Ambassadors Group, Inc. Reports Third Quarter 2013 Results

Ambassadors Group, Inc. Reports Third Quarter 2013 Results

Early Enrollment Trend Shows Improvement

SPOKANE, Wash., Oct. 30, 2013 (GLOBE NEWSWIRE) -- Ambassadors Group, Inc.
(Nasdaq:EPAX), a leading provider of educational travel experiences and online
education research materials, today announced its results for the third
quarter ended September 30, 2013.

Overview

  *Gross revenue, from all sources including non-directly delivered programs,
    of $113.2 million during the first nine months of 2013 compared to $137.7
    million in the prior year period. Traveled 17,940 delegates compared to
    21,089 delegates in the same period in 2012.
  *Year-to-date gross margin of 37.3 percent compared to 36.4 percent in the
    2012 period.
  *Restructuring Discovery Student Adventures product line and China
    operations, with pre-tax charges totaling $1.8 million. Also recorded $6.5
    million in pre-tax asset impairments related primarily to the corporate
    headquarters building during the third quarter.
  *Year-to-date, special items totaled $6.9 million, net of tax, including
    $5.1 million of non-cash expenses, for asset impairments, restructuring
    charges and separation costs.
  *Operating expenses year-to-date, excluding the impact of special items,
    declined $2.6 million year-over-year.
  *Year-to-date net loss of $1.6 million compared to $11.8 million of net
    income in the prior year period; $5.3 million of net income before special
    items compared to $13.4 million in the 2012 period.
  *Cash and cash equivalents and available-for-sale securities balance of
    $41.0 million; no debt outstanding.
  *Recent operational changes made to improve conversion, family engagement
    and digital lead generation via multi-channel marketing model showing
    initial signs of positive impact.
  *Enrolled revenue for 2014 programs up 5.9 percent year-over-year for all
    programs and 5.8 percent year-over-year for core Student Ambassador
    Programs.

Financial Highlights
(in thousands except percent and per share data)
                                                             
                      UNAUDITED
                      Quarter ended September 30, Nine months ended September
                                                   30,
                      2013           2012         2013          2012
Gross revenue, all     $46,894      $52,713    $110,264    $134,563
travel programs
Internet content and   $910         $903       $2,938      $3,106
advertising revenue
Gross revenue, all     $47,804      $53,616    $113,202    $137,669
sources
Gross margin, all      $17,239      $18,256    $39,661     $47,425
travel programs
Gross margin, internet
content and            $785         $785       $2,558      $2,685
advertising
Gross margin, all      $18,024      $19,041    $42,219     $50,110
sources
Gross margin           37.7%          35.5%        37.3%         36.4%
percentage
Operating expense      $20,653      $14,811    $45,099     $38,572
Operating expense,     $12,015      $14,781    $34,268     $36,826
before special items
Operating income,
internet content and   $249         $239       $958        $1,058
advertising
Net Income (loss)      $(1,614)     $5,485     $(1,581)    $11,777
Net Income before      $3,838       $5,519     $5,269      $13,359
special items
Income (loss) per      $(0.10)      $0.31      $(0.09)     $0.67
diluted share
Income per diluted
share before special   $0.23        $0.31      $0.31       $0.76
items

Commenting on the Company's results, Anthony Dombrowik, Ambassadors Group
Interim Chief Executive Officer said, "We remain committed to our stated core
goals: shifting to a multi-channel model to improve our delegate counts, right
sizing our cost structure, and staying close to our customer to enhance our
product and brand relevance.Our peak selling season for 2014 travel began in
earnest in August, generating positive results via our integrated
multi-channel approach. Our early look at enrolled revenue for 2014 is showing
some improvement, and we believe we are seeing success in our efforts to
reverse the downward trend in enrollments that we have experienced the last
few years."

Dombrowik noted, "At this point, we have a 5.8 percent year-over-year increase
in enrolled revenue for our core Student Ambassador Programs for the 2014
travel season.While the results are still very preliminary, we have seen
improvements across the board in our campaign performance metrics including
response, attendance and conversion rates.We believe these results begin to
validate our evolution toward a high-engagement sales and marketing approach,
in which we interact with our target customer across multiple touch points at
each stage of the awareness, interest, and decision cycle. For instance, our
social media presence – the largest and most engaged in the student travel
industry – has played a significant role in validating families' decisions to
attend information meetings and enhancing the perceived value of the programs.
We will continue to nurture our existing leads, generate new leads and focus
on retention in an effort to deliver 2014 enrollments at or above 2013
levels."

Dombrowik continued, "We are accomplishing these results while simultaneously
continuing to right size our cost structure. Year-to-date, we have achieved
$2.6 million in true operating expense savings and as expected, our marketing
and sales costs evened out during the third quarter, following the increased
expenditures last quarter to support our spring campaign. We are on track to
reduce between $4 million and $5 million in operating expenses in 2013,
excluding special items, on top of last year's operating expense reductions of
over $5.0 million compared to 2011.To that end, we have taken a hard look at
all of our operations and made the decision this quarter to restructure both
our operation in China, moving to a third party referral model, and our
Discovery Student Adventures product line.We are now working with Discovery
Education to look at different ways to partner, as the existing model has not
proven to be financially viable. We also took necessary reductions in the
carrying value of certain assets, primarily related to our headquarters
building, due to market conditions."

Dombrowik concluded, "With those decisions behind us, we continue to take
actions to optimize the value of our offerings. Year-to-date across our
programs we have traveled 17,940 delegates and are proud to have achieved the
highest consolidated Net Promoter scores in our history.We will finalize
these scores for the year after we travel the slate of winter programs being
offered this December, but are very excited about the value that our high
quality programs continue to deliver.Our initial 2014 enrollment statistics
are an encouraging step toward a more stabilized long-term business. We are
as committed as ever to the mission we've had for over 50 years, while
managing the business in the most prudent manner possible through this
turnaround endeavor." 

Third Quarter 2013 Results

During the third quarter of 2013, the Company traveled 8,140 delegates,
compared to 8,300 delegates during the prior year quarter primarily due to
lower delegate counts on the Company's core Student Ambassadors
programs.Total revenue of $22.3 million declined one percent from $22.4
million in the prior year quarter. Gross margin for the quarter was $18.0
million compared to $19.0 million in the third quarter of 2012, although,
gross margin percentage increased to 37.7 percent from 35.5 percent in the
prior year period due to favorable land costs compared to the prior year
period. 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.

Third quarter operating expenses were $20.7 million, compared to $14.8 million
in the prior year period.Third quarter 2013 included expenses for certain
special items totaling $8.6 million. The Company restructured its Discovery
Student Adventures product line, terminating the existing royalty agreement
with Discovery Education, as well as restructured its Beijing operations, for
a total of $1.8 million in pre-tax expense. The Company also incurred $6.5
million in asset impairment costs primarily associated with the write-down of
the value of the Company's headquarters, which has been listed for sale since
April 2012. Excluding special items, third quarter 2013 operating expenses
declined $2.8 million, or 19 percent, reflecting both lower selling and
marketing expenses, and general and administration costs.

Net loss for the third quarter of 2013 was $1.6 million, or $0.10 per diluted
share, compared to net income of $5.5 million, or $0.31 per diluted share, in
the prior year period.Third quarter 2013 net income before special items was
$3.8 million compared to $5.5 million in 2012.

Nine Months Ended September 30, 2013 Results

During the nine months ended September 30, 2013, the Company traveled 17,940
delegates compared to 21,089 delegates during the same period in the prior
year.Total revenue of $49.7 million declined 12 percent from $56.7 million in
the same period last year driven by a 13 percent decline in travel-related
revenue and a 5 percent decline in internet content and advertising revenue
related to BookRags, the Company's online education research business.Net
loss for the nine months ended September 30, 2013 was $1.6 million, or $0.09
per diluted share, compared to net income of $11.8 million, or $0.67 per
diluted share, in the prior year period.Net income before special items was
$5.3 million compared to $13.4 million in 2012.

Gross margin for the nine months ended September 30, 2013 was $42.2 million,
down from $50.1 million in the same period last year, however, gross margin
percentage increased to 37.3 percent from 36.4 percent.

Year-to-date, operating expenses excluding special items declined $2.6
million, or 7 percent, reflecting the Company's successful cost cutting
initiatives.

Balance Sheet and Liquidity

Total assets at September 30, 2013 were $82.7 million including cash, cash
equivalents and short-term available-for-sale securities of $41.0. Long-term
assets totaled $33.1 million primarily reflecting goodwill and intangible
assets of the BookRags business, technology, hardware and systems used to
deliver services, and the Company's office building, which has been listed for
sale. Total liabilities were $21.4 million, including $9.8 million in
participant deposits for future travel. The Company had no debt outstanding
and deployable cash of $29.1 million at September 30, 2013.Deployable cash is
a non-GAAP measure defined in the attached schedules.

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 purchases of property, equipment
and intangibles, is also noted (in thousands):

                                              UNAUDITED
                                              Nine months ended September 30,
                                              2013            2012
Net cash provided by (used in) operating       $9,256        $(100)
activities
Purchases of property, equipment and           (2,664)        (5,007)
intangibles
Free cash flow                                 6,592          (5,107)
                                                             
Net purchase of available-for-sale securities  (4,366)        (7,056)
Dividend payments to shareholders             (1,017)        (3,166)
Repurchase of common stock                     (486)          --
Other cash flows, net                          (2,098)        (260)
Net decrease in cash and cash equivalents      $(1,375)      $(15,589)

Outlook for 2013

The Company is updating its guidance for 2013 as follows:

  *Consolidated gross revenues for all programs and operations to be between
    $115 million and $118 million;
  *Consolidated gross margin as a percentage of gross revenue for all
    programs and operations of 36.5 percent to 37.5 percent; and
  *Net income before any special items of between $0 million and $0.5
    million.

2014 Travel Season Statistics

As of October 27, 2013, enrolled revenue for 2014 travel programs was $114.0
million, up 5.9 percent from the same point last year, based on enrolled
travelers of 17,298 compared to 17,004. Enrolled revenue for the Company's
core product, Student Ambassadors, is up 5.8 percent to $106.2 million
compared to $100.3 million at the same date last year, based on enrolled
travelers of 14,915 compared to 14,517.

Enrolled revenue consists of estimated gross receipts to be recognized upon
travel of an enrolled participant and revenue recognized for any delegates who
have completed travel for the travel year referenced. Reported net enrollments
consist of all participants who have enrolled in the Company's programs less
those that have already withdrawn, including travel that has been
completed.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.

Conference Call and Webcast Information

The Company will host a conference call to discuss third quarter 2013 results
of operations on Thursday, October 31, 2013, at 11:30 a.m. Eastern Time (8:30
a.m. Pacific Time).Participants can access the callvia the internet at
www.ambassadorsgroup.com/EPAX. The call can also be accessedbydialing
888-395-3227 or 719-325-2428 (international) and providing the passcode:
1053173.Approximately 24 hours following the call,a webcast will be
available through January 30, 2014 at www.ambassadorsgroup.com/EPAX. A replay
of the call will alsobe available through November 5, 2013 and can be
accessed by dialing 888-203-1112 or 719-457-0820 (international) and providing
the pass code: 1053173.

About Ambassadors Group, Inc.

Ambassadors Group, Inc. (Nasdaq:EPAX) is an 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.

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,
the 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, 2013, and its proxy statement filed May 6, 2013.

AMBASSADORS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                                  
                                     UNAUDITED
                                     Quarter ended September 30,
                                     2013       2012      $ Change   % Change
Net revenue, non-directly delivered   $15,071  $16,746 $(1,675) -10%
programs (1)
Gross revenue, directly delivered     6,296     4,783    1,513     32%
programs(2)
Internet content and advertising      910       903      7         1%
revenue
Total revenue                         22,277    22,432   (155)     -1%
Cost of sales, directly delivered     4,128     3,273    855       26%
programs (2)
Cost of sales, internet content and   125       118      7         6%
advertising
Gross margin (3)                      18,024    19,041   (1,017)   -5%
                                                                  
Operating expenses:                                                
Selling and marketing               9,589     11,289   (1,700)   -15%
General and administration           2,847     3,522    (675)     -19%
Restructuring costs                  1,756     --      1,756     100%
Asset impairments                    6,461     --      6,461     100%
Total operating expenses              20,653    14,811   5,842     39%
                                                                  
Operating income (loss)               (2,629)   4,230    (6,859)   -162%
                                                                  
Other income (expense):                                            
Interest and dividend income         71        595      (524)     -88%
Foreign currency and other income    1         (2)      3         150%
Total other income                    72        593      (521)     -88%
Income (loss) before income tax       (2,557)   4,823    (7,380)   -153%
benefit
Income tax benefit                    943       662      281       42%
Net income (loss)                     $(1,614) $5,485  $(7,099) -129%
                                                                  
Weighted average shares outstanding – 16,984    17,613   (629)     -4%
basic
Weighted average shares outstanding – 16,984    17,613   (629)     -4%
diluted
                                                                  
Net income (loss) per share — basic  $(0.10)  $0.31   $(0.41)  -132%
Net income (loss) per share — diluted $(0.10)  $0.31   $(0.41)  -132%

(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.

              UNAUDITED
              Quarter ended September 30,
              2013      2012      % Change
Gross revenue $40,597 $47,930 -15%
Cost of sales  25,526   31,184   -18%
Net revenue   $15,071 $16,746 -10%

(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
                                    Nine months ended September 30,
                                    2013       2012      $ Change    % Change
Net revenue, non-directly delivered  $36,254  $44,589 $(8,335)  -19%
programs (1)
Gross revenue, directly delivered    10,460    9,008    1,452      16%
programs(2)
Internet content and advertising     2,938     3,106    (168)      -5%
revenue
Total revenue                        49,652    56,703   (7,051)    -12%
Cost of sales, directly delivered    7,053     6,172    881        14%
programs (2)
Cost of sales, internet content and  380       421      (41)       -10%
advertising
Gross margin (3)                     42,219    50,110   (7,891)    -16%
                                                                  
Operating expenses:                                                
Selling and marketing              25,431    26,459   (1,028)    -4%
General and administration          11,451    12,113   (662)      -5%
Restructuring costs                 1,756     --      1,756      100%
Asset impairments                   6,461     --      6,461      100%
Total operating expenses             45,099    38,572   6,527      17%
                                                                  
Operating income (loss)              (2,880)   11,538   (14,418)   -125%
                                                                  
Other income (expense):                                            
Interest and dividend income        358       1,454    (1,096)    -75%
Foreign currency and other income   22        (5)      27         540%
Total other income                   380       1,449    (1,069)    -74%
Income (loss) before income tax      (2,500)   12,987   (15,487)   -119%
benefit (provision)
Income tax benefit (provision)       919       (1,210)  2,129      176%
Net income (loss)                    $(1,581) $11,777 $(13,358) -113%
                                                                  
Weighted average shares outstanding  16,982    17,595   (613)      -3%
– basic
Weighted average shares outstanding  16,982    17,595   (613)      -3%
– diluted
                                                                  
Net income (loss) per share — basic $(0.09)  $0.67   $(0.76)   -113%
Net income (loss) per share —        $(0.09)  $0.67   $(0.76)   -113%
diluted

(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.

              UNAUDITED
              Nine months ended September 30,
              2013       2012        % Change
Gross revenue $99,807  $125,556  -21%
Cost of sales  63,553    80,967     -22%
Net revenue    $36,254  $44,589   -19%

(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)
                                                             
                                          UNAUDITED            AUDITED
                                          September 30,        December 31,
                                          2013      2012       2012
Assets                                                       
Current assets:                                               
Cash and cash equivalents                 $4,775  $3,930   $6,150
Available-for-sale securities             36,240   45,860    32,122
Foreign currency exchange contracts       --      403       837
Prepaid program cost and expenses         7,090    12,773    17,217
Accounts receivable                       1,022    819       850
Deferred tax assets                        547      129       221
Total current assets                      49,674   63,914    57,397
Property and equipment, net               18,948   27,195    26,344
Available-for-sale securities             717      719       723
Intangibles                                3,529    3,541     3,565
Goodwill                                  9,781    9,781     9,781
Other long-term assets                     82       85        85
Total assets                              $82,731 $105,235 $97,895
                                                             
Liabilities and Stockholders' Equity                         
Current liabilities:                                          
Accounts payable and accrued expenses     $9,035  $7,772   $4,238
Participants' deposits                    9,847    7,393      25,735
Foreign currency exchange contracts       90       --       --
Other liabilities                          94       101        111
Total current liabilities                 19,066   15,266    30,084
Deferred tax liabilities                   2,330    2,279      2,688
Total liabilities                         21,396   17,545    32,772
Stockholders' equity                      61,335   87,690     65,123
Total liabilities and stockholders' equity $82,731 $105,235 $97,895


AMBASSADORS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                   
                                                         UNAUDITED
                                                         September 30,
                                                         2013       2012
Cash flows from operating activities:                               
Net income (loss)                                         $(1,581) $11,777
Adjustments to reconcile net income (loss) to net cash              
provided by (used in) operating activities:
Depreciation and amortization                             4,088     3,786
Stock-based compensation                                  2,161     1,166
Deferred income tax provision (benefit)                   (2,373)   159
Loss on disposition and impairment of property and        6,461     --
equipment
Excess tax shortfall from stock-based compensation        2,103     260
Change in assets and liabilities:                                   
Accounts receivable and other assets                      (169)     576
Prepaid program costs and expenses                        9,652     526
Accounts payable, accrued expenses, and other current     4,802     1,653
liabilities
Participants' deposits                                    (15,888)  (20,003)
Net cash provided by (used in) operating activities       9,256     (100)
                                                                   
Cash flows from investing activities:                               
Purchase of available-for-sale securities                 (27,297)  (70,333)
Proceeds from sale of available-for-sale securities       22,931    63,277
Purchase of property and equipment                        (2,413)   (4,589)
Purchase of intangibles                                   (251)     (418)
Net cash used in investing activities                     (7,030)   (12,063)
                                                                   
Cash flows from financing activities:                               
Repurchase of common stock                                (486)     --
Dividend payment to shareholders                          (1,017)   (3,166)
Proceeds from exercise of stock options                   5         --
Excess tax shortfall from stock-based compensation        (2,103)   (260)
Net cash used in financing activities                     (3,601)   (3,426)
                                                                   
Net decrease in cash and cash equivalents                 (1,375)   (15,589)
Cash and cash equivalents, beginning of period            6,150     19,519
Cash and cash equivalents, end of period                  $4,775   $3,930

                                Special Items

During the third quarter of 2013, the Company made the decision to restructure
two of its travel programs believed to be no longer financially viable in
their current form - Discovery Student Adventures and its operations in China.
The costs of those restructurings, including the $1.6 million termination fee
to be paid to Discovery Education to terminate its existing agreement, totaled
$1.8 million.

The Company continues to maintain its corporate headquarters, listed for sale
since April 2012, as an asset to be held and used in operations.However, as
part of its periodic assessment of the recoverability of long-lived assets,
the Company determined an impairment of its corporate headquarters existed.
Total asset impairment charges during the third quarter of 2013 totaled $6.5
million, relating primarily to the building itself as well as impairments for
the restructured operations noted above and for other operating assets.

In connection with the February 2013 resignations of two executives, the
Company's President and Chief Executive Officer and the President and Chief
Operating Officer of the operating subsidiary Ambassador Programs, Inc., as
well as workforce reductions during 2012, the Company incurred separation
payments during both periods.

In addition, as previously disclosed, the Company incurred legal and other
fees in relation to a shareholder class action suit and 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 and at the SEC website www.sec.gov.
These two matters were settled in 2012, however, the recovery of funds from
insurance coverage on these matters have been recorded in the periods
received. The Company also incurred legal and other fees relating to a proxy
contest and shareholder actions.

As a result of these events, the operations as presented in the accompanying
financial statements for the three months and nine months ended September 30,
2013 and 2012 do not necessarily 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 (Loss)            EPS
                              Three months ended September Three months ended
                               30,                          September 30,
                              2013           2012          2013       2012
Amount before special items    $3,838       $5,519      $0.23    $0.31
Asset impairments              (6,461)       --          (0.38)    --
Restructuring Costs            (1,756)       --          (0.10)    --
Legal and other fees          (422)         (20)         (0.03)    --
Separation payments            1             (10)         --       --
Tax impact                     3,186         (4)          0.18      --
Amount per consolidated        $(1,614)     $5,485      $(0.10)  $0.31
statement of operations
                                                                   
                              UNAUDITED
                              Net Income (Loss)            EPS
                              Nine months ended September  Nine months ended
                               30,                          September 30,
                              2013           2012          2013       2012
Amount before special items    $5,269       $13,359     $0.31    $0.76
Asset impairments              (6,461)       --          (0.38)    --
Restructuring Costs            (1,756)       --          (0.10)    --
Legal and other fees           171           (1,502)      0.01      (0.09)
Separation payments            (2,785)       (242)        (0.16)    (0.01)
Tax impact                     3,981         162          0.23      0.01
Amount per consolidated        $(1,581)     $11,777     $(0.09)  $0.67
statement of operations

                               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 at September 30, 2013 and 2012, and
December 31, 2012 (in thousands):

                                             UNAUDITED
                                             September 30,       December 31,
                                             2013      2012      2012
Cash, cash equivalents and short-term         $41,015 $49,790 $38,272
available-for-sale securities
Prepaid program cost and expenses            7,090    12,773   17,217
Less: Participants' deposits                 (9,847)  (7,393)  (25,735)
Less: Accounts payable / accruals / other     (9,129)  (7,873)  (4,349)
liabilities
Deployable cash                              $29,129 $47,297 $25,405

CONTACT: Investor Relations:
         Stacy Feit
         Financial Relations Board
         (213) 486-6549

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