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California and the West

Sharper Image to Restate Results

September 19, 2006|From the Associated Press

Sharper Image Corp. said Monday that it expected to restate financial results for its last three fiscal years and would miss the deadline for reporting results for its latest quarter, joining a growing list of firms grappling with mishandled stock options.

The San Francisco-based retailer of electronics and gadgets expects to revise its results for the three-year period ended Jan. 31 to reflect a charge for options issued in 1998 and 1999.

The company said it would postpone reporting to securities regulators the results for its fiscal quarter ended July 31 until it completed a voluntary internal review of option accounting. The company said it expected to report a wider loss than a year earlier. It estimated that revenue in the quarter declined 22%.

Sharper Image is one of dozens of companies examining their stock option grants to look for backdating -- a practice in which options are issued retroactively, sometimes to coincide with low points in a company's share price. Such a maneuver increases the value of the options to the recipients. If not properly recorded, backdating can inflate a company's profit.

Sharper Image said its review, conducted with the help of independent experts, had revealed improper accounting. The review is continuing. The retailer said it expected the findings to result in a pretax noncash charge of $15 million spread over fiscal years 1998 to 2006.

Sharper Image shares fell 34 cents to $9.35.

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