Ultralife Corporation (NASDAQ: ULBI) announced today that the Company will take a non-cash impairment charge of approximately $14.0 million, or $0.81 per share, in the fourth quarter to write off fully the goodwill and intangible and fixed assets associated with its standby power business included in the Energy Services segment. The amount of this charge is a preliminary estimate based on management assumptions and a valuation analysis.
For the past two years, cautious spending and continued delays in implementing large capital projects by customers in the standby power industry have negatively impacted results for the company’s Energy Services segment. The company’s analysis of the value of the goodwill and intangible and fixed assets associated with the standby power business, conducted under applicable accounting rules, indicates that these assets should be written off. These assets arose from the acquisitions of Stationary Power Services, Inc. and RPS Power Systems, Inc., completed on November 16, 2007, and U.S. Energy Systems, Inc. and U.S. Power Services, Inc. completed on November 10, 2008.
“The decision to write off the standby power business goodwill and intangible and fixed assets, required by accounting standards, in no way affects the Company’s current operations or alters its commitment to building its energy services business,” said John D. Kavazanjian, president and chief executive officer. “Ultralife’s energy services capabilities are an important part of the Company’s energy storage strategy which presents attractive long-term opportunities for value added solutions which incorporate our lithium ion products. These service capabilities are also an important part of the deployment of large scale energy storage systems such as those being developed under Ultralife’s grants from the New York State Energy Research and Development Authority (NYSERDA).
“While customer spending in the standby power market has been depressed, we still believe increased spending will resume as the economy continues to rebound. In addition, we see significant opportunities developing in the wireless market associated with the implementations of 3G and 4G networks. Orders have picked-up in the fourth quarter, and we are building a solid pipeline of sales heading into 2011.”