Spectranetics Corp. has a market cap of $168.58 million; its shares were traded at around $5.09 with a P/E ratio of 169.67 and P/S ratio of 1.47.
Highlight of Business Operations:depreciation and amortization, $1.9 million of stock-based compensation, $0.2 million of provision for excess and obsolete inventories, $0.9 million of asset impairment charge and $6.1 million of an increase in the valuation allowance against our deferred tax assets.
Investing Activities. For the nine months ended September 30, 2010, cash provided by investing activities was $2.3 million, consisting of proceeds from the sale and partial redemption of auction rate securities of $5.4 million, offset by capital expenditures of $3.2 million. In the first quarter of 2010, restricted cash that had previously been held in an escrow fund for a litigation matter had its restriction released, and this cash was invested in a short-term certificate of deposit. The capital expenditures included manufacturing equipment upgrades and replacements as well as additional capital items for research and development projects and additional computer equipment and software purchases.
As of September 30, 2010, the unrealized loss on our auction rate securities was approximately $0.4 million, reducing the par value of the securities of $4.8 million to their fair value of $4.4 million, or approximately 91% of par. The unrealized loss was recorded in earnings in the fourth quarter of 2009 as an other-than-temporary impairment. At December 31, 2009, we also performed a sensitivity analysis in the valuation of our auction rate securities using an estimated date to liquidation of plus or minus one year and a discount rate of plus or minus 50 basis points. The sensitivity analysis with these parameters calculated a valuation ranging from 86% to 96% of par.
Our exposure to foreign currency fluctuations is primarily related to sales of our products in Europe, which are denominated primarily in the euro. Changes in the exchange rate between the euro and the U.S. dollar could adversely affect our revenue and net income. Exposure to foreign currency exchange rate risk may increase over time as our business evolves and our products continue to be introduced into international markets. Currently, we do not hedge against any foreign currencies and, as a result, could incur unanticipated gains or losses. For the three months ended September 30, 2010, approximately $0.3 million of decreased revenue and approximately $0.2 million of decreased operating expenses were the result of exchange rate fluctuations of the U.S. dollar in relation to the euro and other European currencies as compared to the prior year period. Accordingly, the net impact of exchange rate fluctuations on the consolidated net loss for the three months ended September 30, 2010 was a decrease in net income of approximately $0.1 million as compared to the prior year.
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