NEWARK, N.Y.--(BUSINESS WIRE)--October 28, 2010--Ultralife Corporation (NASDAQ: ULBI) reported operating income of $4.7 million on revenue of $53.3 million for the quarter ended September 26, 2010. For the third quarter of 2009, the company reported an operating loss of $0.4 million on revenue of $42.4 million.

Gross margin for the third quarter of 2010 was $14.9 million, or 27.9% of revenue, compared to $10.4 million, or 24.5% of revenue, for the same quarter a year ago, reflecting a favorable mix of high-margin Communications Systems revenue, including strong AMTI amplifier revenue, and Battery & Energy Products manufacturing efficiencies notably in the company’s China operations. Included in gross margin for the third quarter last year was a $1.3 million gain related to the resolution of a trade dispute.

Operating expenses for the third quarter of 2010 totaled $10.2 million compared to $10.8 million a year ago. Net income for the third quarter of 2010 was $4.5 million, or $0.26 per share, compared to a net loss of $0.6 million, or $0.04 per share, for the same quarter in 2009.

For the nine months ended September 26, 2010, revenue was $128.8 million compared to $121.8 million for the same period a year ago. Operating income amounted to $6.0 million compared to an operating loss of $9.0 million for the first nine months of 2009. Net income was $4.8 million for the nine months ended September 26, 2010, or $0.28 per share, compared to a net loss of $10.1 million, or $0.59 per share, for the same period a year ago.

“During the third quarter we generated strong incremental returns on revenue growth,” said John D. Kavazanjian, Ultralife’s president and chief executive officer. “Our focus on developing and selling higher-margin products with greater engineering content helped produce the third consecutive quarter of significant gross margin expansion. After taking into account the planned increase in product development, gross margin gains flowed through to operating income as we held firm on cost controls and realized operational efficiencies.

“Revenue grew by 26% year-over-year led by Communication Systems sales,” added Kavazanjian. “Absent orders for standard military batteries from the U.S. Defense Logistics Agency, Battery & Energy Products revenue increased by 32% as international defense order activity remained robust and volumes in our China operation continued to grow. Results in Energy Services were softer than expected, however, as standby power customers, still cautious about capital spending, delayed project implementations.”

“Our year-to-date performance puts us on track to deliver gross margin expansion and strong operating income growth in 2010. As we continue to generate positive cash flow from operations, we are also making solid progress toward our goal of sustaining a net positive cash position,” concluded Kavazanjian.

The company reaffirms its 2010 forecast which calls for revenue in the range of $177 million to $182 million and operating income of approximately $7.0 million. Management cautions that the timing of orders and shipments may cause some variability in quarterly results.

Ultralife Corporation, which began as a battery company, serves its markets with products and services ranging from portable and standby 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, Communications Systems and Energy Services. 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: worsening global economic conditions, increased competitive environment and pricing pressures, and the possibility of intangible asset impairment charges that may be taken should management decide to retire one or more of the brands of acquired companies. 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.

Ultralife will hold its third quarter earnings conference call today at 10:00 AM ET. To participate, please call (800) 915-4836, identify yourself and ask for the Ultralife call. The conference call will also be broadcast live over the Internet at http://investor.ultralifecorp.com. To listen to the 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 webcast, a replay of the webcast will be available shortly after the call at the same location.


ULTRALIFE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)


	Three-Month Periods Ended						Nine-Month Periods Ended

	September 26,			September 27,			September 26,			September 27,
	2010			2009			2010			2009

Revenues:
Battery & energy products	$	20,632		$	24,809		$	66,440		$	73,435
Communications systems		30,180			12,228			54,488			33,850
Energy services		2,469			5,326			7,884			14,474
Total revenues		53,281			42,363			128,812			121,759

Cost of products sold:
Battery & energy products		16,151			19,553			51,958			60,083
Communications systems		19,536			7,955			35,000			23,640
Energy services		2,722			4,491			7,804			13,111
Total cost of products sold		38,409			31,999			94,762			96,834

Gross margin		14,872			10,364			34,050			24,925

Operating expenses:
Research and development		2,611			2,748			6,242			7,242
Selling, general, and administrative		7,545			8,020			21,827			26,669
Total operating expenses		10,156			10,768			28,069			33,911

Operating income (loss)		4,716			(404	)		5,981			(8,986	)

Other income (expense):
Interest income		-			16			2			20
Interest expense		(253	)		(470	)		(972	)		(1,002	)
Miscellaneous		449			350			370			152
Income (loss) before income taxes		4,912			(508	)		5,381			(9,816	)

Income tax provision-current		130			17			164			19
Income tax provision-deferred		284			88			406			272
Total income taxes		414			105			570			291

Net income (loss)		4,498			(613	)		4,811			(10,107	)

Net (income) loss attributable to noncontrolling interest		28			8			22			26

Net income (loss) attributable to Ultralife	$	4,526		$	(605	)	$	4,833		$	(10,081	)


Net income (loss) attributable to Ultralife common shareholders - basic	$	0.26		$	(0.04	)	$	0.28		$	(0.59	)
Net income (loss) attributable to Ultralife common shareholders - diluted	$	0.26		$	(0.04	)	$	0.28		$	(0.59	)


Weighted average shares outstanding - basic		17,225			16,921			17,131			16,996
Weighted average shares outstanding - diluted		17,449			16,921			17,136			16,996


ULTRALIFE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
(unaudited)


	September 26,			December 31,
ASSETS	2010			2009

Current assets:
Cash and cash equivalents	$	7,568		$	6,094
Trade accounts receivable, net		29,855			32,449
Inventories		38,037			35,503
Prepaid expenses and other current assets		2,369			1,912
Total current assets		77,829			75,958

Property and equipment		14,818			16,648

Other assets
Goodwill, intangible and other assets		38,373			38,560

Total Assets	$	131,020		$	131,166

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Short-term debt and current portion of long-term debt	$	12,143		$	19,082
Accounts payable		16,951			19,177
Other current liabilities		12,031			9,875
Total current liabilities		41,125			48,134

Long-term liabilities:
Long-term debt and capital lease obligations		303			267
Other long-term liabilities		5,032			4,651
Total long-term liabilities		5,335			4,918



Shareholders' equity:
Ultralife equity:
Common stock, par value $0.10 per share		1,863			1,831
Capital in excess of par value		170,725			169,064
Accumulated other comprehensive loss		(1,220	)		(1,256	)
Accumulated deficit		(79,188	)		(84,021	)
		92,180			85,618
Less -- Treasury stock, at cost		7,652			7,558
Total Ultralife equity		84,528			78,060
Noncontrolling interest		32			54
Total shareholders' equity		84,560			78,114

Total Liabilities and Shareholders' Equity	$	131,020		$	131,166

CONTACT:
Company:
Ultralife Corporation
Philip Fain, 315-332-7100
pfain@ulbi.com
or
Investor Relations:
Lippert/Heilshorn & Associates
Jody Burfening, 212-838-3777
jburfening@lhai.com