VIAD CORP, 10-K filed on 2/26/2020
Annual Report
v3.19.3.a.u2
Document and Entity Information - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2019
Jan. 31, 2020
Jun. 29, 2019
Cover [Abstract]      
Entity Registrant Name Viad Corp    
Entity Central Index Key 0000884219    
Document Type 10-K    
Document Period End Date Dec. 31, 2019    
Amendment Flag false    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Current Fiscal Year End Date --12-31    
Trading Symbol VVI    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Public Float     $ 1.3
Entity Common Stock, Shares Outstanding   20,350,597  
Document Transition Report false    
Document Annual Report true    
Entity Tax Identification Number 36-1169950    
Entity File Number 001-11015    
Entity Incorporation, State or Country Code DE    
Entity Address, Address Line One 1850 North Central Avenue    
Entity Address, Address Line Two Suite 1900    
Entity Address, City or Town Phoenix    
Entity Address, State or Province AZ    
Entity Address, Postal Zip Code 85004-4565    
City Area Code 602    
Local Phone Number 207-1000    
Title of 12(b) Security Common Stock, $1.50 Par Value    
Security Exchange Name NYSE    
Entity Interactive Data Current Yes    
Documents Incorporated by Reference [Text Block] A portion of the Proxy Statement for the Viad Corp Annual Meeting of Shareholders scheduled for May 19, 2020, is incorporated by reference into Part III of this Annual Report.    
v3.19.3.a.u2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Current assets    
Cash and cash equivalents $ 61,999 $ 44,893
Accounts receivable, net of allowances for doubtful accounts of $1,200 and $1,288, respectively 126,246 108,936
Inventories 17,269 16,629
Current contract costs 24,535 18,017
Other current assets 30,854 25,486
Total current assets 260,903 213,961
Property and equipment, net 500,901 333,847
Other investments and assets 45,119 42,910
Operating lease right-of-use assets 103,314  
Deferred income taxes 26,163 19,199
Goodwill 287,983 261,330
Other intangible assets, net 94,308 51,294
Total Assets 1,318,691 922,541
Current liabilities    
Accounts payable 86,660 71,927
Contract liabilities 50,671 33,476
Accrued compensation 32,658 22,668
Operating lease obligations 22,180  
Other current liabilities 39,824 32,258
Current portion of debt and finance lease obligations [1] 316,794 229,416
Total current liabilities 548,787 389,745
Long-term debt and finance lease obligations 23,698 705
Pension and postretirement benefits 26,247 26,636
Long-term operating lease obligations 82,851  
Other deferred items and liabilities 83,707 48,991
Total liabilities 765,290 466,077
Commitments and contingencies
Redeemable noncontrolling interest 6,172 5,909
Viad Corp stockholders’ equity:    
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares issued and outstanding 37,402 37,402
Additional capital 574,473 575,339
Retained earnings 122,971 109,032
Unearned employee benefits and other   199
Accumulated other comprehensive loss (35,699) (47,975)
Common stock in treasury, at cost, 4,588,084 and 4,741,638 shares, respectively (231,649) (237,790)
Total Viad stockholders’ equity 467,498 436,207
Non-redeemable noncontrolling interest 79,731 14,348
Total stockholders’ equity 547,229 450,555
Total Liabilities and Stockholders’ Equity $ 1,318,691 $ 922,541
[1]

(4)

Borrowings under the 2018 Credit Facility are classified as current because all borrowed amounts are due within one year.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Statement Of Financial Position [Abstract]    
Allowance for doubtful accounts $ 1,200 $ 1,288
Common stock, par value $ 1.50 $ 1.50
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 24,934,981 24,934,981
Common stock, shares outstanding 24,934,981 24,934,981
Treasury stock, shares 4,588,084 4,741,638
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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Revenue:      
Total revenue $ 1,371,695 $ 1,296,184 $ 1,306,965
Costs and expenses:      
Business interruption gain (141) (602) (2,692)
Corporate activities 10,865 10,993 12,396
Interest income (369) (354) (319)
Interest expense 14,199 9,640 8,304
Multi-employer pension plan withdrawal 15,693    
Other expense [1] 1,586 1,744 2,028
Restructuring charges 8,380 1,587 1,004
Legal settlement 8,500    
Impairment charges (recoveries) 5,346 (35) (29,098)
Total costs and expenses 1,345,585 1,231,175 1,202,615
Income from continuing operations before income taxes 26,110 65,009 104,350
Income tax expense 2,506 17,095 45,898
Income from continuing operations 23,604 47,914 58,452
Income (loss) from discontinued operations (81) 1,481 (268)
Net income 23,523 49,395 58,184
Net income attributable to non-redeemable noncontrolling interest (2,309) (542) (523)
Net loss attributable to redeemable noncontrolling interest 821 317 46
Net income attributable to Viad $ 22,035 $ 49,170 $ 57,707
Diluted income (loss) per common share:      
Continuing operations attributable to Viad common stockholders $ 1.02 $ 2.33 $ 2.84
Discontinued operations attributable to Viad common stockholders   0.07 (0.01)
Net income attributable to Viad common stockholders $ 1.02 $ 2.40 $ 2.83
Weighted-average outstanding and potentially dilutive common shares 20,284 20,404 20,405
Basic income (loss) per common share:      
Continuing operations attributable to Viad common stockholders $ 1.02 $ 2.33 $ 2.84
Discontinued operations attributable to Viad common stockholders   0.07 (0.01)
Net income attributable to Viad common stockholders $ 1.02 $ 2.40 $ 2.83
Weighted-average outstanding common shares 20,146 20,168 20,146
Dividends declared per common share $ 0.40 $ 0.40 $ 0.40
Amounts attributable to Viad common stockholders      
Income from continuing operations $ 22,116 $ 47,689 $ 57,975
Income (loss) from discontinued operations (81) 1,481 (268)
Net income attributable to Viad 22,035 49,170 57,707
Services      
Revenue:      
Total revenue 1,170,493 1,110,249 1,132,424
Costs and expenses:      
Costs and expenses 1,100,146 1,039,403 1,052,911
Products      
Revenue:      
Total revenue 201,202 185,935 174,541
Costs and expenses:      
Costs and expenses $ 181,380 $ 168,799 $ 158,081
[1] 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 $2.0 million from operating expenses to other expense for 2017 to conform with current period presentation.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement Of Income And Comprehensive Income [Abstract]      
Net income $ 23,523 $ 49,395 $ 58,184
Other comprehensive income (loss):      
Unrealized gains on investments, net of tax effects of $0, $0, and $121     195
Unrealized foreign currency translation adjustments, net of tax 12,533 (24,306) 17,058
Change in net actuarial loss, net of tax effects of $(44), $305, and $163 (116) 1,236 344
Change in prior service cost, net of tax effects of $(48), $(52), and $(473) (141) (153) (774)
Comprehensive income 35,799 26,172 75,007
Non-redeemable noncontrolling interest:      
Comprehensive income attributable to non-redeemable noncontrolling interest (2,309) (542) (523)
Unrealized foreign currency translation adjustments, net of tax 1,080    
Redeemable noncontrolling interest:      
Comprehensive loss attributable to redeemable noncontrolling interest 821 317 46
Comprehensive income attributable to Viad $ 35,391 $ 25,947 $ 74,530
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement Of Income And Comprehensive Income [Abstract]      
Unrealized investment gains arising during the period, tax effects $ 0 $ 0 $ 121
Amortization of net actuarial loss, tax effects (44) 305 163
Amortization of prior service cost, tax effects $ (48) $ (52) $ (473)
v3.19.3.a.u2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Common Stock
Additional Capital
Retained Earnings (Deficit)
Unearned Employee Benefits and Other
Accumulated Other Comprehensive Income (Loss)
Common Stock in Treasury
Total Viad Equity
Non-Redeemable Non-Controlling Interest
Beginning Balance at Dec. 31, 2016 $ 370,638 $ 37,402 $ 573,841 $ 16,291 $ 172 $ (39,391) $ (230,960) $ 357,355 $ 13,283
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net income 58,230     57,707       57,707 523
Dividends on common stock ($0.40 per share) (8,160)     (8,160)       (8,160)  
Payment of payroll taxes on stock-based compensation through shares withheld (2,119)           (2,119) (2,119)  
Employee benefit plans 4,177   (2,687)       6,864 4,177  
Share-based compensation - equity awards 3,623   3,623         3,623  
Unrealized foreign currency translation adjustment, net of tax 17,058         17,058   17,058  
Unrealized gains on investments, net of tax effects of $0, $0, and $121 195         195   195  
Change in net actuarial loss, net of tax effects of $(44), $305, and $163 344         344   344  
Change in prior service cost, net of tax effects of $(48), $(52), and $(473) (774)         (774)   (774)  
Other, net (275)   (319) (2) 46     (275)  
Ending Balance at Dec. 31, 2017 442,937 37,402 574,458 65,836 218 (22,568) (226,215) 429,131 13,806
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net income 49,712     49,170       49,170 542
Dividends on common stock ($0.40 per share) (8,154)     (8,154)       (8,154)  
Payment of payroll taxes on stock-based compensation through shares withheld (1,209)           (1,209) (1,209)  
Common stock purchased for treasury (17,174)           (17,174) (17,174)  
Employee benefit plans 4,902   (1,905)       6,807 4,902  
Share-based compensation - equity awards 2,849   2,849         2,849  
Unrealized foreign currency translation adjustment, net of tax (24,306)         (24,306)   (24,306)  
Change in net actuarial loss, net of tax effects of $(44), $305, and $163 1,236         1,236   1,236  
Change in prior service cost, net of tax effects of $(48), $(52), and $(473) (153)         (153)   (153)  
Adoption of ASU | ASU 2016-01       616   (616) [1]      
Adoption of ASU | Accounting Standards Update 2018-02 [2]           (1,568)      
Adoption of ASU | Accounting Standards Update 2018-02       1,568   (1,568)      
Other, net (85)   (63) (4) (19)   1 (85)  
Ending Balance at Dec. 31, 2018 450,555 37,402 575,339 109,032 199 (47,975) (237,790) 436,207 14,348
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net income 24,344     22,035       22,035 2,309
Dividends on common stock ($0.40 per share) (8,094)     (8,094)       (8,094)  
Distributions to noncontrolling interest (407)               (407)
Payment of payroll taxes on stock-based compensation through shares withheld (3,046)           (3,046) (3,046)  
Employee benefit plans 5,530   (3,659)       9,189 5,530  
Share-based compensation - equity awards 2,755   2,755         2,755  
Unrealized foreign currency translation adjustment, net of tax 13,613         12,533   12,533 1,080
Change in net actuarial loss, net of tax effects of $(44), $305, and $163 (116)         (116)   (116)  
Change in prior service cost, net of tax effects of $(48), $(52), and $(473) (141)         (141)   (141)  
Acquisitions 62,401               62,401
Other, net (165)   38 (2) $ (199)   (2) (165)  
Ending Balance at Dec. 31, 2019 $ 547,229 $ 37,402 $ 574,473 $ 122,971   $ (35,699) $ (231,649) $ 467,498 $ 79,731
[1]

(1)

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.

[2] 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.
v3.19.3.a.u2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement Of Stockholders Equity [Abstract]      
Dividends on common stock per share $ 0.40 $ 0.40 $ 0.40
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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Cash flows from operating activities      
Net income $ 23,523 $ 49,395 $ 58,184
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 58,964 56,842 55,114
Deferred income taxes (10,398) 5,350 26,049
(Income) loss from discontinued operations 81 (1,481) 268
Restructuring charges 8,380 1,587 1,004
Legal settlement 8,500    
Impairment charges (recoveries) 5,346 (35) (29,098)
(Gains) losses on dispositions of property and other assets (1,475) 473 1,420
Share-based compensation expense 7,190 4,870 10,969
Multi-employer pension plan withdrawal 15,693    
Other non-cash items, net 3,791 4,306 5,029
Change in operating assets and liabilities (excluding the impact of acquisitions):      
Receivables (16,959) (6,200) (2,338)
Inventories (328) (1,573) 121
Current contract costs (6,333) (4,976) 2,544
Accounts payable 9,726 (1,645) 7,546
Restructuring liabilities (6,047) (1,716) (1,954)
Accrued compensation 6,853 (12,818) (5,152)
Contract liabilities 16,796 3,677 (11,314)
Payments on operating lease obligations (28,146)    
Income taxes payable 195 (7,696) 5,820
Other assets and liabilities, net 12,788 2,235 (11,989)
Net cash provided by operating activities 108,140 90,595 112,223
Cash flows from investing activities      
Capital expenditures (76,147) (83,345) (56,621)
Proceeds from insurance     31,570
Cash paid for acquisitions, net (90,992) (4,628) (1,501)
Proceeds from dispositions of property and other assets 1,583 925 947
Net cash used in investing activities (165,556) (87,048) (25,605)
Cash flows from financing activities      
Proceeds from borrowings 200,473 146,580 90,004
Payments on debt and finance lease obligations (115,708) (128,211) (135,801)
Dividends paid on common stock (8,094) (8,154) (8,160)
Distributions to noncontrolling interest (407)    
Debt issuance costs (39) (1,823) (5)
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased (3,046) (1,209) (2,119)
Common stock purchased for treasury   (17,174)  
Proceeds from exercise of stock options 293 84  
Net cash provided by (used in) financing activities 73,472 (9,907) (56,081)
Effect of exchange rate changes on cash and cash equivalents 1,050 (2,470) 2,286
Net change in cash and cash equivalents 17,106 (8,830) 32,823
Cash and cash equivalents, beginning of year 44,893 53,723 20,900
Cash and cash equivalents, end of year $ 61,999 $ 44,893 $ 53,723
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Overview and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Overview and Summary of Significant Accounting Policies

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.

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.

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

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

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.

Impact of Recent Accounting Pronouncements

The following table provides a brief description of recent accounting pronouncements:

 

Standard

 

Description

 

Date of adoption

 

Effect on the financial statements

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.

 

January 1, 2020

 

We are currently evaluating the potential impact of the 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 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.

 

January 1, 2021

 

We are currently evaluating the potential impact of the 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.

 

Standard

 

Description

 

Date of adoption

 

Effect on the financial statements

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

 

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.

 

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.

ASU 2016-02, Leases (Topic 842)

 

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.

 

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.

 

 

v3.19.3.a.u2
Revenue and Related Contract Costs and Contract Liabilities
12 Months Ended
Dec. 31, 2019
Revenue From Contract With Customer [Abstract]  
Revenue and Related Contract Costs and Contract Liabilities

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

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

 

$

31,981

 

Cash additions

 

 

179,238

 

Revenue recognized

 

 

(174,620

)

Foreign exchange translation adjustment

 

 

(999

)

Balance at December 31, 2018

 

 

35,600

 

Cash additions

 

 

210,871

 

Revenue recognized

 

 

(196,158

)

Foreign exchange translation adjustment

 

 

483

 

Balance at December 31, 2019

 

$

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

 

$

16,878

 

Additions

 

 

65,147

 

Expenses

 

 

(59,601

)

Cancelled

 

 

(136

)

Foreign exchange translation adjustment

 

 

(810

)

Balance at December 31, 2018

 

 

21,478

 

Additions

 

 

74,274

 

Expenses

 

 

(67,425

)

Cancelled

 

 

(68

)

Foreign exchange translation adjustment

 

 

237

 

Balance at December 31, 2019

 

$

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.

Disaggregation of Revenue

The following tables disaggregate GES and Pursuit revenue by major product line, timing of revenue recognition, and markets served:

GES

 

 

Year Ended December 31, 2019

 

(in thousands)

 

GES North America(1)

 

 

GES EMEA(1)

 

 

Intersegment Eliminations

 

 

Total

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core services

 

$

753,648

 

 

$

130,932

 

 

$

 

 

$

884,580

 

Audio-visual

 

 

78,178

 

 

 

24,197

 

 

 

 

 

 

102,375

 

Event technology

 

 

29,600

 

 

 

9,749

 

 

 

 

 

 

39,349

 

Intersegment eliminations

 

 

 

 

 

 

 

 

(20,741

)

 

 

(20,741

)

Total services

 

 

861,426

 

 

 

164,878

 

 

 

(20,741

)

 

 

1,005,563

 

Products:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core products

 

 

74,606

 

 

 

68,713

 

 

 

 

 

 

143,319

 

Total revenue

 

$

936,032

 

 

$

233,591

 

 

$

(20,741

)

 

$

1,148,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services transferred over time

 

$

861,426

 

 

$

164,878

 

 

$

(20,741

)

 

$

1,005,563

 

Products transferred over time(2)

 

 

45,597

 

 

 

16,071

 

 

 

 

 

 

61,668

 

Products transferred at a point in time

 

 

29,009

 

 

 

52,642

 

 

 

 

 

 

81,651

 

Total revenue

 

$

936,032

 

 

$

233,591

 

 

$

(20,741

)

 

$

1,148,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibitions

 

$

478,397

 

 

$

172,400

 

 

$

 

 

$

650,797

 

Conferences

 

 

289,394

 

 

 

27,917

 

 

 

 

 

 

317,311

 

Corporate events

 

 

141,030

 

 

 

32,212

 

 

 

 

 

 

173,242

 

Consumer events

 

 

27,211

 

 

 

1,062

 

 

 

 

 

 

28,273

 

Intersegment eliminations

 

 

 

 

 

 

 

 

(20,741

)

 

 

(20,741

)

Total revenue

 

$

936,032

 

 

$

233,591

 

 

$

(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.

 

 

 

Year Ended December 31, 2018

 

(in thousands)

 

GES North America(1)

 

 

GES EMEA(1)

 

 

Intersegment Eliminations

 

 

Total

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core services

 

$

733,407

 

 

$

120,371

 

 

$

 

 

$

853,778

 

Audio-visual

 

 

73,331

 

 

 

22,011

 

 

 

 

 

 

95,342

 

Event technology

 

 

30,208

 

 

 

10,658

 

 

 

 

 

 

40,866

 

Intersegment eliminations

 

 

 

 

 

 

 

 

(17,140

)

 

 

(17,140

)

Total services

 

 

836,946

 

 

 

153,040

 

 

 

(17,140

)

 

 

972,846

 

Products:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core products

 

 

72,844

 

 

 

65,207

 

 

 

 

 

 

138,051

 

Total revenue

 

$

909,790

 

 

$

218,247

 

 

$

(17,140

)

 

$

1,110,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services transferred over time

 

$

836,946

 

 

$

153,040

 

 

$

(17,140

)

 

$

972,846

 

Products transferred over time(2)

 

 

44,109

 

 

 

16,084

 

 

 

 

 

 

60,193

 

Products transferred at a point in time

 

 

28,735

 

 

 

49,123

 

 

 

 

 

 

77,858

 

Total revenue

 

$

909,790

 

 

$

218,247

 

 

$

(17,140

)

 

$

1,110,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibitions

 

$

500,411

 

 

$

160,876

 

 

$

 

 

$

661,287

 

Conferences

 

 

251,978

 

 

 

27,129

 

 

 

 

 

 

279,107

 

Corporate events

 

 

126,781

 

 

 

28,130

 

 

 

 

 

 

154,911

 

Consumer events

 

 

30,620

 

 

 

2,112

 

 

 

 

 

 

32,732

 

Intersegment eliminations

 

 

 

 

 

 

 

 

(17,140

)

 

 

(17,140

)

Total revenue

 

$

909,790

 

 

$

218,247

 

 

$

(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.

 

Pursuit

 

 

 

Year Ended December 31,

 

(in thousands)

 

2019

 

 

2018

 

Services:

 

 

 

 

 

 

 

 

Admissions

 

$

85,371

 

 

$

83,000

 

Accommodations

 

 

60,672

 

 

 

37,470

 

Transportation

 

 

14,594

 

 

 

13,956

 

Travel planning

 

 

5,979

 

 

 

4,529

 

Intersegment eliminations

 

 

(1,686

)

 

 

(1,551

)

Total services revenue

 

 

164,930

 

 

 

137,404

 

Products:

 

 

 

 

 

 

 

 

Food and beverage

 

 

31,838

 

 

 

25,962

 

Retail operations

 

 

26,045

 

 

 

21,921

 

Total products revenue

 

 

57,883

 

 

 

47,883

 

Total revenue

 

$

222,813

 

 

$

185,287

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

Services transferred over time

 

$

164,930

 

 

$

137,404

 

Products transferred at a point in time