EX-99.1 2 a4945875ex991.txt ULTRALIFE BATTERIES, INC. Exhibit 99.1 Ultralife Batteries Reports Second Quarter Results NEWARK, N.Y.--(BUSINESS WIRE)--Aug. 4, 2005--Ultralife Batteries, Inc. (NASDAQ: ULBI) reported results for the second quarter ended July 2, 2005. Revenues for the quarter were $21.6 million compared to $28.4 million for the same period last year. Operating income for the quarter was $0.2 million, in line with management's guidance, compared with operating income of $3.6 million for the same period last year. The second quarter revenue reflects lower shipments of BA-5390 batteries to the U.S. military, as anticipated, due to delays in contract awards. Partially offsetting this decline in military shipments was an increase in revenue from the company's commercial product lines, including 9-volt and rechargeable batteries and systems. Gross margins for the quarter were 19% compared to 25% in the same quarter last year, mainly as a result of lower production volumes. Operating expenses were $4.0 million, a $0.6 million increase over last year, reflecting the company's commitment to new product development, including charging systems and accessories. Income taxes in the second quarter of 2005 amounted to $1.3 million, primarily resulting from a change in the New York State tax law that required a non-cash reduction to the company's deferred tax asset. The net loss for the second quarter of 2005 was $1.4 million, or $0.10 per share, compared with a net loss of $0.4 million, or $0.03 per share, a year ago. Last year's loss included a $4.0 million charge related to a write-down of the company's investment in Ultralife Taiwan Inc. For the six-month period ended July 2, 2005, revenues totaled $37.0 million compared with $55.4 million reported for the same period last year, resulting mainly from lower shipments of BA-5390 batteries to the U.S. military. The company reported an operating loss of $1.5 million for the first six months of 2005 compared to an operating income of $7.0 million last year, reflecting the revenue decline as well as higher operating expenses necessary to support the company's growth objectives. Net loss for first half of 2005 was $3.0 million, or $0.21 per share, compared to net income of $2.9 million, or $0.19 per diluted share, for 2004. "With about two-thirds of second quarter revenue derived from our commercial business, we are clearly gaining meaningful traction in a number of target commercial markets this year as design wins move into volume production," said John D. Kavazanjian, president and chief executive officer. "Our rechargeable business set new quarterly records for revenue and gross margin this quarter, an indication that we are benefiting from higher gross margin products, such as chargers and accessories. In our military business, we continued to expand our presence with international military organizations. We remain on track to complete qualification of the new and improved version of the BA-5390 battery, with a state-of-charge indicator, during the third quarter, which we believe will stimulate new order activity. "With qualification of the new version of the BA-5390, we will have a catalyst to resume revenue growth," continued Mr. Kavazanjian. "Combined with the strong growth in our commercial markets and additional product qualifications under the Next Gen II contract, we have all the elements for continued sequential revenue and profit growth throughout 2006." As of July 2, 2005, the company has reclassified approximately $6.0 million of debt from long-term to current. Management is working with its lenders to modify the financial covenants of its credit facility to accommodate the company's revised outlook. The company intends to reclassify the debt as long-term pending completion of the amendment to the credit facility and performing in line with its current financial outlook. Outlook Management is adjusting its guidance for the second half of 2005 as a result of the continued uncertainty of the timing of BA-5390 order flow. Management still anticipates that its commercial business will continue to grow in the second half of the year in key target markets such as automotive telematics, search and rescue, and medical. Based on the latest input from the U.S. military, management still anticipates receiving orders for the BA-5390, but at modest revenue levels. As previously stated, management anticipates that BA-5390 order flow will become more predictable following qualification under the Next Gen II, Phase IV award, which is expected to occur in the third quarter. In addition, management believes that the new version of the BA-5390, with the state-of-charge indicator, will strengthen the company's competitive advantage and support continued market share gains, contributing to sequential revenue growth in the fourth quarter. As a result, management currently projects revenues of approximately $21 million for the third quarter, including modest BA-5390 battery shipments, generating positive operating income. Management projects fourth quarter revenue to increase to approximately $25 million, with operating margins improving in line with revenue growth. Overall, revenues for the full year of 2005 are now projected to be approximately $83 million, compared with previous guidance indicating that revenues would be in a range between 2004's level of $98.2 million and up to 10% growth. About Ultralife Batteries, Inc. Ultralife is a global provider of power solutions for diverse applications. The company develops, manufactures and markets a wide range of non-rechargeable and rechargeable batteries, charging systems and accessories for use in military, industrial and consumer portable electronic products. Through its range of standard products and engineered solutions, Ultralife is able to provide the next generation of power systems. Industrial, retail and government customers include General Dynamics, Philips Medical Systems, General Motors, Energizer, Kidde Safety, Lowe's, Radio Shack and the national defense agencies of the United States, United Kingdom and Germany, among others. Ultralife's headquarters, principal manufacturing and research facilities are in Newark, New York, near Rochester. Ultralife (UK) Ltd., a second manufacturing facility, is located in Abingdon, England. Both facilities are ISO-9001 certified. Detailed information about Ultralife is available at the Company's web site, www.ultralifebatteries.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: worsening global economic conditions, increased competitive environment and pricing pressures, disruptions related to restructuring actions and delays. 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. Conference Call Information Investors are invited to listen to a live webcast of the conference call at 10:00 a.m. ET on August 4 at http://investor.ultralifebatteries.com. To listen to the live call, please go to the web site at least fifteen minutes early to download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay of the webcast will be available shortly after the call at the same location for 90 days. Investors may also listen to a telephone replay of the conference call by dialing 888-203-1112, Reservation #8744605, starting at 1:00 p.m. ET August 4 until 1:00 p.m. ET August 18. Ultralife(R) is a registered trademark of Ultralife Batteries, Inc. ULTRALIFE BATTERIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) (Unaudited) ---------------------------------------------------------------------- Three-Month Periods Six-Month Periods Ended Ended July 2, June 26, July 2, June 26, 2005 2004 2005 2004 ---------- --------- --------- ---------- Revenues: Non-rechargeable products $17,692 $26,321 $30,500 $51,643 Rechargeable products 3,262 1,691 5,390 3,065 Technology contracts 649 427 1,076 719 ---------- --------- --------- ---------- Total revenues 21,603 28,439 36,966 55,427 Cost of products sold: Non-rechargeable products 13,983 19,273 24,851 37,821 Rechargeable products 2,823 1,773 4,900 3,632 Technology contracts 592 345 987 594 ---------- --------- --------- ---------- Total cost of products sold 17,398 21,391 30,738 42,047 ---------- --------- --------- ---------- Gross margin 4,205 7,048 6,228 13,380 Operating expenses: Research and development 1,059 560 1,905 1,063 Selling, general, and administrative 2,942 2,858 5,843 5,329 ---------- --------- --------- ---------- Total operating expenses 4,001 3,418 7,748 6,392 ---------- --------- --------- ---------- Operating income/(loss) 204 3,630 (1,520) 6,988 Other income (expense): Interest income 58 27 118 47 Interest expense (180) (110) (373) (235) Write-off of UTI investment and note receivable - (3,951) - (3,951) Miscellaneous (191) 32 (194) 93 ---------- --------- --------- ---------- (Loss)/income before income taxes (109) (372) (1,969) 2,942 ---------- --------- --------- ---------- Income tax provision/(benefit)-current 15 - (2) 79 Income tax provision- deferred 1,315 - 1,022 - ---------- --------- --------- ---------- Total income taxes 1,330 - 1,020 79 ---------- --------- --------- ---------- Net (loss)/income $(1,439) $(372) $(2,989) $2,863 ========== ========= ========= ========== (Loss)/earnings per share - basic $(0.10) $(0.03) $(0.21) $0.21 ========== ========= ========= ========== (Loss)/earnings per share - diluted $(0.10) $(0.03) $(0.21) $0.19 ========== ========= ========= ========== Weighted average shares outstanding - basic 14,450 14,115 14,413 13,930 ========== ========= ========= ========== Weighted average shares outstanding - diluted 14,450 14,115 14,413 15,109 ========== ========= ========= ========== ULTRALIFE BATTERIES, INC. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Per Share Amounts) (unaudited) ---------------------------------------------------------------------- July 2, December 31, ASSETS 2005 2004 ----------- ------------- Current assets: Cash and investments $8,168 $11,529 Trade accounts receivable, net 10,066 8,585 Inventories 17,491 13,938 Prepaid expenses and other current assets 5,418 6,131 ----------- ------------- Total current assets 41,143 40,183 Property and equipment 20,242 20,202 Other assets 19,668 20,749 ----------- ------------- Total Assets $81,053 $81,134 =========== ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt and current portion of long-term debt $8,489 $2,390 Accounts payable 6,533 3,545 Other current liabilities 3,945 3,603 ----------- ------------- Total current liabilities 18,967 9,538 ----------- ------------- Long-term liabilities: Long-term debt and capital lease obligations 48 7,215 Other long-term liabilities 458 756 ----------- ------------- Total long-term liabilities 506 7,971 ----------- ------------- Shareholders' equity: Common stock, par value $0.10 per share 1,522 1,502 Capital in excess of par value 128,584 127,299 Accumulated other comprehensive income (966) (605) Accumulated deficit (65,182) (62,193) ----------- ------------- 63,958 66,003 Less --Treasury stock, at cost 2,378 2,378 ----------- ------------- Total shareholders' equity 61,580 63,625 ----------- ------------- Total Liabilities and Shareholders' Equity $81,053 $81,134 =========== ============= CONTACT: Ultralife Batteries, Inc. Robert W. Fishback, 315-332-7100 bfishback@ulbi.com or Investor Relations: Lippert/Heilshorn & Associates, Inc. Jody Burfening, 212-838-3777 jburfening@lhai.com or Media: Lippert/Heilshorn & Associates, Inc. Chenoa Taitt, 212-201-6635 ctaitt@lhai.com