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Share Name | Share Symbol | Market | Type |
---|---|---|---|
(MM) | NASDAQ:EPAX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.89 | 0 | 01:00:00 |
þ
|
QUARTERLY report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the quarterly period ended September 30, 2011
|
o
|
TRANSITION report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the transition period from
_______________
to ________________ .
|
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
|
91-1957010
(I.R.S. Employer
Identification No.)
|
Dwight D. Eisenhower Building
2001 South Flint Road
Spokane, WA
(Address of Principal Executive Offices)
|
99224
(Zip Code)
|
þ
|
Yes
|
|
o
|
No
|
þ
|
Yes
|
|
o
|
No
|
o
|
Large accelerated filer
|
|
þ
|
Accelerated filer
|
|
o
|
Non-accelerated filer (Do not check if a smaller reporting company)
|
|
o
|
Smaller reporting company
|
o
|
Yes
|
|
þ
|
No
|
Page
|
||
PART I – FINANCIAL INFORMATION
|
||
Item 1. Financial Statements (Unaudited)
|
||
Consolidated Balance Sheets
|
1
|
|
Consolidated Statements of Operations
|
2
|
|
Consolidated Statements of Comprehensive Income
|
3
|
|
Consolidated Statements of Cash Flows
|
4
|
|
Notes to Consolidated Financial Statements
|
5
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
17
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
23
|
|
Item 4. Controls and Procedures
|
23
|
|
|
||
PART II – OTHER INFORMATION
|
||
Item 1. Legal Proceedings
|
24
|
|
Item 1A. Risk Factors
|
24
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
24
|
|
Item 6. Exhibits
|
26
|
|
SIGNATURES
|
27
|
|
EXHIBIT INDEX
|
September 30,
|
December 31,
|
||||||
2011
|
2010
|
||||||
ASSETS
|
|||||||
Current assets:
|
|||||||
Cash and cash equivalents
|
$ | 5,217 | $ | 6,838 | |||
Available-for-sale securities and other
|
47,398 | 72,540 | |||||
Foreign currency exchange contracts
|
- | 1,864 | |||||
Prepaid program costs and expenses
|
13,946 | 3,230 | |||||
Accounts receivable
|
1,140 | 1,976 | |||||
Deferred tax assets
|
597 | - | |||||
Total current assets
|
68,298 | 86,448 | |||||
Property and equipment, net
|
26,652 | 27,625 | |||||
Available-for-sale securities
|
703 | 1,250 | |||||
Intangibles
|
3,398 | 3,367 | |||||
Goodwill
|
9,781 | 9,781 | |||||
Other long-term assets
|
85 | 85 | |||||
Total assets
|
$ | 108,917 | $ | 128,556 | |||
LIABILITIES
|
|||||||
Current liabilities:
|
|||||||
Accounts payable and accrued expenses
|
$ | 11,375 | $ | 5,954 | |||
Participants’ deposits
|
9,014 | 34,436 | |||||
Foreign currency exchange contracts
|
1,225 | - | |||||
Deferred tax liability
|
- | 668 | |||||
Other liabilities
|
105 | 107 | |||||
Total current liabilities
|
21,719 | 41,165 | |||||
Deferred tax liability
|
1,177 | 1,353 | |||||
Total liabilities
|
22,896 | 42,518 | |||||
Commitments and Contingencies (Note 9)
|
|||||||
STOCKHOLDERS’ EQUITY
|
|||||||
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued and outstanding
|
- | - | |||||
Common stock, $.01 par value; 50,000,000 shares authorized; 17,495,344 and 18,255,557 shares issued and outstanding, respectively
|
172 | 180 | |||||
Retained earnings
|
86,343 | 84,825 | |||||
Accumulated other comprehensive income (loss)
|
(494 | ) | 1,033 | ||||
Stockholders’ equity
|
86,021 | 86,038 | |||||
Total liabilities and stockholders’ equity
|
$ | 108,917 | $ | 128,556 |
Nine months ended
|
Three months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net revenue, non-directly delivered programs
|
$ | 51,253 | $ | 53,227 | $ | 20,673 | $ | 21,991 | ||||||||
Gross revenue, directly delivered programs
|
10,357 | 15,956 | 5,135 | 7,307 | ||||||||||||
Gross revenue, internet and advertising
|
2,851 | 2,153 | 934 | 638 | ||||||||||||
Total revenue
|
64,461 | 71,336 | 26,742 | 29,936 | ||||||||||||
Cost of sales, directly delivered programs
|
6,913 | 9,268 | 3,347 | 4,187 | ||||||||||||
Cost of sales, internet and advertising
|
406 | 331 | 144 | 114 | ||||||||||||
Gross margin
|
57,142 | 61,737 | 23,251 | 25,635 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Selling and marketing
|
31,406 | 30,194 | 11,872 | 11,811 | ||||||||||||
General and administrative
|
12,427 | 10,977 | 3,924 | 3,871 | ||||||||||||
Total operating expenses
|
43,833 | 41,171 | 15,796 | 15,682 | ||||||||||||
Operating income
|
13,309 | 20,566 | 7,455 | 9,953 | ||||||||||||
Other income (expense):
|
||||||||||||||||
Interest and dividend income
|
1,090 | 1,236 | 339 | 362 | ||||||||||||
Foreign currency and other income (expense)
|
156 | 1 | (15 | ) | 15 | |||||||||||
Total other income
|
1,246 | 1,237 | 324 | 377 | ||||||||||||
Income before income tax provision
|
14,555 | 21,803 | 7,779 | 10,330 | ||||||||||||
Income tax provision
|
(3,801 | ) | (6,967 | ) | (1,727 | ) | (3,188 | ) | ||||||||
Net income
|
$ | 10,754 | $ | 14,836 | $ | 6,052 | $ | 7,142 | ||||||||
Weighted-average common shares outstanding - basic
|
17,750 | 19,069 | 17,611 | 18,979 | ||||||||||||
Weighted-average common shares outstanding - diluted
|
17,896 | 19,294 | 17,693 | 19,185 | ||||||||||||
Net income per share - basic
|
$ | 0.61 | $ | 0.78 | $ | 0.34 | $ | 0.38 | ||||||||
Net income per share - diluted
|
$ | 0.60 | $ | 0.77 | $ | 0.34 | $ | 0.37 |
Nine months ended September 30,
|
Three months ended September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||||
Net income
|
10,754 | 14,836 | 6,052 | 7,142 | |||||||||||
Unrealized gain (loss) on foreign currency exchange contracts, net of income tax benefit (provision) of $1,081, ($92), $986, and ($810)
|
(2,008 | ) | 172 | (1,831 | ) | 1,505 | |||||||||
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (provision) of ($259), $235, ($94) and $62
|
481 | (438 | ) | 175 | (114 | ) | |||||||||
Comprehensive income
|
$ | 9,227 | $ | 14,570 | $ | 4,396 | $ | 8,533 |
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 10,754 | $ | 14,836 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
||||||||
Depreciation and amortization
|
3,573 | 3,500 | ||||||
Stock-based compensation
|
1,294 | 1,551 | ||||||
Deferred income tax benefit
|
(619 | ) | (321 | ) | ||||
Loss on disposition and impairment of property and equipment
|
123 | 419 | ||||||
Excess tax benefit from stock-based compensation
|
(27 | ) | (77 | ) | ||||
Change in assets and liabilities:
|
||||||||
Accounts receivable and other assets
|
836 | 1,064 | ||||||
Prepaid program costs and expenses
|
(10,716 | ) | (2,878 | ) | ||||
Accounts payable, accrued expenses, and other current liabilities
|
5,519 | 6,721 | ||||||
Participants’ deposits
|
(25,422 | ) | (15,919 | ) | ||||
Net cash (used in) provided by operating activities
|
(14,685 | ) | 8,896 | |||||
Cash flows from investing activities:
|
||||||||
Purchase of available for sale securities
|
(48,674 | ) | (52,961 | ) | ||||
Proceeds from sale of available-for-sale securities
|
75,121 | 51,360 | ||||||
Purchase and construction of property and equipment
|
(2,536 | ) | (3,534 | ) | ||||
Proceeds from sale of property and equipment
|
49 | 75 | ||||||
Purchase of intangibles
|
(357 | ) | (725 | ) | ||||
Net cash (used in) provided by investing activities
|
23,603 | (5,785 | ) | |||||
Cash flows from financing activities:
|
||||||||
Repurchase of Common Stock
|
(7,590 | ) | (4,830 | ) | ||||
Dividend payment to shareholders
|
(3,203 | ) | (3,452 | ) | ||||
Proceeds from exercise of stock options
|
227 | 657 | ||||||
Excess tax benefit from stock-based compensation
|
27 | 77 | ||||||
Net cash used in financing activities
|
(10,539 | ) | (7,548 | ) | ||||
Net decrease in cash and cash equivalents
|
(1,621 | ) | (4,437 | ) | ||||
Cash and cash equivalents, beginning of period
|
6,838 | 7,656 | ||||||
Cash and cash equivalents, end of period
|
$ | 5,217 | $ | 3,219 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
1. The Company
|
Ambassadors Group, Inc., is a leading educational company that organizes and promotes worldwide educational travel programs for students, athletes and professionals, and provides millions of pages of online research content through www.BookRags.com. These unaudited consolidated financial statements include the accounts of Ambassadors Group, Inc. and our wholly owned subsidiaries, Ambassador Programs, Inc. (“Ambassador Programs”), BookRags, Inc. (“BookRags”), World Adventures Unlimited, Inc. (“World Adventures Unlimited”), Ambassadors Unlimited, LLC and Marketing Production Systems, LLC. All significant intercompany accounts and transactions, which are of a normal recurring nature, are eliminated in consolidation.
Our operations are organized in two reporting segments, 1) “Ambassador Programs and Other,” which provides educational travel programs to students, professionals, and athletes through multiple itineraries within five travel program offerings and corporate overhead, and 2) “BookRags,” which provides online research capabilities through book summaries, critical essays, online study guides, lesson plans, biographies, and references to encyclopedia articles.
|
2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from
being materially
misleading. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2011 are not indicative of the results that may be expected for the year ending December 31, 2011.
For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010.
Certain reclassifications from 2010 amounts have been made to conform to the three and nine months ended September 30, 2011 financial statement presentation with no effect on previously reported net income, retained earnings, or cash flow from operations.
|
-
|
Level 1 – Quoted prices in active markets for identical assets or liabilities.
|
-
|
Level 2 – Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
|
-
|
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
|
Classification on Balance Sheet
|
||||||||||||||||||||||||
September 30, 2011
|
Amortized
Cost
|
Unrealized
Gains (Losses)
|
Aggregate Fair
Value
|
Cash and cash equivalents
|
Short-term available-for-
sale securities
|
Long-term available-for-sale securities
|
||||||||||||||||||
Auction rate securities (“ARS”), greater than one year
|
$ | 1,000 | $ | (297 | ) | $ | 703 | $ | - | $ | - | $ | 703 | |||||||||||
Money market funds, ninety days or less
|
2,878 | - | 2,878 | 2,878 | - | - | ||||||||||||||||||
Municipal securities
1
|
||||||||||||||||||||||||
One year or less
|
473 | 7 | 480 | - | 480 | - | ||||||||||||||||||
After one year through three years
|
26,285 | 228 | 26,513 | - | 26,513 | - | ||||||||||||||||||
Greater than three years through five years
|
19,870 | 535 | 20,405 | - | 20,405 | - | ||||||||||||||||||
Total
|
$ | 50,506 | $ | 473 | $ | 50,979 | $ | 2,878 | $ | 47,398 | $ | 703 | ||||||||||||
Classification on Balance Sheet
|
||||||||||||||||||||||||
December 31, 2010
|
Amortized
Cost
|
Unrealized
Gains (Losses)
|
Aggregate Fair Value
|
Cash and cash equivalents
|
Short-term available-for-
sale securities
|
Long-term available-for-sale securities
|
||||||||||||||||||
ARS, greater than one year
|
$ | 1,600 | $ | (350 | ) | $ | 1,250 | $ | - | $ | - | $ | 1,250 | |||||||||||
Money market funds, ninety days or less
|
2,076 | - | 2,076 | 2,076 | - | - | ||||||||||||||||||
Municipal securities
1
|
||||||||||||||||||||||||
One year or less
|
17,081 | (19 | ) | 17,062 | - | 17,062 | - | |||||||||||||||||
After one year through three years
|
53,334 | 59 | 53,393 | - | 53,393 | - | ||||||||||||||||||
Greater than three years through five years
|
2,041 | 44 | 2,085 | - | 2,085 | - | ||||||||||||||||||
Total
|
$ | 76,132 | $ | (266 | ) | $ | 75,866 | 2,076 | 72,540 | $ | 1,250 |
Fair Value Measurements at Reporting Date Using
|
|||||||||||||||||||
September 30, 2011
|
Fair Market
Value
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
Losses on
Impairment
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
||||||||||||||
ARS
|
$ | 703 | $ | - | $ | - | $ | 703 | $ | - | |||||||||
Money market funds
|
2,878 | 2,878 | - | - | - | ||||||||||||||
Municipal securities
1
|
47,398 | 47,398 | - | - | - | ||||||||||||||
Foreign currency exchange contracts
|
93 | - | 93 | - | - | ||||||||||||||
Total financial assets
|
$ | 51,072 | $ | 50,276 | $ | 93 | $ | 703 | $ | - | |||||||||
Financial liabilities:
|
|||||||||||||||||||
Foreign currency exchange contracts
|
1,318 | - | 1,318 | - | - | ||||||||||||||
Total financial liabilities
|
$ | 1,318 | $ | - | $ | 1,318 | $ | - | $ | - | |||||||||
Non-financial assets:
|
|||||||||||||||||||
Property and equipment
|
118 | - | 118 | - | - | ||||||||||||||
Total non-financial assets
|
$ | 118 | $ | - | $ | 118 | $ | - | $ | - |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||||||
December 31, 2010
|
Fair Market
Value
|
Quoted Prices
in Active Markets for Identical
Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Other Unobservable Inputs
(Level 3)
|
Losses on Impairment
|
|||||||||||||||
Financial assets:
|
|
|
|
|
|
|||||||||||||||
ARS
|
$ | 1,250 | $ | - | $ | - | $ | 1,250 | $ | - | ||||||||||
Money market funds
|
2,076 | 2,076 | - | - | - | |||||||||||||||
Municipal securities
1
|
72,540 | 72,540 | - | - | - | |||||||||||||||
Foreign currency exchange contracts
|
1,974 | - | 1,974 | - | - | |||||||||||||||
Total financial assets
|
$ | 77,840 | $ | 74,616 | $ | 1,974 | $ | 1,250 | $ | - | ||||||||||
Financial liabilities:
|
||||||||||||||||||||
Foreign currency exchange contracts
|
110 | - | 110 | - | - | |||||||||||||||
Total financial liabilities
|
$ | 110 | $ | - | $ | 110 | $ | - | $ | - | ||||||||||
Non-financial assets:
|
||||||||||||||||||||
Property and equipment
|
165 | - | 165 | - | 0.8 | |||||||||||||||
Total non-financial assets
|
$ | 165 | $ | - | $ | 165 | $ | - | $ | 0.8 |
Nine months ended
September 30,
|
Three months ended
September 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||
Beginning balance
|
$ | 1,250 | $ | 1,397 | $ | 1,250 | $ | 1,247 | ||||||
Total realized / unrealized losses:
|
||||||||||||||
Included in earnings
|
69 | - | 69 | - | ||||||||||
Included in OCI
|
(16 | ) | (134 | ) | (16 | ) | 16 | |||||||
Purchases, sales, issuances, and
settlements, net
|
(600 | ) | - | (600 | ) | - | ||||||||
Ending balance
|
$ | 703 | $ | 1,263 | $ | 703 | $ | 1,263 |
4. Derivative Financial Instruments
|
Notional
Amount
|
Matures
|
|||
Forward contracts:
|
||||
Australian dollar
|
4,350
|
Jan 2012 - July 2012
|
||
British pound
|
2,870
|
Jan 2012 - July 2012
|
||
Euro
|
16,100
|
Jan 2012 - July 2012
|
||
New Zealand dollar
|
400
|
Mar 2012 - May 2012
|
||
Canadian dollar
|
1,350
|
Feb 2012 - Jun 2012
|
September 30, 2011
|
||||||||||||||
Derivatives designated as
hedging instruments
|
Derivatives not designated
as hedging instruments
|
Total Net
|
||||||||||||
Assets
|
Liabilities
|
Assets
|
Liabilities
|
Liabilities
|
||||||||||
Forward contracts
|
$ | 93 | $ | 1,318 | $ | - | $ | - | $ | 1,225 | ||||
|
||||||||||||||
December 31, 2010
|
||||||||||||||
Derivatives designated as
hedging instruments
|
Derivatives not designated as
hedging instruments
|
Total Net
|
||||||||||||
Assets
|
Liabilities
|
Assets
|
Liabilities
|
Assets
|
||||||||||
Forward contracts
|
$ | 1,974 | $ | 110 | $ | - | $ | - | $ | 1,864 |
Gain (loss) recognized in OCI
(effective portion)
|
Location of gain (loss) reclassed from AOCI (effective portion)
|
Gain (loss) reclassed from AOCI
(effective portion)
|
|||||||||||||||
Nine months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2011
|
2010
|
2011 |
2010
|
||||||||||||||
Forward contracts
|
$
|
(2,008)
|
$
|
172
|
Net revenue, non-directly delivered programs
|
$
|
2,595
|
$
|
(352)
|
||||||||
Three months ended September 30,
|
Three months ended September 30,
|
||||||||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||||||
Forward contracts
|
$
|
(1,831)
|
$
|
1,505
|
Net revenue, non-directly delivered programs
|
$
|
1,036
|
$
|
(83)
|
Amount of Gain
|
|||||||||||
Derivative not designated as hedging
instruments
|
Location of Gain Recognized in
Income on Derivative
|
Three months
ended
September 30,
2011
|
Three months
ended
September 30,
2010
|
||||||||
Forward contracts
|
Foreign currency and other expense
|
$
|
-
|
$
|
-
|
||||||
Amount of Gain
|
|||||||||||
Derivative not designated as hedging
instruments
|
Location of Gain Recognized
in
Income on Derivative
|
Nine months
ended
September 30,
2011
|
Nine months
ended
September 30,
2010
|
||||||||
Forward contracts
|
Foreign currency and other expense
|
$
|
183
|
$
|
-
|
Nine months
ended
|
Nine months
ended
|
Three months
ended
|
Three months
ended
|
|||||||||||||||
September 30,
2011
|
September 30,
2010
|
September 30,
2011
|
September 30,
2010
|
|||||||||||||||
Expected dividend yield
|
2.20
|
%
|
1.89
|
%
|
2.30
|
%
|
1.89
|
%
|
||||||||||
Expected stock price volatility
|
62.53
|
%
|
61.45
|
%
|
63.76
|
%
|
62.41
|
%
|
||||||||||
Risk-free interest rate
|
1.67
|
%
|
2.14
|
%
|
1.02
|
%
|
1.48
|
%
|
||||||||||
Expected life of options
|
5.07
|
Years
|
5.86
|
Years
|
4.60
|
Years
|
5.48
|
Years
|
||||||||||
Estimated fair value per option granted
|
$
4.21
|
$5.60
|
$3.10
|
$5.44
|
Options and Awards Outstanding
|
Options Exercisable
|
|||||||||||||
Range of Exercise Prices
|
Shares
|
Weighted-
Average
Remaining
Contractual
Life (years)
|
Weighted-
Average
Exercise Price
|
Shares
|
Weighted-
Average
Exercise Price
|
|||||||||
Restricted Stock Awards
|
||||||||||||||
$ | 0.00 |
310,317
|
2.02
|
N/A
|
N/A
|
N/A
|
||||||||
Stock Options
|
||||||||||||||
$ | 3.47 - 6.93 |
415,138
|
0.43
|
$
|
6.00
|
415,138
|
$
|
6.00
|
||||||
6.94 - 10.39 |
311,179
|
5.83
|
9.10
|
182,722
|
9.26
|
|||||||||
10.40 - 13.86 |
486,322
|
8.26
|
11.51
|
88,589
|
11.81
|
|||||||||
13.87 - 17.32 |
289,210
|
4.64
|
16.89
|
252,060
|
16.86
|
|||||||||
17.33 - 20.79 |
10,076
|
4.82
|
18.41
|
8,244
|
18.41
|
|||||||||
20.80 - 24.25 |
16,000
|
3.87
|
21.09
|
16,000
|
21.09
|
|||||||||
24.26 - 27.72 |
184,146
|
4.55
|
27.08
|
184,146
|
27.08
|
|||||||||
27.73 - 31.18 |
9,895
|
3.56
|
29.28
|
9,895
|
29.28
|
|||||||||
31.19 - 34.65 |
6,922
|
4.41
|
34.65
|
6,922
|
34.65
|
|||||||||
Total Stock Options
|
1,728,888
|
4.84
|
$
|
12.64
|
1,163,716
|
$
|
13.31
|
|||||||
Combined
|
2,039,205
|
4.41
|
$
|
12.64
|
1,163,716
|
$
|
13.31
|
Restricted Stock
Awarded
|
Weighted-Average Grant Date Fair
Value
|
Stock
Options
|
Weighted-Average Exercise Price
|
||||||||||||
Balance at December 31, 2010
|
337,918 | $ | 11.83 | 1,851,851 | $ | 12.64 | |||||||||
Granted
|
27,837 | 8.94 | 53,697 | 9.19 | |||||||||||
Forfeited
|
(48,230 | ) | 11.39 | (140,106 | ) | 13.04 | |||||||||
Vested
|
(7,208 | ) | 12.14 | N/A | N/A | ||||||||||
Exercised
|
N/A | N/A | (36,554 | ) | 6.20 | ||||||||||
Balance at September 30, 2011
|
310,317 | $ | 11.63 | 1,728,888 | $ | 12.64 |
Nine months ended September 30,
|
Three months ended September 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||
Numerator:
|
||||||||||||||
Net income
|
$ | 10,754 | $ | 14,836 | $ | 6,052 | $ | 7,142 | ||||||
Denominator:
|
||||||||||||||
Weighted-average shares outstanding
|
17,440 | 18,803 | 17,301 | 18,713 | ||||||||||
Effect of unvested restricted stock awards
considered participating securities
|
310 | 266 | 310 | 266 | ||||||||||
Weighted-average shares outstanding – basic
|
17,750 | 19,069 | 17,611 | 18,979 | ||||||||||
Effect of dilutive common stock options
|
146 | 225 | 82 | 206 | ||||||||||
Weighted-average shares outstanding – diluted
|
17,896 | 19,294 | 17,693 | 19,185 | ||||||||||
Net income per share – basic
|
$ | 0.61 | $ | 0.78 | $ | 0.34 | $ | 0.38 | ||||||
Net income per share – diluted
|
$ | 0.60 | $ | 0.77 | $ | 0.34 | $ | 0.37 | ||||||
Cash dividends declared per share
|
$ | 0.18 | $ | 0.18 | $ | 0.06 | $ | 0.06 | ||||||
Stock options excluded from the calculation of diluted
earnings per share because their effect would have
been anti-dilutive
|
1,182,000 | 813,000 | 1,304,000 | 822,000 |
Nine months ended September 30, 2011
|
Nine months ended September 30, 2010
|
||||||||||||||||||||||
Ambassador Programs and
|
Ambassador Programs and
|
||||||||||||||||||||||
Other (1) |
BookRags
|
Consolidated
|
Other (1) |
BookRags
|
Consolidated
|
||||||||||||||||||
Total revenue
|
$ | 61,610 | $ | 2,851 | $ | 64,461 | $ | 69,183 | $ | 2,153 | $ | 71,336 | |||||||||||
Gross margin
|
$ | 54,697 | $ | 2,445 | $ | 57,142 | $ | 59,915 | $ | 1,822 | $ | 61,737 | |||||||||||
Depreciation and amortization
|
$ | 3,209 | $ | 364 | $ | 3,573 | $ | 3,185 | $ | 315 | $ | 3,500 | |||||||||||
Operating income
|
$ | 12,449 | $ | 860 | $ | 13,309 | $ | 19,899 | $ | 667 | $ | 20,566 | |||||||||||
Income tax provision
|
$ | 3,570 | $ | 231 | $ | 3,801 | $ | 6,755 | $ | 212 | $ | 6,967 | |||||||||||
Net income
|
$ | 10,098 | $ | 656 | $ | 10,754 | $ | 14,380 | $ | 456 | $ | 14,836 | |||||||||||
Total additions to property, plant, and equipment
|
$ | 2,362 | $ | 174 | $ | 2,536 | $ | 3,459 | $ | - | $ | 3,459 | |||||||||||
Total additions to goodwill and intangible assets
|
$ | - | $ | 357 | $ | 357 | $ | - | $ | 3,595 | $ | 3,595 | |||||||||||
Intangible assets, excluding goodwill
|
$ | - | $ | 3,398 | $ | 3,398 | $ | - | $ | 3,253 | $ | 3,253 | |||||||||||
Total assets
|
$ | 92,554 | $ | 16,363 | $ | 108,917 | $ | 114,686 | $ | 14,816 | $ | 129,502 |
Three months ended September 30, 2011
|
Three months ended September 30, 2010
|
||||||||||||||||||||||
Ambassador Programs and
|
Ambassador Programs and
|
||||||||||||||||||||||
Other (1) |
BookRags
|
Consolidated
|
Other (1) |
BookRags
|
Consolidated
|
||||||||||||||||||
Total revenue
|
$ | 25,808 | $ | 934 | $ | 26,742 | $ | 29,298 | $ | 638 | $ | 29,936 | |||||||||||
Gross margin
|
$ | 22,461 | $ | 790 | $ | 23,251 | $ | 25,111 | $ | 524 | $ | 25,635 | |||||||||||
Depreciation and amortization
|
$ | 1,085 | $ | 125 | $ | 1,210 | $ | 1,046 | $ | 112 | $ | 1,158 | |||||||||||
Operating income
|
$ | 7,229 | $ | 226 | $ | 7,455 | $ | 9,844 | $ | 109 | $ | 9,953 | |||||||||||
Income tax provision
|
$ | 1,695 | $ | 32 | $ | 1,727 | $ | 3,158 | $ | 30 | $ | 3,188 | |||||||||||
Net income
|
$ | 5,852 | $ | 200 | $ | 6,052 | $ | 7,063 | $ | 79 | $ | 7,142 |
(1)
|
Ambassador Programs and Other include all travel programs offered by Ambassador Programs and World Adventures Unlimited, as well as corporate overhead.
|
September 30, 2011
|
September 30, 2010
|
|||||||
Unrealized loss on foreign currency exchange contracts
|
$ | (3,089 | ) | $ | (264 | ) | ||
Unrealized gain on available-for-sale securities
|
$ | 687 | $ | 673 | ||||
Accrued purchases of property and equipment
|
$ | 73 | $ | 274 | ||||
Stock consideration for acquisition
|
$ | - | $ | (2,870 | ) |
·
|
Net income of $6.1 million or $0.34 million per diluted share, compared to $7.1 million, or $0.37 per diluted share, in third quarter last year.
|
·
|
Total reported revenue of $26.7 million compared to $30.0 milion in third quarter last year. |
·
|
Gross margin of 38.0 percent compared to 39.0 percent in third quarter of last year.
|
·
|
Total delegates travelled of 9,855 compared to 11,025 in third quarter of last year.
|
·
|
Repurchased approximately 216,000 shares of common stock for $1.5 million during the third quarter and paid quarterly dividend of $0.06 per share.
|
·
|
Increase enrollments for future travel seasons through an integrated sales and marketing model as we refine our direct mail marketing processes and incorporate a more substantial digital media approach.
|
·
|
Address declines in our Citizen and Student Leadership product offerings through implementing leadership changes and performing additional market research as we refine our longer term plans.
|
·
|
Continue to improve retention of current enrollments through improving the delegate experience, educating delegates and teachers about activities to pay their way, and maintaining the customer’s emotional excitement between enrollment and travel.
|
·
|
Improve consolidated operating margin through leverage of fixed cost structure and responsible deployment of variable operating expenses.
|
·
|
Maintain and improve upon our high quality of product delivery and increase our Net Promoter customer satisfaction ratings received on our travel programs.
|
·
|
Maximize capital allocation strategies and shareholder return.
|
Nine Months Ended September 30,
|
|||||||||||||||
2011
|
2010
|
$ Change
|
% Change
|
||||||||||||
Total revenue
|
$ | 64,461 | $ | 71,336 | $ | (6,875 | ) | -10 | % | ||||||
Cost of goods sold
|
7,319 | 9,599 | (2,280 | ) | -24 | % | |||||||||
Gross margin
|
57,142 | 61,737 | (4,595 | ) | -7 | % | |||||||||
Selling and marketing expenses
|
31,406 | 30,194 | 1,212 | 4 | % | ||||||||||
General and administrative expenses
|
12,427 | 10,977 | 1,450 | 13 | % | ||||||||||
Operating income
|
13,309 | 20,566 | (7,257 | ) | -35 | % | |||||||||
Other income
|
1,246 | 1,237 | 9 | 1 | % | ||||||||||
Income before income tax provision
|
14,555 | 21,803 | (7,248 | ) | -33 | % | |||||||||
Income tax provision
|
(3,801 | ) | (6,967 | ) | 3,166 | -45 | % | ||||||||
Net income
|
$ | 10,754 | $ | 14,836 | $ | (4,082 | ) | -28 | % |
Three Months Ended September 30,
|
|||||||||||||||
2011
|
2010
|
$ Change
|
% Change
|
||||||||||||
Total revenue
|
$ | 26,742 | $ | 29,936 | $ | (3,194 | ) | -11 | % | ||||||
Cost of goods sold
|
3,491 | 4,301 | (810 | ) | -19 | % | |||||||||
Gross margin
|
23,251 | 25,635 | (2,384 | ) | -9 | % | |||||||||
Selling and marketing expenses
|
11,872 | 11,811 | 61 | 1 | % | ||||||||||
General and administrative expenses
|
3,924 | 3,871 | 53 | 1 | % | ||||||||||
Operating income
|
7,455 | 9,953 | (2,498 | ) | -25 | % | |||||||||
Other income
|
324 | 377 | (53 | ) | -14 | % | |||||||||
Income before income tax provision
|
7,779 | 10,330 | (2,551 | ) | -25 | % | |||||||||
Income tax provision
|
(1,727 | ) | (3,188 | ) | 1,461 | -46 | % | ||||||||
Net income
|
$ | 6,052 | $ | 7,142 | $ | (1,090 | ) | -15 | % |
Nine months ended September 30, 2011 | Nine months ended September 30, 2011 | |||||||||||||||||||||||||||
Ambassador Programs and Other (1)
|
BookRags
|
Consolidated
|
Ambassador Programs
and Other (1)
|
BookRags
|
Consolidated
|
|||||||||||||||||||||||
Total revenue
|
$ | 61,610 | $ | 2,851 | $ | 64,461 | $ | 69,183 | $ | 2,153 | $ | 71,336 | ||||||||||||||||
Cost of goods sold
|
6,913 | 406 | 7,319 | 9,268 | 331 | 9,599 | ||||||||||||||||||||||
Gross margin
|
54,697 | 2,445 | 57,142 | 59,915 | 1,822 | 61,737 | ||||||||||||||||||||||
Selling and marketing expenses
|
30,357 | 1,049 | 31,406 | 29,541 | 653 | 30,194 | ||||||||||||||||||||||
General and administrative expenses
|
11,891 | 536 | 12,427 | 10,475 | 502 | 10,977 | ||||||||||||||||||||||
Operating income
|
12,449 | 860 | 13,309 | 19,899 | 667 | 20,566 | ||||||||||||||||||||||
Other income
|
1,219 | 27 | 1,246 | 1,236 | 1 | 1,237 | ||||||||||||||||||||||
Income before income tax provision
|
13,668 | 887 | 14,555 | 21,135 | 668 | 21,803 | ||||||||||||||||||||||
Income tax provision
|
(3,570 | ) | (231 | ) | (3,801 | ) | (6,755 | ) | (212 | ) | (6,967 | ) | ||||||||||||||||
Net income
|
$ | 10,098 | $ | 656 | $ | 10,754 | $ | 14,380 | $ | 456 | $ | 14,836 | ||||||||||||||||
Three months ended September 30, 2011
|
Three months ended September 30, 2010
|
|||||||||||||||||||||||||||
Ambassador
Programs
|
Ambassador
Programs
|
|||||||||||||||||||||||||||
and Other (1)
|
BookRags
|
Consolidated
|
and Other (1)
|
BookRags
|
Consolidated
|
|||||||||||||||||||||||
Total revenue
|
$ | 25,808 | $ | 934 | $ | 26,742 | $ | 29,298 | $ | 638 | $ | 29,936 | ||||||||||||||||
Cost of goods sold
|
3,347 | 144 | 3,491 | 4,187 | 114 | 4,301 | ||||||||||||||||||||||
Gross margin
|
22,461 | 790 | 23,251 | 25,111 | 524 | 25,635 | ||||||||||||||||||||||
Selling and marketing expenses
|
11,471 | 401 | 11,872 | 11,586 | 225 | 11,811 | ||||||||||||||||||||||
General and administrative expenses
|
3,761 | 163 | 3,924 | 3,681 | 190 | 3,871 | ||||||||||||||||||||||
Operating income
|
7,229 | 226 | 7,455 | 9,844 | 109 | 9,953 | ||||||||||||||||||||||
Other income
|
318 | 6 | 324 | 377 | - | 377 | ||||||||||||||||||||||
Income before income tax provision
|
7,547 | 232 | 7,779 | 10,221 | 109 | 10,330 | ||||||||||||||||||||||
Income tax provision
|
(1,695 | ) | (32 | ) | (1,727 | ) | (3,158 | ) | (30 | ) | (3,188 | ) | ||||||||||||||||
Net income
|
$ | 5,852 | $ | 200 | $ | 6,052 | $ | 7,063 | $ | 79 | $ | 7,142 |
(1)
|
Ambassador Programs and Other include all travel programs offered by Ambassador Programs and World Adventures Unlimited as well as corporate overhead.
|
Deployable Cash Reconciliation (in thousands)
|
September 30,
|
December 31,
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
Cash, cash equivalents and short-term available-for-sale securities
|
$ | 52,615 | $ | 77,834 | $ | 79,378 | ||||||
Prepaid program cost and expenses
|
13,946 | 6,053 | 3,230 | |||||||||
Less: Participants’ deposits
|
(9,014 | ) | (15,219 | ) | (34,436 | ) | ||||||
Less: Accounts payable / accruals / other liabilities
|
(11,480 | ) | (11,670 | ) | (6,061 | ) | ||||||
Deployable cash
|
$ | 46,067 | $ | 56,998 | $ | 42,111 | ||||||
Nine months ended September 30,
|
||||||||||
2011
|
2010
|
$ Change
|
||||||||
Cash flow (used in) provided by operations
|
$ | (14,685 | ) | $ | 8,896 | (23,581 | ) | |||
Purchase of property, equipment and intangibles
|
(2,893 | ) | (4,259 | ) | 1,366 | |||||
Free cash flow
|
$ | (17,578 | ) | $ | 4,637 | (22,215 | ) |
Period
|
Total Number
of
Shares
Purchased
|
Average
Price
Paid per
Share
|
Total Number of
Shares
Purchased as
Part of
Publicly Announced
Plans or Programs
|
Maximum
Number
(or Approximate
Dollar Value) of
Shares that May
Y
et Be Purchased
Under the Plans
or Programs
|
||||||||||||
Available for repurchase at
June 30, 2011
|
$ | 15,000,007 | ||||||||||||||
July 1 – July 31, 2011
|
- | - | - | 15,000,007 | ||||||||||||
August 1 – August 31, 2011
|
125,415 | $ | 7.01 | 125,415 | 14,120,822 | |||||||||||
September 1 – September 30, 2011
|
90,253 | 6.88 | 90,253 | 13,500,020 | ||||||||||||
Available for repurchase at
September 30, 2011
|
215,688 | $ | 6.96 | 215,688 | $ | 13,500,020 |
31.1
|
Certification under Section 302 of the Sarbanes-Oxley Act of 2002
|
|||
31.2
|
Certification under Section 302 of the Sarbanes-Oxley Act of 2002
|
|||
32.1
|
Certification under Section 906 of the Sarbanes-Oxley Act of 2002
|
|||
32.2
|
Certification under Section 906 of the Sarbanes-Oxley Act of 2002
|
Date:
November 7, 2011
|
By:
|
/s/ JEFFREY D. THOMAS
|
|
Jeffrey D. Thomas
|
|||
Chief Executive Officer
|
31.1
|
Certification under Section 302 of the Sarbanes-Oxley Act of 2002
|
|||
31.2
|
Certification under Section 302 of the Sarbanes-Oxley Act of 2002
|
|||
32.1
|
Certification under Section 906 of the Sarbanes-Oxley Act of 2002
|
|||
32.2
|
Certification under Section 906 of the Sarbanes-Oxley Act of 2002
|
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