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Ultralife Corp. reports 2nd quarter earnings

Ultralife Corporation (NASDAQ: ULBI) reported operating income from continuing operations of $2.9 million on revenue of $43.6 million for the quarter ended July 3, 2011. For the second quarter of 2010, the company reported operating income from continuing operations of $1.0 million on revenue of $33.6 million.“Revenue for our second quarter increased by 29% over last year. The growth was driven by solid demand from our defense customers, including resumed order activity from our core U.S. government customer, and further penetration of our batteries into the metering business in China,” said Michael D. Popielec, Ultralife’s president and chief executive officer. “We are continuing to make progress towards improving the company’s profitability through lean manufacturing, reductions in non-value-added overhead and the implementation of plans to further consolidate our facilities footprint. These operational efficiencies are unlocking resources that we are allocating to new product development and expanded sales coverage. Having exited the Energy Services business one quarter ahead of schedule, we are now channeling all of our attention on positioning the company for sustainable, profitable growth.”“As a result of our financial performance, working capital management and cash generated from lean initiatives, we reduced our revolver balance by $6.5 million during the second quarter to $3.7 million at quarter end. Working capital efficiencies included the reduction in inventory levels and improved accounts receivable collections,” added Philip A. Fain, Ultralife’s chief financial officer.Second Quarter 2011 Financial ResultsDuring the quarter, Ultralife completed the exit of the Energy Services business. As a result, the Energy Services segment has been reclassified as a discontinued operation. In connection with exiting the Energy Services business, the company incurred closing costs of $2.9 million for the first six months of 2011, the cash component of which amounted to $2.0 million. All figures presented below represent results from continuing operations.Revenue increased by 29% to $43.6 million, compared to $33.6 million for the second quarter of 2010, consisting of a 23% increase in Battery & Energy Product sales and a 49% increase in Communications Systems sales.Gross margin was $11.8 million, or 27.1% of revenue, compared to $9.0 million, or 26.8% of revenue, for the same quarter a year ago, reflecting a favorable mix of high-margin Communications Systems sales. Included in gross margin for the second quarter of 2011 was a $0.3 million severance charge related to overhead reductions.Operating expenses were $8.9 million, compared to $8.0 million a year ago reflecting higher new product development costs, higher selling expenses, and relocation and severance expenses that did not occur in the same period last year. As a percent of revenue, operating expenses were 20.5%, compared to 23.8% a year ago. Operating income grew to $2.9 million, representing an operating margin of 6.6%, compared to $1.0 million, for an operating margin of 2.9%, for the same quarter last year.Net income from continuing operations was $2.6 million, or $0.15 per share, compared to $0.6 million, or $0.03 per share, for the second quarter of 2010. Net loss from discontinued operations was $2.1 million, or $0.12 per share, reflecting the cost of exiting the Energy Services business, compared to a net loss of $0.6 million, or $0.03 per share, for the same quarter last year. For the second quarter of 2010, the net loss from discontinued operations represented the operating loss of the Energy Services business.Six Months Ended July 3, 2011 Financial ResultsFor the six month period ended July 3, 2011, revenue from continuing operations was $72.0 million, compared to $70.1 million for the same period a year ago. Year-to-date 2011 revenue was negatively impacted by a $2.7 million charge recorded in the first quarter to reflect the settlement with the U.S. Government related to exigent contracts completed between 2003 and 2004. This charge resulted in an operating loss of $1.3 million, compared to operating income of $2.8 million for the first half of 2010. The net loss from continuing operations was $1.5 million, or $0.08 per share, compared to net income of $1.8 million, or $0.11 per share, for the same period a year ago. The net loss from discontinued operations was $3.8 million, or $0.22 per share, including $2.9 million of costs related to the exit of the Energy Services business, compared to a net loss of $1.5 million, or $0.09 per share, for the first half of 2010.OutlookManagement reaffirmed its guidance for 2011, which calls for revenue of approximately $162 million and operating income of approximately $7.8 million. 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.This press release may contain forward-looking statements based on current expectations that involve a number of risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include: uncertain global economic conditions, increased competitive environment and pricing pressures, disruptions related to restructuring actions and delays. The Company cautions investors not to place undue reliance on forward-looking statements, which reflect the Company’s analysis only as of today’s date. The Company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect Ultralife’s financial results is included in Ultralife’s Securities and Exchange Commission (SEC) filings, including the latest Annual Report on Form 10-K.

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