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Ultralife Corp. (ULBI) Reports Second Quarter Results

Ultralife Corporation (NASDAQ: ULBI) reported operating income from continuing operations of $2.9 million on revenue of $43.6 million for the quarter ended July 3, 2011. For the second quarter of 2010, the company reported operating income from continuing operations of $1.0 million on revenue of $33.6 million.

Revenue for our second quarter increased by 29% over last year. The growth was driven by solid demand from our defense customers, including resumed order activity from our core U.S. government customer, and further penetration of our batteries into the metering business in China, said Michael D. Popielec, Ultralifes president and chief executive officer. We are continuing to make progress towards improving the companys profitability through lean manufacturing, reductions in non-value-added overhead and the implementation of plans to further consolidate our facilities footprint. These operational efficiencies are unlocking resources that we are allocating to new product development and expanded sales coverage. Having exited the Energy Services business one quarter ahead of schedule, we are now channeling all of our attention on positioning the company for sustainable, profitable growth.

As a result of our financial performance, working capital management and cash generated from lean initiatives, we reduced our revolver balance by $6.5 million during the second quarter to $3.7 million at quarter end. Working capital efficiencies included the reduction in inventory levels and improved accounts receivable collections, added Philip A. Fain, Ultralifes chief financial officer.

Second Quarter 2011 Financial Results

During the quarter, Ultralife completed the exit of the Energy Services business. As a result, the Energy Services segment has been reclassified as a discontinued operation. In connection with exiting the Energy Services business, the company incurred closing costs of $2.9 million for the first six months of 2011, the cash component of which amounted to $2.0 million. All figures presented below represent results from continuing operations.

Revenue increased by 29% to $43.6 million, compared to $33.6 million for the second quarter of 2010, consisting of a 23% increase in Battery Energy Product sales and a 49% increase in Communications Systems sales.

Gross margin was $11.8 million, or 27.1% of revenue, compared to $9.0 million, or 26.8% of revenue, for the same quarter a year ago, reflecting a favorable mix of high-margin Communications Systems sales. Included in gross margin for the second quarter of 2011 was a $0.3 million severance charge related to overhead reductions.

Operating expenses were $8.9 million, compared to $8.0 million a year ago reflecting higher new product development costs, higher selling expenses, and relocation and severance expenses that did not occur in the same period last year. As a percent of revenue, operating expenses were 20.5%, compared to 23.8% a year ago. Operating income grew to $2.9 million, representing an operating margin of 6.6%, compared to $1.0 million, for an operating margin of 2.9%, for the same quarter last year.

Net income from continuing operations was $2.6 million, or $0.15 per share, compared to $0.6 million, or $0.03 per share, for the second quarter of 2010. Net loss from discontinued operations was $2.1 million, or $0.12 per share, reflecting the cost of exiting the Energy Services business, compared to a net loss of $0.6 million, or $0.03 per share, for the same quarter last year. For the second quarter of 2010, the net loss from discontinued operations represented the operating loss of the Energy Services business.

Six Months Ended July 3, 2011 Financial Results

For the six month period ended July 3, 2011, revenue from continuing operations was $72.0 million, compared to $70.1 million for the same period a year ago. Year-to-date 2011 revenue was negatively impacted by a $2.7 million charge recorded in the first quarter to reflect the settlement with the U.S. Government related to exigent contracts completed between 2003 and 2004. This charge resulted in an operating loss of $1.3 million, compared to operating income of $2.8 million for the first half of 2010. The net loss from continuing operations was $1.5 million, or $0.08 per share, compared to net income of $1.8 million, or $0.11 per share, for the same period a year ago. The net loss from discontinued operations was $3.8 million, or $0.22 per share, including $2.9 million of costs related to the exit of the Energy Services business, compared to a net loss of $1.5 million, or $0.09 per share, for the first half of 2010.

Outlook

Management reaffirmed its guidance for 2011, which calls for revenue of approximately $162 million and operating income of approximately $7.8 million. Management cautions that the timing of orders and shipments may cause variability in quarterly results.

About Ultralife Corporation

Ultralife Corporation serves its markets with products and services ranging from portable power solutions to communications and electronics systems. Through its engineering and collaborative approach to problem solving, Ultralife serves government, defense and commercial customers across the globe.

Headquartered in Newark, New York, the company’s business segments include: Battery Energy Products and Communications Systems. Ultralife has operations in North America, Europe and Asia. For more information, visit www.ultralifecorp.com.

This press release may contain forward-looking statements based on current expectations that involve a number of risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include: uncertain global economic conditions, increased competitive environment and pricing pressures, disruptions related to restructuring actions and delays. The Company cautions investors not to place undue reliance on forward-looking statements, which reflect the Company’s analysis only as of today’s date. The Company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect Ultralife’s financial results is included in Ultralife’s Securities and Exchange Commission (SEC) filings, including the latest Annual Report on Form 10-K.

Conference Call Information

Ultralife will hold its second quarter earnings conference call today at 10:00 AM ET. To participate, please call (800) 915-4836, identify yourself and ask for the Ultralife call. The conference call will also be broadcast live over the Internet at http://investor.ultralifecorp.com. To listen to the call, please go to the web site at least fifteen minutes early to download and install any necessary audio software. For those who cannot listen to the live webcast, a replay of the webcast will be available shortly after the call at the same location.

ULTRALIFE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three-Month Periods Ended Six-Month Periods Ended
July 3, June 27, July 3, June 27,
2011 2010 2011 2010
Revenues:
Battery energy products $ 31,239 $ 25,387 $ 55,487 $ 49,677
Communications systems 12,316 8,260 16,524 20,439
Total revenues 43,555 33,647 72,011 70,116
Cost of products sold:
Battery energy products 23,986 19,382 45,193 38,470
Communications systems 7,772 5,259 10,483 12,801
Total cost of products sold 31,758 24,641 55,676 51,271
Gross margin 11,797 9,006 16,335 18,845
Operating expenses:
Research and development 2,114 1,883 4,621 3,590
Selling, general, and administrative 6,820 6,137 12,971 12,481
Total operating expenses 8,934 8,020 17,592 16,071
Operating income (loss) 2,863 986 (1,257 ) 2,774
Other income (expense):
Interest income 1 2
Interest expense (162 ) (215 ) (318 ) (710 )
Miscellaneous (9 ) (124 ) 290 (83 )
Income (loss) from continuing operations before income taxes 2,693 647 (1,283 ) 1,981
Income tax provision-current 63 28 67 66
Income tax provision-deferred 67 39 133 94
Total income taxes 130 67 200 160
Net income (loss) from continuing operations 2,563 580 (1,483 ) 1,821
Net (income) loss from continuing operations attributable
to noncontrolling interest 15 3 28 (6 )
Net income (loss) from continuing operations attributable to Ultralife 2,578 583 (1,455 ) 1,815
Discontinued operations:
Loss from discontinued operations, net of tax (2,139 ) (563 ) (3,796 ) (1,508 )
Net income (loss) attributable to Ultralife $ 439 $ 20 $ (5,251 ) $ 307
Net income (loss) attributable to Ultralife common shareholders – basic
Continuing operations $ 0.15 $ 0.03 $ (0.08 ) $ 0.11
Discontinued operations $ (0.12 ) $ (0.03 ) $ (0.22 ) $ (0.09 )
Total $ 0.03 $ 0.00 $ (0.30 ) $ 0.02
Net income (loss) attributable to Ultralife common shareholders – diluted
Continuing operations $ 0.15 $ 0.03 $ (0.08 ) $ 0.11
Discontinued operations $ (0.12 ) $ (0.03 ) $ (0.22 ) $ (0.09 )
Total $ 0.03 $ 0.00 $ (0.30 ) $ 0.02
Weighted average shares outstanding – basic 17,296 17,164 17,286 17,089
Weighted average shares outstanding – diluted 17,308 17,169 17,286 17,094
ULTRALIFE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
(unaudited)
July 3, December 31,
ASSETS 2011 2010
Current assets:
Cash and cash equivalents $ 4,033 $ 5,105
Trade accounts receivable, net 25,162 34,270
Inventories 32,056 33,122
Prepaid expenses and other current assets 3,194 3,157
Total current assets 64,445 75,654
Property and equipment 13,649 14,485
Other assets
Goodwill, intangible and other assets 24,345 24,696
Total Assets $ 102,439 $ 114,835
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt $ 3,757 $ 8,717
Accounts payable 14,097 16,409
Other current liabilities 10,016 11,219
Total current liabilities 27,870 36,345
Long-term liabilities:
Long-term debt and capital lease obligations 1 251
Other long-term liabilities 5,186 4,444
Total long-term liabilities 5,187 4,695
Shareholders’ equity:
Ultralife equity:
Common stock, par value $0.10 per share 1,871 1,865
Capital in excess of par value 171,599 171,020
Accumulated other comprehensive loss (975 ) (1,262 )
Accumulated deficit (95,451 ) (90,200 )
77,044 81,423
Less — Treasury stock, at cost 7,658 7,652
Total Ultralife equity 69,386 73,771
Noncontrolling interest (4 ) 24
Total shareholders’ equity 69,382 73,795
Total Liabilities and Shareholders’ Equity $ 102,439 $ 114,835
Thursday, August 4th, 2011 Uncategorized
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