PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Sep. 30, 2016

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

NOTE 6—PROPERTY, PLANT AND EQUIPMENT

Significant components of property, plant and equipment are as follows (in thousands):

September 30,	2016		2015
Land and land improvements	$	16,711	$	16,925
Buildings and improvements		51,113		48,637
Machinery and other equipment		70,547		65,948
Software		51,191		21,633
Leasehold improvements		13,266		11,737
Construction and internal-use software development in progress		8,150		18,019
Accumulated depreciation and amortization		(114,662)		(108,209)
	$	96,316	$	74,690

As a part of our efforts to upgrade our current information systems, early in fiscal 2015 we purchased new enterprise resource planning (ERP) software and began the process of designing and configuring this software and other software applications to manage our operations.

Costs incurred in the development of internal-use software and software applications, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software development, are capitalized as computer software costs. Costs incurred outside of the application development stage are expensed as incurred. The amounts capitalized are included in property, plant and equipment and are amortized on a straight-line basis over the estimated useful life of the software, which ranges from three to seven years. No amortization expense is recorded until the software is ready for its intended use.

Through September 30, 2016 we have incurred costs of $72.7 million related to the purchase and development of our ERP system, including $45.2 million of costs incurred during fiscal 2016. We recognized expense for $24.9 million and $11.5 million of these costs in fiscal years 2016 and 2015, respectively, for costs that did not qualify for capitalization. Amounts that were expensed in connection with the development of these systems are classified within selling, general and administrative expenses in the Consolidated Statements of Income.

We capitalized $16.0 million of qualifying software development costs in fiscal year 2015 and an additional $20.3 million in fiscal 2016 as internal-use software development in progress. On April 1, 2016 we began using certain components of the ERP system. We reclassified the costs of the ERP components that we began using, totaling $28.4 million, into completed software and we began amortizing these costs over the seven year estimated useful life of these software components. We continue to capitalize costs associated with the development of other ERP components that are not yet ready for their intended use.

In 2014 we capitalized internal costs of $5.0 million related to the development of software that is used to design products for CGD Systems’ customers. This software was placed in service in late fiscal 2014. Amortization of this software totaled $1.0 million, $1.0 million, and $0.4 million in fiscal years 2016, 2015, and 2014, respectively.

Our provisions for depreciation of plant and equipment and amortization of leasehold improvements and software amounted to $11.4 million, $10.1 million and $7.8 million in 2016, 2015 and 2014, respectively. Generally, we use straight-line methods for depreciable real property over estimated useful lives ranging from 15 to 39 years or for leasehold improvements, the term of the underlying lease if shorter than the estimated useful lives. We use accelerated methods (declining balance and sum-of-the-years-digits) for machinery and equipment and software other than our ERP system over estimated useful lives ranging from 5 to 10 years.