UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2014
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from			_____________       To ______________
Commission File Number: 0-28972
STEINER LEISURE LIMITED (Exact name of Registrant as Specified in its Charter)

 

Commonwealth of The Bahamas					98-0164731
(State or other jurisdiction of incorporation or organization)					(I.R.S. Employer Identification No.)
Suite 104A, Saffrey Square
P.O. Box N-9306
Nassau, The Bahamas					Not Applicable
(Address of principal executive offices)					(Zip Code)

 

(242) 356-0006 (Registrant's telephone number, including area code)
Indicate by check mark 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.           [X]  Yes    [   ]  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).         [X]  Yes         [  ]  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [X]    Accelerated filer [  ]    Non-accelerated filer [  ]    Smaller reporting company [  ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).             [   ]  Yes    [X]  No
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
On April 29, 2014, the registrant had 14,703,078 common shares, par value (U.S.) $.01 per share, outstanding.

 

 

STEINER LEISURE LIMITED

 

INDEX

 

PART I FINANCIAL INFORMATION					Page No.
ITEM 1.	Unaudited Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013					3
	Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2014 and 2013					4
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2014 and 2013					5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013					6
	Notes to Condensed Consolidated Financial Statements					8
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations					15
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk					24
ITEM 4.	Controls and Procedures					24
PART II OTHER INFORMATION
ITEM 1.	Legal Proceedings					25
ITEM 1A.	Risk Factors					25
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds					25
ITEM 6.	Exhibits					26
SIGNATURES AND CERTIFICATIONS						27

 

 

 PART I - FINANCIAL INFORMATION

 

 Item 1. Unaudited Financial Statements

 

STEINER LEISURE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

		March 31,				December 31,
		2014				2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	62,377			$	75,252
Accounts receivable, net			53,444				53,105
Accounts receivable - students, net			24,546				15,665
Inventories			61,117				60,487
Prepaid expenses and other current assets			16,335				15,395
Total current assets			217,819				219,904
PROPERTY AND EQUIPMENT, net			111,251				114,724
GOODWILL			328,231				328,231
OTHER ASSETS:
Intangible assets, net			88,188				88,414
Deferred financing costs, net			3,060				3,317
Deferred customer acquisition costs			10,455				11,033
Other			11,378				10,690
Total other assets			113,081				113,454
Total assets		$	770,382			$	776,313
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	16,323			$	23,613
Accrued expenses			39,824				52,999
Current portion of deferred rent			1,005				1,113
Current portion of deferred tuition revenue			27,644				20,037
Current portion of deferred revenue			97,014				99,266
Gift certificate liability			15,607				16,448
Income taxes payable			1,789				1,687
Total current liabilities			199,206				215,163
NON-CURRENT LIABILITIES:
Deferred income tax liabilities, net			39,882				39,012
Long-term debt			93,139				93,139
Long-term deferred rent			16,715				16,513
Long-term deferred tuition revenue			574				388
Long-term deferred revenue			10,779				11,029
Total non-current liabilities			161,089				160,081
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred shares, $.0l par value; 10,000 shares authorized, none Issued and outstanding			--				--
Common shares, $.0l par value; 100,000 shares authorized, 24,033 shares issued in 2014 and 23,982 shares issued in 2013			240				240
Additional paid-in capital			191,093				188,541
Accumulated other comprehensive loss			(260	)			(258	)
Retained earnings			539,356				531,995
Treasury shares, at cost, 9,332 shares in 2014 and 9,312 shares in 2013			(320,342	)			(319,449	)
Total shareholders' equity			410,087				401,069
Total liabilities and shareholders' equity		$	770,382			$	776,313

  

The accompanying notes to condensed consolidated financial statements are an integral part of these balance sheets.

 

 

STEINER LEISURE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013
(Unaudited)

(in thousands, except per share data)

 

 

		Three Months Ended March 31,
		2014				2013
REVENUES:
Services		$	155,294			$	151,312
Products			61,442				60,702
Total revenues			216,736				212,014
COST OF REVENUES:
Cost of services			129,257				121,114
Cost of products			42,568				40,677
Total cost of revenues			171,825				161,791
Gross profit			44,911				50,223
OPERATING EXPENSES:
Administrative			14,912				14,812
Salary and payroll taxes			20,438				19,637
Total operating expenses			35,350				34,449
Income from operations			9,561				15,774
OTHER INCOME (EXPENSE), NET:
Interest expense			(756	)			(1,419	)
Other income			143				144
Total other income (expense), net			(613	)			(1,275	)
Income before provision for income taxes			8,948				14,499
PROVISION FOR INCOME TAXES			1,587				1,759
Net income		$	7,361			$	12,740
INCOME PER SHARE:
Basic		$	0.50			$	0.87
Diluted		$	0.50			$	0.86

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

 

 

 

STEINER LEISURE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013
(Unaudited)
(in thousands)

 

 

		Three Months Ended March 31,
		2014				2013
Net income		$	7,361			$	12,740
Other comprehensive loss, net of tax:
Foreign currency translation adjustments			(2	)			(1,255	)
Total other comprehensive loss, net of tax			(2	)			(1,255	)
Comprehensive income		$	7,359			$	11,485

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

 

 

STEINER LEISURE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013

(Unaudited, in thousands)

 

		Three Months Ended March 31,
		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	7,361			$	12,740
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization			5,867				5,158
Stock-based compensation			2,550				2,407
Provision for doubtful accounts			1,979				866
Deferred income tax provision			870				870
Changes in:
Accounts receivable			(10,994	)			(3,473	)
Inventories			(480	)			(5,278	)
Prepaid expenses and other current assets			(923	)			(2,205	)
Other assets			(110	)			(790	)
Accounts payable			(7,337	)			1,957
Accrued expenses			(13,134	)			(4,122	)
Deferred tuition revenue			7,793				6,053
Deferred revenue			(2,502	)			4,996
Deferred rent			94				84
Gift certificate liability			(851	)			(935	)
Net cash (used in) provided by operating activities			(9,817	)			18,328
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(2,064	)			(3,792	)
Net cash used in investing activities			(2,064	)			(3,792	)

 

 

STEINER LEISURE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013

(Unaudited, in thousands)

 

		Three Months Ended March 31,
		2014				2013
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury shares		$	(893	)		$	(2,554	)
Payments for long-term debt			--				(16,188	)
Net cash used in financing activities			(893	)			(18,742	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH			(101	)			788
NET DECREASE IN CASH AND CASH EQUIVALENTS			(12,875	)			(3,418	)
CASH AND CASH EQUIVALENTS,
Beginning of period			75,252				75,028
CASH AND CASH EQUIVALENTS,
End of period		$	62,377			$	71,610
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	497			$	1,052
Income taxes		$	823			$	1,112

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

 

 

STEINER LEISURE LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2014
(Unaudited)

 

(1)           BASIS OF PRESENTATION OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

 

The accompanying unaudited condensed consolidated financial statements for each period include the condensed consolidated balance sheets, statements of income, comprehensive income and cash flows of Steiner Leisure Limited (including its subsidiaries, "Steiner Leisure," the "Company," "we" and "our"). All significant intercompany items and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted pursuant to the SEC's rules and regulations. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which are of a normal recurring nature) necessary to present fairly our unaudited financial position, results of operations and cash flows. The unaudited results of operations and cash flows for the three months ended March 31, 2014 are not necessarily indicative of the results of operations or cash flows that may be expected for the remainder of 2014. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 (the "2013 Annual Report"). The December 31, 2013 Condensed Consolidated Balance Sheet included herein was extracted from the December 31, 2013 audited Consolidated Balance Sheet included in our 2013 Annual Report.

 

The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") 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. Significant estimates include the assessment of the realization of accounts receivables, accounts receivable-students, student notes receivable, and recovery of long-lived assets and goodwill and other intangible assets, the determination of deferred income taxes, including valuation allowances, the useful lives of definite - lived intangible assets and property and equipment gift certificate breakage revenue, the assumptions related to the determination of share based compensation, and for Ideal Image Development, Inc ("Ideal Image") laser hair removal center ("Center") sales and related deferred customer acquisition costs, the determination of the average number of treatments provided, and the allocation of arrangement consideration between services and products for treatment packages that include our products.

 

(2)          ORGANIZATION:

 

Steiner Leisure Limited is a worldwide provider and innovator in the fields of beauty, wellness and education. Steiner Leisure was incorporated in the Bahamas as a Bahamian international business company in 1995. In our facilities on cruise ships, at land-based spas, including at resorts and urban hotels (referenced collectively below as "hotels"), luxury Elemis® day spas, Bliss® premium urban day spas and at our Ideal Image centers, we strive to create a relaxing and therapeutic environment where guests can receive beauty and body treatments of the highest quality. Our services include traditional and alternative massage, body and skin treatment options, fitness, acupuncture, medi-spa treatments and laser hair removal. We also develop and market premium quality beauty products which are sold at our facilities, through e-commerce and third party retail outlets and other channels. We also operate 12 post-secondary schools (comprised of a total of 32 campuses) located in Arizona, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, Pennsylvania, Texas, Utah, Virginia and Washington.

  

 

(3)           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 

Our significant accounting policies were described in Note 2 to our consolidated financial statements included in our 2013 Annual Report. There have been no significant changes in our significant accounting policies for the three months ended March 31, 2014, unless otherwise described below.

 

(a)      Principles of Consolidation and Basis of Presentation

 

We hold variable interests in physician-owned entities that provide medical services to the Centers’ guests. These entities were set up for regulatory compliance purposes. We bear the benefits and risks of loss from operating those entities through contractual agreements. Our consolidated financial statements include the operating results of those entities. The assets and liabilities of these entities are not material to the consolidated balance sheets.

 

(b)      Inventories

 

Inventories, consisting principally of beauty products, are stated at the lower of cost (first-in, first-out) or market. Manufactured finished goods include the cost of raw material, labor and overhead. Inventories consist of the following (in thousands):

 

		March 31, 2014				December 31, 2013
Finished goods		$	56,643			$	54,403
Raw materials			4,474				6,084
		$	61,117			$	60,487

 

 

(c)      Income Taxes

 

A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax asset will not be realized. The majority of our income is generated outside of the United States. We believe a large percentage of our shipboard services income is foreign-source income, not effectively connected to a business we conduct in the United States and, therefore, not subject to United States income taxation. 

 

(d)     Translation of Foreign Currencies

 

For currency exchange rate purposes, assets and liabilities of our foreign subsidiaries are translated at the rate of exchange in effect at the balance sheet date. Equity and other items are translated at historical rates and income and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are reflected in the Accumulated Other Comprehensive Loss caption of our Condensed Consolidated Balance Sheets. Foreign currency gains and losses resulting from transactions, including intercompany transactions, are included in the results of operations. The transaction gains (losses) included in the Administrative expenses caption of our Condensed Consolidated Statements of Income were approximately $0.4 million and ($1.7 million) for the three months ended March 31, 2014 and 2013, respectively. The transaction gains (losses) in the Cost of Products caption of our Condensed Consolidated Statements of Income were approximately ($0.1 million) and $0.6 million for the three months ended March 31, 2014 and 2013, respectively.

 

 

 

(e)      Earnings Per Share

 

Basic earnings per share is computed by dividing the net income available to common shareholders by the weighted average number of outstanding common shares. The calculation of diluted earnings per share is similar to basic earnings per share except that the denominator includes dilutive common share equivalents such as share options and restricted share units. Reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share data):

 

		Three Months Ended March 31,
		2014				2013
Net income		$	7,361			$	12,740
Weighted average shares outstanding used in calculating basic earnings per share			14,681				14,647
Dilutive common share equivalents			87				111
Weighted average common and common share equivalents used in calculating diluted earnings per share			14,768				14,758
Income per common share:
Basic		$	0.50			$	0.87
Diluted		$	0.50			$	0.86
Options and restricted share units outstanding which are not included in the calculation of diluted earnings per share because their impact is anti- dilutive			157				7

 

No options were exercised during the three months ended March 31, 2014 and 2013, respectively.

 

(f)      Stock-Based Compensation

 

No stock-based awards were granted during the three months ended March 31, 2014. The Company granted approximately 20,000 restricted share units during the three months ended March 31, 2013.

 

(g)     Recent Accounting Pronouncements 

 

In April 2014, amended guidance was issued changing the requirements for reporting discontinued operations and enhancing the disclosures in this area. The new guidance requires a disposal of a component of an entity or a group of components of an entity to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. The guidance will be effective prospectively for our interim and annual reporting periods beginning after December 15, 2014. The guidance will impact the reporting and disclosures of future disposals, if any.

 

 

(h)      Fair Value Measurements

 

US GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy.  The three levels of inputs used to measure fair value are as follows:

 

●

Level 1 - Quoted prices in active markets for identical assets and liabilities.

 

●

Level 2 - Observable inputs other than quoted prices included in Level 1. This includes dealer and broker quotations, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.

 

●

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

 

We have no assets or liabilities that are adjusted to fair value on a recurring basis.  We did not have any assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2014, or 2013.

 

Cash and cash equivalents is reflected in the accompanying Condensed Consolidated Financial Statements at cost, which approximated fair value estimated using Level 1 inputs as they are maintained with high-quality financial institutions and having original maturities of three months or less. The fair value of our term loan was estimated using Level 2 inputs based on quoted prices for those or similar instruments. The fair value of the term loan was determined using applicable interest rates as of March 31, 2014 and December 31, 2013 and approximate the carrying value of such debt because the underlying instruments were at variable rates that are repriced frequently. It is not practicable to estimate the fair value of the student receivables, since observable market data is not readily available, and no reasonable estimation methodology exists. 

 

(i)      Concentrations of Credit Risk

 

A roll-forward of the allowance for doubtful accounts for student notes receivables at March 31, 2014 is as follows (in thousands):

 

Balance at beginning of period		$	3,999
Provision			780
Write-offs			(551	)
Balance at end of period		$	4,228

 

As of March 31, 2014, the delinquency status of gross notes receivable was as follows (in thousands):

 

Current				$	3,469
1	-	30			271
31	-	60			589
61	-	90			205
91+					920
				$	5,454

 

 

(j)      Seasonality

 

A significant portion of our revenues are generated from our cruise ship spa operations. Certain cruise lines, and, as a result, Steiner Leisure, has experienced varying degrees of seasonality as the demand for cruises is stronger in the Northern Hemisphere during the summer months and during holidays. Accordingly, generally, the third quarter and holiday periods result in the highest revenue yields for us. Historically, the revenues of Ideal Image were weakest during the third quarter and, if this trend continues, this could offset to some extent the strength of our shipboard operations during the summer months. Our product sales are strongest in the third and fourth quarters as a result of the December holiday shopping period.

 

(4)           COMMITMENTS AND CONTINGENCIES:

 

(a)      Legal Proceedings

 

From time to time, in the ordinary course of business, we are a party to various claims and legal proceedings. There have been no material changes with respect to legal proceedings previously reported in our 2013 Annual Report.

 

(5)           SHAREHOLDERS' EQUITY:

 

On February 27, 2013, the Board of Steiner Leisure approved a new share repurchase plan under which up to $100.0 million of Steiner Leisure common shares can be purchased. In connection with the new repurchase authorization, the repurchase plan approved by the Board in February 2008 was terminated. During the three months ended March 31, 2014 and 2013, respectively, we purchased approximately 20,000 and 55,000 shares, with a value of approximately $0.9 million and $2.6 million, respectively. Of those shares purchased, 20,000 and 7,000 shares for the three months ended March 31, 2014 and 2013, respectively, were surrendered by our employees in connection with the vesting of restricted share units and used by us to satisfy payment of our minimum federal income tax withholding obligations in connection with these vestings. These share purchases were outside of our repurchase plan.

 

(6)           CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS:

 

The following table presents the changes in accumulated other comprehensive loss by component for the quarter ended March 31, 2014 and 2013 (in thousands):

 

		Foreign Currency Translation Adjustments
		2014				2013
Accumulated comprehensive loss at beginning of the year		$	(258	)		$	(1,946	)
Other comprehensive income before reclassifications			(2	)			(1,255	)
Amounts reclassified from accumulated other comprehensive loss			--				--
Net current-period other comprehensive loss			(2	)			(1,255	)
Ending balance		$	(260	)		$	(3,201	)

 

All amounts are after tax. Amounts in parenthesis indicate debits.

 

(7)           SEGMENT INFORMATION:

 

Our Maritime and Land-Based Spas operating segments are aggregated into a reportable segment based upon similar economic characteristics, products, services, customers and delivery methods. Additionally, the operating segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief executive officer in determining how to allocate the Company's resources and evaluate performance.

 

 

We operate in four reportable segments: (1) Spa Operations, which sells spa services and beauty products onboard cruise ships, on land at hotels and at day spas; (2) Products, which sells a variety of high quality beauty products to third parties through channels other than those above; (3) Schools, which offers programs in massage therapy and skin care; and (4) Laser Hair Removal, which sells laser hair removal and other services and certain of our products. Amounts included in "Other" include various corporate items such as unallocated overhead and intercompany transactions.

 

Information about our segments is as follows (in thousands):

 

		Three Months Ended March 31,
		2014				2013
Revenues:
Spa Operations		$	125,834			$	130,403
Products			42,201				42,382
Schools			19,664				19,860
Laser Hair Removal			38,814				31,692
Other			(9,777	)			(12,323	)
Total		$	216,736			$	212,014
Income from Operations:
Spa Operations		$	10,147			$	11,862
Products			2,420				3,766
Schools			(116	)			1,122
Laser Hair Removal			(1,109	)			3,714
Other			(1,781	)			(4,690	)
Total		$	9,561			$	15,774

 

 

		March 31, 2014				December 31, 2013
Identifiable Assets:
Spa Operations		$	209,178			$	212,176
Products			197,781				192,669
Schools			125,809				129,517
Laser Hair Removal			315,157				316,372
Other			(77,543	)			(74,421	)
Total		$	770,382			$	776,313

 

Included in Spa Operations, Products, Laser Hair Removal and Schools is goodwill of $51.0 million, $23.7 million, $195.1 million and $58.4 million, respectively, as of March 31, 2014 and December 31, 2013.

 

Products segment revenues excluding intercompany transactions were $32.0 million and $30.0 million for the three months ended March 31, 2014 and March 31, 2013, respectively.

 

 

(8)           GEOGRAPHIC INFORMATION:

 

Set forth below is information relating to countries in which we have material operations. We are not able to identify the country of origin for the customers to which revenues from our cruise ship operations relate. Geographic information is as follows (in thousands):

 

		Three Months Ended March 31,
		2014				2013
Revenues:
United States		$	91,122			$	84,239
United Kingdom			16,242				15,085
Not connected to a country			101,576				104,156
Other			7,796				8,534
Total		$	216,736			$	212,014

 

 

		March 31, 2014				December 31, 2013
Property and Equipment, net:
United States		$	87,916			$	90,709
United Kingdom			6,117				6,189
Not connected to a country			2,382				2,431
Other			14,836				15,395
Total		$	111,251			$	114,724

 

 

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

 

Steiner Leisure Limited is a worldwide provider and innovator in the fields of health, wellness and education. We operate our business through four reportable segments: Spa Operations, Products, Schools and Laser Hair Removal.

 

Through our Spa Operations segment, we offer massages and a variety of other body treatments, as well as a broad variety of beauty treatments to women, men and teenagers on cruise ships and at land-based spas. We conduct our activities pursuant to agreements with cruise lines and owners of our land-based venues that, generally, give us the exclusive right to offer these types of services at those venues. The cruise lines and land-based venue owners, generally, receive compensation based on a percentage of our revenues at these respective locations and, in certain cases, a minimum annual rental or combination of both.

 

Through our Products segment, we develop and sell a variety of high quality beauty products under our Elemis, La Thérapie™, Bliss, BlissLabs, Remède® and Laboratoire Remède® brands, and also sell products of third parties, both under our packaging and labeling and otherwise. The ingredients for these products are produced for us by several suppliers, including premier European manufacturers. We sell our products at our shipboard and land-based spas pursuant to the same agreements under which we provide spa services at those locations, as well as through our laser hair removal centers, third party outlets and our catalogs and websites.

  

Through our Schools segment, we own and operate 12 post-secondary schools (comprised of a total of 32 campuses) located in Arizona, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, Pennsylvania, Texas, Utah, Virginia and Washington. These schools offer programs in massage therapy and, in some cases, beauty and skin care, and train and qualify spa professionals for health and beauty positions. Among other things, in conjunction with skin care programs, we train the students at our schools in the use of our Elemis, Bliss and La Thérapie products. We offer full-time programs as well as part-time programs for students who work or who otherwise desire to take classes outside traditional education hours. Revenues from our massage and beauty schools, which consist almost entirely of student tuition payments, are derived to a significant extent from the proceeds of loans issued under the Title IV Programs, authorized by Title IV of the Higher Education Act of 1965, which is administered by the U.S. Department of Education (the “DOE”). We must comply with a number of regulatory requirements in order to maintain the eligibility of our students and prospective students for loans under these programs. Rules of the DOE, effective July 1, 2011, increased our regulatory compliance obligations, have adversely affected our Schools segment's enrollments and continue to adversely affect that segment’s enrollment and our results of operations.

 

Through our Laser Hair Removal segment, we offer a non-invasive procedure for the removal of unwanted facial and body hair and other services in a clinical setting. Ideal Image is a leader in the growing consumer healthcare category of laser hair removal. Ideal Image is subject to regulation in the states in which its facilities are located, related to, among other things, corporate entities such as Ideal Image "practicing medicine" and to the provision of the laser hair removal services.

 

We are evaluating whether to continue to expand our Laser Hair Removal segment. If we decide to expand this segment, the Centers will either be company-owned or physician-owned, depending on the applicable regulations in the jurisdiction in which the respective Center will be opened. In connection with the opening of any new Center, we incur expenses, among other things, for leasehold improvements, marketing and training of new personnel. Accordingly, even new Centers that are successful do not become cash flow positive until several months after opening.

 

 

 

Even after a new Center becomes cash flow positive, however, under applicable US GAAP rules, it takes an additional period of time for the positive cash flow (assuming the Center is successful) to be reflected in the operating income of the segment with respect to that Center. This is primarily because the services for which payments are received are not fully performed for a period of several months after all payments have been received and revenue cannot be recognized until the related treatment is performed. Accordingly, operating income of the Laser Hair Removal segment trails behind the related cash flow of the segment. This applies to both new Centers and existing Centers. To the extent that more new Centers are opened, and, therefore, each new Center becomes a smaller portion of the segment as a whole, the trailing of operating income behind the related cash flows will decline because established Centers typically have a regular base of customers and receive new customers at a more regular rate than newly opened Centers and, therefore, have a stronger revenue base than new Centers. 

 

Beginning in the latter part of 2013, there has been a decline in the number of Ideal Image customer leads generated through our marketing efforts. We are taking steps to address this decline through changes in our marketing strategy and tactics. However, we cannot assure you that these efforts will be successful in addressing this matter, and, if they are not successful, our results of operations and financial condition would be adversely affected.

 

A significant portion of our revenues are generated from our cruise ship operations. Historically, we have been able to renew almost all of our cruise line agreements that expired or were scheduled to expire. As of December 31, 2013, our agreement with Celebrity expired and we were notified that it would not be renewed. It is anticipated that the loss of this cruise line will adversely affect our earnings per share for 2014 in the amount of approximately $0.24. To the extent that we fail to obtain in the future renewals of other major cruise line agreements, our results of operations and financial condition could be materially adversely affected.

 

In addition, our success and our growth are dependent to a significant extent on the success and growth of the travel and leisure industry in general, and on the cruise industry in particular. Our hotel land-based spas are dependent on the hospitality industry for their success. These industries are subject to significant risks, more fully described above, that could affect our results of operations.

 

The success of the cruise and hospitality industries, as well as our business, is impacted by economic conditions. The economic slowdown experienced in recent years in the United States and other world economies have created a challenging environment for the cruise and hospitality industries and our business, including our retail beauty products sales. While economic conditions have shown some improvement, a number of countries and business sectors continue to experience adverse economic conditions. The impact on consumers of periodic increases in fuel costs has added to the continuation of this economic adversity.

 

The weakened United States and other world economies in recent years, including the impact on consumers of high fuel costs and tighter credit, has had an adverse effect on the discretionary spending of consumers, including spending on cruise vacations and our services and products. In order for the cruise industry to maintain its market share in a difficult economic environment, cruise lines have at times offered discounted fares to prospective passengers. Passengers who are cruising solely due to discounted fares may reflect their cost consciousness by not spending on discretionary items, such as our services and products. These conditions have adversely affected our results of operations since 2009. Though discretionary spending of passengers on certain cruise lines has increased, the continuing economic challenges have also adversely affected the discretionary spending of cruise customers and potential customers. The recurrence, continuation or worsening of the more severe aspects of these challenging economic conditions, as well as further increases in fuel costs, could have a material adverse effect on the cruise industry and also could have a material adverse effect on our results of operations and financial condition for 2014 and thereafter during any such recurrence, continuation or worsening. 

 

The cruise industry also is subject to risks specific to that industry. Among other things, the highly publicized January 2012 accident involving the Costa Concordia adversely affected cruise ship bookings in 2012 and the highly publicized February 2013 Carnival Triumph fire and other mishaps involving cruise vessels adversely affected cruise ship bookings in 2013. This has adversely affected us because cruise lines are discounting fares in order to attract passengers, which has resulted in an increased number of passengers who are less likely to spend in our spas. Publicity regarding other adverse occurrences onboard cruise ships also could adversely affect cruise ship bookings.

 

Despite the general historic trend of growth in the volume of cruise passengers, in 2014 and future years, the economic environment worldwide could cause the number of cruise passengers to decline or be maintained through discounting, which could result in an increased number of passengers with limited discretionary spending ability. A significant and/or continuing decrease in passenger volume and/or discounting of fares could have a material adverse effect on our results of operations and financial condition.

 

Other factors also can adversely affect our financial results. The U.S. Dollar has been weak in recent years against the U.K. Pound Sterling and the Euro. This weakness affected our results of operations because we pay for the administration of recruitment and training of our shipboard personnel and the ingredients and manufacturing of many of our products in U.K. Pounds Sterling and Euros, respectively.

 

Key Performance Indicators

 

Spa Operations. A measure of performance we have used in connection with our periodic financial disclosure relating to our cruise line operations is that of revenue per staff per day. In using that measure, we have differentiated between our revenue per staff per day on ships with large spas and other ships we serve. Our revenue per staff per day has been affected by the continuing requirement that we place additional non-revenue producing staff on ships with large spas to help maintain a high quality guest experience. We also utilize, as a measure of performance for our cruise line operations, our average revenue per week. We use these measures of performance because they assist us in determining the productivity of our staff, which we believe is a critical element of our operations. With respect to our land-based spas, we measure our performance primarily through average weekly revenue over applicable periods of time.

 

 

Schools. With respect to our massage and beauty schools, we measure performance primarily by revenues.

 

Products. With respect to sales of our products, other than on cruise ships and at our land-based spas, we measure performance by revenues.

 

Laser Hair Removal. With respect to our Ideal Image centers, we measure performance primarily through revenue.

 

Growth

 

We seek to grow our business by attempting to obtain contracts for new cruise ships brought into service by our existing cruise line customers and for existing and new ships of other cruise lines, seeking new venues for our land-based spas, developing new products and services, seeking additional channels for the distribution of our retail products and seeking to increase the student enrollments at our post-secondary massage and beauty schools, including through the opening of new school campuses, and by opening new Ideal Image centers. We also consider growth, among other things, through appropriate strategic transactions, including acquisitions.

 

Critical Accounting Policies

 

Management's discussion and analysis of financial condition and results of operations is based upon our condensed consolidated unaudited financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated unaudited financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions or conditions. At least quarterly, management reevaluates its judgments and estimates, which are based on historical experience, current trends and various other assumptions that are believed to be reasonable under the circumstances.

 

Our critical accounting policies are included in our 2013 Annual Report. We believe that there have been no significant changes during the quarter ended March 31, 2014 to the critical accounting policies disclosed in our 2013 Annual Report.

 

 

Recent Accounting Pronouncements

 

Refer to Note 3(g) to the Condensed Consolidated Financial Statements in this report for a discussion of recent accounting pronouncements.

 

Results of Operations

 

The following table sets forth, for the periods indicated, certain selected income statement data expressed as a percentage of revenues: 

 

		Three Months Ended
		March 31,
		2014				2013
Revenues:
Services			71.7	%			71.4	%
Products			28.3				28.6
Total revenues			100.0				100.0
Cost of revenues:
Cost of services			59.6				57.1
Cost of products			19.7				19.2
Total cost of revenues			79.3				76.3
Gross profit			20.7				23.7
Operating expenses:
Administrative			6.9				7.0
Salary and payroll taxes			9.4				9.3
Total operating expenses			16.3				16.3
Income from operations			4.4				7.4
Other income (expense), net:
Interest expense			(0.4	)			(0.7	)
Other income			0.1				0.1
Total other income (expense), net			(0.3	)			(0.6	)
Income before provision for income taxes			4.1				6.8
Provision for income taxes			0.7				0.8
Net income			3.4	%			6.0	%

 

 

 

Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

 

REVENUES

 

Revenues of our reportable segments for the three months ended March 31, 2014 and 2013, respectively, were as follows (in thousands):

 

		Three Months Ended March 31,								% Change
Revenue:		2014				2013
Spa Operations		$	125,834			$	130,403				(3.5%)
Products			42,201				42,382				(0.4%)
Schools			19,664				19,860				(1.0%)
Laser Hair Removal			38,814				31,692				22.5%
Other			(9,777	)			(12,323	)		N/A
Total		$	216,736			$	212,014				2.2%

 

Total revenues increased approximately 2.2%, or $4.7 million, to $216.7 million in the first quarter of 2014 from $212.0 million in the first quarter of 2013. Of this increase, $4.0 million was attributable to an increase in services revenues and $0.7 million was attributable to an increase in products revenues.

 

Spa Operations Revenues. Spa Operations segment revenues decreased approximately 3.5%, or $4.6 million, to $125.8 million in the first quarter of 2014 from $130.4 million in the first quarter of 2013. Average weekly revenues for our land-based spas decreased 4.4% to $29,051 in the first quarter of 2014 from $30,373 in the first quarter of 2013. We had an average of 2,766 shipboard staff members in service in the first quarter of 2014, compared to an average of 2,688 shipboard staff members in service in the first quarter of 2013. Revenues per shipboard staff per day decreased by 5.3% to $408 in the first quarter of 2014 from $431 in the first quarter of 2013. Average weekly revenues for our shipboard spas decreased by 2.8% to $51,398 in the first quarter of 2014 from $52,852 in the first quarter of 2013. The decreases in revenues and the key performance indicators referenced above were primarily attributable to the disruptions caused by the transition off of the Celebrity ships, which we will cease serving in the second quarter of 2014, bad weather conditions which impacted our land-based spas located in the Northeastern part of the U.S. and increased discounting of our land-based spas to offset promotions from our competitors, resulting in a significant number of customers who spent less money at our spas.

 

Products Revenues. Product segment revenues decreased approximately 0.4% or $0.2 million to $42.2 million in the first quarter of 2014 from $42.4 million in the first quarter of 2013. Excluding intercompany product sales, product revenues increased $2.0 million to $32.0 million for the three months ended March 31, 2014 from $30.0 million in the three months ended March 31, 2013. This increase was primarily attributable to increased sales of new products through third party retail channels.

 

Schools Revenues. Schools segment revenues decreased approximately 1.0%, or $0.2 million to $19.7 million in the first quarter of 2014 from $19.9 million in the first quarter of 2013. This decrease in revenues was primarily attributable to decreased student populations. The decrease in student populations was primarily attributable to fewer enrollments.

 

Laser Hair Removal Revenues. The increase in revenues was primarily attributable to the opening of 29 new Centers in 2013.

 

Cost of Services 

 

Cost of services increased $8.2 million to $129.3 million in the first quarter of 2014 from $121.1 million in the first quarter of 2013. Cost of services as a percentage of services revenues increased to 83.2% in the first quarter of 2014 from 80.0% in the first quarter of 2013. This increase was primarily due to the weaker performances of our Schools and Laser Hair Removal segments, where our costs have increased.

 

Cost of Products 

 

Cost of products increased $1.9 million to $42.6 million in the first quarter of 2014 from $40.7 million in the first quarter of 2013. Cost of products as a percentage of products revenue increased to 69.3% in the first quarter of 2013 from 67.0% in the first quarter of 2013. These increases were primarily attributable to higher margin products that were sold in the first quarter of 2013 compared to the first quarter of 2014 due to a weaker retail environment in the U.S. in the first quarter of 2014 and, to some extent, bad weather conditions.

 

 

Operating Expenses 

 

Operating expenses increased $0.9 million to $35.3 million in the first quarter of 2014 from $34.4 million in the first quarter of 2013. Operating expenses as a percentage of revenues were flat at 16.3% in the first quarter of 2014 and 2013. Excluding the impact of foreign exchange, operating expenses would have increased by $2.9 million. This increase is primarily attributable to the costs incurred to open 29 new Centers in 2013 and increased marketing costs incurred to support 2014 sales initiatives.

 

INCOME FROM OPERATIONS

 

Income from operations of our reportable segments for the three months ended March 31, 2014 and 2013, respectively, was as follows (in thousands):

 

	For the Three Months Ended March 31,						% Change
Income from Operations:	2014			2013
Spa Operations	$	10,147		$	11,862		(14.5%)
Products		2,420			3,766		(35.7%)
Schools		(116	)		1,122		(110.3%)
Laser Hair Removal		(1,109	)		3,714		(129.9%)
Other		(1,781	)		(4,690	)	N/A
Total	$	9,561		$	15,774		(39.4%)

 

The decrease in operating income in the Spa Operations segment was primarily attributable to the disruptions caused by the transition off of the Celebrity ships, bad weather conditions, and additional discounting, which led to lower revenues at our spas. The decrease in operating income in the Products segment was primarily attributable to a weaker retail environment in the U.S. and bad weather conditions. The decrease in the operating income in the Schools segment was primarily attributable to lower student populations. The decrease in student populations was primarily attributable to lower enrollments. The decrease in operating income in the Laser Hair Removal segment was primarily attributable to the opening of 29 new Centers in 2013 and the weaker performance of most of the Centers compared to the first quarter of 2013.

 

OTHER INCOME (EXPENSE)

 

Other income (expense) decreased due to decreased interest expense due to the prior payments made on our term loan.

 

Provision for Income Taxes

 

Provision for income taxes decreased $0.2 million to expense of $1.6 million in the first quarter of 2014 from expense of $1.8 million in the first quarter of 2013, respectively. Provision for income taxes reflected an overall effective rate of 17.7% in the first quarter of 2014 and 12.1% in the first quarter of 2013. The increase was primarily due to the income earned in jurisdictions that tax our income representing a higher percentage of our total income earned in the first quarter of 2014 than such income represented in the first quarter of 2013.

 

NET INCOME

 

Net income was $7.4 million in the first quarter of 2014 compared to $12.7 million in the first quarter of 2013. This decrease was primarily attributable to a decline in operating income in all of our segments, as discussed in more detail above.

 

 

Liquidity and Capital Resources

 

Sources and Uses of Cash

 

During the three months ended March 31, 2014, net cash (used in) provided by operating activities was approximately ($9.8 million) compared with $18.3 million for the three months ended March 31, 2013. This change was attributable to decreases in net income and in a number of working capital changes.

 

During the three months ended March 31, 2014, cash used in investing activities was $2.1 million compared with $3.8 million for the three months ended March 31, 2013. This decrease was primarily attributable to a decline in capital expenditures.

 

During the three months ended March 31, 2014, cash used in financing activities was $0.9 million compared with $18.7 million for the three months ended March 31, 2013. This decrease in cash used in financing activities was primarily attributable to payments on our long-term debt in the three months ended March 31, 2013 that were not made during the three months ended March 31, 2014 because of prior pre-payments.

 

Steiner Leisure had working capital of approximately $18.6 million at March 31, 2014, compared to working capital of approximately $4.7 million at December 31, 2013.

 

In February 2013, our Board of Directors approved a share repurchase plan under which up to $100.0 million of common shares can be purchased, and terminated the prior share repurchase plan. During the three months ended March 31, 2014 and 2013, respectively, we purchased approximately 20,000 and 55,000 shares, with a value of approximately $0.9 million and $2.6 million, respectively. Of those shares purchased, 20,000 and 7,000 shares for the three months ended March 31, 2014 and 2013, respectively, were surrendered by our employees in connection with the vesting of restricted share units and used by us to satisfy payment of our minimum federal income tax withholding obligations in connection with these vestings. These share purchases were outside of our repurchase plan.

 

For the remainder of 2014, we do not plan on opening any new Centers.

 

 

Financing Activities

 

On June 21, 2013, we entered into an amendment to our Credit Facility. As a result, among other things, our restrictive payment limits were increased, certain of our financial covenants were modified, we received improved pricing on our interest rate and the maturity date of the term loan was extended from November 1, 2016 to June 21, 2018. In connection with entering into the amendment, we incurred $0.4 million of lender and third-party costs.

 

The Credit Facility contains customary affirmative, negative and financial covenants, including limitations on dividends, capital expenditures and funded debt, and requirements to maintain prescribed interest expense and fixed charge coverage ratios. We are in compliance with these covenants as of the date of this report. Our prior credit agreement contained similar covenants and, through the termination of that facility, we were in compliance with those covenants. Other limitations on capital expenditures, or on other operational matters, could apply in the future under the credit agreement.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Inflation and Economic Conditions

 

We do not believe that inflation has had a material adverse effect on our revenues or results of operations. However, public demand for activities, including cruises, is influenced by general economic conditions, including inflation. Periods of economic softness, such as has been experienced in recent years, particularly in North America where a substantial number of cruise passengers reside, could have a material adverse effect on the cruise industry and hospitality industry upon which we are dependent, and has had such an effect in recent years. Such a slowdown has adversely affected our results of operations and financial condition in recent years. Continuance of the more severe aspects of the recent adverse economic conditions, as well as continued fuel price increases, in North America and elsewhere, could have a material adverse effect on our results of operations and financial condition during the period of such continuance. Continued weakness in the U.S. Dollar compared to the U.K. Pound Sterling and the Euro also could have a material adverse effect on our results of operations and financial condition.

 

 

Cautionary Statement Regarding Forward-Looking Statements

 

From time to time, including in this report and other disclosures, we may issue "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements reflect our current views about future events and are subject to known and unknown risks, uncertainties and other factors which may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We attempt, whenever possible, to identify these statements by using words like "will," "may," "could," "should," "would," "believe," "expect," "anticipate," "forecast," "future," "intend," "plan," "estimate" and similar expressions of future intent or the negative of such terms.

 

Such forward-looking statements include statements regarding:

 

●     our future financial results;

 

●     our proposed activities pursuant to agreements with cruise lines or land-based spa operators;

 

●     our ability to secure renewals of agreements with cruise lines upon their expiration;

 

●     scheduled introductions of new ships by cruise lines;

 

●     our future land-based spa activities;

 

●     our ability to generate sufficient cash flow from operations;

 

●     the extent of the taxability of our income;

 

●     the financial and other effects of acquisitions and new projects;

 

●     our market sensitive financial instruments;

 

●     our ability to increase sales of our products and to increase the retail distribution of our products;

 

●     the profitability of one or more of our business segments;

 

●     the number, anticipated opening dates, and anticipated costs related to new spas, schools and Ideal Image centers;

 

●     the anticipated enrollments of students at our schools; and

 

●     future channels for distribution of our products.

 

These risks and other risks are detailed in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC. That section contains important cautionary statements and a discussion of many of the factors that could materially affect the accuracy of our forward-looking statements and/or adversely affect our business, results of operations and financial condition.

 

Forward-looking statements should not be relied upon as predictions of actual results. Subject to any continuing obligations under applicable law, we expressly disclaim any obligation to disseminate, after the date of this report, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.

 

 

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

 

For a discussion of our market risks, refer to Part II, Item 7A. - Quantitative and Qualitative Disclosures about Market Risk is in our Annual Report.

 

Item 4.    Controls and Procedures

 

We carried out an evaluation, under the supervision, and with the participation, of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15(d)-15(e) of the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2014.

 

There has been no change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II - OTHER INFORMATION

 

Item 1.    Legal Proceedings

 

From time to time, in the ordinary course of business, we are party to various claims and legal proceedings. There have been no material changes with respect to legal proceedings previously reported in our annual report on Form 10-K for the year ended December 31, 2013.

 

Item 1A. Risk Factors

 

There were no material changes during the first quarter of 2014 in the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013.

 

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

 

(c) The following table provides information about purchases by Steiner Leisure of our common shares during the three month period ended March 31, 2014:

 

		Total Number of Shares Purchased(1)				Average Price Paid per Share(2)				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
January 1, 2014 through January 31, 2014			--			$	--				--			$	93,306,111
February 1, 2014 through February 28, 2014			20,188				44.26				--				93,306,111
March 1, 2014 through March 31, 2014			--				--				--				93,306,111
Total			20,188			$	44.26				--			$	93,306,111

 

(1)   During the first quarter, no shares were purchased through the Company's only repurchase plan, which was approved on February 27, 2013 (the "Repurchase Plan") and replaced the then-existing plan. The Repurchase Plan authorizes the purchase of up to $100.0 million of our common shares in the open market or other transactions, of which $6,693,889 of our common shares have been purchased to date. The total number of shares purchased during February 2014 were repurchases of shares surrendered by our employees in connection with the vesting of restricted share units, which shares were used by us to satisfy payment of the federal income tax withholding obligations of those employees.

 

(2)  Includes commissions paid.

 

 

Item 6.		Exhibits
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1		Section 1350 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2		Section 1350 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
*		Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: May 9, 2014	STEINER LEISURE LIMITED
	(Registrant)
	/s/ Clive E. Warshaw
	Clive E. Warshaw Chairman of the Board
	/s/ Leonard I. Fluxman
	Leonard I. Fluxman President and Chief Executive Officer (principal executive officer)
	/s/ Robert H. Lazar
	Robert H. Lazar Chief Accounting Officer (principal accounting officer)

 

 

Exhibit Index

 

Exhibit Number	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Section 1350 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Section 1350 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
*	Filed herewith.