VVI Viad Corp New

NOTES TO FINANCIAL STATEMENTS

Note 1.  Description of the Plan

The following description of the Viad Corp Capital Accumulation Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information.

General

The Plan, commonly known as “Toward Retirement Income Management” or “TRIM,” is a defined contribution plan which was established on January 1, 1985, and has been amended periodically. The Plan is administered by Viad Corp, which has specifically delegated power and responsibility for daily administration to the Plan committee (the “Committee”), consisting of at least three persons appointed by Viad’s Chief Executive Officer. The trustee and record-keeper of the Plan is T. Rowe Price Retirement Plan Services, Inc. (“T. Rowe Price”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.

Eligibility

Each of our employees and the employees of certain of our subsidiaries are eligible to participate in the Plan, provided any such employee works in the United States, provides at least 1,000 hours of service during a consecutive 12-month period, and is paid a regular fixed compensation. Employees under collective bargaining agreements (unless the collective bargaining agreement specifically provides for participation in the Plan) or leased employees are not eligible to participate in the Plan. Eligible participants may enroll in the Plan at any time.

Contributions

Participants may contribute to the Plan on a pre-tax basis, Roth deferral basis, or a combination of both, up to 50% of their eligible compensation, as defined in the Plan document, subject to regulatory limitations. Participants reaching age 50 or older by the end of the Plan year may elect to contribute additional “catch-up” contributions to the Plan, subject to regulatory limitations.

We make matching contributions equal to 100% of each participant’s pre-tax and Roth deferral contributions up to 3% of eligible compensation, and an additional matching contribution of 50% on the next 2% of participant contributions for an overall maximum matching contribution of 4% of eligible compensation, subject to regulatory limitations. The matching contributions are invested directly in Viad Corp common stock. All matching contributions are 100% vested and are non-forfeitable. Effective April 20, 2020, the employer matching contributions were suspended and will not be made under the Plan. Refer to Note 8 – Subsequent Event for additional information.

Participant contributions are invested by T. Rowe Price into any investment offered by the Plan at the participant’s election. As of December 31, 2019, the Plan had various investment options, including 25 mutual funds and two common/collective trusts. Company matching contributions are held and managed by T. Rowe Price, which invests cash received and dividend income and makes distributions to participants. In general, participants may exchange matching contributions held in Viad Corp common stock into any investment option available in the Plan and may change investments and transfer amounts between funds at any time, subject to excessive trading guidelines.

Our Board of Directors may also provide discretionary profit-sharing allocations of additional shares of Viad Corp common stock. These profit-sharing allocations would be made pro rata based on participant compensation and would be 100% vested once made. No such discretionary profit-sharing allocations were made in either 2019 or 2018.

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Rollovers

Participants may elect to make rollover contributions to the Plan from other qualified plans.

Voting Rights

Participants are entitled to exercise voting rights attributable to the shares allocated in their account and are notified prior to the time that such rights are to be exercised. Shares of allocated stock, for which no instructions are received, are voted upon by the Committee as a single block based on instructions received on the majority of such shares for which instruction is received.

Participant Accounts

T. Rowe Price maintains individual accounts for each Plan participant. Each participant’s account is credited with the participant’s contribution, the Company’s matching contributions, rollover contributions, if any, Plan earnings, and Company discretionary contributions, if any. Participant accounts are also charged with withdrawals, if any, made from the Plan. The benefit, to which a participant is entitled, is the total of the participant’s vested account less any outstanding participant loans.

Distributions to Participants

Benefits are payable to participants upon termination of employment from the Company, disability, retirement, or death. A participant who terminates employment may leave his or her account balance with the Plan, subject to the rules for required distributions. Terminated participants may also roll over or cash out their existing balances. Distributions of allocated Viad Corp shares are made in cash or, if the participant elects, in the form of Viad Corp common stock plus cash, for any fractional share. Qualified distributions from the Roth component of the Plan, including any earnings received thereon, are tax-free to the participant if taken at least five years after the year of the first Roth contribution, upon reaching the age of 59½, total disability, or death. If the distribution is not qualified, withdrawals from the account are subject to certain tax penalties.

Notes Receivable from Participants and Hardship Withdrawals

Participants may borrow from their Plan account balances a minimum of $1,000 up to the lesser of (i) 50% of a participant’s account balance, or (ii) $50,000, reduced by the participant’s highest outstanding loan balance during the last 12 months. Participants may borrow from their pre-tax contributions, non-Roth after-tax deposits, catch-up contributions, and any earnings on them, but may not borrow from the employer matching contributions or Roth deferral contributions. The interest rate for loans is the prime rate at the beginning of the month in which the loan originated, plus 1%. Loans are repaid in equal installments (ratably through payroll deductions) over a period of up to five years, except for loans that are used to purchase a home, which can be repaid over a maximum of 15 years. As of December 31, 2019, participant loans had maturities through 2034 and interest rates ranging from 4.25% to 9.25%.

Withdrawals of deferred contributions and rollovers may be made by the participant in the event of a qualified financial hardship, as defined in the Plan, subject to certain tax penalties. Such withdrawals will only be considered necessary to satisfy a financial hardship if all non-taxable loans available under the Plan have already been obtained. Following a hardship withdrawal, participants are not allowed to contribute to the Plan for a period of six months and are limited to one hardship withdrawal per calendar month.

Plan Termination and Amendments

While it is our intention to continue the Plan, we have the right to terminate the Plan, subject to the provisions of ERISA, provided we have paid all required contributions at the termination date. We also have the right to amend the Plan from time to time. Effective as of December 31, 2014, the Plan was amended and restated to incorporate Plan amendments approved subsequent to the last Plan restatement, and for legal compliance with applicable federal laws and modifications required by the Internal Revenue Service (“IRS”) in connection with the IRS’ review of the Plan’s application for a determination letter.

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Note 2.  Summary of Significant Accounting Policies

Basis of Accounting

The accompanying Plan financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.

Risks and Uncertainties

The Plan provides various investment options to the participants, including mutual funds, common stock, and common/collective trusts. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the value of the participants’ account balances and the amounts reported in the financial statements.

Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Refer to Note 3 - Fair Value Measurements for further discussion.

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date, and interest income is recorded on an accrual basis. Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Notes Receivable from Participants

Notes receivable from participants are measured at their unpaid principal balance, plus any accrued but unpaid interest. Delinquent participant loans are recorded as distributions based on the terms of the Plan document.

Administrative Expenses

During 2019, neither the Plan nor its participants paid a direct fee for recordkeeping and related services provided by T. Rowe Price. Such costs were paid for through revenue sharing built into the expense ratio of the investments. As a result of revenue sharing, participants were not charged loan processing fees or for the cost of legal review of qualified domestic relations orders. Expenses incidental to the operation of the Plan may be paid by the Plan or directly by the Company. During 2019, all Plan-related expenses were paid through revenue sharing. The Plan held undistributed administrative revenue of $529,323 as of December 31, 2019 and $353,304 as of December 31, 2018. Future plan expenses can be paid from any excess remaining revenue sharing amounts.

As indicated above, the Plan’s investment options charge management fees and operating expenses that are built into the operating cost of the investment and referred to as an “expense ratio” or “total annual operating expenses,” which are deducted periodically from the investment. Consequently, these costs are not separately reflected as expenses to the Plan but as a reduction of investment income.

Participant Withdrawal Payable

During 2019, two participants elected to withdraw from the Plan and received payments totaling $5,222 subsequent to December 31, 2019. During 2018, one participant elected to withdraw from the Plan and received a payment of $21,027 subsequent to December 31, 2018.

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Note 3.  Fair Value Measurements

We categorize the Plan assets and liabilities based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy as set forth below. The three levels of the hierarchy are defined as follows:

Asset Valuation Techniques - Valuation methodologies maximize the use of quoted prices and other observable inputs and minimize the use of unobservable inputs. The following is a description of the valuation methodologies used for assets measured at fair value:

Investments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. A summary of the Plan’s investments at fair value is as follows:

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The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. We evaluate the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits. During 2019 and 2018, there were no transfers between levels.

Stable Value Common Trust Fund. The Stable Value Common Trust Fund (“Stable Value Fund”) is a common/collective investment trust fund managed by T. Rowe Price which invests in a variety of investment contracts such as guaranteed investment contracts issued by insurance companies and other financial institutions and other investment products (separate account contracts and structured or synthetic investment contracts) and other similar investments that are intended to maintain a constant NAV while permitting participant-initiated, benefit-responsive withdrawals for certain events. Participants ordinarily may direct the withdrawal or transfer of all or a portion of their investment at contract value.

The existence of certain conditions can limit the Stable Value Fund’s ability to transact at contract value with the issuers of its investment contracts. Specifically, any event outside the normal operation of the Stable Value Fund that causes a withdrawal from an investment contract may result in a negative market value adjustment with respect to such withdrawal. Examples of such events include, but are not limited to, partial or complete legal termination of the Stable Value Fund or a unit holder, tax

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disqualification of the Stable Value Fund or a unit holder, and certain Stable Value Fund amendments if issuers’ consents are not obtained. According to the investment manager’s annual report, as of December 31, 2019, the occurrence of an event outside the normal operation of the Stable Value Fund, which would cause a withdrawal from an investment contract is not probable. To the extent a unit holder requests a redemption, under normal circumstances, it is anticipated that liquid assets would be available to satisfy the redemption of such unit holder’s interest in the Stable Value Fund without the need to access investment contracts. Plan management believes that the occurrence of events that would cause the Stable Value Fund to transact at less than contract value is not probable.

U.S Bond Enhanced Index Trust. The U.S. Bond Enhanced Index Trust (“Bond Index Trust”) normally invests substantially all of its assets in a broad range of income producing securities which attempt to correspond to the total return performance of debt securities in the Barclays Capital Aggregate Bond Index. The Bond Index Trust is valued on a daily basis.

Note 5.  Exempt Party-in-Interest Transactions

Plan investments include shares of mutual funds and common/collective trusts managed by T. Rowe Price. T. Rowe Price is the trustee, as defined by the Plan, thus transactions involving those shares qualify as exempt party-in-interest transactions. The Plan issues loans to participants, which are secured by the vested balance in the participants’ accounts. The Plan also holds shares of Viad Corp common stock, and any transaction involving those shares also qualifies as an exempt party-in-interest transaction. The Plan’s investment in Viad Corp common stock as of December 31, 2019 and 2018 is as follows:

Note 6.  Federal Income Tax Status

GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2019 and 2018, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions. There are currently no tax authority audits in progress, and the Plan administrator believes the Plan is no longer subject to federal income tax examinations for years prior to 2016.

The IRS issued a determination letter on March 4, 2016 confirming that the Plan was designed in accordance with the applicable regulations of the Internal Revenue Code. The Company believes the Plan has maintained its tax-exempt status and, accordingly, no provision for income taxes has been included in the Plan’s financial statements.

There is currently a Department of Labor (“DOL”) audit in progress. We do not believe it will have a material effect on the financial statements.

Note 7.  Nonexempt Party-In-Interest Transaction

During 2019, participant contributions of $11,833, related to periods prior to and including 2019, were remitted to the trustee after the time required by the DOL Regulation 2510.3‑102. We calculated the interest on the delinquent contributions and transmitted the lost earnings of $651 to the Plan during 2019. The Company filed Form 5330 with the IRS and paid the required excise tax on the transaction.

Note 8. Subsequent Event

On March 11, 2020, the World Health Organization declared the coronavirus (“COVID-19”) a “pandemic.” COVID-19 has spread rapidly, with a high concentration of confirmed cases in the U.S. and other countries. The COVID-19 pandemic has had, and is expected to continue to have, a substantial negative impact on businesses around the world and on global, regional, and national economies. Subsequent to December 31, 2019, the value of the Plan assets, including investments held

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in Viad Corp common stock, have been negatively affected due to the deteriorating macroeconomic environment in the global markets. Effective April 20, 2020, the employer matching contributions were suspended and will not be made under the Plan.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted and signed into law in the wake of the COVID-19 pandemic. Certain provisions of the CARES Act allow eligible participants the following:

Eligible participants include those who have been diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention (“CDC”); participant’s spouse or dependents who have been diagnosed with COVID-19 by a test approved by the CDC; or participants who have experienced adverse financial consequences from quarantine, furlough, layoffs, reduced work hours, inability to work due to lack of child care, or the closing or reduced hours of a business owned or operated by the participant on account of the coronavirus.

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VIAD CORP CAPITAL ACCUMULATION PLAN

Employer ID 36-1169950, Plan 002

Supplemental Schedule of Assets (Held at End of Year)

Form 5500, Schedule H, Part IV, Line 4i

As of December 31, 2019

* Party-in-interest as defined by ERISA

Cost information is not included in the above table because investments are participant directed.

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