STNR (MM)

 

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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 June 30, 2015
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 August 3, 2015, the registrant had 12,830,601 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 June 30, 2015 and December 31, 2014		3
	Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2015 and 2014		5
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2015 and 2014		6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014		7
	Notes to Condensed Consolidated Financial Statements		9
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		18
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		29
ITEM 4.	Controls and Procedures		29
PART II OTHER INFORMATION
ITEM 1.		Legal Proceedings	30
ITEM 1A.		Risk Factors	30
ITEM 2.		Unregistered Sales of Equity Securities and Use of Proceeds	31
ITEM 6.		Exhibits	32
SIGNATURES AND CERTIFICATIONS			33

  

 

  

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

STEINER LEISURE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

		June 30,				December 31,
		2015				2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	47,814			$	59,736
Accounts receivable, net			59,015				59,359
Accounts receivable - students, net			18,867				20,531
Inventories			55,569				52,102
Prepaid expenses and other current assets			21,388				18,129
Total current assets			202,653				209,857
PROPERTY AND EQUIPMENT, net			106,279				96,509
GOODWILL			148,815				148,815
OTHER ASSETS:
Intangible assets, net			68,721				69,184
Deferred financing costs, net			2,092				2,481
Deferred customer acquisition costs			9,343				8,723
Other			19,073				17,274
Total other assets			99,229				97,662
Total assets		$	556,976			$	552,843
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	30,134			$	26,162
Accrued expenses			44,688				43,302
Current portion of long-term debt			7,520				1,405
Current portion of deferred rent			2,392				2,392
Current portion of deferred tuition revenue			20,654				22,337
Current portion of deferred revenue			98,082				88,086
Gift certificate liability			15,139				16,364
Income taxes payable			1,452				1,972
Total current liabilities			220,061				202,020
NON-CURRENT LIABILITIES:
Deferred income tax liabilities, net			29,778				28,304
Long-term debt			101,061				127,177
Long-term deferred rent			14,027				14,674
Long-term deferred tuition revenue			344				113
Long-term deferred revenue			7,953				7,660
Total non-current liabilities			153,163				177,928

 

(Continued)

 

 

 

STEINER LEISURE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS - (CONTINUED)

(in thousands)

 

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, 24,213 shares issued in 2015 and 24,191 shares issued in 2014			242				242
Additional paid-in capital			200,487				196,156
Accumulated other comprehensive loss			(2,311	)			(2,571	)
Retained earnings			390,962				373,898
Treasury shares, at cost, 11,385 shares in 2015 and 11,153 shares in 2014			(405,628	)			(394,830	)
Total shareholders' equity			183,752				172,895
Total liabilities and shareholders' equity		$	556,976			$	552,843

 

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 AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited)

(in thousands, except per share data)

 

  

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 AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited)
(in thousands)

 

   

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 SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(Unaudited, in thousands)

 

		Six Months Ended
		June 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	17,064			$	15,644
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			11,136				11,975
Stock-based compensation			4,225				5,025
Provision for doubtful accounts			4,879				4,094
Deferred income tax provision			1,474				1,740
Changes in:
Accounts receivable			(2,400	)			(1,991	)
Inventories			(3,228	)			1,747
Prepaid expenses and other current assets			(3,210	)			(3,516	)
Other assets			(2,419	)			(5,739	)
Accounts payable			3,838				(3,487	)
Accrued expenses			875				(10,220	)
Deferred tuition revenue			(1,452	)			2,394
Deferred revenue			10,289				(6,172	)
Deferred rent			(647	)			(87	)
Gift certificate liability			(1,235	)			(1,080	)
Net cash provided by operating activities			39,189				10,327
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(18,581	)			(10,015	)
Net cash used in investing activities			(18,581	)			(10,015	)

 

(Continued)

 

 

 

STEINER LEISURE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(Unaudited, in thousands)

 

		Six Months Ended
		June 30,
		2015				2014
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury shares		$	(10,798	)		$	(29,503	)
Proceeds from long-term debt			4,000				3,000
Payments for long-term debt			(24,000	)			(3,058	)
Proceeds from share option exercises			103				63
Net cash used in financing activities			(30,695	)			(29,498	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH			(1,835	)			(852	)
NET DECREASE IN CASH AND CASH EQUIVALENTS			(11,922	)			(30,038	)
CASH AND CASH EQUIVALENTS, Beginning of period			59,736				75,252
CASH AND CASH EQUIVALENTS, End of period		$	47,814			$	45,214
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	1,195			$	977
Income taxes		$	1,956			$	1,537

 

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

June 30, 2015
(Unaudited)

 

 

  

  

 

 

  

 

  

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

 

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

 

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 highly regarded and premier United States and 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 Ideal Image 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 31 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 (the “HEA”) and 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 our enrollment and our results of operations. We are taking steps to address this decline in enrollments 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.

 

Through our Ideal Image segment, we offer a non-invasive procedure for the removal of unwanted facial and body hair and other services in a relaxing setting. Ideal Image is a leader in the growing consumer cosmetic category of laser hair removal. We operate 110 cosmetic service centers and are party to agreements with franchisees, who operate 17 cosmetic service centers offering services under the Ideal Image brand, all in upscale retail settings. 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 continuing to evaluate whether to continue to expand our Ideal Image segment. If we decide to expand this segment, the Ideal Image centers will either be company-owned or physician-owned, depending on the applicable regulations in the jurisdiction in which the respective Ideal Image center will be opened. In connection with the opening of any new Ideal Image center, we incur expenses, among other things, for leasehold improvements, marketing and training of new personnel. Accordingly, even new Ideal Image centers that are successful do not become cash flow positive until several months after opening.

  

 

 

Even after a new Ideal Image center becomes cash flow positive, however, under applicable U.S. GAAP rules, it takes an additional period of time for the positive cash flow (assuming the Ideal Image center is successful) to be reflected in the operating income of the segment with respect to that Ideal Image center. This is primarily because the laser hair removal services for which payments are received are not fully performed for a period of several months and revenue cannot be recognized until the related treatment is performed. Accordingly, operating income of the Ideal Image segment trails behind the related cash flow of the segment. This applies to both new Ideal Image centers and existing Ideal Image centers. To the extent that more new Ideal Image centers are opened, and, therefore, each new Ideal Image 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 Ideal Image centers typically have a regular base of customers and receive new customers at a more regular rate than newly opened Ideal Image centers and, therefore, have a stronger revenue base than new Ideal Image centers.

 

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.

 

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.

 

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 created a challenging environment for the cruise and hospitality industries and our business, including our retail beauty products sales. In order for the cruise industry to maintain its market share in difficult economic environments, 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. 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 also adversely affected consumers and business entities. The recurrence of the more severe aspects of these challenging economic conditions could have a material adverse effect on the cruise and hospitality industries and also could have a material adverse effect on our results of operations and financial condition for 2015 and thereafter.

 

Despite the general historic trend of growth in the volume of cruise passengers, in 2015 and future years, the global economic environment 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 decrease in passenger volume could have a material adverse effect on our results of operations and financial condition.

 

Other factors also can adversely affect our financial results. Fluctuations in currency exchange rates compared to the U.S. Dollar can impact our results of operations, most significantly 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. Accordingly, while the relative strength of the U.S. Dollar has improved recently, renewed weakness of the U.S. Dollar against those currencies can adversely affect our results of operations, as has occurred from time to time in recent years.

  

 

 

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.

 

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

 

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

 

Ideal Image. With respect to our Ideal Image centers, we measure performance primarily through revenues.

 

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. 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 2014 Annual Report. We believe that there have been no significant changes during the six months ended June 30, 2015 to the critical accounting policies disclosed in our 2014 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								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
Revenues:
Services			71.1	%			70.0	%			70.7	%			70.8	%
Products			28.9				30.0				29.3				29.2
Total revenues			100.0				100.0				100.0				100.0
Cost of revenues:
Cost of services			59.4				58.7				58.9				59.2
Cost of products		19.4				20.0				19.3				19.8
Total cost of revenues			78.8				78.7				78.2				79.0
Gross profit			21.2				21.3				21.8				21.0
Operating expenses:
Administrative			7.1				6.9				7.7				6.9
Salary and payroll taxes			9.1				9.5				9.2				9.4
Total operating expenses			16.2				16.4				16.9				16.3
Income from operations			5.0				4.9				4.9				4.7
Other income (expense), net:
Interest expense			(0.4	)			(0.3	)			(0.4	)			(0.3	)
Other income			0.1				0.2				0.1				0.1
Total other income (expense), net			(0.3	)			(0.1	)			(0.3	)			(0.2	)
Income before provision for income taxes			4.7				4.8				4.6				4.5
Provision for income taxes			0.6				0.8				0.7				0.8
Net income			4.1	%			4.0	%			3.9	%			3.7	%

  

 

 

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

 

REVENUES

 

Revenues of our reportable segments for the three months ended June 30, 2015 and 2014, respectively, were as follows (in thousands):

 

		Three Months Ended June 30,								% Change
		2015				2014
Revenue:
Spa Operations		$	117,040			$	115,479				1.4%
Products			44,185				44,136				--
Schools			18,340				19,050				(3.7%)
Ideal Image			46,490				39,074				19.0%
Other			(8,694	)			(8,476	)			N/A
Total		$	217,361			$	209,263				3.9%

 

Total revenues increased approximately 3.9%, or $8.1 million, to $217.4 million in the second quarter of 2015 from $209.3 million in the second quarter of 2014. This increase was attributable to a $8.0 million increase in services revenues and by a $0.1 million increase in products revenues.

 

Spa Operations Revenues. Spa Operations segment revenues increased approximately 1.4%, or $1.5 million, to $117.0 million in the second quarter of 2015 from $115.5 million in the second quarter of 2014. Average weekly revenues for our land-based spas increased 1.2% to $27,421 in the second quarter of 2015 from $27,084 in the second quarter of 2014. We had an average of 2,578 shipboard staff members in service in the second quarter of 2015, compared to an average of 2,552 shipboard staff members in service in the second quarter of 2014. Revenues per shipboard staff per day increased by 2.0% to $409 in the second quarter of 2015 from $401 in the second quarter of 2014. Average weekly revenues for our shipboard spas increased by 3.0% to $50,776 in the second quarter of 2015 from $49,306 in the second quarter of 2014. The increases in revenues and key performance indicators referenced above were primarily attributable to some strengthening of the economy worldwide, resulting in increased spending by consumers at our spas.

 

Products Revenues. Products segment revenues were approximately $44.0 million in both the second quarter of 2015 and in the second quarter of 2014. Excluding intercompany products sales, products revenues was $35.1 million for both the three months ended June 30, 2015 and 2014.

 

Schools Revenues. Schools segment revenues decreased approximately 3.7%, or $0.7 million to $18.3 million in the second quarter of 2015 from $19.0 million in the second quarter of 2014. Student population during a period is determined by the number of continuing students that are enrolled as of the beginning of the period combined with the number of new students that first become enrolled during that period, and as reduced by the number of students that graduate or otherwise cease to be enrolled at our schools as of the end of the period. As of December 31, 2014, which was the starting point for 2015 enrollments, there were 3,977 students enrolled in our schools, an increase of 258 students compared to the number of students as of December 31, 2013, the starting point for 2014 enrollments. As of June 30, 2015, 4,170 students were enrolled in our schools, compared to 4,283 students enrolled at our schools at June 30, 2014. The decrease in revenues was primarily attributed to the lower number of new enrollments during the six months ended June 30, 2015.

 

Ideal Image Revenues. Ideal Image segment revenues increased approximately 19.0% or $7.4 million to $46.5 million in the second quarter of 2015 from $39.1 million in the second quarter of 2014.  The increase in revenues was primarily attributable to the offering of new services during the three months ended June 30, 2015, which services were not offered during the three months ended June 30, 2014.

 

Cost of Services 

 

Cost of services increased $6.2 million to $129.0 million in the second quarter of 2015 from $122.8 million on the second quarter of 2014. Cost of services as a percentage of services revenues decreased to 83.5% in the second quarter of 2015 from 83.9% in the second quarter of 2014. This decrease was primarily attributable to the improved performance at Ideal Image.

  

 

 

Cost of Products 

 

Cost of products increased $0.5 million to $42.2 million in the second quarter of 2015 from $41.7 million in the second quarter of 2014. Cost of products as a percentage of products revenue increased to 67.1% in the second quarter of 2015 from 66.4% in the second quarter of 2014. Excluding the impact of foreign exchange, there was no change in these percentages between the second quarters of 2015 and 2014, respectively.

 

OPERATING EXPENSES

 

Operating expenses increased $0.9 million to $35.3 million in the second quarter of 2015 from $34.4 million in the second quarter of 2014. Operating expenses as a percentage of revenues was 16.2% in the second quarter of 2015 from 16.4% in the second quarter of 2014. This decrease is primarily attributable to an incremental $0.9 million foreign exchange gain during the second quarter of 2015.

 

INCOME FROM OPERATIONS

 

Income from operations of our reportable segments for the three months ended June 30, 2015 and 2014, respectively, was as follows (in thousands):

 

		For the Three Months Ended June 30,								% Change
		2015				2014
Income (loss) from Operations:
Spa Operations		$	10,274			$	8,128				26.4%
Products			2,330				3,775				(38.3%)
Schools			(904	)			(235	)			284.7%
Ideal Image			(240	)			(1,544	)			84.5%
Other			(568	)			209				N/A
Total		$	10,892			$	10,333				5.4%

 

The increase in operating income in the Spa Operations segment was attributable to some strengthening of the economy worldwide resulting in increased spending by consumers at our spas and cost efficiencies achieved at certain of our spas. The decrease in operating income in the Products segment was primarily attributable to higher costs incurred to sell our products and expand our brands. The increase in operating loss in the Schools segment was primarily attributable to a lower average student population, which resulted in lower revenues and, commensurately, higher operating loss. The decrease in operating loss in the Ideal Image segment was primarily attributable to the offering of new services during the three months ended June 30, 2015, which services were not offered during the three months ended June 30, 2014.

 

Other Income (Expense)

 

Other income (expense) decreased due to increased interest expense due to additional draws on our revolving term loan for general corporate purposes offset by an increase in interest income.

 

Provision for Income Taxes

 

Provision for income taxes was $1.3 million in the second quarter of 2015 and $1.7 million in the second quarter of 2014, respectively. Provision for income taxes reflected an overall effective rate of 12.9% in the second quarter of 2015 compared to 16.9% in the second quarter of 2014. The decrease was primarily due to the income earned in jurisdictions where we were required to pay tax representing a lower percentage of our total income earned in the second quarter of 2015 than such income represented in the second quarter of 2014.

 

NET INCOME

 

Net income was $9.0 million in the second quarter of 2015 compared to $8.3 million in the second quarter of 2014. This increase was primarily attributable to our improved performances in our Spa Operations and Ideal Image segments as discussed above.

  

 

 

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

 

REVENUES

 

Revenues of our reportable segments for the six months ended June 30, 2015 and 2014, respectively, were as follows (in thousands):

 

		Six Months Ended June 30,								% Change
		2015				2014
Revenue:
Spa Operations		$	235,645			$	241,313				(2.3)%
Products			89,375				86,337				3.5%
Schools			38,475				38,714				(0.6%)
Ideal Image			87,568				77,888				12.4%
Other			(17,598	)			(18,253	)			N/A
Total		$	433,465			$	425,999				1.8%

 

Total revenues increased approximately 1.8%, or $7.5 million, to $433.5 million in the six months ended June 30, 2015 from $426.0 million in the six months ended June 30, 2014. This increase was attributable to a $4.5 million increase in services revenues and a $3.0 million increase in products revenues.

 

Spa Operations Revenues. Spa Operations segment revenues decreased approximately 2.3%, or $5.7 million, to $235.6 million in the six months ended June 30, 2015 from $241.3 million in the six months ended June 30, 2014. Average weekly revenues for our land-based spas decreased 1.1% to $27,765 in the six months ended June 30, 2015 from $28,068 in the six months ended June 30, 2014. We had an average of 2,584 shipboard staff members in service in the six months ended June 30, 2015, compared to an average of 2,658 shipboard staff members in service in the six months ended June 30, 2014. Revenues per shipboard staff per day increased by 1.7% to $412 in the six months ended June 30, 2015 from $405 in the six months ended June 30, 2014. Average weekly revenues for our shipboard spas increased by 1.6% to $51,161 in the six months ended June 30, 2015 from $50,376 in the six months ended June 30, 2014. More than 75% of the decrease in revenues was attributable to the non-renewal of the Celebrity agreement.

 

Products Revenues. Products segment revenues increased approximately 3.5% or $3.1 million to $89.4 million in the six months ended June 30, 2015 from $86.3 million in the six months ended June 30, 2014. Excluding intercompany products sales, products revenues increased $3.9 million to $71.0 million for the six months ended June 30, 2015 from $67.1 million in the six months ended June 30, 2014. This increase was primarily attributable to increased sales of products through third party retail channels, including a substantial amount of products being sold for the first time to Kohl’s department stores.

 

Schools Revenues. Schools segment revenues decreased approximately 0.6%, or $0.2 million to $38.5 million in the six months ended June 30, 2015 from $38.7 million in the six months ended June 30, 2014. Student population during a period is determined by the number of continuing students that are enrolled as of the beginning of the period combined with the number of new students that first become enrolled during that period, and as reduced by the number of students that graduate or otherwise cease to be enrolled at our schools as of the end of the period. As of December 31, 2014, which was the starting point for 2015 enrollments, there were 3,977 students enrolled in our schools, an increase of 258 students compared to the number of students as of December 31, 2013, the starting point for 2014 enrollments. As of June 30, 2015, 4,170 students were enrolled in our schools, compared to 4,283 students enrolled at our schools at June 30, 2014. The decrease in revenues was primarily attributable to the lower number of new enrollments, some of which was caused by the closing of some of our campuses due to the severe winter weather, during the six months ended June 30, 2015.

 

Ideal Image Revenues. Ideal Image segment revenues increased approximately 12.4% or $9.7 million to $87.6 million for the six months ended June 30, 2015 from $77.0 million in the six months ended June 30, 2014.  The increase in revenues was primarily attributable to the offering of new services during the six months ended June 30, 2015, which services were not offered during the six months ended June 30, 2014.

  

 

Cost of Services 

 

Cost of services increased $3.2 million to $255.3 million in the six months ended June 30, 2015 from $252.1 in the six months ended June 30, 2014, respectively. Cost of services as a percentage of services revenues was 83.4% in the six months ended June 30, 2015 and 83.6% in the six months ended June 30, 2014. This decrease was primarily attributable to the improved performance of Ideal Image. 

 

Cost of Products 

 

Cost of products decreased $0.4 million to $83.9 million in the six months ended June 30, 2015 from $84.3 million in the six months ended June 30, 2014. Cost of products as a percentage of products revenue decreased to 65.9% in the six months ended June 30, 2015 from 67.8% in the six months ended June 30, 2014. These decreases were primarily attributable to higher margin products that were sold in the six months ended June 30, 2015 compared to the six months ended June 30, 2014. A substantial amount of these products were sold for the first time to Kohl’s department stores during the six months ended June 30, 2015.

 

OPERATING EXPENSES

 

Operating expenses increased $3.5 million to $73.2 million in the six months ended June 30, 2015 from $69.7 million in the six months ended June 30, 2014. Operating expenses as a percentage of revenues was 16.9% in the six months ended June 30, 2015 and 16.3% in the six months ended June 30, 2014. This increase is primarily attributable to an adverse foreign exchange impact of $1.1 million and to a higher bad debt expense due to the expansion of in-house loan programs at our schools.

 

INCOME FROM OPERATIONS

 

Income from operations of our reportable segments for the six months ended June 30, 2015 and 2014, respectively, was as follows (in thousands):

 

		For the Six Months Ended June 30,								% Change
		2015				2014
Income (loss) from Operations:
Spa Operations		$	19,859			$	18,275				8.7%
Products			5,601				6,195				(9.6%)
Schools			(589	)			(351	)			67.8%
Ideal Image			(1,927	)			(2,653	)			27.4%
Other			(1,862	)			(1,572	)			N/A
Total		$	21,082			$	19,894				6.0%

 

The increase in operating income in the Spa Operations segment was attributable to cost efficiencies achieved at certain of our spas. The decrease in operating income in the Products segment was primarily attributable to higher costs incurred to sell our products and expand our brands. The increase in operating loss in the Schools segment was primarily attributable to lower average student population, which resulted in lower revenues and, commensurately, higher operating loss. The decrease in operating loss in the Ideal Image segment was primarily attributed to the offering of new services during the six months ended June 30, 2015 which services were not offered during the six months ended June 30, 2014.

 

Other Income (Expense)

 

Other income (expense) decreased due to increased interest expense due to additional draws on our revolving term loan for general corporate purposes.

 

Provision for Income Taxes

 

Provision for income taxes was $2.9 million in the six months ended June 30, 2015 and $3.3 million for the six months ended June 30, 2014, respectively. Provision for income taxes reflected an overall effective rate of 14.6% in the six months ended June 30, 2015 compared to 17.3% in the six months ended June 30, 2014. The decrease was primarily due to the income earned in jurisdictions where we were required to pay tax representing a lower percentage of our total income earned in the six months ended June 30, 2015 than such income represented in the six months ended June 30, 2014.

 

  

NET INCOME

 

Net income was $17.1 million in the six months ended June 30, 2015 compared to $15.6 million in the six months ended June 30, 2014. This increase was primarily attributable to our improved performance at our Spa Operations and Ideal Image segments as discussed above. 

 

Liquidity and Capital Resources

 

Sources and Uses of Cash

 

During the six months ended June 30, 2015, net cash provided by operating activities was approximately $39.2 million compared with $10.3 million for the six months ended June 30, 2014. This change was attributable to increases in net income and in a number of working capital changes.

 

During the six months ended June 30, 2015, cash used in investing activities was $18.6 million compared with $10.0 million for the six months ended June 30, 2014. This increase was primarily attributable to an increase in capital expenditures primarily related to equipment purchased for Ideal Image that is used for new services.

 

During the six months ended June 30, 2015, cash used in financing activities was $30.7 million compared with $29.5 million for the six months ended June 30, 2014. This increase in cash used in financing activities was primarily attributable to greater payments of long-term debt during the six months ended June 30, 2015 as compared to June 30, 2014.

 

Steiner Leisure had a working capital deficit of approximately $17.4 million at June 30, 2015, compared to working capital of approximately $7.8 million at December 31, 2014. This was primarily attributable to the increases in deferred revenues related to our Ideal Image segment.

 

In February 2015, 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 six months ended June 30, 2015 and 2014, respectively, we purchased approximately 232,000 and 730,000 shares, with a value of approximately $10.8 million and $29.5 million, respectively. Of those shares purchased, 5,000 and 20,000 shares for the six months ended June 30, 2015 and 2014, 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.

  

 

 

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.

 

On June 3, 2014, our credit facility was amended to limit the total of dividends and share repurchases to no greater than $75 million in fiscal year 2014, and no greater than $35 million in subsequent years.

 

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 had 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 periods of 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. Recurrence of the 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 other Company facilities;

 

●

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, 2014 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 in our 2014 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 June 30, 2015.

 

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 June 30, 2015 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 2014 Annual Report.

  

Item 1A.

Risk Factors

 

There were no material changes during the second quarter of 2015 in the risk factors previously disclosed in our 2014 Annual Report, except as follows:

 

The portion of the risk factor entitled "We Face Risks Relating to the Financing of Ideal Image Services,""-which was previously disclosed in our 2014 Annual Report, is modified to add the following new paragraph immediately prior to the current last paragraph of that risk factor:

 

With respect to our Ideal Image customers who receive third-party financing, we receive payments in full (less applicable finance fees) for the service in question from such third-party financing source up front, at the time that the service in question is commenced. We receive that full amount even where the service in question requires multiple treatments over a period of time. If such third-party financing source is required by applicable regulations, or otherwise determines to change the method of payments to us to spread out such payments to match the times of the respective treatments which are part of the service, this would materially adversely affect the cash flow that we receive from the sales of our Ideal Image services.  

 

With respect to the portion of the risk factor entitled "Government Regulation - Schools,: under the sub-heading "State Regulation and Accreditation," the last three paragraphs are hereby modified as follows:

 

We have obtained accreditation and state approvals for our Arlington, Texas campus and have obtained approval from the DOE for the campus to participate in the Title IV Programs. In order to be eligible to participate in the Title IV Programs, the campus must, among other things, meet DOE requirements for being considered “legally authorized” in the State of Texas.

 

The DOE has approved the Arlington campus to participate in the Title IV Programs. The DOE had previously notified us on August 4, 2014 that it had denied the application for DOE approval of the Arlington campus to participate in the Title IV Programs based on the DOE’s conclusion that documentation of the authorization from the Texas Department of State Health Services (“DSHS”) was insufficient to demonstrate compliance with DOE requirements and based on the documentation from DSHS not containing the required explanation or extension request as referenced above. We subsequently requested the DOE to reconsider its determination based in part on additional documentation that we provided. The DOE responded by granting an extension of the effective date of the state authorization rule requirements until June 30, 2015 and approving the Arlington campus to participate in the Title IV Programs.

 

We also have two other campuses in Texas (Richardson and Houston) that have approvals from DSHS and that the DOE approved in 2014 for continued participation in the Title IV Programs. Those two campuses, together with the Arlington campus, represent 11% of the total student population of our schools. Texas amended its law to clarify the authority of DSHS in a manner that we believe complies with the state authorization rule of the DOE by June 30, 2015. If the DOE were to disagree that the Texas law demonstrates compliance with DOE requirements, we could lose our authority to disburse Title IV funds to students enrolled at our three campuses in Texas, which would have a material adverse effect on our business, results of operations and financial condition.

 

 

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 June 30, 2015:

 

		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)
April 1, 2015 through April 30, 2015			11,808			$	46.72				11,808			$	90,162,102
May 1, 2015 through May 31, 2015			16,145				46.89				16,145				89,405,121
June 1, 2015 through June 30, 2015			--				--				--				89,405,121
Total			27,953			$	46.82				27,953			$	89,405,121

 

(1)   During the second quarter, no shares were purchased through the Company's only repurchase plan, which was approved on February 18, 2015 (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 $10,594,879 of our common shares have been purchased to date.

 

(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: August 7, 2015	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.

 

34

 

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)/ RULE
15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

I, Leonard I. Fluxman, certify that:

 

1.  I have reviewed this quarterly report on Form 10-Q of Steiner Leisure Limited;

 

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: August 7, 2015	/s/ Leonard I. Fluxman
	Leonard I. Fluxman
	President and Chief Executive Officer

 

 

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a)/ RULE
15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

I, Stephen B. Lazarus, certify that:

 

1.  I have reviewed this quarterly report on Form 10-Q of Steiner Leisure Limited;

 

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: August 7, 2015	/s/ Stephen B. Lazarus
	Stephen B. Lazarus
	Chief Operating Officer and Chief Financial Officer

 

 

Exhibit 32.1

 

SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), the undersigned officer of Steiner Leisure Limited certifies that (1) this Quarterly Report of Steiner Leisure Limited (the "Company") on Form 10-Q for the period ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (this "Report"), fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (2) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

	/s/ Leonard I. Fluxman
	Leonard I. Fluxman
	President and Chief Executive Officer

 

August 7, 2015

 

Exhibit 32.2

 

SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), the undersigned officer of Steiner Leisure Limited certifies that (1) this Quarterly Report of Steiner Leisure Limited (the "Company") on Form 10-Q for the period ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (this "Report"), fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (2) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

	/s/ Stephen B. Lazarus
	Stephen B. Lazarus
	Chief Operating Officer and Chief Financial Officer

 

August 7, 2015