# Pursuit Attractions & Hospitality, Inc.: Form 10-Q for the period ended Jun 30, 2016

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-Q
- Filed: 2016-08-05
- Accepted by EDGAR: Aug 5, 2016, 13:22 ET
- Period: 2016-06-30
- Accession: 0001564590-16-022918
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000156459016022918/vvi-10q_20160630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000156459016022918/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2016-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2016-04-01 to 2016-06-30 | $324.7m | us-gaap:SalesRevenueNet |
| Revenue | 6 months, 2016-01-01 to 2016-06-30 | $566.1m | us-gaap:SalesRevenueNet |
| Cost of revenue | 3 months, 2016-04-01 to 2016-06-30 | $40.7m | us-gaap:CostOfGoodsSold |
| Cost of revenue | 6 months, 2016-01-01 to 2016-06-30 | $74.1m | us-gaap:CostOfGoodsSold |
| Operating income | 3 months, 2016-04-01 to 2016-06-30 | $31.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2016-01-01 to 2016-06-30 | $23.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2016-04-01 to 2016-06-30 | $1.3m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2016-01-01 to 2016-06-30 | $2.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2016-04-01 to 2016-06-30 | $9.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2016-01-01 to 2016-06-30 | $5.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2016-04-01 to 2016-06-30 | $19.5m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2016-01-01 to 2016-06-30 | $12.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2016-04-01 to 2016-06-30 | $0.96 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2016-01-01 to 2016-06-30 | $0.62 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2016-04-01 to 2016-06-30 | $0.96 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2016-01-01 to 2016-06-30 | $0.62 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2016-04-01 to 2016-06-30 | 20,153,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2016-01-01 to 2016-06-30 | 20,124,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2016-01-01 to 2016-06-30 | $54.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2016-01-01 to 2016-06-30 | $20.6m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 6 months, 2016-01-01 to 2016-06-30 | $4.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2016-01-01 to 2016-06-30 | $651.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2016-06-30 | $31.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2016-06-30 | $219.9m | us-gaap:AssetsCurrent |
| Total assets | at 2016-06-30 | $780.7m | us-gaap:Assets |
| Current liabilities | at 2016-06-30 | $273.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2016-06-30 | $429.9m | us-gaap:Liabilities |
| Long-term debt | at 2016-06-30 | $129.5m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2016-06-30 | $338.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 49,041 characters.

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the Annual Report on Form 10-K of Viad Corp (“Viad” or the “Company”) for the year ended December 31, 2015 and the condensed consolidated financial statements and accompanying notes included in this Form 10-Q. 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’s actual results could differ materially from those anticipated due to various factors discussed under “Forward-Looking Statements” and elsewhere in this quarterly report.

### Overview

Viad operates through three reportable business segments: the Marketing & Events U.S. Segment (the “U.S. Segment”), the Marketing & Events International Segment (the “International Segment”) (collectively, the “Marketing & Events Group”), and the Travel & Recreation Group.

### Marketing & Events Group

The Marketing & Events Group, comprised of Global Experience Specialists, Inc. and affiliates (“GES”), is a global, full-service provider for live events that produces exhibitions, congresses and conferences, corporate events, consumer events, exhibits, and entertainment experiences. GES provides a comprehensive range of live event services, including official show services, audio-visual services, cutting-edge creative and design, strategic marketing and measurement services, registration, and event accommodations – all with a global reach.

GES’ clients include event organizers and corporate brand marketers. Corporate brand marketers include exhibitors and domestic and international corporations that want to promote their brands, services and innovations, feature new products, and build business relationships. GES serves corporate brand marketers when they exhibit at shows and when GES is engaged to manage their global exhibit program or produce their proprietary corporate events.

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”).

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.

- **Core Services.** GES provides official contracting services and products to event organizers and exhibitors during Live Events. Contracting services and products are provided primarily to Exhibitions and to a lesser degree to Congresses and Conferences, Corporate Events, and Consumer Events.
- **Event Accommodations.** As the distributor of exclusive accommodation 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.
- **Audio-Visual.** 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.
- **Registration and Data.** GES provides event registration and data services and is Europe’s leading software-as-a-service event registration and data intelligence service provider.

### Seasonality

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.

### 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, Denali, and Kenai Fjords National Parks in the United States. The Travel & Recreation Group is composed of Brewster Inc. (“Brewster”), Glacier Park, Inc. (“Glacier Park”), and Alaskan Park Properties, Inc. (“Alaska Denali Travel”).

- **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. Brewster’s operations include the Banff Gondola, Columbia Icefield Glacier Adventure, Glacier Skywalk, Banff Lake Cruise, Maligne Lake Tours, inbound package tours, corporate event management services, sightseeing tours, airport services, charter motorcoach services, and hotel operations.
- **Glacier Park**, an 80 percent owned subsidiary of Viad, is an owner and operator of seven 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 and operator of five lodging properties located in Denali National Park and Preserve and Kenai Fjords National Park in Alaska.

The Travel & Recreation Group expanded its service offerings with the following 2016 acquisitions:

- *Maligne Lake Tours*. In January 2016, the Company acquired the business of Maligne Tours Ltd. (“Maligne Lake Tours”), which provides interpretive boat tours and related services at Maligne Lake, the largest lake in Jasper National Park. Maligne Lake Tours has seven tour boats operating seasonally from May through October, a marina and day lodge that offers food and beverage and retail services, a historic chalet complex that is available for catered special events, and a historic boat house that offers canoes, kayaks, and rowboats for rental.
- *CATC.* In March 2016, the Company acquired CIRI Alaska Tourism Corporation (“CATC”), the operator of an Alaskan tourism business that includes a marine sightseeing tour business, three lodges (the Talkeetna Alaskan Lodge, the Seward Windsong Lodge, and the Kenai Fjords Wilderness Lodge), and a package tour business. The operations of CATC, whose primary operating season runs from May through September, are being integrated with Alaska Denali Travel.

Refer to Note 3 – Acquisition of Businesses of the Notes to Condensed Consolidated Financial Statements for additional information.

### 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.

### 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 non-GAAP financial measures of Adjusted EBITDA, Segment operating income, Adjusted Segment EBITDA, organic revenue, and organic segment operating income (collectively, the “Non-GAAP Measures”). The presentation of the Non-GAAP Measures is supplemental to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. The Non-GAAP Measures may not be comparable to similarly titled measures used by other companies. Management believes that the presentation of 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.

- “**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.
- “**Segment operating income”** is defined by Viad as net income attributable to Viad before income (loss) from discontinued operations, 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. Segment operating income is utilized by management to measure the profit and performance of Viad’s operating segments to facilitate period-to-period comparisons.
- “**Adjusted Segment EBITDA”** is defined by Viad as segment operating income (as defined above) before non-cash depreciation and amortization and acquisition integration costs, if any. 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 (as defined above), respectively, without the impact of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable periods. The impact of exchange rate variances is calculated as the difference between current period activity translated at the current period’s exchange rates and the comparable prior period’s exchange rates. 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 and to facilitate period-to-period comparisons and analysis of Viad’s operating performance. 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.

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 as an important measure of financial performance because it provides 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)*

|  | Three Months Ended June 30, 2016 | 2015 | Six Months Ended June 30, 2016 | 2015 |
| --- | ---: | ---: | ---: | ---: |
| Net income attributable to Viad | $19,509 | $22,389 | $12,526 | $20,333 |
| Depreciation and amortization | 10,187 | 9,162 | 18,557 | 17,870 |
| Interest expense | 1,336 | 1,103 | 2,620 | 2,254 |
| Income tax expense | 9,226 | 10,372 | 5,774 | 7,105 |
| (Income) loss from discontinued operations | 364 | (78) | 550 | 70 |
| Noncontrolling interest | (30) | (46) | (30) | (62) |
| **Adjusted EBITDA** | $40,592 | $42,902 | $39,997 | $47,570 |

The change in Adjusted EBITDA was primarily due to lower segment operating income at the Marketing & Events Group. 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 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 may be materially different from the corresponding GAAP Measure.

### Results of Operations

### Financial Highlights

*(in thousands, except per share data)*

|  | Three Months Ended June 30, 2016 | 2015 | Percentage Change | Six Months Ended June 30, 2016 | 2015 | Percentage Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $324,747 | $317,035 | 2.4% | $566,109 | $581,431 | (2.6)% |
| Segment operating income (1) | $34,436 | $36,286 | (5.1)% | $28,156 | $35,161 | (19.9)% |
| Income from continuing operations attributable to Viad common stockholders | $19,873 | $22,311 | (10.9)% | $13,076 | $20,403 | (35.9)% |
| Net income attributable to Viad | $19,509 | $22,389 | (12.9)% | $12,526 | $20,333 | (38.4)% |
| Diluted income per common share from continuing operations attributable to Viad common stockholders | $0.98 | $1.11 | (11.7)% | $0.65 | $1.02 | (36.3)% |

(1) Refer to Note 19 - Segment Information of the Notes to Condensed Consolidated Financial Statements for a reconciliation of Segment operating income to the most directly comparable GAAP measure.

### Three months ended June 30, 2016 compared with the three months ended June 30, 2015

- **Total revenue** increased $7.7 million or 2.4 percent, primarily due to incremental revenue from the acquisitions of CATC and Maligne Lake Tours of $10.9 million and base same-show revenue growth of 2.6 percent, offset in part by negative show rotation of approximately $6 million, and an unfavorable foreign exchange impact of $4.4 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 $1.9 million or 5.1 percent, primarily due to $1.5 million of additional depreciation and amortization expense related to the acquisitions of Maligne Lake Tours and CATC, as well as increases in certain other expenses.
- **Income from continuing operations attributable to Viad** decreased $2.4 million primarily due to decreased segment operating income, higher corporate costs, and increased interest expense.
- **Net income attributable to Viad** decreased $2.9 million primarily due to decreased segment operating income, higher corporate costs, and increased interest expense.

### Six months ended June 30, 2016 compared with the six months ended June 30, 2015

- **Total revenue** decreased $15.3 million or 2.6 percent, primarily due to negative show rotation of approximately $17 million, an unfavorable foreign exchange impact of $8.4 million, and the partial closure of the Banff Gondola for renovations in the Travel & Recreation Group, offset in part by base same-show revenue growth of 4.1 percent and incremental revenue from the acquisitions of CATC and Maligne Lake Tours.
- **Total segment operating income** decreased $7.0 million or 19.9 percent, primarily due to lower revenue and an increase in certain other expenses.
- **Income from continuing operations attributable to Viad** decreased $7.3 million, primarily due to decreased segment operating income.
- **Net income attributable to Viad** decreased $7.8 million, primarily due to decreased 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 three and six months ended June 30, 2016 and 2015, excluding the effect of 2016 acquisitions:

#### Three months ended June 30, 2016 and 2015:

*(in thousands)*

*(in thousands)*

| Marketing & Events Group: | Revenue Weighted-Average Exchange Rates 2016 | 2015 | FX Impact | Segment Operating Results Weighted-Average Exchange Rates 2016 | 2015 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.78 | $0.81 | $(567) | $0.78 | $0.81 | $(60) |
| United Kingdom (GBP) | $1.44 | $1.54 | (3,209) | $1.42 | $1.55 | (178) |
| Europe (EUR) | $1.13 | $1.11 | 171 | $1.13 | $1.11 | 25 |
|  |  |  | (3,605) |  |  | (213) |
| Travel & Recreation Group |  |  |  |  |  |  |
| Canada (CAD) | $0.78 | $0.81 | (839) | $0.78 | $0.81 | (219) |
|  |  |  | $(4,444) |  |  | $(432) |

#### Six months ended June 30, 2016 and 2015:

*(in thousands)*

*(in thousands)*

| Marketing & Events Group: | Revenue Weighted-Average Exchange Rates 2016 | 2015 | FX Impact | Segment Operating Results Weighted-Average Exchange Rates 2016 | 2015 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.76 | $0.80 | $(1,803) | $0.78 | $0.80 | $(55) |
| United Kingdom (GBP) | $1.43 | $1.53 | (5,479) | $1.61 | $1.54 | (30) |
| Europe (EUR) | $1.12 | $1.11 | 88 | $1.12 | $1.06 | 24 |
|  |  |  | (7,194) |  |  | (61) |
| Travel & Recreation Group |  |  |  |  |  |  |
| Canada (CAD) | $0.77 | $0.81 | (1,237) | $0.86 | $0.81 | 142 |
|  |  |  | $(8,431) |  |  | $81 |

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

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

### Marketing & Events Group

The following tables provide a comparison of the Marketing & Events Group’s reported revenue and segment operating results to organic revenue and segment operating results for the three and six months ended June 30, 2016 and 2015 in order to better understand the underlying performance of the segment without the effects of acquisitions, if any, or FX Impact.

*(in thousands)*

| Revenue: Marketing & Events Group: | Three Months Ended June 30, 2016 As Reported | Acquisitions | FX Impact | Organic(1) | Three Months Ended June 30, 2015 As Reported | Acquisitions | Organic(1) | Change As Reported | Organic(1) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Segment | $220,078 | $— | $— | $220,078 | $208,749 | $— | $208,749 | 5.4% | 5.4% |
| International Segment | 72,682 | — | (3,605) | 76,287 | 85,723 | — | 85,723 | (15.2)% | (11.0)% |
| Intersegment eliminations | (7,332) | — | — | (7,332) | (7,903) | — | (7,903) | 7.2% | 7.2% |
| Total Marketing & Events Group | $285,428 | $— | $(3,605) | $289,033 | $286,569 | $— | $286,569 | (0.4)% | 0.9% |
| **Segment operating income (2):** |  |  |  |  |  |  |  |  |  |
| Marketing & Events Group: |  |  |  |  |  |  |  |  |  |
| U.S. Segment | $22,502 | $— | $— | $22,502 | $18,974 | $— | $18,974 | 18.6% | 18.6% |
| International Segment | 4,876 | — | (213) | 5,089 | 11,109 | — | 11,109 | (56.1)% | (54.2)% |
| Total Marketing & Events Group | $27,378 | $— | $(213) | $27,591 | $30,083 | $— | $30,083 | (9.0)% | (8.3)% |

| Revenue: Marketing & Events Group: | Six Months Ended June 30, 2016 As Reported | Acquisitions | FX Impact | Organic(1) | Six Months Ended June 30, 2015 As Reported | Acquisitions | Organic(1) | Change As Reported | Organic(1) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Segment | $403,815 | $— | $— | $403,815 | $401,692 | $— | $401,692 | 0.5% | 0.5% |
| International Segment | 126,763 | — | (7,194) | 133,957 | 150,959 | — | 150,959 | (16.0)% | (11.3)% |
| Intersegment eliminations | (9,014) | — | — | (9,014) | (9,154) | — | (9,154) | 1.5% | 1.5% |
| Total Marketing & Events Group | $521,564 | $— | $(7,194) | $528,758 | $543,497 | $— | $543,497 | (4.0)% | (2.7)% |
| **Segment operating income (2):** |  |  |  |  |  |  |  |  |  |
| Marketing & Events Group: |  |  |  |  |  |  |  |  |  |
| U.S. Segment | $23,364 | $— | $— | $23,364 | $21,611 | $— | $21,611 | 8.1% | 8.1% |
| International Segment | 4,307 | — | (61) | 4,368 | 12,156 | — | 12,156 | (64.6)% | (64.1)% |
| Total Marketing & Events Group | $27,671 | $— | $(61) | $27,732 | $33,767 | $— | $33,767 | (18.1)% | (17.9)% |

(1) Organic revenue and segment 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 revenue and segment operating results, see the "Non-GAAP Measures" section of this MD&A.

(2) Refer to Note 19 - Segment Information of the Notes to Condensed Consolidated Financial Statements for a reconciliation of Segment operating income to the most directly comparable GAAP measure.

### Three months ended June 30, 2016 compared with the three months ended June 30, 2015

### U.S. Segment

**U.S. Segment revenue** increased $11.3 million or 5.4 percent, primarily due to base same-show revenue growth of 2.6 percent, positive show rotation of approximately $6 million, and increased sales to corporate clients. Base same-shows represented 37.1 percent of the U.S. Segment revenue.

**U.S. Segment operating income** increased $3.5 million or 18.6 percent, primarily due to higher revenue.

### International Segment

**International Segment revenue** decreased $13.0 million or 15.2 percent, primarily due to negative show rotation of approximately $12 million and an unfavorable FX Impact of $3.6 million, offset in part by new business wins and net growth in existing shows. Organic revenue decreased $9.4 million or 11.0 percent.

**International Segment operating income** decreased $6.2 million or 56.1 percent, primarily due to lower revenue, a non-recurring gain of $1.3 million realized in 2015 related to exiting a venue services agreement in the United Kingdom, and higher wages and performance-based incentives in the second quarter of 2016. Organic operating income decreased $6.0 million or 54.2 percent.

### Six months ended June 30, 2016 compared with the six months ended June 30, 2015

### U.S. Segment

**U.S. Segment revenue** increased $2.1 million or 0.5 percent, primarily due to base same-show revenue growth of 4.1 percent, offset in part by lower short-term event bookings due to timing and negative show rotation of approximately $1 million. Base same-shows represented 46.2 percent of the U.S. Segment revenue.

**U.S. Segment operating income** increased $1.8 million or 8.1 percent, primarily due to higher revenue and lower administrative expenses.

### International Segment

**International Segment revenue** decreased $24.2 million or 16.0 percent, primarily due to negative show rotation of approximately $16 million and an unfavorable FX Impact of $7.2 million. Organic revenue decreased $17.0 million or 11.3 percent.

**International Segment operating income** decreased $7.8 million or 64.6 percent, primarily due to lower revenue, higher wages and performance-based incentives, and a non-recurring gain of $1.3 million realized in 2015 related to exiting a venue services agreement in the United Kingdom. Organic operating income decreased $7.8 million or 64.1 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 mid to high-single digits from 2015 driven by positive show rotation of approximately $50 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 $24 million and $1.5 million, respectively. The expected FX Impact has increased due to the expectation that the U.S. dollar to the British pound exchange rate will be approximately $1.29 for the second half of 2016 versus the prior expectation of $1.43. Management expects full year 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 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.

### Travel & Recreation Group

The following tables provide a comparison of the Travel & Recreation Group’s reported revenue and segment operating results to organic revenue and segment operating results for the three and six months ended June 30, 2016 and 2015 in order to better understand the underlying performance of the segment without the effects of acquisitions, if any, or FX Impact.

*(in thousands)*

| Revenue: Travel & Recreation Group: | Three Months Ended June 30, 2016 As Reported | Acquisitions(1) | FX Impact | Organic(2) | Three Months Ended June 30, 2015 As Reported | Acquisitions(1) | Organic(2) | Change As Reported | Organic(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Hospitality | $14,277 | $4,277 | $(140) | $10,140 | $8,845 | $— | $8,845 | 61.4% | 14.6% |
| Attractions | 18,120 | 6,168 | (450) | 12,402 | 13,276 | — | 13,276 | 36.5% | (6.6)% |
| Package Tours | 5,414 | 448 | (164) | 5,130 | 4,518 | — | 4,518 | 19.8% | 13.5% |
| Transportation | 3,111 | — | (102) | 3,213 | 4,217 | — | 4,217 | (26.2)% | (23.8)% |
| Intra-Segment Eliminations & Other | (439) | — | 17 | (456) | (390) | — | (390) | (12.6)% | (16.9)% |
| Total Travel & Recreation Group | $40,483 | $10,893 | $(839) | $30,429 | $30,466 | $— | $30,466 | 32.9% | (0.1)% |
| **Segment operating income (3):** |  |  |  |  |  |  |  |  |  |
| Total Travel & Recreation Group | $7,058 | $1,582 | $(219) | $5,695 | $6,203 | $— | $6,203 | 13.8% | (8.2)% |

| Revenue: Travel & Recreation Group: | Six Months Ended June 30, 2016 As Reported | Acquisitions(1) | FX Impact | Organic(2) | Six Months Ended June 30, 2015 As Reported | Acquisitions(1) | Organic(2) | Change As Reported | Organic(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Hospitality | $17,127 | $4,290 | $(319) | $13,156 | $11,715 | $— | $11,715 | 46.2% | 12.3% |
| Attractions | 18,173 | 6,207 | (452) | 12,418 | 15,133 | — | 15,133 | 20.1% | (17.9)% |
| Package Tours | 5,953 | 448 | (214) | 5,719 | 5,291 | — | 5,291 | 12.5% | 8.1% |
| Transportation | 5,053 | — | (283) | 5,336 | 6,329 | — | 6,329 | (20.2)% | (15.7)% |
| Intra-Segment Eliminations & Other | (597) | — | 31 | (628) | (534) | — | (534) | (11.8)% | (17.6)% |
| Total Travel & Recreation Group | $45,709 | $10,945 | $(1,237) | $36,001 | $37,934 | $— | $37,934 | 20.5% | (5.1)% |
| **Segment operating income (loss) (3):** |  |  |  |  |  |  |  |  |  |
| Total Travel & Recreation Group | $485 | $798 | $142 | $(455) | $1,394 | $— | $1,394 | (65.2)% | \*\* |

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

(1) Acquisitions include Maligne Lake Tours (acquired January 2016) and CATC (acquired March 2016).

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

(3) Refer to Note 19 - Segment Information of the Notes to Condensed Consolidated Financial Statements for a reconciliation of Segment operating income to the most directly comparable GAAP measure.

### Three months ended June 30, 2016 compared with the three months ended June 30, 2015

**Travel & Recreation Group revenue** increased $10.0 million or 32.9 percent, primarily due to incremental revenue from the acquisitions of CATC and Maligne Lake Tours of $10.9 million which mainly impacted hospitality and attractions with the addition of three lodges and two sightseeing tours. This increase was offset in part by the partial closure of the Banff Gondola for renovations, the downsizing of transportation, and an unfavorable FX Impact of $0.8 million. Organic revenue remained relatively flat as compared to the corresponding period in 2015 due to increases across other hospitality and attraction assets which offset the declines at the Banff Gondola.

**Travel & Recreation Group operating income** increased $0.9 million or 13.8 percent, primarily due to higher revenue. Organic operating income decreased $0.5 million or 8.2 percent primarily due to the partial closure of the Banff Gondola.

### Six months ended June 30, 2016 compared with the six months ended June 30, 2015

**Travel & Recreation Group revenue** increased $7.8 million or 20.5 percent, primarily due to incremental revenue from the acquisitions of CATC and Maligne Lake Tours of $10.9 million. Declines from the partial closure of the Banff Gondola, the downsizing of transportation, and an unfavorable FX Impact of $1.2 million, were offset in part by increases across other hospitality and attraction assets. Organic revenue decreased $1.9 million or 5.1 percent.

**Travel & Recreation Group operating income** decreased $0.9 million or 65.2 percent, primarily due to the partial closure of the Banff Gondola, offset in part by incremental operating income from the acquisitions of CATC and Maligne Lake Tours of $0.8 million. Organic operating income decreased $1.8 million.

### 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.

The following table provides Travel & Recreation Group same-store key performance indicators for the three and six months ended June 30, 2016 and 2015. 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: | Three Months Ended June 30, 2016 | 2015 | % Change | Six Months Ended June 30, 2016 | 2015 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Room nights available | 58,220 | 59,269 | (1.8)% | 98,351 | 98,959 | (0.6)% |
| RevPAR | $91 | $78 | 16.7% | $72 | $63 | 14.3% |
| ADR | $141 | $130 | 8.5% | $119 | $112 | 6.3% |
| Occupancy | 65.0% | 60.3% | 4.7% | 60.2% | 56.2% | 4.0% |
| **Attractions:** |  |  |  |  |  |  |
| Passengers | 397,763 | 394,789 | 0.8% | 397,763 | 442,564 | (10.1)% |
| Revenue per passenger | $30 | $32 | (6.3)% | $30 | $33 | (9.1)% |

(1) The Same-Store Key Performance Indicators exclude Maligne Lake Tours attraction (acquired in January 2016) and CATC hospitality properties and attraction (acquired in March 2016), as they were not owned by Viad for the entirety of both periods presented.

**Hospitality.** Room nights available decreased during the three and six months ended June 30, 2016 primarily due to changes in the opening dates at certain seasonal Glacier Park properties as a result of management’s review of a variety of factors, including weather conditions, opening dates of other properties in the area, and availability of seasonal employees.

RevPAR increased during the three and six months ended June 30, 2016 due to increases in both ADR and occupancy across all geographies resulting from strong park visitation and management’s focus on yield management.

**Attractions**. The decrease in the number of passengers for the six months ended June 30, 2016 was due to the partial closure of the Banff Gondola for renovations. The lift operations of the gondola re-opened on May 1, 2016; however the ancillary retail and dining services at the gondola’s mountain top facility remained closed for renovations.

The decrease in revenue per passenger for the three and six months ended June 30, 2016 was primarily due to the partial closure of the Banff Gondola, as well as new pricing strategies at the Columbia Icefield Glacier Adventure and the Glacier Skywalk that resulted in increased revenue from those two attractions with a greater number passengers and lower revenue per passenger.

During 2015, the Travel & Recreation Group derived approximately 73 percent of revenue and 89 percent 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.

### 2016 Outlook

Management expects the Travel & Recreation Group’s revenue to increase 30 percent to 32 percent from 2015, primarily due to the January 2016 acquisition of Maligne Lake Tours and the March 2016 acquisition of CATC, which are expected to provide $31 million to $33 million in revenue and Adjusted Segment EBITDA of approximately $10 million to $12 million. Brewster’s package tours and transportation lines of business are expected to negatively impact revenue by approximately $5 million as management streamlines those operations to focus on higher return opportunities. Management anticipates an unfavorable FX Impact on the Travel & Recreation Group’s 2016 full year revenue of approximately $1.5 million and no impact to segment operating income. Renovation closures at the Banff Gondola are expected to decrease revenue by approximately $1 million.

### Corporate Activities

*(in thousands)*

|  | Three Months Ended June 30, 2016 | 2015 | Percentage Change 2016 vs. 2015 | Six Months Ended June 30, 2016 | 2015 | Percentage Change 2016 vs. 2015 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Corporate activities | $2,707 | $1,983 | 36.5% | $4,618 | $4,793 | (3.7)% |

Corporate activities expense increased $0.7 million during the three months ended June 30, 2016 as compared to the corresponding period in 2015, primarily due to an increase in performance-based compensation expense. Corporate activities expense decreased $0.2 million during the six months ended June 30, 2016, as compared to the corresponding period in 2015 primarily due to 2015 costs related to a shareholder nomination and settlement agreement and higher consulting and other transaction-related costs associated with acquisitions in 2015, offset in part by an increase in performance-based compensation expense.

### Interest Expense

*(in thousands)*

|  | Three Months Ended June 30, 2016 | 2015 | Percentage Change 2016 vs. 2015 | Six Months Ended June 30, 2016 | 2015 | Percentage Change 2016 vs. 2015 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense | $1,336 | $1,103 | 21.1% | $2,620 | $2,254 | 16.2% |

Interest expense increased for the three and six months ended June 30, 2016 as compared to the corresponding periods in 2015, primarily due to higher outstanding debt balances resulting from acquisitions completed during the first quarter of 2016.

### Income Taxes

The effective tax rates for the three months ended June 30, 2016 and 2015 were 31.8 percent for both periods and 31.0 percent and 26.0 percent for the six months ended June 30, 2016 and 2015, respectively. The first six months of 2015 included a $1.6 million non-cash tax benefit related to deferred taxes associated with certain foreign intangible assets.

### Liquidity and Capital Resources

Cash and cash equivalents were $31.2 million as of June 30, 2016, as compared to $56.5 million as of December 31, 2015. During the six months ended June 30, 2016, the Company generated net cash flow from operating activities of $54.4 million primarily due to changes in working capital. 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 June 30, 2016, the Company had approximately $27.0 million of its cash and cash equivalents held outside of the United States, consisting of $10.9 million in Canada, $7.1 million in the United Kingdom, $5.9 million in the Netherlands, $1.9 million in the United Arab Emirates, and $1.2 million in Germany. There are certain earnings related to the Company’s Canadian and Netherlands operations that have historically been deemed permanently reinvested. As of June 30, 2016, the incremental tax associated with these earnings if the cash balances were repatriated to the United States would approximate $0.7 million.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | Six Months Ended June 30, 2016 | 2015 |
| --- | ---: | ---: |
| Net income | $12,299 | $20,160 |
| Depreciation and amortization | 18,557 | 17,870 |
| Deferred income taxes | (3,318) | (1,147) |
| Loss from discontinued operations | 550 | 70 |
| Other non-cash items | 5,833 | 6,430 |
| Changes in assets and liabilities | 20,457 | (5,363) |
| **Net cash provided by operating activities** | $54,378 | $38,020 |

Net cash provided by operating activities increased $16.4 million primarily due to changes in working capital.

### Investing Activities

*(in thousands)*

|  | Six Months Ended June 30, 2016 | 2015 |
| --- | ---: | ---: |
| Capital expenditures | $(20,597) | $(13,150) |
| Cash paid for acquired businesses | (57,766) | (123) |
| Proceeds from dispositions of property and other assets | 1,008 | 751 |
| **Net cash used in investing activities** | $(77,355) | $(12,522) |

Net cash used in investing activities increased $64.8 million, primarily due to cash payments, net of cash acquired, of $57.8 million for the 2016 acquisitions of Maligne Lake Tours and CATC and an increase in capital expenditures primarily due to the Banff Gondola renovations.

### Financing Activities

*(in thousands)*

|  | Six Months Ended June 30, 2016 | 2015 |
| --- | ---: | ---: |
| Proceeds from borrowings | $55,000 | $30,000 |
| Payments on debt and capital lease obligations | (52,054) | (38,100) |
| Dividends paid on common stock | (4,050) | (4,008) |
| Debt issuance costs | (352) | — |
| Common stock purchased for treasury | (651) | (5,969) |
| Other | 39 | 2,367 |
| **Net cash used in financing activities** | $(2,068) | $(15,710) |

Net cash used in financing activities decreased $13.6 million, primarily due to an increase in net borrowings of $11.0 million related to the CATC acquisition completed in 2016 and a decrease in cash used for common stock repurchases of $5.3 million.

### Debt and Capital Lease Obligations

Refer to Note 11 – Debt and Capital Lease Obligations of the Notes to Condensed Consolidated Financial Statements 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 the six months ended June 30, 2015, the Company repurchased 141,462 shares on the open market for $3.8 million. No repurchases were made during the six months ended June 30, 2016. As of June 30, 2016, 440,540 shares remained available for repurchase. The authorization of the Board of Directors does not have an expiration date. In addition, during the six months ended June 30, 2016 and 2015, the Company repurchased 23,625 shares for $0.7 million and 34,184 shares for $0.9 million, respectively, related to tax withholding requirements on vested share-based awards.

### Critical Accounting Policies and Estimates

Refer to *Management’s Discussion and Analysis of Financial Condition and Results of Operations* (Part II, Item 7) of Viad’s Annual Report on Form 10-K for the year ended December 31, 2015, for a discussion of critical accounting policies and estimates.

### Impact of Recent Accounting Pronouncements

Refer to Note 1 - Basis of Presentation and Principles of Consolidation of the Notes to Condensed Consolidated Financial Statements 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 quarterly 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, 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 quarterly report. Additional information concerning business and other risk factors that could cause actual results to materially differ from those in the forward looking statements are discussed in the “Risk Factors” section in Viad’s 2015 Annual Report.

Information about Viad obtained from sources other than the Company may be out-of-date or incorrect. Please rely only on Company press releases, SEC filings, and other information provided by the Company, keeping in mind that forward-looking statements speak only as of the date made. Viad undertakes no obligation to update any forward-looking statements, including prior forward-looking statements, to reflect events or circumstances arising after the date as of which the forward-looking statements were made.

## Market risk

As filed, 5,409 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 condensed consolidated balance sheets. As a result, significant fluctuations in foreign exchange rates relative to the U.S. dollar may result in material changes to Viad’s net equity position reported in its condensed 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 $18.7 million and $23.3 million as of June 30, 2016 and December 31, 2015, respectively. During the three and six months ended June 30, 2016, unrealized foreign currency translation gains of $3.5 million and $4.6 million, respectively, were recorded in other comprehensive income. During the three and six months ended June 30, 2015, unrealized foreign currency translation losses of $6.0 million and $11.6 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 revenue and segment 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 revenue and segment operating results.

The following tables summarize the FX Impact on revenue and segment operating results from Viad’s significant international operations for the three and six months ended June 30, 2016 and 2015, excluding the effect of 2016 acquisitions:

#### Three months ended June 30, 2016 and 2015:

*(in thousands)*

*(in thousands)*

| Marketing & Events Group: | Revenue Weighted-Average Exchange Rates 2016 | 2015 | FX Impact | Segment Operating Results Weighted-Average Exchange Rates 2016 | 2015 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.78 | $0.81 | $(567) | $0.78 | $0.81 | $(60) |
| United Kingdom (GBP) | $1.44 | $1.54 | (3,209) | $1.42 | $1.55 | (178) |
| Europe (EUR) | $1.13 | $1.11 | 171 | $1.13 | $1.11 | 25 |
|  |  |  | (3,605) |  |  | (213) |
| Travel & Recreation Group |  |  |  |  |  |  |
| Canada (CAD) | $0.78 | $0.81 | (839) | $0.78 | $0.81 | (219) |
|  |  |  | $(4,444) |  |  | $(432) |

#### Six months ended June 30, 2016 and 2015:

*(in thousands)*

*(in thousands)*

| Marketing & Events Group: | Revenue Weighted-Average Exchange Rates 2016 | 2015 | FX Impact | Segment Operating Results Weighted-Average Exchange Rates 2016 | 2015 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.76 | $0.80 | $(1,803) | $0.78 | $0.80 | $(55) |
| United Kingdom (GBP) | $1.43 | $1.53 | (5,479) | $1.61 | $1.54 | (30) |
| Europe (EUR) | $1.12 | $1.11 | 88 | $1.12 | $1.06 | 24 |
|  |  |  | (7,194) |  |  | (61) |
| Travel & Recreation Group |  |  |  |  |  |  |
| Canada (CAD) | $0.77 | $0.81 | (1,237) | $0.86 | $0.81 | 142 |
|  |  |  | $(8,431) |  |  | $81 |

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

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 June 30, 2016, 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, 1,338 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 June 30, 2016, 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 June 30, 2016. 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 three months ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

## Risk factors

As filed, 422 characters.

In addition to other information set forth in this Form 10-Q, careful consideration should be given to the *Risk Factors* (Part I, Item 1A) and *Management’s Discussion and Analysis of Financial Condition and Results of Operations* (Part II, Item 7) in Viad’s Annual Report on Form 10-K for the year ended December 31, 2015, which could materially affect the Company’s business, financial condition, and/or future results.

Filed Aug 5, 2016.
Source: SEC EDGAR, the filing index for accession 0001564590-16-022918. Last ingested by Listed: Nov 4, 2026, 17:36 ET. No prices; not investment advice.