Press Release: Steiner Leisure Limited
July 4, 2002
NASSAU, The Bahamas -- Steiner Leisure Limited (Nasdaq:STNR) Tuesday announced that it expects its operating results
to be lower-than-expected for the second quarter ending June 30, 2002 and the remainder of the year. During the
second quarter, the Day Spas segment's performance has been below expectations as a result of additional costs
incurred related to training, new product introductions, advertising and the start-up of new day spas. The results
of the Day Spa segment have been offset by lower than expected interest expense and better than expected performance
in the other segments.
Based on preliminary performance data for the Day Spas segment for the second quarter, earnings per share are estimated
to be in the range of $.17 - $.19 for the second quarter, $.24 - $.26 for the third quarter and $.26 - $.28 for
the fourth quarter. The estimates above do not include the write-off of intangibles.
The Company has substantially completed its assessment of its intangible assets in accordance with SFAS 142 and
estimates the write-off of intangibles to be approximately $30 million. These intangibles, which primarily consist
of goodwill, relate to our July 2001 acquisitions of the Greenhouse Day Spas and the C-Spa Day Spas. This write-off,
which is the result of a new accounting pronouncement, is not expected to impact the covenants under the Company's
Credit Facility.
Leonard Fluxman, President and Chief Executive Officer of Steiner Leisure Limited said, "The acquisition of
the Day Spas segment has been more challenging than anticipated. We believe that continued participation in this
segment is strategically important in helping us to maintain our position as a worldwide provider of spa services.
In the third and fourth quarters we will be implementing cost cutting and other initiatives which we believe will
improve the Day Spas' operating results."
Steiner Leisure Limited is a worldwide provider of spa services. The Company's operations include spas and salons
on 106 cruise ships, and in 51 resort spas and 18 luxury day spas. Our cruise line and land-based resort customers
include Carnival Cruise Line, Royal Caribbean Cruise Lines, Princess Cruises, Disney Cruises, Celebrity Cruises,
Norwegian Cruise Lines, Holland America Lines, Marriott, Park Place Entertainment and Sun International. Elemis
Limited, a dedicated spa therapy company, manufactures its Elemis® brand for use in our cruise ships and land-based
spas. This top quality European line of beauty products is also distributed worldwide to some of the most exclusive
five star hotels, salons, health clubs and destination spas. Elemis®, as well as other Steiner private label
products, including La Therapie®, Ionithermie, and Steiner Hair Care, are available at http://www.timetospa.com.
Steiner Leisure also owns and operates three post secondary schools (comprised of a total of eight campuses) located
in Miami, Fort Lauderdale, Orlando and Sarasota, Florida; Baltimore, Maryland; and Charlottesville and Winchester,
Virginia. Offering degree and non-degree programs in massage 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.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward looking statements within the meaning of the Private Securities Litigation
Reform Act. These forward-looking statements reflect our current views about future events and are subject to risks
and uncertainties which may cause actual results to differ materially from those expressed or implied by such forward-looking
statements.
These forward-looking statements relate to our future reported earnings per share, cost-cutting with respect to
our Day Spas segment, the effects of the write-off of our intangibles on our credit agreement and the future performance
of our Days Spas segment. The occurrence of these future results, activities, effects and performance are dependent
upon certain factors, including factors that could cause actual results, activities, effects and performance to
differ materially from those expressed or implied by our forward-looking statements including the following: the
continuing effect on the economy in general and the travel and leisure segment in particular of the events of September
11, 2001; terminability with limited or no advance notice under certain circumstances of land-based spa agreements;
negotiations with land-based spa lessors resulting in agreements which may not be as beneficial to us as anticipated
or non-renewals of agreements; any adverse judgment or settlement of the current litigation with the lessor of
our New York City day spa or with a client of the previous owner of our New York City day spa who claims damages
from injuries as a result of a treatment at that spa; our dependence on the continued viability of the resorts
where we operate our land-based spas; our dependence on the resort industry and our being subject to the risks
of that industry; any future obligation to make minimum payments to lessors of land-based spas that we may operate
in the future, irrespective of the revenues received by us from customers; increase in rent payments accompanying
renewals of land-based spa agreements; our dependence on a single product manufacturer; economic downturns that
could reduce the number of customers at resorts and day spas and that could otherwise reduce consumer demand for
our products and services; our dependence for success on our ability to recruit and retain qualified personnel;
changes in the taxation of our Bahamas subsidiaries; changing competitive conditions, including increased competition
from other land-based spa providers; our ability to cut costs relating to our Day Spas segment that do not otherwise
hinder our ability to effectively operate our Day Spas; our limited experience in land-based operations, including
with respect to the integration of acquired businesses; uncertainties beyond our control that could effect our
ability to timely and cost-effectively construct land-based spa facilities; operation of facilities in countries
with histories of economic and/or political instability; product liability or other claims against us by customers
of our products or services; restrictions on us as a result of our credit facility; the possible interpretation
of the terms of our credit facility that would cause the write-off of our intangibles to negatively impact the
covenants under our credit facility and changes in laws and government regulations applicable to us.
These risk factors are described in greater detail in Steiner Leisure's Annual Report on Form 10-K/A for the year
ended December 31, 2001 filed with the Securities and Exchange Commission.
We assume no duty to update any forward-looking statements contained in this press release.
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Contact:
Steiner Leisure Limited, Miami
Leonard I. Fluxman, 305/358-9002, ext. 217