Condensed Consolidating Financial Information (Tables)

9 Months Ended

Jun. 30, 2016

Condensed Consolidating Financial Information

Schedule of Condensed Consolidating Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEET — September 30, 2015

			Non-				Eliminations
	Guarantor		guarantor		Parent		and		Headwaters
(in thousands)	Subsidiaries		Subsidiaries		Company		Reclassifications		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	25,819	$	3,577	$	113,201	$	—	$	142,597
Trade receivables, net		129,095		5,289		—		—		134,384
Inventories		52,699		2,375		—		—		55,074
Current income taxes		—		—		143,305		(142,976)		329
Other		10,666		144		1,017		—		11,827
Total current assets		218,279		11,385		257,523		(142,976)		344,211
Property, plant and equipment, net		164,413		9,978		11,327		—		185,718
Other assets:
Goodwill		147,330		30,869		—		—		178,199
Intangible assets, net		116,479		27,239		—		—		143,718
Investments in subsidiaries		55,844		—		372,864		(428,708)		—
Intercompany accounts and notes		57,793		—		637,046		(694,839)		—
Deferred income taxes		—		25,204		79,763		(12,115)		92,852
Other		11,243		2,291		20,787		—		34,321
Total other assets		388,689		85,603		1,110,460		(1,135,662)		449,090
Total assets	$	771,381	$	106,966	$	1,379,310	$	(1,278,638)	$	979,019
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	23,619	$	1,114	$	573	$	—	$	25,306
Accrued personnel costs		14,542		501		37,501		—		52,544
Accrued interest		—		—		2,295		—		2,295
Current income taxes		137,502		5,474		—		(142,976)		—
Other accrued liabilities		39,604		6,380		3,502		—		49,486
Current portion of long-term debt		—		—		4,250		—		4,250
Total current liabilities		215,267		13,469		48,121		(142,976)		133,881
Long-term liabilities:
Long-term debt, net		—		—		558,080		—		558,080
Income taxes		15,091		—		3,614		(12,115)		6,590
Intercompany accounts and notes		—		178,179		516,660		(694,839)		—
Other		1,481		13,897		14,808		—		30,186
Total long-term liabilities		16,572		192,076		1,093,162		(706,954)		594,856
Total liabilities		231,839		205,545		1,141,283		(849,930)		728,737
Redeemable non-controlling interest in consolidated subsidiary		—		12,431		—		—		12,431
Stockholders’ equity:
Common stock		—		—		74		—		74
Capital in excess of par value		486,069		54,470		728,843		(540,715)		728,667
Retained earnings (accumulated deficit)		53,473		(165,480)		(489,889)		112,007		(489,889)
Treasury stock		—		—		(1,001)		—		(1,001)
Total stockholders’ equity		539,542		(111,010)		238,027		(428,708)		237,851
Total liabilities and stockholders’ equity	$	771,381	$	106,966	$	1,379,310	$	(1,278,638)	$	979,019

CONDENSED CONSOLIDATING BALANCE SHEET — June 30, 2016

			Non-				Eliminations
	Guarantor		guarantor		Parent		and		Headwaters
(in thousands)	Subsidiaries		Subsidiaries		Company		Reclassifications		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	24,624	$	9,821	$	53,058	$	—	$	87,503
Trade receivables, net		128,161		7,976		—		—		136,137
Inventories		60,854		4,830		—		—		65,684
Current income taxes		—		—		40,637		(36,962)		3,675
Other		8,142		1,280		7,087		(6,400)		10,109
Total current assets		221,781		23,907		100,782		(43,362)		303,108
Property, plant and equipment, net		166,897		9,753		13,439		—		190,089
Other assets:
Goodwill		176,856		41,866		—		—		218,722
Intangible assets, net		145,643		36,990		—		—		182,633
Investments in subsidiaries		—		—		468,952		(468,952)		—
Intercompany accounts and notes		—		—		726,738		(726,738)		—
Deferred income taxes		—		25,488		65,529		(16,193)		74,824
Other		12,069		4,527		26,844		—		43,440
Total other assets		334,568		108,871		1,288,063		(1,211,883)		519,619
Total assets	$	723,246	$	142,531	$	1,402,284	$	(1,255,245)	$	1,012,816
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	21,942	$	1,584	$	234	$	—	$	23,760
Accrued personnel costs		12,642		430		29,229		—		42,301
Accrued interest		—		28		4,890		—		4,918
Current income taxes		34,782		2,180		—		(36,962)		—
Other accrued liabilities		52,118		12,396		2,657		(6,400)		60,771
Current portion of long-term debt		—		—		4,250		—		4,250
Total current liabilities		121,484		16,618		41,260		(43,362)		136,000
Long-term liabilities:
Long-term debt, net		—		—		552,798		—		552,798
Income taxes		19,208		—		—		(16,193)		3,015
Intercompany accounts and notes		1,878		208,200		516,660		(726,738)		—
Other		750		16,319		18,841		—		35,910
Total long-term liabilities		21,836		224,519		1,088,299		(742,931)		591,723
Total liabilities		143,320		241,137		1,129,559		(786,293)		727,723
Redeemable non-controlling interest in consolidated subsidiary		—		12,544		—		—		12,544
Stockholders’ equity:
Common stock		—		—		74		—		74
Capital in excess of par value		471,794		52,229		731,806		(524,199)		731,630
Retained earnings (accumulated deficit)		108,132		(163,379)		(457,847)		55,247		(457,847)
Treasury stock		—		—		(1,308)		—		(1,308)
Total stockholders’ equity		579,926		(111,150)		272,725		(468,952)		272,549
Total liabilities and stockholders’ equity	$	723,246	$	142,531	$	1,402,284	$	(1,255,245)	$	1,012,816

Schedule of Condensed Consolidating Statement of Income

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended June 30, 2015

			Non-
	Guarantor		guarantor		Parent				Headwaters
(in thousands)	Subsidiaries		Subsidiaries		Company		Eliminations		Consolidated
Revenue:
Building products	$	136,117	$	11,713	$	—	$	—	$	147,830
Construction materials		91,900		—		—		—		91,900
Energy technology		3,564		—		—		—		3,564
Total revenue		231,581		11,713		—		—		243,294
Cost of revenue:
Building products		92,288		8,513		—		—		100,801
Construction materials		63,850		—		—		—		63,850
Energy technology		1,881		—		—		—		1,881
Total cost of revenue		158,019		8,513		—		—		166,532
Gross profit		73,562		3,200		—		—		76,762
Operating expenses:
Selling, general and administrative		30,296		1,637		6,973		—		38,906
Amortization		4,189		368		—		—		4,557
Total operating expenses		34,485		2,005		6,973		—		43,463
Operating income (loss)		39,077		1,195		(6,973)		—		33,299
Other income (expense):
Net interest expense		(25)		—		(8,058)		—		(8,083)
Equity in earnings of subsidiaries		—		—		34,508		(34,508)		—
Other, net		130		(8)		—		—		122
Total other income (expense), net		105		(8)		26,450		(34,508)		(7,961)
Income from continuing operations before income taxes		39,182		1,187		19,477		(34,508)		25,338
Income tax benefit (provision)		(5,430)		(130)		3,340		—		(2,220)
Income from continuing operations		33,752		1,057		22,817		(34,508)		23,118
Loss from discontinued operations, net of income taxes		—		(110)		—		—		(110)
Net income		33,752		947		22,817		(34,508)		23,008
Net income attributable to noncontrolling interest		—		(191)		—		—		(191)
Net income attributable to Headwaters Incorporated	$	33,752	$	756	$	22,817	$	(34,508)	$	22,817

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended June 30, 2016

			Non-
	Guarantor		guarantor		Parent				Headwaters
(in thousands)	Subsidiaries		Subsidiaries		Company		Eliminations		Consolidated
Revenue:
Building products	$	145,635	$	17,007	$	—	$	—	$	162,642
Construction materials		97,741		—		—		—		97,741
Energy technology		2,083		—		—		—		2,083
Total revenue		245,459		17,007		—		—		262,466
Cost of revenue:
Building products		99,049		12,360		—		—		111,409
Construction materials		66,577		—		—		—		66,577
Energy technology		949		—		—		—		949
Total cost of revenue		166,575		12,360		—		—		178,935
Gross profit		78,884		4,647		—		—		83,531
Operating expenses:
Selling, general and administrative		31,712		2,348		8,348		—		42,408
Amortization		4,661		368		—		—		5,029
Total operating expenses		36,373		2,716		8,348		—		47,437
Operating income (loss)		42,511		1,931		(8,348)		—		36,094
Other income (expense):
Net interest expense		(101)		(30)		(9,139)		—		(9,270)
Equity in earnings of subsidiaries		—		—		27,113		(27,113)		—
Other, net		(220)		13		—		—		(207)
Total other income (expense), net		(321)		(17)		17,974		(27,113)		(9,477)
Income from continuing operations before income taxes		42,190		1,914		9,626		(27,113)		26,617
Income tax benefit (provision)		(16,200)		(780)		7,890		—		(9,090)
Income from continuing operations		25,990		1,134		17,516		(27,113)		17,527
Income from discontinued operations, net of income taxes		—		258		—		—		258
Net income		25,990		1,392		17,516		(27,113)		17,785
Net income attributable to noncontrolling interest		—		(269)		—		—		(269)
Net income attributable to Headwaters Incorporated	$	25,990	$	1,123	$	17,516	$	(27,113)	$	17,516

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended June 30, 2015

			Non-
	Guarantor		guarantor		Parent				Headwaters
(in thousands)	Subsidiaries		Subsidiaries		Company		Eliminations		Consolidated
Revenue:
Building products	$	338,445	$	33,325	$	—	$	—	$	371,770
Construction materials		240,802		—		—		—		240,802
Energy technology		10,044		—		—		—		10,044
Total revenue		589,291		33,325		—		—		622,616
Cost of revenue:
Building products		241,222		23,252		—		—		264,474
Construction materials		174,099		—		—		—		174,099
Energy technology		4,453		—		—		—		4,453
Total cost of revenue		419,774		23,252		—		—		443,026
Gross profit		169,517		10,073		—		—		179,590
Operating expenses:
Selling, general and administrative		82,734		4,829		17,723		—		105,286
Amortization		12,498		1,105		—		—		13,603
Total operating expenses		95,232		5,934		17,723		—		118,889
Operating income (loss)		74,285		4,139		(17,723)		—		60,701
Other income (expense):
Net interest expense		(129)		—		(55,871)		—		(56,000)
Equity in earnings of subsidiaries		—		—		68,633		(68,633)		—
Other, net		(12)		(168)		—		—		(180)
Total other income (expense), net		(141)		(168)		12,762		(68,633)		(56,180)
Income (loss) from continuing operations before income taxes		74,144		3,971		(4,961)		(68,633)		4,521
Income tax benefit (provision)		(8,000)		(400)		9,160		—		760
Income from continuing operations		66,144		3,571		4,199		(68,633)		5,281
Loss from discontinued operations, net of income taxes		(67)		(320)		—		—		(387)
Net income		66,077		3,251		4,199		(68,633)		4,894
Net income attributable to noncontrolling interest		—		(695)		—		—		(695)
Net income attributable to Headwaters Incorporated	$	66,077	$	2,556	$	4,199	$	(68,633)	$	4,199

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended June 30, 2016

			Non-
	Guarantor		guarantor		Parent				Headwaters
(in thousands)	Subsidiaries		Subsidiaries		Company		Eliminations		Consolidated
Revenue:
Building products	$	382,062	$	41,620	$	—	$	—	$	423,682
Construction materials		255,494		—		—		—		255,494
Energy technology		4,040		—		—		—		4,040
Total revenue		641,596		41,620		—		—		683,216
Cost of revenue:
Building products		268,125		29,617		—		—		297,742
Construction materials		181,059		—		—		—		181,059
Energy technology		1,736		—		—		—		1,736
Total cost of revenue		450,920		29,617		—		—		480,537
Gross profit		190,676		12,003		—		—		202,679
Operating expenses:
Selling, general and administrative		88,737		5,901		20,534		—		115,172
Amortization		13,305		1,105		—		—		14,410
Total operating expenses		102,042		7,006		20,534		—		129,582
Operating income (loss)		88,634		4,997		(20,534)		—		73,097
Other income (expense):
Net interest expense		(196)		(33)		(25,314)		—		(25,543)
Equity in earnings of subsidiaries		—		—		56,760		(56,760)		—
Other, net		(345)		57		—		—		(288)
Total other income (expense), net		(541)		24		31,446		(56,760)		(25,831)
Income from continuing operations before income taxes		88,093		5,021		10,912		(56,760)		47,266
Income tax benefit (provision)		(33,330)		(1,990)		21,130		—		(14,190)
Income from continuing operations		54,763		3,031		32,042		(56,760)		33,076
Loss from discontinued operations, net of income taxes		—		(186)		—		—		(186)
Net income		54,763		2,845		32,042		(56,760)		32,890
Net income attributable to noncontrolling interest		—		(848)		—		—		(848)
Net income attributable to Headwaters Incorporated	$	54,763	$	1,997	$	32,042	$	(56,760)	$	32,042

Schedule of Condensed Consolidating Statement of Cash Flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended June 30, 2015

			Non-
	Guarantor		guarantor		Parent				Headwaters
(in thousands)	Subsidiaries		Subsidiaries		Company		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	66,077	$	3,251	$	4,199	$	(68,633)	$	4,894
Adjustments to reconcile net income to net cash provided by (used in) operating activities:										—
Depreciation and amortization		37,270		2,153		370		—		39,793
Interest expense related to amortization of debt issue costs and debt discount		—		—		5,611		—		5,611
Stock-based compensation		759		—		1,310		—		2,069
Deferred income taxes		591		363		—		—		954
Net loss on disposition of property, plant and equipment		94		1		—		—		95
Loss on sale of discontinued operations, net of income taxes		45		174		—		—		219
Net loss of unconsolidated joint ventures		—		247		—		—		247
Equity in earnings of subsidiaries		—		—		(68,633)		68,633		0
Decrease in trade receivables		397		109		—		—		506
Increase in inventories		(8,513)		(414)		—		—		(8,927)
Increase (decrease) in accounts payable and accrued liabilities		(10,650)		3,231		(22,060)		—		(29,479)
Other changes in operating assets and liabilities, net		(339)		(8,519)		(1,930)		—		(10,788)
Net cash provided by (used in) operating activities		85,731		596		(81,133)		—		5,194
Cash flows from investing activities:
Business acquisition		(1,200)		—		—		—		(1,200)
Investments in unconsolidated joint venture		(125)		—		—		—		(125)
Purchase of property, plant and equipment		(21,768)		(614)		(4,142)		—		(26,524)
Proceeds from disposition of property, plant and equipment		716		—		—		—		716
Net decrease in long-term receivables and deposits		2,781		—		1,066		—		3,847
Net change in other assets		(587)		—		164		—		(423)
Net cash used in investing activities		(20,183)		(614)		(2,912)		—		(23,709)
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		—		(1,184)		—		—		(1,184)
Employee stock purchases		464		28		141		—		633
Intercompany transfers		(41,029)		(271)		41,300		—		0
Net cash provided by (used in) financing activities		(40,565)		(1,427)		7,380		—		(34,612)
Net increase (decrease) in cash and cash equivalents		24,983		(1,445)		(76,665)		—		(53,127)
Cash and cash equivalents, beginning of period		33,552		5,764		113,226		—		152,542
Cash and cash equivalents, end of period	$	58,535	$	4,319	$	36,561	$	—	$	99,415

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended June 30, 2016

			Non-
	Guarantor		guarantor		Parent				Headwaters
(in thousands)	Subsidiaries		Subsidiaries		Company		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	54,763	$	2,845	$	32,042	$	(56,760)	$	32,890
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		40,297		2,269		487		—		43,053
Interest expense related to amortization of debt issue costs and debt discount		—		—		1,745		—		1,745
Stock-based compensation		817		—		1,520		—		2,337
Deferred income taxes		4,927		(284)		12,986		—		17,629
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock		(106)		—		(226)		—		(332)
Net loss (gain) on disposition of property, plant and equipment		(1,680)		49		—		—		(1,631)
Loss on sale of discontinued operations, net of income taxes		—		3,072		—		—		3,072
Net loss of unconsolidated joint ventures		—		36		—		—		36
Equity in earnings of subsidiaries		—		—		(56,760)		56,760		0
Decrease (increase) in trade receivables		5,948		(1,369)		—		—		4,579
Increase in inventories		(1,709)		(170)		—		—		(1,879)
Increase (decrease) in accounts payable and accrued liabilities		(16,370)		5,183		(6,875)		—		(18,062)
Other changes in operating assets and liabilities, net		(29,513)		(5,128)		30,611		—		(4,030)
Net cash provided by operating activities		57,374		6,503		15,530		—		79,407
Cash flows from investing activities:
Business acquisitions		(73,841)		(33,083)		—		—		(106,924)
Purchase of property, plant and equipment		(28,596)		(355)		(2,468)		—		(31,419)
Proceeds from disposition of property, plant and equipment		8,795		—		—		—		8,795
Net decrease (increase) in long-term receivables and deposits		2		(55)		(147)		—		(200)
Net change in other assets		(1,526)		6,085		(2,690)		—		1,869
Net cash used in investing activities		(95,166)		(27,408)		(5,305)		—		(127,879)
Cash flows from financing activities:
Payments on long-term debt		—		—		(6,937)		—		(6,937)
Dividends paid to non-controlling interest in consolidated subsidiary		—		(735)		—		—		(735)
Employee stock purchases		509		31		178		—		718
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock		106		—		226		—		332
Intercompany transfers		35,982		27,853		(63,835)		—		0
Net cash provided by (used in) financing activities		36,597		27,149		(70,368)		—		(6,622)
Net increase (decrease) in cash and cash equivalents		(1,195)		6,244		(60,143)		—		(55,094)
Cash and cash equivalents, beginning of period		25,819		3,577		113,201		—		142,597
Cash and cash equivalents, end of period	$	24,624	$	9,821	$	53,058	$	—	$	87,503