Income Taxes (Tables)

12 Months Ended

Sep. 30, 2014

Income Taxes

Schedule of income tax benefit (provision)

The income tax provision consisted of the following for the years ended September 30:

(in thousands)	2012			2013			2014
Current tax benefit (provision):
Federal	$	1,267		$	(1,292	)	$	65
State		(1,717	)		(1,934	)		(1,973	)
Total current tax provision		(450	)		(3,226	)		(1,908	)
Deferred tax provision:
Federal		(211	)		(698	)		(1,666	)
State		0			0			0
Total deferred tax provision		(211	)		(698	)		(1,666	)
Total income tax provision	$	(661	)	$	(3,924	)	$	(3,574	)

Schedule of benefit (provision) for income taxes computed using statutory federal income tax rate

(in thousands)	2012			2013			2014
Tax benefit (provision) at U.S. statutory rate	$	9,019		$	(4,273	)	$	(7,016	)
State income taxes, net of federal tax effect		(1,717	)		(1,934	)		(1,973	)
Valuation allowance		(8,913	)		3,955			7,994
Non-deductible executive compensation		0			0			(1,242	)
Unrecognized tax benefits		1,268			(1,245	)		101
Other		(318	)		(427	)		(1,438	)
Income tax provision	$	(661	)	$	(3,924	)	$	(3,574	)

Schedule of deferred income tax assets and liabilities

The components of Headwaters' deferred income tax assets and liabilities were as follows as of September 30:

(in thousands)	2013			2014
Deferred tax assets:
NOL and capital loss carryforwards	$	78,095		$	70,320
Tax credit carryforwards		25,619			24,784
Estimated liabilities		14,165			15,925
Debt repurchase premium		15,503			12,711
Stock-based compensation		8,127			6,958
Deferred revenue		6,792			5,898
Reserves and allowances		5,805			4,860
Other		2,136			1,644
Valuation allowances		(127,418	)		(119,424	)
Total deferred tax assets		28,824			23,676
Deferred tax liabilities:
Property, plant and equipment basis differences		(26,065	)		(20,483	)
Goodwill and intangible asset basis differences		(2,759	)		(3,193	)
Indefinite lived intangible asset basis differences		(3,204	)		(4,869	)
Total deferred tax liabilities		(32,028	)		(28,545	)
Net deferred tax liability	$	(3,204	)	$	(4,869	)

Schedule of reconciliation of change in the amount of gross unrecognized income tax benefits

(in thousands)	2012			2013			2014
Gross unrecognized income tax benefits at beginning of year	$	8,312		$	4,872		$	4,552
Changes based on tax positions related to the current year		(370	)		0			0
Increases for tax positions related to prior years		560			1,214			0
Reductions for tax positions related to prior years		(2,073	)		(1,439	)		0
Settlements		(65	)		(16	)		0
Lapse of statute of limitations		(1,492	)		(79	)		(55	)
Gross unrecognized income tax benefits at end of year	$	4,872		$	4,552		$	4,497