f8k_080113.htm
United States
Securities and Exchange Commission
Washington, D.C. 20549
 
 
FORM 8-K
 
 
Current Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
August 1, 2013
(Date of Report)
 
 
ULTRALIFE CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
000-20852
16-1387013
(State of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
2000 Technology Parkway, Newark, New York
14513
(Address of principal executive offices)
(Zip Code)
 
(315) 332-7100
(Registrant’s telephone number, including area code)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 
Item 2.02
Results of Operation and Financial Condition.

NEWARK, N.Y. – August 1, 2013 -- Ultralife Corporation (NASDAQ: ULBI) reported an operating loss from continuing operations of $1.9 million on revenue of $17.3 million for the quarter ended June 30, 2013.  For the second quarter of 2012, the company reported an operating loss from continuing operations of $2.9 million on revenue of $18.7 million.

Discontinued operations for the second quarter of 2013 reflect the final post-closing working capital adjustment relating to the sale transaction of RedBlack in the third quarter of 2012.  For the second quarter of 2012 discontinued operations include the operating results of RedBlack.  All revenue, gross margin and operating expense amounts presented below represent results from continuing operations.

Revenue was $17.3 million, compared to $18.7 million for the second quarter of 2012, a 7.6% decline, reflecting a $0.9 million, or 5.6%, decrease in Battery & Energy Products sales and a $0.6 million, or 17.6%, decrease in Communications Systems sales.  Battery & Energy Products sales were $14.7 million, compared to $15.5 million last year.  The decrease resulted from lower shipments of rechargeable batteries due to the timing of certain commercial and international defense orders which have been shifted to the second half of 2013.  The continued slowdown in U.S. government and defense order rate for rechargeable and non-rechargeable batteries and charger systems also impacted Battery & Energy Products sales.  Communications Systems sales were $2.6 million, compared to $3.2 million for the same period last year reflecting delays in finalizing several large, funded orders for amplifiers and new products from U.S. and international defense customers.

Gross profit was $4.5 million, or 26.2% of revenue, compared to $4.5 million, or 23.9% of revenue, for the same quarter a year ago. The 230 basis point increase reflects favorable product mix of Communications Systems sales and the impact of a rework reserve recorded in the year earlier period.  Battery & Energy Products’ gross margin was 23.8%, compared to 24.2% last year, a decrease of 40 basis points due primarily to lower overhead absorption on sales volume declines. Communications Systems’ gross margin was 39.3%, an increase of 1,720 basis points over the 22.1% gross margin reported last year, resulting from a stronger product mix, productivity improvements and the recording of a reserve for approximately $0.2 million related to the request by a strategically important customer to rework and upgrade certain McDowell products.

Operating expenses decreased by $1.0 million, or 13.6%, to $6.4 million, compared to $7.4 million a year ago, reflecting ongoing general & administrative expense reductions and sharpened focus on research & development offset by sales force increases.  Despite the lower revenue, operating expenses as a percent of revenue decreased from 39.6% for the year earlier period to 37.0%.

Although gross margin improved by 230 basis points and operating expenses decreased by 13.6%, the low sales volume resulted in an operating loss of $1.9 million.  Compared to the second quarter of 2012, the net loss narrowed by $1.1 million due to the gross margin improvements and reductions in operating expenses.
 
 

 
Net loss from continuing operations was $2.0 million, or $0.11 per share, compared to a net loss of $3.2 million, or $0.18 per share, for the second quarter of 2012.  Net loss from discontinued operations was $0.1 million, or $0.01 per share, for the second quarter of 2013 versus net income of $0.0 million, or $0.00 per share, for the second quarter of 2012.

For 2013, although the Company’s pending funded project pipelines remain strong, given the slower than expected contracting rate for current U.S. government and defense opportunities, management now expects an overall year-over-year revenue decline in the range of 10% to 12%. Driven by the potential for continued softness in government spending and contracting delays for funded projects, management expects Battery & Energy Products’ revenues to decline in the range of 15% to 20% and Communication Systems’ revenues to be in the flat to low-single digit growth range for the full year. However, with additional second half discretionary spending reductions and ongoing productivity improvements, management still expects to be profitable for the year and to generate a low-single digit operating margin.

Management cautions that the timing of orders and shipments may cause variability in quarterly results.

The information set forth in this Form 8-K and the attached exhibit is being furnished to and not filed with the Securities and Exchange Commission and shall not be deemed to be incorporated by reference in any filing under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except to the extent specifically provided in any such filing.

Item 9.01
Financial Statements, Pro Forma Financials and Exhibits.

(a)  
Exhibits

99.1 Press Release of Ultralife Corporation dated August 1, 2013

 
 

 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date:  August 1, 2013
 
ULTRALIFE CORPORATION
     
 
By:
/s/ Philip A. Fain
   
Philip A. Fain
   
Chief Financial Officer & Treasurer
     










 
 

 
EXHIBIT INDEX
 
Exhibit
Number
  Description
     
99.1
 
Press Release of Ultralife Corporation dated August 1, 2013
 
 
exh_991.htm
Exhibit 99.1
 
 
Company Contact:  Investor Relations Contact:
Ultralife Corporation Lippert/Heilshorn & Associates
Philip Fain Jody Burfening
(315) 332-7100 (212) 838-3777
pfain@ulbi.com jburfening@lhai.com
 
Ultralife Corporation Reports Second Quarter Results

NEWARK, N.Y. – August 1, 2013 -- Ultralife Corporation (NASDAQ: ULBI) reported an operating loss from continuing operations of $1.9 million on revenue of $17.3 million for the quarter ended June 30, 2013.  For the second quarter of 2012, the company reported an operating loss from continuing operations of $2.9 million on revenue of $18.7 million.

“Delays in closing several funded projects resulted in Communications Systems’ sales coming in below last year’s second quarter, and the first quarter of 2013.  These delays were the primary source of our second quarter operating loss,” said Michael D. Popielec, Ultralife’s president and chief executive officer.  “Our strategy to widen the aperture of opportunities by investing in new product development ahead of revenue generation has significantly increased the dollar value of our sales funnel of large projects over the past twelve months.  However, the ongoing reductions in U.S. Department of Defense spending have made the timing of converting these opportunities to sales more difficult to predict. Since the end of the second quarter, approximately $3 million of the delayed orders have closed which illustrates this dynamic.”
 
Popielec continued, “In Battery & Energy Products, our strategy to diversify our customer base by investing in new products and sales resources and penetrate new market segments is gradually bearing fruit.  Sales increased over the first quarter by 12% with new products accounting for 44% of second quarter sales, and with sales to commercial customers accounting for 50% of the mix.  As the year-over-year decrease shrinks, we are starting to see indications of revenue stabilization.

“Despite the second quarter operating loss, we maintained strict cash management discipline such that we ended the quarter with $11.6 million of cash on hand, our highest level in over five years, and no debt.”
 
Second Quarter 2013 Financial Results

Discontinued operations for the second quarter of 2013 reflect the final post-closing working capital adjustment relating to the sale transaction of RedBlack in the third quarter of 2012.  For the second quarter of 2012 discontinued operations include the operating results of RedBlack.  All revenue, gross margin and operating expense amounts presented below represent results from continuing operations.

Revenue was $17.3 million, compared to $18.7 million for the second quarter of 2012, a 7.6% decline, reflecting a $0.9 million, or 5.6%, decrease in Battery & Energy Products sales and a $0.6 million, or 17.6%, decrease in Communications Systems sales.  Battery & Energy Products sales were $14.7 million, compared to $15.5 million last year.  The decrease resulted from lower shipments of rechargeable batteries due to the timing of certain commercial and international defense orders which have been shifted to the second half of 2013.  The continued slowdown in U.S. government and defense order rate for rechargeable and non-rechargeable batteries and charger systems also impacted Battery & Energy Products sales.  Communications Systems sales were $2.6 million, compared to $3.2 million for the same period last year reflecting delays in finalizing several large, funded orders for amplifiers and new products from U.S. and international defense customers.

Gross profit was $4.5 million, or 26.2% of revenue, compared to $4.5 million, or 23.9% of revenue, for the same quarter a year ago. The 230 basis point increase reflects favorable product mix of Communications Systems sales and the impact of a rework reserve recorded in the year earlier period.  Battery & Energy Products’ gross margin was 23.8%, compared to 24.2% last year, a decrease of 40 basis points due primarily to lower overhead absorption on sales volume declines. Communications Systems’ gross margin was 39.3%, an increase of 1,720 basis points over the 22.1% gross margin reported last year, resulting from a stronger product mix, productivity improvements and the recording of a reserve for approximately $0.2 million related to the request by a strategically important customer to rework and upgrade certain McDowell products.

Operating expenses decreased by $1.0 million, or 13.6%, to $6.4 million, compared to $7.4 million a year ago, reflecting ongoing general & administrative expense reductions and sharpened focus on research & development offset by sales force increases.  Despite the lower revenue, operating expenses as a percent of revenue decreased from 39.6% for the year earlier period to 37.0%.

Although gross margin improved by 230 basis points and operating expenses decreased by 13.6%, the low sales volume resulted in an operating loss of $1.9 million.  Compared to the second quarter of 2012, the net loss narrowed by $1.1 million due to the gross margin improvements and reductions in operating expenses.

Net loss from continuing operations was $2.0 million, or $0.11 per share, compared to a net loss of $3.2 million, or $0.18 per share, for the second quarter of 2012.  Net loss from discontinued operations was $0.1 million, or $0.01 per share, for the second quarter of 2013 versus net income of $0.0 million, or $0.00 per share, for the second quarter of 2012.
 
Outlook

For 2013, although the Company’s pending funded project pipelines remain strong, given the slower than expected contracting rate for current U.S. government and defense opportunities, management now expects an overall year-over-year revenue decline in the range of 10% to 12%. Driven by the potential for continued softness in government spending and contracting delays for funded projects, management expects Battery & Energy Products’ revenues to decline in the range of 15% to 20% and Communication Systems’ revenues to be in the flat to low-single digit growth range for the full year. However, with additional second half discretionary spending reductions and ongoing productivity improvements, management still expects to be profitable for the year and to generate a low-single digit operating margin.

Management cautions that the timing of orders and shipments may cause variability in quarterly results.

About Ultralife Corporation

Ultralife 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.

Conference Call Information

Ultralife will hold its second 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 in the Events & Presentations section of the company’s website at http://investor.ultralifecorporation.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.

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:  potential reductions in U.S. military spending, uncertain global economic conditions and acceptance of our new products on a global basis. 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 CORPORATION
 CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
(unaudited)
 
   
June 30,
   
December 31,
 
ASSETS
 
2013
   
2012
 
             
Current assets:
           
   Cash and cash equivalents
  $ 11,572     $ 10,078  
   Trade accounts receivable, net
    12,401       20,913  
   Inventories
    31,021       30,370  
   Prepaid expenses and other current assets
    2,183       2,461  
     Total current assets
    57,177       63,822  
                 
Property and equipment
    11,249       12,415  
                 
Other assets:
               
   Goodwill, intangible and other assets
    22,709       21,481  
                 
Total Assets
  $ 91,135     $ 97,718  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Current liabilities:
               
   Short-term debt and current portion of long-term debt
  $ -     $ -  
   Accounts payable
    9,400       11,357  
   Other current liabilities
    4,976       8,535  
      Total current liabilities
    14,376       19,892  
                 
Long-term liabilities:
               
    Other long-term liabilities
    4,493       4,370  
                 
Shareholders' equity:
               
  Ultralife equity:
               
    Common stock, par value $0.10 per share
    1,886       1,886  
    Capital in excess of par value
    174,233       173,791  
    Accumulated other comprehensive loss
    (599 )     (620 )
    Accumulated deficit
    (95,522 )     (93,878 )
 
    79,998       81,179  
    Less -- Treasury stock, at cost
    7,658       7,658  
      Total Ultralife equity
    72,340       73,521  
  Noncontrolling interest
    (74 )     (65 )
      Total shareholders' equity
    72,266       73,456  
                 
Total Liabilities and Shareholders' Equity
  $ 91,135     $ 97,718  
                 
 
 

 
 
ULTRALIFE CORPORATION
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
 
   
Three-Month Periods Ended
   
Six-Month Periods Ended
 
                         
   
June 30,
   
July 1,
   
June 30,
   
July 1,
 
   
2013
   
2012
   
2013
   
2012
 
                         
Revenues:
                       
  Battery & energy products
  $ 14,656     $ 15,523     $ 27,709     $ 35,605  
  Communications systems
    2,623       3,183       10,589       10,602  
Total revenues
    17,279       18,706       38,298       46,207  
                                 
Cost of products sold:
                               
  Battery & energy products
    11,166       11,760       21,119       27,899  
  Communications systems
    1,591       2,479       6,278       7,248  
Total cost of products sold
    12,757       14,239       27,397       35,147  
                                 
Gross profit
    4,522       4,467       10,901       11,060  
                                 
Operating expenses:
                               
  Research and development
    1,669       1,970       3,038       4,109  
  Selling, general, and administrative
    4,727       5,429       9,362       11,172  
Total operating expenses
    6,396       7,399       12,400       15,281  
                                 
Operating loss
    (1,874 )     (2,932 )     (1,499 )     (4,221 )
                                 
Other income (expense):
                               
  Interest income
    12       2       14       3  
  Interest expense
    (43 )     (115 )     (133 )     (219 )
  Miscellaneous
    2       (20 )     (23 )     32  
Loss from continuing operations before income taxes
    (1,903 )     (3,065 )     (1,641 )     (4,405 )
 
                               
Income tax provision-current
    23       188       61       267  
Income tax provision (benefit)-deferred
    30       (17 )     90       (5 )
  Total income taxes
    53       171       151       262  
                                 
Net loss from continuing operations
    (1,956 )     (3,236 )     (1,792 )     (4,667 )
                                 
Discontinued operations:
                               
  Income (loss) from discontinued operations, net of tax
    (120 )     49       144       (22 )
                                 
Net loss
    (2,076 )     (3,187 )     (1,648 )     (4,689 )
                                 
Net loss attributable to noncontrolling interest
    3       20       9       20  
                                 
Net loss attributable to Ultralife
  $ (2,073 )   $ (3,167 )   $ (1,639 )   $ (4,669 )
                                 
Other comprehensive income (loss):
                               
  Foreign currency translation adjustments
    148       (25 )     21       123  
                                 
Comprehensive loss attributable to Ultralife
  $ (1,925 )   $ (3,192 )   $ (1,618 )   $ (4,546 )
                                 
                                 
Net income (loss) attributable to Ultralife common shareholders - basic
                               
  Continuing operations
  $ (0.11 )   $ (0.18 )   $ (0.10 )   $ (0.27 )
  Discontinued operations
  $ (0.01 )   $ 0.00     $ 0.01     $ (0.00 )
  Total
  $ (0.12 )   $ (0.18 )   $ (0.09 )   $ (0.27 )
Net income (loss) attributable to Ultralife common shareholders - diluted
                               
  Continuing operations
  $ (0.11 )   $ (0.18 )   $ (0.10 )   $ (0.27 )
  Discontinued operations
  $ (0.01 )   $ 0.00     $ 0.01     $ (0.00 )
  Total
  $ (0.12 )   $ (0.18 )   $ (0.09 )   $ (0.27 )
                                 
                                 
Weighted average shares outstanding - basic
    17,459       17,396       17,458       17,376  
Weighted average shares outstanding - diluted
    17,459       17,396       17,458       17,376