2012 gross margin was $51.4 million, down from $59.0 million in 2011. Gross margin percentage decreased to 36.7 percent from 38.1 percent last year primarily due to higher air and land costs year-over-year.

Total operating expenses for 2012 decreased $5.9 million, or 10 percent, compared to 2011, as a result of the Company's cost cutting initiatives.

Balance Sheet and Liquidity

Total assets at December 31, 2012 were $97.9 million, including $38.3 million in cash, cash equivalents and short-term available-for-sale securities. Long-term assets totaled $40.5 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 $32.8 million, including $25.7 million in participant deposits for future travel. The Company has no debt outstanding with deployable cash of $25.4 million at December 31, 2012. Deployable cash is a non-GAAP measure defined in the attached schedules.

The Company paid a special cash dividend of $0.50 per share on November 22, 2012 and a regular quarterly dividend of $0.06 per share on December 6, 2012. 

During the fourth quarter of 2012, the Company repurchased 650,121 shares for approximately $3.1 million including brokerage fees. At December 31, 2012, the Company had 17,047,470 shares of common stock issued and outstanding. Approximately $13.1 million remains available for repurchase under the Company's plan.

The following table summarizes the cash flows as further disclosed in the accompanying financial statements. Free cash flow, a non-GAAP measure, which is defined as cash flow from operations less purchase of property, equipment and intangibles, is also noted (in thousands):
  UNAUDITED
  Twelve months ended December 31,   
  2012 2011  
Cash flow from operations   $ 2,219  $ (6,655)  
Purchases of property, equipment and intangibles  (5,672)  (3,594)  
Free cash flow  (3,453)  (10,249)  
       
Net proceeds from available-for-sale securities  6,499  34,342  
Dividend payments to shareholders   (13,012)  (4,258)  
Repurchase of common stock  (3,056)  (7,590)  
Other cash flows, net  (347)  436  
Net change in cash and cash equivalents  $ (13,369)  $ 12,681  

The change in cash flow from operations between periods, and in turn free cash flow, was driven primarily by the timing of recurring prepaid program costs and expenses relative to 2011. Purchases of property and equipment increased as we focused on sales and marketing systems and website improvements.

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