Delaware
|
No. 0-33347
|
91-1957010
|
(State or Other Jurisdiction of Incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 8.01 | Other Events. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit 99.1: | Press Release, dated August 14, 2015 |
|
AMBASSADORS GROUP, INC.
|
||
|
|
|
|
Date August 14, 2015
|
By:
|
||
|
|
/s/
|
Philip B. Livingston
|
|
|
|
Philip B. Livingston
|
|
|
|
Chief Executive Officer(Principal Executive Officer)
|
Exhibit
|
|||
Number
|
Description
|
||
Press Release, dated August 14, 2015
|
· | Approximately $1.3 million to $2.4 million in severance costs, including $0.3 million in non-cash charges for the acceleration of equity awards under the terms of existing separation agreements; |
· | Non-cash charge of approximately $2.0 million in property and equipment and other asset write-downs; |
· | Estimated $0.6 million to $1.3 million in various contract termination fees, ongoing maintenance expenditures, and facility and business closure expenses; and |
· | Approximately $0.4 million to $0.8 million in estimated legal and other professional fees including estimated ongoing insurance costs. |
· | Gross revenue from continuing operations of $47.2 million during the first six months of 2015 compared to $57.4 million in the prior year period, a 17.7 percent decline year-over-year. The Company traveled 7,256 delegates compared to 8,903 delegates during the first six months of 2014. |
· | For the first six months of 2015, net income was $6.6 million compared to a net loss of $11.7 million during the comparable period. Before special items, net income of $6.6 million during the current period improved by $4.9 million compared to net income of $1.7 million reported during the first six months of 2014. During the first six months of 2014, the Company recorded $13.4 million in special items net of tax, including the results of discontinued operations. |
· | Operating expenses for the current six-month period were $11.4 million, down 36 percent from $17.8 million from continuing operations in the prior year period before special items. |
· | Cash, cash equivalents, and available for sale securities totaled $70.9 million at June 30, 2015 compared to $57.5 million on June 30, 2014, a $13.4 million increase year-over-year. Deployable cash, as defined herein, totaled $45.2 million compared to $25.3 million in the prior year period. |
|
UNAUDITED
|
|||||||||||||||
|
Quarter ended June 30,
|
Six months ended June 30,
|
||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
Gross revenue, all travel programs
|
$
|
46,798
|
$
|
56,805
|
$
|
47,188
|
$
|
57,365
|
||||||||
Gross margin, all travel programs
|
17,655
|
18,869
|
17,797
|
19,049
|
||||||||||||
Operating expense from continuing operations
|
4,538
|
12,565
|
11,384
|
22,267
|
||||||||||||
Operating expense from continuing operations before special items
|
4,538
|
8,378
|
11,384
|
17,791
|
||||||||||||
Income (loss) from continuing operations
|
13,214
|
4,635
|
6,602
|
(3,196
|
)
|
|||||||||||
Income from continuing operations before special items
|
13,214
|
8,822
|
6,602
|
1,280
|
||||||||||||
Loss from discontinued operations, net of tax
|
-
|
(8,820
|
)
|
-
|
(8,540
|
)
|
||||||||||
Net income (loss)
|
13,214
|
(4,185
|
)
|
6,602
|
(11,736
|
)
|
||||||||||
Net income before special items
|
13,214
|
7,644
|
6,602
|
1,675
|
||||||||||||
Net income (loss) per diluted share
|
0.76
|
(0.25
|
)
|
0.38
|
(0.70
|
)
|
||||||||||
Net income per diluted share before special items
|
0.76
|
0.45
|
0.38
|
0.10
|
|
UNAUDITED
Six months ended June 30,
|
|||||||
|
2015
|
2014
|
||||||
Net cash provided by operating activities
|
$
|
9,819
|
$
|
12,988
|
||||
Purchases of property, equipment and intangibles
|
(488
|
)
|
(1,098
|
)
|
||||
Free cash flow
|
9,331
|
11,890
|
||||||
|
||||||||
Net purchase of available-for-sale securities
|
(4,783
|
)
|
(10,656
|
)
|
||||
Repurchase of common stock
|
(51
|
)
|
(186
|
)
|
||||
Other cash flows, net
|
430
|
(109
|
)
|
|||||
Net increase in cash and cash equivalents
|
$
|
4,927
|
$
|
939
|
UNAUDITED
|
||||||||
Quarter ended June 30,
|
||||||||
2015
|
2014
|
|||||||
Net revenue, non-directly delivered programs (1)
|
$
|
16,525
|
$
|
18,092
|
||||
Gross revenue, directly delivered programs (2)
|
2,956
|
3,565
|
||||||
Total revenue
|
19,481
|
21,657
|
||||||
Cost of sales, directly delivered programs (2)
|
1,826
|
2,234
|
||||||
Cost of sales, program merchandise markdown
|
-
|
554
|
||||||
Gross margin (3)
|
17,655
|
18,869
|
||||||
Operating expenses:
|
||||||||
Selling and marketing
|
3,064
|
5,827
|
||||||
General and administration
|
1,429
|
3,307
|
||||||
Restructuring costs
|
-
|
1,431
|
||||||
Asset impairments
|
45
|
2,000
|
||||||
Total operating expenses
|
4,538
|
12,565
|
||||||
Operating income
|
13,117
|
6,304
|
||||||
Other income (expense):
|
||||||||
Interest and dividend income
|
157
|
141
|
||||||
Foreign currency and other income (expense)
|
(60
|
)
|
5
|
|||||
Total other income (expense)
|
97
|
146
|
||||||
Income before income tax provision
|
13,214
|
6,450
|
||||||
Income tax provision
|
-
|
(1,815
|
)
|
|||||
Income from continuing operations
|
13,214
|
4,635
|
||||||
Discontinued operations:
|
||||||||
Loss from discontinued segment
|
-
|
(9,830
|
)
|
|||||
Income tax benefit
|
-
|
1,010
|
||||||
Net loss from discontinued operations
|
-
|
(8,820
|
)
|
|||||
Net Income (Loss)
|
$
|
13,214
|
$
|
(4,185
|
)
|
|||
Weighted average shares outstanding – basic
|
17,298
|
17,047
|
||||||
Weighted average shares outstanding – diluted
|
17,377
|
17,159
|
||||||
Discontinued operations weighted average shares outstanding - basic and diluted
|
n/a
|
16,823
|
||||||
Income from continuing operations per share — basic
|
$
|
0.76
|
$
|
0.27
|
||||
Income from continuing operations per share — diluted
|
$
|
0.76
|
$
|
0.27
|
||||
Loss from discontinued segment per share — basic and diluted
|
$
|
-
|
$
|
(0.52
|
)
|
|||
Total net income (loss) per share - basic and diluted
|
$
|
0.76
|
$
|
(0.25
|
)
|
(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,
|
||||||||||||
|
2015
|
2014
|
% Change
|
|||||||||
Gross revenue
|
$
|
43,842
|
$
|
53,240
|
-18
|
%
|
||||||
Cost of sales
|
27,317
|
35,148
|
-22
|
%
|
||||||||
Net revenue
|
$
|
16,525
|
$
|
18,092
|
-9
|
%
|
(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 and gross revenue directly delivered programs less cost of sales non-directly delivered programs and costs of sales directly delivered programs. Gross margin percentage is calculated as gross margin divided by the sum of gross revenue non-directly delivered programs and gross revenue directly delivered programs. |
UNAUDITED
|
||||||||
Six months ended June 30,
|
||||||||
2015
|
2014
|
|||||||
Net revenue, non-directly delivered programs (1)
|
$
|
16,619
|
$
|
18,208
|
||||
Gross revenue, directly delivered programs (2)
|
3,132
|
3,838
|
||||||
Total revenue
|
19,751
|
22,046
|
||||||
Cost of sales, directly delivered programs (2)
|
1,954
|
2,443
|
||||||
Cost of sales, program merchandise markdown
|
-
|
554
|
||||||
Gross margin (3)
|
17,797
|
19,049
|
||||||
Operating expenses:
|
||||||||
Selling and marketing
|
7,593
|
12,500
|
||||||
General and administration
|
3,746
|
6,228
|
||||||
Restructuring costs
|
-
|
1,539
|
||||||
Asset impairments
|
45
|
2,000
|
||||||
Total operating expenses
|
11,384
|
22,267
|
||||||
Operating income (loss)
|
6,413
|
(3,218
|
)
|
|||||
Other income (expense):
|
||||||||
Interest and dividend income
|
286
|
273
|
||||||
Foreign currency and other income (expense)
|
(97
|
)
|
8
|
|||||
Total other income (expense)
|
189
|
281
|
||||||
Income (loss) before income tax provision
|
6,602
|
(2,937
|
)
|
|||||
Income tax provision
|
-
|
(259
|
)
|
|||||
Income (loss) from continuing operations
|
6,602
|
(3,196
|
)
|
|||||
Discontinued operations:
|
||||||||
Loss from discontinued segment
|
-
|
(9,494
|
)
|
|||||
Income tax benefit
|
-
|
954
|
||||||
Net loss from discontinued operations
|
-
|
(8,540
|
)
|
|||||
Net Income (Loss)
|
$
|
6,602
|
$
|
(11,736
|
)
|
|||
Weighted average shares outstanding – basic
|
17,291
|
16,789
|
||||||
Weighted average shares outstanding – diluted
|
17,423
|
16,789
|
||||||
Income (loss) from continuing operations per share — basic and diluted
|
$
|
0.38
|
$
|
(0.19
|
)
|
|||
Loss from discontinued segment per share — basic and diluted
|
$
|
-
|
$
|
(0.51
|
)
|
|||
Total net income (loss) per share - basic and diluted
|
$
|
0.38
|
$
|
(0.70
|
)
|
(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,
|
||||||||||||
|
2015
|
2014
|
% Change
|
|||||||||
Gross revenue
|
$
|
44,056
|
$
|
53,527
|
-18
|
%
|
||||||
Cost of sales
|
27,437
|
35,319
|
-22
|
%
|
||||||||
Net revenue
|
$
|
16,619
|
$
|
18,208
|
-9
|
%
|
(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 and gross revenue directly delivered programs less cost of sales non-directly delivered programs and costs of sales directly delivered programs. Gross margin percentage is calculated as gross margin divided by the sum of gross revenue non-directly delivered programs and gross revenue directly delivered programs. |
UNAUDITED
|
AUDITED
|
|||||||||||
June 30,
|
December 31,
|
|||||||||||
2015
|
2014
|
2014
|
||||||||||
Assets
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
$
|
6,929
|
$
|
10,412
|
$
|
2,002
|
||||||
Restricted cash
|
-
|
-
|
400
|
|||||||||
Available-for-sale securities
|
63,962
|
47,088
|
59,502
|
|||||||||
Foreign currency exchange contracts
|
2
|
60
|
-
|
|||||||||
Prepaid program cost and expenses
|
12,203
|
17,918
|
1,335
|
|||||||||
Accounts receivable
|
405
|
1,421
|
666
|
|||||||||
Total current assets
|
83,501
|
76,899
|
63,905
|
|||||||||
Property and equipment, net
|
1,442
|
14,633
|
2,429
|
|||||||||
Available-for-sale securities
|
-
|
729
|
-
|
|||||||||
Intangibles
|
-
|
3,462
|
-
|
|||||||||
Goodwill
|
70
|
70
|
70
|
|||||||||
Other long-term assets
|
37
|
85
|
81
|
|||||||||
Total assets
|
$
|
85,050
|
$
|
95,878
|
$
|
66,485
|
||||||
Liabilities and Stockholders’ Equity
|
||||||||||||
Current liabilities:
|
||||||||||||
Accounts payable and accrued expenses
|
$
|
4,431
|
$
|
7,145
|
$
|
2,794
|
||||||
Participants’ deposits
|
33,219
|
41,043
|
23,161
|
|||||||||
Foreign currency exchange contracts
|
326
|
-
|
1,345
|
|||||||||
Deferred tax liabilities
|
17
|
77
|
18
|
|||||||||
Other liabilities
|
187
|
103
|
1
|
|||||||||
Total current liabilities
|
38,180
|
48,368
|
27,319
|
|||||||||
Participants’ deposits
|
87
|
1,822
|
-
|
|||||||||
Deferred tax liabilities
|
6
|
19
|
6
|
|||||||||
Total liabilities
|
38,273
|
50,209
|
27,325
|
|||||||||
Stockholders’ equity
|
46,777
|
45,669
|
39,160
|
|||||||||
Total liabilities and stockholders’ equity
|
$
|
85,050
|
$
|
95,878
|
$
|
66,485
|
UNAUDITED
|
||||||||
June 30,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
6,602
|
$
|
(11,736
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
1,100
|
2,977
|
||||||
Stock-based compensation
|
466
|
1,168
|
||||||
Deferred income tax benefit
|
-
|
(805
|
)
|
|||||
Gain on foreign currency exchange contracts
|
(99
|
)
|
-
|
|||||
Loss on disposition and impairment of property and equipment, other assets
|
390
|
2,000
|
||||||
Loss on impairment of goodwill
|
-
|
9,711
|
||||||
Program merchandise writedown
|
-
|
554
|
||||||
Excess tax shortfall from stock-based compensation
|
-
|
109
|
||||||
Change in assets and liabilities:
|
||||||||
Accounts receivable and other assets
|
261
|
368
|
||||||
Prepaid program costs and expenses
|
(10,868
|
)
|
(11,403
|
)
|
||||
Accounts payable, accrued expenses, and other current liabilities
|
1,822
|
3,542
|
||||||
Participants’ deposits
|
10,145
|
16,503
|
||||||
Net cash provided by operating activities
|
9,819
|
12,988
|
||||||
Cash flows from investing activities:
|
||||||||
Purchase of available-for-sale securities
|
(14,783
|
)
|
(24,517
|
)
|
||||
Proceeds from sale of available-for-sale securities
|
10,000
|
13,861
|
||||||
Purchase of property and equipment
|
(488
|
)
|
(952
|
)
|
||||
Proceeds from sale of property and equipment
|
30
|
-
|
||||||
Purchase of intangibles
|
-
|
(146
|
)
|
|||||
Proceeds from the sale of BookRags
|
400
|
-
|
||||||
Net cash used in investing activities
|
(4,841
|
)
|
(11,754
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repurchase of common stock
|
(51
|
)
|
(186
|
)
|
||||
Excess tax shortfall from stock-based compensation
|
-
|
(109
|
)
|
|||||
Net cash used in financing activities
|
(51
|
)
|
(295
|
)
|
||||
Net increase in cash and cash equivalents
|
4,927
|
939
|
||||||
Cash and cash equivalents, beginning of period
|
2,002
|
9,473
|
||||||
Cash and cash equivalents, end of period
|
$
|
6,929
|
$
|
10,412
|
`
|
UNAUDITED
|
|||||||||||||||
|
Net Income (Loss)
|
EPS
|
||||||||||||||
|
Three months ended June 30,
|
Three months ended June 30,
|
||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
Amount before special items
|
$
|
13,214
|
$
|
7,644
|
$
|
0.76
|
$
|
0.45
|
||||||||
Discontinued operations, net of tax
|
-
|
(8,820
|
)
|
-
|
(0.52
|
)
|
||||||||||
Asset impairments
|
-
|
(2,000
|
)
|
-
|
(0.12
|
)
|
||||||||||
Restructuring costs
|
-
|
(1,431
|
)
|
-
|
(0.08
|
)
|
||||||||||
Legal and other fees
|
-
|
(92
|
)
|
-
|
(0.01
|
)
|
||||||||||
Separation payments
|
-
|
(664
|
)
|
-
|
(0.04
|
)
|
||||||||||
Tax impact
|
-
|
1,178
|
-
|
0.07
|
||||||||||||
Amount per consolidated statement of operations
|
$
|
13,214
|
$
|
(4,185
|
)
|
$
|
0.76
|
$
|
(0.25
|
)
|
|
UNAUDITED
|
|||||||||||||||
|
Net Income (Loss)
|
EPS
|
||||||||||||||
|
Six months ended June 30,
|
Six months ended June 30,
|
||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
Amount before special items
|
$
|
6,602
|
$
|
1,675
|
$
|
0.38
|
$
|
0.10
|
||||||||
Discontinued operations, net of tax
|
-
|
(8,540
|
)
|
-
|
(0.51
|
)
|
||||||||||
Asset impairments
|
-
|
(2,000
|
)
|
-
|
(0.12
|
)
|
||||||||||
Restructuring costs
|
-
|
(1,539
|
)
|
-
|
(0.09
|
)
|
||||||||||
Legal and other fees
|
-
|
(273
|
)
|
-
|
(0.02
|
)
|
||||||||||
Separation payments
|
-
|
(664
|
)
|
-
|
(0.04
|
)
|
||||||||||
Tax impact
|
-
|
(395
|
)
|
-
|
(0.02
|
)
|
||||||||||
Amount per consolidated statement of operations
|
$
|
6,602
|
$
|
(11,736
|
)
|
$
|
0.38
|
$
|
(0.70
|
)
|
|
UNAUDITED
|
UNAUDITED
|
||||||||||
|
June 30,
|
July 31,
|
||||||||||
|
2015
|
2014
|
2015
|
|||||||||
Cash, cash equivalents and short-term available-for-sale securities
|
$
|
70,891
|
$
|
57,500
|
$
|
61,601
|
||||||
Prepaid program cost and expenses
|
12,203
|
17,918
|
431
|
|||||||||
Less: Participants’ deposits
|
(33,306
|
)
|
(42,865
|
)
|
(1,697
|
)
|
||||||
Less: Accounts payable / accruals / other liabilities
|
(4,618
|
)
|
(7,248
|
)
|
(5,908
|
)
|
||||||
Deployable cash
|
$
|
45,170
|
$
|
25,305
|
$
|
54,427
|