Good day, and welcome to this Ultralife Batteries Second Quarter Earnings Release Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Ms. Jody Burfening. Please go ahead.

Thank you. Good morning, everyone. This is Jody Burfening of Lippert/Heilshorn and Associates. Thank you all for joining us this morning for Ultralife's earnings conference call for the second quarter of fiscal 2008. The earnings press release was issued earlier this morning and if anyone has not yet received a copy, I invite you to visit the Ultralife website at Ultralife.com, where you will find the release under Investor News in the Investor Relations section. In a minute, I will turn the call over to John Kavazanjian, Ultralife's President and CEO, who, along with Bob Fishback, Ultralife's Chief Financial Officer, will provide their formal remarks. Management will then take questions until 11:00 AM Eastern Time. Before turning the call over to John, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties, including continued acceptance of and demand for the Company's products, changes in the Company's products, and changes and customers' purchasing plans. A more detailed description of such uncertainties is contained in the Company's filings with the Securities and Exchange Commission such as the Company's Annual Report on Form 10-K for the period ending December 31, 2007. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers useful to be useful metrics that differ from GAAP. These non-GAAP measures should be considered as supplemental to corresponding GAAP figures. With that, I would now like to turn the call over to John. Good morning, John.

Thank you, Jody. Good morning, everybody, and welcome to the Ultralife Corporation conference call for the second quarter of 2008. And I would like to point out that this is our first call, thanks to the approval that our shareholders gave of our name change, first call as Ultralife Corporation. With me today are Bob Fishback, our Chief Financial Officer, and Julius Cirin, our Vice President of Corporate Marketing and Technology. Bill Schmitz, our Chief Operating Officer, who usually joins us, is traveling on Company business. Today, we reported revenue of $87.9 million for the second quarter of 2008. These results are in line with our guidance of $88 million in revenue given on our July 9 preannouncement. The operating profit of $9.9 million included non-cash expenses of $1.2 million from the amortization of intangible assets and the expensing of stock-based compensation. The second-quarter revenue was fueled by $62 million of sales in our communications systems business. The main reason for this was the more than $120 million in orders that we received in the second half of 2007 for advanced communications systems. But sales of other products in our McDowell product line showed strong growth as well. Gross margin in this segment was 27%, up from 25% in the first quarter, as we further improved the efficiency of our supply chain. We are now in what we would consider a normal flow of products, and we anticipate no further supply disruptions. We expect to make further progress toward our goal of 30% gross margin in this segment in the second half of the year. Our rechargeable segment was lower than first quarter, with revenue of $4.5 million. Gross margins were still only 18%, mostly due to the effect of lower volumes and overhead rates. This revenue decrease was mostly…

Thank you, John, and good morning. Earlier this morning, we released our second quarter results for our fiscal period ended June 28, 2008. Consolidated revenues totaled $87.9 million, a $52.7 million increase or 2.5 times the revenue in the comparable quarter last year. This impressive revenue growth resulted from a significant increase in shipments of advanced communications systems driven by deliveries on the three large orders we received in the latter part of 2007. In addition, revenue in our design and installation services segment increased, reflecting the contributions from RedBlack and Stationary Power acquisitions, which added approximately $3.4 million. Offsetting these increases, in part, was a decrease in our non-rechargeable revenue from last year's strong level of high-rate battery shipments to international customers. Gross margin in the second quarter of '08 was $20.6 million, an increase of $12 million from the prior year. As a percentage of total revenues, consolidated gross margins were 23.5% in 2008 compared with 24.5% in last year's second quarter. Gross margin in our communications systems segment increased to 27% from 19% last year as production volumes rose and premium cost inventory issues from last year and the supply chain issues that we faced earlier this year have been resolved. Margins in our design and installation services segment were 22% in the second quarter of '08, reflecting ongoing integration initiatives and investments in geographic expansion with RedBlack and Stationary Power. Last year's 16% gross margin in this segment related only to certain technology contracts. Offsetting these improvements in communications systems and design and installation services, the margins in our non-rechargeable segment declined from 27% to 13% as a result of unfavorable product mix and increasing raw material costs related to higher energy and transportation costs. In addition, we recorded a restructuring charge of approximately $750,000 in…

Thank you, Bob. Now I would like to ask the operator to open it up for questions.

(Operator instructions) We will go first to Ted Kundtz with Needham and Company. Theodor Kundtz – Needham & Company: Yes, hello everyone.

Good morning, Ted. Theodor Kundtz – Needham & Company: A couple of questions for you. Maybe you could go over the – John, you talked about this outlook for '09. Can you kind of put a little more substance behind that? What gives you – what kind of visibility do you have this early in the game for the '09 outlook?

Theodor Kundtz – Needham & Company: Okay.

Programs are still there. Vehicles and radios are still being procured, and the plans are right now to have them with our equipment. And by the way, I will tell you in addition to that, we also have outlook from some overseas militaries that we haven't really included in there because we don't have confirmation on their plans yet. So that is about 40 down – about 60 down. That is a net of about 40, because we're saying 270 this year, 250 next year. Our services business – and these are very round numbers. Our services business will grow about $10 million. We are growing very rapidly now, with good backlog going into this quarter. We are booking into the fourth quarter already. And we are looking – one of our strategies is as we expand to go after national contracts, we're looking at national contracts for next year, which – we are very comfortable with a growth of about $10 million year-over-year. Theodor Kundtz – Needham & Company: Okay.

Our battery business, there are several large opportunities we started in our battery business. We only just started supplying customers like Harris, U.K. Ministry of Defense. There are some major procurement out there from them and other overseas military. In addition, we just booked a pretty good sized order that goes into next year for the 5390. That demand has been high. Our market share there is increasing, and has been increasing. There is evidence that stocks are being replenished in that as well. They have been pretty low. We have actually pulled in orders – that's one of the areas where we have pulled in orders. So our battery business next year we think will be up about $20 million across the board. And that includes commercial opportunities as well as defense opportunities. Telematics is also growing in demand. Theodor Kundtz – Needham & Company: Okay.

And then lastly, in the communications area, we see about $10 million in growth from a couple of different things. First, we have a base out there now of – I don't know, 70,000 systems by the end of this year. And there is a – we're already seeing replacement business. We have a base out there in the IED jammer world. We're already seeing replacement business and some of the accessories and products. And on top of that, with our new tactical – our repeater product that's starting to sell, we did a pretty good piece of business – I think we did probably did $3 million or $4 million worth of business this year. But we are starting to see some fairly – and that was a small number of units. We're seeing a pretty large opportunity there next year. So we are saying that our base communications business is going to grow about another $10 million into next year. And that is really kind of our bottoms-up analysis. Theodor Kundtz – Needham & Company: Okay, that’s great. Just remind me for a second, what is the base communications business? How big is that? Because I'm grouping it with the whole thing. And you have got this – 120 million.

Well, this quarter was about $62 million, the total business. If I take out those sitcom-type systems, it probably runs about – it used to run about $22 million last year. It probably ran about $30 million this year. It will probably run about – the base run close to $40 million next year. Theodor Kundtz – Needham & Company: Got it, okay. Terrific, okay, that’s great. And I wonder if, Bob, you could just give us kind of a little sketch on this tax situation here. Is this – you say you're going to review this every quarter. Is there – how do we think about this? I mean this is kind of a – obviously a surprise to me. I didn't have that forecasted in my model. What can we – how do we think about this going forward, this deferred tax issue?

Yes, good question. And let me just comment that this is looked at – and we have looked at this every quarter. It has to do with our valuation allowance against our net deferred tax asset. And it's something that we analyze and determine each quarter what the effect needs to be. And you might recall back a couple of years ago we released that reserve. It had a significant income tax benefit run through the P&L in 2004. And then we reversed that allowance back in 2006. And so there's a lot of variability, and it is a complex issue. But it's something that for accounting standards, we just need to review every quarter based on the FAS 109 literature and so forth. Theodor Kundtz – Needham & Company: How much more is at risk here? How much more can we possibly see?

Well, it's a constant evaluation. And I think what – the appropriate answer is that this is related toward the termination of our deferred tax liability. And this was the quarter that we looked carefully at that. There were some things that – assumptions we looked at differently and determined that we needed to book in that deferred tax liability in this quarter. The key to this, in my view, is that it's non-cash. Alright? It's a non-cash effect. We may decide in next quarter or the following quarter, looking ahead to our determination of whether we think we'll be able to utilize our net operating losses in the future – and again, per FAS 109 standards, that we might release some of that allowance against the reserve and have another adjustment that may be a benefit against this tax expense. So I can tell you it's very difficult to predict. It’s a constant evaluation and – but the main point from my perspective is that it's a non-cash expense.

Yes, Ted, you used the word "at risk." This is not a risk item. This is an item that we have to adjust. It has to do with goodwill amortization. It has to do with some of the acquisition accounting and our valuation of differences in treatment of book versus tax on there. And so it is really a tax accounting issue of how we do our tax accounting reserves. So we have to do these periodic – we do periodic reviews on this. And it really has to do with adjustments in reserves more than anything. Well, in fact, it totally has to do with adjustments in reserves. Theodor Kundtz – Needham & Company: Okay. Maybe I will talk to you more off-line on it. And then one final question is just on the non-rechargeable side, the margins there were a bit low, and you mentioned why, because of the volumes, I guess–

Well, no; non-rechargeable was mostly hit – we took a $750,000 charge on our U.K. operation– Theodor Kundtz – Needham & Company: That's right. And so that should – that comes out, so margins should get back to normal levels there.

Yes. Theodor Kundtz – Needham & Company:

Yes. Theodor Kundtz – Needham & Company: Okay.

There may be a little bit – is there some a little bit this quarter? But I don't think so. I think that we are done. We took what we had to.

Yes, we took the additional charges. We are winding some things down –

And there is a little bit of benefit going forward as we adjust where we build product. Theodor Kundtz – Needham & Company: Right, right, okay. Terrific. Thanks very much. Very nice quarter.

Colin Rusch – Broadpoint Capital: Good morning. So I want to start with the services business. Other than the national service offering, how are you differentiating Ultralife from the Stationary Power business? And how do you see the technology evolving in that segment as you open up the portfolio of technologies that you're selling through that channel?

Well, good question. First, our differentiation – we are – we have several things that are different about us. Number one, while we source batteries from other people, we also have our own line of products. So, as a manufacturer, we have access – we think we have access to better technology and better prices for people just in the components we use; not just batteries, but also electrical components. Second, one of the reasons we bought Stationary Power Services, in particular, is they have excellent technical capability. They're very good at design. Their logistics and their implementation is very good. So the technical capability both on the design side and the implementation side is excellent. The customer reviews are great. They get return business on a regular basis, and all of the metrics you would want to use in terms of satisfying customers. And we have taken that and expanded it geographically. We're bringing the same things to markets in Texas and Atlanta. And we're going to expand that to other places. So our real – we saw them with more opportunity than they could execute on, and they really didn't have the wherewithal to expand the business. We're doing that. And what that does is, as we expand the footprint, we not only get the installation, design and installation work, but we also get the regular maintenance, because you have to be there to get the maintenance. They were doing work in places like Atlanta and not picking up the contract maintenance. And that is really the other thing we will add to that. In terms of technology, it's not just access to products and our ability to do that with electronics and with batteries, but it is also – we have been very clear that we're going…

Yes. We have done – we did a – we announced, I think, a $7 million program where we redesigned their chargers to put intelligence in the chargers and be able to charge all their batteries. And we did a design for them of one of their battery types – one of their largest selling battery types. And the field response has been excellent. There is an open solicitation they have on the streets for their next two years' supply, which is valued over $100 million over two years. And it’s our goal to get part of that. It’s an opportunity. I guess I could not forecast past that. They have to make their decision based on their evaluation of their suppliers. But thus far, I think we have shown them that we have capability, and we would hope to get part of that business. On the communications systems side, we started selling our tactical repeater to them through a program that we announced, and I think – what was the size of that? I forget that. We announced it – I think $6 million contract, where we have sold our initial version of tactical repeater product in there. And that really is the communication accessories business we've seen there. But subsequent to there, I think if you have seen the U.K.'s announced program called FRES which is their new vehicle program. They're going to be procuring a new vehicle, an MRAP type vehicle from Switzerland, from a Swiss supplier. With that, they're looking at how they're going to outfit it. And so we're actively involved in trying to secure part of that communications systems business. Along with that – and along with some of the inroads we've made with the repeater, there's other business there in the U.K. Along with the U.K. MoD, we also have relationships with other defense organizations in Europe and in Asia like Australia and New Zealand. And so they are also looking at some of these programs. Some of them use the same type of equipment. Some of them are on box similar programs. And when I say international business that is what I'm talking about. One of our goals when we bought McDowell product line – they were primarily a US-based business – was to bring them internationally. And that is what we're doing. Colin Rusch – Broadpoint Capital: Fantastic. And then the last question is just about material cost. How are you seeing the material cost going into your battery manufacturing fluctuating over the last quarter, and how are you hedging out some of that risk?

We are doing some things on the logistics end to really match up and say on some of the parts, should we be looking at a local supplier? Should we be arranging our own freight? And so we will get a little bit there also. But nothing has changed from what I said last quarter. And we haven't seen any more increases. It has pretty much stabilized. Colin Rusch – Broadpoint Capital: Perfect. Thanks so much, and congratulations on the execution this quarter.

Thanks, Colin.

We’ll go next to Jim Mcllree with Collins Stewart. Jim Mcllree – Collins Stewart: Thanks, good morning. John, you are talking about $130 million in revenues in the second half and $10 million operating income. I would have thought that on an average of $65 million a quarter, you would have had higher operating margins. Can you update us on what your ultimate goals are for operating margin in that kind of revenue level, and then what you need to do to get there?

Yes, we have been really – I mean that's a good question. I mean we've been very clear that our goal is to be in double-digit operating margins. And there is a chance we can do it. But we are having to give forward-looking guidance on a six-month basis. Given the market today with material costs, given some of the adjustments we are trying to make, and given some of the mix of sensitivity along with some of the investments we want to make – I mean, last quarter we had double-digit, but we took a reserve for some changes we made that we think in the long run are going to improve our margin and make us more efficient. We have made some investments in coverage and in other areas. And I want to leave us a little room to be able to keep making those investments as we see them. And so, if we stopped everything in terms of investments and said, let's just milk the business, we certainly should have double-digit operating margins on $130 million in revenue. But we're going to continue to expand standby power business to other locations. I can't tell you third quarter, fourth quarter, how that's going to fall; if we're still making some of those decisions. We have to leave ourselves a little room for that. So just being frank about it, we have to. I think – what I tried to do is give you a little –commentary is give you a little of the flavor of kind of where we see the margin ranges. We are 23.5% this quarter. Throw back in the 750,000 of reserve we took, that’s it we are over 24%. We have some other areas where we are working on doing some things to improve…

If we did 25% and we had $10 million in expenses, if you do the math, we are at a much higher number. Jim Mcllree – Collins Stewart: Right, right, and so that is what I was getting at. In order to get – let's call it down to the 7.5%, you need to have lower gross margins. But it sounds like all your gross margin trends are the opposite direction.

We believe so, we believe so. But we have to demonstrate it. We are – and rightfully so – we are in "show me" mode. Everybody is saying "show us." And so we will show you. Jim Mcllree – Collins Stewart: If we just split that $130 million in half and called it $65 million per quarter, what’s the gross margin leverage or reverse leverage from going from $88 million to $65 million?

Depending on the product line, it's probably between 25% and 35%, depending on what product line, what kind of mix we have there.

Yes, mix. Yes. Jim Mcllree – Collins Stewart: When you say 25% to 35%, you're saying gross profit dollars could fall 25% to 35%?

You asked about the revenue fall. If we fell $20 million in revenue, we could fall – it wouldn't be that – yes, if we fell $20 million in revenue, we could conceivably fall 25% of that, or $5 million of that. Alright. Now, it's not totally that, because there's sales expense. We have moved to more of a variable sales plan where people are a lot lower base, higher commissions. So there's a commission part of that. There are things that we do – that can do – you have to go look at production rates to see our overhead flow and stuff, what are you shipping out of inventory versus what you're shipping out of production. So, it’s not a perfect formula. Best we can do is build it from the bottom up as we have done. It's hard to go forward and backward on this thing. We're going to have to build it from the bottom up. And that is how we do our guidance. Jim Mcllree – Collins Stewart: Okay. I just want to make sure, Bob, I understand the tax thing. So every quarter, you're going to evaluate this. And at some point, I would assume that the accountants say, okay, you need to reverse this and put your deferred taxes and asset on the balance sheet again, and then start accruing for taxes on a regular basis. Is that right? So you have some interim period of evaluating it quarter-by-quarter, and then you reach that day when you do the reversal again?

I would like to think it's that simple. But it’s going to be dependent upon what our – as we look back in recent history, there is a metric that we look at for looking back at the last 12 quarters, whether it’s profitable or not, and then looking out with confidence to – or reliability on forecasting out into the future, and how reliable our forecasts have been in the past, looking ahead. So I would like to think it was that simple, that we could say – we get to the end of this year, for example, and say, okay, everything looks rosy on out in the future. And we have a high level of confidence, the more likely than not standard for accounting for income taxes that we're going to be able to utilize all of our net operating loss carryforwards. But we may, in consultation with our audit firm, decide that maybe we will only look at only the next year, only into 2009, and potentially reverse the allowance related to our deferred tax asset or something. But I wish it was a very simple answer. But unfortunately it’s very complex. And I just don't have a real pat answer to deal with that. Jim Mcllree – Collins Stewart: Right. But it sounds like – assuming you have a respectable level of profitability in the quarters going forward, that there will be some sort of accrual for, although not cash payment of taxes.

Yes. Jim Mcllree – Collins Stewart: Okay.

Yes. Jim Mcllree – Collins Stewart: Alright, thank you very much.

Okay, Jim.

We’ll go next to Richard Baxter with Ardour Capital. Richard Baxter – Ardour Capital: Good morning. Just a quick question. What was the total international sales as a percentage?

Well, we didn’t break that out. But probably this quarter, since the large contracts we got were with the U.S. government, it probably was more like 20%.

Yes.

It's around 30% to 40% in the past. It probably was more like 20% this quarter. But let me stress that we're giving you that off the top of our head. Richard Baxter – Ardour Capital: Correct. I mean, do you have any long-term goal on that or–?

Well, you know, again, this is the quarter-to-quarter question. In the long term, we think our international business, if you look back, has run 30%, kind of, in the ballpark. It gets increasingly hard to measure, though, because some of our products – now we are finding some of our products could ship to China or Asia or Malaysia for integration that may come back to the U.S. So is that domestic business, or is that overseas business? I'm not trying to fudge it. I'm just trying to tell you, it gets hard. But 30% is kind of the number. Do we have a goal? I don't think we say, oh, we want our international business to be a certain percentage. I think we look at the markets and see look we think there is significant growth to be had in communications systems internationally. We thought that for batteries in the past in international defense, for example. And we really, really went after that. We saw that in the 9-volt, and we went after it. We really have grown our international business in the 9-volt business very heavily. Now we see it in defense and in communications accessories. So I think that's – we do have a goal to sell more. I'm sure in our budget we split it out and have a goal. I can't tell what that is offhand, but it’s a very low number right now in communications accessories. It's mostly U.S. And our goal is to make that a pretty good number, because we think there is good market share there. Richard Baxter – Ardour Capital: Great, thank you. And I guess you had given some, a little – run over some of the investments you had done in the second quarter like the R&D, the sales in China, and some of the engineering and technical. Can you give a little bit more depth – the discussion on that?

Well, yes – RedBlack Communications is an operation that, when we bought, was running about $4 million a year. We think that's a $10 million to $20 million a year business. And it really hinges on having technical capabilities to do certain things. So, for example, they did a very advanced surveillance van – and they've done them in the past, that included satellite communications in it. And when we brought them, they had lost their satellite communications expert. So we're bringing that kind of expertise back in house, because it makes us eligible for more opportunities. And so there are things like that in secure communications where, whether it’s IP switching or other things, where we are adding technical talent so that we qualify. People are saying, we'd love to have you do this, but you need to have this capability to get this contract. So that’s one example of things we're doing. In China, we do a lot of business, a lot of work in battery packs. And a lot of those battery packs, as I said earlier, are going to places in Asia, because that’s where they are integrated. And we want to move that production to China. And we want to add the capability to do those kinds of designs there, plain and simple, because they are not that complicated. And if we're going to have the customer there served with production out of there, we need the design expertise there. In Newark, the investments we're making are more in large – we are making investments in design of large-scale batteries. The things that we are doing for smart – larger-scale smart modular batteries that we're using for standby power, we're going to bring to that market. We're doing more work in that area. But also in RF communications. We have a lot more of our integrated systems that are using amplifiers in RF communications that require EMI shielding and a lot of other expertise which we have, but we need more of. And so that's kind of where we're beefing ourselves up in that kind of capability. So those are the kinds of things we're adding. In the standby power business, we're expanding our technical base there, so we have more people – as we get more opportunities, we need to do more designs, and we need more technician capability for installations. Those are the kinds of investments we're making. Richard Baxter – Ardour Capital: Great, thank you.

(Operator instructions) We’ll go next to Harper Stephens, Thompson Davis Asset Management. Harper Stephens – Thompson Davis Asset Management: Hi, how are you all today?

Hi, Harper. Harper Stephens – Thompson Davis Asset Management: Quick question – not to spend too much time on the tax question, but I was curious, you mentioned the word "miss" as you were talking about top line numbers. But I was wondering why you didn't break out the tax charge on a per-share basis this quarter because of course all the newswires pick up a "miss," because that was included in the numbers, and it's not in any of the analyst estimates. And then also, in the future, you said it might be possible to have a tax – you know, for that to go the other way, and have a benefit. Do you intend on breaking that out, or would you just include that in net income when you report as well?

Well, first of all, we only guide to operating. And the reason we only guide to operating is because there are a lot of exogenous variables like interest rates, like what the tax-free rate is in the Black-Scholes calculation, like who options get given to, and like these regular evaluations of our tax assets and liabilities that can affect – below the line that we have no operating control over, that are part of our review after the quarter is over. And so we guide to operating, because that’s what we can control, and that’s what we can predict. So that – we want to be very clear on that. That’s exactly why we only guide to operating. And I cannot control what the financial press calls a “miss” on bottom line. We do not – it’s not – we only guide to operating, so we only measure ourselves against that. As far as the question about the deferred tax asset, where we put that, that’s below the line also. That never would go in operating, right–

Yes – Harper, you asked whether we break that out separately. I mean, we comply with GAAP. And the presentation of financial statements is in compliance with generally accepted accounting principles. It's included in the income tax section of the P&L in this particular instance. And to take that out and say what the per-share amount related to that is – that's not compliance with GAAP. So that's why we don't talk about it that way. And again, as John pointed out, we focus on guiding to operating earnings. Harper Stephens – Thompson Davis Asset Management: Okay, no, I understand, and I know that many, many, many companies out there do pro forma numbers. And I just think it would be a better service to your shareholders to allow apples-to-apples comparison with analyst estimates, because they are out there.

I will be frank with you and tell you that the SEC has overtly discouraged pro forma estimates from companies. And it is very difficult to do. You have all kinds of obligations on how you do it, what you have to explain, and so it just makes it tough. I mean, I hear what you are saying. But it just makes it tough. I'll give you one other example, which is we do intangible asset amortization. Once we buy a company, we have to estimate that until we have a formal accounting. Sometimes it takes up to a year to get the appraisal and all the formal accounting for it. And sometimes that may require an adjustment. That’s all done below the line because that’s where it goes. Harper Stephens – Thompson Davis Asset Management:

Okay.

Steve Sanders – Stephens Inc.: Good morning. Good quarter.

Thank you. Steve Sanders – Stephens Inc.: John, maybe first, can you just give us an example of the value proposition for the new repeater product? And then talk a little bit about what you see as the incremental market or customer opportunities there? And then finally, just give us a sense of pricing and margin potential for that product versus what we have seen with the satcom orders?

Yes. I mean companies like – everybody – people pretty much I know that companies like Harris and Tallis [ph] have been shipping lots and lots of handheld radios. There are hundreds of thousands of them – 200,000, 300,000 some of the estimates I have seen, deployed throughout the world. Not just the US Defense Department, but it is the mainstay for Kenya, Indonesia, Colombia, Chile, the Philippines – you name it. And so those radios are usually five watts – sometimes 10, but usually five watts, and they are line of site. And they get a range – best-case range may be a one-mile radius – so a two-mile range, but usually, it is a one-mile range. And what we have done – what a repeater does is it puts up a good-sized antenna that can receive over a much better range than the small antenna that a radio has and retransmit that signal after boosting it up – we use a 30-watt amplifier on ours – boosting it up with an RF amplifier, and send it to somebody. So basically, you can extend the radius up to five miles – so give a 10-mile range, possibly. It’s very important over long distances. It’s very important where there are physical obstacles. So you might put this on top of a mountaintop, for example. So our tactical repeater did that. It did that in a suitcase that weighed – I don't know, 20 to 30 pounds; easily carried. So it's the first time somebody had something truly portable. Power – of course, it's very important these things need power. We have the ability to run it from vehicle power, generator power, you name it. We have batteries. We have feeds on it. It’s smart, and it can query – it…

We promised the U.K. defense organization we were working with that we would get this product to their spec first. Everybody has different needs. And so we got them – they bought about 300 units, I believe. They were part of our initial implementation. They helped us in – you never get it perfectly right ergonomically and all the first time. And we finally got to the point where we have just started selling these worldwide. We just started this – actually, I think May or June selling them worldwide. And the link repeater product, we just bought out in the last couple of weeks. It showed up for the first time in Singapore at a defense exhibition, and then went down and demonstrated it in Australia. So we are at very early stages here, Steve, and there is nothing in our revenue for this year that we are counting on for. But we think it is going to be, as I said, an important part of our revenue stream next year. Steve Sanders – Stephens Inc.: Okay. And then on the auto telematics side, can you just bring us up-to-date on what you are seeing in terms of shipment and revenue trends with existing customers? And I think you were expecting to add some other customers here over the next couple of quarters going into '09. Just give us on update on that.

Yes, with our existing customers – we haven't added customers. We have added platforms. I think starting this second half of the year, we have two additional platforms, two additional car platforms that will have this battery in it, the backup in it. Even I know – everybody knows that one of our good-sized customers is General Motors. And everybody knows they have had difficulties, and they are tightening down. But they are still very committed to the OnStar program. We are still – even if vehicle production is down, we are still in a very low percentage of the number of cars that have this system, so that platform penetration is much more important than absolute number of cars sold in total. So that's going along pretty well. We are going to go into an extra – two more platforms there. And then – I said in the past we have had several designs with some European customers for their crash notification system. None of that is in our numbers right now. And we don't know yet if that's going to be in their plans for the '09 model year or not. We don't have that in the basis for any of our plans. We know – we believe they are going to do it eventually. We don't know if '09 is the year, or 2010 is the year. Steve Sanders – Stephens Inc.:

There is a combination of things related – just as we evaluated the overhead structure over there, there were some people costs that we took for termination, which is a little more than half of that charge. And then there were some inventory adjustments as well as some valuation adjustments for certain fixed assets that made up the rest of that. Steve Sanders – Stephens Inc.:

CapEx outlook for the year is in the range of $5 million for the year. We are at $1.6 million year-to-date for the first half right now. We are probably going to do a little bit more in the second half with some of these initiatives that we have got on target to continue to grow the business.

Yes. $5 million is our plan. Our history is that we end up spending 75%, 80% of that, because even when we approve the project, sometimes, we don't end up spending the actual cash out until the next year. Steve Sanders – Stephens Inc.: And then, actually, one follow-up question, on the $125 million or so of satcom orders, just roughly, what have you shipped? And what do we expect there over the back half, 3Q versus 4Q?

Steve Sanders – Stephens Inc.:

Thanks.

And with no further questions in the queue, I would like to turn the conference back to our presenters for any additional or closing remarks.

Well, thanks, everybody. Ultralife Batteries is now Ultralife Corporation. But the Company changed well before the change of the name. And we are going to continue on that trend – as you can see, continue to expand our offerings of products and services. And it’s all aimed at serving our customers and markets. And it’s all with our goal of rewarding long-term shareholders. We are going to continue to grow our revenue and improve our margins. And we really look forward to sharing our progress with you next quarter. Thank you for participating.

This concludes today's conference. We appreciate your participation. You may now disconnect.