UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedJune 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
  Delaware
    
    36-1169950(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)1850 North Central Avenue, Suite 800Phoenix, Arizona
    
    85004-4545(Address of principal executive offices)
    
    (Zip Code)
 (602) 207-4000
 þ o
  Large
accelerated filer þ
    
    Accelerated filer
o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



PART IFINANCIAL INFORMATION
 Item 1. Financial Statements.
 VIAD CORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 June 30, 2008
    
    
    December 31, 2007(in thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    111,561
    
    
    $
    165,069Accounts receivable, net of allowance for doubtful accounts
of $2,321 and $1,569, respectively
    
    
    87,934
    
    
    
    53,099Inventories
    
    
    56,679
    
    
    
    52,664Deferred income taxes
    
    
    19,673
    
    
    
    20,567Other current assets
    
    
    19,911
    
    
    
    15,222Total current assets
    
    
    295,758
    
    
    
    306,621Property and equipment, net
    
    
    178,513
    
    
    
    168,893Other investments and assets
    
    
    28,127
    
    
    
    30,312Deferred income taxes
    
    
    25,331
    
    
    
    34,704Goodwill
    
    
    238,376
    
    
    
    228,170Other intangible assets, net
    
    
    26,019
    
    
    
    12,663Total Assets
    
    $
    792,124
    
    
    $
    781,363LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    71,005
    
    
    $
    68,442Other current liabilities
    
    
    114,613
    
    
    
    117,152Current portion of long-term debt and capital lease obligations
    
    
    2,577
    
    
    
    2,462Total current liabilities
    
    
    188,195
    
    
    
    188,056Long-term debt and capital lease obligations
    
    
    10,893
    
    
    
    11,714Pension and postretirement benefits
    
    
    22,956
    
    
    
    23,099Other deferred items and liabilities
    
    
    66,017
    
    
    
    82,665Commitments and contingencies (Note 15)Minority interest
    
    
    5,739
    
    
    
    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
    
    
    624,850
    
    
    
    635,099Retained earnings
    
    
    79,433
    
    
    
    51,445Unearned employee benefits and other
    
    
    (8,380
    )
    
    
    (8,754
    )Accumulated other comprehensive income (loss):Unrealized gain on investments
    
    
    337
    
    
    
    481Cumulative foreign currency translation adjustments
    
    
    44,963
    
    
    
    47,905Unrecognized net actuarial loss and prior service credit
    
    
    (1,965
    )
    
    
    (1,697
    )Common stock in treasury, at cost, 4,234,504 and 4,363,956
shares, respectively
    
    
    (278,316
    )
    
    
    (292,036
    )Total common stock and other equity
    
    
    498,324
    
    
    
    469,845Total Liabilities and Stockholders Equity
    
    $
    792,124
    
    
    $
    781,363
  Page 2




---



##### 



VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands, except per share data)Revenues:Convention and event services
    
    $
    187,691
    
    
    $
    188,651
    
    
    $
    456,572
    
    
    $
    427,502Exhibits and environments
    
    
    65,693
    
    
    
    65,707
    
    
    
    126,405
    
    
    
    106,083Travel and recreation services
    
    
    23,828
    
    
    
    21,369
    
    
    
    29,680
    
    
    
    25,831Total revenues
    
    
    277,212
    
    
    
    275,727
    
    
    
    612,657
    
    
    
    559,416Costs and expenses:Costs of services
    
    
    194,305
    
    
    
    187,705
    
    
    
    436,092
    
    
    
    400,580Costs of products sold
    
    
    61,828
    
    
    
    56,914
    
    
    
    126,906
    
    
    
    102,610Corporate activities
    
    
    2,219
    
    
    
    2,714
    
    
    
    4,653
    
    
    
    5,023Restructuring charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,210Impairment recovery
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    (100
    )Interest income
    
    
    (653
    )
    
    
    (1,392
    )
    
    
    (1,753
    )
    
    
    (3,181
    )Interest expense
    
    
    415
    
    
    
    379
    
    
    
    878
    
    
    
    845Total costs and expenses
    
    
    258,114
    
    
    
    246,220
    
    
    
    566,776
    
    
    
    506,987Income before income taxes and minority interest
    
    
    19,098
    
    
    
    29,507
    
    
    
    45,881
    
    
    
    52,429Income tax expense
    
    
    6,107
    
    
    
    11,200
    
    
    
    16,297
    
    
    
    20,129Minority interest
    
    
    (92
    )
    
    
    20
    
    
    
    (244
    )
    
    
    (37
    )Income from continuing operations
    
    
    13,083
    
    
    
    18,287
    
    
    
    29,828
    
    
    
    32,337Income (loss) from discontinued operations
    
    
    (210
    )
    
    
    196
    
    
    
    (210
    )
    
    
    102Net income
    
    $
    12,873
    
    
    $
    18,483
    
    
    $
    29,618
    
    
    $
    32,439Diluted income per common shareIncome from continuing operations
    
    $
    0.63
    
    
    $
    0.87
    
    
    $
    1.44
    
    
    $
    1.53Income (loss) from discontinued operations
    
    
    (0.01
    )
    
    
    0.01
    
    
    
    (0.01
    )
    
    
    0.01Net income
    
    $
    0.62
    
    
    $
    0.88
    
    
    $
    1.43
    
    
    $
    1.54Weighted-average outstanding and potentially
dilutive common shares
    
    
    20,666
    
    
    
    21,046
    
    
    
    20,678
    
    
    
    21,127Basic income per common shareIncome from continuing operations
    
    $
    0.65
    
    
    $
    0.89
    
    
    $
    1.47
    
    
    $
    1.57Income (loss) from discontinued operations
    
    
    (0.01
    )
    
    
    0.01
    
    
    
    (0.01
    )
    
    
    Net income
    
    $
    0.64
    
    
    $
    0.90
    
    
    $
    1.46
    
    
    $
    1.57Weighted-average outstanding common shares
    
    
    20,268
    
    
    
    20,567
    
    
    
    20,232
    
    
    
    20,609Dividends declared per common share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.08
    
    
    $
    0.08
  Page 3




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##### 



VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Net income
    
    $
    12,873
    
    
    $
    18,483
    
    
    $
    29,618
    
    
    $
    32,439Other comprehensive income (loss):Unrealized gains (losses) on investments:Holding gains (losses) arising during the period,
net of tax
    
    
    (14
    )
    
    
    62
    
    
    
    (144
    )
    
    
    74Unrealized gains on derivative financial instruments:Holding gains arising during the period, net of tax
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    141Unrealized foreign currency translation adjustments
    
    
    (839
    )
    
    
    11,130
    
    
    
    (2,942
    )
    
    
    12,548Pension and postretirement benefit plans:Amortization of prior service credit, net of tax
    
    
    (205
    )
    
    
    (190
    )
    
    
    (411
    )
    
    
    (379
    )Amortization of net actuarial loss (gain), net of tax
    
    
    72
    
    
    
    (7
    )
    
    
    143
    
    
    
    142Other comprehensive income (loss)
    
    
    (986
    )
    
    
    11,120
    
    
    
    (3,354
    )
    
    
    12,526Comprehensive income
    
    $
    11,887
    
    
    $
    29,603
    
    
    $
    26,264
    
    
    $
    44,965
  Page 4




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##### 



VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six months ended June 30,2008
    
    
    2007(in thousands)Cash flows from operating activities:Net income
    
    $
    29,618
    
    
    $
    32,439Adjustments to reconcile net income to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    13,844
    
    
    
    10,996Deferred income taxes
    
    
    4,747
    
    
    
    (5,006
    )Loss (income) from discontinued operations
    
    
    210
    
    
    
    (102
    )Restructuring charge
    
    
    
    
    
    
    1,210Impairment recovery
    
    
    
    
    
    
    (100
    )Gains on dispositions of property and other assets
    
    
    (89
    )
    
    
    (144
    )Share-based compensation expense
    
    
    3,868
    
    
    
    6,024Tax benefits from share-based compensation arrangements
    
    
    338
    
    
    
    1,341Excess tax benefits from share-based compensation arrangements
    
    
    (287
    )
    
    
    (1,120
    )Other non-cash items, net
    
    
    2,222
    
    
    
    2,162Change in operating assets and liabilities:Receivables
    
    
    (34,191
    )
    
    
    (35,784
    )Inventories
    
    
    (2,987
    )
    
    
    4,057Accounts payable
    
    
    4,110
    
    
    
    18,043Restructuring liabilities
    
    
    (963
    )
    
    
    (1,951
    )Accrued compensation
    
    
    (11,422
    )
    
    
    253Other assets and liabilities, net
    
    
    (15,785
    )
    
    
    (18,413
    )Net cash provided by (used in) operating activities
    
    
    (6,767
    )
    
    
    13,905Cash flows from investing activities:Capital expenditures
    
    
    (25,516
    )
    
    
    (17,740
    )Proceeds from sale of short-term investments
    
    
    3,980
    
    
    
    Acquisition of businesses, net of cash acquired
    
    
    (23,334
    )
    
    
    (33,039
    )Proceeds from dispositions of property and other assets
    
    
    520
    
    
    
    559Net cash used in investing activities
    
    
    (44,350
    )
    
    
    (50,220
    )Cash flows from financing activities:Payments on debt and capital lease obligations
    
    
    (1,325
    )
    
    
    (1,175
    )Dividends paid on common stock
    
    
    (1,657
    )
    
    
    (1,680
    )Excess tax benefits from share-based compensation arrangements
    
    
    287
    
    
    
    1,120Proceeds from exercise of stock options
    
    
    1,621
    
    
    
    1,638Common stock purchased for treasury
    
    
    (1,632
    )
    
    
    (10,480
    )Net cash used in financing activities
    
    
    (2,706
    )
    
    
    (10,577
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    315
    
    
    
    701Net decrease in cash and cash equivalents
    
    
    (53,508
    )
    
    
    (46,191
    )Cash and cash equivalents, beginning of year
    
    
    165,069
    
    
    
    178,073Cash and cash equivalents, end of period
    
    $
    111,561
    
    
    $
    131,882Supplemental disclosure of cash flow informationCash paid during the period for:Income taxes
    
    $
    13,179
    
    
    $
    14,335Interest
    
    $
    697
    
    
    $
    623Equipment acquired under capital leases
    
    $
    606
    
    
    $
    553
  Page 5




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##### 



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
    
    
    (50,775
    )
    
    
    23.80Forfeited
    
    
    (3,686
    )
    
    
    27.59Options outstanding at June 30, 2008
    
    
    699,577
    
    
    
    25.33
    
    
    
    557,198
  Options Outstanding
    
    Options ExercisableWeighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Remaining
    
    Average
    
    
    
    
    
    AverageRange of Exercise Prices
    
    Shares
    
    Contractual Life
    
    Exercise Price
    
    Shares
    
    Exercise Price$18.40 to $23.28
    
    
    123,148
    
    
    4.3 years
    
    $
    19.62
    
    
    
    123,148
    
    
    $
    19.62$23.32 to $24.05
    
    
    139,607
    
    
    2.3 years
    
    
    23.78
    
    
    
    139,607
    
    
    
    23.78$24.22 to $26.07
    
    
    158,976
    
    
    3.2 years
    
    
    25.15
    
    
    
    142,024
    
    
    
    25.26$26.31 to $26.47
    
    
    147,870
    
    
    3.6 years
    
    
    26.32
    
    
    
    87,170
    
    
    
    26.32$26.49 to $38.44
    
    
    129,976
    
    
    3.8 years
    
    
    31.50
    
    
    
    65,249
    
    
    
    29.14$18.40 to $38.44
    
    
    699,577
    
    
    3.4 years
    
    
    25.33
    
    
    
    557,198
    
    
    
    24.27
    Page 7




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##### 



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
    
    
    103,485
    
    
    
    33.84
    
    
    
    55,000
    
    
    
    33.84Vested
    
    
    (86,600
    )
    
    
    26.30
    
    
    
    (52,084
    )
    
    
    30.79Forfeited
    
    
    (550
    )
    
    
    36.75
    
    
    
    
    
    
    
    Balance at June 30, 2008
    
    
    362,135
    
    
    
    34.26
    
    
    
    94,828
    
    
    
    34.56
  Note 3. Impairment Losses and Recoveries
  Note 4. Acquisition of Businesses
  Page 8




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##### 



(in thousands)Cash and cash equivalents
    
    $
    1,263Accounts receivable
    
    
    1,387Inventories
    
    
    1,028Other current assets
    
    
    1,402Property and equipment
    
    
    1,673Goodwill
    
    
    11,833Other intangible assets
    
    
    14,983Total assets acquired
    
    
    33,569Accounts payable
    
    
    (1,675
    )Customer deposits
    
    
    (592
    )Other current liabilities
    
    
    (1,559
    )Deferred taxes
    
    
    (4,941
    )Other non-current liabilities
    
    
    (205
    )Total liabilities assumed
    
    
    (8,972
    )Purchase price
    
    $
    24,597
   Page 9




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##### 



Three months ended
    
    Six months endedJune 30, 2007
    
    June 30, 2007(in thousands, except per share data)Revenue
    
    $
    276,545
    
    
    $
    570,951Income from continuing operations
    
    $
    16,575
    
    
    $
    29,964Net income
    
    $
    16,771
    
    
    $
    30,066Diluted net income per share
    
    $
    0.80
    
    
    $
    1.42Basic net income per share
    
    $
    0.82
    
    
    $
    1.46
   Note 5. Inventories
  June 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Raw materials
    
    $
    30,209
    
    
    $
    28,613Work in process
    
    
    26,470
    
    
    
    24,051Inventories
    
    $
    56,679
    
    
    $
    52,664
 Note 6. Property and Equipment
  June 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Land
    
    $
    26,956
    
    
    $
    27,495Buildings and leasehold improvements
    
    
    96,446
    
    
    
    95,741Equipment and other
    
    
    280,433
    
    
    
    261,917403,835
    
    
    
    385,153Accumulated depreciation
    
    
    (225,322
    )
    
    
    (216,260
    )Property and equipment, net
    
    $
    178,513
    
    
    $
    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
    
    
    
    
    
    
    11,833
    
    
    
    
    
    
    
    11,833Foreign currency
translation adjustments
    
    
    (357
    )
    
    
    
    
    
    
    (1,270
    )
    
    
    (1,627
    )Balance at June 30, 2008
    
    $
    185,319
    
    
    $
    11,833
    
    
    $
    41,224
    
    
    $
    238,376
  Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingValue
    
    
    Amortization
    
    
    Value(in thousands)Amortized intangible assets:Customer contracts and relationships
    
    $
    11,363
    
    
    $
    (1,257
    )
    
    $
    10,106Design libraries
    
    
    2,020
    
    
    
    (113
    )
    
    
    1,907Non-compete agreements
    
    
    3,204
    
    
    
    (1,780
    )
    
    
    1,424Proprietary technology
    
    
    816
    
    
    
    (213
    )
    
    
    603Other
    
    
    95
    
    
    
    (30
    )
    
    
    6517,498
    
    
    
    (3,393
    )
    
    
    14,105Unamortized intangible assets:Trademarks and trade names
    
    
    11,884
    
    
    
    
    
    
    
    11,884Other
    
    
    30
    
    
    
    
    
    
    
    3011,914
    
    
    
    
    
    
    
    11,914Total
    
    $
    29,412
    
    
    $
    (3,393
    )
    
    $
    26,019
  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
    
    $
    1,5662009
    
    $
    3,1132010
    
    $
    2,3012011
    
    $
    1,9482012 and thereafter
    
    $
    5,177
 Note 8. Accrued Liabilities and Other
  June 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Continuing operations:Customer deposits
    
    $
    46,070
    
    
    $
    47,132Accrued compensation
    
    
    25,101
    
    
    
    34,248Self-insured liability accrual
    
    
    8,150
    
    
    
    7,984Accrued income taxes
    
    
    6,296
    
    
    
    787Accrued restructuring
    
    
    2,812
    
    
    
    3,015Accrued sales and use taxes
    
    
    2,509
    
    
    
    3,406Accrued dividends
    
    
    866
    
    
    
    869Other
    
    
    18,068
    
    
    
    15,400109,872
    
    
    
    112,841Discontinued operations:Environmental remediation liabilities
    
    
    3,588
    
    
    
    2,510Self-insured liability accrual
    
    
    492
    
    
    
    591Other
    
    
    661
    
    
    
    1,2104,741
    
    
    
    4,311Total other current liabilities
    
    $
    114,613
    
    
    $
    117,152
  June 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Continuing operations:Self-insured liability accrual
    
    $
    14,699
    
    
    $
    13,931Accrued income taxes
    
    
    10,564
    
    
    
    17,354Accrued compensation
    
    
    6,011
    
    
    
    8,286Accrued restructuring
    
    
    5,128
    
    
    
    6,006Foreign deferred tax liability
    
    
    3,216
    
    
    
    5,086Deferred gain on sale of property
    
    
    2,095
    
    
    
    2,578Other
    
    
    6,668
    
    
    
    9,97348,381
    
    
    
    63,214Discontinued operations:Self-insured liability accrual
    
    
    10,257
    
    
    
    10,351Environmental remediation liabilities
    
    
    4,711
    
    
    
    5,806Accrued income taxes
    
    
    884
    
    
    
    856Other
    
    
    1,784
    
    
    
    2,43817,636
    
    
    
    19,451Total other deferred items and liabilities
    
    $
    66,017
    
    
    $
    82,665
 Page 12




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##### 



Note 9. Debt
   Note 10. Fair Value Measurements
  Level 1 
    
    Quoted prices in active markets for identical assets or liabilities.Level 2 
    
    Observable inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly.Level 3 
    
    Unobservable inputs to the valuation methodology that are significant to the measurement
of fair value.
  Fair Value Measurement at June 30, 2008 UsingQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservedJune 30,
    
    
    Identical Assets
    
    
    Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(in thousands)Assets:Money market
funds
    
    $
    32,011
    
    
    $
    32,011
    
    
    $
    
    
    
    $
    Other mutual funds
    
    
    2,452
    
    
    
    2,452
    
    
    
    
    
    
    
    Total
    
    $
    34,463
    
    
    $
    34,463
    
    
    $
    
    
    
    $
    
 Page 13




---



##### 



Note 11. Income Per Share
  Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands, except per share data)Income from continuing operations
    
    $
    13,083
    
    
    $
    18,287
    
    
    $
    29,828
    
    
    $
    32,337Weighted-average outstanding common shares
    
    
    20,268
    
    
    
    20,567
    
    
    
    20,232
    
    
    
    20,609Additional dilutive shares related to
share-based compensation
    
    
    398
    
    
    
    479
    
    
    
    446
    
    
    
    518Weighted-average outstanding and potentially
dilutive common shares
    
    
    20,666
    
    
    
    21,046
    
    
    
    20,678
    
    
    
    21,127Diluted income per share from
continuing operations
    
    $
    0.63
    
    
    $
    0.87
    
    
    $
    1.44
    
    
    $
    1.53Basic income per share from
continuing operations
    
    $
    0.65
    
    
    $
    0.89
    
    
    $
    1.47
    
    
    $
    1.57
  Note 12. Income Taxes
  2008
    
    2007(in thousands)Computed income tax expense at statutory
federal income tax rate of 35%
    
    $
    16,058
    
    
    
    35.0
    %
    
    $
    18,350
    
    
    
    35.0
    %State income taxes, net of federal benefit
    
    
    1,641
    
    
    
    3.6
    %
    
    
    1,932
    
    
    
    3.7
    %Tax resolutions, net
    
    
    (853
    )
    
    
    (1.9
    %)
    
    
    
    
    
    
    0.0
    %Other, net
    
    
    (549
    )
    
    
    (1.2
    %)
    
    
    (153
    )
    
    
    (0.3
    %)Income tax expense
    
    $
    16,297
    
    
    
    35.5
    %
    
    $
    20,129
    
    
    
    38.4
    %
   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
    
    
    (1,036
    )
    
    
    
    
    
    
    (1,036
    )Foreign currency translation adjustment
    
    
    (110
    )
    
    
    
    
    
    
    (110
    )Balance at June 30, 2008
    
    $
    11,656
    
    
    $
    636
    
    
    $
    12,292
     Note 13. Pension and Postretirement Benefits
  Domestic PlansPostretirement
    
    
    ForeignPension Plans
    
    
    Benefit Plans
    
    
    Pension Plans2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Service cost
    
    $
    50
    
    
    $
    49
    
    
    $
    16
    
    
    $
    19
    
    
    $
    95
    
    
    $
    102Interest cost
    
    
    305
    
    
    
    281
    
    
    
    250
    
    
    
    276
    
    
    
    191
    
    
    
    164Expected return on plan assets
    
    
    (194
    )
    
    
    (186
    )
    
    
    (82
    )
    
    
    (93
    )
    
    
    (184
    )
    
    
    (73
    )Amortization of prior service cost
(credit)
    
    
    18
    
    
    
    52
    
    
    
    (355
    )
    
    
    (362
    )
    
    
    
    
    
    
    Recognized net actuarial loss (gain)
    
    
    91
    
    
    
    109
    
    
    
    69
    
    
    
    136
    
    
    
    
    
    
    
    (289
    )Net periodic benefit cost (credit)
    
    $
    270
    
    
    $
    305
    
    
    $
    (102
    )
    
    $
    (24
    )
    
    $
    102
    
    
    $
    (96
    )
 Page 15




---



##### 



Domestic PlansPostretirement
    
    
    ForeignPension Plans
    
    
    Benefit Plans
    
    
    Pension Plans2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Service cost
    
    $
    100
    
    
    $
    96
    
    
    $
    32
    
    
    $
    38
    
    
    $
    191
    
    
    $
    199Interest cost
    
    
    610
    
    
    
    555
    
    
    
    500
    
    
    
    536
    
    
    
    384
    
    
    
    319Expected return on plan assets
    
    
    (388
    )
    
    
    (372
    )
    
    
    (164
    )
    
    
    (186
    )
    
    
    (372
    )
    
    
    (142
    )Amortization of prior service cost
(credit)
    
    
    36
    
    
    
    104
    
    
    
    (710
    )
    
    
    (724
    )
    
    
    
    
    
    
    Recognized net actuarial loss (gain)
    
    
    182
    
    
    
    218
    
    
    
    138
    
    
    
    272
    
    
    
    
    
    
    
    (561
    )Net periodic benefit cost (credit)
    
    $
    540
    
    
    $
    601
    
    
    $
    (204
    )
    
    $
    (64
    )
    
    $
    203
    
    
    $
    (185
    )
  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
    
    
    (160
    )
    
    
    
    
    
    
    (104
    )
    
    
    (699
    )
    
    
    (963
    )Adjustment to liability
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    
    
    
    
    (122
    )Foreign currency
translation adjustment
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Balance at June 30, 2008
    
    $
    1,316
    
    
    $
    775
    
    
    $
    744
    
    
    $
    5,105
    
    
    $
    7,940
 Page 16




---



##### 



Note 15. Litigation, Claims and Other Contingencies
     Page 17




---



##### 



Note 16. Segment Information
  Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Revenues:GES
    
    $
    187,645
    
    
    $
    192,832
    
    
    $
    473,320
    
    
    $
    437,717Experiential
Marketing Services
    
    
    65,739
    
    
    
    61,526
    
    
    
    109,657
    
    
    
    95,868Travel and
Recreation Services
    
    
    23,828
    
    
    
    21,369
    
    
    
    29,680
    
    
    
    25,831$
    277,212
    
    
    $
    275,727
    
    
    $
    612,657
    
    
    $
    559,416Segment operating income (loss):GES
    
    $
    13,956
    
    
    $
    22,033
    
    
    $
    49,804
    
    
    $
    54,239Experiential
Marketing Services
    
    
    1,945
    
    
    
    4,579
    
    
    
    (2,176
    )
    
    
    (96
    )Travel and
Recreation Services
    
    
    5,178
    
    
    
    4,496
    
    
    
    2,031
    
    
    
    2,08321,079
    
    
    
    31,108
    
    
    
    49,659
    
    
    
    56,226Corporate activities
    
    
    (2,219
    )
    
    
    (2,714
    )
    
    
    (4,653
    )
    
    
    (5,023
    )18,860
    
    
    
    28,394
    
    
    
    45,006
    
    
    
    51,203Interest income
    
    
    653
    
    
    
    1,392
    
    
    
    1,753
    
    
    
    3,181Interest expense
    
    
    (415
    )
    
    
    (379
    )
    
    
    (878
    )
    
    
    (845
    )Restructuring charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,210
    )Impairment recovery
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100Income before income taxes
and minority interest
    
    $
    19,098
    
    
    $
    29,507
    
    
    $
    45,881
    
    
    $
    52,429
 June 30,
    
    
    December 31,2008
    
    
    2007(in thousands)Assets:GES
    
    $
    383,436
    
    
    $
    372,303Experiential Marketing Services
    
    
    132,373
    
    
    
    77,279Travel and Recreation Services
    
    
    141,145
    
    
    
    139,465Corporate and other
    
    
    135,170
    
    
    
    192,316$
    792,124
    
    
    $
    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 $277.2 million compared to $275.7 million in the second quarter of
2007
    
    Net income of $12.9 million versus $18.5 million in 2007
    
    Diluted income per share of $0.62 versus $0.88 in 2007
    
    Cash and cash equivalents totaled $111.6 million as of June 30, 2008
    
    Debt was $13.5 million as of June 30, 2008
 Page 21




---



##### 



GES
 
    
    Revenues of $187.6 million, a decrease of 2.7 percent from 2007
    
    Segment operating income of $14.0 million, a decrease of 36.7 percent from 2007
 Experiential Marketing Services
 
    
    Revenues of $65.7 million, an increase of 6.8 percent from 2007
    
    Segment operating income of $1.9 million, compared to $4.6 million in the second
quarter of 2007
 Travel and Recreation Services
 
    
    Revenues of $23.8 million, an increase of 11.5 percent from 2007
    
    Segment operating income of $5.2 million, an increase of 15.2 percent from 2007
 Non-GAAP Measure:
    Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Adjusted EBITDA
    
    $
    26,821
    
    
    $
    35,566
    
    
    $
    60,847
    
    
    $
    64,207Impairment recovery
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100Interest expense
    
    
    (415
    )
    
    
    (379
    )
    
    
    (878
    )
    
    
    (845
    )Income tax expense
    
    
    (6,107
    )
    
    
    (11,200
    )
    
    
    (16,297
    )
    
    
    (20,129
    )Depreciation and amortization
    
    
    (7,216
    )
    
    
    (5,800
    )
    
    
    (13,844
    )
    
    
    (10,996
    )Income (loss) from discontinued operations
    
    
    (210
    )
    
    
    196
    
    
    
    (210
    )
    
    
    102Net income
    
    $
    12,873
    
    
    $
    18,483
    
    
    $
    29,618
    
    
    $
    32,439
   Page 22




---



##### 



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




---



##### 



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




---



##### 



GES
  Experiential Marketing Services.
 Travel and Recreation Services
  Corporate Activities.
 Net 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)None
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    741,800Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    741,800
 
 (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. No shares were repurchased during
the second 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 4. Submission of Matters to a Vote of Security Holders.
 (a)
    
    The annual meeting of stockholders of Viad Corp was held on May 20, 2008.(b)
    
    Not applicable  (i) proxies for the meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934; (ii) there was no
solicitation in opposition to managements nominees as listed in the proxy
statement; and (iii) all such nominees were elected.(c)
    
    Matters voted upon at the annual meeting for which proxies were solicited
pursuant to Regulation 14 under the Securities Exchange Act of 1934:1.
    
    The election of Directors as follows:
 Affirmative
    
    VoteVote
    
    Against
    
    AbstentionsWayne G. Allcott
    
    
    19,127,936
    
    
    
    106,715
    
    
    
    163,253Paul B. Dykstra
    
    
    19,108,471
    
    
    
    130,346
    
    
    
    159,087
 2.
    
    The appointment of Deloitte & Touche LLP as Viads independent registered
public accounting firm for fiscal year 2008:
 Affirmative Vote
    
    
    19,144,542Against
    
    
    93,737Abstentions
    
    
    159,625
 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. SIGNATURES
  VIAD CORP(Registrant)August 7, 2008
    
    By /s/ G. Michael Latta(Date)
    
    G. Michael LattaVice President  Controller(Chief Accounting Officerand Authorized Officer)
 Page 34