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Ultralife Corp. (ULBI) Reports Second Quarter Results

|Includes: Ultralife Corporation (ULBI)

Earlier today, Ultralife Corp. reported its operating income for the quarter ending July 3, 2011. For the second quarter of 2010, the company reported operating income from continuing operations of $2.9 million on revenue of $43.6 million. The company’s second quarter revenue increased by 29% over last year’s numbers. Ultralife’s president, Michael D. Popielec, stated that demand from the company’s defense customers and further penetration of its batteries into the metering business in China drove the growth seen in the numbers.

He remarked, “We are continuing to make progress towards improving the company’s 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.”

Phillip A. Fain, Ultralife’s CFO, added, “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.”

During the second quarter, Ultralife finalized its exit from the Energy Services business. As a result, the Energy Services segment has been reclassified as a discontinued operation. 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, 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 is 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.

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