Condensed Consolidating Financial Information (Tables)

12 Months Ended

Sep. 30, 2013

Condensed Consolidating Financial Information

Schedule of condensed consolidating balance sheet

CONDENSED CONSOLIDATING BALANCE SHEET—September 30, 2012

(in thousands)	Guarantor Subsidiaries			Parent Company			Eliminations and Reclassifications			Headwaters Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	44,111		$	9,671		$	—		$	53,782
Trade receivables, net		102,006									102,006
Inventories		31,588									31,588
Deferred income taxes		16,168			17,827			(23,122	)		10,873
Assets held for sale		5,864									5,864
Other		10,426			157						10,583
Total current assets		210,163			27,655			(23,122	)		214,696
Property, plant and equipment, net		157,477			2,229			—			159,706
Other assets:
Intangible assets, net		143,911									143,911
Goodwill		116,671									116,671
Assets held for sale		7,807									7,807
Investments in subsidiaries and intercompany accounts		362,739			95,759			(458,498	)		—
Intercompany notes					637,046			(637,046	)		—
Deferred income taxes		70,285			18,309			(88,594	)		—
Other		15,645			22,501						38,146
Total other assets		717,058			773,615			(1,184,138	)		306,535
Total assets	$	1,084,698		$	803,499		$	(1,207,260	)	$	680,937
LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable	$	17,389		$	88		$	—		$	17,477
Accrued personnel costs		14,678			32,370						47,048
Accrued interest					16,267						16,267
Current and deferred income taxes		19,232			4,680			(23,122	)		790
Liabilities associated with assets held for sale		8,640									8,640
Other accrued liabilities		48,760			2,186						50,946
Total current liabilities		108,699			55,591			(23,122	)		141,168
Long-term liabilities:
Long-term debt					500,539						500,539
Income taxes		89,025			21,648			(88,594	)		22,079
Liabilities associated with assets held for sale		9,966									9,966
Intercompany notes		637,046						(637,046	)		—
Other		4,100			6,214						10,314
Total long-term liabilities		740,137			528,401			(725,640	)		542,898
Total liabilities		848,836			583,992			(748,762	)		684,066
Stockholders' equity (net capital deficiency):
Common stock					61						61
Capital in excess of par value		458,498			640,047			(458,498	)		640,047
Retained earnings (accumulated deficit)		(222,636	)		(420,473	)					(643,109	)
Treasury stock					(128	)					(128	)
Total stockholders' equity (net capital deficiency)		235,862			219,507			(458,498	)		(3,129	)
Total liabilities and stockholders' equity (net capital deficiency)	$	1,084,698		$	803,499		$	(1,207,260	)	$	680,937

CONDENSED CONSOLIDATING BALANCE SHEET—September 30, 2013

(in thousands)	Guarantor Subsidiaries			Parent Company			Eliminations and Reclassifications			Headwaters Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	70,747		$	4,569		$	—		$	75,316
Trade receivables, net		109,868									109,868
Inventories		37,383									37,383
Deferred income taxes		25,828			17,895			(29,687	)		14,036
Other		6,548			732						7,280
Total current assets		250,374			23,196			(29,687	)		243,883
Property, plant and equipment, net		155,499			4,120			—			159,619
Other assets:
Intangible assets, net		139,797									139,797
Goodwill		137,198									137,198
Investments in subsidiaries and intercompany accounts		360,482			98,016			(458,498	)		—
Intercompany notes					637,046			(637,046	)		—
Deferred income taxes		53,228			22,179			(75,407	)		—
Other		22,300			21,212						43,512
Total other assets		713,005			778,453			(1,170,951	)		320,507
Total assets	$	1,118,878		$	805,769		$	(1,200,638	)	$	724,009
LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable	$	21,051		$	759		$	—		$	21,810
Accrued personnel costs		14,622			33,124						47,746
Accrued interest					16,077						16,077
Current and deferred income taxes		20,073			9,734			(29,687	)		120
Other accrued liabilities		52,898			2,370						55,268
Current portion of long-term debt					7,553						7,553
Total current liabilities		108,644			69,617			(29,687	)		148,574
Long-term liabilities:
Long-term debt					449,420						449,420
Income taxes		80,877			19,167			(75,407	)		24,637
Intercompany notes		637,046						(637,046	)		—
Other		9,332			7,636						16,968
Total long-term liabilities		727,255			476,223			(712,453	)		491,025
Total liabilities		835,899			545,840			(742,140	)		639,599
Stockholders' equity (net capital deficiency):
Common stock					73						73
Capital in excess of par value		458,498			720,828			(458,498	)		720,828
Retained earnings (accumulated deficit)		(175,519	)		(460,453	)					(635,972	)
Treasury stock					(519	)					(519	)
Total stockholders' equity (net capital deficiency)		282,979			259,929			(458,498	)		84,410
Total liabilities and stockholders' equity (net capital deficiency)	$	1,118,878		$	805,769		$	(1,200,638	)	$	724,009

Schedule of condensed consolidating statement of operations

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Year Ended September 30, 2011

(in thousands)	Guarantor Subsidiaries			Parent Company			Headwaters Consolidated
Revenue:
Light building products	$	314,062		$	—		$	314,062
Heavy construction materials		253,300						253,300
Energy technology		20,602						20,602
Total revenue		587,964			—			587,964
Cost of revenue:
Light building products		238,377						238,377
Heavy construction materials		193,006						193,006
Energy technology		10,648						10,648
Total cost of revenue		442,031			—			442,031
Gross profit		145,933			—			145,933
Operating expenses:
Amortization		22,359						22,359
Research and development		6,451						6,451
Selling, general and administrative		98,845			12,513			111,358
Asset impairments and restructuring costs		16,113			1,817			17,930
Total operating expenses		143,768			14,330			158,098
Operating income (loss)		2,165			(14,330	)		(12,165	)
Other income (expense):
Net interest expense		(16	)		(126,236	)		(126,252	)
Intercompany interest income (expense)		(24,333	)		24,333			—
Other, net		4,314						4,314
Total other income (expense), net		(20,035	)		(101,903	)		(121,938	)
Loss from continuing operations before income taxes		(17,870	)		(116,233	)		(134,103	)
Income tax benefit (provision)		369			(198	)		171
Loss from continuing operations		(17,501	)		(116,431	)		(133,932	)
Loss from discontinued operations, net of income taxes		(95,989	)					(95,989	)
Net loss	$	(113,490	)	$	(116,431	)	$	(229,921	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Year Ended September 30, 2012

(in thousands)	Guarantor Subsidiaries			Parent Company			Headwaters Consolidated
Revenue:
Light building products	$	339,632		$	—		$	339,632
Heavy construction materials		281,672						281,672
Energy technology		11,483						11,483
Total revenue		632,787			—			632,787
Cost of revenue:
Light building products		241,669						241,669
Heavy construction materials		210,158						210,158
Energy technology		5,893						5,893
Total cost of revenue		457,720			—			457,720
Gross profit		175,067			—			175,067
Operating expenses:
Amortization		20,675						20,675
Research and development		8,006						8,006
Selling, general and administrative		84,479			25,359			109,838
Restructuring costs		2,145						2,145
Total operating expenses		115,305			25,359			140,664
Operating income (loss)		59,762			(25,359	)		34,403
Other income (expense):
Net interest expense		(80	)		(52,598	)		(52,678	)
Intercompany interest income (expense)		(25,945	)		25,945			—
Other, net		(9,972	)		2,479			(7,493	)
Total other income (expense), net		(35,997	)		(24,174	)		(60,171	)
Income (loss) from continuing operations before income taxes		23,765			(49,533	)		(25,768	)
Income tax benefit (provision)		(1,482	)		821			(661	)
Income (loss) from continuing operations		22,283			(48,712	)		(26,429	)
Loss from discontinued operations, net of income taxes		(35,819	)					(35,819	)
Net loss	$	(13,536	)	$	(48,712	)	$	(62,248	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Year Ended September 30, 2013

(in thousands)	Guarantor Subsidiaries			Parent Company			Headwaters Consolidated
Revenue:
Light building products	$	394,324		$	—		$	394,324
Heavy construction materials		293,000						293,000
Energy technology		15,252						15,252
Total revenue		702,576			—			702,576
Cost of revenue:
Light building products		283,128						283,128
Heavy construction materials		219,996						219,996
Energy technology		6,970						6,970
Total cost of revenue		510,094			—			510,094
Gross profit		192,482			—			192,482
Operating expenses:
Amortization		20,230						20,230
Research and development		7,330						7,330
Selling, general and administrative		89,148			21,363			110,511
Total operating expenses		116,708			21,363			138,071
Operating income (loss)		75,774			(21,363	)		54,411
Other income (expense):
Net interest expense		(54	)		(42,512	)		(42,566	)
Intercompany interest income (expense)		(23,434	)		23,434			—
Other, net		329			35			364
Total other income (expense), net		(23,159	)		(19,043	)		(42,202	)
Income (loss) from continuing operations before income taxes		52,615			(40,406	)		12,209
Income tax benefit (provision)		(4,350	)		426			(3,924	)
Income (loss) from continuing operations		48,265			(39,980	)		8,285
Loss from discontinued operations, net of income taxes		(1,148	)					(1,148	)
Net income (loss)	$	47,117		$	(39,980	)	$	7,137

Schedule of condensed consolidating statement of cash flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended September 30, 2011

(in thousands)	Guarantor Subsidiaries			Parent Company			Headwaters Consolidated
Cash flows from operating activities:
Net loss	$	(113,490	)	$	(116,431	)	$	(229,921	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		64,143			87			64,230
Interest expense related to amortization of debt issue costs and debt discount					20,069			20,069
Stock-based compensation		1,875			1,783			3,658
Deferred income taxes		(9,953	)		9,919			(34	)
Net gain on disposition of property, plant and equipment		(329	)					(329	)
Asset impairments and non-cash restructuring costs		86,447			255			86,702
Net gain of unconsolidated joint ventures		(3,990	)					(3,990	)
Increase in trade receivables		(1,986	)					(1,986	)
Decrease in inventories		3,233						3,233
Increase (decrease) in accounts payable and accrued liabilities		11,228			(1,892	)		9,336
Other changes in operating assets and liabilities, net		6,890			(9,572	)		(2,682	)
Net cash provided by (used in) operating activities		44,068			(95,782	)		(51,714	)
Cash flows from investing activities:
Payments for acquisitions		(2,466	)					(2,466	)
Purchase of property, plant and equipment		(27,381	)					(27,381	)
Proceeds from disposition of property, plant and equipment		556						556
Net change in other assets		(368	)		(13	)		(381	)
Net cash used in investing activities		(29,659	)		(13	)		(29,672	)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt					392,942			392,942
Payments on long-term debt					(352,449	)		(352,449	)
Employee stock purchases		545			174			719
Net cash provided by financing activities		545			40,667			41,212
Net increase (decrease) in cash and cash equivalents		14,954			(55,128	)		(40,174	)
Cash and cash equivalents, beginning of year		21,168			69,816			90,984
Cash and cash equivalents, end of year	$	36,122		$	14,688		$	50,810

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended September 30, 2012

(in thousands)	Guarantor Subsidiaries			Parent Company			Headwaters Consolidated
Cash flows from operating activities:
Net loss	$	(13,536	)	$	(48,712	)	$	(62,248	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		51,333			148			51,481
Interest expense related to amortization of debt issue costs and debt discount					14,184			14,184
Stock-based compensation		673			1,064			1,737
Deferred income taxes		199			(1	)		198
Net gain on disposition of property, plant and equipment		(538	)					(538	)
Gain on sale of discontinued operations, net of income taxes		(267	)					(267	)
Gain on convertible debt repayments					(2,479	)		(2,479	)
Asset impairments and non-cash restructuring costs		13,166						13,166
Net loss of unconsolidated joint ventures		9,314						9,314
Increase in trade receivables		(9,792	)					(9,792	)
Decrease in inventories		2,954						2,954
Increase in accounts payable and accrued liabilities		9,646			17,797			27,443
Other changes in operating assets and liabilities, net		(51,803	)		52,819			1,016
Net cash provided by operating activities		11,349			34,820			46,169
Cash flows from investing activities:
Payments for acquisition		(996	)					(996	)
Purchase of property, plant and equipment		(24,419	)		(2,028	)		(26,447	)
Proceeds from disposition of property, plant and equipment		1,261						1,261
Proceeds from sale of discontinued operations		2,000						2,000
Proceeds from sale of interests in joint ventures		18,522						18,522
Net change in other assets		(190	)		(558	)		(748	)
Net cash used in investing activities		(3,822	)		(2,586	)		(6,408	)
Cash flows from financing activities:
Payments on long-term debt					(36,334	)		(36,334	)
Debt issue costs					(1,090	)		(1,090	)
Employee stock purchases		462			173			635
Net cash provided by (used in) financing activities		462			(37,251	)		(36,789	)
Net increase (decrease) in cash and cash equivalents		7,989			(5,017	)		2,972
Cash and cash equivalents, beginning of year		36,122			14,688			50,810
Cash and cash equivalents, end of year	$	44,111		$	9,671		$	53,782

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended September 30, 2013

(in thousands)	Guarantor Subsidiaries			Parent Company			Headwaters Consolidated
Cash flows from operating activities:
Net income (loss)	$	47,117		$	(39,980	)	$	7,137
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		52,027			290			52,317
Interest expense related to amortization of debt issue costs and debt discount					5,841			5,841
Stock-based compensation		765			938			1,703
Deferred income taxes		698						698
Net gain on disposition of property, plant and equipment		(649	)					(649	)
Loss on sale of discontinued operations, net of income taxes		55						55
Gain on convertible debt repayments					(35	)		(35	)
Increase in trade receivables		(5,035	)					(5,035	)
Decrease in inventories		2,221						2,221
Increase (decrease) in accounts payable and accrued liabilities		(5,637	)		1,419			(4,218	)
Other changes in operating assets and liabilities, net		1,305			(2,777	)		(1,472	)
Net cash provided by (used in) operating activities		92,867			(34,304	)		58,563
Cash flows from investing activities:
Payments for acquisition		(43,250	)					(43,250	)
Purchase of property, plant and equipment		(26,940	)		(2,179	)		(29,119	)
Proceeds from disposition of property, plant and equipment		791						791
Proceeds from sale of discontinued operations		4,813						4,813
Net change in other assets		(2,184	)		576			(1,608	)
Net cash used in investing activities		(66,770	)		(1,603	)		(68,373	)
Cash flows from financing activities:
Proceeds from issuance of common stock					77,957			77,957
Payments on long-term debt					(47,355	)		(47,355	)
Employee stock purchases		539			203			742
Net cash provided by financing activities		539			30,805			31,344
Net increase (decrease) in cash and cash equivalents		26,636			(5,102	)		21,534
Cash and cash equivalents, beginning of year		44,111			9,671			53,782
Cash and cash equivalents, end of year	$	70,747		$	4,569		$	75,316