Condensed Consolidating Financial Information (Tables)

6 Months Ended

Mar. 31, 2015

Condensed Consolidating Financial Information

Schedule of condensed consolidating balance sheet

CONDENSED CONSOLIDATING BALANCE SHEET — September 30, 2014

	Guarantor			Non- guarantor		Parent			Eliminations and			Headwaters
(in thousands)	Subsidiaries			Subsidiaries		Company			Reclassifications			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	33,552		$	5,764	$	113,226		$	—		$	152,542
Trade receivables, net	113,940			5,390								119,330
Inventories	48,482			2,151								50,633
Deferred income taxes	15,509			289		18,427			(23,149		)	11,076
Other	9,286			168		1,082						10,536
Total current assets	220,769			13,762		132,735			(23,149		)	344,117
Property, plant and equipment, net	162,458			11,674		7,979			—			182,111
Other assets:
Goodwill	145,068			30,518								175,586
Intangible assets, net	131,150			28,713								159,863
Investments in subsidiaries						406,327			(406,327		)	—
Intercompany accounts and notes						637,046			(637,046		)	—
Deferred income taxes	41,658					22,928			(64,586		)	—
Other	14,388			1,381		18,860						34,629
Total other assets	332,264			60,612		1,085,161			(1,107,959		)	370,078
Total assets	$	715,491		$	86,048	$	1,225,875		$	(1,131,108	)	$	896,306
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,643		$	956	$	427		$	—		$	27,026
Accrued personnel costs	13,483			418		35,001						48,902
Accrued interest						18,273						18,273
Current income taxes	23,198			319					(23,149		)	368
Other accrued liabilities	36,811			3,006		1,940						41,757
Total current liabilities	99,135			4,699		55,641			(23,149		)	136,326
Long-term liabilities:
Long-term debt, net						592,458						592,458
Income taxes	65,133			893		21,802			(64,586		)	23,242
Intercompany accounts and notes	191,274			4,061		441,711			(637,046		)	—
Other	16,167			774		11,645						28,586
Total long-term liabilities	272,574			5,728		1,067,616			(701,632		)	644,286
Total liabilities	371,709			10,427		1,123,257			(724,781		)	780,612
Redeemable non-controlling interest in consolidated subsidiary				13,252								13,252
Stockholders’ equity:
Common stock						74						74
Capital in excess of par value	458,498			60,453		723,824			(519,127		)	723,648
Retained earnings (accumulated deficit)	(114,716		)	1,916		(620,688		)	112,800			(620,688		)
Treasury stock						(592		)				(592		)
Total stockholders’ equity	343,782			62,369		102,618			(406,327		)	102,442
Total liabilities and stockholders’ equity	$	715,491		$	86,048	$	1,225,875		$	(1,131,108	)	$	896,306

CON DENSED CONSOLIDATING BALANCE SHEET — March 31, 2015

	Guarantor		Non- guarantor			Parent			Eliminations and			Headwaters
(in thousands)	Subsidiaries		Subsidiaries			Company			Reclassifications			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	36,633	$	2,975		$	40,115		$	—		$	79,723
Trade receivables, net	85,726		5,640									91,366
Inventories	60,857		2,708									63,565
Current and deferred income taxes	7,196		27,998			44,780			(68,756		)	11,218
Other	10,596		163			1,387						12,146
Total current assets	201,008		39,484			86,282			(68,756		)	258,018
Property, plant and equipment, net	162,422		10,304			9,523			—			182,249
Other assets:
Goodwill	144,643		30,869									175,512
Intangible assets, net	124,836		27,976									152,812
Investments in subsidiaries	46,273					474,868			(521,141		)	—
Intercompany accounts and notes						637,046			(637,046		)	—
Deferred income taxes	50,188					23,589			(73,777		)	—
Other	10,894		2,180			21,571						34,645
Total other assets	376,834		61,025			1,157,074			(1,231,964		)	362,969
Total assets	$	740,264	$	110,813		$	1,252,879		$	(1,300,720	)	$	803,236
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	17,904	$	908		$	1,008		$	—		$	19,820
Accrued personnel costs	9,551		598			22,426						32,575
Accrued interest						2,721						2,721
Current income taxes	47,658					21,098			(68,756		)	—
Other accrued liabilities	27,939		5,122			3,988						37,049
Current portion of long-term debt						3,188						3,188
Total current liabilities	103,052		6,628			54,429			(68,756		)	95,353
Long-term liabilities:
Long-term debt, net						559,129						559,129
Income taxes	64,117		7,310			21,289			(73,777		)	18,939
Intercompany accounts and notes			177,035			516,660			(693,695		)	—
Other	333		15,457			15,569						31,359
Total long-term liabilities	64,450		199,802			1,112,647			(767,472		)	609,427
Total liabilities	167,502		206,430			1,167,076			(836,228		)	704,780
Redeemable non-controlling interest in consolidated subsidiary			12,829									12,829
Stockholders’ equity:
Common stock						74						74
Capital in excess of par value	486,069		56,922			725,791			(543,167		)	725,615
Retained earnings (accumulated deficit)	86,693		(165,368		)	(639,306		)	78,675			(639,306		)
Treasury stock						(756		)				(756		)
Total stockholders’ equity	572,762		(108,446		)	85,803			(464,492		)	85,627
Total liabilities and stockholders’ equity	$	740,264	$	110,813		$	1,252,879		$	(1,300,720	)	$	803,236

Schedule of condensed consolidating statement of operations

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended March 31, 2014

	Guarantor			Non- guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Revenue:
Building products	$	85,108		$	9,031		$	—		$	—		$	94,139
Construction materials	59,093												59,093
Energy technology	3,280												3,280
Total revenue	147,481			9,031			—			—			156,512
Cost of revenue:
Building products	64,458			6,370									70,828
Construction materials	45,669												45,669
Energy technology	1,464												1,464
Total cost of revenue	111,591			6,370			—			—			117,961
Gross profit	35,890			2,661			—			—			38,551
Operating expenses:
Amortization	5,123			362									5,485
Selling, general and administrative	25,610			1,142			5,765						32,517
Total operating expenses	30,733			1,504			5,765			—			38,002
Operating income (loss)	5,157			1,157			(5,765		)	—			549
Other income (expense):
Net interest expense	(146		)				(12,088		)				(12,234		)
Equity in earnings of subsidiaries							3,574			(3,574		)	—
Other, net	29			(61		)							(32		)
Total other income (expense), net	(117		)	(61		)	(8,514		)	(3,574		)	(12,266		)
Income (loss) from continuing operations before income taxes	5,040			1,096			(14,279		)	(3,574		)	(11,717		)
Income tax benefit (provision)	(1,571		)	(180		)	3,961						2,210
Income (loss) from continuing operations	3,469			916			(10,318		)	(3,574		)	(9,507		)
Loss from discontinued operations, net of income taxes	(575		)										(575		)
Net income (loss)	2,894			916			(10,318		)	(3,574		)	(10,082		)
Net income attributable to non-controlling interest				(236		)							(236		)
Net income (loss) attributable to Headwaters Incorporated	$	2,894		$	680		$	(10,318	)	$	(3,574	)	$	(10,318	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended March 31, 2015

	Guarantor			Non- guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Revenue:
Building products	$	95,935		$	10,471		$	—		$	—		$	106,406
Construction materials	67,498												67,498
Energy technology	5,821												5,821
Total revenue	169,254			10,471			—			—			179,725
Cost of revenue:
Building products	72,416			7,065									79,481
Construction materials	50,738												50,738
Energy technology	2,365												2,365
Total cost of revenue	125,519			7,065			—			—			132,584
Gross profit	43,735			3,406			—			—			47,141
Operating expenses:
Amortization	4,191			369									4,560
Selling, general and administrative	26,636			1,618			6,097						34,351
Total operating expenses	30,827			1,987			6,097			—			38,911
Operating income (loss)	12,908			1,419			(6,097		)	—			8,230
Other income (expense):
Net interest expense	(60		)				(35,905		)				(35,965		)
Equity in earnings of subsidiaries							12,325			(12,325		)	—
Other, net	(62		)	29									(33		)
Total other income (expense), net	(122		)	29			(23,580		)	(12,325		)	(35,998		)
Income (loss) from continuing operations before income taxes	12,786			1,448			(29,677		)	(12,325		)	(27,768		)
Income tax benefit (provision)	(1,300		)	(140		)	4,220						2,780
Income (loss) from continuing operations	11,486			1,308			(25,457		)	(12,325		)	(24,988		)
Loss from discontinued operations, net of income taxes				(210		)							(210		)
Net income (loss)	11,486			1,098			(25,457		)	(12,325		)	(25,198		)
Net income attributable to non-controlling interest				(259		)							(259		)
Net income (loss) attributable to Headwaters Incorporated	$	11,486		$	839		$	(25,457	)	$	(12,325	)	$	(25,457	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended March 31, 2014

	Guarantor			Non- guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Revenue:
Building products	$	176,445		$	10,706		$	—		$	—		$	187,151
Construction materials	130,614												130,614
Energy technology	4,362												4,362
Total revenue	311,421			10,706			—			—			322,127
Cost of revenue:
Building products	132,327			7,839									140,166
Construction materials	100,434												100,434
Energy technology	2,083												2,083
Total cost of revenue	234,844			7,839			—			—			242,683
Gross profit	76,577			2,867			—			—			79,444
Operating expenses:
Amortization	10,229			362									10,591
Selling, general and administrative	48,411			1,395			10,938						60,744
Total operating expenses	58,640			1,757			10,938			—			71,335
Operating income (loss)	17,937			1,110			(10,938		)	—			8,109
Other income (expense):
Net interest expense	(167		)				(22,123		)				(22,290		)
Equity in earnings of subsidiaries							15,225			(15,225		)	—
Other, net	74			(94		)							(20		)
Total other income (expense), net	(93		)	(94		)	(6,898		)	(15,225		)	(22,310		)
Income (loss) from continuing operations before income taxes	17,844			1,016			(17,836		)	(15,225		)	(14,201		)
Income tax benefit (provision)	(3,350		)	(180		)	6,090						2,560
Income (loss) from continuing operations	14,494			836			(11,746		)	(15,225		)	(11,641		)
Income from discontinued operations, net of income taxes	125												125
Net income (loss)	14,619			836			(11,746		)	(15,225		)	(11,516		)
Net income attributable to non-controlling interest				(230		)							(230		)
Net income (loss) attributable to Headwaters Incorporated	$	14,619		$	606		$	(11,746	)	$	(15,225	)	$	(11,746	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended March 31, 2015

	Guarantor			Non- guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Revenue:
Building products	$	202,328		$	21,612		$	—		$	—		$	223,940
Construction materials	148,902												148,902
Energy technology	6,480												6,480
Total revenue	357,710			21,612			—			—			379,322
Cost of revenue:
Building products	148,934			14,739									163,673
Construction materials	110,249												110,249
Energy technology	2,572												2,572
Total cost of revenue	261,755			14,739			—			—			276,494
Gross profit	95,955			6,873			—			—			102,828
Operating expenses:
Amortization	8,309			737									9,046
Selling, general and administrative	52,438			3,192			10,750						66,380
Total operating expenses	60,747			3,929			10,750			—			75,426
Operating income (loss)	35,208			2,944			(10,750		)	—			27,402
Other income (expense):
Net interest expense	(104		)				(47,813		)				(47,917		)
Equity in earnings of subsidiaries							34,125			(34,125		)	—
Other, net	(142		)	(160		)							(302		)
Total other income (expense), net	(246		)	(160		)	(13,688		)	(34,125		)	(48,219		)
Income (loss) from continuing operations before income taxes	34,962			2,784			(24,438		)	(34,125		)	(20,817		)
Income tax benefit (provision)	(2,570		)	(270		)	5,820						2,980
Income(loss) from continuing operations	32,392			2,514			(18,618		)	(34,125		)	(17,837		)
Loss from discontinued operations, net of income taxes	(67		)	(210		)							(277		)
Net income (loss)	32,325			2,304			(18,618		)	(34,125		)	(18,114		)
Net income attributable to non-controlling interest				(504		)							(504		)
Net income (loss) attributable to Headwaters Incorporated	$	32,325		$	1,800		$	(18,618	)	$	(34,125	)	$	(18,618	)

Schedule of condensed consolidating statement of cash flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended March 31, 2014

				Non-
	Guarantor			guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	14,619		$	836		$	(11,746	)	$	(15,225	)	$	(11,516	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	25,582			748			130						26,460
Interest expense related to amortization of debt issue costs and debt discount							1,153						1,153
Stock-based compensation	404						612						1,016
Deferred income taxes	214												214
Net gain on disposition of property, plant and equipment	328						45						373
Gain on sale of discontinued operations, net of income taxes	(3,117		)										(3,117		)
Net loss of unconsolidated joint ventures				133									133
Equity in earnings of subsidiaries							(15,225		)	15,225			—
Decrease in trade receivables	30,264			647									30,911
Decrease (increase) in inventories	(11,139		)	1,385									(9,754		)
Decrease in accounts payable and accrued liabilities	(21,882		)	(331		)	(1,385		)				(23,598		)
Other changes in operating assets and liabilities, net	(15,224		)	1,320			8,374						(5,530		)
Net cash provided by (used in) operating activities	20,049			4,738			(18,042		)	—			6,745
Cash flows from investing activities:
Payments for acquisitions	(3,100		)				(57,519		)				(60,619		)
Payments for investments in unconsolidated joint ventures				(1,000		)							(1,000		)
Purchase of property, plant and equipment	(13,505		)	(678		)	(1,761		)				(15,944		)
Proceeds from disposition of property, plant and equipment	358												358
Proceeds from sale of discontinued operations	4,666												4,666
Net decrease in long-term receivables and deposits	5,527						298						5,825
Net change in other assets	(192		)				216						24
Net cash used in investing activities	(6,246		)	(1,678		)	(58,766		)	—			(66,690		)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt							146,200						146,200
Payments on long-term debt							(7,792		)				(7,792		)
Employee stock purchases	344						110						454
Net cash provided by financing activities	344			—			138,518			—			138,862
Net increase in cash and cash equivalents	14,147			3,060			61,710			—			78,917
Cash and cash equivalents, beginning of period	70,713			34			4,569						75,316
Cash and cash equivalents, end of period	$	84,860		$	3,094		$	66,279		$	—		$	154,233

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended March 31, 2015

				Non-
	Guarantor			guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	32,325		$	2,304		$	(18,618	)	$	(34,125	)	$	(18,114	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	24,223			1,421			212						25,856
Interest expense related to amortization of debt issue costs and debt discount							5,042						5,042
Stock-based compensation	496						843						1,339
Deferred income taxes	295			182									477
Net loss on disposition of property, plant and equipment	112			1									113
Loss on sale of discontinued operations, net of income taxes	45			196									241
Net loss of unconsolidated joint ventures				234									234
Equity in earnings of subsidiaries							(34,125		)	34,125			0
Decrease (increase) in trade receivables	28,597			(250		)							28,347
Increase in inventories	(10,071		)	(557		)							(10,628		)
Increase (decrease) in accounts payable and accrued liabilities	(23,170		)	2,248			(26,658		)				(47,580		)
Other changes in operating assets and liabilities, net	2,554			(7,521		)	(3,802		)				(8,769		)
Net cash provided by (used in) operating activities	55,406			(1,742		)	(77,106		)	—			(23,442		)
Cash flows from investing activities:
Business acquisition	(1,200		)										(1,200		)
Investments in unconsolidated joint venture	(125		)										(125		)
Purchase of property, plant and equipment	(14,496		)	(259		)	(2,719		)				(17,474		)
Proceeds from disposition of property, plant and equipment	640												640
Net decrease in long-term receivables and deposits	2,584						1,066						3,650
Net change in other assets	(437		)				93						(344		)
Net cash used in investing activities	(13,034		)	(259		)	(1,560		)	—			(14,853		)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt							414,675						414,675
Payments on long-term debt							(448,736		)				(448,736		)
Dividends paid to non-controlling interest in consolidated subsidiary				(927		)							(927		)
Employee stock purchases	342			16			106						464
Intercompany transfers	(39,633		)	123			39,510						0
Net cash provided by (used in) financing activities	(39,291		)	(788		)	5,555			—			(34,524		)
Net increase (decrease) in cash and cash equivalents	3,081			(2,789		)	(73,111		)	—			(72,819		)
Cash and cash equivalents, beginning of period	33,552			5,764			113,226						152,542
Cash and cash equivalents, end of period	$	36,633		$	2,975		$	40,115		$	—		$	79,723