Restructuring Costs

12 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

RESTRUCTURING COSTS

Restructuring costs are generally expensed as incurred. All U.S. government unallowable restructuring costs related to the Raytheon Merger are recorded within Corporate expenses and other unallocated items, as these costs are not included in management’s evaluation of the segments’ performance, and as a result, there are no unallowable restructuring costs at the RIS and RMD segments. During 2020, we recorded net pre-tax restructuring costs totaling $777 million for new and ongoing restructuring actions. We recorded charges in the segments as follows:

(dollars in millions)
Pratt & Whitney	$	183
Collins Aerospace Systems	360
Corporate expenses and other unallocated items	234
Total	$	777

Restructuring charges incurred in 2020 primarily relate to actions initiated during 2020 and 2019, and were recorded as follows:

(dollars in millions)
Cost of sales	$	397
Selling, general & administrative	371
Restructuring costs recorded within operating expenses	768
Non-service pension (benefit)	9
Total	$	777

2020 Actions. During 2020, we recorded net pre-tax restructuring costs totaling $770 million for restructuring actions initiated in 2020, consisting of $401 million in Cost of sales, $360 million in Selling, general and administrative expenses and $9 million in Non-service pension expenses. The 2020 actions primarily relate to severance and restructuring actions at Pratt & Whitney and Collins Aerospace in response to the impact on our operating results related to the current economic environment primarily caused by the COVID-19 pandemic, the Raytheon Merger, and ongoing cost reduction efforts, including workforce reductions and consolidation of field operations.

We are targeting to complete in 2021 the majority of the remaining workforce and all facility related cost reduction actions initiated in 2020. No specific plans for significant other actions have been finalized at this time. The following table summarizes the accrual balances and utilization by cost type for the 2020 restructuring actions:

(dollars in millions)	Severance		Facility Exit and Other Costs		Total
Net pre-tax restructuring costs	$	744	$	26	$	770
Utilization, foreign exchange and other costs	(410)		(20)		(430)
Balance at December 31, 2020	$	334	$	6	$	340

The following table summarizes expected, incurred and remaining costs for the 2020 restructuring actions by segment:

(dollars in millions)	Expected Costs		Cost Incurred During 2020		Remaining Costs at December 31, 2020
Pratt & Whitney	$	205	$	(205)	$	—
Collins Aerospace Systems	373		(333)		40
Corporate expenses and other unallocated items	232		(232)		—
Total	$	810	$	(770)	$	40

2019 Actions. During 2020, we recorded net pre-tax restructuring costs totaling $10 million for restructuring actions initiated in 2019, consisting of a reversal of $2 million in Cost of sales and $12 million in Selling, general and administrative expenses. The 2019 actions relate to ongoing cost reduction efforts, including workforce reductions and the consolidation of field operations. The following table summarizes the accrual balances and utilization by cost type for the 2019 restructuring actions:

(dollars in millions)	Severance		Facility Exit and Other Costs		Total
Restructuring accruals at January 1, 2020	$	47	$	11	$	58
Net pre-tax restructuring costs	6		4		10
Utilization, foreign exchange and other costs	(41)		(5)		(46)
Balance at December 31, 2020	$	12	$	10	$	22

The following table summarizes expected, incurred and remaining costs for the 2019 programs by segment:

(dollars in millions)	Expected Costs		Costs Incurred During 2019		Costs Incurred During 2020		Remaining Costs at December 31, 2020
Pratt & Whitney	$	121	$	(133)	$	12	$	—
Collins Aerospace Systems	107		(27)		(22)		58
Corporate expenses and other unallocated items	2		(2)		—		—
Total	$	230	$	(162)	$	(10)	$	58

2018 and Prior Actions. During 2020, we reversed net pre-tax restructuring costs totaling $3 million for restructuring actions initiated in 2018 and prior. As of December 31, 2020, we have $45 million of accrual balances remaining related to 2018 and prior actions.