10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2012

OR

o TRANSITION report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________to _____________.

Commission file number 0-33347

Ambassadors Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization) 91-1957010 (I.R.S. Employer Identification No.)

Dwight D. Eisenhower Building 2001 South Flint Road Spokane, WA (Address of Principal Executive Offices) 99224 (Zip Code)

Registrant’s Telephone Number, Including Area Code: (509) 568 -7800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes

o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

þ Yes

o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

o Large accelerated  filer

þ Accelerated filer

o Non-accelerated filer (Do not check if a smaller reporting company)

o Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes

þ No

The number of shares outstanding of the registrant’s Common Stock, $0.01 par value, as of July 27, 2012 was 17,604,307.

AMBASSADORS GROUP, INC.

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets	1
Consolidated Statements of Operations	2
Consolidated Statements of Comprehensive Income	3
Consolidated Statements of Cash Flows	4
Notes to Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	24
Item 1A. Risk Factors	24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 6. Exhibits	24
SIGNATURES	25
EXHIBIT INDEX

PART I

FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of June 30, 2012 and December 31, 2011

(in thousands, except share and per share data)

	UNAUDITED			AUDITED
	June 30,			December 31,
	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	3,062		$	19,519
Available-for-sale securities and other		78,875			39,128
Prepaid program costs and expenses		24,825			13,299
Accounts receivable		1,556			1,395
Deferred tax assets		301			668
Total current assets		108,619			74,009
Property and equipment, net		27,297			26,104
Available-for-sale securities		714			700
Intangibles		3,505			3,421
Goodwill		9,781			9,781
Other long-term assets		85			85
Total assets	$	150,001		$	114,100
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	$	10,662		$	5,858
Participants’ deposits		53,508			27,396
Foreign currency exchange contracts		584			1,671
Other liabilities		97			112
Total current liabilities		64,851			35,037
Participants’ deposits		819			-
Foreign currency exchange contracts		50			102
Deferred tax liability		1,941			2,004
Total liabilities		67,661			37,143
Commitments and Contingencies (Note 9)
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued and outstanding		-			-
Common stock, $.01 par value; 50,000,000 shares authorized; 17,606,409 and 17,588,088 shares issued and outstanding, respectively		172			172
Additional paid-in capital		802			314
Retained earnings		81,671			77,489
Accumulated other comprehensive loss		(305	)		(1,018	)
Stockholders’ equity		82,340			76,957
Total liabilities and stockholders’ equity	$	150,001		$	114,100

The accompanying notes are an integral part of the consolidated financial statements.

-1-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the three and six months ended June 30, 2012 and 2011

(in thousands, except per-share amounts)

	Six months ended						Three months ended
	June 30,						June 30,
	2012			2011			2012			2011
Net revenue, non-directly delivered programs	$	27,843		$	30,580		$	27,754		$	30,615
Gross revenue, directly delivered programs		4,225			5,221			3,047			4,527
Gross revenue, internet and advertising		2,203			1,917			1,005			914
Total revenue		34,271			37,718			31,806			36,056
Cost of sales, directly delivered programs		2,899			3,565			2,013			3,079
Cost of sales, internet and advertising		303			262			133			129
Gross margin		31,069			33,891			29,660			32,848
Operating expenses:
Selling and marketing		15,170			19,534			6,483			9,439
General and administrative		8,591			8,503			4,384			4,120
Total operating expenses		23,761			28,037			10,867			13,559
Operating income		7,308			5,854			18,793			19,289
Other income (expense):
Interest and dividend income		859			751			618			416
Foreign currency and other income (expense)		(3	)		171			(5	)		(10	)
Total other income		856			922			613			406
Income before income tax provision		8,164			6,776			19,406			19,695
Income tax provision		(1,872	)		(2,074	)		(5,208	)		(6,264	)
Net income	$	6,292		$	4,702		$	14,198		$	13,431
Weighted-average common shares outstanding - basic		17,600			17,841			17,602			17,672
Weighted-average common shares outstanding - diluted		17,600			18,010			17,602			17,824
Net income per share - basic	$	0.36		$	0.26		$	0.81		$	0.76
Net income per share - diluted	$	0.36		$	0.26		$	0.81		$	0.75

The accompanying notes are an integral part of the consolidated financial statements.

-2-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the three and six months ended June 30, 2012 and 2011

(in thousands)

	Six months ended June 30,						Three months ended June 30,
	2012			2011			2012			2011
Net income		6,292			4,702			14,198			13,431
Unrealized gain (loss) on foreign currency exchange contracts, net of income tax benefit (provision) of ($399), $95, $75, $536		740			(177	)		(192	)		(996	)
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (provision) of  $14, ($165), $70, ($183)		(27	)		306			(135	)		339
Comprehensive income	$	7,005		$	4,831		$	13,871		$	12,774

The accompanying notes are an integral part of the consolidated financial statements.

-3-

 AMBASSADORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the six months ended June 30, 2012 and 2011

(dollars in thousands)

	2012			2011
Cash flows from operating activities:
Net income	$	6,292		$	4,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,412			2,364
Stock-based compensation		720			938
Deferred income tax benefit		(80	)		(582	)
Gain on foreign currency exchange contracts		-			(20	)
Loss on disposition and impairment of property and equipment		-			66
Excess tax benefit (shortfall) from stock-based compensation		232			(15	)
Change in assets and liabilities:
Accounts receivable and other assets		(161	)		714
Prepaid program costs and expenses		(11,526	)		(20,585	)
Accounts payable, accrued expenses, and other current liabilities		3,865			4,792
Participants’ deposits		26,931			27,321
Net cash provided by operating activities		28,685			19,695
Cash flows from investing activities:
Purchase of available-for-sale securities		(69,537	)		(47,881	)
Proceeds from sale of available-for-sale securities		29,734			37,142
Purchase of property and equipment		(2,704	)		(1,895	)
Proceeds from sale of property and equipment		-			19
Purchase of intangibles		(293	)		(213	)
Net cash used in investing activities		(42,800	)		(12,828	)
Cash flows from financing activities:
Repurchase of Common Stock		-			(6,091	)
Dividend payment to shareholders		(2,110	)		(2,143	)
Proceeds from exercise of stock options		-			131
Excess tax shortfall (benefit) from stock-based compensation		(232	)		15
Net cash used in financing activities		(2,342	)		(8,088	7)
Net decrease in cash and cash equivalents		(16,457	)		(1,221	)
Cash and cash equivalents, beginning of period		19,519			6,838
Cash and cash equivalents, end of period	$	3,062		$	5,617

The accompanying notes are an integral part of the consolidated financial statements.

 

-4-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company

Ambassadors Group, Inc. (the “Company”, “we”, “us” or “our”) is a socially conscious educational company primarily engaged in organizing and promoting differentiated worldwide travel programs for students and professionals.  In addition, we operate an education oriented research website called BookRags that provides study guides, lesson plans and other educational resources to students and teachers.  These consolidated financial statements include the accounts of Ambassadors Group, Inc., and our wholly owned subsidiaries, Ambassador Programs, Inc., BookRags, Inc., World Adventures Unlimited, Inc., Ambassadors Unlimited, LLC, AGI Hong Kong Limited, Beijing People to People Education Consultation Co., Ltd, and Marketing Production Systems, LLC. All significant intercompany accounts and transactions, which are of a normal recurring nature, are eliminated in consolidation.

Our operations are organized in two reporting segments, 1) “Ambassador Programs and Other,” which provides educational travel services to students and professionals through multiple itineraries within five travel program types and corporate overhead, and 2) “BookRags,” which provides online research capabilities through book summaries, critical essays, online study guides, lesson plans, biographies, and references to encyclopedia articles.

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being materially misleading. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2012 are not indicative of the results that may be expected for the year ending December 31, 2012.

For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011.

3. Investments and Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market, and we consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance.

Our financial instruments are measured and recorded at fair value. Our non-financial assets, including property and equipment, intangible assets and goodwill, are measured at fair value upon acquisition, reviewed annually, and are fully assessed if there is an indicator of impairment. An adjustment would be made to record non-financial assets at fair value only when an impairment charge is recognized.

-5-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Fair value is determined for assets and liabilities using a three-tiered hierarchy, based upon significant levels of inputs as follows:

-   Level 1 – Quoted prices in active markets for identical assets or liabilities.

-   Level 2 – Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

-   Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following tables summarize the composition of our investments at June 30, 2012 and December 31, 2011 (in thousands):

								Classification on Balance Sheet
June 30, 2012	Amortized Cost		Unrealized Gains (Losses)			Aggregate Fair Value		Cash and cash equivalents		Short-term available-for-sale securities			Long-term available-for-sale securities
Auction rate securities (“ARS”), greater than one year	$	1,000	$	(286	)	$	714	$	-		$	-	$	714
Money market funds, ninety days or less		71		-			71		71			-		-
Municipal securities1
One year or less		48,989		26			49,015		-			49,015		-
After one year through three years		16,315		116			16,431		-			16,431		-
Greater than three years through five years		13,113		316			13,429		-			13,429		-
Total	$	79,488	$	172		$	79,660	$	71		$	78,875	$	714
								Classification on Balance Sheet
December 31, 2011	Amortized Cost		Unrealized Gains (Losses)			Aggregate Fair Value		Cash and cash equivalents		Short-term available-for-sale securities			Long-term available-for-sale securities
ARS, greater than one year	$	1,000	$	(300	)	$	700	$	-		$	-	$	700
Money market funds,  ninety days or less		14,503		-			14,503		14,503			-		-
Municipal securities1
One year or less		3,639		(1	)		3,638		-			3,638		-
After one year through three years		16,679		118			16,797		-			16,797		-
Greater than three years through five years		18,295		398			18,693		-			18,693		-
Total	$	54,116	$	215		$	54,331	$	14,503		$	39,128	$	700

1Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

-6-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table details the fair value measurements of assets and liabilities within the three levels of the fair value hierarchy at June 30, 2012 and December 31, 2011 (in thousands):

			Fair Value Measurements at Reporting Date Using
June 30, 2012	Fair Market Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs  (Level 3)
Financial assets:
ARS	$	714	$	-	$	-	$	714
Money market funds		71		71		-		-
Municipal securities1		78,875		78,875		-		-
Foreign currency exchange contracts		321		-		321		-
Total financial assets	$	79,980	$	78,946	$	321	$	714
Financial liabilities:
Foreign currency exchange contracts		955		-		955		-
Total financial liabilities	$	955	$	-	$	955	$	-
			Fair Value Measurements at Reporting Date Using
December 31, 2011	Fair Market Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Other Unobservable Inputs (Level 3)
Financial assets:
ARS	$	700	$	-	$	-	$	700
Money market funds		14,503		14,503		-		-
Municipal securities1		39,128		39,128		-		-
Foreign currency exchange contracts		115		-		115		-
Total financial assets	$	54,446	$	53,631	$	115	$	700
Financial liabilities:
Foreign currency exchange contracts		1,888		-		1,888		-
Total financial liabilities	$	1,888	$	-	$	1,888	$	-

1 At June 30, 2012, municipal securities consisted of a 56/38/6 percent split between holdings in short-term municipal security funds, municipal revenue bonds and municipal general obligation bonds, respectively. As part of our investment policy, during the first  quarter of 2012, we began investing in debt funds comprised of short-term municipal securities. At December 31, 2011, municipal securities consisted of an 83/17 split between municipal revenue bonds and municipal general obligation bonds, respectively, and no short-term municipal funds. In addition, the underlying credit rating of the municipal securities at June 30, 2012 and December 31, 2011 were A+, A1 or better as defined by S&P 500 and Moody’s, respectively.

Money market funds and municipal securities are classified as Level 1 assets because market prices are readily available for these investments. Level 2 financial assets and liabilities represent the fair value of our foreign currency exchange contracts that were valued using pricing models that take into account the contract terms, as well as multiple inputs where applicable, such as equity prices, interest rate yield curve, option volatility and currency rates. Level 3 financial assets represent the fair value of our auction-rate securities (“ARS”), which were valued using a pricing model that takes into account the average life of the underlying collateral, the rate of return, and the spread used for similar issuances.

-7-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Fair value measurements on a recurring basis using Level 3 inputs only consist of available-for-sale ARS.  The following table presents a reconciliation for the three and six months ended June 30, 2012 and 2011, of available-for-sale ARS measured at fair value on a recurring basis using Level 3 inputs (in thousands):

	Six months ended  June 30,				Three months ended  June 30,
	2012		2011		2012		2011
Beginning balance	$	700	$	1,250	$	703	$	1,249
Total realized / unrealized losses:
Included in earnings		-		-		-		-
Included in OCI		14		-		11		1
Purchases, sales, issuances, and settlements, net		-		-		-		-
Ending balance	$	714	$	1,250	$	714	$	1,250

The credit markets have experienced uncertainty, which may continue to impact the markets where our ARS would be offered. During the six months ended June 30, 2012, we experienced one failed ARS auction, representing principal of $1.0 million. This remaining ARS continues to be classified as a long-term asset due to the high probability that the ARS may fail in future auctions. The next scheduled auction for this ARS is March 7, 2013. We have determined that there is no other-than-temporary impairment on this security, since we do not intend and are not required to sell this security before we have recovered the amortized cost basis, there has been no further deterioration of the credit rating of this investment, interest payments at coupon rate continue to be received and we expect to recover the amortized cost basis of this security. We will continue to reassess liquidity in future reporting periods based on several factors, including the success or failure of future auctions, possible failure of the investment to be redeemed, deterioration of the credit rating of the investment, market risk and other factors.

In determining the fair value of bond and ARS investments, we consider the individual ratings of each holding. With regard to bonds, we consider the following: the underlying rating of the issuer irrespective of the insurance; the performance of the issuer; the term of the bond; and the quality of bond insurance provided by the rating of the bond insurer. With regard to valuation of our ARS, we consider the underlying credit quality of comparable student loan portfolios, the average life of the underlying student loan assets, and apply a discount related to the illiquidity of our ARS due to past failed auctions. Based on these inputs, we have applied a discount of 351-basis points to the London interbank offered rate resulting in a valuation of $0.7 million from a costs basis of $1.0 million as of June 30, 2012. At the reporting dates and in the future, we recognize that this investment is subject to general credit, liquidity, market and interest rate risks, which have been exacerbated by the current global financial environment. The fair value of this investment accordingly will continue to change, and we will continue to evaluate its carrying value.

-8-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes the balances of accumulated other comprehensive income (“AOCI”) and the gain (loss) recognized in other comprehensive income (“OCI”) related to unrealized gains and losses for available-for-sale securities in the periods indicated (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Available-for-sale securities
	2012			2011
Balance, January 1,	$	135			$	(177	)
Other comprehensive income (loss), net of income taxes		(27	)			306
Balance, June 30,	$	108			$	129

4. Derivative Financial Instruments

The majority of our travel programs take place outside of the United States and most foreign suppliers require payment in currency other than the U.S. dollar. Accordingly, we are exposed to foreign currency risk relative to changes in foreign currency exchange rates between those currencies and the U.S. dollar for our non-directly delivered programs. We use forward contracts that allow us to acquire the foreign currency at a fixed price for a specified point in time and to provide a hedge against foreign currency risk. All of our derivatives are cash flow hedges and at June 30, 2012, all contracts qualified for cash flow hedge accounting.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income or loss and reclassified into earnings in the same period during which the hedged transaction is recognized in earnings, which is primarily during the second and third quarters of the year when our student travel programs occur. Gains or losses representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

At June 30, 2012, the following forward contracts were outstanding (in thousands):

	Notional Amount		Matures
Forward contracts:
Euro		6,300	July 2012 - July 2013
British pound		3,220	July 2012 - June 2013
Canadian dollar		2,380	February 2013 - June 2013
Australian dollar		1,880	July 2012 - July 2013
New Zealand dollar		315	March 2013 - July 2013

-9-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The fair value of our forward contracts were as follows (in thousands):

	June 30, 2012
	Derivatives designated as hedging instruments				Derivatives not designated as hedging instruments				Total Net
	Assets		Liabilities		Assets		Liabilities		Liabilities
Forward contracts	$	321	$	955	$	-	$	-	$	634
	December 31, 2011
	Derivatives designated as hedging instruments				Derivatives not designated as hedging instruments				Total Net
	Assets		Liabilities		Assets		Liabilities		Liabilities
Forward contracts	$	115	$	1,888	$	-	$	-	$	1,773

The net liabilities and asset derivatives at June 30, 2012 and December 31, 2011 are reported in the consolidated balance sheet as current and long-term ‘foreign currency exchange contracts.’

The following table summarizes the balances of AOCI and the gain (loss) recognized in OCI for derivatives designated as hedging instruments (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Foreign currency exchange contracts
	2012			2011
Balance, January 1,	$	(1,153	)	$	1,210
Other comprehensive income (loss), net of income taxes		740			(177	)
Balance, June 30,	$	(413	)	$	1,033

Unrealized losses on forward contracts recorded in AOCI at June 30, 2012, which are expected to be realized in net revenue during the next 12 months, were approximately $0.4 million. This amount was computed using the fair value of the cash flow hedges at June 30, 2012, and may change before actual reclassification from AOCI.

For the three and six months ended June 30, 2012 and 2011, the amount of gains or losses recognized in the income statement for derivatives designated as hedging instruments were as follows (in thousands):

Location of gain (loss) reclassed from AOCI (effective portion)	Gain (loss) reclassed from AOCI  (effective portion)
	Three and six months ended June 30,
	2012		2011
Net revenue, non-directly delivered  programs	$	(607)	$	1,559

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AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the three and six months ended June 30, 2012 and 2011, the amount of gains or losses recognized in the income statement for derivatives not designated as hedging instruments were as follows (in thousands):

		Amount of Gain
Derivative not designated as nnhedging instruments	Location of Gain Recognized in Income on Derivative	Three and six months ended  June 30, 2012		Three and six months ended  June 30, 2011
Forward contracts	Foreign currency and other expense	$	2	$	183

5.   Stock-Based Compensation

Under our 2009 Equity Participation Plan we have outstanding options to purchase shares of our Common Stock and restricted stock awards held by eligible employees, non-employee directors and consultants as granted by the Compensation Committee of the Board of Directors.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the three and six months ended June 30, 2012 and 2011.

	Six months ended		Six months ended		Three months  ended		Three months  ended
	June 30, 2012		June 30, 2011		June 30, 2012		June 30, 2011
Expected dividend yield	4.39	%	2.16	%	4.72	%	2.17	%
Expected stock price volatility	60.85	%	62.01	%	60.61	%	63.60	%
Risk-free interest rate	1.79	%	1.95	%	1.89	%	1.89	%
Expected life of options	4.47	Years	5.27	Years	4.46	Years	4.75	Years
Estimated fair value per option granted	$1.89		$4.69		$1.83		$4.59

The dividend yield is based on expected quarterly cash dividends paid to our shareholders. Expected stock price volatility is based on historical volatility of our stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Additionally, an annualized forfeiture rate of 12.7 percent is used as a best estimate of future forfeitures based on our historical forfeiture experience. The stock-based compensation expense is adjusted in later periods if the actual forfeiture rate is different from the estimate.

Total stock-based compensation expense recognized in the consolidated statement of operations for the quarter ended June 30, 2012 was $0.4 million before income taxes. Of the total stock-based compensation expense during the quarter, stock option expense was $0.2 million, restricted stock award expense was $0.2 million, and the related total deferred tax benefit was $0.1 million. Total stock-based compensation expense recognized in the consolidated statement of operations for the six months ended June 30, 2012 was $0.7 million before income taxes. Of the total stock-based compensation expense recognized in 2012, stock option expense was $0.4 million, restricted stock award expense was $0.3 million, and the related total deferred tax benefit was $0.2 million.

-11-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents information about outstanding common stock options and restricted grants as of June 30, 2012:

		Options and Awards Outstanding				Options Exercisable
Range of Exercise Prices		Shares	Weighted- Average Remaining Contractual Life (years)	Weighted-Average  Exercise Price		Shares		Weighted- Average  Exercise Price
Restricted Stock Awards
	$0 .00	385,122	2.19		N/A	N/A			N/A
Stock Options
	$4.52 - 6.93	368,209	9.44	$	4.73	4,000	$		6.21
	6.94 - 10.39	283,699	4.98		9.15	213,685			9.29
	10.40 - 13.86	447,119	7.60		11.52	183,599			11.65
	13.87 - 17.32	279,734	3.89		16.90	279,734			16.90
	17.33 - 20.79	7,328	5.86		18.41	7,328			18.41
	20.80 - 24.25	1,000	3.12		21.09	1,000			21.09
	24.26 - 27.72	179,146	3.73		27.07	179,146			27.07
	27.73 - 31.18	6,937	4.30		29.48	6,937			29.48
	31.19 - 34.65	4,448	4.84		34.65	4,448			34.65
Total Stock Options		1,577,620	6.43	$	9.98	879,877	$		16.19
Combined		1,962,742	5.60	$	9.98	879,877	$		16.19

At June 30, 2012, the aggregate intrinsic value of outstanding stock options and restricted stock was $2.4 million, and the aggregate intrinsic value of exercisable stock options and restricted stock was zero based on our $5.44 closing stock price at June 30, 2012. As of June 30, 2012, total unrecognized stock-based compensation expense related to non-vested stock options and non-vested restricted stock awards was approximately $3.4 million, which is expected to be recognized over approximately 3.86 years. During the quarter ended June 30, 2012, there were no stock options exercised, and the total fair value of options which vested was $0.1 million.

The following table presents information about stock option and restricted stock activity during the six months ended June 30, 2012:
 

	Restricted  Stock Awarded	Weighted-Average Grant Date Fair  Value		Stock  Options	Weighted- Average  Exercise Price
Balance at December 31, 2011	374,957	$	8.82	1,962,321	$	11.56
Granted	43,120		5.12	116,620		5.12
Forfeited	(24,924)		9.22	(501,321)		7.39
Vested	(8,031)		9.34	N/A		N/A
Exercised	N/A		N/A	-		-
Balance at June 30, 2012	385,122	$	8.37	1,577,620	$	12.41

-12-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

6. Net Income and Dividends per Sharep

The following table presents a reconciliation of basic and diluted income per share computations (in thousands, except per share data and anti-dilutive stock option counts):

	Six months ended June 30,				Three months ended June 30,
	2012		2011		2012		2011
Numerator:
Net income	$	6,292	$	4,702	$	14,198	$	13,431
Denominator:
Weighted-average shares outstanding		17,215		17,513		17,217		17,344
Effect of unvested restricted stock awards      considered participating securities		385		328		385		328
Weighted-average shares outstanding – basic		17,600		17,841		17,602		17,672
Effect of dilutive common stock options		-		169		-		152
Weighted-average shares outstanding – diluted		17,600		18,010		17,602		17,824
Net income per share – basic	$	0.36	$	0.26	$	0.81	$	0.76
Net income per share – diluted	$	0.36	$	0.26	$	0.81	$	0.75
Cash dividends declared per share	$	0.12	$	0.12	$	0.06	$	0.06
Stock options excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive		1,402,714		1,105,954		1,253,287		1,201,527

7. Segment Reporting

Our operations are organized in two reporting segments, 1) “Ambassador Programs and Other,” which provides educational travel services to students and professionals through multiple itineraries within five travel program types and corporate overhead, and 2) “BookRags,” which provides online research capabilities through book summaries, critical essays, online study guides, lesson plans, biographies, and references to encyclopedia articles.

Ambassador Programs and Other’s gross margin is comprised of gross receipts less direct program costs, including accommodations, transportation, speakers, facilitators, and event costs. BookRags’ gross margin is comprised of content and subscription and advertising revenues via www.BookRags.com, less affiliate commissions and amortization of intangible assets directly associated with sales.

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AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Segment information for the three and six months ended June 30, 2012 and 2011 were as follows (in thousands):

	Six months ended June 30, 2012						Six months ended June 30, 2011
	Ambassador Programs and Other (1)						Ambassador Programs and Other (1)
			BookRags		Consolidated				BookRags		Consolidated
Total revenue	$	32,068	$	2,203	$	34,271	$	35,801	$	1,917	$	37,718
Gross margin	$	29,169	$	1,900	$	31,069	$	32,236	$	1,655	$	33,891
Depreciation and amortization	$	2,137	$	275	$	2,412	$	2,124	$	240	$	2,364
Operating income	$	6,489	$	819	$	7,308	$	5,219	$	635	$	5,854
Income tax provision	$	1,679	$	193	$	1,872	$	1,874	$	200	$	2,074
Net income	$	5,636	$	656	$	6,292	$	4,246	$	456	$	4,702
Total additions to property, plant, and equipment	$	3,283	$	113	$	3,396	$	1,767	$	128	$	1,895
Total additions to goodwill and intangible assets	$	-	$	293	$	293	$	-	$	213	$	213
Intangible assets, excluding goodwill	$	-	$	3,505	$	3,505	$	-	$	3,361	$	3,361
Total assets	$	132,802	$	17,199	$	150,001	$	142,278	$	15,438	$	157,716
	Three months ended June 30, 2012						Three months ended June 30, 2011
	Ambassador Programs and Other (1)						Ambassador Programs and Other (1)
			BookRags		Consolidated				BookRags		Consolidated
Total revenue	$	30,801	$	1,005	$	31,806	$	35,142	$	914	$	36,056
Gross margin	$	28,788	$	872	$	29,660	$	32,063	$	785	$	32,848
Depreciation and amortization	$	1,096	$	133	$	1,229	$	1,090	$	121	$	1,211
Operating income	$	18,451	$	342	$	18,793	$	19,032	$	257	$	19,289
Income tax provision	$	5,160	$	48	$	5,208	$	6,189	$	75	$	6,264
Net income	$	13,884	$	314	$	14,198	$	13,237	$	194	$	13,431

(1)   Ambassador Programs and Other include all travel programs offered by Ambassador Programs and World Adventures Unlimited as well as corporate overhead.

Any intercompany sales or services provided are eliminated upon consolidation.

8. Supplemental Disclosures of Consolidated Statements of Cash Flows

Our non-cash investing and financing activities during the six months ended June 30, 2012 and 2011 were as follows (in thousands):

	June 30, 2012		June 30, 2011
Unrealized gain (loss) on foreign currency exchange contracts	$	1,139	$	(276)
Unrealized gain (loss) on available-for-sale securities	$	(42)	$	471
Property and equipment	$	692	$	(106)

9.  Commitments and Contingencies

On July 14, 2009, a securities class action was filed against us and certain of our executive officers on behalf of all persons or entities who purchased our Common Stock between February 8, 2007 and October 23, 2007, in the United States District Court for the Eastern District of Washington. As previously disclosed by the Company in a Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on April 18, 2011, an agreement was reached to settle the securities class action. Under the terms of the settlement, our insurance carriers have paid the settlement amount of $7.5 million, in complete settlement of all claims, without any admission of wrongdoing or liability by the Company or any party in the action. Throughout the litigation, the Company and the individual defendants have denied, and continue to deny, the allegations made against them. The settlement agreement, which includes a release for all defendants and other provisions common in such agreements, was preliminarily approved by the Court on September 6, 2011. The Court held a hearing to consider final approval of the settlement, the plan of allocation, and the motion for the award of plaintiffs’ attorneys’ fees on November 30, 2011, but delayed ruling on these matters pending submission of additional materials by the lead plaintiff. The lead plaintiff submitted the requested additional materials on December 30, 2011, January 17, 2012, and March 19, 2012. On June 28, 2012, the Court entered a final order approving the settlement and related matters. As the settlement is covered and was funded by the Company’s insurance carrier, the settlement is not expected to have a material adverse effect on our business, financial condition or results of operations.

-14-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On October 27, 2009, we were informed by the SEC that it had issued a formal order of investigation with respect to trading in the Company’s securities. We believe that the investigation was for the period August through December 2007. The SEC indicated that the investigation should not be construed as an indication that any violation of law has occurred or as an adverse reflection upon any person, entity or security. The Company has been informed that the U.S. Department of Justice, which had been involved in the investigation, has closed its investigation and is not taking enforcement action against the Company or any of its officers, directors or employees.

Other than as disclosed herein, we are not a party to any other material pending legal proceedings other than ordinary routine litigation incidental to our business; the outcome of which we believe will not have a material adverse effect on our business, financial condition, cash flows or results of operations. These matters are subject to inherent uncertainties and management’s view of these matters may change in the future. Adverse outcomes in some or all of the matters described in this section may result in significant monetary damages or injunctive relief against us that would adversely affect our results of operations.

We are subject to the possibility of various loss contingencies, including claims, suits and complaints, arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted and whether new accruals are required.

Under our Bylaws, our directors and officers have certain rights to indemnification by us against certain liabilities that may arise by reason of their status or service as directors or officers. We maintain director and officer insurance, which covers certain liabilities arising from our obligation to indemnify our directors and officers and former directors in certain circumstances. No material indemnification liabilities were accrued at June 30, 2012.

10.  Recently Issued Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that provides a consistent definition of fair value and common requirements of and disclosure about fair value between GAAP and International Financial Reporting Standards. The guidance states the concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets. Enhanced disclosure requirements will require companies to disclose quantitative information about unobservable inputs used, a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements for recurring Level 3 fair value measurements. For assets and liabilities not recorded at fair value but where fair value is disclosed, companies must report the level in the fair value hierarchy of assets and liabilities. This new guidance became effective for interim and annual periods beginning January 1, 2012, which did not have a material impact on our consolidated financial statements.

-15-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” This update, effective for interim and annual reporting periods beginning after December 15, 2011, requires that the total of comprehensive income, the components of net income, and the components of other comprehensive income be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This update does not change what items are reported in other comprehensive income or the requirement to report reclassification of items from other comprehensive income to net income. Effective December 2011, the FASB issued ASU No. 2011-12, “Deferral of the Effective Date for Amendments to Presentation Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” which deferred the requirement to present separate line items on the income statement for reclassification adjustments of items out of accumulated other comprehensive income into net income. This deferral is temporary until the FASB reconsiders the operational concerns and needs of financial statement users. We adopted the new guidance as of March 31, 2012, and it did not have a material effect on our consolidated financial statements.

In September 2011, the FASB issued new accounting guidance regarding the performance of the two-step quantitative impairment testing of goodwill.  Under the guidance, companies would be allowed to assess on a qualitative basis whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount before performing quantitative tests. If after performing appropriate qualitative assessments the company determines the reporting unit’s fair value is more likely than not to exceed its carrying value, then no further quantitative testing will need to be performed. This new guidance became effective for annual and interim periods after December 15, 2011, and did not have a material impact on our consolidated financial statements.

11. Sale of Corporate Headquarters

On April 4, 2012, the Company’s board of directors approved the listing for sale of the corporate headquarters building located in Spokane, Washington. Management may relocate its headquarters to a new leased location also in Spokane upon sale. The Company will continue to classify the building as an asset held for use until the sale is probable and it becomes unlikely that significant changes to the plan will be made. The initial listing price for the building itself and underlying land is $13.3 million. The asset has a total net carrying value, including all related assets, of approximately $16.0 million and is recoverable as an asset held for use. However, the Company will continue to reassess the fair value of the building at each reporting period to determine whether the building qualifies as an asset held for sale and if the carrying value is recoverable as the proposed sale process continues. If the carrying value is not deemed to be recoverable based on current market conditions, the Company may be required to record impairment charges for these assets in the future.

-16-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q.

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933,as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange act”). Forward-looking statements may appear throughout this report, including without limitation, statements in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. For a detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements, please refer to Item 1A Risk Factors disclosure in our Annual Report on Form 10-K filed on March 12, 2012. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Introduction

Ambassadors Group, Inc. is a socially conscious education company primarily engaged in organizing and promoting worldwide educational travel programs for students through a direct to consumer revenue model. We operate student travel programs primarily using the People to People brand under a long-term exclusive license agreement. We have been traveling students on People to People programs for over 50 years and with over 500,000 alumni. We believe that our association with that brand and our own 45 years of experience in the educational travel industry give us both a stong awareness in the market and a high level of credibility.

Our core program offering is an international destination trip for U.S. students in the 11 to 17 year old age group (“Student Ambassadors Program”). We also offer domestic destination travel programs for U.S. students and international students from over 60 countries focused on leadership and education (“Student Leadership Program”). During 2011, we began to expand our in-bound travel programs by establishing a Beijing office traveling Chinese students on U.S. destination trips (“People to People – China”).

In addition to our People to People student programs, we operate professional travel programs for adults under the People to People brand (“Citizen Ambassadors Program”) and a student travel operation under the Discovery Student Adventures brand (“DSA”).  Our DSA program is associated with Discovery Student Education and operates through a teacher recruited revenue model. Lastly, we operate BookRags (www.bookrags.com), an education oriented research website which provides study guides, lesson plans and other educational resources to students and teachers. The site attracts students and teachers each month to its millions of pages of content, which includes internally developed material, licensed material, and user-generated content.

As further discussed below, our operating results depend on the number of travelers that attend our programs (“travelers” or “delegates”), the fees we are able to charge for each traveler (“gross revenue”), and the direct costs associated with the traveler’s itinerary including airfare, hotel charges, meal costs, event and location fees, chaperone costs, tour manager fees, and the cost of in-country travel (“cost of sales”). Our business is highly seasonal and the second quarter is typically our highest period for gross revenue and cost of sales activity. The majority of sales and marketing expenses are incurred in the third and fourth quarters of the year to attract delegates, while the associated revenue is generally recognized in the second and third quarter of the following fiscal year.

-17-

Executive Summary

Our strategy is to maintain our high quality and unique out-of-classroom educational experiences while increasing our volume of business. In order to grow the business our operating plans include: introducing new marketing channels while expanding and refining existing channels; building and preserving high quality customer relationships; and introducing new educational travel programs and experiences independently and through strategic alliances. As we complete the peak 2012 travel season and head into the 2013 selling and marketing campaign season, we continue to focus on growing customer relationships. We are focused on early and frequent engagement with current and target delegates and their families. We have engaged our customers earlier than in previous travel campaigns, which has generated over 1,000 enrollments for the 2013 travel season in advance of our peak season that begins in mid-August and runs through late November. We are focused on maintaining a successful, cost effective direct marketing campaign while strengthening other lead generation and revenue channels to broaden our presence in social media and drive growth in enrollments going forward. We believe our strategy will improve the productivity of our marketing efforts and ultimately improve our costs to acquire delegates.

Results of Operations

Consolidated financial results for the three and six months ended June 30, 2012 and 2011 were as follows (in thousands):

	Three Months Ended June 30,
	2012		2011		$ Change		% Change
Total revenue	$	31,806	$	36,056	$	(4,250)	-12%
Cost of goods sold		2,146		3,208		(1,062)	-33%
Gross margin		29,660		32,848		(3,188)	-10%
Selling and marketing expenses		6,483		9,439		(2,956)	-31%
General and administrative expenses		4,384		4,120		264	6%
Operating income		18,793		19,289		(496)	-3%
Other income		613		406		207	51%
Income before income tax provision		19,406		19,695		(289)	-1%
Income tax provision		(5,208)		(6,264)		1,056	-17%
Net income	$	14,198	$	13,431	$	767	6%
	Six Months Ended June 30,
	2012		2011		$ Change		% Change
Total revenue	$	34,271	$	37,718	$	(3,447)	-9%
Cost of goods sold		3,202		3,827		(625)	-16%
Gross margin		31,069		33,891		(2,822)	-8%
Selling and marketing expenses		15,170		19,534		(4,364)	-22%
General and administrative expenses		8,591		8,503		88	1%
Operating income		7,308		5,854		1,454	25%
Other income		856		922		(66)	-7%
Income before income tax provision		8,164		6,776		1,388	20%
Income tax provision		(1,872)		(2,074)		202	-10%
Net income	$	6,292	$	4,702	$	1,590	34%

-18-

During the three months ended June 30, 2012, we traveled 12,042 delegates compared to 13,262 during the second quarter of 2011. During the six months ended June 30, 2012, we traveled 12,789 delegates compared to 13,582 delegates traveled during the same period in 2011. Overall, our gross revenue decreased during the three and six months ended June 30, 2012 compared to the same periods in 2011, due to the decrease in delegates traveled from our core Student Ambassadors Program as well as from declines in two of our non-core programs, Student Leadership and Citizens. This expected decline in travel revenue was partially offset by an increase in revenue from BookRags reflecting increased content sales.

Associated with the decrease in delegates traveled, gross margin decreased $3.2 million and $2.8 million, respectively, during the second quarter and first six months of 2012 compared to 2011. Gross margin as a percentage of gross revenues declined to 36.5 percent during the second quarter of 2012 compared to 37.7 percent during the second quarter of 2011, primarily due to higher airfare expense associated with rising fuel costs and higher foreign exchange rates year-over-year increasing our land vendor payments. For those same reasons, gross margin as a percentage of gross revenue during the first six months of 2012 was 37 percent compared to 38.1 percent during the first six months of 2011.

The continuation of several cutting initiatives reduced operating expenses by $2.7 million and $4.3 million, respectively, during the second quarter and first six months of 2012 compared to those same periods in 2011.  In line with our strategy to reduce overall operating expenses to maximize profitability, these reductions consisted mainly of lower marketing expenses related to travel campaigns and reduced personnel costs associated with a reduction in staffing. These savings were offset by increased legal and professional expenses primarily related to the previously disclosed proxy contest.

Other income during the second quarter of 2012 increased $0.2 million compared to the second quarter of 2011 due primarily to realized gains from the sale of municipal bonds during the quarter. During the first six months of 2012 compared to the same period in 2011, other income decreased $0.1 million. The prior year six-month period included a $0.2 million gain as a result of the de-designation of derivative contracts after exiting foreign currency positions following the tsunami in Japan.

We record income tax provisions using an effective income tax rate applied to pre-tax income for the three and six months ended June 30, 2012 and 2011, respectively. The difference from our statutory rate of 34 percent and the decrease in the effective tax rate on a year-over-year basis is primarily due to the impact of tax exempt interest income earned during the periods in relation to net income.

In spite of the decline in delegate counts, our cost cutting initiatives discussed above helped increase profitability in the second quarter and first six months of 2012 compared to the same period in 2011. As a result, net income increased $0.8 million and $1.6 million, respectively, in the three and six months ended June 30, 2012, compared to the same periods in 2011.

Results of Operations by Segment

Segment results of operations for the three and six months ended June 30, 2012 and 2011 were as follows (in thousands):

-19-

	Three months ended June 30 2012,								Three months ended June 30 2011,
	Ambassador Programs and Other (1)								Ambassador Programs and Other (1)
				BookRags			Consolidated					BookRags			Consolidated
Total revenue	$	30,801		$	1,005		31,806		$	35,142		$	914		$	36,056
Cost of goods sold		2,013			133		2,146			3,079			129			3,208
Gross margin		28,788			872		29,660			32,063			785			32,848
Selling and marketing expenses		6,164			319		6,483			9,081			358			9,439
General and administrative expenses		4,173			211		4,384			3,950			170			4,120
Operating income		18,451			342		18,793			19,032			257			19,289
Other income		593			20		613			394			12			406
Income before income tax provision		19,044			362		19,406			19,426			269			19,695
Income tax provision		(5,160	)		(48	)	(5,208	)		(6,189	)		(75	)		(6,264	)
Net income	$	13,884		$	314		14,198		$	13,237		$	194		$	13,431

	Six months ended June 30 2012,								Six months ended June 30 2011,
	Ambassador Programs and Other (1)								Ambassador Programs and Other (1)
				BookRags			Consolidated					BookRags			Consolidated
Total revenue	$	32,068		$	2,203		34,271		$	35,801		$	1,917		$	37,718
Cost of goods sold		2,899			303		3,202			3,565			262			3,827
Gross margin		29,169			1,900		31,069			32,236			1,655			33,891
Selling and marketing expenses		14,466			704		15,170			18,886			648			19,534
General and administrative expenses		8,214			377		8,591			8,131			372			8,503
Operating income		6,489			819		7,308			5,219			635			5,854
Other income		826			30		856			901			21			922
Income before income tax provision		7,315			849		8,164			6,120			656			6,776
Income tax provision		(1,679	)		(193	)	(1,872	)		(1,874	)		(200	)		(2,074	)
Net income	$	5,636		$	656		6,292		$	4,246		$	456		$	4,702

(1)   Ambassador Programs and Other include all travel programs offered by Ambassador Programs and World Adventures Unlimited as well as corporate overhead.

Key Performance Non-GAAP Financial Indicators

We analyze our performance on a net income, cash flow and liquidity basis in accordance with generally accepted accounting principles (“GAAP”) as well as on a non-GAAP operating, cash flow and liquidity basis referred to below as “non-GAAP operating results” or “non-GAAP cash flows and liquidity measures.” These measures and related discussions are presented as supplementary information in this analysis to enhance the readers’ understanding of, and highlight trends in, our core financial results. Any non-GAAP financial measure used by us should not be considered in isolation or as a substitute for measures of performance or liquidity prepared in accordance with GAAP.

2012 Net Enrollments

Net enrollments on a forward looking basis consist of all active participants, which we define as those who have enrolled in our programs less those who have already withdrawn for the travel year referenced, including travel that has already been completed. This is a point in time measurement that we use as an indication of future gross revenues for our travel programs. Enrolled revenue consists of estimated gross receipts to be recognized, in the future, upon travel of an enrolled participant and may not result in the actual gross receipts eventually recognized due both to withdrawals from our programs and expected future enrollments. This non-GAAP measure relates to our travel programs only and does not include anticipated revenue for BookRags.

-20-

	As of July 22,
	Delegates
Enrollment detail for travel year	2012	2011	Change		% Change
Student Ambassadors	17,356	19,179	(1,823	)	-9.5	%
Total, all programs	21,262	24,007	(2,745	)	-11.4	%

Deployable Cash

Deployable cash is a liquidity measure which is calculated as the sum of cash, 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 the deployable cash measurement is useful in understanding cash available to deploy for current and future business opportunities, as it represents an estimate of excess cash available for strategic actions. This non-GAAP measure is based on conservative assumptions, such as 100 percent of participants’ deposits being forfeited even though a portion is non-refundable and should not be construed as the maximum amount of cash sources available to run the business. See the ‘Liquidity’ section below for explanations of cash sources and uses.

Deployable Cash Reconciliation (in thousands)

	June 30,						December 31,
	2012			2011			2011
Cash, cash equivalents and short-term available-for-sale securities	$	81,937		$	89,977		$	58,647
Prepaid program cost and expenses		24,825			23,815			13,299
Less: Participants’ deposits		(54,327	)		(61,757	)		(27,396	)
Less: Accounts payable / accruals / other liabilities		(10,759	)		(10,732	)		(5,970	)
Deployable cash	$	41,676		$	41,303		$	38,580

Free Cash Flow

Free cash flow is calculated as cash flow from operations less the purchase of property, equipment and intangible assets. Management believes this non-GAAP measure is useful to investors in understanding the cash generated or distributed within the current period for future use in operations. See the ‘Liquidity’ section below for explanations of cash sources and uses.

Free Cash Flow Reconciliation (in thousands)

	Six months ended June 30,
	2012			2011			$ Change
Cash flow provided by operations	$	28,685		$	19,695		8,990
Purchase of property, equipment and intangibles		(2,997	)		(2,108	)	(889	)
Free cash flow	$	25,688		$	17,587		8,101

-21-

Liquidity

Total assets at June 30, 2012 were $150.0 million, of which 54.6 percent, or $81.9 million, were cash, cash equivalents and short-term available-for-sale securities. At June 30, 2011, total assets were $157.7 million, of which 57.0 percent, or $90.0 million, were cash, cash equivalents and short-term available-for-sale securities. The decrease in cash, cash equivalents and short-term available-for-sale securities year-over-year was a result of lower participant deposits collected due primarily to the lower delegate count volume discussed above.

Cash provided by operations was $28.7 million and $19.7 million during the six months ended June 30, 2012 and 2011, respectively. The increase in cash provided by operations was primarily due to the timing of recurring prepaid program costs offset by lower participant deposits collected.

Cash used in investing activities was $42.8 million and $12.8 million during the three months ended June 30, 2012 and 2011, respectively. The increase in cash used in investing activities was primarily due to a net increase in cash used in the purchases of available-for-sale securities as a result of the timing of our decision to transfer a portion of our investment portfolio to new account managers in an attempt to diversify our holdings.

Cash used in financing activities was $2.3 million and $8.1 million during the six months ended June 30, 2012 and 2011, respectively. The change in cash used in financing activities was a result of no cash being used for repurchase of our Common Stock in the second quarter of 2012.

Capital Resources

We maintain an unsecured revolving line of credit with Wells Fargo Bank, National Association, which at June 30, 2012, had an unused line of credit of $20.0 million. In order to utilize this line of credit, we must comply with certain covenants. These covenants include deployable cash greater than zero, tangible net worth greater than $40.0 million and net income after taxes for the current and previous three quarters of greater than $2.0 million through June 30, 2013, increasing to $4.0 million as of September 30, 2013 and each quarter thereafter. At June 30, 2012, we were in compliance with all covenants.

During the first six months of 2012 we engaged in a proxy contest with certain stockholders which was settled in May 2012. The Company incurred $1.3 million in additional expenses and legal fees in connection with the proxy contest.

Contractual Obligations

We do not have any material capital expenditure commitments for 2012. Our business is not capital intensive and we believe that existing cash and cash equivalents and cash flows from operations will be sufficient to fund our anticipated operating needs and capital expenditures through 2012. For additional information related to our contractual obligations, please refer to our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K filed on March 12, 2012.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported disclosures of assets, liabilities, revenue and expenses. Our estimates are based on our experience and our interpretation of economic, political, regulatory, and other factors that affect our business.  We consider that our most critical accounting estimates are related to the valuation of available-for-sale securities, valuation of goodwill and intangible assets, foreign currency exchange contracts, revenue recognition, and contingencies and litigation as they require us to make assumptions that may be highly uncertain at the time the accounting estimates were made and changes in them are reasonably likely to occur from period to period.  There are other items within our consolidated financial statements that require estimation but are not deemed to be critical.  Changes in estimates used in these and other items could have a material impact on our consolidated financial statements. For a more complete discussion, please refer to our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K filed on March 12, 2012.

-22-

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There has been no significant change to our market risks as discussed in ‘Market Risk,’ as part of Item 7, ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’ in our Annual Report on Form 10-K filed on March 12, 2012.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

As of June 30, 2012, the end of the period covered by this report, our chief executive officer and chief financial officer reviewed, evaluated and concluded that our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) were effective.  These controls and procedures are designed to ensure information required to be disclosed in our Form 10-Q filed or submitted under the Exchange Act is recorded, processed, summarized, and reported on a timely basis, and has been accumulated and communicated to our management including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting

In the three months ended June 30, 2012, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

-23-

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

The information contained in Note 9, “Commitments and Contingencies” to our consolidated financial statements is incorporated by reference to this Item.

Item 1A. Risk Factors

As of the date of this report, there have been no material changes to our risk factors, as discussed in Item 1A, ‘Risk Factors,’ contained in our Annual Report on Form 10-K filed on March 12, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On various dates between May 2004 and May 2011 our Board of Directors has authorized the repurchase of Common Stock in the open market or through private transactions (the “Repurchase Plan”). The current balance of the Repurchase Plan is $13.5 million in shares that may be repurchased. During the three and six months ended June 30, 2012, we repurchased zero shares of our Common Stock.

Item 6. Exhibits

31.1	Certification under Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification under Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification under Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification under Section 906 of the Sarbanes-Oxley Act of 2002

-24-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMBASSADORS GROUP, INC.

Date: August 7, 2012	By:	/s/ JEFFREY D. THOMAS
		Jeffrey D. Thomas
		Chief Executive Officer
Date: August 7, 2012	By:	/s/ ANTHONY F. DOMBROWIK
		Anthony F. Dombrowik
		Senior Vice President, Chief Financial Officer

-25-

EXHIBIT INDEX

31.1	Certification under Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification under Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification under Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification under Section 906 of the Sarbanes-Oxley Act of 2002

-26-

EX-31.1

EXHIBIT 31.1

Certification required by Rule 13a-14(a) or Rule 15d-14(a) and under Section 302 of the Sarbanes-Oxley Act of 2002.

I, Jeffrey D. Thomas, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ambassadors Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2012

 /s/ Jeffrey D. Thomas

Jeffrey D. Thomas

Chief Executive Officer

EX-32.2

EXHIBIT 31.2

Certification required by Rule 13a-14(a) or Rule 15d-14(a) and under Section 302 of the Sarbanes-Oxley Act of 2002.

I, Anthony F. Dombrowik, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ambassadors Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2012

 /s/ Anthony F. Dombrowik

Anthony F. Dombrowik

Senior Vice President, Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ambassadors Group, Inc., (the "Company") on Form 10-Q for the period ending June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Jeffrey D. Thomas, chief executive officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2012

 /s/ Jeffrey D. Thomas

Jeffrey D. Thomas

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ambassadors Group, Inc., (the "Company") on Form 10-Q for the period ending June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Anthony F. Dombrowik, chief financial officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2012

/s/ Anthony F. Dombrowik

Anthony F. Dombrowik

Senior Vice President, Chief Financial Officer

XML

Sale of Corporate Headquarters (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012
Sale of Corporate Headquarters [Abstract]
Listing price of building and land for future sale	$ 13.3
Building and land held for use	$ 16.0

XML

The Company (Details)	6 Months Ended
	Jun. 30, 2012
The Company [Abstract]
Number of reporting segments	2

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"), have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being materially misleading. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2012 are not indicative of the results that may be expected for the year ending December 31, 2012.

For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011.

XML

Net Income and Dividends per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Numerator [Abstract]
Net income	$ 14,198	$ 13,431	$ 6,292	$ 4,702
Denominator: [Abstract]
Weighted-average shares outstanding (in shares)	17,217	17,344	17,215	17,513
Effect of unvested restricted stock awards considered participating securities (in shares)	385	328	385	328
Weighted-average common shares outstanding - basic (in shares)	17,602	17,672	17,600	17,841
Effect of dilutive common stock options (in shares)	0	152	0	169
Weighted-average common shares outstanding - diluted (in shares)	17,602	17,824	17,600	18,010
Net income per share - basic (in dollars per share)	$ 0.81	$ 0.76	$ 0.36	$ 0.26
Net income per share - diluted (in dollars per share)	$ 0.81	$ 0.75	$ 0.36	$ 0.26
Cash dividends declared per share (in dollars per share)	$ 0.06	$ 0.06	$ 0.12	$ 0.12
Stock options excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive (in shares)	1,253,287	1,201,527	1,402,714	1,105,954

XML

Stock-Based Compensation (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield (in hundredths)	4.72%	2.17%	4.39%	2.16%
Expected stock price volatility (in hundredths)	60.61%	63.60%	60.85%	62.01%
Risk-free interest rate (in hundredths)	1.89%	1.89%	1.79%	1.95%
Expected life of options	4 years 5 months 16 days	4 years 9 months	4 years 5 months 19 days	5 years 3 months 7 days
Estimated fair value per option granted (in dollars per share)	$ 1.83	$ 4.59	$ 1.89	$ 4.69
Fair Value Assumptions, Expected Forfeiture Rate (in hundredths)			12.70%
Stock-based compensation	$ 400,000		$ 720,000	$ 938,000
Stock-based compensation expense, tax benefit	100,000		200,000
Options and Awards Outstanding (in shares)	1,962,742		1,962,742
Weighted-Average Remaining Contractual Life			5 years 7 months 6 days
Weighted-Average Exercise Price (in dollars per share)	$ 9.98		$ 9.98
Options Exercisable (in shares)	879,877		879,877
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 16.19		$ 16.19
Option Outstanding, Intrinsic Value	2,400,000		2,400,000
Options, Exercisable, Intrinsic Value	0		0
Valuation assumptions	based on our $5.44 closing stock price		based on our $5.44 closing stock price
Unrecognized stock-based compensation expense	3,400,000		3,400,000
Unrecognized stock-based compensation expense recognition period			3 years 10 months 9 days
Total fair value of options vested			100,000
Restricted Stock Awarded [Roll Forward]
Restricted Stock Awarded, Beginning Balance (in shares)			374,957
Restricted Stock Awarded, Shares Granted (in shares)	43,120
Restricted Stock Awarded, Forfeitures (in shares)	(24,924)
Restricted Stock Awarded, Vested (in shares)	(8,031)
Restricted Stock Awarded, Ending Balance (in shares)	385,122		385,122
Restricted Stock Awarded, Weighted Average Grant Date Fair Value [Roll Forward]
Restricted Stock Awarded, Weighted-Average Grant Date Fair Value, Beginning Balance (in dollars per share)			$ 8.82
Restricted Stock Awarded, Granted, Weighted-Average Grant Date Fair Value (in dollars per share)	$ 5.12
Restricted Stock Awarded, Forefeited, Weighted-Average Grant Date Fair Value (in dollars per share)	$ 9.22
Restricted Stock Awarded, Vested, Weighted-Average Grant Date Fair Value (in dollars per share)	$ 9.34
Restricted Stock Awarded, Weighted-Average Grant Date Fair Value, Ending Balance (in dollars per share)	$ 8.37		$ 8.37
Stock Options [Roll Forward]
Stock Options, Beginning Balance (in shares)			1,962,321
Stock Options, Grants in Period (in shares)			116,620
Stock Options, Forfeited (in shares)			(501,321)
Stock Options, Exercised (in shares)			0
Stock Options, Ending Balance (in shares)	1,577,620		1,577,620
Stock Options, Weighted-Average Exercise Price [Roll Forward]
Stock Options, Weighted-Average Exercise Price, Beginning Balance (in dollars per share)			$ 11.56
Stock Options, Grants, Weighted-Average Exercise Price (in dollars per share)			$ 5.12
Stock Options, Forfeited, Weighted Average Exercise Price (in dollars per share)			$ 7.39
Stock Options, Exercised, Weighted Average Exercise Price (in dollars per share)			$ 0
Stock Options, Weighted Average Exercise Price, Ending Balance (in dollars per share)	$ 12.41		$ 12.41
Exercise Price Range 4.52-6.93 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 4.52
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 6.93
Options and Awards Outstanding (in shares)	368,209		368,209
Weighted-Average Remaining Contractual Life			9 years 5 months 17 days
Weighted-Average Exercise Price (in dollars per share)	$ 4.73		$ 4.73
Options Exercisable (in shares)	4,000		4,000
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 6.21		$ 6.21
Exercise Price Range 6.94-10.39 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 6.94
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 10.39
Options and Awards Outstanding (in shares)	283,699		283,699
Weighted-Average Remaining Contractual Life			4 years 11 months 23 days
Weighted-Average Exercise Price (in dollars per share)	$ 9.15		$ 9.15
Options Exercisable (in shares)	213,685		213,685
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 9.29		$ 9.29
Exercise Price Range 10.40-13.86 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 10.40
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 13.86
Options and Awards Outstanding (in shares)	447,119		447,119
Weighted-Average Remaining Contractual Life			7 years 7 months 6 days
Weighted-Average Exercise Price (in dollars per share)	$ 11.52		$ 11.52
Options Exercisable (in shares)	183,599		183,599
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 11.65		$ 11.65
Exercise Price Range 13.87-17.32 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 13.87
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 17.32
Options and Awards Outstanding (in shares)	279,734		279,734
Weighted-Average Remaining Contractual Life			3 years 10 months 20 days
Weighted-Average Exercise Price (in dollars per share)	$ 16.90		$ 16.90
Options Exercisable (in shares)	279,734		279,734
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 16.90		$ 16.90
Exercise Price Range 17.33-20.79 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 17.33
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 20.79
Options and Awards Outstanding (in shares)	7,328		7,328
Weighted-Average Remaining Contractual Life			5 years 10 months 9 days
Weighted-Average Exercise Price (in dollars per share)	$ 18.41		$ 18.41
Options Exercisable (in shares)	7,328		7,328
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 18.41		$ 18.41
Exercise Price Range 20.80-24.25 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 20.80
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 24.25
Options and Awards Outstanding (in shares)	1,000		1,000
Weighted-Average Remaining Contractual Life			3 years 1 month 13 days
Weighted-Average Exercise Price (in dollars per share)	$ 21.09		$ 21.09
Options Exercisable (in shares)	1,000		1,000
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 21.09		$ 21.09
Exercise Price Range 24.26-27.72 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 24.26
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 27.72
Options and Awards Outstanding (in shares)	179,146		179,146
Weighted-Average Remaining Contractual Life			3 years 9 months 23 days
Weighted-Average Exercise Price (in dollars per share)	$ 27.07		$ 27.07
Options Exercisable (in shares)	179,146		179,146
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 27.07		$ 27.07
Exercise Price Range 27.73-31.18 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 27.73
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 31.18
Options and Awards Outstanding (in shares)	6,937		6,937
Weighted-Average Remaining Contractual Life			4 years 3 months 18 days
Weighted-Average Exercise Price (in dollars per share)	$ 29.48		$ 29.48
Options Exercisable (in shares)	6,937		6,937
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 29.48		$ 29.48
Exercise Price Range 31.19-34.65 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range, Lower Range Limit (in dollars per share)			$ 31.19
Exercise Price Range, Upper Range Limit (in dollars per share)			$ 34.65
Options and Awards Outstanding (in shares)	4,448		4,448
Weighted-Average Remaining Contractual Life			4 years 10 months 2 days
Weighted-Average Exercise Price (in dollars per share)	$ 34.65		$ 34.65
Options Exercisable (in shares)	4,448		4,448
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 34.65		$ 34.65
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	200,000		400,000
Options and Awards Outstanding (in shares)	1,577,620		1,577,620
Weighted-Average Remaining Contractual Life			6 years 5 months 5 days
Weighted-Average Exercise Price (in dollars per share)	$ 9.98		$ 9.98
Options Exercisable (in shares)	879,877		879,877
Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 16.19		$ 16.19
Restricted Stock Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 200,000		$ 300,000
Options and Awards Outstanding (in shares)	385,122		385,122
Weighted-Average Remaining Contractual Life			2 years 2 months 8 days

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Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011		Dec. 31, 2011
Segment Reporting Information [Line Items]
Number of reporting segments					2
Number of travel program types					5
Total revenue	$ 31,806		$ 36,056		$ 34,271		$ 37,718
Gross margin	29,660		32,848		31,069		33,891
Depreciation and amortization	1,229		1,211		2,412		2,364
Operating income	18,793		19,289		7,308		5,854
Income tax provision	5,208		6,264		1,872		2,074
Net income	14,198		13,431		6,292		4,702
Total additions to property, plant, and equipment					3,396		1,895
Total additions to goodwill and intangible assets					293		213
Intangible assets, excluding goodwill	3,505		3,361		3,505		3,361		3,421
Assets For Segments	150,001		157,716		150,001		157,716
Ambassador Programs and Other [Member]
Segment Reporting Information [Line Items]
Total revenue	30,801	[1]	35,142	[1]	32,068	[1]	35,801	[1]
Gross margin	28,788	[1]	32,063	[1]	29,169	[1]	32,236	[1]
Depreciation and amortization	1,096	[1]	1,090	[1]	2,137	[1]	2,124	[1]
Operating income	18,451	[1]	19,032	[1]	6,489	[1]	5,219	[1]
Income tax provision	5,160	[1]	6,189	[1]	1,679	[1]	1,874	[1]
Net income	13,884	[1]	13,237	[1]	5,636	[1]	4,246	[1]
Total additions to property, plant, and equipment					3,283	[1]	1,767	[1]
Total additions to goodwill and intangible assets					0	[1]	0	[1]
Intangible assets, excluding goodwill	0	[1]	0	[1]	0	[1]	0	[1]
Assets For Segments	132,802	[1]	142,278	[1]	132,802	[1]	142,278	[1]
BookRags [Member]
Segment Reporting Information [Line Items]
Total revenue	1,005		914		2,203		1,917
Gross margin	872		785		1,900		1,655
Depreciation and amortization	133		121		275		240
Operating income	342		257		819		635
Income tax provision	48		75		193		200
Net income	314		194		656		456
Total additions to property, plant, and equipment					113		128
Total additions to goodwill and intangible assets					293		213
Intangible assets, excluding goodwill	3,505		3,361		3,505		3,361
Assets For Segments	$ 17,199		$ 15,438		$ 17,199		$ 15,438

[1] Ambassador Programs and Other include all travel programs offered by Ambassador Programs and World Adventures Unlimited as well as corporate overhead.

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Supplemental Disclosures of Consolidated Statements of Cash Flows (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Unrealized gain (loss) on foreign currency exchange contracts	$ 1,139	$ (276)
Unrealized gain (loss) on available-for-sale securities	(42)	471
Property and Equipment	$ 692	$ (106)

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The Company

6 Months Ended

Jun. 30, 2012

The Company [Abstract]

The Company

1. The Company

Ambassadors Group, Inc. (the "Company", "we", "us" or "our") is a socially conscious educational company primarily engaged in organizing and promoting differentiated worldwide travel programs for students and professionals. In addition, we operate an education oriented research website called BookRags that provides study guides, lesson plans and other educational resources to students and teachers. These consolidated financial statements include the accounts of Ambassadors Group, Inc., and our wholly owned subsidiaries, Ambassador Programs, Inc., BookRags, Inc., World Adventures Unlimited, Inc., Ambassadors Unlimited, LLC, AGI Hong Kong Limited, Beijing People to People Education Consultation Co., Ltd, and Marketing Production Systems, LLC. All significant intercompany accounts and transactions, which are of a normal recurring nature, are eliminated in consolidation.

Our operations are organized in two reporting segments, 1) "Ambassador Programs and Other," which provides educational travel services to students and professionals through multiple itineraries within five travel program types and corporate overhead, and 2) "BookRags," which provides online research capabilities through book summaries, critical essays, online study guides, lesson plans, biographies, and references to encyclopedia articles.

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Commitments and Contingencies [Abstract]
Litigation settlement amount	$ 7.5

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 3,062	$ 19,519
Available-for-sale securities and other	78,875	39,128
Prepaid program costs and expenses	24,825	13,299
Accounts receivable	1,556	1,395
Deferred tax assets	301	668
Total current assets	108,619	74,009
Property and equipment, net	27,297	26,104
Available-for-sale securities	714	700
Intangibles	3,505	3,421
Goodwill	9,781	9,781
Other long-term assets	85	85
Total assets	150,001	114,100
Current liabilities:
Accounts payable and accrued expenses	10,662	5,858
Participants' deposits	53,508	27,396
Foreign currency exchange contracts	584	1,671
Other liabilities	97	112
Total current liabilities	64,851	35,037
Participants' deposits	819	0
Foreign currency exchange contracts	50	102
Deferred tax liability	1,941	2,004
Total liabilities	67,661	37,143
Commitments and Contingencies (Note 9)
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued and outstanding	0	0
Common stock, $.01 par value; 50,000,000 shares authorized; 17,606,409 and 17,588,088 shares issued and outstanding, respectively	172	172
Additional paid-in capital	802	314
Retained earnings	81,671	77,489
Accumulated other comprehensive loss	(305)	(1,018)
Stockholders' equity	82,340	76,957
Total liabilities and stockholders' equity	$ 150,001	$ 114,100

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract]
Unrealized gain (loss) on foreign currency exchange contracts, income tax benefit (provision)	$ 75	$ 536	$ (399)	$ 95
Unrealized gain (loss) on available-for-sale securities, income tax benefit (provision)	$ 70	$ (183)	$ 14	$ (165)

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Net Income and Dividends per Share (Tables)

6 Months Ended

Jun. 30, 2012

Net Income and Dividends per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

The following table presents a reconciliation of basic and diluted income per share computations (in thousands, except per share data and anti-dilutive stock option counts):

	Six months ended June 30,				Three months ended June 30,
	2012		2011		2012		2011
Numerator:
Net income	$	6,292	$	4,702	$	14,198	$	13,431
Denominator:
Weighted-average shares outstanding		17,215		17,513		17,217		17,344
Effect of unvested restricted stock awards considered participating securities		385		328		385		328
Weighted-average shares outstanding - basic		17,600		17,841		17,602		17,672
Effect of dilutive common stock options		-		169		-		152
Weighted-average shares outstanding - diluted		17,600		18,010		17,602		17,824
Net income per share - basic	$	0.36	$	0.26	$	0.81	$	0.76
Net income per share - diluted	$	0.36	$	0.26	$	0.81	$	0.75
Cash dividends declared per share	$	0.12	$	0.12	$	0.06	$	0.06
Stock options excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive		1,402,714		1,105,954		1,253,287		1,201,527

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Supplemental Disclosures of Consolidated Statements of Cash Flows (Tables)

6 Months Ended

Jun. 30, 2012

Supplemental Disclosures of Consolidated Statements of Cash Flows [Abstract]

Non-Cash Financing and Investing Activities

Our non-cash investing and financing activities during the six months ended June 30, 2012 and 2011, were as follows (in thousands):

	June 30, 2012			June 30, 2011
Unrealized gain (loss) on foreign currency exchange contracts	$	1,139		$	(276	)
Unrealized gain (loss) on available-for-sale securities	$	(42	)	$	471
Property and Equipment	$	692		$	(106	)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net income	$ 6,292	$ 4,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,412	2,364
Stock-based compensation	720	938
Deferred income tax benefit	(80)	(582)
Gain on foreign currency exchange contracts	0	(20)
Loss on disposition and impairment of property and equipment	0	66
Excess tax benefit (shortfall) from stock-based compensation	232	(15)
Change in assets and liabilities:
Accounts receivable and other assets	(161)	714
Prepaid program costs and expenses	(11,526)	(20,585)
Accounts payable, accrued expenses, and other current liabilities	3,865	4,792
Participants' deposits	26,931	27,321
Net cash provided by operating activities	28,685	19,695
Cash flows from investing activities:
Purchase of available for sale securities	(69,537)	(47,881)
Proceeds from sale of available-for-sale securities	29,734	37,142
Purchase of property and equipment	(2,704)	(1,895)
Proceeds from sale of property and equipment	0	19
Purchase of intangibles	(293)	(213)
Net cash used in investing activities	(42,800)	(12,828)
Cash flows from financing activities:
Repurchase of Common Stock	0	(6,091)
Dividend payment to shareholders	(2,110)	(2,143)
Proceeds from exercise of stock options	0	131
Excess tax shortfall (benefit) from stock-based compensation	(232)	15
Net cash used in financing activities	(2,342)	(8,088)
Net decrease in cash and cash equivalents	(16,457)	(1,221)
Cash and cash equivalents, beginning of period	19,519	6,838
Cash and cash equivalents, end of period	$ 3,062	$ 5,617

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
STOCKHOLDERS' EQUITY
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	17,606,409	17,588,088
Common stock, shares outstanding (in shares)	17,606,409	17,588,088

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Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

Recently Issued Accounting Pronouncements [Abstract]

Recently Issued Accounting Pronouncements

10.  Recently Issued Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board ("FASB") issued new accounting guidance that provides a consistent definition of fair value and common requirements of and disclosure about fair value between GAAP and International Financial Reporting Standards. The guidance states the concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets. Enhanced disclosure requirements will require companies to disclose quantitative information about unobservable inputs used, a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements for recurring Level 3 fair value measurements. For assets and liabilities not recorded at fair value but where fair value is disclosed, companies must report the level in the fair value hierarchy of assets and liabilities. This new guidance became effective for interim and annual periods beginning January 1, 2012, which did not have a material impact on our consolidated financial statements.

In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05, "Comprehensive Income (Topic 220): Presentation of Comprehensive Income." This update, effective for interim and annual reporting periods beginning after December 15, 2011, requires that the total of comprehensive income, the components of net income, and the components of other comprehensive income be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This update does not change what items are reported in other comprehensive income or the requirement to report reclassification of items from other comprehensive income to net income. Effective December 2011, the FASB issued ASU No. 2011-12, "Deferral of the Effective Date for Amendments to Presentation Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05," which deferred the requirement to present separate line items on the income statement for reclassification adjustments of items out of accumulated other comprehensive income into net income. This deferral is temporary until the FASB reconsiders the operational concerns and needs of financial statement users. We adopted the new guidance as of March 31, 2012, and it did not have a material effect on our consolidated financial statements.

In September 2011, the FASB issued new accounting guidance regarding the performance of the two-step quantitative impairment testing of goodwill. Under the guidance, companies would be allowed to assess on a qualitative basis whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount before performing quantitative tests. If after performing appropriate qualitative assessments the company determines the reporting unit's fair value is more likely than not to exceed its carrying value, then no further quantitative testing will need to be performed. This new guidance became effective for annual and interim periods after December 15, 2011, and did not have a material impact on our consolidated financial statements.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 27, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	AMBASSADORS GROUP INC
Entity Central Index Key	0001162315
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		17,604,307
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012

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Sale of Corporate Headquarters

6 Months Ended

Jun. 30, 2012

Sale of Corporate Headquarters [Abstract]

Sale of Corporate Headquarters

11. Sale of Corporate Headquarters

On April 4, 2012, the Company's board of directors approved the listing for sale of the corporate headquarters building located in Spokane, Washington. Management may relocate its headquarters to a new leased location also in Spokane upon sale. The Company will continue to classify the building as an asset held for use until the sale is probable and it becomes unlikely that significant changes to the plan will be made. The initial listing price for the building itself and underlying land is $13.3 million. The asset has a total net carrying value, including all related assets, of approximately $16.0 million and is recoverable as an asset held for use. However, the Company will continue to reassess the fair value of the building at each reporting period to determine whether the building qualifies as an asset held for sale and if the carrying value is recoverable as the proposed sale process continues. If the carrying value is not deemed to be recoverable based on current market conditions, the Company may be required to record impairment charges for these assets in the future.

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) [Abstract]
Net revenue, non-directly delivered programs	$ 27,754	$ 30,615	$ 27,843	$ 30,580
Gross revenue, directly delivered programs	3,047	4,527	4,225	5,221
Gross revenue, internet and advertising	1,005	914	2,203	1,917
Total revenue	31,806	36,056	34,271	37,718
Cost of sales, directly delivered programs	2,013	3,079	2,899	3,565
Cost of sales, internet and advertising	133	129	303	262
Gross margin	29,660	32,848	31,069	33,891
Operating expenses:
Selling and marketing	6,483	9,439	15,170	19,534
General and administrative	4,384	4,120	8,591	8,503
Total operating expenses	10,867	13,559	23,761	28,037
Operating income	18,793	19,289	7,308	5,854
Other income (expense):
Interest and dividend income	618	416	859	751
Foreign currency and other income (expense)	(5)	(10)	(3)	171
Total other income	613	406	856	922
Income before income tax provision	19,406	19,695	8,164	6,776
Income tax provision	(5,208)	(6,264)	(1,872)	(2,074)
Net income	$ 14,198	$ 13,431	$ 6,292	$ 4,702
Weighted-average common shares outstanding - basic (in shares)	17,602	17,672	17,600	17,841
Weighted-average common shares outstanding - diluted (in shares)	17,602	17,824	17,600	18,010
Net income per share - basic (in dollars per share)	$ 0.81	$ 0.76	$ 0.36	$ 0.26
Net income per share - diluted (in dollars per share)	$ 0.81	$ 0.75	$ 0.36	$ 0.26

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

5.   Stock-Based Compensation

Under our 2009 Equity Participation Plan we have outstanding options to purchase shares of our Common Stock and restricted stock awards held by eligible employees, non-employee directors and consultants as granted by the Compensation Committee of the Board of Directors.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the three and six months ended June 30, 2012 and 2011.

	Six months ended			Six months ended		Three months ended		Three months ended
	June 30, 2012			June 30, 2011		June 30, 2012		June 30, 2011
Expected dividend yield		4.39	%	2.16	%	4.72	%	2.17	%
Expected stock price volatility		60.85	%	62.01	%	60.61	%	63.60	%
Risk-free interest rate		1.79	%	1.95	%	1.89	%	1.89	%
Expected life of options		4.47	Years	5.27	Years	4.46	Years	4.75	Years
Estimated fair value per option granted	$	1.89		$4.69		$1.83		$4.59

The dividend yield is based on expected quarterly cash dividends paid to our shareholders. Expected stock price volatility is based on historical volatility of our stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Additionally, an annualized forfeiture rate of 12.7 percent is used as a best estimate of future forfeitures based on our historical forfeiture experience. The stock-based compensation expense is adjusted in later periods if the actual forfeiture rate is different from the estimate.

Total stock-based compensation expense recognized in the consolidated statement of operations for the quarter ended June 30, 2012 was $0.4 million before income taxes. Of the total stock-based compensation expense during the quarter, stock option expense was $0.2 million, restricted stock award expense was $0.2 million, and the related total deferred tax benefit was $0.1 million. Total stock-based compensation expense recognized in the consolidated statement of operations for the six months ended June 30, 2012 was $0.7 million before income taxes. Of the total stock-based compensation expense recognized in 2012, stock option expense was $0.4 million, restricted stock award expense was $0.3 million, and the related total deferred tax benefit was $0.2 million.

The following table presents information about outstanding common stock options and restricted grants as of June 30, 2012:

		Options and Awards Outstanding				Options Exercisable
Range of Exercise Prices		Shares	Weighted- Average Remaining Contractual Life (years)	Weighted-Average Exercise Price		Shares	Weighted- Average Exercise Price
Restricted Stock Awards
$	0 .00	385,122	2.19		N/A	N/A		N/A
Stock Options
$	4.52 - 6.93	368,209	9.44	$	4.73	4,000	$	6.21
	6.94 - 10.39	283,699	4.98		9.15	213,685		9.29
	10.40 - 13.86	447,119	7.60		11.52	183,599		11.65
	13.87 - 17.32	279,734	3.89		16.90	279,734		16.90
	17.33 - 20.79	7,328	5.86		18.41	7,328		18.41
	20.80 - 24.25	1,000	3.12		21.09	1,000		21.09
	24.26 - 27.72	179,146	3.73		27.07	179,146		27.07
	27.73 - 31.18	6,937	4.30		29.48	6,937		29.48
	31.19 - 34.65	4,448	4.84		34.65	4,448		34.65
	Total Stock Options	1,577,620	6.43		9.98	879,877		16.19
	Combined	1,962,742	5.60		9.98	879,877		16.19

At June 30, 2012, the aggregate intrinsic value of outstanding stock options and restricted stock was $2.4 million, and the aggregate intrinsic value of exercisable stock options and restricted stock was zero based on our $5.44 closing stock price at June 30, 2012. As of June 30, 2012, total unrecognized stock-based compensation expense related to non-vested stock options and non-vested restricted stock awards was approximately $3.4 million, which is expected to be recognized over approximately 3.86 years. During the quarter ended June 30, 2012, there were no stock options exercised, and the total fair value of options which vested was $0.1 million.

The following table presents information about stock option and restricted stock activity during the six months ended June 30, 2012:

	Restricted Stock Awarded	Weighted-Average Grant Date Fair Value		Stock Options	Weighted- Average Exercise Price
Balance at December 31, 2011	374,957	$	8.82	1,962,321	$	11.56
Granted	43,120		5.12	116,620		5.12
Forfeited	(24,924)		9.22	(501,321)		7.39
Vested	(8,031)		9.34	N/A		N/A
Exercised	N/A		N/A	-		-
Balance at June 30, 2012	385,122	$	8.37	1,577,620	$	12.41

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

4. Derivative Financial Instruments

The majority of our travel programs take place outside of the United States and most foreign suppliers require payment in currency other than the U.S. dollar. Accordingly, we are exposed to foreign currency risk relative to changes in foreign currency exchange rates between those currencies and the U.S. dollar for our non-directly delivered programs. We use forward contracts that allow us to acquire the foreign currency at a fixed price for a specified point in time and to provide a hedge against foreign currency risk. All of our derivatives are cash flow hedges and at June 30, 2012, all contracts qualified for cash flow hedge accounting.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income or loss and reclassified into earnings in the same period during which the hedged transaction is recognized in earnings, which is primarily during the second and third quarters of the year when our student travel programs occur. Gains or losses representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

At June 30, 2012, the following forward contracts were outstanding (in thousands):

	Notional Amount		Matures
Forward contracts:
Euro		6,300	July 2012 - July 2013
British pound		3,220	July 2012 - June 2013
Canadian dollar		2,380	February 2013 - June 2013
Australian dollar		1,880	July 2012 - July 2013
New Zealand dollar		315	March 2013 - July 2013

The fair value of our forward contracts were as follows (in thousands):

	June 30, 2012
	Derivatives designated as hedging instruments				Derivatives not designated as hedging instruments				Total Net
	Assets		Liabilities		Assets		Liabilities		Liabilities
Forward contracts	$	321	$	955	$	-	$	-	$	634
	December 31, 2011
	Derivatives designated as hedging instruments				Derivatives not designated as hedging instruments				Total Net
	Assets		Liabilities		Assets		Liabilities		Liabilities
Forward contracts	$	115	$	1,888	$	-	$	-	$	1,773

The net liabilities and asset derivatives at June 30, 2012 and December 31, 2011 are reported in the consolidated balance sheet as current and long-term 'foreign currency exchange contracts.'

The following table summarizes the balances of AOCI and the gain (loss) recognized in OCI for derivatives designated as hedging instruments (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Foreign currency exchange contracts
	2012			2011
Balance, January 1,	$	(1,153	)	$	1,210
Other comprehensive income (loss), net of income taxes		740			(177	)
Balance, June 30,	$	(413	)	$	1,033

Unrealized losses on forward contracts recorded in AOCI at June 30, 2012, which are expected to be realized in net revenue during the next 12 months, were approximately $0.4 million. This amount was computed using the fair value of the cash flow hedges at June 30, 2012, and may change before actual reclassification from AOCI.

For the three and six months ended June 30, 2012 and 2011, the amount of gains or losses recognized in the income statement for derivatives designated as hedging instruments were as follows (in thousands):

Location of gain (loss) reclassed from AOCI (effective portion)	Gain (loss) reclassed from AOCI (effective portion)
	Three and six months ended June 30,
	2012		2011
Net revenue, non-directly delivered programs	$	(607)	$	1,559

For the three and six months ended June 30, 2012 and 2011, the amount of gains or losses recognized in the income statement for derivatives not designated as hedging instruments were as follows (in thousands):

		Amount of Gain
Derivative not designated as nnhedging instruments	Location of Gain Recognized in Income on Derivative	Three and six months ended June 30, 2012		Three and six months ended June 30, 2011
Forward contracts	Foreign currency and other expense	$	2	$	183

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Financial information by reporting segment

Segment information for the three and six months ended June 30, 2012 and 2011 were as follows (in thousands):

	Six months ended June 30, 2012						Six months ended June 30, 2011
	Ambassador Programs and Other (1)						Ambassador Programs and Other (1)
			BookRags		Consolidated				BookRags		Consolidated
Total revenue	$	32,068	$	2,203	$	34,271	$	35,801	$	1,917	$	37,718
Gross margin	$	29,169	$	1,900	$	31,069	$	32,236	$	1,655	$	33,891
Depreciation and amortization	$	2,137	$	275	$	2,412	$	2,124	$	240	$	2,364
Operating income	$	6,489	$	819	$	7,308	$	5,219	$	635	$	5,854
Income tax provision	$	1,679	$	193	$	1,872	$	1,874	$	200	$	2,074
Net income	$	5,636	$	656	$	6,292	$	4,246	$	456	$	4,702
Total additions to property, plant, and equipment	$	3,283	$	113	$	3,396	$	1,767	$	128	$	1,895
Total additions to goodwill and intangible assets	$	-	$	293	$	293	$	-	$	213	$	213
Intangible assets, excluding goodwill	$	-	$	3,505	$	3,505	$	-	$	3,361	$	3,361
Total assets	$	132,802	$	17,199	$	150,001	$	142,278	$	15,438	$	157,716
	Three months ended June 30, 2012						Three months ended June 30, 2011
	Ambassador Programs and Other (1)						Ambassador Programs and Other (1)
			BookRags		Consolidated				BookRags		Consolidated
Total revenue	$	30,801	$	1,005	$	31,806	$	35,142	$	914	$	36,056
Gross margin	$	28,788	$	872	$	29,660	$	32,063	$	785	$	32,848
Depreciation and amortization	$	1,096	$	133	$	1,229	$	1,090	$	121	$	1,211
Operating income	$	18,451	$	342	$	18,793	$	19,032	$	257	$	19,289
Income tax provision	$	5,160	$	48	$	5,208	$	6,189	$	75	$	6,264
Net income	$	13,884	$	314	$	14,198	$	13,237	$	194	$	13,431

(1) Ambassador Programs and Other include all travel programs offered by Ambassador Programs and World Adventures Unlimited as well as corporate overhead.

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Investments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Investments and Fair Value Measurements [Abstract]

Fair Value of Investments

The following tables summarize the composition of our investments at June 30, 2012 and December 31, 2011 (in thousands):

								Classification on Balance Sheet
June 30, 2012	Amortized Cost		Unrealized Gains (Losses)			Aggregate Fair Value		Cash and cash equivalents		Short-term available-for-sale securities			Long-term available-for-sale securities
Auction rate securities ("ARS"), greater than one year	$	1,000	$	(286	)	$	714	$	-		$	-	$	714
Money market funds, ninety days or less		71		-			71		71			-		-
Municipal securities1
One year or less		48,989		26			49,015		-			49,015		-
After one year through three years		16,315		116			16,431		-			16,431		-
Greater than three years through five years		13,113		316			13,429		-			13,429		-
Total	$	79,488	$	172		$	79,660	$	71		$	78,875	$	714
								Classification on Balance Sheet
December 31, 2011	Amortized Cost		Unrealized Gains (Losses)			Aggregate Fair Value		Cash and cash equivalents		Short-term available-for-sale securities			Long-term available-for-sale securities
ARS, greater than one year	$	1,000	$	(300	)	$	700	$	-		$	-	$	700
Money market funds, ninety days or less		14,503		-			14,503		14,503			-		-
Municipal securities1
One year or less		3,639		(1	)		3,638		-			3,638		-
After one year through three years		16,679		118			16,797		-			16,797		-
Greater than three years through five years		18,295		398			18,693		-			18,693		-
Total	$	54,116	$	215		$	54,331	$	14,503		$	39,128	$	700

1Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Fair Value by Balance Sheet Grouping

The following table details the fair value measurements of assets and liabilities within the three levels of the fair value hierarchy at June 30, 2012 and December 31, 2011 (in thousands):

			Fair Value Measurements at Reporting Date Using
June 30, 2012	Fair Market Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Financial assets:
ARS	$	714	$	-	$	-	$	714
Money market funds		71		71		-		-
Municipal securities1		78,875		78,875		-		-
Foreign currency exchange contracts		321		-		321		-
Total financial assets	$	79,980	$	78,946	$	321	$	714
Financial liabilities:
Foreign currency exchange contracts		955		-		955		-
Total financial liabilities	$	955	$	-	$	955	$	-
			Fair Value Measurements at Reporting Date Using
December 31, 2011	Fair Market Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Financial assets:
ARS	$	700	$	-	$	-	$	700
Money market funds		14,503		14,503		-		-
Municipal securities1		39,128		39,128		-		-
Foreign currency exchange contracts		115		-		115		-
Total financial assets	$	54,446	$	53,631	$	115	$	700
Financial liabilities:
Foreign currency exchange contracts		1,888		-		1,888		-
Total financial liabilities	$	1,888	$	-	$	1,888	$	-

1 At June 30, 2012, municipal securities consisted of a 56/38/6 percent split between holdings in short-term municipal security funds, municipal revenue bonds and municipal general obligation bonds, respectively. As part of our investment policy, during the first quarter of 2012, we began investing in debt funds comprised of short-term municipal securities. At December 31, 2011, municipal securities consisted of an 83/17 split between municipal revenue bonds and municipal general obligation bonds, respectively, and no short-term municipal funds. In addition, the underlying credit rating of the municipal securities at June 30, 2012 and December 31, 2011 were A+, A1 or better as defined by S&P 500 and Moody's, respectively.

Money market funds and municipal securities are classified as Level 1 assets because market prices are readily available for these investments. Level 2 financial assets and liabilities represent the fair value of our foreign currency exchange contracts that were valued using pricing models that take into account the contract terms, as well as multiple inputs where applicable, such as equity prices, interest rate yield curve, option volatility and currency rates. Level 3 financial assets represent the fair value of our auction-rate securities ("ARS"), which were valued using a pricing model that takes into account the average life of the underlying collateral, the rate of return, and the spread used for similar issuances.

Fair Value of Level 3 Assets Measured on a Recurring Basis

Fair value measurements on a recurring basis using Level 3 inputs only consist of available-for-sale ARS. The following table presents a reconciliation for the three and six months ended June 30, 2012 and 2011, of available-for-sale ARS measured at fair value on a recurring basis using Level 3 inputs (in thousands):

	Six months ended June 30,				Three months ended June 30,
	2012		2011		2012		2011
Beginning balance	$	700	$	1,250	$	703	$	1,249
Total realized / unrealized losses:
Included in earnings		-		-		-		-
Included in OCI		14		-		11		1
Purchases, sales, issuances, and settlements, net		-		-		-		-
Ending balance	$	714	$	1,250	$	714	$	1,250

Unrealized Gains and Losses Included in Accumulated Other Comprehensive Income

The following table summarizes the balances of accumulated other comprehensive income ("AOCI") and the gain (loss) recognized in other comprehensive income ("OCI") related to unrealized gains and losses for available-for-sale securities in the periods indicated (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Available-for-sale securities
	2012			2011
Balance, January 1,	$	135			$	(177	)
Other comprehensive income (loss), net of income taxes		(27	)			306
Balance, June 30,	$	108			$	129

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Supplemental Disclosures of Consolidated Statements of Cash Flows

6 Months Ended

Jun. 30, 2012

Supplemental Disclosures of Consolidated Statements of Cash Flows [Abstract]

Supplemental Disclosures of Consolidated Statements of Cash Flows

8. Supplemental Disclosures of Consolidated Statements of Cash Flows

Our non-cash investing and financing activities during the six months ended June 30, 2012 and 2011, were as follows (in thousands):

	June 30, 2012			June 30, 2011
Unrealized gain (loss) on foreign currency exchange contracts	$	1,139		$	(276	)
Unrealized gain (loss) on available-for-sale securities	$	(42	)	$	471
Property and Equipment	$	692		$	(106	)

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Net Income and Dividends per Share

6 Months Ended

Jun. 30, 2012

Net Income and Dividends per Share [Abstract]

Net Income and Dividends per Share

6. Net Income and Dividends per Share

The following table presents a reconciliation of basic and diluted income per share computations (in thousands, except per share data and anti-dilutive stock option counts):

	Six months ended June 30,				Three months ended June 30,
	2012		2011		2012		2011
Numerator:
Net income	$	6,292	$	4,702	$	14,198	$	13,431
Denominator:
Weighted-average shares outstanding		17,215		17,513		17,217		17,344
Effect of unvested restricted stock awards considered participating securities		385		328		385		328
Weighted-average shares outstanding - basic		17,600		17,841		17,602		17,672
Effect of dilutive common stock options		-		169		-		152
Weighted-average shares outstanding - diluted		17,600		18,010		17,602		17,824
Net income per share - basic	$	0.36	$	0.26	$	0.81	$	0.76
Net income per share - diluted	$	0.36	$	0.26	$	0.81	$	0.75
Cash dividends declared per share	$	0.12	$	0.12	$	0.06	$	0.06
Stock options excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive		1,402,714		1,105,954		1,253,287		1,201,527

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Segment Reporting

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Segment Reporting

7. Segment Reporting

Our operations are organized in two reporting segments, 1) "Ambassador Programs and Other," which provides educational travel services to students and professionals through multiple itineraries within five travel program types and corporate overhead, and 2) "BookRags," which provides online research capabilities through book summaries, critical essays, online study guides, lesson plans, biographies, and references to encyclopedia articles.

Ambassador Programs and Other's gross margin is comprised of gross receipts less direct program costs, including accommodations, transportation, speakers, facilitators, and event costs. BookRags' gross margin is comprised of content and subscription and advertising revenues via www.BookRags.com, less affiliate commissions and amortization of intangible assets directly associated with sales.

Segment information for the three and six months ended June 30, 2012 and 2011 were as follows (in thousands):

	Six months ended June 30, 2012						Six months ended June 30, 2011
	Ambassador Programs and Other (1)						Ambassador Programs and Other (1)
			BookRags		Consolidated				BookRags		Consolidated
Total revenue	$	32,068	$	2,203	$	34,271	$	35,801	$	1,917	$	37,718
Gross margin	$	29,169	$	1,900	$	31,069	$	32,236	$	1,655	$	33,891
Depreciation and amortization	$	2,137	$	275	$	2,412	$	2,124	$	240	$	2,364
Operating income	$	6,489	$	819	$	7,308	$	5,219	$	635	$	5,854
Income tax provision	$	1,679	$	193	$	1,872	$	1,874	$	200	$	2,074
Net income	$	5,636	$	656	$	6,292	$	4,246	$	456	$	4,702
Total additions to property, plant, and equipment	$	3,283	$	113	$	3,396	$	1,767	$	128	$	1,895
Total additions to goodwill and intangible assets	$	-	$	293	$	293	$	-	$	213	$	213
Intangible assets, excluding goodwill	$	-	$	3,505	$	3,505	$	-	$	3,361	$	3,361
Total assets	$	132,802	$	17,199	$	150,001	$	142,278	$	15,438	$	157,716
	Three months ended June 30, 2012						Three months ended June 30, 2011
	Ambassador Programs and Other (1)						Ambassador Programs and Other (1)
			BookRags		Consolidated				BookRags		Consolidated
Total revenue	$	30,801	$	1,005	$	31,806	$	35,142	$	914	$	36,056
Gross margin	$	28,788	$	872	$	29,660	$	32,063	$	785	$	32,848
Depreciation and amortization	$	1,096	$	133	$	1,229	$	1,090	$	121	$	1,211
Operating income	$	18,451	$	342	$	18,793	$	19,032	$	257	$	19,289
Income tax provision	$	5,160	$	48	$	5,208	$	6,189	$	75	$	6,264
Net income	$	13,884	$	314	$	14,198	$	13,237	$	194	$	13,431

(1) Ambassador Programs and Other include all travel programs offered by Ambassador Programs and World Adventures Unlimited as well as corporate overhead.

Any intercompany sales or services provided are eliminated upon consolidation.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

 

9.  Commitments and Contingencies

On July 14, 2009, a securities class action was filed against us and certain of our executive officers on behalf of all persons or entities who purchased our Common Stock between February 8, 2007 and October 23, 2007, in the United States District Court for the Eastern District of Washington. As previously disclosed by the Company in a Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on April 18, 2011, an agreement was reached to settle the securities class action. Under the terms of the settlement, our insurance carriers have paid the settlement amount of $7.5 million, in complete settlement of all claims, without any admission of wrongdoing or liability by the Company or any party in the action. Throughout the litigation, the Company and the individual defendants have denied, and continue to deny, the allegations made against them. The settlement agreement, which includes a release for all defendants and other provisions common in such agreements, was preliminarily approved by the Court on September 6, 2011. The Court held a hearing to consider final approval of the settlement, the plan of allocation, and the motion for the award of plaintiffs' attorneys' fees on November 30, 2011, but delayed ruling on these matters pending submission of additional materials by the lead plaintiff. The lead plaintiff submitted the requested additional materials on December 30, 2011, January 17, 2012, and March 19, 2012. On June 28, 2012, the Court entered a final order approving the settlement and related matters. As the settlement is covered and was funded by the Company's insurance carrier, the settlement is not expected to have a material adverse effect on our business, financial condition or results of operations.

On October 27, 2009, we were informed by the SEC that it had issued a formal order of investigation with respect to trading in the Company's securities. We believe that the investigation was for the period August through December 2007. The SEC indicated that the investigation should not be construed as an indication that any violation of law has occurred or as an adverse reflection upon any person, entity or security. The Company has been informed that the U.S. Department of Justice, which had been involved in the investigation, has closed its investigation, and is not taking enforcement action, against the Company or any of its officers, directors or employees.

Other than as disclosed herein, we are not a party to any other material pending legal proceedings other than ordinary routine litigation incidental to our business; the outcome of which we believe will not have a material adverse effect on our business, financial condition, cash flows or results of operations. These matters are subject to inherent uncertainties and management's view of these matters may change in the future. Adverse outcomes in some or all of the matters described in this section may result in significant monetary damages or injunctive relief against us that would adversely affect our results of operations.

We are subject to the possibility of various loss contingencies, including claims, suits and complaints, arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted and whether new accruals are required.

Under our Bylaws, our directors and officers have certain rights to indemnification by us against certain liabilities that may arise by reason of their status or service as directors or officers. We maintain director and officer insurance, which covers certain liabilities arising from our obligation to indemnify our directors and officers and former directors in certain circumstances. No material indemnification liabilities were accrued at June 30, 2012.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Schedule of Share-based Payment Award, Valuation Assumptions

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the three and six months ended June 30, 2012 and 2011.

	Six months ended			Six months ended		Three months ended		Three months ended
	June 30, 2012			June 30, 2011		June 30, 2012		June 30, 2011
Expected dividend yield		4.39	%	2.16	%	4.72	%	2.17	%
Expected stock price volatility		60.85	%	62.01	%	60.61	%	63.60	%
Risk-free interest rate		1.79	%	1.95	%	1.89	%	1.89	%
Expected life of options		4.47	Years	5.27	Years	4.46	Years	4.75	Years
Estimated fair value per option granted	$	1.89		$4.69		$1.83		$4.59

Schedule of Share-based Compensation, Stock Options, Activity

The following table presents information about outstanding common stock options and restricted grants as of June 30, 2012:

		Options and Awards Outstanding				Options Exercisable
Range of Exercise Prices		Shares	Weighted- Average Remaining Contractual Life (years)	Weighted-Average Exercise Price		Shares	Weighted- Average Exercise Price
Restricted Stock Awards
$	0 .00	385,122	2.19		N/A	N/A		N/A
Stock Options
$	4.52 - 6.93	368,209	9.44	$	4.73	4,000	$	6.21
	6.94 - 10.39	283,699	4.98		9.15	213,685		9.29
	10.40 - 13.86	447,119	7.60		11.52	183,599		11.65
	13.87 - 17.32	279,734	3.89		16.90	279,734		16.90
	17.33 - 20.79	7,328	5.86		18.41	7,328		18.41
	20.80 - 24.25	1,000	3.12		21.09	1,000		21.09
	24.26 - 27.72	179,146	3.73		27.07	179,146		27.07
	27.73 - 31.18	6,937	4.30		29.48	6,937		29.48
	31.19 - 34.65	4,448	4.84		34.65	4,448		34.65
	Total Stock Options	1,577,620	6.43		9.98	879,877		16.19
	Combined	1,962,742	5.60		9.98	879,877		16.19

Schedule of Share-based Compensation, Activity

The following table presents information about stock option and restricted stock activity during the six months ended June 30, 2012:

	Restricted Stock Awarded	Weighted-Average Grant Date Fair Value		Stock Options	Weighted- Average Exercise Price
Balance at December 31, 2011	374,957	$	8.82	1,962,321	$	11.56
Granted	43,120		5.12	116,620		5.12
Forfeited	(24,924)		9.22	(501,321)		7.39
Vested	(8,031)		9.34	N/A		N/A
Exercised	N/A		N/A	-		-
Balance at June 30, 2012	385,122	$	8.37	1,577,620	$	12.41

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Investments and Fair Value Measurements (Details) (USD $)	3 Months Ended			6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011	Jun. 30, 2012		Jun. 30, 2011	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 79,488,000			$ 79,488,000			$ 54,116,000
Unrealized Gains (Losses)	172,000			172,000			215,000
Aggregate Fair Value	79,660,000			79,660,000			54,331,000
Cash and cash equivalents	71,000			71,000			14,503,000
Short-term available-for-sale securities	78,875,000			78,875,000			39,128,000
Long-term available-for-sale securities	714,000			714,000			700,000
Number of investments that failed at auction	1			1
Available-for-sale Securities, Failed Auction, Value	1,000,000			1,000,000
Financial assets [Abstract]
Available for sale auction rate securities fair value disclosure	0			0			0
Money market funds	0			0			0
Available for sale municipal securities fair value disclosure	0	[1]		0	[1]		0	[1]
Foreign currency exchange contracts, assets	0			0			0
Total financial assets	0			0			0
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency exchange contracts, liabilities	0			0			0
Total financial liabilities	0			0			0
Short-term municipal security funds as a percentage of municipal securities (in hundredths)	56.00%			56.00%
Municipal revenue bonds as a percentage of municipal securities (in hundredths)	38.00%			38.00%			83.00%
Municipal general obligation bonds as a percentage of municipal securities (in hundredths)	6.00%			6.00%			17.00%
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	703,000		1,249,000	700,000		1,250,000
Total realized / unrealized losses [abstract]
Included in earnings	0		0	0		0
Included in OCI	11,000		1,000	14,000		0
Purchases, sales, issuances, and settlements, net	0		0	0		0
Ending balance	714,000		1,250,000	714,000		1,250,000
Accumulated Other Comprehensive Income, unrealized gains and losses on available for sale securities [Roll Forward]
Balance, January 1,				135		(177)
Other comprehensive income (loss), net of income taxes				(27)		306
Balance, June 30,	108		129	108		129
Estimate of Fair Value, Fair Value Disclosure [Member]
Financial assets [Abstract]
Available for sale auction rate securities fair value disclosure	714,000			714,000			700,000
Money market funds	71,000			71,000			14,503,000
Available for sale municipal securities fair value disclosure	78,875,000	[1]		78,875,000	[1]		39,128,000	[1]
Foreign currency exchange contracts, assets	321,000			321,000			115,000
Total financial assets	79,981,000			79,981,000			54,446,000
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency exchange contracts, liabilities	955,000			955,000			1,888,000
Total financial liabilities	955,000			955,000			1,888,000
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets [Abstract]
Available for sale auction rate securities fair value disclosure	0			0			0
Money market funds	71,000			71,000			14,503,000
Available for sale municipal securities fair value disclosure	78,875,000	[1]		78,875,000	[1]		39,128,000	[1]
Foreign currency exchange contracts, assets	0			0			0
Total financial assets	78,946,000			78,946,000			53,631,000
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency exchange contracts, liabilities	0			0			0
Total financial liabilities	0			0			0
Significant Other Observable Inputs (Level 2) [Member]
Financial assets [Abstract]
Available for sale auction rate securities fair value disclosure	0			0			0
Money market funds	0			0			0
Available for sale municipal securities fair value disclosure	0	[1]		0	[1]		0	[1]
Foreign currency exchange contracts, assets	321,000			321,000			115,000
Total financial assets	321,000			321,000			115,000
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency exchange contracts, liabilities	955,000			955,000			1,888,000
Total financial liabilities	955,000			955,000			1,888,000
Significant Other Unobservable Inputs (Level 3) [Member]
Financial assets [Abstract]
Available for sale auction rate securities fair value disclosure	714,000			714,000			700,000
Money market funds	0			0			0
Available for sale municipal securities fair value disclosure	0	[1]		0	[1]		0	[1]
Foreign currency exchange contracts, assets	0			0			0
Total financial assets	714,000			714,000			700,000
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency exchange contracts, liabilities	0			0			0
Total financial liabilities	0			0			0
Auction rate securities (ARS) greater than one year [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,000,000			1,000,000			1,000,000
Unrealized Gains (Losses)	(286,000)			(286,000)			(300,000)
Aggregate Fair Value	714,000			714,000			700,000
Cash and cash equivalents	0			0			0
Short-term available-for-sale securities	0			0			0
Long-term available-for-sale securities	714,000			714,000			700,000
Basis points	35100.00%			35100.00%
Cost basis	1,000,000			1,000,000
Money market funds, ninety days or less [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	71,000			71,000			14,503,000
Unrealized Gains (Losses)	0			0			0
Aggregate Fair Value	71,000			71,000			14,503,000
Cash and cash equivalents	71,000			71,000			14,503,000
Short-term available-for-sale securities	0			0			0
Long-term available-for-sale securities	0			0			0
Municipal securities maturing in one year or less [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	48,989,000	[2]		48,989,000	[2]		3,639,000	[2]
Unrealized Gains (Losses)	26,000	[2]		26,000	[2]		(1,000)	[2]
Aggregate Fair Value	49,015,000	[2]		49,015,000	[2]		3,638,000	[2]
Cash and cash equivalents	0	[2]		0	[2]		0	[2]
Short-term available-for-sale securities	49,015,000	[2]		49,015,000	[2]		3,638,000	[2]
Long-term available-for-sale securities	0	[2]		0	[2]		0	[2]
Municipal securities maturing after one year through three years [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	16,315,000	[2]		16,315,000	[2]		16,679,000	[2]
Unrealized Gains (Losses)	116,000	[2]		116,000	[2]		118,000	[2]
Aggregate Fair Value	16,431,000	[2]		16,431,000	[2]		16,797,000	[2]
Cash and cash equivalents	0	[2]		0	[2]		0	[2]
Short-term available-for-sale securities	16,431,000	[2]		16,431,000	[2]		16,797,000	[2]
Long-term available-for-sale securities	0	[2]		0	[2]		0	[2]
Municipal securities maturing greater than three years through five years [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	13,113,000	[2]		13,113,000	[2]		18,295,000	[2]
Unrealized Gains (Losses)	316,000	[2]		316,000	[2]		398,000	[2]
Aggregate Fair Value	13,429,000	[2]		13,429,000	[2]		18,693,000	[2]
Cash and cash equivalents	0	[2]		0	[2]		0	[2]
Short-term available-for-sale securities	13,429,000	[2]		13,429,000	[2]		18,693,000	[2]
Long-term available-for-sale securities	$ 0	[2]		$ 0	[2]		$ 0	[2]

[1] At June 30, 2012, municipal securities consisted of a 56/38/6 percent split between holdings in short-term municipal security funds, municipal revenue bonds and municipal general obligation bonds, respectively. As part of our investment policy, during the first quarter of 2012, we began investing in debt funds comprised of short-term municipal securities. At December 31, 2011, municipal securities consisted of an 83/17 split between municipal revenue bonds and municipal general obligation bonds, respectively, and no short-term municipal funds. In addition, the underlying credit rating of the municipal securities at June 30, 2012 and December 31, 2011 were A+, A1 or better as defined by S&P 500 and Moody's, respectively.

[2] Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract]
Net income	$ 14,198	$ 13,431	$ 6,292	$ 4,702
Unrealized gain (loss) on foreign currency exchange contracts, net of income tax benefit (provision) of $75, $536, $(399), $95	(192)	(996)	740	(177)
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (provision) of $70, ($183), $14, ($165)	(135)	339	(27)	306
Comprehensive income	$ 13,871	$ 12,774	$ 7,005	$ 4,831

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Investments and Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Investments and Fair Value Measurements [Abstract]

Investments and Fair Value Measurements

3. Investments and Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market, and we consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance.

Our financial instruments are measured and recorded at fair value. Our non-financial assets, including property and equipment, intangible assets and goodwill, are measured at fair value upon acquisition, reviewed annually, and are fully assessed if there is an indicator of impairment. An adjustment would be made to record non-financial assets at fair value only when an impairment charge is recognized.

Fair value is determined for assets and liabilities using a three-tiered hierarchy, based upon significant levels of inputs as follows:

- Level 1 - Quoted prices in active markets for identical assets or liabilities.

- Level 2 - Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

- Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following tables summarize the composition of our investments at June 30, 2012 and December 31, 2011 (in thousands):

								Classification on Balance Sheet
June 30, 2012	Amortized Cost		Unrealized Gains (Losses)			Aggregate Fair Value		Cash and cash equivalents		Short-term available-for-sale securities			Long-term available-for-sale securities
Auction rate securities ("ARS"), greater than one year	$	1,000	$	(286	)	$	714	$	-		$	-	$	714
Money market funds, ninety days or less		71		-			71		71			-		-
Municipal securities1
One year or less		48,989		26			49,015		-			49,015		-
After one year through three years		16,315		116			16,431		-			16,431		-
Greater than three years through five years		13,113		316			13,429		-			13,429		-
Total	$	79,488	$	172		$	79,660	$	71		$	78,875	$	714
								Classification on Balance Sheet
December 31, 2011	Amortized Cost		Unrealized Gains (Losses)			Aggregate Fair Value		Cash and cash equivalents		Short-term available-for-sale securities			Long-term available-for-sale securities
ARS, greater than one year	$	1,000	$	(300	)	$	700	$	-		$	-	$	700
Money market funds, ninety days or less		14,503		-			14,503		14,503			-		-
Municipal securities1
One year or less		3,639		(1	)		3,638		-			3,638		-
After one year through three years		16,679		118			16,797		-			16,797		-
Greater than three years through five years		18,295		398			18,693		-			18,693		-
Total	$	54,116	$	215		$	54,331	$	14,503		$	39,128	$	700

1Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

The following table details the fair value measurements of assets and liabilities within the three levels of the fair value hierarchy at June 30, 2012 and December 31, 2011 (in thousands):

			Fair Value Measurements at Reporting Date Using
June 30, 2012	Fair Market Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Financial assets:
ARS	$	714	$	-	$	-	$	714
Money market funds		71		71		-		-
Municipal securities1		78,875		78,875		-		-
Foreign currency exchange contracts		321		-		321		-
Total financial assets	$	79,980	$	78,946	$	321	$	714
Financial liabilities:
Foreign currency exchange contracts		955		-		955		-
Total financial liabilities	$	955	$	-	$	955	$	-
			Fair Value Measurements at Reporting Date Using
December 31, 2011	Fair Market Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Financial assets:
ARS	$	700	$	-	$	-	$	700
Money market funds		14,503		14,503		-		-
Municipal securities1		39,128		39,128		-		-
Foreign currency exchange contracts		115		-		115		-
Total financial assets	$	54,446	$	53,631	$	115	$	700
Financial liabilities:
Foreign currency exchange contracts		1,888		-		1,888		-
Total financial liabilities	$	1,888	$	-	$	1,888	$	-

1 At June 30, 2012, municipal securities consisted of a 56/38/6 percent split between holdings in short-term municipal security funds, municipal revenue bonds and municipal general obligation bonds, respectively. As part of our investment policy, during the first quarter of 2012, we began investing in debt funds comprised of short-term municipal securities. At December 31, 2011, municipal securities consisted of an 83/17 split between municipal revenue bonds and municipal general obligation bonds, respectively, and no short-term municipal funds. In addition, the underlying credit rating of the municipal securities at June 30, 2012 and December 31, 2011 were A+, A1 or better as defined by S&P 500 and Moody's, respectively.

Money market funds and municipal securities are classified as Level 1 assets because market prices are readily available for these investments. Level 2 financial assets and liabilities represent the fair value of our foreign currency exchange contracts that were valued using pricing models that take into account the contract terms, as well as multiple inputs where applicable, such as equity prices, interest rate yield curve, option volatility and currency rates. Level 3 financial assets represent the fair value of our auction-rate securities ("ARS"), which were valued using a pricing model that takes into account the average life of the underlying collateral, the rate of return, and the spread used for similar issuances.

Fair value measurements on a recurring basis using Level 3 inputs only consist of available-for-sale ARS. The following table presents a reconciliation for the three and six months ended June 30, 2012 and 2011, of available-for-sale ARS measured at fair value on a recurring basis using Level 3 inputs (in thousands):

	Six months ended June 30,				Three months ended June 30,
	2012		2011		2012		2011
Beginning balance	$	700	$	1,250	$	703	$	1,249
Total realized / unrealized losses:
Included in earnings		-		-		-		-
Included in OCI		14		-		11		1
Purchases, sales, issuances, and settlements, net		-		-		-		-
Ending balance	$	714	$	1,250	$	714	$	1,250

The credit markets have experienced uncertainty, which may continue to impact the markets where our ARS would be offered. During the six months ended June 30, 2012, we experienced one failed ARS auction, representing principal of $1.0 million. This remaining ARS continues to be classified as a long-term asset due to the high probability that the ARS may fail in future auctions. The next scheduled auction for this ARS is March 7, 2013. We have determined that there is no other-than-temporary impairment on this security, since we do not intend and are not required to sell this security before we have recovered the amortized cost basis, there has been no further deterioration of the credit rating of this investment, interest payments at coupon rate continue to be received and we expect to recover the amortized cost basis of this security. We will continue to reassess liquidity in future reporting periods based on several factors, including the success or failure of future auctions, possible failure of the investment to be redeemed, deterioration of the credit rating of the investment, market risk and other factors.

In determining the fair value of bond and ARS investments, we consider the individual ratings of each holding. With regard to bonds, we consider the following: the underlying rating of the issuer irrespective of the insurance; the performance of the issuer; the term of the bond; and the quality of bond insurance provided by the rating of the bond insurer. With regard to valuation of our ARS, we consider the underlying credit quality of comparable student loan portfolios, the average life of the underlying student loan assets, and apply a discount related to the illiquidity of our ARS due to past failed auctions. Based on these inputs, we have applied a discount of 351-basis points to the London interbank offered rate resulting in a valuation of $0.7 million from a costs basis of $1.0 million as of June 30, 2012. At the reporting dates and in the future, we recognize that this investment is subject to general credit, liquidity, market and interest rate risks, which have been exacerbated by the current global financial environment. The fair value of this investment accordingly will continue to change, and we will continue to evaluate its carrying value.

The following table summarizes the balances of accumulated other comprehensive income ("AOCI") and the gain (loss) recognized in other comprehensive income ("OCI") related to unrealized gains and losses for available-for-sale securities in the periods indicated (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Available-for-sale securities
	2012			2011
Balance, January 1,	$	135			$	(177	)
Other comprehensive income (loss), net of income taxes		(27	)			306
Balance, June 30,	$	108			$	129

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Derivative Financial Instruments (Details) (USD $)	6 Months Ended					3 Months Ended		6 Months Ended				3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Jun. 30, 2012 Designated as Hedging Instrument [Member]	Dec. 31, 2011 Designated as Hedging Instrument [Member]	Jun. 30, 2012 Designated as Hedging Instrument [Member] Forward Contracts [Member] Net revenue, non-directly delivered programs [Member]	Jun. 30, 2011 Designated as Hedging Instrument [Member] Forward Contracts [Member] Net revenue, non-directly delivered programs [Member]	Jun. 30, 2012 Designated as Hedging Instrument [Member] Forward Contracts [Member] Net revenue, non-directly delivered programs [Member]	Jun. 30, 2011 Designated as Hedging Instrument [Member] Forward Contracts [Member] Net revenue, non-directly delivered programs [Member]	Jun. 30, 2012 Not Designated as Hedging Instrument [Member]	Dec. 31, 2011 Not Designated as Hedging Instrument [Member]	Jun. 30, 2012 Not Designated as Hedging Instrument [Member] Forward Contracts [Member] Foreign currency and other expense [Member]	Jun. 30, 2011 Not Designated as Hedging Instrument [Member] Forward Contracts [Member] Foreign currency and other expense [Member]	Jun. 30, 2012 Not Designated as Hedging Instrument [Member] Forward Contracts [Member] Foreign currency and other expense [Member]	Jun. 30, 2011 Not Designated as Hedging Instrument [Member] Forward Contracts [Member] Foreign currency and other expense [Member]	Jun. 30, 2012 Foreign Currency Contract One [Member]	Jun. 30, 2012 Foreign Currency Contract One [Member] Minimum [Member]	Jun. 30, 2012 Foreign Currency Contract One [Member] Maximum [Member]	Jun. 30, 2012 Foreign Currency Contract Two [Member]	Jun. 30, 2012 Foreign Currency Contract Two [Member] Minimum [Member]	Jun. 30, 2012 Foreign Currency Contract Two [Member] Maximum [Member]	Jun. 30, 2012 Foreign Currency Contract Three [Member]	Jun. 30, 2012 Foreign Currency Contract Three [Member] Minimum [Member]	Jun. 30, 2012 Foreign Currency Contract Three [Member] Maximum [Member]	Jun. 30, 2012 Foreign Currency Contract Four [Member]	Jun. 30, 2012 Foreign Currency Contract Four [Member] Minimum [Member]	Jun. 30, 2012 Foreign Currency Contract Four [Member] Maximum [Member]	Jun. 30, 2012 Foreign Currency Contract Five [Member]	Jun. 30, 2012 Foreign Currency Contract Five [Member] Minimum [Member]	Jun. 30, 2012 Foreign Currency Contract Five [Member] Maximum [Member]
Derivative [Line Items]
Currency of forward contract																Australian dollar			British pound			Euro			New Zealand dollar			Canadian dollar
Notional amount of foreign currency forward contracts																$ 1,880,000			$ 3,220,000			$ 6,300,000			$ 315,000			$ 2,380,000
Derivative maturity date range																	Jul. 31, 2012	Jul. 31, 2013		Jul. 31, 2012	Jul. 31, 2013		Jul. 31, 2012	Jul. 31, 2013		Mar. 31, 2013	Jul. 31, 2013		Feb. 28, 2013	Jun. 30, 2013
Derivatives, Fair Value [Line Items]
Forward contracts, assets				321,000	115,000					0	0
Forward contracts, liabilities				955,000	1,888,000					0	0
Total forward contracts	634,000		1,773,000
Beginning Balance	(1,153,000)	1,210,000
Other comprehensive income (loss), net of income taxes	740,000	(177,000)
Ending Balance	(413,000)	1,033,000
Forward contracts expected to be reclassified in net revenue during next 12 months	400,000
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) reclassed from AOCI (effective portion)						(607,000)	1,559,000	(607,000)	1,559,000
Amount og gain loss recognized in income statement												$ 2,000	$ 183,000	$ 2,000	$ 183,000

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Derivative Financial Instruments [Abstract]

Foreign Currency Contracts, by Maturity

At June 30, 2012, the following forward contracts were outstanding (in thousands):

	Notional Amount		Matures
Forward contracts:
Euro		6,300	July 2012 - July 2013
British pound		3,220	July 2012 - June 2013
Canadian dollar		2,380	February 2013 - June 2013
Australian dollar		1,880	July 2012 - July 2013
New Zealand dollar		315	March 2013 - July 2013

Forward Contracts, by Hedging Designation

The fair value of our forward contracts were as follows (in thousands):

	June 30, 2012
	Derivatives designated as hedging instruments				Derivatives not designated as hedging instruments				Total Net
	Assets		Liabilities		Assets		Liabilities		Liabilities
Forward contracts	$	321	$	955	$	-	$	-	$	634
	December 31, 2011
	Derivatives designated as hedging instruments				Derivatives not designated as hedging instruments				Total Net
	Assets		Liabilities		Assets		Liabilities		Liabilities
Forward contracts	$	115	$	1,888	$	-	$	-	$	1,773

Unrealized Gains and Losses included in AOCI

The following table summarizes the balances of AOCI and the gain (loss) recognized in OCI for derivatives designated as hedging instruments (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Foreign currency exchange contracts
	2012			2011
Balance, January 1,	$	(1,153	)	$	1,210
Other comprehensive income (loss), net of income taxes		740			(177	)
Balance, June 30,	$	(413	)	$	1,033

Income statement for derivatives designated as hedging instruments

For the three and six months ended June 30, 2012 and 2011, the amount of gains or losses recognized in the income statement for derivatives designated as hedging instruments were as follows (in thousands):

Location of gain (loss) reclassed from AOCI (effective portion)	Gain (loss) reclassed from AOCI (effective portion)
	Three and six months ended June 30,
	2012		2011
Net revenue, non-directly delivered programs	$	(607)	$	1,559

Gains and Losses on Derivatives Not Designated as Hedging Instruments

For the three and six months ended June 30, 2012 and 2011, the amount of gains or losses recognized in the income statement for derivatives not designated as hedging instruments were as follows (in thousands):

		Amount of Gain
Derivative not designated as nnhedging instruments	Location of Gain Recognized in Income on Derivative	Three and six months ended June 30, 2012		Three and six months ended June 30, 2011
Forward contracts	Foreign currency and other expense	$	2	$	183