Note 18. Pension and Postretirement Benefits

Domestic Plans. Viad has trusteed, frozen defined benefit pension plans that cover certain employees which are funded by the Company. Viad also maintains certain unfunded defined benefit pension plans which provide supplemental benefits to select management employees. These plans use traditional defined benefit formulas based on years of service and final average compensation. Funding policies provide that payments to defined benefit pension trusts shall be at least equal to the minimum funding required by applicable regulations.

Viad also has certain defined benefit postretirement plans that provide medical and life insurance for certain eligible employees, retirees, and dependents. The related postretirement benefit liabilities are recognized over the period that services are provided by employees. In addition, Viad retained the obligations for these benefits for retirees of certain sold businesses. While the plans have no funding requirements, Viad may fund the plans.

The components of net periodic benefit cost and other amounts recognized in other comprehensive income of Viad’s pension plans included the following:

	December 31,
(in thousands)	2015			2014			2013
Net periodic benefit cost:
Service cost	$	101		$	87		$	66
Interest cost		1,018			1,079			1,030
Expected return on plan assets		(380	)		(436	)		(400	)
Recognized net actuarial loss		492			407			583
Net periodic benefit cost		1,231			1,137			1,279
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)		(963	)		3,418			(2,565	)
Reversal of amortization item:
Net actuarial loss		(492	)		(407	)		(583	)
Total recognized in other comprehensive income (loss)		(1,455	)		3,011			(3,148	)
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	(224	)	$	4,148		$	(1,869	)

The components of net periodic benefit cost and other amounts recognized in other comprehensive income of Viad’s postretirement benefit plans included the following:

	December 31,
(in thousands)	2015			2014			2013
Net periodic benefit cost:
Service cost	$	152		$	129		$	156
Interest cost		619			640			663
Expected return on plan assets		—			—			—
Amortization of prior service credit		(552	)		(593	)		(902	)
Recognized net actuarial loss		528			166			518
Net periodic benefit cost		747			342			435
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)		(1,248	)		1,045			(1,496	)
Prior service credit		3			(1,283	)		(40	)
Reversal of amortization item:
Net actuarial loss		(528	)		(166	)		(518	)
Prior service credit		552			593			902
Total recognized in other comprehensive income (loss)		(1,221	)		189			(1,152	)
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	(474	)	$	531		$	(717	)

The following table indicates the funded status of the plans as of December 31:

													Postretirement
	Funded Plans						Unfunded Plans						Benefit Plans
(in thousands)	2015			2014			2015			2014			2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	16,012		$	13,435		$	11,127		$	10,536		$	16,235		$	16,919
Service cost		—			—			101			87			152			129
Interest cost		616			644			402			435			619			640
Actuarial adjustments		(1,013	)		2,700			(1,072	)		649			(1,248	)		1,011
Plan amendments		—			—			—			—			3			(1,283	)
Benefits paid		(709	)		(767	)		(509	)		(580	)		(1,188	)		(1,181	)
Benefit obligation at end of year		14,906			16,012			10,049			11,127			14,573			16,235
Change in plan assets:
Fair value of plan assets at beginning of year		11,198			10,872			—			—			—			520
Actual return on plan assets		(742	)		364			—			—			—			(34	)
Company contributions		732			729			509			580			1,188			695
Benefits paid		(709	)		(767	)		(509	)		(580	)		(1,188	)		(1,181	)
Fair value of plan assets at end of year		10,479			11,198			—			—			—			—
Funded status at end of year	$	(4,427	)	$	(4,814	)	$	(10,049	)	$	(11,127	)	$	(14,573	)	$	(16,235	)

The net amounts recognized in Viad’s consolidated balance sheets under the caption “Pension and postretirement benefits” as of December 31 were as follows:

									Postretirement
	Funded Plans				Unfunded Plans				Benefit Plans
(in thousands)	2015		2014		2015		2014		2015		2014
Other current liabilities	$	—	$	—	$	645	$	635	$	1,122	$	1,094
Non-current liabilities		4,427		4,814		9,404		10,492		13,451		15,141
Net amount recognized	$	4,427	$	4,814	$	10,049	$	11,127	$	14,573	$	16,235

Amounts recognized in accumulated other comprehensive income as of December 31, 2015 consisted of:

(in thousands)	Funded Plans			Unfunded Plans			Postretirement Benefit Plans			Total
Net actuarial loss	$	9,202		$	2,806		$	3,795		$	15,803
Prior service credit		—			—			(2,173	)		(2,173	)
Subtotal		9,202			2,806			1,622			13,630
Less tax effect		(3,490	)		(1,064	)		(615	)		(5,169	)
Total	$	5,712		$	1,742		$	1,007		$	8,461

Amounts recognized in accumulated other comprehensive income as of December 31, 2014 consisted of:

(in thousands)	Funded Plans			Unfunded Plans			Postretirement Benefit Plans			Total
Net actuarial loss	$	9,442		$	4,020		$	5,571		$	19,033
Prior service credit		—			—			(2,729	)		(2,729	)
Subtotal		9,442			4,020			2,842			16,304
Less tax effect		(3,581	)		(1,525	)		(1,078	)		(6,184	)
Total	$	5,861		$	2,495		$	1,764		$	10,120

The estimated net actuarial loss for the postretirement benefit plans that is expected to be amortized from accumulated other comprehensive income into net periodic benefit cost in 2016 is approximately $0.4 million. The estimated prior service credit for the postretirement benefit plans that is expected to be amortized from accumulated other comprehensive income into net periodic benefit credit in 2016 is approximately $0.5 million.

The estimated net actuarial loss for the unfunded and funded benefit plans that is expected to be amortized from accumulated other comprehensive income into net periodic benefit cost in 2016 is approximately $0.1 million and $0.3 million, respectively.

The fair value of the domestic plans’ assets by asset class was as follows:

			Fair Value Measurements at December 31, 2015
			Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobserved Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Domestic pension plans:
Fixed income securities	$	5,453	$	5,453	$	—	$	—
U.S. equity securities		4,459		4,459		—		—
Cash		357		357		—		—
Other		210		—		210		—
Total	$	10,479	$	10,269	$	210	$	—

			Fair Value Measurements at December 31, 2014
			Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobserved Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Domestic pension plans:
Fixed income securities	$	6,534	$	6,534	$	—	$	—
U.S. equity securities		3,855		3,855		—		—
Cash		552		552		—		—
Other		257		—		257		—
Total	$	11,198	$	10,941	$	257	$	—

The Viad Corp Medical Plan maintained a trust account for plan assets invested in various securities. In June 2014, the trust account was closed after all plan assets were liquidated to reimburse Viad Corp for net postretirement medical claims paid. All medical claims are being paid by Viad.

Viad employs a total return investment approach whereby a mix of equities and fixed income securities is used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income securities. Furthermore, equity securities are diversified across U.S. and non-U.S. stocks, as well as growth and value. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews and annual liability measurements.

Viad utilizes a building-block approach in determining the long-term expected rate of return on plan assets. Historical markets are studied and long-term historical relationships between equity securities and fixed income securities are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio return also considers diversification and rebalancing. Peer data and historical returns are reviewed relative to Viad’s assumed rates for reasonableness and appropriateness.

The following pension and postretirement benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

(in thousands)	Funded Plans		Unfunded Plans		Postretirement Benefit Plans
2016	$	834	$	659	$	1,146
2017	$	875	$	697	$	1,157
2018	$	895	$	722	$	1,153
2019	$	922	$	735	$	1,123
2020	$	988	$	737	$	1,112
2021-2025	$	4,879	$	3,447	$	5,021

Foreign Pension Plans. Certain of Viad’s foreign operations also maintain trusteed defined benefit pension plans covering certain employees which are funded by the companies, and unfunded defined benefit pension plans providing supplemental benefits to select management employees. These plans use traditional defined benefit formulas based on years of service and final average compensation. Funding policies provide that payments to defined benefit pension trusts shall be at least equal to the minimum funding required by applicable regulations. The components of net periodic benefit cost and other amounts recognized in other comprehensive income included the following:

	December 31,
(in thousands)	2015			2014			2013
Net periodic benefit cost:
Service cost	$	503		$	413		$	534
Interest cost		505			631			702
Expected return on plan assets		(583	)		(640	)		(698	)
Recognized net actuarial loss		160			145			248
Net periodic benefit cost		585			549			786
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)		182			361			(1,214	)
Reversal of amortization of net actuarial loss		(160	)		145			(248	)
Total recognized in other comprehensive income (loss)		22			506			(1,462	)
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	607		$	1,055		$	(676	)

The following table represents the funded status of the plans as of December 31:

	Funded Plans						Unfunded Plans
(in thousands)	2015			2014			2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	12,016		$	11,460		$	2,756		$	2,911
Service cost		503			413			—			—
Interest cost		415			507			89			124
Actuarial adjustments		(176	)		1,042			178			234
Benefits paid		(1,115	)		(344	)		(179	)		(211	)
Translation adjustment		(1,899	)		(1,062	)		(374	)		(302	)
Benefit obligation at end of year		9,744			12,016			2,470			2,756
Change in plan assets:
Fair value of plan assets at beginning of year		11,747			11,560			—			—
Actual return on plan assets		377			983			—			—
Company contributions		566			604			179			211
Benefits paid		(1,115	)		(344	)		(179	)		(211	)
Translation adjustment		(1,870	)		(1,056	)		—			—
Fair value of plan assets at end of year		9,705			11,747			—			—
Funded status at end of year	$	(39	)	$	(269	)	$	(2,470	)	$	(2,756	)

The net amounts recognized in Viad’s consolidated balance sheets under the caption “Pension and postretirement benefits” as of December 31 were as follows:


	Funded Plans				Unfunded Plans
(in thousands)	2015		2014		2015		2014
Other current liabilities	$	—	$	—	$	162	$	94
Non-current liabilities		39		318		2,308		2,662
Net amount recognized	$	39	$	318	$	2,470	$	2,756

The net actuarial losses for the foreign funded plans as of December 31, 2015 and 2014 were $3.3 million ($2.5 million after-tax) and $4.0 million ($3.1 million after-tax), respectively. The net actuarial losses as of December 31, 2015 and 2014 for the foreign unfunded plans were $0.4 million ($0.3 million after-tax) and $0.4 million ($0.2 million after-tax), respectively.

The fair value of the foreign pension plans’ assets by asset category was as follows:

			Fair Value Measurements at December 31, 2015
(in thousands)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobserved Inputs (Level 3)
Assets:
Canadian fixed income securities	$	4,372	$	4,372	$	—	$	—
International equity securities		3,896		3,521		375		—
U.S. equity securities		1,012		1,012		—		—
Other		425		425		—		—
Total	$	9,705	$	9,330	$	375	$	—

			Fair Value Measurements at December 31, 2014
(in thousands)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobserved Inputs (Level 3)
Assets:
Canadian fixed income securities	$	5,367	$	5,367	$	—	$	—
International equity securities		4,693		4,273		420		—
U.S. equity securities		1,236		1,236		—		—
Other		451		451		—		—
Total	$	11,747	$	11,327	$	420	$	—

The following payments, which reflect expected future service, as appropriate, are expected to be paid:

(in thousands)	Funded Plans		Unfunded Plans
2016	$	311	$	166
2017	$	383	$	166
2018	$	395	$	166
2019	$	449	$	165
2020	$	451	$	165
2021-2025	$	2,716	$	816

Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets. The accumulated benefit obligations in excess of plan assets as of December 31 were as follows:

	Domestic Plans
	Funded Plans				Unfunded Plans
(in thousands)	2015		2014		2015		2014
Projected benefit obligation	$	14,906	$	16,012	$	10,049	$	11,127
Accumulated benefit obligation	$	14,906	$	16,012	$	9,934	$	11,014
Fair value of plan assets	$	10,479	$	11,200	$	—	$	—

	Foreign Plans
	Funded Plans				Unfunded Plans
(in thousands)	2015		2014		2015		2014
Projected benefit obligation	$	9,744	$	12,016	$	2,470	$	2,756
Accumulated benefit obligation	$	9,186	$	11,268	$	2,470	$	2,656
Fair value of plan assets	$	9,705	$	11,747	$	—	$	—

Contributions. In aggregate for both the domestic and foreign plans, the Company anticipates contributing $0.9 million to the funded pension plans, $0.8 million to the unfunded pension plans and $1.1 million to the postretirement benefit plans in 2016.

Weighted-Average Assumptions. Weighted-average assumptions used to determine benefit obligations as of December 31 were as follows:

	Domestic Plans
	Funded Plans						Unfunded Plans						Postretirement Benefit Plans						Foreign Plans
	2015			2014			2015			2014			2015			2014			2015			2014
Discount rate		4.37	%		4.01	%		4.25	%		3.90	%		4.30	%		4.00	%		3.76	%		3.85	%
Rate of compensation increase	N/A			N/A				3.00	%		3.00	%	N/A			N/A				2.31	%		3.00	%

Weighted-average assumptions used to determine net periodic benefit cost were as follows:

	Domestic Plans
	Funded Plans						Unfunded Plans						Postretirement Benefit Plans						Foreign Plans
	2015			2014			2015			2014			2015			2014			2015			2014
Discount rate		3.97	%		4.90	%		3.90	%		4.60	%		4.00	%		4.65	%		3.86	%		4.67	%
Expected return on plan assets		3.33	%		4.15	%	N/A			N/A				0.00	%		0.00	%		4.51	%		5.69	%
Rate of compensation increase	N/A			N/A				3.00	%		3.00	%	N/A			N/A				2.31	%		3.00	%

The assumed health care cost trend rate used in measuring the December 31, 2015 accumulated postretirement benefit obligation was 7.0 percent, declining one-quarter percent each year to the ultimate rate of 4.5 percent by the year 2025 and remaining at that level thereafter. The assumed health care cost trend rate used in measuring the December 31, 2014 accumulated postretirement benefit obligation was 7.5 percent, declining one-quarter percent each year to the ultimate rate of 5.0 percent by the year 2025 and remaining at that level thereafter.

A one-percentage-point increase in the assumed health care cost trend rate for each year would increase the accumulated postretirement benefit obligation as of December 31, 2015 by approximately $1.5 million and the total of service and interest cost components by approximately $0.1 million. A one-percentage-point decrease in the assumed health care cost trend rate for each year would decrease the accumulated postretirement benefit obligation as of December 31, 2015 by approximately $1.3 million and the total of service and interest cost components by approximately $0.1 million.

Multi-employer Plans. Viad contributes to defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. The financial risks of participating in these multi-employer pension plans generally include the fact that assets contributed to the plan by one employer may be used to provide benefits to employees of other participating employers. Furthermore, if a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. In addition, if Viad were to discontinue its participation in some of its multi-employer pension plans, the Company may be required to pay those plans a withdrawal liability amount based on the underfunded status of the plan. Viad also contributes to defined contribution plans pursuant to its collective-bargaining agreements, which are generally not subject to the funding risks inherent in defined benefit pension plans. The overall level of Viad’s contributions to its multi-employer plans may significantly vary from year to year based on the demand for union-represented labor to support the Company’s operations. Viad does not have any minimum contribution requirements for future periods pursuant to its collective-bargaining agreements for individually significant multi-employer plans.

Viad’s participation in multi-employer pension plans for 2015 is outlined in the following table. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2015 and 2014 relates to the plan’s year end as of December 31, 2014 and 2013, respectively, and is based on information received from the plan. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan or a rehabilitation plan is either pending or has been implemented.

		Plan		Pension Protection Act Zone Status		FIP/RP Status Pending/ Implemented	Viad Contributions						Surcharge Paid	Expiration Date of Collective- Bargaining Agreement(s)
(in thousands)	EIN	No.		2015	2014		2015		2014		2013
Pension Fund:
Western Conference of Teamsters Pension Plan	91-6145047		1	Green	Green	No	$	5,632	$	6,369	$	5,524	No	5/31/2018
Southern California Local 831—Employer Pension Fund ⁽¹⁾	95-6376874		1	Green	Green	No		2,485		2,481		2,244	No	8/31/17
Chicago Regional Council of Carpenters Pension Fund	36-6130207		1	Yellow	Yellow	Yes		1,887		1,946		1,614	No	5/31/18
Electrical Contractors Assoc. Chicago Local Union 134, IBEW Joint Pension Trust of Chicago Plan #2	51-6030753		2	Green	Green	No		1,190		1,081		957	No	6/3/17
IBEW Local Union No 357 Pension Plan A⁽²⁾	88-6023284		1	Green	Green	No		1,150		1,457		1,631	No	6/16/18
Central States, Southeast and Southwest Areas Pension Plan	36-6044243		1	Red	Red	Yes		948		1,018		836	No	7/31/18
Southern California IBEW-NECA Pension Fund	95-6392774		1	Yellow	Yellow	Yes		835		768		184	No	continuous
National Electrical Benefit Fund	53-0181657		1	Green	Green	No		771		167		193	No	6/16/18
Southwest Carpenters Pension Trust	95-6042875		1	Green	Green	No		750		885		812	No	6/30/18
Sign Pictorial & Display Industry Pension Plan ⁽¹⁾	94-6278490		1	Green	Green	No		541		439		367	No	3/31/18
Machinery Movers Riggers & Mach Erect Local 136 Supplemental Retirement Plan ⁽¹⁾	36-1416355		11	Red	Red	Yes		502		993		430	Yes	6/30/19
All other funds ⁽³⁾								3,869		3,491		2,032
Total contributions to defined benefit plans								20,560		21,095		16,824
Total contributions to other plans								1,428		2,057		3,489
Total contributions to multi-employer plans							$	21,988	$	23,152	$	20,313

⁽¹⁾	The Company contributed more than 5 percent of total plan contributions for the 2014 and 2013 plan years based on the plans’ Form 5500s.

⁽²⁾	The Company contributed more than 5 percent of total plan contributions for the 2013 plan year based on the plans’ Form 5500.

⁽³⁾	Represents participation in 45 pension funds during 2015.

Other Employee Benefits. The Company matches U.S. employee contributions to the 401(k) plan with shares of Viad common stock up to 100 percent of the first 3 percent of a participant’s salary plus 50 percent of the next 2 percent. The expense associated with the Company match was $3.7 million, $3.3 million, and $1.3 million for 2015, 2014, and 2013, respectively. Historically, Viad has funded its matching contributions to employees’ 401(k) accounts through the Company’s leveraged ESOP feature of the Company’s 401(k) defined contribution plan. ESOP shares are treated as outstanding for income per share calculations. During 2014, the Company depleted these shares and matching contributions are now funded from shares of Viad common stock held in treasury. Refer to Note 14 – Employee Stock Ownership Feature of 401(k) Plan for further information.