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Debt

12 Months Ended

Dec. 31, 2011

Note 10. Debt

Long-term debt as of December 31 was as follows ⁽¹⁾:


	2011			2010
	(in thousands)
Capital lease obligations, 6.2% (2011) and 6.5% (2010) weighted-average interest rate at December 31, due to 2015	$	3,239		$	4,616
Revolving credit agreement, 2.9% (2011) and 3.2% (2010) floating rate indexed to LIBOR at December 31, repaid in 2011		—			4,461

		3,239			9,077
Current portion		(2,018	)		(6,639	)

Long-term debt	$	1,221		$	2,438

⁽¹⁾	Rates shown are exclusive of the effects of commitment fees and other costs of long-term bank credit.

Effective May 18, 2011, Viad entered into an amended and restated revolving credit agreement (the “Credit Facility”). The Credit Facility provides for a $130 million revolving line of credit, which may be increased up to an additional $50 million under certain circumstances. The term of the Credit Facility is five years (expiring on May 18, 2016) and borrowings are to be used for general corporate purposes (including permitted acquisitions) and to support up to $50 million of letters of credit. The lenders have a first perfected security interest in all of the personal property of Viad and GES, including 65 percent of the capital stock of top-tier foreign subsidiaries. In April 2011, Viad paid off its outstanding borrowing under the previous credit facility of $4.2 million and as of December 31, 2011, Viad’s total debt of $3.2 million consisted entirely of capital lease obligations. As of December 31, 2011, Viad had $125.4 million of capacity remaining under its Credit Facility reflecting outstanding letters of credit of $4.6 million.

Borrowings under the Credit Facility (of which GES is a guarantor) are indexed to the prime rate or the London Interbank Offered Rate, plus appropriate spreads tied to Viad’s leverage ratio. Commitment fees and letters of credit fees are also tied to Viad’s leverage ratio. The fees on the unused portion of the Credit Facility are currently 0.35 percent annually.

Financial covenants include a fixed-charge coverage ratio of not less than 2.25 to 1 (and a ratio of not less than 2.50 to 1 after the fiscal quarter ending September 30, 2012) and a leverage ratio of not greater than 2.50 to 1. Additionally, Viad must maintain a consolidated minimum cash and cash equivalents balance of $50 million. As of December 31, 2011, the fixed-charge coverage and leverage ratios were 2.94 to 1 and 0.30 to 1, respectively. The terms of the Credit Facility allow Viad to pay up to $10 million in dividends in the aggregate in any calendar year and also allow the Company to purchase up to $10 million in any calendar year of the Company’s common stock. Significant other covenants include limitations on: investments, additional indebtedness, sales/leases of assets, acquisitions, consolidations or mergers and liens on property. As of December 31, 2011, Viad was in compliance with all covenants.

As of December 31, 2011, Viad had certain obligations under guarantees to third parties on behalf of its subsidiaries. These guarantees are not subject to liability recognition in the consolidated financial statements and relate to leased facilities entered into by the Company’s subsidiary operations. The Company would generally be required to make payments to the respective third parties under these guarantees in the event that the related subsidiary could not meet its own payment obligations. The maximum potential amount of future payments that Viad would be required to make under all guarantees existing as of December 31, 2011 would be $28.5 million. These guarantees relate to leased facilities and expire through October 2017. There are no recourse provisions that would enable Viad to recover from third parties any payments made under the guarantees. Furthermore, there are no collateral or similar arrangements whereby Viad could recover payments.

Aggregate annual maturities of capital lease obligations as of December 31, 2011 are as follows:


	(in thousands)
2012	$	2,450
2013		1,075
2014		231
2015		42

Total		3,798
Less: Amount representing interest		(559	)

Present value of minimum lease payments	$	3,239

The gross amount of assets recorded under capital leases as of December 31, 2011 was $6.6 million and accumulated amortization was $3.0 million. As of December 31, 2010, the gross amount of assets recorded under capital leases and accumulated amortization was $6.4 million and $2.6 million, respectively. The amortization charges related to assets recorded under capital leases are included in depreciation expense. See Note 6.

The weighted-average interest rate on total debt was 7.8 percent, 12.0 percent and 7.6 percent, for 2011, 2010 and 2009, respectively. The weighted average interest rates include the effects of commitment fees and other costs of long-term bank credit.

The estimated fair value of total debt was $3.0 million and $9.2 million as of December 31, 2011 and 2010, respectively. The fair value of debt was estimated by discounting the future cash flows using rates currently available for debt of similar terms and maturity.