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Viad Corp.
602-207-4000
1850
N. Central Ave.
Phoenix, AZ 85004
www.viad.com
Sales
$1.6 billion
Business Description
Viad
Corp (“Viad” or the “Corporation”) is comprised of operating companies and a
division which constitute a diversified services business. Most of Viad’s
services are provided to businesses for use by their customers. Accordingly,
the Corporation primarily markets its services through more than 127,000
retail and financial locations (payment services), and to numerous tradeshow
organizers and exhibitors (convention and event services). The Corporation’s
businesses occupy the number one or number two position in many of the
markets in which they compete. They seek to provide quality, convenient and
cost-effective services with a discernible difference to the ultimate users,
thereby being considered a value-added provider by Viad’s business
customers.
Viad’s services are classified into two reportable business segments, namely
(1) Payment Services, and (2) Convention and Event Services. The Corporation
also provides travel and recreation services. The reportable business
segments have been defined in a manner consistent with Viad’s organizational
structure, internal reporting, allocation of resources and operating
decision-making. The Convention and Event Services segment represents the
aggregation of Viad’s two separate convention-related operating companies
due to their similar characteristics. A description of each of Viad’s
reportable business segments, the travel and recreation businesses, and
recent developments relating to each follows. Viad has announced a plan to
separate its payment services business from the remaining Viad businesses by
means of a tax-free spin-off transaction. See “Spin-off Transaction and Sale
of Business” below for further discussion.
Viad has no customer that comprises more than five percent of its revenues,
nor does any Viad reporting segment have a customer comprising more than six
percent of that segment’s revenues.
Viad Business Units
Viad is built around two operating groups which are leading competitors in
their businesses, including companies engaged in payment services (Travelers
Express Company, Inc., MoneyGram Payment Systems, Inc. and FSMC, Inc.), and
convention and event services (GES Exposition Services, Inc. and the
Exhibitgroup/ Giltspur division). Viad business units also provide travel
tour services (Brewster Transport Company Limited) and recreation services
(Glacier Park, Inc.).
Payment Services
Viad’s payment services business is conducted by the Travelers Express/
MoneyGram group of companies (“TE/ MG”). These companies engage in a variety
of payment service activities, offering products and services to consumers
and businesses through a network of agents and financial institution
customers. These products and services include global money transfer, urgent
and routine bill payment services, issuance and processing of money orders,
issuance and processing of official checks, processing share drafts and
controlled disbursement services.
Travelers Express Company, Inc. (“Travelers Express”) sells money orders to
the public through more than 63,500 agent locations and financial
institutions in the United States and Puerto Rico, and is the largest issuer
of money orders in the United States, having issued more than 295 million
money orders in 2003. Travelers Express is the second largest provider of
official check outsourcing services to financial institutions in the United
States, providing payment processing services through approximately 16,000
branch locations of banks, credit unions and other financial institutions
which offer official checks (used by financial institutions in place of
their own bank check).
MoneyGram Payment Systems, Inc. (“MoneyGram”), a subsidiary of Travelers
Express, is a leading global provider of consumer money transfers on a
worldwide basis providing MoneyGram–branded money transfer services through
more than 63,000 agent locations in more than 160 countries worldwide. Some
of MoneyGram’s U.S. agent locations sell or provide both money orders and
money transfer services. TE/ MG also provides in-person electronic bill
payment services at agent locations for various companies whose consumers
make both urgent and routine bill payments such as utility payments at
conveniently located retail stores. Additionally, a Travelers Express
subsidiary processes high volume refund and rebate checks, food vouchers,
gift certificates, and other financial instruments.
Money Transfer Services
In June 1998, Travelers Express acquired MoneyGram, thereby adding MoneyGram-branded
international money transfer services to TE/ MG’s payment services. Money
transfers are electronic transfers of funds between consumers from one
location to another. Money transfers are used by consumers who want to
transfer funds quickly, safely and efficiently to another individual within
the United States or internationally.
In a typical money transfer, a consumer goes to an agent location, completes
a form and pays the agent the money to be transferred, together with a fee.
The agent then enters the transaction data into a point-of-sale money
transfer platform, which connects to TE/ MG’s central data processing
system. The transferred funds are then made available for payment throughout
TE/ MG’s agent network. The fee paid by the sender is based on the amount to
be transferred and the location at which the funds are to be received. Both
the “send” and “receive” agents receive a commission from the transaction.
TE/ MG’s money transfer revenues are derived primarily from consumer
transaction fees and revenues from currency exchange in connection with
international money transfers.
Money Orders
TE/ MG has its roots in the sale of money orders, a business TE/ MG has been
engaged in since 1940. TE/ MG’s money orders are sold under the Travelers
Express and Travelers Express/ MoneyGram brands, on a private label basis
with certain of TE/ MG’s retail agents and co-branded with certain of TE/
MG’s retail agents. Money orders, much like checks, can be presented by the
consumer to make a payment or for cash. In most cases, TE/ MG receives
transaction fees from its agents for each money order sold. In many cases,
TE/ MG also receives monthly dispenser service fees from its agents for the
money order dispenser equipment it provides. In addition, TE/ MG generates
income from the investment of funds that are remitted from its agents which
it invests until the money orders are cleared through the banking system.
Bill Payment Services
TE/ MG’s ExpressPayment urgent bill payment service is offered through its
money transfer agent locations in the United States. The ExpressPayment
urgent bill payment service, which is provided under contract with billers,
enables delinquent debtors and just-in-time payers to pay bills at an agent
location with same-day credit to a growing group of creditors. The
contracted billers include credit card companies, mortgage companies, auto
finance companies, sub-prime lenders, cellular and long distance telephone
companies and third-party bill collectors.
TE/ MG’s FlashPay and BuyPay routine bill payment services are available at
selected money order agent locations. These services allow unbanked and
underbanked consumers to pay routine bills with cash at a convenient
location. The consumer’s account is typically credited within one week.
Official Check Outsourcing Services
TE/ MG’s official check outsourcing services, PrimeLink and PrimeLinkplus,
allow its financial institution customers to outsource a function that they
often view as “non-core” in a cost-efficient manner while generating
additional fee-based revenue. Financial institutions provide official
checks, which include bank checks, cashier checks, teller checks and agent
checks, to consumers for use in transactions when the payee requires a check
drawn on a bank or other third party. Official checks are commonly used in
consumer loan closings, such as closings of home and car loans, and other
situations where certainty of payment and funds availability is critical.
Financial institutions also use official checks to pay their own
obligations.
TE/ MG provides financial institutions a way to outsource a non-core
business line – providing official checks to consumers – to improve customer
service, reduce costs, minimize capital expenditures, improve efficiency,
increase return on assets and secure enhanced services such as fraud
detection and deterrence. TE/ MG’s PrimeLink services also provide its
financial institution customers superior account reconciliation and customer
service capabilities. TE/ MG provides these outsourcing services at a low
cost to financial institutions and pays an agreed-upon commission rate on
the balance of funds underlying the official checks pending clearing of the
items.
TE/ MG clears the official check items pursuant to contracts with clearing
banks as a service to its official check customers. TE/ MG’s financial
institution clients are generally required to remit to TE/ MG on a daily
basis the funds from their sale of the items in order to fund the daily
clearings. TE/ MG maintains investments having a value in excess of its
outstanding payment instruments, which assures that sufficient funds are
available to pay all items. In some cases, TE/ MG segregates the portion of
its portfolio attributable to the payment instruments of a client as a means
of providing those clients with further assurance that funds will be
available to clear the payment instruments sold by them.
TE/ MG also provides Travelers Express and Travelers Express/ MoneyGram-branded,
private label and co-branded money orders to its financial institution
customers for sale to their customers.
TE/ MG primarily derives revenues from its financial institution customers
from the investment of funds underlying the official check or financial
institution money order. TE/ MG invests funds representing customer items
from the time the proceeds are remitted until they are cleared. TE/ MG also
derives revenue from fees paid by its customers.
Controlled Disbursement Processing
Through a subsidiary, FSMC, Inc., TE/ MG is the nation’s largest processor
of WIC checks. WIC checks are issued under the Special Supplemental
Nutrition Program to Women, Infants and Children administered by the U.S.
Department of Agriculture through the various states. FSMC, Inc. also
processes other controlled disbursements, such as rebate checks. TE/ MG’s
revenue from this area is primarily derived from fees.
Convention and Event Services
Convention and event services are provided by GES Exposition Services, Inc.
(“GES”) and the Corporation’s Exhibitgroup/ Giltspur division.
GES
GES is one of North America’s leading suppliers of convention and event
services to trade associations and other tradeshow organizers, management
companies and exhibitors. With a focus on assisting customers in all aspects
of the preparation, installation and dismantling of a convention, tradeshow
or special event, GES services some of the most visible and influential
events in the tradeshow industry. In 2003, GES provided services for over
250,000 exhibitor customers, an estimated 2,000 tradeshows and hundreds of
events and projects across North America.
GES provides convention services through a network of offices in North
America’s most active and popular tradeshow service markets. GES has full
service operations in 16 U.S. cities and four Canadian cities.
GES is a full-service provider to the tradeshow industry, designing,
planning, producing, installing, dismantling and managing every aspect of a
tradeshow regardless of its size. Central to GES’s customer base are
tradeshow organizers. Under its agreements with tradeshow organizers, GES
will provide services to the tradeshow organizer itself and the tradeshow
organizer will agree that GES will be the exclusive provider of certain
services to all exhibitors attending the tradeshow. These exclusive services
include: general management; concept design, graphics and design;
transportation, logistics and material handling services; furnishings and
decorating; rigging and electrical. The services that GES provides to
tradeshow organizers generally help the organizer present a complete concept
for the show, while the exclusive exhibitor services, which may vary from
venue to venue, serve to integrate all exhibitors into that concept. In
addition, when GES has an agreement with a tradeshow organizer, it seeks to
sell elective services to the exhibitors that attend the tradeshow, in
addition to the exclusive services. These elective services include: program
management and on-site coordination for exhibitors; furnishing, carpeting
and signage; logistics and shipping services; installation and dismantling;
rental exhibits and other exhibit packages and storage and refurbishing of
exhibits.
When GES is the general services contractor, GES prepares and sends an
“Exhibitor Kit” to each exhibitor in advance of the tradeshow, either
through the mail or by GES’s internet-based INTERKIT.® The Exhibitor Kit
contains detailed descriptions of the exclusive and elective services
offered by GES and order forms for those services. When GES is not the
general services contractor, GES competes with the general services
contractor to provide to exhibitors the elective services described above.
In 2002, GES implemented the Exhibitor Value Program, which is intended to
improve service and add value to the customer through consultation and
elective services offerings. The Exhibitor Value Program focuses on
providing practical advice to exhibitors through multiple channels including
telephone (inbound and outbound), internet and fax. Through the Exhibitor
Value Program, GES provides a comprehensive service approach designed to
enhance return on objectives for exhibitors and ensure a more positive
experience and productive tradeshow. Integrating technology and personal
services, the Exhibitor Value Program provides proactive advice and guidance
to exhibitors during the complex tradeshow process as well as integrated
exhibitor support, all of which result in a better overall exhibiting
experience and increased awareness of GES’s products and services.
In addition to the exclusive and elective services that GES offers in the
context of a tradeshow, GES also offers expertise in corporate event
services, which represents a growing market for GES. Corporate events
include user week conferences, value-added reseller conferences, sales
meetings and new product or service launches. For corporate event customers,
GES provides an array of planning, logistics and production services similar
to the services described above and offered in the context of a tradeshow.
Exhibitgroup/ Giltspur
Exhibitgroup/ Giltspur (“Exhibitgroup”), a division of the Corporation, is
one of the largest and oldest exhibit designers and fabricators in the
world, with over 60 years of experience in the exhibit industry.
Exhibitgroup is a highly specialized exhibit program manager that is focused
on providing integrated exhibit services primarily for Fortune 1000 clients.
Custom exhibit design and construction is the primary line of business, with
custom exhibits, designed from concept using state-of-the-art computer
rendering programs, being its core product. Such exhibits vary in size, cost
and complexity according to the client’s needs and budget – from carefully
developed product showcases to more elaborate themed environments and
interactive exhibits. Exhibitgroup’s design team also has the capacity to
blend rental components into a client’s custom exhibit to create the desired
marketing statement at a lower cost to the client. Some of Exhibitgroup’s
exhibits are as large as 40,000 square feet, as high as two stories and may
cost up to several million dollars.
Exhibitgroup combines its core services with an ability to provide complete,
one-stop shop exhibit program management services – services that meet a
client’s long-term marketing needs and ensure the best handling of the
client’s exhibit program. Exhibitgroup’s exhibit program services include:
exhibit program management; logistics management; exhibit maintenance;
installation and dismantling; show services; online ordering and e-services
and marketing services.
Many of Exhibitgroup’s clients attend tradeshows in which GES is the general
services contractor or at which GES offers elective services. In these
instances, an Exhibitgroup client may engage the services of GES for
services such as freight handling, carpeting, furniture and similar on-site
elective services. Because of the complexity of Exhibitgroup’s custom
exhibits, many of Exhibitgroup’s clients are likely to use ExpoServices (Exhibitgroup’s
wholly-owned installation and dismantling division) for installation and
dismantle services.
Through its TL Horton Design division, Exhibitgroup is also a leading
creator of retail merchandising units, such as kiosks, that are generally
used in stores and in shopping malls throughout the world. The design of the
kiosks varies depending on clients’ budgets and specific needs. All kiosks
are designed to draw the attention of potential visitors or customers
through a range of alternatives including product displays, entertainment
using interactive electronics and information displays. The TL Horton Design
division offers clients complete turnkey services related to kiosks,
including design, engineering, graphic production, fabrication, warehousing,
shipping and on-site installation.
Exhibitgroup’s experienced designers, global network of facilities and
strategic alliances and innovative technology make Exhibitgroup a leader in
its industry. Exhibitgroup has won over 50 design awards since 1997,
including 28 prestigious “Best of Show” awards. These awards signify that,
either in specific categories or on a general basis, a particular exhibit
was chosen as the best at the tradeshow by a panel of judges or show
attendees.
Travel and Recreation Services
Travel and recreation services are provided by the Brewster Transport
Company Limited (“Brewster”) and Glacier Park, Inc. (“Glacier Park”)
business units.
Brewster
Brewster is a major tourism service operator in Western Canada. It is a
multifaceted tourism company consisting of seven operating divisions
delivering tourism products to visitors of Western Canada. Brewster’s
operations include two world-class attractions, motorcoach services, charter
and sightseeing services, hotel operations, inbound package tour operations
and travel agencies.
Brewster operates the Banff Gondola and Columbia Icefield Snocoach Tours.
The Banff Gondola transports visitors to an elevation of over 7,000 feet
above sea level to the top of Sulphur Mountain in Banff, Alberta, Canada,
offering an unobstructed view of the Canadian Rockies overlooking the town
of Banff and the Bow Valley. Brewster also offers sightseeing tours of the
Athabasca Glacier on the Columbia Icefield. Tour customers ride in a
snocoach, a vehicle specially designed for glacier travel that provides
customers with an opportunity to experience one of the largest accumulations
of ice and snow south of the Arctic Circle.
Brewster’s transportation operations include charter motorcoach services,
sightseeing and scheduled services and airport service. Brewster operates a
modern fleet of luxury motorcoaches, available for groups of any size for
travel throughout Alberta and British Columbia, Canada. In addition,
Brewster provides year-round half- and full-day sightseeing tours from
Calgary, Banff, Lake Louise and Jasper.
Brewster’s inbound package tour operations feature independent package and
group tours throughout Canada, which are offered year-round. These packages
– in the segments of motorcoach, rail, self-drive automobile, ski and winter
touring – consist of both group and individual tours and may be
custom-designed at the time of booking.
Brewster also operates two hotels in Alberta, Canada: the Mount Royal Hotel,
which is located in the heart of Banff, and the Columbia Icefield Chalet,
which is located on the Icefield Parkway between Lake Louise and Jasper. The
hotels cater to leisure travelers.
Brewster’s travel agencies are affiliated with the American Express travel
agency network. These travel agencies service the vacation needs of the
communities in the Bow Valley Corridor (Banff, Lake Louise and Canmore).
With the American Express affiliation, these travel agencies are able to
offer competitive, discounted rates on travel.
Each Brewster line of business has a different market profile, with
customers that differ in terms of geographic origin and travel preferences.
To deliver its products and services to the consumer, Brewster utilizes
direct to the customer marketing strategies as well as a distribution
channel network that includes tour operators, tour wholesalers, destination
management companies and retail travel agencies/organizations. Brewster’s
major markets are Canada, the United States, Japan, Europe, Australia, New
Zealand and Asia.
Glacier Park
Glacier Park operates four historic lodges and three 1960s-era motor inns in
and around Glacier National Park in Montana and Waterton Lakes National Park
in Alberta, Canada. Glacier Park is the largest concessionaire in Glacier
National Park, and holds concession contracts for approximately 80 percent
of the revenue for services provided within the park’s borders, on the basis
of revenue generated. Glacier National Park and Waterton Lakes National Park
encompass 1.1 million acres of rugged wilderness and are best known for
their spectacular scenery, hiking, glaciers and wildlife. Services provided
by Glacier Park include rooms, varying from hikers’ cabins to suites, food
and beverage operations, retail operations and tour and transportation
services. The tour operation utilizes a fleet of 33 authentic 1930s red
touring buses that have rollback canvas tops. These well-known “reds” are
used to conduct interpretive park tours throughout Glacier and Waterton
Lakes National Parks, including tours of the scenic Going-to-the-Sun Road.
The operations of Glacier Park are seasonal, typically running from mid-May
until the end of September. During those months, Glacier and Waterton Lakes
National Parks host over two million visitors, the vast majority of whom
purchase services from Glacier Park. During the peak months of July and
August, Glacier Park’s lodges and motor inns have an occupancy level of
approximately 94 percent. During the “shoulder” seasons of June and
September, occupancy is approximately 60 percent.
Tour groups and travel agencies account for approximately 15 percent of
Glacier Park’s customers, while individual travelers account for the
remaining 85 percent. Demographically, approximately 97 percent of Glacier
Park’s guests come from the United States, with 20 percent to 24 percent
from the Northwest and 10 percent to 12 percent from the Midwest.
Glacier Park operates the concession portion of its business under a 25-year
concession agreement with the U.S. National Park Service, which expires in
December 2005, and under a 42-year agreement with the Canadian Government
for Waterton Lakes National Park, which expires in 2010. When Glacier Park’s
concession agreement with the U.S. National Park Service expires, Glacier
Park will be obligated, if it wants to continue its concession operations,
to rebid for the right to retain these concession services. If Glacier Park
does not retain these concession rights, it will receive an amount from the
park service, or Glacier Park’s successor, equal to its “possessory
interest,” which generally means the value of the structures acquired or
constructed, fixtures installed and improvements made to Glacier National
Park property during the term of this agreement, based on the reconstruction
cost of a new unit of like kind, less depreciation, but not to exceed fair
market value. If Glacier Park does not retain the concession rights, it
would be able to continue operations at Waterton Lakes, Canada, and East
Glacier, which are not part of the concession.
Competition
The Corporation’s businesses generally compete on the basis of discernible
differences, value, quality, price, convenience and service, and encounter
substantial competition from a large number of providers of similar
services, including numerous well-known local, regional and national
companies, private payment service companies and the U.S. Postal Service
(money orders), many of which have greater resources than the Corporation.
Travelers Express also competes for agents and financial institution
customers on the basis of technical and operational differences and price
and financial incentives paid to agents and competes for consumers on the
basis of number and location of agent locations, price, convenience and
technology. First Data
Corporation and its subsidiaries Western Union Financial Services, Inc.
and Integrated Payment Systems; the U.S. Postal Service and Federal Home
Loan Banks are the principal competitors of Travelers Express. The Freeman
Companies and Champion Exposition Services are the principal competitors of
GES, and The George P. Johnson Company, MC2 and Exhibit Works are the
principal competitors of Exhibitgroup.
Ticker
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