##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 26, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 000-20852
 ULTRALIFE CORPORATION
  Delaware
    
    16-1387013(State or other jurisdiction
    
    (I.R.S. Employer Identification No.)of incorporation or organization)
 2000 Technology Parkway, Newark, New York 14513
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ




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##### 



PagePART I FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets  September 26, 2010 (Unaudited) and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations (Unaudited)   Three- and nine-month periods ended September 26, 2010 and September 27, 2009
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited)   Nine-month periods ended September 26, 2010 and September 27, 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 4. Controls and Procedures
    
    
    40PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    41Item 1A. Risk Factors
    
    
    42Item 6. Exhibits
    
    
    42Signatures
    
    
    43Index to Exhibits
    
    
    44Exhibit 31.1Exhibit 31.2Exhibit 32
   2




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(Unaudited)September 26,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    7,093
    
    
    $
    6,094Restricted cash
    
    
    475
    
    
    
    Trade accounts receivable (less allowance for doubtful accounts
of $646 at September 26, 2010 and $1,024 at December 31, 2009)
    
    
    29,855
    
    
    
    32,449Inventories
    
    
    38,037
    
    
    
    35,503Deferred tax asset  current
    
    
    288
    
    
    
    288Prepaid expenses and other current assets
    
    
    2,081
    
    
    
    1,624Total current assets
    
    
    77,829
    
    
    
    75,958Property, plant and equipment, net
    
    
    14,818
    
    
    
    16,648Other assets:Goodwill
    
    
    26,218
    
    
    
    25,436Intangible assets, net
    
    
    11,870
    
    
    
    13,064Security deposits and other long-term assets
    
    
    285
    
    
    
    6038,373
    
    
    
    38,560Total Assets
    
    $
    131,020
    
    
    $
    131,166LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of debt and capital lease obligations
    
    $
    12,143
    
    
    $
    19,082Accounts payable
    
    
    16,951
    
    
    
    19,177Income taxes payable
    
    
    191
    
    
    
    28Other current liabilities
    
    
    11,840
    
    
    
    9,847Total current liabilities
    
    
    41,125
    
    
    
    48,134Long-term liabilities:Debt and capital lease obligations
    
    
    303
    
    
    
    267Deferred tax liability  long-term
    
    
    4,507
    
    
    
    4,100Other long-term liabilities
    
    
    525
    
    
    
    551Total long-term liabilities
    
    
    5,335
    
    
    
    4,918Commitments and contingencies (Note 11)Shareholders equity:Ultralife equity:Preferred stock, par value $0.10 per share, authorized 1,000,000 shares;
none issued and outstanding
    
    
    
    
    
    
    Common stock, par value $0.10 per share, authorized 40,000,000 shares;
issued  18,614,907 at September 26, 2010 and 18,384,916 at December 31, 2009
    
    
    1,863
    
    
    
    1,831Capital in excess of par value
    
    
    170,725
    
    
    
    169,064Accumulated other comprehensive loss
    
    
    (1,220
    )
    
    
    (1,256
    )Accumulated deficit
    
    
    (79,188
    )
    
    
    (84,021
    )92,180
    
    
    
    85,618Less Treasury stock, at cost  1,371,900 and 1,358,507 shares outstanding,
respectively
    
    
    7,652
    
    
    
    7,558Total Ultralife equity
    
    
    84,528
    
    
    
    78,060Noncontrolling interest
    
    
    32
    
    
    
    54Total shareholders equity
    
    
    84,560
    
    
    
    78,114Total Liabilities and Shareholders Equity
    
    $
    131,020
    
    
    $
    131,166
   3




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Three-Month Periods Ended
    
    
    Nine-Month Periods EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    53,281
    
    
    $
    42,363
    
    
    $
    128,812
    
    
    $
    121,759Cost of products sold
    
    
    38,409
    
    
    
    31,999
    
    
    
    94,762
    
    
    
    96,834Gross margin
    
    
    14,872
    
    
    
    10,364
    
    
    
    34,050
    
    
    
    24,925Operating expenses:Research and development (including $116, $139, $376 and $397
respectively, of amortization of intangible assets)
    
    
    2,611
    
    
    
    2,748
    
    
    
    6,242
    
    
    
    7,242Selling, general, and administrative (including $262, $310,
$875 and $859
respectively, of amortization of intangible assets)
    
    
    7,545
    
    
    
    8,020
    
    
    
    21,827
    
    
    
    26,669Total operating expenses
    
    
    10,156
    
    
    
    10,768
    
    
    
    28,069
    
    
    
    33,911Operating income (loss)
    
    
    4,716
    
    
    
    (404
    )
    
    
    5,981
    
    
    
    (8,986
    )Other income (expense):Interest income
    
    
    
    
    
    
    16
    
    
    
    2
    
    
    
    20Interest expense
    
    
    (253
    )
    
    
    (470
    )
    
    
    (972
    )
    
    
    (1,002
    )Miscellaneous
    
    
    449
    
    
    
    350
    
    
    
    370
    
    
    
    152Income (loss) before income taxes
    
    
    4,912
    
    
    
    (508
    )
    
    
    5,381
    
    
    
    (9,816
    )Income tax provision-current
    
    
    130
    
    
    
    17
    
    
    
    164
    
    
    
    19Income tax provision-deferred
    
    
    284
    
    
    
    88
    
    
    
    406
    
    
    
    272Total income taxes
    
    
    414
    
    
    
    105
    
    
    
    570
    
    
    
    291Net income (loss)
    
    
    4,498
    
    
    
    (613
    )
    
    
    4,811
    
    
    
    (10,107
    )Net (income) loss attributable to noncontrolling interest
    
    
    28
    
    
    
    8
    
    
    
    22
    
    
    
    26Net income (loss) attributable to Ultralife
    
    $
    4,526
    
    
    $
    (605
    )
    
    $
    4,833
    
    
    $
    (10,081
    )Net income (loss) attributable to Ultralife common
shareholders  basic
    
    $
    0.26
    
    
    $
    (0.04
    )
    
    $
    0.28
    
    
    $
    (0.59
    )Net income (loss) attributable to Ultralife common
shareholders  diluted
    
    $
    0.26
    
    
    $
    (0.04
    )
    
    $
    0.28
    
    
    $
    (0.59
    )Weighted average shares outstanding  basic
    
    
    17,225
    
    
    
    16,921
    
    
    
    17,131
    
    
    
    16,996Weighted average shares outstanding  diluted
    
    
    17,449
    
    
    
    16,921
    
    
    
    17,136
    
    
    
    16,996
   4




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Nine-Month Periods EndedSeptember 26,
    
    
    September 27,2010
    
    
    2009OPERATING ACTIVITIES
Net income (loss)
    
    $
    4,811
    
    
    $
    (10,107
    )Adjustments to reconcile net income (loss)
to net cash used in operating activities:Depreciation and amortization of financing fees
    
    
    2,952
    
    
    
    2,986Amortization of intangible assets
    
    
    1,251
    
    
    
    1,256Gain on long-lived asset disposal and write-offs
    
    
    (220
    )
    
    
    Foreign exchange gain
    
    
    (332
    )
    
    
    (150
    )Gain on litigation settlement
    
    
    
    
    
    
    (1,256
    )Non-cash stock-based compensation
    
    
    835
    
    
    
    995Changes in deferred income taxes
    
    
    406
    
    
    
    272Changes in operating assets and liabilities, net of effects
from acquisitions:Accounts receivable
    
    
    2,609
    
    
    
    (5,307
    )Inventories
    
    
    (2,524
    )
    
    
    135Prepaid expenses and other current assets
    
    
    (794
    )
    
    
    (112
    )Income taxes payable
    
    
    163
    
    
    
    (567
    )Accounts payable and other liabilities
    
    
    (315
    )
    
    
    (3,203
    )Net cash provided from (used in) operating activities
    
    
    8,842
    
    
    
    (15,058
    )INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (901
    )
    
    
    (1,443
    )Proceeds from asset disposal
    
    
    464
    
    
    
    Change in restricted cash
    
    
    (475
    )
    
    
    Payments for acquired companies, net of cash acquired
    
    
    (137
    )
    
    
    (6,766
    )Net cash used in investing activities
    
    
    (1,049
    )
    
    
    (8,209
    )FINANCING ACTIVITIESNet change in revolving credit facilities
    
    
    (6,867
    )
    
    
    26,550Proceeds from issuance of common stock
    
    
    
    
    
    
    310Proceeds from issuance of debt
    
    
    
    
    
    
    751Principal payments on debt and capital lease obligations
    
    
    (288
    )
    
    
    (1,468
    )Purchase of treasury stock
    
    
    
    
    
    
    (3,326
    )Net cash provided from (used in) financing activities
    
    
    (7,155
    )
    
    
    22,817Effect of exchange rate changes on cash
    
    
    361
    
    
    
    269Change in cash and cash equivalents
    
    
    999
    
    
    
    (181
    )Cash and cash equivalents at beginning of period
    
    
    6,094
    
    
    
    1,878Cash and cash equivalents at end of period
    
    $
    7,093
    
    
    $
    1,697SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for income taxes
    
    $
    
    
    
    $
    605Cash paid for interest
    
    $
    641
    
    
    $
    823Noncash investing and financing activities:Issuance of common stock for purchase of acquired companies
    
    $
    858
    
    
    $
    Purchase of property and equipment via notes payable
    
    $
    252
    
    
    $
    102
   5




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AMTI TM Brand
    6




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ASSETSCurrent assets:Cash
    
    $
    Trade accounts receivable, net
    
    
    693Inventories
    
    
    2,534Total current assets
    
    
    3,227Property, plant and equipment, net
    
    
    339Goodwill
    
    
    1,033Intangible Assets:Trademarks
    
    
    450Patents and Technology
    
    
    800Customer Relationships
    
    
    970Total assets acquired
    
    
    6,819LIABILITIESCurrent liabilities:Accounts payable
    
    
    801Other current liabilities
    
    
    301Total current liabilities
    
    
    1,102Long-term liabilities:Other long-term liabilities
    
    
    Total liabilities assumed
    
    
    1,102Total Purchase Price
    
    $
    5,717
  
  7




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September 26, 2010
    
    
    December 31, 2009Raw materials
    
    $
    19,578
    
    
    $
    19,743Work in process
    
    
    6,850
    
    
    
    6,044Finished goods
    
    
    11,609
    
    
    
    9,716$
    38,037
    
    
    $
    35,503
   September 26, 2010
    
    
    December 31, 2009Land
    
    $
    123
    
    
    $
    123Buildings and leasehold improvements
    
    
    6,192
    
    
    
    6,127Machinery and equipment
    
    
    44,887
    
    
    
    43,996Furniture and fixtures
    
    
    1,835
    
    
    
    1,829Computer hardware and software
    
    
    3,387
    
    
    
    3,397Construction in progress
    
    
    877
    
    
    
    1,32457,301
    
    
    
    56,796Less: Accumulated depreciation
    
    
    42,483
    
    
    
    40,148$
    14,818
    
    
    $
    16,648
   8




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Battery &
    
    
    Communications
    
    
    EnergyEnergy Products
    
    
    Systems
    
    
    Services
    
    
    TotalBalance at December 31, 2008
    
    $
    2,072
    
    
    $
    14,262
    
    
    $
    6,609
    
    
    $
    22,943Adjustments to purchase price
allocation
    
    
    
    
    
    
    838
    
    
    
    431
    
    
    
    1,269Acquisition of AMTI
    
    
    
    
    
    
    1,397
    
    
    
    
    
    
    
    1,397Effect of foreign currency
translations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at September 27, 2009
    
    
    2,072
    
    
    
    16,497
    
    
    
    7,040
    
    
    
    25,609Adjustments to purchase price
allocation
    
    
    
    
    
    
    (181
    )
    
    
    8
    
    
    
    (173
    )Effect of foreign currency
translations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2009
    
    
    2,072
    
    
    
    16,316
    
    
    
    7,048
    
    
    
    25,436Adjustments to purchase price
allocation
    
    
    
    
    
    
    (183
    )
    
    
    929
    
    
    
    746Effect of foreign currency
translations
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    36Balance at September 26, 2010
    
    $
    2,108
    
    
    $
    16,133
    
    
    $
    7,977
    
    
    $
    26,218
      9




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September 26, 2010AccumulatedGross Assets
    
    
    Amortization
    
    
    NetTrademarks
    
    $
    4,857
    
    
    $
    
    
    
    $
    4,857Patents and technology
    
    
    5,127
    
    
    
    3,234
    
    
    
    1,893Customer relationships
    
    
    9,839
    
    
    
    4,815
    
    
    
    5,024Distributor relationships
    
    
    358
    
    
    
    262
    
    
    
    96Non-compete agreements
    
    
    394
    
    
    
    394
    
    
    
    Total intangible assets
    
    $
    20,575
    
    
    $
    8,705
    
    
    $
    11,870
 December 31, 2009AccumulatedGross Assets
    
    
    Amortization
    
    
    NetTrademarks
    
    $
    4,856
    
    
    $
    
    
    
    $
    4,856Patents and technology
    
    
    5,119
    
    
    
    2,852
    
    
    
    2,267Customer relationships
    
    
    9,772
    
    
    
    3,972
    
    
    
    5,800Distributor relationships
    
    
    352
    
    
    
    215
    
    
    
    137Non-compete agreements
    
    
    393
    
    
    
    389
    
    
    
    4Total intangible assets
    
    $
    20,492
    
    
    $
    7,428
    
    
    $
    13,064
   
  10




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Excess Availability
    
    LIBOR Rate PlusGreater than $10,000
    
    
    4.00
    %Greater than $7,500 but less than or equal to $10,000
    
    
    4.25
    %Greater than $5,000 but less than or equal to $7,500
    
    
    4.50
    %Greater than $3,000 but less than or equal to $5,000
    
    
    4.75
    %
    11




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13




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Nine-Month Periods EndedSeptember 26,
    
    
    September 27,2010
    
    
    2009Risk-free interest rate
    
    
    2.09
    %
    
    
    1.44
    %Volatility factor
    
    
    79.34
    %
    
    
    68.58
    %Dividends
    
    
    0.00
    %
    
    
    0.00
    %Weighted average expected life (years)
    
    
    3.51
    
    
    
    3.51
   WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateNumber
    
    
    Exercise Price
    
    
    Contractual
    
    
    Intrinsicof Shares
    
    
    Per Share
    
    
    Term
    
    
    ValueShares under option at January 1, 2010
    
    
    1,805,107
    
    
    $
    10.99Options granted
    
    
    277,750
    
    
    
    4.46Options exercised
    
    
    
    
    
    
    Options forfeited
    
    
    (89,163
    )
    
    
    5.75Options expired
    
    
    (316,285
    )
    
    
    12.48Shares under option at September 26, 2010
    
    
    1,677,409
    
    
    $
    9.91
    
    
    3.89 years
    
    $
    133Vested and expected to vest as of
September 26, 2010
    
    
    1,559,676
    
    
    $
    10.22
    
    
    3.75 years
    
    $
    112Options exercisable at September 26, 2010
    
    
    994,254
    
    
    $
    12.97
    
    
    2.46 years
    
    $
    
    14




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Nine-MonthPeriod EndedSeptember 27, 2009Number of shares awarded
    
    
    24,786Weighted average fair value per share
    
    $
    10.58Aggregate total value
    
    $
    246
  Weighted AverageNumber of Shares
    
    
    Grant Date Fair ValueUnvested at December 31, 2009
    
    
    46,527
    
    
    $
    11.42Granted
    
    
    
    
    
    
    Vested
    
    
    (9,944
    )
    
    
    12.69Forfeited
    
    
    (26,500
    )
    
    
    10.74Unvested at September 26, 2010
    
    
    10,083
    
    
    $
    11.96
    15




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Three-Month Periods Ended
    
    
    Nine-Month Periods EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2010
    
    
    2009
    
    
    2010
    
    
    2009Income (Loss) before Incomes Taxes (a)
    
    $
    4,912
    
    
    $
    (508
    )
    
    $
    5,381
    
    
    $
    (9,816
    )Total Income Tax Provision (b)
    
    $
    414
    
    
    $
    105
    
    
    $
    570
    
    
    $
    291Effective Tax Rate (b/a)
    
    
    8.4
    %
    
    
    20.7
    %
    
    
    10.6
    %
    
    
    3.0
    %
     16




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Three-Month Periods Ended
    
    
    Nine-Month Periods EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2010
    
    
    2009
    
    
    2010
    
    
    2009Net Income (Loss) attributable to Ultralife
    
    $
    4,526
    
    
    $
    (605
    )
    
    $
    4,833
    
    
    $
    (10,081
    )Net Income (Loss) attributable to
participating securities (unvested
restricted stock awards) (10,000, -0-,
20,000 and -0- shares, respectively)
    
    
    (3
    )
    
    
    
    
    
    
    (6
    )
    
    
    Net Income (Loss) attributable to Ultralife
common shareholders (a)
    
    
    4,523
    
    
    
    (605
    )
    
    
    4,827
    
    
    
    (10,081
    )Effect of Dilutive Securities:Convertible Notes Payable
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    Net Income (Loss) attributable to Ultralife
common shareholders  Adjusted (b)
    
    $
    4,564
    
    
    $
    (605
    )
    
    $
    4,827
    
    
    $
    (10,081
    )Average Common Shares Outstanding  Basic (c)
    
    
    17,225,000
    
    
    
    16,921,000
    
    
    
    17,131,000
    
    
    
    16,996,000Effect of Dilutive Securities:Stock Options / Warrants
    
    
    5,000
    
    
    
    
    
    
    
    5,000
    
    
    
    Convertible Notes Payable
    
    
    219,000
    
    
    
    
    
    
    
    
    
    
    
    Average Common Shares Outstanding  Diluted (d)
    
    
    17,449,000
    
    
    
    16,921,000
    
    
    
    17,136,000
    
    
    
    16,996,000EPS  Basic (a/c)
    
    $
    0.26
    
    
    $
    (0.04
    )
    
    $
    0.28
    
    
    $
    (0.59
    )EPS  Diluted (b/d)
    
    $
    0.26
    
    
    $
    (0.04
    )
    
    $
    0.28
    
    
    $
    (0.59
    )
  17




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Three-Month Periods Ended
    
    
    Nine-Month Periods EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss) attributable to
Ultralife
    
    $
    4,526
    
    
    $
    (605
    )
    
    $
    4,833
    
    
    $
    (10,081
    )Foreign currency translation
adjustments
    
    
    285
    
    
    
    (201
    )
    
    
    36
    
    
    
    661Change in fair value of derivatives
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    12Total comprehensive income (loss)
    
    $
    4,811
    
    
    $
    (805
    )
    
    $
    4,869
    
    
    $
    (9,408
    )
      Balance at December 31, 2009
    
    $
    1,182Accruals for warranties issued
    
    
    (118
    )Settlements made
    
    
    (39
    )Balance at September 26, 2010
    
    $
    1,025
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Three-Month Period Ended September 26, 2010
 Battery &Energy
    
    
    Communications
    
    
    EnergyProducts
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    20,632
    
    
    $
    30,180
    
    
    $
    2,469
    
    
    $
    
    
    
    $
    53,281Segment contribution
    
    
    4,481
    
    
    
    10,644
    
    
    
    (253
    )
    
    
    (10,156
    )
    
    
    4,716Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (253
    )
    
    
    (253
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    449
    
    
    
    449Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (130
    )
    
    
    (130
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (284
    )
    
    
    (284
    )Noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    28Net income attributable to
Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,526Total assets
    
    $
    52,699
    
    
    $
    47,306
    
    
    $
    19,330
    
    
    $
    11,685
    
    
    $
    131,020
 Three-Month Period Ended September 27, 2009
 Battery &Energy
    
    
    Communications
    
    
    EnergyProducts
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    24,809
    
    
    $
    12,228
    
    
    $
    5,326
    
    
    $
    
    
    
    $
    42,363Segment contribution
    
    
    5,256
    
    
    
    4,273
    
    
    
    835
    
    
    
    (10,768
    )
    
    
    (404
    )Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (454
    )
    
    
    (454
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350
    
    
    
    350Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    (17
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    (88
    )Noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    8Net loss attributable to Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (605
    )Total assets
    
    $
    57,253
    
    
    $
    55,814
    
    
    $
    20,663
    
    
    $
    5,870
    
    
    $
    139,600
 Nine-Month Period Ended September 26, 2010
 Battery &Energy
    
    
    Communications
    
    
    EnergyProducts
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    66,440
    
    
    $
    54,488
    
    
    $
    7,884
    
    
    $
    
    
    
    $
    128,812Segment contribution
    
    
    14,482
    
    
    
    19,488
    
    
    
    80
    
    
    
    (28,069
    )
    
    
    5,981Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (970
    )
    
    
    (970
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370
    
    
    
    370Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (164
    )
    
    
    (164
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (406
    )
    
    
    (406
    )Noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    22Net income attributable to
Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,833Total assets
    
    $
    52,699
    
    
    $
    47,306
    
    
    $
    19,330
    
    
    $
    11,685
    
    
    $
    131,020
 Nine-Month Period Ended September 27, 2009
 Battery &Energy
    
    
    Communications
    
    
    EnergyProducts
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    73,435
    
    
    $
    33,850
    
    
    $
    14,474
    
    
    $
    
    
    
    $
    121,759Segment contribution
    
    
    13,352
    
    
    
    10,210
    
    
    
    1,363
    
    
    
    (33,911
    )
    
    
    (8,986
    )Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (982
    )
    
    
    (982
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    152Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    (19
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (272
    )
    
    
    (272
    )Noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    26Net loss attributable to Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (10,081
    )Total assets
    
    $
    57,253
    
    
    $
    55,814
    
    
    $
    20,663
    
    
    $
    5,870
    
    
    $
    139,600
  23




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General
    26




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Overview
     27




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Outlook
  Results of Operations
 Three-month periods ended September 26, 2010 and September 27, 2009
 Revenues.
    Cost of Products Sold.
  28




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Operating Expenses.
 Other Income (Expense).
  29




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Income Taxes.
 Three-Month Periods EndedSeptember 26,
    
    
    September 27,2010
    
    
    2009Income (Loss) before Incomes Taxes (a)
    
    $
    4,912
    
    
    $
    (508
    )Total Income Tax Provision (b)
    
    $
    414
    
    
    $
    105Effective Tax Rate (b/a)
    
    
    8.4
    %
    
    
    20.7
    %
    Net Income (Loss) Attributable to Ultralife.
 Nine-month periods ended September 26, 2010 and September 27, 2009
 Revenues.
   30




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Cost of Products Sold.
    Operating Expenses.
  31




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Other Income (Expense).
 Income Taxes.
 Nine-Month Periods EndedSeptember 26,
    
    
    September 27,2010
    
    
    2009Income (Loss) before Incomes Taxes (a)
    
    $
    5,381
    
    
    $
    (9,816
    )Total Income Tax Provision (b)
    
    $
    570
    
    
    $
    291Effective Tax Rate (b/a)
    
    
    10.6
    %
    
    
    3.0
    %
    Net Income (Loss) Attributable to Ultralife.
  32




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Adjusted EBITDA
    
    
    Adjusted EBITDA (1) does not reflect our cash expenditures or future requirements
for capital expenditures or contractual commitments; (2) does not reflect changes in,
or cash requirements for, our working capital needs; (3) does not reflect the
interest expense, or the cash requirements necessary to service interest or principal
payments, on our debt; (4) does not reflect income taxes or the cash requirements for
any tax payments; and (5) does not reflect all of the costs associated with operating
our business;
 
    
    although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized often will have to be replaced in the future, and Adjusted
EBITDA does not reflect any cash requirements for such replacements;
  33




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
    
    while stock-based compensation is a component of cost of products sold and
operating expenses, the impact on our consolidated financial statements compared to
other companies can vary significantly due to such factors as assumed life of the
stock-based awards and assumed volatility of our common stock; and
 
    
    other companies may calculate Adjusted EBITDA differently than we do, limiting its
usefulness as a comparative measure.
  Three-Month Periods Ended
    
    
    Nine-Month Periods EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss) attributable
to Ultralife
    
    $
    4,526
    
    
    $
    (605
    )
    
    $
    4,833
    
    
    $
    (10,081
    )Add: interest expense, net
    
    
    253
    
    
    
    454
    
    
    
    970
    
    
    
    982Add: income tax provision
    
    
    414
    
    
    
    105
    
    
    
    570
    
    
    
    291Add: depreciation expense
    
    
    1,012
    
    
    
    1,047
    
    
    
    2,952
    
    
    
    2,986Add: amortization expense
    
    
    378
    
    
    
    449
    
    
    
    1,251
    
    
    
    1,256Add: stock-based compensation
expense
    
    
    278
    
    
    
    (82
    )
    
    
    835
    
    
    
    995Adjusted EBITDA
    
    $
    6,861
    
    
    $
    1,368
    
    
    $
    11,411
    
    
    $
    (3,571
    )
 Liquidity and Capital Resources
     34




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Debt Commitments
    Excess Availability
    
    LIBOR Rate PlusGreater than $10,000
    
    
    4.00
    %Greater than $7,500 but less than or equal to $10,000
    
    
    4.25
    %Greater than $5,000 but less than or equal to $7,500
    
    
    4.50
    %Greater than $3,000 but less than or equal to $5,000
    
    
    4.75
    %
  35




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Equity Transactions
    36




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Other Matters
    37




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Recent Accounting Pronouncements and Developments
    38




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Critical Accounting Policies
    39




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Evaluation Of Disclosure Controls And Procedures
  Changes In Internal Control Over Financial Reporting
   40




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PART II OTHER INFORMATION
 
     41




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Updated Risk Factor
 Any impairment of goodwill and indefinite-lived intangible assets, and other intangible assets,
could negatively impact our results of operations.
   
  ExhibitIndex
    
    Description of Document
    
    Incorporated By Reference from:31.1
    
    
    Rule 13a-14(a) / 15d-14(a) CEO Certifications
    
    Filed herewith31.2
    
    
    Rule 13a-14(a) / 15d-14(a) CFO Certifications
    
    Filed herewith32
    
    
    Section 1350 Certifications
    
    Filed herewith
  42




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ULTRALIFE CORPORATION
(Registrant)Date: November 3, 2010
    By:
    /s/ John D. KavazanjianJohn D. KavazanjianPresident and Chief Executive Officer
(Principal Executive Officer)Date: November 3, 2010
    By:
    /s/ Philip A. FainPhilip A. FainChief Financial Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)  43




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31.1
    
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
  44