UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JULY 1, 1999
VIAD CORP
(Exact name of registrant as specified in its charter)
DELAWARE 001-11015 36-1169950
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1850 N. CENTRAL AVE., PHOENIX, ARIZONA 85077
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 207-4000
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 1, 1999, Viad Corp ("Viad") completed the previously announced
sale of its airline catering business, conducted by Dobbs International
Services, Inc. in the United States and by Dobbs International (U.K.)
Limited in the United Kingdom (referred to collectively as "Dobbs").
Dobbs was sold in a stock transaction to SAirGroup for aggregate cash
consideration of approximately $780 million. Effective April 1, 1998,
Viad had previously sold its Aircraft Services International Group
("ASIG"), which conducted aircraft fueling and ground-handling
operations. The sale of Dobbs completed the disposition of Viad's airline
catering and services segment.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information.
The accompanying Pro Forma Consolidated Balance Sheet of Viad as of
March 31, 1999 and Pro Forma Consolidated Statements of Income for the
three months ended March 31, 1999 and for the year ended December 31,
1998, have been prepared to reflect the historical financial position
and results of continuing operations as adjusted for reclassification of
the airline catering and services businesses as discontinued operations.
The historical results of operations of the airline catering and
services businesses up to their respective dates of disposition and the
gains on the sales of Dobbs and ASIG will be reported as discontinued
operations in Viad's future financial statements.
In the opinion of management, all adjustments necessary to present
fairly such pro forma financial statements have been made.
The Pro Forma Consolidated Balance Sheet has been prepared as if the
Dobbs sale occurred on March 31, 1999, and the Pro Forma Consolidated
Statements of Income have been prepared as if the sale of Dobbs occurred
on the first day of the respective periods presented. The pro forma
financial information, which includes adjustments to record the
contemplated near-term use of the sale proceeds upon the disposition of
Dobbs and to reflect the income statement effects associated with the
investment of proceeds, the repayment of debt and the repurchase of
common shares, is unaudited and is not necessarily indicative of the
results that would have occurred if the transactions had been
consummated as of March 31, 1999, or at the beginning of the respective
periods presented. Actual use of the sale proceeds may differ from that
shown in the accompanying pro forma financial information. Over the
longer term, Viad expects that a substantial portion of the proceeds
will be used to expand its core businesses through acquisitions.
The first quarter is normally the slowest quarter of the year for Viad.
Due to increased leisure travel during the summer and year-end holidays,
Viad's airline catering and services operations generally experienced
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peak activity at those times. Convention and event service companies
generally experience increased activity during the first half of the
year.
The pro forma consolidated financial information should be read in
conjunction with the accompanying Notes to Pro Forma Consolidated
Financial Statements and the historical consolidated financial
statements and related notes to consolidated financial statements of
Viad Corp.
(c) Exhibits.
10 Stock Purchase Agreement by and among Viad Corp,
Viad Services Companies Limited and SAirGroup.
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VIAD CORP
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
Reclassify to
Discontinued Pro Forma
(000 omitted) Historical Operations Adjustments Pro Forma
- --------------------------------------------------- ---------------- --------------- --------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 31,183 $ 4,361 (a) $ 780,000 (b) $ 35,544
(780,000) (c)
Receivables 135,193 (29,423)(a) (30,000) (b) 75,770
Inventories 74,841 (9,799)(a) 65,042
Short-term investments 135,000 (c) 135,000
Deferred income taxes 37,398 (6,141)(a) 31,257
Other current assets 49,750 (4,441)(a) 45,309
---------------- --------------- --------------- ---------------
328,365 (45,443) 105,000 387,922
Funds, agents' receivables and current
maturities of investments restricted
for payment service obligations,
after eliminating $90,000 invested
in Viad commercial paper 284,339 284,339
---------------- --------------- --------------- ---------------
Total current assets 612,704 (45,443) 105,000 672,261
Investments restricted for payment service
obligations 2,523,828 2,523,828
Property and equipment 444,987 (181,791)(a) 263,196
Other assets 133,560 (3,275)(a) 130,285
Other investments 390,000 (c) 390,000
Investment in discontinued operations 387,196 (a) (387,196) (b) 0
Deferred income taxes 85,454 (5,291)(a) 80,163
Intangibles 877,321 (262,556)(a) 614,765
---------------- --------------- --------------- ---------------
$ 4,677,854 $ (111,160) $ 107,804 $ 4,674,498
---------------- --------------- --------------- ---------------
---------------- --------------- --------------- ---------------
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 145,051 $ (31,329)(a) $ 113,722
Accrued compensation 63,406 (24,013)(a) 39,393
Other current liabilities 190,278 (48,609)(a) $ 180,000 (b)(c) 321,669
Current portion of long-term debt 32,876 32,876
---------------- --------------- --------------- ---------------
431,611 (103,951) 180,000 507,660
Payment service obligations 2,830,250 2,830,250
---------------- --------------- --------------- ---------------
Total current liabilities 3,261,861 (103,951) 180,000 3,337,910
Long-term debt 509,478 20,000 (b) 429,478
(100,000) (c)
Pension and other benefits 81,530 (6,979)(a) 74,551
Other deferred items and insurance liabilities 161,941 (230)(a) 161,711
Commitments and contingent liabilities
Minority interests 3,134 3,134
$4.75 Redeemable preferred stock 6,629 6,629
Common stock and other equity 653,281 157,804 (b) 661,085
(150,000) (c)
---------------- --------------- --------------- ---------------
$ 4,677,854 $ (111,160) $ 107,804 $ 4,674,498
---------------- --------------- --------------- ---------------
---------------- --------------- --------------- ---------------
See notes to pro forma consolidated financial statements.
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VIAD CORP
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998
Reclassify to
Discontinued Historical Pro Forma
(000 omitted, except per share data) Historical Operations Restated Adjustments Pro Forma
- ---------------------------------------- -------------- -------------- -------------- -------------- --------------
Revenues $2,542,135 $ (922,632)(a) $1,619,503 $1,619,503
Costs and expenses:
Costs of sales and services 2,303,548 (849,396)(a) 1,454,152 1,454,152
Corporate activities, net 21,913 2,294 (a) 24,207 24,207
Interest income $ (26,400)(c) (26,400)
Interest expense 40,818 (6,862)(a) 33,956 (4,640)(c) 29,316
Nonrecurring items:
Gains on sales of businesses (54,639) 21,155 (a) (33,484) (33,484)
Provision for payments previously
received pursuant to
patent infringement litigation 10,642 10,642 10,642
Minority interests 2,165 2,165 2,165
-------------- -------------- -------------- -------------- --------------
2,324,447 (832,809) 1,491,638 (31,040) 1,460,598
-------------- -------------- -------------- -------------- --------------
Income before income taxes 217,688 (89,823) 127,865 31,040 158,905
Income taxes 67,048 (36,527)(a) 30,521 11,671 (d) 42,192
-------------- -------------- -------------- -------------- --------------
Income from continuing operations $ 150,640 (1) $ (53,296) $ 97,344 (2) $ 19,369 $ 116,713 (2)
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Diluted income per common share
from continuing operations $ 1.52 (1) $ 0.98 (2) $ 1.24 (2)
-------------- -------------- --------------
-------------- -------------- --------------
Average outstanding and potentially dilutive
common shares 98,367 98,367 (5,000)(c) 93,367
-------------- -------------- --------------
-------------- -------------- --------------
Basic income per common share
from continuing operations $ 1.58 $ 1.02 $ 1.29
-------------- -------------- --------------
-------------- -------------- --------------
Average outstanding common shares 94,382 94,382 (5,000)(c) 89,382
-------------- -------------- --------------
-------------- -------------- --------------
(1) Excluding the gains on sales of businesses of $32,855,000 (after-tax), or
$0.33 per diluted share, and the provision for payments previously received
pursuant to patent litigation of $6,917,000 (after-tax), or $0.07 per diluted
share, historical income from continuing operations was $124,702,000, or $1.26
per diluted share.
(2) Excluding the gains on sales of businesses not classified
as discontinued operations of $19,654,000 (after-tax), or $0.20 per diluted
share, and the provision for payments previously received pursuant to patent
litigation of $6,917,000 (after-tax), or $0.07 per diluted share, historical
restated income from continuing operations would be $84,607,000, or $0.85 per
diluted share, and pro forma income from continuing operations would be
$103,976,000, or $1.10 per diluted share.
See notes to pro forma consolidated financial statements.
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VIAD CORP
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
QUARTER ENDED MARCH 31, 1999
Reclassify to
Discontinued Historical Pro Forma
(000 omitted, except share data) Historical Operations Restated Adjustments Pro Forma
- ------------------------------------- ---------------- --------------- --------------- --------------- ----------------
Revenues $ 592,449 $ (217,389)(a) $ 375,060 $ 375,060
Costs and expenses:
Costs of sales and services 549,164 (206,159)(a) 343,005 343,005
Corporate activities, net 4,503 650 (a) 5,153 5,153
Interest income $ (8,075)(c) (8,075)
Interest expense 9,634 (1,484)(a) 8,150 (1,040)(c) 7,110
Minority interests 501 501 501
--------------- --------------- --------------- --------------- ----------------
563,802 (206,993) 356,809 (9,115) 347,694
--------------- --------------- --------------- --------------- ----------------
Income before income taxes 28,647 (10,396) 18,251 9,115 27,366
Income taxes 8,262 (4,861)(a) 3,401 3,427 (d) 6,828
--------------- --------------- --------------- --------------- ----------------
Income from continuing operations $ 20,385 $ (5,535) $ 14,850 $ 5,688 $ 20,538
--------------- --------------- --------------- --------------- ----------------
--------------- --------------- --------------- --------------- ----------------
Diluted income per common share
from continuing operations $ 0.20 $ 0.15 $ 0.22
--------------- --------------- ----------------
--------------- --------------- ----------------
Average outstanding and potentially
dilutive common shares 98,452 98,452 (5,000) (c) 93,452
--------------- --------------- ----------------
--------------- --------------- ----------------
Basic income per common share
from continuing operations $ 0.21 $ 0.15 $ 0.23
--------------- --------------- ----------------
--------------- --------------- ----------------
Average outstanding common shares 94,640 94,640 (5,000) (c) 89,640
--------------- --------------- ----------------
--------------- --------------- ----------------
See notes to pro forma consolidated financial statements.
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VIAD CORP
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) To reclassify the assets and liabilities of the airline catering and
services segment as discontinued operations and to eliminate the
operating accounts of such businesses from continuing operations.
(b) To record the sale of Dobbs, including the assumption of certain Dobbs
liabilities by Viad and related estimated expense provisions.
(c) To record the contemplated use of the sale proceeds upon the
disposition of Dobbs and to reflect the income statement effects
associated with the investment of proceeds, the repayment of debt and
the repurchase of 5,000,000 common shares at an assumed market price of
$30.00 per share. Actual use of the sale proceeds may differ from that
shown in the accompanying pro forma financial information.
(d) To record the income tax impact of the pro forma income statement
adjustments.
*****************************
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIAD CORP
By: /s/ Ronald G. Nelson
--------------------------
Ronald G. Nelson
Vice President-Finance & Treasurer
DATE: July 9, 1999
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