Restructuring and Other Exit Costs

3 Months Ended

Apr. 03, 2020

Restructuring and Related Activities [Abstract]

Note E — Restructuring and Other Exit Costs

We record charges for restructuring and other exit activities related to sales or terminations of product lines, closures or relocations of business activities, changes in management structure and fundamental reorganizations that affect the nature and focus of operations. Such charges include termination benefits, contract termination costs and costs to consolidate facilities or relocate employees. We record these charges at their fair value when incurred. In cases where employees are required to render service until they are terminated in order to receive the termination benefits and will be retained beyond the minimum retention period, we record the expense ratably over the future service period. These charges are included as a component of the “Engineering, selling and administrative expenses” line item in our Condensed Consolidated Statement of Income (Unaudited).

L3Harris Merger-Related Restructuring Costs

During the quarter ended April 3, 2020, we did not record any restructuring charges in connection with the L3Harris Merger. At April 3, 2020, we had recorded liabilities of $38 million associated with previous L3Harris Merger-related restructuring actions, of which substantially all will be paid in the next twelve months.

Other Restructuring and Exit Costs

Prior to the L3Harris Merger, we had liabilities for lease obligations associated with exited facilities with remaining terms of three years or less, of which $7 million remained outstanding at April 3, 2020.

During the quarter ended April 3, 2020, we recorded $3 million of restructuring charges for workforce reductions (including severance and other employee-related exit costs) within our Aviation Systems business segment associated with the COVID-19-related downturn in the Commercial Aviation Solutions sector and its impact on customer operations. The corresponding $3 million liability remained outstanding at April 3, 2020.

Our liabilities for restructuring and other exit costs are included in the “Other accrued items” and “Other long-term liabilities” line items in our Condensed Consolidated Balance Sheet (Unaudited). Changes to our liabilities for restructuring and other exit costs during the quarter ended April 3, 2020 were as follows:



	Employee severance-related costs			Facilities consolidation and other exit costs		Total

	(In millions)
Balance at January 3, 2020	$	58		$	7	$	65
Additional provisions	3			—		3
Payments	(20		)	—		(20		)
Balance at April 3, 2020	$	41		$	7	$	48