10-Q

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 September 30, 2014

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

o Accelerated filer

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

þ 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 November 10, 2014 was 17,043,625. .

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 (Loss)	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	19
Item 4. Controls and Procedures	25
PART II – OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6. Exhibits	26
SIGNATURES	27
EXHIBIT INDEX

PART I

FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of September 30, 2014 and December 31, 2013

(in thousands, except share and per share data)

	UNAUDITED			AUDITED
	September 30,			December 31,
	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	3,550		$	9,473
Available-for-sale securities and other		43,586			36,174
Prepaid program costs and expenses		2,597			7,069
Accounts receivable		1,071			1,792
Deferred tax assets		-			1,295
Assets held for sale		8,400			-
Total current assets		59,204			55,803
Property and equipment, net		3,821			18,452
Available-for-sale securities		724			719
Deferred tax assets		125			-
Intangibles		-			3,522
Goodwill		70			9,781
Other long-term assets		483			82
Total assets	$	64,427		$	88,359
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	$	6,646		$	3,587
Participants’ deposits		9,303			26,362
Foreign currency exchange contracts		625			244
Deferred tax liabilities		149			-
Other liabilities		-			119
Total current liabilities		16,723			30,312
Participants’ deposits		190			-
Foreign currency exchange contracts		-			52
Deferred tax liabilities		-			2,087
Total liabilities		16,913			32,451
Commitments and Contingencies (Note 15)
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; 17,044,905 and 17,040,724 shares issued and outstanding, respectively		170			170
Additional paid-in capital		1,478			411
Retained earnings		46,478			55,876
Accumulated other comprehensive gain (loss)		(612	)		(549	)
Stockholders’ equity		47,514			55,908
Total liabilities and stockholders’ equity	$	64,427		$	88,359

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 nine months ended September 30, 2014 and 2013

(in thousands, except per share amounts)

	Three months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Net revenue, non-directly delivered programs	$	10,818		$	15,071		$	29,027		$	36,254
Gross revenue, directly delivered programs		5,896			6,296			9,734			10,460
Total revenue		16,714			21,367			38,761			46,714
Cost of sales, directly delivered programs		3,372			4,128			5,816			7,053
Cost of sales, program merchandise markdown		-			-			554			-
Gross margin		13,342			17,239			32,391			39,661
Operating expenses:
Selling and marketing		8,369			9,224			20,868			24,275
General and administrative		2,418			2,676			8,647			11,007
Restructuring costs		217			1,756			1,756			1,756
Asset impairments		350			6,461			2,350			6,461
Total operating expenses		11,354			20,117			33,621			43,499
Operating income (loss)		1,988			(2,878	)		(1,230	)		(3,838	)
Other income:
Interest and dividend income		84			70			356			357
Foreign currency and other income		(2	)		1			6			22
Total other income		82			71			362			379
Income (loss)  before income tax benefit (provision) from continuing operations		2,070			(2,807	)		(868	)		(3,459	)
Income tax benefit (provision)		(158	)		1,004			(416	)		1,269
Net income (loss) from continuing operations		1,912			(1,803	)		(1,284	)		(2,190	)
Discontinued operations:
Income (loss) from discontinued segment		196			250			(9,298	)		959
Income tax benefit (provision)		230			(61	)		1,184			(350	)
Net income (loss) from discontinued operations		426			189			(8,114	)		609
Net Income (Loss)	$	2,338		$	(1,614	)	$	(9,398	)	$	(1,581	)
Weighted-average common shares outstanding - basic		17,041			16,984			16.827			16,982
Weighted-average common shares outstanding - diluted		17,046			16,984			16,827			16,982
Net income (loss) from continuing operations per share - basic	$	0.11		$	(0.11	)	$	(0.08	)	$	(0.13	)
Net income (loss) from continuing operations per share - diluted	$	0.11		$	(0.11	)	$	(0.08	)	$	(0.13	)
Net income (loss) from discontinued operations per share - basic	$	0.03		$	0.01		$	(0.48	)	$	0.04
Net income (loss) from discontinued operations per share - diluted	$	0.03		$	0.01		$	(0.48	)	$	0.04

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

-2-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

For the three and nine months ended September 30, 2014 and 2013

(in thousands)

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Net income (loss)	$	2,338		$	(1,614	)	$	(9,398	)	$	(1,581	)
Unrealized gain (loss) on foreign currency exchange contracts, net of income tax benefit (provision) of $0, ($112), $0 and $324		(685	)		209			(329	)		(603	)
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (provision) of $0, ($12), $0 and $89		(2	)		21			265			(165	)
Comprehensive income (loss)	$	1,651		$	(1,384	)	$	(9,462	)	$	(2,349	)

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 nine months ended September 30, 2014 and 2013

(in thousands)

	Nine months ended September 30,
	2014			2013
Cash flows from operating activities:
Net loss	$	(9,398	)	$	(1,581	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		4,497			4,088
Stock-based compensation		1,305			2,161
Deferred income tax benefit		(877	)		(2,373	)
Impairment and loss on sale of discontinued operations		9,676			-
Loss on disposition and impairment of property and equipment		2,364			6,461
Program merchandise writedown		554			-
Excess tax shortfall from stock-based compensation		109			2,103
Change in assets and liabilities:
Accounts receivable and other assets		663			(169	)
Prepaid program costs and expenses		3,890			9,652
Accounts payable, accrued expenses, and other current liabilities		2,374			4,802
Participants’ deposits		(16,869	)		(15,888	)
Net cash provided by (used in) operating activities		(1,712	)		9,256
Cash flows from investing activities:
Purchase of available-for-sale securities		(29,733	)		(27,297	)
Proceeds from sale of available-for-sale securities		22,582			22,931
Purchase of property and equipment		(1,202	)		(2,413	)
Proceeds from sale of property and equipment		28			-
Purchase of intangibles		(189	)		(251	)
Proceeds from sale of BookRags, Inc.		4,600			-
Net cash used in investing activities		(3,914	)		(7,030	)
Cash flows from financing activities:
Repurchase of common stock		(188	)		(486	)
Dividend payment to shareholders		-			(1,017	)
Proceeds from exercise of stock options		-			5
Excess tax shortfall from stock-based compensation		(109	)		(2,103	)
Net cash used in financing activities		(297	)		(3,601	)
Net decrease in cash and cash equivalents		(5,923	)		(1,375	)
Cash and cash equivalents, beginning of period		9,473			6,150
Cash and cash equivalents, end of period	$	3,550		$	4,775

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 an educational company primarily engaged in organizing and promoting differentiated worldwide travel programs for students and professionals. These consolidated financial statements include the accounts of Ambassadors Group, Inc., and our wholly owned subsidiaries, Ambassador Programs, Inc., World Adventures Unlimited, Inc., Ambassadors Unlimited, LLC, AGI Hong Kong Limited, Beijing People to People Education Consultation Co., Ltd, Marketing Production Systems LLC, and BookRags, Inc. (“BookRags”). All significant intercompany accounts and transactions, which are of a normal recurring nature, are eliminated in consolidation.

During part of the third quarter we also operated an education oriented research website, BookRags.com, which provided study guides, lesson plans and other educational resources to students and teachers. On September 5, 2014, we consummated the sale of BookRags. All activities related to BookRags have been reflected as discontinued operations for all periods presented.  For additional information, see Note 5 of Notes to Consolidated Financial Statements.

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 nine months ended September 30, 2014 are not indicative of the results that may be expected for the year ending December 31, 2014.

These financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013.

3. Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08). This ASU relates to discontinued operations reporting for disposals of components of an entity that represent strategic shifts that have, or will have, a major effect on the entity’s operations and financial results. The standard expands disclosures for discontinued operations and requires new disclosures related to individually material disposals that do not meet the definition of a discontinued operation. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2014 and will be reflected in periods following the fourth quarter of 2014.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.

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AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In June, 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation-Stock Compensation: Accounting for Share-Based Payments when the terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition on performance stock unit awards. In some cases, the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. That is, the employee would be entitled to benefit from the award regardless of whether the employee is rendering service on the date the performance target is achieved. Current performance stock unit awards are contingent upon employment status as well as internal metrics. As such, this ASU is not expected to have an impact on our financial statements or disclosures.

4. Restructuring Costs

During the third quarter of 2013, we initiated a corporate restructuring plan aimed at streamlining our cost structure and focusing our business on our core Student Ambassador programs in order to promote the long-term health of the organization. This plan included the restructuring of operations and programs associated with Discovery Student Adventures and terminating the operations associated with our Beijing office.

During the second quarter of 2014, we took additional measures to continue to streamline the organization and to further our businesses focus on our core Student Ambassador programs. We completed a workforce reduction during the second quarter of 2014 that resulted in restructuring expense of $1.6 million. Under the terms of executive separation agreements, we will continue to pay each terminated executive bi-weekly during the executive’s severance period, with the future payments having been accrued and reflected in the below table as outstanding liabilities at September 30, 2014.

Other costs recorded as restructuring during the first nine months of 2014 included accelerated depreciation of assets scheduled for replacement within the next year as well as continued transition costs from the termination of operations of our Beijing office.

We anticipate all restructuring expenses to be recognized within twelve months of the initial implementation of the restructuring plan.

The following table summarizes costs incurred to date from continuing operations as part of the restructuring plan, which began during the third quarter of 2013, and the balance of the restructuring cost liability as of September 30, 2014 (in thousands).

Restructuring Costs
	Ambassador Programs and Other
Contract termination fees	$	1,550
Separation payments		949
Equity compensation expenses		377
Other transition costs		1,166
Accumulated expense at September 30, 2014		4,042
less: cash payments		3,302
less: non-cash expenses		377
Total restructuring liabilities at September 30, 2014	$	363

-6-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5. Discontinued Operations

In furtherance to the Company’s focus on its core Student Ambassadors programs, in September 2014, the Company announced it had consummated a sale of BookRags for $5.0 million, subject to a $0.4 million escrow arrangement.  All interests and future cash flows from BookRags were released upon sale.  All activities related to BookRags have been reflected as discontinued operations on our consolidated financial statements for all periods presented.

Included in the consolidated balance sheet at December 31, 2013, were $15.5 million of assets and $1.5 million of liabilities associated with the discontinued operations of BookRags.  The following table summarizes the assets and liabilities of discontinued operations included in the consolidated balance sheet as of December 31, 2013.  There were no assets and liabilities of discontinued operations as of September 30, 2014.

Balance Sheet (Audited)
As of December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	765
Accounts receivable		731
Other current assets		62
Total current assets		1,558
Property and equipment, net		710
Intangibles		3,522
Goodwill		9,711
Total assets	$	15,501
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	283
Other current liabilties		118
Total current liabilites		401
Other long-term liabilties		1,056
Total liabilties	$	1,457

-7-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes the results of discontinued operations for the periods indicated (in thousands):

	Three months ended September 30, 2014			Three months ended September 30, 2013			Nine months ended September 30, 2014			Nine months ended September 30, 2013
Total revenue	$	545		$	910		$	2,608		$	2,938
Gross margin	$	472		$	785		$	2,285		$	2,558
Selling & marketing expenses	$	(53	)	$	(364	)	$	(706	)	$	(1,155	)
General & administrative expenses	$	(258	)	$	(171	)	$	(679	)	$	(444	)
Restructuring costs	$	-		$	-		$	(522	)	$	-
Impairment and gain (loss) on sale of discontinued operations	$	35		$	-		$	(9,676	)	$	-
Operating income (loss) from discontinued operations	$	196		$	250		$	(9,298	)	$	959
Income tax benefit (provision) on discontinued operations	$	230		$	(61	)	$	1,184		$	(350	)
Net income (loss) from discontinued operations	$	426		$	189		$	(8,114	)	$	609

During the second quarter of 2014  due to business changes as well as the narrow margin results of its most recent annual impairment test in December 2013, the Company re-evaluated the carrying value of BookRags and recorded a goodwill impairment charge of $9.7 million, as the implied fair value of the goodwill was determined to be lower than its carrying value.  Using the income and market approaches, the significant assumptions used to determine fair value included projected operating revenues and expenses, growth rates, terminal value, discount rates, future cash flows and capital expenditures.  This impairment charge was recorded within discontinued operations and is reflected in the table above for the nine months ended, September 30, 2014.

6. Assets Held For Sale

In April 2012, the Company listed for sale its corporate headquarters building located in Spokane, Washington. During the third quarter of 2014, a purchase and sale agreement was executed for a sale of the building for $8.8 million.  During the second quarter of 2014, the Company recorded an asset impairment charge of $2.0 million to lower the building’s carrying value to the anticipated sales price.  During the third quarter of 2014, the Company recorded approximately $0.4 million in additional expense related to expected closing costs and broker fees. These charges are classified as asset impairment costs on the consolidated statements of operations.

During the third quarter of 2014, the corporate headquarters building was recorded within current assets as an asset held for sale for $8.8 million less anticipated transaction closing costs of approximately $0.4 million. The Company anticipates this purchase and sale agreement to be finalized during the fourth quarter of 2014.

Simultaneous with the final purchase and sales agreement, the Company expects to enter into a leasing agreement to remain in our current location until April 30, 2015 (with optional extensions until June 30, 2015), to provide us time to find a new leased location in the Spokane area.

7. 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 at least annually for impairment, and are fully assessed if there is an indicator of impairment. An adjustment would be made to the fair value of non-financial assets if 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:

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AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

-   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 September 30, 2014 and December 31, 2013 (in thousands):

								Classification on Balance Sheet
September 30, 2014	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	$	(276	)	$	724	$	-	$	-	$	724
Money market funds, ninety days or less		17		-			17		17		-		-
Municipal securities1
Short term municipal securities funds2		42,803		17			42,820		-		42,820		-
One year or less		-		-			-		-		-		-
After one year through three years		-		-			-		-		-		-
Greater than three years		782		(16	)		766		-		766		-
Total	$	44,602	$	(275	)	$	44,327	$	17	$	43,586	$	724

								Classification on Balance Sheet
December 31, 2013	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	$	1,002	$	(283	)	$	719	$	-	$	-	$	719
Money market funds, ninety days or less		488		-			488		488		-		-
Municipal securities1
Short term municipal securities funds2		27,493		(143	)		27,350		-		27,350		-
One year or less		952		3			955		-		955		-
After one year through three years		3,132		20			3,152		-		3,152		-
Greater than three years		4,854		(137	)		4,717		-		4,717		-
Total	$	37,921	$	(540	)	$	37,381	$	488	$	36,174	$	719

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.

2Amounts include short-term municipal security funds that do not have a set maturity date.

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AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables detail the fair value measurements of assets and liabilities within the three levels of the fair value hierarchy at September 30, 2014 and December 31, 2013 (in thousands):

			Fair Value Measurements at Reporting Date Using
September 30, 2014	Fair Market Value		Level 1		Level 2		Level 3
Financial assets:
ARS	$	724	$	-	$	-	$	724
Money market funds		17		17		-		-
Municipal securities1		43,585		42,819		766		-
Foreign currency exchange contracts		-		-		-		-
Total financial assets	$	44,326	$	42,836	$	766	$	724
Financial liabilities:
Foreign currency exchange contracts		625		-		625		-
Total financial liabilities	$	625	$	-	$	625	$	-

			Fair Value Measurements at Reporting Date Using
December 31, 2013	Fair Market Value		Level 1		Level 2		Level 3
Financial assets:
ARS	$	719	$	-	$	-	$	719
Money market funds		488		488		-		-
Municipal securities1		36,174		27,350		8,824		-
Foreign currency exchange contracts		253		-		253		-
Total financial assets	$	37,634	$	27,838	$	9,077	$	719
Financial liabilities:
Foreign currency exchange contracts		549		-		549		-
Total financial liabilities	$	549	$	-	$	549	$	-

1 At September 30, 2014, municipal securities were split 98/1/1 percent between holdings in short-term municipal security funds, municipal revenue bonds, and municipal general obligation bonds, respectively. At December 31, 2013, municipal securities were split 76/13/11 percent split between holdings in short-term municipal security funds, municipal revenue bonds and municipal general obligation bonds, respectively. The underlying credit rating of the municipal securities at September 30, 2014 and December 31, 2013 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 municipal bonds and 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 rates, volatility and currency rates. Level 3 financial assets represent the fair value of our one auction-rate security (“ARS”), which was 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.

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AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table details the fair value measurements of assets measured on a non-recurring basis within the three levels of the fair value hierarchy at September 30, 2014 (in thousands):

			Fair Value Measurements at Reporting Date Using						Total Loss
September 30, 2014	Fair Market Value		Qouted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Three months ended September 30, 2014
Non-financal assets:
Property and equipment, net	$	8,750	$	-	$	-	$	8,750	$	2,000

Our corporate headquarters building is recorded as an asset held for sale on the balance sheet at $8.4 million, which is the expected sales price less expected costs to sell of $0.4 million.

The following table details the fair value measurements of assets measured on a non-recurring basis within the three levels of the fair value hierarchy at December 31, 2013 (in thousands):

			Fair Value Measurements at Reporting Date Using						Total Loss
December 31, 2013	Fair Market Value		Qouted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Year ended December 31, 2013
Non-financal assets:
Property and equipment, net	$	11,000	$	-	$	-	$	11,000	$	4,544

Fair value measurements on a recurring basis using Level 3 inputs consist of one available-for-sale ARS. The following table presents a reconciliation for the three and nine months ended September 30, 2014 and 2013, of available-for-sale ARS measured at fair value on a recurring basis using Level 3 inputs (in thousands):

	Three months ended					Nine months ended
	September 30,					September 30,
	2014			2013		2014		2013
Beginning balance	$	729		$	716	$	719	$	723
Total realized / unrealized gains (losses):
Included in OCI		(5	)		1		5		(6	)
Ending balance	$	724		$	717	$	724	$	717

During the nine months ended September 30, 2014, we experienced one failed ARS auction, representing principal of $1.0 million. This 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 6, 2015. 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, which is comprised of student loans, we consider the underlying credit quality of comparable student loan portfolios and 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 321.0-basis points to the London interbank offered rate resulting in a valuation of $0.7 million from a cost basis of $1.0 million as of September 30, 2014. At the reporting dates and in the future, we recognize that this investment is subject to general credit, liquidity, market and interest rate risks. The fair value of this investment accordingly will continue to change and we will continue to evaluate its carrying value.

-11-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

8. 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 foreign currency at a fixed price for a specified point in time to provide a hedge against foreign currency risk. All of our derivatives are cash flow hedges and at September 30, 2014, 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; this 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 September 30, 2014, the following forward contracts were outstanding (in thousands):

	Notional Amount	Matures
Forward contracts:
Australian dollar	3,250	January 2015 - July 2015
Euro	9,500	January 2015 - July 2015
British pound	1,900	January 2015 - July 2015
Canadian dollar	400	March 2015 - May 2015
New Zealand dollar	400	March 2015 - July 2015
Japenese Yen	25,000	May 2015

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

	September 30, 2014
	Derivatives designated as hedging instruments					Total Net
	Assets			Liabilities		Liabilities
Forward contracts		$	-	$	625		$	625
	December 31, 2013
	Derivatives designated as hedging instruments					Total Net
		Assets		Liabilities		Liabilities
Forward contracts		$	253	$	549		$	296

The net asset and liability derivatives at September 30, 2014 and December 31, 2013 are reported in the consolidated balance sheet as current and long-term foreign currency exchange contracts.

-12-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

9. Accumulated Other Comprehensive Income (Loss)

Unrealized gains or losses related to derivative securities are recorded in accumulated other comprehensive income (“AOCI”). The change in unrealized gains or losses related to derivative securities are recorded in other comprehensive income net of income taxes in the period the change occurred. When derivative securities designated as cash flow hedges are used to pay vendors, the effective portion of the hedge is reclassified into the income statement and recorded in net revenue, non-directly delivered programs.

Unrealized gains or losses related to available-for-sale securities are recorded in AOCI. The change in unrealized gains or losses related to available-for-sale securities are recorded in other comprehensive income net of income taxes in the period the change occurred. When securities are sold and a realized gain or loss is recognized, the amount is reclassified from AOCI to the income statement and recorded in interest and dividend income. During the nine months ended September 30, 2014 and 2013, the Company recognized net realized losses of $19 thousand and $120 thousand, respectively, due to the sale of investments.

For the three months ended September 30, 2014 and 2013, a summary of AOCI balances and gains (losses) recognized in OCI are as follows (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Derivative Securities						Available-for-sale securities
	Three months ended						Three months ended
	September 30,						September 30,
	2014			2013			2014			2013
Balance, beginning of period	$	164		$	(267	)	$	(90	)	$	(366	)
Change before reclassification		(690	)		253			12			(24	)
Reclassification into net revenue, non-directly delivered programs		5			(67	)		-			-
Reclassification into interest and dividend income		-			-			(14	)		70
Effect of incomes taxes		(0	)		23			0			(25	)
Other comprehensive income (loss), net of income taxes		(685	)		209			(2	)		21
Balance, end of period	$	(521	)	$	(58	)	$	(91	)	$	(345	)

For the nine months ended September 30, 2014 and 2013, a summary of AOCI balances and gains (losses) recognized in OCI are as follows (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Derivative Securities						Available-for-sale securities
	Nine months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Balance, beginning of period	$	(192	)	$	544		$	(357	)	$	(180	)
Change before reclassification		(310	)		(482	)		272			(216	)
Reclassification into net revenue, non-directly delivered programs		(19	)		(185	)		-			-
Reclassification into interest and dividend income		-			-			(6	)		79
Effect of incomes taxes		(0	)		65			0			(28	)
Other comprehensive income (loss), net of income taxes		(329	)		(602	)		266			(165	)
Balance, end of period	$	(521	)	$	(58	)	$	(91	)	$	(345	)

-13-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

10. Income Taxes

We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. A significant piece of objective negative evidence we evaluated was our cumulative loss incurred during the three-year period ended June 30, 2014. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth. As a result, we determined that the negative evidence outweighed the positive evidence as of June 30, 2014 and recorded a one-time, non-cash charge to income tax expense of approximately $0.7 million to establish a valuation allowance against our total U.S. deferred tax assets, net of U.S. deferred tax liabilities, almost all of which relates to the beginning of the year balance. This accounting treatment has no effect on our ability to utilize deferred tax assets such as loss carryforwards and tax credits to reduce future cash tax payments. We will continue to assess the likelihood that the deferred tax assets will be realizable at each reporting period and the valuation allowance will be adjusted accordingly

11. Stock-Based Compensation

Under our Equity Participation Plan (the “Plan”), we may grant stock-based incentive compensation awards to eligible employees (including officers), non-employee directors and consultants in the form of distribution equivalent rights, incentive stock options, non-qualified stock options, performance share awards, performance unit awards, restricted stock awards, restricted stock units awards, stock appreciation rights, tandem stock appreciation rights, unrestricted stock awards or any combination of the foregoing. As of September 30, 2014, we had 2,125,512 shares authorized under the Plan available for future stock-based compensation.

Stock Options

Under the terms of the Plan, options to purchase shares of our common stock are granted at a price set by the Compensation Committee of the Board of Directors (the “Compensation Committee”). The price is not to be less than the fair market value of the stock on the date of grant. The Compensation Committee establishes the vesting period of the awards, which is generally set at 25 percent per year for four years. Options may be exercised any time after they vest for a period up to 10 years from the grant date.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of options. Option valuation models require the input of highly subjective assumptions, particularly for the expected term and stock price volatility. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our experience. Our employee stock options do not trade on a secondary exchange; therefore, employees do not derive a benefit from holding stock options unless there is an appreciation in the market price of our stock above the grant price. Such an increase in stock price would benefit all shareholders commensurately.

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 nine months ended September 30, 2014 and 2013.

	Three months ended  September 30, 2014				Three months ended  September 30, 2013		Nine months ended  September 30, 2014			Nine months ended  September 30, 2013
Expected dividend yield		-	%		-	%		-	%		1.37	%
Expected stock price volatility		41.94	%		-	%		47.98	%		54.66	%
Risk-free interest rate		2.47	%		-	%		2.31	%		2.08	%
Expected life of options		4.15	Years		-	Years		4.28	Years		4.56	Years
Estimated fair value per option granted	$	1.58		$			$	1.61		$	1.63

-14-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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 14.08 percent is used as a best estimate of future forfeitures based on our historical forfeiture experience. Stock-based compensation expense will be adjusted in later periods if the actual forfeiture rate is different from the estimate.

A summary of option activity under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Stock Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (years)
Outstanding at December 31, 2013	907,945	$	6.54
Granted	186,072		4.13
Forfeited / Expired	(510,450)		6.07
Exercised	-		-
Outstanding at September 30, 2014	583,567	$	6.17	7.45
Exercisable at September 30, 2014	214,348	$	9.21	4.86

During the nine months ended September 30, 2014, the total intrinsic value of stock options exercised was zero and the total fair value of options which vested was $0.8 million. During the nine months ended September 30, 2013, the total intrinsic value of stock options exercised was zero and the total fair value of options which vested was $1.0 million. Compensation expense recognized in the consolidated statement of operations for stock options was $0.1 million for the three months ended September 30, 2014 and 2013, respectively, before the effect of income taxes. Compensation expense recognized in the consolidated statement of operations for stock options was $0.5 million and $1.0 million for the nine months ended September 30, 2014 and 2013, respectively, before the effect of income taxes. As of September 30, 2014, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $0.4 million, which is expected to be recognized over approximately 3.83 years.

-15-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Restricted Stock Grants

Restricted stock awards and restricted stock units may be granted under the Plan by the Compensation Committee. The Compensation Committee also establishes the vesting period of the awards, which is generally set at 100 percent at the conclusion of one to four years for restricted stock awards. Restricted stock units generally vest pro rata at 25 percent each year over a four year vesting period. Our key employees who have been granted awards are typically subject to a four year vesting period, while members of our Board of Directors who have been granted awards are subject to a one year vesting period. The fair value of restricted stock awards and restricted stock units is based on the market price of our shares on the grant date.

A summary of the activity of non-vested restricted stock awards and restricted stock units under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Restricted Stock Awards				Restricted Stock Units
	Restricted Stock Awards	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life (years)	Restricted Stock Units	Weighted- Average Grant  Date Fair Value		Weighted- Average Remaining Contractual  Life (years)
Balance at December 31, 2013	285,435	$	5.24		28,123	$	3.88
Granted	51,704		3.72		81,060		4.34
Forfeited	(13,364)		5.76		(12,689)		4.13
Vested	(190,335)		4.97		(9,555)		4.15
Balance at September 30, 2014	133,440	$	5.00	1.61	86,939	$	4.24	2.06

At September 30, 2014, the aggregate value of non-vested restricted stock awards and restricted stock units was $0.5 million and $0.3 million, respectively, before applicable income taxes, based on a $3.70 closing stock price at September 30, 2014. During the three months ended September 30, 2014 and 2013, the weighted-average grant date fair value of restricted stock awards, which vested was $0.1 million and $0, respectively. During the nine months ended September 30, 2014 and 2013, the weighted-average grant date fair value of restricted stock awards, which vested was $1.0 million and $2.0 million, respectively. Compensation expense recognized in the consolidated statement of operations for restricted stock awards and units was $0.1 million for the three months ended September 30, 2014 and 2013, before the effect of income taxes. Compensation expense recognized in the consolidated statement of operations for restricted stock awards and units was $0.8 million and $1.1 million for the nine months ended September 30, 2014 and 2013, respectively, before the effect of income taxes. As of September 30, 2014, total unrecognized stock-based compensation expense related to restricted stock awards and units was approximately $0.3 million and $0.3 million, respectively, which is expected to be recognized over approximately 3.83 years.

Performance Stock Awards

Under the terms of the Plan, performance stock awards may be granted by the Compensation Committee to key executive employees. Performance stock awards are based on achieving key internal metrics measured at the end of each fiscal year over a three year performance period. If performance objectives are achieved as determined by the Compensation Committee, common stock is granted. The fair value of these awards is determined on the date of grant based on our share price. Compensation expense related to performance stock units is evaluated quarterly to determine the likelihood that performance metrics will be achieved during the performance period.

-16-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

A summary of the activity of performance stock units under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Performance Stock Units	Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Life (years)
Balance at December 31, 2013	114,560	$	4.41
Granted	-		-
Forfeited	(78,514)		4.41
Vested	-		-
Balance at September 30, 2014	36,046	$	4.41	2.25

During the three and nine months ended September 30, 2014, no performance stock units were granted. Performance stock units outstanding on September 30, 2014 are payable upon the achievement of certain internal metrics over a performance period of January 1, 2014 through December 31, 2016. As of September 30, 2014, no compensation expense related to performance share unit awards was recognized.

12. Net Income (Loss) per Share

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

	Three months ended  September 30,					Nine months ended  September 30,
	2014		2013			2014			2013
Numerator:
Net income (loss) from continuing operations	$	1,912	$	(1,803	)	$	(1,284	)	$	(2,190	)
Denominator:
Weighted-average shares outstanding		16,903		16,984			16,827			16,982
Effect of unvested restricted stock awards      considered participating securities		138		-			-			-
Weighted-average shares outstanding – basic		17,041		16,984			16,827			16,982
Effect of dilutive common stock options		-		-			-			-
Effect of dilutive restricted stock units		5		-			-			-
Weighted-average shares outstanding – diluted		17,046		16,984			16,827			16,982
Net income (loss) per share - basic	$	0.11	$	(0.11	)	$	(0.08	)	$	(0.13	)
Net income (loss) per share - diluted	$	0.11	$	(0.11	)	$	(0.08	)	$	(0.13	)
Cash dividends declared per share1	$	-	$	-		$	-		$	0.06
Stock options and restricted stock units excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive		658,000		782,000			751,000			1,319,000

1The Company suspended quarterly dividend payments during the second quarter of 2013.

13. Supplemental Disclosures of Consolidated Statements of Cash Flows

Our non-cash investing and financing activities during the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands):

	September 30, 2014			September 30, 2013
Unrealized loss on foreign currency exchange contracts	$	(329	)	$	(927	)
Unrealized income (loss) on available-for-sale securities	$	265		$	(254	)

-17-

AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

14. Line of Credit

The Company’s credit agreement with Wells Fargo expired on June 1, 2014 and was not renewed.

15.  Commitments and Contingencies

On May 7, 2014, Anthony F. Dombrowik, our former interim Chief Executive Officer and Chief Financial Officer, was terminated by the Board of Directors.  In connection with Mr. Dombrowik’s departure, we entered into a separation agreement effective May 7, 2014. The separation agreement required cash payouts of approximately $0.4 million to be made to Mr. Dombrowik, all of which was fully expensed during the second quarter of 2014 although approximately $0.4 million remained to be paid during the 8 months following June 30, 2014.  Additionally, the separation agreement called for the immediate vesting of stock options and stock grants for Mr. Dombrowik in the amount of $0.2 million.

We are not a party to any 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.

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 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 September 30, 2014.

-18-

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 27, 2014. 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 leading provider of educational travel experiences primarily engaged in organizing and promoting worldwide educational travel programs for students through a direct to consumer revenue model. We operate student and adult 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 have over 500,000 alumni. We believe that our association with that brand and experience in the educational travel industry give us both a strong awareness in the market and a high level of credibility.

Our core program offering under the People to People brand is international destination trips for U.S. students in the 11 to 17 year old age group (“Student Ambassador Program”). Student Ambassador Programs make up the majority of our program offerings and are the center of our strategic focus. However, under the People to People brand, we also offer domestic destination travel programs for U.S. students and international students focused on leadership and education (“Leadership Ambassador Program”), as well as professional travel programs for adults (“Citizen Ambassador Program”).

Prior to September 2014, we operated BookRags (www.bookrags.com), an education oriented research website, which provided study guides, lesson plans and other educational resources to students and teachers. This wholly-owned subsidiary was sold in September 2014, and results of operations have been reflected as discontinued operations for all periods presented.

Our operating results depend primarily on the number of travelers who attend our programs (“travelers” or “delegates”), the fees we are able to charge for each traveler, net of pass-through expenses associated with non-directly delivered programs such as airfare and third-party tour operator fees (“total revenue”), and the direct costs associated with the traveler’s itinerary on directly delivered programs 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 our gross revenue and cost of sales are typically at their highest levels in the second and third quarters. Our marketing and sales efforts are conducted year-round and expenses are recognized when incurred.  Revenue associated with these marketing and sales expenses are generally recognized in the second and third quarter of the following fiscal year upon delegate travel.

-19-

Executive Summary

Our year-to-date results reflect several initiatives intended to streamline the organization and continue our business focus toward our core Student Ambassadors programs.  We executed and finalized the sale of BookRags for $5.0 million in September 2014, and believe we will close a purchase and sale agreement related to our corporate headquarters building during the fourth quarter of 2014 for $8.8 million less costs associated with closing.  Upon sale, we will enter into a short-term lease contract to remain in our current location.

The number of enrollments for the Company’s 2015 travel season resulting from our fall 2014 marketing campaign indicates a decline in net travelers and revenue in 2015 compared to 2014.  The Company’s marketing programs and sales initiatives are heavily concentrated in the fall of the year before the summer travel season. Based on the results to date of the 2014 fall marketing campaign, we anticipate that 2015 revenue will be lower than 2014.

-20-

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2014 with the Three and Nine Months Ended September 30, 2013

Financial results from continuing operations for the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands):

	Three Months Ended September 30,
	2014			2013			$ Change			% Change
Total revenue	$	16,714		$	21,367		$	(4,653	)	-22	%
Cost of goods sold		3,372			4,128			(756	)	-18	%
Gross margin		13,342			17,239			(3,897	)	-23	%
Selling and marketing expenses		8,369			9,224			(855	)	-9	%
General and administrative expenses		2,418			2,676			(258	)	-10	%
Restructuring costs		217			1,756			(1,539	)	-88	%
Asset impairments		350			6,461			(6,111	)	-95	%
Operating income (loss)		1,988			(2,878	)		4,866		169	%
Other income		82			71			11		15	%
Income (loss) before income tax benefit (provision)		2,070			(2,807	)		4,877		174	%
Income tax benefit (provision)		(158	)		1,004			(1,162	)	-116	%
Net income (loss) from continuing operations	$	1,912		$	(1,803	)	$	3,715		206	%

	Nine Months Ended September 30,
	2014			2013			$ Change			% Change
Total revenue	$	38,761		$	46,714		$	(7,953	)	-17	%
Cost of goods sold		6,370			7,053			(683	)	-10	%
Gross margin		32,391			39,661			(7,270	)	-18	%
Selling and marketing expenses		20,868			24,275			(3,407	)	-14	%
General and administrative expenses		8,647			11,007			(2,360	)	-21	%
Restructuring costs		1,756			1,756			-		0	%
Asset impairments		2,350			6,461			(4,111	)	-64	%
Operating loss		(1,230	)		(3,838	)		2,608		68	%
Other income		362			379			(17	)	-4	%
Loss before income tax benefit (provision)		(868	)		(3,459	)		2,591		75	%
Income tax benefit (provision)		(416	)		1,269			(1,685	)	-133	%
Net income (loss) from continuing operations	$	(1,284	)	$	(2,190	)	$	906		41	%

During the third quarter of 2014, we traveled 6,808 delegates compared to 8,140 delegates during the prior year period primarily due to lower delegates traveled on our core Student Ambassadors programs.  The prior year period includes 536 Discovery Student Adventures (“DSA”) and People to People China (“China”) traveled students affecting year-over-year comparability given our decision during the third quarter of 2013 to no longer operate these programs in 2014. Total revenue from continuing operations of $16.7 million declined 21.8 percent from $21.4 million in the prior year quarter driven by lower travel-related revenue. Gross margin from continuing operations for the quarter was $13.3 million compared to $17.2 million in the third quarter of 2013, and gross margin percentage was 33.7 percent compared to 36.8 percent in the prior year period.  The lower current period gross margin percentage is reflective of higher foreign exchange rates, a higher ratio of teacher leaders to traveling students, and lower overall traveling group sizes negatively impacting land vendor program costs year-over-year.

During the nine months ended September 30, 2014, we traveled 15,711 delegates compared to 17,940 delegates during the same period in the prior year. The prior period includes 816 DSA and China traveled students affecting year-over-year comparability given the Company’s decision to not operate these programs in 2014.  Total revenue from continuing operations of $38.8 million declined 17.0 percent from $46.7 million in the same period last year driven by the decline in travelers.  Gross margin from continuing operations for the nine months ended September 30, 2014 was $32.4 million, down from $39.7 million in the same period last year, with gross margin percentage at 33.4 percent compared to the prior year at 36.0 percent.  The lower current period gross margin percentage is reflective of higher land vendor costs as discussed in the preceding paragraph, as well as an inventory write-down during the year 2014.

-21-

Selling and marketing expenses decreased approximately $0.9 million, or 9 percent, during the three months ended September 30, 2014 to $8.4 million compared to the same period in 2013, mainly due to an overall reduction in personnel and marketing spend.  General and administrative expenses decreased approximately $0.3 million, or 10 percent, during the three months ended September 30, 2014 to $2.4 million compared to the same period in 2013, primarily due to reductions in executive overhead and salaries as a result of reductions in personnel. Additionally, we incurred approximately $0.2 million in additional restructuring charges and recorded $0.4 million to asset impairments related to the sale of our corporate headquarters during the three months ended September 30, 2014, compared to $1.8 million recorded to restructuring costs as well as $6.5 million in asset impairments primarily related to our corporate headquarters during the third quarter of 2013.

Selling and marketing expenses decreased approximately $3.4 million, or 14 percent, to $20.9 million during the nine months ended September 30, 2014 compared to the same period in 2013, due to a purposeful reduction in marketing spend reflecting primarily a smaller winter and spring marketing campaign compared to one year ago, as well as lower personnel expenditures. General and administrative expenses decreased approximately $2.4 million, or 21 percent, to $8.6 million during the nine months ended September 30, 2014 compared to the same period in 2013, primarily due to lower separation and other related benefit expenses year over year.  Additionally, we incurred approximately $1.8 million in restructuring charges and $2.4 million in asset impairments during the nine months ended September 30, 2014, compared to $1.8 million and $6.5 million during the nine months ended September 30, 2013, respectively.

During the third quarter of 2014, we completed the sale of BookRags and have reflected those results as discontinued operations for all periods presented.  During the third quarter of 2014, we recorded income from discontinued operations of $0.4 million compared to $0.2 million during the comparable prior year period.  During the first nine months of 2014, we recorded a loss from discontinued operations of $8.1 million compared to income of $0.6 million recorded during the first nine months of 2013.  The current year period includes the $9.7 million goodwill impairment charge recorded during the second quarter of 2014.

During the first nine months of 2014, we recorded a valuation allowance against our deferred tax asset due to the loss recorded in the current period.  This allowance resulted in a reduced net income tax benefit of approximately $0.8 million recorded for the first nine months of 2014. The result is an effective income tax rate of 7.6 percent. The difference from the statutory rate of 34 percent during 2014 was a result of the valuation allowance. For additional information, see Note 10 to Consolidated Financial Statements. For the first nine months of 2013, we recorded an income tax benefit using an effective income tax rate of 36.9 percent applied to pre-tax income. The difference from the statutory rate of 34 percent during 2013 was primarily due to the impact of tax exempt interest income on projected net loss for the year ending December 31, 2013.

Key Performance Non-GAAP Financial Indicators

We analyze our performance on a net income, cash flow and liquidity basis in accordance with 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.

-22-

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, including travel that has already been completed, less those who have already withdrawn for the travel year referenced. This is a point in time measurement that we use as an indication of expected future gross revenues for our travel programs

	As of November 2, 2014 and 2013
	Delegates
Enrollment detail for travel year	2015	2014	Change	% Change
Student Ambassadors	10,246	15,853	(5,607)	-35.4%
Total, all programs	12,115	17,955	(5,840)	-32.5%

 Deployable Cash

We use deployable cash as 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 capital deployment. This non-GAAP measure is based on conservative assumptions, such as all participants’ deposits being forfeited, and should not be construed as the maximum amount of cash sources available to run our business.

 Deployable Cash Reconciliation (in thousands)

	September 30,						December 31,
	2014			2013			2013
Cash, cash equivalents and short-term available-for-sale securities	$	47,136		$	41,015		$	45,647
Prepaid program cost and expenses		2,597			7,090			7,069
Less: Participants’ deposits		(9,493	)		(9,847	)		(26,362	)
Less: Accounts payable / accruals / other liabilities		(6,646	)		(9,129	)		(3,706	)
Deployable cash	$	33,594		$	29,129		$	22,648

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.

Free Cash Flow Reconciliation (in thousands)

	Nine months ended September 30,
	2014			2013			$ Change
Net cash provided by (used in) operating activities	$	(1,712	)	$	9,256		(10,968	)
Purchase of property, equipment and intangibles		(1,391	)		(2,664	)	1,273
Free cash flow	$	(3,103	)	$	6,592		(9,695	)

Liquidity and Capital Resources

Total assets at September 30, 2014 were $64.4 million, of which 73 percent, or $47.1 million, were cash, cash equivalents and short-term available-for-sale securities, and $8.4 million was classified as an asset held for sale related to our corporate headquarters anticipated to be finalized during the fourth quarter of 2014. At September 30, 2014, long-lived assets totaled $4.5 million primarily related to technology hardware and systems.  During the third quarter of 2014, we recorded $0.4 million in other long-term assets related to funds held in escrow under the terms of the BookRags purchase and sale agreement.  Total liabilities at September 30, 2014 were $16.9 million, including $9.5 million in participant deposits for future travel.

-23-

Net cash used in operations was $1.7 million during the nine months ended September 30, 2014 compared to net cash provided by operations of $9.3 million during the nine months ended September 30, 2013.  This $10.7 million decrease was primarily due to higher net loss.

Net cash used in investing activities was $3.9 million during the first nine months of 2014 compared to $7.0 million during the first nine months of 2013. The current year period reflects cash proceeds of $4.6 million from the sale of BookRags.

Net cash used in financing activities was $0.3 million and $3.6 million during the nine months ended September 30, 2014 and 2013, respectively.  The prior year period included excess tax benefits associated with the cancellation of expired stock compensation benefits and the repurchase of our common stock through buybacks and share surrenders of $2.6 million compared to $0.3 million in the current year period. In addition, the prior year period included $1.0 million paid in stockholder dividends that did not recur in 2014.

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, intangible assets, and long-lived 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 27, 2014.

-24-

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

As of September 30, 2014, the end of the period covered by this report, our interim chief executive officer and principal 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 interim chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting

In the nine months ended September 30, 2014, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

-25-

PART II

OTHER INFORMATION

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

On various dates between May 2004 and May 2011, our Board of Directors authorized the repurchase of shares of our Common Stock in the open market or through private transactions (the “Repurchase Plan”). During the quarter ended September 30, 2014, there were no shares repurchased under the Repurchase Plan. As of September 30, 2014, approximately $13.1 million was available to repurchase shares of our Common Stock under the Repurchase Plan.

Item 6. Exhibits

10.1	Stock Purchase Agreement dated as of September 6, 2014 by and between GradeSaver, LLC and Ambassadors Group, Inc., incorporated by reference to the Company’s Current Report on Form 8-K filed September 9, 2014.
31.1	Certification under Section 302 of the Sarbanes-Oxley Act of 2002. (1)
31.2	Certification under Section 302 of the Sarbanes-Oxley Act of 2002. (1)
32.1	Certification under Section 906 of the Sarbanes-Oxley Act of 2002. (2)

(1) Filed herewith.

(2) This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section.  Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

-26-

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: November 13, 2014	By:	/s/ PHILIP B. LIVINGSTON
		Philip B. Livingston,
		Interim Chief Executive Officer (Principal Executive Officer)

-27-

EXHIBIT INDEX

10.1	Stock Purchase Agreement dated as of September 6, 2014 by and between GradeSaver, LLC and Ambassadors Group, Inc., incorporated by reference to the Company’s Current Report on Form 8-K filed September 9, 2014.
31.1	Certification under Section 302 of the Sarbanes-Oxley Act of 2002. (1)
31.2	Certification under Section 302 of the Sarbanes-Oxley Act of 2002. (1)
32.1	Certification under Section 906 of the Sarbanes-Oxley Act of 2002. (2)

(1) Filed herewith.

(2) This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section.  Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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, Philip B. Livingston, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 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: November 13, 2014

/s/ Philip B. Livingston

Philip B. Livingston

Interim Chief Executive Officer

(Principal Executive Officer)

EX-31.2

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, Lisa N. Netz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 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: November 13, 2014

/s/ Lisa N. Netz

Lisa N. Netz

Vice President, Finance

(Principal 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 September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Philip B. Livingston, interim chief executive officer of the Company and Lisa N. Netz, vice president, finance 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: November 13, 2014

/s/ Philip B. Livingston

Philip B. Livingston

Interim Chief Executive Officer

(Principal Executive Officer)

/s/ Lisa N. Netz

Lisa N. Netz

Vice President, Finance

(Principal Financial Officer)

XML

Stock-Based Compensation (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized under the plan available for future stock-based compensation (in shares)	2,125,512		2,125,512
Expected dividend yield (in hundredths)	0.00%	0.00%	0.00%	1.37%
Expected stock price volatility (in hundredths)	41.94%	0.00%	47.98%	54.66%
Risk-free interest rate (in hundredths)	2.47%	0.00%	2.31%	2.08%
Expected life of options	4 years 1 month 24 days	0 years	4 years 3 months 11 days	4 years 6 months 22 days
Estimated fair value per option granted (in dollars per share)	$ 1.58	$ 0	$ 1.61	$ 1.63
Stock Options [Roll Forward]
Stock Options, Beginning Balance (in shares)			907,945
Stock Options, Granted in Period (in shares)			186,072
Stock Options, Forfeited / Expired (in shares)			(510,450)
Stock Options, Exercised (in shares)			0
Stock Options, Ending Balance (in shares)	583,567		583,567
Stock Options, Exercisable Ending Balance (in shares)	214,348		214,348
Stock Options, Weighted-Average Exercise Price [Roll Forward]
Stock Options, Weighted-Average Exercise Price, Beginning Balance (in dollars per share)			$ 6.54
Stock Options, Granted, Weighted-Average Exercise Price (in dollars per share)			$ 4.13
Stock Options, Forfeited / Expired, Weighted Average Exercise Price (in dollars per share)			$ 6.07
Stock Options, Exercised, Weighted Average Exercise Price (in dollars per share)			$ 0
Stock Options, Weighted Average Exercise Price, Ending Balance (in dollars per share)	$ 6.17		$ 6.17
Stock Options Exercisable, Weighted Average Exercise Price, Ending Balance (in dollars per share)	$ 9.21		$ 9.21
Outstanding, Weighted-Average Remaining Contractual Life			7 years 5 months 12 days
Exercisable, Weighted-Average Remaining Contractual Life			4 years 10 months 10 days
Stock-based compensation			$ 1,305,000	$ 2,161,000
Board of Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			1 year
Key Employees and Consultants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage that can vest per year (in hundredths)			25.00%
Vesting period			4 years
Exercised period for vest from grant date			10 years
Fair value assumptions expected forfeiture rate (in hundredths)			14.08%
Stock Options, Weighted-Average Exercise Price [Roll Forward]
Total intrinsic value of stock options exercised	0	0	0	0
Total fair value of options vested			800,000	1,000,000
Stock-based compensation	100,000	100,000	500,000	1,000,000
Unrecognized stock-based compensation expense	400,000		400,000
Unrecognized stock-based compensation expense recognition period			3 years 9 months 29 days
Restricted Stock Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage that can vest per year (in hundredths)			100.00%
Stock Options, Weighted-Average Exercise Price [Roll Forward]
Option outstanding, intrinsic value	500,000		500,000
Share price that valuation assumptions are based on (in dollars per share)	$ 3.70		$ 3.70
Stock price (in dollars per share)	$ 3.70		$ 3.70
Stock-based compensation	100,000	100,000	800,000	1,100,000
Unrecognized stock-based compensation expense	300,000		300,000
Unrecognized stock-based compensation expense recognition period			3 years 9 months 29 days
Weighted-average grant date fair value of restricted stock awards vested	100,000	0	1,000,000	2,000,000
Restricted Stock and Performance Stock Awards [Abstract]
Restricted Stock and Performance Stock Awards, Beginning Balance (in shares)			285,435
Restricted Stock and Performance Stock Awards, Shares Granted (in shares)			51,704
Restricted Stock and Performance Stock Awards, Forfeitures (in shares)			(13,364)
Restricted Stock Awarded Performance Stock Awards, Vested (in shares)			(190,335)
Restricted Stock and Performance Stock Awards, Ending Balance (in shares)	133,440		133,440
Restricted Stock and Performance Stock Awards, weighted average grant date fair value [Abstract]
Restricted Stock and Performance Stock Awards, Beginning Balance (in dollars per share)			$ 5.24
Restricted Stock and Performance Stock Awards, Granted, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 3.72
Restricted Stock and Performance Stock Awards, Forfeited, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 5.76
Restricted Stock and Performance Stock Awards, Vested, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 4.97
Restricted Stock and Performance Stock Awards, Weighted-Average Grant Date Fair Value, Ending Balance (in dollars per share)	$ 5.00		$ 5.00
Weighted-Average Remaining Contractual Life			1 year 7 months 10 days
Restricted Stock Award [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			1 year
Restricted Stock Award [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage that can vest per year (in hundredths)			25.00%
Vesting period			4 years
Stock Options, Weighted-Average Exercise Price [Roll Forward]
Option outstanding, intrinsic value	300,000		300,000
Unrecognized stock-based compensation expense	300,000		300,000
Unrecognized stock-based compensation expense recognition period			3 years 9 months 29 days
Restricted Stock and Performance Stock Awards [Abstract]
Restricted Stock and Performance Stock Awards, Beginning Balance (in shares)			28,123
Restricted Stock and Performance Stock Awards, Shares Granted (in shares)			81,060
Restricted Stock and Performance Stock Awards, Forfeitures (in shares)			(12,689)
Restricted Stock Awarded Performance Stock Awards, Vested (in shares)			(9,555)
Restricted Stock and Performance Stock Awards, Ending Balance (in shares)	86,939		86,939
Restricted Stock and Performance Stock Awards, weighted average grant date fair value [Abstract]
Restricted Stock and Performance Stock Awards, Beginning Balance (in dollars per share)			$ 3.88
Restricted Stock and Performance Stock Awards, Granted, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 4.34
Restricted Stock and Performance Stock Awards, Forfeited, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 4.13
Restricted Stock and Performance Stock Awards, Vested, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 4.15
Restricted Stock and Performance Stock Awards, Weighted-Average Grant Date Fair Value, Ending Balance (in dollars per share)	$ 4.24		$ 4.24
Weighted-Average Remaining Contractual Life			2 years 0 months 22 days
Performance Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Stock Options, Weighted-Average Exercise Price [Roll Forward]
Unrecognized stock-based compensation expense	$ 0		$ 0
Restricted Stock and Performance Stock Awards [Abstract]
Restricted Stock and Performance Stock Awards, Beginning Balance (in shares)			114,560
Restricted Stock and Performance Stock Awards, Shares Granted (in shares)			0
Restricted Stock and Performance Stock Awards, Forfeitures (in shares)			(78,514)
Restricted Stock Awarded Performance Stock Awards, Vested (in shares)			0
Restricted Stock and Performance Stock Awards, Ending Balance (in shares)	36,046		36,046
Restricted Stock and Performance Stock Awards, weighted average grant date fair value [Abstract]
Restricted Stock and Performance Stock Awards, Beginning Balance (in dollars per share)			$ 4.41
Restricted Stock and Performance Stock Awards, Granted, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 0
Restricted Stock and Performance Stock Awards, Forfeited, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 4.41
Restricted Stock and Performance Stock Awards, Vested, Weighted-Average Grant Date Fair Value (in dollars per share)			$ 0
Restricted Stock and Performance Stock Awards, Weighted-Average Grant Date Fair Value, Ending Balance (in dollars per share)	$ 4.41		$ 4.41
Weighted-Average Remaining Contractual Life			2 years 3 months

XML

Discontinued Operations (Details) (USD $)	3 Months Ended		9 Months Ended			1 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2014 BookRags [Member]	Dec. 31, 2013 BookRags [Member]
Current assets: [Abstract]
Cash and cash equivalents							$ 765,000
Accounts receivable							731,000
Other current assets							62,000
Total current assets	8,400,000		8,400,000		0		1,558,000
Property and equipment, net							710,000
Intangibles							3,522,000
Goodwill							9,711,000
Total assets	8,800,000		8,800,000				15,501,000
Current liabilities:
Accounts payable and accrued expenses							283,000
Other current liabilties							118,000
Total current liabilites							401,000
Other long-term liabilties							1,056,000
Total liabilties							1,457,000
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue	545,000	910,000	2,608,000	2,938,000
Gross margin	472,000	785,000	2,285,000	2,558,000
Selling & marketing expenses	(53,000)	(364,000)	(706,000)	(1,156,000)
General & administrative expenses	(258,000)	(171,000)	(679,000)	(444,000)
Restructuring costs	0	0	(522,000)	0
Impairment and gain (loss) on sale of discontinued operations	35,000	0	(9,676,000)	0
Operating income (loss) from discontinued operations	196,000	250,000	(9,298,000)	959,000
Income tax benefit (provision) on discontinued operations	230,000	(61,000)	1,184,000	(350,000)
Net income (loss) from discontinued operations	426,000	189,000	(8,114,000)	609,000
Gross proceeds from sale of BookRags						5,000,000
Amount held in escrow						$ 400,000

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Investments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Investments and Fair Value Measurements [Abstract]

Fair value of investments

The following tables summarize the composition of our investments at September 30, 2014 and December 31, 2013 (in thousands):

								Classification on Balance Sheet
September 30, 2014	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	$	(276	)	$	724	$	-	$	-	$	724
Money market funds, ninety days or less		17		-			17		17		-		-
Municipal securities1
Short term municipal securities funds2		42,803		17			42,820		-		42,820		-
One year or less		-		-			-		-		-		-
After one year through three years		-		-			-		-		-		-
Greater than three years		782		(16	)		766		-		766		-
Total	$	44,602	$	(275	)	$	44,327	$	17	$	43,586	$	724

								Classification on Balance Sheet
December 31, 2013	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	$	1,002	$	(283	)	$	719	$	-	$	-	$	719
Money market funds, ninety days or less		488		-			488		488		-		-
Municipal securities1
Short term municipal securities funds2		27,493		(143	)		27,350		-		27,350		-
One year or less		952		3			955		-		955		-
After one year through three years		3,132		20			3,152		-		3,152		-
Greater than three years		4,854		(137	)		4,717		-		4,717		-
Total	$	37,921	$	(540	)	$	37,381	$	488	$	36,174	$	719

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.

2Amounts include short-term municipal security funds that do not have a set maturity date.

Fair value by balance sheet grouping

The following tables detail the fair value measurements of assets and liabilities within the three levels of the fair value hierarchy at September 30, 2014 and December 31, 2013 (in thousands):

			Fair Value Measurements at Reporting Date Using
September 30, 2014	Fair Market Value		Level 1		Level 2		Level 3
Financial assets:
ARS	$	724	$	-	$	-	$	724
Money market funds		17		17		-		-
Municipal securities1		43,585		42,819		766		-
Foreign currency exchange contracts		-		-		-		-
Total financial assets	$	44,326	$	42,836	$	766	$	724
Financial liabilities:
Foreign currency exchange contracts		625		-		625		-
Total financial liabilities	$	625	$	-	$	625	$	-

			Fair Value Measurements at Reporting Date Using
December 31, 2013	Fair Market Value		Level 1		Level 2		Level 3
Financial assets:
ARS	$	719	$	-	$	-	$	719
Money market funds		488		488		-		-
Municipal securities1		36,174		27,350		8,824		-
Foreign currency exchange contracts		253		-		253		-
Total financial assets	$	37,634	$	27,838	$	9,077	$	719
Financial liabilities:
Foreign currency exchange contracts		549		-		549		-
Total financial liabilities	$	549	$	-	$	549	$	-

1 At September 30, 2014, municipal securities were split 98/1/1 percent between holdings in short-term municipal security funds, municipal revenue bonds, and municipal general obligation bonds, respectively. At December 31, 2013, municipal securities were split 76/13/11 percent split between holdings in short-term municipal security funds, municipal revenue bonds and municipal general obligation bonds, respectively. The underlying credit rating of the municipal securities at September 30, 2014 and December 31, 2013 were A+, A1 or better as defined by S&P 500 and Moody’s, respectively.

Fair value measurements of assets measured on non-recurring basis

The following table details the fair value measurements of assets measured on a non-recurring basis within the three levels of the fair value hierarchy at September 30, 2014 and December 31, 2013 (in thousands):

			Fair Value Measurements at Reporting Date Using						Total Loss
September 30, 2014	Fair Market Value		Qouted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Three months ended September 30, 2014
Non-financal assets:
Property and equipment, net	$	8,750	$	-	$	-	$	8,750	$	2,000

The following table details the fair value measurements of assets measured on a non-recurring basis within the three levels of the fair value hierarchy at December 31, 2013 (in thousands):

			Fair Value Measurements at Reporting Date Using						Total Loss
December 31, 2013	Fair Market Value		Qouted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Year ended December 31, 2013
Non-financal assets:
Property and equipment, net	$	11,000	$	-	$	-	$	11,000	$	4,544

Fair value of Level 3 assets measured on a recurring basis

The following table presents a reconciliation for the three and nine months ended September 30, 2014 and 2013, of available-for-sale ARS measured at fair value on a recurring basis using Level 3 inputs (in thousands):

	Three months ended					Nine months ended
	September 30,					September 30,
	2014			2013		2014		2013
Beginning balance	$	729		$	716	$	719	$	723
Total realized / unrealized gains (losses):
Included in OCI		(5	)		1		5		(6	)
Ending balance	$	724		$	717	$	724	$	717

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Line of Credit (Details)	9 Months Ended
	Sep. 30, 2014
Line of Credit [Abstract]
Line of credit facility, expiration date	Jun. 01, 2014

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period			$ (549)
Reclassification into net revenue, non-directly delivered programs	10,818	15,071	29,027	36,254
Reclassification into interest and dividend income	84	70	356	357
Effect of incomes taxes, Derivative Securities	0	112	0	(324)
Effect of income taxes, Available-for-sale securities	0	12	0	(89)
Balance, end of period	(612)		(612)
Realized gain (loss) on sale of investments			19	120
Derivative Securities [Member] | Foreign Currency Exchange Contracts [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period	164	(267)	(192)	544
Change before reclassification	(690)	253	(310)	(482)
Reclassification into net revenue, non-directly delivered programs	5	(67)	(19)	(185)
Reclassification into interest and dividend income	0	0	0	0
Effect of incomes taxes, Derivative Securities	0	23	0	65
Other comprehensive income (loss), net of income taxes	(685)	209	(329)	(602)
Balance, end of period	(521)	(58)	(521)	(58)
Available-for-sale securities [Member] | Foreign Currency Exchange Contracts [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period	(90)	(366)	(357)	(180)
Change before reclassification	12	(24)	272	(216)
Reclassification into net revenue, non-directly delivered programs	0	0	0	0
Reclassification into interest and dividend income	(14)	70	(6)	79
Effect of income taxes, Available-for-sale securities	0	(25)	0	(28)
Other comprehensive income (loss), net of income taxes	(2)	21	266	(165)
Balance, end of period	$ (91)	$ (345)	$ (91)	$ (345)

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Basis of Presentation

9 Months Ended

Sep. 30, 2014

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 nine months ended September 30, 2014 are not indicative of the results that may be expected for the year ending December 31, 2014.

These financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013.

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Commitments and Contingencies (Details) (Anthony F. Dombrowik [Member], USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014
Anthony F. Dombrowik [Member]
Related Party Transaction [Line Items]
Cash payouts to be made under separation agreements	$ 0.4
Cash payments remained to be paid		0.4
Number of months under terms of agreement	8 months
Vesting of stock options	$ 0.2

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Net Income (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2014

Net Income (Loss) per Share [Abstract]

Reconciliation of basic and diluted income per share computations

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

	Three months ended  September 30,					Nine months ended  September 30,
	2014		2013			2014			2013
Numerator:
Net income (loss) from continuing operations	$	1,912	$	(1,803	)	$	(1,284	)	$	(2,190	)
Denominator:
Weighted-average shares outstanding		16,903		16,984			16,827			16,982
Effect of unvested restricted stock awards      considered participating securities		138		-			-			-
Weighted-average shares outstanding – basic		17,041		16,984			16,827			16,982
Effect of dilutive common stock options		-		-			-			-
Effect of dilutive restricted stock units		5		-			-			-
Weighted-average shares outstanding – diluted		17,046		16,984			16,827			16,982
Net income (loss) per share - basic	$	0.11	$	(0.11	)	$	(0.08	)	$	(0.13	)
Net income (loss) per share - diluted	$	0.11	$	(0.11	)	$	(0.08	)	$	(0.13	)
Cash dividends declared per share1	$	-	$	-		$	-		$	0.06
Stock options and restricted stock units excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive		658,000		782,000			751,000			1,319,000

1The Company suspended quarterly dividend payments during the second quarter of 2013.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Stock-Based Compensation [Abstract]

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 nine months ended September 30, 2014 and 2013.

	Three months ended  September 30, 2014				Three months ended  September 30, 2013		Nine months ended  September 30, 2014			Nine months ended  September 30, 2013
Expected dividend yield		-	%		-	%		-	%		1.37	%
Expected stock price volatility		41.94	%		-	%		47.98	%		54.66	%
Risk-free interest rate		2.47	%		-	%		2.31	%		2.08	%
Expected life of options		4.15	Years		-	Years		4.28	Years		4.56	Years
Estimated fair value per option granted	$	1.58		$			$	1.61		$	1.63

Summary of stock option activity

A summary of option activity under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Stock Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (years)
Outstanding at December 31, 2013	907,945	$	6.54
Granted	186,072		4.13
Forfeited / Expired	(510,450)		6.07
Exercised	-		-
Outstanding at September 30, 2014	583,567	$	6.17	7.45
Exercisable at September 30, 2014	214,348	$	9.21	4.86

Summary of activity of non-vested restricted stock awards and restricted stock units

A summary of the activity of non-vested restricted stock awards and restricted stock units under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Restricted Stock Awards				Restricted Stock Units
	Restricted Stock Awards	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life (years)	Restricted Stock Units	Weighted- Average Grant  Date Fair Value		Weighted- Average Remaining Contractual  Life (years)
Balance at December 31, 2013	285,435	$	5.24		28,123	$	3.88
Granted	51,704		3.72		81,060		4.34
Forfeited	(13,364)		5.76		(12,689)		4.13
Vested	(190,335)		4.97		(9,555)		4.15
Balance at September 30, 2014	133,440	$	5.00	1.61	86,939	$	4.24	2.06

Summary of activity of performance stock units under the Plan

A summary of the activity of performance stock units under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Performance Stock Units	Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Life (years)
Balance at December 31, 2013	114,560	$	4.41
Granted	-		-
Forfeited	(78,514)		4.41
Vested	-		-
Balance at September 30, 2014	36,046	$	4.41	2.25

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Supplemental Disclosures of Consolidated Statements of Cash Flows (Tables)

9 Months Ended

Sep. 30, 2014

Supplemental Disclosures of Consolidated Statements of Cash Flows [Abstract]

Non-cash investing and financing activities

13. Supplemental Disclosures of Consolidated Statements of Cash Flows

Our non-cash investing and financing activities during the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands):

	September 30, 2014			September 30, 2013
Unrealized loss on foreign currency exchange contracts	$	(329	)	$	(927	)
Unrealized income (loss) on available-for-sale securities	$	265		$	(254	)

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The Company (Details)	9 Months Ended
	Sep. 30, 2014 Segment
The Company [Abstract]
Number of reporting segments	2

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The Company

9 Months Ended

Sep. 30, 2014

The Company [Abstract]

The Company

1. The Company

Ambassadors Group, Inc. (the “Company”, “we”, “us” or “our”) is an educational company primarily engaged in organizing and promoting differentiated worldwide travel programs for students and professionals. Up through September 2014, we also operated an education oriented research website, BookRags.com, which provided 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., World Adventures Unlimited, Inc., Ambassadors Unlimited, LLC, AGI Hong Kong Limited, Beijing People to People Education Consultation Co., Ltd, Marketing Production Systems LLC, and BookRags, Inc. (“BookRags”). All significant intercompany accounts and transactions, which are of a normal recurring nature, are eliminated in consolidation.

During the third quarter of 2014, the Company announced it had consummated a sale of its wholly-owned subsidiary BookRags. All activities related to BookRags have been reflected as discontinued operations for all periods presented. For additional information, see Note 5 of Notes to Consolidated Financial Statements.

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Restructuring Costs (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Restructuring Cost and Reserve [Line Items]
Period in which restructuring costs will be recognized				12 months
Additional restructuring cost incurred	$ 217	$ 1,600	$ 1,756	$ 1,756	$ 1,756
Ambassador Programs and Other [Member]
Restructuring cost liability [Roll Forward]
Restructuring costs				4,042
less: cash payments				3,302
less: non-cash expenses				377
Total restructuring liabilities at September 30, 2014	363			363
Ambassador Programs and Other [Member] | Contract Termination Fees [Member]
Restructuring cost liability [Roll Forward]
Restructuring costs				1,550
Ambassador Programs and Other [Member] | Separation Payments [Member]
Restructuring cost liability [Roll Forward]
Restructuring costs				949
Ambassador Programs and Other [Member] | Equity Compensation Expense [Member]
Restructuring cost liability [Roll Forward]
Restructuring costs				377
Ambassador Programs and Other [Member] | Other Transition Costs [Member]
Restructuring cost liability [Roll Forward]
Restructuring costs				$ 1,166

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Net Income (Loss) per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Numerator [Abstract]
Net income (loss) from continuing operations	$ 1,912		$ (1,803)		$ (1,284)		$ (2,190)
Denominator [Abstract]
Weighted-average shares outstanding (in shares)	16,903,000		16,984,000		16,827,000		16,982,000
Effect of unvested restricted stock awards considered participating securities (in shares)	138,000		0		0		0
Weighted-average shares outstanding - basic (in shares)	17,041,000		16,984,000		16,827,000		16,982,000
Effect of dilutive common stock options (in shares)	0		0		0		0
Effect of dilutive restricted stock units	5,000		0		0		0
Weighted-average shares outstanding - diluted (in shares)	17,046,000		16,984,000		16,827,000		16,982,000
Net income (loss) per share - basic (in dollars per share)	$ 0.11		$ (0.11)		$ (0.08)		$ (0.13)
Net income (loss) per share - diluted (in dollars per share)	$ 0.11		$ (0.11)		$ (0.08)		$ (0.13)
Cash dividends declared per share (in dollars per share)	$ 0	[1]	$ 0	[1]	$ 0	[1]	$ 0.06	[1]
Stock Options and Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options and restricted stock units excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive	658,000		782,000		751,000		1,319,000

[1] The Company suspended quarterly dividend payments during the second quarter of 2013.

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 3,550	$ 9,473
Available-for-sale securities and other	43,586	36,174
Prepaid program costs and expenses	2,597	7,069
Accounts receivable	1,071	1,792
Deferred tax assets	0	1,295
Assets held for sale	8,400	0
Total current assets	59,204	55,803
Property and equipment, net	3,821	18,452
Available-for-sale securities	724	719
Deferred tax assets	125	0
Intangibles	0	3,522
Goodwill	70	9,781
Other long-term assets	483	82
Total assets	64,427	88,359
Current liabilities:
Accounts payable and accrued expenses	6,646	3,587
Participants' deposits	9,303	26,362
Foreign currency exchange contracts	625	244
Deferred tax liabilities	149	0
Other liabilities	0	119
Total current liabilities	16,723	30,312
Participants' deposits	190	0
Foreign currency exchange contracts	0	52
Deferred tax liabilities	0	2,087
Total liabilities	16,913	32,451
Commitments and Contingencies (Note 15)
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; 17,044,905 and 17,040,724 shares issued and outstanding, respectively	170	170
Additional paid-in capital	1,478	411
Retained earnings	46,478	55,876
Accumulated other comprehensive gain (loss)	(612)	(549)
Stockholders' equity	47,514	55,908
Total liabilities and stockholders' equity	$ 64,427	$ 88,359

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) [Abstract]
Unrealized gain (loss) on foreign currency exchange contracts, income tax benefit (provision)	$ 0	$ (112)	$ 0	$ 324
Unrealized gain (loss) on available-for-sale securities, income tax benefit (provision)	$ 0	$ (12)	$ 0	$ 89

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Investments and Fair Value Measurements (Details) (USD $)	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2014 Investment		Sep. 30, 2013	Sep. 30, 2014 Investment		Sep. 30, 2013	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 44,602,000			$ 44,602,000			$ 37,921,000
Unrealized Gains (Losses)	(275,000)			(275,000)			(540,000)
Aggregate Fair Value	44,327,000			44,327,000			37,381,000
Cash and cash equivalents	17,000			17,000			488,000
Short-term available-for-sale securities	43,586,000			43,586,000			36,174,000
Long-term available-for-sale securities	724,000			724,000			719,000
Financial assets [Abstract]
ARS	724,000			724,000			719,000
Money market funds	17,000			17,000			488,000
Municipal securities	43,585,000	[1]		43,585,000	[1]		36,174,000	[1]
Foreign currency exchange contracts	0			0			253,000
Total financial assets	44,326,000			44,326,000			37,634,000
Financial liabilities [Abstract]
Foreign currency exchange contracts	625,000			625,000			549,000
Total financial liabilities	625,000			625,000			549,000
Non-financial assets [Abstract]
Property and equipment, net	8,750,000			8,750,000			11,000,000
Loss on disposition and impairment of property and equipment	2,000,000			2,364,000		6,461,000	4,544,000
Short-term municipal security funds as a percentage of municipal securities (in hundredths)	98.00%			98.00%			76.00%
Municipal revenue bonds as a percentage of municipal securities (in hundredths)	1.00%			1.00%			13.00%
Municipal general obligation bonds as a percentage of municipal securities (in hundredths)	1.00%			1.00%			11.00%
Reconciliation of available-for-sale ARS measured at fair value on a recurring basis using Level 3 inputs [Roll Forward]
Beginning balance	729,000		716,000	719,000		723,000	723,000
Total realized / unrealized gains (losses): [Abstract]
Included in OCI	(5,000)		1,000	5,000		(6,000)
Ending balance	724,000		717,000	724,000		717,000	719,000
Assets held for sale	8,400,000			8,400,000			0
Sales commissions and fees	400,000			400,000
Number of investments that failed at auction	1			1
Principal amount of failed ARS auction	1,000,000			1,000,000
Basis points (in hundredths)				3.21%
Valuation of Ars after discount has been applied	700,000			700,000
Cost basis	1,000,000			1,000,000
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets [Abstract]
ARS	0			0			0
Money market funds	17,000			17,000			488,000
Municipal securities	42,819,000	[1]		42,819,000	[1]		27,350,000	[1]
Foreign currency exchange contracts	0			0			0
Total financial assets	42,836,000			42,836,000			27,838,000
Financial liabilities [Abstract]
Foreign currency exchange contracts	0			0			0
Total financial liabilities	0			0			0
Non-financial assets [Abstract]
Property and equipment, net	0			0			0
Significant Other Observable Inputs (Level 2) [Member]
Financial assets [Abstract]
ARS	0			0			0
Money market funds	0			0			0
Municipal securities	766,000	[1]		766,000	[1]		8,824,000	[1]
Foreign currency exchange contracts	0			0			253,000
Total financial assets	766,000			766,000			9,077,000
Financial liabilities [Abstract]
Foreign currency exchange contracts	625,000			625,000			549,000
Total financial liabilities	625,000			625,000			549,000
Non-financial assets [Abstract]
Property and equipment, net	0			0			0
Significant Other Unobservable Inputs (Level 3) [Member]
Financial assets [Abstract]
ARS	724,000			724,000			719,000
Money market funds	0			0			0
Municipal securities	0	[1]		0	[1]		0	[1]
Foreign currency exchange contracts	0			0			0
Total financial assets	724,000			724,000			719,000
Financial liabilities [Abstract]
Foreign currency exchange contracts	0			0			0
Total financial liabilities	0			0			0
Non-financial assets [Abstract]
Property and equipment, net	8,750,000			8,750,000			11,000,000
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			1,002,000
Unrealized Gains (Losses)	(276,000)			(276,000)			(283,000)
Aggregate Fair Value	724,000			724,000			719,000
Cash and cash equivalents	0			0			0
Short-term available-for-sale securities	0			0			0
Long-term available-for-sale securities	724,000			724,000			719,000
Money Market Funds, Ninety Days or Less [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	17,000			17,000			488,000
Unrealized Gains (Losses)	0			0			0
Aggregate Fair Value	17,000			17,000			488,000
Cash and cash equivalents	17,000			17,000			488,000
Short-term available-for-sale securities	0			0			0
Long-term available-for-sale securities	0			0			0
Short Term Municipal Securities Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	42,803,000	[2],[3]		42,803,000	[2],[3]		27,493,000	[2],[3]
Unrealized Gains (Losses)	17,000	[2],[3]		17,000	[2],[3]		(143,000)	[2],[3]
Aggregate Fair Value	42,820,000	[2],[3]		42,820,000	[2],[3]		27,350,000	[2],[3]
Cash and cash equivalents	0	[2],[3]		0	[2],[3]		0	[2],[3]
Short-term available-for-sale securities	42,820,000	[2],[3]		42,820,000	[2],[3]		27,350,000	[2],[3]
Long-term available-for-sale securities	0	[2],[3]		0	[2],[3]		0	[2],[3]
Municipal Securities Maturing in One Year or Less [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	0	[2]		0	[2]		952,000	[2]
Unrealized Gains (Losses)	0	[2]		0	[2]		3,000	[2]
Aggregate Fair Value	0	[2]		0	[2]		955,000	[2]
Cash and cash equivalents	0	[2]		0	[2]		0	[2]
Short-term available-for-sale securities	0	[2]		0	[2]		955,000	[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	0	[2]		0	[2]		3,132,000	[2]
Unrealized Gains (Losses)	0	[2]		0	[2]		20,000	[2]
Aggregate Fair Value	0	[2]		0	[2]		3,152,000	[2]
Cash and cash equivalents	0	[2]		0	[2]		0	[2]
Short-term available-for-sale securities	0	[2]		0	[2]		3,152,000	[2]
Long-term available-for-sale securities	0	[2]		0	[2]		0	[2]
Municipal Securities Maturing Greater Than Three Years [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	782,000	[2]		782,000	[2]		4,854,000	[2]
Unrealized Gains (Losses)	(16,000)	[2]		(16,000)	[2]		(137,000)	[2]
Aggregate Fair Value	766,000	[2]		766,000	[2]		4,717,000	[2]
Cash and cash equivalents	0	[2]		0	[2]		0	[2]
Short-term available-for-sale securities	766,000	[2]		766,000	[2]		4,717,000	[2]
Long-term available-for-sale securities	$ 0	[2]		$ 0	[2]		$ 0	[2]

[1] At September 30, 2014, municipal securities were split 98/1/1 percent between holdings in short-term municipal security funds, municipal revenue bonds, and municipal general obligation bonds, respectively. At December 31, 2013, municipal securities were split 76/13/11 percent split between holdings in short-term municipal security funds, municipal revenue bonds and municipal general obligation bonds, respectively. The underlying credit rating of the municipal securities at September 30, 2014 and December 31, 2013 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.

[3] Amounts include short-term municipal security funds that do not have a set maturity date.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies [Abstract]

Commitments and Contingencies

15.  Commitments and Contingencies

On May 7, 2014, Anthony F. Dombrowik, our former interim Chief Executive Officer and Chief Financial Officer, was terminated by the Board of Directors.  In connection with Mr. Dombrowik’s departure, we entered into a separation agreement effective May 7, 2014.  Under the terms of the separation agreement, cash payouts of approximately $0.4 million are to be made to Mr. Dombrowik, all of which was fully expensed during the second quarter of 2014 although approximately $0.4 million remained to be paid during the 8 months following June 30, 2014.  Additionally, the separation agreement called for the immediate vesting of stock options and stock grants for Mr. Dombrowik in the amount of $0.2 million.

We are not a party to any 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.

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 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 September 30, 2014.

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Derivative Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified				9 Months Ended			9 Months Ended			9 Months Ended			9 Months Ended			9 Months Ended
	Sep. 30, 2014 Designated as Hedging Instrument [Member]	Dec. 31, 2013 Designated as Hedging Instrument [Member]	Sep. 30, 2014 Australian Dollar [Member] Forward Contracts [Member]	Sep. 30, 2014 Australian Dollar [Member] Forward Contracts [Member] Minimum [Member]	Sep. 30, 2014 Australian Dollar [Member] Forward Contracts [Member] Maximum [Member]	Sep. 30, 2014 Euro [Member] Forward Contracts [Member]	Sep. 30, 2014 Euro [Member] Forward Contracts [Member] Minimum [Member]	Sep. 30, 2014 Euro [Member] Forward Contracts [Member] Maximum [Member]	Sep. 30, 2014 British Pound [Member] Forward Contracts [Member]	Sep. 30, 2014 British Pound [Member] Forward Contracts [Member] Minimum [Member]	Sep. 30, 2014 British Pound [Member] Forward Contracts [Member] Maximum [Member]	Sep. 30, 2014 Canadian Dollar [Member] Forward Contracts [Member]	Sep. 30, 2014 Canadian Dollar [Member] Forward Contracts [Member] Minimum [Member]	Sep. 30, 2014 Canadian Dollar [Member] Forward Contracts [Member] Maximum [Member]	Sep. 30, 2014 New Zealand Dollar [Member] Forward Contracts [Member]	Sep. 30, 2014 New Zealand Dollar [Member] Forward Contracts [Member] Minimum [Member]	Sep. 30, 2014 New Zealand Dollar [Member] Forward Contracts [Member] Maximum [Member]	Sep. 30, 2014 Japanese Yen [Member] Forward Contracts [Member]
Derivative [Line Items]
Notional amount of foreign currency forward contracts			$ 3,250			$ 9,500			$ 1,900			$ 400			$ 400			$ 25,000
Derivative maturity date range				Jan. 31, 2015	Jul. 31, 2015		Jan. 31, 2015	Jul. 31, 2015		Jan. 31, 2015	Jul. 31, 2015		Mar. 31, 2015	May 31, 2015		Mar. 31, 2015	Jul. 31, 2015	May 31, 2015
Derivatives, Fair Value [Line Items]
Forward contracts, assets	0	253
Forward contracts, liabilities	625	549
Total net forward contracts	$ 625	$ 296

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2014

Discontinued Operations [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

The following table summarizes the assets and liabilities of discontinued operations including in the consolidated balance sheet as of December 31, 2013.  There were no assets and liabilities of discontinued operations as of September 30, 2014.

Balance Sheet (Audited)
As of December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	765
Accounts receivable		731
Other current assets		62
Total current assets		1,558
Property and equipment, net		710
Intangibles		3,522
Goodwill		9,711
Total assets	$	15,501
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	283
Other current liabilties		118
Total current liabilites		401
Other long-term liabilties		1,056
Total liabilties	$	1,457

The following table summarizes the results of discontinued operations for the periods indicated (in thousands):

	Three months ended September 30, 2014			Three months ended September 30, 2013			Nine months ended September 30, 2014			Nine months ended September 30, 2013
Total revenue	$	545		$	910		$	2,608		$	2,938
Gross margin	$	472		$	785		$	2,285		$	2,558
Selling & marketing expenses	$	(53	)	$	(364	)	$	(706	)	$	(1,155	)
General & administrative expenses	$	(258	)	$	(171	)	$	(679	)	$	(444	)
Restructuring costs	$	-		$	-		$	(522	)	$	-
Impairment and gain (loss) on sale of discontinued operations	$	35		$	-		$	(9,676	)	$	-
Operating income (loss) from discontinued operations	$	196		$	250		$	(9,298	)	$	959
Income tax benefit (provision) on discontinued operations	$	230		$	(61	)	$	1,184		$	(350	)
Net income (loss) from discontinued operations	$	426		$	189		$	(8,114	)	$	609

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (9,398)	$ (1,581)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	4,497	4,088
Stock-based compensation	1,305	2,161
Deferred income tax benefit	(877)	(2,373)
Impairment and loss on sale of discontinued operations	9,676	0
Loss on disposition and impairment of property and equipment	2,364	6,461
Program merchandise writedown	554	0
Excess tax shortfall from stock-based compensation	109	2,103
Change in assets and liabilities:
Accounts receivable and other assets	663	(169)
Prepaid program costs and expenses	3,890	9,652
Accounts payable, accrued expenses, and other current liabilities	2,374	4,802
Participants' deposits	(16,869)	(15,888)
Net cash provided by (used in) operating activities	(1,712)	9,256
Cash flows from investing activities:
Purchase of available-for-sale securities	(29,733)	(27,297)
Proceeds from sale of available-for-sale securities	22,582	22,931
Purchase of property and equipment	(1,202)	(2,413)
Proceeds from sale of property and equipment	28	0
Purchase of intangibles	(189)	(251)
Proceeds from sale of BookRags, Inc.	4,600	0
Net cash used in investing activities	(3,914)	(7,030)
Cash flows from financing activities:
Repurchase of Common Stock	(188)	(486)
Dividend payment to shareholders	0	(1,017)
Proceeds from exercise of stock options	0	5
Excess tax shortfall from stock-based compensation	(109)	(2,103)
Net cash used in financing activities	(297)	(3,601)
Net decrease in cash and cash equivalents	(5,923)	(1,375)
Cash and cash equivalents, beginning of period	9,473	6,150
Cash and cash equivalents, end of period	$ 3,550	$ 4,775

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
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)	17,044,905	17,040,724
Common stock, shares outstanding (in shares)	17,044,905	17,040,724

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Taxes [Abstract]

Income Taxes

10. Income Taxes

We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. A significant piece of objective negative evidence we evaluated was our cumulative loss incurred over the three-year period ended June 30, 2014. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth. As a result, we determined that the negative evidence outweighed the positive evidence as of June 30, 2014 and recorded a one-time, non-cash charge to income tax expense of approximately $0.7 million to establish a valuation allowance against our total U.S. deferred tax assets, net of U.S. deferred tax liabilities, approximately all of which relates to the beginning of the year balance. This accounting treatment has no effect on our ability to utilize deferred tax assets such as loss carryforwards and tax credits to reduce future cash tax payments. We will continue to assess the likelihood that the deferred tax assets will be realizable at each reporting period and the valuation allowance will be adjusted accordingly.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 10, 2014
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	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		17,043,625
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Stock-Based Compensation [Abstract]

Stock-Based Compensation

11. Stock-Based Compensation

Under our Equity Participation Plan (the “Plan”), we may grant stock-based incentive compensation awards to eligible employees (including officers), non-employee directors and consultants in the form of distribution equivalent rights, incentive stock options, non-qualified stock options, performance share awards, performance unit awards, restricted stock awards, restricted stock units awards, stock appreciation rights, tandem stock appreciation rights, unrestricted stock awards or any combination of the foregoing. As of September 30, 2014, we had 2,125,512 shares authorized under the Plan available for future stock-based compensation.

Stock Options

Under the terms of the Plan, options to purchase shares of our common stock are granted at a price set by the Compensation Committee of the Board of Directors (the “Compensation Committee”). The price is not to be less than the fair market value of the stock on the date of grant. The Compensation Committee establishes the vesting period of the awards, which is generally set at 25 percent per year for four years. Options may be exercised any time after they vest for a period up to 10 years from the grant date.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of options. Option valuation models require the input of highly subjective assumptions, particularly for the expected term and stock price volatility. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our experience. Our employee stock options do not trade on a secondary exchange; therefore, employees do not derive a benefit from holding stock options unless there is an appreciation in the market price of our stock above the grant price. Such an increase in stock price would benefit all shareholders commensurately.

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 nine months ended September 30, 2014 and 2013.

	Three months ended  September 30, 2014				Three months ended  September 30, 2013		Nine months ended  September 30, 2014			Nine months ended  September 30, 2013
Expected dividend yield		-	%		-	%		-	%		1.37	%
Expected stock price volatility		41.94	%		-	%		47.98	%		54.66	%
Risk-free interest rate		2.47	%		-	%		2.31	%		2.08	%
Expected life of options		4.15	Years		-	Years		4.28	Years		4.56	Years
Estimated fair value per option granted	$	1.58		$			$	1.61		$	1.63

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 14.08 percent is used as a best estimate of future forfeitures based on our historical forfeiture experience. Stock-based compensation expense will be adjusted in later periods if the actual forfeiture rate is different from the estimate.

A summary of option activity under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Stock Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (years)
Outstanding at December 31, 2013	907,945	$	6.54
Granted	186,072		4.13
Forfeited / Expired	(510,450)		6.07
Exercised	-		-
Outstanding at September 30, 2014	583,567	$	6.17	7.45
Exercisable at September 30, 2014	214,348	$	9.21	4.86

During the nine months ended September 30, 2014, the total intrinsic value of stock options exercised was zero and the total fair value of options which vested was $0.8 million. During the nine months ended September 30, 2013, the total intrinsic value of stock options exercised was zero and the total fair value of options which vested was $1.0 million. The aggregate intrinsic value of outstanding and exercisable stock options was $0.1 million, based on our $3.70 closing stock price at September 30, 2014. Compensation expense recognized in the consolidated statement of operations for stock options was $0.1 million and $0.1 million for the three months ended September 30, 2014 and 2013, respectively, before the effect of income taxes. Compensation expense recognized in the consolidated statement of operations for stock options was $0.5 million and $1.0 million for the nine months ended September 30, 2014 and 2013, respectively, before the effect of income taxes. As of September 30, 2014, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $0.4 million, which is expected to be recognized over approximately 3.83 years.

Restricted Stock Grants

Restricted stock awards and restricted stock units may be granted under the Plan by the Compensation Committee. The Compensation Committee also establishes the vesting period of the awards, which is generally set at 100 percent at the conclusion of one to four years for restricted stock awards. Restricted stock units generally vest pro rata at 25 percent each year over a four year vesting period. Our key employees who have been granted awards are typically subject to a four year vesting period, while members of our Board of Directors who have been granted awards are subject to a one year vesting period. The fair value of restricted stock awards and restricted stock units is based on the market price of our shares on the grant date.

A summary of the activity of non-vested restricted stock awards and restricted stock units under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Restricted Stock Awards				Restricted Stock Units
	Restricted Stock Awards	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life (years)	Restricted Stock Units	Weighted- Average Grant  Date Fair Value		Weighted- Average Remaining Contractual  Life (years)
Balance at December 31, 2013	285,435	$	5.24		28,123	$	3.88
Granted	51,704		3.72		81,060		4.34
Forfeited	(13,364)		5.76		(12,689)		4.13
Vested	(190,335)		4.97		(9,555)		4.15
Balance at September 30, 2014	133,440	$	5.00	1.61	86,939	$	4.24	2.06

At September 30, 2014, the aggregate value of non-vested restricted stock awards and restricted stock units was $0.5 million and $0.3 million, respectively, before applicable income taxes, based on a $3.70 closing stock price at September 30, 2014. During the three months ended September 30, 2014 and 2013, the weighted-average grant date fair value of restricted stock awards, which vested was $0.1 million and $0, respectively. During the nine months ended September 30, 2014 and 2013, the weighted-average grant date fair value of restricted stock awards, which vested was $1.0 million and $2.0 million, respectively. Compensation expense recognized in the consolidated statement of operations for restricted stock awards and units was $0.1 million for the three months ended September 30, 2014 and 2013, before the effect of income taxes. Compensation expense recognized in the consolidated statement of operations for restricted stock awards and units was $0.8 million and $1.1 million for the nine months ended September 30, 2014 and 2013, respectively, before the effect of income taxes. As of September 30, 2014, total unrecognized stock-based compensation expense related to restricted stock awards and units was approximately $0.3 million and $0.3 million, respectively, which is expected to be recognized over approximately 3.83 years.

Performance Stock Awards

Under the terms of the Plan, performance stock awards may be granted by the Compensation Committee to key executive employees. Performance stock awards are based on achieving key internal metrics measured at the end of each fiscal year over a three year performance period. If performance objectives are achieved as determined by the Compensation Committee, common stock is granted. The fair value of these awards is determined on the date of grant based on our share price. Compensation expense related to performance stock units is evaluated quarterly to determine the likelihood that performance metrics will be achieved during the performance period.

A summary of the activity of performance stock units under the Plan as of September 30, 2014, and the changes during the nine months then ended is presented below:

	Performance Stock Units	Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Life (years)
Balance at December 31, 2013	114,560	$	4.41
Granted	-		-
Forfeited	(78,514)		4.41
Vested	-		-
Balance at September 30, 2014	36,046	$	4.41	2.25

During the three and nine months ended September 30, 2014, no performance stock units were granted. Performance stock units outstanding on September 30, 2014 are payable upon the achievement of certain internal metrics over a performance period of January 1, 2014 through December 31, 2016. As of September 30, 2014, no compensation expense related to performance share unit awards was recognized.

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) [Abstract]
Net revenue, non-directly delivered programs	$ 10,818	$ 15,071	$ 29,027	$ 36,254
Gross revenue, directly delivered programs	5,896	6,296	9,734	10,460
Total revenue	16,714	21,367	38,761	46,714
Cost of sales, directly delivered programs	3,372	4,128	5,816	7,053
Cost of sales, program merchandise markdown	0	0	554	0
Gross margin	13,342	17,239	32,391	39,661
Operating expenses:
Selling and marketing	8,369	9,224	20,868	24,275
General and administrative	2,418	2,676	8,647	11,007
Restructuring costs	217	1,756	1,756	1,756
Asset impairments	350	6,461	2,350	6,461
Total operating expenses	11,354	20,117	33,621	43,499
Operating income (loss)	1,988	(2,878)	(1,230)	(3,838)
Other income:
Interest and dividend income	84	70	356	357
Foreign currency and other income	(2)	1	6	22
Total other income	82	71	362	379
Income (loss) before income tax benefit (provision) from continuing operations	2,070	(2,807)	(868)	(3,459)
Income tax benefit (provision)	(158)	1,004	(416)	1,269
Net income (loss) from continuing operations	1,912	(1,803)	(1,284)	(2,190)
Discontinued operations:
Income (loss) from discontinued operations	196	250	(9,298)	959
Income tax benefit (provision)	230	(61)	1,184	(350)
Net income (loss) from discontinued operations	426	189	(8,114)	609
Net Income (Loss)	$ 2,338	$ (1,614)	$ (9,398)	$ (1,581)
Weighted-average common shares outstanding - basic (in shares)	17,041	16,984	16,827	16,982
Weighted-average common shares outstanding - diluted (in shares)	17,046	16,984	16,827	16,982
Net income (loss) from continuing operations per share - basic (in dollars per share)	$ 0.11	$ (0.11)	$ (0.08)	$ (0.13)
Net income (loss) from continuing operations per share - diluted (in dollars per share)	$ 0.11	$ (0.11)	$ (0.08)	$ (0.13)
Net income (loss) from discontinued operations per share - basic (in dollars per share)	$ 0.03	$ 0.01	$ (0.48)	$ 0.04
Net income (loss) from discontinued operations per share - diluted (in dollars per share)	$ 0.03	$ 0.01	$ (0.48)	$ 0.04

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Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations [Abstract]

Discontinued Operations

5. Discontinued Operations

In furtherance to the Company’s focus on its core Student Ambassadors programs, in September 2014, the Company announced it had consummated a sale of BookRags for $5.0 million, subject to a $0.4 million escrow arrangement.  All interests and future cash flows from BookRags were released upon sale.  All activities related to BookRags, Inc. have been reflected as discontinued operations on our consolidated financial statements for all periods presented.

Included in the consolidated balance sheet at December 31, 2013, were $15.5 million of assets and $1.5 million of liabilities associated with the discontinued operations of BookRags.  The following table summarizes the assets and liabilities of discontinued operations including in the consolidated balance sheet as of December 31, 2013.  There were no assets and liabilities of discontinued operations as of September 30, 2014.

Balance Sheet (Audited)
As of December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	765
Accounts receivable		731
Other current assets		62
Total current assets		1,558
Property and equipment, net		710
Intangibles		3,522
Goodwill		9,711
Total assets	$	15,501
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	283
Other current liabilties		118
Total current liabilites		401
Other long-term liabilties		1,056
Total liabilties	$	1,457

The following table summarizes the results of discontinued operations for the periods indicated (in thousands):

	Three months ended September 30, 2014			Three months ended September 30, 2013			Nine months ended September 30, 2014			Nine months ended September 30, 2013
Total revenue	$	545		$	910		$	2,608		$	2,938
Gross margin	$	472		$	785		$	2,285		$	2,558
Selling & marketing expenses	$	(53	)	$	(364	)	$	(706	)	$	(1,155	)
General & administrative expenses	$	(258	)	$	(171	)	$	(679	)	$	(444	)
Restructuring costs	$	-		$	-		$	(522	)	$	-
Impairment and gain (loss) on sale of discontinued operations	$	35		$	-		$	(9,676	)	$	-
Operating income (loss) from discontinued operations	$	196		$	250		$	(9,298	)	$	959
Income tax benefit (provision) on discontinued operations	$	230		$	(61	)	$	1,184		$	(350	)
Net income (loss) from discontinued operations	$	426		$	189		$	(8,114	)	$	609

During the second quarter of 2014 and due to business changes as well as the narrow margin results of its most recent annual impairment test in December 2013, the Company re-evaluated the carrying value of BookRags and recorded a goodwill impairment charge of $9.7 million, as the implied fair value of the goodwill was determined to be lower than its carrying value.  Using the income and market approaches, the significant assumptions used to determine fair value included projected operating revenues and expenses, growth rates, terminal value, discount rates, future cash flows and capital expenditures.  This impairment charge has been recorded within discontinued operations and is reflected in the table above for the nine months ended, September 30, 2014.

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Restructuring Costs

9 Months Ended

Sep. 30, 2014

Restructuring Costs [Abstract]

Restructuring Costs

4. Restructuring Costs

During the third quarter of 2013, we initiated a corporate restructuring plan aimed at streamlining our cost structure and focusing our business on our core Student Ambassador programs in order to promote the long-term health of the organization. This plan included the restructuring of operations and programs associated with Discovery Student Adventures and terminating the operations associated with our Beijing office.

During the second quarter of 2014, we took additional measures to continue to streamline the organization and to further our businesses focus on our core Student Ambassador programs. We completed a workforce reduction during the second quarter of 2014 that resulted in restructuring expense of $1.6 million. Under the terms of executive separation agreements, we will continue to pay each terminated executive bi-weekly during the executive’s severance period, with the future payments having been accrued and reflected in the below table as outstanding liabilities at September 30, 2014.

Other costs recorded as restructuring during the first nine months of 2014 included accelerated depreciation of assets scheduled for replacement within the next year as well as continued transition costs from the termination of operations of our Beijing office.

We anticipate all restructuring expenses to be recognized within twelve months of the initial implementation of the restructuring plan.

The following table summarizes costs incurred to date from continuing operations as part of the restructuring plan, which began during the third quarter of 2013 and the balance of the restructuring cost liability as of September 30, 2014 (in thousands).

Restructuring Costs
	Ambassador Programs and Other
Contract termination fees	$	1,550
Separation payments		949
Equity compensation expenses		377
Other transition costs		1,166
Accumulated expense at September 30, 2014		4,042
less: cash payments		3,302
less: non-cash expenses		377
Total restructuring liabilities at September 30, 2014	$	363

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Restructuring Costs (Tables)

9 Months Ended

Sep. 30, 2014

Restructuring Costs [Abstract]

Summary of restructuring cost liability

The following table summarizes costs incurred to date from continuing operations as part of the restructuring plan, which began during the third quarter of 2013 and the balance of the restructuring cost liability as of September 30, 2014 (in thousands).

Restructuring Costs
	Ambassador Programs and Other
Contract termination fees	$	1,550
Separation payments		949
Equity compensation expenses		377
Other transition costs		1,166
Accumulated expense at September 30, 2014		4,042
less: cash payments		3,302
less: non-cash expenses		377
Total restructuring liabilities at September 30, 2014	$	363

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Net Income (Loss) per Share

9 Months Ended

Sep. 30, 2014

Net Income (Loss) per Share [Abstract]

Net Income (Loss) per Share

12. Net Income (Loss) per Share

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

	Three months ended  September 30,					Nine months ended  September 30,
	2014		2013			2014			2013
Numerator:
Net income (loss) from continuing operations	$	1,912	$	(1,803	)	$	(1,284	)	$	(2,190	)
Denominator:
Weighted-average shares outstanding		16,903		16,984			16,827			16,982
Effect of unvested restricted stock awards      considered participating securities		138		-			-			-
Weighted-average shares outstanding – basic		17,041		16,984			16,827			16,982
Effect of dilutive common stock options		-		-			-			-
Effect of dilutive restricted stock units		5		-			-			-
Weighted-average shares outstanding – diluted		17,046		16,984			16,827			16,982
Net income (loss) per share - basic	$	0.11	$	(0.11	)	$	(0.08	)	$	(0.13	)
Net income (loss) per share - diluted	$	0.11	$	(0.11	)	$	(0.08	)	$	(0.13	)
Cash dividends declared per share1	$	-	$	-		$	-		$	0.06
Stock options and restricted stock units excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive		658,000		782,000			751,000			1,319,000

1The Company suspended quarterly dividend payments during the second quarter of 2013.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2014

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

8. 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 foreign currency at a fixed price for a specified point in time to provide a hedge against foreign currency risk. All of our derivatives are cash flow hedges and at September 30, 2014, 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; this 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 September 30, 2014, the following forward contracts were outstanding (in thousands):

	Notional Amount	Matures
Forward contracts:
Australian dollar	3,250	January 2015 - July 2015
Euro	9,500	January 2015 - July 2015
British pound	1,900	January 2015 - July 2015
Canadian dollar	400	March 2015 - May 2015
New Zealand dollar	400	March 2015 - July 2015
Japenese Yen	25,000	May 2015

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

	September 30, 2014
	Derivatives designated as hedging instruments					Total Net
	Assets			Liabilities		Liabilities
Forward contracts		$	-	$	625		$	625
	December 31, 2013
	Derivatives designated as hedging instruments					Total Net
		Assets		Liabilities		Liabilities
Forward contracts		$	253	$	549		$	296

The net asset and liability derivatives at September 30, 2014 and December 31, 2013 are reported in the consolidated balance sheet as current and long-term foreign currency exchange contracts.

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Assets Held For Sale

9 Months Ended

Sep. 30, 2014

Assets held for sale [Abstract]

Assets held for sale

6. Assets Held For Sale

In April 2012, the Company listed for sale its corporate headquarters building located in Spokane, Washington. During the third quarter of 2014, a purchase and sale agreement was executed for a sale of the building for $8.8 million.  During the second quarter of 2014, the Company recorded an asset impairment charge of $2.0 million to lower the building’s carrying value to the anticipated sales price.  During the third quarter of 2014, the Company recorded approximately $0.4 million in additional expense related to expected closing costs and broker fees. These charges are classified as asset impairment costs on the consolidated statements of operations.

During the third quarter of 2014, the corporate headquarters building was recorded within current assets as an asset held for sale for $8.8 million less anticipated transaction closing costs of approximately $0.4 million. The Company anticipates this purchase and sale agreement to be finalized during the fourth quarter of 2014.

Simultaneous with the final purchase and sales agreement, the Company will enter into a leasing agreement to remain in our current location until a new leased location in the Spokane area is found.  It is expected that a new location will be selected within a year of sale.

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Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Investments and Fair Value Measurements [Abstract]

Investments and Fair Value Measurements

7. 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 at least annually for impairment, and are fully assessed if there is an indicator of impairment. An adjustment would be made to the fair value of non-financial assets if 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 September 30, 2014 and December 31, 2013 (in thousands):

								Classification on Balance Sheet
September 30, 2014	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	$	(276	)	$	724	$	-	$	-	$	724
Money market funds, ninety days or less		17		-			17		17		-		-
Municipal securities1
Short term municipal securities funds2		42,803		17			42,820		-		42,820		-
One year or less		-		-			-		-		-		-
After one year through three years		-		-			-		-		-		-
Greater than three years		782		(16	)		766		-		766		-
Total	$	44,602	$	(275	)	$	44,327	$	17	$	43,586	$	724

								Classification on Balance Sheet
December 31, 2013	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	$	1,002	$	(283	)	$	719	$	-	$	-	$	719
Money market funds, ninety days or less		488		-			488		488		-		-
Municipal securities1
Short term municipal securities funds2		27,493		(143	)		27,350		-		27,350		-
One year or less		952		3			955		-		955		-
After one year through three years		3,132		20			3,152		-		3,152		-
Greater than three years		4,854		(137	)		4,717		-		4,717		-
Total	$	37,921	$	(540	)	$	37,381	$	488	$	36,174	$	719

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.

2Amounts include short-term municipal security funds that do not have a set maturity date.

The following tables detail the fair value measurements of assets and liabilities within the three levels of the fair value hierarchy at September 30, 2014 and December 31, 2013 (in thousands):

			Fair Value Measurements at Reporting Date Using
September 30, 2014	Fair Market Value		Level 1		Level 2		Level 3
Financial assets:
ARS	$	724	$	-	$	-	$	724
Money market funds		17		17		-		-
Municipal securities1		43,585		42,819		766		-
Foreign currency exchange contracts		-		-		-		-
Total financial assets	$	44,326	$	42,836	$	766	$	724
Financial liabilities:
Foreign currency exchange contracts		625		-		625		-
Total financial liabilities	$	625	$	-	$	625	$	-

			Fair Value Measurements at Reporting Date Using
December 31, 2013	Fair Market Value		Level 1		Level 2		Level 3
Financial assets:
ARS	$	719	$	-	$	-	$	719
Money market funds		488		488		-		-
Municipal securities1		36,174		27,350		8,824		-
Foreign currency exchange contracts		253		-		253		-
Total financial assets	$	37,634	$	27,838	$	9,077	$	719
Financial liabilities:
Foreign currency exchange contracts		549		-		549		-
Total financial liabilities	$	549	$	-	$	549	$	-

1 At September 30, 2014, municipal securities were split 98/1/1 percent between holdings in short-term municipal security funds, municipal revenue bonds, and municipal general obligation bonds, respectively. At December 31, 2013, municipal securities were split 76/13/11 percent split between holdings in short-term municipal security funds, municipal revenue bonds and municipal general obligation bonds, respectively. The underlying credit rating of the municipal securities at September 30, 2014 and December 31, 2013 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 municipal bonds and 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 rates, volatility and currency rates. Level 3 financial assets represent the fair value of our one auction-rate security (“ARS”), which was 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.

The following table details the fair value measurements of assets measured on a non-recurring basis within the three levels of the fair value hierarchy at September 30, 2014 and December 31, 2013 (in thousands):

			Fair Value Measurements at Reporting Date Using						Total Loss
September 30, 2014	Fair Market Value		Qouted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Three months ended September 30, 2014
Non-financal assets:
Property and equipment, net	$	8,750	$	-	$	-	$	8,750	$	2,000

Our corporate headquarters building is recorded as an asset held for sale on the balance sheet at $8.4 million, which is the expected sales price less expected costs to sell of $0.4 million.

The following table details the fair value measurements of assets measured on a non-recurring basis within the three levels of the fair value hierarchy at December 31, 2013 (in thousands):

			Fair Value Measurements at Reporting Date Using						Total Loss
December 31, 2013	Fair Market Value		Qouted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Year ended December 31, 2013
Non-financal assets:
Property and equipment, net	$	11,000	$	-	$	-	$	11,000	$	4,544

Fair value measurements on a recurring basis using Level 3 inputs consist of one available-for-sale ARS. The following table presents a reconciliation for the three and nine months ended September 30, 2014 and 2013, of available-for-sale ARS measured at fair value on a recurring basis using Level 3 inputs (in thousands):

	Three months ended					Nine months ended
	September 30,					September 30,
	2014			2013		2014		2013
Beginning balance	$	729		$	716	$	719	$	723
Total realized / unrealized gains (losses):
Included in OCI		(5	)		1		5		(6	)
Ending balance	$	724		$	717	$	724	$	717

During the nine months ended September 30, 2014, we experienced one failed ARS auction, representing principal of $1.0 million. This 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 6, 2015. 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, which is comprised of student loans, we consider the underlying credit quality of comparable student loan portfolios and 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 321.0-basis points to the London interbank offered rate resulting in a valuation of $0.7 million from a cost basis of $1.0 million as of September 30, 2014. At the reporting dates and in the future, we recognize that this investment is subject to general credit, liquidity, market and interest rate risks. The fair value of this investment accordingly will continue to change and we will continue to evaluate its carrying value.

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2014

Accumulated Other Comprehensive Income (Loss) [Abstract]

Accumulated Other Comprehensive Income (Loss)

9. Accumulated Other Comprehensive Income (Loss)

Unrealized gains or losses related to derivative securities are recorded in accumulated other comprehensive income (“AOCI”). The change in unrealized gains or losses related to derivative securities are recorded in other comprehensive income net of income taxes in the period the change occurred. When derivative securities designated as cash flow hedges are used to pay vendors, the effective portion of the hedge is reclassified into the income statement and recorded in net revenue, non-directly delivered programs.

Unrealized gains or losses related to available-for-sale securities are recorded in AOCI. The change in unrealized gains or losses related to available-for-sale securities are recorded in other comprehensive income net of income taxes in the period the change occurred. When securities are sold and a realized gain or loss is recognized, the amount is reclassified from AOCI to the income statement and recorded in interest and dividend income. During the nine months ended September 30, 2014 and 2013, the Company recognized net realized losses of $19 thousand and $120 thousand, respectively, due to the sale of investments.

For the three months ended September 30, 2014 and 2013, a summary of AOCI balances and gains (losses) recognized in OCI are as follows (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Derivative Securities						Available-for-sale securities
	Three months ended						Three months ended
	September 30,						September 30,
	2014			2013			2014			2013
Balance, beginning of period	$	164		$	(267	)	$	(90	)	$	(366	)
Change before reclassification		(690	)		253			12			(24	)
Reclassification into net revenue, non-directly delivered programs		5			(67	)		-			-
Reclassification into interest and dividend income		-			-			(14	)		70
Effect of incomes taxes		(0	)		23			0			(25	)
Other comprehensive income (loss), net of income taxes		(685	)		209			(2	)		21
Balance, end of period	$	(521	)	$	(58	)	$	(91	)	$	(345	)

For the nine months ended September 30, 2014 and 2013, a summary of AOCI balances and gains (losses) recognized in OCI are as follows (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Derivative Securities						Available-for-sale securities
	Nine months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Balance, beginning of period	$	(192	)	$	544		$	(357	)	$	(180	)
Change before reclassification		(310	)		(482	)		272			(216	)
Reclassification into net revenue, non-directly delivered programs		(19	)		(185	)		-			-
Reclassification into interest and dividend income		-			-			(6	)		79
Effect of incomes taxes		(0	)		65			0			(28	)
Other comprehensive income (loss), net of income taxes		(329	)		(602	)		266			(165	)
Balance, end of period	$	(521	)	$	(58	)	$	(91	)	$	(345	)

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Assets Held For Sale (Details) (USD $)	3 Months Ended			9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Assets held for sale [Abstract]
Purchase and sale agreement amount for land and building	$ 8,800,000			$ 8,800,000
Asset impairment charges	350,000	2,000,000	6,461,000	2,350,000	6,461,000
Assets held for sale, Gross	8,800,000			8,800,000
Sales commissions and fees	$ 400,000			$ 400,000

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Line of Credit

9 Months Ended

Sep. 30, 2014

Line of Credit [Abstract]

Line of Credit

14. Line of Credit

The Company’s credit agreement with Wells Fargo expired on June 1, 2014 and was not renewed.

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Financial Instruments [Abstract]

Foreign currency contracts, by maturity

At September 30, 2014, the following forward contracts were outstanding (in thousands):

	Notional Amount	Matures
Forward contracts:
Australian dollar	3,250	January 2015 - July 2015
Euro	9,500	January 2015 - July 2015
British pound	1,900	January 2015 - July 2015
Canadian dollar	400	March 2015 - May 2015
New Zealand dollar	400	March 2015 - July 2015
Japenese Yen	25,000	May 2015

Forward contracts, by hedging designation

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

	September 30, 2014
	Derivatives designated as hedging instruments					Total Net
	Assets			Liabilities		Liabilities
Forward contracts		$	-	$	625		$	625
	December 31, 2013
	Derivatives designated as hedging instruments					Total Net
		Assets		Liabilities		Liabilities
Forward contracts		$	253	$	549		$	296

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Supplemental Disclosures of Consolidated Statements of Cash Flows (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Non-cash financing and investing activities [Abstract]
Unrealized loss on foreign currency exchange contracts	$ (329)	$ (927)
Unrealized income (loss) on available-for-sale securities	$ 265	$ (254)

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) [Abstract]
Net income (loss)	$ 2,338	$ (1,614)	$ (9,398)	$ (1,581)
Unrealized gain (loss) on foreign currency exchange contracts, net of income tax benefit (provision) of $0, ($112), $0 and $324	(685)	209	(329)	(603)
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (provision) of $0, ($12), $0 and $89	(2)	21	265	(165)
Comprehensive income (loss)	$ 1,651	$ (1,384)	$ (9,462)	$ (2,349)

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2014

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

3. Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08). This ASU relates to discontinued operations reporting for disposals of components of an entity that represent strategic shifts that have, or will have, a major effect on the entity’s operations and financial results. The standard expands disclosures for discontinued operations and requires new disclosures related to individually material disposals that do not meet the definition of a discontinued operation. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2014 and will be reflected in periods following the fourth quarter of 2014.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.

In June, 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation-Stock Compensation: Accounting for Share-Based Payments when the terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition on Performance Stock Unit awards. In some cases, the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. That is, the employee would be entitled to benefit from the award regardless of whether the employee is rendering service on the date the performance target is achieved. Current performance stock unit awards are contingent upon employment status as well as internal metrics. As such, this ASU is not expected to have an impact on our financial statements or disclosures.

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2014

Accumulated Other Comprehensive Income (Loss) [Abstract]

Summary of AOCI balances and gains (losses) recognized in OCI

For the three months ended September 30, 2014 and 2013, a summary of AOCI balances and gains (losses) recognized in OCI are as follows (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Derivative Securities						Available-for-sale securities
	Three months ended						Three months ended
	September 30,						September 30,
	2014			2013			2014			2013
Balance, beginning of period	$	164		$	(267	)	$	(90	)	$	(366	)
Change before reclassification		(690	)		253			12			(24	)
Reclassification into net revenue, non-directly delivered programs		5			(67	)		-			-
Reclassification into interest and dividend income		-			-			(14	)		70
Effect of incomes taxes		(0	)		23			0			(25	)
Other comprehensive income (loss), net of income taxes		(685	)		209			(2	)		21
Balance, end of period	$	(521	)	$	(58	)	$	(91	)	$	(345	)

For the nine months ended September 30, 2014 and 2013, a summary of AOCI balances and gains (losses) recognized in OCI are as follows (in thousands):

	Accumulated Other Comprehensive Income (Loss)
	Derivative Securities						Available-for-sale securities
	Nine months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Balance, beginning of period	$	(192	)	$	544		$	(357	)	$	(180	)
Change before reclassification		(310	)		(482	)		272			(216	)
Reclassification into net revenue, non-directly delivered programs		(19	)		(185	)		-			-
Reclassification into interest and dividend income		-			-			(6	)		79
Effect of incomes taxes		(0	)		65			0			(28	)
Other comprehensive income (loss), net of income taxes		(329	)		(602	)		266			(165	)
Balance, end of period	$	(521	)	$	(58	)	$	(91	)	$	(345	)

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Income Taxes [Abstract]
Income tax expense	$ 0.7

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Supplemental Disclosures of Consolidated Statements of Cash Flows

9 Months Ended

Sep. 30, 2014

Supplemental Disclosures of Consolidated Statements of Cash Flows [Abstract]

Supplemental Disclosures of Consolidated Statements of Cash Flows

13. Supplemental Disclosures of Consolidated Statements of Cash Flows

Our non-cash investing and financing activities during the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands):

	September 30, 2014			September 30, 2013
Unrealized loss on foreign currency exchange contracts	$	(329	)	$	(927	)
Unrealized income (loss) on available-for-sale securities	$	265		$	(254	)