# Pursuit Attractions & Hospitality, Inc.: Form 10-K for the period ended Dec 31, 2015

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-K
- Filed: 2016-03-11
- Accepted by EDGAR: Mar 11, 2016, 14:26 ET
- Period: 2015-12-31
- Accession: 0001564590-16-014544
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000156459016014544/vvi-10k_20151231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000156459016014544/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2015-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2015-10-01 to 2015-12-31 | $251.7m | us-gaap:SalesRevenueNet |
| Revenue | 12 months, 2015-01-01 to 2015-12-31 | $1.09bn | us-gaap:SalesRevenueNet |
| Cost of revenue | 12 months, 2015-01-01 to 2015-12-31 | $166.1m | us-gaap:CostOfGoodsSold |
| Operating income | 3 months, 2015-10-01 to 2015-12-31 | −$231.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 12 months, 2015-01-01 to 2015-12-31 | $44.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 12 months, 2015-01-01 to 2015-12-31 | $4.5m | us-gaap:InterestExpense |
| Income tax | 12 months, 2015-01-01 to 2015-12-31 | $10.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2015-10-01 to 2015-12-31 | −$957.0k | us-gaap:NetIncomeLoss |
| Net income | 12 months, 2015-01-01 to 2015-12-31 | $26.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2015-10-01 to 2015-12-31 | −$0.05 | us-gaap:EarningsPerShareBasicAndDiluted |
| Diluted EPS | 12 months, 2015-01-01 to 2015-12-31 | $1.32 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 12 months, 2015-01-01 to 2015-12-31 | $1.32 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months, 2015-01-01 to 2015-12-31 | 19,981,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2015-01-01 to 2015-12-31 | $60.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 12 months, 2015-01-01 to 2015-12-31 | $29.8m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 12 months, 2015-01-01 to 2015-12-31 | $8.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 12 months, 2015-01-01 to 2015-12-31 | $4.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2015-12-31 | $56.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2015-12-31 | $195.2m | us-gaap:AssetsCurrent |
| Total assets | at 2015-12-31 | $692.3m | us-gaap:Assets |
| Current liabilities | at 2015-12-31 | $185.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2015-12-31 | $357.0m | us-gaap:Liabilities |
| Long-term debt | at 2015-12-31 | $129.0m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2015-12-31 | $322.6m | us-gaap:StockholdersEquity |

## Business

As filed, 34,851 characters.

Viad Corp (“Viad” or the “Company”) is in the business of creating experiences 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 two main business groups: the Marketing & Events Group and the Travel & Recreation Group.

The Marketing & Events Group is a world-class live event service provider to some of the most visible and influential events and global brands. The Travel & Recreation Group provides experiential travel services in iconic locations which enjoy perennial demand.

The Marketing & Events Group accounted for 90 percent of Viad’s 2015 consolidated revenue and 60 percent of Viad’s 2015 consolidated Adjusted Segment EBITDA. The Travel & Recreation Group accounted for 10 percent of Viad’s 2015 consolidated revenue and 40 percent of Viad’s 2015 consolidated Adjusted Segment EBITDA. Adjusted Segment EBITDA is defined as segment operating income before non-cash depreciation and amortization and integration costs, if any. For further information on this forward-looking, non-GAAP financial measure, see the “Non-GAAP Measures,” included in Management’s Discussion and Analysis of Financial Condition and Results of Operations (Part II, Item 7 of this Annual Report on Form 10-K).

### 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’ National Servicenter® has been recognized with certification under the J.D. Power and Associates Certified Call Center Program℠ for the past seven years, and GES was named one of the “World’s 50 Largest Agency Companies” for the sixth year in a row by Ad Age.

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. See “Item 1A - Risk Factors - The failure of a large client to renew its services contract or the loss of business from exhibition facilities could adversely impact revenue” for a discussion of the risks related to the Marketing & Events Group’s client relationships, which is incorporated herein by reference.

The Marketing & Events Group is divided into two reportable segments based on geography: The Marketing & Events U.S. Segment (the “U.S. Segment”) and the Marketing & Events International Segment (the “International Segment”).

- **The U.S. Segment** holds a leading position in the U.S. with full-service operations in every major exhibition market in the U.S., including Las Vegas, Nevada; Chicago, Illinois; Orlando, Florida; New York, New York; and Los Angeles, California.
- **The International Segment** holds leading positions in Canada, Europe, and the Middle East. The International Segment has full-service operations at many of the most active and popular destinations and venues, including seven cities in Canada, six cities in the United Kingdom, one city in Germany, two cities in the United Arab Emirates, and two cities in the Netherlands.

As described in further detail in the following table, the U.S. Segment and the International Segment both provide a full suite of services for event organizers and exhibitors across four categories of live events: (i) Exhibitions; (ii) Congresses and Conferences; (iii) Corporate Events; and (iv) Consumer Events (collectively, “Live Events”):

| LIVE EVENTS | DEFINITION | % GES 2015 REVENUE |
| --- | --- | ---: |
| **Exhibitions** | Expo/trade show/exhibition with the primary purpose of facilitating business-to-business and business-to-consumer sales and marketing. | 63% |
| **Congresses and Conferences** | Convention/meeting with the primary purpose of facilitating attendee education. An expo or trade show may be held in conjunction to further facilitate attendee education. | 25% |
| **Corporate Events** | Expo/trade show/event/meeting with the primary purpose of engaging, educating, and informing key audiences. | 7% |
| **Consumer Events** | Event with the primary purpose of entertaining, educating, or creating a marketing experience targeting end consumers. | 5% |

Within each of the above four Live Events categories, the Marketing & Events Group delivers variations of four types of services to event organizers and exhibitors: (i) Core Services; (ii) Event Accommodations; (iii) Audio-Visual; and (iv) Registration and Data.

2

**Core Services** GES provides official contracting services and products to event organizers and exhibitors during Live Events in both the U.S. Segment and the International Segment. Contracting services and products are provided primarily to Exhibitions and to a lesser degree to Congresses and Conferences, Corporate Events, and Consumer Events. For the U.S. Segment, Core Services accounted for 63 percent of Viad’s 2015 consolidated revenue, as compared to 66 percent in both 2014 and 2013. For the International Segment, Core Services accounted for 23 percent of Viad’s 2015 consolidated revenue, as compared to 23 percent and 25 percent in 2014 and 2013, respectively.

The U.S Segment and the International Segment generally provide the same services and products. The following is a list of services and products provided to Live Event organizers and exhibitors that are generally exclusive or discretionary:

| Services/Products Provided to Event Organizers | Services/Products Provided to Exhibitors |  |
| --- | --- | --- |
| **Exclusive Services:** | **Exclusive Services:** | **Discretionary Services:** |
| General event management | Material handling | Creative design and strategy |
| Planning and consultation | Overhead and booth rigging | Integrated marketing, including pre- and post-event communications |
| Concept design and layout |  | Event surveys |
| Carpeting and flooring | Temporary electrical, lighting and plumbing | Return on investment analysis |
| Online management tools | Cleaning | Online management tools |
| Show traffic analysis |  | Attendee and exhibit booth traffic analysis |
| Marketing and strategy |  | Staff training |
| Overhead and booth rigging |  | Logistics and freight-forwarding |
| Temporary electrical, lighting, and plumbing |  | Storage and refurbishment of exhibits |
| Cleaning |  | Booth furnishings, carpeting |
|  |  | In-house installation and dismantling |
|  |  | Tradeshow program management |
| **Exclusive Products:** |  | **Discretionary Products:** |
| Graphics and signage |  | Custom exhibit design and construction |
| Common area structures |  | Portable and modular exhibits and design |
|  |  | Graphics and signage |

Under various agreements with event organizers of Live Events, GES serves as the official services contractor and provides the services and products listed above under “Services/Products Provided to Event Organizers.” As the official services contractor, GES is designated as the exclusive provider of certain services to exhibitors participating in a Live Event. This designation provides exhibitors with a single point of contact to facilitate a timely, safe, and efficient move-in and move-out of a Live Event and to facilitate an organized, professional, during-show experience. Whether or not GES is the official services contractor of a Live Event, GES competes with other service providers to sell discretionary services to exhibitors. GES also offers discretionary services, combined with complete event program management, including creative design, strategy, and planning to corporate brand marketers across all Live Events in which they participate.

3

**Event Accommodations** With the acquisition of onPeak LLC and Travel Planners, Inc. (collectively, “onPeak”) in October 2014, and Travel Planners, Inc.’s subsequent merger into onPeak LLC, the U.S. Segment of GES positioned itself as the leading provider of Event Accommodations services in North America. As the distributor of exclusive accommodations services for a Live Event, GES is responsible for researching and recommending local hotels, securing room blocks, marketing reserved room blocks to event attendees and exhibitors, managing attendee and exhibitor reservations, and addressing any accommodations concerns during the show. Event Accommodations offer GES the unique potential to serve multiple Live Event participants through a single integrated service network. Event attendees and exhibitors benefit from GES’ accommodations services by receiving convenient and affordable hotel accommodations. Additionally, event organizers benefit from GES’ management of complex hotel booking administration before, during, and after the event. GES also helps drive revenue per available room for hotels by acting as a direct sales channel to high-value, professional guests. For the U.S. Segment, Event Accommodations accounted for 3 percent of Viad’s 2015 consolidated revenue, as compared to 1 percent in 2014 and none in 2013.

**Audio-Visual** In both the U.S. Segment and the International Segment, GES offers a variety of audio-visual (“AV”) and digital services for Live Events and corporate brand marketers. GES combines the science of innovative digital solutions with the latest AV technology and superior service to create award-winning attendee engagements. Services provided include digital design and content, media production, content testing, equipment rental, staging, and creative services. With the acquisition of Blitz Communications Group Limited and its affiliates (collectively, “Blitz”) in September 2014, GES obtained a prominent position in the United Kingdom AV market and delivery services in continental Europe. For the U.S. Segment, AV accounted for 1 percent of Viad’s 2015 consolidated revenue, as compared to less than 1 percent in 2014 and none in 2013. For the International Segment, AV accounted for 2 percent of Viad’s 2015 consolidated revenue, as compared to 1 percent in 2014 and none in 2013.

**Registration and Data** In the International Segment, GES provides event registration and data services. GES positioned itself as a leading provider of registration services for a Live Event with the acquisition of N200 Limited and its affiliates (collectively, “N200”) in November 2014. As Europe’s leading software-as-a-service event registration and data intelligence service provider, N200’s Visit Registration platform is used by 258 clients to stage over 1,100 events across 41 countries. N200 also supports 57,000 exhibitors who use its Connect platform to capture and manage sales leads at events. The N200 acquisition enables GES to expand and cross-sell its service and technology offering globally, reaching new markets, clients, and customers. For the International Segment, registration and data accounted for 1 percent of Viad’s 2015 consolidated revenue, as compared to less than 1 percent in 2014 and none in 2013.

### Seasonality and Show Rotation

For both the U.S. Segment and the International Segment, exhibition and event activity can vary significantly from quarter to quarter and year to year depending on the frequency and timing of shows, as some shows are not held each year and some may shift between quarters. The U.S. Segment generally reports its highest revenue during the first and second quarters. The International Segment generally reports its highest revenue during the second and fourth quarters. The show rotation metric refers to the net change in revenue from 2014 to 2015 due to show movement between quarters and years. 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. See “Item 1A – Risk Factors – Viad’s businesses are seasonal, which causes results of operations to fluctuate and makes results of operations particularly sensitive to adverse events during peak periods” and “Item 1A – Risk Factors - Show rotation impacts overall profitability and makes comparisons between periods difficult,” which are incorporated herein by reference.

### Competition

For both the U.S. Segment and the International Segment, GES generally competes across all classes of services and all markets in the Live Events industry on the basis of discernible differences, value, quality, price, convenience, and service. GES has a competitive advantage through its worldwide network of resources, experienced personnel, pioneering service programs and offerings, first class execution, proprietary technology platforms, and financial strength. All known U.S. competitors and most international competitors are privately held companies that provide limited public information regarding their operations. The primary competitor for GES within its Core Services is The Freeman Company (a privately held company); however, there is substantial competition from a large number of service providers in the other categories of service offerings.

### Growth Strategy

GES is committed to becoming the preferred global, full-service provider for Live Events, with further reach to Exhibitions, Congresses and Conferences, Corporate Events, and Consumer Events. GES has uniquely combined the art of high-impact creativity, service, and expertise with the science of easy-to-use technology, strategy, and worldwide logistics to help clients gain a greater return at their events and enhance the exhibitor experience.

- **Global Reach.** Leverage global capabilities and large customer base to drive continued growth in new services and other Live Events;
- **Full-Service Provider.** Growth of adjacent services to create a unique and integrated offering to deepen client relationships, expand client base, and increase share of total event spend; and
- **Live Events.** Growth of exhibition business and penetration into new events to extend industry leadership and leverage capabilities.

With its strategic acquisitions in 2014, GES made significant progress creating the most comprehensive suite of services for the Live Events industry. GES extended its AV services beyond North America with the acquisition of Blitz, positioned itself as a leading event registration and data intelligence services provider in Europe with the acquisition of N200, and acquired a leading event accommodations company, onPeak. In 2015, these acquisitions enhanced overall competiveness, facilitated growth in under-penetrated areas, and formed a basis for a data platform. The Company continues to pursue opportunities to acquire businesses with proven products and services that complement, enhance, or expand current businesses or offer growth opportunities.

### Recent Developments of the Marketing & Events Group

- **Successful integration of 2014 acquisitions**. Successful integration of Blitz, N200, and onPeak.
- **Cross-selling opportunities**. Effectively positioned to cross-sell an increasingly comprehensive suite of service offerings with a convenient approach to service delivery that differentiates GES from its competition.
- **Registration and data services planned entrance in U.S. market**. Planned entrance of registration and data services in the U.S market in 2016.

### 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. It draws its customers from major markets, including Canada, the United States, the United Kingdom, Australia/New Zealand, Asia, and Europe. It markets directly to consumers, as well as through distribution channels that include tour operators, tour wholesalers, destination management companies, and retail travel agencies and organizations.

The Travel & Recreation Group is comprised 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 and Denali 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”).

**Brewster**, a wholly-owned subsidiary of Viad, is a leading travel and tourism provider in the Canadian Rockies in Alberta and in other areas of Western Canada.

**Glacier Park**, an 80 percent owned subsidiary of Viad, is an owner and operator of lodging properties located in and around Glacier National Park in Montana and Waterton Lakes National Park in Alberta, Canada, with a leading share of rooms in that market.

**Alaska Denali Travel**, a wholly-owned subsidiary of Viad, is a travel and tourism provider in Denali National Park and Preserve in Alaska.

6

Brewster, Glacier Park, and Alaska Denali Travel have the following lines of business:

|  | Hospitality (# of rooms) | Attractions (1) | Package Tours (2) | Transportation (2) |
| --- | --- | --- | --- | --- |
| **Brewster** | Mount Royal Hotel (135) Banff International Hotel (162) Glacier View Inn (32) | Banff Gondola Columbia Icefield Glacier Adventure Glacier Skywalk Banff Lake Cruise | Inbound package tours Corporate event management services | Sightseeing tours Airporter services Charter motorcoach services |
| **Glacier Park** | St. Mary Lodge (116) Glacier Park Lodge (162) Grouse Mountain Lodge (144) Prince of Wales Hotel (86) West Glacier Motel & Cabins (32) Motel Lake McDonald (27) Apgar Village Lodge (48) |  |  |  |
| **Alaska Denali Travel** | Denali Backcountry Lodge (42) Denali Cabins (46) |  | Inbound package tours | Denali Backcountry Adventure |

(1) On January 4, 2016, Brewster acquired the business of Maligne Tours Ltd. (“Maligne Lake Tours”), which offers sightseeing boat tours on Maligne Lake in Jasper National Park.

(2) During 2016, Brewster will begin exiting third party tour and travel products and summer season charter transportation services.

**Hospitality** The Travel & Recreation Group provides lodging accommodations, food and beverage services, and retail operations through its collection of unique hotels and lodges varying from hikers’ cabins to hotel suites. ·**Mount Royal Hotel** and the **Banff International Hotel** are located in the heart of Banff National Park in downtown Banff, Alberta, Canada. ·**Glacier View Inn** is located on the Columbia Icefield between Lake Louise and Jasper National Park. ·**St. Mary Lodge** is located outside the east entrance of Glacier National Park in St. Mary, Montana. ·**Glacier Park Lodge** is located in East Glacier, Montana. ·**Grouse Mountain Lodge** is located near Glacier National Park in Whitefish, Montana. ·**Prince of Wales Hotel** is located in Waterton Lakes National Park, Alberta, Canada. ·**West Glacier Motel & Cabins** are located in West Glacier, Montana. ·**Motel Lake McDonald** and the **Apgar Village Lodge** are located inside Glacier National Park. ·**Denali Backcountry Lodge** is located in the heart of the Denali National Park. ·**Denali Cabins** are located near the entrance to the Denali National Park.

|  |  |
| --- | --- |
| **Attractions** | Brewster owns and operates the following four attractions in the Canadian Rocky Mountains: |
| The Banff Gondola transports visitors to an elevation of over 7,000 feet above sea level to the top of Sulphur Mountain in Banff, Alberta, Canada, offering an unobstructed view of the Canadian Rockies and overlooking the town of Banff and the Bow Valley. Brewster began an upper terminal redevelopment project in September 2015, which will result in 25 percent more square footage, an improved layout, optimized food and beverage and retail space, and new interpretive experiences. It is scheduled to reopen in phases from May 2016 through August 2016. |  |
| The Columbia Icefield Glacier Adventure is a tour of the Athabasca Glacier on the Columbia Icefield, and provides customers the experience to view one of the largest accumulations of ice and snow south of the Arctic Circle. Icefield customers ride in an “Ice Explorer,” a unique vehicle specially designed for glacier travel. |  |
| The Glacier Skywalk is a 1,312-foot guided interpretive walkway with a 98-foot glass-floored observation area overlooking the Sunwapta Valley, in close proximity to the Company’s Columbia Icefield Glacier Adventure attraction in Jasper National Park, Alberta, Canada. The Glacier Skywalk attraction, which opened in May 2014, has experienced robust visitor traffic and continues to win awards and receive international recognition for its innovative design and environmentally sound architecture. |  |
| The Banff Lake Cruise provides customers a unique sightseeing tour experience through interpretive boat cruises on Lake Minnewanka and the scenic Canadian Rockies. The Banff Lake Cruise operations are located adjacent to the town of Banff and include boat tours, small boat rentals, and charter fishing. |  |

**Package Tours** Brewster’s inbound package tour operations currently offer package tours that feature Brewster’s attractions, transportation services, and hotels. Brewster also offers a full suite of corporate and event management services for meetings, conferences, incentive travel, sports, and special events. Event-related service offerings include staffing, off-site events, tours/activities, team building, accommodations, event management, theme development, production, and AV services. During 2015, Brewster’s package tours offered third party tour and travel products; however, to align with its goal of delivering premium experiences and improving overall profit margin, Brewster will begin phasing out these products in 2016. Alaska Denali Travel provides complete travel planning services and vacation packages throughout Alaska.

8

**Transportation** Brewster’s transportation operations currently include sightseeing tours, airport shuttle services, and charter motorcoach services. Brewster’s sightseeing services and airport express shuttle services include seasonal half- and full-day tours from Calgary, Banff, Lake Louise, and Jasper, Canada. Brewster’s charter business operates a fleet of luxury motorcoaches, available for groups of any size, for travel throughout the Canadian provinces of Alberta and British Columbia. During 2015, Brewster operated the charter business year-round. Beginning in 2016, Brewster will begin exiting certain low-margin, capital-intensive charter businesses in the summer season to improve overall profitability and return on invested capital. Alaska Denali Travel offers unique sightseeing tours in and around Denali National Park.

### Seasonality

The Travel & Recreation Group experiences peak activity during the summer months. During 2015, 87 percent of the Travel & Recreation Group’s revenue was earned in the second and third quarters. See “Item 1A – Risk Factors – Viad’s businesses are seasonal, which causes results of operations to fluctuate and makes results of operations particularly sensitive to adverse events during peak periods,” which is incorporated herein by reference.

### Competition

The Travel & Recreation Group generally competes on the basis of location, uniqueness of facilities, service, quality, and price. Competition exists both locally and regionally across all four lines of business. The hospitality business has a large number of competitors and competes for leisure travelers (both individual and tour groups) across the United States and Canada. The Travel & Recreation Group has a competitive advantage through its distinctive attractions and the iconic destinations of its assets.

### Growth Strategy

The Travel & Recreation Group remains focused on delivering powerful experiences while growing and enhancing its unique portfolio of integrated tourism assets through its Refresh-Build-Buy growth initiatives.

- **Refresh**. Refresh assets to optimize market position and maximize returns;
- **Build.** Build new assets that create new revenue streams with economies of scale and scope; and
- **Buy.** Buy strategic assets that drive economies of scale and scope with strong returns.

The Travel & Recreation Group continued to make progress with its Refresh-Build-Buy growth initiatives by commencing a major renovation of the Banff Gondola and upgrades of the Banff International Hotel, both of which are scheduled for completion in 2016. The Glacier Skywalk continues to win awards and receive international recognition for its innovative design and environmentally sound architecture. The Travel & Recreation Group also complemented its existing assets and reinforced its position as the Gateway to Glacier National Park with the acquisition of the West Glacier Motel &

Cabins, the Apgar Village Lodge and related land, food and beverage services, and retail operations (collectively, the “West Glacier Properties”) in 2014. The Company continues to search for opportunities to acquire high return tourism assets in iconic natural destinations that enjoy perennial demand, bring meaningful scale and market share, and offer cross-selling advantages with a combination of attractions and hotels.

### Recent Developments of the Travel & Recreation Group

- **Successful integration of the West Glacier Properties**. The West Glacier Properties acquisition was successfully integrated, positioning the Company to deliver long-term value to its shareholders.
- **Renovation of the Banff Gondola**. The Travel & Recreation Group began the redevelopment project of the Banff Gondola in September 2015. This renovation will feature 25 percent more square footage, including an 8,000 square foot rooftop viewing deck and an exterior climbing wall. The renovation will also include enhanced retail and dining offerings, a state of the art interpretive area including new experiential areas such as a high definition theater. It is scheduled to reopen in phases from May 2016 through August 2016.
- **Acquisition of Maligne Lake Tours**. On January 4, 2016, Brewster acquired the business of Maligne Lake Tours, which offers sightseeing boat tours on a picturesque glacial lake. The Maligne Lake Tours acquisition strengthens the Travel & Recreation Group’s presence in the Jasper National Park area and adds another world-class attraction to its portfolio of services.

Financial information on Viad’s reportable segments and geographic areas is contained in Note 22 – Segment Information of the Notes to Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K).

### Intellectual Property

Viad and its subsidiaries own or have the right to use registered trademarks and trademarks pending registration, used in their businesses, including *Global Experience Specialists & design®, GES®, GES Servicenter®, GES National Servicenter®, GES MarketWorks®, The Art and Science of Engagement®, Trade Show Rigging TSR®, TSE Trade Show Electrical & design®, Earth Explorers®, Compass Direct®, ethnoMetrics®, eXPRESSO®, FIT®, eco-sense®, Alaska Denali Travel®, Alaska Denali Escapes®, Denali Backcountry Adventure®, Denali Backcountry Lodge®*, and *Denali Cabins®*. Viad and its subsidiaries also own or have the right to use many registered trademarks and trademarks pending registration outside of the United States, including *GES®, ShowTech®, Brewster Travel Canada & design®, Brewster Attractions Explore & design®, Brewster Hospitality Refresh & design®, Glacier Skywalk®* and *escape.connect.refresh.explore®*. United States trademark registrations are for a term of 10 years and are renewable every 10 years as long as the trademarks are used in the regular course of business.

The Company owns patents that it believes provide competitive advantages in the marketplace for its exhibit and exhibition services. Its patented technology relating to a modular structure having a load-bearing surface provides efficiencies and cost savings in the design, manufacture, assembly, take down, and maintenance of displays and exhibitions. Its patented invention relating to a surface-covering installation tool and method not only reduces direct labor costs, but provides improved worker safety. The Company also owns a number of design patents for its retail merchandising units. United States utility patents are currently granted for a term of 20 years from the date a patent application is filed and United States design patents are currently granted for a term of 14 years from the date granted. The Marketing & Events Group has extensive design libraries with copyright protections and owns copyright registrations for a number of the designs within its design libraries. Copyright protection for such work is 95 years from the date of publication or 120 years from creation, whichever is shorter.

Although Viad believes that certain of its patents, trademarks, and copyrights have substantial value, it does not believe that the loss of any one of those patents, trademarks, or copyrights would have a material adverse effect on its financial condition or results of operations, or the financial condition or results of operations of any of its reporting segments.

### Government Regulation and Compliance

Compliance with legal requirements and government regulations represents a normal cost of doing business. The principal regulations affecting the day-to-day businesses are rules and regulations relating to transportation (such as regulations promulgated by the U.S. Department of Transportation and its state counterparts), employees (such as regulations implemented by the Occupational Safety and Health Administration, equal employment opportunity laws, guidelines implemented pursuant to the Americans with Disabilities Act, and general federal and state employment laws), unionized labor (such as guidelines imposed by the National Labor Relations Act), and U.S. and Canadian regulations relating to national parks (such as regulations established by Parks Canada, the U.S. Department of the Interior, and the U.S. National Park Service).

Some of Viad’s current and former businesses are subject to U.S. federal and state environmental regulations, including laws enacted under the Comprehensive Environmental Response, Compensation and Liability Act, or its state law counterparts. Compliance with federal, state and local environmental, health and safety provisions, including, but not limited to, those regulating the discharge of materials into the environment and other actions relating to the environment, have not had, and are not expected to have, a material effect on Viad’s capital expenditures, competitive position, financial condition or results of operations. See “Item 1A - Risk Factors - Liabilities relating to prior and discontinued operations may adversely affect results of operations” and Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to the Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for a discussion of the risks related to liabilities arising from the Company’s compliance with federal, state, and local environmental laws, which are incorporated herein by reference.

### Employees

Viad’s businesses had 4,285 employees as of December 31, 2015 as follows:

|  | Number of Employees | Regular Full-Time Employees Covered by Collective Bargaining Agreements |
| --- | ---: | ---: |
| Marketing & Events Group | 3,634 | 1,113 |
| Travel & Recreation Group | 513 | 109 |
| Viad Corporate and Shared Services Group | 138 | — |
| **Total** | 4,285 | 1,222 |

Viad believes that relations with its employees are good and that collective-bargaining agreements expiring in 2016 will be renegotiated in the ordinary course of business without a material adverse effect on Viad’s operations.

Viad is governed by a Board of Directors comprised of seven non-employee directors and one employee director, and has an executive management team consisting of six executive officers.

### Financial Information about Restructuring Charges

Refer to Note 19 - Restructuring Charges of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for information regarding restructuring charges.

### Financial Information about Segments

Refer to Note 22 - Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for segment financial information.

### Financial Information about Geographic Areas

Refer to Note 22 - Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for geographic area financial information.

### Available Information

Viad’s website address is *www.viad.com*. All of Viad’s filings with the Securities and Exchange Commission (“SEC”), including Viad’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are available free of charge on Viad’s website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in Viad’s website is neither a part of, nor incorporated by reference into, this Annual Report on Form 10-K. In addition, the public may read and copy materials that Viad filed with the SEC at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the public reference room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC’s website address is *www.sec.gov.*

Viad’s investor relations website is *http://viad.investorroom.com/* and includes key information about the Company’s corporate governance initiatives, including its Corporate Governance Guidelines, charters of the committees of the Board of Directors, Code of Ethics, and information concerning Viad’s Board of Directors and methods for communicating with directors.

## Risk factors

As filed, 20,158 characters.

Viad’s results of operations are subject to known and unknown risks. As a result, past financial performance and historical trends may not be reliable indicators of future performance.

***Completed acquisitions may not perform as anticipated or be integrated as planned.*** Viad has acquired businesses and intends to continue to pursue opportunities to acquire businesses that complement, enhance or expand Viad’s current businesses, or offer growth opportunities to Viad. Acquisitions can involve a number of risks, including the failure to achieve the financial and strategic goals and other benefits from the acquisition; the inability to successfully integrate the acquired business into Viad’s ongoing businesses; the inability to retain key personnel or customers of the acquired business; the inability to successfully integrate financial reporting and internal control systems; increased debt; new regulatory requirements; the disruption of Viad’s ongoing businesses and distraction of senior management and employees of Viad from other opportunities and challenges due to the integration of the acquired business; and the potential existence of unknown liabilities or contingencies not disclosed to or known by Viad prior to closing the acquisition or not otherwise provided for through the purchase agreement. If Viad makes changes to its business strategy or if external conditions adversely affect its business operations, the Company may also be required to record an impairment charge to goodwill or intangible assets.

***Viad’s businesses and results of operations are adversely affected by deterioration in general economic conditions.*** Viad’s businesses are sensitive to fluctuations in general economic conditions and are impacted by changes in the cost of materials and operating supplies. The results of operations for the U.S. Segment and the International Segment depends largely on the number of exhibitions held and on the size of exhibitors’ marketing expenditures, which in turn depend partly on the strength of particular industries in which exhibitors operate. The number and size of exhibitions generally decrease when the economy weakens.

Further, many exhibitors’ marketing budgets are partly discretionary, and are frequently among the first expenditures reduced by exhibitors when economic conditions deteriorate, resulting in reduced spending by exhibitors for the Company’s services. Marketing expenditures often are not increased until economic conditions improve. As a result, during periods of general economic weakness, the results of operations for the Marketing & Events Group are adversely affected.

Revenue from the Travel & Recreation Group depends largely on the amount of disposable income that consumers have available for travel and vacations. This amount decreases during periods of weak general economic conditions.

***Viad’s results of operations are impacted by changes in foreign currency exchange rates.*** Viad conducts foreign operations primarily in Canada, the United Kingdom, Germany, and to a lesser extent, in certain other countries. The functional currency of Viad’s foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, Viad translates the assets and liabilities of its 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 those foreign denominated assets and liabilities are included as a component of accumulated other comprehensive income in Viad’s consolidated balance sheets. As a result, significant fluctuations in foreign exchange rates, relative to the U.S. dollar, may result in material changes to Viad’s net equity position reported in its consolidated balance sheets. Viad does not currently hedge its equity risk arising from the translation of foreign denominated assets and liabilities.

In addition, for purposes of consolidation, revenue, expenses, gains, and losses related to Viad’s foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, Viad’s consolidated results of operations are exposed to fluctuations in foreign exchange rates, even when the functional currency amounts have not changed. Accordingly, fluctuations in the exchange rates affect overall profitability and historical period-to-period comparisons. Viad has not hedged its net earnings exposure arising from the translation of its foreign results of operations.

During 2015, the Marketing & Events Group derived approximately 28 percent of its revenue and 46 percent of its segment operating income from its International Segment. The Travel & Recreation Group derived approximately 73 percent of its 2015 revenue and 89 percent of its 2015 segment operating income from its Canadian operations, which are largely dependent on foreign customer visitation. Accordingly, the strengthening or weakening of the Canadian dollar, relative to other currencies, could affect customer volumes and the results of operations in the Travel & Recreation Group.

***Show rotation impacts overall profitability and makes comparisons between periods difficult.*** The business activities of the Marketing & Events Group are largely dependent upon the frequency, timing, and location of exhibitions and events. Some large exhibitions are not held annually (they may be held once every two or three years or longer) or may be held at a different time of year than when previously held. In addition, the same exhibition may be held in different locations in different years, and may result in Viad generating lower margins if the exhibition shifts to a higher-cost city. The factors described above may cause the results of operations for those businesses to fluctuate significantly from quarter to quarter or from year to year, making periodic comparisons difficult.

***Viad’s businesses are adversely affected by disruptions in the travel industry, particularly those adversely affecting the hotel and airline industries.*** The success of Viad’s businesses depends largely on the ability and willingness of people, whether exhibitors, exhibition attendees, or others, to travel. Factors adversely affecting the travel industry as a whole, and particularly the airline and hotel industries, generally also adversely affect Viad’s businesses and results of operations. Factors that could adversely affect the travel industry as a whole include high or rising fuel prices, increased security and passport requirements, weather conditions, airline accidents, and international political instability and hostilities. Unexpected events of this nature, or other events that may have an impact on the availability and pricing of air travel and accommodations, could have a material adverse effect on Viad’s businesses and results of operations.

***The failure of a large client to renew its services contract or the loss of business from exhibition facilities could adversely impact revenue.*** Although no single client accounted for more than 6.3 percent of Viad’s consolidated revenue in 2015, the U.S. Segment and the International Segment have a relatively small number of large exhibition event organizers and large customer accounts. Consistent with industry practice, and only after a favorable review of credit worthiness, some of those larger clients have also been granted extended payment terms. The loss of any of these large clients, or the failure of such clients to pay in accordance with any extended payment terms, could have a material adverse effect on the results of operations of the U.S Segment and the International Segment.

In addition, revenue of the Marketing & Events Group may be significantly impacted if certain exhibition facilities choose to in-source electrical, plumbing, or other services. When the Marketing & Events Group is hired as the official services contractor for an exhibition, the event organizer contractually grants an exclusive right to perform those electrical and plumbing services, subject to the exhibition facility’s option to in-source the services (either by performing the services themselves or by hiring a separate service provider). Many exhibition facilities are under financial pressure as a result of conditions generally affecting their industry, including an increased supply of exhibition space. As a result, some of those facilities have sought to in-source all or a large portion of those services. If a large number of facilities with which the Marketing & Events Group has those relationships choose to in-source those services, such a decision could have a material adverse effect on Viad’s results of operations.

***Viad’s key businesses are relationship driven.*** The business activities of the U.S. Segment and the International Segment are heavily focused on client relationships, and, specifically, on the close collaboration and interaction with the client. Those relationships require the account team to become attuned to the client’s desires and expectations in order to provide top-quality service. Viad has in the past lost, and may in the future lose, important clients (and corresponding revenue) if a key member of the account team were to cease employment with the Company and take those customers to a competitor.

***Viad’s future payment of special dividends should not be relied upon as a way to realize any future gains on an investment.*** The Board of Directors generally declares and pays regular dividends to Viad’s shareholders on a quarterly basis and also has paid special dividends, most recently in February 2014. The decision to declare a special dividend and the amount, timing, and payment of any such dividend are at the sole discretion of the Board. Factors in any decision to declare a dividend would include the amount of funds legally available and an evaluation of the Company’s financial condition, capital requirements, future prospects, and other factors deemed relevant by the Board. Accordingly, investors should not rely on the future payment of special dividends as a way to realize gains on their investment.

***Viad’s businesses are seasonal, which causes results of operations to fluctuate and makes results of operations particularly sensitive to adverse events during peak periods.*** Exhibition and event activity for the U.S. Segment and the International Segment varies significantly depending on the frequency and timing of shows, as some shows are not held each year and some may shift between quarters. The Travel & Recreation Group experiences peak activity during the summer months. During 2015, 87 percent of the Travel & Recreation Group’s revenue was earned in the second and third quarters. Because of the seasonal nature of Viad’s businesses, adverse events or conditions occurring during peak periods could have a material adverse effect on Viad’s results of operations.

***New capital projects may not be commercially successful.*** From time to time, in an effort to seize opportunities that complement, enhance, and expand its businesses, Viad pursues new capital projects. Capital projects are subject to a number of risks, including unanticipated delays, cost overruns, and the failure to achieve established financial and strategic goals, as well as additional risks specific to a project. The occurrence of any of the events described above could prevent a new capital project from performing in accordance with Viad’s commercial expectations and could have a material adverse effect on its businesses and results of operations.

***Transportation disruptions and increases in transportation costs could adversely affect Viad’s businesses and results of operations.*** The U.S. Segment and the International Segment rely on independent transportation carriers to send materials and exhibits to and from exhibitions, warehouse facilities, and customer facilities. If Viad’s customers and suppliers were unable to secure the services of those independent transportation carriers at favorable rates, it could have a material adverse effect on Viad’s businesses and results of operations. In addition, disruption of transportation services because of weather-related problems, strikes, lockouts, or other events could adversely affect their ability to supply services to customers and could cause the cancellation of exhibitions, which may have a material adverse effect on the businesses and results of operations.

***Union-represented labor creates an increased risk of work stoppages and higher labor costs.*** A significant portion of Viad’s employees are unionized and Viad’s businesses are party to approximately 100 collective-bargaining agreements, with approximately one-third requiring renegotiation each year. If the results of labor negotiations caused the Company to increase wages or benefits, which increases total labor costs, the increased costs could either be absorbed (which would adversely affect operating margins) or passed on to customers, which may lead customers to turn to other vendors in response to higher prices. Either event could have a material adverse effect on Viad’s businesses and results of operations.

Additionally, if the Company were unable to reach an agreement with a union during the collective-bargaining process, the union may strike or carry out other types of work stoppages. In such a circumstance, Viad might be unable to find substitute workers with the necessary skills to perform many of the services, or may incur additional costs to do so, which could have a material adverse effect on the Company’s businesses and results of operations.

***Obligations to fund multi-employer pension plans, to which Viad contributes, may have an adverse impact on its results of operations.*** Viad’s businesses contribute to various multi-employer pension plans based on obligations arising under collective-bargaining agreements covering its union-represented employees. Viad’s contributions to those multi-employer plans in 2015 and 2014 totaled $22.0 million and $23.2 million, respectively. Viad does not directly manage those multi-employer plans, which are generally managed by boards of trustees. Based upon the information available to Viad from plan administrators, management believes that several of those 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. Viad cannot determine at this time the amount of additional funding, if any, it may be required to make to those plans. However, plan contribution increases, if any, could have a material adverse effect on Viad’s consolidated financial condition, results of operations, and cash flows. Refer to Note 18 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further information.

***Viad competes in competitive industries and increased competition could negatively impact its results of operations.*** Viad is engaged in a number of highly competitive industries. Competition in the Live Events industry and the exhibits and experiential environments industries is driven by price and service quality, among other factors. To the extent competitors seek to gain or retain their market presence through aggressive underpricing strategies, Viad may be required to lower its prices and rates to avoid loss of related business, thereby adversely affecting it results of operations. In addition, if Viad is unable to anticipate and respond as effectively as competitors to changing business conditions, including new technologies and business models, Viad could lose market share to its competitors. Viad’s inability to meet the challenges presented by the competitive environment could have a material adverse effect on its results of operations.

***Liabilities relating to prior and discontinued operations may adversely affect results of operations.*** Viad and its predecessors have a corporate history spanning over eight decades and involving approximately 2,400 previous subsidiaries in diverse businesses, such as the manufacturing of locomotives, buses, industrial chemicals, fertilizers, pharmaceuticals, leather, textiles, food, and fresh meats. Some of those businesses used raw materials that have been, and may continue to be, subject to litigation. Moreover, some of the raw materials used and the waste produced by those businesses have been and are the subject of U.S. federal and state environmental regulations, including laws enacted under the Comprehensive Environmental Response, Compensation and Liability Act, or its state law counterparts. In addition, Viad may incur other liabilities, resulting from indemnification claims involving previously sold subsidiaries, as well as from past operations of predecessors or their subsidiaries. Although the Company believes it has adequate reserves and sufficient insurance coverage to cover those future liabilities, future events or proceedings could contradict with current assumptions, which could cause reserves or insurance to become inadequate and, ultimately, have a material adverse effect on Viad’s results of operations.

***Terrorist attacks, natural disasters or other catastrophic events may have a negative effect on Viad’s business.*** The occurrence of catastrophic events ranging from natural disasters (such as hurricanes and floods), health epidemics or pandemics, acts of war or terrorism, or the prospect of these events could disrupt Viad’s businesses. Such catastrophic events could impact the Marketing & Events Group’s production facilities, preventing the Company from timely completing exhibit fabrication and other projects for customers, and could also cause a cancellation of exhibitions and other events held in public venues or a disruption in the services the Company provides to its customers at convention centers, exhibition halls, hotels, and other public venues. Such catastrophic events could also adversely impact the Travel & Recreation Group businesses, which are heavily dependent on the ability and willingness of its guests to travel. The guests serviced by the Travel & Recreation Group tend to delay or postpone vacations if natural conditions differ from those that typically prevail at competing lodges, resorts and attractions during a given season, and catastrophic events could impede the guests’ ability to travel, interrupt the Company’s business operations, and/or cause damage to the Company’s properties. If the conditions arising from such events persist or worsen, they could have a material adverse effect on Viad’s results of operations and financial condition.

***Improper disclosure of personal data could result in liability and harm the Company’s reputation.*** Viad’s businesses store and process a significant amount of personally identifiable information in connection with the services they provide to customers. If the Company’s security controls over personal data, training of employees and vendors on data security, and other practices and procedures do not prevent the improper disclosure of personally identifiable information, the Company’s reputation could be harmed, and the Company could face legal exposure to customers and other liabilities under laws that protect personal data, resulting in increased costs or loss of revenue. Certain of the Company’s services also enable its customers to store and process personal data. Perceptions that the Company’s services do not adequately protect the privacy of personal information could have a material adverse effect on Viad’s businesses and results of operations.

## Properties

As filed, 2,413 characters.

Viad’s businesses operate service or production facilities and maintain sales and service offices in the United States, Canada, the United Kingdom, Germany, the United Arab Emirates, and the Netherlands. The principal properties of Viad are operated by the Marketing & Events Group, the Travel & Recreation Group, and Viad Corporate and Shared Services as follows:

### Marketing & Events U.S. Segment

The U.S. Segment operates 20 offices and 25 multi-use facilities (manufacturing, sales and design, office, storage and/or warehouse, and truck marshaling yards). The multi-use facilities vary in size up to approximately 677,800 square feet. Two of the multi-use facilities are owned; all other properties are leased.

### Marketing & Events International Segment

The International Segment operates 11 offices and 21 multi-use facilities, with three offices and eight multi-use facilities in Canada, four offices and six multi-use facilities in the United Kingdom, one office and two multi-use facilities in Germany, two offices and three multi-use facilities in the United Arab Emirates, and one office and two multi-use facilities in the Netherlands. The multi-use facilities vary in size up to approximately 133,600 square feet. All properties are leased or licensed.

### Travel & Recreation Group

The Travel & Recreation Group operates four offices, 22 retail stores, one bus terminal, five garages, an icefield attraction, an observation platform attraction, a gondola lift attraction, a boat tour attraction, and 12 hotels/lodges (including ancillary food service and recreational facilities). All of the facilities are in the United States or Canada. The bus terminal, all of the hotels/lodges, one office, four garages, the icefield attraction, the gondola lift attraction, the observation platform attraction, and the boat tour attraction are owned. One garage and three offices are leased, and four hotels/lodges, an office and all of the owned garages and attractions are situated on land subject to multiple long-term ground leases with the Canadian government.

### Viad Headquarters

The Company’s headquarters are leased and approximate 19,900 square feet, and are located at 1850 North Central Avenue, Suite 1900 in Phoenix, Arizona 85004-4565.

Management believes that the Company’s facilities are adequate and suitable for its business operations and that capacity is sufficient for current needs.

## Legal proceedings

As filed, 245 characters.

Refer to Note 21 - Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for information regarding legal proceedings for which the Company is involved.

## Management's discussion and analysis

As filed, 72,077 characters.

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the consolidated financial statements and related notes of Viad Corp (“Viad” or the “Company”). The MD&A is intended to assist in providing an understanding of the Company’s financial condition and results of operations. This discussion contains forward-looking statements that involve risks and uncertainties. Viad Corp’s actual results could differ materially from those anticipated due to various factors discussed under “Risk Factors,” “Forward-Looking Statements,” and elsewhere in this Annual Report on Form 10-K.

### Overview

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.

The Marketing & Events Group, comprised of Global Experience Specialists, Inc. and affiliates (“GES”), is a global, full-service provider for live events. GES uniquely combines the art of high-impact creativity, service, and expertise with the science of easy-to-use technology, strategy, and worldwide logistics to help clients gain a greater return at their events and enhance the exhibitor experience.

The Travel & Recreation Group provides experiential travel services in iconic locations which enjoy perennial demand. The Travel & Recreation Group offers guests distinctive and world renowned experiences through its collection of unique hotels, lodges, recreational attractions, and transportation services. The Company remains focused on building powerful new experiences and enhancing a unique portfolio of integrated tourism assets.

### Non-GAAP Measures

In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company also discloses the following non-GAAP financial measures:

- “**Adjusted EBITDA”** is defined by Viad as net income attributable to Viad before the Company’s portion of interest expense, income taxes, depreciation and amortization, impairment charges and recoveries, changes in accounting principles, and the effects of discontinued operations. Adjusted EBITDA is utilized by management to measure the profit and performance of Viad’s operations and to facilitate period-to-period comparisons. Refer to the table below for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income attributable to Viad.
- “**Adjusted Segment EBITDA”** is defined by Viad as segment operating income before non-cash depreciation and amortization and integration costs, if any. Segment operating income is a GAAP measure defined as income from continuing operations before corporate activities, interest expense and interest income, income taxes, restructuring charges, impairment losses and recoveries, and the reduction for income attributable to non-controlling interest. Adjusted Segment EBITDA is utilized by management to measure the profit and performance of Viad’s operating segments and acquisitions to facilitate period-to-period comparisons. For a discussion of how this metric is used in connection with 2016 full year acquisition performance expectations, refer to the “Forward Looking Non-GAAP Financial Measures” section of this MD&A. Management believes that Adjusted Segment EBITDA for acquisitions enables investors to assess how effectively management is investing capital into major corporate development projects, both from a valuation and return perspective.
- “**Organic revenue”** and “**organic segment operating income”** are defined by Viad as revenue and segment operating income, 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. Management believes that the presentation of “organic” results permits investors to better understand Viad’s performance without the effects of exchange rate variances or acquisitions. Refer to the “Results of Operations” section of this MD&A for reconciliations of organic revenue and organic segment operating income to the most directly comparable GAAP measures, revenue and segment operating income.

Management believes that the presentation of Adjusted EBITDA, Adjusted Segment EBITDA, organic revenue, and organic segment operating income (collectively, the “Non-GAAP Measures”) provides useful information to investors regarding Viad’s results of operations for trending, analyzing, and benchmarking the performance and value of Viad’s business. The presentation of the Non-GAAP Measures is supplemental to results presented under GAAP and may not be comparable to similarly titled measures used by other companies. The Non-GAAP Measures should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

The Non-GAAP Measures are considered useful operating metrics as potential variations arising from taxes, depreciation and amortization, debt service costs, impairment charges and recoveries, changes in accounting principles, and the effects of discontinued operations are eliminated, thus resulting in additional measures considered to be indicative of Viad’s ongoing operations and segment performance. Although the Non-GAAP Measures are used as financial measures to assess the performance of the business, the use of these measures is limited because these measures do not consider material costs, expenses, and other items necessary to operate the business. These items include debt service costs, non-cash depreciation and amortization expense associated with long-lived assets, expenses related to U.S. federal, state, local and foreign income taxes, impairment charges or recoveries, and the effects of accounting changes and discontinued operations. Since the Non-GAAP Measures do not consider the above items, a user of Viad’s financial information should consider net income attributable to Viad and organic segment operating income as important measures of financial performance because both provide a more complete measure of the Company’s performance.

A reconciliation of net income attributable to Viad to Adjusted EBITDA is as follows:

*(in thousands)*

|  | 2015 | 2014 | 2013 |
| --- | ---: | ---: | ---: |
| Net income attributable to Viad | $26,606 | $52,354 | $21,555 |
| Depreciation and amortization | 35,231 | 30,792 | 27,967 |
| Interest expense | 4,535 | 2,015 | 1,234 |
| Income tax expense | 10,493 | 109 | 8,310 |
| Impairment charges | 96 | 884 | 3,049 |
| (Income) loss from discontinued operations | 394 | (11,564) | (2,118) |
| Noncontrolling interest | (554) | (636) | (840) |
| **Adjusted EBITDA** | $76,801 | $73,954 | $59,157 |

Adjusted EBITDA increased $2.8 million in 2015 primarily due to lower corporate costs, offset in part by higher restructuring charges. Adjusted EBITDA increased $14.8 million in 2014 primarily due to higher segment operating income at both the Marketing & Events Group and Travel & Recreation Group and lower restructuring charges, partially offset by higher corporate costs. Refer to the Results of Operations section of this MD&A for a discussion of fluctuations.

### Forward-Looking Non-GAAP Financial Measures

The Company has also provided Adjusted Segment EBITDA, formerly referred to as “segment EBITDA,” as a forward-looking Non-GAAP Measure within the Results of Operations section of this MD&A. The Company does not provide a reconciliation of this forward-looking Non-GAAP Measure to the most directly comparable GAAP financial measure because, due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible, not all of the information necessary for quantitative reconciliation of this forward-looking Non-GAAP Measure to the most directly comparable GAAP financial measure is available to the Company without unreasonable efforts. Consequently, any attempt to disclose such reconciliation would imply a degree of precision that could be confusing or misleading to investors. It is probable that the forward-looking Non-GAAP Measure provided without the directly comparable GAAP financial measure may be materially different from the corresponding Non-GAAP Measure.

### Results of Operations

### Financial Highlights

*(in thousands, except per share data)*

|  | Year Ended December 31, 2015 | 2014 | 2013 | Percentage Change 2015 vs. 2014 | Percentage Change 2014 vs. 2013 |
| --- | ---: | ---: | ---: | ---: | --- |
| Revenue | $1,089,048 | $1,064,987 | $953,347 | 2.3% | 11.7% |
| Segment operating income | $54,584 | $59,866 | $41,911 | (8.8)% | 42.8% |
| Income (loss) from discontinued operations attributable to Viad common stockholders | $(394) | $11,564 | $2,118 | \*\* | \*\* |
| Net income attributable to Viad | $26,606 | $52,354 | $21,555 | (49.2)% | \*\* |
| Diluted income per common share from continuing operations attributable to Viad common stockholders | $1.34 | $2.02 | $0.96 | (33.7)% | \*\* |

\*\* Change is greater than +/- 100 percent.

#### 2015 compared with 2014

- **Total revenue** increased $24.1 million or 2.3 percent, primarily due to incremental revenue from the acquisitions of onPeak, Blitz, N200, and the West Glacier Properties of $49.1 million, U.S. base same-show revenue growth of 8 percent, and new business wins in the Marketing & Events Group as well as revenue growth in attractions in the Travel & Recreation Group, offset in part by negative show rotation of approximately $71 million and an unfavorable foreign exchange impact of $39.7 million. Management defines base same-show revenue as revenue derived from shows that the Company produced out of the same city during the same quarter in each year.
- **Total segment operating income** decreased $5.3 million or 8.8 percent, primarily due to higher performance-based incentives, non-cash depreciation and amortization from acquisitions completed in 2014 of $7.3 million, and an unfavorable foreign exchange impact of $5.7 million, offset in part by flow through from higher revenue.
- **Income (loss) from discontinued operations attributable to Viad** decreased $12.0 million due to the income in 2014 related to the expiration of Glacier Park’s concession contract with the Park Service.
- **Net income attributable to Viad** decreased $25.7 million or 49.2 percent, primarily due to decreased segment operating income, the discontinued operations income in 2014 related to the expiration of Glacier Park’s concession contract with the Park Service, and the $11.7 million reversal of a valuation allowance in 2014 in connection with the Company’s analysis of its deferred tax assets.

#### 2014 compared with 2013

- **Total revenue** increased $111.6 million or 11.7 percent, primarily due to positive show rotation of approximately $69 million, U.S. base same-show revenue growth of 6.4 percent, and incremental revenue from the acquisitions of onPeak, Blitz, N200, and the West Glacier Properties of $21.3 million, as well as revenue growth in attractions in the Travel & Recreation Group largely due to the Glacier Skywalk (opened May 2014).
- **Total segment operating income** increased $18.0 million or 42.8 percent, primarily due to flow through from higher revenue and increased margins in all three reportable segments.
- **Income from discontinued operations attributable to Viad** increased $9.4 million due to the income in 2014 related to the expiration of Glacier Park’s concession contract with the Park Service on December 31, 2013. The Company’s 2013 results related to the operations of Glacier Park’s concession contract business were reclassified as discontinued operations.
- **Net income attributable to Viad** increased $30.8 million primarily due to an $11.7 million reversal of a valuation allowance in 2014 in connection with the Company’s analysis of its deferred tax assets, income in 2014 related to the expiration of Glacier Park’s concession contract with the Park Service, and increased segment operating income.

### Foreign Exchange Rate Variances

Viad conducts its foreign operations primarily in Canada, the United Kingdom, Germany, and to a lesser extent, in certain other countries.

The following tables summarize the effects of foreign exchange rate variances on revenue and segment operating results (or “FX Impact”) from Viad’s significant international operations for the years ended December 31, 2015, 2014, and 2013, excluding the effect of 2014 acquisitions:

| Marketing & Events Group: | Revenue Weighted-Average Exchange Rates 2015 | 2014 | FX Impact (in thousands) | Segment Operating Results Weighted-Average Exchange Rates 2015 | 2014 | FX Impact (in thousands) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada | $0.78 | $0.90 | $(9,420) | $0.80 | $0.88 | $(336) |
| United Kingdom | $1.53 | $1.65 | (13,380) | $1.52 | $1.66 | (652) |
| Germany | $1.11 | $1.32 | (3,200) | $1.10 | $1.35 | (56) |
|  |  |  | (26,000) |  |  | (1,044) |
| Travel & Recreation Group: |  |  |  |  |  |  |
| Canada | $0.78 | $0.92 | (13,705) | $0.78 | $0.93 | (4,638) |
|  |  |  | $(39,705) |  |  | $(5,682) |

| Marketing & Events Group: | Revenue Weighted-Average Exchange Rates 2014 | 2013 | FX Impact (in thousands) | Segment Operating Results Weighted-Average Exchange Rates 2014 | 2013 | FX Impact (in thousands) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada | $0.90 | $0.97 | $(4,635) | $0.88 | $0.99 | $(211) |
| United Kingdom | $1.65 | $1.56 | 9,105 | $1.66 | $1.57 | 460 |
| Germany | $1.32 | $1.33 | (58) | $1.35 | $1.33 | 2 |
|  |  |  | 4,412 |  |  | 251 |
| Travel & Recreation Group: |  |  |  |  |  |  |
| Canada | $0.92 | $0.96 | (4,735) | $0.93 | $0.96 | (877) |
|  |  |  | $(323) |  |  | $(626) |

Viad’s 2015 operating results were primarily impacted by the weakening of the British pound and the Canadian dollar relative to the U.S. dollar. Viad’s 2014 operating results were primarily impacted by the weakening of the Canadian dollar and the strengthening of the British pound relative to the U.S. dollar. Future changes in the exchange rates may impact overall expected profitability and historical period-to-period comparisons when operating results are translated into U.S. dollars.

### Analysis of Operating Results by Reportable Segment

### Marketing & Events Group

#### 2015 compared with 2014

The following table provides a comparison of the Marketing & Events Group’s reported operating results to organic operating results for the years ended December 31, 2015 and 2014 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.

*(in thousands)*

| Revenue: Marketing & Events Group: | Year Ended December 31, 2015 As Reported | Acquisitions (1) | FX Impact | Organic (2) | Year Ended December 31, 2014 As Reported | Acquisitions (1) | Organic (2) | Change As Reported | Organic (2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Segment | $720,882 | $30,916 | $— | $689,966 | $710,835 | $6,123 | $704,712 | 1.4% | (2.1)% |
| International Segment | 272,634 | 34,066 | (26,000) | 264,568 | 249,649 | 10,589 | 239,060 | 9.2% | 10.7% |
| Intersegment eliminations | (16,638) | — | — | (16,638) | (16,016) | — | (16,016) | (3.9)% | (3.9)% |
| Total Marketing & Events Group | $976,878 | $64,982 | $(26,000) | $937,896 | $944,468 | $16,712 | $927,756 | 3.4% | 1.1% |
| **Segment operating income (loss):** |  |  |  |  |  |  |  |  |  |
| Marketing & Events Group: |  |  |  |  |  |  |  |  |  |
| U.S. Segment | $14,563 | $6,419 | $— | $8,144 | $21,400 | $(252) | $21,652 | (31.9)% | (62.4)% |
| International Segment | 12,211 | 1,132 | (1,044) | 12,123 | 10,339 | 186 | 10,153 | 18.1% | 19.4% |
| Total Marketing & Events Group | $26,774 | $7,551 | $(1,044) | $20,267 | $31,739 | $(66) | $31,805 | (15.6)% | (36.3)% |

(1) Acquisitions for the U.S Segment include onPeak (acquired in October 2014). Acquisitions for the International Segment include Blitz (acquired in September 2014) and N200 (acquired in November 2014).

(2) Organic operating results 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 operating results, see the “Non-GAAP Measures” section of this MD&A.

### U.S. Segment

**U.S. Segment revenue** increased $10.0 million or 1.4 percent, primarily due to incremental revenue of $24.8 million from the acquisition of onPeak, base same-show revenue growth of 8.0 percent, new business wins, and increased sales to corporate clients, offset in part by negative show rotation of approximately $75 million. Base same-shows represented 44.7 percent of the 2015 U.S. Segment organic revenue. Organic revenue decreased $14.7 million or 2.1 percent.

**U.S. Segment operating income** decreased $6.8 million or 31.9 percent, primarily due to negative show rotation revenue and higher performance-based incentives, offset in part by incremental segment operating income of $6.7 million from the acquisition of onPeak. Organic operating income decreased $13.5 million or 62.4 percent.

### International Segment

**International Segment revenue** increased $23.0 million or 9.2 percent, primarily driven by incremental revenue of $23.5 million from the acquisitions of Blitz and N200, new business wins, increased client spending, and positive show rotation revenue of approximately $4 million, offset in part by an unfavorable FX Impact of $26.0 million. Organic revenue increased $25.5 million or 10.7 percent.

**International Segment operating income** increased $1.9 million or 18.1 percent, primarily due to higher organic revenue and incremental segment operating income from the acquisitions of Blitz and N200 of $0.9 million, offset in part by higher performance-based incentives and an unfavorable FX Impact of $1.0 million. Organic operating income increased $2.0 million or 19.4 percent.

### 2016 Outlook

Although the Marketing & Events Group has a diversified revenue base and long-term contracts for future shows, its revenue is affected by general economic and industry-specific conditions. The prospects for individual shows tend to be driven by the success of the industry related to those shows. In general, the exhibition and event industry is experiencing modest growth.

For the 2016 full year, management expects the Marketing & Events Group’s revenue to be up high-single digits from 2015 driven by positive show rotation of approximately $50 million to $55 million, new business wins, and continued same-show growth, partially offset by an unfavorable FX Impact. Management anticipates an unfavorable FX Impact on the Marketing & Events Group’s 2016 full year revenue and segment operating income of approximately $17 million and $1 million, respectively. Management expects U.S. base same-show revenue to increase at a mid-single digit rate.

Management is executing a strategic growth plan to position the Marketing & Events Group as the preferred, global full-service provider of live events, with further reach to exhibitions, congresses and conferences, corporate events, and consumer events. In support of this strategy, the Company acquired Blitz, onPeak, and N200 during 2014. The Company continues to pursue opportunities to acquire businesses with proven products and services that complement, enhance, or expand the current business or offer growth opportunities to create the most comprehensive suite of services for the Live Events industry.

Additionally, management remains focused on improving the profitability of the U.S. Segment through continued efforts to more effectively manage labor costs by driving productivity gains through rigorous and strategic pre-show planning that reduces the ratio of labor costs to revenue. Improving this metric is a top priority of management and the Company continues to develop and enhance tools to support and systematize show site labor planning, measurement and benchmarking.

#### 2014 compared with 2013

The following table provides a comparison of the Marketing & Events Group’s reported operating results to organic operating results for the years ended December 31, 2014 and 2013 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.

26

*(in thousands)*

| Revenue: Marketing & Events Group: | Year Ended December 31, 2014 As Reported | Acquisitions (1) | FX Impact | Organic (2) | Year Ended December 31, 2013 As Reported | Acquisitions | Organic (2) | Change As Reported | Organic (2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Segment | $710,835 | $6,123 | $— | $704,712 | $628,856 | $— | $628,856 | 13.0% | 12.1% |
| International Segment | 249,649 | 10,589 | 4,412 | 234,648 | 229,312 | — | 229,312 | 8.9% | 2.3% |
| Intersegment eliminations | (16,016) | — | — | (16,016) | (13,264) | — | (13,264) | (20.7)% | (20.7)% |
| Total Marketing & Events Group | $944,468 | $16,712 | $4,412 | $923,344 | $844,904 | $— | $844,904 | 11.8% | 9.3% |
| **Segment operating income (loss):** |  |  |  |  |  |  |  |  |  |
| Marketing & Events Group: |  |  |  |  |  |  |  |  |  |
| U.S. Segment | $21,400 | $(252) | $— | $21,652 | $11,024 | $— | $11,024 | 94.1% | 96.4% |
| International Segment | 10,339 | 186 | 251 | 9,902 | 9,068 | — | 9,068 | 14.0% | 9.2% |
| Total Marketing & Events Group | $31,739 | $(66) | $251 | $31,554 | $20,092 | $— | $20,092 | 58.0% | 57.0% |

(1) Acquisitions for the U.S Segment include onPeak (acquired in October 2014). Acquisitions for the International Segment include Blitz (acquired in September 2014) and N200 (acquired in November 2014).

(2) Organic operating results 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 operating results, see the “Non-GAAP Measures” section of this MD&A.

### U.S. Segment

**U.S Segment revenue** increased $82.0 million or 13.0 percent, primarily due to positive show rotation revenue of approximately $69 million, base same-show revenue growth of 6.4 percent, incremental revenue of $6.1 million from the acquisition of onPeak, and higher revenue from corporate clients, offset in part by the loss of the International Consumer Electronics Show. Base same-shows represented approximately 39 percent of the 2014 U.S. Segment revenue. Organic revenue increased $75.9 million or 12.1 percent.

**U.S. Segment operating income** increased $10.4 million or 94.1 percent, primarily due to higher organic revenue, offset in part by a non-recurring gain of $4.8 million in 2013 related to the sale of a facility and higher performance-based incentives in 2014. Organic operating income increased $10.6 million or 96.4 percent.

### International Segment

**International Segment revenue** increased $20.3 million or 8.9 percent, primarily due to incremental revenue of $10.6 million from the acquisitions of Blitz and N200 and a favorable FX Impact of $4.4 million. Organic revenue increased $5.3 million or 2.3 percent.

**International Segment operating income** increased $1.3 million or 14.0 percent, primarily due to higher organic revenue, a favorable FX Impact of $0.3 million, and operating income of $0.2 million from the acquisitions of Blitz and N200. Organic operating income increased $0.8 million or 9.2 percent.

### Travel & Recreation Group

#### 2015 compared with 2014

The following table provides a comparison of the Travel & Recreation Group’s reported operating results to organic operating results for the years ended December 31, 2015 and 2014 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.

*(in thousands)*

| Revenue: Travel & Recreation Group: | Year Ended December 31, 2015 As Reported | Acquisitions (1) | FX Impact | Organic (2) | Year Ended December 31, 2014 As Reported | Acquisitions (1) | Organic (2) | Change As Reported | Organic (2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Hospitality | $41,605 | $5,470 | $(1,997) | $38,132 | $42,689 | $4,637 | $38,052 | (2.5)% | 0.2% |
| Attractions | 42,405 | — | (7,444) | 49,849 | 44,691 | — | 44,691 | (5.1)% | 11.5% |
| Package Tours | 15,863 | — | (2,453) | 18,316 | 19,336 | — | 19,336 | (18.0)% | (5.3)% |
| Transportation | 13,999 | — | (2,111) | 16,110 | 15,954 | — | 15,954 | (12.3)% | 1.0% |
| Intra-Segment Eliminations & Other | (1,702) | — | 300 | (2,002) | (2,151) | — | (2,151) | 20.9% | 6.9% |
| Total Travel & Recreation Group | $112,170 | $5,470 | $(13,705) | $120,405 | $120,519 | $4,637 | $115,882 | (6.9)% | 3.9% |
| **Segment operating income:** |  |  |  |  |  |  |  |  |  |
| Total Travel & Recreation Group | $27,810 | $1,547 | $(4,638) | $30,901 | $28,127 | $1,511 | $26,616 | (1.1)% | 16.1% |

(1) Acquisitions include the West Glacier Properties (acquired in July 2014).

(2) Organic operating results 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 operating results, see the “Non-GAAP Measures” section of this MD&A.

**Travel & Recreation Group revenue** decreased $8.3 million or 6.9 percent, primarily due to an unfavorable FX Impact of $13.7 million. Organic revenue increased $4.5 million or 3.9 percent, primarily due to higher effective ticket prices at the attractions and an increase in the number of passengers at the Columbia Icefield Glacier Adventure.

**Travel & Recreation Group operating income** decreased $0.3 million or 1.1 percent, primarily due to an unfavorable FX Impact of $4.6 million. Organic operating income increased $4.3 million or 16.1 percent, primarily driven by increased attractions revenue.

### 2016 Outlook

Management expects the Travel & Recreation Group’s revenue to be down low-single digits from 2015 due to changes in Brewster’s package tours and transportation lines of business, which are expected to impact revenue by approximately $7 million to $9 million as management streamlines those operations to focus on higher return opportunities, an unfavorable FX Impact, and renovation closures at the Banff Gondola which are expected to decrease revenue by approximately $1 million. Management anticipates an unfavorable FX Impact on the Travel & Recreation Group’s 2016 full year revenue and segment operating income of approximately $8 million and $2 million, respectively.

Management expects the January 2016 acquisition of Maligne Tours Ltd. (“Maligne Lake Tours”) to provide revenue of approximately $5 million and Adjusted Segment EBITDA of approximately $2 million.

#### 2014 compared with 2013

The following table provides a comparison of the Travel & Recreation Group’s reported operating results to organic operating results for the years ended December 31, 2014 and 2013 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.

*(in thousands)*

| Revenue: Travel & Recreation Group: | Year Ended December 31, 2014 As Reported | Acquisitions (1) | FX Impact | Organic (2) | Year Ended December 31, 2013 As Reported | Acquisitions | Organic (2) | Change As Reported | Organic (2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Hospitality | $42,689 | $4,637 | $(804) | $38,856 | $38,236 | $— | $38,236 | 11.6% | 1.6% |
| Attractions | 44,691 | — | (2,290) | 46,981 | 36,102 | — | 36,102 | 23.8% | 30.1% |
| Package Tours | 19,336 | — | (847) | 20,183 | 18,950 | — | 18,950 | 2.0% | 6.5% |
| Transportation | 15,954 | — | (904) | 16,858 | 17,247 | — | 17,247 | (7.5)% | (2.3)% |
| Intra-Segment Eliminations & Other | (2,151) | — | 110 | (2,261) | (2,092) | — | (2,092) | (2.8)% | (8.1)% |
| Total Travel & Recreation Group | $120,519 | $4,637 | $(4,735) | $120,617 | $108,443 | $— | $108,443 | 11.1% | 11.2% |
| **Segment operating income:** |  |  |  |  |  |  |  |  |  |
| Total Travel & Recreation Group | $28,127 | $1,511 | $(877) | $27,493 | $21,819 | $— | $21,819 | 28.9% | 26.0% |

(1) Acquisitions include the West Glacier Properties (acquired in July 2014).

(2) Organic operating results 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 operating results, see the “Non-GAAP Measures” section of this MD&A.

**Travel & Recreation Group revenue** increased $12.1 million or 11.1 percent, primarily driven by attractions and incremental revenue of $4.6 million from the West Glacier Properties acquisition, offset in part by an unfavorable FX Impact of $4.7 million. Organic revenue increased $12.2 million or 11.2 percent, primarily due to the opening of the Glacier Skywalk attraction and increased passenger counts at the Columbia Icefield Glacier Adventure, the Banff Gondola, and the Banff Lake Cruise. Hospitality revenue increased slightly primarily due to increases at the Banff International Hotel, the Mount Royal Hotel, and the Glacier View Inn, which benefitted from strong visitation to Banff and Jasper National Parks, as well as Grouse Mountain Lodge driven by the Company’s renovations in 2012 and 2013. The increases at these properties were offset in part by decreased revenue at the Denali Backcountry Lodge due to flooding at the end of June 2014 and at Glacier Park Lodge which experienced especially strong occupancy in 2013 as a result of its centennial anniversary. Transportation revenue decreased primarily due to reduced business for the Denali Backcountry Adventure. Package tours revenue increased primarily due to higher group and individual business.

**Travel & Recreation Group operating income** increased $6.3 million or 28.9 percent, primarily due to higher revenue, offset in part by an unfavorable FX Impact of $0.9 million. Organic operating income increased $5.7 million or 26.0 percent, primarily driven by increased attractions revenue.

### Performance Measures

Management uses the following key business metrics to evaluate the Travel & Recreation Group hospitality business: revenue per available room (“RevPAR”), average daily rate (“ADR”), and occupancy. These metrics are commonly used in the hospitality industry to measure performance.

- **Revenue per Available Room.** RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Travel & Recreation Group 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 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 Travel & Recreation Group hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to generate. Increases in ADR at hospitality properties 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 Travel & Recreation Group 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 increased ancillary non-rooms revenue (including food and beverage and retail revenue).

Management evaluates the performance of the Travel & Recreation Group attractions business utilizing the number of passengers and total attractions revenue per passenger. The number of passengers allows management to assess the volume of visitor activity at each attraction during the period. Total attractions revenue per passenger is calculated as total attractions revenue divided by the total number of passengers at all Travel & Recreation Group 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 passenger measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.

#### 2015 compared with 2014

The following table provides Travel & Recreation Group same-store key performance indicators for the years ended December 31, 2015 and 2014. The same-store metrics below indicate the performance of all Travel & Recreation Group properties and attractions that were owned by Viad and operating at full capacity, considering seasonal closures, for the entirety of both periods presented. For Travel & Recreation Group properties and attractions located in Canada, 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. Management believes that this same-store constant currency basis provides better comparability between reporting periods.

| Same-Store Key Performance Indicators (1) Hospitality: | Year Ended December 31, 2015 | 2014 | Change |
| --- | ---: | ---: | ---: |
| Room nights available | 218,915 | 218,913 | 0.0% |
| RevPAR | $96 | $95 | 1.1% |
| ADR | $144 | $139 | 3.6% |
| Occupancy | 66.7% | 68.2% | -1.5% |
| **Attractions:** |  |  |  |
| Passengers | 1,340,175 | 1,353,314 | -1.0% |
| Revenue Per Passenger | $32 | $28 | 14.3% |

(1) The Same-Store Key Performance Indicators exclude the West Glacier Properties (acquired in July 2014), as it was not included in the entirety of 2014.

**Hospitality**. Room nights available were relatively flat in 2015. The slight increase was due to additional room nights available from the Denali Cabins due to its opening ten days earlier than the prior year as a result of management’s review of a variety of factors, including the weather conditions, opening dates of other properties in the area, and availability of seasonal employees. Additionally, the Grouse Mountain Lodge added one guest room in 2015, offset in part by St. Mary Lodge closing eight days earlier than the prior year due to the Going-to-the-Sun Road closure for construction.

RevPAR increased in 2015 primarily driven by the Alaska Denali Travel and Brewster properties, offset in part by decreases at certain Glacier Park properties (Glacier Park Lodge, St. Mary Lodge, and Grouse Mountain Lodge) as a result of forest fires during the third quarter of 2015. ADR increased for the Alaska Denali Travel and Brewster properties due to higher room rates charged. Occupancy decreased in 2015 primarily due to forest fires that affected certain Glacier Park properties and decreases at the Banff International Hotel due to planned room renovation activity, offset in part by the Denali Backcountry Lodge which experienced a strong increase in occupancy in 2015 due to flooding in June 2014.

**Attractions.** Revenue per passenger increased primarily due to higher effective ticket prices. The number of passengers decreased during 2015 at the Glacier Skywalk, which is attributed to widespread marketing efforts and a strong opening in 2014, and at the Banff Gondola due to the closure in October 2015 as part of the redevelopment project. The decrease in the number of passengers was offset in part by an increase in the number of passengers at the Columbia Icefield Glacier Adventure. Excluding the Banff Gondola fourth quarter passengers, total attraction passengers would have increased 2.4 percent in 2015.

#### 2014 compared with 2013

The following table provides Travel & Recreation Group same-store key performance indicators for the years ended December 31, 2014 and 2013. The same-store metrics below indicate the performance of all Travel & Recreation Group properties and attractions that were owned by Viad and operating at full capacity, considering seasonal closures, for the entirety of both periods presented. For Travel & Recreation Group properties and attractions located in Canada, 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. Management believes that this same-store constant currency basis provides better comparability between reporting periods.

| Same-Store Key Performance Indicators (1) Hospitality: | Year Ended December 31, 2014 | 2013 | Change |
| --- | ---: | ---: | ---: |
| Room nights available | 218,913 | 220,989 | (0.9)% |
| RevPAR | $102 | $97 | 5.2% |
| ADR | $149 | $151 | (1.3)% |
| Occupancy | 68.2% | 64.4% | 3.8% |
| **Attractions:** |  |  |  |
| Passengers | 1,053,496 | 915,598 | 15.1% |
| Revenue per passenger | $37 | $37 | —% |

(1) The Same-Store Key Performance Indicators exclude the West Glacier Properties (acquired in July 2014) and the Glacier Skywalk attraction (opened May 2014), as they were not included in 2013.

**Hospitality.** The increase in RevPAR in 2014 was primarily due to higher occupancy and ADR at the Mount Royal Hotel, the Banff International Hotel, and the Glacier View Inn driven by increased visitation to Banff and Jasper National Parks. The Grouse Mountain Lodge also experienced higher RevPAR driven by the Company’s renovations in 2012 and 2013. These increases were partially offset by reduced occupancy at the Denali Backcountry Lodge, which experienced flooding early in its operating season, and at Glacier Park Lodge, which experienced especially strong occupancy in 2013 as a result of its centennial anniversary. The decrease in ADR was primarily driven by offering lower rates at the Prince of Wales Hotel in response to softer demand as compared to prior year and higher occupancy during the off-peak season at the Grouse Mountain Lodge when rates were lower. The decrease in room nights available from 2013 to 2014 was due to changes in seasonal opening and closing dates of certain Glacier Park properties. Management schedules opening and closing dates to optimize profitability based on anticipated travel patterns, and forecasted occupancy levels and operating expenses.

**Attractions.** The number of passengers increased in 2014 at all three comparable attractions (Columbia Icefield Glacier Adventure, Banff Gondola, and Banff Lake Cruise). The attractions benefited from increased park visitation traffic, favorable weather conditions, and strong combination ticket sales with the Glacier Skywalk. The Banff Lake Cruise experienced a substantial increase in individual traffic as a result of implementing additional departure times in 2014.

During 2015 and 2014, the Travel & Recreation Group derived approximately 73 percent and 75 percent, respectively, of revenue and 89 percent and 90 percent, respectively, of segment operating income from its Canadian operations, which are largely dependent on foreign customer visitation. Accordingly, the strengthening or weakening of the Canadian dollar, relative to other currencies, could affect customer volumes and the results of operations. Additionally, the Travel & Recreation Group is affected by consumer discretionary spending on tourism activities.

### Corporate Activities

*(in thousands)*

|  | Year Ended December 31, 2015 | 2014 | 2013 | Percentage Change 2015 vs. 2014 | Percentage Change 2014 vs. 2013 |
| --- | ---: | ---: | ---: | ---: | --- |
| Corporate activities | $9,720 | $14,348 | $6,755 | (32.3)% | \*\* |

\*\* Change is greater than +/- 100 percent.

#### 2015 compared with 2014

Corporate activities expense decreased $4.6 million during 2015 as compared to 2014, primarily related to consulting and other transaction-related costs associated with acquisitions incurred primarily during the third and fourth quarters of 2014 and CEO transition costs of $2.7 million incurred during the fourth quarter of 2014, offset in part by costs related to a shareholder nomination and settlement agreement in 2015.

#### 2014 compared with 2013

Corporate activities expense increased $7.6 million during 2014 as compared to 2013, primarily related to acquisition transaction-related costs of $4.2 million, CEO transition costs of $2.7 million, and higher 401(k) employer matching contributions expense due to the depletion of the Company’s common stock held in the Employee Stock Ownership Plan feature of the Company’s 401(k). Matching contributions are now funded from shares of Viad common stock held in treasury which have a higher cost to the Company.

### Interest Expense

*(in thousands)*

|  | Year Ended December 31, 2015 | 2014 | 2013 | Percentage Change 2015 vs. 2014 | Percentage Change 2014 vs. 2013 |
| --- | ---: | ---: | ---: | --- | ---: |
| Interest expense | $4,535 | $2,015 | $1,234 | \*\* | 63.3% |

\*\* Change is greater than +/- 100 percent.

#### 2015 compared with 2014

Interest expense increased $2.5 million during 2015 as compared to 2014, primarily due to higher outstanding debt balances resulting from acquisitions completed during the second half of 2014.

#### 2014 compared with 2013

Interest expense increased $0.8 million during 2014 as compared to 2013, primarily due to higher outstanding debt balances resulting from acquisitions completed during the second half of 2014.

### Restructuring Charges

*(in thousands)*

|  | Year Ended December 31, 2015 | 2014 | 2013 | Percentage Change 2015 vs. 2014 | Percentage Change 2014 vs. 2013 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Restructuring charges | $2,956 | $1,637 | $3,793 | 80.6% | (56.8)% |

#### 2015 compared with 2014

During 2015, Viad recorded restructuring charges of $3.0 million ($1.9 million after-tax) primarily related to the elimination of positions and facility consolidations in the Marketing & Events Group, as well as the elimination of certain positions at the Corporate office and the Travel & Recreation Group. During 2014, Viad recorded net restructuring charges of $1.6 million ($1.0 million after-tax) primarily related to the elimination of certain positions in the Marketing & Events Group, net of restructuring recoveries of $0.2 million ($0.1 million after-tax) primarily related to updated estimates of facility contractual arrangements.

#### 2014 compared with 2013

During 2014, Viad recorded net restructuring charges of $1.6 million ($1.0 million after-tax) primarily related to the elimination of certain positions in the Marketing & Events Group, net of restructuring recoveries of $0.2 million ($0.1 million after-tax) primarily related to updated estimates of facility contractual arrangements. In 2013, Viad recorded net restructuring charges of $3.8 million ($2.6 million after-tax) primarily related to facility consolidations and the elimination of certain positions in the Marketing & Events Group. In addition, restructuring charges related to the elimination of certain positions in the Travel & Recreation Group and at Viad corporate were also recorded in 2013.

### Impairment Charges

*(in thousands)*

|  | Year Ended December 31, 2015 | 2014 | 2013 | Percentage Change 2015 vs. 2014 | Percentage Change 2014 vs. 2013 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Impairment charges | $96 | $884 | $3,049 | (89.1)% | (71.0)% |

#### 2015 compared with 2014

Viad recorded impairment charges primarily related to the write-off of certain internally developed software of $0.1 million ($0.1 million after-tax) in the Travel & Recreation Group in 2015 and $0.9 million ($0.5 million after-tax) in the Marketing & Events Group in 2014.

#### 2014 compared with 2013

In 2014, Viad recorded impairment charges of $0.9 million ($0.5 million after-tax) in the Marketing & Events Group primarily related to the write-off of certain internally developed software. In 2013, Viad recorded impairment charges of approximately $3.0 million ($1.6 million after-tax) related to the non-cash write-down of goodwill at Glacier Park of $2.1 million ($1.0 million after-tax) and $1.0 million ($0.6 million after-tax) related to the write-off of certain assets within the Marketing & Events Group.

### Income Taxes

The effective tax rates for the years ended December 31, 2015, 2014, and 2013 were 27.7 percent, 0.2 percent, and 30.1 percent, respectively. The effective tax rate in 2015 included a $1.6 million non-cash tax benefit related to deferred taxes associated with certain foreign intangibles. The decrease in the effective tax rate for 2014 compared to 2013 was primarily due to the release of the valuation allowance related to foreign tax credit and state NOL carryforwards.

### Discontinued Operations

On December 31, 2013, Glacier Park’s concession contract with the Park Service to operate lodging, tour and transportation and other hospitality services for Glacier National Park expired. Upon completion of the contract term, Viad received cash payments in January 2014 of $25.0 million for the Company’s possessory interest. This resulted in a pre-tax gain of $21.5 million and an after-tax gain of $13.5 million which was recorded as income from discontinued operations. In addition, 2014 income from discontinued operations included approximately $0.7 million, net of tax, related to the gain on sale of personal property at Glacier Park, as well as an insurance recovery of $0.3 million, net of tax. During 2015 and 2014, the Company recorded $0.4 million and $0.1 million, respectively, net of tax, due to additional reserves related to certain liabilities associated with previously sold operations.

The Company’s 2013 results related to the operations of Glacier Park’s concession contract business have been reclassified as discontinued operations. Accordingly, for the 2013 full year, approximately $19 million in revenue and $4 million in operating income have been reclassified to discontinued operations. In addition, 2013 income from discontinued operations included $1.1 million, net of tax, primarily related to the sale of land associated with a previously sold operation.

### Liquidity and Capital Resources

Cash and cash equivalents were $56.5 million as of December 31, 2015, as compared to $57.0 million as of December 31, 2014. During 2015, the Company generated net cash flows from operating activities of $60.3 million primarily from results of operations. Management believes that Viad’s existing sources of liquidity will be sufficient to fund operations and capital commitments for at least the next 12 months.

As of December 31, 2015, the Company had approximately $53.5 million of its cash and cash equivalents held outside of the United States, consisting of $34.7 million in Canada, $11.9 million in the United Kingdom, $4.9 million in the Netherlands, $1.1 million in Germany, and $0.9 million in the United Arab Emirates. There are certain earnings related to the Company’s Canadian operations that have historically been deemed permanently reinvested. As of December 31, 2015, the incremental tax associated with these earnings, if the cash balances were repatriated to the United States, would approximate $2.3 million.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | December 31, 2015 | 2014 | 2013 |
| --- | ---: | ---: | ---: |
| Net income | $27,048 | $55,567 | $21,686 |
| Depreciation and amortization | 35,231 | 30,792 | 27,967 |
| Deferred income taxes | 469 | (9,731) | 2,298 |
| (Income) loss from discontinued operations | 394 | (14,389) | (2,366) |
| Other non-cash items | 11,186 | 9,765 | 11,471 |
| Changes in assets and liabilities | (14,051) | (13,914) | (55,001) |
| **Net cash provided by operating activities** | $60,277 | $58,090 | $6,055 |

#### 2015 compared with 2014

Net cash provided by operating activities increased $2.2 million in 2015, primarily due to changes in working capital.

#### 2014 compared with 2013

Net cash provided by operating activities increased $52.0 million in 2014, primarily due to higher net income and favorable working capital mainly reflecting the volume and timing of revenue in the Marketing & Events Group.

### Investing Activities

*(in thousands)*

|  | December 31, 2015 | 2014 | 2013 |
| --- | ---: | ---: | ---: |
| Capital expenditures | $(29,839) | $(29,389) | $(36,119) |
| Proceeds from dispositions of property and other assets | 1,542 | 1,109 | 464 |
| Cash paid for acquired businesses | (430) | (120,251) | (647) |
| Proceeds from possessory interest and personal property - discontinued operations | — | 28,000 | — |
| Proceeds from sale of facility and related land | — | — | 12,696 |
| Proceeds from sale of land - discontinued operations | — | — | 1,645 |
| **Net cash used in investing activities** | $(28,727) | $(120,531) | $(21,961) |

#### 2015 compared with 2014

Net cash used in investing activities decreased $91.8 million in 2015, primarily due to the cash payments of $120.3 million for the acquisitions of Blitz, onPeak, N200, and the West Glacier Properties in 2014, offset in part by $28.0 million received in 2014 for the Company’s possessory interest and personal property at Glacier Park.

#### 2014 compared with 2013

Net cash used in investing activities increased $98.6 million in 2014, primarily due to the cash payments of $120.3 million for the acquisitions of Blitz, onPeak, N200, and the West Glacier Properties in 2014, offset in part by $28.0 million received in 2014 for the Company’s possessory interest and personal property at Glacier Park, and the proceeds from the sale of facility and land in 2013.

### Financing Activities

*(in thousands)*

|  | December 31, 2015 | 2014 | 2013 |
| --- | ---: | ---: | ---: |
| Proceeds from borrowings | $50,000 | $189,512 | $20,000 |
| Payments on debt and capital lease obligations | (62,969) | (61,461) | (11,362) |
| Dividends paid on common stock | (8,036) | (38,387) | (58,914) |
| Common stock purchased for treasury | (4,816) | (12,321) | (1,328) |
| Acquisition of business - deferred consideration | (896) | — | — |
| Debt issuance costs | — | (1,671) | — |
| Other | 1,459 | 1,269 | 1,199 |
| **Net cash provided by (used in) financing activities** | $(25,258) | $76,941 | $(50,405) |

#### 2015 compared with 2014

The change in net cash provided by (used in) financing activities was primarily due to a decrease in net borrowings of $141.0 million, offset in part by a decrease in dividends paid of $30.4 million related to a special cash dividend of $1.50 per share paid in 2014, and a decrease in cash used for common stock repurchases of $7.5 million. An additional amount of $0.9 million was paid during 2015 as a result of an election made by the Company to treat the Travel Planners, Inc. purchase as an asset acquisition for tax purposes.

#### 2014 compared with 2013

The change in net cash provided by (used in) financing activities was primarily due to an increase in net borrowings of $119.4 million and a decrease in dividends paid of $20.5 million, offset in part by an increase in cash used for common stock repurchases of $11.0 million. Special cash dividends of $1.50 per share and $2.50 per share were paid in 2014 and 2013, respectively.

### Debt and Capital Lease Obligations

Refer to Note 11 – Debt and Capital Lease Obligations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further discussion.

### Guarantees

Refer to Note 11 – Debt and Capital Lease Obligations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further discussion.

### Share Repurchases

The Board of Directors authorized the Company to repurchase shares of its common stock from time to time at prevailing market prices. During 2015 and 2014, the Company repurchased 141,462 shares and 448,436 shares on the open market for $3.8 million and $10.6 million, respectively. As of December 31, 2015, 440,540 shares remained available for repurchase. The authorization of the Board of Directors does not have an expiration date. In addition, during 2015 and 2014, the Company repurchased 35,649 shares and 72,996 shares for $1.0 million and $1.8 million, respectively, related to tax withholding requirements on vested share-based awards.

### Contractual Obligations

The following table presents Viad’s contractual obligations as of December 31, 2015:

*(in thousands)*

|  | Payments due by period 2016 | 2017-2018 | 2019-2020 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revolver and term loan borrowings | $33,750 | $37,500 | $56,250 | $— | $127,500 |
| Operating leases | 20,962 | 35,004 | 24,440 | 10,122 | 90,528 |
| Pension and postretirement benefits (1) | 3,116 | 6,609 | 6,847 | 16,879 | 33,451 |
| Purchase obligations (2) | 18,329 | 8,086 | 1,663 | — | 28,078 |
| Capital lease obligations | 804 | 671 | — | — | 1,475 |
| Estimated interest payments | 122 | 106 | — | — | 228 |
| **Total contractual obligations (3)** | $77,083 | $87,976 | $89,200 | $27,001 | $281,260 |

(1) Estimated contributions related to multi-employer benefit plans are excluded from the table above. Refer to Note 18 - Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further information.

(2) Purchase obligations primarily represent payments due under various licensing agreements and commitments related to consulting and other contracted services that are enforceable and legally binding and that specify all significant terms, including open purchase orders.

(3) Aggregate self-insurance liabilities of $30.7 million are excluded from the table above as the timing and amounts of future cash outflows are uncertain. Refer to Note 9 - Other Current Liabilities and Note 10 - Other Deferred Liabilities of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further information.

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. Additionally, Viad’s businesses contribute to various multi-employer pension plans based on obligations arising under collective-bargaining agreements covering its union-represented employees. Refer to Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further information.

### Off-Balance Sheet Arrangements

Viad has not entered into any off-balance sheet arrangements with unconsolidated special-purpose or other entities that would materially affect the Company’s financial position, results of operations, liquidity, or capital resources. Furthermore, Viad does not have any relationships with special-purpose or other entities that provide off-balance sheet financing; liquidity, market risk, or credit risk support; or engage in leasing or other services that may expose the Company to liability or risks of loss that are not reflected in Viad’s consolidated financial statements and related notes. Refer to Note 11 – Debt and Capital Lease Obligations, Note 20 – Leases and Other, and Note 21 - Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further information.

### Critical Accounting Policies and Estimates

Viad’s financial statements have been prepared in conformity with U.S. GAAP. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Critical accounting policies are defined as those policies that are most important to the portrayal of a company’s financial position and results of operations, and that require a company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on these criteria, Viad has identified and discussed with its audit committee the following critical accounting policies and estimates pertaining to Viad, and the methodology and disclosures related to those estimates:

**Goodwill —** Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31, and between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. Viad’s reporting units are defined, and goodwill is tested, at either an operating segment level or at the component level of an operating segment, depending on various factors including the internal reporting structure of the operating segment, the level of integration among components, the sharing of assets and other resources among components, and the benefits and likely recoverability of goodwill by the component’s operations.

For the Marketing & Events U.S. Segment, goodwill is assigned to and tested at the operating segment level (all domestic operations of GES). For the Marketing & Events International Segment, goodwill is assigned to and tested based on the segment’s geographical operations (GES EMEA and GES Canada). For the Travel & Recreation Group, impairment testing is performed at the reporting unit level (Brewster, Alaska Denali Travel, and Glacier Park).

Viad uses a discounted expected future cash flow methodology (income approach) in order to estimate the fair value of its reporting units for purposes of goodwill impairment testing. The estimates and assumptions regarding expected future cash flows, discount rates, and terminal values require considerable judgment and are based on market conditions, financial forecasts, industry trends, and historical experience.

The most critical assumptions and estimates in determining the estimated fair value of its reporting units relate to the amounts and timing of expected future cash flows for each reporting unit and the reporting unit cost of capital (discount rate) applied to those cash flows. The assumed reporting unit cost of capital rates (discount rates) are estimated using a build-up method based on the perceived risk associated with the cash flows pertaining to the specific reporting unit. In order to assess the reasonableness of its fair value estimates, the Company performs a reconciliation of the aggregate fair values of its reporting units to Viad’s market capitalization.

As noted above, the estimates and assumptions regarding expected future cash flows, discount rates, and terminal values require considerable judgment and are based on market conditions, financial forecasts, industry trends, and historical experience. These estimates, however, have inherent uncertainties, and different assumptions could lead to materially different results. As of December 31, 2015, Viad’s aggregate goodwill was $185.2 million. As a result of the Company’s most recent impairment analysis performed as of October 31, 2015, the excess of the estimated fair value over the carrying value (expressed as a percentage of the carrying amounts) under step one of the impairment test for each of the Marketing & Events Group’s reporting units in the U.S., GES EMEA, and GES Canada, was 146 percent, 132 percent, and 91 percent, respectively. For the Brewster, Alaska Denali Travel, and Glacier Park reporting units, the excess of the estimated fair value over the carrying value was 146 percent, 48 percent, and 10 percent, respectively. Significant reductions in the Company’s expected future revenue, operating income, or cash flow forecasts and projections, or an increase in a reporting unit’s cost of capital, could trigger additional goodwill impairment testing, which may result in impairment charges.

**Income taxes —** Viad is required to estimate and record provisions for income taxes in each of the jurisdictions in which the Company operates. Accordingly, the Company must estimate its actual current income tax liability, and assess temporary differences arising from the treatment of items for tax purposes, as compared to the treatment for accounting purposes. These differences result in deferred tax assets and liabilities which are included in Viad’s consolidated balance sheet. 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. As of December 31, 2015 and 2014, Viad had gross deferred tax assets of $64.6 million and $69.2 million, respectively. These deferred tax assets reflect the expected future tax benefits to be realized upon reversal of deductible temporary differences, and the utilization of net operating loss and tax credit carryforwards.

During the third quarter of 2014, the Company released a $10.1 million valuation allowance associated with foreign income tax credits. The Company considered all available positive and negative evidence regarding the future recoverability of the foreign tax credits, including recent operating history, future reversals of deferred tax liabilities, utilization history, and projected future U.S. taxable income. Based on the evaluation of all positive and negative evidence, it was determined to be more-likely-than-not that the foreign tax credits carryforwards would be utilized before their expiration. At the end of 2015, the remaining foreign tax credit carryforwards are $9.2 million. If not utilized, the tax credits will begin to expire during 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 has not recorded deferred taxes on certain historical unremitted earnings of its subsidiaries located in Canada, the United Kingdom, and the Netherlands as management intends to reinvest those earnings in its operations. As of December 31, 2015, the incremental unrecognized tax liability (net of estimated foreign tax credits) related to those undistributed earnings was approximately $3.4 million. To the extent that circumstances change and it becomes apparent that some or all of those undistributed earnings will be remitted to the U.S., Viad would accrue income taxes attributable to such remittance.

The Company records uncertain tax positions on the basis of a two-step process in which a determination is first made as to whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position. For all tax positions meeting this threshold, Viad recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

**Pension and postretirement benefits —** Viad’s pension plans use traditional defined benefit formulas based on years of service and final average compensation. Funding policies provide that payments to defined benefit pension trusts shall be at least equal to the minimum funding required by applicable regulations. The Company presently anticipates contributing $0.9 million to its funded pension plans and $0.8 million to its unfunded pension plans in 2016.

Viad and certain of its subsidiaries have defined benefit postretirement plans that provide medical and life insurance for certain eligible employees, retirees, and dependents. The related postretirement benefit liabilities are recognized over the period that services are provided by employees. In addition, Viad retained the obligations for these benefits for retirees of certain sold businesses. While the plans have no funding requirements, Viad expects to contribute $1.1 million to the plans in 2016.

The assumed health care cost trend rate used in measuring the December 31, 2015 accumulated postretirement benefit obligation was 7.0 percent, declining one-quarter percent each year to the ultimate rate of 4.5 percent by the year 2025 and remaining at that level thereafter. The assumed health care cost trend rate used in measuring the December 31, 2014 accumulated postretirement benefit obligation was 7.5 percent, declining one-quarter percent each year to the ultimate rate of 5.0 percent by the year 2025 and remaining at that level thereafter.

A one-percentage-point increase in the assumed health care cost trend rate for each year would increase the accumulated postretirement benefit obligation as of December 31, 2015 by approximately $1.5 million and the total of service and interest cost components by approximately $0.1 million. A one-percentage-point decrease in the assumed health care cost trend rate for each year would decrease the accumulated postretirement benefit obligation as of December 31, 2015 by approximately $1.3 million and the total of service and interest cost components by approximately $0.1 million.

The discount rates used in determining future pension and postretirement benefit obligations are based on rates determined by actuarial analysis and management review, and reflect the estimated rates of return on a high-quality, hypothetical bond portfolio whose cash flows match the timing and amounts of expected benefit payments. Refer to Note 18 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further information.

**Share-based compensation —** Viad grants share-based compensation awards to officers, directors, and certain key employees pursuant to the 2007 Viad Corp Omnibus Incentive Plan, which has a 10-year life and provides for the following types of awards: (a) incentive and non-qualified stock options; (b) restricted stock and restricted stock units; (c) performance units or performance shares; (d) stock appreciation rights; (e) cash-based awards; and (f) certain other stock-based awards.

Share-based compensation expense recognized in the consolidated financial statements in 2015, 2014, and 2013 was $3.8 million, $2.9 million, and $5.2 million, respectively, and the total tax benefits related to such costs were $1.5 million, $1.1 million, and $1.9 million respectively. No share-based compensation costs were capitalized during 2015, 2014, or 2013.

The fair value of restricted stock awards is based on Viad’s stock price on the date of grant. Liability-based awards are recorded at estimated fair value, based on the number of units expected to vest and the level of achievement of predefined performance goals, where applicable, and are remeasured on each balance sheet date based on Viad’s stock price, or the Monte Carlo simulation model, until the time of settlement. The Monte Carlo simulation requires the use of a number of assumptions, including historical volatility and correlation of the price of Viad’s stock and the price of the common shares of a comparator group, a risk-free rate of return, and an expected term. Viad uses the Black-Scholes option pricing model for purposes of determining the fair value of each stock option grant for which key assumptions are necessary. These assumptions include Viad’s expected stock price volatility, the expected period of time the stock option will remain outstanding, the expected dividend yield on Viad’s common stock, and the risk-free interest rate. While the Company has not granted stock options since 2010, changes in the assumptions of any future grants could result in different estimates of the fair value of stock option grants, and consequently impact Viad’s future results of operations. Refer to Note 2 – Share-Based Compensation of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further information.

### Impact of Recent Accounting Pronouncements

Refer to Note 1 – Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for further information.

### Forward-Looking Statements

As provided by the safe harbor provision under the Private Securities Litigation Reform Act of 1995, Viad cautions readers that, in addition to historical information contained herein, this Annual Report includes certain information, assumptions, and discussions that may constitute forward-looking statements. These forward-looking statements are not historical facts, but reflect current estimates, projections, expectations, or trends concerning future growth, operating cash flows, availability of short-term borrowings, consumer demand, new or renewal business, investment policies, productivity improvements, ongoing cost reduction efforts, efficiency, competitiveness, legal expenses, tax rates and other tax matters, foreign exchange rates, and the realization of restructuring cost savings. Actual results could differ materially from those discussed in the forward-looking statements. Viad’s businesses can be affected by a host of risks and uncertainties. Among other things, natural disasters, gains and losses of customers, consumer demand patterns, labor relations, purchasing decisions related to customer demand for exhibition and event services, existing and new competition, industry alliances, consolidation and growth patterns within the industries in which Viad competes, acquisitions, capital allocations, adverse developments in liabilities associated with discontinued operations, and any deterioration in the economy and other risks discussed in Item 1A, “Risk Factors,” included in this Annual Report, may individually or in combination impact future results. In addition to factors mentioned elsewhere, economic, competitive, governmental, technological, capital marketplace, and other factors, including terrorist activities or war, a pandemic health crisis, and international conditions, could affect the forward-looking statements in this Annual Report.

## Market risk

As filed, 4,602 characters.

Viad’s market risk exposures relate to fluctuations in foreign exchange rates, interest rates, and certain commodity prices. Foreign exchange risk is the risk that fluctuating exchange rates will adversely affect Viad’s financial condition or results of operations. Interest rate risk is the risk that changing interest rates will adversely affect the earnings of Viad. Commodity risk is the risk that changing prices will adversely affect results of operations.

Viad conducts its foreign operations primarily in Canada, the United Kingdom, Germany, and to a lesser extent, in certain other countries. The functional currency of Viad’s foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, Viad translates the assets and liabilities of its 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 in Viad’s consolidated balance sheets. As a result, significant fluctuations in foreign exchange rates relative to the U.S. dollar may result in material changes to Viad’s net equity position reported in its consolidated balance sheets. Viad does not currently hedge its equity risk arising from the translation of foreign denominated assets and liabilities. Viad had cumulative unrealized foreign currency translation losses recorded in stockholders’ equity of $23.3 million as of December 31, 2015 and gains of $12.4 million as of December 31, 2014. During 2015 and 2014, unrealized foreign currency translation losses of $35.7 million and $18.4 million, respectively, were recorded in other comprehensive income.

For purposes of consolidation, revenue, expenses, gains, and losses related to Viad’s foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, Viad’s consolidated results of operations are exposed to fluctuations in foreign exchange rates as the operating results of its 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. Viad does not currently hedge its net earnings exposure arising from the translation of its foreign operating results.

The following table summarizes the FX Impact on revenue and segment operating results from Viad’s significant international operations for 2015 and 2014, excluding the effect of 2014 acquisitions:

| Marketing & Events Group: | Revenue Weighted-Average Exchange Rates 2015 | 2014 | FX Impact (in thousands) | Segment Operating Results Weighted-Average Exchange Rates 2015 | 2014 | FX Impact (in thousands) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada | $0.78 | $0.90 | $(9,420) | $0.80 | $0.88 | $(336) |
| United Kingdom | $1.53 | $1.65 | (13,380) | $1.52 | $1.66 | (652) |
| Germany | $1.11 | $1.32 | (3,200) | $1.10 | $1.35 | (56) |
|  |  |  | (26,000) |  |  | (1,044) |
| Travel & Recreation Group: |  |  |  |  |  |  |
| Canada | $0.78 | $0.92 | (13,705) | $0.78 | $0.93 | (4,638) |
|  |  |  | $(39,705) |  |  | $(5,682) |

Viad’s 2015 operating results were primarily impacted by the weakening of the British pound and the Canadian dollar relative to the U.S. dollar.

A hypothetical change of 10 percent in the Canadian dollar exchange rate would have resulted in a change to operating income of approximately $2.7 million. A hypothetical change of 10 percent in the British pound exchange rate would have resulted in a change to operating income of approximately $0.7 million. A hypothetical change of 10 percent in the Euro exchange rate would have resulted in a change to operating income of approximately $0.3 million.

Viad is exposed to foreign exchange transaction risk as its foreign subsidiaries have certain revenue transactions denominated in currencies other than the functional currency of the respective subsidiary. From time to time, Viad utilizes forward contracts to mitigate the impact on earnings related to these transactions due to fluctuations in foreign exchange rates. As of December 31, 2015 and 2014, Viad did not have any foreign currency forward contracts outstanding.

Viad is exposed to short-term and long-term interest rate risk on certain of its debt obligations. Viad currently does not use derivative financial instruments to hedge cash flows for such obligations.

## Controls and procedures

As filed, 1,586 characters.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of Viad, the effectiveness of the design and operation of disclosure controls and procedures has been evaluated as of December 31, 2015, and, based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of December 31, 2015. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in such reports is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

There were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2015 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

Management’s report on internal control over financial reporting and the report of Viad’s independent registered public accounting firm, Deloitte & Touche LLP, are provided in this Annual Report immediately prior to the Index to Financial Statements.

Filed Mar 11, 2016.
Source: SEC EDGAR, the filing index for accession 0001564590-16-014544. Last ingested by Listed: Nov 4, 2026, 17:36 ET. No prices; not investment advice.