# Pursuit Attractions & Hospitality, Inc.: Form 10-Q for the period ended Sep 30, 2021

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-Q
- Filed: 2021-11-05
- Accepted by EDGAR: Nov 5, 2021, 17:09 ET
- Period: 2021-09-30
- Accession: 0000950170-21-003250
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000095017021003250/vvi-20210930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000095017021003250/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-07-01 to 2021-09-30 | $233.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2021-01-01 to 2021-09-30 | $323.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 3 months, 2021-07-01 to 2021-09-30 | $9.5m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2021-01-01 to 2021-09-30 | $20.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2021-07-01 to 2021-09-30 | $5.3m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2021-01-01 to 2021-09-30 | $118.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-07-01 to 2021-09-30 | $15.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2021-01-01 to 2021-09-30 | −$70.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-07-01 to 2021-09-30 | $0.46 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2021-01-01 to 2021-09-30 | −$3.77 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2021-07-01 to 2021-09-30 | $0.46 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2021-01-01 to 2021-09-30 | −$3.77 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2021-07-01 to 2021-09-30 | 20,742 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2021-01-01 to 2021-09-30 | 20,396 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2021-01-01 to 2021-09-30 | −$2.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2021-01-01 to 2021-09-30 | $45.2m | us-gaap:PaymentsToAcquireProductiveAssets |
| Cash and equivalents | at 2021-09-30 | $110.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-09-30 | $229.9m | us-gaap:AssetsCurrent |
| Total assets | at 2021-09-30 | $1.06bn | us-gaap:Assets |
| Current liabilities | at 2021-09-30 | $176.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2021-09-30 | $807.5m | us-gaap:Liabilities |
| Long-term debt | at 2021-09-30 | $390.8m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2021-09-30 | $25.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 52,524 characters.

### Forward-Looking Statements

This Form 10-Q contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words, and variations of words, such as “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “estimate,” “anticipate,” “deliver,” “seek,” “aim,” “potential,” “target,” “outlook,” and similar expressions are intended to identify our forward-looking statements. Similarly, statements that describe our business strategy, outlook, objectives, plans, initiatives, intentions, or goals also are forward-looking statements. These forward-looking statements are not historical facts and are subject to a host of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those in the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors include, among others: the factors set forth under “Risk Factors” (Part I, Item 1A) and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7) in our 2020 Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”), as may be updated elsewhere in this report; and the information set forth in other Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we have filed or will file with the SEC. Such risks, uncertainties, and other important factors include, among others: the short- and longer-term effects of the COVID-19 pandemic, including the demand for travel, event business and travel experiences, and levels of consumer confidence; actions that governments, businesses, and individuals take in response to the COVID-19 pandemic or any future resurgence, including limiting or banning travel; the impact of the COVID-19 pandemic, or any future resurgence, on global and regional economies, travel, and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; and the pace of recovery following the COVID-19 pandemic or any future resurgence.

Important factors that could cause actual results to differ materially from those described in our forward-looking statements include, but are not limited to, the following:

the impact of the COVID-19 pandemic on our financial condition, liquidity, and cash flow;

our ability to anticipate and adjust for the impact of the COVID-19 pandemic on our businesses;

general economic uncertainty in key global markets and a worsening of global economic conditions;

travel industry disruptions;

our ability to successfully integrate and achieve established financial and strategic goals from acquisitions;

our dependence on large exhibition event clients;

the importance of key members of our account teams to our business relationships;

the competitive nature of the industries in which we operate;

unanticipated delays and cost overruns of our capital projects, and our ability to achieve established financial and strategic goals for such projects;

seasonality of our businesses;

transportation disruptions and increases in transportation costs;

natural disasters, weather conditions, and other catastrophic events;

our multi-employer pension plan funding obligations;

our exposure to labor cost increases and work stoppages related to unionized employees;

liabilities relating to prior and discontinued operations;

adverse effects of show rotation on our periodic results and operating margins;

our exposure to currency exchange rate fluctuations;

our exposure to cybersecurity attacks and threats;

compliance with laws governing the storage, collection, handling, and transfer of personal data and our exposure to legal claims and fines for data breaches or improper handling of such data; and

changes affecting the London Inter-bank Offered Rate.

For a more complete discussion of the risks and uncertainties that may affect our business or financial results, refer to Item 1A, “Risk Factors,” of our 2020 Form 10-K. We disclaim and do not undertake any obligation to update or revise any forward-looking statement except as required by applicable law or regulation.

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with our 2020 Form 10-K and the condensed consolidated financial statements and related notes included in this Form 10-Q. The MD&A is intended to assist in understanding our financial condition and results of operations.

### Overview

We are a leading provider of experiential leisure travel and live events and marketing experiences with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our clients and guests.

We operate through two reportable business segments: GES and Pursuit:

**GES** is a global, full-service live events company providing exhibition and conference services, brand experiences, and on-site venue services to the world’s leading brands and event organizers.

**Pursuit** is an attractions and hospitality company that provides a collection of inspiring and unforgettable experiences in iconic destinations.

### COVID-19 Pandemic

Starting in mid-March 2020, the COVID-19 pandemic had a significant and negative impact on our operations and financial performance, with severe disruptions in live event and tourism activity. In response, we implemented aggressive cost reduction measures in 2020 to preserve cash, including furloughs, layoffs, mandatory unpaid time off or salary reductions for all employees, and the reduction of discretionary spending. We also suspended future common stock dividend payments and share repurchases, and we availed ourselves of governmental assistance programs for wages and other expense relief. Additionally, in May and August 2020, we obtained waivers of the financial covenants under our then $450 million revolving credit facility (“the 2018 Credit Facility”), which we subsequently refinanced in July 2021 as discussed below, and we secured additional capital to strengthen our liquidity position by entering into an investment agreement with funds managed by private equity firm Crestview Partners who made an investment of $135 million, offset in part by $9.2 million in fees, in newly issued perpetual convertible preferred stock. Refer to Note 15 – Common and Preferred Stock of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information.

During 2021, we continued to preserve cash and closely manage our costs as pandemic-related restrictions lessened. In connection with COVID-19 vaccination programs, we began to see signs of recovery in the travel and hospitality and live event sectors during early 2021 as people started to feel more comfortable traveling and gathering in larger groups. Pursuit’s operations in the United States experienced strong visitation primarily from domestic travelers, while tourism in Canada remained constrained by border closures. Canada reopened its border with the United States in early August 2021 to fully vaccinated travelers and to travelers from other countries beginning in September 2021, which accelerated short-term bookings from long-haul travelers to our Pursuit operations in Canada. The live event markets also began to re-open in 2021 with smaller scale live events starting to take place during the first half of the year. Toward the end of the second quarter and into the third quarter, we began to see an acceleration in the recovery of in-person trade shows as event organizers began to hold larger scale face-to-face live events.

Effective July 30, 2021, we refinanced our 2018 Credit Facility, which was scheduled to mature on October 24, 2023, with a new $500 million senior secured credit facility (the “2021 Credit Facility”) to provide for financial flexibility to support our growth initiatives. The 2021 Credit Facility provides for a $400 million term loan with a maturity date of July 30, 2028 (“Term Loan B”) and a $100 million revolving credit facility with a maturity date of July 30, 2026. The loan proceeds of $400 million were offset in part by $14.8 million in fees. The proceeds from the Term Loan B were used to repay the 2018 Credit Facility and the remaining proceeds will be used to fund future acquisitions and growth initiatives and for general corporate purposes. Refer to Note 12 – Debt and Finance Lease Obligations of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information.

Although we have seen a recent acceleration in demand and bookings and early signs of recovery for travel and in-person live events, we remain cautious as variants of COVID-19, including the predominant Delta variant, have caused an increase in infections and hospitalizations across the United States and globally. Due to the evolving and uncertain nature of COVID-19, and depending on the success of ongoing vaccination and other mitigation efforts as well as the scope and magnitude of infections and hospitalizations, we are not able at this time to fully estimate the effect of these factors on our business; however, the adverse impact on our business, results of operations, and cash flows has been significant. We will continue to evaluate and implement additional actions necessary to mitigate the negative financial and operational impact of COVID-19 on our business.

### Seasonality

GES’ live event activity can vary significantly from quarter to quarter and year to year depending on the frequency and timing of shows. Some shows are not held annually and some shift between quarters. Show rotation refers to shows that occur less frequently than annually, as well as annual shows that shift quarters from one year to the next. Starting in mid-March 2020, in-person live event activity was largely cancelled or postponed due to the COVID-19 pandemic. The live event markets began to re-open in 2021 with smaller scale live events starting to take place during the first half of the year. Toward the end of the second quarter and into the third quarter, we began to see an acceleration in the recovery of in-person trade shows as event organizers began to hold larger scale face-to-face live events.

Pursuit’s peak activity occurs during the summer months. During 2020, health and travel restrictions including border closures due to the COVID-19 pandemic resulted in lower visitation to all of Pursuit’s properties. During 2021, as pandemic-related restrictions lessened and as people started to feel more comfortable traveling, visitation to Pursuit’s properties improved from 2020. Pursuit’s experiences in the United States saw a strong recovery in visitation primarily from domestic travelers, while tourism in Canada and Iceland remained constrained by border closures and travel restrictions. Canada reopened its border with the United States in early August 2021 to fully vaccinated travelers and to travelers from other countries beginning in September 2021, which accelerated short-term bookings from long-haul travelers to our Pursuit operations in Canada.

### Results of Operations

### Financial Highlights

*(in thousands, except per share data)*

|  | Three Months Ended September 30, 2021 | 2020 | % Change | Nine Months Ended September 30, 2021 | 2020 | % Change |
| --- | ---: | ---: | --- | ---: | ---: | ---: |
| Total revenue (1) | $233,599 | $62,807 | \*\* | $323,767 | $387,532 | (16.5)% |
| Net income (loss) attributable to Viad | $15,067 | $(30,758) | \*\* | $(70,111) | $(323,621) | 78.3% |
| Segment operating income (loss) (2) | $40,102 | $(6,781) | \*\* | $(33,117) | $(65,949) | 49.8% |
| Diluted income (loss) per common share from continuing operations attributable to Viad common stockholders | $0.45 | $(1.54) | \*\* | $(3.80) | $(15.98) | 76.2% |

\*\* Change is greater than +/- 100%

(1) As previously disclosed in our 2020 Form 10-K, and subsequent to the issuance of the Condensed Consolidated Financial Statements for the quarter ended September 30, 2020, we identified prior period errors related to the recognition of revenue of GES’ third-party services. Revenue from these services should have been recorded on a net basis to reflect only the fees received for arranging these services, whereas previously, we recorded this revenue on a gross basis, thus overstating revenue and cost of services by the same amount. As a result, GES’ 2020 revenue has been corrected to reflect this immaterial gross-to-net adjustment. Refer to Note 1 – Overview and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional information.

(2) Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

### Three months ended September 30, 2021 compared with the three months ended September 30, 2020

**Total revenue** increased $170.8 million during the three months ended September 30, 2021 primarily due to face-to-face live events once again taking place at GES and Pursuit’s increased visitation from domestic travelers in Glacier Park and the Alaska Collection. Canada’s border reopened to the United States in early August 2021 to fully vaccinated travelers and in September 2021 to other countries. Additionally, there continues to be strong regional and national demand from Canadians as they were required to stay closer to home.

**Net income attributable to Viad** was $15.1 million during the three months ended September 30, 2021 as compared to a loss of $30.8 million during the three months ended September 30, 2020. This improvement was primarily due to improved segment operating results in 2021 and restructuring charges of $11.3 million during the three months ended September 30, 2020 related to transformation efforts at GES to significantly reduce costs and create a lower and more flexible cost structure.

**Total segment operating income** was $40.1 million during the three months ended September 30, 2021 as compared to a loss of $6.8 million during the three months ended September 30, 2020. This improvement was primarily due to increased revenue at GES and Pursuit in addition to a lower cost structure at GES. The 2020 third quarter operating loss included a $13.5 million gain on the sale of GES’ San Diego facility.

### Nine months ended September 30, 2021 compared with the nine months ended September 30, 2020

**Total revenue** decreased $63.8 million or 16.5% during the nine months ended September 30, 2021 primarily due to the impact of the COVID-19 pandemic as GES experienced show postponements and cancellations starting in mid-March 2020. Live events remained largely shut down during the first half of 2021 with large scale in-person events beginning to take place toward the end of the second quarter and into the third quarter. Although Pursuit continued to be affected by pandemic-related restrictions in certain geographies, overall revenue at Pursuit improved from 2020 as health and travel restrictions lessened and people felt more comfortable traveling.

**Net loss attributable to Viad** improved $253.5 million during the nine months ended September 30, 2021, primarily reflecting impairment charges of $203.1 million and higher restructuring charges of $6.6 million recorded during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2021, as well as improved segment operating results during 2021.

**Total segment operating loss** improved $32.8 million during the nine months ended September 30, 2021, primarily due to higher revenue at Pursuit in addition to the elimination of performance-based incentives in 2020.

### Foreign Exchange Rate Variances

We conduct our foreign operations primarily in Canada, the United Kingdom, Iceland, the Netherlands, Germany, and to a lesser extent, in certain other countries.

The following table summarizes the foreign exchange rate variance effects (or “FX Impact”) on revenue and segment operating income (loss) from our significant international operations for the three months ended September 30, 2021 and 2020:

*(in thousands)*

*(in thousands)*

| GES: | Revenue Weighted-Average Exchange Rates 2021 | 2020 | FX Impact | Segment Operating Income (Loss) Weighted-Average Exchange Rates 2021 | 2020 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.79 | $0.75 | $68 | $0.80 | $0.75 | $(51) |
| United Kingdom (GBP) | $1.37 | $1.30 | 1,060 | $1.38 | $1.29 | (2) |
| Europe (EUR) | $1.18 | $1.17 | 2 | $1.18 | $1.17 | (9) |
|  |  |  | $1,130 |  |  | $(62) |
| Pursuit: |  |  |  |  |  |  |
| Canada (CAD) | $0.79 | $0.75 | $2,885 | $0.79 | $0.75 | $1,289 |
| Iceland (ISK) | $0.01 | $0.01 | 100 | $0.01 | $0.01 | (33) |
|  |  |  | $2,985 |  |  | $1,256 |
| Total |  |  | $4,115 |  |  | $1,194 |

The following table summarizes the FX Impact on revenue and segment operating income (loss) from our significant international operations for the nine months ended September 30, 2021 and 2020:

*(in thousands)*

*(in thousands)*

| GES: | Revenue Weighted-Average Exchange Rates 2021 | 2020 | FX Impact | Segment Operating Income (Loss) Weighted-Average Exchange Rates 2021 | 2020 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.79 | $0.73 | $185 | $0.80 | $0.73 | $(234) |
| United Kingdom (GBP) | $1.38 | $1.28 | 1,538 | $1.38 | $1.27 | (535) |
| Europe (EUR) | $1.18 | $1.11 | 54 | $1.19 | $1.11 | (32) |
|  |  |  | $1,777 |  |  | $(801) |
| Pursuit: |  |  |  |  |  |  |
| Canada (CAD) | $0.80 | $0.75 | $4,635 | $0.80 | $0.74 | $(250) |
| Iceland (ISK) | $0.01 | $0.01 | 168 | $0.01 | $0.01 | (175) |
|  |  |  | $4,803 |  |  | $(425) |
| Total |  |  | $6,580 |  |  | $(1,226) |

Revenue and segment operating income (loss) were primarily impacted by variances of the British pound, the Canadian dollar, the Euro, and the Icelandic krona relative to the U.S. dollar. Future changes in exchange rates may impact overall expected profitability and historical period-to-period comparisons when revenue and segment operating loss are translated into U.S. dollars.

### Analysis of Revenue and Operating Results by Reportable Segment

### GES

During the first quarter of 2021, we reorganized GES’ operating segments to represent the changes in how our chief operating decision maker (“CODM”) reviews the financial performance of GES and makes decisions regarding the allocation of resources. Accordingly, GES is now a single reportable segment.

The following table presents a comparison of GES’ reported revenue and segment operating loss to organic revenue(2) and organic segment operating loss(2) for the three and nine months ended September 30, 2021 and 2020:

*(in thousands)*

|  | Three Months Ended September 30, 2021 As Reported | Acquisitions | FX Impact | Organic(2) | Three Months Ended September 30, 2020 As Reported | Acquisitions | Organic(2) | Change vs. 2020 As Reported | Organic(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Total GES revenue(1) | $116,044 | $— | $1,130 | $114,914 | $13,992 | $— | $13,992 | \*\* | \*\* |
| Total GES segment operating loss(3) | $(9,499) | $— | $(62) | $(9,437) | $(18,248) | $— | $(18,248) | 47.9% | 48.3% |

*(in thousands)*

|  | Nine Months Ended September 30, 2021 As Reported | Acquisitions | FX Impact | Organic(2) | Nine Months Ended September 30, 2020 As Reported | Acquisitions | Organic(2) | Change vs. 2020 As Reported | Organic(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Total GES revenue(1) | $160,109 | $— | $1,777 | $158,332 | $319,930 | $— | $319,930 | (50.0)% | (50.5)% |
| Total GES segment operating loss(3) | $(56,300) | $— | $(801) | $(55,499) | $(39,450) | $— | $(39,450) | (42.7)% | (40.7)% |

\*\* Change is greater than +/- 100%

(1) As previously disclosed in our 2020 Form 10-K, and subsequent to the issuance of the Condensed Consolidated Financial Statements for the quarter ended September 30, 2020, we identified prior period errors related to the recognition of revenue of GES’ third-party services. Revenue from these services should have been recorded on a net basis to reflect only the fees received for arranging these services, whereas previously, we recorded this revenue on a gross basis, thus overstating revenue and cost of services by the same amount. As a result, GES’ 2020 revenue has been corrected to reflect this immaterial gross-to-net adjustment. Refer to Note 1 – Overview and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional information.

(2) Organic revenue and organic segment operating loss are non-GAAP financial measures that adjust for the impacts of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable periods presented. For more information about organic revenue and organic segment operating loss, see the “Non-GAAP Measures” section of this MD&A.

(3) Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of the non-GAAP financial measure, segment operating loss, to the most directly comparable GAAP measure.

### Three months ended September 30, 2021 compared with the three months ended September 30, 2020

**GES revenue** increased $102.1 million during the three months ended September 30, 2021 as compared to the prior year as face-to-face live event activity increased and large scale events began to take place after being canceled or postponed for most of 2020 and into the first half of 2021. Revenue earned during the third quarter of 2020 was primarily driven by virtual and hybrid events. Organic revenue\* increased $100.9 million during the three months ended September 30, 2021.

**GES segment operating loss** improved $8.7 million primarily due to the increase in revenue and the reduction in operating costs by reducing wages and discretionary costs. Additionally, GES’ operating results included a $13.5 million gain on sale of GES’ San Diego facility during the 2020 third quarter. Excluding this gain, GES’ segment operating results improved by $22.2 million as compared to the three months ended September 30, 2020. Organic segment operating loss\* improved $8.8 million during the three months ended September 30, 2021.

### Nine months ended September 30, 2021 compared with the nine months ended September 30, 2020

**GES revenue** decreased $159.8 million, primarily due to show postponements and cancellations as a result of the COVID-19 pandemic beginning in mid-March 2020. During the first half of 2021, GES serviced clients primarily with virtual and hybrid events while in-person events remained largely shut down. Larger-scale in-person events began to take place toward the end of the second quarter and during the third quarter with generally lower exhibitor participation and lower attendance than pre-pandemic occurrences. Revenue earned during 2020 was primarily driven by shows completed during the first quarter of 2020 before the onset of the pandemic, compensation for work completed on cancelled shows, the conversion of convention centers into temporary hospitals, and virtual and hybrid events completed during 2020. Organic revenue\* decreased $161.6 million during the nine months ended September 30, 2021.

**GES segment operating loss** increased $16.8 million during the nine months ended September 30, 2021 primarily due to the decrease in revenue, offset in part by the reduction in operating costs by reducing wages and discretionary cost. Additionally, GES’ operating results included a $9.1 million gain on sale of a GES warehouse in Orlando in 2021 and a $13.5 million gain on sale of a GES warehouse in San Diego in 2020. Organic segment operating loss\* increased $16.0 million during the nine months ended September 30, 2021.

\* Refer to footnote (2) in the above table for more information about the non-GAAP financial measures of organic revenue and organic segment operating loss.

### Pursuit

The following table presents a comparison of Pursuit’s reported revenue and segment operating income (loss) to organic revenue(3) and organic segment operating loss(3) for the three and nine months ended September 30, 2021 and 2020:

*(in thousands)*

| Revenue(1): Pursuit: | Three Months Ended September 30, 2021 As Reported | Acquisitions(2) | FX Impact | Organic(3) | Three Months Ended September 30, 2020 As Reported | Acquisitions(2) | Organic(3) | Change vs. 2020 As Reported | Organic(3) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | --- | --- |
| Attractions | $49,614 | $2,297 | $1,763 | $45,554 | $17,699 | $— | $17,699 | \*\* | \*\* |
| Hospitality | 63,151 | — | 1,102 | 62,049 | 30,403 | — | 30,403 | \*\* | \*\* |
| Transportation | 3,468 | — | 75 | 3,393 | 444 | — | 444 | \*\* | \*\* |
| Travel planning and other | 1,728 | — | 59 | 1,669 | 160 | — | 160 | \*\* | \*\* |
| Intra-segment eliminations | (406) | — | (14) | (392) | 109 | — | 109 | \*\* | \*\* |
| Total Pursuit | $117,555 | $2,297 | $2,985 | $112,273 | $48,815 | $— | $48,815 | \*\* | \*\* |
| **Segment operating income (4):** |  |  |  |  |  |  |  |  |  |
| Total Pursuit | $49,601 | $1,504 | $1,256 | $46,841 | $11,467 | $— | $11,467 | \*\* | \*\* |

*(in thousands)*

| Revenue(1): Pursuit: | Nine Months Ended September 30, 2021 As Reported | Acquisitions(2) | FX Impact | Organic(3) | Nine Months Ended September 30, 2020 As Reported | Acquisitions(2) | Organic(3) | Change vs. 2020 As Reported | Organic(3) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | --- | --- |
| Attractions | $64,799 | $2,531 | $2,426 | $59,842 | $25,141 | $— | $25,141 | \*\* | \*\* |
| Hospitality | 91,971 | — | 2,151 | 89,820 | 39,382 | — | 39,382 | \*\* | \*\* |
| Transportation | 4,975 | — | 140 | 4,835 | 2,604 | — | 2,604 | 91.1% | 85.7% |
| Travel planning and other | 2,376 | — | 113 | 2,263 | 361 | — | 361 | \*\* | \*\* |
| Intra-segment eliminations | (463) | — | (27) | (436) | 114 | — | 114 | \*\* | \*\* |
| Total Pursuit | $163,658 | $2,531 | $4,803 | $156,324 | $67,602 | $— | $67,602 | \*\* | \*\* |
| **Segment operating income (loss)(4):** |  |  |  |  |  |  |  |  |  |
| Total Pursuit | $23,183 | $1,171 | $(425) | $22,437 | $(26,499) | $— | $(26,499) | \*\* | \*\* |

\*\* Change is greater than +/- 100%

(1) Revenue by line of business does not agree to Note 2 – Revenue and Related Contract Costs and Contract Liabilities in the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) as the amounts in the above table include product revenue from food and beverage and retail operations within each line of business.

(2) Acquisitions include the Golden Skybridge (acquired March 2021 and opened June 2021).

(3) Organic revenue and organic segment operating income (loss) are non-GAAP financial measures that adjust for the impacts of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable periods presented. For more information about organic revenue and organic segment operating income (loss), see the “Non-GAAP Measures” section of this MD&A.

(4) Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

### Three months ended September 30, 2021 compared with the three months ended September 30, 2020

**Pursuit revenue** increased $68.7 million as all of Pursuit’s attractions and properties were open during the third quarter of 2021, although some operated at reduced capacities, whereas 2020 was negatively impacted by the COVID-19 pandemic as travel restrictions and border closures largely remained in place. Glacier Park and the Alaska Collection did not have any COVID-19 related closures during the third quarter of 2021 and experienced increased visitation from strong domestic leisure travel. The Canadian border reopened to fully vaccinated travelers from the United States in early August 2021 and to fully vaccinated travelers from other countries in September 2021. In addition to general improvements in leisure travel, Pursuit also opened three new attractions during 2021 that generated an aggregate of $7.4 million in revenue during the third quarter. Organic revenue\* increased $63.5 million during the three months ended September 30, 2021.

**Pursuit segment operating income** improved $38.1 million, primarily due to the increase in revenue and ongoing efforts to maximize profitability. Organic segment operating income\* improved $35.4 million during the three months ended September 30, 2021.

### Nine months ended September 30, 2021 compared with the nine months ended September 30, 2020

**Pursuit revenue** increased $96.1 million, as all of Pursuit’s seasonal attractions and properties were open during the second and third quarters of 2021, whereas its properties and attractions were temporarily closed in 2020 from mid-March through most of the second quarter. Additionally, Pursuit experienced much stronger visitation during the third quarter of 2021 versus the third quarter of 2020 as pandemic-related restrictions lessened and as people started to feel more comfortable traveling. Organic revenue\* increased $88.7 million during the nine months ended September 30, 2021.

**Pursuit segment operating income** was $23.2 million during the nine months ended September 30, 2021 as compared to a loss of $26.5 million during the nine months ended September 30, 2020. This improvement was primarily due to the increase in revenue and ongoing efforts to maximize profitability. Organic segment operating income\* improved $48.9 million during the nine months ended September 30, 2021.

\* Refer to footnote (3) in the above table for more information about the non-GAAP financial measures of organic revenue and organic segment operating income (loss).

### Performance Measures

We use the following key business metrics to evaluate the performance of Pursuit’s attractions business:

**Number of visitors**. The number of visitors allows us to assess the volume of tickets sold at each attraction during the period.

**Revenue per attraction visitor**. Revenue per attraction visitor is calculated as total attractions revenue divided by the total number of visitors at all Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per visitor measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.

**Effective ticket price**. Effective ticket price is calculated as revenue from the sale of attraction tickets divided by the total number of visitors at all comparable Pursuit attractions during the period.

We use the following key business metrics, common in the hospitality industry, to evaluate Pursuit’s hospitality business:

**Revenue per Available Room.** RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue per available room for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.

**Average Daily Rate.** ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to realize. Increases in ADR lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.

**Occupancy.** Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increases in ancillary non-rooms revenue (including food and beverage and retail revenue).

The following table provides Pursuit’s same-store key performance indicators. The same-store metrics indicate the performance of all Pursuit’s properties and attractions that we owned and operated at full capacity, considering seasonal closures, for the entirety of both periods presented. For Pursuit properties and attractions located outside of the United States, comparisons to the prior year are on a constant U.S. dollar basis, using the current year quarterly average exchange rates for previous periods, to eliminate the FX Impact. We believe this same-store constant currency basis provides better comparability between reporting periods.

| Same-Store Key Performance Indicators (1) Attractions: | Three Months Ended September 30, 2021 | 2020 | Change vs. 2020 | Nine Months Ended September 30, 2021 | 2020 | Change vs. 2020 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Number of visitors | 768,294 | 382,005 | \*\* | 979,869 | 602,922 | 62.5% |
| Revenue per attraction visitor | $55 | $49 | 12.2% | $55 | $44 | 25.0% |
| Effective ticket price | $42 | $33 | 27.3% | $42 | $31 | 35.5% |
| **Hospitality:** |  |  |  |  |  |  |
| Room nights available (2) | 195,903 | 158,162 | 23.9% | 454,083 | 286,184 | 58.7% |
| RevPAR (2) | $180 | $110 | 63.6% | $113 | $82 | 37.8% |
| ADR | $241 | $184 | 31.0% | $202 | $154 | 31.2% |
| Occupancy (2) | 74.9% | 59.8% | 15.1% | 56.0% | 53.0% | 3.0% |

\*\* Change is greater than +/- 100%

(1) The Same-Store Key Performance Indicators for attractions exclude the Open Top Touring (opened September 2020), the Sky Lagoon (opened April 2021), the Golden Skybridge (opened June 2021), and FlyOver Las Vegas (opened September 2021).

(2) The rooms that were out of service as a result of property closures due to the COVID-19 pandemic were excluded from room nights available when calculating hospitality RevPAR and occupancy.

**Attractions**. The increase in same-store visitors during 2021 reflects the temporary closure of our attractions beginning in mid-March 2020 and extending through most of the second quarter of 2020 as a result of COVID-19 in addition to the reopening of the Canadian border with the United States in early August 2021 to fully vaccinated travelers and to travelers from other countries in September 2021, which accelerated visitation from international travelers. Revenue per attraction increased due to higher effective ticket prices and ancillary revenue.

**Hospitality**. Room nights available increased as all of Pursuit’s properties were fully open during the second and third quarters of 2021, whereas in 2020, Pursuit temporarily closed its properties in mid-March 2020 through most of the second quarter of 2020. The increase in RevPAR and ADR was primarily driven by Pursuit’s properties being open in 2021.

Pursuit is largely dependent on foreign customer visitation. Travel restrictions and border closures due to the COVID-19 pandemic have negatively affected long-haul travelers to Canada and Iceland. Additionally, the strengthening or weakening of the Canadian dollar, relative to other currencies, could affect customer volumes and the results of operations.

### Other Expenses

*(in thousands)*

|  | Three Months Ended September 30, 2021 | 2020 | Change vs. 2020 | Nine Months Ended September 30, 2021 | 2020 | Change vs. 2020 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Corporate activities | $3,093 | $2,645 | 16.9% | $8,104 | $5,902 | 37.3% |
| Interest expense, net | $9,518 | $5,450 | 74.6% | $20,168 | $14,399 | 40.1% |
| Multi-employer pension plan withdrawal | $— | $— | \*\* | $57 | $462 | (87.7)% |
| Other expense, net | $466 | $210 | \*\* | $1,506 | $894 | 68.5% |
| Restructuring charges | $2,186 | $11,259 | (80.6)% | $5,799 | $12,370 | (53.1)% |
| Impairment charges | $— | $676 | (100.0)% | $— | $203,076 | (100.0)% |
| Income tax expense | $5,329 | $735 | \*\* | $118 | $20,454 | (99.4)% |
| Income (loss) from discontinued operations | $248 | $(989) | \*\* | $534 | $(1,822) | \*\* |

\*\* Change is greater than +/- 100%

**Corporate Activities –** The increase in corporate activities expense during the three months ended September 30, 2021 was primarily due to an FX impact loss of $0.8 million on the repayment of our Canadian debt and lower performance-based compensation expense in 2020 as we reduced our estimated performance achievement to zero as a result of COVID-19. The increase in corporate activities expense during the nine months ended September 30, 2021 was primarily due to lower performance-based compensation expense in 2020.

**Interest Expense, net –** The increase in interest expense during the three months ended September 30, 2021 was primarily due to higher interest rates and higher debt balances in 2021. As a result of the refinance and the repayment of the 2018 Credit Facility, we recorded $2.1 million of interest expense related to the write-off of unamortized debt issuance costs during the three months ended September 30, 2021. The increase in interest expense during the nine months ended September 30, 2021 was primarily due to higher debt balances in 2021 and the write-off of unamortized debt issuance costs.

**Restructuring Charges –** Restructuring charges during the three and nine months ended September 30, 2021 were primarily related to facility closures and the elimination of certain positions at GES. In response to the COVID-19 pandemic in 2020, we accelerated our transformation and streamlining efforts at GES to significantly reduce costs and create a lower and more flexible cost structure focused on servicing our more profitable market segments. Restructuring charges during 2020 were primarily related to the elimination of certain positions at GES and our corporate office in response to the COVID-19 pandemic, as well as charges related to the closure of GES’ United Kingdom based audio-visual services business during the third quarter of 2020. During the fourth quarter of 2020, we entered into an agreement with a third-party to outsource the management, cleaning, and storage of the aisle carpeting that we use at live events, which resulted in restructuring charges in 2021 when we vacated a facility.

**Impairment Charges –** Due to the deteriorating macroeconomic environment in 2020 related to the COVID-19 pandemic, resulting in disruptions to our operations and the decline in our stock price, we recorded non-cash goodwill impairment charges of $185.8 million, a non-cash impairment charge to intangible assets of $15.7 million related to GES’ United States audio-visual production business, and a fixed asset impairment charge of $1.6 million during the nine months ended September 30, 2020. We recorded a fixed asset impairment charge of $0.7 million during the three months ended September 30, 2020.

**Income Tax Expense –** The effective tax rate was 21.4% for the three months ended September 30, 2021 and a negative 2.7% for the three months ended September 30, 2020. The effective tax rate was a negative 0.2% for the nine months ended September 30, 2021 and a negative 6.8% for the nine months ended September 30, 2020. The effective tax rate for the three months ended September 30, 2021 was the result of income earned in Canada without taxes on income in our jurisdictions with valuation allowances. The rate for the nine months ended September 30, 2021 was lower than the blended statutory rate primarily as a result of excluding the tax benefit on losses recognized in the United States, the United Kingdom, and other European countries where we have a valuation allowance. The negative effective tax rates for 2020 were due to the recording of a valuation allowance against our remaining United States, United Kingdom, and other European countries net deferred tax assets of $25.5 million, as well as no tax benefits on non-deductible goodwill impairments and losses recognized in those jurisdictions.

**Income (Loss) from Discontinued Operations –** Income from discontinued operations during the three and nine months ended September 30, 2021 was primarily due to a favorable legal settlement and an insurance recovery related to a previously sold operation, offset in part by legal expenses. Loss from discontinued operations during the three and nine months ended September 30, 2020 was primarily due to legal expenses related to previously sold operations.

### Liquidity and Capital Resources

Cash, cash equivalents, and restricted cash were $113.3 million as of September 30, 2021, as compared to $42.0 million as of December 31, 2020. During the nine months ended September 30, 2021, we used net cash from operating activities of $2.7 million.

On August 5, 2020, we entered into an investment agreement with funds managed by private equity firm Crestview Partners (the “Investment Agreement”) who made an investment of $135 million, offset in part by $9.2 million in fees, in newly issued perpetual convertible preferred stock that carries a 5.5% cumulative quarterly dividend, which is payable in cash or in-kind at Viad’s option (the “Convertible Preferred Stock”). The Convertible Preferred Stock is convertible into shares of our common stock at a conversion price of $21.25 per share. The proceeds from Crestview’s investment were used to repay a portion of our 2018 Credit Facility, provided us additional short-term liquidity to fund capital expenditures, and supported general corporate purposes.

Effective July 30, 2021, we refinanced the 2018 Credit Facility, which was scheduled to mature on October 24, 2023, with a new $500 million 2021 Credit Facility to provide for financial flexibility to support our growth initiatives. The 2021 Credit Facility provides for a $400 million Term Loan B with a maturity date of July 30, 2028 and a $100 million revolving credit facility with a maturity date of July 30, 2026. The loan proceeds of $400 million were offset in part by $14.8 million in fees. The proceeds from the Term Loan B were used to repay the 2018 Credit Facility and the remaining proceeds will be used to fund future acquisitions and growth initiatives and for general corporate purposes. The 2021 Credit Facility requires us to maintain liquidity of $75 million. Refer to Note 12 – Debt and Finance Lease Obligations of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional information.

We believe that our existing sources of liquidity will be sufficient to fund operations and capital commitments, including approximately $75 million in expected capital expenditures in select maintenance and growth investments, for at least the next 12 months.

As of September 30, 2021, we held approximately $56.0 million of our cash and cash equivalents outside of the United States, consisting of $37.1 million in Canada, $8.3 million in the United Kingdom, $5.9 million in the Netherlands, and $4.7 million in certain other countries.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | Nine Months Ended September 30, 2021 | 2020 |
| --- | ---: | ---: |
| Net loss | $(68,283) | $(325,280) |
| Depreciation and amortization | 39,986 | 43,051 |
| Deferred income taxes | (131) | 20,428 |
| (Income) loss from discontinued operations | (534) | 1,822 |
| Restructuring charges | 5,799 | 12,370 |
| Impairment charges | — | 203,076 |
| Gains on dispositions of property and other assets | (9,345) | (14,935) |
| Share-based compensation expense | 5,960 | 649 |
| Multi-employer pension plan withdrawal | 57 | 462 |
| Other non-cash items, net | 4,642 | 10,371 |
| Changes in assets and liabilities | 19,136 | 4,467 |
| **Net cash used in operating activities** | $(2,713) | $(43,519) |

The decrease in net cash used in operating activities of $40.8 million was primarily due to improved segment operating results at Pursuit.

### Investing Activities

*(in thousands)*

|  | Nine Months Ended September 30, 2021 | 2020 |
| --- | ---: | ---: |
| Capital expenditures | $(45,187) | $(40,057) |
| Cash surrender value of life insurance policies | — | 24,767 |
| Cash paid for acquisitions, net | (7,704) | — |
| Proceeds from dispositions of property and other assets | 14,292 | 21,788 |
| **Net cash (used in) provided by investing activities** | $(38,599) | $6,498 |

The increase in net cash used in investing activities of $45.1 million was primarily due to 2020 activity including proceeds from the termination of our life insurance policies and proceeds of $17.1 million from the sale of the GES warehouse in San Diego. In 2021, we used cash from investing activities for the acquisition of the Golden Skybridge, offset in part by the proceeds from the sale of a GES warehouse in Orlando.

### Financing Activities

*(in thousands)*

|  | Nine Months Ended September 30, 2021 | 2020 |
| --- | ---: | ---: |
| Proceeds from borrowings | $451,350 | $191,733 |
| Payments on debt and finance lease obligations | (335,665) | (273,663) |
| Dividends paid on common stock | — | (4,064) |
| Dividends paid on preferred stock | (1,950) | — |
| Distributions to noncontrolling interest, net of contributions from noncontrolling interest | (798) | (1,526) |
| Payments of debt issuance costs | (1,767) | (1,585) |
| Payment of payroll taxes on stock-based compensation through shares withheld or repurchased | (1,119) | (1,062) |
| Common stock purchased for treasury | — | (2,785) |
| Proceeds from issuance of Convertible Series A Preferred Stock, net of issuance costs | — | 125,763 |
| Proceeds from exercise of stock options | — | 2,077 |
| **Net cash provided by financing activities** | $110,051 | $34,888 |

The increase in net cash provided by financing activities of $75.2 million was primarily due to net debt proceeds of $115.7 million during the nine months ended September 30, 2021 compared to net debt payments of $81.9 million during the nine months ended September 30, 2020. In July 2021, we received $400 million from the Term Loan B of the 2021 Credit Facility, which was used to repay the 2018 Credit Facility. The increase in net cash provided by financing activities was offset in part by proceeds from the issuance of Convertible Series A Preferred Stock in 2020.

### Debt and Finance Lease Obligations

Refer to Note 12 – Debt and Finance Lease Obligations of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion, all of which is incorporated by reference herein.

### Share Repurchases

Our Board of Directors previously authorized us to repurchase shares of our common stock from time to time at prevailing market prices. Effective February 7, 2019, our Board of Directors authorized the repurchase of an additional 500,000 shares. In March 2020, our Board of Directors suspended our share repurchase program for the foreseeable future. Prior to the suspension, we had repurchased 53,784 shares on the open market for $2.8 million during the three months ended March 31, 2020. As of September 30, 2021, 546,283 shares remained available for repurchase. The Board of Directors’ authorization does not have an expiration date.

Additionally, we repurchased shares related to tax withholding requirements on vested restricted share-based awards.

### Critical Accounting Policies and Estimates

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7) of our 2020 Form 10-K for a discussion of our critical accounting policies and estimates.

### Impact of Recent Accounting Pronouncements

Refer to Note 1 – Overview and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information.

### Non-GAAP Measures

In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we also disclose the following non-GAAP financial measures: Segment operating income (loss), organic revenue, and organic segment operating income (loss) (collectively, the “Non-GAAP Measures”). Our use of Non-GAAP Measures is supplemental to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. As not all companies use identical calculations, our Non-GAAP Measures may not be comparable to similarly titled measures used by other companies. We believe that our use of Non-GAAP Measures provides useful information to investors regarding our results of operations for trending, analyzing, and benchmarking our performance and the value of our business.

“**Segment operating income (loss)”** is net income (loss) attributable to Viad before loss from discontinued operations, corporate activities, interest expense and interest income, income taxes, restructuring charges, impairment charges, and the reduction for income (loss) attributable to noncontrolling interests. Segment operating income (loss) is used to measure the profit and performance of our operating segments to facilitate period-to-period comparisons. Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of segment operating income (loss) to income (loss) from continuing operations before income taxes.

“**Organic revenue”** and “**organic segment operating income (loss)”** are revenue and segment operating income (loss) (as defined above), respectively, without the impact of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable periods. The impact of exchange rate variances is calculated as the difference between current period activity translated at the current period’s exchange rates and the comparable prior period’s exchange rates. We believe the presentation of “organic” results permits investors to better understand our performance without the effects of exchange rate variances or acquisitions and to facilitate period-to-period comparisons and analysis of our operating performance. Refer to the “Results of Operations” section of this MD&A for reconciliations of organic revenue and organic segment operating income (loss) to the most directly comparable GAAP measures.

We believe non-GAAP Measures are useful operating metrics as they eliminate potential variations arising from taxes, debt service costs, impairment charges, and the effects of discontinued operations, resulting in additional measures considered to be indicative of our ongoing operations and segment performance. Although we use Non-GAAP Measures to assess the performance of our business, the use of these measures is limited because these measures do not consider material costs, expenses, and other items necessary to operate our business. These items include debt service costs, expenses related to U.S. federal, state, local and foreign income taxes, impairment charges, and the effects of discontinued operations. As the Non-GAAP Measures do not consider these items, you should consider net income or loss attributable to Viad as an important measure of financial performance because it provides a more complete measure of our performance.

## Market risk

As filed, 3,265 characters.

Our market risk exposure relates to fluctuations in foreign exchange rates and interest rates. Foreign exchange risk is the risk that fluctuating exchange rates will adversely affect our financial condition or results of operations. Interest rate risk is the risk that changing interest rates will adversely affect our financial position or results of operations.

Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, and Germany. The functional currency of our foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, we translate the assets and liabilities of our foreign subsidiaries into U.S. dollars at the foreign exchange rates in effect at the balance sheet date. The unrealized gains or losses resulting from the translation of these foreign denominated assets and liabilities are included as a component of accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets. As a result, significant fluctuations in foreign exchange rates relative to the U.S. dollar may result in material changes to our net equity position reported in the Condensed Consolidated Balance Sheets. We do not currently hedge our equity risk arising from the translation of foreign denominated assets and liabilities. We recorded cumulative unrealized foreign currency translation gain in stockholders’ equity of $17.7 million as of September 30, 2021 and a loss of $16.7 million as of December 31, 2020. We recorded unrealized foreign currency translation losses in other comprehensive income of $1.0 million during the nine months ended September 30, 2021 and unrealized foreign currency translation losses of $7.3 million during the nine months ended September 30, 2020.

For purposes of consolidation, revenue, expenses, gains, and losses related to our foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, our consolidated results of operations are exposed to fluctuations in foreign exchange rates as revenue and segment operating income (loss) of our foreign operations, when translated, may vary from period to period, even when the functional currency amounts have not changed. Such fluctuations may adversely impact overall expected profitability and historical period-to-period comparisons. We do not currently hedge our net earnings exposure arising from the translation of our foreign revenue and segment operating income (loss). Refer to “Foreign Exchange Rate Variances” section of MD&A included in this Form 10-Q.

We are exposed to foreign exchange transaction risk, as our foreign subsidiaries have certain revenue transactions denominated in currencies other than the functional currency of the respective subsidiary. From time to time, we utilize forward contracts to mitigate the impact on earnings related to these transactions due to fluctuations in foreign exchange rates. As of September 30, 2021 and December 31, 2020, we did not have any outstanding foreign currency forward contracts.

We are exposed to short-term and long-term interest rate risk on certain of our debt obligations.

We do not currently use derivative financial instruments to hedge cash flows for such obligations.

## Controls and procedures

As filed, 1,089 characters.

We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. Management, together with our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021. Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2021.

There were no changes in our internal control over financial reporting during the three months ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 370 characters.

In addition to other information set forth in this report, careful consideration should be given to the factors discussed in Part I, Item 1A – Risk Factors and Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2020 Form 10-K, which could materially affect our business, financial condition, or future results.

Filed Nov 5, 2021.
Source: SEC EDGAR, the filing index for accession 0000950170-21-003250. Last ingested by Listed: Nov 4, 2026, 17:36 ET. No prices; not investment advice.