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Sharps Compliance Corp. has a market cap of $43.1 million; its shares were traded at around $2.91 with and P/S ratio of 2.
Highlight of Business Operations:The following analyzes changes in the consolidated operating results and financial condition of the Company during the twelve months ended June 30, 2012, 2011 and 2010, respectively. The following table sets forth, for the periods indicated, certain items from the Company s Consolidated Statements of Operations (dollars in thousands except for percentages expressed as a percentage of revenues):
The Company generated an operating loss of $2.5 million for the year ended June 30, 2012 compared to an operating loss of $4.5 million for the year ended June 30, 2011. The operating margin was (11.6%) for the year ended June 30, 2012 compared to (23.4%) for the year ended June 30, 2011. The improvement in operating loss is a result of the higher sales volume as well as strong cost discipline and focused use of resources on targeted markets primarily Retail, Pharmaceutical, Professional and Core Government markets (discussed above).
The Company generated an operating loss of $4.5 million for the year ended June 30, 2011 compared to an operating income of $14.4 million for the year ended June 30, 2010. The operating margin was (23.4%) for the year ended June 30, 2011 compared to 36.8% for the year ended June 30, 2010. The decrease in operating income and operating margin is a result of the above mentioned decrease in revenue and operating leverage inherent in the Company s business model.
The Company has calculated the change in revenue assigned to each of the units of accounting under the relative selling price methodology as compared to using the residual allocation method and determined that the change is not material. The Company has determined that the implementation of ASU No. 2009-13 did not have a material effect on the consolidated financial statements when compared to its previous revenue recognition methodology.
Stock-Based Compensation: The Company accounts for stock-based compensation under guidance which establishes accounting for equity instruments exchanged for employee services. Under this guidance, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee s requisite service period (generally the vesting period of the equity grant). Total stock-based compensation expense for the fiscal years ended June 30, 2012, 2011 and 2010, was $786 thousand ($68 thousand included in cost of revenues and $718 thousand included in general and administrative expenses in the Company s consolidated statement of operations), $871 thousand ($67 thousand included in cost of revenues and $804 thousand included in general and administrative expenses in the Company consolidated statement of operations) and $980 thousand ($52 thousand included in cost of revenues and $928 thousand included in general and administrative expenses in the Company s consolidated statement of operations), respectively. The guidance requires any reduction in taxes payable resulting from tax deductions that exceed the recognized tax benefit associated with compensation expense (excess tax benefits) to be classified as financing cash flows and as an increase to additional paid in capital. The Company included $0.1 million, $1.0 million, and$1.1 million of excess tax benefits in its cash flows from financing activities for the fiscal years ended June 30, 2012, 2011 and 2010, respectively.
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