HARTFORD, Conn. (AP) - United Technologies Corp. agreed Tuesday to pay $283 million to settle a lawsuit with the U.S. Defense Department over accounting practices at jet-engine maker Pratt & Whitney.
The dispute was over the company's cost accounting for engine parts from commercial engine collaboration programs between 1984 and 2004. It centered on differences in how Pratt allocated overhead costs between its commercial and government programs.
Since January 2005, the company has used a system based on the value added by Pratt in the manufacturing process. The company said that method has been approved by the government.
UTC had reserves set aside which exceeded the actual settlement amount. The company said it expects restructuring charges over 2006 will meet or exceed the difference.
UTC reaffirmed its earnings' guidance at between $3.50 to $3.60 per share for the year. Analysts surveyed by Thomson Financial expect the company to earn $3.62 per share in 2006.
UTC shares fell 45 cents to $61 on morning trading on the New York Stock Exchnange, but are still closer to the high end of their 52-week range of $49.20 to $66.39.
