UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 or
 o
    
    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 800Phoenix, Arizona
    
    85004-4545(Address of principal executive offices)
    
    (Zip Code)
 (602) 207-4000  (Registrants telephone number, including area code)
 þ o
  Large accelerated filer þ

   

   Accelerated filer
 o


   Non-accelerated filer o
(Do not check if a smaller reporting company)


  Smaller reporting company o
 o þ




---



##### 



PART IFINANCIAL INFORMATION
 Item 1. Financial Statements.
 VIAD CORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 September 30, 2008
    
    
    December 31, 2007(in thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    152,883
    
    
    $
    165,069Accounts receivable, net of allowance for doubtful accounts
of $1,789 and $1,569, respectively
    
    
    78,415
    
    
    
    53,099Inventories
    
    
    51,873
    
    
    
    52,664Deferred income taxes
    
    
    19,664
    
    
    
    20,567Other current assets
    
    
    16,209
    
    
    
    15,222Total current assets
    
    
    319,044
    
    
    
    306,621Property and equipment, net
    
    
    173,255
    
    
    
    168,893Other investments and assets
    
    
    27,022
    
    
    
    30,312Deferred income taxes
    
    
    18,717
    
    
    
    34,704Goodwill
    
    
    231,940
    
    
    
    228,170Other intangible assets, net
    
    
    24,127
    
    
    
    12,663Total Assets
    
    $
    794,105
    
    
    $
    781,363LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    77,602
    
    
    $
    68,442Other current liabilities
    
    
    116,941
    
    
    
    117,152Current portion of long-term debt and capital lease obligations
    
    
    2,535
    
    
    
    2,462Total current liabilities
    
    
    197,078
    
    
    
    188,056Long-term debt and capital lease obligations
    
    
    10,331
    
    
    
    11,714Pension and postretirement benefits
    
    
    22,870
    
    
    
    23,099Other deferred items and liabilities
    
    
    60,948
    
    
    
    82,665Commitments and contingencies (Note 15)Minority interest
    
    
    6,653
    
    
    
    5,984Common stock and other equity:Common stock, $1.50 par value, 200,000,000 shares
authorized, 24,934,981 shares issued
    
    
    37,402
    
    
    
    37,402Additional capital
    
    
    622,687
    
    
    
    635,099Retained earnings
    
    
    95,369
    
    
    
    51,445Unearned employee benefits and other
    
    
    (8,119
    )
    
    
    (8,754
    )Accumulated other comprehensive income (loss):Unrealized gain on investments
    
    
    184
    
    
    
    481Cumulative foreign currency translation adjustments
    
    
    33,324
    
    
    
    47,905Unrecognized net actuarial loss and prior service credit
    
    
    (2,214
    )
    
    
    (1,697
    )Common stock in treasury, at cost, 4,423,058 and 4,363,956
shares, respectively
    
    
    (282,408
    )
    
    
    (292,036
    )Total common stock and other equity
    
    
    496,225
    
    
    
    469,845Total Liabilities and Stockholders Equity
    
    $
    794,105
    
    
    $
    781,363
  Page 2




---



##### 



VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three months ended September 30,
    
    
    Nine months ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands, except per share data)Revenues:Convention and event services
    
    $
    205,057
    
    
    $
    141,611
    
    
    $
    661,629
    
    
    $
    569,113Exhibits and environments
    
    
    46,791
    
    
    
    36,845
    
    
    
    173,196
    
    
    
    142,928Travel and recreation services
    
    
    50,514
    
    
    
    50,348
    
    
    
    80,194
    
    
    
    76,179Total revenues
    
    
    302,362
    
    
    
    228,804
    
    
    
    915,019
    
    
    
    788,220Costs and expenses:Costs of services
    
    
    227,136
    
    
    
    176,007
    
    
    
    663,228
    
    
    
    576,587Costs of products sold
    
    
    49,164
    
    
    
    39,754
    
    
    
    176,070
    
    
    
    142,364Business interruption insurance proceeds
    
    
    
    
    
    
    (146
    )
    
    
    
    
    
    
    (146
    )Corporate activities
    
    
    2,659
    
    
    
    2,342
    
    
    
    7,312
    
    
    
    7,365Restructuring charges (recoveries)
    
    
    (124
    )
    
    
    693
    
    
    
    (124
    )
    
    
    1,903Impairment recoveries
    
    
    
    
    
    
    (72
    )
    
    
    
    
    
    
    (172
    )Interest income
    
    
    (809
    )
    
    
    (1,461
    )
    
    
    (2,562
    )
    
    
    (4,642
    )Interest expense
    
    
    430
    
    
    
    407
    
    
    
    1,308
    
    
    
    1,252Total costs and expenses
    
    
    278,456
    
    
    
    217,524
    
    
    
    845,232
    
    
    
    724,511Income before income taxes and minority interest
    
    
    23,906
    
    
    
    11,280
    
    
    
    69,787
    
    
    
    63,709Income tax expense
    
    
    6,235
    
    
    
    1,843
    
    
    
    22,532
    
    
    
    21,972Minority interest
    
    
    913
    
    
    
    862
    
    
    
    669
    
    
    
    825Income from continuing operations
    
    
    16,758
    
    
    
    8,575
    
    
    
    46,586
    
    
    
    40,912Income (loss) from discontinued operations
    
    
    
    
    
    
    (37
    )
    
    
    (210
    )
    
    
    65Net income
    
    $
    16,758
    
    
    $
    8,538
    
    
    $
    46,376
    
    
    $
    40,977Diluted income per common shareIncome from continuing operations
    
    $
    0.81
    
    
    $
    0.41
    
    
    $
    2.25
    
    
    $
    1.95Income (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.01
    )
    
    
    Net income
    
    $
    0.81
    
    
    $
    0.41
    
    
    $
    2.24
    
    
    $
    1.95Weighted-average outstanding and potentially
dilutive common shares
    
    
    20,650
    
    
    
    20,787
    
    
    
    20,662
    
    
    
    20,965Basic income per common shareIncome from continuing operations
    
    $
    0.83
    
    
    $
    0.42
    
    
    $
    2.30
    
    
    $
    1.99Income (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.01
    )
    
    
    0.01Net income
    
    $
    0.83
    
    
    $
    0.42
    
    
    $
    2.29
    
    
    $
    2.00Weighted-average outstanding common shares
    
    
    20,294
    
    
    
    20,345
    
    
    
    20,253
    
    
    
    20,521Dividends declared per common share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.12
    
    
    $
    0.12
  Page 3




---



##### 



VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three months ended September 30,
    
    
    Nine months ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Net income
    
    $
    16,758
    
    
    $
    8,538
    
    
    $
    46,376
    
    
    $
    40,977Other comprehensive income (loss):Unrealized gains (losses) on investments:Holding gains (losses) arising during the period,
net of tax
    
    
    (153
    )
    
    
    6
    
    
    
    (297
    )
    
    
    80Unrealized gains (losses) on derivative financial
instruments:Holding gains (losses) arising during the period,
net of tax
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    103Unrealized foreign currency translation adjustments
    
    
    (11,639
    )
    
    
    12,374
    
    
    
    (14,581
    )
    
    
    24,922Pension and postretirement benefit plans:Amortization of prior service credit, net of tax
    
    
    (270
    )
    
    
    (189
    )
    
    
    (681
    )
    
    
    (568
    )Amortization of net actuarial loss, net of tax
    
    
    21
    
    
    
    190
    
    
    
    164
    
    
    
    332Other comprehensive income (loss)
    
    
    (12,041
    )
    
    
    12,343
    
    
    
    (15,395
    )
    
    
    24,869Comprehensive income
    
    $
    4,717
    
    
    $
    20,881
    
    
    $
    30,981
    
    
    $
    65,846
  Page 4




---



##### 



VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine months ended September 30,2008
    
    
    2007(in thousands)Cash flows from operating activities:Net income
    
    $
    46,376
    
    
    $
    40,977Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    21,388
    
    
    
    16,965Deferred income taxes
    
    
    7,562
    
    
    
    (3,997
    )Loss (income) from discontinued operations
    
    
    210
    
    
    
    (65
    )Restructuring charges (recoveries)
    
    
    (124
    )
    
    
    1,903Impairment recoveries
    
    
    
    
    
    
    (172
    )Gains on dispositions of property and other assets
    
    
    (88
    )
    
    
    (229
    )Share-based compensation expense
    
    
    6,654
    
    
    
    7,154Tax benefits from share-based compensation arrangements
    
    
    562
    
    
    
    2,237Excess tax benefits from share-based compensation arrangements
    
    
    (361
    )
    
    
    (1,512
    )Other non-cash items, net
    
    
    4,118
    
    
    
    3,682Change in operating assets and liabilities:Receivables
    
    
    (24,781
    )
    
    
    (22,219
    )Inventories
    
    
    1,819
    
    
    
    (2,425
    )Accounts payable
    
    
    11,506
    
    
    
    20,698Restructuring liabilities
    
    
    (1,646
    )
    
    
    (3,068
    )Accrued compensation
    
    
    (4,753
    )
    
    
    2,681Customer deposits
    
    
    (4,453
    )
    
    
    4,137Other assets and liabilities, net
    
    
    (11,724
    )
    
    
    (15,583
    )Net cash provided by operating activities
    
    
    52,265
    
    
    
    51,164Cash flows from investing activities:Capital expenditures
    
    
    (32,049
    )
    
    
    (23,388
    )Proceeds from sale of short-term investments
    
    
    3,980
    
    
    
    Acquisition of businesses, net of cash acquired
    
    
    (23,334
    )
    
    
    (33,164
    )Proceeds from dispositions of property and other assets
    
    
    532
    
    
    
    717Net cash used in investing activities
    
    
    (50,871
    )
    
    
    (55,835
    )Cash flows from financing activities:Payments on debt and capital lease obligations
    
    
    (2,108
    )
    
    
    (1,767
    )Dividends paid on common stock
    
    
    (2,491
    )
    
    
    (2,502
    )Excess tax benefits from share-based compensation arrangements
    
    
    361
    
    
    
    1,512Proceeds from exercise of stock options
    
    
    3,700
    
    
    
    1,984Common stock purchased for treasury
    
    
    (11,695
    )
    
    
    (28,188
    )Net cash used in financing activities
    
    
    (12,233
    )
    
    
    (28,961
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (1,347
    )
    
    
    3,289Net decrease in cash and cash equivalents
    
    
    (12,186
    )
    
    
    (30,343
    )Cash and cash equivalents, beginning of year
    
    
    165,069
    
    
    
    178,073Cash and cash equivalents, end of period
    
    $
    152,883
    
    
    $
    147,730Supplemental disclosure of cash flow informationCash paid during the period for:Income taxes
    
    $
    15,692
    
    
    $
    18,854Interest
    
    $
    903
    
    
    $
    873Equipment acquired under capital leases
    
    $
    633
    
    
    $
    1,078
  Page 5




---



##### 



VIAD CORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1. Basis of Preparation and Principles of Consolidation
    Note 2. Share-Based Compensation
    Page 6




---



##### 



Weighted-Average
    
    OptionsShares
    
    Exercise Price
    
    ExercisableOptions outstanding at January 1, 2008
    
    
    727,438
    
    
    $
    24.93
    
    
    
    548,117Granted
    
    
    26,600
    
    
    
    33.81Exercised
    
    
    (143,659
    )
    
    
    22.56Forfeited
    
    
    (9,194
    )
    
    
    25.92Options outstanding at September 30, 2008
    
    
    601,185
    
    
    
    25.87
    
    
    
    463,037
  Options Outstanding
    
    Options ExercisableWeighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Remaining
    
    Average
    
    
    
    
    
    AverageRange of Exercise Prices
    
    Shares
    
    Contractual Life
    
    Exercise Price
    
    Shares
    
    Exercise Price$18.40 to $20.77
    
    
    75,520
    
    
    4.1 years
    
    $
    19.58
    
    
    
    75,520
    
    
    $
    19.58$22.29 to $24.05
    
    
    103,727
    
    
    2.2 years
    
    
    23.88
    
    
    
    103,727
    
    
    
    23.88$24.22 to $26.07
    
    
    154,107
    
    
    2.9 years
    
    
    25.15
    
    
    
    137,530
    
    
    
    25.26$26.31 to $26.63
    
    
    154,185
    
    
    3.3 years
    
    
    26.34
    
    
    
    91,229
    
    
    
    26.35$28.15 to $38.44
    
    
    113,646
    
    
    3.7 years
    
    
    32.20
    
    
    
    55,031
    
    
    
    29.61$18.40 to $38.44
    
    
    601,185
    
    
    3.2 years
    
    
    25.87
    
    
    
    463,037
    
    
    
    24.76
    Page 7




---



##### 



Restricted Stock
    
    PBRSWeighted-Average
    
    
    
    
    
    Weighted-AverageGrant Date
    
    
    
    
    
    Grant DateShares
    
    Fair Value
    
    Shares
    
    Fair ValueBalance at January 1, 2008
    
    
    345,800
    
    
    $
    32.40
    
    
    
    91,912
    
    
    $
    32.85Granted
    
    
    104,385
    
    
    
    33.79
    
    
    
    55,000
    
    
    
    33.84Vested
    
    
    (86,600
    )
    
    
    26.30
    
    
    
    (52,084
    )
    
    
    30.79Forfeited
    
    
    (5,300
    )
    
    
    34.70
    
    
    
    
    
    
    
    Balance at September 30,
2008
    
    
    358,285
    
    
    
    34.25
    
    
    
    94,828
    
    
    
    35.56
  Note 3. Impairment Recoveries
  Note 4. Acquisition of Businesses
  Page 8




---



##### 



(in thousands)Cash and cash equivalents
    
    $
    1,263Accounts receivable
    
    
    1,387Inventories
    
    
    1,028Other current assets
    
    
    1,532Property and equipment
    
    
    1,673Goodwill
    
    
    11,563Other intangible assets
    
    
    14,983Total assets acquired
    
    
    33,429Accounts payable
    
    
    (1,675
    )Customer deposits
    
    
    (592
    )Other current liabilities
    
    
    (1,559
    )Deferred taxes
    
    
    (4,801
    )Other non-current liabilities
    
    
    (205
    )Total liabilities assumed
    
    
    (8,832
    )Purchase price
    
    $
    24,597
   Page 9




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##### 



Three months ended
    
    Nine months endedSeptember 30, 2007
    
    September 30, 2007(in thousands, except per share data)Revenue
    
    $
    230,948
    
    
    $
    801,899Income from continuing operations
    
    $
    6,732
    
    
    $
    36,696Net income
    
    $
    6,695
    
    
    $
    36,761Diluted net income per share
    
    $
    0.32
    
    
    $
    1.75Basic net income per share
    
    $
    0.33
    
    
    $
    1.79
   Note 5. Inventories
  September 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Raw materials
    
    $
    30,595
    
    
    $
    28,613Work in process
    
    
    21,278
    
    
    
    24,051Inventories
    
    $
    51,873
    
    
    $
    52,664
 Note 6. Property and Equipment
  September 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Land
    
    $
    26,100
    
    
    $
    27,495Buildings and leasehold improvements
    
    
    93,888
    
    
    
    95,741Equipment and other
    
    
    278,333
    
    
    
    261,917398,321
    
    
    
    385,153Accumulated depreciation
    
    
    (225,066
    )
    
    
    (216,260
    )Property and equipment, net
    
    $
    173,255
    
    
    $
    168,893
  Page 10




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##### 



Note 7. Goodwill and Other Intangible Assets
  Experiential
    
    
    Travel andGES
    
    
    Marketing
    
    
    Recreation
    
    
    Total(in thousands)Balance at January 1, 2008
    
    $
    185,676
    
    
    $
    
    
    
    $
    42,494
    
    
    $
    228,170Business acquisition
    
    
    
    
    
    
    11,563
    
    
    
    
    
    
    
    11,563Foreign currency translation adjustments
    
    
    (4,509
    )
    
    
    
    
    
    
    (3,284
    )
    
    
    (7,793
    )Balance at September 30, 2008
    
    $
    181,167
    
    
    $
    11,563
    
    
    $
    39,210
    
    
    $
    231,940
  Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingValue
    
    
    Amortization
    
    
    Value(in thousands)Amortized intangible assets:Customer contracts and relationships
    
    $
    11,011
    
    
    $
    (1,511
    )
    
    $
    9,500Design libraries
    
    
    2,020
    
    
    
    (169
    )
    
    
    1,851Non-compete agreements
    
    
    3,132
    
    
    
    (2,021
    )
    
    
    1,111Proprietary technology
    
    
    783
    
    
    
    (260
    )
    
    
    523Other
    
    
    91
    
    
    
    (34
    )
    
    
    5717,037
    
    
    
    (3,995
    )
    
    
    13,042Unamortized intangible assets:Trademarks and trade names
    
    
    11,055
    
    
    
    
    
    
    
    11,055Other
    
    
    30
    
    
    
    
    
    
    
    3011,085
    
    
    
    
    
    
    
    11,085Total
    
    $
    28,122
    
    
    $
    (3,995
    )
    
    $
    24,127
  Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingValue
    
    
    Amortization
    
    
    Value(in thousands)Amortized intangible assets:Customer contracts and relationships
    
    $
    3,555
    
    
    $
    (548
    )
    
    $
    3,007Non-compete agreements
    
    
    2,050
    
    
    
    (1,202
    )
    
    
    848Proprietary technology
    
    
    582
    
    
    
    (90
    )
    
    
    492Other
    
    
    97
    
    
    
    (18
    )
    
    
    796,284
    
    
    
    (1,858
    )
    
    
    4,426Unamortized intangible assets:Trademarks and trade names
    
    
    8,207
    
    
    
    
    
    
    
    8,207Other
    
    
    30
    
    
    
    
    
    
    
    308,237
    
    
    
    
    
    
    
    8,237Total
    
    $
    14,521
    
    
    $
    (1,858
    )
    
    $
    12,663
 Page 11




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##### 



(in thousands)2008
    
    $
    7612009
    
    $
    3,0362010
    
    $
    2,2302011
    
    $
    1,8902012 and thereafter
    
    $
    5,125
 Note 8. Accrued Liabilities and Other
  September 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Continuing operations:Customer deposits
    
    $
    43,271
    
    
    $
    47,132Accrued compensation
    
    
    30,919
    
    
    
    34,248Self-insured liability accrual
    
    
    8,490
    
    
    
    7,984Accrued income taxes
    
    
    6,079
    
    
    
    787Accrued sales and use taxes
    
    
    3,569
    
    
    
    3,406Accrued restructuring
    
    
    1,975
    
    
    
    3,015Accrued dividends
    
    
    867
    
    
    
    869Other
    
    
    17,461
    
    
    
    15,400112,631
    
    
    
    112,841Discontinued operations:Environmental remediation liabilities
    
    
    3,588
    
    
    
    2,510Self-insured liability accrual
    
    
    636
    
    
    
    591Other
    
    
    86
    
    
    
    1,2104,310
    
    
    
    4,311Total other current liabilities
    
    $
    116,941
    
    
    $
    117,152
  September 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Continuing operations:Self-insured liability accrual
    
    $
    14,249
    
    
    $
    13,931Accrued income taxes
    
    
    7,230
    
    
    
    17,354Accrued compensation
    
    
    6,862
    
    
    
    8,286Accrued restructuring
    
    
    4,960
    
    
    
    6,006Foreign deferred tax liability
    
    
    2,832
    
    
    
    5,086Deferred gain on sale of property
    
    
    1,853
    
    
    
    2,578Other
    
    
    5,992
    
    
    
    9,97343,978
    
    
    
    63,214Discontinued operations:Self-insured liability accrual
    
    
    9,935
    
    
    
    10,351Environmental remediation liabilities
    
    
    4,356
    
    
    
    5,806Accrued income taxes
    
    
    895
    
    
    
    856Other
    
    
    1,784
    
    
    
    2,43816,970
    
    
    
    19,451Total other deferred items and liabilities
    
    $
    60,948
    
    
    $
    82,665
 Page 12




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##### 



Note 9. Debt
   Note 10. Fair Value Measurements
      Fair Value Measurement at September 30, 2008 UsingQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservedSeptember 30,
    
    
    Identical Assets
    
    
    Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(in thousands)Assets:Money market funds
    
    $
    61,311
    
    
    $
    61,311
    
    
    $
    
    
    
    $
    Other mutual funds
    
    
    2,156
    
    
    
    2,156
    
    
    
    
    
    
    
    Total
    
    $
    63,467
    
    
    $
    63,467
    
    
    $
    
    
    
    $
    
 Page 13




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##### 



Note 11. Income Per Share
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands, except per share data)Income from continuing operations
    
    $
    16,758
    
    
    $
    8,575
    
    
    $
    46,586
    
    
    $
    40,912Weighted-average outstanding common shares
    
    
    20,294
    
    
    
    20,345
    
    
    
    20,253
    
    
    
    20,521Additional dilutive shares related to
share-based compensation
    
    
    356
    
    
    
    442
    
    
    
    409
    
    
    
    444Weighted-average outstanding and potentially
dilutive common shares
    
    
    20,650
    
    
    
    20,787
    
    
    
    20,662
    
    
    
    20,965Diluted income per share from
continuing operations
    
    $
    0.81
    
    
    $
    0.41
    
    
    $
    2.25
    
    
    $
    1.95Basic income per share from
continuing operations
    
    $
    0.83
    
    
    $
    0.42
    
    
    $
    2.30
    
    
    $
    1.99
  Note 12. Income Taxes
  2008
    
    2007(in thousands)Computed income tax expense at statutory
federal income tax rate of 35%
    
    $
    24,425
    
    
    
    35.0
    %
    
    $
    22,298
    
    
    
    35.0
    %State income taxes, net of federal benefit
    
    
    2,044
    
    
    
    2.9
    %
    
    
    1,989
    
    
    
    3.1
    %Tax resolutions, net
    
    
    (3,177
    )
    
    
    (4.5
    %)
    
    
    (1,906
    )
    
    
    (3.0
    %)Other, net
    
    
    (760
    )
    
    
    (1.1
    %)
    
    
    (409
    )
    
    
    (0.6
    %)Income tax expense
    
    $
    22,532
    
    
    
    32.3
    %
    
    $
    21,972
    
    
    
    34.5
    %
   Page 14




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##### 



Continuing
    
    
    DiscontinuedOperations
    
    
    Operations
    
    
    Total(in thousands)Balance at January 1, 2008
    
    $
    12,802
    
    
    $
    636
    
    
    $
    13,438Reductions for tax positions taken in
prior years
    
    
    (3,448
    )
    
    
    
    
    
    
    (3,448
    )Foreign currency translation adjustment
    
    
    (286
    )
    
    
    
    
    
    
    (286
    )Balance at September 30, 2008
    
    $
    9,068
    
    
    $
    636
    
    
    $
    9,704
     Note 13. Pension and Postretirement Benefits
  Domestic PlansPostretirement
    
    
    ForeignPension Plans
    
    
    Benefit Plans
    
    
    Pension Plans2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Service cost
    
    $
    55
    
    
    $
    76
    
    
    $
    16
    
    
    $
    17
    
    
    $
    93
    
    
    $
    108Interest cost
    
    
    353
    
    
    
    313
    
    
    
    269
    
    
    
    244
    
    
    
    166
    
    
    
    154Expected return on plan assets
    
    
    (245
    )
    
    
    (186
    )
    
    
    (99
    )
    
    
    (93
    )
    
    
    (180
    )
    
    
    (77
    )Amortization of prior service
cost (credit)
    
    
    21
    
    
    
    51
    
    
    
    (461
    )
    
    
    (362
    )
    
    
    
    
    
    
    (303
    )Recognized net actuarial loss
    
    
    110
    
    
    
    109
    
    
    
    4
    
    
    
    99
    
    
    
    
    
    
    
    Net periodic benefit cost (credit)
    
    $
    294
    
    
    $
    363
    
    
    $
    (271
    )
    
    $
    (95
    )
    
    $
    79
    
    
    $
    (118
    )
 Page 15




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##### 



Domestic PlansPostretirement
    
    
    ForeignPension Plans
    
    
    Benefit Plans
    
    
    Pension Plans2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Service cost
    
    $
    155
    
    
    $
    172
    
    
    $
    48
    
    
    $
    55
    
    
    $
    285
    
    
    $
    307Interest cost
    
    
    963
    
    
    
    868
    
    
    
    769
    
    
    
    780
    
    
    
    511
    
    
    
    439Expected return on plan assets
    
    
    (633
    )
    
    
    (558
    )
    
    
    (263
    )
    
    
    (279
    )
    
    
    (553
    )
    
    
    (220
    )Amortization of prior service
cost (credit)
    
    
    57
    
    
    
    155
    
    
    
    (1,171
    )
    
    
    (1,086
    )
    
    
    
    
    
    
    (864
    )Recognized net actuarial loss
    
    
    292
    
    
    
    327
    
    
    
    142
    
    
    
    371
    
    
    
    
    
    
    
    Net periodic benefit cost (credit)
    
    $
    834
    
    
    $
    964
    
    
    $
    (475
    )
    
    $
    (159
    )
    
    $
    243
    
    
    $
    (338
    )
  Note 14. Restructuring
     2007
    
    
    2004
    
    
    2002
    
    
    2001Restructuring
    
    
    Restructuring
    
    
    Restructuring
    
    
    Restructuring
    
    
    Total(in thousands)Balance at January 1, 2008
    
    $
    1,472
    
    
    $
    897
    
    
    $
    848
    
    
    $
    5,804
    
    
    $
    9,021Cash payments
    
    
    (213
    )
    
    
    
    
    
    
    (188
    )
    
    
    (1,245
    )
    
    
    (1,646
    )Adjustment to liability
    
    
    
    
    
    
    (184
    )
    
    
    
    
    
    
    
    
    
    
    (184
    )Restructuring recoveries
    
    
    
    
    
    
    (42
    )
    
    
    
    
    
    
    (82
    )
    
    
    (124
    )Foreign currency translation
adjustment
    
    
    (132
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132
    )Balance at September 30, 2008
    
    $
    1,127
    
    
    $
    671
    
    
    $
    660
    
    
    $
    4,477
    
    
    $
    6,935
 Page 16




---



##### 



Note 15. Litigation, Claims and Other Contingencies
     Page 17




---



##### 



Note 16. Segment Information
  Three months ended September 30,
    
    
    Nine months ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Revenues:GES
    
    $
    203,278
    
    
    $
    151,616
    
    
    $
    676,598
    
    
    $
    589,333Experiential Marketing Services
    
    
    48,570
    
    
    
    26,840
    
    
    
    158,227
    
    
    
    122,708Travel and Recreation Services
    
    
    50,514
    
    
    
    50,348
    
    
    
    80,194
    
    
    
    76,179$
    302,362
    
    
    $
    228,804
    
    
    $
    915,019
    
    
    $
    788,220Segment operating income (loss):GES
    
    $
    7,941
    
    
    $
    (2,744
    )
    
    $
    57,745
    
    
    $
    51,495Experiential Marketing Services
    
    
    (3,594
    )
    
    
    (6,181
    )
    
    
    (5,770
    )
    
    
    (6,277
    )Travel and Recreation Services
    
    
    21,715
    
    
    
    22,114
    
    
    
    23,746
    
    
    
    24,19726,062
    
    
    
    13,189
    
    
    
    75,721
    
    
    
    69,415Corporate activities
    
    
    (2,659
    )
    
    
    (2,342
    )
    
    
    (7,312
    )
    
    
    (7,365
    )23,403
    
    
    
    10,847
    
    
    
    68,409
    
    
    
    62,050Interest income
    
    
    809
    
    
    
    1,461
    
    
    
    2,562
    
    
    
    4,642Interest expense
    
    
    (430
    )
    
    
    (407
    )
    
    
    (1,308
    )
    
    
    (1,252
    )Restructuring recoveries (charges):GES
    
    
    82
    
    
    
    
    
    
    
    82
    
    
    
    Experiential Marketing Services
    
    
    
    
    
    
    (754
    )
    
    
    
    
    
    
    (1,964
    )Corporate
    
    
    42
    
    
    
    61
    
    
    
    42
    
    
    
    61Impairment recoveries
    
    
    
    
    
    
    72
    
    
    
    
    
    
    
    172Income before income taxes
and minority interest
    
    $
    23,906
    
    
    $
    11,280
    
    
    $
    69,787
    
    
    $
    63,709
 September 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Assets:GES
    
    $
    373,525
    
    
    $
    372,303Experiential Marketing Services
    
    
    118,513
    
    
    
    77,279Travel and Recreation Services
    
    
    141,727
    
    
    
    139,465Corporate and other
    
    
    160,340
    
    
    
    192,316$
    794,105
    
    
    $
    781,363
 Note 17. Impact of Recent Accounting Pronouncements
  Page 18




---



##### 



Page 19




---



##### 



Note 18. Common Stock Repurchases
  Note 19. Discontinued Operations
  Page 20




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview:
   GES 
 Experiential Marketing Services 
 Travel and Recreation Services 
  Viad Corp (Consolidated)
 
    
    Total revenues of $302.4 million compared to $228.8 million in the third quarter of
2007
    
    Net income of $16.8 million versus $8.5 million in 2007
    
    Diluted income per share of $0.81 versus $0.41 in 2007
    
    Cash and cash equivalents totaled $152.9 million as of September 30, 2008
    
    Debt was $12.9 million as of September 30, 2008
    
    Viad repurchased 328,000 shares of its common stock for $10.1 million
 Page 21




---



##### 



GES
 
    
    Revenues of $203.3 million, an increase of 34.1 percent from 2007
    
    Segment operating income of $7.9 million, compared to a loss of $2.7 million in 2007
 Experiential Marketing Services
 
    
    Revenues of $48.6 million, an increase of 81.0 percent from 2007
    
    Segment operating loss of $3.6 million, compared to a loss of $6.2 million in 2007
 Travel and Recreation Services
 
    
    Revenues of $50.5 million, comparable to 2007 revenue of $50.3 million
    
    Segment operating income of $21.7 million, a decrease of 1.8 percent from 2007
 Non-GAAP Measure:
    Three months ended September 30,
    
    
    Nine months ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Adjusted EBITDA
    
    $
    30,967
    
    
    $
    16,722
    
    
    $
    91,814
    
    
    $
    80,929Impairment recoveries
    
    
    
    
    
    
    72
    
    
    
    
    
    
    
    172Interest expense
    
    
    (430
    )
    
    
    (407
    )
    
    
    (1,308
    )
    
    
    (1,252
    )Income tax expense
    
    
    (6,235
    )
    
    
    (1,843
    )
    
    
    (22,532
    )
    
    
    (21,972
    )Depreciation and amortization
    
    
    (7,544
    )
    
    
    (5,969
    )
    
    
    (21,388
    )
    
    
    (16,965
    )Income (loss) from
discontinued operations
    
    
    
    
    
    
    (37
    )
    
    
    (210
    )
    
    
    65Net income
    
    $
    16,758
    
    
    $
    8,538
    
    
    $
    46,376
    
    
    $
    40,977
   Page 22




---



##### 



Results of Operations:
 Comparison of Third Quarter of 2008 to the Third Quarter of 2007
   GES.
    Experiential Marketing Services.
    Page 23




---



##### 



Travel and Recreation Services.
    Corporate Activities.
 Interest Income.
 Income Taxes.
 Comparison of First Nine Months of 2008 to the First Nine Months of 2007
   Page 24




---



##### 



GES
  Experiential Marketing Services.
 Travel and Recreation Services
  Interest Income.
 Income Taxes.
 Liquidity and Capital Resources:
    Page 25




---



##### 



Page 26




---



##### 



Off-Balance Sheet Arrangements:
  Critical Accounting Policies and Estimates:
  Goodwill and other intangible assets
  Income taxes
  Page 27




---



##### 



Insurance liabilities
 Pension and postretirement benefits
    Page 28




---



##### 



Share-based compensation
   Impact of Recent Accounting Pronouncements:
   Page 29




---



##### 



Page 30




---



##### 



Forward-Looking Statements:
  Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    Page 31




---



##### 



Item 4. Controls and Procedures.
   Page 32




---



##### 



PART IIOTHER INFORMATION
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  ISSUER PURCHASES OF EQUITY SECURITIES
 Total Number of
    
    Maximum Number (orShares Purchased as
    
    Approximate Dollar Value) ofPart of Publicly
    
    Shares that May Yet BeTotal Number of
    
    Average Price Paid
    
    Announced Plans or
    
    Purchased Under the Plans orPeriod
    
    Shares Purchased (#)
    
    Per Share ($)
    
    Programs
    
    Programs (1)September 2008
    
    
    328,000
    
    
    
    30.68
    
    
    
    328,000
    
    
    
    413,800Total
    
    
    328,000
    
    
    
    30.68
    
    
    
    328,000
    
    
    
    413,800
 
 (1)
    
    Viad has announced its intent, under authorizations by its Board of Directors, to
repurchase up to an aggregate of three million shares of the Companys common stock from
time to time at prevailing prices in the open market. Viad purchased 328,000 shares for
$10.1 million during the third quarter of 2008. Shares repurchased in 2007 and 2006 under
these programs totaled 781,700 and 1,476,500, respectively. The authorizations of the
Board of Directors do not have expiration dates. Page 33




---



##### 



Item 6. Exhibits.
 Exhibit No. 31.1
    
    Certification of Chief Executive Officer of Viad Corp
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.*Exhibit No. 31.2
    
    Certification of Chief Financial Officer of Viad Corp
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.*Exhibit No. 32.1
    
    Certification of Chief Executive Officer of Viad Corp
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*Exhibit No. 32.2
    
    Certification of Chief Financial Officer of Viad Corp
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
 
 *
    
    Filed herewith. Page 34




---



##### 



SIGNATURES
  VIAD CORP(Registrant)November 7, 2008
    
    By /s/ G. Michael Latta(Date)
    
    G. Michael LattaVice President  Controller(Chief Accounting Officerand Authorized Officer)
 Page 35