Restructurings and Impairments

Restructuring charges are recorded based on restructuring plans that have been committed to by management and are, in part, based upon management's best estimates of future events. Changes to the estimates may require future adjustments to the restructuring liabilities.

Restructuring Liability

The following tables summarize the activity in the restructuring liability, which includes amounts related to discontinued operations and excludes pension and other postretirement contractual termination benefits:



(in millions)	Balance at October 31, 2014		Additions		Payments			Adjustments			Balance at January 31, 2015
Employee termination charges	$	8	$	3	$	(3	)	$	(1	)	$	7
Lease vacancy	11		—		(2		)	—			9
Other	1		—		—			—			1
Restructuring liability	$	20	$	3	$	(5	)	$	(1	)	$	17



(in millions)	Balance at October 31, 2013		Additions		Payments			Adjustments			Balance at January 31, 2014
Employee termination charges	$	15	$	2	$	(5	)	$	(1	)	$	11
Employee relocation costs	—		1		(1		)	—			—
Lease vacancy	18		—		(2		)	—			16
Other	1		—		(1		)	1			1
Restructuring liability	$	34	$	3	$	(9	)	$	—		$	28

North American Manufacturing Restructuring Activities

We continue to focus on improving our core North American Truck and Parts businesses. We continue to evaluate our portfolio of assets, with the purpose of closing or divesting non-core/non-strategic businesses, and identifying opportunities to restructure our business and rationalize our Manufacturing operations in an effort to optimize our cost structure. The Company is currently evaluating its portfolio of assets to validate their strategic and financial fit. To allow us to increase our focus on our North America core businesses, we are evaluating product lines, businesses, and engineering programs that fall outside of our core businesses. We are using a Return-On-Invested-Capital ("ROIC") methodology, combined with an assessment of the strategic fit to our core businesses, to identify areas that are not performing to our expectations. For those areas, we are evaluating whether to fix, divest, or close. These actions could result in additional restructuring and other related charges in the future, including but not limited to: (i) impairments, (ii) costs for employee and contractor termination and other related benefits, and (iii) charges for pension and other postretirement contractual benefits and curtailments. These charges could be significant.

Chatham restructuring activities

In the third quarter of 2011, the Company committed to close its Chatham, Ontario heavy truck plant, which had been idled since June 2009. Potential additional charges in future periods could range from $0 million to $60 million, primarily related to pension, postretirement costs and termination benefits, which are subject to employee negotiation, acceptance rates and the resolution of disputes related thereto.

Huntsville Facility

In February 2014, the Company announced plans to consolidate its mid-range engine manufacturing footprint and relocate mid-range engine production from its Huntsville, Alabama, facility ("Huntsville Facility") to its Melrose Park, Illinois facility ("Melrose Park Facility"). As a result, in the first quarter of 2014, the Truck segment recognized restructuring charges of $1 million for personnel costs related to employee terminations and $2 million for inventory reserves related to the idled production equipment at the Huntsville Facility. These charges are reported within Cost of products sold in the Company's Consolidated Statements of Operations.

Foundry Facilities

In the fourth quarter of 2014, as part of our ROIC evaluation, we recognized certain impairment and other charges related to our Indianapolis, Indiana foundry facility and our Waukesha, Wisconsin foundry operations. In the first quarter of 2015, the Truck segment recognized charges of $13 million for the acceleration of depreciation of certain assets related to the foundry facilities. These charges are reported within Cost of products sold in the Company's Consolidated Statements of Operations. We expect to incur the remaining accelerated depreciation charges through the third quarter of 2015.

Asset Impairments

The following table reconciles our impairment charges in our Consolidated Statements of Operations



	Three Months Ended January 31,
(in millions)	2015		2014
Indefinite-lived intangible asset impairment charge	$	—	$	16
Other asset impairment charges related to continuing operations	7		2
Total asset impairment charges	$	7	$	18

In the first quarter of 2015, the Company concluded it had a triggering event related to certain operating leases. As a result, the Truck segment recorded $7 million of asset impairment charges, which are recognized in Asset impairment charges in the Company's Consolidated Statements of Operations.

In the first quarter of 2014, the Company concluded it had a triggering event related to potential sales of assets requiring assessment of impairment for certain intangible and long-lived assets in the Truck segment. As a result, certain amortizing intangible assets and long-lived assets were determined to be fully impaired, resulting in an impairment charge of $18 million that was recognized in the three months ended January 31, 2014 in Asset impairment charges in the Company's Consolidated Statements of Operations.