# Pursuit Attractions & Hospitality, Inc.: Form 10-K for the period ended Dec 31, 2016

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-K
- Filed: 2017-03-06
- Accepted by EDGAR: Mar 6, 2017, 16:55 ET
- Period: 2016-12-31
- Accession: 0001564590-17-003489
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000156459017003489/vvi-10k_20161231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000156459017003489/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2016-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2016-10-01 to 2016-12-31 | $256.4m | us-gaap:SalesRevenueNet |
| Cost of revenue | 12 months, 2016-01-01 to 2016-12-31 | $165.1m | us-gaap:CostOfGoodsSold |
| Operating income | 3 months, 2016-10-01 to 2016-12-31 | −$6.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 12 months, 2016-01-01 to 2016-12-31 | $74.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 12 months, 2016-01-01 to 2016-12-31 | $5.9m | us-gaap:InterestExpense |
| Income tax | 12 months, 2016-01-01 to 2016-12-31 | $21.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2016-10-01 to 2016-12-31 | −$4.0m | us-gaap:NetIncomeLoss |
| Net income | 12 months, 2016-01-01 to 2016-12-31 | $42.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2016-10-01 to 2016-12-31 | −$0.20 | us-gaap:EarningsPerShareBasicAndDiluted |
| Diluted EPS | 12 months, 2016-01-01 to 2016-12-31 | $2.09 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 12 months, 2016-01-01 to 2016-12-31 | $2.09 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months, 2016-01-01 to 2016-12-31 | 20,177,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2016-01-01 to 2016-12-31 | $100.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 12 months, 2016-01-01 to 2016-12-31 | $49.8m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 12 months, 2016-01-01 to 2016-12-31 | $8.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 12 months, 2016-01-01 to 2016-12-31 | $722.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2016-12-31 | $20.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2016-12-31 | $175.4m | us-gaap:AssetsCurrent |
| Total assets | at 2016-12-31 | $869.8m | us-gaap:Assets |
| Current liabilities | at 2016-12-31 | $345.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2016-12-31 | $499.2m | us-gaap:Liabilities |
| Long-term debt | at 2016-12-31 | $247.7m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2016-12-31 | $357.4m | us-gaap:StockholdersEquity |

## Business

As filed, 41,392 characters.

Viad Corp (“Viad” or the “Company”) 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 unforgettable experiences to its clients and guests. Viad operates through the following two main business groups:

- **GES**, previously referred to as the Marketing & Events Group, is a world-class live event service provider to some of the most visible and influential events and global brands; and
- **Pursuit**, previously referred to as the Travel & Recreation Group, is a collection of iconic natural and cultural destination travel experiences that enjoy perennial demand.

GES accounted for 88 percent of Viad’s 2016 consolidated revenue and 58 percent of Viad’s 2016 consolidated segment operating income(1). Pursuit accounted for 12 percent of Viad’s 2016 consolidated revenue and 42 percent of Viad’s 2016 consolidated segment operating income(1).

(1) Segment operating income is defined by Viad as net income attributable to Viad before income (loss) from discontinued operations, corporate activities and eliminations, interest expense and interest income, income taxes, restructuring charges, impairment losses and recoveries, and the reduction for income attributable to non-controlling interest. Refer to Note 21 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for a reconciliation of segment operating income to the most directly comparable GAAP measure.

GES is a global, full-service provider for live events that produces exhibitions, conferences, corporate events, and consumer events. GES offers a comprehensive range of live event services, from the design and production of compelling, immersive experiences that engage audiences and build brand awareness, to material handling, rigging, electrical, and other on-site event services. In addition, GES offers clients a full suite of audio-visual services from creative and technology to content and design, along with online tools powered by next generation technologies that help clients easily manage the complexities of their events. GES’ National Servicenter® has been recognized with certification under the J.D. Power and Associates Certified Call Center ProgramSM for the past eight years, and GES was named one of the “World’s 50 Largest Agency Companies” for the seventh 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 GES’ client relationships, which is incorporated herein by reference.

GES is divided into two reportable segments based on geography: GES U.S. and GES International.

- **GES U.S.** 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.
- **GES International** holds leading positions in Canada, Europe, and the Middle East. GES International has full-service operations at many of the most active and popular event 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.

### Markets Served

GES U.S. and GES International both provide a full suite of services for event organizers and corporate brand marketers across four live event markets: (i) Exhibitions; (ii) Conferences; (iii) Corporate Events; and (iv) Consumer Events (collectively, “Live Events”).

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| LIVE EVENT | PURPOSE | % GES 2016 REVENUE |
| --- | --- | ---: |
| **Exhibitions** | Primary purpose is to facilitate business-to-business and business-to-consumer sales and marketing. | 65% |
| **Conferences** | Primary purpose is to facilitate attendee education. An expo or trade show may be held in conjunction to further facilitate attendee education and to facilitate business-to-business and business-to-consumer sales and marketing. | 23% |
| **Corporate Events** | Primary purpose is to facilitate attendee education of sponsoring company’s products or product ecosystem. | 8% |
| **Consumer Events** | Primary purpose is to entertain, educate, or create an experience, typically around a specific genre. | 4% |

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### Services Offered

GES offers a comprehensive range of services and innovative technology to event organizers and corporate brand marketers including (i) Core Services; (ii) Event Technology; and (iii) Audio-Visual.

**Core Services** GES provides official contracting services and products to event organizers and corporate brand marketers for Live Events in both GES U.S. and GES International. Contracting services and products are provided primarily to Exhibitions and to a lesser degree to Conferences, Corporate Events, and Consumer Events. GES U.S. Core Services accounted for 61 percent of Viad’s 2016 and 2015 consolidated revenue and 64 percent of Viad’s 2014 consolidated revenue. GES International Core Services accounted for 19 percent of Viad’s 2016 consolidated revenue and 23 percent for Viad’s 2015 and 2014 consolidated revenue.

GES U.S. and GES International generally provide the same level of services and products. The following is a general list of exclusive and discretionary services and products provided to Live Event organizers and exhibitors:

| Exclusive Services: | Discretionary Services: |
| --- | --- |
| **Event Organizers:** **Corporate Brand Marketers:** | **Corporate Brand Marketers:** |
| Event Planning and Production Material Handling | Creative Design and Strategy |
| Look and Feel Design Electrical Distribution | Integrated Marketing and Pre/Post Event Communications |
| Layout and Floor Plan Designs Cleaning | Event Surveys |
| Furnishings and Carpet Plumbing | Return on Investment Analysis |
| Show Traffic Analysis Overhead Rigging | Online Management Tools |
| Marketing and Strategy Booth Rigging | Attendee/Exhibit Booth Traffic Analysis |
| Electrical Distribution | Staff Training |
| Cleaning | Logistics/Transportation |
| Plumbing | Storage/Refurbishment of Exhibits |
| Overhead Rigging | Furnishings and Carpet |
| Booth Rigging | Installation and Dismantling Labor |
|  | Tradeshow program management |
| **Exclusive Products:** | **Discretionary Products:** |
| **Event Organizers:** | **Corporate Brand Marketers:** |
| Signage | Custom Exhibit Design/Construction |
| Common Area Structures | Portable/Modular Exhibits and Design |
|  | Graphics and Signage |

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Under various agreements with event organizers of Live Events, GES serves as the official services contractor and provides the services and products listed above. 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. Regardless if 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.

**Event Technology** GES U.S. and GES International offer a comprehensive range of event technology services including event accommodation solutions, registration and data analytics, and event management tools. •**Event accommodation solutions**. GES U.S. provides end-to-end event accommodation services in North America. GES positioned itself as the leading provider of event accommodations with its 2014 acquisitions of onPeak LLC and Travel Planners, Inc. (collectively, “onPeak”). 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 corporate brand marketers, managing attendee and corporate brand marketer 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 corporate brand marketers 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. •**Registration and data analytics.** GES International and GES U.S. provide event registration and data analytic services. GES positioned itself as a leading provider of registration services for Live Events in Europe with the 2014 acquisition of N200 Limited and its affiliates (collectively, “N200”). GES provides both a software-as-a-service model and fully managed options for registration and ticketing, lead management, and reporting and analytics. Its multi-lingual and multi-currency technology enables a common platform for global event organizers. During the fourth quarter of 2016, GES officially launched registration and data analytic services to the U.S. market. •**Event management tools.** GES U.S. and GES International provide event management tools for Live Events which include online ordering capabilities, sponsoring management tools, content management systems, and live event tracking. GES U.S. provides all three of the above event technology services which accounted for three percent of Viad’s 2016 and 2015 consolidated revenue and one percent of Viad’s 2014 consolidated revenue. GES International provides registration and data analytics and event management tools which accounted for one percent of Viad’s 2016 and 2015 consolidated revenue and less than one percent of Viad’s 2014 consolidated revenue.

**Audio-Visual** GES offers a variety of audio-visual and digital services for Live Events and corporate brand marketers in both GES U.S. and GES International. GES expanded its audio-visual services through the acquisition of two leading audio-visual production businesses: ON Event Services, LLC (“ON Services”) and Blitz Communications Group Limited and its affiliates (collectively, “Blitz”). The assets and operations of ON Services were acquired in August 2016. ON Services’ in-house audio-visual production services enhance GES’ ability to gain market share in the Corporate Event markets in North America and enables GES to cross-sell its services and technology offerings. With the 2014 acquisition of Blitz, GES took a prominent position in the United Kingdom audio-visual market with services in continental Europe. GES combines the science of innovative digital solutions with the latest audio-visual 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. GES U.S. audio-visual services accounted for three percent of Viad’s 2016 consolidated revenue, one percent of Viad’s 2015 consolidated revenue, and less than one percent of Viad’s 2014 consolidated revenue. GES International audio-visual services accounted for two percent of Viad’s 2016 and 2015 consolidated revenue and one percent of Viad’s 2014 consolidated revenue.

### Seasonality and Show Rotation

GES U.S. and GES International 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. During 2016, GES U.S. reported its highest revenue during the second and third quarters. During 2015, GES U.S. reported its highest revenue during the first and second quarters. GES International generally reports its highest revenue during the second and fourth quarters. The show rotation revenue metric refers to the net change in revenue from 2015 to 2016 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

GES U.S. and GES International generally compete 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, U.S. headquartered 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. GES holds a dominate market position in Exhibitions and is pursuing a focused and disciplined growth strategy of expanding its market share in the currently under-penetrated 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 from 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.** Penetration into other live events to extend industry leadership and leverage capabilities.

With its 2016 acquisition of the assets and operations of ON Services and its 2014 acquisitions of Blitz, onPeak, and N200, GES made significant progress toward creating the most comprehensive suite of services for the Live Events industry. GES extended its audio-visual services to North America with the acquisition of ON Services and 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 2016, these acquisitions enhanced overall competitiveness, 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 GES

- **Acquisition of ON Services.** On August 11, 2016, the Company acquired the assets and operations of ON Services, a leading provider of audio-visual production services for Live Events in the United States. ON Services specializes in corporate events and exhibitions, supporting more than 1,000 Live Events annually with production services, including audio, video, lighting, mapping, and scenic design. In addition, the business produces high-end entertainment events and is the preferred in-house provider of audio-visual services for venues, including hotels, arenas, and conference centers.
- **Cross-selling opportunities**. GES is 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 analytic services entrance in U.S. and Asia markets**. GES officially launched registration and data analytic services in the U.S. market during the fourth quarter of 2016. The planned entrance of registration and data services in the Asia market is expected in early 2017 with an office opening in Hong Kong.

The Travel & Recreation Group introduced the “Pursuit” brand in 2017 to align all of its businesses around a common vision, mission, and set of core values. Pursuit is a collection of iconic natural and cultural destination travel experiences in North America that showcase the best of Banff, Jasper, Waterton Lakes, Glacier, Denali, and Kenai Fjords National Parks, and Vancouver, Canada. Through Pursuit’s collection of unique hotels and lodges, world-class recreational attractions, and ground transportation services, it connects guests to iconic places through unforgettable, inspiring experiences. Pursuit draws its guests from major markets, including Canada, the United States, China, the United Kingdom, Australia/New Zealand, Asia Pacific, and Europe. Pursuit 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. Pursuit is composed of the following collections:

|  |  |
| --- | --- |
| **Brewster Travel Canada** | Brewster Travel Canada is a leading travel and tourism provider in the Canadian Rockies in Alberta, Canada with two lodging properties in Banff National Park, one lodging property in Jasper National Park, five world-class recreational attractions, food and beverage services, retail operations, sightseeing and transportation services. |
| **Alaska Collection** | The Alaska Collection is a leading travel and tourism provider in Alaska with two lodging properties and a sightseeing excursion in Denali National Park and Preserve, a lodge in Talkeetna, Alaska’s top rated wildlife and glacier cruise, and two lodging properties located near Kenai Fjords National Park. The Alaska Collection also provides food and beverage services and retail operations with respect to those properties. |
| **Glacier Park, Inc.** | Glacier Park, Inc. is an operator of seven lodging properties, twelve retail shops, and eleven dining outlets in and around Glacier National Park in Montana, one of the most visited national parks in the United States, and Waterton Lakes National Park in Alberta, Canada, with a leading share of rooms in that market. Glacier Park, Inc. is an 80 percent owned subsidiary of Viad. |
| **FlyOver Canada** | FlyOver Canada is a one-of-a-kind virtual flight ride experience located in Vancouver, Canada that combines motion seating, spectacular media, and visual effects including wind, scents, and mist to give the unforgettable experience of flying across Canada. |

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Pursuit is composed of four lines of business: (i) Hospitality (including food and beverage services and retail operations); (ii) Attractions (including food and beverage services and retail operations); (iii) Transportation; and (iv) Travel Planning. 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 and Vancouver in Canada, and Glacier, Denali, and Kenai Fjords National Parks in the United States.

|  | Hospitality (# of rooms) | Attractions | Transportation (6) | Travel Planning (6) |
| --- | --- | --- | --- | --- |
| **Brewster Travel Canada** | Elk + Avenue Hotel (164) (1) Glacier View Inn (32) Mount Royal Hotel (135) (2) | Banff Gondola Banff Lake Cruise Columbia Icefield Glacier Adventure Glacier Skywalk Maligne Lake Tours(3) | Airporter Services Charter Motorcoach Services Sightseeing Tours | Corporate Event Management Services Explore Rockies Activity Booking Centers |
| **Alaska Collection** | Denali Backcountry Lodge (42) Denali Cabins (46) Kenai Fjords Wilderness Lodge (8)(4) Seward Windsong Lodge (180)(4) Talkeetna Alaska Lodge (212)(4) | Kenai Fjords Tours(4) | Denali Backcountry Adventure | Travel Planning Services |
| **Glacier Park, Inc.** | Apgar Village Lodge (48) Glacier Park Lodge (162) Grouse Mountain Lodge (144) Motel Lake McDonald (27) Prince of Wales Hotel (86) St. Mary Lodge (117) West Glacier Motel & Cabins (32) |  |  |  |
| **FlyOver Canada** |  | FlyOver Canada - Vancouver(5) |  |  |

(1) The Elk + Avenue Hotel, formerly known as the Banff International Hotel, was renamed in 2016.

(2) The Mount Royal Hotel was damaged by a fire on December 29, 2016 and will be closed for reconstruction during 2017.

(3) In January 2016, the Company acquired the business of Maligne Tours Ltd. (“Maligne Lake Tours”), which offers sightseeing boat tours on Maligne Lake in Jasper National Park.

(4) In March 2016, the Company acquired CATC Alaska Tourism Corporation, formerly known as CIRI Alaska Tourism Corporation (“CATC”), the operator of an Alaskan tourism business that includes the Kenai Fjords Tours marine sightseeing attraction and three lodges.

(5) In December 2016, the Company acquired FlyOver Canada, a recreational attraction that provides a virtual flight ride experience with a combination of motion seating, a four-story movie screen, and media and visual effects.

(6) During 2016, the Company began to phase out third party tour and travel products within Canada and exited summer season charter transportation services.

**Hospitality** Pursuit provides lodging accommodations, food and beverage services, and retail operations through its collection of unique hotels and lodges varying from hikers’ cabins to grand and historic lodges. •**Mount Royal Hotel** and **Elk + Avenue 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 in Jasper 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. •**Kenai Fjords Wilderness Lodge** is located on a private island in Resurrection Bay adjacent to the Kenai Fjords National Park. •**Seward Windsong Lodge** is located near Kenai Fjords National Park in Seward, Alaska. •**Talkeetna Alaskan Lodge** is located in Talkeetna, Alaska on the south side of Denali National Park. •**Apgar Village Lodge** and **Motel Lake McDonald** are located inside Glacier National Park. •**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. •**St. Mary Lodge** is located outside the east entrance of Glacier National Park in St. Mary, Montana. •**West Glacier Motel & Cabins** are located outside the west entrance of Glacier National Park.

|  |  |
| --- | --- |
| **Attractions** | Pursuit owns and operates the following attractions in the Canadian Rocky Mountains, Vancouver, and in Alaska: |
| 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. The Company completed the upper terminal redevelopment project in 2016, which resulted in 25 percent more square footage, an improved layout, optimized food and beverage and retail space, interactive exhibits, and a multisensory theatre. The Banff Gondola refresh project has been honored with two Top Project Awards from Alberta Construction Magazine. The Banff Gondola’s winning categories include the People’s Choice Award and the Commercial Award (Under $50 Million). The Banff Gondola is rated by Trip Advisor as the #1 “Things to do in Banff” and has been awarded with the Trip Advisor Certificate of Excellence. |  |
| Banff Lake Cruise provides guests a unique sightseeing experience through interpretive boat cruises on Lake Minnewanka in the 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 expeditions. The Banff Lake Cruise has been awarded with the Trip Advisor Certificate of Excellence. |  |

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**Columbia Icefield Glacier Adventure** is a tour of the Athabasca Glacier on the Columbia Icefield, and provides guests the experience to view one of the largest accumulations of ice and snow south of the Arctic Circle. Guests ride in a giant “Ice Explorer,” a unique vehicle specially designed for glacier travel. The Columbia Icefield Glacier Adventure has been awarded with the Trip Advisor Certificate of Excellence.

**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, 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, including the prestigious Governor General’s Medals in Architecture in 2016.

**FlyOver Canada** provides a virtual flight ride experience that showcases some of Canada’s most awe-inspiring scenery from coast to coast. The state-of-the-art, multi-sensory experience combines motion seating, spectacular media, and special effects including wind, scents, and mist, to provide a true flying experience for guests. FlyOver Canada is ideally located in downtown Vancouver, Canada. FlyOver Canada is rated by Trip Advisor as the #1 “Fun & Games in Vancouver” and has been awarded with the Trip Advisor Certificate of Excellence.

**Kenai Fjords Tours** is the most popular Alaska wildlife and glacier day cruise offering guests unforgettable sights of towering glaciers, humpback and grey whales, orcas, arctic birdlife, sea lions, seals, and porpoises of Kenai Fjords National Park. Tours range from a few hours to full days, with some tours including a full meal of wild Alaska salmon, prime rib and Alaskan King Crab on Fox Island. Kenai Fjords Tours has been awarded with the Trip Advisor Certificate of Excellence.

**Maligne Lake Tours** provides interpretive boat tours and related services at Maligne Lake, the largest lake in Jasper National Park, Alberta, Canada. Maligne Lake Tours has seven tour boats, a marina and day lodge that offers food and beverage and retail services, a historic chalet complex and boat house that offers canoes, kayaks, and rowboats for rental. Maligne Lake Tours has been awarded with the Trip Advisor Certificate of Excellence.

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**Transportation** Brewster Travel Canada’s transportation operations currently include sightseeing tours, airport shuttle services, and charter motorcoach services. The sightseeing services include seasonal half- and full-day tours from Calgary, Banff, Lake Louise, and Jasper, Canada and bring guests to the very best parts of Banff and Jasper National Parks. The 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 the winter months. In 2016, Brewster Travel Canada exited certain low-margin, capital-intensive charter businesses in the summer season to improve overall profitability and return on invested capital. The Alaska Collection offers a unique sightseeing tour 92 miles deep into Denali National Park.

**Travel Planning** Brewster Travel Canada 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 audio-visual services. Brewster Travel Canada also owns and operates eight Explore Rockies activity booking centers throughout Banff and Jasper National Parks and Calgary, Alberta. In 2016, Brewster Travel Canada began phasing out third party package tour and travel products to align with its goal of delivering premium experiences and improving its overall profit margin. The Alaska Collection provides complete travel planning services throughout Alaska.

### Seasonality

Pursuit experiences peak activity during the summer months. During 2016, 90 percent of Pursuit’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

Pursuit 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. Pursuit has a competitive advantage through its distinctive attractions and the iconic destinations of its assets.

### Growth Strategy

Pursuit remains focused on delivering inspiring and unforgettable experiences in iconic locations while growing and enhancing its unique portfolio of integrated tourism assets through its Refresh-Build-Buy growth initiatives.

- **Refresh**. Refresh assets and processes 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.

Pursuit continued to make progress with its Refresh-Build-Buy growth initiatives by completing a major renovation of the Banff Gondola and the Elk + Avenue Hotel during 2016. The Glacier Skywalk continues to win awards and receive international recognition for its innovative design and environmentally sound architecture. Pursuit also complemented its existing assets with the acquisition of Maligne Lake Tours, CATC, and FlyOver Canada in 2016. The Company continues to search for opportunities to acquire or build/construct high return tourism assets in iconic natural and cultural 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 Pursuit

- **Renovation of the Banff Gondola**. The Company completed the redevelopment project of the Banff Gondola in 2016. This renovation featured approximately 25 percent more square footage, including an 8,000 square foot rooftop viewing deck. The renovation also included enhanced retail and dining offerings and a state of the art interpretive area including new experiential areas such as a high definition theater.
- **Acquisition of Maligne Lake Tours**. On January 4, 2016, the Company acquired the business of Maligne Lake Tours, which offers sightseeing boat tours on Maligne Lake, a picturesque glacial lake in Jasper National Park. The Maligne Lake Tours acquisition strengthens the Company’s presence in the Jasper National Park area and adds another world-class attraction to its portfolio of services. The operations of Maligne Lake Tours are integrated with Brewster Travel Canada.
- **Acquisition of CATC**. On March 11, 2016, the Company acquired CATC, the operator of an Alaskan tourism business that includes the number one wildlife and glacier cruise in Alaska and three unique lodges. The operations of CATC are integrated with the Alaska Collection.
- **Acquisition of FlyOver Canada.** On December 29, 2016, the Company acquired FlyOver Canada, a recreational attraction located in downtown Vancouver, Canada that provides a virtual flight ride experience with a combination of motion seating, a four-story movie screen, and media and visual effects.

Financial information on Viad’s reportable segments and geographic areas is contained in Note 21 – 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®, FLYOVER®, eco-sense®*, ONPEAK®, *Above Banff®, Alaska Denali Travel®, Alaska Denali Escapes®, Alaska Heritage Tours®, Kenai Fjords Tours & design®, Kenai Fjords Wilderness Lodge®, Seward Windsong Lodge & design®, Talkeetna Alaskan Lodge®, Explore Rockies®, 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®, Above Banff®, Explore Rockies®, FLYOVER®, Soaring Over Canada®, Elk + Avenue Hotel®, Brewster Epic Summer* Pass®, and *escape.connect.refresh.explore®*. Viad also has trademark applications in process both in and outside the United States relating to the Pursuit brand. 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. GES 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 20 – 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 the following number of employees as of December 31, 2016:

|  | Number of Employees | Regular Full-Time Employees Covered by Collective Bargaining Agreements |
| --- | ---: | ---: |
| GES | 2,967 | 951 |
| Pursuit | 414 | 59 |
| Viad Corporate | 55 | — |
| **Total** | 3,436 | 1,010 |

Viad believes that relations with its employees are good and that collective-bargaining agreements expiring in 2017 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 five executive officers.

### Financial Information about Restructuring Charges

Refer to Note 18 – 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 21 – 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 21 – 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 on 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 *www.viad.com/investors/investor-center/default.aspx* 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, 19,673 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 GES U.S. and GES International depend 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 GES are adversely affected.

Revenue from Pursuit 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, the Netherlands, 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 2016, GES derived approximately 24 percent of its revenue and 19 percent of its segment operating income from GES International. During 2016, Pursuit derived approximately 59 percent of its revenue and 74 percent of its 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 of Pursuit.

***Show rotation impacts overall profitability and makes comparisons between periods difficult.*** The business activities of GES 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 6.1 percent of Viad’s consolidated revenue in 2016, GES U.S. and GES International 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 GES U.S. and GES International.

In addition, revenue of GES may be significantly impacted if certain exhibition facilities choose to in-source electrical, plumbing, or other services. When GES 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 GES 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 GES U.S. and GES International 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 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 GES U.S. and GES International varies significantly depending on the frequency and timing of shows, as some shows are not held each year and some may shift between quarters. Pursuit experiences peak activity during the summer months. During 2016, 90 percent of Pursuit’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.*** GES U.S. and GES International 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 2016 and 2015 totaled $25.8 million and $22.0 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 17 – 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.

***The new presidential administration may make substantial changes to fiscal and tax policies that may adversely affect Viad’s business***. The new presidential administration has called for substantial change to fiscal and tax policies, which may include comprehensive tax reform. The Company cannot predict the impact, if any, of these changes to its business. However, it is possible that these changes could adversely affect its business. It is likely that some policies adopted by the new presidential administration will benefit the Company and others will negatively affect the Company. Until Viad knows what changes are enacted, the Company will not know whether in total it benefits from, or is negatively affected by, the changes.

***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 the 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 GES’ 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 businesses of Pursuit, which are heavily dependent on the ability and willingness of its guests to travel. The guests serviced by Pursuit 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, 2,681 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 GES, Pursuit, and Viad Corporate and Shared Services as follows:

### GES U.S.

GES U.S. operates 20 offices and 33 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 or licensed.

### GES International

GES International operates 11 offices and 20 multi-use facilities, with three offices and eight multi-use facilities in Canada, four offices and five 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.

### Pursuit

Pursuit operates eight offices, 25 retail stores, one bus terminal, six garages, seven attractions (Banff Gondola, Banff Lake Cruise, Columbia Icefield Glacier Adventure, Glacier Skywalk, Maligne Lake Tours, Kenai Fjords Tours, and FlyOver Canada), and 15 hotels/lodges (including ancillary food and beverage services, retail, and recreational facilities). All of the facilities are in the United States or Canada. Properties owned include two offices, 23 retail stores, the bus terminal, four garages, all of the attractions, and all of the hotels/lodges. Properties leased include six offices, two retail stores, and two garages. Properties situated on land subject to multiple long-term ground leases with the Canadian government include four hotels/lodges, an office, all of the owned garages, Banff Gondola, Banff Lake Cruise, Columbia Icefield Glacier Adventure, Glacier Skywalk, Maligne Lake Tours, and FlyOver Canada.

### 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. For additional information related to the Company’s 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).

## Legal proceedings

As filed, 245 characters.

Refer to Note 20 – 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, 70,692 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’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 unforgettable experiences to its clients and guests. Viad operates through three reportable business segments: GES U.S., GES International, (collectively, “GES”), and Pursuit.

GES is a global, full-service provider for live events that produces exhibitions, conferences, corporate events, and consumer events. GES offers a comprehensive range of live event services and a full suite of audio-visual services from creative and technology to content and design along with online tools powered by next generation technologies that help them easily manage the complexities of their events.

Pursuit is a collection of iconic natural and cultural destination travel experiences that enjoy perennial demand. Pursuit offers guests distinctive and world renowned experiences through its collection of unique hotels, lodges, recreational attractions, and transportation services. Pursuit remains focused on delivering inspiring and unforgettable experiences in iconic locations while growing and enhancing its 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 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. As not all companies use identical calculations, 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 2017 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)*

|  | Year Ended December 31, 2016 | 2015 | 2014 |
| --- | ---: | ---: | ---: |
| Net income attributable to Viad | $42,269 | $26,606 | $52,354 |
| Depreciation and amortization | 42,743 | 35,231 | 30,792 |
| Interest expense | 5,898 | 4,535 | 2,015 |
| Income tax expense | 21,250 | 10,493 | 109 |
| Impairment charges | 218 | 96 | 884 |
| (Income) loss from discontinued operations | 684 | 394 | (11,564) |
| Noncontrolling interest | (634) | (554) | (636) |
| **Adjusted EBITDA** | $112,428 | $76,801 | $73,954 |

Adjusted EBITDA increased $35.6 million in 2016 primarily due to higher segment operating income at GES and Pursuit. Adjusted EBITDA increased $2.8 million in 2015 primarily due to lower corporate costs, offset in part by higher restructuring charges. 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 and segment operating income as forward-looking Non-GAAP Measures within the “Results of Operations” section of this MD&A. The Company does not provide reconciliations of these forward-looking Non-GAAP Measures to the most directly comparable GAAP financial measures 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 reconciliations of these forward-looking Non-GAAP Measures to the most directly comparable GAAP financial measures is available to the Company without unreasonable efforts. Consequently, any attempt to disclose such reconciliations would imply a degree of precision that could be confusing or misleading to investors. It is probable that these forward-looking Non-GAAP Measures may be materially different from the corresponding GAAP Measures.

### Results of Operations

### Financial Highlights

*(in thousands, except per share data)*

|  | Year Ended December 31, 2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenue | $1,204,970 | $1,089,048 | $1,064,987 | 10.6% | 2.3% |
| Net income attributable to Viad | $42,269 | $26,606 | $52,354 | 58.9% | (49.2)% |
| Segment operating income (1) | $85,928 | $54,584 | $59,866 | 57.4% | (8.8)% |
| Income (loss) from discontinued operations attributable to Viad common stockholders | $(684) | $(394) | $11,564 | (73.6)% | \*\* |
| Diluted income per common share from continuing operations attributable to Viad common stockholders | $2.12 | $1.34 | $2.02 | 58.2% | (33.7)% |

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

(1) Refer to Note 21 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for a reconciliation of segment operating income to the most directly comparable GAAP measure.

### 2016 compared with 2015

- **Total revenue increased** $115.9 million or 10.6 percent, mainly due to the incremental revenue from acquisitions completed during 2016, primarily CATC, ON Services, and Maligne Lake Tours, of $55.7 million, positive show rotation of approximately $52 million, and continued underlying growth in both GES and Pursuit, offset in part by an unfavorable foreign exchange impact of $24.0 million.
- **Net income attributable to Viad** increased $15.7 million or 58.9 percent, primarily due to increased segment operating income at GES and Pursuit, offset in part by higher income tax expense.
- **Total segment operating income** increased $31.3 million or 57.4 percent, primarily due to high flow-through on the increase in revenue.

### 2015 compared with 2014

- **Total revenue** increased $24.1 million or 2.3 percent, primarily due to the 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 8.0 percent, and new business wins in GES as well as revenue growth in attractions in Pursuit, 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.
- **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, Inc.’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.
- **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, Inc.’s concession contract with the Park Service.

### Foreign Exchange Rate Variances

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

The following table summarizes 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, 2016 and 2015, excluding the effect of acquisitions completed during 2016:

### 2016 compared with 2015

*(in thousands)*

*(in thousands)*

| GES: | Revenue Weighted-Average Exchange Rates 2016 | 2015 | FX Impact | Segment Operating Results Weighted-Average Exchange Rates 2016 | 2015 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.76 | $0.78 | $(1,852) | $0.78 | $0.80 | $(77) |
| United Kingdom (GBP) | $1.35 | $1.53 | (20,946) | $1.24 | $1.53 | (632) |
| Europe (EUR) | $1.11 | $1.10 | 150 | $1.12 | $1.09 | 36 |
|  |  |  | (22,648) |  |  | (673) |
| Pursuit: |  |  |  |  |  |  |
| Canada (CAD) | $0.77 | $0.78 | (1,307) | $0.78 | $0.80 | 91 |
|  |  |  | $(23,955) |  |  | $(582) |

### 2015 compared with 2014

The following table summarizes the FX Impact on revenue and segment operating results from Viad’s significant international operations for the years ended December 31, 2015 and 2014, excluding the effect of acquisitions completed during 2014:

*(in thousands)*

*(in thousands)*

| GES: | Revenue Weighted-Average Exchange Rates 2015 | 2014 | FX Impact | Segment Operating Results Weighted-Average Exchange Rates 2015 | 2014 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.78 | $0.90 | $(9,420) | $0.80 | $0.88 | $(336) |
| United Kingdom (GBP) | $1.53 | $1.65 | (13,380) | $1.52 | $1.66 | (652) |
| Europe (EUR) | $1.11 | $1.32 | (3,200) | $1.10 | $1.35 | (56) |
|  |  |  | (26,000) |  |  | (1,044) |
| Pursuit: |  |  |  |  |  |  |
| Canada (CAD) | $0.78 | $0.92 | (13,705) | $0.78 | $0.93 | (4,638) |
|  |  |  | $(39,705) |  |  | $(5,682) |

Viad’s 2016 revenue and segment operating results were primarily impacted by the weakening of the British pound relative to the U.S. dollar. Viad’s 2015 revenue and segment operating results were primarily impacted by the weakening of the British pound and the 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

### GES

### 2016 compared with 2015

The following table provides a comparison of GES’ reported revenue and segment operating results to organic revenue and organic segment operating results for the years ended December 31, 2016 and 2015 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.

*(in thousands)*

| Revenue: GES: | Year Ended December 31, 2016 As Reported | Acquisitions(1) | FX Impact | Organic(2) | Year Ended December 31, 2015 As Reported | Acquisitions | Organic(2) | Change As Reported | Organic(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. | $826,408 | $21,306 | $— | $805,102 | $720,882 | $— | $720,882 | 14.6% | 11.7% |
| International | 248,503 | — | (22,648) | 271,151 | 272,634 | — | 272,634 | (8.9)% | (0.5)% |
| Intersegment eliminations | (20,172) | — | — | (20,172) | (16,638) | — | (16,638) | (21.2)% | (21.2)% |
| Total GES | $1,054,739 | $21,306 | $(22,648) | $1,056,081 | $976,878 | $— | $976,878 | 8.0% | 8.1% |
| **Segment operating income (loss)(2)(3):** |  |  |  |  |  |  |  |  |  |
| GES: |  |  |  |  |  |  |  |  |  |
| U.S. | $40,524 | $(804) | $— | $41,328 | $14,563 | $— | $14,563 | \*\* | \*\* |
| International | 9,699 | — | (673) | 10,372 | 12,211 | — | 12,211 | (20.6)% | (15.1)% |
| Total GES | $50,223 | $(804) | $(673) | $51,700 | $26,774 | $— | $26,774 | 87.6% | 93.1% |

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

(1) Acquisition for GES U.S. includes ON Services (acquired August 2016).

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

(3) Refer to Note 21 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for a reconciliation of segment operating income to the most directly comparable GAAP measure.

### GES U.S.

**GES U.S. revenue** increased $105.5 million or 14.6 percent, primarily due to positive show rotation of approximately $59 million, base same-show revenue growth of 4.1 percent, the incremental revenue from the acquisition of ON Services of $21.3 million, new business wins, and increased sales to corporate clients. Base same-show revenue represented 39.1 percent of GES U.S. 2016 organic revenue. Organic revenue increased $84.2 million or 11.7 percent.

**GES U.S. operating income** increased $26.0 million, primarily due to higher revenue and the strong operating leverage that exists within the GES business. ON Services generated a segment operating loss of $0.8 million during Viad’s partial year of ownership, which included depreciation and amortization expense of $4.0 million. Organic operating income increased $26.8 million.

### GES International

**GES International revenue** decreased $24.1 million or 8.9 percent, primarily due to an unfavorable FX Impact of $22.6 million and negative show rotation of approximately $7 million, offset in part by new business wins. Organic revenue decreased $1.5 million or 0.5 percent.

**GES International operating income** decreased $2.5 million or 20.6 percent, primarily reflecting lower revenue and investments in personnel and assets to support continued growth of the business. Organic operating income decreased $1.8 million or 15.1 percent.

### 2017 Outlook

Although GES 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 2017 full year, management expects GES’ revenue to increase at a mid-single digit rate versus 2016. The August 2016 acquisition of ON Services is expected to provide incremental revenue of $45 million to $48 million and incremental Adjusted Segment EBITDA of $11 million to $13 million. GES show rotation is expected to have a negative impact on revenue of approximately $20 million compared to 2016. GES U.S. base same-show revenue is expected to increase at a mid-single digit rate. Management anticipates an unfavorable FX Impact on GES’ 2017 full year revenue and segment operating income of approximately $20 million and $1 million, respectively. The expected FX Impact reflects the expectation that the U.S. dollar to the British pound exchange rate will be $1.23 and the U.S. dollar to the Canadian dollar exchange rate will be $0.74 during 2017.

Management is executing a strategic growth plan to position GES as the preferred global, full-service provider for Live Events, with further reach to corporate events, consumer events, conferences and exhibitions. In support of this strategy, the Company acquired two leading audio-visual production businesses and three leading event technology businesses since 2014 that complement, enhance, and expand the current business and offer higher-margin growth opportunities. Management continues to pursue additional opportunities to acquire businesses with proven products and services to create the most comprehensive suite of services for the Live Events industry. During 2017, management intends to make selective investments in additional resources to capitalize on continued growth opportunities in under-penetrated categories of Live Events, such as corporate events and consumer events, and in cross-selling new services.

Additionally, management remains focused on improving the profitability of GES 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.

### 2015 compared with 2014

The following table provides a comparison of GES’ reported revenue and segment operating results to organic revenue and organic segment 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: GES: | 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. | $720,882 | $30,916 | $— | $689,966 | $710,835 | $6,123 | $704,712 | 1.4% | (2.1)% |
| International | 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 GES | $976,878 | $64,982 | $(26,000) | $937,896 | $944,468 | $16,712 | $927,756 | 3.4% | 1.1% |
| **Segment operating income (loss)(2)(3):** |  |  |  |  |  |  |  |  |  |
| GES: |  |  |  |  |  |  |  |  |  |
| U.S. | $14,563 | $6,419 | $— | $8,144 | $21,400 | $(252) | $21,652 | (31.9)% | (62.4)% |
| International | 12,211 | 1,132 | (1,044) | 12,123 | 10,339 | 186 | 10,153 | 18.1% | 19.4% |
| Total GES | $26,774 | $7,551 | $(1,044) | $20,267 | $31,739 | $(66) | $31,805 | (15.6)% | (36.3)% |

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

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

(3) Refer to Note 21 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for a reconciliation of segment operating income to the most directly comparable GAAP measure.

### GES U.S.

**GES U.S. revenue** increased $10.0 million or 1.4 percent, primarily due to the 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-show revenue represented 44.7 percent of GES U.S. 2015 organic revenue. Organic revenue decreased $14.7 million or 2.1 percent.

**GES U.S. 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.

### GES International

**GES International revenue** increased $23.0 million or 9.2 percent, primarily due to the 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.

**GES International 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.

### Pursuit

### 2016 compared with 2015

The following table provides a comparison of Pursuit’s reported revenue and segment operating results to organic revenue and organic segment operating results for the years ended December 31, 2016 and 2015 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.

*(in thousands)*

| Revenue: Pursuit: | Year Ended December 31, 2016 As Reported | Acquisitions(1) | FX Impact | Organic(2) | Year Ended December 31, 2015 As Reported | Acquisitions | Organic(2) | Change As Reported | Organic(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Hospitality | $59,757 | $12,834 | $(328) | $47,251 | $41,605 | $— | $41,605 | 43.6% | 13.6% |
| Attractions | 65,945 | 20,043 | (496) | 46,398 | 42,405 | — | 42,405 | 55.5% | 9.4% |
| Transportation | 11,833 | — | (275) | 12,108 | 13,999 | — | 13,999 | (15.5)% | (13.5)% |
| Travel Planning | 17,631 | 1,540 | (233) | 16,324 | 15,863 | — | 15,863 | 11.1% | 2.9% |
| Intra-Segment Eliminations & Other | (1,802) | — | 25 | (1,827) | (1,702) | — | (1,702) | (5.9)% | (7.3)% |
| Total Pursuit | $153,364 | $34,417 | $(1,307) | $120,254 | $112,170 | $— | $112,170 | 36.7% | 7.2% |
| **Segment operating income(2)(3):** |  |  |  |  |  |  |  |  |  |
| Total Pursuit | $35,705 | $7,917 | $91 | $27,697 | $27,810 | $— | $27,810 | 28.4% | (0.4)% |

(1) Acquisitions include Maligne Lake Tours (acquired January 2016), CATC (acquired March 2016), and FlyOver Canada (acquired December 2016).

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

(3) Refer to Note 21 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for a reconciliation of segment operating income to the most directly comparable GAAP measure.

**Pursuit revenue** increased $41.2 million or 36.7 percent, primarily due to the incremental revenue of $34.4 million from acquisitions completed during 2016, primarily CATC and Maligne Lake Tours, increases across all hospitality assets and attractions, offset in part by the strategic downsizing of the transportation line of business and an unfavorable FX Impact of $1.3 million. Organic revenue increased $8.1 million or 7.2 percent.

**Pursuit operating income** increased $7.9 million or 28.4 percent, primarily due to higher revenue, offset in part by higher accruals for performance-based incentives, acquisition transaction-related costs, and investments to support continued growth of the business. Organic operating income decreased $0.1 million or 0.4 percent.

### 2017 Outlook

For the 2017 full year, management expects Pursuit’s revenue to increase at a mid-single digit rate, primarily due to the December 2016 acquisition of FlyOver Canada and the March 2016 acquisition of CATC, which combined are expected to provide incremental revenue of $10 million to $12 million and incremental Adjusted Segment EBITDA of $2 million to $3.5 million, which includes an incremental first quarter seasonal operating loss of approximately $3 million from CATC. FlyOver Canada is expected to contribute incremental revenue of $9 million to $10 million with Adjusted Segment EBITDA of $5 million to $5.5 million. Management anticipates an unfavorable FX Impact on Pursuit’s 2017 full year revenue and segment operating income of approximately $3 million and $1.5 million, respectively.

Additionally, management expects Pursuit’s revenue to be negatively impacted by approximately $13 million as the Company completes the previously announced downsizing of Brewster Travel Canada’s package tours line of business. The fire-related closure of the Mount Royal Hotel is expected to negatively impact revenue by approximately $6 million, which assumes the hotel will remain closed for the duration of 2017 and the proceeds from the Company’s business interruption insurance will be recorded when received. Management expects these factors will be offset by organic growth across the rest of Pursuit’s lines of business including expected revenue growth of $7 million to $9 million from the newly renovated Banff Gondola.

During 2016 and 2015, Pursuit derived approximately 59 percent and 73 percent, respectively, of revenue and 74 percent and 89 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, Pursuit is affected by consumer discretionary spending on tourism activities.

### 2015 compared with 2014

The following table provides a comparison of Pursuit’s reported revenue and segment operating results to organic revenue and organic segment 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: Pursuit: | 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% |
| Transportation | 13,999 | — | (2,111) | 16,110 | 15,954 | — | 15,954 | (12.3)% | 1.0% |
| Travel Planning | 15,863 | — | (2,453) | 18,316 | 19,336 | — | 19,336 | (18.0)% | (5.3)% |
| Intra-Segment Eliminations & Other | (1,702) | — | 300 | (2,002) | (2,151) | — | (2,151) | 20.9% | 6.9% |
| Total Pursuit | $112,170 | $5,470 | $(13,705) | $120,405 | $120,519 | $4,637 | $115,882 | (6.9)% | 3.9% |
| **Segment operating income(2)(3):** |  |  |  |  |  |  |  |  |  |
| Total Pursuit | $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 July 2014).

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

(3) Refer to Note 21 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K) for a reconciliation of segment operating income to the most directly comparable GAAP measure.

**Pursuit 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.

**Pursuit 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.

### Performance Measures

Management uses the following key business metrics to evaluate Pursuit’s 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 Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.
- **Average Daily Rate.** ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to 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 Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increased ancillary non-rooms revenue (including food and beverage and retail revenue).

Management evaluates the performance of Pursuit’s 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 Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per passenger measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.

### 2016 compared with 2015

The following table provides Pursuit’s same-store key performance indicators for the years ended December 31, 2016 and 2015. The same-store metrics below indicate the performance of all of Pursuit’s properties and attractions that were owned by Viad and operating at full capacity, considering seasonal closures, for the entirety of both periods presented. For Pursuit 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, 2016 | 2015 | % Change |
| --- | ---: | ---: | ---: |
| Room nights available | 228,290 | 228,739 | (0.2)% |
| RevPAR | $108 | $97 | 11.3% |
| ADR | $153 | $143 | 7.0% |
| Occupancy | 71.1% | 67.4% | 3.7% |
| **Attractions:** |  |  |  |
| Passengers | 1,478,172 | 1,340,175 | 10.3% |
| Revenue per passenger | $31 | $31 | 0.0% |

(1) Same-Store Key Performance Indicators exclude the Maligne Lake Tours attraction (acquired in January 2016), the CATC hospitality properties and attraction (acquired in March 2016), and the FlyOver Canada attraction (acquired in December 2016), as they were not owned by Viad for the entirety of 2016. Same-store passengers and revenue per passenger were affected by the partial closure of the Banff Gondola during 2016.

**Hospitality.** Room nights available decreased during 2016 primarily due to changes in the opening dates of certain seasonal Glacier Park, Inc. 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. Additionally, the Mount Royal Hotel in Banff, Canada suffered fire damage on December 29, 2016 and has been closed until further notice.

RevPAR increased during the year ended December 31, 2016 due to increases in both ADR and occupancy across all geographies resulting from management’s focus on revenue management and strong park visitation in 2016 due in part to favorable weather conditions in contrast to forest fires during the third quarter of 2015.

**Attractions**. The increase in the number of passengers for the year ended December 31, 2016 was primarily due to revenue management initiatives combined with strong park visitation. During the year ended December 31, 2016, the number of passengers increased across all attractions. Growth in passengers was especially strong at the Glacier Skywalk attraction as a result of management’s decision to introduce a combination ticket that included both the Glacier Skywalk and the adjacent Columbia Icefield Glacier Adventure. Additionally, despite the Banff Gondola being partially closed for renovations during most of 2016, it showed strong demand with a 3.8 percent increase in the number of passengers during 2016 as compared to 2015. Excluding the Banff Gondola passengers, total attraction passengers would have increased 15.1 percent in 2016.

Revenue per passenger remained flat during 2016 primarily due to lower revenue from ancillary food and beverage and retail services at the Banff Gondola due to its partial closure and the greater proportion of total passengers coming from the lower-priced Glacier Skywalk.

### 2015 compared with 2014

The following table provides Pursuit’s same-store key performance indicators for the years ended December 31, 2015 and 2014. The same-store metrics below indicate the performance of all of Pursuit’s properties and attractions that were owned by Viad and operating at full capacity, considering seasonal closures, for the entirety of both periods presented. For Pursuit 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) Same-Store Key Performance Indicators exclude the West Glacier Properties (acquired in July 2014), as it was not owned by Viad for 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 Collection and the Brewster Travel Canada properties, offset in part by decreases at certain Glacier Park, Inc. 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 Collection and the Brewster Travel Canada properties due to higher room rates charged. Occupancy decreased in 2015 primarily due to forest fires that affected certain Glacier Park, Inc. properties and decreases at the Elk + Avenue 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.

### Corporate Activities

*(in thousands)*

|  | Year Ended December 31, 2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Corporate activities | $10,322 | $9,720 | $14,348 | 6.2% | (32.3)% |

Corporate activities expense increased $0.6 million during 2016, as compared to 2015, primarily due to an increase in performance-based compensation expense, offset in part by costs related to a shareholder nomination and settlement agreement during 2015 and lower acquisition transaction-related costs in 2016. 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.

### Interest Expense

*(in thousands)*

|  | Year Ended December 31, 2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 |
| --- | ---: | ---: | ---: | ---: | --- |
| Interest expense | $5,898 | $4,535 | $2,015 | 30.1% | \*\* |

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

Interest expense increased $1.4 million during 2016 as compared to 2015, primarily due to higher outstanding debt balances resulting from acquisitions completed during 2016. 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.

### Restructuring Charges

*(in thousands)*

|  | Year Ended December 31, 2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Restructuring Charges | $5,183 | $2,956 | $1,637 | 75.3% | 80.6% |

Restructuring charges during 2016 and 2015 were primarily related to the elimination of positions and facility consolidations in GES, as well as the elimination of certain positions at Viad’s corporate office and in Pursuit. Restructuring charges during 2014 primarily related to the elimination of certain positions in GES, net of restructuring recoveries primarily related to updated estimates of facility contractual arrangements.

### Income Taxes

The effective tax rates for the years ended December 31, 2016, 2015, and 2014 were 32.8 percent, 27.7 percent, and 0.2 percent, respectively. The increase in the 2016 effective tax rate was primarily due to a non-cash tax benefit of $1.6 million recorded in 2015 related to deferred taxes associated with certain foreign intangible assets. The low effective tax rate in 2014 was primarily due to the release of the valuation allowance related to foreign tax credits and state net operating loss carryforwards.

### Discontinued Operations

Discontinued operations during 2016 and 2015 primarily related to liability reserve adjustments and legal fees related to previously sold operations.

On December 31, 2013, Glacier Park, Inc.’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 2014. 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, Inc., 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.

### Liquidity and Capital Resources

Cash and cash equivalents were $20.9 million as of December 31, 2016, as compared to $56.5 million as of December 31, 2015. During the year ended December 31, 2016, the Company generated net cash flow from operating activities of $100.3 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, 2016, the Company had approximately $19.9 million of its cash and cash equivalents held outside of the United States, consisting of $6.2 million in the Netherlands, $6.0 million in Canada, $4.1 million in the United Kingdom, $1.8 million in Germany, and $1.8 million in the United Arab Emirates. There are certain earnings related to the Company’s Canadian, Netherlands, and United Kingdom operations that have historically been deemed permanently reinvested. As of December 31, 2016, the incremental tax associated with these earnings if the cash balances were repatriated to the United States would approximate $0.3 million.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | Year Ended December 31, 2016 | 2015 | 2014 |
| --- | ---: | ---: | ---: |
| Net income | $42,795 | $27,048 | $55,567 |
| Depreciation and amortization | 42,743 | 35,231 | 30,792 |
| Deferred income taxes | 7,672 | 469 | (9,731) |
| (Income) loss from discontinued operations | 684 | 394 | (14,389) |
| Other non-cash items | 19,457 | 11,186 | 9,765 |
| Changes in assets and liabilities | (13,033) | (14,051) | (13,914) |
| **Net cash provided by operating activities** | $100,318 | $60,277 | $58,090 |

### 2016 compared with 2015

Net cash provided by operating activities increased $40.0 million, primarily from results of operations and changes in working capital.

### 2015 compared with 2014

Net cash provided by operating activities increased $2.2 million in 2015, primarily from results of operations.

### Investing Activities

*(in thousands)*

|  | Year Ended December 31, 2016 | 2015 | 2014 |
| --- | ---: | ---: | ---: |
| Capital expenditures | $(49,815) | $(29,839) | $(29,389) |
| Cash paid for acquired businesses, net | (195,989) | (430) | (120,251) |
| Proceeds from dispositions of property and other assets | 1,166 | 1,542 | 1,109 |
| Proceeds from possessory interest and personal property - discontinued operations | — | — | 28,000 |
| **Net cash used in investing activities** | $(244,638) | $(28,727) | $(120,531) |

36

### 2016 compared with 2015

Net cash used in investing activities increased $215.9 million, primarily due to cash payments, net of cash acquired, of $196.0 million for the acquisitions completed in 2016 of ON Services, FlyOver Canada, CATC, and Maligne Lake Tours, and an increase in capital expenditures, primarily due to the Banff Gondola renovations.

### 2015 compared with 2014

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

### Financing Activities

*(in thousands)*

|  | Year Ended December 31, 2016 | 2015 | 2014 |
| --- | ---: | ---: | ---: |
| Proceeds from borrowings | $229,701 | $50,000 | $189,512 |
| Payments on debt and capital lease obligations | (108,915) | (62,969) | (61,461) |
| Dividends paid on common stock | (8,111) | (8,036) | (38,387) |
| Debt issuance costs | (336) | — | (1,671) |
| Common stock purchased for treasury | (722) | (4,816) | (12,321) |
| Acquisition of business - deferred consideration | (130) | (896) | — |
| Other | 95 | 1,459 | 1,269 |
| **Net cash provided by (used in) financing activities** | $111,582 | $(25,258) | $76,941 |

### 2016 compared with 2015

The change in net cash provided by (used in) financing activities was primarily due to an increase in net borrowings of $133.8 million related to the acquisitions of ON Services, CATC, and FlyOver Canada completed in 2016 and a decrease in cash used for common stock repurchases of $4.1 million.

### 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.

### 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, the Company repurchased 141,462 shares on the open market for $3.8 million. No open market repurchases were made during 2016. As of December 31, 2016, 440,540 shares remained available for repurchase. The authorization of the Board of Directors does not have an expiration date. In addition, during 2016 and 2015, the Company repurchased 25,432 shares for $0.7 million and 35,649 shares for $1.0 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, 2016.

*(in thousands)*

|  | Payments due by period 2017 | 2018-2019 | 2020-2021 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revolver and term loan borrowings | $174,206 | $75,000 | $— | $— | $249,206 |
| Operating leases | 25,829 | 38,936 | 22,541 | 9,404 | 96,710 |
| Pension and postretirement benefits (1) | 3,255 | 6,640 | 6,702 | 16,480 | 33,077 |
| Purchase obligations (2) | 29,520 | 7,291 | 2,330 | 478 | 39,619 |
| Capital lease obligations | 762 | 693 | 14 | — | 1,469 |
| **Total contractual obligations (3)** | $233,572 | $128,560 | $31,587 | $26,362 | $420,081 |

(1) Estimated contributions related to multi-employer benefit plans are excluded from the table above. Refer to Note 17 – 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 $33.3 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 Items and 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 20 – 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 19 – Leases and Other, and Note 20 – 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 and Other Intangible Assets —** Goodwill and other intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually. Intangible assets with finite lives are amortized over their respective estimated useful lives and are reviewed for impairment if an event occurs or circumstances change that would indicate the carrying value of the intangible assets may not be recoverable.

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 GES U.S., goodwill is assigned to and tested at the operating segment level (all domestic operations of GES). For GES International, goodwill is assigned to and tested based on the segment’s geographical operations (GES EMEA and GES Canada). For Pursuit, impairment testing is performed at the reporting unit level (Brewster Travel Canada, the Alaska Collection, Glacier Park, Inc., and FlyOver Canada).

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, 2016, Viad’s aggregate goodwill was $254.0 million. As a result of the Company’s most recent impairment analysis performed as of October 31, 2016, 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 GES’ reporting units in the U.S., GES EMEA, and GES Canada, was 153 percent, 137 percent, and 165 percent, respectively. For the Brewster Travel Canada, the Alaska Collection, and the Glacier Park, Inc. reporting units, the excess of the estimated fair value over the carrying value was 132 percent, 70 percent, and 14 percent, respectively. FlyOver Canada was acquired on December 29, 2016 and was not included in the October 31, 2016 impairment analysis. 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.

If an impairment indicator related to intangible assets is identified, or if other circumstances indicate an impairment may exist, the Company performs an assessment to determine if an impairment loss should be recognized. This assessment includes a recoverability test to identify if the expected future undiscounted cash flows are less than the carrying value of the related assets. If the results of the recoverability test identify expected future undiscounted cash flows are less than the carrying value of the related assets, a measurement of impairment is performed and any carrying amount in excess of fair value is recognized as an impairment. The Company periodically evaluates the continued recoverability of intangible assets which were previously evaluated due to an impairment indicator to determine if remeasurement is necessary.

**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 sheets. 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, 2016 and 2015, Viad had gross deferred tax assets of $58.3 million and $64.6 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 income 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 income tax credits carryforwards would be utilized before their expiration. At the end of 2016, the remaining foreign income tax credit carryforwards are $2.3 million. If not utilized, the foreign income 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, 2016, the incremental unrecognized tax liability (net of estimated foreign income tax credits) related to those undistributed earnings was approximately $6.8 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 $1.6 million to its funded pension plans and $0.9 million to its unfunded pension plans in 2017.

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 2017.

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 17 – 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 2016, 2015, and 2014 was $8.0 million, $3.8 million, and $2.9 million, respectively, and the total tax benefits related to such costs were $3.0 million $1.5 million, and $1.1 million, respectively. No share-based compensation costs were capitalized during 2016, 2015, or 2014.

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, and 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. Equity-based awards (including performance units) are recorded at estimated fair value, based on the number of units expected to vest and the level of achievement of predefined performance goals, until the time of settlement. 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 of which stock options have a ten-year life, 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, changes in the levels of interest rates, 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, 3,893 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, the Netherlands, 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 $29.1 million and $23.3 million as of December 31, 2016 and 2015, respectively. During the years ended December 31, 2016 and 2015, unrealized foreign currency translation losses of $5.8 million and $35.7 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. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7 of this Annual Report on Form 10-K) for a discussion on the “Foreign Exchange Rate Variances”.

A hypothetical change of 10 percent in the Canadian dollar exchange rate would have resulted in a change to operating income of approximately $2.8 million. A hypothetical change of 10 percent in the British pound exchange rate would have resulted in a change to operating income of approximately $0.2 million. A hypothetical change of 10 percent in the Euro exchange rate would have resulted in a change to operating income of approximately $0.4 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, 2016 and 2015, 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, 2,044 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, 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 December 31, 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.

In accordance with the SEC’s published guidance, our management has excluded from its assessment the internal control over financial reporting at CATC, ON Services, and FlyOver Canada, which we acquired on March 11, 2016, August 11, 2016, and December 29, 2016, respectively, and whose financial statements constitute 22.2% of total assets and 4.1% of revenue of our consolidated financial statement amounts as of and for the year ended December 31, 2016.

There were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2016 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 the Annual Report immediately prior to the Index to Financial Statements.

Filed Mar 6, 2017.
Source: SEC EDGAR, the filing index for accession 0001564590-17-003489. Last ingested by Listed: Nov 4, 2026, 17:36 ET. No prices; not investment advice.