UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to

Commission file number: 001-11015

Viad Corp

(Exact name of registrant as specified in its charter)

Delaware		36-1169950
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

1850 North Central Avenue, Suite 1900 Phoenix, Arizona		85004-4565
(Address of principal executive offices)		(Zip Code)

(602) 207-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.50 Par Value

VVI

New York Stock Exchange

Junior Participating Preferred Stock, par value $0.01 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files.) Yes ☒ No ☐

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐☒	Accelerated filer	☒☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐		~~Emerging growth company~~	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 27, 2017,~~June 15, 2020, there were ~~20,411,480~~20,408,428 shares of Common Stock ($1.50 par value) outstanding.

INDEX

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019	1
	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	2
	Condensed Consolidated Statements of Comprehensive ~~Income~~Loss for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	3
	Condensed Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	6
	Notes to Condensed Consolidated Financial Statements	57
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2332
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3741
Item 4.	Controls and Procedures	3842
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	3943
Item 1A.	Risk Factors	3943
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3947
Item 5.6.	~~Other Information~~Exhibits	3948
~~Item 6.~~Items 3-5	~~Exhibits~~Not applicable	40

SIGNATURES		4049

EXPLANATORY NOTE

In this report, for periods presented, “we,” “us,” “our,” “the Company,” and “Viad Corp” refer to Viad Corp and its subsidiaries.

The SEC issued an order on March 4, 2020, and as revised on March 25, 2020, pursuant to Section 36 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), granting exemptions from specified provisions of the Exchange Act and certain rules thereunder, (Release No. 34-88465) (the “SEC Order”). The SEC Order provides that a registrant subject to the reporting requirements of Exchange Act Section 13(a) or 15(d), and any person required to make any filings with respect to such registrant, is exempt from any requirement to file or furnish materials with the Commission under Exchange Act Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d) and Regulations 13A, Regulation 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D, and Exchange Act Rules 13f-1, and 14f-1, as applicable, if certain conditions are satisfied.

We relied on the SEC Order to delay the filing of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 due to circumstances related to the coronavirus pandemic (“COVID-19”).

We have experienced extreme disruption to our business and operations due to the unprecedented conditions surrounding COVID-19. As a result of the COVID-19 adverse effects, we were required to conduct additional impairment testing and other complex financial analysis in order to complete our financial statements and review for the quarter ended March 31, 2020. A significant portion of our finance and accounting personnel are either on furlough or working reduced hours, and we are requiring all of our personnel to work remotely, which has increased the difficulty of completing these required reviews.

PART I - ~~FINANCI~~ALFINANCIAL INFORMATION

Item 1. Financial Statements

VIAD CORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			December 31,			March 31,			December 31,
(in thousands, except share data)	2017			2016			2020			2019
Assets
Current assets
Cash and cash equivalents	$	53,481		$	20,900		$	130,528		$	61,999
Accounts receivable, net of allowances for doubtful accounts of $1,897 and $1,342, respectively		129,105			104,648
Accounts receivable, net of allowances for doubtful accounts of $10,154 and $1,200, respectively								112,081			126,246
Inventories		39,753			31,420			17,528			17,269
Current contract costs								14,999			24,535
Other current assets		23,973			18,449			37,377			30,854
Total current assets		246,312			175,417			312,513			260,903
Property and equipment, net		295,757			279,858			481,622			500,901
Other investments and assets		46,745			44,297			45,544			45,119
Operating lease right-of-use assets								96,719			103,314
Deferred income taxes		34,391			42,549			37,228			26,163
Goodwill		263,919			254,022			204,613			287,983
Other intangible assets, net		65,672			73,673			69,222			94,308
Total Assets	$	952,796		$	869,816		$	1,247,461		$	1,318,691
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	88,510		$	67,596		$	86,050		$	86,660
Customer deposits		53,093			42,723
Contract liabilities								36,750			50,671
Accrued compensation		28,094			29,913			12,652			32,658
Operating lease obligations								20,708			22,180
Other current liabilities		52,318			30,390			46,750			39,824
Current portion of debt and capital lease obligations		124,574			174,968
Current portion of debt and finance lease obligations								420,830			5,330
Total current liabilities		346,589			345,590			623,740			237,323
Long-term debt and capital lease obligations		60,627			74,243
Long-term debt and finance lease obligations								18,016			335,162
Pension and postretirement benefits		26,826			28,611			25,921			26,247
Long-term operating lease obligations								78,685			82,851
Other deferred items and liabilities		50,260			50,734			75,743			83,707
Total liabilities		484,302			499,178			822,105			765,290
Commitments and contingencies
Redeemable noncontrolling interest								4,908			6,172
Stockholders’ equity
Viad Corp stockholders’ equity:
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares issued and outstanding		37,402			37,402			37,402			37,402
Additional capital		573,660			573,841			570,859			574,473
Retained earnings		89,552			16,291			34,347			122,971
Unearned employee benefits and other		239			172
Accumulated other comprehensive income (loss):
Unrealized gain on investments		564			421
Cumulative foreign currency translation adjustments		(10,264	)		(29,084	)
Unrecognized net actuarial loss and prior service credit, net		(10,544	)		(10,728	)
Common stock in treasury, at cost, 4,519,023 and 4,613,520 shares, respectively		(226,145	)		(230,960	)
Total Viad Corp stockholders’ equity		454,464			357,355
Noncontrolling interest		14,030			13,283
Accumulated other comprehensive loss								(63,543	)		(35,699	)
Common stock in treasury, at cost, 4,544,371 and 4,588,084 shares, respectively								(229,770	)		(231,649	)
Total Viad stockholders’ equity								349,295			467,498
Non-redeemable noncontrolling interest								71,153			79,731
Total stockholders’ equity		468,494			370,638			420,448			547,229
Total Liabilities and Stockholders’ Equity	$	952,796		$	869,816		$	1,247,461		$	1,318,691

Refer to Notes to Condensed Consolidated Financial Statements.

VIAD CORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in thousands, except per share data)	2017			2016			2017			2016			2020			2019
Revenue:
Exhibition and event services	$	198,868		$	240,278		$	750,111		$	681,592
Exhibits and environments		33,251			44,785			119,988			123,871
Pursuit services		106,980			97,402			159,581			143,111
Services													$	275,556		$	250,641
Products														30,452			34,953
Total revenue		339,099			382,465			1,029,680			948,574			306,008			285,594
Costs and expenses:
Costs of services		254,963			278,764			813,456			743,032			284,402			263,356
Costs of products sold		37,070			44,784			117,072			118,891
Business interruption gain		(1,091	)		—			(2,231	)		—
Costs of products														31,006			33,474
Corporate activities		4,474			2,772			10,092			7,390			789			1,833
Interest income		(74	)		(44	)		(174	)		(138	)		(79	)		(98	)
Interest expense		2,117			1,489			6,281			4,109			4,018			2,915
Other expense														419			455
Restructuring charges		255			1,697			817			3,664			851			688
Impairment charges (recoveries)		(24,467	)		120			(29,098	)		120
Legal settlement														—			8,500
Impairment charges														88,380			—
Total costs and expenses		273,247			329,582			916,215			877,068			409,786			311,123
Income from continuing operations before income taxes		65,852			52,883			113,465			71,506
Income tax expense		20,010			17,878			32,929			23,652
Income from continuing operations		45,842			35,005			80,536			47,854
Loss from continuing operations before income taxes														(103,778	)		(25,529	)
Income tax benefit														(15,797	)		(7,595	)
Loss from continuing operations														(87,981	)		(17,934	)
Loss from discontinued operations		(101	)		(221	)		(408	)		(771	)		(454	)		(287	)
Net income		45,741			34,784			80,128			47,083
Net income attributable to noncontrolling interest		(1,084	)		(992	)		(747	)		(765	)
Net income attributable to Viad	$	44,657		$	33,792		$	79,381		$	46,318
Diluted income per common share:
Net loss														(88,435	)		(18,221	)
Net loss attributable to non-redeemable noncontrolling interest														1,333			420
Net loss attributable to redeemable noncontrolling interest														517			24
Net loss attributable to Viad													$	(86,585	)	$	(17,777	)
Diluted loss per common share:
Continuing operations attributable to Viad common stockholders	$	2.19		$	1.68		$	3.91		$	2.33		$	(4.27	)	$	(0.88	)
Discontinued operations attributable to Viad common stockholders		—			(0.01	)		(0.02	)		(0.04	)		(0.02	)		(0.01	)
Net income attributable to Viad common stockholders	$	2.19		$	1.67		$	3.89		$	2.29
Net loss attributable to Viad common stockholders													$	(4.29	)	$	(0.89	)
Weighted-average outstanding and potentially dilutive common shares		20,436			20,207			20,382			20,150			20,215			20,076
Basic income per common share:
Basic loss per common share:
Continuing operations attributable to Viad common stockholders	$	2.19		$	1.68		$	3.91		$	2.33		$	(4.27	)	$	(0.88	)
Discontinued operations attributable to Viad common stockholders		—			(0.01	)		(0.02	)		(0.04	)		(0.02	)		(0.01	)
Net income attributable to Viad common stockholders	$	2.19		$	1.67		$	3.89		$	2.29
Net loss attributable to Viad common stockholders													$	(4.29	)	$	(0.89	)
Weighted-average outstanding common shares		20,166			20,017			20,130			19,972			20,215			20,076
Dividends declared per common share	$	0.10		$	0.10		$	0.30		$	0.30		$	0.10		$	0.10
Amounts attributable to Viad common stockholders
Income from continuing operations	$	44,758		$	34,013		$	79,789		$	47,089
Loss from continuing operations													$	(86,131	)	$	(17,490	)
Loss from discontinued operations		(101	)		(221	)		(408	)		(771	)		(454	)		(287	)
Net income	$	44,657		$	33,792		$	79,381		$	46,318
Net loss													$	(86,585	)	$	(17,777	)

Refer to Notes to Condensed Consolidated Financial Statements.

VIAD CORP

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME~~LOSS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2017

2016

2017

2016

Net income

$
45,741

$
34,784

$
80,128

$
47,083

Other comprehensive income (loss):

Unrealized gains on investments, net of tax⁽¹⁾

48

42

143

62

Unrealized foreign currency translation adjustments, net of tax⁽¹⁾

9,115

(3,849
)

18,820

723

Change in net actuarial gain, net of tax⁽¹⁾

103

93

385

334

Change in prior service cost, net of tax⁽¹⁾

(67
)

(78
)

(201
)

(234
)
Comprehensive income

54,940

30,992

99,275

47,968

Comprehensive income attributable to noncontrolling interest

(1,084
)

(992
)

(747
)

(765
)
Comprehensive income attributable to Viad

$
53,856

$
30,000

$
98,528

$
47,203

	Three Months Ended
	March 31,
(in thousands)	2020			2019
Net loss	$	(88,435	)	$	(18,221	)
Other comprehensive income (loss):
Unrealized foreign currency translation adjustments		(28,158	)		4,780
Change in net actuarial loss, net of tax ⁽¹⁾		341			120
Change in prior service cost, net of tax ⁽¹⁾		(27	)		(35	)
Comprehensive loss		(116,279	)		(13,356	)
Non-redeemable noncontrolling interest:
Comprehensive loss attributable to non-redeemable noncontrolling interest		1,333			420
Unrealized foreign currency translation adjustments		(5,719	)		—
Redeemable noncontrolling interest:
Comprehensive loss attributable to redeemable noncontrolling interest		517			24
Comprehensive loss attributable to Viad	$	(120,148	)	$	(12,912	)

⁽¹⁾	The tax effect on other comprehensive income (loss) is not significant.

Refer to Notes to Condensed Consolidated Financial Statements.

VIAD CORP

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands)	Common Stock		Additional Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock in Treasury			Total Viad Equity			Non-Redeemable Non-Controlling Interest			Total Stockholders’ Equity
Balance, December 31, 2019	$	37,402	$	574,473		$	122,971		$	(35,699	)	$	(231,649	)	$	467,498		$	79,731		$	547,229
Net loss		—		—			(86,585	)		—			—			(86,585	)		(1,333	)		(87,918	)
Dividends on common stock ($0.10 per share)		—		—			(2,038	)		—			—			(2,038	)		—			(2,038	)
Distributions to noncontrolling interest		—		—			—			—			—			—			(1,526	)		(1,526	)
Payment of payroll taxes on stock-based compensation through shares withheld		—		—			—			—			(1,059	)		(1,059	)		—			(1,059	)
Common stock purchased for treasury		—		—			—			—			(2,785	)		(2,785	)		—			(2,785	)
Employee benefit plans		—		(3,810	)		—			—			5,722			1,912			—			1,912
Share-based compensation - equity awards		—		276			—			—			—			276			—			276
Unrealized foreign currency translation adjustment, net of tax		—		—			—			(28,158	)		—			(28,158	)		(5,719	)		(33,877	)
Amortization of net actuarial loss, net of tax		—		—			—			341			—			341			—			341
Amortization of prior service cost, net of tax		—		—			—			(27	)		—			(27	)		—			(27	)
Other, net		—		(80	)		(1	)		—			1			(80	)		—			(80	)
Balance, March 31, 2020	$	37,402	$	570,859		$	34,347		$	(63,543	)	$	(229,770	)	$	349,295		$	71,153		$	420,448

Refer to Notes to Condensed Consolidated Financial Statements.

VIAD CORP

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited)

(in thousands)	Common Stock		Additional Capital			Retained Earnings			Unearned Employee Benefits and Other		Accumulated Other Comprehensive Income (Loss)			Common Stock in Treasury			Total Viad Equity			Non-Redeemable Non-Controlling Interest			Total Stockholders’ Equity
Balance, December 31, 2018	$	37,402	$	575,339		$	109,032		$	199	$	(47,975	)	$	(237,790	)	$	436,207		$	14,348		$	450,555
Net loss		—		—			(17,777	)		—		—			—			(17,777	)		(420	)		(18,197	)
Dividends on common stock ($0.10 per share)		—		—			(2,028	)		—		—			—			(2,028	)		—			(2,028	)
Payment of payroll taxes on stock-based compensation through shares withheld		—		—			—			—		—			(2,905	)		(2,905	)		—			(2,905	)
Employee benefit plans		—		(4,302	)		—			—		—			5,522			1,220			—			1,220
Share-based compensation - equity awards		—		780			—			—		—			—			780			—			780
Unrealized foreign currency translation adjustment, net of tax		—		—			—			—		4,780			—			4,780			—			4,780
Amortization of net actuarial loss, net of tax		—		—			—			—		120			—			120			—			120
Amortization of prior service cost, net of tax		—		—			—			—		(35	)		—			(35	)		—			(35	)
Other, net		—		16			—			24		—			1			41			—			41
Balance, March 31, 2019	$	37,402	$	571,833		$	89,227		$	223	$	(43,110	)	$	(235,172	)	$	420,403		$	13,928		$	434,331

Refer to Notes to Condensed Consolidated Financial Statements.

VIAD CORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in thousands)	2017			2016			2020			2019
Cash flows from operating activities
Net income	$	80,128		$	47,083
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss							$	(88,435	)	$	(18,221	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		42,499			31,206			15,285			13,188
Deferred income taxes		318			(3,549	)		(15,799	)		(9,098	)
Loss from discontinued operations		408			771			454			287
Restructuring charges		817			3,664			851			688
Impairment charges (recoveries)		(29,098	)		120
Legal settlement								—			8,500
Impairment charges								88,380			—
Gains on dispositions of property and other assets		465			126			(85	)		(551	)
Share-based compensation expense		9,484			4,709
Excess tax benefit from share-based compensation arrangements		—			(60	)
Share-based compensation (benefit) expense								(2,145	)		2,206
Other non-cash items, net		3,603			4,644			9,342			1,041
Change in operating assets and liabilities (excluding the impact of acquisitions):
Change in operating assets and liabilities:
Receivables		(25,966	)		(41,510	)		15,651			(25,545	)
Inventories		(6,839	)		(12,903	)		(711	)		(874	)
Current contract costs								8,970			(4,838	)
Accounts payable		18,998			38,522			(1,109	)		12,868
Restructuring liabilities		(1,748	)		(2,518	)		(1,293	)		(714	)
Accrued compensation		(7,455	)		(620	)		(20,551	)		(7,490	)
Customer deposits		9,076			26,954
Contract liabilities								(12,602	)		32,379
Payments on operating lease obligations								(6,529	)		(6,198	)
Income taxes payable		16,058			5,280			17,753			6
Other assets and liabilities, net		3,895			13,503			(12,146	)		10,386
Net cash provided by operating activities		114,643			115,422
Net cash (used in) provided by operating activities								(4,719	)		8,020
Cash flows from investing activities
Capital expenditures		(39,493	)		(32,582	)		(23,246	)		(19,543	)
Proceeds from insurance		31,570			—
Cash paid for acquired businesses, net		(1,661	)		(145,735	)
Proceeds from dispositions of property and other assets		734			774			85			611
Net cash used in investing activities		(8,850	)		(177,543	)		(23,161	)		(18,932	)
Cash flows from financing activities
Proceeds from borrowings		60,574			153,000			160,755			28,347
Payments on debt and capital lease obligations		(128,808	)		(86,989	)
Payments on debt and finance lease obligations								(56,077	)		(14,376	)
Dividends paid on common stock		(6,119	)		(6,079	)		(2,038	)		(2,028	)
Debt issuance costs		(5	)		(340	)
Distributions to noncontrolling interest								(1,526	)		—
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased								(1,059	)		(2,905	)
Common stock purchased for treasury		(1,272	)		(679	)		(2,785	)		—
Excess tax benefit from share-based compensation arrangements		—			60
Net cash provided by (used in) financing activities		(75,630	)		58,973
Proceeds from exercise of stock options								2,077			—
Net cash provided by financing activities								99,347			9,038
Effect of exchange rate changes on cash and cash equivalents		2,418			(702	)		(2,938	)		454
Net change in cash and cash equivalents		32,581			(3,850	)		68,529			(1,420	)
Cash and cash equivalents, beginning of year		20,900			56,531			61,999			44,893
Cash and cash equivalents, end of period	$	53,481		$	52,681		$	130,528		$	43,473

Refer to Notes to Condensed Consolidated Financial Statements.

VIAD CORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Overview and Basis of Presentation ~~and Principles of Consolidation~~

The accompanying unaudited condensed consolidated financial statements of Viad Corp (“Viad” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or Securities and Exchange Commission (“SEC”) rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with Viad’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 6, 2017.

~~The condensed consolidated financial statements include the accounts of Viad and its subsidiaries. All significant intercompany account balances and transactions have been eliminated in consolidation.~~

~~Use of Estimates~~

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Estimates and assumptions are used in accounting for, among other things, the fair value of Viad’s reporting units used to perform annual impairment testing of recorded goodwill; allowances for uncollectible accounts receivable; provisions for income taxes, including uncertain tax positions; valuation allowances related to deferred tax assets; liabilities for losses related to self-insured liability claims; liabilities for losses related to environmental remediation obligations; sublease income associated with restructuring liabilities; assumptions used to measure pension and postretirement benefit costs and obligations; assumptions used to determine share-based compensation costs under the fair value method; and the allocation of purchase price of acquired businesses. Actual results could differ from these and other estimates.

~~Insurance Recoveries~~

Receipts from insurance up to the amount of the recognized losses are considered recoveries and are accounted for when they are probable of receipt. Anticipated proceeds in excess of the recognized loss are considered a gain contingency. A contingency gain for anticipated insurance proceeds in excess of losses already recognized is not recognized until all contingencies relating to the insurance claim have been resolved.

On December 29, 2016, the Mount Royal Hotel was damaged by a fire and closed. During the fourth quarter of 2016, the Company recorded an asset impairment loss of $2.2 million and an offsetting impairment recovery (and related insurance receivable) as the losses related to the fire were covered by Viad’s property and business interruption insurance. During July 2017, Viad resolved its property and business interruption insurance claims for a total of $36.3 million, of which $9.0 million was received during the first six months of 2017 with the remainder received during the third quarter. The Company allocated $2.2 million to an insurance receivable, $29.3 million was recorded as an impairment recovery (partially offset by impairment charges of $0.2 million) related to construction costs to re-open the hotel, $2.2 million was recorded as a business interruption gain for the recovery of lost profits, $1.1 million was recorded as contra-expense to offset non-capitalizable costs incurred by the Company, and the remaining $1.5 million was recorded as deferred revenue, which will be recognized over the periods when the business interruption losses are actually incurred.

Nature of Business

~~Viad is~~We are an international experiential services company with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and ~~Hong Kong. Viad is~~Iceland. We are committed to providing unforgettable experiences to ~~its~~our clients and guests. ~~Viad operates~~We operate through ~~three~~3 reportable business segments: GES ~~U.S.,~~North America, GES ~~International~~EMEA (collectively, “GES”), and Pursuit.

GES

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

~~GES’ clients include~~ event organizers and corporate brand marketers. Event organizers schedule and run events 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.

Pursuit

Pursuit is a collection of ~~iconic natural~~inspiring and ~~cultural destination~~unforgettable travel experiences that ~~enjoy perennial demand. Pursuit offers guests distinctive and world renowned experiences through~~ ~~its collection of~~include recreational attractions, unique hotels and lodges, ~~recreational attractions,~~food and beverage, retail, sightseeing, and ground transportation services. Pursuit ~~is composed~~comprises the Banff Jasper Collection, the Alaska Collection, the Glacier Park Collection, and FlyOver.

Impact of ~~four lines~~COVID-19 and Going Concern

On March 11, 2020, the World Health Organization declared COVID-19 a “pandemic.” COVID-19 has spread rapidly, with a high concentration of ~~business: (i) Hospitality; (ii) Attractions; (iii) Transportation,~~confirmed cases in the U.S. and ~~(iv) Travel Planning. These four lines of business work together, driving economies of scope and meaningful scale~~other countries in ~~and~~which we operate. The rapid spread has resulted in authorities around the ~~iconic destinations~~world implementing numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders, and business shutdowns. The COVID-19 pandemic and these containment measures have had, and are expected to continue to have, a substantial negative impact on businesses around the world and on global, regional, and national economies.

The COVID-19 pandemic is having and will likely continue to have a significant and negative impact on our operations and financial performance, with live event and tourism activities largely shut down. As a result, we have taken the following measures to improve our liquidity position due to COVID-19:

•

On March 17, 2020, we borrowed $123 million under the revolving credit facility (the “2018 Credit Facility”) as a proactive measure to increase our cash position and preserve financial flexibility. At the end of March 2020, we repaid $32 million and in early April 2020, we borrowed $31 million under the 2018 Credit Facility. Refer to Note 12 – Debt and Finance Lease Obligations and Note 24 – Subsequent Events;

•

We implemented aggressive cost reduction actions, including furloughs, mandatory unpaid time off, or salary reductions for all employees;

•

Our executive management voluntarily reduced its base salaries by 20% to 50%;

•

The non-employee members of our Board of Directors agreed to reduce their annual cash retainer and committee retainers by 50% for payments typically made to them in the second quarter of 2020;

•

We have eliminated all non-essential capital expenditures and discretionary spending;

•

In March 2020, our Board of Directors suspended future dividend payments and share repurchases;

•

On April 20, 2020, we suspended our 401(k) Plan employer match contributions. Refer to Note 24 – Subsequent Events;

•

On May 8, 2020, we obtained a waiver of our financial covenants for the quarter ending June 30, 2020. Refer to Note 12 – Debt and Finance Lease Obligations and Note 24 – Subsequent Events;

•

We availed ourselves of governmental assistance programs for wages and tax relief; and

•

In May 2020, we terminated our legacy life insurance policies on former employees and received the cash proceeds of $24.8 million. Refer to Note 8 – Other Investments and Assets and Note 24 – Subsequent Events.

Although we were in compliance with the financial covenants of ~~Banff, Jasper,~~our Second Amended and ~~Waterton Lakes National Parks~~Restated Credit Agreement (the “2018 Credit Agreement”) as of March 31, 2020, disruptions caused by the COVID-19 pandemic have had and ~~Vancouver~~are likely to continue to have

a significant and negative impact on our operations and financial performance. In May 2020, we entered into an amendment to our 2018 Credit Agreement, which waived our financial covenants for the quarter ending June 30, 2020 and added a new minimum liquidity requirement. However, we expect to be unable to meet our financial covenants beginning with the quarter ending September 30, 2020, and as a result, the entire $412.6 million balance outstanding under the 2018 Credit Facility as of March 31, 2020 has been classified as a current liability. We are actively negotiating with our lenders to further amend our 2018 Credit Agreement, and we are pursuing options to raise capital and enhance our liquidity position. We cannot provide any assurance regarding the likelihood, certainty, or exact timing of our ability to raise capital or our ability to obtain further amendments to the 2018 Credit Agreement in ~~Canada,~~a timely manner, or on acceptable terms, if at all. If we are unable to raise capital or obtain a waiver to our financial covenants, our lenders may exercise remedies against us, including the acceleration of our outstanding indebtedness. We also expect to be unable to meet our financial covenants under our FlyOver Iceland Credit Facility beginning with the quarter ending September 30, 2020, and as a result, the $5.3 million balance outstanding as of March 31, 2020 has been classified as a current liability. We have concluded that the shut-down of live event and tourism activities resulting in substantial net losses and operating cash outflows and the expected inability to maintain compliance with debt covenants discussed above raise substantial doubt about our ability to continue as a going concern for a period through one year from the issuance of the financial statements. We have prepared the financial statements on a going concern basis, which do not include any adjustments that might result from the outcome of this uncertainty.

Due to the deteriorating macroeconomic environment, disruptions to our operations, and the sustained decline in our stock price caused by COVID-19, we determined an interim triggering event had occurred, which required us to assess the carrying values of goodwill and intangible assets in accordance with Accounting Standards Codification (“ASC”) No. 350, Intangibles – Goodwill and Other. Based on this assessment, we recorded a non-cash goodwill impairment charge of $72.7 million during the three months ended March 31, 2020 associated with the GES U.S., GES EMEA, and Pursuit’s Glacier ~~Denali,~~Park Collection reporting units. Additionally, during the three months ended March 31, 2020, we recorded a non-cash impairment charge to other intangible assets of $15.7 million related to our U.S. audio-visual production business. The duration and ~~Kenai Fjords National Parks~~impact of COVID-19 may result in additional future impairment charges as facts and circumstances evolve. Refer to Note 9 – Goodwill and Other Intangible Assets for additional information.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United ~~States. Pursuit is composed~~States of ~~Brewster Travel Canada,~~America (“GAAP”) and with the ~~Alaska Collection, Glacier Park, Inc.,~~instructions to Form 10-Q and ~~FlyOver Canada.~~Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or SEC rules and regulations for complete financial statements. These financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 26, 2020 (“2019 Form 10-K”). We corrected the classification of debt as of December 31, 2019. Refer to Note 12 – Debt and Finance Lease Obligations.

The condensed consolidated financial statements include the accounts of Viad and its subsidiaries. We have eliminated all significant intercompany account balances and transactions in consolidation.

Impact of Recent Accounting Pronouncements

The following table provides a brief description of recent accounting pronouncements:

Standard	Description	Date of adoption	Effect on the financial statements
Standards Not Yet Adopted
ASU ~~2014-09~~2019-12,~~Revenue from Contracts with Customers~~ Income Taxes (Topic ~~606)~~	~~The standard establishes a new recognition model that requires revenue to be recognized in a manner to depict~~740) Simplifying the ~~transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange~~Accounting for those goods or services. The Company may adopt either retrospectively to each prior period presented with the option to elect certain practical expedients or with the cumulative effect recognized at the date of initial application and providing certain disclosures. Subsequent to the issuance of ASU 2014-09, the FASB issued several amendments in 2016 which do not change the core principle of the guidance stated in ASU 2014-09. Rather, they are intended to clarify and improve understanding of certain topics included within the revenue standard.	~~January 1, 2018~~	The Company is currently evaluating the impact of the adoption of this new guidance on its financial position or results of operations including analyzing its current portfolio of customer contracts. The Company has assigned internal resources in addition to the engagement of a third-party service provider to assist in the evaluation of the impact on its accounting policies, processes, and system requirements. Based on the Company’s preliminary assessment, the adoption of this standard will not have a material impact on Viad’s consolidated financial statements. Although significant additional disclosures will be required, the Company expects the immaterial impact to primarily relate to the deferral of certain commissions which were previously expensed as incurred but will generally be capitalized and amortized over the period of contract performance, and the deferral of certain costs incurred in connection with trade shows which were previously expensed as incurred but will generally be capitalized and expensed upon the completion of the show. The Company will adopt the standard on January 1, 2018 and will be using the modified retrospective transition method. Additionally, the new guidance requires enhanced disclosures, including revenue recognition policies to identify performance obligations to customers and significant judgments in measurement and recognition. The Company is continuing its assessment, which may identify other impacts.
~~ASU 2016-02~~, ~~Leases (Topic 842)~~Income Taxes	The amendment ~~requires lessees to recognize on their balance sheet a right-of-use asset~~enhances and ~~a lease liability~~simplifies various aspects of the income tax accounting guidance, including requirements such as ownership changes in investments, and interim-period accounting for leases with lease terms greater than one year. The amendment requires additional disclosures about leasing arrangements, and requires a modified retrospective approach to adoption. Early adoption is permitted.enacted changes in tax law.	~~January 1, 2019~~1/1/2021	~~The Company is~~We are currently evaluating the potential impact of the adoption of this new guidance on ~~its~~our consolidated financial ~~position or results of operations including analyzing its existing operating leases. Based on the Company’s current assessment, the adoption of~~statements. We do not expect this ~~standard will~~new guidance to have a material impact on ~~Viad’s~~our consolidated balance sheets, but the income statement is not expected to be materially impacted. The Company expects the most significant impact will relate to facility and equipment leases and embedded lease arrangements which are currently recorded as operating leases. The Company is continuing its assessment, which may identify other impacts. The Company will adopt the standard on January 1, 2019.
~~ASU 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments~~	The amendment provides guidance on eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. Early adoption is permitted.	~~January 1, 2018~~	~~The adoption of this new guidance is not expected to have a significant effect on Viad’s~~ financial ~~position or results of operations.~~
~~ASU 2016-16~~, ~~Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory~~	The amendment eliminates an exception in ASC 740 which prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The amendment requires an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory at the time that the transfer occurs.	~~January 1, 2018~~	~~The adoption of this new guidance is not expected to have a significant effect on Viad’s financial position or results of operations.~~statements.

Standard	Description	Date of adoption	Effect on the financial statements
Standards ~~Not Yet~~Recently Adopted ~~(Continued)~~
ASU ~~2017-01~~2016-13,~~Business Combination~~ Financial Instruments – Credit Losses (Topic ~~805)~~326) - ~~Clarifying the Definition~~Measurement of ~~a Business~~	~~The amendment provides guidance~~Credit Losses on ~~evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.~~	~~January 1, 2018~~	~~The adoption of this new guidance is not expected to have a significant effect on Viad’s consolidated financial statements.~~
~~ASU 2017-04~~, ~~Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment~~Financial Instruments	The amendment eliminates the ~~requirement to estimate the implied fair value of goodwill if~~incurred credit loss impairment methodology and replaces it was determined that the carrying amount of a reporting unit exceeded its fair value. Goodwill impairment will now be recognized by the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The amendment should be applied prospectivelywith an expected credit loss concept based on historical experience, current conditions, and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.reasonable and supportable forecasts.	~~January 1,~~ 1/1/2020	We adopted this new standard on a modified retrospective basis. The adoption of this new ~~guidance is~~standard on January 1, 2020 did not ~~expected to~~ have a ~~significant effect~~material impact on ~~Viad’s~~our condensed consolidated financial ~~statements and~~statements. However, due to the ~~Company expects~~significant economic impact of COVID-19, we recorded an increase of $2.8 million to the ~~adoption to reduce the complexity surrounding the analysis of goodwill impairment.~~provision for credit losses during March 2020.
ASU ~~2017-07~~2020-04,~~Compensation - Retirement Benefits~~ Reference Rate Reform (Topic ~~715) - Improving the Presentation of Net Periodic Pension~~ ~~Cost and Net Periodic Postretirement Benefit Cost~~	The amendment requires an employer to disaggregate the service cost components from the other components of net benefit cost. The service cost components are required to be presented in operating income and the other components of net benefit cost are required to be presented outside of operating income.	~~January 1, 2018~~	The Company currently presents all components of net periodic pension and postretirement benefit costs in cost of services in the consolidated statements of operations. The adoption of this new guidance is not expected to have a significant effect on Viad’s consolidated financial statements.
~~ASU 2017-09~~, ~~Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting~~848)	The amendment provides temporary optional guidance ~~about which changes~~ to ease the ~~terms or conditions of a share-based payment award require an entity~~potential burden in accounting for reference rate reform. Topic 848 provides optional expedients and exceptions for applying U.S. GAAP to ~~apply modification accounting in Topic 718.~~transactions affected by reference rate reform if certain criteria are met.	~~January 1, 2018~~3/12/2020	~~The Company grants share-based awards but rarely has modifications~~Topic 848 was effective beginning on March 12, 2020, and we will apply the amendments prospectively through December 31, 2022. There was no impact to ~~the awards. The adoption of this new guidance is not expected to have a significant effect on Viad’s~~our condensed consolidated financial ~~statements.~~statements for the quarter ended March 31, 2020 as a result of adopting this amendment.

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Estimates and assumptions are used in accounting for, among other things: impairment testing of recorded goodwill and intangible assets; allowances for uncollectible accounts receivable; provisions for income taxes, including uncertain tax positions; valuation allowances related to deferred tax assets; liabilities for losses related to self-insured liability claims; liabilities for losses related to environmental remediation obligations; sublease income associated with restructuring liabilities; pension and postretirement benefit costs and obligations; share-based compensation costs; the discount rates used to value lease obligations; the redemption value of redeemable noncontrolling interests; and the allocation of purchase price of acquired businesses. Actual results could differ from these and other 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, Event Technology, and Audio-Visual. GES’ service revenue is earned over time over the duration of the exhibition, conference, or corporate event, which generally lasts one to three days. 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 admissions, accommodations, 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.

Noncontrolling Interests – Non-redeemable and Redeemable

Non-redeemable noncontrolling interest represents the portion of equity in a subsidiary that is not attributable, directly or indirectly, to us. Our non-redeemable noncontrolling interest relates to the 20% equity ownership interest that we do not own in Glacier Park, Inc., the 40% equity interest that we do not own in the Mountain Park Lodges, and the 49% equity interest that we do not own in the new entity that will operate the Pursuit Sky Lagoon attraction. We report non-redeemable noncontrolling interest within stockholders’ equity in the Condensed Consolidated Balance Sheets. The amount of consolidated net income or loss attributable to Viad and the non-redeemable noncontrolling interest is presented in the Condensed Consolidated Statements of Operations.

We consider noncontrolling interests with redemption features that are not solely within our control to be redeemable noncontrolling interests. Our redeemable noncontrolling interest relates to our 54.5% equity ownership interest in Esja Attractions ehf. (“Esja”), which owns the FlyOver Iceland attraction. The Esja shareholders agreement contains a put option that gives the minority Esja

shareholders the right to sell (or “put”) their Esja shares to us based on a calculated formula within a predefined term. This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the Condensed Consolidated Balance Sheets. The amount of the net income or loss attributable to redeemable noncontrolling interests is recorded in the Condensed Consolidated Statements of Operations and the accretion of the redemption value is recorded as an adjustment to retained earnings and is included in our income per share. Refer to Note 21 – Redeemable Noncontrolling Interest for additional information.

Leases

We recognize a right-of-use (“ROU”) asset and lease liability on the balance sheet and classify leases as either finance or operating leases. The classification of the lease determines whether we recognize the lease expense on an effective interest method basis (finance lease) or on a straight-line basis (operating lease) over the lease term. In determining whether an agreement contains a lease, we consider if we have a right to control the use of the underlying asset during the lease term in exchange for an obligation to make lease payments arising from the lease. We recognize ROU assets and lease liabilities at commencement date, which is when the underlying asset is available for use to a lessee, based on the present value of lease payments over the lease term.

Our operating and finance leases are primarily facility, equipment, and land leases. Our facility leases comprise mainly manufacturing facilities, sales and design facilities, offices, storage and/or warehouses, and truck marshaling yards. These facility leases generally have lease terms ranging up to 25 years. Our equipment leases comprise mainly vehicles, hardware, and office equipment, each with various lease terms. Our land leases comprise mainly leases in Canada and Iceland on which our hotels or attractions are located and have lease terms ranging up to 42 years.

If a lease contains a renewal option that is reasonably certain to be exercised, then the lease term includes the optional periods in measuring a ROU asset and lease liability. We evaluate the reasonably certain threshold at lease commencement, and it is typically met if we identify substantial economic incentives or termination penalties. We do not include variable leases and variable non-lease components in the calculation of the ROU asset and corresponding lease liability. For facility leases, variable lease costs include the costs of common area maintenance, taxes, and insurance for which we pay our lessors an estimate that we adjust to actual expense on a quarterly or annual basis depending on the underlying contract terms. We expense these variable lease payments as incurred. Our lease agreements do not contain any significant residual value guarantees or restrictive covenants.

Substantially all of our lease agreements do not specify an implicit borrowing rate, and as such, we utilize an incremental borrowing rate based on lease term and country, in order to calculate the present value of our future lease payments. The discount rate represents a risk-adjusted rate on a collateralized basis and is the expected rate at which we would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term and the country.

We are also a lessor to third party tenants who either lease certain portions of facilities that we own or sublease certain portions of facilities that we lease. We record lease income from owned facilities as rental income and we record sublease income from leased facilities against lease expense in the Condensed Consolidated Statements of Operations. We classify all of our leases for which we are the lessor as operating leases.

Note 2. Revenue and Related Contract Costs and Contract Liabilities

GES’ performance obligations consist of services or product(s) outlined in a contract. While we often sign multi-year contracts for recurring events, the obligations for each occurrence are well defined and conclude upon the occurrence of each event. The obligations are typically the provision of services and/or sale of a product in connection with an exhibition, conference, or other event. GES’ revenue is earned over time over the duration of the event, but as a practical expedient we recognize revenue when we have a right to invoice at the close of the exhibition, conference, or corporate event, which typically lasts one to three days or when a customer cancels a contract. We recognize revenue for consumer events over the duration of the event. We recognize revenue for products either upon delivery to the customer’s location, upon delivery to an event that we are serving, or when we have the right to invoice, generally at the close of the exhibition, conference, or corporate event, or when a customer cancels a contract. If a customer cancels a contract, then GES is generally contractually able to invoice the customer for contract costs that have been incurred by GES in preparing for the exhibition, conference, or corporate event. Payment terms are generally within 30-60 days and contain no significant financing components.

Pursuit’s performance obligations are short-term in nature. They include the provision of a hotel room, an attraction admission, a chartered or ticketed bus or van ride, the fulfillment of travel planning itineraries, and/or the sale of food, beverage, or retail products. We recognize revenue when the service has been provided or the product has been delivered. When we extend credit, payment terms are generally within 30 days and contain no significant financing components.

Contract Liabilities

GES and Pursuit typically receive customer deposits prior to transferring the related product or service to the customer. We record these deposits as a contract liability, which are recognized as revenue upon satisfaction of the related contract performance obligation(s). GES also provides customer rebates and volume discounts to certain event organizers that we recognize as a reduction of revenue. We include these amounts in the Condensed Consolidated Balance Sheets under the captions “Contract liabilities” and “Other deferred items and liabilities.”

Changes to contract liabilities are as follows:

(in thousands)
Balance at December 31, 2019	$	50,796
Cash additions		53,284
Revenue recognized		(64,430	)
Foreign exchange translation adjustment		(1,482	)
Balance at March 31, 2020	$	38,168

Contract Costs

GES capitalizes certain incremental costs incurred in obtaining and fulfilling contracts. Capitalized costs principally relate to direct costs of materials and services incurred in fulfilling services of future exhibitions, conferences, and events, and also include up-front incentives and commissions incurred upon contract signing. We expense costs associated with preliminary contract activities (i.e. proposal activities) as incurred. Capitalized contract costs are expensed upon the transfer of the related goods or services and are included in cost of services or cost of products, as applicable. We include the deferred incremental costs of obtaining and fulfilling contracts in the Condensed Consolidated Balance Sheets under the captions “Current contract costs” and “Other investments and assets.”

Changes to contract costs are as follows:

(in thousands)
Balance at December 31, 2019	$	28,496
Additions		11,672
Expenses		(17,679	)
Cancelled		(2,086	)
Foreign exchange translation adjustment		(644	)
Balance at March 31, 2020	$	19,759

As of March 31, 2020, capitalized contract costs consisted of $1.7 million to obtain contracts and $18.1 million to fulfill contracts. We did 0t recognize an impairment loss with respect to capitalized contract costs during the three months ended March 31, 2020 or 2019.

Disaggregation of Revenue

The following tables disaggregate GES and Pursuit revenue by major product line, timing of revenue recognition, and markets served:

GES

	Three Months Ended March 31, 2020
(in thousands)	GES North America		GES EMEA		Intersegment Eliminations			Total
Services:
Core services	$	210,183	$	26,503	$	—		$	236,686
Audio-visual		17,430		4,034		—			21,464
Event technology		5,554		2,861		—			8,415
Intersegment eliminations		—		—		(1,989	)		(1,989	)
Total services		233,167		33,398		(1,989	)		264,576
Products:
Core products		18,591		9,318		—			27,909
Total revenue	$	251,758	$	42,716	$	(1,989	)	$	292,485

Timing of revenue recognition:
Services transferred over time	$	233,167	$	33,398	$	(1,989	)	$	264,576
Products transferred over time⁽¹⁾		10,577		2,450		—			13,027
Products transferred at a point in time		8,014		6,868		—			14,882
Total revenue	$	251,758	$	42,716	$	(1,989	)	$	292,485

Markets:
Exhibitions	$	184,358	$	32,547	$	—		$	216,905
Conferences		35,890		4,807		—			40,697
Corporate events		26,964		5,154		—			32,118
Consumer events		4,546		208		—			4,754
Intersegment eliminations		—		—		(1,989	)		(1,989	)
Total revenue	$	251,758	$	42,716	$	(1,989	)	$	292,485

⁽¹⁾	GES’ graphics product revenue is earned over time over the duration of the event as it is considered a part of the single performance obligation satisfied over time.

	Three Months Ended March 31, 2019
(in thousands)	GES North America		GES EMEA		Intersegment Eliminations			Total
Services:
Core services	$	179,873	$	31,063	$	—		$	210,936
Audio-visual		18,406		3,888		—			22,294
Event technology		8,763		2,953		—			11,716
Intersegment eliminations		—		—		(2,690	)		(2,690	)
Total services		207,042		37,904		(2,690	)		242,256
Products:
Core products		16,199		16,472		—			32,671
Total revenue	$	223,241	$	54,376	$	(2,690	)	$	274,927

Timing of revenue recognition:
Services transferred over time	$	207,042	$	37,904	$	(2,690	)	$	242,256
Products transferred over time⁽¹⁾		11,269		3,479		—			14,748
Products transferred at a point in time		4,930		12,993		—			17,923
Total revenue	$	223,241	$	54,376	$	(2,690	)	$	274,927

Markets:
Exhibitions	$	136,429	$	45,655	$	—		$	182,084
Conferences		47,862		2,982		—			50,844
Corporate events		32,787		5,545		—			38,332
Consumer events		6,163		194		—			6,357
Intersegment eliminations		—		—		(2,690	)		(2,690	)
Total revenue	$	223,241	$	54,376	$	(2,690	)	$	274,927

Pursuit

	Three Months Ended
	March 31,
(in thousands)	2020			2019
Services:
Admissions	$	4,102		$	3,525
Accommodations		4,517			2,418
Transportation		2,056			1,995
Travel planning		416			632
Intersegment eliminations		(111	)		(185	)
Total services revenue		10,980			8,385
Products:
Food and beverage		1,649			1,364
Retail operations		894			918
Total products revenue		2,543			2,282
Total revenue	$	13,523		$	10,667

Timing of revenue recognition:
Services transferred over time	$	10,980		$	8,385
Products transferred at a point in time		2,543			2,282
Total revenue	$	13,523		$	10,667

Markets:
Banff Jasper Collection	$	9,799		$	7,870
Alaska Collection		151			180
Glacier Park Collection		723			823
FlyOver		2,850			1,794
Total revenue	$	13,523		$	10,667

Note 2. 3. Share-Based Compensation

The following table summarizes share-based compensation (income) expense:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in thousands)	2017			2016			2017			2016			2020			2019
Performance unit incentive plan (“PUP”)(1)	$	3,941		$	1,601		$	7,184		$	2,952		$	(2,635	)	$	1,423
Restricted stock		672			523			2,069			1,597			650			693
Restricted stock units		124			86			231			160			(160	)		90
Share-based compensation before income tax benefit		4,737			2,210			9,484			4,709
Share-based compensation (income) expense before income tax benefit														(2,145	)		2,206
Income tax benefit		(1,752	)		(812	)		(3,524	)		(1,750	)		(109	)		(558	)
Share-based compensation, net of income tax benefit	$	2,985		$	1,398		$	5,960		$	2,959
Share-based compensation (income) expense, net of income tax benefit													$	(2,254	)	$	1,648

Viad did not record any share-based compensation expense through restructuring expense during the three months ended September 30, 2017 or 2016, and recorded zero and $0.2 million for the nine months ended September 30, 2017 and 2016, respectively.

⁽¹⁾

PUP awards are liability-based awards that are tied to our stock price and the expected achievement of certain performance-based criteria. During the three months ended March 31, 2020, the value of the PUP awards decreased due to the reduction of our estimated performance achievement and the decline in our stock price as a result of COVID-19.

The following table summarizes the activity of the outstanding share-based compensation awards:

	PUP Awards					Restricted Stock					Restricted Stock Units					PUP Awards					Restricted Stock					Restricted Stock Units
	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value
Balance at December 31, 2016		255,505		$	26.11		267,051		$	25.96		15,982		$	25.58
Balance at December 31, 2019																	214,904		$	52.53		136,123		$	52.66		11,623		$	52.17
Granted		73,557		$	47.44		64,648		$	46.64		2,950		$	47.45		84,898		$	56.15		47,742		$	55.91		3,391		$	55.24
Vested		(76,082	)	$	23.66		(79,104	)	$	24.01		(6,182	)	$	25.05		(67,866	)	$	47.43		(61,475	)	$	50.02		(2,815	)	$	47.45
Forfeited		(5,911	)	$	30.64		(9,807	)	$	33.84		—		$	—		(595	)	$	58.79		(1,494	)	$	54.39		(760	)	$	56.88
Balance at September 30, 2017		247,069		$	33.10		242,788		$	31.79		12,750		$	30.90
Balance at March 31, 2020																	231,341		$	55.34		120,896		$	55.26		11,439		$	53.93

Viad Corp Omnibus Incentive Plan

~~The~~We grant share-based compensation awards to our officers, directors, and certain key employees pursuant to the 2017 Viad Corp Omnibus Incentive Plan (the “2017 Plan”) ~~was approved by Viad stockholders and was effective May 18, 2017. The 2017 Plan replaced the Company’s 2007 Viad Corp Omnibus Stock Plan (the “2007 Plan”)~~. ~~No further awards may be made under the 2007 Plan, although awards previously granted under the 2007 Plan will remain outstanding in accordance with their respective terms.~~ The 2017 Plan has a 10-year ~~life~~term and provides for the following types of awards: (a) incentive and non-qualified stock ~~options,~~options; (b) restricted stock and restricted stock ~~units,~~units; (c) performance units or performance ~~shares,~~shares; (d) stock appreciation ~~rights,~~rights; (e) cash-based ~~awards,~~awards; and (f) certain other stock-based awards. In June 2017, ~~Viad~~we registered 1,750,000 shares of common stock issuable under the 2017 Plan. As of ~~September 30, 2017,~~March 31, 2020, there were ~~1,746,927~~1,505,330 shares available for future grant under the 2017 Plan.

PUP Awards

In February 2016, the PUP Plan was amended to provide that PUP awards earned under the 2007 Plan may be payable in the form of cash or in shares of Viad common stock (or a combination of both). Previously, payouts could only be made in cash. The vesting of PUP award shares is based upon achievement of certain performance-based ~~criteria. The performance period of the shares is three years.~~criteria over a three-year period.

During the ~~nine~~three months ended ~~September 30, 2017, Viad~~March 31, 2020, we granted ~~$3.5~~PUP awards with a grant date fair value of $4.8 million of ~~PUP awards of~~ which ~~$1.4~~$1.8 million are payable in shares. ~~As of September 30, 2017 and December 31, 2016, Viad had recorded liabilities of $10.3 million and $7.6 million, respectively,~~Liabilities related to PUP ~~awards.~~awards were $0.4 million as of March 31, 2020 and $5.3 million as of December 31, 2019. In ~~March 2017, the~~2020, PUP awards granted in ~~2014~~2017 vested and ~~cash payouts of $3.7~~we paid $2.6 million in cash. NaN PUP awards were ~~distributed.~~paid in shares in 2020. In ~~March 2016, the~~2019, PUP awards granted in ~~2013~~2016 vested and we paid $5.6 million in cash ~~payouts of $0.2~~and $3.4 million ~~were distributed.~~in shares. In 2019, we withheld 25,771 shares for $1.5 million related to tax withholding requirements on vested PUP awards paid in shares.

Restricted Stock

As of ~~September 30, 2017,~~March 31, 2020, the unamortized cost of ~~all~~ outstanding restricted stock awards was ~~$3.1~~$4.4 million, which ~~Viad expects~~we expect to recognize ~~in the consolidated financial statements~~ over a weighted-average period of approximately ~~1.2~~1.8 years. ~~During~~We repurchased 17,674 shares for $1.1 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, the Company repurchased 26,916~~24,067 shares for ~~$1.3~~$1.4 million ~~and 24,432 shares for $0.7 million, respectively,~~during the three months ended March 31, 2019 related to tax withholding requirements on vested share-based awards.

Restricted Stock Units

~~As of both September 30, 2017 and December 31, 2016, Viad had aggregate~~Aggregate liabilities ~~recorded of $0.4 million~~ related to restricted stock ~~units. In February 2017, portions~~units were $0.1 million as of March 31, 2020 and $0.4 million as of December 31, 2019. During the ~~2012 and 2014~~three months ended March 31, 2020, restricted stock units vested and ~~cash payouts of $0.3~~we paid $0.2 million ~~were distributed. In February 2016, portions of~~in cash. During the ~~2011, 2012, and 2013~~three months ended March 31, 2019, restricted stock units vested and ~~cash payouts of $0.2~~we paid $0.3 million ~~were distributed.~~in cash.

Stock Options

During the three and nine months ended September 30, 2017, there was no stock option activity. As of both September 30, 2017 and December 31, 2016, there were 63,773 stock options outstanding and exercisable with a weighted-average exercise price of $16.62. As of September 30, 2017, there were no unrecognized costs related to non-vested stock option awards.

~~Note 3.~~ ~~Acquisition of Businesses~~

~~FlyOver Canada~~

On December 29, 2016, the Company acquired the assets and operations of FlyOver Canada, a recreational attraction that provides a virtual flight ride experience with a combination of motion seating, spectacular media, and visual effects including wind, scents, and mist. The purchase price was $68.8 million Canadian dollars (approximately $50.9 million U.S. dollars) in cash, subject to certain adjustments.

The following table summarizes the allocation of the aggregate purchase price paid and the amounts of assets acquired and liabilities assumed based on the estimated fair value as of the acquisition date. The allocation of the purchase price was completed as of March 31, 2017. stock option activity:

(in thousands)

Purchase price paid as:

Cash

$
50,920

Cash acquired

(6
)
Purchase price, net of cash acquired

50,914

Fair value of net assets acquired:

Inventories

$
11

Prepaid expenses

37

Property and equipment

10,867

Intangible assets

6,028

Total assets acquired

16,943

Accrued liabilities

118

Total liabilities assumed

118

Total fair value of net assets acquired

16,825

Excess purchase price over fair value of net assets acquired (“goodwill”)

$
34,089

	Shares			Weighted-Average Exercise Price
Options outstanding and exercisable at December 31, 2019		41,143		$	16.62
Exercised		(41,143	)	$	16.62
Options outstanding and exercisable at March 31, 2020		—		$	—

~~Under~~

Note 4. Acquisitions

2019 Acquisitions

Belton Chalet

On May 16, 2019, we acquired the ~~acquisition method~~Belton Chalet in Glacier National Park for total cash consideration of accounting, the purchase price as shown in the table above is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over the fair value of net assets acquired was recorded as goodwill. Goodwill of FlyOver Canada is included in the Pursuit business group and is a separate reporting unit. The primary factor that contributed to the purchase price resulting in the recognition of goodwill relates to future growth opportunities and the expansion of the FlyOver concept. Goodwill is expected to be deductible for tax purposes pursuant to Canadian tax regulations. The estimated values of current assets and liabilities were based upon their historical costs on the date of acquisition due to their short-term nature.$3.2 million. Transaction costs associated with the acquisition ~~of FlyOver Canada~~ were ~~$0.1~~$0.3 million ~~in 2017 and $0.5 million in 2016 and~~during 2019, which are included in ~~cost~~“Cost of ~~services in Viad’s condensed consolidated statements of operations.~~

~~Identified intangible assets acquired~~services” in the ~~FlyOver Canada acquisition totaled $6.0~~Consolidated Statements of Operations. We included these assets in the consolidated financial statements from the date of acquisition.

Mountain Park Lodges

On June 8, 2019, we acquired a 60% equity interest in Mountain Park Lodges’ group of 7 hotels and an undeveloped land parcel located in Jasper National Park for total consideration of $100.6 million ~~and consisted of trade names of $3.7~~Canadian dollars (approximately $76 million ~~customer relationships of $1.6 million, and non-compete agreements of $0.7 million. The weighted-average amortization period related to the intangible assets is 9.4 years.~~U.S. dollars).

The seven Mountain Park Lodges properties include: Sawridge Inn and Conference Centre (152 guest rooms); Pyramid Lake Resort (62 guest rooms); The Crimson Hotel (99 guest rooms); Chateau Jasper (119 guest rooms); Pocahontas Cabins (57 guest rooms); Marmot Lodge (107 guest rooms); and Lobstick Lodge (139 guest rooms).

As the majority owner of these properties, we consolidate 100% of the results of operations in our consolidated financial statements and record the 40% owners’ share of ~~FlyOver Canada have been~~the income or loss attributable to non-redeemable noncontrolling interest.

Transaction costs associated with the Mountain Park Lodges were $0.9 million in 2019, which are included in ~~Viad’s condensed~~“Corporate activities” in the Consolidated Statements of Operations. We included these assets and results of operations in the consolidated financial statements from the date of acquisition. During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, revenue related to ~~FlyOver Canada~~the Mountain Park Lodges was ~~$4.2~~$2.9 million and ~~$8.0 million, respectively, and~~ operating ~~income~~loss was ~~$2.2~~$2.4 million.

Identifiable intangible assets acquired in the Mountain Park Lodges acquisition were $20.2 million and ~~$2.5~~consist primarily of in-place leases, customer relationships, and trade names. The weighted average amortization period related to the intangible assets was approximately 30.8 years.

Pursuit – Sky Lagoon Attraction

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 acquired a 51% controlling interest for $13.2 million ~~respectively.~~

~~Other Acquisitions~~

~~In March 2017,~~in the ~~Company completed~~new entity that will manage the Pursuit Sky Lagoon attraction, which we will operate in partnership with Geothermal Lagoon ehf., the Icelandic entity that owns the lagoon assets. The noncontrolling interest’s carrying value was determined by the fair value of the noncontrolling interest as of the acquisition date and the noncontrolling interest’s share of the ~~Poken event engagement technology~~subsequent net income or loss. The amortization of the resulting operating contract intangible is not deductible for ~~total cash consideration of $1.7 million, subject~~tax purposes. We expect to ~~certain adjustments. These assets have been included~~open our new attraction in ~~Viad’s condensed consolidated financial statements from the date of acquisition.~~2021.

Supplementary pro forma financial information

The following table summarizes the unaudited pro forma results of operations attributable to Viad, assuming the ~~2016 acquisitions~~completion of ~~CATC Alaska Tourism Corporation (“CATC”) (acquired March 2016),~~ the ~~business of ON Event Services, LLC (“ON Services”) (acquired August 2016), and FlyOver Canada (acquired December 2016) had been completed~~Mountain Park Lodges acquisition was on January 1, ~~2016:~~2019. We do not consider the Pursuit Sky Lagoon attraction or the Belton Chalet significant acquisitions and accordingly, they are not included in the following pro forma results of operations:

Three Months Ended

Nine Months Ended

(in thousands, except per share data)

September 30, 2016

September 30, 2016

Revenue

$
389,877

$
991,818

Depreciation and amortization

$
14,427

$
39,565

Income from continuing operations

$
35,047

$
47,734

Net income attributable to Viad

$
33,834

$
46,198

Diluted income per share

$
1.67

$
2.28

Basic income per share

$
1.67

$
2.28

	Three Months Ended
(in thousands, except per share data)	March 31, 2019
Revenue	$	289,476
Depreciation and amortization	$	14,508
Loss from continuing operations	$	(18,760	)
Net loss attributable to Viad	$	(18,228	)
Diluted loss per share⁽¹⁾	$	(0.91	)
Basic loss per share	$	(0.91	)

⁽¹⁾	Diluted loss per share amount cannot exceed basic loss per share.

Note 4. 5. Inventories

We state inventories, which consist primarily of exhibit design and construction materials and supplies, as well as retail inventory, at the lower of cost (first-in, first-out and specific identification methods) or net realizable value.

The components of inventories consisted of the following:

	September 30,		December 31,		March 31,		December 31,
(in thousands)	2017		2016		2020		2019
Raw materials	$	18,455	$	16,846	$	11,895	$	11,788
Work in process		21,298		14,574
Finished goods						5,633		5,481
Inventories	$	39,753	$	31,420	$	17,528	$	17,269

Note 5. 6. Other Current Assets

Other current assets consisted of the following:

	September 30,		December 31,		March 31,		December 31,
(in thousands)	2017		2016		2020		2019
Prepaid vendor payments	$	6,407	$	3,633
Income tax receivable		4,282		3,614	$	18,492	$	13,250
Prepaid software maintenance		3,435		2,804		5,110		3,875
Prepaid insurance		3,030		2,479		5,027		5,573
Prepaid vendor payments						3,852		4,698
Prepaid taxes		1,038		850		653		917
Prepaid rent		769		327
Prepaid other		3,273		731		3,753		1,904
Other		1,739		4,011		490		637
Other current assets	$	23,973	$	18,449	$	37,377	$	30,854

Note 6. 7. Property and Equipment

Property and equipment consisted of the following:

	September 30,			December 31,			March 31,			December 31,
(in thousands)	2017			2016			2020			2019
Land and land interests	$	32,599		$	31,670		$	34,169		$	34,532
Buildings and leasehold improvements		214,844			185,987			361,971			377,754
Equipment and other		347,461			326,868			417,965			417,239
Gross property and equipment		594,904			544,525			814,105			829,525
Accumulated depreciation		(299,147	)		(264,667	)		(355,439	)		(353,974	)
Property and equipment, net (excluding finance leases)								458,666			475,551
Finance lease right-of-use assets, net								22,956			25,350
Property and equipment, net	$	295,757		$	279,858		$	481,622		$	500,901

Depreciation expense was ~~$12.5 million and $10.0~~$12.2 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and $32.9 million and $25.1~~$10.1 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2019.

~~Non-cash increases to property and equipment related to~~

Amortization expense on finance lease assets ~~acquired under capital leases were $1.1 million and $1.0~~was $0.9 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively. Non-cash increases to property~~$0.6 million for the three months ended March 31, 2019.

Property and equipment ~~purchases in~~purchased through accounts payable and accrued liabilities ~~were $0.8~~decreased $4.6 million ~~and $5.6 million for~~during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively.~~decreased $1.5 million during the three months ended March 31, 2019.

Note 7. 8. Other Investments and Assets

Other investments and assets consisted of the following:

	September 30,		December 31,		March 31,		December 31,
(in thousands)	2017		2016		2020		2019
Cash surrender value of life insurance(1)	$	23,167	$	23,197	$	24,951	$	24,873
Self-insured liability receivable		10,463		10,463		9,982		9,982
Workers’ compensation insurance security deposits		3,550		4,050
Contract costs						4,760		3,961
Other mutual funds		2,560		2,062		2,633		3,107
Other		7,005		4,525		3,218		3,196
Other investments and assets	$	46,745	$	44,297	$	45,544	$	45,119

⁽¹⁾	In May 2020, we terminated our life insurance policies and received cash proceeds of $24.8 million. Refer to Note 24 – Subsequent Events.

Note 8. 9. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill ~~were~~are as follows:

(in thousands)

GES U.S.

GES International

Pursuit

Total

Balance at December 31, 2016

$
148,277

$
34,460

$
71,285

$
254,022

Business acquisitions

—

1,060

—

1,060

Foreign currency translation adjustments

—

3,084

5,753

8,837

Balance at September 30, 2017

$
148,277

$
38,604

$
77,038

$
263,919

(in thousands)	GES North America			GES EMEA			Pursuit			Total
Balance at December 31, 2019	$	155,276		$	30,829		$	101,878		$	287,983
Goodwill impairment		(41,887	)		(29,042	)		(1,757	)		(72,686	)
Foreign currency translation adjustments		(534	)		(1,787	)		(8,363	)		(10,684	)
Balance at March 31, 2020	$	112,855		$	—		$	91,758		$	204,613

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. We use a discounted expected future cash flow methodology (income approach) in order to estimate the fair value of our reporting units for purposes of goodwill impairment testing.

In early March 2020, as a result of COVID-19 concerns, we began to see event postponements and cancellations at GES, as well as some cancelled bookings at Pursuit. This quickly escalated into the shut-down of event activity and tourism as government mandated closures and stay-at-home orders went more broadly into effect around the world. As demand halted, we essentially placed our businesses into a state of hibernation to preserve cash. As select areas of the global economy have begun to re-open, primarily at the discretion of local authorities, we are beginning to restart our business with enhanced health and safety protocols in place. On May 7, 2020, we re-opened FlyOver Iceland, and we have begun and expect to continue to re-open other Pursuit experiences in June as restrictions are eased. However, exhibition and event activity has yet to resume. For GES, we believe that as governments lift restrictions, events in certain geographies will start to take place again during the third quarter and we stand ready to reactivate areas of that business when it makes sense to do so.

During the three months ended March 31, 2020, we determined that an interim triggering event had occurred due to the deteriorating macroeconomic environment, disruptions to our operations, and the sustained decline in our stock price caused by COVID-19. As such, we performed an interim evaluation of goodwill as of March 31, 2020. As a result of the interim impairment test, we recorded non-cash goodwill impairment charges of $41.9 million associated with GES U.S., $29.0 million associated with GES EMEA, and $1.8 million associated with Pursuit’s Glacier Park Collection. We recorded an income tax benefit of $12.4 million related to these goodwill impairment charges.

Given the evolving, uncertain nature of COVID-19, and the uncertain government and consumer reactions, the estimates and assumptions regarding expected future cash flows, discount rates, and terminal values used in our goodwill impairment analysis require considerable judgment and are based on our current estimates of market conditions, financial forecasts, and industry trends. These estimates, however, have inherent uncertainties and different assumptions could lead to materially different results including additional impairment charges in the future.

Other intangible assets consisted of the following:

	September 30, 2017							December 31, 2016								March 31, 2020							December 31, 2019
(in thousands)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Useful Life (Years)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Amortized intangible assets:
Intangible assets subject to amortization:
Customer contracts and relationships	$	68,739	$	(21,505	)	$	47,234	$	67,762	$	(14,345	)	$	53,417	6.6	$	39,395	$	(25,144	)	$	14,251	$	72,219	$	(40,866	)	$	31,353
Operating contracts and licenses		10,038		(1,083	)		8,955		9,315		(652	)		8,663	37.2		37,924		(1,757	)		36,167		43,329		(1,881	)		41,448
In-place lease															13.7		13,897		(280	)		13,617		15,044		(231	)		14,813
Tradenames		8,665		(2,613	)		6,052		8,324		(1,440	)		6,884	7.4		5,397		(1,688	)		3,709		9,423		(4,338	)		5,085
Non-compete agreements		5,358		(2,682	)		2,676		5,190		(1,369	)		3,821	1.8		697		(453	)		244		2,077		(1,775	)		302
Other		896		(601	)		295		886		(458	)		428	7.9		742		(70	)		672		802		(66	)		736
Total amortized intangible assets		93,696		(28,484	)		65,212		91,477		(18,264	)		73,213			98,052		(29,392	)		68,660		142,894		(49,157	)		93,737
Unamortized intangible assets:
Indefinite-lived intangible assets:
Business licenses		460		—			460		460		—			460			562		—			562		571		—			571
Other intangible assets	$	94,156	$	(28,484	)	$	65,672	$	91,937	$	(18,264	)	$	73,673		$	98,614	$	(29,392	)	$	69,222	$	143,465	$	(49,157	)	$	94,308

Intangible asset amortization expense was ~~$3.3 million and $2.7~~$2.2 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and $9.6 million and $6.1~~$2.5 million for the ~~nine~~three months ended September 30, 2017 and 2016, respectively. The weighted-average amortization period of customer contracts and relationships is approximately 8.8 years, operating contracts and licenses is approximately 26.5 years, tradenames is approximately 7.2 years, non-compete agreements is approximately 2.5 years, and other amortizableMarch 31, 2019. We recorded an impairment charge to intangible assets ~~is approximately 2.6 years. The~~of $15.7 million during the three months ended March 31, 2020 related to our U.S. audio-visual production business.

At March 31, 2020, the estimated future amortization expense related to ~~amortized~~ intangible assets ~~held at September 30, 2017~~subject to amortization is as follows:

(in thousands)
Year ending December 31,
Remainder of 2017	$	2,812
2018		11,014
2019		9,946
2020		8,446
Remainder of 2020			$	4,305
2021		7,450		4,948
2022				4,832
2023				4,203
2024				3,282
Thereafter		25,544		47,090
Total	$	65,212	$	68,660

The duration and impact of COVID-19 may result in additional future impairment charges as facts and circumstances evolve.

Note 9. 10. Other Current Liabilities

Other current liabilities consisted of the following:

	September 30,		December 31,		March 31,		December 31,
(in thousands)	2017		2016		2020		2019
Continuing operations:
Accrued income tax payable	$	16,673	$	758
Accrued sales and use taxes					$	7,751	$	5,451
Commissions payable						7,450		8,274
Accrued employee benefit costs		5,935		2,624		6,249		3,564
Self-insured liability accrual		5,690		5,941
Commissions payable		3,777		639
Accrued sales and use taxes		2,623		4,279
Self-insured liability						6,001		5,668
Accommodation services deposits						5,863		959
Accrued dividends		2,116		2,119		2,023		2,019
Current portion of pension liability		1,793		1,963
Deferred rent		1,656		1,535
Accrued rebates		1,061		1,078
Current portion of pension and postretirement liabilities						1,722		1,899
Accrued restructuring						1,705		2,130
Accrued legal settlement						1,250		2,500
Accrued professional fees		924		794		1,125		1,248
Accrued restructuring		750		1,924
Other taxes		3,315		4,210		542		278
Other		4,909		1,774		4,398		5,187
Total continuing operations		51,222		29,638		46,079		39,177
Discontinued operations:
Self-insured liability						386		260
Environmental remediation liabilities		661		492		206		311
Self-insured liability accrual		332		162
Other		103		98		79		76
Total discontinued operations		1,096		752		671		647
Total other current liabilities	$	52,318	$	30,390	$	46,750	$	39,824

Note ~~10.~~ 11. Other Deferred Items and Liabilities

Other deferred items and liabilities consisted of the following:

	September 30,		December 31,		March 31,		December 31,
(in thousands)	2017		2016		2020		2019
Continuing operations:
Foreign deferred tax liability					$	27,374	$	32,570
Multi-employer pension plan withdrawal liability						15,508		15,693
Self-insured excess liability						9,982		9,982
Self-insured liability	$	14,644	$	12,981		8,314		8,682
Self-insured excess liability		10,463		10,463
Accrued compensation		9,402		8,514		4,409		7,485
Deferred rent		4,076		5,271
Foreign deferred tax liability		2,264		2,264
Accrued restructuring		1,903		1,858		2,250		2,383
Contract liabilities						1,418		125
Other		2,655		1,300		2,206		2,423
Total continuing operations		45,407		42,651		71,461		79,343
Discontinued operations:
Environmental remediation liabilities						2,125		1,964
Self-insured liability		3,011		3,748		1,778		2,018
Environmental remediation liabilities		1,716		3,091
Accrued income taxes		—		1,045
Other		126		199		379		382
Total discontinued operations		4,853		8,083		4,282		4,364
Total other deferred items and liabilities	$	50,260	$	50,734	$	75,743	$	83,707

Note ~~11.~~ 12. Debt and ~~Capital~~Finance Lease Obligations

The components of long-term debt and ~~capital~~finance lease obligations consisted of the following:

September 30,

December 31,

(in thousands, except interest rates)

2017

2016

Revolving credit facility and term loan 3.3% and 2.6% weighted-average interest rate at
   September 30, 2017 and December 31, 2016, respectively, due through 2019 ⁽¹⁾

$
184,688

$
212,750

Brewster Inc. revolving credit facility 2.7% weighted-average interest rate at
   December 31, 2016 ⁽¹⁾

—

36,456

Less unamortized debt issuance costs

(1,071
)

(1,464
)
Total debt

183,617

247,742

Capital lease obligations 4.2% and 4.9% weighted-average interest rate at September 30,
   2017 and December 31, 2016, respectively, due through 2021

1,584

1,469

Total debt and capital lease obligations

185,201

249,211

Current portion ⁽²⁾

(124,574
)

(174,968
)
Long-term debt and capital lease obligations

$
60,627

$
74,243

	March 31,			December 31,
(in thousands, except interest rates)	2020			2019
2018 Credit Facility, 3.1% weighted-average interest rate at March 31, 2020 and 3.9% at December 31, 2019, due through 2023⁽¹⁾	$	412,551		$	311,464
FlyOver Iceland Credit Facility, 4.9% weighted-average interest rate at March 31, 2020 and December 31, 2019, due through 2022⁽¹⁾		5,254			5,607
Less unamortized debt issuance costs		(1,708	)		(1,836	)
Total debt ⁽²⁾		416,097			315,235
Finance lease obligations, 7.8% weighted-average interest rate at March 31, 2020 and December 31, 2019, due through 2021		22,749			25,257
Total debt and finance lease obligations ⁽³⁾		438,846			340,492
Current portion ⁽⁴⁾⁽⁵⁾		(420,830	)		(5,330	)
Long-term debt and finance lease obligations	$	18,016		$	335,162

⁽¹⁾	Represents the weighted-average interest rate in effect at the respective periods, ~~for the revolving credit facilities and term loan borrowings,~~ including any applicable margin. The interest rates do not include amortization of debt issuance costs or commitment fees.

⁽²⁾

The estimated fair value of total debt and finance leases was $430.1 million as of March 31, 2020 and $339.4 million as of December 31, 2019. The fair value of debt was estimated by discounting the future cash flows using rates currently available for debt of similar terms and maturity, which is a Level 2 measurement. Refer to Note 13 – Fair Value Measurements.

⁽³⁾	Cash paid for interest on debt was $3.5 million for the three months ended March 31, 2020 and $2.7 million for the three months ended March 31, 2019.

⁽⁴⁾

Subsequent to the filing of our 2019 Form 10-K, we identified a correction related to the classification of the 2018 Credit Facility (as defined below) from current to long-term given that the 2018 Credit Facility’s contractual maturity is not within 12 months of the balance sheet date, and we were in compliance with all applicable covenants as of December 31, 2019. As a result, we corrected the classification of the debt on the accompanying condensed consolidated balance sheet and the disclosure related to classification of debt in the table above as of December 31, 2019 to present the 2018 Credit Facility as long-term. Except for this change, the correction had no impact upon this Quarterly Report on Form 10-Q. We determined that the error is not material to the previously issued financial statements.

⁽⁵⁾

~~Borrowings~~As discussed below, in May 2020, we entered into an amendment to our 2018 Credit Agreement (as defined below), which waived our financial covenants for the quarter ending June 30, 2020. However, we expect to be unable to meet our financial covenants beginning with the quarter ending September 30, 2020, and as a result, the entire $412.6 million balance outstanding under the ~~revolving credit facilities are~~2018 Credit Facility as of March 31, 2020 has been classified as a current ~~because all borrowed amounts~~liability. We are ~~due within one year.~~actively negotiating with our lenders to further amend our 2018 Credit Agreement; however, we cannot provide any assurance regarding our ability to obtain further amendments to the 2018 Credit Agreement in a timely manner, or on acceptable terms, if at all. If we are unable to obtain a waiver to our financial covenants, our lenders may exercise remedies against us, including the acceleration of our outstanding indebtedness We also expect to be unable to meet our financial covenants under our FlyOver Iceland Credit Facility beginning with the quarter ending September 30, 2020, and as a result, the $5.3 million balance outstanding as of March 31, 2020 has been classified as a current liability.

2018 Credit Agreement

Effective ~~December 22, 2014, Viad~~October 24, 2018, we entered into a ~~$300 million~~Second Amended and Restated Credit Agreement (the ~~“Credit~~“2018 Credit Agreement”). The 2018 Credit Agreement has a maturity date of October 24, 2023 and provides for a ~~senior credit facility in the aggregate amount of $300 million, which consists of a $175~~$450 million revolving credit facility ~~(the “Revolving~~(“2018 Credit Facility”) ~~and a $125 million term loan (the “Term Loan”)~~. ~~Loans under the Credit Agreement have a maturity date of December 22, 2019.~~ Proceeds from the ~~loans made under the~~2018 Credit ~~Agreement~~Facility were used to refinance certain of our outstanding debt ~~of the Company~~ and ~~will be used~~provide us with additional funds for ~~the Company’s~~our operations, growth initiatives, acquisitions, and other general corporate purposes in the ordinary course of ~~its~~ business. ~~Under the Credit Agreement, the Revolving~~The 2018 Credit Facility ~~and/or the Term Loan~~ may be increased up to an additional ~~$100~~$250 million under certain ~~circumstances. If such~~ circumstances ~~are met, the Company may obtain the additional borrowings under the Revolving Credit Facility, the Term Loan, or a combination of the two. The Revolving Credit Facility~~and has a ~~$40~~$20 million sublimit for letters of credit. Borrowings and letters of credit can be denominated in U.S. dollars, Euros, Canadian dollars, or British pounds. ~~Viad’s~~Our lenders under the 2018 Credit ~~Agreement~~Facility have a first perfected security interest in all of ~~the~~our personal property ~~of Viad,~~including GES, GES Event Intelligence Services, Inc., CATC Alaska Tourism Corporation (“CATC”), ON Event Services, LLC (“ON Services”), and ~~ON Services including 65 percent~~65% of the capital stock of our top-tier foreign ~~subsidiaries.~~

~~Effective February 24, 2016, Viad executed~~subsidiaries (other than Esja). Financial covenants include an ~~amendment (the “Credit Agreement Amendment”)~~interest coverage ratio of not less than 3.00 to ~~the Credit Agreement. The Credit Agreement Amendment modified the terms of the financial covenants~~1.00 and ~~the negative covenants related to acquisitions, restricted payments, and indebtedness. The overall maximum~~a leverage ratio ~~and minimum fixed charge coverage ratio are~~of not greater than 3.50 to 1.00, ~~and 1.75~~with a step-up to 4.00 to 1.00 ~~respectively, and will remain at those levels~~ for ~~the entire remaining term~~four quarters following a material acquisition of ~~the Credit Agreement. Acquisitions in substantially the same~~$50 million or ~~related lines of business~~more. Dividends are permitted ~~under the Credit Agreement Amendment,~~up to $15 million in any calendar year. In addition, we can declare and pay dividends or repurchase our common stock up to $20 million per calendar year. Dividends and repurchases above those thresholds are permitted as long as ~~the~~our pro forma leverage ratio is less than or equal to ~~3.00~~2.75 to 1.00. Viad can make dividends, distributions, and repurchases of its common stock up to $20 million per calendar year. Stock dividends, distributions, and repurchases above the $20 million limit are not subject to a liquidity covenant, and are permitted as long as the Company’s pro forma leverage ratio is less than or equal to 2.50 to 1.00 and there is no default or unmatured default, as defined in the Credit Agreement.

Unsecured debt is allowed ~~as long as~~provided we are in compliance with the ~~Company’s pro forma~~ leverage ~~ratio~~ratio. In addition, the unsecured debt must mature after the expiration of the 2018 Credit Facility, cannot have scheduled principal payments while the 2018 Credit Facility is ~~less~~in place, and any covenants for unsecured debt cannot be more restrictive than ~~or equal to 3.00 to 1.00.~~the 2018 Credit Facility. Significant other covenants ~~under the Credit Agreement that remain unchanged by the Credit Agreement Amendment~~ include limitations on investments, ~~sales/leases~~additional indebtedness, sales and dispositions of assets, ~~consolidations or mergers,~~ and liens on property. As of ~~September 30, 2017,~~March 31, 2020, the ~~fixed charge~~interest coverage ratio was ~~3.18~~9.16 to 1.00, the leverage ratio was ~~1.26~~3.13 to 1.00, and ~~Viad was~~we were in compliance with all covenants under the 2018 Credit Agreement.

Effective ~~December 28, 2016, Brewster Inc., part of Pursuit,~~July 23, 2019, we entered into ~~a credit agreement (the “Brewster~~an amendment (“Amendment No. 1”) to the 2018 Credit ~~Agreement”~~Agreement. Amendment No.1 modified the terms related to the withdrawal liabilities of single and multi-employer ERISA plans.

Effective May 8, 2020, we entered into an amendment (“Amendment No. 2”) ~~with a $38 million revolving credit facility (the “Brewster Revolving~~to the 2018 Credit ~~Facility”). The Brewster~~Agreement. Amendment No. 2, which among other things, waived our financial covenants for the quarter ending June 30, 2020 under the 2018 Credit Agreement ~~was used in connection~~and added a new minimum liquidity requirement; however, we expect to be unable to meet our financial covenants beginning with the Company’s acquisition of FlyOver Canada and has a maturity date of December 28, 2017. The Company intends to amend and extend the Brewster Revolving Credit Facility for one year. Additional loan proceeds will be used for potential future acquisitions in Canada and other general corporate purposes of Brewster Inc. Brewster Inc.’s lender has a first perfected security interest in all of the personal property of Brewster Inc. under the Brewster Revolving Credit Facility and a guaranty from Brewster Travel Canada Inc., the immediate parent of Brewster Inc., (secured by its present and future personal property), Viad, and all current or future subsidiaries of Viad that are required to be guarantors under Viad’s Credit Agreement.

~~As of~~quarter ending September 30, ~~2017, Viad’s total debt~~2020. Refer to Note 1 – Overview and ~~capital lease obligations were $185.2 million, consisting~~Basis of ~~outstanding~~Presentation (Impact of COVID-19 and Going Concern) and Note 24 – Subsequent Events for additional information.

We index borrowings under the Term Loan of $79.7 million, the Revolving Credit Facility of $105.0 million, and capital lease obligations of $1.6 million, offset in part by unamortized debt issuance costs of $1.1 million. As of September 30, 2017, Viad had $68.7 million of capacity remaining under the Revolving Credit Facility, reflecting borrowings of $105.0 million and $1.3 million in outstanding letters of credit. As of September 30, 2017, Brewster Inc. had $38.0 million of capacity remaining under the Brewster Revolving Credit Facility.

~~Borrowings under the Revolving~~2018 Credit Facility (of which GES, GES Event Intelligence Services, Inc., CATC, and ON Services are guarantors) ~~are indexed~~ to the prime rate or the London Interbank Offered Rate (“LIBOR”), plus appropriate spreads tied to ~~Viad’s~~our leverage ratio. As LIBOR will be phased out in 2021, our 2018 Credit Facility includes a method for determining an alternative or successor rate of interest that considers the new prevailing market convention. The vast majority of our borrowings under the 2018 Credit Facility are indexed to LIBOR. Commitment fees and letters of credit fees are also tied to ~~Viad’s~~our leverage ratio. The fees on the unused portion of the 2018 Credit Facility ~~are currently 0.35 percent annually.~~were 0.35% annually as of March 31, 2020. We index only our borrowings under the 2018 Credit Facility and the discount rates we use to account for some leases to LIBOR. We do not expect the alternative or successor rate to LIBOR to have a material impact on either our 2018 Credit Facility or the accounting for our leases.

On March 17, 2020, we borrowed $123.0 million under the 2018 Credit Facility as a proactive measure to increase our cash position and preserve financial flexibility due to uncertainty in the global markets resulting from the COVID-19 outbreak.

As of March 31, 2020, capacity remaining under the 2018 Credit Facility was $33.8 million, reflecting borrowings of $412.6 million and $3.6 million in outstanding letters of credit. In early April 2020, we borrowed $31 million under the 2018 Credit Facility.

FlyOver Iceland Credit Facility

Effective February 15, 2019, FlyOver Iceland ehf., a wholly-owned subsidiary of Esja, entered into a credit agreement with a €5.0 million (approximately $5.6 million U.S. dollars) credit facility (the “FlyOver Iceland Credit Facility”) with a maturity date of March 1, 2022. We used the loan proceeds to complete the development of the FlyOver Iceland attraction. In response to COVID-19, we entered into an addendum to the FlyOver Iceland Credit Facility effective May 14, 2020 wherein the principal and interest payments will be deferred for six months beginning June 1, 2020, with the first payment due December 1, 2020. The addendum also extended the maturity date to September 1, 2022. There were no other changes to the terms of the FlyOver Iceland Credit Facility. We expect to be unable to meet our financial covenants under our FlyOver Iceland Credit Facility beginning with the quarter ending September 30, 2017, Viad, on behalf of its subsidiaries, had certain obligations under guarantees to third parties. These guarantees are not subject to liability recognition in the condensed consolidated financial statements and relate to leased facilities entered into by Viad’s subsidiary operations. The Company would generally be required to make payments to the respective third parties under these guarantees in the event that the related subsidiary could not meet its own payment obligations. The maximum potential amount of future payments that Viad would be required to make under all guarantees existing as of September 30, 2017 would be $7.5 million. These guarantees relate to facilities leased by the Company through September 2021. There are no recourse provisions that would enable Viad to recover from third parties any payments made under the guarantees. Furthermore, there are no collateral or similar arrangements whereby Viad could recover payments.2020.

The estimated fair value of total debt was $179.8 million and $252.8 million as of September 30, 2017 and December 31, 2016, respectively. The fair value of debt was estimated by discounting the future cash flows using rates currently available for debt of similar terms and maturity.

~~Cash paid for interest on debt was $5.5 million and $3.7 million for the nine months ended September 30, 2017 and 2016, respectively.~~

Note ~~12.~~ 13. Fair Value Measurements

The fair value of an asset or liability is defined as the price that would be received ~~to sell~~by selling an asset or ~~paid~~paying to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value guidance requires an entity to maximize the use of quoted prices and other observable inputs and minimize the use of unobservable inputs when measuring fair value, and also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value.

~~Viad measures its money~~Money market mutual funds and certain other mutual fund investments are measured at fair value on a recurring basis using Level 1 inputs. The fair value information related to these assets is summarized in the following tables:

			Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
(in thousands)	September 30, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		March 31, 2020		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds⁽¹⁾	$	119	$	119	$	—	$	—	$	77,125	$	77,125	$	—	$	—
Other mutual funds⁽²⁾		2,560		2,560		—		—		2,633		2,633		—		—
Total assets at fair value on a recurring basis	$	2,679	$	2,679	$	—	$	—	$	79,758	$	79,758	$	—	$	—

			Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
(in thousands)	December 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2019		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds⁽¹⁾	$	118	$	118	$	—	$	—	$	123	$	123	$	—	$	—
Other mutual funds⁽²⁾		2,062		2,062		—		—		3,107		3,107		—		—
Total assets at fair value on a recurring basis	$	2,180	$	2,180	$	—	$	—	$	3,230	$	3,230	$	—	$	—

⁽¹⁾

~~Money~~We include money market ~~mutual~~ funds ~~are included~~ in “Cash and cash equivalents” in the ~~condensed consolidated balance sheets. These~~Condensed Consolidated Balance Sheets. We classify these investments ~~are classified~~ as available-for-sale and ~~were recorded~~record them at fair value. There have been no0 realized gains or losses related to these investments and ~~the Company has~~we have not experienced any redemption restrictions with respect to any of the money market mutual funds. A portion of the funds borrowed during the three months ended March 31, 2020 under the 2018 Credit Facility were deposited into money market funds. Refer to Note 12 – Debt and Finance Lease Obligations for additional information.

⁽²⁾

~~Other~~We include other mutual funds ~~are included~~ in “Other investments and assets” in the condensed consolidated balance sheets. These investments are classified as available-for-sale and were recorded at fair value. As of September 30, 2017 and December 31, 2016, there were unrealized gains of $0.9 million ($0.6 million after-tax) and $0.7 million ($0.4 million after tax), respectively, which were included in “Accumulated other comprehensive income (loss)” (“AOCI”) in the condensed consolidated balance sheets.Condensed Consolidated Balance Sheets.

The carrying values of cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term ~~maturities~~nature of these instruments. Refer to Note 11 12 – Debt and ~~Capital~~Finance Lease Obligations for the estimated fair value of debt obligations.

Note ~~13.~~ ~~Stockholders’ Equity~~14. Accumulated Other Comprehensive Income (Loss)

~~The following represents a reconciliation of the carrying amounts of stockholders’ equity attributable to Viad and the noncontrolling interest for the nine months ended September 30, 2017 and 2016:~~

(in thousands)

Total Viad
Stockholders’
Equity

Noncontrolling
Interest

Total
Stockholders’
Equity

Balance at December 31, 2016

$
357,355

$
13,283

$
370,638

Net income

79,381

747

80,128

Dividends on common stock ($0.30 per share)

(6,119
)

—

(6,119
)
Common stock purchased for treasury

(1,272
)

—

(1,272
)
Employee benefit plans

5,916

—

5,916

Unrealized foreign currency translation adjustment

18,820

—

18,820

Other changes to AOCI

327

327

Other

56

—

56

Balance at September 30, 2017

$
454,464

$
14,030

$
468,494

(in thousands)

Total Viad
Stockholders’
Equity

Noncontrolling
Interest

Total
Stockholders’
Equity

Balance at December 31, 2015

$
322,581

$
12,757

$
335,338

Net income

46,318

765

47,083

Dividends on common stock ($0.30 per share)

(6,079
)

—

(6,079
)
Common stock purchased for treasury

(679
)

—

(679
)
Employee benefit plans

4,693

—

4,693

Unrealized foreign currency translation adjustment

723

—

723

Tax benefits from share-based compensation

60

—

60

Other changes to AOCI

162

—

162

Other

28

—

28

Balance at September 30, 2016

$
367,807

$
13,522

$
381,329

Changes in ~~AOCI~~accumulated other comprehensive income (“AOCI”) by component are as follows:

(in thousands)

Unrealized Gains
on Investments

Cumulative
Foreign Currency Translation Adjustments

Unrecognized Net Actuarial Loss and Prior Service Credit, Net

Accumulated
Other
Comprehensive
Income (Loss)

Balance at December 31, 2016

$
421

$
(29,084
)

$
(10,728
)

$
(39,391
)
Other comprehensive income before reclassifications

188

18,820

—

19,008

Amounts reclassified from AOCI, net of tax

(45
)

—

184

139

Net other comprehensive income

143

18,820

184

19,147

Balance at September 30, 2017

$
564

$
(10,264
)

$
(10,544
)

$
(20,244
)

(in thousands)	Cumulative Foreign Currency Translation Adjustments			Unrecognized Net Actuarial Loss and Prior Service Credit, Net			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2019	$	(23,799	)	$	(11,900	)	$	(35,699	)
Other comprehensive loss before reclassifications		(28,158	)		—			(28,158	)
Amounts reclassified from AOCI, net of tax		—			314			314
Net other comprehensive income (loss)		(28,158	)		314			(27,844	)
Balance at March 31, 2020	$	(51,957	)	$	(11,586	)	$	(63,543	)

(in thousands)	Cumulative Foreign Currency Translation Adjustments			Unrecognized Net Actuarial Loss and Prior Service Credit, Net			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018	$	(36,332	)	$	(11,643	)	$	(47,975	)
Other comprehensive income before reclassifications		4,780			—			4,780
Amounts reclassified from AOCI, net of tax		—			85			85
Net other comprehensive income		4,780			85			4,865
Balance at March 31, 2019	$	(31,552	)	$	(11,558	)	$	(43,110	)

~~The following table presents information about reclassification adjustments out~~Amounts reclassified that relate to our defined benefit pension and postretirement plans include the amortization of ~~AOCI:~~prior service costs and actuarial net losses recognized during each period presented. We recorded these costs as components of net periodic cost for each period presented. Refer to Note 17 – Pension and Postretirement Benefits for additional information.

Nine Months Ended September 30,

Affected Line Item in the
Statement Where Net
Income is Presented
(in thousands)

2017

2016

Unrealized gains on investments

$
(72
)

$
(67
)

Interest income
Tax effect

27

25

Income taxes

$
(45
)

$
(42
)

Recognized net actuarial loss⁽¹⁾

$
596

$
538

Amortization of prior service credit⁽¹⁾

(323
)

(377
)

Tax effect

(89
)

(61
)

Income taxes

$
184

$
100

⁽¹⁾	~~Amount included in pension expense. Refer to Note 16~~ – ~~Pension and Postretirement Benefits.~~

Note ~~14.~~ ~~Income~~15. Loss Per Share

The components of basic and diluted income per share are as follows:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in thousands, except per share data)	2017			2016			2017			2016			2020			2019
Net income attributable to Viad (diluted)	$	44,657		$	33,792		$	79,381		$	46,318
Net loss attributable to Viad (diluted)													$	(86,585	)	$	(17,777	)
Less: Allocation to non-vested shares		(539	)		(454	)		(993	)		(629	)		—			—
Net income allocated to Viad common stockholders (basic)	$	44,118		$	33,338		$	78,388		$	45,689
Adjustment to the redemption value of redeemable noncontrolling interest														(126	)		(87	)
Net loss allocated to Viad common stockholders (basic)													$	(86,711	)	$	(17,864	)
Basic weighted-average outstanding common shares		20,166			20,017			20,130			19,972			20,215			20,076
Additional dilutive shares related to share-based compensation		270			190			252			178			—			—
Diluted weighted-average outstanding shares		20,436			20,207			20,382			20,150			20,215			20,076
Income per share:
Basic income attributable to Viad common stockholders	$	2.19		$	1.67		$	3.89		$	2.29
Diluted income attributable to Viad common stockholders	$	2.19		$	1.67		$	3.89		$	2.29
Loss per share:
Basic loss attributable to Viad common stockholders													$	(4.29	)	$	(0.89	)
Diluted loss attributable to Viad common stockholders⁽¹⁾													$	(4.29	)	$	(0.89	)

⁽¹⁾	Diluted loss per share amount cannot exceed basic loss per share.

~~During the nine months ended September 30, 2017, 11,000 shares of share-based awards were not included in the computation of dilutive shares outstanding because the effect would be anti-dilutive.~~

Note ~~15.~~ 16. Income Taxes

The effective tax ~~rates~~rate was 15.2% for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016 were 30.4 percent and 33.8 percent, respectively. The effective tax rates~~29.8% for the ~~nine~~three months ended ~~September 30, 2017 and 2016 were 29.0 percent and 33.1 percent, respectively.~~March 31, 2019.

The income tax provision was computed based on ~~the Company’s~~our estimated annualized effective tax rate and the full-year forecasted income ~~by jurisdiction expected for~~or loss plus the ~~full year, including the~~tax impact of ~~any~~ unusual, infrequent, or ~~non-recurring items.~~nonrecurring significant items during the period. The effective tax rate for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was less than the federal statutory rate of ~~35.0 percent~~21% primarily due to ~~foreign income taxed at lower rates, the release~~no tax benefit recognized on some of the ~~valuation allowance against certain foreign net operating losses,~~impairments recorded on goodwill (see Note 9 – Goodwill and ~~the adoption of new accounting guidance, which requires the excess tax benefit on share-based compensation to be recorded to income tax expense rather than equity.~~Intangible Assets). The effective tax rate for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2019 was ~~less~~more than the federal statutory rate primarily due to foreign ~~income~~losses taxed at ~~lower rates.~~higher rates, equity

compensation vested during the quarter, and the tax benefit of a legal settlement that was treated as an unusual item and not included in the annualized tax rate calculation.

~~During the nine months ended September 30, 2017 and 2016,~~Net cash paid for income taxes was ~~$10.9~~$3.3 million for the three months ended March 31, 2020 and ~~$8.4~~$3.4 million ~~respectively.~~for the three months ended March 31, 2019.

Note ~~16.~~ 17. Pension and Postretirement Benefits

The components of net periodic benefit cost of ~~Viad’s~~our pension and postretirement benefit plans for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016 included~~2019 consist of the following:

Domestic Plans

Pension Plans

Postretirement Benefit Plans

Foreign Pension Plans

(in thousands)

2017

2016

2017

2016

2017

2016

Service cost

$
8

$
54

$
22

$
5

$
138

$
123

Interest cost

197

257

92

126

120

124

Expected return on plan assets

(55
)

(62
)

—

—

(156
)

(142
)
Amortization of prior service credit

—

—

(107
)

(125
)

—

—

Recognized net actuarial loss

106

105

3

46

48

1

Net periodic benefit cost

$
256

$
354

$
10

$
52

$
150

$
106

~~The components of net periodic benefit cost of Viad’s pension and postretirement benefit plans for the nine months ended September 30, 2017 and 2016 included the following:~~

	Domestic Plans																		Domestic Plans
	Pension Plans						Postretirement Benefit Plans						Foreign Pension Plans						Pension Plans						Postretirement Benefit Plans						Foreign Pension Plans
(in thousands)	2017			2016			2017			2016			2017			2016			2020			2019			2020			2019			2020			2019
Service cost	$	56		$	74		$	69		$	74		$	396		$	368		$	—		$	15		$	15		$	20		$	110		$	101
Interest cost		604			774			311			429			348			368			160			214			88			124			84			94
Expected return on plan assets		(162	)		(192	)		—			—			(450	)		(421	)		(1	)		(34	)		—			—			(131	)		(122	)
Amortization of prior service credit		—			—			(323	)		(377	)		—			—			—			—			(36	)		(47	)		—			—
Recognized net actuarial loss		336			318			123			221			137			2			135			106			82			77			46			38
Net periodic benefit cost	$	834		$	974		$	180		$	347		$	431		$	317		$	294		$	301		$	149		$	174		$	109		$	111

~~Viad expects~~

We expect to contribute ~~$1.6~~$1.4 million to ~~its~~our funded pension plans, $0.9 million to ~~its~~our unfunded pension plans, and ~~$1.1~~$1.0 million to ~~its~~our postretirement benefit plans in ~~2017.~~2019. During the ~~nine~~three months ended ~~September 30, 2017, Viad~~March 31, 2020, we contributed ~~$1.4~~$0.1 million to ~~its~~our funded pension plans, ~~$0.5~~$0.2 million to ~~its~~our unfunded pension plans, and ~~$1.1~~$0.2 million to ~~its~~our postretirement benefit plans.

Note ~~17.~~ 18. Restructuring Charges

~~The Company has taken~~GES

As part of our efforts to drive efficiencies and simplify our business operations, we took certain restructuring actions designed to reduce ~~the Company’s~~our cost structure primarily within ~~GES U.S. and GES International, as well as~~GES. During 2020, we completed some strategic simplification actions, including the elimination of certain positions atprimarily in the ~~corporate office. As a result, the Company~~United Kingdom.

Other Restructurings

We recorded restructuring charges in connection with the consolidation of certain support functions at our corporate headquarters. These charges primarily ~~consisting~~consist of severance and related benefits ~~as a result of workforce~~due to headcount reductions and charges related to the ~~consolidation and~~ downsizing of ~~facilities representing the remaining operating lease obligations (net of estimated sublease income) and related costs.~~facilities.

Changes to the restructuring liability by major restructuring activity are as follows:

	GES						Other Restructurings						GES						Other Restructurings
(in thousands)	Severance & Employee Benefits			Facilities			Severance & Employee Benefits			Total			Severance & Employee Benefits			Facilities			Severance & Employee Benefits			Total
Balance at December 31, 2016	$	2,274		$	1,092		$	416		$	3,782
Balance at December 31, 2019													$	2,935		$	1,339		$	239		$	4,513
Restructuring charges		442			237			138			817			664			(8	)		195			851
Cash payments		(1,048	)		(449	)		(451	)		(1,948	)		(808	)		(223	)		(262	)		(1,293	)
Adjustment to liability		—			—			2			2			(80	)		(46	)		10			(116	)
Balance at September 30, 2017	$	1,668		$	880		$	105		$	2,653
Balance at March 31, 2020													$	2,711		$	1,062		$	182		$	3,955

As of ~~September 30, 2017,~~March 31, 2020, we expect to pay all but $1.5 million of the liabilities related to severance and employee benefits ~~are expected to be paid~~ by the end of ~~2018. Additionally, the~~2020. The liability related to future lease payments will be paid over the remaining lease ~~terms for GES.~~terms. Refer to Note 19 22 – Segment Information, for information regarding restructuring charges by segment.

Note 19. Leases and Other

The balance sheet presentation of our operating and finance leases is as follows:

		March 31,		December 31,
(in thousands)	Classification on the Condensed Consolidated Balance Sheet	2020		2019
Assets:
Operating lease assets	Operating lease right-of-use assets	$	96,719	$	103,314
Finance lease assets	Property and equipment, net		22,956		25,350
Total lease assets		$	119,675	$	128,664

Liabilities:
Current:
Operating lease obligations	Operating lease obligations	$	20,708	$	22,180
Finance lease obligations	Current portion of debt and finance lease obligations		3,025		3,386
Noncurrent:
Operating lease obligations	Long-term operating lease obligations		78,685		82,851
Finance lease obligations	Long-term debt and finance lease obligations		19,724		21,871
Total lease liabilities		$	122,142	$	130,288

The components of lease expense consisted of the following:

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Finance lease cost:
Amortization of right-of-use assets	$	918	$	589
Interest on lease liabilities		417		67
Operating lease cost		6,727		5,992
Short-term lease cost		310		215
Variable lease cost		1,699		1,815
Sublease income⁽¹⁾		—		(172	)
Total lease cost, net	$	10,071	$	8,506

⁽¹⁾Sublease income excludes rental income from owned assets, which is recorded in revenue.

Other information related to operating and finance leases are as follows:

	Three Months Ended
	March 31,
(in thousands)	2020			2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,529		$	6,198
Operating cash flows from finance leases	$	160		$	67
Financing cash flows from finance leases	$	777		$	522
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	779		$	11,439
Finance leases	$	730		$	1,182

	March 31,			December 31,
	2020			2019
Weighted-average remaining lease term (years):
Operating leases		8.21			8.17
Finance leases		13.24			14.01
Weighted-average discount rate:
Operating leases		5.74	%		5.77	%
Finance leases		7.77	%		7.73	%

As of March 31, 2020, the estimated future minimum lease payments under non-cancellable leases, excluding variable leases and variable non-lease components, are as follows:

(in thousands)	Operating Leases			Finance Leases			Total
Remainder of 2020	$	18,496		$	3,680		$	22,176
2021		19,571			4,181			23,752
2022		16,152			3,687			19,839
2023		13,159			3,166			16,325
2024		9,959			2,468			12,427
Thereafter		54,919			22,550			77,469
Total future lease payments		132,256			39,732			171,988
Less: Amount representing interest		(32,863	)		(16,983	)		(49,846	)
Present value of minimum lease payments		99,393			22,749			122,142
Current portion		20,708			3,025			23,733
Long-term portion	$	78,685		$	19,724		$	98,409

As of March 31, 2020, the estimated future minimum rentals under non-cancellable leases, which includes rental income from facilities that we own, are as follows:

(in thousands)
Remainder of 2020	$	1,516
2021		1,839
2022		1,515
2023		1,329
2024		1,091
Thereafter		4,789
Total minimum rents	$	12,079

Leases Not Yet Commenced

As of March 31, 2020, we had executed certain facility and land leases for which we did not have control of the underlying assets. Accordingly, we did not record the lease liabilities and right-of-use assets on our Condensed Consolidated Balance Sheets. These leases include future planned attractions for Pursuit that are currently in the planning or development phase and that we expect the lease commencement dates to begin between fiscal years 2021 and 2022 with lease terms of 15 to 47 years.

Note ~~18.~~ 20. Litigation, Claims, Contingencies, and Other

~~Viad and certain of its subsidiaries~~We are plaintiffs or defendants to various actions, proceedings, and pending claims, some of which involve, or may involve, compensatory, punitive, or other damages. Litigation is subject to many uncertainties and it is possible that some of the legal actions, proceedings, or claims could be decided against ~~Viad.~~us. During the three months ended March 31, 2019, we recorded an $8.5 million charge to resolve a legal dispute at GES involving a former industry contractor. Although the amount of liability as of ~~September 30, 2017~~March 31, 2020 with respect to ~~these~~unresolved legal matters is not ascertainable, ~~Viad believes~~we believe that any resulting liability, after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on ~~Viad’s~~our business, financial position, or results of operations.

~~Viad is~~We are subject to various U.S. federal, state, and foreign laws and regulations governing the prevention of pollution and the protection of the environment in the jurisdictions in which ~~Viad has~~we have or had operations. If ~~the Company fails~~we fail to comply with these environmental laws and regulations, civil and criminal penalties could be imposed, and ~~Viad~~we could become subject to regulatory enforcement actions in the form of injunctions and cease and desist orders. As is the case with many companies, ~~Viad~~we also ~~faces~~face exposure to actual or potential claims and lawsuits involving environmental matters relating to ~~its~~our past operations. As of ~~September 30, 2017, Viad~~March 31, 2020, we had recorded environmental remediation liabilities of ~~$2.4~~$2.3 million related to previously sold operations. Although ~~it is~~we are a party to certain environmental disputes, ~~Viad believes~~we believe that any resulting liabilities, after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on ~~the Company’s~~our financial position or results of operations.

As of ~~September 30, 2017, Viad,~~March 31, 2020, on behalf of ~~its~~our subsidiaries, we had certain obligations under guarantees to third parties. These guarantees are not subject to liability recognition in the condensed consolidated financial statements and relate to leased facilities and equipment leases entered into by ~~Viad’s~~our subsidiary operations. ~~The Company~~We would generally be required to make payments to the respective third parties under these guarantees in the event that the related subsidiary could not meet its own payment obligations. The maximum potential amount of future payments that ~~Viad~~we would be required to make under all guarantees existing as of ~~September 30, 2017~~March 31, 2020 would be ~~$7.5~~ $75.3

million. These guarantees relate to our leased equipment and facilities ~~leased by the Company~~ through ~~September 2021.~~January 2040. There are no0 recourse provisions that would enable ~~Viad~~us to recover from third parties any payments made under the guarantees. Furthermore, there are no collateral or similar arrangements ~~whereby Viad~~pursuant to which we could recover payments.

A significant ~~portion~~number of ~~Viad’s~~our employees are unionized and ~~the Company is~~we are a party to approximately 100 collective-bargaining agreements, with approximately one-third requiring renegotiation each year. If ~~the Company was~~we are unable to reach an agreement with a union during the collective-bargaining process, the union may call for a strike or work stoppage, which may, under certain circumstances, adversely impact ~~the Company’s businesses~~our business and results of operations. ~~Viad believes~~We believe that relations with ~~its~~our employees are satisfactory and that collective-bargaining agreements expiring in ~~2017~~2020 will be renegotiated in the ordinary course of business without having a material adverse effect on Viad’s operations. The Company entered into showsite and warehouse agreements with the Chicago Teamsters Local 727, effective January 1, 2014, and those agreements contain provisions that allow the parties to re-open negotiation of the agreements on pension-related issues. The Company is in informal discussions regarding those issues with all relevant parties to resolve those issues in a manner that will be reasonable and equitable to employees, customers, and stockholders.business. Although ~~the Company’s~~our labor relations are currently stable, disruptions ~~pending the outcome of the Chicago Teamsters Local 727 negotiations~~ could occur, ~~as they could with any collective-bargaining agreement negotiation,~~ with the possibility of an adverse impact on the operating results of GES.

~~Viad’s businesses contribute to various multi-employer pension plans based on obligations arising under~~ During the three months ended June 30, 2019, we finalized the terms of a new collective-bargaining ~~agreements covering its union-represented employees. Based upon~~agreement with the ~~information available to Viad~~Teamsters Local 727 union. The terms included a withdrawal from plan administrators, management believes that several of these multi-employer plans are underfunded. The Pension Protection Act of 2006 requires pension plans underfunded at certain levels to reduce, over defined time periods, the underfunded ~~status. In addition, under current laws,~~Central States Pension Plan. Accordingly, we recorded a charge of $15.5 million, which represents the ~~termination~~estimated present value of ~~a plan, or a voluntary withdrawal from a plan by Viad, or a shrinking contribution base~~future contributions we will be required to amake to the plan as a result of ~~the insolvency or~~this withdrawal and $0.2 million of other contributing employers to such plan, would require Viad to make payments to such plan for its proportionate share of the plan’s unfunded vested liabilities. As of September 30, 2017, the amount of additional funding, if any, that Viad would be required to make related to multi-employer pension plans is not ascertainable.withdrawal costs.

~~Viad is~~We are self-insured up to certain limits for workers’ compensation ~~employee health benefits,~~and general liabilities, which includes automobile, product ~~and~~ general liability, and client property loss claims. The aggregate amount of insurance liabilities (up to ~~the Company’s~~our retention limit) related to ~~Viad’s~~our continuing operations was ~~$20.2~~$14.3 million as of ~~September 30, 2017~~March 31, 2020, which includes ~~$14.3~~$9.8 million related to workers’ compensation liabilities, and ~~$5.9~~$4.5 million related to ~~general/auto~~general liability claims. ~~Viad has~~We have also retained and provided for certain workers’ compensation insurance liabilities in conjunction with previously sold businesses of ~~$3.3~~$2.2 million as of ~~September 30, 2017, related to workers’ compensation liabilities.~~March 31, 2020. We are also self-insured for certain employee health benefits and the estimated employee health benefit claims incurred but not yet reported was $1.5 million as of March 31, 2020. Provisions for losses for claims incurred, including actuarially derived estimated claims incurred but not yet reported, are made based on ~~Viad’s~~our historical experience, claims frequency, and other factors. A change in the assumptions used could result in an adjustment to recorded liabilities. ~~Viad has~~We have purchased insurance for amounts in excess of the self-insured levels, which generally range from $0.2 million to $0.5 million on a per claim basis. ~~Viad does~~We do not maintain a self-insured retention pool fund as claims are paid from current cash resources at the time of settlement. ~~Viad’s~~Our net cash payments in connection with these insurance liabilities were ~~$1.3 million and~~ $1.5 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and $3.8 million and $3.9~~$1.8 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2019.

In addition, as of ~~September 30, 2017, Viad~~March 31, 2020, we have recorded insurance liabilities of ~~$10.5~~$10.0 million related to continuing operations, which represents the amount for which ~~Viad remains~~we remain the primary obligor after self-insured insurance limits, without taking into consideration the above-referenced insurance coverage. Of this total, ~~$6.9~~$6.5 million related to workers’ compensation liabilities and ~~$3.6~~$3.5 million related to general/auto liability claims, which are recorded in other deferred items and liabilities in ~~Viad’s condensed consolidated balance sheets~~the Condensed Consolidated Balance Sheets with a corresponding receivable in other investments.

Note 21. Redeemable Noncontrolling Interest

On November 3, 2017, we acquired the controlling interest (54.5% of the common stock) in Esja, a private corporation in Reykjavik, Iceland. Through Esja and its wholly-owned subsidiary, we are operating a new FlyOver Iceland attraction.

The minority Esja shareholders have the right to sell (or “put”) their Esja shares to us based on a multiple of 5.0x EBITDA as calculated on the trailing 12 months from the most recently completed quarter before the put option exercise. The put option is only exercisable after 36 months of business operation (the “Reference Date”) and if the FlyOver Iceland attraction has earned a minimum of €3.25 million in unadjusted EBITDA during the most recent fiscal year and during the trailing 12-month period prior to exercise (the “Put Option Condition”). The put option is exercisable during a period of 12 months following the Reference Date (the “Option Period”) if the Put Option Condition has been met. If the Put Option Condition has not been met during the first Option Period, the Reference Date will be extended for an additional 12 months up to three times. If after 72 months, the FlyOver Iceland attraction has not achieved the Put Option Condition, the put option expires. If the Put Option Condition is met during any of the Option Periods, yet the shares are not exercised prior to the end of the 12-month Option Period, the put option will expire.

The noncontrolling interest’s carrying value is determined by the fair value of the noncontrolling interest as of the acquisition date and the noncontrolling interest’s share of the subsequent net income or loss. This value is benchmarked against the redemption value of the sellers’ put option. The carrying value is adjusted to the redemption value, provided that it does not fall below the initial carrying value, as determined by the purchase price allocation. We have made a policy election to reflect any changes caused by such an adjustment to retained earnings, rather than to current earnings.

Changes in the redeemable noncontrolling interest are as follows:

(in thousands)
Balance at December 31, 2019	$	6,172
Net loss attributable to redeemable noncontrolling interest		(517	)
Adjustment to the redemption value		126
Foreign currency translation adjustment		(873	)
Balance at March 31, 2020	$	4,908

Note ~~19.~~ 22. Segment Information

~~Viad measures~~We measure the profit and performance of ~~its~~our operations on the basis of segment operating income (loss), which excludes restructuring charges and recoveries and impairment ~~charges and recoveries.~~charges. Intersegment sales are eliminated in consolidation and intersegment transfers are not significant. Corporate activities include expenses not allocated to operations. Depreciation and amortization and share-based compensation expense are the only significant non-cash items for the reportable segments.

~~Viad’s~~Our reportable segments, with reconciliations to consolidated totals, are as follows:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in thousands)	2017			2016			2017			2016			2020			2019
Revenue:
GES:
U.S.	$	184,761		$	232,484		$	684,003		$	636,299
International		54,040			60,926			203,222			187,689
GES North America													$	251,758		$	223,241
GES EMEA														42,716			54,376
Intersegment eliminations		(6,682	)		(6,425	)		(17,126	)		(15,439	)		(1,989	)		(2,690	)
Total GES		232,119			286,985			870,099			808,549			292,485			274,927
Pursuit		106,980			97,402			159,581			143,111			13,523			10,667
Corporate eliminations ⁽¹⁾		—			(1,922	)		—			(3,086	)
Total revenue	$	339,099		$	382,465		$	1,029,680		$	948,574		$	306,008		$	285,594
Segment operating income (loss):
GES:
U.S.	$	(2,851	)	$	14,543		$	39,319		$	37,907
International		(2,870	)		644			8,491			4,951
GES North America													$	11,966		$	608
GES EMEA														(1,108	)		1,135
Total GES		(5,721	)		15,187			47,810			42,858			10,858			1,743
Pursuit		53,860			44,248			53,523			44,733			(20,274	)		(12,995	)
Segment operating income		48,139			59,435			101,333			87,591
Segment operating loss														(9,416	)		(11,252	)
Corporate eliminations ⁽¹⁾		18			(518	)		50			(940	)		16			16
Corporate activities		(4,474	)		(2,772	)		(10,092	)		(7,390	)		(789	)		(1,833	)
Operating income		43,683			56,145			91,291			79,261
Operating loss														(10,189	)		(13,069	)
Interest income		74			44			174			138			79			98
Interest expense		(2,117	)		(1,489	)		(6,281	)		(4,109	)		(4,018	)		(2,915	)
Restructuring charges:
GES U.S.		435			(1,498	)		364			(1,791	)
GES International		(689	)		(203	)		(1,043	)		(1,374	)
Other expense														(419	)		(455	)
Restructuring recoveries (charges):
GES North America														79			17
GES EMEA														(735	)		(662	)
Pursuit		—			—			—			(93	)		(1	)		—
Corporate		(1	)		4			(138	)		(406	)		(194	)		(43	)
Impairment recoveries (charges):
Impairment charges:
GES North America														(57,581	)		—
GES EMEA														(29,042	)		—
Pursuit		24,467			(120	)		29,098			(120	)		(1,757	)		—
Income from continuing operations before income taxes	$	65,852		$	52,883		$	113,465		$	71,506
Legal settlement:
GES														—			(8,500	)
Loss from continuing operations before income taxes													$	(103,778	)	$	(25,529	)

⁽¹⁾

Corporate eliminations ~~recorded during the three and nine months ended September 30, 2017~~ represent the elimination of depreciation expense recorded by Pursuit associated with previously eliminated intercompany profit realized by GES for renovations to Pursuit’s Banff Gondola. The corporate eliminations recorded during the three and nine months ended September 30, 2016 represent the elimination of intercompany revenue and profit realized by GES for work completed on renovations to Pursuit’s Banff Gondola.

Note ~~20.~~ ~~Discontinued Operations~~23. Common and Preferred Stock

~~Discontinued operations in 2017 includes reserves~~Common Stock Repurchases

We previously announced our Board of Directors’ authorization to ~~resolve certain environmental matters and legal fees~~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.

During the three months ended March 31, 2020, we repurchased 53,784 shares on the open market for $2.8 million. As of March 31, 2020, 546,283 shares remain available for repurchase. NaN shares were purchased on the open market during the three months ended March 31, 2019. Additionally, we repurchase shares related to ~~previously sold operations. During 2016,~~tax withholding requirements on vested restricted stock awards. Refer to Note 3 – Share-Based Compensation.

In March 2020, our Board of Directors suspended our share repurchase program.

Stockholder Rights Plan

On March 29, 2020, our Board of Directors adopted a short-term stockholder rights plan and declared a dividend payable to stockholders of record on April 13, 2020 of one preferred stock purchase right per each outstanding share of Viad ~~recorded liability reserve adjustments~~common stock to purchase one one-hundredth of a share of Viad’s Junior Participating Preferred Stock at an exercise price of $115.00. Our Board of Directors will be able to redeem the rights at $0.01 per right at any time before a person or group acquired 10% (20% in the case of a passive institutional investor) or more of the outstanding common stock. The rights expire on February 28, 2021, subject to our right to extend the date, unless we redeem, exchange, or terminate the rights earlier.

Subject to limited exceptions, if a person or group acquires 10% (20% in the case of a passive institutional investor) or more of our common stock (including shares that are synthetically owned pursuant to derivative transactions or ownership of derivative securities) or announces a tender offer, and ~~legal fees related~~the consummation of that offer would result in such ownership (we refer to ~~previously sold operations.~~such a person or group as an “acquiring person”), each right will entitle its holder to purchase, at the right’s then-current exercise price, a number of shares of common stock having a market value at that time of twice the right’s exercise price. Rights held by the acquiring person will become void and will not be exercisable. If the Company is acquired in a merger or other business combination transaction that has not been approved by our Board of Directors after the rights become exercisable, each right will entitle its holder to purchase, at the right’s then-current exercise price, a number of shares of the acquiring company’s common stock having a market value at that time of twice the right’s exercise price.

Note ~~21.~~ 24. Subsequent ~~Event~~

On November 3, 2017, the Company acquired the controlling interest (54.5% of the common stock) in Esja Attractions ehf. (“Esja”), for a purchase price of €8.2 million (approximately $9.5 million) in cash. Esja, a private corporation in Reykjavik, Iceland, is developing and will operate the new FlyOver Iceland attraction. The FlyOver Iceland attraction is expected to open in 2019.Events

We completed the following measures to mitigate the negative financial impacts due to COVID-19:

•

On April 20, 2020, we suspended our 401(k) Plan employer match contributions.

•

In early April 2020, we borrowed $31 million under the 2018 Credit Facility.

•

On May 8, 2020, we entered into an amendment to the 2018 Credit Agreement that waived our financial covenants for the quarter ending June 30, 2020. The amendment, among other things, (i) suspended the testing of the interest coverage ratio and the leverage ratio for the fiscal quarter ending June 30, 2020, (ii) added a new minimum liquidity covenant applicable at all times during the period from the effective date of the amendment until the first business day after we deliver quarterly financial statements and the related compliance certificate for the fiscal quarter ending September 30, 2020, and (iii) extended the deadline for delivery of quarterly financial statements for the fiscal quarter ending March 31, 2020 to 75 days after the close of such fiscal quarter.

•

We availed ourselves of governmental assistance programs for wages and tax relief.

•

In May 2020, we terminated our legacy life insurance policies on former employees and received the cash proceeds of $24.8 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

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

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with ~~the Annual Report on~~our 2019 Form 10-K ~~of Viad Corp (“Viad” or the “Company”) for the year ended December 31, 2016~~ and the condensed consolidated financial statements and ~~accompanying~~related notes included in this Form 10-Q. The MD&A is intended to assist in ~~providing an~~ understanding ~~of the Company’s~~our financial condition and results of operations. This discussion contains forward-looking statements that involve risks and uncertainties. Viad’s actual results could differ materially from those anticipated due to various factors discussed under “Forward-Looking Statements” and elsewhere in this Form 10-Q.

Overview

~~Viad operates~~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 ~~U.S.,~~North America, GES ~~International~~EMEA, (collectively, “GES”), and Pursuit.

GES

~~GES’ clients include~~ event organizers and corporate brand marketers. Event organizers schedule and run events from start to finish. Corporate brand marketers include exhibitors and domestic and international corporations that want to promote their brands, services and ~~innovations,~~innovation, 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.

~~Markets Served~~Pursuit

~~GES~~Pursuit is a collection of inspiring and unforgettable travel experiences that include recreational attractions, unique hotels and lodges, food and beverage, retail, sightseeing, and ground transportation services.

Impact of COVID-19 and Going Concern

On March 11, 2020, the World Health Organization declared COVID-19 a “pandemic.” COVID-19 has spread rapidly, with a high concentration of confirmed cases in the U.S. and ~~GES International both offer~~other countries in which we operate. The rapid spread has resulted in authorities around the world implementing numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders, and business shutdowns. The COVID-19 pandemic and these containment measures have had, and are expected to continue to have, a ~~full suite of services for event organizers~~substantial negative impact on businesses around the world and ~~corporate brand marketers across four~~on global, regional, and national economies.

The COVID-19 pandemic is having and will likely continue to have a significant and negative impact on our operations and financial performance, with live event ~~markets: (i) Exhibitions; (ii) Conferences; (iii) Corporate Events,~~ and ~~(iv) Consumer Events (collectively, “Live Events”).~~

~~Services Offered~~

~~GES offers~~tourism activities largely shut down. As a ~~comprehensive range of services~~result, we have taken the following measures to improve our liquidity position and ~~innovative technology~~mitigate the negative financial impacts due to ~~event organizers and corporate brand marketers including (i) Core Services; (ii) Event Technology, and (iii) Audio-Visual:~~COVID-19:

~~Core Services~~. GES provides official contracting services and products to event organizers and corporate brand marketers for Live Events. Contracting services and products are provided primarily to Exhibitions and to a lesser degree to Conferences, Corporate Events, and Consumer Events.

~~Event Technology.~~ ~~GES offers a comprehensive range of event technology services including event accommodation solutions, registration and data analytics, and event management tools.~~

o•

~~Event accommodation solutions. GES U.S. provides end-to-end event accommodation services~~On March 17, 2020, we borrowed $123 million under the 2018 Credit Facility as a proactive measure to increase our cash position and preserve financial flexibility. At the end of March 2020, we repaid $32 million and in North America. GES is responsible for researching and recommending local hotels, securing room blocks, marketing reserved room blocks to event attendees and corporate brand marketers, managing attendee and corporate brand marketer reservations, and addressing any accommodations concerns duringearly April 2020, we borrowed $31 million under the ~~show.~~2018 Credit Facility;

o•

~~Registration and data analytics. GES U.S. and GES International provide both a software-as-a-service model and fully managed options~~We implemented aggressive cost reduction actions, including furloughs, mandatory unpaid time off, or salary reductions for ~~registration and ticketing, lead management, and reporting and analytics. Their multi-lingual and multi-currency technology enables a common platform for global event organizers.~~all employees;

o•

~~Event~~Our executive management ~~tools. GES U.S.~~voluntarily reduced its base salaries by 20% to 50%;

•

The non-employee members of our Board of Directors agreed to reduce their annual cash retainer and ~~GES International provide event management tools~~committee retainers by 50% for ~~Live Events which include online ordering capabilities, sponsoring management tools, content management systems,~~payments typically made to them in the second quarter of 2020;

•

We have eliminated all non-essential capital expenditures and ~~Live Event tracking.~~discretionary spending;

•

In March 2020, our Board of Directors suspended future dividend payments and share repurchases;

•

On April 20, 2020, we suspended our 401(k) Plan employer match contributions;

•

On May 8, 2020, we obtained a waiver of our financial covenants for the quarter ending June 30, 2020;

•

We availed ourselves of governmental assistance programs for wages and tax relief; and

•

In May 2020, we terminated our legacy life insurance policies on former employees and received the cash proceeds of $24.8 million.

~~Audio-Visual.~~ ~~GES U.S. and GES International offer a variety of audio-visual and digital services for Live Events and corporate brand marketers. GES combines the science of innovative digital solutions~~Although we were in compliance with the ~~latest~~financial covenants of our 2018 Credit Agreement as of March 31, 2020, disruptions caused by the COVID-19 pandemic have had and are likely to continue to have a significant and negative impact on our operations and financial performance. In May 2020, we entered into an amendment to our 2018 Credit Agreement, which waived our financial covenants for the quarter ending June 30, 2020 and added a new minimum liquidity requirement. However, we expect to be unable to meet our financial covenants beginning with the quarter ending September 30, 2020, and as a result, the entire $412.6 million balance outstanding under the 2018 Credit Facility as of March 31, 2020 has been classified as a current liability. We are actively negotiating with our lenders to further amend our 2018 Credit Agreement, and we are pursuing options to raise capital and enhance our liquidity position. We cannot provide any assurance regarding the likelihood, certainty, or exact timing of our ability to raise capital or our ability to obtain further amendments to the 2018 Credit Agreement in a timely manner, or on acceptable terms, if at all. If we are unable to raise capital or obtain a waiver to our financial covenants, our lenders may exercise remedies against us, including the acceleration of our outstanding indebtedness. We also expect to be unable to meet our financial covenants under our FlyOver Iceland Credit Facility beginning with the quarter ending September 30, 2020, and as a result, the $5.3 million balance outstanding as of March 31, 2020 has been classified as a current liability. We have concluded that the shut-down of live event and tourism activities resulting in substantial net losses and operating cash outflows and the expected inability to maintain compliance with debt covenants discussed above raise substantial doubt about our ability to continue as a going concern for a period through one year from the issuance of the financial statements. We have prepared the financial statements on a going concern basis, which do not include any adjustments that might result from the outcome of this uncertainty.

Due to the deteriorating macroeconomic environment, disruptions to our operations, and the sustained decline in our stock price caused by COVID-19, we determined an interim triggering event had occurred, which required us to assess the carrying values of goodwill and intangible assets. Based on this assessment, we recorded a non-cash goodwill impairment charge of $72.7 million during the three months ended March 31, 2020 associated with the GES U.S., GES EMEA, and Pursuit’s Glacier Park Collection reporting units. Additionally, during the three months ended March 31, 2020, we recorded a non-cash impairment charge to other intangible assets of $15.7 million related to our U.S. audio-visual ~~technology~~production business. The duration and ~~superior service to create award-winning attendee engagements. Services provided include digital design~~impact of COVID-19 may result in additional future impairment charges as facts and ~~content, media production, content testing, equipment rental, staging, and creative services.~~circumstances evolve.

Seasonality

~~GES U.S. and GES International~~GES’ exhibition and event activity can vary significantly from quarter to quarter and year to year depending on the frequency and timing of ~~shows, as some~~shows. Some shows are not held ~~each year~~annually, and some ~~may~~ shift between quarters.

~~Pursuit~~

~~Pursuit is a collection of iconic natural~~ During 2019, GES reported its highest revenue during the second and cultural destination travel experiences that enjoy perennial demand. Pursuit offers guests distinctive and world renowned experiences through its collection of unique hotels, lodges, recreational attractions, and transportation services. Pursuit is composed of the following collections:

~~Brewster Travel Canada~~ is a leading travel and tourism provider in the Canadian Rockies in Alberta, Canada with two lodging properties in Banff National Park, one lodging property in Jasper National Park, five world-class recreational attractions, food and beverage services, retail operations, sightseeing and transportation services.

~~Alaska Collection~~ is a leading travel and tourism provider in Alaska with two lodging properties and a sightseeing excursion in Denali National Park and Preserve, a lodge in Talkeetna, Alaska’s top-rated wildlife and glacier cruise, and two lodging properties located near Kenai Fjords National Park. The Alaska Collection also provides food and beverage services and retail operations with respect to those properties.

~~Glacier Park, Inc.~~ is an operator of seven lodging properties, 12 retail shops, and 11 dining outlets in and around Glacier National Park in Montana, one of the most visited national parks in the United States, and Waterton Lakes National Park in Alberta, Canada, with a leading share of rooms in that market. Glacier Park, Inc. is an 80 percent owned subsidiary of Viad.

~~FlyOver Canada~~ is a recreational attraction that provides a virtual flight ride experience located in Vancouver, Canada that combines motion seating, spectacular media, and visual effects including wind, scents, and mist to give the unforgettable experience of flying across Canada.

Pursuit is composed of four lines of business: (i) Hospitality (including food and beverage services and retail operations); (ii) Attractions (including food and beverage services and retail operations); (iii) Transportation; and (iv) Travel Planning. These four lines of business work together, driving economies of scope and meaningful scale in and around the iconic destinations of Banff, Jasper, and Waterton Lakes National Parks and Vancouver in Canada, and Glacier, Denali, and Kenai Fjords National Parks in the United States.

~~Seasonality~~fourth quarters.

Pursuit experiences peak activity during the summer months. During ~~2016, 90 percent~~2019, 85% of Pursuit’s revenue was earned in the second and third quarters.

As a result of COVID-19 concerns, we began to see event postponements and cancellations at GES, as well as some cancelled bookings at Pursuit. Pursuit’s year-round attractions and lodging properties were closed temporarily starting in mid-March to help reduce the spread of COVID-19. As select areas of the global economy have begun to re-open, we are beginning to restart our business with enhanced health and safety protocols in place. On May 7, 2020, we re-opened Pursuit’s FlyOver Iceland attraction, and

we have begun and expect to continue to re-open other Pursuit experiences in June 2020 as restrictions are eased. However, exhibition and event activity has yet to resume. For GES, we believe that, as governments lift restrictions, events in certain geographies will start to take place again during the third quarter and we stand ready to reactivate areas of that business when it makes sense to do so. Additionally, in the event of a future resurgence of the virus, we may be required to re-close certain attractions or events based on local or governmental restrictions implemented.

The extent to which COVID-19 will impact our future consolidated results of operations is uncertain. We expect COVID-19 to negatively and materially impact revenue and earnings for the remainder of 2020, with the most significant impact currently expected in the second and third quarters. We will continue to evaluate and implement additional cost-cutting measures as are necessary to mitigate the negative financial and operational impact of COVID-19 on our business. For a discussion of the risks and uncertainties that may affect our business or financial results, refer to “Risk Factors” (Part II, Item 1A of this Form 10-Q).

Results of Operations

Financial Highlights

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands, except per share data)

2017

2016

Percentage
Change

2017

2016

Percentage
Change

Revenue

$
339,099

$
382,465

(11.3
)%

$
1,029,680

$
948,574

8.6
%
Net income attributable to Viad

$
44,657

$
33,792

32.2
%

$
79,381

$
46,318

71.4
%
Segment operating income ⁽¹⁾

$
48,139

$
59,435

(19.0
)%

$
101,333

$
87,591

15.7
%
Diluted income per common share from continuing operations attributable to Viad common stockholders

$
2.19

$
1.68

30.4
%

$
3.91

$
2.33

67.8
%

	Three Months Ended
	March 31,
(in thousands, except per share data)	2020			2019			% Change
Total revenue	$	306,008		$	285,594			7.1	%
Net loss attributable to Viad	$	(86,585	)	$	(17,777	)	**
Segment operating loss ⁽¹⁾	$	(9,416	)	$	(11,252	)		16.3	%
Diluted loss per common share from continuing operations attributable to Viad common stockholders	$	(4.27	)	$	(0.88	)	**

~~Three months ended September 30, 2017 compared with the three months ended September 30, 2016~~** Change is greater than +/- 100%

~~Total revenue~~ decreased $43.4 million or 11.3 percent, primarily due to negative show rotation of approximately $75 million at GES. This decrease was offset in part by underlying growth at both GES and Pursuit, incremental revenue from the acquisitions of the business of ON Event Services, LLC (“ON Services”), FlyOver Canada, and the Poken event engagement technology (“Poken”) of $13.1 million, and a favorable foreign exchange impact of $3.4 million. Management defines base same-show revenue as revenue derived from shows that the Company produced out of the same city during the same quarter in each year.

~~Net income attributable to Viad~~ increased $10.9 million, primarily due to impairment recoveries related to the Mount Royal Hotel fire and higher segment operating income from Pursuit, offset in part by decreased segment operating income at GES primarily due to negative show rotation.

•

Total revenue increased $20.4 million or 7.1%, primarily due to positive show rotation of approximately $57 million and incremental revenue from Pursuit’s Mountain Park Lodges acquisition, offset in part by show postponements at GES due to the COVID-19 pandemic and an unfavorable foreign exchange impact of $1.1 million.

•

~~Total segment operating income~~⁽¹⁾~~decreased $11.3~~Net loss attributable to Viad increased $68.8 million, primarily due to ~~the decrease~~impairment charges of $88.4 million, offset in ~~revenue.~~part by a higher income tax benefit and lower performance-based compensation expense as we reduced our estimated performance achievement to zero as a result of COVID-19.

~~Nine months ended September 30, 2017 compared with the nine months ended September 30, 2016~~

~~Total revenue~~ increased $81.1 million or 8.6 percent, primarily due to incremental revenue from the acquisitions of ON Services, FlyOver Canada, and Poken of $49.8 million and underlying growth at both GES and Pursuit. This increase was offset in part by an unfavorable foreign exchange impact of $10.6 million and negative show rotation of approximately $6 million.

~~Net income attributable to Viad~~ increased $33.1 million, primarily due to impairment recoveries related to the Mount Royal Hotel fire, increased segment operating income at Pursuit and GES, and a decrease in restructuring charges, offset in part by higher corporate activities expense due to an increase in performance-based compensation driven by the Company’s stock price appreciation, and higher interest expense.

•

Total segment operating ~~income~~loss⁽¹⁾ ~~increased $13.7~~decreased $1.8 million, primarily due to higher revenue at GES and the ~~increase~~elimination of performance-based incentives, offset in ~~revenue.~~part by increased seasonal operating losses at Pursuit driven primarily by our June 2019 Mountain Park Lodges acquisition and the opening of FlyOver Iceland.

⁽¹⁾	Refer to Note 19 22 – Segment Information of the Notes to Condensed Consolidated Financial Statements for a reconciliation of the non-GAAP financial measure, segment operating ~~income,~~loss, to the most directly comparable GAAP measure.

Foreign Exchange Rate Variances

~~Viad conducts its~~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 ~~tables summarize~~table summarizes the ~~effects of~~ foreign exchange rate ~~variances~~variance effects (or “FX Impact”) on revenue and segment operating ~~results (or “FX Impact”)~~income (loss) from ~~Viad’s~~our significant international operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, excluding the effect of acquisitions completed during 2017 and 2016:~~2019:

~~Three months ended September 30, 2017 compared with the three months ended September 30, 2016~~

	Revenue						Segment Operating Results						Revenue							Segment Operating Income (Loss)
	Weighted-Average Exchange Rates				FX Impact		Weighted-Average Exchange Rates				FX Impact		Weighted-Average Exchange Rates				FX Impact			Weighted-Average Exchange Rates				FX Impact
	2017		2016		(in thousands)		2017		2016		(in thousands)		2020		2019		(in thousands)			2020		2019		(in thousands)
GES:
GES North America:
Canada (CAD)	$	0.80	$	0.77	$	680	$	0.80	$	0.77	$	44	$	0.73	$	0.75	$	(334	)	$	0.73	$	0.75	$	(80	)

GES EMEA:
United Kingdom (GBP)	$	1.32	$	1.31		235	$	1.31	$	1.32		115	$	1.28	$	1.31	$	(507	)	$	1.28	$	1.30	$	(46	)
Europe (EUR)	$	1.19	$	1.12		382	$	1.18	$	1.14		13	$	1.10	$	1.13		(181	)	$	1.10	$	1.14		5
						1,297						172						(688	)						(41	)
Pursuit
Pursuit:
Canada (CAD)	$	0.80	$	0.77		2,119	$	0.80	$	0.77		1,218	$	0.75	$	0.75		(38	)	$	0.74	$	0.75		92
					$	3,416					$	1,390					$	(1,060	)					$	(29	)

~~Nine months ended September 30, 2017 compared with the nine months ended September 30, 2016~~

Revenue

Segment Operating Results

Weighted-Average
Exchange Rates

FX Impact

Weighted-Average
Exchange Rates

FX Impact

2017

2016

(in thousands)

2017

2016

(in thousands)

GES:

Canada (CAD)

$
0.76

$
0.76

$
(202
)

$
0.76

$
0.78

$
(221
)
United Kingdom (GBP)

$
1.28

$
1.38

(11,395
)

$
1.28

$
1.25

(210
)
Europe (EUR)

$
1.11

$
1.12

(100
)

$
1.12

$
1.13

(39
)

(11,697
)

(470
)
Pursuit

Canada (CAD)

$
0.78

$
0.77

1,134

$
0.78

$
0.77

762

$
(10,563
)

$
292

~~Viad’s three months ended September 30, 2017 revenue~~Revenue and segment operating ~~results~~income (loss) were primarily impacted by ~~the strengthening of the Canadian dollar relative to the U.S. dollar. Viad’s nine months ended September 30, 2017 revenue and segment operating results were primarily impacted by the weakening~~variances of the British pound, ~~and the strengthening of~~ the Canadian dollar, and the Euro relative to the U.S. dollar. Future changes in ~~the~~ exchange rates may impact overall expected profitability and historical period-to-period comparisons when revenue and segment operating ~~results~~income (loss) are translated into U.S. dollars.

Analysis of Revenue and Operating Results by Reportable Segment

GES

The following ~~tables provide~~table presents a comparison of GES’ reported revenue and segment operating ~~results~~income (loss) to organic revenue⁽³⁾⁽¹⁾ and organic segment operating ~~results~~income (loss)⁽³⁾⁽¹⁾ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.~~2019.

Three Months Ended

Three Months Ended

September 30, 2017

September 30, 2016

Change

(in thousands)

As Reported

Acquisitions⁽¹⁾

FX Impact

Organic⁽³⁾

As Reported

Acquisitions⁽²⁾

Organic⁽³⁾

As Reported

Organic⁽³⁾

Revenue:

GES:

U.S.

$
184,761

$
19,063

$
—

$
165,698

$
232,484

$
10,354

$
222,130

(20.5
)%

(25.4
)%
International

54,040

152

1,297

52,591

60,926

—

60,926

(11.3
)%

(13.7
)%
Intersegment eliminations

(6,682
)

—

—

(6,682
)

(6,425
)

—

(6,425
)

(4.0
)%

(4.0
)%
Total GES

$
232,119

$
19,215

$
1,297

$
211,607

$
286,985

$
10,354

$
276,631

(19.1
)%

(23.5
)%
Segment operating income (loss) ⁽⁴⁾:

GES:

U.S.

$
(2,851
)

$
(1,080
)

$
—

$
(1,771
)

$
14,543

$
458

$
14,085

**

**

International

(2,870
)

(269
)

172

(2,773
)

644

—

644

**

**

Total GES

$
(5,721
)

$
(1,349
)

$
172

$
(4,544
)

$
15,187

$
458

$
14,729

**

**

	Nine Months Ended												Nine Months Ended														Three Months Ended											Three Months Ended
	September 30, 2017												September 30, 2016								Change						March 31, 2020											March 31, 2019								Change vs. 2019
(in thousands)	As Reported			Acquisitions⁽¹⁾			FX Impact			Organic⁽³⁾			As Reported			Acquisitions⁽²⁾		Organic⁽³⁾			As Reported			Organic⁽³⁾			As Reported			Acquisitions		FX Impact			Organic⁽¹⁾			As Reported			Acquisitions		Organic⁽¹⁾			As Reported			Organic⁽¹⁾
Revenue:
GES:
U.S.	$	684,003		$	56,544		$	—		$	627,459		$	636,299		$	15,398	$	620,901			7.5	%		1.1	%
International		203,222			738			(11,697	)		214,181			187,689			—		187,689			8.3	%		14.1	%
North America																											$	251,758		$	—	$	(334	)	$	252,092		$	223,241		$	—	$	223,241			12.8	%		12.9	%
EMEA																												42,716			—		(688	)		43,404			54,376			—		54,376			(21.4	)%		(20.2	)%
Intersegment eliminations		(17,126	)		—			—			(17,126	)		(15,439	)		—		(15,439	)		(10.9	)%		(10.9	)%		(1,989	)		—		—			(1,989	)		(2,690	)		—		(2,690	)		26.1	%		26.1	%
Total GES	$	870,099		$	57,282		$	(11,697	)	$	824,514		$	808,549		$	15,398	$	793,151			7.6	%		4.0	%	$	292,485		$	—	$	(1,022	)	$	293,507		$	274,927		$	—	$	274,927			6.4	%		6.8	%
Segment operating income (loss)⁽⁴⁾:
Segment operating income (loss)⁽²⁾:
GES:
U.S.	$	39,319		$	(913	)	$	—		$	40,232		$	37,907		$	543	$	37,364			3.7	%		7.7	%
International		8,491			(463	)		(470	)		9,424			4,951			—		4,951			71.5	%		90.3	%
North America																											$	11,966		$	—	$	(80	)	$	12,046		$	608		$	—	$	608		**			**
EMEA																												(1,108	)		—		(41	)		(1,067	)		1,135			—		1,135		**			**
Total GES	$	47,810		$	(1,376	)	$	(470	)	$	49,656		$	42,858		$	543	$	42,315			11.6	%		17.3	%	$	10,858		$	—	$	(121	)	$	10,979		$	1,743		$	—	$	1,743		**			**

** Change is greater than +/- ~~100 percent~~100%

⁽¹⁾	~~Acquisitions include ON Services (acquired August 2016) for GES U.S. and Poken (acquired March 2017) for GES International and GES U.S.~~

⁽²⁾	To maximize synergies, GES’ existing in-house audio-visual services team was merged into ON Services. Accordingly, the amounts for GES U.S. acquisitions include results from the existing in-house audio-visual services team.

⁽³⁾

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

⁽⁴⁾⁽²⁾

Refer to Note 19 22 – Segment Information of the Notes to Condensed Consolidated Financial Statements for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

~~Three months ended September 30, 2017 compared with~~GES North America

GES North America revenue increased $28.5 million or 12.8%, primarily due to positive show rotation of approximately $61 million, offset in part by U.S. base same-show revenue decrease of 3.6% and an unfavorable FX Impact of $0.3 million. Base same-show revenue represented 26.1% of GES North America’s organic revenue during the three months ended ~~September 30, 2016~~March 31, 2020. Organic revenue* increased $28.9 million or 12.9%.

GES ~~U.S.~~North America segment operating income increased $11.4 million, primarily due to the increase in revenue and the elimination of performance-based incentives. Organic segment operating income* increased $11.4 million.

GES EMEA

GES ~~U.S.~~EMEA revenue decreased ~~$47.7~~$11.7 million or ~~20.5 percent,~~21.4%, primarily due to negative show rotation of approximately ~~$63~~$5 million and ~~other non-recurring business in the comparable prior period, offset in part by incremental revenue~~an unfavorable FX Impact of $8.7 million from the acquisitions of ON Services and Poken, new business wins, and U.S. base same-show revenue growth of 1.6 percent. U.S. base same-show revenue growth was lower due to one event with a reduced scope of service as result of a venue change. Base same-shows represented 37.0 percent of GES’ U.S. organic revenue*.$0.7 million. Organic revenue* decreased ~~$56.4~~$11.0 million or ~~25.4 percent.~~20.2%.

GES ~~U.S.~~EMEA segment operating ~~results~~ ~~decreased $17.4~~loss increased $2.2 million, ~~to an operating loss of $2.9 million. This decrease was~~ primarily due to the decrease in revenue driven by negative show rotation, offset in part by lower performance-based compensation expense and income of $2.8 million from a contract settlement. Organic operating income* decreased $15.9 million.

~~GES International~~

~~GES International revenue~~ decreased $6.9 million or 11.3 percent, primarily due to negative show rotation of approximately $12 million, offset in part by new business wins and a favorable FX Impact of $1.3 million. Organic revenue* decreased $8.3 million or 13.7 percent.

~~GES International operating results~~ decreased $3.5 million to an operating loss of $2.9 million. This decrease was primarily due to the decrease in revenue driven by negative show rotation. Organic operating income* decreased $3.4 million.

~~Nine months ended September 30, 2017 compared with the nine months ended September 30, 2016~~

~~GES U.S.~~

~~GES U.S. revenue~~ increased $47.7 million or 7.5 percent, primarily due to incremental revenue of $41.1 million from the acquisitions of ON Services and Poken and U.S. base same-show revenue growth of 4.4 percent, offset in part by negative show rotation of approximately $7 million. Base same-shows represented 35.4 percent of GES’ U.S. organic revenue*. Organic revenue* increased $6.6 million or 1.1 percent.

~~GES U.S. operating income~~ increased $1.4 million or 3.7 percent, primarily due to higher revenue, offset in part by a $7.5 million increase in depreciation and amortization expense primarily due to the acquisition of ON Services. Organic operating income* increased $2.9 million or 7.7 percent.

~~GES International~~

~~GES International revenue~~ increased $15.5 million or 8.3 percent, primarily due to new business wins, offset in part by an unfavorable FX Impact of $11.7 million. GES International had positive show rotation of approximately $1.0 million. Organic revenue* increased $26.5 million or 14.1 percent.

~~GES International operating income~~ ~~increased $3.5 million or 71.5 percent, primarily due to higher~~ revenue. Organic segment operating income*loss* increased ~~$4.5 million or 90.3 percent.~~$2.2 million.

* Refer to footnote ~~(3)~~(1) in the above ~~tables~~table for more information about the non-GAAP financial measures of organic revenue and organic segment operating ~~results.~~

~~2017 Outlook~~

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

For the 2017 full year, management expects GES’ revenue to increase 6 percent to 7 percent versus 2016. The August 2016 acquisition of ON Services and the March 2017 acquisition of Poken are expected to provide incremental revenue of $43 million to $45 million and incremental Adjusted Segment EBITDA of $5 million to $7 million. Show rotation is expected to have a net negative impact on GES’ revenue of approximately $10 million compared to 2016. GES U.S. base same-show revenue is expected to increase at a mid-single digit rate. Management anticipates an unfavorable FX Impact on GES’ 2017 full year revenue and segment operating income of approximately $7 million and $0.2 million, respectively. The expected FX Impact reflects the assumption that the U.S. dollar to the British pound exchange rate will be $1.31 and the U.S. dollar to the Canadian dollar exchange rate will be $0.81 during the fourth quarter of 2017. For more information about Adjusted Segment EBITDA and segment operating income, see the “Non-GAAP Measures” section of this MD&A.

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

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

Pursuit

The following ~~tables provide~~table presents a comparison of Pursuit’s reported revenue and segment operating ~~results~~loss to organic revenue⁽²⁾⁽³⁾ and organic segment operating ~~results~~loss⁽²⁾⁽³⁾ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.~~2019.

	Three Months Ended											Three Months Ended														Three Months Ended												Three Months Ended
	September 30, 2017											September 30, 2016								Change						March 31, 2020												March 31, 2019								Change vs. 2019
(in thousands)	As Reported			Acquisitions⁽¹⁾		FX Impact			Organic⁽²⁾			As Reported			Acquisitions		Organic⁽²⁾			As Reported			Organic⁽²⁾			As Reported			Acquisitions⁽²⁾			FX Impact			Organic⁽³⁾			As Reported			Acquisitions		Organic⁽³⁾			As Reported			Organic⁽³⁾
Revenue:
Revenue⁽¹⁾:
Pursuit:
Attractions																										$	5,278		$	—		$	(14	)	$	5,292		$	4,668		$	—	$	4,668			13.1	%		13.4	%
Hospitality	$	39,577		$	—	$	236		$	39,341		$	39,664		$	—	$	39,664			(0.2	)%		(0.8	)%		5,981			2,940			(11	)		3,052			3,664			—		3,664			63.2	%		(16.7	)%
Attractions		59,059			4,227		1,700			53,132			42,883			—		42,883			37.7	%		23.9	%
Transportation		6,252			—		201			6,051			5,097			—		5,097			22.7	%		18.7	%		2,146			—			(12	)		2,158			2,150			—		2,150			(0.2	)%		0.4	%
Travel Planning		2,874			—		29			2,845			10,908			—		10,908			(73.7	)%		(73.9	)%		199			—			(2	)		201			447			—		447			(55.5	)%		(55.0	)%
Intra-Segment Eliminations & Other		(782	)		—		(47	)		(735	)		(1,150	)		—		(1,150	)		32.0	%		36.1	%		(81	)		—			1			(82	)		(262	)		—		(262	)		69.1	%		68.7	%
Total Pursuit	$	106,980		$	4,227	$	2,119		$	100,634		$	97,402		$	—	$	97,402			9.8	%		3.3	%	$	13,523		$	2,940		$	(38	)	$	10,621		$	10,667		$	—	$	10,667			26.8	%		(0.4	)%

Segment operating income ⁽³⁾:
Segment operating loss⁽⁴⁾:
Total Pursuit	$	53,860		$	2,227	$	1,218		$	50,415		$	44,248		$	—	$	44,248			21.7	%		13.9	%	$	(20,274	)	$	(2,467	)	$	92		$	(17,899	)	$	(12,995	)	$	—	$	(12,995	)		(56.0	)%		(37.7	)%

Nine Months Ended

Nine Months Ended

September 30, 2017

September 30, 2016

Change

(in thousands)

As Reported

Acquisitions⁽¹⁾

FX Impact

Organic⁽²⁾

As Reported

Acquisitions⁽¹⁾

Organic⁽²⁾

As Reported

Organic⁽²⁾

Revenue:

Pursuit:

Hospitality

$
55,279

$
13,440

$
145

$
41,694

$
56,791

$
12,935

$
43,856

(2.7
)%

(4.9
)%
Attractions

88,910

21,256

910

66,744

61,056

13,597

47,459

45.6
%

40.6
%
Transportation

11,906

—

120

11,786

10,150

—

10,150

17.3
%

16.1
%
Travel Planning

4,334

1,268

9

3,057

16,861

1,529

15,332

(74.3
)%

(80.1
)%
Intra-Segment Eliminations & Other

(848
)

—

(50
)

(798
)

(1,747
)

—

(1,747
)

51.5
%

54.3
%
Total Pursuit

$
159,581

$
35,964

$
1,134

$
122,483

$
143,111

$
28,061

$
115,050

11.5
%

6.5
%

Segment operating income ⁽³⁾:

Total Pursuit

$
53,523

$
8,431

$
762

$
44,330

$
44,733

$
8,870

$
35,863

19.6
%

23.6
%

⁽¹⁾⁽¹⁾

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

⁽²⁾

Acquisitions ~~for the three months ended September 30, 2017~~ include ~~FlyOver Canada~~Mountain Park Lodges (acquired ~~December 2016). Acquisitions for the nine month periods include CATC Alaska Tourism Corporation (“CATC”)~~June 2019) and Belton Chalet (acquired ~~March 2016) and FlyOver Canada (acquired December 2016)~~May 2019).

⁽²⁾⁽³⁾

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

⁽³⁾⁽⁴⁾

Refer to Note 19 22 – Segment Information of the Notes to Condensed Consolidated Financial Statements for a reconciliation of the non-GAAP financial measure, segment operating ~~income,~~loss, to the most directly comparable GAAP measure.

~~Three months ended September 30, 2017~~Pursuit revenue increased $2.9 million or 26.8%, primarily due to incremental revenue from the Mountain Park Lodges acquisition of $2.9 million. Organic revenue* was flat compared ~~with~~to the three months ended ~~September 30, 2016~~March 31, 2019.

Pursuit ~~revenue~~segment operating loss increased ~~$9.6~~$7.3 million or ~~9.8 percent,~~56.0%, due to ~~strong growth from attractions,~~increased seasonal operating losses driven primarily by the ~~Banff Gondola and Columbia Icefield Glacier Adventure attractions, incremental revenue of $4.2 million from~~June 2019 Mountain Park Lodges acquisition, the ~~acquisition~~opening of FlyOver ~~Canada,~~Iceland, and a favorable FX Impact of $2.1 million. This increase was offset in part by a reduction in travel planning as the Company completes the previously announced downsizing of Brewster Travel Canada’s package tours line of businessincreased depreciation and ~~a revenue decline of $2.1 million due to the fire-related closure of the Mount Royal Hotel.~~amortization expense. Organic revenue*segment operating loss* increased ~~$3.2~~$4.9 million or ~~3.3 percent.~~

~~Pursuit operating income~~ increased $9.6 million or 21.7 percent, primarily due to the increase in revenue from high-margin attractions. Operating income included a $1.1 million business interruption gain for the recovery of lost profits from the Mount Royal Hotel. Organic operating income* increased $6.2 million or 13.9 percent.

~~Nine months ended September 30, 2017 compared with the nine months ended September 30, 2016~~

~~Pursuit revenue~~ increased $16.5 million or 11.5 percent, due to strong growth from attractions primarily driven by the re-opening of the Banff Gondola (which was closed for renovations from October 2015 through April 2016), incremental revenue of $7.9 million from the acquisitions of FlyOver Canada and CATC, and a favorable FX Impact of $1.1 million. This increase was offset in part by a reduction in travel planning as the Company completes the previously announced downsizing of Brewster Travel Canada’s package tours line of business and a revenue decline of $4.6 million due to the fire-related closure of the Mount Royal Hotel. Organic revenue* increased $7.4 million or 6.5 percent.

~~Pursuit operating income~~ increased $8.8 million or 19.6 percent, primarily due to the increase in revenue from high-margin attractions. Operating income included a $2.2 million business interruption gain for the recovery of lost profits from the Mount Royal Hotel. Organic operating income* increased $8.5 million or 23.6 percent.37.7%.

* Refer to footnote ~~(2)~~(3) in the above ~~tables~~table for more information about the non-GAAP financial measures of organic revenue and organic segment operating ~~results.~~loss.

Performance Measures

~~Management uses~~We use the following key business metrics to evaluate the performance of Pursuit’s ~~hospitality~~attractions business: ~~revenue per available room (“RevPAR”), average daily rate (“ADR”), and occupancy. These~~

•

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, ~~are commonly used~~common in the hospitality industry, to ~~measure performance.~~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 for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.

•

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 generate. Increases in ADR at hospitality properties lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.

•

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 increased ancillary non-rooms revenue (including food and beverage and retail revenue).
•
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).

Management evaluates the performance of Pursuit’s attractions business utilizing the number of passengers and total attractions revenue per passenger. The number of passengers allows management to assess the volume of visitor activity at each attraction during the period. Total attractions revenue per passenger is calculated as total attractions revenue divided by the total number of passengers at all Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per passenger measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.

The following table provides Pursuit’s same-store key performance ~~indicators for the three and nine months ended September 30, 2017 and 2016.~~indicators. The same-store metrics ~~below~~ indicate the performance of all ~~Pursuit~~Pursuit’s properties and attractions that ~~were~~we owned ~~by Viad~~ and ~~operating~~operated at full capacity, considering seasonal closures, for the entirety of both periods presented. For Pursuit properties and attractions located ~~in Canada,~~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. ~~Management believes that~~We believe this same-store constant currency basis provides better comparability between reporting periods.

	Three Months Ended									Nine Months Ended									Three Months Ended
	September 30,									September 30,									March 31,
	2017			2016			% Change			2017			2016			% Change			2020			2019			Change vs. 2019
Same-Store Key Performance Indicators ⁽¹⁾
Attractions:
Number of visitors																				106,422			151,166			(29.6	)%
Revenue per attraction visitor																			$	33		$	31			6.5	%
Effective ticket price																			$	24		$	23			4.3	%
Hospitality:
Room nights available		108,015			107,635			0.4	%		152,366			150,604			1.2	%		35,765			39,780			(10.1	)%
RevPAR	$	200		$	192			4.2	%	$	140		$	133			5.3	%	$	56		$	57			(1.8	)%
ADR	$	227		$	213			6.6	%	$	187		$	178			5.1	%	$	101		$	107			(5.6	)%
Occupancy		87.9	%		90.1	%		(2.2	)%		75.2	%		74.8	%		0.4	%		55.6	%		53.2	%		2.4	%
Attractions:
Passengers		1,139,516			1,092,356			4.3	%		1,626,121			1,453,899			11.8	%
Revenue per passenger	$	48		$	40			20.0	%	$	42		$	33			27.3	%

⁽¹⁾

~~The~~ Same-Store Key Performance Indicators for ~~the three month comparison~~attractions exclude ~~the~~ FlyOver ~~Canada attraction (acquired in December 2016) as it was not owned by Viad for the entirety of both periods presented. The~~Iceland (opened August 2019). Same-Store Key Performance Indicators for hospitality excludes the ~~nine month comparison exclude the CATC hospitality properties and attraction~~Mountain Park Lodges (acquired in March 2016) and the FlyOver Canada attraction (acquired in December 2016), as they were not owned by Viad for the entirety of both periods presented. Additionally, the Same-Store Key Performance Indicators exclude the Mount Royal Hotel hospitality property due to its fire-related closure (effective December 2016)June 2019). The Banff Gondola attraction was closed for renovations from October 2015 through April 2016. Accordingly, 2016 includes only five months of operation whereas 2017 includes the full three and nine months of operations.

~~Hospitality.~~ ~~Room nights available increased during~~For the ~~nine months ended September 30, 2017 primarily due~~health and well-being of our employees, guests, and community, Pursuit’s year-round attractions and lodging properties were closed temporarily starting in mid-March to ~~changes in~~help reduce the opening dates for certain seasonal properties. RevPAR increased during the three months ended September 30, 2017 primarily due to an increase in ADR driven by management’s focus on yield management, offset in part by lower occupancy primarily due to forest fires in the Glacier National Park area. RevPAR increased during the nine months ended September 30, 2017 primarily due to an increase in occupancy and an increase in ADR driven by management’s focus on yield management, as well as an increase in occupancy reflecting strong park visitationspread of COVID-19. All other lodging properties were seasonally closed during the first ~~nine months~~quarter. In order to mitigate the negative financial and operational impacts, we have eliminated all non-essential capital expenditures. This has resulted in the delay of ~~2017.~~the opening of FlyOver Canada Toronto, which is now anticipated to open in 2023. FlyOver Las Vegas and the Sky Lagoon are still on track to open in 2021.

Attractions. The ~~increase~~decrease in ~~the number of passengers during the three months ended September 30, 2017~~same-store visitors was primarily due to management’s efforts to enhance the guest experience and its focus on yield management, combined with strong park visitation in Canada. The increase in the number of passengers during the nine months ended September 30, 2017 was primarily due to the Banff Gondola being closed for renovations during the first four months of 2016. Excluding the Banff Gondola passengers, total same-store attraction passengers for the nine month period would have increased 36,158 in 2017 driven by ~~management’s efforts to enhance~~ the ~~guest experience and its focus on yield management, combined with strong park visitation~~closure of our attractions in ~~Canada.~~

March 2020 as a result of COVID-19. Revenue per ~~passenger~~attraction visitor increased ~~during 2017~~ primarily due to higher effective ticket prices and ancillary revenue driven at our recently refreshed experiences and dynamic pricing.

Hospitality. The decrease in RevPAR and ADR was driven by ~~management’s focus on yield management, and higher revenue from ancillary food and beverage and retail services primarily resulting from management’s recent renovations~~the closure of ~~the retail and food and beverage operations at the Banff Gondola and the food and beverage operations at the Columbia Icefield Glacier Discovery Center.~~our hospitality assets in March 2020 as a result of COVID-19.

During ~~2016,~~2019, Pursuit derived approximately ~~59 percent~~66% of its revenue and ~~74 percent~~88% of its segment operating income from its Canadian operations, which are largely dependent on foreign customer visitation. Accordingly, the reopening of borders and the strengthening or weakening of the Canadian dollar, relative to other currencies, could affect customer volumes and the results of operations. ~~Additionally, Pursuit~~

Other Expenses

	Three Months Ended
	March 31,
(in thousands)	2020			2019			Change vs. 2019
Corporate activities	$	789		$	1,833			(57.0	)%
Interest expense	$	4,018		$	2,915			37.8	%
Restructuring charges	$	851		$	688			23.7	%
Legal settlement	$	—		$	8,500			(100.0	)%
Impairment charges	$	88,380		$	—		**
Income tax benefit	$	(15,797	)	$	(7,595	)	**
Loss from discontinued operations	$	(454	)	$	(287	)		(58.2	)%

** Change is ~~affected by consumer discretionary spending on tourism activities.~~

~~2017 Outlook~~

For the 2017 full year, management expects Pursuit’s revenue to increase 12 percent to 14 percent. The December 2016 acquisition of FlyOver Canada and the March 2016 acquisition of CATC, combined, are expected to provide incremental revenue of $10 million to $11 million and incremental Adjusted Segment EBITDA of $2 million to $3.5 million, which includes an incremental first quarter seasonal operating loss of approximately $2.3 million from CATC.

Additionally, management expects Pursuit’s revenue to be negatively impacted by approximately $13 million as the Company completes the previously announced downsizing of Brewster Travel Canada’s package tours line of business. The fire-related closure of the Mount Royal Hotel is expected to negatively impact revenue by approximately $5 million. Management anticipates a favorable FX Impact on Pursuit’s 2017 full year revenue and segment operating income of approximately $2 million and $0.7 million, respectively. Management expects these factors will be moregreater than ~~offset by organic growth across the rest of Pursuit’s lines of business.~~

In July 2017, Viad resolved its property and business interruption insurance claims related to the Mount Royal Hotel fire for a total of $36.3 million, inclusive of $9.0 million received during the first and second quarters of 2017. Viad recorded an additional impairment recovery of approximately $24.7 million related to construction costs to re-open the hotel, $1.1 million was recorded as a business interruption gain for the recovery of lost profits, and the remaining $1.5 million was recorded as deferred income that will be recognized over the periods the business interruption losses are actually incurred. Management anticipates recognizing approximately $0.5 million of the business interruption recovery during the remainder of 2017 with approximately $1 million being deferred to the first half of 2018.

The Pursuit guidance ranges include approximately $1 million in revenue and approximately $3 million in adjusted segment EBITDA related to the Mount Royal Hotel, which reflects the 2017 portion of business interruption insurance recoveries (including both business interruption gains for lost profits and contra-expense for on-going operating costs) and the re-opening of most of the property’s retail tenants and one of its dining operations. The hotel itself is expected to remain closed until mid-2018. For more information about Adjusted Segment EBITDA and segment operating income, see the “Non-GAAP Measures” section of this MD&A.+/- 100%

Corporate Activities

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2017

2016

Percentage Change 2017 vs. 2016

2017

2016

Percentage Change 2017 vs. 2016

Corporate activities

$
4,474

$
2,772

61.4
%

$
10,092

$
7,390

36.6
%

– The ~~increase~~decrease in corporate activities expense ~~for~~during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 relative to 2019 was primarily due to ~~an increase in~~lower performance-based compensation expense ~~driven by Viad’s common stock price appreciation.~~as we reduced our estimated performance achievement to zero as a result of COVID-19.

Interest Expense

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2017

2016

Percentage Change 2017 vs. 2016

2017

2016

Percentage Change 2017 vs. 2016

Interest expense

$
2,117

$
1,489

42.2
%

$
6,281

$
4,109

52.9
%

– The increase in interest expense ~~for the three and nine months ended September 30, 2017~~ was primarily due to higher debt balances in ~~2017 resulting from acquisitions completed during August and December of 2016.~~2020.

Restructuring Charges

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2017

2016

Percentage Change 2017 vs. 2016

2017

2016

Percentage Change 2017 vs. 2016

Restructuring charges

$
255

$
1,697

(85.0
)%

$
817

$
3,664

(77.7
)%

– Restructuring charges during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 were primarily related to the elimination of certain positions ~~and facility consolidations in~~at GES.

~~Impairment Charges (Recoveries)~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2017

2016

Percentage Change 2017 vs. 2016

2017

2016

Percentage Change 2017 vs. 2016
Impairment charges (recoveries)

$
(24,467
)

$
120

**

$
(29,098
)

$
120

**

** Change is greater than +/- 100 percent

On December 29, 2016, the Mount Royal Hotel was damaged by a fire and closed. During July 2017, the Company resolved its property and business interruption insurance claims related to the fire for a total of $36.3 million. Legal Settlement – During the three months ended ~~September 30, 2017,~~March 31, 2019, we recorded a charge to resolve a legal dispute at GES involving a former industry contractor.

Impairment Charges – During the ~~Company received insurance proceeds~~three months ended March 31, 2020, we performed an interim evaluation of ~~$27.3~~goodwill as of March 31, 2020. As a result, we recorded a non-cash goodwill impairment charge of $72.7 million associated with GES U.S., GES EMEA, and Pursuit’s Glacier Park Collection reporting units. Additionally, during the three months ended March 31, 2020, we recorded a non-cash impairment charge to other intangible assets of ~~which $24.7~~$15.7 million ~~was recorded as an impairment recovery (partially offset by impairment charges of $0.2 million)~~ related to construction costs to re-open the hotel, $1.1 million was recorded as a business interruption gain for the recovery of lost profits, and the remaining $1.5 million was recorded as deferred income, which will be recognized over the periods the business interruption losses are actually incurred. During the nine months ended September 30, 2017, the Company received $36.3 million in insurance proceeds, of which $2.2 million was allocated to an insurance receivable, $29.3 million was recorded as an impairment recovery (partially offset by impairment charges of $0.2 million) related to construction costs to re-open the hotel, $2.2 million was recorded as a business interruption gain for the recovery of lost profits, $1.1 million was recorded as contra-expense to offset non-capitalizable costs incurred by the Company, and the remaining $1.5 million was recorded as deferred income, which will be recognized over the periods the business interruption losses are actually incurred.our U.S. audio-visual production business.

Income ~~Taxes~~

~~The~~Tax Benefit – Our effective income tax ~~rates~~rate for the three months ended September 30, 2017 and 2016 were 30.4 percent and 33.8 percent, respectively. The effective tax rates for the nine months ended September 30, 2017 and 2016 were 29.0 percent and 33.1 percent, respectively. The decreaseMarch 31, 2020 was 15.2%, as compared to 29.8% for the three months ended March 31, 2019. The decrease in the effective rate was primarily due to higher foreign income taxed at lower rates. The decrease for the nine months was primarily due to higher foreign income taxed at lower rates, the release of a valuation allowance related to foreign net operating losses, and the adoption of new accounting guidance, effective in the first quarter of 2017, which requires the excessno tax benefit recognized on ~~share-based compensation to be~~some of the impairments recorded ~~to income tax expense rather than equity.~~on goodwill.

Loss from Discontinued Operations

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2017

2016

Percentage Change 2017 vs. 2016

2017

2016

Percentage Change 2017 vs. 2016

Loss from discontinued operations

$
(101
)

$
(221
)

54.3
%

$
(408
)

$
(771
)

47.1
%

~~The loss~~ – Loss from discontinued operations during the three months ended ~~September 30, 2017,~~March 31, 2020 and 2019 was primarily related to legal expenses ~~associated with~~related to previously sold operations. The loss from discontinued operations, during the nine months ended September 30, 2017, was primarily related to legal expenses associated with previously sold operations, offset in part by a reduction in an uncertain tax position due to the lapse of a statute.

Liquidity and Capital Resources

On March 17, 2020, we borrowed $123 million under the 2018 Credit Facility, and at the end of March 2020 we repaid $32 million. Cash and cash equivalents were ~~$53.5~~$130.5 million as of ~~September 30, 2017,~~March 31, 2020, as compared to ~~$20.9~~$62.0 million as of December 31, ~~2016.~~2019. In early April 2020, we borrowed $31 million under the 2018 Credit Facility. As of May 31, 2020, we had $165 million of cash and cash equivalents. During the ~~nine~~three months ended ~~September 30, 2017, the Company generated~~March 31, 2020, we used net cash ~~flow from~~in operating activities of ~~$114.6 million primarily from results~~$4.7 million. In May 2020, we terminated our legacy life insurance policies on former employees and received $24.8 million.

Although we were in compliance with the financial covenants of ~~operations. Management believes that Viad’s existing sources~~our 2018 Credit Agreement as of ~~liquidity will be sufficient~~March 31, 2020, disruptions caused by the COVID-19 pandemic have had and are likely to ~~fund~~continue to have a significant and negative impact on our operations and financial performance. In May 2020, we entered into an amendment to our 2018 Credit Agreement, which waived our financial covenants for the quarter ending June 30, 2020 and added a new minimum liquidity requirement. However, we expect to be unable to meet our financial covenants beginning with the quarter ending September 30, 2020, and as a result, the entire $412.6 million balance outstanding under the 2018 Credit Facility as of March 31, 2020 has been classified as a current liability. We are actively negotiating with our lenders to further amend our 2018 Credit Agreement, and we are pursuing options to raise capital ~~commitments~~and enhance our liquidity position. We cannot provide any assurance regarding the likelihood, certainty, or exact timing of our ability to raise capital or our ability to obtain further amendments to the 2018 Credit Agreement in a timely manner, or on acceptable terms, if at all. If we are unable to raise capital or obtain a waiver to our financial covenants, our lenders may exercise remedies against us, including the acceleration of our outstanding indebtedness. We also expect to be unable to meet our financial covenants under our FlyOver Iceland Credit Facility beginning with the quarter ending September 30, 2020, and as a result, the $5.3 million balance outstanding as of March 31, 2020 has been classified as a current liability. We have concluded that the shut-down of live event and tourism activities resulting in substantial net losses and operating cash outflows and the expected inability to maintain compliance with debt covenants discussed above raise substantial doubt about our ability to continue as a going concern for ~~at least~~a period through one year from the ~~next 12 months.~~issuance of the financial statements. We have prepared the financial statements on a going concern basis, which do not include any adjustments that might result from the outcome of this uncertainty.

As of ~~September 30, 2017, the Company had~~March 31, 2020, we held approximately ~~$49.0~~$36.3 million of ~~its~~our cash and cash equivalents ~~held~~ outside of the United States, consisting of ~~$31.9~~$10.3 million in Canada, ~~$7.8~~$8.8 million in the Netherlands, ~~$7.0 million in the United Kingdom, $1.2 million in Germany, $0.9~~$8.4 million in the United Arab Emirates, $6.1 million in the United Kingdom, and ~~$0.2~~$2.7 million in certain other countries. There are certain earnings related to the Company’s Canadian and Netherlands operations that have historically been deemed permanently reinvested. As of September 30, 2017, the incremental tax associated with these earnings if the cash balances were repatriated to the United States would approximate $1.6 million.

Cash Flows

Operating Activities

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in thousands)	2017			2016			2020			2019
Net income	$	80,128		$	47,083
Net loss							$	(88,435	)	$	(18,221	)
Depreciation and amortization		42,499			31,206			15,285			13,188
Deferred income taxes		318			(3,549	)		(15,799	)		(9,098	)
Loss from discontinued operations		408			771			454			287
Impairment charges (recoveries)		(29,098	)		120
Restructuring charges								851			688
Legal settlement								—			8,500
Impairment charges								88,380			—
Other non-cash items		14,369			13,083			7,112			2,696
Changes in assets and liabilities		6,019			26,708			(12,567	)		9,980
Net cash provided by operating activities	$	114,643		$	115,422
Net cash (used in) provided by operating activities							$	(4,719	)	$	8,020

~~Net~~The main factor driving the increase in cash ~~provided by~~used in operating activities ~~decreased $0.8~~of $12.7 million ~~primarily~~was due to unfavorable changes in working ~~capital, offset in part by an increase in results of operations.~~capital.

Investing Activities

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in thousands)	2017			2016			2020			2019
Capital expenditures	$	(39,493	)	$	(32,582	)	$	(23,246	)	$	(19,543	)
Proceeds from insurance		31,570			—
Cash paid for acquired businesses, net		(1,661	)		(145,735	)
Proceeds from dispositions of property and other assets		734			774			85			611
Net cash used in investing activities	$	(8,850	)	$	(177,543	)	$	(23,161	)	$	(18,932	)

Net cash used in investing activities ~~decreased $168.7~~increased $4.2 million primarily due to the increase in capital expenditures in 2020.

Financing Activities

	Three Months Ended
	March 31,
(in thousands)	2020			2019
Proceeds from borrowings	$	160,755		$	28,347
Payments on debt and finance lease obligations		(56,077	)		(14,376	)
Dividends paid on common stock		(2,038	)		(2,028	)
Distributions to noncontrolling interest		(1,526	)		—
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased		(1,059	)		(2,905	)
Common stock purchased for treasury		(2,785	)		—
Proceeds from exercise of stock options		2,077			—
Net cash provided by financing activities	$	99,347		$	9,038

Cash provided by financing activities increased $90.3 million primarily due to the borrowings under the 2018 Credit Facility as a proactive measure to increase our cash ~~payments, net~~position and preserve financial flexibility in light of ~~cash acquired, of $145.7 million for~~current uncertainty in the ~~2016 acquisitions of ON Services, CATC, and the business of Maligne Lake Tours Ltd.~~global markets resulting from COVID-19, ~~and the Mount Royal Hotel fire-related insurance proceeds received in 2017,~~ offset in part by ~~an increase~~the repurchase of treasury shares on the open market in ~~capital expenditures.~~

~~Financing Activities~~

Nine Months Ended

September 30,

(in thousands)

2017

2016

Proceeds from borrowings

$
60,574

$
153,000

Payments on debt and capital lease obligations

(128,808
)

(86,989
)
Dividends paid on common stock

(6,119
)

(6,079
)
Debt issuance costs

(5
)

(340
)
Common stock purchased for treasury

(1,272
)

(679
)
Other

—

60

Net cash provided by (used in) financing activities

$
(75,630
)

$
58,973

Net cash used in financing activities increased $134.6 million primarily due to net debt payments of $68.2 million during the nine months ended September 30, 2017 compared to net debt proceeds of $66.0 million during the nine months ended September 30, 2016.2020.

Debt and ~~Capital~~Finance Lease Obligations

Refer to Note 1112 – Debt and ~~Capital~~Finance Lease Obligations of the Notes to Condensed Consolidated Financial Statements for further ~~discussion.~~discussion, all of which is incorporated by reference herein.

Share Repurchases

~~The~~Our Board of Directors previously authorized ~~the Company~~us to repurchase shares of ~~its~~our common stock from time to time at prevailing market prices. NoEffective February 7, 2019, our Board of Directors authorized the repurchase of an additional 500,000 shares. During the three months ended March 31, 2020, we repurchased 53,784 shares on the open market ~~repurchases~~for $2.8 million. No shares were ~~made~~repurchased on the open market during the ~~nine~~three months ended ~~September 30, 2017 or 2016.~~March 31, 2019. As of ~~September 30, 2017, 440,540~~March 31, 2020, 546,283 shares remained available for repurchase. The ~~authorization of the~~ Board of ~~Directors~~Directors’ authorization does not have an expiration date. ~~In addition, during the nine months ended September 30, 2017 and 2016, the Company~~

Additionally, we repurchased ~~26,916~~ shares ~~for $1.3 million and 24,432 shares for $0.7 million, respectively,~~ related to tax withholding requirements on vested restricted share-based awards.

In March 2020, our Board of Directors suspended our share repurchase program.

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 condensed consolidated financial statements and related notes. Refer to Note 12 – Debt and Finance Lease Obligations, Note 19 – Leases and Other, and Note 20 – Litigation, Claims, Contingencies, and Other of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this quarterly report on Form 10-Q) for further information, which information is incorporated by reference herein.

Critical Accounting Policies and Estimates

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7) of ~~Viad’s Annual Report on~~our 2019 Form 10-K, for ~~the year ended December 31, 2016, for~~ a discussion of our critical accounting policies and estimates.

Impact of Recent Accounting Pronouncements

Refer to Note 1 – Overview and Basis of Presentation ~~and Principles of Consolidation~~ of the Notes to Condensed Consolidated Financial Statements for further information.

~~Forward-Looking Statements~~

As provided by the safe harbor provision under the Private Securities Litigation Reform Act of 1995, Viad cautions readers that, in addition to historical information contained herein, this quarterly report includes certain information, assumptions, and discussions that may constitute forward-looking statements. These forward-looking statements are not historical facts, but reflect current estimates, projections, expectations, or trends concerning future growth, operating cash flows, availability of short-term borrowings, consumer demand, new or renewal business, investment policies, productivity improvements, ongoing cost reduction efforts, efficiency, competitiveness, legal expenses, tax rates and other tax matters, foreign exchange rates, and the realization of restructuring cost savings. Actual results could differ materially from those discussed in the forward-looking statements. Viad’s businesses can be affected by a host of risks and uncertainties. Among other things, natural disasters, gains and losses of customers, consumer demand patterns, labor relations, purchasing decisions related to customer demand for exhibition and event services, existing and new competition, industry alliances, consolidation and growth patterns within the industries in which Viad competes, acquisitions, capital allocations, adverse developments in liabilities associated with discontinued operations, changes in the levels of interest rates, and any deterioration in the economy, may individually or in combination impact future results. In addition to factors mentioned elsewhere, economic, competitive, governmental, technological, capital marketplace, and other factors, including terrorist activities or war, a pandemic health crisis, and international conditions, could affect the forward-looking statements in this quarterly report. Additional information concerning business and other risk factors that could cause actual results to materially differ from those in the forward looking statements are discussed in the “Risk Factors” section in Viad’s 2016 Annual Report.

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

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 ~~Company also discloses~~following non-GAAP financial ~~measures of Adjusted EBITDA,~~measures: Segment operating income ~~Adjusted Segment EBITDA,~~(loss), organic revenue, and organic segment operating income (loss) (collectively, the “Non-GAAP Measures”). ~~The presentation~~Our use of ~~the~~ Non-GAAP Measures is supplemental to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. As not all companies use identical calculations, ~~the~~our Non-GAAP Measures may not be comparable to similarly titled measures used by other companies. ~~Management believes~~We believe that ~~the presentation~~our use of ~~the~~ Non-GAAP Measures provides useful information to investors regarding ~~Viad’s~~our results of operations for trending, analyzing, and benchmarking ~~the~~our performance and the value of ~~Viad’s~~our business.

~~“Adjusted EBITDA”~~ is defined by Viad as net income attributable to Viad before the Company’s portion of interest expense, income taxes, depreciation and amortization, impairment charges and recoveries, changes in accounting principles, and the effects of discontinued operations. Adjusted EBITDA is utilized by management to measure the profit and performance of Viad’s operations and to facilitate period-to-period comparisons. Refer to the table below for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure.

~~“Segment operating income”~~ is defined by Viad as net income attributable to Viad before income (loss) from discontinued operations, corporate activities, interest expense and interest income, income taxes, restructuring charges, impairment losses and recoveries, and the reduction for income attributable to noncontrolling interest. Segment operating income is utilized by management to measure the profit and performance of Viad’s operating segments to facilitate period-to-period comparisons.

~~“Adjusted Segment EBITDA”~~ is defined by Viad as segment operating income (as defined above) before non-cash depreciation and amortization and acquisition integration costs, if any. Adjusted Segment EBITDA is utilized by management to measure the profit and performance of Viad’s operating segments and acquisitions to facilitate period-to-period comparisons. For a discussion of how this metric is used in connection with 2017 full year acquisition performance expectations, refer to the “Forward-Looking Non-GAAP Financial Measures” section of this MD&A. Management believes that Adjusted Segment EBITDA for acquisitions enables investors to assess how effectively management is investing capital into major corporate development projects, both from a valuation and return perspective.

•

“Segment operating income (loss)” is net loss attributable to Viad before loss from discontinued operations, corporate activities, interest expense and interest income, income taxes, restructuring charges, impairment charges, and the reduction for income attributable to noncontrolling interest. Segment operating income (loss) is used to measure the profit and performance of our operating segments to facilitate period-to-period comparisons. Refer to Note 22 – Segment Information of the Notes to Condensed Consolidated Financial Statements for a reconciliation of segment operating income (loss) to loss from continuing operations before income taxes.

•

~~“Organic~~“Organic revenue” and “organic segment operating ~~income”~~income (loss)” are ~~defined by Viad as~~ revenue and segment operating income (loss) (as defined above), respectively, without the impact of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable periods. The impact of exchange rate variances is calculated as the difference between current period activity translated at the current period’s exchange rates and the comparable prior period’s exchange rates. ~~Management believes that~~We believe the presentation of “organic” results permits investors to better understand ~~Viad’s~~our performance without the effects of exchange rate variances or acquisitions and to facilitate ~~period-to-~~

~~period~~period-to-period comparisons and analysis of ~~Viad’s~~our operating performance. Refer to the “Results of Operations” section of this MD&A for reconciliations of organic revenue and organic segment operating income (loss) to the most directly comparable GAAP measures.

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

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2017

2016

2017

2016

Net income attributable to Viad

$
44,657

$
33,792

$
79,381

$
46,318

Depreciation and amortization

15,833

12,649

42,499

31,206

Interest expense

2,117

1,489

6,281

4,109

Income tax expense

20,010

17,878

32,929

23,652

Impairment charges (recoveries)

(24,467
)

120

(29,098
)

120

Loss from discontinued operations

101

221

408

771

Other noncontrolling interest

(739
)

(661
)

(697
)

(691
)
Adjusted EBITDA

$
57,512

$
65,488

$
131,703

$
105,485

The decrease in Adjusted EBITDA for the three months ended September 30, 2017 was primarily due to lower segment operating income at GES. The increase in Adjusted EBITDA for the nine months ended September 30, 2017 was primarily due to higher segment operating income at GES and Pursuit. Refer to the “Results of Operations” section of this MD&A for a discussion of fluctuations.

~~Forward-Looking Non-GAAP Financial Measures~~

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

~~Viad conducts its~~Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, ~~Germany,~~ and ~~to a lesser extent, in certain other countries.~~Germany. The functional currency of ~~Viad’s~~our foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, ~~Viad translates~~we translate the assets and liabilities of ~~its~~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 ~~Viad’s condensed consolidated balance sheets.~~the Condensed Consolidated Balance Sheets. As a result, significant fluctuations in foreign exchange rates relative to the U.S. dollar may result in material changes to ~~Viad’s~~our net equity position reported in ~~its condensed consolidated balance sheets. Viad does~~the Condensed Consolidated Balance Sheets. We do not currently hedge ~~its~~our equity risk

arising from the translation of foreign denominated assets and liabilities. ~~Viad had~~We recorded cumulative unrealized foreign currency translation losses ~~recorded~~ in stockholders’ equity of ~~$10.3 million and $29.1~~$52.0 million as of ~~September 30, 2017~~March 31, 2020 and $23.8 million as of December 31, ~~2016, respectively. During~~2019. We recorded unrealized foreign currency translation losses in other comprehensive income of $28.2 million during the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and unrealized foreign currency translation gains of ~~$9.1~~$4.8 million ~~and $18.8 million, respectively, were recorded in other comprehensive income. During~~during the three ~~and nine~~ months ended ~~September 30, 2016 an unrealized foreign currency translation loss of $3.8 million and a gain of $0.7 million, respectively, were recorded in other comprehensive income.~~March 31, 2019.

For purposes of consolidation, revenue, expenses, gains, and losses related to ~~Viad’s~~our foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, ~~Viad’s~~our consolidated results of operations are exposed to fluctuations in foreign exchange rates as revenue and segment operating ~~results~~income (loss) of ~~its~~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. ~~Viad does~~We do not currently hedge ~~its~~our net earnings exposure arising from the translation of ~~its~~our foreign revenue and segment operating ~~results.~~income (loss). Refer to ~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion on the~~ “Foreign Exchange Rate ~~Variances.”~~Variances” section of this MD&A.

~~Viad is~~We are exposed to foreign exchange transaction risk, as ~~its~~our foreign subsidiaries have certain revenue transactions denominated in currencies other than the functional currency of the respective subsidiary. From time to time, ~~Viad utilizes~~we utilize forward contracts to mitigate the impact on earnings related to these transactions due to fluctuations in foreign exchange rates. As of ~~September 30, 2017, Viad~~March 31, 2020 and December 31, 2019, we did not have any outstanding foreign currency forward ~~contracts outstanding.~~contracts.

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

Item 4. Controls and Procedures

~~Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of Viad, the effectiveness of the design and operation of~~We have established disclosure controls and procedures ~~has been evaluated as of September 30, 2017, and, based on~~ that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of September 30, 2017. Disclosure controls and procedures are designed to ensure that information required to be disclosed in ~~the~~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 ~~the SEC’s~~SEC rules and ~~forms. Disclosure controls~~forms, and ~~procedures include, without limitation, controls and procedures designed to ensure that~~such information ~~required to be disclosed in such reports~~ is accumulated and communicated to our management, including ~~the~~our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow ~~for~~ timely decisions regarding required disclosure. Management, together with our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2020. Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2020.

There were no changes in ~~the Company’s~~our internal control over financial reporting during the three months ended ~~September 30, 2017~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - ~~OTHE~~ROTHER INFORMATION

Item 1. Legal Proceedings

Refer to Note 1820 – Litigation, Claims, Contingencies, and Other of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for information regarding our legal proceedings ~~involving the Company.~~that is incorporated by reference herein.

Item 1A. Risk Factors

~~There~~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.

The recent COVID-19 pandemic and related responsive actions have, and may continue to, adversely affect our financial condition, liquidity, and cash flow. The spread of COVID-19 and related government and private sector responsive actions, including social distancing, stay-at-home orders, and actions we have taken to help stem the spread of the virus, forced the cancellation of many of our live events and the closure of substantially all of our attractions, hotels, and other operations, which has had an adverse effect on our financial condition, liquidity, and cash flow. A prolonged disruption could have a long-term material impact on our financial condition, liquidity, and cash flow. We are considering options to raise additional capital to enhance our liquidity position. This financing may not be available to us or may only be available on unattractive terms that could significantly increase our interest costs, dilute our shareholders, and significantly limit how we conduct business, including our ability to complete capital projects that are currently in development. In addition, our Credit Facility includes financial covenants requiring us to comply with minimum liquidity requirements and maximum total leverage and minimum interest coverage ratios. In May 2020, we entered into an amendment to our 2018 Credit Agreement, which waived our financial covenants for the quarter ending June 30, 2020; however, we expect to be unable to meet our financial covenants beginning with the quarter ending September 30, 2020. We are negotiating with our lenders to obtain relief beyond the second quarter of 2020 under these ratios and other covenants in our Credit Facility. Any relief that we obtain is expected to increase our interest costs and limit how we conduct business, including prohibiting certain payments to our shareholders. If we are unable to raise capital or obtain a waiver to our financial covenants, our lenders may exercise remedies against us, including the acceleration of our outstanding indebtedness. We have concluded that the shut-down of live event and tourism activities resulting in substantial net losses and operating cash outflows and the expected inability to maintain compliance with debt covenants discussed above raise substantial doubt about our ability to continue as a going concern for a period through one year from the issuance of the financial statements. We have prepared the financial statements on a going concern basis, which do not include any adjustments that might result from the outcome of this uncertainty.

We cannot predict the extent to which the COVID-19 pandemic will affect our ongoing business, results of operations, and financial condition, or the duration of those effects. The COVID-19 pandemic forced the cancellation of many of our events and the closure of substantially all of our attractions, hotels, and other operations. The substantial reduction in our operations will result in near-term losses and negative cash flow from operations. The full impact of the pandemic on our longer-term operational and financial performance is highly uncertain and will depend on future developments that we cannot predict, including the duration and spread of the pandemic, any future resurgence of COVID-19, and related social-distancing orders, travel restrictions, and/or government limitations on group gatherings. Our GES business depends on exhibitions, conferences, and other live events and the size of marketing expenditures relating to those events. The continuation of government orders prohibiting large group gatherings will continue to significantly and adversely affect our revenue and results of operations. Even if exhibitions or other live events do occur, 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, and people may be unwilling to attend large group events. In addition, many of the attractions and hospitality operations within our Pursuit business are currently subject to government closure orders designed to limit the spread of COVID-19, which adversely affects our profitability and cash flow. Future revenue from our Pursuit operations will depend on our ability to reopen our operations, the willingness of people to travel to our locations, and the amount of disposable income that consumers have available for travel and vacations, which decreases during periods of weak general economic conditions. Both our GES and Pursuit businesses may also experience increased costs in order to supply our customers or guests with personal protection equipment, conduct comprehensive cleaning regiments, and other measures that we determine are in the best interests of our employees, customers, guests, and/or event participants. As a result, any continuation in the closure of our operations or further deterioration in general economic conditions would materially and further adversely affect our business, financial condition, and results of operations.

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 we are forced to make changes to our business strategy or if external conditions adversely affect our business operations, including the duration and impact of COVID-19, we may be required to record additional future impairment charges, as we did in the first quarter of 2020. 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. Suchborrowings 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. The recent decline in global and regional economic conditions, and consumers’ fears that economic conditions will further decline, has caused declining consumer confidence, unemployment, fluctuations in stock markets and interest rates, contraction of credit availability, and 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, which our business has experienced due to the COVID-19 pandemic. 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 further 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, 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 COVID-19 pandemic and social distancing orders resulted in severe global travel restrictions, mandatory shutdowns of show and event venues, hotels, attractions and other operations and limitations on large gatherings of people. These circumstances had severe effects on our businesses. The occurrence of additional disruptions, a prolonged recovery from the COVID-19 pandemic or a spike or resurgence in cases of COVID-19, or other unexpected events that affect the availability and pricing of air travel and accommodations, could further 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. A prolonged delay in these capital projects could prevent them from performing in accordance with our commercial expectations and could materially and adversely affect our future success, 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 the 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 nopreviously 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, ~~factors disclosed~~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 ~~Viad’s Annual Report~~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 ~~Form 10-K~~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 ~~year ended December 31, 2016,~~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 ~~Form 10-Q~~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 ~~the quarter ended March 31, 2017.~~our securities.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes the total number of shares of ~~Viad’s~~our common stock that were repurchased during the three months ended ~~September 30, 2017 by Viad~~March 31, 2020 pursuant to publicly announced plans or programs, as well as ~~from~~certain previously owned shares of common stock that were surrendered by employees, former employees, and non-employee directors ~~surrendering previously owned Viad common stock (outstanding shares) to pay the taxes in connection with the vesting of restricted stock~~for tax withholding requirements on vested share-based awards.

ISSUER PURCHASES OF EQUITY SECURITIES

Period

Total Number of Shares Purchased

Average Price Paid
Per Share

Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs

Maximum Number of Shares
That May Yet Be Purchased
Under the Plans or Programs

July 1, 2017 - July 31, 2017

—

$
—

—

440,540

August 1, 2017 - August 31, 2017

1,120

$
52.80

—

440,540

September 1, 2017 - September 30, 2017

154

$
56.05

—

440,540

Total

1,274

$
53.19

—

440,540

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
January 1, 2020 - January 31, 2020		966	$	67.16		—		600,067
February 1, 2020 - February 29, 2020		69,748	$	53.63		53,784		546,283
March 1, 2020 - March 31, 2020		744	$	50.55		—		546,283
Total		71,458	$	53.79		53,784		546,283

~~The~~Pursuant to previously announced authorizations, our Board of Directors has authorized ~~the Company~~us to repurchase shares of ~~its~~our common stock from time to time at prevailing market prices. NoEffective February 7, 2019, our Board of Directors approved an additional 500,000 shares ~~were~~to repurchase. During the three months ended March 31, 2020 we repurchased 53,784 shares on the open market ~~during the three and nine months ended September 30, 2017. As of September 30, 2017, 440,540 shares remain available~~ for ~~repurchase.~~$2.8 million. The Board’s authorization ~~of the~~has no expiration date. In March 2020, our Board of Directors ~~does not have an expiration date.~~

~~Item 5.~~ ~~OTHER INFORMATION~~

~~Not applicable.~~suspended our share repurchase program.

Item 6. E~~xhibits~~Exhibits

~~Incorporated by Reference~~

~~Exhibit~~

~~Number~~

~~Exhibit Description~~

~~Form~~

~~Period~~

~~Ending~~

~~Exhibit~~

~~Filing Date~~

~~4.1~~

~~Joinder to Guaranty, dated August 31, 2017, by and among ON Services – AV Specialists, Inc. and BMO Harris Bank, N.A.~~

~~31.1~~

~~Exhibit of Certification of Chief Executive Officer of Viad Corp pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~31.2~~

~~Exhibit of Certification of Chief Financial Officer of Viad Corp pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~32.1~~

~~Additional Exhibit of Certification of Chief Executive Officer of Viad Corp pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~32.2~~

~~Additional Exhibit of Certification of Chief Financial Officer of Viad Corp pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~101.INS~~

~~XBRL Instance Document~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~

~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~

~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~

~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document~~

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Period

Ending

Exhibit

Filing Date

4.1

Rights Agreement, dated as of March 30, 2020, between Viad Corp and Equiniti Trust Company, which includes the Form of Right Certificate as Exhibit A and the Summary of Rights to Purchase Preferred Stock as Exhibit B.

8-K

4.1

3/30/2020

4.2

Amendment No. 2 to $450 million Second Amended and Restated Credit Agreement, dated May 8, 2020.

8-K

4.A3

5/11/2020

10.1

Severance Agreement and General Release between Viad Corp and Jay Altizer, effective as of May 22, 2020.

31.1

Certification of Chief Executive Officer of Viad Corp pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, for the period ended March 31, 2020.

31.2

Certification of Chief Financial Officer of Viad Corp pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, for the period ended March 31, 2020.

32.1

Certifications of Chief Executive Officer and Chief Financial Officer of Viad Corp pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for the period ended March 31, 2020.

101.INS

***

XBRL Instance Document

101.SCH

****

XBRL Taxonomy Extension Schema Document.

101.CAL

****

XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB

****

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

****

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

****

XBRL Taxonomy Extension Definition Linkbase Document.

104

***

Cover Page Interactive Data File

*	Filed herewith.

**	Furnished herewith.

***	The XBRL Instance Document and Cover Page Interactive Data File do not appear in the Interactive Data File because their XBRL tags are embedded within the Inline XBRL document.

****	Submitted electronically herewith.

SIGNATURES

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VIAD CORP
	(Registrant)

~~November 6, 2017~~June 19, 2020	By:	/s/ Leslie S. Striedel
(Date)		Leslie S. Striedel
		Chief Accounting Officer (Duly Authorized Officer)
		~~(Chief Accounting Officer and Authorized Officer)~~

4048

(in thousands)
Purchase price paid as:
Cash			$	50,920
Cash acquired				(6	)
Purchase price, net of cash acquired				50,914

Fair value of net assets acquired:
Inventories	$	11
Prepaid expenses		37
Property and equipment		10,867
Intangible assets		6,028
Total assets acquired		16,943
Accrued liabilities		118
Total liabilities assumed		118
Total fair value of net assets acquired				16,825
Excess purchase price over fair value of net assets acquired (“goodwill”)			$	34,089

(in thousands)	Total Viad Stockholders’ Equity			Noncontrolling Interest		Total Stockholders’ Equity
Balance at December 31, 2016	$	357,355		$	13,283	$	370,638
Net income		79,381			747		80,128
Dividends on common stock ($0.30 per share)		(6,119	)		—		(6,119	)
Common stock purchased for treasury		(1,272	)		—		(1,272	)
Employee benefit plans		5,916			—		5,916
Unrealized foreign currency translation adjustment		18,820			—		18,820
Other changes to AOCI		327					327
Other		56			—		56
Balance at September 30, 2017	$	454,464		$	14,030	$	468,494

(in thousands)	Unrealized Gains on Investments			Cumulative Foreign Currency Translation Adjustments			Unrecognized Net Actuarial Loss and Prior Service Credit, Net			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2016	$	421		$	(29,084	)	$	(10,728	)	$	(39,391	)
Other comprehensive income before reclassifications		188			18,820			—			19,008
Amounts reclassified from AOCI, net of tax		(45	)		—			184			139
Net other comprehensive income		143			18,820			184			19,147
Balance at September 30, 2017	$	564		$	(10,264	)	$	(10,544	)	$	(20,244	)

	Nine Months Ended September 30,						Affected Line Item in the Statement Where Net Income is Presented
(in thousands)	2017			2016
Unrealized gains on investments	$	(72	)	$	(67	)	Interest income
Tax effect		27			25		Income taxes
	$	(45	)	$	(42	)

Recognized net actuarial loss⁽¹⁾	$	596		$	538
Amortization of prior service credit⁽¹⁾		(323	)		(377	)
Tax effect		(89	)		(61	)	Income taxes
	$	184		$	100

~~Standards Recently Adopted~~

~~ASU 2015-11, Inventory (Topic 330) - Simplifying~~GES’ graphics product revenue is earned over time over the ~~Measurement~~duration of ~~Inventory~~

~~The amendment applies to inventory measures using first-in, first-out or average cost and requires entities to measure inventory at~~an event as it is considered a part of the lower of cost or net realizable value. Net realizable value is the estimated selling price in the normal course of business, minus the cost of completion, disposal and transportation. Replacement cost and net realizable value less a normal profit margin will no longer be considered.

~~January 1, 2017~~

~~The adoption of this new guidance did not have a significant effect on Viad’s consolidated financial statements.~~

~~ASU 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting~~

The amendment identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows.

~~January 1, 2017~~

The adoption of this new guidance resulted in a decrease of 6% to the effective tax rate during the first quarter of 2017 as compared to 2016, and resulted in a decrease of 1% to the effective tax rate during the nine months ended September 30, 2017 as compared to 2016.single performance obligation satisfied over time.