Urologix Reports Fiscal Year 2014 Second Quarter Results

Urologix Reports Fiscal Year 2014 Second Quarter Results  Second Quarter Revenue Totaled $3.8 Million  MINNEAPOLIS, Feb. 4, 2014 (GLOBE NEWSWIRE) -- Urologix^®, Inc. (OTCQB:ULGX), the leading provider of in-office procedures for the safe, durable and effective treatment of BPH, today reported financial results for its fiscal second quarter ended December 31, 2013.  Operating Results for the Second Quarter of Fiscal Year 2014  Second quarter fiscal year 2014 revenue totaled $3.8 million, up 0.7% sequentially which is relatively flat with the first quarter of fiscal year 2014 and down 12.6% compared to the second quarter of fiscal year 2013. The revenue decline compared to the second quarter of fiscal year 2013 was due to lower volume of units sold in both product lines.  "Second quarter revenue improved slightly sequentially, but did not meet our growth expectations. Our results combined with our assessment of where we can have the most impact in our market led us to implement the restructuring of the organization at the beginning of January. Careful management of our resources in advance of the restructuring helped our ending cash position in the quarter," stated Greg Fluet, Chief Executive Officer. "Our new organizational structure should allow us to meet our operational goals with improved profitability in the future. We remain intently focused on serving the unmet clinical needs of the large number of men suffering from the symptoms related to BPH. The execution of our market development and patient education programs will continue as we work to expand the market for our in-office BPH treatments."  As of December 31, 2013, the Company's cash balance was $1.3 million compared to $1.6 million as of September 30, 2013. Cash utilization in the quarter was $284,000. The Company's cash utilization benefited from increased collections at the end of the calendar year and reduced operating expenses. The Company's cash needs will be determined by a number of items including operating performance, accessibility of the Silicon Valley Bank ("SVB") line of credit and the timing of the payment of annual royalty amounts due and unpaid in the second quarter of the fiscal year totaling $650,000 which are included in short-term deferred acquisition payments on the balance sheet. The Company is pleased to announce today that it entered into an amendment to the line of credit with SVB which extends the line through June 30, 2014. Additional information on this extension is included in a separate press release issued today.  Gross profit for the second quarter of fiscal year 2014 was $1.8 million, or 47.2% of revenue, compared to $2.2 million, or 51.4% of revenue, in the second quarter of fiscal year 2013. Gross margin also declined sequentially compared to 49.3% in the first quarter of fiscal year 2014. The change in gross margin compared to the prior year second quarter and first quarter of fiscal year 2014 was primarily due to lower production volumes to reduce inventory levels in the second quarter of fiscal year 2014 as well as higher costs related to the Prostiva product line. The lower production volumes resulted in increased fixed manufacturing costs on a per-unit basis.  Total operating expense was $2.7 million for the second quarter of fiscal year 2014, representing a decline of 12.3% compared to the prior year period and a decline of 11.1% sequentially. The decline as compared to the second quarter of fiscal year 2013 in total operating expense was driven by lower sales and marketing expense as well as lower research and development expense, offset partially by the medical device excise tax which was not assessed in the prior year period. The sequential decline in operating expense was driven by the combination of lower costs in sales and marketing as well as lower legal and audit fees.  For the second quarter of fiscal year 2014, Urologix reported a net loss of $1.1 million, or $0.05 per diluted share, compared to a net loss of $970,000, or $0.05 per diluted share, in the second quarter of fiscal year 2013. The change in net loss in the second quarter of fiscal year 2014 was primarily due to lower sales and gross profit compared to the prior year second quarter. The net loss this quarter represented a modest sequential improvement over the net loss of $1.3 million, or $0.06 per share, in the first quarter of fiscal 2014. The sequential improvement in net loss in the second quarter was driven by lower operating expenses.  Earnings Call Information  Urologix will host a conference call with the financial community to discuss fiscal year 2014 second quarter results on Tuesday, February 4, 2014 at 4:00 p.m. Central Standard Time. To listen to the call, please dial 1-800-688-0836 and enter the Participant Passcode 89504173 at least 10 minutes prior to the call. A live webcast of the call will be available through the investor relations section of the Company's website at www.urologix.com and available for replay approximately two hours after the completion of the call.  About Urologix  Urologix, Inc., based in Minneapolis, develops, manufactures, markets and distributes minimally invasive medical products for the treatment of obstruction and symptoms due to Benign Prostatic Hyperplasia (BPH). Urologix' Cooled ThermoTherapy™ produces targeted microwave energy combined with a unique cooling mechanism to protect healthy tissue and enhance patient comfort. The Prostiva® RF Therapy System delivers radio frequency energy directly into the prostate destroying prostate tissue, reducing constriction of the urethra, and thereby relieving BPH symptoms. Both of these therapies provide safe, effective and lasting relief of the symptoms and obstruction due to BPH. Prostiva® is a registered trademark of Medtronic, Inc., used under license. All other trademarks are the property of Urologix.  If you'd like more information on this topic, please contact Brian Smrdel at (763) 475-7696 or bsmrdel@urologix.com or to learn more about Urologix and its products and services, visit their website at www.urologix.com.  The Urologix, Inc. logo is available at www.urologix.com/clinicians/resource-library.php.  Forward Looking Statements  This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. Such forward looking statements include, for example, the effectiveness of the Company's sales and marketing strategies and organization, the Company's future revenue and operating performance, the effect on expenses or cash balances as a result of the previously announced strategic restructuring, the development and marketing of new products, the timing or payment of any amounts to Medtronic, or the availability of borrowing under the line of credit with Silicon Valley Bank. The statements made by the Company are based upon management's current expectations and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include market conditions and other factors beyond the Company's control and the risk factors and other cautionary statements described in the Company's Annual Report on Form 10-K for the year ended June 30, 2013 and other documents filed with the Securities and Exchange Commission.                                                                    Urologix, Inc. Statements of Operations (Unaudited, in thousands, except per share data)                                                                                                          Three Months Ended Six Months Ended                                         December 31,      December 31,                                                                                                          2013      2012     2013      2012                                                                   Sales                                   $3,806   $4,354  $7,585   $8,324 Cost of goods sold                      2,008     2,117    3,923     4,072 Gross profit                            1,798     2,237    3,662     4,252                                                                   Costs and expenses:                                                Sales and marketing                     1,681     2,007    3,527     3,724 General and administrative              561       646      1,246     1,383 Research and development                452       602      874       1,218 Change in value of                      (85)      (215)    (93)     (369) acquisitionconsideration Medical device tax                      59        --       119       -- Amortization expense                    22        26       44        52 Total costs and expenses                2,690     3,066    5,717     6,008                                                                   Operating loss                          (892)     (829)    (2,055)   (1,756) Interest expense                        (178)     (127)    (338)     (249) Foreign currency exchange gain/(loss)   1         2        2         (3) Loss before income taxes                (1,069)   (954)    (2,391)   (2,008)                                                                   Income tax expense                      16        16       28        32 Net loss                                $(1,085) $(970)  $(2,419) $(2,040)                                                                   Net loss per common share---basic       $(0.05)  $(0.05) $(0.11)  $(0.10)                                                                   Net loss per common share---diluted     $(0.05)  $(0.05) $(0.11)  $(0.10)                                                                   Weighted average number of common       21,245    20,835   21,132    20,507 shares outstanding---basic                                                                   Weighted average number of common       21,245    20,835   21,132    20,507 shares outstanding---diluted                                                                   Urologix, Inc. Balance Sheets (Unaudited, in thousands)                                                                                                                      December 31, June 30,                                                      2013         2013 ASSETS                                                            Current assets:                                                   Cash                                                 $1,267     $2,290 Accounts receivable, net                             1,856        2,132 Inventories                                          1,357        1,571 Prepaids and other current assets                    264          128 Total current assets                                 4,744        6,121 Property and equipment:                                           Property and equipment                               12,158      12,165 Less accumulated depreciation                        (11,569)    (11,430) Property and equipment, net                          589         735 Other intangible assets, net                         1,483        1,587 Goodwill                                             3,036        3,036 Long-term inventories                                959          1,043 Other assets                                         5            5 Total assets                                         $10,816     $12,527                                                                  LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)                    Current liabilities:                                              Accounts payable                                     $1,054      $628 Accrued compensation                                 677         721 Deferred income                                      7            5 Short-term deferred acquisition payment              1,270        681 Other accrued expenses                               525          602 Total current liabilities                            3,533        2,637                                                                  Deferred tax liability                               54           36 Long-term deferred acquisition payment               3,552        4,026 Long-term debt                                       5,333        5,333 Other accrued liabilities                            56           75 Interest payable                                     165          -- Total liabilities                                    12,693       12,107                                                                  Shareholders' equity/(deficit):                                   Common stock                                         209         208 Additional paid-in capital                           119,351     119,230 Accumulated deficit                                  (121,437)    (119,018) Total shareholders' equity/(deficit)                 (1,877)      420 Total liabilities and shareholders' equity/(deficit) $10,816     $12,527                                                                                                                                       Urologix, Inc. Condensed Statements of Cash Flows (Unaudited, in thousands)                                                                                                                               Six Months Ended                                                           December 31,                                                           2013      2012 Operating Activities:                                                Net loss                                                   $ (2,419) $ (2,040) Adjustments to reconcile net loss to net cash used for               operating activities: Depreciation and amortization                              302       339 Employee stock-based compensation expense                  122       151 Provision for bad debts                                    29        23 Loss on disposal of assets                                 3         7 Accretion expense on deferred acquisition payments         209       284 Net adjustment to acquisition consideration                (93)      (369) Deferred income taxes                                      18        22 Change in operating items, net of acquisition:                       Accounts receivable                                        247       (92) Inventories                                                276       (577) Prepaids and other assets                                  (136)     44 Accounts payable                                           426       1,599 Accrued expenses and deferred income                       (139)     (177) Interest payable                                           165       -- Net cash used for operating activities                     (990)     (786)                                                                     Investing Activities:                                                Purchase of property and equipment                         (27)      (36) Purchases of intellectual property                         (6)       (12) Net cash used for investing activities                     (33)      (48)                                                                     Financing Activities:                                                Issuance of common stock                                   --        3,814 Net cash provided by financing activities                  --        3,814                                                                     Net decrease in cash and cash equivalents                  (1,023)   2,980 Cash and cash equivalents:                                           Beginning of period                                        2,290     1,899 End of period                                              $1,267    $ 4,879                                                                     Supplemental cash-flow information                                   Income taxes paid during the period                        $ 12      $ 15 Net amount of inventory transferred to property and        $ 22      $ 56 equipment                                                                      CONTACT: Urologix Investor Relations Contact          Brian Smrdel          (763) 475-7696          Bsmrdel@urologix.com  Urologix, Inc. 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