Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 14, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | OSW | |
Entity Registrant Name | ONESPAWORLD HOLDINGS Ltd | |
Entity Central Index Key | 0001758488 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 61,118,298 | |
Entity Address, Country | BS | |
Security Exchange Name | NASDAQ | |
Title of 12(b) Security | Common Shares |
CONDENSED CONSOLIDATED AND COMB
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 14,447 | $ 15,302 |
Accounts receivable, net | 26,875 | 25,352 |
Inventories | 33,752 | 32,265 |
Prepaid expenses | 8,625 | 6,617 |
Other current assets | 2,230 | 1,424 |
Total current assets | 85,929 | 80,960 |
Property and equipment, net | 24,632 | 16,239 |
Intangible assets, net | 628,239 | 131,517 |
Goodwill | 182,121 | 33,864 |
OTHER ASSETS: | ||
Deferred tax assets | 8,406 | 4,265 |
Other non-current assets | 535 | 5,814 |
Total other assets | 8,941 | 10,079 |
Total assets | 929,862 | 272,659 |
LIABILITIES: | ||
Accounts payable | 9,403 | 7,595 |
Accounts payable - related parties | 6,409 | 6,553 |
Accrued expenses | 26,001 | 27,211 |
Income taxes payable | 966 | 670 |
Current portion of long-term debt | 2,085 | |
Other current liabilities | 1,123 | 1,210 |
Total current liabilities | 45,987 | 43,239 |
Deferred rent | 68 | 645 |
Income tax contingency | 3,969 | 3,918 |
Long-term debt, net | 232,203 | 352,440 |
Total liabilities | 282,227 | 400,242 |
Commitments (Note 7) | ||
EQUITY (DEFICIT): | ||
Common stock, $0.0001 par value; 250,000,000 shares authorized; 61,118,298 issued and outstanding at June 30, 2019 | 6 | |
Additional paid-in capital | 660,416 | |
Accumulated deficit | (19,074) | |
Net Parent investment | (130,520) | |
Accumulated other comprehensive loss | (391) | (649) |
Total OneSpaWorld stockholders' equity and Parent's (deficit), respectively | 640,957 | (131,169) |
Noncontrolling interest | 6,678 | 3,586 |
Total equity (deficit) | 647,635 | (127,583) |
Total liabilities and equity (deficit) | $ 929,862 | $ 272,659 |
CONDENSED CONSOLIDATED AND CO_2
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (Parenthetical) | Jun. 30, 2019$ / sharesshares |
Common stock, par value | $ / shares | $ 0.0001 |
Common stock, shares authorized | 250,000,000 |
Common stock, shares issued | 61,118,298 |
Common stock, shares outstanding | 61,118,298 |
CONDENSED CONSOLIDATED AND CO_3
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Jun. 30, 2019 | Mar. 19, 2019 | Jun. 30, 2018 | Jun. 30, 2018 | |||
REVENUES: | |||||||
REVENUES | $ 140,430 | $ 159,444 | $ 118,452 | $ 135,395 | $ 264,289 | ||
COST OF REVENUES AND OPERATING EXPENSES: | |||||||
Administrative | 4,346 | 6,863 | 2,498 | 2,796 | 5,081 | ||
Salary and payroll taxes | 4,249 | 25,464 | 29,349 | 3,680 | 7,507 | ||
Amortization of intangible assets | 4,491 | 5,073 | 755 | 893 | 1,760 | ||
Total cost of revenues and operating expenses | 132,332 | 172,622 | 133,395 | 122,996 | 240,219 | ||
Income (loss) from operations | 8,098 | (13,178) | (14,943) | 12,399 | 24,070 | ||
OTHER INCOME (EXPENSE), NET: | |||||||
Interest expense | (4,271) | (4,828) | (6,316) | (8,780) | (16,139) | ||
Loss on extinguishment of debt | (3,413) | ||||||
Interest income | 205 | 205 | |||||
Other income (expense) | 14 | (17) | |||||
Total other expense, net | (4,271) | (4,828) | (9,729) | (8,561) | (15,951) | ||
Income (loss) before (benefit) provision for income taxes | 3,827 | (18,006) | (24,672) | 3,838 | 8,119 | ||
(BENEFIT) PROVISION FOR INCOME TAXES | (732) | 14 | 109 | 141 | 639 | ||
Net income (loss) | 4,559 | (18,020) | (24,781) | 3,697 | 7,480 | ||
Net income attributable to noncontrolling interest | 950 | 1,054 | 678 | 1,044 | 1,944 | ||
Net income (loss) attributable to common shareholders and Parent, respectively | $ 3,609 | [1] | $ (19,074) | [1] | (25,459) | 2,653 | 5,536 |
Earnings (loss) per share: | |||||||
Basic earnings (loss) per share | $ 0.06 | $ (0.31) | |||||
Diluted earnings (loss) per share | $ 0.05 | $ (0.31) | |||||
Basic weighted average shares outstanding | 61,118,298 | 61,118,298 | |||||
Diluted weighted average shares outstanding | 72,047,201 | 61,118,298 | |||||
Service [Member] | |||||||
REVENUES: | |||||||
REVENUES | $ 107,285 | $ 121,998 | 91,280 | 102,845 | 200,891 | ||
COST OF REVENUES AND OPERATING EXPENSES: | |||||||
Cost of Revenue | 90,642 | 103,028 | 76,836 | 88,092 | 171,270 | ||
Product [Member] | |||||||
REVENUES: | |||||||
REVENUES | 33,145 | 37,446 | 27,172 | 32,550 | 63,398 | ||
COST OF REVENUES AND OPERATING EXPENSES: | |||||||
Cost of Revenue | $ 28,604 | $ 32,194 | $ 23,957 | $ 27,535 | $ 54,601 | ||
[1] | Calculated as total net income (loss) less amounts attributable to noncontrolling interest. |
CONDENSED CONSOLIDATED AND CO_4
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2019 | Mar. 19, 2019 | Jun. 30, 2018 | Jun. 30, 2018 | |
Net income (loss) | $ 4,559 | $ (18,020) | $ (24,781) | $ 3,697 | $ 7,480 |
Other comprehensive loss, net of tax: | |||||
Foreign currency translation adjustments | (130) | (955) | (165) | (308) | (119) |
Total other comprehensive loss, net of tax | (130) | (955) | (165) | (308) | (119) |
Comprehensive income (loss) | 4,429 | (18,975) | (24,946) | 3,389 | 7,361 |
Comprehensive income attributable to noncontrolling interest | 950 | 1,054 | 678 | 1,044 | 1,944 |
Comprehensive income (loss) attributable to common shareholders and Parent, respectively | $ 3,479 | $ (20,029) | $ (25,624) | $ 2,345 | $ 5,417 |
CONDENSED CONSOLIDATED AND CO_5
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Net Parent Investment [Member] | Accumulated Other Comprehensive Loss [Member] | Retained Earnings [Member] | Parent [Member] | Non -Controlling Interest [Member] | |
BALANCE at Dec. 31, 2017 | $ 225,281 | $ 221,041 | $ (356) | $ 220,685 | $ 4,596 | ||||
Net (loss) income | 7,480 | 5,536 | 5,536 | 1,944 | |||||
Distributions to noncontrolling interest | (1,765) | (1,765) | |||||||
Net distributions from Parent and its affiliates | (351,107) | (351,107) | (351,107) | ||||||
Foreign currency translation adjustment | (119) | (119) | (119) | ||||||
BALANCE at Jun. 30, 2018 | (120,230) | (124,530) | (475) | (125,005) | 4,775 | ||||
BALANCE at Mar. 31, 2018 | (129,147) | (134,476) | (167) | (134,643) | 5,496 | ||||
Net (loss) income | 3,697 | 2,653 | 2,653 | 1,044 | |||||
Distributions to noncontrolling interest | (1,765) | (1,765) | |||||||
Net contributions from Parent and its affiliates | 7,293 | 7,293 | 7,293 | ||||||
Foreign currency translation adjustment | (308) | (308) | (308) | ||||||
BALANCE at Jun. 30, 2018 | (120,230) | (124,530) | (475) | (125,005) | 4,775 | ||||
BALANCE at Dec. 31, 2018 | (127,583) | (130,520) | (649) | (131,169) | 3,586 | ||||
Net (loss) income | (24,781) | (25,459) | (25,459) | 678 | |||||
Distributions to noncontrolling interest | (267) | (267) | |||||||
Net contributions from Parent and its affiliates | 351,802 | 351,802 | 351,802 | ||||||
Foreign currency translation adjustment | (165) | (165) | (165) | ||||||
BALANCE at Mar. 19, 2019 | 199,006 | $ 195,823 | (814) | 195,009 | 3,997 | ||||
BALANCE at Mar. 20, 2019 | [1] | 669,790 | $ 6 | $ 664,160 | 664,166 | 5,624 | |||
BALANCE (In Shares) at Mar. 20, 2019 | [1] | 61,118,298,000 | |||||||
Immaterial correction of an error | [2] | (24,115) | (24,115) | (24,115) | |||||
Net (loss) income | (18,020) | $ (19,074) | (19,074) | 1,054 | |||||
Stock-based compensation | 20,371 | 20,371 | 20,371 | ||||||
Foreign currency translation adjustment | (391) | (391) | (391) | ||||||
BALANCE at Jun. 30, 2019 | 647,635 | $ 6 | 660,416 | (391) | (19,074) | 640,957 | 6,678 | ||
BALANCE (In Shares) at Jun. 30, 2019 | 61,118,298,000 | ||||||||
BALANCE at Mar. 31, 2019 | 666,757 | $ 6 | 684,531 | (825) | (22,683) | 661,029 | 5,728 | ||
BALANCE (In Shares) at Mar. 31, 2019 | 61,118,298,000 | ||||||||
Immaterial correction of an error | [2] | (23,551) | (24,115) | 564 | (23,551) | ||||
Net (loss) income | 4,559 | 3,609 | 3,609 | 950 | |||||
Foreign currency translation adjustment | (130) | (130) | (130) | ||||||
BALANCE at Jun. 30, 2019 | $ 647,635 | $ 6 | $ 660,416 | $ (391) | $ (19,074) | $ 640,957 | $ 6,678 | ||
BALANCE (In Shares) at Jun. 30, 2019 | 61,118,298,000 | ||||||||
[1] | Initial equity balances of the Successor reflect the equity of the accounting acquirer, Haymaker, and the issuance of common stock, warrants and cash contributed by Haymaker in connection with the acquisition of OSW Predecessor. | ||||||||
[2] | See Note 2(k). |
CONDENSED CONSOLIDATED AND CO_6
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Mar. 19, 2019 | Jun. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net (loss) income | $ (18,020) | $ (24,781) | $ 7,480 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 7,954 | 1,989 | 5,566 |
Amortization of deferred financing costs | 301 | 213 | |
Stock-based compensation | 20,371 | ||
Provision for doubtful accounts | 8 | 18 | |
Loss on extinguishment of debt | 3,413 | ||
Allocation of Parent corporate overhead | 5,516 | ||
Deferred income taxes | (77) | 85 | |
Changes in: | |||
Accounts receivable, net | (3,202) | 1,671 | 1,976 |
Inventories | 398 | (406) | (2,518) |
Prepaid expenses | (3,081) | 1,073 | 392 |
Other current assets | (1,019) | 213 | 402 |
Other noncurrent assets | (536) | (1,003) | 148 |
Accounts payable | (6,505) | 8,313 | (3,194) |
Accounts payable - related parties | (6,553) | (5,532) | |
Accrued expenses | (22,021) | 19,792 | 5,262 |
Other current liabilities | 388 | (288) | 231 |
Note receivable due from affiliate of the Parent | (204) | ||
Income taxes payable | 229 | 42 | 553 |
Deferred rent | 68 | 37 | 108 |
Net cash (used in) provided by operating activities | (24,752) | 3,733 | 16,289 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Capital expenditures | (1,243) | (517) | (2,936) |
Acquisition of OSW Predecessor | (670,044) | ||
Net cash used in investing activities | (671,287) | (517) | (2,936) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from the issuance of common shares | 122,499 | ||
Net proceeds from Haymaker and private placement investors | 349,390 | ||
Proceeds from term loan and revolver facilities | 245,900 | ||
Repayment on term loan and revolver facilities | (5,021) | ||
Proceeds from amounts due from related party | 3,187 | ||
Payment of deferred financing costs | (6,892) | ||
Net distributions to Parent and its affiliates | (4,262) | (5,706) | |
Distributions to noncontrolling interest | (267) | (1,765) | |
Net cash provided by (used in) financing activities | 709,063 | (4,529) | (7,471) |
Effect of exchange rate changes on cash | (351) | 649 | 19 |
Net (decrease) increase in cash and cash equivalents | 12,673 | (664) | 5,901 |
Cash and cash equivalents, Beginning of period | 1,774 | 15,302 | 8,671 |
Cash and cash equivalents, End of period | 14,447 | 14,638 | 14,572 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Cash paid during the period for: Income taxes | 73 | 28 | |
Cash paid during the period for: Interest | 4,396 | 13,023 | |
Non-cash transactions: | |||
Equity consideration paid in connection with the Business Combination | 167,300 | ||
Accounts payable to related party related to changes in working capital in connection with the Business Combination | $ 6,409 | ||
Allocation of Parent corporate overhead | 5,516 | ||
Assignment and assumption of long-term debt | 351,197 | ||
Repayment of long-term debt by Parent on behalf of the Company | $ 351,482 | ||
Write-off income tax payable for separate return provision | $ 254 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2019 | |
ORGANIZATION | 1. ORGANIZATION OneSpaWorld Holdings Limited (“OneSpaWorld” or the “Company”) is an international business company incorporated under the laws of the Commonwealth of The Bahamas. OneSpaWorld is a global provider and innovator in the fields of health and wellness, fitness and beauty. In facilities on cruise ships and in land-based resorts, the Company strives to create a relaxing and therapeutic environment where guests can receive health and wellness, fitness and beauty services and experiences of the highest quality. The Company’s services include traditional and alternative massage, body and skin treatments, fitness, acupuncture, and medispa treatments. The Company also sells premium quality health and wellness, fitness and beauty products at its facilities and through its timetospa.com website. The predominant business, based on revenues, is sales of services and products on cruise ships and in land-based resorts, followed by sales of products through the timetospa.com website. On March 19, 2019 (the “Business Combination Date”), OneSpaWorld consummated a business combination pursuant to that certain Business Combination Agreement, dated as of November 1, 2018 (as amended on January 7, 2019, by Amendment No. 1 to the Business Combination Agreement), by and among Steiner Leisure Limited (“Steiner Leisure,” “Steiner,” or “Parent”), Steiner U.S. Holdings, Inc., Nemo (UK) Holdco, Ltd., Steiner UK Limited, Steiner Management Services, LLC, Haymaker Acquisition Corp. (“Haymaker”), OneSpaWorld, Dory US Merger Sub, LLC, Dory Acquisition Sub, Limited, Dory Intermediate LLC, and Dory Acquisition Sub, Inc. (the “Business Combination”). Prior to the consummation of the Business Combination, OneSpaWorld was a wholly-owned subsidiary of Steiner Leisure. On the Business Combination Date, OneSpaWorld became the ultimate parent company of Haymaker and OSW Predecessor (“OSW”). Haymaker was organized as a blank check company incorporated in Delaware on April 27, 2017 and was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On October 27, 2017, Haymaker consummated an initial public offering (“IPO”) of its Class A common shares (the “Haymaker Class A Shares”), generating gross proceeds of approximately $300,000,000. The net proceeds from the IPO were subsequently placed in a trust account for the intended purpose of being applied toward consummating a business combination. OSW is comprised of the net assets and operations of (i) the following wholly-owned subsidiaries of Steiner Leisure: OneSpaWorld LLC, Steiner Spa Asia Limited, Steiner Spa Limited, and Steiner Marks Limited, (ii) the following respective indirect subsidiaries of Steiner Leisure: Mandara PSLV, LLC, Mandara Spa (Hawaii), LLC, Florida Luxury Spa Group, LLC, Steiner Transocean U.S., Inc., Steiner Spa Resorts (Nevada), Inc., Steiner Spa Resorts (Connecticut), Inc., Steiner Resort Spas (California), Inc., Steiner Resort Spas (North Carolina), Inc., OSW SoHo LLC, OSW Distribution LLC, Steiner Training Limited, STO Italy S.r.l., One Spa World LLC, Mandara Spa Services LLC, OneSpaWorld Limited, OneSpaWorld (Bahamas) Limited (formerly known as Steiner Transocean Limited), OneSpaWorld Medispa LLC, OneSpaWorld Medispa Limited, OneSpaWorld Medispa (Bahamas) Limited, Mandara Spa (Cruise I), LLC, Mandara Spa (Cruise II), LLC, Steiner Transocean (II) Limited, The Onboard Spa by Steiner (Shanghai) Co., Ltd., Mandara Spa LLC, Mandara Spa Puerto Rico, Inc., Mandara Spa (Guam), L.L.C., Mandara Spa (Bahamas) Limited, Mandara Spa Aruba N.V., Mandara Spa Polynesia Sarl, Inc., Mandara Spa Asia Limited, PT Mandara Spa Indonesia, Spa Services Asia Limited, Mandara Spa Palau, Mandara Spa (Malaysia) Sdn. Bhd., Mandara Spa Ventures International Sdn. Bhd., Spa Partners (South Asia) Limited, Mandara Spa (Maldives) PVT LTD, and Mandara Spa (Fiji) Limited, (iii) Medispa Limited, a majority-owned subsidiary of Steiner Leisure, and (iv) the timetospa website owned by Elemis USA, Inc. (formerly known as Steiner Beauty Products, Inc.). The Business Combination was accounted for using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations Transaction costs, consisting primarily of debt issuance costs of $6,892,000, are recorded as deferred financing costs and netted against the long-term debt in the accompanying condensed consolidated balance sheet. Under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the period in which such costs are incurred, or, if related to the issuance of debt or equity, capitalized as debt issuance costs or recorded as a reduction in proceeds to additional paid-in capital, respectively. Acquisition-related transaction costs incurred as part of a business combination include estimated fees related to the issuance of long-term debt, underwriting fees, as well as advisory, legal and accounting fees. Upon completion of the Business Combination, the Haymaker selling stockholders received an aggregate 31,713,387 common shares, par value $0.0001, of OneSpaWorld (the “OneSpaWorld Shares”), with each Haymaker stockholder receiving one OneSpaWorld Share in exchange for each Haymaker Class A Common Share. In addition, each warrant to purchase a Haymaker Class A Common Share (the “Haymaker Warrants”) became exercisable for one OneSpaWorld Share, on the same terms and conditions as those applicable to the warrants to purchase the Haymaker Class A Shares. Also, 3,000,000 OneSpaWorld Shares, and the right to receive 1,600,000 OneSpaWorld Shares upon the occurrence of certain events, were issued to Haymaker Sponsor and the other former holders of Haymaker Class B common shares (the “Founder Shares”) in exchange for such shares, and the Haymaker Warrants held by Haymaker Sponsor became exercisable for 3,408,186 OneSpaWorld Shares. The consideration paid to Steiner Leisure in connection with the Business Combination consisted of (i) 14,155,274 OneSpaWorld Shares, of which 5,607,144 OneSpaWorld shares were issued to Steiner by OneSpaWorld in a private placement offering to investors (see Note 5), (ii) warrants to purchase 1,486,520 OneSpaWorld Shares, (iii) $691,086 in cash, including the cash proceeds from the 5,607,144 OneSpaWorld shares in the private placement and $6,409,000 in working capital adjustments accrued as of June 30, 2019 (see Note 9), and (iv) the right to receive an additional 5,000,000 OneSpaWorld Shares upon the occurrence of certain events (the “Deferred Shares”) (see Note 6). The fair value of the OneSpaWorld Shares and Deferred Shares issued as equity consideration in the Business Combination was based on the observable market price of $11.85 per share of OneSpaWorld common stock on the Business Combination Date. The fair value of the warrants to purchase OneSpaWorld shares issued as equity consideration in the Business Combination was determined using a Black-Sholes option-pricing model with inputs as of the Business Combination Date. The OSW acquisition is recorded on the Company’s condensed consolidated balance sheet as of March 19, 2019 based upon estimated fair values as of such date. The preliminary computations of consideration and the allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed, as adjusted, is presented in the table below (in thousands): Cash consideration $ 691,086 Equity consideration 167,300 Total consideration transferred $ 858,386 Cash and cash equivalents $ 14,638 Accounts receivable 23,673 Inventories 34,150 Other current assets 9,943 Property and equipment 26,253 Intangible assets 633,300 Deferred tax asset 8,407 Current liabilities (64,518 ) Deferred tax liabilities (77 ) Other long-term liabilities (3,880 ) Non-controlling interest (5,624 ) Net assets acquired $ 676,265 Excess purchase price attributable to goodwill $ 182,121 Fair Value Useful Life (years) Retail concession agreements $ 604,800 39 Lease agreements 21,100 10 Trade name 5,900 Indefinite Licensing agreement 1,500 8 $ 633,300 The valuation of the assets acquired and liabilities assumed was based on fair values at the Business Combination Date. The preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed reflect various preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair values of certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income and non-income based taxes and goodwill. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the Business Combination Date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the Business Combination Date. However, given the circumstances of this acquisition which closed during the first quarter of fiscal 2019, as well as the size and complexity of the transaction, the entire purchase price allocation disclosed herein is considered provisional at this time and subject to adjustment to reflect new information obtained about factors and circumstances that existed as of the Business Combination Date that if known would have affected the measurement of the amounts recognized as of that date, while the measurement period remains open. The Company recorded identifiable intangible assets of $633.3 million related to retail concession agreements, lease agreements, a trade name and a licensing agreement. Retail concession agreements and lease agreements were valued through application of the multi-period excess earnings method. Under this method, revenues, operating expenses and other costs associated with these agreements were estimated in order to derive cash flows attributable to the existing agreements. The resulting cash flows were then discounted to present value at rates reflective of the risk and return expectations of the agreements to arrive at the fair value of the agreements as of the Business Combination Date. The Company has determined the estimated useful lives of the retail concession agreements and lease agreements based on the projected economic benefits associated with these interests. The trade name and licensing agreement were valued through application of the relief from royalty method. Under this method a royalty rate is applied to the revenues associated with the trade name to capture value associated with use of the name as if licensed. The resulting royalty savings are then discounted to present value at rates reflective of the risk and return expectations of the interests to derive their respective fair values as of the Business Combination Date. The Company has determined that the trade name is expected to have an indefinite useful life while the licensing agreement life is estimated based on the projected economic benefits associated with this interest. The preliminary allocation of the purchase consideration to property and equipment was based on the fair value of such assets determined using the trending method of the cost approach. The fair value of the inventory was determined through use of the replacement cost approach. Goodwill represents the excess of the total purchase consideration over the fair value of the underlying net assets, largely arising from the workforce and extensive distribution network that has been established by OSW. Goodwill is assigned to the Maritime and Destination Resorts reporting units expected to benefit from the combination as of the Business Combination Date. Noncontrolling interest was based on the fair value using a discounted cash flow method of the income approach. The following information represents the unaudited supplemental pro forma results of the Company’s condensed consolidated statement of operations as if the Business Combination occurred on January 1, 2018, after giving effect to certain adjustments, including depreciation and amortization of the assets acquired and liabilities assumed based on their estimated fair values and changes in interest expense resulting from changes in debt (in thousands): Three Months Ended Six Months Ended Six Months Ended June 30, 2018 June 30, 2019 June 30, 2018 Revenues $ 135,395 $ 277,896 $ 264,289 Net income (loss) $ 892 $ (41,947 ) $ 2,014 The pro forma information does not purport to be indicative of what the Company’s results of operations would have been if the Business Combination had in fact occurred at the beginning of the period presented and is not intended to be a projection of the Company’s future results of operations. Financial information prior to the Business Combination Date is referred to as “Predecessor” company information, which reflects the combined financial statements of OSW prepared using OSW’s previous combined basis of accounting. The financial information beginning March 20, 2019 is referred to as “Successor” company information and reflects the consolidated financial statements of OneSpaWorld, including the financial statement effects of recording fair value adjustments and the capital structure resulting from the Business Combination. Black lines have been drawn to separate the Successor’s financial information from that of the Predecessor since their financial statements are not comparable as a result of the application of acquisition accounting and the Company’s capital structure resulting from the Business Combination. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of Presentation, Principles of Consolidation and Principles of Combination Successor: The accompanying unaudited condensed consolidated financial statements as of and for the period March 20, 2019 to June 30, 2019, includes the condensed consolidated balance sheet and statements of operations, comprehensive income (loss), equity, and cash flows of OneSpaWorld. 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 period from March 20, 2019 to June 30, 2019 are not necessarily indicative of the results of operations or cash flows that may be expected for the remainder of 2019. 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, 2018. 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. Predecessor: The condensed combined OSW financial statements (the “OSW financial statements”) include the accounts of the wholly-owned and indirect subsidiaries of Steiner Leisure listed in Note 1 and include the accounts of a company majority-owned by OneSpaWorld Medispa (Bahamas) Limited, in which OneSpaWorld (Bahamas) Limited (100% owner of OneSpaWorld Medispa (Bahamas) Limited) had a controlling interest. The OSW condensed combined financial statements also include the accounts and results of operations associated with the timetospa.com website owned by Elemis USA, Inc. The OSW condensed financial statements do not represent the financial position and results of operations of a legal entity but rather a combination of entities under common control of Steiner Leisure that have been “carved out” of the Steiner Leisure consolidated financial statements and reflect significant assumptions and allocations. All significant intercompany transactions and balances have been eliminated in combination. The accompanying condensed combined OSW financial statements may not be indicative of what they would have been had OSW actually been a separate stand-alone entity. The accompanying OSW financial statements include the assets, liabilities, revenues and expenses specifically related to OSW’s operations. OSW receives services and support from various functions performed by Steiner Leisure and costs associated with these functions have been allocated to OSW. These allocations are necessary to reflect all of the costs of doing business and include costs related to certain Steiner Leisure corporate functions, including, but not limited to, senior management, legal, human resources, finance, IT and other shared services that have been allocated to OSW based on direct usage or benefit where identifiable, with the remainder allocated on a pro rata basis determined by an estimate of the percentage of time Steiner Leisure employees devoted to OSW, as compared to total time available or by the headcount of employees at Steiner Leisure corporate headquarters that are fully dedicated to the OSW entities in relation to the total employee headcount. These allocated costs are reflected in salaries and payroll taxes and administrative expenses in the accompanying condensed combined OSW statements of operations. Management considers these allocations to be a reasonable reflection of the utilization of services by or benefit provided to OSW. However, the allocations may not be indicative of the actual expenses that would have been incurred had OSW operated as an independent, stand-alone entity. Net Parent investment represents the Steiner Leisure controlling interest in the recorded net assets of OSW, specifically, the cumulative net investment by Steiner Leisure in OSW and cumulative operating results through the date presented. The net effect of the settlement of transactions between OSW, Steiner Leisure, and other affiliates of Steiner Leisure are reflected in the accompanying condensed combined statements of cash flows as a financing activity and in the condensed combined balance sheet as Net Parent investment. Certain expenses and operating costs were paid by Steiner Leisure on behalf of OSW. The Parent has paid on behalf of OSW expenses associated with the allocation of Steiner Leisure corporate overhead and costs associated with the purchase of products from related parties. Operating cash flows for the predecessor periods exclude OSW expenses and operating costs paid by Steiner Leisure on behalf of OSW. Consequently, OSW’s historical cash flows may not be indicative of cash flows had OSW actually been a separate stand-alone entity or future cash flows of OSW. As of December 31, 2018, OSW had assumed long-term debt of the Parent. Such debt was paid-off by the Parent on behalf of OSW during the Predecessor period from January 1, 2019 to March 19, 2019. Refer to Note 4 for more information on long-term debt. Management believes the assumptions and allocations underlying the accompanying condensed combined OSW financial statements and notes to the OSW condensed combined financial statements are reasonable, appropriate and consistently applied for the periods presented. Management believes the accompanying condensed combined OSW financial statements reflect all costs of doing business. The accompanying OSW condensed combined financial statements have been prepared in conformity with U.S. GAAP. b) Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”). As modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemption from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, section 102(b) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Act) are required to comply with new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt-out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election is irrevocable. The Company has elected not to opt-out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor a non-emerging growth company, which has opted-out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used. c) 2019 Equity Incentive Plan The Company’s board of directors approved the 2019 Equity Incentive Plan (the “2019 Plan”) on March 18, 2019 and the Company’s shareholders approved the 2019 Plan on March 18, 2019. The purpose of the 2019 Plan is to make available incentives that will assist the Company to attract, retain, and motivate employees, including officers, consultants and directors. The Company may provide these incentives through the grant of share options, share appreciation rights, restricted shares, restricted share units, performance shares and units and other cash-based or share-based awards. Awards may be granted under the 2019 Plan to OneSpaWorld employees, including officers, directors or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. A total of 7,000,000 OneSpaWorld Shares have been authorized and reserved for issuance under the 2019 Plan. On March 26, 2019 (the “Grant Date”), a total of 4,547,076 options were granted by the Company under the 2019 Plan to executive officers of the Company. The options have an exercise price of $12.99 and expire on the sixth anniversary of the Grant Date. The options were 100% vested on the Grant Date. The options become exercisable upon the five day volume weighted average price of OneSpaWorld common shares reaching $20.00 per share. The aggregate Grant Date fair value of the options was estimated to be $20,370,900, resulting in stock-based compensation of $20,370,900 being recognized by the Company in the period from March 20, 2019 to March 31, 2019 (Successor) in accordance with FASB Accounting Standards Codification (ASC) Topic 718, Compensation – Stock Compensation Hurdle price per share $ 20.00 Strike price per share $ 12.99 Average period for hurdle price, in days 5 End of simulation term 3/26/2025 Term of simulation 6.00 years Stock price as of the Measurement Date $ 12.99 Volatility 37.5 % Risk-free rate (continuous) 2.2 % Dividend yield (quarterly after 3 years) 3.0 % Suboptimal exercise multiple 2.8x d) Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs, which do not add to the value of the related assets or materially extend their original lives, are expensed as incurred. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the terms of the respective leases and the estimated useful lives of the respective assets. Depreciation and amortization expense for the three months ended June 30, 2019 (Successor) and the three months ended June 30, 2018 (Predecessor) was $2.1 million and $1.8 million, respectively. Depreciation and amortization expense for the periods from March 20, 2019 to June 30, 2019 (Successor), January 1, 2019 to March 19, 2019 (Predecessor) and the six months ended June 30, 2018 (Predecessor) was $2.3 million, $1.2 million and $3.2 million, respectively. e) Income Taxes Successor: As part of the process of preparing the condensed consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current income tax exposure together with an assessment of temporary differences resulting from differing treatment of items for tax purposes and accounting purposes, respectively. These differences result in deferred income tax assets and liabilities which are included in the accompanying condensed consolidated balance sheet. The Company must then assess the likelihood that its deferred income tax assets will be recovered from future taxable income and, to the extent that the Company believes that recovery is not likely, the Company must establish a valuation allowance. Predecessor: OSW accounts for income taxes under the separate return method of accounting. This method requires the allocation of current and deferred taxes to OSW as if it were a separate taxpayer. Under this method, the resulting portion of current income taxes payable that is not actually owed to the tax authorities is written-off through net Parent investment. Accordingly, income taxes payable in the accompanying condensed combined balance sheet as of December 31, 2018 (Predecessor) reflects current income tax amounts actually owed to the tax authorities as of those dates, as well as the accrual for uncertain tax positions. The write-off of current income taxes payable not actually owed to the tax authorities is included in net Parent investment in the accompanying condensed combined balance sheet as of December 31, 2018 (Predecessor). f) Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of diluted shares, as calculated under the treasury stock method, which includes the potential effect of dilutive common stock equivalents, such as options and warrants to purchase common shares, and contingently issuable shares. If the entity reports a net loss, rather than net income for the period, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, as their effect would be anti-dilutive. The following table provides details underlying OneSpaWorld’s earnings (loss) per basic and diluted share calculation for the three months ended June 30, 2019 (Successor) and the period from March 20, 2019 to June 30, 2019 (Successor) (in thousands except per share data): Successor Three Months Ended March 20, 2019 to June 30, 2019 June 30, 2019 Net income (loss) attributable to OneSpaWorld (a) $ 3,609 $ (19,074 ) Weighted average shares issued and outstanding - basic 61,118 61,118 Weighted average shares issued and outstanding - diluted (b) (c) 72,047 61,118 Earnings (loss) per share: Basic $ 0.06 ($ 0.31 ) Diluted $ 0.05 ($ 0.31 ) (a) Calculated as total net income (loss) less amounts attributable to noncontrolling interest. (b) For the three months ended June 30, 2019, weighted average shares issued and outstanding – diluted includes 4,329 potential dilutive shares under the treasury stock method and 6,600 contingently issuable dilutive shares. (c) For the period from March 20, 2019 to June 30, 2019, potential common shares under the treasury stock method were antidilutive because the Company reported a net loss in this period. Consequently, the Company did not have any adjustments in these periods between basic and diluted loss per share related to stock options, warrants, or deferred shares. The following is a reconciliation of the denominator of the basic and diluted per share computation for the three months ended June 30, 2019 (in thousands): Successor Three Weighted average shares outstanding - basic 61,118 Common stock warrants 4,066 Deferred shares 6,600 Employee stock options 263 Weighted average shares outstanding - diluted 72,047 The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted loss per share (in thousands): Successor March 20, 2019 to June 30, 2019 Common share warrants 24,500 Deferred shares 6,600 Employee stock options 4,547 35,647 g) Intangible Assets As a result of the Business Combination on March 19, 2019, and the related application of acquisition accounting, the Company completed a preliminary valuation of the identifiable intangible assets as of that date. As of June 30, 2019 (Successor), the trade name intangible asset, the Company’s only identified intangible asset with an indefinite life, had carrying values of $5.9 million. As of June 30, 2019, the definite-lived intangible assets had a carrying value of $622.3 million. Prior to the Business Combination and application of acquisition accounting, the trade name intangible asset, and the definite-lived intangible assets had carrying values of $5.0 million and $126.5 million, respectively, as of December 31, 2018 (Predecessor). The Company amortizes intangible assets with definite lives on a straight-line basis over their estimated useful lives. Amortization expense related to intangible assets for the three months ended June 30, 2019 (Successor) and three months ended June 30, 2018 (Predecessor) was $4.5 million and $0.9 million, respectively. Amortization expense for the periods from March 20, 2019 to June 30, 2019 (Successor), January 1, 2019 to March 19, 2019 (Predecessor) and the six months ended June 30, 2018 (Predecessor) was $5.1 million, $0.8 million and $1.8 million, respectively. Amortization expense is estimated to be $17.8 million in each of the next five years beginning in 2019. Contracts with cruise lines are generally renewed every five years. The Company has the intent and ability to renew such contracts over the estimated useful lives of the assets. Costs incurred to renew contracts are capitalized and amortized to cost of revenues and operating expenses over the term of the contract. At June 30, 2019 (Successor), the cost, accumulated amortization, and net balance of the definite-lived intangible assets were as follows (in thousands): Weighted Average Accumulated Net Remaining Useful Successor: Cost Depreciation Balance Life (yrs.) Retail concession agreements $ 604,800 $ (4,399 ) $ 600,401 39 Lease agreements 21,100 (604 ) 20,496 10 Licensing agreement 1,500 (58 ) 1,442 7 $ 627,400 $ (5,061 ) $ 622,339 At December 31, 2018 (Predecessor), the cost, accumulated amortization, and net balance of the definite-lived intangible assets were as follows (in thousands): Weighted Average Accumulated Net Remaining Useful Predecessor: Cost Depreciation Balance Life (yrs.) Retail concession agreements $ 130,000 $ (10,210 ) $ 119,790 36 Lease agreements 7,300 (573 ) 6,727 36 $ 137,300 $ (10,783 ) $ 126,517 h) Goodwill Goodwill represents the excess of cost over the fair value of net tangible and identifiable intangible assets acquired. The Company has two operating segments: (1) Maritime and (2) Destination Resorts. The Maritime and Destination Resorts operating segments each have associated goodwill, and each has been determined to be a reporting unit. The Company reviews goodwill for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently. The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely-than-not that a reporting unit’s fair value is less than its carrying amount, and if necessary, a two-step goodwill impairment test. Factors to consider when performing the qualitative assessment primarily include general economic conditions and changes in forecasted operating results. If the qualitative assessment demonstrates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to perform the two-step goodwill impairment test. The Company may elect to bypass the qualitative assessment and proceed directly to step one, for any reporting unit, in any period. The Company can resume the qualitative assessment for any reporting unit in any subsequent period. When performing the two-step goodwill impairment test, the fair value of the reporting unit is determined and compared to the carrying value of the net assets allocated to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required. If the fair value of the reporting unit is less than the carrying value of its net assets, the implied fair value of the reporting unit is allocated to all its underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair value. If necessary, goodwill is then written down to its implied fair value. As a result of the Business Combination on March 19, 2019, and the related application of acquisition accounting, the Company completed an initial preliminary valuation of goodwill as of that date of $199.4 million. As of June 30, 2019 (Successor), goodwill was adjusted to $182.1 million, a decrease of $17.3 million attributable to an increase in the cash consideration of $6.4 million due to working capital adjustments accrued as of June 30, 2019 offset by measurement period adjustments of $0.7 million, and immaterial corrections totaling $23.0 million further discussed in Note 2(k) below. The assignment of goodwill to reporting units, as of the acquisition date, has not been completed. i) Recent Accounting Pronouncements With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2019 that are of significance, or potential significance, to the Company based on its current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement. In May 2014, the FASB issued ASU 2014-09. The core principle of the guidance in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the ASC. Additionally, ASU 2014-09 supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. In periods subsequent to the initial issuance of this ASU, the FASB has issued additional ASU’s clarifying items within Topic 606, as follows: • In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal versus agent considerations. • In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas). • In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain issues identified to improve Topic 606 by enhancing guidance on assessing collectability, presentation of sales taxes and other similar taxes collected from customers, non-cash consideration and completed contracts and contract modifications at transition. The FASB issued updates ASU 2016-08, ASU 2016-10 and ASU 2016-12 to provide guidance to improve the operability and understandability of the implementation guidance included in ASU 2014-09. ASU 2016-08, ASU 2016-10 and ASU 2016-12 have the same effective date and transition requirements of ASU 2015-14, which defers the effective date and transition of ASU 2014-09 annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019, with early adoption permitted. The Company plans to adopt this standard, other related revenue standard clarifications and technical guidance effective for the annual period ending December 31, 2019 and quarterly periods beginning January 1, 2020. The Company has elected the modified retrospective transition approach. Under this method, the standard will be applied only to the most current period presented and the cumulative effect of applying the standard will be recognized at the date of initial application. The Company is progressing through its implementation plan and is continuing to evaluate the impact of the standard on its processes, accounting systems, controls and financial disclosures. The Company is not able to determine at this time if the adoption of this guidance will have a material impact on the Company’s consolidated and combined financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) to increase transparency and comparability among organizations by recognizing rights and obligations resulting from leases as lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The update requires lessees to recognize for all leases with a term of 12 months or more at the commencement date: (a) a lease liability or a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset or a lessee’s right to use or control the use of a specified asset for the lease term. Under the update, lessor accounting remains largely unchanged. The update requires a modified retrospective transition approach for leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements and do not require any transition accounting for leases that expire before the earliest comparative period presented. The update is effective retrospectively for annual periods beginning after December 15, 2019, and interim periods beginning after December 15, 2020, with early adoption permitted. The Company is not able to determine at this time if the adoption of this guidance will have a material impact on the Company’s consolidated and combined financial statements. j) Accounting for Business Combinations In accordance with ASC 805, when accounting for business combinations, the Company is required to recognize the assets acquired, liabilities assumed, contractual contingencies, noncontrolling interests and contingent consideration at their fair value as of the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets and/or pre-acquisition contingencies, all of which ultimately affect the fair value of goodwill established as of the acquisition date. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date and is then subsequently tested for impairment at least annually. As part of the Company’s accounting for business combinations, the Company is required to determine the useful lives of identifiable intangible assets recognized separately from goodwill. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the acquired business. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized. The Company bases the estimate of the useful life of an intangible asset on an analysis of all pertinent factors, including but not limited to the expected use of the asset, the expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate, any legal, regulatory, or contractual provisions that may limit the useful life, the Company’s own historical experience in renewing or extending similar arrangements, consistent with the Company’s intended use of the asset, regardless of whether those arrangements have explicit renewal or extension provisions, the effects of obsolescence, demand, competition, and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. If no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite. The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the acquired business. Although the Company believes the assumptions and estimates it has made have been reasonable and appropriate, such assumptions and estimates are based in part on historical experience and information obtained from the management of the acquired entity and are inherently uncertain. Examples of critical estimates in accounting for acquisitions include, but are not limited to, the future expected cash flows from sales of products and services, and related contracts and agreements, and discount and long-term growth rates. Unanticipated events and circumstances may occur which could affect the accuracy or validity of the Company’s assumptions, estimates or actual results k) Correction of Immaterial Errors The Company corrected errors that were immaterial to the previously reported condensed consolidated financial statements as of March 31, 2019. These errors were identified in connection with the preparation of our condensed consolidated financial statements for the second quarter of 2019 and relate to the period from March 20, 2019 to March 31, 2019 (Successor). As of June 30, 2019, goodwill decreased by $23.0 million due to the net effect of adjusting for i) a decrease of $26.6 million attributable to incorrectly including as consideration transferred change in control payments pursuant to employment agreements entered into in 2016 that were earned upon consummation of the Business Combination for services rendered prior to the Business Combination for which an assumed liability had been recorded in the purchase accounting treatment of the Business Combination; ii) a decrease of $3.2 million attributable to a receivable due from Parent for the reimbursement of cash payments made by the Company on behalf of the Parent that had not been recorded in the purchase accounting treatment of the Business Combination; and iii) an increase of $6.8 million attributable to contract acquisition costs that had incorrectly been recorded as an intangible asset in the purchase accounting of the Business Combination. Additionally, the Company corrected for $3.7 million of accrued expenses associated with Haymaker that had not been recorded upon consummation of the Business Combination and to reclassify $0.6 million of accumulated other comprehensive loss as additional paid in capital as of June 30, 2019. The effect of correcting these errors decreased additional paid in capital and stockholders’ equity by $24.1 million and $23.5 million, respectively as of June 30, 2019. The condensed consolidated statement of cash flows for the period from March 20, 2019 to June 30, 2019 has been corrected for the effect of the above referenced condensed consolidated balance sheet adjustments and other cash flow presentation items. The effect of correcting i) above resulted in a $26.6 million decrease in Cash Flow Used in Investing Activities attributable to the acquisition of OSW Predecessor, which was further reduced to reflect $14.6 million of cash acquired in the Business Combination (which was previously presented as cash and cash equivalents, beginning of period). The effect of correcting iii) above resulted in a $6.8 million increase in Cash Flow Used In by Operating Activities (specifically, to decrease the change in other noncurrent assets |
ACCRUED EXPENSES
ACCRUED EXPENSES | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses | 3. ACCRUED EXPENSES Accrued expenses consisted of the following (in thousands): Successor Predecessor As of As of June 30, December 31, 2019 2018 Operative commissions $ 4,573 $ 4,663 Minimum cruiseline commissions 7,346 5,648 Payroll and bonuses 3,519 5,037 Interest 356 2,513 Other 10,207 9,350 $ 26,001 $ 27,211 |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2019 | |
LONG-TERM DEBT | 4. LONG-TERM DEBT Successor: On March 19, 2019, the Company entered into (i) senior secured first lien credit facilities (the “First Lien Credit Facilities”) with Goldman Sachs Lending Partners LLC, as administrative agent, and certain lenders, consisting of (x) a term loan facility of $208.5 million (of which $20 million was borrowed by a subsidiary of the Company) (the “First Lien Term Loan Facility”), (y) a revolving loan facility of up to $20 million (the “First Lien Revolving Facility”) and (z) a delayed draw term loan facility of $5 million (the “First Lien Delayed Draw Facility”), and (ii) a senior secured second lien term loan facility of $25 million with Cortland Capital Market Services LLC, as administrative agent, and Neuberger Berman Alternative Funds, Neuberger Berman Long Short Fund, as lender. (the “Second Lien Term Loan Facility” and, together with the First Lien Term Loan Facility, the “Term Loan Facilities”; the New Term Loan Facilities, together with the First Lien Revolving Facility and the First Lien Delayed Draw Facility, are referred to as the “New Credit Facilities”). The First Lien Revolving Facility includes borrowing capacity available for letters of credit up to $5 million. Any issuance of letters of credit reduces the amount available under the New First Lien Revolving Facility. The First Lien Term Loan Facility matures seven years after March 19, 2019, the First Lien Revolving Facility matures five years after March 19, 2019 and the Second Lien Term Loan Facility matures eight years after March 19, 2019. Total debt, net of $234.3 million at June 30, 2019 consisted of the following (amounts in thousands): Amount Borrowing Borrowed at Capacity June 30, 2019 First Lien Revolving Facility $ 20,000 $ 7,900 First Lien Term Loan Facility 208,500 207,979 Second Lien Term Loan Facility 25,000 25,000 $ 253,500 240,879 Unamortized deferred financing costs (6,591 ) Total debt 234,288 Less: current portion of long-term debt 2,085 Long-term debt, net $ 232,203 Loans outstanding under the First Lien Credit Facilities will accrue interest at a rate per annum equal to LIBOR plus a margin of 4.00%, with one step down to 3.75% upon achievement of a certain leverage ratio, and undrawn amounts under the First Lien Revolving Facility will accrue a commitment fee at a rate per annum of 0.50% on the average daily undrawn portion of the commitments thereunder, with one step down to 0.325% upon achievement of a certain leverage ratio. Loans outstanding under the Second Lien Term Loan Facility will accrue interest at a rate per annum equal to LIBOR plus 7.50%. The obligations under the Credit Facilities are guaranteed by the Company and each of its direct or indirect wholly-owned subsidiaries organized under the laws of the United States and the Commonwealth of The Bahamas, in each case, other than certain excluded subsidiaries, including, but not limited to, immaterial subsidiaries, non-profit subsidiaries, and any other subsidiary with respect to which the burden or cost of providing a guarantee is excessive in view of the benefits to be obtained by the lenders therefrom. The Term Loan Facilities require the Company to make certain mandatory prepayments, with (i) 100% of net cash proceeds of all non-ordinary course asset sales or other dispositions of property, subject to the ability to reinvest such proceeds and certain other exceptions, and subject to step downs if certain leverage ratios are met and (ii) 100% of the net cash proceeds of any debt incurrence, other than debt permitted under the definitive agreements (but excluding debt incurred to refinance the Credit Facilities). The Company also is required to make quarterly amortization payments equal to 0.25% of the original principal amount of the First Lien Term Loan Facility commencing after the first full fiscal quarter after the closing date of the Credit Facilities (subject to reductions by optional and mandatory prepayments of the loans). The Company may prepay (i) the First Lien Credit Facilities at any time without premium or penalty, subject to payment of customary breakage costs and a customary “soft call,” and (ii) the Second Lien Term Loan Facility at any time without premium or penalty, subject to a customary make-whole premium for any voluntary prepayment prior to the date that is 30 months following the closing date of the Credit Facilities (the “Callable Date”), following by a call premium of (x) 4.0% on or prior to the first anniversary of the Callable Date, (y) 2.50% after the first anniversary but on or prior to the second anniversary of the Callable Date, and (z) 1.50% after the second anniversary but on or prior to the third anniversary of the Callable Date. The First Lien Revolving Facility contains a financial covenant and the Credit Facilities contain a number of traditional negative covenants including negative covenants related to the following subjects: consolidations, mergers, and sales of assets; limitations on the incurrence of certain liens; limitations on certain indebtedness; limitations on the ability to pay dividends; and certain affiliate transaction. The Credit Facilities also contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Credit Facilities are entitled to take various actions, including the acceleration of amounts due under the Credit Facilities and all actions permitted to be taken by a secured creditor, subject to customary intercreditor provisions among the first and second lien secured parties. Predecessor: On January 11, 2018, the Company entered into an assignment and assumption of third-party debt (the “Term Credit Agreement”) of $356.2 million from the Parent with a maturity date on December 9, 2021. Long-term debt is presented net of related unamortized deferred financing costs of $3.7 million on the condensed combined balance sheet as of December 31, 2018. The interest rate on the Term Credit Agreement was based on (at the Parent’s election) either LIBOR plus a predetermined margin that ranged from 7.00% to 7.50%, or the base rate as defined in the Term Credit Agreement plus a predetermined margin that ranged from 6.00% to 6.50%, in each case based on the Parent’s consolidated total leverage ratio. At December 31, 2018, the Parent elected the LIBOR rate and the applicable margin was 7.25% per annum. On March 1, 2019, all amounts due under the Term Credit Agreement were paid off in full by the Parent on behalf of OSW. This resulted in a loss on extinguishment of debt to OSW of $3,413,000, representing the write-off of unamortized deferred financing costs, which is recorded in other income (expense) in the accompanying condensed combined statements of operations for the period from January 1, 2019 to March 19, 2019 (Predecessor). |
PRIVATE PLACEMENTS
PRIVATE PLACEMENTS | 6 Months Ended |
Jun. 30, 2019 | |
PRIVATE PLACEMENTS | 5. PRIVATE PLACEMENTS On November 1, 2018, the Company entered into certain subscription agreements (the “Subscription Agreements”) with the certain investors pursuant to which, among other things, such investors agreed to subscribe for and purchase, and OneSpaWorld agreed to issue and sell to such investors 17,856,781 newly issued OneSpaWorld Shares and 3,105,294 OneSpaWorld Warrants for gross proceeds of approximately $122,496,370 (the “Private Placements”). On March 19, 2019, OneSpaWorld completed the sales of 17,856,781 OneSpaWorld Shares and 3,105,294 OneSpaWorld Warrants to such investors as contemplated by the Subscription Agreements. The proceeds from the Private Placements were used to fund a portion of the cash payment payable in connection with the consummation of the Business Combination. |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2019 | |
EQUITY | 6. EQUITY Common Shares The Company is authorized to issue 250,000,000 common shares with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share. At June 30, 2019, there were 61,118,298 shares of OneSpaWorld common stock issued and outstanding. Deferred Shares As part of the equity consideration transferred in the Business Combination, Steiner received 5,000,000 Deferred Shares. Haymaker Sponsor, LLC also received 1,600,000 Deferred Shares in connection with the Business Combination. The issuance of the OneSpaWorld common shares related to the Deferred Shares is contingent upon the earlier occurrence of any of the following events: (i) OneSpaWorld share price reaching $20 per share for five consecutive trading dates, as adjusted to reflect any stock split, reverse stock split, stock dividend, payment of dividends and other events as defined in the applicable Deferred Shares agreement (ii) in the event of a change of control, as defined, of the Company if the price per share paid in connection with such change in control is equal to or greater than $20; however, if the price per share paid in connection with such change in control is less than $20, then no OneSpaWorld common shares will be issued and all the rights to receive the shares will be forfeited for no consideration, and (iii) ten years from the date of the Business Combination agreement. Public Warrants Each whole Public Warrant is exercisable to purchase one share of common stock and only whole warrants are exercisable. The Public Warrants became exercisable 30 days after the completion of the Business Combination. Each whole Public Warrant entitles the holder to purchase one share of OneSpaWorld common stock at an exercise price of $11.50. As of June 30, 2019, 24,500,000 Public Warrants were issued and outstanding. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of OneSpaWorld common stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless the holder purchases at least two units, the holder will not be able to receive or trade a whole warrant. The warrants will expire five years after the date of the Business Combination or earlier upon redemption or liquidation. If the shares issuable upon exercise of the warrants are not registered under the Securities Act within 60 business days following the Business Combination, the Company will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available. In the event that the conditions in the immediately preceding sentence are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of OneSpaWorld common stock underlying such unit. The Company filed with the Securities and Exchange Commission (“SEC”) a registration statement for the registration, under the Securities Act, of the shares of OneSpaWorld common stock issuable upon exercise of the warrants. This registration statement has since been declared effective by the SEC. The Company will use its reasonable efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Company’s common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. Once the warrants become exercisable, the Company may call the warrants for redemption: • in whole and not in part; • at a price of $0.01 per warrant; • upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and • if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders. Private Placement Warrants Certain investors (the “Investors’) purchased an aggregate of 3,105,294 Private Placement Warrants at a price of $1.00 per whole warrant in a private placement that occurred simultaneously with the closing of the Business Combination. Each whole Private Placement Warrant is exercisable for one whole share of OneSpaWorld common stock at a price of $11.50 per share. The proceeds from the purchase of the Private Placement Warrants was used to fund a portion of the cash payment payable in connection with the consummation of the Business Combination. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Investors or their permitted transferees. The Private Placement Warrants (including the OneSpaWorld common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or saleable until 30 days after the Business Combination and they will not be redeemable so long as they are held by the Investors or their permitted transferees. Otherwise, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis the Public Warrants. If holders of the Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of OneSpaWorld common stock equal to the quotient obtained by dividing (x) the product of the number of shares of OneSpaWorld common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The Company’s Sponsor has agreed not to transfer, assign or sell any of the Private Placement Warrants (including the OneSpaWorld common stock issuable upon exercise of any of these warrants) until the date that is 30 days after the date the Company completes its Business Combination. Stock Options On March 26, 2019 (Successor), OneSpaWorld granted certain executive officers of the Company a total of 4,547,076 non-qualified stock options. The options were 100%, fully-vested on the grant date and become exercisable upon the five-day volume weighted average price of OneSpaWorld common shares reaching $20.00 per share. As of June 30, 2019, 4,547,076 stock options were issued and outstanding. |
COMMITMENTS
COMMITMENTS | 6 Months Ended |
Jun. 30, 2019 | |
COMMITMENTS | 7. COMMITMENTS Registration Rights Agreement On March 19, 2019, in connection with the closing of the Business Combination (the “Closing”), OneSpaWorld, Steiner Leisure and Haymaker Sponsor, LLC (“Haymaker Sponsor”), entered into a Registration Rights Agreement (the “Registration Rights Agreement”). The Registration Rights Agreement provides for customary registration rights, including demand and piggyback rights subject to cut-back provisions. In addition, OneSpaWorld has agreed to use its commercially reasonable efforts to file a shelf registration statement to register Steiner Leisure’s and Haymaker Sponsor’s shares (the “Shares”) within 45 days of the Closing. During the quarter ended June 30, 2019, the Company filed with the SEC a registration statement under the Securities Act to register the Shares. This registration statement has since been declared effective by the SEC. At any time, and from time to time, after the shelf registration statement has been declared effective by the SEC, Steiner Leisure will be entitled to make up to three demands per year, and Haymaker Sponsor will be entitled to make up to three demands per year, that a resale of shares of OneSpaWorld reasonably expected to exceed $10,000,000 in gross offering price pursuant to such shelf registration statement be made pursuant to an underwritten offering. Pursuant to the Registration Rights Agreement, Steiner Leisure and Haymaker Sponsor will agree not to sell, transfer, pledge or otherwise dispose of their OneSpaWorld Shares (as defined in the Registration Rights Agreement) during the seven days before and 90 days after the pricing of any underwritten offering of OneSpaWorld, subject to certain exceptions, and Steiner Leisure and Haymaker Sponsor will enter into a customary lock-up agreement to such effect. Steiner Leisure and Haymaker Sponsor agreed not to assign or delegate their rights, duties or obligations under the Registration Rights Agreement for a period of six months following the Closing, subject to certain exceptions. Operating Leases The Company leases office and warehouse space, as well as office equipment and automobiles, under operating leases. The Company also makes certain payments to the owners of the venues where destination resort health and wellness centers are located. Destination resort health and wellness centers generally require rent based on a percentage of revenues. In addition, as part of the rental arrangements for some of the destination resort health and wellness centers, the Company is required to pay a minimum annual rental regardless of whether such amount would be required to be paid under the percentage rent arrangement. Substantially all of these arrangements include renewal options ranging from three to five years. |
NONCONTROLLING INTEREST
NONCONTROLLING INTEREST | 6 Months Ended |
Jun. 30, 2019 | |
NONCONTROLLING INTEREST | 8. NONCONTROLLING INTEREST The Company has a 60% controlling interest and a third party has a 40% noncontrolling interest in Medispa Limited, a Bahamian entity that is a consolidated subsidiary of the Company. The operations of MediSpa Limited relate to the delivery of non-invasive aesthetic services, provision of related services, and the sale of related products on cruise ships and in destination resorts outside the tax jurisdiction of the U.S. As of June 30, 2019 (Successor) and December 31, 2018 (Predecessor), the noncontrolling interest was $6.7 million and $3.6 million, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2019 | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS Predecessor: The Company purchased products from wholly-owned subsidiaries of Steiner Leisure for resale to its customers Inventories on hand related to these purchases and accounts payable owed to the supplier entities related to the purchases were as follows (in thousands): Predecessor As of December 31, 2018 Inventory $ 17,268 Accounts payable - related parties $ 6,553 The Company entered into a loan agreement with a wholly-owned subsidiary of the Parent (the “Borrower”), for €5.0 million on February 25, 2016. The note receivable was due in full by January 3, 2021 and bears an annual interest rate of 7.50%. The note receivable was accounted for on an amortized cost basis, and interest was recognized using the effective interest rate method. On July 27, 2018, the Parent settled the outstanding principal amount and all accrued interest under this loan agreement. The Company received services and support from various functions performed by the Parent. These expenses related to allocations of Parent corporate overhead. Successor: As of June 30, 2019, Steiner was due $6,408,910 from OneSpaWorld as additional purchase price consideration related to working capital adjustments in connection with the Business Combination, which was settled and paid in July 2019. Such amount due is included in “Accounts payable – Related parties” in the accompanying condensed consolidated balance sheet. One Spa World LLC, a subsidiary of OneSpaWorld, entered into a transition services agreement, concurrent with the closing of the Business Combination, with Steiner Management Services, LLC (“SMS”), which became effective at the time of the closing. This agreement provides for the provision by SMS and its affiliates and third-party providers of certain services, including accounting, information technology and legal services, to certain subsidiaries of OneSpaWorld until December 31, 2019 in exchange for approximately $360,000. OSW Predecessor entered into an Executive Services Agreement, concurrent with the closing of the Business Combination, with Nemo, the ultimate parent of OneSpaWorld, which became effective at the time of the closing. The agreement provides that after the closing of the Business Combination, Leonard Fluxman and Stephen Lazarus are to be made available to provide certain transition services to Nemo Investor Aggregator, Limited, the parent company of Steiner Leisure, until December 31, 2019 in exchange for $850,000. Predecessor and Successor: OSW Predecessor entered into a Management Agreement, dated May 25, 2018 and amended and restated October 25, 2018, with Bliss World LLC, an indirect subsidiary of Steiner Leisure, which became effective at the time of the closing of the Business Combination. The agreement provides that OSW Predecessor will manage the operation of nine U.S. health and wellness centers on behalf of Bliss World LLC in exchange for approximately $1.25 million in the aggregate for the year ended December 31, 2019. Subject to certain customary early termination rights, the agreement terminates, with respect to each health and wellness center, upon expiration or termination of the respective lease for each such health and wellness center. On August 3, 2018, OSW Predecessor entered into a lease of office space in Coral Gables, Florida (the “Coral Gables Lease”) with an initial lease term of twelve years and options to renew for two periods of five years each. Additionally, on August 3, 2018, OSW Predecessor entered into a sublease of the Coral Gables Lease with SMS, with an initial term of five years and an annual rent amount of approximately $480,000. |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 6 Months Ended |
Jun. 30, 2019 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | 10. SEGMENT AND GEOGRAPHICAL INFORMATION The Company operates facilities on cruise ships and in destination resorts, which provide health and wellness, fitness and beauty services and sell related products onboard cruise ships and in destination resorts. The Company’s Maritime and Destination Resorts operating segments are aggregated into a single reportable segment based upon similar economic characteristics, products, services, customers and delivery methods. Additionally, the Company’s 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, who is the Company’s chief operating decision maker (CODM), in determining how to allocate the Company’s resources and evaluate performance. The basis for determining the geographic information below is based on the countries in which the Company operates. The Company is not able to identify the country of origin for the customers to which revenues from cruise ship operations relate. Geographic information is as follows (in thousands): Successor Predecessor Successor Predecessor Three Months Ended Three Months Ended March 20, 2019 to January 1, 2019 to Six Months Ended Revenues: U.S. $ 8,576 $ 7,023 $ 9,283 $ 6,008 $ 13,843 Not connected to a country 125,843 122,914 142,855 106,886 238,841 Other 6,011 5,458 7,306 5,558 11,605 Total $ 140,430 $ 135,395 $ 159,444 $ 118,452 $ 264,289 Successor Predecessor As of June 30, 2019 As of December 31, 2018 Property and equipment, net: U.S. $ 9,282 $ 6,838 Not connected to a country 6,637 2,188 Other 8,713 7,213 Total $ 24,632 $ 16,239 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Derivatives and Fair Value [Text Block] | 11. Fair Value Measurements The Company has no assets or liabilities that are recorded at fair value on a recurring basis. Cash and cash equivalents are reflected in the accompanying consolidated and combined balance sheets at cost, which approximated fair value, estimated using Level 1 inputs, as they are maintained with various high-quality financial institutions and having original maturities of three months or less. The Company’s outstanding long-term debt as of June 30, 2019 was recently originated and bear variable interest rate. As a result, the Company believes that the fair value of long-term debt as of June 30, 2019 approximates carrying amounts. The fair value of outstanding long-term debt as of December 31, 2018 is estimated at $372.2 million using a discounted cash flow analysis based on current market interest rates for debt issuances with similar remaining years-to-maturity |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Basis of Presentation, Principles of Consolidation and Principles of Combination | a) Basis of Presentation, Principles of Consolidation and Principles of Combination Successor: The accompanying unaudited condensed consolidated financial statements as of and for the period March 20, 2019 to June 30, 2019, includes the condensed consolidated balance sheet and statements of operations, comprehensive income (loss), equity, and cash flows of OneSpaWorld. 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 period from March 20, 2019 to June 30, 2019 are not necessarily indicative of the results of operations or cash flows that may be expected for the remainder of 2019. 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, 2018. 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. Predecessor: The condensed combined OSW financial statements (the “OSW financial statements”) include the accounts of the wholly-owned and indirect subsidiaries of Steiner Leisure listed in Note 1 and include the accounts of a company majority-owned by OneSpaWorld Medispa (Bahamas) Limited, in which OneSpaWorld (Bahamas) Limited (100% owner of OneSpaWorld Medispa (Bahamas) Limited) had a controlling interest. The OSW condensed combined financial statements also include the accounts and results of operations associated with the timetospa.com website owned by Elemis USA, Inc. The OSW condensed financial statements do not represent the financial position and results of operations of a legal entity but rather a combination of entities under common control of Steiner Leisure that have been “carved out” of the Steiner Leisure consolidated financial statements and reflect significant assumptions and allocations. All significant intercompany transactions and balances have been eliminated in combination. The accompanying condensed combined OSW financial statements may not be indicative of what they would have been had OSW actually been a separate stand-alone entity. The accompanying OSW financial statements include the assets, liabilities, revenues and expenses specifically related to OSW’s operations. OSW receives services and support from various functions performed by Steiner Leisure and costs associated with these functions have been allocated to OSW. These allocations are necessary to reflect all of the costs of doing business and include costs related to certain Steiner Leisure corporate functions, including, but not limited to, senior management, legal, human resources, finance, IT and other shared services that have been allocated to OSW based on direct usage or benefit where identifiable, with the remainder allocated on a pro rata basis determined by an estimate of the percentage of time Steiner Leisure employees devoted to OSW, as compared to total time available or by the headcount of employees at Steiner Leisure corporate headquarters that are fully dedicated to the OSW entities in relation to the total employee headcount. These allocated costs are reflected in salaries and payroll taxes and administrative expenses in the accompanying condensed combined OSW statements of operations. Management considers these allocations to be a reasonable reflection of the utilization of services by or benefit provided to OSW. However, the allocations may not be indicative of the actual expenses that would have been incurred had OSW operated as an independent, stand-alone entity. Net Parent investment represents the Steiner Leisure controlling interest in the recorded net assets of OSW, specifically, the cumulative net investment by Steiner Leisure in OSW and cumulative operating results through the date presented. The net effect of the settlement of transactions between OSW, Steiner Leisure, and other affiliates of Steiner Leisure are reflected in the accompanying condensed combined statements of cash flows as a financing activity and in the condensed combined balance sheet as Net Parent investment. Certain expenses and operating costs were paid by Steiner Leisure on behalf of OSW. The Parent has paid on behalf of OSW expenses associated with the allocation of Steiner Leisure corporate overhead and costs associated with the purchase of products from related parties. Operating cash flows for the predecessor periods exclude OSW expenses and operating costs paid by Steiner Leisure on behalf of OSW. Consequently, OSW’s historical cash flows may not be indicative of cash flows had OSW actually been a separate stand-alone entity or future cash flows of OSW. As of December 31, 2018, OSW had assumed long-term debt of the Parent. Such debt was paid-off by the Parent on behalf of OSW during the Predecessor period from January 1, 2019 to March 19, 2019. Refer to Note 4 for more information on long-term debt. Management believes the assumptions and allocations underlying the accompanying condensed combined OSW financial statements and notes to the OSW condensed combined financial statements are reasonable, appropriate and consistently applied for the periods presented. Management believes the accompanying condensed combined OSW financial statements reflect all costs of doing business. The accompanying OSW condensed combined financial statements have been prepared in conformity with U.S. GAAP. |
Emerging Growth Company | b) Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”). As modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemption from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, section 102(b) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Act) are required to comply with new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt-out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election is irrevocable. The Company has elected not to opt-out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor a non-emerging growth company, which has opted-out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used. |
2019 Equity Incentive Plan | c) 2019 Equity Incentive Plan The Company’s board of directors approved the 2019 Equity Incentive Plan (the “2019 Plan”) on March 18, 2019 and the Company’s shareholders approved the 2019 Plan on March 18, 2019. The purpose of the 2019 Plan is to make available incentives that will assist the Company to attract, retain, and motivate employees, including officers, consultants and directors. The Company may provide these incentives through the grant of share options, share appreciation rights, restricted shares, restricted share units, performance shares and units and other cash-based or share-based awards. Awards may be granted under the 2019 Plan to OneSpaWorld employees, including officers, directors or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. A total of 7,000,000 OneSpaWorld Shares have been authorized and reserved for issuance under the 2019 Plan. On March 26, 2019 (the “Grant Date”), a total of 4,547,076 options were granted by the Company under the 2019 Plan to executive officers of the Company. The options have an exercise price of $12.99 and expire on the sixth anniversary of the Grant Date. The options were 100% vested on the Grant Date. The options become exercisable upon the five day volume weighted average price of OneSpaWorld common shares reaching $20.00 per share. The aggregate Grant Date fair value of the options was estimated to be $20,370,900, resulting in stock-based compensation of $20,370,900 being recognized by the Company in the period from March 20, 2019 to March 31, 2019 (Successor) in accordance with FASB Accounting Standards Codification (ASC) Topic 718, Compensation – Stock Compensation Hurdle price per share $ 20.00 Strike price per share $ 12.99 Average period for hurdle price, in days 5 End of simulation term 3/26/2025 Term of simulation 6.00 years Stock price as of the Measurement Date $ 12.99 Volatility 37.5 % Risk-free rate (continuous) 2.2 % Dividend yield (quarterly after 3 years) 3.0 % Suboptimal exercise multiple 2.8x |
Property and Equipment | d) Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs, which do not add to the value of the related assets or materially extend their original lives, are expensed as incurred. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the terms of the respective leases and the estimated useful lives of the respective assets. Depreciation and amortization expense for the three months ended June 30, 2019 (Successor) and the three months ended June 30, 2018 (Predecessor) was $2.1 million and $1.8 million, respectively. Depreciation and amortization expense for the periods from March 20, 2019 to June 30, 2019 (Successor), January 1, 2019 to March 19, 2019 (Predecessor) and the six months ended June 30, 2018 (Predecessor) was $2.3 million, $1.2 million and $3.2 million, respectively. |
Income Taxes | e) Income Taxes Successor: As part of the process of preparing the condensed consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current income tax exposure together with an assessment of temporary differences resulting from differing treatment of items for tax purposes and accounting purposes, respectively. These differences result in deferred income tax assets and liabilities which are included in the accompanying condensed consolidated balance sheet. The Company must then assess the likelihood that its deferred income tax assets will be recovered from future taxable income and, to the extent that the Company believes that recovery is not likely, the Company must establish a valuation allowance. Predecessor: OSW accounts for income taxes under the separate return method of accounting. This method requires the allocation of current and deferred taxes to OSW as if it were a separate taxpayer. Under this method, the resulting portion of current income taxes payable that is not actually owed to the tax authorities is written-off through net Parent investment. Accordingly, income taxes payable in the accompanying condensed combined balance sheet as of December 31, 2018 (Predecessor) reflects current income tax amounts actually owed to the tax authorities as of those dates, as well as the accrual for uncertain tax positions. The write-off of current income taxes payable not actually owed to the tax authorities is included in net Parent investment in the accompanying condensed combined balance sheet as of December 31, 2018 (Predecessor). |
Earnings (Loss) Per Share | f) Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of diluted shares, as calculated under the treasury stock method, which includes the potential effect of dilutive common stock equivalents, such as options and warrants to purchase common shares, and contingently issuable shares. If the entity reports a net loss, rather than net income for the period, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, as their effect would be anti-dilutive. The following table provides details underlying OneSpaWorld’s earnings (loss) per basic and diluted share calculation for the three months ended June 30, 2019 (Successor) and the period from March 20, 2019 to June 30, 2019 (Successor) (in thousands except per share data): Successor Three Months Ended March 20, 2019 to June 30, 2019 June 30, 2019 Net income (loss) attributable to OneSpaWorld (a) $ 3,609 $ (19,074 ) Weighted average shares issued and outstanding - basic 61,118 61,118 Weighted average shares issued and outstanding - diluted (b) (c) 72,047 61,118 Earnings (loss) per share: Basic $ 0.06 ($ 0.31 ) Diluted $ 0.05 ($ 0.31 ) (a) Calculated as total net income (loss) less amounts attributable to noncontrolling interest. (b) For the three months ended June 30, 2019, weighted average shares issued and outstanding – diluted includes 4,329 potential dilutive shares under the treasury stock method and 6,600 contingently issuable dilutive shares. (c) For the period from March 20, 2019 to June 30, 2019, potential common shares under the treasury stock method were antidilutive because the Company reported a net loss in this period. Consequently, the Company did not have any adjustments in these periods between basic and diluted loss per share related to stock options, warrants, or deferred shares. The following is a reconciliation of the denominator of the basic and diluted per share computation for the three months ended June 30, 2019 (in thousands): Successor Three Weighted average shares outstanding - basic 61,118 Common stock warrants 4,066 Deferred shares 6,600 Employee stock options 263 Weighted average shares outstanding - diluted 72,047 The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted loss per share (in thousands): Successor March 20, 2019 to June 30, 2019 Common share warrants 24,500 Deferred shares 6,600 Employee stock options 4,547 35,647 |
Intangible Assets and Goodwill | g) Intangible Assets As a result of the Business Combination on March 19, 2019, and the related application of acquisition accounting, the Company completed a preliminary valuation of the identifiable intangible assets as of that date. As of June 30, 2019 (Successor), the trade name intangible asset, the Company’s only identified intangible asset with an indefinite life, had carrying values of $5.9 million. As of June 30, 2019, the definite-lived intangible assets had a carrying value of $622.3 million. Prior to the Business Combination and application of acquisition accounting, the trade name intangible asset, and the definite-lived intangible assets had carrying values of $5.0 million and $126.5 million, respectively, as of December 31, 2018 (Predecessor). The Company amortizes intangible assets with definite lives on a straight-line basis over their estimated useful lives. Amortization expense related to intangible assets for the three months ended June 30, 2019 (Successor) and three months ended June 30, 2018 (Predecessor) was $4.5 million and $0.9 million, respectively. Amortization expense for the periods from March 20, 2019 to June 30, 2019 (Successor), January 1, 2019 to March 19, 2019 (Predecessor) and the six months ended June 30, 2018 (Predecessor) was $5.1 million, $0.8 million and $1.8 million, respectively. Amortization expense is estimated to be $17.8 million in each of the next five years beginning in 2019. Contracts with cruise lines are generally renewed every five years. The Company has the intent and ability to renew such contracts over the estimated useful lives of the assets. Costs incurred to renew contracts are capitalized and amortized to cost of revenues and operating expenses over the term of the contract. At June 30, 2019 (Successor), the cost, accumulated amortization, and net balance of the definite-lived intangible assets were as follows (in thousands): Weighted Average Accumulated Net Remaining Useful Successor: Cost Depreciation Balance Life (yrs.) Retail concession agreements $ 604,800 $ (4,399 ) $ 600,401 39 Lease agreements 21,100 (604 ) 20,496 10 Licensing agreement 1,500 (58 ) 1,442 7 $ 627,400 $ (5,061 ) $ 622,339 At December 31, 2018 (Predecessor), the cost, accumulated amortization, and net balance of the definite-lived intangible assets were as follows (in thousands): Weighted Average Accumulated Net Remaining Useful Predecessor: Cost Depreciation Balance Life (yrs.) Retail concession agreements $ 130,000 $ (10,210 ) $ 119,790 36 Lease agreements 7,300 (573 ) 6,727 36 $ 137,300 $ (10,783 ) $ 126,517 |
Goodwill And Intangible Assets Goodwill Policy | h) Goodwill Goodwill represents the excess of cost over the fair value of net tangible and identifiable intangible assets acquired. The Company has two operating segments: (1) Maritime and (2) Destination Resorts. The Maritime and Destination Resorts operating segments each have associated goodwill, and each has been determined to be a reporting unit. The Company reviews goodwill for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently. The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely-than-not that a reporting unit’s fair value is less than its carrying amount, and if necessary, a two-step goodwill impairment test. Factors to consider when performing the qualitative assessment primarily include general economic conditions and changes in forecasted operating results. If the qualitative assessment demonstrates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to perform the two-step goodwill impairment test. The Company may elect to bypass the qualitative assessment and proceed directly to step one, for any reporting unit, in any period. The Company can resume the qualitative assessment for any reporting unit in any subsequent period. When performing the two-step goodwill impairment test, the fair value of the reporting unit is determined and compared to the carrying value of the net assets allocated to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required. If the fair value of the reporting unit is less than the carrying value of its net assets, the implied fair value of the reporting unit is allocated to all its underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair value. If necessary, goodwill is then written down to its implied fair value. As a result of the Business Combination on March 19, 2019, and the related application of acquisition accounting, the Company completed an initial preliminary valuation of goodwill as of that date of $199.4 million. As of June 30, 2019 (Successor), goodwill was adjusted to $182.1 million, a decrease of $17.3 million attributable to an increase in the cash consideration of $6.4 million due to working capital adjustments accrued as of June 30, 2019 offset by measurement period adjustments of $0.7 million, and immaterial corrections totaling $23.0 million further discussed in Note 2(k) below. The assignment of goodwill to reporting units, as of the acquisition date, has not been completed. |
Recent Accounting Pronouncements | i) Recent Accounting Pronouncements With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2019 that are of significance, or potential significance, to the Company based on its current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement. In May 2014, the FASB issued ASU 2014-09. The core principle of the guidance in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the ASC. Additionally, ASU 2014-09 supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. In periods subsequent to the initial issuance of this ASU, the FASB has issued additional ASU’s clarifying items within Topic 606, as follows: • In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal versus agent considerations. • In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas). • In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain issues identified to improve Topic 606 by enhancing guidance on assessing collectability, presentation of sales taxes and other similar taxes collected from customers, non-cash consideration and completed contracts and contract modifications at transition. The FASB issued updates ASU 2016-08, ASU 2016-10 and ASU 2016-12 to provide guidance to improve the operability and understandability of the implementation guidance included in ASU 2014-09. ASU 2016-08, ASU 2016-10 and ASU 2016-12 have the same effective date and transition requirements of ASU 2015-14, which defers the effective date and transition of ASU 2014-09 annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019, with early adoption permitted. The Company plans to adopt this standard, other related revenue standard clarifications and technical guidance effective for the annual period ending December 31, 2019 and quarterly periods beginning January 1, 2020. The Company has elected the modified retrospective transition approach. Under this method, the standard will be applied only to the most current period presented and the cumulative effect of applying the standard will be recognized at the date of initial application. The Company is progressing through its implementation plan and is continuing to evaluate the impact of the standard on its processes, accounting systems, controls and financial disclosures. The Company is not able to determine at this time if the adoption of this guidance will have a material impact on the Company’s consolidated and combined financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) to increase transparency and comparability among organizations by recognizing rights and obligations resulting from leases as lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The update requires lessees to recognize for all leases with a term of 12 months or more at the commencement date: (a) a lease liability or a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset or a lessee’s right to use or control the use of a specified asset for the lease term. Under the update, lessor accounting remains largely unchanged. The update requires a modified retrospective transition approach for leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements and do not require any transition accounting for leases that expire before the earliest comparative period presented. The update is effective retrospectively for annual periods beginning after December 15, 2019, and interim periods beginning after December 15, 2020, with early adoption permitted. The Company is not able to determine at this time if the adoption of this guidance will have a material impact on the Company’s consolidated and combined financial statements. |
Accounting for Business Combinations | j) Accounting for Business Combinations In accordance with ASC 805, when accounting for business combinations, the Company is required to recognize the assets acquired, liabilities assumed, contractual contingencies, noncontrolling interests and contingent consideration at their fair value as of the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets and/or pre-acquisition contingencies, all of which ultimately affect the fair value of goodwill established as of the acquisition date. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date and is then subsequently tested for impairment at least annually. As part of the Company’s accounting for business combinations, the Company is required to determine the useful lives of identifiable intangible assets recognized separately from goodwill. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the acquired business. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized. The Company bases the estimate of the useful life of an intangible asset on an analysis of all pertinent factors, including but not limited to the expected use of the asset, the expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate, any legal, regulatory, or contractual provisions that may limit the useful life, the Company’s own historical experience in renewing or extending similar arrangements, consistent with the Company’s intended use of the asset, regardless of whether those arrangements have explicit renewal or extension provisions, the effects of obsolescence, demand, competition, and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. If no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite. The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the acquired business. Although the Company believes the assumptions and estimates it has made have been reasonable and appropriate, such assumptions and estimates are based in part on historical experience and information obtained from the management of the acquired entity and are inherently uncertain. Examples of critical estimates in accounting for acquisitions include, but are not limited to, the future expected cash flows from sales of products and services, and related contracts and agreements, and discount and long-term growth rates. Unanticipated events and circumstances may occur which could affect the accuracy or validity of the Company’s assumptions, estimates or actual results |
Correction of Immaterial Errors | k) Correction of Immaterial Errors The Company corrected errors that were immaterial to the previously reported condensed consolidated financial statements as of March 31, 2019. These errors were identified in connection with the preparation of our condensed consolidated financial statements for the second quarter of 2019 and relate to the period from March 20, 2019 to March 31, 2019 (Successor). As of June 30, 2019, goodwill decreased by $23.0 million due to the net effect of adjusting for i) a decrease of $26.6 million attributable to incorrectly including as consideration transferred change in control payments pursuant to employment agreements entered into in 2016 that were earned upon consummation of the Business Combination for services rendered prior to the Business Combination for which an assumed liability had been recorded in the purchase accounting treatment of the Business Combination; ii) a decrease of $3.2 million attributable to a receivable due from Parent for the reimbursement of cash payments made by the Company on behalf of the Parent that had not been recorded in the purchase accounting treatment of the Business Combination; and iii) an increase of $6.8 million attributable to contract acquisition costs that had incorrectly been recorded as an intangible asset in the purchase accounting of the Business Combination. Additionally, the Company corrected for $3.7 million of accrued expenses associated with Haymaker that had not been recorded upon consummation of the Business Combination and to reclassify $0.6 million of accumulated other comprehensive loss as additional paid in capital as of June 30, 2019. The effect of correcting these errors decreased additional paid in capital and stockholders’ equity by $24.1 million and $23.5 million, respectively as of June 30, 2019. The condensed consolidated statement of cash flows for the period from March 20, 2019 to June 30, 2019 has been corrected for the effect of the above referenced condensed consolidated balance sheet adjustments and other cash flow presentation items. The effect of correcting i) above resulted in a $26.6 million decrease in Cash Flow Used in Investing Activities attributable to the acquisition of OSW Predecessor, which was further reduced to reflect $14.6 million of cash acquired in the Business Combination (which was previously presented as cash and cash equivalents, beginning of period). The effect of correcting iii) above resulted in a $6.8 million increase in Cash Flow Used In by Operating Activities (specifically, to decrease the change in other noncurrent assets), which was offset partially by a correction for $3.0 million associated with payment of accrued expenses. The Company also corrected the presentation of Net Proceeds From Haymaker and Institutional Investors by reducing the amount previously presented by $25.0 million, the effect of exchange rate changes on cash by reducing it by $0.6 million, and adjusted cash and cash equivalents at beginning of period to $1.7 million, which was the cash held by Haymaker at the Business Combination Date. The corrections of these errors did not have any effect on the condensed consolidated income statements for any of the periods previously presented. Additionally, these errors did not have any effect on cash and cash equivalents at March 31, 2019. |
ORGANIZATION (Tables)
ORGANIZATION (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of allocation of consideration to the net tangible and intangible assets acquired and liabilities | The preliminary computations of consideration and the allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed, as adjusted, is presented in the table below (in thousands): Cash consideration $ 691,086 Equity consideration 167,300 Total consideration transferred $ 858,386 Cash and cash equivalents $ 14,638 Accounts receivable 23,673 Inventories 34,150 Other current assets 9,943 Property and equipment 26,253 Intangible assets 633,300 Deferred tax asset 8,407 Current liabilities (64,518 ) Deferred tax liabilities (77 ) Other long-term liabilities (3,880 ) Non-controlling interest (5,624 ) Net assets acquired $ 676,265 Excess purchase price attributable to goodwill $ 182,121 |
Schedule of lease agreements, trade name and licensing agreement | Fair Value Useful Life (years) Retail concession agreements $ 604,800 39 Lease agreements 21,100 10 Trade name 5,900 Indefinite Licensing agreement 1,500 8 $ 633,300 |
Schedule of unaudited supplemental pro forma | The following information represents the unaudited supplemental pro forma results of the Company’s condensed consolidated statement of operations as if the Business Combination occurred on January 1, 2018, after giving effect to certain adjustments, including depreciation and amortization of the assets acquired and liabilities assumed based on their estimated fair values and changes in interest expense resulting from changes in debt (in thousands): Three Months Ended Six Months Ended Six Months Ended June 30, 2018 June 30, 2019 June 30, 2018 Revenues $ 135,395 $ 277,896 $ 264,289 Net income (loss) $ 892 $ (41,947 ) $ 2,014 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of grant date fair value of the options | The Grant Date fair value of the options was estimated by a third party valuation specialist using a Monte Carlo simulation in a risk-neutral framework assuming Geometric Motion, 2,500,000 trials, and using the following assumptions: Hurdle price per share $ 20.00 Strike price per share $ 12.99 Average period for hurdle price, in days 5 End of simulation term 3/26/2025 Term of simulation 6.00 years Stock price as of the Measurement Date $ 12.99 Volatility 37.5 % Risk-free rate (continuous) 2.2 % Dividend yield (quarterly after 3 years) 3.0 % Suboptimal exercise multiple 2.8x |
Summary of loss per basic and diluted share calculation | The following table provides details underlying OneSpaWorld’s earnings (loss) per basic and diluted share calculation for the three months ended June 30, 2019 (Successor) and the period from March 20, 2019 to June 30, 2019 (Successor) (in thousands except per share data): Successor Three Months Ended March 20, 2019 to June 30, 2019 June 30, 2019 Net income (loss) attributable to OneSpaWorld (a) $ 3,609 $ (19,074 ) Weighted average shares issued and outstanding - basic 61,118 61,118 Weighted average shares issued and outstanding - diluted (b) (c) 72,047 61,118 Earnings (loss) per share: Basic $ 0.06 ($ 0.31 ) Diluted $ 0.05 ($ 0.31 ) (a) Calculated as total net income (loss) less amounts attributable to noncontrolling interest. (b) For the three months ended June 30, 2019, weighted average shares issued and outstanding – diluted includes 4,329 potential dilutive shares under the treasury stock method and 6,600 contingently issuable dilutive shares. (c) For the period from March 20, 2019 to June 30, 2019, potential common shares under the treasury stock method were antidilutive because the Company reported a net loss in this period. Consequently, the Company did not have any adjustments in these periods between basic and diluted loss per share related to stock options, warrants, or deferred shares. |
Schedule of Weighted Average Number of Shares [Table Text Block] | The following is a reconciliation of the denominator of the basic and diluted per share computation for the three months ended June 30, 2019 (in thousands): Successor Three Weighted average shares outstanding - basic 61,118 Common stock warrants 4,066 Deferred shares 6,600 Employee stock options 263 Weighted average shares outstanding - diluted 72,047 |
Schedule of weighted-average number of antidilutive potential common shares | The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted loss per share (in thousands): Successor March 20, 2019 to June 30, 2019 Common share warrants 24,500 Deferred shares 6,600 Employee stock options 4,547 35,647 |
Summary of cost, accumulated amortization, and net balance of the definite-lived intangible assets | Contracts with cruise lines are generally renewed every five years. The Company has the intent and ability to renew such contracts over the estimated useful lives of the assets. Costs incurred to renew contracts are capitalized and amortized to cost of revenues and operating expenses over the term of the contract. At June 30, 2019 (Successor), the cost, accumulated amortization, and net balance of the definite-lived intangible assets were as follows (in thousands): Weighted Average Accumulated Net Remaining Useful Successor: Cost Depreciation Balance Life (yrs.) Retail concession agreements $ 604,800 $ (4,399 ) $ 600,401 39 Lease agreements 21,100 (604 ) 20,496 10 Licensing agreement 1,500 (58 ) 1,442 7 $ 627,400 $ (5,061 ) $ 622,339 At December 31, 2018 (Predecessor), the cost, accumulated amortization, and net balance of the definite-lived intangible assets were as follows (in thousands): Weighted Average Accumulated Net Remaining Useful Predecessor: Cost Depreciation Balance Life (yrs.) Retail concession agreements $ 130,000 $ (10,210 ) $ 119,790 36 Lease agreements 7,300 (573 ) 6,727 36 $ 137,300 $ (10,783 ) $ 126,517 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Accrued expenses | Accrued expenses consisted of the following (in thousands): Successor Predecessor As of As of June 30, December 31, 2019 2018 Operative commissions $ 4,573 $ 4,663 Minimum cruiseline commissions 7,346 5,648 Payroll and bonuses 3,519 5,037 Interest 356 2,513 Other 10,207 9,350 $ 26,001 $ 27,211 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of Debt | Total debt, net of $234.3 million at June 30, 2019 consisted of the following (amounts in thousands): Amount Borrowing Borrowed at Capacity June 30, 2019 First Lien Revolving Facility $ 20,000 $ 7,900 First Lien Term Loan Facility 208,500 207,979 Second Lien Term Loan Facility 25,000 25,000 $ 253,500 240,879 Unamortized deferred financing costs (6,591 ) Total debt 234,288 Less: current portion of long-term debt 2,085 Long-term debt, net $ 232,203 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventories on hand related to these purchases and accounts payable | Inventories on hand related to these purchases and accounts payable owed to the supplier entities related to the purchases were as follows (in thousands): Predecessor As of December 31, 2018 Inventory $ 17,268 Accounts payable - related parties $ 6,553 |
SEGMENT AND GEOGRAPHICAL INFO_2
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of geographic information | The Company is not able to identify the country of origin for the customers to which revenues from cruise ship operations relate. Geographic information is as follows (in thousands): Successor Predecessor Successor Predecessor Three Months Ended Three Months Ended March 20, 2019 to January 1, 2019 to Six Months Ended Revenues: U.S. $ 8,576 $ 7,023 $ 9,283 $ 6,008 $ 13,843 Not connected to a country 125,843 122,914 142,855 106,886 238,841 Other 6,011 5,458 7,306 5,558 11,605 Total $ 140,430 $ 135,395 $ 159,444 $ 118,452 $ 264,289 Successor Predecessor As of June 30, 2019 As of December 31, 2018 Property and equipment, net: U.S. $ 9,282 $ 6,838 Not connected to a country 6,637 2,188 Other 8,713 7,213 Total $ 24,632 $ 16,239 |
ORGANIZATION - Schedule of allo
ORGANIZATION - Schedule of allocation of consideration to the net tangible and intangible assets acquired and liabilities (Detail) - USD ($) $ in Thousands | Mar. 19, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Equity consideration | $ 167,300 | ||
Intangible assets | $ 633,300 | ||
Excess purchase price attributable to goodwill | $ 182,121 | $ 33,864 | |
Haymaker Acquisition Corp [Member] | |||
Cash consideration | 691,086 | ||
Equity consideration | 167,300 | ||
Total consideration transferred | 858,386 | ||
Cash and cash equivalents | 14,638 | ||
Accounts receivable | 23,673 | ||
Inventories | 34,150 | ||
Other current assets | 9,943 | ||
Property and equipment | 26,253 | ||
Intangible assets | 633,300 | ||
Deferred tax asset | 8,407 | ||
Current liabilities | (64,518) | ||
Deferred tax liabilities | (77) | ||
Other long-term liabilities | (3,880) | ||
Non-controlling interest | (5,624) | ||
Net assets acquired | 676,265 | ||
Excess purchase price attributable to goodwill | $ 182,121 |
ORGANIZATION - Schedule of inta
ORGANIZATION - Schedule of intangible assets consist of retail concession agreements (Detail) $ in Thousands | Mar. 19, 2019USD ($) |
Fair Value | $ 633,300 |
Trade name [Member] | |
Fair Value | $ 5,900 |
Useful Life (years) | Indefinite |
Licensing agreement [Member] | |
Fair Value | $ 1,500 |
Useful Life (years) | 8 years |
Retail concession agreements [Member] | |
Fair Value | $ 604,800 |
Useful Life (years) | 39 years |
Lease agreements [Member] | |
Fair Value | $ 21,100 |
Useful Life (years) | 10 years |
ORGANIZATION - Schedule of unau
ORGANIZATION - Schedule of unaudited supplemental pro forma (Detail) - Haymaker Acquisition Corp [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2018 | |
Revenues | $ 277,896 | $ 135,395 | $ 264,289 |
Net income | $ (41,947) | $ 892 | $ 2,014 |
ORGANIZATION - Additional Infor
ORGANIZATION - Additional Information (Detail) - USD ($) | Nov. 01, 2018 | Oct. 27, 2017 | Jun. 30, 2019 | Mar. 19, 2019 |
Gross Proceeds | $ 122,499,000 | |||
Business Combination, Separately Recognized Transactions, Description | The consideration paid to Steiner Leisure in connection with the Business Combination consisted of (i) 14,155,274 OneSpaWorld Shares, of which 5,607,144 OneSpaWorld shares were issued to Steiner by OneSpaWorld in a private placement offering to investors (see Note 5), (ii) warrants to purchase 1,486,520 OneSpaWorld Shares, (iii) $691,086 in cash, including the cash proceeds from the 5,607,144 OneSpaWorld shares in the private placement and $6,409,000 in working capital adjustments accrued as of June 30, 2019 (see Note 9), and (iv) the right to receive an additional 5,000,000 OneSpaWorld Shares upon the occurrence of certain events (the "Deferred Shares") (see Note 6). | |||
Business Acquisition, Share Price | $ 0.0001 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | $ 633,300,000 | |||
Private Placement [Member] | ||||
Stock Issued During Period, Shares, New Issues | 17,856,781 | 17,856,781 | ||
Haymaker Acquisition Corp [Member] | ||||
Gross Proceeds | $ 300,000,000 | |||
Transaction costs | $ 6,892,000 | |||
Aggregate Stockholders Shares | 31,713,387 | |||
Business Acquisition, Equity Interest Issued or Issuable, Description | each warrant to purchase a Haymaker Class A Common Share (the “Haymaker Warrants”) became exercisable for one OneSpaWorld Share, on the same terms and conditions as those applicable to the warrants to purchase the Haymaker Class A Shares. Also, 3,000,000 OneSpaWorld Shares, and the right to receive 1,600,000 OneSpaWorld Shares upon the occurrence of certain events, were issued to Haymaker Sponsor and the other former holders of Haymaker Class B common shares (the “Founder Shares”) in exchange for such shares, and the Haymaker Warrants held by Haymaker Sponsor became exercisable for 3,408,186 OneSpaWorld Shares. | |||
Business Acquisition, Share Price | $ 11.85 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | $ 633,300,000 | |||
Steiner Leisure [Member] | Private Placement [Member] | ||||
Stock Issued During Period, Shares, New Issues | 5,607,144 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Grant date fair value of options (Detail) | 6 Months Ended |
Jun. 30, 2019$ / shares | |
Hurdle price per share | $ 20 |
Strike price per share | $ 12.99 |
Average period for hurdle price, in days | 5 days |
End of simulation term | Mar. 26, 2025 |
Term of simulation | 6 years |
Stock price as of the Measurement Date | $ 12.99 |
Volatility | 37.50% |
Risk-free rate (continuous) | 2.20% |
Dividend yield (quarterly after 3 years) | 3.00% |
Suboptimal exercise multiple | 2.8 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of loss per basic and diluted share calculation (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Jun. 30, 2019 | Mar. 19, 2019 | Jun. 30, 2018 | Jun. 30, 2018 | |||
Net income (loss) attributable to OneSpaWorld | $ 3,609 | [1] | $ (19,074) | [1] | $ (25,459) | $ 2,653 | $ 5,536 |
Weighted average shares issued and outstanding—basic | 61,118,298 | 61,118,298 | |||||
Weighted average shares issued and outstanding—diluted | 72,047,201 | 61,118,298 | |||||
Earnings (loss) per share: | |||||||
Basic | $ 0.06 | $ (0.31) | |||||
Diluted | $ 0.05 | $ (0.31) | |||||
[1] | Calculated as total net income (loss) less amounts attributable to noncontrolling interest. |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of basic and diluted per share computation (Detail) - shares | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||
Weighted average shares outstanding - basic | 61,118,298 | 61,118,298 |
Common stock warrants | 4,066,000 | |
Deferred shares | 6,600,000 | |
Employee stock options | 263,000 | |
Weighted average shares outstanding - diluted | 72,047,201 | 61,118,298 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of weighted-average number of antidilutive potential common shares (Detail) shares in Thousands | 3 Months Ended |
Jun. 30, 2019shares | |
Antidilutive securities excluded from computation of earnings per share, amount | 35,647 |
Warrant [Member] | |
Antidilutive securities excluded from computation of earnings per share, amount | 24,500 |
Deferred shares [Member] | |
Antidilutive securities excluded from computation of earnings per share, amount | 6,600 |
Employee Stock Option [Member] | |
Antidilutive securities excluded from computation of earnings per share, amount | 4,547 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of cost, accumulated amortization, and net balance of the definite-lived intangible assets (Detail) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Cost | $ 627,400 | $ 137,300 |
Accumulated Amortization | (5,061) | (10,783) |
Net Balance | 622,339 | 126,517 |
Lease agreements [Member] | ||
Cost | 21,100 | 7,300 |
Accumulated Amortization | (604) | (573) |
Net Balance | $ 20,496 | $ 6,727 |
Weighted Average Remaining Useful Life (Yrs.) | 10 years | 36 years |
Retail concession agreements [Member] | ||
Cost | $ 604,800 | $ 130,000 |
Accumulated Amortization | (4,399) | (10,210) |
Net Balance | $ 600,401 | $ 119,790 |
Weighted Average Remaining Useful Life (Yrs.) | 39 years | 36 years |
Licensing Agreements [Member] | ||
Cost | $ 1,500 | |
Accumulated Amortization | (58) | |
Net Balance | $ 1,442 | |
Weighted Average Remaining Useful Life (Yrs.) | 7 years |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) - USD ($) | Mar. 26, 2019 | Jun. 30, 2019 | Jun. 30, 2019 | Mar. 19, 2019 | Jun. 30, 2018 | Jun. 30, 2018 | Mar. 20, 2019 | Mar. 18, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill | $ 182,121,000 | $ 182,121,000 | $ 33,864,000 | ||||||||
Amortization of intangible assets | 4,491,000 | 5,073,000 | $ 755,000 | $ 893,000 | $ 1,760,000 | ||||||
Depreciation and amortization expense | 2,100,000 | 2,300,000 | 1,200,000 | 1,800,000 | 3,200,000 | ||||||
Amortization expense beginning in 2019 | $ 17,800,000 | $ 17,800,000 | |||||||||
Antidilutive Securities Treasury Shsres | 35,647,000 | ||||||||||
Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares | 6,600,000 | ||||||||||
Accumulated other comprehensive income (loss), net of tax | $ (391,000) | $ (391,000) | (649,000) | ||||||||
Effect of exchange rate on cash and cash equivalents | (351,000) | 649,000 | 19,000 | ||||||||
Adjusted cash and cash equivalents | 14,447,000 | 14,447,000 | 14,638,000 | $ 14,572,000 | $ 14,572,000 | $ 1,774,000 | 15,302,000 | $ 8,671,000 | |||
Correcting these errors decreased additional paid in capital and stockholders' equity | [1] | (23,551,000) | (24,115,000) | ||||||||
Additional Paid-in Capital [Member] | |||||||||||
Correcting these errors decreased additional paid in capital and stockholders' equity | [1] | (24,115,000) | (24,115,000) | ||||||||
Parent [Member] | |||||||||||
Correcting these errors decreased additional paid in capital and stockholders' equity | [1] | (23,551,000) | (24,115,000) | ||||||||
Steiner Leisure [Member] | |||||||||||
Goodwill | 182,100,000 | 182,100,000 | |||||||||
Goodwill Fair value | $ 199,400,000 | ||||||||||
Goodwill, Purchase Accounting Adjustments | 6,400,000 | ||||||||||
Goodwill Increases Due To Additional Consideration | 17,300,000 | ||||||||||
Goodwill, period adjustments | 700,000 | ||||||||||
Goodwill, immaterial corrections | 23,000,000 | ||||||||||
Correction of Immaterial Errors [Member] | |||||||||||
Business Combination, Consideration Transferred | $ 25,000,000 | ||||||||||
Goodwill, immaterial corrections | $ 23,000,000 | ||||||||||
Error corrections and prior period adjustments, description | adjusting for i) a decrease of $26.6 million attributable to incorrectly including as consideration transferred change in control payments pursuant to employment agreements entered into in 2016 that were earned upon consummation of the Business Combination for services rendered prior to the Business Combination for which an assumed liability had been recorded in the purchase accounting treatment of the Business Combination; ii) a decrease of $3.2 million attributable to a receivable due from Parent for the reimbursement of cash payments made by the Company on behalf of the Parent that had not been recorded in the purchase accounting treatment of the Business Combination; and iii) an increase of $6.8 million attributable to contract acquisition costs that had incorrectly been recorded as an intangible asset in the purchase accounting of the Business Combination. | The effect of correcting i) above resulted in a $26.6 million decrease in Cash Flow Used in Investing Activities attributable to the acquisition of OSW Predecessor, which was further reduced to reflect $14.6 million of cash acquired in the Business Combination (which was previously presented as cash and cash equivalents, beginning of period). The effect of correcting iii) above resulted in a $6.8 million increase in Cash Flow Used In by Operating Activities (specifically, to decrease the change in other noncurrent assets) | |||||||||
Accrued Expenses | $ 3,700,000 | ||||||||||
Accumulated other comprehensive income (loss), net of tax | 600,000 | $ 600,000 | |||||||||
Increase decrease accrued expenses | 3,000,000 | ||||||||||
Effect of exchange rate on cash and cash equivalents | 600,000 | ||||||||||
Adjusted cash and cash equivalents | 1,700,000 | $ 1,700,000 | |||||||||
Correction of Immaterial Errors [Member] | Additional Paid-in Capital [Member] | |||||||||||
Correcting these errors decreased additional paid in capital and stockholders' equity | 24,100,000 | ||||||||||
Correction of Immaterial Errors [Member] | Parent [Member] | |||||||||||
Correcting these errors decreased additional paid in capital and stockholders' equity | $ 23,500,000 | ||||||||||
Treasury shares [Member] | |||||||||||
Antidilutive Securities Treasury Shsres | 4,329,000 | ||||||||||
Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares | 6,600,000 | ||||||||||
2019 Equity Incentive Plan [Member] | |||||||||||
Share based compensation initially authorized | 7,000,000 | ||||||||||
Share based compensation grant | 4,547,076 | ||||||||||
Options fully vested resulting in stock based compensation | $ 20,370,900 | ||||||||||
Share based compensation fair value | $ 20,370,900 | ||||||||||
Exercise price | $ 12.99 | ||||||||||
Vesting Rights, Percentage | 100.00% | ||||||||||
Stock based Compensation | $ 20,370,900 | ||||||||||
Common shares reaching | $ 20 | ||||||||||
Previously Reported [Member] | |||||||||||
Goodwill | 33,900,000 | ||||||||||
Indefinite-lived intangible assets | 126,500,000 | ||||||||||
Previously Reported [Member] | Trade Names [Member] | |||||||||||
Intangible asset tradename | $ 5,000,000 | ||||||||||
Adjustments for New Accounting Pronouncement [Member] | |||||||||||
Goodwill | $ 199,400,000 | $ 199,400,000 | |||||||||
Intangible asset tradename | 5,900,000 | 5,900,000 | |||||||||
Indefinite-lived intangible assets | $ 622,300,000 | $ 622,300,000 | |||||||||
Owner Of One Spa World Medi spa Bahamas Limited [Member] | |||||||||||
Ownership percentage | 100.00% | 100.00% | |||||||||
[1] | See Note 2(k). |
ACCRUED EXPENSES - Summary of
ACCRUED EXPENSES - Summary of Accrued expenses (Detail) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Operative commissions | $ 4,573 | $ 4,663 |
Minimum cruiseline commissions | 7,346 | 5,648 |
Payroll and bonuses | 3,519 | 5,037 |
Interest | 356 | 2,513 |
Other | 10,207 | 9,350 |
Total | $ 26,001 | $ 27,211 |
LONG-TERM DEBT - Summary of Lon
LONG-TERM DEBT - Summary of Long-term debt (Detail) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Line Of Credit Facility Maximum Borrowing Capacity | $ 253,500 | |
Debt Instrument Carrying Amount | 240,879 | |
Unamortized deferred financing costs | (6,591) | |
Total debt | 234,288 | |
Less: current portion of long-term debt | 2,085 | |
Long-term debt, net | 232,203 | $ 352,440 |
First Lien Revolving Facility [Member] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 20,000 | |
Debt Instrument Carrying Amount | 7,900 | |
First Lien Term Loan Facility [Member] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 208,500 | |
Debt Instrument Carrying Amount | 207,979 | |
Second Lien Term Loan Facility [Member] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 25,000 | |
Debt Instrument Carrying Amount | $ 25,000 |
LONG-TERM DEBT - Summary of L_2
LONG-TERM DEBT - Summary of Long-term debt (Detail) (Parenthetical) $ in Thousands | Jun. 30, 2019USD ($) |
Long-term debt, net | $ 234,288 |
LONG-TERM DEBT - Additional Inf
LONG-TERM DEBT - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 01, 2019 | Jan. 11, 2019 | Mar. 19, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Unamortized deferred financing costs | $ 6,591 | ||||
Maximum borrowing capacity | $ 253,500 | ||||
Commitment Fee Rate | 0.50% | ||||
Commitment Fee Rate On Achievement Of Leverage Ratio | 0.325% | ||||
Quarterly amortization payments | 0.25% | ||||
Loss on extinguishment of debt | $ (3,413) | ||||
Term Credit Agreement [Member] | |||||
Maturity date | Dec. 9, 2021 | ||||
Debt instrument variable rate basis | The interest rate on the Term Credit Agreement was based on (at the Parent’s election) either LIBOR plus a predetermined margin that ranged from 7.00% to 7.50%, or the base rate as defined in the Term Credit Agreement plus a predetermined margin that ranged from 6.00% to 6.50%, in each case based on the Parent’s consolidated total leverage ratio. | ||||
Debt instrument variable rate basis | 7.25% | ||||
Unamortized deferred financing costs | $ 3,700 | ||||
Debt instrument face amount | $ 356,200 | ||||
Loss on extinguishment of debt | $ 3,413 | ||||
First Lien Credit Facilities [Member] | |||||
Debt instrument variable rate basis | LIBOR plus a margin of 4.00% | ||||
Debt instrument variable rate basis | 4.00% | ||||
Maximum borrowing capacity | $ 208,500 | ||||
Debt instrument variable rate basis | 3.75% | ||||
First Lien Term Loan Facility [Member] | |||||
Debt instrument face amount | $ 20,000 | ||||
First Lien Revolving Facility [Member] | |||||
Maximum borrowing capacity | 20,000 | ||||
First Lien Delayed Draw Facility [Member] | |||||
Debt instrument face amount | $ 5,000 | ||||
Second Lien Term Loan Facility [Member] | |||||
Debt instrument variable rate basis | LIBOR plus 7.50% | ||||
Debt instrument variable rate basis | 7.50% | ||||
Maximum borrowing capacity | $ 25,000 | ||||
Letter of Credit [Member] | First Lien Revolving Facility [Member] | |||||
Maximum borrowing capacity | $ 5,000 | ||||
Prior to the first anniversary [Member] | |||||
call premium | 4.00% | ||||
After the first anniversary [Member] | |||||
call premium | 2.50% | ||||
After the second anniversary [Member] | |||||
call premium | 1.50% |
PRIVATE PLACEMENTS - Additional
PRIVATE PLACEMENTS - Additional Information (Detail) - Private Placement [Member] - USD ($) | Nov. 01, 2018 | Mar. 19, 2019 |
Stock Issued During Period, Shares, New Issues | 17,856,781 | 17,856,781 |
Class Of Warrant Or Rights issued | 3,105,294 | 3,105,294 |
Proceeds from Issuance or Sale of Equity | $ 122,496,370 |
EQUITY - Additional Information
EQUITY - Additional Information (Detail) - USD ($) | 1 Months Ended | 6 Months Ended |
Mar. 26, 2019 | Jun. 30, 2019 | |
Common stock, shares authorized | 250,000,000 | |
Common stock, par value | $ 0.0001 | |
Common stock, shares issued | 61,118,298 | |
Common stock, shares outstanding | 61,118,298 | |
Warrant exercise price | $ 11.50 | |
Redemption price of warrant | $ 0.01 | |
Warrants agreement expire date | 5 years | |
Warrants and Rights Outstanding | $ 24,500,000 | |
Consideration Arrangements Description | As part of the equity consideration transferred in the Business Combination, Steiner received 5,000,000 Deferred Shares. Haymaker Sponsor, LLC also received 1,600,000 Deferred Shares in connection with the Business Combination. The issuance of the OneSpaWorld common shares related to the Deferred Shares is contingent upon the earlier occurrence of any of the following events: (i) OneSpaWorld share price reaching $20 per share for five consecutive trading dates, as adjusted to reflect any stock split, reverse stock split, stock dividend, payment of dividends and other events as defined in the applicable Deferred Shares agreement (ii) in the event of a change of control, as defined, of the Company if the price per share paid in connection with such change in control is equal to or greater than $20; however, if the price per share paid in connection with such change in control is less than $20, then no OneSpaWorld common shares will be issued and all the rights to receive the shares will be forfeited for no consideration, and (iii) ten years from the date of the Business Combination agreement. | |
Executive Officer [Member] | Non Qualified Stock Options [Member] | ||
Non Qualified Stock Options Granted To The Executive | 4,547,076 | |
Percentage Of Vesting Rights Of The Stock Options | 100.00% | |
Stock Options Issued And Outstanding | 4,547,076 | |
Weighted Average Exercise Price Of The Options Granted | $ 20 | |
Steiner [Member] | ||
Deferred Shares Issued | 5,000,000 | |
Haymaker Sponsor LLC [Member] | ||
Deferred Shares Issued | 1,600,000 | |
Private Placement [Member] | ||
Warrant exercise price | $ 11.50 | |
Warrants purchased by investors | 3,105,294 | |
Warrants purchased by investors price per warrant | $ 1 | |
Common Class A [Member] | ||
Common stock, shares authorized | 250,000,000 | |
Common stock, par value | $ 0.0001 | |
Common stock, shares issued | 61,118,298 | |
Common stock, shares outstanding | 61,118,298 | |
Share price minimum for redemption | $ 18 |
COMMITMENTS - Additional Inform
COMMITMENTS - Additional Information (Detail) - USD ($) | Jun. 30, 2019 | Mar. 19, 2019 |
Maximum [Member] | ||
Lessee, Operating Lease, Renewal Term | 5 years | |
Minimum [Member] | ||
Lessee, Operating Lease, Renewal Term | 3 years | |
Steiner Leisure And Haymaker Sponsor [Member] | ||
Resale Of Shares Expected Minimum Value | $ 10,000,000 |
NONCONTROLLING INTEREST - Addit
NONCONTROLLING INTEREST - Additional Information (Detail) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Stockholders' Equity Attributable to Noncontrolling Interest | $ 6,678 | $ 3,586 |
Medispa Limited [Member] | ||
Noncontrolling Interest | 40.00% | |
Bahamian [Member] | ||
Noncontrolling Interest | 60.00% |
RELATED PARTY TRANSACTIONS - Su
RELATED PARTY TRANSACTIONS - Summary of Inventories on hand related to these purchases and accounts payable (Detail) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Inventories | $ 33,752 | $ 32,265 |
Steiner Leisure [Member] | ||
Inventories | 17,268 | |
Accounts payable - related parties | $ 6,553 |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Detail) € in Millions | Aug. 03, 2018USD ($) | Dec. 31, 2019USD ($) | Feb. 25, 2016EUR (€) | Jun. 30, 2019USD ($) |
Coral Gables Lease [Member] | ||||
Lessee, operating lease, term of contract | 12 years | |||
Lessee, operating lease, option to extend | two periods of five years each | |||
Operating leases, rent expense, net | $ 480,000 | |||
Lessee operating sub lease term of contract | 5 years | |||
Steiner [Member] | Accounts Payable-Related Parties [Member] | ||||
Business Combinatiuon Additional Purchase Consideration Due | $ 6,408,910 | |||
Forecast [Member] | Bliss World LLC [Member] | ||||
Business combination, consideration transferred | $ 1,250,000 | |||
Forecast [Member] | Steiner Management Services LLC [Member] | ||||
Related party transaction, amounts of transaction | 360,000 | |||
Forecast [Member] | Nemo Investor Aggregator Limited [Member] | ||||
Related party transaction, amounts of transaction | $ 850,000 | |||
Loan Agreement [Member] | ||||
Loan agreement wholly owned subsidiary | € | € 5 | |||
Debt instrument, interest rate, basis for effective rate | 7.50 | |||
Maturity date | Jan. 3, 2021 |
SEGMENT AND GEOGRAPHICAL INFO_3
SEGMENT AND GEOGRAPHICAL INFORMATION - Summary of Geographic information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2019 | Mar. 19, 2019 | Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2018 | |
Revenues: | ||||||
Revenues | $ 140,430 | $ 159,444 | $ 118,452 | $ 135,395 | $ 264,289 | |
Property and equipment, net: | ||||||
Property and equipment, net | 24,632 | 24,632 | $ 16,239 | |||
U.S. [Member] | ||||||
Revenues: | ||||||
Revenues | 8,576 | 9,283 | 6,008 | 7,023 | 13,843 | |
Property and equipment, net: | ||||||
Property and equipment, net | 9,282 | 9,282 | 6,838 | |||
Not connected to a country [Member] | ||||||
Revenues: | ||||||
Revenues | 125,843 | 142,855 | 106,886 | 122,914 | 238,841 | |
Property and equipment, net: | ||||||
Property and equipment, net | 6,637 | 6,637 | 2,188 | |||
Other [Member] | ||||||
Revenues: | ||||||
Revenues | 6,011 | 7,306 | $ 5,558 | $ 5,458 | $ 11,605 | |
Property and equipment, net: | ||||||
Property and equipment, net | $ 8,713 | $ 8,713 | $ 7,213 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional information (Detail) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Valuation Technique, Discounted Cash Flow [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value Of Long Term Outstanding Debt | $ 372,200,000 | |
Fair Value, Recurring [Member] | ||
Fair Value Of Assets | $ 0 | |
Fair Value Of Liabilities | $ 0 |