VIAD CORP, 10-Q filed on 11/8/2012
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2012
Oct. 31, 2012
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
VIAD CORP 
 
Entity Central Index Key
0000884219 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2012 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2012 
 
Document Fiscal Period Focus
Q3 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
20,259,497 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Current assets:
 
 
Cash and cash equivalents
$ 124,229 
$ 100,376 
Accounts receivable, net of allowance for doubtful accounts of $1,265 and $1,072, respectively
87,418 
63,583 
Inventories
38,089 
35,825 
Deferred income taxes
23,893 
24,200 
Other current assets
17,161 
14,647 
Total current assets
290,790 
238,631 
Property and equipment, net
197,470 
173,813 
Other investments and assets
29,447 
31,051 
Deferred income taxes
41,917 
38,755 
Goodwill
138,299 
133,694 
Other intangible assets, net
2,717 
1,884 
Total Assets
700,640 
617,828 
Current liabilities:
 
 
Accounts payable
80,213 
51,448 
Other current liabilities
115,413 
97,331 
Current portion of long-term debt and capital lease obligations
1,368 
2,018 
Total current liabilities
196,994 
150,797 
Long-term debt and capital lease obligations
897 
1,221 
Pension and postretirement benefits
34,832 
35,419 
Other deferred items and liabilities
46,938 
44,212 
Total liabilities
279,661 
231,649 
Commitments and contingencies (Note 16)
   
   
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
593,367 
599,188 
Retained earnings (deficit)
10,188 
(13,256)
Unearned employee benefits and other
(1,804)
(2,951)
Accumulated other comprehensive income (loss):
 
 
Unrealized gains on investments, net
288 
222 
Cumulative foreign currency translation adjustments
41,873 
34,648 
Unrecognized net actuarial loss and prior service credit, net
(13,012)
(12,977)
Common stock in treasury, at cost, 4,676,742 and 4,790,920 shares, respectively
(256,225)
(264,382)
Total Viad Corp stockholders' equity
412,077 
377,894 
Noncontrolling interest
8,902 
8,285 
Total stockholders' equity
420,979 
386,179 
Total Liabilities and Stockholders' Equity
$ 700,640 
$ 617,828 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
 
 
Allowance for doubtful accounts
$ 1,265 
$ 1,072 
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 
Treasury stock, shares
4,676,742 
4,790,920 
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Revenues:
 
 
 
 
Convention and event services
$ 197,221 
$ 121,157 
$ 583,304 
$ 529,963 
Exhibits and environments
33,083 
30,540 
125,985 
120,807 
Travel and recreation services
77,153 
64,472 
113,390 
94,189 
Total revenues
307,457 
216,169 
822,679 
744,959 
Costs and expenses:
 
 
 
 
Costs of services
238,980 
180,517 
653,933 
595,554 
Costs of products sold
34,295 
30,240 
118,533 
116,872 
Corporate activities
2,036 
2,356 
6,000 
5,203 
Interest income
(153)
(198)
(445)
(588)
Interest expense
331 
373 
991 
1,165 
Restructuring charges
608 
75 
3,511 
1,550 
Total costs and expenses
276,097 
213,363 
782,523 
719,756 
Income from continuing operations before income taxes
31,360 
2,806 
40,156 
25,203 
Income tax expense
10,304 
523 
13,084 
9,011 
Income from continuing operations
21,056 
2,283 
27,072 
16,192 
Income from discontinued operations
 
 
639 
 
Net income
21,056 
2,283 
27,711 
16,192 
Net income attributable to noncontrolling interest
(1,080)
(1,038)
(618)
(675)
Net income attributable to Viad
19,976 
1,245 
27,093 
15,517 
Diluted income per common share
 
 
 
 
Income from continuing operations attributable to Viad common stockholders
$ 0.99 
$ 0.06 
$ 1.31 
$ 0.76 
Income from discontinued operations attributable to Viad common stockholders
 
 
$ 0.03 
 
Net income attributable to Viad common stockholders
$ 0.99 
$ 0.06 
$ 1.34 
$ 0.76 
Weighted-average outstanding and potentially dilutive common shares
20,017 
20,033 
19,993 
20,089 
Basic income per common share
 
 
 
 
Income from continuing operations attributable to Viad common stockholders
$ 0.99 
$ 0.06 
$ 1.31 
$ 0.76 
Income from discontinued operations attributable to Viad common stockholders
 
 
$ 0.03 
 
Net income attributable to Viad common stockholders
$ 0.99 
$ 0.06 
$ 1.34 
$ 0.76 
Weighted-average outstanding common shares
19,721 
19,711 
19,694 
19,768 
Dividends declared per common share
$ 0.10 
$ 0.04 
$ 0.18 
$ 0.12 
Amounts attributable to Viad common stockholders
 
 
 
 
Income from continuing operations
19,976 
1,245 
26,454 
15,517 
Income from discontinued operations
 
 
639 
 
Net income
$ 19,976 
$ 1,245 
$ 27,093 
$ 15,517 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Condensed Consolidated Statements of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 21,056 
$ 2,283 
$ 27,711 
$ 16,192 
Other comprehensive income (loss):
 
 
 
 
Unrealized gain (loss) on investments, net of tax
15 
(160)
66 
(99)
Unrealized foreign currency translation adjustments, net of tax
6,229 
(13,072)
7,225 
(7,460)
Amortization of net actuarial loss, net of tax
132 
51 
481 
459 
Amortization of prior service credit, net of tax
(172)
(197)
(516)
(592)
Total other comprehensive income (loss)
6,204 
(13,378)
7,256 
(7,692)
Comprehensive income (loss)
27,260 
(11,095)
34,967 
8,500 
Comprehensive income attributable to noncontrolling interest
(1,080)
(1,038)
(618)
(675)
Comprehensive income (loss) attributable to Viad
$ 26,180 
$ (12,133)
$ 34,349 
$ 7,825 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Cash flows from operating activities:
 
 
Net income
$ 27,711 
$ 16,192 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
23,560 
21,882 
Deferred income taxes
(4,242)
548 
Income from discontinued operations
(639)
 
Restructuring charges
3,511 
1,550 
Gains on disposition of property and other assets
(156)
(64)
Share-based compensation expense
4,524 
3,284 
Excess tax benefit from share-based compensation arrangements
(269)
(54)
Other non-cash items, net
3,646 
3,532 
Change in operating assets and liabilities (excluding the impact of acquisitions):
 
 
Receivables
(24,342)
(16,154)
Inventories
(2,238)
(883)
Accounts payable
26,272 
12,665 
Restructuring liabilities
(2,761)
(3,362)
Accrued compensation
5,783 
3,536 
Customer deposits
(1,994)
(3,975)
Income taxes payable
8,185 
2,036 
Other assets and liabilities, net
2,255 
(5,665)
Net cash provided by operating activities
68,806 
35,068 
Cash flows from investing activities:
 
 
Capital expenditures
(19,912)
(17,251)
Acquisition of businesses, net of cash acquired
(23,546)
(41,105)
Proceeds from dispositions of property and other assets
194 
315 
Proceeds from sale of land
1,041 
 
Net cash used in investing activities
(42,223)
(58,041)
Cash flows from financing activities:
 
 
Payments on debt and capital lease obligations
(2,308)
(6,544)
Dividends paid on common stock
(2,429)
(2,435)
Debt issuance costs
 
(1,001)
Common stock purchased for treasury
(1,038)
(5,230)
Excess tax benefit from share-based compensation arrangements
269 
54 
Proceeds from exercise of stock options
90 
163 
Net cash used in financing activities
(5,416)
(14,993)
Effect of exchange rate changes on cash and cash equivalents
2,686 
(3,322)
Net change in cash and cash equivalents
23,853 
(41,288)
Cash and cash equivalents, beginning of year
100,376 
145,841 
Cash and cash equivalents, end of period
124,229 
104,553 
Supplemental disclosure of cash flow information
 
 
Cash paid for income taxes
7,202 
7,805 
Cash paid for interest
855 
804 
Equipment acquired under capital leases
$ 690 
$ 1,097 
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, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

For further information, refer to the consolidated financial statements and related footnotes for the year ended December 31, 2011, included in the Company’s Form 10-K (File No. 001-11015), filed with the Securities and Exchange Commission on March 9, 2012.

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 the 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, leading consumer brands and casinos.

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. Brewster also operates the Banff International Hotel acquired on March 7, 2012. The Banff International Hotel is a 162-guest room hotel located in downtown Banff, Alberta, Canada. Glacier Park 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. Glacier Park is an 80 percent owned subsidiary of Viad. Alaska Denali Travel operates Denali Backcountry Lodge and Denali Cabins. Denali Backcountry Lodge is a 42-guest room lodge located within Denali National Park and Preserve in Alaska and Denali Cabins are 46 guest cabins located near the entrance to Denali National Park and Preserve. 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,
 
    2012     2011     2012     2011  
          (in thousands)        

Restricted stock/performance-based restricted stock (“PBRS”)

  $ 890     $ 794     $ 2,610     $ 2,409  

Performance unit incentive plan (“PUP”)

    548       86       1,220       345  

Stock options

    148       146       450       476  

Restricted stock units/PBRS units

    84       (35     244       54  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation before income tax benefit

    1,670       991       4,524       3,284  

Income tax benefit

    (571     (358     (1,606     (1,163
   

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation, net of income tax benefit

  $ 1,099     $ 633     $ 2,918     $ 2,121  
   

 

 

   

 

 

   

 

 

   

 

 

 

In addition, $253,000 and $124,000 of share-based compensation costs were included in restructuring charges during the nine months ended September 30, 2012 and 2011, respectively. Of the 2012 amount, $94,000 related to the PUP awards presented below.

Restricted Stock and PBRS. The following table summarizes restricted stock and PBRS activity:

 

                                 
    Restricted Stock     PBRS  
    Shares     Weighted-Average
Grant Date

Fair Value
    Shares     Weighted-Average
Grant Date

Fair Value
 

Balance at January 1, 2012

    572,022     $ 20.36       416     $ 15.36  

Granted

    166,750       20.46       —         —    

Vested

    (197,571     17.97       (416     15.36  

Forfeited

    (4,150     24.80       —         —    
   

 

 

           

 

 

         

Balance at September 30, 2012

    537,051       21.23       —         —    
   

 

 

           

 

 

         

The unamortized cost of all outstanding restricted stock awards as of September 30, 2012 was $4.6 million, which Viad expects to recognize in the consolidated financial statements over a weighted-average period of approximately 2.2 years. During the nine months ended September 30, 2012 and 2011, the Company repurchased 53,019 shares for $1.0 million and 28,627 shares for $679,000, respectively, related to tax withholding requirements on vested share-based awards. As of September 30, 2012, there were 1,056,607 total shares available for future grant.

Liability-Based Awards. The following table summarizes the liability-based award activity:

 

                                                 
    Restricted Stock Units     PBRS Units     PUP Awards  
    Units     Weighted-Average
Grant Date

Fair Value
    Units     Weighted-Average
Grant Date

Fair Value
    Units     Weighted-Average
Grant Date

Fair Value
 

Balance at January 1, 2012

    38,600     $ 19.07       1,956     $ 15.36       95,500     $ 23.02  

Granted

    15,850       20.57       —         —         115,100       20.60  

Vested

    (13,100     15.36       (1,956     15.36       —         —    
   

 

 

           

 

 

           

 

 

         

Balance at September 30, 2012

    41,350       20.82       —         —         210,600       21.70  
   

 

 

           

 

 

           

 

 

         

As of September 30, 2012 and December 31, 2011, Viad had liabilities of $427,000 and $475,000, respectively, related to restricted stock unit and PBRS unit liability awards. A portion of the 2009 PBRS unit awards vested effective December 31, 2009 and cash payouts of $35,000 and $52,000 were distributed in January 2012 and January 2011, respectively. Similarly, a portion of the 2009 restricted stock unit awards vested in February 2012 and cash payouts of $257,000 were distributed in February 2012.

As of September 30, 2012 and December 31, 2011, Viad had liabilities of $2.0 million and $714,000, respectively, related to PUP awards. There were no PUP awards which vested during the nine months ended September 30, 2012 or 2011. Furthermore, there were no cash settlements of PUP awards during the nine months ended September 30, 2012 or 2011.

 

Stock Options. The following table summarizes stock option activity:

 

                         
    Shares     Weighted-
Average
Exercise  Price
    Options
Exercisable
 

Options outstanding at January 1, 2012

    584,201     $ 23.32       396,688  

Exercised

    (4,562     19.57          

Forfeited or expired

    (191,881     26.18          
   

 

 

                 

Options outstanding at September 30, 2012

    387,758       21.95       293,905  
   

 

 

                 

The total unrecognized cost related to non-vested stock option awards was $244,000 as of September 30, 2012, which Viad expects to recognize in the consolidated financial statements over a weighted-average period of approximately less than one year. No stock options were granted during the nine months ended September 30, 2012.

In addition to the above, Viad had stock options outstanding which were granted to employees of MoneyGram International, Inc. (“MoneyGram”) prior to the spin-off of that company in 2004. As of September 30, 2012, there were 2,367 of such options both outstanding and exercisable at an exercise price of $19.57. The weighted-average remaining contractual life of these options was less than one year. During the nine months ended September 30, 2012, 35 options were exercised by a MoneyGram participant with an exercise price of $19.57.

Acquisition of Businesses
Acquisition of Businesses

Note 3. Acquisition of Businesses

On March 7, 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 Company recorded $1.9 million of goodwill in connection with the transaction, which 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 of $1.3 million 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.

On September 16, 2011, Viad acquired the Denali Backcountry Lodge and Denali Cabins for $15.3 million in cash. Denali Backcountry Lodge is a 42-guest room lodge located within Denali National Park and Preserve in Alaska and Denali Cabins consist of 46 guest cabins near the entrance to Denali National Park and Preserve. These properties are operated by Viad’s wholly-owned subsidiary, Alaska Denali Travel, within the Travel & Recreation Group. On June 29, 2011, Viad acquired St. Mary Lodge & Resort (“St. Mary”) for $15.3 million in cash. St. Mary is a 115-guest room hotel located outside of Glacier National Park’s east entrance and is operated by Glacier Park within the Travel & Recreation Group. On January 5, 2011, Viad acquired Grouse Mountain Lodge for $10.5 million in cash. Grouse Mountain Lodge is a 145-guest room hotel located in Whitefish, Montana and is operated by Glacier Park within the Travel & Recreation Group.

 

 

The following information represents the aggregate amounts assigned to the assets and liabilities of the acquisitions that occurred during 2011:

 

         
    (in thousands)  

Cash and cash equivalents

    30  

Other current assets

    870  

Property and equipment

    32,905  

Goodwill

    7,645  

Other intangible assets

    1,086  
   

 

 

 

Total assets acquired

    42,536  
   

 

 

 

Customer deposits

    (821

Other current liabilities

    (198

Other long-term liabilities

    (382
   

 

 

 

Total liabilities acquired

    (1,401
   

 

 

 

Purchase price

  $ 41,135  
   

 

 

 

The primary factor that contributed to the recognition of goodwill for the 2011 acquisitions relates to future growth opportunities. The acquired goodwill is included in the Travel & Recreation Group and is deductible for tax purposes over a period of 15 years. The transaction costs related to the acquisitions were insignificant. The results of operations of the acquisitions have been included in Viad’s consolidated financial statements from the date of acquisition.

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

 

                                 
    Three months ended September 30,     Nine months ended September 30,  
    2012     2011     2012     2011  
    (in thousands, except per share data)  

Revenue

  $ 307,457     $ 223,494     $ 823,129     $ 756,698  

Depreciation and amortization

  $ 8,560     $ 7,947     $ 23,764     $ 23,178  

Segment operating income

  $ 34,182     $ 8,645     $ 50,182     $ 35,614  

Net income attributable to Viad

  $ 19,976     $ 3,192     $ 27,071     $ 17,319  

Diluted net income per share

  $ 0.99     $ 0.16     $ 1.34     $ 0.85  

Basic net income per share

  $ 0.99     $ 0.16     $ 1.34     $ 0.85  
Inventories
Inventories

Note 4. Inventories

The components of inventories were as follows:

 

                 
    September 30,     December 31,  
    2012     2011  
    (in thousands)  

Raw materials

  $ 17,724     $ 18,297  

Work in process

    20,365       17,528  
   

 

 

   

 

 

 

Inventories

  $ 38,089     $ 35,825  
   

 

 

   

 

 

 

 

Property and Equipment
Property and Equipment

Note 5. Property and Equipment

Property and equipment consisted of the following:

 

                 
    September 30,     December 31,  
    2012     2011  
    (in thousands)  

Land and land interests

  $ 26,223     $ 18,134  

Buildings and leasehold improvements

    137,495       109,077  

Equipment and other

    318,184       310,186  
   

 

 

   

 

 

 
      481,902       437,397  

Accumulated depreciation

    (284,432     (263,584
   

 

 

   

 

 

 

Property and equipment, net

  $ 197,470     $ 173,813  
   

 

 

   

 

 

 

Depreciation expense for the three months ended September 30, 2012 and 2011 was $8.4 million and $7.4 million, respectively, and for the nine months ended September 30, 2012 and 2011 was $23.1 million and $21.3 million, respectively.

Other Investments and Assets
Other Investments and Assets

Note 6. Other Investments and Assets

Other investments and assets consisted of the following:

 

                 
    September 30,     December 31,  
    2012     2011  
    (in thousands)  

Cash surrender value of life insurance

  $ 18,152     $ 18,812  

Workers’ compensation insurance security deposits

    4,652       4,658  

Other

    6,643       7,581  
   

 

 

   

 

 

 

Total other investments and assets

  $ 29,447     $ 31,051  
   

 

 

   

 

 

 
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets

Note 7. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2012 were as follows:

 

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

Balance at January 1, 2012

  $ 62,686     $ 22,198     $ 48,810     $ 133,694  

Business acquisition

    —         —         1,890       1,890  

Foreign currency translation adjustments

    —         853       1,862       2,715  
   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2012

  $ 62,686     $ 23,051     $ 52,562     $ 138,299  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

A summary of other intangible assets as of September 30, 2012 is presented below:

 

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

Amortized intangible assets:

                       

Contracts and customer relationships

  $ 3,598     $ (2,225   $ 1,373  

Other

    968       (84     884  
   

 

 

   

 

 

   

 

 

 
      4,566       (2,309     2,257  

Unamortized intangible assets:

                       

Business licenses

    460       —         460  
   

 

 

   

 

 

   

 

 

 

Total

  $ 5,026     $ (2,309   $ 2,717  
   

 

 

   

 

 

   

 

 

 

A summary of other intangible assets as of December 31, 2011 is presented below:

 

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

Amortized intangible assets:

                       

Contracts and customer relationships

  $ 3,122     $ (1,736   $ 1,386  

Other

    68       (30     38  
   

 

 

   

 

 

   

 

 

 
      3,190       (1,766     1,424  

Unamortized intangible assets:

                       

Business licenses

    460       —         460  
   

 

 

   

 

 

   

 

 

 

Total

  $ 3,650     $ (1,766   $ 1,884  
   

 

 

   

 

 

   

 

 

 

Intangible asset amortization expense for the three months ended September 30, 2012 and 2011 was $187,000 and $185,000, respectively, and $508,000 and $568,000 for the nine months ended September 30, 2012 and 2011, respectively. Estimated amortization expense related to amortized intangible assets for future periods is expected to be as follows:

 

         
    (in thousands)  

2012

  $ 206  

2013

  $ 714  

2014

  $ 428  

2015

  $ 256  

2016

  $ 200  

Thereafter

  $ 453  

 

Accrued Liabilities and Other
Accrued Liabilities and Other

Note 8. Accrued Liabilities and Other

Other current liabilities consisted of the following:

 

                 
    September 30,
2012
    December 31,
2011
 
    (in thousands)  

Continuing operations:

               

Customer deposits

  $ 47,252     $ 49,182  

Accrued compensation

    28,704       22,587  

Self-insured liability accrual

    7,754       6,697  

Accrued foreign income taxes

    4,434       234  

Accrued employee benefit costs

    3,671       3,730  

Accrued sales and use taxes

    3,220       1,668  

Accrued income taxes

    3,110       —    

Accrued dividends

    2,049       827  

Accrued restructuring

    1,733       2,303  

Other

    12,266       8,185  
   

 

 

   

 

 

 
      114,193       95,413  
   

 

 

   

 

 

 

Discontinued operations:

               

Environmental remediation liabilities

    584       755  

Self-insured liability accrual

    137       639  

Other

    499       524  
   

 

 

   

 

 

 
      1,220       1,918  
   

 

 

   

 

 

 

Total other current liabilities

  $ 115,413     $ 97,331  
   

 

 

   

 

 

 

Other deferred items and liabilities consisted of the following:

 

                 
    September 30,
2012
    December 31,
2011
 
    (in thousands)  

Continuing operations:

               

Self-insured liability accrual

  $ 13,352     $ 14,403  

Accrued compensation

    6,668       5,538  

Accrued restructuring

    5,741       4,647  

Foreign deferred tax liability

    2,469       1,219  

Other

    6,458       5,900  
   

 

 

   

 

 

 
      34,688       31,707  
   

 

 

   

 

 

 

Discontinued operations:

               

Self-insured liability accrual

    5,455       5,351  

Environmental remediation liabilities

    4,779       4,999  

Accrued income taxes

    1,045       1,022  

Other

    971       1,133  
   

 

 

   

 

 

 
      12,250       12,505  
   

 

 

   

 

 

 

Total other deferred items and liabilities

  $ 46,938     $ 44,212  
   

 

 

   

 

 

 
Debt
Debt

Note 9. Debt

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, 2012, Viad’s total debt of $2.3 million consisted entirely of capital lease obligations. As of September 30, 2012, Viad had $125.5 million of capacity remaining under the Credit Facility reflecting outstanding letters of credit of $4.5 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 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, 2012, Viad was in compliance with all covenants.

The estimated fair value of total debt was $2.1 million and $3.0 million as of September 30, 2012 and December 31, 2011, 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 10. 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, 2012:

 

                         
    Total Viad
Stockholders’
Equity
    Noncontrolling
Interest
    Total
Stockholders’
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  
   

 

 

   

 

 

   

 

 

 

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, 2011:

 

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

Balance at January 1, 2011

  $ 378,959     $ 7,752     $ 386,711  

Net income

    15,517       675       16,192  

Dividends on common stock

    (2,435     —         (2,435

Common stock purchased for treasury

    (5,230     —         (5,230

Employee benefit plans

    2,800       —         2,800  

Unrealized foreign currency translation adjustment

    (7,460     —         (7,460

Unrealized loss on investments

    (99     —         (99

Prior service credit and net actuarial loss

    (133     —         (133

ESOP allocation adjustment

    920       —         920  

Other

    4       —         4  
   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2011

  $ 382,843     $ 8,427     $ 391,270  
   

 

 

   

 

 

   

 

 

 

 

Viad has announced its intent to repurchase shares of the Company’s common stock from time to time at prevailing market prices. During the nine months ended September 30, 2011, Viad repurchased 250,760 shares for $4.6 million. During the nine months ended September 30, 2012, no shares were repurchased. As of September 30, 2012, 53,621 shares remain available for repurchase under the announced authorization. Additionally, during the nine months ended September 30, 2012 and 2011, the Company repurchased 53,019 shares for $1.0 million and 28,627 shares for $679,000, respectively, related to tax withholding requirements on share-based awards.

In August 2012, Viad’s Board of Directors approved a 150 percent increase in the quarterly dividend from $0.04 per share to $0.10 per share. The dividend was paid on October 1, 2012 to stockholders of record on September 7, 2012.

Fair Value Measurements
Fair Value Measurements

Note 11. 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, 2012  Using  

Description

  September 30,
2012
    Quoted Prices in
Active Markets
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobserved
Inputs (Level 3)
 
    (in thousands)  

Money market funds

  $ 30,674     $ 30,674     $ —       $ —    

Other mutual funds

    1,277       1,277       —         —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 31,951     $ 31,951     $ —       $ —    
   

 

 

   

 

 

   

 

 

   

 

 

 

As of September 30, 2012 and December 31, 2011, Viad had investments in money market mutual funds of $30.7 million and $20.9 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, 2012 and December 31, 2011, Viad had investments in other mutual funds of $1.3 million and $1.4 million, respectively, which are classified in the consolidated balance sheets under the caption “Other investments and assets.” These investments were classified as available-for-sale and were recorded at fair value. As of September 30, 2012 and December 31, 2011, there were unrealized gains on the investments of $472,000 ($288,000 after-tax) and $366,000 ($222,000 after-tax), respectively, which were included in the consolidated balance sheets under the caption “Accumulated other comprehensive income (loss).”

The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term maturities of these instruments. The estimated fair value of debt obligations is disclosed in Note 9.

 

Income Per Share
Income Per Share

Note 12. 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,
 
    2012     2011     2012     2011  
    (in thousands, except per share data)  

Basic net income per share

                               

Numerator:

                               

Net income attributable to Viad

  $ 19,976     $ 1,245     $ 27,093     $ 15,517  

Less: Allocation to non-vested shares

    (532     (34     (735     (412
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income allocated to Viad common stockholders

  $ 19,444     $ 1,211     $ 26,358     $ 15,105  
   

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

                               

Weighted-average outstanding common shares

    19,721       19,711       19,694       19,768  
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Viad common stockholders

  $ 0.99     $ 0.06     $ 1.34     $ 0.76  
   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share

                               

Numerator:

                               

Net income attributable to Viad

  $ 19,976     $ 1,245     $ 27,093     $ 15,517  
   

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

                               

Weighted-average outstanding common shares

    19,721       19,711       19,694       19,768  

Additional dilutive shares related to share-based compensation

    296       322       299       321  
   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average outstanding and potentially dilutive shares

    20,017       20,033       19,993       20,089  
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Viad common stockholders (1)

  $ 0.99     $ 0.06     $ 1.34     $ 0.76  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Diluted income per share cannot exceed basic income per share.

Options to purchase 436,000 and 313,000 shares of common stock were outstanding during the nine months ended September 30, 2012 and 2011, respectively, but were not included in the computation of dilutive shares outstanding because the effect would be anti-dilutive. Additionally, 296,000 and 322,000 share-based compensation awards were considered dilutive and included in the computation of diluted income per share during the three months ended September 30, 2012 and 2011, respectively. During the nine months ended September 30, 2012 and 2011, 299,000 and 321,000 share-based compensation awards were considered dilutive and included in the computation of diluted income per share, respectively.

Income Taxes
Income Taxes

Note 13. Income Taxes

The following represents a reconciliation of income tax expense and the amount that would be computed using the statutory federal income tax rates for the nine months ended September 30:

 

                                 
    2012     2011  
    (in thousands)  

Computed income tax expense at statutory federal income tax rate of 35%

  $ 14,055       35.0   $ 8,821       35.0

State income taxes, net of federal provision

    622       1.5     537       2.1

Foreign tax rate differentials

    (2,194     (5.5 %)      (1,733     (6.9 %) 

U.S. tax on foreign earnings

    1,681       4.3     1,452       5.9

Tax resolutions, net

    —         0.0     (103     (0.4 %) 

Change in valuation allowance

    48       0.1     —         0.0

Proceeds from life insurance

    (373     (0.9 %)      —         0.0

Other, net

    (755     (1.9 %)      37       0.1
   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

  $ 13,084       32.6   $ 9,011       35.8
   

 

 

   

 

 

   

 

 

   

 

 

 

 

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, 2012 and December 31, 2011, Viad had gross deferred tax assets of $75.1 million and $70.7 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 must assess the likelihood that deferred tax assets will be recovered from future taxable income and to the extent that recovery is not likely, a valuation allowance must be established. The Company uses significant judgment in forming a conclusion regarding the recoverability of its deferred tax assets and evaluates the available positive and negative evidence to determine whether it is more-likely-than-not that its deferred tax assets will be realized in the future. 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 and projected taxable income, taxpaying history and future reversals of deferred tax liabilities. Furthermore, Viad also considered the fact that goodwill impairment charges are not tax deductible and thus did not contribute to tax losses. As of September 30, 2012 and December 31, 2011, Viad had a valuation allowance of $404,000 and $356,000, respectively, related to certain 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, 2012 and December 31, 2011. In addition, as of September 30, 2012 and December 31, 2011, Viad had accrued interest and penalties related to uncertain tax positions for discontinued operations of $410,000 and $386,000, 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, 2012 and December 31, 2011, liabilities associated with uncertain tax positions (including interest and penalties) of $1.0 million were classified as non-current liabilities.

Pension and Postretirement Benefits
Pension and Postretirement Benefits

Note 14. 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
 
    2012     2011     2012     2011     2012     2011  
    (in thousands)  

Service cost

  $ 24     $ 17     $ 31     $ 22     $ 123     $ 92  

Interest cost

    276       292       187       187       186       183  

Expected return on plan assets

    (84     (140     (15     (35     (157     (164

Amortization of prior service credit

    —         —         (278     (320     —         —    

Recognized net actuarial loss

    110       1       101       80       —         —    
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost (credit)

  $ 326     $ 170     $ 26     $ (66   $ 152     $ 111  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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
 
    2012     2011     2012     2011     2012     2011  
    (in thousands)  

Service cost

  $ 78     $ 91     $ 110     $ 96     $ 368     $ 276  

Interest cost

    863       892       611       651       552       551  

Expected return on plan assets

    (305     (422     (56     (101     (467     (493

Amortization of prior service credit

    —         —         (835     (958     —         —    

Recognized net actuarial loss

    368       342       410       400       —         —    
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

  $ 1,004     $ 903     $ 240     $ 88     $ 453     $ 334  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Viad expects to contribute $2.0 million to its funded pension plans, $955,000 to its unfunded pension plans and $450,000 to its postretirement benefit plans in 2012. During the nine months ended September 30, 2012, Viad contributed $1.5 million to its funded pension plans, $703,000 to its unfunded pension plans and $233,000 to its postretirement benefit plans.

Restructuring Charges
Restructuring Charges

Note 15. Restructuring Charges

During the nine months ended September 30, 2012, Viad recorded aggregate restructuring charges of $3.5 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, 2012 related to future lease obligations which will be paid over the remaining lease terms, and severance and employee benefits are expected to be paid by the end of 2012. The table below represents a reconciliation of Viad’s restructuring liability by major restructuring activity:

 

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

Balance at January 1, 2012

  $ 831     $ 4,819     $ 24     $ 1,276     $ 6,950  

Restructuring charges

    1,365       2,133       13       —         3,511  

Cash payments, net

    (1,475     (1,096     (37     (153     (2,761

Adjustment to liability

    (255     —         —         —         (255

Foreign currency translation adjustment

    —         29       —         —         29  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2012

  $ 466     $ 5,885     $ —       $ 1,123     $ 7,474  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

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

Note 16. 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, 2012, 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, 2012, there was a remaining environmental remediation liability of $5.4 million related to previously sold operations of which $584,000 was included in the consolidated balance sheets under the caption “Other current liabilities” and $4.8 million under the caption “Other deferred items and liabilities.”

 

As of September 30, 2012, 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, 2012 would be $23.0 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, 2012, 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 operates the concession portion of its business under a concession contract with the U.S. National Park Service (the “Park Service”) for Glacier National Park. Glacier Park’s original 25-year concession contract with the Park Service that was to expire on December 31, 2005, has been extended for seven one-year periods and now expires on December 31, 2012. The Park Service, in its sole discretion, may continue extending Glacier Park’s concession contract in one-year increments beyond 2012. Glacier Park expects to receive another one-year extension through 2013. In connection with the expiration of the contract, Glacier Park will have the opportunity to bid on a new concession contract. If Glacier Park does secure a new contract, possible terms would be for 10, 15 or 20 years. Glacier Park generated approximately 45 percent of its 2011 revenue through its concession contract for services provided within Glacier National Park. If a new concessionaire is selected by the Park Service, Glacier Park’s remaining business would consist of its operations at Waterton Lakes National Park, Alberta, Canada; East Glacier, Montana; Whitefish, Montana and St. Mary, Montana. In such a circumstance, Glacier Park would be entitled to an amount equal to its “possessory interest” of $25 million, which generally means the value of the structures acquired or constructed, fixtures installed and improvements made to the concession property at Glacier National Park during the term of the concession contract. Glacier Park would also be entitled to the value of personal property located within the in-park concession business. Glacier Park owns Glacier Park Lodge in East Glacier, Montana; Grouse Mountain Lodge in Whitefish, Montana and St. Mary Lodge & Resort in St. Mary, Montana. Glacier Park also owns the Prince of Wales Hotel in Waterton Lakes National Park, which is operated under a 42-year ground lease with the Canadian government running through January 31, 2052. Glacier Park generated 19 percent of Travel & Recreation Group’s full year 2011 segment operating income.

 

Segment Information
Segment Information

Note 17. 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. Overhead and shared expenses, including share-based compensation costs, are not allocated to segment operations; they are reported in the caption “Corporate activities.” Similarly, references to operating margin regarding segment operations mean segment operating income divided by 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,  
    2012     2011     2012     2011  
    (in thousands)  

Revenues:

                               

Marketing & Events Group:

                               

U.S.

  $ 168,395     $ 116,826     $ 540,741     $ 498,691  

International

    67,780       38,516       180,217       159,443  

Intersegment eliminations

    (5,871     (3,645     (11,669     (7,364
   

 

 

   

 

 

   

 

 

   

 

 

 
      230,304       151,697       709,289       650,770  

Travel & Recreation Group

    77,153       64,472       113,390       94,189  
   

 

 

   

 

 

   

 

 

   

 

 

 
    $ 307,457     $ 216,169     $ 822,679     $ 744,959  
   

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating income (loss):

                               

Marketing & Events Group:

                               

U.S.

  $ (585   $ (17,078   $ 12,235     $ 1,061  

International

    3,432       (3,110     9,637       7,325  
   

 

 

   

 

 

   

 

 

   

 

 

 
      2,847       (20,188     21,872       8,386  

Travel & Recreation Group

    31,335       25,600       28,341       24,147  
   

 

 

   

 

 

   

 

 

   

 

 

 
      34,182       5,412       50,213       32,533  

Corporate activities

    (2,036     (2,356     (6,000     (5,203
   

 

 

   

 

 

   

 

 

   

 

 

 
      32,146       3,056       44,213       27,330  

Interest income

    153       198       445       588  

Interest expense

    (331     (373     (991     (1,165

Restructuring charges:

                               

Marketing & Events U.S.

    (392     (75     (2,879     (1,550

Marketing & Events International

    (216     —         (619     —    

Corporate

    —         —         (13     —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

  $ 31,360     $ 2,806     $ 40,156     $ 25,203  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

                 
    September 30,
2012
    December 31,
2011
 
    (in thousands)  

Assets:

               

Marketing & Events U.S.

  $ 225,127     $ 213,843  

Marketing & Events International

    108,124       96,996  

Travel & Recreation Group

    233,578       194,278  

Corporate and other

    133,811       112,711  
   

 

 

   

 

 

 
    $ 700,640     $ 617,828  
   

 

 

   

 

 

 

 

Discontinued Operations
Discontinued Operations

Note 18. Discontinued Operations

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 19. Impact of Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance related to goodwill impairment testing, which is codified in Accounting Standards Codification (“ASC”) Topic 350. The new guidance simplifies how entities test goodwill for impairment and permits an entity to first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after performing the assessment, an entity determines that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this new guidance is not expected to have a material impact on Viad’s financial condition or results of operations. The Company performs its annual goodwill impairment test as of October 31 of each year.

In July 2012, the FASB issued new guidance that allows companies the option to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, which is codified in ASC Topic 350. Under this guidance, an entity is required to perform a quantitative impairment test if qualitative factors indicate that it is more-likely-than-not that indefinite-lived intangible assets are impaired. The qualitative factors are consistent with the guidance established for goodwill impairment testing and include identifying and assessing events and circumstances that would most significantly impact, individually or in the aggregate, the carrying value of the indefinite-lived intangible assets. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this new guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

Impact of Recent Accounting Pronouncements (Policies)

In September 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance related to goodwill impairment testing, which is codified in Accounting Standards Codification (“ASC”) Topic 350. The new guidance simplifies how entities test goodwill for impairment and permits an entity to first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after performing the assessment, an entity determines that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this new guidance is not expected to have a material impact on Viad’s financial condition or results of operations. The Company performs its annual goodwill impairment test as of October 31 of each year.

In July 2012, the FASB issued new guidance that allows companies the option to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, which is codified in ASC Topic 350. Under this guidance, an entity is required to perform a quantitative impairment test if qualitative factors indicate that it is more-likely-than-not that indefinite-lived intangible assets are impaired. The qualitative factors are consistent with the guidance established for goodwill impairment testing and include identifying and assessing events and circumstances that would most significantly impact, individually or in the aggregate, the carrying value of the indefinite-lived intangible assets. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this new guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

Share-Based Compensation (Tables)

The following table summarizes share-based compensation expense:

 

                                 
    Three months ended
September 30,
    Nine months ended
September 30,
 
    2012     2011     2012     2011  
          (in thousands)        

Restricted stock/performance-based restricted stock (“PBRS”)

  $ 890     $ 794     $ 2,610     $ 2,409  

Performance unit incentive plan (“PUP”)

    548       86       1,220       345  

Stock options

    148       146       450       476  

Restricted stock units/PBRS units

    84       (35     244       54  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation before income tax benefit

    1,670       991       4,524       3,284  

Income tax benefit

    (571     (358     (1,606     (1,163
   

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation, net of income tax benefit

  $ 1,099     $ 633     $ 2,918     $ 2,121  
   

 

 

   

 

 

   

 

 

   

 

 

 

Restricted Stock and PBRS. The following table summarizes restricted stock and PBRS activity:

 

                                 
    Restricted Stock     PBRS  
    Shares     Weighted-Average
Grant Date

Fair Value
    Shares     Weighted-Average
Grant Date

Fair Value
 

Balance at January 1, 2012

    572,022     $ 20.36       416     $ 15.36  

Granted

    166,750       20.46       —         —    

Vested

    (197,571     17.97       (416     15.36  

Forfeited

    (4,150     24.80       —         —    
   

 

 

           

 

 

         

Balance at September 30, 2012

    537,051       21.23       —         —    
   

 

 

           

 

 

         

Liability-Based Awards. The following table summarizes the liability-based award activity:

 

                                                 
    Restricted Stock Units     PBRS Units     PUP Awards  
    Units     Weighted-Average
Grant Date

Fair Value
    Units     Weighted-Average
Grant Date

Fair Value
    Units     Weighted-Average
Grant Date

Fair Value
 

Balance at January 1, 2012

    38,600     $ 19.07       1,956     $ 15.36       95,500     $ 23.02  

Granted

    15,850       20.57       —         —         115,100       20.60  

Vested

    (13,100     15.36       (1,956     15.36       —         —    
   

 

 

           

 

 

           

 

 

         

Balance at September 30, 2012

    41,350       20.82       —         —         210,600       21.70  
   

 

 

           

 

 

           

 

 

         

Stock Options. The following table summarizes stock option activity:

 

                         
    Shares     Weighted-
Average
Exercise  Price
    Options
Exercisable
 

Options outstanding at January 1, 2012

    584,201     $ 23.32       396,688  

Exercised

    (4,562     19.57          

Forfeited or expired

    (191,881     26.18          
   

 

 

                 

Options outstanding at September 30, 2012

    387,758       21.95       293,905  
   

 

 

                 
Acquisition of Businesses (Tables)

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 information represents the aggregate amounts assigned to the assets and liabilities of the acquisitions that occurred during 2011:

 

         
    (in thousands)  

Cash and cash equivalents

    30  

Other current assets

    870  

Property and equipment

    32,905  

Goodwill

    7,645  

Other intangible assets

    1,086  
   

 

 

 

Total assets acquired

    42,536  
   

 

 

 

Customer deposits

    (821

Other current liabilities

    (198

Other long-term liabilities

    (382
   

 

 

 

Total liabilities acquired

    (1,401
   

 

 

 

Purchase price

  $ 41,135  
   

 

 

 

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

 

                                 
    Three months ended September 30,     Nine months ended September 30,  
    2012     2011     2012     2011  
    (in thousands, except per share data)  

Revenue

  $ 307,457     $ 223,494     $ 823,129     $ 756,698  

Depreciation and amortization

  $ 8,560     $ 7,947     $ 23,764     $ 23,178  

Segment operating income

  $ 34,182     $ 8,645     $ 50,182     $ 35,614  

Net income attributable to Viad

  $ 19,976     $ 3,192     $ 27,071     $ 17,319  

Diluted net income per share

  $ 0.99     $ 0.16     $ 1.34     $ 0.85  

Basic net income per share

  $ 0.99     $ 0.16     $ 1.34     $ 0.85  
Inventories (Tables)
Components of Inventories

The components of inventories were as follows:

 

                 
    September 30,     December 31,  
    2012     2011  
    (in thousands)  

Raw materials

  $ 17,724     $ 18,297  

Work in process

    20,365       17,528  
   

 

 

   

 

 

 

Inventories

  $ 38,089     $ 35,825  
   

 

 

   

 

 

 
Property and Equipment (Tables)
Property and Equipment

Property and equipment consisted of the following:

 

                 
    September 30,     December 31,  
    2012     2011  
    (in thousands)  

Land and land interests

  $ 26,223     $ 18,134  

Buildings and leasehold improvements

    137,495       109,077  

Equipment and other

    318,184       310,186  
   

 

 

   

 

 

 
      481,902       437,397  

Accumulated depreciation

    (284,432     (263,584
   

 

 

   

 

 

 

Property and equipment, net

  $ 197,470     $ 173,813  
   

 

 

   

 

 

 
Other Investment and Assets (Tables)
Summary of other investments and assets

Other investments and assets consisted of the following:

 

                 
    September 30,     December 31,  
    2012     2011  
    (in thousands)  

Cash surrender value of life insurance

  $ 18,152     $ 18,812  

Workers’ compensation insurance security deposits

    4,652       4,658  

Other

    6,643       7,581  
   

 

 

   

 

 

 

Total other investments and assets

  $ 29,447     $ 31,051  
   

 

 

   

 

 

 
Goodwill and Other Intangible Assets (Tables)

The changes in the carrying amount of goodwill for the nine months ended September 30, 2012 were as follows:

 

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

Balance at January 1, 2012

  $ 62,686     $ 22,198     $ 48,810     $ 133,694  

Business acquisition

    —         —         1,890       1,890  

Foreign currency translation adjustments

    —         853       1,862       2,715  
   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2012

  $ 62,686     $ 23,051     $ 52,562     $ 138,299  
   

 

 

   

 

 

   

 

 

   

 

 

 

A summary of other intangible assets as of September 30, 2012 is presented below:

 

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

Amortized intangible assets:

                       

Contracts and customer relationships

  $ 3,598     $ (2,225   $ 1,373  

Other

    968       (84     884  
   

 

 

   

 

 

   

 

 

 
      4,566       (2,309     2,257  

Unamortized intangible assets:

                       

Business licenses

    460       —         460  
   

 

 

   

 

 

   

 

 

 

Total

  $ 5,026     $ (2,309   $ 2,717  
   

 

 

   

 

 

   

 

 

 

A summary of other intangible assets as of December 31, 2011 is presented below:

 

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

Amortized intangible assets:

                       

Contracts and customer relationships

  $ 3,122     $ (1,736   $ 1,386  

Other

    68       (30     38  
   

 

 

   

 

 

   

 

 

 
      3,190       (1,766     1,424  

Unamortized intangible assets:

                       

Business licenses

    460       —         460  
   

 

 

   

 

 

   

 

 

 

Total

  $ 3,650     $ (1,766   $ 1,884  
   

 

 

   

 

 

   

 

 

 

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

 

         
    (in thousands)  

2012

  $ 206  

2013

  $ 714  

2014

  $ 428  

2015

  $ 256  

2016

  $ 200  

Thereafter

  $ 453  
Accrued Liabilities and Other (Tables)

Other current liabilities consisted of the following:

 

                 
    September 30,
2012
    December 31,
2011
 
    (in thousands)  

Continuing operations:

               

Customer deposits

  $ 47,252     $ 49,182  

Accrued compensation

    28,704       22,587  

Self-insured liability accrual

    7,754       6,697  

Accrued foreign income taxes

    4,434       234  

Accrued employee benefit costs

    3,671       3,730  

Accrued sales and use taxes

    3,220       1,668  

Accrued income taxes

    3,110       —    

Accrued dividends

    2,049       827  

Accrued restructuring

    1,733       2,303  

Other

    12,266       8,185  
   

 

 

   

 

 

 
      114,193       95,413  
   

 

 

   

 

 

 

Discontinued operations:

               

Environmental remediation liabilities

    584       755  

Self-insured liability accrual

    137       639  

Other

    499       524  
   

 

 

   

 

 

 
      1,220       1,918  
   

 

 

   

 

 

 

Total other current liabilities

  $ 115,413     $ 97,331  
   

 

 

   

 

 

 

Other deferred items and liabilities consisted of the following:

 

                 
    September 30,
2012
    December 31,
2011
 
    (in thousands)  

Continuing operations:

               

Self-insured liability accrual

  $ 13,352     $ 14,403  

Accrued compensation

    6,668       5,538  

Accrued restructuring

    5,741       4,647  

Foreign deferred tax liability

    2,469       1,219  

Other

    6,458       5,900  
   

 

 

   

 

 

 
      34,688       31,707  
   

 

 

   

 

 

 

Discontinued operations:

               

Self-insured liability accrual

    5,455       5,351  

Environmental remediation liabilities

    4,779       4,999  

Accrued income taxes

    1,045       1,022  

Other

    971       1,133  
   

 

 

   

 

 

 
      12,250       12,505  
   

 

 

   

 

 

 

Total other deferred items and liabilities

  $ 46,938     $ 44,212  
   

 

 

   

 

 

 
Stockholder's Equity (Tables)
Reconciliation of the carrying amounts of stockholders' equity attributable to Viad and the noncontrolling interest

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
Stockholders’
Equity
    Noncontrolling
Interest
    Total
Stockholders’
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  
   

 

 

   

 

 

   

 

 

 

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, 2011:

 

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

Balance at January 1, 2011

  $ 378,959     $ 7,752     $ 386,711  

Net income

    15,517       675       16,192  

Dividends on common stock

    (2,435     —         (2,435

Common stock purchased for treasury

    (5,230     —         (5,230

Employee benefit plans

    2,800       —         2,800  

Unrealized foreign currency translation adjustment

    (7,460     —         (7,460

Unrealized loss on investments

    (99     —         (99

Prior service credit and net actuarial loss

    (133     —         (133

ESOP allocation adjustment

    920       —         920  

Other

    4       —         4  
   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2011

  $ 382,843     $ 8,427     $ 391,270  
   

 

 

   

 

 

   

 

 

 
Fair Value Measurements (Tables)
Fair value information related to assets

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

 

                                 
          Fair Value Measurements at September 30, 2012  Using  

Description

  September 30,
2012
    Quoted Prices in
Active Markets
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobserved
Inputs (Level 3)
 
    (in thousands)  

Money market funds

  $ 30,674     $ 30,674     $ —       $ —    

Other mutual funds

    1,277       1,277       —         —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 31,951     $ 31,951     $ —       $ —    
   

 

 

   

 

 

   

 

 

   

 

 

 
Income Per Share (Tables)
Reconciliation of the numerators and denominators of basic and diluted 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,
 
    2012     2011     2012     2011  
    (in thousands, except per share data)  

Basic net income per share

                               

Numerator:

                               

Net income attributable to Viad

  $ 19,976     $ 1,245     $ 27,093     $ 15,517  

Less: Allocation to non-vested shares

    (532     (34     (735     (412
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income allocated to Viad common stockholders

  $ 19,444     $ 1,211     $ 26,358     $ 15,105  
   

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

                               

Weighted-average outstanding common shares

    19,721       19,711       19,694       19,768  
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Viad common stockholders

  $ 0.99     $ 0.06     $ 1.34     $ 0.76  
   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share

                               

Numerator:

                               

Net income attributable to Viad

  $ 19,976     $ 1,245     $ 27,093     $ 15,517  
   

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

                               

Weighted-average outstanding common shares

    19,721       19,711       19,694       19,768  

Additional dilutive shares related to share-based compensation

    296       322       299       321  
   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average outstanding and potentially dilutive shares

    20,017       20,033       19,993       20,089  
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Viad common stockholders (1)

  $ 0.99     $ 0.06     $ 1.34     $ 0.76  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Diluted income per share cannot exceed basic income per share.

Income Taxes (Tables)
Reconciliation of income tax expense

The following represents a reconciliation of income tax expense and the amount that would be computed using the statutory federal income tax rates for the nine months ended September 30:

 

                                 
    2012     2011  
    (in thousands)  

Computed income tax expense at statutory federal income tax rate of 35%

  $ 14,055       35.0   $ 8,821       35.0

State income taxes, net of federal provision

    622       1.5     537       2.1

Foreign tax rate differentials

    (2,194     (5.5 %)      (1,733     (6.9 %) 

U.S. tax on foreign earnings

    1,681       4.3     1,452       5.9

Tax resolutions, net

    —         0.0     (103     (0.4 %) 

Change in valuation allowance

    48       0.1     —         0.0

Proceeds from life insurance

    (373     (0.9 %)      —         0.0

Other, net

    (755     (1.9 %)      37       0.1
   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

  $ 13,084       32.6   $ 9,011       35.8
   

 

 

   

 

 

   

 

 

   

 

 

 
Pension and Postretirement Benefits (Tables)
Net periodic benefit cost of pension and post retirement benefit plans

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
 
    2012     2011     2012     2011     2012     2011  
    (in thousands)  

Service cost

  $ 24     $ 17     $ 31     $ 22     $ 123     $ 92  

Interest cost

    276       292       187       187       186       183  

Expected return on plan assets

    (84     (140     (15     (35     (157     (164

Amortization of prior service credit

    —         —         (278     (320     —         —    

Recognized net actuarial loss

    110       1       101       80       —         —    
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost (credit)

  $ 326     $ 170     $ 26     $ (66   $ 152     $ 111  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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
 
    2012     2011     2012     2011     2012     2011  
    (in thousands)  

Service cost

  $ 78     $ 91     $ 110     $ 96     $ 368     $ 276  

Interest cost

    863       892       611       651       552       551  

Expected return on plan assets

    (305     (422     (56     (101     (467     (493

Amortization of prior service credit

    —         —         (835     (958     —         —    

Recognized net actuarial loss

    368       342       410       400       —         —    
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

  $ 1,004     $ 903     $ 240     $ 88     $ 453     $ 334  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
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 &
Employee
Benefits
    Facilities     Severance &
Employee
Benefits
    Facilities     Total  
    (in thousands)  

Balance at January 1, 2012

  $ 831     $ 4,819     $ 24     $ 1,276     $ 6,950  

Restructuring charges

    1,365       2,133       13       —         3,511  

Cash payments, net

    (1,475     (1,096     (37     (153     (2,761

Adjustment to liability

    (255     —         —         —         (255

Foreign currency translation adjustment

    —         29       —         —         29  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2012

  $ 466     $ 5,885     $ —       $ 1,123     $ 7,474  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
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,  
    2012     2011     2012     2011  
    (in thousands)  

Revenues:

                               

Marketing & Events Group:

                               

U.S.

  $ 168,395     $ 116,826     $ 540,741     $ 498,691  

International

    67,780       38,516       180,217       159,443  

Intersegment eliminations

    (5,871     (3,645     (11,669     (7,364
   

 

 

   

 

 

   

 

 

   

 

 

 
      230,304       151,697       709,289       650,770  

Travel & Recreation Group

    77,153       64,472       113,390       94,189  
   

 

 

   

 

 

   

 

 

   

 

 

 
    $ 307,457     $ 216,169     $ 822,679     $ 744,959  
   

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating income (loss):

                               

Marketing & Events Group:

                               

U.S.

  $ (585   $ (17,078   $ 12,235     $ 1,061