UTC Expects Loss From Restructuring

United Technologies said Tuesday that it expected to post a substantial fourth-quarter loss as a result of $592 million in pretax charges taken for a corporate restructuring, but said it will show a profit for the full year.

The giant defense contractor said the restructuring plans, including cutting 11,000 jobs from its worldwide work force of 188,000 by the end of next year, were approved by its board of directors on Tuesday.

UTC said $355 million of the fourth-quarter charge will represent pretax losses expected to result from the sale, reduction in size or termination of several small business units and operations. The company, which has 300 plants worldwide, would not say how many business units will be affected.

“We’re in the process of negotiating the sales of some small units and defining the downsizing or termination of other units in our operation,” UTC spokesman Tom Drohan said.

“If there are two or three plants in an operation, we may, for example, consolidate them into one plant,” he said.

The remaining $237 million represents the estimated cost of companywide reductions in the work force, primarily salaried workers, the company said.

Job Cuts Planned

UTC has announced plans to cut 1,000 salaried workers from its Hamilton Standard division and up to 2,000 from its Pratt & Whitney Aircraft division.

Earlier this year, the company announced smaller reductions in the work force at its headquarters in Hartford, at Sikorsky Aircraft and at Hamilton Standard.

Analysts have praised the restructuring.

“I think Wall Street is applauding this move because it’s going to have a good chance of turning around the company’s earnings and reversing the down trend the company has had,” L. Howard Nichol, vice president of research at Advest Inc., said.

Jim Barnes, a vice president at Smith Barney, Harris Upham & Co., said investors will perceive the writeoffs as positive steps toward streamlining the company and increasing profits.

“To reduce payrolls, you have to offer incentives--one-year salaries, pension benefits above and beyond what they’d normally offer--but it’s a one-time charge,” he said. “They’ll take it all at once, but next year there will be fewer people to pay, and they’ll report profits.”