Income Taxes (Tables)

12 Months Ended

Sep. 30, 2013

Income Taxes

Schedule of income tax benefit (provision)

The income tax benefit (provision) consisted of the following for the years ended September 30:

(in thousands)	2011			2012			2013
Current tax benefit (provision):
Federal	$	1,109		$	1,267		$	(1,292	)
State		(968	)		(1,717	)		(1,934	)
Total current tax benefit (provision)		141			(450	)		(3,226	)
Deferred tax benefit (provision):
Federal		30			(211	)		(698	)
State		0			0			0
Total deferred tax benefit (provision)		30			(211	)		(698	)
Total income tax benefit (provision)	$	171		$	(661	)	$	(3,924	)

Schedule of benefit (provision) for income taxes computed using statutory federal income tax rate

(in thousands)	2011			2012			2013
Tax benefit (provision) at U.S. statutory rate	$	46,936		$	9,019		$	(4,273	)
State income taxes, net of federal tax effect		(968	)		(1,717	)		(1,934	)
Valuation allowance		(45,310	)		(8,913	)		3,955
Unrecognized tax benefits		1,110			1,268			(1,245	)
Other		(1,597	)		(318	)		(427	)
Income tax benefit (provision)	$	171		$	(661	)	$	(3,924	)

Schedule of deferred income tax assets and liabilities

  The components of Headwaters' deferred income tax assets and liabilities were as follows as of September 30:

(in thousands)	2012			2013
Deferred tax assets:
NOL and capital loss carryforwards	$	69,252		$	78,095
Tax credit carryforwards		23,779			25,619
Debt repurchase premium		18,221			15,503
Estimated liabilities		15,819			14,165
Stock-based compensation		9,306			8,127
Reserves and allowances		2,409			5,805
Deferred revenue		584			6,792
Convertible note hedge		1,279			47
Other		1,950			2,137
Valuation allowances		(127,795	)		(127,418	)
Total deferred tax assets		14,804			28,872
Deferred tax liabilities:
Property, plant and equipment basis differences		(11,066	)		(26,065	)
Goodwill and intangible asset basis differences		(2,381	)		(2,759	)
Convertible debt discount		(1,357	)		(48	)
Indefinite lived intangible asset basis differences		(2,505	)		(3,204	)
Total deferred tax liabilities		(17,309	)		(32,076	)
Net deferred tax liability	$	(2,505	)	$	(3,204	)

Schedule of reconciliation of change in the amount of gross unrecognized income tax benefits

(in thousands)	2011			2012			2013
Gross unrecognized income tax benefits at beginning of year	$	11,843		$	8,312		$	4,872
Changes based on tax positions related to the current year		(872	)		(370	)		0
Increases for tax positions related to prior years		4,915			560			1,214
Reductions for tax positions related to prior years		(5,365	)		(2,073	)		(1,439	)
Settlements		(1,720	)		(65	)		(16	)
Lapse of statute of limitations		(489	)		(1,492	)		(79	)
Gross unrecognized income tax benefits at end of year	$	8,312		$	4,872		$	4,552