Ultralife Batteries Reports Preliminary Fourth Quarter Results
Ultralife Batteries, Inc. announced that, based on a preliminary review of results for the fourth quarter ended December 31, 2006, the company expects to report an operating loss of approximately $1.5 million on revenue in the range of $30.0 million to $30.5 million.
Along with the impact from lower-than-expected sales, the anticipated operating loss reflects $1.1 million in higher-than-expected material costs at McDowell Research and $0.5 million in unplanned non-cash charges, including $0.3 million in higher-than-expected intangible amortization and $0.2 million in additional inventory and bad debt reserves at McDowell related to an assessment of reserves at the McDowell operating unit. In addition, the company incurred approximately $0.6 million in manufacturing inefficiencies at its Newark operation, which resulted from a change in the process parameters of one part used in its 9V battery operation. The company revised its processes around a substitute product and, based on preliminary indications, efficiencies returned to planned levels in early January.
quot;As we proceed with the integration of McDowell, we are identifying and addressing operational issues and, although we have made considerable progress, more work lies ahead," said John D. Kavazanjian, Ultralife’s President and Chief Executive Officer. "To address inadequacies in McDowell’s cost accounting system, manufacturing and accounting staff from our Newark facility have been on site examining reporting procedures and analyzing manufacturing costs. As a result of an extensive review, we discovered purchasing decisions that had been made in the third quarter, which resulted in significantly higher-than-anticipated fourth quarter product costs. The magnitude of these higher material costs became apparent to us with the closing of the books for the fourth quarter."