Long-Term Assets

Property, Plant and Equipment

Property, plant and equipment is stated at cost. Costs associated with the repair and maintenance of the Company’s property, plant and equipment are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency or safety of the Company’s property, plant and equipment are capitalized and depreciated over the remaining useful life of the related asset. Depreciable property is depreciated over the estimated useful lives of the assets, using principally the straight-line method.

A summary of property, plant and equipment is shown below (in millions):



	July 2, 2016			December 31, 2015
Land	$	104.2		$	97.9
Buildings and improvements	613.0			560.4
Machinery and equipment	2,350.8			2,125.8
Construction in progress	210.7			274.9
Total property, plant and equipment	3,278.7			3,059.0
Less – accumulated depreciation	(1,388.4		)	(1,232.5		)
Property, plant and equipment, net	$	1,890.3		$	1,826.5

Depreciation expense was $81.2 million and $71.7 million for the three months ended July 2, 2016 and June 27, 2015, respectively, and $158.2 million and $142.9 million for the six months ended July 2, 2016 and June 27, 2015, respectively.

The Company monitors its long-lived assets for impairment indicators on an ongoing basis in accordance with GAAP. If impairment indicators exist, the Company performs the required impairment analysis by comparing the undiscounted cash flows expected to be generated from the long-lived assets to the related net book values. If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized. Except as discussed below, the Company does not believe that there were any indicators that would have resulted in long-lived asset impairment charges as of July 2, 2016. The Company will, however, continue to assess the impact of any significant industry events and long-term automotive production estimates on the realization of its long-lived assets.

In the first six months of 2016 and 2015, the Company recognized fixed asset impairment charges of $3.2 million and $1.6 million, respectively, in conjunction with its restructuring actions (Note 2, "Restructuring"). In the first six months of 2015, the Company also recognized additional fixed asset impairment charges of $0.5 million.

Investment in Affiliates

On June 21, 2016, the Company gained control of Beijing BAI Lear Automotive Systems Co., Ltd. (“Beijing BAI”) by amending the existing joint venture agreement to eliminate the substantive participating rights of its joint venture partner. Prior to the amendment, Beijing BAI was accounted for under the equity method. The consolidation of Beijing BAI was accounted for as a business combination, and accordingly, the assets acquired and liabilities assumed are included in the accompanying condensed consolidated balance sheet as of July 2, 2016. The operating results and cash flows of Beijing BAI are reflected in the Company’s seating segment in the accompanying condensed consolidated financial statements from the date of the amended joint venture agreement.

A preliminary summary of the fair value of the assets acquired and liabilities assumed in conjunction with the consolidation is shown below (in millions):



Property, plant and equipment	$	20.7
Other assets and liabilities assumed, net	33.2
Goodwill	13.1
Intangible assets	34.0
	$	101.0

Intangible assets consist of amounts recognized for the fair value of customer-based assets and were based on an independent appraisal. Customer-based assets include Beijing BAI’s established relationships with its customers and the expectation of these relationships generating future economic profits for the Company. It is currently estimated that these intangible assets have a weighted average useful life of approximately eight years. Recognized goodwill is attributable to the assembled workforce, expected synergies and other intangible assets that do not qualify for separate recognition.

The fair values of the assets acquired and liabilities assumed in conjunction with the consolidation contain provisional estimates that may be revised as a result of additional information obtained regarding such assets and liabilities.

As of the date of consolidation, the fair value of the Company’s previously held equity interest in Beijing BAI was $61.0 million, and the fair value of the noncontrolling interest in Beijing BAI was $40.0 million. As a result of valuing the Company’s previously held equity interest in Beijing BAI at fair value, the Company recognized a gain of $30.3 million during the three and six months ended July 2, 2016.

The pro forma effects of the consolidation would not materially impact the Company’s reported results for any period presented.

For further information on acquired assets measured at fair value see Note 15, "Financial Instruments".