Table of Contents Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2010 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001 -11015 VIAD CORP (Exact name of registrant as specified in its charter) Delaware 36 -1169950 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1850 North Central Avenue, Suite 800 Phoenix, Arizona 85004-4545 (Address of principal executive offices) (Zip Code) (602) 207-4000 (Registrant’s telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non -accelerated filer Small reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No As of October 31, 2010, there were 20,191,294 shares of common stock ($1.50 par value) outstanding. TABLE OF CONTENTS PART I —FINANCIAL INFORMATION Item 1. Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Item 2. Management ’s Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures PART II —OTHER INFORMATION Item 1A. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 6. Exhibits SIGNATURES Exhibit 31.1 Exhibit 31.2 Exhibit 32.1 Exhibit 32.2 Table of Contents PART I—FINANCIAL INFORMATION Item 1. Financial Statements. VIAD CORP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, 2010 December 31, 2009 (in thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 152,127 $ 116,342 Accounts receivable, net of allowance for doubtful accounts of $2,130 and $3,892, respectively 56,915 44,767 Inventories 36,095 44,818 Deferred income taxes 20,136 20,150 Asset held for sale — 13,982 Other current assets 18,134 21,476 Total current assets 283,407 261,535 Property and equipment, net 146,663 155,000 Other investments and assets 30,912 29,069 Deferred income taxes 38,086 35,951 Goodwill 125,758 124,931 Other intangible assets, net 1,970 2,700 Total Assets $ 626,796 $ 609,186 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 53,323 $ 41,509 Other current liabilities 97,068 85,077 Current portion of long -term debt and capital lease obligations 6,954 4,301 Total current liabilities 157,345 130,887 Long -term debt and capital lease obligations 2,624 8,487 Pension and postretirement benefits 32,907 32,767 Other deferred items and liabilities 48,119 52,414 Total liabilities 240,995 224,555 Commitments and contingencies (Note 15) Stockholders ’ equity: 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 607,441 606,038 Retained deficit (14,022 ) (16,405 ) Unearned employee benefits and other (4,856 ) (5,954 ) Accumulated other comprehensive income (loss): Unrealized gains on investments 232 154 Cumulative foreign currency translation adjustments 34,066 31,283 Unrecognized net actuarial loss and prior service credit (10,043 ) (8,385 ) Common stock in treasury, at cost, 4,741,937 and 4,379,125 shares, respectively (272,301 ) (266,618 ) Total Viad Corp stockholders ’ equity 377,919 377,515 Noncontrolling interest 7,882 7,116 Total stockholders ’ equity 385,801 384,631 Total Liabilities and Stockholders’ Equity $ 626,796 $ 609,186 See Notes to Condensed Consolidated Financial Statements. Page 2 Table of Contents VIAD CORP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended September 30, Nine months ended September 30, 2010 2009 2010 2009 (in thousands, except per share data) Revenues: Convention and event services $ 130,609 $ 104,895 $ 464,465 $ 456,512 Exhibits and environments 32,550 29,761 111,544 109,565 Travel and recreation services 51,985 46,469 81,787 69,562 Total revenues 215,144 181,125 657,796 635,639 Costs and expenses: Costs of services 170,354 147,035 517,905 498,302 Costs of products sold 34,871 36,780 122,048 123,552 Corporate activities 1,749 2,024 4,451 4,230 Interest income (174 ) (102 ) (358 ) (495 ) Interest expense 472 378 1,438 1,223 Restructuring charges 183 3,867 2,795 6,797 Goodwill impairment losses — 98,304 — 98,304 Intangible asset impairment losses — 11,352 — 11,352 Other impairment losses — 1,700 — 1,700 Total costs and expenses 207,455 301,338 648,279 744,965 Income (loss) before income taxes 7,689 (120,213 ) 9,517 (109,326 ) Income tax expense (benefit) 1,911 (23,947 ) 3,909 (19,735 ) Net income (loss) 5,778 (96,266 ) 5,608 (89,591 ) Net income attributable to noncontrolling interest (982 ) (867 ) (766 ) (640 ) Net income (loss) attributable to Viad $ 4,796 $ (97,133 ) $ 4,842 $ (90,231 ) Diluted income (loss) per common share Net income (loss) attributable to Viad common stockholders $ 0.23 $ (4.86 ) $ 0.24 $ (4.52 ) Weighted-average outstanding and potentially dilutive common shares 20,309 19,981 20,332 19,950 Basic income (loss) per common share Net income (loss) attributable to Viad common stockholders $ 0.23 $ (4.86 ) $ 0.24 $ (4.52 ) Weighted -average outstanding common shares 20,001 19,981 20,037 19,950 Dividends declared per common share $ 0.04 $ 0.04 $ 0.12 $ 0.12 See Notes to Condensed Consolidated Financial Statements. Page 3 Table of Contents VIAD CORP CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three months ended September 30, Nine months ended September 30, 2010 2009 2010 2009 (in thousands) Net income (loss) $ 5,778 $ (96,266 ) $ 5,608 $ (89,591 ) Other comprehensive income: Unrealized gains on investments: Holding gains arising during the period, net of tax 97 146 78 207 Unrealized foreign currency translation adjustments 6,693 11,571 2,783 21,995 Pension and postretirement benefit plans: Net actuarial loss, net of tax 183 106 (1,188 ) 201 Prior service credit, net of tax (175 ) (190 ) (470 ) (570 ) Total other comprehensive income 6,798 11,633 1,203 21,833 Comprehensive income (loss) 12,576 (84,633 ) 6,811 (67,758 ) Comprehensive income attributable to noncontrolling interest (982 ) (867 ) (766 ) (640 ) Comprehensive income (loss) attributable to Viad $ 11,594 $ (85,500 ) $ 6,045 $ (68,398 ) See Notes to Condensed Consolidated Financial Statements. Page 4 Table of Contents VIAD CORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended September 30, 2010 2009 (in thousands) Cash flows from operating activities: Net income (loss) $ 5,608 $ (89,591 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 21,314 21,380 Deferred income taxes (5,217 ) (6,353 ) Restructuring charges 2,795 6,797 Impairment charges — 111,356 Losses (gains) on dispositions of property and other assets 51 (22 ) Share -based compensation expense 2,748 2,239 Other non -cash items, net 3,281 4,023 Change in operating assets and liabilities: Receivables (12,801 ) (2,706 ) Inventories 8,723 8,198 Accounts payable 12,536 (6,123 ) Restructuring liabilities (5,866 ) (5,537 ) Accrued compensation 7,018 (16,086 ) Customer deposits 2,670 (4,297 ) Income taxes payable 1,983 (10,281 ) Other assets and liabilities, net 429 (11,354 ) Net cash provided by operating activities 45,272 1,643 Cash flows from investing activities: Capital expenditures (11,609 ) (18,727 ) Proceeds from dispositions of property and other assets 14,630 43 Net cash provided by (used in) investing activities 3,021 (18,684 ) Cash flows from financing activities: Payments on debt and capital lease obligations (3,944 ) (2,493 ) Dividends paid on common stock (2,466 ) (2,470 ) Common stock purchased for treasury (6,906 ) (1,167 ) Proceeds from exercise of stock options 38 — Net cash used in financing activities (13,278 ) (6,130 ) Effect of exchange rate changes on cash and cash equivalents 770 3,674 Net increase (decrease) in cash and cash equivalents 35,785 (19,497 ) Cash and cash equivalents, beginning of year 116,342 148,040 Cash and cash equivalents, end of period $ 152,127 $ 128,543 Supplemental disclosure of cash flow information Cash paid during the period for: Income taxes $ 5,680 $ 8,642 Interest $ 792 $ 673 Equipment acquired under capital leases $ 590 $ 3,253 See Notes to Condensed Consolidated Financial Statements.