Ambassadors Group, Inc. (Nasdaq:EPAX), a leading provider of
educational travel experiences and online education research
materials, today announced its results for the second quarter and
six months ended June 30, 2011.
Overview
- Year-to-date reported total revenue of $37.7 million compared
to $41.4 million in the same period last year.
- Gross revenue, from all sources including non-directly
delivered programs, for the first six months of 2011 was $89.0
million, up 3.1 percent compared to $86.2 million in the same
period of last year.
- 13,582 delegates traveled year-to-date compared to 14,199
delegates traveled in the same period last year.
- Year-to-date net income of $4.7 million, or $0.26, per diluted
share compared to $7.7 million, or $0.40 per diluted share, in the
same period last year.
- Year-to-date gross margin of 38.1 percent compared to 41.9
percent in the same period last year.
- Enrolled revenue for 2011 programs is down 5 percent
year-over-year; enrolled revenue for the core Student Ambassadors
Programs is up 5 percent year-over-year.
- Maintained strong balance sheet and liquidity position; Cash
and cash equivalents and available-for-sale securities balance of
$90.0 million and no debt
outstanding.
- Repurchased approximately 60,000 shares of common stock for
$0.7 million during the second quarter and paid quarterly dividend
of $0.06 per share.
- As previously reported, the Company's board of directors
authorized a $15.0 million increase in the funds which may be
utilized under the Company's stock repurchase plan.
Financial Highlights
(in thousands except percent and per share
data)
| |
|
|
|
|
| |
UNAUDITED |
| |
Quarter ended
June 30, |
Six months ended
June 30, |
| |
2011 |
2010 |
2011 |
2010 |
| Gross revenue, all travel programs |
$ 86,260 |
$ 82,387 |
$ 87,036 |
$ 84,726 |
| Internet content and advertising revenue |
$ 914 |
$ 761 |
$ 1,917 |
$ 1,515 |
| Gross margin, all travel programs |
$ 32,063 |
$ 33,855 |
$ 32,236 |
$ 34,804 |
| Gross margin, internet content and
advertising |
$ 785 |
$ 654 |
$ 1,655 |
$ 1,298 |
| Gross margin percentage |
37.7% |
41.5% |
38.1% |
41.9% |
| Operating expense |
$ 13,559 |
$ 12,393 |
$ 28,037 |
$ 25,489 |
| Net income before special items |
$ 13,925 |
$ 15,186 |
$ 5,436 |
$ 8,002 |
| Net income |
$ 13,431 |
$ 15,183 |
$ 4,702 |
$ 7,694 |
| Income per diluted share |
$ 0.75 |
$ 0.78 |
$ 0.26 |
$ 0.40 |
Commenting on the Company's results, Jeff Thomas, Ambassador
Group's President and Chief Executive Officer, said, "We commenced
the 2011 summer travel season with headwinds from the current
economic cycle and global events in both Japan and the Middle East.
Through the first half of 2011, we traveled 13,582 delegates, down
4 percent compared to 14,199 delegates traveled during the same
period last year. This expected decline was primarily due to fewer
travelers in our domestic Student Leadership Programs. In addition,
we anticipate that we will see a decrease in the number of
delegates traveled on our Citizen Programs by the end of the year.
To better address the evolving market for these programs, we are
currently re-assessing our opportunity and working to improve their
value proposition going forward. In addition, we are experiencing
pressure on gross margins, which declined to 38.1 percent for the
first six months of 2011 from 41.9 percent in the same period last
year. The margins were impacted not only by the change in product
mix, but also by higher land and air travel costs. We continue to
take proactive measures to mitigate the impact of these operational
challenges on our profitability. A highlight in the second quarter
was the year-over-year growth of our flagship Student Ambassadors
Programs. Total enrolled revenue for 2011, which includes delegates
traveled and those yet to travel, is 5 percent higher for our
Student Ambassadors Programs on a year-over-year basis. As the
most significant contributor to our financial results, the
improving performance of Student Ambassadors is very encouraging
and a positive trend for our overall business."
Thomas continued, "The perceived value of the educational
experience we offer our delegate travelers is as compelling as ever
based on delegate and family feedback that we have received thus
far this season. While still in the midst of the peak travel
time, early indications are that our Net Promoter scores are again
coming in strong."
"We continue to make strategic investments to retain our
existing enrolled travelers and attract new delegates to our
programs. Our ongoing retention efforts have been improved
with the adoption of a new higher-touch model to increase
excitement and build a heightened sense of community among enrolled
delegate travelers. We believe these efforts have contributed
to the significantly lower withdrawal rates than we had experienced
early in the 2011 enrollment cycle. In addition, we are
rolling-out a new integrated marketing promotion for the 2012
travel season featuring former American Idol winner and recording
artist, Jordin Sparks, who recently traveled on one of our Student
Ambassadors itineraries."
Thomas concluded, "We ended the second quarter with cash, cash
equivalents and short-term available-for-sale securities of $90.0
million and no outstanding debt. In addition to maintaining
our quarterly common stock dividend of $0.06 per share, we
repurchased approximately 60,000 shares of stock for approximately
$0.7 million during the quarter. Our board of directors also
authorized a $15 million increase to the Company's existing stock
repurchase program. Our strong balance sheet and liquidity
position provides us with significant financial flexibility to
enhance long term shareholder value."
Second Quarter 2011 Results
During the second quarter of 2011, the Company traveled 13,262
delegates, a 1 percent decrease compared to 13,396 during the prior
year quarter. A 7 percent increase in delegates traveling on
the core Students Ambassador Programs and a modest increase in
delegates traveling on the Citizens Ambassadors Programs during
this quarter nearly offset a reduction in delegates traveling on
the Company's Leadership Ambassador Programs.
Total revenue of $36.1 million declined 7 percent compared to
$38.7 million during the prior year quarter. The decrease in
delegates traveled and resulting travel-related revenue more than
offset the 20 percent increase in internet content and advertising
revenue related to BookRags, the Company's internet research
business. Net income for the second quarter of 2011 was $13.4
million, or $0.75 per diluted share, compared to net income of
$15.2 million, or $0.78 per diluted share, in the prior year
period.
Gross margin for the quarter was $32.8 million, down from $34.5
million in the second quarter of 2010 primarily related to the
aforementioned revenue decline. Gross margin percentage
decreased to 37.7 percent from 41.5 percent in the prior year
period due to change in product mix and increased land and air
costs. Gross margin is calculated as the sum of gross revenue
non-directly delivered programs, gross revenue directly delivered
programs and internet content and advertising revenue less cost of
sales non-directly delivered programs, costs of sales directly
delivered programs and cost of sales internet content and
advertising. Gross margin percentage is calculated as gross
margin divided by the sum of gross revenue non-directly delivered
programs, gross revenue directly delivered programs and internet
content and advertising revenue.
Second quarter 2011 operating expenses increased 9 percent,
primarily due to higher legal expenses and incremental costs
associated with both retention efforts and our integrated marketing
efforts.
Other income decreased slightly year-over-year due primarily to
lower interest and dividend income. The income tax provision
decreased by $1.1 million driven primarily by the lower pre-tax
income.
Six Months Ended June 30, 2011 Results
During the six months ended June 30, 2011, the Company traveled
13,582 delegates, a 4 percent decrease compared to 14,199 delegates
in the same period last year. Total revenue of $37.7 million
declined 9 percent compared to $41.4 million in the same period
last year. The decrease in delegates traveled and resulting
travel-related revenue more than offset the 27 percent increase in
internet content and advertising revenue related to
BookRags. Net income for six months ended June 30, 2011 was
$4.7 million, or $0.26 per diluted share, compared to net income of
$7.7 million, or $0.40 per diluted share, in the prior year
period.
Gross margin for the six months ended June 30, 2011 was $33.9
million, down from $36.1 million in the same period last
year. Gross margin percentage decreased to 38.1 percent from
41.9 percent in the same period last year primarily due to a change
in product mix and higher land and air travel costs.
Total operating expenses for the six months ended June 30, 2011
increased 10 percent compared to the same period last year,
primarily due to higher legal expenses and incremental costs
associated with retention and marketing initiatives.
Other income for the six months ended June 30, 2011 increased by
7 percent primarily due to a foreign currency de-designation gain
during the first quarter of 2011 related to Japanese currency,
offset by lower interest and dividend income. The income tax
provision decreased by $1.7 million driven primarily by the lower
pre-tax income.
Balance Sheet and Liquidity
Total assets at June 30, 2011 were $157.7 million, including
$90.0 million in cash, cash equivalents and short-term
available-for-sale securities. Long-lived assets totaled $40.2
million reflecting goodwill and intangible assets of the BookRags
business, technology, hardware and systems used to deliver
services, and the Company's office building. Total liabilities
were $74.0 million, including $61.8 million in participant deposits
for future travel. The Company has no debt
outstanding. Deployable cash at June 30, 2011 was $41.3
million.
The Company paid a quarterly dividend of $0.06 per share on June
9, 2011.
The following table summarizes the cash flows as further
disclosed in the accompanying financial statements. Free cash
flow, a non-GAAP measure, which is defined as cash flow from
operations less purchase of property, equipment and intangibles, is
also noted (in thousands):
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|
|
| |
UNAUDITED |
| |
Six months ended
June 30, |
| |
2011 |
2010 |
| Cash flow from operations |
$ 19,695 |
$ 33,517 |
| Purchases of property, equipment and
intangibles |
(2,108) |
(2,972) |
| Free cash flow |
17,587 |
30,545 |
| |
|
|
| Net purchase of available-for-sale
securities |
(10,739) |
(26,967) |
| Dividend payments to shareholders |
(2,143) |
(2,314) |
| Repurchase of common stock |
(6,091) |
(1,791) |
| Other cash flows, net |
165 |
514 |
| Net change in cash and cash equivalents |
$ (1,221) |
$ (13) |
The change in cash flow from operations between periods, and in
turn free cash flow, was driven primarily by lower participant
deposits related to the 2011 travel remaining for the Citizen and
Leadership program offerings and lower net income year over
year.
Deployable cash and free cash flow are non-GAAP measures defined
in the attached schedules.
Share Repurchase Program
During the second quarter of 2011, the Company repurchased
approximately 60,000 shares for approximately $0.7 million
including brokerage fees. On May 12, 2011, the Company
announced that its board of directors authorized a $15.0 million
increase in the funds which the Company may spend under the
Company's stock repurchase plan and as of June 30, 2011 no stock
repurchases have occurred under this authorization. At June
30, 2011 the Company had 17,712,836 shares of common stock issued
and outstanding.
Outlook for 2011
As of July 24, 2011, enrolled revenue for 2011 travel programs,
which includes delegates traveled and those yet to travel, was
$151.9 million, down 5 percent from the same point in 2010,
reflecting enrolled travelers of 24,007 compared to 26,826 at the
same date in 2010. Enrolled revenue for the Company's core product,
Student Ambassadors, is up 5 percent to $134.1 compared to $128.0
at the same date last year.
Enrolled revenue consists of estimated gross receipts to be
recognized, in the future, upon travel of an enrolled participant
and revenue recognized for any delegates who have completed travel.
Net enrollments consist of all participants who have enrolled in
the Company's programs less those that have already withdrawn.
Enrolled revenue may not result in actual gross receipts eventually
recognized by the Company due to both withdrawals from the
Company's programs and expected future enrollments.
Considering the unpredictable nature of many of the travel cost
drivers and both national and world events impacting travel
decisions, guidance for 2011 has been difficult to gauge. Based on
the latest enrollment information, the declines in expected
travelers year on year for 2011 on the Leadership and Citizens
People to People programs, and the volatile tendencies of airline
costs, the Company is changing its guidance for 2011 to the
following:
- Consolidated gross revenues for all programs and operations to
be down 3% to 5% compared to 2010;
- Consolidated gross margin as a percentage of gross revenue for
all programs and operations of 38.0% to 39.0%;
and
- Net income before any special items of between $4.5 million and
$6.5 million.
Special items for the quarter and year-to-date currently include
legal costs associated with the class action law suit and ongoing
SEC inquiry and the impact of de-designation of foreign currency
positions. A table outlining those special items is included
at the end of this release.
Conference Call and Webcast Information
The Company will host a conference call to discuss second
quarter 2011 results of operations on Thursday, July 28, 2011, at
11:30 a.m. Eastern Time (8:30 a.m. Pacific
Time). Participants can access the call via the
internet at www.ambassadorsgroup.com/EPAX. The call can also be
accessed by dialing 888-389-5997 or 719-325-2236
(international) and providing the pass code:
5953156. Approximately 24 hours following the
call, a webcast will be available through October 26, 2011 at
www.ambassadorsgroup.com/EPAX. A replay of the call will
also be available through August 3, 2011 and can be accessed
by dialing 888-203-1112 and providing the pass code:
5953156.
About Ambassadors Group, Inc.
Ambassadors Group, Inc. (NASDAQ: EPAX) is a socially conscious
education company located in Spokane, Washington. Ambassadors
Group, Inc. is the parent company of Ambassador Programs, Inc.,
World Adventures Unlimited, Inc. and BookRags, Inc., an educational
research website. The Company also oversees the Washington School
of World Studies, an accredited travel study and distance learning
school. Additional information about Ambassadors Group, Inc. and
its subsidiaries is available at www.ambassadorsgroup.com. In this
press release, "Company", "we", "us", and "our" refer to
Ambassadors Group, Inc. and its subsidiaries.
The Ambassadors Group, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3541
Forward-Looking Statements
This press release contains forward-looking statements regarding
actual and expected financial performance and the reasons for
variances between period-to-period results. Forward-looking
statements, which are included per the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995, may involve
known and unknown risks, uncertainties and other factors that may
cause actual results and performance in future periods to be
materially different from any future results or performance
suggested by the forward-looking statements in this release. Such
forward-looking statements speak only as of the date of this
release and may not reflect risks related to international unrest,
outbreak of disease, conditions in the travel industry, direct
marketing environment, changes in economic conditions and changes
in the competitive environment. We expressly disclaim any
obligation to provide public updates or revisions to any
forward-looking statements found herein to reflect any changes in
expectations or any change in events. Although we believe the
expectations reflected in such forward-looking statements are based
upon reasonable assumptions, we can give no assurance that our
expectations will be met. For a more complete discussion of certain
risks and uncertainties that could cause actual results to differ
materially from anticipated results, please refer to the
Ambassadors Group, Inc. 10-K filed March 11, 2011, proxy statement
filed April 12, 2011.
| |
| AMBASSADORS GROUP,
INC. |
| |
| CONSOLIDATED STATEMENTS
OF OPERATIONS |
| (in thousands, except
per share data) |
| |
| |
UNAUDITED |
| |
Quarter ended
June 30, |
| |
2011 |
2010 |
$ Change |
% Change |
| Net revenue, non-directly delivered programs
(1) |
$ 30,615 |
$ 31,033 |
$ (418) |
-1% |
| Gross revenue, directly delivered
programs (2) |
4,527 |
6,870 |
(2,343) |
-34% |
| Internet content and advertising revenue |
914 |
761 |
153 |
20% |
| Total revenue |
36,056 |
38,664 |
(2,608) |
-7% |
| Cost of sales, directly delivered programs
(2) |
3,079 |
4,048 |
(969) |
-24% |
| Cost of sales, internet content and
advertising |
129 |
107 |
22 |
21% |
| Gross margin (3) |
32,848 |
34,509 |
(1,661) |
-5% |
| |
|
|
|
|
| Operating expenses: |
|
|
|
|
| Selling and marketing |
9,439 |
8,981 |
458 |
5% |
| General and administration |
4,120 |
3,412 |
708 |
21% |
| Total operating expenses |
13,559 |
12,393 |
1,166 |
9% |
| |
|
|
|
|
| Operating income |
19,289 |
22,116 |
(2,827) |
-13% |
| |
|
|
|
|
| Other income (expense) |
|
|
|
|
| Interest and dividend income |
416 |
463 |
(47) |
-10% |
| Foreign currency expense and
other |
(10) |
-- |
(10) |
-100% |
| Total other income |
406 |
463 |
(57) |
-12% |
| Income before income tax
provision |
19,695 |
22,579 |
(2,884) |
-13% |
| Income tax provision |
(6,264) |
(7,396) |
1,132 |
-15% |
| Net income |
$ 13,431 |
$ 15,183 |
$ (1,752) |
-12% |
| |
|
|
|
|
| Weighted average shares outstanding –
basic |
17,672 |
19,187 |
(1,515) |
-8% |
| Weighted average shares outstanding –
diluted |
17,824 |
19,410 |
(1,586) |
-8% |
| |
|
|
|
|
| Net income per share — basic |
$ 0.76 |
$ 0.79 |
$ (0.03) |
-4% |
| Net income per share — diluted |
$ 0.75 |
$ 0.78 |
$ (0.03) |
-4% |
(1) Net revenue, non-directly delivered programs
consists of gross revenue, less program pass-through expenses for
non-directly delivered programs because we primarily engage
third-party operators to perform these services.
| |
|
|
|
| |
Quarter ended
June 30, |
| |
2011 |
2010 |
% Change |
| Gross revenue |
$ 81,733 |
$ 75,517 |
8% |
| Cost of sales |
51,118 |
44,484 |
15% |
| Net revenue |
$ 30,615 |
$ 31,033 |
-1% |
(2) Gross revenue and cost of sales for directly
delivered programs are reported as separate items because we plan,
organize and operate all activities, including speakers,
facilitators, events, accommodations and transportation.
(3) Gross margin is calculated as the sum of gross
revenue non-directly delivered programs, gross revenue directly
delivered programs and internet content and advertising revenue
less cost of sales non-directly delivered programs, costs of sales
directly delivered programs and cost of sales internet content and
advertising. Gross margin percentage is calculated as gross
margin divided by the sum of gross revenue non-directly delivered
programs, gross revenue directly delivered programs and internet
content and advertising revenue.
| |
|
|
|
|
| AMBASSADORS GROUP,
INC. |
| |
|
|
|
|
| CONSOLIDATED STATEMENTS
OF OPERATIONS |
| (in thousands, except
per share data) |
| |
|
|
|
|
| |
UNAUDITED |
| |
Six months ended
June 30, |
| |
2011 |
2010 |
$ Change |
% Change |
| Net revenue, non-directly delivered programs
(1) |
$ 30,580 |
$ 31,236 |
$ (656) |
-2% |
| Gross revenue, directly delivered
programs (2) |
5,221 |
8,649 |
(3,428) |
-40% |
| Internet content and advertising revenue |
1,917 |
1,515 |
402 |
27% |
| Total revenue |
37,718 |
41,400 |
(3,682) |
-9% |
| Cost of sales, directly delivered programs
(2) |
3,565 |
5,081 |
(1,516) |
-30% |
| Cost of sales, internet content and
advertising |
262 |
217 |
45 |
21% |
| Gross margin (3) |
33,891 |
36,102 |
(2,211) |
-6% |
| |
|
|
|
|
| Operating expenses: |
|
|
|
|
| Selling and marketing |
19,534 |
18,383 |
1,151 |
6% |
| General and administration |
8,503 |
7,106 |
1,397 |
20% |
| Total operating expenses |
28,037 |
25,489 |
2,548 |
10% |
| |
|
|
|
|
| Operating income |
5,854 |
10,613 |
(4,759) |
-45% |
| |
|
|
|
|
| Other income (expense) |
|
|
|
|
| Interest and dividend income |
751 |
874 |
(123) |
-14% |
| Foreign currency expense and
other |
171 |
(14) |
185 |
-1321% |
| Total other income |
922 |
860 |
62 |
7% |
| Income before income tax
provision |
6,776 |
11,473 |
(4,697) |
-41% |
| Income tax provision |
(2,074) |
(3,779) |
1,705 |
-45% |
| Net income |
$ 4,702 |
$ 7,694 |
$ (2,992) |
-39% |
| |
|
|
|
|
| Weighted average shares outstanding –
basic |
17,841 |
19,112 |
(1,271) |
-7% |
| Weighted average shares outstanding –
diluted |
18,010 |
19,346 |
(1,336) |
-7% |
| |
|
|
|
|
| Net income per share — basic |
$ 0.26 |
$ 0.40 |
$ (0.14) |
-35% |
| Net income per share — diluted |
$ 0.26 |
$ 0.40 |
$ (0.14) |
-35% |
(1) Net revenue, non-directly delivered programs
consists of gross revenue, less program pass-through expenses for
non-directly delivered programs because we primarily engage
third-party operators to perform these services.
| |
|
|
|
| |
Six months ended
June 30, |
| |
2011 |
2010 |
% Change |
| Gross revenue |
$ 81,815 |
$ 76,077 |
8% |
| Cost of sales |
51,235 |
44,841 |
14% |
| Net revenue |
$ 30,580 |
$ 31,236 |
-2% |
(2) Gross revenue and cost of sales for directly
delivered programs are reported as separate items because we plan,
organize and operate all activities, including speakers,
facilitators, events, accommodations and transportation.
(3) Gross margin is calculated as the sum of gross
revenue non-directly delivered programs, gross revenue directly
delivered programs and internet content and advertising revenue
less cost of sales non-directly delivered programs, costs of sales
directly delivered programs and cost of sales internet content and
advertising. Gross margin percentage is calculated as gross
margin divided by the sum of gross revenue non-directly delivered
programs, gross revenue directly delivered programs and internet
content and advertising revenue.
| |
|
|
|
| AMBASSADORS GROUP,
INC. |
| |
|
|
|
| CONSOLIDATED BALANCE
SHEETS |
| (in thousands, except
per share data) |
| |
|
|
|
| |
UNAUDITED |
AUDITED |
| |
June
30, |
December 31, |
| |
2011 |
2010 |
2010 |
| Assets |
|
|
|
| Current assets: |
|
|
|
| Cash and cash equivalents |
$ 5,617 |
$ 7,643 |
$ 6,838 |
| Available-for-sale securities |
84,360 |
100,172 |
72,540 |
| Foreign currency exchange
contracts |
1,608 |
-- |
1,864 |
| Prepaid program cost and expenses |
23,815 |
26,196 |
3,230 |
| Accounts receivable |
1,262 |
1,201 |
1,976 |
| Deferred tax asset |
-- |
578 |
-- |
| Total current
assets |
116,662 |
135,790 |
86,448 |
| Property and equipment, net |
27,104 |
29,156 |
27,625 |
| Available-for-sale securities |
719 |
1,247 |
1,250 |
| Foreign currency exchange
contracts |
-- |
-- |
-- |
| Intangibles |
3,361 |
3,107 |
3,367 |
| Goodwill |
9,781 |
9,781 |
9,781 |
| Other long-term assets |
89 |
110 |
85 |
| Total assets |
$ 157,716 |
$ 179,191 |
$ 128,556 |
| |
|
|
|
| Liabilities and Stockholders'
Equity |
|
|
|
| Current liabilities: |
|
|
|
| Accounts payable and accrued
expenses |
$ 10,651 |
$ 14,408 |
$ 5,954 |
| Participants' deposits |
61,757 |
66,982 |
34,436 |
| Foreign currency exchange
contracts |
-- |
975 |
-- |
| Deferred tax liability |
290 |
-- |
668 |
| Other liabilities |
81 |
108 |
107 |
| Total current
liabilities |
72,779 |
82,473 |
41,165 |
| Deferred tax liability |
1,218 |
13 |
1,353 |
| Total liabilities |
73,997 |
82,486 |
42,518 |
| Stockholders' equity |
83,719 |
96,705 |
86,038 |
| Total liabilities and stockholders'
equity |
$ 157,716 |
$ 179,191 |
$ 128,556 |
| |
|
|
| AMBASSADORS GROUP,
INC. |
| |
|
|
| CONSOLIDATED STATEMENTS
OF CASH FLOWS |
| (in
thousands) |
| |
|
|
| |
|
|
| |
UNAUDITED |
| |
June
30, |
| |
2011 |
2010 |
| Cash flows from operating
activities: |
|
|
| Net income |
$ 4,702 |
$ 7,694 |
| Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
| Depreciation and amortization |
2,364 |
2,341 |
| Stock-based compensation |
938 |
1,023 |
| Deferred income tax benefit |
(582) |
(300) |
| Gain on foreign currency exchange
contracts |
(20) |
-- |
| Loss on disposition of property and
equipment |
66 |
266 |
| Excess tax benefit from stock-based
compensation |
(15) |
(125) |
| Change in assets and liabilities: |
|
|
| Accounts receivable and other assets |
714 |
820 |
| Prepaid program costs and expenses |
(20,585) |
(23,022) |
| Accounts payable, accrued expenses, and
other current liabilities |
4,792 |
8,975 |
| Participants' deposits |
27,321 |
35,845 |
| Net cash provided by operating
activities |
19,695 |
33,517 |
| |
|
|
| Cash flows from investing
activities: |
|
|
| Purchase of available for sale
securities |
(47,881) |
(52,814) |
| Proceeds from sale of available-for-sale
securities |
37,142 |
25,847 |
| Purchase and construction of property and
equipment |
(1,895) |
(2,498) |
| Proceeds from sale of property and
equipment |
19 |
-- |
| Purchase of intangibles |
(213) |
(474) |
| Net cash used in investing
activities |
(12,828) |
(29,939) |
| |
|
|
| Cash flows from financing
activities: |
|
|
| Repurchase of Common Stock |
(6,091) |
(1,791) |
| Dividend payment to shareholders |
(2,143) |
(2,314) |
| Proceeds from exercise of stock
options |
131 |
389 |
| Excess tax benefit from stock-based
compensation |
15 |
125 |
| Net cash used in financing
activities |
(8,088) |
(3,591) |
| |
|
|
| Net decrease in cash and cash
equivalents |
(1,221) |
(13) |
| Cash and cash equivalents, beginning of
period |
6,838 |
7,656 |
| Cash and cash equivalents, end of
period |
$ 5,617 |
$ 7,643 |
Deployable Cash
Deployable cash is a non-GAAP liquidity measurement and is
calculated as the sum of cash and cash equivalents, short-term
available-for-sale securities, and prepaid program costs and
expenses, less the sum of accounts payable, accrued expenses and
other short-term liabilities (excluding deferred taxes) and
participant deposits. We believe this non-GAAP measurement is
useful to investors in understanding important characteristics of
our business.
The following summarizes deployable cash as June 30, 2011 and
2010 and December 31, 2010 (in thousands):
| |
|
|
|
| |
UNAUDITED |
| |
June
30, |
December 31, |
| |
2011 |
2010 |
2010 |
| Cash, cash equivalents and short-term
available-for-sale securities |
$ 89,977 |
$ 107,815 |
$ 79,378 |
| Prepaid program cost and expenses |
23,815 |
26,196 |
3,230 |
| Less: Participants' deposits |
(61,757) |
(66,982) |
(34,436) |
| Less: Accounts payable / accruals / other
liabilities |
(10,732) |
(14,516) |
(6,061) |
| Deployable cash |
$ 41,303 |
$ 52,513 |
$ 42,111 |
Special Items
The Company impaired assets and incurred losses on the sale of
equipment primarily related to its print facility and moving those
activities to an outsourced vendor. Also, the Company recognized a
foreign currency gain from de-designating Japanese Yen
contracts.
Lastly, as previously disclosed, the Company was party to a
shareholder class action suit and is party to an inquiry by the
U.S. Securities and Exchange Commission ("SEC") more fully
described in the Company's filings with the SEC on Form 10-K and
10-Q available on the Company's website www.ambassadorsgroup.com or
at the SEC website www.sec.gov.
As a result of these events, the operations as presented in the
accompanying financial statements for the six months ended June 30,
2011 and 2010 do not reflect a meaningful comparison between
periods or in relation to the operational activities of the
Company. In order to provide more meaningful disclosure, the
following table represents a reconciliation of certain earnings
measures before special items to those same items after the impact
of special items (in thousands except per share data):
| |
|
|
|
|
| |
UNAUDITED |
| |
Net
Income |
EPS |
| |
Three months
ended June 30, |
Three months
ended June 30, |
| |
2011 |
2010 |
2011 |
2010 |
| Amount before special
items |
$ 13,925 |
$ 15,186 |
$ 0.78 |
$ 0.78 |
| Asset impairments and loss on sale |
(62) |
-- |
-- |
-- |
| Legal fees – class action and SEC,
net |
(662) |
(4) |
(0.04) |
-- |
| Tax impact |
230 |
1 |
0.01 |
-- |
| Amount per consolidated statement of
operations |
$ 13,431 |
$ 15,183 |
$ 0.75 |
$ 0.78 |
| |
|
|
|
|
| |
|
|
|
|
| |
UNAUDITED |
| |
Net
Income |
EPS |
| |
Six months ended
June 30, |
Six months ended
June 30, |
| |
2011 |
2010 |
2011 |
2010 |
| Amount before special
items |
$ 5,436 |
$ 8,002 |
$ 0.30 |
$ 0.41 |
| Asset impairments and loss on sale |
(66) |
(243) |
-- |
(0.01) |
| Foreign currency de-designation gain |
183 |
-- |
0.01 |
-- |
| Legal fees – class action and SEC,
net |
(1,175) |
(217) |
(0.07) |
(0.01) |
| Tax impact |
324 |
152 |
0.02 |
0.01 |
| Amount per consolidated statement of
operations |
$ 4,702 |
$ 7,694 |
$ 0.26 |
$ 0.40 |
CONTACT: Company Contact:
Anthony Dombrowik
(509) 568-7800
Investor Relations:
Stacy Feit
Financial Relations Board
(213) 486-6549
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