Discontinued Operations

3 Months Ended

Dec. 31, 2011

Discontinued Operations

Discontinued Operations

3.Discontinued Operations

Headwaters assessed the strategic fit of its various operations and is pursuing divestiture of certain businesses in the energy technology segment which do not align with its long-term strategy. In September 2011, the Board of Directors committed to a plan to sell the coal cleaning business, which is part of the energy technology segment. Headwaters currently expects to sell the business to one or more buyers before the end of 2012.

In September 2011, the coal cleaning business met all the criteria for classification as held for sale and presentation as a discontinued operation and accordingly, the assets and liabilities associated with this business have been reflected as held for sale in the accompanying consolidated balance sheets. The results of Headwaters’ coal cleaning operations have been presented as discontinued operations for all periods presented. Certain summarized information for the discontinued coal cleaning business is presented in the table below.

	Three Months Ended December 31,
(in thousands)	2010			2011
Revenue	$	18,266		$	5,291
Loss from discontinued operations before income taxes	$	(2,169	)	$	(10,468	)
Income tax benefit	240			0
Loss from discontinued operations, net of income taxes	$	(1,929	)	$	(10,468	)

Current assets held for sale consist primarily of accounts receivable and inventory. Non-current assets held for sale consist of approximately $16.1 million and $17.2 million of property, plant and equipment and approximately $8.3 million and $8.4 million of other assets, as of September 30, 2011 and December 31, 2011, respectively, all of which are recorded at the lower of historical carrying amount or fair value. If assumptions regarding future cash flows from the sale of the coal cleaning assets prove to be incorrect, Headwaters may be required to record a loss or a gain when the assets are sold. Liabilities held for sale consist primarily of accrued liabilities.