Property, Plant and Equipment, net and Intangibles, net

12 Months Ended

Dec. 30, 2017

Property, Plant and Equipment, net and Intangibles, net

(6) Property, Plant and Equipment, net and Intangibles, net

Property, plant and equipment, net consisted of the following as of December 30, 2017 and December 31, 2016:

	2017		2016
Land (mineral bearing) and asset retirement costs	$	274,083	$	227,558
Land (non-mineral bearing)		168,501		146,099
Buildings and improvements		170,615		160,638
Plants, machinery and equipment		1,068,007		965,522
Mobile equipment and barges		391,256		307,885
Truck and auto fleet		47,270		32,236
Landfill airspace and improvements		49,480		48,513
Office equipment		33,314		26,096
Construction in progress		44,739		16,459
Property, plant and equipment		2,247,265		1,931,006
Less accumulated depreciation, depletion and amortization		(631,841)		(484,554)
Property, plant and equipment, net	$	1,615,424	$	1,446,452

Depreciation on property, plant and equipment, including assets subject to capital leases, is generally computed on a straight-line basis. Depletion of mineral reserves is computed based on the portion of the reserves used during the period compared to the gross estimated value of proven and probable reserves, which is updated periodically as circumstances dictate. Leasehold improvements are amortized on a straight-line basis over the lesser of the asset’s useful life or the remaining lease term. The estimated useful lives are generally as follows:

Buildings and improvements	10 - 30	years
Plant, machinery and equipment	15 - 20	years
Office equipment	3 - 7	years
Truck and auto fleet	5 - 8	years
Mobile equipment and barges	6 - 8	years
Landfill airspace and improvements	10 - 30	years
Other	4 - 20	years

Depreciation, depletion and amortization expense of property, plant and equipment was $174.4 million, $144.2 million and $111.6 million in the years ended December 30, 2017, December 31, 2016 and January 2, 2016, respectively.

Property, plant and equipment at December 30, 2017 and December 31, 2016 included $51.2 million and $49.8 million, respectively, of capital leases for certain equipment and a building with accumulated amortization of $18.5 million and $10.6 million, respectively. The equipment leases generally have terms of less than five years and the building lease had an original term of 30 years. Approximately $19.3 million and $11.8 million of the future obligations associated with the capital leases are included in accrued expenses as of December 30, 2017 and December 31, 2016, respectively, and the present value of the remaining capital lease payments, $16.4 million and $27.5 million, respectively, is included in other noncurrent liabilities on the consolidated balance sheets. Future minimum rental commitments under long-term capital leases are $20.5 million, $7.6 million, $5.9 million, $1.4 million, and $0.6 million for the years ended 2018, 2019, 2020, 2021 and 2022, respectively.

Assets are assessed for impairment charges when identified for disposition. Projected losses from disposition are recognized in the period in which they become estimable, which may be in advance of the actual disposition. The net gain from asset dispositions recognized in general and administrative expenses in fiscal years 2017, 2016 and 2015 was $7.5 million, $6.8 million and $23.5 million, respectively. No material impairment charges have been recognized on assets held for use in fiscal 2017, 2016 or 2015. The losses are commonly a result of the cash flows expected from selling the asset being less than the expected cash flows that could be generated from holding the asset for use.

Intangible Assets—The Company’s intangible assets are primarily composed of lease agreements and reserve rights. The assets related to lease agreements reflect the submarket royalty rates paid under agreements, primarily, for extracting aggregates. The values were determined as of the respective acquisition dates by a comparison of market-royalty rates to contract-royalty rates. The reserve rights relate to aggregate reserves to which the Company has the rights of ownership, but do not own the reserves. The intangible assets are amortized on a straight-line basis over the lives of the leases. The following table shows intangible assets by type and in total:

	December 30, 2017						December 31, 2016
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Leases	$	15,888	$	(4,178)	$	11,710	$	15,888	$	(3,382)	$	12,506
Reserve rights		6,234		(1,625)		4,609		8,706		(3,710)		4,996
Trade names		1,000		(758)		242		1,000		(658)		342
Other		409		(137)		272		249		(104)		145
Total intangible assets	$	23,531	$	(6,698)	$	16,833	$	25,843	$	(7,854)	$	17,989

Amortization expense in fiscal 2017, 2016 and 2015 was $1.3 million, $2.6 million and $2.2 million, respectively. The estimated amortization expense for intangible assets for each of the next five years and thereafter is as follows:

2018	$	1,281
2019		1,268
2020		1,185
2021		1,142
2022		1,113
Thereafter		10,844
Total	$	16,833

Summit Materials, LLC

Property, Plant and Equipment, net and Intangibles, net

(6) Property, Plant and Equipment, net and Intangibles, net

Property, plant and equipment, net consisted of the following as of December 30, 2017 and December 31, 2016:

	2017		2016
Land (mineral bearing) and asset retirement costs	$	274,083	$	227,558
Land (non-mineral bearing)		168,501		146,099
Buildings and improvements		170,615		160,638
Plants, machinery and equipment		1,068,007		965,522
Mobile equipment and barges		391,256		307,885
Truck and auto fleet		47,270		32,236
Landfill airspace and improvements		49,480		48,513
Office equipment		33,314		26,096
Construction in progress		44,739		16,459
Property, plant and equipment		2,247,265		1,931,006
Less accumulated depreciation, depletion and amortization		(631,841)		(484,554)
Property, plant and equipment, net	$	1,615,424	$	1,446,452

Depreciation on property, plant and equipment, including assets subject to capital leases, is generally computed on a straight-line basis. Depletion of mineral reserves is computed based on the portion of the reserves used during the period compared to the gross estimated value of proven and probable reserves, which is updated periodically as circumstances dictate. Leasehold improvements are amortized on a straight-line basis over the lesser of the asset’s useful life or the remaining lease term. The estimated useful lives are generally as follows:

Buildings and improvements	10 - 30	years
Plant, machinery and equipment	15 - 20	years
Office equipment	3 - 7	years
Truck and auto fleet	5 - 8	years
Mobile equipment and barges	6 - 8	years
Landfill airspace and improvements	10 - 30	years
Other	4 - 20	years

Depreciation, depletion and amortization expense of property, plant and equipment was $174.4 million, $144.2 million and $111.6 million in the years ended December 30, 2017, December 31, 2016 and January 2, 2016, respectively.

Property, plant and equipment at December 30, 2017 and December 31, 2016 included $51.2 million and $49.8 million, respectively, of capital leases for certain equipment and a building with accumulated amortization of $18.5 million and $10.6 million, respectively. The equipment leases generally have terms of less than five years and the building lease had an original term of 30 years. Approximately $19.3 million and $11.8 million of the future obligations associated with the capital leases are included in accrued expenses as of December 30, 2017 and December 31, 2016, respectively, and the present value of the remaining capital lease payments, $16.4 million and $27.5 million, respectively, is included in other noncurrent liabilities on the consolidated balance sheets. Future minimum rental commitments under long-term capital leases are $20.5 million, $7.6 million, $5.9 million, $1.4 million, and $0.6 million for the years ended 2018, 2019, 2020, 2021 and 2022, respectively.

 Assets are assessed for impairment charges when identified for disposition. Projected losses from disposition are recognized in the period in which they become estimable, which may be in advance of the actual disposition. The net gain from asset dispositions recognized in general and administrative expenses in fiscal years 2017, 2016 and 2015 was $7.5 million, $6.8 million and $23.5 million, respectively. No material impairment charges have been recognized on assets held for use in fiscal 2017, 2016 or 2015. The losses are commonly a result of the cash flows expected from selling the asset being less than the expected cash flows that could be generated from holding the asset for use.

Intangible Assets—The Company’s intangible assets are primarily composed of lease agreements and reserve rights. The assets related to lease agreements reflect the submarket royalty rates paid under agreements, primarily, for extracting aggregates. The values were determined as of the respective acquisition dates by a comparison of market-royalty rates to contract-royalty rates. The reserve rights relate to aggregate reserves to which the Company has the rights of ownership, but do not own the reserves. The intangible assets are amortized on a straight-line basis over the lives of the leases. The following table shows intangible assets by type and in total:

	December 30, 2017						December 31, 2016
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Leases	$	15,888	$	(4,178)	$	11,710	$	15,888	$	(3,382)	$	12,506
Reserve rights		6,234		(1,625)		4,609		8,706		(3,710)		4,996
Trade names		1,000		(758)		242		1,000		(658)		342
Other		409		(137)		272		249		(104)		145
Total intangible assets	$	23,531	$	(6,698)	$	16,833	$	25,843	$	(7,854)	$	17,989

Amortization expense in fiscal 2017, 2016 and 2015 was $1.3 million, $2.6 million and $2.2 million, respectively. The estimated amortization expense for intangible assets for each of the next five years and thereafter is as follows:

2018	$	1,281
2019		1,268
2020		1,185
2021		1,142
2022		1,113
Thereafter		10,844
Total	$	16,833