Property, Plant and Equipment

Property, plant and equipment as of October 3, 2015 and September 27, 2014 consisted of the following (in thousands):



	2015			2014
Land, buildings and improvements	$	278,637		$	283,569
Machinery and equipment	334,257			331,981
Computer hardware and software	102,763			95,780
Construction in progress	9,175			9,694
Total property, plant and equipment, gross	724,832			721,024
Less: accumulated depreciation	(407,481		)	(386,098		)
Total property, plant and equipment, net	$	317,351		$	334,926

Assets held under capital leases and included in property, plant and equipment as of October 3, 2015 and September 27, 2014 consisted of the following (in thousands):



	2015			2014
Buildings and improvements	$	22,953		$	23,141
Machinery and equipment	3,757			3,669
Total property, plant and equipment held under capital leases, gross	26,710			26,810
Less: accumulated amortization	(22,201		)	(19,405		)
Total property, plant and equipment held under capital leases, net	$	4,509		$	7,405

The building and improvements category in the above table includes a leased manufacturing facility in San Diego, California, which is no longer used by the Company and has been subleased. This facility is recorded at the net present value of the sublease income, net of expected cash outflows associated with the subleases. The net book value of the San Diego facility is reduced on a monthly basis by the amortization of the sublease cash receipts, net of certain cash outflows associated with the subleases. As of October 3, 2015 and September 27, 2014, the net book value of the San Diego facility was approximately $1.9 million and $4.3 million, respectively. The lease on the San Diego facility expires during fiscal 2016.

Amortization of assets held under capital leases totaled $0.5 million, $0.6 million and $0.6 million for fiscal 2015, 2014 and 2013, respectively. Capital lease additions totaled $1.2 million, $1.4 million, and $1.4 million for fiscal 2015, 2014 and 2013, respectively.

As of October 3, 2015, September 27, 2014 and September 28, 2013, accounts payable included approximately $2.7 million, $7.0 million and $10.9 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 ten-year base lease term that commenced upon the completion of construction during the fourth quarter of fiscal 2014, with two five-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 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 3, 2015 and September 27, 2014, the balance of the related financing obligation totaled $8.2 million and $8.0 million, respectively. The Company capitalized related leasehold improvements of $1.4 million and $16.2 million during fiscal 2015 and 2014, respectively, which are included in "Property, plant and equipment" in the Consolidated Balance Sheets and depreciated accordingly. 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, respectively.

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



2016	$	1,440
2017	1,476
2018	1,513
2019	1,550
2020	1,589
2021 through 2024	6,746
	$	14,314
2025 through 2029	9,451
2030 through 2034	$	10,870