Note 17. 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)	2016			2015			2014
Net periodic benefit cost:
Service cost	$	98		$	101		$	87
Interest cost		1,032			1,018			1,079
Expected return on plan assets		(256	)		(380	)		(436	)
Recognized net actuarial loss		423			492			407
Net periodic benefit cost		1,297			1,231			1,137
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)		1			(963	)		3,418
Reversal of amortization item:
Net actuarial loss		(423	)		(492	)		(407	)
Total recognized in other comprehensive income (loss)		(422	)		(1,455	)		3,011
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	875		$	(224	)	$	4,148

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)	2016			2015			2014
Net periodic benefit cost:
Service cost	$	99		$	152		$	129
Interest cost		573			619			640
Amortization of prior service credit		(503	)		(552	)		(593	)
Recognized net actuarial loss		295			528			166
Net periodic benefit cost		464			747			342
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)		(790	)		(1,248	)		1,045
Prior service credit		73			3			(1,283	)
Reversal of amortization item:
Net actuarial loss		(295	)		(528	)		(166	)
Prior service credit		503			552			593
Total recognized in other comprehensive income (loss)		(509	)		(1,221	)		189
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	(45	)	$	(474	)	$	531

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

													Postretirement
	Funded Plans						Unfunded Plans						Benefit Plans
(in thousands)	2016			2015			2016			2015			2016			2015
Change in benefit obligation:
Benefit obligation at beginning of year	$	14,906		$	16,012		$	10,049		$	11,127		$	14,573		$	16,235
Service cost		—			—			97			101			99			152
Interest cost		629			616			403			402			573			619
Actuarial adjustments		240			(1,013	)		(221	)		(1,072	)		(790	)		(1,248	)
Plan amendments		—			—			—			—			73			3
Benefits paid		(748	)		(709	)		(503	)		(509	)		(909	)		(1,188	)
Benefit obligation at end of year		15,027			14,906			9,825			10,049			13,619			14,573
Change in plan assets:
Fair value of plan assets at beginning of year		10,479			11,198			—			—			—			—
Actual return on plan assets		273			(742	)		—			—			—			—
Company contributions		412			732			503			509			909			1,188
Benefits paid		(748	)		(709	)		(503	)		(509	)		(909	)		(1,188	)
Fair value of plan assets at end of year		10,416			10,479			—			—			—			—
Funded status at end of year	$	(4,611	)	$	(4,427	)	$	(9,825	)	$	(10,049	)	$	(13,619	)	$	(14,573	)

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)	2016		2015		2016		2015		2016		2015
Other current liabilities	$	—	$	—	$	699	$	645	$	1,094	$	1,122
Non-current liabilities		4,611		4,427		9,126		9,404		12,525		13,451
Net amount recognized	$	4,611	$	4,427	$	9,825	$	10,049	$	13,619	$	14,573

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

													Postretirement
	Funded Plans						Unfunded Plans						Benefit Plans						Total			Total
(in thousands)	2016			2015			2016			2015			2016			2015			2016			2015
Net actuarial loss	$	9,090		$	9,202		$	2,496		$	2,806		$	2,710		$	3,795		$	14,296		$	15,803
Prior service credit		—			—			—			—			(1,598	)		(2,173	)		(1,598	)		(2,173	)
Subtotal		9,090			9,202			2,496			2,806			1,112			1,622			12,698			13,630
Less tax effect		(3,447	)		(3,490	)		(947	)		(1,064	)		(422	)		(615	)		(4,816	)		(5,169	)
Total	$	5,643		$	5,712		$	1,549		$	1,742		$	690		$	1,007		$	7,882		$	8,461

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 2017, is approximately $0.2 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 2017 is approximately $0.4 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 2017 is approximately $0.1 million and $0.4 million, respectively.

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

			Fair Value Measurements at December 31, 2016
			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	$	5,352	$	5,352	$	—	$	—
Equity securities		4,580		4,580		—		—
Cash		280		280		—		—
Other		204		—		204		—
Total	$	10,416	$	10,212	$	204	$	—

			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	$	—	$	—
Equity securities		4,459		4,459		—		—
Cash		357		357		—		—
Other		210		—		210		—
Total	$	10,479	$	10,269	$	210	$	—

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
2017	$	890	$	713	$	1,116
2018	$	907	$	738	$	1,105
2019	$	933	$	749	$	1,098
2020	$	1,001	$	751	$	1,078
2021	$	963	$	736	$	1,039
2022-2026	$	4,941	$	3,405	$	4,750

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)	2016			2015			2014
Net periodic benefit cost:
Service cost	$	488		$	503		$	413
Interest cost		488			505			631
Expected return on plan assets		(558	)		(583	)		(640	)
Recognized net actuarial loss		162			160			145
Net periodic benefit cost		580			585			549
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)		158			182			361
Reversal of amortization of net actuarial loss		(162	)		(160	)		145
Total recognized in other comprehensive income (loss)		(4	)		22			506
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	576		$	607		$	1,055

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

	Funded Plans						Unfunded Plans
(in thousands)	2016			2015			2016			2015
Change in benefit obligation:
Benefit obligation at beginning of year	$	9,744		$	12,016		$	2,470		$	2,756
Service cost		488			503			—			—
Interest cost		400			415			87			89
Actuarial adjustments		395			(176	)		105			178
Benefits paid		(818	)		(1,115	)		(177	)		(179	)
Translation adjustment		279			(1,899	)		1			(374	)
Benefit obligation at end of year		10,488			9,744			2,486			2,470
Change in plan assets:
Fair value of plan assets at beginning of year		9,705			11,747			—			—
Actual return on plan assets		617			377			—			—
Company contributions		795			566			177			179
Benefits paid		(818	)		(1,115	)		(177	)		(179	)
Translation adjustment		277			(1,870	)		—			—
Fair value of plan assets at end of year		10,576			9,705			—			—
Funded status at end of year	$	88		$	(39	)	$	(2,486	)	$	(2,470	)

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)	2016			2015		2016		2015
Non-current assets	$	(88	)	$	—	$	—	$	—
Other current liabilities		—			—		170		162
Non-current liabilities		—			39		2,316		2,308
Net amount recognized	$	(88	)	$	39	$	2,486	$	2,470

The net actuarial losses for the foreign funded plans as of December 31, 2016 and 2015 were $3.3 million ($2.5 million after-tax) and $3.3 million ($2.5 million after-tax), respectively. The net actuarial losses for the foreign unfunded plans as of December 31, 2016 and 2015 were $0.4 million ($0.3 million after-tax) and $0.4 million ($0.3 million after-tax), respectively.

The fair value information related to the foreign pension plans’ assets is summarized in the following tables:

			Fair Value Measurements at Reporting Date Using
(in thousands)	December 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobserved Inputs (Level 3)
Assets:
Fixed income securities	$	4,082	$	4,082	$	—	$	—
Equity securities		4,518		4,130		388		—
Other		1,976		1,976		—		—
Total	$	10,576	$	10,188	$	388	$	—

			Fair Value Measurements at Reporting Date Using
(in thousands)	December 31, 2015		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobserved Inputs (Level 3)
Assets:
Fixed income securities	$	4,372	$	4,372	$	—	$	—
Equity securities		4,908		4,533		375		—
Other		425		425		—		—
Total	$	9,705	$	9,330	$	375	$	—

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

(in thousands)	Funded Plans		Unfunded Plans
2017	$	366	$	170
2018	$	385	$	169
2019	$	387	$	169
2020	$	390	$	169
2021	$	407	$	168
2022-2026	$	2,551	$	833

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)	2016		2015		2016		2015
Projected benefit obligation	$	15,027	$	14,906	$	9,825	$	10,049
Accumulated benefit obligation	$	15,027	$	14,906	$	9,737	$	9,934
Fair value of plan assets	$	10,416	$	10,479	$	—	$	—

	Foreign Plans
	Funded Plans				Unfunded Plans
(in thousands)	2016		2015		2016		2015
Projected benefit obligation	$	10,488	$	9,744	$	2,486	$	2,470
Accumulated benefit obligation	$	9,906	$	9,186	$	2,486	$	2,470
Fair value of plan assets	$	10,576	$	9,705	$	—	$	—

Contributions

In aggregate for both the domestic and foreign plans, the Company anticipates contributing $1.6 million to the funded pension plans, $0.9 million to the unfunded pension plans, and $1.1 million to the postretirement benefit plans in 2017.

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
	2016			2015			2016			2015			2016			2015			2016			2015
Discount rate		4.12	%		4.37	%		3.99	%		4.25	%		4.08	%		4.30	%		3.52	%		3.76	%
Rate of compensation increase	N/A			N/A				3.00	%		3.00	%	N/A			N/A				2.34	%		2.31	%

Weighted-average assumptions used to determine net periodic benefit costs as of December 31 were as follows:

	Domestic Plans
	Funded Plans						Unfunded Plans						Postretirement Benefit Plans						Foreign Plans
	2016			2015			2016			2015			2016			2015			2016			2015
Discount rate		4.33	%		3.97	%		4.25	%		3.90	%		4.30	%		4.00	%		3.77	%		3.86	%
Expected return on plan assets		2.25	%		3.33	%	N/A			N/A				0.00	%		0.00	%		4.53	%		4.51	%
Rate of compensation increase	N/A			N/A				3.00	%		3.00	%	N/A			N/A				2.34	%		2.31	%

The assumed health care cost trend rate used in measuring the December 31, 2016 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 2026 and remaining at that level thereafter. 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.

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, 2016 by approximately $1.3 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, 2016 by approximately $1.1 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 2016 is outlined in the following table. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2016 and 2015 relates to the plan’s year end as of December 31, 2015 and 2014, 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.		2016	2015		2016		2015		2014
Pension Fund:
Western Conference of Teamsters Pension Plan	91-6145047		1	Green	Green	No	$	6,684	$	5,632	$	6,369	No	3/31/2020
Southern California Local 831—Employer Pension Fund⁽¹⁾	95-6376874		1	Green	Green	No		2,805		2,485		2,481	No	8/31/2017
Chicago Regional Council of Carpenters Pension Fund	36-6130207		1	Green	Yellow	Yes		2,532		1,887		1,946	No	5/31/2019
IBEW Local Union No 357 Pension Plan A	88-6023284		1	Green	Green	No		1,402		1,150		1,457	No	6/16/2018
Machinery Movers Riggers & Mach Erect Local 136 Supplemental Retirement Plan⁽¹⁾	36-1416355		11	Red	Red	Yes		1,203		502		993	Yes	6/30/2019
Central States, Southeast and Southwest Areas Pension Plan	36-6044243		1	Red	Red	Yes		1,151		948		1,018	No	12/31/2018
Electrical Contractors Assoc. Chicago Local Union 134, IBEW Joint Pension Trust of Chicago Plan #2	51-6030753		2	Green	Green	No		845		1,190		1,081	No	6/4/2017
Southwest Carpenters Pension Trust	95-6042875		1	Green	Green	No		791		750		885	No	6/30/2018
Southern California IBEW-NECA Pension Fund	95-6392774		1	Yellow	Yellow	Yes		701		835		768	Yes	continuous
New England Teamsters & Trucking Industry Pension	04-6372430		1	Red	Red	Yes		552		381		571	No	3/31/2017
Sign Pictorial & Display Industry Pension Plan⁽¹⁾	94-6278490		1	Green	Green	No		526		541		439	No	3/31/2018
All other funds⁽²⁾								3,585		4,259		3,087
Total contributions to defined benefit plans								22,777		20,560		21,095
Total contributions to other plans								2,995		1,428		2,057
Total contributions to multi-employer plans							$	25,772	$	21,988	$	23,152

⁽¹⁾	The Company contributed more than 5 percent of total plan contributions for the 2015 and 2014 plan years based on the plans’ Form 5500s.

⁽²⁾	Represents participation in 39 pension funds during 2016.

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 $3.9 million, $3.7 million, and $3.3 million for 2016, 2015, and 2014, respectively. Matching contributions are funded from shares of Viad common stock held in treasury.