Acquisition of Businesses

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Acquisition of Businesses

Note 3. Acquisition of Businesses

Maligne Lake Tours

On January 4, 2016, the Company acquired the assets and operations of Maligne Tours Ltd. (“Maligne Lake Tours”), which provides interpretive boat tours and related services at Maligne Lake, the largest lake in Jasper National Park. The purchase price was $20.9 million Canadian dollars (approximately $15.0 million U.S. dollars) in cash, subject to certain adjustments.

The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date. Due to the recent timing of the acquisition, the purchase price allocation is not yet finalized and is subject to change within the measurement period (up to one year from the acquisition date) as the assessment of property and equipment, intangible assets, and working capital is finalized.

(in thousands)
Purchase price paid as:
Cash			$	14,962
Fair value of net assets acquired:
Inventories	$	246
Prepaid expenses		2
Property and equipment		4,133
Intangible assets		9,244
Total assets acquired		13,625
Customer deposits		15
Total liabilities assumed		15
Total fair value of net assets acquired				13,610
Excess purchase price over fair value of net assets acquired (“goodwill”)			$	1,352

Under the acquisition method of accounting, the purchase price as shown in the table above is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over the fair value of net assets acquired was recorded as goodwill. Goodwill is included in the Travel & Recreation Group and the primary factor that contributed to the purchase price resulting in the recognition of goodwill relates to future growth opportunities when combined with the Company’s other businesses. Goodwill is expected to be deductible for tax purposes pursuant to Canadian tax regulations. The estimated values of current assets and liabilities were based upon their historical costs on the date of acquisition due to their short-term nature. Transaction costs associated with the acquisition of Maligne Lake Tours were $0.1 million in 2016 and $0.2 million in 2015, and were included in corporate activities in Viad’s condensed consolidated statements of operations.

Identified intangible assets acquired in the Maligne Lake Tours acquisition totaled $9.2 million and consist of operating licenses, customer relationships, and trade names. The weighted-average amortization period related to the intangible assets is 26.7 years, largely attributable to operating licenses amortized over the remaining Parks Canada lease of 29 years.

The results of operations of Maligne Lake Tours have been included in Viad’s condensed consolidated financial statements from the date of acquisition. During the three months ended March 31, 2016, revenue of $7,000 and an operating loss of $0.1 million, related to Maligne Lake Tours, were included in Viad’s condensed consolidated statements of operations.

CATC

On March 11, 2016, the Company acquired 100 percent of the equity interest in CIRI Alaska Tourism Corporation (“CATC”), the operator of an Alaskan tourism business that includes a marine sightseeing tour business, three lodges, and a package tour business. The purchase price was $45.0 million in cash, subject to certain adjustments.

The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date. Due to the recent timing of the acquisition, the purchase price allocation is not yet finalized and is subject to change within the measurement period (up to one year from the acquisition date) as the assessment of property and equipment, intangible assets, and working capital is finalized.  

(in thousands)
Purchase price paid as:
Cash			$	45,000
Estimated working capital adjustment				54
Cash acquired				(2,196	)
Purchase price, net of cash acquired				42,858
Fair value of net assets acquired:
Accounts receivable	$	8
Inventories		921
Prepaid expenses		82
Property and equipment		43,470
Intangible assets		980
Total assets acquired		45,461
Accounts payable		201
Accrued liabilities		450
Customer deposits		1,952
Total liabilities assumed		2,603
Total fair value of net assets acquired				42,858
Excess purchase price over fair value of net assets acquired (“goodwill”)			$	—

Under the acquisition method of accounting, the purchase price as shown in the table above is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The estimated values of current assets and liabilities were based upon their historical costs on the date of acquisition due to their short-term nature. Transaction costs associated with the acquisition of CATC were $0.1 million in 2016 and $0.6 million in 2015 and were included in corporate activities in Viad’s condensed consolidated statements of operations.

Identified intangible assets acquired in the CATC acquisition totaled $1.0 million and consist of customer relationships and trade names. The weighted-average amortization period related to the intangible assets is 5.8 years.

The results of operations of CATC have been included in Viad’s condensed consolidated financial statements from the date of acquisition. During the three months ended March 31, 2016, revenue of $45,000 and an operating loss of $0.6 million, related to CATC, were included in Viad’s condensed consolidated statements of operations.

Supplementary pro forma financial information

The following table summarizes the unaudited pro forma results of operations attributable to Viad, assuming the above acquisitions had each been completed on January 1, 2015:

	Three Months Ended March 31,
(in thousands, except per share data)	2016			2015
Revenue	$	241,441		$	264,528
Depreciation and amortization	$	8,898		$	9,314
Loss from continuing operations	$	(8,352	)	$	(4,709	)
Net loss attributable to Viad	$	(8,376	)	$	(4,793	)
Diluted loss per share	$	(0.41	)	$	(0.24	)
Basic loss per share	$	(0.41	)	$	(0.24	)