EX-99.1 2 a5335108ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Ultralife Batteries Reports Fourth Quarter Results NEWARK, N.Y.--(BUSINESS WIRE)--Feb. 15, 2007--Ultralife Batteries, Inc. (NASDAQ: ULBI) reported an operating loss of $1.5 million on record quarterly revenues of $30.1 million for the fourth quarter ended December 31, 2006. In comparison, the company reported an operating profit of $0.1 million on revenues of $17.8 million for the same period last year. Revenues in the fourth quarter of 2006 reflect growth in sales of rechargeable batteries and chargers, 9-volt batteries and automotive telematics products as well as the addition of McDowell Research and ABLE New Energy, which were acquired in 2006. As a percentage of revenues, gross margins for the fourth quarter of 2006 were 17% compared to 21% for the same period last year, due to higher than expected material costs at McDowell and certain manufacturing inefficiencies in 9-volt production. Operating expenses totaled $6.6 million and included $1.7 million of additional expenses from McDowell and ABLE, $0.7 million of intangible asset amortization and $0.5 million of stock-based compensation expense; excluding these items, operating expenses rose modestly over the $3.5 million reported in the fourth quarter last year. At the end of 2004, the company recorded a deferred tax asset associated with its U.S. net operating loss carryforwards as the company had begun to demonstrate a profitable track record. The company continually assesses the carrying value of this asset based on relevant accounting standards. The company's assessment in the fourth quarter of 2006 concluded by reestablishing full reserves against this deferred tax asset, generating a $24.1 million non-cash charge to income taxes. As the company reestablishes a pattern of profitability, it will continue to reassess the reserves associated with this issue. As a result of the above, net loss for the fourth quarter of 2006 was $26.0 million, or $1.73 per common share, compared to a net loss of $40,000, or $0.00 per common share, for the fourth quarter of 2005. For the full year ended December 31, 2006, revenues totaled $93.5 million, a 33% increase over the $70.5 million reported for 2005. The company reported an operating loss of $3.0 million in 2006, including $1.5 million in stock-based compensation expense and $1.2 million of intangible amortization, compared to an operating loss of $2.9 million in 2005. Net loss for 2006 was $27.5 million, or $1.84 per share, including the adjustment for the deferred tax asset, compared to a net loss for the same period last year of $4.3 million, or $0.30 per share. Management cautions that the fourth quarter and full year results are subject to the completion of its year-end audit by the company's independent accounting firm. In particular, the final review related to McDowell's inventory valuation and associated cost of goods sold has not yet been completed. As a result, final financial statements reported in the Form 10-K for the year ended December 31, 2006 may differ from the results reported in this press release. "During 2006, we accomplished a great deal while facing numerous challenges," said John D. Kavazanjian, Ultralife's president and chief executive officer. "Diversifying our market opportunities and reducing our dependence on orders from the U.S. Defense Department were strategic priorities for the company and we achieved these objectives by further building our commercial business, particularly in the area of automotive telematics, and by expanding our reach into different segments of the government/military market. As evidence of our success in diversifying revenues, sales of standard batteries under contract with the U.S. Defense Department for all of 2006 were approximately $18 million, or 19% of total revenue, and only $1.0 million in the fourth quarter, or 3% of total revenue. As a result of our key initiatives to solidify our business with military prime contractors, nurture relationships with automotive manufacturers and strengthen our global distribution network, we now possess a broader set of market opportunities and see greater demand for our power solutions than ever before. "The challenges we faced in 2006 were principally related to the integration of McDowell Research and associated operational issues that arose in the second half of the year," continued Mr. Kavazanjian. "As stated in our fourth quarter pre-announcement, we are addressing the operational issues and are resolved to improve manufacturing efficiency and optimize McDowell's cost structure. The actions we took in early January to address manufacturing issues at our Newark facility are proving to be effective and we are now operating at planned levels. In addition, we are working through McDowell's inventory that carries above-normal product costs and have made the necessary changes to lower future costs." Concluded Mr. Kavazanjian, "Ultralife's mix of business today is very different than a year ago, combining a steady revenue base in our established commercial market segments and expanding activity with military prime contractors who value our engineering expertise and broad product offering, supplemented by design wins in target commercial markets and by U.S. military orders against existing contracts." Outlook Management is projecting revenue between $28 million to $30 million for its first quarter ending March 31, 2007, largely based on our current backlog of shipments in addition to our pipeline of orders. Based on this revenue estimate, management anticipates reporting an operating loss in the range of $1 million up to breakeven, inclusive of approximately $1.1 million of non-cash expenses related to stock-based compensation and intangible asset amortization. About Ultralife Batteries, Inc. Ultralife is a global provider of high-energy power solutions and communications accessories for diverse applications. The company develops, manufactures and markets a wide range of non-rechargeable and rechargeable batteries, charging systems and accessories including power supplies, amplifiers, amplified speakers, equipment mounts, case equipment and integrated communication systems for markets including military, industrial and consumer portable electronics. Through its portfolio of standard products and engineered solutions, Ultralife is at the forefront of providing the next generation of power systems and accessories. Commercial, 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, Germany, Australia and New Zealand, among others. Ultralife's headquarters, principal manufacturing and research facilities are in Newark, New York, near Rochester. Ultralife's three other operating units are: Ultralife Batteries (UK) Ltd., in Abingdon, England; McDowell Research in Waco, Texas; and ABLE New Energy in Shenzhen, China. Detailed information on Ultralife is available at: 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 February 15, 2007 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 4704751, during the period starting at 1:00 p.m. ET February 15 and ending at 1:00 p.m. ET February 22, 2007. 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 Twelve-Month Periods Ended Ended December 31, December 31, December 31, December 31, 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Revenues: Non-rechargeable products $ 16,678 $ 15,204 $ 67,779 $ 58,509 Rechargeable products 9,069 2,391 17,745 10,067 Communications accessories 4,387 - 7,433 - Technology contracts (25) 248 589 1,925 ------------ ------------ ------------ ------------ Total revenues 30,109 17,843 93,546 70,501 Cost of products sold: Non-rechargeable products 14,100 11,781 55,921 47,626 Rechargeable products 7,129 2,021 13,923 8,751 Communications accessories 3,720 - 5,662 - Technology contracts 45 371 597 1,866 ------------ ------------ ------------ ------------ Total cost of products sold 24,994 14,173 76,103 58,243 ------------ ------------ ------------ ------------ Gross margin 5,115 3,670 17,443 12,258 Operating expenses: Research and development 1,395 877 4,478 3,751 Selling, general, and administrative 4,542 2,664 14,723 11,409 Amortization of intangible assets 687 - 1,199 - ------------ ------------ ------------ ------------ Total operating expenses 6,624 3,541 20,400 15,160 ------------ ------------ ------------ ------------ Operating income /(loss) (1,509) 129 (2,957) (2,902) Other income (expense): Interest income 22 23 126 185 Interest expense (561) (228) (1,424) (821) Gain on insurance settlement - - 191 - Miscellaneous 125 (115) 311 (318) ------------ ------------ ------------ ------------ Income/(loss) before income taxes (1,923) (191) (3,753) (3,856) ------------ ------------ ------------ ------------ Income tax provision/ (benefit)-current (20) - - 3 Income tax provision/ (benefit)-deferred 24,136 (151) 23,735 486 ------------ ------------ ------------ ------------ Total income taxes 24,116 (151) 23,735 489 ------------ ------------ ------------ ------------ Net Income/(Loss) $ (26,039) $ (40) $ (27,488) $ (4,345) ============ ============ ============ ============ Earnings/(Loss) per share - basic $ (1.73) $ (0.00) $ (1.84) $ (0.30) ============ ============ ============ ============ Earnings/(Loss) per share - diluted $ (1.73) $ (0.00) $ (1.84) $ (0.30) ============ ============ ============ ============ Weighted average shares outstanding - basic 15,030 14,727 14,906 14,551 ============ ============ ============ ============ Weighted average shares outstanding - diluted 15,030 14,727 14,906 14,551 ============ ============ ============ ============ ULTRALIFE BATTERIES, INC. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Per Share Amounts) (unaudited) ---------------------------------------------------------------------- December 31, December 31, ASSETS 2006 2005 ------------ ------------ Current assets: Cash and investments $ 720 $ 3,214 Trade accounts receivable, net 24,197 10,965 Inventories 27,360 19,446 Prepaid expenses and other current assets 3,669 5,737 ------------ ------------ Total current assets 55,946 39,362 Property and equipment 19,396 19,931 Other assets Deferred tax asset - non-current - 21,221 Goodwill, intangible and other assets 22,416 243 ------------ ------------ Total Assets $ 97,758 $ 80,757 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt and current portion of long-term debt $ 12,246 $ 7,715 Accounts payable 15,925 5,218 Other current liabilities 9,639 5,450 ------------ ------------ Total current liabilities 37,810 18,383 ------------ ------------ Long-term liabilities: Long-term debt and capital lease obligations 20,043 25 Other long-term liabilities 316 242 ------------ ------------ Total long-term liabilities 20,359 267 ------------ ------------ Shareholders' equity: Common stock, par value $0.10 per share 1,585 1,547 Capital in excess of par value 134,729 130,530 Accumulated other comprehensive income (321) (1,054) Accumulated deficit (94,026) (66,538) ------------ ------------ 41,967 64,485 Less -- Treasury stock, at cost 2,378 2,378 ------------ ------------ Total shareholders' equity 39,589 62,107 ------------ ------------ Total Liabilities and Shareholders' Equity $ 97,758 $ 80,757 ============ ============ 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