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 April 30, 1997 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, 8,266,940 shares as of June 12, 1997
1
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<TABLE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SHARPER IMAGE CORPORATION
CONDENSED BALANCE SHEETS
<CAPTION>
April 30, April 30,
1997 January 31, 1996
Dollars in thousands, except per share amount (Unaudited) 1997 (Unaudited)
------- ------- -------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalent $ 4,260 $10,873 $ 858
Accounts receivable, net of allowance for doubtful
accounts of $512, $505 and $331 4,499 5,915 4,296
Merchandise inventories 28,793 27,365 32,516
Deferred catalog costs 3,696 3,712 4,501
Prepaid expenses and other 6,103 4,495 4,103
------- ------- -------
Total Current Assets 47,351 52,360 46,274
Property and equipment, net 22,145 23,012 21,141
Deferred taxes and other assets 3,430 3,431 1,802
------- ------- -------
Total Assets $72,926 $78,803 $69,217
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $32,864 $36,652 $26,677
Deferred revenue 5,622 5,045 4,861
Income taxes payable -- 308 --
Current portion of notes payable 931 927 246
------- ------- -------
Total Current Liabilities 39,417 42,932 31,784
Notes payable 4,011 4,245 3,274
Other liabilities 3,215 3,177 3,613
------- ------- -------
Total Liabilities 46,643 50,354 38,671
------- ------- -------
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,
8,266,940, 8,266,940 and 8,255,480 shares 83 83 83
Additional paid-in capital 9,590 9,590 9,563
Retained earnings 16,610 18,776 20,900
------- ------- -------
Total Stockholders' Equity 26,283 28,449 30,546
------- ------- -------
Total Liabilities and Stockholders' Equity $72,926 $78,803 $69,217
======= ======= =======
<FN>
See notes to financial statements.
</FN>
</TABLE>
2
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SHARPER IMAGE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Dollars in thousands, except per share amounts April 30,
----------------------------
1997 1996
----------- -----------
REVENUES:
Sales $ 40,701 $ 40,730
Less: returns and allowances 5,220 5,104
----------- -----------
Net Sales 35,481 35,626
Other revenue 792 875
----------- -----------
36,273 36,501
----------- -----------
COST AND EXPENSES:
Cost of products 19,563 19,245
Buying and occupancy 5,707 5,601
Advertising and promotion 3,546 4,726
General, selling, and administrative 11,021 10,651
----------- -----------
39,837 40,223
----------- -----------
OPERATING LOSS (3,564) (3,722)
OTHER INCOME (EXPENSE):
Interest income (expense) net (55) 8
Other-net 10 13
----------- -----------
(45) 21
----------- -----------
Loss Before Income Tax Benefit (3,609) (3,701)
Income Tax Benefit (1,443) (1,480)
----------- -----------
Net Loss $ (2,166) $ (2,221)
=========== ===========
Weighted Average Number of Shares 8,266,940 8,252,124
Net Loss Per Share $ (0.26) $ (0.27)
=========== ===========
See notes to financial statements.
3
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<TABLE>
SHARPER IMAGE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
(Unaudited) Three Months Ended
April 30,
---------------------------
Dollars in thousands 1997 1996
-------- --------
<S> <C> <C>
Cash was Provided by (Used for) Operating Activities:
Net loss $ (2,166) $ (2,221)
Adjustments to reconcile net loss to net cash
provided by (used for) operations:
Depreciation and amortization 1,136 978
Deferred rent expense 49 5
Deferred income taxes (1,443) (1,481)
Changes in:
Merchandise inventories (1,428) (8,203)
Accounts receivable 1,416 140
Deferred catalog costs, prepaid expenses and other (146) (420)
Accounts payable and accrued expenses (3,790) 1,453
Deferred revenue and other liabilities 258 (427)
-------- --------
Cash Used for Operating Activities (6,114) (10,176)
-------- --------
Cash was Provided by (Used for) Investing Activities:
Property and equipment expenditures (269) (1,418)
Disposal of equipment 0 25
-------- --------
Cash Used for Investing Activities (269) (1,393)
-------- --------
Cash was Provided by (Used for) Financing Activities:
Issuance of common stock for stock options -- 9
Principal payments on notes payable (230) (58)
-------- --------
Cash Used for Financing Activities (230) (49)
-------- --------
Net Decrease in Cash and Equivalents (6,613) (11,618)
-------- --------
Cash and Equivalents at Beginning of Period 10,873 12,476
-------- --------
Cash and Equivalents at End of Period $ 4,260 $ 858
======== ========
Supplemental Disclosure of Cash Paid for:
Interest $ 135 $ 106
Income Taxes $ 383 $ 459
<FN>
See notes to financial statements.
</FN>
</TABLE>
4
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SHARPER IMAGE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
Three-month periods ended April 30, 1997 and 1996
(Unaudited)
NOTE A- Financial Statements
The condensed balance sheets at April 30, 1997 and 1996, the condensed
statements of operations for the three-month periods ended April 30, 1997 and
1996, and the statements of cash flows for the three-month periods ended April
30, 1997 and 1996 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 April 30, 1997 and 1996, 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, 1997, presented herein, has been derived from
the audited balance sheet of the Company.
Certain information and footnote disclosures normally included in the footnotes
to the annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted from these interim financial
statements. It is suggested that these interim financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's 1996 Annual Report.
In February 1997, the Financial Accounting Standards Board issued Statement of
Finanical Accounting Standards (SFAS) No. 128, "Earnings per Share". SFAS No.
128 requires dual presentation of basic EPS and diluted EPS on the face of all
income statements issued after December 15, 1997 for all entities with complex
capital structures. Basic EPS is computed as net income divided by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that could occur from common shares issuable through
stock options, warrants and other convertible securities. The pro forma effect
assuming adoption of SFAS No. 128 at the beginning of each period is presented
below:
Quarter Ended April 30,
-----------------------
1997 1996
---- ----
Pro forma Earnings (Loss) Per Share:
Basic $(0.26) $(0.27)
Diluted $(0.26) $(0.27)
NOTE B- Revolving Loan and Notes Payable
In September 1994, the Company entered into a five-year revolving secured credit
facility ("credit facility") with The CIT Group/Business Credit, Inc. ("CIT").
The credit facility allows the Company to borrow funds and issue letters of
credit up to $20.0 million 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.
In May 1996, an amendment to the credit facility was completed with CIT to
provide for term loans for capital expenditures ("CAPEX Term Loans") up to an
aggregate amount of $4.5 million. As a result of the amendment, the total credit
facility was increased from $20.0 million to $24.5 million and the expiration
has been extended for an additional two years to September 2001. The CAPEX Term
Loans allow the Company to borrow amounts for the acquisition of capital
improvements. Amounts borrowed under the CAPEX Term Loans bear interest at
either prime plus 1% per annum, or at LIBOR plus 3% per annum. Each CAPEX Term
Loan is to be repaid in 36 equal monthly
5
<PAGE>
NOTE B - Revolving Loan and Notes Payable (continued)
principal installments. Certain financial covenants of the credit facility were
revised in the amendment.
Subsequent to January 31, 1997, two amendments to the credit facility were
completed with CIT to amend certain financial covenants and to provide
additional seasonal borrowings during 1997. The credit facility has been
increased to $29.5 million for the period from October 1, 1997 through December
31, 1997.
At April 30, 1997, the Company had no amounts outstanding on its revolving loan
credit facility. Letters of credit commitments outstanding under the credit
facility were $2,026,000. Borrowings of $1,666,000 were outstanding under the
CAPEX term loans which is included in notes payable.
Notes payable also included two mortgage loans collateralized by certain
property and equipment. In connection with the expansion of the Company's
distribution center which was completed in October 1995, the Company refinanced
the mortgage loan collateralized by the distribution center and paid off the
existing mortgage. The new note in the amount of $3 million was funded in
December 1995, bears interest at a fixed rate of 8.40%, provides for monthly
payments of principal and interest in the amount of $29,367, and matures in
January 2011. 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.
Notes payable also included a CAPEX Term Loan which bears interest at a variable
rate equal to the prime rate plus 1%, provides for monthly principal payments of
$55,555 plus the related interest payment, and matures in October 1999.
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 periods financial statements
in order to conform with current period classifications.
INDEPENDENT ACCOUNTANTS REVIEW REPORT
The condensed balance sheets of the Company as of April 30, 1997 and 1996, and
the related condensed statements of operations for the three-month periods then
ended and cash flows for the three month periods then ended have been reviewed
by the Company's independent accountants, Deloitte & Touche LLP, whose report
covering their review of the financial statements is presented herein.
6
<PAGE>
Deloitte &
Touche LLP
- ------------- ----------------------------------------------------------------
50 Fremont Street Telephone: (415) 247-4000
San Francisco, California 94105-2230 Facsimile: (415) 247-4329
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 April 30, 1997 and 1996 and the related condensed statements
of operations for the three-month and nine-month periods then ended and cash
flows for the 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,
1997, and the related statements of operations, stockholders' equity and cash
flows for the year ended (not presented herein); and in our report dated March
7, 1997, 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, 1997 is fairly stated, in all material respects, in
relation to the balance sheet from which it has been derived.
/s/ Deloitte & Touche LLP
May 22, 1997
- ---------------
Deloitte Touche
Tonmatsu
International
- ---------------
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.
Percentage of Total Revenues
----------------------------
Three Months Ended
April 30,
---------------------
1997 1996
----- -----
Revenues:
Net store sales 70.7% 71.5%
Net catalog sales 27.1 26.1
Other revenue 2.2 2.4
----- -----
Total Revenues 100.0% 100.0%
Costs and Expenses:
Cost of products 53.9 52.7
Buying and occupancy 15.7 15.3
Advertising and promotion 9.8 12.9
General, selling
and administrative 30.4 29.2
Other Expense (0.1) 0.0
----- -----
Loss Before Income Tax Benefit (9.9) (10.1)
Income Tax Benefit 3.9 4.0
----- -----
Net Loss (6.0)% (6.1)%
===== =====
8
<PAGE>
Revenues
Net sales for the three-month period ended April 30, 1997, decreased $146,000,
or 0.4%, from the comparable period of the prior year. Returns and allowances
for the three-month period ended April 30, 1997, were 12.8% of sales, as
compared with 12.5% of sales for the comparable prior year period. For the
three-month period ended April 30, 1997, as compared with the same period last
year, net store sales decreased $449,000, or 1.7%, comparable store sales
decreased by 3.8%, and net catalog sales increased $303,000 or 3.2%.
The decrease in net store sales for the three-month period ended April 30, 1997
as compared with the same prior year period reflects a 5.0% decrease in average
revenue per transaction, partially offset by a 2.7% increase in total store
transactions. The increase in net catalog sales for the three-month period ended
April 30, 1997 reflects an increase in average revenue per order of 72.4%,
partially offset by a decrease of 40.0% in total catalog orders as compared to
the same prior year period. The Company believes that the decrease in net store
sales, and comparable store sales for the three-month period ended April 30,
1997 is partially due to fewer magazine ads impacting store sales, as well as
the unavailability of certain popular products, including several limited
edition products. The increase in net catalog sales is due to increases in sales
for both The Sharper Image and The Sharper Image Home Collection catalogs.
Cost of Products
Cost of products for the three-month period ended April 30, 1997 increased
$318,000, or 1.7%, from the comparable prior year period. The increase in cost
of products reflects the higher costs of products attributable to the Company's
merchandise mix, partially offset by the lower product costs related to the
decrease in sales.
Buying and Occupancy
Buying and occupancy cost increased $106,000 due primarily to the increase in
store occupancy expenses. Store occupancy expense for the three-month period
ended April 30, 1997 increased $90,000, or 1.7%, from the comparable prior year
period. The increase primarily reflects the occupancy costs associated with the
six new stores opened during the last nine months of the prior fiscal year,
which was partially offset by the elimination of the occupancy costs of the two
Sharper Image stores closed during the three-month period ended April 30, 1997,
and the closure of the Sharper Image SPA division.
Advertising and Promotion Expenses
Advertising and promotion expenses for the three-month period ended April 30,
1997 decreased $1,181,000, or 25%, from the comparable prior year period. The
decrease in advertising and promotion expenses for the three-month period ended
April 30, 1997 reflects primarily the elimination of the SPA Collection catalog,
lower expenses related to magazine ads, and reduced catalog costs for The
Sharper Image catalog. These decreases in advertising and promotion expenses
were partially offset by the costs related to the Sharper Image Home Collection
catalog.
General, Selling and Administrative Expenses
General, selling and administrative expenses (GS&A) for the three-month period
ended April 30, 1997 increased $370,000, or 3.5%, from the comparable prior year
period. The increase was primarily due to the increase in general and
administrative costs related to the catalog operations and additional corporate
administrative costs, partially offset by the elimination of costs related to
the closure of the SPA division.
9
<PAGE>
Liquidity and Capital Resources
The Company met its short-term liquidity needs and its capital requirements in
the three-month period ended April 30, 1997 with available cash, trade credit,
and borrowings under the credit facility. During the three-month period ended
April 30, 1997, the Company's cash decreased by $6,613,000 to $4,260,000
primarily due to the increases in merchandise inventory and the funding of
operating expenses for the period.
In September 1994, the Company entered into a five-year revolving secured credit
facility ("credit facility") with The CIT Group/Business Credit, Inc., ("CIT").
The credit facility allows the Company to borrow funds and issue letters of
credit up to $20.0 million based upon inventory levels. The credit facility is
secured by the Company's inventory, accounts receivable, general intangibles and
certain other assets. Except as described below, 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.
In May 1996, an amendment to the credit facility was completed with CIT to
provide for term loans for capital expenditures ("CAPEX Term Loans") up to an
aggregate amount of $4.5 million. As a result of the amendment, the total credit
facility was increased from $20.0 million to $24.5 million and the expiration
has been extended for an additional two years to September 2001. The CAPEX Term
Loans allow the Company to borrow amounts for the acquisition of capital
improvements. Amounts borrowed under the CAPEX Term Loans bear interest at
either prime plus 1% per annum, or at LIBOR plus 3% per annum. Each CAPEX Term
Loan is to be repaid in 36 equal monthly principal installments. Certain
financial covenants of the credit facility were revised in the amendment.
Subsequent to January 31, 1997, two amendments to the credit facility were
completed with CIT to amend certain financial covenants and to provide
additional seasonal borrowings during 1997. The credit facility has been
increased to $29.5 million for the period from October 1, 1997 through December
31, 1997.
At April 30, 1997, the Company had no amounts outstanding on its revolving loan
credit facility. Letters of credit commitments outstanding under the credit
facility were $2,026,000. Borrowings of $1,666,000 were outstanding under the
CAPEX term loans, which is included in notes payable.
Notes payable also included two mortgage loans collateralized by certain
property and equipment. In connection with the expansion of the Company's
distribution center which was completed in October 1995, the Company refinanced
the mortgage loan collateralized by the distribution center and paid off the
existing mortgage. The new note in the amount of $3 million was funded in
December 1995, bears interest at a fixed rate of 8.40%, provides for monthly
payments of principal and interest in the amount of $29,367, and matures in
January 2011. 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.
Notes payable also included a CAPEX Term Loan which bears interest at a variable
rate equal to the prime rate plus 1%, provides for monthly principal payments of
$55,555 plus the related interest payment, and matures in October 1999.
10
<PAGE>
The Company's merchandise inventory at April 30, 1997 was approximately 11%
lower than that of April 30, 1996. Management believes that the lower than
optimal inventory levels during the three-month period ended April 30, 1997 had
an impact on the lower sales.
During the three-month period ended April 30, 1997, the Company closed two
stores located in Novato, California and Washington, D.C. The Company is
currently evaluating its plan to open one to three new Sharper Image stores and
convert certain of the SPA Collection stores to Sharper Image stores during
fiscal 1997. Total capital expenditures estimated for the new and existing
stores, including the remodel of a number of existing stores, corporate
headquarters, and the distribution center for fiscal 1997 are between $4.0
million to $6.0 million.
The Company believes it will be able to fund its cash needs for the remainder of
the fiscal year through internally generated cash, trade credit and the credit
facility.
Seasonality
The Company's business is highly seasonal, reflecting the general pattern
associated with the retail industry of peak sales and earnings during the
Christmas season. The secondary peak period for the Company is June, reflecting
the gifting for Father's Day and graduations. A substantial portion of the
Company's total revenues and all or most of the Company's net earnings occur in
the fourth quarter ending January 31. The Company generally experiences lower
revenues and earnings during the other quarters and, as is typical in the retail
industry, has incurred and may continue to incur losses in these quarters. The
results of operations for these interim periods are not necessarily indicative
of the results for the full fiscal year.
Uncertainties and Risk
The foregoing discussion and analysis should be read in conjunction with the
Company's financial statements and notes thereto included with this report. The
foregoing discussion contains certain forward-looking statements that are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those set forth in such forward-looking statements. Such
risks and uncertainties include, without limitation, risks of changing market
conditions in the overall economy and the retail industry, consumer demand, the
opening of new stores, actual advertising expenditures by the Company, the
success of the Company's advertising and merchandising strategy, availability of
products, and other factors detailed from time to time in the Company's annual
and other reports filed with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date thereof. The Company undertakes no obligations to
publicly release any revisions to these forward-looking statements or reflect
events or circumstances after the date hereof.
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 January 19, 1996
(Registration No. 33-3327).)
10.2 1994 Non-Employee Director Stock Option Plan dated October 7, 1994.
(Incorporated by reference to Registration Statement on Form S-8 filed on
January 19, 1996 (Registration No. 33-3327).)
10.3 Cash or Deferred Profit Sharing Plan, as amended. (Incorporated by
reference to Exhibit10.2 to Registration Statement on Form S-1
(Registration No. 33-12755).)
10.4 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.)
10.5 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.)
10.6 Form of Stock Purchase Agreement dated July 26, 1985 relating to shares
of Common Stock purchased 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).)
10.7 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).)
10.8 Form of Stock Purchase Agreement dated November 10, 1986 relating to
shares of Common Stock purchased 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).)
10.9 Form of Director Indemnification Agreement. (Incorporated by reference to
Exhibit 10.42 to Registration Statement on Form S-1 (Registration No.
33-12755).)
10.10 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 Form 10-K for fiscal year
ended January 31, 1994)
12
<PAGE>
10.11 Financing Agreement dated September 21, 1994 between the Company and CIT
Group/Business Credit Inc. (Incorporated by reference to Exhibit 10.12 to
Form 10-Q for the quarter ended October 31, 1994)
10.12 The Sharper Image 401(K) Savings Plan (Incorporated by reference to
Exhibit 10.21 to Registration Statement of Form S-8 (Registration No.
33-80504) dated June 21, 1994))
10.13 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.)
10.14 Annual Report for the Sharper Image 401(K) Savings Plan (incorporated by
reference to Form 11-K (Registration No. 33-80504) for the plan year
ended December 31, 1995.)
10.15 Split-Dollar Agreement between the Company and Mr. R. Thalheimer, its
Chief Executive Officer dated October 13, 1995, effective as of May 17,
1995. (Incorporated by reference to Exhibit 10.17 to the Form 10-K for
the fiscal year ended January 31, 1996.)
10.16 Assignments of Life Insurance Policy as Collateral, both dated October
13, 1995, effective May 17, 1995. (Incorporated by reference to Exhibit
10.18 to the Form 10-K for the fiscal year ended January 31, 1996.)
10.17 Amendment to the Financing Agreement dated May 15, 1996 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by reference
to Exhibit 10.19 to the Form 10Q for the quarter ended April 30, 1996).
10.18 Warrant to Purchase Common Stock Agreement dated May 15, 1996 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by reference
to Exhibit 10.20 to the Form 10Q for the quarter ended April 30, 1996).
10.19 CAPEX Term Loan Promissory note dated October 15, 1996 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by reference
to Exhibit 10.21 to the Form 10Q for the quarter ended October 31, 1996.)
10.20 Employment Agreement between the Company and Mr. Barry Gilbert, its Vice
Chairman and Chief Operating Officer dated and effective December 2,
1996. (Incorporated by reference to Exhibit 10.20 to the Form 10-K for
the fiscal year ended January 31, 1997.)
10.21 Amendment to the Financing Agreement dated February 13, 1997 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by reference
to Exhibit 10.21 to the Form 10-K for the fiscal year ended January 31,
1997.)
10.22 Warrant to Purchase Common Stock Agreement dated February 13, 1997
between the Company and The CIT Group/Business Credit Inc. (Incorporated
by reference to Exhibit 10.22 to the Form 10-K for the fiscal year ended
January 31, 1997.)
10.23 Amendment to the Financing Agreement dated March 24, 1997 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by reference
to Exhibit 10.23 to the Form 10-K for the fiscal year ended January 31,
1997.)
13
<PAGE>
11.1 Statement 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 April 30, 1997.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SHARPER IMAGE CORPORATION
Date: June 12, 1997 by: /s/ Craig P. Womack
------------- --------------------
Craig P. Womack
President
Chief Administrative
Officer
by: /s/ Tracy Y. Wan
--------------------
Tracy Y. Wan
Senior Vice President
Chief Financial Officer
15
Exhibit 11.1
SHARPER IMAGE CORPORATION
STATEMENTS RE: COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
April 30,
-----------------------------
Dollars in thousands, except per share amounts 1997 1996
-------------- -----------
Net Loss $ (2,166) $ (2,221)
Average shares of common stock
outstanding during the period 8,266,940 8,252,124
Add:
Incremental shares from assumed
exercise of stock options (Primary) * *
-------------- -----------
8,266,940 8,252,124
============== ===========
Primary loss per share $ (0.26) $ (0.27)
============== ===========
Average shares of common stock
outstanding during the period 8,266,940 8,252,124
Add:
Incremental shares from assumed
exercise of stock options (Fully-diluted) * *
-------------- -----------
8,266,940 8,252,124
============== ===========
Fully-diluted loss per share $ (0.26) $ (0.27)
============== ===========
*Incremental shares from assumed exercise of stock options are antidilutive for
primary and fully diluted loss per share, and therefore not presented.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SHARPER IMAGE CORPORATION
Date: June 12, 1997 by:
------------- -----------------------------
Craig P. Womack
President
Chief Administrative Officer
by:
-----------------------------
Tracy Y. Wan
Senior Vice President
Chief Financial Officer
Deloitte &
Touche LLP
- ----------- -----------------------------------------------------------------
50 Fremont Street Telephone: (415) 247-4000
San Francisco, California 94105-2230 Facsimile: (415) 247-4329
June 13, 1997
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 April 30, 1997
and 1996, as indicated in our report May 22, 1997; 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 April 30, 1997, 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.
/s/ Deloitte & Touche LLP
- ---------------
Deloitte Touche
Tohmatsu
International
- ---------------
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<ARTICLE> 5
<CIK> 0000811696
<NAME> SHARPER IMAGE CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<EXCHANGE-RATE> 1
<CASH> 4,260
<SECURITIES> 0
<RECEIVABLES> 5,011
<ALLOWANCES> (512)
<INVENTORY> 28,793
<CURRENT-ASSETS> 47,351
<PP&E> 56,535
<DEPRECIATION> (34,390)
<TOTAL-ASSETS> 72,926
<CURRENT-LIABILITIES> 39,417
<BONDS> 0
0
0
<COMMON> 83
<OTHER-SE> 26,200
<TOTAL-LIABILITY-AND-EQUITY> 72,926
<SALES> 40,701
<TOTAL-REVENUES> 36,273
<CGS> 19,563
<TOTAL-COSTS> 39,837
<OTHER-EXPENSES> (10)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55
<INCOME-PRETAX> (3,609)
<INCOME-TAX> (1,443)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,166)
<EPS-PRIMARY> (0.26)
<EPS-DILUTED> (0.26)
</TABLE>
