Condensed Consolidating Financial Information (Tables)

6 Months Ended

Mar. 31, 2013

Condensed Consolidating Financial Information

Schedule of condensed consolidating balance sheet

CONDENSED CONSOLIDATING BALANCE SHEET — September 30, 2012

	Guarantor			Parent			Eliminations and			Headwaters
(in thousands)	Subsidiaries			Company			Reclassifications			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
Current and 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	362,569			95,929			(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	716,888			773,785			(1,184,138		)	306,535

Total assets	$	1,084,528		$	803,669		$	(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)	(222,806		)	(420,303		)				(643,109		)
Treasury stock				(128		)				(128		)
Total stockholders’ equity (net capital deficiency)	235,692			219,677			(458,498		)	(3,129		)

Total liabilities and stockholders’ equity (net capital deficiency)	$	1,084,528		$	803,669		$	(1,207,260	)	$	680,937

CONDENSED CONSOLIDATING BALANCE SHEET — March 31, 2013

	Guarantor		Parent		Eliminations and			Headwaters
(in thousands)	Subsidiaries		Company		Reclassifications			Consolidated

ASSETS

Current assets:
Cash and cash equivalents	$	52,903	$	10,710	$	—		$	63,613
Trade receivables, net	73,157							73,157
Inventories	45,458							45,458
Current and deferred income taxes	15,222		32,019		(36,809		)	10,432
Other	14,890		1,108					15,998
Total current assets	201,630		43,837		(36,809		)	208,658

Property, plant and equipment, net	158,465		3,306					161,771

Other assets:
Intangible assets, net	154,708							154,708
Goodwill	132,176							132,176
Investments in subsidiaries and intercompany accounts	336,788		121,710		(458,498		)	—
Intercompany notes			637,046		(637,046		)	—
Deferred income taxes	68,993		18,994		(87,987		)	—
Other	17,331		21,793					39,124
Total other assets	709,996		799,543		(1,183,531		)	326,008

Total assets	$	1,070,091	$	846,686	$	(1,220,340	)	$	696,437

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	17,941		$	26		$	—		$	17,967
Accrued personnel costs	8,820			25,221						34,041
Accrued interest				16,211						16,211
Current and deferred income taxes	20,469			16,340			(36,809		)	0
Other accrued liabilities	42,574			1,826						44,400
Current portion of long-term debt				38,085						38,085
Total current liabilities	89,804			97,709			(36,809		)	150,704

Long-term liabilities:
Long-term debt				449,341						449,341
Income taxes	86,682			20,519			(87,987		)	19,214
Intercompany notes	637,046						(637,046		)	—
Other	8,155			7,052						15,207
Total long-term liabilities	731,883			476,912			(725,033		)	483,762
Total liabilities	821,687			574,621			(761,842		)	634,466

Stockholders’ equity:
Common stock				73						73
Capital in excess of par value	458,498			719,462			(458,498		)	719,462
Retained earnings (accumulated deficit)	(210,094		)	(447,147		)				(657,241		)
Treasury stock				(323		)				(323		)
Total stockholders’ equity	248,404			272,065			(458,498		)	61,971

Total liabilities and stockholders’ equity	$	1,070,091		$	846,686		$	(1,220,340	)	$	696,437

Schedule of condensed consolidating statement of operations

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended March 31, 2012

	Guarantor			Parent			Headwaters
(in thousands)	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)	678			(3,408		)	(2,730		)

Income (loss) from continuing operations	4,759			(22,987		)	(18,228		)

Loss from discontinued operations, net of income taxes	(2,330		)				(2,330		)

Net income (loss)	$	2,429		$	(22,987	)	$	(20,558	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended March 31, 2013

	Guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Company			Consolidated

Revenue:
Light building products	$	84,778		$	—		$	84,778
Heavy construction materials	54,014						54,014
Energy technology	2,196						2,196
Total revenue	140,988			—			140,988

Cost of revenue:
Light building products	64,126						64,126
Heavy construction materials	43,396						43,396
Energy technology	1,055						1,055
Total cost of revenue	108,577			—			108,577

Gross profit	32,411			—			32,411

Operating expenses:
Amortization	5,288						5,288
Research and development	1,817						1,817
Selling, general and administrative	21,510			4,912			26,422
Total operating expenses	28,615			4,912			33,527

Operating income (loss)	3,796			(4,912		)	(1,116		)

Other income (expense):
Net interest expense	(44		)	(11,095		)	(11,139		)
Other, net	167			35			202
Total other income (expense), net	123			(11,060		)	(10,937		)

Income (loss) from continuing operations before income taxes	3,919			(15,972		)	(12,053		)

Income tax benefit (provision)	(770		)	2,540			1,770

Income (loss) from continuing operations	3,149			(13,432		)	(10,283		)

Income from discontinued operations, net of income taxes	2,023						2,023

Net income (loss)	$	5,172		$	(13,432	)	$	(8,260	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended March 31, 2012

	Guarantor			Parent			Headwaters
(in thousands)	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	(6,335		)	2,025			(4,310		)
Total other income (expense), net	(6,372		)	(23,921		)	(30,293		)

Income (loss) from continuing operations before income taxes	5,426			(33,104		)	(27,678		)

Income tax benefit (provision)	867			(4,697		)	(3,830		)

Income (loss) from continuing operations	6,293			(37,801		)	(31,508		)

Loss from discontinued operations, net of income taxes	(12,798		)				(12,798		)

Net loss	$	(6,505	)	$	(37,801	)	$	(44,306	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended March 31, 2013

	Guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Company			Consolidated

Revenue:
Light building products	$	161,466		$	—		$	161,466
Heavy construction materials	122,172						122,172
Energy technology	6,923						6,923
Total revenue	290,561			—			290,561

Cost of revenue:
Light building products	120,627						120,627
Heavy construction materials	96,980						96,980
Energy technology	3,298						3,298
Total cost of revenue	220,905			—			220,905

Gross profit	69,656			—			69,656

Operating expenses:
Amortization	10,224						10,224
Research and development	3,423						3,423
Selling, general and administrative	41,397			9,696			51,093
Total operating expenses	55,044			9,696			64,740

Operating income (loss)	14,612			(9,696		)	4,916

Other income (expense):
Net interest expense	(58		)	(21,553		)	(21,611		)
Other, net	203			35			238
Total other income (expense), net	145			(21,518		)	(21,373		)

Income (loss) from continuing operations before income taxes	14,757			(31,214		)	(16,457		)

Income tax benefit (provision)	(2,070		)	4,370			2,300

Income (loss) from continuing operations	12,687			(26,844		)	(14,157		)

Income from discontinued operations, net of income taxes	25						25

Net income (loss)	$	12,712		$	(26,844	)	$	(14,132	)

Schedule of condensed consolidating statement of cash flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended March 31, 2012

	Guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Company			Consolidated

Cash flows from operating activities:
Net loss	$	(6,505	)	$	(37,801	)	$	(44,306	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	26,140			56			26,196
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 gain on disposition of property, plant and equipment	(429		)				(429		)
Gain on convertible debt repayment				(2,025		)	(2,025		)
Non-cash restructuring costs	971						971
Net loss of unconsolidated joint ventures	6,069						6,069
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	(43,379		)	50,649			7,270
Net cash provided by (used in) operating activities	(7,959		)	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 interests in joint ventures	8,636						8,636
Net change in other assets	(2,732		)	1,218			(1,514		)
Net cash provided by (used in) investing activities	(4,628		)	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		)	(394		)	(12,730		)

Cash and cash equivalents, beginning of period	36,122			14,688			50,810

Cash and cash equivalents, end of period	$	23,786		$	14,294		$	38,080

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended March 31, 2013

	Guarantor			Parent			Headwaters
(in thousands)	Subsidiaries			Company			Consolidated

Cash flows from operating activities:
Net income (loss)	$	12,712		$	(26,844	)	$	(14,132	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	25,449			133			25,582
Interest expense related to amortization of debt issue costs and debt discount				3,165			3,165
Stock-based compensation	381			440			821
Deferred income taxes	55						55
Net gain on disposition of property, plant and equipment	(673		)				(673		)
Gain on sale of discontinued operations, net of income taxes	(3,110		)				(3,110		)
Gain on convertible debt repayment				(35		)	(35		)
Decrease in trade receivables	31,676						31,676
Increase in inventories	(5,960		)				(5,960		)
Decrease in accounts payable and accrued liabilities	(20,707		)	(7,627		)	(28,334		)
Other changes in operating assets and liabilities, net	22,303			(30,401		)	(8,098		)
Net cash provided by (used in) operating activities	62,126			(61,169		)	957

Cash flows from investing activities:
Payment for acquisition	(43,250		)				(43,250		)
Purchase of property, plant and equipment	(13,220		)	(1,187		)	(14,407		)
Proceeds from disposition of property, plant and equipment	789						789
Proceeds from sale of discontinued operations	3,813						3,813
Net change in other assets	(1,785		)	520			(1,265		)
Net cash used in investing activities	(53,653		)	(667		)	(54,320		)

Cash flows from financing activities:
Net proceeds from issuance of common stock				77,957			77,957
Payments on long-term debt				(15,217		)	(15,217		)
Employee stock purchases	319			135			454
Net cash provided by financing activities	319			62,875			63,194

Net increase in cash and cash equivalents	8,792			1,039			9,831

Cash and cash equivalents, beginning of period	44,111			9,671			53,782

Cash and cash equivalents, end of period	$	52,903		$	10,710		$	63,613