Viad Corp Announces Third Quarter 2003 Results

For the nine months ended September 30, 2003, income from continuing operations was $0.99 per diluted share on revenue of $1.2 billion, segment operating income of $135.4 million and income from continuing operations of $86.2 million. Diluted earnings per share was $1.01 on net income of $87.7 million including $1.5 million of income from discontinued operations. Status of Proposed Spin Off On July 24, 2003, Viad Corp announced that the board of directors authorized the company to pursue the separation of the Travelers Express business from the remaining Viad businesses by means of a tax-free spin-off. The transaction is subject to a number of conditions, including among other things, receipt of a satisfactory ruling from the Internal Revenue Service (IRS), confirmation that the long-term debt of Travelers Express will have an investment grade rating, availability of satisfactory banking and credit arrangements for each of the businesses, and final approval of the board of directors of Viad. The company also provides the following information with respect to the proposed transaction: -- On July 29, 2003, Viad Corp announced that the company will tender for all its public debt, pay off commercial paper and redeem its preferred stock concurrent with the transaction; -- Viad filed a ruling request with the Internal Revenue Service on August 5, 2003, regarding the proposed separation of Travelers Express. The company estimates it will take six to nine months for the IRS to complete the ruling; and -- The transaction will not be consummated earlier than the end of first quarter 2004. The company gives no assurance that any such transaction will be consummated. Payment Services Payment Services revenue for the third quarter 2003 of $203.7 million was essentially flat to that of the third quarter 2002. Segment operating income was down 15.5 percent to $28.5 million compared with $33.8 million in 2002, and operating margins for the quarter were 14.0 percent compared with 16.6 percent in the third quarter of 2002. For the nine months ended September 30, 2003, revenue was $596.4 million, an increase of 3.4 percent compared to revenue of $576.5 million for the comparable period in 2002. Segment operating income for the 2003 nine month period was $80.2 million, down 15.1 percent from $94.5 million for the comparable period in 2002. In the third quarter 2003, MoneyGram transaction volume grew 32 percent and revenues 19 percent in comparison to the prior year third quarter. The worldwide agent base grew by 11 percent in comparison to the prior year quarter. Payment Services total average float investment balances were $7.4 billion for the quarter, up nearly 20 percent from the prior year quarter. Net float income (float investment income less commission expense and excluding gains and losses) was $17.4 million in the third quarter 2003, down $8.9 million, compared to the prior year third quarter. Mortgage refinance activity lifted third quarter investment volume, however, growth was mitigated by lower average investment rates, high cash balances, and fixed-rate swap payment obligations. See Table Three for current and historical net float margins. Convention and Event Services Convention and Event Services revenue was $132.4 million, a decrease of 22.9 percent from $171.6 million in the third quarter 2002. The third quarter 2003 returned a segment operating loss of $1.1 million as compared with segment operating income of $2.2 million in the 2002 third quarter. The third quarter results reflect negative show rotation at GES and weak demand for new exhibit construction at Exhibitgroup. Last year, GES serviced the International Manufacturing Technology Show (IMTS). IMTS is one of the largest tradeshows in the world and occurs every other year. GES has signed the show again for 2004.