NEWPORT BEACH, Calif., July 26 /PRNewswire-FirstCall/ -- Ambassadors International, Inc. reported revenue of $29.7 million for the three months ended June 30, 2006, up from $7.8 million for the three months ended June 30, 2005. In addition, the Company reported net income of $1.7 million, or $0.15 per diluted share, for the three months ended June 30, 2006, compared to net income of $1.3 million, or $0.13 per diluted share, for the three months ended June 30, 2005.
Joe Ueberroth, President and CEO of the Company, stated, "We are pleased with the operational progress in our cruise operations thus far and are encouraged by our stronger-than-expected bookings to date for 2006 and 2007. In our initial projections at the time of our cruise acquisitions, we shared that we anticipated generating 2006 pretax income of approximately $3.1 million in our cruise segment. With our improved visibility for 2006, and despite the unexpected grounding of the Empress of the North earlier this year, we now believe that our cruise segment should generate pretax income of approximately $8.0 million in 2006."
"Additionally, we are excited with our acquisition of Bellingham Marine Industries and the recent launch of our BellPort Newport Harbor Shipyard operations. These additional operations solidify our position in the marine industry. We believe that our combined marine operations should contribute pretax income of $3.5 million to the company in 2006."
We achieved revenues of $29.7 million in the second quarter of 2006, an increase of $21.8 million from 2005. For the quarter ended June 30, 2006, the increase in revenue resulted from the addition of $21.8 million in cruise-related revenue from our cruise segment which commenced operations on January 13, 2006. In addition, our marine revenue increased $2.0 million over 2005 as a result of our shipyard operations which began on April 1, 2006. These increases were partially offset by lower travel, incentive and event related revenue, as well as lower net insurance premiums earned, both a result of decreased business in the second quarter.
Our costs and operating expenses increased $21.1 million in the second quarter of 2006 from 2005. This increase was primarily due to $19.5 million in cruise operating expenses and other selling, general and administration and depreciation expenses associated with our new cruise segment. In addition, our cost of marine revenue increased $1.1 million related to revenues generated from our new shipyard operations. As of January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123R, "Share-Based Payment" and recorded approximately $0.2 million in general and administrative expenses related to employee stock options.
On March 24, 2006, the Empress of the North vessel ran aground. No passengers or crew were injured during the incident. The vessel was in dry dock for repairs for approximately four weeks and the vessel returned to operations on April 16, 2006. As a result of this event and ensuing repairs, we canceled three cruises which resulted in lost revenue of approximately $1.4 million in the second quarter. Additionally, included in cruise operating expenses for the second quarter are vessel repair, passenger relocation and crew expenses totaling approximately $2.4 million incurred as a result of the grounding. These expenses were offset by insurance recoveries of $1.6 received in the second quarter of 2006. We continue to pursue additional insurance recoveries from this incident.
We reported other income (expense) for the three months ended June 30, 2006 of $1.0 million, compared to $1.4 million for the three months ended June 30, 2005. The decline was a result of approximately $0.7 million of interest expense related to long-term debt assumed in our cruise acquisitions consummated in the first and second quarters of 2006 and decreases in our net earnings on minority investments in 2006 of $0.6 million. Our other income (expense) was favorably impacted by realized gains of $0.7 million which resulted from sales of available-for-sale securities and improved yields on our investment portfolio of $0.2 million resulting from higher interest rates in 2006 compared to 2005.
Recent News
We recently announced our acquisition of Bellingham Marine Industries, a leading marina design/build construction company based in Bellingham, Washington. This acquisition was completed on July 21, 2006.
On June 30, 2006, Ambassadors International, Inc. was added to the Russell 2000(R) index.
Conference Call
Ambassadors International, Inc. will host a conference call to discuss the results of operations on Thursday, July 27, 2006 at 11:30 a.m. Eastern Time. Interested parties may join the call by dialing (800) 795-1259, conference ID #: ANALYST. The conference call may also be joined via the Internet at http://www.ambassadors.com/investor. For conference replay access, parties may dial (888) 566-0870 and follow the prompts, or visit the http://www.ambassadors.com/investor website. Post call webcast access will be available two hours following the webcast.
About Ambassadors International, Inc.
Ambassadors International, Inc. is a cruise, marine and travel and event company. The Company operates Majestic America Line, North America's premier river and coastal cruise company. The Company also provides travel and event services and operates international marine facilities through subsidiary companies. The Company is headquartered in Newport Beach, California. In this press release, any reference to "Company," "Ambassadors," "management," "we," "us" and "our" refers to Ambassadors International, Inc. and its management team.
Forward-Looking Statements
This press release contains forward-looking statements that involve various risks and uncertainties, including statements relating to the Company's future prospects and projected financial performance. The forward-looking statements contained in this release are based on our current expectations and entail various risks and uncertainties that could cause our actual results to differ materially from those suggested in our forward-looking statements. We believe that such risks and uncertainties include, among others, general economic and business conditions; overall conditions in the cruise, marine, travel and insurance industries; potential claims related to our reinsurance business; further declines in the fair market value of our investments; lower investment yields; unexpected events that disrupt the operations of our cruise operations; environmental related factors; our ability to successfully integrate the operations of companies or businesses we acquire and realize the expected benefits of our acquisitions (including Bellingham Marine); our ability to successfully and efficiently operate the businesses that we acquire (including Bellingham Marine); our ability to compete effectively in the U.S. cruise market; our ability to compete effectively in the U.S. and international marina construction markets; our ability to effectively and efficiently manage our rapid growth; our ability to continue to identify attractive acquisition targets and consummate future acquisitions on favorable terms; our ability to accurately estimate contract risks; our ability to service our debt and other factors discussed more specifically in our annual, quarterly and periodic filings with the Securities and Exchange Commission on Form 10-K, 10-Q and 8-K. Any projections provided in this release are based on limited information currently available to management and are subject to change. We are providing this information as of the date of this release and do not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
Additional Information
For further information please contact: Brian Schaefgen of Ambassadors International, Inc. at (949) 759-5900.
Summary financial information is as follows (in thousands, except per share amounts):
Three Months Ended
June 30,
2006 2005
(unaudited)
Revenues:
Passenger ticket revenue $19,089 $--
Onboard and other cruise revenue 2,680 --
Travel, incentive and event related 2,910 4,312
Net insurance premiums earned 2,536 3,096
Marine revenue 2,250 214
License fees 198 206
29,663 7,828
Costs and operating expenses:
Cruise operating expenses 12,228 --
Cost of marine revenue 1,082 --
Selling and tour promotion 3,654 770
General and administrative 7,781 3,325
Depreciation and amortization 856 102
Loss and loss adjustment expenses 1,492 1,602
Insurance acquisition costs and
other operating expenses 990 1,195
28,083 6,994
Operating income 1,580 834
Other income (expense):
Interest and dividend income 894 678
Realized gains on sale of
available-for-sale securities 735 12
Interest expense (728) --
Other, net 146 696
1,047 1,386
Income before income taxes 2,627 2,220
Provision for income taxes 967 876
Net income $1,660 $1,344
Earnings per share:
Basic $0.15 $0.13
Diluted $0.15 $0.13
Weighted-average common shares outstanding:
Basic 10,898 10,337
Diluted 11,376 10,574
Six Months Ended
June 30,
2006 2005
(unaudited)
Revenues:
Passenger ticket revenue $20,375 $--
Onboard and other cruise revenue 2,789 --
Travel, incentive and event related 7,102 9,484
Net insurance premiums earned 5,020 5,692
Marine revenue 2,420 328
License fees 275 305
37,981 15,809
Costs and operating expenses:
Cruise operating expenses 14,557 --
Cost of marine revenue 1,082 --
Selling and tour promotion 5,193 1,613
General and administrative 12,625 6,138
Depreciation and amortization 1,326 214
Loss and loss adjustment expenses 2,857 2,863
Insurance acquisition costs and
other operating expenses 2,033 2,244
39,673 13,072
Operating income (loss) (1,692) 2,737
Other income (expense):
Interest and dividend income 1,835 1,290
Realized gains on sale of
available-for-sale securities 747 12
Interest expense (1,095) (5)
Other, net 72 690
1,559 1,987
Income (loss) before provision (benefit)
for income taxes (133) 4,724
Provision (benefit) for income taxes (73) 1,861
Net income (loss) $(60) $2,863
Earnings (loss) per share:
Basic $(0.01) $0.28
Diluted $(0.01) $0.27
Weighted-average common shares outstanding:
Basic 10,597 10,224
Diluted 10,597 10,524
In January 2006, concurrent with certain acquisitions completed subsequent to December 31, 2005, the Company realigned its business segments. As of January 2006, the Company will report the following business segments: (i) Cruise, (ii) Marine, which will include the operations of BellPort, (iii) Travel and Events, which will include the operations of Ambassadors, (iv) Insurance, which will include the operations of Cypress Re and (v) Corporate and Other, which will consist of general corporate assets (primarily cash and cash equivalents and investments) and other activities which are not directly related to our operating segments.
Summary of business segment information is as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(unaudited) (unaudited)
Revenue:
Cruise $21,769 $-- $23,164 $--
Marine 2,250 214 2,420 328
Travel and Events 3,108 4,518 7,377 9,789
Insurance 2,536 3,096 5,020 5,692
Corporate and Other -- -- -- --
Total revenue $29,663 $7,828 $37,981 $15,809
Operating income (loss):
Cruise $2,241 $-- $(1,433) $--
Marine 248 29 181 (8)
Travel and Events 132 1,239 1,560 3,461
Insurance 54 300 130 585
Corporate and Other (1,095) (734) (2,130) (1,301)
Total operating
income (loss) $1,580 $834 $(1,692) $2,737
Summary balance sheet information is as follows (in thousands):
June 30, December 31,
2006 2005
(unaudited)
Assets:
Current assets:
Cash and short-term investments $94,051 $95,131
Accounts receivable, net 7,757 2,976
Premiums receivable 15,807 14,135
Deferred policy acquisition costs 1,348 1,668
Reinsurance recoverable 1,470 1,257
Prepaid reinsurance premiums 968 1,095
Inventory 1,926 --
Deferred income taxes 138 414
Prepaid program costs and
other current assets 9,598 2,524
Total current assets 133,063 119,200
Property and equipment, net 100,622 595
Goodwill 9,181 8,996
Other intangibles 1,250 1,325
Other assets 9,726 4,667
Total assets $253,842 $134,783
Liabilities:
Current liabilities:
Accounts payable and accrued and
other expenses $11,511 $4,477
Participant and passenger deposits 41,695 6,124
Loss and loss adjustment expense reserves 10,761 9,021
Unearned premiums 4,905 5,779
Deferred gain on retroactive reinsurance 80 151
Current portion of long term debt 4,229 --
Total current liabilities 73,181 25,552
Non-current participant and passenger deposits 308 5
Long term debt, net of current portion 71,106 --
Total liabilities 144,595 25,557
Stockholders' equity 109,247 109,226
Total liabilities and stockholders' equity $253,842 $134,783
