Ultralife Corporation (NASDAQ: ULBI) reported an operating loss of $5.8 million on revenues of $30.7 million for the first quarter ended April 3, 2011. Revenue for the first quarter was $30.7 million compared to $38.5 million for the first quarter of 2010. 2011 revenue included a $2.7 million charge to reflect a proposed settlement with the U.S. government related to exigent contracts completed between 2003 and 2004, as disclosed on April 29. Excluding the $2.7 million charge, Battery & Energy Products revenue increased by 11.1% to $27.0 million reflecting increased demand for commercial products from the company’s China operation and chargers. Communications Systems revenue was $4.2 million, down from $12.2 million for the first quarter of 2010 reflecting delays in orders from the U.S. Department of Defense and the absence of orders for SATCOM systems for the first quarter of 2011. Energy Services revenue was $2.3 million, compared to $2.0 million for the same period last year. As disclosed on March 10, the company is exiting the Energy Services business in 2011. Gross profit for the first quarter of 2011 was $3.5 million, or 11.5% of revenue, compared to $9.8 million, or 25.3% of revenue, for the same quarter a year ago. 2011 gross profit reflected the $2.7 million charge, unfavorable product mix and deterioration in the gross margin for the Energy Services segment. Also included in gross profit for the first quarter of 2011 was $0.7 million of costs related to exiting the Energy Services business, of which $0.6 million was non-cash. Excluding the $2.7 million charge and Energy Services segment gross profit for both periods, gross margin would have been 23.3% for the first quarter of 2011, compared to 27.0% for the same period last year. The reduction in gross margin was primarily caused by the completion of a low margin contract from 2009, manufacturing variances due to low U.S. government defense sales volume and the write-off of certain inventories.