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Ambassadors Group, Inc. (NASDAQ:EPAX)

Q1 2010 Earnings Call Transcript

April 22, 2010 11:30 am ET

Executives

Jeff Thomas – President and CEO

Peg Thomas – President, People to People Ambassador Programs

Kristi Gravelle – Interim CFO

Analysts

Gregory McKinley – Dougherty & Co

Mike Roarke – McAdams Wright Ragen

James Bellessa – DA Davidson

Dan Smith [ph]

Operator

Good morning ladies and gentlemen and welcome to the Q1 2010 Ambassadors Group Inc. earnings conference call. My name is Jamie Ikenberg, and I’ll be your coordinator for today.

I would like to turn the call over to your host for today’s conference Mr. Dina Presnow [ph], Director of Financial Planning and Analysis. Please proceed Ms. Presnow.

Dina Presnow

Thank you. Good morning. On the call with me today is Jeff Thomas, President and Chief Executive Officer of Ambassadors Group; Peg Thomas, President of the Operating Subsidiary Ambassador Programs; Kristi Gravelle, Interim Chief Financial Officer of Ambassadors Group; Jim Kreyenhagen, President of BookRags; and

Susannah Stoltz representing Discovery Student Adventures.

First, before we proceed into the call, I will read the Safe Harbor statements regarding forward-looking statements. Statements contained in this press conference and related comments by Ambassadors Group’s management which are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27-A of the Securities Act of 1933 as amended, and Section 21-E of the Securities Exchange Act of 1934 as amended.

These forward-looking statements include without limitation, statements that relate to expectations concerning matters that are not historical facts. Word such as projects, believes, anticipates, plans, expects, intends, estimates and similar words and expressions are intended to identify forward-looking statements.

These forward-looking statements reflect our beliefs or current expectations with respect to among other things, trends in the travel industry, our business and growth strategies,

use of technology, our ability to integrate acquired businesses, future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies such as legal proceedings, financial results and fluctuations in our results of operations.

Forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from anticipated results. These risks and uncertainties are

set forth in Ambassadors Group most recent report filed with the Securities and Exchange Commission on Form 10-K, as it may be updated in our subsequent Form 10-Q and 8-K reports. All forward-looking statements are expressly qualified in their entirety by these factors and all related cautionary statements. We do not undertake any obligation to update any forward-looking statements.

With that I will hand the call over to Jeff.

Jeff Thomas

Thank you. Good morning. Thank you for joining our call this morning.

We are planning to follow our regular call outline, starting with a brief overview of the company results, and Peg Thomas, Ambassador Programs, will discuss our core People to People Student Ambassador Program’s results so far and Kristi Gravelle will discuss our financial results for the first quarter of 2010.

Jim and Susannah are on the call to field questions about their respective business units should the need arise. As most of you are aware, our company has seasonal revenues and our first quarter is our least important revenue quarter of the year. Q2, our current quarter will be the most important revenue quarter of 2010. In the first quarter we posted a loss of $0.35 per share compared to a loss of $0.28 per share in the same quarter one year ago. This was driven primarily by having fewer travelers this quarter than the same quarter one year ago, and the majority of the decline in the number of travelers is driven by the Presidential Inauguration program that we operated one year ago.

Our expenses for the quarter were down slightly, although our sales and marketing expenses have increased compared to the same quarter last year, primarily driven by additional spending to acquire 2010 travelers, as well as the beginning of our marketing spend for 2011 travelers.

With our core People to People Ambassador Program’s operations, we have focused to a greater extent on our largest and most important product, the Student Ambassador Program, and are seeing some progress there. One of the key aspects of the first quarter is our traveler retention efforts, and you'll see there has been improvement in our Student Ambassador Retention results so far.

In addition, although our enrolled revenue is down over 20% this quarter compared to the same quarter one year ago, our enrolled revenues for Student Ambassador Programs is down approximately 12%. Our BookRags.com operating unit that provides book summaries, notes, and teaching materials to students and teachers through the same website experienced a slight decline in financial performance. This decrease is expected due to renegotiated agreement with an ad partner in 2009, while during the same period receipts for the sale of content on the site were up 9% over Q1 of last year.

Our monthly unique users were up 3% over the same period last year. This modest growth was expected and in spite of turning of unprofitable marketing and Google AdWords, which drove traffic but not revenue. Our revenue per 1000 unique users, which is the measurement that shows our efficiency in generating revenue from website traffic was down 16% from the comparable period last year. This decrease was also expected, and was the result of the prior mentioned ad partner contract renegotiation.

Discovery Student Adventures will also start operating its 2010 travel programs this quarter. After a slow start the team enrolled nearly 200 students, and will be having approximately 130 students after withdrawal. The number one withdrawal reason was financial hardship or the economy. Brand awareness, as expected is a key strength of our Discovery programs.

On the balance sheet, cash remains by far our largest asset increasing from $108 million one year ago at this time to $112 million at the end of Q1 2010. Our cash flow for the quarter was $31.7 million compared to $34.8 million one year ago, a decrease of 9%. Our deployable cash has decreased from $21.5 million at the end of the first quarter one year ago to $37.4 million at the end of the first quarter of this year.

In the quarter just ended, we paid approximately $1.16 million in dividend compared to $1.15 million in the same quarter one year ago.

At this point, I will turn the call over to Peg Thomas.

Peg Thomas

Good morning, and thank you for joining us this morning. For the first quarter of 2010, we traveled 803 delegates compared to 3500 delegates in the first quarter of 2009. The majority of this decrease year-over-year can be attributed to the inauguration events that were held one year ago in January. We had 2200 inauguration travelers in the first quarter one year ago.

For 2010 travel, we have almost 27,274 delegates enrolled to travel in comparison to 35,566 for 2009 on this date one year ago. This 23% decrease is already net of withdrawals to date. As you can see on the balance sheet, by our participant deposits, we're holding more deposit per delegate than last year at this time. Even though enrolments at down 23% year-over-year, participant deposits are only down 15%.

Our core product International Student Travel is only up 12% year-over-year. In addition, the overall withdrawal rates for all programs last year was approaching 37%. For 2010, we're trending better by almost 2 points. From an operational perspective, we are pleased with the results of our quality ratings to date for 2010, our net promoter scores today are at 70%, in comparison to a score of 62% at the end of 2009.

And if you are not yet familiar with the net promoter system, this is a question that we ask our customers if they would recommend us to someone else. A score of 70% is world-class. This puts us in a category with companies like Cosco, Amazon, and Apple, (inaudible). Finally, we are preparing for our largest travel season, our first summer departure is June 2. We will be traveling 47 countries in 2010 and also 7 continents.

Similar to 2009 we are again finding some good opportunities through tough negotiations with our airline partners for 2010 summer travel. We believe our gross margins for 2010 will be similar to what we achieved in 2009.

Thank you for your time and attention this morning. I will now turn the call over to Kristi for the financial review.

Kristi Gravelle

Thanks Peg and good morning everyone. Today I will open by discussing our first-quarter results, our balance sheet and cash flows, and close with an outlook for the remainder of 2010. During the first quarter of 2010, we traveled 803 delegates as compared to 3492 during the first quarter of 2009. This decrease in travelers is related to the absence of the Presidential Inauguration event, offered in 2009 and reduced attendance at our 2010 Spring World Leadership Forum.

We attribute the weakening of our spring programs largely to the timing of the selling season, which occurred early 2009 when the impact of the economic meltdown remained quite uncertain, and before we offered our peace of mind assurance coverage to protect family investments against the event of a job loss. This decline has magnified by a large move to the summer WLF program.

Both gross receipts and gross margins are down 70%, somewhat less than the delegates traveled, which was down 77%. Gross receipts for the period were 3.1 million, down from 10.4 million in the first quarter of 2009, and gross margin was 1.6 million down from 5.3 million one year ago. Gross margin as a percent of gross receipts increased from 51% to 52% quarter-over-quarter. This improvement is attributable to the leverage that BookRags gross margin is having on the consolidated results in 2010 as compared to 2009.

Selling and marketing cost increased 0.8 million or 8.5% for the quarter. This rise primarily represents the increased marketing efforts made to drive the winter campaign

to drive 2010 enrolments and accelerated timing of the 2011 marketing initiative. We are maintaining our overall selling and marketing expenses to position the company to travel more delegates in 2011.

In contrast, general and administrative costs decreased $1 million in the first quarter of 2010. This reduction is mainly due to realized insurance benefits related to litigation expenses, and is complemented by smaller savings and personal cost and corporate travel expenses.

Other income increased 0.8 million due to the absence of realized foreign currency losses of $1 million taken in the first quarter of 2009, offset by lower prevailing interest rates on an average invested balance of 92 million this year. At this time we do not anticipate any losses on our foreign currency contracts entered into for our 2010 travel program.

All things combined, our net loss after tax was 6.8 million, increased 29% from the net loss of 5.3 million one year ago. This loss resulted in a fully diluted loss per share of $0.35 as compared to $0.28 in 2009, a 25% decline.

Our balance sheet continues to remain strong. Cash and short-term investments increased $4 million or 4% to $112 million, while prepaid expenses of participants for Q1 of 2010 as compared to Q1 of 2009 are down 16% and 15% respectively. The change in participant funds is lower than the 23% decline in active enrolled delegates, largely due to the stronger retention of our core Student Ambassador product line.

We continue to remain debt free, and 66% of our total $170.6 million asset balance resides in cash and short-term investments. During Q1 2010 we generated 31.8 million in free cash flow and allocated 1.2 million back to our shareholders in the form of dividends. We increased our deployable cash 74% from 21.5 million in Q1 2009 to 37.4 million in Q1 2010. The cash and investments per share was $5.87, while deployable cash was $1.96 per share.

As we look forward to the remainder of the 2010 fiscal year, we are managing through the reduced number of project to travelers and are excited about our plans for 2011. On the travel front, we are preparing for our largest quarter of travel in 2010. The preferred time of travel have traditionally been in June, and with less travelers this year, the second quarter will represent the peak of our delegates traveling.

We are working hard to maintain margins and retain the current levels of enrolled delegates. In terms of operating expenses, we examine each spending decision as we continue through to 2010. Although the economy has reduced the effectiveness of our marketing expenditures, our continued investments in selling and marketing are needed to work towards putting the company back on a growth track.

The majority of our remaining marketing expenditures for 2010 are directed at driving 2010 enrolment. With regard to general and administrative expense management, we are balancing quality execution with judicious cost-cutting measures. As mentioned on the last call, we are proceeding with our plans to outsource our print and mailing operations, which will result in about an additional 8% reduction in headcount by the end of 2010.

We will begin to see the financial benefit of these measures in 2011 and beyond. All up, our operating expenses are projected to have a similar run rate to 2009. In spite of the current challenges, we expect to deliver another profitable year.

Thank you for your time today, and now I will turn the call back over to Jeff.

Jeff Thomas

Thank you Kristi. Jamie, at this point we are ready to open the lines for questions.

Question-and-Answer Session

Operator

(Operator instructions) We will first hear from Pete Mahon [ph] with Dougherty & Company.

Gregory McKinley – Dougherty & Co

Hi, it's actually Greg McKinley. I was wondering if you could comment a little bit about your any sort of menu changes you are considering with your travel offerings to try to appeal to a larger student base, when you think about marketing to our 2011 programs. And then if you can talk a little bit about your expense structure. Again I know you talked about 8% additional headcount reduction by the end of this year, what type of annualized operating expense structure does that set you up for 2011? Thank you.

Peg Thomas

Hi, Greg. I will take the first part of the question. This is Peg. For the offerings for 2011, there are obviously new definitions or really new ideas out there. It is more, we are shifting our marketing opportunities to the programs that have the highest returns, and are selling at the best rates, which is in that student international business. So you will see some of that as we go into 2011.

And then on the operating expenses, I think Kristi can address that question.

Kristi Gravelle

So, Greg on that I think that personnel represents about 35% of our operating expenses in total. So we would expect this to produce about 10% benefit on that personnel line.

Jeff Thomas

Okay. Greg, let me just add to the answer about our offering. I think it is important to know we don't think we are losing sales, because we are not offering the right products. We think we are losing sales because people just aren't buying those products for their students right now. And without going into a lot of detail, we can actually see particularly after this year that if you look at the purchasing behavior by kind of household income is that the households in the higher income categories and higher income in this group is 80,000 and above, are actually purchasing like they did a couple of years ago, whereas as you move down the income scale they are purchasing on a kind of sequential decline every year.

So what we see is that things are returning to normal at least in part of the customer segments and no question about that (inaudible) things like that seem to be start to move behind us when we look that sort of return to normalcy amongst at least some of our customer segments.

Gregory McKinley – Dougherty & Co

Thank you.

Operator

(Operator instructions) We will hear from Mike Roarke with McAdams Wright Ragen.

Mike Roarke – McAdams Wright Ragen

Hi, good morning everyone.

Peg Thomas

Good morning.

Mike Roarke – McAdams Wright Ragen

I am curious about why you are being somewhat coy for providing kind of a bottom-line earnings figure for this year?

Peg Thomas

Well, we really are not providing the guidance through an EPS range, but providing guidance in the form of enrolled revenue margin and operating expenses that can get you to the answer in the models that we use.

Mike Roarke – McAdams Wright Ragen

Okay. So, why aren't you just coming out and saying that?

Peg Thomas

I think that the trend in the economic times right now is for mid-size companies is a lot of people are not doing that. And that is where we are kind of going through following best practices right now in relation to that.

Mike Roarke – McAdams Wright Ragen

Okay. Would you be able to elaborate on the language in the press release that talked about the surveys that you have conducted and how you perceived to be a greater degree of interest around the programs at this time?

Jeff Thomas

Sure. One of the things that we started doing a couple of years ago is talk to the people who did not actually purchase the product, but went through at least part of the purchasing process, and asked them how they viewed the concept of traveling internationally, traveling with People to People, their intention to travel in the future and kind of the headline in looking at people who did not buy. Roughly 85% of them said they still intend to buy within the next year or two, which is a phenomenal rate and shows that that people are fairly disposed to international travel, and the People to People concept is just not in their financial plans for this year.

Mike Roarke – McAdams Wright Ragen

So does that leave you with a generally better impression about potential success rates moving into next year's marketing campaign versus where you were about a year ago now?

Jeff Thomas

I don't have the exact figures from the same question a year ago, but the percentage of people saying this, they are going to buy in the next year or two is up. And again some of the questions people have asked us are you know, does the negative PR hurt you, and people think differently about international travel, and you know, anecdotally at least, the surveys would confirm that people are still put it very high in their list, and anecdotally I would add that a lot of people seem to put that higher on the list and the fact that the world has gotten more competitive, and they think they need to be better prepare their children or their students for a more global economy.

So, we look at that plus the data that suggests that at least some of our customer segments are starting to purchase like they did a couple of years ago, and are cautiously optimistic about how things might play out in the future.

Mike Roarke – McAdams Wright Ragen

Okay. Just one more if I may, could you comment on the SEC investigation, and whether that appears to be approaching resolution?

Jeff Thomas

We talk to our counsel quite a bit on how to answer some of the litigation related questions, and they said we really can’t comment on any pending litigation and what we are able to disclose, we have actually disclosed in public documents already.

Mike Roarke – McAdams Wright Ragen

Thank you.

Jeff Thomas

Thanks.

Operator

We will next hear from Pete Mahon with Dougherty & Co.

Gregory McKinley – Dougherty & Co

Yes, good morning. Greg McKinley again. I just had a couple of follow-up questions if I could, I hopped on the call just a tad bit late, my know the question before was relating to your guidance, what did you say about gross margins and operating margins in 2010?

Kristi Gravelle

Gross margins for 2010 are looking like they are going to come in line with the 2009 numbers. Unlike the past years, we are still negotiating from pretty big numbers on the airline side. But our forecast right now is that that should come in line with 2009.

Gregory McKinley – Dougherty & Co

Okay. Anyhow when you say still negotiating, you're talking about like surcharge data that you have shared with us in the past?

Kristi Gravelle

Negotiating with the airlines, you know, our ticketing has happened later in the season. We are still working through some of that information for the summer travel right now.

Peg Thomas

Greg, when you say surcharge what are your…

Gregory McKinley – Dougherty & Co

I guess, I was referring to this margin risk to Opex, whether or not the company has to absorb any fuel related surcharges compared to what you have sort of built into your pricing for the students?

Peg Thomas

Yes, there is some risk out there, but we think we have mitigated the majority of that component out there and now we are working through some of the other regions, where we don’t have such contracts. And there are some opportunities out there just for pure airfare.

Gregory McKinley – Dougherty & Co

Okay. And then, and I think in 2010 you said operating expenses should be roughly flat to 2009, was that correct?

Peg Thomas

Yes.

Gregory McKinley – Dougherty & Co

Okay. And then I wonder if you could just talk a little bit about your program delivery costs, and remind us when you start getting into dialogue with service providers. Is it really to 2011 travel? What if any thoughts can you share with us about, you know, to a degree you are in a buyer's market today, and the opportunities you have to purchase some of these services at more attractive prices?

Peg Thomas

Right. We are actually just – we are in the midst of the 2011 negotiations right now. And we are seeing similar markets to what is happening now with some opportunities we have seen here in 2010. It is still a buyer's market, and the issue is volume is the only risk that is out there, and with the lower volume that we have had going back to our peak year of 2007, we may not continue to see that benefit, but we are seeing again good opportunity for 2011 that we are seeing in 2010?

Gregory McKinley – Dougherty & Co

Okay, great, and then maybe my last question, you talked about Q2 being your peak travel period for this year, based on sort of the timing of your itineraries, could you give us a sense for the mix of your remaining travelers between Q2 and Q3?

Peg Thomas

We definitely are doing the bulk of our travel in Q2. When you look at the year-over-year comparison, the Q2 will suffer less than last year and then Q3 will take a little bit more of a decline.

Gregory McKinley – Dougherty & Co

Okay. So Q2 could actually be up year-over-year in travelers while Q3 is down year-over-year in travelers?

Peg Thomas

It won’t be up, but there is a little bit of a peak and valley kind of thing going on year-over-year. So Q2 will look much more similar to 2009 and then Q3 will drop off more to the overall trend for the year.

Gregory McKinley – Dougherty & Co

Thank you.

Operator

We’ll next hear from James Bellessa with DA Davidson.

James Bellessa – DA Davidson

Good morning. One comment to start off with. I don't deem the lack of or absence of EPS guidance as a best practice. I don't know what others call it but I don't call it a best practice. My first question relates to why is there this relative weakness in the non-Student Ambassador programs?

Jeff Thomas

Jim, I think our Student Ambassador programs are our most compelling offering, and it has been that way for a long time. You know, lot of their organizations was built around that. Some of the smaller more boutique offerings are less compelling. Anyway, if you look at – I guess if you compare it to sports, it is a good comparison of you know, I think people sending their son or daughter aboard to play sports in Europe. I think there is less of a need than sending their son or daughter aboard to Europe to learn about the culture and the economy over there. It’s just less important to you right now. So I think you're seeing a greater impact in that area for example.

James Bellessa – DA Davidson

I believe I heard the word tough when describing airline negotiations, what’s tough?

Peg Thomas

Well, tough is us discussing them on a regular basis right now, and I think the results of it Jim is that we are seeing similar margins in 2010, and we believe we’ll see similar margins in 2010 to 2009, which is obviously better than we had seen in previous years. So I guess that's how you would define tough.

Jeff Thomas

I’d also add, I mean, obviously we all watch the news and in airlines I don't know what their total ended up as, but you know, cancelled literally tens of thousands of flights in the last couple of weeks, and again that's created more flux in the airline industry than it has been there traditionally. I mean, you know, they’ve had fuel surcharges, no one foresaw volcanic ashes having this kind of impact, and so I think going back and forth, working with the airlines, and they are very competitive with each other now is what we call tough in terms of kind of grinding it out and focusing on group by group and looking to optimize every travel delegation.

James Bellessa – DA Davidson

You mentioned that the upper income families appear to be returning to their historical buying patterns. Do you capture the family income stats when you first enroll the families or the students?

Jeff Thomas

They come throughout the process because, you know, oftentimes we’re direct marketing to folks and so you know, their zip code or zip +4, which allows us to look at different block groups around the United States. And I think there is roughly quarter of a million blog groups in the United States and so you can get pretty good targeted information on that.

James Bellessa – DA Davidson

I see, and then the CFO search, what do you have to say about that?

Jeff Thomas

The CFO search has taken a little bit longer than expected. The good news is that Kristi is doing a great job as interim CFO and providing the luxury of time to find the right person.

James Bellessa – DA Davidson

I agree. She is good help to me. That's all I have for right now.

Jeff Thomas

Thank you Jim.

Kristi Gravelle

Thank you Jim.

Operator

We’ll now hear from Dan Smith [ph].

Dan Smith

Good morning guys. Two related questions. One, I was kind of surprised to see enrolled revenue down sequentially as much as it was. I kind of, I guess, was expecting that enrollment might come down a little bit later than normal and then you might see sequential improvement. Was that unreasonable for me to expect that or and then secondly would it be reasonable to expect enrollees when you report Q2. I guess enrolled revenue plus gross receipts to be higher than the Q1 number, the number that we have today.

Kristi Gravelle

The first part of that question I can definitely take it. I'd like to clarify on the second one. So let me give you the first answer and see if that changes how you phrase the second. We expected to gain ground quarter-over-quarter between Q4 and now through the expansion of the winter campaign. However, the campaign didn't produce those expectations, primarily impacted around sports and leadership programs, but again we're seeing the stability of our student numbers and some of these other product lines having a little less traction there. One of the main reasons for the lower anticipated results was the increment weather on the East Coast. And that impacted our information mainly, and our abilities to get in front of those families to sell.

And then could you ask the second part of your question again to make sure that I can understand.

Dan Smith

When you report Q2, you're going to give us an enrolled revenue, but of those that will be down because your traveled a lot of that enrolled revenue. So I guess the way I was trying to ask it is like the enrolled revenue in July whenever you report plus the Q2 gross receipt. Do you think that that will be higher in the Q1 enrolled revenue?

Kristi Gravelle

You know, it's hard to say exactly. I think that the enrolled revenue number that you see from a dollar perspective represents the gross receipts for the people who have traveled in addition to those who have yet to travel, and so you’ll combine those two. So the items in play are the retention rates between now and our summer travel season, and then we do significant travel on our citizen product lines in Q4, and so that marketing campaign is launching right now, and so we are going to see some uplift from that.

Dan Smith

So enrolled revenue does include historical gross receipts that is what you are saying?

Kristi Gravelle

It does not on the number of delegates, but in the dollars it does. So we include the dollars recognized for travel.

Dan Smith

Okay, and then I guess one third question, the enrolled revenue per delegate, looks like it's up slightly, maybe 2% year-over-year. Should we expect 2010 pricing, or gross receipts per delegate to be up?

Kristi Gravelle

I think from a pricing standpoint, we're looking at those things right now. I think on pricing will be relatively flat.

Dan Smith

Right.

Peg Thomas

Sorry, were you asking about 2010 or 2011?

Dan Smith

2010.

Kristi Gravelle

Oh, I'm sorry.

Peg Thomas

So for 2010 that increase should maintain throughout the year, because there is a mix change, as we are seeing more shift into that international student business, and we did have a slight price increase year-over-year.

Dan Smith

Okay. So 2% is a reasonable assumption for 2010?

Peg Thomas

Yes.

Dan Smith

Okay, thank you.

Peg Thomas

Thank you.

Operator

We will take a follow-up question from Mike Roarke with McAdams Wright Ragen.

Mike Roarke – McAdams Wright Ragen

Hi, capital allocation question. Going back to a couple of years, you guys were comfortable buying back stock at price levels materially higher then where it trades, now just – even looking at your deployable cash position, if you do have a confident long-term outlook in your business, why wouldn't you do something meaningful on the share repurchase front?

Kristi Gravelle

I think that in the past, it's been easier to make decisions about where exactly to spend that cash. Right now we're looking at our capital deployment strategy, and trying to make sure that we spend that dollar with the most beneficial return. So I think that in Q2, you'll see some additional activities in that area where we decide to deploy that cash.

Mike Roarke – McAdams Wright Ragen

Okay. So you’re entertaining the idea of meaningful share repurchase or what does that mean?

Kristi Gravelle

I think it is definitely, you know, on the table for discussion. We've got $19.1 million authorized right now to be able to do that.

Mike Roarke – McAdams Wright Ragen

Okay, great. Thank you.

Kristi Gravelle

Thank you.

Operator

And we have no further questions at this time. Jeff, I’ll turn it back to you for closing or additional remarks.

Jeff Thomas

Thanks Jamie. Again, I want to thank everyone for being on the call this morning and listening to us talk about organization a little bit, and what's happening here. As I mentioned before, we’re looking forward to the second quarter which will be our largest travel quarter this year, and we're looking forward and cautiously optimistic as we move into 2011 based on some of the trends we're seeing underlying enrollments for this year. Thank you and have a good day.

Operator

Ladies and gentlemen that does conclude our conference for today. We thank you for your participation.

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