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Note 1. Basis of Presentation 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”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or Securities and Exchange Commission (“SEC”) rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with Viad’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 11, 2016.
The condensed consolidated financial statements include the accounts of Viad and its subsidiaries. All significant intercompany account balances and transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Estimates and assumptions are used in accounting for, among other things, the fair value of Viad’s reporting units used to perform annual impairment testing of recorded goodwill, allowances for uncollectible accounts receivable, provisions for income taxes, including uncertain tax positions, valuation allowances related to deferred tax assets, liabilities for losses related to self-insured liability claims, liabilities for losses related to environmental remediation obligations, sublease income associated with restructuring liabilities, assumptions used to measure pension and postretirement benefit costs and obligations, assumptions used to determine share-based compensation costs under the fair value method, and allocation of purchase price of acquired businesses. Actual results could differ from these and other estimates.
Nature of Business
Viad is an international experiential services company with operations in the United States, Canada, the United Kingdom, continental Europe, and the United Arab Emirates. Viad is committed to providing best in class experiences to its clients, customers, and guests by offering products and services designed to meet their current and future needs. Viad operates through three reportable business segments: the Marketing & Events U.S. Segment (the “U.S. Segment”), the Marketing & Events International Segment (the “International Segment”) (collectively, the “Marketing & Events Group”), and the Travel & Recreation Group.
Marketing & Events Group
The Marketing & Events Group, comprised of Global Experience Specialists, Inc. and affiliates (“GES”), is a global, full-service provider for live events that produces exhibitions, congresses and conferences, corporate events, consumer events, exhibits, and entertainment experiences. GES provides a comprehensive range of live event services, including official show services, audio-visual services, cutting-edge creative and design, strategic marketing and measurement services, registration, and event accommodations – all with a global reach.
GES’ clients include event organizers and corporate brand marketers. 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.
Travel & Recreation Group
The Travel & Recreation Group offers guests distinctive and world renowned experiences in iconic natural and cultural destinations in North America through its collection of unique hotels, lodges, recreational attractions, and transportation services. The Travel & Recreation Group is composed of four lines of business: (i) Hospitality; (ii) Attractions; (iii) Package Tours; and (iv) Transportation. These four lines of business work together, driving economies of scope and meaningful scale in and around the iconic destinations of Banff, Jasper, and Waterton Lakes National Parks in Canada, and Glacier, Denali, and Kenai Fjords National Parks in the United States. The Travel & Recreation Group is composed of Brewster Inc. (“Brewster”), Glacier Park, Inc. (“Glacier Park”), and Alaskan Park Properties, Inc. (“Alaska Denali Travel”).
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 2014-09, Revenue from Contracts with Customers (Topic 606) ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) |
|
The standard establishes a new recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company may adopt either retrospectively to each prior period presented with the option to elect certain practical expedients or with the cumulative effect recognized at the date of initial application and providing certain disclosures.
ASU 2016-08 improves the operability and understandability of the implementation guidance on principal versus agent considerations. |
|
January 1, 2018 |
|
The Company is currently evaluating the potential impact of the adoption of this new guidance on its financial position or results of operations, including the method of adoption to be used. |
ASU 2015-11, Inventory (Topic 330) - Simplifying the Measurement of Inventory |
|
The amendment applies to inventory measures using first-in, first-out or average cost and will require entities to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the normal course of business, minus the cost of completion, disposal and transportation. Replacement cost and net realizable value less a normal profit margin will no longer be considered. |
|
January 1, 2017 |
|
The adoption of this guidance is not expected to have a significant effect on Viad's consolidated financial statements. |
ASU 2016-02, Leases (Topic 842) |
|
The amendment requires lessees to recognize on their balance sheet a right-of-use asset and a lease liability for leases with lease terms greater than one year. The amendment requires additional disclosures about leasing arrangements, and requires a modified retrospective approach to adoption. Early adoption is permitted. |
|
January 1, 2019 |
|
The Company is currently evaluating the potential impact of the adoption of this new guidance on its financial position or results of operations. |
ASU 2016-09, Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting |
|
The amendment identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. Early adoption is permitted. |
|
January 1, 2017 |
|
The Company is currently evaluating the potential impact of the adoption of this new guidance on its financial position or results of operations. |
|
|
|
|
|
|
|
Standards Recently Adopted |
||||||
ASU 2014-12, Compensation - Stock Compensation (Topic 718) - Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period |
|
The amendment requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. |
|
January 1, 2016 |
|
The Company adopted this guidance prospectively to all awards granted after the effective date. The adoption of this guidance did not have a material impact on the consolidated financial statements. |
ASU 2015-03, Interest - Imputation of Interest Simplifying the Presentation of Debt Issuance Costs ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements |
|
The amendments require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. For line-of-credit arrangements, an entity may defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. |
|
January 1, 2016 |
|
The adoption of this guidance resulted in the reclassification of unamortized debt issuance costs of $1.6 million from other long-term assets to a reduction in long-term debt on the December 31, 2015 consolidated balance sheet. |
ASU 2015-16, Business Combinations (Topic 805) - Simplifying the Accounting for Measurement-Period Adjustments |
|
The amendment requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. |
|
January 1, 2016 |
|
The adoption of this guidance did not have a material impact on the consolidated financial statements. |
|
Note 3. Acquisition of Businesses
Maligne Lake Tours
On January 4, 2016, the Company acquired the assets and operations of Maligne Tours Ltd. (“Maligne Lake Tours”), which provides interpretive boat tours and related services at Maligne Lake, the largest lake in Jasper National Park. The purchase price was $20.9 million Canadian dollars (approximately $15.0 million U.S. dollars) in cash, subject to certain adjustments.
The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date. Due to the recent timing of the acquisition, the purchase price allocation is not yet finalized and is subject to change within the measurement period (up to one year from the acquisition date) as the assessment of property and equipment, intangible assets, and working capital is finalized.
(in thousands) |
|
|
|
|
|
|
|
|
Purchase price paid as: |
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
$ |
14,962 |
|
|
|
|
|
|
|
|
|
|
Fair value of net assets acquired: |
|
|
|
|
|
|
|
|
Inventories |
|
$ |
246 |
|
|
|
|
|
Prepaid expenses |
|
|
2 |
|
|
|
|
|
Property and equipment |
|
|
4,133 |
|
|
|
|
|
Intangible assets |
|
|
9,244 |
|
|
|
|
|
Total assets acquired |
|
|
13,625 |
|
|
|
|
|
Customer deposits |
|
|
15 |
|
|
|
|
|
Total liabilities assumed |
|
|
15 |
|
|
|
|
|
Total fair value of net assets acquired |
|
|
|
|
|
|
13,610 |
|
Excess purchase price over fair value of net assets acquired (“goodwill”) |
|
|
|
|
|
$ |
1,352 |
|
Under the acquisition method of accounting, the purchase price as shown in the table above is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over the fair value of net assets acquired was recorded as goodwill. Goodwill is included in the Travel & Recreation Group and the primary factor that contributed to the purchase price resulting in the recognition of goodwill relates to future growth opportunities when combined with the Company’s other businesses. Goodwill is expected to be deductible for tax purposes pursuant to Canadian tax regulations. The estimated values of current assets and liabilities were based upon their historical costs on the date of acquisition due to their short-term nature. Transaction costs associated with the acquisition of Maligne Lake Tours were $0.1 million in 2016 and $0.2 million in 2015, and were included in corporate activities in Viad’s condensed consolidated statements of operations.
Identified intangible assets acquired in the Maligne Lake Tours acquisition totaled $9.2 million and consist of operating licenses, customer relationships, and trade names. The weighted-average amortization period related to the intangible assets is 26.7 years, largely attributable to operating licenses amortized over the remaining Parks Canada lease of 29 years.
The results of operations of Maligne Lake Tours have been included in Viad’s condensed consolidated financial statements from the date of acquisition. During the three months ended March 31, 2016, revenue of $7,000 and an operating loss of $0.1 million, related to Maligne Lake Tours, were included in Viad’s condensed consolidated statements of operations.
CATC
On March 11, 2016, the Company acquired 100 percent of the equity interest in CIRI Alaska Tourism Corporation (“CATC”), the operator of an Alaskan tourism business that includes a marine sightseeing tour business, three lodges, and a package tour business. The purchase price was $45.0 million in cash, subject to certain adjustments.
The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date. Due to the recent timing of the acquisition, the purchase price allocation is not yet finalized and is subject to change within the measurement period (up to one year from the acquisition date) as the assessment of property and equipment, intangible assets, and working capital is finalized.
(in thousands) |
|
|
|
|
|
|
|
|
Purchase price paid as: |
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
$ |
45,000 |
|
Estimated working capital adjustment |
|
|
|
|
|
|
54 |
|
Cash acquired |
|
|
|
|
|
|
(2,196 |
) |
Purchase price, net of cash acquired |
|
|
|
|
|
|
42,858 |
|
|
|
|
|
|
|
|
|
|
Fair value of net assets acquired: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
$ |
8 |
|
|
|
|
|
Inventories |
|
|
921 |
|
|
|
|
|
Prepaid expenses |
|
|
82 |
|
|
|
|
|
Property and equipment |
|
|
43,470 |
|
|
|
|
|
Intangible assets |
|
|
980 |
|
|
|
|
|
Total assets acquired |
|
|
45,461 |
|
|
|
|
|
Accounts payable |
|
|
201 |
|
|
|
|
|
Accrued liabilities |
|
|
450 |
|
|
|
|
|
Customer deposits |
|
|
1,952 |
|
|
|
|
|
Total liabilities assumed |
|
|
2,603 |
|
|
|
|
|
Total fair value of net assets acquired |
|
|
|
|
|
|
42,858 |
|
Excess purchase price over fair value of net assets acquired (“goodwill”) |
|
|
|
|
|
$ |
— |
|
Under the acquisition method of accounting, the purchase price as shown in the table above is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The estimated values of current assets and liabilities were based upon their historical costs on the date of acquisition due to their short-term nature. Transaction costs associated with the acquisition of CATC were $0.1 million in 2016 and $0.6 million in 2015 and were included in corporate activities in Viad’s condensed consolidated statements of operations.
Identified intangible assets acquired in the CATC acquisition totaled $1.0 million and consist of customer relationships and trade names. The weighted-average amortization period related to the intangible assets is 5.8 years.
The results of operations of CATC have been included in Viad’s condensed consolidated financial statements from the date of acquisition. During the three months ended March 31, 2016, revenue of $45,000 and an operating loss of $0.6 million, related to CATC, were included in Viad’s condensed consolidated statements of operations.
Supplementary pro forma financial information
The following table summarizes the unaudited pro forma results of operations attributable to Viad, assuming the above acquisitions had each been completed on January 1, 2015:
|
|
Three Months Ended March 31, |
|
|||||
(in thousands, except per share data) |
|
2016 |
|
|
2015 |
|
||
Revenue |
|
$ |
241,441 |
|
|
$ |
264,528 |
|
Depreciation and amortization |
|
$ |
8,898 |
|
|
$ |
9,314 |
|
Loss from continuing operations |
|
$ |
(8,352 |
) |
|
$ |
(4,709 |
) |
Net loss attributable to Viad |
|
$ |
(8,376 |
) |
|
$ |
(4,793 |
) |
Diluted loss per share |
|
$ |
(0.41 |
) |
|
$ |
(0.24 |
) |
Basic loss per share |
|
$ |
(0.41 |
) |
|
$ |
(0.24 |
) |
|
Note 4. Inventories
The components of inventories consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Raw materials |
|
$ |
16,047 |
|
|
$ |
14,383 |
|
Work in process |
|
|
22,468 |
|
|
|
13,146 |
|
Inventories |
|
$ |
38,515 |
|
|
$ |
27,529 |
|
|
Note 5. Other Current Assets
Other current assets consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Income tax receivable |
|
$ |
6,699 |
|
|
$ |
4,643 |
|
Prepaid vendor payments |
|
|
5,894 |
|
|
|
2,140 |
|
Prepaid insurance |
|
|
1,985 |
|
|
|
2,024 |
|
Prepaid software maintenance |
|
|
1,640 |
|
|
|
2,026 |
|
Prepaid rent |
|
|
1,639 |
|
|
|
1,406 |
|
Prepaid taxes |
|
|
1,142 |
|
|
|
1,261 |
|
Prepaid other |
|
|
4,664 |
|
|
|
2,777 |
|
Other |
|
|
1,486 |
|
|
|
1,034 |
|
Other current assets |
|
$ |
25,149 |
|
|
$ |
17,311 |
|
|
Note 6. Property and Equipment
Property and equipment consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Land and land interests |
|
$ |
29,525 |
|
|
$ |
29,032 |
|
Buildings and leasehold improvements |
|
|
189,251 |
|
|
|
135,381 |
|
Equipment and other |
|
|
279,620 |
|
|
|
270,957 |
|
Gross property and equipment |
|
|
498,396 |
|
|
|
435,370 |
|
Accumulated depreciation |
|
|
(255,015 |
) |
|
|
(246,131 |
) |
Property and equipment, net |
|
$ |
243,381 |
|
|
$ |
189,239 |
|
Depreciation expense was $6.7 million for both of the three months ended March 31, 2016 and 2015.
|
Note 7. Other Investments and Assets
Other investments and assets consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 (1) |
|
||
Cash surrender value of life insurance |
|
$ |
22,028 |
|
|
$ |
21,970 |
|
Self-insured liability receivable |
|
|
5,979 |
|
|
|
5,979 |
|
Workers’ compensation insurance security deposits |
|
|
4,250 |
|
|
|
4,250 |
|
Other mutual funds |
|
|
2,395 |
|
|
|
2,192 |
|
Other |
|
|
3,752 |
|
|
|
3,240 |
|
Other investments and assets |
|
$ |
38,404 |
|
|
$ |
37,631 |
|
(1) |
In accordance with ASU 2015-03, unamortized debt issuance costs are reflected as a direct deduction from the carrying amount of the related debt. The Company adopted the new guidance retrospectively to all prior periods presented in the condensed consolidated financial statements. As a result, $1.6 million of unamortized debt issuance costs were reclassified from other investments and assets to a reduction of long-term debt on the December 31, 2015 condensed consolidated balance sheet. |
|
Note 8. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill were as follows:
(in thousands) |
|
Marketing & Events U.S. Segment |
|
|
Marketing & Events International Segment |
|
|
Travel & Recreation Group |
|
|
Total |
|
||||
Balance at December 31, 2015 |
|
$ |
112,300 |
|
|
$ |
38,635 |
|
|
$ |
34,288 |
|
|
$ |
185,223 |
|
Business acquisitions |
|
|
— |
|
|
|
— |
|
|
|
1,352 |
|
|
|
1,352 |
|
Foreign currency translation adjustments |
|
|
— |
|
|
|
211 |
|
|
|
2,480 |
|
|
|
2,691 |
|
Balance at March 31, 2016 |
|
$ |
112,300 |
|
|
$ |
38,846 |
|
|
$ |
38,120 |
|
|
$ |
189,266 |
|
Intangible assets consisted of the following:
|
|
March 31, 2016 |
|
|
December 31, 2015 |
|
||||||||||||||||||
(in thousands) |
|
Gross Carrying Value |
|
|
Accumulated Amortization |
|
|
Net Carrying Value |
|
|
Gross Carrying Value |
|
|
Accumulated Amortization |
|
|
Net Carrying Value |
|
||||||
Amortized intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer contracts and relationships |
|
$ |
40,143 |
|
|
$ |
(9,399 |
) |
|
$ |
30,744 |
|
|
$ |
38,342 |
|
|
$ |
(7,814 |
) |
|
$ |
30,528 |
|
Operating contracts and licenses |
|
|
9,628 |
|
|
|
(309 |
) |
|
|
9,319 |
|
|
|
665 |
|
|
|
(272 |
) |
|
|
393 |
|
Other |
|
|
4,883 |
|
|
|
(2,843 |
) |
|
|
2,040 |
|
|
|
3,736 |
|
|
|
(1,795 |
) |
|
|
1,941 |
|
Total amortized intangible assets |
|
|
54,654 |
|
|
|
(12,551 |
) |
|
|
42,103 |
|
|
|
42,743 |
|
|
|
(9,881 |
) |
|
|
32,862 |
|
Unamortized intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business licenses |
|
|
460 |
|
|
|
— |
|
|
|
460 |
|
|
|
460 |
|
|
|
— |
|
|
|
460 |
|
Total |
|
$ |
55,114 |
|
|
$ |
(12,551 |
) |
|
$ |
42,563 |
|
|
$ |
43,203 |
|
|
$ |
(9,881 |
) |
|
$ |
33,322 |
|
Intangible asset amortization expense was $1.7 million and $2.0 million for the three months ended March 31, 2016 and 2015, respectively. The weighted-average amortization period of customer contracts and relationships, operating contracts and licenses, and other amortizable intangible assets is approximately 7.9 years, 27.7 years, and 2.5 years, respectively. The estimated future amortization expense related to amortized intangible assets held at March 31, 2016 is as follows:
(in thousands) |
|
|
|
|
Year ending December 31, |
|
|
|
|
Remainder of 2016 |
|
$ |
5,443 |
|
2017 |
|
|
6,159 |
|
2018 |
|
|
5,174 |
|
2019 |
|
|
4,794 |
|
2020 |
|
|
4,240 |
|
Thereafter |
|
|
16,293 |
|
Total |
|
$ |
42,103 |
|
|
Note 9. Other Current Liabilities
Other current liabilities consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Continuing operations: |
|
|
|
|
|
|
|
|
Self-insured liability accrual |
|
$ |
5,835 |
|
|
$ |
6,891 |
|
Accrued employee benefit costs |
|
|
5,516 |
|
|
|
3,892 |
|
Accrued sales and use taxes |
|
|
4,545 |
|
|
|
4,772 |
|
Accrued dividends |
|
|
2,108 |
|
|
|
2,103 |
|
Current portion of pension liability |
|
|
1,767 |
|
|
|
1,768 |
|
Accrued restructuring |
|
|
1,630 |
|
|
|
1,757 |
|
Accrued rebates |
|
|
1,162 |
|
|
|
752 |
|
Accrued professional fees |
|
|
1,027 |
|
|
|
751 |
|
Deferred rent |
|
|
965 |
|
|
|
548 |
|
Other taxes |
|
|
4,256 |
|
|
|
1,465 |
|
Other |
|
|
2,629 |
|
|
|
3,523 |
|
Total continuing operations |
|
|
31,440 |
|
|
|
28,222 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Environmental remediation liabilities |
|
|
302 |
|
|
|
295 |
|
Self-insured liability accrual |
|
|
141 |
|
|
|
200 |
|
Other |
|
|
513 |
|
|
|
521 |
|
Total discontinued operations |
|
|
956 |
|
|
|
1,016 |
|
Total other current liabilities |
|
$ |
32,396 |
|
|
$ |
29,238 |
|
|
Note 10. Other Deferred Items and Liabilities
Other deferred items and liabilities consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Continuing operations: |
|
|
|
|
|
|
|
|
Self-insured liability |
|
$ |
13,179 |
|
|
$ |
13,662 |
|
Accrued compensation |
|
|
6,018 |
|
|
|
7,612 |
|
Self-insured excess liability |
|
|
5,979 |
|
|
|
5,979 |
|
Deferred rent |
|
|
5,903 |
|
|
|
5,607 |
|
Foreign deferred tax liability |
|
|
1,394 |
|
|
|
2,384 |
|
Accrued restructuring |
|
|
566 |
|
|
|
519 |
|
Other |
|
|
1,149 |
|
|
|
1,262 |
|
Total continuing operations |
|
|
34,188 |
|
|
|
37,025 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Environmental remediation liabilities |
|
|
4,092 |
|
|
|
4,177 |
|
Self-insured liability |
|
|
3,915 |
|
|
|
3,986 |
|
Accrued income taxes |
|
|
1,160 |
|
|
|
1,151 |
|
Other |
|
|
994 |
|
|
|
997 |
|
Total discontinued operations |
|
|
10,161 |
|
|
|
10,311 |
|
Total other deferred items and liabilities |
|
$ |
44,349 |
|
|
$ |
47,336 |
|
|
Note 11. Debt and Capital Lease Obligations
The components of long-term debt and capital lease obligations consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Revolving credit facility and term loan 2.5% and 2.4% weighted-average interest rate at March 31, 2016 and December 31, 2015, respectively, due through 2019 (1) |
|
$ |
162,813 |
|
|
$ |
127,500 |
|
Less unamortized debt issuance costs (2) |
|
|
(1,788 |
) |
|
|
(1,572 |
) |
Total debt |
|
|
161,025 |
|
|
|
125,928 |
|
Capital lease obligations, 6.1% and 6.1% weighted-average interest rate at March 31, 2016 and December 31, 2015, respectively, due through 2018 |
|
|
1,672 |
|
|
|
1,475 |
|
Total debt and capital lease obligations |
|
|
162,697 |
|
|
|
127,403 |
|
Current portion |
|
|
(74,640 |
) |
|
|
(34,554 |
) |
Long-term debt and capital lease obligations |
|
$ |
88,057 |
|
|
$ |
92,849 |
|
(1) |
Represents the weighted-average interest rate in effect at the respective periods for the revolving credit facility and term loan borrowings, including any applicable margin. The interest rates do not include amortization of debt issuance costs or commitment fees. |
(2) |
In accordance with ASU 2015-03, unamortized debt issuance costs are reflected as a direct deduction from the carrying amount of the related debt. The Company applied the new guidance retrospectively to all prior periods presented in the condensed consolidated financial statements. As a result, $1.6 million of unamortized debt issuance costs were reclassified from other investments and assets to a reduction in long-term debt on the December 31, 2015 condensed consolidated balance sheet. |
Effective December 22, 2014, Viad entered into a $300 million Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for a senior credit facility in the aggregate amount of $300 million, which consists of a $175 million revolving credit facility (the “Revolving Credit Facility”) and a $125 million term loan (the “Term Loan”). Loans under the Credit Agreement have a maturity date of December 22, 2019. Proceeds from the loans made under the Credit Agreement were used to refinance certain outstanding debt of the Company and will be used for the Company’s general corporate purposes in the ordinary course of its business. Under the Credit Agreement, the Revolving Credit Facility and/or the Term Loan may be increased up to an additional $100 million under certain circumstances. If such circumstances are met, the Company may obtain the additional borrowings under the Revolving Credit Facility, the Term Loan, or a combination of the two. The Revolving Credit Facility has a $40 million sublimit for letters of credit. Borrowings and letters of credit can be denominated in U.S. dollars, Euros, Canadian dollars, or British pounds. Viad’s lenders under the Credit Agreement have a first perfected security interest in all of the personal property of Viad, GES, and GES Event Intelligence Services, Inc., including 65 percent of the capital stock of top-tier foreign subsidiaries.
Effective February 24, 2016, Viad executed an amendment (the “Credit Agreement Amendment”) to the Credit Agreement. The Credit Agreement Amendment modified the terms of the financial covenants and the negative covenants related to acquisitions, restricted payments, and indebtedness. The overall maximum leverage ratio and minimum fixed charge coverage ratio are 3.50 to 1.00 and 1.75 to 1.00, respectively, and will remain at those levels for the entire remaining term of the Credit Agreement. Acquisitions in substantially the same or related lines of business are permitted under the Credit Agreement Amendment, as long as the pro forma leverage ratio is less than or equal to 3.00 to 1.00. Viad can make dividends, distributions, and repurchases of its common stock up to $20 million per calendar year. Stock dividends, distributions, and repurchases above the $20 million limit are not subject to a liquidity covenant, and are permitted as long as the Company’s pro forma leverage ratio is less than or equal to 2.50 to 1.00 and no default or unmatured default, as defined in the Credit Agreement, exists. Unsecured debt is allowed as long as the Company’s pro forma leverage ratio is less than or equal to 3.00 to 1.00. Significant other covenants under the Credit Agreement that remain unchanged by the Credit Agreement Amendment include limitations on investments, sales/leases of assets, consolidations or mergers, and liens on property. As of March 31, 2016, the fixed charge coverage ratio was 2.19 to 1.00, the leverage ratio was 2.00 to 1.00, and Viad was in compliance with all covenants under the Credit Agreement.
As of March 31, 2016, Viad’s total debt and capital lease obligations were $162.7 million, consisting of outstanding borrowings under the Term Loan of $107.8 million, under the Revolving Credit Facility of $55.0 million, and capital lease obligations of $1.7 million, offset in part by unamortized debt issuance costs of $1.8 million. As of March 31, 2016, Viad had $118.7 million of capacity remaining under its Credit Facility, reflecting borrowings of $55.0 million under the Revolving Credit Facility and $1.3 million in outstanding letters of credit.
Borrowings under the Revolving Credit Facility (of which GES and GES Event Intelligence Services, Inc. are guarantors) are indexed to the prime rate or the London Interbank Offered Rate, plus appropriate spreads tied to Viad’s leverage ratio. Commitment fees and letters of credit fees are also tied to Viad’s leverage ratio. The fees on the unused portion of the Credit Facility are currently 0.35 percent annually.
As of March 31, 2016, 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 the Company’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 March 31, 2016 would be $9.9 million. These guarantees relate to leased facilities and expire through March 2021. 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.
The estimated fair value of total debt was $151.7 million and $113.9 million as of March 31, 2016 and December 31, 2015, 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.
|
Note 12. Fair Value Measurements
The fair value of an asset or liability is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value guidance requires an entity to maximize the use of quoted prices and other observable inputs and minimize the use of unobservable inputs when measuring fair value, and also establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value.
Viad measures its money market mutual funds and certain other mutual fund investments at fair value on a recurring basis using Level 1 inputs. The fair value information related to these assets is summarized in the following tables:
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
|||||||||
(in thousands) |
|
March 31, 2016 |
|
|
Quoted Prices in Active Markets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
|
|
Significant Unobserved Inputs (Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
2,118 |
|
|
$ |
2,118 |
|
|
$ |
— |
|
|
$ |
— |
|
Other mutual funds |
|
|
2,395 |
|
|
|
2,395 |
|
|
|
— |
|
|
|
— |
|
Total assets at fair value on a recurring basis |
|
$ |
4,513 |
|
|
$ |
4,513 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
|||||||||
(in thousands) |
|
December 31, 2015 |
|
|
Quoted Prices in Active Markets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
|
|
Significant Unobserved Inputs (Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
118 |
|
|
$ |
118 |
|
|
$ |
— |
|
|
$ |
— |
|
Other mutual funds |
|
|
2,192 |
|
|
|
2,192 |
|
|
|
— |
|
|
|
— |
|
Total assets at fair value on a recurring basis |
|
$ |
2,310 |
|
|
$ |
2,310 |
|
|
$ |
— |
|
|
$ |
— |
|
As of March 31, 2016 and December 31, 2015, Viad had investments in money market mutual funds of $2.1 million and $0.1 million, respectively, which are included in the condensed consolidated balance sheets under the caption “Cash and cash equivalents.” These investments are classified as available-for-sale and were recorded at fair value. There have been no realized 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 March 31, 2016 and December 31, 2015, Viad had investments in other mutual funds of $2.4 million and $2.2 million, respectively, which are included in the condensed 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 March 31, 2016 and December 31, 2015, there were unrealized gains of $0.6 million ($0.3 million after-tax), which were included in the condensed consolidated balance sheets under the caption “Accumulated other comprehensive income (loss)” (“AOCI”).
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 11 - Debt and Capital Lease Obligations.
|
Note 13. Stockholders’ Equity
The following represents a reconciliation of the carrying amounts of stockholders’ equity attributable to Viad and the noncontrolling interest for the three months ended March 31, 2016 and 2015:
(in thousands) |
|
Total Viad Stockholders’ Equity |
|
|
Noncontrolling Interest |
|
|
Total Stockholders’ Equity |
|
|||
Balance at December 31, 2015 |
|
$ |
322,581 |
|
|
$ |
12,757 |
|
|
$ |
335,338 |
|
Net loss |
|
|
(6,983 |
) |
|
|
(162 |
) |
|
|
(7,145 |
) |
Dividends on common stock ($0.10 per share) |
|
|
(2,024 |
) |
|
|
— |
|
|
|
(2,024 |
) |
Common stock purchased for treasury |
|
|
(651 |
) |
|
|
— |
|
|
|
(651 |
) |
Employee benefit plans |
|
|
1,449 |
|
|
|
— |
|
|
|
1,449 |
|
Unrealized foreign currency translation adjustment |
|
|
8,042 |
|
|
|
— |
|
|
|
8,042 |
|
Tax benefits from share-based compensation |
|
|
28 |
|
|
|
— |
|
|
|
28 |
|
Other changes to AOCI |
|
|
72 |
|
|
|
— |
|
|
|
72 |
|
Other |
|
|
(24 |
) |
|
|
— |
|
|
|
(24 |
) |
Balance at March 31, 2016 |
|
$ |
322,490 |
|
|
$ |
12,595 |
|
|
$ |
335,085 |
|
(in thousands) |
|
Total Viad Stockholders’ Equity |
|
|
Noncontrolling Interest |
|
|
Total Stockholders’ Equity |
|
|||
Balance at December 31, 2014 |
|
$ |
335,387 |
|
|
$ |
12,315 |
|
|
$ |
347,702 |
|
Net income |
|
|
(2,056 |
) |
|
|
(64 |
) |
|
|
(2,120 |
) |
Dividends on common stock ($0.10 per share) |
|
|
(2,000 |
) |
|
|
— |
|
|
|
(2,000 |
) |
Common stock purchased for treasury |
|
|
(4,702 |
) |
|
|
— |
|
|
|
(4,702 |
) |
Employee benefit plans |
|
|
1,786 |
|
|
|
— |
|
|
|
1,786 |
|
Unrealized foreign currency translation adjustment |
|
|
(17,579 |
) |
|
|
— |
|
|
|
(17,579 |
) |
Tax benefits from share-based compensation |
|
|
283 |
|
|
|
— |
|
|
|
283 |
|
Other changes to AOCI |
|
|
241 |
|
|
|
— |
|
|
|
241 |
|
Other |
|
|
(97 |
) |
|
|
— |
|
|
|
(97 |
) |
Balance at March 31, 2015 |
|
$ |
311,263 |
|
|
$ |
12,251 |
|
|
$ |
323,514 |
|
Changes in AOCI by component are as follows:
(in thousands) |
|
Unrealized Gains on Investments |
|
|
Cumulative Foreign Currency Translation Adjustments |
|
|
Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
|
Accumulated Other Comprehensive Income (Loss) |
|
||||
Balance at December 31, 2015 |
|
$ |
346 |
|
|
$ |
(23,257 |
) |
|
$ |
(11,265 |
) |
|
$ |
(34,176 |
) |
Other comprehensive income before reclassifications |
|
|
11 |
|
|
|
8,042 |
|
|
|
— |
|
|
|
8,053 |
|
Amounts reclassified from AOCI, net of tax |
|
|
(12 |
) |
|
|
— |
|
|
|
73 |
|
|
|
61 |
|
Net other comprehensive income (loss) |
|
|
(1 |
) |
|
|
8,042 |
|
|
|
73 |
|
|
|
8,114 |
|
Balance at March 31, 2016 |
|
$ |
345 |
|
|
$ |
(15,215 |
) |
|
$ |
(11,192 |
) |
|
$ |
(26,062 |
) |
The following table presents information about reclassification adjustments out of AOCI:
|
|
Three Months Ended March 31, |
|
|
Affected Line Item in the Statement Where Net Income is Presented |
|||||
(in thousands) |
|
2016 |
|
|
2015 |
|
|
|
||
Unrealized gains on investments |
|
$ |
(20 |
) |
|
$ |
(27 |
) |
|
Interest income |
Tax effect |
|
|
8 |
|
|
|
10 |
|
|
Income taxes |
|
|
$ |
(12 |
) |
|
$ |
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized net actuarial loss(1) |
|
$ |
255 |
|
|
$ |
75 |
|
|
|
Amortization of prior service credit(1) |
|
|
(137 |
) |
|
|
(139 |
) |
|
|
Tax effect |
|
|
(45 |
) |
|
|
(50 |
) |
|
Income taxes |
|
|
$ |
73 |
|
|
$ |
(114 |
) |
|
|
(1) |
Amount included in pension expense. Refer to Note 16 - Pension and Postretirement Benefits. |
|
Note 15. Income Taxes
The effective tax rates for the three months ended March 31, 2016 and 2015 were 33.2 percent and 62.4 percent, respectively.
The income tax provisions were computed based on the Company’s estimated effective tax rate and forecasted income by jurisdiction expected to be applicable for the full fiscal year, including the impact of any unusual or infrequent items. The effective tax rate for the three months ended March 31, 2016 was less than the federal statutory rate of 35.0 percent primarily due to foreign income taxed at lower rates. The effective tax rate for the three months ended March 31, 2015 was greater than the federal statutory rate primarily due to the recording of a non-cash tax benefit relating to certain foreign intangible deferred tax assets that was recorded during the quarter.
The Company uses significant judgment in forming conclusions regarding the recoverability of its deferred tax assets and evaluates all available positive and negative evidence to determine if it is more-likely-than-not that the deferred tax assets will be realized. To the extent recovery does not appear likely, a valuation allowance must be recorded. These deferred tax assets reflect the expected future tax benefits to be realized upon reversal of deductible temporary differences and the utilization of net operating loss and tax credit carryforwards.
The Company also evaluates its ability to utilize its foreign tax credits, given its recent utilization history and projected future domestic income. As of December 31, 2015, $9.2 million of the $19.5 million in tax credit carryforwards were related to foreign tax credits, which are subject to a 10-year carryforward period and begin to expire in 2020.
While management believes that the deferred tax assets, net of existing valuation allowances will be utilized in future periods, there are inherent uncertainties regarding the ultimate realization of these assets. It is possible that the relative weight of positive and negative evidence regarding the realization of deferred tax assets may change, which could result in a material increase or decrease in the company’s valuation allowance. Such a change could result in a material increase or decrease to income tax expense in the period the assessment was made.
Viad exercises judgment in determining its income tax provision when the ultimate tax determination is uncertain. Viad classifies liabilities associated with uncertain tax positions as non-current liabilities in its consolidated balance sheets unless they are expected to be paid within the next year.
Viad had liabilities associated with uncertain tax positions (including interest and penalties) for continuing operations of $0.3 million as of both March 31, 2016 and December 31, 2015. In addition, Viad had liabilities for uncertain tax positions (including interest and penalties) for discontinued operations of $1.1 million as of both March 31, 2016 and December 31, 2015. The total liability associated with uncertain tax positions for March 31, 2016 and December 31, 2015 was $1.4 million. Future tax resolutions or settlements that may occur related to these uncertain tax positions would be recorded through either continuing or discontinued operations (net of tax, if applicable). The Company does not expect a material amount of uncertain tax positions to be resolved or settled within the next twelve months.
|
Note 16. Pension and Postretirement Benefits
The net periodic benefit cost of Viad’s pension and postretirement plans for the three months ended March 31, 2016 and 2015 included the following components:
|
|
Domestic Plans |
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Pension Plans |
|
|
Postretirement Benefit Plans |
|
|
Foreign Pension Plans |
|
|||||||||||||||
(in thousands) |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||||
Service cost |
|
$ |
10 |
|
|
$ |
25 |
|
|
$ |
36 |
|
|
$ |
43 |
|
|
$ |
119 |
|
|
$ |
128 |
|
Interest cost |
|
|
258 |
|
|
|
251 |
|
|
|
151 |
|
|
|
177 |
|
|
|
120 |
|
|
|
127 |
|
Expected return on plan assets |
|
|
(93 |
) |
|
|
(111 |
) |
|
|
— |
|
|
|
— |
|
|
|
(137 |
) |
|
|
(149 |
) |
Amortization of prior service credit |
|
|
— |
|
|
|
— |
|
|
|
(126 |
) |
|
|
(91 |
) |
|
|
— |
|
|
|
— |
|
Recognized net actuarial loss |
|
|
115 |
|
|
|
125 |
|
|
|
94 |
|
|
|
139 |
|
|
|
1 |
|
|
|
2 |
|
Net periodic benefit cost |
|
$ |
290 |
|
|
$ |
290 |
|
|
$ |
155 |
|
|
$ |
268 |
|
|
$ |
103 |
|
|
$ |
108 |
|
Viad expects to contribute $0.9 million to its funded pension plans, $0.8 million to its unfunded pension plans, and $1.1 million to its postretirement benefit plans in 2016. During the three months ended March 31, 2016, Viad contributed $0.2 million to its funded pension plans, $0.2 million to its unfunded pension plans, and $0.2 million to its postretirement benefit plans.
|
Note 17. Restructuring Charges
The Company commenced certain restructuring actions designed to reduce the Company’s cost structure primarily within the Marketing & Events U.S. Segment, and to a lesser extent, in the Marketing & Events International Segment. As a result, it has recorded restructuring charges related to the consolidation and downsizing of facilities. Additionally, the Company has recorded restructuring charges in connection with certain reorganization activities. These charges consist of severance and related benefits due to headcount reductions.
Changes to the restructuring liability by major restructuring activity are as follows:
|
|
Marketing & Events Group Consolidation |
|
|
Other Restructurings |
|
|
|
|
|
||||||
(in thousands) |
|
Severance & Employee Benefits |
|
|
Facilities |
|
|
Severance & Employee Benefits |
|
|
Total |
|
||||
Balance at December 31, 2015 |
|
$ |
751 |
|
|
$ |
1,291 |
|
|
$ |
234 |
|
|
$ |
2,276 |
|
Restructuring charges |
|
|
499 |
|
|
|
9 |
|
|
|
484 |
|
|
|
992 |
|
Cash payments |
|
|
(775 |
) |
|
|
(165 |
) |
|
|
(374 |
) |
|
|
(1,314 |
) |
Adjustment to liability |
|
|
— |
|
|
|
— |
|
|
|
242 |
|
|
|
242 |
|
Balance at March 31, 2016 |
|
$ |
475 |
|
|
$ |
1,135 |
|
|
$ |
586 |
|
|
$ |
2,196 |
|
As of March 31, 2016, the liabilities related to severance and employee benefits are expected to be paid by the end of 2018. Additionally, the liability of $1.3 million related to future lease payments will be paid over the remaining lease terms for the Marketing & Events Group. Refer to Note 19 - Segment Information, for information regarding restructuring charges by segment.
|
Note 18. 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 March 31, 2016 with respect to these matters is not ascertainable, Viad believes that any resulting liability, after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on Viad’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 and insurance coverage, will not have a material effect on the Company’s financial position or results of operations. As of March 31, 2016, Viad had recorded environmental remediation liabilities of $4.4 million related to previously sold operations.
As of March 31, 2016, Viad had certain obligations under guarantees to third parties on behalf of its subsidiaries. These guarantees are not subject to liability recognition in the condensed 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 March 31, 2016 would be $9.9 million. These guarantees relate to leased facilities expiring through March 2021. 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.
A significant portion of Viad’s employees are unionized and the Company is a party to approximately 100 collective-bargaining agreements, with approximately one-third requiring renegotiation each year. If the Company was unable to reach an agreement with a union during the collective-bargaining process, the union may call for a strike or work stoppage, which may, under certain circumstances, adversely impact the Company’s businesses and results of operations. Viad believes that relations with its employees are satisfactory and that collective-bargaining agreements expiring in 2016 will be renegotiated in the ordinary course of business without having a material adverse effect on Viad’s operations. The Company entered into showsite and warehouse agreements with the Chicago Teamsters Local 727, effective January 1, 2014, and those agreements contain provisions that allow the parties to re-open negotiation of the agreements on pension-related issues. The Company is in informal discussions regarding those issues with all relevant parties and is working diligently to resolve those issues in a manner that will be reasonable and equitable to employees, customers, and shareholders. Although the Company’s labor relations are currently stable, disruptions pending the outcome of the Chicago Teamsters Local 727 negotiations could occur, as they could with any collective-bargaining agreement negotiation, with the possibility of an adverse impact on the operating results of the Marketing & Events Group.
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 March 31, 2016, the amount of additional funding, if any, that Viad would be required to make related to multi-employer pension plans is not ascertainable.
Viad is self-insured up to certain limits for workers’ compensation, employee health benefits, automobile, product and general liability, and property loss claims. The aggregate amount of insurance liabilities (up to the Company’s retention limit) related to Viad’s continuing operations was $19.0 million as of March 31, 2016 which includes $12.5 million related to workers’ compensation liabilities and $6.5 million related to general/auto liability claims. Viad has also retained and provided for certain insurance liabilities in conjunction with previously sold businesses of $4.1 million as of March 31, 2016, related to workers’ compensation liabilities. Provisions for losses for claims incurred, including estimated claims incurred but not yet reported, are made based on Viad’s historical experience, claims frequency, and other factors. A change in the assumptions used could result in an adjustment to recorded liabilities. Viad has purchased insurance for amounts in excess of the self-insured levels, which generally range from $0.2 million to $0.5 million on a per claim basis. Viad does not maintain a self-insured retention pool fund as claims are paid from current cash resources at the time of settlement. Viad’s net cash payments in connection with these insurance liabilities were $1.0 million and $1.1 million for the three months ended March 31, 2016 and 2015, respectively.
In addition, as of March 31, 2016, Viad recorded insurance liabilities of $6.0 million related to continuing operations, which represents the amount for which Viad remains the primary obligor after self-insured insurance limits, without taking into consideration the above-referenced insurance coverage. Of this total, $2.5 million related to workers’ compensation liabilities and $3.5 million related to general/auto liability claims. The Company has recorded those amounts in other deferred items and liabilities in Viad’s condensed consolidated balance sheets with a corresponding receivable in other investments.
|
Note 19. Segment Information
Viad’s reportable segments consist of the Marketing & Events U.S. Segment, the Marketing & Events International Segment (together the “Marketing & Events Group”) and the Travel & Recreation Group.
Viad measures profit and performance of its operations on the basis of segment operating income which excludes restructuring charges and recoveries and impairment charges. 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.
Viad’s reportable segments, with reconciliations to consolidated totals, are as follows:
|
|
Three Months Ended March 31, |
|
|||||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Revenue: |
|
|
|
|
|
|
|
|
Marketing & Events Group: |
|
|
|
|
|
|
|
|
U.S. Segment |
|
$ |
183,737 |
|
|
$ |
192,943 |
|
International Segment |
|
|
54,081 |
|
|
|
65,236 |
|
Intersegment eliminations |
|
|
(1,682 |
) |
|
|
(1,251 |
) |
Total Marketing & Events Group |
|
|
236,136 |
|
|
|
256,928 |
|
Travel & Recreation Group |
|
|
5,226 |
|
|
|
7,468 |
|
Total revenue |
|
$ |
241,362 |
|
|
$ |
264,396 |
|
Segment operating income (loss): |
|
|
|
|
|
|
|
|
Marketing & Events Group: |
|
|
|
|
|
|
|
|
U.S. Segment |
|
$ |
862 |
|
|
$ |
2,637 |
|
International Segment |
|
|
(569 |
) |
|
|
1,047 |
|
Total Marketing & Events Group |
|
|
293 |
|
|
|
3,684 |
|
Travel & Recreation Group |
|
|
(6,573 |
) |
|
|
(4,809 |
) |
Segment operating loss |
|
|
(6,280 |
) |
|
|
(1,125 |
) |
Corporate activities |
|
|
(1,911 |
) |
|
|
(2,810 |
) |
Operating loss |
|
|
(8,191 |
) |
|
|
(3,935 |
) |
Interest income |
|
|
56 |
|
|
|
63 |
|
Interest expense |
|
|
(1,284 |
) |
|
|
(1,151 |
) |
Restructuring (charges) recoveries: |
|
|
|
|
|
|
|
|
Marketing & Events U.S. Segment |
|
|
(293 |
) |
|
|
(88 |
) |
Marketing & Events International Segment |
|
|
(215 |
) |
|
|
(138 |
) |
Travel & Recreation Group |
|
|
(92 |
) |
|
|
6 |
|
Corporate |
|
|
(392 |
) |
|
|
4 |
|
Loss from continuing operations before income taxes |
|
$ |
(10,411 |
) |
|
$ |
(5,239 |
) |
|
Note 20. Discontinued Operations
For the three months ended March 31, 2016 and 2015, Viad recorded losses from discontinued operations of $0.2 million and $0.1 million, respectively, primarily due to legal fees related to previously sold operations.
|
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”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or Securities and Exchange Commission (“SEC”) rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with Viad’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 11, 2016.
The condensed consolidated financial statements include the accounts of Viad and its subsidiaries. All significant intercompany account balances and transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Estimates and assumptions are used in accounting for, among other things, the fair value of Viad’s reporting units used to perform annual impairment testing of recorded goodwill, allowances for uncollectible accounts receivable, provisions for income taxes, including uncertain tax positions, valuation allowances related to deferred tax assets, liabilities for losses related to self-insured liability claims, liabilities for losses related to environmental remediation obligations, sublease income associated with restructuring liabilities, assumptions used to measure pension and postretirement benefit costs and obligations, assumptions used to determine share-based compensation costs under the fair value method, and allocation of purchase price of acquired businesses. Actual results could differ from these and other estimates.
Nature of Business
Viad is an international experiential services company with operations in the United States, Canada, the United Kingdom, continental Europe, and the United Arab Emirates. Viad is committed to providing best in class experiences to its clients, customers, and guests by offering products and services designed to meet their current and future needs. Viad operates through three reportable business segments: the Marketing & Events U.S. Segment (the “U.S. Segment”), the Marketing & Events International Segment (the “International Segment”) (collectively, the “Marketing & Events Group”), and the Travel & Recreation Group.
Marketing & Events Group
The Marketing & Events Group, comprised of Global Experience Specialists, Inc. and affiliates (“GES”), is a global, full-service provider for live events that produces exhibitions, congresses and conferences, corporate events, consumer events, exhibits, and entertainment experiences. GES provides a comprehensive range of live event services, including official show services, audio-visual services, cutting-edge creative and design, strategic marketing and measurement services, registration, and event accommodations – all with a global reach.
GES’ clients include event organizers and corporate brand marketers. 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.
Travel & Recreation Group
The Travel & Recreation Group offers guests distinctive and world renowned experiences in iconic natural and cultural destinations in North America through its collection of unique hotels, lodges, recreational attractions, and transportation services. The Travel & Recreation Group is composed of four lines of business: (i) Hospitality; (ii) Attractions; (iii) Package Tours; and (iv) Transportation. These four lines of business work together, driving economies of scope and meaningful scale in and around the iconic destinations of Banff, Jasper, and Waterton Lakes National Parks in Canada, and Glacier, Denali, and Kenai Fjords National Parks in the United States. The Travel & Recreation Group is composed of Brewster Inc. (“Brewster”), Glacier Park, Inc. (“Glacier Park”), and Alaskan Park Properties, Inc. (“Alaska Denali Travel”).
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 2014-09, Revenue from Contracts with Customers (Topic 606) ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) |
|
The standard establishes a new recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company may adopt either retrospectively to each prior period presented with the option to elect certain practical expedients or with the cumulative effect recognized at the date of initial application and providing certain disclosures.
ASU 2016-08 improves the operability and understandability of the implementation guidance on principal versus agent considerations. |
|
January 1, 2018 |
|
The Company is currently evaluating the potential impact of the adoption of this new guidance on its financial position or results of operations, including the method of adoption to be used. |
ASU 2015-11, Inventory (Topic 330) - Simplifying the Measurement of Inventory |
|
The amendment applies to inventory measures using first-in, first-out or average cost and will require entities to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the normal course of business, minus the cost of completion, disposal and transportation. Replacement cost and net realizable value less a normal profit margin will no longer be considered. |
|
January 1, 2017 |
|
The adoption of this guidance is not expected to have a significant effect on Viad's consolidated financial statements. |
ASU 2016-02, Leases (Topic 842) |
|
The amendment requires lessees to recognize on their balance sheet a right-of-use asset and a lease liability for leases with lease terms greater than one year. The amendment requires additional disclosures about leasing arrangements, and requires a modified retrospective approach to adoption. Early adoption is permitted. |
|
January 1, 2019 |
|
The Company is currently evaluating the potential impact of the adoption of this new guidance on its financial position or results of operations. |
ASU 2016-09, Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting |
|
The amendment identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. Early adoption is permitted. |
|
January 1, 2017 |
|
The Company is currently evaluating the potential impact of the adoption of this new guidance on its financial position or results of operations. |
|
|
|
|
|
|
|
Standards Recently Adopted |
||||||
ASU 2014-12, Compensation - Stock Compensation (Topic 718) - Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period |
|
The amendment requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. |
|
January 1, 2016 |
|
The Company adopted this guidance prospectively to all awards granted after the effective date. The adoption of this guidance did not have a material impact on the consolidated financial statements. |
ASU 2015-03, Interest - Imputation of Interest Simplifying the Presentation of Debt Issuance Costs ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements |
|
The amendments require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. For line-of-credit arrangements, an entity may defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. |
|
January 1, 2016 |
|
The adoption of this guidance resulted in the reclassification of unamortized debt issuance costs of $1.6 million from other long-term assets to a reduction in long-term debt on the December 31, 2015 consolidated balance sheet. |
ASU 2015-16, Business Combinations (Topic 805) - Simplifying the Accounting for Measurement-Period Adjustments |
|
The amendment requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. |
|
January 1, 2016 |
|
The adoption of this guidance did not have a material impact on the consolidated financial statements. |
|
The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date. Due to the recent timing of the acquisition, the purchase price allocation is not yet finalized and is subject to change within the measurement period (up to one year from the acquisition date) as the assessment of property and equipment, intangible assets, and working capital is finalized.
(in thousands) |
|
|
|
|
|
|
|
|
Purchase price paid as: |
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
$ |
14,962 |
|
|
|
|
|
|
|
|
|
|
Fair value of net assets acquired: |
|
|
|
|
|
|
|
|
Inventories |
|
$ |
246 |
|
|
|
|
|
Prepaid expenses |
|
|
2 |
|
|
|
|
|
Property and equipment |
|
|
4,133 |
|
|
|
|
|
Intangible assets |
|
|
9,244 |
|
|
|
|
|
Total assets acquired |
|
|
13,625 |
|
|
|
|
|
Customer deposits |
|
|
15 |
|
|
|
|
|
Total liabilities assumed |
|
|
15 |
|
|
|
|
|
Total fair value of net assets acquired |
|
|
|
|
|
|
13,610 |
|
Excess purchase price over fair value of net assets acquired (“goodwill”) |
|
|
|
|
|
$ |
1,352 |
|
The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date. Due to the recent timing of the acquisition, the purchase price allocation is not yet finalized and is subject to change within the measurement period (up to one year from the acquisition date) as the assessment of property and equipment, intangible assets, and working capital is finalized.
(in thousands) |
|
|
|
|
|
|
|
|
Purchase price paid as: |
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
$ |
45,000 |
|
Estimated working capital adjustment |
|
|
|
|
|
|
54 |
|
Cash acquired |
|
|
|
|
|
|
(2,196 |
) |
Purchase price, net of cash acquired |
|
|
|
|
|
|
42,858 |
|
|
|
|
|
|
|
|
|
|
Fair value of net assets acquired: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
$ |
8 |
|
|
|
|
|
Inventories |
|
|
921 |
|
|
|
|
|
Prepaid expenses |
|
|
82 |
|
|
|
|
|
Property and equipment |
|
|
43,470 |
|
|
|
|
|
Intangible assets |
|
|
980 |
|
|
|
|
|
Total assets acquired |
|
|
45,461 |
|
|
|
|
|
Accounts payable |
|
|
201 |
|
|
|
|
|
Accrued liabilities |
|
|
450 |
|
|
|
|
|
Customer deposits |
|
|
1,952 |
|
|
|
|
|
Total liabilities assumed |
|
|
2,603 |
|
|
|
|
|
Total fair value of net assets acquired |
|
|
|
|
|
|
42,858 |
|
Excess purchase price over fair value of net assets acquired (“goodwill”) |
|
|
|
|
|
$ |
— |
|
The following table summarizes the unaudited pro forma results of operations attributable to Viad, assuming the above acquisitions had each been completed on January 1, 2015:
|
|
Three Months Ended March 31, |
|
|||||
(in thousands, except per share data) |
|
2016 |
|
|
2015 |
|
||
Revenue |
|
$ |
241,441 |
|
|
$ |
264,528 |
|
Depreciation and amortization |
|
$ |
8,898 |
|
|
$ |
9,314 |
|
Loss from continuing operations |
|
$ |
(8,352 |
) |
|
$ |
(4,709 |
) |
Net loss attributable to Viad |
|
$ |
(8,376 |
) |
|
$ |
(4,793 |
) |
Diluted loss per share |
|
$ |
(0.41 |
) |
|
$ |
(0.24 |
) |
Basic loss per share |
|
$ |
(0.41 |
) |
|
$ |
(0.24 |
) |
|
The components of inventories consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Raw materials |
|
$ |
16,047 |
|
|
$ |
14,383 |
|
Work in process |
|
|
22,468 |
|
|
|
13,146 |
|
Inventories |
|
$ |
38,515 |
|
|
$ |
27,529 |
|
|
Other current assets consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Income tax receivable |
|
$ |
6,699 |
|
|
$ |
4,643 |
|
Prepaid vendor payments |
|
|
5,894 |
|
|
|
2,140 |
|
Prepaid insurance |
|
|
1,985 |
|
|
|
2,024 |
|
Prepaid software maintenance |
|
|
1,640 |
|
|
|
2,026 |
|
Prepaid rent |
|
|
1,639 |
|
|
|
1,406 |
|
Prepaid taxes |
|
|
1,142 |
|
|
|
1,261 |
|
Prepaid other |
|
|
4,664 |
|
|
|
2,777 |
|
Other |
|
|
1,486 |
|
|
|
1,034 |
|
Other current assets |
|
$ |
25,149 |
|
|
$ |
17,311 |
|
|
Property and equipment consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Land and land interests |
|
$ |
29,525 |
|
|
$ |
29,032 |
|
Buildings and leasehold improvements |
|
|
189,251 |
|
|
|
135,381 |
|
Equipment and other |
|
|
279,620 |
|
|
|
270,957 |
|
Gross property and equipment |
|
|
498,396 |
|
|
|
435,370 |
|
Accumulated depreciation |
|
|
(255,015 |
) |
|
|
(246,131 |
) |
Property and equipment, net |
|
$ |
243,381 |
|
|
$ |
189,239 |
|
|
Other investments and assets consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 (1) |
|
||
Cash surrender value of life insurance |
|
$ |
22,028 |
|
|
$ |
21,970 |
|
Self-insured liability receivable |
|
|
5,979 |
|
|
|
5,979 |
|
Workers’ compensation insurance security deposits |
|
|
4,250 |
|
|
|
4,250 |
|
Other mutual funds |
|
|
2,395 |
|
|
|
2,192 |
|
Other |
|
|
3,752 |
|
|
|
3,240 |
|
Other investments and assets |
|
$ |
38,404 |
|
|
$ |
37,631 |
|
(1) |
In accordance with ASU 2015-03, unamortized debt issuance costs are reflected as a direct deduction from the carrying amount of the related debt. The Company adopted the new guidance retrospectively to all prior periods presented in the condensed consolidated financial statements. As a result, $1.6 million of unamortized debt issuance costs were reclassified from other investments and assets to a reduction of long-term debt on the December 31, 2015 condensed consolidated balance sheet. |
|
The changes in the carrying amount of goodwill were as follows:
(in thousands) |
|
Marketing & Events U.S. Segment |
|
|
Marketing & Events International Segment |
|
|
Travel & Recreation Group |
|
|
Total |
|
||||
Balance at December 31, 2015 |
|
$ |
112,300 |
|
|
$ |
38,635 |
|
|
$ |
34,288 |
|
|
$ |
185,223 |
|
Business acquisitions |
|
|
— |
|
|
|
— |
|
|
|
1,352 |
|
|
|
1,352 |
|
Foreign currency translation adjustments |
|
|
— |
|
|
|
211 |
|
|
|
2,480 |
|
|
|
2,691 |
|
Balance at March 31, 2016 |
|
$ |
112,300 |
|
|
$ |
38,846 |
|
|
$ |
38,120 |
|
|
$ |
189,266 |
|
Intangible assets consisted of the following:
|
|
March 31, 2016 |
|
|
December 31, 2015 |
|
||||||||||||||||||
(in thousands) |
|
Gross Carrying Value |
|
|
Accumulated Amortization |
|
|
Net Carrying Value |
|
|
Gross Carrying Value |
|
|
Accumulated Amortization |
|
|
Net Carrying Value |
|
||||||
Amortized intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer contracts and relationships |
|
$ |
40,143 |
|
|
$ |
(9,399 |
) |
|
$ |
30,744 |
|
|
$ |
38,342 |
|
|
$ |
(7,814 |
) |
|
$ |
30,528 |
|
Operating contracts and licenses |
|
|
9,628 |
|
|
|
(309 |
) |
|
|
9,319 |
|
|
|
665 |
|
|
|
(272 |
) |
|
|
393 |
|
Other |
|
|
4,883 |
|
|
|
(2,843 |
) |
|
|
2,040 |
|
|
|
3,736 |
|
|
|
(1,795 |
) |
|
|
1,941 |
|
Total amortized intangible assets |
|
|
54,654 |
|
|
|
(12,551 |
) |
|
|
42,103 |
|
|
|
42,743 |
|
|
|
(9,881 |
) |
|
|
32,862 |
|
Unamortized intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business licenses |
|
|
460 |
|
|
|
— |
|
|
|
460 |
|
|
|
460 |
|
|
|
— |
|
|
|
460 |
|
Total |
|
$ |
55,114 |
|
|
$ |
(12,551 |
) |
|
$ |
42,563 |
|
|
$ |
43,203 |
|
|
$ |
(9,881 |
) |
|
$ |
33,322 |
|
The estimated future amortization expense related to amortized intangible assets held at March 31, 2016 is as follows:
(in thousands) |
|
|
|
|
Year ending December 31, |
|
|
|
|
Remainder of 2016 |
|
$ |
5,443 |
|
2017 |
|
|
6,159 |
|
2018 |
|
|
5,174 |
|
2019 |
|
|
4,794 |
|
2020 |
|
|
4,240 |
|
Thereafter |
|
|
16,293 |
|
Total |
|
$ |
42,103 |
|
|
Note 9. Other Current Liabilities
Other current liabilities consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Continuing operations: |
|
|
|
|
|
|
|
|
Self-insured liability accrual |
|
$ |
5,835 |
|
|
$ |
6,891 |
|
Accrued employee benefit costs |
|
|
5,516 |
|
|
|
3,892 |
|
Accrued sales and use taxes |
|
|
4,545 |
|
|
|
4,772 |
|
Accrued dividends |
|
|
2,108 |
|
|
|
2,103 |
|
Current portion of pension liability |
|
|
1,767 |
|
|
|
1,768 |
|
Accrued restructuring |
|
|
1,630 |
|
|
|
1,757 |
|
Accrued rebates |
|
|
1,162 |
|
|
|
752 |
|
Accrued professional fees |
|
|
1,027 |
|
|
|
751 |
|
Deferred rent |
|
|
965 |
|
|
|
548 |
|
Other taxes |
|
|
4,256 |
|
|
|
1,465 |
|
Other |
|
|
2,629 |
|
|
|
3,523 |
|
Total continuing operations |
|
|
31,440 |
|
|
|
28,222 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Environmental remediation liabilities |
|
|
302 |
|
|
|
295 |
|
Self-insured liability accrual |
|
|
141 |
|
|
|
200 |
|
Other |
|
|
513 |
|
|
|
521 |
|
Total discontinued operations |
|
|
956 |
|
|
|
1,016 |
|
Total other current liabilities |
|
$ |
32,396 |
|
|
$ |
29,238 |
|
|
Other deferred items and liabilities consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Continuing operations: |
|
|
|
|
|
|
|
|
Self-insured liability |
|
$ |
13,179 |
|
|
$ |
13,662 |
|
Accrued compensation |
|
|
6,018 |
|
|
|
7,612 |
|
Self-insured excess liability |
|
|
5,979 |
|
|
|
5,979 |
|
Deferred rent |
|
|
5,903 |
|
|
|
5,607 |
|
Foreign deferred tax liability |
|
|
1,394 |
|
|
|
2,384 |
|
Accrued restructuring |
|
|
566 |
|
|
|
519 |
|
Other |
|
|
1,149 |
|
|
|
1,262 |
|
Total continuing operations |
|
|
34,188 |
|
|
|
37,025 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Environmental remediation liabilities |
|
|
4,092 |
|
|
|
4,177 |
|
Self-insured liability |
|
|
3,915 |
|
|
|
3,986 |
|
Accrued income taxes |
|
|
1,160 |
|
|
|
1,151 |
|
Other |
|
|
994 |
|
|
|
997 |
|
Total discontinued operations |
|
|
10,161 |
|
|
|
10,311 |
|
Total other deferred items and liabilities |
|
$ |
44,349 |
|
|
$ |
47,336 |
|
|
The components of long-term debt and capital lease obligations consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Revolving credit facility and term loan 2.5% and 2.4% weighted-average interest rate at March 31, 2016 and December 31, 2015, respectively, due through 2019 (1) |
|
$ |
162,813 |
|
|
$ |
127,500 |
|
Less unamortized debt issuance costs (2) |
|
|
(1,788 |
) |
|
|
(1,572 |
) |
Total debt |
|
|
161,025 |
|
|
|
125,928 |
|
Capital lease obligations, 6.1% and 6.1% weighted-average interest rate at March 31, 2016 and December 31, 2015, respectively, due through 2018 |
|
|
1,672 |
|
|
|
1,475 |
|
Total debt and capital lease obligations |
|
|
162,697 |
|
|
|
127,403 |
|
Current portion |
|
|
(74,640 |
) |
|
|
(34,554 |
) |
Long-term debt and capital lease obligations |
|
$ |
88,057 |
|
|
$ |
92,849 |
|
(1) |
Represents the weighted-average interest rate in effect at the respective periods for the revolving credit facility and term loan borrowings, including any applicable margin. The interest rates do not include amortization of debt issuance costs or commitment fees. |
(2) |
In accordance with ASU 2015-03, unamortized debt issuance costs are reflected as a direct deduction from the carrying amount of the related debt. The Company applied the new guidance retrospectively to all prior periods presented in the condensed consolidated financial statements. As a result, $1.6 million of unamortized debt issuance costs were reclassified from other investments and assets to a reduction in long-term debt on the December 31, 2015 condensed consolidated balance sheet. |
|
The fair value information related to these assets is summarized in the following tables:
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
|||||||||
(in thousands) |
|
March 31, 2016 |
|
|
Quoted Prices in Active Markets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
|
|
Significant Unobserved Inputs (Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
2,118 |
|
|
$ |
2,118 |
|
|
$ |
— |
|
|
$ |
— |
|
Other mutual funds |
|
|
2,395 |
|
|
|
2,395 |
|
|
|
— |
|
|
|
— |
|
Total assets at fair value on a recurring basis |
|
$ |
4,513 |
|
|
$ |
4,513 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
|||||||||
(in thousands) |
|
December 31, 2015 |
|
|
Quoted Prices in Active Markets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
|
|
Significant Unobserved Inputs (Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
118 |
|
|
$ |
118 |
|
|
$ |
— |
|
|
$ |
— |
|
Other mutual funds |
|
|
2,192 |
|
|
|
2,192 |
|
|
|
— |
|
|
|
— |
|
Total assets at fair value on a recurring basis |
|
$ |
2,310 |
|
|
$ |
2,310 |
|
|
$ |
— |
|
|
$ |
— |
|
|
The following represents a reconciliation of the carrying amounts of stockholders’ equity attributable to Viad and the noncontrolling interest for the three months ended March 31, 2016 and 2015:
(in thousands) |
|
Total Viad Stockholders’ Equity |
|
|
Noncontrolling Interest |
|
|
Total Stockholders’ Equity |
|
|||
Balance at December 31, 2015 |
|
$ |
322,581 |
|
|
$ |
12,757 |
|
|
$ |
335,338 |
|
Net loss |
|
|
(6,983 |
) |
|
|
(162 |
) |
|
|
(7,145 |
) |
Dividends on common stock ($0.10 per share) |
|
|
(2,024 |
) |
|
|
— |
|
|
|
(2,024 |
) |
Common stock purchased for treasury |
|
|
(651 |
) |
|
|
— |
|
|
|
(651 |
) |
Employee benefit plans |
|
|
1,449 |
|
|
|
— |
|
|
|
1,449 |
|
Unrealized foreign currency translation adjustment |
|
|
8,042 |
|
|
|
— |
|
|
|
8,042 |
|
Tax benefits from share-based compensation |
|
|
28 |
|
|
|
— |
|
|
|
28 |
|
Other changes to AOCI |
|
|
72 |
|
|
|
— |
|
|
|
72 |
|
Other |
|
|
(24 |
) |
|
|
— |
|
|
|
(24 |
) |
Balance at March 31, 2016 |
|
$ |
322,490 |
|
|
$ |
12,595 |
|
|
$ |
335,085 |
|
(in thousands) |
|
Total Viad Stockholders’ Equity |
|
|
Noncontrolling Interest |
|
|
Total Stockholders’ Equity |
|
|||
Balance at December 31, 2014 |
|
$ |
335,387 |
|
|
$ |
12,315 |
|
|
$ |
347,702 |
|
Net income |
|
|
(2,056 |
) |
|
|
(64 |
) |
|
|
(2,120 |
) |
Dividends on common stock ($0.10 per share) |
|
|
(2,000 |
) |
|
|
— |
|
|
|
(2,000 |
) |
Common stock purchased for treasury |
|
|
(4,702 |
) |
|
|
— |
|
|
|
(4,702 |
) |
Employee benefit plans |
|
|
1,786 |
|
|
|
— |
|
|
|
1,786 |
|
Unrealized foreign currency translation adjustment |
|
|
(17,579 |
) |
|
|
— |
|
|
|
(17,579 |
) |
Tax benefits from share-based compensation |
|
|
283 |
|
|
|
— |
|
|
|
283 |
|
Other changes to AOCI |
|
|
241 |
|
|
|
— |
|
|
|
241 |
|
Other |
|
|
(97 |
) |
|
|
— |
|
|
|
(97 |
) |
Balance at March 31, 2015 |
|
$ |
311,263 |
|
|
$ |
12,251 |
|
|
$ |
323,514 |
|
Changes in AOCI by component are as follows:
(in thousands) |
|
Unrealized Gains on Investments |
|
|
Cumulative Foreign Currency Translation Adjustments |
|
|
Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
|
Accumulated Other Comprehensive Income (Loss) |
|
||||
Balance at December 31, 2015 |
|
$ |
346 |
|
|
$ |
(23,257 |
) |
|
$ |
(11,265 |
) |
|
$ |
(34,176 |
) |
Other comprehensive income before reclassifications |
|
|
11 |
|
|
|
8,042 |
|
|
|
— |
|
|
|
8,053 |
|
Amounts reclassified from AOCI, net of tax |
|
|
(12 |
) |
|
|
— |
|
|
|
73 |
|
|
|
61 |
|
Net other comprehensive income (loss) |
|
|
(1 |
) |
|
|
8,042 |
|
|
|
73 |
|
|
|
8,114 |
|
Balance at March 31, 2016 |
|
$ |
345 |
|
|
$ |
(15,215 |
) |
|
$ |
(11,192 |
) |
|
$ |
(26,062 |
) |
The following table presents information about reclassification adjustments out of AOCI:
|
|
Three Months Ended March 31, |
|
|
Affected Line Item in the Statement Where Net Income is Presented |
|||||
(in thousands) |
|
2016 |
|
|
2015 |
|
|
|
||
Unrealized gains on investments |
|
$ |
(20 |
) |
|
$ |
(27 |
) |
|
Interest income |
Tax effect |
|
|
8 |
|
|
|
10 |
|
|
Income taxes |
|
|
$ |
(12 |
) |
|
$ |
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized net actuarial loss(1) |
|
$ |
255 |
|
|
$ |
75 |
|
|
|
Amortization of prior service credit(1) |
|
|
(137 |
) |
|
|
(139 |
) |
|
|
Tax effect |
|
|
(45 |
) |
|
|
(50 |
) |
|
Income taxes |
|
|
$ |
73 |
|
|
$ |
(114 |
) |
|
|
(1) |
Amount included in pension expense. Refer to Note 16 - Pension and Postretirement Benefits. |
|
The net periodic benefit cost of Viad’s pension and postretirement plans for the three months ended March 31, 2016 and 2015 included the following components:
|
|
Domestic Plans |
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Pension Plans |
|
|
Postretirement Benefit Plans |
|
|
Foreign Pension Plans |
|
|||||||||||||||
(in thousands) |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||||
Service cost |
|
$ |
10 |
|
|
$ |
25 |
|
|
$ |
36 |
|
|
$ |
43 |
|
|
$ |
119 |
|
|
$ |
128 |
|
Interest cost |
|
|
258 |
|
|
|
251 |
|
|
|
151 |
|
|
|
177 |
|
|
|
120 |
|
|
|
127 |
|
Expected return on plan assets |
|
|
(93 |
) |
|
|
(111 |
) |
|
|
— |
|
|
|
— |
|
|
|
(137 |
) |
|
|
(149 |
) |
Amortization of prior service credit |
|
|
— |
|
|
|
— |
|
|
|
(126 |
) |
|
|
(91 |
) |
|
|
— |
|
|
|
— |
|
Recognized net actuarial loss |
|
|
115 |
|
|
|
125 |
|
|
|
94 |
|
|
|
139 |
|
|
|
1 |
|
|
|
2 |
|
Net periodic benefit cost |
|
$ |
290 |
|
|
$ |
290 |
|
|
$ |
155 |
|
|
$ |
268 |
|
|
$ |
103 |
|
|
$ |
108 |
|
|
Changes to the restructuring liability by major restructuring activity are as follows:
|
|
Marketing & Events Group Consolidation |
|
|
Other Restructurings |
|
|
|
|
|
||||||
(in thousands) |
|
Severance & Employee Benefits |
|
|
Facilities |
|
|
Severance & Employee Benefits |
|
|
Total |
|
||||
Balance at December 31, 2015 |
|
$ |
751 |
|
|
$ |
1,291 |
|
|
$ |
234 |
|
|
$ |
2,276 |
|
Restructuring charges |
|
|
499 |
|
|
|
9 |
|
|
|
484 |
|
|
|
992 |
|
Cash payments |
|
|
(775 |
) |
|
|
(165 |
) |
|
|
(374 |
) |
|
|
(1,314 |
) |
Adjustment to liability |
|
|
— |
|
|
|
— |
|
|
|
242 |
|
|
|
242 |
|
Balance at March 31, 2016 |
|
$ |
475 |
|
|
$ |
1,135 |
|
|
$ |
586 |
|
|
$ |
2,196 |
|
|
Viad’s reportable segments, with reconciliations to consolidated totals, are as follows:
|
|
Three Months Ended March 31, |
|
|||||
(in thousands) |
|
2016 |
|
|
2015 |
|
||
Revenue: |
|
|
|
|
|
|
|
|
Marketing & Events Group: |
|
|
|
|
|
|
|
|
U.S. Segment |
|
$ |
183,737 |
|
|
$ |
192,943 |
|
International Segment |
|
|
54,081 |
|
|
|
65,236 |
|
Intersegment eliminations |
|
|
(1,682 |
) |
|
|
(1,251 |
) |
Total Marketing & Events Group |
|
|
236,136 |
|
|
|
256,928 |
|
Travel & Recreation Group |
|
|
5,226 |
|
|
|
7,468 |
|
Total revenue |
|
$ |
241,362 |
|
|
$ |
264,396 |
|
Segment operating income (loss): |
|
|
|
|
|
|
|
|
Marketing & Events Group: |
|
|
|
|
|
|
|
|
U.S. Segment |
|
$ |
862 |
|
|
$ |
2,637 |
|
International Segment |
|
|
(569 |
) |
|
|
1,047 |
|
Total Marketing & Events Group |
|
|
293 |
|
|
|
3,684 |
|
Travel & Recreation Group |
|
|
(6,573 |
) |
|
|
(4,809 |
) |
Segment operating loss |
|
|
(6,280 |
) |
|
|
(1,125 |
) |
Corporate activities |
|
|
(1,911 |
) |
|
|
(2,810 |
) |
Operating loss |
|
|
(8,191 |
) |
|
|
(3,935 |
) |
Interest income |
|
|
56 |
|
|
|
63 |
|
Interest expense |
|
|
(1,284 |
) |
|
|
(1,151 |
) |
Restructuring (charges) recoveries: |
|
|
|
|
|
|
|
|
Marketing & Events U.S. Segment |
|
|
(293 |
) |
|
|
(88 |
) |
Marketing & Events International Segment |
|
|
(215 |
) |
|
|
(138 |
) |
Travel & Recreation Group |
|
|
(92 |
) |
|
|
6 |
|
Corporate |
|
|
(392 |
) |
|
|
4 |
|
Loss from continuing operations before income taxes |
|
$ |
(10,411 |
) |
|
$ |
(5,239 |
) |
|
|
|
|
|
|
|
|
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