Ambassadors International, Inc. Reports Increased Revenue and Improvement in Pretax Results for the First Quarter 2008

NEWPORT BEACH, Calif., May 5 /PRNewswire-FirstCall/ -- Ambassadors International, Inc. reported revenue of $56.8 million for the three months ended March 31, 2008, compared to $32.9 million, for the three months ended March 31, 2007, an increase of $24.0 million. Loss before benefit for income taxes for the three months ended March 31, 2008 decreased to $12.1 million from $14.3 million for the three months ended March 31, 2007, an improvement of $2.2 million.

For the three months ended March 31, 2008, the Company only reported a tax benefit of $0.1 million due its policy established in the fourth quarter of 2007 in which the Company records a valuation allowance equal to 100% of its domestic deferred tax assets. This is in contrast to the 39.9% effective tax rate used in the first quarter of 2007 which resulted in a tax benefit of $5.7 million. As a result, the Company reported a net loss of $12.0 million, or $1.10 per diluted share for the three months ended March 31, 2008, compared to a net loss of $8.6 million, or $0.77 per diluted share, for the three months ended March 31, 2007. Adjusting for the effects of the valuation allowance, the Company would have recorded a tax benefit of $0.2 million for the quarter ended March 31, 2007. On a comparable year-over-year basis, adjusting for the effects of the valuation allowance, net loss for the three months ended March 31, 2007 would have been $14.1 million or $1.27 per diluted share compared to net loss of $12.0 million or $1.10 per diluted share for the three months ended March 31, 2008, an improvement by $2.1 million or $0.17 per diluted share.

Comparison of First Quarter Results

Revenues in the first quarter of 2008 were $56.8 million compared to $32.9 million in the first quarter of 2007, an increase of $24.0 million. Cruise revenues increased $18.6 million primarily due to $19.4 million of additional revenue generated from Windstar Cruises which was acquired in April 2007. Marine revenues increased $5.9 million over the first quarter of 2007 as a result of an increase in sales in Bellingham Marine, the Company's marina construction business. Our travel, incentive and event related revenue increased $0.2 million primarily due to an increase in program volume. These increases in revenue were slightly offset by a decrease in insurance premiums earned of $0.6 million due to a decrease in premiums earned on existing insurance programs as a result of not entering into any new programs in 2008.

Costs and operating expenses were $68.1 million in the first quarter of 2008, an increase of $21.6 million from the first quarter of 2007. This increase was primarily due to cruise operating expenses and other selling, general and administrative and depreciation expenses associated with our cruise segment. Approximately $19.1 million of this increase was due to the addition of expenses associated with Windstar Cruises which was acquired in April 2007. In addition, cost and expenses in our marine division increased $5.1 million in the first quarter of 2008 compared to the same period in the prior year primarily due to the increase in cost of marine revenue resulting from increased revenues generated during the period.

We reported other expense for the quarter ended March 31, 2008 of $0.8 million compared to $0.6 million for the three months ended March 31, 2007. Other income (expense) for the quarter ended March 31, 2008 included $1.1 million in interest expense related to our convertible debt and $1.0 million in interest expense related to our ship financing, partially offset by insurance recoveries of $0.6 million for the Queen of the West and the Empress of the North related to incidents in 2006 and 2007, respectively, and $0.2 million in recovery from a marine group contract that was written off in 2007.

  First Quarter Results and Statistics by Segment

  Cruise

                                     Three Months        Three Months
                                 Ended March 31, 2008  Ended March 31, 2007
                                  Majestic  Windstar    Majestic  Windstar*
                                       (unaudited)        (unaudited)
  Statistical Information:
    Sailing days                       47       259         79     N/A
    Passengers Carried              1,934     7,221      3,055     N/A
    Occupancy Percentage             74.9%     94.9%      82.2%    N/A
    Passenger Cruise Days          12,696    50,547     17,964     N/A
    APCD                           16,943    53,256     21,858     N/A
    APD                              $295      $257       $251     N/A



                                     Three Months          Three Months
                                 Ended March 31, 2008  Ended March 31, 2007
                                  Majestic  Windstar    Majestic  Windstar*
                                      (unaudited)          (unaudited)

    Revenue                         $4,371  $19,386     $5,202     N/A
    Operating Income (Loss)        (11,674)     281    (12,542)    N/A

  * Windstar was acquired in April 2007.