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.

Statements contained in this Quarterly Report on Form 10-Q, which are not historical in nature, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements include, without limitation, statements in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, regarding matters which are not historical fact, including our intent, belief or current expectations of our company or our officers with respect to, among other things, trends in the travel industry, business and growth strategies, use of technology, ability to integrate acquired businesses, future actions, future performance or results of operations, and the outcome of contingencies such as legal proceedings.

Forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from anticipated results. These risks and uncertainties include factors affecting the travel and education industry generally, competition, dependence on key personnel and vendor relationships, our ability to successfully integrate the operations of existing or acquired companies, and a variety of factors such as conflict in the Middle East, periods of international unrest, the outbreak of disease, changes in the direct-mail environment, protection of intellectual rights, unidentified taxation exposure, recession, weather conditions and concerns for passenger safety that could cause a decline in travel demand, as well as the risk factors, and other factors as may be identified from time to time in our SEC filings or in our press releases. For a more complete discussion of these risks, please refer to Item 1A Risk Factors disclosure in our Annual Report on Form 10-K filed on March 12, 2009 and those factors set forth under Part II, Item 1A Risk Factors set forth in this Quarterly Report on Form 10-Q. 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.

Executive Overview

We are a leading educational company that (1) organizes and promotes worldwide travel programs for students, athletes and professionals and (2) provides over 8 million pages of online research content.

People to People Ambassador Programs provide worldwide travel programs for youth, student leaders and professionals. Youth travel programs provide opportunities for grade school, middle school and high school students to learn about the history, government, economy and culture of the foreign and domestic destinations they visit, as well as for middle and high school athletes to participate in international sports challenges. Our student leader programs provide educational opportunities for middle school and high school students to learn leadership, government, college admissions and community involvement skills at domestic destinations. Our professional programs emphasize meetings and seminars between delegates and persons in similar professions abroad. Discovery Student Adventures provide adventure based travel packages for students, kindergarten through twelfth grade, to destinations outside of North America.

The BookRag's website, www.bookrags.com, is an educational website that attracts millions of users each month. Students and teachers are able to "research anything" through over 8 million pages of content, including BookRags-created material, licensed material, user-generated content, and other third party content. This acquisition, which aligns with our mission of bridging cultural and political borders through education, is a thriving young business and is a complementary revenue stream to the seasonal nature of the student travel industry. Its key website metrics, including but not limited to, monthly page views, website visitors, and unique users, have had year over year double digit growth rates. This acquisition was made for the purpose of owning a business that attracts millions of similar customers, however, we do not expect this business to perform at the level of our travel programs. We expect BookRags to continue to be profitable as it is still in its growth phase. We believe its revenues and earnings will be negatively impacted by the current economic conditions, but not to the extent of our educational travel business.

Because our operating results depend primarily on income from our travel programs, acquisition and retention costs influence our operating results. Additionally, the level of expenses required to promote and operate our programs will impact our operating results. The seasonality of our business is always a consideration, as the majority of our travel programs occur in June and July of each year, complimented by the majority of our content sales, which we expect to occur during the school year, from September to June. We have historically earned more than 80 percent of our annual revenues in the second and third quarters, which we anticipate will continue for the foreseeable future. Historically these seasonal revenues have more than offset operating losses incurred during the rest of the year.

For 2009, our focus is targeted at the following: increase net enrollments; improve margin through effective program cost management; maximize utilization of cash; develop our websites; improve brand recognition; investigate growth opportunities; manage expenses; and increase efficiency through improved business processes and automation. We will continue to seek opportunities to improve our performance and add complementary revenue streams, such as the contract we signed with Discovery Education, Inc. during the first quarter of 2009. Please see "2009 Net Enrollments" below for further discussion on our 2009 outlook on delegate registrations.

Results of Operations

The following table sets forth the consolidated financial results and change in
dollars and percentages for the periods indicated:

Comparison of the Three Months Ended June 30, 2009 to the Three Months Ended
June 30, 2008

                                                 Three Months Ended June 30,
                                        2009         2008        $ Change      % Change
Total revenue                         $ 46,176     $ 42,286     $    3,890             9 %
Cost of goods sold                       5,884        5,569            315             6 %
Gross margin                            40,292       36,717          3,575            10 %
Selling and marketing                    9,258        8,875            383             4 %
General and administrative expenses      3,303        3,168            135             4 %
Operating income                        27,731       24,674          3,057            12 %
Other income                               574          905           (331 )         (37 )%
Income before tax                       28,305       25,579          2,726            11 %
Income tax provision                     9,126        8,395            731             9 %
Net income                            $ 19,179     $ 17,184     $    1,995            12 %

During the quarter ended June 30, 2009, we traveled 15,995 delegates, a decrease of 11 percent from 17,885 delegates during the comparable 2008 quarter. In the second quarter of 2009, total revenue increased $3.9 million to $46.2 million from $42.3 million in the second quarter of 2008. Gross margin increased to $40.3 million in the second quarter of 2009 compared to $36.7 million in the second quarter in 2008. The increase in revenue is primarily due to higher program prices, which was driven by inflated prices in the travel industry in 2008, the result of high fuel prices and increased demand. Increased gross margin resulted from the global economic slowdown beginning in late 2008, that reduced travel demand and supplier prices, enabling us to purchase our travel components at more favorable than expected prices. In addition, including a full quarter of BookRags' results plus its year-over-year growth, increased second quarter revenue and gross margin in 2009 to $0.8 million and $0.7 million, respectively. In 2008, these same numbers in the second quarter were $0.3 million in gross revenue and $0.3 million in gross margin.

Other income consisted primarily of interest income generated by our cash, cash equivalents and available-for-sale securities. We realized interest and dividend income of $0.6 million in the quarter ended June 30, 2009, compared to $0.9 million in the quarter ended June 30, 2008. The decrease in interest and dividend income is due to lower prevailing interest rates and an increased investment in money market accounts as a percent of the total investment portfolio in comparison to the same period one year ago.

The income tax provision has been recorded based on a 33.5 percent estimated annual effective income tax rate, applied to the pre-tax income for the quarters ended June 30, 2009 and 2008. The difference from the statutory rate of 35 percent is primarily due to tax exempt interest income earned during the periods.

Comparison of the Six Months Ended June 30, 2009 to the Six Months Ended June

30, 2008

                                                  Six Months Ended June 30,
                                        2009         2008       $ Change      % Change
Total revenue                         $ 56,182     $ 50,166     $   6,016            12 %
Cost of goods sold                      10,609        9,979           630             6 %
Gross margin                            45,573       40,187         5,386            13 %
Selling and marketing                   18,130       18,269          (139 )          (1 )%
General and administrative expenses      6,672        6,156           516             8 %
Operating income                        20,771       15,762          5009            32 %
Other income                               127        1,808        (1,681 )         (93 )%
Income before tax                       20,898       17,570         3,328            19 %
Income tax provision                     6,973        5,860         1,113            19 %
Net income                            $ 13,925     $ 11,710     $   2,215            19 %

During the six months ended June 30, 2009, we traveled 19,487 delegates, a decrease of 8 percent from 21,250 delegates during the same period one year ago. In the first six months of 2009, total revenue increased $6.0 million to $56.2 million from $50.2 million in the first six months of 2008. Gross margin increased to $45.6 million in the six months ended June 30, 2009 compared to $40.2 million in the six months ended June 30, 2008. The increase in revenue and gross margin is primarily due to traveling fewer delegates at lower costs during the first six months of 2009 compared to the same period in 2008. In addition, BookRags' year-over-year growth, as well as including their results for the full six months of 2009, led to revenue and gross margin of $1.7 million and $1.5 million, respectively. For the comparable period in 2008, BookRags reported $0.3 million of revenue and gross margin.

Selling and marketing expenses were $18.1 million and $18.3 million during the first six months of 2009 and 2008, respectively. The $0.1 million decrease was primarily due to a $0.1 million decline in marketing activities compared to the same period one year ago, a $0.2 million savings in personnel costs and offset by a $0.2 million increase in depreciation expense. General and administrative expenses were $6.7 million and $6.2 million during the first six months of 2009 and 2008, respectively. The $0.5 million increase was due to a $0.6 million increase in legal and professional fees, and a $0.2 million increase in depreciation expense, which was offset by $0.4 million reductions in personnel costs.

The income tax provision has been recorded based on a 33.5 percent estimated annual effective income tax rate, applied to the pre-tax income for the six months ended June 30, 2009 and 2008. The difference from the statutory rate of 35 percent is primarily due to tax exempt interest income earned during the periods.

Results of Operations by Segment

With the acquisition of BookRags on May 15, 2008, we changed from having one reporting segment to having two reporting segments, consisting of (1) Travel Programs and Other, which provides educational travel services to students, professionals and athletes through multiple itineraries within five travel program types, and (2) BookRags, an internet research site housing content sales and advertising revenue.

Our travel programs' gross margin is comprised of gross receipts less direct program costs, including accommodation, transportation, speakers, facilitators, and event costs. BookRags' gross margin is comprised of content, subscription, and advertising revenues via www.bookrags.com, less commissions and amortization of intangible assets directly associated with sales.

Segment results of operations for the three and six months ended June 30, 2009 and 2008 are as follows (in thousands):

                                 Three months ended June 30, 2009                      Three months ended June 30, 2008
                           Travel                                                 Travel
                          Programs            Book                               Programs             Book
                         and Other          Rags (1)         Consolidated       and Other           Rags (1)      Consolidated
Total revenue           $     45,361       $       815      $       46,176     $     41,968       $      318     $     42,286
Gross margin                  39,568               724              40,292           36,406              311           36,717
Selling and marketing          9,124               134               9,258            8,815               60            8,875
General and
administrative
expenses                       3,204                99               3,303            3,111               57            3,168
Operating income              27,240               491              27,731           24,480              194           24,674
Other income                     574                 -                 574              900                5              905
Income before tax             27,814               491              28,305           25,380              199           25,579
Income tax provision           8,959               167               9,126            8,329               66            8,395




                                  Six months ended June 30, 2009                         Six months ended June 30, 2008
                           Travel                                                 Travel
                        Programs and           Book                            Programs and            Book
                            Other            Rags (1)        Consolidated          Other             Rags (1)       Consolidated
Total revenue           $      54,494       $     1,688     $       56,182     $      49,848       $       318     $     50,166
Gross margin                   44,074             1,499             45,573            39,876               311           40,187
Selling and marketing          17,807               323             18,130            18,209                60           18,269
General and
administrative
expenses                        6,492               180              6,672             6,099                57            6,156
Operating income               19,775               996             20,771            15,568               194           15,762
Other income                      126                 1                127             1,803                 5            1,808
Income before tax              19,901               997             20,898            17,371               199           17,570
Income tax provision            6,639               334              6,973             5,794                66            5,860
Net income              $      13,262       $       663     $       13,925     $      11,577       $       133     $     11,710

See 'Results of Operations' above for a discussion of year over year variances for Travel Programs and details regarding the portion that was contributed by BookRags.

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.

2009 Net Enrollments

Net enrollments consist of all individuals traveled year to date, plus those actively enrolled for future travel. As of July 20, 2009, we had 34,657 net enrolled participants for our 2009 travel programs, compared to 42,667 net enrolled participants as of the same date last year for our 2008 travel programs. The decrease in net enrollments for our 2009 programs, which we believe is primarily caused by current economic conditions, a decline in consumer confidence and an increase in the unemployment rate, will impact our 2009 results, however, not to the degree we originally expected. Better than anticipated results are due to increased retention rates higher than originally anticipated, program cost savings through vendor negotiations, and continued expense management. However, there is no assurance that these results will continue.

Deployable Cash

Deployable cash is a non-GAAP liquidity measure. Deployable cash is 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. See the 'Liquidity' section below for explanations of cash
sources and uses.
Deployable Cash Reconciliation (in thousands)
                                                            June 30,               December 31,
                                                      2009            2008             2008

Cash, cash equivalents and short-term
available-for-sale securities                        $ 109,485     $   99,814     $       74,425
Prepaid program cost and expenses                       39,843         54,829              4,160
Less: Participants' deposits                           (83,531 )     (100,610 )          (44,166 )
Less: Accounts payable/accruals/other liabilities      (22,367 )      (22,186 )           (4,473 )
Deployable cash                                      $  43,430     $   31,847     $       29,946

Free Cash Flow

Free cash flow is a non-GAAP cash flow measure. Free cash flow is calculated as cash flow from operations less purchase of property, plant, equipment and intangibles. Management believes this non-GAAP measure is useful to investors in understanding the cash generated within the current period for future use in operations. Free cash flow per share is calculated as free cash flow divided by weighted average shares outstanding at period end.

                                                Six months ended June 30,
                                                   2009               2008
Cash flow from operations as reported        $          39,777     $   38,649
Purchase of property, plant, equipment and
intangibles                                            (2,851)        (4,581)
Free cash flow                               $          36,926     $   34,068
Weighted average shares outstanding -
diluted                                                 19,315         19,800
Free cash flow per share                     $            1.91     $     1.72

Liquidity

At June 30, 2009, we had $109.5 million of cash, cash equivalents and short-term available-for-sale securities, including program participant funds of $83.5 million. At June 30, 2008, we had $99.8 million of cash, cash equivalents and short-term available-for-sale securities, including program participant funds of $100.6 million.

Net cash provided by operations for the six months ended June 30, 2009 and 2008 was $39.8 million and $38.6 million, respectively. The increased cash flow from operations was primarily related to $15.5 million less in prepaid program costs for future travel programs, a $2.2 million increase in earnings, and a $1.0 million loss on foreign currency contracts, offset by $18.5 million reduced participant deposits.

Net cash used in investing activities was $22.2 million and $26.6 million for the six months ended June 30, 2009 and 2008, respectively. The decrease is primarily due to an $8.7 million decline in cash paid for BookRags in 2008, offset by a $3.7 million increase in cash used to purchase available-for-sale securities.

Net cash used in financing activities for the six months ended June 30, 2009 and 2008 was $2.4 million and $10.8 million, respectively. The net change in financing activities is primarily related to the change in stock repurchases and dividend payments. We repurchased $0.4 million of our Common Stock, or approximately 57,000 shares, during the first six months of 2009 in comparison to $6.5 million of stock repurchases, or approximately 416,400 shares, during the first six months of 2008. During the first six months of 2009 and 2008, we paid $2.3 million and $4.4 million, respectively, in cash dividends to our shareholders.

Capital Resources

Our business is not capital intensive. However, we do retain funds for operating purposes in order to conduct sales and marketing efforts for future programs.

During the first six months of 2009, we had an unused line of credit in the amount of $20.0 million. The line of credit covenants include deployable cash greater than zero, tangible net worth greater than $40.0 million and net income after taxes for the current and previous three quarters of greater than $4.0 million. At June 30, 2009, we were in compliance with all covenants. Additionally, we have no plans to draw any of these funds in the immediate future.

We continue to consider acquisitions of educational, travel and youth businesses that may require the use of cash and cash equivalents. No such acquisitions are currently pending and no assurance can be given that definitive agreements for any such acquisitions will be entered into, or, if they are entered into, that they will be on terms favorable to us.

We do not have any material capital expenditure commitments for 2009, not already presented within our June 30, 2009 financial statements. We believe that existing cash and cash equivalents and cash flows from operations will be sufficient to fund our anticipated operating needs and capital expenditures through 2009. For a more complete discussion of these and other contractual factors, please refer to our consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K filed on March 12, 2009.

Market Risk

Financial Instruments

We classify our marketable debt investments as available-for-sale securities, which are carried at fair value. Estimated fair values have been determined in compliance with SFAS 157. Unrealized gains and losses on available-for-sale securities are excluded from operations and reported as accumulated other comprehensive income, net of deferred income taxes. Realized gains and losses on the sale of available-for-sale securities are recognized on a specific identification basis in the statement of operations in the period the investments are sold.

We evaluate investment securities for other-than-temporary declines in fair value on a quarterly basis. If the fair value of investment securities falls . . .