SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Date of Report: February 5, 1998
AMBASSADORS INTERNATIONAL, INC.
-------------------------------
(Exact name of the registrant
as specified in its charter.)
Delaware
--------------------------------
(State or other jurisdiction
of incorporation)
0-26420
--------------------------------
(Commission File Number)
91-1688605
--------------------------------
(IRS Employer I.D. Number)
Dwight D. Eisenhower Building
110 S. Ferrall St.
Spokane, Washington 91101-2203
--------------------------------
(509) 534-6200
--------------------------------
Registrant's telephone number,
including area code
N/A
--------------------------------
(Former name or former address,
if changed from last report)
<PAGE>
The undersigned Registrant hereby amends, as and to the extent set
forth below, the following items, financial statements, exhibits or
other portions of the Current Report on Form 8-K for an event which
occurred on February 5, 1998:
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This item has not been amended and has been included herein
for convenience of reference only.
On February 5, 1998, Ambassador Performance Group, Inc.
("APG"), a wholly-owned subsidiary of Ambassadors
International, Inc. (the "Company"), acquired certain of the
assets (the "Assets") of Rogal America, Co., pursuant to a
certain Asset Purchase Agreement dated as of February 5, 1998
by and among APG, the Company, Rogal America, Co., a
Massachusetts Business Trust (the "Seller") and Andrew Rogal
("Rogal")(the "Asset Purchase Agreement").
The purchase price for the Assets was approximately
$9,500,000, subject to adjustment, with approximately
$6,500,000 of such purchase price paid in cash at the closing
and approximately $3,000,000 of such purchase price to be
delivered in the form of 140,187 shares of the Company's
common stock. The Seller was also granted certain piggyback
registration rights with respect to the shares received.
The Seller was in the business of providing comprehensive,
integrated, housing, registration and travel services for
major meetings, conventions, expositions and trade shows for
business clients (the "Business"). The Assets acquired by the
Company include two office leases for premises in Virginia and
Massachusetts, computer equipment and Seller's client
contracts. The Company intends to continue to use the Assets
in connection with the Business.
If pre-tax net income for the Business exceeds $1,700,000 for
the period from January 31, 1998 through December 31, 1998 and
the 1999 bookings of the Business (as determined at December
31, 1998) exceed the 1998 bookings, then APG will pay an
additional $500,000 to Seller, which amount will be payable,
at the option of APG, in cash, shares of stock of the Company
or a combination thereof, and, in addition, APG will pay to
Seller an amount equal to 10% of that portion of the net
income before income taxes which exceeds $1,700,000.
The purchase price for the Assets was arrived at through arms'
length negotiations with the Seller, an unrelated third party.
The approximately $6,500,000 of the cash portion of the
purchase price came from funds raised in the Company's August
1995 initial public offering of securities.
<PAGE>
Andrew Rogal, the President and holder of more than 99% of the
equity securities of Seller, entered into a five year
employment agreement to serve as an executive of APG. In
addition, the Company agreed that upon the request of Rogal,
at any time prior to April 16, 1999, that it would make a loan
to Rogal of up to $500,000 at an interest rate of 8% per
annum, which loan, plus accrued but unpaid interest thereon,
would be secured by the Company's common stock and would be
due and payable within one year from the date of the making of
such loan.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
EXHIBIT INDEX
99.1 Audited consolidated financial statements of Rogal
America, Co. as of and for the year ended December 31,
1997.
99.2 Unaudited condensed pro forma combined balance sheet of
Ambassadors International, Inc. and Rogal America, Co.
as of December 31, 1997 and condensed pro forma combined
statement of operations for the year ended December 31,
1997.
<PAGE>
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 duly authorized.
AMBASSADORS INTERNATIONAL, INC.
Date: April 1, 1998 /s/John A. Ueberroth
-----------------------------------
John A. Ueberroth, President
<PAGE>
EXHIBIT 99.1
------------
ROGAL AMERICA, CO.
DECEMBER 31, 1997 AND 1996
TABLE OF CONTENTS
Independent Auditor's Report
Financial Statements
Balance Sheets
Statements of Income and Retained Earnings
Statements of Cash Flows
Notes to the Financial Statements
Supplemental Information
Independent Auditor's Report on Supplemental Information
Schedules of Operating Expenses
Schedules of Other Charges, Net
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Rogal America, Co.
We have audited the accompanying balance sheets of Rogal America, Co.
as of December 31, 1997 and 1996, and the related statements of income
and retained earnings and cash flows for the years then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Rogal
America, Co. as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity
with generally accepted accounting principles.
STARR, FINER, STARR LLP
Boston, Massachusetts
January 22, 1998
<PAGE>
ROGAL AMERICA, CO.
Balance Sheets as of December 31,
ASSETS
1997 1996
---------- ----------
CURRENT:
Cash and Cash Equivalents $ 270,636 $ 735,130
Accounts Receivable (NOTE C) 870,819 1,162,743
Prepaid Expenses 62,738 72,212
---------- ----------
Total Current Assets 1,204,193 1,970,085
---------- ----------
PROPERTY AND EQUIPMENT, at Cost (NOTE E) 706,835 570,872
Accumulated Depreciation 395,427 319,492
---------- ----------
311,408 251,380
---------- ----------
OTHER:
Deposits 29,159 34,673
Deferred Charges 5,277 --
---------- ----------
34,436 34,673
---------- ----------
$1,550,037 $2,256,138
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Current:
Current Portion of Long-Term Debt
(NOTE E) $ 22,832 $ --
Customer Deposits (NOTE D) 395,154 297,383
Accounts Payable 80,262 159,720
Taxes Payable 70,375 14,805
Other Accruals 238,768 258,398
---------- ----------
Total Current Liabilities 807,391 730,306
Long-Term Debt (NOTE E) 30,446 --
---------- ----------
837,837 730,306
---------- ----------
<PAGE>
ROGAL AMERICA, CO.
Balance Sheets as of December 31, Continued
1997 1996
---------- ----------
STOCKHOLDERS' EQUITY:
Capital Stock:
Common
Authorized 12,500 Shares, No Par
Issued 1,000 Shares 5,412 5,412
Retained Earnings 706,788 1,520,420
---------- ----------
712,200 1,525,832
---------- ----------
$1,550,037 $2,256,138
========== ==========
COMMITMENTS AND CONTINGENCIES (NOTE F)
See accompanying notes to the financial statements.
<PAGE>
ROGAL AMERICA, CO.
Statements of Income and Retained Earnings
for the Years Ended December 31,
1997 1996
---------- ----------
COMMISSIONS AND REGISTRATION FEES $6,905,066 $6,642,134
OPERATING EXPENSES 5,087,607 4,800,634
---------- ----------
PROFIT FROM OPERATIONS 1,817,459 1,841,500
OTHER (CHARGES), NET (114,997) (17,044)
---------- ----------
NET INCOME 1,702,462 1,824,456
RETAINED EARNINGS-at Beginning 1,520,420 1,336,220
DISTRIBUTION TO STOCKHOLDER (2,516,094) (1,640,256)
---------- ----------
RETAINED EARNINGS-at End $ 706,788 $1,520,420
========== ==========
See accompanying notes to the financial statements.
<PAGE>
ROGAL AMERICA, CO.
Statements of Cash Flows
for the Year Ended December 31,
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,702,462 $1,824,456
---------- ----------
Adjustments to Reconcile Net Income to
Net Cash Provided from Operating Activities:
Depreciation and Amortization 97,191 87,228
Abandonment of Leasehold Improvements 27,975 --
(Gain)/Loss on Disposal of Equipment (2,000) 4,036
Changes in Assets and Liabilities:
(Increase)/Decrease in:
Accounts Receivable 276,249 143,249
Prepaid Expenses 9,474 (44,212)
Deferred Charges (6,090) --
Increase/(Decrease) in:
Customer Deposits 97,771 23,635
Accounts Payable (79,458) (36,374)
Taxes Payable 55,570 (23,195)
Other Accruals (19,630) (199,387)
---------- ----------
Total Adjustments 457,052 (45,020)
---------- ----------
Net Cash Provided from Operating Activities 2,159,514 1,779,436
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property and Equipment (184,381) (30,138)
Decrease in Advances to Employees and Others 15,675 5,748
Decrease/(Increase) in Deposits 5,514 (24,260)
Proceeds from Sale of Assets 2,000 23,956
---------- ----------
Net Cash (Used in) Investing Activities (161,192) (24,694)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to Stockholder (2,516,094) (1,640,256)
Additions to Long-Term Debt 68,500 --
Repayment of Long-Term Debt (15,222) --
---------- ----------
Net Cash (Used in) Financing Activities (2,462,816) (1,640,256)
---------- ----------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (464,494) 114,486
CASH -at Beginning 735,130 620,644
---------- ----------
CASH -at End $ 270,636 $ 735,130
========== ==========
SUPPLEMENTAL DISCLOSURE:
Interest Paid $ 20,976 $ 19,606
Taxes Paid $ 65,089 $ 27,100
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
ROGAL AMERICA, CO.
Notes to the Financial Statements as of December 31, 1997 and 1996
NOTE A - NATURE OF ORGANIZATION
Rogal America Company, a Massachusetts business trust organized
October 26, 1997 (formerly Rogal America, Inc., a Massachusetts
corporation organized November 20, 1980) provides hotel front desk and
booking services for convention attendees in North America.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS. The Company considers all highly liquid debt
instruments purchased with an original maturity of three months or
less to be cash equivalents.
PROPERTY AND EQUIPMENT. The cost of property and equipment and
estimated service lives used in computing depreciation is as follows:
SERVICE
YEARS 1997 1996
-------- -------- --------
Furniture and Equipment 5-7 $669,707 $531,343
Leasehold Improvements 5-31 1/2 37,128 39,529
-------- --------
$706,835 $570,872
======== ========
For financial statement purposes, depreciation and amortization have
been computed on the straight-line method. Depreciation and
amortization charged to operations totaled $96,378 and $87,228 in 1997
and 1996, respectively.
Maintenance, repairs and minor renewals are charged to income as
incurred. Assets sold or otherwise disposed of and the accumulated
depreciation applicable thereto have been eliminated from the accounts
and the resultant gains or losses have been taken up in income.
DEFERRED CHARGES. Represents costs incurred in connection with
acquisition of lease for office space, amortized over the term of the
lease, net of accumulated amortization of $813.
RETIREMENT PLAN. The Company has a 401(k) savings plan for the
benefit of eligible employees. Contributions are at the discretion of
the Board of Directors. Contributions charged to operations totaled
$-0- in each of 1997 and 1996.
<PAGE>
ROGAL AMERICA, CO.
Notes to the Financial Statements as of December 31, 1997 and 1996
(Continued)
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INCOME TAXES. The Company has elected to file its Federal income tax
return as a Small Business Corporation under Subchapter S of the
Internal Revenue Code of 1986. The Company is required to pay a
Massachusetts income tax based upon its net income. The stockholders
are liable for Federal income taxes on the Company's income and
Massachusetts income taxes except for the period from October 26, 1997
through December 31, 1997.
CONCENTRATION OF CREDIT RISK.
a) CASH. The Company maintains its cash accounts in several
financial institutions. At times, balances may exceed federally
insured limits. The Company has not experienced any losses in
such account.
b) ACCOUNTS RECEIVABLE. Concentration of credit risk with respect to
trade accounts receivable is limited due to strict credit controls
and the large number of customers comprising the Company's
customer base.
USE OF ESTIMATES. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
CHANGES IN PRESENTATION. Certain amounts in the financial statements
for the year ended December 31, 1996 have been reclassified to conform
to the current year presentation.
NOTE C - ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
1997 1996
---------- ----------
Trade $ 806,969 $1,146,993
Employees and Other 75 15,750
Refundable State Tax 49,375 --
Related Party 14,400 --
---------- ----------
$ 870,819 $1,162,743
========== ==========
<PAGE>
ROGAL AMERICA, CO.
Notes to the Financial Statements as of December 31, 1997 and 1996
(Continued)
NOTE D - CUSTOMER DEPOSITS
Represents amounts received from convention attendees for deposits on
reservations not yet turned over to the participating hotels.
NOTE E - LONG-TERM DEBT AND CREDIT FACILITIES
LONG-TERM DEBT.
1997 1996
------- ------
Promissory note in the original amount of $68,500,
collateralized by certain equipment, payable in
equal monthly principal installments of $1,903
through April 30, 2000 with interest payable at
1/4% above the lender's prime rate. $53,278 $ --
Less-current portion 22,832 --
------- ------
$30,446 $ --
======= ======
Annual maturities of Long-Term Debt are as follows:
YEAR AMOUNT
1998 $22,836
1999 22,836
2000 7,606
-------
$53,278
=======
LINE OF CREDIT. The Company has a revolving loan agreement expiring
August 30, 1998 whereby it may borrow the lesser of 80% of eligible
accounts receivable plus $250,000, or $800,000 with interest at 1%
above the lender's prime rate. At December 31, 1997 and 1996, the
entire line of credit was unused.
The revolving loan agreement contains the following covenants:
a. Security interest in all corporate assets.
b. Guarantee by the sole stockholder.
c. Maintaining a certain tangible net worth.
d. Limit on amounts distributed to sole stockholder.
<PAGE>
ROGAL AMERICA, CO.
Notes to the Financial Statements as of December 31, 1997 and 1996
(Continued)
NOTE E - LONG-TERM DEBT AND CREDIT FACILITIES, CONTINUED
OTHER DISCLOSURE:
Interest charges on all debt included in operations totaled $20,976
and $19,606 in 1997 and 1996 respectively.
NOTE F - COMMITMENTS AND CONTINGENCIES
OPERATING LEASES. The Company leases office facilities, motor
vehicles and equipment expiring at various dates through April 1,
2002.
Annual minimum future rental payments under the non-cancelable lease
agreements are as follows:
YEAR AMOUNT
---- --------
1998 $240,984
1999 195,016
2000 173,303
2001 171,960
2002 42,990
--------
$824,253
========
The Company is obligated under a five year lease agreement for office
facilities in Watertown, Massachusetts. Provisions of the lease
agreement include (1) annual base rental of $171,960 (2) payment of
certain operating costs and real estate taxes and (3) one five year
extension option.
Rentals charged to operations totaled $237,933 and $246,500 in 1997
and 1996, respectively.
NOTE G - RELATED PARTY TRANSACTIONS
Accounts receivable includes $14,400 due from a related company at
December 31, 1997 and accounts payable includes $91,268 due to the
related company at December 31, 1996.
<PAGE>
ROGAL AMERICA, CO.
Notes to the Financial Statements as of December 31, 1997 and 1996
(Continued)
NOTE H - SUBSEQUENT EVENT
Management of the company is negotiating with Ambassadors
International, Inc. (Ambassadors) for the sale of certain assets. The
agreement is to be effective February 1, 1998 and requires payment of
approximately $9.5 million dollars in cash and shares of Ambassadors
common stock.
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTAL INFORMATION
Board of Directors
Rogal America, Co.
Our report on our audit of the basic financial statements of Rogal
America, Co. for the year ended December 31, 1997 and 1996 appears on
Page 1. That audit was conducted for the purpose of forming an
opinion on the basic financial statements taken as a whole. The
supplemental schedules are presented for purposes of additional
analysis and are not a required part of the basic financial
statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
STARR, FINER, STARR LLP
Boston, Massachusetts
January 22, 1998
<PAGE>
ROGAL AMERICA, CO.
Schedules of Operating Expenses for the Year Ended December 31,
1997 1996
---------- ----------
Officer's Salary $ 150,681 $ 150,000
Other Salaries and Wages 2,126,816 2,013,089
Payroll Taxes 236,844 206,709
Group Insurance 126,487 115,256
Employee Relations 25,813 24,557
Training 7,460 4,780
Recruiting 28,278 14,746
Temporary Help 126,023 112,582
Commissions 116,430 177,346
On Site Costs 304,846 282,143
Professional Services 148,717 109,195
Rent and Utilities 255,150 220,647
Computer Supplies and Maintenance 50,742 36,495
Communications 415,653 457,223
Postage 92,675 155,501
Equipment Rental 53,560 46,231
Consulting 144,330 9,908
Printing and Office Supplies 118,785 117,341
Automobile Maintenance 55,938 65,134
Insurance 36,945 28,729
Dues and Subscriptions 14,285 17,292
Bank and Payroll Fees 13,876 11,319
Travel and Entertainment 247,742 250,200
Consumer Adjustments 18,046 31,656
Taxes 74,294 55,327
Depreciation and Amortization Provided 97,191 87,228
---------- ----------
$5,087,607 $4,800,634
========== ==========
Schedules of Other Charges, Net for the Year Ended December 31,
1997 1996
---------- ----------
Other Charges:
Donations $ 6,764 $ 12,446
Interest Costs 20,976 19,606
Abandonment of Leasehold Improvements 27,975 --
Relocation 78,106 --
---------- ----------
133,821 32,052
---------- ----------
Other Income:
Interest Earned 16,824 19,044
Gain/(Loss) on Disposal of Equipment 2,000 (4,036)
---------- ----------
18,824 15,008
---------- ----------
$ 114,997 $ 17,044
========== ==========
<PAGE>
EXHIBIT 99.2
------------
CONDENSED PRO FORMA COMBINED FINANCIAL INFORMATION
The following condensed pro forma combined balance sheet and condensed
pro forma combined statement of operations collectively, the "Pro
Forma Financial Statements" were prepared by Ambassadors
International, Inc. ("Ambassadors") to illustrate the estimated
effects of the business combination to be accounted for as a purchase
under generally accepted accounting principles. Accordingly, the
financial information of Ambassadors and Rogal America, Co.
("Rogal") has been combined as if the acquisition occurred on
January 1, 1997 for purposes of the condensed pro forma combined
statement of operations, and as of December 31, 1997, for purposes of
the condensed pro forma combined balance sheet. There are no
differences between Ambassadors' and Rogal's accounting policies which
are expected to have a material impact on the pro forma combined
financial statements. The Pro Forma Financial Statements do not
purport to represent what the combined financial position or results
of operations would have been if the combination had occurred at the
beginning of the period or to project the combined financial position
or results of operations for any future date or period.
The Pro Forma Financial Statements should be read in conjunction with
the historical consolidated financial statements, including the notes
thereto, of Ambassadors, which are included in Ambassadors' Form 10-K
for the year ended December 31, 1997 and of Rogal, which are included
elsewhere in this document.
The Pro Forma Financial Statements are presented utilizing the
purchase method of accounting whereby the excess of the total purchase
price over the fair value of the assets acquired and liabilities
assumed of Rogal is recorded as goodwill. The combined pro forma
results of operations presented herein are not necessarily indicative
of the future results of operations.
<PAGE>
Condensed Pro Forma Combined Balance Sheet
December 31, 1997
<TABLE>
<CAPTION>
Ambassadors Rogal Pro Forma Pro Forma
Historical Historical Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $22,870,546 $ 270,636 $(6,375,482) (A) $16,765,700
Restricted cash 125,000 -- -- 125,000
Accounts receivable 1,753,369 870,819 (870,819) (B) 1,753,369
Inventory 76,033 -- -- 76,033
Prepaid program costs and
expenses 2,004,995 62,738 -- 2,067,733
Deferred income taxes 31,229 -- -- 31,229
Other assets 422,096 -- -- 422,096
----------- ----------- ----------- -----------
Total current assets 27,283,268 1,204,193 (7,246,301) 21,241,160
Property and equipment, net 2,148,305 311,408 -- 2,459,713
Other investments 462,500 -- -- 462,500
Goodwill 4,247,219 -- 8,544,696 (C) 12,791,915
Covenant-not-to-compete 195,515 -- -- 195,515
Other assets 85,573 34,436 -- 120,009
Deferred income taxes 26,608 -- -- 26,608
----------- ----------- ----------- -----------
Total assets $34,448,988 $ 1,550,037 $ 1,298,395 $37,297,420
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current liabilities:
Accounts payable $ 1,616,120 $ 80,262 $ (80,262) (B) $ 1,616,120
Accrued expenses 724,008 309,143 (309,143) (B) 724,008
Participants' deposits 7,397,924 395,154 -- 7,793,078
Customer advances 980,834 -- -- 980,834
Notes payable, current
portion 171,241 22,832 -- 194,073
Unrealized loss on foreign
currency exchange contracts 674,625 -- -- 674,625
----------- ----------- ----------- -----------
Total current liabilities 11,564,752 807,391 (389,405) 11,982,738
Notes payable due after one year 328,696 30,446 -- 359,142
----------- ----------- ----------- -----------
Total liabilities 11,893,448 837,837 (389,405) 12,341,880
----------- ----------- ----------- -----------
SHAREHOLDERS' EQUITY:
Common stock 67,682 5,412 (4,010) (A) 69,084
Additional paid-in capital 13,760,963 -- 2,398,598 (A) 16,159,561
Retained earnings 8,726,895 706,788 (706,788) 8,726,895
----------- ----------- ----------- -----------
Total shareholders'
equity 22,555,540 712,200 1,687,800 24,955,540
----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $34,448,988 $ 1,550,037 $ 1,298,395 $37,297,420
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this condensed
pro forma combined balance sheet.
<PAGE>
NOTES TO CONDENSED PRO FORMA COMBINED BALANCE SHEET
The following adjustments were made to reflect the combination of
Ambassadors and Rogal America, Co. as if it occurred December 31,
1997:
(A) Certain assets were acquired and liabilities were assumed of Rogal
America, Co. for a total purchase price of $6,500,000 cash and
140,187 shares of common stock. The fair value of the common
stock was determined to be $2,400,000 by an independent valuation.
The value represented a 20% discount from the quoted market price
on February 5, 1998 due to the restricted nature of the stock.
(B) These assets and liabilities of Rogal were not acquired by
Ambassadors.
(C) Goodwill was recorded for the excess of the purchase price over
the fair value of the assets acquired and liabilities assumed of
Rogal America, Co. as follows:
Total purchase price $8,900,000
Fair value of assets acquired (803,736)
Fair value of liabilities assumed 448,432
----------
$8,544,696
==========
<PAGE>
Condensed Pro Forma Combined Statement of Income
for the year ended December 31, 1997
<TABLE>
<CAPTION>
Ambassadors Rogal Pro Forma Pro Forma
Historical Historical Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $26,540,897 $ 6,905,066 $ -- $33,445,963
----------- ----------- ----------- -----------
Operating expenses:
Selling and tour promotion 9,825,916 2,216,888 -- 12,042,804
General and administrative 8,210,378 2,870,719 427,235 (A) 11,508,332
----------- ----------- ----------- -----------
18,036,294 5,087,607 427,235 23,551,136
----------- ----------- ----------- -----------
Operating income 8,504,603 1,817,459 (427,235) 9,894,827
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (9,535) (20,976) -- (30,511)
Interest and dividend income 1,588,408 16,824 -- 1,605,232
Realized and unrealized loss
on investments (1,101,526) -- -- (1,101,526)
Other, net 647 (110,845) -- (110,198)
----------- ----------- ----------- -----------
477,994 (114,997) -- 362,997
----------- ----------- ----------- -----------
Income before income taxes 8,982,597 1,702,462 (427,235) 10,257,824
Income tax provision 3,345,465 -- 433,577 3,779,042
----------- ----------- ----------- -----------
Net income $ 5,637,132 $ 1,702,462 $ (860,812)(B) $ 6,478,782
=========== =========== =========== ===========
Net income per share - basic $ 0.83 $ 0.25 $ 0.94
=========== =========== ===========
Shares used in pro forma
calculation - basic 6,759,541 6,759,541 6,899,728
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this condensed
pro forma combined statement of operations.
<PAGE>
NOTE TO CONDENSED PRO FORMA STATEMENT OF OPERATIONS
The following adjustments were made to reflect the combination of
Ambassadors and Rogal America, Co. as if it occurred on January 1,
1997. The combined pro forma results of operations presented herein
are not necessarily indicative of the future results of operations of
the combined companies.
(A) The amortization of goodwill associated with the Rogal business
combination on a straight-line basis over 20 years.
(B) Rogal was an S Corporation for federal income tax purposes.
Therefore, for the year ended December 31, 1997, federal income
taxes were paid by the shareholder and not recorded on the Rogal
statement of income. A pro forma adjustment was made to record
federal income tax provision at the statutory corporate income
tax rate for the Rogal historical income and the effect of the
goodwill amortization.
<PAGE>
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 duly authorized.
AMBASSADORS INTERNATIONAL, INC.
Date: April 1, 1998 /s/John A. Ueberroth
-----------------------------------
John A. Ueberroth, President
<PAGE>
