Viad Corp.

Viad Tower, 1850 N. Central Avenue
Phoenix, Arizona 85004-4545
U.S.A.
Telephone: (602) 207-4000
Fax: (602) 207-5900
Web site: http://www.viad.com

Public Company
Incorporated: 1926 as Motor Transit Corp.
Employees: 3,025
Sales: $785.7 million (2004)
Stock Exchanges: New York
Ticker Symbol: VVI
NAIC: 561920 Convention and Trade Show Organizers

Viad Corp. is a Phoenix, Arizona-based descendant of the Greyhound Bus line. The publicly traded company is primarily engaged in providing services for trade shows, conventions, and special events. Subsidiary GES Exposition Services, Inc. offers trade show layout and design, logistics planning, and show execution services for approximately 2,000 events each year. The Exhibitgroup/Giltspur subsidiary works with major companies to design, build, and dismantle trade show exhibitions, and provides exhibitor show program management services. To a lesser degree, Viad is also involved in the travel and recreation field. Brewsters Tours, Inc. offers travel services to attractions in the Canadian Rocky Mountains, such as The Columbia Icefield and Banff Gondola. A fourth Viad subsidiary, Glacier Park, Inc., is the principal concessionaire in Montana's Glacier Park, operating four lodges and three motor inns in the area.

1920s Roots

Viad's Greyhound corporate lineage dates to 1926 when Motor Transit Corp. was formed to provide bus service and become a consolidator in the young industry. In 1930 the company changed its name to Greyhound Corp., then survived the Great Depression of the 1930s and emerged as the country's premiere bus line. But as business began to tail off in the 1960s, the company, under the leadership of Gerald H. Trautman, began to diversify into a wide range of businesses and refashioned itself as a conglomerate. In 1962 Greyhound became involved in equipment leasing through the acquisition of Boothe Leasing Corp. Two years later it turned to food services, picking up Prophet Co., renamed Greyhound Food Management Inc. In 1965 Greyhound added financial services to the mix, acquiring Travelers Express Co., Inc., which processed money orders. Greyhound acquired Carey Transportation, Inc. and 80 percent of Nassau Air Dispatch in 1969 to provide ground support to airlines serving the Bahamas. This business was then supplemented by the addition of Freeport Flight Services.

The most significant move Greyhound made to diversify was the 1970 $400 million acquisition of Chicago-based Armour & Company, the famous meatpacker founded in the 1860s. However, 100 years later the company faced a hostile takeover bid by General Host Corp. and convinced the Greyhound board to act as a white knight. After some legal wrangling, General Host sold its Armour stock to Greyhound, which acquired the rest of the company as well. Greyhound then unloaded much of Armour's assets, retaining the meatpacking business, renamed Armour Foods and the consumer productions division, Armour-Dial. Dial soap had been part of the Armour company since 1948 when its researchers used the packing operation's tallow byproduct to develop a new germicidal deodorant soap. In the 1950s Dial adopted the advertising slogan, "Aren't you glad you use Dial? Don't you wish everybody did?," which proved instrumental in Dial emerging as the leading deodorant soap in the country. So enduring was the slogan that Dial employed it for the next 40 years.

On some levels Trautman had assembled a successful conglomerate, but the company was not embraced by Wall Street, which derisively referred to Greyhound as "the dog." Its earnings were erratic, up one year and down the next, and instead of viewing Greyhound as diversified, analysts criticized it for lacking focus. In 1982, a new chairman and chief executive officer, John W. Teets, was brought in to overhaul Greyhound. When his work was completed 14 years later, he would emerge as the chairman and CEO of Viad Corp.

Teets grew up in Chicago in a blue collar home, the son of a crane operator who later started his own construction company. An indifferent student, Teets was uninterested in becoming a civil engineer as his father desired, instead finding himself drawn to the restaurant business. In his early 20s, with backing from his father, Teets bought an interest in the Winter Garden, a Chicago complex that included a shopping center, restaurant, and ice skating rink. The venture proved highly successful and Teets may have likely remained involved in this field and never worked for Greyhound had it not been for a string of tragedies that struck his life in 1963. First his wife died in her sleep from unknown causes, followed a few weeks later by the death of a brother from a gas leak on the job. Finally, in November of that year the Winter Garden was completely destroyed by fire. Teets was in total despair and it was only at the insistence of a close friend that he applied for a food management job that Greyhound was advertising. He was hired to run the Greyhound restaurants at the 1964 New York World's Fair and performed so well at the task that Greyhound made him president of Posts Houses, a bus terminal restaurant operator. After a few years Teets left Greyhound for stints with other restaurant operations, including Canteen Corp., where he worked for a taskmaster and conglomerate wizard Harold Geneen, who taught him the importance of being detail-oriented and how to squeeze the utmost from managers. In 1976 a much more seasoned Teets returned to Greyhound, lured back by Trautman to take over the struggling Food Service Group. With Geneen as his model, Teets whipped the subsidiary into shape and became heir to Trautman's top post.

Teets told Fortune in 1985 that "Trautman wasn't much of a tire kicker," and that "Greyhound was run with benign neglect." All that changed when Teets took charge in 1982. Insisting that all subsidiaries had to return at least 15 percent on equity, he was especially hard on the bus lines and meatpacking units which fell far short of that mark. He moved aggressively to take on the unions, demanding wage cuts from workers at Armour Foods, and when they refused he shuttered the company's 29 plants and sold the business to Conagra Inc., which in days reopened with thousands of non-union workers. Teets then turned his attention to his unionized bus drivers, which Greyhound paid at a much higher rate than the competition. His demand for a 17 percent wage and benefit cut resulted in a 47-day strike marred by violence. In the end he achieved a 15 percent giveback, but Greyhound had been severely hurt and despite a number of cost-cutting measures never fully recovered. In 1987 Teets sold the Greyhound bus company to Dallas investors for $350 million, although the company retained the Greyhound Corp. name.

While casting off major assets, Teets added to existing businesses. In 1986 the consumer products division acquired Ellio's Pizza and Purex Corp., maker of soap, bleach, and other household products that filled in gaps in Greyhound's product lines. A year later Greyhound acquired Carson Pirie Scott & Co.'s in-flight catering and airport terminal concession business. The 20 Mule Team division of United States Borax & Chemical Corp. and its household products were brought into the fold in 1988. The addition of Republic Money Orders, Inc. added to the financial services area. In 1990 Greyhound acquired the Breck hair care products business. In that same year, the company changed its name to Greyhound-Dial in the hopes of creating some distance from its erstwhile bus line while still providing a connection to the ten subsidiaries, such as Greyhound Exhibit group, that continued to carry the Greyhound name. The distinction was lost on the public, however, as people continued to call the corporate switchboard with bus route and fare questions. Less than a year later, in February 1991, the company adopted a less confusing name: The Dial Corp.

Teets undertook a further restructuring of Dial in 1992, creating a spinoff company—GFC Financial Corp. later taking the name of Finova Capital Corp.—composed of Greyhound Financial Corp., Greyhound European Financial Group, and Verex Corp. The result was that a lot of hidden value was unlocked in these assets and Finova enjoyed strong growth, prompting investors to clamor for even more streamlining in Dial, convinced there was additional unrealized wealth in the remaining assets, split between consumer products and service companies. Unlike Finova, Dial was only able to achieve growth through further acquisitions.

Teets resisted the idea of further divestiture until 1996 when Michael Price of Heine Securities began accumulating a significant stake in Dial, which for years had been trading in the $20 range but had an estimated breakup value around $40. In a proactive move Teets announced that Dial would be split into two publicly held companies, with consumer products and the service assets going their separate ways. The consumer products side kept the Dial name, while the service companies inherited the corporate entity that was once Greyhound Corp. and took a new name, Viad Corp. It also retained Teets as chairman and CEO, if only for a brief period. He announced plans to retire at the start of 1997 while at the same time naming his handpicked successor, Robert H. Bohannon, the 51-year-old head of the Travelers Express subsidiary. Bohannon also brought 17 years of experience at General Electric's financial unit.

After the split-up was completed in 1996, Viad consisted of companies involved in airline catering through Dobbs International Service; airplane fueling and ground-handling through Aircraft Service International; convention and exhibit services through GES Exposition Services and Exhibitgroup/Giltspur; contract foodservices through Restaura, Inc.; airport and cruise ship duty-free concessions through Greyhound Leisure Services; travel services through Brewster Transport, Jetsave, and Crystal Holidays; and payment services through Travelers Express. The best of the group were Travelers Express, GES Exposition, and Exhibitgroup/Giltspur, all of which were major players in their fields and enjoying strong growth.

Company Perspectives:

Viad (pronounced VEE-ahd) is an S&P SmallCap 600 Company comprised of businesses that provide high-quality services that address the needs of trade show organizers and exhibitors, as well as travel and recreation services in the United States and Canada.

Upon taking over for Teets, Bohannon began to refine Viad's business mix, shedding some assets while adding others. In 1998 Viad cast off Aircraft Services International Group and the duty-free business, then a year later sold Restaura and Dobbs International Services. During this period, the company bolstered Travelers Express with the $50 million acquisition of Game Financial Corporation, providing patrons of casinos and other gaming establishments with cash through credit card advance and check cashing services, and automated teller machines. In June 1998 Travelers Express paid $287 million to acquire MoneyGram Payment Systems Inc., a nonbank provider of consumer wire-transfer services, which complemented Travelers Express's money order business.

Exhibitgroup/Giltspur also grew externally, acquiring Dimension Works in November 1998, just one in a series of acquisitions that commenced before the creation of Viad Corp. and resulted in the largest exhibition company in the world. Headed by Charles Corsentino, the Dial subsidiary Exhibitgroup began its growth spurt in 1995 with the acquisition of its top competitor, Giltspur, with both companies generating about $130 million in annual sales. In addition, in 1995, the company added All West Display and Displaymasters & Deaton. The acquisition of Color & Design Exhibits followed in July 1996, then in 1998 T.L. Horton, Germany's Volbo Innenausbau, and Dimension Works were brought into the fold of the world's largest full-service exhibition company, maintaining offices in 17 cities in the United States as well as Toronto, Canada, and Dusseldorf, Germany.

By the new century Viad was involved in two primary areas: payment services and convention and event services. Revenues totaled more than $1.57 billion in 1999, yielding net income of $347.5 million. Both business segments enjoyed solid growth in 2000, a 16 percent increase for payment services and 11 percent for convention and event services. However, events outside the company's control intervened in 2001 and adversely affected Viad's fortunes. While payment services added nearly $100 million in sales for the year, convention and event services experienced a 14.3 percent drop in revenues due to a sagging economy, which caused some convention customers to forgo building new exhibits, and the terrorist attacks of September 11, leading to travel concerns and the cancellation of some trade shows and exhibit orders.

Difficult conditions continued in 2002, as Viad's total revenues decreased 2.1 percent to $1.62 billion and net income slipped to $57.9 million. Again, payment services held steady, increasing revenues by 9.5 percent, but the convention and event services' sales declined by another 11.1 percent. In 2003 payment services was adversely impacted by lower interest rates and widespread mortgage refinancing that resulted in the segment growing at a modest 3.6 percent clip. Convention and event services lost another 8.8 percent in sales, although it was able to produce profitable results in spite of a shrinking marketplace for trade shows and conventions.

It had become clear to investors and management alike that Viad's two principal business segments were hardly capable of achieving synergy. As had been true during the Greyhound and Dial days, the assets were building up unrealized value that could hopefully be unlocked by splitting the two segments into separate companies. In 2003 Viad began the process of engineering a reverse tax-free spinoff of the payment services unit. Thus, a new subsidiary was formed, MoneyGram International, Inc., which early in 2004 received the payment services business and its stock was distributed to Viad stockholders. Viad then conducted a one-for-four reverse stock split to increase the price of Viad shares. For the year, continuing operations generated $785.7 million in revenues. The company that had once been involved in buses, meat, soap, and money orders was now focused almost entirely on the trade show and convention business. Given its size and breadth there was every reason to expect that with a rebounding economy, Viad was well positioned to enjoy success in its chosen field.