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Newark’s Ultralife announces 3Q earnings

Ultralife Corporation (Nasdaq:ULBI) reported breakeven operating results on revenue of $16.1 million for the quarter ended September 28, 2014. For the third quarter of 2013, the Company reported an operating profit of $0.7 million on revenue of $20.4 million.”On the strength of a 36% increase in commercial sales in Battery & Energy Products, consolidated sales to commercial customers surpassed sales to Government/Defense customers for the third consecutive quarter and Battery & Energy Products sales grew 3%. Our strategy to embed our battery systems into the design of our commercial customers’ products is bearing fruit and giving us a strong foundation to continue to grow commercial sales while strengthening our customer relationships,” said Michael D. Popielec, Ultralife’s President and Chief Executive Officer.”Communications Systems remains challenged by sluggish government tactical communications spending,” added Popielec. “Nevertheless, based on customer feedback, our value proposition meets the needs of diverse governmental entities for reliability and mobility, and therefore we continue to invest in new product development supporting our Communications Systems business development activities. With a strong balance sheet and growing contribution of Battery & Energy Products towards the Company’s operating profitability, we have the resources to continue strengthening our position with Government/Defense customers while growing our commercial business.” Third Quarter 2014 Financial ResultsRevenue was $16.1 million, compared to $20.4 million for the third quarter of 2013, a $4.3 million, or 21%, decline reflecting an increase of $0.4 million in Battery & Energy Products sales offset by a $4.7 million decrease in Communications Systems sales. Battery & Energy Products sales were $13.9 million, compared to $13.5 million last year, a 3% increase, with sales to commercial customers increasing 36% and Government/Defense sales decreasing 25%. Communications Systems sales were $2.1 million, compared to $6.9 million for the same period last year, a decrease of 69% reflecting ongoing soft order flow from Government/Defense customers and continued delays in approving U.S. Government orders. On a consolidated basis, sales to commercial customers accounted for 53% of total revenue, up from 30% last year.Gross profit was $4.5 million, or 27.9% of revenue, compared to $6.1 million, or 30.1% of revenue, for the same quarter a year ago. The 220 basis point decrease reflects primarily the lower mix of Communications Systems sales. Battery & Energy Products gross margin was 27.4%, 70 basis points higher than the 26.7% reported last year reflecting increased sales of higher margin commercial products. Communications Systems gross margin was 31.3% compared to 36.9% last year, a decrease of 560 basis points on lower volume and unfavorable product mix. Operating expenses were $4.5 million, $.9 million or 17% lower than last year primarily due to continued reductions in discretionary spending, the timing of certain expenses related to new product development and lower sales commissions. Operating expenses were 28.3% of revenue, compared to 26.9% for the year earlier period. With gross profit nearly equal to operating expenses the Company reported a slight operating loss of $55,000 for the fiscal 2014 third quarter. For the comparable period last year, the Company reported operating income of $0.7 million. The Company reported a net loss of $.3 million, or $0.02 per share, compared to net income of $0.6 million, or $0.04 per share, for the third quarter of 2013. During the third quarter, Ultralife repurchased 160,557 shares under its 1.8 million share repurchase program.OutlookDespite the Company’s commercial sales momentum, management now expects revenue for the year to be up to 20% below last year given the reduction in global government and defense spending exacerbated by the continued timing uncertainties of several Communications Systems projects. As a result, management expects an operating loss of approximately 3% – 4% of sales for the year.Management cautions that the timing of orders and shipments may cause variability in quarterly results. About Ultralife CorporationUltralife Corporation serves its markets with products and services ranging from portable power solutions to communications and electronics systems. Through its engineering and collaborative approach to problem solving, Ultralife serves government, defense and commercial customers across the globe.Headquartered in Newark, New York, the Company’s business segments include Battery & Energy Products and Communications Systems. Ultralife has operations in North America, Europe and Asia. For more information, visit www.ultralifecorp.com.

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