Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Consolidation, Policy [Policy Text Block]

(a)

Principles of Consolidation and Basis of Presentation

We hold variable interests in physician-owned entities that provide cosmetic services to the Ideal Image centers’ guests. These entities were set up for regulatory compliance purposes. We bear the benefits and risks of loss from operating those entities through contractual agreements. Our consolidated financial statements include the operating results of those entities. The assets and liabilities of these entities are not material to the consolidated balance sheets.

Inventory, Policy [Policy Text Block]

(b)

Inventories

Inventories, consisting principally of beauty products, are stated at the lower of cost (first-in, first-out) or market. Inventories consist of the following (in thousands):

	September 30,		December 31,
	2015		2014

Finished goods	$	51,990	$	48,736
Raw materials		2,871		3,366
	$	54,861	$	52,102

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

(c)

Intangible Assets

A detail of intangibles is as follows (in thousands):

	September 30,			December 31,
	2015			2014
Intangible assets (various, principally trade names, leases, licenses and logos) with definite lives:
Gross carrying amount	$	13,509		$	13,509
Less accumulated amortization		(11,746	)		(11,057	)
Amortized intangible assets, net		1,763			2,452

Unamortized intangible assets with indefinite lives:
Trade names		57,817			60,428
Title IV rights		200			6,304
Intangible assets with indefinite lives		58,017			66,732
Total intangible assets, net	$	59,780		$	69,184

See Note 3 (d) for discussion regarding impairment charges during the third quarter of 2015.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

(d)

Goodwill

During the quarter ended September 30, 2015, the Company voluntarily changed the date of its annual goodwill and indefinite - lived intangible assets impairment testing from the first day of the fiscal year to the first day of the fourth quarter. This voluntary change is preferable under the circumstances as it provides the Company with additional time to complete its annual goodwill and indefinite - lived intangible asset impairment testing in advance of its year-end reporting and results in better alignment with the Company’s strategic planning and forecasting process. The voluntary change in accounting principle related to the annual testing date will not delay, accelerate or avoid an impairment charge. This change will not be applied retrospectively as it is impracticable to do so because retrospective application would require application of significant estimates and assumptions with the use of hindsight. Accordingly, the change will be applied prospectively.

During the third quarter of 2015, we concluded that as a result of current conditions, circumstances, and as required by Accounting Standards Codification No. 350, Intangibles – Goodwill and Other, that our Schools reporting unit was at risk of its respective carrying values exceeding fair values as of September 30, 2015. A significant amount of judgment is involved in determining if an indicator of impairment has occurred.

During 2015, our Schools reporting unit continued to operate in an environment with increased regulatory compliance obligations that continued to adversely affect our enrollments and its overall financial performance. During the third quarter of 2015, our actual enrollments and overall financial performance at the Schools reporting unit was significantly below what we had planned, which also adversely affected our projections of future results for this business.

Consequently, we performed an interim impairment analysis as of September 30, 2015. We calculated the fair value for this unit and performed extensive valuation analyses, utilizing the income approach, in our goodwill assessment process.

To determine the estimated fair value of our Schools reporting unit, utilizing the income approach, we discounted our estimated cash flows which were developed by management. We estimate our future cash flows after considering current economic conditions and trends, estimated future operating results, our views of growth rates and anticipated future economic and regulatory conditions. The discount rate used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in our future expected cash flows and the rate of return an outside investor would expect to earn. To estimate cash flows beyond the final year of our models, we use a terminal value approach and incorporate the present value of the resulting terminal value into our estimate of fair value.

The determination of estimated fair value of our Schools reporting unit requires significant estimates and assumptions, and as such, the fair value measurement is categorized as Level 3 per ASC Topic 820. These estimates and assumptions primarily include, but are not limited to, the discount rate, terminal growth rates, operating cash flow projections and capital expenditure forecasts. Due to the inherent uncertainty involved in deriving those estimates, actual results could differ from those estimates. We evaluate the merits of each significant assumption used, both individually and in the aggregate, to determine the fair value of the reporting unit for reasonableness.

As a result of the second step of the interim impairment test completed as of September 30, 2015, we recorded a goodwill impairment charge of $20.8 million for our Schools reporting unit.

In addition, in conjunction with the second step of the goodwill impairment test, fair values are assigned to all assets and liabilities for each reporting unit, including all other intangible assets, as if the reporting unit had been acquired in a business combination. As a result, there was an impairment charge to the Schools trade names of $2.6 million and a $6.1 million impairment charge to the rights under the Title IV student loan programs of the U.S. Department of Education (“DOE”) for the Schools. We calculate the fair value of each of those intangible assets in accordance with FASB ASC Topic 820—

Fair Value Measurement

, by utilizing the relief from royalty method under the income approach. The assumptions utilized in determining these fair values included utilizing projected revenue growth rates, discount rates of approximately 17%, royalty rates ranging from 1% to 3% and terminal growth rates of approximately 3%. These fair value measurements are categorized as Level 3 per ASC Topic 820. Due to the inherent uncertainty involved in deriving those estimates, actual results could differ from those estimates. We evaluate the merits of each significant assumption used, both individually and in the aggregate, to determine the fair value of these intangible assets for reasonableness.

A tax benefit of $3.5 million was recorded in connection with these charges and related primarily to the reversal of related deferred tax liabilities.

The following table presents the balance of goodwill by reporting unit, including the changes in the carrying amount of goodwill (in thousands):

	Maritime		Land-Based Spas		Product Distribution		Schools			Ideal Image		Total
Balance at December 31, 2014	$	10,704	$	40,297	$	23,695	$	30,752		$	43,367	$	148,815
Impairment charges		--		--		--		(20,792	)		--		(20,792	)
Balance at September 30, 2015	$	10,704	$	40,297	$	23,695	$	9,960		$	43,367	$	128,023

Foreign Currency Transactions and Translations Policy [Policy Text Block]

(e)

Translation of Foreign Currencies

For currency exchange rate purposes, assets and liabilities of our foreign subsidiaries are translated at the rate of exchange in effect at the balance sheet date. Equity and other items are translated at historical rates and income and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are reflected in the Accumulated Other Comprehensive Loss caption of our Condensed Consolidated Balance Sheets. Foreign currency gains and losses resulting from transactions, including intercompany transactions, are included in the results of operations. The transaction gains (losses) included in the Administrative expenses caption of our Condensed Consolidated Statements of Operations were approximately ($0.8 million) and ($1.7 million) for the three months ended September 30, 2015 and 2014, respectively, and approximately ($1.2 million) and ($0.9 million) for the nine months ended September 30, 2015 and 2014, respectively. The transaction gains (losses) in the Cost of Products caption of our Condensed Consolidated Statements of Operations were approximately $0.7 million and $0.9 million for the three months ended September 30, 2015 and 2014, respectively, and approximately $0.3 million and $0.5 million for the nine months ended September 30, 2015 and 2014, respectively.

Earnings Per Share, Policy [Policy Text Block]

(f)

Earnings Per Share

Basic earnings per share is computed by dividing the net income available to common shareholders by the weighted average number of outstanding common shares. The calculation of diluted earnings per share is similar to basic earnings per share except that the denominator includes dilutive common share equivalents such as share options and restricted share units. Reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share data):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2015			2014		2015			2014

Net (loss) income	$	(17,489	)	$	12,106	$	(425	)	$	27,750

Weighted average shares outstanding used in calculating basic earnings per share		12,833			13,771		12,888			14,299
Dilutive common share equivalents		--			112		--			94
Weighted average common and common share equivalents used in calculating diluted earnings per share		12,833			13,883		12,888			14,393

(Loss) income per common share:
Basic	$	(1.36	)	$	0.88	$	(0.03	)	$	1.94

Diluted	$	(1.36	)	$	0.87	$	(0.03	)	$	1.93

Options and restricted share units outstanding which are not included in the calculation of diluted earnings per share because their impact is anti-dilutive		460			123		460			78

No share options were issued during the three months ended September 30, 2015 or September 30, 2014.

The Company issued 3,000 of its common shares upon the exercise of share options during both the nine months ended September 30, 2015 and 2014, respectively.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

(g)

Stock-Based Compensation

The Company granted approximately 10,000 and 12,000 restricted share units during the nine months ended September 30, 2015 and 2014, respectively. No stock-based compensation was granted during the three months ended September 30, 2015 and 2014, respectively.

New Accounting Pronouncements, Policy [Policy Text Block]

(h)

Recent Accounting Pronouncements

In January 2015, amended GAAP guidance was issued changing the requirements for reporting extraordinary and unusual items in the income statement. The update eliminates the concept of extraordinary items. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. A reporting entity may apply the amendments prospectively or retrospectively to all periods presented in the financial statements. The guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this newly issued guidance is not expected to have an impact on our consolidated financial statements.

In February 2015, amended GAAP guidance was issued affecting current consolidation guidance. The guidance changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance must be applied using one of two retrospective application methods and will be effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in any interim period. The adoption of this newly issued guidance is not expected to have an impact on our consolidated financial statements.

In April 2015, amended GAAP guidance was issued simplifying the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by these amendments. This guidance will be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The guidance will be effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this newly issued guidance is not expected to be material to our consolidated financial statements.

In April 2015, amended GAAP guidance was issued to clarify a customer’s accounting for fees paid in a cloud computing arrangement. The amendments provide guidance to customers about whether a cloud computing arrangement includes a software license or if the arrangement should be accounted for as a service contract. This guidance will impact the accounting of software licenses but will not change a customer’s accounting for service contracts. The guidance will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. An entity can elect to adopt the amendments either prospectively or retrospectively. We are currently evaluating the impact, if any, that the adoption of this newly issued guidance would have on our consolidated financial statements.

In July 2015, amended GAAP guidance was issued that simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost and realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last in first out (“LIFO”) and the retail inventory method (“RIM”). Entities that use LIFO or RIM will continue to use existing impairment models. This guidance is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. We are currently evaluating the impact, if any, that the adoption of this newly issued guidance would have on our consolidated financial statements.

In September 2015, amended GAAP guidance was issued to simplify the accounting for measurement-period adjustments related to business combinations. The amendments require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments are determined and eliminates the requirement to retroactively adjust the provisional amounts recognized at the acquisition date. The guidance will be effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments are required to be applied prospectively to measurement period adjustments that occur after the effective date. Early adoption is permitted for financial statements that have not been issued. The adoption of this newly issued guidance is not expected to have a material impact to our consolidated financial statements.

Fair Value of Financial Instruments, Policy [Policy Text Block]

(i)

Fair Value Measurements

U.S. GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. The three levels of inputs used to measure fair value are as follows:

Level 1 - Quoted prices in active markets for identical assets and liabilities.

Level 2 - Observable inputs other than quoted prices included in Level 1. This includes dealer and broker quotations, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

We have no assets or liabilities that are adjusted to fair value on a recurring basis. We did not have any assets or liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 2014.

The fair value of items measured on a nonrecurring basis, estimated using Level 3 input as of September 30, 2015 is as follows (in thousands):

Schools goodwill	$	9,940
Certain Schools indefinite-lived intangibles	$	3,031

Cash and cash equivalents is reflected in the accompanying Condensed Consolidated Financial Statements at cost, which approximated fair value estimated using Level 1 inputs as they are maintained with high-quality financial institutions and having original maturities of three months or less. The fair values of our term and revolving loans were estimated using Level 2 inputs based on quoted prices for those or similar instruments. The fair values of the term and revolving loans were determined using applicable interest rates as of September 30, 2015 and December 31, 2014 and approximate the carrying value of such debt because the underlying instruments were at variable rates that are repriced frequently. It is not practicable to estimate the fair value of the student receivables, since observable market data is not readily available, and no reasonable estimation methodology exists.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

)

Concentrations of Credit Risk

Student notes receivable represent extensions of credit to students that generally mature 60 months subsequent to the students’ graduation dates. We extend credit after an evaluation of credit scores and credit information. Revenues related to the issuance of such notes are recognized over the students' applicable course or program period at the net amount expected to be collected on such notes. Any future adjustments to our estimate of collectability of the notes are recorded as an adjustment to bad debt expense. Generally, no interest is charged while the student attends courses and the interest rate generally increases to 9.5% once the student graduates. Interest income is recorded as amounts are received. Loan origination fees are deferred and recognized over the life of the notes as an adjustment of interest income. Any other lending costs, such as servicing fees, are charged to expense as incurred.

These notes receivable are included in other current assets and other assets for the short-term and long-term balances, respectively. Student notes receivable are stated net of an allowance for doubtful accounts. We establish and monitor an allowance for doubtful accounts based on historical bad debt experience for these loans and other qualitative information. Generally, a student's notes receivable balance is written off once it is determined to be uncollectible (if the note is more than 90 days past due, based on collection efforts, and/or if a student has filed for bankruptcy). Payments received on past due student notes receivable are recorded against bad debt expense. A roll-forward of the allowance for doubtful accounts for student notes receivables at September 30, 2015 is as follows (in thousands):

Balance at beginning of period	$	3,494
Provision		3,329
Write-offs		(2,932	)
Balance at end of period	$	3,891

As of September 30, 2015, the delinquency status of gross notes receivable was as follows (in thousands):

Current	$	5,967
1-30		762
31-60		454
61-90		877
91+		457
	$	8,517

Revenue Recognition, Sales of Services [Policy Text Block]

(k)

Seasonality

A significant portion of our revenues are generated from our cruise ship spa operations. Certain cruise lines, and, as a result, Steiner Leisure, has experienced varying degrees of seasonality as the demand for cruises is stronger in the Northern Hemisphere during the summer months and during holidays. Accordingly, generally, the third quarter and holiday periods result in the highest revenue yields for us. Historically, the revenues of Ideal Image were weakest during the third quarter and, if this trend continues, this could offset to some extent the strength of our shipboard operations during the summer months. Our product sales are strongest in the third and fourth quarters as a result of the December holiday shopping period.

Income Tax, Policy [Policy Text Block]

(l)

Income Taxes

A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax asset will not be realized. The majority of our income is generated outside of the United States. We believe a large percentage of our shipboard services income is foreign-source income, not effectively connected to a business we conduct in the United States and, therefore, not subject to United States income taxation. During the third quarter of 2015, we recorded a $3.5 million tax benefit related to our impairment charges.