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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

For the quarterly period ended June 30, 2003

OR

For the transition period from _______ to _________

Commission file number: 0-26420

AMBASSADORS INTERNATIONAL, INC.

Registrant’s Telephone Number, Including Area Code: (949) 759-5900

     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. Yes [X]    No[  ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes        No [X]

     Indicate number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

Common shares outstanding as of July 31, 2003: 9,912,130

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AMBASSADORS INTERNATIONAL, INC.
FORM 10-Q QUARTERLY REPORT

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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements

Ambassadors International, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)

See Notes to Condensed Consolidated Financial Statements.

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Ambassadors International, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share data)

See Notes to Condensed Consolidated Financial Statements.

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Ambassadors International, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)

See Notes to Condensed Consolidated Financial Statements.

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Ambassadors International, Inc.
Notes to Condensed Consolidated Financial Statements

1.		Description of the Company and Basis of Presentation
		The Company
		Ambassadors International, Inc. (the “Company”) is a travel services and performance improvement company. The Company’s operations are classified in the following segments:

	•		Ambassadors Performance Group — Develops, markets and manages meetings and incentive programs for a nationwide roster of corporate clients utilizing incentive travel, merchandise award programs and corporate meeting management services.
	•		Ambassadors Services Group — Provides comprehensive hotel reservation, registration and travel services for meetings, conventions, expositions and trade shows.
	•		Ambassadors Technology Group — Develops, markets and distributes event portfolio management technology solutions for corporations and large associations.

		The Company was founded in 1967 and was reincorporated in Delaware in 1995. Ambassadors Group, Inc. (“AGI” or the “Education Group”) represented the entire operations of the Company until 1996 when the Performance Group commenced operations. The Services Group commenced operations in 1998 and the Technology Group commenced operations in 2002.
		Basis of Presentation
		In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the consolidated financial position of Ambassadors International, Inc. and its subsidiaries as of June 30, 2003, the consolidated results of operations for the three and six months ended June 30, 2003 and 2002 and cash flows for the six months ended June 30, 2003 and 2002. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Certain reclassifications have been made to amounts in 2002 to conform with the 2003 presentation.
		It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three and six months ended June 30, 2003 are not necessarily indicative of those to be expected for the entire year. The accompanying consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2002 filed with the Securities and Exchange Commission.
		As more fully described in Note 5, on January 25, 2002, the Company’s Board of Directors approved a spin-off distribution that separated the Company into two publicly traded entities. The Condensed Consolidated Statement of Cash Flows for the three and six months ended June 30, 2002 include the effects of discontinued operations on a consolidated basis, without separate identification and classification of discontinued operations.

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Ambassadors International, Inc.
Notes to Condensed Consolidated Financial Statements

		Accounting for Stock Options
		The Company accounts for its stock-based compensation in accordance with Accounting Principals Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and has adopted the disclosure-only alternative of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” (“SFAS No. 123”) as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.”
		The following table illustrates the effect on net income (loss) and earnings (loss) per share had compensation expense for the employee stock-based plans been recorded based on the fair value method under SFAS No. 123 (in thousands, except per share data):