Ambassadors Group, Inc. Reports Results for the First Six Months and Second Quarter

Ambassadors Group, Inc. Reports Results for the First Six Months and Second
Quarter

SPOKANE, Wash., July 30, 2014 (GLOBE NEWSWIRE) -- Ambassadors Group, Inc.
(Nasdaq:EPAX), a leading provider of educational travel, today announced its
results for the second quarter ended June 30, 2014.

Overview

  *For the firstsix months of 2014, net income before special items of $2.2
    million compared to $1.3 million in the 2013 period. Net loss of $11.7
    million compared to net income of $33 thousand in the prior year period.
    
  *Gross revenue, from all sources including non-directly delivered programs,
    of $59.4 million during the first six months of 2014 compared to $65.4
    million in the prior year period. In 2014, the Company traveled 8,903
    delegates compared to 9,800 delegates in the same period in 2013.
    
  *Year-to-date gross margin of 35.1 percent compared to 37.0 percent in
    2013, the current year was impacted by unfavorable Euro and British Pound
    foreign exchange rates and a program merchandise write-down.
    
  *Goodwill write-down associated with BookRags, our online
    education-oriented research subsidiary, resulting in pre-tax charges
    totaling $9.7 million. 
    
  *Subsequent to the balance sheet date, we anticipate executing a purchase
    and sale agreement for the corporate headquarters building listed for sale
    since April 2012. The Company recorded a $2.0 million in pre-tax asset
    impairment at June 30, 2014.
    
  *Year-to-date, special items totaled $14.7 million, including $12.7 million
    of non-cash items, for asset impairments, restructuring charges and
    separation costs.
    
  *Operating expenses for the six month period, excluding the impact of
    special items, of $18.9 million, a decrease of $3.4 million, or 15.2
    percent, year-over-year.
    
  *Cash and cash equivalents and available-for-sale securities balance of
    $57.5 million compared to $55.9 million at the same point in 2013.
    
  *Enrolled revenue for 2014 programs down 7.2 percent year-over-year for all
    programs and 9.7 percent year-over-year for core Student Ambassadors
    Programs.Prior year enrolled travelers for Discovery Student Adventures
    and People to People China programs have been excluded for year-over-year
    comparability given the Company's decision during the third quarter of
    2013 to no longer operate these programs in 2014.

Financial Highlights
(in thousands except percent and per share data)

                             UNAUDITED
                             Quarter ended June 30, Six months ended June 30,
                             2014        2013       2014          2013
Gross revenue, all travel     $ 56,805   $ 61,476  $ 57,365     $ 63,370
programs
BookRags revenue              $ 1,055    $1,029    $2,063       $2,028
Gross revenue, all sources    $ 57,860   $ 62,505  $ 59,428     $ 65,398
Gross margin, all travel      $ 18,869   $ 21,900  $ 19,049     $ 22,422
programs
Gross margin, BookRags        $937       $903      $1,813       $1,773
Gross margin, all sources     $ 19,806   $ 22,803  $ 20,862     $ 24,195
Gross margin percentage       34.2%       36.5%      35.1%         37.0%
Operating expense             $ 23,333   $ 10,261  $ 33,574     $ 24,446
Operating expense, before     $8,913     $ 10,258  $ 18,865     $ 22,253
special items
Operating income, BookRags    $ (9,831)  $377      $ (9,495)    $709
Net income before special     $9,461     $ 8,094   $2,151       $ 1,303
items
Net income (loss)             $ (4,185)  $ 8,092   $ (11,736)   $33
Income per diluted share      $0.56      $0.48     $0.13        $ 0.08
before special items
Income (loss) per diluted     $ (0.25)   $0.48     $ (0.70)     $--
share

Commenting on the Company's results, Philip B. Livingston, Ambassadors Group
Interim Chief Executive Officer said, "We streamlined and flattened the
organization structure in June and the current quarter results reflect several
initiatives aimed to simplify the way we work and move faster.Our focus is
traveling more People to People student delegates and we have taken measures
to concentrate on that nimbly and cost effectively.Our summer travel season
was very successful from a customer perspective, and customer satisfaction
continues to be very high.We have begun to more actively promote the voice of
the customer and are publishing customer reviews on our sites. We expect this
to substantially improve the ability of travelers and their parents to
understand the unique nature of our educational programs.Home stays, visits
to local schools, debates and discussions with local residents are part of
what sets us apart from other travel companies."

Livingston continued, "Our marketing season for 2015 travel is underway with
intense digital marketing, direct mail and local meetings all taking place
from August to November of this year.We are acutely focused on web-based
services integration into our traditional direct marketing channels.These
customer centric initiatives are aimed at driving higher attendance at our
information meetings, targeting qualified prospects, converting generated
leads and improving our retention rate.The results of those revised efforts
will be important to reflect on in our third quarter results."

Livingston concluded, "We are driving aggressive changes in order to deliver
solid, broad-based financial results driven by strong execution and a more
efficient cost structure.We believe that these changes, as well as our strong
People to People brand, will in the long-term deliver profitability, a
stronger balance sheet and shareholder value."

Second Quarter 2014 Results

During the second quarter of 2014, the Company traveled 8,720 delegates,
compared to 9,228 delegates during the prior year quarter primarily due to
lower delegate counts on the Company's core Student Ambassadors programs.The
prior year period includes Discovery Student Adventures traveled students
affecting year-over-year comparability given the Company's decision during the
third quarter of 2013 to no longer operate these programs in 2014. Total
revenue of $22.7 million declined 7.2 percent from $24.5 million in the prior
year quarter driven by lower travel-related revenue. Gross margin for the
quarter was $19.8 million compared to $22.8 million in the second quarter of
2013, and gross margin percentage was 34.2 percent compared to 36.5 percent in
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.The lower current period gross margin
percentage is reflective of higher foreign exchange rates negatively impacting
land vendor program costs year-over-year, as well as a program merchandise
write-down of $0.6 million in the current period. Year-over-year, the Company
experienced a decrease of approximately $1.2 million in Student Ambassador
program gross margin, excluding the impact of the decline in delegates
traveled year-over-year, $0.8 million of which is due to unfavorable Euro and
British Pound rates hedged for 2014 travel compared to hedged rates for 2013
travel.

Second quarter operating expenses were $23.3 million compared to $10.3 million
in the prior year period.Excluding special items, second quarter 2014
operating expenses were $8.9 million, a decline of $1.3 million, or 13.1
percent, compared to the same time in 2013. Special items of $14.4 million for
the second quarter of 2014 are more fully described in a table to this
release, and include restructuring charges related to the write-down of
goodwill recorded upon the purchase of BookRags in 2008, an additional
write-down of the corporate headquarters building and separation and other
related benefit costs from the workforce reduction and other personnel changes
previously announced during the quarter.

Net loss for the second quarter of 2014 was $4.2 million, or $0.25 per diluted
share, compared to net income of $8.1 million, or $0.48 per diluted share, in
the prior year period.Second quarter 2014 net income before special items was
$9.5 million compared to $8.1 million in 2013.

Six Months Ended June 30, 2014 Results

During the six months ended June 30, 2014, the Company traveled 8,903
delegates compared to 9,800 delegates during the same period in the prior
year.The prior year period includes Discovery Student Adventures and People
to People China traveled students affecting year-over-year comparability given
the Company's decision during the third quarter of 2013 to no longer operate
these programs in 2014. Total revenue of $24.1 million declined 11.9 percent
from $27.4 million in the same period last year driven by the decline in
travel-related revenue.Gross margin for the six months ended June 30, 2014
was $20.9 million, down from $24.2 million in the same period last year, with
gross margin percentage at 35.1 percent compared to the prior year at 37.0
percent.

Year-to-date, operating expenses excluding special items decreased 15.2
percent compared to the prior year period to $18.9 million. Special items of
$14.7 million for the year-to-date period are more fully described in a table
to this release.

The Company recorded a valuation allowance on its deferred tax assets due to
the loss it recorded for the six months ended June 30, 2014, resulting in a
deferred tax benefit of $0.7 million for the year-to-date period.The Company
does not anticipate having current tax expense until its net operating loss
carryforward has been absorbed.

Net loss for the six months ended June 30, 2014 was $11.7 million, or $0.70
per diluted share, compared to net income of $33 thousand in the prior year
period.

Balance Sheet and Liquidity

Total assets at June 30, 2014 were $95.9 million, including $57.5 million in
cash, cash equivalents and short-term available-for-sale securities. Long-term
assets totaled $19.0 million primarily reflecting 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 and remains
categorized as held for use at June 30, 2014.During the second quarter of
2014, the Company recognized restructuring and other asset reduction charges
that resulted in a $9.7 million reduction in the balance of goodwill as well
as an additional write-down of $2.0 million to the carrying value of the
corporate headquarters building. We anticipate executing a purchase and sale
agreement subsequent to the balance sheet date; therefore, the carrying value
will be reclassed to an asset held for sale during the third quarter of 2014.
The Company recorded a valuation allowance on its deferred tax assets due to
the loss it recorded for the six months ended June 30, 2014.

Total liabilities were $50.2 million, including $42.9 million in participant
deposits for future travel.Deployable cash at June 30, 2014, totaled $25.3
million, and is a non-GAAP measure defined in the attached schedules.On June
1, 2014, the Company's existing credit agreement with Wells Fargo Bank,
National Association, expired and was not renewed.

The below 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). We believe this non-GAAP
measurement is useful to investors in understanding the cash generated or
distributed within the current period for future use in operations.

                                                    UNAUDITED
                                                    Six months ended June 30,
                                                    2014         2013
Net cash provided by operating activities            $ 12,988    $ 23,415
Purchases of property, equipment and intangibles     (1,098)     (1,963)
Free cash flow                                       11,890      21,452
                                                                
Net proceeds from purchase of available-for-sale     (10,656)    (19,515)
securities
Dividend payments to shareholders                    --         (1,017)
Repurchase of common stock                           (186)       (486)
Other cash flows, net                                (109)       (2,090)
Net increase (decrease) in cash and cash equivalents $ 939       $ (1,656)

Outlook for 2014

As of July 28, 2014, enrolled revenue for 2014 travel programs was $97.4
million, down 7.2 percent from the same point last year, based on enrolled
travelers of 16,126 compared to 17,283. Enrolled revenue for the Company's
core product, Student Ambassadors, is down 9.7 percent to $86.0 million
compared to $95.3 million at the same date last year, based on enrolled
travelers of 12,256 compared to 13,849.Prior year data excludes the impact of
enrolled travelers for Discovery Student Adventures and China programs as of
this time last year to reflect year-over-year comparability given the
Company's decision to no longer operate these programs in 2014.

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.

The Company is updating its guidance for 2014 as follows:

  *Consolidated gross revenues for all programs and operations to be between
    $100 million and $105 million;
    
  *Consolidated gross margin as a percentage of gross revenue for all
    programs and operations of 35 percent to 36 percent; and
    
  *Net loss before any special items of between $2.0 million and $0.

About Ambassadors Group, Inc.

Ambassadors Group, Inc. (Nasdaq:EPAX) is an education and student travel
company located in Spokane, Washington. 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, changes in
foreign currency rates 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 27, 2014, and its proxy statement
filed April 11, 2014.

AMBASSADORS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

                                     UNAUDITED
                                     Quarter ended June 30,
                                     2014      2013      $ Change    % Change
Net revenue, non-directly delivered   $ 18,092 $ 21,183 $ (3,091)  -15%
programs (1)
Gross revenue, directly delivered     3,565    2,270    1,295      57%
programs(2)
Internet content and advertising      1,055    1,029    26         3%
revenue
Total revenue                         22,712   24,482   (1,770)    -7%
Cost of sales, directly delivered     2,234    1,553    681        44%
programs (2)
Cost of sales, internet content and   118      126      (8)        -6%
advertising
Cost of sales, program merchandise    554      --      554        100%
markdown
Gross margin (3)                      19,806   22,803   (2,997)    -13%
                                                                  
Operating expenses:                                                
Selling and marketing                 6,159    7,323    (1,164)    -16%
General and administration            3,510    2,938    572        19%
Restructuring costs                   11,664   --      11,664     100%
Asset impairments                     2,000    --      2,000      100%
Total operating expenses              23,333   10,261   13,072     127%
                                                                  
Operating income (loss)               (3,527)  12,542   (16,069)   -128%
                                                                  
Other income (expense):                                            
Interest and dividend income          142      160      (18)       -11%
Foreign currency and other income     5        1        4          400%
Total other income                    147      161      (14)       -9%
Income (loss) before income tax       (3,380)  12,703   (16,083)   -127%
provision
Income tax provision                  (805)    (4,611)  3,806      83%
Net income (loss)                     $(4,185) $ 8,092  $ (12,277) -152%
                                                                  
Weighted average shares outstanding – 16,823   16,960   (137)      -1%
basic
Weighted average shares outstanding – 16,823   16,960   (137)      -1%
diluted
                                                                  
Net income (loss) per share — basic   $(0.25)  $ 0.48   $ (0.73)   -152%
Net income (loss) per share — diluted $(0.25)  $ 0.48   $ (0.73)   -152%

(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 June 30,
             2014      2013      % Change
Gross revenue $ 53,241 $ 59,210 -10%
Cost of sales 35,149   38,027   -8%
Net revenue   $ 18,092 $ 21,183 -15%

(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,
                                   2014        2013      $ Change    % Change
Net revenue, non-directly delivered $ 18,208   $ 21,183 $ (2,975)  -14%
programs (1)
Gross revenue, directly delivered   3,838      4,164    (326)      -8%
programs(2)
Internet content and advertising    2,063      2,028    35         2%
revenue
Total revenue                       24,109     27,375   (3,266)    -12%
Cost of sales, directly delivered   2,443      2,925    (482)      -16%
programs (2)
Cost of sales, internet content and 250        255      (5)        -2%
advertising
Cost of sales, inventory markdown   554        --      554        100%
Gross margin (3)                    20,862     24,195   (3,333)    -14%
                                                                  
Operating expenses:                                                
Selling and marketing               13,152     15,842   (2,690)    -17%
General and administration          6,650      8,604    (1,954)    -23%
Restructuring costs                 11,772     --      11,772     100%
Asset impairments                   2,000      --      2,000      100%
Total operating expenses            33,574     24,446   9,128      37%
                                                                  
Operating loss                      (12,712)   (251)    (12,461)   -4965%
                                                                  
Other income (expense):                                            
Interest and dividend income        273        287      (14)       -5%
Foreign currency and other income   8          21       (13)       -62%
Total other income                  281        308      (27)       -9%
Income (loss) before income tax     (12,431)   57       (12,488)   -21909%
benefit (provision)
Income tax benefit (provision)      695        (24)     719        2996%
Net income (loss)                   $ (11,736) $ 33     $ (11,769) -35664%
                                                                  
Weighted average shares outstanding 16,789     16,980   (191)      -1%
– basic
Weighted average shares outstanding 16,789     16,980   (191)      -1%
– diluted
                                                                  
Net loss per share — basic          $ (0.70)   $ --    $ (0.70)   -100%
Net loss per share — diluted        $ (0.70)   $ --    $ (0.70)   -100%

(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
             Six months ended June 30,
             2014      2013      % Change
Gross revenue $ 53,528 $ 59,210 -10%
Cost of sales 35,320   38,027   -7%
Net revenue   $ 18,208 $ 21,183 -14%

(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,
                                          2014      2013       2013
Assets                                                        
Current assets:                                               
Cash and cash equivalents                  $ 10,412 $ 4,494   $ 9,473
Available-for-sale securities              47,088   51,358    36,174
Foreign currency exchange contracts        60       --       --
Prepaid program cost and expenses          17,918   26,354    7,069
Accounts receivable                        1,421    905       1,792
Deferred tax assets                        --      583       1,295
Total current assets                       76,899   83,694    55,803
Property and equipment, net                14,633   25,656    18,452
Available-for-sale securities              729      716       719
Intangibles                                3,462    3,540     3,522
Goodwill                                   70       9,781     9,781
Other long-term assets                     85       83        82
Total assets                               $ 95,878 $ 123,470 $ 88,359
                                                             
Liabilities and Stockholders' Equity                          
Current liabilities:                                          
Accounts payable and accrued expenses      $ 7,145  $ 6,668    $ 3,587
Participants' deposits                     41,043   47,785     26,362
Foreign currency exchange contracts        --      358       244
Deferred tax liabilities                   77       --       --
Other liabilities                          103      77         119
Total current liabilities                  48,368   54,888    30,312
Participants' deposits                     1,822    1,673     --
Foreign currency exchange contracts        --      53        52
Deferred tax liabilities                   19       4,333     2,087
Total liabilities                          50,209   60,947    32,451
Stockholders' equity                       45,669   62,523     55,908
Total liabilities and stockholders' equity $ 95,878 $ 123,470 $ 88,359


AMBASSADORS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

                                                         UNAUDITED
                                                         June 30,
                                                         2014       2013
Cash flows from operating activities:                               
Net income (loss)                                         $(11,736) $33
Adjustments to reconcile net income (loss) to net cash              
provided by operating activities:
Depreciation and amortization                             2,977     2,711
Stock-based compensation                                  1,168     1,957
Deferred income tax benefit                               (805)     (275)
Loss on disposition and impairment of property and        2,000     7
equipment
Loss on impairment of goodwill                            9,711     --
Program merchandise writedown                             554       --
Excess tax shortfall from stock-based compensation        109       2,095
Change in assets and liabilities:                                   
Accounts receivable and other assets                      368       (53)
Prepaid program costs and expenses                        (11,403)  (9,189)
Accounts payable, accrued expenses, and other current     3,542     2,406
liabilities
Participants' deposits                                    16,503    23,723
Net cash provided by operating activities                 12,988    23,415
                                                                   
Cash flows from investing activities:                               
Purchase of available-for-sale securities                 (24,517)  (26,844)
Proceeds from sale of available-for-sale securities       13,861    7,329
Purchase of property and equipment                        (952)     (1,799)
Purchase of intangibles                                   (146)     (164)
Net cash used in investing activities                     (11,754)  (21,478)
                                                                   
Cash flows from financing activities:                               
Repurchase of common stock                                (186)     (486)
Dividend payment to shareholders                          --       (1,017)
Proceeds from exercise of stock options                   --       5
Excess tax shortfall from stock-based compensation        (109)     (2,095)
Net cash used in financing activities                     (295)     (3,593)
                                                                   
Net increase (decrease) in cash and cash equivalents      939       (1,656)
Cash and cash equivalents, beginning of period            9,473     6,150
Cash and cash equivalents, end of period                  $ 10,412  $ 4,494

                                Special Items

During the third quarter of 2013, the Company initiated a corporate
restructuring plan aimed at streamlining its cost structure and focusing the
business primarily on its core Student Ambassador Programs in order to promote
the long-term health of the organization.At that time, the Company announced
its decision to restructure two of its travel programs believed no longer
financially viable in their current form – Discovery Student Adventures and
People to People China.During the second quarter of 2014, the Company
evaluated the carrying value of its BookRags subsidiary and determined that
its fair value was lower, resulting in a goodwill impairment of $9.7 million
that has been included within restructuring costs in the table below.

As part of the Company's restructuring plan and as previously announced, the
Company completed a workforce reduction and incurred pre-tax charges of
approximately $1.6 million for severance benefits and other related expenses
during the second quarter of 2014 that has been included within restructuring
costs in the table below.Of the $1.6 million in expense, a $0.4 million
non-cash expense is included to reflect accelerated vesting of previously
awarded stock options and stock grants.In addition, the Company has incurred
other restructuring related charges including from accelerated depreciation on
assets to be replaced.

The Company's corporate headquarters, listed for sale since April 2012, is
classified as an asset to be held and used in operations.Subsequent to the
balance sheet date, the Company anticipates executing a purchase and sale
agreement to sell the building for $8.8 million.As such, the Company recorded
an additional asset impairment of $2.0 million to lower its carrying value to
the sales price.During the third quarter of 2014, the Company expects to
reclassify the building as an asset held for sale and anticipates incurring
additional charges related to transaction closing fees.

In connection with the previously announced termination of the Company's
former interim chief executive officer, during the second quarter of 2014 the
Company incurred pre-tax charges of approximately $0.7 million for severance
benefits and other related expenses, including a non-cash expense of
approximately $0.3 million to reflect accelerated vesting of previously
awarded stock options and stock grants under the terms of the executive's
separation agreement.During the first quarter of 2013, the Company incurred
separation expense of approximately $2.7 million upon the resignation of two
executives.

In addition, as previously disclosed in prior year periods, the Company has
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.These two matters were settled in 2012, however, the Company received a
recovery of funds from insurance coverage on these matters during the first
quarter of 2013 and has been included in the table below during the prior year
periods.

As a result of these events, the operations as presented in the accompanying
financial statements for the three months and six months ended June 30, 2014
and 2013 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 (Loss)           EPS
                        Three months ended June 30, Three months ended June
                                                     30,
                        2014            2013        2014          2013
Amount before special    $ 9,461        $ 8,094    $ 0.56       $ 0.48
items
Asset impairments        (2,000)        --        (0.12)       --
Restructuring costs      (11,664)       --        (0.69)       --
Legal and other fees     (92)           45         (0.01)       --
Separation payments      (664)          (48)       (0.04)       --
Tax impact               774            1          0.05         --
Amount per consolidated  $(4,185)       $ 8,092    $ (0.25)     $ 0.48
statement of operations
                                                               
                        UNAUDITED
                        Net Income (Loss)           EPS
                        Six months ended June 30,   Six months ended June 30,
                        2014            2013        2014          2013
Amount before special    $ 2,151        $ 1,303    $ 0.13       $ 0.08
items
Asset impairments        (2,000)        --        (0.12)       --
Restructuring costs      (11,772)       --        (0.70)       --
Legal and other fees     (273)          593        (0.02)       0.03
Separation payments      (664)          (2,786)    (0.05)       (0.16)
Tax impact               822            923        0.05         0.05
Amount per consolidated  $ (11,736)     $ 33       $ (0.71)     $ --
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 June 30, 2014 and 2013, and
December 31, 2013 (in thousands):

                                             UNAUDITED
                                             June 30,            December 31,
                                             2014      2013      2013
                                                               
Cash, cash equivalents and short-term         $ 57,500 $ 55,852 $ 45,647
available-for-sale securities
Prepaid program cost and expenses             17,918   26,354   7,069
Less: Participants' deposits                  (42,865) (49,458) (26,362)
Less: Accounts payable / accruals / other     (7,248)  (6,745)  (3,706)
liabilities
Deployable cash                               $ 25,305 $ 26,003 $ 22,648

CONTACT: Investor Relations:
         Lisa Netz
         Ambassadors Group, Inc.
         (509) 568-7800

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