16. Quarterly Financial Data (unaudited)

Summarized unaudited quarterly financial data for 2015 and 2016 is as follows.


	2015(1)(2)
	First		Second		Third		Fourth
(in thousands, except per-share amounts)	quarter		quarter		quarter		quarter		Full year
Net revenue	$	199,597	$	179,725	$	243,294	$	272,717	$	895,333
Gross profit		55,687		47,141		76,762		90,301		269,891
Net income (loss) (3)(4)		7,084		(25,198)		23,008		126,774		131,668
Basic earnings (loss) per share (5)		0.09		(0.34)		0.30		1.72		1.78
Diluted earnings (loss) per share (5)		0.09		(0.34)		0.30		1.68		1.73


	2016(1)(2)
	First		Second		Third		Fourth
(in thousands, except per-share amounts)	quarter		quarter		quarter		quarter		Full year
Net revenue	$	218,418	$	202,332	$	262,466	$	291,591	$	974,807
Gross profit		64,271		54,877		83,531		85,522		288,201
Net income (4)		12,721		2,384		17,785		16,873		49,763
Basic earnings per share (5)		0.17		0.03		0.23		0.21		0.65
Diluted earnings per share (5)		0.17		0.03		0.23		0.21		0.64

(1)

Headwaters’ revenue is seasonal, typically with higher revenues in the third and fourth quarters of the fiscal year than in the first and second quarters. As a result, profitability is also usually higher in the last half of the fiscal year than in the first half of the year.

(2)

As described in Note 4, Headwaters acquired several businesses during 2015 and 2016 and these acquisitions have affected to a certain extent the comparability of the above information.

(3)

As described in Note 9, through the June 2015 quarter, Headwaters recorded a full valuation allowance on its net amortizable deferred tax assets and recorded income tax expense due to the combination of recognizing benefit for deferred tax assets only to the extent of projected fiscal year earnings, plus state income taxes in certain state jurisdictions. In the September 2015 quarter, Headwaters released a majority of the valuation allowance on NOL and tax credit carryforwards and certain other deferred tax assets. Approximately $96.8 million of the release represents a non-routine income tax benefit, which when combined with the 2015 utilization of $12.5 million, resulted in a total change in the valuation allowance of $109.3 million recorded in the year.

(4)

As described in Note 7, Headwaters incurred approximately $24.8 million of non-routine extinguishment loss related to early repayments of debt in the March 2015 quarter and $8.7 million of non-routine extinguishment loss and non-capitalizable debt issuance costs in the September 2016 quarter.

(5)

In accordance with ASC Topic 260 Earnings Per Share, EPS is computed independently for each of the four quarters in a fiscal year. The basic and diluted EPS computed for certain years may not equal the sum of the four quarterly computations due to the combination of profitable quarters and loss quarters and / or rounding conventions.