VIAD CORP, 10-Q filed on 11/8/2013
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2013
Oct. 31, 2013
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q3 
 
Entity Registrant Name
VIAD CORP 
 
Entity Central Index Key
0000884219 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
20,329,341 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 120,122 
$ 114,171 
Accounts receivable, net of allowance for doubtful accounts of $1,050 and $1,150, respectively
74,490 
62,756 
Inventories
37,817 
35,656 
Deferred income taxes
20,055 
26,301 
Other current assets
20,372 
15,534 
Total current assets
272,856 
254,418 
Property and equipment, net
189,600 
197,298 
Other investments and assets
31,368 
32,416 
Deferred income taxes
29,556 
26,104 
Goodwill
130,999 
137,820 
Other intangible assets, net
4,781 
2,521 
Total Assets
659,160 
650,577 
Current liabilities:
 
 
Accounts payable
60,772 
57,995 
Other current liabilities
96,549 
107,684 
Current portion of capital lease obligations
909 
1,347 
Total current liabilities
158,230 
167,026 
Long-term capital lease obligations
831 
879 
Pension and postretirement benefits
36,591 
37,812 
Other deferred items and liabilities
48,816 
47,828 
Total liabilities
244,468 
253,545 
Commitments and contingencies (Note 17)
   
   
Viad Corp stockholders' equity:
 
 
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares issued
37,402 
37,402 
Additional capital
589,951 
593,862 
Retained earnings (deficit)
7,044 
(13,034)
Unearned employee benefits and other
(453)
(1,301)
Accumulated other comprehensive income (loss):
 
 
Unrealized gains on investments
392 
275 
Cumulative foreign currency translation adjustments
36,066 
42,158 
Unrecognized net actuarial loss and prior service credit, net
(14,877)
(14,968)
Common stock in treasury, at cost, 4,615,040 and 4,694,468 shares, respectively
(250,229)
(256,333)
Total Viad Corp stockholders' equity
405,296 
388,061 
Noncontrolling interest
9,396 
8,971 
Total stockholders' equity
414,692 
397,032 
Total Liabilities and Stockholders' Equity
$ 659,160 
$ 650,577 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 1,050 
$ 1,150 
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 in treasury, shares
4,615,040 
4,694,468 
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Revenues:
 
 
 
 
Convention and event services
$ 126,744 
$ 197,221 
$ 538,489 
$ 583,304 
Exhibits and environments
29,742 
33,083 
114,571 
125,985 
Travel and recreation services
79,987 
77,153 
117,890 
113,390 
Total revenues
236,473 
307,457 
770,950 
822,679 
Costs and expenses:
 
 
 
 
Costs of services
184,635 
238,980 
613,386 
653,933 
Costs of products sold
31,989 
34,295 
114,007 
118,533 
Gain on sale of facility and related land
(4,775)
   
(4,775)
   
Corporate activities
2,034 
2,036 
4,007 
6,000 
Interest income
(122)
(153)
(397)
(445)
Interest expense
286 
331 
905 
991 
Restructuring charges
714 
608 
2,207 
3,511 
Goodwill impairment loss
4,461 
   
4,461 
   
Other impairment losses
952 
   
952 
   
Total costs and expenses
220,174 
276,097 
734,753 
782,523 
Income from continuing operations before income taxes
16,299 
31,360 
36,197 
40,156 
Income tax expense
4,557 
10,304 
10,605 
13,084 
Income from continuing operations
11,742 
21,056 
25,592 
27,072 
Income from discontinued operations
1,006 
   
1,006 
639 
Net income
12,748 
21,056 
26,598 
27,711 
Net income attributable to noncontrolling interest
(893)
(1,080)
(425)
(618)
Net income
11,855 
19,976 
26,173 
27,093 
Diluted income per common share
 
 
 
 
Income from continuing operations attributable to Viad common stockholders
$ 0.53 
$ 0.99 
$ 1.24 
$ 1.31 
Income from discontinued operations attributable to Viad common stockholders
$ 0.05 
   
$ 0.05 
$ 0.03 
Net income attributable to Viad common stockholders
$ 0.58 
$ 0.99 
$ 1.29 
$ 1.34 
Weighted-average outstanding and potentially dilutive common shares
20,191 
20,017 
20,188 
19,993 
Basic income per common share
 
 
 
 
Income from continuing operations attributable to Viad common stockholders
$ 0.53 
$ 0.99 
$ 1.24 
$ 1.31 
Income from discontinued operations attributable to Viad common stockholders
$ 0.05 
   
$ 0.05 
$ 0.03 
Net income attributable to Viad common stockholders
$ 0.58 
$ 0.99 
$ 1.29 
$ 1.34 
Weighted-average outstanding common shares
19,868 
19,721 
19,839 
19,694 
Dividends declared per common share
$ 0.10 
$ 0.10 
$ 0.30 
$ 0.18 
Amounts attributable to Viad common stockholders
 
 
 
 
Income from continuing operations
10,849 
19,976 
25,167 
26,454 
Income from discontinued operations
1,006 
   
1,006 
639 
Net income
$ 11,855 
$ 19,976 
$ 26,173 
$ 27,093 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 12,748 
$ 21,056 
$ 26,598 
$ 27,711 
Other comprehensive (loss) income:
 
 
 
 
Unrealized gains on investments, net of tax
62 
15 
117 
66 
Unrealized foreign currency translation adjustments, net of tax
5,331 
6,229 
(6,092)
7,225 
Amortization of net actuarial loss, net of tax
150 
132 
511 
481 
Amortization of prior service credit, net of tax
(140)
(172)
(420)
(516)
Total other comprehensive (loss) income
5,403 
6,204 
(5,884)
7,256 
Comprehensive income
18,151 
27,260 
20,714 
34,967 
Comprehensive income attributable to noncontrolling interest
(893)
(1,080)
(425)
(618)
Comprehensive income attributable to Viad
$ 17,258 
$ 26,180 
$ 20,289 
$ 34,349 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Cash flows from operating activities:
 
 
Net income
$ 26,598 
$ 27,711 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
21,777 
23,560 
Deferred income taxes
1,775 
(4,242)
Income from discontinued operations
(1,006)
(639)
Restructuring charges
2,207 
3,511 
Impairment losses
5,413 
 
Gain on sale of facility and related land
(4,775)
   
Gains on disposition of property and other assets
(223)
(156)
Share-based compensation expense
3,569 
4,524 
Excess tax benefit from share-based compensation arrangements
(389)
(269)
Other non-cash items, net
3,603 
3,646 
Change in operating assets and liabilities (excluding the impact of acquisitions):
 
 
Receivables
(12,173)
(24,342)
Inventories
(2,161)
(2,238)
Accounts payable
4,704 
26,272 
Restructuring liabilities
(3,771)
(2,761)
Accrued compensation
(8,768)
5,783 
Customer deposits
(5,806)
(1,994)
Income taxes payable
2,115 
8,185 
Other assets and liabilities, net
(5,356)
2,255 
Net cash provided by operating activities
27,333 
68,806 
Cash flows from investing activities:
 
 
Capital expenditures
(26,927)
(19,912)
Acquisition of businesses, net of cash acquired
(647)
(23,546)
Proceeds from sale of facility and related land
12,696 
 
Proceeds from dispositions of property and other assets
422 
194 
Proceeds from sale of land - discontinued operations
1,645 
1,041 
Net cash used in investing activities
(12,811)
(42,223)
Cash flows from financing activities:
 
 
Payments on debt and capital lease obligations
(1,027)
(2,308)
Dividends paid on common stock
(6,095)
(2,429)
Common stock purchased for treasury
(1,294)
(1,038)
Excess tax benefit from share-based compensation arrangements
389 
269 
Proceeds from exercise of stock options
540 
90 
Net cash used in financing activities
(7,487)
(5,416)
Effect of exchange rate changes on cash and cash equivalents
(1,084)
2,686 
Net change in cash and cash equivalents
5,951 
23,853 
Cash and cash equivalents, beginning of year
114,171 
100,376 
Cash and cash equivalents, end of period
120,122 
124,229 
Supplemental disclosure of cash flow information
 
 
Cash paid for income taxes
6,956 
7,202 
Cash paid for interest
633 
855 
Property and equipment acquired under capital leases
591 
690 
Property and equipment purchases in accounts payable and accrued liabilities
$ 2,895 
$ 5,078 
Basis of Preparation and Principles of Consolidation
Basis of Preparation and Principles of Consolidation

Note 1. Basis of Preparation and Principles of Consolidation

The accompanying unaudited, condensed consolidated financial statements of Viad Corp (“Viad” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

For further information, refer to the consolidated financial statements and related footnotes for the year ended December 31, 2012, included in the Company’s Form 10-K (File No. 001-11015), filed with the Securities and Exchange Commission on March 11, 2013.

The condensed consolidated financial statements include the accounts of Viad and all of its subsidiaries. All significant intercompany account balances and transactions between Viad and its subsidiaries have been eliminated in consolidation. Viad’s reporting segments consist of Marketing & Events U.S., Marketing & Events International and Travel & Recreation Group.

The Marketing & Events Group, comprised of Global Experience Specialists, Inc. and affiliates (“GES”), specializes in all aspects of the design, planning and production of face-to-face events, immersive environments and brand-based experiences for clients, including show organizers, corporate brand marketers and retail shopping centers. In addition, the Marketing & Events Group provides a variety of immersive, entertaining attractions and brand-based experiences, sponsored events, mobile marketing and other branded entertainment and face-to-face marketing solutions for clients and venues, including shopping malls, movie studios, museums and leading consumer brands.

The Travel & Recreation Group segment consists of Brewster Inc. (“Brewster”), Glacier Park, Inc. (“Glacier Park”) and Alaskan Park Properties, Inc. (“Alaska Denali Travel”). Brewster provides tourism services in the Canadian Rockies in Alberta and in other parts of Western Canada. Brewster’s operations include the Banff Gondola, Columbia Icefield Glacier Adventure, motorcoach services, charter and sightseeing services, tour boat operations, inbound package tour operations and hotel operations. Glacier Park, an 80 percent owned subsidiary of Viad, currently operates five lodges, three motor inns and one four-season resort hotel and provides food and beverage operations, retail operations and tour and transportation services in and around Glacier National Park in Montana and Waterton Lakes National Park in Alberta, Canada. As discussed in Note 3 below, Glacier Park’s concession portion of its business with the U.S. National Park Service (the “Park Service”) for Glacier National Park expires on December 31, 2013. Thereafter, the ongoing operations of Glacier Park will include: Glacier Park Lodge in East Glacier, Montana; Grouse Mountain Lodge in Whitefish, Montana; St. Mary Lodge in St. Mary, Montana; Stewart Motel, an in-holding within Glacier National Park and the Prince of Wales Hotel in Waterton Lakes National Park, Alberta, Canada. Alaska Denali Travel operates the Denali Backcountry Lodge and Denali Cabins. In addition to lodging, Alaska Denali Travel also provides food and beverage operations and package tour and transportation services in and around Denali National Park and Preserve.

Share-Based Compensation
Share-Based Compensation

Note 2. Share-Based Compensation

The following table summarizes share-based compensation expense:

 

     Three months ended September 30,     Nine months ended September 30,  
     2013     2012     2013     2012  
     (in thousands)  

Restricted stock

   $ 802      $ 890      $ 2,522      $ 2,610   

Performance unit incentive plan (“PUP”)

     347        548        871        1,220   

Stock options

     3        148        104        450   

Restricted stock units

     50        84        72        244   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation before income tax benefit

     1,202        1,670        3,569        4,524   

Income tax benefit

     (445     (571     (1,326     (1,606
  

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation, net of income tax benefit

   $ 757      $ 1,099      $ 2,243      $ 2,918   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

In addition, $253,000 of share-based compensation costs were included in restructuring charges during the nine months ended September 30, 2012, including $94,000 related to the PUP awards presented below.

The following table summarizes the activity of the outstanding share-based compensation awards:

 

     Restricted Stock      Restricted Stock Units      PUP Awards  
           Weighted-            Weighted-            Weighted-  
           Average            Average            Average  
           Grant Date            Grant Date            Grant Date  
     Shares     Fair Value      Units     Fair Value      Units     Fair Value  

Balance at January 1, 2013

     516,351      $ 21.25         40,500      $ 20.82         210,600      $ 21.70   

Granted

     101,300        27.28         8,600        27.35         93,100        27.35   

Vested

     (161,186     20.74         (11,300     19.10         —          —     

Forfeited

     (5,966     23.07         (8,840     22.33         (432     20.60   
  

 

 

      

 

 

      

 

 

   

Balance at September 30, 2013

     450,499        22.76         28,960        22.98         303,268        23.43   
  

 

 

      

 

 

      

 

 

   

The unamortized cost of all outstanding restricted stock awards as of September 30, 2013 was $4.1 million, which Viad expects to recognize in the consolidated financial statements over a weighted-average period of approximately 1.9 years. During the nine months ended September 30, 2013 and 2012, the Company repurchased 48,937 shares for $1.3 million and 53,019 shares for $1.0 million, respectively, related to tax withholding requirements on vested share-based awards. As of September 30, 2013, there were 1,005,372 total shares available for future grant.

As of September 30, 2013 and December 31, 2012, Viad had liabilities recorded of $405,000 and $633,000, respectively, related to restricted stock unit liability awards. Portions of the 2009 and 2010 restricted stock unit awards vested in February 2013 and February 2012 and cash payouts of $300,000 and $257,000 were distributed in February 2013 and 2012, respectively. In addition, a portion of the 2009 performance-based restricted stock unit awards vested effective December 31, 2009 and cash payouts of $35,000 were distributed in January 2012.

As of September 30, 2013 and December 31, 2012, Viad had liabilities recorded of $4.6 million and $3.7 million, respectively, related to PUP awards. There were no PUP awards which vested during the nine months ended September 30, 2013 or 2012. Furthermore, there were no cash settlements of PUP awards during the nine months ended September 30, 2013 or 2012.

The following table summarizes stock option activity:

 

           Weighted-         
           Average      Options  
     Shares     Exercise Price      Exercisable  

Options outstanding at January 1, 2013

     363,896      $ 22.03         276,009   

Exercised

     (47,343     19.48      

Forfeited or expired

     (27,419     28.22      
  

 

 

      

Options outstanding at September 30, 2013

     289,134        21.87         287,134   
  

 

 

      

The total unrecognized cost related to non-vested stock option awards was $3,000 as of September 30, 2013, which Viad expects to recognize in the consolidated financial statements over a weighted-average period of less than one year. No stock options were granted during the nine months ended September 30, 2013.

Impairment Losses
Impairment Losses

Note 3. Impairment Losses

In August 2013, Viad was notified by the Park Service that the concession contract for Glacier National Park, commencing in 2014, was awarded to another concessionaire. As a result, management revised its outlook for future revenues and earnings from Glacier Park and performed a preliminary interim impairment evaluation of goodwill at the Glacier Park reporting unit. Based on this preliminary evaluation, the Company recorded a non-cash impairment charge of $4.5 million representing all goodwill at the Glacier Park reporting unit, of which $892,000 related to the noncontrolling interest. The goodwill impairment loss is included in the consolidated statements of operations under the caption, “Goodwill impairment loss.” Management intends to finalize the impairment evaluation during the fourth quarter of 2013, which could result in adjustments to the amount initially recorded.

Viad uses a discounted expected future cash flow methodology (income approach) in order to estimate the fair value of its reporting units for purposes of goodwill impairment testing. The estimates and assumptions regarding expected future cash flows, discount rates and terminal values require considerable judgment and are based on market conditions, financial forecasts, industry trends and historical experience. These estimates, however, have inherent uncertainties and different assumptions could lead to different results.

 

Also in the third quarter of 2013, Viad recorded other asset impairment charges of $952,000 at the Marketing & Events Group related to the write off of a touring exhibition asset and amounts capitalized for internally developed software that is not anticipated to be put into use. These impairment losses are included in the consolidated statements of operations under the caption, “Other impairment losses.”

Acquisition of Businesses
Acquisition of Businesses

Note 4. Acquisition of Businesses

On February 19, 2013, Viad acquired the assets of Resource Creative Limited (“RCL”) for $647,000 in cash, subject to certain adjustments, plus a deferred payment of up to approximately $278,000, which is contingent upon RCL’s performance. RCL is a United Kingdom-based company specializing in providing creative graphic services to the exhibition, events and retail markets throughout the United Kingdom and continental Europe.

The final amounts assigned to the assets of RCL as of the acquisition date included: property and equipment of $72,000, goodwill of $158,000 and other intangible assets of $695,000. In addition, a liability of $278,000 was recorded as of the acquisition date related to the contingent consideration. The primary factor that contributed to a purchase price resulting in the recognition of goodwill relates to future growth opportunities. The goodwill is deductible for tax purposes over a period of 15 years. The amounts assigned to other intangible assets included: $564,000 of customer relationships and $131,000 of noncompete agreements. The weighted-average amortization period related to the other intangible assets was 4.5 years. The transaction costs related to the acquisition were insignificant. The results of operations of RCL have been included in Viad’s consolidated financial statements from the date of acquisition.

In March 2012, Viad acquired the Banff International Hotel and related assets for $23.6 million in cash. The Banff International Hotel is a 162-guest room hotel located in downtown Banff, Alberta, Canada and is operated by Brewster within the Travel & Recreation Group. The following information represents the final amounts assigned to the assets and liabilities of the Banff International Hotel as of the date of acquisition:

 

     (in thousands)  

Cash and cash equivalents

   $ 10   

Accounts receivable

     23   

Other current assets

     33   

Property and equipment

     20,408   

Goodwill

     1,890   

Other intangible assets

     1,323   
  

 

 

 

Total assets acquired

     23,687   
  

 

 

 

Customer deposits

     (64

Other current liabilities

     (67
  

 

 

 

Total liabilities acquired

     (131
  

 

 

 

Purchase price

   $ 23,556   
  

 

 

 

The goodwill recorded in connection with the transaction is included in the Travel & Recreation Group. The primary factor that contributed to a purchase price resulting in the recognition of goodwill relates to future growth opportunities. The goodwill is deductible for tax purposes pursuant to regulations in Canada. The amount assigned to other intangible assets relates to an operating contract and customer relationships. The weighted-average amortization period related to the other intangible assets was 7.7 years. The transaction costs related to the acquisition were insignificant. The results of operations of the Banff International Hotel have been included in Viad’s consolidated financial statements from the date of acquisition.

The following table summarizes the unaudited pro forma results of operations attributable to Viad assuming that the acquisitions above had each been completed at the beginning of each period:

 

     Three months ended September 30,      Nine months ended September 30,  
     2013      2012      2013      2012  
     (in thousands, except per share data)  

Revenues

   $ 236,473       $ 307,802       $ 771,197       $ 823,842   

Depreciation and amortization

     7,439         8,560         21,818         23,862   

Segment operating income

     24,624         34,110         48,346         49,931   

Net income attributable to Viad

     11,855         19,932         26,182         26,916   

Diluted net income per share

     0.58         0.98         1.29         1.33   

Basic net income per share

     0.58         0.98         1.29         1.33  
Inventories
Inventories

Note 5. Inventories

The components of inventories were as follows:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Raw materials

   $ 14,792       $ 16,422   

Work in process

     23,025         19,234   
  

 

 

    

 

 

 

Inventories

   $ 37,817       $ 35,656   
  

 

 

    

 

 

 
Property and Equipment
Property and Equipment

Note 6. Property and Equipment

During the three months ended September 30, 2013, Viad sold a facility and the land upon which it was situated within the Marketing & Events Group for $12.7 million (net of selling costs). Viad recorded a gain on the sale of the facility and related land of $4.8 million.

Property and equipment consisted of the following:

 

     September 30,     December 31,  
     2013     2012  
     (in thousands)  

Land and land interests

   $ 23,951      $ 26,124   

Buildings and leasehold improvements

     137,932        137,293   

Equipment and other

     308,836        310,448   
  

 

 

   

 

 

 
     470,719        473,865   

Accumulated depreciation

     (281,119     (276,567
  

 

 

   

 

 

 

Property and equipment, net

   $ 189,600      $ 197,298   
  

 

 

   

 

 

 

Depreciation expense for the three months ended September 30, 2013 and 2012, was $7.1 million and $8.4 million, respectively, and for the nine months ended September 30, 2013 and 2012, was $20.8 million and $23.1 million, respectively.

Other Investments and Assets
Other Investments and Assets

Note 7. Other Investments and Assets

Other investments and assets consisted of the following:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Cash surrender value of life insurance

   $ 19,290       $ 19,142   

Workers’ compensation insurance security deposits

     3,350         3,350   

Other

     8,728         9,924   
  

 

 

    

 

 

 

Total other investments and assets

   $ 31,368       $ 32,416   
  

 

 

    

 

 

 
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets

Note 8. Goodwill and Other Intangible Assets

As discussed in Note 3 above, Viad recorded a goodwill impairment loss of $4.5 million related to Glacier Park during the three months ended September 30, 2013, of which $892,000 related to the noncontrolling interest.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2013, were as follows:

 

            Marketing &              
     Marketing &      Events     Travel &        
     Events U.S.      International     Recreation Group     Total  
     (in thousands)  

Balance at January 1, 2013

   $ 62,686       $ 23,054      $ 52,080      $ 137,820   

Goodwill impairment loss

     —           —          (4,461     (4,461

Business acquisition

     —           158        —          158   

Foreign currency translation adjustments

     —           (622     (1,896     (2,518
  

 

 

    

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 62,686       $ 22,590      $ 45,723      $ 130,999   
  

 

 

    

 

 

   

 

 

   

 

 

 

 

The following table summarizes goodwill by reporting unit and segment:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Marketing & Events Group:

     

Marketing & Events U.S.

   $ 62,686       $ 62,686   

Marketing & Events International:

     

GES United Kingdom

     13,766         13,894   

GES Canada

     8,824         9,160   
  

 

 

    

 

 

 

Total Marketing & Events Group

     85,276         85,740   
  

 

 

    

 

 

 

Travel & Recreation Group:

     

Brewster

     42,539         44,435   

Alaska Denali Travel

     3,184         3,184   

Glacier Park

     —           4,461   
  

 

 

    

 

 

 

Total Travel & Recreation Group

     45,723         52,080   
  

 

 

    

 

 

 

Total goodwill

   $ 130,999       $ 137,820   
  

 

 

    

 

 

 

A summary of other intangible assets as of September 30, 2013, is presented below:

 

     Gross
Carrying
     Accumulated     Net
Carrying
 
     Value      Amortization     Value  
     (in thousands)  

Amortized intangible assets:

       

Contracts and customer relationships

   $ 5,483       $ (2,238   $ 3,245   

Other

     1,312         (236     1,076   
  

 

 

    

 

 

   

 

 

 
     6,795         (2,474     4,321   

Unamortized intangible assets:

       

Business licenses

     460         —          460   
  

 

 

    

 

 

   

 

 

 

Total

   $ 7,255       $ (2,474   $ 4,781   
  

 

 

    

 

 

   

 

 

 

A summary of other intangible assets as of December 31, 2012 is presented below:

 

     Gross
Carrying
     Accumulated     Net
Carrying
 
     Value      Amortization     Value  
     (in thousands)  

Amortized intangible assets:

       

Contracts and customer relationships

   $ 3,594       $ (2,384   $ 1,210   

Other

     959         (108     851   
  

 

 

    

 

 

   

 

 

 
     4,553         (2,492     2,061   

Unamortized intangible assets:

       

Business licenses

     460         —          460   
  

 

 

    

 

 

   

 

 

 

Total

   $ 5,013       $ (2,492   $ 2,521   
  

 

 

    

 

 

   

 

 

 

During the nine months ended September 30, 2013, Viad recorded a contract-related intangible asset of $2.1 million in connection with a preferred supplier agreement. Intangible asset amortization expense for the three months ended September 30, 2013 and 2012, was $318,000 and $187,000, respectively, and $930,000 and $508,000 for the nine months ended September 30, 2013 and 2012, respectively. Estimated amortization expense related to amortized intangible assets for future periods is expected to be as follows:

 

     (in thousands)  

2013

   $ 325   

2014

     992   

2015

     791   

2016

     667   

2017

     549   

Thereafter

     997   

 

Accrued Liabilities and Other
Accrued Liabilities and Other

Note 9. Accrued Liabilities and Other

Other current liabilities consisted of the following:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Continuing operations:

     

Customer deposits

   $ 44,366       $ 50,172   

Accrued compensation

     18,797         25,067   

Self-insured liability accrual

     7,466         8,501   

Accrued foreign income taxes

     3,616         28   

Other taxes

     3,254         1,325   

Accrued employee benefit costs

     3,038         3,132   

Accrued restructuring

     2,114         4,084   

Accrued dividends

     2,068         2,053   

Accrued sales and use taxes

     1,247         3,179   

Other

     9,489         8,673   
  

 

 

    

 

 

 
     95,455         106,214   
  

 

 

    

 

 

 

Discontinued operations:

     

Self-insured liability accrual

     520         527   

Environmental remediation liabilities

     398         571   

Other

     176         372   
  

 

 

    

 

 

 
     1,094         1,470   
  

 

 

    

 

 

 

Total other current liabilities

   $ 96,549       $ 107,684   
  

 

 

    

 

 

 

Other deferred items and liabilities consisted of the following:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Continuing operations:

     

Self-insured liability accrual

   $ 17,326       $ 15,579   

Accrued compensation

     6,506         8,061   

Accrued restructuring

     3,546         3,140   

Foreign deferred tax liability

     1,970         2,024   

Other

     7,491         6,734   
  

 

 

    

 

 

 
     36,839         35,538   
  

 

 

    

 

 

 

Discontinued operations:

     

Self-insured liability accrual

     4,913         5,188   

Environmental remediation liabilities

     4,723         4,745   

Accrued income taxes

     1,077         1,053   

Other

     1,264         1,304   
  

 

 

    

 

 

 
     11,977         12,290   
  

 

 

    

 

 

 

Total other deferred items and liabilities

   $ 48,816       $ 47,828  
Debt and Capital Leases
Debt and Capital Leases

Note 10. Debt and Capital Leases

In May 2011, Viad entered into an amended and restated revolving credit agreement (the “Credit Facility”). The Credit Facility provides for a $130 million revolving line of credit, which may be increased up to an additional $50 million under certain circumstances. The term of the Credit Facility is five years (expiring on May 18, 2016) and borrowings are to be used for general corporate purposes (including permitted acquisitions) and to support up to $50 million of letters of credit. The lenders have a first perfected security interest in all of the personal property of Viad and GES, including 65 percent of the capital stock of top-tier foreign subsidiaries. As of September 30, 2013 and December 31, 2012, Viad’s total debt of $1.7 million and $2.2 million, respectively, consisted entirely of capital lease obligations. As of September 30, 2013, Viad had $128.2 million of capacity remaining under the Credit Facility reflecting outstanding letters of credit of $1.8 million.

Borrowings under the Credit Facility (of which GES is a guarantor) are indexed to the prime rate or the London Interbank Offered Rate, plus appropriate spreads tied to Viad’s leverage ratio. Commitment fees and letters of credit fees are also tied to Viad’s leverage ratio. The fees on the unused portion of the Credit Facility are currently 0.35 percent annually.

 

The Credit Facility contains various affirmative and negative covenants that are customary for facilities of this type, including a fixed-charge coverage ratio, leverage ratio, minimum cash balance, dividend limits and share repurchase restrictions. Significant other covenants include limitations on: investments, additional indebtedness, sales/leases of assets, acquisitions, consolidations or mergers and liens on property. As of September 30, 2013, Viad was in compliance with all covenants.

In December 2012, the Credit Facility was amended to remove the limitation on share repurchases of $10 million in the aggregate per calendar year pursuant to certain conditions. The amendment allows share repurchases unless the Company’s leverage ratio, as defined in the Credit Facility, is greater than 1.50 to 1.00 or a default or an unmatured default, as defined in the Credit Facility, exists immediately prior to and immediately after giving effect to such share repurchases. The amendment also allows dividends to be declared and paid in excess of $10 million in the aggregate per calendar year, as well as distributions on its capital stock, as defined in the Credit Facility, unless the Company’s leverage ratio, as defined in the Credit Facility, is greater than 1.50 to 1.00 or a default or an unmatured default, as defined in the Credit Facility, exists immediately prior to and immediately after giving effect to such distributions.

The estimated fair value of total debt was $1.7 million and $2.1 million as of September 30, 2013 and December 31, 2012, respectively. The fair value of debt was estimated by discounting the future cash flows using rates currently available for debt of similar terms and maturity.

Stockholders' Equity
Stockholders' Equity

Note 11. Stockholders’ Equity

The following represents a reconciliation of the carrying amounts of stockholders’ equity attributable to Viad and the noncontrolling interest for the nine months ended September 30, 2013:

 

     Total Viad            Total  
     Stockholders’     Noncontrolling      Stockholders’  
     Equity     Interest      Equity  
           (in thousands)         

Balance at January 1, 2013

   $ 388,061      $ 8,971       $ 397,032   

Net income

     26,173        425         26,598   

Dividends on common stock

     (6,095     —           (6,095

Common stock purchased for treasury

     (1,294     —           (1,294

Employee benefit plans

     3,485        —           3,485   

Unrealized foreign currency translation adjustment

     (6,092     —           (6,092

Unrealized gain on investments

     117        —           117   

Prior service credit and net actuarial loss

     91        —           91   

ESOP allocation adjustment

     850        —           850   
  

 

 

   

 

 

    

 

 

 

Balance at September 30, 2013

   $ 405,296      $ 9,396       $ 414,692   
  

 

 

   

 

 

    

 

 

 

The following represents a reconciliation of the carrying amounts of stockholders’ equity attributable to Viad and the noncontrolling interest for the nine months ended September 30, 2012:

 

     Total Viad           Total  
     Stockholders’     Noncontrolling     Stockholders’  
     Equity     Interest     Equity  
           (in thousands)        

Balance at January 1, 2012

   $ 377,894      $ 8,285      $ 386,179   

Net income

     27,093        618        27,711   

Dividends on common stock

     (3,649     —          (3,649

Common stock purchased for treasury

     (1,038     —          (1,038

Employee benefit plans

     3,370        —          3,370   

Unrealized foreign currency translation adjustment

     7,225        —          7,225   

Unrealized gain on investments

     66        —          66   

Prior service credit and net actuarial loss

     (35     —          (35

ESOP allocation adjustment

     1,150        —          1,150   

Other

     1        (1     —     
  

 

 

   

 

 

   

 

 

 

Balance at September 30, 2012

   $ 412,077      $ 8,902      $ 420,979   
  

 

 

   

 

 

   

 

 

 

 

In December 2012, Viad announced its intent to repurchase up to an additional one million shares of the Company’s common stock from time to time at prevailing market prices. At the time of the announcement, there were 30,438 shares available for repurchase pursuant to previously announced authorizations. No shares were repurchased during the nine months ended September 30, 2013 or 2012. As of September 30, 2013, 1,030,438 shares were available for repurchase. Additionally, during the nine months ended September 30, 2013 and 2012, the Company repurchased 48,937 shares for $1.3 million and 53,019 shares for $1.0 million pursuant to separate authority, respectively, related to tax withholding requirements on share-based awards.

Changes in accumulated other comprehensive income (“AOCI”) by component were as follows:

 

           Cumulative     Unrecognized        
           Foreign     Net Actuarial     Accumulated  
     Unrealized     Currency     Loss and     Other  
     Gains on     Translation     Prior Service     Comprehensive  
     Investments     Adjustments     Credit     Income  
     (in thousands)  

Balance at January 1, 2013

   $ 275      $ 42,158      $ (14,968   $ 27,465   

Other comprehensive income before reclassifications

     162        (6,092     —          (5,930

Amounts reclassified from AOCI, net of tax

     (45     —          91        46   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

     117        (6,092     91        (5,884
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 392      $ 36,066      $ (14,877   $ 21,581   
  

 

 

   

 

 

   

 

 

   

 

 

 

The following table presents information about reclassification adjustments out of AOCI for the nine months ended September 30:

 

                 Affected Line
                 Item in the
                 Statement Where
                 Net Income is
     2013     2012    

Presented

     (in thousands)      

Unrealized gain on investments

   $ (72   $ (45   Interest income

Tax effect

     27        16      Income tax expense
  

 

 

   

 

 

   
   $ (45   $ (29   Net of tax
  

 

 

   

 

 

   

Recognized net actuarial loss

   $ 827      $ 778      See (1) below

Amortization of prior service credit

     (680     (835   See (1) below

Tax effect

     (56     (21   Income tax benefit
  

 

 

   

 

 

   
   $ 91      $ (78   Net of tax
  

 

 

   

 

 

   

 

(1) Amount is included in pension expense. See Note 15 for additional information.
Fair Value Measurements
Fair Value Measurements

Note 12. Fair Value Measurements

The fair value of an asset or liability is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value guidance requires an entity to maximize the use of quoted prices and other observable inputs and minimize the use of unobservable inputs when measuring fair value, and also establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value as follows:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value.

 

Viad measures its money market mutual funds and certain other mutual fund investments at fair value on a recurring basis using Level 1 inputs. The fair value information related to these assets is summarized in the following table:

 

            Fair Value Measurements at September 30, 2013 Using  

Description

   September 30,
2013
     Quoted Prices
in Active
Markets

(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobserved
Inputs
(Level 3)
 
     (in thousands)  

Money market funds

   $ 16,680       $ 16,680       $ —         $ —     

Other mutual funds

     1,289         1,289         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 17,969       $ 17,969       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

As of September 30, 2013 and December 31, 2012, Viad had investments in money market mutual funds of $16.7 million and $10.2 million, respectively, which are included in the consolidated balance sheets under the caption “Cash and cash equivalents.” These investments were classified as available-for-sale and were recorded at fair value. There have been no realized or unrealized gains or losses related to these investments and the Company has not experienced any redemption restrictions with respect to any of the money market mutual funds.

As of September 30, 2013 and December 31, 2012, Viad had investments in other mutual funds of $1.3 million and $1.2 million, respectively, which were classified in the consolidated balance sheets under the caption “Other investments and assets.” These investments were classified as available-for-sale and were recorded at fair value. As of September 30, 2013, and December 31, 2012, there were unrealized gains on the investments of $641,000 ($392,000 after-tax) and $450,000 ($275,000 after-tax), respectively, which were included in the consolidated balance sheets under the caption “Accumulated other comprehensive income (loss).”

The carrying values of cash and cash equivalents, receivables, accounts payable and contingent considerations approximate fair value due to the short-term maturities of these instruments. The estimated fair value of debt obligations is disclosed in Note 10.

During the third quarter of 2013, Viad had certain non-financial assets that were measured at fair value on a non-recurring basis using Level 3 inputs. These assets include goodwill and certain property and equipment for which impairment losses were recorded during the third quarter of 2013. The fair value information related to these assets is summarized in the following table:

 

            Fair Value Measurements at September 30, 2013 Using         

Description

   September 30,
2013
     Quoted Prices
in Active
Markets (Level 1)
     Significant
Other

Observable
Inputs

(Level 2)
     Significant
Unobserved
Inputs

(Level 3)
     Total
Gains
(Losses)
 
     (in thousands)  

Goodwill(1)

   $ —         $ —         $ —         $ —         $ (4,461

Property and equipment(1)

     —           —           —           —           (952
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —         $ —         $ —         $ —         $ (5,413
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  See Note 3 for details of the impairment losses.
Income Per Share
Income Per Share

Note 13. Income Per Share

The following is a reconciliation of the numerators and denominators of basic and diluted per share computations for net income attributable to Viad:

 

     Three months ended September 30,     Nine months ended September 30,  
     2013     2012     2013     2012  
     (in thousands, except per share data)  

Basic net income per share

        

Numerator:

        

Net income attributable to Viad

   $ 11,855      $ 19,976      $ 26,173      $ 27,093   

Less: Allocation to non-vested shares

     (264     (532     (605     (735
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income allocated to Viad common stockholders

   $ 11,591      $ 19,444      $ 25,568      $ 26,358   
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

        

Weighted-average outstanding common shares

     19,868        19,721        19,839        19,694   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Viad common stockholders

   $ 0.58      $ 0.99      $ 1.29      $ 1.34   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share

        

Numerator:

        

Net income attributable to Viad

   $ 11,855      $ 19,976      $ 26,173      $ 27,093   
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

        

Weighted-average outstanding common shares

     19,868        19,721        19,839        19,694   

Additional dilutive shares related to share-based compensation

     323        296        349        299   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average outstanding and potentially dilutive shares

     20,191        20,017        20,188        19,993   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Viad common stockholders (1)

   $ 0.58      $ 0.99      $ 1.29      $ 1.34   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Diluted income per share cannot exceed basic income per share.

Options to purchase 47,000 and 436,000 shares of common stock were outstanding during the nine months ended September 30, 2013 and 2012, respectively, but were not included in the computation of dilutive shares outstanding because the effect would be anti-dilutive. Additionally, 323,000 and 296,000 share-based compensation awards were considered dilutive and included in the computation of diluted income per share during the three months ended September 30, 2013 and 2012, respectively. During the nine months ended September 30, 2013 and 2012, 349,000 and 299,000 share-based compensation awards were considered dilutive and included in the computation of diluted income per share, respectively.

Income Taxes
Income Taxes

Note 14. Income Taxes

The effective tax rates for the nine months ended September 30, 2013 and 2012 were 29.3 percent and 32.6 percent, respectively. The income tax provisions were computed based on the Company’s estimated effective tax rate and forecasted income by jurisdiction expected to be applicable for the full fiscal year, including the impact of any unusual or infrequent items. The relatively low effective tax rates compared to the federal statutory rate of 35 percent were primarily due to foreign income which is taxed at lower rates.

Viad is required to estimate and record provisions for income taxes in each of the jurisdictions in which the Company operates. Accordingly, the Company must estimate its actual current income tax liability and assess temporary differences arising from the treatment of items for tax purposes as compared to the treatment for accounting purposes. These differences result in deferred tax assets and liabilities which are included in Viad’s consolidated balance sheets. As of September 30, 2013 and December 31, 2012, Viad had gross deferred tax assets of $73.4 million and $77.2 million, respectively. These deferred tax assets reflect the expected future tax benefits to be realized upon reversal of deductible temporary differences and the utilization of net operating loss and tax credit carryforwards.

The Company considered all available positive and negative evidence regarding the future recoverability of its deferred tax assets, including the Company’s recent operating history, taxpaying history and future reversals of deferred tax liabilities. The Company also evaluated its ability to utilize its foreign tax credits, given its recent utilization history. These tax credits are subject to a 10-year carryforward period and begin to expire in 2019. Based on the Company’s assessment, it was determined during the fourth quarter of 2012 that the weight of the evidence indicated that certain deferred tax assets associated with foreign tax credit carryforwards no longer met the more-likely-than-not test regarding the realization of those assets. As of September 30, 2013, the weight of the evidence with respect to the foreign tax credit has not changed. As of September 30, 2013 and December 31, 2012, Viad had a valuation allowance of $14.7 million and $14.6 million, respectively, related to certain federal, state and foreign deferred tax assets. With respect to all other deferred tax assets, management believes that recovery from future taxable income is more-likely-than-not.

 

As noted above, Viad uses considerable judgment in forming a conclusion regarding the recoverability of its deferred tax assets. As a result, there are inherent uncertainties regarding the ultimate realization of these assets, which is primarily dependent upon Viad’s ability to generate sufficient taxable income in future periods. In future periods, it is reasonably possible that the relative weight of positive and negative evidence regarding the recoverability of Viad’s deferred tax assets may change, which could result in a material increase in the Company’s valuation allowance. If such an increase in the valuation allowance were to occur, it would result in increased income tax expense in the period the assessment was made.

Viad had accrued gross liabilities associated with uncertain tax positions for discontinued operations of $636,000 as of both September 30, 2013 and December 31, 2012. In addition, as of September 30, 2013 and December 31, 2012, Viad had accrued interest and penalties related to uncertain tax positions for discontinued operations of $441,000 and $418,000, respectively. Future tax resolutions or settlements that may occur related to these uncertain tax positions would be recorded through discontinued operations (net of federal tax effects, if applicable). Viad does not expect any of the unrecognized tax benefits to be recognized during the next 12 months. As of both September 30, 2013 and December 31, 2012, liabilities associated with uncertain tax positions (including interest and penalties) of $1.1 million were classified as non-current liabilities.

Pension and Postretirement Benefits
Pension and Postretirement Benefits

Note 15. Pension and Postretirement Benefits

The net periodic benefit cost of Viad’s pension and postretirement benefit plans for the three months ended September 30 included the following components:

 

     Domestic Plans              
     Pension Plans     Postretirement
Benefit Plans
    Foreign
Pension Plans
 
     2013     2012     2013     2012     2013     2012  
     (in thousands)  

Service cost

   $ —        $ 24      $ 25      $ 31      $ 134      $ 123   

Interest cost

     251        276        152        187        175        186   

Expected return on plan assets

     (100     (84     —          (15     (175     (157

Amortization of prior service credit

     —          —          (227     (278     —          —     

Recognized net actuarial loss

     129        110        106        101        10        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 280      $ 326      $ 56      $ 26      $ 144      $ 152   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The net periodic benefit cost of Viad’s pension and postretirement benefit plans for the nine months ended September 30 included the following components:

 

     Domestic Plans              
     Pension Plans     Postretirement
Benefit Plans
    Foreign
Pension Plans
 
     2013     2012     2013     2012     2013     2012  
     (in thousands)  

Service cost

   $ 60      $ 78      $ 117      $ 110      $ 405      $ 368   

Interest cost

     773        863        498        611        531        552   

Expected return on plan assets

     (300     (305     —          (56     (530     (467

Amortization of prior service credit

     —          —          (677     (835     —          —     

Recognized net actuarial loss

     427        368        388        410        30        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 960      $ 1,004      $ 326      $ 240      $ 436      $ 453   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Viad expects to contribute $2.6 million to its funded pension plans, $1.1 million to its unfunded pension plans and $400,000 to its postretirement benefit plans in 2013. During the nine months ended September 30, 2013, Viad contributed $2.3 million to its funded pension plans, $665,000 to its unfunded pension plans and $64,000 to its postretirement benefit plans.

Restructuring Charges
Restructuring Charges

Note 16. Restructuring Charges

During the nine months ended September 30, 2013, Viad recorded net restructuring charges of $2.2 million primarily related to facility consolidations and the elimination of certain positions in the Marketing & Events Group. The amounts included in the restructuring liability as of September 30, 2013, related to future lease obligations which will be paid over the remaining lease terms, and severance and employee benefits that are expected to be paid by the end of 2013. The table below represents a reconciliation of Viad’s restructuring liability by major restructuring activity:

 

     Marketing & Events                    
     Group Consolidation     Other Restructurings        
     Severance &           Severance &              
     Employee           Employee              
     Benefits     Facilities     Benefits     Facilities     Total  
     (in thousands)  

Balance at January 1, 2013

   $ 720      $ 5,571      $ —        $ 933      $ 7,224   

Restructuring charges, net

     1,890        872        137        (692     2,207   

Cash payments

     (1,434     (2,034     (62     (241     (3,771
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 1,176      $ 4,409      $ 75      $ —        $ 5,660   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Litigation, Claims, Contingencies and Other
Litigation, Claims, Contingencies and Other

Note 17. Litigation, Claims, Contingencies and Other

Viad and certain of its subsidiaries are plaintiffs or defendants to various actions, proceedings and pending claims, some of which involve, or may involve, compensatory, punitive or other damages. Litigation is subject to many uncertainties and it is possible that some of the legal actions, proceedings or claims could be decided against Viad. Although the amount of liability as of September 30, 2013, with respect to certain of these matters is not ascertainable, Viad believes that any resulting liability, after taking into consideration amounts already provided for, including insurance coverage, will not have a material impact on the Company’s business, financial position or results of operations.

Viad is subject to various U.S. federal, state and foreign laws and regulations governing the prevention of pollution and the protection of the environment in the jurisdictions in which Viad has or had operations. If the Company has failed to comply with these environmental laws and regulations, civil and criminal penalties could be imposed and Viad could become subject to regulatory enforcement actions in the form of injunctions and cease and desist orders. As is the case with many companies, Viad also faces exposure to actual or potential claims and lawsuits involving environmental matters relating to its past operations. Although it is a party to certain environmental disputes, Viad believes that any resulting liabilities, after taking into consideration amounts already provided for, including insurance coverage, will not have a material effect on the Company’s financial position or results of operations. As of September 30, 2013, there was a remaining environmental remediation liability of $5.1 million related to previously sold operations of which $398,000 was included in the consolidated balance sheets under the caption “Other current liabilities” and $4.7 million under the caption “Other deferred items and liabilities.”

As of September 30, 2013, Viad had certain obligations under guarantees to third parties on behalf of its subsidiaries. These guarantees are not subject to liability recognition in the consolidated financial statements and relate to leased facilities entered into by Viad’s subsidiary operations. The Company would generally be required to make payments to the respective third parties under these guarantees in the event that the related subsidiary could not meet its own payment obligations. The maximum potential amount of future payments that Viad would be required to make under all guarantees existing as of September 30, 2013, would be $15.5 million. These guarantees relate to leased facilities expiring through October 2017. There are no recourse provisions that would enable Viad to recover from third parties any payments made under the guarantees. Furthermore, there are no collateral or similar arrangements whereby Viad could recover payments.

Viad’s businesses contribute to various multi-employer pension plans based on obligations arising under collective-bargaining agreements covering its union-represented employees. Based upon the information available to Viad from plan administrators, management believes that several of these multi-employer plans are underfunded. The Pension Protection Act of 2006 requires pension plans underfunded at certain levels to reduce, over defined time periods, the underfunded status. In addition, under current laws, the termination of a plan, or a voluntary withdrawal from a plan by Viad, or a shrinking contribution base to a plan as a result of the insolvency or withdrawal of other contributing employers to such plan, would require Viad to make payments to such plan for its proportionate share of the plan’s unfunded vested liabilities. As of September 30, 2013, the amount of additional funding, if any, that Viad would be required to make related to multi-employer pension plans is not ascertainable.

Glacier Park currently operates the concession portion of its business under a concession contract with the Park Service for Glacier National Park. In August 2013, the Company announced that its contract with the Park Service will end on December 31, 2013. Upon completion of the contract term, the Company will be entitled to cash payments totaling $25 million for its “possessory interest,” which generally means the value of the structures acquired or constructed, fixtures installed and improvements made to the concession property during the term of the contract. The cash payments associated with the possessory interest will be recorded when received. The Company will also be entitled to an estimated $5 million for the personal property used at the facilities covered by the concession contract. Glacier Park generated approximately 49 percent of its 2012 revenues through its concession contract for services provided within Glacier National Park.

 

Following the expiration of the concession contract on December 31, 2013, the ongoing Glacier Park business will include: Glacier Park Lodge in East Glacier, Montana; Grouse Mountain Lodge in Whitefish, Montana; St. Mary Lodge in St. Mary, Montana; Stewart Motel, an in-holding within Glacier National Park adjacent to Lake McDonald Lodge, and the Prince of Wales Hotel in Waterton Lakes National Park, Alberta, Canada, which Glacier Park owns. The Prince of Wales Hotel is situated on land for which the Company has a 42-year ground lease with the Canadian government running through January 31, 2052. Glacier Park generated 24 percent of the Travel & Recreation Group’s 2012 segment operating income.

Segment Information
Segment Information

Note 18. Segment Information

Viad measures profit and performance of its operations on the basis of segment operating income, which excludes restructuring charges and recoveries and impairment charges and recoveries. For the purpose of discussing segment operations, Viad refers to segment operating income as calculated by subtracting segment direct expenses from segment revenues. 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.

Disclosures regarding Viad’s reportable segments with reconciliations to consolidated totals are as follows:

 

     Three months ended
September 30,
    Nine months ended
September 30,
 
     2013     2012     2013     2012  
     (in thousands)  

Revenues:

        

Marketing & Events Group:

        

U.S.

   $ 120,503      $ 168,395      $ 494,355      $ 540,741   

International

     40,335        67,780        168,974        180,217   

Intersegment eliminations

     (4,352     (5,871     (10,269     (11,669
  

 

 

   

 

 

   

 

 

   

 

 

 
     156,486        230,304        653,060        709,289   

Travel & Recreation Group

     79,987        77,153        117,890        113,390   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 236,473      $ 307,457      $ 770,950      $ 822,679   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating income (loss):

        

Marketing & Events Group:

        

U.S. (1)

   $ (3,745   $ (585   $ 12,971      $ 12,235   

International

     (4,159     3,432        5,821        9,637   
  

 

 

   

 

 

   

 

 

   

 

 

 
     (7,904     2,847        18,792        21,872   

Travel & Recreation Group

     32,528        31,335        29,540        28,341   
  

 

 

   

 

 

   

 

 

   

 

 

 
     24,624        34,182        48,332        50,213   

Corporate activities

     (2,034     (2,036     (4,007     (6,000
  

 

 

   

 

 

   

 

 

   

 

 

 
     22,590        32,146        44,325        44,213   

Interest income

     122        153        397        445   

Interest expense

     (286     (331     (905     (991

Restructuring charges:

        

Marketing & Events U.S.

     (185     (392     (309     (2,879

Marketing & Events International

     (434     (216     (1,761     (619

Travel & Recreation Group

     (77     —          (90     —     

Corporate

     (18     —          (47     (13

Impairment losses:

        

Marketing & Events U.S.

     (658     —          (658     —     

Marketing & Events International

     (294     —          (294     —     

Travel & Recreation Group

     (4,461     —          (4,461     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

   $ 16,299      $ 31,360      $ 36,197      $ 40,156   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes a gain on the sale of a facility and related land of $4.8 million which was recorded during the three months ended September 30, 2013

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Assets:

     

Marketing & Events U.S.

   $ 210,836       $ 203,145   

Marketing & Events International

     88,996         100,387   

Travel & Recreation Group

     247,948         223,199   

Corporate and other

     111,380         123,846   
  

 

 

    

 

 

 
   $ 659,160       $ 650,577  
Discontinued Operations
Discontinued Operations

Note 19. Discontinued Operations

In July 2013, Viad completed the sale of certain land located in Utah associated with previously sold operations for $1.0 million (net of tax). The sale transaction was recorded in discontinued operations in the third quarter of 2013. In June 2012, Viad recorded income from discontinued operations of $639,000 related to the sale of land associated with previously sold operations.

Impact of Recent Accounting Pronouncements
Impact of Recent Accounting Pronouncements

Note 20. Impact of Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued new guidance related to the reporting of amounts reclassified out of AOCI, which is codified in Accounting Standards Codification (“ASC”) Topic 220. The new guidance requires entities to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, entities are required to present significant amounts reclassified out of other comprehensive income by the respective line items of net income in certain circumstances, or otherwise cross-reference amounts to other disclosures. The adoption of this new guidance did not have an impact on Viad’s financial condition or results of operations. See Note 11 for required disclosures.

In July 2013, the FASB issued new guidance related to the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists, which is codified in ASC Topic 740. This new guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Retrospective application is permitted. Management does not believe that this guidance will have an impact on Viad’s financial condition and results of operations.

Subsequent Event
Subsequent Event

Note 21. Subsequent Event

On October 25, 2013, Viad announced that its Board of Directors declared a special cash dividend of $2.50 per share, or approximately $50.8 million in the aggregate, to shareholders of record at the close of business on November 7, 2013. The dividend will be paid on November 14, 2013.

Share-Based Compensation (Tables)

The following table summarizes share-based compensation expense:

 

     Three months ended September 30,     Nine months ended September 30,  
     2013     2012     2013     2012  
     (in thousands)  

Restricted stock

   $ 802      $ 890      $ 2,522      $ 2,610   

Performance unit incentive plan (“PUP”)

     347        548        871        1,220   

Stock options

     3        148        104        450   

Restricted stock units

     50        84        72        244   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation before income tax benefit

     1,202        1,670        3,569        4,524   

Income tax benefit

     (445     (571     (1,326     (1,606
  

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation, net of income tax benefit

   $ 757      $ 1,099      $ 2,243      $ 2,918  

The following table summarizes the activity of the outstanding share-based compensation awards:

 

     Restricted Stock      Restricted Stock Units      PUP Awards  
           Weighted-            Weighted-            Weighted-  
           Average            Average            Average  
           Grant Date            Grant Date            Grant Date  
     Shares     Fair Value      Units     Fair Value      Units     Fair Value  

Balance at January 1, 2013

     516,351      $ 21.25         40,500      $ 20.82         210,600      $ 21.70   

Granted

     101,300        27.28         8,600        27.35         93,100        27.35   

Vested

     (161,186     20.74         (11,300     19.10         —          —     

Forfeited

     (5,966     23.07         (8,840     22.33         (432     20.60   
  

 

 

      

 

 

      

 

 

   

Balance at September 30, 2013

     450,499        22.76         28,960        22.98         303,268        23.43   
  

 

 

      

 

 

      

 

 

   

The following table summarizes stock option activity:

 

           Weighted-         
           Average      Options  
     Shares     Exercise Price      Exercisable  

Options outstanding at January 1, 2013

     363,896      $ 22.03         276,009   

Exercised

     (47,343     19.48      

Forfeited or expired

     (27,419     28.22      
  

 

 

      

Options outstanding at September 30, 2013

     289,134        21.87         287,134   
  

 

 

      
Acquisition of Businesses (Tables)

within the Travel & Recreation Group. The following information represents the final amounts assigned to the assets and liabilities of the Banff International Hotel as of the date of acquisition:

 

     (in thousands)  

Cash and cash equivalents

   $ 10   

Accounts receivable

     23   

Other current assets

     33   

Property and equipment

     20,408   

Goodwill

     1,890   

Other intangible assets

     1,323   
  

 

 

 

Total assets acquired

     23,687   
  

 

 

 

Customer deposits

     (64

Other current liabilities

     (67
  

 

 

 

Total liabilities acquired

     (131
  

 

 

 

Purchase price

   $ 23,556   
  

 

 

 

The following table summarizes the unaudited pro forma results of operations attributable to Viad assuming that the acquisitions above had each been completed at the beginning of each period:

 

     Three months ended September 30,      Nine months ended September 30,  
     2013      2012      2013      2012  
     (in thousands, except per share data)  

Revenues

   $ 236,473       $ 307,802       $ 771,197       $ 823,842   

Depreciation and amortization

     7,439         8,560         21,818         23,862   

Segment operating income

     24,624         34,110         48,346         49,931   

Net income attributable to Viad

     11,855         19,932         26,182         26,916   

Diluted net income per share

     0.58         0.98         1.29         1.33   

Basic net income per share

     0.58         0.98         1.29         1.33
Inventories (Tables)
Components of Inventories

The components of inventories were as follows:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Raw materials

   $ 14,792       $ 16,422   

Work in process

     23,025         19,234   
  

 

 

    

 

 

 

Inventories

   $ 37,817       $ 35,656   
  

 

 

    

 

 

 
Property and Equipment (Tables)
Summary of Property and Equipment

Property and equipment consisted of the following:

 

     September 30,     December 31,  
     2013     2012  
     (in thousands)  

Land and land interests

   $ 23,951      $ 26,124   

Buildings and leasehold improvements

     137,932        137,293   

Equipment and other

     308,836        310,448   
  

 

 

   

 

 

 
     470,719        473,865   

Accumulated depreciation

     (281,119     (276,567
  

 

 

   

 

 

 

Property and equipment, net

   $ 189,600      $ 197,298   
  

 

 

   

 

 

 
Other Investments and Assets (Tables)
Summary of Other Investments and Assets

Other investments and assets consisted of the following:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Cash surrender value of life insurance

   $ 19,290       $ 19,142   

Workers’ compensation insurance security deposits

     3,350         3,350   

Other

     8,728         9,924   
  

 

 

    

 

 

 

Total other investments and assets

   $ 31,368       $ 32,416   
  

 

 

    

 

 

 
Goodwill and Other Intangible Assets (Tables)

The changes in the carrying amount of goodwill for the nine months ended September 30, 2013, were as follows:

 

            Marketing &              
     Marketing &      Events     Travel &        
     Events U.S.      International     Recreation Group     Total  
     (in thousands)  

Balance at January 1, 2013

   $ 62,686       $ 23,054      $ 52,080      $ 137,820   

Goodwill impairment loss

     —           —          (4,461     (4,461

Business acquisition

     —           158        —          158   

Foreign currency translation adjustments

     —           (622     (1,896     (2,518
  

 

 

    

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 62,686       $ 22,590      $ 45,723      $ 130,999   
  

 

 

    

 

 

   

 

 

   

 

 

 

The following table summarizes goodwill by reporting unit and segment:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Marketing & Events Group:

     

Marketing & Events U.S.

   $ 62,686       $ 62,686   

Marketing & Events International:

     

GES United Kingdom

     13,766         13,894   

GES Canada

     8,824         9,160   
  

 

 

    

 

 

 

Total Marketing & Events Group

     85,276         85,740   
  

 

 

    

 

 

 

Travel & Recreation Group:

     

Brewster

     42,539         44,435   

Alaska Denali Travel

     3,184         3,184   

Glacier Park

     —           4,461   
  

 

 

    

 

 

 

Total Travel & Recreation Group

     45,723         52,080   
  

 

 

    

 

 

 

Total goodwill

   $ 130,999       $ 137,820   
  

 

 

    

 

 

 

A summary of other intangible assets as of September 30, 2013, is presented below:

 

     Gross
Carrying
     Accumulated     Net
Carrying
 
     Value      Amortization     Value  
     (in thousands)  

Amortized intangible assets:

       

Contracts and customer relationships

   $ 5,483       $ (2,238   $ 3,245   

Other

     1,312         (236     1,076   
  

 

 

    

 

 

   

 

 

 
     6,795         (2,474     4,321   

Unamortized intangible assets:

       

Business licenses

     460         —          460   
  

 

 

    

 

 

   

 

 

 

Total

   $ 7,255       $ (2,474   $ 4,781   
  

 

 

    

 

 

   

 

 

 

A summary of other intangible assets as of December 31, 2012 is presented below:

 

     Gross
Carrying
     Accumulated     Net
Carrying
 
     Value      Amortization     Value  
     (in thousands)  

Amortized intangible assets:

       

Contracts and customer relationships

   $ 3,594       $ (2,384   $ 1,210   

Other

     959         (108     851   
  

 

 

    

 

 

   

 

 

 
     4,553         (2,492     2,061   

Unamortized intangible assets:

       

Business licenses

     460         —          460   
  

 

 

    

 

 

   

 

 

 

Total

   $ 5,013       $ (2,492   $ 2,521   
  

 

 

    

 

 

   

 

 

 

Estimated amortization expense related to amortized intangible assets for future periods is expected to be as follows:

 

     (in thousands)  

2013

   $ 325   

2014

     992   

2015

     791   

2016

     667   

2017

     549   

Thereafter

     997   

 

Accrued Liabilities and Other (Tables)

Other current liabilities consisted of the following:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Continuing operations:

     

Customer deposits

   $ 44,366       $ 50,172   

Accrued compensation

     18,797         25,067   

Self-insured liability accrual

     7,466         8,501   

Accrued foreign income taxes

     3,616         28   

Other taxes

     3,254         1,325   

Accrued employee benefit costs

     3,038         3,132   

Accrued restructuring

     2,114         4,084   

Accrued dividends

     2,068         2,053   

Accrued sales and use taxes

     1,247         3,179   

Other

     9,489         8,673   
  

 

 

    

 

 

 
     95,455         106,214   
  

 

 

    

 

 

 

Discontinued operations:

     

Self-insured liability accrual

     520         527   

Environmental remediation liabilities

     398         571   

Other

     176         372   
  

 

 

    

 

 

 
     1,094         1,470   
  

 

 

    

 

 

 

Total other current liabilities

   $ 96,549       $ 107,684  

Other deferred items and liabilities consisted of the following:

 

     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Continuing operations:

     

Self-insured liability accrual

   $ 17,326       $ 15,579   

Accrued compensation

     6,506         8,061   

Accrued restructuring

     3,546         3,140   

Foreign deferred tax liability

     1,970         2,024   

Other

     7,491         6,734   
  

 

 

    

 

 

 
     36,839         35,538   
  

 

 

    

 

 

 

Discontinued operations:

     

Self-insured liability accrual

     4,913         5,188   

Environmental remediation liabilities

     4,723         4,745   

Accrued income taxes

     1,077         1,053   

Other

     1,264         1,304   
  

 

 

    

 

 

 
     11,977         12,290   
  

 

 

    

 

 

 

Total other deferred items and liabilities

   $ 48,816       $ 47,828   
  

 

 

    

 

 

 
Stockholders' Equity (Tables)

The following represents a reconciliation of the carrying amounts of stockholders’ equity attributable to Viad and the noncontrolling interest for the nine months ended September 30, 2013:

 

     Total Viad            Total  
     Stockholders’     Noncontrolling      Stockholders’  
     Equity     Interest      Equity  
           (in thousands)         

Balance at January 1, 2013

   $ 388,061      $ 8,971       $ 397,032   

Net income

     26,173        425         26,598   

Dividends on common stock

     (6,095     —           (6,095

Common stock purchased for treasury

     (1,294     —           (1,294

Employee benefit plans

     3,485        —           3,485   

Unrealized foreign currency translation adjustment

     (6,092     —           (6,092

Unrealized gain on investments

     117        —           117   

Prior service credit and net actuarial loss

     91        —           91   

ESOP allocation adjustment

     850        —           850   
  

 

 

   

 

 

    

 

 

 

Balance at September 30, 2013

   $ 405,296      $ 9,396       $ 414,692   
  

 

 

   

 

 

    

 

 

 

The following represents a reconciliation of the carrying amounts of stockholders’ equity attributable to Viad and the noncontrolling interest for the nine months ended September 30, 2012:

 

     Total Viad           Total  
     Stockholders’     Noncontrolling     Stockholders’  
     Equity     Interest     Equity  
           (in thousands)        

Balance at January 1, 2012

   $ 377,894      $ 8,285      $ 386,179   

Net income

     27,093        618        27,711   

Dividends on common stock

     (3,649     —          (3,649

Common stock purchased for treasury

     (1,038     —          (1,038

Employee benefit plans

     3,370        —          3,370   

Unrealized foreign currency translation adjustment

     7,225        —          7,225   

Unrealized gain on investments

     66        —          66   

Prior service credit and net actuarial loss

     (35     —          (35

ESOP allocation adjustment

     1,150        —          1,150   

Other

     1        (1     —     
  

 

 

   

 

 

   

 

 

 

Balance at September 30, 2012

   $ 412,077      $ 8,902      $ 420,979   
  

 

 

   

 

 

   

 

 

 

Changes in accumulated other comprehensive income (“AOCI”) by component were as follows:

 

           Cumulative     Unrecognized        
           Foreign     Net Actuarial     Accumulated  
     Unrealized     Currency     Loss and     Other  
     Gains on     Translation     Prior Service     Comprehensive  
     Investments     Adjustments     Credit     Income  
     (in thousands)  

Balance at January 1, 2013

   $ 275      $ 42,158      $ (14,968   $ 27,465   

Other comprehensive income before reclassifications

     162        (6,092     —          (5,930

Amounts reclassified from AOCI, net of tax

     (45     —          91        46   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

     117        (6,092     91        (5,884
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 392      $ 36,066      $ (14,877   $ 21,581   
  

 

 

   

 

 

   

 

 

   

 

 

 

The following table presents information about reclassification adjustments out of AOCI for the nine months ended September 30:

 

                 Affected Line
                 Item in the
                 Statement Where
                 Net Income is
     2013     2012    

Presented

     (in thousands)      

Unrealized gain on investments

   $ (72   $ (45   Interest income

Tax effect

     27        16      Income tax expense
  

 

 

   

 

 

   
   $ (45   $ (29   Net of tax
  

 

 

   

 

 

   

Recognized net actuarial loss

   $ 827      $ 778      See (1) below

Amortization of prior service credit

     (680     (835   See (1) below

Tax effect

     (56     (21   Income tax benefit
  

 

 

   

 

 

   
   $ 91      $ (78   Net of tax
  

 

 

   

 

 

   

 

(1) Amount is included in pension expense. See Note 15 for additional information.
Fair Value Measurements (Tables)

The fair value information related to these assets is summarized in the following table:

 

            Fair Value Measurements at September 30, 2013 Using  

Description

   September 30,
2013
     Quoted Prices
in Active
Markets

(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobserved
Inputs
(Level 3)
 
     (in thousands)  

Money market funds

   $ 16,680       $ 16,680       $ —         $ —     

Other mutual funds

     1,289         1,289         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 17,969       $ 17,969       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value information related to these assets is summarized in the following table:

 

            Fair Value Measurements at September 30, 2013 Using         

Description

   September 30,
2013
     Quoted Prices
in Active
Markets (Level 1)
     Significant
Other

Observable
Inputs

(Level 2)
     Significant
Unobserved
Inputs

(Level 3)
     Total
Gains
(Losses)
 
     (in thousands)  

Goodwill(1)

   $ —         $ —         $ —         $ —         $ (4,461

Property and equipment(1)

     —           —           —           —           (952
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —         $ —         $ —         $ —         $ (5,413
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  See Note 3 for details of the impairment losses.
Income Per Share (Tables)
Reconciliation of the Numerators and Denominators of Basic and Diluted Earnings Per Share Computations

The following is a reconciliation of the numerators and denominators of basic and diluted per share computations for net income attributable to Viad:

 

     Three months ended September 30,     Nine months ended September 30,  
     2013     2012     2013     2012  
     (in thousands, except per share data)  

Basic net income per share

        

Numerator:

        

Net income attributable to Viad

   $ 11,855      $ 19,976      $ 26,173      $ 27,093   

Less: Allocation to non-vested shares

     (264     (532     (605     (735
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income allocated to Viad common stockholders

   $ 11,591      $ 19,444      $ 25,568      $ 26,358   
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

        

Weighted-average outstanding common shares

     19,868        19,721        19,839        19,694   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Viad common stockholders

   $ 0.58      $ 0.99      $ 1.29      $ 1.34   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share

        

Numerator:

        

Net income attributable to Viad

   $ 11,855      $ 19,976      $ 26,173      $ 27,093   
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

        

Weighted-average outstanding common shares

     19,868        19,721        19,839        19,694   

Additional dilutive shares related to share-based compensation

     323        296        349        299   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average outstanding and potentially dilutive shares

     20,191        20,017        20,188        19,993   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Viad common stockholders (1)

   $ 0.58      $ 0.99      $ 1.29      $ 1.34   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Diluted income per share cannot exceed basic income per share.
Pension and Postretirement Benefits (Tables) (Foreign Pension Plans [Member])
Components of Net Periodic Benefit Cost of Viad's Pension and Post Retirement Benefit Plan

The net periodic benefit cost of Viad’s pension and postretirement benefit plans for the three months ended September 30 included the following components:

 

     Domestic Plans              
     Pension Plans     Postretirement
Benefit Plans
    Foreign
Pension Plans
 
     2013     2012     2013     2012     2013     2012  
     (in thousands)  

Service cost

   $ —        $ 24      $ 25      $ 31      $ 134      $ 123   

Interest cost

     251        276        152        187        175        186   

Expected return on plan assets

     (100     (84     —          (15     (175     (157

Amortization of prior service credit

     —          —          (227     (278     —          —     

Recognized net actuarial loss

     129        110        106        101        10        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 280      $ 326      $ 56      $ 26      $ 144      $ 152   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The net periodic benefit cost of Viad’s pension and postretirement benefit plans for the nine months ended September 30 included the following components:

 

     Domestic Plans              
     Pension Plans     Postretirement
Benefit Plans
    Foreign
Pension Plans
 
     2013     2012     2013     2012     2013     2012  
     (in thousands)  

Service cost

   $ 60      $ 78      $ 117      $ 110      $ 405      $ 368   

Interest cost

     773        863        498        611        531        552   

Expected return on plan assets

     (300     (305     —          (56     (530     (467

Amortization of prior service credit

     —          —          (677     (835     —          —     

Recognized net actuarial loss

     427        368        388        410        30        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 960      $ 1,004      $ 326      $ 240      $ 436      $ 453  
Restructuring Charges (Tables)
Reconciliation of Beginning and Ending Liability Balances by Major Restructuring Activity

The table below represents a reconciliation of Viad’s restructuring liability by major restructuring activity:

 

     Marketing & Events                    
     Group Consolidation     Other Restructurings        
     Severance &           Severance &              
     Employee           Employee              
     Benefits     Facilities     Benefits     Facilities     Total  
     (in thousands)  

Balance at January 1, 2013

   $ 720      $ 5,571      $ —        $ 933      $ 7,224   

Restructuring charges, net

     1,890        872        137        (692     2,207   

Cash payments

     (1,434     (2,034     (62     (241     (3,771
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 1,176      $ 4,409      $ 75      $ —        $ 5,660   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Segment Information (Tables)

Disclosures regarding Viad’s reportable segments with reconciliations to consolidated totals are as follows:

 

     Three months ended
September 30,
    Nine months ended
September 30,
 
     2013     2012     2013     2012  
     (in thousands)  

Revenues:

        

Marketing & Events Group:

        

U.S.

   $ 120,503      $ 168,395      $ 494,355      $ 540,741   

International

     40,335        67,780        168,974        180,217   

Intersegment eliminations

     (4,352     (5,871     (10,269     (11,669
  

 

 

   

 

 

   

 

 

   

 

 

 
     156,486        230,304        653,060        709,289   

Travel & Recreation Group

     79,987        77,153        117,890        113,390   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 236,473      $ 307,457      $ 770,950      $ 822,679   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating income (loss):

        

Marketing & Events Group:

        

U.S. (1)

   $ (3,745   $ (585   $ 12,971      $ 12,235   

International

     (4,159     3,432        5,821        9,637   
  

 

 

   

 

 

   

 

 

   

 

 

 
     (7,904     2,847        18,792        21,872   

Travel & Recreation Group

     32,528        31,335        29,540        28,341   
  

 

 

   

 

 

   

 

 

   

 

 

 
     24,624        34,182        48,332        50,213   

Corporate activities

     (2,034     (2,036     (4,007     (6,000
  

 

 

   

 

 

   

 

 

   

 

 

 
     22,590        32,146        44,325        44,213   

Interest income

     122        153        397        445   

Interest expense

     (286     (331     (905     (991

Restructuring charges:

        

Marketing & Events U.S.

     (185     (392     (309     (2,879

Marketing & Events International

     (434     (216     (1,761     (619

Travel & Recreation Group

     (77     —          (90     —     

Corporate

     (18     —          (47     (13

Impairment losses:

        

Marketing & Events U.S.

     (658     —          (658     —     

Marketing & Events International

     (294     —          (294     —     

Travel & Recreation Group

     (4,461     —          (4,461     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

   $ 16,299      $ 31,360      $ 36,197      $ 40,156   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes a gain on the sale of a facility and related land of $4.8 million which was recorded during the three months ended September 30, 2013
     September 30,      December 31,  
     2013      2012  
     (in thousands)  

Assets:

     

Marketing & Events U.S.

   $ 210,836       $ 203,145   

Marketing & Events International

     88,996         100,387   

Travel & Recreation Group

     247,948         223,199   

Corporate and other

     111,380         123,846   
  

 

 

    

 

 

 
   $ 659,160       $ 650,577   
  

 

 

    

 

 

 
Basis of Preparation and Principles of Consolidation - Additional Information (Detail) (Glacier Park Inc [Member])
9 Months Ended
Sep. 30, 2013
Hotel
Restaurants
Lodge
Glacier Park Inc [Member]
 
Basis Of Presentation And Principles Of Consolidation [Line Items]
 
Number of lodges
Number of motor inns
Number of hotel
Percentage of subsidiary's interest owned by Viad
80.00% 
Share-Based Compensation - Summary of Share-Based Compensation Expense (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation before income tax benefit
$ 1,202,000 
$ 1,670,000 
$ 3,569,000 
$ 4,524,000 
Income tax benefit
(445,000)
(571,000)
(1,326,000)
(1,606,000)
Total share-based compensation, net of income tax benefit
757,000 
1,099,000 
2,243,000 
2,918,000 
Restricted Stock [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation before income tax benefit
802,000 
890,000 
2,522,000 
2,610,000 
Performance Shares [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation before income tax benefit
347,000 
548,000 
871,000 
1,220,000 
Stock Options [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation before income tax benefit
3,000 
148,000 
104,000 
450,000 
Restricted Stock Units and Performance Based Restricted Stock Units [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation before income tax benefit
$ 50,000 
$ 84,000 
$ 72,000 
$ 244,000 
Share Based Compensation - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Restructuring Charges [Member]
Sep. 30, 2013
Performance Unit Incentive Plan (PUP) [Member]
Sep. 30, 2013
Performance Unit Incentive Plan (PUP) [Member]
Sep. 30, 2012
Performance Unit Incentive Plan (PUP) [Member]
Dec. 31, 2012
Performance Unit Incentive Plan (PUP) [Member]
Sep. 30, 2013
Stock Options [Member]
Sep. 30, 2012
Stock Options [Member]
Sep. 30, 2013
Stock Options [Member]
Sep. 30, 2012
Stock Options [Member]
Sep. 30, 2013
Restricted Stock [Member]
Sep. 30, 2012
Restricted Stock [Member]
Sep. 30, 2013
Restricted Stock [Member]
Sep. 30, 2012
Restricted Stock [Member]
Sep. 30, 2013
Restricted Stock Units and Performance Based Restricted Stock Units [Member]
Dec. 31, 2012
Restricted Stock Units and Performance Based Restricted Stock Units [Member]
Jan. 31, 2012
PBRS [Member]
Feb. 28, 2013
Restricted Stock Units [Member]
Feb. 28, 2012
Restricted Stock Units [Member]
Sep. 30, 2013
Restricted Stock Units [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation before income tax benefit
$ 1,202,000 
$ 1,670,000 
$ 3,569,000 
$ 4,524,000 
$ 253,000 
$ 94,000 
 
 
 
$ 3,000 
$ 148,000 
$ 104,000 
$ 450,000 
$ 802,000 
$ 890,000 
$ 2,522,000 
$ 2,610,000 
 
 
 
 
 
 
Unamortized cost
 
 
 
 
 
 
 
 
 
 
 
 
 
4,100,000 
 
4,100,000 
 
 
 
 
 
 
 
Recognition Period of Unrecognized cost
 
 
 
 
 
 
 
 
 
 
 
1 year 
 
 
 
1 year 10 months 24 days 
 
 
 
 
 
 
 
Repurchase of Common Stock for Employee Tax Withholding Obligations amount
 
 
1,300,000 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchased shares tax withholding
 
 
48,937 
53,019 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares Available for Grant
1,005,372 
 
1,005,372 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities related to restricted stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
405,000 
633,000 
 
 
 
 
Payments To Employees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35,000 
300,000 
257,000 
 
Liability awards recorded
 
 
 
 
 
 
4,600,000 
 
3,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PUP award vested
 
 
 
 
 
 
 
 
 
 
 
 
 
161,186 
 
 
 
 
 
 
11,300 
Total unrecognized cost related to non-vested stock option awards
$ 3,000 
 
$ 3,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options granted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-Based Compensation - Summary of Activity of the Outstanding Share-Based Compensation Awards (Detail) (USD $)
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Restricted Stock [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Beginning Balance, Shares
516,351 
 
Granted, Shares
101,300 
 
Vested, Shares
(161,186)
 
Forfeited, Shares
(5,966)
 
Ending Balance, Shares
450,499 
 
Beginning Balance, Weighted-Average Grant Date Fair Value
$ 21.25 
 
Granted, Weighted-Average Grant Date Fair Value
$ 27.28 
 
Vested, Weighted-Average Grant Date Fair Value
$ 20.74 
 
Forfeited, Weighted-Average Grant Date Fair Value
$ 23.07 
 
Ending Balance, Weighted-Average Grant Date Fair Value
$ 22.76 
 
Restricted Stock Units [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Beginning Balance, Shares
40,500 
 
Granted, Shares
8,600 
 
Vested, Shares
(11,300)
 
Forfeited, Shares
(8,840)
 
Ending Balance, Shares
28,960 
 
Beginning Balance, Weighted-Average Grant Date Fair Value
$ 20.82 
 
Granted, Weighted-Average Grant Date Fair Value
$ 27.35 
 
Vested, Weighted-Average Grant Date Fair Value
$ 19.10 
 
Forfeited, Weighted-Average Grant Date Fair Value
$ 22.33 
 
Ending Balance, Weighted-Average Grant Date Fair Value
$ 22.98 
 
Performance Unit Incentive Plan (PUP) [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Beginning Balance, Shares
210,600 
 
Granted, Shares
93,100 
 
Vested, Shares