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, 1997
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)
________________________________________________________________________________
(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 - 7,979,586 shares outstanding as of October 31,
1997.
1
ULTRALIFE BATTERIES, INC.
INDEX
- --------------------------------------------------------------------------------
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets -
September 30, 1997 and June 30, 1997.. .............................3
Condensed Statements of Operations -
Three months ended
September 30, 1997 and 1996 ........................................4
Condensed Statements of Cash Flows -
Three months ended September 30, 1997 and 1996......................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
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
ULTRALIFE BATTERIES, INC.
CONDENSED BALANCE SHEETS
As of September 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
Sept. 30, 1997 June 30, 1997
-------------- -------------
ASSETS
Current Assets
Cash and Cash Equivalents $ 2,029,074 $ 2,310,725
Available-for-sale securities 18,476,972 19,847,201
Accounts Receivables 3,665,332 2,715,728
Inventory 4,638,017 5,302,752
Prepaid Expenses 959,853 1,661,655
------------ ------------
Total Current Assets 29,769,248 31,838,061
Net Plant & Equipment 20,248,026 18,873,695
Purchase Technology 658,347 683,347
Total Assets $ 50,675,621 $ 51,395,103
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,077,286 $ 2,659,547
Customer Advances 1,270,666 1,636,433
Other Liabilities 1,583,244 336,242
------------ ------------
Total Current Liabilities 4,931,196 4,632,222
Shareholders' Equity
Capital Stock - Par Value 796,935 795,360
Additional Paid In Capital 64,959,864 64,785,814
Unrealized Gain on Investments 1,520,156 1,311,343
Accumulated deficit (21,321,449) (20,115,175)
Foreign Currency Translation Adjustment 94,421 291,041
------------ ------------
Total Shareholders' Equity 46,049,927 47,068,383
Less: Treasury Stock, at Cost (305,502) (305,502)
Total Liabilities and
Shareholders' Equity $ 50,675,621 $ 51,395,103
============ ============
3
ULTRALIFE BATTERIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
First Quarter, Fiscal 1998
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Sept. 30,
------------------------------
1997-Actual 1996-Actual
----------- -----------
Revenues:
Battery sales $ 3,693,067 $ 3,619,676
Technology contracts 1,183,450 352,050
----------- -----------
Total revenue 4,876,517 3,971,726
Cost of Products Sold:
Battery costs 3,181,630 3,301,163
Technology contracts 800,427 196,710
----------- -----------
Total cost of products sold 3,982,057 3,497,873
Gross Profit 894,460 473,853
Research & Development 1,151,909 818,075
Selling & Administrative 1,188,993 1,270,248
----------- -----------
Total Operating Expenses 2,340,902 2,088,323
----------- -----------
Operating Loss (1,446,442) (1,164,470)
Interest Income 253,162 302,995
Miscellaneous (12,994) --
----------- -----------
Net Loss $(1,206,274) $(1,311,475)
=========== ===========
Loss Per Share $ (0.15) $ (0.17)
=========== ===========
Average Shares Outstanding 7,949,727 7,924,840
=========== ===========
4
ULTRALIFE BATTERIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
First Quarter, Fiscal 1998
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Sept. 30,
------------------------------
1997-Actual 1996-Actual
----------- -----------
OPERATING ACTIVITIES
Net loss $ (1,206,274) $ (1,311,475)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 214,434 380,319
Foreign currency loss -- (3,115)
Changes in operating assets
and liabilities:
Increase in accounts receivable (949,604) (395,110)
Decrease (increase) in inventories 664,735 (459,920)
Decrease in prepaid expenses
and other current assets 701,802 17,332
Increase (decrease) in accounts payable
and other current liabilities 298,974 (479,369)
------------ ------------
Net cash used in
operating activities (275,933) (2,251,338)
------------ ------------
INVESTING ACTIVITIES
Purchase of property and equipment (1,563,765) (1,307,445)
Purchase of securities (15,946,736) (16,941,122)
Sales of securities 768,497 5,722,824
Maturities of securities 16,757,281 16,693,917
------------ ------------
Net cash provided by (used in)
investing activities 15,277 4,168,174
------------ ------------
FINANCING ACTIVITIES
Proceeds from issuance
of common stock 175,625 26,500
Purchase (sale of) treasury stock -- --
------------ ------------
Net cash provided by
financing activities 175,625 26,500
------------ ------------
Effect of exchange rate
changes on cash (196,620) --
------------ ------------
Increase (Decrease) in cash
and cash equivalents (281,651) 1,943,336
Cash and cash equivalents at
beginniing of period 2,310,725 1,212,743
------------ ------------
Cash and cash equivalents
at end of period $ 2,029,074 $ 3,156,079
============ ============
5
ULTRALIFE BATTERIES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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, 1997
and the results of operations and cash flows for the three month periods
ended September 30, 1997 and 1996. The results for the three months ended
September 30, 1997 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, 1997, filed on Form 10-K on October 14, 1997.
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. NEW ACCOUNTING PRONOUNCEMENTS
The Company accounts for net income per common and common equivalent
share in accordance with the provisions of Accounting Principles Board
Opinion No. 15 (APB No. 15). In February 1997, Statement of Financial
Accounting Standards No. 128 (SFAS No. 128), "Earnings Per Share" was
issued. SFAS No. 128 replaces primary Earnings Per Share (EPS) with basic
EPS. Basic EPS is computed by dividing reported earnings available to
common stockholders by weighted average shares outstanding. No dilution for
common share equivalents is included. Fully diluted EPS, now called diluted
EPS, is still required. The company is required to adopt SFAS No. 128
retroactively for periods ending after December 15, 1997. On a pro forma
basis, basic EPS and diluted EPS for the first quarters ended September 30,
1997 and September 30, 1996 were $(0.15), and $(0.17), respectively, the
same as reported EPS.
6
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.
This Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the accompanying
condensed consolidated financial statements and notes thereto contained herein
and the Company's consolidated financial statements and notes thereto contained
in the Company's Annual Report on Form 10-K as of and for the year ended June
30, 1997.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Three months ended September 30, 1997 and 1996
Consolidated revenues of Ultralife Batteries, Inc. (the "Company") for the
three months ended September 30,1997 were $4,876,500 compared to $3,971,700
reported for the same period of the prior year. The increased revenue in the
amount of $904,800 or 23% reflects increase sales of both batteries and
Technology Contracts. Sales of U.S. manufactured primary batteries increased
$595,500, or 26%. This increase was mostly offset by lower sales from the
Company's UK subsidiary, which has only recently resumed limited production of
high rate batteries following the December, 1996 fire.
Technology contract revenues were $1,183,450, a gain of more than 200%,
primarily as a result of the Company's contracts with Mitsubishi Electric
Corporation to develop and produce advanced solid state rechargeable batteries
for a new generation of notebook computers.
Consolidated gross margin was 18% of revenue compared to 12% for the same
period for fiscal 1997. Cost reduction programs combined with increasing volumes
and favorable mix have contributed to improved margins.
Total operating expenses of $2,340,900 for the first quarter of the current
year reflect an increase of $252,600, or 12% compared to $2,088,300 for the same
period of the prior year. Research and development expenses increased $333,800,
or 41%. Expenditures directly related to the commercialization of the Company's
rechargeable batteries continue to focus on production processes and the
performance of the batteries. Selling and administration expenses decreased
$81,200 or 6% reflecting the favorable impact of expense control programs.
Interest income decreased to $253,200 for the first quarter of fiscal 1998
from $303,000 for the first three months of the prior year. This is the result
of a lower average balance invested as the Company has used its cash and
investments to fund the operations and capital equipment additions for high
volume production of Rechargeable Batteries.
7
Net losses in the amount of $1,206,300 or $0.15 per share were reported for
the first quarter fiscal 1998 compared to a net loss of $1,311,500 or $0.17 per
share reported for the same period last year. The improvement reflects both
increasing sales volumes and improving profit margins, partially offset by
higher Research and Development expenses.
Liquidity and Capital Resources
As of September 30, 1997, cash, cash equivalents and available for sale
investments totaled $20,500,000. The Company used $275,900 of cash from
operations during the first three months of fiscal 1998. This is the net result
of net losses for the period and increased accounts receivable largely offset by
reductions in inventories and prepaid expenses and increased accounts payable.
Additionally, the Company spent $1,563,800 of cash to purchase machinery and
equipment primarily for the expansion of facilities to produce rechargeable
batteries. The balance of equipment to complete the initial phase of the
Company's capital expansion program for rechargeable batteries is expected to be
received in the second fiscal quarter. Accordingly, cash requirements for
capital additions in the next quarter are likely to reach $3,500,000.
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 though fiscal 1998.
8
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, 1997.
9
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.
(Registrant)
Date: November 14, 1997 By:/s/ Bruce Jagid
----------------- ----------------------------
Bruce Jagid
Chief Executive Officer
Date: November 14, 1997 By:/s/ Frederick F. Drulard
----------------- ----------------------------
Frederick F. Drulard
Vice President & Chief Financial Officer