Delaware
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No. 0-33347
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91-1957010
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(State or Other Jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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¨
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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AM AMBASSADORS GROUP, INC.
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||||||||
Date: February 5, 2014
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By: By:
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Anthony F. Dombrowik
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||||||
/s/
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Anthony F. Dombrowik
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|||||||
ChJ.Interim Chief Executive Officer, Chief Financial Officer
(Principal Executive Officer and Financial Officer)
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Exhibit
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|||
Number
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Description |
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99.1
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Press Release, dated February 5, 2014
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Exhibit 99.1
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NEWS FOR IMMEDIATE RELEASE
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February 5, 2014
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Investor Relations:
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Stacy Feit
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Financial Relations Board
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(213) 486-6549
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●
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Gross revenue, from all sources including non-directly delivered programs, of $116.2 million for the year ended December 31, 2013 compared to $139.9 million in 2012. Traveled 18,251 delegates compared to 21,252 delegates in 2012.
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●
|
2013 gross margin of 37.5 percent compared to 36.7 percent in 2012.
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●
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Special items totaled $7.2 million, net of tax, including $5.1 million of non-cash expenses recorded for asset impairments, restructuring charges and separation costs in 2013.
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●
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2013 operating expenses, excluding the impact of special items of $11.4 million, declined $5.4 million year-over-year.
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●
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Net loss of $7.1 million in 2013 compared to net income of $1.7 million in 2012; Net income before special items of $0.1 million compared to $3.2 million last year.
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●
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Cash and cash equivalents and available-for-sale securities balance of $46.4 million; deployable cash, as defined, of $22.6 million and no debt outstanding.
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●
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Enrolled revenue for 2014 programs down 3.2 percent year-over-year for all programs and 4.0 percent year-over-year for core Student Ambassador Programs. Prior year enrolled travelers for Discovery Student Adventures and People to People China programs have been excluded for year-over-year comparability given the Company’s decision to no longer operate these programs in 2014. Enrolled revenue has been adversely impacted by increased withdrawal rates since last quarter, which we are actively addressing.
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UNAUDITED
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||||||||||||||||
Quarter ended December 31,
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Year ended December 31,
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|||||||||||||||
2013
|
2012 |
2013
|
2012 | |||||||||||||
Gross revenue, all travel programs
|
$ | 1,980 | $ | 1,179 | $ | 112,244 | $ | 135,742 | ||||||||
Internet content and advertising revenue
|
$ | 1,037 | $ | 1,101 | $ | 3,975 | $ | 4,207 | ||||||||
Gross revenue, all sources
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$ | 3,017 | $ | 2,280 | $ | 116,219 | $ | 139,949 | ||||||||
Gross margin, all travel programs
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$ | 513 | $ | 313 | $ | 40,174 | $ | 47,738 | ||||||||
Gross margin, internet content and advertising
|
$ | 904 | $ | 968 | $ | 3,462 | $ | 3,653 | ||||||||
Gross margin, all sources
|
$ | 1,417 | $ | 1,281 | $ | 43,636 | $ | 51,391 | ||||||||
Gross margin percentage
|
47.0 | % | 56.2 | % | 37.5 | % | 36.7 | % | ||||||||
Operating expense
|
$ | 10,320 | $ | 12,497 | $ | 55,419 | $ | 51,069 | ||||||||
Operating expense, before special items
|
$ | 9,707 | $ | 12,531 | $ | 43,975 | $ | 49,357 | ||||||||
Operating income, internet content and advertising
|
$ | 344 | $ | 269 | $ | 1,302 | $ | 1,327 | ||||||||
Net Income (loss)
|
$ | (5,496 | ) | $ | (10,033 | ) | $ | (7,077 | ) | $ | 1,744 | |||||
Net Income (loss) before special items
|
$ | (5,110 | ) | $ | (10,064 | ) | $ | 136 | $ | 3,208 | ||||||
Income (loss) per diluted share
|
$ | (0.32 | ) | $ | (0.58 | ) | $ | (0.42 | ) | $ | 0.10 | |||||
Income (loss) per diluted share before special items
|
$ | (0.30 | ) | $ | (0.58 | ) | $ | 0.01 | $ | 0.18 |
UNAUDITED
|
||||||||
Twelve months ended December 31,
|
||||||||
2013
|
2012
|
|||||||
Net cash provided by operating activities
|
$ | 14,754 | $ | 2,219 | ||||
Purchases of property, equipment and intangibles
|
(3,454 | ) | (5,672 | ) | ||||
Free cash flow
|
11,300 | (3,453 | ) | |||||
Net proceeds from sale (purchase) of available-for-sale securities
|
(4,320 | ) | 6,499 | |||||
Dividend payments to shareholders
|
(1,017 | ) | (13,012 | ) | ||||
Repurchase of common stock
|
(509 | ) | (3,056 | ) | ||||
Other cash flows, net
|
(2,131 | ) | (347 | ) | ||||
Net increase (decrease) in cash and cash equivalents
|
$ | 3,323 | $ | (13,369 | ) |
● |
Consolidated gross revenues for all programs and operations to be between $110.0 million and $120.0 million;
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●
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Consolidated gross margin as a percentage of gross revenue for all programs and operations of 36 percent to 37 percent; and
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●
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Net income before any special items of between $1 million and $3 million.
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UNAUDITED
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||||||||||||||||
Quarter ended December 31,
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||||||||||||||||
2013
|
2012
|
$ Change
|
% Change
|
|||||||||||||
Net revenue, non-directly delivered programs (1)
|
$ | 498 | $ | 248 | $ | 250 | 101 | % | ||||||||
Gross revenue, directly delivered programs (2)
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8 | - | 8 | 100 | % | |||||||||||
Internet content and advertising revenue
|
1,037 | 1,101 | (64 | ) | -6 | % | ||||||||||
Total revenue
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1,543 | 1,349 | 194 | 14 | % | |||||||||||
Cost of sales, directly delivered programs (2)
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(7 | ) | (65 | ) | 58 | 89 | % | |||||||||
Cost of sales, internet content and advertising
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133 | 133 | - | 0 | % | |||||||||||
Gross margin (3)
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1,417 | 1,281 | 136 | 11 | % | |||||||||||
Operating expenses:
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||||||||||||||||
Selling and marketing
|
6,887 | 8,386 | (1,499 | ) | -18 | % | ||||||||||
General and administration
|
2,972 | 4,111 | (1,139 | ) | -28 | % | ||||||||||
Restructuring costs
|
456 | - | 456 | 100 | % | |||||||||||
Asset impairments
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5 | - | 5 | 100 | % | |||||||||||
Total operating expenses
|
10,320 | 12,497 | (2,177 | ) | -17 | % | ||||||||||
Operating loss
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(8,903 | ) | (11,216 | ) | 2,313 | 21 | % | |||||||||
Other income (expense):
|
||||||||||||||||
Interest and dividend income
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174 | 276 | (102 | ) | -37 | % | ||||||||||
Foreign currency and other income
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1 | (8 | ) | 9 | 113 | % | ||||||||||
Total other income
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175 | 268 | (93 | ) | -35 | % | ||||||||||
Loss before income tax benefit
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(8,728 | ) | (10,948 | ) | 2,220 | 20 | % | |||||||||
Income tax benefit
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3,232 | 915 | 2,317 | 253 | % | |||||||||||
Net loss
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$ | (5,496 | ) | $ | (10,033 | ) | $ | 4,537 | 45 | % | ||||||
Weighted average shares outstanding – basic
|
17,000 | 17,333 | (333 | ) | -2 | % | ||||||||||
Weighted average shares outstanding – diluted
|
17,000 | 17,333 | (333 | ) | -2 | % | ||||||||||
Net loss per share — basic
|
$ | (0.32 | ) | $ | (0.58 | ) | $ | 0.26 | 45 | % | ||||||
Net loss per share — diluted
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$ | (0.32 | ) | $ | (0.58 | ) | $ | 0.26 | 45 | % |
(1)
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Net revenue, non-directly delivered programs consists of gross revenue, less program pass-through expenses for non-directly delivered programs because we primarily engage third-party operators to perform these services.
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UNAUDITED
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||||||||||||
Quarter ended December 31,
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||||||||||||
2013
|
2012
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% Change
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||||||||||
Gross revenue
|
$ | 1,972 | $ | 1,178 | 67 | % | ||||||
Cost of sales
|
1,474 | 930 | 58 | % | ||||||||
Net revenue
|
$ | 498 | $ | 248 | 101 | % |
(2)
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Gross revenue and cost of sales for directly delivered programs are reported as separate items because we plan, organize and operate all activities, including speakers, facilitators, events, accommodations and transportation.
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(3)
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Gross margin is calculated as the sum of gross revenue non-directly delivered programs, gross revenue directly delivered programs and internet content and advertising revenue less cost of sales non-directly delivered programs, costs of sales directly delivered programs and cost of sales internet content and advertising. Gross margin percentage is calculated as gross margin divided by the sum of gross revenue non-directly delivered programs, gross revenue directly delivered programs and internet content and advertising revenue.
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UNAUDITED
|
||||||||||||||||
Twelve months ended December 31,
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||||||||||||||||
2013
|
2012
|
$ Change
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% Change
|
|||||||||||||
Net revenue, non-directly delivered programs (1)
|
$ | 36,752 | $ | 44,837 | $ | (8,085 | ) | -18 | % | |||||||
Gross revenue, directly delivered programs (2)
|
10,468 | 9,008 | 1,460 | 16 | % | |||||||||||
Internet content and advertising revenue
|
3,975 | 4,207 | (232 | ) | -6 | % | ||||||||||
Total revenue
|
51,195 | 58,052 | (6,857 | ) | -12 | % | ||||||||||
Cost of sales, directly delivered programs (2)
|
7,046 | 6,107 | 939 | 15 | % | |||||||||||
Cost of sales, internet content and advertising
|
513 | 554 | (41 | ) | -7 | % | ||||||||||
Gross margin (3)
|
43,636 | 51,391 | (7,755 | ) | -15 | % | ||||||||||
Operating expenses:
|
||||||||||||||||
Selling and marketing
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32,318 | 34,845 | (2,527 | ) | -7 | % | ||||||||||
General and administration
|
14,423 | 16,224 | (1,801 | ) | -11 | % | ||||||||||
Restructuring costs
|
2,212 | - | 2,212 | 100 | % | |||||||||||
Asset impairments
|
6,466 | - | 6,466 | 100 | % | |||||||||||
Total operating expenses
|
55,419 | 51,069 | 4,350 | 9 | % | |||||||||||
Operating income (loss)
|
(11,783 | ) | 322 | (12,105 | ) | -3759 | % | |||||||||
Other income (expense):
|
||||||||||||||||
Interest and dividend income
|
532 | 1,730 | (1,198 | ) | -69 | % | ||||||||||
Foreign currency and other income
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23 | (13 | ) | 36 | 277 | % | ||||||||||
Total other income
|
555 | 1,717 | (1,162 | ) | -68 | % | ||||||||||
Income (loss) before income tax benefit (provision)
|
(11,228 | ) | 2,039 | (13,267 | ) | -651 | % | |||||||||
Income tax benefit (provision)
|
4,151 | (295 | ) | 4,446 | 1507 | % | ||||||||||
Net income (loss)
|
$ | (7,077 | ) | $ | 1,744 | $ | (8,821 | ) | -506 | % | ||||||
Weighted average shares outstanding – basic
|
16,986 | 17,530 | (544 | ) | -3 | % | ||||||||||
Weighted average shares outstanding – diluted
|
16,986 | 17,530 | (544 | ) | -3 | % | ||||||||||
Net income (loss) per share — basic
|
$ | (0.42 | ) | $ | 0.10 | $ | (0.52 | ) | -520 | % | ||||||
Net income (loss) per share — diluted
|
$ | (0.42 | ) | $ | 0.10 | $ | (0.52 | ) | -520 | % |
(1)
|
Net revenue, non-directly delivered programs consists of gross revenue, less program pass-through expenses for non-directly delivered programs because we primarily engage third-party operators to perform these services.
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UNAUDITED
|
||||||||||
Twelve months ended December 31,
|
||||||||||
2013
|
2012
|
% Change
|
||||||||
Gross revenue
|
$ | 101,779 | $ | 126,734 | -20 | % | ||||
Cost of sales
|
65,027 | 81,897 | -21 | % | ||||||
Net revenue
|
$ | 36,752 | $ | 44,837 | -18 | % |
(2)
|
Gross revenue and cost of sales for directly delivered programs are reported as separate items because we plan, organize and operate all activities, including speakers, facilitators, events, accommodations and transportation.
|
(3)
|
Gross margin is calculated as the sum of gross revenue non-directly delivered programs, gross revenue directly delivered programs and internet content and advertising revenue less cost of sales non-directly delivered programs, costs of sales directly delivered programs and cost of sales internet content and advertising. Gross margin percentage is calculated as gross margin divided by the sum of gross revenue non-directly delivered programs, gross revenue directly delivered programs and internet content and advertising revenue.
|
UNAUDITED
|
AUDITED
|
|||||||||
2013
|
2012
|
% Change
|
||||||||
Assets
|
||||||||||
Current assets:
|
||||||||||
Cash and cash equivalents
|
$ | 9,473 | $ | 6,150 | 54 | % | ||||
Available-for-sale securities
|
36,174 | 32,122 | 13 | % | ||||||
Foreign currency exchange contracts
|
- | 837 | -100 | % | ||||||
Prepaid program cost and expenses
|
7,069 | 17,217 | -59 | % | ||||||
Accounts receivable
|
1,792 | 850 | 111 | % | ||||||
Deferred tax assets
|
1,295 | 221 | 486 | % | ||||||
Total current assets
|
55,803 | 57,397 | -3 | % | ||||||
Property and equipment, net
|
18,452 | 26,344 | -30 | % | ||||||
Available-for-sale securities
|
719 | 723 | -1 | % | ||||||
Intangibles
|
3,522 | 3,565 | -1 | % | ||||||
Goodwill
|
9,781 | 9,781 | 0 | % | ||||||
Other long-term assets
|
82 | 85 | -4 | % | ||||||
Total assets
|
$ | 88,359 | $ | 97,895 | -10 | % | ||||
Liabilities and Stockholders’ Equity
|
||||||||||
Current liabilities:
|
||||||||||
Accounts payable and accrued expenses
|
$ | 3,587 | $ | 4,238 | -15 | % | ||||
Participants’ deposits
|
26,362 | 25,735 | 2 | % | ||||||
Foreign currency exchange contracts
|
244 | - | 100 | % | ||||||
Other liabilities
|
119 | 111 | 7 | % | ||||||
Total current liabilities
|
30,312 | 30,084 | 1 | % | ||||||
Foreign currency exchange contracts
|
52 | - | 100 | % | ||||||
Deferred tax liabilities
|
2,087 | 2,688 | -22 | % | ||||||
Total liabilities
|
32,451 | 32,772 | -1 | % | ||||||
Stockholders’ equity
|
55,908 | 65,123 | -14 | % | ||||||
Total liabilities and stockholders’ equity
|
$ | 88,359 | $ | 97,895 | -10 | % | ||||
UNAUDITED
|
||||||||
December 31,
|
||||||||
2013
|
2012
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | (7,077 | ) | $ | 1,744 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
5,368 | 5,273 | ||||||
Stock-based compensation
|
2,432 | 1,455 | ||||||
Deferred income tax provision (benefit)
|
(3,319 | ) | 387 | |||||
Loss on disposition and impairment of property and equipment
|
6,466 | 24 | ||||||
Excess tax shortfall from stock-based compensation
|
2,136 | 347 | ||||||
Change in assets and liabilities:
|
||||||||
Accounts receivable and other assets
|
(939 | ) | 545 | |||||
Prepaid program costs and expenses
|
9,673 | (3,918 | ) | |||||
Accounts payable, accrued expenses, and other current liabilities
|
(613 | ) | (1,977 | ) | ||||
Participants’ deposits
|
627 | (1,661 | ) | |||||
Net cash provided by operating activities
|
14,754 | 2,219 | ||||||
Cash flows from investing activities:
|
||||||||
Purchase of available-for-sale securities
|
(27,448 | ) | (74,022 | ) | ||||
Proceeds from sale of available-for-sale securities
|
23,128 | 80,521 | ||||||
Purchase of property and equipment
|
(3,110 | ) | (5,139 | ) | ||||
Purchase of intangibles
|
(344 | ) | (533 | ) | ||||
Net cash provided by (used in) investing activities
|
(7,774 | ) | 827 | |||||
Cash flows from financing activities:
|
||||||||
Repurchase of common stock
|
(509 | ) | (3,056 | ) | ||||
Dividend payment to shareholders
|
(1,017 | ) | (13,012 | ) | ||||
Proceeds from exercise of stock options
|
5 | - | ||||||
Excess tax shortfall from stock-based compensation
|
(2,136 | ) | (347 | ) | ||||
Net cash used in financing activities
|
(3,657 | ) | (16,415 | ) | ||||
Net increase (decrease) in cash and cash equivalents
|
3,323 | (13,369 | ) | |||||
Cash and cash equivalents, beginning of period
|
6,150 | 19,519 | ||||||
Cash and cash equivalents, end of period
|
$ | 9,473 | $ | 6,150 | ||||
UNAUDITED
|
|||||||||||
Net Loss
|
EPS
|
||||||||||
Three months ended December 31,
|
Three months ended December 31,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Amount before special items
|
$
|
(5,110)
|
$
|
(10,064)
|
$
|
(0.30)
|
$
|
(0.58)
|
|||
Asset impairments
|
(5)
|
-
|
-
|
-
|
|||||||
Restructuring costs
|
(456)
|
-
|
(0.02)
|
-
|
|||||||
Legal and other fees
|
(148)
|
74
|
(0.01)
|
-
|
|||||||
Separation payments
|
(4)
|
(40)
|
-
|
-
|
|||||||
Tax impact
|
227
|
(3)
|
0.01
|
-
|
|||||||
Amount per consolidated statement of operations
|
$
|
(5,496)
|
$
|
(10,033)
|
$
|
(0.32)
|
$
|
(0.58)
|
|||
UNAUDITED
|
|||||||||||
Net Income (Loss)
|
EPS
|
||||||||||
Twelve months ended December 31,
|
Twelve months ended December 31,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Amount before special items
|
$
|
136
|
$
|
3,208
|
$
|
0.01
|
$
|
0.18
|
|||
Asset impairments
|
(6,466)
|
-
|
(0.38)
|
-
|
|||||||
Restructuring costs
|
(2,212)
|
-
|
(0.13)
|
-
|
|||||||
Legal and other fees
|
23
|
(1,430)
|
-
|
(0.08)
|
|||||||
Separation payments
|
(2,789)
|
(282)
|
(0.17)
|
(0.01)
|
|||||||
Tax impact
|
4,231
|
248
|
0.25
|
0.01
|
|||||||
Amount per consolidated statement of operations
|
$
|
(7,077)
|
$
|
1,744
|
$
|
(0.42)
|
$
|
0.10
|
|||
UNAUDITED
|
||||||||
December 31,
|
||||||||
2013
|
2012
|
|||||||
Cash, cash equivalents and short-term available-for-sale securities
|
$ | 45,647 | $ | 38,272 | ||||
Prepaid program cost and expenses
|
7,069 | 17,217 | ||||||
Less: Participants’ deposits
|
(26,362 | ) | (25,735 | ) | ||||
Less: Accounts payable / accruals / other liabilities
|
(3,706 | ) | (4,349 | ) | ||||
Deployable cash
|
$ | 22,648 | $ | 25,405 | ||||