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, 2015		Additions		Payments			Adjustments			Balance at January 31, 2016
Employee termination charges	$	62	$	4	$	(22	)	$	(2	)	$	42
Lease vacancy	5		—		(3		)	—			2
Other	1		—		—			—			1
Restructuring liability	$	68	$	4	$	(25	)	$	(2	)	$	45



(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

North American Manufacturing Restructuring Activities

We continue to focus on our core Truck and Parts businesses. We continue to evaluate our portfolio of assets to validate their strategic and financial fit, 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. For those areas that fall outside our core businesses, we are evaluating alternatives which 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, we committed to close our Chatham, Ontario heavy truck plant, which had been idled since June 2009. At that time, we recognized curtailment and contractual termination charges related to postretirement plans. Based on a ruling regarding pension benefits received from the Financial Services Tribunal in Ontario, Canada, in the third quarter of 2014, we recognized additional charges of $14 million related to the 2011 closure of the Chatham, Ontario plant. We appealed this ruling, but it was upheld in a July 3, 2015 decision issued by the Divisional Court of Ontario. On July 23, 2015, we filed a notice of motion for leave to appeal to the Court of Appeal for Ontario, which was perfected on August 25, 2015 through an additional filing. On December 21, 2015, the Ontario Court of Appeal denied the motion for leave to appeal. We are in the process of preparing the final partial wind-up report for approval by the Financial Services Commission of Ontario. Potential 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 governmental approval, employee negotiation, acceptance rates and the resolution of disputes related thereto. In addition, we are evaluating the impact of the ruling on prior plan administration practices and it is probable that additional charges will be recognized, but those charges are currently not estimable.

Foundry Facilities

In December 2014, we announced the closure of our Indianapolis, Indiana foundry facility and on June 30, 2015, we closed this foundry. In addition, on April 30, 2015, we sold our Waukesha, Wisconsin foundry operations. As a result, 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 Costs of products sold in our Consolidated Statements of Operations.

Asset Impairments

In the first quarter of 2016, we concluded that a triggering event occurred in connection with the potential sale of Pure Power Technologies ("PPT") assets requiring the impairment of its assets in the Truck segment. As a result, a charge of approximately $2 million was recognized in the first quarter of 2016. This charge is reported within Asset impairment charges in our Consolidated Statements of Operations. In February 2016, we sold PPT, a components business focused on air and fuel systems.

In the first quarter of 2015, we concluded we had a triggering event related to certain equipment leased to others. As a result, the Truck segment recorded $7 million of asset impairment charges. These charges are reported within Asset impairment charges in our Consolidated Statements of Operations.