UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) [ X ] Quarterly report pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 for
the quarterly period ended July 31, 1995 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from _____________ to ________________.
Commission File Number: 0-15827
SHARPER IMAGE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2493558
(State of Incorporation) (I.R.S. Employer Identification No.)
650 Davis Street, San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 445-6000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
Common Stock, $0.01 par value, 8,244,840 shares as of September 11, 1995
PART I
FINANCIAL INFORMATION
1
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
SHARPER IMAGE CORPORATION
BALANCE SHEETS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<CAPTION>
JULY 31, JULY 31,
1995 JANUARY 31, 1994
(UNAUDITED) 1995 (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CASH AND EQUIVALENTS $2,552 $ 18,193 $ 9,768
ACCOUNTS RECEIVABLE, NET 4,036 3,234 3,237
MERCHANDISE INVENTORY 28,035 23,555 20,933
DEFERRED CATALOG COSTS 4,445 3,022 2,486
PREPAID EXPENSES & OTHER 4,191 2,097 3,228
-------- -------- --------
TOTAL CURRENT ASSETS 43,259 50,101 39,652
PROPERTY AND EQUIPMENT, NET 15,146 12,694 12,450
OTHER LONG-TERM ASSETS 984 1,241 1,120
-------- -------- --------
TOTAL ASSETS $ 59,389 $ 64,036 $ 53,222
======== ======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 20,784 $ 21,083 $ 16,846
DEFERRED REVENUE 4,057 3,612 2,888
INCOME TAXES PAYABLE 22 2,246 -
CURRENT PORTION OF NOTES PAYABLE 155 149 145
-------- -------- --------
TOTAL CURRENT LIABILITIES 25,018 27,090 19,879
NOTES PAYABLE 759 838 914
OTHER LIABILITIES 3,330 3,316 3,364
-------- -------- --------
TOTAL LIABILITIES 29,107 31,244 24,157
-------- -------- --------
STOCKHOLDERS' EQUITY
PREFERRED STOCK, $0.01 PAR VALUE: AUTHORIZED,
3,000,000 SHARES;ISSUED AND OUTSTANDING,NONE - - -
COMMON STOCK, $0.01 PAR VALUE: AUTHORIZED,
25,000,000 SHARES; ISSUED AND OUTSTANDING,
8,244,700, 8,283,140 AND 8,284,820 SHARES 82 83 83
ADDITIONAL PAID-IN CAPITAL 9,615 10,032 10,798
RETAINED EARNINGS 20,585 22,677 18,184
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY 30,282 32,792 29,065
-------- -------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 59,389 $64,036 $ 53,222
======== ======= ========
</TABLE>
2
<PAGE>
<TABLE>
SHARPER IMAGE CORPORATION
STATEMENTS OF OPERATIONS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
-------- --------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
SALES $ 51,357 $ 46,136 $ 94,485 $ 80,550
LESS: RETURNS AND ALLOWANCES 6,071 5,545 11,886 9,656
--------- --------- ---------- ---------
NET SALES 45,286 40,591 82,599 70,894
LIST RENTAL 186 282 466 603
LICENSING 292 154 394 246
--------- -------- --------- ---------
TOTAL REVENUES 45,764 41,027 83,459 71,743
COST & EXPENSES:
COST OF PRODUCTS 22,614 20,796 41,780 36,963
BUYING & OCCUPANCY 5,199 4,778 10,102 9,549
ADVERTISING AND PROMOTION 8,757 5,376 14,361 8,145
GENERAL, SELLING AND
ADMINISTRATIVE 11,338 9,512 21,128 18,079
---------- --------- -------- ---------
OPERATING INCOME (LOSS) (2,144) 565 (3,912) (993)
OTHER INCOME (EXPENSE):
INTEREST INCOME (EXPENSE)-(NET) 92 (42) 308 (111)
OTHER (NET) 121 (220) 118 (245)
---------- ---------- ---------- -----------
INCOME (LOSS)
BEFORE INCOME TAXES (CREDIT) (1,931) 303 (3,486) (1,349)
INCOME TAXES (CREDIT) (772) 122 (1,394) (540)
----------- --------- ----------- ---------
NET INCOME (LOSS) $ (1,159) $ 181 $ (2,092) $ (809)
========== ========= ========= =========
WEIGHTED AVERAGE
NUMBER OF SHARES 8,237,902 8,897,699 8,243,928 8,284,199
NET INCOME (LOSS) PER SHARE $ (0.14) $ 0.02 $ (0.25) $ (0.10)
========== ======== ========= =========
</TABLE>
3
<PAGE>
<TABLE>
SHARPER IMAGE CORPORATION
STATEMENTS OF CASH FLOWS
DOLLARS IN THOUSANDS
(UNAUDITED)
<CAPTION>
Six Months Ended
July 31,
1995 1994
<S> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
NET LOSS $ (2,092) $ (809)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED FOR) CONTINUING OPERATIONS:
DEPRECIATION AND AMORTIZATION 1,684 1,572
DEFERRED RENT EXPENSE 45 12
DEFERRED INCOME TAXES (1,138) (229)
MERCHANDISE INVENTORY (4,480) 4,428
ACCOUNTS RECEIVABLE (802) 578
ACCOUNTS PAYABLE & ACCRUED EXPENSES (299) 716
DEFERRED CATALOG COSTS, PREPAID EXPENSES AND OTHER (2,121) (1,051)
DEFERRED REVENUE AND OTHER LIABILITIES (1,810) (1,703)
----------- ---------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (11,013) 3,514
----------- ---------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
PROPERTY AND EQUIPMENT EXPENDITURES (4,140) (716)
DISPOSAL OF EQUIPMENT 4 193
----------- ---------
CASH USED FOR INVESTING ACTIVITIES (4,136) (523)
----------- ---------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
STOCK OPTION EXERCISE 78 7
REPURCHASE OF COMMON STOCK (497) -
PRINCIPAL PAYMENTS ON NOTES PAYABLE
AND SHORT-TERM BORROWINGS (73) (96)
---------- --------
CASH USED FOR FINANCING ACTIVITIES (492) (89)
---------- --------
NET INCREASE (DECREASE) IN CASH (15,641) 2,902
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 18,193 6,866
---------- ---------
CASH AND EQUIVALENTS AT END OF PERIOD $ 2,552 $ 9,768
========== =========
SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR:
INTEREST $ 84 $ 79
INCOME TAXES $ 1,946 $ 945
</TABLE>
4
<PAGE>
SHARPER IMAGE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Three-month periods and six-month periods ended July 31, 1995 and 1994
(Unaudited)
Note A- Financial Statements
The balance sheets at July 31, 1995 and 1994, statements of
operations for the three-month and six-month periods ended July
31, 1995 and 1994, and statements of cash flows for the six-month
periods ended July 31, 1995 and 1994 have been prepared by the
Company, without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations and cash flows at July 31, 1995 and 1994, and for all
periods presented, have been made. The Company's business is
seasonal in nature and the results of operations for the interim
periods presented are not necessarily indicative of the results
for the full fiscal year.
The balance sheet at January 31, 1995, presented herein, has been
derived from the audited balance sheet of the Company.
Certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted from these
interim financial statements. It is suggested that these
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's 1994
Annual Report.
NOTE B- Short-Term Borrowings and Notes Payable
In September 1994, the Company entered into a five-year revolving
secured credit facility with The CIT Group/Business Credit, Inc.,
a New York corporation. The credit facility allows the Company to
borrow and issue letters of credit up to $20,000,000 based upon
inventory levels. The credit facility is secured by the Company's
inventory, accounts receivable, general intangibles and certain
other assets. Borrowings under the credit facility bear interest
at either prime plus 0.75% per annum, or at LIBOR plus 2.75% per
annum. The credit facility contains certain financial covenants
pertaining to fixed charge coverage ratio, leverage ratio,
working capital and net worth. The credit facility has
limitations on operating leases, other borrowings, dividend
payments and stock repurchases.
At July 31, 1995, there were no borrowings outstanding under the
credit facility. No borrowings were made under the credit
facility during the second quarter. Letters of credit commitments
at July 31, 1995 were $2,168,000.
Notes payable included two mortgage loans collateralized by
certain property and equipment. The first note bears interest at
a fixed rate of 8%, provides for monthly payments of principal
and interest in the amount of $3,640, and matures in October
2003. The other note bears interest at a variable rate equal to
the rate on 30- day commercial paper plus 3.82%, provides for
monthly payments of principal and interest in the amount of
$14,320, and matures in January 2000.
5
<PAGE>
NOTE C - Commitments and Contingencies
The Company is party to various legal proceedings arising from
normal business activities. Management believes that the
resolution of these matters will not have a material effect on
the Company's financial condition.
NOTE D - Reclassifications
Certain reclassifications have been made to prior years'
financial statements in order to conform with current year
classifications.
REVIEW BY INDEPENDENT ACCOUNTANTS
The financial statements at July 31, 1995 and 1994 and for the
three-month and six-month periods then ended have been reviewed
by the Registrant's independent accountants, Deloitte & Touche
LLP, whose report covering their review of the financial
statements is presented herein.
6
<PAGE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table is derived from the Company's Statements of
Operations and shows the results of operations for the periods
indicated as a percentage of total revenues.
<TABLE>
<CAPTION>
Percentage of Total Revenues
Three Months Ended Six Months Ended
July 31 July 31
------- -------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Net store sales 71.8% 72.7% 71.3% 73.5%
Net catalog sales 27.1 26.2 27.6 25.4
List rental 0.4 0.7 0.6 0.8
Licensing 0.7 0.4 0.5 0.3
----- ----- ----- -----
Total Revenues 100.0 100.0 100.0 100.0
Costs and Expenses:
Cost of Products 49.4 50.7 50.1 51.5
Buying and Occupancy 11.4 11.7 12.1 13.3
Advertising and Promotion 19.1 13.1 17.2 11.4
General, Selling
and Administrative 24.8 23.2 25.3 25.2
Other Expense (Income) (0.5) 0.6 (0.5) 0.5
------- ----- ------ -----
Income (Loss) Before
Income Taxes (Credit) (4.2) 0.7 (4.2) (1.9)
Income Taxes (Credit) (1.7) 0.3 (1.7) (0.8)
----- ---- ------ ------
Net Income (Loss) (2.5)% 0.4% (2.5)% (1.1)%
======= ==== ====== ======
</TABLE>
8
<PAGE>
Revenues
Net sales for the three-month and six-month periods ended July
31, 1995, increased $4,695,000, or 11.6%, and $11,705,000, or
16.5%, over the comparable periods of the prior year. Returns and
allowances for the three-month and six-month periods ended July
31, 1995, were 11.8% and 12.5% of sales, as compared with 12.0%
of sales for both comparable prior year periods. For the
three-month and six-month periods ended July 31, 1995, as
compared with the same periods last year, net store sales
increased $3,041,000, or 10.2%, and $6,842,000, or 13.0%,
comparable store sales increased 7.0% and 10.6%, while net
catalog sales increased $1,654,000, or 15.4%, and $4,863,000, or
26.7%.
The increases in net store sales and comparable store sales for
the three-month and six-month periods ended July 31, 1995 as
compared with the same prior year periods reflect a 1.0% and 3.7%
increase in total store transactions, respectively, and an
increase in average revenue per transaction from $97 to $106 for
the three-month period, and $98 to $106 for the six-month period.
The increase in net catalog sales for the three-month and
six-month periods ended July 31, 1995 reflect a 11% and 22%
increase in total catalog orders, respectively, and an increase
in average revenue per order from $117 to $119 for the
three-month period, and $120 to $122 for the six-month period.
The Company believes that the increases in net store sales,
comparable store sales and net catalog sales primarily reflected
the significant increase in advertising and promotion expense due
to the increase in the number of catalogs and catalog pages
circulated, to sales related to the test mailing of the "Sharper
Image SPA" catalogs, and the demand for the Company's merchandise
assortment, particularly the Company's proprietary products.
Cost of Products, Buying and Occupancy Expenses
Costs of products for the three-month and six-month periods ended
July 31, 1995 increased $1,818,000, or 8.7%, and $4,817,000, or
13.0%, from the comparable prior year periods. These increases
primarily reflects the increase in cost of products related to
the increases in net sales. The gross margin rate for the
three-month and six-month periods ended July 31, 1995 was 49.9%
and 49.3%, or 1.4 and 2.2 percentage points higher than the gross
margin rate of 48.5% and 47.1% for the same periods of the prior
year. The higher gross margin rates for the three-month and
six-month periods as compared with the prior year periods
primarily reflected the positive impact of the Company's strategy
of emphasizing and expanding its line of proprietary products,
private label and exclusive products and improved margins on the
balance of the merchandise mix.
Store occupancy expense for the three-month and six-month period
ended July 31, 1995 increased by $410,000 and $584,000,
respectively. The increase primarily reflected the opening of
three new stores during the quarter.
9
<PAGE>
Advertising and Promotion Expenses
Advertising and promotion expenses for the three-month and
six-month periods ended July 31, 1995 increased $3,381,000, or
62.9%, and $6,216,000, or 76.3%, from the comparable prior year
periods. The increases in advertising and promotion expenses were
primarily due to an increase in net catalog costs as a result of
an increase of 12.3% and 33.2% in the number of pages included in
the catalog and an increase of 8.2% and 10.1% in the number of
Sharper Image catalogs circulated during the three-month and
six-month periods. The increase can also be attributed to the
increase in paper and postage costs, which is having a
significant impact on the general mail order industry, and the
costs associated with the test mailings of the "Sharper Image
SPA" catalogs.
The Company continually evaluates its advertising strategy to
maximize the effectiveness of advertising.
General, Selling and Administrative Expenses
General, selling and administrative (G S & A) expenses for the
three-month and six month periods ended July 31, 1995 increased
$1,825,000, or 19.2%, and $3,049,000, or 16.9%, from the
comparable prior year periods. The increase was primarily
attributable to the increases in overall selling expenses related
to the increase in net sales. The increase in G S & A expenses
also included increases in personnel costs to support the higher
sales volume, an increase in store expense due to the opening of
three new stores during the second quarter of 1995 and an
increase in net delivery expense related to the increase in mail
order sales. The Company offers overnight delivery to mail order
customers at no extra charge. For the six-month period, total G S
& A expenses were comparable with the prior year.
Liquidity and Capital Resources
The Company met its short-term liquidity needs and its capital
requirements in the six-month period ended July 31, 1995 with
available cash and trade credit. During the six-month period
ended July 31, 1995, the Company's cash decreased by $15,641,000
to $2,552,000 primarily due to the increases in merchandise
inventory, property and equipment expenditures, the net loss for
the period and the repurchase of common stock during such period.
However it was not necessary for the Company to draw on the
credit facility.
In September 1994, the Company entered into a five-year revolving
secured credit facility with The CIT Group/Business Credit, Inc.,
a New York corporation. The credit facility allows the Company to
borrow and issue letters of credit up to $20,000,000 based upon
inventory levels. The credit facility is secured by the Company's
inventory, accounts receivable, general intangibles and certain
other assets. Borrowings under the credit facility bear interest
at either prime plus 0.75% per annum, or at LIBOR plus 2.75% per
annum. The credit facility contains certain financial covenants
pertaining to fixed charge coverage ratio, leverage ratio,
working capital and net worth. The credit facility has
limitations on operating leases, other borrowings, dividend
payments and stock repurchases.
At July 31, 1995, there were no short-term borrowings outstanding
under the credit facility. Letters of credit commitments at July
31, 1995 were $2,168,000.
10
<PAGE>
Notes payable included two mortgage loans collateralized by
certain property and equipment. The first note bears interest at
a fixed rate of 8%, provides for monthly payments of principal
and interest in the amount of $3,640, and matures in October
2003. The other note bears interest at a variable rate equal to
the rate on 30- day commercial paper plus 3.82%, provides for
monthly payments of principal and interest in the amount of
$14,320, and matures in January 2000.
The Company's net merchandise inventory at July 31, 1995 was
approximately 33% higher than that of July 31, 1994, while
supporting an increase of 16.5% in net sales. The Company's
inventory reflects incremental amounts for the support of five
Sharper Image stores opened since July 31, 1994 and one Sharper
Image SPA store, which opened on August 4, 1995, new retail
concepts and the expanding wholesale business.
During the six-month period ended July 31, 1995, the Company
opened four Sharper Image stores located in White Plains, New
York (March 1995), St. Louis, Missouri (June 1995); Kahului,
Maui, Hawaii (June 1995) and Aspen, Colorado (July 1995).
Subsequent to the quarter ended July 31, 1995, the Company opened
its first SPA retail store test site. One additional Sharper
Image store and three Sharper Image SPA stores are currently
planned to open during the balance of the fiscal year. The
Company is also expanding its existing distribution center,
located in Little Rock, Arkansas, from 50,000 square feet to
approximately 110,000 square feet. Total capital expenditures for
new and existing stores, corporate headquarters, and the
distribution center for the current fiscal year are estimated at
$9,500,000. These capital expenditures will be financed with cash
from operations, trade credit and the revolving credit facility.
11
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 - Amended and Restated Stock Option Plan.
(Incorporated by reference to Registration
Statement on Form S-8 filed on December 11,
1992 (Registration 33-12755).)
10.2 - Cash or Deferred Profit Sharing Plan, as
amended. (Incorporated by reference to
Exhibit 10.2 to Registration Statement on
Form S-1 (Registration No. 33-12755).)
10.3 - Form of Stock Purchase Agreement dated
July 26, 1985 relating to shares of
Common Stock purchase pursuant to
exercise of employee stock options.
(Incorporated by reference to Exhibit 10.3
to Registration Statement on Form S-1
(Registration No. 33-12755).)
10.4 - Form of Stock Purchase Agreement dated
December 13, 1985 relating to shares
of Common Stock purchase pursuant to
exercise of employee stock options.
(Incorporated by reference to Exhibit 10.4
to Registration Statement on Form S-1
(Registration No. 33-12755).)
10.5 - Form of Stock Purchase Agreement dated
November 10, 1986 relating to shares
of Common Stock purchase pursuant to
exercise of employee stock options.
(Incorporated by reference to Exhibit 10.4
to Registration Statement on Form S-1
(Registration No. 33-12755).)
10.6 - Form of Director Indemnification Agreement.
(Incorporated by reference to Exhibit 10.42
to Registration Statement on Form S-1
(Registration No. 33-12755).)
10.7 - Cash or Deferred Profit Sharing Plan
Amendment No. 3. (Incorporated by
reference to Exhibit 10.15 to Form 10-K
for the fiscal year ended January 31,
1988.)
10.8 - Cash or Deferred Profit Sharing Plan
Amendment No. 4 (Incorporated by reference
to Exhibit 10.16 to Form 10-K for the
fiscal year ended January 31, 1988.)
10.9 - Form of Stock Option Agreement for
Directors under the Company's Amended and
Restated Stock Option Plan. (Incorporated
by reference to Exhibit 10.17 to Form
10-K for the fiscal year ended January 31,
1988.)
12
<PAGE>
10.10 - Financing Agreement dated September 21,
1994, among the Company and The
CIT Group/Business Credit Inc. (Incorporated
by reference to Exhibit 10.12 to
Form 10-Q for the quarter ended October 31,
1994.)
10.11 - Real Estate Installment Note and Mortgage
dated October 4, 1994 among the
Company and Lee Thalheimer, Trustee
for the Alan Thalheimer Trust.
(Incorporated by reference to Exhibit 10.20
to the Form 10-K for the fiscal year
ended January 31, 1995.)
10.12 - The Sharper Image 401(K) Savings Plan.
(Incorporated by reference to Exhibit
10.21 to Registration Statement on
Form S-8 (Registration No. 33-80504) dated
June 21, 1994.)
10.13 - Form of Plan Amendment to the Company's
Amended and Restated Stock Option
Plan dated October 7, 1994. (Incorporated
by reference to Exhibit 10.22 to Form
10-K for the fiscal year ended January 31,
1995.)
10.14 - Form of Stock Option Agreement
under the Company's 1994 Non-Employee
Directors Stock Option Plan dated October 7, 1994.
(Incorporated by reference to
Exhibit 10.23 to Form 10-K for the
fiscal year ended January 31, 1995.)
10.15 - Form of Chief Executive Officer Compensation
Plan dated February 3, 1995.
(Incorporated by reference to Exhibit 10.24
to the Form 10-K for the fiscal year
ended January 31, 1995.)
11.0 - Statements Re: Computation of Earnings
Per Share
15.0 - Letter Re: Unaudited Interim Financial
Information
27.0 - Financial Data Schedule
(b) Reports on Form 8-K
The Company has not filed any reports on Form
8-K for the three months ended July 31, 1995.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SHARPER IMAGE CORPORATION
Date: September 13, 1995 by: /s/ Craig P. Womack
--------------------
Craig P. Womack
President
Chief Operating Officer
by: /s/ Tracy Y. Wan
--------------------
Tracy Y. Wan
Senior Vice President
Chief Financial Officer
14
<PAGE>
<TABLE>
SHARPER IMAGE CORPORATION EXHIBIT 11
STATEMENTS RE: COMPUTATION OF EARNINGS PER SHARE
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
-------- --------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET INCOME (LOSS) $ (1,159) $ 181 $ (2,092) $ (809)
AVERAGE SHARES OF COMMON
STOCK OUTSTANDING DURING
THE PERIOD 8,237,902 8,284,414 8,243,928 8,284,199
ADD:
INCREMENTAL SHARES FROM
ASSUMED EXERCISE OF STOCK
OPTIONS (PRIMARY) * 613,285 * *
---------- ---------- ---------- ----------
8,237,902 8,897,699 8,243,928 8,284,199
========== ========== ========== ==========
PRIMARY INCOME (LOSS)
PER SHARE $ (0.14) $ 0.02 $ (0.25) $ (0.10)
========== ========== ========== ===========
AVERAGE SHARES OF COMMON
STOCK OUTSTANDING DURING
THE PERIOD 8,237,902 8,284,414 8,243,928 8,284,199
ADD:
INCREMENTAL SHARES FROM
ASSUMED EXERCISE OF STOCK
OPTIONS (FULLY-DILUTED) * 648,012 * *
---------- ---------- ---------- ----------
8,237,902 8,932,426 8,243,928 8,284,199
========== ========== ========== ==========
FULLY-DILUTED INCOME (LOSS)
PER SHARE $ (0.14) $ 0.02 $ (0.25) $ (0.10)
========== ========== ========== ===========
* Incremental shares from assumed exercise of stock options are
antidilutive for primary and fully diluted loss per share, and
therefore not presented.
</TABLE>
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SHARPER IMAGE CORPORATION
Date: September 13, 1995 by:
----------------------
Craig P. Womack
President
Chief Operating Officer
by:
----------------------
Tracy Y. Wan
Senior Vice President
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000811696
<NAME> THE SHARPER IMAGE
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JUL-31-1995
<EXCHANGE-RATE> 1
<CASH> 2,552
<SECURITIES> 0
<RECEIVABLES> 4,036
<ALLOWANCES> 0
<INVENTORY> 28,035
<CURRENT-ASSETS> 43,259
<PP&E> 43,886
<DEPRECIATION> (28,740)
<TOTAL-ASSETS> 49,389
<CURRENT-LIABILITIES> 25,018
<BONDS> 0
<COMMON> 82
0
0
<OTHER-SE> 30,200
<TOTAL-LIABILITY-AND-EQUITY> 59,389
<SALES> 51,357
<TOTAL-REVENUES> 45,764
<CGS> 22,614
<TOTAL-COSTS> 47,908
<OTHER-EXPENSES> (121)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (92)
<INCOME-PRETAX> (1,931)
<INCOME-TAX> (772)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,159)
<EPS-PRIMARY> (0.14)
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[DELOITTE & TOUCHE LLP LETTERHEAD]
EXHIBIT 15.1
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Sharper Image Corporation
San Francisco, California
We have reviewed the accompanying condensed balance sheets of
Sharper Image Corporation as of July 31, 1995 and 1994, and the
related condensed statements of operations and cash flows for the
three- and six-month periods then ended. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying condensed financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of Sharper Image Corporation
as of January 31, 1995, and the related statements of operations,
stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated March 31, 1995, we
expressed an unqualified opinion on those financial statements. In
our opinion, the information set forth in the accompanying
condensed balance sheet as of January 31, 1995 is fairly stated, in
all material respects, in relation to the balance sheet from which
it has been derived.
DELOITTE & TOUCHE LLP
August 18, 1995
[DELOITTE & TOUCHE LLP LETTERHEAD]
EXHIBIT 15.2
Board of Directors
Sharper Image Corporation
San Francisco, California
We have made a review, in accordance with standards established by
the American Institute of Certified Public Accountants, of the
unaudited interim financial information of Sharper Image
Corporation for the periods ended July 31, 1995 and 1994, as
indicated in our report dated August 18, 1995; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included
in your Quarterly Report on Form 10-Q for the quarter ended
July 31, 1995, is incorporated by reference in Registration
Statement No. 33-12755 and Registration Statement No. 33-80504 on
Forms S-8 of Sharper Image Corporation.
We also are aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act of 1933, is not considered a part
of the Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
August 18, 1995
