Discontinued Operations

9 Months Ended

Jun. 30, 2012

Discontinued Operations

Discontinued Operations

3.Discontinued Operations

Headwaters assessed the strategic fit of its various operations and is pursuing divestiture of certain businesses in the energy technology segment which do not align with its long-term strategy. In September 2011, the Board of Directors committed to a plan to sell the coal cleaning business, which is part of the energy technology segment, and at that time the business met all the criteria for classification as held for sale and presentation as a discontinued operation. Accordingly, the assets and liabilities associated with the coal cleaning business have been reflected as held for sale in the accompanying consolidated balance sheets. The results of Headwaters’ coal cleaning operations have been presented as discontinued operations for all periods presented.

Certain summarized information for the discontinued coal cleaning business is presented in the following table.

	Three Months Ended June 30,						Nine Months Ended June 30,
(in thousands)	2011			2012			2011			2012
Revenue	$	9,897		$	6,586		$	40,258		$	16,384
Loss from operations of discontinued operations before income taxes	$	(6,479	)	$	(15,345	)	$	(50,410	)	$	(28,143	)
Gain on disposal	0			267			0			267
Income tax provision	(1,900		)	0			(2,180		)	0
Loss from discontinued operations, net of income taxes	$	(8,379	)	$	(15,078	)	$	(52,590	)	$	(27,876	)

During the March 2011 quarter, Headwaters recorded an impairment of the coal cleaning assets totaling $37.0 million. During the June 2012 quarter, Headwaters recorded an impairment of the coal cleaning assets totaling $13.0 million, which reduced the remaining book value for the coal cleaning assets, net of liabilities, to near $0. Current assets held for sale consist primarily of accounts receivable and inventory. Non-current assets held for sale consist of approximately $16.1 million and $1.9 million of property, plant and equipment and approximately $8.3 million and $5.9 million of other assets, as of September 30, 2011 and June 30, 2012, respectively, all of which are recorded at the lower of historical carrying amount or fair value. Liabilities held for sale consist primarily of accrued liabilities.

Headwaters sold one coal cleaning facility during the June 2012 quarter for cash proceeds of $2.0 million plus potential future consideration totaling approximately $8.4 million, which amount would be received over a number of years, depending upon future plant production levels. Headwaters currently expects to sell all, or substantially all, of the remaining business before the end of calendar 2012. If assumptions regarding future cash flows from the sale of the coal cleaning assets prove to be incorrect, Headwaters may be required to record a loss or a gain when the assets are sold.