(Source: PrimeNewswire)SPOKANE, Wash., Oct. 21, 2009 (GLOBE NEWSWIRE) -- Ambassadors Group, Inc. (Nasdaq:EPAX), a leading provider of educational travel experiences and online education research materials, announced $1.37 fully diluted per share earnings for the nine months ended September 30, 2009, an 8 percent improvement over $1.27 fully diluted per share earnings for the same period one year ago. Despite travelling 17 percent fewer delegates, operating income for the first nine months of the year increased 14 percent as the Company actively managed its program price and travel cost structures. Net income for the nine months ended September 30, 2009 was $26.4 million, compared to $25.0 million for the same period in 2008.

Comparing the third quarters ended September 30, 2009 and 2008, fully diluted per share earnings decreased 6 percent to $0.64 in 2009 from $0.68 in 2008, and net income decreased 6 percent to $12.5 million in 2009 from $13.3 million in 2008. The third quarter 2009 results are down due to traveling 27 percent fewer delegates in the quarter.

The Company's continued profitability and cash management led to a $17.8 million or 47 percent increase in deployable cash from a year ago. Free cash flow per share for the first nine months of the year increased 91 percent or $0.21 per share to $0.44 per share.

Outlook

The Company also announced that as of October 19, 2009, enrolled revenue for 2009 travel programs in comparison to the same date one year ago decreased 12 percent. Enrolled revenue was $199.9 million, driven by the 34,263 net enrolled participants, including those that have already traveled, for 2009 compared to $227.9 million in enrolled revenue due to 41,928 net enrolled participants, including those that already traveled, for 2008 on this same day one year ago. The decrease in enrolled revenue year over year is primarily due to the 18 percent decrease of net enrolled participants.

In addition, as of October 19, 2009, the Company announced that enrolled revenue for 2010 travel programs in comparison to the same date one year ago decreased 24 percent. Enrolled revenue was $117.7 million, driven by the 19,919 net enrolled participants for 2010 travel programs compared to $154.8 million in enrolled revenue on this same day one year ago due to the 26,925 net enrolled participants for 2009 travel programs. The decrease in enrolled revenue year over year is primarily due to the 26 percent decrease of net enrolled participants.

Enrolled revenue consists of estimated gross receipts to be recognized, in the future, upon travel of an enrolled participant. Net enrollments consist of all participants who have enrolled in the Company's programs less those that have already withdrawn. Enrolled revenue may not result in actual gross receipts eventually recognized by the Company due to both withdrawals from the Company's programs and expected future enrollments.

"We are pleased to report our third quarter 2009 financial results," stated Jeff Thomas, president and chief executive officer of Ambassadors Group, Inc. "For the first nine months of the year, our operating income is up 14 percent, from $34.7 million to $39.4 million, which reflects three positive efforts: delegate retention, aggressive management of our cost of sales, and tight operating expense management. Unfortunately, the market for international student travel is being negatively impacted, which resulted in fewer traveled delegates this year. Our operating expenses have increased slightly, due in large part to legal expenses associated with litigation, upon which it is our policy not to comment.

"There are other financial highlights that merit further attention. In the first nine months of 2009, we generated $8.6 million in free cash flow, an increase of $4.1 million over 2008. Our balance sheet continues to remain pristine -- debt free. Our deployable cash has also increased. We continue to pay a dividend.

"On the other hand, looking ahead, the market for international student travel continues to experience negative growth. Forward bookings are down for us as well as other international student travel operators. Our own marketing and sales efforts have led us to conclude that there remains a very high level of interest in our programs but many families are not comfortable making the commitment and spending the money this year. We have taken a number of actions and conducted a number of tests to counter the negative impact of high unemployment, stagnating compensation and lower net worth. One example of our efforts is what we call "Peace of Mind" -- which enables families to enroll and cancel without penalty if they experience job loss between now and travel time.

"As a result, we will continue to manage expenses very tightly, as well as to look for ways to illustrate to potential travelers and their families that traveling internationally now is more important than ever, especially for the up-and-coming generation of Americans who will live in a more integrated and connected global society.

"We appreciate your continued support and are eager to see our core markets turn around as the economic recovery continues."

Nine months ended September 30, 2009

During the nine months ended September 30, 2009, we traveled 32,454 delegates, a 17 percent decrease from 38,926 delegates traveled during the same period one year ago. Comparing the nine months ended September 30, 2009 and 2008, gross receipts decreased 10 percent to $192.5 million from $214.1 million, however, gross margin increased 8 percent to $78.8 million from $73.2 million, respectively. Gross margin as a percent of gross receipts was 41 percent and 34 percent for the nine months ended September 30, 2009 and 2008, respectively. The decrease in gross receipts is primarily due to traveling fewer delegates. The increase in gross margin was due to higher program prices and lower travel cost components. The higher program prices were driven by higher prices in the travel industry in 2008, the result of high fuel prices and constrained capacity. In 2009, the global economic slowdown has reduced travel demand and supplier prices, which enabled us to purchase our travel components at better than expected rates. In addition, BookRags' year-over-year growth in gross receipts as well as including their results for the full nine months of 2009, led to gross receipts and gross margin of $2.3 million and $2.1 million, respectively. For the comparable period in 2008, BookRags reported $0.9 million and $0.8 million in gross receipts and gross margin, respectively.

Operating expenses for the nine months ended September 30, 2009 and 2008 were $39.3 million and $38.5 million, respectively. The $0.8 million increase is primarily due to increased legal and professional costs. Operating income was $39.4 million and $34.7 million for the nine months ended September 30, 2009 and 2008, respectively.

Other income was $0.6 million for the nine months ended September 30, 2009, compared to $2.5 million for the nine months ended September 30, 2008. The decrease in other income is due to $1.0 million foreign currency loss recorded early in the year on over-hedged foreign currency contracts for 2009 coupled with $0.9 million less in interest income that was caused by lower prevailing interest rates.

Quarter Ended September 30, 2009

During the third quarter of 2009, we traveled 12,967 delegates, a 27 percent decrease from 17,676 delegates traveled during the same quarter one year ago. Gross receipts were $82.8 million in the third quarter of 2009 compared to $101.2 million in the third quarter of 2008. Gross margin increased 1 percent, to $33.2 million in the third quarter of 2009 from $33.0 million in the same period of 2008. Gross margin as a percentage of gross receipts was 40 percent and 33 percent for the quarters ended September 30, 2009 and 2008, respectively. The decrease in gross receipts is due to traveling fewer delegates partially offset by increased program prices. The increase in gross margin is a combined result of higher program prices and lower travel cost components despite traveling fewer delegates. In addition, BookRags' year-over-year growth in the third quarter of 2009 resulted in gross receipts and gross margin of $0.7 million and $0.6 million, respectively. BookRags gross receipts and gross margin in the third quarter of 2008 were $0.6 million and $0.5 million, respectively.

Operating expenses were $14.5 million in the third quarter of 2009 compared to $14.1 million in the third quarter of 2008, an increase of 3 percent. The $0.4 million increase is primarily due to increased legal and professional costs. Operating income was $18.7 million for the third quarter of 2009, compared to $18.9 million for the third quarter of 2008, a 1 percent decline.

Other income for the third quarter of 2009 was $0.5 million in comparison to $0.7 million in the third quarter of 2008. The $0.2 million decrease is due to lower prevailing interest rates.

Balance Sheet and Cash Flow

Total assets at September 30, 2009 were $127.8 million, of which 63 percent, or $80.3 million, were cash and short-term investments. Our deployable cash increased $17.8 million or 47 percent to $55.5 million at the end of the third quarter of 2009. Participant deposits were $16.5 million at the end of the third quarter of 2009, a 25 percent decrease from one year ago.

Cash provided by operations was $12.7 million and $8.6 million during the nine months ended September 30, 2009 and 2008, respectively. The increase in 2009 resulted primarily from a decline in prepaid program expenses driven by decreased travel costs.