Ultralife Batteries Inc. (ULBI, Financial) filed Quarterly Report for the period ended 2009-03-29.
ULTRALIFE CORPORATION which began as a battery company now offers 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.Ultralife's family of brands includes: Ultralife Batteries Stationary Power Services RPS Power Systems ABLE McDowell Research and RedBlack Communications. Ultralife's operations are in North America Europe and Asia.Ultralife was incorporated in 1990 and became a public company in 1992. Our shares trade on the NASDAQ under the symbol ULBI. Ultralife Batteries Inc. has a market cap of $131.2 million; its shares were traded at around $7.62 with a P/E ratio of 15.5 and P/S ratio of 0.5.
In our Design and Installation Services segment, the cost of sales increased $1,978, from $3,682 in the three-month period ended March 29, 2008 to $5,660 in 2009. Design and Installation Services gross margin for 2009 was $481, or 7.8% of revenues, a decrease of $16 from 2008s gross margin of $497, or 11.9% of revenues. Gross margin in this particular segment was weaker than expected due to expected short-term price competition with component suppliers, relatively low margin jobs that carried over from year-end, and ongoing integration efforts related to the USE acquisition.
Operating Expenses. Total operating expenses for the three-month period ended March 29, 2009 totaled $10,038, an increase of $1,526 from the prior years amount of $8,512. Overall, operating expenses as a percentage of sales increased to 25.2% in the first quarter of 2009 from 17.1% reported in the prior year, due to the overall expense increase over a lower revenue base. Amortization expense associated with intangible assets related to our acquisitions was $341 for 2009 ($231 in selling, general and administrative expenses and $110 in research and development costs), compared with $520 for 2008 ($361 in selling, general, and administrative expenses and $159 in research and development costs). Research and development costs were $1,980 in 2009, an increase of $371, or 23.1%, over the $1,609 reported in 2008 as we increased our investment in product development and design activity. Selling, general, and administrative expenses increased $1,155, or 16.7%, to $8,058. This increase was comprised of costs related to recently acquired companies, in addition to higher sales and marketing expenses related to development of new territories for the standby power business and generally higher administrative costs.
to $179 for the first quarter of 2009 from $318 for the comparable period in 2008, mainly as a result of lower average borrowings under our revolving credit facility and lower interest rates. In 2008, we recognized a gain of $313 on the early conversion of the $10,500 convertible notes held by the sellers of McDowell, which related to an increase in the interest rate on the notes from 4.0% to 5.0% in October 2007. Miscellaneous income/expense amounted to income of $11 for the first quarter of 2009 compared with income of $108 for the same period in 2008. This decrease was primarily due to transactions impacted by changes in foreign currencies relative to the U.S. dollar.
During the three-month period ended March 29, 2009, we generated $12,904 in funds from financing activities compared to the generation of $2,116 in funds in the same period of 2008. The financing activities in 2009 included a $16,600 inflow from drawdowns on the revolver portion of our primary credit facility, and an inflow of cash from stock option and warrant exercises of $242, offset by an outflow of $612 for principal payments on term debt under our primary credit facility and capital lease obligations, and an outflow of $3,326 for the purchase of treasury shares related to our share repurchase program.
On November 16, 2007, we finalized a settlement agreement with the sellers of McDowell Research, Ltd. relating to the initial purchase price of that company, which related to various operational issues that arose during the first several months following the July 2006 acquisition that significantly reduced our profit margins. The settlement agreement reduced the overall purchase price by approximately $7,900, by reducing the principal amount on the convertible notes initially issued in that transaction from $20,000 to $14,000, and eliminating a $1,889 liability related to a purchase price adjustment. In addition, the interest rate on the convertible notes was increased from 4% to 5% and we made prepayments totaling $3,500 on the convertible notes. Upon payment of the $3,500 in November 2007, we reported a one-time, non-operating gain of approximately $7,550 to account for the purchase price reduction, net of certain adjustments related to the change in the interest rate on the convertible notes. Based on the facts and circumstances surrounding the settlement agreement, there was not a clear and direct link to the purchase price; therefore, we recorded the settlement as an adjustment to income in accordance with SFAS No. 141. In January 2008, the remaining $10,500 principal balance on the convertible notes was converted in full into 700,000 shares of our common stock, and the remaining $313 that pertained to the change in the interest rate on the notes was recorded in other income as a gain on debt conversion.
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ULTRALIFE CORPORATION which began as a battery company now offers 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.Ultralife's family of brands includes: Ultralife Batteries Stationary Power Services RPS Power Systems ABLE McDowell Research and RedBlack Communications. Ultralife's operations are in North America Europe and Asia.Ultralife was incorporated in 1990 and became a public company in 1992. Our shares trade on the NASDAQ under the symbol ULBI. Ultralife Batteries Inc. has a market cap of $131.2 million; its shares were traded at around $7.62 with a P/E ratio of 15.5 and P/S ratio of 0.5.
Highlight of Business Operations:
In our Communications Systems segment, the cost of products sold decreased $14,737, from $17,933 in the three-month period ended March 29, 2008 to $3,196 in 2009. Communications Systems gross margin for 2009 was $1,040, or 24.6% of revenues, a decrease of $5,081 from 2008s gross margin of $6,121, or 25.4% of revenues. The decrease in the gross margin for Communications Systems resulted mainly from the change in the overall sales mix in this segment.In our Design and Installation Services segment, the cost of sales increased $1,978, from $3,682 in the three-month period ended March 29, 2008 to $5,660 in 2009. Design and Installation Services gross margin for 2009 was $481, or 7.8% of revenues, a decrease of $16 from 2008s gross margin of $497, or 11.9% of revenues. Gross margin in this particular segment was weaker than expected due to expected short-term price competition with component suppliers, relatively low margin jobs that carried over from year-end, and ongoing integration efforts related to the USE acquisition.
Operating Expenses. Total operating expenses for the three-month period ended March 29, 2009 totaled $10,038, an increase of $1,526 from the prior years amount of $8,512. Overall, operating expenses as a percentage of sales increased to 25.2% in the first quarter of 2009 from 17.1% reported in the prior year, due to the overall expense increase over a lower revenue base. Amortization expense associated with intangible assets related to our acquisitions was $341 for 2009 ($231 in selling, general and administrative expenses and $110 in research and development costs), compared with $520 for 2008 ($361 in selling, general, and administrative expenses and $159 in research and development costs). Research and development costs were $1,980 in 2009, an increase of $371, or 23.1%, over the $1,609 reported in 2008 as we increased our investment in product development and design activity. Selling, general, and administrative expenses increased $1,155, or 16.7%, to $8,058. This increase was comprised of costs related to recently acquired companies, in addition to higher sales and marketing expenses related to development of new territories for the standby power business and generally higher administrative costs.
to $179 for the first quarter of 2009 from $318 for the comparable period in 2008, mainly as a result of lower average borrowings under our revolving credit facility and lower interest rates. In 2008, we recognized a gain of $313 on the early conversion of the $10,500 convertible notes held by the sellers of McDowell, which related to an increase in the interest rate on the notes from 4.0% to 5.0% in October 2007. Miscellaneous income/expense amounted to income of $11 for the first quarter of 2009 compared with income of $108 for the same period in 2008. This decrease was primarily due to transactions impacted by changes in foreign currencies relative to the U.S. dollar.
During the three-month period ended March 29, 2009, we generated $12,904 in funds from financing activities compared to the generation of $2,116 in funds in the same period of 2008. The financing activities in 2009 included a $16,600 inflow from drawdowns on the revolver portion of our primary credit facility, and an inflow of cash from stock option and warrant exercises of $242, offset by an outflow of $612 for principal payments on term debt under our primary credit facility and capital lease obligations, and an outflow of $3,326 for the purchase of treasury shares related to our share repurchase program.
On November 16, 2007, we finalized a settlement agreement with the sellers of McDowell Research, Ltd. relating to the initial purchase price of that company, which related to various operational issues that arose during the first several months following the July 2006 acquisition that significantly reduced our profit margins. The settlement agreement reduced the overall purchase price by approximately $7,900, by reducing the principal amount on the convertible notes initially issued in that transaction from $20,000 to $14,000, and eliminating a $1,889 liability related to a purchase price adjustment. In addition, the interest rate on the convertible notes was increased from 4% to 5% and we made prepayments totaling $3,500 on the convertible notes. Upon payment of the $3,500 in November 2007, we reported a one-time, non-operating gain of approximately $7,550 to account for the purchase price reduction, net of certain adjustments related to the change in the interest rate on the convertible notes. Based on the facts and circumstances surrounding the settlement agreement, there was not a clear and direct link to the purchase price; therefore, we recorded the settlement as an adjustment to income in accordance with SFAS No. 141. In January 2008, the remaining $10,500 principal balance on the convertible notes was converted in full into 700,000 shares of our common stock, and the remaining $313 that pertained to the change in the interest rate on the notes was recorded in other income as a gain on debt conversion.
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