Condensed Consolidating Financial Information (Tables)

6 Months Ended

Mar. 31, 2012

Condensed Consolidating Financial Information

Schedule of condensed consolidating balance sheet

CONDENSED CONSOLIDATING BALANCE SHEET — September 30, 2011

	Guarantor			Non- guarantor			Parent			Eliminationsand			Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Reclassifications			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	36,122		$	—		$	14,688		$	—		$	50,810
Trade receivables, net	90,931												90,931
Inventories	33,247												33,247
Current and deferred income taxes	13,734						12,720			(23,367		)	3,087
Assets held for sale	6,777												6,777
Other	6,617						337						6,954
Total current assets	187,428			—			27,745			(23,367		)	191,806
Property, plant and equipment, net	164,446			—			263			—			164,709
Other assets:
Intangible assets, net	164,221												164,221
Goodwill	116,671												116,671
Assets held for sale	22,446						2,000						24,446
Investments in subsidiaries and intercompany accounts	321,026			(9,499		)	146,971			(458,498		)	—
Intercompany notes	(637,046		)				637,046						—
Deferred income taxes	89,158						21,670			(110,828		)	—
Other	19,263			24,376			22,745						66,384
Total other assets	95,739			14,877			830,432			(569,326		)	371,722
Total assets	$	447,613		$	14,877		$	858,440		$	(592,693	)	$	728,237
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,397		$	—		$	582		$	—		$	18,979
Accrued personnel costs	10,677						12,353						23,030
Accrued interest							18,336						18,336
Liabilities held for sale	7,470												7,470
Current and deferred income taxes	21,981			2,588			(1,202		)	(23,367		)	—
Other accrued liabilities	43,544						1,843						45,387
Current portion of long-term debt							9,014						9,014
Total current liabilities	102,069			2,588			40,926			(23,367		)	122,216
Long-term liabilities:
Long-term debt							518,789						518,789
Deferred income taxes	92,752			(27		)	22,319			(110,828		)	4,216
Unrecognized income tax benefits	7,226						4,467						11,693
Liabilities held for sale	5,507												5,507
Other	3,158						5,922						9,080
Total long-term liabilities	108,643			(27		)	551,497			(110,828		)	549,285
Total liabilities	210,712			2,561			592,423			(134,195		)	671,501
Stockholders’ equity:
Common stock	209,346						61			(209,346		)	61
Capital in excess of par value	249,152						637,547			(249,152		)	637,547
Retained earnings (accumulated deficit)	(221,597		)	12,327			(371,591		)				(580,861		)
Other				(11		)							(11		)
Total stockholders’ equity	236,901			12,316			266,017			(458,498		)	56,736
Total liabilities and stockholders’ equity	$	447,613		$	14,877		$	858,440		$	(592,693	)	$	728,237

CONDENSED CONSOLIDATING BALANCE SHEET — March 31, 2012

	Guarantor			Non- guarantor		Parent			Eliminationsand			Headwaters
(in thousands)	Subsidiaries			Subsidiaries		Company			Reclassifications			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	23,786		$	—	$	14,294		$	—		$	38,080
Trade receivables, net	69,089											69,089
Inventories	35,328											35,328
Current and deferred income taxes	13,806					8,952			(20,723		)	2,035
Assets held for sale	4,776											4,776
Other	3,412					10,468						13,880
Total current assets	150,197			—		33,714			(20,723		)	163,188
Property, plant and equipment, net	158,748			—		439			—			159,187
Other assets:
Intangible assets, net	153,758											153,758
Goodwill	116,671											116,671
Assets held for sale	25,366											25,366
Investments in subsidiaries and intercompany accounts	358,926			9,023		91,204			(459,153		)	—
Intercompany notes	(637,046		)			637,046						—
Deferred income taxes	81,586					23,830			(105,416		)	—
Other	19,212					22,541						41,753
Total other assets	118,473			9,023		774,621			(564,569		)	337,548
Total assets	$	427,418		$	9,023	$	808,774		$	(585,292	)	$	659,923
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,782		$	—	$	749		$	—		$	14,531
Accrued personnel costs	9,600					13,235						22,835
Accrued interest						16,307						16,307
Current and deferred income taxes	15,903			3,518		4,180			(20,723		)	2,878
Liabilities held for sale	8,062											8,062
Other accrued liabilities	35,645					1,512						37,157
Current portion of long-term debt						9,178						9,178
Total current liabilities	82,992			3,518		45,161			(20,723		)	110,948
Long-term liabilities:
Long-term debt						502,787						502,787
Deferred income taxes	89,087					20,699			(105,416		)	4,370
Unrecognized income tax benefits	7,063			13		3,782						10,858
Liabilities held for sale	7,587											7,587
Other	2,803					6,852						9,655
Total long-term liabilities	106,540			13		534,120			(105,416		)	535,257
Total liabilities	189,532			3,531		579,281			(126,139		)	646,205
Stockholders’ equity:
Common stock	213,812					61			(213,812		)	61
Capital in excess of par value	245,341					638,824			(245,341		)	638,824
Retained earnings (accumulated deficit)	(221,267		)	5,492		(409,392		)				(625,167		)
Total stockholders’ equity	237,886			5,492		229,493			(459,153		)	13,718
Total liabilities and stockholders’ equity	$	427,418		$	9,023	$	808,774		$	(585,292	)	$	659,923

Schedule of condensed consolidating statement of operations

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended March 31, 2011

	Guarantor			Non-guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Consolidated
Revenue:
Light building products	$	62,677		$	—		$	—		$	62,677
Heavy construction materials	45,096									45,096
Energy technology	5,431									5,431
Total revenue	113,204			—			—			113,204
Cost of revenue:
Light building products	51,935									51,935
Heavy construction materials	37,509									37,509
Energy technology	2,683									2,683
Total cost of revenue	92,127			—			—			92,127
Gross profit	21,077			—			—			21,077
Operating expenses:
Amortization	5,606									5,606
Research and development	1,645									1,645
Selling, general and administrative	36,414						4,498			40,912
Restructuring costs	4,819									4,819
Total operating expenses	48,484			—			4,498			52,982
Operating loss	(27,407		)	—			(4,498		)	(31,905		)
Other income (expense):
Net interest expense	(8		)				(82,587		)	(82,595		)
Other, net	12			1,836						1,848
Total other income (expense), net	4			1,836			(82,587		)	(80,747		)
Income (loss) from continuing operations before income taxes	(27,403		)	1,836			(87,085		)	(112,652		)
Income tax benefit (provision)	425			(677		)	(968		)	(1,220		)
Income (loss) from continuing operations	(26,978		)	1,159			(88,053		)	(113,872		)
Loss from discontinued operations, net of income taxes	(42,282		)							(42,282		)
Net income (loss)	$	(69,260	)	$	1,159		$	(88,053	)	$	(156,154	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended March 31, 2012

	Guarantor			Non-guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Consolidated
Revenue:
Light building products	$	74,311		$	—		$	—		$	74,311
Heavy construction materials	51,239									51,239
Energy technology	4,082									4,082
Total revenue	129,632			—			—			129,632
Cost of revenue:
Light building products	54,613									54,613
Heavy construction materials	41,380									41,380
Energy technology	2,074									2,074
Total cost of revenue	98,067			—			—			98,067
Gross profit	31,565			—			—			31,565
Operating expenses:
Amortization	5,298									5,298
Research and development	1,616									1,616
Selling, general and administrative	19,622						6,070			25,692
Restructuring costs	757									757
Total operating expenses	27,293			—			6,070			33,363
Operating income (loss)	4,272			—			(6,070		)	(1,798		)
Other income (expense):
Net interest expense	(18		)				(13,509		)	(13,527		)
Other, net	(173		)							(173		)
Total other income (expense), net	(191		)	—			(13,509		)	(13,700		)
Income (loss) from continuing operations before income taxes	4,081			—			(19,579		)	(15,498		)
Income tax benefit (provision)	794			(116		)	(3,408		)	(2,730		)
Income (loss) from continuing operations	4,875			(116		)	(22,987		)	(18,228		)
Loss from discontinued operations, net of income taxes	(2,330		)							(2,330		)
Net income (loss)	$	2,545		$	(116	)	$	(22,987	)	$	(20,558	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended March 31, 2011

	Guarantor			Non-guarantor		Parent			Headwaters
(in thousands)	Subsidiaries			Subsidiaries		Company			Consolidated
Revenue:
Light building products	$	132,386		$	—	$	—		$	132,386
Heavy construction materials	108,311								108,311
Energy technology	8,327								8,327
Total revenue	249,024			—		—			249,024
Cost of revenue:
Light building products	105,784								105,784
Heavy construction materials	85,861								85,861
Energy technology	4,473								4,473
Total cost of revenue	196,118			—		—			196,118
Gross profit	52,906			—		—			52,906
Operating expenses:
Amortization	11,153								11,153
Research and development	3,590								3,590
Selling, general and administrative	56,510					8,796			65,306
Restructuring costs	4,819					980			5,799
Total operating expenses	76,072			—		9,776			85,848
Operating loss	(23,166		)	—		(9,776		)	(32,942		)
Other income (expense):
Net interest expense	6					(99,496		)	(99,490		)
Other, net	371			2,451					2,822
Total other income (expense), net	377			2,451		(99,496		)	(96,668		)
Income (loss) from continuing operations before income taxes	(22,789		)	2,451		(109,272		)	(129,610		)
Income tax benefit (provision)	(380		)	41		(2,681		)	(3,020		)
Income (loss) from continuing operations	(23,169		)	2,492		(111,953		)	(132,630		)
Loss from discontinued operations, net of income taxes	(44,211		)						(44,211		)
Net income (loss)	$	(67,380	)	$	2,492	$	(111,953	)	$	(176,841	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended March 31, 2012

	Guarantor			Non-guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Consolidated
Revenue:
Light building products	$	147,645		$	—		$	—		$	147,645
Heavy construction materials	114,377									114,377
Energy technology	5,037									5,037
Total revenue	267,059			—			—			267,059
Cost of revenue:
Light building products	109,943									109,943
Heavy construction materials	88,478									88,478
Energy technology	2,631									2,631
Total cost of revenue	201,052			—			—			201,052
Gross profit	66,007			—			—			66,007
Operating expenses:
Amortization	10,803									10,803
Research and development	3,470									3,470
Selling, general and administrative	37,791						9,183			46,974
Restructuring costs	2,145									2,145
Total operating expenses	54,209			—			9,183			63,392
Operating income (loss)	11,798			—			(9,183		)	2,615
Other income (expense):
Net interest expense	(37		)				(25,946		)	(25,983		)
Other, net	(443		)	(5,892		)	2,025			(4,310		)
Total other income (expense), net	(480		)	(5,892		)	(23,921		)	(30,293		)
Income (loss) from continuing operations before income taxes	11,318			(5,892		)	(33,104		)	(27,678		)
Income tax benefit (provision)	1,810			(943		)	(4,697		)	(3,830		)
Income (loss) from continuing operations	13,128			(6,835		)	(37,801		)	(31,508		)
Loss from discontinued operations, net of income taxes	(12,798		)							(12,798		)
Net income (loss)	$	330		$	(6,835	)	$	(37,801	)	$	(44,306	)

Schedule of condensed consolidating statement of cash flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended March 31, 2011

	Guarantor			Non-guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(67,380	)	$	2,492		$	(111,953	)	$	(176,841	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	31,159						56			31,215
Asset impairments and non-cash restructuring costs	39,210						980			40,190
Interest expense related to amortization of debt issue costs and debt discount							14,496			14,496
Stock-based compensation	1,220						817			2,037
Deferred income taxes	8,649			134			(8,390		)	393
Net gain of unconsolidated joint ventures				(2,452		)				(2,452		)
Net gain on disposition of property, plant and equipment	(309		)							(309		)
Decrease in trade receivables	24,394									24,394
Increase in inventories	(2,593		)							(2,593		)
Increase (decrease) in accounts payable and accrued liabilities	1,258						(13,822		)	(12,564		)
Other changes in operating assets and liabilities, net	(19,672		)	15			20,742			1,085
Net cash provided by (used in) operating activities	15,936			189			(97,074		)	(80,949		)
Cash flows from investing activities:
Purchase of property, plant and equipment and payments for acquisitions	(14,643		)							(14,643		)
Proceeds from disposition of property, plant and equipment	413									413
Net decrease in long-term receivables and deposits	526									526
Net change in other assets	(462		)	(189		)	(100		)	(751		)
Net cash used in investing activities	(14,166		)	(189		)	(100		)	(14,455		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt							392,750			392,750
Payments on long-term debt							(338,044		)	(338,044		)
Employee stock purchases	308						95			403
Net cash provided by financing activities	308			—			54,801			55,109
Net increase (decrease) in cash and cash equivalents	2,078			0			(42,373		)	(40,295		)
Cash and cash equivalents, beginning of period	21,168			0			69,816			90,984
Cash and cash equivalents, end of period	$	23,246		$	0		$	27,443		$	50,689

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended March 31, 2012

	Guarantor			Non-guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Consolidated
Cash flows from operating activities:
Net income (loss)	$	330		$	(6,835	)	$	(37,801	)	$	(44,306	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	26,140						56			26,196
Non-cash restructuring costs	971									971
Interest expense related to amortization of debt issue costs and debt discount							5,863			5,863
Stock-based compensation	349						574			923
Deferred income taxes	29						(2		)	27
Net loss of unconsolidated joint ventures				6,069						6,069
Net gain on disposition of property, plant and equipment	(429		)							(429		)
Gain on convertible debt repayment							(2,025		)	(2,025		)
Decrease in trade receivables	23,245									23,245
Increase in inventories	(717		)							(717		)
Decrease in accounts payable and accrued liabilities	(13,732		)				(1,311		)	(15,043		)
Other changes in operating assets and liabilities, net	(35,509		)	(7,870		)	50,649			7,270
Net cash provided by (used in) operating activities	677			(8,636		)	16,003			8,044
Cash flows from investing activities:
Purchase of property, plant and equipment	(11,625		)				(207		)	(11,832		)
Proceeds from disposition of property, plant and equipment	1,093									1,093
Proceeds from sale of interest in joint ventures				8,636						8,636
Net decrease (increase) in long-term receivables and deposits	(2,447		)				1,946			(501		)
Net change in other assets	(285		)				(728		)	(1,013		)
Net cash provided by (used in) investing activities	(13,264		)	8,636			1,011			(3,617		)
Cash flows from financing activities:
Payments on long-term debt							(17,441		)	(17,441		)
Employee stock purchases	251						33			284
Net cash provided by (used in) financing activities	251			—			(17,408		)	(17,157		)
Net decrease in cash and cash equivalents	(12,336		)	0			(394		)	(12,730		)
Cash and cash equivalents, beginning of period	36,122			0			14,688			50,810
Cash and cash equivalents, end of period	$	23,786		$	0		$	14,294		$	38,080