VIAD CORP, 10-Q filed on 11/8/2011
Quarterly Report
Document and Entity Information (USD $)
In Millions, except Share data
9 Months Ended
Sep. 30, 2011
Oct. 31, 2011
Jun. 30, 2010
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, 2011 
 
 
Amendment Flag
FALSE 
 
 
Document Fiscal Year Focus
2011 
 
 
Document Fiscal Period Focus
Q3 
 
 
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 Public Float
 
 
$ 353 
Entity Common Stock, Shares Outstanding
 
20,124,707 
 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands
Sep. 30, 2011
Dec. 31, 2010
Current assets:
 
 
Cash and cash equivalents
$ 104,553 
$ 145,841 
Accounts receivable, net of allowance for doubtful accounts of $1,624 and $1,172, respectively
61,931 
47,187 
Inventories
40,410 
38,670 
Deferred income taxes
22,922 
22,057 
Other current assets
19,559 
17,160 
Total current assets
249,375 
270,915 
Property and equipment, net
174,022 
149,346 
Other investments and assets
31,911 
31,363 
Deferred income taxes
35,901 
35,875 
Goodwill
131,909 
127,441 
Other intangible assets, net
2,278 
1,563 
Total Assets
625,396 
616,503 
Current liabilities:
 
 
Accounts payable
58,089 
47,933 
Other current liabilities
96,256 
96,749 
Current portion of long-term debt and capital lease obligations
2,200 
6,639 
Total current liabilities
156,545 
151,321 
Long-term debt and capital lease obligations
1,420 
2,438 
Pension and postretirement benefits
32,603 
33,008 
Other deferred items and liabilities
43,558 
43,025 
Total liabilities
234,126 
229,792 
Commitments and contingencies (Note 15)
 
 
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
599,347 
606,902 
Retained deficit
(6,145)
(19,229)
Unearned employee benefits and other
(3,520)
(4,433)
Accumulated other comprehensive income (loss):
 
 
Unrealized gains on investments
183 
282 
Cumulative foreign currency translation adjustments
31,519 
38,979 
Unrecognized net actuarial loss and prior service credit
(10,543)
(10,410)
Common stock in treasury, at cost, 4,809,459 and 4,710,988 shares, respectively
(265,400)
(270,534)
Total Viad Corp stockholders' equity
382,843 
378,959 
Noncontrolling interest
8,427 
7,752 
Total stockholders' equity
391,270 
386,711 
Total Liabilities and Stockholders' Equity
$ 625,396 
$ 616,503 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data
Sep. 30, 2011
Dec. 31, 2010
Current assets:
 
 
Allowance for doubtful accounts
$ 1,624 
$ 1,172 
Viad Corp stockholders' equity:
 
 
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
4,809,459 
4,710,988 
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Revenues:
 
 
 
 
Convention and event services
$ 121,157 
$ 130,609 
$ 529,963 
$ 464,465 
Exhibits and environments
30,540 
32,550 
120,807 
111,544 
Travel and recreation services
64,472 
51,985 
94,189 
81,787 
Total revenues
216,169 
215,144 
744,959 
657,796 
Costs and expenses:
 
 
 
 
Costs of services
180,517 
170,354 
595,554 
517,905 
Costs of products sold
30,240 
34,871 
116,872 
122,048 
Corporate activities
2,356 
1,749 
5,203 
4,451 
Interest income
(198)
(174)
(588)
(358)
Interest expense
373 
472 
1,165 
1,438 
Restructuring charges
75 
183 
1,550 
2,795 
Total costs and expenses
213,363 
207,455 
719,756 
648,279 
Income before income taxes
2,806 
7,689 
25,203 
9,517 
Income tax expense
523 
1,911 
9,011 
3,909 
Net income
2,283 
5,778 
16,192 
5,608 
Net income attributable to noncontrolling interest
(1,038)
(982)
(675)
(766)
Net income attributable to Viad
$ 1,245 
$ 4,796 
$ 15,517 
$ 4,842 
Diluted income per common share
 
 
 
 
Net income attributable to Viad common stockholders
$ 0.06 
$ 0.23 
$ 0.76 
$ 0.24 
Weighted-average outstanding and potentially dilutive common shares
20,033 
20,309 
20,089 
20,332 
Basic income per common share
 
 
 
 
Net income attributable to Viad common stockholders
$ 0.06 
$ 0.23 
$ 0.76 
$ 0.24 
Weighted-average outstanding common shares
19,711 
20,001 
19,768 
20,037 
Dividends declared per common share
$ 0.04 
$ 0.04 
$ 0.12 
$ 0.12 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Condensed Consolidated Statements of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 2,283 
$ 5,778 
$ 16,192 
$ 5,608 
Other comprehensive income (loss):
 
 
 
 
Holding gains (losses) arising during the period, net of tax
(160)
97 
(99)
78 
Unrealized foreign currency translation adjustments, net of tax
(13,072)
6,693 
(7,460)
2,783 
Net actuarial loss, net of tax
51 
183 
459 
(1,188)
Prior service credit, net of tax
(197)
(175)
(592)
(470)
Total other comprehensive income (loss)
(13,378)
6,798 
(7,692)
1,203 
Comprehensive income (loss)
(11,095)
12,576 
8,500 
6,811 
Comprehensive income attributable to noncontrolling interest
(1,038)
(982)
(675)
(766)
Comprehensive income (loss) attributable to Viad
$ (12,133)
$ 11,594 
$ 7,825 
$ 6,045 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands
9 Months Ended
Sep. 30,
2011
2010
Cash flows from operating activities:
 
 
Net income
$ 16,192 
$ 5,608 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
21,882 
21,314 
Deferred income taxes
548 
(5,217)
Restructuring charges
1,550 
2,795 
Losses (gains) on dispositions of property and other assets
(64)
51 
Share-based compensation expense
3,284 
2,748 
Excess tax benefit from share-based compensation arrangements
(54)
 
Other non-cash items, net
3,532 
3,281 
Change in operating assets and liabilities:
 
 
Receivables
(16,154)
(12,801)
Inventories
(883)
8,723 
Accounts payable
12,665 
12,536 
Restructuring liabilities
(3,362)
(5,866)
Accrued compensation
3,536 
7,018 
Customer deposits
(3,975)
2,670 
Income taxes payable
2,036 
1,983 
Other assets and liabilities, net
(5,665)
429 
Net cash provided by operating activities
35,068 
45,272 
Cash flows from investing activities:
 
 
Capital expenditures
(17,251)
(11,609)
Acquisition of businesses, net of cash acquired
(41,105)
 
Proceeds from dispositions of property and other assets
315 
14,630 
Net cash provided by (used in) investing activities
(58,041)
3,021 
Cash flows from financing activities:
 
 
Payments on debt and capital lease obligations
(6,544)
(3,944)
Dividends paid on common stock
(2,435)
(2,466)
Common stock purchased for treasury
(5,230)
(6,906)
Debt issuance costs
(1,001)
 
Excess tax benefit from share-based compensation arrangements
54 
 
Proceeds from exercise of stock options
163 
38 
Net cash used in financing activities
(14,993)
(13,278)
Effect of exchange rate changes on cash and cash equivalents
(3,322)
770 
Net increase (decrease) in cash and cash equivalents
(41,288)
35,785 
Cash and cash equivalents, beginning of year
145,841 
116,342 
Cash and cash equivalents, end of period
104,553 
152,127 
Supplemental disclosure of cash flow information
 
 
Income taxes
7,805 
5,680 
Interest
804 
792 
Equipment acquired under capital leases
$ 1,097 
$ 590 
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 three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
For further information, refer to the consolidated financial statements and related footnotes for the year ended December 31, 2010, included in the Company’s Form 10-K (File No. 001-11015), filed with the Securities and Exchange Commission on March 4, 2011.
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. (“Denali”). Brewster provides tourism services in the Canadian Rockies in Alberta and in other parts of Western Canada. Brewster’s operations include the Banff Gondola, Columbia Icefield Glacier Adventure, motorcoach services, charter and sightseeing services, tour boat operations, inbound package tour operations and hotel operations. Glacier Park 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. Denali operates the Denali Backcountry Lodge, which is the largest of three lodges located within Denali National Park and Preserve in Alaska, and the Denali Cabins, which are located near the entrance to Denali National Park. In addition to lodging, Denali also provides food and beverage operations, and packaged tour and transportation services in and around the park.
Share-Based Compensation
Share-Based Compensation
Note 2. Share-Based Compensation
The following table summarizes share-based compensation expense for the three and nine months ended September 30:
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2011     2010     2011     2010  
    (in thousands)  
Stock options
  $ 146     $ 152     $ 476     $ 415  
Restricted stock/performance-based restricted stock (“PBRS”)
    794       736       2,409       2,211  
Restricted stock units/PBRS units
    (35 )     60       54       125  
Performance unit incentive plan (“PUP”)
    86             345       (3 )
 
                       
Total share-based compensation before income tax benefit
    991       948       3,284       2,748  
Income tax benefit
    (358 )     (329 )     (1,163 )     (957 )
 
                       
Total share-based compensation, net of income tax benefit
  $ 633     $ 619     $ 2,121     $ 1,791  
 
                       
In addition, $124,000 and $509,000 of costs associated with share-based compensation (including $43,000 for the nine months ended September 30, 2010 of restricted stock units and PBRS units presented below) were included in restructuring charges during the nine months ended September 30, 2011 and 2010, respectively.
The following table summarizes restricted stock and PBRS activity during the nine months ended September 30, 2011:
                                 
    Restricted Stock     PBRS  
            Weighted-Average             Weighted-Average  
            Grant Date             Grant Date  
    Shares     Fair Value     Shares     Fair Value  
Balance at January 1, 2011
    478,499     $ 21.51       18,830     $ 33.02  
Granted
    177,350       22.91              
Vested
    (91,212 )     31.31       (18,414 )     33.42  
Forfeited
    (4,400 )     21.19              
 
                           
 
                               
Balance at September 30, 2011
    560,237       20.36       416       15.36  
 
                           
The unamortized cost of all outstanding restricted stock and PBRS awards as of September 30, 2011 was $4.4 million, which Viad expects to recognize in its consolidated financial statements over a weighted-average period of approximately 2.4 years. During the nine months ended September 30, 2011 and 2010, the Company repurchased 28,627 shares for $679,000 and 28,407 shares for $573,000, respectively, related to tax withholding requirements on vested share-based awards. As of September 30, 2011, there were 997,903 total shares available for future grant.
The following table summarizes the liability-based award activity during the nine months ended September 30, 2011:
                                                 
    Restricted Stock Units     PBRS Units     PUP Awards  
            Weighted-Average             Weighted-Average             Weighted-Average  
            Grant Date             Grant Date             Grant Date  
    Units     Fair Value     Units     Fair Value     Units     Fair Value  
Balance at January 1, 2011
    26,050     $ 17.18       3,914     $ 15.36       102,960     $ 33.81  
Granted
    12,550       23.01                   95,500       23.02  
Vested
                (1,958 )     15.36              
Cancelled
                            (102,960 )     33.81  
 
                                         
Balance at September 30, 2011
    38,600       19.07       1,956       15.36       95,500       23.02  
 
                                         
As of September 30, 2011 and December 31, 2010, Viad had liabilities recorded of $409,000 and $407,000, 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 $52,000 and $37,000 were distributed in January 2011 and March 2010, respectively.
As of September 30, 2011, Viad had a liability recorded of $345,000 related to PUP awards. The PUP awards for the 2007-2009 period vested effective December 31, 2009 and a cash payout of $19,000 was distributed in March 2010. No cash payouts of PUP awards were made during the nine months ended September 30, 2011. In March 2011, 102,960 PUP awards for the 2008-2010 period were cancelled as the performance conditions related to those awards were not achieved.
The following table summarizes stock option activity during the nine months ended September 30, 2011:
                         
            Weighted-        
            Average     Options  
    Shares     Exercise Price     Exercisable  
 
                       
Options outstanding at January 1, 2011
    763,794     $ 23.38       451,194  
Exercised
    (7,866 )     20.56          
Forfeited or expired
    (147,911 )     24.42          
 
                     
Options outstanding at September 30, 2011
    608,017       23.17       401,438  
 
                     
The total unrecognized cost related to non-vested stock option awards was $812,000 as of September 30, 2011, which Viad expects to recognize in the consolidated financial statements over a weighted-average period of approximately 1.7 years. No stock options were granted during the nine months ended September 30, 2011.
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, 2011, there were 10,864 of such options outstanding and exercisable, both with exercise prices ranging from $19.57 to $26.31. The weighted-average remaining contractual life of these options outstanding was less than one year. During the nine months ended September 30, 2011, 100 options were exercised by MoneyGram participants at an exercise price of $19.57.
Acquisition of Businesses
Acquisition of Businesses
Note 3. Acquisition of Businesses
On September 16, 2011, Viad acquired the Denali Backcountry Lodge and Denali Cabins for $15.3 million in cash. Denali Backcountry Lodge is the largest of three lodges located within Denali National Park and Preserve in Alaska and Denali Cabins consist of 46 guest cabins near the entrance to Denali National Park. Denali will operate as a separate business unit within the Travel & Recreation Group. The following information represents the preliminary amounts assigned to the assets and liabilities of Denali as of the date of acquisition:
         
    (in thousands)  
Other current assets
  $ 43  
Property and equipment
    11,090  
Goodwill
    3,482  
Other intangible assets
    818  
 
     
Total assets acquired
    15,433  
 
     
 
       
Customer deposits
    (38 )
Other current liabilities
    (90 )
 
     
Total liabilities acquired
    (128 )
 
     
 
       
Purchase price
  $ 15,305  
 
     
The Company recorded $3.5 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 entire amount of the goodwill is expected to be deductible for tax purposes over a period of 15 years. The amount assigned to other intangible assets includes $633,000 related to non-amortized trade names, $100,000 related to customer relationships and $85,000 related to a non-compete agreement. Transaction costs related to the acquisition were insignificant. The results of operations of Denali have been included in Viad’s consolidated financial statements from the date of acquisition.
On June 29, 2011, Viad acquired St. Mary Lodge & Resort (“St. Mary”) for $15.3 million in cash. St. Mary is a 115-room hotel located outside of Glacier National Park’s east entrance and is operated by Glacier Park within the Travel & Recreation Group. The following information represents the preliminary amounts assigned to the assets and liabilities of St. Mary as of the date of acquisition:
         
    (in thousands)  
Cash and cash equivalents
  $ 21  
Other current assets
    715  
Property and equipment
    13,058  
Goodwill
    2,583  
Other intangible assets
    60  
 
     
Total assets acquired
    16,437  
 
     
 
       
Customer deposits
    (684 )
Other current liabilities
    (46 )
Other long-term liabilities
    (382 )
 
     
Total liabilities acquired
    (1,112 )
 
     
 
       
Purchase price
  $ 15,325  
 
     
The Company recorded $2.6 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 entire amount of the goodwill is expected to be deductible for tax purposes over a period of 15 years. The amount assigned to other intangible assets includes $60,000 related to a non-amortized business license. Transaction costs related to the acquisition were insignificant. The results of operations of St. Mary have been included in Viad’s consolidated financial statements from the date of acquisition.
On January 5, 2011, Viad acquired Grouse Mountain Lodge for $10.5 million in cash. Grouse Mountain Lodge is a 145-room hotel located in Whitefish, Montana, and is operated by Glacier Park within the Travel & Recreation Group. The following information represents the preliminary amounts assigned to the assets and liabilities of Grouse Mountain Lodge as of the date of acquisition:
         
    (in thousands)  
Cash and cash equivalents
  $ 9  
Other current assets
    126  
Property and equipment
    8,750  
Goodwill
    1,331  
Other intangible assets
    400  
 
     
Total assets acquired
    10,616  
 
     
 
       
Customer deposits
    (99 )
Other current liabilities
    (12 )
 
     
Total liabilities acquired
    (111 )
 
     
 
       
Purchase price
  $ 10,505  
 
     
The Company recorded $1.3 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 entire amount of the goodwill is expected to be deductible for tax purposes over a period of 15 years. The amount assigned to other intangible assets includes $400,000 related to a non-amortized business license. Transaction costs related to the acquisition were insignificant. The results of operations of Grouse Mountain Lodge 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 of Viad for the three and nine months ended September 30, 2011 and 2010, assuming that the acquisitions of Denali, St. Mary and Grouse Mountain Lodge had each been completed at the beginning of each period:
                                 
    Three months ended September 30,     Nine months ended September 30,  
    2011     2010     2011     2010  
    (in thousands, except per share data)  
Revenue
  $ 221,335     $ 227,169     $ 752,868     $ 673,567  
Net income attributable to Viad
  $ 2,869     $ 7,114     $ 17,158     $ 6,852  
Diluted net income per share
  $ 0.14     $ 0.35     $ 0.84     $ 0.33  
Basic net income per share
  $ 0.14     $ 0.35     $ 0.84     $ 0.33  
Inventories
Inventories
Note 4. Inventories
The components of inventories were as follows:
                 
    September 30,     December 31,  
    2011     2010  
    (in thousands)  
Raw materials
  $ 18,143     $ 18,488  
Work in process
    22,267       20,182  
 
           
Inventories
  $ 40,410     $ 38,670  
 
           
Property and Equipment
Property and Equipment
Note 5. Property and Equipment
Property and equipment consisted of the following:
                 
    September 30,     December 31,  
    2011     2010  
    (in thousands)  
Land
  $ 17,846     $ 9,139  
Buildings and leasehold improvements
    109,729       89,945  
Equipment and other
    306,617       299,558  
 
           
 
    434,192       398,642  
Accumulated depreciation
    (260,170 )     (249,296 )
 
           
Property and equipment, net
  $ 174,022     $ 149,346  
 
           
Depreciation expense for the three months ended September 30, 2011 and 2010 was $7.4 million and $7.1 million, respectively, and for the nine months ended September 30, 2011 and 2010 was $21.3 million and $20.6 million, respectively.
In March 2010, Viad completed the sale of a non-strategic real estate asset within the Travel & Recreation Group consisting of land, building and related improvements for $14.3 million (net of selling costs).
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
Note 6. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill for the nine months ended September 30, 2011 were as follows:
                                 
            Marketing &              
    Marketing &     Events     Travel &        
    Events U.S.     International     Recreation Group     Total  
    (in thousands)  
Balance at January 1, 2011
  $ 62,686     $ 22,455     $ 42,300     $ 127,441  
Business acquisitions
                7,396       7,396  
Foreign currency translation adjustments
          (465 )     (2,463 )     (2,928 )
 
                       
Balance at September 30, 2011
  $ 62,686     $ 21,990     $ 47,233     $ 131,909  
 
                       
A summary of other intangible assets as of September 30, 2011 is presented below:
                         
    Gross Carrying     Accumulated     Net Carrying  
    Value     Amortization     Value  
    (in thousands)  
Amortized intangible assets:
                       
Customer contracts and relationships
  $ 2,587     $ (1,540 )   $ 1,047  
Non-compete agreement
    85             85  
Proprietary technology
    517       (505 )     12  
Other
    67       (26 )     41  
 
                 
 
    3,256       (2,071 )     1,185  
 
                 
 
                       
Unamortized intangible assets:
                       
Trade names
    633             633  
Business licenses
    460             460  
 
                 
 
    1,093             1,093  
 
                 
 
                       
Total
  $ 4,349     $ (2,071 )   $ 2,278  
 
                 
A summary of amortized other intangible assets as of December 31, 2010 is presented below:
                         
    Gross Carrying     Accumulated     Net Carrying  
    Value     Amortization     Value  
    (in thousands)  
Customer contracts and relationships
  $ 2,506     $ (1,135 )   $ 1,371  
Proprietary technology
    517       (448 )     69  
Design libraries
    175       (110 )     65  
Other
    166       (108 )     58  
 
                 
 
  $ 3,364     $ (1,801 )   $ 1,563  
 
                 
Intangible asset amortization expense for the three months ended September 30, 2011 and 2010 was $185,000 and $238,000, respectively, and $568,000 and $721,000 for the nine months ended September 30, 2011 and 2010, respectively. Estimated amortization expense related to amortized intangible assets for future periods is expected to be as follows:
         
    (in thousands)  
 
2011
  $ 265  
2012
  $ 434  
2013
  $ 349  
2014
  $ 119  
2015
  $ 18  
]
Accrued Liabilities and Other
Accrued Liabilities and Other
Note 7. Accrued Liabilities and Other
Other current liabilities consisted of the following:
                 
    September 30,     December 31,  
    2011     2010  
    (in thousands)  
Continuing operations:
               
Customer deposits
  $ 40,257     $ 43,411  
Accrued compensation
    21,679       17,599  
Self-insured liability accrual
    7,819       8,278  
Accrued foreign income taxes
    5,004       2,852  
Accrued employee benefit costs
    3,232       3,127  
Accrued restructuring
    1,840       4,272  
Accrued sales and use taxes
    1,454       2,990  
Accrued dividends
    826       827  
Other
    12,182       11,084  
 
           
 
    94,293       94,440  
 
           
Discontinued operations:
               
Environmental remediation liabilities
    936       1,124  
Self-insured liability accrual
    493       552  
Other
    534       633  
 
           
 
    1,963       2,309  
 
           
Total other current liabilities
  $ 96,256     $ 96,749  
 
           
Other deferred items and liabilities consisted of the following:
                 
    September 30,     December 31,  
    2011     2010  
    (in thousands)  
Continuing operations:
               
Self-insured liability accrual
  $ 13,442     $ 14,330  
Accrued compensation
    4,984       5,129  
Accrued restructuring
    3,972       3,724  
Foreign deferred tax liability
    1,584       1,582  
Accrued income taxes
          146  
Other
    5,877       3,945  
 
           
 
    29,859       28,856  
 
           
Discontinued operations:
               
Self-insured liability accrual
    6,607       6,898  
Environmental remediation liabilities
    4,897       4,953  
Accrued income taxes
    1,015       987  
Other
    1,180       1,331  
 
           
 
    13,699       14,169  
 
           
Total other deferred items and liabilities
  $ 43,558     $ 43,025  
 
           
Debt
Debt
Note 8. Debt
On May 18, 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. On April 28, 2011, Viad paid off its outstanding borrowing under the previous credit facility of $4.2 million and as of September 30, 2011, Viad’s total debt of $3.6 million consisted entirely of capital lease obligations. As of September 30, 2011, Viad had $125.4 million of capacity remaining under its Credit Facility reflecting outstanding letters of credit of $4.6 million.
Borrowings under the Credit Facility (of which GES is a guarantor) are indexed to 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.
Financial covenants include a fixed-charge coverage ratio of not less than 2.25 to 1 (and a ratio of not less than 2.50 to 1 after the fiscal quarter ending September 30, 2012) and a leverage ratio of not greater than 2.50 to 1. Additionally, Viad must maintain a consolidated minimum cash and cash equivalents balance of $50 million. As of September 30, 2011, the fixed-charge coverage and leverage ratios were 3.08 to 1 and 0.29 to 1, respectively. The terms of the Credit Facility allow Viad to pay up to $10 million in dividends in the aggregate in any calendar year and also allow the Company to purchase up to $10 million in any calendar year of the Company’s common stock. 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, 2011, Viad was in compliance with all covenants.
The estimated fair value of total debt was $3.6 million and $9.2 million as of September 30, 2011 and December 31, 2010, 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 9. 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, 2011:
                         
    Total Viad             Total  
    Stockholders’     Noncontrolling     Stockholders’  
    Equity     Interest     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 gain 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  
 
                 
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, 2010:
                         
    Total Viad             Total  
    Stockholders’     Noncontrolling     Stockholders’  
    Equity     Interest     Equity  
    (in thousands)  
 
                       
Balance at January 1, 2010
  $ 377,515     $ 7,116     $ 384,631  
Net income
    4,842       766       5,608  
Dividends on common stock
    (2,466 )           (2,466 )
Common stock purchased for treasury
    (6,906 )           (6,906 )
Employee benefit plans
    2,621             2,621  
Unrealized foreign currency translation adjustment
    2,783             2,783  
Unrealized loss on investments
    78             78  
Prior service credit and net actuarial loss
    (1,658 )           (1,658 )
ESOP allocation adjustment
    1,100             1,100  
Other
    10             10  
 
                 
Balance at September 30, 2010
  $ 377,919     $ 7,882     $ 385,801  
 
                 
Viad has announced its intent to repurchase shares of the Company’s common stock from time to time at prevailing market prices. During the three months ended September 30, 2011 and 2010, Viad repurchased 250,760 shares for $4.6 million and 356,300 shares for $6.3 million, respectively. As of September 30, 2011, 53,621 shares remain available for repurchase from the announced authorization. Additionally, during the nine months ended September 30, 2011 and 2010, the Company repurchased 28,627 shares for $679,000 and 28,407 shares for $573,000, respectively, related to tax withholding requirements on share-based awards.
Fair Value Measurements
Fair Value Measurements
Note 10. 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, 2011 Using  
                    Significant        
            Quoted Prices     Other     Significant  
            in Active     Observable     Unobserved  
    September 30,     Markets     Inputs     Inputs  
    2011     (Level 1)     (Level 2)     (Level 3)  
    (in thousands)  
Assets:
                               
Money market funds
  $ 19,245     $ 19,245     $     $  
Other mutual funds
    1,331       1,331              
 
                       
Total
  $ 20,576     $ 20,576     $     $  
 
                       
As of September 30, 2011 and December 31, 2010, Viad had investments in money market mutual funds of $19.2 million and $31.3 million, respectively, which were 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, 2011 and December 31, 2010, Viad had investments in other mutual funds of $1.3 million and $1.7 million, respectively, which were classified in the consolidated balance sheets under the caption “Other investments and assets.” These investments were classified as available-for-sale and were recorded at fair value. As of September 30, 2011 and December 31, 2010, there were unrealized gains on the investments of $302,000 ($183,000 after-tax) and $462,000 ($282,000 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 8.
Income Per Share
Income Per Share
Note 11. 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     Nine months ended  
    September 30,     September 30,  
    2011     2010     2011     2010  
    (in thousands, except per share data)  
Basic net income per share
                               
Numerator:
                               
Net income attributable to Viad
  $ 1,245     $ 4,796     $ 15,517     $ 4,842  
Less: Allocation to non-vested shares
    (34 )     (114 )     (412 )     (126 )
 
                       
Net income allocated to Viad common stockholders
  $ 1,211     $ 4,682     $ 15,105     $ 4,716  
 
                       
 
                               
Denominator:
                               
Weighted-average outstanding common shares
    19,711       20,001       19,768       20,037  
 
                       
 
                               
Net income attributable to Viad common stockholders
  $ 0.06     $ 0.23     $ 0.76     $ 0.24  
 
                       
 
                               
Diluted net income per share
                               
Numerator:
                               
Net income attributable to Viad
  $ 1,245     $ 4,796     $ 15,517     $ 4,842  
 
                       
 
                               
Denominator:
                               
Weighted-average outstanding shares
    19,711       20,001       19,768       20,037  
Additional dilutive shares related to share- based compensation
    322       308       321       295  
 
                       
Weighted-average outstanding and potentially dilutive shares
    20,033       20,309       20,089       20,332  
 
                       
 
                               
Net income attributable to Viad common stockholders (1)
  $ 0.06     $ 0.23     $ 0.76     $ 0.24  
 
                       
     
(1)  
Diluted income per share cannot exceed basic income per share.
Options to purchase 313,000 and 474,000 shares of common stock were outstanding during the nine months ended September 30, 2011 and 2010, respectively, but were not included in the computation of dilutive shares outstanding because the effect would be anti-dilutive. Additionally, 322,000 and 308,000 share-based compensation awards were considered dilutive and included in the computation of diluted income per share during the three months ended September 30, 2011 and 2010, respectively. During the nine months ended September 30, 2011 and 2010, 321,000 and 295,000 share-based compensation awards were considered dilutive and included in the computation of diluted income per share, respectively.
Income Taxes
Income Taxes
Note 12. 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:
                                 
    2011     2010  
    (in thousands)  
Computed income tax expense at statutory federal income tax rate of 35%
  $ 8,821       35.0 %   $ 3,331       35.0 %
State income tax expense (benefit), net of federal benefit or provision
    537       2.1 %     (279 )     (2.9 %)
Tax resolutions, net
    (103 )     (0.4 %)     (149 )     (1.6 %)
Change in enacted tax law
          0.0 %     1,279       13.5 %
Other, net
    (244 )     (0.9 %)     (273 )     (2.9 %)
 
                       
Income tax expense
  $ 9,011       35.8 %   $ 3,909       41.1 %
 
                       
In March 2010, the Patient Protection and Affordable Care Act and a related measure, the Health Care and Education Reconciliation Act of 2010, were both enacted into law. As a result of this legislation, the tax deductions for the portion of the prescription drug costs for which Viad receives a Medicare Part D subsidy have been eliminated for tax years beginning after December 31, 2012. Accordingly, during the three months ended March 31, 2010, Viad reduced its deferred tax asset related to its postretirement benefit plan liability to reflect the change in the tax law. The reduction in the deferred tax asset resulted in an increase to income tax expense of $1.3 million during the three months ended March 31, 2010.
As of September 30, 2011 and December 31, 2010, Viad had gross deferred tax assets of $64.9 million and $67.1 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.
During 2010 and 2009, Viad recorded pre-tax losses from its operations in the United States. The Company considered the negative evidence of these domestic pre-tax operating losses on the future recoverability of its deferred tax assets. Viad also considered positive evidence regarding the realization of deferred tax assets including the Company’s historical and forecasted taxable income, taxpaying history and future reversals of deferred tax liabilities. Furthermore, Viad also considered the fact that goodwill impairment losses were not tax deductible and thus did not contribute to tax losses in 2009. As of both September 30, 2011 and December 31, 2010, Viad had a valuation allowance of $411,000 related to certain state deferred tax assets. With respect to all other deferred tax assets, management believes that recovery from future taxable income is more-likely-than-not.
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 are primarily dependent on Viad’s ability to generate sufficient taxable income in future periods. In light of the Company’s domestic operating losses in 2010 and 2009, and the continued uncertainties in the current economic environment, it is 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.
As of September 30, 2011 and December 31, 2010, Viad did not have any accrued gross liabilities associated with uncertain tax positions for continuing operations. Additionally, as of September 30, 2011, Viad did not have any accrued interest and penalties related to uncertain tax positions for continuing operations. As of December 31, 2010, Viad had accrued interest and penalties related to uncertain tax positions for continuing operations of $146,000. Viad classifies interest and penalties related to income tax liabilities as a component of income tax expense. During the three months ended September 30, 2011 and 2010, Viad recorded tax-related interest expense credits of $64,000 and $230,000, respectively. During the nine months ended September 30, 2011 and 2010, Viad recorded tax-related interest expense credits of $146,000 and $214,000, respectively.
In addition to the above, Viad had accrued gross liabilities associated with uncertain tax positions for discontinued operations of $636,000 as of both September 30, 2011 and December 31, 2010. In addition, as of September 30, 2011 and December 31, 2010, Viad had accrued interest and penalties related to uncertain tax positions for discontinued operations of $379,000 and $351,000, 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).
As of September 30, 2011 and December 31, 2010, liabilities associated with uncertain tax positions (including interest and penalties) of $1.0 million and $1.1 million, respectively, were classified as non-current liabilities.
Pension and Postretirement Benefits
Pension and Postretirement Benefits
Note 13. 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        
                    Postretirement     Foreign  
    Pension Plans     Benefit Plans     Pension Plans  
    2011     2010     2011     2010     2011     2010  
    (in thousands)  
Service cost
  $ 17     $ 53     $ 22     $ 27     $ 92     $ 75  
Interest cost
    292       311       187       265       183       193  
Expected return on plan assets
    (140 )     (149 )     (35 )     (41 )     (164 )     (149 )
Amortization of prior service cost (credit)
          10       (320 )     (293 )            
Recognized net actuarial loss
    1       139       80       157              
 
                                   
Net periodic benefit cost
  $ 170     $ 364     $ (66 )   $ 115     $ 111     $ 119  
 
                                   
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        
                    Postretirement     Foreign  
    Pension Plans     Benefit Plans     Pension Plans  
    2011     2010     2011     2010     2011     2010  
    (in thousands)  
Service cost
  $ 91     $ 159     $ 96     $ 81     $ 276     $ 227  
Interest cost
    892       933       651       795       551       581  
Expected return on plan assets
    (422 )     (447 )     (101 )     (123 )     (493 )     (448 )
Amortization of prior service cost (credit)
          30       (958 )     (879 )            
Recognized net actuarial loss
    342       416       400       470              
 
                                   
Net periodic benefit cost
  $ 903     $ 1,091     $ 88     $ 344     $ 334     $ 360  
 
                                   
Viad expects to contribute $1.7 million to its funded pension plans, $959,000 to its unfunded pension plans and $500,000 to its postretirement benefit plans in 2011. As of September 30, 2011, Viad had contributed $1.1 million to its funded pension plans, $648,000 to its unfunded pension plans and $52,000 to its postretirement benefit plans.
Restructuring Charges
Restructuring Charges
Note 14. Restructuring Charges
During the nine months ended September 30, 2011, Viad recorded aggregate restructuring charges of $1.6 million primarily related to reorganization activities in the Marketing & Events Group, comprised of the elimination of certain positions as well as facility consolidations. The restructuring liabilities at September 30, 2011 related to future lease payment obligations will be made over the remaining lease terms and severance and employee benefits are expected to be paid by the end of 2011.
The table below represents a reconciliation of beginning and ending liability balances by major restructuring activity for the nine months ended September 30, 2011:
                                         
    Marketing & Events              
    Group Consolidation     Other Restructurings        
    Severance &             Severance &              
    Employee             Employee              
    Benefits     Facilities     Benefits     Facilities     Total  
    (in thousands)  
 
                                       
Balance at January 1, 2011
  $ 1,106     $ 5,051     $ 197     $ 1,642     $ 7,996  
Restructuring charges
    514       1,036                   1,550  
Cash payments
    (1,509 )     (1,175 )     (197 )     (481 )     (3,362 )
Adjustment to liability
    (128 )                 (263 )     (391 )
Foreign currency translation adjustment
    17       2                   19  
 
                             
Balance at September 30, 2011
  $     $ 4,914     $     $ 898     $ 5,812  
 
                             
Litigation, Claims, Contingencies and Other
Litigation, Claims, Contingencies and Other
Note 15. 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, 2011, 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, 2011, there was a remaining environmental remediation liability of $5.8 million related to previously sold operations of which $936,000 was included in the consolidated balance sheets under the caption “Other current liabilities” and $4.9 million under the caption “Other deferred items and liabilities.”
As of September 30, 2011, 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, 2011 would be $30.4 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, 2011, 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 six one-year periods and now expires on December 31, 2011. The Park Service, in its sole discretion, may continue extending Glacier Park’s concession contract in one-year increments. When this contract ultimately expires, 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 70 percent of its 2010 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,” 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 owns its Glacier Park Lodge operations 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 25 percent of Travel & Recreation Group’s full year 2010 segment operating income.
Segment Information
Segment Information
Note 16. 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 losses and recoveries. Intersegment sales are eliminated in consolidation and intersegment transfers are not significant. Corporate activities include expenses not allocated to operations. Depreciation and amortization and share-based compensation expense are the only significant non-cash items for the reportable segments. Disclosures regarding Viad’s reportable segments with reconciliations to consolidated totals are as follows:
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2011     2010     2011     2010  
    (in thousands)  
Revenues:
                               
Marketing & Events Group:
                               
U.S.
  $ 116,826     $ 125,127     $ 498,691     $ 438,996  
International
    38,516       38,133       159,443       144,559  
Intersegment eliminations
    (3,645 )     (101 )     (7,364 )     (7,546 )
 
                       
 
    151,697       163,159       650,770       576,009  
Travel & Recreation Group
    64,472       51,985       94,189       81,787  
 
                       
 
  $ 216,169     $ 215,144     $ 744,959     $ 657,796  
 
                       
 
                               
Segment operating income (loss):
                               
Marketing & Events Group:
                               
U.S.
  $ (17,078 )   $ (9,544 )   $ 1,061     $ (11,890 )
International
    (3,110 )     (2,038 )     7,325       7,131  
 
                       
 
    (20,188 )     (11,582 )     8,386       (4,759 )
Travel & Recreation Group
    25,600       21,501       24,147       22,602  
 
                       
 
    5,412       9,919       32,533       17,843  
Corporate activities
    (2,356 )     (1,749 )     (5,203 )     (4,451 )
 
                       
 
    3,056       8,170       27,330       13,392  
Interest income
    198       174       588       358  
Interest expense
    (373 )     (472 )     (1,165 )     (1,438 )
Restructuring charges:
                               
Marketing & Events U.S.
    (75 )     (183 )     (1,550 )     (2,508 )
Travel & Recreation Group
                      (235 )
Corporate
                      (52 )
 
                       
Income before income taxes
  $ 2,806     $ 7,689     $ 25,203     $ 9,517  
 
                       
                 
    September 30,     December 31,  
    2011     2010  
    (in thousands)  
Assets:
               
Marketing & Events U.S.
  $ 232,212     $ 235,965  
Marketing & Events International
    86,149       83,441  
Travel & Recreation Group
    202,214       157,562  
Corporate and other
    104,821       139,535  
 
           
 
  $ 625,396     $ 616,503  
 
           
Impact of Recent Accounting Pronouncements
Impact of Recent Accounting Pronouncements
Note 17. Impact of Recent Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance related to fair value measurement and disclosure requirements, which is codified in Accounting Standards Codification (“ASC”) Topic 820. The new guidance is intended to clarify the application of existing fair value measurement and disclosure requirements, and also changes certain principles and disclosures. The guidance is effective for fiscal years and interim periods 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.
In June 2011, the FASB issued new guidance related to the presentation of comprehensive income, which is codified in ASC Topic 220. The new guidance requires entities to present the total of comprehensive income, the components of net income and the components of other comprehensive income in one of two formats: 1) in a single continuous statement, or 2) in two separate but consecutive statements. The guidance also requires the presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. The guidance is effective for fiscal years and interim periods beginning after December 15, 2011, and will not have an impact on Viad’s financial condition or results of operations.
In September 2011, the FASB issued new guidance related to goodwill impairment testing, which is codified in 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.
In September 2011, the FASB issued new guidance related to disclosures regarding employer’s participation in multi-employer pension plans, which is codified in ASC Topic 715. The new guidance requires employers that participate in multi-employer pension plans to provide additional quantitative and qualitative information about their involvement in those plans. The guidance is effective for annual periods for fiscal years ending after December 15, 2011. The adoption of this disclosure-only guidance will not impact Viad’s financial condition or results of operations.