Restructuring Costs

12 Months Ended

Dec. 31, 2021

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 2021, we recorded net pre-tax restructuring costs totaling $143 million for new and ongoing restructuring actions. We recorded charges in the segments as follows:

(dollars in millions)
Pratt & Whitney	$	7
Collins Aerospace Systems	40
Corporate expenses and other unallocated items	96
Total	$	143

Restructuring charges incurred in 2021 primarily relate to actions initiated during 2021 and were recorded as follows:

(dollars in millions)
Cost of sales	$	34
Selling, general & administrative	109
Total	$	143

2021 Actions. During 2021, we recorded net pre-tax restructuring costs totaling $137 million for restructuring actions initiated in 2021, consisting of $97 million in Selling, general and administrative and $40 million in Cost of sales. The 2021 actions primarily consist of severance costs related to ongoing cost reduction efforts, and to a much lesser extent, the exit and consolidation of facilities.

We are targeting to complete in 2022 the majority of the remaining cost reduction actions initiated in 2021. No specific plans for other significant actions have been finalized at this time. The following table summarizes our accrual balances for the 2021 restructuring actions, which is included in Other accrued liabilities on our Consolidated Balance Sheet:

(dollars in millions)
Net pre-tax restructuring costs	$	137
Utilization, foreign exchange and other costs	(50)
Balance at December 31, 2021	$	87

The following table summarizes expected, incurred and remaining costs for the 2021 restructuring actions by segment:

(dollars in millions)	Expected Costs		Cost Incurred During 2021		Remaining Costs at December 31, 2021
Pratt & Whitney	$	60	$	(24)	$	36
Collins Aerospace Systems	62		(36)		26
Corporate expenses and other unallocated items	77		(77)		—
Total	$	199	$	(137)	$	62

2020 Actions. During 2021, we reversed net pre-tax restructuring costs totaling $23 million for restructuring actions initiated in 2020, consisting of a reversal of $14 million in Cost of sales and $9 million in Selling, general and administrative expenses. The 2020 actions primarily consist of severance costs principally related to restructuring actions at Pratt & Whitney and Collins Aerospace in response to the impact on our operating results from the economic environment primarily caused by the COVID-19 pandemic, actions at Corporate related to the Raytheon Merger, and ongoing cost reduction efforts including workforce reductions, and to a lesser extent, consolidation of field operations. The following table summarizes the accrual balance for the 2020 restructuring actions for the year ended 2021, which is included in Other accrued liabilities on our Consolidated Balance Sheet:

(dollars in millions)
Restructuring accruals at January 1, 2021	$	340
Net pre-tax restructuring costs	(23)
Utilization, foreign exchange and other costs	(267)
Balance at December 31, 2021	$	50

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

(dollars in millions)	Expected Costs		Costs Incurred During 2020		Costs (Incurred) Reversed During 2021		Remaining Costs at December 31, 2021
Pratt & Whitney	$	188	$	(205)	$	17	$	—
Collins Aerospace Systems	312		(333)		25		4
Corporate expenses and other unallocated items	251		(232)		(19)		—
Total	$	751	$	(770)	$	23	$	4

2019 and Prior Actions. During 2021, we recorded net pre-tax restructuring costs totaling $29 million for restructuring actions initiated in 2019 and prior. As of December 31, 2021, we had $25 million of accrual balances remaining related to 2019 and prior actions.