NEW YORK (AP) — Defense contractor L-3 Communications said Thursday that it fired four employees after discovering they overstated the company's profit and sales from a contract with the U.S. government.
The New York company said a fifth employee resigned. It said the employees, who worked for its aerospace systems business, also inappropriately deferred some cost overruns associated with the contract. L-3 described the contract as a maintenance and logistics support contract with the U.S. Department of Defense, and said the deal began Dec. 1, 2010, and ends January 31. The deal brings in about $115 million in annual revenue for the company.
"The misconduct included concealment from L-3's Corporate staff and external auditors," L-Communications 3 Chairman and CEO Michael Strianese said during a conference call.
The company did not disclose the names or positions of the employees or provide other details about the contract. Government spokespeople were not able to confirm the specifics of the contract.
L-3 Communications said it is conducting an internal review and will take an $84 million charge associated with the misconduct. It said $34 million of that total will come from the first half of 2014. Separately, it will reduce its net sales by $43 million. The company also cut its estimate for second-half operating income for the aerospace systems business by $35 million.
Shares of L-3 Communications Holdings Inc. tumbled $14.68, or 12 percent, to $104.96 Thursday as the markets slumped.