<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>a5259120ex99-1.txt
<DESCRIPTION>ULTRALIFE BATTERIES, EXHIBIT 99.1
<TEXT>
                                                          Exhibit 99.1

         Ultralife Reports Preliminary Third Quarter Results

         Company to Report Third Quarter Results on November 9


    NEWARK, N.Y.--(BUSINESS WIRE)--Oct. 26, 2006--Ultralife Batteries,
Inc. (NASDAQ: ULBI) announced that, based on a preliminary review of
results for the third quarter ended September 30, the company expects
to report revenue of approximately $24.4 million and an operating loss
in the range of $1.5 million. These results compare to the guidance
management provided in its second quarter report that called for
revenue of between $25 million and $29 million and operating profit in
the range of $1.2 million to $2.4 million.

    The difference between management's operating income guidance and
the preliminary results reflects expenses associated with integrating
McDowell Research and ABLE New Energy, the two companies Ultralife
recently acquired, unanticipated reserves and operational expenses,
and a less favorable than expected revenue mix. Details of the
variance include:

    --  approximately $0.3 million in intangible amortization expense
        associated with the acquisitions of McDowell and ABLE
        determined through asset appraisals initiated during the
        quarter to support the valuation of the acquired assets.
        Management did not contemplate this recurring amortization
        expense in its guidance for the third quarter;

    --  approximately $0.7 million in lower than expected operating
        income from both McDowell and ABLE;

    --  approximately $0.5 million in charges consisting of a reserve
        related to a workers compensation trust in which the company
        previously participated, together with a write-down of certain
        fixed assets; and,

    --  approximately $1.2 million related to compressed gross margins
        arising from lower than expected revenue, a lower-margin
        product mix, some unplanned scrap costs in the company's
        Newark operations and higher than anticipated energy costs.

    "During the third quarter we incurred a number of unanticipated
operational expenses that were not factored into the guidance we
provided on August 3rd," said John D. Kavazanjian, Ultralife's
president and chief executive officer. "In particular, we
underestimated the expenses associated with integrating McDowell and
ABLE, and the effect of the transition on our top and bottom line
performance. Having devoted considerable time and attention to gaining
a deeper understanding of the operations at both of these companies
and implementing integration measures, we are certain that these
businesses will deliver value and incremental profits to Ultralife by
broadening our product portfolio and sales coverage, diversifying our
military business and expanding our target markets. Underscoring our
firm belief is the $10.9 million contract we announced on October 9th
for the production and delivery of Ultralife batteries and McDowell
chargers.

    "We are taking steps to put the third quarter operational issues
behind us. We are almost finished implementing the product transitions
and pricing adjustments to ameliorate our mix issues; we have improved
our energy usage efficiencies and are moving to a new energy plan; and
we expect no re-occurrence of the scrap issues that affected the third
quarter performance. In addition, we are in the process of
implementing numerous initiatives to improve results at both McDowell
and ABLE," continued Mr. Kavazanjian. "For the fourth quarter, we
expect to achieve revenue in the range of $35 million, consistent with
our previous revenue guidance for fiscal 2006, based on planned
deliveries against a strong backlog and a very strong pipeline. We are
finalizing our review of operating earnings for the quarter and look
forward to discussing these issues when we report final third quarter
results on November 9."

    Third Quarter Earnings Conference Call and Webcast Information

    Ultralife will report its third quarter 2006 results for the
period ended September 30, 2006 before the market opens on Thursday,
November 9, 2006. Management will host an investor conference call at
10:00 AM ET also on November 9, 2006. Investors are invited to access
a live webcast of the conference call in the Investor Info - Event
Calendar section of the company's website:
http://investor.ultralifebatteries.com. A replay of the webcast will
be available shortly after the call at the same location and will be
archived for 90 days.

    About Ultralife Batteries, Inc.

    Ultralife is a global provider of high-energy power solutions and
communications accessories for diverse applications. The company
develops, manufactures and markets a wide range of non-rechargeable
and rechargeable batteries, charging systems and accessories including
power supplies, amplifiers, amplified speakers, equipment mounts, case
equipment and integrated communication systems for markets including
military, commercial and consumer portable electronics. Through its
portfolio of standard products and engineered solutions, Ultralife is
at the forefront of providing the next generation of power systems and
accessories. Commercial, retail and government customers include
General Dynamics, Philips Medical Systems, General Motors, Energizer,
Kidde Safety, Lowe's, Radio Shack and the national defense agencies of
the United States, United Kingdom, Germany, Australia and New Zealand,
among others.

    Ultralife's headquarters, principal manufacturing and research
facilities are in Newark, New York, near Rochester. Ultralife's three
other operating units are: Ultralife Batteries (UK) Ltd., in Abingdon,
England; McDowell Research in Waco, Texas; and ABLE New Energy in
Shenzhen, China. Detailed information on Ultralife is available at:
www.ultralifebatteries.com.

    This press release may contain forward-looking statements based on
current expectations that involve a number of risks and uncertainties.
The potential risks and uncertainties that could cause actual results
to differ materially include: worsening global economic conditions,
increased competitive environment and pricing pressures, disruptions
related to restructuring actions and delays. Further information on
these factors and other factors that could affect Ultralife's
financial results is included in Ultralife's Securities and Exchange
Commission (SEC) filings, including the latest Annual Report on Form
10-K.

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


    CONTACT: Ultralife Batteries, Inc.
             Robert W. Fishback, 315-332-7100
             bfishback@ulbi.com
             Or
             Investor Relations:
             Lippert/Heilshorn & Associates, Inc.
             Jody Burfening, 212-838-3777
             jburfening@lhai.com
</TEXT>
</DOCUMENT>
