UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-K/A
                                (Amendment No. 1)

     (Mark One)
     [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 1997  
                      
                                       OR
     [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from              to 
                                         ------------    ------------.

                         Commission file number: 0-26420
                                                 -------

                         AMBASSADORS INTERNATIONAL, INC.
                         -------------------------------
             (Exact Name of Registrant As Specified In Its Charter)

                  Delaware                       91-1688605
      --------------------------------    ------------------------
       (State or Other Jurisdiction of        (I.R.S. Employer
       Incorporation or Organization)       Identification  No.)

        Dwight D. Eisenhower Building
            110 S. Ferrall Street
                Spokane, WA                         99202
     ---------------------------------    ------------------------
            (Address of Principal                (Zip Code)
             Executive Offices)

     Registrant's Telephone Number, Including Area Code:  (509) 534-6200

     Securities registered pursuant to Section 12(b) of the Act:  None

     Securities registered pursuant to Section 12(g) of the Act:


                      
                               Title of Each Class
                        --------------------------------
                          Common Stock, $.01 Par Value
     <PAGE>
     Indicate by check mark whether the registrant:  (1) filed all reports
     required to be filed by Section 13 or 15(d) of the Securities Exchange
     Act of 1934 during the preceding 12 months (or for such shorter period
     that the registrant was required to file such reports) and (2) has
     been subject to such filing requirements for the past 90 days.  
     Yes  X   No
         ---     ---

     Indicate by check mark if disclosure of delinquent filers pursuant to
     Item 405 of Regulation S-K is not contained herein, and will not be
     contained, to the best of registrant's knowledge, in definitive proxy
     or information statements incorporated by reference in Part III of
     this Form 10-K or any amendment to this Form 10-K. [X]

     The aggregate market value of the voting stock of the registrant held
     by non-affiliates of the Registrant, based upon the closing sales
     price of the Common Stock on the Nasdaq Stock Market on March 16,
     1998, was $82,249,629.

     The number of shares of the registrant's Common Stock outstanding as
     of March 16, 1998 was 7,012,029.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's definitive Proxy Statement relating to
     the 1998 Annual Meeting of Stockholders are incorporated by reference
     into Part III.
     <PAGE>



                                TABLE OF CONTENTS



     PART I

          Item 1.   Business 
          Item 2.   Properties 
          Item 3.   Legal Proceedings 
          Item 4.   Submission of Matters to a Vote of Security Holders 

     PART II

          Item 5.   Market for the Registrant's Common Equity and Related
                      Stockholder Matters
          Item 6.   Selected Financial Data
          Item 7.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations
          Item 8.   Financial Statements and Supplementary Data
          Item 9.   Changes in and Disagreements with Accountants on
                      Accounting and Financial Disclosure

     PART III

          Item 10.  Directors and Executive Officers of the Registrant
          Item 11.  Executive Compensation
          Item 12.  Security Ownership of Certain Beneficial Owners and
                      Management
          Item 13.  Certain Relationships and Related Transactions


     PART IV

          Item 14.  Exhibits, Financial Statement Schedules and Reports on
                      Form 8-K


     SIGNATURES
     <PAGE>
     PART I

     Item 1.  BUSINESS

     OVERVIEW
     --------
     Ambassadors International, Inc., a Delaware corporation, is a leading
     educational travel, travel services and performance improvement
     company, which, through its wholly owned subsidiaries, is engaged
     primarily in the business of (i) organizing, marketing and operating
     international educational travel programs on a worldwide basis for
     students and adults (the "Education Group"); and (ii) developing,
     marketing and managing performance improvement programs for a
     nationwide roster of corporate clients that utilize merchandise awards
     and incentive travel, providing business meeting management services,
     and providing comprehensive housing reservation, registration and
     travel services for meetings, conventions, expositions and trade shows
     (the "Performance Group").  

     The Education Group is comprised of the Company's wholly owned
     subsidiary, Ambassador Education Group, Inc., a Delaware corporation
     ("AEG"), and AEG's wholly owned subsidiaries, Ambassador Programs,
     Inc., a Delaware corporation ("API"), and Ambassador Specialty Group,
     Inc., a Delaware corporation.  The Performance Group is comprised of
     the Company's wholly owned subsidiaries, Ambassador Performance Group,
     Inc., a Delaware corporation ("APG"), and The Helin Organization, a
     California corporation ("Helin").  References to the Company herein
     includes Ambassadors International, Inc. and its subsidiaries, unless
     the context otherwise requires.
         
     EDUCATION GROUP

     The Company's Education Group has been active since the Company's
     founding in 1967.  The Education Group consists of several specialized
     private-label travel programs, including (i) the "People to People
     Student Ambassador Programs" ("Student Ambassador Programs"), which
     provide opportunities for junior high and high school students to
     visit foreign countries to learn about the politics, economy and
     culture of such countries and (ii) the "People to People Ambassador
     Programs" ("Adult Ambassador Programs"), which provides foreign travel
     experiences for adults, with emphasis on meetings and seminars between
     participants and persons in similar jobs abroad. See "Business--
     Education Group."

     Since 1983, the Company has organized programs for more than 70,000
     students and 45,000 adults in more than 35 countries on 5 continents.
     In 1997, the Company's educational travel programs featured visits to
     such countries as Australia, China, France, Germany, Great Britain,
     India, Italy and New Zealand. In 1997, approximately 14,000
     participants traveled on the Company's educational programs.

     A majority of the Education Group's programs are organized in
     connection with People to People International ("People to People"), a
     private, non-profit organization dedicated to the promotion of world
     <PAGE>
     peace through cultural exchange. People to People was founded by
     President Dwight D. Eisenhower in 1956 and was originally administered
     by the U.S. State Department. Seven Presidents since President
     Eisenhower have served as Honorary Chairman of People to People,
     including President Bill Clinton, who currently holds that position.
     Subject to certain exceptions, the Company's agreements with People to
     People give the Company the exclusive right to develop and conduct
     programs for kindergarten through college age students using the
     People to People name and the non-exclusive right to develop and
     conduct programs for adults using the People to People name. The
     Company believes that its long association with People to People has
     been a major factor in its ability to provide quality educational
     student and adult travel programs, and that this relationship provides
     the Company with greater access to foreign governmental agencies,
     officials and institutions. The Company also believes that its
     association with the People to People programs and the recent efforts
     of management have provided the foundation for the Company to develop
     strategic alliances with Eddie Bauer, Inc., Yosemite National
     Institutes and the American Youth Soccer Organization.

     PERFORMANCE GROUP

     During 1996, the Company commenced operations of its Performance Group
     through the acquisition of two existing entities engaged in this
     business.  See "Business--Performance Group."  In February 1998,
     through its acquisition of the assets of Rogal America, Co. ("Rogal"),
     the Company further expanded its Performance Group to include
     comprehensive housing reservation, registration and travel services
     for meetings, conventions, expositions and trade shows.  See "Recent
     Acquisitions."

     The Performance Group develops, markets and manages performance
     improvement programs for a nationwide roster of clients. The programs
     offer services in three principal areas: (i) performance improvement
     programs, (ii) business meeting management services and (iii)
     comprehensive housing reservation, registration and travel services.
     The Company's performance improvement programs utilize merchandise
     awards and travel incentives designed to help clients achieve sales
     goals, improve productivity and attract and retain qualified
     employees. The Company's business meeting management services assist
     clients in planning, coordinating and producing business meetings and
     conferences. The Company also provides comprehensive housing
     reservation, registration and travel services for meetings,
     conventions, expositions and trade shows. These services include hotel
     booking, guest registration, confirmation, and on-site services.

     The Performance Group's clients include both small and large
     businesses and organizations, including several Fortune 500 companies
     and nationally recognized trade and professional associations.

     The Company intends to continue its strategy of growth by making
     selective acquisitions of travel and travel-related businesses which
     are either compatible with the Company's existing businesses or
     represent a developing specialty travel or travel-related segment not
     currently addressed by the Company's operations.  
     <PAGE>
     The Company was originally incorporated in the State of Washington in
     1967 under the name International Ambassador Programs, Inc. to provide
     international educational travel programs for students and adults. 
     The Company was reincorporated in the State of Delaware in 1995.  The
     Company's principal executive offices are located at Dwight D.
     Eisenhower Building, 110 S. Ferrall Street, Spokane, Washington 
     99202, and its telephone number is (509) 534-6200.  


     BUSINESS
     --------
     EDUCATION GROUP

     Through its Education Group, the Company organizes, markets and
     operates educational travel programs for students and adults,
     principally using the People to People name. The Company has the
     exclusive right to develop and conduct programs for kindergarten
     through college age students using the People to People name.  The
     Company also has the non-exclusive right to develop, market and
     operate programs for adults using the People to People name; however,
     at the present time the Company is the only entity that has been given
     this right by People to People. These rights have been granted
     pursuant to agreements with People to People, which expire in 2005.
     The agreements will be automatically renewed for an additional ten
     years unless either party elects otherwise. The principal offices of
     the Company's Education Group are located in Spokane, Washington. 

     STUDENT AMBASSADOR PROGRAMS.  The Company's Student Ambassador
     Programs provide an opportunity for students in the sixth through
     twelfth grades to visit one or more foreign countries to learn about
     the politics, economy and culture of such countries.  The Company
     markets its Student Ambassador Programs through a combination of
     direct mail and local informational meetings.  Representatives of the
     Company review candidate applications and conduct informational
     meetings throughout the country from September through April, after
     which selected applicants register to participate in the program.

     Student Ambassador Program delegations depart during the summer and
     generally travel for approximately 21 days, during which time each
     delegation visits one or more foreign countries.  Each delegation
     generally consists of approximately 35 students and several teachers,
     who act as the delegation's leaders.  Teachers and students comprising
     a delegation generally come from the same locale.  Local guides assist
     the delegation in their travels.  

     Programs are designed by the Company's staff of international planners
     and researchers to provide an educational and entertaining travel
     experience by exposing students to the history, government, economy
     and culture of the country or countries visited.  In each country the
     Company contracts with overseas program coordinators to provide day-
     to-day oversight of the programs.  Additionally, a guide trained by
     the Company accompanies the group throughout the duration of its
     program.  In most instances, the Company also arranges to provide
     students the opportunity for a "homestay" (a brief stay with a host
     <PAGE>
     family), which gives students a glimpse of daily life in the visited
     country.  

     Students who complete certain written assignments and other projects
     can receive high school and university credit for their participation
     in the program.  Universities which recognize academic credit include
     Stanford University, University of California at Los Angeles, and
     Georgetown University.

     ADULT AMBASSADOR PROGRAMS.  The Company's Adult Ambassador Programs
     provide adults with common interests the opportunity to travel abroad
     to meet and exchange ideas with foreign citizens who have similar
     backgrounds, interests or professions.  The Company markets its Adult
     Ambassador Programs through a direct mail marketing effort throughout
     the year.  Programs originate from the Company's internal marketing
     and research staff who identify potential delegation topics and
     leaders.  Adult programs have been conducted in such areas as
     agriculture, economics, education, medicine and science.

     The Company believes that its Adult Ambassador Programs provide
     participants with enriching experiences and deeper understandings of
     foreign cultures and peoples than visits arranged independently or
     through travel agencies.  The Adult Ambassador Programs operate
     year-round and are generally designed to provide a more specialized
     adult educational experience.  Adult Ambassador Programs generally
     last from ten days to two weeks and are designed to provide adults
     with similar backgrounds or common interests the opportunity to
     exchange information and ideas with their counterparts in other
     countries.  Unlike travel programs provided by travel agencies, these
     professional exchanges are intended largely as working trips, with a
     significant amount of the participant's time involved in organized
     meetings, seminars and round-table discussions with their foreign
     counterparts, inspection visits to major foreign facilities and
     institutions and informal gatherings with foreign counterparts.  Each
     program is led by a delegation leader chosen by the Company based upon
     his or her recognition in the field and expertise regarding the
     special focus of the particular program.

     The Company acquired additional People to People adult business
     through an acquisition in February 1996, which included, among other
     things, the right to operate adult educational and exchange travel
     programs under the tradenames "American People Ambassador Programs"
     and "Missions in Understanding" and rights under an agreement with
     People to People to operate additional travel programs.  See "Recent
     Acquisitions."

     The Company also operates travel programs pursuant to alliances with
     Eddie Bauer, Inc., a direct mail and retail company, and Yosemite
     National Institutes, a non-profit organization with operations in
     Yosemite National Park, Olympic National Park and Golden Gate National
     Recreation Area.  Under its agreement with Eddie Bauer, Inc., the
     Company recently began to offer outdoor recreational travel
     experiences under the name "Eddie Bauer Travel."  The agreement with
     Yosemite National Institutes is exclusive, except that Yosemite
     <PAGE>
     National Institutes may conduct its own programs.  The Company also
     has an agreement with the American Youth Soccer Organization to
     provide international travel for its players.  The initial program
     includes travel to Paris, London and Amsterdam to play soccer matches
     against local teams.

     PERFORMANCE GROUP

     The Performance Group develops, markets and manages performance
     improvement programs for a nationwide roster of clients.  The programs
     offer services in three principal areas: (i) performance improvement
     programs, (ii) business meeting management services, and (iii)
     comprehensive housing reservation, registration and travel services.
     The Performance Group commenced operations through a series of
     acquisitions commencing in 1996.  The principal offices of the
     Performance Group are located in Newport Beach, California. 

     In offering performance improvement programs and business meeting
     management services, the Performance Group follows a strategy aimed at
     developing and implementing programs tailored to each client's
     objectives.  The Company's employees first meet with existing or
     potential clients to determine their business objectives and their
     performance enhancement opportunities.  Once a client agrees to pursue
     a program, the Company works with the client to determine the scope of
     the program by identifying concepts and parameters in terms of
     purpose, costs, time and employee participation.  Subsequently, the
     Company's employees develop and provide customized services that fall
     within the identified parameters.

     Performance Group employees participate in various aspects of a
     client's program development.  The staff of creative writers and
     graphic designers often delivers promotional campaigns and materials
     that are complete from concept through production, including design,
     printing, collating, labeling and mailing.  The Company has developed
     computerized monitoring systems and provides each client with lists
     generated by internally-designed software programs which track the
     program participants and enable the client to know the status of each
     participant at any time.  Additionally, the Company provides a program
     coordinator to formulate, maintain and finalize each aspect of the
     client's event.  

     For its services, the Company is usually paid a percentage markup of
     the program components including air and ground transportation,
     promotional gifts, meals and hotel accommodations.  In addition, the
     Company is reimbursed for expenses incurred in organizing the program.

     The Company also provides comprehensive housing reservation,
     registration and travel services for meetings, conventions,
     expositions and trade shows.  The contracts for these services
     generally cover an annual meeting or event and may be for a term of
     one to several years.  Pursuant to these agreements, the Company
     provides a wide range of services associated with booking hotel space
     and guest registration, including securing sufficient and appropriate
     hotel room inventories, coordinating blocking and booking of all hotel
     <PAGE>
     rooms, monitoring the status and volume of reservations, accepting
     individual and group reservations, mailing reservation confirmations
     and providing an on-site housing services desk at a meeting site to
     coordinate attendees' housing needs.  For providing these and other
     services, the Company generally receives a fixed commission, which is
     paid directly by the hotels.

     RECENT ACQUISITIONS

     In January 1996, the Company acquired all of the capital stock of
     Helin, a company engaged in the performance incentives and meeting
     management businesses.

     In February 1996, API completed the acquisition of certain assets from
     Marc L. Bright, d/b/a M.L. Bright Associates ("MLB"), American People
     Ambassador Programs and Missions in Understanding.  MLB operated adult
     educational and exchange travel programs under the "People to People"
     name.

     In December 1996, APG acquired all of the issued and outstanding
     shares of capital stock of Bitterman & Associates Inc. ("Bitterman"),
     a merchandise incentive and performance improvement company.

     In September 1997, APG acquired certain of the assets of Debol &
     Associates, a company engaged in the performance incentives and
     meeting management businesses.

     On February 5, 1998, APG acquired certain of the assets (the "Rogal
     Assets") of Rogal.  Rogal provides comprehensive housing reservation,
     registration and travel services for meetings, conventions,
     expositions and trade shows.  The Rogal Assets include two office
     leases for premises in Massachusetts and Virginia, computer equipment
     and Rogal's existing client service contracts.  The Company intends to
     continue to service the existing client contracts of Rogal and to
     expand further this area of its business.  Additional information
     regarding this transaction is included in the Company's Current Report
     on Form 8-K dated February 12, 1998 (as amended on Form 8-K/A dated
     April 2, 1998), which report is incorporated herein by reference.

     On February 20, 1998, the Company further expanded the operations of
     its Performance Group through the acquisition by APG of the capital
     stock of Travel Incentives, Inc. ("TII"), a company engaged in the
     performance incentives and meeting management businesses.

     BUSINESS STRATEGY

     The Company believes that high quality programs and exceptional
     customer service are and will remain key elements of the Company's
     success.  The Company's strategy is to maintain its quality standards
     while increasing its volume of business.  To increase its business,
     the Company intends to (i) expand the marketing and tour volume of its
     existing student travel programs, (ii) introduce new student travel
     programs and strategic alliances, (iii) broaden its adult travel
     programs, (iv) expand the scope of services and increase the market
     <PAGE>
     penetration of the Performance Group, and (v) pursue selective
     acquisitions of travel and performance improvement businesses.

     COMPETITION

     The travel industry in general, and the educational segment of the
     travel industry in particular, is highly competitive.  The Company's
     student programs compete with similar educational travel programs
     operated by other individuals and organizations, as well as
     independent programs organized and sponsored by local teachers with
     the assistance of local travel agents.  The Company's adult programs
     also compete with independent professional associations that sponsor
     and organize their own travel programs through the assistance of local
     travel agents, and other organizations that design travel programs for
     adults. 

     The Company believes that the barriers to entry for any future
     competitors are relatively low.  Certain organizations engaged in the
     travel business have substantially greater financial, marketing and
     sales resources than the Company.  There can be no assurance that the
     Company's present competitors or competitors that choose to enter the
     marketplace in the future will not exert significant competitive
     pressures on the Company. 

     The Company believes that the principal bases of competition in the
     educational segment of the market are the quality and uniqueness of
     the educational program offered, customer service, reputation and
     program cost.  The Company believes that its agreements with People to
     People, as well as its years of experience organizing student
     educational programs and established relationships with public
     officials, organizations and residents in countries in which it
     provides programs, allow the Company to provide an educational
     opportunity that is not easily duplicated by competitors' programs. 

     The Performance Group also competes in segments of the travel industry
     that are highly competitive.  In the meeting management and incentives
     businesses, the Company competes with companies which are larger and
     have greater resources than the Company.  The Company believes that,
     although some potential clients will focus on price alone, other
     clients will also be interested in the quality of the programs
     developed by the Performance Group and customer service.  The Company
     believes that its programs are not easily duplicated by its
     competitors.

     SERVICEMARKS

     The Company has registered a variety of service and trademarks,
     including the names "High School Student Ambassador Program" and
     "Citizen Ambassador Program."  In addition, the Company has the right,
     subject to certain exceptions, to use People to People's name,
     servicemark and logo for use in marketing student and adult programs. 
     In February 1996, the Company acquired the exclusive rights to the
     names "American People Ambassador Programs" and "Missions in
     Understanding."  The Company believes that the strength of its service
     <PAGE>
     and trademarks is valuable to its business and intends to continue to
     protect and promote its marks as appropriate.  However, the Company
     believes that its business is not dependent upon any trademark or
     servicemark. 

     INSURANCE

     The Company maintains insurance coverage in amounts it believes are
     adequate for its business, including a $5 million professional
     liability policy and a $5 million umbrella policy.  The Company also
     maintains a $1 million general liability and property coverage policy. 
     The Company has not experienced difficulty in obtaining adequate
     insurance coverage.  There is no assurance that the insurance
     maintained by the Company will be adequate in the event of a claim, or
     that such insurance will continue to be available in the future.

     EMPLOYEES

     At February 28, 1998 the Company had approximately 302 employees, of
     which 288 were full-time employees.  Of the Company's total employees,
     118 are located in Spokane, Washington, 17 are located in Newport
     Beach, California, 3 are located in Winnebago, Illinois,  50 are
     located in Minneapolis, Minnesota, 86 are located in Watertown,
     Massachusetts, 5 are located in Alexandria, Virginia, and 23 are
     located in Westlake, California.  The Company has 76 full-time
     employees engaged in marketing and sales and 226 in operations,
     administration and finance.  The Company also occasionally employs
     temporary labor on a seasonal basis to assist it with its direct
     marketing efforts in recognition of the fact that the Company's
     student travel programs are seasonal in nature.  None of the Company's
     employees is subject to collective bargaining agreements or is
     represented by a union. The Company believes that its labor relations
     are good. 


     Item 2.  PROPERTIES 

     The principal executive offices of the Company, consisting of
     approximately 41,000 square feet, are located in Spokane, Washington
     and are occupied pursuant to a lease dated January 3, 1995 that
     expires December 31, 2004.  The lease currently provides for monthly
     rental payments of $36,992.  The Company may cancel the lease without
     penalty (upon one year's prior notice) and also may extend the term of
     the lease for an additional ten year period upon providing written
     notice to the Lessor of its intention to exercise such option at least
     six months prior to the end of the initial term.  If the Company
     elects to exercise the extension option, the monthly rental during the
     renewal period will be the fair market rental value of the leased
     premises as of the date the option is exercised (as determined based
     on market rentals of similar properties in the Spokane, Washington
     area).  The owner of the premises is a partnership consisting of two
     former principals of the Company, who subsequently sold their interest
     in the Company in January 1995.  
     <PAGE>
     In March 1998, the Company entered into a new lease for general
     administrative offices in Newport Beach, California.  The lease
     commences on or about June 15, 1998 and is for a term of seven years. 
     The initial base rental is $28,346 per month.  The premises consist of
     approximately 26,996 square feet.

     The Company also leases 900 square feet of office space in Winnebago,
     Illinois pursuant to a lease that expires in August 2000.  The Company
     also leases 4,500 square feet of office space in Newport Beach,
     California.  The lease expires in June 2000, and currently provides
     for monthly rental payments of $4,742.  In addition, the Company
     leases approximately 10,690 square feet of office and warehouse space
     in Plymouth, Minnesota, pursuant to a lease which expires in 1999 and
     provides for current monthly rental payments of $9,101.

     In February 1998, the Company assumed two additional leases for office
     space in connection with its acquisition of the Rogal Assets.  One
     lease is for approximately 15,900 square feet in Watertown,
     Massachusetts, with a current monthly rental of $15,640, which lease
     expires in 2003, and a second lease is for approximately 1,805 square
     feet in Alexandria, Virginia, with a currently monthly rental of
     $2,074, which lease expires in November 1998; however, the Company has
     an option to extend the term for three years.

     In February 1998, the Company assumed a month-to-month lease for
     office space in connection with its acquisition of TII.  The lease is
     for approximately 4,841 square feet with a current monthly rental of
     $6,051.

     Management believes that its existing facilities are sufficient to
     meet its present needs and anticipated needs for the foreseeable
     future.  However, additional facilities may be required in connection
     with future business acquisitions.


     Item 3.  LEGAL PROCEEDINGS

     On September 22, 1997, Sarah Buffington and certain other individuals,
     for themselves and on behalf of their children, six teenage students
     (the "Plaintiffs"), filed a lawsuit in the District Court of Harris
     County, Texas, against People to People and three individual tour
     leaders.  In February 1998, the lawsuit was amended to include the
     Company (the original named defendants and the Company are
     collectively referred to as the "Defendants").  The basis for the
     Plaintiffs' claim is their allegation that, while the six teenagers
     were in Europe in June 1997 as part of a tour involving 31 students,
     three of the tour leaders behaved in an inappropriate manner toward
     the six teenagers.  The Plaintiffs allege breach of contract,
     negligence, negligent hiring and retention of the tour leaders,
     slander, intentional infliction of emotional distress, and assault and
     battery.  The Plaintiffs seek at least $15,000,000 in punitive and
     exemplary damages against the Defendants, together with unspecified
     actual damages, attorneys' fees, court costs and other incidental
     costs.  The Company intends to defend vigorously the lawsuit. The
     Company believes it has meritorious defenses to this lawsuit and
     intends to defend itself vigorously.
     <PAGE>
     Except for the foregoing, the Company is not a party to any material
     pending legal proceedings other than ordinary routine litigation
     incidental to its business, the outcome of which the Company believes
     will not have a material adverse effect on its business, financial
     condition or results of operations. 


     Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.


     PART II

     Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
              MATTERS

     STOCK MARKET AND OTHER INFORMATION

     The Company's common stock has been traded on the Nasdaq National
     Market under the symbol "AMIE" since August 3, 1995.  Prior to such
     date, there was no public trading market for the Company's equity
     securities.  As of March 31, 1998, there were approximately 48 holders
     of record of the Company's Common Stock.  This number does not include
     beneficial owners holding shares through nominee or "street" name.

     The following table sets forth the high and low sale prices of a share
     of the Company's Common Stock as reported on the Nasdaq National
     Market on a quarterly basis for the Company's fiscal years ended
     December 31, 1996 and December 31, 1997.


                                                        High       Low
                                                        --------   -------
     1996:
       Quarter ended March 31, 1996                      $13.25    $ 8.50
       Quarter ended June 30, 1996                       $16.13    $ 9.88
       Quarter ended September 30, 1996                  $14.25    $ 7.88
       Quarter ended December 31, 1996                   $11.00    $ 8.00

     1997:
       Quarter ended March 31, 1997                      $12.50    $ 9.00
       Quarter ended June 30, 1997                       $13.75    $ 8.75
       Quarter ended September 30, 1997                  $22.00    $12.25
       Quarter ended December 31, 1997                   $26.75    $17.25
     <PAGE>
     DIVIDEND POLICY

     The Company has not paid any dividends since the consummation of its
     initial public offering of securities in 1995 and intends to continue
     to retain its earnings for use in the operation and expansion of its
     business and therefore does not anticipate declaring any cash
     dividends in the foreseeable future.  The payment of dividends in the
     future will be at the discretion of the Board of Directors and will be
     dependent upon the Company's financial condition, results of
     operations, capital requirements and such other factors as the Board
     of Directors, in its discretion, deems relevant. 

     TRANSFER AGENT AND REGISTRAR

     Chase Mellon Shareholder Services of Los Angeles, California serves as
     transfer agent and registrar of the Company's Common Stock.

     CHANGES IN SECURITIES

     In February 1998, the Company issued 140,187 shares of its Common
     Stock in connection with its acquisition of the Rogal Assets, and
     52,068 shares of its Common Stock in connection with its acquisition
     of TII.

     In August 1997, in connection with the employment of Ronald L.
     Merriman, the Company agreed to issue to Mr. Merriman an aggregate of
     50,000 shares of Common Stock, which vest in four equal annual
     installments commencing January 1, 1998.  

     In December 1996, the Company issued 137,857 shares of its Common
     Stock in connection with the acquisition of Bitterman.  

     In January 1996, the Company issued 80,000 shares of its Common Stock
     in exchange for all of the issued and outstanding shares of Helin in
     connection with the Company's acquisition of Helin.  

     Each of the foregoing issuances was made directly by the officers and
     directors of the Company and no underwriting discounts or commissions
     were paid.  Each of the foregoing transactions was exempt from the
     registration provisions of the Securities Act of 1933, as amended (the
     "Securities Act"), pursuant to Section 4(2) thereof for issuances of
     securities not involving a public offering and exempt from
     registration under applicable state securities laws.

     Each of the persons with whom the Company's Common Stock was issued
     represented to the Company, substantially as follows:  that he or it
     acquired the securities for his or its own account, for investment
     purposes only and not with a view to or for sale in connection with
     any distribution thereof.  Certificates evidencing the Common Stock
     issued in these transactions bear restrictive legends to such effect
     and state further that the securities have not been registered under
     the Securities Act or state securities laws and may not be sold,
     pledged or otherwise transferred without registration under the
     Securities Act or an exemption therefrom.
     <PAGE>
     USE OF PROCEEDS

     The Company's Registration Statement for its initial public offering
     of securities (File No. 33-93586) became effective on August 3, 1995. 
     Of the total net proceeds to the Company from the offering in the
     amount of $11,983,103, the following amounts were used from the date
     of the offering through the date of this report.

     Category of Use                                          Amount
     ----------------------------------------------           -----------
     Construction of plant, building and facilities            $        0
     Purchase and installation of machinery and 
       equipment                                                        0
     Purchase of real estate                                            0
     Acquisition of other businesses                            9,850,000
     Repayment of indebtedness                                          0
     Working capital                                            1,385,000
     Temporary investments in Bank of America money
       market and investment accounts                             748,103
     Other purposes                                                     0
                                                              -----------
         Total                                                $11,983,103
                                                              ===========

     Item 6.  SELECTED FINANCIAL DATA
     <TABLE>
     <CAPTION>
                                  Year Ended December 31,
                                  ---------------------------------------------------------------
                                  1997         1996         1995         1994         1993
                                  -----------  -----------  -----------  -----------  -----------
                                  (dollars in thousands, except per share data)
      <S>                         <C>          <C>          <C>          <C>          <C>
      Statement of Income
        Data (A):
      Operating revenues          $    26,541  $    18,843  $    17,133  $    16,990  $    14,334

      Operating expenses:
        Selling and tour
          promotion                     9,826        8,420        8,694        9,407        8,361
        General and
          administrative                8,210        5,770        4,676        5,380        4,983
      Operating income                  8,505        4,653        3,763        2,203          990
      Net income                        5,637        3,947        5,157        2,127        1,142
      Pro forma net income (B)             --           --        3,179        3,152           --
      Net income per share -
        basic (B)                 $      0.83  $      0.60  $      0.57  $      0.63         (C)
      Net income per share -
        diluted (B)               $      0.82  $      0.59  $      0.56  $      0.63         (C)

      Balance Sheet Data (D):                
      Cash and cash equivalents   $    22,871  $    18,281  $    12,974  $     6,634  $       674
      Total current assets             27,283       21,950       14,857        7,415        4,239
      Total assets                     34,449       27,269       16,016        9,637        6,247
      Long-term debt                      329           --            6           17           25
      Total liabilities (includ-
        ing current portion)           11,893       10,486        4,881        7,877        4,418
      Total stockholders' equity       22,556       16,783       11,135        1,829        1,829
      </TABLE>
      <PAGE>
     (A)  Since 1995, the Company has made several acquisitions which have
          been accounted for under the purchase method of accounting. 
          Therefore, the results of operations of these acquired entities
          are included in the results of operations of the Company since
          their respective dates of acquisition.  The statement of income
          data for the years ended December 31, 1995, 1994 and 1993 only
          reflects the Education Group.  During 1996, the Company commenced
          operations of its Performance Group through the acquisition of
          two existing entities engaged in this business.  Due to the
          timing of these acquisitions, the results of operations for one
          of these entities are included in the Company's results of
          operations for the year ended December 31, 1996.  The results of
          operations of the second acquisition are included in the
          financial presentation for the year ended December 31, 1997.  The
          results of operations for the year ended December 31, 1997 also
          include the acquisition in September 1997 of a third company in
          the Performance Group.

     (B)  In connection with the Company's change in ownership and
          reincorporation in 1995, certain compensation agreements between
          the Company and certain stockholders were terminated and new
          employment agreements were executed.  Also, notes receivable from
          certain stockholders were repaid.  Therefore, the pro forma net
          income for the year ended December 31, 1994 reflects adjustments
          to (i) reduce certain incentive compensation costs and (ii)
          eliminate interest income on the repayment of notes receivable. 
          The pro forma net income for the years ended December 31, 1995
          and 1994 reflects an adjustment to record income taxes which
          would have been paid by the Company as a C Corporation rather
          than as an S Corporation.

     (C)  Historical net income per share for the year ended December 31,
          1993 has not been presented due to the Company's change in
          ownership and reincorporation in 1995.

     (D)  All of the Company's acquisitions have been accounted for under
          the purchase method of accounting.  Therefore, the balance sheet
          data include the accounts of the acquired entities as of their
          respective dates of acquisition.  Since one of the acquisitions
          occurred effective December 31, 1996, the balance sheet data
          includes the accounts of this entity as of December 31, 1996;
          however, the results of operations of this entity are not
          included in the statement of income data until the year ended
          December 31, 1997.
     <PAGE>
     Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with the
     Company's consolidated financial statements and the notes thereto
     incorporated by reference in this Annual Report on Form 10-K.  Certain
     statements contained herein that are not related to historical
     results, including, without limitation, statements regarding the
     Company's business strategy and objectives, future financial position,
     expectations about pending litigation and estimated cost savings, are
     forward-looking statements within the meaning of Section 27A of the
     Securities Act and Section 21E of the Securities Exchange Act of 1934,
     as amended, and involve risks and uncertainties.  Actual results could
     differ materially from those discussed in the forward-looking
     statements.  Factors that could cause or contribute to such
     differences include, but are not limited to, those discussed below and
     under "Risk Factors."  All forward-looking statements contained in
     this Annual Report on Form 10-K are qualified in their entirety by
     this statement.

     General
     -------
     The Company is engaged primarily in (i) organizing, marketing and
     operating international educational travel programs on a worldwide
     basis for students and adults and (ii) developing, marketing and
     managing performance improvement programs that utilize merchandise
     awards and incentive travel, providing business meeting management
     services and providing comprehensive housing reservation, registration
     and travel services for meetings, conventions, expositions and trade
     shows.

     Since its initial public offering in August 1995, the Company has
     expanded its operations primarily through internal growth and a series
     of acquisitions of businesses within the travel and performance
     improvement industries.  Prior to 1996, the Company's business was
     conducted through its Education Group.

     In January 1996, the Company completed the acquisition of The Helin
     Organization and commenced operations of the Performance Group.  This
     acquisition was followed in February 1996 by the acquisition of
     certain assets of Marc L. Bright & Associates, which expanded the
     business of the Company's already existing Education Group.  In
     December 1996, the Company acquired Bitterman & Associates, Inc.; in
     September 1997, the Company acquired certain of the assets of Debol &
     Associates; and in February 1998, the Company acquired certain of the
     assets of Rogal America, Co. and the stock of Travel Incentives, Inc.,
     further expanding its Performance Group.  All of these acquisitions
     were accounted for under the purchase method of accounting. 
     Therefore, the results of operations of the acquired businesses are
     included in the Company's results of operations since their respective
     dates of acquisition.
     <PAGE>
     Gross program receipts reflect the total payments received by the
     Company from Education Group participants and Performance Group
     clients.  Gross program receipts less program pass-through expenses
     constitute the Company's revenues.  Program pass-through expenses
     include all direct costs associated with the Company's programs,
     including costs related to airfare, ships, hotels, meals, ground
     transportation, guides, professional exchanges, changes in currency
     exchange rates and merchandise costs. The Company recognizes gross
     program receipts, pass-through expenses and revenues upon the
     departure of the program participant or as the Performance Group
     service is rendered.  Operating expenses, which are expensed by the
     Company as incurred, are the costs related to the creation of
     programs, promotional materials and marketing costs, salaries, rent,
     other general and administrative expenses and all of the Company's
     ordinary expenses.  The Company's policy is to obtain payment for
     substantially all travel services prior to entering into commitments
     for incurring expenses relating to such travel.

     The Company's businesses are highly seasonal.  The majority of the
     Company's travel programs occur in May through July and October of
     each year.  Substantially all of the Company's operating income is
     generated in these periods, which historically has offset the
     operating losses incurred during the rest of the year.  The Company
     anticipates that this trend will continue for the foreseeable future. 
     The Company's annual results would be adversely affected if the
     Company's revenues were to be substantially below seasonal norms
     during these periods.  The Company's operating results may fluctuate
     as a result of many factors, including the mix of Education Group and
     Performance Group programs and services, the mix of programs and
     program destinations offered by the Company and its competitors, the
     introduction and acceptance of new programs and program enhancements
     by the Company and its competitors, timing of program completions,
     cancellation rates, competitive conditions in the industry, marketing
     expenses, extreme weather conditions, international conflicts, timing
     of and costs relating to acquisitions, changes in relationships with
     certain travel providers, economic factors and other considerations
     affecting travel.

     The substantial majority of the Company's programs takes place outside
     the United States and most foreign suppliers require payment in local
     currency rather than U.S. dollars.  Accordingly, the Company is
     exposed to foreign currency risks in certain countries as foreign
     currency exchange rates between those currencies and the U.S. dollar
     fluctuate.  To manage these risks, the Company enters into forward
     foreign exchange contracts and foreign currency option contracts.
     These foreign exchange contracts and options are entered into to
     support normal recurring purchases, and accordingly, are not entered
     into for speculative purposes.  The Company is exposed to credit risk
     under the forward contracts and options to the extent that the
     counterparty is unable to perform under the agreement.  The Company
     anticipates hedging the majority of its foreign currency risk in
     <PAGE>
     future periods.  There can be no assurance that the Company's hedging
     strategies will be successful in mitigating the impact of foreign
     currency fluctuations.  The Company records its forward foreign
     exchange contracts at market value on a quarterly basis.  Unrealized
     and realized gains and losses on these securities are recognized in
     the statement of income.

     Results of Operations
     ---------------------
     The following table sets forth, for the periods indicated, the
     relative percentages that certain income and expense items bear to
     revenues.

                                                 Year Ended December 31,
                                                 ------------------------
                                                 1995     1996     1997
                                                 ------   ------   ------
     Revenue                                     100.0%   100.0%   100.0%
     Operating expenses:
       Selling and tour promotion                 50.7     44.7     37.0
       General and administrative                 27.3     30.6     31.0
                                                 -----    -----    -----
         Total operating expenses                 78.0     75.3     68.0
                                                 -----    -----    -----
     Operating income                             22.0     24.7     32.0
                                                 -----    -----    -----
     Other income (expense)                        6.1      7.0      1.8
     Income before income taxes                   28.1     31.7     33.8
     Income tax provision (benefit)               (2.0)    10.8     12.6
                                                 -----    -----    -----
         Net income                               30.1%    20.9%    21.2%
                                                 =====    =====    =====
     Pro forma information:(1)
     Income before income taxes                   28.1%
     Pro forma income tax provision                9.5
                                                 -----
     Pro forma net income                         18.6%
                                                 =====

     (1)  The pro forma net income for the year ended December 31, 1995
          reflects an adjustment to record income taxes which would have
          been paid by the Company as a C Corporation rather than as an S
          Corporation for such year. The Company's S Corporation status
          terminated in 1995.
     <PAGE>
     COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31,
     1996

     The Company is organized in two operating divisions: the Education
     Group and the Performance Group. For the year ended December 31, 1997,
     the Education Group increased its productivity by growth within the
     core product lines while realizing efficiencies through the sales and
     marketing process. The Performance Group contribution resulted from
     its acquisitions and additional sales of incentive travel programs and
     business meeting management services.

     Gross program receipts increased 42% in 1997 over 1996, from $56.7
     million to $80.3 million, and net revenue increased 41% from $18.8
     million in 1996 to $26.5 million in 1997. These increases were driven
     by an increase in the number of Education Group program participants,
     the addition of new acquisitions, and improved cross-selling in the
     Performance Group.

     The overall gross margins (revenues as a percentage of gross program
     receipts) for the 1997 year remained consistent with the prior year at
     33%. This reflects a strengthening of the Education Group margins,
     combined with the margins achieved by the new acquisitions in the
     Performance Group. Gross margins of the Performance Group are expected
     to be slightly lower than those achieved in the Education Group.

     Selling and tour promotion expenses increased during 1997 when
     compared to 1996 by $1.4 million, or 17%. Most of this increase
     results from an acquisition in late 1996 within the Performance Group.
     As a percentage of revenues, selling and tour expenses decreased to
     37% in 1997 from 45% in 1996, as a result of sales and marketing
     efficiencies and the benefits of a cost management program.

     General and administrative expenses increased from $5.8 million to
     $8.2 million between 1996 and 1997. Most of this increase is due to
     the assumption of continuing expenses associated with the Performance
     Group acquisitions.

     Operating income increased 83% in the year ended December 31, 1997
     compared to the year ended December 31, 1996.

     Other income includes interest income and unrealized foreign currency
     gains or losses. Other income decreased from $1.3 million in 1996 to
     $0.5 million in 1997. The cash component of other income, interest
     income, increased to $1.6 million from $1.1 million, a 47% increase on
     a 25% increase in year-end cash balances. This increase in interest
     income is the effect of improved cash management practices implemented
     in 1997. The overall net decrease in other income can be attributed to
     the non-cash component of other income, unrealized foreign exchange
     losses. In 1997, the Company incurred $0.7 million of net unrealized
     losses compared to an insignificant amount in 1996. The face amount of
     forward foreign exchange contracts outstanding at December 31, 1997,
     was $17.4 million.
     <PAGE>
     The Company's income before taxes in 1997 increased 50% over 1996 as a
     result of the foregoing factors. The Company has recorded an income
     tax provision of $3.3 million for 1997 which represents an effective
     tax rate of 37%. The tax provision has increased over the prior year's
     provision of $2.0 million due to the effect of certain non-deductible
     expenses as well as the increase in state income taxes with the
     expansion of the Company through acquisitions.

     COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31,
     1995

     The expansion of the Company's programs in 1996 resulted in a 24%
     increase in the number of participants from 11,635 in 1995 to 14,377
     in 1996, which increased the Company's gross program receipts 21%,
     from $46.7 million in 1995 to $56.7 million in 1996. Revenues also
     increased to $18.8 million or 10% over 1995 revenues.

     The Company maintained a 33% gross margin for the year, even with the
     addition of the expected lower margins of the Performance Group.

     Selling and tour promotion expenses decreased approximately $0.3
     million in 1996 when compared to 1995. The Company's marketing efforts
     were more effective and efficient than in prior years. This more
     targeted effort contributed to the increase in revenues for 1996.
     Company policy is to expense all promotional expenses as they are
     incurred.

     In 1996, these expenses included the integration of American People
     Ambassador Programs, The Helin Organization, and the developmental
     costs related to Eddie Bauer Travel.

     General and administrative expenses increased from $4.7 million in
     1995 to $5.8 million in 1996 primarily due to the acquisitions of The
     Helin Organization and American People Ambassador Programs in early
     1996.

     Other income includes interest income and foreign currency gains or
     losses. During 1996, other income increased 26% from $1.1 million to
     $1.3 million. This increase was due to improved cash management
     systems, as well as a full year's benefit of investing the proceeds
     from the initial public offering. These two factors increased interest
     income from $0.8 million in 1995 to $1.1 million in 1996.

     Also included in other income are gains from foreign currency
     contracts and options which are marked to market. The Company enters
     into forward foreign exchange contracts and foreign currency option
     contracts to offset certain operational exposures from changes in
     foreign currency exchange rates. These foreign exchange contracts and
     options are entered into to support normal recurring purchases, and
     accordingly are not entered into for speculative purposes. Forward
     foreign exchange contracts are utilized to manage the risk associated
     with currency fluctuations on certain purchase commitments. The face
     amount of forward foreign exchange contracts outstanding as of
     December 31, 1996, was $6.7 million.
     <PAGE>
     The Company has recorded an income tax provision of $2.0 million for
     1996 which represents an effective tax rate of 34%. The income tax
     benefit of $0.3 million in 1995 reflected the benefit of the net
     operating loss incurred by the Company which was generated after the
     Company became a C Corporation in mid-1995.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company's business is not capital intensive. However, the Company
     does retain funds for working capital purposes in order to conduct
     sales and marketing efforts for future programs and services.

     Net cash provided by operations for the years ended December 31, 1995,
     1996 and 1997 was $1.8 million, $6.1 million and $6.2 million,
     respectively. The increase in cash flow from operations between 1996
     and 1997 resulted primarily from the increase in net income. The
     increase from 1995 to 1996 can be attributed to the increase in cash
     receipts from Education Group participants in 1996 and the payment in
     1995 of approximately $2.4 million of incentive compensation for the
     1994 year to previous owners of the Company.

     Net cash used in investing activities for the years ended December 31,
     1995, 1996 and 1997 was $0.4 million, $0.8 million and $1.5 million,
     respectively. The investing activities during 1997 were due primarily
     to leasehold improvements in the corporate headquarters facilities as
     well as the purchase of a company in the third quarter of the year.
     The $0.4 million increase from 1995 to 1996 was due to the acquisition
     of subsidiaries and purchase of other investments. The Company does
     not have any material capital expenditure commitments for 1998.
     However, the Company is continuing to pursue further acquisitions of
     related travel and performance improvement businesses that may require
     the use of cash and cash equivalents. The Company had no significant
     long- or short-term debt as of December 31, 1996; however, at 
     December 31, 1997, the Company had $0.3 million in long-term debt as a
     result of an acquisition during 1997. Subsequent to December 31, 1997,
     the Company utilized $7.5 million in cash to fund acquisitions.

     Net cash provided by financing activities in 1995 was $5.0 million as
     a result of the reorganization of the Company and the initial public
     offering. Net cash used in financing activities in 1996 and 1997 was
     insignificant.

     The Company has a credit facility available with Seafirst Bank for up
     to $23.0 million U.S. dollars for foreign currency purchases and
     forward contracts. Although this facility expires in July 1998, the
     Company expects it to be renewed.

     At December 31, 1997, the Company had approximately $22.9 million of
     cash and cash equivalents, including participant deposits of $7.4
     million. Under the Company's cancellation policy, a participant may be
     entitled to a refund of a portion of his or her deposit (less certain
     fees) depending on the time of cancellation. Management believes that
     <PAGE>
     existing cash and cash equivalents and cash flows from operations,
     together with the net proceeds of its recently completed public
     offering of common stock, which closed on April 29, 1998, will be
     sufficient to fund the Company's anticipated future acquisitions,
     operating needs and capital expenditures at least through 1998.

     YEAR 2000 ISSUES

     The nature of the Company's business systems is such that the year
     2000 is expected to have a minimal impact on the Company's operations
     or financial performance. However, there can be no assurance that the
     systems of other parties upon which the Company's businesses also rely
     will address the year 2000 problem adequately.

     NEW ACCOUNTING PRONOUNCEMENTS

     In February 1997, Statement of Financial Accounting Standards ("SFAS")
     No. 128, "Earnings per Share," was issued. SFAS No. 128 established
     standards for computing and presenting earnings per share ("EPS"). It
     requires the dual presentation and a reconciliation of basic and
     diluted EPS. The Company adopted the provisions of SFAS No. 128 in
     1997, which had no effect on EPS as previously reported.

     In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was
     issued, which requires the reporting of comprehensive income.
     Comprehensive income is defined as the change in equity of a business
     enterprise arising from non-owner sources. This Statement is effective
     for fiscal years beginning after December 15, 1997. Management does
     not believe that the implementation of SFAS No. 130 will have a
     material impact on the presentation of its consolidated financial
     statements.

     In June 1997, the Financial Accounting Standards Board issued SFAS No.
     131, "Disclosures About Segments for an Enterprise and Related
     Information." This Statement requires presentation of segment
     information in reports to stockholders, including disclosures about
     the products and services an entity provides and its major customers.
     The Statement is effective for fiscal years beginning after 
     December 15, 1997. Management of the Company has not determined the
     disclosure to be made upon implementation of SFAS No. 131.

     Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Financial Statements of the Company are submitted as a separate
     section of this Form 10-K on pages F-1 through F-26.

     Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE

     None
     <PAGE>
     PART III

     Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information called for by this item is hereby incorporated by
     reference from the Registrant's definitive Proxy Statement for the
     fiscal year ended December 31, 1997, which Proxy Statement was filed
     with the Securities and Exchange Commission on April 14, 1998.

     Item 11.  EXECUTIVE COMPENSATION

     The information called for by this item is hereby incorporated by
     reference from the Registrant's definitive Proxy Statement for the
     fiscal year ended December 31, 1997, which Proxy Statement was filed
     with the Securities and Exchange Commission on April 14, 1998.

     Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT

     The information called for by this item is hereby incorporated by
     reference from the Registrant's definitive Proxy Statement for the
     fiscal year ended December 31, 1997, which Proxy Statement was filed
     with the Securities and Exchange Commission on April 14, 1998.  

     Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information called for by this item is hereby incorporated by
     reference from the Registrant's definitive Proxy Statement for the
     fiscal year ended December 31, 1997, which Proxy Statement was filed
     with the Securities and Exchange Commission on April 14, 1998.
     <PAGE>
     PART IV

     Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON 
               FORM 8-K

     (a)  List of documents filed as part of Report

          (1)  FINANCIAL STATEMENTS INCLUDED IN ITEM 8:

               Report of Independent Accountants                      F-1
               Consolidated Balance Sheets at December 31, 
                 1997 and 1996                                        F-2
               Consolidated Statements of Income for the 
                 years ended December 31, 1997, 1996 and 1995         F-3
               Consolidated Statements of Changes in Share-
                 holders' Equity for the years ended 
                 December 31, 1997, 1996 and 1995                     F-4
               Consolidated Statements of Cash Flows for the 
                 years ended December 31, 1997, 1996 and 1995         F-5
               Notes to Consolidated Financial Statements             F-7

          (2)  FINANCIAL STATEMENT SCHEDULES INCLUDED IN ITEM 8:

               No financial statement schedules are presented as the
               required information is either not applicable or included in
               the Consolidated Financial Statements or notes thereto.

          (3)  EXHIBITS

               The exhibits listed on the accompanying Exhibit Index are
               filed as part of this Annual Report.

     (b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the quarter ended 
     December 31, 1997.
     <PAGE>
     SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
     Exchange Act of 1934, the Registrant has caused this report to be
     signed on its behalf by the undersigned, thereunto duly authorized.

                              AMBASSADORS INTERNATIONAL, INC.
                              (Registrant)

     Date:  May 6, 1998       By:   /s/ Jeffrey D. Thomas
            ---------------         ---------------------------------------
                                    Jeffrey D. Thomas, Chief Financial
                                      Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934,
     this report has been signed below by the following persons on behalf
     of the Registrant and in the capacities and on the dates indicated.

     <TABLE>
     <CAPTION>
     Signature                           Title                                    Date
     ---------------------------------   -------------------------------------    --------------
     <S>                                 <C>                                      <C>

      /s/ John A. Ueberroth               President and Chief Executive Officer    May 6, 1998
      ----------------------------        (Principal Executive Officer)
      John A. Ueberroth


      *                                   Chairman of the Board of Directors       May 6, 1998
      ----------------------------
      Peter V. Ueberroth


      /s/ Jeffrey D. Thomas               Chief Financial Officer                  May 6, 1998
      ----------------------------       (Principal Financial and Accounting
      Jeffrey D. Thomas                   Officer)


      *                                   Director                                 May 6, 1998
      ----------------------------
      James L. Easton


      *                                   Director                                 May 6, 1998
      ----------------------------
      Richard D.C. Whilden


      *                                   Director                                 May 6, 1998
      ----------------------------
      John C. Spence

      </TABLE>
      <PAGE>
      SIGNATURES, CONTINUED

      <TABLE>
      <CAPTION>
      Signature                           Title                                    Date
      ---------------------------------   -------------------------------------    --------------
      <S>                                 <C>                                      <C>
           *                              Director                                 May 6, 1998
           ----------------------------
           Rafer L. Johnson


      *By: /s/ John A. Ueberroth          Attorney-in-Fact                         May 6, 1998
           ----------------------------
           John A. Ueberroth

      </TABLE>
      <PAGE>
     INDEX TO EXHIBITS

     2.1    Form of Reincorporation Agreement(1)
     2.2    Rescission Agreement(1)
     2.3    Stock Purchase Agreement(1)
     2.4    Redemption Agreement(1)
     3.1    Certificate of Incorporation of Ambassadors International,
              Inc.(1)
     3.2    By-Laws of Ambassadors International, Inc.(1)
     4.1    Specimen Stock Certificate(1)
     10.1   People to People Contract - Student Ambassador Program(1)
     10.2   People to People Contract - Citizen Ambassador Program(1)
     10.3   Form of Equity Participation Plan of Ambassadors International,
              Inc.(1)
     10.4   Form of Registration Rights Agreement among the Company,
              John and Peter Ueberroth, and certain other stockholders(1)
     10.5   Form of Indemnification Agreement for officers and
              directors(1)
     10.6   Commercial Lease dated December 21, 1992 between Portolese
              and Sample Investments and International Ambassador Programs,
              Inc.(1)
     10.7   First Amendment to Commercial Lease dated January 3, 1995
              between Portolese and Sample Investments and International
              Ambassador Programs, Inc.(1)
     10.8   Form of Employment Agreement with Executive Officers(1)
     10.9   Form of Note between the Company and the Ueberroths relating
              to the Distribution(1)
     10.10  General Contract between People to People and M.L. Bright
              Associates dated July 1, 1995 and Assignment documents to
              the Company dated February 6, 1996(2)
     10.11  Agreement and Plan of Merger, effective as of December 11,
              1996 by and among Ambassadors International, Inc., a
              Delaware corporation, Ambassadors Performance Improvement,
              Inc., a Delaware corporation and wholly owned subsidiary of
              Ambassadors, Bitterman & Associates, Inc., a Minnesota
              corporation, and Michael H. Bitterman.(3)
     10.12  Asset Purchase Agreement dated as of February 5, 1998
              by and among the company, Ambassador Performance Group, Inc.,
              Rogal America, Co. and Andrew Rogal.(4)
     10.13  Lease dated December 20, 1996 between Rogal America, Inc. and
              Ark-Les Corp.(5)
     10.14  Industrial Lease dated ________, 19__ between the Company
              and the Irvine Company (5)
     21.1   Subsidiaries of Ambassadors International, Inc.(5)
     23.1   Consent of Coopers & Lybrand L.L.P.(5)
     24.1   Powers of Attorney and certified copy of the related
              resolutions of the board of directors.(5)
     27.1   Financial Data Schedule--1997(5)
     27.2   Financial Data Schedule--1996(5)
     99.1   Item 2 of the Company's Current Report on Form 8-K dated
              February 20, 1998.(6)
     <PAGE>
     (1)    Filed as an exhibit of the same number to the Company's
            Registration Statement on Form S-1 (Registration No. 33-93586)
            and incorporated herein by reference.
     (2)    Filed as an exhibit of the same number to the Company's Form
            10-KSB for the year ended December 31, 1995 and incorporated
            herein by reference.
     (3)    Filed with the Securities and Exchange Commission as Exhibit
            2.5 to Form 8-K dated January 3, 1997, and incorporated herein
            by reference.
     (4)    Filed with the Securities and Exchange Commission as Exhibit
            2.6 to Form 8-K dated February 12, 1998 (as amended on 
            Form 8-K/A dated April 2, 1998), and incorporated herein by
            reference.
     (5)    Previously filed as exhibits to the Company's Annual Report on
            Form 10-K for the fiscal year ended December 31, 1997, which
            was filed with the Securities and Exchange Commission on 
            March 31, 1998.
     (6)    Filed with the Securities and Exchange Commission as part of a
            Current Report on Form 8-K on February 12, 1998 (as amended on
            Form 8-K/A dated April 2, 1998), and incorporated herein by
            reference.

     <PAGE>
     REPORT OF INDEPENDENT ACCOUNTANTS



     Board of Directors and Shareholders
     Ambassadors International, Inc.
     Spokane, Washington


     We have audited the accompanying consolidated balance sheets of
     Ambassadors International, Inc. and subsidiaries as of December 31,
     1997 and 1996, and the related consolidated statements of income,
     changes in shareholders' equity and cash flows for each of the three
     years in the period ended December 31, 1997. 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 audits.

     We conducted our audits 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 audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
     fairly, in all material respects, the consolidated financial position
     of Ambassadors International, Inc. as of December 31, 1997 and 1996,
     and the consolidated results of their operations and their cash flows
     for each of the three years in the period ended December 31, 1997 in
     conformity with generally accepted accounting principles.

     As discussed in Note 1 to the financial statements, the Company
     changed its method of accounting for impairment of long-lived assets
     in 1996.


                            COOPERS & LYBRAND L.L.P.


     Spokane, Washington
     February 9, 1998, except for the first 
        paragraph of Note 12 as to which the 
        date is February 19, 1998
     <PAGE>
     AMBASSADORS INTERNATIONAL, INC.
     CONSOLIDATED BALANCE SHEETS
     December 31, 1997 and 1996


                                                 1997         1996
                                                 -----------  -----------
               ASSETS

     Current assets:
       Cash and cash equivalents                 $22,870,546  $18,281,433
       Restricted cash equivalents                   125,000       55,000
       Available-for-sale investments                             590,111
       Accounts receivable                         1,753,369    1,469,053
       Inventory                                      76,033      157,234
       Prepaid program costs and expenses          2,004,995    1,359,950
       Deferred income taxes                          31,229       24,584
       Other assets                                  422,096       12,892
                                                 -----------  -----------
           Total current assets                   27,283,268   21,950,257

     Property and equipment, net                   2,148,305    1,575,486
     Other investments                               462,500      262,500
     Goodwill, net of $290,711 and $115,567 
       of accumulated amortization                 4,247,219    3,308,224
     Covenants-not-to-compete, net of 
       $179,485 and $19,209 of accumulated 
       amortization                                  195,515      135,791
     Other assets                                     85,573       36,792
     Deferred income taxes                            26,608
                                                 -----------  -----------
           Total assets                          $34,448,988  $27,269,050
                                                 ===========  ===========
     <PAGE>
     AMBASSADORS INTERNATIONAL, INC.
     CONSOLIDATED BALANCE SHEETS, CONTINUED
     December 31, 1997 and 1996


                                                 1997         1996
                                                 -----------  -----------

       LIABILITIES AND SHAREHOLDERS' EQUITY

     Current liabilities:
       Accounts payable                          $ 1,616,120  $ 1,764,002
       Accrued expenses                              724,008      822,927
       Participants' deposits                      7,397,924    6,199,982
       Customer advances                             980,834    1,335,368
       Notes payable, current portion                171,241      201,146
       Unrealized loss on foreign currency 
       exchange contracts                            674,625
                                                 -----------  -----------
           Total current liabilities              11,564,752   10,323,425

     Deferred income taxes                                        163,044
     Notes payable due after one year                328,696
                                                 -----------  -----------
           Total liabilities                      11,893,448   10,486,469
                                                 -----------  -----------

     Commitments and contingencies 
       (Notes 6, 7, 8 and 12)

     Shareholders' equity:
       Preferred stock, $.01 par value; 
         2,000,000 shares authorized; 
         none issued and outstanding
       Common stock, $.01 par value; 
         authorized, 20,000,000 shares; 
         issued and outstanding, 6,768,223
         and 6,753,887 shares                         67,682       67,539
       Additional paid-in capital                 13,760,963   13,625,279
       Retained earnings                           8,726,895    3,089,763
                                                 -----------  -----------
           Total shareholders' equity             22,555,540   16,782,581
                                                 -----------  -----------
           Total liabilities and 
             shareholders' equity                $34,448,988  $27,269,050
                                                 ===========  ===========

     The accompanying notes are an integral part of the consolidated
       financial statements.
     <PAGE>
     AMBASSADORS INTERNATIONAL, INC.
     CONSOLIDATED STATEMENTS OF INCOME
     for the years ended December 31, 1997, 1996 and 1995


                                    1997         1996         1995
                                    -----------  -----------  -----------
     Revenue                        $26,540,897  $18,843,422  $17,132,920
                                    -----------  -----------  -----------
     Operating expenses:
       Selling and tour promotion     9,825,916    8,420,151    8,693,600
       General and administrative     8,210,378    5,769,874    4,676,494
                                    -----------  -----------  -----------
                                     18,036,294   14,190,025   13,370,094
                                    -----------  -----------  -----------
     Operating income                 8,504,603    4,653,397    3,762,826
                                    -----------  -----------  -----------
     Other income (expense):
       Interest expense                  (9,535)      (1,515)      (2,404)
       Interest and dividend income   1,588,408    1,079,855      785,561
       Realized and unrealized gain 
         (loss) on investments       (1,101,526)     290,253      278,471
       Other, net                           647      (41,060)      (7,868)
                                    -----------  -----------  -----------
                                        477,994    1,327,533    1,053,760
                                    -----------  -----------  -----------
     Income before income taxes       8,982,597    5,980,930    4,816,586
     Income tax provision (benefit)   3,345,465    2,034,395     (340,708)
                                    -----------  -----------  -----------
     Net income                     $ 5,637,132  $ 3,946,535  $ 5,157,294
                                    ===========  ===========  ===========
     Unaudited proforma information:
       Income before income taxes                             $ 4,816,586
       Income tax provision                                     1,637,639
                                                              -----------
                                                              $ 3,178,947
                                                              ===========
       Net income per share - 
         basic                      $      0.83  $      0.60  $      0.57
                                    ===========  ===========  ===========
       Weighted-average shares 
         outstanding - basic          6,759,541    6,618,454    5,623,688
                                    ===========  ===========  ===========
       Net income per share - 
         diluted                    $      0.82  $      0.59  $      0.56
                                    ===========  ===========  ===========
       Weighted-average shares 
         outstanding - diluted        6,893,231    6,649,884    5,647,882
                                    ===========  ===========  ===========

     The accompanying notes are an integral part of the consolidated
       financial statements.
     <PAGE>
     AMBASSADORS INTERNATIONAL, INC.
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
     for the years ended December 31, 1997, 1996 and 1995
     <TABLE>
     <CAPTION>

                                                                                 Retained
                                            Common Stock            Additional   Earnings     Receivables
                                            ----------------------  Paid-In      (Accumulat-  From
                                            Shares     Amount       Capital      ed Deficit   Shareholders Total
                                            ---------  -----------  -----------  -----------  ------------ -----------
      <S>                                   <C>        <C>          <C>          <C>          <C>          <C>
      Balances, December 31, 1994               6,636  $     6,636  $   133,540  $ 1,688,539               $ 1,828,715
        Origination of receivables
           from shareholders                                                                  $(1,820,000)  (1,820,000)
        Redemption and retire-
           ment of common stock                (2,823)      (2,823)    (133,540)  (1,683,637)   1,820,000
        Contribution of S corporation 
           retained earnings with change
           to C corporation status                                        4,902       (4,902)
        Effect of reorganization and
           sale of common stock, net
           of issuance costs                6,531,217       61,537   11,921,566                             11,983,103
        Distributions to shareholders                                             (6,014,066)               (6,014,066)
        Origination of notes receivable
           from shareholders                                                                   (2,000,000)  (2,000,000)
        Repayment of notes receivable
           from shareholders                                                                    2,000,000    2,000,000
        Net income                                                                 5,157,294                 5,157,294
                                            ---------  -----------  -----------  -----------  -----------  -----------
      Balances, December 31, 1995           6,535,030       65,350   11,926,468     (856,772)           0   11,135,046
        Stock issued for acquisition 
           of subsidiaries                    218,857        2,189    1,698,811                              1,701,000
        Net income                                                                 3,946,535                 3,946,535
                                            ---------  -----------  -----------  -----------  -----------  -----------
      Balances, December 31, 1996           6,753,887       67,539   13,625,279    3,089,763            0   16,782,581
        Stock options exercised                14,336          143      135,684                                135,827
        Net income                                                                 5,637,132                 5,637,132
                                            ---------  -----------  -----------  -----------  -----------  -----------
      Balances, December 31, 1997           6,768,223  $    67,682  $13,760,963  $ 8,726,895  $         0  $22,555,540
                                            =========  ===========  ===========  ===========  ===========  ===========
      </TABLE>

      The accompanying notes are an integral part of the consolidated 
        financial statements.
      <PAGE>
     AMBASSADORS INTERNATIONAL, INC.
     CONSOLIDATED STATEMENTS OF CASH FLOWS
     for the years ended December 31, 1997, 1996 and 1995


                                    1997         1996         1995
                                    -----------  -----------  ------------

     Cash flows from operating 
       activities:
         Net income                 $ 5,637,132  $ 3,946,535  $ 5,157,294
         Adjustments to reconcile 
           net income to net cash 
           provided by operating 
           activities:
             Depreciation and 
               amortization             894,963      392,403      227,039
             Deferred income tax 
               provision (benefit)     (196,297)     458,235     (340,708)
             (Gain) loss on
               investments            1,101,526     (290,253)    (278,471)
             Loss on sale of prop-
               erty and equipment        15,245          880
             Purchase of trading 
               securities            (6,699,420)  (7,765,969)  (1,005,000)
             Proceeds from sale of 
               trading securities     6,225,946    8,330,781    1,076,575
             Change in assets and 
               liabilities, net of 
               effects of purchase
               of subsidiaries:
                 Restricted cash 
                   equivalents          (70,000)     (10,000)      (5,000)
                 Accounts 
                   receivable          (284,316)     882,787     (468,126)
                 Inventory               81,201
                 Prepaid program
                   costs and 
                   expenses             179,635       62,447     (159,397)
                 Accounts payable
                   and accrued 
                   expenses            (246,801)    (564,821)    (695,502)
                 Accrued incentive 
                 compensation                                  (2,403,600)
                 Participants' 
                   deposits            (116,226)     684,834      697,937
                 Customer advances     (354,534)
                                    -----------  -----------  -----------
                     Net cash 
                       provided by 
                       operating 
                       activities     6,168,054    6,127,859    1,803,041
                                    -----------  -----------  -----------
     <PAGE>
     AMBASSADORS INTERNATIONAL, INC.
     CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
     for the years ended December 31, 1997, 1996 and 1995

                                    1997         1996         1995
                                    -----------  -----------  ------------
     Cash flows from investing 
       activities:
         Purchase of property and 
           equipment                $(1,032,040) $  (338,072) $  (454,778)
         Proceeds from sale of 
           property and equipment                      1,220        2,500
         Proceeds from sale of 
           available-for-sale 
           securities                   636,684
         Purchase of other 
           investments                 (200,000)    (262,500)
         Cash paid for acquisition 
           of subsidiaries, net of 
           cash received               (199,075)    (105,340)
         Payment for covenant-not-
           to-compete agreement        (220,000)    (125,000)
         Redemption of life 
           insurance                                               28,950
         Change in other assets        (295,631)      19,766        2,147
         Issuance of note 
           receivable                  (162,354)
                                    -----------  -----------  -----------
                     Net cash used
                       in investing 
                       activities    (1,472,416)    (809,926)    (421,181)
                                    -----------  -----------  -----------
     Cash flows from financing 
       activities:
         Payments on long-term 
           debt                        (242,352)     (10,752)      (9,596)
         Proceeds from exercise 
           of stock options             135,827
         Net proceeds from initial 
           public offering                                     11,983,103
         Redemption and retirement 
           of common stock                                       (923,937)
         Shareholder distributions                             (6,090,756)
         Repayments of notes 
           receivable from 
           shareholders                                         2,000,000
         Origination of notes 
           receivable from share-
           holders                                             (2,000,000)
                                    -----------  -----------  -----------
                     Net cash
                       provided by 
                       (used in) 
                       financing 
                       activities      (106,525)     (10,752)   4,958,814
                                    -----------  -----------  -----------
     <PAGE>
     AMBASSADORS INTERNATIONAL, INC.
     CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
     for the years ended December 31, 1997, 1996 and 1995


                                    1997         1996         1995
                                    -----------  -----------  ------------

     Net increase in cash and
       cash equivalents             $ 4,589,113  $ 5,307,181  $ 6,340,674
     Cash and cash equivalents, 
       beginning of year             18,281,433   12,974,252    6,633,578
                                    -----------  -----------  -----------
     Cash and cash equivalents, 
       end of year                  $22,870,546  $18,281,433  $12,974,252
                                    ===========  ===========  ===========
     Supplemental disclosure of 
       cash flow information:
         Cash paid for interest     $     9,535  $     1,515  $     2,404
         Cash paid for income 
           taxes                      3,688,507    1,440,000
         Noncash investing and 
           financing activities:
             Issuance of stock
               for acquisition 
               of subsidiaries                     1,701,000
           Net reduction of assets
             and liabilities 
             associated with 
             deferred sale of land 
             and building through 
             redemption of common 
             stock                                                896,063
           Origination of note payable 
             for acquisition of 
             subsidiary                 541,143


     The accompanying notes are an integral part of the consolidated
       financial statements.
     <PAGE>
     AMBASSADORS INTERNATIONAL, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      1.  COMPANY BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

          ORGANIZATION AND BASIS OF CONSOLIDATION
          ---------------------------------------
          On August 4, 1995, Ambassadors International, Inc. (the Company),
          was reincorporated in the state of Delaware and changed its name
          from International Ambassador Programs, Inc. (see Note 10). The
          Company's predecessor, International Ambassadors Programs, Inc.,
          was incorporated in the state of Washington in 1967. Subsequent
          to the reincorporation, the Company contributed all of its assets
          and liabilities to Ambassador Programs, Inc., a wholly owned
          subsidiary.

          The consolidated financial statements include the accounts of
          Ambassadors International, Inc., and its subsidiaries, Ambassador
          Education Group, Inc. (AEG) and Ambassador Performance Group,
          Inc. (APG). AEG and APG have several wholly owned operating
          subsidiaries including those described in Note 12. All
          significant intercompany accounts and transactions are eliminated
          in consolidation. Through AEG, the Company organizes, markets and
          operates international educational travel programs on a worldwide
          basis for students and adults. Through APG, the Company develops,
          markets and manages performance improvement programs for a
          nationwide roster of corporate clients that utilize merchandise
          awards, consumer promotions and incentive travel, as well as
          provides comprehensive housing, registration and travel services
          for major meetings, conventions, expositions and trade shows.

          During the years ended December 31, 1997, 1996 and 1995, the
          Company's revenues as a percentage of total revenues were derived
          from travel programs in the following geographic areas:

                                             1996   1997   1995
                                             ----   ----   ----
            Europe                           34%    41%    38%
            South Pacific                    24%    28%    32%
            China                            11%    11%    19%
            Other                            17%    19%    7%

          CREDIT RISK
          -----------
          The Company's financial instruments that are exposed to
          concentrations of credit risk consist primarily of cash and cash
          equivalents, investments and trade accounts receivable. The
          Company places its cash and temporary cash investments with high
          credit quality institutions. At times, such investments may be in
          excess of the federal  insurance limit or at institutions which
          are not covered by this insurance. The Company believes that its
          primary trade accounts receivable credit risk exposure is limited
          as travel program participants are required to pay for their
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  COMPANY BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
          CONTINUED:

          CREDIT RISK, CONTINUED
          ----------------------
          entire program costs prior to the program departure and trade
          accounts receivable for non-travel related programs are
          principally with large credit-worthy corporations.

          CASH AND CASH EQUIVALENTS
          -------------------------
          The Company invests cash in excess of operating requirements in
          short-term time deposits, money market instruments, government
          mutual bond funds and marketable securities. The Company
          considers investments with remaining maturities at date of
          purchase of three months or less to be cash equivalents.

          The Company's restricted cash equivalents represent certificates
          of deposit held by four airline companies as collateral for
          airfare purchase agreements. The certificates of deposit are
          issued in the Company's name with the respective airline company
          listed as the beneficiary.

          INVENTORY
          ---------
          Merchandise inventory that is used in connection with the
          Company's merchandise award programs is stated at the lower of
          cost, as determined by the first-in, first-out method, or net
          realizable value.

          INVESTMENTS
          -----------
          The Company classifies its marketable investments as trading or
          available-for-sale. Trading securities consist of foreign
          currency futures and forward contracts which are carried at fair
          value. The Company uses foreign currency exchange contracts as
          part of an overall risk-management strategy. These instruments
          are used as a means of mitigating exposure to foreign currency
          risk connected to anticipated travel programs. In entering into
          these contracts, the Company has assumed the risk which might
          arise from the possible inability of counterparties to meet the
          terms of their contracts. The Company does not expect any losses
          as a result of counterparty defaults. Realized and unrealized
          gains and losses on these securities are recognized in the
          statement of income.

          Available-for-sale securities are recorded at market value.
          Unrealized gains and losses are excluded from operations and
          reported as a separate component of shareholders' equity, net of
          deferred income taxes.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  COMPANY BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
          CONTINUED:

          INVESTMENTS, CONTINUED
          ----------------------
          Realized gains and losses on the sale of investments are
          recognized on a specific identification basis in the statement of
          income in the period the investments are sold.

          The Company owns a 20% interest in a company which provides
          packaged tours primarily to Formula One, Indy Car and NASCAR
          races. This investment is reported on the equity method. The
          Company also owns a 15% interest in a joint venture. The joint
          venture's purpose is the acquisition of preferred stock (which
          represents 18.4% of the total outstanding stock) of a private
          company. This investment is reported at the lower of cost or
          estimated net realizable value.

          PROPERTY AND EQUIPMENT
          ----------------------
          Property and equipment are stated at cost. Cost of maintenance
          and repairs which do not improve or extend the lives of the
          respective assets are expensed currently. Major additions and
          betterments are capitalized. Depreciation and amortization are
          provided over the lesser of the estimated useful lives of the
          respective assets or the lease term (including extensions), using
          the straight-line method.

          When property and equipment are sold or retired, the related cost
          and accumulated depreciation are removed from the accounts and
          any gain or loss is recognized in operations.

          GOODWILL AND COVENANTS-NOT-TO-COMPETE
          -------------------------------------
          Goodwill recorded in connection with the Company's acquisition of
          other businesses is being amortized using the straight-line
          method over 10 to 15 years. Costs associated with obtaining
          covenants-not-to-compete are amortized using the straight-line
          method over the term of the agreements, generally 5 to 10 years.

          In 1996, the Company adopted SFAS No. 121, "Accounting for the
          Impairment of Long-Lived Assets or Long-Lived Assets to be
          Disposed Of." SFAS No. 121 requires certain long-lived assets,
          such as the Company's property and equipment and goodwill, be
          reviewed for impairment in value whenever events or circumstances
          indicate that the carrying value of an asset may not be
          recoverable. In performing the review, if expected future
          undiscounted cash flows from the use of the asset or the fair
          value, less selling costs, from the disposition of the asset is
          less than its carrying value, an impairment loss is to be
          recognized. There was no effect on the Company's results of
          operations, financial condition or cash flows of adopting SFAS
          No. 121 on January 1, 1996.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  COMPANY BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
          CONTINUED:

          REVENUE RECOGNITION
          -------------------
          For travel programs, the Company bills travel participants in
          advance and records such deposits as participants' deposits.
          Additionally, the Company pays for certain direct program costs
          such as airfare, hotel, rail passes and other program costs in
          advance of the departure and records these amounts as prepaid
          program costs and expenses. The Company recognizes revenue and
          related costs associated with its programs when travel convenes.

          The Company also recognizes revenue from the sale of merchandise,
          printing and administration of customer incentive programs.
          Revenues from the sale of merchandise are recognized when the
          merchandise is shipped. Revenue from incentive programs is
          deferred as customer advances until the Company's obligations are
          fulfilled. Revenues are recognized from printing and
          administration based upon the percentage of completion of the
          related program.

          Amounts reported as customer advances associated with prepaid
          certificate-based merchandise incentive programs are subject to
          change due to estimates made by management related to the
          ultimate obligation associated with the unredeemed prepaid
          certificates. Estimates are based upon historical trends of
          issued and redeemed certificates. Due to uncertainties inherent
          in the estimation process, it is reasonably possible that changes
          could occur in the near term which could materially affect the
          estimated obligation.

          SELLING AND TOUR PROMOTION EXPENSES
          -----------------------------------
          The Company expenses all selling and tour promotion costs as
          incurred.

          NET INCOME PER SHARE
          --------------------
          In February 1997, Statement of Financial Accounting Standards No.
          128 (SFAS No. 128), "Earnings per Share" was issued. SFAS No. 128
          established standards for computing and presenting earnings per
          share (EPS). It requires the dual presentation and a
          reconciliation of basic and diluted EPS. The Company adopted the
          provisions of SFAS No. 128 in 1997, and all prior period EPS
          calculations have been restated to conform with SFAS No. 128.
          There was no effect of adopting SFAS No. 128 on EPS as previously
          reported.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  COMPANY BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
          CONTINUED:

          NET INCOME PER SHARE, CONTINUED
          -------------------------------
          Net income per share - basic is computed by dividing net income
          by the weighted-average number of common shares outstanding
          during the period. Net income per share - diluted is computed by
          increasing the weighted-average number of common shares
          outstanding by the additional common shares that would have been
          outstanding if the dilutive potential common shares had been
          issued.

          Historical net income per share for the year ended December 31,
          1995 has not been presented as it is not meaningful in the
          presentation of these financial statements. Pro forma weighted
          average common shares outstanding have been calculated for the
          year ended December 31, 1995, using common shares outstanding
          after the reorganization and, including certain shares issued in
          connection with the initial public offering (see Notes 10
          and 11).

          ACCOUNTING FOR STOCK OPTIONS
          ----------------------------
          In October 1995, the Financial Accounting Standards Board issued
          SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No.
          123 establishes financial accounting and reporting standards for
          stock-based employee compensation plans. SFAS No. 123 encourages
          all entities to adopt a fair value based method of accounting,
          but allows an entity to continue to measure compensation cost for
          those plans using the intrinsic value method of accounting
          prescribed by Accounting Principles Board Opinion No. 25,
          "Accounting for Stock Issued to Employees." The Company adopted
          the disclosure only provisions of SFAS No. 123 on January 1,
          1996.

          ESTIMATES
          ---------
          The preparation of financial statements in conformity with
          generally accepted accounting principles requires management to
          make estimates and assumptions that affect the reported amounts
          of assets and liabilities and disclosure of contingent assets and
          liabilities at the date of the financial statements and the
          reported amounts of revenues and expenses during the reporting
          period. Actual results could differ from those estimates.

          RECLASSIFICATIONS
          -----------------
          Certain prior year amounts have been reclassified to conform with
          the 1997 presentation. These reclassifications had no effect on
          net income or retained earnings as previously reported.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      1.  COMPANY BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
          CONTINUED:

          NEW ACCOUNTING PRONOUNCEMENTS
          -----------------------------
          In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was
          issued, which requires reporting of comprehensive income.
          Comprehensive income is defined as the change in equity of a
          business enterprise arising from non-owner sources. This
          Statement is effective for fiscal years beginning after December
          15, 1997. Management does not believe that the implementation of
          SFAS No. 130 will have a material impact on the presentation of
          its consolidated financial statements.

          In June 1997, the Financial Accounting Standards Board issued
          SFAS No. 131, "Disclosures about Segments for an Enterprise and
          Related Information." This Statement requires presentation of
          segment information in reports to shareholders including
          disclosures about the products and services an entity provides
          and its major customers. The Statement is effective for fiscal
          years beginning after December 15, 1997. Management of the
          Company has not determined the disclosure to be made upon
          implementation of SFAS No. 131.


      2.  INVESTMENTS:

          TRADING SECURITIES
          ------------------
          At December 31, 1997, the Company had foreign currency forward
          contracts. The cost and fair values of these securities were as
          follows:

               Cost                                            $        0
               Gross unrealized gains                             374,775
               Gross unrealized losses                         (1,049,400)
                                                               ----------
               Fair value (carrying value)                     $ (674,625)
                                                               ==========

          The fair value of the Company's investments in foreign currency
          forward contracts is based upon the spot price of these
          currencies at December 31, 1997.

          There was no cost or unrealized gain or loss associated with the
          Company's foreign currency contracts at December 31, 1996. Net
          realized gains (losses) on investments of $(426,901), $290,253
          and $7,983 for the years ended December 31, 1997, 1996 and 1995,
          respectively, were included in the determination of net income.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      2.  INVESTMENTS, CONTINUED:

          TRADING SECURITIES, CONTINUED
          -----------------------------
          AVAILABLE-FOR-SALE SECURITIES
          -----------------------------
          The Company's available-for-sale investments were all obtained
          through the acquisition of a subsidiary on December 31, 1996 (see
          Note 12). Since the acquisition was accounted for using the
          purchase method of accounting, cost and market value were the
          same at December 31, 1996 as follows:

                Taxable fixed income securities                  $224,315
                Equity securities                                 365,796
                                                                 --------
                                                                 $590,111
                                                                 ========

     3.  PROPERTY AND EQUIPMENT:

         Property and equipment consists of the following at December 31,
         1997 and 1996:

                                                   1997        1996
                                                   ----------  ----------
             Office furniture, fixtures and 
               equipment                           $1,519,240  $1,312,516
             Computer equipment                     2,308,828   2,014,779
             Leasehold improvements                   676,065     161,301
                                                   ----------  ----------
                                                    4,504,133   3,488,596
             Less accumulated depreciation 
               and amortization                    (2,355,828) (1,913,110)
                                                   ----------  ----------
                                                   $2,148,305  $1,575,486
                                                   ==========  ==========

          Depreciation and amortization expense on property and equipment
          of approximately $444,000, $327,000 and $227,000 for the years
          ended December 31, 1997, 1996 and 1995, respectively, were
          included in the determination of net income.


      4.  NOTE PAYABLE:

          During 1997, in conjunction with one of the Company's
          acquisitions, the Company agreed to pay $541,143 over three years
          with quarterly principal and interest payments of $50,000. The
          amount bears interest at 6.5% and the obligation is unsecured.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      4.  NOTE PAYABLE, CONTINUED:

          At December 31, 1997, future maturities of the note payable are
          as follows:

               Year Ended
               December 31,
               ------------
                 1998                                $171,241
                 1999                                 182,808
                 2000                                 145,888
                                                     --------
                                                     $499,937
                                                     ========


      5.  INCOME TAXES:

          Effective August 4, 1995, the Company terminated its S
          corporation status. As a result, the Company's earnings for the
          period ended August 4, 1995 were taxed at the shareholders'
          level. From August 5, 1995, the Company's earnings (losses) have
          been taxed as a C corporation and the resultant income taxes have
          been reflected in the consolidated financial statements.

          The provision (benefit) for income taxes for the years ended
          December 31, 1997, 1996 and 1995 consisted of the following:

                                       1997        1996        1995
                                       ----------  ----------  ----------
             Current:
               Federal                 $3,356,949  $1,542,186
               State                      102,866      33,974
             Deferred                    (114,350)    458,235  $ (340,708)
                                       ----------  ----------  ----------
                                       $3,345,465  $2,034,395  $ (340,708)
                                       ==========  ==========  ==========
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      5.  INCOME TAXES, CONTINUED:

           Components of the net deferred tax assets and liabilities as of
           December 31, 1997 and 1996 are as follows:

                                       December 31, 1997
                                       -----------------------------------
                                       Assets      Liabilities   Total
                                       ---------   -----------   ---------
            Accrued vacation           $  44,051                 $  44,051
            Depreciation                            $(199,614)    (199,614)
            Unrealized loss on 
              futures contracts          272,565                   272,565
            Amortization of good-
              will and non-compete 
              agreements                  31,782                    31,782
            Net operating loss 
              carryforwards              293,045                   293,045
            Customer advances                        (415,661)    (415,661)
            Inventory valuation           29,467                    29,467
            Other                          2,202                     2,202
                                       ---------    ---------    ---------
            Total temporary 
              differences and
              tax attributes           $ 673,112    $(615,275)   $  57,837
                                       =========    =========    =========

                                       December 31, 1996
                                       -----------------------------------
                                       Assets       Liabilities  Total
                                       ---------    -----------  ---------
            Accrued vacation           $  51,380                 $  51,380
            Depreciation                            $(163,044)    (163,044)
            Unrealized gain on 
              available-for-sale
              investments                              (7,364)      (7,364)
            Net operating loss 
              carryforwards              279,180                   279,180
            Customer advances                        (295,248)    (295,248)
            Other                          1,050       (4,414)      (3,364)
                                       ---------    ---------    ---------
            Total temporary 
              differences and 
              tax attributes           $ 331,610    $(470,070)   $(138,460)
                                       =========    =========    =========

           The Company does not believe a valuation allowance is necessary
           to reduce the deferred tax asset as this asset will more likely
           than not be realized through the future reversal of temporary
           taxable items. Although realization is not assured, management
           believes it is more likely than not that all of the deferred tax
           asset will be utilized.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      5.  INCOME TAXES, CONTINUED:

          The income tax provision (benefit) for the years ended 
          December 31, 1997, 1996 and 1995 differ from that computed using
          the federal statutory rate applied to income before income taxes
          as follows:
     <TABLE>
     <CAPTION>
                                   1997                1996                1995
                                   -----------------   -----------------   -----------------
                                   Amount      %       Amount      %       Amount      %
                                   ----------  -----   ----------  -----   ----------  -----
      <S>                          <C>         <C>     <C>         <C>     <C>         <C>
      Provision at the federal 
        statutory rate             $3,054,083  34.0%   $2,033,516  34.0%   $1,637,639  34.0%
      Tax effect of income not 
        subject to federal tax 
        due to Sub-chapter S 
        status                                                             (2,062,273)(42.8)
      Recognition of net deferred 
        tax liability in 
        connection with S 
        corporation termination                                                83,926   1.7
      Nondeductible goodwill           78,869   0.9
      State income tax, net of 
        federal benefit                67,892   0.8
      Adjustment of prior years' 
        taxes                         104,144   1.2
      Other                            40,477   0.3           879
                                   ----------  ----    ----------  ----    ---------   ----
                                   $3,345,465  37.2%   $2,034,395  34.0%   $(340,708)  (7.1)%
                                   ==========  ====    ==========  ====    =========   ====
      </TABLE>

           At December 31, 1997, the Company has acquired companies with
           federal net operating loss carryforwards of approximately
           $792,000, which can be used to offset future regular taxable
           income. These carryforwards expire in 2011. The Company's
           utilization of tax net operating loss carryforwards is currently
           limited to approximately $133,000 annually, subject to earnings
           from the acquired entity.


      6.   COMMITMENTS AND CONTINGENCIES:

           The substantial majority of the Company's travel programs take
           place outside of the United States and most foreign suppliers
           require payment in currency other than the U.S. dollar.
           Accordingly, the Company is exposed to foreign currency risk
           relative to changes in foreign currency exchange rates between
           those currencies and the U.S. dollar. The Company has a program
           to provide an economic hedge against certain of these foreign
           currency risks. The Company uses forward contracts which allow
           the Company to acquire the foreign currency at a fixed price for
           a specified period of time. Additionally, the Company uses
           foreign currency call options which provide the Company with the
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      6.   COMMITMENTS AND CONTINGENCIES, CONTINUED:

           option to acquire certain foreign currencies at a fixed exchange
           rate and time period. Concurrent with the purchase of a foreign
           currency call option, the Company sells a foreign currency put
           option to minimize the net premium paid for the call option. The
           strike prices on these options generally straddle the exchange
           rate at the time the options are purchased and sold. Any gains
           or losses associated with these anticipated transactions are
           recognized in the Company's operations currently based upon the
           fair value of the instruments as the Company does not have firm
           commitments to purchase goods and services denominated in
           foreign currencies. The Company also purchases future contracts
           to similarly hedge its foreign currency risk. The Company is
           exposed to credit risk under the forward contracts to the extent
           that the counterparty is unable to perform under the agreement.
           The Company has a $23,000,000 credit facility through July 1998
           to support foreign currency purchases and foreign exchange
           forward contracts.

           At December 31, 1997, the Company had outstanding forward
           exchange contracts to purchase foreign currencies as follows:

                 Currency                               Amount
                 --------                               -----------
                 Australian dollar                      $ 5,273,570  (A)
                 French franc                             1,011,638  (B)
                 New Zealand dollar                       1,235,850  (C)
                 British pound                            7,879,225  (B)
                 Australian dollar                        2,036,925  (D)
                                                        -----------
                                                        $17,437,208
                                                        ===========

         (A) Matures in April-July 1998
         (B) Matures in April-June 1998
         (C) Matures in April-August 1998
         (D) Matures in May 1999

         At December 31, 1996, there were no unrealized gains or losses
         associated with the Company's foreign currency contracts. For the
         years ended December 31, 1997 and 1995, the Company recognized
         unrealized foreign currency gains (losses) associated with these
         financial instruments of $(674,625) and $270,488, respectively.

         The Company is subject to claims, suits and complaints which have
         arisen in the ordinary course of business. In the opinion of
         management and its legal counsel, all matters are adequately
         covered by insurance or, if not covered, are without merit or are
         of such a nature, or involve such amounts as would not have a
         material effect on the financial position, cash flows or results
         of operations of the Company.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      6.   COMMITMENTS AND CONTINGENCIES, CONTINUED:

           The Company leases office facilities and office equipment under
           noncancelable operating leases. At December 31, 1997, future
           noncancelable lease commitments, including the lease described
           in Note 7, are as follows:

               Year Ended
               December 31,
               ------------
                 1998                              $  653,283
                 1999                                 536,131
                 2000                                 485,964
                 2001                                 449,605
                 2002                                 447,354
                 Thereafter                           887,808
                                                   ----------
                                                   $3,460,145
                                                   ==========

           Total rent expense for the years ended December 31, 1997, 1996
           and 1995 was approximately $747,000, $503,000 and $444,000,
           respectively.

           In addition to the above lease commitments, the Company entered
           into a new lease agreement for one of its facilities commencing
           in June 1998 for $28,346 per month for seven years.
           Additionally, with an acquisition in February 1998 described in
           Note 12, the Company assumed a lease for $15,640 per month until
           2003.


      7.   RELATED-PARTY TRANSACTIONS:

           In 1992, the Company sold, financed and leased back its office
           building and land to a partnership formed by two shareholders of
           the Company, who were also officers and directors. Effective
           January 1, 1995, the Company modified its lease to provide a 10-
           year lease cancelable with notice after the initial three-year
           term. This lease is renewable for an additional 10 years after
           the initial lease term. For each of the years ended December 31,
           1997, 1996 and 1995, the Company incurred rent expense
           approximating $444,000 under this lease.

           In March 1995, the Company loaned $1,000,000 each to Messrs.
           John and Peter Ueberroth (the Ueberroths), Company shareholders,
           under notes receivable bearing interest at 7.25% per annum. In
           June 1995, both notes were repaid in full, and the Company
           recognized approximately $36,000 of interest income during 1995.

           The Company owns a 15% interest in a joint venture whose
           Chairman of the Board and Chief Executive Officer is also a
           Director of the Company.  Also, the President of the Company is
           a director of the joint venture.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      8.   STOCK PLANS:

           The Company adopted the 1995 Equity Participation Plan (the
           Plan) during 1995 which provides for the grant of stock options,
           awards of restricted stock, performance or other awards or stock
           appreciation rights to directors, key employees and consultants
           of the Company. The maximum number of shares which may be
           awarded under the Plan is 600,000 shares. Awards cannot exceed
           100,000 shares to any individual in a calendar year.

           Under the terms of the Plan, options to purchase shares of the
           Company's common stock are granted at a price set by the
           Compensation Committee of the Board of Directors, not to be less
           than the par value of a share of common stock and if granted as
           performance-based compensation or as incentive stock options, no
           less than the fair market value of the stock on the date of
           grant. The Compensation Committee establishes the vesting period
           of the awards. The options may be exercised any time after they
           are fully vested for a period up to 10 years from the grant
           date.

           On January 1, 1996, the Company adopted SFAS No. 123,
           "Accounting for Stock-Based Compensation." As permitted by SFAS
           No. 123, the Company has chosen to apply APB Opinion No. 25 (APB
           No. 25), "Accounting for Stock Issued to Employees" and related
           interpretations in accounting for its plans. Had compensation
           cost for the Company's plans been determined based on the fair
           value at the grant dates for awards under the plans consistent
           with the method of SFAS No. 123, the Company's pro forma net
           income and net income per share would have been changed to the
           pro forma amounts indicated below:

     <TABLE>
     <CAPTION>
                        Year Ended              Year Ended              Year Ended
                        December 31, 1997       December 31, 1996       December 31, 1995
                        ----------------------  ----------------------  ----------------------
                        As          Pro         As          Pro         As          Pro
                        Reported    Forma       Reported    Forma       Reported    Forma
                        ----------  ----------  ----------  ----------  ----------  ----------
      <S>               <C>         <C>         <C>         <C>         <C>         <C>
      Net income        $5,637,132  $5,242,093  $3,946,535  $3,783,749  $3,178,947  $3,032,901
                        ==========  ==========  ==========  ==========  ==========  ==========
      Net income
        per share - 
        basic           $     0.83  $     0.78  $     0.60  $     0.57  $     0.57  $     0.54
                        ==========  ==========  ==========  ==========  ==========  ==========
      Net income 
        per share - 
        diluted         $     0.82  $     0.76  $     0.59  $     0.57  $     0.56  $     0.54
                        ==========  ==========  ==========  ==========  ==========  ==========
      </TABLE>
      <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      8.  STOCK PLANS, CONTINUED:

          The fair value of each option grant is estimated on the date of
          grant using the Black-Scholes option-pricing model with the
          following weighted-average assumptions used for grants in 1997,
          1996 and 1995:

                                    1997        1996          1995
                                    ----------  ------------  ------------
             Dividend yield                0%            0%            0%
             Expected volatility          63%           84%           84%
             Risk free interest 
               rates                    6.50%   6.40%-6.44%   5.57%-5.65%
             Expected option lives  9.7 years       8 years       8 years


         Stock option transactions are summarized as follows:

     <TABLE>
     <CAPTION>
                                                          Weighted-
                                                          Average    Exercise
                                              Number of   Exercise   Price           Expiration
                                              Shares      Price      Per Share       Date
                                              ---------   --------   -------------   ----------
      <S>                                     <C>         <C>        <C>             <C>
            Balance, December 31, 1994             -                              
              Options granted                  319,800     $ 8.92    $   8.25-9.00      2005
              Options forfeited                (42,750)      9.00             9.00
                                               -------     ------    -------------
            Balance, December 31, 1995         277,050       8.90        8.25-9.00      2005
              Options granted                  109,400      10.79       9.75-11.25      2006
              Options forfeited               (145,087)      9.06       9.00-11.00
                                               -------     ------    -------------
            Balance, December 31, 1996         241,363       9.66       8.25-11.25      2005-
                                                                                        2006
              Options granted                  269,950      10.84       8.75-15.25      2007
              Options forfeited                (49,925)      9.53       9.00-11.00
              Options exercised                (14,336)      9.47       9.00-11.25
                                               -------     ------    -------------
            Balance, December 31, 1997         447,052     $10.39    $  8.25-15.25      2005-
                                               =======     ======    =============      2007

            Exercisable, December 31, 1997      76,326     $ 9.34
                                               =======     ======
      </TABLE>

          The weighted-average fair value of options granted during 1997,
          1996 and 1995 were $8.32 per share, $7.95 per share and $8.41 per
          share, respectively.

          In addition to the stock options above, during 1997, the Company
          granted an executive 50,000 shares of the Company's stock which
          vests over four years. The Company incurred compensation expense
          of approximately $53,000 in 1997 related to these shares.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

      9.  EMPLOYEE BENEFIT PLANS:

          Effective January 1, 1993, the Company established a
          noncontributory profit sharing plan which covers substantially
          all employees. The plan provides full vesting upon eligibility
          and permits employees to direct the investment of their accounts.
          Contributions by the Company are determined at the discretion of
          the Board of Directors. No contributions were made to the plan
          during the year ended December 31, 1995. During 1996, the assets
          of the plan were transferred into a new 401(k) Profit-Sharing
          Plan (the Plan).

          Employees are eligible to participate in the Plan upon one year
          of service and 21 years of age. Employees may contribute up to
          15% of their salary, subject to the maximum contribution allowed
          by the Internal Revenue Service. The Company's matching
          contribution is discretionary based upon approval by management.
          Employees are 100% vested in their contributions and vest in
          Company matching contributions equally over four years. During
          the years ended December 31, 1997 and 1996, the Company
          contributed approximately $26,000 and $57,000 to the Plan,
          respectively. No contributions were made to the Plan in 1995.


     10.  REORGANIZATION AND INITIAL PUBLIC OFFERING:

          On January 3, 1995, the shareholders sold 3,320 shares to new
          shareholders (the Ueberroths). Simultaneously, the Company
          redeemed the remaining 3,316 shares outstanding for $1,820,000.
          The prior shareholders, all of whom were officers and directors
          of the Company, resigned from the Board of Directors effective
          January 3, 1995, and the Ueberroths were installed as the new
          officers and directors. The prior shareholders were to continue
          employment with the Company under employment contracts and
          entered into an agreement not to compete with the Company for a
          10-year period. The Company's obligations to the prior
          shareholders under these agreements aggregated $1,700,000 per
          year over the 10-year agreement terms. These transactions were
          rescinded in entirety in connection with the Company's initial
          public offering in August 1995. As a result of the rescission,
          the Company recorded a receivable from shareholders for
          $1,820,000 to reflect the reversal of the common stock
          redemption.

          In connection with the Company's initial public offering, the
          Ueberroths purchased 2,823 shares and the Company redeemed 2,823
          shares of the Company's 6,636 shares of common stock held by the
          shareholders for $1,820,000 effective January 1995. In connection
          with the Company's reincorporation (see Note 1), the Company
          increased the number of common shares to 4,995,030 (1,310 shares
          of the new corporation for each share of the old corporation). 
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     10.  REORGANIZATION AND INITIAL PUBLIC OFFERING,CONTINUED:

          Also, the Company authorized 2,000,000 shares of preferred stock
          which can be issued by the Board of Directors, without
          shareholder authorization, with such preferences as determined by
          the Board of Directors.

          In August 1995, the Company completed an initial public offering
          of its common stock whereby it sold 1,540,000 shares at $9 per
          share. Proceeds, net of offering costs, were approximately
          $11,983,000. 


     11.  PRO FORMA STATEMENT OF INCOME INFORMATION:

          The pro forma statement of income for the year ended December 31,
          1995 presents the pro forma effects of recording an income tax
          provision for the Company as a C corporation rather than an S
          corporation. The total pro forma adjustment to the historical
          information for the year ended December 31, 1995 was $1,978,347.


     12.  BUSINESS ACQUISITIONS:

          In February 1998, the Company acquired certain assets of a
          meeting management company specializing in comprehensive,
          integrated hotel registration and related travel services for
          major meetings, conventions and trade shows. The Company is
          located in Boston, Massachusetts. In February 1998, the Company
          acquired all of the outstanding stock of a meeting management and
          incentive travel company located in Westlake, California. The
          total purchase price for these acquisitions was $7,550,000 and
          192,255 shares of the Company's restricted common stock and
          certain contingent consideration. The common stock issued to
          effect the transactions will be recorded at fair value.

          In September 1997, the Company acquired the assets of a company
          located in Waconia, Minnesota. The Company organizes and operates
          travel and other incentive programs, professional meetings,
          conventions and seminars for businesses. The results of
          operations of this business for the year ended December 31, 1996
          and for the 1997 period prior to being acquired by the Company
          were immaterial to the consolidated operating results of the
          Company. The total purchase price of this company was $500,000 in
          cash, a $541,000 note payable and certain contingent
          consideration as described below. Goodwill related to this
          acquisition of approximately $1,054,000 is being amortized over
          15 years.

          The contingent consideration to be paid is dependent upon the
          success of the acquired companies' programs. The contingent
          consideration will be accounted for as goodwill and will be
          amortized accordingly when, and if, the contingency is removed
          and additional consideration is paid.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     12.  BUSINESS ACQUISITIONS, CONTINUED:

          In December 1996, the Company acquired all of the outstanding
          common stock of a company which is located in Minneapolis,
          Minnesota, with sales offices in Des Moines, Iowa; Newport Beach
          and San Francisco, California; Philadelphia, Pennsylvania; and
          Fairway, Kansas. The Company administers incentive travel and
          merchandise programs. In connection with this acquisition, the
          Company also entered into a ten-year covenant-not-to-compete
          agreement for a total of $1,200,000. This amount will be paid in
          equal annual payments over eight years.

          In February 1996, the Company acquired the assets of a company
          which has offices in Winnebago, Illinois and Birmingham, Alabama
          and provides adult travel programs. In connection with the
          acquisition, the Company also entered into a covenant-not-to-
          compete agreement for a total of $300,000, to be paid over 4.5
          years.

          In January 1996, the Company acquired all of the outstanding
          stock of a meeting management and incentive travel company
          located in Newport Beach, California.

          All of the above acquisitions have been accounted for using the
          purchase method of accounting. The results of operations of these
          companies have been included in the consolidated statement of
          income since their respective dates of acquisition.

          The following unaudited pro forma summary presents the
          consolidated results of operations of the Company as if the 1996
          acquisitions had occurred at January 1, 1995:

                                                 1996         1995
                                                 -----------  -----------
             Revenue                             $22,616,552  $21,922,665
                                                 ===========  ===========
             Net income                          $ 3,690,375  $ 3,045,964
                                                 ===========  ===========
             Net income per share - basic        $      0.55  $      0.52
                                                 ===========  ===========

          The above amounts are based upon certain assumptions and
          estimates which the Company believes are reasonable and do not
          reflect any benefit from economies which might be achieved from
          combined operations. The pro forma results do not necessarily
          represent results which would have occurred if the acquisitions
          had taken place on the bases assumed above, nor are they
          indicative of the results of future combined operations.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     13.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

          The following disclosure of the estimated fair value of financial
          instruments is made in accordance with the requirements of
          Statement of Financial Accounting Standards No. 107, "Disclosures
          about Fair Value of Financial Instruments." The estimated fair
          value amounts have been determined using available market
          information and appropriate valuation methodologies. However,
          considerable judgment is necessarily required to interpret market
          data and to develop the estimates of fair value. Accordingly, the
          estimates presented herein are not necessarily indicative of the
          amounts the Company could realize in a current market exchange.
          The use of different market assumptions and/or estimation
          methodologies may have a material effect on the estimated fair
          value amounts.

          The following methods and assumptions were used to estimate the
          fair value of each class of financial instrument for which it is
          practicable to estimate that value. Potential income tax
          ramifications related to the realization of unrealized gains and
          losses that would be incurred in an actual sale and/or settlement
          have not been taken into consideration.

             CASH AND CASH EQUIVALENTS - The carrying value of cash and
             cash equivalents approximates fair value due to the nature of
             the cash investments.

             INVESTMENTS - The fair value of the Company's investments in
             foreign currency forward contracts is based on quoted market
             prices and the spot rate of the foreign currencies subject to
             contracts at year end. The fair value of the Company's foreign
             currency put and call options is based on the estimated amount 
             to  terminate  the  put  and call contracts with the
             counterparties at year end. The fair value of the Company's
             investment in debt and equity securities is based on quoted
             market prices.

             OTHER ASSETS - The fair value of the note receivable, which is
             included in other assets, is based on the discounted value of
             contractual cash flows. The discount rate is estimated using
             the rates currently offered for notes with similar remaining
             maturities and credit risks.

             OTHER INVESTMENTS - The fair value of other investments
             approximates carrying value.

             NOTES PAYABLE - The fair value of notes payable is based on
             the discounted value of contractual cash flows of the notes.
             The discount rate is estimated using the rates currently
             offered for debt with similar remaining maturities.
     <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     13.  FAIR VALUE OF FINANCIAL INSTRUMENTS,CONTINUED:

          The estimated fair values of the following financial instruments
          as of December 31, 1997 and 1996 are as follows:
     <TABLE>
     <CAPTION>
                                          1997                        1996
                                          -------------------------   -------------------------
                                          Carrying      Fair          Carrying      Fair
                                          Amount        Value         Amount        Value
                                          -----------   -----------   -----------   -----------
      <S>                                 <C>           <C>           <C>           <C>
      Financial assets:
        Cash and cash equivalents         $22,870,546   $22,870,546   $18,281,433   $18,281,433
        Investments                          (674,625)     (674,625)      590,111       590,111
        Other assets                          162,354       162,354        35,513        35,513
        Other investments                     462,500       462,500       262,500       262,500

      Financial liabilities:
        Notes payable                         499,937       499,937       201,146       201,146
      </TABLE>
            LIMITATIONS - The fair value estimates are made at a discrete
            point in time based on relevant market information and
            information about the financial instruments. Fair value
            estimates are based on judgments regarding current economic
            conditions, risk characteristics of various financial
            instruments and other factors. These estimates are subjective
            in nature and involve uncertainties and matters of significant
            judgment and, therefore, cannot be determined with precision.
            Changes in assumptions could significantly affect the
            estimates. Accordingly, the estimates presented herein are not
            necessarily indicative of what the Company could realize in a
            current market exchange.


     14.  EARNINGS PER SHARE:

          In accordance with SFAS No. 128, the following table presents a
          reconciliation of the numerators and denominators used in the
          basic and diluted EPS computations. Also shown is the number of
          dilutive securities (stock options) that were included in the
          dilutive EPS computation.
     <TABLE>
     <CAPTION>
                                                       1997
                                                       ----------------------------------
                                                                    Weighted-
                                                       Net          Average        Per
                                                       Income       Shares         Share
                                                       (Numerator)  (Denominator)  Amount
                                                       -----------  -------------  ------
              <S>                                      <C>          <C>            <C>
              Net income per share - basic             $5,637,132   6,759,541      $ 0.83
                                                       ==========   =========      ======
              Net income per share - diluted:
                Net income                             $5,637,132
                                                       ==========
      </TABLE>
      <PAGE>
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

     14.  EARNINGS PER SHARE, CONTINUED:

     <TABLE>
     <CAPTION>
                                                       1997
                                                       ----------------------------------
                                                                    Weighted-
                                                       Net          Average        Per
                                                       Income       Shares         Share
                                                       (Numerator)  (Denominator)  Amount
                                                       -----------  -------------  ------
              <S>                                      <C>          <C>            <C>
              Weighted-average shares outstanding                   6,759,541
                Effect of dilutive securities                         133,690
                                                                    ---------
                                                                    6,893,231      $ 0.82
                                                                    =========      ======

      <CAPTION>
                                                       1996
                                                       ----------------------------------
                                                                    Weighted-
                                                       Net          Average        Per
                                                       Income       Shares         Share
                                                       (Numerator)  (Denominator)  Amount
                                                       -----------  -------------  ------
              <S>                                      <C>          <C>            <C>
              Net income per share - basic             $3,946,535   6,618,454      $ 0.60
                                                       ==========   =========      ======
              Net income per share - diluted:
                Net income                             $3,946,535
                                                       ==========
                Weighted-average shares 
                  outstanding                                       6,618,454
                Effect of dilutive securities                          31,430
                                                                    ---------
                                                                    6,649,884      $ 0.59
                                                                    =========      ======
      </TABLE>

      <TABLE>
      <CAPTION>
                                                       1995
                                                       ----------------------------------
                                                                    Weighted-
                                                       Net          Average        Per
                                                       Income       Shares         Share
                                                       (Numerator)  (Denominator)  Amount
                                                       -----------  -------------  ------
              <S>                                      <C>          <C>            <C>
              Net income per share - basic             $3,178,947   5,623,688      $ 0.57
                                                       ==========   =========      ======
              Net income per share - diluted:
                Net income                             $3,178,947
                                                       ==========
                Weighted-average shares 
                  outstanding                                       5,623,688
                Effect of dilutive securities                          24,194
                                                                    ---------
                                                                    5,647,882      $ 0.56
                                                                    =========      ======
      </TABLE>

<PAGE>