Viad Corp (VVI) 2008 Q4 法說會逐字稿

Good morning, everyone, and thank you for standing by.

At this time all participants are in a listen-only mode.

After the conference call we will have a question and answer session.

(Operator Instructions) Today's conference call is being recorded and if you have any objection you may disconnect at this time.

I would like to turn the call over to your first speaker, Ms Carrie Long, Director Investor Relations, and you may begin, ma'am.

Thank you.

Good morning and thank you for attending our conference call.

Before we begin I would like to remind everyone that certain statements made during the call which are nonhistorical facts may constitute forward-looking statements.

Actual results may differ materially from those projected in the forward-looking statements.

Additional information concerning business and other risk factors that could cause actual results to materially differ from those in the forward-looking statements can be found in Viad's annual and quarterly reports filed with the SEC.

This conference call may not be recorded or reproduced in transcripts without the expressed written permission of Viad.

And during today's call we will refer to tables one and two in the earnings press release, which can be found on our website at www.viad.com.

With that said, I will introduce Paul Dykstra, Chairman, President and CEO of Viad Corp.

Good morning, everyone, thanks very much for being with us today.

On today's call you will hear from Kevin Rabbitt, President of GES Exposition Services, John Jastrem, President of Exhibitgroup/Giltspur, and Ellen Ingersoll, Viad's Chief Financial Officer.

As I discuss our 2008 results, you may want to refer to tables one and two in the earnings press release.

We had a very strong year in 2008.

All of our businesses performed well and for that I would like to thank all of Viad's employees for their dedication and extraordinary contributions throughout the year.

Exhibitgroup/Giltspur produced its second straight year of double digit revenue growth, GES successfully executed a record revenue year and the Travel and Recreation Services businesses continued to produce strong operating income and margins.

Viad's full year income before other items per share grew by 21.3% to $2.28, which is at the high end of the guidance we set forth at the beginning of 2008.

We reached $1.1 billion in revenues, up 11.7% from 2007, and segment operating income grew 19.3%, to $82 million.

This growth was driven primarily by positive show rotation and strong penetration into exhibitor discretionary spending at GES and a 15.8% increase in revenue at Exhibitgroup/Giltspur.

For the 2008 fourth quarter, income before other items was $0.16 per share, up from $0.02 per share in the 2007 quarter.

Our substantial improvement in fourth quarter results was driven primarily by higher segment operating income from the acquisition of Becker Group.

As a reminder, income before other items is a non-GAAP measure that we define as income from continuing operations before the favorable resolution of tax matters and impairment charges and recoveries.

For 2008, the favorable resolution of tax matters added $0.28 per share to our income from continuing operations versus $0.15 per share in 2007.

And we recorded impairment charges of $0.46 per share in 2008 versus impairment recoveries of $0.01 per share in 2007.

Our 2008 income from continuing operations, which includes these other items, was $2.10 per share.

The 2008 impairment charges relate to The Becker Group and Melville acquisitions and Ellen will discuss them in detail later.

While these impairments are disappointing, I can assure you that all other fundamental reasons we acquired Becker Group and Melville remain in tact.

They are both terrific businesses with strong brands and customer relationships and they are a great strategic fit with GES and Exhibitgroup/Giltspur.

Unfortunately, like nearly all other businesses, they are being negatively impacted by broader economic issues.

Now let's move on to the individual operating segment results.

You may want to refer to table one of the press release, which provides revenues and operating income for each of the operating segments.

First I will turn it over to Kevin Rabbitt to talk GES, Kevin.

Thanks, Paul.

Despite the deteriorating economy, we had a very strong year with record revenues of $808.8 million, up 8.3% from 2007.

Full year operating income increased 14.3% to $58.1 million.

Our growth in 2008 was driven by positive show rotation of $63 million versus 2007, along with strong penetration into exhibitor discretionary spending, partially offset by a 3.2% decline in base same show revenue.

As a reminder, base same show growth is a measure of growth in our US shows that occur in the same city and same quarter every year.

Base same shows represent 34% of our full year revenues.

As I've discussed on prior earnings calls, the weakness in base same show revenue in 2008 was driven primarily by two major biannual retail shows.

Excluding these shows, full year base same show revenue grew by about 1%, reflecting the stronger growth in the first half of the year and declines in the second half.

For the fourth quarter our total revenue $132.2 million down $25.2 million or 16% over the 2007 quarter.

This decrease was driven by negative show rotation revenue of $9 million, unfavorable currency translation of $8.8 million, lower exhibitor discretionary revenue and a 6% decline in base same show growth.

Base same shows represented 29% of our fourth quarter revenues.

Although fourth quarter revenue was down, we drove $1 million improvement in operating results through proactive cost reductions and tight control over discretionary spending.

Our accruals for performance based incentives were also lower than the 2007 fourth quarter.

During the fourth quarter we signed more than $84 million in future bookings.

Our show revenue backlog for 2009 and beyond stands at $1.3 billion and we have nearly 70% of our 2009 forecasted revenue under contract.

While our long-term show contracts provide us with high revenue visibility relative to most businesses, that visibility is becoming more challenging in the current environment.

Exhibitors are delaying decisions, making it difficult to accurately forecast the size of shows.

Additionally, exhibitors are focused on reducing their costs by using lighter weight exhibitry and less product, which affects our shipping and drayage revenues.

As I mentioned earlier, we saw base same show growth deteriorate as 2008 progressed, ending the year with a decline of 6% in the fourth quarter.

Many of the space commitments for 2008 shows were made in 2007, before the economic issues came to the forefront.

In contrast space commitments for 2009 shows were made or are being made within the context of a economic recession and during a time when most companies are looking for every opportunity to cut costs, which might include trade show marketing budgets.

We have said many times the trade show industry represents every sector of the broader economy and that shows go as their industries goes.

We are working very closely with our show organizer clients to gauge exhibitor participation at future shows.

Based on recent client feedback and performance of January shows, we are planning for a 10% decline in same show revenue in 2009.

In addition to the economic headwinds, we are also expecting unfavorable currency translation to negatively impact revenues by about $25 million.

As I've mentioned on past earnings calls, we'll face significant negative show rotation this year, as 2009 will bring only a small number of non-annual shows compared to 2008, which had several major non-annual shows, including ConEx, Bo,Con/Agg and FB, IMTS, Mine Expo and the International Woodworking Machinery and Furniture Supply Fair.

In total we expect show rotation to have a net negative impact of about $85 million on our 2009 revenues compared to 2008.

The large revenue swings caused by show rotation will make our year-over-year financial comparisons especially difficult.

Overall we expect full year 2009 revenue to decrease by 15% to 20% from 2008.

This drop can be attributed to a 10% decline from show rotation, 3% from foreign exchange, with the remaining 2% to 7% reflecting expected same show declines, partially offset by new shows, market share gains and pricing.

We expect 2009 full year operating margins to approximate 6%, reflecting our ability to flex variable and semi-variable costs, while ensuring we deliver high levels of customer service and maintain our strong sales actions to win market share.

For the first quarter we expect revenue to be in the range of $215 million to $225 million.

This range reflects a decrease of about $60 million to $70 million from the 2008 quarter, driven by negative show rotation of about $30 million, unfavorable currency translation of $11 million and same show declines.

First quarter operating income is expected to be in the range of $20 million to $23 million, reflecting an operating margin of about 10%, which is in-line with the 2008 quarter.

Cost control will be important focus for us in 2009.

As we demonstrated in the fourth quarter of 2008, the cost reduction measures we have already put in place are working.

We are diligently monitoring and managing our direct labor costs, which are highly variable and represent roughly one-third of our total cost structure.

Nearly two-thirds of our costs are truly variable and roughly 30% of the remaining cost structure is semi-variable in nature and we have been aggressively attacking these costs and reducing budgets wherever we can.

As we do so, we are being careful not to cut too deep and insure that changes we make to our cost structure will help us emerge from the recession as an even stronger and more efficient organization.

We anticipate the economy downturn will provide an opportunity for us to gain market share through new show wins in 2009, as some of our competitors begin to struggle.

Ges' financial strength and transparency, industry leading capabilities and high levels of customer service and safety are key advantages for us and they will be strong selling points as we go out to win new business.

Our products and services sales team is working closely with our trade show sales team to provide cost affective exhibit rental solutions to gain greater share of the show floor.

Additionally, we are able to offer our organizer clients the high end creative and branding capabilities of our sister companies, Exhibitgroup/Giltspur and Becker Group, which our competitors cannot match.

And while we anticipate the trade show industry will continue to see declines into 2009, the industry has a long history of steady growth.

It has been negatively impacted by prior recessions, has always emerged from these periods and resumed its upward trajectory.

We do not expect this recession to be any different.

Trade shows are still a vital and cost affective means of transacting business, launching new products and connecting with customers.

As we endure this recession, we plan to look for every opportunity to strengthen our business through market share gains, increased productivity and selective investments.

We will remain focused on delivering solid results and positioning the Company for continued success.

We will continue to provide quality products and services, along with best in class customer service at a great value to our customers.

As always, the GES team is committed to winning for all of our stakeholders and for that I want to thank the hard working dedicated employees of GES.

Thanks, Kevin.

Now let's move onto the Experiential Marketing Services segment.

As a reminder, this segment is comprised of Exhibitgroup/Giltspur and Becker Group.

Since our acquisition of Becker Group in January 2008, Exhibitgroup and Becker Group have worked successfully together on several notable projects, including production of the Chronicles of Narnia touring exhibition and Norad Holiday environments.

During the fourth quarter we began the formal integration of Exhibitgroup and Becker Group in order to best leverage the creative talent, customer relationships and capital of these two businesses under the leadership of John Jastrem.

As a result of the integration and in light of lower revenue expectations resulting from the economic downturn, we eliminated certain positions within the two companies and trimmed redundant headcount during January, 2009.

This action would result in a pretax restructuring charge of approximately $1 million and will provide annual pretax cost savings in the range of $2 million to $3 million.

Now I will turn it over to John to discuss the segment's results and outlook.

Thanks Paul.

For the fourth quarter revenue for the segment was $67.2 million, up $17.1 million from the 2007 quarter and operating income increased $6.2 million to $7.7 million.

These increases were due to the acquisition of Becker Group, which generated revenue of $21.4 million and operating income of $6.9 million in the fourth quarter.

Partially offsetting the benefit from Becker Group were declines at Exhibitgroup/Giltspur driven primarily by some non-repeating business in the 2007 fourth quarter.

As compared to the 2007 fourth quarter EG's revenue declined by $4.2 million or 8.4%, with a corresponding decline in operating results of $659,000.

On a full year basis, the Experiential Marketing Services segment earned revenues of $225.4 million, with an operating profit of $1.9 million.

Full year results for the segment include revenues of $25.4 million and an operating loss of $677,000 at the Becker Group, which includes $1.8 million of amortization expense related to acquired intangible assets.

Excluding this noncash amortization expense, Becker Group turned an operating profit of $1.1 million.

Although Becker Group's results fell short of initial expectations due to reduced client spending on holiday programs, driven by the weak economy and the credit market issues, Becker Group still realized record revenues in 2008 and substantial growth over 2007.

Exhibitgroup/Giltspur also realized strong revenue growth in 2008, despite the economic downturn.

Full year revenues increased $27.3 million or 15.8% to $200 million.

And full year operating results improved by $7.4 million, driven primarily by continued success in winning new clients and strong client retention.

EG's success in 2008 was fueled by our client centric approach and the hard work, creativity and the dedication that EG employees provide to our clients each and every day.

During the past two years we have invested significant time and energy to reposition EG as an experienced marketing agency by elevating our customer service and increasing the quality and quantity of our creative and strategic thinkers, transforming EG from a design and build shop to a true strategic marketing partner to our clients.

The recent integration of EG and Becker Group will further strengthen our capabilities and client relationships, EG and Becker Group are both well established brands with reputations for providing innovative experiential marketing solutions to clients.

By focusing on client needs and leveraging the collective resources of both teams, we have the opportunity to strengthen each brand independently, while simultaneously establishing a cohesive product offering that is unmatched by the competition.

As we move forward together, the talent of the staff at EG and Becker Group will enhance our product and service offerings.

We have a combined worldwide network of 28 client care centers, 600 professionals worldwide, more than 100 outstanding creators and designers, production and installation and dismantle capabilities, and a first rate team of sales, marketing and branded entertainment specialists throughout the world.

While we have a lot of positives going for us, we are facing a increasingly challenging economic environment.

We have stayed close to our clients through the 2009 budgeting season and are expecting many of them to cut back on their trade show and marketing spend in 2009.

To help offset the impact of reduced client budgets, we are taking steps to capitalize on the momentum we gained during the past two years and on the combined talents and resources of EG and Becker Group to continue winning new clients and gaining market share.

Many of our competitors are suffering financially in the current recessionary environment, affording us the opportunity to capitalize on our recent successes and be out strong financial position.

We will leverage this opportunity by continuing to serve as a strategic partner to our clients, focusing on their needs to find innovative ways to maximize the value of their marketing spend during this difficult time.

We have significant new business goals for 2009 and we are well positioned to achieve those goals from a position of strength and forward momentum.

Our international divisions, SDD and Voblo, have been key differentiators and contributors to our success and we expect them to continue to provide valuable service to our international clients.

However, the rapid strengthening of the US dollar during the last quarter foreshadows negative foreign exchange headwinds for 2009.

As a result of these factors and with limited visibility, we are guiding for 2009 full year segment revenues to decline by $25 million to $35 million, or 11% to 16%, including roughly $9 million from unfavorable currency translation.

Full year operating income is expected to decrease by $6 million to $9 million due to the decline in revenues partially offset by proactive overhead cost reductions.

For the first quarter we expect segment revenues to be in the range of $32 million to $38 million, with an operating loss of $6.5 million to $8.5 million, reflecting the expectation of lower trade show marketing spend.

Going forward we remain focused on strengthening our client relationships by providing compelling value added programs that help our clients achieve their marketing goals within budget.

At the same time, we will continue to identify and to implement initiatives to improve efficiencies and capacity utilization across our network.

Our team is committed to our mission of positioning EG and Becker Group as the leading brands in face to face and Experiential Marketing Services and growing our business by delivering the highest level of value and innovation to our clients.

While the current economic climate is challenging, I remain excited and optimistic about the future of our business and confident in the talented and energetic team that comes to work for our clients every day.

Paul.

Thanks John.

Now I will cover highlights for the Travel and Recreation Services segment.

Revenue during the segment's seasonally slow fourth quarter were $6.4 million as compared to $8 million in the fourth quarter of 2007.

Fourth quarter operating segment loss was $1.7 million as compared to a loss of $1.5 million in the 2007 quarter.

For the full year, revenues were $86.6 million up 2.8% from 2007.

Segment operating income was $22 million, down slightly from 2007 with operating margins at 25.4%.

Overall the Travel and Recreation Services segment had another very solid year.

Despite a soft economy and higher travel costs, Glacier Park realized strong occupancy at its inns and lodges and an increase in room revenue over 2007.

Brewster saw lower tourist volumes due to reduced international travel, but the team did a great job managing the business to maintain revenues and control costs.

Recent feedback from Brewster's tour operator clients in various international markets suggest that group tour volume will decline markedly in 2009.

In 2008 Brewster was successful in offsetting declining long haul group traffic with visitors from the local and regional markets.

This will once again be an area of focus in 2009.

However, the recent decline in oil prices has slowed the western Canadian economy and as a result, we are not expecting this market to be as strong in 2009.

Overall we expect full year revenues to decrease by 15% to 20% from 2008, including $8 million or 9% from unfavorable currency translation, with the remaining 6% to 11% being driven by the weaker economy.

Full year operating margins are expected to proximate 23%.

For the seasonally slow first quarter we expect revenue to be in the range of $4.5 million to $5.5 million, with an operating loss in the range of $3 million to $2 million.

I will now ask Ellen Ingersoll to discuss some financial highlights for the quarter.

Thanks, Paul.

In the fourth quarter of 2008, we recorded noncash impairment charges totaling $11.2 million pretax and $9.4 million after tax.

Of the total pretax amount $8.6 million related primarily to the write-down of goodwill and other intangible assets at Becker Group and $2.6 million related to the write-down of certain intangible assets at Melville.

A discounted cash flow methodology was used to test for impairment, which required various estimates and assumptions .

In light of the recession, our future revenue and cash flow projections were revised downward resulting in the impairment charges.

Moving on, as shown in table two of the earnings release, our adjusted EBITDA was $12.9 million during the quarter versus $5.4 million in the fourth quarter 2007.

Also shown in table two, our free cash flow was $5.5 million for the quarter versus $20.4 million in the 2007 fourth quarter.

We expect positive operating cash flow during the year to fund our capital expenditures and regular dividend payments, resulting in essentially breakeven free cash flow for 2009.

At December 31, 2008 we had total cash and cash equivalents of $148 million as compared to $152.9 million at September 30, 2008.

Our total debt at the end of the quarter was $12.6 million, with a debt to capital ratio of 2.6%.

We repurchased shares in the fourth quarter totaling 253,119 at an aggregate cost of $5.7 million.

Our net interest income for the quarter was $231,000 versus $1.1 million in the fourth quarter of 2007.

Our depreciation and amortization expense for the quarter was $6.7 million.

This compares to last year's fourth quarter of $5.9 million.

The full year 2009 forecast is approximately $28 million to $30 million.

Our capital expenditures were $7 million in the fourth quarter of 2008 compared to $9.9 million in the fourth quarter 2007.

The full year 2009 forecast is approximately $26 million to $28 million as compared to full year 2008 actual amount of $39 million.

Payment center restructuring reserves were $788,000 during the fourth quarter of 2008, versus $536,000 in the fourth quarter 2007.

Full year 2009 restructuring payments are expected to approximate $3.5 million.

The 2008 income tax rate for the year was 32.2% versus 31% in 2007.

The 2008 and 2007 rates reflect aggregate favorable resolution of tax matters of $5.7 million and $3.1 million respectively.

The 2008 and 2007 tax rates on income before other items, which excludes the favorable resolution of tax matters and the impairment charges, were 37.4% and 35.9% respectively.

Back to you,

Thanks, Ellen.

Before wrapping up my comments and opening up the call to questions, let me discuss our outlook for the 2009 full year and first quarter.

For the full year, as you heard in our earlier remarks, we expect economic headwinds to be a much larger factor for us in 2009.

Corporate marketing budgets are being reduced as a part of overall cost reduction efforts and consumers are being affected by falling home prices and rising unemployment.

Trade show exhibitors are scaling back and based on early 2009 shows and input from organizer and exhibitor clients, we expect larger same show declines and lower exhibitor spending as compared to 2008.

On the travel and recreation side we expect declines in tourism, especially from long haul groups.

In addition to the weaker economy, our 2009 results will also be hampered by significant negative show rotation at GES and unfavorable currency translation due to the rapid strengthening of the US dollar.

Overall we expect 2009 full year income to be in the range of $1.15 to $1.35 per share, as compared to 2008 income before other items of $2.28 per share.

This guidance range reflects the expectation that unfavorable currency translation will negatively impact income per share by approximately $0.18.

It also includes lower interest income of approximately $0.06 per share and the first quarter restructuring charge of approximately $0.03 per share related to the integration of Becker Group and Exhibitgroup that I discussed earlier.

We expect full year revenue to decrease by 15% to 20%, including roughly $40 million from unfavorable currency translation and about $85 million from negative show rotation.

Excluding those two factors, the decline in revenue is expected to be roughly 4% to 9%, reflecting the expectation that we will be successful in winning new business and gaining market share to help offset the economic headwinds.

Full year segment operating income is expected to decrease by 35% to 40%, driven by the decline in revenues partially offset by cost reductions.

For the first quarter we expect income per share to be in the range of $0.18 to $0.33, as compared to 2008 first quarter income before other items of $0.81 per share.

Revenue's expected to be in the range of $250 million to $270 million, with operating income in the range of $9 million to $14 million.

The expected declines from 2008 first quarter revenue of $335.4 million and operating income of $28.6 million reflect negative show rotation of about $30 million in revenue at GES, a $14 million revenue decline due to unfavorable currency translation, and expected declines in trade show marketing spend.

Additional details regarding our full year and first quarter outlook can be found in the earnings press release.

In closing, we had a very successful 2008 thanks to the hard work and winning spirit of our talented employees.

Income before other items per share grew by 21.3%, driven by double digit revenue growth at Exhibitgroup, a record revenue year at GES, and solid performance by our Travel and Recreation Services companies.

We have celebrated our 2008 successes and have quickly moved on to executing well on a very challenging 2009.

While we are expecting significant headwinds, including difficult year-over-year comparisons due to the significant positive show rotation in 2008, we also expect 2009 to bring many opportunities.

In this environment, our leading market positions, talented and hard working employees, culture of innovation and integrity, and strong balance sheet are key advantages for us relative to many of our competitors and we fully intend to capitalize on these advantages.

Cash is king in this market, and as Ellen mentioned earlier, we have nearly $150 million on our balance sheet with very little debt.

Over the past three years we have generated $121.3 million in free cash flow and we have returned $105 million to shareholders through share repurchases and regular quarterly dividends.

Our financial strength and transparency will be an important differentiator for us in this market, as both clients and employees are looking for a bigger boat in stormy seas.

Our capital will also enable us to continue making selective investments to further strengthen our businesses.

We will continue to be good stewards of our shareholders' capital and we will keep a tight leash on spending in 2009.

All of our Companies are focused not only on reducing costs, but also on increasing service levels, winning new business, and increasing market share.

The near-term will clearly be difficult, but the fundamentals of our business remain very strong.

Our goal right now is simple, do the best job possible to manage through the downturn, while also positioning our businesses to emerge from this recession even stronger.

We remain committed to driving long-term growth and shareholder value.

With that we will close and take your questions.

Catherine, if you can open up the question line, please.

(Operator Instructions) And we will begin with the first question, Mr.

John Healy of FTN Equity Capital Markets, your line is open.

Good morning.

Question for you guys on the show rotation.

You mentioned $85 million.

I was looking back at my notes, that was a bit higher than I thought we had talked about in previous calls.

Just trying to reconcile those numbers and if it is higher maybe and where it's coming from and maybe what your initial expectations are for 2010 type show rotation, how we should begin to think about things.

Yes, John, I think we -- our comments before said in excess of $60 million and the non-annual shows that we did in '08 turned out to be very, very strong events.

IMTS, Mine Expo, ConExpo all were very strong events.

We are just now starting to look at 2010 and given the visibility issues we are having just in the near-term in 2009, it's a little bit of challenging to look at '10, but we do expect that that should be a positive rotation here given some of the every other year shows coming back into the mix.

Kevin, do you have anything to add to that?

Yes, just a little bit more.

John, how are you.

Well, thanks, Yourself?

Doing all right.

We had said in excess of $60 million.

One thing I remind you, these are net numbers.

You got things coming in and things going out.

And Paul's right on is that the 2008 shows were very high performing.

We do not expect that same kind of growth in the 2009 shows as well.

That's where the numbers check out when the math is all done at that point in time.

Okay, that's helpful.

Your comment about the operating margins for GES, despite the negative share rotation and the declines in same store revenue growth to still get to the 6% goal, can you maybe walk us through on kind of if same store revenue growth declines maybe 15%, where you could keep margins at.

And maybe how fast -- in 2010 if we had a positive show rotation number, maybe where we could think about margins going back to if they get, kind of get back to where they were this year.

Thanks John.

If you remember in 2008 after the first quarter busy season we started to recognize and decrease cost and then we did some more after the busy third quarter in anticipation of down show rotation this year.

Since then we have continued to be very aggressive in cutting costs.

Kevin and his team have been very proactive.

The economic issues have continued to deteriorate during that time.

So we are continuing to look at every possible thing that we can do to manage our variable costs down as revenue comes down, but more importantly, get at the semi-variables and some of the fixed costs that can help us out short-term and at the same time recognize that we do believe in the fundamentals of this business.

The face to face marketing is something that's going to come back, so we have got to be careful not to lose our potential when that market does come back and we got a lot of very talented people that we rely on.

Kevin, would you add anything to that?

Sure.

John, I had outlined in my comments a little bit about our cost structure, saying roughy two-thirds variable and about 30% semi-variable, the remaining fixed.

And if you think about where margins could be, just look over the past several years and kind of see kind of what things when we had revenue the margins went up a little bit more and when they -- you go back to the 2007 they were, they are little bit lower.

Want to highlight, though, that we are taking a real comprehensive approach here at 2009.

There is a big piece of it that is around making sure that we're cutting costs and we are tightening our spending and understanding kind of where our headcount levels are at.

But just as importantly, we are not cutting in some of the very specific areas that are going to enable us to win market share.

We know we can deliver client value and cost effective exhibitor solutions.

We know we can bring the value to organizer clients in helping them reduce their budgets and make sure their shows are healthy.

And we have got some really strong momentum in our sales efforts that will enable us, that we believe, to take some market share in this downturn.

And then coupled with that, we will continue to do some selective investments that are going to help us in the long-term with the, into the Melville Middle East and Abu Dhabi being one of those that we would continue forward with.

I think that gives you some range if you look historically where things are at and we will certainly [variablize] all the variable costs and aggressively be on the semi-variable side as well, while not cutting in a way that doesn't hurt us in the long-term.

Two quick financial related questions.

When I looked at kind of the income statement, the restructuring charge of the $600,000, it looks like to me that's included in the $0.16 non-GAAP number.

So just wanted to make sure that was true and then just on the impairment charge at Becker, was just a little bit surprised with just the magnitude of the decline, especially the business.

It is pretty decent this year, just trying to understand kind of what's changed there or what's kind of being looked at a little bit differently.

Sure.

The restructuring charge is included in the $0.16, it's not considered an other item, what we call other items.

The only thing in there would be the favorable resolution of tax matters and then the impairment charge.

On Becker, basically what we did is we reanalyzed the forecast going forward in light of the current economic environment, the retail clients that they have and we lowered their cash flow forecast going forward, which resulted in a goodwill write-off and some intangible write-offs.

Was there a change in kind of the big customers they had.

Was there any significant customer loss.

No it's just decreased spending due to the retail environment that rapidly deteriorated in the end of the year here.

And that's Becker's biggest quarter.

That's Becker's biggest quarter and we see that continuing through 2009.

Great, thank you, guys.

(Operator Instructions) And we have no further questions at this time, sir.

Okay, thank you.

Excuse me, we do have one question that just came in.

[Mr Carl Brown] from [Reavis Partners].

Your line is open.

Hi, I was just wondering if you could walk through a little bit of the offsets to the same show rotation that you talked about, new wins, market share gains, pricing.

I think you had maybe a positive 2% to 7% growth, which was -- so I guess you're assuming that you can offset some of the negative same store rotation.

Can you talk about maybe or have you already -- do you have any of that already in the queue or already actually one in terms of new shows or pricing, things like that.

Good morning, Carl.

I will have Kevin comment on that.

We are certainly doing a lot of things to aggressively take market share in this environment to continue to drive products and services, so there is some offset to that.

Kevin, can you put some color on that.

Sure, yes.

And Carl, you are thinking about it the right way.

We had negative 10% -- we are anticipating negative 10% same show declines and so that means that we do have the offsets, but somewhere around 2% to 7% if you look at where we had outlined.

And there is really several areas, one is around exhibitor discretionary wins.

We are confident we can provide kind of cost affective solutions to exhibitors around transportation, some rental exhibits and even some events tied to trade shows.

We also had some recent new show wins, one is American Veterinary Medicine, another is EH events that we take on in 2009.

Then there is always short-term bookings that are part of our business.

That is traditionally hotel business in different geographies.

And we have got a very high win rate there and so we are banking on being able to continue that win rate and offset that as well.

Okay, thanks a lot.

Thank you.

Thank you, that does conclude the question and answer session.

I would like to turn the call back over to Mr.

Paul Dykstra for closing comments.

Thanks, Catherine, and thanks everybody for being with us this morning.

In closing, Viad's base business remains sound despite the economic headwinds we currently face.

In an environment when many business models are spiraling downward, our revenues are expected to decline 4% to 9% when you factor out negative show rotation and unfavorable currency translation.

Our balance sheet and fundamentals are strong and we believe we are well positioned to build shareholder value over time.

We believe the current trends are basically cyclical in nature and not structural, as they relate to our industries or to Viad.

We are confident that we will manage through this challenging time and that we will emerge in an even stronger competitive position.

So thank you again for being with us and we look forward to talking to you again in three months.

Thank you.

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