Property, Plant and Equipment

Property, plant and equipment as of October 1, 2016 and October 3, 2015 consisted of the following (in thousands):



	2016			2015
Land, buildings and improvements	$	247,806		$	278,637
Machinery and equipment	336,378			334,257
Computer hardware and software	107,239			102,763
Construction in progress	4,298			9,175
Total property, plant and equipment, gross	695,721			724,832
Less: accumulated depreciation	(404,496		)	(407,481		)
Total property, plant and equipment, net	$	291,225		$	317,351

Assets held under capital leases and included in property, plant and equipment as of October 1, 2016 and October 3, 2015 consisted of the following (in thousands):



	2016			2015
Buildings and improvements	$	4,801		$	22,953
Machinery and equipment	6,070			3,757
Total property, plant and equipment held under capital leases, gross	10,871			26,710
Less: accumulated amortization	(7,375		)	(22,201		)
Total property, plant and equipment held under capital leases, net	$	3,496		$	4,509

As of October 3, 2015, the building and improvements category in the table above included a subleased manufacturing facility in San Diego, California recorded at a gross and net book value of approximately $17.9 million and $1.9 million, respectively. The lease expired during the year and the related asset had no value at the end of fiscal 2016.

Amortization of assets held under capital leases totaled $1.9 million, $0.5 million and $0.6 million for fiscal 2016, 2015 and 2014, respectively. Capital lease additions totaled $2.9 million, $1.2 million, and $1.4 million for fiscal 2016, 2015 and 2014, respectively.

As of October 1, 2016, October 3, 2015 and September 27, 2014, accounts payable included approximately $3.5 million, $2.7 million and $7.0 million, respectively, related to the purchase of property, plant and equipment, which have been treated as non-cash transactions for purposes of the Consolidated Statements of Cash Flows.

The Company’s lease agreement for the building shell and land of its facility in Guadalajara, Mexico, includes a 10-year base lease term that commenced upon the completion of construction during the fourth quarter of fiscal 2014, with two 5-year renewal options. This lease did not qualify as a sale-leaseback transaction, and was accounted for as a non-cash financing transaction. Since the Company believes that it will exercise both renewal options, the lease is being accounted for using a 20 year lease term.

During the third quarter of fiscal 2014, the Company capitalized the building shell in Guadalajara as a non-cash financing obligation of approximately $8.0 million, which will be increased by interest expense and land rent expense, and reduced by contractual payments. As of October 1, 2016 and October 3, 2015, the balance of the related financing obligation totaled $8.4 million and $8.2 million, respectively. The Company capitalized related leasehold improvements of $1.4 million during fiscal 2015, which are included in "Property, plant and equipment" in the Consolidated Balance Sheets, and depreciated accordingly; no leasehold improvements were capitalized during fiscal 2016. At the end of the 20-year lease term, the net book value of the assets will approximate the balance of the financing obligation. If the Company does not exercise both renewal options or exercises the first but not the second, it would record a loss related to the disposal of the underlying assets in operating results of $4.1 million in fiscal 2024 or $0.8 million in fiscal 2029.

The future minimum payments under the remainder of the ten-year base lease agreement, as well as the two five-year renewal options, are as follows (in thousands):



2017	$	1,476
2018	1,513
2019	1,550
2020	1,589
2021	1,629
2022 through 2024	5,135
	$	12,892
2025 through 2029	$	9,451
2030 through 2034	$	10,870