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Note 2 - Acquisition | 12 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | Note 2 – Acquisition On December 13, 2021, the Company acquired all the outstanding shares of Excell for an aggregate net purchase price of $23,519 in cash. On December 13, 2021, 1336889 B.C. Unlimited Liability Company, a British Columbia unlimited liability corporation and wholly-owned subsidiary of Ultralife Canada Holding Corp., a Delaware corporation (“UCHC”) and wholly-owned subsidiary of Ultralife Excell Holding Corp., a Delaware corporation (“UEHC”) and wholly-owned subsidiary of Ultralife Corporation, a Delaware corporation (“Ultralife” or the “Company”), completed the acquisition of all issued and outstanding shares of Excell Battery Canada Inc., a British Columbia corporation (“Excell Canada”) (the “Excell Canada Acquisition”), and, concurrently, 1336902 B.C. Unlimited Liability Company, a British Columbia unlimited liability corporation and wholly-owned subsidiary of UCHC, completed the acquisition of all issued and outstanding shares of 656700 B.C. LTD, a British Columbia corporation and sole owner of all issued and outstanding shares of Excell Battery Corporation USA, a Texas corporation (“Excell USA”, and together with Excell Canada, “Excell Battery Group” or “Excell”) (the “Excell USA Acquisition”, and together with the Excell Canada Acquisition, the “Excell Acquisition”). Based in Canada with U.S. operations, Excell is a leading independent designer and manufacturer of high-performance smart battery systems, battery packs and monitoring systems to customer specifications. Excell serves a variety of industrial markets including downhole drilling, OEM industrial and medical devices, automated meter reading, ruggedized computers, and mining, marine and other mission critical applications which demand uncompromised safety, service, reliability and quality. The Excell Canada Acquisition was completed pursuant to a Share Purchase Agreement dated December 13, 2021 (the “Excell Canada Acquisition Agreement”) by and among 1336889 B.C. Unlimited Liability Company, Mark Kroeker, Randolph Peters, Brian Larsen, M. & W. Holdings Ltd., Karen Kroeker, Heather Peterson, Michael Kroeker, Nicholas Kroeker, Brentley Peters, Craig Peters, Kurtis Peters, Heather Larsen, Ian Kane, Carol Peters, and 0835205 B.C. LTD (the “Excell Canada Sellers”), Mark Kroeker in his capacity as the Excell Canada Sellers’ Representative, and Excell Canada. The Excell USA Acquisition was completed pursuant to a Share Purchase Agreement dated December 13, 2021 (the “Excell USA Acquisition Agreement”, and together with the Excell Canada Acquisition Agreement, the “Excell Acquisition Agreements”) by and among 1336902 B.C. Unlimited Liability Company, M. & W. Holdings Ltd., Ian Kane, Sanford Capital Ltd., Arcee Enterprises Inc., and 0835205 B.C. Ltd. (the “Excell USA Sellers”, and together with the Excell Canada Sellers, the “Sellers”), Mark Kroeker in his capacity as the Excell USA Sellers’ Representative, and 656700 B.C. LTD. The Excell Acquisition Agreements contain customary terms and conditions including representations, warranties and indemnification provisions. A portion of the consideration paid to the Sellers will be held in escrow for indemnification purposes. The Excell Acquisition was funded by the Company through a combination of cash on hand and borrowings under the Amended Credit Facilities (Note 3). The Excell Acquisition was accounted for in accordance with the accounting treatment of a business combination pursuant to FASB ASC Topic 805, Business Combinations (“ASC 805”). Accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values on the acquisition date. The excess of the purchase price over the estimated fair value of the separately identifiable assets acquired and liabilities assumed was allocated to goodwill. Management is responsible for determining the acquisition date fair value of the assets acquired and liabilities assumed, which requires the use of various assumptions and judgments that are inherently subjective. The purchase price allocation presented below reflects all known information about the fair value of the assets acquired and liabilities assumed as of the acquisition date. The purchase price allocation is subject to change should additional information existing as of the acquisition date about the fair value of the assets acquired and liabilities assumed become known. The final purchase price allocation may reflect material changes in the valuation of assets acquired and liabilities assumed, including but not limited to intangible assets, fixed assets, deferred taxes, and residual goodwill.
Cash |  | $ | 736 |
Accounts receivable |  |  | 3,570 |
Inventories |  |  | 3,622 |
Prepaid expenses and other current assets |  |  | 785 |
Property, plant and equipment |  |  | 429 |
Goodwill |  |  | 11,019 |
Other intangible assets |  |  | 8,830 |
Other noncurrent assets |  |  | 991 |
Accounts payable |  |  | (1,450 | )
Accrued compensation and related benefits |  |  | (540 | )
Accrued expenses and other current liabilities |  |  | (720 | )
Deferred tax liability, net |  |  | (2,213 | )
Other noncurrent liabilities |  |  | (803 | )
Net assets acquired |  | $ | 24,256 |
The goodwill included in the Company’s purchase price allocation presented above represents the value of Excell’s assembled and trained workforce, the incremental value that Excell 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. Other intangible assets were valued using the income approach which requires a forecast of all expected future cash flows and the use of certain assumptions and estimates. The following table summarizes the estimated fair value and annual amortization for each of the identifiable intangible assets acquired.
|  |  |  |  |  |  |  |  |  | Annual Amortization |
|  | Estimated Fair Value |  |  | Amortization Period (Years) |  |  | Year 1 |  |  | Year 2 |  |  | Year 3 |  |  | Year 4 |  |  | Year 5 |
Customer relationships |  | $ | 4,070 |  |  |  | 15 |  |  | $ | 271 |  |  | $ | 271 |  |  | $ | 271 |  |  | $ | 271 |  |  | $ | 271 |
Trade name |  |  | 3,150 |  |  | Indefinite |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Customer contracts |  |  | 1,130 |  |  |  | 15 |  |  |  | 75 |  |  |  | 75 |  |  |  | 75 |  |  |  | 75 |  |  |  | 75 |
Backlog |  |  | 360 |  |  |  | 1 |  |  |  | 360 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Technology |  |  | 120 |  |  |  | 7 |  |  |  | 17 |  |  |  | 17 |  |  |  | 17 |  |  |  | 17 |  |  |  | 17 |
Total |  | $ | 8,830 |  |  |  |  |  |  | $ | 724 |  |  | $ | 364 |  |  | $ | 364 |  |  | $ | 364 |  |  | $ | 364 |
We acquired right-of-use assets and assumed lease liabilities of $960 for Excell’s operating facilities. Right-of-use assets are classified as other noncurrent assets, and current and long-term lease liabilities are classified as accrued expenses and other current liabilities and other noncurrent liabilities, respectively, on the Company’s consolidated balance sheet. The operating results and cash flows of Excell are reflected in the Company’s consolidated financial statements from the date of acquisition. Excell is included in the Battery & Energy Products segment. For the year ended December 31, 2021, from the December 13, 2021 acquisition date, Excell contributed revenue of $1,131 and net loss of $128, inclusive of a $121 increase in cost of products sold for the fair value step-up of acquired finished goods inventory sold during the period, and amortization expense of $30 on acquired identifiable intangible assets. Excell did not have operations from December 23, 2021 thru December 31, 2021 due to a planned holiday closure. During the year ended December 31, 2021, the Company incurred acquisition-related costs and other non-recurring expenses of $354 directly attributable to the acquisition, including one-time accounting, legal and due diligence services. The following supplemental pro forma information presents the combined results of operations, inclusive of the acquisition accounting adjustments and one-time expenses described above, as if the acquisition of Excell had been completed on January 1, 2020, the beginning of the comparable prior period. The supplemental pro forma results do not reflect the realization of potential synergies or other cost reductions following the completion of the business combination. The supplemental pro forma results are presented for informational purposes only and should not be considered indicative of the financial position or results of operations had the acquisition been completed as of the dates indicated and does not purport to indicate the future combined financial position or results of operation. Set forth below are the unaudited supplemental pro forma results of the Company and Excell for the years ended December 31, 2021 and 2020 as if the acquisition had occurred as of January 1, 2020.
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |
Revenue |  | $ | 118,467 |  |  | $ | 125,826 |
Operating income |  |  | 1,450 |  |  |  | 4,489 |
Net Income attributable to Ultralife Corporation |  |  | 1,367 |  |  |  | 4,081 |
Net income per share attributable to Ultralife Corporation: |  |  |  |  |  |  |  |
Basic |  | $ | .09 |  |  | $ | .26 |
Diluted |  | $ | .08 |  |  | $ | .25 |
The historical results of Excell reflected in the unaudited supplemental pro forma results for the year ended December 31, 2020 include a non-cash charge of $950 for the write-off of obsolete inventory in January 2020.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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