As filed with the Securities and Exchange Commission on July 9, 2002
Registration No. 333-76436
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO 6
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
STEINER LEISURE LIMITED
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Suite 104A
SAFFREY SQUARE
NASSAU, THE BAHAMAS
COMMONWEALTH OF THE BAHAMAS (242) 356-0006 98-0164731
- ------------------------------- ---------------------------------------------- --------------------------------------
(State or other jurisdiction (Address, including zip code, and (I.R.S. Employer Identification No.)
of incorporation or telephone number, including area code,
organization) of registrant's principal executive offices)
LEONARD I. FLUXMAN
C/O STEINER MANAGEMENT SERVICES, LLC
770 SOUTH DIXIE HIGHWAY, SUITE 200
CORAL GABLES, FL 33146
(305) 358-9002
----------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications to:
BRUCE JORDAN, ESQ. ROBERT C. BOEHM, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL AKERMAN, SENTERFITT & EIDSON, P.A.
C/O STEINER MANAGEMENT SERVICES, LLC ONE S.E. THIRD AVENUE, 28TH FLOOR
770 SOUTH DIXIE HIGHWAY, SUITE 200 MIAMI, FLORIDA 33131-1714
CORAL GABLES, FL 33146 PHONE: (305) 374-5600
(305) 358-9002 FAX: (305) 374-5095
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]______________________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]______________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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SUBJECT TO COMPLETION DATED JULY 9, 2002
PROSPECTUS
400,626 SHARES
STEINER LEISURE LIMITED
COMMON SHARES
----------------------------
STEINER LEISURE LIMITED IS A WORLDWIDE PROVIDER OF SPA SERVICES. WE ALSO OFFER
PREMIUM PRICED SKIN CARE AND OTHER BEAUTY PRODUCTS TO CUSTOMERS AT OUR
FACILITIES AND AT OTHER SPAS.
The selling shareholders identified in the table on page 30 of this
prospectus are offering all of the shares. We will not receive any proceeds from
the sale of the shares.
Our common shares trade on the Nasdaq National Market under the symbol
"STNR." On July __, 2002, the closing sale price of our common shares on Nasdaq
was $XX.00 per share.
----------------------
INVESTING IN OUR COMMON SHARES INVOLVES RISKS WHICH WE DESCRIBE IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is __________, 2002
TABLE OF CONTENTS
Cautionary Statement Regarding Forward-Looking Statements................. 1
Where you can find more Information....................................... 3
Certain Information about this Prospectus................................. 3
The Company............................................................... 4
Risk Factors.............................................................. 4
Our Business.............................................................. 15
Use of Proceeds........................................................... 28
Selling Shareholders...................................................... 28
Plan of Distribution...................................................... 29
Legal Matters............................................................. 30
Experts................................................................... 30
Unaudited Pro Forma Combined Financial Statements......................... F-1
You should rely only on the information contained in and incorporated
by reference into this prospectus. We have not authorized any other person to
provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. This
prospectus does not constitute an offer by any of the selling shareholders to
sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in and incorporated
by reference into this prospectus is accurate only as of the date on the front
cover of this prospectus. Our business, financial condition, results of
operations and prospects may have change since that date.
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
From time to time, including in this prospectus and in the documents
incorporated into this prospectus by reference, Steiner Leisure may publish
"forward-looking" statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements reflect our current views about
future events and are subject to known and unknown risks, uncertainties and
other factors which may cause our actual results to differ materially from those
expressed or implied by such forward-looking statements.
Such forward-looking statements include statements regarding:
o our proposed activities pursuant to agreements with cruise lines or
land-based operators;
o our future land-based activities;
o scheduled introductions of new ships by cruise lines;
o our ability to generate sufficient cash flow from operations;
o the extent of the taxability of our income;
o the affects of acquisitions and new projects;
o our market sensitive financial instruments; and
o our future financial results.
Factors that could cause actual results to differ materially from those
expressed or implied by our forward-looking statements include the following:
o our dependence on cruise line concession agreements of specified terms
that are, in some cases, terminable by cruise lines with limited or no
advance notice under certain circumstances;
o our dependence on the cruise industry and the resort industry and our
being subject to the risks of those industries, including operation of
facilities in countries with histories of economic and/or political
instability;
o economic downturns that could reduce the number of customers on cruise
ships and at resorts and that could otherwise reduce consumer demand
for our products and services and the continuing effect on the economy
in general and the travel and leisure segment in particular of the
events of September 11, 2001;
o our dependence on a limited number of cruise companies;
o our obligation to make minimum payments to certain cruise lines and,
possibly, to lessors of land-based spas that we may operate in the
future, irrespective of the revenues received by us from customers;
o increase in payments accompanying renewals of, or new cruise line
agreements and land-based spa agreements;
o our dependence on the continued viability of the cruise lines we serve
and the resorts where we operate our land-based spas;
o delays in new ship introductions;
o our dependence for success on our ability to recruit and retain
qualified personnel;
1
o our dependence on a single product manufacturer;
o changes in the taxation of our Bahamas subsidiaries and increased
amounts of our income being subject to taxation;
o changing competitive conditions, including increased competition from
providers of shipboard spa services;
o our limited experience in land-based operations including with respect
to the integration of acquired businesses;
o uncertainties beyond our control that could effect our ability to
timely and cost-effectively construct land-based spa facilities;
o changes in laws and government regulations applicable to us and the
cruise industry;
o product liability or other claims against us by customers of our
products or services;
o restrictions on us as
o a result of our credit facility;
o our possible need to seek additional financing;
o our owning less than 100% of the Mandara companies; and
o possible delays in financing resulting from our use of Arthur Andersen
to audit our financial statements.
You should read carefully the risk factors included in this prospectus
and in any document incorporated by reference into this prospectus. We assume no
duty to update any forward-looking statements contained in this prospectus or in
any document incorporated by reference into this prospectus.
2
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
You may read, at no charge, and copy, at prescribed rates, any of the
information we file with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the Public Reference Room.
We file information electronically with the SEC. Our SEC filings also
are available from the SEC's Internet site at www.sec.gov, which contains
reports, proxy and information statements, and other information regarding
issuers that file electronically.
CERTAIN INFORMATION ABOUT THIS PROSPECTUS
We have filed a registration statement on Form S-3 with the SEC
covering the common shares being offered by means of this prospectus. As
permitted by SEC rules, this prospectus omits certain information that is
included in the registration statement. For further information about us and our
common shares, you should refer to our registration statement and its exhibits.
This prospectus summarizes material provisions of contracts and other
documents. Since the prospectus may not contain all the information that you may
find important, you should review the full text of those documents.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document we have filed separately with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, and information that we may later file with the SEC will
automatically update and supersede the information in this prospectus. This
prospectus incorporates by reference the documents set forth below that we have
previously filed with the SEC under the Exchange Act, and any future filings we
make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
until the offering of securities covered by this prospectus is completed. These
documents contain important information about us and our financial condition.
o Our Annual Report on Form 10-K/A for the year ended December 31,
2001.
o Our Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2002.
o Our Current Reports on Form 8-K filed on July 18, 2001, July 27,
2001, September 17, 2001, September 25, 2001, March 26, 2002 and
June 6, 2002.
o The description of our common shares contained in our registration
statement on Form 8-A filed with the SEC under Section 12 of the
Exchange Act, including any amendments or reports filed for the
purpose of updating the description.
We will provide a copy of the information we incorporate by reference,
at no cost, to each person, including any beneficial owner of our common shares,
to whom this prospectus is delivered. To request a copy of any or all of this
information, you should contact us at the following address and telephone
number:
Carl St. Philip, Jr.
Corporate Secretary
Steiner Leisure Limited
c/o Steiner Management Services, LLC
770 South Dixie Highway
Coral Gables, Florida 33146
Telephone: (305) 358-9002
3
THE COMPANY
Steiner Leisure Limited (including its subsidiaries and predecessors,
"Steiner Leisure," "we," "us," or "our") is a worldwide provider of spa
services. At our facilities, we strive to create a relaxing and therapeutic
environment where customers can receive facial and body treatments of the
highest quality. Steiner Leisure also develops and markets premium quality
beauty products which are sold at our facilities and third party retail outlets.
Our cruise line and land-based resort customers include Carnival Cruise Line,
Celebrity Cruises, Disney Cruises, Hilton, Holland America Line, Marriott,
Norwegian Cruise Line, Park Place Entertainment, Princess Cruises, Royal
Caribbean Cruise Line and Sun International. As of March 1, 2002, we served 104
cruise ships representing 23 cruise lines, and operated 50 resort spas and 19
day spas. Our maritime services are provided under agreements with cruise lines
with terms which range in duration from one to six years. Our land-based
services are provided under leases with resort operators and other lessors and
have terms ranging from five to 15 years. Our principal executive office is
located at Suite 104A, Saffrey Square, Nassau, The Bahamas, and our telephone
number there is (242) 356-0006. Our administrative offices are located in
Steiner Management Services, LLC's offices at 770 South Dixie Highway, Coral
Gables, FL 33146. The telephone number there is (305) 358-9002. Our website can
be found at www.steinerleisure.com.
RISK FACTORS
WE DEPEND ON OUR AGREEMENTS WITH CRUISE LINES AND RESORTS, IF THESE AGREEMENTS
TERMINATE, OUR BUSINESS WOULD BE HARMED
Our revenues are generated principally on cruise ships. Under our
agreements with cruise lines, we provide services and products paid for by
cruise passengers. The cruise line agreements have specific terms, ranging from
one to six years with an average remaining term per ship, as of March 1, 2002,
of approximately three years. As of that date, cruise line agreements that
expire within one year, covered 12 of the 104 ships served by us. These 12 ships
accounted for approximately 6.2% of our 2001 revenues. We cannot assure you that
any of these agreements will be renewed after their expiration date or that any
renewal will be on similar terms.
Also, we cannot assure you that upon renewal, these agreements will not cause
reductions in our margins. These agreements provide for termination by the
cruise lines with limited or no advance notice under certain circumstances,
including, among other things, failure of a cruise line to meet a specified
passenger occupancy rate, the withdrawal of a vessel from the cruise trade, the
sale or lease of a vessel or our failure to achieve specified passenger service
standards. As of March 1, 2002, an agreement for two ships provided for
termination for any reason by the cruise line on six months' notice, agreements
for three ships provided for termination for any reason by the cruise line on 90
days' notice and we are operating on two ships without a written agreement.
These seven ships accounted for 5.4% of our revenues for 2001. Our cruise line
agreements may, therefore, be terminated prior to their specified termination
dates. Termination of significant cruise lines agreements, or a series of other
cruise line agreements, either upon completion of its term or prior thereto,
could have a material adverse effect on our business, results of operations and,
financial condition. Some of our land-based agreements also provide for
termination with limited advance notice under certain circumstances, including a
failure to meet specified performance standards. In addition, negotiations with
cruise lines or land-based spa lessors may result in agreements which may not be
as beneficial to us as anticipated, or non-renewals of agreements.
WE DEPEND ON THE CRUISE INDUSTRY AND THEIR RISKS ARE RISKS TO US
Our revenues are generated principally from cruise ship passengers.
Therefore, the ability of the cruise industry to attract passengers is critical
to our results of operations and financial condition. According to Cruise Lines
Industry Association, the passenger volume of cruises marketed primarily to
North American consumers increased from approximately 2.2 million passengers in
1985 to approximately 6.9 million in 2001. However, the cruise industry may not
continue to grow or may decrease in size in the future. A decrease in passenger
volume could have a material adverse effect on our business, results of
operations and financial condition.
The cruise industry is subject to significant risks that could effect
our results of operations. Accidents and other incidents involving cruise ships,
environmental violations by cruise lines, restricted access to cruise ships to
environmentally sensitive regions and possible increases in fuel costs could
materially adversely offset the cruise industry. In addition, industry analysts
have expressed concern regarding potential over-capacity of ships operated by
the cruise lines. Such over-capacity could adversely effect the cruise industry.
4
The cruise lines operate in waters and call on ports throughout the
world, including geographic regions that from time to time experience political
and civil unrest and armed hostilities. Historically, such events have adversely
effected demand for cruise vacations. Severe weather conditions, both at sea and
at ports of embarkation, publicized operational difficulties or outbreaks of
disease on cruise ships also could adversely effect the cruise industry. The
cruise industry also relies to a significant extent on airlines to transport
passengers to ports of embarkation. Terrorist attacks, such as those of
September 11, may cause prospective travelers to cancel their plans, including
plans for cruise vacations. In addition, any strikes or other disruptions of
airline service, including of the type that followed the terrorist attacks of
September 11, 2001, could adversely effect the ability of cruise passengers to
reach their ports of embarkation.
Cruise lines compete for consumer disposable leisure time dollars with
other vacation alternatives such as land-based resort hotels and sightseeing
vacations. In addition, public demand for vacation activities is influenced by
general economic conditions. A majority of cruise passengers we serve reside in
North America. Periods of general economic recession, particularly in North
America, could have a material adverse effect on the cruise industry and could
also have a material adverse effect on our business, results of operations and
financial condition.
THE AFTERMATH OF THE SEPTEMBER 11, 2001 ATTACKS MAY ADVERSELY IMPACT OUR
FINANCIAL RESULTS AND GROWTH
Both the Company and the leisure industry in general have been
adversely affected in the aftermath of the September 11 terrorist attacks on New
York and Washington. Domestic and international leisure travel and resort
occupancy, which already had been adversely affected by the recent economic
downturn in the United States and internationally, have decreased further and
are likely to remain depressed over the near term as potential travelers reduce
or avoid discretionary air and other travel in light of the increased safety
concerns and anticipated travel delays. The attacks also have decreased consumer
confidence, and a resulting further decline in the U.S. and global economies
could further reduce travel. At present, it is not possible to predict either
the severity or duration of such declines, but weaker cruise industry and resort
hotel performance could have a material adverse effect on our business, results
of operations and financial condition.
WE DEPEND ON CERTAIN CRUISE COMPANIES, AND THE LOSS OF ONE OR TWO SIGNIFICANT
CRUISE LINE CUSTOMERS COULD HARM US
As a result of the consolidation of the cruise industry, the number of
independent cruise companies has decreased in the past few years. In the second
half of 2000, Premier and Commodore Cruise Lines ceased to operate. In September
2001, Renaissance Cruise Line ceased its operations. Industry analysts believe
that further consolidation of the cruise industry may occur. As a result of
industry consolidation, a small number of cruise companies, all of whom
currently are our customers, dominate the cruise industry. Revenues from
passengers of each of the following cruise companies accounted for more than ten
percent of our revenues in 2001: Carnival (including Costa, Holland America,
Seabourn, Windstar and Cunard) - 26.7%; Royal Caribbean (including Celebrity) -
25.5% and P&O Princess (including Princess and P&O European Ferries) - 11.0%.
Each of Royal Caribbean and Carnival is also seeking to acquire Princess/P&L.
These companies also accounted for 74 of the 104 ships served by us as of March
1, 2002. If we cease to serve one of these cruise companies, or a substantial
number of ships operated by a cruise company, it could materially adversely
affect our business, results of operations and financial condition.
WE ARE REQUIRED TO MAKE MINIMUM PAYMENTS UNDER OUR AGREEMENTS AND FACE
INCREASING PAYMENTS TO CRUISE LINES AND RESORT OPERATORS
Steiner Leisure is obligated to make minimum payments to certain cruise
lines and resort operators regardless of the amount of revenues we receive from
customers. We may also be required to make such minimum annual payments under
any future cruise line or land-based spa agreements we enter into with resort
owners or others. Accordingly, we could be obligated to pay more than the amount
collected from customers or might not receive revenues sufficient to cover our
costs. As of December 31, 2001, these payments are required by cruise line
agreements covering a total of 35 ships served by us and three additional ships
not yet in service. As of December 31, 2001 Steiner Leisure will have guaranteed
total minimum payments to cruise lines (excluding payments based on minimum
passenger per diems applicable to certain ships served by us) of approximately:
$24.4 million in 2002, $27.2 million in 2003, $29.4 million in 2004 and $26.3
million in 2005. These amounts could increase under new, or renewed agreements.
5
Some of the minimum annual payments are calculated based upon minimum
passenger per diems for passengers actually embarked on each cruise of the
respective vessel. These payments could significantly increase the minimum
payments above.
In general, Steiner Leisure has experienced increases in these
payments, as a percentage of revenues, upon renewing, or entering into new
agreements with cruise lines.
As of December 31, 2001 Steiner Leisure will have guaranteed total
minimum payments to resorts of approximately: $2.1 million in 2002, $2.1 million
in 2003, $2.1 million in 2004, $2.0 million in 2005, $1.8 million in 2006 and
$9.7 million thereafter. These amounts could increase under new, or renewed
agreements.
WE DEPEND ON THE CONTINUED VIABILITY OF THE SHIPS AND RESORTS WE SERVE
Our revenues from shipboard customers and customers at land-based
resorts we serve can only be generated if the ships and resorts in question
continue to operate. In addition to the cessation of operations in 2000 and 2001
of Premier, Commodore and Renaissance Cruise Lines, the Aladdin Resort and
Casino, where we began operating a luxury spa in December 2001, filed for
protection under the federal bankruptcy laws. Renaissance Cruises accounted for
approximately 2.7% of our revenues in 2001. The Aladdin Resort continues to
operate and we have taken legal steps to protect our interest as the proposed
operator of the spa at that resort. We cannot assure you, however, as to the
continued viability of the Aladdin Resort and Casino (including our ability to
protect our substantial investment in our build-out there) or of any of the
other cruise lines or resorts that we serve. To the extent that cruise lines or
resorts that we serve, or could potentially serve in the future, cease to
operate, our business, results of operations and financial condition could be
materially, adversely affected.
DELAYS IN NEW SHIP INTRODUCTIONS COULD HARM US
Our growth depends, in part, on our serving new cruise ships brought
into service. A number of cruise lines we serve have experienced in the past,
and continue to experience, delays in bringing new ships into service. Such
delays, if they occur with respect to ships in any year, could have a material,
adverse affect on our business, results of operations and financial condition.
WE DEPEND ON OUR KEY OFFICERS AND QUALIFIED SHIPBOARD EMPLOYEES
Our continued success depends to a significant extent on our senior
executive officers, including Clive E. Warshaw, Chairman of the Board, Leonard
I. Fluxman, President and Chief Executive Officer, and Glenn J. Fusfield, Chief
Operating Officer. In addition, as a result of our limited experience with
land-based spa operations, the success of our resort spas and day spas depends
to a significant extent on the senior officers who run those operations. The
loss of services of any of these persons or other key management personnel could
have a material adverse effect on our business. Steiner Leisure has employment
agreements with Mr. Warshaw, Mr. Fluxman and Mr. Fusfield and has taken out key
person life insurance policies on Mr. Warshaw and Mr. Fluxman, but not yet for
Mr. Fusfield. We also have employment agreements with the senior officers of our
land-based spa operations. Our continued success is also dependent on our
ability to recruit and retain personnel qualified to perform our shipboard and
land-based facilities. Shipboard employees typically are employed pursuant to
agreements with terms of eight months; land-based spa employees' agreements are
for terms of one year. Other providers of shipboard spa services have been
competing with us for shipboard personnel. We also compete with spas and other
employers for land-based personnel. We cannot guarantee that we will be able to
continue to attract a sufficient number of applicants possessing the requisite
skills necessary for our business. If we are unable to attract a sufficient
number of qualified applicants, our business, results of operations and
financial condition could be materially, adversely affected.
WE DEPEND ON A SINGLE PRODUCT MANUFACTURER
Almost all of the ingredients and other materials for our "Elemis(R)"
and "La Therapi(R)" beauty products are produced by a single manufacturer,
pursuant to an agreement that terminates in December 2003. If this manufacturer
ceased producing these ingredients and other materials for our products, the
transition to other manufacturers could result in significant production delays.
Any significant delay or disruption in the supply of our products could have a
material adverse effect on our product sales.
6
POSSIBLE ADVERSE CHANGES IN THE TAXATION OF STEINER LEISURE
BACKGROUND
o Steiner Leisure is a Bahamas international business company ("IBC")
that, directly or indirectly, owns:
o Steiner Transocean Limited, our principal subsidiary and a Bahamas
IBC that conducts our shipboard operations;
o Steiner Management Services LLC, a Florida limited liability company
that performs administrative services in connection with our
operations in exchange for fees from Steiner Transocean and other
subsidiaries ("Management Services");
o Greenhouse Day Spa Group, Inc., a Florida corporation that operates
our Greenhouse Day Spa operations;
o Steiner Spa Limited, a Bahamas company that owns our majority
interest in Mandara Spas LLC, a Delaware limited liability company
that operates Mandara resort spas in the United States, the Pacific
and the Caribbean;
o Steiner Spa Asia Limited, a Bahamas company that owns our majority
interest in Mandara Spa Asia Limited, a British Virgin Islands
company that operates Mandara resort spas in Asia.
o Steiner Day Spas, Inc., a California corporation that operates our
C-Spa day spa operations;
o Steiner Beauty Products, Inc., a Florida corporation that retails
and distributes beauty and hair care products;
o Steiner Spa Resorts (Nevada), Inc., a Florida corporation that
operates our spa at the Aladdin Resort in Las Vegas, Nevada;
o Steiner Spa Resorts (Connecticut), Inc., a Florida corporation
involved in the build-out (and expected to be involved in the
operations) of our spa at the Mohegan Resort in Uncasville,
Connecticut;
o Cosmetics Limited, a Bahamas company that owns the rights to, and
distributes our "Elemis" and "La Therapie" products;
o FCNH, Inc., a Florida corporation through which we operate our
massage therapy Florida schools;
o Mid-Atlantic Massage Therapy, Inc., a Florida corporation through
which we operate our massage therapy schools in Maryland and
Pennsylvania; and
o Virginia Massage Therapy Inc., a Florida corporation through which
we operate our massage therapy school in Virginia.
Steiner Leisure also owns all, or almost all, of the shares of
additional United States, Bahamas, United Kingdom and other subsidiaries through
which we conduct our business.
Steiner Leisure and its Bahamas IBC subsidiaries are not subject to
Bahamas or other tax, except as set forth below. Steiner Leisure's United States
subsidiaries are subject to U.S. income tax as a consolidated group at regular
corporate rates up to 35%. Steiner Leisure believes that none of its other
income will be effectively connected with our deemed conduct of business in the
United States and, accordingly, that our remaining income will not be subject to
United States federal income tax.
Steiner Transocean is a Bahamas IBC and is not subject to Bahamas tax.
As discussed above, a foreign corporation generally is subject to United States
federal corporate income tax at a rate of up to 35% on its United States-source
income and on certain of its foreign-source income that is effectively
connected
7
to a business it conducts in the United States. We believe that Steiner
Transocean's income will be foreign-source income, none of which will be
effectively connected to a business it conducts in the United States. This
belief is based on the following factors:
o all of Steiner Transocean's shipboard spa and salon services being
performed outside the United States and its possessions and their
respective territorial waters;
o passage of title and transfer of ownership of all beauty products
sold by Steiner Transocean taking place outside the United States;
and
o the activities performed on behalf of Steiner Transocean in the
United States not being a material factor in generating income for
Steiner Transocean.
THE RISKS TO US
However, a portion of Steiner Transocean's income could be subject to United
States federal income tax:
o to the extent the first two activities described above were
considered by the United States Internal Revenue Service to occur in
the United States, its possessions or territorial waters;
o if regulation or legislation is enacted that changes the way the IRS
views the taxability of our operations; or
o if the activities performed on behalf of Steiner Transocean in the
United States were considered to be a material factor in generating
Steiner Transocean's income.
In that event, Steiner Transocean would be subject to U.S. federal
income tax at a rate of up to 35%. If Steiner Transocean is subject to United
States federal income tax at a rate of up to 35% on its United States source
income and on certain of its foreign-source income that is effectively connected
to a business it conducts in the United States, it would also be subject to a
branch tax of 30% imposed on its after-tax earnings subject to United States
federal income tax that are withdrawn or considered to be withdrawn from its
United States business.
Management Services receives payments from Steiner Transocean in return
for certain administrative services it provides to Steiner Transocean. The IRS
may assert that transactions between Management Services and Steiner Transocean
(and between our other direct and indirect subsidiaries) do not contain arms'
length terms. In that event, income or deductions could be reallocated among the
subsidiaries in a manner that could increase the taxable income of Steiner
Management Services. This reallocation also could result in the imposition of
interest and penalties. Management Services and Steiner Beauty also may be
subject to additional U.S. state and local income, franchise and other taxes.
Our United Kingdom subsidiaries provide goods and services to Steiner
Transocean and Cosmetics Limited. The United Kingdom Inland Revenue authorities
may assert that these transactions do not contain arms' length terms. In that
event, income or deductions could be reallocated among the subsidiaries in a
manner that could increase the U.K. tax on us. This reallocation also could
result in the imposition of interest and penalties.
In January 2001, the IRS proposed regulations that, if adopted, could
possibly subject a portion of our shipboard income to U.S. federal income tax.
In 2001, Steiner Leisure paid tax at an aggregate rate of 4.2% on its
income. Our recent acquisitions of the Greenhouse, Mandara and C-Spa land-based
spas, as well as our proposed operations at the Aladdin Resort and Casino and
the Mohegan Sun Resort will, in total, significantly increase the amount of our
non-shipboard income. This could result in a significant increase in the amount
of our income that is subject to taxation. In addition, such amount of income
subject to tax will increase to the extent we increase the size land-based
income relative to our shipboard income. We cannot assure you that the tax laws
that we have relied on to minimize our income taxes will remain unchanged in the
future.
8
WE FACE COMPETITION ON SHIPS AND ON LAND
We compete with passenger activity alternatives on cruise ships and
with competing providers of services and products similar to ours seeking
agreements with cruise lines. Gambling casinos, bars and a variety of shops are
found on almost all of the ships served by us. In addition, ships dock in ports
which provide opportunities for additional shopping as well as other activities
that compete with us for passenger attention and dollars. Cruise ships also
typically offer swimming pools and other recreational facilities and activities,
as well as musical and other entertainment, all without additional charge to the
passengers. A few cruise lines currently perform the shipboard services
performed by us with their own personnel, and one or more additional cruise
lines could elect to perform these services themselves. In addition, there are
several other entities offering services in the cruise industry similar to these
provided by us, including Harding Brothers and other providers.
Many of the resorts we serve, as well as any resorts that we may serve
in the future, offer recreational entertainment facilities and activities, often
without additional charge to guests, similar to those offered on cruise ships.
Our day spas compete with other day spa chains and individual day spas which
have operations in the vicinities of our day spas, as well as with other beauty,
relaxation or other therapeutic alternatives that compete for consumer dollars.
These include, with respect to hair and manicure and pedicure services, large,
well-known national chains and independently owned salons that offer these
services at prices significantly lower than those charged by us. We believe,
however, that the prices charged by us are appropriate for the quality of the
experience we provide to our customers. In addition, Steiner Leisure is very new
to the land-based spa industry and, although we have acquired land-based
operations that we believe offer good name recognition and reputation our spas
compete with spas and beauty salons owned or operated by companies that have
been offering land-based spa services longer than we have and which may enjoy
greater name recognition, with consumers and prospective consumers of land-based
spas operated by us.
The post-secondary education market is highly competitive. Our massage
therapy schools compete with providers of similar instruction in the states in
which they are located and elsewhere in the United States, including many
providers with greater resources than ours. Our schools face competition from,
among others, traditional public and private two-year and four-year colleges and
universities and other proprietary schools, including those that offer distance
learning programs. Some public institutions are able to charge lower tuition
than our schools, due in part to government subsidies, government and foundation
grants, tax deductible contributions and other financial sources not available
to proprietary schools such as ours.
Our land-based product sales compete with a variety of other brands,
including those of manufacturers with greater resources than ours, and those
with greater name recognition than our products, including large entities with
greater resources than ours.
OUR LAND--BASED OPERATIONS FACE ADDITIONAL RISKS
WE HAVE LIMITED EXPERIENCE IN LAND-BASED OPERATIONS
In July 2001, we made a series of acquisitions which resulted in our being the
operators of the Greenhouse, Mandara and C-Spa land-based spas. In 1999 and
2000, we acquired three massage therapy schools, with nine campuses located in
Florida and several mid-Atlantic states. As a result of these acquisitions and
other recent land-based activities, a growing portion of our business is now
represented by land-based operations. In the future, we may decide to grow our
business through other land-based acquisitions that we deem appropriate. Prior
to the acquisitions described above, our business almost entirely consisted of
providing spa services and products on cruise ships and we had only limited
experience with respect to land-based operations. Accordingly, there is a risk
that we will not be able to duplicate any success we have had with shipboard
customers with land-based customers.
9
In order to successfully conduct our land-based businesses, we will be
required to effectively and efficiently integrate the businesses we have
acquired. If we are unable to successfully integrate our new
businessesland-based spa operations, or any other land-based operations we may
acquire in the future, then, among other things, we could determine to dispose
of, or otherwise cease to operate one or more of the facilities constituting
those land-based operations. In that event, our business and financial results
could be materially, adversely affected.
The success of our land-based business also depends on our ability to
hire and retain the services of qualified personnel . We cannot assure you that
a sufficient number of highly qualified personnel will be available to us.
Our earnings for the second quarter of 2002 were adversely affected by
the costs of our day spa operations and our earnings for the balance of 2002 are
expected to be similarly adversely affected by those costs. Subsequent to 2002,
our earnings also could be adversely affected by our day spa operations.
RISKS OF NON-U.S. OPERATIONS
A total of 25 of our non-United States resort spa operations are
located in Indonesia, Thailand and Malaysia, countries that have experienced in
the past, and may experience in the future, political and/or economic unrest. In
addition, countries where we currently, or may in the future operate spas may
experience adverse developments in the political and economic environment,
varying governmental regulations and foreign currency fluctuations and potential
adverse tax consequences. Such adverse developments, among other things, could
prevent us from adequately supervising these operations and could materially,
adversely affect the financial performance of these operations. Any of these
factors could have a material adverse affect on our business, results of
operations and financial condition.
OUR RESORT SPAS DEPEND ON THE RESORT HOTEL INDUSTRY
We operate luxury spas at 50 resorts located in 11 countries. Similar
to our dependence on the cruise industry with respect to our shipboard
services and products, we are dependent on the resort hotel industry for the
success of our resort spas. The hotel resort industry is subject to risks that
are, in many ways, similar to that of the cruise industry and include the
following risks:
o changes in the national, regional and local economic climate
(including major national or international events such as the
terrorist attacks of September 11, 2001), local conditions,
including an oversupply of hotel properties or a reduction in demand
for hotel rooms;
o the attractiveness of the hotels to consumers and competition from
comparable hotels;
o the philosophy and performance of the employees at the resorts we
serve;
o changes in room rates at the resorts we serve; and
o the maintenance of the resorts we serve and changes in popular
travel patterns.
To the extent that there are adverse changes in the foregoing
conditions, this could adversely affect the financial performance of our resort
spa operations.
RISKS RELATING TO OUR SCHOOLS
In August 1999, we acquired a post-secondary school (comprised of four
campuses) in Florida offering degree and non-degree programs in massage
therapy, skin care and related areas. In April 2000, we acquired a total of two
massage therapy schools (comprised of five campuses) in Maryland, Virginia and
Pennsylvania. We had no prior experience in operations of this type and we
cannot assure you that these businesses will perform as we anticipate. If we are
unable to successfully operate these schools, or any other non-spa-related
operations that we may acquire in the future, our business, results of
operations and financial condition could be materially, adversely affected.
10
As of March 31, 2001, Neal Heller, President of our subsidiary that
operates our massage therapy schools, and Elizabeth Heller, a former Vice
President of another schools' subsidiary, decided to pursue other interests and
were no longer employed by us. While we have new management in place at our
schools, we cannot assure you that the loss of these two officers will not
adversely affect our massage therapy schools' operations or financial condition.
RISKS RELATING TO BUILD-OUT OF LAND-BASED SPAS
In connection with our agreements relating to our spas at the Atlantis
Resort and Casino, the Ocean Club, the Aladdin Resort and Casino and the Hilton
Hawaiian Village Resort, as well as our proposed spa at the Mohegan Sun Resort,
which we expect to operate commencing in May 2002, we have been required to
build-out the spa facilities we are to operate at our own expense. We anticipate
that in connection with any other new land-based resort spas that we may seek to
operate in the future, we may decide to build-out the spa's facilities at our
own expense. To date, the cost to build-out these large facilities has ranged
from $3.0 million to $14.0 million. Any land-based spas we operate in the future
could require build-out expenditures of that amount or more. Such build-outs
involve risks to us, including as follows:
o The commencement of the build-outs generally cannot begin until the
venue owner has completed its own construction site around the
premises of the proposed spa. We have no control over that process
and that process, as well as weather-related postponements and other
factors affecting construction projects generally, could delay our
spa's opening date, a date upon which our financial model for the
spa may be tied.
o If the resort owner files for bankruptcy or otherwise has financial
problems prior to opening of the spa, the spa may never commence
operations and funds, possibly substantial funds, that we may have
expended on the build-out to that point may be lost if we lose our
rights to build out and/or operate that spa as a result of a
bankruptcy or similar proceeding.
GOVERNMENT REGULATION COULD ADVERSELY EFFECT US
PRODUCTS
Steiner Leisure's advertising and product labeling practices in the
United States are subject to regulation by the Federal Trade Commission and the
Food and Drug Administration, as well as various other federal, state and local
regulatory authorities. The contents of our products that are sold in the United
States are subject to regulation in the United States. We are subject to similar
regulation under the laws of the United Kingdom and certain European Union laws.
Federal, state and local regulations in the United States and non-United States
jurisdictions, including increasing regulation by the European Union, designed
to protect consumers or the environment could materially adversely affect, or
increase the cost of advertising, manufacturing and packaging our products.
LAND-BASED SPAS
Steiner Leisure's land-based spa operations are subject to applicable
regulations in the locations where such operations are conducted. These
regulations could adversely effect our ability to sell, or could increase the
cost of our services and products. Among other things, local immigration laws
could impede our ability to obtain work permits needed for Steiner
Leisure-trained employees at our land-based facilities.
SCHOOLS
Our massage therapy schools are subject to extensive regulation by
governmental agencies. In particular, these operations are subject to the
requirements of the Higher Education Act ("HEA") and the regulations promulgated
thereunder by the Department of Education ("DOE"). Our schools must satisfy
certain criteria in order to participate in various financial assistance
programs under Title IV of the HEA. Any regulatory violation could be the basis
for the initiation of a suspension, limitation or termination of the eligibility
of Steiner Leisure or any of its schools to participate in such programs.
Under the applicable regulations, there are three financial ratios for
an institution, each of which will be scored separately and which will then be
combined to determine the institution's financial responsibility. If an
institution's composite score is below the minimum requirement for unconditional
approval but above a designated
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threshold level, such institution may take advantage of an alternative that
allows it to continue to participate in the Title IV Programs for up to three
years under additional monitoring procedures. If an institution's composite
score falls below this threshold level or is between the minimum for
unconditional approval and the threshold for more than three consecutive years,
the institution will be required to post a letter of credit in favor of the DOE.
All of the schools are eligible to receive federal funding, including
loan funds. In order to operate and award degrees, diplomas and certificates and
to participate in the Title IV Programs, a campus must be licensed or authorized
to offer its programs by the appropriate states' Department of Education.
Additionally, each institution must be accredited by an agency recognized by the
DOE.
The financial aid and assistance programs, in which most of our
schools' students participate, are subject to political and budgetary
considerations. There is no assurance that such funding will be maintained at
current levels. Administration of these programs is periodically reviewed by
various regulatory agencies. The failure by our schools to comply with
applicable federal, state or accrediting agency requirements could result in the
limitation, suspension or termination of the ability to participate in Title IV
Programs or the loss of the state licensure or accreditation. The loss of, or a
significant reduction in, Title IV Program funds would have a material adverse
effect on the Steiner Leisure's revenues and cash flows because the Schools'
student enrollment would likely decline as a result of its students' inability
to finance their education without the availability of Title IV Program funds.
PRODUCT LIABILITY AND OTHER POTENTIAL CLAIMS COULD ADVERSELY EFFECT US
The nature and use of Steiner Leisure's products and services could
give rise to product liability or other claims if a customer were injured while
receiving one of our services or suffered adverse reactions following the use of
our products. Adverse reactions could be caused by various factors beyond our
control, including hypoallergenic sensitivity and the possibility of malicious
tampering with our products. If any of these events occurred, we could incur
substantial litigation expense, receive adverse publicity and suffer a loss of
sales, and, therefore, our business, results of operations and financial
condition could be materially, adversely affected.
OUR CREDIT FACILITY FINANCINGS COULD RESTRICT OUR ACTIVITIES
In July 2001, we entered into a credit agreement with a syndicate of
banks that provides for a term loan of $45 million and a revolving facility of
up to $10 million. That agreement contains certain affirmative, negative and
financial covenants, that could restrict us from taking actions which our
management believes would be desirable and in the best interests of Steiner
Leisure and its shareholders.
Additionally, our ability to comply with these covenants can be
affected by events beyond our control, and we may not be able to meet these
covenants. A breach of any of these covenants could result in a default under
the senior credit facility. Upon the occurrence of a such a breach the
outstanding principal, together with all accrued interest under our senior
credit facility will at the option of our senior lenders become immediately due
and payable. If we were unable to repay amounts that become due under the senior
credit facility, our lenders could proceed against the collateral granted to
them to secure that indebtedness. Substantially all of our assets are pledged as
security under the senior credit facility. If the indebtedness under the senior
credit facility were to be accelerated, our assets may not be sufficient to
repay in full the indebtedness.
WE ARE NOT A UNITED STATES COMPANY AND, AS A RESULT, THERE ARE SPECIAL RISKS
Our corporate affairs are governed by our Memorandum of Association and
Articles of Association, which are similar to the articles of incorporation and
bylaws of a United States corporation, and the International Business Companies
Act, 2000 of The Bahamas (the "IBC Act"). There are very few reported judicial
cases under the IBC Act. Accordingly, the rights and remedies of our public
shareholders in the face of actions by our management, directors or shareholders
are less clearly established than would be the case with a company incorporated
in the United Kingdom or a United States jurisdiction.
Certain of our directors and executive officers reside outside the
United States. A substantial portion of our assets and the assets of those
persons are located outside the United States. As a result, it may not be
possible to effect service of process within the United States upon such
persons. It also may not be possible to enforce against them or Steiner Leisure
judgments obtained in United States courts based on the civil liability
provisions of the United States federal securities laws. In the opinion of Harry
B. Sands, Lobosky and Company, our Bahamas counsel:
12
o it is unlikely that Bahamian courts would entertain original actions
against Bahamas companies or their directors or officers based
solely upon United States federal securities laws;
o judgments predicated upon any civil liability provisions of the U.S.
federal securities laws are not directly enforceable in The Bahamas;
rather, a lawsuit must be brought in The Bahamas on any such
judgment; and
o in general, a judgment obtained after due trial by a court of
competent jurisdiction, which is final and conclusive as to the
issues in contention, is actionable in Bahamian courts and is
impeachable only upon the grounds of (i) fraud, (ii) public policy
and (iii) natural justice.
WE WILL NEED TO SEEK ADDITIONAL FINANCING TO FUND OUR BUSINESS PLAN;
Our business strategy contemplates substantial capital expenditures for
the build-out of land-based spas which we have committed to build-out through
2002. We expect to fund all of these planned capital expenditures from cash flow
from operations and from the revolving credit portion of our credit facility. We
may draw up to $10.0 million under the revolving credit portion of our credit
facility. At March 31, 2002, the outstanding principal balance of the revolving
credit portion of our credit facility was $9.8 million and there was no
remaining availability. Accordingly, in the event we exceed our currently
anticipated cash capital expenditures or our cash flow is less than anticipated,
we would need to seek additional equity or debt financing to fund our business
plan. Additional financing, including a new senior credit facility, may not be
available on commercially acceptable terms or at all.
WE FACE RISKS BY NOT OWNING 100% OF THE MANDARA COMPANIES
We only own 60% of the company that owns and operates our Mandara Spas
in Asia, and 80% of the Company that owns and operates our other Mandara Spas.
The remaining equity interests of each of those companies is owned by Shiseido
Co., Ltd., either directly or through a wholly-owned subsidiary. Shiseido is a
Japanese company and a leading manufacturer of cosmetics and personal care
products. To the extent funding is required for the operations or expansion of
our Mandara Spas, under the applicable agreements, Steiner Leisure and Shiseido
can fund those operations or expansion on a pro rata basis, based on their
respective ownership interests in the Mandara companies. The need for such
funding is determined by the respective boards of the Mandara companies. We
currently control the boards of those entities based on our 60% and 80%
ownership interest. To the extent we, or Shiseido, decline to contribute money
to fund operations or expansion, then, the other party can contribute the needed
funds and increase its ownership interest in that Mandara company, while the
non-contributing party's ownership interest is reduced accordingly. To the
extent Shiseido is unable or unwilling to contribute funds when deemed
appropriate by the board of one of the Mandara companies, then, in order to
provide all of the needed funds for operations or expansion, we would be
required to contribute funds in excess of the amount that we would contribute
based on our ownership percentage. We cannot assure you that we would be able to
fund such additional amounts at any time or times when such amounts would be
needed. On the other hand, to the extent we are unable or unwilling to
contribute an amount needed for operations or expansion of a Mandara company to
the full extent of our ownership interest in that company, Shiseido would be
entitled to make that additional contribution and increase its ownership
percentage of that Mandara company. To the extent that Shiseido's ownership
interest goes above 50% as a result of any such contributions, we would then
lose control of that Mandara company.
ANTI-TAKEOVER PROVISIONS LIMIT SHAREHOLDERS' ABILITY TO EFFECT A CHANGE IN
MANAGEMENT OR CONTROL
Our Articles of Association include certain provisions which may have
the effect of delaying or preventing a future takeover or change in control of
Steiner Leisure that shareholders may consider to be in their best interests.
Among other things, our Articles provide for a classified Board of Directors
serving staggered terms of three years, super majority voting requirements with
respect to certain significant transactions and restrictions on certain
transactions with holders of 15% or more of the voting shares of Steiner
Leisure. We have an authorized class of 10,000,000 Preferred Shares that may be
issued in one or more series by the Board of Directors without further action by
the shareholders on such terms and with such rights, preferences and
designations as the Board of Directors may determine. Furthermore, our Amended
and Restated 1996 Share Option and Incentive Plan and certain of our employment
agreements provide certain rights to plan participants and our officers in the
event of a change in control of Steiner Leisure.
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OUR STOCK PRICE HAS FLUCTUATED AND COULD FLUCTUATE SIGNIFICANTLY
Since our common shares have commenced being publicly traded, the
market price of our shares has fluctuated over a wide range and may continue to
do so in the future. The market price of our common shares could be subject to
significant fluctuations in response to various factors and events, including,
among other things:
o the depth and liquidity of the trading market for our common shares;
o quarterly variations in our actual or anticipated operating results;
o changes in estimates of our earnings by analysts;
o market conditions in the travel, leisure and cruise industries;
o announcements or activities by our competitors; and
o general economic or market conditions.
The stock market has from time to time experienced significant price
and volume fluctuations, which may be unrelated to the operating performance of
particular companies including as a result of significant national events such
as the terrorist attacks of September 11, 2001 and their aftermath. Furthermore,
our operating results and prospects form time to time may be below the
expectations of public market analysts and investors. Any such event could
result in a material decline in the price of our common shares.
OUR USE OF ARTHUR ANDERSEN LLP AS OUR INDEPENDENT AUDITOR MAY POSE RISKS TO US
AND LIMIT YOUR ABILITY TO SEEK POTENTIAL RECOVERIES FROM THEM RELATED TO THEIR
WORK.
Our consolidated financial statements as of, and for, each of the three
years in the period ended December 31, 2001 were audited by Arthur Andersen LLP.
On June 15, 2002, Arthur Andersen was convicted on a federal obstruction of
justice charge arising from the government's investigation of Enron Corporation.
Arthur Andersen has stated publicly that it intends to appeal that conviction,
but also that it intends to cease providing auditing services to public
companies like Steiner Leisure as of August 31, 2002.
SEC rules require us to present our audited financial statements in
various SEC filings, along with Arthur Andersen's consent to our inclusion of
its audit report in those filings. However, due to Arthur Andersen no longer
having a business presence in their office that provided service to us, we did
not receive a timely consent from Arthur Andersen in connection with the
registration statement of which this prospectus is a part. In addition, due to
the foregoing and to the upcoming cessation of Arthur Andersen's auditing
practice, it is likely that Arthur Andersen will be unable to provide us with
consents for the use of its audit report in connection with our future
Securities Act filings, or with assurance services with respect to those
financial statements, such as advice customarily given to underwriters of our
securities offerings and other similar market participants. The SEC recently has
provided regulatory relief designed to allow companies that file reports with
the SEC to dispense with the requirement to file a consent of Arthur Andersen in
certain circumstances, including with respect to this registration statement.
Notwithstanding this relief, the inability of Arthur Andersen to provide its
consent or to provide assurance services to us in the future could negatively
affect our ability to, among other things, access the public capital markets.
Any delay or inability to access the public markets as a result of this
situation could have a material adverse impact on us. Also, the ability of
purchasers of securities sold under certain of our registration statements to
seek potential recoveries from Arthur Andersen related to any claims that they
may assert as a result of the audit performed by Arthur Andersen will be limited
significantly both as a result of the absence of a consent and the diminished
amount of assets of Arthur Andersen that are, or may in the future, be available
to satisfy claims. The registration statements in question are those, including
the registration statement of which this prospectus is a part, that include or
incorporate by reference financial statements of ours audited by Arthur
Andersen, but as to which Arthur Andersen has not consented to such inclusion or
incorporation by reference.
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OUR BUSINESS
GENERAL
Steiner Leisure Limited (including its subsidiaries and predecessors,
"Steiner Leisure," "we" "us" and "our" refer to as "Steiner Leisure") is a
worldwide provider of spa services. At our facilities, we strive to create a
relaxing and therapeutic environment where customers can receive facial and body
treatments of the highest quality. Steiner Leisure also develops and markets
premium quality beauty products which are sold at our facilities and third party
retail outlets. Our cruise line and land-based resort customers include Carnival
Cruise Line, Celebrity Cruises, Disney Cruises, Hilton, Holland America Line,
Marriott, Norwegian Cruise Line, Park Place Entertainment, Princess Cruises,
Royal Caribbean Cruise Line and Sun International. As of March 1, 2002, we
served 104 cruise ships representing 23 cruise lines, and operated 50 resort
spas and 19 day spas. Our maritime services are provided under agreements with
cruise lines with terms which range in duration from one to six years. Our
land-based services are provided under leases with resort operators and other
lessors and have terms ranging from five to 15 years.
Steiner Leisure provides its shipboard services in treatment and
fitness facilities located on cruise ships. On newer ships, our services are
provided in enhanced, large "spa" facilities. Many of these facilities are in
large fitness and treatment areas, generally located in a single passenger
activity area. As of March 1, 2002, 58 of the 104 ships that we served had large
spa facilities. Ships with large spas provided us with average weekly revenues
of $43,936 in 2000 and $44,177 in 2001, as compared to average weekly revenues
of $11,775 in 2000 and $11,011 in 2001 for the other ships we served. Our
services include massage, water-based treatments, aromatherapy treatments,
seaweed wraps, saunas, steam rooms, aerobic exercise, yoga, hair styling,
manicures, pedicures, and a variety of other specialized facial and body
treatments. Our range of services is designed to capitalize on the growing
consumer trend toward health awareness, personal care, and fitness.
We also provide spa services similar to those we provide on cruise
ships at resort hotels located in United States, the Caribbean, Asia, the
Pacific and other locations and in day spas located in various locations in the
United States and one in the United Kingdom. Our resort spas range in size from
2,000 square feet to 32,000 square feet. Our day spas range in size from 1,500
square feet to 6,800 square feet.
We develop and sell a variety of high quality beauty products under our
"Elemis(R)" and "La Therapie(R)" trademarks. The raw materials for these
products are produced for us by a premier French manufacturer. We also sell
products of third parties, including a variety of hair care products under the
"Steiner(R)" name. We manufacture and private label a total of more than 185
different retail products. These products include beauty preparations, such as
aromatherapy oils, cleansers and creams, other skin care preparations,
15
hair care products, such as shampoos, moisturizers and lotions, and nail care
products. Steiner Leisure sells its products on board the ships that we serve,
at our land-based spas, through third party land-based retail and wholesale
outlets, mail order and our web sites, including www.steinerleisure.com.
During 2001, services accounted for approximately 66% of our revenues
and products accounted for approximately 34% of our revenues.
Steiner Leisure also owns and operates three post secondary schools
(comprised of a total of nine campuses, including one to be discontinued in
2002) located in Florida, Virginia, Maryland and Pennsylvania. Offering degrees
in massage, advanced therapy and skin care, these schools train and qualify spa
professionals for health and beauty positions within the Steiner family of
companies or other industry entities.
Steiner Leisure was organized as an international business company
under the laws of The Bahamas in October 1995 as the successor to Steiner Group
Limited, now known as STGR Limited, a family-owned business founded in 1934 in
the United Kingdom. Steiner Leisure commenced operations in November 1995 with
the contribution to its capital of substantially all of the cruise-related
assets of the maritime division of Steiner Group and the outstanding common
stock of Coiffeur Transocean (Overseas), Inc., a subsidiary of Steiner Group
acquired in June 1994.
PRINCIPAL CUSTOMERS
Revenues from passengers of each of the following cruise companies
accounted for more than ten percent of our revenues in 2001, respectively:
Carnival (including Costa, Holland America, Seabourn, Windstar and Cunard)
26.7%: Royal Caribbean (including Celebrity) 25.5%; and P&O Princess (including
Princess and P&O European Ferries) 11%. Each of Royal Caribbean and Carnival
currently are attempting to acquire P&O Princess. These companies also accounted
for 74 of the 104 ships served by us as of March 1, 2002. If we cease to serve
one of these cruise companies, or a substantial number of ships operated by a
cruise company, it could materially adversely affect our business, results of
operations and financial condition.
CRUISE INDUSTRY OVERVIEW
The passenger cruise industry has experienced substantial growth over
the past 35 years. The industry has evolved from a trans-ocean carrier service
into a vacation alternative to land-based resorts and sightseeing destinations.
The cruise market is comprised of luxury, premium and volume segments which
appeal to a broad range of passenger tastes and budgets. Steiner Leisure serves
ships in all of these segments. According to Cruise Lines International
Association, a trade association ("CLIA"), passenger volume of cruises marketed
primarily to North American consumers ("North American Cruises") grew from
approximately 2.2 million in 1985 to approximately 6.9 million in 2001,
representing a compound annual growth rate of approximately 7.4%. As of March 1,
2002, approximately 93 of the 104 ships we served offered North American
Cruises.
According to a study reported by CLIA in February 2000, passengers
ranked as their top reason for preferring cruising to other vacation types that
cruises "allow you to be pampered." Similarly, that study indicated that, in
comparing cruise vacations to other vacations, customers of both ranked cruise
vacations higher than other vacations in many categories. "Being pampered"
achieved the greatest positive distinction. We believe our services offer a
therapeutic and indulgent experience to passengers, and provide a memorable
highlight of their cruise vacation. As a result, we believe our operations are
an important part of the cruise ship experience.
In recent years, cruise lines have been building larger ships with
large spas dedicated to the types of health, beauty and fitness services we
offer. Generally, these large spas offer enlarged fitness and treatment
facilities, are located on higher profile decks and have enriched decor. With
respect to certain ships, we participate in the design of these facilities and
provide unique branding for certain cruise lines. As of March 1, 2002, 58 of the
ships that we served offered large spa facilities. The cruise lines we serve are
scheduled to introduce a total of 12 new ships through 2002. Steiner Leisure
expects to perform services on all of these ships, 11 of which are currently
covered by cruise line agreements. All 11 of these will have large spa
facilities.
OVERVIEW OF OUR LAND-BASED SPA BUSINESS
Until July 2001, our business consisted almost entirely of providing
spa services and products to cruise line passengers. Prior to that time our
limited land-based activities consisted almost entirely of sales of our products
to
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land-based retail outlets and through mail order, and the operation of three
massage therapy schools (consisting of a total of nine campuses) on the east
coast of the United States. Our land-based activities have grown as follows:
o In February 1999, we began to operate the spa at the Atlantis Resort
and Casino in Paradise Island in the Bahamas (after ceasing to
operate that spa in January 2001, commencing in July 2001, we once
again are operating the spa as a result of our acquisition of
Mandara Spa).
o In October 2000, we entered into an agreement to build and operate a
luxury spa facility, which opened in December 2001, at the Aladdin
Resort and Casino in Las Vegas, Nevada.
o In January 2001, we began operating our Elemis luxury day spa in
Mayfair , London.
o In July 2001, we entered into an agreement to build and operate a
luxury spa facility at the Mohegan Sun Resort in Uncasville,
Connecticut, which spa is expected to open in May 2002.
o In July 2001, we purchased a 60% equity interest in the United
States and Asia Mandara Spa companies. Mandara Spa operates luxury
spas at resorts in more than 50 locations worldwide principally in
Asia and the Pacific, the United States and the Caribbean. Mandara
Spa also provides spa services for Silversea Cruises, Norwegian
Cruise Line and Orient Lines.
o In July 2001, we purchased the assets of the Greenhouse Day Spa
business. As a result we acquired 11 luxury day spas under the
"Greenhouse" name at various locations in the United States and own
the "Greenhouse" mark. We licensed that mark pursuant to a royalty
agreement to the owners of the Greenhouse destination spa in
Arlington, Texas for use at that spa.
o In July 2001, we purchased C.Spa, which operated six day spas in
California.
As a result of these recent acquisitions, a substantial portion of our
business now consists of the operation of 50 luxury spas at resorts in
throughout the world, and the operation of 19 day spas in a total of 9 states in
the United States and one location in the United Kingdom.
BUSINESS STRATEGY
Our business strategy is directed at maintaining and enhancing our
position as the leading worldwide provider of spa services and products. To do
so, we:
RECRUIT AND TRAIN HIGH QUALITY PERSONNEL. Steiner Leisure provides
services to our customers on a personal basis. We employ staff who are
professional, attentive and able to continue our tradition of catering to the
needs of individual customers. We recruit our shipboard staff primarily from the
British Isles, Australia, South Africa and continental Europe. Our land-based
staff are recruited from the regions where the facilities at which they would
work are located. We require prospective employees to be technically skilled and
to possess a willingness to provide outstanding personal service. We train
candidates in our philosophy of customer care. Our training emphasizes the
importance of an individualized and therapeutic experience for our customers. We
believe that our success is largely attributable to our ability to staff our
operations with highly trained personnel who provide outstanding personal
service.
UTILIZE EXPERIENCED AND EMPOWERED MANAGEMENT. Steiner Leisure's
operations are supervised at the facility level by experienced managers who
implement our philosophy of customer care. Our facility managers are selected
based on performance as staff members or appropriate industry experience and
receive specialized management training. Managers are granted substantial
authority to make day-to-day decisions regarding operations, including those
actions necessary to maximize revenues of the facility they manage. Our managers
are responsible for efficient scheduling of personnel, inventory management,
supervision of sales and marketing, maintenance of required discipline and
communication with our senior management.
DEVELOP AND DELIVER HIGH QUALITY SERVICES AND PRODUCTS. Steiner Leisure
strives to create an engaging and therapeutic environment where customers can
receive facial and body treatments and hair styling of the highest quality. We
conduct our own research and respond to the needs and requests of our customers
and have developed many of the techniques and products used by our personnel. We
continually update the range of techniques,
17
services and products we offer to satisfy changing health, beauty and fitness
trends. Through our attentive and highly trained staff and our premium quality
beauty and hair products, Steiner Leisure provides its customers with what we
believe is a richly rewarding experience that is a memorable highlight of a
vacation or a relaxing interlude from the normal routine.
EFFECTIVELY MARKET OUR SERVICES AND PRODUCTS. Steiner Leisure uses a
variety of marketing techniques to bring our services and products to the
attention of customers. Our personnel individually inform our customers as to
the services and products offered by us and also offer group promotions,
seminars and demonstrations. We provide incentives to our employees to maximize
sales of our services and products and train employees to cross-market services
and products among our network of spas and other distribution channels. Steiner
Leisure also promotes gift certificates and other pre-use purchases at certain
of our locations.
MAINTAIN CLOSE RELATIONSHIPS WITH THE CRUISE LINES AND RESORT
OPERATORS. Steiner Leisure has developed strong relationships with the cruise
lines as a result of the revenues we generate for them and the high level of
customer satisfaction with our services. We are also attempting to develop
strong relationships with the operators of the resorts where we operate our
luxury spas. These relationships are important to our future growth and, in the
cruise industry, we believe that they have positioned us to obtain renewals of
almost all of our cruise line agreements that have expired since 1990.
DEVELOP RECOGNIZABLE BRANDS. We believe we have developed positive
brand name recognition with "Steiner(R)" for shipboard spas and with "Elemis(R)"
and "La Therapie(R)" for high quality beauty products. We also believe that the
land-based spas we recently acquired also have positive brand name recognition.
We also have helped to develop and promote customized brands for the cruise
lines we serve and we hope to continue to do so for the cruise lines as well as
for operators of resorts at which provide our services. We believe that by
creating these brands for cruise lines and resorts, we can strengthen our
relationships with those entities.
GROWTH STRATEGY
Steiner Leisure's strategy for continued growth includes the following
principal elements:
EXPAND WITH PRESENT CRUISE LINE AND RESORT CUSTOMERS. We believe that
our success in providing high quality services and products and generating
revenues for the cruise lines will enable us to grow as our cruise line
customers introduce new ships with large spas. From November 1996 to March 1,
2002, we commenced serving 50 new cruise ships brought into service by our
cruise line customers. As of March 1, 2002, the cruise lines served by us were
scheduled to introduce 12 new ships into service through December 31, 2002.
Steiner Leisure expects to perform services on 12 of these ships, 11 of which
are currently covered by our cruise line agreements. We also believe that the
success we hope to achieve at our resort spas could help our growth since it
could encourage the operators of those resorts to have us provide services at
any new resorts that they may open or acquire in the future.
CAPITALIZE ON GROWTH IN SIZE AND QUALITY OF SHIPBOARD FACILITIES. An
increasing number of cruise ships offer large spa facilities. Many of these
facilities include hydrotherapy treatments and enlarged fitness and treatment
areas. Newer facilities are located on higher profile decks, have enriched decor
and offer all of our services and products in a single passenger activity area.
These enhanced facilities foster the cross-marketing of services and products
and enable us to serve a larger number of passengers. We often assist cruise
lines with the planning and design of spa facilities on new ships. We believe
that our participation in the design of facilities has resulted in improved
quality of service and increased revenues to us and the cruise lines. Through
2002, we believe we will begin serving an additional 11 ships with large spa
facilities.
INCREASE PRODUCT SALES Sales of our products increased at a compound
annual growth rate of 17.7% from 1997 through 2001. Steiner Leisure's products
are sold primarily to our spa customers and through third party, land-based
retail and wholesale channels. Our products are also offered through mail order
and our web sites, including www.steinerleisure.com. We have increased our
retail product sales through third-party, land-based channels through marketing
campaigns aimed at mail order customers, enhanced training of our employees with
respect to new products and through sales through the QVC television channel. We
believe that there is a significant opportunity to increase our product retail
sales from the growth in our customer base resulting from our land-based spa
acquisitions as well as the increased recognition we've gained from those
acquisitions.
SEEK ADDITIONAL LAND-BASED OPPORTUNITIES. A number of the resorts we
currently serve are well known and highly regarded. We believe that we can use
our successful affiliation with those resorts, as well as our
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reputation in the cruise industry, to encourage other land-based resort
operators to consider having us operate their spas.
CONSIDER STRATEGIC ACQUISITIONS. Steiner Leisure will consider
strategic acquisitions of land-based or maritime-based businesses which are
compatible with our operations.
CRUISE LINES WE SERVE
As of March 1, 2002, Steiner Leisure provided its services and products
to 23 cruise lines representing a total of 104 ships, including almost all of
the major cruise lines offering North American Cruise.
The numbers of ships served as of March 1, 2002 under cruise line
agreements with the respective cruise lines are listed below:
NUMBER OF NUMBER OF
CRUISE LINE SHIPS SERVED CRUISE LINE SHIPS SERVED
- ----------- -------------- ----------- ------------
Carnival (l) 16 Orient (4) 2
Celebrity (2) 8 Passat 1
Costa (l) 7 P&O European Ferries (5) 1
Crystal 2 Princess (5) 11
Cunard (l) (3) 2 Radisson Diamond Seven Seas 2
Disney 2 Royal Caribbean (2)(5) 15
Fred Olsen 2 Saga 1
Holland America (l) 10 Seabourn (3) 4
Louis 1 Seadream (6) 2
MTC 1 Silver Seas 4
Norwegian (4) 8 Unicom 1
Windstar (1) 1
----
Total 104
- ---------------------
(1) Carnival Corporation, the parent company of Carnival Cruise Lines, also
owns Costa, Holland America, and Windstar and a majority interest in
Cunard. Each of Royal Caribbean and Carnival currently is attempting to
acquire P&O Princess.
(2) Celebrity is owned by Royal Caribbean.
(3) Cunard owns Seabourn.
(4) Norwegian and Orient are owned by Star Cruises.
(5) P&O European Ferries and Princess are subsidiaries of P&O Princess
Cruises. Each of Royal Caribbean and Carnival and currently are attempting
to acquire P&O Princess Cruises.
(6) We are currently negotiating this agreement.
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The cruise lines served by us are scheduled to introduce 12 new ships
into service through 2002. Steiner Leisure expects to perform services on all of
these ships, 11 of which are currently covered by cruise line agreements. Eleven
of these ships will have large spa facilities. The cruise lines for which these
ships are scheduled to enter service are as follows: Carnival (2 ships);
Celebrity (1 ship); Costa (1 ship); Holland America (2 ships); Norwegian (1
ship); Passat (1 ship); Royal Caribbean (2 ships) and Princess (2 ships).
Since November 1996, none of our cruise line agreements was terminated
prior to its expiration date. Historically, almost all of our cruise line
agreements that have expired have been renewed beyond their specified expiration
dates. The total number of ships we serve is affected by cruise lines removing
from service older ships as new ships are introduced.
OUR RESORT SPAS
We provide luxury spa services at 50 resorts located in 11 countries.
The luxury spa resorts we operate are located in the following countries:
COUNTRY NUMBER OF RESORT SPAS
------- ---------------------
United States 4
Indonesia 14
Thailand (1) 7
Maldives 7
Guam 5
Malaysia 4
Saipan 3
Fiji 1
Bahamas 2
Aruba 1
Tahiti 2
----
Total 50
- ------------------
(1) Operated through a joint venture in which we own a 49% interest.
The luxury resort spas we operate range in size from 2,000 square feet
to 32,000 square feet.
OUR DAY SPAS
We operate 19 luxury day spas in the following cities: Beverly Hills,
California; New York City; Greenwich, Connecticut; Newport Beach, California;
Dallas, Texas; Houston, Texas; Troy, Michigan; Manhasset, New York; Orlando,
Florida; Birmingham, Alabama; Denver, Colorado; San Diego, California;
Encinitas, California; La Jolla, California; Irvine, California; Poway,
California; Menlo Park, California, Newtown, Pennsylvania and London, England.
The luxury day spas range in size from 1,500 square feet to 6,800
square feet.
Our luxury day spas are located in fashionable shopping centers and
other venues in the cities in which they are located.
OUR SERVICES
Our goal is to provide our customers with a therapeutic and indulgent
experience in an atmosphere of individualized attention. Steiner Leisure
provides a broad range of high quality personal services. The treatment
techniques we use include those developed by us in response to the needs and
requests of our customers. Our pricing is based on the nature of the services
and the location of the facility where it is performed. Our services include the
following:
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MASSAGE AND OTHER BODY TREATMENTS. We offer massages and a variety of
other body treatments to women and men. Types of treatments include seaweed and
other therapeutic wraps and aromatherapy treatments. On ships, the number of
private treatment rooms available for these services ranges from one to
fourteen, depending on the size of the ship. The number of our staff providing
these services on a ship ranges from one to twenty-four. On several ships,
Steiner Leisure provides certain specialty treatments including a body capsule
that provides a multi-sensory, massage-like treatment in an individual,
self-contained environment. At our land-based spas the number of treatment rooms
varies from two to 36 and the number of our staff providing services varies from
two to 40.
BEAUTY AND HAIR. At all of our facilities we offer a broad variety of
facial treatments including the Japanese silk booster facial and the
anti-oxidant/glycolic facial. At all of our facilities we operate a hair styling
salon which provides services to women, men and children and facilities for nail
and beauty treatments. Steiner Leisure's facilities offer from one to twelve
hair styling stations as well as stations for manicures and pedicures. We staff
each facility with one to seven employees performing hair, nail and beauty
services.
SHIPBOARD SPAS. Since the late 1980s, cruise lines increasingly have
provided enlarged spa facilities which, in general, allow all of our services to
be offered in a single passenger activity area. As of March 1, 2002, large spas
were found on 58 of the ships that we served. We expect to serve an additional
11 ships with large spa facilities that are anticipated to begin service later
through the end of 2002. These spas provide enlarged fitness and treatment areas
and on most ships include water-based treatments. These facilities are generally
located on higher profile decks and have enriched decor. We believe that the
location of our operations in a spa environment enhances enjoyment of our
services by passengers, encourages increased passenger interest in our services
and facilitates cross-marketing of our services and products. We believe that
most of the ships currently under construction for our largest cruise line
customers will include large spas. In 2001, our average weekly revenues on ships
with large spas was 4.0 times our average weekly revenues on other ships.
FITNESS FACILITIES. As of March 1, 2002, we operated fitness facilities
on 85 of the ships we serve and three of our resort spas. Fitness facilities
typically include weightlifting equipment, cardiovascular equipment (including
treadmills, exercise bicycles and rowing and stair machines) and facilities for
fitness classes. On ships, Steiner Leisure provides from one to three fitness
instructors, depending on ship size. At our resorts spas we provide one or two
instructors, depending on the size of the spa. These instructors are available
to provide special services to our customers, such as personal nutritional and
dietary advice, body composition analysis and personal training. Use of fitness
facilities is generally available at no charge to cruise passengers, except for
fees that are typically charged for special services, but generally require fees
at our resort spas.
SAUNAS AND STEAM ROOMS. We operate saunas and steam rooms at most of
the facilities we serve. These facilities generally may be used by customers at
no charge.
FACILITIES DESIGN
In general, the shipboard facilities we operate have been designed by
the cruise lines. However, several cruise lines have requested our assistance in
the design of shipboard spas and other facilities. We have assisted, or are
assisting in the design of facilities for more than 50 ships we have served. We
also have designed some of the luxury spas at the resorts and day spas we
operate. We believe that our participation in the design of these facilities has
resulted in the construction of facilities permitting improved quality of
service and increased revenues to us at these facilities. We believe that our
involvement in the design of these facilities has enabled us to obtain
additional agreements with the cruise lines and resort hotels. However, we
cannot assure you that we will be able to obtain agreements for all of the
facilities for which we provide design assistance.
HOURS OF OPERATION
Our shipboard facilities generally are open each day during the course
of a cruise from 8:00 a.m. to 8:00 p.m., except when a ship is in the
territorial waters of a jurisdiction that would tax our sales or income from our
spa activities. Our land-based spas have similar operating hours.
RECRUITING AND TRAINING
Our continued success is dependent, in part, on our ability to attract
qualified employees. Steiner Leisure's goal in recruiting and training new
employees is to constantly have available a sufficient number of skilled
21
personnel trained in our customer service philosophy. We hire and train
personnel who perform our shipboard services and the services at our land-based
spas. Steiner Leisure recruits prospective shipboard employees primarily from
the British Isles, Australia, South Africa and continental Europe. Recruitment
techniques for our shipboard employees include advertisements in trade and other
publications, appearances at beauty, hair and fitness trade shows, meetings with
students at trade schools and recommendations from our employees. All shipboard
employment candidates are required to have received prior training in the
services they are to perform for us and are tested with respect to their skills
prior to being hired. Applicants to be Steiner Leisure employees must possess a
willingness to provide outstanding personal service. Prospective employees for
our land-based operations are recruited by customary employee recruitment means
within the region of the facility in question.
Each employment candidate must complete a rigorous training program at
our facilities in London, England (principally, shipboard personnel) or San
Diego, California (land-based personnel). We can train up to approximately 180
employees at a time in London and approximately 50 at a time in San Diego. The
training course for shipboard service personnel is typically conducted over a
period of two to eight weeks, and for land-based personnel, one to two weeks,
depending on the services to be performed by the employee. The training course
emphasizes our culture of personalized, attentive, customer care. All employees
also receive supplemental training in their area of specialization, including
instruction in treatments and techniques developed by us. Each employee is
educated with respect to all of our services and products to enable them to
cross-market our services and products. We also train candidates to manage our
spas. This training covers, among other things, maximization of revenues,
personnel supervision, customer service and administrative matters, including
interaction with cruise line personnel.
Students trained at our massage therapy schools may be employed by us
at our land-based facilities, as well as on cruise ships we serve.
PRODUCTS
Steiner Leisure sells high quality personal care products for men and
women. We also offer our products through our land-based spas, the retail
outlets of our massage therapy schools, and salons, retail stores and other
third party land-based retail and wholesale outlets. We also sell products
through mail order and our web sites including at www.steinerleisure.com. The
beauty products offered include aromatherapy oils as well as cleansers, creams
and other skin care products and cleansing accessories. Hair care products
offered include shampoos, moisturizers and lotions. Most of the products sold by
us are from our "Elemis(R)" and "La Therapie(R)" product lines. As of March 1,
2002, Steiner Leisure sold 140 "Elemis(R)" skin and hair care products made
primarily from premium quality natural ingredients and 27 premium quality "La
Therapie(R)" skin care products. Almost all of the raw materials for "Elemis(R)"
and "La Therapie(R)" products are sourced from a premier French manufacturer. If
this manufacturer ceased producing these ingredients and other materials for our
products, the transition to other manufacturers could result in significant
production delays. Production, packaging and distribution of our "Elemis(R)" and
"La Therapie(R)" products are conducted at our facilities in Bridgewater,
England.
We train our prospective shipboard and land-based employees, as well as
the students attending our massage therapy schools in the use of our Elemis
products.
We also sell the products of third parties, including 18 private label
products manufactured by other companies and sold by us under the "Steiner(R)"
brand name.
MARKETING AND PROMOTION
We promote our services and products to cruise passengers and resort
guests through on-site demonstrations and seminars, video presentations shown on
in-cabin/in-room television, tours of our facilities and promotional discounts
on lower volume days, such as when a ship is in a destination port. We also
distribute illustrated brochures and order forms describing our services and
products to passenger cabins and guest resort rooms at the resorts where we
operate.
We market our day spas primarily through public relations activities
aimed at television and other media coverage and through local radio
advertising. In addition, employees cross-market other services and products
offered by us to their customers. As part of our marketing efforts we provide
incentives to our employees to maximize sales of our services and products and
instruct employees in cross-marketing among our network of spas and other
distribution channels. We also offer gift certificates and other pre-use
purchases. We also benefit from
22
advertising by the cruise lines and resorts we serve, and, increasingly, cruise
lines and resorts are featuring their spa facilities and our services as part of
their advertising campaigns.
CRUISE LINE AGREEMENTS
Our cruise line agreements give us the exclusive right to offer our
services and the non-exclusive right to sell products on board ships. Services
and products sold to passengers are billed to them by the cruise lines. The
cruise lines retain a specified percentage of our gross receipts from such sales
before remitting the remainder to us. Under the cruise line agreements, we are
required to pay for the meals and accommodations of our employees. Most of the
agreements cover all of the then-operating ships of a cruise line. New
arrangements must often be negotiated between us and a cruise line as ships
enter service. The agreements have specified terms ranging from one to six
years, with an average remaining term per ship of approximately three years as
of March 1, 2002. As of that date, cruise line agreements that expire within one
year covered 12 of the 104 ships served by us. These 12 ships accounted for
approximately 6.2% of our revenue in 2001.
The cruise line agreements provide for termination by the cruise lines
with limited or no advance notice under certain circumstances, including, among
other things, the withdrawal of a vessel from the cruise trade, the sale or
lease of a vessel or our failure to achieve specified passenger service
standards. As of March 1, 2002, an agreement for two ships provide for
termination for any reason by the cruise line on six months' notice, agreements
for three ships provides for termination for any reason by the cruise line on 90
days' notice and we are operating on two ships without a written agreement.
LAND-BASED SPA LEASES
We operate our land-based spas pursuant to lease arrangements with the
owners of the properties involved. Our resort spas generally require rent based
on the percentage of our revenues. In addition, as part of the percentage rental
arrangements for some of our resort spas, we are required to pay a minimum
annual rental amount whether or not such amount would be required to be paid
under the percentage rent arrangement. In addition, in connection with our spas
at the Atlantis Resort and Casino, the Ocean Club, the Aladdin Resort and
Casino, the Hilton Hawaiian Village Resort as well as our proposed spa at the
Mohegan Sun Resort, in order to obtain the leases for these premises, we agreed
to build out the spa facilities there at our expense. The costs of these
build-outs have ranged from $3.0 million to $14.0 million. We believe that in
order to procure leases for the large spas at resorts in the future, we likely
will be required to build out the spa facilities at those resorts at our
expense. Those build-outs also likely will involve expenditures per facility
comparable to, or in excess of the expenditures we have spent to date on the
build-out of resort spa facilities.
The terms of the leases for our resort spas range from two to 15 years.
Most of our day spas are operated pursuant to fixed rental
arrangements, although some of them require that we pay a rent based on a
percentage of our revenues. Our day spa leases have terms that range from five
to 15 years.
MINIMUM PAYMENT OBLIGATIONS
Steiner Leisure is obligated to make minimum payments to certain cruise
lines regardless of the amount of revenues we receive from customers. As of
December 31, 2001, these payments are required by cruise line agreements
covering a total of 35 ships served by us and three additional ships not yet in
service. As of December 31, 2001, Steiner Leisure had guaranteed total minimum
payments to cruise lines (excluding payments based on minimum passenger per
diems applicable to certain ships served by us) of approximately: $24.4 million
in 2002, $27.2 million in 2003, $29.4 million in 2004 and $26.3 million in 2005.
These amounts could increase under new, or renewed agreements.
Certain of our resort spa agreements also require that we make minimum
rental payments irrespective of the amount of our revenues. As of December 31,
2001, Steiner Leisure will have guaranteed total minimum payments to resorts of
approximately: $2.1 million in 2002, $2.1 million in 2003, $2.1 million in 2004,
$2.0 million in 2005, $1.8 million in 2006 and $9.7 million thereafter.
23
OTHER ACTIVITIES
In August 1999, we acquired a post-secondary school (comprised of four
campuses) in Florida offering degree and non-degree courses in massage therapy,
skin care and related areas. In April 2000, we acquired two post-secondary
massage therapy schools (five campuses, including one which is scheduled to
close in 2002) located in Maryland, Pennsylvania and Virginia. We sell our
Elemis product line at our Florida schools. As of March 1, 2002, there were
1,828 students attending our schools. We are eligible to participate in student
financial assistance programs administered by the DOE and a majority of our
students receive one or more forms of assistance under those programs.
Accordingly, the success of our schools is dependent to a significant extent on
our continued eligibility to participate in these programs.
We believe the schools have the potential to provide us with the
services of skilled and trained staff for our land-based and shipboard
facilities and will assist us in creating new channels for distribution of our
Elemis product range.
COMPETITION
Steiner Leisure is the leading worldwide provider of spa services.
However, both our shipboard and land-based services and products face
competition.
On cruise ships we compete with passenger activity alternates on cruise
ships and with competing providers of services and products similar to ours
seeking agreements with cruise lines. Gambling casinos, bars and a variety of
shops are found on almost all of the ships served by us. In addition, the ships
call on ports which provide opportunities for additional shopping as well as
other activities that compete with us for passenger dollars. Cruise ships also
typically offer swimming pools and other recreational facilities and activities,
as well as musical and other entertainment, all without additional charge to the
passengers. A few cruise lines currently perform the shipboard services
performed by us with their own personnel and one or more additional cruise lines
could elect to perform these services themselves. There currently are several
other entities offering services to the cruise industry similar to those
provided by us including Harding Brothers and other providers.
Many of the resorts we serve, as well as any resorts that we may serve
in the future, offer recreational entertainment facilities and activities, often
without additional charge to guests, similar to those offered on cruise ships. A
number of these resorts also offer casino gambling. Our day spas compete with
other day spa chains and individual day spas which have operations in the
vicinities of our day spas, as well as with other beauty, relaxation or other
therapeutic alternatives that compete for consumer dollars. These include, with
respect to hair and manicure and pedicure services, large, well-known national
chains and independently owned salons that offer these services at prices
significantly lower than those charged by us. We believe, however, that the
prices charged by us are appropriate for the quality of the experience we
provide to our customers. In addition, Steiner Leisure is very new to the
land-based spa industry and, although we have acquired land-based operations
that we believe offer good name recognition and reputation.
The post-secondary education market is highly competitive. Our schools
compete with providers of similar instruction in the states in which they are
located and elsewhere in the United States, including many providers with
greater resources than ours. Our schools face competition from, among others,
traditional public and private two-year and four-year colleges and universities
and other proprietary schools, including those that offer distance learning
programs. Some public institutions are able to charge lower tuition than our
Schools, due in part to government subsidies, government and foundation grants,
tax deductible contributions and other financial sources not available to
proprietary schools such as ours.
Our land-based product sales compete with a variety of other brands,
including those of manufacturers with greater resources than ours, and those
with greater name recognition than our products.
TRADEMARKS
Steiner Leisure holds or controls numerous trademarks, both United
States and in several foreign countries. The most recognized trademarks are for
"Steiner(R)," "Elemis(R)," "The Greenhouse(R)" and "Mandara Spa(R)." We believe
that the use of these trademarks is important in establishing and maintaining
our reputation for providing high quality spa services as well as cosmetic goods
and we are committed to protecting these trademarks by all appropriate legal
means. Registrations for the "Steiner," "Elemis," and "The Beautiful Skin
24
Centre" trademarks have been obtained in numerous countries throughout the
world. Steiner Leisure continues to apply for other trademark registrations in
countries in North America and Europe. While a number of the trademarks we use
have been registered in the United States and other countries, the registrations
of other trademarks that we use are pending. We believe that the trademarks that
are material to our business that have not yet been registered are well
established in their fields of services and products, thus limiting the risks of
our losing the rights to use them.
REGULATION
The cruise industry is subject to significant United States and
international regulation relating to, among other things, financial
responsibility, environmental matters and passenger safety. With respect to
safety, enhanced passenger safety standards adopted as part of the Safety of
Life at Sea Convention by the International Maritime Organization had been
phased in and additional standards are required to be phased in by 2010 with
respect to vessel structural requirements. These standards have caused the
retirement of certain cruise ships and otherwise could adversely effect certain
of the cruise lines, including those with which we have cruise line agreements.
From time to time, various other regulatory and legislative changes have been or
may in the future be proposed or enacted that could have an adverse effect on
the cruise industry.
Steiner Leisure's advertising and product labeling practices in the
United States are subject to regulation by the Federal Trade Commission and the
Food and Drug Administration, as well as various other federal, state and local
regulatory authorities. The contents of our products that are sold in the United
States are subject to regulation in the United States. We are subject to similar
regulations under the laws of the United Kingdom and certain European Union
laws. Federal, state and local regulations in the United States and non-United
States jurisdictions, including increasing regulation by the European Union
designed to protect consumers or the environment could adversely effect or
increase the cost of advertising, marketing and packaging our products.
Steiner Leisure's land-based spa operations are subject to applicable
regulations in the locations where such operations are conducted. These
regulations could adversely effect our ability to sell, or could increase the
cost of our services and products. Among other things, local immigration laws
could impede our ability to obtain work permits needed for Steiner
Leisure-trained employees at our land-based facilities.
The Schools are subject to extensive regulation by governmental
agencies. In particular, these operations are subject to the requirements of the
HEA and the regulations promulgated thereunder by the DOE. Our Schools must
satisfy certain criteria in order to participate in various financial assistance
programs under Title IV of the HEA. Any regulatory violation could be the basis
for the initiation of a suspension, limitation or termination of the eligibility
of Steiner Leisure or any of its schools to participate in such programs.
Under the applicable regulations, there are three financial ratios for
an institution, each of which will be scored separately and which will then be
combined to determine the institution's financial responsibility. If an
institution's composite score is below the minimum requirement for unconditional
approval but above a designated threshold level, such institution may take
advantage of an alternative that allows it to continue to participate in the
Title IV Programs for up to three years under additional monitoring procedures.
If an institution's composite score falls below this threshold level or is
between the minimum for unconditional approval and the threshold for more than
three consecutive years, the institution will be required to post a letter of
credit in favor of the DOE.
All of our schools are eligible to receive federal funding, including
loan funds. In order to operate and award degrees, diplomas and certificates and
to participate in the Title IV Programs, a campus must be licensed or authorized
to offer its programs by the appropriate states' Department of Education.
Additionally, each institution must be accredited by an agency recognized by the
DOE.
The financial aid and assistance programs, in which most of the
School's students participate, are subject to political and budgetary
considerations. There is no assurance that such funding will be maintained at
current levels. Administration of these programs is periodically reviewed by
various regulatory agencies. The failure by our Schools to comply with
applicable federal, state or accrediting agency requirements could result in the
limitation, suspension or termination of the ability to participate in Title IV
Programs or the loss of the state licensure or accreditation. The loss of, or a
significant reduction in, Title IV Program funds would have a material adverse
effect on Steiner Leisure's revenues and cash flows because the Schools' student
enrollment would likely decline as a result of its students' inability to
finance their education without the availability of Title IV Program funds.
25
EMPLOYEES
As of March 1, 2002, Steiner Leisure had a total of 3,313 employees. Of
that number, 2,604 worked in spa operations, 53 were involved in the recruiting
and training of spa personnel, 377 were involved in teaching at our massage
therapy schools, 79 were involved in the bottling, distributing, warehousing and
shipping of our beauty products and 200 represented management and sales
personnel and support staff. Shipboard employees typically are employed under
agreements with terms generally of eight months. Depending on the size of the
vessel and the nature of the facilities on board, Steiner Leisure has up to two
managers on board each ship we serve. Shipboard employees' compensation consists
of salary plus a commission based on the volume of revenues generated by the
employee. Employees at our land-based spas generally are employed without
contracts, on an at-will basis. None of our employees are covered by a
collective bargaining agreement. We believe that our relations with our
employees are satisfactory.
PROPERTIES
All of our land-based spas are leased. In the case of our day spas, our
leases are with the owner of the shopping centers or other venues where they are
located. In the case of our resort spas, our leases are with the operators of
the resorts. In addition to our land-based spas, we maintain other facilities.
Steiner Leisure's principal executive office is located in Nassau, The Bahamas,
and the office of Steiner Management Services LLC (formerly, CT Maritime
Services, L.C.), a Florida subsidiary of Steiner Leisure and our administrative
headquarters, is located in Coral Gables, Florida. We also maintain warehouse
and shipping facilities in Fort Lauderdale, Florida. Our Florida schools are
located in Pompano Beach, Miami, Altamonte Springs and Sarasota. Our other U.S.
Schools are located in Maryland (Baltimore), Pennsylvania (York) and Virginia
(Charlottesville, Winchester and Blacksburg, the latter being scheduled to close
in 2002). Our shipboard staff training facilities and the administrative offices
of our Elemis Limited subsidiary are located in Harrow Weald, near London,
England. We also maintain a product production, packaging, warehousing and
distribution facility in Bridgewater, England. We administer our day spa
operations from offices in San Diego, California, where we also maintain a
training facility for land-based spa employees. We administer Mandara's
operations from offices in Honolulu, Hawaii and also administer Mandara's Asia
operations from offices in Bali, Indonesia. All of the above-described
properties are leased, and Steiner Leisure believes that alternative sites are
readily available on competitive terms in the event that any of our material
leases are not renewed.
LEASE DISPUTE
In September 2001, the landlord from whom we rent the space for our
Greenhouse Day Spa in New York City informed us that it was terminating our
lease for that property. In response, in October 2001, we filed a request for an
injunction in the Supreme Court of New York, seeking to prevent that
termination. The landlord's action was based on the landlord's claim that the
assignment to us of the lease in connection with our acquisition of the
Greenhouse Day Spas in July 2001 was improper. The action is currently pending
and we continue to operate that spa on the premises in question. While we
believe that we have valid defenses to the landlord's action, we cannot assure
you that we will prevail in this action. If the court rules in favor of the
landlord in this action, we could be required to vacate our New York Greenhouse
Spa premises. Alternatively, we may be required, as a result of a settlement
with the landlord or otherwise, to increase the amount of rent payable to the
landlord. In either of these events our Greenhouse Day Spa operations could be
materially, adversely affected.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers of Steiner Leisure.
NAME AGE POSITION
- ---- --- --------
Clive E. Warshaw 59 Chairman of the Board
Leonard I. Fluxman 43 President and Chief Executive Officer and a Director
Glenn J. Fusfield 39 Chief Operating Officer
Amanda Jane Francis 36 Senior Vice President - Operations of Steiner Transocean
Sean C. Harrington 35 Managing Director of Elemis Limited
Carl S. St. Philip, Jr. 35 Vice President and Chief Financial Officer
Bruce A. Jordan 48 Senior Vice President and General Counsel
Celeste Dunn 43 President and Chief Executive Officer of Steiner Day Spas, Inc.
Thomas Gottlieb 49 President and CEO of Mandara Spa LLC
26
Clive E. Warshaw has served as our Chairman of the Board since November
1995. From November 1995 to December 2001, Mr. Warshaw also served as our Chief
Executive Officer. Mr. Warshaw joined Steiner Group in 1982. Mr. Warshaw resides
in The Bahamas. Mr. Warshaw is the husband of Michele Steiner Warshaw.
Leonard I. Fluxman has served as our President and Chief Executive
Officer since January 2001, and as a director since November 1995. From January
1999 to December 2000, Mr. Fluxman served as our President and Chief Operating
Officer. From November 1995 through December 1998, he served as Chief Operating
Officer and Chief Financial Officer of Steiner Leisure. Mr. Fluxman joined us in
June 1994, in connection with our acquisition of Coiffeur Transocean (Overseas),
Inc. ("CTO"). Mr. Fluxman served as CTO's Vice President - Finance from January
1990 until June 1994, and as its Chief Operating Officer from June 1994 until
November 1996.
Glenn J. Fusfield was appointed Chief Operating Officer on January 1,
2001. Mr. Fusfield joined us in November 2000 as our Senior Vice President,
Group Operations. Prior to joining us, Mr. Fusfield was with Carnival Cruise
Lines for 12 years, serving as Director, Hotel Operations for Carnival from
January 1995 until December 1998, and Vice President, Hotel Operations from
January 1999 to October 2000.
Amanda Jane Francis has served as Senior Vice President - Operations of
Steiner Transocean Limited, our subsidiary that conducts our shipboard
operations, since November 1995, and of Steiner Group from June 1994 until
November 1995. From 1989 until June 1994, Ms. Francis was the Director of
Training for Steiner Group. From 1982 until 1989, Ms. Francis held other
land-based and shipboard positions with Steiner Group.
Sean C. Harrington has served as Managing Director of our Elemis
Limited subsidiary since January 1996. Mr. Harrington also oversees our United
Kingdom operations and our Dubai and Elemis Beautiful Skin Centre operations.
From July 1993 through December 1995, he served as Sales Director, and from May
1991 until July 1993, as United Kingdom Sales Manager of Elemis Limited.
Carl S. St. Philip, Jr. has served as Vice President and Chief
Financial Officer of Steiner Leisure since January 1999. From July 1997 through
December 1998, he served as our Vice President - Finance. From January 1997
through December 1998, Mr. St. Philip served as Vice President - Finance of our
Steiner Management Services LLC subsidiary. Mr. St. Philip joined us in June
1994 when we acquired CTO. Mr. St. Philip served as Assistant Controller of CTO
from June 1991 until June 1993, and as CTO's Controller from June 1993 until
December 1996, when CTO was liquidated. Mr. St. Philip, a certified public
accountant, was employed by Laventhol and Horwath from 1989 to 1991.
Bruce A. Jordan was appointed Senior Vice President and General Counsel
of Steiner Leisure in November 2001. Prior to his joining us, from April 1997
until January 2001, Mr. Jordan was Vice President and General Counsel of
Pediatrix Medical Group, Inc., a publicly-traded healthcare services company,
though he remained through November 2001 as an in-house attorney transitioning
his responsibilities. Concurrent with this period of transition, from April 2001
to November 2001, Mr. Jordan also served as in-house attorney/consultant with
the Law Department of Sunbeam Corporation, a manufacturer of home appliances and
other items. Beginning in September 1990, he was the Assistant General Counsel
for Del Monte Fresh Produce Company. In January 1994, he was appointed as
Executive Vice President and General Counsel for Del Monte, which position he
held until April 1997. From early 1987 through September 1990, Mr. Jordan was
employed as Assistant General Counsel with Carnival Cruise Lines.
Celeste Dunn has served as President and Chief Executive Officer of our
Steiner Day Spas, Inc. subsidiary. Since July 2001, when we acquired the C. Spa
chain of day spas she founded. Ms. Dunn is responsible for our United States day
spa operations. From May 1997 until July 2001, Ms. Dunn was founder and the
President of the entity that operated the C. Spa chain. From December 1991 to
January 1997, Ms. Dunn served as a Vice President in the Consumer Division of
Compaq Computer Corporation.
Thomas Gottlieb has served as President of our Mandara Spa LLC
subsidiary since July 2001, when we acquired a majority interest in Mandara. Mr.
Gottlieb is responsible for our Mandara Spa operations worldwide as well as our
other United States resort spas. From January 1996 until July 2001, Mr. Gottlieb
was the President and a
27
founder and owner of Mandara. From June 1993 through December 1995, Mr. Gottlieb
was a Principal with Sierra Pacific Investments, an investment fund, and from
1990 through May 1993 he was the Chief Investment Officer of InterPacific Group,
an investment holding company.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares in this
offering by the selling shareholders.
SELLING SHAREHOLDERS
All of the 400,626 common shares offered hereby were issued in
connection with our acquisition of a sixty percent (60%) interest in each of
Mandara Spa LLC and Mandara Spa Asia Limited in July 2001, in a transaction
exempt from the registration requirements of the Securities Act. Since March 1,
2002, we have been the owner of an 80% interest in Mandara Spa LLC. The
shareholders named below and their transferees, pledges, donees or successors
(collectively, the "selling shareholders") may from time to time offer and sell
pursuant to this prospectus and or all of the common shares.
The following table sets forth the name of each selling shareholder,
the total number of our common shares beneficially owned by each of the selling
shareholders on the date of this prospectus, and the total number of common
shares that each selling shareholder may offer and sell pursuant to this
prospectus. No selling shareholder owns, or will own after completion of this
offering, more than 1% of our common shares.
NUMBER OF SHARES
NUMBER OF SHARES BEING OFFERED FOR
BENEFICIALLY OWNED SELLING
PRIOR TO THE SHAREHOLDERS'
SELLING SHAREHOLDERS OFFERING (1) ACCOUNT
- -------------------- ------------------- -----------------
Red Sail Spas, L.L.C. 181,011 181,011
SP Spas LLC (2) 119,790 119,790
Sierra Pacific Investments LLC (2) 62,261 62,261
Pacific Century Capital Limited (3) 29,319 29,319
Jeffrey R.W. Matthews (4) 4,811 4,811
Okie R. Lukita 1,717 1,717
Franky Tjahyadikarta 1,717 1,717
- ----------------
(1) As used herein, beneficial ownership means the sole power to vote, or
direct the voting of, a security, or the sole or shared power to dispose,
or direct the disposition of, a security. Except as otherwise indicated,
each selling shareholder has beneficial ownership with respect to his or
her common shares.
(2) Thomas M. Gottlieb, President of Mandara Spa LLC, an 80% owned subsidiary
of ours, together with his wife, Carol Kirsh, owns 100% of SP Spas LLC and
Sierra Pacific Investments LLC. Mr. Gottlieb and Ms. Kirsh disclaim
beneficial ownership of the Steiner common shares owned by SP Spas LLC and
Sierra Pacific Investments LLC.
(3) Mark A. Edleson, President of Mandara Spa Asia Limited, a 60% owned
subsidiary of ours, is the Chief Executive Officer of Pacific Century
Capital Limited. Mr. Edleson disclaims beneficial ownership of the shares
owned by Pacific Century Capital Limited.
(4) Mr. Matthews is the Chief Operating Officer of Mandara Spa Asia Limited.
28
Red Sail Spa, L.L.C. and SP Spas LLC collectively owned a 60% interest
in Mandara Spa LLC, which interest was acquired by us in July 2001 for a
purchase price of $23,520,000 in cash, $6,400,000 in our shares and $5,600,000
in subordinated notes. Red Sail Spas and SP Spas each received a portion of that
consideration based on its relative ownership of the 60% interest in Mandara Spa
acquired by us. This relative ownership is reflected in their ownership of our
shares as set forth above.
The other selling shareholders listed above collectively owned a 60%
interest in Mandara Spa Asia Limited, which interest we also acquired by us in
July 2001 for a purchase price of $5,880,000 in cash, $1,600,000 in our shares
and $1,400,000 in subordinated notes. Each of these other shareholders received
a portion of this consideration based on its relative ownership of the 60%
interest in Mandara Spa Asia acquired by us. This relative ownership is
reflected in their ownership of our shares as set forth above.
The registration statement of which this prospectus forms a part is
being filed by us, at our expense, pursuant to the requirements of the
acquisition agreements for these transactions.
PLAN OF DISTRIBUTION
The purpose of the prospectus is to permit the selling shareholders to
offer for sale or to sell our common shares at such time and at such prices as
they, in their sole discretion, choose. We will not receive any of the proceeds
from these offerings or sales.
The selling shareholders may sell or distribute some or all of our
common shares offered by this prospectus from time to time through underwriters
or dealers or brokers or other agents or directly to one or more purchasers,
including pledgees, in transactions (which may involve crosses and block
transactions) on Nasdaq or other exchanges on which our common shares may be
listed for trading, in privately negotiated transactions (including sales
pursuant to pledges) or in the over-the-counter market, or in brokerage
transactions, or in a combination of such transactions or by any other legally
available means. These transactions may be effected by the selling shareholders
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices, which may be
changed. Brokers, dealers, underwriters or their agents participating in these
transactions as agent may receive compensation in the form of discounts,
concessions or commissions from the selling shareholders, and, if they act as
agent for the purchaser of the shares being sold, from the purchaser. The
discounts, concessions or commissions given to a particular broker, dealer,
agent or underwriter might be in excess of those customary in the type of
transaction involved. This prospectus also may be used by donees and pledgees of
the selling shareholders, or by other persons acquiring shares offered by this
prospectus and who wish to offer and sell these shares under circumstances
requiring or making desirable its use. If required, we will file, during any
period in which offers or sales are being made, one or more supplements to this
prospectus to set forth any material information with respect to the plan of
distribution not previously disclosed.
The selling shareholders and any underwriters, brokers, dealers or
agents that participate in a distribution of the shares offered by this
prospectus may be deemed to be "underwriters" within the meaning of the
Securities Act, and any discounts, commissions or concessions received by any
underwriters, brokers, dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act. Neither we nor the selling
shareholders can presently estimate the amount of such compensation. We know of
no existing arrangements between the selling shareholders and any underwriter,
broker, dealer or other agent relating to the sale or distribution of the shares
offered by this prospectus.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of any of the shares offered by this prospectus
may not simultaneously engage in market activities with respect to our common
shares for the applicable period under Regulation M prior to the commencement of
such distribution. In addition and without limiting the foregoing, the selling
shareholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation Rule 10b-5
and Regulation M, which provisions may limit the timing of purchases and sales
of any of the shares offered by this prospectus. Any of those rules or
regulations may affect the marketability of our common shares.
We will pay substantially all of the expenses incident to the offering
of the shares offered by the selling shareholders to the public pursuant to this
prospectus, including SEC filing fees and expenses of compliance with state
securities or "blue sky" laws. The selling shareholders will pay any selling
commissions and underwriting
29
discounts of underwriters, brokers or dealers. The selling shareholders will be
indemnified by us against certain civil liabilities, including certain
liabilities under the Securities Act, or they will be entitled to contribution
in connection therewith. The selling shareholders may indemnify any broker,
dealer, agent or underwriter that participates in transactions involving sales
of these shares against certain liabilities, including liabilities arising under
the Securities Act.
Although we have no obligation to permit the selling shareholders to
offer shares under this prospectus in an underwritten offering, if any shares
offered by the prospectus are sold in an underwritten offering, those shares may
be acquired by the underwriters for their own account and may be further resold
from time to time in one or more transactions, including negotiated
transactions, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, at negotiated prices, or at fixed prices. The
names of the underwriters with respect to any offering of this kind and the
terms of the transactions, including any underwriting discounts, concessions or
commissions and other items constituting compensation of the underwriters and
broker-dealers, if any, will be set forth in a supplement to this prospectus
relating to that offering. Any public offering price and any discounts,
concessions or commissions allowed or reallowed or paid to broker-dealers may be
changed from time to time. Unless otherwise set forth in a supplement to this
prospectus, the obligations of the underwriters to purchase the shares will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all of the shares specified in the supplement if any shares are
purchased.
If any shares offered by this prospectus are sold in an underwritten
offering, the underwriters and selling group members, if any, may engage in
passive market making transactions in our common shares on Nasdaq immediately
prior to the commencement of the sale of shares in such offering, in accordance
with Regulation M under the Exchange Act. Passive market making presently
consists of displaying bids on Nasdaq limited by the bid prices of market makers
not connected with the offering and purchases limited by these prices and
effected in response to order flow. Net purchases by a passive market maker on
each day are limited in amount to 30% of the passive market maker's average
daily trading volume in our common shares during the period of the two full
consecutive calendar months prior to the filing with the Commission of the
Registration Statement of which this prospectus is a part and must be
discontinued when that limit is reached. Passive market making may stabilize the
market price of our common shares at a level above that which might otherwise
prevail and, if commenced, may be discontinued at any time.
In order to comply with certain states' securities laws, if applicable,
the shares offered by this prospectus will be sold in those jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states our common shares may not be sold unless they have been registered or
qualified for sale in the state or an exemption form registration or
qualification is available and we comply with the exemption.
We have agreed to keep the registration statement of which this
prospectus forms a part continuously effective for a period of two years from
its effective date or a shorter period that will terminate upon the date on
which all of the offered securities have been sold under the registration
statement.
LEGAL MATTERS
The validity of the common shares offered hereby will be passed upon
for the selling shareholders by Harry B. Sands, Lobosky & Company, Nassau, The
Bahamas, Bahamas Counsel to Steiner Leisure. Certain legal matters in connection
with this offering will be passed upon for us by Akerman, Senterfitt & Eidson,
P.A., Miami, Florida.
EXPERTS
The financial statements of Mandara Spa LLC and Mandara Spa Asia
Limited incorporated by reference in this registration statement have been
audited by Ernst & Young LLP, independent public accountants, as indicated in
the reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The financial
statements of the Company and GH Day Spas, Inc. included in or incorporated by
reference in this registration statement have been audited by Arthur Andersen
LLP, independent certified public accountants. Arthur Andersen has not consented
to the inclusion of their report with respect to their audits in this
prospectus, and we have dispensed with the requirement to file their consent in
reliance upon Rule 437a of the Securities Act of 1933. Because Arthur Anderson
has not consented to the inclusion of their report in this prospectus the
ability of purchasers of securities sold hereunder to seek potential recoveries
from Arthur Andersen related to any claims that they may assert as a result of
the audit performed by Arthur Andersen will be limited significantly as a result
of the absence of the consent.
30
STEINER LEISURE LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
INDEX
DESCRIPTION PAGE
- ----------- ----
Introduction to Unaudited Pro Forma Combined Financial Statements F-2
Unaudited Pro Forma Combined Statement of Operations for the
year ended December 31, 2001 F-3
Notes to Unaudited Pro Forma Combined Financial Statements F-4
F-1
STEINER LEISURE LIMITED AND SUBSIDIARIES
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On July 3, 2001, Steiner Leisure Limited purchased a 60% equity interest in each
of Mandara Spa LLC and Mandara Spa Asia Limited (collectively referred to as
"Mandara Spa"). Mandara Spa operates spas in 50 locations worldwide, principally
in Asia and the Pacific, the United States and the Caribbean. Mandara Spa also
provides spa services for Silverseas Cruises, Norwegian Cruise Line and Orient
Lines.
We paid $29.4 million in cash, $7.0 million in subordinated debt, $10.6 million
in common shares and assumed $4.1 million of subordinated indebtedness as
consideration for Mandara Spa. The seller parties have guaranteed certain income
levels for Mandara Spa for an 18 month period. If the income levels are not
achieved, then amounts owed on the subordinated debt are reduced on a pro rata
basis.
On July 12, 2001, we 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 11 luxury day spas located at various
locations within the United States, including, among others, New York City,
Beverly Hills, Greenwich, Connecticut and Troy, Michigan.
We paid $24.8 million in cash and $4.3 million in Steiner common shares for the
Greenhouse Assets. In addition, $3.0 million worth of, and 200,000 options in,
the Company's common shares can be earned by the sellers if certain EBITDA
thresholds are obtained.
On July 31, 2001, we purchased the shares of DK Partners, Inc. d/b/a C. Spa,
Inc. which operates six day spas located in California. We paid $5.5 million in
cash and assumed $2.9 million of indebtedness. In addition, $3.0 million in cash
can be earned by the sellers if certain income levels are obtained. The
acquisition was not considered to be significant under Rule 3-05 of Regulation
S-X and as a result the historical financial statements are not part of this
registration statement.
The foregoing transactions were financed with working capital and a term loan
and were accounted for under the provisions of SFAS No. 141 and No. 142. The
Company borrowed $45 million under the term loan. The maturity date of the loan
is July 2, 2004 with annual payments of $11.0 million, $16.0 million and $18.0
million. The loan bears interest at LIBOR plus a spread that is dependent upon
the Company's financial performance (6.09% at December 31, 2001). If interest
rates were to increase (decrease) by 1/8 % interest expense would increase
(decrease) by approximately $51,000.
The following table sets forth certain unaudited pro forma combined financial
information for Steiner Leisure after giving effect to the acquisitions of
Mandara Spa, Greenhouse and C. Spa as if they had been consummated at the
beginning of the period presented. Mandara Spa LLC had a fiscal year-end of
January 31. The unaudited pro forma statement of operations for the 12 month
period combines the 12 month periods ended December 31, 2001 of both Steiner
Leisure and Mandara Spa, which results in one month of overlap between the
periods. The table reflects the acquisitions being accounted for as a purchase.
Our historical financial information included herein has been derived from its
respective historical 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 period presented, or what may be in the future.
F-2
STEINER LEISURE LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
PRO FORMA AS
ADJUSTED
STEINER FOR THE
LEISURE MANDARA GH DAY ACQUISITION BUSINESSES
LIMITED MANDARA LLC ASIA SPAS, INC. C. SPA ADJUSTMENT ACQUIRED
------------- --------------- ------------ ------------- ------------ ----------------- --------------
REVENUES:
Services $ 129,263,000 $ 12,600,000 $ 2,556,000 $ 5,742,000 $1,678,000 $ -- $ 151,839,000
Products 65,092,000 1,277,000 222,000 932,000 218,000 -- 67,741,000
Total revenues 194,355,000 13,877,000 2,778,000 6,674,000 1,896,000 -- 219,580,000
COST OF SALES:
Cost of services 104,220,000 10,709,000 1,547,000 7,674,000 772,000 -- 124,922,000
Cost of products 48,845,000 1,009,000 150,000 1,318,000 213,000 -- 51,535,000
Total costs of
sales 153,065,000 11,718,000 1,697,000 8,992,000 985,000 -- 176,457,000
Gross profit 41,290,000 2,159,000 1,081,000 (2,318,000) 911,000 -- 43,123,000
OPERATING
EXPENSES:
Administrative 10,415,000 1,794,000 333,000 494,000 2,304,000 393,000 (a) 15,733,000
Salary and
payroll taxes 12,223,000 1,348,000 339,000 1,100,000 30,000 -- 15,040,000
Goodwill
amortization 741,000 -- -- -- -- -- 741,000
Total operating
expenses 23,379,000 3,142,000 672,000 1,594,000 2,334,000 393,000 31,514,000
Income from
operations 17,911,000 (983,000) 409,000 (3,912,000) (1,423,000) (393,000) 11,609,000
OTHER INCOME
(EXPENSE):
Interest income 1,188,000 -- -- -- 13,000 -- 1,201,000
Interest expense (1,744,000) (353,000) -- (513,000) -- (2,136,000)(b) (4,081,000)
536,000 (c)
129,000 (d)
Other 56,000 -- 78,000 -- -- -- 134,000
Total Other
Income
(expenses) (500,000) (353,000) 78,000 (513,000) 13,000 (1,471,000) (2,746,000)
Income before
provision for
income taxes
and minority
interest 17,411,000 (1,336,000) 487,000 (4,425,000) (1,410,000) (1,864,000) 8,863,000
PROVISION FOR
INCOME TAXES 743,000 -- 138,000 -- -- -- 881,000
Income before
minority
interest 16,668,000 (1,336,000) 349,000 (4,425,000) (1,410,000) (1,864,000) 7,982,000
MINORITY
INTEREST 222,000 -- -- -- -- 395,000 (e) 617,000
Net Income $ 16,890,000 $ (1,336,000) $ 349,000 $ (4,425,000) $ (1,410,000) $ (1,469,000) $ 8,599,000
Earnings per
Common Share:
Net Income $ 23,746,000 $ (1,518,000) $ 609,000 $ (4,999,000) $ (1,875,000) $ (3,636,000) $ 12,327,000
Basic $ 1.11 536,000 (c) $ 0.56
Diluted $ 1.06 129,000 (d) $ 0.54
Weighted
Average Shares:
Basic 15,229,000
Diluted 15,863,000
Other -- -- 78,000 -- -- -- 78,000
The accompanying notes are an integral part of these
combined financial statements
F-3
STEINER LEISURE LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(a) To record intangible asset amortization as follows:
SINCE
LIFE VALUE FULL YEAR ACQUISITION
---- ----- --------- -----------
Customer/List 7 $ 1,204,000 $ 170,000 $ 93,000
Covenant not to compete 5 250,000 50,000 27,000
Location/Leases 7-10 1,440,000 187,000 98,000
Unpatented technologies 7 650,000 93,000 52,000
Trade names, Licenses, Logos 20 4,730,000 237,000 123,000
$ 8,274,000 $ 737,000 $ 393,000
(b) To record interest expense and amortization of deferred financing fees.
(c) To reduce interest expense related to debt not assumed in connection with
the acquisition and intercompany interest of Mandara Spa, after
consideration of the above pro forma entries.
(d) To reduce amortization of deferred debt costs associated with debt repaid
in connection with the acquisition.
(e) To record 40% minority interest of Mandara Spa, after consideration of the
above pro forma entries.
F-4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1)
The following is a list of estimated expenses to be incurred by Steiner
Leisure on behalf of the selling shareholders in connection with the
registration of the common shares registered hereunder:
Securities and Exchange Commission registration fee --
Printing expenses 2,500
Legal fees and expenses 25,000
Accountants' fees and expenses 15,000
Miscellaneous 1,000
------
Total 43,500
- -------------
(1) Estimated except for SEC registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Association of Steiner Leisure (the "Articles") provide
that the directors and officers of Steiner Leisure, as well as certain other
individuals, shall be indemnified by Steiner Leisure to the fullest extent
authorized by Bahamian law as it now exists or may in the future be amended,
against all expenses and liabilities reasonably incurred in connection with
service for or on behalf of Steiner Leisure or any subsidiary of Steiner
Leisure.
Section 57 of the International Business Companies Act, 2000 of The
Bahamas provides:
(1) Subject to subsection (2) and any limitations in its
Memorandum or Articles or in any unanimous shareholder
agreement, a company incorporated under this Act may indemnify
against all expenses, including legal fees, and against all
judgments, fines and amounts paid in settlement and reasonably
incurred in connection with legal, administrative or
investigative proceedings any person who:
(a) is or was a party or is threatened to be made a party
to any threatened, pending or completed proceedings,
whether civil, criminal, administrative or
investigative, by reason of the fact that the person
is or was a director, an officer or a liquidator of
the company; or
(b) is or was, at the request of the company, serving as
a director, officer or liquidator of, or in any other
capacity is or was acting for, another company or a
partnership, joint venture, trust or other
enterprise.
(2) Subsection (1) only applies to a person referred to in that
subsection if the person acted honestly and in good faith with
a view to the best interests of the company.
The Articles also provide that expenses of directors and/or officers of
Steiner Leisure incurred in defending civil or criminal proceedings be paid by
Steiner Leisure in advance of final disposition of such proceedings upon such
director or officer undertaking to reimburse any such expense which it is
ultimately determined he or she is not entitled to be indemnified against by
Steiner Leisure.
The Articles also provide that the right of directors and officers to
indemnification is not exclusive of any other right to which such directors or
officers may be entitled under any law, agreement, vote of shareholders or
directors or otherwise. The Articles contain a provision that eliminates the
liability of directors and officers of Steiner Leisure and certain other persons
in connection with the performance of their respective functions, provided
II-1
that any such person has acted honestly and in good faith with a view to the
best interests of Steiner Leisure and has exercised the care, diligence and
skill that a reasonably prudent person would exercise in comparable
circumstances. Steiner Leisure also maintains insurance on behalf of any person
who is or was a director or officer of Steiner Leisure or is or was serving at
the request of Steiner Leisure as a director or officer of another entity
against any liability asserted against him or her and incurred by him or her in
any such capacity or arising out of his or her status as such.
ITEM 16. EXHIBITS
(a) The exhibits listed in the following table have been filed as
part of this registration statement.
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- -----------------------
5.1 Opinion of Harry B. Sands, Lobosky & Company*
10.11(a) Amendment to Product Agreement dated March 4, 2002 among Nicolas
D. Steiner, Elemis Limited, Alban Muller International, Cosmetics
Limited and Alban Muller.*
10.21 Membership Interest Purchase Agreement, dated June 27, 2001, by
and among Steiner Leisure Limited, Steiner Spa Limited, SP Spas
LLC and Red Sail Spas, L.L.C.*
10.22 Share Purchase Agreement, dated June 27, 2001, by and among
Steiner Leisure Limited, Steiner Spa Asia Limited, Sierra Pacific
Investments LLC, Pacific Century Capital Limited, Franky
Tjahyadikarta, Okie R. Lukita and Jeffrey Matthews.*
10.23 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.*
10.24 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.*
10.25 Credit Agreement, dated July 2, 2001, by and among Steiner Leisure
Limited, the Institutions from time to time parties thereto as
Lenders, ABN Amro Bank N.V., Suntrust Bank and BankUnited, FSB.*
10.26 First Amendment, Waiver and Consent to Credit Agreement, dated
March 8, 2002, by and among Steiner Leisure Limited, the
International Bank of Miami, N.A., HSBC Bank USA, ABN Amro Bank
N.V., Suntrust Bank and BankUnited, FSB.*
23.3 Consent of Ernst & Young, Independent Auditors of Mandara Spa LLC
23.4 Consent of Ernst & Young, Independent Auditors of Mandara Spa Asia
Limited
23.5 Consent of Harry B. Sands, Lobosky & Company, included in Exhibit
5.1*
24.1 Powers of attorney executed by certain officers and directors of
the Registrant (included on signature page)*
- --------------
* Previously filed
ITEM 17. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
II-2
(ii) To reflect in the prospectus any facts or
events arisingafter the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than a 20 percent
change in the maximum aggregate offering
price set forth in the "Calculation of
Registration Fee" table in the effective
registration statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be included
in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission
by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
2. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Coral Gables, Florida, on July 9, 2002.
-------------------------------------------
STEINER LEISURE LIMITED
By: /s/ LEONARD I. FLUXMAN
----------------------------------------
Leonard I. Fluxman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE(S) AND CAPACITIES DATE
- --------- ----------------------- ----
/s/ CLIVE E. WARSHAW Chairman of the Board July 9, 2002
- ---------------------------------------
Clive E. Warshaw
July 9, 2002
/s/ LEONARD I. FLUXMAN President, Chief Executive Officer and
- --------------------------------------- Director (Principal Executive Officer)
Leonard I. Fluxman
/s/ GLENN J. FUSFIELD Senior Vice President and Chief July 9, 2002
- --------------------------------------- Operating Officer
Glenn J. Fusfield
/s/ CARL ST. PHILIP, JR. Vice President and Chief Financial July 9, 2002
- --------------------------------------- Officer and Authorized Representative
Carl St. Philip, Jr. in the United States (Principal
Financial and Accounting Officer)
/s/ MICHELE STEINER WARSHAW Director July 9, 2002
- ---------------------------------------
Michele Steiner Warshaw
/s/ CHARLES D. FINKELSTEIN Director July 9, 2002
- ---------------------------------------
Charles D. Finkelstein
/s/ JONATHAN D. MARINER Director July 9, 2002
- ---------------------------------------
Jonathan D. Mariner
/s/ STEVEN J. PRESTON Director July 9, 2002
- ---------------------------------------
Steven J. Preston
II-4
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- -----------------------
5.1 Opinion of Harry B. Sands, Lobosky & Company*
10.11(a) Amendment to Product Agreement dated March 4, 2002 among Nicolas
D. Steiner, Elemis Limited, Alban Muller International, Cosmetics
Limited and Alban Muller.*
10.21 Membership Interest Purchase Agreement, dated June 27, 2001, by
and among Steiner Leisure Limited, Steiner Spa Limited, SP Spas
LLC and Red Sail Spas, L.L.C.*
10.22 Share Purchase Agreement, dated June 27, 2001, by and among
Steiner Leisure Limited, Steiner Spa Asia Limited, Sierra Pacific
Investments LLC, Pacific Century Capital Limited, Franky
Tjahyadikarta, Okie R. Lukita and Jeffrey Matthews.*
10.23 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.*
10.24 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.*
10.25 Credit Agreement, dated July 2, 2001, by and among Steiner
Leisure Limited, the Institutions from time to time parties
thereto as Lenders, ABN Amro Bank N.V., Suntrust Bank and
BankUnited, FSB.*
10.26 First Amendment, Waiver and Consent to Credit Agreement, dated
March 8, 2002, by and among Steiner Leisure Limited, the
International Bank of Miami, N.A., HSBC Bank USA, ABN Amro Bank
N.V., Suntrust Bank and BankUnited, FSB.*
23.3 Consent of Ernst & Young, Independent Auditors of Mandara Spa LLC
23.4 Consent of Ernst & Young, Independent Auditors of Mandara Spa
Asia Limited
23.5 Consent of Harry B. Sands, Lobosky & Company, included in Exhibit
5.1*
24.1 Powers of attorney executed by certain officers and directors of
the Registrant (included on signature page)*
- --------------
* Previously filed
II-5