UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
______________
(Mark One)
[X] |
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SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 27, 2016
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 0-27460
ULTRALIFE CORPORATION |
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation)
| 16-1387013 (I.R.S. Employer Identification No.) | |
2000 Technology Parkway Newark, New York (Address of principal executive offices) |
(Zip Code) |
___________________
Registrant'sRegistrant’s telephone number, including area code: (315) 332-7100
_____________________________
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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒[ X ] No ☐[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer: Large accelerated filer ☐[ ] Accelerated filer ☐[ ] Non-accelerated filer ☐[ ] Smaller reporting company ☒[ X ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐[ ] No ☒[ X ]
The number of shares outstanding of the registrant'sregistrant’s common stock was 15,219,620,15,329,423, net of 3,838,8073,859,660 treasury shares, as of OctoberApril 28, 2015. 2016.
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ULTRALIFE CORPORATION AND SUBSIDIARIES
(Dollars in Thousands)
(unaudited)
ASSETS
March 27, | December 31, | |||||||
2016 | 2015 | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ 2,759 | $ 14,393 | ||||||
Restricted cash | 143 | 140 | ||||||
Trade accounts receivable, net of allowance for doubtful accounts of $302 and $300, respectively | 15,140 | 11,430 | ||||||
Inventories, net | 26,980 | 23,814 | ||||||
Prepaid expenses and other current assets | 2,334 | 1,900 | ||||||
Due from insurance company | 177 | 177 | ||||||
Deferred income taxes | 92 | 92 | ||||||
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Total current assets | 47,625 | 51,946 | ||||||
Property, equipment and improvements, net | 8,865 | 9,038 | ||||||
Goodwill | 20,584 | 16,283 | ||||||
Other intangible assets, net | 8,475 | 3,946 | ||||||
Security deposits and other non-current assets | 94 | 309 | ||||||
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Total assets | $ 85,643 | $ 81,522 | ||||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ 8,018 | $ 6,494 | ||||||
Accrued compensation and related benefits | 1,928 | 2,377 | ||||||
Accrued expenses and other current liabilities | 2,413 | 1,749 | ||||||
Current portion of debt | 1,156 | - | ||||||
Income taxes payable | 373 | 227 | ||||||
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Total current liabilities | 13,888 | 10,847 | ||||||
Deferred income taxes | 5,513 | 4,631 | ||||||
Other non-current liabilities | 28 | 28 | ||||||
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Total liabilities | 19,429 | 15,506 | ||||||
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Commitments and contingencies (Note 11) | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock – par value $.10 per share; authorized 1,000,000 shares; none issued | - | - | ||||||
Common stock – par value $.10 per share; authorized 40,000,000 shares; issued – 19,185,899 shares at March 27, 2016 and 19,181,815 shares at December 31, 2015; outstanding – 15,326,239 shares at March 27, 2016 and 15,322,155 at December 31, 2015 | 1,919 | 1,918 | ||||||
Capital in excess of par value | 177,202 | 177,007 | ||||||
Accumulated deficit | (93,752) | (94,051) | ||||||
Accumulated other comprehensive loss | (1,186) | (907) | ||||||
Treasury stock - at cost; 3,859,660 shares at March 27, 2016 and at December 31, 2015 | (17,808) | (17,808) | ||||||
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Total Ultralife Corporation equity | 66,375 | 66,159 | ||||||
Non-controlling interest | (161) | (143) | ||||||
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Total shareholders’ equity | 66,214 | 66,016 | ||||||
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Total liabilities and shareholders’ equity | $ 85,643 | $ 81,522 | ||||||
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The accompanying notes are an integral part of these consolidated financial statements.
ULTRALIFE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In Thousands except per share amounts)
(unaudited)
Three month periods ended
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March 27,
| March 29,
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2016 | 2015 | |||||||
Revenues | $20,833 | $19,177 | ||||||
Cost of products sold | 14,428 | 13,170 | ||||||
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Gross profit | 6,405 | 6,007 | ||||||
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Operating expenses: | ||||||||
Research and development | 1,656 | 1,359 | ||||||
Selling, general and administrative | 4,267 | 3,826 | ||||||
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Total operating expenses | 5,923 | 5,185 | ||||||
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Operating income | 482 | 822 | ||||||
Other (expense) income: | ||||||||
Interest income | - | 1 | ||||||
Interest and financing expense | (102) | (67) | ||||||
Miscellaneous | (11) | (122) | ||||||
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(113) | (188) | |||||||
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Income before income taxes | 369 | 634 | ||||||
Income tax provision | (88) | (111) | ||||||
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Net income | 281 | 523 | ||||||
Net loss attributable to non-controlling interest | 18 | 10 | ||||||
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Net income attributable to Ultralife Corporation | 299 | 533 | ||||||
Other comprehensive (loss) income: | ||||||||
Foreign currency translation adjustments | (279) | 22 | ||||||
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Comprehensive income attributable to Ultralife Corporation | $20 | $555 | ||||||
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Net income per share attributable to Ultralife common shareholders – basic: | ||||||||
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Total | $ .02 | $ .03 | ||||||
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Net income per share attributable to Ultralife common shareholders – diluted: | ||||||||
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Total | $ .02 | $ .03 | ||||||
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Weighted average shares outstanding – basic | 15,323 | 17,346 | ||||||
Potential common shares | 343 | 8 | ||||||
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Weighted average shares outstanding – diluted | 15,666 | 17,354 | ||||||
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The accompanying notes are an integral part of these consolidated financial statements.
ULTRALIFE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(unaudited)
Three month periods ended
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March 27,
| March 29,
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2016 | 2015 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income | $ 281 | $523 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 589 | 596 | ||||||
Amortization of intangible assets | 137 | 60 | ||||||
Amortization of financing fees | 19 | 18 | ||||||
Stock-based compensation | 181 | 144 | ||||||
Deferred income tax benefit | 42 | 55 | ||||||
Loss on long-lived asset disposals | - | 36 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (2,407) | (392) | ||||||
Inventories | (1,138) | 1,326 | ||||||
Prepaid expenses and other assets | 41 | (202) | ||||||
Accounts payable and other liabilities | (620) | 996 | ||||||
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Net cash provided by (used in) operating activities | (2,875) | 3,160 | ||||||
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INVESTING ACTIVITIES: | ||||||||
Acquisition of Accutronics, net of cash acquired | (9,857) | - | ||||||
Cash paid for property, equipment and improvements | (69) | (470) | ||||||
Change in restricted cash | - | 16 | ||||||
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Net cash used in investing activities | (9,926) | (454) | ||||||
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FINANCING ACTIVITIES: | ||||||||
Cash paid to repurchase treasury stock | - | (336) | ||||||
Proceeds from debt borrowings | 1,156 | - | ||||||
Return of security deposit | - | 49 | ||||||
Proceeds from stock option exercise | 14 | 8 | ||||||
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Net cash provided by (used in) financing activities | 1,170 | (279) | ||||||
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Effect of exchange rate changes on cash and cash equivalents | (3) | (5) | ||||||
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (11,634) | 2,422 | ||||||
Cash and cash equivalents, beginning of period | 14,393 | 17,711 | ||||||
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Cash and cash equivalents, end of period | $2,759 | $20,133 | ||||||
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The accompanying notes are an integral part of these consolidated financial statements.
ULTRALIFE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands – except share and per share amounts)
(unaudited)
1. | BASIS OF PRESENTATION |
The accompanying unaudited Condensed Consolidated Financial Statements of Ultralife Corporation (the “Company”) and subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Results for interim periods should not be considered indicative of results to be expected for a full year. Reference should be made to the Consolidated Financial Statements and related notes thereto contained in our Form 10-K for the year ended December 31, 2014.
2015.
The December 31, 2014 condensed2015 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.
Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation.
Our quarters end on the last Sunday of the third month in themonthly closing schedule is a 4/4/5 weekly-based cycle for each fiscal quarter, as opposed to a calendar month-based cycle for each fiscal quarter. While the actual dates for the quarter-ends will change slightly each year, we believe that there are not any material differences when making quarterly comparisons.
2. | ACQUISITION |
On January 13, 2016, Ultralife UK Limited (the “Merger Subsidiary”), a U.K. corporation and a wholly-owned subsidiary of Ultralife Corporation (the “Company”), completed the acquisition of all of the outstanding ordinary shares of Accutronics Limited (“Accutronics”), a U.K. corporation based in Newcastle-under-Lyme, U.K., from Intrinsic Equity Limited, Catapult Growth Fund Limited Partnership, MJF Pension Trustees Limited, Robert Andrew Phillips and Michael Allen (collectively, the “Sellers”). There are no material relationships between the Company or Merger Subsidiary and any of the Sellers, other than pertaining to this acquisition. Accutronics is a leading independent designer and manufacturer of smart batteries and charger systems for high-performance, feature-laden portable and handheld electronic devices and will be classified in the Battery & Energy Products segment.
The acquisition was completed pursuant to the terms of a Share Purchase Agreement dated January 13, 2016, with an effective date of January 1, 2016 for accounting purposes, by and among the Merger Subsidiary and the Sellers. The Merger Subsidiary paid at the time of closing an aggregate purchase price of £7,575 ($10,976) in cash, and in exchange the Merger Subsidiary received all of the outstanding shares of Accutronics ordinary stock. Monies to fund the purchase price were advanced to the Merger Subsidiary from the Company’s general corporate funds.
The purchase price was subject to adjustment based on the difference between actual and estimated amounts of working capital of Accutronics as well as the amount of net cash of Accutronics. The adjustment resulted in a final payment to the Sellers in the amount of £133 on February 24, 2016, bringing the total aggregate purchase price to £7,708 ($11,161).
The purchase price allocation was determined in accordance with the accounting treatment of a business combination in the FASB ASC Topic 805,Business Combinations. Under the guidance, the fair value of the consideration was determined and the assets acquired and liabilities assumed have been recorded at their fair values at the date of the acquisition. The excess of the purchase price over the estimated fair values has been recorded as goodwill.
The allocation of purchase price to the assets acquired and liabilities assumed at the date of the acquisition is presented in the table below (in thousands). Management is responsible for determining the fair value of the tangible and intangible assets acquired and liabilities assumed as of the date of acquisition. Management considered a number of factors, including reference to an analysis performed under FASB ASC Topic 805 solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed. The Company’s estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. These valuations require the use of management’s assumptions, which would not reflect unanticipated events and circumstances that occur. The resulting purchase price allocation is considered preliminary as it is subject to change due to events in the future and subject to audit by the Company’s independent registered accountants. The final audited purchase price allocation may include (1) changes in allocations to intangible assets such as customer contracts and relationships, trade name and intellectual property as well as goodwill, (2) changes to deferred income taxes and (3) other changes to assets and liabilities.
Cash | $1,304 | |||||||
Accounts Receivable | 1,344 | |||||||
Inventory | 2,167 | |||||||
Prepaids and Other Current Assets | 290 | |||||||
Property, Plant & Equipment | 269 | |||||||
Identifiable Intangible Assets | 4,776 | |||||||
Goodwill | 4,407 | |||||||
Accounts Payable | (1,009) | |||||||
Accrued Expenses | (1,133) | |||||||
Income Taxes Payable | (111) | |||||||
Non-Current Liabilities | (209) | |||||||
Deferred Income Taxes | (74) | |||||||
Deferred Income Taxes on Intangible Assets | (860) | |||||||
Total Consideration | $11,161 |
The goodwill included in the Company’s purchase price allocation presented above represents the value of Accutronics assembled and trained workforce, the incremental value that Accutronics engineering and technology will bring to the Company and the revenue growth which is expected to occur over time which is attributable to increased market penetration from future new products and customers. The goodwill acquired in connection with the acquisition is not deductible for income tax purposes.
During the three month period ended March 27, 2016, direct acquisition costs of $251 and increased cost of sales related to purchase accounting adjustments of $91 for inventory acquired were recorded in the Company’s Consolidated Statement of Income and Comprehensive Income. Accutronics contributed revenue of $2,486 and an operating loss of $275 during the three month period ended March 27, 2016 reflecting the purchase accounting adjustments and non-recurring costs directly related to the acquisition.
The following unaudited pro forma information presents the combined results of operations as if the acquisition of Accutronics had been completed on January 1, 2015, the beginning of the comparable prior year three month period. The unaudited pro forma results include purchase accounting adjustments to reflect the restatement of inventory to estimated fair value and the resulting increase in cost of sales for the sale of the inventory during this three month period, direct acquisition costs and the amortization of intangible assets resulting from the purchase price allocation.
The unaudited pro forma results do not reflect the realization of any expected cost savings or other synergies from the acquisition of Accutronics as a result of restructuring activities, other cost savings initiatives or sales synergies following the completion of the business combination. Accordingly, these unaudited pro forma results are presented for informational purposes only and not necessarily indicative of what the actual results of operations of the combined Company would have been if the acquisition had occurred at the beginning of the 2015 period presented, nor are they indicative of future results of operations.
Set forth below is the unaudited pro forma results of the Company and Accutronics for the three month period ended March 29, 2015 as if the acquisition occurred as of January 1, 2015 along with the reported results for the three month period ended March 27, 2016 which includes the consolidation of Accutronics (in thousands, except per share amounts).
Three Months Ended | ||||||
March 29, 2015 | March 27, 2016 | |||||
Revenue | $22,330 | $20,833 | ||||
Operating Income | $ 706 | $ 482 | ||||
Net Income | $ 410 | $ 281 | ||||
Earnings Per Share: | ||||||
Basic | $ .02 | $ .02 | ||||
Diluted | $ .02 | $ .02 |
3. | SHARE REPURCHASE PROGRAM |
On April 28, 2014, the Company’s Board of Directors approved a share repurchase program (the “Share Repurchase Program”) which became effective on May 1, 2014 and under which the Company was authorized to repurchase up to 1.8 million shares of its outstanding common stock over a period not to exceed twelve months. The Share Repurchase Program has been extended through April 30,June 2, 2016, and the maximum number of shares authorized to be repurchased under the program has been increased to 3.4 million shares.
Share repurchases under this program are made in accordance with SEC Rule 10b-18 using a variety of methods, which may include open market purchases, privately negotiated transactions and block trades, or any combination of such methods, in compliance with applicable insider trading and other securities laws and regulations. With the exception of repurchases made during stock trading black-out periods under a 10b5-1 Plan,Plans, the timing, manner, price and amount of any repurchases are determined at the Company’s discretion. The Share Repurchase Program may be suspended, terminated or modified by the Company at any time and for any reason. The Share Repurchase Program does not obligate the Company to repurchase any specific number of shares.
There were no shares repurchased during the three month period ended March 27, 2016. During the three month period ended September 27,March 29, 2015, the Company repurchased 748,58278,401 shares under this program, for a total cost (excluding fees and commissions) of $3,357.$298.
During the nine month period ended September 27, 2015, the Company repurchased 2,225,437 shares under this program for a total cost (excluding fees and commissions) of $9,162.
From the inception of the Share Repurchase Program on May 1, 2014 through October 28, 2015,March 27, 2016, the Company has repurchased 2,442,191 shares for an aggregate cost (excluding fees and commissions) of $9,877. The total remaining balance of shares authorized for repurchase under the Share Repurchase Program is 957,809 shares as of October 28, 2015.
March 27, 2016.
4. | INVENTORIES |
Inventories are stated at the lower of cost or market with cost determined under the first-in, first-out (FIFO) method. The composition of inventories was:
September 27, | December 31, | |||||||
2015 | 2014 | |||||||
Raw materials | $ | 12,601 | $ | 15,100 | ||||
Work in process | 1,874 | 1,489 | ||||||
Finished goods | 8,877 | 9,497 | ||||||
Total | $ | 23,352 | $ | 26,086 |
March 27, | December 31, | |||
2016 | 2015 | |||
Raw materials | $13,369 | $11,602 | ||
Work in process | 2,363 | 1,560 | ||
Finished goods | 11,248 | 10,652 | ||
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Total | $26,980 | $23,814 | ||
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5. | PROPERTY, EQUIPMENT AND IMPROVEMENTS |
Major classes of property, equipment and improvements consisted of the following:
September 27, | December 31, | |||||||
2015 | 2014 | |||||||
Land | $ | 123 | $ | 123 | ||||
Buildings and leasehold improvements | 7,441 | 7,437 | ||||||
Machinery and equipment | 49,357 | 48,054 | ||||||
Furniture and fixtures | 1,976 | 1,811 | ||||||
Computer hardware and software | 4,562 | 4,452 | ||||||
Construction in process | 679 | 1,351 | ||||||
64,138 | 63,228 | |||||||
Less-accumulated depreciation | (54,947 | ) | (53,416 | ) | ||||
Net property, equipment and improvements | $ | 9,191 | $ | 9,812 |
March 27, | December 31, | |||
2016 | 2015 | |||
Land | $123 | $123 | ||
Buildings and leasehold improvements | 7,854 | 7,490 | ||
Machinery and equipment | 49,521 | 49,609 | ||
Furniture and fixtures | 1,993 | 1,974 | ||
Computer hardware and software | 4,685 | 4,585 | ||
Construction in process | 763 | 745 | ||
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64,939 | 64,526 | |||
Less-accumulated depreciation | (56,074) | (55,488) | ||
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Net property, equipment and improvements | $8,865 | $9,038 | ||
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Depreciation expense for property, equipment and improvements was as follows:
Three-month periods ended | Nine-month periods ended | |||||||||||||||
September 27, | September 28, | September 27, | September 28, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Depreciation expense | $ | 617 | $ | 709 | $ | 1,795 | $ | 2,174 | ||||||||
$589 and $596 for the three-month periods ended March 27, 2016 and March 29, 2015, respectively.
6. | GOODWILL, INTANGIBLE ASSETS AND LONG TERM ASSETS |
a. Goodwill
The following table summarizes the goodwill activity by segment for the nine-monththree-month periods ended SeptemberMarch 27, 20152016 and September 28, 2014:March 29, 2015:
Battery & Energy | Communi- cations | |||||||||||
Products | Systems | Total | ||||||||||
Balance - December 31, 2013 | $ | 4,926 | $ | 11,493 | $ | 16,419 | ||||||
Effect of foreign currency translation | (12 | ) | — | (12 | ) | |||||||
Balance – September 28, 2014 | 4,914 | 11,493 | 16,407 | |||||||||
Effect of foreign currency translation | — | — | — | |||||||||
Balance - December 31, 2014 | 4,914 | 11,493 | 16,407 | |||||||||
Effect of foreign currency translation | (80 | ) | — | (80 | ) | |||||||
Balance – September 27, 2015 | $ | 4,834 | $ | 11,493 | $ | 16,327 |
Battery & Energy | Communi- cations | |||||
Products | Systems | Total | ||||
Balance – December 31, 2014 | $4,914 | $11,493 | $16,407 | |||
Effect of foreign currency translation | 9 | - | 9 | |||
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Balance – March 29, 2015 | 4,923 | 11,493 | 16,416 | |||
Effect of foreign currency translation | -133 | - | -133 | |||
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Balance - December 31, 2015 | 4,790 | 11,493 | 16,283 | |||
Acquisition of Accutronics | 4,407 | - | 4,407 | |||
Effect of foreign currency translation | -106 | - | -106 | |||
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Balance – March 27, 2016 | $9,091 | $11,493 | $20,584 | |||
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b. Intangible Assets
The composition of intangible assets was:
at September 27, 2015 | ||||||||||||
Accumulated | ||||||||||||
Cost | amortization | Net | ||||||||||
Trademarks | $ | 3,563 | $ | — | $ | 3,563 | ||||||
Patents and technology | 4,491 | (4,193 | ) | 298 | ||||||||
Customer relationships | 3,991 | (3,715 | ) | 276 | ||||||||
Distributor relationships | 377 | (359 | ) | 18 | ||||||||
Total intangible assets | $ | 12,422 | $ | (8,267 | ) | $ | 4,155 | |||||
at December 31, 2014 | ||||||||||||
Accumulated | ||||||||||||
Cost | amortization | Net | ||||||||||
Trademarks | $ | 3,567 | $ | — | $ | 3,567 | ||||||
Patents and technology | 4,509 | (4,114 | ) | 395 | ||||||||
Customer relationships | 4,029 | (3,679 | ) | 350 | ||||||||
Distributor relationships | 391 | (365 | ) | 26 | ||||||||
Total intangible assets | $ | 12,496 | $ | (8,158 | ) | $ | 4,338 |
at March 27, 2016 | ||||||
Accumulated | ||||||
Cost | Amortization | Net | ||||
Trademarks | $3,413 | $ 0 | $3,413 | |||
Patents and technology | 5,595 | (4,278) | 1,317 | |||
Customer relationships | 7,136 | (3,810) | 3,326 | |||
Distributor relationships | 377 | (360) | 17 | |||
Trade Name | 412 | (10) | 402 | |||
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Total intangible assets | $16,933 | $(8,458) | $8,475 | |||
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at December 31, 2015 | ||||||
Accumulated | ||||||
Cost | Amortization | Net | ||||
Trademarks | $ 3,411 | $0 | $3,411 | |||
Patents and technology | 4,482 | (4,217) | 265 | |||
Customer relationships | 3,971 | (3,716) | 255 | |||
Distributor relationships | 370 | (355) | 15 | |||
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Total intangible assets | $12,234 | $(8,288) | $3,946 | |||
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Amortization expense for intangible assets was as follows:
Three-month periods ended | Nine-month periods ended | |||||||||||||||
September 27, | September 28, | September 27, | September 28, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Amortization included in: | ||||||||||||||||
Research and development | $ | 32 | $ | 44 | $ | 97 | $ | 131 | ||||||||
Selling, general and administrative | 29 | 34 | 83 | 101 | ||||||||||||
Total amortization expense | $ | 61 | $ | 78 | $ | 180 | $ | 232 | ||||||||
$137 and $60 for the three-month periods ended March 27, 2016 and March 29, 2015, respectively. Amortization included in research and development expenses was $51 and $32 for the three-month periods ended March 27, 2016 and March 29, 2015, respectively. Amortization included in selling, general and administrative expenses was $86 and $28 for the three-month periods ended March 27, 2016 and March 29, 2015, respectively.
The change in the cost value of total intangible assets from December 31, 20142015 to SeptemberMarch 27, 20152016 is a result of the acquisition of Accutronics and the effect of foreign currency translations.
7. |
REVOLVING CREDIT AGREEMENT |
We have financing through a Revolving Credit, Guaranty and Security Agreement dated as of May 24, 2013 (the “Credit Agreement”), and related security agreements with PNC Bank, National Association (“PNC”PNC Bank”), which provides a $20 million$20,000 secured asset-based revolving credit facility that includes a $1 million$1,000 letter of credit sub-facility (the “Credit Facility”). The Credit Agreement provides that the Credit Facility may be increased with PNC’sPNC Bank’s concurrence to an amount not to exceed $35 million, provided such increase must occur$35,000 prior to the last six months of the term whichand expires on May 24, 2017.
Our available borrowing limit under the Credit Facility is based on a borrowing base formula equal to a percentage of accounts receivable, inventory and eligible foreign in-transit inventory. Interest is payable quarterly and accrues on outstanding indebtedness under the Credit Agreement at either a LIBOR-based rate or an alternate base rate, as defined in the Credit Agreement. The applicable interest rate was 2.43% at March 27, 2016. We pay a quarterly fee on the Credit Facility’s unused availability at 0.375% per annum.
As of SeptemberMarch 27, 2015,2016, we had approximately $9,666$11,589 of borrowing capacity in addition tounder our cash on hand of $14,585,$20,000 Credit Facility with PNC Bank, and we had borrowings of $1,156 under the Credit Facility. At March 29, 2015, the Company had no outstanding borrowings or outstanding letters of credit under the Credit Facility at either September 27, 2015 or December 31, 2014.
Facility.
8. | SHAREHOLDERS’ EQUITY |
We recorded non-cash stock compensation expense in each period as follows:
Three-month periods ended | Nine-month periods ended | |||||||||||||||
September 27, | September 28, | September 27, | September 28, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Stock options | $ | 112 | $ | 142 | $ | 368 | $ | 430 | ||||||||
Restricted stock grants: | ||||||||||||||||
Employee | 23 | 4 | 71 | 4 | ||||||||||||
President and CEO | — | 34 | — | 117 | ||||||||||||
Board of Directors compensation – | ||||||||||||||||
stock grant | — | 57 | — | 170 | ||||||||||||
Total | $ | 135 | $ | 237 | $ | 439 | $ | 721 | ||||||||
Three month periods ended | ||||
March 27, 2016 | March 29, 2015 | |||
Stock options | $170 | $120 | ||
Restricted stock grants: | ||||
Employee | 11 | 24 | ||
|
| |||
Total | $181 | $144 | ||
|
|
These are more fully discussed as follows:
a. Stock Options
We have stock options outstanding from various stock-based employee compensation plans for which we record compensation expensecost relating to share-based payment transactions in our financial statements. As of SeptemberMarch 27, 2015,2016, there was $414$509 of total unrecognized compensation expensecost related to outstanding stock options, which is expected to be recognized over a weighted average period of 1.13.4 years.
The following table summarizes stock option activity for the nine-month period ended September 27, 2015:first quarter of 2016:
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||
Outstanding at January 1, 2016 | 2,257,969 | $6.30 | ||||||||
Granted | 75,000 | $6.24 | ||||||||
Exercised | (4,084) | 3.51 | ||||||||
Forfeited or expired | (34,905) | 11.38 | ||||||||
|
| |||||||||
Outstanding at March 27, 2016 | 2,293,980 | 6.22 | 3.52 | $1,225 | ||||||
|
| |||||||||
Vested and expected to vest at March 27, 2016 | 2,146,741 | 6.31 | 3.33 | $1,144 | ||||||
|
| |||||||||
Exercisable at March 27, 2016 | 1,395,423 | $4.89 | 2.85 | $891 | ||||||
|
|
The following assumptions were used to value stock options granted during the first quarter of 2016:
Risk-free interest rate |
Volatility factor | 44.7% | |||||
Dividends | 0.00% | |||||
Weighted average expected life (years) | 4.15 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding at January 1, 2015 | 2,056,122 | $ | 6.66 | |||||||||||||
Granted | 311,250 | 3.83 | ||||||||||||||
Exercised | (8,502 | ) | 3.37 | |||||||||||||
Forfeited or expired | (68,166 | ) | 12.21 | |||||||||||||
Outstanding at September 27, 2015 | 2,290,704 | 6.12 | 3.61 | $ | 1,985 | |||||||||||
Vested and expected to vest at September 27, 2015 | 2,151,104 | 6.27 | 3.47 | $ | 1,763 | |||||||||||
Exercisable at September 27, 2015 | 1,387,971 | $ | 5.10 | 2.69 | $ | 1,184 |
FASB’s guidance for share-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductions for exercised stock options in excess of the deferred tax asset attributable to stock compensation costs for such stock options. We did not record any excess tax benefits in the first three months of 2016 or 2015. Cash received from stock option exercises under our stock-based compensation plans for the three-month periods ended SeptemberMarch 27, 2016 and March 29, 2015 was $14 and September 28, 2014 was $19 and $0,$8, respectively. Cash received from stock option exercises for the nine-month periods ended September 27, 2015 and September 28, 2014 was $28 and $11, respectively.
b. Restricted Stock Awards
AtIn September 27, 2015, our President and Chief Executive Officer held 60,000 unearned, unvested restricted stock units. These units vested subsequent to September 27, 2015 upon the satisfaction of the condition of our common stock having closed at a price of $5.00 per share or greater for 15 trading days in a 30 trading day period.
In addition,2014, 49,200 shares of restricted stock were awarded to certain of our employees in September, 2014. 16,400 shares of these awards vested in September 2015.employees. These units vest over three years and we estimated their weighted average grant date fair value to be $3.24 per share. There is $60$38 of unrecognized compensation expensecost related to these restricted shares at SeptemberMarch 27, 2015.2016.
9. | INCOME TAXES |
We use the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.
For the three-month periods ended SeptemberMarch 27, 20152016 and September 28, 2014,March 29, 2015, we recorded $130$88 and $60,$111, respectively, in income tax expense. For the nine-month periods ended September 27, 2015 and September 28, 2014, we recorded $312 and $177, respectively, in income tax expense. These areexpense, detailed as follows:
Three month periods ended | ||||
March 27, 2016 | March 29, 2015 | |||
Current income tax provision: | ||||
Foreign | $27 | $52 | ||
Federal | 4 | - | ||
State | 15 | 4 | ||
Deferred income tax provision | 42 | 55 | ||
|
| |||
Total | $88 | $111 | ||
|
|
Three-month periods ended | Nine-month periods ended | |||||||||||||||
September 27, | September 28, | September 27, | September 28, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Current income tax provision: | ||||||||||||||||
Foreign | $ | 44 | $ | — | $ | 87 | $ | — | ||||||||
Federal | 26 | — | 48 | — | ||||||||||||
State | 5 | 5 | 12 | 12 | ||||||||||||
Deferred income tax provision | 55 | 55 | 165 | 165 | ||||||||||||
Total | $ | 130 | $ | 60 | $ | 312 | $ | 177 | ||||||||
DeferredThe deferred income tax provision is primarily due to the recognition of deferred tax liabilities generated fromrelating to goodwill and certain intangible assets that cannot be predicted to reverse for book purposes during our loss carryforward periods. The remaining expense in 2015 wascurrent income tax provision is primarily due to the income reported for our China operations during the periodoperation and Accutronics (U.K.) and estimated U.S. federal alternative minimum taxes, while the remaining expense in 2014 wasis primarily due to state income taxes.
Our effective consolidated tax rates for the three-month periods ended March 27, 2016 and March 29, 2015 were:
Three month periods ended | ||||
March 27, 2016 | March 29, 2015 | |||
Income from continuing operations before income taxes (a) | $369 | $634 | ||
Income tax provision (b) | 88 | 111 | ||
Effective income tax rate (b/a) | 23.8% | 17.5% |
OurThe overall effective tax rate is the result of the combination of income and losses in each of our tax jurisdictions, which is particularly influenced by the fact that we have recorded a full reserve against our deferred tax assets pertaining to cumulative historical losses for our U.S. operations and our U.K. subsidiary,certain foreign subsidiaries, as management does not believe, at this time, that it is more likely than not that we will realize the benefit of these losses. Our tax rate for the nine-month period ended September 27, 2015 was 11.7%, which was different from the federal statutory rate due to the effect of the utilization of fully reserved net operating loss carryforwards (“NOL”) as well as the effect of differing foreign income tax rates, principally in China. Our tax rate for the nine-month period ended September 28, 2014 was (6.5%), which was different from the federal statutory rate due to the loss incurred and our full reserve against our NOLs, and the effect of differing foreign income tax rates, principally in China.
We have substantial NOLs available to offset taxable income in the United States. However, we remain subject to the alternative minimum tax in the United States. The alternative minimum tax limits the amount of NOL available to offset taxable income to 90% of the current year income. We recorded a provision of $26 and $48 for U.S. alternative minimum tax for the three and nine months ended September 27, 2015, respectively, and no alternative minimum tax in either the three or nine months ended September 28, 2014. The payment of the alternative minimum tax normally results in the establishment of a deferred tax asset; however, we have established a full valuation allowance for this related deferred tax asset.
As of September 27,December 31, 2015, we have foreign and domestic NOLnet operating loss (“NOL”) and credit carryforwards totaling approximately $85,200$86,800 and $1,400$1,600 available to reduce future taxable income. Included in our NOL carryforwards are foreign loss carryforwards of approximately $12,400 that can be carried forward indefinitely. The domestic NOL carryforward of $72,800$74,400 expires from 2019 through 2035.2034. The domestic NOL carryforward includes approximately $2,900$3,000 for which a benefit will be recorded in capital in excess of par value when realized.
Our unrecognized tax benefits related to uncertain tax positions at September 27,March 29, 2015 pertainin the amount of $7,296 relate to foreign taxFederal and various state jurisdictions. The following table summarizesWe recorded the activity related to our unrecognized tax benefits:
Nine month periods ended | ||||||||
September 27, | September 28, | |||||||
2015 | 2014 | |||||||
Balance – beginning of period | $ | 7,296 | $ | 7,296 | ||||
Increases related to current year tax positions | — | — | ||||||
Increases related to prior year tax positions | — | — | ||||||
Decreases related to prior year tax positions | — | — | ||||||
Expiration of statute of limitations for assessment of taxes | — | — | ||||||
Settlements of examinations | (7,296 | ) | — | |||||
Balance – end of period | $ | — | $ | 7,296 |
The release of uncertain tax positions in 2015 relatesrelating to the conclusion of a federal tax examination, resulting in a $21.4 million increase in the amount of our reported domestic NOL carryforward.
The total unrecognized tax benefit balances at March 29, 2015 were comprised of tax benefits that, if recognized, would result in a deferred tax asset and a corresponding increase in our valuation allowance. As a result, because the benefit would be offset by an increase in the valuation allowance, there would be no net effect on our effective tax rate or income tax provision. We recorded the release of this unrecognized tax benefit amount during 2015 upon the conclusion of a of a federal tax examination, resulting in a $21.4 million increase in the amount of our reported domestic NOL carryforward.
We are not required to accrue interest and penalties as the unrecognized tax benefits have been recorded as a decrease in our NOL. Interest and penalties would begin to accrue in the period in which the NOLs related to the uncertain tax positions are utilized. We do not expect our unrecognized tax benefits to change significantly over the next twelve months.
As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. We are routinely subject to examination by taxing authorities in these various jurisdictions. Our U.S. tax matters for the years 20002001 through 20142015 remain subject to examination by the Internal Revenue Service (“IRS”) anddue to our NOL carryforwards. Our U.S. tax matters for the years 2001 through 2015 remain subject to examination by various state and local tax jurisdictions due to our NOL carryforwards. Our tax matters for the years 20072009 through 20142015 remain subject to examination by the respective foreign tax jurisdiction authorities.
10. | EARNINGS PER SHARE |
Basic earnings per share (“EPS”) iscomputed by dividing earnings attributable to the Company’s common shareholders by the weighted-average shares outstanding during the period. Diluted EPS includes the dilutive effect of securities, if any, and is calculated using the treasury stock method. For the three-month period ended SeptemberMarch 27, 2015, 1,026,2822016, 1,242,230 stock options and 34,20032,800 restricted stock unitsawards were included in the calculation of Diluted EPS as such securities are dilutive. Inclusion of these securities resulted in 107,000342,809 additional shares in the calculation of fully diluted earnings per share. For the nine-monthcomparable period ended September 27,March 29, 2015, 431,53297,700 stock options, and 34,200 restricted stock units were included in the calculation of Diluted EPS as such securities are dilutive. Inclusion of these securities resultedresulting in 47,0008,101 additional shares in the calculation of fully diluted earnings per share. Due to our net losses in both the three-month and nine-month periods ended September 28, 2014, no dilutive securities were considered.
There were 1,264,4221,051,750 and 2,020,588outstanding2,179,756 outstanding stock options for the three-month periods ended SeptemberMarch 27, 20152016 and September 28, 2014, respectively, that were not included in EPS as the effect would be anti-dilutive. There were 1,859,172 and 2,020,588outstanding stock options for the nine-month periods ended September 27,March 29, 2015, and September 28, 2014, respectively, that were not included in EPS as the effect would be anti-dilutive.
11. |
COMMITMENTS AND CONTINGENCIES |
a. Purchase Commitments
As of SeptemberMarch 27, 2015,2016, we have made commitments to purchase approximately $358$878 of production machinery and equipment.
b. Product Warranties
We estimate future costs associated with expected product failure rates, material usage and service costs in the development of our warranty obligations. Warranty reserves are based on historical experience of warranty claims and generally will be estimated as a percentage of sales over the warranty period. In the event the actual results of these items differ from the estimates, an adjustment to the warranty obligation would be recorded. Changes in our product warranty liability during the first ninethree months of 20152016 and 20142015 were as follows:
Nine month periods ended | Three month periods ended | |||||||||||
September 27, 2015 | September 28, 2014 | March 27, 2016 | March 29, 2015 | |||||||||
Accrued warranty obligations – beginning | $ | 376 | $ | 513 | $192 | $376 | ||||||
Accruals for warranties issued | 16 | 77 | 10 | - | ||||||||
Settlements made | (29 | ) | (90 | ) | (22) | (1) | ||||||
Effect of foreign currency translation | (5 | ) | — | |||||||||
|
| |||||||||||
Accrued warranty obligations – ending | $ | 358 | $ | 500 | $180 | $375 | ||||||
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|
c. Contingencies and Legal Matters
We are subject to legal proceedings and claims that arise from time to time in the normal course of business. We believe that the final disposition of such matters, other than the matters described below, will not have a material adverse effect on our financial position, results of operations or cash flows.
Dreamliner Litigation
In July 2013, an unoccupied Boeing 787 Dreamliner aircraft operated by Ethiopian Airlines was damaged by a fire while parked at London Heathrow Airport. We participated in and provided technical assistance in support of an investigation of this incident conducted by U.K. and U.S. regulatory authorities as well as by the manufacturer of the aircraft, as we are one of many downstream suppliers to that manufacturer. A final report was issued by the Air Accidents Investigative Branch - - UK Civil Aviation regulatory authority, with findings indicating that the fire was primarily caused by circumstances related to the plane’s emergency locator transmitter (“ELT”) manufactured and installed by another company.
On May 4, 2015, we were notified of a lawsuit in which we were named, along with other suppliers to the aircraft manufacturer, concerning that 2013 fire. The suit was filed by Ethiopian Airlines Enterprise in the Commercial Court, Queen’s Bench Division of the High Court of Justice, London. The suit seeks as damages USD 42 million plus other unspecified amounts, including those for loss of use and diminution in value of the aircraft. We maintain liability and products liability insurance through reputable providers, and in accordance with our corporate practices, immediately advised and referred this matter to our insurers. We are working with those insurers and their counsel to respond to and actively defend against this action.
A component of the ELT is a battery pack which incorporates Ultralife’s industry-standard lithium manganese dioxide non-rechargeable D-cell. Ultralife has had this cell in production since 2001, with millions of units produced and this cell is widely-used for global defense and commercial applications. This battery product has gone through rigorous safety and qualification testing, including United Nations Transport of Dangerous Goods, Manual of Tests and Criteria, and is authorized for use in aerospace applications under Technical Standard Order C142.
On May 4, 2015, we were notified of a lawsuit in which we were named, along with other suppliers to the aircraft manufacturer, concerning that 2013 fire. The suit was filed by Ethiopian Airlines Enterprise in the Commercial Court, Queen’s Bench Division of the High Court of Justice, London. The suit seeks as damages $42,000 plus other unspecified amounts, including those for loss of use and diminution in value of the aircraft. We maintain liability and products liability insurance through reputable providers, and in accordance with our corporate practices, immediately advised and referred this matter to our insurers. We are working with those insurers and their counsel to respond to and actively defend against this action, which is ongoing.
At this time, we believe that there is not a reasonable possibility that this incident will result in a material financial exposure to the Company.
Arista Power Litigation
InSince September 2011, we initiated anhave been pursuing legal action against Arista Power, Inc. (“Arista”) and our former employee, David Modeen, (“Modeen”), in the Statefor, among other things, alleged breach of New York Supreme Court, Countycertain agreements, duties and obligations, including misappropriation of Wayne, in which we allege that Arista recruited all but one of the members of its executive team from us, subsequently changed and redirected its business to compete directly with us by using our confidential information and during the summer of 2011, recruited Modeen to become an Arista employee. As more fully disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, we allege that both Arista and Modeen breached agreements with us, that Arista’s employment of Modeen will inevitably lead to the disclosure and use of our trade secrets, by Arista. We seek damages as determined at trialtortious interference, and preliminary and permanent injunctive relief. The defendants answeredbreach of contract. On January 12, 2016, Arista filed for liquidation under Chapter 7 of the allegations set forthbankruptcy laws of the United States, without accurately identifying our ongoing lawsuit against them. Although we have not withdrawn our lawsuit, nor has it been dismissed, the Company does not intend to submit a Proof of Claim in the Complaint and assertedconnection with Arista’s bankruptcy filing, or otherwise continue pursuing its claims against us, which have since been dropped. Arista.
We initiated the September 2011 Complaint against Arista Power to protect our shareholders, customersand employees from the unauthorized use and theft of our investments in intellectual property, trade secrets and confidential information by Arista and its employees. Protecting our intellectual property and know-how, developed and obtained at great cost to us to form our competitive position in the marketplace and create value for our shareholders and stakeholders, is a fundamental responsibility of all our employees.
Discovery in this action is ongoing, and we plan to continue to pursue our complaint against Arista. It is not possible to predict the outcome of this action, whether we will be granted the injunctive relief we seek, nor the monetary amount, if any, which we may be awarded should we prevail.
12. | BUSINESS SEGMENT INFORMATION |
We report our results in two operating segments: Battery & Energy Products and Communications Systems. The Battery & Energy Products segment includes: lithium 9-volt, cylindrical and various other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories, such as cables.accessories. The Communications Systems segment includes: RF amplifiers, power supplies, cable and connector assemblies, RF amplifiers, amplified speakers, equipment mounts, case equipment, man-portable systems, integrated communication system kitssystems for fixed or vehicle applications and communications and electronics systems design. We believe that reporting performance at the gross profit level is the best indicator of segment performance. As such, we report segment performance at the gross profit level and operating expenses as Corporate charges.
corporate charges.
The components of segment performance were as follows:
Three-Month Period Ended March 27, 2016:
Battery & Energy Products | Communi- cations Systems | Corporate | Total | |||||
Revenues | $16,440 | $ 4,393 | $ - | $20,833 | ||||
Segment contribution | 5,217 | 1,188 | (5,924) | 482 | ||||
Interest, financing and miscellaneous expense, net | (113) | (113) | ||||||
Tax provision | (88) | (88) | ||||||
Non-Controlling interest | 18 | 18 | ||||||
Net income attributable to Ultralife | 299 | |||||||
Total assets | $46,897 | $33,720 | $5,025 | $85,643 |
Three-Month Period Ended September 27,March 29, 2015:
Battery & Energy Products | Communi- cations systems | Discontinued operations | Corporate | Total | ||||||||||||||||
Revenues | $ | 16,390 | $ | 2,654 | $ | — | $ | — | $ | 19,044 | ||||||||||
Segment contribution | 4,774 | 1,126 | — | (4,727 | ) | 1,173 | ||||||||||||||
Interest, financing | ||||||||||||||||||||
and miscellaneous | ||||||||||||||||||||
expense, net | 5 | 5 | ||||||||||||||||||
Tax provision | (130 | ) | (130 | ) | ||||||||||||||||
Discontinued operations | ||||||||||||||||||||
Noncontrolling interest | (1 | ) | (1 | ) | ||||||||||||||||
Net income attributable | ||||||||||||||||||||
to Ultralife | $ | 1,047 | ||||||||||||||||||
Total assets | $ | 35,828 | $ | 28,191 | $ | — | $ | 17,333 | $ | 81,352 |
Battery & Energy Products | Communi- cations Systems | Corporate | Total | |||||
Revenues | $16,276 | $ 2,901 | $ - | $19,177 | ||||
Segment contribution | 4,784 | 1,223 | (5,185) | 822 | ||||
Interest, financing and miscellaneous expense, net | (188) | (188) | ||||||
Tax provision | (111) | (111) | ||||||
Discontinued operations | ||||||||
Non-Controlling interest | 10 | 10 | ||||||
Net income attributable to Ultralife | 533 | |||||||
Total assets | $37,299 | $29,062 | $22,694 | $89,055 |
Three-Month Period Ended September 28, 2014:
Battery & Energy Products | Communi- cations systems | Discontinued operations | Corporate | Total | ||||||||||||||||
Revenues | $ | 13,913 | $ | 2,149 | $ | — | $ | — | $ | 16,062 | ||||||||||
Segment contribution | 3,812 | 674 | — | (4,541 | ) | (55 | ) | |||||||||||||
Interest, financing | ||||||||||||||||||||
and miscellaneous | ||||||||||||||||||||
expense, net | (211 | ) | (211 | ) | ||||||||||||||||
Tax provision | (60 | ) | (60 | ) | ||||||||||||||||
Noncontrolling interest | 3 | 3 | ||||||||||||||||||
Net loss attributable | ||||||||||||||||||||
to Ultralife | $ | (323 | ) | |||||||||||||||||
Total assets | $ | 39,568 | $ | 29,649 | $ | — | $ | 18,323 | $ | 87,540 |
Nine-Month Period Ended September 27, 2015:
Battery & Energy Products | Communi- cations systems | Discontinued operations | Corporate | Total | ||||||||||||||||
Revenues | $ | 48,638 | $ | 8,538 | $ | — | $ | — | $ | 57,176 | ||||||||||
Segment contribution | 14,100 | 3,666 | — | (14,954 | ) | 2,812 | ||||||||||||||
Interest, financing | ||||||||||||||||||||
and miscellaneous | ||||||||||||||||||||
expense, net | (156 | ) | (156 | ) | ||||||||||||||||
Tax provision | (312 | ) | (312 | ) | ||||||||||||||||
Noncontrolling interest | 23 | 23 | ||||||||||||||||||
Net income attributable | ||||||||||||||||||||
to Ultralife | $ | 2,367 |
13. |
Nine-Month Period Ended September 28, 2014:
Battery & Energy Products | Communi- cations systems | Discontinued operations | Corporate | Total | ||||||||||||||||
Revenues | $ | 40,000 | $ | 6,546 | $ | — | $ | — | $ | 46,546 | ||||||||||
Segment contribution | 10,489 | 2,544 | — | (15,508 | ) | (2,475 | ) | |||||||||||||
Interest, financing | ||||||||||||||||||||
and miscellaneous | ||||||||||||||||||||
expense, net | (269 | ) | (269 | ) | ||||||||||||||||
Tax provision | (177 | ) | (177 | ) | ||||||||||||||||
Discontinued operations | (61 | ) | (61 | ) | ||||||||||||||||
Noncontrolling interest | 13 | 13 | ||||||||||||||||||
Net loss attributable | ||||||||||||||||||||
to Ultralife | $ | (2,969 | ) |
FAIR VALUE OF FINANCIAL INSTRUMENTS |
FASB’s guidance for the disclosure regarding fair value of financial instruments requires disclosure of an estimate of the fair value of certain financial instruments. The fair value of financial instruments pursuant to FASB’s guidance for the disclosure regarding fair value of financial instruments approximated their carrying values at SeptemberMarch 27, 20152016 and December 31, 2014.2015. The fair value of cash, trade accounts receivable, trade accounts payable and accrued liabilities approximates carrying value due to the short-term nature of these instruments. The fair value of debt approximates the carrying value due to short-term nature and the current ability to borrow under similar terms.
14. | FIRE AT MANUFACTURING FACILITY |
In June 2011, we experienced a fire that damaged certain inventory and machinery and equipment at our facility in China. The total amount of the loss pertaining to assets and the related expenses was approximately $1,589. We have pursued a claim against our insurance policy, with the majority of our insurance claim related to the recovery of damaged inventory. We have received payments in June 2012 and April 2013 totaling approximately $1,286 as a partial payment on our insurance claim, which resulted in no gain or loss being recognized. As of SeptemberMarch 27, 2016 and December 31, 2015, we reflect a receivable from the insurance company relating to this claim of $177, which is net of our deductible of approximately $130,$126, and represents additional proceeds expected to be received.
15. | RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS |
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers.” This ASU amends the existing accounting standards for revenue recognition and is based on the principle that revenue should be recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In AprilAugust 2015, the FASB proposed a one year delay inissued ASU 2015-14, which deferred the effective date of ASU 2014-09. This standard currently becomes effective for the Company on January 1, 2017, and the one-year delay, if promulgated as proposed, will make this standard effective for the Company onuntil January 1, 2018. The Company is currently evaluating the potential impact of this new guidance as well as the available transition methods.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"“safe harbor” for forward-looking statements. This report contains certain forward-looking statements and information that are based on the beliefs of management as well as assumptions made by and information currently available to management. The statements contained in this report relating to matters that are not historical facts are forward-looking statements that involve risks and uncertainties, including, but not limited to, our reliance on a certain key customer; possible reduced or further delayed U.S.potential costs because of the warranties we supply with our products and foreign defense spending, includingservices; our ability to comply with changes to the uncertaintyregulations for the shipment of government budget approvals; possible delays or lack of success inour products; our efforts to develop new commercial applications for our products; the unique risks associated with our China operations; possible future declines in demand for the products usingthat use our batteries or communications systems; general domesticreduced U.S. and global economic conditions;foreign military spending including the uncertainty associated with government budget approvals; possible impairments of our goodwill and other intangible assets; possible breaches in security and other disruptions; variability in our quarterly and annual results and the price of our common stock; safety risks, including the unique risks associated withrisk of fire; negative publicity of lithium-ion batteries; the risk that we are unable to protect our Chinese operations; the possibility of impairment of our intangible assets; potential breaches in securityproprietary and other disruptions; the possibility thatintellectual property; our resources could bebeing overwhelmed by our growth prospects; residual effects of negative news relatedour ability to our industries;retain top management and key personnel; potential significant costs from our warranties; loss of top management; possible disruptions in our supply of raw materials and components; failureour exposure to foreign currency fluctuations; our customers’ demand falling short of customers to meet the volume expectations in our supply agreements; our inabilityrules and procedures regarding contracting with the U.S. and foreign governments; exposure to adequately protect our proprietary and intellectual property; the possibility that our ability to use our NOL carryforwards in the future may be limited; possible adverse effects from violations of the U.S. Foreign Corrupt Practices Act, andthe U.K. Bribery Act or other anti-corruption laws; variabilityour ability to utilize our net operating loss carryforwards; our ability to comply with government regulations regarding the use of foreign currencies; the process of U.S. defense procurement;“conflict minerals”; possible effects of audits of our contracts by the U.S. and foreign governments; our compliance withgovernments and their respective defense agencies; known and unknown environmental matters; technological innovations in the regulations for the shipment of our products; business disruptionsnon-rechargeable and other safety risks including those caused by fires; government and environmental regulations;rechargeable battery industries; and other risks and uncertainties, certain of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those forward-looking statements described herein. When used in this report, the words “anticipate”, “believe”, “estimate” or “expect” or words of similar import are intended to identify forward-looking statements. For further discussion of certain of the matters described above and other risks and uncertainties, see Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014.
2015.
Undue reliance should not be placed on our forward-looking statements. Except as required by law, we disclaim any obligation to update any risk factors or to publicly announce the results of any changes in any of the beliefs, assumptions or information underlying or affectingrevisions to any of the forward-looking statements contained in this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K for the year ended December 31, 20142015 to reflect new information or risks, future events or other developments.
The following discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q and the Risk Factors and our Consolidated Financial Statements and Notes thereto contained in our Form 10-K for the year ended December 31, 2014.
2015.
The financial information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in thousands of dollars, except for share and per share amounts. All figures presented below represent results from continuing operations, unless otherwise specified.
General
We offer products and services ranging from power solutions to communications and electronics systems. Through our engineering and collaborative approach to problem solving, we serve government, defense and commercial customers across the globe. We design, manufacture, install and maintain power and communications systems including rechargeable and non-rechargeable batteries, charging systems,
communications and electronics systems and accessories, and custom engineered systems. We continually evaluate ways to grow and broaden the scope of our products and services, including the design, development and sale of new products, expansion of our sales force to penetrate new markets and geographies, as well as seeking opportunities to expand through acquisitions. We sell our products worldwide through a variety of trade channels, including original equipment manufacturers (“OEMs”), industrial and defense supply distributors and directly to U.S. and international defense departments.
We report our results in two operating segments: Battery & Energy Products and Communications Systems. The Battery & Energy Products segment includesincludes: lithium 9-volt, cylindrical and various other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories, such as cables.accessories. The Communications Systems segment includesincludes: RF amplifiers, power supplies, cable and connector assemblies, amplified speakers, equipment mounts, case equipment, man-portable systems, integrated communication systems kitsfor fixed or vehicle applications and communications and electronics systems design. We believe that reporting performance at the gross profit level is the best indicator of segment performance. As such, we report segment performance at the gross profit level and operating expenses as corporate charges. (See Note 12 in the Notes to Consolidated Financial Statements)
Statements.)
Overview
Consolidated revenues of $19,044$20,833 for the three-month period ended SeptemberMarch 27, 20152016, increased by $2,982$1,656 or 18.6%8.6%, from $16,062$19,177 during the three-month period ended September 28, 2014,March 29, 2015, due primarily to increased ordershigher revenues from U.S. government and defense customers for our Battery & Energy Products business reflecting the January 13, 2016 acquisition of Accutronics and from our Communications Systems businesses.
business driven by shipments of Vehicle Installed Power Enhanced Rifleman Appliqué (“VIPER”) systems.
Gross profit for the three-month period ended SeptemberMarch 27, 20152016 was $5,900,$6,405 or 31.0%30.7% of revenues, compared to $4,486,$6,007 or 27.9%31.3% of revenues, for the same quarter a year ago. The 31060 basis points improvement is due primarily to favorable product mix, higher production volume increasingpoint reduction in gross margin in large part resulted from the absorptionwrite-up of factory overheadcertain Accutronics inventory for fair market value in line with Generally Accepted Accounting Principles (“GAAP”) purchase accounting and continued productivity improvements.
the subsequent sell through of that inventory during the first quarter.
Operating expenses increased to $4,725$5,923 during the three-month period ended SeptemberMarch 27, 2015,2016, compared to $4,541$5,185 during the three-month period ended September 28, 2014, resulting primarily from commissions relatedMarch 29, 2015. The increase of $738 or 14.2% was fully attributable to the increased revenues and higher new product development costs.
The increased revenue and resulting leverage on gross profit along with lowerAccutronics which contributed operating expenses resultedof $1,005 in anthe first quarter, including $203 of one-time direct acquisition costs incurred by the Company. Excluding Accutronics, operating profit of $1,173expenses decreased $267 or 5.1% due to strict control over selling, general and administrative discretionary spending.
Operating income for the three-month period ended SeptemberMarch 27, 2015,2016 was $482 or 2.3% of revenues, compared to an operating loss of $55$822 or 4.3% for the three-month period ended September 28, 2014.year-earlier period. The year-over-year improvementdecrease in operating profitincome primarily reflects the $295 impact of $1,228 resulted from the 18.6% increase in sales that contributed $832 to the improvement of operating profitpurchase accounting adjustments and the 310 basis point improvement in gross margin which contributed $583, partially offset by the higher operating expenses which reduced operating profit by $184.
non-recurring direct acquisition costs.
Net income was $1,048,$281 or $0.07$0.02 per diluted share, for the three-month period ended SeptemberMarch 27, 2015,2016, compared to a net loss of $(326),$523 or $(0.02)$0.03 per basic share for the three-month period ended September 28, 2014.
March 29, 2015. Net income for the first quarter of 2016 includes total one-time costs of $342 pertaining to the acquisition of Accutronics, equivalent $0.02 per share.
Adjusted EBITDA, from continuing operations, defined as net income (loss) attributable to Ultralife before net interest expense, provision (benefit) for income taxes, depreciation and amortization, plus/minus expenses/income that we do not consider reflective of our ongoing operations, amounted to $2,055$1,506 in the thirdfirst quarter of 20152016 compared to $815 in$1,510 for the thirdfirst quarter of 2014.2015. See the section “Adjusted EBITDA from continuing operations”EBITDA” beginning on Page 23page 22 for a reconciliation of Adjusted EBITDA from continuing operations to net income (loss) attributable to Ultralife.
As
Primarily as a result of careful working capital managementour acquisition of Accutronics on January 13, 2016, together with an increase in accounts receivable due to the timing of first quarter sales and an increase in inventory to fulfill backorders, we utilized $11,634 of cash and cash generated from operations, our liquidity remains solid with no debt,equivalents for the three month period ended March 27, 2016. Accordingly, cash and cash and cash equivalents of $14,585, a $3,126 or 17.7% decreasedecreased from our cash position of $17,711$14,393 at December 31, 2014. The decrease2015 to $2,759 at March 27, 2016.
As our market opportunities mature and through continued new product development, we remain well positioned to deliver profitable growth in cash and cash equivalents from year-end 2014 is primarily attributable to2016 now boosted by our purchasesacquisition of stock under our Share Repurchase Program which totaled $9,228 inclusive of fees and commissions related to such purchases, partially offset by cash generated from our operating results and a 10.5% inventory reduction.
With our new products gaining traction and our opportunity set widening, we firmly believe our plans to produce revenue and earnings growth for 2015 are within reach.
Accutronics.
Results of Operations
Three-month periods ended SeptemberMarch 27, 20152016 and September 28, 2014
March 29, 2015
Revenues.Consolidated revenues for the three-month period ended SeptemberMarch 27, 20152016 amounted to $19,044,$20,833, an increase of $2,982,$1,656, or 18.6%8.6%, from the $16,062$19,177 reported for the three-month period ended September 28, 2014.
March 29, 2015. Revenues for the 2016 period include Accutronics which was acquired by the Company on January 13, 2016.
Battery & Energy Products revenues increased $2,477,$164, or 17.8%1.0%, from $13,913$16,276 for the three-month period ended September 28, 2014March 29, 2015 to $16,390$16,440 for the three-month period ended SeptemberMarch 27, 2015.2016. The increase was primarily attributable to higher shipmentsthe $2,486 revenue contribution resulting from the acquisition of batteries to U.S. government and defense customers,Accutronics which helped to increase government and defense shipments by 31.3% overalong with other increases in the 2014 period, and now comprise 44% of total Battery & Energy Products sales versus 39%core business more than compensated for the thirdabsence of a large 9-Volt and a large battery charger order fulfilled in the first quarter of 2014.2015. Commercial revenues for the thirdfirst quarter of 20152016 increased 9.1%20.0% over the year-earlierprior year period, due to higher shipments ofreflecting Accutronics sales, which partially offset the year earlier sales demand for our 9-Volt batteries tofrom large global smoke detector OEM’s to comply with legislation and trends in certain European Union countries for products lasting ten years. Our rechargeable batteriesbattery business, primarily comprised of medical sales, grew 27% year-over-year before including the contribution of Accutronics. Government and chargers into medical channels.
defense sales decreased 13.6% from the 2015 period due to the shipment of a large charger order to an international prime defense supplier in 2015 which was partially compensated for by a 106.5% increase in rechargeable battery sales and higher charger shipments to international customers.
Communications Systems revenues increased $505,$1,492, or 23.5%51.4%, from $2,149 in$2,901 during the three-month period ended September 28, 2014March 29, 2015 to $2,654$4,393 for the three-month period ended SeptemberMarch 27, 2015. Similar2016. This increase is attributable to the first twoshipments of VIPER systems which more than offset a decrease in core product sales due to closing delays associated with some orders which are expected to ship in subsequent quarters of 2016 and a large 2015 for the third quarter, we continuedshipment of Universal Vehicle Adaptors to experience more broad-based sales as well as increases in our order flow reflecting increased demand from system integrators in support of U.S. Department of Defense program andan international projects.
prime contractor.
Cost of Products Sold.Cost of products sold totaled $13,144$14,428 for the quarter ended SeptemberMarch 27, 2015,2016, an increase of $1,568,$1,258, or 13.5%9.5%, from the $11,576$13,170 reported for the same quarter a year ago. Consolidated cost of products sold as a percentage of total revenue decreased from 72.1% for the three-month period ended September 28, 2014 to 69.0% for the three-month period ended September 27, 2015. Correspondingly, consolidated gross margin was 31.0% for the three-month period ended September 27, 2015, compared with 27.9% for the three-month period ended September 28, 2014, reflecting favorable product mix, higher production volume increasing the absorption of factory overhead and continued productivity improvements.
In our Battery & Energy Products segment, the cost of products sold increased $1,515, from $10,101 during the three-month period ended September 28, 2014 to $11,616 during the three-month period ended September 27, 2015. Battery & Energy Products’ gross profit for the third quarter of 2015 was $4,774, or 29.1% of revenues, an increase of $962 from gross profit of $3,812, or 27.4% of revenues, for the third quarter of 2014. Battery & Energy Products’ gross margin as a percentage of revenues increased for the three-month period ended September 27, 2015 by 170 basis points, reflecting favorable product mix, higher production volume and ongoing productivity improvements through the Lean process.
In our Communications Systems segment, the cost of products sold increased $53 or 3.6% from $1,475 during the three-month period ended September 28, 2014 to $1,528 during the three-month period ended September 27, 2015. Communications Systems’ gross profit for the third quarter of 2015 was $1,126, or 42.4% of revenues, an increase of $452 from gross profit of $674, or 31.4% of revenues, for the third quarter of 2014. The 1,100 basis points increase in gross margin as a percentage of revenue during 2015 is driven primarily by both product mix and production volume.
Operating Expenses.Operating expenses for the three-month period ended September 27, 2015 totaled $4,725, an increase of $184 or 4.1% from the $4,541 recorded during the three-month period ended September 28, 2014, resulting primarily from continued tight control over all discretionary spending.
Overall, operating expenses as a percentage of revenues were 24.8% for the quarter ended September 27, 2015 compared to 28.3% for the quarter ended September 28, 2014. Amortization expense associated with intangible assets related to our acquisitions was $61 for the third quarter of 2015 ($29 in selling, general and administrative expenses and $32 in research and development costs), compared with $78 for the third quarter of 2014 ($34 in selling, general, and administrative expenses and $44 in research and development costs). Research and development costs were $1,224 for the three-month period ended September 27, 2015, an increase of $210, or 20.7%, from $1,014 for the three-months ended September 28, 2014, as we continued to focus our spending on the development of new products with the highest estimated return on investment. Selling, general, and administrative expenses decreased $24, or 0.7%, to $3,503 during the third quarter of 2015 from $3,527 during the third quarter of 2014, reflecting continued actions to reduce discretionary expenses.
Other Income (Expense).Other income (expense) totaled $5 for the three-month period ended September 27, 2015 compared to ($211) for the three-month period ended September 28, 2014. Interest and financing expense, net of interest income, increased $12, to $65 for the third quarter of 2015 from $53 for the comparable period in 2014, as a result of costs to insure certain non-U.S. accounts receivable consistent with our Credit Agreement with PNC Bank. Miscellaneous income (expense) amounted to $70 for the third quarter of 2015 compared with ($158) for the third quarter of 2014, primarily due to transactions impacted by changes in foreign currencies.
Income Taxes.We reflected a tax provision of $130 for the third quarter of 2015, an increase of $70 as compared to the $60 provision reported for the third quarter of 2014, primarily as a result of estimated U.S. federal alternative minimum taxes and foreign income taxes.
See Note 8 in the Notes to Condensed Consolidated Financial Statements for additional information regarding our income taxes.
Certain of our NOL carryforwards are subject to U.S. alternative minimum tax such that carryforwards can offset only 90% of alternative minimum taxable income. This limitation resulted in an estimated alternative minimum income tax provision for the third quarter of 2015 but did not have an impact on income taxes determined for the third quarter of 2014. The use of our U.K. NOL carryforwards may be limited due to the change in the U.K. operation during 2008 from a manufacturing and assembly center to primarily a distribution and service center and its subsequent change to a sales center in 2012.
Net Income (Loss) Attributable to Ultralife.Net income (loss) attributable to Ultralife and income (loss) attributable to Ultralife common shareholders per diluted share was $1,047 and $0.07, respectively, for the three months ended September 27, 2015, compared to ($323) and $(0.02), respectively, for the three months ended September 28, 2014. Average common shares outstanding used to compute diluted earnings per share decreased from 17,490,000 in the third quarter of 2014 to 15,727,000 in the third quarter of 2015 due primarily to the repurchase of stock under our Share Repurchase Plan.
Nine-month periods ended September 27, 2015 and September 28, 2014
Revenues.Consolidated revenues for the nine-month period ended September 27, 2015 amounted to $57,176, an increase of $10,630 or 22.8%, from the $46,546 reported for the nine-month period ended September 28, 2014.
Battery & Energy Products revenues increased $8,638, or 21.6%, from $40,000 for the nine-month period ended September 28, 2014 to $48,638 for the nine-month period ended September 27, 2015. Government and defense sales of this business increased 51.5% over the 2014 nine-month period and now comprise 45.1% of total segment sales versus 36.2% last year. The year-over-year growth was driven by higher shipments of batteries and chargers to a large international prime defense supplier and shipments of primary batteries to the U.S. Government’s Defense Logistics Agency. Commercial sales increased 1.5% over the 2014 period reflecting higher shipments of 9-Volt batteries to global smoke-detector OEM’s and rechargeable batteries into medical channels.
Communications Systems revenues increased $1,992, or 30.4%, from $6,546 during the nine-month period ended September 28, 2014 to $8,538 for the nine-month period ended September 27, 2015, reflecting increased demand from system integrators in support of U.S. Department of Defense programs and international projects.
Cost of Products Sold.Cost of products sold totaled $39,410 for the nine-month period ended September 27, 2015, an increase of $5,897, or 17.6%, from the $33,513 reported for the same nine-month period a year ago. Consolidated cost of products sold as a percentage of total revenue decreasedincreased from 72.0%68.7% for the nine-monththree-month period ended September 28, 2014March 29, 2015 to 68.9%69.3% for the nine-monththree-month period ended SeptemberMarch 27, 2015.2016. Correspondingly, consolidated gross margin was 31.1%30.7% for the nine-monththree-month period ended SeptemberMarch 27, 2015,2016, compared with 28.0%31.3% for the nine-monththree-month period ended September 28, 2014,March 29, 2015, primarily reflecting favorablea one-time adjustment to increase the opening inventory of Accutronics to fair market value in accordance with purchase accounting which resulted in a 44 basis point reduction in reported gross margin upon sell through of the product mix, higher production volume increasingduring the absorptionfirst quarter of factory overhead2016 and continued productivity improvements through the Company’s Lean process.sales mix.
ForIn our Battery & Energy Products segment, the cost of products sold increased $5,027,decreased $270, or 2.3% from $29,511$11,492 during the nine-monththree-month period ended September 28, 2014March 29, 2015 to $34,538$11,222 during the nine-monththree-month period ended SeptemberMarch 27, 2015.2016. Battery & Energy Products’ gross profit for the 2015 nine-month periodfirst quarter of 2016 was $14,100,$5,217 or 29.0%31.7% of revenues, an increase of $3,611$433 or 9.0% from gross profit of $10,489,$4,784, or 26.2%29.4% of revenues, for the 2014 nine-month period.first quarter of 2015. Battery & Energy Products’ gross margin as a percentage of revenues increased
for the nine-monththree-month period ended SeptemberMarch 27, 20152016 by 280230 basis points, reflecting favorable mix, higher production volumes and ongoing productivity improvements throughdespite the Lean process.purchase accounting adjustment for the increase of Accutronics opening inventory to fair market value upon which $91 was recognized in cost of products sold in the first quarter of 2016. Excluding this adjustment, the gross margin for Battery & Energy Products would have been 32.2%, the highest ever reported for this segment.
ForIn our Communications Systems segment, the cost of products sold increased by $870$1,527 or 21.7%91.0% from $4,002$1,678 during the nine-monththree-month period ended September 28, 2014March 29, 2015 to $4,872$3,205 during the nine-monththree-month period ended SeptemberMarch 27, 2015.2016 due to the higher sales in 2016. Communications Systems’ gross profit for the first nine monthsquarter of 20152016 was $3,666,$1,188 or 42.9%27.0% of revenues, an increasea decrease of $1,122$35 or 2.8%, from gross profit of $2,544,$1,223, or 38.9%42.2% of revenues, for the first nine monthsquarter of 2014.2015. The 4001,520 basis points increasedecrease in gross margin as a percentage of revenue during 20152016 is due to a greater mix of higher-margin new products and increased manufacturing throughput.
driven by the sales mix.
Operating Expenses.Total operating expenses for the nine-monththree-month period ended SeptemberMarch 27, 20152016 totaled $14,954, a decrease$5,923, an increase of $554$738 or 3.6%14.2% from the $15,508$5,185 recorded during the nine-monththree-month period ended September 28, 2014, resultingMarch 29, 2015. The increase was fully attributable to the acquisition of Accutronics, which contributed operating expenses of $1,005 in the first quarter, including $203 of one-time direct acquisition costs and $92 of intangible asset amortization. Excluding Accutronics results, operating expenses decreased $267 or 5.1% due primarily from continued tightto strict control over all discretionary spending.
Overall, operating expenses as a percentage of revenues were 26.2%28.4% for the nine-month periodquarter ended SeptemberMarch 27, 20152016 compared to 33.3%27.0% for the comparable 2014 period.quarter ended March 29, 2015. Amortization expense associated with intangible assets related to our acquisitions was $180$137, including $92 for Accutronics, for the first nine monthsquarter of 20152016 ($8386 in selling, general and administrative expenses and $97$51 in research and development costs), compared with $232$60 for the first nine monthsquarter of 20142015 ($10128 in selling, general, and administrative expenses and $131$32 in research and development costs). Research and development costs were $3,917$1,656 for the nine-monththree-month period ended SeptemberMarch 27, 2015, a decrease2016, an increase of $93,$297 or 2.3%21.9%, from $4,010$1,359 for the nine-monthsthree-months ended September 28, 2014, as we continuedMarch 29, 2015. The increase is comprised of $184 of research and development costs (including intangible asset amortization of $28) incurred by Accutronics and an increase of $113 due to focus our spending on the developmenthigher level of new products withproduct development spending in the highest estimated return on investment.2016 period in response to a heightened level of requests for proposals. Selling, general, and administrative expenses decreased $461,increased $441 or 4.0%11.5%, from $11,498to $4,267 during the first nine monthsquarter of 2014 to $11,0372016 from $3,826 during the first nine monthsquarter of 2015, reflecting2015. The increase is fully attributable to the inclusion of Accutronics results which contributed $619 (including intangible asset amortization of $64) of selling, general and administrative expenses for the first quarter, partially offset by continued actions in the core business to reduce discretionary general and administrative expenses.
Other Income (Expense).Other (expense) totaled $(156) for the nine-month period ended September 27, 2015 compared to $(269)($113) for the three-month period ended September 28, 2014.March 27, 2016 compared to ($188) for the three-month period ended March 29, 2015. Interest and financing expense, net of interest income, increased $54,$36, to $195$102 for the 2015 periodfirst quarter of 2016 from $141$66 for the comparable period in 2014,2015, as a result of one-time costs to insure certain non-U.S. accounts receivable consistent withour Credit Agreementof $48 associated with PNC Bank.the acquisition of Accutronics. Miscellaneous income (expense)expense amounted to $39($11) for the first nine monthsquarter of 20152016 compared with ($128)122) for the first nine monthsquarter of 2014,2015, primarily due to transactions impacted by changesthe Company’s actions commenced in the latter half of 2015 to mitigate the impact of foreign currencies relative.
currency fluctuation between the U.S. dollar relative to the Euro and Pounds Sterling.
Income Taxes.We reflected a tax provision of $312$88 for the first three quartersquarter of 20152016 compared with a tax provision of $177$111 for the first three quartersquarter of 2014. The increase of $135, or 76.3% was due to estimated U.S. alternative minimum taxes in 2015 and increased foreign tax liabilities.2015. The effective consolidated tax rate for the nine-monththree-month periods ended SeptemberMarch 27, 2016 and March 29, 2015 and September 28, 2014 were:was:
Nine-month periods ended | ||||||||
September 27, | June 29, | |||||||
2015 | 2014 | |||||||
Income (loss) income from continuing operations before | ||||||||
income taxes (a) | $ | 2,656 | $ | (2,744 | ) | |||
Income tax provision (b) | 312 | 177 | ||||||
Effective income tax rate (b/a) | 11.7 | % | (6.5 | )% |
Three month periods ended | ||||||||||
March 27, | March 29, | |||||||||
2016 | 2015 | |||||||||
Income from continuing operations before income taxes (a) | $369 | $634 | ||||||||
Income tax provision (b) | 88 | 111 | ||||||||
Effective income tax rate (b/a) | 23.8% | 17.5% |
See Note 89 in the Notes to Condensed Consolidated Financial Statements for additional information regarding our income taxes.
Discontinued Operations.Income (Loss) from discontinued operations, net of tax, totaled $0 for the first nine months of 2015, compared to ($61) for the comparable period in 2014. The loss for the 2014 period reflects the final settlement of the sale of our RedBlack business.
Net Income (Loss) Attributable to Ultralife.Net income (loss) attributable to Ultralife and income (loss) attributable to Ultralife common shareholders per diluted share was $2,367$299 and $0.14,$.02, respectively, for the ninethree months ended SeptemberMarch 27, 2015,2016 compared to $($2,969)$533 and $(0.17),$0.03, respectively, for the ninethree months ended September 28, 2014.March 29, 2015. The 2016 period was impacted by the purchase accounting adjustments and non-recurring costs totaling $343 related to the acquisition of Accutronics, equivalent to $0.02 per share. Average common shares outstanding used to compute diluted earnings per share decreased from 17,510,00017,354,000 in the 2014 periodfirst quarter of 2015 to 16,548,00015,666,000 in the 2015 period,first quarter of 2016, mainly due to the repurchase of stockshares under our Share Repurchase Plan, offset slightly by stock option exercises and the vesting of restricted stock units.
Company’s share repurchase program during 2015.
Adjusted EBITDA from Continuing Operations
In evaluating our business, we consider and use Adjusted EBITDA, from continuing operations, a non-GAAP financial measure, as a supplemental measure of our operating performance. We define Adjusted EBITDA from continuing operations as net income (loss) attributable to Ultralife before net interest expense, provision (benefit) for income taxes, depreciation and amortization, plus/minus expenses/income that we do not consider reflective of our ongoing continuing operations. We use Adjusted EBITDA from continuing operations as a supplemental measure to review and assess our operating performance and to enhance comparability between periods. We also believe the use of Adjusted EBITDA from continuing operations facilitates investors’ use of operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in such items as capital structures (affecting relative interest expense and stock-based compensation expense), the book amortization of intangible assets (affecting relative amortization expense), the age and book value of facilities and equipment (affecting relative depreciation expense) and other significant non-operating expenses or income. We also present Adjusted EBITDA from continuing operations because we believe it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance. We reconcile Adjusted EBITDA from continuing operations to net income (loss) attributable to Ultralife, the most comparable financial measure under U.S. generally accepted accounting principles (“U.S. GAAP”).
We use Adjusted EBITDA from continuing operations in our decision-making processes relating to the operation of our business together with U.S. GAAP financial measures such as income (loss) from operations. We believe that Adjusted EBITDA from continuing operations permits a comparative assessment of our operating performance, relative to our performance based on our U.S. GAAP results, while isolating the effects of depreciation and amortization, which may vary from period to period without any correlation to underlying operating performance, and of non-cash stock-based compensation, which is a non-cash expense that varies widely among companies. We believe that by limiting Adjusted EBITDA, to continuing operations, we assist investors in gaining a better understanding of our business on a going forward basis. We provide information relating to our Adjusted EBITDA from continuing operations so that securities analysts, investors and other interested parties have the same data that we employ in assessing our overall operations. We believe that trends in our Adjusted EBITDA from continuing operations are a valuable indicator of our operating performance on a consolidated basis and of our ability to produce operating cash flows to fund working capital needs, to service debt obligations and to fund capital expenditures.
The term Adjusted EBITDA from continuing operations is not defined under U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted EBITDA from continuing operations has limitations as an analytical tool, and when assessing our operating performance, Adjusted EBITDA from continuing operations should not be considered in isolation or as a substitute for net income (loss) attributable to Ultralife or other consolidated statement of operations data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to, the following:
Adjusted EBITDA |
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA from continuing operations does not reflect any cash requirements for such replacements; |
while stock-based compensation is a component of cost of products sold and operating expenses, the impact on our consolidated financial statements compared to other companies can vary significantly due to such factors as assumed life of the stock-based awards and assumed volatility of our common stock; and |
other companies may calculate Adjusted EBITDA |
We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA from continuing operations only supplementally. Adjusted EBITDA from continuing operations is calculated as follows for the periods presented:
Three-month periods ended | Nine-month periods ended | |||||||||||||||
September 27, | September 28, | September 27, | September 28, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income (loss) attributable | ||||||||||||||||
to Ultralife | $ | 1,047 | $ | (323 | ) | $ | 2,367 | $ | (2,969 | ) | ||||||
Add (subtract): | ||||||||||||||||
Interest and financing expense, net | 65 | 53 | 195 | 141 | ||||||||||||
Income tax provision | 130 | 60 | 312 | 177 | ||||||||||||
Depreciation expense | 617 | 709 | 1,795 | 2,174 | ||||||||||||
Amortization of intangible assets | 61 | 78 | 180 | 232 | ||||||||||||
Stock-based compensation expense | 135 | 238 | 439 | 761 | ||||||||||||
Impairment of long-lived assets Loss (gain) from discontinued | — | — | 36 | — | ||||||||||||
operations | — | — | — | 61 | ||||||||||||
Adjusted EBITDA | $ | 2,055 | $ | 815 | $ | 5,324 | $ | 577 |
Three month periods ended | ||||
March 27, 2016 | March 29, 2015 | |||
Net income attributable to Ultralife | $299 | $533 | ||
Add: | ||||
Interest and financing expense, net | 102 | 66 | ||
Income tax provision | 88 | 111 | ||
Depreciation expense | 589 | 596 | ||
Amortization of intangible assets & financing fees | 156 | 60 | ||
Stock-based compensation expense | 181 | 144 | ||
Non-cash purchase accounting adjustments | 91 | - | ||
|
| |||
Adjusted EBITDA | $1,506 | $1,510 | ||
|
|
Liquidity and Capital Resources
As of SeptemberMarch 27, 2015,2016, cash and cash equivalents totaled $14,585,$2,759, a decrease of $3,126$11,634 from the beginning of the year.year primarily attributable to the Company’s acquisition of Accutronics. During the nine-monththree-month period ended SeptemberMarch 27, 2015,2016, we generated $7,428utilized $2,875 of cash from our operating activities as compared to providing cash generated totaling $505 duringof $3,160 for the nine-monththree-month period ended September 28, 2014.March 29, 2015, a decrease of $6,035. Cash generated fromutilized by operations in 2015 included our2016 resulted from cash provided from net income attributable to Ultralife of $2,344 plus$281 and non-cash expenses (depreciation, amortization and stock-based compensation) totaling $2,502, and cash provided$926, offset by a $2,621 decrease$2,407 increase in inventoriesaccounts receivables due primarily to the timing of sales during the first quarter of
2016, and $455an increase in inventory of $1,138 due primarily to service backlog including VIPER systems, and a net increase in accounts payable and other liabilities, offset partially by an increaseworking capital items of $537 due in prepaid expenses and other assets of $630. Cash generated from operations in 2014 was positive despite our net loss of $2,982, as the loss was more than offset by non-cash expenses totaling $3,180. Cash generated from operations in 2014 resulted primarily from a $3,755 decrease in accounts receivable, offset partially by our loss of $2,982, a decrease in accounts payable and other liabilities of $1,017 and an increase in inventories which totaled $2,460.
Inventory turnover for the first nine months of 2015 was an annualized rate of approximately 2.1 turns per year, a slight improvement over the 2.0 figure from the first nine months of 2014.
large part to procuring inventory associated with servicing backlog.
We used $1,298$9,926 in cash for investing activities during the nine month period ended September 27, 2015 compared with $968 in cash used for investing activitiesfirst three months of 2016, The Company acquired Accutronics in the same2016 period utilizing cash of $11,161, which was partially offset by the cash acquired from Accutronics of $1,304. Cash paid for capital expenditures totaled $69 and $470 in 2014. In both periods, this spending was principally for the purchasefirst three months of property, equipment2016 and improvements.
2015, respectively.
As of SeptemberMarch 27, 2015,2016, we had made commitments to purchase approximately $358$878 of production machinery and equipment, which we expect to fund through operating cash flows or debt borrowings.
flows.
On April 28, 2014, the Company’s Board of Directors approved a share repurchase program (the “Share Repurchase Program”) which became effective on May 1, 2014, under which the Company was initially authorized to repurchase up to 1.8 million shares of its outstanding common stock over a period not to exceed twelve months. On April 28, 2015, the Board of Directors authorized an extension of the Share Repurchase Program for an additional twelve month period beginning May 1, 2015 and ending April 30, 2016, subject, for the entire period as extended, to the 1.8 million share aggregate limit established in the initial authorization. On June 2, 2015, the Board of Directors approved an expansion and extension of the Share Repurchase Program, authorizing the repurchase of up to an additional 1.6 million shares through June 2, 2016.
Share repurchases under this program are made in accordance with SEC Rule 10b-18 using a variety of methods, which may include open market purchases, privately negotiated transactions and block trades, or any combination of such methods, in compliance with applicable insider trading and other securities laws and regulations. With the exception of repurchases made during stock trading black-out periods under a 10b5-1 Plan, the timing, manner, price and amount of any repurchase are determined at the Company’s discretion. The Share Repurchase Program may be suspended, terminated or modified byhas been extended through June 2, 2016, and the Company at any time and for any reason. The Share Repurchase Program does not obligate the Company to repurchase any specificmaximum number of shares authorized to be repurchased under the program has been increased to 3.4 million shares.
DuringThere were no shares repurchases during the three month period ended SeptemberMarch 27, 2015, the Company repurchased 748,582 shares under our Share Repurchase Program for a total cost (excluding fees and commissions) of $3,357. During the nine month period ended September 27, 2015, the Company repurchased 2,225,437 shares under this program for a total cost (excluding fees and commissions) of $9,162.2016. From the inception of the Share Repurchase Program on May 1, 2014 through October 28, 2015,March 27, 2016, the Company has repurchased 2,442,191 shares for an aggregate cost (excluding fees and commissions) of $9,877. The total remaining balance of shares authorized for repurchase under the Share Repurchase Program is 957,809 shares as of October 28, 2015.
March 27, 2016.
Debt Commitments
We have financing through our Credit Facility with PNC Bank, which provides a $20 million$20,000 secured asset-based revolving credit facility that includes a $1 million$1,000 letter of credit sub-facility. As of SeptemberMarch 27, 2015,2016, we had approximately $9,666$11,589 of borrowing capacity under our $20 million$20,000 Credit Facility with PNC Bank, in addition to our cash on hand of $14,585, and we had no outstanding borrowings or outstanding letters of credit$1,156 under the Credit Facility at either September 27, 2015 or September 28, 2014.
Facility.
Our available borrowing limit under the Credit Facility is based on a borrowing base formula equal to a percentage of accounts receivable, inventory and eligible foreign in-transit inventory. Interest is payable quarterly and accrues on outstanding indebtedness under the Credit Agreement at either a LIBOR-based rate or an alternate base rate, as defined in the Credit Agreement. The applicable interest rate was 2.43% at March 27, 2016. We pay a quarterly fee on the Credit Facility’s unused availability at 0.375% per annum.
Other Matters
With respect toThe Company currently believes that the cash flow generated from operations and when necessary, available borrowing from our battery products, we typically offer warranties against any defects due to product malfunction or workmanship for a period up to one year from the date of purchase. With respect to our communications accessory products, we typically offer a three-year warranty. We provide for a reserve for these potential warranty expenses, which is based on an analysis of historical warranty issues. There is no assurance that future warranty claimsCredit Facility, will be consistent with past history,sufficient to meet its current and inlong-term funding requirements for the event we experience a significant increase in warranty claims, there is no assurance that our reserves would be sufficient. This could have a material adverse effect on our business, financial condition and results of operations.
foreseeable future.
Critical Accounting Policies
Management exercises judgment in making important decisions pertaining to choosing and applying accounting policies and methodologies in many areas. Not only are these decisions necessary to comply with U.S. GAAP, but they also reflect management’s view of the most appropriate manner in which to record and report our overall financial performance. All accounting policies are important, and all policies described in Note 1 (“Summary of Operations and Significant Accounting Policies”) to our Consolidated Financial Statements in our 20142015 Annual Report on Form 10-K should be reviewed for a greater understanding of how our financial performance is recorded and reported.
During the first ninethree months of 2015,2016, there were no significant changes in the manner in which our significant accounting policies were applied or in which related assumptions and estimates were developed.
ITEM 4.Controls and Procedures CONTROLS AND PROCEDURES
Evaluation Of Disclosure Controls And Procedures
Our President and Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer and Treasurer (Principal Financial Officer) have evaluated our disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e)) as of the end of the period covered by this quarterly report. Based on this evaluation, our President and Chief Executive Officer and Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures were effective as of such date.
Changes In Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Securities Exchange Act Rule 13a-15(f)) that occurred during the fiscal quarter covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 1. | LEGAL PROCEEDINGS |
Dreamliner Litigation
In July 2013, an unoccupied Boeing 787 Dreamliner aircraft operated by Ethiopian Airlines was damaged by a fire while parked at London Heathrow Airport. We participated in and provided technical assistance in support of an investigation of this incident conducted by UKU.K. and USU.S. regulatory authorities as well as by the manufacturer of the aircraft, as we are one of many downstream suppliers to that manufacturer. A final report was issued by the Air Accidents Investigative Branch - - UK Civil Aviation regulatory authority, with findings indicating that the fire was primarily caused by circumstances related to the plane’s emergency locator transmitter (“ELT”) manufactured and installed by another company.
On May 4, 2015, we were notified of a lawsuit in which we were named, along with other suppliers to the aircraft manufacturer, concerning that 2013 fire. The suit was filed by Ethiopian Airlines Enterprise in the Commercial Court, Queen’s Bench Division of the High Court of Justice, London. The suit seeks as damages USD 42 million plus other unspecified amounts, including those for loss of use and diminution in value of the aircraft. We maintain liability and products liability insurance through reputable providers, and in accordance with our corporate practices, immediately advised and referred this matter to our insurers. We are working with those insurers and their counsel to respond to and actively defend against this action.
A component of the ELT is a battery pack which incorporates Ultralife’s industry-standard lithium manganese dioxide non-rechargeable D-cell. Ultralife has had this cell in production since 2001, with millions of units produced and this cell is widely-used for global defense and commercial applications. This battery product has gone through rigorous safety and qualification testing, including United Nations Transport of Dangerous Goods, Manual of Tests and Criteria, and is authorized for use in aerospace applications under Technical Standard Order C142.
On May 4, 2015, we were notified of a lawsuit in which we were named, along with other suppliers to the aircraft manufacturer, concerning that 2013 fire. The suit was filed by Ethiopian Airlines Enterprise in the Commercial Court, Queen’s Bench Division of the High Court of Justice, London. The suit seeks as damages $42,000 plus other unspecified amounts, including those for loss of use and diminution in value of the aircraft. We maintain liability and products liability insurance through reputable providers, and in accordance with our corporate practices, immediately advised and referred this matter to our insurers. We
are working with those insurers and their counsel to respond to and actively defend against this action, which is ongoing.
At this time, we believe that there is not a reasonable possibility that this incident will result in a material financial exposure to the Company.
Arista Power Litigation
InSince September 2011, we initiated anhave been pursuing legal action against Arista Power, Inc. (“Arista”) and our former employee, David Modeen, (“Modeen”), in the Statefor, among other things, alleged breach of New York Supreme Court, Countycertain agreements, duties and obligations, including misappropriation of Wayne, in which we allege that Arista recruited all but one of the members of its executive team from us, subsequently changed and redirected its business to compete directly with us by using our confidential information and during the summer of 2011, recruited Modeen to become an Arista employee. As more fully disclosed in our Annual Report on Form 10-K, we allege that both Arista and Modeen breached agreements with us, that Arista’s employment of Modeen will inevitably lead to the disclosure and use of our trade secrets, by Arista. We seek damages as determined at trialtortious interference, and preliminary and permanent injunctive relief. The defendants answeredbreach of contract. On January 12, 2016, Arista filed for liquidation under Chapter 7 of the allegations set forthbankruptcy laws of the United States, without accurately identifying our ongoing lawsuit against them. Although we have not withdrawn our lawsuit, nor has it been dismissed, the Company does not intend to submit a Proof of Claim in the Complaint and assertedconnection with Arista’s bankruptcy filing, or otherwise continue pursuing its claims against us, which have since been dropped.
Arista.
We initiated the September 2011 Complaint against Arista Power to protect our shareholders, customersand employees from the unauthorized use and theft of our investments in intellectual property, trade secrets and confidential information by Arista and its employees. Protecting our intellectual property and know-how, developed and obtained at great cost to us to form our competitive position in the marketplace and create value for our shareholders and stakeholders, is a fundamental responsibility of all our employees.
Discovery in this action is ongoing, and we plan to continue to pursue our complaint against Arista. It is not possible to predict the outcome of this action, whether we will be granted the injunctive relief we seek, nor the monetary amount, if any, which we may be awarded should we prevail.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
2(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets forth information regarding second quarter 2015 purchases of common stock underOn April 28, 2014, the Company’s stock repurchase program. Under the repurchase program, the Board of Directors initiallyapproved a share repurchase program which became effective on May 1, 2014 and under which the Company was authorized theto repurchase of up to 1.8 million shares of the Company’s Common Stock through April 30, 2015.its outstanding common stock over a period not to exceed twelve months. The Board of DirectorsShare Repurchase Program has sincebeen extended the program through June 2, 2016, and expanded the maximum number of shares authorized to be repurchased from 1.8 million sharesunder the program has been increased to 3.4 million shares.
SinceThere were no shares repurchases during the commencementthree month period ended March 27, 2016
From the inception of this repurchase planthe Share Repurchase Program on May 1, 2014 through SeptemberMarch 27, 2015,2016, the Company has repurchased 2,442,191 common shares under this plan for an aggregate dollar amount of $9,951.
Total Number of Shares Purchased | Average Price Paid Per Share(1) | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Number of Shares That May Yet Be Purchased Under the Program | |||||||||||||||
June 29 – July 26 | 201,971 | $ | 4.05 | 201,971 | 1,504,420 | |||||||||||||
July 27 – August 23 | 46,611 | 4.05 | 46,611 | 1,457,809 | ||||||||||||||
August 24 – September 27 | 500,000 | 4.70 | 500,000 | 957,809 | ||||||||||||||
Total | 1,398,454 | $ | 4.48 | 1,398,454 | 957,809 |
(1)Average Price Paid Per Share excludescost (excluding fees and commissions related to such repurchases. Including these costs, the average price paid per sharecommissions) of $9,877. The total remaining balance of shares authorized for all purchasesrepurchase under the Share Repurchase Program is $4.51.957,809 shares as of March 27, 2016.
Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Number of Shares That May Yet Be Purchased Under the Program | |||||
January 1 – January 24 | - | - | - | 957,809 | ||||
January 25 – February 21 | - | - | - | 957,809 | ||||
February 22 – March 27 | - | - | - | 957,809 | ||||
Total | - | - | - | 957,809 | ||||
ITEM 6. | EXHIBITS |
Exhibit Index | Description of Document | Incorporated By Reference from: | |||
31.1 | Rule 13a-14(a) / 15d-14(a) CEO Certifications | Filed herewith | |||
31.2 | Rule 13a-14(a) / 15d-14(a) CFO Certifications | Filed herewith | |||
32 | Section 1350 Certifications | Filed herewith | |||
101.INS | XBRL Instance Document | ||||
101.SCH | XBRL Taxonomy Extension Schema Document | ||||
101.CAL | XBRL Taxonomy Calculation Linkbase Document | ||||
101.LAB | XBRL Taxonomy Label Linkbase Document | ||||
101.PRE | XBRL Taxonomy Presentation Linkbase Document | ||||
101.DEF | XBRL Taxonomy Definition Document |
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 CORPORATION | |||||||
(Registrant) | |||||||
Date:April 28, 2016 | |||||||
/s/ Michael D. Popielec | |||||||
Michael D. Popielec | |||||||
President and Chief Executive Officer | |||||||
(Principal Executive Officer) | |||||||
Date:April 28, 2016 | |||||||
By: | |||||||
Philip A. Fain | |||||||
Chief Financial Officer and Treasurer | |||||||
(Principal Financial Officer and | |||||||
Principal Accounting Officer) |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Calculation Linkbase Document |
101.LAB | XBRL Taxonomy Label Linkbase Document |
101.PRE | XBRL Taxonomy Presentation Linkbase Document |
101.DEF | XBRL Taxonomy Definition Document | |
29