##### 



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 endedJuly 1, 2006
 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 BATTERIES, INC.
 
 Delaware
    
    16-1387013(State or other jurisdiction
of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 
 
 
 þ o
 
 o þ o
 o þ




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##### 



PagePART I FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Balance Sheets -
July 1, 2006 and December 31, 2005
    
    
    3Condensed Consolidated Statements of Operations -
Three- and six-month periods ended July 1, 2006
and July 2, 2005
    
    
    4Condensed Consolidated Statements of Cash Flows -
Six-month periods ended July 1, 2006 and July 2, 2005
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    20Item 3.
    
    Quantitative and Qualitative Disclosures
About Market Risk
    
    
    29Item 4.
    
    Controls and Procedures
    
    
    29PART II OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    31Item 1A.
    
    Risk Factors
    
    
    31Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    32Item 6.
    
    Exhibits
    
    
    33Signatures
    
    
    34Index to Exhibits
    
    
    35
 2




---



##### 



July 1,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    4,237
    
    
    $
    3,214Trade accounts receivable (less allowance for doubtful accounts
of $355 at July 1, 2006 and $458 at December 31, 2005)
    
    
    12,748
    
    
    
    10,965Inventories
    
    
    17,010
    
    
    
    19,446Due from insurance company
    
    
    
    
    
    
    482Deferred tax asset  current
    
    
    2,406
    
    
    
    2,508Prepaid expenses and other current assets
    
    
    1,752
    
    
    
    2,747Total current assets
    
    
    38,153
    
    
    
    39,362Property, plant and equipment, net
    
    
    19,892
    
    
    
    19,931Goodwill and Intangible Assets
    
    
    2,806
    
    
    
    Other assets:Security deposits and other
    
    
    12
    
    
    
    243Deferred tax asset  non-current
    
    
    20,880
    
    
    
    21,22120,892
    
    
    
    21,464Total Assets
    
    $
    81,743
    
    
    $
    80,757LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Short-term debt and current portion of long-term debt
    
    $
    6,190
    
    
    $
    7,715Accounts payable
    
    
    5,681
    
    
    
    5,218Income taxes payable
    
    
    23
    
    
    
    Other current liabilities
    
    
    4,168
    
    
    
    5,450Total current liabilities
    
    
    16,062
    
    
    
    18,383Long-term liabilities:Debt and capital lease obligations
    
    
    25
    
    
    
    25Other long-term liabilities
    
    
    251
    
    
    
    242Total long-term liabilities
    
    
    276
    
    
    
    267Commitments and contingencies (Note 11)Shareholders equity:Preferred stock, par value $0.10 per share, authorized 1,000,000 shares;
none outstanding
    
    
    
    
    
    
    Common stock, par value $0.10 per share, authorized 40,000,000 shares;
issued  15,648,838 at July 1, 2006 and 15,471,446 at December 31, 2005
    
    
    1,565
    
    
    
    1,547Capital in excess of par value
    
    
    133,159
    
    
    
    130,530Accumulated other comprehensive loss
    
    
    (652
    )
    
    
    (1,054
    )Accumulated deficit
    
    
    (66,289
    )
    
    
    (66,538
    )67,783
    
    
    
    64,485Less Treasury stock, at cost  727,250 shares
    
    
    2,378
    
    
    
    2,378Total shareholders equity
    
    
    65,405
    
    
    
    62,107Total Liabilities and Shareholders Equity
    
    $
    81,743
    
    
    $
    80,757
  3




---



##### 



Three-Month Periods Ended
    
    
    Six-Month Periods EndedJuly 1,
    
    
    July 2,
    
    
    July 1,
    
    
    July 2,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    21,393
    
    
    $
    21,603
    
    
    $
    39,712
    
    
    $
    36,966Cost of products sold
    
    
    17,016
    
    
    
    17,398
    
    
    
    31,365
    
    
    
    30,738Gross margin
    
    
    4,377
    
    
    
    4,205
    
    
    
    8,347
    
    
    
    6,228Operating expenses:Research and development
    
    
    884
    
    
    
    1,059
    
    
    
    1,844
    
    
    
    1,905Selling, general, and administrative
    
    
    3,032
    
    
    
    2,942
    
    
    
    5,814
    
    
    
    5,843Total operating expenses
    
    
    3,916
    
    
    
    4,001
    
    
    
    7,658
    
    
    
    7,748Operating income/(loss)
    
    
    461
    
    
    
    204
    
    
    
    689
    
    
    
    (1,520
    )Other income (expense):Interest income
    
    
    40
    
    
    
    58
    
    
    
    85
    
    
    
    118Interest expense
    
    
    (207
    )
    
    
    (180
    )
    
    
    (412
    )
    
    
    (373
    )Gain on insurance settlement
    
    
    43
    
    
    
    
    
    
    
    191
    
    
    
    Miscellaneous
    
    
    139
    
    
    
    (191
    )
    
    
    147
    
    
    
    (194
    )Income/(loss) before income taxes
    
    
    476
    
    
    
    (109
    )
    
    
    700
    
    
    
    (1,969
    )Income tax provision/(benefit)current
    
    
    20
    
    
    
    15
    
    
    
    24
    
    
    
    (2
    )Income tax provision/(benefit)deferred
    
    
    347
    
    
    
    1,315
    
    
    
    427
    
    
    
    1,022Total income taxes
    
    
    367
    
    
    
    1,330
    
    
    
    451
    
    
    
    1,020Net Income/(Loss)
    
    $
    109
    
    
    $
    (1,439
    )
    
    $
    249
    
    
    $
    (2,989
    )Earnings/(Loss) per share  basic
    
    $
    0.01
    
    
    $
    (0.10
    )
    
    $
    0.02
    
    
    $
    (0.21
    )Earnings/(Loss) per share  diluted
    
    $
    0.01
    
    
    $
    (0.10
    )
    
    $
    0.02
    
    
    $
    (0.21
    )Weighted average shares outstanding  basic
    
    
    14,851
    
    
    
    14,450
    
    
    
    14,807
    
    
    
    14,413Weighted average shares outstanding 
diluted
    
    
    15,165
    
    
    
    14,450
    
    
    
    15,150
    
    
    
    14,413
  4




---



##### 



Six-Month Periods EndedJuly 1,
    
    
    July 2,2006
    
    
    2005OPERATING ACTIVITIESNet income (loss)
    
    $
    249
    
    
    $
    (2,989
    )Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    1,817
    
    
    
    1,613Loss on asset disposal
    
    
    
    
    
    
    6Gain on insurance settlement
    
    
    (191
    )
    
    
    Foreign exchange (gain)/loss
    
    
    (147
    )
    
    
    203Non-cash stock-based compensation
    
    
    566
    
    
    
    20Changes in deferred taxes
    
    
    427
    
    
    
    1,035Changes in operating assets and liabilities, net of effects from
the purchase of ABLE:Accounts receivable
    
    
    (1,332
    )
    
    
    (1,593
    )Inventories
    
    
    3,455
    
    
    
    (3,849
    )Prepaid expenses and other current assets
    
    
    1,236
    
    
    
    180Insurance receivable relating to fires
    
    
    602
    
    
    
    699Income taxes payable
    
    
    23
    
    
    
    Accounts payable and other liabilities
    
    
    (2,234
    )
    
    
    3,276Net cash provided by (used in) operating activities
    
    
    4,471
    
    
    
    (1,399
    )INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (651
    )
    
    
    (1,972
    )Proceeds from asset disposal
    
    
    
    
    
    
    10Sales of securities
    
    
    
    
    
    
    1,000Payment for purchase of ABLE, net of cash acquired
    
    
    (1,946
    )
    
    
    Net cash used in investing activities
    
    
    (2,597
    )
    
    
    (962
    )FINANCING ACTIVITIESNet change in revolving credit facilities
    
    
    (525
    )
    
    
    129Proceeds from issuance of common stock
    
    
    555
    
    
    
    1,100Principal payments on long-term debt and capital lease obligations
    
    
    (1,000
    )
    
    
    (1,167
    )Net cash (used in) provided by in financing activities
    
    
    (970
    )
    
    
    62Effect of exchange rate changes on cash
    
    
    119
    
    
    
    (62
    )Increase (decrease) in cash and cash equivalents
    
    
    1,023
    
    
    
    (2,361
    )Cash and cash equivalents at beginning of period
    
    
    3,214
    
    
    
    10,529Cash and cash equivalents at end of period
    
    $
    4,237
    
    
    $
    8,168SUPPLEMENTAL CASH FLOW INFORMATIONTaxes paid
    
    $
    5
    
    
    $
    Interest paid
    
    $
    363
    
    
    $
    277Noncash investing and financing activities:Issuance of common stock and stock warrants for purchase of ABLE
    
    $
    1,526
    
    
    $
    
  5




---



##### 



Risk-free interest rate
    
    
    4.31
    %Volatility factor
    
    
    61.25
    %Dividends
    
    
    0
    %Weighted average expected life (years)
    
    
    2.5
 6




---



##### 



ASSETSCurrent assets:Cash and cash equivalents
    
    $
    104Trade accounts receivables, net
    
    
    318Inventories
    
    
    789Prepaid expenses and other current expenses
    
    
    73Total current assets
    
    
    1,284Property, plant and equipment, net
    
    
    746Goodwill
    
    
    516Intangible Assets:Trademarks
    
    
    190Patents and technology
    
    
    780Customer relationships
    
    
    920Distributor relationships
    
    
    340Non-compete agreements
    
    
    60Total assets acquired
    
    
    4,836LIABILITIESCurrent liabilities:Accounts payable
    
    
    1,085Other current liabilities
    
    
    110Total current liabilities
    
    
    1,195Other long-term liabilities
    
    
    65Total liabilities assumed
    
    
    1,260Total Purchase Price
    
    $
    3,576
  7




---



##### 



Three-Month Periods Ended
    
    Six-Month Periods EndedJuly 1,
    
    July 2,
    
    July 1,
    
    July 2,(In thousands, except per share data)
    
    2006
    
    2005
    
    2006
    
    2005Net Income/(Loss) (a)
    
    $
    109
    
    
    $
    (1,439
    )
    
    $
    249
    
    
    $
    (2,989
    )Average Shares Outstanding  Basic (b)
    
    
    14,851
    
    
    
    14,450
    
    
    
    14,807
    
    
    
    14,413Effect of Dilutive Securities:Stock Options / Warrants
    
    
    314
    
    
    
    
    
    
    
    343
    
    
    
    Average Shares Outstanding  Diluted (c)
    
    
    15,165
    
    
    
    14,450
    
    
    
    15,150
    
    
    
    14,413EPS  Basic (a/b)
    
    $
    .01
    
    
    $
    (0.10
    )
    
    $
    .02
    
    
    $
    (0.21
    )EPS  Diluted (a/c)
    
    $
    .01
    
    
    $
    (0.10
    )
    
    $
    .02
    
    
    $
    (0.21
    )
    8




---



##### 



9




---



##### 



Three-Month Period
    
    
    Six-Month Period(In thousands, except per share data)
    
    Ended July 2, 2005
    
    
    Ended July 2, 2005Net loss, as reported
    
    $
    (1,439
    )
    
    $
    (2,989
    )Add: Stock-based employee
compensation expense included in
reported net income, net of related
tax effects
    
    
    
    
    
    
    Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax
effects
    
    
    (511
    )
    
    
    (1,048
    )Pro forma net loss
    
    $
    (1,950
    )
    
    $
    (4,037
    )Loss per share:Basic  as reported
    
    $
    (0.10
    )
    
    $
    (0.21
    )Basic  pro forma
    
    $
    (0.13
    )
    
    $
    (0.28
    )Diluted  as reported
    
    $
    (0.10
    )
    
    $
    (0.21
    )Diluted  pro forma
    
    $
    (0.13
    )
    
    $
    (0.28
    )
  Risk-free interest rate
    
    
    4.76
    %Volatility factor
    
    
    60.08
    %Dividends
    
    
    0
    %Weighted average expected life (years)
    
    
    3.58
 10




---



##### 



Weighted Average
    
    Weighted AverageNumber
    
    Exercise Price
    
    Remaining
    
    Aggregate Intrinsicof Shares
    
    Per Share
    
    Contractual Term
    
    ValueShares under option at January 1, 2006
    
    
    1,430,271
    
    
    $
    10.94Options granted
    
    
    275,500
    
    
    $
    10.99Options exercised
    
    
    (80,600
    )
    
    $
    6.85Options forfeited
    
    
    (4,400
    )
    
    $
    5.11Options expired
    
    
    (15,900
    )
    
    $
    14.47Shares under option at July 1, 2006
    
    
    1,604,871
    
    
    $
    11.14
    
    
    4.71 years
    
    $
    2,760Vested and expected to vest as of
July 1, 2006
    
    
    1,536,676
    
    
    $
    11.16
    
    
    4.65 years
    
    $
    2,690Options exercisable at July 1, 2006
    
    
    1,034,145
    
    
    $
    11.90
    
    
    4.32 years
    
    $
    1,795
     Three-Month Periods Ended
    
    Six-Month Periods EndedJuly 1,
    
    July 2,
    
    July 1,
    
    July 2,2006
    
    2005
    
    2006
    
    2005Net income (loss)
    
    $
    109
    
    
    $
    (1,439
    )
    
    $
    249
    
    
    $
    (2,989
    )Foreign currency translation adjustments
    
    
    318
    
    
    
    (313
    )
    
    
    370
    
    
    
    (465
    )Change in fair value of derivatives,
net of tax
    
    
    11
    
    
    
    (5
    )
    
    
    32
    
    
    
    104Total comprehensive income (loss)
    
    $
    438
    
    
    $
    (1,757
    )
    
    $
    651
    
    
    $
    (3,350
    )
 11




---



##### 



July 1, 2006
    
    
    December 31, 2005Raw materials
    
    $
    8,550
    
    
    $
    8,817Work in process
    
    
    6,481
    
    
    
    8,648Finished goods
    
    
    2,359
    
    
    
    2,84917,390
    
    
    
    20,314Less: Reserve for obsolescence
    
    
    380
    
    
    
    868$
    17,010
    
    
    $
    19,446
   July 1, 2006
    
    
    December 31, 2005Land
    
    $
    123
    
    
    $
    123Buildings and leasehold improvements
    
    
    4,410
    
    
    
    4,229Machinery and equipment
    
    
    40,197
    
    
    
    37,876Furniture and fixtures
    
    
    848
    
    
    
    788Computer hardware and software
    
    
    2,246
    
    
    
    2,197Construction in progress
    
    
    695
    
    
    
    1,05948,519
    
    
    
    46,272Less: Accumulated depreciation
    
    
    28,627
    
    
    
    26,341$
    19,892
    
    
    $
    19,931
     12




---



##### 



13




---



##### 



Balance at December 31, 2005
    
    $
    464Accruals for warranties issued
    
    
    23Settlements made
    
    
    (38
    )Balance at July 1, 2006
    
    $
    449
  14




---



##### 



15




---



##### 



Three-Month Period Ended July 1, 2006
 Non-rechargeable
    
    
    RechargeableBatteries
    
    
    Batteries
    
    
    Technology Contracts
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    18,458
    
    
    $
    2,648
    
    
    $
    287
    
    
    $
    
    
    
    $
    21,393Segment contribution
    
    
    3,558
    
    
    
    789
    
    
    
    30
    
    
    
    (3,916
    )
    
    
    461Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (167
    )
    
    
    (167
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182
    
    
    
    182Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    (20
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (347
    )
    
    
    (347
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    109Total assets
    
    $
    47,160
    
    
    $
    3,883
    
    
    $
    158
    
    
    $
    30,542
    
    
    $
    81,743
 Three-Month Period Ended July 2, 2005
 Non-rechargeable
    
    
    RechargeableBatteries
    
    
    Batteries
    
    
    Technology Contracts
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    17,692
    
    
    $
    3,262
    
    
    $
    649
    
    
    $
    
    
    
    $
    21,603Segment contribution
    
    
    3,709
    
    
    
    439
    
    
    
    57
    
    
    
    (4,001
    )
    
    
    204Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (122
    )
    
    
    (122
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    (191
    )Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (15
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,315
    )
    
    
    (1,315
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,439
    )Total assets
    
    $
    41,661
    
    
    $
    4,346
    
    
    $
    476
    
    
    $
    34,570
    
    
    $
    81,053
 16




---



##### 



Six-Month Period Ended July 1, 2006
 Non-rechargeable
    
    
    RechargeableBatteries
    
    
    Batteries
    
    
    Technology Contracts
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    34,103
    
    
    $
    5,213
    
    
    $
    396
    
    
    $
    
    
    
    $
    39,712Segment contribution
    
    
    6,880
    
    
    
    1,485
    
    
    
    (18
    )
    
    
    (7,658
    )
    
    
    689Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (327
    )
    
    
    (327
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    338
    
    
    
    338Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    (24
    )Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (427
    )
    
    
    (427
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    249Total assets
    
    $
    47,160
    
    
    $
    3,883
    
    
    $
    158
    
    
    $
    30,542
    
    
    $
    81,743
 Six-Month Period Ended July 2, 2005
 Non-rechargeable
    
    
    RechargeableBatteries
    
    
    Batteries
    
    
    Technology Contracts
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    30,500
    
    
    $
    5,390
    
    
    $
    1,076
    
    
    $
    
    
    
    $
    36,966Segment contribution
    
    
    5,649
    
    
    
    490
    
    
    
    89
    
    
    
    (7,748
    )
    
    
    (1,520
    )Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (255
    )
    
    
    (255
    )Miscellaneous
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (194
    )
    
    
    (194
    )Income taxes-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Income taxes-deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,022
    )
    
    
    (1,022
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,989
    )Total assets
    
    $
    41,661
    
    
    $
    4,346
    
    
    $
    476
    
    
    $
    34,570
    
    
    $
    81,053
    17




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##### 



18




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##### 



19




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##### 



Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    General
    20




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##### 



Results of Operations
 Three-month periods ended July 1, 2006 and July 2, 2005
 Impact of Adoption of FAS 123R.
  Three-Month Period
    
    
    
    
    
    
    Three-Month Period
    
    
    Three-Month PeriodEnded July 1, 2006
    
    
    
    
    
    
    Ended July 1, 2006
    
    
    Ended July 2, 2005(as reported)
    
    
    FAS 123R Impact
    
    
    (as adjusted)
    
    
    (as reported)Revenues
    
    $
    21,393
    
    
    $
    
    
    
    $
    21,393
    
    
    $
    21,603Cost of Products Sold
    
    
    17,016
    
    
    
    (34
    )
    
    
    16,982
    
    
    
    17,398Gross Margin
    
    
    4,377
    
    
    
    34
    
    
    
    4,411
    
    
    
    4,205Operating Expenses
    
    
    3,916
    
    
    
    (274
    )
    
    
    3,642
    
    
    
    4,001Operating Income
    
    $
    461
    
    
    $
    308
    
    
    $
    769
    
    
    $
    204
  Revenues.
 21




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##### 



Cost of Products Sold.
 Operating Expenses.
 Other Income (Expense).
 Income Taxes.
 Net (Loss)/Income.
 22




---



##### 



Six-month periods ended July 1, 2006 and July 2, 2005
 Impact of Adoption of FAS 123R.
  Six-Month Period
    
    
    
    
    
    
    Six-Month Period
    
    
    Six-Month PeriodEnded July 1, 2006
    
    
    
    
    
    
    Ended July 1, 2006
    
    
    Ended July 2, 2005(as reported)
    
    
    FAS 123R Impact
    
    
    (as adjusted)
    
    
    (as reported)Revenues
    
    $
    39,712
    
    
    $
    
    
    
    $
    39,712
    
    
    $
    36,966Cost of Products Sold
    
    
    31,365
    
    
    
    (68
    )
    
    
    31,297
    
    
    
    30,738Gross Margin
    
    
    8,347
    
    
    
    68
    
    
    
    8,415
    
    
    
    6,228Operating Expenses
    
    
    7,658
    
    
    
    (498
    )
    
    
    7,160
    
    
    
    7,748Operating Income/(Loss)
    
    $
    689
    
    
    $
    566
    
    
    $
    1,255
    
    
    $
    (1,520
    )
  Revenues.
 Cost of Products Sold.
 23




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##### 



Operating Expenses.
 Other Income (Expense).
 Income Taxes.
 Net (Loss)/Income.
 Liquidity and Capital Resources
  24




---



##### 



25




---



##### 



26




---



##### 



Outlook
   Recent Accounting Pronouncements and Developments
  27




---



##### 



Critical Accounting Policies
   28




---



##### 



Item 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (in whole dollars)
      29




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##### 



30




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##### 



PART II OTHER INFORMATION
      Integration of Acquired Companies
  31




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##### 



(a)
    
    On June 8, 2006, the Company held its Annual Meeting of Shareholders.(b)
    
    At the Annual Meeting, the shareholders of the Company elected to the Board
of Directors all seven nominees for Director with the following votes:
 DIRECTOR
    
    FOR
    
    AGAINSTCarole L. Anderson
    
    
    11,766,139
    
    
    
    328,842Patricia C. Barron
    
    
    11,728,680
    
    
    
    366,301Anthony J. Cavanna
    
    
    11,726,930
    
    
    
    368,051Paula H. J. Cholmondeley
    
    
    10,514,090
    
    
    
    1,580,891Daniel W. Christman
    
    
    11,727,330
    
    
    
    367,651John D. Kavazanjian
    
    
    11,757,017
    
    
    
    337,964Ranjit C. Singh
    
    
    11,769,689
    
    
    
    325,292
 (c)
    
    At the Annual Meeting, the shareholders of the Company voted for the
ratification of the selection of PricewaterhouseCoopers LLP as the Companys
independent registered public accounting firm for 2006 with the following votes:
 FOR
    
    AGAINST
    
    ABSTENTIONS11,963,990
    
    
    119,710
    
    
    
    11,281
 (d)
    
    At the Annual Meeting, the shareholders of the Company voted for the
amendment of the Companys Long-Term Incentive Plan with the following votes:
 ABSTENTIONS ANDFOR
    
    AGAINST
    
    BROKER NON-VOTES8,034,800
    
    
    813,014
    
    
    
    3,247,167
 (e)
    
    At the Annual Meeting, the shareholders of the Company voted for the
ratification of the grant of non-statutory options to John D. Kavazanjian with the
following votes:
 ABSTENTIONS ANDFOR
    
    AGAINST
    
    BROKER NON-VOTES7,728,578
    
    
    1,104,093
    
    
    
    3,262,315
 32




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##### 



10.1
    
    
    
    Amendment Number Five to Credit Agreement31.1
    
    
    
    Section 302 Certification  CEO31.2
    
    
    
    Section 302 Certification  CFO32
    
    
    
    Section 906 Certifications
 33




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##### 



ULTRALIFE BATTERIES, INC.
(Registrant)Date: August 10, 2006
    By:
    /s/ John D. KavazanjianJohn D. KavazanjianPresident and Chief Executive OfficerDate: August 10, 2006
    By:
    /s/ Robert W. FishbackRobert W. FishbackVice President  Finance and Chief
Financial Officer 34




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##### 



10.1
    
    
    
    Amendment Number Five to Credit Agreement31.1
    
    
    
    Section 302 Certification  CEO31.2
    
    
    
    Section 302 Certification  CFO32
    
    
    
    Section 906 Certifications
 35