Ultralife Corp., a portable power solutions and electronics systems provider, Friday announced that its first quarter 2011 results will include a $2.7 million charge, which will be accounted for as a reduction to revenues. The charge reflects a proposed settlement with the U.S. Government related to three exigent contracts that were completed between 2003 and 2004.
As noted in the company’s 10k filing for the period ended December 31, 2010, the company received a proposed settlement from the U.S. Attorney’s Office in regards to ongoing discussions the company has for three exigent, non-bid contracts with the U.S. Government that have been subject to an audit and final price adjustment.
In September 2005, the Defense Contracting Audit Agency suggested a potential pricing adjustment of $1.4 million related to reductions in the cost of materials that occurred prior to the final negotiation of these contracts. Ultralife notes that it cooperated with these audits and furnished the government with requested information and documents.
Under applicable federal law, the company may have been subject to treble damages and penalties associated with the potential pricing adjustment. As such, Ultralife approached the U.S. Attorney’s Office in April to negotiate a settlement deemed in the best interests of its customers, employees and shareholders.
On April 21, 2011, the government advised Ultralife that there was a $2.7 million settlement-in-principle to resolve all claims related to the contracts, subject to final approval by the Department of Justice, which results in Ultralife’s announcement of a $2.7 million charge as a reduction in revenues for the first quarter of 2011. Payment terms remain to be finalized with the U.S. government.
Michael D. Popielec, Ultralife’s president and CEO said the company’s decision to move forward with the proposed settlement reflects its desire to thwart further expenses and time on the matter.
“Throughout the negotiating process, we have maintained strong relationships with our customers in the U.S. government. With this issue soon to be behind us, we look forward to concentrating all of our efforts on developing and delivering innovative new power products and communications systems that meet the soldier modernization requirements of an increasingly mobile military,” Popielec stated in the press release.
The company also updated its financial guidance for 2011, with revenue and operating income from continuing operations reflecting the $2.7 million charge. Ultralife now expects revenue of approximately $165 million and operating income of approximately $7.8 million.
For more information visit www.ultralifecorp.com