Earning Per Share

9 Months Ended

Oct. 02, 2011

EARNINGS PER SHARE

On January 1, 2009, we adopted the provisions of FASB’s guidance for determining whether instruments granted in share-based payment transactions are participating securities. The guidance requires that all outstanding unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (such as restricted stock awards granted by us) be considered participating securities. Because restricted stock awards are participating securities, we are required to apply the two-class method of computing basic and diluted earnings per share (the “Two-Class Method”).

Basic EPS is determined using the Two-Class Method and is computed by dividing earnings attributable to Ultralife common shareholders by the weighted-average shares outstanding during the period. The Two-Class Method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Diluted EPS includes the dilutive effect of securities, if any, and reflects the more dilutive EPS amount calculated using the treasury stock method or the Two-Class Method. For the three- and nine-month periods ended October 2, 2011 and September 26, 2010, both the Two-Class Method and the treasury stock method calculations for diluted EPS yielded the same result.

The computation of basic and diluted earnings per share is summarized as follows:


	Three-Month Periods Ended					Nine-Month Periods Ended
	October 2,		September 26,			October 2,			September 26,
	2011		2010			2011			2010
Net Income (Loss) from continuing operations attributable to Ultralife	$	1,388	$	5,992		$	(67	)	$	7,807
Net Income (Loss) from continuing operations attributable to participating securities (unvested restricted stock awards) (1,000, 10,000, -0- and 20,000 shares, respectively)		—		(3	)		—			(9	)

Net Income (Loss) from continuing operations attributable to Ultralife common shareholders (a)		1,388		5,989			(67	)		7,798
Effect of Dilutive Securities:
Convertible Notes Payable		—		41			—			—

Net Income (Loss) from continuing operations attributable to Ultralife common shareholders — Adjusted (b)	$	1,388	$	6,030		$	(67	)	$	7,798


Net Income (Loss) from discontinued operations attributable to Ultralife common shareholders (c)	$	—	$	(1,466	)	$	(3,796	)	$	(2,974	)
Effect of Dilutive Securities:
Convertible Notes Payable		—		—			—			—

Net Income (Loss) from discontinued operations attributable to Ultralife common shareholders — Adjusted (d)	$	—	$	(1,466	)	$	(3,796	)	$	(2,974	)


	Three-Month Periods Ended					Nine-Month Periods Ended
	October 2,		September 26,			October 2,			September 26,
	2011		2010			2011			2010
Average Common Shares Outstanding — Basic (e)		17,313,000		17,225,000			17,295,000			17,131,000
Effect of Dilutive Securities:
Stock Options / Warrants		28,000		5,000			—			5,000
Convertible Notes Payable		—		219,000			—			—

Average Common Shares Outstanding — Diluted (f)		17,341,000		17,449,000			17,295,000			17,136,000


EPS — Basic (a/e) — continuing operations	$	0.08	$	0.35		$	(0.00	)	$	0.45
EPS — Basic (c/e) — discontinued operations	$	0.00	$	(0.09	)	$	(0.22	)	$	(0.17	)
EPS — Diluted (b/f) — continuing operations	$	0.08	$	0.35		$	(0.00	)	$	0.45
EPS — Diluted (d/f) — discontinued operations	$	0.00	$	(0.09	)	$	(0.22	)	$	(0.17	)

There were 2,060,802 and 1,647,992 outstanding stock options, warrants and restricted stock awards for the three-month periods ended October 2, 2011 and September 26, 2010, respectively, that were not included in EPS as the effect would be anti-dilutive. The dilutive effect of 259,552 and 47,500 outstanding stock options, warrants and restricted stock awards were included in the dilution computation for the three-month periods ended October 2, 2011 and September 26, 2010, respectively. We also had 219,398 shares of common stock reserved under convertible notes payable, which were included in the dilution computation for the three-month period ended September 26, 2010.

There were 2,320,354 and 1,647,992 outstanding stock options, warrants and restricted stock awards for the nine-month periods ended October 2, 2011 and September 26, 2010, respectively, that were not included in EPS as the effect would be anti-dilutive. We also had 221,117 shares of common stock for the nine-month period ended September 26, 2010, reserved under convertible notes payable, which were not included in EPS as the effect would be anti-dilutive. The dilutive effect of -0- and 47,500 outstanding stock options, warrants and restricted stock awards were included in the dilution computation for the nine-month periods ended October 2, 2011 and September 26, 2010, respectively.