Segment Reporting

12 Months Ended

Sep. 30, 2013

Segment Reporting

Segment Reporting

3. Segment Reporting

        Headwaters currently operates three business segments: light building products, heavy construction materials and energy technology. These segments are managed and evaluated separately by management due to differences in their markets, operations, products and services. Revenues for the light building products segment consist of product sales to wholesale and retail distributors, contractors and other users of building products. Revenues for the heavy construction materials segment consist primarily of CCP product sales to ready-mix concrete businesses, with a smaller amount from services provided to coal-fueled electric generating utilities. Historically, revenues for the energy technology segment consisted primarily of coal sales; however, as described in Note 4, in September 2011 Headwaters committed to a plan to sell its coal cleaning business and, as of September 30, 2013, all coal cleaning facilities have been sold. Coal sales revenue and results of operations have been reflected as discontinued operations in the accompanying statements of operations for all periods. Currently, continuing revenues for the energy technology segment consist primarily of catalyst sales to oil refineries. Intersegment sales are immaterial.

        The following segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. Segment performance is evaluated primarily on revenue and operating income, although other factors are also used, such as Adjusted EBITDA. Headwaters defines Adjusted EBITDA as net income plus net interest expense, income taxes, depreciation and amortization, stock-based compensation, cash-based compensation tied to stock price, goodwill and other impairments, and other non-routine adjustments that arise from time to time.

        Segment costs and expenses considered in deriving segment operating income include cost of revenue, amortization, research and development, and segment-specific selling, general and administrative expenses. Amounts included in the Corporate column represent expenses that are not allocated to any segment and include administrative departmental costs and general corporate overhead. Segment assets reflect those specifically attributable to individual segments and primarily include cash, accounts receivable, inventories, property, plant and equipment, intangible assets and goodwill. Certain other assets are included in the Corporate column. The operating results of the discontinued coal cleaning business are not included in the energy technology segment results included in the tables below but the net results are reflected in the single line item for discontinued operations. The energy technology segment assets in 2011 and 2012 include the coal cleaning assets held for sale.

	2011
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	314,062		$	253,300		$	20,602		$	0		$	587,964
Depreciation and amortization	$	(37,747	)	$	(13,847	)	$	(2,327	)	$	(87	)	$	(54,008	)
Operating income (loss)	$	(14,751	)	$	31,304		$	(14,387	)	$	(14,331	)	$	(12,165	)
Net interest expense														(126,252	)
Other income (expense), net														4,314
Income tax benefit														171
Loss from continuing operations														(133,932	)
Loss from discontinued operations, net of income taxes														(95,989	)
Net loss													$	(229,921	)
Capital expenditures	$	14,862		$	2,696		$	9,823		$	0		$	27,381
Segment assets	$	292,411		$	298,584		$	101,645		$	35,597		$	728,237

	2012
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	339,632		$	281,672		$	11,483		$	0		$	632,787
Depreciation and amortization	$	(35,724	)	$	(13,322	)	$	(2,287	)	$	(148	)	$	(51,481	)
Operating income (loss)	$	25,553		$	40,254		$	(6,045	)	$	(25,359	)	$	34,403
Net interest expense														(52,678	)
Other income (expense), net														(7,493	)
Income tax provision														(661	)
Loss from continuing operations														(26,429	)
Loss from discontinued operations, net of income taxes														(35,819	)
Net loss													$	(62,248	)
Capital expenditures	$	17,707		$	5,240		$	1,472		$	2,028		$	26,447
Segment assets	$	271,554		$	338,753		$	36,377		$	34,253		$	680,937

	2013
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	394,324		$	293,000		$	15,252		$	0		$	702,576
Depreciation and amortization	$	(37,065	)	$	(12,809	)	$	(2,153	)	$	(290	)	$	(52,317	)
Operating income (loss)	$	34,194		$	43,519		$	(1,939	)	$	(21,363	)	$	54,411
Net interest expense														(42,566	)
Other income (expense), net														364
Income tax provision														(3,924	)
Income from continuing operations														8,285
Loss from discontinued operations, net of income taxes														(1,148	)
Net income													$	7,137
Capital expenditures	$	21,455		$	4,851		$	634		$	2,179		$	29,119
Segment assets	$	306,686		$	358,684		$	34,509		$	24,130		$	724,009