ULTRALIFE CORP | 2013 | FY | 3

Note 11 - 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 fire occurred after business hours and was fully extinguished quickly with no injuries, and the plant was back in full operation shortly thereafter with no significant disruption in supply or service to customers.  We maintain adequate insurance coverage for this operation.

The total amount of the loss pertaining to assets and the related expenses was approximately $1,589.  The majority of our insurance claim is related to the recovery of damaged inventory.  Through payments received in June 2012 and April 2013, we have received approximately $1,286 as a partial payment on our insurance claim, which resulted in no gain or loss being recognized.  As of December 31, 2013, we reflect a receivable from the insurance company relating to this claim of $185, which is net of our deductible of approximately $132, and represents additional proceeds to be received.  The deductible charge was expensed in the second quarter of 2011 and reflected as a component of cost of products sold in the Consolidated Statements of Operations and Comprehensive Income (Loss).