Exhibit 99.1

Ultralife Batteries Announces $7.9 Million Reduction in Purchase Price
                  for McDowell Research Acquisition

    NEWARK, N.Y.--(BUSINESS WIRE)--Oct. 5, 2007--Ultralife Batteries,
Inc. (NASDAQ: ULBI) has agreed with the sellers of McDowell Research
to reduce the purchase price relating to Ultralife's acquisition of
McDowell Research in July 2006. The negotiated reduction of $7.9
million reduces the total purchase price from approximately $28.4
million to $20.5 million.

    Under the May 1, 2006 acquisition agreement, Ultralife acquired
McDowell Research for a purchase price of approximately $25 million
consisting of $5 million in cash and a $20 million convertible note
held by the sellers, plus an additional $3.4 million for a purchase
price adjustment based on the value of certain assets acquired as of
the closing. In the first quarter of 2007, Ultralife paid $1.5 million
of the outstanding purchase price adjustment with $1.9 million
remaining as an accrued liability.

    Pursuant to a settlement agreement dated as of October 3, 2007
between Ultralife and the sellers of McDowell Research, the $20
million convertible note will be reduced to $14 million, the interest
rate on the note will be increased from 4% to 5% per annum, certain
claims will be settled and Ultralife will prepay $3.5 million on the
convertible note on or before November 18, 2007. Additionally,
Ultralife's remaining $1.9 million accrued liability associated with
the purchase price adjustment will be extinguished. The settlement
agreement, including the $6 million purchase price reduction, related
interest rate increase and claim settlement, is subject to termination
retroactively by sellers if the $3.5 million convertible note
prepayment is not made on or before November 18, 2007. Management
expects to fund the $3.5 million prepayment with cash from operations
and its existing credit facility.

    About Ultralife Batteries, Inc.

    Ultralife is a global provider of high-energy power solutions,
communications accessories, and engineering and technical services for
diverse applications. The company develops, manufactures and markets a
wide range of non-rechargeable and rechargeable batteries, charging
systems and accessories for markets including defense, commercial 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, communications accessories and technical
services. Defense, commercial and retail customers include: General
Dynamics, Raytheon, 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.

    Ultralife's headquarters, principal manufacturing and research
facilities, and its McDowell Research operating unit are in Newark,
New York, near Rochester. Ultralife's other operating units are:
Ultralife Batteries (UK) Ltd., in Abingdon, England; Innovative
Solutions Consulting in Hollywood, Maryland; 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.

    Ultralife(R) and McDowell Research(R) are registered trademarks of
Ultralife Batteries, Inc.

    CONTACT: Ultralife Batteries, Inc.
             Pete Comerford, 315-332-7100
             pcomerford@ulbi.com
             or
             Investor Relations:
             Lippert/Heilshorn & Associates, Inc.
             Jody Burfening, 212-838-3777
             jburfening@lhai.com