Long-Lived Assets

9 Months Ended

Jun. 30, 2011

Long- Lived Assets

Long-Lived Assets

4. Long-lived Assets

Asset Impairments – During the March 2011 quarter, Headwaters recorded asset impairments totaling $38.0 million, consisting of $37.0 million of assets in the energy technology segment and $1.0 million of restructuring costs in the light building products segment. The impaired energy technology segment assets consisted of approximately $32.0 million of property, plant and equipment and approximately $5.0 million of other assets, all related to Headwaters' coal cleaning business. The impaired light building products segment assets consisted of property, plant and equipment.

In the June 2010 quarter, Headwaters recorded an approximate $3.5 million impairment charge for assets related to a CCP loading facility that was not being utilized for fly ash shipments as originally planned.

The carrying value of a long-lived asset, including property, plant and equipment, is considered impaired when the anticipated cumulative undiscounted cash flow from that asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. A number of Headwaters' coal cleaning assets remain idle or are producing coal at low levels. These low production levels resulted in a forecast of future cash flows that indicated an impairment existed at March 31, 2011. Management used its best efforts to reasonably estimate all of the inputs in the cash flow models utilized; however, it is probable that actual results will differ from these estimates and the differences could be material. Materially different input estimates and assumptions, including the probabilities of differing potential outcomes, would necessarily result in materially different calculations of expected future cash flows and asset fair values and materially different impairment estimates. Headwaters will reassess its cash flow input estimates and assumptions, including probabilities related thereto, if triggering events arise in the future. If assumptions regarding future cash flows related to the coal cleaning assets prove to be incorrect, Headwaters may be required to record additional impairment charges in future periods.

Intangible Assets – All of Headwaters' identified intangible assets are being amortized. The following table summarizes the gross carrying amounts and related accumulated amortization of intangible assets as of:

			September 30, 2010				June 30, 2011
(in thousands)	Estimated useful lives		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
CCP contracts		8 -20 years	$	117,690	$	51,912	$	117,690	$	56,961
Customer relationships		5-15 years		77,603		32,537		77,914		36,974
Trade names		5-20 years		67,425		20,114		67,890		22,734
Patents and patented technologies		4-19 years		53,426		31,044		54,692		34,968
Other		2-17 years		5,661		2,827		4,985		1,828
			$	321,805	$	138,434	$	323,171	$	153,465

Total amortization expense related to intangible assets was approximately $5.5 million and $5.7 million for the June 2010 and June 2011 quarters, respectively; and approximately $16.7 million and $16.8 million for the nine months ended June 30, 2010 and 2011, respectively. Total estimated annual amortization expense for fiscal years 2011 through 2016 is shown in the following table.

Year ending September 30:	(in thousands)
2011	$	22,357
2012		20,638
2013		19,681
2014		19,157
2015		15,038
2016		14,781