##### 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 endedMarch 29, 2009
 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 0-20852
 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
 (315) 332-7100
 
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



PagePART I FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Balance Sheets 
March 29, 2009 and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations 
Three-month periods ended March 29, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows 
Three-month periods ended March 29, 2009 and 2008
    
    
    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
    
    
    37Item 4.
    
    Controls and Procedures
    
    
    37PART II OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    38Item 2.
    
    Unregistered Sales of Equity Securities
and Use of Proceeds
    
    
    38Item 6.
    
    Exhibits
    
    
    39Signatures
    
    
    40Index to Exhibits
    
    
    41EX-10.3EX-31.1EX-31.2EX-32
  2




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March 29,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    943
    
    
    $
    1,878Trade accounts receivable (less allowance for doubtful accounts
of $1,000 at March 29, 2009 and $1,086 at December 31, 2008)
    
    
    32,040
    
    
    
    30,588Inventories
    
    
    48,076
    
    
    
    40,465Deferred tax asset  current
    
    
    441
    
    
    
    441Prepaid expenses and other current assets
    
    
    1,714
    
    
    
    1,801Total current assets
    
    
    83,214
    
    
    
    75,173Property, plant and equipment, net
    
    
    18,095
    
    
    
    18,465Other assets:Goodwill
    
    
    26,176
    
    
    
    22,943Intangible assets, net
    
    
    13,605
    
    
    
    12,925Security deposits and other long-term assets
    
    
    100
    
    
    
    8139,881
    
    
    
    35,949Total Assets
    
    $
    141,190
    
    
    $
    129,587LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of debt and capital lease obligations
    
    $
    17,576
    
    
    $
    1,425Accounts payable
    
    
    20,453
    
    
    
    20,255Income taxes payable
    
    
    15
    
    
    
    582Other current liabilities
    
    
    11,383
    
    
    
    9,974Total current liabilities
    
    
    49,427
    
    
    
    32,236Long-term liabilities:Debt and capital lease obligations
    
    
    4,029
    
    
    
    4,670Deferred tax liability  long-term
    
    
    3,983
    
    
    
    3,894Other long-term liabilities
    
    
    686
    
    
    
    634Total long-term liabilities
    
    
    8,698
    
    
    
    9,198Commitments 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  18,290,672 at March 29, 2009 and 18,227,009 at December 31, 2008
    
    
    1,821
    
    
    
    1,815Capital in excess of par value
    
    
    168,031
    
    
    
    167,259Accumulated other comprehensive income
    
    
    (1,977
    )
    
    
    (1,930
    )Accumulated deficit
    
    
    (77,292
    )
    
    
    (74,780
    )90,583
    
    
    
    92,364Less Treasury stock, at cost  1,358,507 and 942,202 shares outstanding, respectively
    
    
    7,558
    
    
    
    4,232Total Ultralife equity
    
    
    83,025
    
    
    
    88,132Noncontrolling interest
    
    
    40
    
    
    
    21Total shareholders equity
    
    
    83,065
    
    
    
    88,153Total Liabilities and Shareholders Equity
    
    $
    141,190
    
    
    $
    129,587
  3




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Three-Month Periods EndedMarch 29,
    
    
    March 29,2009
    
    
    2008Revenues
    
    $
    39,803
    
    
    $
    49,587Cost of products sold
    
    
    32,022
    
    
    
    38,712Gross margin
    
    
    7,781
    
    
    
    10,875Operating expenses:Research and development (including $110 and $159
respectively, of amortization of intangible assets)
    
    
    1,980
    
    
    
    1,609Selling, general, and administrative (including $231
and $361
respectively, of amortization of intangible assets)
    
    
    8,058
    
    
    
    6,903Total operating expenses
    
    
    10,038
    
    
    
    8,512Operating income (loss)
    
    
    (2,257
    )
    
    
    2,363Other income (expense):Interest income
    
    
    3
    
    
    
    11Interest expense
    
    
    (182
    )
    
    
    (329
    )Gain on insurance settlement
    
    
    
    
    
    
    39Gain on debt conversion
    
    
    
    
    
    
    313Miscellaneous
    
    
    11
    
    
    
    69Income (loss) before income taxes
    
    
    (2,425
    )
    
    
    2,466Income tax provision-current
    
    
    2
    
    
    
    54Income tax provision (benefit)-deferred
    
    
    89
    
    
    
    (9
    )Total income taxes
    
    
    91
    
    
    
    45Net income (loss)
    
    
    (2,516
    )
    
    
    2,421Net loss attributable to noncontrolling interest
    
    
    4
    
    
    
    13Net income (loss) attributable to Ultralife
    
    $
    (2,512
    )
    
    $
    2,434Net income (loss) attributable to Ultralife common
shareholders  basic
    
    $
    (0.15
    )
    
    $
    0.14Net income (loss) attributable to Ultralife common
shareholders  diluted
    
    $
    (0.15
    )
    
    $
    0.14Weighted average shares outstanding  basic
    
    
    17,115
    
    
    
    17,027Weighted average shares outstanding  diluted
    
    
    17,115
    
    
    
    17,441
  4




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Three-Month Periods EndedMarch 29,
    
    
    March 29,2009
    
    
    2008OPERATING ACTIVITIESNet income (loss)
    
    $
    (2,516
    )
    
    $
    2,421Adjustments to reconcile net income (loss)
to net cash used in operating activities:Depreciation and amortization of financing fees
    
    
    942
    
    
    
    998Amortization of intangible assets
    
    
    341
    
    
    
    520(Gain) loss on asset disposal
    
    
    
    
    
    
    (2
    )Gain on insurance settlement
    
    
    
    
    
    
    (39
    )Foreign exchange (gain) loss
    
    
    (14
    )
    
    
    (52
    )Gain on debt conversion
    
    
    
    
    
    
    (313
    )Non-cash stock-based compensation
    
    
    536
    
    
    
    487Changes in deferred income taxes
    
    
    89
    
    
    
    9Changes in operating assets and liabilities, net of effects
from acquisitions:Accounts receivable
    
    
    (1,361
    )
    
    
    (12,812
    )Inventories
    
    
    (5,286
    )
    
    
    (5,074
    )Prepaid expenses and other current assets
    
    
    46
    
    
    
    1,636Insurance receivable relating to fires
    
    
    
    
    
    
    197Income taxes payable
    
    
    (567
    )
    
    
    Accounts payable and other liabilities
    
    
    1,075
    
    
    
    8,765Net cash used in operating activities
    
    
    (6,715
    )
    
    
    (3,259
    )INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (393
    )
    
    
    (376
    )Payments for acquired companies, net of cash acquired
    
    
    (6,763
    )
    
    
    (21
    )Net cash used in investing activities
    
    
    (7,156
    )
    
    
    (397
    )FINANCING ACTIVITIESNet change in revolving credit facilities
    
    
    16,600
    
    
    
    896Proceeds from issuance of common stock
    
    
    242
    
    
    
    1,775Principal payments on debt and capital lease obligations
    
    
    (612
    )
    
    
    (555
    )Purchase of treasury stock
    
    
    (3,326
    )
    
    
    Net cash provided from financing activities
    
    
    12,904
    
    
    
    2,116Effect of exchange rate changes on cash
    
    
    32
    
    
    
    29Change in cash and cash equivalents
    
    
    (935
    )
    
    
    (1,511
    )Cash and cash equivalents at beginning of period
    
    
    1,878
    
    
    
    2,245Cash and cash equivalents at end of period
    
    $
    943
    
    
    $
    734SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for income taxes
    
    $
    605
    
    
    $
    Cash paid for interest
    
    $
    136
    
    
    $
    428Noncash investing and financing activities:Purchase of property and equipment via notes payable
    
    $
    102
    
    
    $
    66Conversion of convertible notes into shares of common stock
    
    $
    
    
    
    $
    10,500
  5




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2009 Activity
  AMTI Brand
    6




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ASSETSCurrent assets:Cash
    
    $
    Trade accounts receivable, net
    
    
    696Inventories
    
    
    2,350Total current assets
    
    
    3,046Property, plant and equipment, net
    
    
    206Goodwill
    
    
    2,119Intangible Assets:Trademarks
    
    
    480Patents and Technology
    
    
    513Customer Relationships
    
    
    319Total assets acquired
    
    
    6,683LIABILITIESCurrent liabilities:Accounts payable
    
    
    801Other current liabilities
    
    
    165Total current liabilities
    
    
    966Long-term liabilities:Other long-term liabilities
    
    
    Total liabilities assumed
    
    
    966Total Purchase Price
    
    $
    5,717
  2008 Activity
  Ultralife Batteries India Private Limited
  7




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U.S. Energy Systems, Inc. and U.S. Power Services, Inc.
      ASSETSCurrent assets:Cash
    
    $
    Total current assets
    
    
    Property, plant and equipment, net
    
    
    306Goodwill
    
    
    1,368Intangible Assets:Patents and Technology
    
    
    260Customer Relationships
    
    
    1,320Total assets acquired
    
    
    3,254
 8




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LIABILITIESCurrent liabilities:Current portion of long-term debt
    
    
    56Other current liabilities
    
    
    43Total current liabilities
    
    
    99Long-term liabilities:Debt
    
    
    228Total liabilities assumed
    
    
    327Total Purchase Price
    
    $
    2,927
    March 29, 2009
    
    December 31, 2008Raw materials
    
    $
    34,777
    
    
    $
    29,352Work in process
    
    
    9,875
    
    
    
    9,087Finished goods
    
    
    6,572
    
    
    
    4,87651,224
    
    
    
    43,315Less: Reserve for obsolescence
    
    
    3,148
    
    
    
    2,850$
    48,076
    
    
    $
    40,465
   March 29, 2009
    
    December 31, 2008Land
    
    $
    123
    
    
    $
    123Buildings and leasehold improvements
    
    
    5,245
    
    
    
    5,274Machinery and equipment
    
    
    42,436
    
    
    
    42,172Furniture and fixtures
    
    
    1,759
    
    
    
    1,669Computer hardware and software
    
    
    2,966
    
    
    
    2,808Construction in progress
    
    
    2,035
    
    
    
    2,02354,564
    
    
    
    54,069Less: Accumulated depreciation
    
    
    36,469
    
    
    
    35,604$
    18,095
    
    
    $
    18,465
  9




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Non-
    
    
    
    
    
    
    
    
    
    Design andRechargeable
    
    Rechargeable
    
    Communications
    
    InstallationProducts
    
    Products
    
    Systems
    
    Services
    
    TotalBalance at December 31, 2007
    
    $
    1,703
    
    
    $
    4,287
    
    
    $
    10,460
    
    
    $
    4,730
    
    
    $
    21,180Adjustments to purchase price allocation
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    (116
    )
    
    
    (110
    )Effect of foreign currency translations
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71Balance at March 29, 2008
    
    
    1,774
    
    
    
    4,293
    
    
    
    10,460
    
    
    
    4,614
    
    
    
    21,141Adjustments to purchase price allocation
    
    
    250
    
    
    
    43
    
    
    
    
    
    
    
    350
    
    
    
    643Acquisition of US Energy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,111
    
    
    
    1,111Effect of foreign currency translations
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48Balance at December 31, 2008
    
    
    2,072
    
    
    
    4,336
    
    
    
    10,460
    
    
    
    6,075
    
    
    
    22,943Adjustments to purchase price allocation
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    1,095
    
    
    
    1,115Acquisition of AMTI
    
    
    
    
    
    
    
    
    
    
    2,119
    
    
    
    
    
    
    
    2,119Effect of foreign currency translations
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Balance at March 29, 2009
    
    $
    2,071
    
    
    $
    4,356
    
    
    $
    12,579
    
    
    $
    7,170
    
    
    $
    26,176
     March 29, 2009AccumulatedGross Assets
    
    Amortization
    
    NetTrademarks
    
    $
    4,885
    
    
    $
    
    
    
    $
    4,885Patents and technology
    
    
    4,871
    
    
    
    2,422
    
    
    
    2,449Customer relationships
    
    
    9,191
    
    
    
    3,136
    
    
    
    6,055Distributor relationships
    
    
    352
    
    
    
    189
    
    
    
    163Non-compete agreements
    
    
    393
    
    
    
    340
    
    
    
    53Total intangible assets
    
    $
    19,692
    
    
    $
    6,087
    
    
    $
    13,605
 10




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December 31, 2008AccumulatedGross Assets
    
    Amortization
    
    NetTrademarks
    
    $
    4,789
    
    
    $
    
    
    
    $
    4,789Patents and technology
    
    
    4,229
    
    
    
    2,313
    
    
    
    1,916Customer relationships
    
    
    8,906
    
    
    
    2,934
    
    
    
    5,972Distributor relationships
    
    
    352
    
    
    
    180
    
    
    
    172Non-compete agreements
    
    
    393
    
    
    
    317
    
    
    
    76Total intangible assets
    
    $
    18,669
    
    
    $
    5,744
    
    
    $
    12,925
       11




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Three Months Ended March 29,2009
    
    2008Shares of common stock repurchased
    
    
    416,305
    
    
    
    Value of common stock repurchased
    
    $
    3,326
    
    
    $
    
      13




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Three-Month Periods EndedMarch 29,
    
    March 29,2009
    
    2008Risk-free interest rate
    
    
    1.24
    %
    
    
    3.30
    %Volatility factor
    
    
    67.65
    %
    
    
    52.74
    %Dividends
    
    
    0.00
    %
    
    
    0.00
    %Weighted average expected life (years)
    
    
    3.57
    
    
    
    3.76
  14




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WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateNumber
    
    Exercise Price
    
    Contractual
    
    Intrinsicof Shares
    
    Per Share
    
    Term
    
    ValueShares under option at January 1, 2009
    
    
    1,651,007
    
    
    $
    12.33Options granted
    
    
    59,820
    
    
    
    12.18Options exercised
    
    
    (40,805
    )
    
    
    5.00Options forfeited
    
    
    (3,599
    )
    
    
    10.47Options expired
    
    
    (5,000
    )
    
    
    15.05Shares under option at March 29, 2009
    
    
    1,661,423
    
    
    $
    12.50
    
    
    3.94 years
    
    $
    195Vested and expected to vest as of
March 29, 2009
    
    
    1,572,910
    
    
    $
    12.55
    
    
    3.89 years
    
    $
    195Options exercisable at March 29, 2009
    
    
    1,118,507
    
    
    $
    12.91
    
    
    3.31 years
    
    $
    195
        Three-MonthPeriod EndedMarch 29, 2009Number of shares awarded
    
    
    16,286Weighted average fair value per share
    
    $
    11.33Aggregate total value
    
    $
    185
 15




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Weighted AverageNumber of Shares
    
    
    Grant Date Fair ValueUnvested at December 31, 2008
    
    
    69,864
    
    
    $
    11.36Granted
    
    
    16,286
    
    
    
    11.33Vested
    
    
    (23,000
    )
    
    
    11.51Forfeited
    
    
    
    
    
    
    Unvested at March 29, 2009
    
    
    63,150
    
    
    $
    11.30
       16




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Three-Month PeriodsEnded March 29,2009
    
    2008Net Income (Loss) attributable to Ultralife
    
    $
    (2,512
    )
    
    $
    2,434Net Income (Loss) attributable to
participating securities (unvested
restricted stock awards) (-0- and 87,000
shares, respectively)
    
    
    
    
    
    
    (12
    )Net Income (Loss) attributable to Ultralife
common shareholders (a)
    
    
    (2,512
    )
    
    
    2,422Effect of Dilutive Securities:Convertible Notes Payable
    
    
    
    
    
    
    Net Income (Loss) attributable to Ultralife
common shareholders  Adjusted (b)
    
    $
    (2,512
    )
    
    $
    2,422Average Common Shares Outstanding 
Basic (c)
    
    
    17,115,000
    
    
    
    17,027,000Effect of Dilutive Securities:Stock Options / Warrants
    
    
    
    
    
    
    414,000Convertible Notes Payable
    
    
    
    
    
    
    Average Common Shares Outstanding 
Diluted (d)
    
    
    17,115,000
    
    
    
    17,441,000EPS  Basic (a/c)
    
    $
    (0.15
    )
    
    $
    0.14EPS  Diluted (b/d)
    
    $
    (0.15
    )
    
    $
    0.14
  18




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10.
    
    COMPREHENSIVE INCOME
  Three-Month PeriodsEnded March 29,2009
    
    2008Net income (loss) attributable to Ultralife
    
    $
    (2,512
    )
    
    $
    2,434Foreign currency translation adjustments
    
    
    (54
    )
    
    
    165Change in fair value of derivatives
    
    
    7
    
    
    
    (32
    )Total comprehensive income (loss)
    
    $
    (2,559
    )
    
    $
    2,567
 11.
    
    COMMITMENTS AND CONTINGENCIES
     Balance at December 31, 2008
    
    $
    1,010Accruals for warranties issued
    
    
    114Settlements made
    
    
    (99
    )Balance at March 29, 2009
    
    $
    1,025
    19




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12.
    
    BUSINESS SEGMENT INFORMATION
  22




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Three-Month Period Ended March 29, 2009
 Non-
    
    
    
    
    
    
    
    
    
    
    Design andRechargeable
    
    
    Rechargeable
    
    
    Communications
    
    
    InstallationProducts
    
    
    Products
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    15,572
    
    
    $
    13,854
    
    
    $
    4,236
    
    
    $
    6,141
    
    
    $
    
    
    
    $
    39,803Segment contribution
    
    
    2,822
    
    
    
    3,438
    
    
    
    1,040
    
    
    
    481
    
    
    
    (10,038
    )
    
    
    (2,257
    )Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (179
    )
    
    
    (179
    )Gain on debt
conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    11Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (89
    )
    
    
    (89
    )Non controlling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    4Net loss
attributable to
Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,512
    )Total assets
    
    $
    46,004
    
    
    $
    28,669
    
    
    $
    39,240
    
    
    $
    22,395
    
    
    $
    4,882
    
    
    $
    141,190
 Three-Month Period Ended March 29, 2008
 Non-
    
    
    
    
    
    
    
    
    
    
    Design andRechargeable
    
    
    Rechargeable
    
    
    Communications
    
    
    InstallationProducts
    
    
    Products
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    14,616
    
    
    $
    6,738
    
    
    $
    24,054
    
    
    $
    4,179
    
    
    $
    
    
    
    $
    49,587Segment contribution
    
    
    3,056
    
    
    
    1,201
    
    
    
    6,121
    
    
    
    497
    
    
    
    (8,512
    )
    
    
    2,363Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (318
    )
    
    
    (318
    )Gain on debt
conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    313
    
    
    
    313Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108
    
    
    
    108Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    (54
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9Non controlling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13Net income
attributable to
Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,434Total assets
    
    $
    46,166
    
    
    $
    23,154
    
    
    $
    45,544
    
    
    $
    16,050
    
    
    $
    4,927
    
    
    $
    135,841
 13.
    
    FIRE AT MANUFACTURING FACILITY
  14.
    
    RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS
  23




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24




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25




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Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    General
   26




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Results of Operations
 Three-month periods ended March 29, 2009 and March 29, 2008
 Revenues.
    27




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Cost of Products Sold.
     Operating Expenses.
 Other Income (Expense).
 28




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Income Taxes.
    Net Income (Loss) Attributable to Ultralife.
 Adjusted EBITDA
  29




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
    
    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;
    
    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.
 30




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Three-Month Period EndedMarch 29,
    
    
    March 29,2009
    
    
    2008Net income (loss) attributable to Ultralife
    
    $
    (2,512
    )
    
    $
    2,434Add: interest expense, net
    
    
    179
    
    
    
    318Add: income tax provision
    
    
    91
    
    
    
    45Add: depreciation expense
    
    
    942
    
    
    
    998Add: amortization expense
    
    
    341
    
    
    
    520Add: stock-based compensation expense
    
    
    536
    
    
    
    487Less: gain on debt conversion
    
    
    
    
    
    
    (313
    )Adjusted EBITDA
    
    $
    (423
    )
    
    $
    4,489
 Liquidity and Capital Resources
      31




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Debt Commitments
      32




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Equity Transactions
   Other Matters
   33




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Outlook
  Recent Accounting Pronouncements and Developments
    34




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35




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Critical Accounting Policies
   36




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Item 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(Dollars in thousands)
    
    37




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PART II OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  (c) Total Number
    
    (d) Approximateof Shares Purchased
    
    Dollar Value of(a) Total Number
    
    (b) Average
    
    as Part of Publically
    
    Shares that May yetof Shares
    
    Price Paid
    
    Announced Plans or
    
    Be Purchased UnderPeriod
    
    Purchased
    
    Per Share
    
    Programs
    
    The Plans or ProgramsJanuary 1, 2009 
February 1, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    8,185February 2, 2009 
March 1, 2009
    
    
    101,458
    
    
    
    8.13
    
    
    
    101,458
    
    
    
    7,360March 2, 2009 
March 29, 2009
    
    
    314,847
    
    
    
    7.95
    
    
    
    314,847
    
    
    
    4,859Total First Quarter of 2009
    
    
    416,305
    
    
    
    
    
    
    
    416,305
 38




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Item 6.
    
    Exhibits
 ExhibitIndex
    
    Description of Document
    
    Incorporated By Reference from:10.1
    
    Amended and Restated
Credit Agreement dated as
of January 27, 2009, with
the Lenders Party Hereto
and JPMorgan Chase Bank,
N.A. as Administrative
Agent
    
    Exhibit 99.1 of the Form 8-K
filed on February 2, 200910.2
    
    Amendment No.1 to the
Stock Purchase Agreement
by and among Innovative
Solutions Consulting,
Inc., Michele A. Aloisio,
Marc DeLaVergne, Thomas
R. Knowlton, Kenneth J.
Wood, W. Michael Cooper,
and the Registrant, dated
September 12, 2007
    
    Exhibit 99.1 of the Form 8-K
filed on February 13, 200910.3
    
    Amended and Restated
Subordinated Promissory
Note with William Maher
effective March 28, 2009
    
    Filed herewith31.1
    
    CEO 302 Certifications
    
    Filed herewith31.2
    
    CFO 302 Certifications
    
    Filed herewith32.1
    
    906 Certifications
    
    Filed herewith
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ULTRALIFE CORPORATION
             (Registrant)Date: May 7, 2009
    By:
    /s/ John D. KavazanjianJohn D. KavazanjianPresident and Chief Executive OfficerDate: May 7, 2009
    By:
    /s/ Robert W. FishbackRobert W. FishbackVice President  Finance and Chief
Financial Officer 40




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##### Table of Contents



10.3
    
    Amended and Restated Subordinated Promissory Note with William Maher effective March 28, 200931.1
    
    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
 41