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SECURITIES AND EXCHANGE COMMISSION |
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FORM 10-Q |
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(Mark One) |
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x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended September 30, 2002 |
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OR |
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o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from |
_____________ |
To ______________ |
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STEINER LEISURE LIMITED (Exact name of Registrant as Specified in its Charter) |
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Commission File Number: 0-28972 |
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Commonwealth of The Bahamas |
98-0164731 |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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Suite 104A, Saffrey Square |
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Nassau, The Bahamas |
Not Applicable |
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(Address of principal executive offices) |
(Zip Code) |
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(242) 356-0006 |
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(Former name , former address and former fiscal year, if changed since last report) |
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Indicate by check 4 whether the registrant (1) has 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. [4 ] Yes [ ] No |
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Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. |
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Class |
Outstanding |
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Common Shares, par value (U.S.) $.01 per share |
17,846,516 (including 1,866,406 treasury shares) shares as of November 7, 2002 |
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2
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STEINER LEISURE LIMITED AND SUBSIDIARIES |
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ASSETS |
December 31, |
September 30, |
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2001 |
2002 |
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CURRENT ASSETS: |
(Unaudited) |
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Cash and cash equivalents |
$ |
10,242,000 |
$ |
13,662,000 |
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Marketable securities |
515,000 |
-- |
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Accounts receivable, net |
8,044,000 |
10,303,000 |
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Accounts receivable - students, net |
6,161,000 |
5,659,000 |
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Inventories |
15,528,000 |
17,509,000 |
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Other current assets |
5,604,000 |
7,881,000 |
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Total current assets |
46,094,000 |
55,014,000 |
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PROPERTY AND EQUIPMENT, net |
58,145,000 |
58,761,000 |
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GOODWILL, net |
68,556,000 |
40,846,000 |
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OTHER ASSETS: |
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Intangible assets, net |
8,815,000 |
7,271,000 |
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Deferred financing costs, net |
1,551,000 |
1,260,000 |
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Other |
2,268,000 |
2,516,000 |
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Total other assets |
12,634,000 |
11,047,000 |
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Total assets |
$ |
185,429,000 |
$ |
165,668,000 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
$ |
8,160,000 |
$ |
6,757,000 |
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Accrued expenses |
13,655,000 |
15,317,000 |
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Current portion of long-term debt |
14,488,000 |
17,720,000 |
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Current portion of capital lease obligations |
275,000 |
202,000 |
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Current portion of deferred tuition revenue |
6,327,000 |
5,888,000 |
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Gift certificate liability |
4,508,000 |
4,758,000 |
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Income taxes payable |
1,513,000 |
1,899,000 |
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Total current liabilities |
48,926,000 |
52,541,000 |
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LONG-TERM DEBT, net of current portion |
32,314,000 |
24,956,000 |
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CAPITAL LEASE OBLIGATIONS, net of current portion |
583,000 |
449,000 |
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LONG-TERM DEFERRED TUITION REVENUE |
97,000 |
90,000 |
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MINORITY INTEREST |
3,863,000 |
5,083,000 |
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SHAREHOLDERS' EQUITY: |
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Preferred shares, $.0l par value; 10,000,000 shares authorized, none |
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issued and outstanding |
-- |
-- |
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Common shares, $.0l par value; 100,000,000 shares authorized, |
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17,631,000 shares issued in 2001 and 17,847,000 |
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shares issued in 2002 |
176,000 |
178,000 |
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Additional paid-in capital |
32,105,000 |
34,129,000 |
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Accumulated other comprehensive income (loss) |
(974,000 |
) |
82,000 |
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Retained earnings |
97,710,000 |
77,531,000 |
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Treasury shares, at cost, 1,866,000 shares in 2001 and 2002 |
(29,371,000 |
) |
(29,371,000 |
) |
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Total shareholders' equity |
99,646,000 |
82,549,000 |
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Total liabilities and shareholders' equity |
$ |
185,429,000 |
$ |
165,668,000 |
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The accompanying notes to condensed consolidated financial statements are an integral part of these balance sheets.
3
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STEINER LEISURE LIMITED AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2002 |
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(Unaudited) |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2001 |
2002 |
2001 |
2002 |
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REVENUES: |
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Services |
$ |
39,938,000 |
$ |
48,421,000 |
$ |
92,978,000 |
$ |
135,757,000 |
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Products |
18,156,000 |
21,956,000 |
48,635,000 |
60,562,000 |
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Total revenues |
58,094,000 |
70,377,000 |
141,613,000 |
196,319,000 |
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COST OF SALES: |
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Cost of services |
32,443,000 |
40,593,000 |
72,712,000 |
114,278,000 |
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Cost of products |
13,651,000 |
16,578,000 |
36,421,000 |
45,744,000 |
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Total cost of sales |
46,094,000 |
57,171,000 |
109,133,000 |
160,022,000 |
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Gross profit |
12,000,000 |
13,206,000 |
32,480,000 |
36,297,000 |
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OPERATING EXPENSES: |
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Administrative |
2,999,000 |
3,668,000 |
7,314,000 |
10,734,000 |
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Salary and payroll taxes |
4,285,000 |
3,836,000 |
8,549,000 |
11,590,000 |
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Goodwill amortization |
186,000 |
-- |
556,000 |
-- |
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Total operating expenses |
7,470,000 |
7,504,000 |
16,419,000 |
22,324,000 |
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Income from operations |
4,530,000 |
5,702,000 |
16,061,000 |
13,973,000 |
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OTHER INCOME (EXPENSE): |
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Interest income |
173,000 |
23,000 |
1,145,000 |
96,000 |
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Interest expense |
(958,000 |
) |
(966,000 |
) |
(964,000 |
) |
(2,910,000 |
) |
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Other |
-- |
-- |
-- |
15,000 |
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Total other income (expense) |
(785,000 |
) |
(943,000 |
) |
181,000 |
(2,799,000 |
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Income before provision for income taxes, |
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minority interest, equity investment |
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and cumulative effect of a change |
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in accounting principle |
3,745,000 |
4,759,000 |
16,242,000 |
11,174,000 |
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PROVISION FOR INCOME TAXES |
108,000 |
348,000 |
681,000 |
723,000 |
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Income before minority interest, equity |
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investment and cumulative effect of a |
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change in accounting principle |
3,637,000 |
4,411,000 |
15,561,000 |
10,451,000 |
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MINORITY INTEREST |
(22,000 |
) |
(461,000 |
) |
(30,000 |
) |
(1,220,000 |
) |
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INCOME IN EQUITY INVESTMENT |
-- |
88,000 |
-- |
234,000 |
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Income before cumulative effect of a |
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change in accounting principle |
3,615,000 |
4,038,000 |
15,531,000 |
9,465,000 |
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CUMULATIVE EFFECT OF A CHANGE IN |
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ACCOUNTING PRINCIPLE |
-- |
-- |
-- |
(29,644,000 |
) |
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Net income (loss) |
$ |
3,615,000 |
$ |
4,038,000 |
$ |
15,531,000 |
$ |
(20,179,000 |
) |
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Continued
4
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STEINER LEISURE LIMITED AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - (CONTINUED) |
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FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2002 |
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(Unaudited) |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2001 |
2002 |
2001 |
2002 |
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INCOME (LOSS) PER SHARE-BASIC: |
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Income before cumulative effect of a |
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change in accounting principle |
$ |
0.23 |
$ |
0.25 |
$ |
1.03 |
$ |
0.59 |
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Cumulative effect of a change in |
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accounting principle |
-- |
-- |
-- |
(1.86 |
) |
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$ |
0.23 |
$ |
0.25 |
$ |
1.03 |
$ |
(1.27 |
) |
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INCOME (LOSS) PER SHARE-DILUTED: |
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Income before cumulative effect of a |
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change in accounting principle |
$ |
0.22 |
$ |
0.25 |
$ |
0.99 |
$ |
0.58 |
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Cumulative effect of a change in |
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accounting principle |
-- |
-- |
-- |
(1.82 |
) |
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$ |
0.22 |
$ |
0.25 |
$ |
0.99 |
$ |
(1.24 |
) |
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The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
5
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STEINER LEISURE LIMITED AND SUBSIDIARIES |
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2002 |
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(Unaudited) |
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Nine Months Ended September 30, |
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2001 |
2002 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) |
$ |
15,531,000 |
$ |
(20,179,000 |
) |
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Adjustments to reconcile net income (loss) to |
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net cash provided by operating activities - |
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Cumulative effect of a change in accounting principle |
-- |
29,644,000 |
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Depreciation and amortization |
3,105,000 |
6,793,000 |
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Provision for doubtful accounts |
129,000 |
729,000 |
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Income in equity investment |
-- |
(234,000 |
) |
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Minority interest |
30,000 |
1,220,000 |
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(Increase) decrease in- |
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Accounts receivable |
(113,000 |
) |
(1,963,000 |
) |
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Inventories |
(2,799,000 |
) |
(1,411,000 |
) |
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Other current assets |
(1,742,000 |
) |
(2,325,000 |
) |
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Other assets |
(2,572,000 |
) |
(447,000 |
) |
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Increase (decrease) in- |
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Accounts payable |
(551,000 |
) |
(1,634,000 |
) |
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Accrued expenses |
2,819,000 |
1,575,000 |
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Deferred tuition revenue |
1,126,000 |
(446,000 |
) |
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Gift certificate liability |
(148,000 |
) |
250,000 |
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Income taxes payable |
332,000 |
342,000 |
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Net cash provided by operating activities |
15,147,000 |
11,914,000 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from maturities of marketable securities |
3,073,000 |
515,000 |
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Proceeds from sale of marketable securities |
753,000 |
-- |
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Capital expenditures |
(14,672,000 |
) |
(5,540,000 |
) |
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Proceeds from the sale of fixed assets |
4,969,000 |
-- |
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Acquisitions, net of cash acquired |
(62,071,000 |
) |
(971,000 |
) |
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Net cash used in investing activities |
(67,948,000 |
) |
(5,996,000 |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from long-term debt |
45,000,000 |
6,683,000 |
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Payments on long-term debt |
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