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Ambassadors Group, Inc. Reports First Quarter 2013 Results

Outlook for 2013

As of April 28, 2013, enrolled revenue for 2013 travel programs was $113.1 million, down 19.4 percent from the same point last year, based on enrolled travelers of 18,911 compared to 22,537. Enrolled revenue for the Company's core product, Student Ambassadors, is down 21.5 percent to $100.6 million compared to $128.3 million at the same date last year, based on enrolled travelers of 14,637 compared to 18,627

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net enrollments consist of all participants who have enrolled in the Company's programs less those that have already withdrawn, including travel that has been completed.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 adjusting its guidance for 2013 previously provided on February 6, 2013 as follows:
  • Consolidated gross revenues for all programs and operations to be between $115 million and $125 million;  
  • Consolidated gross margin as a percentage of gross revenue for all programs and operations of 36 percent to 37 percent; and   
  • Net income before any special items of between $0 million and $2 million.

Conference Call and Webcast Information

The Company will host a conference call to discuss first quarter 2013 results of operations on Thursday, May 2, 2013, at 11:30 a.m. Eastern Time (8:30 a.m. Pacific Time).  Participants can access the call via the internet at www.ambassadorsgroup.com/EPAX. The call can also be accessed by dialing 888-264-8931 or 913-312-0686 (international) and providing the passcode: 7010368. Approximately 24 hours following the call, a webcast will be available through August 2, 2013 at www.ambassadorsgroup.com/EPAX. A replay of the call will also be available through May 7, 2013 and can be accessed by dialing 888-203-1112 or 719-457-0820 (international) and providing the pass code: 7010368.  

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 9, 2012.
 
 
AMBASSADORS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
         
  UNAUDITED
  Quarter ended March 31,
   2013  2012  $ Change % Change
Net revenue, non-directly delivered programs (1)  $ --   $ 89  $ (89) -100%
Gross revenue, directly delivered programs (2)  1,894  1,178  716 61%
Internet content and advertising revenue  999  1,198  (199) -17%
Total revenue  2,893  2,465  428 17%
Cost of sales, directly delivered programs (2)  1,372  886  486 55%
Cost of sales, internet content and advertising  129  170  (41) -24%
Gross margin (3)  1,392  1,409  (17) -1%
         
Operating expenses:        
 Selling and marketing   8,519  8,687  (168) -2%
 General and administration  5,666  4,207  1,459 35%
Total operating expenses  14,185  12,894  1,291 10%
         
Operating loss  (12,793)  (11,485)  (1,308) 11%
         
Other income:        
 Interest and dividend income  127  241  (114) -47%
 Foreign currency expense and other  20  2  18 900%
Total other income  147  243  (96) -40%
Loss before income tax benefit  (12,646)  (11,242)  (1,404) -12%
Income tax benefit  4,587  3,336  1,251 38%
Net loss  $ (8,059)  $ (7,906)  $ (153) -2%
         
Weighted average shares outstanding – basic  17,001  17,576  (575) -3%
Weighted average shares outstanding – diluted  17,001  17,576  (575) -3%
         
Net loss per share — basic   $ (0.47)  $ (0.45)  $ (0.02) -4%
Net loss per share — diluted  $ (0.47)  $ (0.45)  $ (0.02) -4%

(1) Net revenue, non-directly delivered programs consists of gross revenue, less program pass-through expenses for non-directly delivered programs because we primarily engage third-party operators to perform these services.
  UNAUDITED
  Quarter ended March 31,
  2013 2012   % Change
Gross revenue  $ --   $ 310   -100%
Cost of sales  --   221   -100%
Net revenue  $ --   $ 89   -100%

(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.

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