Segment Reporting

9 Months Ended

Jun. 30, 2011

Segment Reporting

Segment Reporting

2. Segment Reporting

Headwaters currently operates three business segments: light building products, heavy construction materials and energy technology. These segments are managed and evaluated separately by management due to differences in their markets, operations, products and services. Revenues for the light building products segment consist of product sales to wholesale and retail distributors, contractors and other users of building products. Revenues for the heavy construction materials segment consist primarily of CCP product sales to ready-mix concrete businesses, with a smaller amount from services provided to coal-fueled electric generating utilities. Revenues for the energy technology segment consist primarily of coal sales. Intersegment sales are immaterial.

The following segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. Segment performance is evaluated primarily on revenue and operating income, although other factors are also used, such as income tax credits generated by the energy technology segment and adjusted EBITDA. Headwaters defines adjusted EBITDA as net income plus net interest expense, income taxes, depreciation and amortization, stock-based compensation, foreign currency translation gain or loss, goodwill and other impairments, and other non-routine adjustments that arise from time to time, consistent with the methodology Headwaters has used historically.

Segment costs and expenses considered in deriving segment operating income (loss) include cost of revenue, amortization, research and development, and segment-specific selling, general and administrative expenses. Amounts included in the "Corporate" column represent expenses that are not allocated to any segment and include administrative departmental costs and general corporate overhead. Segment assets reflect those specifically attributable to individual segments and primarily include cash, accounts receivable, inventories, property, plant and equipment, intangible assets and goodwill. Certain other assets are included in the "Corporate" column.

	Three Months Ended June 30, 2010
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	95,052		$	70,383		$	26,746		$	0		$	192,181
Depreciation and amortization	$	(8,216	)	$	(3,455	)	$	(3,642	)	$	(32	)	$	(15,345	)
Operating income (loss)	$	10,571		$	8,536		$	(572	)	$	(5,088	)	$	13,447
Net interest expense														(18,447	)
Other income (expense), net														(102	)
Income tax benefit														6,610
Net income													$	1,508
Capital expenditures	$	4,634		$	1,273		$	52		$	0		$	5,959
Segment assets as of June 30, 2010	$	335,652		$	304,007		$	208,339		$	84,363		$	932,361

	Three Months Ended June 30, 2011
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	91,635		$	62,435		$	18,187		$	0		$	172,257
Depreciation and amortization	$	(9,746	)	$	(3,455	)	$	(3,599	)	$	(16	)	$	(16,816	)
Operating income (loss)	$	6,246		$	7,672		$	(3,486	)	$	(1,553	)	$	8,879
Net interest expense														(13,427	)
Other income (expense), net														0
Income tax provision														(1,800	)
Net loss													$	(6,348	)
Capital expenditures	$	3,501		$	458		$	1,220		$	0		$	5,179
Segment assets as of June 30, 2011	$	309,628		$	303,252		$	107,014		$	49,389		$	769,283
	Nine Months Ended June 30, 2010
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	227,538		$	173,530		$	58,913		$	0		$	459,981
Depreciation and amortization	$	(23,783	)	$	(10,232	)	$	(10,382	)	$	(104	)	$	(44,501	)
Operating income (loss)	$	9,769		$	16,567		$	(8,424	)	$	(15,102	)	$	2,810
Net interest expense														(51,886	)
Other income (expense), net														1,076
Income tax benefit														22,580
Net loss													$	(25,420	)
Capital expenditures	$	14,205		$	3,587		$	1,841		$	27		$	19,660
	Nine Months Ended June 30, 2011
(in thousands)	Light building products			Heavy construction materials			Energy technology			Corporate			Totals
Segment revenue	$	224,021		$	170,746		$	59,326		$	0		$	454,093
Depreciation and amortization	$	(28,109	)	$	(10,359	)	$	(9,491	)	$	(72	)	$	(48,031	)
Operating income (loss)	$	(8,991	)	$	15,803		$	(60,790	)	$	(11,329	)	$	(65,307	)
Net interest expense														(113,110	)
Other income (expense), net														328
Income tax provision														(5,100	)
Net loss													$	(183,189	)
Capital expenditures	$	11,476		$	1,585		$	4,261		$	0		$	17,322