VIAD CORP, 10-K filed on 3/2/2021
Annual Report
v3.20.4
Document and Entity Information - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Feb. 15, 2021
Jun. 30, 2020
Document Information [Line Items]      
Entity Registrant Name Viad Corp    
Entity Central Index Key 0000884219    
Document Type 10-K    
Document Period End Date Dec. 31, 2020    
Amendment Flag false    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Public Float     $ 381.0
Entity Common Stock, Shares Outstanding   20,464,515  
Document Transition Report false    
Document Annual Report true    
Entity Tax Identification Number 36-1169950    
Entity File Number 001-11015    
Entity Incorporation, State or Country Code DE    
Entity Address, Address Line One 1850 North Central Avenue    
Entity Address, Address Line Two Suite 1900    
Entity Address, City or Town Phoenix    
Entity Address, State or Province AZ    
Entity Address, Postal Zip Code 85004-4565    
City Area Code 602    
Local Phone Number 207-1000    
ICFR Auditor Attestation Flag true    
Entity Interactive Data Current Yes    
Documents Incorporated by Reference [Text Block] A portion of the Proxy Statement for the Viad Corp Annual Meeting of Shareholders scheduled for May 14, 2021, is incorporated by reference into Part III of this Annual Report.    
Common Stock      
Document Information [Line Items]      
Trading Symbol VVI    
Title of 12(b) Security Common Stock, $1.50 Par Value    
Security Exchange Name NYSE    
Junior Participating Preferred Stock      
Document Information [Line Items]      
Title of 12(b) Security Preferred Stock Purchase Rights    
No Trading Symbol Flag true    
v3.20.4
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Current assets    
Cash and cash equivalents $ 39,545 $ 61,999
Accounts receivable, net of allowances for doubtful accounts of $5,310 and $1,200, respectively 17,837 126,246
Inventories 8,727 17,269
Current contract costs 7,923 24,535
Other current assets 17,225 30,854
Total current assets 91,257 260,903
Property and equipment, net 492,154 500,901
Other investments and assets 15,492 45,119
Operating lease right-of-use assets 82,739 103,314
Deferred income taxes 563 26,163
Goodwill 99,847 287,983
Other intangible assets, net 71,172 94,308
Total Assets 853,224 1,318,691
Current liabilities    
Accounts payable 21,037 86,660
Contract liabilities 18,595 50,671
Accrued compensation 7,030 32,658
Operating lease obligations 15,697 22,180
Other current liabilities 27,039 39,824
Current portion of debt and finance lease obligations [1] 8,335 5,330
Total current liabilities 97,733 237,323
Long-term debt and finance lease obligations 285,356 335,162
Pension and postretirement benefits 27,264 26,247
Long-term operating lease obligations 70,150 82,851
Other deferred items and liabilities 64,628 83,707
Total liabilities 545,131 765,290
Commitments and contingencies
Redeemable noncontrolling interest 5,225 6,172
Viad Corp stockholders’ equity:    
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares issued and outstanding 37,402 37,402
Additional capital 568,100 574,473
Retained earnings (deficit) (253,164) 122,971
Accumulated other comprehensive loss (30,641) (35,699)
Common stock in treasury, at cost, 4,475,489 and 4,588,084 shares, respectively (225,742) (231,649)
Total Viad stockholders’ equity 95,955 467,498
Non-redeemable noncontrolling interest 78,144 79,731
Total stockholders’ equity 174,099 547,229
Total Liabilities, Mezzanine Equity, and Stockholders’ Equity 853,224 $ 1,318,691
Convertible Series A Preferred Stock    
Current liabilities    
Convertible Series A Preferred Stock, $0.01 par value, 180,000 shares authorized, 135,000 shares issued and outstanding at December 31, 2020 $ 128,769  
[1] Subsequent to the filing of our 2019 Form 10-K, we identified a correction related to the classification of the 2018 Credit Facility (as defined below) from current to long-term given that the 2018 Credit Facility’s contractual maturity was not within 12 months of the balance sheet date, and we were in compliance with all applicable covenants as of December 31, 2019. As a result, we corrected the classification of the debt on the accompanying Consolidated Balance Sheet and the disclosure related to classification of debt in the table above as of December 31, 2019 to present the 2018 Credit Facility as long-term. Except for this change, the correction had no impact upon this Annual Report on Form 10-K. We determined that the error is not material to the previously issued financial statements.
v3.20.4
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Allowance for doubtful accounts $ 5,310 $ 1,200
Preferred Stock, Shares Authorized 5,000,000  
Preferred Stock, Shares Outstanding 135,000  
Common stock, par value $ 1.50 $ 1.50
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 24,934,981 24,934,981
Common stock, shares outstanding 24,934,981 24,934,981
Treasury stock, shares 4,475,489 4,588,084
Convertible Series A Preferred Stock    
Preferred Stock, Par value $ 0.01  
Preferred Stock, Shares Authorized 180,000  
Preferred Stock, Shares Issued 135,000  
Preferred Stock, Shares Outstanding 135,000  
v3.20.4
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Revenue:      
Total revenue $ 415,435 $ 1,302,736 $ 1,237,324
Costs and expenses:      
Business interruption gain   (141) (602)
Corporate activities 8,687 10,865 10,993
Interest income (377) (369) (354)
Interest expense 18,264 14,199 9,640
Multi-employer pension plan withdrawal 462 15,693  
Other expense, net 1,132 1,586 1,744
Restructuring charges 13,440 8,380 1,587
Legal settlement   8,500  
Impairment charges (recoveries) 203,076 5,346 (35)
Total costs and expenses 776,294 1,276,626 1,172,315
Income (loss) from continuing operations before income taxes (360,859) 26,110 65,009
Income tax expense 14,246 2,506 17,095
Income (loss) from continuing operations (375,105) 23,604 47,914
Income (loss) from discontinued operations (1,847) (81) 1,481
Net income (loss) (376,952) 23,523 49,395
Net (income) loss attributable to non-redeemable noncontrolling interest 1,376 (2,309) (542)
Net loss attributable to redeemable noncontrolling interest 1,482 821 317
Net income (loss) attributable to Viad $ (374,094) $ 22,035 $ 49,170
Diluted income (loss) per common share:      
Continuing operations attributable to Viad common stockholders $ (18.55) $ 1.02 $ 2.33
Discontinued operations attributable to Viad common stockholders (0.09)   0.07
Net income (loss) attributable to Viad common stockholders [1] $ (18.64) $ 1.02 $ 2.40
Weighted-average outstanding and potentially dilutive common shares 20,279 20,284 20,404
Basic income (loss) per common share:      
Continuing operations attributable to Viad common stockholders $ (18.55) $ 1.02 $ 2.33
Discontinued operations attributable to Viad common stockholders (0.09)   0.07
Net income (loss) attributable to Viad common stockholders $ (18.64) $ 1.02 $ 2.40
Weighted-average outstanding common shares 20,279 20,146 20,168
Dividends declared per common share $ 0.10 $ 0.40 $ 0.40
Amounts attributable to Viad common stockholders      
Income (loss) from continuing operations $ (372,247) $ 22,116 $ 47,689
Income (loss) from discontinued operations (1,847) (81) 1,481
Net income (loss) attributable to Viad (374,094) 22,035 49,170
Services      
Revenue:      
Total revenue 351,528 1,101,534 1,051,389
Costs and expenses:      
Costs and expenses 457,827 1,031,187 980,543
Products      
Revenue:      
Total revenue 63,907 201,202 185,935
Costs and expenses:      
Costs and expenses $ 73,783 $ 181,380 $ 168,799
[1]

Diluted loss per share amount cannot exceed basic loss per share.

v3.20.4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]      
Net income (loss) $ (376,952) $ 23,523 $ 49,395
Other comprehensive income (loss):      
Unrealized foreign currency translation adjustments 7,113 12,533 (24,306)
Change in net actuarial loss, net of tax effects of $(55), $(44), and $305 (1,955) (116) 1,236
Change in prior service cost, net of tax effects of $(46), $(48), and $(52) (100) (141) (153)
Comprehensive income (loss) (371,894) 35,799 26,172
Non-redeemable noncontrolling interest:      
Net (income) loss attributable to non-redeemable noncontrolling interest 1,376 (2,309) (542)
Unrealized foreign currency translation adjustments 1,315 1,080  
Redeemable noncontrolling interest:      
Comprehensive loss attributable to redeemable noncontrolling interest 1,482 821 317
Comprehensive income (loss) attributable to Viad $ (367,721) $ 35,391 $ 25,947
v3.20.4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]      
Amortization of net actuarial loss, tax effects $ (55) $ (44) $ 305
Amortization of prior service cost, tax effects $ (46) $ (48) $ (52)
v3.20.4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND MEZZANINE EQUITY - USD ($)
$ in Thousands
Total
Common Stock
Additional Capital
Retained Earnings (Deficit)
Unearned Employee Benefits and Other
Accumulated Other Comprehensive Income (Loss)
Common Stock in Treasury
Total Viad Equity
Non-Redeemable Non-Controlling Interest
Mezzanine Equity Redeemable Non Controlling Interest
Convertible Series A Preferred Stock
Beginning Balance at Dec. 31, 2017 $ 442,937 $ 37,402 $ 574,458 $ 65,836 $ 218 $ (22,568) $ (226,215) $ 429,131 $ 13,806 $ 6,648  
Increase Decrease In Stockholders' Equity Roll Forward                      
Net income (loss) 49,712     49,170       49,170 542 (317)  
Dividends on common stock (8,154)     (8,154)       (8,154)      
Payment of payroll taxes on stock-based compensation through shares withheld (1,209)           (1,209) (1,209)      
Common stock purchased for treasury (17,174)           (17,174) (17,174)      
Employee benefit plans 4,902   (1,905)       6,807 4,902      
Share-based compensation - equity awards 2,849   2,849         2,849      
Unrealized foreign currency translation adjustment (24,306)         (24,306)   (24,306)   (673)  
Amortization of net actuarial gain (loss), net of tax 1,236         1,236   1,236      
Amortization of prior service cost, net of tax (153)         (153)   (153)      
Adoption of ASU | ASU 2016-01       616   (616)          
Adoption of ASU | Accounting Standards Update 2018-02 [Member]       1,568   (1,568)          
Other, net (85)   (63) (4) (19)   1 (85)   251  
Ending Balance at Dec. 31, 2018 450,555 37,402 575,339 109,032 199 (47,975) (237,790) 436,207 14,348 5,909  
Increase Decrease In Stockholders' Equity Roll Forward                      
Net income (loss) 24,344     22,035       22,035 2,309 (821)  
Dividends on common stock (8,094)     (8,094)       (8,094)      
Distributions to noncontrolling interest (407)               (407)    
Payment of payroll taxes on stock-based compensation through shares withheld (3,046)           (3,046) (3,046)      
Employee benefit plans 5,530   (3,659)       9,189 5,530      
Share-based compensation - equity awards 2,755   2,755         2,755      
Unrealized foreign currency translation adjustment 13,613         12,533   12,533 1,080 (234)  
Amortization of net actuarial gain (loss), net of tax (116)         (116)   (116)      
Amortization of prior service cost, net of tax (141)         (141)   (141)      
Acquisitions 62,401               62,401    
Other, net (165)   38 (2) $ (199)   (2) (165)   1,318  
Ending Balance at Dec. 31, 2019 547,229 37,402 574,473 122,971   (35,699) (231,649) 467,498 79,731 6,172  
Increase Decrease In Stockholders' Equity Roll Forward                      
Net income (loss) (375,470)     (374,094)       (374,094) (1,376) (1,482)  
Dividends on common stock (2,038)     (2,038)       (2,038)      
Issuance of Series A convertible preferred stock                     $ 125,763
Dividends on convertible preferred stock (3,006)   (3,006)         (3,006)     3,006
Distributions to noncontrolling interest (1,526)               (1,526)    
Payment of payroll taxes on stock-based compensation through shares withheld (1,688)           (1,688) (1,688)      
Common stock purchased for treasury (2,785)           (2,785) (2,785)      
Employee benefit plans 2,479   (7,901)       10,380 2,479      
Share-based compensation - equity awards 4,444   4,444         4,444      
Unrealized foreign currency translation adjustment 8,428         7,113   7,113 1,315 (390)  
Amortization of net actuarial gain (loss), net of tax (1,955)         (1,955)   (1,955)      
Amortization of prior service cost, net of tax (100)         (100)   (100)      
Other, net 87   90 (3)       87   925  
Ending Balance at Dec. 31, 2020 $ 174,099 $ 37,402 $ 568,100 $ (253,164)   $ (30,641) $ (225,742) $ 95,955 $ 78,144 $ 5,225 $ 128,769
v3.20.4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND MEZZANINE EQUITY (Parenthetical) - $ / shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Statement Of Stockholders Equity [Abstract]      
Dividends on common stock per share $ 0.10 $ 0.40 $ 0.40
v3.20.4
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Cash flows from operating activities      
Net income (loss) $ (376,952) $ 23,523 $ 49,395
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
Depreciation and amortization 56,565 58,964 56,842
Deferred income taxes 15,097 (10,398) 5,350
(Income) loss from discontinued operations 1,847 81 (1,481)
Restructuring charges 13,440 8,380 1,587
Legal settlement   8,500  
Impairment charges (recoveries) 203,076 5,346 (35)
(Gains) losses on dispositions of property and other assets (14,935) (1,475) 473
Share-based compensation expense 2,653 7,190 4,870
Multi-employer pension plan withdrawal 462 15,693  
Other non-cash items, net 8,056 3,791 4,306
Change in operating assets and liabilities (excluding the impact of acquisitions):      
Receivables 106,082 (16,959) (6,200)
Inventories 8,644 (328) (1,573)
Current contract costs 16,279 (6,333) (4,976)
Accounts payable (88,251) 9,726 (1,645)
Restructuring liabilities (7,427) (6,047) (1,716)
Accrued compensation (26,375) 6,853 (12,818)
Contract liabilities (31,585) 16,796 3,677
Income taxes payable 770 195 (7,696)
Other assets and liabilities, net 32,306 (15,359) 2,235
Net cash (used in) provided by operating activities (80,248) 108,139 90,595
Cash flows from investing activities      
Capital expenditures (53,567) (76,147) (83,345)
Cash surrender value of life insurance policies 24,767    
Cash paid for acquisitions, net   (90,992) (4,628)
Proceeds from dispositions of property and other assets 22,027 1,583 925
Net cash used in investing activities (6,773) (165,556) (87,048)
Cash flows from financing activities      
Proceeds from borrowings 225,422 200,473 146,580
Payments on debt and finance lease obligations (275,327) (115,708) (128,211)
Dividends paid on common stock (4,064) (8,094) (8,154)
Distributions to noncontrolling interest (1,526) (407)  
Payments of debt issuance costs (1,585) (39) (1,823)
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased (1,688) (3,046) (1,209)
Common stock purchased for treasury (2,785)   (17,174)
Proceeds from issuance of Convertible Series A Preferred Stock, net of issuance costs 125,763    
Proceeds from exercise of stock options 2,077 293 84
Net cash provided by (used in) financing activities 66,287 73,472 (9,907)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 701 1,050 (2,470)
Net change in cash, cash equivalents, and restricted cash (20,033) 17,105 (8,830)
Cash, cash equivalents, and restricted cash, beginning of year 62,004 44,899 53,729
Cash, cash equivalents, and restricted cash, end of year $ 41,971 $ 62,004 $ 44,899
v3.20.4
Overview and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Overview and Summary of Significant Accounting Policies

Note 1. Overview and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of Viad and its subsidiaries. All significant intercompany account balances and transactions have been eliminated in consolidation.

Nature of Business

We are a leading provider of experiential leisure travel and face-to-face events and marketing experiences company with operations in the U.S., Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our clients and guests. We operate through three reportable business segments: GES North America, GES EMEA (collectively, “GES”), and Pursuit.

GES

GES is a global, full-service live events company offering a comprehensive range of services to event organizers and corporate brand marketers. Event organizers schedule and run events from start to finish. Corporate brand marketers include exhibitors and domestic and international corporations that want to promote their brands, services and innovations, feature new products, and build business relationships. GES serves corporate brand marketers when they exhibit at shows and when GES is engaged to manage their global exhibit program or produce their proprietary corporate events.

Pursuit

Pursuit is a collection of inspiring and unforgettable travel experiences that includes recreational attractions, unique hotels and lodges, food and beverage, retail, sightseeing, and ground transportation services. Pursuit comprises the Banff Jasper Collection, the Alaska Collection, the Glacier Park Collection, and FlyOver.

Impact of COVID-19

On March 11, 2020, the World Health Organization declared COVID-19 a “pandemic.” COVID-19 has spread rapidly, with a high concentration of confirmed cases in the U.S. and other countries in which we operate. The rapid spread has resulted in authorities around the world implementing numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders, and business shutdowns. The COVID-19 pandemic and these containment measures have had, and are expected to continue to have, a substantial negative impact on businesses around the world and on global, regional, and national economies.

The COVID-19 pandemic is having and will likely continue to have a significant and negative impact on our operations and financial performance, with live events largely shut down and severe tourism activity disruptions. In response to the COVID-19 pandemic, we implemented aggressive cost reduction measures to preserve cash, including furloughs, layoffs, mandatory unpaid time off, or salary reductions for all employees, and the reduction of discretionary spending. We continue to implement measures to successfully adapt for the long-term impact of COVID-19. During 2020, we secured additional capital to strengthen our liquidity position and amended our Second Amended and Restated Credit Agreement (the “2018 Credit Agreement”) to provide financial covenant relief and financial flexibility.

Investment Agreement

On August 5, 2020, we entered into an investment agreement with funds managed by private equity firm Crestview Partners (the “Investment Agreement”) who made an initial investment of $135 million, offset in part by $9.2 million in fees, in newly issued perpetual convertible preferred stock that carries a 5.5% cumulative quarterly dividend, which is payable in cash or in-kind at Viad’s option (the “Convertible Preferred Stock”). The Convertible Preferred Stock is convertible into shares of our common stock at a conversion price of $21.25 per share. The Investment Agreement also includes a delayed draw commitment of up to $45 million in additional Convertible Preferred Stock, which we may access during the 12 months following the August 5, 2020 closing date on the same terms and conditions as the initial investment. The proceeds from Crestview’s initial investment were used to repay a portion of our 2018 Credit Facility, will provide additional short-term liquidity, will fund capital expenditures, and will support general corporate purposes. Pursuant to the Investment Agreement, two Crestview Partners’ designees joined our Board of Directors, increasing the size of our board from seven to nine directors.

Credit Agreement Amendment

On August 5, 2020, we entered into an amendment to our 2018 Credit Agreement, which, among other things, (i) waives our financial covenants until September 30, 2022 (the “Covenant Waiver Period”) and (ii) requires us to maintain minimum liquidity of $100 million, with liquidity defined as unrestricted cash and available capacity on our 2018 Credit Facility. The interest rate on the borrowings is equal to the London Inter-bank Offered Rate (“LIBOR”) plus 350 basis points, with a LIBOR floor of one percent during the Covenant Waiver Period. The LIBOR floor continues until the end of the 2018 Credit Agreement. Viad pledged 100% of the capital stock of its wholly-owned domestic subsidiaries and its top-tier foreign subsidiaries (other than Esja Attractions ehf.). Fees related to the amendment were approximately $1.7 million.

Management anticipates that the initial cash proceeds from Crestview Partners, existing cash and cash equivalents, and the amendment to waive financial covenants within the 2018 Credit Agreement until September 30, 2022 will be sufficient to fund operations for at least the next 12 months.

Goodwill and Other Intangible Assets Impairments

Due to the deteriorating macroeconomic environment related to the COVID-19 pandemic, resulting in disruptions to our operations and the decline in our stock price, we determined interim triggering events had occurred in the first and second quarters of 2020, which required us to assess the carrying values of goodwill and intangible assets in accordance with Accounting Standards Codification (“ASC”) No. 350, Intangibles – Goodwill and Other. Based on this assessment, we recorded non-cash goodwill impairment charges of $185.8 million during 2020, which included a full impairment charge to the remaining GES goodwill balance. Our remaining goodwill balance as of December 31, 2020 of $99.8 million pertains to our Pursuit business. We also recorded a non-cash impairment charge to intangible assets of $15.7 million during 2020 related to our U.S. audio-visual production business. The duration and impact of COVID-19 may result in additional future impairment charges as facts and circumstances evolve. Refer to Note 9 – Goodwill and Other Intangible Assets for additional information.

Correction to Prior Period Financial Statements

Subsequent to the issuance of the December 31, 2019 consolidated financial statements, we identified prior period errors related to the recognition of revenue of GES’ Corporate Accounts’ third-party services. Revenue from these services should have been recorded on a net basis to reflect only the fees received for arranging these services, whereas previously, we recorded this revenue on a gross basis, thus overstating revenue and cost of services by the same amount. As a result, we corrected the accompanying Consolidated Statements of Operations for the years ended December 31, 2019 and 2018 related to this gross-to-net adjustment.

We determined that the error is not material to the previously issued financial statements. Note 2 – Revenue and Related Contract Costs and Contract Liabilities, Note 23 – Segment Information, and Note 24 – Selected Quarterly Financial Information reflect this correction.

 

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

(in thousands)

 

Services Revenue

 

 

Cost of Services

 

 

Services Revenue

 

 

Cost of Services

 

As previously reported

 

$

1,170,493

 

 

$

1,100,146

 

 

$

1,110,249

 

 

$

1,039,403

 

Gross to net correction for GES North America

 

 

(51,927

)

 

 

(51,927

)

 

 

(43,603

)

 

 

(43,603

)

Gross to net correction for GES EMEA

 

 

(17,032

)

 

 

(17,032

)

 

 

(15,257

)

 

 

(15,257

)

Total as corrected

 

$

1,101,534

 

 

$

1,031,187

 

 

$

1,051,389

 

 

$

980,543

 

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Estimates and assumptions are used in accounting for, among other things: impairment testing of recorded goodwill and intangible assets and long-lived assets; allowances for uncollectible accounts receivable; sales reserve allowances; provisions for income taxes, including uncertain tax positions; valuation allowances related to deferred tax assets; liabilities for losses related to self-insured liability claims; liabilities for losses related to environmental remediation obligations; sublease income associated with restructuring liabilities; pension and postretirement benefit costs and obligations; share-based compensation costs; the discount rates used to value lease obligations; the redemption value of redeemable noncontrolling interests; and the allocation of purchase price of acquired businesses. Actual results could differ from these and other estimates.

Cash, Cash Equivalents, and Restricted Cash

Cash equivalents are highly-liquid investments with remaining maturities when purchased of three months or less. Cash and cash equivalents consist of cash and bank demand deposits and money market funds. Investments in money market funds are classified as available-for-sale and carried at fair value. Restricted cash represents collateral required for surety bonds and letters of credit.

Cash, cash equivalents, and restricted cash balances presented in the Consolidated Statements of Cash Flows consisted of the following:

 

 

 

December 31,

 

(in thousands)

 

2020

 

 

2019

 

Cash and cash equivalents

 

$

39,545

 

 

$

61,999

 

Restricted cash included in other current assets

 

 

2,426

 

 

 

5

 

Cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

41,971

 

 

$

62,004

 

 

Allowances for Doubtful Accounts

Allowances for doubtful accounts reflect the best estimate of probable losses inherent in the accounts receivable balance. The allowances for doubtful accounts, including a sales allowance for discounts at the time of sale, are based upon an evaluation of the aging of receivables, historical trends, and the current economic environment.

Inventories

We state inventories, which consist primarily of exhibit design and construction materials and supplies, as well as retail inventory, at the lower of cost (first-in, first-out and specific identification methods) or net realizable value.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets: buildings, 15 to 40 years; equipment, 3 to 12 years; and leasehold improvements, over the shorter of the lease term or useful life. Property and equipment are tested for potential impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable through undiscounted cash flows.

Leases

We recognize a right-of-use (“ROU”) asset and lease liability on the balance sheet and classify leases as either finance or operating leases. The classification of the lease determines whether the lease expense is recognized on an effective interest method basis (finance lease) or on a straight-line basis (operating lease) over the lease term. In determining whether an agreement contains a lease, we consider if we have a right to control the use of the underlying asset during the lease term in exchange for an obligation to make lease payments arising from the lease. We recognize ROU assets and lease liabilities at commencement date, which is when the underlying asset is available for use to a lessee, based on the present value of lease payments over the lease term.

Our operating and finance leases are primarily facility, equipment, and land leases. Our facility leases comprise mainly manufacturing facilities, sales and design facilities, offices, storage and/or warehouses, and truck marshaling yards. These facility leases generally have lease terms ranging up to 23 years. Our equipment leases comprise mainly vehicles, hardware, and office equipment, each with various lease terms. Our land leases comprise mainly leases in Canada and Iceland on which our hotels or attractions are located and have lease terms ranging up to 47 years.

If a lease contains a renewal option that is reasonably certain to be exercised, then the lease term includes the optional periods in measuring a ROU asset and lease liability. The reasonably certain threshold is evaluated at lease commencement and is typically met if we identify substantial economic incentives or termination penalties. We do not include variable leases and variable non-lease components in the calculation of the ROU asset and corresponding lease liability. For facility leases, variable lease costs include the costs of common area maintenance, taxes, and insurance for which we pay our lessors an estimate that is adjusted to actual expense on a quarterly or annual basis depending on the underlying contract terms. We expense these variable lease payments as incurred. Our lease agreements do not contain any significant residual value guarantees or restrictive covenants.

Substantially all of our lease agreements do not specify an implicit borrowing rate, and as such, we utilize an incremental borrowing rate based on lease term and country, in order to calculate the present value of our future lease payments. The discount rate represents a risk-adjusted rate on a collateralized basis and is the expected rate at which we would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term and the country.  

We are also a lessor to third party tenants who either lease certain portions of facilities that we own or sublease certain portions of facilities that we lease. We record lease income from owned facilities as rental income and we record sublease income from leased

facilities against lease expense in the Consolidated Statements of Operations. We classify all of our leases for which we are the lessor as operating leases.

Goodwill

Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31, and between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. We use a discounted expected future cash flow methodology (income approach) in order to estimate the fair value of our reporting units for purposes of goodwill impairment testing. The estimates and assumptions regarding expected future cash flows, discount rates, and terminal values require considerable judgment and are based on market conditions, financial forecasts, industry trends, and historical experience. These estimates, however, have inherent uncertainties and different assumptions could lead to materially different results.

Cash Surrender Value of Life Insurance

We had Company-owned life insurance contracts that were intended to fund the cost of certain employee compensation and benefit programs. These contracts were carried at cash surrender value, net of outstanding policy loans. The cash surrender value represented the amount of cash we could receive if the policies were discontinued before maturity. The changes in the cash surrender value of the policies, net of insurance premiums, were included as a component of “Costs of services” in the Consolidated Statements of Operations. In 2020, we terminated the life insurance policies and received cash proceeds of $24.8 million.

Self-Insurance Liabilities

We are self-insured up to certain limits for workers’ compensation and general liabilities, which includes automobile, product general liability, and client property loss claims. We have also retained and provided for certain workers’ compensation insurance liabilities in conjunction with previously sold operations. We are also self-insured for certain employee health benefits. Provisions for losses for claims incurred, including actuarially derived estimated claims incurred but not yet reported, are made based on historical experience, claims frequency, and other factors. We have purchased insurance for amounts in excess of the self-insured levels.

Environmental Remediation Liabilities

Environmental remediation liabilities represent the estimated cost of environmental remediation obligations primarily associated with previously sold operations. The amounts accrued primarily consist of the estimated direct incremental costs, on an undiscounted basis, for contractor and other services related to remedial actions and post-remediation site monitoring. Environmental remediation liabilities are recorded when the specific obligation is considered probable and the costs are reasonably estimable. Subsequent recoveries from third parties, if any, are recorded through discontinued operations when realized. Environmental insurance is maintained that provides coverage for new and undiscovered pre-existing conditions at both our continuing and discontinued operations.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term maturities of these instruments. Refer to Note 12 – Debt and Finance Lease Obligations for the estimated fair value of debt obligations.

Convertible Preferred Stock

We record shares of convertible preferred stock based on proceeds received net of costs on the date of issuance. Redeemable preferred stock (including preferred stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity and is reported between liabilities and stockholders’ equity in the Consolidated Balance Sheets.

Noncontrolling Interests – Non-redeemable and Redeemable

Non-redeemable noncontrolling interest represents the portion of equity in a subsidiary that is not attributable, directly or indirectly, to us. Our non-redeemable noncontrolling interest relates to the 20% equity ownership interest that we do not own in Glacier Park, Inc., the 40% equity interest that we do not own in the Mountain Park Lodges, and the 49% equity interest that we do not own in the new entity that will operate the Pursuit Sky Lagoon attraction. We report non-redeemable noncontrolling interest within stockholders’ equity in the Consolidated Balance Sheets. The amount of consolidated net income or loss attributable to Viad and the non-redeemable noncontrolling interest is presented in the Consolidated Statements of Operations.  

We consider noncontrolling interests with redemption features that are not solely within our control to be redeemable noncontrolling interests. Our redeemable noncontrolling interest relates to our 54.5% equity ownership interest in Esja Attractions ehf. (“Esja”), which owns the FlyOver Iceland attraction. The Esja shareholders agreement contains a put option that gives the minority Esja shareholders the right to sell (or “put”) their Esja shares to us based on a calculated formula within a predefined term. This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the Consolidated Balance Sheets. The amount of the net income or loss attributable to redeemable noncontrolling interests is recorded in the Consolidated Statements of

Operations and the accretion of the redemption value is recorded as an adjustment to retained earnings (deficit) and is included in our income (loss) per share. Refer to Note 22 – Redeemable Noncontrolling Interest for additional information.

Foreign Currency Translation

Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, Germany, and to a lesser extent, in certain other countries. The functional currency of our foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, we translate the assets and liabilities of our foreign subsidiaries into U.S. dollars at the foreign exchange rates in effect at the balance sheet date. The unrealized gains or losses resulting from the translation of these foreign denominated assets and liabilities are included as a component of accumulated other comprehensive income (loss) in the Consolidated Balance Sheets. For purposes of consolidation, revenue, expenses, gains, and losses related to our foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period.

Revenue Recognition

Revenue is measured based on a specified amount of consideration in a contract with a customer, net of commissions paid to customers and amounts collected on behalf of third parties. We recognize revenue when a performance obligation is satisfied by transferring control of a product or service to a customer.

GES’ service revenue is primarily derived through its comprehensive range of services to event organizers and corporate brand marketers including Core Services, Event Technology, and Audio-visual. GES’ service revenue is earned over time over the duration of the exhibition, conference or corporate event, which generally lasts one to three days. Revenue for goods and services provided for which we do not have control of the goods or services before that good or service is transferred to a customer is recorded on a net basis to reflect only the fees received for arranging these services. GES’ product revenue is derived from the build of exhibits and environments and graphics. GES’ product revenue is recognized at a point in time upon delivery of the product.

Pursuit’s service revenue is derived through its admissions, accommodations, transportation, and travel planning services. Pursuit’s product revenue is derived through food and beverage and retail sales. Pursuit’s revenue is recognized at the time services are performed or upon delivery of the product. Pursuit’s service revenue is recognized over time as the customer simultaneously receives and consumes the benefits. Pursuit’s product revenue is recognized at a point in time.

Share-Based Compensation

Share-based compensation costs related to all share-based payment awards are recognized and measured using the fair value method of accounting. These awards generally include restricted stock awards, restricted stock units, performance units, and stock options, and contain forfeiture and non-compete provisions. We issue share-based payment awards from shares held in treasury. Future vesting is generally subject to continued employment. Holders of share-based awards have the right to receive dividends and vote the shares, but may not sell, assign, transfer, pledge, or otherwise encumber the stock, except to the extent restrictions have lapsed and in accordance with our stock trading policy.

We account for share-based payment awards that will be settled in cash as liability-based awards, which includes performance units and restricted stock units. We measure share-based compensation expense of liability-based awards at fair value at each reporting date until the date of settlement based on the number of units expected to vest and, where applicable, the level of achievement of predefined performance goals. These awards are remeasured on each reporting date based on our stock price and the Monte Carlo simulation model. A Monte Carlo simulation requires the use of several assumptions, including historical volatility and correlation between our stock price and the price of the common shares of a comparator group, a risk-free rate of return, and an expected term. Share-based compensation expense related to liability-based awards is recognized ratably over the requisite service period of approximately three years.

We account for share-based awards that will be settled in shares of our common stock as equity-based awards, which include performance units, restricted stock units, and restricted stock awards. We measure share-based compensation expense of equity-based awards at fair value on the grant date on a straight-line basis over the vesting period. The estimated number of shares to be achieved is updated each reporting period based on the number of units expected to vest and, where applicable, the level of achievement of predefined performance goals, until the date of settlement. Share-based compensation expense related to equity-based awards is recognized ratably over the requisite service period ranging from three months to three years.

The fair value of stock option grants is estimated on the date of grant using the Black-Scholes stock option pricing model. We grant non-qualified stock options that are performance-based and service-based. The performance-based awards are recognized on a straight-line basis over the performance period ranging up to 3.4 years, and the underlying shares expected to be settled are adjusted each reporting period based on estimated future achievement of the respective performance metrics. The service-based awards are recognized on a straight-line basis over the requisite service period on a graded-vesting schedule over two years. The exercise price of stock options is based on the market value of our common stock at the date of grant.

Common Stock in Treasury

Common stock purchased for treasury is recorded at historical cost. Subsequent share reissuances are primarily related to share-based compensation programs and recorded at weighted-average cost.

Income (Loss) Per Common Share

Diluted income per common share is calculated using the more dilutive of the two-class method or as-converted method. The two-class method uses net income available to common stockholders and assumes conversion of all potential shares other than the participating securities. The as-converted method uses net income and assumes conversion of all potential shares including the participating securities. Dilutive potential common shares include outstanding stock options, unvested restricted share units and convertible preferred stock. We apply the two-class method in calculating income per common share as unvested share-based payment awards that contain nonforfeitable rights to dividends and preferred stock are considered participating securities. Accordingly, such securities are included in the earnings allocation in calculating income per share. The adjustment to the carrying value of the redeemable noncontrolling interest is reflected in income per common share.

Impact of Recent Accounting Pronouncements

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

 

Standard

 

Description

 

Date of adoption

 

Effect on the financial statements

Standards Not Yet Adopted

ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)

 

The amendment simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. The amendment also requires expanded disclosures about the terms and features of convertible instruments. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

 

1/1/2022

 

We are currently evaluating the potential impact of the adoption of this new guidance on our consolidated financial statements and if there are applicable provisions that will simplify our accounting or reporting we will likely pursue early adoption.

 

Standard

 

Description

 

Date of adoption

 

Effect on the financial statements

Standards Recently Adopted

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments

 

The amendment eliminates the incurred credit loss impairment methodology and replaces it with an expected credit loss concept based on historical experience, current conditions, and reasonable and supportable forecasts.

 

1/1/2020

 

We adopted this new standard on a modified retrospective basis. The adoption of this new standard on January 1, 2020 did not have a material impact on our consolidated financial statements.

ASU 2020-04, Reference Rate Reform (Topic 848)

 

The amendment provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. Topic 848 provides optional expedients and exceptions for applying U.S. GAAP to transactions affected by reference rate reform if certain criteria are met.

 

3/12/2020

 

Topic 848 was effective beginning on March 12, 2020, and we will apply the amendments prospectively through December 31, 2022. There was no impact to our consolidated financial statements as a result of adopting this amendment.

ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes

 

The amendment enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as ownership changes in investments, and interim-period accounting for enacted changes in tax law.

 

1/1/2021

 

The adoption of this new standard on January 1, 2021 did not have a material impact on our consolidated financial statements.

 

 

v3.20.4
Revenue and Related Contract Costs and Contract Liabilities
12 Months Ended
Dec. 31, 2020
Revenue From Contract With Customer [Abstract]  
Revenue and Related Contract Costs and Contract Liabilities

Note 2. Revenue and Related Contract Costs and Contract Liabilities

GES’ performance obligations consist of services or product(s) outlined in a contract. While we often sign multi-year contracts for recurring events, the obligations for each occurrence are well defined and conclude upon the occurrence of each event. The obligations are typically the provision of services and/or sale of a product in connection with an exhibition, conference, or other event. Revenue for

goods and services provided for which we do not have control of the goods or services before that good or service is transferred to a customer is recorded on a net basis to reflect only the fees received for arranging these services. We recognize revenue for services generally at the close of the exhibition, conference, or corporate event. We recognize revenue for products either upon delivery to the customer’s location, upon delivery to an event that we are serving, or when we have the right to invoice. In circumstances where a customer cancels a contract, we generally have the right to bill the customer for costs incurred to date. Payment terms are generally within 30-60 days and contain no significant financing components.

Pursuit’s performance obligations are short-term in nature. They include the provision of a hotel room, an attraction admission, a chartered or ticketed bus or van ride, the fulfillment of travel planning itineraries, and/or the sale of food, beverage, or retail products. Revenue is recognized when the service has been provided or the product has been delivered. When credit is extended, payment terms are generally within 30 days and contain no significant financing components.

Contract Liabilities

GES and Pursuit typically receive customer deposits prior to transferring the related product or service to the customer. We record these deposits as a contract liability, which are recognized as revenue upon satisfaction of the related contract performance obligation(s). GES also provides customer rebates and volume discounts to certain event organizers that we recognize as a reduction of revenue. We include these amounts in the Consolidated Balance Sheets under the captions “Contract liabilities” and “Other deferred items and liabilities.” The decrease in contract liabilities for the year ended December 31, 2020 was primarily due to the reduction of planned shows in the first half of 2021 due to the COVID-19 pandemic.

Changes to contract liabilities are as follows:

 

(in thousands)

 

 

 

 

Balance at January 1, 2019

 

$

35,600

 

Cash additions

 

 

210,871

 

Revenue recognized

 

 

(196,158

)

Foreign exchange translation adjustment

 

 

483

 

Balance at December 31, 2019

 

 

50,796

 

Cash additions

 

 

154,057

 

Revenue recognized

 

 

(186,518

)

Foreign exchange translation adjustment

 

 

283

 

Balance at December 31, 2020

 

$

18,618

 

Contract Costs

GES capitalizes certain incremental costs incurred in obtaining and fulfilling contracts. Capitalized costs principally relate to direct costs of materials and services incurred in fulfilling services of future exhibitions, conferences, and events, and also include up-front incentives and commissions incurred upon contract signing. We expense costs associated with preliminary contract activities (i.e. proposal activities) as incurred. Capitalized contract costs are expensed upon the transfer of the related goods or services and are included in cost of services or cost of products, as applicable. We include the deferred incremental costs of obtaining and fulfilling contracts in the Consolidated Balance Sheets under the captions “Current contract costs” and “Other investments and assets.”

Changes to contract costs are as follows:

(in thousands)

 

 

 

 

Balance at January 1, 2019

 

$

21,478

 

Additions

 

 

74,274

 

Expenses

 

 

(67,425

)

Cancelled

 

 

(68

)

Foreign exchange translation adjustment

 

 

237

 

Balance at December 31, 2019

 

 

28,496

 

Additions

 

 

19,517

 

Expenses

 

 

(25,381

)

Cancelled

 

 

(11,482

)

Foreign exchange translation adjustment

 

 

(315

)

Balance at December 31, 2020

 

$

10,835

 

As of December 31, 2020, capitalized contract costs consisted of $0.9 million to obtain contracts and $9.9 million to fulfill contracts. We did not recognize an impairment loss with respect to capitalized contract costs during the years ended December 31, 2020 or 2019.

Disaggregation of Revenue

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

GES

 

 

Year Ended December 31, 2020

 

(in thousands)

 

GES North America

 

 

GES EMEA

 

 

Intersegment Eliminations

 

 

Total

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core services

 

$

231,666

 

 

$

33,556

 

 

$

 

 

$

265,222

 

Audio-visual

 

 

20,148

 

 

 

4,126

 

 

 

 

 

 

24,274

 

Event technology

 

 

9,150

 

 

 

3,979

 

 

 

 

 

 

13,129

 

Intersegment eliminations

 

 

 

 

 

 

 

 

(3,680

)

 

 

(3,680

)

Total services

 

 

260,964

 

 

 

41,661

 

 

 

(3,680

)

 

 

298,945

 

Products:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core products

 

 

27,957

 

 

 

11,723

 

 

 

 

 

 

39,680

 

Total revenue

 

$

288,921

 

 

$

53,384

 

 

$

(3,680

)

 

$

338,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services transferred over time

 

$

260,964

 

 

$

41,661

 

 

$

(3,680

)

 

$

298,945

 

Products transferred over time(1)

 

 

13,068

 

 

 

2,449

 

 

 

 

 

 

15,517

 

Products transferred at a point in time

 

 

14,889

 

 

 

9,274

 

 

 

 

 

 

24,163

 

Total revenue

 

$

288,921

 

 

$

53,384

 

 

$

(3,680

)

 

$

338,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibitions

 

$

211,953

 

 

$

40,077

 

 

$

 

 

$

252,030

 

Conferences

 

 

41,371

 

 

 

7,789

 

 

 

 

 

 

49,160

 

Corporate events

 

 

24,521

 

 

 

5,353

 

 

 

 

 

 

29,874

 

Consumer events

 

 

11,076

 

 

 

165

 

 

 

 

 

 

11,241

 

Intersegment eliminations

 

 

 

 

 

 

 

 

(3,680

)

 

 

(3,680

)

Total revenue

 

$

288,921

 

 

$

53,384

 

 

$

(3,680

)

 

$

338,625

 

 

(1)

GES’ graphics product revenue is earned over time over the duration of an event as it is considered a part of the single performance obligation satisfied over time.

 

 

 

 

Year Ended December 31, 2019

 

(in thousands)

 

GES North America

 

 

GES EMEA

 

 

Intersegment Eliminations

 

 

Total

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core services

 

$

701,721

 

 

$

113,900

 

 

$

 

 

$

815,621

 

Audio-visual

 

 

78,178

 

 

 

24,197

 

 

 

 

 

 

102,375

 

Event technology

 

 

29,600

 

 

 

9,749

 

 

 

 

 

 

39,349

 

Intersegment eliminations

 

 

 

 

 

 

 

 

(20,741

)

 

 

(20,741

)

Total services

 

 

809,499

 

 

 

147,846

 

 

 

(20,741

)

 

 

936,604

 

Products:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core products

 

 

74,606

 

 

 

68,713

 

 

 

 

 

 

143,319

 

Total revenue

 

$

884,105

 

 

$

216,559

 

 

$

(20,741

)

 

$

1,079,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services transferred over time

 

$

809,499

 

 

$

147,846

 

 

$

(20,741

)

 

$

936,604

 

Products transferred over time(1)

 

 

45,597

 

 

 

16,071

 

 

 

 

 

 

61,668

 

Products transferred at a point in time

 

 

29,009

 

 

 

52,642