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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported):
JULY 12, 2001
STEINER LEISURE LIMITED
(Exact Name of Registrant as Specified in Charter)
COMMONWEALTH OF THE BAHAMAS 0-28972 98-0164731
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
SUITE 104A, SAFFREY SQUARE
NASSAU, THE BAHAMAS NOT APPLICABLE
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (242) 356-0006
N/A
(Former Name or Former Address; if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 12, 2001, Steiner Leisure Limited (Nasdaq: STNR) ("Steiner"),
through a wholly owned subsidiary, purchased substantially all of the assets
(the "Greenhouse Assets") of each of Birmingham Day Spa, LLC, 57th Street Day
Spa, LLC, GH Day Spas, Inc. and GH Day Spa Second Street, LLC, and substantially
all of the intellectual property owned by The Greenhouse Spa, Inc., which
assets, collectively, constitute a chain of eleven luxury day spas located at
various locations within the United States, including New York City, Beverly
Hills, Greenwich, Connecticut and Troy, Michigan (the "Acquisition"). The
Acquisition was consummated pursuant to that certain Asset Purchase Agreement
dated April 30, 2001 (the "Agreement"), as amended by that certain Amendment No.
1 on June 1, 2001 (the "Amendment"). The Agreement and the Amendment are
included as Exhibit 2.1 and 2.2 hereto, respectively, and are incorporated
herein by reference.
Steiner paid $24.8 million in cash and $4.3 million in Steiner common
shares for the Greenhouse Assets. In addition, $3.0 million of, and 200,000
options in, Steiner common shares can be earned by the sellers if certain EBITDA
thresholds are obtained. Steiner financed the acquisition through a credit
facility entered into with ABN AMRO Bank, N.A. and working capital. The purchase
price for the Greenhouse Assets was determined through arms' length negotiation
between the parties. Prior to the execution of the Agreement, Steiner had no
material relationship with any of the parties thereto.
Gerald Katzoff, the senior executive of the entities which sold the
Greenhouse Assets to Steiner, continues to be involved in the operations of the
Greenhouse Day Spas. In addition, Steiner has licensed the right to use the
"Greenhouse" name to The Greenhouse Spa, Inc., an entity controlled by Mr.
Katzoff's family, which will continue to operate the Greenhouse luxury
destination spa in Arlington, Texas, which was excluded from this transaction.
The operations of the Arlington, Texas Spa is not included in the accompanying
historical combined financial statements.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
PAGE
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a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
GH Day Spas, Inc.
Report of Independent Public Accountants as of December 31, 2000 5
Combined Balance Sheet as of December 31, 2000 6
Combined Statement of Operations for the year ended December 31, 2000 7
Combined Statement of Shareholders' Deficit for the year ended
December 31, 2000 8
Combined Statement of Cash Flows for the year ended December 31, 2000 9
Notes to Combined Financial Statements 10
Unaudited Interim Combined Financial Statements of GH Day Spas, Inc.
Unaudited Interim Combined Balance Sheets as of December 31, 2000 and June 17
30, 2001
Unaudited Interim Combined Statements of Operations for the six months ended 18
June 30, 2000 and 2001
Unaudited Interim Combined Statements of Cash Flows for the six months 19
ended June 30, 2000 and 2001
Notes to Unaudited Interim Combined Financial Statements 20
(b) PRO FORMA FINANCIAL INFORMATION.
Introduction to Pro Forma Combined Financial Statements 23
Unaudited Pro Forma Combined Balance Sheet as of June 30, 2001 24
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PAGE
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Unaudited Pro Forma Combined Statement of Operations for the year ended 25
December 31, 2000
Unaudited Pro Forma Combined Statement of Operations for the six months 26
ended June 30, 2001
Notes to Unaudited Pro Forma Combined Financial Statements 27
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GH DAY SPAS, INC.
COMBINED FINANCIAL STATEMENTS
Description Page
----------- ----
Report of Independent Public Accountants as of December 31, 2000 5
Combined Balance Sheet as of December 31, 2000 6
Combined Statement of Operations for the year ended December 31, 2000 7
Combined Statement of Shareholders' Deficit for the year ended
December 31, 2000 8
Combined Statement of Cash Flows for the year ended December 31, 2000 9
Notes to Combined Financial Statements 10
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
GH Day Spas, Inc.:
We have audited the accompanying combined balance sheet of GH Day Spas, Inc. (a
Pennsylvania corporation) and 57th Street Day Spa, LLC (a New York limited
liability company) as of December 31, 2000 and the related combined statements
of operations, shareholders' deficit and cash flows for the year then ended.
These financial statements are the responsibility of the Companies' management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of GH Day Spas, Inc. and
57th Street Day Spa, LLC as of December 31, 2000 and the results of their
combined operations and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States.
The accompanying combined financial statements have been prepared assuming that
GH Day Spas, Inc. and 57th Street Day Spa, LLC (the "Companies") will continue
as a going concern. As discussed in Note 2 to the financial statements, the
Companies have suffered losses from operations and have a combined net capital
deficiency that raises substantial doubt about their ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Philadelphia, Pennsylvania,
July 12, 2001.
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GH DAY SPAS, INC.
COMBINED BALANCE SHEET
DECEMBER 31, 2000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 142,009
Accounts receivable 56,519
Inventories 1,129,217
Due from affiliate 275,671
Other current assets 43,152
------------
Total current assets 1,646,568
PROPERTY AND EQUIPMENT, net 12,684,468
DEFERRED DEBT COSTS, net 343,624
OTHER ASSETS 658,996
------------
Total assets $ 15,333,656
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 2,895,631
Accrued expenses 926,126
Current portion of long-term debt 250,000
Current portion of capital lease obligations 329,369
Due to shareholder 669,523
Deferred revenue 617,162
Gift certificate liability 3,195,704
------------
Total current liabilities 8,883,515
CAPITAL LEASE OBLIGATIONS, net of current portion 754,441
LONG-TERM DEBT, net of current portion 7,200,000
NOTES PAYABLE - RELATED PARTY 5,094,414
------------
Total liabilities 21,932,370
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COMMITMENTS AND CONTINGENCIES (Notes 2 and 8)
SHAREHOLDERS' DEFICIT:
Common shares, $1.00 par; 1,000 shares authorized, issued and outstanding 1,000
Additional paid-in capital 386,577
Accumulated deficit (6,986,291)
------------
Total shareholders' deficit (6,598,714)
------------
Total liabilities and shareholders' deficit $ 15,333,656
============
The accompanying notes are an integral part of this combined balance sheet.
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GH DAY SPAS, INC.
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
REVENUES:
Services $ 9,661,604
Products 1,158,724
------------
Total revenues 10,820,328
------------
COST OF REVENUES:
Cost of services 11,580,853
Cost of products 556,204
------------
Total cost of revenues 12,137,057
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Gross profit (1,316,729)
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OPERATING EXPENSES:
Administrative 1,765,388
Salary and payroll taxes 1,591,469
------------
Total operating expenses 3,356,857
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Loss from operations (4,673,586)
INTEREST EXPENSE 325,957
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Net loss $ (4,999,543)
============
The accompanying notes are an integral part of
this combined statement.
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GH DAY SPAS, INC.
COMBINED STATEMENT OF SHAREHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2000
Common Stock Additional
--------------------- Paid-in Accumulated
Shares Amount Capital Deficit
------ ------ ---------- -----------
Balance, December 31, 2000 1,000 $ 1,000 $ -- $ (1,986,748)
Net loss -- -- -- (4,999,543)
Deferred debt issuance costs -- -- 386,577 --
----- ------- ---------- ------------
Balance, December 31, 2001 1,000 $ 1,000 $ 386,577 $ (6,986,291)
===== ======= ========== ============
The accompanying notes are an integral part of this combined statement.
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GH DAY SPAS, INC.
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,999,543)
Adjustments to reconcile net loss to net cash used in operating activities-
Depreciation and amortization 1,940,401
Amortization of deferred debt costs 42,953
Changes in operating assets and liabilities:
Accounts receivable (49,336)
Inventories (275,475)
Other current assets (28,326)
Other assets (653,338)
Accounts payable 2,622,419
Accrued expenses (29,759)
Deferred revenue (18,254)
Gift certificate liability 209,186
------------
Net cash used in operating activities (1,239,072)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,768,026)
Acquisitions, net of liabilities assumed (544,000)
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Net cash used in investing activities (4,312,026)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings, net 4,244,448
Advances from shareholder, net 669,523
Advances to affiliate, net (606,315)
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Net cash provided by financing activities 4,307,656
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NET DECREASE IN CASH AND CASH EQUIVALENTS (1,243,442)
CASH AND CASH EQUIVALENTS, beginning of year 1,385,451
------------
CASH AND CASH EQUIVALENTS, end of year $ 142,009
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 101,306
============
The accompanying notes are an integral part of this combined statement.
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GH DAY SPAS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. ORGANIZATION
GH Day Spas, Inc. and 57th Street Day Spa, LLC (the "Companies") are in the
business of providing spa services, as well as the sale of retail cosmetic
products. These services and products include manicures, pedicures, massages,
facials, water treatments, exfoliation of dried skin, laser hair removal and the
sale of various Greenhouse and other retail products.
At December 31, 2000, the Companies had 11 operating day spa locations and one
day spa under construction. The operating day spas are licensed to do business
in Beverly Hills and Newport Beach, California; Denver, Colorado; Greenwich,
Connecticut; Troy, Michigan; Manhasset and New York City, New York; Dallas and
Houston, Texas; Birmingham, Alabama; and Orlando, Florida. Construction is in
process for a day spa in the Newtown Athletic Club in Newtown, Pennsylvania.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
The accompanying combined financial statements include the accounts of the
Companies. The entities are under common control. All significant intercompany
balances and transactions have been eliminated in combination.
Liquidity
The accompanying combined financial statements have been prepared assuming that
the Companies will continue as a going concern. During the year ended December
31, 2000, the Companies incurred a loss of $4,999,543, had a working capital
deficit at December 31, 2000 of approximately $7,237,000, and had a
shareholders' deficit of $6,598,714. These factors raise substantial doubt about
the Companies' ability to continue as a going concern.
The Companies are currently implementing operational measures designed to
increase the level of cash flows from operations, although there can be no
assurance that the Companies will be successful in any of these efforts. The
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Companies be unable
to continue as a going concern.
Cash and Cash Equivalents
The Companies consider all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Inventories
Inventories, consisting principally of beauty products and other supplies, are
stated at the lower of cost (first-in, first-out) or market.
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Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided over the
estimated useful lives of the respective assets on a straight-line basis.
Leasehold improvements are amortized on a straight-line basis over the shorter
of the terms of the respective leases or the estimated useful lives of the
respective assets.
Revenue Recognition
The Companies recognize revenues earned as services are provided and as products
are sold or shipped. Sales of laser hair removal packages are deferred and
recognized as revenue when the services are provided to the customers. Gift
certificate sales are deferred and recognized as revenue when utilized by
customers. Gift certificates generally expire one year after issuance.
Income Taxes
The Companies are organized as small business corporations under the provisions
of Subchapter S of the Internal Revenue Code. Accordingly, the accompanying
combined statement of operations and accumulated deficit does not include a
provision for income taxes. All income or loss is reported through the
shareholders' personal tax returns. The tax returns and the amount of taxable
income are subject to examination by federal and state taxing authorities. If
such examinations result in changes to taxable income, the tax liabilities of
the shareholders could be changed accordingly.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about
Fair Value of Financial Instruments," requires disclosure of the fair value of
certain financial instruments. Cash and cash equivalents, accounts receivable
and accounts payable are reflected in the accompanying combined financial
statements at cost, which approximates fair value.
Deferred Debt Costs
In connection with the Companies' receipt of proceeds from a note payable and
granting of a right to purchase equity, the Companies recorded deferred debt
costs of $386,577. The value of this right was calculated under the provisions
of EITF 96-18 "Accounting for Equity Instruments That are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services."
Assumptions used in connection therewith are as follows: Volatility--20%, risk
free interest rate--5%, dividend yield--0, term--0.5 years. Such costs are being
amortized over the 18-month term of the related debt (see Note 6).
Accumulated amortization of deferred debt costs at December 31, 2000 amounted to
$42,953.
Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income," establishes standards for the
reporting and display of comprehensive income, which is defined as the change in
equity of a business enterprise during a period from nonowner sources.
Comprehensive loss and net loss are the same for the period presented.
Recently Issued Accounting Pronouncements
SFAS No. 133, "Accounting for Derivatives Instruments and Hedging Activities,"
(as amended by SFAS No. 137 and SFAS No. 138) was adopted by the Companies on
January 1, 2001. SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments embedded in other contracts, be recorded on the balance sheet as
either an asset or a liability measured at its fair value. The Companies have no
derivatives as defined under SFAS No. 133.
In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141,
"Business Combinations". SFAS 141 addresses financial accounting and reporting
for business combinations and supercedes APB No. 16, "Business Combinations" and
SFAS 38 "Accounting for Pre-acquisition Contingencies of Purchased Enterprises".
All business combinations in the scope of SFAS 141 are to be accounted for under
the purchase method. SFAS 141 is effective July 1, 2001. The adoption of SFAS
141 will not have an impact on the Companies' financial position, results of
operations or cash flows.
In July 2001, the FASB also issued SFAS 142, "Goodwill and Other Intangible
Assets". SFAS 142 addresses financial accounting and reporting for intangible
assets acquired individually or with a group of other assets (but not those
acquired in a business combination) at acquisition. SFAS 142 also addresses
financial accounting and reporting for goodwill and other intangible assets
subsequent to their acquisition. With the adoption of SFAS 142, goodwill is no
longer subject to amortization. Rather, goodwill will be subject to at least an
annual assessment for impairment by applying a fair value-based test. The
impairment loss is the amount, if any, by which the implied fair value of
goodwill is less than the carrying or book value. SFAS 142 is effective for
fiscal years beginning after December 15, 2001. Impairment loss for goodwill
arising from the initial application of SFAS 142 is to be reported as resulting
from a change in accounting principle. The Companies are currently assessing the
impact of adopting SFAS 142, but do not believe the impact will be material to
their financial position, results of operations or cash flows in the year of
adoption.
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3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Useful Life December 31,
in Years 2000
----------- ------------
Leasehold improvements Term of lease $ 11,407,143
Computers and equipment 3 - 5 2,629,722
Furniture and fixtures 3 - 7 1,328,322
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15,365,187
Less: Accumulated depreciation and amortization (2,680,719)
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$ 12,684,468
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4. ACQUISITIONS
In July 2000, the Companies acquired the net assets of Deborah Stone Spa &
Perfumerie for a $250,000 note payable and the assumption of approximately
$544,000 and $139,000 in deferred gift certificate liability and capital lease
obligations, respectively. The transaction was accounted for under the purchase
method of accounting. The purchase price approximated the fair market value of
net assets acquired, resulting in no goodwill.
In November 2000, the Companies entered into an agreement with Universal Studios
Florida ("Universal") for the construction of a day spa in the Portofino Bay
Hotel at Universal Studios Escape for a $1,400,000 note payable to Universal and
approximately $544,000 (including purchase price adjustments) in cash. The
purchase price approximated the fair market value of net assets acquired,
resulting in no goodwill.
A summary of net assets purchased in 2000 is as follows:
Inventories $ 233,865
Property and equipment 2,699,348
Capital lease obligations (139,362)
Gift certificate liability (543,851)
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$ 2,250,000
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5. ACCRUED EXPENSES
Accrued expenses consist of the following:
December 31,
2000
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Payroll related $ 333,165
Insurance 107,259
Interest 67,271
Other 418,431
---------
$ 926,126
=========
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6. DEBT
Debt consists of the following:
December 31,
2000
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Note payable to bank, payable in monthly installments of interest only at
the greater of LIBOR plus 1.30% or prime less 0.25% (9.00% at December 31,
2000). The note automatically renews annually, in November, and is
collateralized by a $2,000,000 deposit by a potential investor (Note 8). $ 1,800,000
Note payable to potential investor, payable in annual installments of
interest only at 7.50% through April 2001 and 9.50% through April 2002,
maturing in April 2002 (Notes 2 and 8). 2,000,000
Note payable, payable in monthly installments of interest only at
10.00% per annum beginning April 2001, maturing in October 2002. 1,400,000
Note payable, due to the previous owner of the Companies' spas acquired
in June 1999 at interest at 10%, maturing in November 2005. The holder
has the option to convert the note into a 10% equity interest in the
Companies. 2,000,000
Note payable, due to the previous owner of one of the Companies' spas,
payable in monthly installments of interest only at 8.00% per annum,
maturing in June 2001. 250,000
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7,450,000
Less - current portion (250,000)
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$ 7,200,000
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Minimum annual commitments under notes payable at December 31, 2000 are as
follows:
Year Ending December 31, Amount
------------------------ ------
2001 $ 250,000
2002 1,400,000
2003 --
2004 --
2005 --
Thereafter 5,800,000
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$ 7,450,000
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7. CAPITAL LEASE OBLIGATIONS
During the year ended December 31, 2000, the Companies entered into or assumed
capital lease obligations of approximately $1,139,361 for various property and
equipment. The Companies have a $500,000 certificate of deposit at a federally
insured institution as collateral for the three leases. Such amount is included
in other assets in the accompanying combined balance sheet. As of December 31,
2000, the assets acquired under capital leases have a cost of approximately
$1,140,000 and accumulated depreciation and amortization of approximately
$122,400.
Future minimum lease payments under these capital leases are due as follows:
Year ending December 31, Amount
------------------------ ------
2001 $ 361,717
2002 361,717
2003 361,717
2004 297,754
-----------
Total future minimum lease payments 1,382,905
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Year ending December 31, Amount
------------------------ ------
Less- Interest imputed at 10 percent (299,095)
-----------
Present value of future minimum lease payments 1,083,810
Less- Current portion (329,369)
-----------
Capital lease obligations, less current portion $ 754,441
===========
8. COMMITMENTS AND CONTINGENCIES
Employment Agreement
The Companies have entered into a one-year employment contract (the "Contract")
with its medical director through the year ending December 31, 2001. The
contract provides for a minimum salary and incentives based on the Companies
attaining specified levels of sales and earnings. As of December 31, 2000, the
Companies have accrued $125,000 pursuant to the Contract, which is included in
accrued expenses in the accompanying combined balance sheet.
Letters of Credit
The Companies have guaranteed a $200,000 letter of credit issued to the landlord
of the 57th Street Day Spa. The Companies also have issued letters of credit to
the landlords of eight of its other spas totaling $700,000 as collateral for the
Companies' lease commitments.
Guarantor Arrangement
The Companies have agreed to be a guarantor for a $5,100,000 credit facility
with a bank. The facility is comprised of $4,100,000 in two term loans, a
$500,000 line of credit, and a $500,000 letter of credit. The credit facility is
co-guaranteed by an affiliated company.
Litigation
The Companies are involved in claims and actions arising in the ordinary course
of business. In the opinion of management, after consultation with legal
counsel, the ultimate disposition of these matters is not expected to have a
material adverse effect on the combined financial position of the Companies.
Equity Agreement
During 2000, the Companies entered into an agreement (the Equity Agreement) to
sell up to 23.6% interest in the Companies for $5,625,000 (see Notes 2 and 6).
In addition, the potential investor placed $2,000,000 in a bank as cash
collateral for the bank loan with an outstanding balance of $1,800,000 and a
$200,000 letter of credit for the 57th Street Day Spa, LLC. The potential
investor also loaned the Companies $2,000,000. The loan proceeds were utilized
for the construction of the 57th Street Day Spa. The Equity Agreement provides
that on or before April 30, 2001, the potential investor will provide an
additional $3,625,000 in the form of a Senior Convertible Note (the "Note"). The
ultimate percentage of ownership is dependent upon revenue and cash flow levels
attained during the years ending December 31, 2000 through December 31, 2004.
The potential investor can convert the Note into a 23.6% equity interest in the
Companies. Through July 12, 2001, the potential investor did not provide any
additional funds to the Companies, nor did it convert the Note into an equity
interest in the Companies (See Note 11).
Operating Leases
The Companies lease facilities as well as office equipment and automobiles under
operating leases. During the year ended December 31, 2000, the Companies
incurred approximately $2,417,000 in rental expense under non-cancelable
operating leases.
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Minimum annual commitments under operating leases at December 31, 2000 are as
follows:
Year ending December 31, Amount
------------------------ ------
2001 $ 3,111,144
2002 3,227,883
2003 3,239,681
2004 3,145,075
2005 3,111,690
Thereafter 7,753,827
-----------
$23,589,300
===========
9. EMPLOYEE BENEFIT PLAN
The Companies a defined contribution 401(k) plan (the "Plan") covering
substantially all employees. Participants may contribute up to 15% of their
annual compensation, subject to certain statutory limitations. Matching of
participant contributions is at the discretion of the Companies. The Companies
did not make any contributions to the Plan during the year ended December 31,
2000.
10. RELATED PARTY TRANSACTIONS
Due from Affiliate
Due from affiliate consists of amounts receivable from a related entity owned
and controlled by the Companies' shareholders. During the year ended December
31, 2000, the Companies advanced the affiliate approximately $248,000 to be used
for debt service. The advances are non-interest bearing and require no monthly
principal payments.
Due to Shareholder
During 2000, one of the shareholders advanced the Companies cash to be used for
working capital needs. The advances are non-interest bearing and require no
monthly principal payments.
Notes Payable - Related Party
Notes payable - related party are due to an entity owned and controlled by the
Companies' shareholders. The notes were incurred in connection with the
acquisition of the Companies' original spas in June 1999 and consist of a
$4,000,000 term note, plus an additional $1,100,000 in the form of a revolving
note and letters of credit. The notes are payable in monthly installments of
principal plus interest accruing at prime, and mature in June 2005.
Term note (9% at December 31, 2000) $ 3,994,414
Revolving note (9.5% at December 31, 2000) 500,000
Letters of credit (9.5% at December 31, 2000) 600,000
-----------
Total $ 5,094,414
===========
11. SUBSEQUENT EVENT
On July 12, 2001, Steiner Leisure Limited ("Steiner") purchased the assets of
the Companies. Steiner paid $24.8 million in cash and $4.3 million in common
shares. In addition, $3.0 million of, and 200,000 options in Steiner common
shares can be earned by the sellers if certain income levels are obtained.
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GH DAY SPAS, INC.
UNAUDITED INTERIM COMBINED FINANCIAL STATEMENTS
Description Page
----------- ----
Unaudited Interim Combined Balance Sheets as of December 31, 2000 and June 30,
2001 17
Unaudited Interim Combined Statements of Operations for the six months ended
June 30, 2000 and 2001 18
Unaudited Interim Combined Statements of Cash Flows for the six months ended
June 30, 2000 and 2001. 19
Notes to Unaudited Interim Combined Financial Statements 20
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GH DAY SPAS, INC.
UNAUDITED INTERIM COMBINED BALANCE SHEETS
ASSETS DECEMBER 31, JUNE 30,
------------ ------------
2000 2001
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 142,009 $ 114,130
Accounts receivable 56,519 28,003
Inventories 1,129,217 269,274
Due from affiliate 275,671 --
Other current assets 43,152 92,318
------------ ------------
Total current assets 1,646,568 503,725
------------ ------------
PROPERTY AND EQUIPMENT, net 12,684,468 11,935,473
------------ ------------
OTHER ASSETS 1,002,620 805,090
------------ ------------
Total assets $ 15,333,656 $ 13,244,288
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 2,895,631 $ 1,968,278
Accrued expenses 926,126 130,826
Current portion of long term debt 250,000 406,034
Current portion of capital lease obligations 329,369 296,012
Due to shareholder 669,523 4,951,438
Deferred revenue 617,162 365,051
Gift certificate liability 3,195,704 3,090,838
------------ ------------
Total current liabilities 8,883,515 11,208,477
------------ ------------
CAPITAL LEASE OBLIGATIONS 754,441 641,004
LONG-TERM DEBT 7,200,000 7,200,000
NOTES PAYABLE RELATED PARTIES 5,094,414 5,094,414
------------ ------------
Total liabilities 21,932,370 24,143,895
------------ ------------
SHAREHOLDERS' DEFICIT:
Common Shares 1,000 1,000
Additional Paid-In Capital 386,577 386,577
Accumulated Deficit (6,986,291) (11,287,184)
------------ ------------
Total shareholders' deficit (6,598,714) (10,899,607)
------------ ------------
Total liabilities and shareholders' deficit $ 15,333,656 $ 13,244,288
============ ============
The accompanying notes are an integral part of these combined financial
statements.
17
18
GH DAY SPAS, INC.
UNAUDITED INTERIM COMBINED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
---------------------------------
2000 2001
------------ ------------
REVENUES:
Services $ 4,046,826 $ 5,411,640
Products 475,266 892,519
------------ ------------
Total revenues 4,522,092 6,304,159
------------ ------------
COST OF SALES:
Cost of services 5,334,568 7,407,104
Cost of products 190,106 1,158,697
------------ ------------
Total cost of sales 5,524,674 8,565,801
------------ ------------
Gross profit (1,002,582) (2,261,642)
------------ ------------
OPERATING EXPENSES:
Administrative 574,777 453,403
Salary and payroll taxes 765,420 1,068,615
------------ ------------
Total operating expenses 1,340,197 1,522,018
------------ ------------
Loss from operations (2,342,779) (3,783,660)
INTEREST EXPENSE (9,705) (517,233)
------------ ------------
Net loss $ (2,352,484) $ (4,300,893)
============ ============
The accompanying notes are an integral part of these combined financial
statements.
18
19
GH DAY SPAS, INC.
UNAUDITED INTERIM COMBINED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30,
-------------------------------
2000 2001
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(2,352,484) $(4,300,893)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 968,090 1,377,265
(Increase)/decrease in-
Accounts receivable (77,586) 28,516
Inventory (114,703) 859,943
Other current assets (147,604) 226,505
Other assets (37,842) 68,671
Increase/(decrease) in-
Accounts payable 299,041 (927,353)
Accrued expenses 99,680 (795,300)
Gift certificate liability (184,087) (104,866)
Deferred revenue 22,702 (252,111)
----------- -----------
Net cash used in operating activities (1,524,793) (3,819,623)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (26,875) (499,411)
----------- -----------
Net cash used in investing activities (26,875) (499,411)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long term debt -- 156,034
Payments on lease obligations -- (146,794)
Advances from Shareholder -- 4,281,915
Advances from Affiliates 185,713 --
----------- -----------
Net cash provided by financing activities 185,713 4,291,155
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (1,365,955) (27,879)
CASH AND CASH EQUIVALENTS,
Beginning of period 1,385,451 142,009
----------- -----------
CASH AND CASH EQUIVALENTS,
End of period $ 19,496 $ 114,130
=========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash Paid during the period for:
Interest $ 9,705 $ 321,103
=========== ===========
Income taxes $ -- $ --
=========== ===========
The accompanying notes are an integral part of these combined financial
statements.
19
20
GH DAY SPAS, INC.
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION AND NATURE OF BUSINESS:
GH Day Spas, Inc. and 57th Street Day Spa, LLC (the "Companies") are in the
business of providing spa services, as well as the sale of retail cosmetic
products. These services and products include manicures, pedicures, massages,
facials, water treatments, exfoliation of dried skin, laser hair removal and the
sale of various Greenhouse and other retail products.
At June 30, 2001, the Companies had 11 operating day spa locations and one day
spa under construction. The operating day spas are licensed to do business in
Beverly Hills and Newport Beach, California; Denver, Colorado; Greenwich,
Connecticut; Troy, Michigan; Manhasset and New York City, New York; Dallas and
Houston, Texas; Birmingham, Alabama; and Orlando, Florida. Construction is in
process for a day spa in the Newtown Athletic Club in Newtown, Pennsylvania.
(2) INTERIM FINANCIALS
The accompanying unaudited interim combined financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. The accompanying unaudited interim combined financial statements
should be read in conjunction with the Companies' December 31, 2000 combined
financial statements and the notes thereto.
In the opinion of management, the accompanying unaudited interim combined
financial statements of the Companies contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of the Companies as of June 30, 2001 and the results of their
operations and cash flows for the six month periods ended June 30, 2001 and
2000. The results of operations and cash flows for the six month period ended
June 30, 2001 are not necessarily indicative of the results of operations or
cash flows which may be reported for the year ending December 31, 2001.
(3) USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from these estimates.
(4) NEW ACCOUNTING PRONOUNCEMENTS
On January 1, 2001, the Companies adopted Statement of Financial Accounting
Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities". SFAS 133, as amended by SFAS 138, requires the recognition
of all derivatives on the balance sheet as either assets or liabilities measured
at fair value. Derivatives that do not qualify for hedge accounting must be
adjusted to fair value through income. Adoption of SFAS 133 did not have a
material impact on the combined financial statements, as no derivative contracts
have been entered into.
In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141,
"Business Combinations". SFAS 141 addresses financial accounting and reporting
for business combinations and supercedes APB No. 16, "Business Combinations" and
SFAS 38 "Accounting for Pre-acquisition Contingencies of Purchased Enterprises".
All business combinations in the scope of SFAS 141 are to be accounted for under
the purchase method. SFAS 141 is effective July 1, 2001. The adoption of SFAS
141 will not have an impact on the Companies' financial position, results of
operations or cash flows.
20
21
In July 2001, the FASB also issued SFAS 142, "Goodwill and Other Intangible
Assets". SFAS 142 addresses financial accounting and reporting for intangible
assets acquired individually or with a group of other assets (but not those
acquired in a business combination) at acquisition. SFAS 142 also addresses
financial accounting and reporting for goodwill and other intangible assets
subsequent to their acquisition. With the adoption of SFAS 142, goodwill is no
longer subject to amortization. Rather, goodwill will be subject to at least an
annual assessment for impairment by applying a fair value-based test. The
impairment loss is the amount, if any, by which the implied fair value of
goodwill is less than the carrying or book value. SFAS 142 is effective for
fiscal years beginning after December 15, 2001. Impairment loss for goodwill
arising from the initial application of SFAS 142 is to be reported as resulting
from a change in accounting principle. The Companies are currently assessing the
impact of adopting SFAS 142, but do not believe the impact will be material to
their financial position, results of operations or cash flows in the year of
adoption.
(5) SUBSEQUENT EVENTS
On July 12, 2001, the Companies' assets were purchased by Steiner Leisure
Limited ("Steiner"). Steiner paid $24.8 million in cash and $4.3 million in
common shares. In addition, $3.0 million of, and 200,000 options in common
shares can be earned by the Sellers if certain income levels are obtained.
21
22
STEINER LEISURE LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Description Page
Introduction to Pro Forma Combined Financial Statements 23
Unaudited Pro Forma Combined Balance Sheet as of June 30, 2001 24
Unaudited Pro Forma Combined Statement of Operations for the year ended
December 31, 2000 25
Unaudited Pro Forma Combined Statement of Operations for the six months ended
June 30, 2001 26
Notes to Unaudited Pro Forma Combined Financial Statements 27
22
23
STEINER LEISURE LIMITED AND SUBSIDIARIES
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On July 12, 2001, Steiner Leisure Limited (the "Company"), through a
wholly owned subsidiary, purchased substantially all of the assets (the
"Greenhouse Assets") of each of Birmingham Day Spa, LLC, 57th Street Day Spa,
LLC, GH Day Spas, Inc. and GH Day Spa Second Street, LLC, and substantially all
of the intellectual property owned by The Greenhouse Spa, Inc., which assets,
collectively, constitute a chain of eleven luxury day spas located at various
locations within the United States, including New York City, Beverly Hills,
Greenwich, Connecticut and Troy, Michigan (the "Acquisition").
The Company paid $24.8 million in cash and $4.3 million in Steiner
common shares for the Greenhouse Assets. In addition, $3.0 million of, and
200,000 options in, the Company's common shares can be earned by the sellers if
certain EBITDA thresholds are obtained. The transaction was financed with
working capital and a term loan and was accounted for under the provisions of
SFAS No. 141 and No. 142.
The following tables set forth certain unaudited pro forma combined
financial information for the Company after giving effect to the acquisition as
if it had been consummated, with respect to statement of operations data, at the
beginning of the period, or with respect to the balance sheet data, as of the
date presented. The tables represent the acquisition being accounted for as a
purchase. The Company's historical and quarterly financial information included
herein has been derived from its respective historical and quarterly financial
statements. The pro forma combined financial information has been prepared for
comparative purposes only and does not purport to indicate what necessarily
would have occurred had the entities merged at the beginning of the periods
presented, or what may be in the future.
23
24
STEINER LEISURE LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF JUNE 30, 2001
Pro Forma as
Adjusted
Steiner for the
Leisure GH Day Spas, Acquisition Business
Limited Inc Adjustments Acquired
------------ ------------ ------------ -------------
CURRENT ASSETS:
Cash and cash equivalents $ 24,927,000 $ 114,000 $ (6,476,000)(b) $ 26,190,000
7,625,000 (f)
Marketable securities 1,356,000 -- -- 1,356,000
Accounts receivable 5,677,000 28,000 -- 5,705,000
Accounts receivable - students, net 5,716,000 -- -- 5,716,000
Inventories 11,126,000 269,000 -- 11,395,000
Other current assets 3,036,000 92,000 -- 3,128,000
------------ ------------ ------------ -------------
Total current assets 51,838,000 503,000 1,149,000 53,490,000
------------ ------------ ------------ -------------
PROPERTY AND EQUIPMENT, net 11,405,000 11,936,000 -- 23,341,000
------------ ------------ ------------ -------------
GOODWILL, net 13,617,000 -- 18,642,000 (a) 32,259,000
------------ ------------ ------------ -------------
OTHER ASSETS:
Trademarks and product formulations, net 184,000 -- -- 184,000
License rights, net 700,000 -- -- 700,000
Advances and deposits related to acquisitions 15,174,000 -- (7,625,000)(f) 7,549,000
Other 2,332,000 805,000 2,519,000 (a) 6,174,000
733,000 (e)
(215,000)(g)
------------ ------------ ------------ -------------
Total other assets 18,390,000 805,000 (4,588,000) 14,607,000
------------ ------------ ------------ -------------
Total assets $ 95,250,000 $ 13,244,000 $ 15,203,000 $ 123,697,000
============ ============ ============ =============
CURRENT LIABILITIES:
Accounts payable $ 2,796,000 $ 1,968,000 $ (1,968,000)(a) $ 2,796,000
Accrued expenses 9,186,000 131,000 700,000 (a) 10,619,000
733,000 (e)
(131,000)(a)
Current portion of deferred tuition revenue 5,925,000 -- -- 5,925,000
Current portion of notes payable -- 406,000 (406,000) (a) --
Current portion of capital lease obligations -- 296,000 -- 296,000
Income taxes payable 1,115,000 -- -- 1,115,000
Due to shareholder -- 4,951,000 (4,951,000) (a) --
Gift certificate liability -- 3,091,000 -- 3,091,000
Other current liabilities -- 365,000 -- 365,000
------------ ------------ ------------ -------------
Total current liabilities 19,022,000 11,208,000 (6,023,000) 24,207,000
------------ ------------ ------------ -------------
LONG TERM DEFERRED TUITION REVENUE 86,000 -- -- 86,000
------------ ------------ ------------ -------------
MINORITY INTEREST 29,000 -- -- 29,000
------------ ------------ ------------ -------------
LONG TERM DEBT -- 7,200,000 18,324,000 (b) 18,324,000
(7,200,000)(a)
------------ ------------ ------------ -------------
NOTES PAYABLE RELATED PARTIES -- 5,094,000 (5,094,000)(a) --
------------ ------------ ------------ -------------
CAPITAL LEASE OBLIGATIONS -- 641,000 -- 641,000
------------ ------------ ------------ -------------
SHAREHOLDERS' EQUITY:
Common shares 166,000 1,000 (1,000)(c) 168,000
2,000 (d)
Additional paid-in capital 13,457,000 387,000 4,295,000 (d) 17,752,000
(387,000)(c)
Accumulated other comprehensive loss (872,000) -- -- (872,000)
Retained earnings 92,733,000 (11,287,000) 11,287,000 (c) 92,733,000
Treasury shares (29,371,000) -- -- (29,371,000)
------------ ------------ ------------ -------------
Total shareholders' equity 76,113,000 (10,899,000) 15,196,000 80,410,000
------------ ------------ ------------ -------------
Total liabilities and shareholders' equity $ 95,250,000 $ 13,244,000 $ 15,203,000 $ 123,697,000
============ ============ ============ =============
The accompanying notes are an integral part of these combined financial
statements.
24
25
STEINER LEISURE LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
Pro Forma as
Adjusted
Steiner for the
Leisure GH Day Acquisition Business
Limited Spas, Inc. Adjustments Acquired
------------- ------------ ------------ ------------
REVENUES:
Services $ 102,334,000 $ 9,662,000 $ -- $111,996,000
Products 59,482,000 1,159,000 -- 60,641,000
------------- ------------ ------------ ------------
Total revenues 161,816,000 10,821,000 -- 172,637,000
------------- ------------ ------------ ------------
COST OF SALES:
Cost of services 77,349,000 11,581,000 -- 88,930,000
Cost of products 44,071,000 556,000 -- 44,627,000
------------- ------------ ------------ ------------
Total cost of sales 121,420,000 12,137,000 -- 133,557,000
------------- ------------ ------------ ------------
Gross profit 40,396,000 (1,316,000) -- 39,080,000
------------- ------------ ------------ ------------
OPERATING EXPENSES:
Administrative 8,365,000 1,765,000 228,000 (h) 10,358,000
Salary and payroll taxes 7,990,000 1,592,000 -- 9,582,000
Goodwill amortization 651,000 -- -- 651,000
------------- ------------ ------------ ------------
Total operating expenses 17,006,000 3,357,000 228,000 20,591,000
------------- ------------ ------------ ------------
Income from operations 23,390,000 (4,673,000) (228,000) 18,489,000
------------- ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest income 1,667,000 -- -- 1,667,000
Interest expense (2,000) (326,000) (1,576,000)(i) (1,578,000)
283,000 (k)
43,000 (l)
------------- ------------ ------------ ------------
Total other income (expense) 1,665,000 (326,000) (1,250,000) 89,000
------------- ------------ ------------ ------------
Income before provision for income taxes
and minority interest 25,055,000 (4,999,000) (1,478,000) 18,578,000
PROVISION FOR INCOME TAXES 1,289,000 -- -- 1,289,000
------------- ------------ ------------ ------------
Income before minority interest 23,766,000 (4,999,000) (1,478,000) 17,289,000
MINORITY INTEREST (20,000) -- -- (20,000)
------------- ------------ ------------ ------------
Net Income $ 23,746,000 $ (4,999,000) $ (1,478,000) $ 17,269,000
============= ============ ============ ============
EARNINGS PER COMMON SHARE:
Basic $ 1.55 $ 1.11
============= ============
Diluted $ 1.50 $ 1.08
============= ============
WEIGHTED AVERAGE SHARES:
Basic 15,337,000 170,000 (j) 15,507,000
============= ============ ============
Diluted 15,802,000 170,000 (j) 15,972,000
============= ============ ============
The accompanying notes are an integral part of these combined financial
statements.
25
26
STEINER LEISURE LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
Pro Forma
as Adjusted
Steiner for the
Leisure GH Day Acquisition Business
Limited Spas, Inc. Adjustments Acquired
------------ ----------- ------------ ------------
REVENUES:
Services $ 53,040,000 $ 5,412,000 $ -- $ 58,452,000
Products 30,477,000 892,000 -- 31,369,000
------------ ----------- ------------ ------------
Total revenues 83,517,000 6,304,000 -- 89,821,000
------------ ----------- ------------ ------------
COST OF SALES:
Cost of services 40,269,000 7,407,000 -- 47,676,000
Cost of products 22,770,000 1,159,000 -- 23,929,000
------------ ----------- ------------ ------------
Total cost of sales 63,039,000 8,566,000 -- 71,605,000
------------ ----------- ------------ ------------
Gross profit 20,478,000 (2,262,000) -- 18,216,000
------------ ----------- ------------ ------------
OPERATING EXPENSES:
Administrative 4,315,000 453,000 114,000 (h) 4,882,000
Salary and payroll taxes 4,264,000 1,069,000 -- 5,333,000
Goodwill amortization 370,000 -- -- 370,000
------------ ----------- ------------ ------------
Total operating expenses 8,949,000 1,522,000 114,000 10,585,000
------------ ----------- ------------ ------------
Income from operations 11,529,000 (3,784,000) (114,000) 7,631,000
------------ ----------- ------------ ------------
OTHER INCOME (EXPENSE):
Interest income 972,000 -- -- 972,000
Interest expense (6,000) (517,000) (833,000)(i) (887,000)
340,000 (k)
129,000 (l)
------------ ----------- ------------ ------------
Total other income (expense) 966,000 (517,000) (364,000) 85,000
------------ ----------- ------------ ------------
Income before provision for income taxes
and minority interest 12,495,000 (4,301,000) (478,000) 7,716,000
PROVISION FOR INCOME TAXES 573,000 -- -- 573,000
------------ ----------- ------------ ------------
Income before minority interest 11,922,000 (4,301,000) (478,000) 7,143,000
MINORITY INTEREST (8,000) -- -- (8,000)
------------ ----------- ------------ ------------
Net Income $ 11,914,000 $(4,301,000) $ (478,000) $ 7,135,000
============ =========== ============ ============
EARNINGS PER COMMON SHARE:
Basic $ 0.81 $ 0.48
============ ============
Diluted $ 0.78 $ 0.46
============ ============
WEIGHTED AVERAGE SHARES:
Basic 14,763,000 170,000 (j) 14,933,000
============ ============ ============
Diluted 15,241,000 170,000 (j) 15,411,000
============ ============ ============
The accompanying notes are an integral part of these combined financial
statements.
26
27
STEINER LEISURE LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
BALANCE SHEET:
(a) To record goodwill and other intangible assets based on an independent
appraisal, calculated as follows:
Consideration paid:
Cash $ 24,800,000
Common stock, at fair value 4,297,000
Acquisition costs 700,000
------------
Total consideration paid 29,797,000
Net identifiable assets acquired:
Net assets of GH Day Spas, Inc. at June 30, 2001 8,636,000
Identifiable intangible assets based on
an independent appraisal:
Covenant Not to Compete 250,000
Customer List 464,000
Location/Leases 440,000
Trade names, Licenses, Logos 1,365,000
---------
Total identifiable intangible assets 2,519,000
Net identifiable assets acquired 11,155,000
------------
Goodwill $ 18,642,000
============
Includes the elimination of liabilities not assumed by the Company in the
amount of $19,535,000.
(b) To reflect cash paid and debt financing to fund the acquisition.
(c) To eliminate the shareholders' deficit of GH Day Spas, Inc.
(d) To record 170,000 shares issued in conjunction with the merger at fair
value.
(e) To record deferred financing fees.
(f) To reflect advances to a shareholder of GH Day Spas, Inc.
(g) To eliminate deferred debt costs associated with debt not assumed in
connection with the acquisition.
STATEMENT OF OPERATIONS:
(h) To record intangible asset amortization as follows: Life value full year six months
----------------------------------------------------------
Covenant Not To Compete 5 $ 250,000 $ 50,000 $ 25,000
Customer List 7 464,000 66,000 33,000
Location/Leases 10 440,000 44,000 22,000
Trade names, Licenses, Logos 20 1,365,000 68,000 34,000
----------------------------------------
$ 2,519,000 $ 228,000 $ 114,000
========================================
(i) To record interest expense and amortization of deferred financing fees.
(j) To reflect shares issued in conjunction with the merger.
(k) To reduce interest expense related to debt not assumed in connection with
the acquisition.
(l) To reduce amortization of deferred debt costs associated with
debt repaid in connection with the acquisition.
27
28
(c) EXHIBITS.
2.1 Asset Purchase Agreement, dated April 30, 2001, by
and among Greenhouse Day Spa Group, Inc. Birmingham
Day Spa, LLC, 57th Street Day Spa, LLC, GH Day Spas,
Inc., GH Day Spa Second Street, LLC, TGH, LLC, The
Greenhouse Spa, Inc., The Stuart Michael Katzoff
Trust u/d/t dated October 9, 1990, Gerald Katzoff,
Lydia Katzoff and Stuart Katzoff. The Exhibits and
Disclosure Schedules have been omitted for purposes
of this filing. (Previously filed with the Company's
Current Report on Form 8-K filed July 27, 2001 and
incorporated herein by reference)
2.2 Amendment No. 1, dated June 1, 2001, to the Asset
Purchase Agreement, dated April 30, 2001, by and
among Greenhouse Day Spa Group, Inc., Birmingham Day
Spa, LLC, 57th Street Day Spa, LLC, GH Day Spas,
Inc., GH Day Spa Second Street, LLC, TGH, LLC, The
Greenhouse Spa, Inc., The Stuart Michael Katzoff
Trust u/d/t dated October 9, 1990, Gerald Katzoff,
Lydia Katzoff and Stuart Katzoff. The Exhibits have
been omitted for purposes of this filing. (Previously
filed with the Company's Current Report on Form 8-K
filed July 27, 2001 and incorporated herein by
reference).
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants of GH Day Spas, Inc.
99.1 The press release of Steiner, dated April 30, 2001,
announcing agreement to acquire the Greenhouse
Assets. (Previously filed with the Company's Current
Report on Form 8-K filed July 27, 2001 and
incorporated herein by reference)
* Filed herewith.
28
29
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STEINER LEISURE LIMITED
By: /s/ Carl S. St. Philip, Jr.
-----------------------------------
Carl S. St. Philip, Jr., Vice President
and Chief Financial Officer
September 25, 2001
29
30
EXHIBIT INDEX
EXHIBIT
NO DESCRIPTION
2.1 Asset Purchase Agreement, dated April 30, 2001, by and among
Greenhouse Day Spa Group, Inc. Birmingham Day Spa, LLC, 57th
Street Day Spa, LLC, GH Day Spas, Inc., GH Day Spa Second
Street, LLC, TGH, LLC, The Greenhouse Spa, Inc., The Stuart
Michael Katzoff Trust u/d/t dated October 9, 1990, Gerald
Katzoff, Lydia Katzoff and Stuart Katzoff. The Exhibits and
Disclosure Schedules have been omitted for purposes of this
filing. (Previously filed with the Company's Current Report on
Form 8-K filed July 27, 2001 and incorporated herein by
reference)
2.2 Amendment No. 1, dated June 1, 2001, to the Asset Purchase
Agreement, dated April 30, 2001, by and among Greenhouse Day
Spa Group, Inc., Birmingham Day Spa, LLC, 57th Street Day Spa,
LLC, GH Day Spas, Inc., GH Day Spa Second Street, LLC, TGH,
LLC, The Greenhouse Spa, Inc., The Stuart Michael Katzoff
Trust u/d/t dated October 9, 1990, Gerald Katzoff, Lydia
Katzoff and Stuart Katzoff. The Exhibits have been omitted for
purposes of this filing. (Previously filed with the Company's
Current Report on Form 8-K filed July 27, 2001 and
incorporated herein by reference).
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants
of GH Day Spas, Inc.
99.1 The press release of Steiner, dated April 30, 2001, announcing
agreement to acquire the Greenhouse Assets. (Previously filed
with the Company's Current Report on Form 8-K filed July 27,
2001 and incorporated herein by reference)
* Filed herewith
30