SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
______________ to ______________
Commission file number 0-20852
ULTRALIFE BATTERIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 16-1387013
(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
1350 Route 88 South, Newark, New York 14513
(Address of principal executive offices)
(Zip Code)
(315) 332-7100
(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes..X... No.....
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.10 par value -7,934,211 shares outstanding as of
November 5, 1996
ULTRALIFE BATTERIES, INC.
INDEX
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Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets -
September 30, 1996 and June 30, 1996................................3
Condensed Statements of Operations -
Three months ended
September 30, 1996 and 1995........................................4
Condensed Statements of Cash Flows -
Three months ended September 30, 1996 and 1995......................5
Notes to Condensed Financial Statements..............................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....................7 - 8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.....................................9
SIGNATURES...................................................................10
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
ULTRALIFE BATTERIES, INC.
CONDENSED BALANCE SHEETS
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(Unaudited)
Sept. 30, 1996 June 30, 1996
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ASSETS
Current assets
Cash and cash equivalents $ 3,156,079 $ 1,212,743
Available-for-sale securities 16,019,905 21,839,692
Acounts receivable 5,293,871 4,907,279
Inventories 8,773,135 8,437,791
Other current assets 432,920 450,251
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Total current assets 33,675,910 36,847,756
Net property and equipment 11,782,156 10,688,538
Available-for-sale securities
held to purchase equipment 11,026,052 12,016,593
Investment in joint venture 283,500 283,500
Technology license agreements, net 763,143 796,542
============== ==============
Total assets $ 57,530,761 $ 60,632,929
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,783,263 $ 3,434,473
Other accrued liablilities 935,532 763,690
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Total current liabilities 3,718,795 4,198,163
Shareholders' equity
Common stock - par value 792,985 792,322
Capital in excess of par value 64,656,475 64,630,638
Unrealized gain on securities 2,508,169 3,842,878
Foreign currency translation adjustments 34,633 37,749
Accumulated deficit -14,180,296 -12,868,821
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Total shareholders' equity 53,811,966 56,434,766
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Total liabilities and shareholders' equity $ 57,530,761 $ 60,632,929
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ULTRALIFE BATTERIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended
September 30,
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1996 1995
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Revenues:
Battery sales $ 3,619,676 $ 3,719,963
Technology contracts 352,050 395,197
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Total revenue 3,971,726 4,115,160
Cost of products sold:
Battery costs 3,301,163 3,109,841
Technology contracts 196,710 195,110
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Total cost of products sold 3,497,873 3,304,951
Gross Profit 473,853 810,209
Research & Development 818,075 635,761
Selling & Administrative 1,270,248 981,662
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Total Operating Expenses 2,088,323 1,617,423
Operating (Loss) (1,614,470) (807,214)
Interest Income 302,995 552,087
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Net Income (Loss) $(1,311,475) $ (255,127)
=============================
Earnings (Loss) Per Share $ (0.17) $ (0.03)
=============================
Weighted Average Number of Shares 7,924,840 7,665,634
=============================
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ULTRALIFE BATTERIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended September 30,
--------------------------------
1996 1995
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OPERATING ACTIVITIES
Net income (loss) $ (1,311,475) $ (255,127)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation, amortization and other provisions 380,319 (199,795)
Foreign currency (loss)/gain (3,115) 3,196
Changes in operating assets and liabilities:
Increase in trade accounts receivable (395,110) (1,083,633)
(Increase) decrease in contract revenue receivable 0 21,277
Increase in inventories (459,920) 582,357
Decrease in prepaid expenses
and other current assets 17,332 424,394
(Decrease) increase in accounts payable and
accrued liabilities (479,369) (719,743)
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Net cash used in operating activities (2,251,338) (1,227,074)
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INVESTING ACTIVITIES
Purchase of property and equipment (1,307,445) (2,584,966)
Purchase of securities (16,941,122) (20,380,083)
Sales of securities 5,722,824 5,423,008
Maturities of securities 16,693,917 18,882,342
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Net cash (used in) provided
by investing activities 4,168,174 1,340,301
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FINANCING ACTIVITIES
Proceeds from issuance of common stock 26,500 30,294
Effect of exchange rate changes on cash 0 810
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Net cash provided by financing activities 26,500 31,104
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(Decrease) Increase in Cash and Cash Equivalents 1,943,336 144,331
Cash and Cash Equivalents at Beginning of Period 1,212,743 1,734,146
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Cash and Cash Equivalents at End of Period $ 3,156,079 $ 1,878,477
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ULTRALIFE BATTERIES, INC.
NOTES TO FINANCIAL STATEMENTS
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1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments, which are of a normal recurring nature,
necessary to present fairly the financial position at September 30, 1996 and the
results of operations and cash flows for the three month periods ended September
30, 1996 and 1995. The results for the three months ended September 30, 1996 are
not necessarily indicative of the results to be expected for the entire year.
The Financial Statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with the
Company's financial statements for the year ended June 30, 1996, filed on Form
10-K on September 30, 1996.
2. NET LOSS PER SHARE
Net loss per share is calculated by dividing net loss by the weighted
average number of common shares outstanding during the period; common stock
options have not been included since their inclusion would be antidilutive.
3. RECENT PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed of,"
which requires that impairment losses be recognized when the carrying value of
an asset exceeds its fair value. Although the Company is required to adopt the
standard in fiscal 1997, the Company regularly assesses all of its long-lived
assets for impairment; and therefore does not believe the adoption of the
standard will have a material effect on its financial position or results of
operations.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which establishes market value accounting and reporting standards
for stock-based employee compensation plans. Companies may elect to continue to
account for stock-based compensation using the "intrinsic value approach" under
Accounting Principles Board (APB) Opinion No. 25. Although the Company is
required to adopt the standard in fiscal 1997, it anticipates continuing to
follow APB No. 25, with pro forma disclosures required under SFAS No. 123.
Therefore, adoption will have no impact on its financial position or results of
operations.
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The discussion and analysis below, and throughout this report, contains
forward-looking statements within the meaning of Section 27A of the Securities
and Exchange Act of 1933 and Section 21E of the Securities and Exchange Act of
1934. Actual results could differ materially from those projected or suggested
in the forward-looking statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Three months ended September 30, 1996 and 1995
Consolidated revenues of Ultralife Batteries, Inc. (the "Company") for the
three months ended September 30, 1996 were $3,972,000 compared to $4,115,000
reported for the same period of the prior year. The decreased revenue in the
amount of $143,000 or 3% was the net result of reduced revenues in the U.S.
nearly offset by increased sales in the U.K. Revenues from Ultralife's U.K.
operations increased 32% from the prior year's first quarter as orders increased
and the company resumed full production of its high rate primary battery product
line following a fire which occurred in September, 1995. In the U.S., higher
revenues were anticipated from sales of 9 volt batteries. However, delays in
introduction of premium long life smoke detector units by the original equipment
manufacturers have delayed release of the company's 9 volt batteries to these
customers. Additionally, technical contract revenues were lower than the
comparable period in the prior year.
On November 1, 1996, Ultralife was awarded a contract valued at $1,260,000
as a result of the U.S. Army exercising its option to receive more batteries. In
addition, the company's U.K. operations received a production contract from the
British Ministry of Defense valued at approximately $1,000,000 to be delivered
in this fiscal year.
Consolidated gross margin was 12% of revenue for the first fiscal quarter
of 1997 compared to 20% for the same period for fiscal 1996. The Company has
continuted its reduced production level of the 9 volt battery during the quarter
ended September 30, 1996 compared to the prior year. This strategic decision was
taken in order to more closely balance production with sales levels. As a
result, cost of goods sold in the U.S. increased as the fixed costs were
absorbed over fewer batteries manufactured.
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Total operating expenses of $2,088,000 for the first quarter of the current
year reflect an increase of $471,000 or 29% compared to $1,617,000 for the same
period of the prior year. A component of total operating expense is research and
development. These expenditures increased by $182,000 or 29% to $818,000 for the
three months ended September 30, 1996 from $636,000 for the corresponding period
of the previous year. These increased research and development expenditures are
directly related to the commercialization of the Company's rechargeable
lithium-ion solid-polymer batteries. A continuation of substantial research and
development expenditures is anticipated as the company moves toward mass
production and continued improvement of rechargeable batteries. Selling and
administrative expenses increased by $288,000 or 29% to $1,270,000 for the first
quarter of the current fiscal year compared to $982,000 for the prior year. This
increase was planned by the Company in order to support the introduction of the
rechargeable battery.
Automated manufacturing equipment for the rechargeable battery has been
ordered and significant machinery has been received by the Company. The Company
expects to have the manufacturing machinery installed and qualified for
production of the rechargeable battery during the first calendar quarter of
1997.
Liquidity and Capital Resources
As of September 30, 1996, cash, cash equivalents and available-for-sale
investments totaled more than $30,000,000. The Company used $2,251,000 of cash
from operations during the first three months of fiscal 1997. This is the net
result of increased net losses for the period, a reduction of accounts payable
as well as increases in both accounts receivable and inventory. Additionally,
the Company expended approximately $1,307,000 of cash to purchase machinery and
equipment as it continues preparation of the commercialization of the
rechargeable lithium-ion solid-polymer battery and upgrades of both the U.S. and
U.K. manufacturing facilities.
The Company does not currently have any long-term debt. Also, it does not
have any current financing arrangements or loan facilities in place or available
to it. The Company's current financial position is adequate to support its
financial requirements for the near future.
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PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None filed during the quarter ended September 30, 1996.
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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 thereunto duly authorized.
ULTRALIFE BATTERIES, INC.
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(Registrant)
Date: November 14, 1996. By:/s/ Bruce Jagid
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Bruce Jagid
Chief Executive Officer
Date: November 14, 1996. By:/s/ Robert Cook
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Robert Cook
Chief Financial Officer
and Controller