<PAGE> 1
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 OCTOBER 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, 8,261,400 shares as of December 13, 1995
1
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SHARPER IMAGE CORPORATION
BALANCE SHEETS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 31,
1995 JANUARY 31, 1994
(UNAUDITED) 1995 (UNAUDITED)
----------- ---- -----------
<S> <C> <C> <C>
ASSETS
CASH AND EQUIVALENTS $ 803 $18,193 $ 3,724
ACCOUNTS RECEIVABLE, NET 4,856 3,234 4,425
MERCHANDISE INVENTORY 38,403 23,555 30,117
DEFERRED CATALOG COSTS 9,560 3,022 5,862
PREPAID EXPENSES & OTHER 5,796 2,097 4,180
------- ------- -------
TOTAL CURRENT ASSETS 59,418 50,101 48,308
PROPERTY AND EQUIPMENT, NET 18,647 12,694 12,813
OTHER LONG-TERM ASSETS 1,177 1,241 1,070
------- ------- -------
TOTAL ASSETS $79,242 $64,036 $62,191
======= ======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $33,969 $ 21,083 $ 26,277
DEFERRED REVENUE 4,840 3,612 3,142
INCOME TAXES PAYABLE - 2,246 -
CURRENT PORTION OF NOTES PAYABLE 158 149 147
------- ------- -------
TOTAL CURRENT LIABILITIES 38,967 27,090 29,566
REVOLVING LOAN 6,800 - -
NOTES PAYABLE 719 838 876
OTHER LIABILITIES 3,336 3,316 3,335
------- ------- -------
TOTAL LIABILITIES 49,822 31,244 33,777
------- ------- ------
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,
8,246,900, 8,283,140 AND 8,324,240 SHARES 82 83 83
ADDITIONAL PAID-IN CAPITAL 9,587 10,032 10,889
RETAINED EARNINGS 19,751 22,677 17,442
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY 29,420 32,792 28,414
------- ------- -------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $79,242 $64,036 $62,191
======= ======= =======
</TABLE>
2
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SHARPER IMAGE CORPORATION
STATEMENTS OF OPERATIONS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
----------- -----------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
SALES $ 46,524 $ 44,036 $ 141,009 $ 124,586
LESS: RETURNS AND ALLOWANCES 5,698 5,366 17,584 15,022
---------- ---------- ---------- ----------
NET SALES 40,826 38,670 123,425 109,564
LIST RENTAL 386 469 852 1,072
LICENSING 123 86 517 332
---------- ---------- ---------- ----------
TOTAL REVENUES 41,335 39,225 124,794 110,968
COST & EXPENSES:
COST OF PRODUCTS 20,582 20,283 62,361 57,246
BUYING & OCCUPANCY 5,370 4,791 15,472 14,340
ADVERTISING AND PROMOTION 5,860 4,504 20,222 12,649
GENERAL, SELLING AND
ADMINISTRATIVE 10,847 10,538 31,976 28,617
---------- ---------- ---------- ----------
OPERATING LOSS (1,324) (891) (5,237) (1,884)
OTHER INCOME (EXPENSE):
INTEREST EXPENSE (NET) (75) (96) 233 (205)
OTHER (NET) 8 (160) 127 (407)
---------- ---------- ---------- ----------
LOSS BEFORE INCOME TAX CREDIT (1,391) (1,147) (4,877) (2,496)
INCOME TAX CREDIT (556) (459) (1,951) (999)
---------- ---------- ---------- ----------
NET LOSS $ (835) $ (688) $ (2,926) $ (1,497)
========== ========== ========== ===========
WEIGHTED AVERAGE
NUMBER OF SHARES 8,247,492 8,294,254 8,242,853 8,287,587
NET LOSS PER SHARE $ (0.10) $ (0.08) $ (0.36) $ (0.18)
========== ========== ========== ==========
</TABLE>
3
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SHARPER IMAGE CORPORATION
STATEMENTS OF CASH FLOWS
DOLLARS IN THOUSANDS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
October 31,
-----------
1995 1994
---- ----
<S> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
NET LOSS $ (2,926) $ (1,497)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED FOR):
DEPRECIATION AND AMORTIZATION 2,532 2,378
DEFERRED RENT EXPENSE 66 -
DEFERRED INCOME TAXES (1,951) (649)
MERCHANDISE INVENTORY (14,848) (4,756)
ACCOUNTS RECEIVABLE (1,622) (610)
ACCOUNTS PAYABLE & ACCRUED EXPENSES 12,886 10,147
DEFERRED CATALOG COSTS, PREPAID EXPENSES AND OTHER (8,222) (4,910)
DEFERRED REVENUE AND OTHER LIABILITIES (1,065) (1,466)
-------- -------
CASH USED FOR OPERATING ACTIVITIES (15,150) (1,363)
-------- -------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
PROPERTY AND EQUIPMENT EXPENDITURES (8,490) (1,884)
DISPOSAL OF EQUIPMENT 5 193
-------- -------
CASH USED FOR INVESTING ACTIVITIES (8,485) (1,691)
-------- -------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
PROCEEDS FROM REVOLVING LOANS 6,800 -
ISSUANCE OF COMMON STOCK FOR STOCK OPTIONS 109 100
REPURCHASE OF COMMON STOCK (554) (55)
PRINCIPAL PAYMENTS ON NOTES PAYABLE (110) (133)
-------- -------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 6,245 (88)
-------- -------
NET DECREASE IN CASH (17,390) (3,142)
-------- -------
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 18,193 6,866
-------- -------
CASH AND EQUIVALENTS AT END OF PERIOD $ 803 $ 3,724
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR:
INTEREST $ 158 $ 229
INCOME TAXES $ 1,972 $ 956
</TABLE>
4
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SHARPER IMAGE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Three-month periods and nine-month periods ended October 31, 1995 and 1994
(Unaudited)
Note A- Financial Statements
The balance sheets at October 31, 1995 and 1994, statements of operations for
the three-month and nine-month periods ended October 31, 1995 and 1994, and
statements of cash flows for the nine-month periods ended October 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 October 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- Revolving Loan 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 October 31, 1995, borrowings outstanding under the credit facility were
$6,800,000. Letters of credit commitments at October 31, 1995 were $1,032,000.
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> 6
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 October 31, 1995 and 1994 and for the three-month
and nine-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
Deloitte & Touche
Independent Accountants' Report
7
<PAGE> 8
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 NINE MONTHS ENDED
OCTOBER 31 OCTOBER 31
---------- ----------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Net store sales 70.8% 72.2% 71.1% 73.0%
Net catalog sales 28.0 26.4 27.8 25.7
List rental 0.9 1.2 0.7 1.0
Licensing 0.3 0.2 0.4 0.3
----- ----- ----- -----
Total Revenues 100.0% 100.0% 100.0% 100.0%
Costs and Expenses:
Cost of Products 49.8 51.7 50.0 51.6
Buying and Occupancy 13.0 12.2 12.4 12.9
Advertising and Promotion 14.2 11.5 16.2 11.4
General, Selling
and Administrative 26.2 26.9 25.6 25.8
Other (Income) Expense 0.1 0.6 (0.3) 0.6
----- ----- ----- -----
Loss Before Income Tax Credit (3.3) (2.9) (3.9) (2.3)
Income Tax Credit (1.3) (1.2) (1.6) (0.9)
----- ------ ------ ------
Net Loss (2.0)% (1.7)% (2.3)% (1.4)%
===== ====== ====== ======
</TABLE>
8
<PAGE> 9
Revenues
Net sales for the three-month and nine-month periods ended October 31, 1995,
increased $2,156,000, or 5.6%, and $13,861,000, or 12.7%, over the comparable
periods of the prior year. Returns and allowances for the three-month periods
ended October 31, 1995 and 1994 were 12.2%, while returns and allowances for the
nine-month period ended October 31, 1995 totalled 12.5%, as compared with 12.1%
for the same prior year period. For the three-month and nine-month periods ended
October 31, 1995, as compared with the same periods last year, net store sales
increased $934,000, or 3.3%, and $7,776,000, or 9.6%, while net catalog sales
increased $1,222,000, or 11.8%, and $6,085,000, or 21.3%. Comparable store sales
for the three-month period ended October 31, 1995 decreased by 1.5%, while
comparable store sales for the nine-month period ended October 31, 1995
increased by 6.4%.
The increase in net store sales for the three-month and nine-month periods ended
October 31, 1995 as compared with the same prior year periods reflect a 2.2% and
3.2% increase in total store transactions, respectively, and an increase in
average revenue per transaction from $105.6 to $106.1 for the three-month
period, and $100.2 to $106.3 for the nine-month period. The net catalog sales
for the three-month period ended October 31, 1995 reflect a decrease of 6.5% in
total catalog orders, as compared to the same prior year period, partially
offset by an increase in average revenue per order from $108.6 to $119.2. The
net catalog sales for the nine-month period ended October 31, 1995 reflect an
increase of 11.2% in total catalog orders, as compared to the same prior year
period and an increase in average revenue per order from $115.8 to $121.2 for
the nine-month period.
The Company believes that the increase in net store sales for the three-month
period ended October 31, 1995 reflected the sales associated with the addition
of seven new stores opened since October 31, 1994. The decrease in comparable
store sales for the three-month period ended October 31, 1995 can be partially
attributable to the reduction in the number of pages circulated for the Sharper
Image catalog during the third quarter.
The increase in net store sales and comparable store sales for the nine-month
period ended October 31, 1995 was partially attributable to the addition of
seven new stores opened during the period. The increase in net catalog sales for
the three-month and nine-month periods ended October 31, 1995 was partially
attributable to the sales related to the test mailing of The Sharper Image SPA
catalogs. Also contributing to the increase in net store sales for the
nine-month period ended October 31, 1995 and the increase in net catalog sales
for the three-month and nine-month periods ended October 31, 1995 were the
increase in the number of pages circulated for the Sharper Image catalog during
the first two quarters of the fiscal year, as well as the strong demand for the
Company's merchandise assortment, particularly the Company's proprietary
products, personal care products and fitness equipment.
Cost of Products
Costs of products for the three-month and nine-month periods ended October 31,
1995 increased $299,000, or 1.5%, and $5,115,000, or 8.9%, from the comparable
prior year periods. These increases primarily reflect the increase in cost of
products related to the increases in net sales. The gross margin rate for the
three-month and nine-month periods ended October 31, 1995 was 49.0% and 49.2%,
or 1.6 and 1.7 percentage points higher than the gross margin
9
<PAGE> 10
Cost of Products (continued)
rate of 47.4% and 47.5% for the same periods of the prior year. The higher gross
margin rates for the three-month and nine-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 nine-month periods ended October
31, 1995 increased by $549,000, or 12.0%, and $1,133,000, or 8.3%. The increase
primarily reflected the occupancy costs associated with the seven new stores
opened during the nine-month period ended October 31, 1995.
Advertising and Promotion Expenses
Advertising and promotion expenses for the three-month and nine-month periods
ended October 31, 1995 increased $1,356,000, or 30.1%, and $7,573,000, or 59.9%,
from the comparable prior year periods. The increase in advertising and
promotion expenses for the three-month period ended October 31, 1995 was
primarily due to the test mailings of the Sharper Image SPA catalogs and a
slight increase in the circulation of the Sharper Image catalog, partially
offset by a 9% decrease in the number of pages circulated for the Sharper Image
catalog. The increase in advertising and promotion for the nine-month period
ended October 31, 1995 was primarily due to a 7% increase in the circulation of
the Sharper Image catalog and a 16% increase in the number of pages circulated
for the Sharper Image catalog, as well as the test mailings of the Sharper Image
SPA catalogs. Another significant factor for the increase is the rate increases
in paper and postage costs, which is having a significant impact on the general
mail order industry. The Company has implemented measures in an effort to
partially offset the impact of the rate increases in paper and postage costs,
which includes trimming the catalog dimensions by fractions of an inch, reducing
the number of pages per catalog, as well as using a lighter weight of paper.
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
nine-month periods ended October 31, 1995 increased $309,000, or 2.9%, and
$3,359,000, or 11.7%, 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 expenses due to the opening of three and seven new stores during the
three-month and nine-month period ended October 31, 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 three and
nine-month periods ended October 31, 1995, G S & A expenses, as a percent of
total revenues, have improved to slightly lower than the prior year's comparable
periods.
10
<PAGE> 11
Liquidity and Capital Resources
The Company met its short-term liquidity needs and its capital requirements in
the nine-month period ended October 31, 1995 with available cash, trade credit
and the revolving loan. During the nine-month period ended October 31, 1995, the
Company's cash decreased by $17,390,000 to $803,000 primarily due to the
increases in merchandise inventory, deferred catalog costs, property and
equipment expenditures related to new stores, store remodelling and the
expansion of the corporate distribution center, the net loss for the period and
the repurchase of common stock during such period.
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 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 October 31, 1995, borrowings outstanding under the credit facility were
$6,800,000. Letters of credit commitments at October 31, 1995 were $1,032,000.
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.
The Company's merchandise inventory at October 31, 1995 was approximately 28%
higher than that of October 31, 1994. The Company's inventory reflects
incremental amounts for the support of five Sharper Image and two Sharper Image
SPA stores opened since October 31, 1994, the new Sharper Image SPA catalog
concept and the expanding wholesale business.
During the nine-month period ended October 31, 1995, the Company opened two
Sharper Image stores located in White Plains, New York (March 1995) and St.
Louis, Missouri (June 1995); and three Sharper Image Design stores located in
Kahului, Maui, Hawaii (June 1995), Aspen, Colorado (July 1995) and Reno, Nevada
(October 1995). The Company also opened two Sharper Image SPA stores located in
Walnut Creek, California (August 1995) and St. Louis, Missouri (October 1995).
Subsequent to the quarter ended October 31, 1995, the Company opened one Sharper
Image store located at Milpitas, California and two more Sharper Image SPA
stores located at Shorthills, New Jersey and Skokie, Illinois. The Sharper Image
SPA store is a new test concept the Company launched during this fiscal year to
target the discerning female customers. The Company also expanded 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 $10,700,000. These capital expenditures are
financed with cash from operations, trade credit and the revolving credit
facility.
11
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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 10.5 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 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 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 fiscal year ended January 31, 1988.)
12
<PAGE> 13
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, 1993 among the Company and Lee Thalheimer, Trustee for
the Alan Thalheimer Trust. (Incorporated by reference to
Exhibit 10.20 to the Form 10-K Annual Report for the
fiscal year ended January 31, 1994.)
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 From 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 - Statement Re: Computation of Earnings Per Share
15.0 - Letter Re: Unaudited Interim Financial Information
15.1 - Independent Accountants' Report
15.2 - Independent Accountants' Report
27 - 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 October 31, 1995.
13
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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: December 15, 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> 15
INDEX TO EXHIBITS
Sequential
Exhibit Page
Number Exhibit Description Number
- ------- ------------------- ----------
11.0 - Statement Re: Computation of Earnings Per Share
15.1 - Independent Accountants' Report
15.2 - Independent Accountants' Report
27 - Financial Data Schedule
15
<PAGE> 1
SHARPER IMAGE CORPORATION EXHIBIT 11
STATEMENTS RE: COMPUTATION OF EARNINGS PER SHARE
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
----------- -----------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET LOSS $ (835) $ (688) $ (2,926) $ (1,497)
AVERAGE SHARES OF COMMON
STOCK OUTSTANDING DURING
THE PERIOD 8,247,492 8,294,254 8,242,853 8,287,587
ADD:
INCREMENTAL SHARES FROM
ASSUMED EXERCISE OF STOCK
OPTIONS (PRIMARY) * * * *
---------- ---------- ---------- ----------
8,247,492 8,294,254 8,242,853 8,287,587
========== ========== ========== ==========
PRIMARY LOSS PER SHARE $ (0.10) $ (0.08) $ (0.36) $ (0.18)
========== ========== ========== ===========
AVERAGE SHARES OF COMMON
STOCK OUTSTANDING DURING
THE PERIOD 8,247,492 8,294,254 8,242,853 8,287,587
ADD:
INCREMENTAL SHARES FROM
ASSUMED EXERCISE OF STOCK
OPTIONS (FULLY-DILUTED) * * * *
---------- ---------- ---------- -------------
8,247,492 8,294,254 8,242,853 8,287,587
========== ========== ========== ==========
FULLY-DILUTED LOSS PER SHARE $ (0.10) $ (0.08) $ (0.36) $ (0.18)
========== ============ ============ ============
</TABLE>
* Incremental shares from assumed exercise of stock options are antidilutive
for primary and fully diluted loss per share, and therefore not presented.
16
<PAGE> 1
EXHIBIT 15.1
[DELOITTE & TOUCHE LLP LETTERHEAD]
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 October 31, 1995 and 1994, and the related condensed
statements of operations and cash flows for the three and nine-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.
/s/ Deloitte & Touche LLP
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November 17, 1995
17
<PAGE> 1
EXHIBIT 15.2
[DELOITTE & TOUCHE LLP LETTERHEAD]
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 October 31, 1995
and 1994, as indicated in our report dated November 17, 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 October 31, 1995, is
incorporated by reference in Registration Statement Nos. 33-12755 and 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.
/s/ Deloitte & Touche LLP
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November 17, 1995
18
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