 2013,
Viad had $118.7 million of capacity remaining under its Credit Facility reflecting outstanding letters of credit of $1.3 million
and the outstanding balance under the Credit Facility of $10 million.
Borrowings under the Credit Facility (of which GES is a guarantor) are indexed to the prime rate or the London
Interbank Offered Rate, plus appropriate spreads tied to Viad’s leverage ratio. Commitment fees and letters of credit fees are
also tied to Viad’s leverage ratio. The fees on the unused portion of the Credit Facility are currently 0.35 percent annually.
The Credit Facility contains various affirmative and negative covenants that are customary for facilities of this type,
including a fixed-charge coverage ratio, leverage ratio and dividend and share repurchase limits. Significant other covenants
include limitations on: investments, additional indebtedness, sales/leases of assets, acquisitions, consolidations or mergers
and liens on property. As of December 31, 2013, Viad was in compliance with all covenants.
In December 2012, the Credit Facility was amended to remove the limitation on share repurchases of $10 million in the
aggregate per calendar year pursuant to certain conditions. The amendment allows share repurchases unless the Company’s
leverage ratio, as defined in the Credit Facility, is greater than 1.50 to 1.00 or a default or an unmatured default, as defined in
the Credit Facility, exists. The amendment also allows dividends to be declared and paid in excess of $10 million in the
aggregate per calendar year, as well as distributions on its capital stock, as defined in the Credit Facility, unless the
F-17
Company’s leverage ratio, as defined in the Credit Facility, is greater than 1.50 to 1.00 or a default or an unmatured default,
as defined in the Credit Facility, exists.
Effective November 14, 2013, the Credit Facility was amended to remove the liquidity covenant that required Viad to
maintain at all times not less than $50 million of unrestricted cash and cash equivalent investments, as that term is defined in
the Credit Facility. With the amendment, the Credit Facility no longer requires any minimum amount of unrestricted cash and
cash equivalent investments.
As of December 31, 2013, Viad had certain obligations under guarantees to third parties on behalf of its subsidiaries.
These guarantees are not subject to liability recognition in the consolidated financial statements and relate to leased facilities
entered into by the Company’s subsidiary operations. The Company would generally be required to make payments to the
respective third parties under these guarantees in the event that the related subsidiary could not meet its own payment
obligations. The maximum potential amount of future payments that Viad would be required to make under all guarantees
existing as of December 31, 2013 would be $13.7 million. These guarantees relate to leased facilities and expire through
October 2017. There are no recourse provisions that would enable Viad to recover from third parties any payments made
under the guarantees. Furthermore, there are no collateral or similar arrangements whereby Viad could recover payments.
Aggregate annual maturities of long-term debt and capital lease obligations as of December 31, 2013 are as follows:
(in thousands)
2014
2015
2016
2017
2018
Total
Less: Amount representing interest
Present value of minimum lease payments
Revolving Credit
Agreement
Capital Lease
Obligations
$
$
10,000 $
—
—
—
—
10,000
$
984
609
186
32
2
1,813
(145)
1,668
The gross amount of assets recorded under capital leases as of December 31, 2013 was $3.9 million and accumulated
amortization was $2.1 million. As of December 31, 2012, the gross amount of assets recorded under capital leases and
accumulated amortization was $5.9 million and $2.9 million, respectively. The amortization charges related to assets recorded
under capital leases are included in depreciation expense. See Note 5.
The weighted-average interest rate on total debt was 4.2 percent, 8.5 percent and 7.8 percent for 2013, 2012 and 2011,
respectively. The estimated fair value of total debt was $11.5 million and $2.1 million as of December 31, 2013 and 2012,
respectively. The fair value of debt was estimated by discounting the future cash flows using rates currently available for debt
of similar terms and maturity.
Note 10. Fair Value Measurements
The fair value of an asset or liability is defined as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. The fair value guidance requires an
entity to maximize the use of quoted prices and other observable inputs and minimize the use of unobservable inputs when
measuring fair value, and also establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value.
F-18
Viad measures its money market mutual funds and certain other mutual fund investments at fair value on a recurring
basis using Level 1 inputs. The fair value information related to these assets is summarized in the following tables:
(in thousands)
Assets:
Money market funds
Other mutual funds
Total assets at fair value on a recurring basis
(in thousands)
Assets:
Money market funds
Other mutual funds
Total assets at fair value on a recurring basis
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobserved
Inputs
(Level 3)
December 31, 2013
$
$
118 $
2,023
2,141 $
118 $
2,023
2,141 $
— $
—
— $
—
—
—
Fair Value Measurements at Reporting Date Using
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobserved
Inputs
(Level 3)
December 31, 2012
$
$
10,177 $
1,239
11,416 $
10,177 $
1,239
11,416 $
— $
—
— $
—
—
—
As of December 31, 2013 and 2012, Viad had investments in money market mutual funds of $118,000 and $10.2
million, respectively, which are included in the consolidated balance sheets under the caption “Cash and cash equivalents.”
These investments are classified as available-for-sale and were recorded at fair value. There have been no realized or
unrealized gains or losses related to these investments and the Company has not experienced any redemption restrictions
with respect to any of the money market mutual funds.
As of December 31, 2013 and 2012, Viad had investments in other mutual funds of $2.0 million and $1.2 million,
respectively, which are classified in the consolidated balance sheets under the caption “Other investments and assets.”
These investments were classified as available-for-sale and were recorded at fair value. As of December 31, 2013 and
2012, there were unrealized gains of $700,000 ($429,000 after-tax) and $450,000 ($275,000 after-tax), respectively, which
were included in the consolidated balance sheets under the caption “Accumulated other comprehensive income (loss).”
The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the
short-term maturities of these instruments. The estimated fair value of debt obligations is disclosed in Note 9.
During 2013, Viad had certain non-financial assets that were measured at fair value on a non-recurring basis using
Level 3 inputs. These assets include goodwill and certain property and equipment for which impairment losses were
recorded during 2013. The fair value information related to these assets is summarized in the following table:
Fair Value Measurements at Reporting Date Using
December 31,
2013
Quoted Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobserved
Inputs
(Level 3)
Total Gains
(Losses)
$
— $
—
— $
—
— $
— $
—
—
$
— $
—
(4,461)
(952)
— $
(5,413)
(in thousands)
Assets:
Goodwill (1)
Property and equipment(1)
Total assets at fair value on a non-recurring
basis
(1) See Notes 5 and 7 for details of the impairment charges.
$
— $
F-19
Note 11. Income Per Share
The following are the components of basic and diluted income per share:
(in thousands, except per share data)
Net income attributable to Viad (diluted)
Less: Allocation to non-vested shares
Net income allocated to Viad common stockholders (basic)
Basic weighted-average outstanding common shares
Additional dilutive shares related to share-based compensation
$
$
Diluted weighted-average outstanding shares
Income per share:
Basic income attributable to Viad common stockholders
Diluted income attributable to Viad common stockholders(1)
(1) Diluted income per share amount cannot exceed basic income per share.
$
$
2013
2012
2011
21,555 $
(485)
21,070 $
19,850
415
20,265
1.06 $
1.06 $
5,897 $
(157 )
5,740 $
19,701
304
20,005
0.29 $
0.29 $
9,210
(248)
8,962
19,719
336
20,055
0.45
0.45
Options to purchase 47,000, 110,000 and 304,000 shares of common stock were outstanding during 2013, 2012 and
2011, respectively, but were not included in the computation of dilutive shares outstanding because the effect would be anti-
dilutive. Additionally, 415,000, 304,000 and 336,000 share-based compensation awards were considered dilutive and
included in the computation of diluted income per share in 2013, 2012 and 2011, respectively.
Note 12. Employee Stock Ownership Feature of 401(k) Plan
Viad funds its matching contributions to employees’ 401(k) accounts through the Company’s ESOP portion of the Viad
Corp Capital Accumulation Plan (the “401(k) Plan”). All eligible employees of Viad and its participating affiliates, other than
certain employees covered by collective-bargaining agreements that do not expressly provide for participation of such
employees in an employee stock ownership plan, may participate in the employee stock ownership feature within the 401(k)
Plan.
In 1989, the ESOP borrowed $40.0 million (guaranteed by Viad) to purchase treasury shares from the Company. In
2004, Viad borrowed $12.2 million under its revolving credit agreement to pay in full the outstanding ESOP loan and obtain
release of Viad from its guarantee of the loan. In connection with the loan payoff, the ESOP entered into a $12.4 million loan
with Viad maturing in June 2009 calling for minimum quarterly principal payments of $250,000 plus interest. The same
amount, representing unearned employee benefits, was recorded as a reduction of stockholders’ equity. In 2007, the loan
agreement between the ESOP and Viad was extended to December 31, 2016. As of December 31, 2013, the balance of the
ESOP loan was $44,000 and is included in the consolidated balance sheets under the caption “Unearned employee benefits
and other.” The liability is reduced as the ESOP makes principal payments on the borrowing, and the amount offsetting
stockholders’ equity is reduced as stock is allocated to employees and benefits are charged to expense. The 401(k) Plan
repays the loan using Viad contributions and dividends received on the unallocated Viad shares held by the 401(k) Plan.
Information regarding ESOP transactions is as follows:
(in thousands)
Amounts paid by ESOP for:
Debt repayment
Interest
Amounts received from Viad as:
Contributions
Dividends
2013
2012
2011
$
1,280 $
1
1,202
79
1,647 $
5
1,604
48
1,490
8
1,435
63
Shares were released for allocation to participants based upon the ratio of the current year’s principal and interest
payments to the sum of the total principal and interest payments expected over the remaining life of the loan. Viad recorded
expense of $1.3 million, $1.7 million and $1.6 million in 2013, 2012 and 2011, respectively.
Unallocated shares held by the 401(k) Plan totaled 4,361 and 130,577 as of December 31, 2013 and 2012, respectively.
Shares allocated during 2013 and 2012 totaled 126,216 and 162,703, respectively. In January 2014, the 4,361 shares
F-20
remaining in the ESOP as of December 31, 2013 had been fully exhausted. Future matching contributions on employee
deferrals will be made from shares held in treasury.
Note 13. Preferred Stock Purchase Rights
Viad has authorized five million and two million shares of Preferred Stock and Junior Participating Preferred Stock,
respectively, none of which was outstanding on December 31, 2013.
On February 28, 2013, Viad’s shareholder rights plan (the “Rights Agreement”), as adjusted in connection with Viad’s
one-for-four reverse stock split on July 1, 2004 and as amended on February 28, 2012, terminated on its own terms and the
Preferred Stock Purchase Rights issued pursuant to the Rights Agreement expired.
Note 14. Accumulated Other Comprehensive Income
Changes in accumulated other comprehensive income (“AOCI”) by component were as follows:
(in thousands)
Unrealized Gains
on Investments
Cumulative
Foreign Currency
Translation
Adjustments
Unrecognized Net
Actuarial Loss and
Service Credit
Accumulated
Other
Comprehensive
Income
Balance at January 1, 2013
$
Other comprehensive income before
reclassifications
Amounts reclassified from AOCI, net of tax
Net other comprehensive income (loss)
Balance at December 31, 2013
$
275 $
215
(61)
154
429 $
42,158 $
(14,968) $
(11,311)
—
(11,311)
30,847 $
3,421
288
3,709
(11,259) $
27,465
(7,675)
227
(7,448)
20,017
The following table presents information about reclassification adjustments out of AOCI:
(in thousands)
Unrealized gains on investments
Tax effect
Recognized net actuarial loss
Amortization of prior service credit
Tax effect
2013
2012
Affected Line Item in the
Statement Where Net
Income is Presented
$
$
$
$
99 $
(38)
61 $
(1,349) $
902
159
(288) $
92 Interest income
(35) Income taxes
57 Net of tax
(1,239) See Note 16
1,113 See Note 16
Income taxes
42
(84) Net of tax
F-21
Note 15. Income Taxes
The following represents a reconciliation of income tax expense and the amount that would be computed using the
statutory federal income tax rates:
(in thousands)
Computed income tax expense at
statutory federal income tax rate of 35% $
State income taxes, net of federal
provision
Foreign tax rate differentials
U.S. tax on foreign earnings (net of
foreign tax credits)
Tax resolutions, net
Change in valuation allowance
Proceeds from life insurance
Return to provision and other adjustments
Other, net
Income tax expense
$
2013
2012
2011
10,201
35.0 % $
9,381
35.0 % $
4,613
35.0 %
345
77
(1,831)
—
(2,184)
(196)
1,664
514
8,590
1.2 %
0.3 %
(6.3)%
— %
(7.5)%
(0.7)%
5.7 %
1.8 %
29.5 % $
470
(2,031)
(595)
—
14,220
(472)
(371)
241
20,843
1.8 %
(7.6)%
(100)
(1,679)
(0.8)%
(12.7)%
(2.2)%
— %
53.1 %
(1.8)%
(1.4)%
0.9 %
77.8 % $
1,105
(103)
(55)
—
(43)
150
3,888
8.4 %
(0.8)%
(0.4)%
— %
(0.3)%
1.1 %
29.5 %
Viad is subject to regular and recurring audits by the taxing authorities in the jurisdictions in which the Company
conducts or had previously conducted operations. These include U.S. federal and most state jurisdictions, and certain
foreign jurisdictions including Canada, the United Kingdom and Germany.
Viad exercises judgment in determining its income tax provision due to transactions, credits and calculations where
the ultimate tax determination is uncertain. As of December 31, 2013, the Company recognized an increase in the liability
for uncertain tax positions for continuing operations of approximately $736,000 as there were no accrued gross liabilities
associated with uncertain tax positions as of December 31, 2012. As of December 31, 2013, Viad had accrued interest and
penalties related to uncertain tax positions for continuing operations of $20,000. Viad classifies interest and penalties
related to income tax liabilities as a component of income tax expense. The tax expense impact of the uncertain tax
positions was $200,000 due to tax credit carryforwards that were available to offset the expense. The Company believes
that it is reasonably possible that approximately $293,000 of its uncertain tax positions could be resolved or settled within
the next twelve months, which would reduce the amount of accrued income taxes payable.
During 2011, Viad recorded tax benefits related to the favorable resolution of tax matters in continuing operations of
$103,000. These tax resolutions primarily represent the reversal of amounts accrued for tax and related interest and
penalties in connection with uncertain tax positions which were effectively settled or for which there was a lapse of the
applicable statute of limitations.
In addition to the above, Viad had accrued gross liabilities associated with uncertain tax positions for discontinued
operations of $636,000 as of both December 31, 2013 and 2012. In addition, as of December 31, 2013 and 2012, Viad had
accrued interest and penalties related to uncertain tax positions for discontinued operations of $450,000 and $418,000,
respectively. Future tax resolutions or settlements that may occur related to these uncertain tax positions would be
recorded through discontinued operations (net of federal tax effects, if applicable). Viad believes that it is reasonably
possible that the unrecognized tax benefits related to discontinued operations will be recognized or settled during the next
12 months as the statute of limitations related to this item will lapse on December 31, 2014.
F-22
The following represents a reconciliation of the total amounts of liabilities associated with uncertain tax positions
(excluding interest and penalties):
(in thousands)
Balance, January 1, 2011
Reductions for tax positions taken in prior years
Reductions for tax settlements
Reductions for lapse of applicable statutes
Balance at December 31, 2011
Reductions for tax positions taken in prior years
Reductions for tax settlements
Reductions for lapse of applicable statutes
Balance at December 31, 2012
Additions for tax positions taken in prior years
Reductions for tax positions taken in prior years
Reductions for tax settlements
Reductions for lapse of applicable statutes
Balance at December 31, 2013
Continuing
Operations
Discontinued
Operations
Total
$
$
— $
—
—
—
—
—
—
—
—
736
—
—
—
736 $
636 $
—
—
—
636
—
—
—
636
—
—
—
—
636 $
636
—
—
—
636
—
—
—
636
736
—
—
—
1,372
Viad’s 2010 through 2013 U.S. federal tax years and various state tax years from 2009 through 2013 remain subject
to income tax examinations by tax authorities. Additionally, 2005, 2006, 2008 and 2009 remain subject to examination
due to federal net operating loss carryback claims. In addition, tax years from 2010 through 2013 related to Viad’s foreign
taxing jurisdictions also remain subject to examination.
Viad classifies liabilities associated with uncertain tax positions as non-current liabilities in its consolidated balance
sheets unless they are expected to be paid within the next year. As of December 31, 2013 and 2012, the Company had
liabilities associated with uncertain tax positions (including interest and penalties) of $1.8 million and $1.1 million,
respectively, which were classified as non-current liabilities.
F-23
Deferred income tax assets and liabilities included in the consolidated balance sheets as of December 31 related to
the following:
(in thousands)
Deferred tax assets:
Tax credit carryforwards
Pension, compensation and other employee benefits
Provisions for losses
Net operating loss carryforward
State income taxes
Other deferred income tax assets
Total deferred tax assets
Valuation allowance
Foreign deferred tax assets included above
Net deferred tax assets
Deferred tax liabilities:
Property and equipment
Deferred tax related to life insurance
Goodwill and other intangible assets
Unremitted foreign earnings
Other deferred income tax liabilities
Total deferred tax liabilities
Foreign deferred tax liabilities included above
United States deferred tax assets
2013
2012
$
$
26,945 $
23,835
13,674
4,794
2,170
5,552
76,970
(12,393 )
(1,713 )
62,864
(7,861 )
(4,842 )
(959 )
(398 )
(393 )
(14,453 )
1,989
50,400 $
25,290
31,782
15,229
1,755
2,813
5,331
82,200
(14,576)
(990)
66,634
(8,801)
(4,992)
(1,306)
(978)
(176)
(16,253)
2,024
52,405
Viad is required to estimate and record provisions for income taxes in each of the jurisdictions in which the
Company operates. Accordingly, the Company must estimate its actual current income tax liability, and assess temporary
differences arising from the treatment of items for tax purposes, as compared to the treatment for accounting purposes.
These differences result in deferred tax assets and liabilities which are included in Viad’s consolidated balance sheets. The
Company must assess the likelihood that deferred tax assets will be recovered from future taxable income and to the
extent that recovery is not likely, a valuation allowance must be established. The Company uses significant judgment in
forming a conclusion regarding the recoverability of its deferred tax assets and evaluates the available positive and
negative evidence to determine whether it is more-likely-than-not that its deferred tax assets will be realized in the future.
As of December 31, 2013 and 2012, Viad had gross deferred tax assets of $77.0 million and $82.2 million, respectively.
These deferred tax assets reflect the expected future tax benefits to be realized upon reversal of deductible temporary
differences, and the utilization of net operating loss and tax credit carryforwards.
The Company considered all available positive and negative evidence regarding the future recoverability of its
deferred tax assets, including the Company’s recent operating history, taxpaying history and future reversals of deferred
tax liabilities. The Company also evaluated its ability to utilize its foreign tax credits, given its recent utilization history.
These tax credits are subject to a 10-year carryforward period and begin to expire in 2019. Based on the Company’s
assessment, it was determined during the fourth quarter of 2012 that the weight of the evidence indicated that certain
deferred tax assets associated with foreign tax credit carryforwards no longer met the more-likely-than-not test regarding
the realization of those assets. As a result, the Company recorded a valuation allowance of $13.4 million related to all of
its foreign tax credit carryforwards. During 2013, the Company generated additional foreign tax credit carryforwards of
$1.9 million for which an additional valuation allowance was recorded. However, the Company also determined, due to
the taxable income associated with the Glacier Park possessory interest the Company received in the first quarter of 2014,
it was more-likely-than-not that a portion of its previously existing foreign tax credit carryforwards would be utilized.
Therefore, during the fourth quarter of 2013, the Company reversed $4.1 million of its valuation allowance related to
those tax credits. Accordingly, the Company recorded a net decrease to income tax expense of $2.2 million and a decrease
of $300,000 to deferred tax assets for a total decrease to income tax expense of $2.5 million related to changes in the
valuation allowance associated with its foreign tax credit carryforwards. As of December 31, 2013 and 2012, Viad had
federal, state and foreign net operating loss carryforwards of $96.0 million and $82.0 million, respectively, for which the
Company had deferred tax assets of $4.8 million and $1.8 million, respectively. The state and foreign net operating loss
F-24
carryforwards expire on various dates from 2014 through 2033. During 2013, the Company increased its valuation
allowance related to state and foreign net operating loss carryforwards by $329,000. As of December 31, 2013 and 2012,
Viad had a valuation allowance of $1.5 million and $1.2 million, respectively, related to those state and foreign deferred
tax assets. With respect to all other deferred tax assets, management believes that recovery from future taxable income is
more-likely-than-not.
As noted above, Viad uses considerable judgment in forming a conclusion regarding the recoverability of its
deferred tax assets. As a result, there are inherent uncertainties regarding the ultimate realization of these assets, which is
primarily dependent on Viad’s ability to generate sufficient taxable income in future periods. In future periods, it is
reasonably possible that the relative weight of positive and negative evidence regarding the recoverability of Viad’s
deferred tax assets may change, which could result in a material increase or decrease in the Company’s valuation
allowance. If such a change in the valuation allowance were to occur, it would result in a material increase or decrease to
income tax expense in the period the assessment was made.
As of December 31, 2013, Viad had tax credit carryforwards related to alternative minimum tax of $11.3 million
that may be carried forward indefinitely. Additionally, as of December 31, 2013, Viad had foreign tax credit carryforwards
of $15.0 million, of which $222,000 expire in 2019, $8.3 million expire in 2020, $4.4 million expire in 2021 and $2.1
million expire in 2033. The Company has a valuation allowance of $10.9 million related to the foreign tax credit
carryforwards. Viad also had general business credits of $622,000 as of December 31, 2013, which expire at various dates
from 2028 to 2033.
Viad has not recorded deferred taxes on certain historical unremitted earnings of its Canadian subsidiaries as
management intends to reinvest those earnings in its Canadian operations. As of December 31, 2013, the incremental
unrecognized tax liability (net of estimated foreign tax credits) related to those undistributed earnings was approximately
$1.0 million. To the extent that circumstances change and it becomes apparent that some or all of those undistributed
earnings will be remitted to the U.S., Viad would accrue income taxes attributable to such remittance.
Income tax expense consisted of the following:
(in thousands)
Current:
United States:
Federal
State
Foreign
Total current
Deferred:
United States:
Federal
State
Foreign
Total deferred
Income tax expense
2013
2012
2011
$
$
(2,134) $
(286)
9,606
7,186
1,113
651
(360)
1,404
8,590 $
(272) $
2,189
7,652
9,569
11,127
40
107
11,274
20,843 $
(4,643)
1,292
8,163
4,812
992
(1,560)
(356)
(924)
3,888
The aggregate tax benefit realized in connection with the vesting of restricted stock and the exercise of stock
options was $404,000 for 2013, which was recorded as a credit to stockholders’ equity. During 2012 and 2011, the
Company recorded tax deficiencies of $96,000 and $325,000, respectively, related to the vesting of restricted stock and
the exercise of stock options, which were recorded as charges to stockholders’ equity.
Eligible subsidiaries (including sold and discontinued businesses up to their respective disposition dates) are
included in the consolidated federal and other applicable income tax returns of Viad.
F-25
United States and foreign income from continuing operations before income taxes was as follows:
(in thousands)
Foreign
United States
Income from continuing operations before income taxes
Note 16. Pension and Postretirement Benefits
2013
2012
2011
$
$
25,010 $
4,138
29,148 $
29,645 $
(2,843)
26,802 $
29,407
(16,227)
13,180
Domestic Plans. Viad has trusteed, frozen defined benefit pension plans that cover certain employees which are funded
by the Company. Viad also maintains certain unfunded defined benefit pension plans which provide supplemental benefits to
select management employees. These plans use traditional defined benefit formulas based on years of service and final
average compensation. Funding policies provide that payments to defined benefit pension trusts shall be at least equal to the
minimum funding required by applicable regulations.
Viad also has certain defined benefit postretirement plans that provide medical and life insurance for certain eligible
employees, retirees and dependents. The related postretirement benefit liabilities are recognized over the period that services
are provided by employees. In addition, Viad retained the obligations for these benefits for retirees of certain sold businesses.
While the plans have no funding requirements, Viad may fund the plans.
The components of net periodic benefit cost and other amounts recognized in other comprehensive income of Viad’s
pension plans included the following:
(in thousands)
Net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Recognized net actuarial loss
Net periodic benefit cost
Other changes in plan assets and benefit obligations recognized in other
comprehensive income:
Net actuarial loss (gain)
Reversal of amortization item:
Net actuarial loss
Total recognized in other comprehensive income (loss)
Total recognized in net periodic benefit cost and other
comprehensive income (loss)
2013
2012
2011
$
66 $
1,030
(400)
583
1,279
(2,565)
(583)
(3,148)
104 $
1,150
(406 )
491
1,339
1,942
(491 )
1,451
$
(1,869) $
2,790
$
121
1,189
(563)
457
1,204
1,589
(457)
1,132
2,336
F-26
The components of net periodic benefit cost and other amounts recognized in other comprehensive income of Viad’s
postretirement benefit plans included the following:
(in thousands)
Net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service credit
Recognized net actuarial loss
Net periodic benefit cost
Other changes in plan assets and benefit obligations recognized in other
comprehensive income:
Net actuarial loss (gain)
Prior service credit
Reversal of amortization item:
Net actuarial loss
Prior service credit
Total recognized in other comprehensive income (loss)
Total recognized in net periodic benefit cost and other
comprehensive income (loss)
2013
2012
2011
$
156 $
663
—
(902)
518
435
(1,496)
(40)
(518)
902
(1,152)
146 $
814
(74 )
(1,113 )
547
320
224
—
(547 )
1,113
790
$
(717) $
1,110
$
128
868
(135)
(1,277)
533
117
24
—
(533)
1,277
768
885
The following table indicates the funded status of the plans as of December 31:
(in thousands)
Change in benefit obligation:
$
Benefit obligation at beginning of
year
Service cost
Interest cost
Actuarial adjustments
Plan amendments
Benefits paid
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at
beginning of year
Actual return on plan assets
Company contributions
Benefits paid
Fair value of plan assets at end of
year
Funded status at end of year
Funded Plans
Unfunded Plans
Postretirement
Benefit Plans
2013
2012
2013
2012
2013
2012
15,348 $
—
608
(1,530)
—
(991)
13,435
10,624
580
659
(991)
13,938 $
—
659
1,419
—
(668)
15,348
11,570 $
66
422
(856)
—
(666)
10,536
$
10,883
104
491
799
—
(707)
11,570
18,701 $
156
663
(1,631)
(40)
(930)
16,919
9,846
683
763
(668)
—
—
666
(666)
—
—
707
(707)
1,397
(135)
188
(930)
18,667
146
814
250
—
(1,176)
18,701
2,118
100
355
(1,176)
10,872
(2,563) $
10,624
(4,724) $
—
(10,536) $
—
(11,570) $
520
(16,399) $
1,397
(17,304)
$
F-27
The net amounts recognized in Viad’s consolidated balance sheets under the caption “Pension and postretirement
benefits” as of December 31 were as follows:
(in thousands)
Other current liabilities
Non-current liabilities
Net amount recognized
Funded Plans
Unfunded Plans
Postretirement
Benefit Plans
2013
2012
2013
2012
2013
2012
$
$
— $
2,563
2,563 $
— $
4,724
4,724 $
713 $
9,823
10,536 $
816 $
10,754
11,570 $
928 $
15,471
16,399 $
392
16,912
17,304
Amounts recognized in accumulated other comprehensive income as of December 31, 2013 consisted of:
(in thousands)
Net actuarial loss
Prior service credit
Subtotal
Less tax effect
Total
Funded
Plans
Unfunded
Plans
Postretirement
Benefit Plans
Total
$
$
6,972 $
—
6,972
(2,644)
4,328 $
3,480 $
—
3,480
(1,320)
2,160 $
4,692 $
(2,038 )
2,654
(1,006 )
1,648 $
15,144
(2,038)
13,106
(4,970)
8,136
Amounts recognized in accumulated other comprehensive income as of December 31, 2012 consisted of:
(in thousands)
Net actuarial loss
Prior service credit
Subtotal
Less tax effect
Total
Funded
Plans
Unfunded
Plans
Postretirement
Benefit Plans
Total
$
$
9,052 $
—
9,052
(3,433)
5,619 $
4,548 $
—
4,548
(1,725)
2,823 $
6,706 $
(2,900 )
3,806
(1,443 )
2,363 $
20,306
(2,900)
17,406
(6,601)
10,805
The estimated net actuarial loss for the pension plans that is expected to be amortized from accumulated other
comprehensive income into net periodic pension cost in 2014 is approximately $416,000. The estimated net actuarial loss for
the postretirement benefit plans that is expected to be amortized from accumulated other comprehensive income into net
periodic benefit cost in 2014 is approximately $405,000. The estimated prior service credit for the postretirement benefit
plans that is expected to be amortized from accumulated other comprehensive income into net periodic benefit credit in 2014
is approximately $592,000.
The fair value of the domestic plans’ assets by asset class was as follows:
(in thousands)
Domestic pension plans:
Fixed income securities
U.S. equity securities
Cash
Other
Total
Postretirement benefit plans:
Fixed income securities
U.S. equity securities
Cash
Total
Fair Value Measurements at December 31, 2013
Quoted Prices
in Active
Markets
Total
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobserved
Inputs
(Level 3)
$
$
$
$
5,966 $
4,542
147
217
10,872 $
407 $
109
4
520 $
5,966 $
4,542
147
—
10,655 $
407 $
109
4
520 $
F-28
— $
—
—
217
217 $
— $
—
—
— $
—
—
—
—
—
—
—
—
—
(in thousands)
Domestic pension plans:
Cash
Other
Total
Postretirement benefit plans:
Cash
Fair Value Measurements at December 31, 2012
Quoted Prices
in Active
Markets
Total
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobserved
Inputs
(Level 3)
$
$
$
10,401 $
223
10,624 $
10,401 $
—
10,401 $
1,397 $
1,397 $
— $
223
223 $
— $
—
—
—
—
The significant amount of investments held in cash in the domestic pension and postretirement plans as of
December 31, 2012 was due to a change in the investment custodian during December 2012. All securities held by the
previous custodian were liquidated to cash and transferred to the new custodian in December 2012. During January and
February 2013, the new custodian invested the plans’ assets in a mix of equities and fixed income securities approximating
the same mixes as December 31, 2011.
Viad employs a total return investment approach whereby a mix of equities and fixed income securities is used to
maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful
consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a
diversified blend of equity and fixed income securities. Furthermore, equity securities are diversified across U.S. and non-
U.S. stocks, as well as growth and value. Investment risk is measured and monitored on an ongoing basis through quarterly
investment portfolio reviews and annual liability measurements.
Viad utilizes a building-block approach in determining the long-term expected rate of return on plan assets. Historical
markets are studied and long-term historical relationships between equity securities and fixed income securities are preserved
consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over
the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market
assumptions are determined. The long-term portfolio return also considers diversification and rebalancing. Peer data and
historical returns are reviewed relative to Viad’s assumed rates for reasonableness and appropriateness.
The following pension and postretirement benefit payments, which reflect expected future service, as appropriate, are
expected to be paid, as well as the Medicare Part D subsidy expected to be received:
(in thousands)
2014
2015
2016
2017
2018
2019-2022
$
Funded
Plans
Unfunded
Plans
Postretirement
Benefit
Plans
Medicare
Part D Subsidy
Receipts
853 $
879
830
865
857
4,668
729 $
716
806
827
894
4,211
1,739 $
1,702
1,691
1,649
1,609
7,330
254
254
253
251
247
1,169
F-29
Foreign Pension Plans. Certain of Viad’s foreign operations also maintain trusteed defined benefit pension plans
covering certain employees which are funded by the companies, and unfunded defined benefit pension plans providing
supplemental benefits to select management employees. These plans use traditional defined benefit formulas based on years
of service and final average compensation. Funding policies provide that payments to defined benefit pension trusts shall be
at least equal to the minimum funding required by applicable regulations. The components of net periodic benefit cost and
other amounts recognized in other comprehensive income included the following:
(in thousands)
Net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Recognized net actuarial loss
Net periodic benefit cost
Other changes in plan assets and benefit obligations recognized in other
comprehensive income:
Net actuarial loss (gain)
Reversal of amortization of net actuarial loss
Total recognized in other comprehensive income (loss)
Total recognized in net periodic benefit cost and other
comprehensive income (loss)
2013
2012
2011
$
534 $
702
(698)
248
786
(1,214)
(248)
(1,462)
491 $
737
(622 )
201
807
958
(201 )
757
$
(676) $
1,564
$
366
729
(665)
73
503
1,936
(73)
1,863
2,366
The following table represents the funded status of the plans as of December 31:
(in thousands)
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial adjustments
Benefits paid
Translation adjustment
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Benefits paid
Translation adjustment
Fair value of plan assets at end of year
Funded status at end of year
Funded Plans
Unfunded Plans
2013
2012
2013
2012
$
15,387 $
534
582
(473)
(3,644)
(926)
11,460
12,997
1,148
1,892
(3,644)
(833)
11,560
$
100 $
13,141 $
491
607
1,086
(328)
390
15,387
11,028
860
1,111
(328)
326
12,997
(2,390) $
3,032 $
—
120
44
(219 )
(66 )
2,911
—
—
219
(219 )
—
—
(2,911 ) $
2,939
—
130
113
(220)
70
3,032
—
—
220
(220)
—
—
(3,032)
As of December 31, 2013 and 2012, the foreign funded plans had net assets of $100,000 and net liabilities of $2.4
million, respectively. The unfunded plans had liabilities of $2.9 million and $3.0 million at December 31, 2013 and 2012,
respectively. These amounts are each included in the consolidated balance sheets under the caption “Pension and
postretirement benefits.”
The net actuarial losses for the foreign funded plans as of December 31, 2013 and 2012 were $3.8 million ($2.8 million
after-tax) and $5.3 million ($3.9 million after-tax), respectively. The net actuarial losses as of December 31, 2013 and 2012
for the foreign unfunded plans were $367,000 ($275,000 after-tax) and $366,000 ($271,000 after-tax), respectively.
F-30
The fair value of the foreign pension plans’ assets by asset category were as follows:
(in thousands)
Assets:
Canadian fixed income securities
International equity securities
U.S. equity securities
Other
Total
(in thousands)
Assets:
Canadian fixed income securities
International equity securities
U.S. equity securities
Other
Total
Fair Value Measurements at December 31, 2013
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobserved
Inputs
(Level 3)
5,174 $
4,386
1,269
336
11,165 $
— $
395
—
—
395 $
—
—
—
—
—
Fair Value Measurements at December 31, 2012
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobserved
Inputs
(Level 3)
6,744 $
4,494
1,185
197
12,620 $
— $
377
—
—
377 $
—
—
—
—
—
Total
5,174 $
4,781
1,269
336
11,560 $
Total
6,744 $
4,871
1,185
197
12,997 $
$
$
$
$
The following payments, which reflect expected future service, as appropriate, are expected to be paid:
(in thousands)
2014
2015
2016
2017
2018
2019-2022
$
Funded
Plans
Unfunded
Plans
365 $
480
485
488
512
3,226
213
213
212
212
211
1,051
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets. The accumulated
benefit obligations in excess of plan assets as of December 31 were as follows:
(in thousands)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
(in thousands)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Domestic Plans
Funded Plans
Unfunded Plans
2013
2012
2013
2012
13,435 $
13,435
10,872
15,348 $
15,348
10,624
10,536 $
10,227
—
11,570
11,322
—
Foreign Plans
Funded Plans
Unfunded Plans
2013
2012
2013
2012
11,460 $
10,823
11,560
15,387 $
14,307
12,997
2,911 $
2,911
—
3,032
3,032
—
$
$
F-31
Contributions. In aggregate for both the domestic and foreign plans, the Company anticipates contributing $1.4
million to the funded pension plans, $942,000 to the unfunded pension plans and $950,000 to the postretirement benefit plans
in 2014.
Weighted-Average Assumptions. Weighted-average assumptions used to determine benefit obligations as of
December 31 were as follows:
Discount rate
Rate of compensation increase
Domestic Plans
Funded Plans
Unfunded Plans
Postretirement
Benefit Plans
Foreign Plans
2013
4.89%
N/A
2012
4.11%
N/A
2013
4.60%
3.00%
2012
3.80%
4.50%
2013
4.65%
N/A
2012
3.85 %
N/A
2013
4.67%
3.00%
2012
4.06%
3.00%
Weighted-average assumptions used to determine net periodic benefit cost were as follows:
Discount rate
Expected return on plan assets
Rate of compensation increase
Domestic Plans
Funded Plans
Unfunded Plans
Postretirement
Benefit Plans
Foreign Plans
2013
4.09%
3.90%
N/A
2012
4.93%
4.20%
N/A
2013
3.80%
N/A
4.50%
2012
4.75%
N/A
4.50%
2013
3.85%
0.00%
N/A
2012
4.70%
4.65%
N/A
2013
4.03%
5.44%
3.00%
2012
4.65%
5.45%
3.00%
The assumed health care cost trend rate used in measuring the December 31, 2013 accumulated postretirement benefit
obligation was 8.0 percent, declining one-half percent each year to the ultimate rate of 5.0 percent by the year 2019 and
remaining at that level thereafter. The assumed health care cost trend rate used in measuring the December 31, 2012
accumulated postretirement benefit obligation was 8.5 percent, declining one-half percent each year to the ultimate rate of 5.0
percent by the year 2019 and remaining at that level thereafter.
A one-percentage-point increase in the assumed health care cost trend rate for each year would increase the
accumulated postretirement benefit obligation as of December 31, 2013 by approximately $1.5 million and the total of
service and interest cost components by approximately $113,000. A one-percentage-point decrease in the assumed health care
cost trend rate for each year would decrease the accumulated postretirement benefit obligation as of December 31, 2013 by
approximately $1.3 million and the total of service and interest cost components by approximately $90,000.
Multi-employer Plans. Viad contributes to defined benefit pension plans under the terms of collective-bargaining
agreements that cover its union-represented employees. The financial risks of participating in these multi-employer pension
plans generally include the fact that assets contributed to the plan by one employer may be used to provide benefits to
employees of other participating employers. Furthermore, if a participating employer ceases to contribute to the plan, the
unfunded obligations of the plan may be borne by the remaining participating employers. In addition, if Viad were to
discontinue its participation in some of its multi-employer pension plans, the Company may be required to pay those plans a
withdrawal liability amount based on the underfunded status of the plan. Viad also contributes to defined contribution plans
pursuant to its collective-bargaining agreements, which are generally not subject to the funding risks inherent in defined
benefit pension plans. The overall level of Viad’s contributions to its multi-employer plans may significantly vary from year
to year based on the demand for union-represented labor to support the Company’s operations. Viad does not have any
minimum contribution requirements for future periods pursuant to its collective-bargaining agreements for individually
significant multi-employer plans.
F-32
Viad’s participation in multi-employer pension plans for 2013 is outlined in the following table. Unless otherwise
noted, the most recent Pension Protection Act zone status available in 2013 and 2012 relates to the plan’s year end as of
December 31, 2012 and 2011, respectively, and is based on information received from the plan. Among other factors, plans in
the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in
the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a
financial improvement plan or a rehabilitation plan is either pending or has been implemented.
(in thousands)
Pension Fund:
Western Conference of
Teamsters Pension Plan
Southern California Local
831—Employer Pension
Fund(1)
National Electrical Benefit
Fund
Chicago Regional Council
of Carpenters Pension
Fund(2)
Electrical Contractors
Assoc. Chicago Local
Union 134, IBEW Joint
Pension Trust of Chicago
Plan #2
Central States, Southeast
and Southwest Areas
Pension Plan
Southwest Carpenters
Pension Trust
Machinery Movers Riggers
& Mach Erect Local 136
Supplemental Retirement
Plan(1),(2)
Nevada Resort Association
IATSE Local 720
Retirement Plan
Sign Pictorial & Display
Industry Pension Plan
Carpenters Retirement Plan
of Western Washington
New England Teamsters &
Trucking Industry
Pension(3)
Steelworkers Pension Trust
All other funds(4)
Total contributions to
defined benefit plans
Total contributions to other
plans
Total contributions to
multi-employer plans
EIN
Plan
No.
Pension
Protection Act
Zone Status
2013
2012
FIP/RP
Status
Pending/
Implemented
Viad Contributions
2013
2012
2011
Surcharg
e Paid
91-6145047
1
Green
Green
No
$
5,524 $
5,694 $
5,720
No
95-6376874
1
Green
Green
53-0181657
1
Green
Green
No
No
2,244
2,358
2,232
1,631
1,814
1,691
36-6130207
1
Yellow Yellow
Yes
1,614
1,749
1,411
No
No
No
Expiration
Date of
Collective-
Bargaining
Agreement(s)
3/31/14 to
5/31/15
8/31/14
5/31/14 to
6/16/14
5/31/14
51-6030753
2
Green
Green
No
957
108
—
No
6/3/14
36-6044243
1
Red
Red
95-6042875
1
Green
Green
Yes
No
836
812
874
944
725
1,031
No
No
7/31/15
6/30/15
36-1416355
1
Red
Red
Yes
430
930
386
No
6/30/14
51-0144767
1
Red
Red
Yes
94-6278490
1
Green
Green
91-6029051
1
Green
Green
04-6372430
1
Yellow
Red
23-6648508
499
Green
Green
No
No
Yes
No
No
No
No
No
No
12/31/14
3/31/15
5/31/13
3/31/17
3/31/13 to
2/28/15
367
367
357
516
196
357
329
191
286
347
334
339
266
2,592
326
2,468
422
2,946
18,344
18,668
17,709
1,969
2,001
1,892
$ 20,313 $ 20,669 $ 19,601
(1) The Company contributed more than 5 percent of total plan contributions for the 2012 and 2011 plan years based on the
plans’ Form 5500s.
(2) Zone status as of 6/30/12 and 6/30/11.
(3) Zone status as of 9/30/12 and 9/30/11.
(4) Represents participation in 37 pension funds during 2013.
Other Employee Benefits. Costs of the 401(k) Plan and other benefit plans totaled $1.3 million, $1.7 million and $1.3
million in 2013, 2012 and 2011, respectively.
F-33
Note 17. Restructuring Charges
Marketing & Events Group Consolidation
Beginning in 2009, Viad commenced certain restructuring actions designed to reduce the Company’s cost structure
primarily within the Marketing & Events U.S. segment, and to a lesser extent in the Marketing & Events International
segment. The Company implemented a strategic reorganization plan in order to consolidate the separate business units within
the Marketing & Events U.S. segment. The Company also consolidated facilities and streamlined its operations in the United
Kingdom and Germany. As a result, the Company recorded restructuring charges in 2013, 2012 and 2011, primarily
consisting of severance and related benefits as a result of workforce reductions and charges related to the consolidation and
downsizing of facilities representing the remaining operating lease obligations (net of estimated sublease income) and related
costs. During 2012 and 2011, the Company recorded restructuring charges related to leased facility consolidations and
optimization of the Marketing & Events U.S. segment’s service delivery network.
Other Restructurings
The Company has recorded restructuring charges in connection with the consolidation of certain support functions at its
corporate headquarters, and certain reorganization activities within the Travel & Recreation Group. These charges primarily
consist of severance and related benefits due to headcount reductions. In addition, the Company had recorded significant
restructuring charges in past years, primarily within the Marketing & Events U.S. segment. These legacy restructuring
liabilities represented the remaining contractual lease obligations on certain facilities, and were subject to periodic
adjustments as a result of changes in estimated sublease activity and other factors.
The table below represents a reconciliation of beginning and ending liability balances by major restructuring activity:
(in thousands)
Balance at January 1, 2011
Restructuring charges
Cash payments
Adjustment to liability
Foreign currency translation adjustment
Balance at December 31, 2011
Restructuring charges
Cash payments
Adjustment to liability
Foreign currency translation adjustment
Balance at December 31, 2012
Restructuring charges (recoveries)
Cash payments
Adjustment to liability
Balance at December 31, 2013
Marketing & Events
Group Consolidation
Other Restructurings
Severance &
Employee
Benefits
Facilities
Severance &
Employee
Benefits
Facilities
Total
$
$
1,106 $
1,182
(1,175)
(294)
12
831
2,506
(2,670)
51
2
720
2,931
(2,411)
—
1,240 $
5,051 $
2,519
(2,356)
(397)
2
4,819
2,346
(1,567)
(27)
—
5,571
(315)
(1,691)
—
3,565 $
197 $
26
(199)
—
—
24
90
(114)
—
—
—
1,967
(498)
(478)
991 $
1,642 $
55
(158)
(263)
—
1,276
—
(343)
—
—
933
(692)
(241)
—
— $
7,996
3,782
(3,888)
(954)
14
6,950
4,942
(4,694)
24
2
7,224
3,891
(4,841)
(478)
5,796
As of December 31, 2013, the liabilities related to severance and employee benefits are expected to be paid by the end
of 2014. Additionally, the liability of $3.6 million related to future lease payments are to be paid over the remaining lease
terms at the Marketing & Events Group. See Note 20 for information regarding restructuring charges by segment.
Note 18. Leases and Other
Viad has entered into operating leases for the use of certain of its offices, equipment and other facilities. These leases
expire over periods up to 40 years. Leases which expire are generally renewed or replaced by similar leases. Some leases
contain scheduled rental increases accounted for on a straight-line basis.
F-34
As of December 31, 2013, Viad’s future minimum rental payments and related sublease rentals receivable with respect
to non-cancelable operating leases with terms in excess of one year were as follows:
(in thousands)
2014
2015
2016
2017
2018
Thereafter
Total
$
$
Rental
Payments
Receivable
Under Subleases
1,665
1,212
963
963
873
1,092
6,768
19,808 $
14,371
9,439
7,870
6,097
8,137
65,722 $
Net rent expense under operating leases consisted of the following:
(in thousands)
Minimum rentals
Sublease rentals
Total rentals, net
2013
2012
2011
$
$
34,201 $
(6,815)
27,386 $
36,309 $
(6,501 )
29,808 $
30,860
(6,497)
24,363
The aggregate annual maturities and the related amounts representing interest on capital lease obligations are included
in Note 9.
In addition, as of December 31, 2013, the Company had aggregate purchase obligations of $31.6 million related to
various licensing agreements, consulting and other contracted services.
Note 19. Litigation, Claims, Contingencies and Other
Viad and certain of its subsidiaries are plaintiffs or defendants to various actions, proceedings and pending claims,
some of which involve, or may involve, compensatory, punitive or other damages. Litigation is subject to many uncertainties
and it is possible that some of the legal actions, proceedings or claims could be decided against Viad. Although the amount of
liability as of December 31, 2013 with respect to these matters is not ascertainable, Viad believes that any resulting liability,
after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on Viad’s
business, financial position or results of operations.
Viad is subject to various U.S. federal, state and foreign laws and regulations governing the prevention of pollution and
the protection of the environment in the jurisdictions in which Viad has or had operations. If the Company has failed to
comply with these environmental laws and regulations, civil and criminal penalties could be imposed and Viad could become
subject to regulatory enforcement actions in the form of injunctions and cease and desist orders. As is the case with many
companies, Viad also faces exposure to actual or potential claims and lawsuits involving environmental matters relating to its
past operations. Although it is a party to certain environmental disputes, Viad believes that any resulting liabilities, after
taking into consideration amounts already provided for and insurance coverage, will not have a material effect on the
Company’s financial position or results of operations. As of December 31, 2013 and 2012, Viad had recorded environmental
remediation liabilities of $5.0 million and $5.3 million, respectively, related to previously sold operations.
As of December 31, 2013, Viad had certain obligations under guarantees to third parties on behalf of its subsidiaries.
These guarantees are not subject to liability recognition in the consolidated financial statements and relate to leased facilities
entered into by Viad’s subsidiary operations. The Company would generally be required to make payments to the respective
third parties under these guarantees in the event that the related subsidiary could not meet its own payment obligations. The
maximum potential amount of future payments that Viad would be required to make under all guarantees existing as of
December 31, 2013 would be $13.7 million. These guarantees relate to leased facilities expiring through October 2017. There
are no recourse provisions that would enable Viad to recover from third parties any payments made under the guarantees.
Furthermore, there are no collateral or similar arrangements whereby Viad could recover payments.
A significant portion of Viad’s employees are unionized and the Company is a party to approximately 100 collective-
bargaining agreements, with approximately one-third requiring renegotiation each year. As of December 31, 2013,
approximately 30 percent of Viad’s regular full-time employees are covered by collective-bargaining agreements. If the
F-35
Company were unable to reach an agreement with a union during the collective-bargaining process, the union may call for a
strike or work stoppage, which may, under certain circumstances, adversely impact the Company’s businesses and results of
operations. Viad believes that relations with its employees are satisfactory and that collective-bargaining agreements expiring
in 2014 will be renegotiated in the ordinary course of business without having a material adverse effect on Viad’s operations.
Viad’s businesses contribute to various multi-employer pension plans based on obligations arising under collective
bargaining agreements covering its union-represented employees. Viad’s contributions to these plans in 2013, 2012 and 2011
totaled $20.3 million, $20.7 million and $19.6 million, respectively. Based upon the information available to Viad from plan
administrators, management believes that several of these multi-employer plans are underfunded. The Pension Protection Act
of 2006 requires pension plans underfunded at certain levels to reduce, over defined time periods, the underfunded status. In
addition, under current laws, the termination of a plan, or a voluntary withdrawal from a plan by Viad, or a shrinking
contribution base to a plan as a result of the insolvency or withdrawal of other contributing employers to such plan, would
require Viad to make payments to such plan for its proportionate share of the plan’s unfunded vested liabilities. As of
December 31, 2013, the amount of additional funding, if any, that Viad would be required to make related to multi-employer
pension plans is not ascertainable.
On December 31, 2013, Glacier Park’s concession contract to operate lodging, tour and transportation and other
hospitality services for Glacier National Park expired. Glacier Park generated approximately 47 percent of its 2013 revenue
through its concession contract for services provided within Glacier National Park.
Upon completion of the contract term, the Company received in January 2014 cash payments totaling $25 million for
the Company’s “possessory interest,” which generally means the value of the structures acquired or constructed, fixtures
installed and improvements made to the concession property at Glacier National Park during the term of the concession
contract. The Company anticipates a cash payment of approximately $5 million for the personal property Glacier Park used at
the facilities covered by the concession contract.
Glacier Park continues to generate revenue from the five properties it owns: (1) St. Mary Lodge in St. Mary, Montana;
(2) Glacier Park Lodge in East Glacier, Montana; (3) Grouse Mountain Lodge in Whitefish, Montana; (4) the Prince of Wales
Hotel in Waterton Lakes National Park, Alberta; and (5) Motel Lake McDonald, which is located inside Glacier National
Park. Glacier Park also continues to operate the food and beverage services with respect to these properties and the retail
shops located near Glacier National Park. The five properties Glacier Park currently owns contain more than one-half of the
rooms that Glacier Park operated in 2013.
F-36
Note 20. Segment Information
Viad measures profit and performance of its operations on the basis of segment operating income which excludes
restructuring charges and recoveries and impairment charges and recoveries. Intersegment sales are eliminated in
consolidation and intersegment transfers are not significant. Corporate activities include expenses not allocated to operations.
Depreciation and amortization and share-based compensation expense are the only significant non-cash items for the
reportable segments. No reportable segment has a client comprising more than 7.0 percent of that segment’s revenues, and no
client comprises more than 4.5 percent of Viad’s revenues. Disclosures regarding Viad’s reportable segments with
reconciliations to consolidated totals are as follows:
2013
2012
2011
628,856 $
229,312
(13,264)
844,904
127,888
972,792 $
676,772 $
240,137
(14,869 )
902,040
123,191
1,025,231 $
631,360
218,639
(9,449)
840,550
101,814
942,364
11,024 $
9,068
20,092
25,799
45,891
(6,755)
39,136
550
(1,234)
409
(2,362)
(907)
(1,031)
(658)
(294)
(4,461)
29,148 $
5,579 $
12,321
17,900
23,962
41,862
(9,408 )
32,454
593
(1,303 )
(3,479 )
(1,373 )
(79 )
(11 )
—
—
—
26,802 $
(6,269)
11,449
5,180
20,196
25,376
(7,682)
17,694
779
(1,511)
(3,756)
—
—
(26)
—
—
—
13,180
$
$
$
(in thousands)
Revenues:
Marketing & Events Group:
U.S.
International
Intersegment eliminations
Travel & Recreation Group
Total Revenue
Segment operating income (loss):
Marketing & Events Group:
U.S.
International
Travel & Recreation Group
Corporate activities
Interest income
Interest expense
Restructuring recoveries (charges):
Marketing & Events U.S.
Marketing & Events International
Travel & Recreation Group
Corporate
Impairment charges:
Marketing & Events U.S.
Marketing & Events International
Travel & Recreation Group
Income from continuing operations before income taxes
$
F-37
(in thousands)
Assets:
Marketing & Events Group:
U.S.
International
Travel & Recreation Group
Corporate and other
Depreciation and amortization:
Marketing & Events Group:
U.S.
International
Travel & Recreation Group
Corporate and other
Capital expenditures:
Marketing & Events Group:
U.S.
International
Travel & Recreation Group
Corporate and other
2013
2012
2011
194,422 $
81,058
209,611
76,841
561,932 $
203,145 $
100,387
223,199
123,846
650,577 $
213,843
96,996
194,278
112,711
617,828
14,906 $
5,566
7,967
176
28,615 $
8,278 $
4,332
23,108
401
36,119 $
17,643 $
5,162
7,781
145
30,731 $
7,525 $
4,913
15,201
36
27,675 $
17,247
5,027
6,674
178
29,126
11,692
5,635
3,271
940
21,538
$
$
$
$
$
$
Products and Services. Viad’s revenues for each group of products and services are presented in the following table:
(in thousands)
Revenues:
Exhibition and event services
Exhibits and environments
Travel and recreation services
Total revenues
2013
2012
2011
$
$
685,350 $
159,554
127,888
972,792 $
726,429 $
175,611
123,191
1,025,231 $
670,054
170,496
101,814
942,364
Geographic Areas. Viad’s foreign operations are located principally in Canada, the United Kingdom, Germany and the
United Arab Emirates. Marketing & Events Group revenues are designated as domestic or foreign based on the originating
location of the product or service. Long-lived assets are attributed to domestic or foreign based principally on the physical
location of the assets. Long-lived assets consist of “Property and equipment, net” and “Other investments and assets.” The
table below presents the financial information by major geographic area:
(in thousands)
Revenues:
United States
United Kingdom
Canada
Other international
Total revenues
Long-lived assets:
United States
Canada
United Kingdom
Other international
Total long-lived assets
2013
2012
2011
$
$
$
$
656,927 $
151,217
148,934
15,714
972,792 $
132,315 $
82,986
9,631
424
225,356 $
700,414 $
153,027
151,070
20,720
1,025,231 $
141,727 $
76,067
9,757
2,163
229,714 $
660,998
124,208
140,374
16,784
942,364
145,217
47,624
8,165
3,858
204,864
F-38
Note 21. Common Stock Repurchases
In December 2012, Viad announced the authorization of its Board of Directors to repurchase shares of the Company’s
common stock from time to time at prevailing market prices. No shares were repurchased on the open market during 2013.
During 2012 and 2011, Viad repurchased 23,183 shares for $526,000 and 250,760 shares for $4.6 million, respectively. As of
December 31, 2013, 1,030,438 shares remain available for repurchase. Additionally, during 2013, 2012 and 2011, the
Company repurchased 50,156 shares for $1.3 million, 56,885 shares for $1.1 million and 28,627 shares for $679,000,
respectively, related to tax withholding requirements on share-based awards.
Note 22. Discontinued Operations
In 2013 and 2012, Viad recorded income from discontinued operations of $1.1 million and $624,000, respectively,
primarily related to the sale of land associated with previously sold operations. In 2011, Viad recorded income from
discontinued operations of $451,000 related to the reversal of certain liabilities associated with previously sold operations.
Note 23. Condensed Consolidated Quarterly Results (Unaudited)
The following quarterly financial information was derived from the Company’s interim financial statements and was
prepared in a manner consistent with the annual financial statements and includes all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation.
2013
2012
(in thousands, except per share data)
Revenues:
Operating income (loss):
Ongoing operations(1)
Corporate activities
Restructuring charges
Impairment charges
Operating income (loss)
First
Quarter
Fourth
Quarter
$ 285,163 $ 249,314 $ 236,473 $ 201,842 $ 268,772 $ 246,450 $ 307,457 $ 202,552
Second
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Third
Quarter
$
12,827 $
10,881 $
24,624 $
(2,441) $
5,533 $
(806)
(720)
(1,167)
(773)
—
11,301 $
$
—
8,941 $
(2,034)
(714)
(5,413)
16,463 $
(2,748)
(1,684)
(1,777)
(2,225)
—
(6,873) $
—
1,531 $
10,498 $
(2,187)
(678)
—
7,633 $
34,182 $
(8,351)
(2,036)
(608)
—
31,538 $
(3,408)
(1,431)
—
(13,190)
Income (loss) from continuing operations
attributable to Viad(2)
Net income (loss) attributable to Viad(2)
$
Income (loss) per common share-Diluted(2),(3):
Income (loss) from continuing operations
attributable to Viad
$
Net income (loss) attributable to Viad
Income (loss) per common share-Basic(2),(3):
Income (loss) from continuing operations
attributable to Viad
Net income (loss) attributable to Viad
$
$
$
$
8,065 $
8,065 $
6,253 $
6,253 $
10,849 $
11,855 $
(4,740) $
(4,618) $
1,027 $
1,027 $
$
5,451
6,090 $
19,976 $
19,976 $
(21,181)
(21,196)
0.40 $
0.40 $
0.31 $
0.31 $
0.53 $
0.58 $
(0.24) $
(0.23) $
0.05 $
0.05 $
$
0.27
0.30 $
0.99 $
0.99 $
(1.07)
(1.07)
0.40 $
0.40 $
0.31 $
0.31 $
0.53 $
0.58 $
(0.24) $
(0.23) $
0.05 $
0.05 $
$
0.27
0.30 $
0.99 $
0.99 $
(1.07)
(1.07)
(1) Represents revenues less costs of services and products sold.
(2) The fourth quarter of 2012 includes a tax charge of $13.4 million representing a valuation allowance for certain deferred
tax assets associated with foreign tax credit carryforwards.
(3) The sum of quarterly income per share amounts may not equal annual income per share due to rounding.
Note 24. Subsequent Events
In connection with the expiration of the Company’s concession contract at Glacier National Park, Viad received cash
payments in January 2014 totaling $25 million for its “possessory interest,” which generally means the value of the structures
acquired or constructed, fixtures installed and improvements made to the concession property during the term of the
concession contract. The Company also anticipates a cash payment of approximately $5 million for the personal property
Glacier Park uses at the facilities covered by the concession contract.
On January 24, 2014, Viad announced that its Board of Directors declared a special cash dividend of $1.50 per share, or
approximately $30.5 million in the aggregate, to shareholders of record at the close of business on February 7, 2014. The
dividend was paid on February 14, 2014.
F-39
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Viad Corp
Phoenix, Arizona
We have audited the accompanying consolidated balance sheets of Viad Corp and subsidiaries (the “Company”) as of
December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income, stockholders’
equity and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the
financial statement schedule listed in the Index at Item 15. These consolidated financial statements and financial statement
schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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, such consolidated financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company’s internal control over financial reporting as of December 31, 2013, based on the criteria established in
Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 7, 2014 expressed an unqualified opinion on the Company’s internal control over
financial reporting.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Phoenix, Arizona
March 7, 2014
F-40
VIAD CORP
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Allowance for doubtful accounts:
December 31, 2011
December 31, 2012
December 31, 2013
Deferred tax valuation allowance:
December 31, 2011
December 31, 2012
December 31, 2013
Additions
Deductions
Balance at
Beginning
of Year
Charged to
Charged to
Other
Expense
Accounts
Write Offs
Credited
to Other
Accounts
Balance at
End of Year
$
$
1,172
1,072
1,150
411
356
14,576
1,696
708
313
—
14,220
1,917
—
—
—
—
—
—
(1,796)
(630)
(586)
(55)
—
(4,100)
— $
—
—
— $
—
—
1,072
1,150
877
356
14,576
12,393
F-41
EXHIBIT INDEX
Exhibit #
3.A
Copy of Restated Certificate of Incorporation of Viad Corp, as amended through July 1, 2004, filed as Exhibit 3.A
to Viad Corp’s Form 10-Q for the period ended June 30, 2004, is hereby incorporated by reference (SEC File No.
001-11015; SEC Film No. 04961107).
Copy of Bylaws of Viad Corp, as amended through December 5, 2013, filed as Exhibit 3 to Viad Corp’s Form 8-
K filed December 9, 2013, is hereby incorporated by reference.
Copy of $130,000,000 Amended and Restated Credit Agreement dated as of May 18, 2011 and Affirmation and
Amendment of Collateral Documents dated as of May 18, 2011, filed as Exhibit 4 to Viad Corp’s Form 8-K filed
May 24, 2011, is hereby incorporated by reference.
Copy of amendment No. 1 to the $130,000,000 Amended and Restated Credit Agreement dated as of May 18,
2011, effective as of December 12, 2012, filed as Exhibit 4 to Viad Corp’s Form 8-K filed December 14, 2012, is
hereby incorporated by reference.
Copy of amendment No. 2 to the $130,000,000 Amended and Restated Credit Agreement dated as of May 18,
2011, effective as of November 14, 2013, filed as Exhibit 4 to Viad Corp’s Form 8-K filed November 14, 2013, is
hereby incorporated by reference.
Copy of Pledge and Security Agreement, Guaranty, and Subsidiary Pledge and Security Agreement dated as of
June 30, 2004, filed as Exhibit 4.A to Viad Corp’s Form 10-Q for the period ended June 30, 2004, is hereby
incorporated by reference (SEC File No. 001-11015; SEC Film No. 04961107).
Copy of 2007 Viad Corp Omnibus Incentive Plan, filed as Appendix A to Viad Corp’s Proxy Statement for the
2012 Annual Meeting of Shareholders, filed April 13, 2012, is hereby incorporated by reference.+
Copy of form of Restricted Stock Agreement-Executives, effective as of February 25, 2008, pursuant to the 2007
Viad Corp Omnibus Incentive Plan, filed as Exhibit 10.C to Viad Corp’s Form 8-K filed February 28, 2008, is
hereby incorporated by reference (SEC File No. 001-11015).+
Copy of form of Restricted Stock Agreement for Outside Directors, effective as of February 25, 2008, pursuant to
the 2007 Viad Corp Omnibus Incentive Plan, filed as Exhibit 10.F to Viad Corp’s Form 8-K filed February 28,
2008, is hereby incorporated by reference (SEC File No. 001-11015).+
Copy of form of Restricted Stock Agreement-Executives (five-year cliff), effective as of March 23, 2011,
pursuant to the 2007 Viad Corp Omnibus Incentive Plan, filed as Exhibit 10.A to Viad Corp’s Form 8-K filed
March 29, 2011, is hereby incorporated by reference.+
Copy of form of Restricted Stock Agreement – Executives (three-year cliff vesting), effective as of March 23,
2011, pursuant to the 2007 Viad Corp Omnibus Incentive Plan, filed as Exhibit 10.B to Viad Corp’s Form 8-K
filed March 29, 2011, is hereby incorporated by reference. +
Copy of form of Restricted Stock Units Agreement, effective as of March 23, 2011, pursuant to the 2007 Viad
Corp Omnibus Incentive Plan, filed as Exhibit 10.C to Viad Corp’s Form 8-K filed March 29, 2011, is hereby
incorporated by reference. +
Copy of form of Performance Unit Agreement, effective as of March 23, 2011, pursuant to the 2007 Viad Corp
Omnibus Incentive Plan, filed as Exhibit 10.D to Viad Corp’s Form 8-K filed March 29, 2011, is hereby
incorporated by reference.+
Copy of Viad Corp Performance Unit Incentive Plan, effective as of February 27, 2013, pursuant to the 2007 Viad
Corp Omnibus Incentive Plan, filed as Exhibit 10.D to Viad Corp’s Form 8-K filed March 5, 2013, is hereby
incorporated by reference.+
Copy of Viad Corp Management Incentive Plan, amended as of February 27, 2013, pursuant to the 2007 Viad
Corp Omnibus Incentive Plan, filed as Exhibit 10.C to Viad Corp’s Form 8-K filed March 5, 2013, is hereby
incorporated by reference.+
Copy of form of Non-Qualified Stock Option Agreement, effective as of February 25, 2008, pursuant to the 2007
Viad Corp Omnibus Incentive Plan, filed as Exhibit 10.D to Viad Corp’s Form 8-K filed February 28, 2008, is
hereby incorporated by reference (SEC File No. 001-11015).+
Copy of form of Non-Qualified Stock Option Agreement, effective as of February 25, 2010, pursuant to the 2007
Viad Corp Omnibus Incentive Plan, filed as Exhibit 10.B to Viad Corp’s Form 8-K filed February 26, 2010, is
hereby incorporated by reference.+
Copy of form of Incentive Stock Option Agreement, effective as of February 25, 2010, pursuant to the 2007 Viad
Corp Omnibus Incentive Plan, filed as Exhibit 10.A to Viad Corp’s Form 8-K filed February 26, 2010, is hereby
incorporated by reference.+
Copy of form of Restricted Stock Units Agreement, effective as of February 24, 2009, pursuant to the 2007 Viad
Corp Omnibus Incentive Plan, filed as Exhibit 10.A to Viad Corp’s Form 8-K filed February 26, 2009, is hereby
incorporated by reference (SEC File No. 001-11015).+
3.B
4.A1
4.A2
4.A3
4.B
10.A1
10.A2
10.A3
10.A4
10.A5
10.A6
10.A7
10.A8
10.A9
10.A10
10.A11
10.A12
10.A13
10.A14
10.B1
10.B2
10.C1
10.C2
10.C3
10.C4
10.C5
10.D1
10.D2
10.E
10.F1
10.F2
10.G1
10.G2
10.H
10.I
14
21
23
24
Copy of form of Restricted Stock Agreement – Executives (three-year cliff vesting), effective as of November 29,
2012, pursuant to the 2007 Viad Corp Omnibus Incentive Plan, filed as Exhibit 10 to Viad Corp’s Form 8-K filed
December 3, 2012, is hereby incorporated by reference.+
Copy of 1997 Viad Corp Omnibus Incentive Plan, as amended through February 23, 2006, filed as Exhibit 10.A to
Viad Corp’s 8-K filed February 28, 2006, is hereby incorporated by reference (SEC File No. 001-11015; SEC
Film No. 06650477).+
Copy of form of Non-Qualified Stock Option Agreement, as amended through August 13, 2004, pursuant to the
1997 Viad Corp Omnibus Incentive Plan, filed as Exhibit 10.C2 to Viad Corp’s Form 10-Q for the period ended
September 30, 2004, is hereby incorporated by reference (SEC File No. 001-11015; SEC Film No. 041123501).+
Copy of Viad Corp Deferred Compensation Plan (Executive) Amended and Restated as of August 13, 2004, filed
as Exhibit 10.A to Viad Corp’s Form 10-Q for the period ended September 30, 2004, is hereby incorporated by
reference (SEC File No. 001-11015; SEC Film No. 041123501).+
Copy of form of Viad Corp Executive Severance Plan (Tier I-2013), effective as February 27, 2013, filed as
Exhibit 10.B to Viad Corp’s Form 8-K filed March 5, 2013, is hereby incorporated by reference.+
Copy of forms of Viad Corp Executive Severance Plans (Tier I and II), amended and restated for Code Section
409A as of January 1, 2005, filed as Exhibit 10.B to Viad Corp’s Form 8-K filed August 29, 2007, is hereby
incorporated by reference (SEC File No. 001-11015; SEC Film No. 071088413).+
Copy of amendment No. 1 to Viad Corp Executive Severance Plan (Tier I), effective as of February 26, 2014,
filed as Exhibit 10 to Viad Corp’s Form 8-K filed March 4, 2014, is hereby incorporated by reference.+
Copy of Executive Officer Pay Continuation Policy adopted February 7, 2007, filed as Exhibit 10.A to Viad
Corp’s Form 8-K filed February 13, 2007, is hereby incorporated by reference (SEC File No. 001-11015; SEC
Film No. 07609762).+
Copy of Employment Agreement between Viad Corp and Paul B. Dykstra dated as of May 15, 2007, filed as
Exhibit 10.B to Viad Corp’s Form 8-K filed May 21, 2007, is hereby incorporated by reference (SEC File No.
001-11015; SEC Film No. 07867527).+
Copy of Amendment No. 1 to Employment Agreement between Viad Corp and Paul B. Dykstra effective as of
February 27, 2013, filed as Exhibit 10.A to Viad Corp’s Form 8-K filed March 5, 2013, is hereby incorporated by
reference.+
Copy of Viad Corp Supplemental TRIM Plan, as amended and restated effective January 1, 2005 for Code Section
409A, filed as Exhibit 10.E to Viad Corp’s Form 8-K filed August 29, 2007, is hereby incorporated by reference
(SEC File No. 001-11015; SEC Film No. 071088413).+
Copy of Viad Corp Supplemental Pension Plan, amended and restated as of January 1, 2005 for Code Section
409A, filed as Exhibit 10.A to Viad Corp’s Form 8-K filed August 29, 2007, is hereby incorporated by reference
(SEC File No. 001-11015; SEC Film No. 071088413).+
Copy of Viad Corp Defined Contribution Supplemental Executive Retirement Plan, effective as of January 1,
2013, filed as Exhibit 10.E to Viad Corp’s Form 8-K filed March 5, 2013, is hereby incorporated by reference.+
Summary of Compensation Program of Non-Employee Directors of Viad Corp as of January 1, 2012, filed as
Exhibit 10.G1 to Viad Corp’s 2011 Form 10-K filed March 9, 2012, is hereby incorporated by reference.+
Description of Viad Corp Director’s Matching Gift Program, filed as Exhibit 10.Q to Viad Corp’s 1999 Form 10-
K filed March 17, 2000, is hereby incorporated by reference (SEC File No. 001-11015; SEC Film No. 572329).+
Copy of form of Indemnification Agreement between Viad Corp and Directors of Viad Corp, as approved by Viad
Corp stockholders on October 16, 1987, as updated to reflect revised company name and gender-neutral
references only, and filed as Exhibit 10.I to Viad Corp’s 2008 Form 10-K filed February 27, 2009, is hereby
incorporated by reference (SEC File No. 001-11015).+
Copy of Retirement Plan for Management Employees of Brewster Inc., as amended and restated effective January
1, 2010, and filed as Exhibit 10.J to Viad Corp’s 2009 Form 10-K filed March 8, 2010, is hereby incorporated by
reference.+
Copy of Code of Ethics of Viad Corp adopted May 13, 2003, filed as Exhibit 14 to Viad Corp’s 2003 Form 10-K
filed March 11, 2004, is hereby incorporated by reference (SEC File No. 001-11015; SEC Film No. 04663620).
List of Subsidiaries of Viad Corp.*
Consent of Independent Registered Public Accounting Firm to the incorporation by reference into specified
registration statements on Form S-3 or on Form S-8 of their report contained in this Annual Report.*
Power of Attorney signed by Directors of Viad Corp.*
31.1
31.2
32.1
32.2
Exhibit of Certification of Chief Executive Officer of Viad Corp pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.#*
Exhibit of Certification of Chief Financial Officer of Viad Corp pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.#*
Additional Exhibit of Certification of Chief Executive Officer of Viad Corp pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.#**
Additional Exhibit of Certification of Chief Financial Officer of Viad Corp pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.#**
XBRL Instance Document.**
101.INS
101.SCH XBRL Taxonomy Extension Schema Document.**
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.**
101.LAB XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.**
*
Filed herewith.
**
Furnished herewith.
+
#
Management contract or compensation plan or arrangement.
A signed original of this written statement has been provided to Viad Corp and will be retained by Viad Corp and
furnished to the Securities and Exchange Commission upon request.
Documents incorporated by reference can be read and copied at the SEC’s public reference section, located in Room
1580, 100 F Street, N.E., Washington, DC 20549, and on the SEC’s Internet site at www.sec.gov.
ViaD cORP
BOaRD Of DiREctORs
Dr. Albert M.
Teplin (1, 2)
Rockville, Maryland
Retired Senior Economist, Board
of Governors of the Federal
Reserve System
Paul B. Dykstra (4)
Phoenix, Arizona
Chairman, President and Chief
Executive Officer
Andrew B. Benett (2, 4)
New Canaan, Connecticut
Global Chief Executive Officer
of Havas Worldwide and Chief
Strategy Officer of Havas
Creative Group
Daniel Boggan Jr. (2, 3)
Oakland, California
Retired Senior Vice President
and Chief Operating Officer,
National Collegiate Athletic
Association (NCAA)
Dr. Isabella
Cunningham (1, 2, 4)
Austin, Texas
Ernest A. Sharpe Centennial
Professor in Communication and
Chair of Advertising Department at
The University of Texas at Austin
Richard H. Dozer (1, 3)
Phoenix, Arizona
Former President, Arizona
Diamondbacks, and President,
US Airways Center
Robert E.
Munzenrider (1, 3)
Payson, Arizona
Retired President, Harmon
AutoGlass
Margaret E. Pederson (2, 3, 4)
New Canaan, Connecticut
President–Amirexx LLC and
Managing Director, Golden
Seeds Fund LP
Edward E. Mace (1, 3)
Denver, Colorado
President of Mace Pacific
Holding Company, LLC
Board Committees
(1) Audit Committee (Chair, Robert E. Munzenrider)
(2) Corporate Governance and Nominating Committee (Chair, Dr. Albert M. Teplin)
(3) Human Resources Committee (Chair, Richard H. Dozer)
(4) Innovation & Marketing Strategy Committee (Chair, Margaret E. Pederson)
Specialists in the Art and Science of Engagement
There’s more to a successful trade show
than meets the eye. As a global leader in
trade show and event marketing, Global
Experience Specialists (GES) unique-
ly combines the art of high-impact
creativity and service with the
science of easy-to-use technol-
ogy, strategy and worldwide
logistics
gain more awareness,
more involvement and
more value
their trade show
programs.
to help clients
from
MARkETING &
EVENTS GROUP
MARkETING &
EVENTS GROUP
Exhibitor
Services
GES
range of
marketers a
material handling,
offers
exhibitors and
full
services
and capabilities, from
rig-
ging, electrical and other
on-site services to the design
and production of compel-
ling, immersive experiences that
engage audiences and build brand
awareness. GES experts in design,
brand planning, marketing and analytics
create fully-integrated programs that weave
together exhibits, events, audio visual, and full
marketing communications, to help exhibitors
engage attendees, generate and measure leads and
improve ROI.
Show Organizer Services
GES partners with show organizers to create high-value,
face-to-face events that bring buyers and sellers together to
conduct business, learn about new products and services and
expand their business network. Along with a complete range of
at-show services, GES offers organizers a full suite of online tools and
new technologies that help them more easily manage the complexities
of a trade show.
Other Marketing Services
In addition to marketing communications offered to clients, GES partners with
leading entertainment brands, movie studios and sports marketers to generate
buzz and excitement, through national and international promotional tours, large-
scale touring exhibitions, PR events and guerilla marketing. GES also partners with
retailers to design and produce unique retail environments and experiences that drive
traffic, build brand awareness and improve sales. Retail solutions include pop-up stores and
kiosks, large-scale interactive holiday programs and unique branded installations.
TRAVEL &
RECREATION
GROUP
TRAVEL &
RECREATION
GROUP
Brewster Travel Canada (Brewster)
With expertise in travel planning, hospitality, recreational attractions and
transportation, Brewster has been delivering authentic Canadian travel
experiences to the global market for more than a century. Brewster
owns and operates three lodging properties and four recreational
attractions within Banff and Jasper National Parks. Brewster’s world-
class attractions include: the Banff Gondola; the Columbia Icefield
Glacier Adventure; the Banff Lake Cruise; and, opening in May
2014, the Glacier Skywalk. Brewster also offers in-bound pack-
age tours, corporate and event management services, luxury
motorcoach charters, guided sightseeing excursions and
convenient airport shuttle services.
Glacier Park
Glacier Park owns and operates five lodging proper-
ties that are ideally located for guests to enjoy the
infinite splendors and majestic scenery of Glacier
National Park and Waterton Lakes National Park.
Ranging from historic and rustic to upscale,
Glacier Park’s full-service lodges, inns, cabins
and hotels are where the ordinary stops
and the journey begins.
Alaska Denali Travel
As Alaska experts and Denali special-
ists, the team at Alaska Denali Travel
is committed to sharing the best
of Alaska. Alaska Denali Travel
owns and operates two lodg-
ing properties and offers
tours in and around Denali
National Park, in addition
to providing complete
ser-
vices and vacation
packages through-
travel planning
out Alaska.
Passionate Destination Experts
Viad’s Travel & Recreation Group
offers guests rich travel experiences
in iconic natural destinations in North
America through its hotels and lodges,
recreational attractions, food and bever-
age offerings, retail operations, transporta-
tion services and package tours. Composed
of Brewster Travel Canada, Glacier Park and
Alaska Denali Travel, the group has operations
in or adjacent to Glacier and Denali National
Parks
in the United States and
Banff, Jasper and Waterton
Lakes National Parks in
Canada.
Executive Officers
Paul B. Dykstra
Chairman, President &
Chief Executive Officer
Deborah J. DePaoli
General Counsel and Secretary
George N. Hines
Chief Information Officer
Ellen M. Ingersoll
Chief Financial Officer
Thomas M. Kuczynski
Chief Corporate Development &
Strategy Officer
G. Michael Latta
Chief Accounting Officer –
Controller
Steven W. Moster
Group President –
Marketing & Events
President – Global Experience
Specialists, Inc.
Shareholder Information
Annual Shareholders Meeting
The annual meeting of shareholders
will be held on:
May 22, 2014
8:00 a.m. (MST)
The Ritz Carlton
2401 East Camelback Road
Phoenix, AZ 85016
(602) 468-0700
www.ritzcarlton.com/en/Properties/Phoenix
Transfer Agent
To submit a change of address, to
make inquiries regarding dividend
payments, to mail Common Stock
certificates for transfer or to redeem
$4.75 Preferred Stock certificates,
please contact:
Wells Fargo Shareowner Services
PO Box 64874
St. Paul, MN 55164-0874
(800) 453-2235
www.wellsfargo.com/shareownerservices
Shareholders of record who receive
more than one copy of this annual
report may contact our transfer
agent and arrange to have their
accounts consolidated.
Pictured on front cover (from top to bottom):
Glacier Skywalk, Rain Room installation at MoMA, Prince of Wales Hotel
otel
85004-4565 www.viad.com
1850 North Central Avenue, Suite 1900 Phoenix, AZ 85004-4565 www.viad.com
5 www.viad.co