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EX-32.1 - EXHIBIT 32.1 - AMBASSADORS GROUP INCex32_1.htm
EX-31.1 - EXHIBIT 31.1 - AMBASSADORS GROUP INCex31_1.htm
EX-31.2 - EXHIBIT 31.2 - AMBASSADORS GROUP INCex31_2.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
QUARTERLY report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended June 30, 2015
 
OR
 
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
 
91-1957010
 (State or Other Jurisdiction of Incorporation or Organization)
 
 (I.R.S. Employer Identification No.)
 
157 S. Howard, Suite 601
Spokane, WA
 
99201
 (Address of Principal Executive Offices)
 
 (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.
 
 
Yes
 
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).
 
 
Yes
 
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):
 
 
Large accelerated  filer
 
Accelerated filer
 
Non-accelerated filer (Do not check if a smaller reporting company)
 
Smaller reporting company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 
Yes
 
No
 
The number of shares outstanding of the registrant’s Common Stock, $0.01 par value, as of August 10, 2015 was 17,139,091.
 


AMBASSADORS GROUP, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
 
   
Page
PART I – FINANCIAL INFORMATION  
 
Item 1.
 
 
 
1
 
 
2
 
 
3
 
 
4
 
 
5
 
Item 2.
15
 
Item 4.
19
     
PART II – OTHER INFORMATION
 
 
Item 2.
20
 
Item 6.
20
     
SIGNATURES
21
     
EXHIBIT INDEX  
 
PART I
FINANCIAL INFORMATION
 
Item1.
FINANCIAL STATEMENTS
 
AMBASSADORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of June 30, 2015 and December 31, 2014
(in thousands, except share and per share data)

   
UNAUDITED
   
AUDITED
 
   
June 30
2015
   
December 31
2014
 
ASSETS
 
   
 
Current assets:
 
   
 
Cash and cash equivalents
 
$
6,929
   
$
2,002
 
Restricted cash
   
-
     
400
 
Available-for-sale securities
   
63,962
     
59,502
 
Foreign currency exchange contracts
   
2
     
-
 
Prepaid program costs and expenses
   
12,203
     
1,335
 
Accounts receivable
   
405
     
666
 
Total current assets
   
83,501
     
63,905
 
Property and equipment, net
   
1,442
     
2,429
 
Goodwill
   
70
     
70
 
Other long-term assets
   
37
     
81
 
Total assets
 
$
85,050
   
$
66,485
 
                 
LIABILITIES
               
Current liabilities:
               
Accounts payable and accrued expenses
 
$
4,431
   
$
2,794
 
Participants’ deposits
   
33,219
     
23,161
 
Foreign currency exchange contracts
   
326
     
1,345
 
Deferred tax liabilities
   
17
     
18
 
Other liabilities
   
187
     
1
 
Total current liabilities
   
38,180
     
27,319
 
Participants’ deposits
   
87
     
-
 
Deferred tax liabilities
   
6
     
6
 
Total liabilities
   
38,273
     
27,325
 
                 
Commitments and Contingencies (Note 11)
               
                 
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; 17,067,907 and 16,944,812 shares issued and outstanding, respectively
   
173
     
173
 
Additional paid-in capital
   
2,045
     
1,630
 
Retained earnings
   
44,936
     
38,334
 
Accumulated other comprehensive loss
   
(377
)
   
(977
)
Stockholders’ equity
   
46,777
     
39,160
 
Total liabilities and stockholders’ equity
 
$
85,050
   
$
66,485
 

The accompanying notes are an integral part of the consolidated financial statements.
 
AMBASSADORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three and six months ended June 30, 2015 and 2014
(in thousands, except per share amounts)
 
   
Three months ended
June 30
   
Six months ended
June 30
 
   
2015
   
2014
   
2015
   
2014
 
Net revenue, non-directly delivered programs
 
$
16,525
   
$
18,092
   
$
16,619
   
$
18,208
 
Gross revenue, directly delivered programs
   
2,956
     
3,565
     
3,132
     
3,838
 
Total revenue
   
19,481
     
21,657
     
19,751
     
22,046
 
Cost of sales, directly delivered programs
   
1,826
     
2,234
     
1,954
     
2,443
 
Cost of sales, program merchandise markdown
   
-
     
554
     
-
     
554
 
Gross margin
   
17,655
     
18,869
     
17,797
     
19,049
 
Operating expenses:
                               
Selling and marketing
   
3,064
     
5,827
     
7,593
     
12,500
 
General and administrative
   
1,429
     
3,307
     
3,746
     
6,228
 
Restructuring costs
   
-
     
1,431
     
-
     
1,539
 
Asset impairments
   
45
     
2,000
     
45
     
2,000
 
Total operating expenses
   
4,538
     
12,565
     
11,384
     
22,267
 
Operating income (loss)
   
13,117
     
6,304
     
6,413
     
(3,218
)
Other income:
                               
Interest and dividend income
   
157
     
141
     
286
     
273
 
Foreign currency and other income (expense)
   
(60
)
   
5
     
(97
)
   
8
 
Total other income
   
97
     
146
     
189
     
281
 
Income (loss) before income tax provision from continuing operations
   
13,214
     
6,450
     
6,602
     
(2,937
)
Income tax provision
   
-
     
(1,815
)
   
-
     
(259
)
Net income (loss) from continuing operations
   
13,214
     
4,635
     
6,602
     
(3,196
)
                                 
Discontinued operations:
                               
Loss from discontinued segment
   
-
     
(9,830
)
   
-
     
(9,494
)
Income tax benefit
   
-
     
1,010
     
-
     
954
 
Net loss from discontinued operations
   
-
     
(8,820
)
   
-
     
(8,540
)
                                 
Net Income (Loss)
 
$
13,214
   
$
(4,185
)
 
$
6,602
   
$
(11,736
)
                                 
Weighted-average common shares outstanding - basic
   
17,298
     
17,047
     
17,291
     
16,789
 
Weighted-average common shares outstanding - diluted
   
17,377
     
17,159
     
17,423
     
16,789
 
Discontinued operations weighted-average common shares outstanding - basic and diluted
   
n/
a
   
16,823
     
n/
a
   
16,789
 
                                 
Net income (loss) from continuing operations per share - basic
 
$
0.76
   
$
0.27
   
$
0.38
   
$
(0.19
)
Net income (loss) from continuing operations per share - diluted
 
$
0.76
   
$
0.27
   
$
0.38
   
$
(0.19
)
                                 
Net loss from discontinued operations per share - basic and diluted
 
$
-
   
$
(0.52
)
 
$
-
   
$
(0.51
)
                                 
Total net income (loss) per share - basic and diluted
 
$
0.76
   
$
(0.25
)
 
$
0.38
   
$
(0.70
)
 
The accompanying notes are an integral part of the consolidated financial statements.
 
AMBASSADORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
For the three and six months ended June 30, 2015 and 2014
(in thousands)

   
Three months ended June 30,
   
Six months ended June 30,
 
   
2015
   
2014
   
2015
   
2014
 
Net income (loss)
 
$
13,214
   
$
(4,185
)
 
$
6,602
   
$
(11,736
)
Unrealized gain on foreign currency exchange contracts, net of income tax provision of $0, ($69), $0 and $0
   
1,814
     
229
     
922
     
357
 
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit of $0, $62, $0 and $0
   
(252
)
   
153
     
(322
)
   
267
 
Comprehensive income (loss)
 
$
14,776
   
$
(3,803
)
 
$
7,202
   
$
(11,112
)

The accompanying notes are an integral part of the consolidated financial statements.
 
AMBASSADORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 30, 2015 and 2014
(in thousands)
 
   
Six months ended June 30,
 
   
2015
   
2014
 
Cash flows from operating activities:
 
   
 
Net income (loss)
 
$
6,602
   
$
(11,736
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Depreciation and amortization
   
1,100
     
2,977
 
Stock-based compensation
   
466
     
1,168
 
Deferred income tax benefit
   
-
     
(805
)
Gain on foreign currency exchange contracts
   
(99
)
   
-
 
Impairment and loss on sale of discontinued operations
   
-
     
9,711
 
Loss on disposition and impairment of property and equipment, other assets
   
390
     
2,000
 
Program merchandise writedown
   
-
     
554
 
Excess tax shortfall from stock-based compensation
   
-
     
109
 
Change in assets and liabilities:
               
Accounts receivable and other assets
   
261
     
368
 
Prepaid program costs and expenses
   
(10,868
)
   
(11,403
)
Accounts payable, accrued expenses, and other current liabilities
   
1,822
     
3,542
 
Participants’ deposits
   
10,145
     
16,503
 
Net cash provided by operating activities
   
9,819
     
12,988
 
                 
Cash flows from investing activities:
               
Purchase of available-for-sale securities
   
(14,783
)
   
(24,517
)
Proceeds from sale of available-for-sale securities
   
10,000
     
13,861
 
Purchase of property and equipment
   
(488
)
   
(952
)
Proceeds from sale of property and equipment
   
30
     
-
 
Purchase of intangibles
   
-
     
(146
)
Proceeds from sale of BookRags, Inc.
   
400
     
-
 
Net cash used in investing activities
   
(4,841
)
   
(11,754
)
                 
Cash flows from financing activities:
               
Repurchase of common stock
   
(51
)
   
(186
)
Excess tax shortfall from stock-based compensation
   
-
     
(109
)
Net cash used in financing activities
   
(51
)
   
(295
)
                 
Net increase in cash and cash equivalents
   
4,927
     
939
 
Cash and cash equivalents, beginning of period
   
2,002
     
9,473
 
Cash and cash equivalents, end of period
 
$
6,929
   
$
10,412
 

The accompanying notes are an integral part of the consolidated financial statements.
 
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.  On July 13, 2015, we announced our plan to cease operations and close our student and adult travel business by the end of 2015. On August 11, 2015, our board of directors reached the conclusion that it is in the best interests of the shareholders to dissolve and liquidate the Company, subject to shareholder approval. For additional information, see Note 12 of Notes to Consolidated Financial Statements.
 
These consolidated financial statements include the accounts of Ambassadors Group, Inc., and our wholly owned subsidiaries, Ambassador Programs, Inc., and Ambassadors Unlimited, LLC. All significant intercompany accounts and transactions, which are of a normal recurring nature, are eliminated in consolidation.

Through September 2014, we operated an education oriented research website, BookRags.com, which provided study guides, lesson plans, and other educational resources to students and teachers.  This business was operated by BookRags, Inc. (“BookRags”) our then wholly-owned subsidiary.  In September 2014, we consummated the sale of the BookRags subsidiary.  All activities related to BookRags have been reflected as discontinued operations for all periods presented.  For additional information, see Note 8 of Notes to Consolidated Financial Statements.

2. Basis of Presentation

The accompanying unaudited 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 six months ended June 30, 2015 are not indicative of the results that may be expected for the year ending December 31, 2015.

It is suggested that these financial statements 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, 2014.

As noted above, on July 13, 2015, we announced our plan to cease operations and close our student and adult travel business by the end of 2015, and on August 11, 2015, our board of directors approved dissolution of the Company, subject to shareholder approval .  Assuming our plan of liquidation is approved by our shareholders in the third quarter of 2015, we will apply liquidation accounting.  For additional information, see Note 12 of Notes to Consolidated Financial Statements.

3. Recent Accounting Pronouncements

Management has assessed the impact of recently issued, but not yet effective, accounting standards and determined that the provisions are either not applicable to us, or are not anticipated to have a material impact on our consolidated financial statements.

4. 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 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.
 
AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Fair value is determined for assets and liabilities using a three-tiered hierarchy, based upon significant levels of inputs as follows:

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

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

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

The below tables summarize the composition of our investments at June 30, 2015 and December 31, 2014 (in thousands).  For both periods, all investments have been recorded to short-term available-for-sale securities on the consolidated balance sheet.

June 30, 2015
 
Amortized Cost
   
Unrealized
 Losses
   
Aggregate
Fair Value
 
Short term municipal securities funds1
 
$
64,302
   
$
(340
)
 
$
63,962
 
Total
 
$
64,302
   
$
(340
)
 
$
63,962
 
 
December 31, 2014
 
Amortized Cost
   
Unrealized
Losses
   
Aggregate
 Fair Value
 
Short term municipal securities funds1
 
$
59,520
   
$
(18
)
 
$
59,502
 
Total
 
$
59,520
   
$
(18
)
 
$
59,502
 
 
1 Do not have a set maturity date.
 
AMBASSADORS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The following tables detail the fair value measurements of assets and liabilities within the three levels of the fair value hierarchy at June 30, 2015 and December 31, 2014 (in thousands):

   
   
Fair Value Measurements at Reporting Date Using
 
June 30, 2015
 
Fair Market
Value
   
Level 1
   
Level 2
   
Level 3
 
Financial assets:
               
Municipal securities1
   
63,962
     
63,962
     
-
     
-
 
Foreign currency exchange contracts
   
2
     
-
     
2
     
-
 
Total financial assets
 
$
63,964
   
$
63,962
   
$
2
   
$
-
 
Financial liabilities:
                               
Foreign currency exchange contracts
   
326
     
-
     
326
     
-
 
Total financial liabilities
 
$
326
   
$
-
   
$
326
   
$
-
 

December 31, 2014
 
Fair Market
Value
   
Level 1
   
Level 2
   
Level 3
 
Financial assets:
               
Municipal securities1
   
59,502
     
59,502
     
-
     
-
 
Foreign currency exchange contracts
   
14
     
-
     
14
     
-
 
Total financial assets
 
$
59,516
   
$
59,502
   
$
14
   
$
-
 
Financial liabilities:
                               
Foreign currency exchange contracts
   
1,359
     
-
     
1,359
     
-
 
Total financial liabilities
 
$
1,359
   
$
-
   
$
1,359
   
$
-
 

1 At June 30, 2015 and December 31, 2014, municipal securities consisted solely of holdings in short-term municipal security funds.

Municipal securities are classified as Level 1 assets because market prices are readily available for these investments. Level 2 financial assets and liabilities represent the fair value of our foreign currency exchange contracts that were valued using pricing models that take into account the contract terms, as well as multiple inputs where applicable, such as currency rates.
 
5. 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 June 30, 2015, 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 June 30, 2015, the following forward contracts were outstanding (in thousands):
 
   
Notional Amount
 
Matures
Forward contracts:
 
 
  
Australian dollar
 
700
 
July 2015
Euro
 
1,705
 
July 2015
British pound
 
420
 
July 2015
New Zealand dollar
 
50
 
July 2015
 
The fair value of our forward contracts were as follows (in thousands):

 
June 30, 2015
 
 
Derivatives designated as
hedging instruments
 
Total Net
 
 
Assets
 
Liabilities
 
Liabilities
 
Forward contracts
$
2
 
$
326
 
$
324
 

 
December 31, 2014
 
 
Derivatives designated as
hedging instruments
 
Total Net
 
 
Assets
 
Liabilities
 
Liabilities
 
Forward contracts
$
14
 
$
1,359
 
$
1,345
 

The net asset and liability derivatives at June 30, 2015 and December 31, 2014 are reported in the consolidated balance sheets as current and long-term foreign currency exchange contracts.

6. Accumulated Other Comprehensive Income (Loss)

Unrealized gains or losses related to derivative securities are recorded in accumulated other comprehensive income (loss) (“AOCI”). The change in unrealized gains or losses related to derivative securities are recorded in other comprehensive income (loss) 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 statement of operations 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 statement of operations and recorded in interest and dividend income. During the six months ended June 30, 2015 and 2014, there were no realized gains or losses recognized in the statement of operations for the sale of investments.

For the three and six months ended June 30, 2015 and 2014, 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
June 30,
 
Three months ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
Balance, beginning of period
$
(2,034
)
$
(65
)
$
95
 
$
(243
)
Change before reclassification
 
1,814
   
185
   
(252
)
 
83
 
Reclassification into net revenue, non-directly delivered programs
 
-
   
(24
)
 
-
   
-
 
Reclassification into interest and dividend income
                   
8
 
Effect of incomes taxes
 
-
   
69
   
-
   
62
 
Other comprehensive income (loss), net of income taxes
 
1,814
   
230
   
(252
)
 
153
 
Balance, end of period
$
(220
)
$
165
 
$
(157
)
$
(90
)

 
Accumulated Other Comprehensive Income (Loss)
 
 
Derivative Securities
 
Available-for-sale securities
 
 
Six months ended
June 30,
 
Six months ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
Balance, beginning of period
$
(1,142
)
$
(192
)
$
165
 
$
(357
)
Change before reclassification
 
1,021
   
381
   
(322
)
 
259
 
Reclassification into net revenue, non-directly delivered programs
 
(99
)
 
(24
)
 
-
   
-
 
Reclassification into interest and dividend income
 
-
   
-
   
-
   
8
 
Effect of incomes taxes
 
-
   
-
   
-
   
-
 
Other comprehensive income (loss), net of income taxes
 
922
   
357
   
(322
)
 
267
 
Balance, end of period
$
(220
)
$
165
 
$
(157
)
$
(90
)

7. Stock-Based Compensation

Under our Stock Incentive Plan (the “Plan”), we may grant stock-based incentive compensation awards to eligible employees and non-employee directors 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 may be best suited to the circumstances of the particular employee, director or consultant. As of June 30, 2015, we had 1,622,590 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 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.  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.  No stock options were granted during the first six months of 2015.

A summary of option activity under the Plan as of June 30, 2015, and the changes during the six months then ended is presented below:

   
Stock
Options
   
Weighted-
Average
Exercise Price
   
Weighted-
Average
Remaining
Contractual
Life (years)
 
Outstanding at December 31, 2014
   
551,409
   
$
6.05
   
 
Granted
   
-
     
-
   
 
Forfeited / Expired
   
(178,589
)
   
5.75
   
 
Exercised
   
-
     
-
         
Outstanding at June 30, 2015
   
372,820
   
$
6.20
     
7.26
 
Exercisable at June 30, 2015
   
227,969
   
$
7.47
     
6.53
 
 
During the three and six months ended June 30, 2015, the total intrinsic value of stock options exercised was zero and the total fair value of options which vested was zero. During the three and six months ended June 30, 2014, the total intrinsic value of stock options exercised was zero and the total fair value of options which vested was $0.7 million. The aggregate intrinsic value of outstanding and exercisable stock options was zero, based on our $2.44 closing stock price at June 30, 2015.

Compensation expense recognized in the consolidated statement of operations for stock options was $40 thousand and $0.3 million for the three months ended June 30, 2015 and 2014, respectively, before the effect of income taxes. Compensation expense recognized in the consolidated statement of operations for stock options was $77 thousand and $0.4 million for the six months ended June 30, 2015 and 2014, respectively, before the effect of income taxes.

As of June 30, 2015, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $0.1 million.
 
Restricted Stock Grants

Under the terms of the Plan, restricted stock awards and restricted stock units are granted by the Compensation Committee on the same terms as options. The Compensation Committee also establishes the vesting period of the awards.  The fair value of restricted stock awards and restricted stock units are 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 June 30, 2015, and the changes during the six 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, 2014
   
341,637
   
$
2.83
 
 
   
82,572
   
$
4.17
 
 
Granted
   
31,251
     
-
       
165,000
     
2.55
   
Forfeited
   
(97,210
)
   
5.21
 
 
   
(95,836
)
   
3.22
 
 
Vested
   
(32,294
)
   
2.72
       
(35,726
)
   
3.08
   
Balance at June 30, 2015
   
243,384
   
$
2.60
 
               1.24
   
116,010
   
$
2.98
 
           1.83

At June 30, 2015, the aggregate value of non-vested restricted stock awards and restricted stock units was $0.6 million and $0.3 million, respectively, before applicable income taxes, based on a $2.44 closing stock price.  During the six months ended June 30, 2015 and 2014, the weighted-average grant date fair value of restricted stock awards which vested was $0.1 million and $0.9 million, respectively. Compensation expense recognized in the consolidated statement of operations for restricted stock awards and units was $0.3 million and $0.5 million for the six months ended June 30, 2015 and 2014, respectively, before the effect of income taxes.

As of June 30, 2015, total unrecognized stock-based compensation expense related to restricted stock awards and restricted stock units was approximately $0.5 million and $0.3 million, respectively.

Performance Stock Awards

Under the terms of the Plan, performance stock awards are 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.

A summary of the activity of performance stock units under the Plan as of June 30, 2015, and the changes during the six 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, 2014
   
229,315
   
$
2.50
 
 
Granted
   
165,000
     
2.55
 
 
Forfeited
   
(90,798
)
   
2.77
 
 
Vested
   
-
     
-
   
Balance at June 30, 2015
   
303,517
   
$
2.40
 
               2.42
 
Performance stock units outstanding on June 30, 2015 are payable upon the achievement of certain internal metrics over various performance periods. Compensation expense recognized on the consolidated statement of operations for performance stock awards was $0.1 million for the six months ended June 30, 2015.  No compensation expense was recorded during the comparable 2014 period.  As of June 30, 2015, there was $0.5 million of unrecognized compensation expense related to unvested performance share unit awards.
 
8. Discontinued Operations

In September 2014, we consummated the sale of BookRags for $5.0 million.  All activities related to BookRags have been reflected as discontinued operations on our consolidated financial statements for the period ended June 30, 2014.  There were no discontinued operations for the three or six month periods ending June 30, 2015.

The following table summarizes the results of discontinued operations for the periods indicated (in thousands):
 
   
Three months ended
   
Six months ended
 
   
June 30, 2015
   
June 30, 2014
   
June 30, 2015
   
June 30, 2014
 
Total revenue
 
$
-
   
$
1,055
   
$
-    
$
2,063
 
Gross margin
 
$
-
   
$
937
   
$
-    
$
1,813
 
Selling & marketing expenses
 
$
-
   
$
332
   
$
-    
$
653
 
General & administrative expenses
 
$
-
   
$
203
   
$
-    
$
422
 
Restructuring costs $ - $ 10,233 $ - $ 10,233
Operating loss from discontinued operations
 
$
-
   
$
(9,830
 
$
-    
$
(9,494
)
Income tax benefit on discontinued operations
 
$
-
   
$
1,010
   
$
-    
$
984
 
Net loss from discontinued operations
 
$
-
   
$
(8,820
 
$
-    
$
(8,540
)
 
9. Net Income (Loss) and Income (Loss) per Share

The following table presents a reconciliation of basic and diluted income (loss) per share computations (in thousands, except per share data):

   
Three months ended
June 30,
   
Six months ended
June 30,
 
   
2015
   
2014
   
2015
   
2014
 
Numerator:
 
   
   
   
 
Income (loss) from continuing operations
 
$
13,214
   
$
4,635
     
6,602
     
(3,196
)
Loss from discontinued operations
   
-
     
(8,820
)
   
-
     
(8,540
)
Net income (loss)
 
$
13,214
   
$
(4,185
)
 
$
6,602
   
$
(11,736
)
                                 
Denominator:
                               
Weighted-average shares outstanding
   
17,028
     
16,823
     
16,990
     
16,789
 
Effect of unvested restricted stock awards considered participating securities
   
270
     
224
     
301
     
-
 
Weighted-average shares outstanding - basic
   
17,298
     
17,047
     
17,291
     
16,789
 
Effect of diluted restricted stock and performance share awards
   
79
     
112
     
132
     
-
 
Weighted-average shares outstanding – diluted
   
17,377
     
17,159
     
17,423
     
16,789
 
                                 
Income (loss) from continuing operations - basic
   
0.76
     
0.27
     
0.38
     
(0.19
)
Loss from discontinued operations - basic
   
-
     
(0.52
)
   
-
     
(0.51
)
Net income (loss) per share - basic
 
$
0.76
   
$
(0.25
)
 
$
0.38
   
$
(0.70
)
                                 
Income (loss) from continuing operations - diluted
   
0.76
     
0.27
     
0.38
     
(0.19
)
Loss from discontinued operations - diluted
   
-
     
(0.52
)
   
-
     
(0.51
)
Net income (loss) per share - diluted
 
$
0.76
   
$
(0.25
)
 
$
0.38
   
$
(0.70
)
                                 
Stock options, restricted stock units, restricted stock awards, and performance share awards excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive
   
443
     
774
     
447
     
799
 

10. Supplemental Disclosures of Consolidated Statements of Cash Flows

Our non-cash investing and financing activities during the six months ended June 30, 2015 and 2014 were as follows (in thousands):

   
June 30, 2015
   
June 30, 2014
 
Unrealized gain on foreign currency exchange contracts
 
$
1,021
   
$
357
 
Unrealized gain (loss) on available-for-sale securities
 
$
(322
)
 
$
267
 

11.  Commitments and Contingencies

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.
 
Our directors and officers have certain rights to indemnification by us against certain liabilities that may arise by reason of their status or service as directors or officers. We maintain director and officer insurance, which covers certain liabilities arising from our obligation to indemnify our directors and officers and former directors in certain circumstances. No material indemnification liabilities were accrued at June 30, 2015.

12.  Subsequent Events

On July 13, 2015, we announced our plan to cease operations and close our student and adult travel business by the end of 2015. On August 11, 2015, our board of directors reached the conclusion that it is in the best interests of the shareholders to dissolve and liquidate the Company, subject to shareholder approval. The dissolution was unanimously approved by the board of directors and is subject to shareholder approval.
 
Over the past several years, we have experienced declining revenues and declining travelers and have explored strategic alternatives and alternative marketing models.  We have also been engaged in a lengthy and intensive evaluation of potential strategic alternatives in order to preserve and maximize shareholder value.  Those potential alternatives included pursuing a strategic transaction with a third party, such as a merger or sale, and dissolving the Company, winding down our remaining operations and distributing net assets to shareholders after making appropriate reserves for liabilities and expenses. 
 
In connection with the dissolution, we intend to distribute to shareholders all available cash other than as may be required to pay expenses and pay or make reasonable provision for known and potential claims and obligations as required by applicable law.

In a Form 8-K filed with the SEC on July 23, 2015, we disclosed our estimates of various cash and non-cash exit costs, including for severance and related compensation benefits, rent and other contract termination fees, acceleration of depreciation and other prepaid costs, and other associated costs related to its closing.  These amounts are estimated below and are not audited:
 
· Approximately $1.3 million to $2.4 million in severance costs, including $0.3 million in non-cash charges for the acceleration of equity awards under the terms of existing separation agreements;
· Non-cash charge of approximately $2.0 million in property and equipment and other asset write-downs;
· Estimated $0.6 million to $1.3 million in various contract termination fees, ongoing maintenance expenditures, and facility and business closure expenses; and
· Approximately $0.4 million to $0.8 million in estimated legal and other professional fees including estimated ongoing insurance costs.
 
We expect to recognize the majority of the charges in the third and fourth quarters of 2015, and no cost or expense associated with the business closure has been recognized in the current period financial statements.
 
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 and Section 21E of the Securities 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 25, 2015. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Ambassadors Group, Inc. is a provider of educational travel experiences engaged in the organization and promotion of worldwide educational travel programs. On July 13, 2015, we announced our plan to cease operations and close our student and adult travel business by the end of 2015, and on August 11, 2015, our board of directors approved dissolution of the Company, subject to shareholder approval.
 
Results of Operations

Comparison of the Three and Six Months Ended June 30, 2015 with the Three and Six Months Ended June 30, 2014

Consolidated financial results for the three and six months ended June 30, 2015 and 2014 were as follows (in thousands):
 
 
 
Three Months Ended June 30,
 
 
 
2015
   
2014
   
$ Change
   
% Change
 
Total revenue
 
$
19,481
   
$
21,657
   
$
(2,176
)
   
-10
%
Cost of goods sold
   
1,826
     
2,788
     
(962
)
   
-35
%
Gross margin
   
17,655
     
18,869
     
(1,214
)
   
-6
%
Selling and marketing expenses
   
3,064
     
5,827
     
(2,763
)
   
-47
%
General and administrative expenses
   
1,429
     
3,307
     
(1,878
)
   
-57
%
Restructuring costs
   
-
     
1,431
     
(1,431
)
   
-100
%
Asset impairments
   
45
     
2,000
     
(1,955
)
   
-98
%
Operating income
   
13,117
     
6,304
     
6,813
     
108
%
Other income
   
97
     
146
     
(49
)
   
-34
%
Income before income tax provision
   
13,214
     
6,450
     
6,764
     
105
%
Income tax provision
   
-
     
(1,815
)
   
1,815
     
100
%
Net income from continuing operations
 
$
13,214
   
$
4,635
   
$
8,579
     
185
%
Net loss from discontinued operations
 
$
-
   
$
(8,820
)
   
8,820
     
100
%
 
 
 
Six Months Ended June 30,
 
 
 
2015
   
2014
   
$ Change
   
% Change
 
Total revenue
 
$
19,751
   
$
22,046
   
$
(2,295
)
   
-10
%
Cost of goods sold
   
1,954
     
2,997
     
(1,043
)
   
-35
%
Gross margin
   
17,797
     
19,049
     
(1,252
)
   
-7
%
Selling and marketing expenses
   
7,593
     
12,500
     
(4,907
)
   
-39
%
General and administrative expenses
   
3,746
     
6,228
     
(2,482
)
   
-40
%
Restructuring costs
   
-
     
1,539
     
(1,539
)
   
-100
%
Asset impairments
   
45
     
2,000
     
(1,955
)
   
-98
%
Operating income (loss)
   
6,413
     
(3,218
)
   
9,631
     
299
%
Other income
   
189
     
281
     
(92
)
   
-33
%
Income (loss) before income tax provision
   
6,602
     
(2,937
)
   
9,539
     
325
%
Income tax provision
   
-
     
(259
)
   
259
     
100
%
Net income (loss) from continuing operations
 
$
6,602
   
$
(3,196
)
 
$
9,798
     
307
%
Net loss from discontinued operations
 
$
-
   
$
(8,540
)
   
8,540
     
100
%
 
During the second quarter of 2015, we traveled 7,142 delegates compared to 8,720 delegates during the prior year quarter primarily due to lower delegates traveled on our core Student Ambassadors programs.  In total, we anticipate travelling approximately 13,300 delegates during 2015, with 95% of the total traveled by the end of July.

Total revenue from continuing operations was $19.5 million compared to $21.7 million in the prior year quarter. Gross margin from continuing operations during the quarter was $17.7 million compared to $18.9 million in the second quarter of 2014, and gross margin percentage was 37.7 percent compared to 33.2 percent in the prior year period.  The improved gross margin percentage was primarily due to stronger foreign exchange rates compared to the prior year.  The prior year margin was also impacted negatively by an inventory write-down of $0.6 million.
 
During the six months ended June 30, 2015, we traveled 7,256 delegates compared to 8,903 delegates during the same period in the prior year.  Total revenue from continuing operations was $19.8 million compared to $22.0 million in the same period last year driven by the decline in travelers year-over-year.  Gross margin from continuing operations for the six months ended June 30, 2015 was $17.8 million from $19.0 million in the same period last year, with gross margin percentage at 37.7 percent compared to the prior year at 33.2 percent. The improved gross margin was due to the same factors described for the second quarter.
 
Second quarter operating expenses from continuing operations were $4.5 million compared to $12.6 million in the prior year period, an improvement of $8.1 million year-over-year.  The prior year period included a $2.0 million asset impairment charge and $2.1 million in restructuring costs from work force reductions and associated severance and separation expenses.  Operating expenditures during the comparable six month periods decreased $10.9 million year-over-year to $11.4 million recorded during the first six months of 2015.  Current period expenditures are lower due to less marketing spend, lower personnel expense based on headcount reductions, and lower overall spend across the organization year-over-year.
 
During the current three and six month periods, we did not record income tax expense as we have sufficient net operating loss carryforwards to offset against taxable income and we do not anticipate generating taxable income in excess of the amount of our available carryforwards.  The prior year periods include income tax provisions of $1.8 million for the three months ended June 30, 2014 and $0.3 million during the six month period ended June 30, 2014, respectively.
 
Prior to September 2014, we operated BookRags, 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.
 
During the second quarter of 2015, we reported net income of $13.2 million, or $0.76 per diluted share, compared to a net loss of $4.2 million, or $0.25 per share, during the second quarter of 2014.  During the first six months of 2015, we reported net income of $6.6 million, or $0.38 per diluted share, compared to a net loss of $11.7 million, or $0.70 per share, in the same period in 2014.
 
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.

Deployable Cash

We use deployable cash as a liquidity measure 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)
 
 
Six months ended June 30,
   
December 31, 2014
 
Cash, cash equivalents and short-term available-for-sale securities
 
$
70,891
   
$
57,500
   
$
61,504
 
Prepaid program cost and expenses
   
12,203
     
17,918
     
1,335
 
Less: Participants’ deposits
   
(33,306
)
   
(42,865
)
   
(23,161
)
Less: Accounts payable / accruals / other liabilities
   
(4,618
)
   
(7,248
)
   
(2,794
)
Deployable cash
 
$
45,170
   
$
25,305
   
$
36,884
 

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)
Six months ended June 30,
 
 
2015
 
2014
 
$ Change
 
Net cash provided by operating activities
   
9,819
     
12,988
     
(3,169
)
Purchase of property, equipment and intangibles
   
(488
)
   
(1,098
)
   
610
 
Free cash flow
 
$
9,331
   
$
11,890
   
$
(2,559
)
 
Liquidity and Capital Resources
 
Total assets at June 30, 2015 were $85.1 million compared to $95.9 million at June 30, 2014.  Cash, cash equivalents and short-term available-for-sale securities increased $13.4 million to $70.9 million at June 30, 2015 compared to the balance at June 30, 2014.  Long-term assets totaled $1.5 million at June 30, 2015 compared to $19.0 million at June 30, 2014, a decrease driven primarily by the sale of our corporate headquarters building during the fourth quarter of 2014 and the sale of BookRags during the third quarter of 2014.  Total liabilities were $38.3 million, including $33.3 million in participant deposits for upcoming travel.
 
Net cash provided by operations was $9.8 million during the six months ended June 30, 2015 compared to net cash provided by operations of $13.0 million during the six months ended June 30, 2014. This $3.2 million decrease was primarily due to lower participant deposits due to a lower delegate count compared to 2014, partially offset by improved profitability year-over-year. Net cash used in investing activities was $4.8 million during the first six months of 2015 compared to $11.8 million during the first six months of 2014.
 
On July 13, 2015, we announced our plan to cease operations and close our student and adult travel business by the end of 2015, and on August 11, 2015, our board of directors approved dissolution of the Company, subject to shareholder approval.  Over the past several years, we have experienced declining revenues and declining travelers and have explored strategic alternatives and alternative marketing models.  We have also been engaged in a lengthy and intensive evaluation of potential strategic alternatives in order to preserve and maximize shareholder value.
 
In connection with the dissolution, we intend to distribute to shareholders all available cash other than as may be required to pay expenses and pay or make reasonable provision for known and potential claims and obligations as required by applicable law.  If the proposal is approved by shareholders, we currently anticipate to make an initial liquidating distribution to shareholders of approximately $44.0 million up to $50.0 million, or between $2.50 and $2.85 per share.  We anticipate to make this initial liquidating distribution as soon as practicable following receipt of shareholder approval and filing of a certificate of dissolution.

Delaware law requires that, in connection with dissolution, our board of directors make reasonable provision for known and potential claims and obligations and maintain those reserves until resolution of such matters.  In a Form 8-K filed with the SEC on July 23, 2015, we disclosed our estimates of various cash and non-cash exit costs, including for severance and related compensation benefits, rent and other contract termination fees, acceleration of depreciation and other prepaid costs, and other associated costs related to closing.  These amounts are estimated below and are not audited:
 
· Approximately $1.3 million to $2.4 million in severance costs, including $0.3 million in non-cash charges for the acceleration of equity awards under the terms of existing separation agreements;
· Non-cash charge of approximately $2.0 million in property and equipment and other asset write-downs;
· Estimated $0.6 million to $1.3 million in various contract termination fees, ongoing maintenance expenditures, and facility and business closure expenses; and
· Approximately $0.4 million to $0.8 million in estimated legal and other professional fees including estimated ongoing insurance costs.
 
Insofar as the reserves required by applicable law exceed, in the view of the board of directors, the ultimate amounts we will likely be required to pay creditors, the board of directors believes it possible that a portion of the reserves will ultimately be distributed to shareholders.  The board of directors currently believes total aggregate distributions to shareholders could range between $44.0 million and $53.0 million, $2.50 and $3.00 per share.  The board of directors will evaluate our cash reserves on a periodic basis and will approve liquidating distributions when and as it deems appropriate.  Additional liquidating distributions will be made to the extent the required contingency reserves are released and upon non-cash assets being monetized, which would likely span a multi-year period.  Further details regarding anticipated future distributions will be disclosed in the proxy materials to be filed in connection with the special meeting.
 
The amount distributable to shareholders, both initially and in total, may vary substantially from the amounts currently estimated based on many factors, including the resolution of outstanding known claims and obligations, the possible assertion of claims that are currently unknown, the ability to receive reasonable value when selling or otherwise monetizing its assets, and costs incurred to wind down the business.  Further, if additional amounts are ultimately determined to be necessary to satisfy or make provision for any of these obligations, shareholders may receive substantially less than the current estimates.
 
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, 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 25, 2015.
 
Item 4. Controls and Procedures
 
(a) Evaluation of disclosure controls and procedures
 
As of June 30, 2015, the end of the period covered by this report, our chief executive officer and principal finance and accounting 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 chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
(b) Changes in internal control over financial reporting
 
In the six months ended June 30, 2015, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
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 June 30, 2015, there were no shares repurchased under the Repurchase Plan. As of June 30, 2015, approximately $13.1 million was available to repurchase shares of our Common Stock under the Repurchase Plan.

Item 6.
Exhibits
 
 
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.
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
AMBASSADORS GROUP, INC.
 
Date: August 14, 2015
By:
/s/ PHILIP B. LIVINGSTON
   
Philip B. Livingston
   
Chief Executive Officer
  (Principal Executive Officer)
 
EXHIBIT INDEX

31.1 Certification under Section 302 of the Sarbanes-Oxley Act of 2002. (1)

Certification under Section 302 of the Sarbanes-Oxley Act of 2002. (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.
 
 
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