<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
Commission file number 001-11015
VIAD CORP
(Exact name of registrant as specified in its charter)
DELAWARE 36-1169950
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 N. CENTRAL AVE., PHOENIX, ARIZONA 85077
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 207-4000
Indicate by check mark whether the registrant (1) has filed all
Exchange Act reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
Yes x No
--------- ---------
As of October 31, 1997, 96,506,631 shares of Common Stock ($1.50
par value) were outstanding.
<PAGE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
VIAD CORP
CONSOLIDATED BALANCE SHEET
<CAPTION>
September 30, December 31,
(000 omitted) 1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,957 $ 4,422
Receivables, less allowance of
$12,053 and $12,744 172,099 163,262
Inventories 103,617 93,730
Deferred income taxes 25,245 32,567
Other current assets 53,375 59,562
---------- ----------
364,293 353,543
Funds, agents' receivables and current
maturities of investments restricted
for payment service obligations,
after eliminating $90,000 invested
in Viad commercial paper 449,408 670,258
---------- ----------
Total current assets 813,701 1,023,801
Investments restricted for
payment service obligations 1,452,167 1,144,279
Property and equipment 454,256 473,039
Other investments and assets 115,613 125,705
Investment in discontinued operations 97,958
Deferred income taxes 77,238 47,904
Intangibles 548,235 540,626
---------- ----------
$ 3,461,210 $ 3,453,312
========== ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
September 30, December 31,
(000 omitted, except share data) 1997 1996
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 150,781 $ 148,990
Accrued compensation 63,573 68,976
Other current liabilities 181,919 263,049
Current portion of long-term debt 3,169 2,348
---------- ----------
399,442 483,363
Payment service obligations 1,954,664 1,869,480
---------- ----------
Total current liabilities 2,354,106 2,352,843
Long-term debt 421,089 518,779
Pension and other benefits 66,561 61,689
Other deferred items and insurance reserves 103,364 73,291
Minority interests 8,514 7,888
$4.75 Redeemable preferred stock 6,611 6,604
Common stock and other equity:
Common stock, $1.50 par value,
200,000,000 shares authorized,
97,108,724 shares issued 145,663 145,663
Additional capital 290,097 282,203
Retained income 185,506 146,664
Cumulative translation adjustments (2,837) (1,519)
Unearned employee benefits (120,132) (118,766)
Unrealized gain on securities
available for sale 9,374 205
Common stock in treasury, at cost,
370,301 and 1,162,718 shares (6,706) (22,232)
---------- ----------
Total common stock and other equity 500,965 432,218
---------- ----------
$ 3,461,210 $ 3,453,312
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
Quarter ended September 30, 1997 1996
(000 omitted, except per share data) ---------- ----------
<S> <C> <C>
REVENUES $ 622,226 $ 598,290
---------- ----------
Costs and expenses:
Costs of sales and services 553,971 534,538
Unallocated corporate expense
and other items, net 6,910 7,335
Sale of trade accounts receivable expense 1,110 808
Spin-off costs and management transition expenses 3,000
Interest expense 11,471 13,520
Minority interests 555 936
---------- ----------
574,017 560,137
---------- ----------
Income before income taxes 48,209 38,153
Income taxes 14,359 13,064
---------- ----------
INCOME FROM CONTINUING OPERATIONS 33,850 25,089
Loss from discontinued operations (4,667)
---------- ----------
NET INCOME $ 33,850 $ 20,422
========== ==========
INCOME (LOSS) PER COMMON SHARE:
Continuing operations $ 0.36 $ 0.27
Discontinued operations (0.05)
---------- ----------
NET INCOME PER COMMON SHARE $ 0.36 $ 0.22
========== ==========
Dividends declared per common share $ 0.08 $ 0.08
========== ==========
Average outstanding common
and equivalent shares 94,339 92,192
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
Nine months ended September 30, 1997 1996
(000 omitted, except per share data) ---------- ----------
<S> <C> <C>
REVENUES $ 1,806,897 $ 1,698,041
---------- ----------
Costs and expenses:
Costs of sales and services 1,641,286 1,544,736
Unallocated corporate expense
and other items, net 22,412 25,248
Sale of trade accounts receivable expense 3,330 1,818
Spin-off costs and management transition expenses 15,000
Interest expense 38,073 40,554
Minority interests 1,039 1,571
---------- ----------
1,706,140 1,628,927
---------- ----------
Income before income taxes 100,757 69,114
Income taxes 29,712 26,507
---------- ----------
INCOME FROM CONTINUING OPERATIONS 71,045 42,607
Income from discontinued operations 16,427
---------- ----------
Income before extraordinary charge 71,045 59,034
Extraordinary charge for early retirement
of debt, net of tax benefit of $4,554 (8,458)
---------- ----------
NET INCOME $ 62,587 $ 59,034
========== ==========
INCOME (LOSS) PER COMMON SHARE:
Continuing operations $ 0.75 $ 0.46
Discontinued operations 0.18
---------- ----------
Income before extraordinary charge 0.75 0.64
Extraordinary charge (0.09)
---------- ----------
NET INCOME PER COMMON SHARE $ 0.66 $ 0.64
========== ==========
Dividends declared per common share $ 0.24 $ 0.40
========== ==========
Average outstanding common
and equivalent shares 93,632 91,338
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF RETAINED INCOME
<CAPTION>
Nine months ended September 30, 1997 1996
(000 omitted) ---------- ----------
<S> <C> <C>
Balance, beginning of year $ 146,664 $ 322,439
Net income 62,587 59,034
Dividends on common and preferred stock (22,715) (36,374)
Distribution of the consumer products
business to Viad stockholders (1,216) (160,026)
Other 186 280
---------- ----------
Balance, end of period $ 185,506 $ 185,353
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
VIAD CORP
STATEMENT OF CONSOLIDATED CASH FLOWS
<CAPTION>
Nine months ended September 30, 1997 1996
(000 omitted) ---------- ----------
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income $ 62,587 $ 59,034
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 58,995 55,616
Deferred income taxes 2,879 7,305
Income from discontinued operations (16,427)
Extraordinary charge for early retirement of debt 8,458
Spin-off costs and management transition expenses 15,000
Other noncash items, net (3,215) 3,216
Change in operating assets and liabilities:
Receivables and inventories (20,576) (37,102)
Payment service current assets and
obligations, net 198,847 130,893
Proceeds from agents' receivables sold 119,396
Accounts payable and accrued compensation (3,612) 32,972
Other assets and liabilities, net (42,570) (48,495)
---------- ----------
Net cash provided by operating activities 381,189 202,012
---------- ----------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Capital expenditures (71,178) (47,333)
Purchase of asset previously leased (20,997)
Acquisitions of businesses, net of cash acquired (18,676) (19,396)
Proceeds from sales of property and equipment, net 89,852 8,242
Investments restricted for payment service obligations:
Proceeds from sales and maturities of securities
classified as available for sale 535,441 379,925
Proceeds from maturities of securities
classified as held to maturity 25,061 7,784
Purchases of securities classified as
available for sale (765,767) (384,606)
Purchases of securities classified as
held to maturity (97,525) (157,253)
Investments in and advances from discontinued
operations, net 66,545 32,693
---------- ----------
Net cash used by investing activities (257,244) (179,944)
---------- ----------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Payments on long-term borrowings (75,780) (77,666)
Premium paid upon early retirement of debt (13,012)
Net change in short-term borrowings (21,003) 51,966
Dividends on common and preferred stock (22,715) (36,374)
Proceeds from sales of treasury stock 16,373 38,377
Cash payments on interest rate swaps (2,273) (6,009)
---------- ----------
Net cash used by financing activities (118,410) (29,706)
---------- ----------
Net increase (decrease) in cash
and cash equivalents 5,535 (7,638)
Cash and cash equivalents, beginning of year 4,422 17,945
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,957 $ 10,307
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
VIAD CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--Basis of Preparation
The Consolidated Financial Statements of Viad Corp ("Viad")
include the accounts for Viad and all of its subsidiaries. This
information should be read in conjunction with the financial
statements set forth in the Viad Corp Annual Report to
Stockholders for the year ended December 31, 1996.
Accounting policies utilized in the preparation of the financial
information herein presented are the same as set forth in Viad's
annual financial statements except as modified for interim
accounting policies which are within the guidelines set forth in
Accounting Principles Board Opinion No. 28, "Interim Financial
Reporting." The interim consolidated financial information is
unaudited. In the opinion of management, all adjustments,
consisting only of normal recurring accruals, necessary to
present fairly Viad's financial position as of September 30,
1997, and its results of operations and its cash flows for the
quarters and nine months ended September 30, 1997 and 1996 have
been included. Interim results of operations are not necessarily
indicative of the results of operations for the full year.
NOTE B--Investments Restricted for Payment Service Obligations
Investments restricted for payment service obligations include
the following debt and equity securities:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----------- -----------
(000 omitted)
<S> <C> <C>
Securities available for sale, at
fair value (amortized cost of
$981,476 and $748,642) $ 996,843 $ 748,977
Securities held to maturity, at
amortized cost (fair value of
$484,255 and $403,278) 478,152 405,921
----------- ----------
1,474,995 1,154,898
Less current maturities (22,828) (10,619)
----------- ----------
$ 1,452,167 $ 1,144,279
=========== ==========
</TABLE>
NOTE C--Sale of Viad Tower
During May 1997, Viad sold its corporate headquarters building
for $73,000,000, before expenses of sale. As part of the
transaction, Viad is leasing back the portion of the building it
currently occupies for nearly 15 years. Accordingly, the excess
of the net sales price over the net book value of the building
was deferred and is being amortized over the remaining term of
the lease.
NOTE D--Sale of Agents' Receivables
In September 1997, Viad's payment services subsidiary entered
into a five year agreement to sell, on a periodic basis,
undivided percentage ownership interests in certain receivables
in an amount not to exceed $250,000,000. The receivables,
representing funds in transit from money order agents, are being
sold in order to accelerate payment services' cash flow for
investment in admissible securities (which are available to
satisfy certain state requirements that qualified assets be equal
to or exceed related payment service obligations at all times).
The agents' receivables sold in the third quarter of 1997 totaled
$119,396,000. The expense of selling such receivables amounted
to approximately $467,000 for the quarter ended September 30,
1997, which has been deducted in arriving at payment service
operating income.
NOTE E--Debt
In September 1997, Viad reduced the aggregate bank commitments
available under a long-term revolving bank credit agreement from
$400,000,000 to $300,000,000. The commitments support short-term
borrowings made through Viad's issuance of commercial paper and
promissory notes. Also in the third quarter, the agreement was
extended an additional year to expire in 2002. At September 30,
1997 and December 31, 1996, Viad classified $62,997,000 and
$84,000,000, respectively, of short-term borrowings supported by
such unused commitments as long-term debt.
As discussed in Liquidity and Capital Resources, in late March
1997, Viad repurchased $58,414,000 par value of its 10.5 percent
subordinated debentures at a premium, resulting in an
extraordinary after-tax charge of $8,458,000.
NOTE F--Income Taxes
A reconciliation of the provision for income taxes and the amount
that would be computed using statutory federal income tax rates
on income before income taxes for the nine months ended September
30, is as follows:
<TABLE>
<CAPTION>
1997 1996
(000 omitted) ------------ ------------
<S> <C> <C>
Computed income taxes at statutory
federal income tax rate of 35% $ 35,265 $ 24,190
Nondeductible goodwill amortization 3,106 2,932
Minority interests 364 550
State income taxes 3,501 2,794
Tax-exempt income (13,676) (9,856)
Spin-off transaction costs 5,250
Adjustment to estimated annual
effective rate 500
Other, net 652 647
----------- -----------
Provision for income taxes $ 29,712 $ 26,507
=========== ===========
</TABLE>
<PAGE>
NOTE G--Supplementary Information--Revenues and Operating Income
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 30, September 30,
------------------------- --------------------------
1997 1996 1997 1996
(000 omitted) ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Airline Catering
and Services $ 244,537 $ 225,712 $ 687,355 $ 633,694
Convention Services 181,310 191,591 612,977 579,507
Travel and Leisure
and Payment
Services (1) 196,379 180,987 506,565 484,840
----------- ----------- ----------- -----------
$ 622,226 $ 598,290 $ 1,806,897 $ 1,698,041
=========== =========== =========== ===========
Operating Income:
Airline Catering
and Services $ 24,342 $ 22,712 $ 58,788 $ 54,991
Convention
Services 14,046 12,956 54,273 48,759
Travel and Leisure
and Payment
Services (1) 29,867 28,084 52,550 49,555
----------- ----------- ----------- -----------
Total principal
business segments 68,255 63,752 165,611 153,305
Unallocated
corporate expense
and other
items, net (6,910) (7,335) (22,412) (25,248)
Sale of trade
accounts
receivable
expense (1,110) (808) (3,330) (1,818)
----------- ----------- ----------- -----------
$ 60,235 $ 55,609 $ 139,869 $ 126,239
=========== =========== =========== ===========
<FN>
(1) Viad's payment services subsidiary is investing increasing amounts in tax-
exempt securities. On a fully taxable equivalent basis, revenues and operating
income would be higher by $7,103,000 and $6,136,000 for the 1997 and 1996
quarters, respectively, and by $21,040,000 and $15,163,000 for the 1997 and 1996
nine month periods, respectively.
</TABLE>
<PAGE>
NOTE H--Discontinued Operations
The caption, "Income (loss) from discontinued operations" presented
in the Statement of Consolidated Income for the quarter and nine
months ended September 30, 1996, includes the following, after
income taxes where applicable:
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 30, 1996 September 30, 1996
------------------ ------------------
(000 omitted)
<S> <C> <C>
Consumer products business
(spun off August 15, 1996
as The Dial Corporation):
Income (loss) from operations $ (3,729) $ 35,620
Spin-off costs and management
transition expenses (1,000) (5,000)
----------- -----------
(4,729) 30,620
----------- -----------
Canadian intercity bus transportation
business, net of applicable minority
interests (disposed of May 31, 1996):
Loss from operations (583)
Transaction costs, loss on
disposition and foreign
currency translation losses (1) (15,866)
-----------
(16,449)
-----------
Cruise line business (sold
April 17, 1997):
Income from operations 62 2,256
----------- -----------
Income (loss) from discontinued
operations $ (4,667) $ 16,427
=========== ===========
<FN>
(1) Includes spin-off and exchange transaction costs, totaling $1,579,000,
associated with the disposition of the Canadian intercity bus transportation
business, along with a loss recorded on the disposition of $2,021,000 and
recognition of previously unrealized foreign currency translation losses of
$12,266,000. The translation losses had previously been deducted from common
stock and other equity in accordance with SFAS No. 52.
</TABLE>
NOTE I--Dividends Declared Per Common Share
The decline in dividends declared per common share for the nine
months ended September 30, 1997, as compared to the first nine
months of 1996, reflects the spin-off of Viad's consumer products
business, now conducted under the name The Dial Corporation, on
August 15, 1996. Viad's quarterly dividend decreased from $0.16
per share to $0.08 per share following the spin-off. The Dial
Corporation's initial quarterly dividend of $0.08 per share after
the spin-off maintained the $0.16 quarterly dividend for
stockholders who retained shares of both companies following the
spin-off.
NOTE J--Impact of New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share." SFAS No. 128 requires the dual
presentation of basic and diluted earnings per share ("EPS") on the
face of the income statement and requires a reconciliation of the
numerators and denominators of basic and diluted EPS calculations.
SFAS No. 128 will be effective for Viad's 1997 fiscal year. Early
adoption of the Statement is not permitted. Pro forma basic and
diluted net income per common share as defined for the third
quarter and nine month periods ended September 30 would be as
follows had SFAS No. 128 been adopted for those periods:
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 30, September 30,
------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Basic $ 0.37 $ 0.23 $ 0.68 $ 0.66
Diluted 0.36 0.22 0.66 0.64
</TABLE>
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income," to be effective in 1998. SFAS No. 130
establishes standards for reporting and displaying comprehensive
income and its components. The adoption of SFAS No. 130 will not
affect net income as previously reported.
Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131
requires disclosure of certain financial and descriptive
information for each reportable operating segment based on
management's internal organizational decision making structure.
SFAS No. 131 also establishes standards for disclosures relating to
products and services, geographic areas and major customers. The
new disclosures required by SFAS No. 131 will be effective for
Viad's financial statements for the year ending December 31, 1998.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS:
There were no material changes in the nature of Viad's business, nor
were there any other changes in the general characteristics of its
operations as described and discussed in the first paragraph of the
results section of Management's Discussion and Analysis of Results of
Operations and Financial Condition presented in the Viad Corp Annual
Report to Stockholders for the year ended December 31, 1996.
COMPARISON OF THIRD QUARTER OF 1997 TO THE THIRD QUARTER OF 1996:
In the third quarter of 1997, revenues increased $23.9 million, or 4.0
percent, to $622.2 million from $598.3 million in 1996. The 1997
third quarter operating income of Viad's principal business segments
increased $4.5 million, or 7.1 percent, over that of 1996. Viad's
payment services subsidiary continues to invest increasing amounts of
its growing money order and official check funds in tax-exempt
securities. On a fully taxable equivalent basis, revenues rose 4.1
percent and operating income was up 7.8 percent.
Income from continuing operations for the third quarter of 1997 was
$33.9 million, or $0.36 per share. Income from continuing operations
for the third quarter of 1996 was $25.1 million, or $0.27 per share,
after deducting a provision for spin-off costs and management
transition expenses of $3.0 million, or $0.03 per share.
Net income for the third quarter of 1997 was $33.9 million, or $0.36
per share. Net income for the third quarter of 1996 was $20.4
million, or $0.22 per share, which included a loss from discontinued
operations of $4.7 million, or $0.05 per share. See Note H of Notes
to Consolidated Financial Statements.
There were 2.1 million more average common and equivalent shares
outstanding in the 1997 quarter than in the 1996 quarter, due
primarily to the effects of stock option exercises and other issuances
related to employee benefit plans.
AIRLINE CATERING AND SERVICES.
The third quarter 1997 revenues of the Airline Catering and Services
group were $244.5 million, an 8.3 percent increase from the 1996 third
quarter revenues of $225.7 million. On a fully comparable basis, the
revenue increase was 7.1 percent, as the reported 1996 revenues did
not include two catering kitchens which had only been 50 percent owned
in 1996. Operating income increased $1.6 million, or 7.2 percent,
over that of the 1996 third quarter. This performance was led by
airline catering, with into-plane fueling and ground handling showing
some improvement in operating income despite slightly lower revenues
resulting from eliminating certain low-margin business. Catering
revenues and operating income increased primarily as a result of new
business added over the past year, including the acquisition of a
flight kitchen in Miami in early 1997. Operating margins for the
segment were 10.0 percent as compared with 10.1 percent in 1996. When
the 1996 unconsolidated revenues from the two catering kitchens which
had only been 50 percent owned are considered, last year's margin
would have been 10.0 percent, even with 1997 on a fully comparable
basis.
CONVENTION SERVICES.
Convention Services third quarter 1997 revenues decreased $10.3
million, or 5.4 percent, to $181.3 million from $191.6 million in the
1996 third quarter. The third quarter of 1996 included revenues from
the Atlanta Olympic Games and the Democratic National Convention.
Despite the lower revenues, operating income increased $1.1 million,
or 8.4 percent, and operating margins improved to 7.7 percent from 6.8
percent in the 1996 third quarter. These increases were achieved as
the result of efficiencies gained from the consolidation of Giltspur
Inc. operations with Exhibitgroup, strong segment revenue growth
(excluding the effects of the one-time events mentioned above) and
improved show management cost controls at GES Exposition Services.
TRAVEL AND LEISURE AND PAYMENT SERVICES.
Revenues of the Travel and Leisure and Payment Services companies were
$196.4 million for the third quarter of 1997, up $15.4 million from
those of the 1996 third quarter. Operating income increased 6.3
percent to $29.9 million. On the fully taxable equivalent basis,
third quarter revenues and operating income would be higher by $7.1
million and $6.1 million in 1997 and 1996, respectively, resulting in
an 8.7 percent revenue increase and an 8.0 percent operating income
increase. Operating margins on the fully taxable equivalent basis
would be 18.2 percent in the third quarter of 1997, down slightly from
18.3 percent in the 1996 third quarter.
On the fully taxable equivalent basis, payment services revenues and
operating income increased $11.2 million and $2.4 million,
respectively, over those of 1996's third quarter, primarily as a
result of increased investment income arising from larger investment
balances and the contribution from two acquisitions by payment
services made in the first quarter of 1997.
Duty Free and shipboard concession revenues and operating income
increased $4.0 million and $400,000, respectively, over those of the
1996 third quarter, due primarily to an increase in the number of
shipboard passenger days and increased sales at Miami International
Airport.
Travel tour service revenues and operating income decreased $1.3
million and $1.5 million, respectively, from those of the 1996 third
quarter, as Japanese tourism into Canada and European tourism to the
United States were both down from 1996 levels. See Recent
Developments.
Food service companies revenues and operating income increased $2.5
million and $800,000, respectively, in the 1997 third quarter, due
primarily to higher revenues at America West Arena and Glacier Park.
UNALLOCATED CORPORATE EXPENSE AND OTHER ITEMS, NET.
Unallocated corporate expense and other items, net, decreased $400,000
from the third quarter of 1996.
SALE OF TRADE ACCOUNTS RECEIVABLE EXPENSE.
Expenses from the sale of trade accounts receivable were higher by
$300,000 in the third quarter of 1997 compared to the third quarter of
1996. The average level of such accounts receivable sold by
continuing operations was higher in 1997 than in 1996, as Viad still
had consumer products trade receivables in the program up to the
August 15, 1996, spin-off of the consumer products business, now
reclassified to discontinued operations.
INTEREST EXPENSE.
Interest expense decreased $2.0 million in the 1997 third quarter.
Viad repurchased $58.4 million par value of its 10.5 percent
subordinated debentures in late March 1997, resulting in lower
interest expense in the third quarter of 1997 compared to the 1996
quarter. In addition, cash proceeds from the sale of the Star/Ship
Atlantic in March, the disposition of Premier Cruise Lines in April
and the sale/leaseback of Viad's corporate headquarters building in
May resulted in lower debt levels and reduced interest expense.
INCOME TAXES.
The effective tax rate in the 1997 third quarter was 29.8 percent.
Excluding the effects of the $3.0 million provision for spin-off costs
and management transition expenses without tax benefit, the effective
tax rate for the third quarter of 1996 was 31.7 percent. The
reduction in the effective tax rate results primarily from the
increased use of tax-exempt investments by Viad's payment services
subsidiary.
COMPARISON OF FIRST NINE MONTHS OF 1997 TO THE
FIRST NINE MONTHS OF 1996:
Revenues for the first nine months of 1997 increased $108.9 million,
or 6.4 percent, to $1.8 billion from $1.7 billion in the same period
of 1996. Operating income of Viad's principal business segments
increased $12.3 million, or 8.0 percent, over that of 1996. On the
fully taxable equivalent basis, revenues rose 6.7 percent and
operating income was up 10.8 percent.
Income from continuing operations for the first nine months of 1997
was $71.0 million, or $0.75 per share. Income from continuing
operations for the first nine months of 1996 was $42.6 million, or
$0.46 per share, after deducting a provision for spin-off costs and
management transition expenses of $15.0 million, or $0.16 per share.
For the first nine months of 1997, net income was $62.6 million, or
$0.66 per share, after deducting an extraordinary charge of $8.5
million (net of tax benefit of $4.6 million), or $0.09 per share, for
the early retirement of debt. Net income for the same period of 1996
was $59.0 million, or $0.64 per share, which included income from
discontinued operations of $16.4 million, or $0.18 per share.
There were 2.3 million more average common and equivalent shares
outstanding in 1997 than in 1996, due primarily to the effects of
stock option exercises and other issuances related to employee benefit
plans.
AIRLINE CATERING AND SERVICES.
Nine month revenues of the Airline Catering and Services group were
$687.4 million in 1997, an 8.5 percent increase from the 1996 nine
month revenues of $633.7 million. On a fully comparable basis, the
revenue increase was 6.8 percent, as the reported 1996 revenues did
not include two catering kitchens which had only been 50 percent owned
in 1996. Operating income increased $3.8 million, or 6.9 percent, to
$58.8 million for the first nine months of 1997. The segment
performance was led by airline catering. Catering revenues and
operating income increased primarily as a result of new business
added, including the acquisition of a flight kitchen in Miami in early
1997. Operating margins were 8.6 percent in 1997 compared with 8.7
percent in 1996. On a fully comparable basis, including
unconsolidated 1996 revenues from the two catering kitchens which had
only been 50 percent owned, the 1996 operating margin would have been
8.5 percent.
CONVENTION SERVICES.
Convention Services' nine month revenues of $613.0 million were $33.5
million, or 5.8 percent, greater than the 1996 nine month period.
Operating income increased 11.3 percent to $54.3 million, and
operating margins increased to 8.9 percent from 8.4 percent in 1996.
These increases were achieved as a result of efficiencies gained from
the consolidation of Giltspur Inc. operations with Exhibitgroup,
strong segment revenue growth (excluding the effects of the Atlanta
Olympic Games and the Democratic National Convention held in 1996) and
improved show management cost controls at GES Exposition Services.
TRAVEL AND LEISURE AND PAYMENT SERVICES.
For the first nine months of 1997, revenues of the Travel and Leisure
and Payment Services companies were $506.6 million, up $21.7 million,
or 4.5 percent, from those of the 1996 nine month period. Operating
income increased 6.0 percent to $52.6 million. On the fully taxable
equivalent basis, nine month revenues and operating income would be
higher by $21.0 million and $15.2 million in 1997 and 1996,
respectively, for a 5.5 percent revenue increase and a 13.7 percent
operating income increase. Excluding the 1996 revenues of Oakbrook
Hills Hotel & Resort, sold June 30, 1996, the nine month revenue
increase was 7.7 percent. Operating margins on the fully taxable
equivalent basis would be 13.9 percent for the first nine months of
1997, up from 12.9 percent in the comparable period of 1996.
On the fully taxable equivalent basis, payment services revenues and
operating income increased $27.7 million and $7.1 million,
respectively, over those of 1996's first nine months, due principally
to increased investment income arising from larger investment balances
and business generated from two acquisitions made in the first quarter
of 1997.
Duty Free airport and shipboard concession revenues and operating
income increased $5.7 million and $500,000, respectively, over those
of the first nine months of 1996, due to an increase in the number of
shipboard passenger days and increased sales at Miami International
Airport.
Travel tour service revenues improved $2.2 million over the first nine
months of 1996, due in part to the effects of an acquisition made in
the third quarter of 1996. Operating results declined $2.4 million as
a consequence of the lower 1997 passenger volumes and higher costs to
provide services. See Recent Developments.
Revenues of the food service companies for the first nine months of
1997 increased $2.2 million over those of the 1996 nine month period.
Increased business at America West Arena (due to the addition of
Phoenix Coyotes hockey games) and increased revenues at General Motors
(due to strikes at certain General Motors plants in the first quarter
of 1996) were partly offset by the closure of certain locations in
1996. Operating income increased $2.4 million, due primarily to the
higher revenues and improved cost efficiencies when compared to the
effects of the strikes on 1996 operations.
UNALLOCATED CORPORATE EXPENSE AND OTHER ITEMS, NET.
Unallocated corporate expense and other items, net, decreased $2.8
million from the same period of 1996.
SALE OF TRADE ACCOUNTS RECEIVABLE EXPENSE.
Expenses from the sale of trade accounts receivable were higher by
$1.5 million in the first nine months of 1997 compared to the same
period of 1996. The average level of accounts receivable sold by
Viad's continuing operations was higher in 1997 than in 1996, as Viad
still had consumer products trade receivables in the program up to the
August 15, 1996, spin-off of the consumer products business, now
reclassified to discontinued operations.
INTEREST EXPENSE.
Interest expense for the first nine months of 1997 decreased $2.5
million from that of the same period of 1996. Viad repurchased $58.4
million par value of its 10.5 percent subordinated debentures in late
March 1997, resulting in lower interest expense. In addition,
proceeds from the sale of the Star/Ship Atlantic, the disposition of
Premier Cruise Lines and the sale of Viad's corporate headquarters
building results in lower debt levels and reduced interest expense.
INCOME TAXES.
The effective tax rate for the first nine months of 1997 was 29.5
percent. Excluding the effects of the $15.0 million provision for
spin-off costs and management transition expenses without tax benefit,
the effective tax rate for the first nine months of 1996 was 31.5
percent. The reduction in the effective tax rate results primarily
from the increased use of tax-exempt investments by Viad's payment
services subsidiary.
LIQUIDITY AND CAPITAL RESOURCES:
In late March 1997, Viad repurchased $58.4 million par value of its
10.5 percent subordinated debentures at a premium, resulting in an
extraordinary charge of $8.5 million (net of tax benefit of $4.6
million), or $0.09 per share. The tender offer was financed with
general corporate funds, operating cash flow, proceeds from the sale
of certain assets and short-term borrowings. The purpose of the
repurchase was to reduce ongoing interest expense.
In September 1997, Viad reduced the aggregate bank commitments
available under its long-term revolving bank credit agreement from
$400 million to $300 million. Also in the third quarter, the
agreement was extended an additional year to expire in 2002. The
commitments support short-term borrowings made through Viad's issuance
of commercial paper and promissory notes.
Viad's total debt at September 30, 1997 was $424.3 million compared
with $521.1 million at December 31, 1996. The debt-to-capital ratio
at September 30, 1997 was 0.45 to 1, down from 0.54 to 1 at December
31, 1996.
In September 1997, Viad's payment services subsidiary entered into a
five year agreement to sell, on a periodic basis, undivided percentage
ownership interests in certain receivables in an amount not to exceed
$250 million. The receivables, representing funds in transit from
money order agents, are being sold in order to accelerate payment
services' cash flow for investments in admissible securities (which
are available to satisfy certain state requirements that qualified
assets be equal to or exceed related payment service obligations at
all times). See Note D of Notes to Consolidated Financial Statements.
As mentioned previously in Note C of Notes to Consolidated Financial
Statements, in May 1997, Viad sold its corporate headquarters building
for $73.0 million, before selling expenses. In mid-March 1997, Viad
sold the Star/Ship Atlantic for $70.0 million, and in April 1997, Viad
finalized the sale of Premier Cruise Lines for $19.0 million.
Fluctuations in the balances of payment service assets and obligations
result from varying levels of sales of money orders and other payment
instruments, the timing of the collections of agents' receivables and
the timing of the presentment of such instruments. Increases in the
amount of agents' receivables sold also result in increases in the
levels of investments restricted for payment service obligations
(classified as long-term assets) and lower payment service current
assets.
RECENT DEVELOPMENTS:
In September 1997, Viad announced that it had signed an agreement to
enter into a merger with Game Financial Corporation ("Game"), with
Viad to issue common stock in exchange for 100 percent of the
outstanding shares of Game. Game, which offers cash access services
to casinos and other gaming establishments, will operate as part of
Viad's payment services group. In early October 1997, Viad filed a
Form S-4 registering 2,800,000 shares of common stock. The proxy
statement/prospectus became effective on November 7, 1997. The number
of shares to be issued in the merger depends on Viad's average stock
price for a defined period leading up to the merger date. The
acquisition, which is not material to Viad's results of operations,
is anticipated to be completed by year end.
In October 1997, Viad completed the sale of two small British travel
tour companies from the travel and leisure and payment services
segment.
There were no other material changes in Viad's financial condition nor
were there any substantive changes relative to matters discussed in
the Liquidity and Capital Resources section of Management's Discussion
and Analysis of Results of Operations and Financial Condition as
presented in Viad Corp's Annual Report to Stockholders for the year
ended December 31, 1996.
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
third quarter of 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. 10A - Viad Corp Deferred Compensation Plan
Amended and Restated as of August 21, 1997
Exhibit No. 10B - 1997 Viad Corp Omnibus Incentive Plan, As
Amended, filed as Exhibit 4.3 to Viad's Form S-8,
Registration No. 333-35231, is hereby incorporated by
reference.
Exhibit No. 11 - Statement Re Computation of Per Share
Earnings
Exhibit No. 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed by the
registrant during the quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements 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 12, 1997 By /s/ Richard C. Stephan
-------------------------
Richard C. Stephan
Vice President-Controller
(Chief Accounting Officer
and Authorized Officer)
Exhibit 10A
VIAD CORP
DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED AS OF AUGUST 21, 1997
1. PURPOSE OF THE PLAN.
The purpose of the Deferred Compensation Plan (the Plan) is
to provide a select group of management or highly compensated
employees of Viad Corp (the Corporation) and its subsidiaries
with an opportunity to defer the receipt of incentive
compensation awarded to them under the Management Incentive Plan,
the Performance Unit Incentive Plan and certain other incentive
plans of Viad Corp and its subsidiaries (the Incentive Plans) and
thereby enhance the long-range benefits and purposes of the
incentive awards. Each plan year shall extend from January 1
through December 31 of each calendar year.
2. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation Advisory
Committee (the Committee). Subject to the express provisions of
the Plan, and the Incentive Plans, the Committee shall have the
authority to adopt, amend and rescind such rules and regulations,
and to make such determinations and interpretations relating to
the Plan, which it deems necessary or advisable for the
administration of the Plan, but it shall not have the power to
amend, suspend or terminate the Plan. All such rules,
regulations, determinations and interpretations shall be
conclusive and binding on all parties.
3. PARTICIPATION IN THE PLAN.
(a) Participation in the Plan shall be restricted to a
select group of management or highly compensated employees of the
Corporation or one of its subsidiaries who are participants in
certain Incentive Plans, including the Management Incentive Plan,
Viad Corp Performance Unit Incentive Plan, and any other bonus or
bonuses or similar or successor plans, who have been selected in
writing by the Chief Executive Officer of the Corporation to
participate in the Plan, and whose timely written requests to
defer the receipt of all or a portion of any incentive
compensation which may be awarded to them, are honored in whole
or in part by the Committee. Any individual whose request for
deferral is not accepted or honored by the Committee, whether for
failure of timely submission or for any other reason, shall not
become a participant in the Plan, and the Committee's
determination in this regard shall be conclusive and binding.
(b) Participants may defer incentive compensation into a
cash account and, if designated by the Committee, into a stock
unit account.
(c) If a participant in the Plan shall 1) sever,
voluntarily or involuntarily, his employment with the Corporation
or one of its subsidiaries other than as a result of disability
or retirement, 2) engage in any activity in competition with the
Corporation or any of its subsidiaries during or following such
employment, or 3) remain in the employ of a corporation which for
any reason ceases to be a subsidiary of the Corporation, the
Committee may at any time thereafter direct, in its sole and
exclusive discretion, that his participation in the Plan shall
terminate, and that he be paid in a lump sum the aggregate amount
credited to his deferred incentive account as of the date such
participation is terminated. The Committee is authorized to
establish and implement a policy and procedures for
administration of this paragraph, including, but not limited to,
a policy regarding small account balance cash-outs.
(d) The Corporation and each participating subsidiary shall
be solely liable for payment of any benefits and, except as may
be otherwise determined by the Committee, for maintenance of
deferred incentive accounts pursuant to paragraph 7, with respect
to its own employees who participate in the Plan. In the event a
participant leaves the employ of the Corporation or a
participating subsidiary ("former employer") and is subsequently
employed by another employer, the Corporation or another
subsidiary of the Corporation ("new employer"), the former
employer may agree to transfer and the new employer may agree to
assume the benefit liability reflected in such participant's
deferred incentive account, without the consent of such
participant and subject to the approval of the Committee, in its
sole discretion. In the event of such a transfer and assumption
of liability, the former employer shall have no further liability
for any benefit under the Plan to its former employee or
otherwise with respect to such transferred account.
4. REQUESTS FOR DEFERRAL.
All requests for deferral of incentive awards must be made
in writing prior to November 15 of the year in which the bonus is
being earned and shall be in such form and shall contain such
terms and conditions as the Committee may determine. Each such
request shall specify the dollar amount or the percentage to be
deferred of incentive award which would otherwise be received in
the following calendar year, but in no event shall the amount to
be deferred be less than $1,000. Each such request shall also
specify 1) the date (no later than the employee's actual
retirement date) when payment of the aggregate amount credited to
the deferred incentive account is to commence, 2) whether such
payment is then to be made in a lump sum or in quarterly or
annual installments, 3) if payment is to be made in installments,
the period of time (not in excess of ten years) over which the
installments are to be paid, and 4) if the participant is
permitted to defer incentive compensation into a stock unit
account, the portion of the deferred incentive compensation which
shall be treated as a cash account under paragraph 7(b) and the
portion which shall be treated as a stock unit account under
paragraph 7(c). The Committee shall, under no circumstances,
accept any request for deferral of less than $1,000 of an
incentive award or any request which is not in writing or which
is not timely submitted.
5. DEFERRAL AND PAYMENT OF INCENTIVE AWARDS.
The Committee shall, prior to December 15 of the year in
which the bonus is being earned, notify each individual who has
submitted a request for deferral of an incentive award whether or
not such request has been accepted and honored. If the request
has been honored in whole or in part, the Committee shall advise
the participant of the dollar amount or percentage of his
incentive compensation which the Committee has determined to be
deferred. The Committee shall further advise the participant of
its determination as to the date when payment of the aggregate
amount credited to the participant's deferred incentive account
is to commence, whether payment of the amount so credited as of
that date will then be made in a lump sum or in quarterly or
annual installments, if payment is to be made in installments,
the period of time over which the installments will be paid, and
if the participant is permitted to defer incentive compensation
into a stock unit account, whether the deferred incentive account
shall be treated as a cash account or a stock unit account or
split between cash and stock units. Upon subsequently being
advised of the existence of special circumstances which are
beyond the participant's control and which impose an unforeseen
severe financial hardship on the participant or his beneficiary,
the Committee may, in its sole and exclusive discretion, modify
the deferral arrangement established for that participant to the
extent necessary to remedy such financial hardship.
If the participant has elected to defer incentive
compensation in the form of cash, the Corporation shall distrib-
ute a sum in cash to such participant, pursuant to his or her
election provided for in paragraph 4. If the participant has
elected to defer incentive compensation in the form of stock
units, the Corporation shall distribute to such participant,
pursuant to his or her election provided for in paragraph 4, the
cash equivalent of the portion of the stock units being dis-
tributed in such installment which will be calculated by
multiplying (i) the closing price of the Common Stock of the
Corporation (as reported from the New York Stock Exchange-Composite
Transactions) on the last trading day preceding the date of each
distribution by (ii) the number of stock units being
distributed in such installment.
6. CONVERSION OF ACCOUNT BALANCE.
Each participant who is permitted to defer incentive
compensation into a stock unit account may, not more than once a
year or such other period as is determined by the Committee, by
written notice delivered to the Committee, convert: (i) the
aggregate balance or any portion thereof in his or her deferred
compensation account (either before or after payments from the
account may have commenced) from an account in the form of stock
units to an account in the form of cash in an amount equal to
such stock units balance or specified portion thereof multiplied
by the closing price of the Common Stock of the Corporation (as
reported from the New York Stock Exchange-Composite Transactions)
on the last trading day of the quarter in which such notice is
given, said account to then accrue interest as set forth in
paragraph 7(b) below or (ii) convert the aggregate balance or any
portion thereof in his or her deferred compensation account
(either before or after installment payments from the account may
have commenced) from an account in the form of cash to an account
in the form of stock units in an amount equal to the cash balance
or specified portion thereof divided by the closing price of the
Common Stock of the Corporation (as reported for the New York
Stock Exchange-Composite Transactions) on the last trading day of
the quarter in which such notice is given, said account to then
accrue dividend equivalents as set forth in paragraph 7(c) below;
provided however, that no such notice of conversion ("Conversion
Notice") (a) may be given within six months following the date of
an election by such participant, if an Executive Officer of the
Corporation, with respect to any plan of the Corporation, that
effected a Discretionary Transaction (as defined in Rule 16b-3(f)
under the Securities Exchange Act of 1934) that was an
acquisition (if the Conversion Notice is pursuant to clause (i))
or a disposition (if the Conversion Notice is pursuant to clause
(ii)) or (b) may be given after an individual ceases to be an
employee of the Corporation.
7. DEFERRED INCENTIVE ACCOUNT.
(a) A deferred incentive account shall be maintained by his
employer for each participant in the Plan, and there shall be
credited to each participant's account, on the date incentive
compensation is paid, the incentive award, or portion thereof,
which would have been paid to such participant on said date if
the receipt thereof had not been deferred. If the account is to
be a stock unit account, the incentive compensation award shall
be converted into stock units by dividing the closing price of
the Corporation's Common Stock (as reported for the New York
Stock Exchange Composite Transactions) on the day such incentive
award is payable into such incentive award.
(b) If the participant has elected to defer incentive
compensation in the form of cash, there shall be credited on the
last day of the quarter to each participant's account, an
interest credit on his deferred incentive award at the interest
rates determined by the Committee to be payable during each
calendar year, or portion thereof, prior to the termination of
such participant's deferral period or, if the amount then
credited to his deferred incentive account is to be paid in
installments, prior to the termination of such installment
period. Interest will be paid on a prorated basis for amounts
withdrawn from the account during the quarter, with the remaining
balance accruing interest for the duration of the quarter. The
interest credit for the following quarter shall be a rate equal
to the yield as of March 31, June 30, September 30, and December
31 on Merrill Lynch Taxable Bond Index - Long Term Medium Quality
(A3) Industrial Bonds, unless and until otherwise determined.
(c) If a participant has elected to defer incentive
compensation in the form of stock units, then, in the event of a
dividend paid in cash, stock of the Corporation (other than
Common Stock) or property, additional credits (dividend
equivalents) shall be made to the participant's stock unit
account consisting of a number of stock units equal to the amount
of such dividend per share (or the fair market value, on the date
of payment, of dividends paid in stock or property), multiplied
by the aggregate number of stock units credited to such
participant's deferred compensation account on the record date
for the payment of such dividend, divided by the closing price of
the Corporation's Common Stock (as reported for the New York
State Exchange-Composite transactions) on the date such dividend
is payable to stockholders. After payment of deferred
compensation commences, dividend equivalents shall accrue on the
unpaid balance thereof in the same manner until all such deferred
compensation has been paid.
(d) In the event of a dividend of Common Stock declared and
paid by the Corporation, an additional credit shall be made to
the participant's stock unit account of a number of stock units
equal to the number of shares of the Corporation's Common Stock
which the participant would have received as a stock dividend had
he or she been the owner on the record date for the payment of
such stock dividend of the number of shares of Common Stock equal
to the number of units in such stock unit account on such date.
After payment of deferred compensation commences, additional
credits for stock dividends shall accrue on the unpaid balance
thereof in the same manner until all such deferred compensation
has been paid.
(e) The Plan shall at all times be unfunded. The
Corporation shall not be required to segregate physically any
amounts of money or otherwise provide funding or security for any
amounts credited to the deferred incentive accounts of
participants in the Plan.
8. CHANGE OF CONTROL OR CHANGE IN CAPITALIZATION.
(a) If a tender offer or exchange offer for shares of
Common Stock of the Corporation (other than such an offer by the
Corporation) is commenced, or if the stockholders of the
Corporation shall approve an agreement providing either for a
transaction in which the Corporation will cease to be an
independent publicly owned corporation or for a sale or other
disposition of all or substantially all the assets of the
Corporation (Change of Control), a lump sum cash payment shall be
made to each participant participating in the Plan of the
aggregate current balance of his or her deferred compensation ac-
count accrued to the participant's deferred compensation account
on the date of the Change of Control, notwithstanding any other
provision herein. If the participant has elected to defer
compensation in the form of stock units, the Corporation shall
distribute to such participant the sum in cash equal to the
closing price of the Corporation's Common Stock on the day
preceding the date of the Change of Control (as reported for the
New York Stock Exchange-Composite Transactions) multiplied by the
number of stock units in such account. Any notice by a
participant to change or terminate his or her election to defer
Compensation or before the date of the Change of Control shall be
effective as of the date of the Change of Control,
notwithstanding any other provision herein.
(b) Any recapitalization, reclassification, split-up, spin-off,
sale of assets, combination or merger not otherwise provided for
herein which affects the outstanding shares of Common Stock of the
Corporation or any other relevant change in the capitalization of
the Corporation shall be appropriately adjusted for by the Board of
Directors of this Corporation, and any such adjustments shall be
final, conclusive and binding.
9. DESIGNATION OF BENEFICIARY.
Each participant in the Plan shall deliver to the Committee
a written instrument, in the form provided by the Committee,
designating one or more beneficiaries to whom payment of the
amount credited to his deferred incentive account shall be made
in the event of his death. Unless the Committee shall otherwise
determine, such payments shall be made in such amounts and at
such times as they would otherwise have been paid to the
participant if he had survived.
10. NONASSIGNABILITY OF PARTICIPATION RIGHTS.
No right, interest or benefit under the Plan shall be
assignable or transferable under any circumstances other than to
a participant's designated beneficiary in the event of his death,
nor shall any such right, interest or benefit be subject to or
liable for any debt, obligation, liability or default of any
participant. The payments, benefits or rights arising by reason
of this Plan shall not in any way be subject to a participant's
debts, contracts or engagements, and shall not be subject to
attachment, garnishment, levy, execution or other legal or
equitable process.
11. RIGHTS OF PARTICIPANTS.
A participant in the Plan shall have only those rights,
interests or benefits as are expressly provided in the Plan and
in the Incentive Plans. The Plan shall be deemed to be ancillary
to the Incentive Plans and the rights of participants in the Plan
shall be limited as provided in the Incentive Plans.
12. CLAIMS FOR BENEFITS.
Claims for benefits under the Plan shall be filed with the
Committee. Written notice of the disposition of a claim shall be
furnished the claimant within 60 days after the application
therefor is filed. In the event the claim is denied, the reasons
for the denial shall be specifically set forth. Pertinent
provisions of this Plan shall be cited. In addition, the written
notice shall describe any additional material or information
necessary for the claimant to perfect the claim (along with an
explanation of why such material or information is needed), and
the written notice will fully describe the claim review
procedures of paragraph 13 below.
13. CLAIM REVIEW.
Any claimant who has been denied a benefit shall be
entitled, upon request to the Committee, to receive a written
notice of such action, together with a full and clear statement
of the reasons for the action. The claimant may also review this
Plan if he chooses. If the claimant wishes further consideration
of his position, he may request a hearing. The request, together
with a written statement of the claimant's position, shall be
filed with a Committee member no later than 60 days after receipt
of the written notification provided for above. The Committee
shall schedule an opportunity for a full and fair hearing of the
issue within the next 60 days. The decision following the
hearing shall be made within 60 days and shall be communicated in
writing to the claimant. If the claimant requests, the hearing
may be waived, in which case the Committee's decision shall be
made within 60 days from the date on which the hearing is waived
and shall be communicated in writing to the claimant.
14. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
The Board of Directors of the Corporation (the Board) may
from time to time amend, suspend or terminate the Plan, in whole
or in part, and if the Plan is suspended or terminated, the Board
may reinstate any or all provisions of the Plan, except that no
amendment, suspension or termination of the Plan shall, without
the consent of a participant, adversely affect such participant's
right to receive payment of the entire amount credited to his
deferred incentive account on the date of such Board action. In
the event the Plan is suspended or terminated, the Board may, in
its discretion, direct the Committee to pay to each participant
the amount credited to his account either in a lump sum or in
accordance with the Committee's prior determination regarding the
method of payment.
15. EFFECTIVE DATE.
The Plan shall become effective on the date of its approval
by the Human Resources Committee of the Viad Corp Board of
Directors or on such other date as the Human Resources Committee
may direct, but the Plan shall become operative with respect to a
select group of management or highly compensated employees of
each subsidiary only upon the adoption of the Plan by that
subsidiary's Board of Directors.
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
VIAD CORP
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(000 omitted)
Quarter ended Nine months ended
September 30, September 30,
--------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Primary:
Net income $ 33,850 $ 20,422 $ 62,587 $ 59,034
Less: Preferred
stock dividends (282) (282) (845) (844)
----------- ----------- ----------- -----------
Adjusted net income $ 33,568 $ 20,140 $ 61,742 $ 58,190
=========== =========== =========== ===========
Weighted average common
shares outstanding before
common equivalents 91,456 89,594 90,933 88,861
Common equivalent
stock options 2,883 2,598 2,699 2,477
----------- ----------- ----------- -----------
Average outstanding common
and equivalent shares 94,339 92,192 93,632 91,338
=========== =========== =========== ===========
Primary net income
per share (dollars) $ 0.36 $ 0.22 $ 0.66 $ 0.64
=========== =========== =========== ===========
Fully Diluted:
Adjusted net income
from above $ 33,568 $ 20,140 $ 61,742 $ 58,190
=========== =========== =========== ===========
Average outstanding common
and equivalent shares
from above 94,339 92,192 93,632 91,338
Additional common
equivalent stock options 84 446
----------- ----------- ----------- -----------
94,423 92,192 94,078 91,338
=========== =========== =========== ===========
Fully diluted net income
per share (dollars) $ 0.36 $ 0.22 $ 0.66 $ 0.64
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM VIAD CORP'S
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<CAPTION>
Exhibit 27
VIAD CORP
FINANCIAL DATA SCHEDULE
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<PERIOD-TYPE> 9-MOS
<CASH> 9,957
<SECURITIES> 0
<RECEIVABLES> 184,152
<ALLOWANCES> 12,053
<INVENTORY> 103,617
<CURRENT-ASSETS> 813,701
<PP&E> 863,024
<DEPRECIATION> 408,768
<TOTAL-ASSETS> 3,461,210
<CURRENT-LIABILITIES> 2,354,106
<BONDS> 421,089
<COMMON> 145,663
6,611
0
<OTHER-SE> 355,302
<TOTAL-LIABILITY-AND-EQUITY> 3,461,210
<SALES> 0
<TOTAL-REVENUES> 1,806,897
<CGS> 0
<TOTAL-COSTS> 1,641,286
<OTHER-EXPENSES> 25,742
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,073
<INCOME-PRETAX> 100,757
<INCOME-TAX> 29,712
<INCOME-CONTINUING> 71,045
<DISCONTINUED> 0
<EXTRAORDINARY> (8,458)
<CHANGES> 0
<NET-INCOME> 62,587
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
