UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2019
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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)
(602) 207-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $1.50 Par Value
Trading Symbol(s)
VVI
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 ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files.) Yes ☒ No ☐
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
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 29, 2019) was approximately $1.3 billion.
Registrant had 20,350,597 shares of Common Stock ($1.50 par value) outstanding as of January 31, 2020.
Documents Incorporated by Reference
A portion of the Proxy Statement for the Viad Corp Annual Meeting of Shareholders scheduled for May 19, 2020, is incorporated by reference into
Part III of this Annual Report.
INDEX
Page
Business...........................................................................................................................................................2
Risk Factors .....................................................................................................................................................15
Unresolved Staff Comments............................................................................................................................18
Properties.........................................................................................................................................................18
Legal Proceedings ...........................................................................................................................................19
Mine Safety Disclosures..................................................................................................................................19
Information about our Executive Officers.......................................................................................................19
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities..............................................................................................................................................21
Selected Financial Data ...................................................................................................................................23
Management’s Discussion and Analysis of Financial Condition and Results of Operations .........................24
Quantitative and Qualitative Disclosures About Market Risk ........................................................................35
Financial Statements and Supplementary Data ...............................................................................................36
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ........................84
Controls and Procedures..................................................................................................................................84
Other Information............................................................................................................................................87
Directors, Executive Officers and Corporate Governance ..............................................................................88
Executive Compensation .................................................................................................................................88
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.............................................................................................................................................................88
Certain Relationships and Related Transactions, and Director Independence................................................88
Principal Accounting Fees and Services .........................................................................................................88
Exhibits and Financial Statement Schedule ....................................................................................................88
Form 10-K Summary ..............................................................................................................................
92
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.
Item 16.
In this report, for periods presented, “we,” “us,” “our,” “the Company,” and “Viad Corp” refer to Viad Corp and its
subsidiaries.
Forward-Looking Statements
PART I
This Annual Report on Form 10-K (“2019 Form 10-K”) contains a number of forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may appear throughout this 2019 Form
10-K, including the following sections: “Business” (Part I, Item 1), “Risk Factors” (Part I, Item 1A), “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7), and “Quantitative and
Qualitative Disclosures About Market Risk” (Part II, Item 7A). Words, and variations of words, such as “will,” “may,”
“expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “estimate,” “anticipate,” “deliver,” “seek,” “aim,”
“potential,” “target,” “outlook,” and similar expressions are intended to identify our forward-looking statements. Similarly,
statements that describe our business strategy, outlook, objectives, plans, initiatives, intentions or goals also are forward-
looking statements. These forward-looking statements are not historical facts and are subject to a host of risks and
uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those in the
forward-looking statements.
Important factors that could cause actual results to differ materially from those described in our forward-looking statements
include, but are not limited to, the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our ability to successfully integrate and achieve established financial and strategic goals from acquisitions;
fluctuations in general economic conditions;
our dependence on large exhibition event clients;
the importance of key members of our account teams to our business relationships;
the competitive nature of the industries in which we operate;
travel industry disruptions;
unanticipated delays and cost overruns of our capital projects, and our ability to achieve established financial and
strategic goals for such projects;
seasonality of our businesses;
transportation disruptions and increases in transportation costs;
natural disasters, weather conditions, and other catastrophic events;
our multi-employer pension plan funding obligations;
our exposure to labor cost increases and work stoppages related to unionized employees;
liabilities relating to prior and discontinued operations;
adverse effects of show rotation on our periodic results and operating margins;
our exposure to currency exchange rate fluctuations;
our exposure to cybersecurity attacks and threats;
compliance with laws governing the storage, collection, handling, and transfer of personal data and our exposure to
legal claims and fines for data breaches or improper handling of such data;
the effects of the United Kingdom’s exit from the European Union; and
changes affecting the LIBOR.
For a more complete discussion of the risks and uncertainties that may affect our business or financial results, refer to “Risk
Factors” (Part I, Item 1A of this 2019 Form 10-K). We disclaim and do not undertake any obligation to update or revise any
forward-looking statement in this 2019 Form 10-K except as required by applicable law or regulation.
1
Item 1. BUSINESS
We are an international experiential services company with operations in the United States, Canada, the United Kingdom,
continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our
clients and guests.
We operate through two business groups:
•
•
GES is a global, full-service live events company offering a comprehensive range of services to the world’s
leading brands and event organizers.
Pursuit is an attractions and hospitality company that provides a collection of inspiring and unforgettable
experiences in iconic destinations.
2019 REVENUE
$1.4B
2019 SEGMENT OPERATING
INCOME(1) $90.2M
16%
84%
40%
60%
GES
Pursuit
(1) We define segment operating income as net income attributable to Viad before income (loss) from discontinued
operations, corporate activities and eliminations, interest expense and interest income, income taxes, restructuring
charges, impairment charges and recoveries, the reduction for income attributable to non-redeemable noncontrolling
interest, and the addition of loss attributable to redeemable noncontrolling interest. Refer to Note 23 – Segment
Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for a
reconciliation of segment operating income to the most directly comparable GAAP measure.
GES is a global, full-service provider for live events that partners with show organizers, exhibitors, and brand marketers to
create high-value, face-to-face events. GES offers a comprehensive range of live event services, from the design and
production of compelling, immersive experiences that engage audiences and build brand awareness, to material handling,
rigging, electrical, and other on-site event services. In addition, GES offers clients a full suite of audio-visual services from
creative and technology to content and design, along with registration, data analytics, engagement, and online tools powered
by next generation technologies that help clients easily manage the complexities of their event. For eleven years, GES’
National Servicenter® has been certified under the J.D. Power and Associates Certified Call Center ProgramSM, and this past
year also received certification for Chat Channel communication. For ten consecutive years, Ad Age has recognized GES as
one of the nation’s largest experiential/event marketing agency networks. For the sixth year in a row, GES is included in
Event Marketer magazine’s Fab 50 list of the top exhibit builders.
2
GES’ clients include event organizers and corporate brand marketers. Event organizers schedule and run the event from start
to finish. Corporate brand marketers include exhibitors and domestic and international corporations that want to promote
their brands, services and innovations, feature new products, and build business relationships. GES serves corporate brand
marketers when they exhibit at shows and when GES is engaged to manage their global exhibit program or produce their
proprietary corporate events.
GES has a leading position in the U.S. with full-service operations in every major exhibition market, including Las Vegas,
Chicago, Orlando, New York, and Los Angeles. Additionally, GES has operating facilities at many of the most active and
popular international event destinations and venues in the United Kingdom, Canada, Germany, the United Arab Emirates,
and the Netherlands.
Markets Served
GES provides a full suite of services for event organizers and corporate brand marketers across four live event markets:
Exhibitions, Conferences, Corporate Events, and Consumer Events (collectively, “Live Events”).
LIVE EVENT
PRIMARY PURPOSE
Exhibitions
Facilitates business-to-business and business-to-
consumer sales and marketing.
% GES 2019
REVENUE
56%
27%
15%
2%
Conferences
Facilitates attendee education. May also include an
expo or trade show to further facilitate attendee
education and to facilitate business-to-business and
business-to-consumer sales and marketing.
Corporate Events
Facilitates attendee education of sponsoring company’s
products or product ecosystem.
Consumer Events
Entertains, educates, or creates an experience, typically
around a specific genre.
3
Services Offered
GES offers a comprehensive range of services and innovative technology, including Core Services, Event Technology, and
Audio-Visual, to event organizers and corporate brand marketers.
2019 GES Revenue
Mix
Core Services 88%
Event Technology 3%
Audio-Visual 9%
Core Services
GES provides official contracting services and products to event organizers and corporate brand
marketers, which are provided primarily to Exhibitions and Conferences and to a lesser extent to
Corporate Events and Consumer Events.
Under various agreements with Live Event organizers, GES has the exclusive right to provide certain
contracting services to participating exhibitors. This gives exhibitors a single point of contact to
facilitate a timely, safe, and efficient move-in/out of a Live Event and to facilitate an organized,
professional, during-show experience. GES also competes with other service providers to sell
discretionary services to exhibitors.
Exclusive Services
Discretionary Services
Corporate Brand
Marketers
Material handling
Electrical
distribution
Cleaning
Plumbing
Overhead rigging
Booth rigging
Event Organizers
Event planning and
production
Look and feel design
Layout and floor plan
designs
Furnishings and carpet
Show traffic analysis
Marketing and strategy
Electrical distribution
Cleaning
Plumbing
Overhead rigging
Booth rigging
Exclusive Products
Event Organizers
Signage
Common area structures
Corporate Brand Marketers
Creative design and strategy
Data analytics and insights
Integrated marketing and pre/post event
communications
Event surveys
Return on investment analysis
Online management tools
Attendee/exhibit booth traffic analysis
Staff training
Logistics/transportation
Exhibit storage/refurbishment
Furnishings and carpet
Installation and dismantling labor
Tradeshow program management
Discretionary Products
Corporate Brand Marketers
Custom exhibit design/construction
Portable/modular exhibits and design
Graphics and signage
4
Event accommodation solutions:
Researching and selection of local hotels
•
• Negotiating and contracting
•
Room block management
• Group reservation management
•
Rate integrity and monitoring
• Marketing services
• On-site services
•
Post-event reporting
Event Technology
Registration and data analytics:
Registration and ticketing
Lead management
Reporting and analytics
•
•
•
• Web-based enterprise-wide application
•
Software-as-a-service model or partial and fully managed options
Event management tools:
• Online ordering capabilities
•
•
•
Sponsorship management solutions
Content management systems
Live Event tracking
Audio-Visual
• Video production
•
Lighting design
• Digital studio services
•
•
•
Entertainment services and talent coordination
Projection mapping
Computer rental and support
5
Seasonality and Show Rotation
GES’ exhibition and event activity can vary significantly from quarter to quarter and year to year depending on the frequency
and timing of shows. Some shows are not held annually and some shift between quarters. During 2019 and 2018, GES
reported its highest revenue during second and fourth quarters. The following show rotation revenue metric refers to the net
change in revenue from 2018 to 2019 due to show movement between quarters and years. Show rotation refers to shows that
occur less frequently than annually, as well as annual shows that shift quarters from one year to the next.
GES Revenue
(in millions)
2019 Show Rotation Revenue
(in millions)
40
20
0
-20
-40
-60
Q1
Q2
Q3
Q4
2019
2018
400.0
300.0
200.0
100.0
-
Competition
Q1
Q2
Q3
Q4
In the Live Events industry, GES generally competes across all classes of services and all markets on the basis of discernible
differences, value, quality, price, convenience, and service. GES has a competitive advantage through its worldwide network
of resources, history of serving as an extension of clients’ teams, experienced and knowledgeable personnel, client focus,
creativity, reliable execution, proprietary technology platforms, and financial strength. All known U.S. competitors and most
international competitors are privately held companies that provide limited public information regarding their operations.
GES’ primary competitor within its Core Services is a privately-held, U.S.-headquartered company; however, there is
substantial competition from a large number of service providers in GES’ other service offerings.
Growth Strategy
GES is committed to becoming the preferred global, full-service provider for Live Events. GES has combined the art of high-
impact creativity, service, and expertise with the science of easy-to-use technology, strategy, and worldwide logistics to help
clients gain a greater return from their events and enhance the exhibitor and attendee experience. GES holds leading market
positions in Exhibitions and Conferences and is pursuing a focused and disciplined growth strategy with the goal of
expanding its market share in the currently under-penetrated Corporate Events market. We expect to accomplish this by
acquiring businesses and capitalizing on organic opportunities that further the following goals:
•
•
•
Global Reach. Leverage global capabilities and large customer base to drive continued growth in new services
and other Live Events.
Full-Service Provider. Growth of adjacent services to create a unique and integrated offering to deepen client
relationships, expand client base, and increase share of total event spend.
Live Events. Penetration into other Live Events to leverage our existing capabilities and gain more corporate
clients.
6
Pursuit is an attractions and hospitality company that provides a collection of inspiring and unforgettable travel experiences
in iconic destinations. From world-class attractions, distinctive lodges, and engaging tours in stunning national parks and
renowned global travel locations, to our growing collection of FlyOver flight ride experiences in the vibrant cities of
Vancouver, Reykjavik, Las Vegas (anticipated opening in 2021), and Toronto (anticipated opening in 2022), Pursuit’s
elevated hospitality experiences enable visitors to discover and connect with these iconic destinations. With a strategic
direction to build an expanding portfolio of extraordinary experiences, Pursuit remains focused on refreshing, improving, and
growing its collection in outstanding places around the globe. Pursuit draws its guests from major markets, including the
United States, Canada, China, the United Kingdom, Australia/New Zealand, Asia Pacific, and Europe. Pursuit markets
directly to consumers, as well as through distribution channels that include tour operators, tour wholesalers, destination
management companies, and retail travel agencies. Pursuit comprises the following collections:
Banff Jasper Collection
Alaska Collection
Glacier Park Collection
FlyOver Attractions
With over 120 years of history in Canada’s oldest national parks, the
Banff Jasper Collection provides experiential travel experiences in the
majestic Canadian Rockies. Featuring sun-swept lake cruises in Banff
and Jasper National Parks, top-of-the-mountain views at the Banff
Gondola, and glacier exploration at the toe of the Columbia Icefield,
the collection offers visitors unique hotel experiences, attractions,
culinary destinations and retail offerings. The collection is also
complemented by a robust sightseeing tour and transportation
portfolio.
From the dramatic and rugged landscapes of Denali National Park to
the glaciers, fjords and lush vegetation surrounding Kenai Fjords
National Park, the Alaska Collection offers wilderness tours and
glacier cruises complemented by unique lodging experiences across
some of Alaska’s most recognizable interior and southcentral
landscapes. From the port town of Seward, to the authentic mountain
town of Talkeetna to the end of the road in Denali National Park,
Pursuit offers a collection of unique attractions and hotels,
complemented by culinary and retail services.
Located in and around two stunning national parks, the Glacier Park
Collection features lodging, culinary and retail experiences and
attractions designed to enable guests to experience both Montana and
Southern Alberta’s stunning outdoors. The collection’s unique
portfolio of lodging surrounding Glacier and Waterton Lakes National
Parks also includes three historic lodges built by the Great Northern
Railroad along with RV and rustic cabin stays.
Pursuit’s FlyOver flight ride attractions provide guests with an
exhilarating flying experience over iconic natural wonders, hard to
reach locations, and picturesque scenery. Utilizing state-of-the-art ride
and audiovisual technology, each FlyOver experience features moving
ride vehicles with six degrees of motion, multi-sensory special effects,
and a spherical screen that provides guests with a flight across
stunning landscapes. Special effects, including wind, mist and scents,
combine with the ride’s motion to create an unforgettable visceral
experience.
7
Pursuit’s collection of experiences focuses on four distinct lines of business. These include attractions, including food and
beverage services and retail operations; hospitality, including food and beverage services and retail operations; transportation;
and travel planning.
Banff Jasper Collection
Banff Gondola transports visitors to an elevation of
over 7,000 feet above sea level to the top of Sulphur
in Banff, Alberta, Canada offering an
Mountain
unobstructed view of
the Canadian Rockies and
overlooking the town of Banff and the Bow Valley. The
Banff Gondola has been honored with two Top Project
Awards from Alberta Construction Magazine. The
Banff Gondola’s winning categories
the
People’s Choice Award in 2016 and the Commercial
Award (Under $50 Million) in 2016. The Banff Gondola
received the Trip Advisor Certificate of Excellence.
include
Lake Minnewanka Cruise provides guests a unique
sightseeing experience through interpretive boat cruises
on Lake Minnewanka in the Canadian Rockies. The
Lake Minnewanka Cruise operations are
located
adjacent to the town of Banff and include boat tours,
small boat rentals, and charter fishing expeditions. The
Lake Minnewanka Cruise received the Trip Advisor
Certificate of Excellence.
Attractions
is a
tour of
Columbia Icefield Adventure
the
Athabasca Glacier on the Columbia Icefield, and
provides guests a view of one of
largest
accumulations of ice and snow south of the Arctic
Circle. Guests ride in a giant “Ice Explorer,” a unique
vehicle specially designed for glacier travel. The
Columbia Icefield Adventure received the Trip Advisor
Certificate of Excellence.
the
Columbia Icefield Skywalk is a 1,312-foot guided
interpretive walkway with a 98-foot glass-floored
observation area overlooking the Sunwapta Valley, in
close proximity to our Columbia Icefield Adventure
attraction in Jasper National Park, Alberta, Canada.
Since opening in 2014, the Columbia Icefield Skywalk
continues to win awards and receive international
and
innovative
recognition
environmentally sound architecture,
the
prestigious Governor General’s Medals in Architecture
in 2016.
design
including
for
its
8
Attractions
Maligne Lake Cruise provides interpretive boat tours
at Maligne Lake, the largest lake in Jasper National
Park, Alberta, Canada. In addition to boat tours,
Maligne Lake has a marina and day lodge that offers
food and beverage and retail services, an historic chalet
complex and boat house that offers canoes, kayaks, and
rowboats for rental. Maligne Lake Cruise received the
Trip Advisor Certificate of Excellence.
Alaska Collection
Kenai Fjords Tours is a leading Alaska wildlife and
glacier day cruise, offering guests unforgettable sights
of towering glaciers, humpback and grey whales, orcas,
arctic birdlife, sea lions, seals, and porpoises of Kenai
Fjords National Park. Tours range from a few hours to
full days, with some tours including a full meal of wild
Alaskan salmon, prime rib, and Alaskan King Crab on
Fox Island. Kenai Fjords Tours received the Trip
Advisor Certificate of Excellence.
lagoon. Located
Sky Lagoon
Sky Lagoon In July 2019, Pursuit announced plans to
expand its collection of travel experiences in Iceland
the development of a premium oceanfront
with
geothermal
in Kársnes Harbour,
Kópavogur, just minutes from Reykjavik’s vibrant city
centre and iconic urban landmarks, the sky lagoon will
showcase expansive ocean vistas punctuated by awe-
inspiring sunsets, Northern Lights and dark sky views.
Development of the new sky lagoon kicked off in 2019,
with the anticipated opening in 2021.
FlyOver Attractions
FlyOver Canada Since opening in June 2013 along
Vancouver’s widely recognized waterfront in the
heart of downtown, over two million riders have
ride
experienced FlyOver Canada. The
attraction utilizes state-of-the-art
to
reveal some of Canada’s most awe-inspiring sights
as guests hang suspended, feet dangling, before a
65-foot spherical screen while the film whisks
guests away on an exhilarating journey across the
country. The flight ride, complemented by an
immersive pre-show experience, has received the
TripAdvisor Certificate of Excellence.
flight
technology
9
FlyOver Iceland is an exhilarating flying experience
over some of the country’s most iconic natural
wonders, hard to reach locations and picturesque
scenery. The attraction opened in August 2019 along
the historic harbor in Reykjavik’s popular Grandi
Harbour District, just minutes from downtown. The
attraction also features two pre-ride multi-sensory
experiences featuring Icelandic glaciers, volcanos, and
folklore to complement the overall FlyOver experience.
In February 2019, Pursuit
FlyOver Las Vegas
announced the expansion of the flight ride concept to
Las Vegas. Modeled after Pursuit’s successful FlyOver
Canada attraction, FlyOver Las Vegas will provide
guests with an exhilarating flight experience over the
locations,
Southwest’s most
American
picturesque
scenery and natural wonders. With
construction scheduled to begin in 2020, the new
attraction to be located on Las Vegas Boulevard is
anticipated to open in 2021.
iconic
FlyOver Canada Toronto In July 2019, Pursuit
announced the expansion of a new FlyOver attraction to
be located at the base of the famed CN Tower in
Toronto’s Entertainment District. The new experience
will feature a brand-new ride film showcasing Canada’s
most awe-inspiring sights and will include the creation
of two immersive pre-ride experiences housed in a
newly constructed iconic building. Construction on the
new building is expected to begin in 2020, with an
anticipated opening in 2022.
Banff Jasper Collection
•
Elk + Avenue Hotel (164 rooms)
• Mount Royal Hotel (133 rooms)
• Glacier View Lodge (32 rooms)
•
Sawridge Inn & Conference Centre (152
rooms)
•
Lobstick Lodge (139 rooms)
• Chateau Jasper Hotel (119 rooms)
• Marmot Lodge (107 rooms)
•
•
•
The Crimson Hotel (99 rooms)
Pyramid Lake Resort (62 rooms)
Pocahontas Cabins (56 rooms)
Attractions
Hospitality
10
Alaska Collection
• Denali Backcountry Lodge (42 rooms)
• Denali Cabins (46 rooms)
•
• Windsong Lodge (216 rooms)
• Kenai Fjords Wilderness Lodge (8 rooms)
Talkeetna Alaskan Lodge (212 rooms)
Hospitality
Glacier Park Collection
• Glacier Park Lodge (162 rooms)
• Grouse Mountain Lodge (145 rooms)
•
St. Mary Lodge (116 rooms)
•
Prince of Wales Hotel (86 rooms)
• Apgar Village Lodge (48 rooms)
• West Glacier Motel & Cabins (32 rooms)
•
• Motel Lake McDonald (27 rooms)
• West Glacier RV Park & Cabins (20 rooms)
Belton Chalet (27 rooms)
Transportation
The Banff Jasper Collection:
Transportation operations include sightseeing tours, airport shuttle services, and seasonal charter
motorcoach services. The sightseeing services include seasonal half- and full-day tours from Calgary,
Banff, Lake Louise, and Jasper, Canada and bring guests to the most scenic areas of Banff, Jasper,
and Yoho National Parks. The charter business operates a fleet of luxury motorcoaches, available for
groups of any size, for travel throughout the Canadian provinces of Alberta and British Columbia
during the winter months. In 2020, we expect to launch a new historic sightseeing experience in the
heart of Banff, with Open Top Touring.
Alaska Collection:
Transportation includes a Denali Backcountry Adventure, which is a unique photo safari tour 92
miles deep into Denali National Park.
The Banff Jasper Collection:
Travel planning services include 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, accommodations, event management,
theme development, production, and audio-visual services. The Banff Jasper Collection also owns
and operates eight Pursuit Adventure Centers, which help guests book their leisure activities in Banff
and Jasper National Parks.
Travel Planning
Alaska Collection:
Travel planning services provide complete travel planning services throughout Alaska.
11
Seasonality
Pursuit experiences peak activity during the summer months. During 2019, 85% of Pursuit’s revenue was earned in the
second and third quarters.
2019 Pursuit Revenue
(in millions)
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Q1
Q2
Q3
Q4
Competition
Pursuit generally competes on the basis of location, uniqueness of facilities, service, quality, and price. Competition exists
both locally and regionally across all four lines of business. The hospitality industry has a large number of competitors and
competes for leisure travelers (both individual and tour groups) across the United States and Canada. Pursuit’s competitive
advantage is its distinctive attractions, iconic destinations, and strong culture of hospitality and guest services.
Growth Strategy
Pursuit’s growth strategy is to become a leading attractions hospitality company through its Refresh-Build-Buy initiatives:
•
•
•
Refresh. Refreshing our existing assets and processes to optimize guest experience, market position, and
maximize returns
Build. Building new assets that create new guest experiences and additional revenue streams with economies of
scale and scope
Buy. Buying strategic assets that drive guest experience, economies of scale and scope, and improving financial
performance
We continue to search for opportunities to acquire or to build high return tourism assets in iconic natural and cultural
destinations that enjoy perennial demand, bring meaningful scale and market share, and offer cross-selling advantages with a
combination of attractions and hotels.
Recent Pursuit Developments
Banff Jasper Collection:
•
•
Acquisition of Mountain Park Lodges – On June 8, 2019, we acquired a 60% equity interest in Mountain Park
Lodges’ group of seven hotels and an undeveloped land parcel located in Jasper National Park. The seven hotels
include: Sawridge Inn and Conference Centre; Pyramid Lake Resort; The Crimson Hotel; Chateau Jasper;
Pocahontas Cabins; Marmot Lodge; and Lobstick Lodge.
Renovation of Glacier View Lodge – In June 2019, we completed the renovation of our 32-room Glacier View
Lodge in Jasper National Park. The renovation includes an elevated lodging experience that matches its
incredible views of the majestic Columbia Icefield. The Glacier View Lodge has been included in Fodor’s 100
most incredible hotels in the world and top five hotels in Canada.
12
Alaska Collection:
•
Expansion of the Windsong Lodge – In June 2019, we completed the expansion of the Windsong Lodge, one of
our hospitality properties located in Seward, Alaska, near Kenai Fjords National Park. This expansion features 36
new guestrooms, six of which are suites.
Glacier Park Collection:
•
•
Acquisition of Belton Chalet – On May 16, 2019, we acquired the historic Belton Chalet, which is located just
outside the west entrance to Glacier National Park and includes 27 rooms and dining.
RV and Cabin Park Development – On July 1, 2019, we opened our new RV and cabin park located at the
Glacier National Park entrance. These fully equipped RV sites and cabins include 102 RV slips, 20 guest cabins,
five employee housing cabins, guest registration, and a laundromat.
Sky Lagoon:
•
Development of Sky Lagoon – On July 25, 2019, we announced plans for a new geothermal lagoon attraction
that will be located on an oceanfront lot just outside downtown Reykjavik, Iceland. We expect to open our new
attraction in 2021.
FlyOver Attractions:
•
•
•
•
Expansion of FlyOver Concept in Las Vegas – On February 26, 2019, we announced the expansion of our
flight ride theater concept into Las Vegas, Nevada, which is scheduled to open in 2021.
Expansion of FlyOver in Toronto, Canada – On July 25, 2019, we announced plans for the expansion of our
flight ride theater concept into Toronto, Canada. We were awarded the right to construct the new attraction near
the base of Canada’s CN Tower in the Entertainment District. We expect construction to begin in 2020, and the
new attraction to open in 2022.
Opening of FlyOver Iceland. We opened our flight ride theater concept in Iceland’s capital city of Reykjavik in
August 2019.
Improvements to FlyOver Canada Exterior Structure – In September 2019, we completed the construction
and development of a new guest experience building that includes an expanded retail store, new café, and an
enhanced post-show.
Intellectual Property
Our intellectual property rights (including trademarks, patents, copyrights, registered designs, technology, and know-how)
are material to our business.
We own or have the right to use numerous trademarks and patents in many countries. Depending on the country, trademarks
remain valid for as long as we use them, or as long as we maintain their registration status. Trademark registrations are
generally for renewable, fixed terms. We also have patents for current and potential products. Our patents cover inventions
ranging from a modular structure having a load-bearing surface that we use in our event and exhibition services, to a surface-
covering installation tool and method that reduces our labor costs and improves worker safety. Our U.S. issued utility patents
extend for 20 years from the patent application filing date, and our U.S. issued design patents are currently granted for 14
years from the grant date. We also have an extensive design library. Many of the designs have copyright protection and we
have also registered many of the copyrights. In the U.S., copyright protection is for 95 years from the date of publication or
120 years from creation, whichever is shorter. While we believe that certain of our patents, trademarks, and copyrights have
substantial value, the loss of any one of them would not have a material adverse effect on our financial condition or results of
operations.
Our Trademarks
Our U.S. registered trademarks and trademarks pending registration include Global Experience Specialists & design®,
GES®, GES Servicenter®, GES National Servicenter®, GES MarketWorks®, GES Measurement & Insight®, GES Project
Central, The Art and Science of Engagement®, Trade Show Rigging TSR®, TSE Trade Show Electrical & design®, Earth
Explorers®, Compass Direct®, ethnoMetrics®, eXPRESSO®, FIT®, ON Services, a GES Company & design®, ON Site
Audio Visual & design®, FLYOVER® & design, eco-sense®, ONPEAK®, Mount Royal, Above Banff®, Alaska Denali
Travel®, Alaska Denali Escapes®, Alaska Heritage Tours®, by Pursuit, Kenai Fjords Tours & design®, Kenai Fjords
13
Wilderness Lodge® & design, Seward Windsong Lodge & design®, Talkeetna Alaskan Lodge®, Explore Rockies®, Denali
Backcountry Adventure®, Denali Backcountry Lodge®, and Denali Cabins & design®.
We also own or have the right to use many registered trademarks and trademarks pending registration outside of the United
States, including GES®, ShowTech®, Poken®, Visit®, Visit by GES®, Blitz, a GES Company & design®, Brewster Inc. &
design®, Brewster Attractions Explore & design®, Brewster Hospitality Refresh & design®, Glacier Skywalk®, Above
Banff®, Explore Rockies®, FLYOVER & design®, FLYOVER ICELAND & design, FLYOVER Canada & design, GES Event
Intelligence AG®, Pursuit®, by Pursuit®, Soaring Over Canada®, Elk + Avenue Hotel®, Brewster Epic Summer Pass®,
and escape.connect.refresh.explore®.
Government Regulation and Compliance
Compliance with legal requirements and government regulations represents a normal cost of doing business. The principal
rules and regulations affecting our day-to-day business relate to transportation (such as regulations promulgated by the U.S.
Department of Transportation and its state counterparts), our 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), U.S. and Canadian regulations relating to national parks (such as regulations
established by Parks Canada, the U.S. Department of the Interior, and the U.S. National Park Service), and U.S. and
Canadian regulations relating to boating (such as regulations implemented by the U.S. and Canadian Coast Guard and state
boating laws).
Some of our 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 our 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 we do
not expect them to have, a material effect on our capital expenditures, competitive position, financial condition, or results of
operations.
Employees
We had the following number of employees as of December 31, 2019:
GES..........................................................................................................................................................
Pursuit......................................................................................................................................................
Viad Corporate ........................................................................................................................................
Total...................................................................................................................................................
(1)
Includes 1,109 employees covered by collective bargaining agreements.
Number of
Employees (1)
4,223
1,085
53
5,361
We believe that relations with our employees are good and that collective bargaining agreements expiring in 2020 will be
renegotiated in the ordinary course of business without a material adverse effect on our operations.
We are governed by a Board of Directors comprising seven non-employee directors and one employee director, and we have
an executive management team with eight executive officers.
Available Information
We were incorporated in Delaware in 1991. Our common stock trades on the New York Stock Exchange under the symbol
“VVI.”
Our website address is www.viad.com. All of our SEC filings, including our Annual Reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are available free of charge on our website as
soon as reasonably practicable after we electronically file that material with, or furnish it to, the SEC. The information
contained on our website is neither a part of, nor incorporated by reference into, this 2019 Form 10-K. The SEC’s website,
www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC.
14
Our investor relations website is www.viad.com/investors/investor-center/default.aspx and includes key information about
our corporate governance initiatives, including our Corporate Governance Guidelines, our Board of Directors committee
charters, our Code of Ethics, and information concerning our Board members and how to communicate with them.
Item 1A. RISK FACTORS
Our operations and financial results are subject to known and unknown risks. As a result, past financial performance and
historical trends may not be reliable indicators of our future performance.
Completed acquisitions may not perform as anticipated or be integrated as planned. We regularly evaluate and pursue
opportunities to acquire businesses that complement, enhance, or expand our current business, or offer growth opportunities.
Our acquired businesses might not meet our financial and non-financial expectations or yield anticipated benefits. Our
success depends, in part, on our ability to conform controls, policies and procedures, and business cultures; consolidate and
streamline operations and infrastructures; identify and eliminate redundant and underperforming operations and assets;
manage inefficiencies associated with the integration of operations; and retain the acquired business’s key personnel and
customers. Moreover, our acquisition activity may subject us to new regulatory requirements, distract our senior management
and employees, and expose us to unknown liabilities or contingencies that we may fail to identify prior to closing. If our
acquisitions cause us to make changes to our business strategy or if external conditions adversely affect our business
operations, we may also be required to record an impairment charge to goodwill or intangible assets. Additionally, we may
borrow funds to finance strategic acquisitions. Debt leverage resulting from future acquisitions would reduce our debt
capacity, increase our interest expense, and limit our ability to capitalize on future business opportunities. Such borrowings
may also be subject to fluctuations in interest rates. Any of these risks could materially and adversely affect our business,
product and service sales, financial condition, and results of operations.
We are vulnerable to deterioration in general economic conditions. Our business is sensitive to fluctuations in general
economic conditions in the U.S. and other global markets in which we operate. A decline in global or regional economic
conditions, or consumers’ fears that economic conditions will decline, could cause declining consumer confidence,
unemployment, fluctuations in stock markets and interest rates, contraction of credit availability, or other dynamic factors
affecting economic conditions generally. The success of our GES business largely depends on the number of exhibitions
held, the size of exhibitors’ marketing expenditures, and on the strength of particular industries in which exhibitors operate.
The number and size of exhibitions generally decrease when the economy weakens. We also could suffer from reduced
spending for our services because many exhibitors’ marketing budgets are partly discretionary and are frequently among the
first expenditures reduced when economic conditions deteriorate. In addition, revenue from our Pursuit operations depends
largely on the amount of disposable income that consumers have available for travel and vacations, which decreases during
periods of weak general economic conditions. As a result, any deterioration in general economic conditions could materially
and adversely affect our business, product sales, financial condition, and results of operations.
We depend on our large exhibition event clients to renew their service contracts and on our exclusive right to provide
those services. GES has a number of large exhibition event organizers and large customer accounts. If any of these large
clients do not renew their service contracts, our results of operations could be materially and adversely affected.
Moreover, when event organizers hire GES as the official services contractor, they usually also grant GES an exclusive right
to perform material handling, electrical, rigging, and other services at the exhibition facility. However, some exhibition
facilities have taken certain steps to in-source certain event services (either by performing the services themselves or by
hiring a separate service provider) as a result of conditions generally affecting their industry, such as an increased supply of
exhibition space. If exhibition facilities choose to in-source certain event services, GES will lose the ability to provide certain
event services, and our results of operations could be materially and adversely affected.
Our business is relationship driven. Our GES business is heavily focused on client relationships, and, specifically, on having
close collaboration and interaction with our clients. To be successful, our account teams must be able to understand clients’
desires and expectations in order to provide top-quality service. If we are unable to maintain our client relationships,
including due to the loss of key members of our account teams, we could also lose customers and our results of operations
could be materially and adversely affected.
We operate in highly competitive and dynamic industries. Competition in the Live Events markets is driven by price and
service quality, among other factors. To the extent competitors seek to gain or retain market presence through aggressive
underpricing strategies, we may be required to lower our prices and rates to avoid the loss of related business. Moreover,
recent customer consolidations and other actions have caused downward pricing pressure for our products and services and
could affect our ability to negotiate favorable terms with our customers. If we are unable to anticipate and respond as
effectively as our competitors to changing business conditions, including new technologies and business models, we could
15
lose market share. Our inability to meet the challenges presented by the competitive and dynamic environment of our
industry could materially and adversely affect our results of operations.
Travel industry disruptions, particularly those affecting the hotel and airline industries, could adversely affect our
business. Our business depends largely on the ability and willingness of people, whether exhibitors, exhibition attendees,
tourists, or others, to travel. Factors adversely affecting the travel industry, and particularly the airline and hotel industries,
generally also adversely affect our business and results of operations. Factors that could adversely affect the travel industry
include high or rising fuel prices, increased security and passport requirements, weather conditions, health epidemics and
pandemics, airline accidents, acts of terrorism, and international political instability and hostilities. For example, the recent
outbreak of respiratory illness caused by a new coronavirus that surfaced in the Hubei Province of China, resulted in (i) major
U.S. airlines canceling all flights into and out of China, (ii) the U.S. limiting the airports at which China flights may enter the
U.S., and (iii) the U.S. imposing the first federally mandated quarantine in more than 50 years for passengers who had
traveled to the Hubei Province. Any of these factors, or other unexpected events that affect the availability and pricing of air
travel and accommodations, could materially and adversely affect our business and results of operations.
New capital projects may not be commercially successful. From time to time, we pursue capital projects, such as our current
construction of FlyOver Las Vegas, FlyOver Canada Toronto, the Sky Lagoon, and other efforts to upgrade some of our
Pursuit offerings, in order to enhance and expand our business. Capital projects are subject to a number of risks, including
unanticipated delays, cost overruns, and the failure to achieve established financial and strategic goals, as well as additional
project-specific risks. The occurrence of any of these events could prevent a new capital project from performing in
accordance with our commercial expectations and could materially and adversely affect our business and results of
operations.
The seasonality of our business makes us particularly sensitive to adverse events during peak periods. The peak activity for
our Pursuit business is during the summer months, as 85% of Pursuit’s 2019 revenue was earned in the second and third
quarters. Our GES exhibition and event activity varies significantly because it is based on the frequency and timing of shows,
many of which are not held each year, and which may shift between quarters. If adverse events or conditions occur during
these peak periods, our results of operations could be materially and adversely affected.
Transportation disruptions and increases in transportation costs could adversely affect our business and results of
operations. GES relies on independent transportation carriers to send materials and exhibits to and from exhibition,
warehouse, and customer facilities. If our customers and suppliers are unable to secure the services of those independent
transportation carriers at favorable rates, it could materially and adversely affect our business and results of operations. In
addition, disruption of transportation services due to weather-related problems, labor strikes, lockouts, or other events could
adversely affect our ability to supply services to customers and could cause the cancellation of exhibitions, which could
materially and adversely affect our business and results of operations.
Natural disasters, weather conditions, and other catastrophic events could negatively affect our business. The occurrence
of catastrophic events ranging from natural disasters (such as hurricanes, fires, floods, and earthquakes), acts of war or
terrorism, accidents involving our travel offerings or experiences, the effects of climate change, including any impact of
global warming, or the prospect of these events could disrupt our business. Changes in climates may increase the frequency
and intensity of adverse weather patterns and make certain destinations less desirable. Such catastrophic events have, and
could have, an adverse impact on Pursuit, which is heavily dependent on the ability and willingness of its guests to travel
and/or visit our attractions. Pursuit guests tend to delay or postpone vacations if natural conditions differ from those that
typically prevail at competing lodges, resorts, and attractions, and catastrophic events and heightened travel security
measures instituted in response to such events could impede the guests’ ability to travel, and interrupt our business
operations, including damaging our properties. Such catastrophic events could also have a negative impact on GES, causing a
cancellation of exhibitions and other events held in public venues or disrupt the services we provide to our customers at
convention centers, exhibition halls, hotels, and other public venues. Such events could also have a negative impact on GES’
production facilities, preventing us from timely completing exhibit fabrication and other projects for customers. In addition,
unfavorable media attention, or negative publicity, in the wake of a catastrophic event could damage our reputation or reduce
the demand for our services. If the conditions arising from such events persist or worsen, they could materially and adversely
affect our results of operations and financial condition.
Our participation in multi-employer pension plans could substantially increase our pension costs. We sponsor a number of
defined benefit plans for our U.S. and Canada-based employees. In addition, we are obligated to contribute to multi-employer
pension plans under collective bargaining agreements covering our union-represented employees. We contributed $27.3
million in 2019, $26.4 million in 2018, and $26.6 million in 2017 to those multi-employer pension plans. Third-party boards
of trustees manage these multi-employer plans. Based upon the information we receive from plan administrators, we believe
that several of those multi-employer plans are underfunded. The Pension Protection Act of 2006 requires us to reduce the
16
underfunded status over defined time periods. Moreover, we would be required to make additional payments of our
proportionate share of a plan’s unfunded vested liabilities if a plan terminates, or other contributing employers withdraw, due
to insolvency or other reasons, or if we voluntarily withdraw from a plan. In 2019, we finalized the terms of a new collective
bargaining agreement with the Teamsters Local 727 union. The terms included a withdrawal from the underfunded Central
States Pension Plan. Accordingly, we recorded a charge of $15.5 million, which represents the estimated present value of
future contributions we will be required to make as a result of the union’s withdrawal and $0.2 million of other withdrawal
costs. At this time, we do not anticipate triggering any withdrawal from any other multi-employer pension plan to which we
currently contribute. However, significant plan contribution increases could materially and adversely affect our consolidated
financial condition, results of operations, and cash flows. Refer to Note 18 – Pension and Postretirement Benefits of the
Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.
Union-represented labor increases our risk of higher labor costs and work stoppages. Significant portions of our
employees are unionized. We have approximately 100 collective bargaining agreements, and we are required to renegotiate
approximately one-third of those each year. If we increase wages or benefits as a result of labor negotiations, either our
operating margins will suffer, or we could increase the cost of our services to our customers, which could lead those
customers to turn to other vendors with lower prices. Either event could materially and adversely affect our business and
results of operations.
Additionally, if we are 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. If that happens, we might be unable to find substitute workers with the
necessary skills to perform many of the services, or we may incur additional costs to do so, both of which could materially
and adversely affect our business and results of operations.
Liabilities relating to prior and discontinued operations may adversely affect our results of operations. We and our
predecessors have a corporate history spanning decades and involving diverse businesses. Some of those businesses owned
properties and used raw materials that have been, and may continue to be, subject to litigation. Moreover, some of the raw
materials used and the waste produced by those 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, we may incur other liabilities resulting from indemnification claims
involving previously sold properties and subsidiaries, or obligations under defined benefit plans or other employee plans, as
well as claims from past operations of predecessors or their subsidiaries. Although we believe we have adequate reserves and
sufficient insurance coverage to cover those future liabilities, future events or proceedings could render our reserves or
insurance protections inadequate, any of which could materially and adversely affect our business and results of operations.
Show rotation affects our profitability and makes comparisons between periods difficult. GES results 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, three, or four years) or may be held at different times of the year from when they were previously held.
In addition, the same exhibition may change locations from year to year resulting in lower margins if the exhibition shifts to a
higher-cost location. Any of these factors could cause our results of operations to fluctuate significantly from quarter to
quarter or from year to year, making periodic comparisons difficult.
We are subject to currency exchange rate fluctuations. We have operations outside of the U.S. primarily in Canada, the
United Kingdom, Iceland, the Netherlands, and Germany. During 2019, GES EMEA, GES Canada, and Pursuit’s
international operations accounted for approximately 33% of our consolidated revenue and 66% of our segment operating
income. Consequently, a significant portion of our business is exposed to currency exchange rate fluctuations. We do not
currently hedge equity risk arising from the translation of non-U.S. denominated assets and liabilities. Our financial results
and capital ratios are sensitive to movements in currency exchange rates because a large portion of our assets, liabilities,
revenue, and expenses must be translated into U.S. dollars for reporting purposes. The unrealized gains or losses resulting
from the currency translation are included as a component of accumulated other comprehensive income (loss) in our
consolidated balance sheets. As a result, significant fluctuations in currency exchange rates could result in material changes
to the net equity position we report in our consolidated balance sheets.
We are vulnerable to cybersecurity attacks and threats. We regularly collect and process credit, financial, and other personal
and confidential information from individuals and entities who attend or participate in events and exhibitions that we
produce, or who visit our attractions and other offerings. In addition, our devices, servers, computer systems, and business
systems are vulnerable to cybersecurity risk, including cyberattacks, or we may be the target of email scams that attempt to
acquire personal information and company assets. Despite our efforts to protect ourselves with insurance, and create security
barriers to such threats, including regularly reviewing our systems for vulnerabilities and continually updating our
protections, we might not be able to entirely mitigate these risks. Our failure to effectively prevent, detect, and recover from
the increasing number and sophistication of information security threats could lead to business interruptions, delays or loss of
17
critical data, misuse, modification, or destruction of information, including trade secrets and confidential business
information, reputational damage, and third-party claims, any of which could materially and adversely affect our results of
operations.
Laws and regulations relating to the handling of personal data are evolving and could result in increased costs, legal
claims, or fines. We store and process the personally identifiable information of our customers, employees, and third parties
with whom we have business relationships. The legal requirements restricting the way we store, collect, handle, and transfer
personal data continue to evolve, and there are an increasing number of authorities issuing privacy laws and regulations.
These data privacy laws and regulations are subject to differing interpretations, creating uncertainty and inconsistency across
jurisdictions. Our compliance with these myriad requirements could involve making changes in our services, business
practices, or internal systems, any of which could increase our costs, lower revenue, or reduce efficiency. Our failure to
comply with existing or new rules could result in significant penalties or orders to stop the alleged noncompliant activity,
litigation, adverse publicity, or could cause our customers to lose trust in our services. In addition, if the third parties we work
with violate applicable laws, contractual obligations, or suffer a security breach, those violations could also put us in breach
of our obligations under privacy laws and regulations. In addition, the costs of maintaining adequate protection, including
insurance protection against such threats, as they develop in the future (or as legal requirements related to data security
increase) are expected to increase and could be material. Any of these risks could materially and adversely affect our business
and results of operations.
The United Kingdom’s exit from the European Union could adversely affect our business. We operate substantial parts of
our EU businesses from U.K.-based entities. On January 31, 2020, the U.K. officially withdrew from the EU. The final terms
of the withdrawal are being negotiated with the transition period ending on December 31, 2020. The withdrawal could disrupt
the free movement of goods, services, and people between the U.K. and the EU. Moreover, the regulatory and legal
environment that will govern our U.K. operations is uncertain. Any new arrangements may require us to make changes to our
operations in Europe, which could result in a higher cost and less efficient operating model across our European business.
These new arrangements could adversely affect our business and results of operations.
Changes affecting the availability of the London Inter-bank Offered Rate (“LIBOR”) or increases in interest rates may
have consequences for us that cannot yet be reasonably predicted. Viad has outstanding debt with variable interest rates
based on LIBOR. Borrowings under the 2018 Credit Facility are indexed to the prime rate or LIBOR, plus appropriate
spreads tied to our leverage ratio. The LIBOR benchmark has been the subject of national, international, and other regulatory
guidance and proposals to reform. In July 2017, the United Kingdom Financial Conduct Authority (the authority that
regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.
These reforms may cause LIBOR to perform differently than in the past and LIBOR may ultimately cease to exist after 2021.
Our 2018 Credit Facility includes a method for determining an alternative or successor rate of interest that gives
consideration to the new prevailing market convention. The alternative rate could affect the Company's debt and debt
payments. At this time, it is not possible to predict the effect of any changes to LIBOR, any phase out of LIBOR or any
establishment of alternative benchmark rates. Any new benchmark rate will likely not replicate LIBOR exactly, which could
impact our contracts which terminate after 2021. There is uncertainty about how applicable law, the courts or the Company
will address the replacement of LIBOR with alternative rates. If LIBOR ceases to exist after 2021, the interest rates under our
revolving credit facility and the discount rates we apply to finance lease obligations will be based on the alternative rate,
which may result in higher interest rates and debt obligations. In addition, any increases to our benchmark interest rates could
have an uncertain impact on our cost of funds and our access to the capital markets, which could impact our results of
operations and cash flows. Uncertainty as to the nature of such potential changes may also adversely affect the trading market
for our securities.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 2. PROPERTIES
We lease our corporate headquarters in Phoenix, Arizona. Our other principal properties are owned or leased by GES and
Pursuit.
GES primarily leases its properties, both domestically and internationally. GES properties consist of offices and multi-use
facilities. Multi-use facilities include manufacturing, sales and design, office, storage and/or warehouse, and truck marshaling
yards. Multi-use facilities vary in size up to approximately 677,800 square feet in the U.S. and approximately 136,000 square
feet in the United Kingdom.
18
Pursuit primarily owns its properties, both domestically and internationally. Pursuit’s properties mainly include attractions,
hotels and lodges, retail stores, and offices. Properties located in Canada and Iceland are subject to multiple long-term ground
leases with their respective governments. For further information on Pursuit’s attractions and hospitality assets, refer to the
Business Section (Part I, Item 1 of this 2019 Form 10-K).
We believe our owned and leased properties are adequate and suitable for our business operations and that capacity is
sufficient for current needs. For additional information related to our lease obligations, refer to Note 12 – Debt and Finance
Lease Obligations and Note 20 – Leases and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this
2019 Form 10-K).
Item 3. LEGAL PROCEEDINGS
Refer to Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II,
Item 8 of this 2019 Form 10-K) for information regarding legal proceedings in which we are involved.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Other. INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Our executive officers as of the date of this 2019 Form 10-K were as follows:
Name
Steven W. Moster
Age Business Experience During the Past Five Years and Other Information
50
President and Chief Executive Officer of Viad since 2014; President of GES from November
2010 to February 2019; prior thereto, held various executive management roles within the
GES organization, including Executive Vice President-Chief Sales & Marketing Officer
from 2008 to February 2010; Executive Vice President-Products and Services from 2006 to
2008; and Vice President-Products & Services Business from 2005 to 2006; and prior
thereto, Engagement Manager, Management Strategy Consulting for McKinsey & Company,
a global management consulting firm, from 2000 to 2004. Mr. Moster is a director of Cavco
Industries, Inc (NASDAQ: CVCO), which designs and produces factory-built housing
products, and serves as the Chair of the Compensation Committee.
Ellen M. Ingersoll
55
Chief Financial Officer since July 2002; prior thereto, Vice President-Controller or similar
position since 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, a real estate investment trust, from 1992 to 2000.
David W. Barry
Derek P. Linde
Trisha L. Fox
57 President of Pursuit since June 2015; prior thereto, Chief Executive Officer and President of
Trust Company of America, an independent registered investment adviser custodian, from
2011 to June 2015; prior thereto, Chief Executive Officer of Alpine/CMH, a helicopter
skiing company, from 2007 to 2011; and prior thereto, Chief Operating Officer for all U.S.
resort operations of Intrawest Corporation (formerly NYSE: IDR) (now Alterra Mountain
Company) a North American mountain resort and adventure company, from 2004 to 2007.
44 General Counsel and Corporate Secretary since 2018; prior thereto, Deputy General Counsel
and Assistant Secretary at Illinois Tool Works Inc. (NYSE: ITW), a diversified manufacturer
of specialized industrial equipment, from 2014 to 2018, and Associate General Counsel and
Assistant Secretary from 2011 to 2014; prior thereto, a partner at the law firm of Winston &
Strawn LLP, from 2008 to 2011, and an Associate from 2000 to 2008.
50 Chief Human Resources Officer since 2018; prior thereto, Executive Vice President, Human
Resources, from 2016 to 2018; prior thereto, Senior Vice President at Fifth Third Bank
Chicago, (NASDAQ: FITB), a diversified financial services company, from 2011 to 2016;
prior thereto, Director, then Senior Director, Human Resources at Dean Foods Company
(NYSE:DF), a food and beverage company, from 2009 to 2011; prior thereto, various roles
of increasing responsibility in Human Resources at PepsiCo, Inc. (NASDAQ: PEP), a global
food and beverage company from 1999 to 2009.
19
Jay A. Altizer
Richard A. Britton
49 President of GES since October 2019; prior thereto, President, GES North America; prior
thereto, Managing Director of Falling Branch Advisors LLC, a management advisory firm,
from May 2015 to May 2018; prior thereto, Sr. Vice President and General Manager of
Saputo Inc. (TSX: SAP), a global dairy producer, from September 2007 to April 2015; prior
thereto, General Manager at Morningstar Foods, a Dean Foods Company (NYSE:DF), a
food and beverage company, from September 2010 to January 2013, and Vice President of
Strategy from September 2007 to September 2010; prior thereto, Sr. Manager of Strategy
and Business Development of PepsiCo, Inc. (NASDAQ: PEP), a global food and beverage
company from July 2005
thereto, General Manager at
Exhibitgroup/Giltspur, a former Viad marketing and events division, from May 2004 to June
2005; and prior thereto, Manager at Bain & Company from August 2000 to May 2004. Mr.
Altizer has been a Director of the following two non-profits: On the Road Lending, since
May 2013, and Chairman since 2017; and Champion Impact Capital, where he is also
Treasurer, since May 2013.
to August 2007; prior
59 Chief Information Officer since 2018; prior thereto, Executive Vice President, Information
Technology, from 2015 to 2018; prior thereto, 16 years in various roles of increasing
responsibility in the Healthcare and Reinsurance divisions of General Electric Company
(NYSE:GE), a global digital industrial company, including Executive IT Leader at GE
Healthcare from 2007 to October 2015.
Leslie S. Striedel
57
Chief Accounting Officer since 2014; prior thereto, Vice President of Finance from March
2014 to April 2014; prior thereto, Vice President of Finance and Administration or similar
positions with Colt Defense LLC, a firearms manufacturer, from 2010 to 2013; prior thereto,
Vice President of Finance, Director of Financial Reporting and Compliance, and Corporate
Controller of White Electronics Designs Corp. (formerly NASDAQ: WEDC) (now a
subsidiary of Microsemi Corporation, a wholly owned subsidiary of Microchip Technology
Inc.), a circuits and semiconductors manufacturer, from 2004 to 2010; and prior thereto,
Corporate Controller of MD Helicopters, an international helicopter manufacturer, from
2002 to 2004; prior thereto, Corporate Controller of Fluke Networks (formerly Microtest,
Inc. NASDAQ: MTST), a manufacturing and technology company, from 1999 to 2002; and
prior thereto, Senior Tax Manager for KPMG LLP, a global firm providing audit, tax, and
advisory services, from 1998 to 1999.
Our executive officers’ term of office is until our next Board of Directors annual organization meeting to be held on May 19,
2020.
20
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
PART II
Market Information
Our common stock is traded on the New York Stock Exchange under the symbol VVI.
Holders
As of January 31, 2020, there were 4,969 shareholders of record of our common stock, including 223 shareholders that had
not converted their shares following a reverse stock split effective on July 1, 2004.
Issuer Purchases of Equity Securities
Total Number of
Shares Purchased
Average Price Paid
Per Share
Total Number of Shares
Purchased as Part of Publicly
Announced Plans or
Programs
Period
October 1, 2019 - October 31, 2019
November 1, 2019 - November 30,
2019..................................................
December 1, 2019 - December 31,
2019..................................................
Total .................................................
409 $
67.41
— $
— $
409 $
—
—
67.41
Maximum Number of Shares
That May Yet Be Purchased
Under the Plans or Programs
600,067
—
—
—
—
600,067
600,067
600,067
Pursuant to previously announced authorizations, our Board of Directors has authorized us to repurchase shares of our
common stock from time to time at prevailing market prices. Effective February 7, 2019, our Board of Directors approved an
additional 500,000 shares to repurchase. No shares were repurchased on the open market during the three months ended
December 31, 2019. The Board’s authorization has no expiration date. During the fourth quarter of 2019, certain previously
owned shares of common stock were surrendered by employees, former employees, and non-employee directors for tax
withholding requirements on vested share-based awards. We returned $2.0 million to shareholders during the fourth quarter
of 2019 in the form of dividends. We expect to pay comparable dividends in the future.
21
Performance Graph
The following graph compares the change in the cumulative total shareholder return, from December 31, 2014 to
December 31, 2019, on our common stock, the Standard & Poor’s SmallCap 600 Media Index, the Standard & Poor’s
SmallCap 600 Commercial Services & Supplies Index, the Standard & Poor’s SmallCap 600 Index, the Russell 2000 Index,
and Standard & Poor’s 500 Index (assuming reinvestment of dividends, as applicable). The graph assumes $100 was invested
on December 31, 2014.
$300
$250
$200
$150
$100
$50
$-
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
Viad Corp
Russell 2000
S&P 500
S&P SmallCap 600
S&P 600 Comm. Services & Supplies
S&P 600 Media Index
2014
2015
2016
2017
2018
2019
Year Ended December 31,
Viad Corp .............................................................. $ 100.00 $ 107.42 $ 169.75 $ 214.96 $ 195.81 $ 265.57
S&P 500 ................................................................ $ 100.00 $ 101.37 $ 113.49 $ 138.26 $ 132.19 $ 173.80
95.59 $ 115.93 $ 132.88 $ 118.23 $ 148.36
Russell 2000 .......................................................... $ 100.00 $
97.99 $ 123.92 $ 140.22 $ 128.27 $ 157.44
S&P SmallCap 600 ............................................... $ 100.00 $
97.59 $ 124.58 $ 133.40 $ 119.47 $ 147.53
S&P SmallCap 600 Comm. Services & Supplies $ 100.00 $
94.53 $ 108.97 $ 127.33 $ 136.73
S&P SmallCap 600 Media .................................... $ 100.00 $ 105.36 $
22
Item 6. SELECTED FINANCIAL DATA
(in thousands, except per share data)
Summary Statement of Operations Data
Revenue (1) .............................................................................................. $
Income from continuing operations (2).................................................... $
Income from continuing operations attributable to Viad common
stockholders......................................................................................... $
Basic and diluted income from continuing operations attributable to
Viad common stockholders per share ................................................. $
Dividends declared per common share .................................................. $
(in thousands)
Summary Balance Sheet Data
2019
Year Ended December 31,
2017
2016
2018
2015
1,371,695 $
23,604 $
1,296,184 $
$
47,914
1,306,965 $
$
58,452
1,204,970 $
$
43,479
1,089,048
27,442
22,116 $
47,689
1.02 $
0.40 $
2.33
0.40
$
$
$
57,975
2.84
0.40
2019
2018
December 31,
2017
$
$
$
$
$
$
$
$
$
42,953
2.12
0.40
2016
20,900
869,816
249,211
—
370,638
13,283
$
$
$
$
$
$
$
$
$
27,000
1.34
0.40
2015
56,531
690,723
127,403
—
335,338
12,757
Cash and cash equivalents ............................................................... $
Total assets ...................................................................................... $
Total debt and finance lease obligations.......................................... $
Redeemable noncontrolling interest (3) ............................................ $
Total stockholders’ equity ............................................................... $
Non-redeemable noncontrolling interest ......................................... $
61,999 $
1,318,691 $
340,492 $
6,172 $
547,229 $
79,731 $
44,893
922,541
230,121
5,909
450,555
14,348
$
$
$
$
$
$
53,723
919,899
209,192
6,648
442,937
13,806
(1)
(2)
The 2019 amounts include an aggregate of $19.9 million in revenue from the Mountain Park Lodges and the Belton
Chalet acquisitions. The 2017 amounts include $1.4 million in revenue from our Poken acquisition. The 2016 amounts
include an aggregate $55.7 million in revenue from our acquisitions of ON Event Services, LLC, CATC Alaska
Tourism Corporation, Maligne Lake Tours Ltd. (“Maligne Lake Tours”), and FlyOver Canada. Refer to Note 4 –
Acquisitions of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K).
Income from continuing operations includes the following items:
•
•
•
•
•
Multi-employer pension plan withdrawal, pre-tax, of $15.7 million in 2019. Refer to Note 18 – Pension and
Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-
K).
Restructuring charges, pre-tax, of $8.4 million in 2019, $1.6 million in 2018, $1.0 million in 2017, $5.2 million
in 2016, and $3.0 million in 2015. Refer to Note 19 – Restructuring Charges of the Notes to Consolidated
Financial Statements (Part II, Item 8 of this 2019 Form 10-K).
Legal settlement, pre-tax, of $8.5 million in 2019. Refer to Note 21 – Litigation, Claims, Contingencies, and
Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K).
Impairment charges (recoveries), pre-tax, net, of $5.3 million in 2019, $(35) thousand in 2018, $(29.1) million in
2017, $0.2 million in 2016, and $0.1 million in 2015. Refer to Note 9 – Goodwill and Other Intangible Assets
and Note 7 – Property and Equipment of the Notes to Consolidated Financial Statements (Part II, Item 8 of this
2019 Form 10-K).
Income tax expense in 2019 included a $4.5 million benefit resulting from the re-measurement of our Alberta
deferred tax liabilities due to a statutory rate reduction. Income tax expense in 2018 included a $3.1 million
benefit related to the Tax Cuts and Jobs Act (the “Tax Act”) and a $0.9 million charge for an increase in our
valuation allowance for certain foreign net operating losses. Income tax expense in 2017 included a $16.1 million
charge related to the Tax Act. Income tax expense in 2015 included a $1.6 million non-cash tax benefit related to
deferred taxes associated with certain foreign intangibles. Refer to Note 17 – Income Taxes of the Notes to
Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K).
(3)
On November 3, 2017, we acquired the controlling interest (54.5% of the common stock) in Esja, a private corporation
in Reykjavik, Iceland. The minority Esja shareholders have the right to sell (or “put”) their Esja shares to us based on a
calculated formula within a predefined term. Refer to Note 22 – Redeemable Noncontrolling Interest of the Notes to
Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K).
23
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the consolidated
financial statements and related notes. The MD&A is intended to assist in understanding our financial condition and results
of operations. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated due to various factors discussed under “Risk Factors,” “Forward-Looking
Statements,” and elsewhere in this 2019 Form 10-K.
Overview
We are an international experiential services company with operations in the United States, Canada, the United Kingdom,
continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our
clients and guests. We operate through three reportable business segments: GES North America, GES EMEA, (collectively,
“GES”), and Pursuit.
GES is a global, full-service Live Events company that produces exhibitions, conferences, corporate events, and consumer
events. GES offers a comprehensive range of live event services including a full suite of audio-visual services from creative
and technology to content and design, along with registration, data analytics, engagement, and online tools powered by next
generation technologies that help clients easily manage the complexities of their events.
Pursuit is an attraction and hospitality company that provides a collection of inspiring and unforgettable travel experiences in
iconic destinations. From world-class attractions, distinctive lodges and engaging tours in stunning national parks and
renowned global travel locations, to our growing collection of FlyOver flight ride experiences, Pursuit’s elevated hospitality
experiences enable visitors to discover and connect with these iconic destinations.
24
Results of Operations
A discussion related to our results of operations for 2019 compared to 2018 is presented below. A discussion related to our
results of operations for 2018 compared to 2017 can be found under Part II, Item 7 of our Annual Report on Form 10-K for
the year ended December 31, 2018, filed with the SEC on February 27, 2019, and is incorporated herein by reference.
Financial Highlights
(in thousands, except per share data)
Total revenue ....................................................................... $
Net income attributable to Viad .......................................... $
Segment operating income(1) ............................................... $
Diluted income per common share from continuing
operations attributable to Viad common stockholders ........ $
Year Ended December 31,
2019
1,371,695 $
22,035 $
90,243 $
2018
1,296,184
49,170
88,517
1.02 $
2.33
Change vs. 2018
5.8%
(55.2)%
1.9%
(56.2)%
•
•
•
Total revenue increased $75.5 million, mainly due to continued growth from GES’ corporate clients and other
new client wins, underlying growth at Pursuit, incremental revenue from Pursuit’s Mountain Park Lodges and
Belton Chalet acquisitions, and the opening of several new build and refresh projects at Pursuit, offset in part by
negative show rotation of approximately $15 million at GES and an unfavorable foreign exchange impact of
$13.3 million.
Net income attributable to Viad decreased $27.1 million, primarily due to charges related to our partial
withdrawal from the Central States Pension Plan of $15.7 million ($11.7 million after tax), a legal settlement
charge of $8.5 million ($6.4 million after tax), higher restructuring charges, and an asset impairment charge of
$5.3 million ($4.3 million after tax), primarily related to our audio-visual production business in the United
Kingdom, offset in part by a decrease in income tax expense and higher segment operating results at Pursuit.
Total segment operating income(1) increased $1.7 million, primarily due to the increase in revenue, offset in
part by higher accruals for performance-based incentives, the revenue mix at GES, and additional costs to
support the growth initiatives of Pursuit.
(1)
Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019
Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly
comparable GAAP measure.
Foreign Exchange Rate Variances
We conduct our foreign operations primarily in Canada, the United Kingdom, the Netherlands, Germany, and to a lesser
extent, in certain other countries.
The following table summarizes the foreign exchange rate variance effects (or “FX Impact”) on revenue and segment
operating income from our significant international operations:
Revenue
Segment Operating Income
Weighted-Average
Exchange Rates
2019
2018
FX Impact
(in thousands)
Weighted-Average
Exchange Rates
2019
2018
FX Impact
(in thousands)
GES North America:
Canada (CAD) .................................................. $
0.75 $
0.77 $
(1,611) $
0.75 $
0.77 $
(191)
GES EMEA:
United Kingdom (GBP) .................................... $
Europe (EUR) ................................................... $
1.27 $
1.12 $
1.34
1.18
(7,381) $
(2,171) $
(9,552)
1.27 $
1.11 $
1.31
1.17
Pursuit:
Canada (CAD) .................................................. $
0.75 $
0.77
$
(2,125) $
(13,288)
0.76 $
0.77
$
(50)
(204)
(254)
(208)
(653)
Revenue and segment operating income were primarily impacted by variances of the British pound, the Canadian dollar, and
the Euro relative to the U.S. dollar. Future changes in exchange rates may impact overall expected profitability and historical
period-to-period comparisons when revenue and segment operating income are translated into U.S. dollars.
25
Analysis of Revenue and Operating Results by Reportable Segment
GES
During the first quarter of 2019, we realigned GES’ organizational structure. As a result, we changed GES’ reportable
segments to reflect how our chief operating decision maker regularly reviews and makes decisions regarding the allocation of
resources. Accordingly, GES’ new reportable segments are GES North America and GES EMEA.
The following table presents a comparison of GES’ reported revenue and segment operating income to organic revenue(1) and
organic segment operating income(1) for the years ended December 31, 2019 and 2018.
Year Ended December 31, 2019
Year Ended December 31, 2018
Change vs. 2018
As Reported Acquisitions
FX
Impact
Organic(1)
As Reported Acquisitions Organic(1)
As
Reported
Organic(1)
(in thousands)
Revenue:
GES:
North America $ 936,032 $
EMEA .............
233,591
Intersegment
eliminations .....
(20,741)
Total GES........... $1,148,882 $
Segment
operating
income(2):
GES:
North America $
EMEA .............
Total GES........... $
27,659 $
8,274
35,933 $
— $ (1,611) $ 937,643 $ 909,790 $
218,247
—
243,143
(9,552)
—
(17,140)
— $(11,163) $1,160,045 $1,110,897 $
(20,741)
—
— $ 909,790
218,247
—
2.9%
7.0%
3.1%
11.4%
—
(17,140)
— $1,110,897
(21.0)%
3.4%
(21.0)%
4.4%
— $
—
— $
(191) $
(254)
(445) $
27,850 $
8,528
36,378 $
29,981 $
9,621
39,602 $
— $
—
— $
29,981
9,621
39,602
(7.7)%
(14.0)%
(9.3)%
(7.1)%
(11.4)%
(8.1)%
(1)
(2)
Organic revenue and organic segment operating income are non-GAAP financial measures that adjust for the impacts of
exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable
periods presented. For more information about organic revenue and organic segment operating income, see the “Non-
GAAP Measures” section of this MD&A.
Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019
Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly
comparable GAAP measure.
GES North America
GES North America revenue increased $26.2 million or 2.9%, primarily due to continued growth from corporate clients
and other new client wins and U.S. base same-show revenue growth of 1.3%, offset in part by negative show rotation of
approximately $27 million and an unfavorable FX Impact of $1.6 million. Base same-show revenue represented 29.7% of
2019 GES North America’s organic revenue. Organic revenue* increased $27.9 million or 3.1%.
GES North America segment operating income decreased $2.3 million or 7.7%, primarily due to accruals for
performance-based incentives earned in 2019 and the revenue mix. Organic segment operating income* decreased $2.1
million or 7.1%.
GES EMEA
GES EMEA revenue increased $15.3 million or 7.0%, primarily due to positive show rotation of approximately $12 million,
new client wins, and growth from the underlying business, offset in part by an unfavorable FX Impact of $9.6 million.
Organic revenue* increased $24.9 million or 11.4%.
GES EMEA segment operating income decreased $1.3 million or 14.0%, primarily due to the revenue mix, the timing of
certain expenses, and accruals for performance-based incentives earned in 2019. Organic segment operating income*
decreased $1.1 million or 11.4%.
* Refer to footnote (1) in the above table for more information about the non-GAAP financial measures of organic revenue
and organic segment operating income.
26
Pursuit
The following table presents a comparison of Pursuit’s reported revenue and segment operating income to organic revenue(3)
and organic segment operating income(3) for the years ended December 31, 2019 and 2018.
Year Ended December 31, 2019
Year Ended December 31, 2018
Change vs. 2018
(in thousands)
Revenue(1):
Pursuit:
As
Reported Acquisitions(2)
FX
Impact Organic(3)
As
Reported Acquisitions Organic(3)
As
Reported
Organic(3)
Attractions .................. $110,369 $
Hospitality .................. 94,149
Transportation ............ 14,861
Travel Planning ..........
4,504
Intra-Segment
Eliminations & Other
(1,070)
Total Pursuit..................... $222,813 $
Segment operating
income(4):
Total Pursuit..................... $ 54,310 $
— $(1,470) $111,839 $103,830 $
(361) 74,636 64,620
(271) 15,132 14,070
4,375
4,547
19,874
—
—
(43)
—
(1,608)
19,874 $(2,125) $205,064 $185,287 $
(1,090)
20
— $103,830
— 64,620
— 14,070
4,375
—
6.3%
45.7%
5.6%
2.9%
7.7%
15.5%
7.5%
3.9%
(1,608)
—
— $185,287
33.5%
20.3%
32.2%
10.7%
5,693 $ (208) $ 48,825 $ 48,915 $
— $ 48,915
11.0%
(0.2)%
(1)
Revenue by line of business does not agree to Note 2 – Revenue and Related Contract Costs and Contract Liabilities of
the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) as the amounts in the above
table include product revenue from food and beverage and retail operations within each line of business.
(2) Acquisitions include Mountain Park Lodges (acquired June 2019) and Belton Chalet (acquired May 2019).
(3)
Organic revenue and organic segment operating income are non-GAAP financial measures that adjust for the impacts
of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both
comparable periods presented. For more information about organic revenue and organic segment operating income, see
the “Non-GAAP Measures” section of this MD&A.
Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019
Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly
comparable GAAP measure.
(4)
Pursuit revenue increased $37.5 million or 20.3%, primarily due to incremental revenue from the Mountain Park Lodges
and the Belton Chalet acquisitions of $19.9 million, the opening of several new build and refresh projects, and stronger
performance from our existing assets, offset in part by an unfavorable FX Impact of $2.1 million. Organic revenue* increased
$19.8 million or 10.7%.
Pursuit segment operating income increased $5.4 million or 11.0%, primarily due to incremental segment operating income
of $5.7 million from the Mountain Park Lodges and Belton Chalet acquisitions and an increase in revenue from our existing
assets, offset in part by additional costs to support the continued expansion of the business, including an increase of $4.5
million in depreciation and amortization expense and an unfavorable FX impact of $0.2 million. Organic operating income*
decreased $0.1 million or 0.2%.
* Refer to footnote (3) in the above table for more information about the non-GAAP financial measures of organic revenue
and organic segment operating income.
27
Performance Measures
We use the following key business metrics to evaluate the performance of Pursuit’s attractions business:
•
•
•
Number of visitors. The number of visitors allows us to assess the volume of tickets sold at each attraction
during the period.
Revenue per attraction visitor. Revenue per attraction visitor is calculated as total attractions revenue divided
by the total number of visitors at all Pursuit attractions during the period. Total attractions revenue includes ticket
sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total
attractions revenue per visitor measures the total spend per visitor that attraction properties are able to capture,
which is important to the profitability of the attractions business.
Effective ticket price. Effective ticket price is calculated as revenue from the sale of attraction tickets divided by
the total number of visitors at all comparable Pursuit attractions during the period.
We use the following key business metrics, common in the hospitality industry, to evaluate Pursuit’s hospitality business:
•
•
•
Revenue per Available Room. RevPAR is calculated as total rooms revenue divided by the total number of
room nights available for all comparable Pursuit 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 per available room for comparable hospitality properties. RevPAR is affected by average daily rate and
occupancy, which have different implications on profitability.
Average Daily Rate. ADR is calculated as total rooms revenue divided by the total number of room nights sold
for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that
the hospitality properties are able to realize. Increases in ADR 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. Occupancy is calculated as the total number of room nights sold divided by the total number of
room nights available for all comparable Pursuit 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 increases in ancillary non-rooms revenue (including food and beverage and retail
revenue).
The following table provides Pursuit’s same-store key performance indicators. The same-store metrics indicate the
performance of all Pursuit’s properties and attractions that we owned and operated at full capacity, considering seasonal
closures, for the entirety of both periods presented. For Pursuit properties and attractions located outside of the U.S.,
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 FX Impact. We believe this same-store constant currency basis provides better
comparability between reporting periods.
Year Ended December 31,
2019
2018
Change vs.
2018
Same-Store Key Performance Indicators (1)
Attractions:
Number of visitors...............................................................................
Revenue per attraction visitor ............................................................. $
Effective ticket price ........................................................................... $
2,348,069
46
35
$
$
2,443,624
42
33
Hospitality:
Room nights available.........................................................................
RevPAR............................................................................................... $
ADR .................................................................................................... $
Occupancy...........................................................................................
234,938
$
150
$
215
69.8%
230,710
142
200
70.7%
(3.9)%
9.5%
6.1%
1.8%
5.6%
7.5%
(0.9)%
(1)
Same-Store Key Performance Indicators for attractions exclude FlyOver Iceland (opened August 2019). Same-Store
Key Performance Indicators for hospitality exclude the West Glacier RV Park & Cabins (opened July 2019), the
Mountain Park Lodges (acquired in June 2019), the Belton Chalet (acquired in May 2019), and the Mount Royal
Hotel, which was closed from December 2016 through June 2018 for reconstruction due to fire damage.
28
Attractions. The decrease in same-store visitors was driven by the impact of softer visitation from select long-haul markets
at certain attractions. Revenue per attraction visitor increased primarily due to higher effective ticket prices and ancillary
revenue driven at our recently refreshed experiences and dynamic pricing.
Hospitality. The increase in RevPAR was primarily due to higher ADR driven by our refreshed properties, including the
recently renovated Glacier View Lodge and the Mount Royal Hotel, and revenue management efforts across all our
properties.
During 2019, Pursuit derived approximately 66% of its revenue and 88% of its segment operating income from its Canadian
operations, which are largely dependent on foreign customer visitation. Accordingly, the strengthening or weakening of the
Canadian dollar, relative to other currencies, could affect customer volumes and the results of operations.
Other Expenses
(in thousands)
Corporate activities ............................................... $
Interest expense ..................................................... $
Multi-employer pension plan withdrawal ............. $
Other expense ........................................................ $
Restructuring charges ............................................ $
Legal settlement .................................................... $
Impairment charges (recoveries) ........................... $
Income tax expense ............................................... $
Income (loss) from discontinued operations ......... $
** Change is greater than +/- 100%.
Year Ended December 31,
2019
2018
Change vs. 2018
10,865 $
14,199 $
15,693 $
1,586 $
8,380 $
8,500 $
5,346 $
2,506 $
(81) $
10,993
9,640
—
1,744
1,587
—
(35)
17,095
1,481
(1.2)%
47.3%
**
(9.1)%
**
**
**
(85.3)%
**
Corporate Activities – The decrease in corporate activities expense during 2019 relative to 2018 was primarily due to a gain
on sale of corporate fixed assets and foreign currency exchange, offset in part by higher acquisition transaction-related costs
in 2019.
Interest Expense – The increase in interest expense relative to 2018 was primarily due to higher debt balances in 2019.
Multi-Employer Pension Plan Withdrawal – During 2019, we finalized the terms of a new collective bargaining agreement
with the Teamsters 727 union. The terms included a withdrawal from the underfunded Central States Pension Plan.
Accordingly, we recorded a charge of $15.5 million, which represents the estimated present value of future contributions we
will be required to make to the plan as a result of this withdrawal and $0.2 million of other withdrawal costs.
Other Expense – Other expense primarily represents the nonservice cost component of net periodic benefit cost.
Restructuring Charges – Restructuring charges during 2019 were primarily related to the elimination of certain positions at
GES, our corporate headquarters, and Pursuit, in addition to facility consolidations at GES. Restructuring charges during
2018 were primarily related to the elimination of certain positions at GES and Pursuit.
Legal Settlement – During 2019, we recorded a charge to resolve a legal dispute at GES involving a former industry
contractor.
Impairment Charges (Recoveries) – We recorded asset impairment charges of $5.3 million during the fourth quarter of
2019 primarily related to our audio-visual production business in the United Kingdom.
Income Tax Expense – Our effective income tax rate for 2019 was 9.6% as compared to 26.3% for 2018. The decrease in
the effective rate was primarily related to a $4.5 million benefit resulting from the re-measurement of our Alberta deferred
tax liabilities due to a statutory rate reduction, higher foreign tax credits generated, and lower state taxes, partially offset by
the mix of domestic versus foreign income, which is taxed at higher rates.
Income (Loss) from Discontinued Operations – Loss from discontinued operations during 2019 was primarily related to
legal expenses related to previously sold operations. Income from discontinued operations during 2018 was primarily related
to a favorable legal settlement related to previously sold operations, offset in part by legal expenses related to previously sold
operations.
29
Liquidity and Capital Resources
Cash and cash equivalents were $62.0 million as of December 31, 2019, as compared to $44.9 million as of December 31,
2018. During the year ended December 31, 2019, we generated net cash from operating activities of $108.1 million. We
believe that our existing sources of liquidity will be sufficient to fund operations and capital commitments for at least the next
12 months.
As of December 31, 2019, we held approximately $59.0 million of our cash and cash equivalents outside of the United States,
consisting of $22.8 million in Canada, $11.9 million in the Netherlands, $11.1 million in the United Kingdom, $9.2 million in
the United Arab Emirates, and $4.0 million in other countries.
Cash Flows
Operating Activities
(in thousands)
Net income.................................................................................................................... $
Depreciation and amortization......................................................................................
Deferred income taxes ..................................................................................................
(Income) loss from discontinued operations.................................................................
Restructuring charges ...................................................................................................
Legal settlement............................................................................................................
Impairment charges (recoveries) ..................................................................................
Multi-employer pension plan withdrawal.....................................................................
Other non-cash items ....................................................................................................
Changes in assets and liabilities ...................................................................................
Net cash provided by operating activities ........................................................... $
Year Ended December 31,
2019
2018
23,523 $
58,964
(10,398)
81
8,380
8,500
5,346
15,693
9,506
(11,455)
108,140 $
49,395
56,842
5,350
(1,481)
1,587
—
(35)
—
9,649
(30,712)
90,595
Net cash provided by operating activities increased $17.5 million, primarily due to a decrease in cash paid for taxes and lower
performance-based compensation payments.
Investing Activities
(in thousands)
Capital expenditures ..................................................................................................... $
Cash paid for acquisitions, net......................................................................................
Proceeds from dispositions of property and other assets..............................................
Net cash used in investing activities..................................................................... $
Year Ended December 31,
2019
2018
(76,147)
(90,992)
1,583
(165,556)
$
$
(83,345)
(4,628)
925
(87,048)
Net cash used in investing activities increased $78.5 million, primarily due to the Mountain Park Lodges, the Belton Chalet,
and the Sky Lagoon attraction acquisitions in 2019.
Financing Activities
(in thousands)
Proceeds from borrowings............................................................................................ $
Payments on debt and finance lease obligations...........................................................
Dividends paid on common stock.................................................................................
Distributions to noncontrolling interest ........................................................................
Debt issuance costs .......................................................................................................
Payment of payroll taxes on stock-based compensation through shares withheld or
repurchased ...................................................................................................................
Common stock purchased for treasury .........................................................................
Proceeds from exercise of stock options ......................................................................
Net cash provided by (used in) financing activities............................................ $
Year Ended December 31,
2019
2018
200,473
(115,708)
(8,094)
(407)
(39)
(3,046)
—
293
73,472
$
$
146,580
(128,211)
(8,154)
—
(1,823)
(1,209)
(17,174)
84
(9,907)
30
The change in net cash provided by (used in) financing activities of $83.4 million was primarily due to net debt proceeds of
$84.8 million during 2019 compared to $18.4 million during 2018, as well as the repurchase of treasury shares on the open
market in 2018.
Debt and Finance Lease Obligations
Refer to Note 12 – Debt and Finance Lease Obligations of the Notes to Consolidated Financial Statements (Part II, Item 8 of
this 2019 Form 10-K) for further discussion.
Guarantees
Refer to Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II,
Item 8 of this 2019 Form 10-K) for further discussion.
Share Repurchases
Our Board of Directors has authorized us to repurchase shares of our common stock from time to time at prevailing market
prices. Effective February 7, 2019, our Board of Directors authorized the repurchase of an additional 500,000 shares. No
shares were repurchased on the open market during 2019. During 2018, we repurchased 340,473 shares on the open market
for $17.2 million. As of December 31, 2019, 600,067 shares remained available for repurchase. The Board of Directors’
authorization does not have an expiration date.
Additionally, we repurchased shares related to tax withholding requirements on vested restricted share-based awards.
Contractual Obligations
The following table presents our contractual obligations as of December 31, 2019.
(in thousands)
Revolver borrowings........................................................ $ 317,071 $ 313,407 $
22,180
Operating leases ............................................................... 105,031
Pension and postretirement benefits (1).............................
4,387
58,050
Purchase obligations (2) ....................................................
73,633
77,075
3,386
25,257
Finance lease obligations .................................................
Total contractual obligations (3)............................... $ 582,484 $ 416,993 $
Total
2020
Payments due by period
2021-2022
3,664 $
29,304
9,066
3,324
5,674
51,032 $
2023-2024 Thereafter
—
35,592
35,561
—
12,430
83,583
— $
17,955
9,036
118
3,767
30,876 $
(2)
(1) We have included the estimated payments due as a result of our withdrawal from the Central States pension plan.
Estimated contributions related to multi-employer benefit plans are excluded from the table above. Refer to Note 18 –
Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019
Form 10-K) for further information.
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.
Aggregate self-insurance liabilities are excluded from the table above as the timing and amounts of future cash
outflows are uncertain. Redeemable noncontrolling interest is also excluded from the above table as the redemption
value of the put option and the timing and amounts of future cash outflows is uncertain. Refer to Note 10 – Other
Current Liabilities, Note 11 – Other Deferred Items and Liabilities, and Note 22 – Redeemable Noncontrolling Interest
of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.
(3)
We are plaintiffs or defendants to various actions, proceedings, and pending claims, some of which involve, or may involve,
compensatory, punitive, or other damages. Additionally, our business contributes to various multi-employer pension plans
based on obligations arising under collective bargaining agreements covering our union-represented employees. Refer to
Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of
this 2019 Form 10-K) for further information.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements with unconsolidated special-purpose or other entities that would
materially affect our financial position, results of operations, liquidity, or capital resources. Furthermore, we do not have any
relationships with special-purpose or other entities that provide off-balance sheet financing; liquidity, market risk, or credit
31
risk support; or engage in leasing or other services that may expose us to liability or risks of loss that are not reflected in the
consolidated financial statements and related notes. Refer to Note 12 – Debt and Finance Lease Obligations, Note 20 –
Leases and Other, and Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial
Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with U.S. GAAP. We are required to make estimates and
assumptions that affect our reported amounts of assets, liabilities, revenue, and expenses. Critical accounting policies are
those policies that are most important to the portrayal of our financial position and results of operations, and that require us to
make the most difficult and subjective judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. We identified and discussed with our audit committee the following critical accounting policies and
estimates and the methodology and disclosures related to those estimates:
Revenue recognition — Revenue is measured based on a specified amount of consideration in a contract with a customer, net
of commissions paid to customers and amounts collected on behalf of third parties. We recognize revenue when a
performance obligation is satisfied by transferring control of a product or service to a customer.
GES’ service revenue is primarily derived through its comprehensive range of services to event organizers and corporate
brand marketers including Core Services, Audio-Visual, and Event Technology. GES’ service revenue is earned over time
over the duration of the exhibition, conference or corporate event, which generally lasts one to three days; however, we use
the practical expedient of recognizing service revenue at the close of the event when we have the right to invoice. GES’
product revenue is derived from the build of exhibits and environments and graphics. GES’ product revenue is recognized at
a point in time upon delivery of the product.
Pursuit’s service revenue is derived through its accommodations, admissions, transportation, and travel planning services.
Pursuit’s product revenue is derived through food and beverage and retail sales. Pursuit’s revenue is recognized at the time
services are performed or upon delivery of the product. Pursuit’s service revenue is recognized over time as the customer
simultaneously receives and consumes the benefits. Pursuit’s product revenue is recognized at a point in time.
Goodwill and Other Intangible Assets — Goodwill and other intangible assets with indefinite useful lives are not amortized,
but instead are tested for impairment at least annually. Intangible assets with finite lives are amortized over their respective
estimated useful lives and are reviewed for impairment if an event occurs or circumstances change that would indicate the
intangible asset’s carrying value may not be recoverable.
Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31, and 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 value. Our 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.
GES North America’s goodwill is assigned to, and tested at, the operating segment level (GES U.S. and GES Canada
(collectively “GES North America”). GES EMEA’s goodwill is assigned to and tested at the operating segment level.
Pursuit’s goodwill impairment testing is performed at the reporting unit level (Banff Jasper Collection, the Alaska Collection,
the Glacier Park Collection, and FlyOver).
For purposes of goodwill impairment testing, we use a discounted expected future cash flow methodology (income approach)
to estimate the fair value of our reporting units. 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 our 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. We estimate the assumed reporting unit cost of capital rates (discount rates) 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 our fair value estimates, we perform a reconciliation of the aggregate fair values of our reporting units
to our market capitalization.
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
32
experience. These estimates have inherent uncertainties, and different assumptions could lead to materially different results.
As of December 31, 2019, our aggregate goodwill was $288.0 million. As a result of our most recent impairment analysis
performed as of October 31, 2019, the excess of the estimated fair value over the carrying value for each of our reporting
units (expressed as a percentage of the carrying amounts) under step one of the impairment test for GES U.S. was 238%,
GES EMEA was 226%, GES Canada was 591%, the Banff Jasper Collection was 237%, the Alaska Collection was 110%,
the Glacier Park Collection was 25%, and FlyOver was 60%. Significant reductions in our expected future revenue, operating
income, or cash flow forecasts and projections, or an increase in a reporting unit’s cost of capital, could trigger additional
goodwill impairment testing, which may result in impairment charges.
If an impairment indicator related to intangible assets is identified, or if other circumstances indicate an impairment may
exist, we perform an assessment to determine if an impairment loss should be recognized. This assessment includes a
recoverability test to identify if the expected future undiscounted cash flows are less than the carrying value of the related
assets. If the results of the recoverability test indicate that expected future undiscounted cash flows are less than the carrying
value of the related assets, we perform a measurement of impairment and we recognize any carrying amount in excess of fair
value as an impairment. We periodically evaluate the continued recoverability of intangible assets which were previously
evaluated due to an impairment indicator to determine if remeasurement is necessary.
During the fourth quarter of 2019, there were indicators of impairment of our intangible and other long-lived assets at our
audio-visual production business in the United Kingdom, Blitz. As a result, we recorded an asset impairment charge to
equipment of $3.5 million and to our intangible asset of $1.5 million.
Income taxes — We are required to estimate and record provisions for income taxes in each of the jurisdictions in which we
operate. Accordingly, we must estimate our 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 the Consolidated Balance Sheets. We use significant judgment in
forming conclusions regarding the recoverability of our deferred tax assets and evaluate all available positive and negative
evidence to determine if it is more-likely-than-not that the deferred tax assets will be realized. To the extent recovery does not
appear likely, a valuation allowance must be recorded. We had gross deferred tax assets of $40.5 million as of December 31,
2019 and $36.5 million as of December 31, 2018.
While we believe that the deferred tax assets, net of existing valuation allowances, will be utilized in future periods, there are
inherent uncertainties regarding the ultimate realization of these assets. It is possible that the relative weight of positive and
negative evidence regarding the realization of deferred tax assets may change, which could result in a material increase or
decrease in our valuation allowance. Such a change could result in a material increase or decrease to income tax expense in
the period the assessment was made.
We record uncertain tax positions on the basis of a two-step process: first we determine whether it is more-likely-than-not
that the tax positions will be sustained on the basis of the technical merits of the position; and, if so, we recognize the largest
amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.
Pension and postretirement benefits — Our 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. We presently anticipate contributing $1.4 million to our
funded pension plans and $0.9 million to our unfunded pension plans in 2020.
We 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 employees’ service period. In addition, we
retain the obligations for these benefits for retirees of certain sold businesses. While the plans have no funding requirements, we
expect to contribute $1.0 million to the plans in 2020.
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. Refer to Note 18 – Pension and
Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further
information.
Share-based compensation — We grant share-based compensation awards to our officers, directors, and certain key
employees under our 2017 Viad Corp Omnibus Incentive Plan, which has a 10-year term 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.
33
Share-based compensation expense recognized in the consolidated financial statements was $7.2 million in 2019, $4.9
million in 2018, and $11.0 million in 2017, and the total tax benefits related to such costs were $2.2 million in 2019, $1.2
million in 2018, and $4.1 million in 2017. No share-based compensation costs were capitalized during 2019, 2018, or 2017.
The fair value of restricted stock awards is based on our stock price on the grant date. 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 our stock price, and the Monte Carlo
simulation model, until the time of settlement. The Monte Carlo simulation requires the use of a number of assumptions,
including historical volatility and correlation between our stock price and the price of the common shares of a comparator
group, a risk-free rate of return, and an expected term. Equity-based awards (including performance units) are recorded at
estimated fair value, based on the number of units expected to vest and the level of achievement of predefined performance
goals, until the time of settlement. Refer to Note 3 – Share-Based Compensation of the Notes to Consolidated Financial
Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.
Self-Insurance Liabilities — We are self-insured up to certain limits for workers’ compensation and general liabilities, which
includes automobile, product general liability, and client property loss claims. We have also retained and provided for certain
workers’ compensation insurance liabilities in conjunction with previously sold businesses. We are also self-insured for
certain employee health benefits. Provisions for losses for claims incurred, including actuarially derived estimated claims
incurred but not yet reported, are made based on historical experience, claims frequency, and other factors. We have
purchased insurance for amounts in excess of the self-insured levels.
Impact of Recent Accounting Pronouncements
Refer to Note 1 – Overview and Summary of Significant Accounting Policies of the Notes to Consolidated Financial
Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.
Non-GAAP Measures
In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting
principles (“GAAP”), we also disclose the following non-GAAP financial measures: Segment operating income, organic
revenue, and organic segment operating income (collectively, the “Non-GAAP Measures”). Our use of Non-GAAP Measures
is supplemental to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.
As not all companies use identical calculations, our Non-GAAP Measures may not be comparable to similarly titled measures
used by other companies. We believe that our use of Non-GAAP Measures provides useful information to investors regarding
our results of operations for trending, analyzing, and benchmarking our performance and the value of our business.
•
•
“Segment operating income” is net income attributable to Viad before income (loss) from discontinued
operations, corporate activities, interest expense and interest income, income taxes, restructuring charges,
impairment charges and recoveries, and the reduction for income attributable to noncontrolling interest. Segment
operating income is used to measure the profit and performance of our operating segments to facilitate period-to-
period comparisons. Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements
(Part II, Item 8 of this 2019 Form 10-K) for a reconciliation of segment operating income to income from
continuing operations before income taxes.
“Organic revenue” and “organic segment operating income” are revenue and segment operating income (as
defined above), respectively, without the impact of exchange rate variances and acquisitions, if any, until such
acquisitions are included in the entirety of both comparable periods. The impact of exchange rate variances is
calculated as the difference between current period activity translated at the current period’s exchange rates and
the comparable prior period’s exchange rates. We believe the presentation of “organic” results permits investors
to better understand our performance without the effects of exchange rate variances or acquisitions and to
facilitate period-to-period comparisons and analysis of our operating performance. Refer to the “Results of
Operations” section of this MD&A for reconciliations of organic revenue and organic segment operating income
to the most directly comparable GAAP measures.
We believe non-GAAP Measures are useful operating metrics as they eliminate potential variations arising from taxes, debt
service costs, impairment charges and recoveries, and the effects of discontinued operations, resulting in additional measures
considered to be indicative of our ongoing operations and segment performance. Although we use Non-GAAP Measures to
assess the performance of our business, the use of these measures is limited because these measures do not consider material
costs, expenses, and other items necessary to operate our business. These items include debt service costs, expenses related to
U.S. federal, state, local and foreign income taxes, impairment charges and recoveries, and the effects of discontinued
34
operations. As the Non-GAAP Measures do not consider these items, you should consider net income attributable to Viad as
an important measure of financial performance because it provides a more complete measure of our performance.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our market risk exposure relates to fluctuations in foreign exchange rates and interest rates. Foreign exchange risk is the risk
that fluctuating exchange rates will adversely affect our financial condition or results of operations. Interest rate risk is the
risk that changing interest rates will adversely affect our financial position or results of operations.
Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, and Germany. The functional
currency of our foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, we translate the assets
and liabilities of our 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 (loss) in the Consolidated Balance Sheets. As a result, significant
fluctuations in foreign exchange rates relative to the U.S. dollar may result in material changes to our net equity position
reported in the Consolidated Balance Sheets. We do not currently hedge our equity risk arising from the translation of foreign
denominated assets and liabilities. We recorded cumulative unrealized foreign currency translation losses in stockholders’
equity of $23.8 million as of December 31, 2019 and $36.3 million as of December 31, 2018. We recorded unrealized foreign
currency translation gains in other comprehensive income of $12.5 million during the year ended December 31, 2019 and
foreign currency translation losses of $24.3 million during the year ended December 31, 2018, in each case, net of tax.
For purposes of consolidation, revenue, expenses, gains, and losses related to our foreign operations are translated into U.S.
dollars at the average foreign exchange rates for the period. As a result, our consolidated results of operations are exposed to
fluctuations in foreign exchange rates as revenue and segment operating income of our 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. We do not currently hedge our
net earnings exposure arising from the translation of our foreign revenue and segment operating income. Refer to
“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Foreign Exchange Rate
Variances” (Part II, Item 7 of this 2019 Form 10-K) for a further discussion.
A hypothetical change of 10% in the Canadian dollar exchange rate would result in a change to 2019 operating income of
approximately $5.3 million. A hypothetical change of 10% in the British pound exchange rate would result in a change to
2019 operating income of approximately $0.1 million. A hypothetical change of 10% in the Euro exchange rate would result
in a change to 2019 operating income of approximately $0.4 million.
We are exposed to foreign exchange transaction risk, as our foreign subsidiaries have certain revenue transactions
denominated in currencies other than the functional currency of the respective subsidiary. From time to time, we utilize
forward contracts to mitigate the impact on earnings related to these transactions due to fluctuations in foreign exchange
rates. As of December 31, 2019 and 2018, we did not have any outstanding foreign currency forward contracts.
We are exposed to short-term and long-term interest rate risk on certain of our debt obligations. We do not currently use
derivative financial instruments to hedge cash flows for such obligations.
35
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheets ......................................................................................................................................
Consolidated Statements of Operations .......................................................................................................................
Consolidated Statements of Comprehensive Income...................................................................................................
Consolidated Statements of Stockholders’ Equity.......................................................................................................
Consolidated Statements of Cash Flows ......................................................................................................................
Notes to Consolidated Financial Statements................................................................................................................
Report of Independent Registered Public Accounting Firm ........................................................................................
Schedule II – Valuation and Qualifying Accounts ......................................................................................................
Page
37
38
39
40
41
42
82
93
36
VIAD CORP
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
Current assets
Assets
Cash and cash equivalents.............................................................................................. $
Accounts receivable, net of allowances for doubtful accounts of $1,200 and $1,288,
respectively .................................................................................................................
Inventories......................................................................................................................
Current contract costs.....................................................................................................
Other current assets........................................................................................................
Total current assets............................................................................................................
Property and equipment, net ................................................................................................
Other investments and assets ...............................................................................................
Operating lease right-of-use assets ......................................................................................
Deferred income taxes .........................................................................................................
Goodwill ..............................................................................................................................
Other intangible assets, net ..................................................................................................
Total Assets......................................................................................................................... $
Current liabilities
Liabilities and Stockholders’ Equity
Accounts payable ........................................................................................................... $
Contract liabilities ..........................................................................................................
Accrued compensation...................................................................................................
Operating lease obligations............................................................................................
Other current liabilities ..................................................................................................
Current portion of debt and finance lease obligations ...................................................
Total current liabilities......................................................................................................
Long-term debt and finance lease obligations .....................................................................
Pension and postretirement benefits ....................................................................................
Long-term operating lease obligations ................................................................................
Other deferred items and liabilities......................................................................................
Total liabilities....................................................................................................................
Commitments and contingencies
Redeemable noncontrolling interest ....................................................................................
Stockholders’ equity
Viad Corp stockholders’ equity:
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares
issued and outstanding ................................................................................................
Additional capital...........................................................................................................
Retained earnings...........................................................................................................
Unearned employee benefits and other..........................................................................
Accumulated other comprehensive loss.........................................................................
Common stock in treasury, at cost, 4,588,084 and 4,741,638 shares, respectively.......
Total Viad stockholders’ equity........................................................................................
Non-redeemable noncontrolling interest .........................................................................
Total stockholders’ equity.................................................................................................
Total Liabilities and Stockholders’ Equity...................................................................... $
Refer to Notes to Consolidated Financial Statements.
December 31,
2019
2018
61,999 $
44,893
126,246
17,269
24,535
30,854
260,903
500,901
45,119
103,314
26,163
287,983
94,308
1,318,691 $
86,660 $
50,671
32,658
22,180
39,824
316,794
548,787
23,698
26,247
82,851
83,707
765,290
108,936
16,629
18,017
25,486
213,961
333,847
42,910
—
19,199
261,330
51,294
922,541
71,927
33,476
22,668
—
32,258
229,416
389,745
705
26,636
—
48,991
466,077
6,172
5,909
37,402
574,473
122,971
—
(35,699)
(231,649)
467,498
79,731
547,229
1,318,691 $
37,402
575,339
109,032
199
(47,975)
(237,790)
436,207
14,348
450,555
922,541
37
VIAD CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Revenue:
Services................................................................................................ $
Products ...............................................................................................
Total revenue ...........................................................................................
Costs and expenses:
Costs of services ..................................................................................
Costs of products .................................................................................
Business interruption gain ...................................................................
Corporate activities..............................................................................
Interest income ....................................................................................
Interest expense ...................................................................................
Multi-employer pension plan withdrawal............................................
Other expense ......................................................................................
Restructuring charges ..........................................................................
Legal settlement...................................................................................
Impairment charges (recoveries) .........................................................
Total costs and expenses .........................................................................
Income from continuing operations before income taxes....................
Income tax expense ...................................................................................
Income from continuing operations ......................................................
Income (loss) from discontinued operations .............................................
Net income ...............................................................................................
Net income attributable to non-redeemable noncontrolling interest.........
Net loss attributable to redeemable noncontrolling interest......................
Net income attributable to Viad ............................................................ $
Diluted income (loss) 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 (loss) 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 (loss) from discontinued operations .............................................
Net income ............................................................................................... $
2019
Year Ended December 31,
2018
2017
1,170,493 $
201,202
1,371,695
$
1,110,249
185,935
1,296,184
1,132,424
174,541
1,306,965
1,100,146
181,380
(141)
10,865
(369)
14,199
15,693
1,586
8,380
8,500
5,346
1,345,585
26,110
2,506
23,604
(81)
23,523
(2,309)
821
22,035 $
1,039,403
168,799
(602)
10,993
(354)
9,640
—
1,744
1,587
—
(35)
1,231,175
65,009
17,095
47,914
1,481
49,395
(542)
317
49,170
1.02 $
—
1.02 $
2.33
0.07
2.40
20,284
20,404
1.02 $
—
1.02 $
20,146
0.40 $
22,116 $
(81)
22,035 $
2.33
0.07
2.40
20,168
0.40
47,689
1,481
49,170
$
$
$
$
$
$
$
$
1,052,911
158,081
(2,692)
12,396
(319)
8,304
—
2,028
1,004
—
(29,098)
1,202,615
104,350
45,898
58,452
(268)
58,184
(523)
46
57,707
2.84
(0.01)
2.83
20,405
2.84
(0.01)
2.83
20,146
0.40
57,975
(268)
57,707
Refer to Notes to Consolidated Financial Statements.
38
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
VIAD CORP
(in thousands)
Net income ............................................................................................... $
Other comprehensive income (loss):
Unrealized gains on investments, net of tax effects of $0, $0, and
$121 .....................................................................................................
Unrealized foreign currency translation adjustments, net of tax .........
Change in net actuarial loss, net of tax effects of $(44), $305, and
$163 .....................................................................................................
Change in prior service cost, net of tax effects of $(48), $(52), and
$(473)...................................................................................................
Comprehensive income...........................................................................
Non-redeemable noncontrolling interest:
Comprehensive income attributable to non-redeemable
noncontrolling interest.........................................................................
Unrealized foreign currency translation adjustments, net of tax .........
Redeemable noncontrolling interest:
Comprehensive loss attributable to redeemable noncontrolling
interest .................................................................................................
Comprehensive income attributable to Viad........................................ $
2019
Year Ended December 31,
2018
2017
23,523 $
49,395
$
58,184
—
12,533
—
(24,306)
195
17,058
(116)
1,236
344
(141)
35,799
(153)
26,172
(774)
75,007
(2,309)
1,080
(542)
—
(523)
—
821
35,391 $
317
25,947
$
46
74,530
Refer to Notes to Consolidated Financial Statements.
39
VIAD CORP
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Unearned
Accumulated
Employee
Other
Benefits
Comprehensive
and Other
Income (Loss)
$
Total
Common
Viad
Stock in
Treasury
Equity
(39,391 ) $ (230,960 ) $ 357,355 $
57,707
—
—
172
—
Non-
Redeemable
Non-
Controlling
Interest
Total
Stockholders’
Equity
$
13,283
523
370,638
58,230
—
—
—
—
—
—
—
—
—
—
—
—
3,623
(8,160 )
Common
Stock
—
—
—
—
—
(2,687 )
Additional
Capital
Retained
Earnings
(Deficit)
37,402 $ 573,841 $ 16,291 $
— 57,707
(in thousands)
Balance, December 31, 2016................ $
Net income .............................................
Dividends on common stock ($0.40 per
share)......................................................
Payment of payroll taxes on stock-
based compensation through shares
withheld..................................................
Employee benefit plans..........................
Share-based compensation - equity
awards ....................................................
Unrealized foreign currency translation
adjustment, net of tax.............................
Unrealized gain on investments, net of
tax...........................................................
Amortization of net actuarial gain, net
of tax ......................................................
Amortization of prior service cost, net
—
of tax ......................................................
Other, net................................................
(2 )
Balance, December 31, 2017................ $ 37,402 $ 574,458 $ 65,836 $
Net income .............................................
— 49,170
Dividends on common stock ($0.40 per
share)......................................................
Payment of payroll taxes on stock-
based compensation through shares
withheld..................................................
Common stock purchased for treasury ..
Employee benefit plans..........................
Share-based compensation - equity
awards ....................................................
Unrealized foreign currency translation
adjustment, net of tax.............................
Amortization of net actuarial loss, net
of tax ......................................................
Amortization of prior service cost, net
of tax ......................................................
Adoption of ASU 2016-01.....................
Adoption of ASU 2018-02.....................
Other, net................................................
Balance, December 31, 2018................ $
—
616
1,568
(4 )
37,402 $ 575,339 $ 109,032 $
—
—
(1,905 )
—
—
—
(63 )
—
—
—
—
—
—
—
—
—
—
—
(319 )
—
—
(8,154 )
2,849
—
—
—
—
—
—
—
—
—
—
—
—
—
Net income .............................................
Dividends on common stock ($0.40 per
share)......................................................
Distributions to noncontrolling interest .
Payment of payroll taxes on stock-
based compensation through shares
withheld..................................................
Employee benefit plans..........................
Share-based compensation - equity
awards ....................................................
Unrealized foreign currency translation
adjustment, net of tax.............................
Amortization of net actuarial loss, net
of tax ......................................................
Amortization of prior service cost, net
of tax ......................................................
Acquisitions .......................................
Other, net................................................
Balance, December 31, 2019................ $
—
—
—
— 22,035
—
—
(8,094 )
—
—
—
—
(3,659 )
—
—
—
2,755
—
—
—
—
—
—
—
—
—
—
—
—
(2 )
37,402 $ 574,473 $ 122,971 $
—
—
38
—
—
—
—
—
—
—
—
46
218 $
—
—
—
—
—
—
—
—
—
—
—
(19 )
$
199
—
—
—
—
—
—
—
—
—
—
(199 )
$
—
—
—
—
—
—
(8,160 )
(2,119 )
6,864
(2,119 )
4,177
—
3,623
17,058
—
17,058
195
344
—
195
—
344
—
—
(774 )
—
(774 )
(275 )
(22,568) $ (226,215) $429,131 $
49,170
—
—
—
—
—
—
—
—
(8,154 )
(1,209 )
(17,174 )
6,807
(1,209 )
(17,174 )
4,902
—
2,849
(24,306 )
—
(24,306 )
1,236
—
1,236
(153 )
(616 )
(1,568 )
—
(153 )
—
—
(85 )
(47,975 ) $ (237,790 ) $ 436,207 $
—
—
—
1
—
—
—
—
—
—
—
—
—
13,806 $
542
—
—
—
—
—
—
—
—
—
—
—
$
14,348
—
—
—
—
—
—
—
22,035
2,309
—
—
(8,094 )
—
—
(407 )
(3,046 )
9,189
(3,046 )
5,530
—
2,755
—
—
—
(8,160 )
(2,119 )
4,177
3,623
17,058
195
344
(774 )
(275 )
442,937
49,712
(8,154 )
(1,209 )
(17,174 )
4,902
2,849
(24,306 )
1,236
(153 )
—
—
(85 )
450,555
24,344
(8,094 )
(407 )
(3,046 )
5,530
2,755
12,533
—
12,533
1,080
13,613
(116 )
—
(116 )
—
(116 )
(141 )
—
—
(141 )
—
(165 )
(35,699 ) $ (231,649 ) $ 467,498 $
—
—
(2 )
—
62,401
—
79,731 $
(141 )
62,401
(165 )
547,229
Refer to Notes to Consolidated Financial Statements.
40
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:
Depreciation and amortization ................................................................................
Deferred income taxes.............................................................................................
(Income) loss from discontinued operations ...........................................................
Restructuring charges ..............................................................................................
Legal settlement.......................................................................................................
Impairment charges (recoveries) .............................................................................
(Gains) losses on dispositions of property and other assets ....................................
Share-based compensation expense ........................................................................
Multi-employer pension plan withdrawal ...............................................................
Other non-cash items, net ........................................................................................
Change in operating assets and liabilities (excluding the impact of acquisitions):
Receivables .......................................................................................................
Inventories.........................................................................................................
Current contract costs........................................................................................
Accounts payable ..............................................................................................
Restructuring liabilities .....................................................................................
Accrued compensation......................................................................................
Contract liabilities .............................................................................................
Payments on operating lease obligations ..........................................................
Income taxes payable ........................................................................................
Other assets and liabilities, net..........................................................................
Net cash provided by operating activities..................................................................
Cash flows from investing activities
Capital expenditures ................................................................................................
Proceeds from insurance..........................................................................................
Cash paid for acquisitions, net.................................................................................
Proceeds from dispositions of property and other assets.........................................
Net cash used in investing activities ...........................................................................
Cash flows from financing activities
Proceeds from borrowings.......................................................................................
Payments on debt and finance lease obligations .....................................................
Dividends paid on common stock ...........................................................................
Distributions to noncontrolling interest...................................................................
Debt issuance costs..................................................................................................
Payment of payroll taxes on stock-based compensation through shares withheld
or repurchased .........................................................................................................
Common stock purchased for treasury ....................................................................
Proceeds from exercise of stock options .................................................................
Net cash provided by (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 ..................................................................... $
2019
Year Ended December 31,
2018
2017
23,523 $
49,395
$
58,184
58,964
(10,398)
81
8,380
8,500
5,346
(1,475)
7,190
15,693
3,791
(16,959)
(328)
(6,333)
9,726
(6,047)
6,853
16,796
(28,146)
195
12,788
108,140
(76,147)
—
(90,992)
1,583
(165,556)
200,473
(115,708)
(8,094)
(407)
(39)
(3,046)
—
293
73,472
1,050
17,106
44,893
61,999 $
56,842
5,350
(1,481)
1,587
—
(35)
473
4,870
—
4,306
(6,200)
(1,573)
(4,976)
(1,645)
(1,716)
(12,818)
3,677
—
(7,696)
2,235
90,595
(83,345)
—
(4,628)
925
(87,048)
146,580
(128,211)
(8,154)
—
(1,823)
(1,209)
(17,174)
84
(9,907)
(2,470)
(8,830)
53,723
44,893
$
55,114
26,049
268
1,004
—
(29,098)
1,420
10,969
—
5,029
(2,338)
121
2,544
7,546
(1,954)
(5,152)
(11,314)
—
5,820
(11,989)
112,223
(56,621)
31,570
(1,501)
947
(25,605)
90,004
(135,801)
(8,160)
—
(5)
(2,119)
—
—
(56,081)
2,286
32,823
20,900
53,723
Refer to Notes to Consolidated Financial Statements.
41
VIAD CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Overview and Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements were prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) and include the accounts of Viad and its subsidiaries. All significant
intercompany account balances and transactions have been eliminated in consolidation.
Nature of Business
We are an international experiential services company with operations principally in the United States, Canada, the United
Kingdom, continental Europe, and the United Arab Emirates. We are committed to providing unforgettable experiences to
our clients and guests. We operate through three reportable business segments: GES North America, GES EMEA
(collectively, “GES”), and Pursuit.
GES
GES is a global, full-service live events company offering a comprehensive range of services to event organizers and
corporate brand marketers. Event organizers schedule and run events from start to finish. Corporate brand marketers include
exhibitors and domestic and international corporations that want to promote their brands, services and innovations, feature
new products, and build business relationships. GES serves corporate brand marketers when they exhibit at shows and when
GES is engaged to manage their global exhibit program or produce their proprietary corporate events.
Pursuit
Pursuit is a collection of inspiring and unforgettable travel experiences that includes recreational attractions, unique hotels
and lodges, food and beverage, retail, sightseeing, and ground transportation services. Pursuit comprises the Banff Jasper
Collection, the Alaska Collection, the Glacier Park Collection, and FlyOver.
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 reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reported period. Estimates and assumptions are used in accounting for, among other things:
impairment testing of recorded goodwill and intangible assets; 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; pension and postretirement benefit costs and obligations; share-based compensation
costs; the discount rates used to value lease obligations; the redemption value of redeemable noncontrolling interests; and the
allocation of purchase price of acquired businesses. Actual results could differ from these and other estimates.
Cash and Cash Equivalents
Cash equivalents are highly-liquid investments with remaining maturities when purchased of three months or less. Cash and
cash equivalents consist of cash and bank demand deposits and money market funds. Investments in money market funds are
classified as available-for-sale and carried at fair value.
Allowances for Doubtful Accounts
Allowances for doubtful accounts reflect the best estimate of probable losses inherent in the accounts receivable balance. The
allowances for doubtful accounts, including a sales allowance for discounts at the time of sale, are based upon an evaluation
of the aging of receivables, historical trends, and the current economic environment.
42
Inventories
Inventories, which consist primarily of exhibit design and construction materials and supplies, as well as retail inventory, are
stated at the lower of cost (first-in, first-out and specific identification methods) or net realizable value.
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.
Leases
We adopted FASB Accounting Standards Update (“ASU”) 2016-02, Leases (“Topic 842”) on January 1, 2019 using the
optional transition method. Under this method, a cumulative adjustment to retained earnings is recorded, if any, and prior
periods are not restated. Topic 842 requires that we recognize a right-of-use (“ROU”) asset and lease liability on the balance
sheet and requires lessees to classify leases as either finance or operating leases. The classification of the lease determines
whether the lease expense is recognized on an effective interest method basis (finance lease) or on a straight-line basis
(operating lease) over the lease term. In determining whether an agreement contains a lease, we consider if we have a right to
control the use of the underlying asset during the lease term in exchange for an obligation to make lease payments arising
from the lease. We recognize ROU assets and lease liabilities at commencement date, which is when the underlying asset is
available for use to a lessee, based on the present value of lease payments over the lease term.
Our operating and finance leases are primarily facility, equipment, and land leases. Our facility leases comprise mainly
manufacturing facilities, sales and design facilities, offices, storage and/or warehouses, and truck marshaling yards. These
facility leases generally have lease terms ranging up to 25 years. Our equipment leases comprise mainly vehicles, hardware,
and office equipment, each with various lease terms. Our land leases comprise mainly leases in Canada and Iceland on which
our hotels or attractions are located and have lease terms ranging up to 42 years.
We made the accounting policy election not to recognize ROU assets and lease liabilities for leases with a term of twelve
months or less. We elected to apply the package of practical expedients permitted under Topic 842 transition guidance,
which, among other things, allows us to carry forward our historical lease classifications. We also elected the practical
expedient to not separate non-lease components from lease components for all asset classes, and payments associated with
fixed non-lease components are included in measuring the ROU asset and lease liability.
If a lease contains a renewal option that is reasonably certain to be exercised, then the lease term includes the optional periods
in measuring a ROU asset and lease liability. The reasonably certain threshold is evaluated at lease commencement and is
typically met if substantial economic incentives or termination penalties are identified. Variable leases and variable lease and
non-lease components are not included in the calculation of the ROU asset and corresponding lease liability. For facility
leases, variable lease costs include the costs of common area maintenance, taxes, and insurance for which we pay our lessors
an estimate that is adjusted to actual expense on a quarterly or annual basis depending on the underlying contract terms.
These variable lease payments are expensed as incurred. Upon the adoption of Topic 842, our accounting for finance leases,
previously referred to as capital leases, remains substantially unchanged from prior guidance. Our lease agreements do not
contain any significant residual value guarantees or restrictive covenants.
Substantially all of our lease agreements do not specify an implicit borrowing rate, and as such, we utilize an incremental
borrowing rate based on lease term and country, in order to calculate the present value of our future lease payments. The
discount rate represents a risk-adjusted rate on a collateralized basis and is the expected rate at which we would borrow funds
to satisfy the scheduled lease liability payment streams commensurate with the lease term and the country. On January 1,
2019, the discount rate used to value existing leases was based on the remaining lease term and the country interest rates. For
new or renewed leases starting in 2019, the discount rate is determined using available data at lease commencement and
based on the lease term and country including any reasonably certain renewal periods. The determination of the discount rate
required significant judgement.
We are also a lessor to third party tenants who either lease certain portions of facilities that we own or sublease certain
portions of facilities that we lease. Lease income from owned facilities is recorded as rental income and sublease income
from leased facilities is recorded against lease expense in the Consolidated Statements of Operations. All of our leases for
which we are the lessor are classified as operating leases under Topic 842.
43
Goodwill
Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31, and 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 value. We use a discounted expected future cash flow methodology (income approach) in order to estimate the fair
value of our 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
We have Company-owned life insurance contracts that 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 we 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
We are self-insured up to certain limits for workers’ compensation and general liabilities, which includes automobile, product
general liability, and client property loss claims. We have also retained and provided for certain workers’ compensation
insurance liabilities in conjunction with previously sold operations. We are also self-insured for certain employee health
benefits. Provisions for losses for claims incurred, including actuarially derived estimated claims incurred but not yet
reported, are made based on historical experience, claims frequency, and other factors. We have purchased insurance for
amounts in excess of the self-insured levels.
Environmental Remediation Liabilities
Environmental remediation liabilities represent 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. Environmental insurance is maintained that provides coverage for new and undiscovered pre-existing conditions at
both our continuing and discontinued operations.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-
term maturities of these instruments. Refer to Note 12 – Debt and Finance Lease Obligations for the estimated fair value of
debt obligations.
Noncontrolling Interests – Non-redeemable and Redeemable
Non-redeemable noncontrolling interest represents the portion of equity in a subsidiary that is not attributable, directly or
indirectly, to us. Our non-redeemable noncontrolling interest relates to the 20% equity ownership interest that we do not own
in Glacier Park, Inc., the 40% equity interest that we do not own in the recently acquired Mountain Park Lodges, and the 49%
equity interest that we do not own in the new entity that will operate the Sky Lagoon attraction. We report non-redeemable
noncontrolling interest within stockholders’ equity in the Consolidated Balance Sheets. The amount of consolidated net
income attributable to Viad and the non-redeemable noncontrolling interest is presented in the Consolidated Statements of
Operations.
Noncontrolling interests with redemption features that are not solely within our control are considered redeemable
noncontrolling interests. Our redeemable noncontrolling interest relates to our 54.5% equity ownership interest in Esja
Attractions ehf. (“Esja”). The Esja shareholders agreement contains a put option that gives the minority Esja shareholders the
right to sell (or “put”) their Esja shares to us based on a calculated formula within a predefined term. This redeemable
noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the
Consolidated Balance Sheets. The amount of the net income or loss attributable to redeemable noncontrolling interests is
recorded in the Consolidated Statements of Operations and the accretion of the redemption value is recorded as an adjustment
44
to retained earnings and is included in our income per share. Refer to Note 22 – Redeemable Noncontrolling Interest for
additional information.
Foreign Currency Translation
Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, Germany, and to a lesser
extent, in certain other countries. The functional currency of our foreign subsidiaries is their local currency. Accordingly, for
purposes of consolidation, we translate the assets and liabilities of our 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 (loss) in the
Consolidated Balance Sheets. For purposes of consolidation, revenue, expenses, gains, and losses related to our foreign
operations are translated into U.S. dollars at the average foreign exchange rates for the period.
Revenue Recognition
We adopted Accounting Standard Update 2014-09, Revenue from Contracts with Customers (“Topic 606”) on January 1,
2018. Upon the adoption of Topic 606, revenue is measured based on a specified amount of consideration in a contract with a
customer, net of commissions paid to customers and amounts collected on behalf of third parties. We recognize revenue
when a performance obligation is satisfied by transferring control of a product or service to a customer.
GES’ service revenue is primarily derived through its comprehensive range of services to event organizers and corporate
brand marketers including Core Services, Event Technology, and Audio-Visual. GES’ service revenue is earned over time
over the duration of the exhibition, conference or corporate event, which generally lasts one to three days. GES’ product
revenue is derived from the build of exhibits and environments and graphics. GES’ product revenue is recognized at a point
in time upon delivery of the product.
Pursuit’s service revenue is derived through its admissions, accommodations, transportation, and travel planning services.
Pursuit’s product revenue is derived through food and beverage and retail sales. Pursuit’s revenue is recognized at the time
services are performed or upon delivery of the product. Pursuit’s service revenue is recognized over time as the customer
simultaneously receives and consumes the benefits. Pursuit’s product revenue is recognized at a point in time.
Insurance Recoveries
Receipts from insurance up to the amount of the recognized losses are considered recoveries and are accounted for when they
are probable of receipt. Anticipated proceeds in excess of the recognized loss are considered a gain contingency. A
contingency gain for anticipated insurance proceeds in excess of losses already recognized is not recognized until all
contingencies relating to the insurance claim have been resolved.
Insurance proceeds allocated to business interruption gains are reported as cash flows from operating activities, and proceeds
allocated to impairment recoveries are reported as cash flows from investing activities. Insurance proceeds used for
capitalizable costs are classified as cash flows from investing activities, and proceeds used for non-capitalizable costs are
classified as operating activities.
On December 29, 2016, the Mount Royal Hotel was damaged by a fire and closed. During the fourth quarter of 2016, we
recorded an asset impairment loss of $2.2 million and an offsetting impairment recovery (and related insurance receivable) as
the losses related to the fire were covered by our property and business interruption insurance. During July 2017, we resolved
our property and business interruption insurance claims for a total of $36.3 million. We allocated $2.2 million to an insurance
receivable, $29.3 million was recorded as an impairment recovery (partially offset by impairment charges of $0.2 million)
related to construction costs to re-open the hotel, $2.5 million was recorded as a business interruption gain for the recovery of
lost profits, $1.3 million was recorded as contra-expense to offset non-capitalizable costs incurred, and the remaining $1.0
million was deferred and recognized during the first half of 2018 when the business interruption losses were actually
incurred.
Share-Based Compensation
Share-based compensation costs related to all share-based payment awards are recognized and measured using the fair value
method of accounting. These awards generally include restricted stock, liability-based awards (including performance units
and restricted stock units), and stock options, and contain forfeiture and non-compete provisions.
The fair value of restricted stock awards is based on our closing stock price on the date of grant. We issue restricted stock
awards from shares held in treasury. Future vesting of restricted stock is generally subject to continued employment. Holders
45
of restricted stock 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 and in accordance with our stock trading policy.
Restricted stock awards vest three years from the date of grant. Share-based compensation expense is recognized using the
straight-line method over the requisite service period.
Liability-based awards (including performance units and restricted stock units) are recorded at estimated fair value, based on
the number of units expected to vest and, where applicable, the level of achievement of predefined performance goals. These
awards are remeasured on each balance sheet date based on our stock price, and the Monte Carlo simulation model, until the
time of settlement. A Monte Carlo simulation requires the use of several assumptions, including historical volatility and
correlation between our stock price and the price of the common shares of a comparator group, a risk-free rate of return, and
an expected term. To the extent earned, liability-based awards are settled in cash based on our stock price. Compensation
expense related to liability-based awards is recognized ratably over the requisite service period of approximately three years.
Equity-based awards (including performance units) are recorded at estimated fair value, based on the number of units
expected to vest and the level of achievement of predefined performance goals, until the time of settlement. To the extent
earned, equity-based awards are settled in our common stock. Compensation expense related to equity-based awards is
recognized ratably over the requisite service period of approximately three years.
The fair value of stock option grants 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 our common
stock at the date of grant. We have not granted stock options since 2010.
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
We apply 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. The adjustment to the carrying value of the redeemable
noncontrolling interest is reflected in income per common share.
46
Impact of Recent Accounting Pronouncements
The following table provides a brief description of recent accounting pronouncements:
Standard
Description
Standards Not Yet Adopted
ASU 2016-13,
Financial
Instruments –
Credit Losses
(Topic 326) -
Measurement of
Credit Losses on
Financial
Instruments
The amendment eliminates the incurred
credit loss impairment methodology in
current GAAP and replaces it with an
expected credit loss concept based on
historical experience, current conditions, and
reasonable and supportable forecasts.
Date of
adoption
Effect on the financial statements
January 1,
We are currently evaluating the potential impact of the
2020
adoption of this new guidance on our consolidated
financial statements. We will be required to use a forward-
looking expected credit loss model for trade receivables.
Adoption of this new standard will be applied using the
modified retrospective approach through a cumulative-
effect adjustment to retained earnings as of the effective
date in an amount necessary to adjust our current credit
loss methodology to equal the current estimate of expected
losses on financial assets held at that date. We do not
expect this new guidance to have a material impact on our
consolidated financial statements.
ASU 2019-12,
Income Taxes
(Topic 740)
Simplifying the
Accounting for
Income Taxes
The amendment enhances and simplifies
January 1,
We are currently evaluating the potential impact of the
2021
various aspects of the income tax accounting
guidance, including requirements such as tax
basis step-up in goodwill obtained in a
transaction that is not a business
combination, ownership changes in
investments, and interim-period accounting
for enacted changes in tax law.
adoption of this new guidance on our consolidated
financial statements. We do not expect this new guidance
to have a material impact on our consolidated financial
statements.
47
Standard
Description
Standards Recently Adopted
ASU 2018-15,
Intangibles –
Goodwill and Other
– Internal-Use
Software (Subtopic
350-40) Customer’s
Accounting for
Implementation
Costs Incurred in a
Cloud Computing
Arrangement That
Is a Service
Contract
ASU 2016-02,
Leases (Topic 842)
The amendment aligns the requirements for
capitalizing implementation costs incurred in
a hosting arrangement that is a service
contract with the requirements for
capitalizing implementation costs incurred to
develop or obtain internal-use software. The
amendment also requires an entity to
expense the capitalized implementation costs
of a hosting arrangement that is a service
contract over the term of the hosting
arrangement. Early adoption is permitted and
may be applied on either a retrospective or
prospective basis.
The amendment increases transparency and
comparability by requiring the recognition of
a right-of-use asset and a lease liability on
the balance sheet. The standard also requires
more detailed disclosures to enable users of
financial statements to understand the nature,
amount, timing, and uncertainty of cash
flows arising from leases.
Date of
adoption
Effect on the financial statements
September
30, 2019
We early adopted this new guidance on a retrospective
basis and determined it did not have a material impact on
our consolidated financial statements.
January 1,
2019
We elected the optional transition method and adopted
ASU 2016-02 and its related amendments (collectively,
“Topic 842”) on January 1, 2019, on a modified
retrospective basis. Under the optional transition method,
a cumulative adjustment to retained earnings is recorded,
if any, and prior periods are not restated. We determined
there was no cumulative effect adjustment to retained
earnings on January 1, 2019.
The adoption of Topic 842 did not have a material impact
on our Consolidated Statement of Operations. The most
significant impact related to facility and equipment leases,
which were previously recorded as operating leases. Upon
adoption as of January 1, 2019, we recognized an
additional right-of-use asset and lease liability of $68
million on the balance sheet. The existing deferred rent
liabilities balance, resulting from historical straight-lining
of operating leases, was reclassified upon adoption to
reduce the measurement of leased assets. Refer to our
Leases Significant Accounting Policy preceding this table
and Note 20 - Leases and Other for additional information.
Note 2. Revenue and Related Contract Costs and Contract Liabilities
GES’ performance obligations consist of services or product(s) outlined in a contract. While multi-year contracts are often
signed for recurring events, the obligations for each occurrence are well defined and conclude upon the occurrence of each
event. The obligations are typically the provision of services and/or sale of a product in connection with an exhibition,
conference, or other event. Revenue for services is recognized when we have a right to invoice at the close of the exhibition,
conference, or corporate event, which typically lasts one to three days. Revenue for consumer events is recognized over the
duration of the event. Revenue for products is recognized either upon delivery to the customer’s location, upon delivery to an
event that we are serving, or when we have the right to invoice, generally at the close of the exhibition, conference, or
corporate event. Payment terms are generally within 30-60 days and contain no significant financing components.
Pursuit’s performance obligations are short-term in nature. They include the provision of a hotel room, an attraction
admission, a chartered or ticketed bus or van ride, the fulfillment of travel planning itineraries, and/or the sale of food,
beverage, or retail products. Revenue is recognized when the service has been provided or the product has been delivered.
When credit is extended, payment terms are generally within 30 days and contain no significant financing components.
Contract Liabilities
GES and Pursuit typically receive customer deposits prior to transferring the related product or service to the customer. These
deposits are recorded as a contract liability and are recognized as revenue upon satisfaction of the related contract
performance obligation(s). GES also provides customer rebates and volume discounts to certain event organizers that are
48
recognized as a reduction of revenue. These amounts are included in the Consolidated Balance Sheets under the captions
“Contract liabilities” and “Other deferred items and liabilities.”
Changes to contract liabilities are as follows:
(in thousands)
Balance at January 1, 2018 ................................................................................................................... $
Cash additions .........................................................................................................................................
Revenue recognized.................................................................................................................................
Foreign exchange translation adjustment ................................................................................................
Balance at December 31, 2018..............................................................................................................
Cash additions .........................................................................................................................................
Revenue recognized.................................................................................................................................
Foreign exchange translation adjustment ................................................................................................
Balance at December 31, 2019.............................................................................................................. $
31,981
179,238
(174,620)
(999)
35,600
210,871
(196,158)
483
50,796
Contract Costs
GES capitalizes certain incremental costs incurred in obtaining and fulfilling contracts. Capitalized costs principally relate to
direct costs of materials and services incurred in fulfilling services of future exhibitions, conferences, and events, and also
include up-front incentives and commissions incurred upon contract signing. Costs associated with preliminary contract
activities (i.e. proposal activities) are expensed as incurred. Capitalized contract costs are expensed upon the transfer of the
related goods or services and are included in cost of services or cost of products, as applicable. The deferred incremental
costs of obtaining and fulfilling contracts are included in the Consolidated Balance Sheets under the captions “Current
contract costs” and “Other investments and assets.”
Changes to contract costs are as follows:
(in thousands)
Balance at January 1, 2018 ................................................................................................................... $
Additions..................................................................................................................................................
Expenses ..................................................................................................................................................
Cancelled..................................................................................................................................................
Foreign exchange translation adjustment.................................................................................................
Balance at December 31, 2018 ..............................................................................................................
Additions..................................................................................................................................................
Expenses ..................................................................................................................................................
Cancelled..................................................................................................................................................
Foreign exchange translation adjustment.................................................................................................
Balance at December 31, 2019 .............................................................................................................. $
16,878
65,147
(59,601)
(136)
(810)
21,478
74,274
(67,425)
(68)
237
28,496
As of December 31, 2019, capitalized contract costs consisted of $1.9 million to obtain contracts and $26.6 million to fulfill
contracts. We did not recognize an impairment loss with respect to capitalized contract costs during the years ended
December 31, 2019 or 2018.
49
Disaggregation of Revenue
The following tables disaggregate GES and Pursuit revenue by major product line, timing of revenue recognition, and
markets served:
GES
(in thousands)
Services:
GES North
America(1)
Year Ended December 31, 2019
Intersegment
Eliminations
GES EMEA(1)
Total
Core services ............................................................................ $
Audio-visual .............................................................................
Event technology......................................................................
Intersegment eliminations ........................................................
Total services ..............................................................................
Products:
753,648 $
78,178
29,600
—
861,426
130,932 $
24,197
9,749
—
164,878
884,580
— $
102,375
—
39,349
—
(20,741)
(20,741)
(20,741) 1,005,563
Core products ...........................................................................
Total revenue ............................................................................. $
74,606
936,032 $
68,713
233,591 $
—
143,319
(20,741) $ 1,148,882
Timing of revenue recognition:
Services transferred over time.................................................. $
Products transferred over time(2) ..............................................
Products transferred at a point in time......................................
Total revenue ............................................................................. $
861,426 $
45,597
29,009
936,032 $
164,878 $
16,071
52,642
233,591 $
(20,741) $ 1,005,563
61,668
81,651
(20,741) $ 1,148,882
—
—
Markets:
Exhibitions................................................................................ $
Conferences ..............................................................................
Corporate events.......................................................................
Consumer events ......................................................................
Intersegment eliminations ........................................................
Total revenue ............................................................................. $
478,397 $
289,394
141,030
27,211
—
936,032 $
172,400 $
27,917
32,212
1,062
—
233,591 $
650,797
— $
317,311
—
173,242
—
28,273
—
(20,741)
(20,741)
(20,741) $ 1,148,882
(1) During the first quarter of 2019, we realigned GES’ organizational structure. As a result, we changed GES’ reportable
segments to reflect how our chief operating decision maker regularly reviews and makes decisions regarding the
allocation of resources. Accordingly, GES’ new reportable segments are GES North America and GES EMEA.
(2) GES’ graphics product revenue is recognized over time as it is considered a part of the single performance obligation
satisfied over time.
50
(in thousands)
Services:
GES North
America(1)
Year Ended December 31, 2018
Intersegment
Eliminations
GES EMEA(1)
Total
Core services ............................................................................ $
Audio-visual.............................................................................
Event technology .....................................................................
Intersegment eliminations ........................................................
Total services ..............................................................................
Products:
733,407 $
73,331
30,208
—
836,946
120,371 $
22,011
10,658
—
153,040
— $
—
—
(17,140)
(17,140)
853,778
95,342
40,866
(17,140)
972,846
Core products ...........................................................................
Total revenue............................................................................. $
72,844
909,790 $
65,207
218,247 $
—
138,051
(17,140) $ 1,110,897
Timing of revenue recognition:
Services transferred over time ................................................. $
Products transferred over time(2) .............................................
Products transferred at a point in time .....................................
Total revenue............................................................................. $
836,946 $
44,109
28,735
909,790 $
153,040 $
16,084
49,123
218,247 $
(17,140) $
—
—
972,846
60,193
77,858
(17,140) $ 1,110,897
Markets:
Exhibitions ............................................................................... $
Conferences..............................................................................
Corporate events ......................................................................
Consumer events......................................................................
Intersegment eliminations ........................................................
Total revenue............................................................................. $
500,411 $
251,978
126,781
30,620
—
909,790 $
160,876 $
27,129
28,130
2,112
—
218,247 $
661,287
— $
279,107
—
154,911
—
32,732
—
(17,140)
(17,140)
(17,140) $ 1,110,897
(1) During the first quarter of 2019, we realigned GES’ organizational structure. As a result, we changed GES’ reportable
segments to reflect how our chief operating decision maker regularly reviews and makes decisions regarding the
allocation of resources. Accordingly, GES’ new reportable segments are GES North America and GES EMEA.
(2) GES’ graphics product revenue is recognized over time as it is considered a part of the single performance obligation
satisfied over time.
51
Pursuit
(in thousands)
Services:
Year Ended December 31,
2019
2018
Admissions ................................................................................................................. $
Accommodations........................................................................................................
Transportation ............................................................................................................
Travel planning...........................................................................................................
Intersegment eliminations ..........................................................................................
Total services revenue...................................................................................................
Products:
Food and beverage......................................................................................................
Retail operations.........................................................................................................
Total products revenue..................................................................................................
Total revenue ............................................................................................................... $
85,371 $
60,672
14,594
5,979
(1,686)
164,930
31,838
26,045
57,883
222,813 $
Timing of revenue recognition:
Services transferred over time.................................................................................... $
Products transferred at a point in time........................................................................
Total revenue ............................................................................................................... $
164,930 $
57,883
222,813 $
Markets:
Banff Jasper Collection .............................................................................................. $
Alaska Collection .......................................................................................................
Glacier Park Collection ..............................................................................................
FlyOver.......................................................................................................................
Total revenue ............................................................................................................... $
133,229 $
39,406
37,121
13,057
222,813 $
83,000
37,470
13,956
4,529
(1,551)
137,404
25,962
21,921
47,883
185,287
137,404
47,883
185,287
106,106
36,451
31,465
11,265
185,287
Note 3. Share-Based Compensation
The following table summarizes share-based compensation expense:
(in thousands)
Performance unit incentive plan (“PUP”) ................................................. $
Restricted stock .........................................................................................
Restricted stock units ................................................................................
Share-based compensation before income tax benefit.........................
Income tax benefit.....................................................................................
Share-based compensation, net of income tax benefit ......................... $
2019
Year Ended December 31,
2018
2017
3,990
2,684
516
7,190
(2,241)
4,949
$
$
2,260 $
2,453
157
4,870
(1,227)
3,643 $
8,088
2,594
287
10,969
(4,079)
6,890
We recorded share-based compensation expense through restructuring charges of $0.1 million in 2019, none in 2018, and
$0.1 million in 2017. No share-based compensation costs were capitalized during 2019, 2018, or 2017.
52
The following table summarizes the activity of the outstanding share-based compensation awards:
PUP Awards
Restricted Stock
Restricted Stock Units
Weighted-
Average
Grant Date
Fair Value
Shares
Weighted-
Average
Grant Date
Fair Value
Shares
Shares
Balance at December 31, 2018 ..................... 239,809 $
73,619 $
Granted............................................................
(95,309) $
Vested..............................................................
Forfeited ..........................................................
(3,215) $
Balance at December 31, 2019 ..................... 214,904 $
40.65 176,769 $
56,390 $
58.29
(85,436) $
26.98
55.72
(11,600) $
52.53 136,123 $
40.87
57.99
32.27
49.05
52.66
12,090 $
8,898 $
(9,250) $
(115) $
11,623 $
Weighted-
Average
Grant Date
Fair Value
39.04
61.16
43.65
52.15
52.17
Viad Corp Omnibus Incentive Plan
We grant share-based compensation awards to our officers, directors, and certain key employees pursuant to the 2017 Viad
Corp Omnibus Incentive Plan (the “2017 Plan”). The 2017 Plan has a 10-year term 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. In June
2017, we registered 1,750,000 shares of common stock issuable under the 2017 Plan. As of December 31, 2019, there were
1,584,154 shares available for future grant under the 2017 Plan.
PUP Awards
The vesting of PUP award shares is based upon achievement of certain performance-based criteria over a three-year period.
During the year ended December 31, 2019, we granted PUP awards with a grant date fair value of $4.3 million of which $1.7
million are payable in shares. Liabilities related to PUP awards were $5.3 million as of December 31, 2019 and $7.0 million
as of December 31, 2018. In 2019, PUP awards granted in 2016 vested and we paid $5.6 million in cash and $3.4 million in
shares. In 2019, we withheld 25,771 shares for $1.5 million related to tax withholding requirements on vested PUP awards
paid in shares. In 2018, PUP awards granted in 2015 vested and we paid $5.9 million in cash. In 2017, PUP awards granted in
2014 vested and we paid $3.7 million in cash.
Restricted Stock
The grant date fair value of vested restricted stock was $2.8 million in 2019, $2.1 million in 2018, and $2.7 million in 2017.
As of December 31, 2019, the unamortized cost of outstanding restricted stock awards was $2.5 million, which we expect to
recognize over a weighted-average period of approximately 1.1 years. We repurchased 24,995 shares for $1.5 million in
2019, 22,358 shares for $1.2 million in 2018, and 41,532 shares for $2.1 million in 2017 related to tax withholding
requirements on vested share-based awards.
Restricted Stock Units
Aggregate liabilities related to restricted stock units were $0.4 million as of December 31, 2019 and $0.4 million as of
December 31, 2018. In 2019, restricted stock units vested and we paid $0.6 million in cash and $0.2 million in shares. In
2018, the 2015 restricted stock units vested and we paid $0.2 million in cash. In 2017, portions of the 2012 and 2014
restricted stock units vested and we paid $0.3 million in cash.
Stock Options
The following table summarizes stock option activity:
Options outstanding and exercisable at December 31, 2018...................................
Exercised.......................................................................................................................
Options outstanding and exercisable at December 31, 2019...................................
Shares
Weighted-Average
Exercise Price
58,689 $
(17,546) $
41,143 $
16.62
16.62
16.62
The weighted-average remaining contractual life of stock options outstanding is less than one year. The total intrinsic value
of stock options outstanding was $2.1 million in 2019, $2.0 million in 2018, and $2.5 million in 2017. The intrinsic value of
stock options outstanding represents the difference between our closing stock price on December 31 of each year and the
exercise price, multiplied by the number of in-the-money stock options.
53
Note 4. Acquisitions
2019 Acquisitions
Belton Chalet
On May 16, 2019, we acquired the Belton Chalet in Glacier National Park for total cash consideration of $3.2 million.
Transaction costs associated with the acquisition were $0.3 million, which are included in “Cost of services” in the
Consolidated Statements of Operations. These assets have been included in the consolidated financial statements from the
date of acquisition.
Mountain Park Lodges
On June 8, 2019, we acquired a 60% equity interest in Mountain Park Lodges’ group of seven hotels and an undeveloped
land parcel located in Jasper National Park for total consideration of $100.6 million Canadian dollars (approximately $76
million U.S. dollars).
The seven Mountain Park Lodges properties include: Sawridge Inn and Conference Centre (152 guest rooms); Pyramid Lake
Resort (62 guest rooms); The Crimson Hotel (99 guest rooms); Chateau Jasper (119 guest rooms); Pocahontas Cabins (57
guest rooms); Marmot Lodge (107 guest rooms); and Lobstick Lodge (139 guest rooms).
As the majority owner of these properties, we consolidate 100% of the results of operations in our consolidated financial
statements and record the 40% owners’ share of the income or loss attributable to non-redeemable noncontrolling interest.
The following table summarizes the preliminary recording of the fair value allocation of the assets acquired and liabilities
assumed as of the date of acquisition. During the year ended December 31, 2019, we made certain purchase accounting
measurement period adjustments based on refinements to assumptions used in the preliminary valuation. The purchase price
allocation was final as of December 31, 2019.
(in thousands)
Purchase price paid as:
Cash ........................................................................................................................
Net working capital adjustment..............................................................................
Consideration transferred.....................................................................................
Right to manage......................................................................................................
Purchase price, net..........................................................................................
$
75,837
18
75,855
(1,276)
74,579
Fair value of net assets acquired:
$
Accounts receivable ...............................................................................................
Inventories ..............................................................................................................
Prepaid expenses ....................................................................................................
Property and equipment..........................................................................................
Intangible assets .....................................................................................................
Total assets acquired.......................................................................................
Accounts payable ...................................................................................................
Advanced deposits payable ....................................................................................
Deferred tax liability ..............................................................................................
Other liabilities .......................................................................................................
Total liabilities assumed .................................................................................
Noncontrolling interest equity................................................................................
Total fair value of net assets acquired...........................................................
Excess purchase price over fair value of net assets acquired (“goodwill”) ..........
333
152
276
103,642
20,180
124,583
329
400
19,734
16
20,479
49,719
$
54,385
20,194
Under the acquisition method of accounting, the purchase price as shown in the table above is allocated to the tangible and
identifiable intangible assets acquired and liabilities assumed based on their estimated fair value. The excess purchase price
over the fair value of net assets acquired was recorded as “Goodwill.” Goodwill is included in the Pursuit business group.
The primary factor that contributed to the purchase price resulting in the recognition of goodwill related to future growth
54
opportunities when combined with our other businesses. Goodwill is not deductible for tax purposes. The estimated values of
current assets and liabilities were based upon their historical costs on the acquisition date due to their short-term nature.
Transaction costs associated with the Mountain Park Lodges were $0.9 million in 2019 and $0.1 million in 2018, which are
included in “Corporate activities” in the Consolidated Statements of Operations. We included these assets and results of
operations in the consolidated financial statements from the date of acquisition. During the year ended December 31, 2019,
revenue related to the Mountain Park Lodges was $18.8 million and operating income was $5.5 million.
Identifiable intangible assets acquired in the Mountain Park Lodges acquisition were $20.2 million and consist primarily of
in-place leases, customer relationships, and trade names. The weighted average amortization period related to the intangible
assets is approximately 30.8 years.
Supplementary pro forma financial information
The following table summarizes the unaudited pro forma results of operations attributable to Viad, assuming the Mountain
Park Lodges acquisition had been completed on January 1, 2018:
(in thousands, except per share data)
Revenue ........................................................................................................................ $
Depreciation and amortization ..................................................................................... $
Income from continuing operations ............................................................................. $
Net income attributable to Viad ................................................................................... $
Diluted income per share.............................................................................................. $
Basic income per share................................................................................................. $
Year Ended December 31,
2019
1,379,956 $
61,597 $
22,195 $
21,337 $
0.99 $
0.99 $
2018
1,323,524
62,261
48,312
49,070
2.39
2.40
Pursuit – Sky Lagoon Attraction
On July 25, 2019, we announced plans for a new geothermal lagoon attraction that will be located on an oceanfront lot just
outside downtown Reykjavik, Iceland. We acquired a 51% controlling interest for $13.2 million in the new entity that will
manage the sky lagoon attraction, which we will operate in partnership with Geothermal Lagoon ehf., the Icelandic entity that
owns the lagoon assets. The noncontrolling interest’s carrying value was determined by the fair value of the noncontrolling
interest as of the acquisition date and the noncontrolling interest’s share of the subsequent net income or loss. The
amortization of the resulting operating contract intangible is not deductible for tax purposes. We expect to open our new
attraction in 2021. Refer to Note 9 – Goodwill and Other Intangible Assets for additional information.
2018 Acquisition
Maligne Canyon Restaurant
In March 2018, we acquired the Maligne Canyon Restaurant and Gift Shop for total cash consideration of $6.0 million
Canadian dollars (approximately $4.6 million U.S. dollars). Transaction costs associated with the acquisition were $24
thousand in 2018, which are included in “Cost of services” in the Consolidated Statements of Operations. These assets have
been included in the consolidated financial statements from the date of acquisition. The Maligne Canyon Restaurant has been
renovated and rebranded as the Maligne Canyon Wilderness Kitchen.
2017 Acquisitions
Poken
In March 2017, we acquired Poken event engagement technology for total cash consideration of $1.7 million. Transaction
costs associated with the acquisition of Poken were $0.3 million in 2017, which are included in “Cost of services” in the
Consolidated Statements of Operations. These assets have been included in the consolidated financial statements from the
date of acquisition.
Esja
On November 3, 2017, we acquired the controlling interest (54.5% of the common stock) in Esja, a private corporation in
Reykjavik, Iceland. Through Esja and its wholly-owned subsidiary, we are operating a new FlyOver Iceland attraction, which
opened in August 2019. The purchase price was €8.2 million (approximately $9.5 million U.S. dollars) in cash, and the
shareholders agreement includes a put option that gives the minority Esja shareholders the right to sell (or “put”) their Esja
shares to us based on a calculated formula within a predefined term. Refer to Note 22 – Redeemable Noncontrolling Interest
for additional information.
55
Under the acquisition method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed
based on their estimated fair values. The excess purchase price over the fair value of net assets acquired is recorded as
goodwill. Goodwill is included in the Pursuit business group and the primary factor that contributed to the purchase price
resulting in the recognition of goodwill relates to future expected income from operations. Goodwill is deductible for tax
purposes. Refer to Note 9 – Goodwill and Other Intangible Assets for additional information.
Transaction costs associated with the Esja acquisition were $0.1 million in each 2018 and 2017, which are included in
“Corporate activities” in the Consolidated Statements of Operations. The Esja results of operations have been included in the
consolidated financial statements from the date of acquisition.
Note 5. Inventories
The components of inventories consisted of the following:
(in thousands)
Raw materials ............................................................................................................... $
Finished goods ..............................................................................................................
Inventories ............................................................................................................. $
December 31,
2019
2018
11,788 $
5,481
17,269 $
12,368
4,261
16,629
Note 6. Other Current Assets
Other current assets consisted of the following:
(in thousands)
Income tax receivable ................................................................................................... $
Prepaid insurance..........................................................................................................
Prepaid vendor payments..............................................................................................
Prepaid software maintenance ......................................................................................
Prepaid taxes.................................................................................................................
Prepaid other.................................................................................................................
Other .............................................................................................................................
Other current assets .............................................................................................. $
December 31,
2019
2018
13,250 $
5,573
4,698
3,875
917
1,904
637
30,854 $
10,886
2,754
4,492
4,010
591
1,755
998
25,486
Note 7. Property and Equipment
Property and equipment consisted of the following:
(in thousands)
Land and land interests(1) .............................................................................................. $
Buildings and leasehold improvements ........................................................................
Equipment and other.....................................................................................................
Gross property and equipment ............................................................................
Accumulated depreciation ............................................................................................
Property and equipment, net (excluding finance leases) ...................................
Finance lease right-of-use assets, net............................................................................
Property and equipment, net ............................................................................... $
December 31,
2019
2018
34,532 $
377,754
417,239
829,525
(353,974)
475,551
25,350
500,901 $
32,887
238,995
383,284
655,166
(321,319)
333,847
—
333,847
(1)
Land and land interests include certain leasehold interests in land within Pursuit for which we are considered to have
perpetual use rights. The carrying amount of these leasehold interests was $8.2 million as of December 31, 2019 and
$7.8 million as of December 31, 2018. The increase was due to additional purchased land in 2019. These land interests
are not subject to amortization.
Depreciation expense was $45.6 million during 2019, $45.8 million during 2018, and $42.7 million during 2017.
Property and equipment purchased through accounts payable and accrued liabilities increased $4.2 million during 2019,
decreased $1.9 million during 2018, and increased $2.3 million during 2017.
56
We recorded asset impairment charges to equipment of $3.8 million during the fourth quarter of 2019 primarily related to our
audio-visual production business in the United Kingdom.
On December 29, 2016, the Mount Royal Hotel in Banff, Canada was damaged by a fire and closed from December 2016
through June 2018 for reconstruction. During 2017, we resolved our property and business interruption insurance claims
related to the fire for a total of $36.3 million of which $29.3 million was recorded as an impairment recovery (partially offset
by impairment charges of $0.2 million) related to construction costs to re-open the hotel.
Note 8. Other Investments and Assets
Other investments and assets consisted of the following:
(in thousands)
Cash surrender value of life insurance.......................................................................... $
Self-insured liability receivable....................................................................................
Contract costs................................................................................................................
Other mutual funds .......................................................................................................
Other .............................................................................................................................
Other investments and assets ............................................................................... $
December 31,
2019
2018
24,873 $
9,982
3,961
3,107
3,196
45,119 $
23,815
9,176
3,461
2,517
3,941
42,910
Note 9. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill are as follows:
(in thousands)
Balance at December 31, 2017 ................................................. $
Foreign currency translation adjustments...................................
Purchase price allocation adjustments ........................................
Balance at December 31, 2018 .................................................
Business acquisitions ..................................................................
Foreign currency translation adjustments...................................
Balance at December 31, 2019 ................................................. $
GES North
America
GES EMEA
Pursuit
155,505 $
(561)
—
154,944
—
332
155,276 $
31,612 $
(1,658)
—
29,954
—
875
30,829 $
83,434 $
(6,929)
(73)
76,432
20,684
4,762
101,878 $
Total
270,551
(9,148)
(73)
261,330
20,684
5,969
287,983
The following table summarizes goodwill by reporting unit and segment:
(in thousands)
GES:
GES North America:
December 31,
2019
2018
U.S. .................................................................................................................... $
Canada ...............................................................................................................
GES EMEA .............................................................................................................
Total GES ....................................................................................................................
Pursuit:
Banff Jasper Collection ...........................................................................................
Alaska Collection ....................................................................................................
Glacier Park Collection ...........................................................................................
FlyOver ...................................................................................................................
Total Pursuit................................................................................................................
Total Goodwill............................................................................................................. $
148,277 $
6,999
30,829
186,105
55,524
3,184
1,758
41,412
101,878
287,983 $
148,277
6,667
29,954
184,898
32,009
3,184
1,268
39,971
76,432
261,330
Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31, and 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 value.
57
GES North America’s goodwill is assigned to, and tested at, the operating segment level (GES U.S. and GES Canada,
collectively “GES North America”). GES EMEA’s goodwill is assigned to and tested at the operating segment level.
Pursuit’s goodwill impairment testing is performed at the reporting unit level (Banff Jasper Collection, the Alaska Collection,
the Glacier Park Collection, and FlyOver).
Our accumulated goodwill impairment as of both December 31, 2019 and 2018 was $229.7 million.
Other intangible assets consisted of the following:
(in thousands)
Intangible assets subject to amortization:
Customer contracts and relationships........
Operating contracts and licenses ...............
In-place lease.............................................
Tradenames ...............................................
Non-compete agreements..........................
Other..........................................................
Total amortized intangible assets ................
Indefinite-lived intangible assets:
Business licenses .......................................
Other intangible assets .................................
December 31, 2019
December 31, 2018
Useful Life
(Years)
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
7.8 $ 72,219 $ (40,866) $ 31,353 $ 67,729 $ (31,201) $ 36,528
(1,376) 7,804
(1,881) 41,448 9,180
37.7 43,329
—
—
13.1 15,044
(3,109) 4,596
(4,338) 5,085 7,705
9,423
6.6
(4,080) 1,094
302 5,174
(1,775)
2,077
2.0
812
736 1,365
(66)
802
8.2
(40,319) 50,834
(49,157) 93,737 91,153
142,894
(231) 14,813
(553)
—
571
460
571
$143,465 $ (49,157) $ 94,308 $ 91,613 $ (40,319) $ 51,294
460
—
—
Intangible asset amortization expense was $10.6 million during 2019, $11.0 million during 2018, and $12.4 million during
2017. We recorded an impairment charge to intangible assets of $1.5 million during the fourth quarter of 2019 related to our
audio-visual production business in the United Kingdom.
At December 31, 2019, the estimated future amortization expense related to intangible assets subject to amortization is as
follows:
(in thousands)
Year ending December 31,
2020 ............................................................................................................................................................. $
2021 .............................................................................................................................................................
2022 .............................................................................................................................................................
2023 .............................................................................................................................................................
2024 .............................................................................................................................................................
Thereafter.....................................................................................................................................................
Total.................................................................................................................................................................. $
9,151
8,151
7,491
6,564
5,340
57,040
93,737
58
Note 10. Other Current Liabilities
Other current liabilities consisted of the following:
(in thousands)
Continuing operations:
Commissions payable.............................................................................................. $
Self-insured liability................................................................................................
Accrued sales and use taxes ....................................................................................
Accrued employee benefit costs..............................................................................
Accrued legal settlement .........................................................................................
Accrued restructuring..............................................................................................
Accrued dividends...................................................................................................
Current portion of pension and postretirement liabilities........................................
Accrued professional fees .......................................................................................
Accommodation services deposits ..........................................................................
Deferred rent(1) .......................................................................................................
Other taxes ..............................................................................................................
Other........................................................................................................................
Total continuing operations .......................................................................................
Discontinued operations:
Environmental remediation liabilities .....................................................................
Self-insured liability................................................................................................
Other........................................................................................................................
Total discontinued operations ...................................................................................
Total other current liabilities..................................................................................... $
December 31,
2019
2018
8,274 $
5,668
5,451
3,564
2,500
2,130
2,019
1,899
1,248
959
—
278
5,187
39,177
311
260
76
647
39,824 $
2,703
5,688
5,397
3,224
—
716
2,012
2,310
886
1,541
1,659
695
4,501
31,332
555
295
76
926
32,258
(1)
Upon the adoption of Topic 842, we reclassified deferred rent to operating lease obligations. We did not recast prior
year financial statements under the new standard. Refer to Note 20 – Leases and Other for additional information.
Note 11. Other Deferred Items and Liabilities
Other deferred items and liabilities consisted of the following:
(in thousands)
Continuing operations:
Foreign deferred tax liability................................................................................... $
Multi-employer pension plan withdrawal liability..................................................
Self-insured excess liability ....................................................................................
Self-insured liability................................................................................................
Accrued compensation ............................................................................................
Accrued restructuring..............................................................................................
Deferred rent(1).........................................................................................................
Contract liabilities ...................................................................................................
Other........................................................................................................................
Total continuing operations .......................................................................................
Discontinued operations:
Self-insured liability................................................................................................
Environmental remediation liabilities .....................................................................
Other........................................................................................................................
Total discontinued operations ...................................................................................
Total other deferred items and liabilities ................................................................. $
December 31,
2019
2018
32,570 $
15,693
9,982
8,682
7,485
2,383
—
125
2,423
79,343
2,018
1,964
382
4,364
83,707 $
9,768
—
9,176
10,681
6,664
1,535
2,719
2,124
1,868
44,535
2,437
1,775
244
4,456
48,991
(1)
Upon the adoption of Topic 842, we reclassified deferred rent to operating lease obligations. We did not recast prior
year financial statements under the new standard. Refer to Note 20 – Leases and Other for additional information.
59
Note 12. Debt and Finance Lease Obligations
The components of long-term debt and finance lease obligations consisted of the following:
(in thousands, except interest rates)
2018 Credit Facility, 3.9% weighted-average interest rate at December 31, 2019
and 4.3% at December 31, 2018, due through 2023(1).................................................. $
FlyOver Iceland Credit Facility, 4.9% weighted-average interest rate at December
31, 2019, due through 2022(1) .......................................................................................
Less unamortized debt issuance costs...........................................................................
Total debt(2)..................................................................................................................
Finance lease obligations, 7.7% weighted-average interest rate at December 31,
2019 and 4.5% at December 31, 2018, due through 2021............................................
Total debt and finance lease obligations(3)................................................................
Current portion(4) .....................................................................................................
Long-term debt and finance lease obligations.......................................................... $
December 31,
2019
2018
311,464 $
227,792
5,607
(1,836)
315,235
25,257
340,492
(316,794)
23,698 $
—
(2,310)
225,482
4,639
230,121
(229,416)
705
(1)
(2)
(3)
(4)
Represents the weighted-average interest rate in effect at the respective periods, including any applicable margin. The
interest rates do not include amortization of debt issuance costs or commitment fees.
The weighted-average interest rate on total debt (including unamortized debt issuance costs and commitment fees) was
4.2% for 2019, 4.3% for 2018 and 3.7% for 2017. The estimated fair value of total debt was $339.4 million as of
December 31, 2019 and $228.6 million as of December 31, 2018. The fair value of debt was estimated by discounting
the future cash flows using rates currently available for debt of similar terms and maturity, which is a Level 2
measurement. Refer to Note 13 – Fair Value Measurements.
Cash paid for interest on debt was $11.9 million during 2019, $8.5 million during 2018, and $7.7 million during 2017.
Borrowings under the 2018 Credit Facility are classified as current because all borrowed amounts are due within one
year.
2018 Credit Agreement
Effective October 24, 2018, we entered into a Second Amended and Restated Credit Agreement (the “2018 Credit
Agreement”). The 2018 Credit Agreement has a maturity date of October 24, 2023 and provides for a $450 million revolving
credit facility (“2018 Credit Facility”). Proceeds from the 2018 Credit Facility were used to refinance certain of our
outstanding debt and provide us with additional funds for our operations, growth initiatives, acquisitions, and other general
corporate purposes in the ordinary course of business. The 2018 Credit Facility may be increased up to an additional $250
million under certain circumstances and has a $20 million sublimit for letters of credit. Borrowings and letters of credit can
be denominated in U.S. dollars, Euros, Canadian dollars, or British pounds. Our lenders under the 2018 Credit Facility have a
first perfected security interest in all of our personal property including GES, GES Event Intelligence Services, Inc., CATC
Alaska Tourism Corporation (“CATC”), ON Event Services, LLC (“ON Services”), and 65% of the capital stock of our top-
tier foreign subsidiaries (other than Esja). Financial covenants include an interest coverage ratio of not less than 3.00 to 1.00
and a leverage ratio of not greater than 3.50 to 1.00, with a step-up to 4.00 to 1.00 for four quarters following a material
acquisition of $50 million or more. Dividends are permitted up to $15 million in any calendar year. In addition, we can
declare and pay dividends or repurchase our common stock up to $20 million per calendar year. Dividends and repurchases
above those thresholds are permitted as long as our pro forma leverage ratio is less than or equal to 2.75 to 1.00. Unsecured
debt is allowed provided we are in compliance with the leverage ratio. In addition, the unsecured debt must mature after the
expiration of the 2018 Credit Facility, cannot have scheduled principal payments while the 2018 Credit Facility is in place,
and any covenants for unsecured debt cannot be more restrictive than the 2018 Credit Facility. Significant other covenants
include limitations on investments, additional indebtedness, sales and dispositions of assets, and liens on property. As of
December 31, 2019, the interest coverage ratio was 9.23 to 1.00, the leverage ratio was 2.48 to 1.00, and we were in
compliance with all covenants under the 2018 Credit Agreement.
Effective July 23, 2019, we entered into an amendment (“Amendment No.1”) to the 2018 Credit Agreement. Amendment
No.1 modified the terms related to the withdrawal liabilities of single and multi-employer ERISA plans.
Borrowings under the 2018 Credit Facility (of which GES, GES Event Intelligence Services, Inc., CATC, and ON Services
are guarantors) are indexed to the prime rate or the London Interbank Offered Rate (“LIBOR”), plus appropriate spreads tied
to our leverage ratio. As LIBOR will be phased out in 2021, our 2018 Credit Facility includes a method for determining an
alternative or successor rate of interest that gives consideration to the new prevailing market convention. The vast majority of
our borrowings under the 2018 Credit Facility are indexed to LIBOR. Commitment fees and letters of credit fees are also tied
60
to our leverage ratio. The fees on the unused portion of the 2018 Credit Facility were 0.35% annually as of December 31,
2019. Only our borrowings under the 2018 Credit Facility and the discount rates we use to account for some leases are
indexed to LIBOR. We do not expect the alternative or successor rate to LIBOR to have a material impact on either our 2018
Credit Facility or the accounting for our leases.
As of December 31, 2019, capacity remaining under the 2018 Credit Facility was $134.9 million, reflecting borrowings of
$311.5 million and $3.6 million in outstanding letters of credit.
FlyOver Iceland Credit Facility
Effective February 15, 2019, FlyOver Iceland ehf., a wholly-owned subsidiary of Esja, entered into a credit agreement with a
€5.0 million (approximately $5.6 million U.S. dollars) credit facility (the “FlyOver Iceland Credit Facility”) with a maturity
date of March 1, 2022. The loan proceeds were used to complete the development of the FlyOver Iceland attraction.
Quarterly payments will be made until the loan is repaid.
Aggregate annual maturities of long-term debt as of December 31, 2019 are as follows:
(in thousands)
Year ending December 31,
2020 ......................................................................................................................................................... $
2021 .........................................................................................................................................................
2022 .........................................................................................................................................................
2023 .........................................................................................................................................................
2024 .........................................................................................................................................................
Thereafter ................................................................................................................................................
Total................................................................................................................................................... $
Credit Facilities
313,407
1,583
2,081
—
—
—
317,071
The aggregate annual maturities and the related amounts representing interest on finance lease obligations are included in
Note 20 – Leases and Other.
Note 13. Fair Value Measurements
The fair value of an asset or liability is defined as the price that would be received by selling an asset or paying 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.
Money market mutual funds and certain other mutual fund investments are measured 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:
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
December 31,
2019
Money market funds(1).......................................................... $
Other mutual funds(2)............................................................
Total assets at fair value on a recurring basis....................... $
123 $
3,107
3,230 $
123 $
3,107
3,230 $
— $
—
— $
—
—
—
61
(in thousands)
Assets:
December 31,
2018
Fair Value Measurements at Reporting Date Using
Significant
Other
Observable
Inputs
(Level 2)
Quoted Prices
in Active
Markets
(Level 1)
Significant
Unobservable
Inputs
(Level 3)
Money market funds(1) .......................................................... $
Other mutual funds(2) ............................................................
Total assets at fair value on a recurring basis ....................... $
121 $
2,517
2,638 $
121 $
2,517
2,638 $
— $
—
— $
—
—
—
(1) Money market funds are included in “Cash and cash equivalents” in the Consolidated Balance Sheets. These
investments are classified as available-for-sale and are recorded at fair value. There have been no realized gains or
losses related to these investments and we have not experienced any redemption restrictions with respect to any of the
money market mutual funds.
Other mutual funds are included in “Other investments and assets” in the Consolidated Balance Sheets.
(2)
The carrying values of cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-
term nature of these instruments. Refer to Note 12 – Debt and Finance Lease Obligations for the estimated fair value of debt
obligations.
Note 14. Income Per Share
The components of basic and diluted income per share are as follows:
(in thousands, except per share data)
Net income attributable to Viad (diluted) ............................................. $
Less: Allocation to non-vested shares..................................................
Adjustment to the redemption value of redeemable noncontrolling
interest..................................................................................................
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 ...................... $
2019
Year Ended December 31,
2018
2017
$
$
22,035
(147)
(1,318)
20,570
20,146
138
20,284
49,170 $
(458)
(251)
48,461 $
20,168
236
20,404
1.02
1.02
$
$
2.40 $
2.40 $
57,707
(700)
—
57,007
20,146
259
20,405
2.83
2.83
Options to purchase 8,000 shares of common stock during 2019, 500 shares during 2018, and 8,000 shares during 2017 were
outstanding but were not included in the computation of dilutive shares outstanding because the effect would be anti-dilutive.
Note 15. Preferred Stock Purchase Rights
We authorized five million shares of Preferred Stock and two million shares of Junior Participating Preferred Stock, none of
which was outstanding on December 31, 2019.
62
Note 16. Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (“AOCI”) by component are as follows:
(in thousands)
Balance at December 31, 2017.......................................... $
Unrealized Gains
on Investments
Cumulative
Foreign Currency
Translation
Adjustments
Unrecognized Net
Actuarial Loss
and Prior Service
Credit, Net
616 $
(12,026) $
(11,158) $
Accumulated
Other
Comprehensive
Income (Loss)
(22,568)
Other comprehensive income (loss) before
reclassification ...............................................................
Amounts reclassified from AOCI, net of tax .................
Net other comprehensive income (loss) ...........................
Adoption of ASU 2016-01(1)..........................................
Adoption of ASU 2018-02(2)..........................................
Balance at December 31, 2018.......................................... $
Other comprehensive income (loss) before
reclassifications..............................................................
Amounts reclassified from AOCI, net of tax .................
Net other comprehensive income (loss) ...........................
Balance at December 31, 2019.......................................... $
—
—
—
(616)
—
— $
—
—
—
— $
(24,306)
—
(24,306)
—
—
(36,332) $
12,533
—
12,533
(23,799) $
359
724
1,083
—
(1,568)
(11,643) $
(10)
(247)
(257)
(11,900) $
(23,947)
724
(23,223)
(616)
(1,568)
(47,975)
12,523
(247)
12,276
(35,699)
(1)
(2)
Upon the adoption of ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial
Assets and Financial Liabilities, we recorded a cumulative-effect adjustment from unrealized gains on investments to
beginning retained earnings.
Upon the adoption of ASU 2018-02, Income Statement – Reporting Comprehensive Income: Reclassification of
Certain Tax Effects from Accumulated Other Comprehensive Income, we recorded a cumulative-effect adjustment from
AOCI to beginning retained earnings.
Amounts reclassified that relate to our defined benefit pension and postretirement plans include the amortization of prior
service costs and actuarial net losses recognized during each period presented. These costs are recorded as components of net
periodic cost for each period presented. Refer to Note 18 – Pension and Postretirement Benefits for additional information.
Note 17. Income Taxes
We record current income tax expense for the amounts that we expect to report and pay on our income tax returns and
deferred income tax expense for the change in the deferred tax assets and liabilities. On December 22, 2017, the United States
enacted the Tax Cuts and Jobs Act (the “Tax Act”) that significantly changed U.S. tax law. One part of this Tax Act required
the Company to pay a deemed repatriation tax of $5.2 million on its cumulative foreign E&P. After application of tax year
2017 estimated tax payments, $1.1 million of the liability remains outstanding and is due in 2024.
Income from continuing operations before income taxes consisted of the following:
(in thousands)
Foreign....................................................................................................... $
United States..............................................................................................
Income from continuing operations before income taxes .................... $
2019
Year Ended December 31,
2018
49,171 $
(23,061)
26,110 $
54,753 $
10,256
65,009 $
2017
82,919
21,431
104,350
63
Significant components of the income tax provision from continuing operations are as follows:
(in thousands)
Current:
United States:
2019
Year Ended December 31,
2018
2017
Federal ............................................................................................ $
State ................................................................................................
Foreign .................................................................................................
Total current ..............................................................................................
Deferred:
(2,260) $
1,400
13,764
12,904
United States:
Federal ............................................................................................
State ................................................................................................
Foreign .................................................................................................
Total deferred ............................................................................................
Income tax expense.................................................................................. $
(3,355)
(1,619)
(5,424)
(10,398)
2,506 $
41 $
(335)
12,039
11,745
1,860
860
2,630
5,350
17,095 $
1,693
2,573
15,583
19,849
19,893
1,761
4,395
26,049
45,898
We are subject to income tax in jurisdictions in which we operate. A reconciliation of the statutory federal income tax rate to
the effective tax rate is as follows:
(in thousands)
Computed income tax expense at statutory federal
income tax rate........................................................ $
State income taxes, net of federal benefit...............
Deemed mandatory repatriation state tax ...............
Deemed mandatory repatriation federal tax, net of
foreign tax credit.....................................................
Remeasurement of deferred taxes due to change
in tax rates *............................................................
Foreign tax rate differential ....................................
U.S. tax on current year foreign earnings, net of
foreign tax credits ...................................................
Change in valuation allowance...............................
Other adjustments, net ............................................
Income tax expense ......................................... $
2019
Year Ended December 31,
2018
2017
5,483
(173)
—
21.0% $ 13,665
3,489
(0.2)%
(909)
0.0%
21.0% $ 36,522
1,160
5.4%
1,206
(1.4)%
35.0%
1.1%
1.2%
—
0.0%
(1,690)
(2.6)%
6,936
6.6%
(4,517)
3,122
(17.3)%
12.0%
(510)
4,138
(0.8)%
6.4%
8,000
(5,031)
7.7%
(4.8)%
(1,792)
920
(537)
2,506
(223)
(6.9)%
(653)
1.8%
(0.8)%
(212)
9.6% $ 17,095
(2,726)
(0.3)%
(796)
(1.0)%
(0.3)%
627
26.4% $ 45,898
(2.6)%
(0.8)%
0.6%
44.0%
* Included $0.6 million increase to the valuation allowance in 2017.
64
The components of deferred income tax assets and liabilities included in the Consolidated Balance Sheets are as follows:
(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 ......................................................................
Other deferred income tax liabilities.......................................................................
Total deferred tax liabilities............................................................................
Foreign deferred tax liabilities included above........................................................
United States net deferred tax assets ........................................................................ $
December 31,
2019
2018
7,879 $
17,231
4,778
5,371
3,089
2,177
40,525
(4,276)
(2,351)
33,898
(20,681)
(3,945)
(16,172)
(1,858)
(42,656)
31,192
22,434 $
9,156
13,022
5,133
4,707
1,546
2,920
36,484
(3,356)
(2,468)
30,660
(14,501)
(3,498)
(4,759)
(939)
(23,697)
9,808
16,771
We use significant judgment in forming conclusions regarding the recoverability of our deferred tax assets and evaluate all
available positive and negative evidence to determine if it is more-likely-than-not that the deferred tax assets will be realized.
To the extent recovery does not appear likely, a valuation allowance must be recorded. We had gross deferred tax assets of
$40.5 million as of December 31, 2019 and $36.5 million as of December 31, 2018. These deferred tax assets reflect the
expected future tax benefits to be realized upon reversal of deductible temporary differences and the utilization of tax
attributes, including tax credit carryforwards.
As of December 31, 2019, foreign tax credit carryforwards were $5.4 million, of which $4.7 million are foreign tax credits
against U.S. income tax which will begin to expire in 2021 and $0.7 million are creditable against United Kingdom taxes,
which can be carried forward indefinitely. As of December 31, 2019, we had alternative minimum tax credit carryforwards of
$1.9 million, and $0.6 million of U.S. research and development credit carryforwards.
We had gross state and foreign net operating loss carryforwards of $55.2 million as of December 31, 2019 and $49.1 million
as of December 31, 2018, for which we had deferred tax assets of $5.4 million as of December 31, 2019 and $4.7 million as
of December 31, 2018. The state net operating loss carryforwards of $1.9 million expire from 2020 through 2038 and are
subject to a full valuation allowance since it is unlikely that we will utilize these tax benefits prior to expiration. The foreign
net operating loss carryforwards of $3.2 million do not expire.
The valuation allowance was $4.3 million at December 31, 2019 and $3.4 million at December 31, 2018. The increase was
primarily due to an increase for certain foreign net operating loss and credit carryforwards that do not meet the more likely-
than-not threshold for recognition.
While we believe that the deferred tax assets, net of existing valuation allowances, will be utilized in future periods, there are
inherent uncertainties regarding the ultimate realization of these tax assets. It is possible that the relative weight of positive
and negative evidence regarding the realization of deferred tax assets may change, which could result in a material increase
or decrease in our valuation allowance. Such a change could result in a material increase or decrease to income tax expense in
the period the assessment was made.
We have not recorded deferred taxes for withholding taxes on current unremitted earnings of our subsidiaries located in
Canada, the United Kingdom, and the Netherlands as we expect to reinvest those earnings in operations outside of the United
States.
We exercise judgment in determining the income tax provision for positions taken on prior returns when the ultimate tax
determination is uncertain. We classify liabilities associated with uncertain tax positions as “Other deferred items and
65
liabilities” in the Consolidated Balance Sheets unless expected to be paid or released within one year. We had liabilities
associated with uncertain tax positions, including interest and penalties, of $0.4 million as of December 31, 2019 and $0.4
million as of December 31, 2018. Uncertain tax positions, including interest and penalties, are classified as a component of
income tax expense.
During 2019, we decreased the liability for continuing operations uncertain tax positions, including interest and penalties, by
$0.4 million due to the lapse of statute. We expect $0.1 million of the continuing operations uncertain tax positions to be
resolved or settled within the next twelve months and have classified this amount as a current liability.
A reconciliation of the liabilities associated with uncertain tax positions (excluding interest and penalties) is as follows:
(in thousands)
Balance at December 31, 2016................................................................ $
Additions for tax positions taken in prior years ........................................
Reductions for lapse of applicable statutes ...............................................
Balance at December 31, 2017................................................................
Additions for tax positions taken in prior years ........................................
Reductions for lapse of applicable statutes ...............................................
Balance at December 31, 2018................................................................
Additions for tax positions taken in prior years ........................................
Reductions for lapse of applicable statutes ...............................................
Balance at December 31, 2019................................................................ $
Continuing
Operations
Discontinued
Operations
Total
1,559 $
43
(177)
1,425
31
(1,086)
370
151
(296)
225 $
636 $
—
(636)
—
—
—
—
—
—
— $
2,195
43
(813)
1,425
31
(1,086)
370
151
(296)
225
We are subject to taxation in various jurisdictions and file federal, state and local income tax returns in the United States,
Canada, the United Kingdom and other foreign countries. During the year, we concluded the IRS audit of the 2016 tax year
and various other state tax audits, which resulted in a $0.1 million reduction of U.S. foreign tax credits and $0.3 million of
additional tax expense. We are also currently in the process of resolving the audit by the Canada Revenue Agency for the
2016 and 2017 tax years, which we estimate will result in a $0.6 million reduction in existing depreciable assets and a $0.1
million of additional liability.
Our 2017 through 2018 U.S. federal tax years and various state tax years from 2014 through 2018 remain subject to income
tax examinations by tax authorities. The tax years 2015 through 2018 remain subject to examination by various foreign
taxing jurisdictions.
Cash paid for income taxes was $17.2 million during 2019, $27.3 million during 2018, and $14.6 million during 2017.
Note 18. Pension and Postretirement Benefits
Domestic Plans
We have frozen defined benefit pension plans held in trust for certain employees which we funded. We also maintain 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.
We also have 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, we retained the obligations for these benefits for retirees of certain sold businesses.
While the plans have no funding requirements, we may fund the plans.
66
The components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) of our
pension plans consist of 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 (loss):
2019
December 31,
2018
2017
61 $
861
(99)
403
1,226
64 $
780
(193)
494
1,145
Net actuarial gain (loss) .......................................................................
1,305
(76)
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) ............................................................... $
(403)
902
(494)
(570)
2,128 $
575 $
64
803
(176)
433
1,124
114
(433)
(319)
805
The components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) of our
postretirement benefit plans consist of the following:
(in thousands)
Net periodic benefit cost:
Service cost .......................................................................................... $
Interest cost ..........................................................................................
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 (loss):
Net actuarial gain (loss) .......................................................................
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) ............................................................... $
2019
December 31,
2018
2017
64 $
458
(189)
112
445
(1,117)
—
(112)
189
(1,040)
80 $
449
(205)
405
729
170
—
(405)
205
(30)
92
413
(431)
164
238
237
816
(164)
431
1,320
(595) $
699 $
1,558
67
The following table indicates the funded status of the plans as of December 31:
(in thousands)
Change in benefit obligation:
Funded Plans
Unfunded Plans
Postretirement
Benefit Plans
2019
2018
2019
2018
2019
2018
Benefit obligation at beginning of year............. $ 14,235 $ 15,440 $
—
Service cost .......................................................
481
Interest cost .......................................................
(887)
Actuarial adjustments........................................
(799)
Benefits paid......................................................
14,235
—
527
1,611
(801)
Benefit obligation at end of year.......................... 15,572
Change in plan assets:
9,271 $
61
333
753
(956)
9,462
9,857 $ 13,454 $ 13,807
80
449
170
(1,052)
13,454
64
64
458
299
(1,117)
(425)
(524)
(873)
9,271 11,986
—
Fair value of plan assets at beginning of year ... 10,299
—
1,157
Actual return on plan assets ..............................
1,052
636
Company contributions .....................................
(1,052)
(801)
Benefits paid......................................................
Fair value of plan assets at end of year............... 11,291
—
Funded status at end of year................................ $ (4,281) $ (3,936) $ (9,462) $ (9,271) $ (11,986) $ (13,454)
11,590
(1,043)
551
(799)
10,299
—
—
873
(873)
—
—
—
524
(524)
—
—
—
956
(956)
—
The net amounts recognized in the Consolidated Balance Sheets under the caption “Pension and postretirement benefits” as
of December 31 are as follows:
(in thousands)
Other current liabilities ........................................... $
Non-current liabilities .............................................
Net amount recognized ........................................... $
2019
2018
2019
2018
2019
2018
— $
4,281
4,281 $
— $
3,936
3,936 $
703 $
8,759
9,462 $
974 $
1,160
1,019 $
8,297 10,967
12,294
9,271 $ 11,986 $ 13,454
Funded Plans
Unfunded Plans
Postretirement
Benefit Plans
Amounts recognized in AOCI as of December 31 are as follows:
Funded Plans
Unfunded Plans
2018
Postretirement
Benefit Plans
Total
2019
Total
2018
2019
(in thousands)
Net actuarial loss ....................................... $ 8,856 $ 8,643 $ 2,744 $ 2,055 $ 1,320 $ 2,549 $12,920 $13,247
(146)
Prior service credit..................................... — — — —
Subtotal ............................................... 8,856 8,643 2,744 2,055 1,363 2,403 12,963 13,101
(607) (3,273) (3,308)
Total..................................................... $ 6,620 $ 6,461 $ 2,051 $ 1,536 $ 1,019 $ 1,796 $ 9,690 $ 9,793
Less tax effect............................................ (2,236) (2,182)
(146)
(344)
(519)
(693)
43
43
2019
2019
2018
2018
The fair value of the domestic plans’ assets by asset class are as follows:
(in thousands)
Domestic pension plans:
Total
Fair Value Measurements at December 31, 2019
Significant
Other
Observable
Inputs
(Level 2)
Quoted Prices
in Active
Markets
(Level 1)
Significant
Unobservable
Inputs
(Level 3)
Fixed income securities ......................................................... $
Equity securities ....................................................................
Cash .......................................................................................
Other ......................................................................................
Total............................................................................................ $
5,267
5,518
316
190
11,291
$
$
5,267
5,518
316
—
11,101
$
$
—
—
—
190
190
$
$
—
—
—
—
—
68
(in thousands)
Domestic pension plans:
Total
Fair Value Measurements at December 31, 2018
Significant
Other
Observable
Inputs
(Level 2)
Quoted Prices
in Active
Markets
(Level 1)
Significant
Unobservable
Inputs
(Level 3)
Fixed income securities ......................................................... $
Equity securities ....................................................................
Cash .......................................................................................
Other ......................................................................................
Total............................................................................................ $
5,355
4,611
140
193
10,299
$
$
5,355
4,611
140
—
10,106
$
$
—
—
—
193
193
$
$
—
—
—
—
—
We employ 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.
We utilize 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 our 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:
(in thousands)
$
2020 ...........................................................................................................
2021 ........................................................................................................... $
2022 ........................................................................................................... $
2023 ........................................................................................................... $
2024 ........................................................................................................... $
2025-2029.................................................................................................. $
Funded
Plans
Unfunded
Plans
Postretirement
Benefit
Plans
1,441
$
928 $
1,002 $
996 $
962 $
4,759 $
714 $
$
702
$
687
$
672
$
656
$
2,985
1,035
985
956
928
893
3,768
69
Foreign Pension Plans
Certain of our foreign operations also maintain defined benefit pension plans held in trust for 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 (loss) included the following:
(in thousands)
Net periodic benefit cost:
Service cost .......................................................................................... $
Interest cost ..........................................................................................
Expected return on plan assets .............................................................
Recognized net actuarial loss...............................................................
Settlement.............................................................................................
Net periodic benefit cost..........................................................................
Other changes in plan assets and benefit obligations recognized in other
comprehensive income (loss):
Net actuarial loss..................................................................................
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 ......................................................................... $
2019
December 31,
2018
2017
405 $
397
(487)
127
—
442
605
(127)
478
552 $
381
(505)
139
—
567
(238)
(139)
(377)
530
492
(602)
155
777
1,352
(106)
(155)
(261)
920 $
190 $
1,091
The following table represents the funded status of the plans as of December 31:
(in thousands)
Change in benefit obligation:
Funded Plans
2019
2018
Unfunded Plans
2019
2018
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 .................................................... $
8,134 $
405
320
1,037
(336)
430
9,990
8,243
1,156
515
(336)
435
10,013
23 $
9,521 $
552
308
(809)
(732)
(706)
8,134
9,493
(322)
514
(732)
(710)
8,243
109 $
2,290 $
—
77
106
(178)
36
2,331
—
—
178
(178)
—
—
(2,331) $
2,582
—
73
(25)
(184)
(156)
2,290
—
—
184
(184)
—
—
(2,290)
The net amounts recognized in the Consolidated Balance Sheets under the caption “Pension and postretirement benefits” as
of December 31 were as follows:
(in thousands)
Non-current assets ................................................................................ $
Other current liabilities .........................................................................
Non-current liabilities...........................................................................
Net amount recognized ......................................................................... $
Funded Plans
Unfunded Plans
2019
2018
2019
2018
(43) $
—
20
(23) $
(109) $
—
—
(109) $
— $
177
2,154
2,331 $
—
176
2,114
2,290
70
Net actuarial losses for the foreign funded plans recognized in AOCI were $2.6 million ($1.9 million after-tax) as of
December 31, 2019 and $2.2 million ($1.6 million after-tax) as of December 31, 2018. Net actuarial losses for the foreign
unfunded plans recognized in AOCI were $0.7 million ($0.5 million after-tax) as of December 31, 2019 and $0.6 million
($0.4 million after-tax) as of December 31, 2018.
The fair value information related to the foreign pension plans’ assets is summarized in the following tables:
(in thousands)
Assets:
December 31,
2019
Fair Value Measurements at Reporting Date Using
Significant
Other
Observable
Inputs
(Level 2)
Quoted Prices
in Active
Markets
(Level 1)
Significant
Unobserved
Inputs
(Level 3)
Fixed income securities ......................................................... $
Equity securities ....................................................................
Other ......................................................................................
Total............................................................................................ $
5,194
4,669
150
10,013
$
$
5,194 $
4,669
150
10,013 $
— $
—
—
— $
—
—
—
—
(in thousands)
Assets:
December 31,
2018
Fair Value Measurements at Reporting Date Using
Significant
Other
Observable
Inputs
(Level 2)
Quoted Prices
in Active
Markets
(Level 1)
Significant
Unobserved
Inputs
(Level 3)
Fixed income securities ......................................................... $
Equity securities ....................................................................
Other ......................................................................................
Total............................................................................................ $
3,967
4,087
189
8,243
$
$
3,967 $
4,087
189
8,243 $
— $
—
—
— $
The following payments, which reflect expected future service, as appropriate, are expected to be paid:
(in thousands)
2020 ..............................................................................................................................
$
2021 .............................................................................................................................. $
2022 .............................................................................................................................. $
2023 .............................................................................................................................. $
2024 .............................................................................................................................. $
2025-2029 ..................................................................................................................... $
Funded
Plans
Unfunded
Plans
345
$
355 $
398 $
438 $
440 $
2,268 $
—
—
—
—
177
177
176
176
175
860
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
2019
2018
Unfunded Plans
2019
2018
15,572
$
15,572 $
11,291 $
14,235 $
$
14,235
$
10,299
9,462 $
9,454 $
— $
9,271
9,224
—
Foreign Plans
Funded Plans
2019
2018
Unfunded Plans
2019
2018
$
9,990
9,347 $
10,013 $
8,134 $
$
7,581
$
8,243
2,331 $
2,331 $
— $
2,290
2,290
—
71
Contributions
In aggregate for both the domestic and foreign plans, we anticipate contributing $1.4 million to the funded pension plans,
$0.9 million to the unfunded pension plans, and $1.0 million to the postretirement benefit plans in 2020.
Weighted-Average Assumptions
Weighted-average assumptions used to determine benefit obligations as of December 31 were as follows:
Domestic Plans
Funded Plans
2019
2018
Unfunded Plans
2019
2018
Postretirement
Benefit Plans
Foreign Plans
2019
2018
2019
2018
Discount rate ............................................. 3.15% 4.30% 3.13% 4.21% 3.17% 4.29% 2.92% 3.58%
2.34% 2.24%
Rate of compensation increase.................. N/A
3.00% N/A
N/A
N/A
N/A
Weighted-average assumptions used to determine net periodic benefit costs as of December 31 were as follows:
Domestic Plans
Funded Plans
2019
2018
Unfunded Plans
2019
2018
Postretirement
Benefit Plans
Foreign Plans
2019
2018
2019
2018
Discount rate ............................................. 4.28% 3.60% 4.22% 3.55% 4.29% 3.59% 3.68% 3.27%
0.00% 0.00% 4.55% 4.62%
Expected return on plan assets .................. 5.50% 5.50% N/A
2.34% 2.24%
Rate of compensation increase.................. N/A
N/A
3.00% 3.00% N/A
N/A
N/A
Multi-employer Plans
We contribute to various defined benefit pension plans under the terms of collective bargaining agreements that cover our
union-represented employees. The financial risks of participating in these multi-employer pension plans generally include the
fact that the unfunded obligations of the plan may be borne by solvent participating employers. In addition, if we were to
discontinue participating in some of our multi-employer pension plans, we could be required to pay a withdrawal liability
amount based on the underfunded status of the plan. We finalized the terms of the new collective bargaining agreement with
the Teamsters 727 union. The terms included a withdrawal from the underfunded Central States pension plan. Accordingly,
we recorded a charge of $15.5 million, which represents the estimated present value of future contributions we will be
required to make to the plan as a result of this withdrawal and $0.2 million of other withdrawal costs. Currently, we do not
anticipate triggering any withdrawal from any other multi-employer pension plan to which we currently contribute. We also
contribute to defined contribution plans pursuant to collective bargaining agreements, which are generally not subject to the
funding risks inherent in defined benefit pension plans. The overall level of contributions to our multi-employer plans may
significantly vary from year to year based on the demand for union-represented labor to support our operations. We do not
have any minimum contribution requirements for future periods pursuant to our collective bargaining agreements for
individually significant multi-employer plans.
72
Our participation in multi-employer pension plans for 2019 is outlined in the following table. Unless otherwise noted, the
most recent Pension Protection Act zone status available in 2019 and 2018 relates to the plan’s year end as of December 31,
2018 and 2017, respectively, and is based on information received from the plan. Among other factors, plans in the red zone
are generally less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at
least 80% 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.
Pension
Protection Act
Zone Status
Plan
EIN No.
2019
2018
FIP/RP
Status
Pending/
Implemented
Viad Contributions
2018
2019
2017
Expiration
Date of
Collective
Bargaining
Agreement(s)
Surcharge
Paid
91-
6145047
1 Green Green
No
$ 6,754 $ 6,471 $ 7,809
No
3/31/2020
95-
6376874
1 Green Green
No
3,427 3,087 3,087
No
8/31/2021
36-
6130207
1 Green Green
Yes
2,877 2,876 2,390
No
5/31/2023
51-
6030753
2 Green Green
88-
6023284
1 Green Green
No
No
1,651
927 1,099
No
6/6/2021
1,074 1,025 1,682
No
6/16/2021
36-
6044243
1 Red Red
Yes
872 1,177 1,060
No
3/31/2023
95-
6392774
1 Yellow Yellow
Yes
799
881
905 Yes
8/31/2021
36-
1416355
11 Yellow Yellow
Yes
797 1,328
719 Yes
6/30/2024
94-
6278490
1 Green Green
95-
6042875
1 Green Green
No
No
04-
6372430
1 Red Red
Yes
768
778
654
No
3/31/2021
717
789
883
No
7/31/2023
506
772
3,625 3,734 2,900
423
No
3/31/2022
23,867 23,496 23,960
3,416 2,900 2,613
$27,283 $26,396 $26,573
(in thousands)
Pension Fund:
Western Conference of
Teamsters Pension Plan
Southern California
Local 831—Employer
Pension Fund(1)..............
Chicago Regional
Council of Carpenters
Pension Fund.................
Electrical Contractors
Assoc. Chicago Local
Union 134, IBEW Joint
Pension Trust of
Chicago Plan #2 ............
IBEW Local Union No
357 Pension Plan A .......
Central States,
Southeast and
Southwest Areas
Pension Plan..................
Southern California
IBEW-NECA Pension
Fund ..............................
Machinery Movers
Riggers & Mach Erect
Local 136
Supplemental
Retirement Plan(1)..........
Sign Pictorial &
Display Industry
Pension Plan(1) ...............
Southwest Carpenters
Pension Trust.................
New England
Teamsters & Trucking
Industry Pension............
All other funds(2) ...........
Total contributions to
defined benefit plans .....
Total contributions to
other plans .....................
Total contributions to
multi-employer plans ....
(1) We contributed more than 5% of total plan contributions for the plan year detailed in the plans’ most recent Form
(2)
5500s.
Represents participation in 35 pension funds during 2019.
73
Other Employee Benefits
We match U.S. employee contributions to the 401(k) plan with shares of our common stock held in treasury up to 100% of
the first 3% of a participant’s salary plus 50% of the next 2%. The expense associated with our match was $5.0 million for
2019, $4.8 million for 2018, and $4.2 million for 2017.
Note 19. Restructuring Charges
GES
As part of our efforts to drive efficiencies and simplify our business operations, we have taken certain restructuring actions
designed to reduce our cost structure primarily within GES. These actions include consolidating facilities and operations in
the U.S., Canada, and the United Kingdom. During 2019, we completed some strategic simplification actions, including a
facility consolidation in Las Vegas and other restructuring actions. As a result, we recorded restructuring charges 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.
Other Restructurings
We recorded restructuring charges in connection with the consolidation of certain support functions at our corporate
headquarters and certain reorganization activities within Pursuit. These charges primarily consist of severance and related
benefits due to headcount reductions and charges related to the downsizing of facilities.
Changes to the restructuring liability by major restructuring activity are as follows:
GES
Facilities
Other
Restructurings
Severance &
Employee
Benefits
Severance &
Employee
Benefits
(in thousands)
Balance at December 31, 2016 ................................................. $
Restructuring charges..................................................................
Cash payments ............................................................................
Adjustment to liability ................................................................
Balance at December 31, 2017 .................................................
Restructuring charges..................................................................
Cash payments ............................................................................
Adjustment to liability ................................................................
Balance at December 31, 2018 .................................................
Restructuring charges..................................................................
Cash payments ............................................................................
Adjustment to liability ................................................................
Balance at December 31, 2019 ................................................. $
2,274 $
442
(1,165)
—
1,551
1,457
(1,379)
410
2,039
6,071
(5,169)
(6)
2,935 $
1,092 $
265
(550)
—
807
—
(156)
(451)
200
1,817
(752)
74
1,339 $
416 $
297
(538)
16
191
130
(181)
(128)
12
492
(272)
7
239 $
Total
3,782
1,004
(2,253)
16
2,549
1,587
(1,716)
(169)
2,251
8,380
(6,193)
75
4,513
As of December 31, 2019, we expect to pay the liabilities related to severance and employee benefits by the end of 2020. The
liability related to future lease payments will be paid over the remaining lease terms. Refer to Note 23 – Segment
Information, for information regarding restructuring charges by segment.
74
Note 20. Leases and Other
The balance sheet presentation of our operating and finance leases is as follows:
(in thousands)
Assets:
Classification on the Consolidated Balance Sheet
Operating lease assets .................................................
Finance lease assets.....................................................
Total lease assets .....................................................
Operating lease right-of-use assets
Property and equipment, net
December 31,
2019
$ 103,314
25,350
$ 128,664
Liabilities:
Current:
Operating lease obligations .........................................
Finance lease obligations ............................................
Operating lease obligations
Current portion of debt and finance lease obligations
$
22,180
3,386
Noncurrent:
Operating lease obligations .........................................
Finance lease obligations ............................................
Total lease liabilities ...............................................
Long-term operating lease obligations
Long-term debt and finance lease obligations
82,851
21,871
$ 130,288
The components of lease expense consisted of the following:
(in thousands)
Finance lease cost:
Year Ended
December 31, 2019
Amortization of right-of-use assets ...................................................................................................... $
Interest on lease liabilities ....................................................................................................................
Operating lease cost.................................................................................................................................
Short-term lease cost ...............................................................................................................................
Variable lease cost...................................................................................................................................
Total lease cost, net .......................................................................................................................... $
2,780
924
26,511
1,932
6,271
38,418
Other information related to operating and finance leases are as follows:
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Year Ended
December 31, 2019
Operating cash flows from operating leases ........................................................................................
Operating cash flows from finance leases ...........................................................................................
Financing cash flows from finance leases ...........................................................................................
Right-of-use assets obtained in exchange for lease obligations:
Operating leases ...................................................................................................................................
Finance leases ......................................................................................................................................
$
$
$
$
$
28,146
502
2,698
125,755
18,822
Weighted-average remaining lease term (years):
Operating leases ...................................................................................................................................
Finance leases ......................................................................................................................................
Weighted-average discount rate:
Operating leases ...................................................................................................................................
Finance leases ......................................................................................................................................
December 31, 2019
8.17
14.01
5.77%
7.73%
75
As of December 31, 2019, the estimated future minimum lease payments under non-cancellable leases, excluding variable
leases and variable non-lease components, are as follows:
(in thousands)
2020 ........................................................................................................ $
2021 ........................................................................................................
2022 ........................................................................................................
2023 ........................................................................................................
2024 ........................................................................................................
Thereafter ...............................................................................................
Total future lease payments ...................................................................
Less: Amount representing interest........................................................
Present value of minimum lease payments ...........................................
Current portion .......................................................................................
Long-term portion................................................................................... $
Operating
Leases
25,449
18,600
16,310
13,257
9,978
54,388
137,982
(32,951)
105,031
22,180
82,851
$
Finance Leases
$
4,868 $
4,113
3,620
3,185
2,524
24,222
42,532
(17,275)
25,257
3,386
21,871 $
Total
30,317
22,713
19,930
16,442
12,502
78,610
180,514
(50,226)
130,288
25,566
104,722
As of December 31, 2019, the estimated future minimum rentals under non-cancellable leases, which includes rental income
from facilities that we own and sublease income from facilities that we lease, are as follows:
(in thousands)
2020 ...................................................................................................................................................... $
2021 ......................................................................................................................................................
2022 ......................................................................................................................................................
2023 ......................................................................................................................................................
2024 ......................................................................................................................................................
Thereafter..............................................................................................................................................
Total minimum sublease rents ............................................................................................................. $
2,141
1,837
1,491
1,289
1,038
4,402
12,198
Leases Not Yet Commenced
As of December 31, 2019, we had certain facility and land leases that were executed but for which we did not have control of
the underlying assets. Accordingly, we did not record the lease liabilities and right-of-use assets on our Consolidated Balance
Sheets. These leases include future planned attractions for Pursuit that are currently in the planning or development phase and
that we expect the lease commencement dates to begin between fiscal years 2020 and 2022 with lease terms of 15 to 47 years.
Leases Under Previous Lease Accounting Standard
As previously disclosed in our 2018 Form 10-K and under the previous lease accounting standard, our future minimum rental
payments and related sublease rentals receivable with respect to non-cancelable operating leases with terms in excess of one
year would have been as follows as of December 31, 2018:
(in thousands)
2019 .............................................................................................................................. $
2020 ..............................................................................................................................
2021 ..............................................................................................................................
2022 ..............................................................................................................................
2023 ..............................................................................................................................
Thereafter......................................................................................................................
Total........................................................................................................................ $
Rental
Payments
Receivable
Under Subleases
28,671 $
22,919
13,217
8,280
6,201
8,305
87,593 $
2,382
1,582
1,711
1,370
1,270
2,798
11,113
Note 21. Litigation, Claims, Contingencies, and Other
We 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 us. During the year ended December 31, 2019, we recorded an $8.5
million charge to resolve a legal dispute at GES involving a former industry contractor. Although the amount of liability as of
76
December 31, 2019 with respect to unresolved legal matters is not ascertainable, we believe that any resulting liability, after
taking into consideration amounts already provided for and insurance coverage, will not have a material effect on our
business, financial position, or results of operations.
We are 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 we have or had operations. If we fail to comply with these
environmental laws and regulations, civil and criminal penalties could be imposed, and we could become subject to
regulatory enforcement actions in the form of injunctions and cease and desist orders. As is the case with many companies,
we also face exposure to actual or potential claims and lawsuits involving environmental matters relating to our past
operations. As of December 31, 2019, we had recorded environmental remediation liabilities of $2.3 million related to
previously sold operations. Although we are a party to certain environmental disputes, we believe that any resulting
liabilities, after taking into consideration amounts already provided for and insurance coverage, will not have a material effect
on our financial position or results of operations.
As of December 31, 2019, on behalf of our subsidiaries, we had certain obligations under guarantees to third parties. These
guarantees are not subject to liability recognition in the consolidated financial statements and relate to leased facilities and
equipment leases entered into by our subsidiary operations. We 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 we would be required to make under all guarantees
existing as of December 31, 2019 would be $79.3 million. These guarantees relate to our leased equipment and facilities
through January 2040. There are no recourse provisions that would enable us to recover from third parties any payments
made under the guarantees. Furthermore, there are no collateral or similar arrangements pursuant to which we could recover
payments.
A significant number of our employees are unionized and we are a party to approximately 100 collective bargaining
agreements, with approximately one-third requiring renegotiation each year. If we are 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 our business and results of operations. We believe that relations with our employees are
satisfactory and that collective bargaining agreements expiring in 2020 will be renegotiated in the ordinary course of
business. Although our labor relations are currently stable, disruptions could occur, with the possibility of an adverse impact
on the operating results of GES. During 2019, we finalized the terms of a new collective bargaining agreement with the
Teamsters Local 727 union. The terms included a withdrawal from the underfunded Central States Pension Plan.
Accordingly, we recorded a charge of $15.5 million, which represents the estimated present value of future contributions we
will be required to make to the plan as a result of this withdrawal and $0.2 million of other withdrawal costs. Refer to Note
18 – Pension and Postretirement Benefits for additional information on specific union-related pension issues.
We are self-insured up to certain limits for workers’ compensation and general liabilities, which includes automobile, product
general liability, and client property loss claims. The aggregate amount of insurance liabilities (up to our retention limit)
related to our continuing operations was $14.3 million as of December 31, 2019, which includes $9.9 million related to
workers’ compensation liabilities, and $4.4 million related to general liability claims. We have also retained and provided for
certain workers’ compensation insurance liabilities in conjunction with previously sold businesses of $2.3 million as of
December 31, 2019. We are also self-insured for certain employee health benefits and the estimated employee health benefit
claims incurred but not yet reported was $1.6 million as of December 31, 2019. Provisions for losses for claims incurred,
including actuarially derived estimated claims incurred but not yet reported, are made based on our historical experience,
claims frequency, and other factors. A change in the assumptions used could result in an adjustment to recorded liabilities.
We have purchased insurance for amounts in excess of the self-insured levels, which generally range from $0.2 million to
$0.5 million on a per claim basis. We do not maintain a self-insured retention pool fund as claims are paid from current cash
resources at the time of settlement. Our net cash payments in connection with these insurance liabilities were $6.9 million for
2019, $5.4 million for 2018, and $5.5 million for 2017.
In addition, as of December 31, 2019, we have recorded insurance liabilities of $10.0 million related to continuing
operations, which represents the amount for which we remain the primary obligor after self-insured insurance limits, without
taking into consideration the above-referenced insurance coverage. Of this total, $6.5 million related to workers’
compensation liabilities and $3.5 million related to general/auto liability claims, which are recorded in other deferred items
and liabilities in the Consolidated Balance Sheets with a corresponding receivable in other investments.
77
Note 22. Redeemable Noncontrolling Interest
On November 3, 2017, we acquired the controlling interest (54.5% of the common stock) in Esja, a private corporation in
Reykjavik, Iceland. Through Esja and its wholly-owned subsidiary, we are operating a new FlyOver Iceland attraction.
The minority Esja shareholders have the right to sell (or “put”) their Esja shares to us based on a multiple of 5.0x EBITDA as
calculated on the trailing 12 months from the most recently completed quarter before the put option exercise. The put option
is only exercisable after 36 months of business operation (the “Reference Date”) and if the FlyOver Iceland attraction has
earned a minimum of €3.25 million in unadjusted EBITDA during the most recent fiscal year and during the trailing 12-
month period prior to exercise (the “Put Option Condition”). The put option is exercisable during a period of 12 months
following the Reference Date (the “Option Period”) if the Put Option Condition has been met. If the Put Option Condition
has not been met during the first Option Period, the Reference Date will be extended for an additional 12 months up to three
times. If after 72 months, the FlyOver Iceland attraction has not achieved the Put Option Condition, the put option expires. If
the Put Option Condition is met during any of the Option Periods, yet the shares are not exercised prior to the end of the 12-
month Option Period, the put option will expire.
The noncontrolling interest’s carrying value is determined by the fair value of the noncontrolling interest as of the acquisition
date and the noncontrolling interest’s share of the subsequent net income or loss. This value is benchmarked against the
redemption value of the sellers’ put option. The carrying value is adjusted to the redemption value, provided that it does not
fall below the initial carrying value, as determined by the purchase price allocation. We have made a policy election to reflect
any changes caused by such an adjustment to retained earnings, rather than to current earnings.
Changes in the redeemable noncontrolling interest are as follows:
(in thousands)
Balance at December 31, 2017................................................................................................................ $
Net loss attributable to redeemable noncontrolling interest .................................................................
Adjustment to the redemption value.....................................................................................................
Foreign currency translation adjustment ..............................................................................................
Balance at December 31, 2018................................................................................................................ $
Net loss attributable to redeemable noncontrolling interest .................................................................
Adjustment to the redemption value.....................................................................................................
Foreign currency translation adjustment ..............................................................................................
Balance at December 31, 2019................................................................................................................ $
6,648
(317)
251
(673)
5,909
(821)
1,318
(234)
6,172
78
Note 23. Segment Information
We measure the profit and performance of our 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.
During the first quarter of 2019, we realigned GES’ organizational structure. As a result, we changed GES’ reportable
segments to reflect how our chief operating decision maker regularly reviews and makes decisions regarding the allocation of
resources. Accordingly, GES’ new reportable segments are GES North America and GES EMEA. We made no changes to
the Pursuit reportable segment.
Our reportable segments, with reconciliations to consolidated totals, are as follows:
(in thousands)
Revenue:
GES:
GES North America............................................................................. $
GES EMEA .........................................................................................
Intersegment eliminations....................................................................
Total GES..................................................................................................
Pursuit .......................................................................................................
Total revenue ........................................................................................... $
Segment operating income:
GES:
GES North America............................................................................. $
GES EMEA .........................................................................................
Total GES..................................................................................................
Pursuit .......................................................................................................
Segment operating income .....................................................................
Corporate eliminations (1) ....................................................................
Corporate activities..............................................................................
Operating income ....................................................................................
Interest income ....................................................................................
Interest expense ...................................................................................
Multi-employer pension plan withdrawal............................................
Other expense (2) ..................................................................................
Restructuring recoveries (charges):
GES North America.............................................................................
GES EMEA .........................................................................................
Pursuit..................................................................................................
Corporate .............................................................................................
Impairment (charges) recoveries:
GES......................................................................................................
Pursuit..................................................................................................
Legal settlement:
2019
Year Ended December 31,
2018
2017
936,032 $
233,591
(20,741)
1,148,882
222,813
1,371,695 $
909,790 $
218,247
(17,140)
1,110,897
185,287
1,296,184 $
943,952
209,825
(20,680)
1,133,097
173,868
1,306,965
27,659 $
8,274
35,933
54,310
90,243
67
(10,865)
79,445
369
(14,199)
(15,693)
(1,586)
(6,157)
(1,731)
(52)
(440)
(5,346)
—
29,981 $
9,621
39,602
48,915
88,517
67
(10,993)
77,591
354
(9,640)
—
(1,744)
(408)
(1,049)
(140)
10
—
35
41,156
9,575
50,731
47,867
98,598
67
(12,396)
86,269
319
(8,304)
—
(2,028)
354
(1,061)
(86)
(211)
—
29,098
GES......................................................................................................
Income from continuing operations before income taxes.................... $
(8,500)
26,110 $
—
65,009 $
—
104,350
(1)
(2)
Corporate eliminations represent the elimination of depreciation expense recorded by Pursuit associated with
previously eliminated intercompany profit realized by GES for renovations to Pursuit’s Banff Gondola.
We adopted ASU 2017-07 on January 1, 2018, which requires retrospective adoption. As a result, we recorded the
nonservice cost component of net periodic benefit cost within other expense for the years ended December 31, 2019
and 2018, and we reclassified $2.0 million from operating expenses to other expense for 2017 to conform with
current period presentation.
79
(in thousands)
Assets:
GES:
2019
December 31,
2018
2017
GES North America ............................................................................. $
GES EMEA..........................................................................................
Pursuit........................................................................................................
Corporate and other ...................................................................................
$
475,279 $
132,975
589,205
121,232
1,318,691 $
406,484 $
111,798
357,630
46,629
922,541 $
406,038
110,788
350,256
52,817
919,899
Depreciation and amortization:
GES:
GES North America ............................................................................. $
GES EMEA..........................................................................................
Pursuit........................................................................................................
Corporate and other ...................................................................................
$
Capital expenditures:
GES:
GES North America ............................................................................. $
GES EMEA..........................................................................................
Pursuit........................................................................................................
Corporate and other ...................................................................................
$
29,321 $
6,260
23,154
229
58,964 $
19,099 $
7,098
49,934
16
76,147 $
30,855 $
7,071
18,690
226
56,842 $
19,263 $
7,065
56,865
152
83,345 $
30,260
7,004
17,653
197
55,114
18,900
6,521
30,786
414
56,621
Geographic Areas
Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, Germany, and to a lesser
extent, in certain other countries. GES revenue is 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)
Revenue:
United States ........................................................................................ $
EMEA ..................................................................................................
Canada..................................................................................................
Total revenue ........................................................................................... $
Long-lived assets:
United States ........................................................................................ $
EMEA ..................................................................................................
Canada..................................................................................................
Total long-lived assets ............................................................................. $
2019
December 31,
2018
2017
925,140 $
235,436
211,119
1,371,695 $
894,442 $
218,247
183,495
1,296,184 $
913,210
209,824
183,931
1,306,965
205,399 $
63,582
277,039
546,020 $
182,140 $
48,553
146,064
376,757 $
180,345
43,630
129,108
353,083
Note 24. Common Stock Repurchases
We previously announced our Board of Directors’ authorization to repurchase shares of our common stock from time to time
at prevailing market prices. Effective February 7, 2019, our Board of Directors authorized the repurchase of an additional
500,000 shares.
No shares were repurchased on the open market during 2019. During 2018, we repurchased 340,473 shares on the open
market for $17.2 million. No shares were repurchased on the open market during 2017. As of December 31, 2019, 600,067
80
shares remain available for repurchase. Additionally, we repurchase shares related to tax withholding requirements on vested
restricted stock awards. Refer to Note 3 – Share-Based Compensation.
Note 25. Selected Quarterly Financial Information (Unaudited)
The following table sets forth selected unaudited consolidated quarterly financial information:
2019
2018
Fourth
(in thousands, except per share data)
Quarter
Revenue:............................................. $285,594 $402,279 $362,488 $321,334 $277,428 $363,677 $358,163 $296,916
Operating income (loss):
Second
Quarter
Fourth
Quarter
Second
Quarter
Third
Quarter
Third
Quarter
Quarter
Quarter
First
First
141
(3,282)
83
(2,957)
—
(1,833)
98
(2,915)
141 $ (10,989) $ 38,402 $ 56,551 $
35
—
(3,777)
(3,070)
101
109
(2,608)
(4,587)
Ongoing operations (1)................... $ (11,236) $ 46,442 $ 54,822 $
—
Business interruption gain ............
(2,680)
Corporate activities .......................
79
Interest income..............................
Interest expense.............................
(3,740)
Multi-employer pension plan
withdrawal ....................................
Other expense ...............................
Restructuring charges ...................
Legal settlement............................
Impairment recoveries (charges) ..
Income from continuing
operations before income taxes..... $ (25,529) $ 20,008 $ 46,498 $ (14,867) $ (15,401) $ 32,773 $ 49,600 $ (1,963)
— (15,508)
(456)
(4,455)
—
—
(185)
(394)
(1,535)
—
(5,346)
—
(281)
(1,702)
—
—
4,018
—
(2,464)
116
(2,609)
(455)
(688)
(8,500)
—
377
(2,535)
53
(2,354)
190
(2,217)
84
(2,069)
—
(527)
(175)
—
—
—
(543)
(662)
—
35
—
(238)
(162)
—
—
—
(436)
(588)
—
—
Income (loss) from continuing
operations attributable to Viad ........... $ (17,490) $ 13,364 $ 31,557 $ (5,315) $ (10,315) $ 23,769 $ 37,635 $ (3,400)
Net income (loss) attributable to
Viad .................................................... $ (17,777) $ 13,824 $ 31,416 $ (5,428) $ (9,387) $ 23,490 $ 37,389 $ (2,322)
Diluted income (loss) per common
share: (2)
Continuing operations
attributable to Viad ....................... $
Net income (loss) attributable to
Viad common stockholders .......... $
(0.88) $
0.65 $
1.54 $
(0.30) $
(0.51) $
1.16 $
1.84 $
(0.17)
(0.89) $
0.67 $
1.53 $
(0.31) $
(0.47) $
1.15 $
1.83 $
(0.12)
(1)
(2)
Represents revenue less costs of services and cost of products sold.
The sum of quarterly income per share amounts may not equal annual income per share due to rounding.
81
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Viad Corp
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Viad Corp and subsidiaries (the “Company”) as of
December 31, 2019 and 2018, 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, 2019, and the related notes and the
schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018,
and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in
conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 26, 2020 expressed an unqualified opinion on the Company’s internal control
over financial reporting.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, effective January 1, 2019, the Company adopted FASB Accounting
Standards Update 2016-02, Leases, using the modified retrospective approach.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due
to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
Litigation, Claims, Contingencies, and Other—Self Insurance Reserves —Refer to Notes 1 and 21 to the financial
statements
Critical Audit Matter Description
The Company is self-insured up to certain limits for workers’ compensation, automobile, product and general liability claims.
Reserves for losses for claims incurred, including actuarially derived estimated claims incurred but not reported, are made by
the Company based on historical experience, claims frequency, insurance coverage, and other factors. The Company
purchases insurance for amounts in excess of self-insured levels. The aggregate amount of these insurance liabilities related
to continuing operations was $24.3 million as of December 31, 2019.
Given the subjectivity of estimating the projected settlement value of reported and unreported claims, auditing the self-
82
insurance reserves involved especially subjective auditor judgment and an increased extent of effort, including the need to
involve our actuarial specialist when auditing the self-insurance reserve, and therefore we have identified this as a critical
audit matter.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the self-insurance reserves included the following, among others:
• We tested the effectiveness of controls related to self-insurance reserves, including those over the projection of
settlement value of reported and unreported claims.
• We evaluated the methods and assumptions used by management to estimate the self-insurance reserves by:
• Agreeing the underlying claims data to source documents that served as the basis for the Company’s actuarial
analysis, to evaluate whether the inputs to the actuarial estimate were reasonable.
•
Comparing management’s prior-year assumptions of expected development and ultimate loss to actuals incurred
during the current year to identify potential bias in the determination of the self-insurance reserves.
• With the assistance of our actuarial specialists, we developed independent estimates of the self-insurance reserves, using
standard traditional actuarial methodologies, and compared our estimates to management’s estimates.
/s/ Deloitte & Touche LLP
Phoenix, Arizona
February 26, 2020
We have served as the Company’s auditor since at least 1929; however, an earlier year could not be reliably determined.
83
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded,
processed, summarized, and reported within the time periods specified in SEC rules and forms, and such information is
accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial
Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. Management, together with our CEO
and CFO, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2019. Based on this
evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2019.
There were no changes in our internal control over financial reporting during the fourth quarter of 2019 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
84
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management 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) of the Exchange Act as a process designed by, or
under the supervision of, our principal executive and principal financial officers and effected by our board of directors, our
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 U.S. GAAP 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 our assets;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on our financial statements.
Because of 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 our internal control over financial reporting using the criteria
described in the “Internal Control - Integrated Framework (2013),” issued by the Committee of Sponsoring Organizations of
the Treadway Commission. The objective of this assessment was to determine whether our internal control over financial
reporting was effective as of December 31, 2019.
In accordance with the SEC’s published guidance, our management has excluded from its assessment the internal control
over financial reporting for Mountain Park Lodges, which we acquired on June 8, 2019 and whose financial statements
constitute 9.8% of total assets and 1.4% of revenue of our consolidated financial statement amounts as of and for the year
ended December 31, 2019.
Based on our assessment, we concluded that, as of December 31, 2019, our internal control over financial reporting is
effective based on those criteria.
Our independent registered public accounting firm, Deloitte & Touche LLP, has issued a report relating to our audit of the
effectiveness of our internal control over financial reporting, which appears on the following page of this 2019 Form 10-K.
85
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Viad Corp
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Viad Corp and subsidiaries (the “Company”) as of December
31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our
report dated February 26, 2020 expressed an unqualified opinion on those consolidated financial statements and financial
statement schedule and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.
As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its
assessment the internal control over financial reporting at Mountain Park Lodges, Inc., which was acquired on June 8, 2019,
and whose financial statements constitute 9.8% of total assets and 1.4% of revenues of the consolidated financial statement
amounts as of and for the year ended December 31, 2019. Accordingly, our audit did not include the internal control over
financial reporting at Mountain Park Lodges, Inc.
Basis for Opinion
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 are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
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.
/s/ Deloitte & Touche LLP
Phoenix, Arizona
February 26, 2020
86
Item 9B. OTHER INFORMATION
Not applicable.
87
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding our directors, director nomination procedures, and the Audit Committee of our Board of Directors is
included in our Proxy Statement for the Annual Meeting of Shareholders to be held on May 19, 2020 (the “Proxy
Statement”), under the captions “Election of Directors,” “Board of Directors and Corporate Governance,” and “Stock
Ownership Information,” and are incorporated herein by reference. Information regarding our executive officers is located in
Part I, “Other – Information about our Executive Officers” of this 2019 Form 10-K.
We adopted a Code of Ethics for all of our directors, officers and employees. A copy of our Code of Ethics is available at our
website at www.viad.com/about-us/corporate-governance/documents-and-charters/default.aspx and is also available without
charge to any shareholder upon written request to: Viad Corp, 1850 North Central Avenue, Suite 1900, Phoenix, Arizona
85004-4565, Attention: Corporate Secretary.
Item 11. EXECUTIVE COMPENSATION
Information in the Proxy Statement under the captions “Compensation Discussion and Analysis,” “Board of Directors and
Corporate Governance,” and “Executive Compensation” is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information in the Proxy Statement under the captions “Executive Compensation” and “Stock Ownership Information” is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information in the Proxy Statement under the caption “Board of Directors and Corporate Governance” 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 under the caption
“Ratification of the Selection of Deloitte & Touche LLP as Our Independent Registered Public Accounting Firm for 2020”
and is incorporated herein by reference.
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a)
Financial Statements and Schedule
PART IV
See Index to Financial Statements and Financial Statement Schedule at Item 8 of this 2019 Form 10-K.
(b) Exhibit Index
88
Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
Period
Ending
Exhibit Filing Date
Share Purchase Agreement, dated May 27, 2019, by and among
Brewster Travel Canada Inc., Jas-Day Investments Ltd., and
2192449 Alberta Ltd.
8-K
Share and Unit Purchase Agreement, dated May 27, 2019, by
and among Brewster Travel Canada Inc., Jas-Day Investments
Ltd., 2187582 Alberta Ltd., and The Sawridge Hotels Limited
Partnership.
8-K
2.1
5/30/2019
2.2
5/30/2019
Restated Certificate of Incorporation of Viad Corp, as amended
through July 1, 2004 (SEC File No. 001-11015; SEC Film No.
04961107).
10-Q
6/30/2004 3.A
8/9/2004
Bylaws of Viad Corp, as amended through December 5, 2013.
8-K
3
12/9/2013
$450,000,000 Second Amended and Restated Credit
Agreement by and among Viad Corp, JP Morgan Chase Bank,
N.A., as administrative agent, and the lenders party thereto,
dated as of October 24, 2018.
8-K
4.1
10/25/2018
Amendment No. 1, dated July 23, 2019, to the Second
Amended and Restated Credit Agreement, Dated October 24,
2018, between Viad Corp and JPMorgan Chase Bank, N.A., as
Lender, as LC Issuer, as Swing Line Lender, and as
administrative agent, and other lenders party thereto.
8-K
4.A2
7/25/2019
2.A
2.B
3.A
3.B
4. A1
4.A2
4.B
*
Description of Viad Corp’s Securities
2007 Viad Corp Omnibus Incentive Plan, filed as Appendix A
to Viad Corp’s Proxy Statement for the 2012 Annual Meeting
of Shareholders.
10.A1
+
DEF 14A
4/13/2012
Form of Restricted Stock Agreement - Executives, (three-year
cliff vesting), effective as of March 26, 2014, pursuant to the
2007 Viad Corp Omnibus Incentive Plan.
8-K
10.A2
+
Form of Restricted Stock Units Agreement, effective as of
March 26, 2014, pursuant to the 2007 Viad Corp Omnibus
Incentive Plan.
10.A3
+
Form of Restricted Stock Agreement for Outside Directors,
effective as of February 25, 2008, pursuant to the 2007 Viad
Corp Omnibus Incentive Plan.
10.A4
+
8-K
8-K
Form of Non-Qualified Stock Option Agreement, effective as
of February 25, 2010, pursuant to the 2007 Viad Corp Omnibus
Incentive Plan.
8-K
10.A5
+
Form of Incentive Stock Option Agreement, effective as of
February 25, 2010, pursuant to the 2007 Viad Corp Omnibus
Incentive Plan.
8-K
10.A6
+
89
10.A
3/28/2014
10.B
3/28/2014
10.F
2/28/2008
10.B
2/26/2010
10.A
2/26/2010
Exhibit
Number
10.A7
+
Exhibit Description
Viad Corp Performance Unit Incentive Plan, effective as of
February 27, 2013, pursuant to the 2007 Viad Corp Omnibus
Incentive Plan.
Incorporated by Reference
Form
Period
Ending
Exhibit
Filing Date
8-K
10.D
3/5/2013
Amendment to the Viad Corp Performance Unit Incentive Plan,
as amended February 27, 2013 pursuant to the 2007 Viad Corp
Omnibus Incentive Plan, effective as of February 24, 2016.
8-K
10.A8
+
Form of Performance Unit Agreement, effective as of March
26, 2014, pursuant to the 2007 Viad Corp Omnibus Incentive
Plan.
8-K
10.A9
+
Form of Performance Unit Agreement, effective as of February
24, 2016, pursuant to the 2007 Viad Corp Omnibus Incentive
Plan.
8-K
10.A10 +
10.B1
+
2017 Viad Corp Omnibus Incentive Plan, effective as of May
18, 2017.
8-K
Form of Restricted Stock Units Agreement, effective as of May
18, 2017, pursuant to the 2017 Viad Corp Omnibus Incentive
Plan.
8-K
10.B3
+
10.B
3/1/2016
10.C
3/28/2014
10.A
3/1/2016
10.1
5/23/2017
10.4
5/23/2017
Form of Management Incentive Plan (MIP) Administrative
Guidelines, effective February 27, 2018, pursuant to the 2017
Viad Corp Omnibus Incentive Plan, effective as of May 18,
2017.
10.B4
+
10-K
12/31/2017 10.B4
2/28/2018
Form of Management Incentive Plan, effective as of February
27, 2018, pursuant to the 2017 Viad Corp Omnibus Incentive
Plan, effective as of May 18, 2017.
10.B5
+
10-K
12/31/2017 10.B5
2/28/2018
Form of Performance Unit Incentive Plan (“PUP”)
Administrative Guidelines, effective February 27, 2018,
pursuant to the 2017 Viad Corp Omnibus Incentive Plan,
effective as of May 18, 2017.
Form of 2017 Viad Corp Omnibus Incentive Plan Performance
Unit Agreement, effective February 27, 2018, pursuant to the
2017 Viad Corp Omnibus Incentive Plan, effective as of May
18, 2017.
10.B6
+
10.B7
+
10-K
12/31/2017 10.B6
2/28/2018
10-K
12/31/2017 10.B7
2/28/2018
Form of Viad Corp Performance Unit Incentive Plan, effective
as of February 27, 2018, pursuant to the 2017 Viad Corp
Omnibus Incentive Plan, effective as of May 18, 2017.
10.B8
+
10-K
12/31/2017 10.B8
2/28/2018
Form of Restricted Stock Agreement – Non-Employee
Directors, effective as of May 18, 2017, pursuant to the 2017
Viad Corp Omnibus Incentive Plan.
8-K
10.B9
+
10.2
5/23/2017
Form of Restricted Stock Agreement – Non-Employee
Directors, effective as of February 27, 2018, pursuant to the
2017 Viad Corp Omnibus Incentive Plan.
10.B10 +
10-K
12/31/2017 10.B10
2/28/2018
90
Exhibit
Number
10.C1
+
Exhibit Description
Forms of Viad Corp Executive Severance Plans (Tier I and II),
amended and restated for Code Section 409A as of January 1,
2005.
10.C2
+
Form of Viad Corp Executive Severance Plan (Tier I-2013)
effective as February 27, 2013.
10.C3
+
Amendment No. 1 to Viad Corp Executive Severance Plan
(Tier I), effective as of February 26, 2014.
8-K
8-K
8-K
10.C4
+
Severance Agreement (No Change in Control) between Viad
Corp and Steven W. Moster, effective as of December 3, 2014. 8-K
Incorporated by Reference
Form
Period
Ending
Exhibit
Filing Date
10.B
8/29/2007
10.B
3/5/2013
10
3/4/2014
10.B
12/5/2014
10.C5
+
Severance Agreement (No Change in Control) between Viad
Corp and David W. Barry, effective as of April 22, 2015.
10-K
12/31/2015 10.H4
3/11/2016
10.C6
+
Severance Agreement and General Release between Viad Corp
and Deborah J. DePaoli, effective as of November 29, 2017.
8-K/A
10.E1
+
Viad Corp Supplemental Pension Plan, amended and restated
as of January 1, 2005 for Code Section 409A.
8-K
10.F1
+
Viad Corp Defined Contribution Supplemental Executive
Retirement Plan, effective as of January 1, 2013.
8-K
10.G1
+
Executive Officer Pay Continuation Policy adopted February 7,
2007.
8-K
10.1
12/1/2017
10.A
8/29/2007
10.E
3/5/2013
10.A
2/13/2007
10.H1
+
Viad Corp Directors’ Matching Gift Program, effective as of
February 18, 1999.
10-K
12/31/2018 10.H1
2/27/2019
Form of Indemnification Agreement between Viad Corp and
Directors of Viad Corp, as approved by Viad Corp stockholders
on October 16, 1987.
10-K
10.I1
+
12/31/2008 10.1
2/27/2009
10.J1
21
23
24
31.1
31.2
Summary of Compensation Program of Non-Employee
Directors of Viad Corp, effective as of February 27, 2018.
10-Q
3/31/2018 10.J1
5/9/2018
List of Viad Corp Subsidiaries.
Consent of Independent Registered Public Accounting Firm to
the incorporation by reference into specified registration
statements on Form S-8 of its report contained in this Annual
Report.
Power of Attorney signed by Viad Corp Directors.
+
*
*
*
Certification of Chief Executive Officer of Viad Corp pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
# *
Certification of Chief Financial Officer of Viad Corp pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
#*
91
Incorporated by Reference
Form
Period
Ending
Exhibit
Filing Date
Exhibit
Number
32.1
Exhibit Description
Certifications of Chief Executive Officer and Chief Financial
Officer of Viad Corp pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
#**
101.INS *** XBRL Instance Document.
101.SCH **** XBRL Taxonomy Extension Schema Document.
101.CAL **** XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB **** XBRL Taxonomy Extension Label Linkbase Document.
101.PRE **** XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF **** XBRL Taxonomy Extension Definition Linkbase Document.
104
*** Cover Page Interactive Data File
*
**
Filed herewith.
Furnished herewith.
*** The XBRL Instance Document and Cover Page Interactive Data File do not appear in the Interactive Data File because
their XBRL tags are embedded within the Inline XBRL document.
**** Submitted electronically 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 SEC upon request.
Item 16. FORM 10-K SUMMARY
None.
92
VIAD CORP
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Allowances for doubtful accounts:
Balance at
Beginning
of Year
Additions
Deductions
Charged to
Charged to
Other
Expense
Accounts Write-Offs
Other(1)
Balance at
End of Year
December 31, 2017............................................
December 31, 2018............................................
December 31, 2019............................................
1,342
2,023
1,288
2,470
414
1,050
Deferred tax valuation allowance:
December 31, 2017............................................
December 31, 2018............................................
December 31, 2019............................................
3,998
4,010
3,356
1,385
1,230
884
49
39
45
—
—
—
(1,529)
(1,170)
(1,182)
(1,595)
(1,851)
—
(309)
(18)
(1)
222
(33)
36
2,023
1,288
1,200
4,010
3,356
4,276
(1)
“Other” primarily includes foreign exchange translation adjustments.
93
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 26, 2020.
SIGNATURES
VIAD CORP
By:
/s/ Steven W. Moster
Steven W. Moster
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated:
Date: February 26, 2020
Date: February 26, 2020
Date: February 26, 2020
Date: February 26, 2020
Principal Executive Officer
By:
/s/ Steven W. Moster
Steven W. Moster
President and Chief Executive Officer,
Director
Principal Financial Officer
By:
/s/ Ellen M. Ingersoll
Ellen M. Ingersoll
Chief Financial Officer
Principal Accounting Officer
By:
/s/ Leslie S. Striedel
Leslie S. Striedel
Chief Accounting Officer
Directors
Andrew B. Benett*
Denise M. Coll*
Richard H. Dozer*
Virginia L. Henkels*
Edward E. Mace*
Robert E. Munzenrider*
Joshua E. Schechter*
By:
/s/ Ellen M. Ingersoll
Ellen M. Ingersoll
Attorney-in-Fact
*
Pursuant to power of attorney filed as Exhibit 24 to this 2019 Form 10-K
94