# Pursuit Attractions & Hospitality, Inc.: Form 10-K for the period ended Dec 31, 2019

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-K
- Filed: 2020-02-26
- Accepted by EDGAR: Feb 26, 2020, 16:44 ET
- Period: 2019-12-31
- Accession: 0001564590-20-006825
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000156459020006825/vvi-10k_20191231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000156459020006825/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2019-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2019-10-01 to 2019-12-31 | $321.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 12 months, 2019-01-01 to 2019-12-31 | $1.37bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 12 months, 2019-01-01 to 2019-12-31 | $79.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2019-10-01 to 2019-12-31 | $4.6m | us-gaap:InterestExpense |
| Interest expense | 12 months, 2019-01-01 to 2019-12-31 | $14.2m | us-gaap:InterestExpense |
| Income tax | 12 months, 2019-01-01 to 2019-12-31 | $2.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2019-10-01 to 2019-12-31 | −$5.4m | us-gaap:NetIncomeLoss |
| Net income | 12 months, 2019-01-01 to 2019-12-31 | $22.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2019-10-01 to 2019-12-31 | −$0.31 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 12 months, 2019-01-01 to 2019-12-31 | $1.02 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 12 months, 2019-01-01 to 2019-12-31 | $1.02 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months, 2019-01-01 to 2019-12-31 | 20,284,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2019-01-01 to 2019-12-31 | $108.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 12 months, 2019-01-01 to 2019-12-31 | $76.1m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 12 months, 2019-01-01 to 2019-12-31 | $8.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2019-12-31 | $62.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2019-12-31 | $260.9m | us-gaap:AssetsCurrent |
| Total assets | at 2019-12-31 | $1.32bn | us-gaap:Assets |
| Current liabilities | at 2019-12-31 | $548.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2019-12-31 | $765.3m | us-gaap:Liabilities |
| Long-term debt | at 2019-12-31 | $315.2m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2019-12-31 | $467.5m | us-gaap:StockholdersEquity |

## Business

As filed, 32,073 characters.

We are an international experiential services company with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our clients and guests.

We operate through two business groups:

- **GES** is a global, full-service live events company offering a comprehensive range of services to the world’s leading brands and event organizers.
- **Pursuit** is an attractions and hospitality company that provides a collection of inspiring and unforgettable experiences in iconic destinations.

(1) We define segment operating income 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 charges and recoveries, the reduction for income attributable to non-redeemable noncontrolling interest, and the addition of loss attributable to redeemable noncontrolling interest. Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 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 partners with show organizers, exhibitors, and brand marketers to create high-value, face-to-face 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 registration, data analytics, engagement, and online tools powered by next generation technologies that help clients easily manage the complexities of their event. For eleven years, GES’ National Servicenter® has been certified under the J.D. Power and Associates Certified Call Center ProgramSM, and this past year also received certification for Chat Channel communication. For ten consecutive years, *Ad Age* has recognized GES as one of the nation’s largest experiential/event marketing agency networks. For the sixth year in a row, GES is included in Event Marketer magazine’s Fab 50 list of the top exhibit builders.

GES’ clients include event organizers and corporate brand marketers. Event organizers schedule and run the event from start to finish. 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.

GES has a leading position in the U.S. with full-service operations in every major exhibition market, including Las Vegas, Chicago, Orlando, New York, and Los Angeles. Additionally, GES has operating facilities at many of the most active and popular international event destinations and venues in the United Kingdom, Canada, Germany, the United Arab Emirates, and the Netherlands.

### Markets Served

GES provides a full suite of services for event organizers and corporate brand marketers across four live event markets: Exhibitions, Conferences, Corporate Events, and Consumer Events (collectively, “Live Events”).

| LIVE EVENT | PRIMARY PURPOSE | % GES 2019 REVENUE |
| --- | --- | ---: |
| **Exhibitions** | Facilitates business-to-business and business-to-consumer sales and marketing. | 56% |
| **Conferences** | Facilitates attendee education. May also include an expo or trade show to further facilitate attendee education and to facilitate business-to-business and business-to-consumer sales and marketing. | 27% |
| **Corporate Events** | Facilitates attendee education of sponsoring company’s products or product ecosystem. | 15% |
| **Consumer Events** | Entertains, educates, or creates an experience, typically around a specific genre. | 2% |

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### Services Offered

GES offers a comprehensive range of services and innovative technology, including Core Services, Event Technology, and Audio-Visual, to event organizers and corporate brand marketers.

|  |  |
| --- | --- |
| **Core Services** | GES provides official contracting services and products to event organizers and corporate brand marketers, which are provided primarily to Exhibitions and Conferences and to a lesser extent to Corporate Events and Consumer Events. Under various agreements with Live Event organizers, GES has the exclusive right to provide certain contracting services to participating exhibitors. This gives exhibitors a single point of contact to facilitate a timely, safe, and efficient move-in/out of a Live Event and to facilitate an organized, professional, during-show experience. GES also competes with other service providers to sell discretionary services to exhibitors. |
| Exclusive Services Discretionary ServicesEvent OrganizersCorporate Brand MarketersCorporate Brand MarketersEvent planning and productionLook and feel designLayout and floor plan designs Furnishings and carpetShow traffic analysisMarketing and strategyElectrical distributionCleaningPlumbingOverhead riggingBooth rigging Material handlingElectrical distributionCleaningPlumbingOverhead riggingBooth rigging Creative design and strategyData analytics and insightsIntegrated marketing and pre/post event communicationsEvent surveysReturn on investment analysisOnline management toolsAttendee/exhibit booth traffic analysisStaff trainingLogistics/transportationExhibit storage/refurbishmentFurnishings and carpetInstallation and dismantling laborTradeshow program management Exclusive Products Discretionary ProductsEvent OrganizersCorporate Brand MarketersSignageCommon area structures Custom exhibit design/constructionPortable/modular exhibits and designGraphics and signage |  |

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**Event Technology Event accommodation solutions: •**Researching and selection of local hotels •Negotiating and contracting •Room block management •Group reservation management •Rate integrity and monitoring •Marketing services •On-site services •Post-event reporting **Registration and data analytics: •**Registration and ticketing •Lead management •Reporting and analytics •Web-based enterprise-wide application •Software-as-a-service model or partial and fully managed options **Event management tools: •**Online ordering capabilities •Sponsorship management solutions •Content management systems •Live Event tracking

**Audio-Visual •**Video production •Lighting design •Digital studio services •Entertainment services and talent coordination •Projection mapping •Computer rental and support

### Seasonality and Show Rotation

GES’ exhibition and event activity can vary significantly from quarter to quarter and year to year depending on the frequency and timing of shows. Some shows are not held annually and some shift between quarters. During 2019 and 2018, GES reported its highest revenue during second and fourth quarters. The following show rotation revenue metric refers to the net change in revenue from 2018 to 2019 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.

### Competition

In the Live Events industry, GES generally competes across all classes of services and all markets on the basis of discernible differences, value, quality, price, convenience, and service. GES has a competitive advantage through its worldwide network of resources, history of serving as an extension of clients’ teams, experienced and knowledgeable personnel, client focus, creativity, reliable 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. GES’ primary competitor within its Core Services is a privately-held, U.S.-headquartered company; however, there is substantial competition from a large number of service providers in GES’ other service offerings.

### Growth Strategy

GES is committed to becoming the preferred global, full-service provider for Live Events. GES has 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 and attendee experience. GES holds leading market positions in Exhibitions and Conferences and is pursuing a focused and disciplined growth strategy with the goal of expanding its market share in the currently under-penetrated Corporate Events market. We expect to accomplish this by acquiring businesses and capitalizing on organic opportunities that further the following goals:

- **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.
- **Live Events.** Penetration into other Live Events to leverage our existing capabilities and gain more corporate clients.

Pursuit is an attractions and hospitality company that provides a collection of inspiring and unforgettable travel experiences in iconic destinations. From world-class attractions, distinctive lodges, and engaging tours in stunning national parks and renowned global travel locations, to our growing collection of FlyOver flight ride experiences in the vibrant cities of Vancouver, Reykjavik, Las Vegas (anticipated opening in 2021), and Toronto (anticipated opening in 2022), Pursuit’s elevated hospitality experiences enable visitors to discover and connect with these iconic destinations. With a strategic direction to build an expanding portfolio of extraordinary experiences, Pursuit remains focused on refreshing, improving, and growing its collection in outstanding places around the globe. Pursuit draws its guests from major markets, including the United States, Canada, 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. Pursuit comprises the following collections:

|  |  |
| --- | --- |
| **Banff Jasper Collection** | With over 120 years of history in Canada’s oldest national parks, the Banff Jasper Collection provides experiential travel experiences in the majestic Canadian Rockies. Featuring sun-swept lake cruises in Banff and Jasper National Parks, top-of-the-mountain views at the Banff Gondola, and glacier exploration at the toe of the Columbia Icefield, the collection offers visitors unique hotel experiences, attractions, culinary destinations and retail offerings. The collection is also complemented by a robust sightseeing tour and transportation portfolio. |
| **Alaska Collection** | From the dramatic and rugged landscapes of Denali National Park to the glaciers, fjords and lush vegetation surrounding Kenai Fjords National Park, the Alaska Collection offers wilderness tours and glacier cruises complemented by unique lodging experiences across some of Alaska’s most recognizable interior and southcentral landscapes. From the port town of Seward, to the authentic mountain town of Talkeetna to the end of the road in Denali National Park, Pursuit offers a collection of unique attractions and hotels, complemented by culinary and retail services. |
| **Glacier Park Collection** | Located in and around two stunning national parks, the Glacier Park Collection features lodging, culinary and retail experiences and attractions designed to enable guests to experience both Montana and Southern Alberta’s stunning outdoors. The collection’s unique portfolio of lodging surrounding Glacier and Waterton Lakes National Parks also includes three historic lodges built by the Great Northern Railroad along with RV and rustic cabin stays. |
| **FlyOver Attractions** | Pursuit’s FlyOver flight ride attractions provide guests with an exhilarating flying experience over iconic natural wonders, hard to reach locations, and picturesque scenery. Utilizing state-of-the-art ride and audiovisual technology, each FlyOver experience features moving ride vehicles with six degrees of motion, multi-sensory special effects, and a spherical screen that provides guests with a flight across stunning landscapes. Special effects, including wind, mist and scents, combine with the ride’s motion to create an unforgettable visceral experience. |

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Pursuit’s collection of experiences focuses on four distinct lines of business. These include attractions, including food and beverage services and retail operations; hospitality, including food and beverage services and retail operations; transportation; and travel planning.

### Attractions Banff Jasper Collection

**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 Banff Gondola has been honored with two Top Project Awards from *Alberta Construction Magazine*. The Banff Gondola’s winning categories include the People’s Choice Award in 2016 and the Commercial Award (Under $50 Million) in 2016. The Banff Gondola received the Trip Advisor Certificate of Excellence.

**Lake Minnewanka Cruise** provides guests a unique sightseeing experience through interpretive boat cruises on Lake Minnewanka in the Canadian Rockies. The Lake Minnewanka Cruise operations are located adjacent to the town of Banff and include boat tours, small boat rentals, and charter fishing expeditions. The Lake Minnewanka Cruise received the Trip Advisor Certificate of Excellence.

**Columbia Icefield Adventure** is a tour of the Athabasca Glacier on the Columbia Icefield, and provides guests a view of 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 Adventure received the Trip Advisor Certificate of Excellence.

**Columbia Icefield 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 our Columbia Icefield Adventure attraction in Jasper National Park, Alberta, Canada. Since opening in 2014, the Columbia Icefield Skywalk 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.

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|  |  |
| --- | --- |
| **Attractions** | Maligne Lake Cruise provides interpretive boat tours at Maligne Lake, the largest lake in Jasper National Park, Alberta, Canada. In addition to boat tours, Maligne Lake has a marina and day lodge that offers food and beverage and retail services, an historic chalet complex and boat house that offers canoes, kayaks, and rowboats for rental. Maligne Lake Cruise received the Trip Advisor Certificate of Excellence. |
| **Alaska Collection** |  |
| Kenai Fjords Tours is a leading 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 Alaskan salmon, prime rib, and Alaskan King Crab on Fox Island. Kenai Fjords Tours received the Trip Advisor Certificate of Excellence. |  |
| **Sky Lagoon** |  |
| Sky Lagoon In July 2019, Pursuit announced plans to expand its collection of travel experiences in Iceland with the development of a premium oceanfront geothermal lagoon. Located in Kársnes Harbour, Kópavogur, just minutes from Reykjavik’s vibrant city centre and iconic urban landmarks, the sky lagoon will showcase expansive ocean vistas punctuated by awe-inspiring sunsets, Northern Lights and dark sky views. Development of the new sky lagoon kicked off in 2019, with the anticipated opening in 2021. |  |
| **FlyOver Attractions** |  |
| FlyOver Canada Since opening in June 2013 along Vancouver’s widely recognized waterfront in the heart of downtown, over two million riders have experienced FlyOver Canada. The flight ride attraction utilizes state-of-the-art technology to reveal some of Canada’s most awe-inspiring sights as guests hang suspended, feet dangling, before a 65-foot spherical screen while the film whisks guests away on an exhilarating journey across the country. The flight ride, complemented by an immersive pre-show experience, has received the TripAdvisor Certificate of Excellence. |  |

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|  |  |
| --- | --- |
| **Attractions** | FlyOver Iceland is an exhilarating flying experience over some of the country’s most iconic natural wonders, hard to reach locations and picturesque scenery. The attraction opened in August 2019 along the historic harbor in Reykjavik’s popular Grandi Harbour District, just minutes from downtown. The attraction also features two pre-ride multi-sensory experiences featuring Icelandic glaciers, volcanos, and folklore to complement the overall FlyOver experience. |
| FlyOver Las Vegas In February 2019, Pursuit announced the expansion of the flight ride concept to Las Vegas. Modeled after Pursuit’s successful FlyOver Canada attraction, FlyOver Las Vegas will provide guests with an exhilarating flight experience over the American Southwest’s most iconic locations, picturesque scenery and natural wonders. With construction scheduled to begin in 2020, the new attraction to be located on Las Vegas Boulevard is anticipated to open in 2021. |  |
| FlyOver Canada Toronto In July 2019, Pursuit announced the expansion of a new FlyOver attraction to be located at the base of the famed CN Tower in Toronto’s Entertainment District. The new experience will feature a brand-new ride film showcasing Canada’s most awe-inspiring sights and will include the creation of two immersive pre-ride experiences housed in a newly constructed iconic building. Construction on the new building is expected to begin in 2020, with an anticipated opening in 2022. |  |

### Hospitality Banff Jasper Collection

- **Elk + Avenue Hotel** (164 rooms) •**Mount Royal Hotel** (133 rooms) •**Glacier View Lodge** (32 rooms) •**Sawridge Inn & Conference Centre** (152 rooms) •**Lobstick Lodge** (139 rooms) •**Chateau Jasper Hotel** (119 rooms) •**Marmot Lodge** (107 rooms) •**The Crimson Hotel** (99 rooms) •**Pyramid Lake Resort** (62 rooms) •**Pocahontas Cabins** (56 rooms)

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### Hospitality Alaska Collection

- **Denali Backcountry Lodge** (42 rooms) •**Denali Cabins** (46 rooms) •**Talkeetna Alaskan Lodge** (212 rooms) •**Windsong Lodge** (216 rooms) •**Kenai Fjords Wilderness Lodge** (8 rooms)

### Glacier Park Collection

- **Glacier Park Lodge** (162 rooms) •**Grouse Mountain Lodge** (145 rooms) •**St. Mary Lodge** (116 rooms) •**Prince of Wales Hotel** (86 rooms) •**Apgar Village Lodge** (48 rooms) •**West Glacier Motel & Cabins** (32 rooms) •**Belton Chalet** (27 rooms) •**Motel Lake McDonald** (27 rooms) •**West Glacier RV Park & Cabins** (20 rooms)

**Transportation The Banff Jasper Collection:** Transportation operations include sightseeing tours, airport shuttle services, and seasonal 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 most scenic areas of Banff, Jasper, and Yoho 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 2020, we expect to launch a new historic sightseeing experience in the heart of Banff, with Open Top Touring. **Alaska Collection:** Transportation includes a Denali Backcountry Adventure, which is a unique photo safari tour 92 miles deep into Denali National Park.

**Travel Planning The Banff Jasper Collection:** Travel planning services include 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. The Banff Jasper Collection also owns and operates eight Pursuit Adventure Centers, which help guests book their leisure activities in Banff and Jasper National Parks. **Alaska Collection:** Travel planning services provide complete travel planning services throughout Alaska.

### Seasonality

Pursuit experiences peak activity during the summer months. During 2019, 85% of Pursuit’s revenue was earned in the second and third quarters.

### 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 industry has a large number of competitors and competes for leisure travelers (both individual and tour groups) across the United States and Canada. Pursuit’s competitive advantage is its distinctive attractions, iconic destinations, and strong culture of hospitality and guest services.

### Growth Strategy

Pursuit’s growth strategy is to become a leading attractions hospitality company through its Refresh-Build-Buy initiatives:

- **Refresh.** Refreshing our existing assets and processes to optimize guest experience, market position, and maximize returns
- **Build.** Building new assets that create new guest experiences and additional revenue streams with economies of scale and scope
- **Buy.** Buying strategic assets that drive guest experience, economies of scale and scope, and improving financial performance

We continue to search for opportunities to acquire or to build 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 Pursuit Developments

### Banff Jasper Collection:

- **Acquisition of Mountain Park Lodges –** On June 8, 2019, we acquired a 60% equity interest in Mountain Park Lodges’ group of seven hotels and an undeveloped land parcel located in Jasper National Park. The seven hotels include: Sawridge Inn and Conference Centre; Pyramid Lake Resort; The Crimson Hotel; Chateau Jasper; Pocahontas Cabins; Marmot Lodge; and Lobstick Lodge.
- **Renovation of Glacier View Lodge –** In June 2019, we completed the renovation of our 32-room Glacier View Lodge in Jasper National Park. The renovation includes an elevated lodging experience that matches its incredible views of the majestic Columbia Icefield. The Glacier View Lodge has been included in Fodor’s 100 most incredible hotels in the world and top five hotels in Canada.

### Alaska Collection:

- **Expansion of the Windsong Lodge –** In June 2019, we completed the expansion of the Windsong Lodge, one of our hospitality properties located in Seward, Alaska, near Kenai Fjords National Park. This expansion features 36 new guestrooms, six of which are suites.

### Glacier Park Collection:

- **Acquisition of Belton Chalet –** On May 16, 2019, we acquired the historic Belton Chalet, which is located just outside the west entrance to Glacier National Park and includes 27 rooms and dining.
- **RV and Cabin Park Development –** On July 1, 2019, we opened our new RV and cabin park located at the Glacier National Park entrance. These fully equipped RV sites and cabins include 102 RV slips, 20 guest cabins, five employee housing cabins, guest registration, and a laundromat.

### Sky Lagoon:

- **Development of Sky Lagoon –** On July 25, 2019, we announced plans for a new geothermal lagoon attraction that will be located on an oceanfront lot just outside downtown Reykjavik, Iceland. We expect to open our new attraction in 2021.

### FlyOver Attractions:

- **Expansion of FlyOver Concept in Las Vegas –** On February 26, 2019, we announced the expansion of our flight ride theater concept into Las Vegas, Nevada, which is scheduled to open in 2021.
- **Expansion of FlyOver in Toronto, Canada –** On July 25, 2019, we announced plans for the expansion of our flight ride theater concept into Toronto, Canada. We were awarded the right to construct the new attraction near the base of Canada’s CN Tower in the Entertainment District. We expect construction to begin in 2020, and the new attraction to open in 2022.
- **Opening of FlyOver Iceland.** We opened our flight ride theater concept in Iceland’s capital city of Reykjavik in August 2019.
- **Improvements to FlyOver Canada Exterior Structure –** In September 2019, we completed the construction and development of a new guest experience building that includes an expanded retail store, new café, and an enhanced post-show.

### Intellectual Property

Our intellectual property rights (including trademarks, patents, copyrights, registered designs, technology, and know-how) are material to our business.

We own or have the right to use numerous trademarks and patents in many countries. Depending on the country, trademarks remain valid for as long as we use them, or as long as we maintain their registration status. Trademark registrations are generally for renewable, fixed terms. We also have patents for current and potential products. Our patents cover inventions ranging from a modular structure having a load-bearing surface that we use in our event and exhibition services, to a surface-covering installation tool and method that reduces our labor costs and improves worker safety. Our U.S. issued utility patents extend for 20 years from the patent application filing date, and our U.S. issued design patents are currently granted for 14 years from the grant date. We also have an extensive design library. Many of the designs have copyright protection and we have also registered many of the copyrights. In the U.S., copyright protection is for 95 years from the date of publication or 120 years from creation, whichever is shorter. While we believe that certain of our patents, trademarks, and copyrights have substantial value, the loss of any one of them would not have a material adverse effect on our financial condition or results of operations.

### Our Trademarks

Our U.S. registered trademarks and trademarks pending registration include *Global Experience Specialists & design®, GES®, GES Servicenter®, GES National Servicenter®, GES MarketWorks®, GES Measurement & Insight®, GES Project Central, The Art and Science of Engagement®, Trade Show Rigging TSR®, TSE Trade Show Electrical & design®, Earth Explorers®, Compass Direct®, ethnoMetrics®, eXPRESSO®, FIT®, ON Services, a GES Company & design®, ON Site Audio Visual & design®, FLYOVER® & design, eco-sense®, ONPEAK®, Mount Royal, Above Banff®, Alaska Denali Travel®, Alaska Denali Escapes®, Alaska Heritage Tours®, by Pursuit, Kenai Fjords Tours & design®, Kenai Fjords*

*Wilderness Lodge® & design, Seward Windsong Lodge & design®, Talkeetna Alaskan Lodge®, Explore Rockies®, Denali Backcountry Adventure®, Denali Backcountry Lodge®, and Denali Cabins & design®.*

We also own or have the right to use many registered trademarks and trademarks pending registration outside of the United States, including *GES®, ShowTech®, Poken®, Visit®, Visit by GES®, Blitz, a GES Company & design®, Brewster Inc. & design®, Brewster Attractions Explore & design®, Brewster Hospitality Refresh & design®, Glacier Skywalk®, Above Banff®, Explore Rockies®, FLYOVER & design®, FLYOVER ICELAND & design, FLYOVER Canada & design, GES Event Intelligence AG®, Pursuit®, by Pursuit®, Soaring Over Canada®, Elk + Avenue Hotel®, Brewster Epic Summer Pass®, and escape.connect.refresh.explore®.*

### Government Regulation and Compliance

Compliance with legal requirements and government regulations represents a normal cost of doing business. The principal rules and regulations affecting our day-to-day business relate to transportation (such as regulations promulgated by the U.S. Department of Transportation and its state counterparts), our 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), 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), and U.S. and Canadian regulations relating to boating (such as regulations implemented by the U.S. and Canadian Coast Guard and state boating laws).

Some of our 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 our 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 we do not expect them to have, a material effect on our capital expenditures, competitive position, financial condition, or results of operations.

### Employees

We had the following number of employees as of December 31, 2019:

|  | Number of Employees (1) |
| --- | ---: |
| GES | 4,223 |
| Pursuit | 1,085 |
| Viad Corporate | 53 |
| **Total** | 5,361 |

(1) Includes 1,109 employees covered by collective bargaining agreements.

We believe that relations with our employees are good and that collective bargaining agreements expiring in 2020 will be renegotiated in the ordinary course of business without a material adverse effect on our operations.

We are governed by a Board of Directors comprising seven non-employee directors and one employee director, and we have an executive management team with eight executive officers.

### Available Information

We were incorporated in Delaware in 1991. Our common stock trades on the New York Stock Exchange under the symbol “VVI.”

Our website address is *www.viad.com*. All of our SEC filings, including our Annual Reports 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 our website as soon as reasonably practicable after we electronically file that material with, or furnish it to, the SEC. The information contained on our website is neither a part of, nor incorporated by reference into, this 2019 Form 10-K. The SEC’s website, *www.sec.gov*, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Our investor relations website is *www.viad.com/investors/investor-center/default.aspx* and includes key information about our corporate governance initiatives, including our Corporate Governance Guidelines, our Board of Directors committee charters, our Code of Ethics, and information concerning our Board members and how to communicate with them.

## Risk factors

As filed, 23,207 characters.

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

***Completed acquisitions may not perform as anticipated or be integrated as planned.*** We regularly evaluate and pursue opportunities to acquire businesses that complement, enhance, or expand our current business, or offer growth opportunities. Our acquired businesses might not meet our financial and non-financial expectations or yield anticipated benefits. Our success depends, in part, on our ability to conform controls, policies and procedures, and business cultures; consolidate and streamline operations and infrastructures; identify and eliminate redundant and underperforming operations and assets; manage inefficiencies associated with the integration of operations; and retain the acquired business’s key personnel and customers. Moreover, our acquisition activity may subject us to new regulatory requirements, distract our senior management and employees, and expose us to unknown liabilities or contingencies that we may fail to identify prior to closing. If our acquisitions cause us to make changes to our business strategy or if external conditions adversely affect our business operations, we may also be required to record an impairment charge to goodwill or intangible assets. Additionally, we may borrow funds to finance strategic acquisitions. Debt leverage resulting from future acquisitions would reduce our debt capacity, increase our interest expense, and limit our ability to capitalize on future business opportunities. Such borrowings may also be subject to fluctuations in interest rates. Any of these risks could materially and adversely affect our business, product and service sales, financial condition, and results of operations.

***We are vulnerable to deterioration in general economic conditions.*** Our business is sensitive to fluctuations in general economic conditions in the U.S. and other global markets in which we operate. A decline in global or regional economic conditions, or consumers’ fears that economic conditions will decline, could cause declining consumer confidence, unemployment, fluctuations in stock markets and interest rates, contraction of credit availability, or other dynamic factors affecting economic conditions generally. The success of our GES business largely depends on the number of exhibitions held, the size of exhibitors’ marketing expenditures, and on the strength of particular industries in which exhibitors operate. The number and size of exhibitions generally decrease when the economy weakens. We also could suffer from reduced spending for our services because many exhibitors’ marketing budgets are partly discretionary and are frequently among the first expenditures reduced when economic conditions deteriorate. In addition, revenue from our Pursuit operations depends largely on the amount of disposable income that consumers have available for travel and vacations, which decreases during periods of weak general economic conditions. As a result, any deterioration in general economic conditions could materially and adversely affect our business, product sales, financial condition, and results of operations.

***We depend on our large exhibition event clients to renew their service contracts and on our exclusive right to provide those services.*** GES has a number of large exhibition event organizers and large customer accounts. If any of these large clients do not renew their service contracts, our results of operations could be materially and adversely affected.

Moreover, when event organizers hire GES as the official services contractor, they usually also grant GES an exclusive right to perform material handling, electrical, rigging, and other services at the exhibition facility. However, some exhibition facilities have taken certain steps to in-source certain event services (either by performing the services themselves or by hiring a separate service provider) as a result of conditions generally affecting their industry, such as an increased supply of exhibition space. If exhibition facilities choose to in-source certain event services, GES will lose the ability to provide certain event services, and our results of operations could be materially and adversely affected.

***Our business is relationship driven.*** Our GES business is heavily focused on client relationships, and, specifically, on having close collaboration and interaction with our clients. To be successful, our account teams must be able to understand clients’ desires and expectations in order to provide top-quality service. If we are unable to maintain our client relationships, including due to the loss of key members of our account teams, we could also lose customers and our results of operations could be materially and adversely affected.

***We operate in highly competitive and dynamic industries.*** Competition in the Live Events markets is driven by price and service quality, among other factors. To the extent competitors seek to gain or retain market presence through aggressive underpricing strategies, we may be required to lower our prices and rates to avoid the loss of related business. Moreover, recent customer consolidations and other actions have caused downward pricing pressure for our products and services and could affect our ability to negotiate favorable terms with our customers. If we are unable to anticipate and respond as effectively as our competitors to changing business conditions, including new technologies and business models, we could lose market share. Our inability to meet the challenges presented by the competitive and dynamic environment of our industry could materially and adversely affect our results of operations.

***Travel industry disruptions, particularly those affecting the hotel and airline industries, could adversely affect our business.*** Our business depends largely on the ability and willingness of people, whether exhibitors, exhibition attendees, tourists, or others, to travel. Factors adversely affecting the travel industry, and particularly the airline and hotel industries, generally also adversely affect our business and results of operations. Factors that could adversely affect the travel industry include high or rising fuel prices, increased security and passport requirements, weather conditions, health epidemics and pandemics, airline accidents, acts of terrorism, and international political instability and hostilities. For example, the recent outbreak of respiratory illness caused by a new coronavirus that surfaced in the Hubei Province of China, resulted in (i) major U.S. airlines canceling all flights into and out of China, (ii) the U.S. limiting the airports at which China flights may enter the U.S., and (iii) the U.S. imposing the first federally mandated quarantine in more than 50 years for passengers who had traveled to the Hubei Province. Any of these factors, or other unexpected events that affect the availability and pricing of air travel and accommodations, could materially and adversely affect our business and results of operations.

***New capital projects may not be commercially successful.*** From time to time, we pursue capital projects, such as our current construction of FlyOver Las Vegas, FlyOver Canada Toronto, the Sky Lagoon, and other efforts to upgrade some of our Pursuit offerings, in order to enhance and expand our business. 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 project-specific risks. The occurrence of any of these events could prevent a new capital project from performing in accordance with our commercial expectations and could materially and adversely affect our business and results of operations.

***The seasonality of our business makes us particularly sensitive to adverse events during peak periods.*** The peak activity for our Pursuit business is during the summer months, as 85% of Pursuit’s 2019 revenue was earned in the second and third quarters. Our GES exhibition and event activity varies significantly because it is based on the frequency and timing of shows, many of which are not held each year, and which may shift between quarters. If adverse events or conditions occur during these peak periods, our results of operations could be materially and adversely affected.

***Transportation disruptions and increases in transportation costs could adversely affect our business and results of operations.*** GES relies on independent transportation carriers to send materials and exhibits to and from exhibition, warehouse, and customer facilities. If our customers and suppliers are unable to secure the services of those independent transportation carriers at favorable rates, it could materially and adversely affect our business and results of operations. In addition, disruption of transportation services due to weather-related problems, labor strikes, lockouts, or other events could adversely affect our ability to supply services to customers and could cause the cancellation of exhibitions, which could materially and adversely affect our business and results of operations.

***Natural disasters, weather conditions, and other catastrophic events could negatively affect our business.*** The occurrence of catastrophic events ranging from natural disasters (such as hurricanes, fires, floods, and earthquakes), acts of war or terrorism, accidents involving our travel offerings or experiences, the effects of climate change, including any impact of global warming, or the prospect of these events could disrupt our business. Changes in climates may increase the frequency and intensity of adverse weather patterns and make certain destinations less desirable. Such catastrophic events have, and could have, an adverse impact on Pursuit, which is heavily dependent on the ability and willingness of its guests to travel and/or visit our attractions. Pursuit guests tend to delay or postpone vacations if natural conditions differ from those that typically prevail at competing lodges, resorts, and attractions, and catastrophic events and heightened travel security measures instituted in response to such events could impede the guests’ ability to travel, and interrupt our business operations, including damaging our properties. Such catastrophic events could also have a negative impact on GES, causing a cancellation of exhibitions and other events held in public venues or disrupt the services we provide to our customers at convention centers, exhibition halls, hotels, and other public venues. Such events could also have a negative impact on GES’ production facilities, preventing us from timely completing exhibit fabrication and other projects for customers. In addition, unfavorable media attention, or negative publicity, in the wake of a catastrophic event could damage our reputation or reduce the demand for our services. If the conditions arising from such events persist or worsen, they could materially and adversely affect our results of operations and financial condition.

***Our participation in multi-employer pension plans could substantially increase our pension costs.*** We sponsor a number of defined benefit plans for our U.S. and Canada-based employees. In addition, we are obligated to contribute to multi-employer pension plans under collective bargaining agreements covering our union-represented employees. We contributed $27.3 million in 2019, $26.4 million in 2018, and $26.6 million in 2017 to those multi-employer pension plans. Third-party boards of trustees manage these multi-employer plans. Based upon the information we receive from plan administrators, we believe that several of those multi-employer plans are underfunded. The Pension Protection Act of 2006 requires us to reduce the underfunded status over defined time periods. Moreover, we would be required to make additional payments of our proportionate share of a plan’s unfunded vested liabilities if a plan terminates, or other contributing employers withdraw, due to insolvency or other reasons, or if we voluntarily withdraw from a plan. In 2019, we finalized the terms of a new collective bargaining agreement with the Teamsters Local 727 union. The terms included a withdrawal from the underfunded Central States Pension Plan. Accordingly, we recorded a charge of $15.5 million, which represents the estimated present value of future contributions we will be required to make as a result of the union’s withdrawal and $0.2 million of other withdrawal costs. At this time, we do not anticipate triggering any withdrawal from any other multi-employer pension plan to which we currently contribute. However, significant plan contribution increases could materially and adversely affect our consolidated financial condition, results of operations, and cash flows. Refer to Note 18 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.

***Union-represented labor increases our risk of higher labor costs and work stoppages.*** Significant portions of our employees are unionized. We have approximately 100 collective bargaining agreements, and we are required to renegotiate approximately one-third of those each year. If we increase wages or benefits as a result of labor negotiations, either our operating margins will suffer, or we could increase the cost of our services to our customers, which could lead those customers to turn to other vendors with lower prices. Either event could materially and adversely affect our business and results of operations.

Additionally, if we are 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. If that happens, we might be unable to find substitute workers with the necessary skills to perform many of the services, or we may incur additional costs to do so, both of which could materially and adversely affect our business and results of operations.

***Liabilities relating to prior and discontinued operations may adversely affect our results of operations.*** We and our predecessors have a corporate history spanning decades and involving diverse businesses. Some of those businesses owned properties and 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, we may incur other liabilities resulting from indemnification claims involving previously sold properties and subsidiaries, or obligations under defined benefit plans or other employee plans, as well as claims from past operations of predecessors or their subsidiaries. Although we believe we have adequate reserves and sufficient insurance coverage to cover those future liabilities, future events or proceedings could render our reserves or insurance protections inadequate, any of which could materially and adversely affect our business and results of operations.

***Show rotation affects our profitability and makes comparisons between periods difficult.*** GES results 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, three, or four years) or may be held at different times of the year from when they were previously held. In addition, the same exhibition may change locations from year to year resulting in lower margins if the exhibition shifts to a higher-cost location. Any of these factors could cause our results of operations to fluctuate significantly from quarter to quarter or from year to year, making periodic comparisons difficult.

***We are subject to currency exchange rate fluctuations.*** We have operations outside of the U.S. primarily in Canada, the United Kingdom, Iceland, the Netherlands, and Germany. During 2019, GES EMEA, GES Canada, and Pursuit’s international operations accounted for approximately 33% of our consolidated revenue and 66% of our segment operating income. Consequently, a significant portion of our business is exposed to currency exchange rate fluctuations. We do not currently hedge equity risk arising from the translation of non-U.S. denominated assets and liabilities. Our financial results and capital ratios are sensitive to movements in currency exchange rates because a large portion of our assets, liabilities, revenue, and expenses must be translated into U.S. dollars for reporting purposes. The unrealized gains or losses resulting from the currency translation are included as a component of accumulated other comprehensive income (loss) in our consolidated balance sheets. As a result, significant fluctuations in currency exchange rates could result in material changes to the net equity position we report in our consolidated balance sheets.

***We are vulnerable to cybersecurity attacks and threats.*** We regularly collect and process credit, financial, and other personal and confidential information from individuals and entities who attend or participate in events and exhibitions that we produce, or who visit our attractions and other offerings. In addition, our devices, servers, computer systems, and business systems are vulnerable to cybersecurity risk, including cyberattacks, or we may be the target of email scams that attempt to acquire personal information and company assets. Despite our efforts to protect ourselves with insurance, and create security barriers to such threats, including regularly reviewing our systems for vulnerabilities and continually updating our protections, we might not be able to entirely mitigate these risks. Our failure to effectively prevent, detect, and recover from the increasing number and sophistication of information security threats could lead to business interruptions, delays or loss of critical data, misuse, modification, or destruction of information, including trade secrets and confidential business information, reputational damage, and third-party claims, any of which could materially and adversely affect our results of operations.

***Laws and regulations relating to the handling of personal data are evolving and could result in increased costs, legal claims, or fines.*** We store and process the personally identifiable information of our customers, employees, and third parties with whom we have business relationships. The legal requirements restricting the way we store, collect, handle, and transfer personal data continue to evolve, and there are an increasing number of authorities issuing privacy laws and regulations. These data privacy laws and regulations are subject to differing interpretations, creating uncertainty and inconsistency across jurisdictions. Our compliance with these myriad requirements could involve making changes in our services, business practices, or internal systems, any of which could increase our costs, lower revenue, or reduce efficiency. Our failure to comply with existing or new rules could result in significant penalties or orders to stop the alleged noncompliant activity, litigation, adverse publicity, or could cause our customers to lose trust in our services. In addition, if the third parties we work with violate applicable laws, contractual obligations, or suffer a security breach, those violations could also put us in breach of our obligations under privacy laws and regulations. In addition, the costs of maintaining adequate protection, including insurance protection against such threats, as they develop in the future (or as legal requirements related to data security increase) are expected to increase and could be material. Any of these risks could materially and adversely affect our business and results of operations.

***The United Kingdom’s exit from the European Union could adversely affect our business.*** We operate substantial parts of our EU businesses from U.K.-based entities. On January 31, 2020, the U.K. officially withdrew from the EU. The final terms of the withdrawal are being negotiated with the transition period ending on December 31, 2020. The withdrawal could disrupt the free movement of goods, services, and people between the U.K. and the EU. Moreover, the regulatory and legal environment that will govern our U.K. operations is uncertain. Any new arrangements may require us to make changes to our operations in Europe, which could result in a higher cost and less efficient operating model across our European business. These new arrangements could adversely affect our business and results of operations.

***Changes affecting the availability of the London Inter-bank Offered Rate (“LIBOR”) or increases in interest rates may have consequences for us that cannot yet be reasonably predicted.*** Viad has outstanding debt with variable interest rates based on LIBOR. Borrowings under the 2018 Credit Facility are indexed to the prime rate or LIBOR, plus appropriate spreads tied to our leverage ratio. The LIBOR benchmark has been the subject of national, international, and other regulatory guidance and proposals to reform. In July 2017, the United Kingdom Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. These reforms may cause LIBOR to perform differently than in the past and LIBOR may ultimately cease to exist after 2021. Our 2018 Credit Facility includes a method for determining an alternative or successor rate of interest that gives consideration to the new prevailing market convention. The alternative rate could affect the Company's debt and debt payments. At this time, it is not possible to predict the effect of any changes to LIBOR, any phase out of LIBOR or any establishment of alternative benchmark rates. Any new benchmark rate will likely not replicate LIBOR exactly, which could impact our contracts which terminate after 2021. There is uncertainty about how applicable law, the courts or the Company will address the replacement of LIBOR with alternative rates. If LIBOR ceases to exist after 2021, the interest rates under our revolving credit facility and the discount rates we apply to finance lease obligations will be based on the alternative rate, which may result in higher interest rates and debt obligations. In addition, any increases to our benchmark interest rates could have an uncertain impact on our cost of funds and our access to the capital markets, which could impact our results of operations and cash flows. Uncertainty as to the nature of such potential changes may also adversely affect the trading market for our securities.

## Properties

As filed, 1,365 characters.

We lease our corporate headquarters in Phoenix, Arizona. Our other principal properties are owned or leased by GES and Pursuit.

GES primarily leases its properties, both domestically and internationally. GES properties consist of offices and multi-use facilities. Multi-use facilities include manufacturing, sales and design, office, storage and/or warehouse, and truck marshaling yards. Multi-use facilities vary in size up to approximately 677,800 square feet in the U.S. and approximately 136,000 square feet in the United Kingdom.

Pursuit primarily owns its properties, both domestically and internationally. Pursuit’s properties mainly include attractions, hotels and lodges, retail stores, and offices. Properties located in Canada and Iceland are subject to multiple long-term ground leases with their respective governments. For further information on Pursuit’s attractions and hospitality assets, refer to the Business Section (Part I, Item 1 of this 2019 Form 10-K).

We believe our owned and leased properties are adequate and suitable for our business operations and that capacity is sufficient for current needs. For additional information related to our lease obligations, refer to Note 12 – Debt and Finance Lease Obligations and Note 20 – Leases and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K).

## Legal proceedings

As filed, 224 characters.

Refer to Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for information regarding legal proceedings in which we are involved.

## Management's discussion and analysis

As filed, 45,365 characters.

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the consolidated financial statements and related notes. The MD&A is intended to assist in understanding our financial condition and results of operations. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussed under “Risk Factors,” “Forward-Looking Statements,” and elsewhere in this 2019 Form 10-K.

### Overview

We are an international experiential services company with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our clients and guests. We operate through three reportable business segments: GES North America, GES EMEA, (collectively, “GES”), and Pursuit.

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

Pursuit is an attraction and hospitality company that provides a collection of inspiring and unforgettable travel experiences in iconic destinations. From world-class attractions, distinctive lodges and engaging tours in stunning national parks and renowned global travel locations, to our growing collection of FlyOver flight ride experiences, Pursuit’s elevated hospitality experiences enable visitors to discover and connect with these iconic destinations.

### Results of Operations

A discussion related to our results of operations for 2019 compared to 2018 is presented below. A discussion related to our results of operations for 2018 compared to 2017 can be found under Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019, and is incorporated herein by reference.

### Financial Highlights

*(in thousands, except per share data)*

|  | Year Ended December 31, 2019 | 2018 | Change vs. 2018 |
| --- | ---: | ---: | ---: |
| Total revenue | $1,371,695 | $1,296,184 | 5.8% |
| Net income attributable to Viad | $22,035 | $49,170 | (55.2)% |
| Segment operating income(1) | $90,243 | $88,517 | 1.9% |
| Diluted income per common share from continuing operations attributable to Viad common stockholders | $1.02 | $2.33 | (56.2)% |

- **Total revenue increased** $75.5 million, mainly due to continued growth from GES’ corporate clients and other new client wins, underlying growth at Pursuit, incremental revenue from Pursuit’s Mountain Park Lodges and Belton Chalet acquisitions, and the opening of several new build and refresh projects at Pursuit, offset in part by negative show rotation of approximately $15 million at GES and an unfavorable foreign exchange impact of $13.3 million.
- **Net income attributable to Viad** decreased $27.1 million, primarily due to charges related to our partial withdrawal from the Central States Pension Plan of $15.7 million ($11.7 million after tax), a legal settlement charge of $8.5 million ($6.4 million after tax), higher restructuring charges, and an asset impairment charge of $5.3 million ($4.3 million after tax), primarily related to our audio-visual production business in the United Kingdom, offset in part by a decrease in income tax expense and higher segment operating results at Pursuit.
- **Total segment operating income(1)** increased $1.7 million, primarily due to the increase in revenue, offset in part by higher accruals for performance-based incentives, the revenue mix at GES, and additional costs to support the growth initiatives of Pursuit.

(1) Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly comparable GAAP measure.

### Foreign Exchange Rate Variances

We conduct our 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 foreign exchange rate variance effects (or “FX Impact”) on revenue and segment operating income from our significant international operations:

*(in thousands)*

*(in thousands)*

| GES North America: | Revenue Weighted-Average Exchange Rates 2019 | 2018 | FX Impact | Segment Operating Income Weighted-Average Exchange Rates 2019 | 2018 | FX Impact |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Canada (CAD) | $0.75 | $0.77 | $(1,611) | $0.75 | $0.77 | $(191) |
| GES EMEA: |  |  |  |  |  |  |
| United Kingdom (GBP) | $1.27 | $1.34 | (7,381) | $1.27 | $1.31 | (50) |
| Europe (EUR) | $1.12 | $1.18 | (2,171) | $1.11 | $1.17 | (204) |
|  |  |  | (9,552) |  |  | (254) |
| Pursuit: |  |  |  |  |  |  |
| Canada (CAD) | $0.75 | $0.77 | (2,125) | $0.76 | $0.77 | (208) |
|  |  |  | $(13,288) |  |  | $(653) |

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

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

### GES

During the first quarter of 2019, we realigned GES’ organizational structure. As a result, we changed GES’ reportable segments to reflect how our chief operating decision maker regularly reviews and makes decisions regarding the allocation of resources. Accordingly, GES’ new reportable segments are GES North America and GES EMEA.

The following table presents a comparison of GES’ reported revenue and segment operating income to organic revenue(1) and organic segment operating income(1) for the years ended December 31, 2019 and 2018.

*(in thousands)*

| Revenue: GES: | Year Ended December 31, 2019 As Reported | Acquisitions | FX Impact | Organic(1) | Year Ended December 31, 2018 As Reported | Acquisitions | Organic(1) | Change vs. 2018 As Reported | Organic(1) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| North America | $936,032 | $— | $(1,611) | $937,643 | $909,790 | $— | $909,790 | 2.9% | 3.1% |
| EMEA | 233,591 | — | (9,552) | 243,143 | 218,247 | — | 218,247 | 7.0% | 11.4% |
| Intersegment eliminations | (20,741) | — | — | (20,741) | (17,140) | — | (17,140) | (21.0)% | (21.0)% |
| Total GES | $1,148,882 | $— | $(11,163) | $1,160,045 | $1,110,897 | $— | $1,110,897 | 3.4% | 4.4% |
| **Segment operating income(2):** |  |  |  |  |  |  |  |  |  |
| GES: |  |  |  |  |  |  |  |  |  |
| North America | $27,659 | $— | $(191) | $27,850 | $29,981 | $— | $29,981 | (7.7)% | (7.1)% |
| EMEA | 8,274 | — | (254) | 8,528 | 9,621 | — | 9,621 | (14.0)% | (11.4)% |
| Total GES | $35,933 | $— | $(445) | $36,378 | $39,602 | $— | $39,602 | (9.3)% | (8.1)% |

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

(2) Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly comparable GAAP measure.

### GES North America

**GES North America revenue** increased $26.2 million or 2.9%, primarily due to continued growth from corporate clients and other new client wins and U.S. base same-show revenue growth of 1.3%, offset in part by negative show rotation of approximately $27 million and an unfavorable FX Impact of $1.6 million. Base same-show revenue represented 29.7% of 2019 GES North America’s organic revenue. Organic revenue\* increased $27.9 million or 3.1%.

**GES North America segment operating income** decreased $2.3 million or 7.7%, primarily due to accruals for performance-based incentives earned in 2019 and the revenue mix. Organic segment operating income\* decreased $2.1 million or 7.1%.

### GES EMEA

**GES EMEA revenue** increased $15.3 million or 7.0%, primarily due to positive show rotation of approximately $12 million, new client wins, and growth from the underlying business, offset in part by an unfavorable FX Impact of $9.6 million. Organic revenue\* increased $24.9 million or 11.4%.

**GES EMEA segment operating income** decreased $1.3 million or 14.0%, primarily due to the revenue mix, the timing of certain expenses, and accruals for performance-based incentives earned in 2019. Organic segment operating income\* decreased $1.1 million or 11.4%.

\* Refer to footnote (1) in the above table for more information about the non-GAAP financial measures of organic revenue and organic segment operating income.

### Pursuit

The following table presents a comparison of Pursuit’s reported revenue and segment operating income to organic revenue(3) and organic segment operating income(3) for the years ended December 31, 2019 and 2018.

*(in thousands)*

| Revenue(1): Pursuit: | Year Ended December 31, 2019 As Reported | Acquisitions(2) | FX Impact | Organic(3) | Year Ended December 31, 2018 As Reported | Acquisitions | Organic(3) | Change vs. 2018 As Reported | Organic(3) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Attractions | $110,369 | $— | $(1,470) | $111,839 | $103,830 | $— | $103,830 | 6.3% | 7.7% |
| Hospitality | 94,149 | 19,874 | (361) | 74,636 | 64,620 | — | 64,620 | 45.7% | 15.5% |
| Transportation | 14,861 | — | (271) | 15,132 | 14,070 | — | 14,070 | 5.6% | 7.5% |
| Travel Planning | 4,504 | — | (43) | 4,547 | 4,375 | — | 4,375 | 2.9% | 3.9% |
| Intra-Segment Eliminations & Other | (1,070) | — | 20 | (1,090) | (1,608) | — | (1,608) | 33.5% | 32.2% |
| Total Pursuit | $222,813 | $19,874 | $(2,125) | $205,064 | $185,287 | $— | $185,287 | 20.3% | 10.7% |
| **Segment operating income(4):** |  |  |  |  |  |  |  |  |  |
| Total Pursuit | $54,310 | $5,693 | $(208) | $48,825 | $48,915 | $— | $48,915 | 11.0% | (0.2)% |

(1) Revenue by line of business does not agree to Note 2 – Revenue and Related Contract Costs and Contract Liabilities of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) as the amounts in the above table include product revenue from food and beverage and retail operations within each line of business.

(2) Acquisitions include Mountain Park Lodges (acquired June 2019) and Belton Chalet (acquired May 2019).

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

(4) Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly comparable GAAP measure.

**Pursuit revenue** increased $37.5 million or 20.3%, primarily due to incremental revenue from the Mountain Park Lodges and the Belton Chalet acquisitions of $19.9 million, the opening of several new build and refresh projects, and stronger performance from our existing assets, offset in part by an unfavorable FX Impact of $2.1 million. Organic revenue\* increased $19.8 million or 10.7%.

**Pursuit segment operating income** increased $5.4 million or 11.0%, primarily due to incremental segment operating income of $5.7 million from the Mountain Park Lodges and Belton Chalet acquisitions and an increase in revenue from our existing assets, offset in part by additional costs to support the continued expansion of the business, including an increase of $4.5 million in depreciation and amortization expense and an unfavorable FX impact of $0.2 million. Organic operating income\* decreased $0.1 million or 0.2%.

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

### Performance Measures

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

- **Number of visitors.** The number of visitors allows us to assess the volume of tickets sold at each attraction during the period.
- **Revenue per attraction visitor.** Revenue per attraction visitor is calculated as total attractions revenue divided by the total number of visitors at all Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per visitor measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.
- **Effective ticket price.** Effective ticket price is calculated as revenue from the sale of attraction tickets divided by the total number of visitors at all comparable Pursuit attractions during the period.

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

- **Revenue per Available Room.** RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue per available room for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.
- **Average Daily Rate.** ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to realize. Increases in ADR lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.
- **Occupancy.** Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increases in ancillary non-rooms revenue (including food and beverage and retail revenue).

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

| Same-Store Key Performance Indicators (1) Attractions: | Year Ended December 31, 2019 | 2018 | Change vs. 2018 |
| --- | ---: | ---: | ---: |
| Number of visitors | 2,348,069 | 2,443,624 | (3.9)% |
| Revenue per attraction visitor | $46 | $42 | 9.5% |
| Effective ticket price | $35 | $33 | 6.1% |
| **Hospitality:** |  |  |  |
| Room nights available | 234,938 | 230,710 | 1.8% |
| RevPAR | $150 | $142 | 5.6% |
| ADR | $215 | $200 | 7.5% |
| Occupancy | 69.8% | 70.7% | (0.9)% |

(1) Same-Store Key Performance Indicators for attractions exclude FlyOver Iceland (opened August 2019). Same-Store Key Performance Indicators for hospitality exclude the West Glacier RV Park & Cabins (opened July 2019), the Mountain Park Lodges (acquired in June 2019), the Belton Chalet (acquired in May 2019), and the Mount Royal Hotel, which was closed from December 2016 through June 2018 for reconstruction due to fire damage.

**Attractions.** The decrease in same-store visitors was driven by the impact of softer visitation from select long-haul markets at certain attractions. Revenue per attraction visitor increased primarily due to higher effective ticket prices and ancillary revenue driven at our recently refreshed experiences and dynamic pricing.

**Hospitality.** The increase in RevPAR was primarily due to higher ADR driven by our refreshed properties, including the recently renovated Glacier View Lodge and the Mount Royal Hotel, and revenue management efforts across all our properties.

During 2019, Pursuit derived approximately 66% of its revenue and 88% 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.

### Other Expenses

*(in thousands)*

|  | Year Ended December 31, 2019 | 2018 | Change vs. 2018 |
| --- | ---: | ---: | --- |
| Corporate activities | $10,865 | $10,993 | (1.2)% |
| Interest expense | $14,199 | $9,640 | 47.3% |
| Multi-employer pension plan withdrawal | $15,693 | $— | \*\* |
| Other expense | $1,586 | $1,744 | (9.1)% |
| Restructuring charges | $8,380 | $1,587 | \*\* |
| Legal settlement | $8,500 | $— | \*\* |
| Impairment charges (recoveries) | $5,346 | $(35) | \*\* |
| Income tax expense | $2,506 | $17,095 | (85.3)% |
| Income (loss) from discontinued operations | $(81) | $1,481 | \*\* |

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

**Corporate Activities –** The decrease in corporate activities expense during 2019 relative to 2018 was primarily due to a gain on sale of corporate fixed assets and foreign currency exchange, offset in part by higher acquisition transaction-related costs in 2019.

**Interest Expense –** The increase in interest expense relative to 2018 was primarily due to higher debt balances in 2019.

**Multi-Employer Pension Plan Withdrawal –** During 2019, we finalized the terms of a new collective bargaining agreement with the Teamsters 727 union. The terms included a withdrawal from the underfunded Central States Pension Plan. Accordingly, we recorded a charge of $15.5 million, which represents the estimated present value of future contributions we will be required to make to the plan as a result of this withdrawal and $0.2 million of other withdrawal costs.

**Other Expense –** Other expense primarily represents the nonservice cost component of net periodic benefit cost.

**Restructuring Charges –** Restructuring charges during 2019 were primarily related to the elimination of certain positions at GES, our corporate headquarters, and Pursuit, in addition to facility consolidations at GES. Restructuring charges during 2018 were primarily related to the elimination of certain positions at GES and Pursuit.

**Legal Settlement –** During 2019, we recorded a charge to resolve a legal dispute at GES involving a former industry contractor.

**Impairment Charges (Recoveries) –** We recorded asset impairment charges of $5.3 million during the fourth quarter of 2019 primarily related to our audio-visual production business in the United Kingdom.

**Income Tax Expense –** Our effective income tax rate for 2019 was 9.6% as compared to 26.3% for 2018. The decrease in the effective rate was primarily related to a $4.5 million benefit resulting from the re-measurement of our Alberta deferred tax liabilities due to a statutory rate reduction, higher foreign tax credits generated, and lower state taxes, partially offset by the mix of domestic versus foreign income, which is taxed at higher rates.

**Income (Loss) from Discontinued Operations –** Loss from discontinued operations during 2019 was primarily related to legal expenses related to previously sold operations. Income from discontinued operations during 2018 was primarily related to a favorable legal settlement related to previously sold operations, offset in part by legal expenses related to previously sold operations.

### Liquidity and Capital Resources

Cash and cash equivalents were $62.0 million as of December 31, 2019, as compared to $44.9 million as of December 31, 2018. During the year ended December 31, 2019, we generated net cash from operating activities of $108.1 million. We believe that our existing sources of liquidity will be sufficient to fund operations and capital commitments for at least the next 12 months.

As of December 31, 2019, we held approximately $59.0 million of our cash and cash equivalents outside of the United States, consisting of $22.8 million in Canada, $11.9 million in the Netherlands, $11.1 million in the United Kingdom, $9.2 million in the United Arab Emirates, and $4.0 million in other countries.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | Year Ended December 31, 2019 | 2018 |
| --- | ---: | ---: |
| Net income | $23,523 | $49,395 |
| Depreciation and amortization | 58,964 | 56,842 |
| Deferred income taxes | (10,398) | 5,350 |
| (Income) loss from discontinued operations | 81 | (1,481) |
| Restructuring charges | 8,380 | 1,587 |
| Legal settlement | 8,500 | — |
| Impairment charges (recoveries) | 5,346 | (35) |
| Multi-employer pension plan withdrawal | 15,693 | — |
| Other non-cash items | 9,506 | 9,649 |
| Changes in assets and liabilities | (11,455) | (30,712) |
| **Net cash provided by operating activities** | $108,140 | $90,595 |

Net cash provided by operating activities increased $17.5 million, primarily due to a decrease in cash paid for taxes and lower performance-based compensation payments.

### Investing Activities

*(in thousands)*

|  | Year Ended December 31, 2019 | 2018 |
| --- | ---: | ---: |
| Capital expenditures | $(76,147) | $(83,345) |
| Cash paid for acquisitions, net | (90,992) | (4,628) |
| Proceeds from dispositions of property and other assets | 1,583 | 925 |
| **Net cash used in investing activities** | $(165,556) | $(87,048) |

Net cash used in investing activities increased $78.5 million, primarily due to the Mountain Park Lodges, the Belton Chalet, and the Sky Lagoon attraction acquisitions in 2019.

### Financing Activities

*(in thousands)*

|  | Year Ended December 31, 2019 | 2018 |
| --- | ---: | ---: |
| Proceeds from borrowings | $200,473 | $146,580 |
| Payments on debt and finance lease obligations | (115,708) | (128,211) |
| Dividends paid on common stock | (8,094) | (8,154) |
| Distributions to noncontrolling interest | (407) | — |
| Debt issuance costs | (39) | (1,823) |
| Payment of payroll taxes on stock-based compensation through shares withheld or repurchased | (3,046) | (1,209) |
| Common stock purchased for treasury | — | (17,174) |
| Proceeds from exercise of stock options | 293 | 84 |
| **Net cash provided by (used in) financing activities** | $73,472 | $(9,907) |

30

The change in net cash provided by (used in) financing activities of $83.4 million was primarily due to net debt proceeds of $84.8 million during 2019 compared to $18.4 million during 2018, as well as the repurchase of treasury shares on the open market in 2018.

### Debt and Finance Lease Obligations

Refer to Note 12 – Debt and Finance Lease Obligations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further discussion.

### Guarantees

Refer to Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further discussion.

### Share Repurchases

Our Board of Directors has authorized us to repurchase shares of our common stock from time to time at prevailing market prices. Effective February 7, 2019, our Board of Directors authorized the repurchase of an additional 500,000 shares. No shares were repurchased on the open market during 2019. During 2018, we repurchased 340,473 shares on the open market for $17.2 million. As of December 31, 2019, 600,067 shares remained available for repurchase. The Board of Directors’ authorization does not have an expiration date.

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

### Contractual Obligations

The following table presents our contractual obligations as of December 31, 2019.

*(in thousands)*

|  | Total | Payments due by period 2020 | 2021-2022 | 2023-2024 | Thereafter |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revolver borrowings | $317,071 | $313,407 | $3,664 | $— | $— |
| Operating leases | 105,031 | 22,180 | 29,304 | 17,955 | 35,592 |
| Pension and postretirement benefits (1) | 58,050 | 4,387 | 9,066 | 9,036 | 35,561 |
| Purchase obligations (2) | 77,075 | 73,633 | 3,324 | 118 | — |
| Finance lease obligations | 25,257 | 3,386 | 5,674 | 3,767 | 12,430 |
| **Total contractual obligations (3)** | $582,484 | $416,993 | $51,032 | $30,876 | $83,583 |

(1) We have included the estimated payments due as a result of our withdrawal from the Central States pension plan. Estimated contributions related to multi-employer benefit plans are excluded from the table above. Refer to Note 18 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 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 are excluded from the table above as the timing and amounts of future cash outflows are uncertain. Redeemable noncontrolling interest is also excluded from the above table as the redemption value of the put option and the timing and amounts of future cash outflows is uncertain. Refer to Note 10 – Other Current Liabilities, Note 11 – Other Deferred Items and Liabilities, and Note 22 – Redeemable Noncontrolling Interest of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.

We are plaintiffs or defendants to various actions, proceedings, and pending claims, some of which involve, or may involve, compensatory, punitive, or other damages. Additionally, our business contributes to various multi-employer pension plans based on obligations arising under collective bargaining agreements covering our union-represented employees. Refer to Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.

### Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements with unconsolidated special-purpose or other entities that would materially affect our financial position, results of operations, liquidity, or capital resources. Furthermore, we do 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 us to liability or risks of loss that are not reflected in the consolidated financial statements and related notes. Refer to Note 12 – Debt and Finance Lease Obligations, Note 20 – Leases and Other, and Note 21 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.

### Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with U.S. GAAP. We are required to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue, and expenses. Critical accounting policies are those policies that are most important to the portrayal of our financial position and results of operations, and that require us to make the most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We identified and discussed with our audit committee the following critical accounting policies and estimates and the methodology and disclosures related to those estimates:

*Revenue recognition —* Revenue is measured based on a specified amount of consideration in a contract with a customer, net of commissions paid to customers and amounts collected on behalf of third parties. We recognize revenue when a performance obligation is satisfied by transferring control of a product or service to a customer.

GES’ service revenue is primarily derived through its comprehensive range of services to event organizers and corporate brand marketers including Core Services, Audio-Visual, and Event Technology. GES’ service revenue is earned over time over the duration of the exhibition, conference or corporate event, which generally lasts one to three days; however, we use the practical expedient of recognizing service revenue at the close of the event when we have the right to invoice. GES’ product revenue is derived from the build of exhibits and environments and graphics. GES’ product revenue is recognized at a point in time upon delivery of the product.

Pursuit’s service revenue is derived through its accommodations, admissions, transportation, and travel planning services. Pursuit’s product revenue is derived through food and beverage and retail sales. Pursuit’s revenue is recognized at the time services are performed or upon delivery of the product. Pursuit’s service revenue is recognized over time as the customer simultaneously receives and consumes the benefits. Pursuit’s product revenue is recognized at a point in time.

*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 intangible asset’s carrying value 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. Our 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.

GES North America’s goodwill is assigned to, and tested at, the operating segment level (GES U.S. and GES Canada (collectively “GES North America”). GES EMEA’s goodwill is assigned to and tested at the operating segment level. Pursuit’s goodwill impairment testing is performed at the reporting unit level (Banff Jasper Collection, the Alaska Collection, the Glacier Park Collection, and FlyOver).

For purposes of goodwill impairment testing, we use a discounted expected future cash flow methodology (income approach) to estimate the fair value of our reporting units. 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 our 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. We estimate the assumed reporting unit cost of capital rates (discount rates) 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 our fair value estimates, we perform a reconciliation of the aggregate fair values of our reporting units to our 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 have inherent uncertainties, and different assumptions could lead to materially different results. As of December 31, 2019, our aggregate goodwill was $288.0 million. As a result of our most recent impairment analysis performed as of October 31, 2019, the excess of the estimated fair value over the carrying value for each of our reporting units (expressed as a percentage of the carrying amounts) under step one of the impairment test for GES U.S. was 238%, GES EMEA was 226%, GES Canada was 591%, the Banff Jasper Collection was 237%, the Alaska Collection was 110%, the Glacier Park Collection was 25%, and FlyOver was 60%. Significant reductions in our 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, we perform 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 indicate that expected future undiscounted cash flows are less than the carrying value of the related assets, we perform a measurement of impairment and we recognize any carrying amount in excess of fair value as an impairment. We periodically evaluate the continued recoverability of intangible assets which were previously evaluated due to an impairment indicator to determine if remeasurement is necessary.

During the fourth quarter of 2019, there were indicators of impairment of our intangible and other long-lived assets at our audio-visual production business in the United Kingdom, Blitz. As a result, we recorded an asset impairment charge to equipment of $3.5 million and to our intangible asset of $1.5 million.

*Income taxes —* We are required to estimate and record provisions for income taxes in each of the jurisdictions in which we operate. Accordingly, we must estimate our 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 the Consolidated Balance Sheets. We use significant judgment in forming conclusions regarding the recoverability of our deferred tax assets and evaluate 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. We had gross deferred tax assets of $40.5 million as of December 31, 2019 and $36.5 million as of December 31, 2018.

While we believe 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 our valuation allowance. Such a change could result in a material increase or decrease to income tax expense in the period the assessment was made.

We record uncertain tax positions on the basis of a two-step process: first we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position; and, if so, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

*Pension and postretirement benefits —* Our 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. We presently anticipate contributing $1.4 million to our funded pension plans and $0.9 million to our unfunded pension plans in 2020.

We 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 employees’ service period. In addition, we retain the obligations for these benefits for retirees of certain sold businesses. While the plans have no funding requirements, we expect to contribute $1.0 million to the plans in 2020.

The discount rates used in determining future pension and postretirement benefit obligations are based on rates determined by actuarial analysis and management review and reflect the estimated rates of return on a high-quality, hypothetical bond portfolio whose cash flows match the timing and amounts of expected benefit payments. Refer to Note 18 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.

*Share-based compensation —* We grant share-based compensation awards to our officers, directors, and certain key employees under our 2017 Viad Corp Omnibus Incentive Plan, which has a 10-year term 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 was $7.2 million in 2019, $4.9 million in 2018, and $11.0 million in 2017, and the total tax benefits related to such costs were $2.2 million in 2019, $1.2 million in 2018, and $4.1 million in 2017. No share-based compensation costs were capitalized during 2019, 2018, or 2017.

The fair value of restricted stock awards is based on our stock price on the grant date. 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 our 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 between our stock price 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. Refer to Note 3 – Share-Based Compensation of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.

*Self-Insurance Liabilities —* We are self-insured up to certain limits for workers’ compensation and general liabilities, which includes automobile, product general liability, and client property loss claims. We have also retained and provided for certain workers’ compensation insurance liabilities in conjunction with previously sold businesses. We are also self-insured for certain employee health benefits. Provisions for losses for claims incurred, including actuarially derived estimated claims incurred but not yet reported, are made based on historical experience, claims frequency, and other factors. We have purchased insurance for amounts in excess of the self-insured levels.

### Impact of Recent Accounting Pronouncements

Refer to Note 1 – Overview and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for further information.

### Non-GAAP Measures

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

- “**Segment operating income”** is net income attributable to Viad before income (loss) from discontinued operations, corporate activities, interest expense and interest income, income taxes, restructuring charges, impairment charges and recoveries, and the reduction for income attributable to noncontrolling interest. Segment operating income is used to measure the profit and performance of our operating segments to facilitate period-to-period comparisons. Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2019 Form 10-K) for a reconciliation of segment operating income to income from continuing operations before income taxes.
- “**Organic revenue”** and “**organic segment operating income”** are 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. We believe the presentation of “organic” results permits investors to better understand our performance without the effects of exchange rate variances or acquisitions and to facilitate period-to-period comparisons and analysis of our operating performance. Refer to the “Results of Operations” section of this MD&A for reconciliations of organic revenue and organic segment operating income to the most directly comparable GAAP measures.

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

## Market risk

As filed, 3,747 characters.

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

Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, and Germany. The functional currency of our foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, we translate the assets and liabilities of our foreign subsidiaries into U.S. dollars at the foreign exchange rates in effect at the balance sheet date. The unrealized gains or losses resulting from the translation of these foreign denominated assets and liabilities are included as a component of accumulated other comprehensive income (loss) in the Consolidated Balance Sheets. As a result, significant fluctuations in foreign exchange rates relative to the U.S. dollar may result in material changes to our net equity position reported in the Consolidated Balance Sheets. We do not currently hedge our equity risk arising from the translation of foreign denominated assets and liabilities. We recorded cumulative unrealized foreign currency translation losses in stockholders’ equity of $23.8 million as of December 31, 2019 and $36.3 million as of December 31, 2018. We recorded unrealized foreign currency translation gains in other comprehensive income of $12.5 million during the year ended December 31, 2019 and foreign currency translation losses of $24.3 million during the year ended December 31, 2018, in each case, net of tax.

For purposes of consolidation, revenue, expenses, gains, and losses related to our foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, our consolidated results of operations are exposed to fluctuations in foreign exchange rates as revenue and segment operating income of our foreign operations, when translated, may vary from period to period, even when the functional currency amounts have not changed. Such fluctuations may adversely impact overall expected profitability and historical period-to-period comparisons. We do not currently hedge our net earnings exposure arising from the translation of our foreign revenue and segment operating income. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Foreign Exchange Rate Variances” (Part II, Item 7 of this 2019 Form 10-K) for a further discussion.

A hypothetical change of 10% in the Canadian dollar exchange rate would result in a change to 2019 operating income of approximately $5.3 million. A hypothetical change of 10% in the British pound exchange rate would result in a change to 2019 operating income of approximately $0.1 million. A hypothetical change of 10% in the Euro exchange rate would result in a change to 2019 operating income of approximately $0.4 million.

We are exposed to foreign exchange transaction risk, as our foreign subsidiaries have certain revenue transactions denominated in currencies other than the functional currency of the respective subsidiary. From time to time, we utilize forward contracts to mitigate the impact on earnings related to these transactions due to fluctuations in foreign exchange rates. As of December 31, 2019 and 2018, we did not have any outstanding foreign currency forward contracts.

We are exposed to short-term and long-term interest rate risk on certain of our debt obligations. We do not currently use derivative financial instruments to hedge cash flows for such obligations.

## Controls and procedures

As filed, 9,313 characters.

We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. Management, together with our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2019. Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2019.

There were no changes in our internal control over financial reporting during the fourth quarter of 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, our management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that:

- Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Management performed an assessment of the effectiveness of our internal control over financial reporting using the criteria described in the “Internal Control - Integrated Framework (2013),” issued by the Committee of Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal control over financial reporting was effective as of December 31, 2019.

In accordance with the SEC’s published guidance, our management has excluded from its assessment the internal control over financial reporting for Mountain Park Lodges, which we acquired on June 8, 2019 and whose financial statements constitute 9.8% of total assets and 1.4% of revenue of our consolidated financial statement amounts as of and for the year ended December 31, 2019.

Based on our assessment, we concluded that, as of December 31, 2019, our internal control over financial reporting is effective based on those criteria.

Our independent registered public accounting firm, Deloitte & Touche LLP, has issued a report relating to our audit of the effectiveness of our internal control over financial reporting, which appears on the following page of this 2019 Form 10-K.

### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Viad Corp

### Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Viad Corp and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in *Internal Control — Integrated Framework (2013)* issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 26, 2020 expressed an unqualified opinion on those consolidated financial statements and financial statement schedule and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Mountain Park Lodges, Inc., which was acquired on June 8, 2019, and whose financial statements constitute 9.8% of total assets and 1.4% of revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2019. Accordingly, our audit did not include the internal control over financial reporting at Mountain Park Lodges, Inc.

### Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

### Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

#### /s/ Deloitte & Touche LLP

Phoenix, Arizona

February 26, 2020

Filed Feb 26, 2020.
Source: SEC EDGAR, the filing index for accession 0001564590-20-006825. Last ingested by Listed: Nov 4, 2026, 17:36 ET. No prices; not investment advice.