##### 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 June 28, 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 
of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 2000 Technology Parkway, Newark, New York 14513
 (315) 332-7100
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ   No oIndicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes o   No oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
 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 
June 28, 2009 and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations 
Three- and six-month periods ended June 28, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows 
Three- and six-month periods ended June 28, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    30Item 3. Quantitative and Qualitative Disclosures
About Market Risk
    
    
    47Item 4. Controls and Procedures
    
    
    47PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    48Item 1A. Risk Factors
    
    
    48Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50Item 4. Submission of Matters to a Vote of Security Holders
    
    
    51Item 6. Exhibits
    
    
    51Signatures
    
    
    52Index to Exhibits
    
    
    53EX-10.4EX-31.1EX-31.2EX-32
  2




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June 28,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,175
    
    
    $
    1,878Trade accounts receivable (less allowance for doubtful accounts
of $1,216 at June 28, 2009 and $1,086 at December 31, 2008)
    
    
    30,587
    
    
    
    30,588Inventories
    
    
    51,223
    
    
    
    40,465Deferred tax asset  current
    
    
    441
    
    
    
    441Prepaid expenses and other current assets
    
    
    1,539
    
    
    
    1,801Total current assets
    
    
    84,965
    
    
    
    75,173Property, plant and equipment, net
    
    
    18,250
    
    
    
    18,465Other assets:Goodwill
    
    
    25,361
    
    
    
    22,943Intangible assets, net
    
    
    14,000
    
    
    
    12,925Security deposits and other long-term assets
    
    
    87
    
    
    
    8139,448
    
    
    
    35,949Total Assets
    
    $
    142,663
    
    
    $
    129,587LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of debt and capital lease obligations
    
    $
    24,514
    
    
    $
    1,425Accounts payable
    
    
    20,449
    
    
    
    20,255Income taxes payable
    
    
    15
    
    
    
    582Other current liabilities
    
    
    10,775
    
    
    
    9,974Total current liabilities
    
    
    55,753
    
    
    
    32,236Long-term liabilities:Debt and capital lease obligations
    
    
    4,562
    
    
    
    4,670Deferred tax liability  long-term
    
    
    4,078
    
    
    
    3,894Other long-term liabilities
    
    
    654
    
    
    
    634Total long-term liabilities
    
    
    9,294
    
    
    
    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 - 18,336,876 at June 28, 2009 and 18,227,009 at December 31, 2008
    
    
    1,826
    
    
    
    1,815Capital in excess of par value
    
    
    168,635
    
    
    
    167,259Accumulated other comprehensive loss
    
    
    (1,057
    )
    
    
    (1,930
    )Accumulated deficit
    
    
    (84,256
    )
    
    
    (74,780
    )85,148
    
    
    
    92,364Less Treasury stock, at cost  1,358,507 and 942,202 shares outstanding, respectively
    
    
    7,558
    
    
    
    4,232Total Ultralife equity
    
    
    77,590
    
    
    
    88,132Noncontrolling interest
    
    
    26
    
    
    
    21Total shareholders equity
    
    
    77,616
    
    
    
    88,153Total Liabilities and Shareholders Equity
    
    $
    142,663
    
    
    $
    129,587
  3




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Three-Month Periods Ended
    
    
    Six-Month Periods EndedJune 28,
    
    
    June 28,
    
    
    June 28,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    39,593
    
    
    $
    87,898
    
    
    $
    79,396
    
    
    $
    137,485Cost of products sold
    
    
    32,813
    
    
    
    67,270
    
    
    
    64,835
    
    
    
    105,982Gross margin
    
    
    6,780
    
    
    
    20,628
    
    
    
    14,561
    
    
    
    31,503Operating expenses:Research and development (including $148, $158, $258 and $317
respectively, of amortization of intangible assets)
    
    
    2,514
    
    
    
    2,137
    
    
    
    4,494
    
    
    
    3,746Selling, general, and administrative (including $318, $368, $549 and $729
respectively, of amortization of intangible assets)
    
    
    10,591
    
    
    
    8,554
    
    
    
    18,649
    
    
    
    15,457Total operating expenses
    
    
    13,105
    
    
    
    10,691
    
    
    
    23,143
    
    
    
    19,203Operating income (loss)
    
    
    (6,325
    )
    
    
    9,937
    
    
    
    (8,582
    )
    
    
    12,300Other income (expense):Interest income
    
    
    1
    
    
    
    2
    
    
    
    4
    
    
    
    13Interest expense
    
    
    (350
    )
    
    
    (240
    )
    
    
    (532
    )
    
    
    (569
    )Gain on insurance settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39Gain on debt conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    313Miscellaneous
    
    
    (209
    )
    
    
    40
    
    
    
    (198
    )
    
    
    109Income (loss) before income taxes
    
    
    (6,883
    )
    
    
    9,739
    
    
    
    (9,308
    )
    
    
    12,205Income tax provision-current
    
    
    
    
    
    
    264
    
    
    
    2
    
    
    
    318Income tax provision-deferred
    
    
    95
    
    
    
    3,095
    
    
    
    184
    
    
    
    3,086Total income taxes
    
    
    95
    
    
    
    3,359
    
    
    
    186
    
    
    
    3,404Net income (loss)
    
    $
    (6,978
    )
    
    $
    6,380
    
    
    $
    (9,494
    )
    
    $
    8,801Net loss attributable to noncontrolling interest
    
    
    14
    
    
    
    15
    
    
    
    18
    
    
    
    28Net income (loss) attributable to Ultralife
    
    $
    (6,964
    )
    
    $
    6,395
    
    
    $
    (9,476
    )
    
    $
    8,829Net income (loss) attributable to Ultralife common shareholders  basic
    
    $
    (0.41
    )
    
    $
    0.37
    
    
    $
    (0.56
    )
    
    $
    0.51Net income (loss) attributable to Ultralife common shareholders  diluted
    
    $
    (0.41
    )
    
    $
    0.36
    
    
    $
    (0.56
    )
    
    $
    0.50Weighted average shares outstanding  basic
    
    
    16,894
    
    
    
    17,309
    
    
    
    17,024
    
    
    
    17,155Weighted average shares outstanding  diluted
    
    
    16,894
    
    
    
    17,708
    
    
    
    17,024
    
    
    
    17,770
  4




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Six-Month Periods EndedJune 28,
    
    
    June 28,2009
    
    
    2008OPERATING ACTIVITIESNet income (loss)
    
    $
    (9,494
    )
    
    $
    8,801Adjustments to reconcile net income (loss)
to net cash used in operating activities:Depreciation and amortization of financing fees
    
    
    1,939
    
    
    
    1,931Amortization of intangible assets
    
    
    807
    
    
    
    1,046Gain on asset disposal
    
    
    
    
    
    
    (3
    )Gain on insurance settlement
    
    
    
    
    
    
    (39
    )Foreign exchange (gain) loss
    
    
    191
    
    
    
    (64
    )Gain on debt conversion
    
    
    
    
    
    
    (313
    )Impairment of long-lived assets
    
    
    
    
    
    
    138Non-cash stock-based compensation
    
    
    1,077
    
    
    
    1,196Changes in deferred income taxes
    
    
    184
    
    
    
    3,086Changes in operating assets and liabilities, net of effects from acquisitions:Accounts receivable
    
    
    420
    
    
    
    (26,340
    )Inventories
    
    
    (8,094
    )
    
    
    (10,918
    )Prepaid expenses and other current assets
    
    
    225
    
    
    
    2,693Insurance receivable relating to fires
    
    
    
    
    
    
    201Income taxes payable
    
    
    (567
    )
    
    
    318Accounts payable and other liabilities
    
    
    339
    
    
    
    22,074Net cash provided from (used in) operating activities
    
    
    (12,973
    )
    
    
    3,807INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (1,253
    )
    
    
    (1,616
    )Payments for acquired companies, net of cash acquired
    
    
    (6,763
    )
    
    
    11Net cash used in investing activities
    
    
    (8,016
    )
    
    
    (1,605
    )FINANCING ACTIVITIESNet change in revolving credit facilities
    
    
    23,900
    
    
    
    (4,704
    )Proceeds from issuance of common stock
    
    
    310
    
    
    
    2,163Proceeds from issuance of debt
    
    
    751
    
    
    
    Principal payments on debt and capital lease obligations
    
    
    (1,192
    )
    
    
    (1,113
    )Purchase of treasury stock
    
    
    (3,326
    )
    
    
    Net cash provided from (used in) financing activities
    
    
    20,443
    
    
    
    (3,654
    )Effect of exchange rate changes on cash
    
    
    (157
    )
    
    
    34Change in cash and cash equivalents
    
    
    (703
    )
    
    
    (1,418
    )Cash and cash equivalents at beginning of period
    
    
    1,878
    
    
    
    2,245Cash and cash equivalents at end of period
    
    $
    1,175
    
    
    $
    827SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for income taxes
    
    $
    605
    
    
    $
    Cash paid for interest
    
    $
    449
    
    
    $
    641Noncash 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
    
    
    1,261Intangible Assets:Trademarks
    
    
    450Patents and Technology
    
    
    800Customer Relationships
    
    
    920Total 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
  7




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2008 Activity
  Ultralife Batteries India Private Limited
  U.S. Energy Systems, Inc. and U.S. Power Services, Inc.
    8




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##### Table of Contents



ASSETSCurrent assets:Cash
    
    $
    Total current assets
    
    
    Property, plant and equipment, net
    
    
    306Goodwill
    
    
    1,368Intangible Assets:Patents and Technology
    
    
    260Customer Relationships
    
    
    1,320Total assets acquired
    
    
    3,254LIABILITIESCurrent 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
    June 28, 2009
    
    
    December 31, 2008Raw materials
    
    $
    33,751
    
    
    $
    29,352Work in process
    
    
    10,721
    
    
    
    9,087Finished goods
    
    
    10,092
    
    
    
    4,87654,564
    
    
    
    43,315Less: Reserve for obsolescence
    
    
    3,341
    
    
    
    2,850$
    51,223
    
    
    $
    40,465
 9




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June 28, 2009
    
    
    December 31, 2008Land
    
    $
    123
    
    
    $
    123Buildings and leasehold improvements
    
    
    6,052
    
    
    
    5,274Machinery and equipment
    
    
    44,058
    
    
    
    42,172Furniture and fixtures
    
    
    1,808
    
    
    
    1,669Computer hardware and software
    
    
    2,980
    
    
    
    2,808Construction in progress
    
    
    1,489
    
    
    
    2,02356,510
    
    
    
    54,069Less: Accumulated depreciation
    
    
    38,260
    
    
    
    35,604$
    18,250
    
    
    $
    18,465
     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
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    (63
    )
    
    
    (43
    )Effect of foreign currency translations
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109Balance at June 28, 2008
    
    
    1,812
    
    
    
    4,307
    
    
    
    10,460
    
    
    
    4,667
    
    
    
    21,246Adjustments to purchase price
allocation
    
    
    250
    
    
    
    29
    
    
    
    
    
    
    
    297
    
    
    
    576Acquisition of US Energy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,111
    
    
    
    1,111Effect of foreign currency translations
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Balance at December 31, 2008
    
    
    2,072
    
    
    
    4,336
    
    
    
    10,460
    
    
    
    6,075
    
    
    
    22,943Adjustments to purchase price
allocation
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    1,095
    
    
    
    1,160Acquisition of AMTI
    
    
    
    
    
    
    
    
    
    
    1,261
    
    
    
    
    
    
    
    1,261Effect of foreign currency translations
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )Balance at June 28, 2009
    
    $
    2,069
    
    
    $
    4,401
    
    
    $
    11,721
    
    
    $
    7,170
    
    
    $
    25,361
  10




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June 28, 2009AccumulatedGross Assets
    
    
    Amortization
    
    
    NetTrademarks
    
    $
    4,855
    
    
    $
    
    
    
    $
    4,855Patents and technology
    
    
    5,158
    
    
    
    2,570
    
    
    
    2,588Customer relationships
    
    
    9,791
    
    
    
    3,417
    
    
    
    6,374Distributor relationships
    
    
    352
    
    
    
    197
    
    
    
    155Non-compete agreements
    
    
    393
    
    
    
    365
    
    
    
    28Total intangible assets
    
    $
    20,549
    
    
    $
    6,549
    
    
    $
    14,000
 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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Six-Month Periods EndedJune 28, 2009
    
    June 28, 2008Risk-free interest rate
    
    
    1.44
    %
    
    
    2.33
    %Volatility factor
    
    
    68.40
    %
    
    
    59.46
    %Dividends
    
    
    0.00
    %
    
    
    0.00
    %Weighted average expected life (years)
    
    
    3.57
    
    
    
    3.55
  15




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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
    
    
    242,820
    
    
    
    8.42Options exercised
    
    
    (89,355
    )
    
    
    4.87Options forfeited
    
    
    (6,681
    )
    
    
    11.81Options expired
    
    
    (22,751
    )
    
    
    17.07Shares under option at June 28, 2009
    
    
    1,775,040
    
    
    $
    12.11
    
    
    4.07 years
    
    $
    64Vested and expected to vest as of
June 28, 2009
    
    
    1,678,403
    
    
    $
    12.19
    
    
    4.01 years
    
    $
    64Options exercisable at June 28, 2009
    
    
    1,162,523
    
    
    $
    12.95
    
    
    3.31 years
    
    $
    64
        Six-Month PeriodEndedJune 28, 2009Number of shares awarded
    
    
    24,786Weighted average fair value per share
    
    $
    10.58Aggregate total value
    
    $
    246
 16




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Weighted AverageNumber of Shares
    
    
    Grant Date Fair ValueUnvested at December 31, 2008
    
    
    69,864
    
    
    $
    11.36Granted
    
    
    24,786
    
    
    
    7.44Vested
    
    
    (23,000
    )
    
    
    11.51Forfeited
    
    
    
    
    
    
    Unvested at June 28, 2009
    
    
    71,650
    
    
    $
    9.96
      17




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Three-Month Periods
    
    Six-Month Periods EndedEnded June 28,
    
    June 28,2009
    
    2008
    
    2009
    
    2008Net Income (Loss) attributable to Ultralife
    
    $
    (6,964
    )
    
    $
    6,395
    
    
    $
    (9,476
    )
    
    $
    8,829Net Income (Loss) attributable to
participating securities (unvested
restricted stock awards) (-0-,
78,000, -0-,
and 87,000 shares, respectively)
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    (43
    )Net Income (Loss) attributable to Ultralife
common shareholders (a)
    
    
    (6,964
    )
    
    
    6,366
    
    
    
    (9,476
    )
    
    
    8,786Effect of Dilutive Securities:Convertible Notes Payable
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    115Net Income (Loss) attributable to Ultralife
common shareholders  Adjusted (b)
    
    $
    (6,964
    )
    
    $
    6,416
    
    
    $
    (9,476
    )
    
    $
    8,901Average Common Shares Outstanding 
Basic (c)
    
    
    16,894,000
    
    
    
    17,309,000
    
    
    
    17,024,000
    
    
    
    17,155,000Effect of Dilutive Securities:Stock Options / Warrants
    
    
    
    
    
    
    132,000
    
    
    
    
    
    
    
    248,000Convertible Notes Payable
    
    
    
    
    
    
    267,000
    
    
    
    
    
    
    
    367,000Average Common Shares Outstanding 
Diluted (d)
    
    
    16,894,000
    
    
    
    17,708,000
    
    
    
    17,024,000
    
    
    
    17,770,000EPS  Basic (a/c)
    
    $
    (0.41
    )
    
    $
    0.37
    
    
    $
    (0.56
    )
    
    $
    0.51EPS  Diluted (b/d)
    
    $
    (0.41
    )
    
    $
    0.36
    
    
    $
    (0.56
    )
    
    $
    0.50
 19




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Three-Month Periods
    
    Six-Month Periods EndedEnded June 28,
    
    June 28,2009
    
    2008
    
    2009
    
    2008Net income (loss) attributable to Ultralife
    
    $
    (6,964
    )
    
    $
    6,395
    
    
    $
    (9,476
    )
    
    $
    8,829Foreign currency translation adjustments
    
    
    916
    
    
    
    16
    
    
    
    862
    
    
    
    181Change in fair value of derivatives
    
    
    4
    
    
    
    13
    
    
    
    11
    
    
    
    (19
    )Total comprehensive income (loss)
    
    $
    (6,044
    )
    
    $
    6,424
    
    
    $
    (8,603
    )
    
    $
    8,991
    20




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##### Table of Contents



Balance at December 31, 2008
    
    $
    1,010Accruals for warranties issued
    
    
    75Settlements made
    
    
    (166
    )Balance at June 28, 2009
    
    $
    919
      21




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22




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23




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24




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Three-Month Period Ended June 28, 2009
 Non-
    
    
    
    
    
    
    
    
    
    
    Design andRechargeable
    
    
    Rechargeable
    
    
    Communications
    
    
    InstallationProducts
    
    
    Products
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    18,925
    
    
    $
    10,307
    
    
    $
    6,601
    
    
    $
    3,760
    
    
    $
    
    
    
    $
    39,593Segment contribution
    
    
    3,357
    
    
    
    1,987
    
    
    
    1,175
    
    
    
    261
    
    
    
    (13,105
    )
    
    
    (6,325
    )Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (349
    )
    
    
    (349
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (209
    )
    
    
    (209
    )Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95
    )
    
    
    (95
    )Non controlling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    14Net loss
attributable to
Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (6,964
    )Total assets
    
    $
    47,565
    
    
    $
    27,485
    
    
    $
    39,537
    
    
    $
    23,252
    
    
    $
    4,824
    
    
    $
    142,663
 Three-Month Period Ended June 28, 2008
 Non-
    
    
    
    
    
    
    
    
    
    
    Design andRechargeable
    
    
    Rechargeable
    
    
    Communications
    
    
    InstallationProducts
    
    
    Products
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    17,699
    
    
    $
    4,490
    
    
    $
    61,946
    
    
    $
    3,763
    
    
    $
    
    
    
    $
    87,898Segment contribution
    
    
    2,251
    
    
    
    821
    
    
    
    16,741
    
    
    
    815
    
    
    
    (10,691
    )
    
    
    9,937Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (238
    )
    
    
    (238
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    40Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (264
    )
    
    
    (264
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,095
    )
    
    
    (3,095
    )Non controlling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    15Net income
attributable to
Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,395Total assets
    
    $
    46,848
    
    
    $
    19,773
    
    
    $
    68,469
    
    
    $
    14,993
    
    
    $
    3,945
    
    
    $
    154,028
 Six-Month Period Ended June 28, 2009
 Non-
    
    
    
    
    
    
    
    
    
    
    Design andRechargeable
    
    
    Rechargeable
    
    
    Communications
    
    
    InstallationProducts
    
    
    Products
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    34,497
    
    
    $
    24,161
    
    
    $
    10,837
    
    
    $
    9,901
    
    
    $
    
    
    
    $
    79,396Segment contribution
    
    
    6,179
    
    
    
    5,425
    
    
    
    2,215
    
    
    
    742
    
    
    
    (23,143
    )
    
    
    (8,582
    )Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (528
    )
    
    
    (528
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (198
    )
    
    
    (198
    )Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (184
    )
    
    
    (184
    )Non controlling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    18Net loss
attributable to
Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (9,476
    )Total assets
    
    $
    47,565
    
    
    $
    27,485
    
    
    $
    39,537
    
    
    $
    23,252
    
    
    $
    4,824
    
    
    $
    142,663
 25




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Six-Month Period Ended June 28, 2008
 Non-
    
    
    
    
    
    
    
    
    
    
    Design andRechargeable
    
    
    Rechargeable
    
    
    Communications
    
    
    InstallationProducts
    
    
    Products
    
    
    Systems
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    32,315
    
    
    $
    11,228
    
    
    $
    86,000
    
    
    $
    7,942
    
    
    $
    
    
    
    $
    137,485Segment contribution
    
    
    5,307
    
    
    
    2,022
    
    
    
    22,862
    
    
    
    1,312
    
    
    
    (19,203
    )
    
    
    12,300Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (556
    )
    
    
    (556
    )Gain on debt
conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    313
    
    
    
    313Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148
    
    
    
    148Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (318
    )
    
    
    (318
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,086
    )
    
    
    (3,086
    )Non controlling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    28Net loss
attributable to
Ultralife
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8,829Total assets
    
    $
    46,848
    
    
    $
    19,773
    
    
    $
    68,469
    
    
    $
    14,993
    
    
    $
    3,945
    
    
    $
    154,028
        26




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General
   30




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Overview
   31




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32




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Results of Operations
 Three-month periods ended June 28, 2009 and June 28, 2008
 Revenues.
     Cost of Products Sold.
   33




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Operating Expenses.
 Other Income (Expense).
 Income Taxes.
 34




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Net Income (Loss) Attributable to Ultralife.
 Six-month periods ended March 29, 2009 and March 29, 2008
 Revenues.
   35




---



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Cost of Products Sold.
     36




---



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Operating Expenses.
 Other Income (Expense).
 Income Taxes.
  37




---



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Net Income (Loss) Attributable to Ultralife.
 Adjusted EBITDA
   38




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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.
  Three-Month Periods Ended
    
    
    Six-Month Periods EndedJune 28,
    
    
    June 28,
    
    
    June 28,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss) attributable to Ultralife
    
    $
    (6,964
    )
    
    $
    6,395
    
    
    $
    (9,476
    )
    
    $
    8,829Add: interest expense, net
    
    
    349
    
    
    
    238
    
    
    
    528
    
    
    
    556Add: income tax provision
    
    
    95
    
    
    
    3,359
    
    
    
    186
    
    
    
    3,404Add: depreciation expense
    
    
    997
    
    
    
    933
    
    
    
    1,939
    
    
    
    1,931Add: amortization expense
    
    
    466
    
    
    
    526
    
    
    
    807
    
    
    
    1,046Add: stock-based
compensation expense
    
    
    541
    
    
    
    709
    
    
    
    1,077
    
    
    
    1,196Less: gain on debt conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (313
    )Adjusted EBITDA
    
    $
    (4,516
    )
    
    $
    12,160
    
    
    $
    (4,939
    )
    
    $
    16,649
 39




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Liquidity and Capital Resources
      Debt Commitments
   40




---



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41




---



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Equity Transactions
   Other Matters
    42




---



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Outlook
  Recent Accounting Pronouncements and Developments
  "
  43




---



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44




---



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45




---



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Critical Accounting Policies
   46




---



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47




---



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PART II OTHER INFORMATION
 
    
     Updated Risk Factors
 We face risks related to the current credit crisis.
   48




---



##### Table of Contents



We may be unable to obtain financing to fund ongoing operations and future growth.
    A significant portion of our revenues is derived from certain key customers and the delay or
cancellation of orders by any of these key customers may adversely affect our business.
   49




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##### Table of Contents



New Risk Factor
 We may not generate a sufficient amount of cash or generate sufficient funds from operations to
fund our operations or repay our indebtedness at maturity or otherwise.
  
   50




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(a)
    
    On June 9, 2009, we held our Annual Meeting of Shareholders.(b)
    
    At the Annual Meeting, our shareholders elected to the Board of Directors all
eight nominees for Director with the following votes:
 DIRECTOR
    
    FOR
    
    AGAINSTCarole Lewis Anderson
    
    
    10,969,030
    
    
    
    4,664,699Patricia C. Barron
    
    
    10,965,989
    
    
    
    4,667,740Anthony J. Cavanna
    
    
    10,965,804
    
    
    
    4,667,925Paula H. J. Cholmondeley
    
    
    10,697,304
    
    
    
    4,936,425Daniel W. Christman
    
    
    10,968,524
    
    
    
    4,665,205John D. Kavazanjian
    
    
    15,571,374
    
    
    
    62,355Ranjit C. Singh
    
    
    10,917,887
    
    
    
    4,715,842Bradford T. Whitmore
    
    
    15,420,741
    
    
    
    212,988
 (c)
    
    At the Annual Meeting, our shareholders voted for the ratification of the
selection of BDO Seidman, LLP as our independent registered public accounting firm for
2009 with the following votes:
 FOR
    
    AGAINST
    
    ABSTENTIONS15,557,664
    
    51,156
    
    24,908
 
  ExhibitIndex
    
    Description of Document
    
    Incorporated By Reference from:10.1
    
    Amended and Restated
Subordinated
Promissory Note with
William Maher
effective March 28,
2009
    
    Exhibit 10.3 of the Form 10-Q for the fiscal
quarter ended March 29, 2009, filed May 7, 200910.2
    
    Employment Agreement
between the Registrant
and John D.
Kavazanjian
    
    Exhibit 99.1 of the Form 8-K filed on July 9, 200910.3
    
    Employment Agreement
between the Registrant
and William A. Schmitz
    
    Exhibit 99.2 of the Form 8-K filed on July 9, 200910.4
    
    Waiver and Amendment
Number One to Amended
and Restated Credit
Agreement as of June
28, 2009, with the
Lenders Party Thereto
and JPMorgan Chase
Bank, N.A. as
Administrative Agent
    
    Filed herewith31.1
    
    CEO 302 Certifications
    
    Filed herewith31.2
    
    CFO 302 Certifications
    
    Filed herewith32.1
    
    906 Certifications
    
    Filed herewith
 51




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ULTRALIFE CORPORATION
(Registrant)Date: August 10, 2009
    By:
    /s/ John D. KavazanjianJohn D. KavazanjianPresident and Chief Executive Officer
(Principal Executive Officer)Date: August 10, 2009
    By:
    /s/ John C. CasperJohn C. CasperVice President of Finance and Chief
Financial Officer(Principal Financial and Principal Accounting Officer) 52




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10.4
    
    Waiver and Amendment Number One to Amended and Restated Credit Agreement as of
June 28, 2009, with the Lenders Party Thereto and JPMorgan Chase Bank, N.A. as
Administrative Agent31.1
    
    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
 53