EX-99.1 3 p67400exv99w1.txt EX-99.1 EXHIBIT 99.1 Contact: Patricia D. Phillips (Investor Relations) 602/207-1040 pphillip@viad.com VIAD CORP ANNOUNCES FOURTH QUARTER AND FULL YEAR 2002 RESULTS EARNINGS PER SHARE OF $0.31 FOR FOURTH QUARTER AND $1.45 FOR 2002 BEFORE FOURTH QUARTER RESTRUCTURING CHARGE OF $13.3 MILLION (AFTER-TAX) AND 2002 GOODWILL IMPAIRMENT CHARGE OF $37.7 MILLION (AFTER-TAX) AFTER THE ABOVE CHARGES, EARNINGS PER SHARE ON A GAAP BASIS OF $0.15 FOR FOURTH QUARTER AND $0.86 FOR 2002 PHOENIX, Ariz., January 23, 2003 -- Viad Corp (NYSE:VVI) today announced fourth quarter 2002 diluted earnings per share (on a taxable equivalent basis and before restructuring charges) of $0.31 on revenue of $383.4 million, segment operating income of $48.6 million and net income of $26.9 million. Fourth quarter 2002 diluted earnings per share on a GAAP basis was $0.15 on revenue of $375.5 million, segment operating income of $20.2 million and net income of $13.6 million. Certain supplemental information is included in this press release, which is presented using methods management utilizes to measure profits and performance of its operations. This information is supplemental to results presented under accounting principles generally accepted in the United States of America (GAAP) and may not be comparable to similarly titled measures presented by other companies. Such significant supplemental information includes taxable equivalent information, EBITDA, net float income and net float margin. Refer to the Tables for a reconciliation of the supplemental information to GAAP. -more- -2- Full year 2002 diluted earnings per share (on a taxable equivalent basis, before restructuring charges and change in accounting principle) was $1.45 on revenue of $1.68 billion, segment operating income of $241.9 million and net income of $126.9 million. Full year 2002 diluted earnings per share on a GAAP basis was $0.86 on revenue of $1.65 billion, segment operating income of $185.6 million and net income of $76.1 million. Robert H. Bohannon, chairman, president and chief executive officer said, "Overall, Viad ended the year with good results. The company out-performed both the S&P 500 and MidCap 400 indices. During the year, the convention and event segment was profitable and delivered strong cash flow, despite slower demand for new exhibit construction and show shrinkage. Travelers Express made tremendous progress in expanding the MoneyGram network and added over $1 billion in new Official Check balances. In addition, the balance sheet was strengthened significantly." Bohannon added, "During 2002 our operating companies faced both anticipated and unanticipated market challenges. As expected, our convention and event companies operated in a market that looked very different than the tradeshow heyday of late 1999 and 2000. Travelers Express experienced diminished operating income growth caused by a challenging interest rate environment and unprecedented mortgage refinancing activity, well in excess of our assumptions. We are confident that these external factors are temporary, and will change in time. Travelers Express is solidly on the path for long-term growth and our convention and event companies are working aggressively to improve operating efficiency to build even stronger companies." FOURTH QUARTER AND 2002 FINANCIAL HIGHLIGHTS Highlights of the 2002 fourth quarter and full year financial results, compared to 2001 results follow. Results are presented on a taxable equivalent basis before restructuring charges and other items (FTE - BR) and on a GAAP basis. For -more- -3- comparability purposes, 2001 results throughout this earnings release are adjusted for Statement of Financial Accounting Standards No. 142 - "Goodwill and Other Intangible Assets," which eliminates goodwill amortization. Fourth Quarter 2002
FTE - BR Change from GAAP Change from ($ in millions) Prior Year ($ in millions) Prior Year --------------- ---------- --------------- ---------- Revenue $ 383.4 2.1% $ 375.5 2.8% Segment operating income $ 48.6 -5.5% $ 20.2 -51.0% Operating margins * 12.7% -100 bps 5.4% -590 bps Net income $ 26.9 -6.2% $ 13.6 -52.6% Net income per share $ 0.31 -6.1% $ 0.15 -54.5% Cash flow (EBITDA) ** $ 59.8 -5.0% N/A N/A
Full Year 2002
FTE - BR Change from GAAP Change from ($ in millions) Prior Year ($ in millions) Prior Year --------------- ---------- --------------- ---------- Revenue $ 1,683.2 -1.4% $1,647.0 -0.7% Segment operating income $ 241.9 -1.1% $ 185.6 83.9% Operating margins * 14.4% +10 bps 11.3% +520 bps Net income $ 126.9 0.3% $ 76.1 16.4% Net income per share $ 1.45 - $ 0.86 16.2% Cash flow (EBITDA) ** $ 281.2 -2.7% N/A N/A
* For operating margins, the change from prior period is presented in terms of basis points. ** EBITDA is defined by Viad as income before interest expense, income taxes, depreciation and amortization, restructuring charges and other items and changes in accounting principles. -more- -4- Also, during the periods: Fourth Quarter 2002 ------------------- - Debt was reduced by $20 million compared to third quarter 2002 - Cash and corporate investments were $303.6 million, up by $11 million from third quarter 2002 Full Year 2002 -------------- - Debt was reduced by $35 million compared to December 31, 2001 - Cash and corporate investments were up by $87 million from December 31, 2001 - The company repurchased 1.2 million shares of common stock for $26 million RECENTLY COMPLETED ACQUISITION OF MONEYGRAM INTERNATIONAL LIMITED (MIL) On January 17, 2003, Viad announced that Travelers Express/MoneyGram had completed an acquisition of the minority interest of MoneyGram International Limited (MIL) for approximately $95 million in cash (92 million euros) plus a dividend payment of approximately $7.7 million (7.5 million euros). This transaction is expected to be slightly accretive to earnings in 2003 and much more accretive to earnings in the following years. Prior to the acquisition, Travelers Express/MoneyGram had a 51 percent interest in MIL's operations. With the acquisition, MoneyGram obtains full control of MIL's growing international wire transfer corridors and the associated agent network. FOURTH QUARTER RESTRUCTURING CHARGE RELATED TO EXHIBITGROUP/GILTSPUR In the fourth quarter of 2002, Viad approved a pre-tax restructuring charge of $20.5 million ($13.3 million, after-tax) relating to Exhibitgroup/Giltspur (Exhibitgroup). Exhibitgroup will be consolidating manufacturing and certain other functions. The company will be maintaining full sales, design and support capabilities in all cities currently served. This restructuring is part of Exhibitgroup's continuing effort to achieve -more- -5- greater efficiency and improve customer service, through the centralization of functions such as manufacturing, purchasing and freight. It is expected that this restructuring will result in annual cost savings of $12 million to $14 million, with $8 million to $9 million of this annual amount occurring in fiscal 2003 (based on the projected timing of the restructuring activity). PAYMENT SERVICES On a taxable equivalent basis, Payment Services revenue for the fourth quarter 2002 grew 7.8 percent to $218.2 million, up from $202.4 million in the fourth quarter 2001. Segment operating income was down 6.5 percent to $52.2 million compared with $55.8 million in 2001, and operating margins for the quarter were 23.9 percent compared with 27.6 percent in the 2001 fourth quarter. Revenue for the fourth quarter 2002 on a GAAP basis grew 9.5 percent to $210.3 million, from $192.2 million in the 2001 fourth quarter. Segment operating income was down 2.9 percent to $44.3 million compared with $45.6 million in 2001, and operating margins for the quarter were 21.0 percent compared with 23.7 percent in the 2001 fourth quarter. The strong revenue growth was driven by MoneyGram, with fourth quarter 2002 versus 2001 transaction volume increasing 34 percent. MoneyGram's agent base expanded to over 57,000 agents in 2002. Payment Services' total average investable balances grew to $6.9 billion for the quarter, up 22 percent from the prior year quarter driven by the Official Check product. Float income (investment income on a taxable equivalent basis, excluding gains) represented approximately 47 percent of total Payment Systems revenue in the fourth quarter 2002. Float income was $101.5 million in the fourth quarter 2002 compared to $95.4 million in the fourth quarter 2001, an increase of 6.4 percent. Net float income -more- -6- (float income on a taxable equivalent basis less commission expense) was $37.6 million in the fourth quarter 2002, down $2.7 million, or 6.7 percent primarily due to declining interest rates. See Supplemental Tables A and B for further information on the Payment Services segment's income and expenses related to the float portfolio. On a taxable equivalent basis (before restructuring charges and other items in 2001), full year 2002 Payment Services revenue increased 10.2 percent to $838.7 million. Segment operating income was $190.6 million, up 3.1 percent over $184.9 million in 2001, despite the impact of lower interest rates year over year. Operating margins for the year were 22.7 percent compared with 24.3 percent in 2001. The taxable equivalent adjustment declined in 2002 as tax-exempt income as a percentage of total interest income was lower than in 2001. Full year 2002 revenue on a GAAP basis increased 12.4 percent to $802.5 million. Segment operating income was $154.0 million as compared to $132.1 million in 2001. It should be noted that Payment Services' net income is the same on a GAAP and on a taxable equivalent basis. Similar to the fourth quarter, MoneyGram transaction growth was the primary driver of the strong revenue growth for the year ended December 31, 2002. MoneyGram showed strong results with total transaction volume up over 32 percent. For the year, Payment Systems' average investable balances grew to $6.2 billion, up over 23 percent from the prior year average. Float income (on a taxable equivalent basis) was $390.6 million for the full year 2002 compared to $355.7 million in 2001, an increase of 9.8 percent, driven by higher average float portfolio balances. Float income growth was constrained by lower interest rates. Net float income was $150.5 million for the full year 2002, up $3.0 million, or 2.0 percent, primarily due to higher average balances. Bohannon said, "Travelers Express is growing into a strong market presence in the payment services arena. In 2002 MoneyGram and Official Check demonstrated -more- -7- significant network expansion and customer signings, strengthening the foundation for future growth. Prospects for MoneyGram are enhanced by the acquisition of the minority interest of MIL." CONVENTION AND EVENT SERVICES Convention and Event Services revenue was $160.4 million, a decrease of 5.1 percent from $169.0 million in the fourth quarter 2001. Before the restructuring charge, the fourth quarter operating loss for the segment was $1.3 million compared with a loss of $2.9 million in the 2001 quarter. Segment operating losses on a GAAP basis were $21.8 million compared with $2.9 million in the 2001 quarter. For the full year 2002, Convention and Event Services revenue was $786.2 million, a decrease of 11.1 percent from $884.0 million in 2001. Before restructuring charges, 2002 segment operating income was $37.6 million, down 14.7 percent from $44.1 million in the prior year and operating margins were 4.8 percent, down from 5.0 percent in 2001. Segment operating income on a GAAP basis was $17.9 million in 2002 compared to an operating loss of $46.7 million in the prior year. Bohannon said, "With demand for new exhibit construction down in 2002, Exhibitgroup was the primary reason for the decline in convention and event segment revenue and operating income. I am pleased to report, however, that GES had an outstanding year with operating profit growth of over 15 percent year over year. I commend GES management and employees for producing excellent results in a very difficult market." TRAVEL AND RECREATION SERVICES Travel and Recreation Services provided by the Brewster Transport and Glacier National Park business units generated revenue of $4.8 million in the fourth quarter of 2002 as compared to $4.0 million in the fourth quarter 2001. Operating losses were -more- -8- $2.3 million in the fourth quarter of 2002, compared with $1.5 million in the fourth quarter 2001. Full year revenue for 2002 of $58.3 million was down 5.2 percent as compared to $61.5 million in 2001. Operating income was $13.7 million, down from $15.6 million in 2001. Operating margins were 23.6 percent in 2002 as compared to 25.3 percent in 2001. The results of these business units have been affected by the decline in worldwide travel since late 2001. 2003 OUTLOOK Viad provides the following guidance for 2003 full year and first quarter. The guidance is provided on a GAAP basis. As the municipal securities portfolio is reduced in accordance with Viad's tax strategy, the effect of the tax-exempt income continues to diminish. Therefore, going-forward, the company will not present results on a taxable equivalent basis. Guidance provided by Viad Corp is subject to change. Factors that can affect guidance are identified in the safe harbor language at the end of this press release. The company has little visibility in the convention and event businesses, particularly for Exhibitgroup/Giltspur. Additionally, Payment Services float-based revenues can be affected by changes in interest rates. In providing earnings guidance, the company makes certain assumptions about interest rates and other market factors. These assumptions can change throughout the course of the year. The company expects: FULL YEAR 2003 - Earnings growth (relative to adjusted EPS of $1.45 in 2002) in the range of 3 to 7 percent. This translates into expected diluted EPS in the range of $1.50 to $1.55. -more- -9- - Payment Services segment revenue is expected to grow at a high-single to low-double digit rate. - Payment Services segment operating income is expected to grow at a mid-single digit rate. - Convention and Event Services segment revenue is expected to decline at a mid-single to low-double digit rate from 2002 levels primarily due to decreased demand for exhibit construction. - Convention and Event Services segment operating income is expected to increase at a low-double digit rate from 2002 levels primarily due to ongoing cost improvements. FIRST QUARTER 2003 - Earnings are expected to be relatively flat compared to the first quarter of 2002. This translates into expected diluted EPS in the range of $0.36 to $0.39. - Payment Services segment revenue and operating income are expected to grow at a high-single to low-double digit rate compared to first quarter 2002. - Convention and Event Services segment revenue and operating income are expected to decline at a low-double-digit to low-teens rate from first quarter 2002 levels. Viad is a $1.65 billion revenue S&P MidCap 400 company. Major subsidiaries include Travelers Express/MoneyGram of Minneapolis, GES Exposition Services of Las Vegas and Exhibitgroup/Giltspur of Chicago. For more information, visit the company's Web site at www.viad.com. # # # # As provided by the safe harbor provision under the "Private Securities Litigation Reform Act of 1995" Viad cautions readers that, in addition to historical information contained herein, this press release includes certain information, assumptions and discussions that may constitute forward-looking statements. These forward-looking statements are not historical facts, but reflect current estimates, projections, or expectations of or current trends in future growth, operating cash flows, availability of short-term borrowings, consumer demand, new business, investment policies, productivity improvements, ongoing cost reduction efforts, efficiency, competitiveness, tax rates, restructure plans (including timing and realization of cost savings) and market risk disclosures. Actual results could differ materially from those projected in the forward-looking statements. Viad's businesses can be affected by a host of risks and uncertainties. Among other things, gains and losses of customers, consumer demand patterns, labor relations, purchasing decisions related to customer demand for convention and event services, existing and new competition, industry alliances, consolidation and growth patterns within the industries in which Viad competes and any further deterioration in the economy may individually or in combination impact future results. In addition to factors mentioned elsewhere, economic, competitive, governmental, technological, capital marketplace and other factors, including further terrorist activities could affect forward-looking statements. Information about Viad Corp obtained from sources other than the company may be out-of-date or incorrect. Please rely only on company press releases, SEC filings and other information provided by the company. VIAD CORP AND SUBSIDIARIES TABLE ONE - QUARTERLY RESULTS (UNAUDITED)
Quarter Ended December 31, Adjusted for SFAS 142 * -------------------------------------- ----------------------- (000 omitted, except per share data) 2002 2001 % 2001 % --------- --------- ------ --------- ------ Revenues: TAXABLE EQUIVALENT BASIS (Note A) $ 383,364 $ 375,392 2.1% $ 375,392 2.1% Taxable equivalent adjustment (7,889) (10,218) -22.8% (10,218) -22.8% --------- --------- ------ --------- ------ $ 375,475 $ 365,174 2.8% $ 365,174 2.8% ========= ========= ====== ========= ====== Segment operating income: TAXABLE EQUIVALENT BASIS (Note A) $ 48,603 $ 47,185 3.0% $ 51,415 -5.5% Taxable equivalent adjustment (7,889) (10,218) -22.8% (10,218) -22.8% --------- --------- ------ --------- ------ 40,714 36,967 10.1% 41,197 -1.2% Corporate activities and minority interests (4,509) (2,322) -94.2% (2,322) -94.2% Net interest expense (1,250) (3,724) 66.4% (3,724) 66.4% --------- --------- ------ --------- ------ Income before income taxes 34,955 30,921 13.0% 35,151 -0.6% Income taxes (8,014) (5,734) -39.8% (6,433) -24.6% --------- --------- ------ --------- ------ INCOME BEFORE RESTRUCTURING CHARGES AND OTHER ITEMS 26,941 25,187 7.0% 28,718 -6.2% Restructuring charges and other items (Note E) (13,335) -- NM -- NM --------- --------- ------ --------- ------ Net income $ 13,606 $ 25,187 -46.0% $ 28,718 -52.6% ========= ========= ====== ========= ====== Diluted net income per common share: INCOME BEFORE RESTRUCTURING CHARGES AND OTHER ITEMS $ 0.31 $ 0.29 6.9% $ 0.33 -6.1% Restructuring charges and other items (0.16) -- NM -- NM --------- --------- ------ --------- ------ Net income per share $ 0.15 $ 0.29 -48.3% $ 0.33 -54.5% ========= ========= ====== ========= ====== Basic net income per common share: Income before restructuring charges and other items $ 0.31 $ 0.29 6.9% $ 0.33 -6.1% Restructuring charges and other items (0.15) -- NM -- NM --------- --------- ------ --------- ------ Net income per share $ 0.16 $ 0.29 -44.8% $ 0.33 -51.5% ========= ========= ====== ========= ====== Common shares treated as outstanding for net income per share calculations: Average outstanding shares 85,738 85,733 0.0% 85,733 0.0% ========= ========= ====== ========= ====== Average outstanding and potentially dilutive shares 86,068 86,248 -0.2% 86,248 -0.2% ========= ========= ====== ========= ======
* Results "Adjusted for SFAS 142" exclude amortization expense to reflect the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" for comparability to 2002. NM = not meaningful VIAD CORP AND SUBSIDIARIES TABLE TWO - FULL YEAR RESULTS (UNAUDITED)
Year Ended December 31, Adjusted for SFAS 142 * ---------------------------------- ----------------------- (000 omitted, except per share data) 2002 2001 % 2001 % ----------- ----------- ---- ----------- ---- Revenues: TAXABLE EQUIVALENT BASIS (Note A) $ 1,683,155 $ 1,706,237 -1.4% $ 1,706,237 -1.4% Taxable equivalent adjustment (36,171) (46,847) -22.8% (46,847) -22.8% ----------- ----------- ---- ----------- ------ $ 1,646,984 $ 1,659,390 -0.7% $ 1,659,390 -0.7% =========== =========== ==== =========== ====== Segment operating income: TAXABLE EQUIVALENT BASIS (Note A) $ 241,927 $ 227,606 6.3% $ 244,500 -1.1% Taxable equivalent adjustment (36,171) (46,847) -22.8% (46,847) -22.8% ----------- ----------- ----- ----------- ----- 205,756 180,759 13.8% 197,653 4.1% Corporate activities and minority interests (Note B) (22,750) (13,355) -70.3% (13,355) -70.3% Net interest expense (Note C) (8,737) (20,284) 56.9% (20,284) 56.9% ----------- ----------- ----- ----------- ----- Income before income taxes 174,269 147,120 18.5% 164,014 6.3% Income taxes (47,350) (34,783) -36.1% (37,434) -26.5% ----------- ----------- ----- ----------- ----- INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE AND RESTRUCTURING CHARGES AND OTHER ITEMS 126,919 112,337 13.0% 126,580 0.3% Change in accounting principle (Note D) (37,739) -- NM -- NM Restructuring charges and other items (Note E) (13,086) (61,203) 78.6% (61,203) 78.6% ----------- ----------- ----- ----------- ----- Net income $ 76,094 $ 51,134 48.8% $ 65,377 16.4% =========== =========== ===== =========== ===== Diluted net income per common share: INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE AND RESTRUCTURING CHARGES AND OTHER ITEMS $ 1.45 $ 1.29 12.4% $ 1.45 0.0% Change in accounting principle (0.44) -- NM -- NM Restructuring charges and other items (0.15) (0.71) 78.9% (0.71) 78.9% ----------- ----------- ----- ----------- ----- Net income per share $ 0.86 $ 0.58 48.3% $ 0.74 16.2% =========== =========== ===== =========== ===== Basic net income per common share: Income before change in accounting principle and restructuring charges and other items $ 1.46 $ 1.30 12.3% $ 1.47 -0.7% Change in accounting principle (0.44) -- NM -- NM Restructuring charges and other items (0.15) (0.72) 79.2% (0.72) 79.2% ----------- ----------- ----- ----------- ----- Net income per share $ 0.87 $ 0.58 50.0% $ 0.75 16.0% =========== =========== ===== =========== ===== Common shares treated as outstanding for net income per share calculations: Average outstanding shares 86,178 85,503 0.8% 85,503 0.8% =========== =========== ===== =========== ==== Average outstanding and potentially dilutive shares 86,716 86,322 0.5% 86,322 0.5% =========== =========== ===== =========== ====
* Results "Adjusted for SFAS 142" exclude amortization expense to reflect the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" for comparability to 2002. NM = not meaningful \ VIAD CORP AND SUBSIDIARIES TABLE THREE - EBITDA (UNAUDITED)
Quarter Ended December 31, Adjusted for SFAS 142 * ------------------------------ ----------------------- 2002 2001 % 2001 % (000 omitted) ------- ------- ------ ------- ------ EBITDA: Net income $13,606 $25,187 -46.0% $28,718 -52.6% Restructuring charges and other items 13,335 -- NM -- NM ------- ------- ------ ------- ------ Income before restructuring charges and other items 26,941 25,187 7.0% 28,718 -6.2% Interest expense 4,201 5,280 -20.4% 5,280 -20.4% Income taxes 8,014 5,734 39.8% 6,433 24.6% Depreciation and amortization 12,763 16,514 -22.7% 12,284 3.9% ------- ------- ------ ------- ------ EBITDA before adjustment 51,919 52,715 -1.5% 52,715 -1.5% Taxable equivalent adjustment 7,889 10,218 -22.8% 10,218 -22.8% ------- ------- ------ ------- ------ EBITDA as adjusted $59,808 $62,933 -5.0% $62,933 -5.0% ======= ======= ====== ======= ======
Year Ended December 31, Adjusted for SFAS 142 * ----------------------------------- ------------------------ 2002 2001 % 2001 % (000 omitted) -------- -------- ------ -------- ------ EBITDA: Net income $ 76,094 $ 51,134 48.8% $ 65,377 16.4% Change in accounting principle 37,739 -- NM -- NM Restructuring charges and other items 13,086 61,203 -78.6% 61,203 -78.6% -------- -------- ------ -------- ------ Income before change in accounting principle and restructuring charges and other items 126,919 112,337 13.0% 126,580 0.3% Interest expense 19,268 25,936 -25.7% 25,936 -25.7% Income taxes 47,350 34,783 36.1% 37,434 26.5% Depreciation and amortization 51,483 69,096 -25.5% 52,202 -1.4% -------- -------- ------ -------- ------ EBITDA before adjustment 245,020 242,152 1.2% 242,152 1.2% Taxable equivalent adjustment 36,171 46,847 -22.8% 46,847 -22.8% -------- -------- ------ -------- ------ EBITDA as adjusted $281,191 $288,999 -2.7% $288,999 -2.7% ======== ======== ====== ======== ======
* Results "Adjusted for SFAS 142" exclude amortization expense to reflect the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" for comparability to 2002. VIAD CORP AND SUBSIDIARIES TABLE FOUR - NOTES TO SUMMARY OF CONSOLIDATED INCOME (UNAUDITED) (A) Reportable Segments
Quarter Ended December 31, Adjusted for SFAS 142 * --------------------------------------- ------------------------- (000 omitted) 2002 2001 % 2001 % --------- --------- ------ --------- ------ Revenues: Payment Services (taxable equivalent basis) $ 218,235 $ 202,389 7.8% $ 202,389 7.8% Convention and Event Services 160,360 168,998 -5.1% 168,998 -5.1% --------- --------- ------ --------- ------ Reportable segments 378,595 371,387 1.9% 371,387 1.9% Travel and Recreation Services 4,769 4,005 19.1% 4,005 19.1% --------- --------- ------ --------- ------ 383,364 375,392 2.1% 375,392 2.1% Taxable equivalent adjustment (7,889) (10,218) -22.8% (10,218) -22.8% --------- --------- ------ --------- ------ $ 375,475 $ 365,174 2.8% $ 365,174 2.8% ========= ========= ====== ========= ====== Segment operating income: Payment Services (taxable equivalent basis) $ 52,162 $ 53,747 -2.9% $ 55,811 -6.5% Convention and Event Services (1,286) (4,825) 73.3% (2,874) 55.3% --------- --------- ------ --------- ------ Reportable segments 50,876 48,922 4.0% 52,937 -3.9% Travel and Recreation Services (2,273) (1,737) -30.9% (1,522) -49.3% --------- --------- ------ --------- ------ 48,603 47,185 3.0% 51,415 -5.5% Taxable equivalent adjustment (7,889) (10,218) -22.8% (10,218) -22.8% --------- --------- ------ --------- ------ 40,714 36,967 10.1% 41,197 -1.2% Restructuring charges and other items: Payment Services -- -- NM -- NM Convention and Event Services (20,515) -- NM -- NM Travel and Recreation Services -- -- NM -- NM --------- --------- ------ --------- ------ $ 20,199 $ 36,967 -45.4% $ 41,197 -51.0% ========= ========= ====== ========= ======
Year Ended December 31, Adjusted for SFAS 142 * ----------------------------------------- ------------------------- (000 omitted) 2002 2001 % 2001 % ----------- ----------- ----- ---------- ----- Revenues: Payment Services (taxable equivalent basis) $ 838,669 $ 760,740 10.2% $ 760,740 10.2% Convention and Event Services 786,233 884,044 -11.1% 884,044 -11.1% ----------- ----------- ----- ---------- ----- Reportable segments 1,624,902 1,644,784 -1.2% 1,644,784 -1.2% Travel and Recreation Services 58,253 61,453 -5.2% 61,453 -5.2% ----------- ----------- ----- ---------- ----- 1,683,155 1,706,237 -1.4% 1,706,237 -1.4% Taxable equivalent adjustment (36,171) (46,847) -22.8% (46,847) -22.8% ----------- ----------- ----- ---------- ----- $ 1,646,984 1,659,390 -0.7% $1,659,390 -0.7% =========== =========== ===== ========== ===== Segment operating income: Payment Services (taxable equivalent basis) $ 190,570 $ 176,615 7.9% $ 184,852 3.1% Convention and Event Services 37,614 36,293 3.6% 44,094 -14.7% ----------- ----------- ----- ---------- ----- Reportable segments 228,184 212,908 7.2% 228,946 -0.3% Travel and Recreation Services 13,743 14,698 -6.5% 15,554 -11.6% ----------- ----------- ----- ---------- ----- 241,927 227,606 6.3% 244,500 -1.1% Taxable equivalent adjustment (36,171) (46,847) -22.8% (46,847) -22.8% ----------- ----------- ----- ---------- ----- 205,756 180,759 13.8% 197,653 4.1% Restructuring charges and other items: Payment Services (440) (5,947) 92.6% (5,947) 92.6% Convention and Event Services (19,742) (90,775) 78.3% (90,775) 78.3% Travel and Recreation Services -- -- NM -- NM ----------- ----------- ----- ---------- ----- $ 185,574 $ 84,037 120.8% $ 100,931 83.9% =========== =========== ===== ========== =====
* Results "Adjusted for SFAS 142" exclude amortization expense to reflect the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" for comparability to 2002. VIAD CORP AND SUBSIDIARIES TABLE FOUR - NOTES TO SUMMARY OF CONSOLIDATED INCOME (CONTINUED) (UNAUDITED) (B) Corporate Activities -- Corporate activities for the year ended December 31, 2002 include after-tax charges of $2.5 million for legal, investment banking, and other costs incurred in connection with a contemplated initial public offering of Travelers Express/MoneyGram. (C) Net Interest Expense -- In the 2002 third quarter, the Company recorded interest income of $3.5 million related to a Federal tax refund received in October 2002. (D) Change in Accounting Principle -- In June 2002, in accordance with Viad's adoption of SFAS No. 142, a transitional impairment test for goodwill was completed. This test resulted in a $40.0 million ($37.7 million after-tax) impairment of goodwill associated with Viad's Convention and Event Services segment. This impairment was retroactively restated to the first quarter of 2002 as a cumulative effect of a change in accounting principle in accordance with SFAS No. 142. (E) Restructuring Charges and Other Items -- In the 2002 fourth quarter, Viad recorded a restructuring charge totaling $20.5 million ($13.3 million after-tax). The charges consisted of costs associated with the closure and consolidation of certain facilities, severance and other employee benefits. The charges also included amounts for the write-down (net of estimated sales proceeds) of certain inventories and assets, facilities closure and lease termination costs (less estimated sublease income) and other exit costs. In the 2001 third quarter, Viad recorded restructuring and other charges totaling $66.1 million ($39.9 million after-tax). The charges consisted of costs associated with the closure and consolidation of certain facilities, severance and other employee benefits. The charges also included amounts for the write-down (net of estimated sales proceeds) of certain inventories and assets, facilities closure and lease termination costs (less estimated sublease income) and other exit costs. In the 2002 third quarter, $0.4 million ($0.2 million after-tax) of the reserve was reversed as certain actual costs incurred were less than original estimates. During the 2001 third quarter, Viad's payment services subsidiary recorded a charge totaling $5.0 million ($3.0 million after-tax) resulting from the bankruptcy of a large money order agent in September 2001. In August 2000, Key3Media Group, Inc. ("Key3Media"), a company spun off by Ziff-Davis Inc., terminated a long-term agreement with GES Exposition Services, Inc., ("GES") to produce tradeshows. The companies had been involved in litigation regarding the contract termination. The key points in the litigation centered around the interpretation of certain contract terms and the scope of free services required of GES. During the second quarter of 2001, after both sides assessed the business market, the risks and demands of the litigation and the need to move forward on a productive basis, GES and Key3Media agreed to end the litigation. As a result of the settlement, Viad recorded a noncash provision totaling $29.3 million ($18.3 million after-tax) in the 2001 second quarter representing primarily the write-off of net receivables and prepayments made to Key3Media. (F) Supplemental Information -- Information included in the press release is presented using methods management utilizes to measure profit and performance of its operations. The information is supplemental to results presented under accounting principles generally accepted in the United States of America. This supplemental information includes the following: -- An adjustment is made to the Payment Services segment to present revenues and operating income resulting from amounts invested in tax-exempt securities on a taxable equivalent basis. -- EBITDA is defined by Viad as income before interest expense, income taxes, depreciation and amortization, restructuring charges and other items, changes in accounting principles and includes the fully taxable equivalent adjustment. -- Float income is defined as investment income, excluding gains and net float income is defined as float income less commission expense. Both are presented in Supplemental Table A on a GAAP basis and in Supplemental Table B on a taxable equivalent basis. VIAD CORP AND SUBSIDIARIES SUPPLEMENTAL TABLE A - NET FLOAT INCOME AND MARGIN - GAAP BASIS (UNAUDITED) Analysis of Average Balances, Float and Average Yields and Interest Rates:
Average Income/ Yield/ Average Balance Expense Rate Balance ----------------- -------------- --------------- ----------------- --------------------------------------------------------------------- 2002 -------------------------------------------------- ----------------- (000 omitted) Investments restricted for payment service obligations $ 5,776,049 $85,217 5.98% $ 4,348,614 Payment service obligations (1) 4,300,849 55,607 5.24% 2,793,958 -------------- Net float income and margin $29,610 2.08% ==============
Income/ Yield/ Average Income/ Yield/ Expense Rate Balance Expense Rate ---------------- -------------- ----------------- ------------- -------------- Quarter Ended March 31, ------------------------------------------------------------------------------------- 2001 2000 --------------------------------- -------------------------------------------------- (000 omitted) Investments restricted for payment service obligations $69,515 6.48% $ 3,398,524 $50,825 6.07% Payment service obligations (1) 48,720 7.07% 2,095,752 34,965 6.77% -------------- -------------- Net float income and margin $20,795 1.94% $15,860 1.89% ============== ==============
Average Income/ Yield/ Average Balance Expense Rate Balance ------------------- -------------- --------------- ----------------- ----------------------------------------------------------------------- 2002 -------------------------------------------------- ------------------- Investments restricted for payment service obligations $ 5,745,632 $86,449 6.03% $ 4,849,462 Payment service obligations (1) 4,290,814 58,088 5.43% 3,358,932 -------------- Net float income and margin $28,361 1.98% ==============
Income/ Yield/ Average Income/ Yield/ Expense Rate Balance Expense Rate -------------- -------------- ----------------- -------------- --------------- Quarter Ended June 30, ----------------------------------------------------------------------------------- 2001 2000 -------------------------------- -------------------------------------------------- Investments restricted for payment service obligations $75,016 6.20% $ 3,712,819 $55,460 5.99% Payment service obligations (1) 51,629 6.17% 2,343,633 37,750 6.46% -------------- -------------- Net float income and margin $23,387 1.93% $17,710 1.91% ============== ==============
Average Income/ Yield/ Average Balance Expense Rate Balance ------------------ -------------- --------------- ---------------- ---------------------------------------------------------------------- 2002 -------------------------------------------------- ----------------- Investments restricted for payment service obligations $ 6,207,540 $89,136 5.70% $ 5,111,664 Payment service obligations (1) 4,778,993 62,541 5.19% 3,609,678 -------------- Net float income and margin $26,595 1.70% ==============
Income/ Yield/ Average Income/ Yield/ Expense Rate Balance Expense Rate -------------- -------------- ----------------- -------------- --------------- Quarter Ended March 31, ------------------------------------------------------------------------------------- 2001 2000 --------------------------------- -------------------------------------------------- Investments restricted for payment service obligations $79,181 6.15% $ 3,900,293 $61,151 6.22% Payment service obligations (1) 52,844 5.81% 2,477,142 43,446 6.96% -------------- -------------- Net float income and margin $26,337 2.04% $17,705 1.80% ============== ==============
Average Income/ Yield/ Average Balance Expense Rate Balance ------------------ -------------- --------------- ---------------- ---------------------------------------------------------------------- 2002 -------------------------------------------------- ----------------- Investments restricted for payment service obligations $ 6,886,104 $93,631 5.39% $ 5,663,279 Payment service obligations (1) 5,454,641 63,916 4.65% 4,198,415 -------------- Net float income and margin $29,715 1.71% ==============
Income/ Yield/ Average Income/ Yield/ Expense Rate Balance Expense Rate -------------- -------------- ----------------- -------------- --------------- Quarter Ended December 31, ------------------------------------------------------------------------------------- 2001 2000 --------------------------------- -------------------------------------------------- Investments restricted for payment service obligations $85,182 5.97% $ 4,211,649 $63,597 5.99% Payment service obligations (1) 55,080 5.20% 2,725,516 48,164 7.01% -------------- -------------- Net float income and margin $30,102 2.11% $15,433 1.45% ============== ==============
Average Income/ Yield/ Average Balance Expense Rate Balance ------------------ -------------- --------------- ---------------- --------------------------------------------------------------------- 2002 ------------------------------------------------- ----------------- Investments restricted for payment service obligations $ 6,153,831 $354,433 5.76% $ 4,993,255 Payment service obligations (1) 4,706,324 240,152 5.10% 3,490,246 -------------- Net float income and margin $114,281 1.86% ==============
Income/ Yield/ Average Income/ Yield/ Expense Rate Balance Expense Rate -------------- -------------- ----------------- -------------- --------------- Year Ended December 31, ------------------------------------------------------------------------------------- 2001 2000 --------------------------------- -------------------------------------------------- Investments restricted for payment service obligations $308,894 6.19% $ 3,805,821 $231,033 6.07% Payment service obligations (1) 208,273 5.97% 2,410,511 164,325 6.82% -------------- -------------- Net float income and margin $100,621 2.02% $ 66,708 1.75% ============== ==============
(1) Commissions are paid to financial institution customers based upon average outstanding balances generated by the sale of official check products only. The expense reported includes those payments made to financial institution customers, costs associated with swaps and with the sale of receivable program. The average balance in the table reflects only the payment service obligations for which commissions are paid and does not include the average balance of the sold receivables as these are not recorded on the Consolidated Balance Sheets. VIAD CORP AND SUBSIDIARIES SUPPLEMENTAL TABLE B - NET FLOAT INCOME AND MARGIN - TAXABLE EQUIVALENT BASIS (UNAUDITED) Analysis of Average Balances, Float and Average Yields and Interest Rates:
Average Income/ Yield/ Average Income/ Balance Expense Rate Balance Expense ----------------- -------------- --------------- ----------------- -------------- Quarter Ended March 31, --------------------------------------------------------------------------------------- (000 omitted) 2002 2001 -------------------------------------------------- ----------------------------------- Investments restricted for payment service obligations $ 5,776,049 $95,474 6.70% $ 4,348,614 $82,417 Payment service obligations 4,300,849 55,607 5.24% 2,793,958 48,720 -------------- -------------- Net float income and margin $39,867 2.80% $33,697 ============== ==============
Yield/ Average Income/ Yield/ Rate Balance Expense Rate -------------- ----------------- -------------- -------------- ------------------------------------------------------------------- (000 omitted) 2000 --------------- -------------------------------------------------- Investments restricted for payment service obligations 7.69% $ 3,398,524 $65,164 7.78% Payment service obligations 7.07% 2,095,752 34,965 6.77% -------------- Net float income and margin 3.14% $30,199 3.60% ==============
Average Income/ Yield/ Average Income/ Balance Expense Rate Balance Expense ----------------- -------------- --------------- ----------------- -------------- Quarter Ended March 31, --------------------------------------------------------------------------------------- (000 omitted) 2002 2001 -------------------------------------------------- ----------------------------------- Investments restricted for payment service obligations $ 5,745,632 $96,485 6.74% $ 4,849,462 $87,793 Payment service obligations 4,290,814 58,088 5.43% 3,358,932 51,629 -------------- -------------- Net float income and margin $38,397 2.68% $36,164 ============== ==============
Yield/ Average Income/ Yield/ Rate Balance Expense Rate -------------- ----------------- -------------- -------------- ------------------------------------------------------------------- (000 omitted) 2000 --------------- -------------------------------------------------- Investments restricted for payment service obligations 7.26% $ 3,712,819 $72,307 7.81% Payment service obligations 6.17% 2,343,633 37,750 6.46% -------------- Net float income and margin 2.99% $34,557 3.73% ==============
Average Income/ Yield/ Average Income/ Balance Expense Rate Balance Expense ----------------- -------------- --------------- ----------------- -------------- Quarter Ended March 31, --------------------------------------------------------------------------------------- (000 omitted) 2002 2001 -------------------------------------------------- ----------------------------------- Investments restricted for payment service obligations $ 6,207,540 $97,126 6.21% $ 5,111,664 $90,131 Payment service obligations 4,778,993 62,541 5.19% 3,609,678 52,844 -------------- -------------- Net float income and margin $34,585 2.21% $37,287 ============== ==============
Yield/ Average Income/ Yield/ Rate Balance Expense Rate -------------- ----------------- -------------- -------------- ------------------------------------------------------------------- (000 omitted) 2000 --------------- -------------------------------------------------- Investments restricted for payment service obligations 7.00% $ 3,900,293 $78,675 8.00% Payment service obligations 5.81% 2,477,142 43,446 6.96% -------------- Net float income and margin 2.89% $35,229 3.58% ==============
Average Income/ Yield/ Average Income/ Balance Expense Rate Balance Expense ----------------- -------------- --------------- ----------------- -------------- Quarter Ended March 31, --------------------------------------------------------------------------------------- (000 omitted) 2002 2001 -------------------------------------------------- ----------------------------------- Investments restricted for payment service obligations $ 6,886,104 $101,520 5.85% $ 5,663,279 $95,400 Payment service obligations 5,454,641 63,916 4.65% 4,198,415 55,080 -------------- -------------- Net float income and margin $ 37,604 2.17% $40,320 ============== ==============
Yield/ Average Income/ Yield/ Rate Balance Expense Rate -------------- ----------------- -------------- -------------- ------------------------------------------------------------------- (000 omitted) 2000 --------------- -------------------------------------------------- Investments restricted for payment service obligations 6.68% $ 4,211,649 $81,112 7.64% Payment service obligations 5.20% 2,725,516 48,164 7.01% -------------- Net float income and margin 2.82% $32,948 3.10% ==============
Average Income/ Yield/ Average Income/ Balance Expense Rate Balance Expense ----------------- -------------- --------------- ----------------- -------------- Quarter Ended March 31, --------------------------------------------------------------------------------------- (000 omitted) 2002 2001 -------------------------------------------------- ----------------------------------- Investments restricted for payment service obligations $ 6,153,831 $390,605 6.35% $ 4,993,255 $355,741 Payment service obligations 4,706,324 240,152 5.10% 3,490,246 208,273 -------------- -------------- Net float income and margin $150,453 2.44% $147,468 ============== ==============
Yield/ Average Income/ Yield/ Rate Balance Expense Rate -------------- ----------------- -------------- -------------- ------------------------------------------------------------------- (000 omitted) 2000 --------------- -------------------------------------------------- Investments restricted for payment service obligations 7.12% $ 3,805,821 $297,258 7.81% Payment service obligations 5.97% 2,410,511 164,325 6.82% -------------- Net float income and margin 2.95% $132,933 3.49% ==============
(1) Commissions are paid to financial institution customers based upon average outstanding balances generated by the sale of official check products only. The expense reported includes those payments made to financial institution customers, costs associated with swaps and with the sale of receivable program. The average balance in the table reflects only the payment service obligations for which commissions are paid and does not include the average balance of the sold receivables as these are not recorded on the Consolidated Balance Sheets. VIAD CORP AND SUBSIDIARIES SUPPLEMENTAL TABLE C - NET FLOAT INCOME (UNAUDITED) Changes in Float Income and Commission Expense - Due to Changes in Average Investable Balances and Interest Rates:
GAAP BASIS TAXABLE EQUIVALENT BASIS ------------------------------------------ ----------------------------------------- Quarter Ended March 31, 2002 vs. 2001 Quarter Ended March 31, 2002 vs. 2001 (000 omitted) Balance Yield/Rate Total Balance Yield/Rate Total ------------- ------------ ------------- ------------- ------------ ------------ Float Income $ 22,818 $ (7,116) $ 15,702 $ 27,054 $ (13,997) $ 13,057 Commission expense $ 26,277 $ (19,390) $ 6,887 $ 26,277 $ (19,390) $ 6,887 Net float income $ 6,826 $ 1,989 $ 8,815 $ 11,061 $ (4,891) $ 6,170
Quarter Ended June 30, 2002 vs 2001 Quarter Ended June 30, 2002 vs 2001 Balance Yield/Rate Total Balance Yield/Rate Total ------------- ------------ ------------- ------------- ------------ ------------ Float Income $ 13,863 $ (2,430) $ 11,433 $ 16,224 $ (7,532) $ 8,692 Commission expense $ 14,324 $ (7,865) $ 6,459 $ 14,324 $ (7,865) $ 6,459 Net float income $ 4,322 $ 652 $ 4,974 $ 6,683 $ (4,450) $ 2,233
Quarter Ended September 30, 2002 vs. 2001 Quarter Ended September 30, 2002 vs. 2001 Balance Yield/Rate Total Balance Yield/Rate Total ------------- ------------ ------------- ------------- ------------ ------------ Float Income $ 16,976 $ (7,021) $ 9,955 $ 19,323 $ (12,328) $ 6,995 Commission expense $ 17,118 $ (7,421) $ 9,697 $ 17,118 $ (7,421) $ 9,697 Net float income $ 5,646 $ (5,388) $ 258 $ 7,994 $ (10,696) $ (2,702)
Quarter Ended December 31, 2002 vs. 2001 Quarter Ended December 31, 2002 vs. 2001 Balance Yield/Rate Total Balance Yield/Rate Total ------------- ------------ ------------- ------------- ------------ ------------ Float Income $ 18,393 $ (9,944) $ 8,449 $ 20,599 $ (14,479) $ 6,120 Commission expense $ 16,481 $ (7,645) $ 8,836 $ 16,481 $ (7,645) $ 8,836 Net float income $ 6,500 $ (6,887) $ (387) $ 8,706 $ (11,422) $ (2,716)
Year Ended December 31, 2002 vs. 2001 Year Ended December 31, 2002 vs. 2001 Balance Yield/Rate Total Balance Yield/Rate Total ------------- ------------ ------------- ------------- ------------ ------------ Float Income $ 71,796 $ (26,257) $ 45,539 $ 82,685 $ (47,821) $ 34,864 Commission expense $ 72,567 $ (40,688) $ 31,879 $ 72,567 $ (40,688) $ 31,879 Net float income $ 23,387 $ (9,727) $ 13,660 $ 34,276 $ (31,291) $ 2,985