RESTRUCTURING COSTS

At September 30, 2014 and 2013, $11 million and $12 million, respectively, of restructuring reserves primarily related to unpaid employee termination benefits remained in the consolidated balance sheet. Asset impairment charges relate to manufacturing facilities that have been sold and machinery and equipment that became idle and obsolete as a result of these actions.

The following table summarizes changes in restructuring reserves (in millions):



	Employee Termination Benefits			Asset Impairment			Plant Shutdown & Other			Total
Balance at September 30, 2011	$	19		$	—		$	—		$	19
Activity during the period:
Charges to continuing operations	18			19			2			39
Charges to discontinued operations ⁽¹⁾	—			—			1			1
Asset write-offs	—			(19		)	—			(19		)
Cash payments – continuing operations	(20		)	—			(2		)	(22		)
Cash payments – discontinued operations	(2		)	—			(1		)	(3		)
Balance at September 30, 2012	15			—			—			15
Activity during the period:
Charges to continuing operations	18			1			4			23
Charges to discontinued operations ⁽¹⁾	3			—			—			3
Asset write-offs	—			(1		)	—			(1		)
Cash payments – continuing operations	(19		)	—			(4		)	(23		)
Cash payments – discontinued operations ⁽¹⁾	(3		)	—			—			(3		)
Other	(2		)	—			—			(2		)
Balance at September 30, 2013	12			—			—			12
Activity during the period:
Charges to continuing operations	10			—			—			10
Cash payments – continuing operations	(10		)	—			—			(10		)
Other	(1		)	—			—			(1		)
Total restructuring reserves, end of year	11			—			—			11
Less: non-current restructuring reserves	(2		)	—			—			(2		)
Restructuring reserves – current, at September 30, 2014	$	9		$	—		$	—		$	9

____________________


(1)	Charges to discontinued operations are included in discontinued operations in the consolidated statement of operations. Amounts for prior periods have been recast for discontinued operations.

Restructuring costs attributable to in the company’s business segments during fiscal years 2014, 2013 and 2012 are as follows (in millions):



	Commercial Truck & Industrial		Aftermarket & Trailer		Corporate		Total
Fiscal year 2014:
South America labor reduction	$	7	$	—	$	—	$	7
Other	1		1		1		3
Total restructuring costs	$	8	$	1	$	1	$	10
Fiscal year 2013:
Variable labor reductions	$	5	$	—	$	—	$	5
Segment reorganization and Asia-Pacific realignment	10		3		3		16
M2016 footprint actions	2		—		—		2
Total restructuring costs	$	17	$	3	$	3	$	23
Fiscal year 2012:
Performance Plus actions	$	24	$	—	$	—	$	24
Fiscal Year 2012 European action	7		—		—		7
Variable labor reductions	5		—		—		5
Other	—		2		1		3
Total restructuring costs	$	36	$	2	$	1	$	39

South America Labor Reduction: During the fourth quarter of fiscal year 2014, the company initiated a South America headcount reduction plan intended to reduce labor costs in response to softening economic conditions in the region. In response to decreasing production volumes in South America, the company plans to eliminate approximately 190 hourly and 20 salaried positions and incurred $7 million of restructuring costs, primarily severance benefits, in the Commercial Truck & Industrial segment.

Variable Labor Reductions: During the fourth quarter of fiscal year 2012, the company initiated a global variable labor headcount reduction plan intended to reduce labor and other costs in response to market conditions. In response to further deterioration in the global markets, the company approved further headcount reductions under this action during the fourth quarter of fiscal year 2013. As part of this action, the company eliminated approximately 600 hourly and 120 salaried positions and incurred $10 million of restructuring costs, primarily severance benefits, in the Commercial Truck & Industrial segment of which $5 million was recognized in fiscal year 2013, and $5 million was recognized in fiscal year 2012. Restructuring actions associated with the variable labor reductions were substantially complete as of September 30, 2013.

Segment Reorganization and Asia-Pacific Realignment: On November 12, 2012, the company announced a revised management reporting structure resulting in two business segments to drive efficiencies. On January 8, 2013, the company announced restructuring actions related to the business segment rationalization. On March 26, 2013, the company announced plans to consolidate its operations in China by transferring manufacturing operations to the company's majority owned off-highway joint venture facility and closing its facilities in Wuxi, China and Nanjing, China. During fiscal year 2013, the company recorded employee severance charges and other exit costs associated with the elimination of approximately 200 salaried positions (including contract employees) and 50 hourly positions of $8 million and $3 million in the Commercial Truck & Industrial and Aftermarket & Trailer segments, respectively, as well as $3 million at a corporate location. The company also recognized $2 million within the Commercial Truck & Industrial segment related to a lease termination. Restructuring actions associated with this program were substantially complete as of September 30, 2013.

M2016 Footprint Actions: As part of the company's recently announced M2016 Strategy, a three-year plan to achieve sustainable financial strength, the company approved a North American footprint realignment action and a European Shared Services Reorganization, which is expected to be completed over the next twelve months. As part of these actions, the company expects to eliminate 74 hourly and 27 salaried positions and incur approximately $2 million of restructuring costs in the Commercial Truck & Industrial segment. The company has recognized costs of approximately $2 million within the Commercial Truck & Industrial segment, primarily related to severance benefits, during the fiscal year 2013.

Performance Plus: During fiscal year 2007, the company launched a long-term profit improvement and cost reduction initiative called “Performance Plus.” As part of this program, the company identified significant restructuring actions which would eliminate up to 2,800 positions in North America and Europe and consolidate and combine certain global facilities. The company’s continuing operations recognized restructuring costs in its Commercial Truck & Industrial segment of $24 million and $16 million in fiscal years 2013 and 2012, respectively, related to Performance Plus. Fiscal year 2012 Performance Plus costs include $19 million of non-cash charges, including an impairment charge of $17 million for assets held for sale at December 31, 2011. In connection with the then-planned sale of St. Priest, France manufacturing facility to Renault Trucks SAS, the company classified certain assets and associated liabilities as held for sale (collectively the “Disposal Group”) at December 31, 2011. Upon comparing the carrying value of the Disposal Group to its fair value less cost to sell, an impairment was identified. The sale of Disposal Group was completed on January 2, 2012. In addition, other restructuring charges of approximately $5 million associated with employee headcount reduction and plant rationalization costs were recognized in connection with the sale of St. Priest facility. Performance Plus costs recognized in fiscal years 2011 and 2010 were also related to employee headcount reductions, asset write-downs and facility rationalization at the company's St. Priest location.

Restructuring actions associated with Performance Plus were complete as of September 30, 2012. Cumulative restructuring costs recorded for this program as of September 30, 2012 were $186 million, including $93 million reported in discontinued operations in the consolidated statement of operations. These costs primarily related to employee severance and related costs of $117 million, asset impairment charges of $41 million and $28 million primarily associated with pension termination benefits. The company’s Commercial Truck & Industrial segment has recognized cumulative restructuring costs associated with Performance Plus of $82 million. Cumulative restructuring costs of $11 million were recognized by corporate locations and the company’s Aftermarket & Trailer segment.

Fiscal Year 2012 European Action: During the second quarter of fiscal year 2012, the company approved a European headcount reduction plan in response to the ongoing economic weakness and uncertainty in that region. The company recognized approximately $7 million of restructuring costs associated with this plan in its Commercial Truck & Industrial segment. Restructuring actions associated with this plan were substantially complete as of September 30, 2012.

Other Actions: The remaining restructuring costs incurred during the fiscal year 2012 were primarily associated with the company’s previously announced executive headcount reduction.