Condensed Consolidating Financial Information (Tables)

9 Months Ended

Jun. 30, 2014

Condensed Consolidating Financial Information

Schedule of condensed consolidating balance sheet

CONDENSED CONSOLIDATING BALANCE SHEET — September 30, 2013

	Guarantor			Parent			Eliminations and			Headwaters
(in thousands)	Subsidiaries			Company			Reclassifications			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	70,747		$	4,569		$	—		$	75,316
Trade receivables, net	109,868									109,868
Inventories	37,383									37,383
Deferred income taxes	25,828			17,895			(29,687		)	14,036
Other	6,548			732						7,280
Total current assets	250,374			23,196			(29,687		)	243,883
Property, plant and equipment, net	155,499			4,120			—			159,619
Other assets:
Goodwill	137,198									137,198
Intangible assets, net	139,797									139,797
Investments in subsidiaries				282,979			(282,979		)	—
Intercompany accounts and notes	360,482			637,046			(997,528		)	—
Deferred income taxes	53,228			22,179			(75,407		)	—
Other	22,300			21,212						43,512
Total other assets	713,005			963,416			(1,355,914		)	320,507
Total assets	$	1,118,878		$	990,732		$	(1,385,601	)	$	724,009
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	21,051		$	759		$	—		$	21,810
Accrued personnel costs	14,622			33,124						47,746
Accrued interest				16,077						16,077
Current and deferred income taxes	20,073			9,734			(29,687		)	120
Other accrued liabilities	52,898			2,370						55,268
Current portion of long-term debt				7,553						7,553
Total current liabilities	108,644			69,617			(29,687		)	148,574
Long-term liabilities:
Long-term debt				449,420						449,420
Income taxes	80,877			19,167			(75,407		)	24,637
Intercompany accounts and notes	637,046			360,482			(997,528		)	—
Other	9,332			7,636						16,968
Total long-term liabilities	727,255			836,705			(1,072,935		)	491,025
Total liabilities	835,899			906,322			(1,102,622		)	639,599
Stockholders’ equity:
Common stock				73						73
Capital in excess of par value	458,498			720,828			(458,498		)	720,828
Retained earnings (accumulated deficit)	(175,519		)	(635,972		)	175,519			(635,972		)
Treasury stock				(519		)				(519		)
Total stockholders’ equity	282,979			84,410			(282,979		)	84,410
Total liabilities and stockholders’ equity	$	1,118,878		$	990,732		$	(1,385,601	)	$	724,009

CONDENSED CONSOLIDATING BALANCE SHEET — June 30, 2014

	Guarantor			Non- guarantor		Parent			Eliminations and			Headwaters
(in thousands)	Subsidiaries			Subsidiaries		Company			Reclassifications			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	102,997		$	5,177	$	6,290		$	—		$	114,464
Trade receivables, net	109,896			5,102								114,998
Inventories	53,204			2,849								56,053
Current and deferred income taxes	24,601					17,981			(30,155		)	12,427
Other	10,070			237		2,095						12,402
Total current assets	300,768			13,365		26,366			(30,155		)	310,344
Property, plant and equipment, net	158,514			11,457		6,310			—			176,281
Other assets:
Goodwill	150,547			35,493								186,040
Intangible assets, net	128,152			24,527								152,679
Investments in subsidiaries						386,127			(386,127		)	—
Intercompany accounts and notes	276,022					637,046			(913,068		)	—
Deferred income taxes	54,404					19,981			(74,385		)	—
Other	15,235			1,200		26,461						42,896
Total other assets	624,360			61,220		1,069,615			(1,373,580		)	381,615
Total assets	$	1,083,642		$	86,042	$	1,102,291		$	(1,403,735	)	$	868,240
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	23,818		$	795	$	244		$	—		$	24,857
Accrued personnel costs	9,391			326		32,332						42,049
Accrued interest						15,515						15,515
Current and deferred income taxes	29,505			650					(30,155		)	—
Other accrued liabilities	35,895			3,665		2,507						42,067
Total current liabilities	98,609			5,436		50,598			(30,155		)	124,488
Long-term liabilities:
Long-term debt						599,539						599,539
Income taxes	80,276					15,089			(74,385		)	20,980
Intercompany accounts and notes	571,136			1,433		340,499			(913,068		)	—
Other	13,033			94		11,210						24,337
Total long-term liabilities	664,445			1,527		966,337			(987,453		)	644,856
Total liabilities	763,054			6,963		1,016,935			(1,017,608		)	769,344
Non-controlling interest in consolidated subsidiary				13,698								13,698
Stockholders’ equity:
Common stock						73						73
Capital in excess of par value	458,499			64,318		723,030			(522,975		)	722,872
Retained earnings (accumulated deficit)	(137,911		)	1,063		(637,214		)	136,848			(637,214		)
Treasury stock						(533		)				(533		)
Total stockholders’ equity	320,588			65,381		85,356			(386,127		)	85,198
Total liabilities and stockholders’ equity	$	1,083,642		$	86,042	$	1,102,291		$	(1,403,735	)	$	868,240

Schedule of condensed consolidating statement of operations

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended June 30, 2013

	Guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Company			Eliminations			Consolidated
Revenue:
Light building products	$	118,035		$	—		$	—		$	118,035
Heavy construction materials	75,114									75,114
Energy technology	3,881									3,881
Total revenue	197,030			—			—			197,030
Cost of revenue:
Light building products	82,096									82,096
Heavy construction materials	54,642									54,642
Energy technology	1,787									1,787
Total cost of revenue	138,525			—			—			138,525
Gross profit	58,505			—			—			58,505
Operating expenses:
Amortization	5,319									5,319
Selling, general and administrative	25,193			4,808						30,001
Total operating expenses	30,512			4,808			—			35,320
Operating income (loss)	27,993			(4,808		)	—			23,185
Other income (expense):
Net interest income (expense)	9			(11,120		)				(11,111		)
Equity in earnings of subsidiaries				22,624			(22,624		)	—
Other, net	24									24
Total other income (expense), net	33			11,504			(22,624		)	(11,087		)
Income from continuing operations before income taxes	28,026			6,696			(22,624		)	12,098
Income tax benefit (provision)	(7,170		)	4,320						(2,850		)
Income from continuing operations	20,856			11,016			(22,624		)	9,248
Income from discontinued operations, net of income taxes	1,768									1,768
Net income	$	22,624		$	11,016		$	(22,624	)	$	11,016

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended June 30, 2014

	Guarantor			Non- guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Revenue:
Light building products	$	129,085		$	11,487		$	—		$	—		$	140,572
Heavy construction materials	80,636												80,636
Energy technology	2,191												2,191
Total revenue	211,912			11,487			—			—			223,399
Cost of revenue:
Light building products	89,948			7,725									97,673
Heavy construction materials	57,070												57,070
Energy technology	984												984
Total cost of revenue	148,002			7,725			—			—			155,727
Gross profit	63,910			3,762			—			—			67,672
Operating expenses:
Amortization	5,165			312									5,477
Selling, general and administrative	28,837			1,409			6,258						36,504
Total operating expenses	34,002			1,721			6,258			—			41,981
Operating income (loss)	29,908			2,041			(6,258		)	—			25,691
Other income (expense):
Net interest expense	(125		)	(2		)	(11,994		)				(12,121		)
Equity in earnings of subsidiaries							23,446			(23,446		)	—
Other, net	25			(61		)							(36		)
Total other income (expense), net	(100		)	(63		)	11,452			(23,446		)	(12,157		)
Income from continuing operations before income taxes	29,808			1,978			5,194			(23,446		)	13,534
Income tax benefit (provision)	(7,250		)	(470		)	5,310						(2,410		)
Income from continuing operations	22,558			1,508			10,504			(23,446		)	11,124
Loss from discontinued operations, net of income taxes	(231		)										(231		)
Net income	22,327			1,508			10,504			(23,446		)	10,893
Net income attributable to non-controlling interest				(389		)							(389		)
Net income attributable to Headwaters Incorporated	$	22,327		$	1,119		$	10,504		$	(23,446	)	$	10,504

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Nine Months Ended June 30, 2013

	Guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Company			Eliminations			Consolidated
Revenue:
Light building products	$	279,501		$	—		$	—		$	279,501
Heavy construction materials	197,286									197,286
Energy technology	10,804									10,804
Total revenue	487,591			—			—			487,591
Cost of revenue:
Light building products	202,723									202,723
Heavy construction materials	151,622									151,622
Energy technology	5,085									5,085
Total cost of revenue	359,430			—			—			359,430
Gross profit	128,161			—			—			128,161
Operating expenses:
Amortization	15,543									15,543
Selling, general and administrative	70,013			14,504						84,517
Total operating expenses	85,556			14,504			—			100,060
Operating income (loss)	42,605			(14,504		)	—			28,101
Other income (expense):
Net interest expense	(49		)	(32,673		)				(32,722		)
Equity in earnings of subsidiaries				35,336			(35,336		)	—
Other, net	227			35						262
Total other income (expense), net	178			2,698			(35,336		)	(32,460		)
Income (loss) from continuing operations before income taxes	42,783			(11,806		)	(35,336		)	(4,359		)
Income tax benefit (provision)	(9,240		)	8,690						(550		)
Income (loss) from continuing operations	33,543			(3,116		)	(35,336		)	(4,909		)
Income from discontinued operations, net of income taxes	1,793									1,793
Net income (loss)	$	35,336		$	(3,116	)	$	(35,336	)	$	(3,116	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Nine Months Ended June 30, 2014

	Guarantor			Non- guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Revenue:
Light building products	$	305,530		$	22,193		$	—		$	—		$	327,723
Heavy construction materials	211,250												211,250
Energy technology	6,553												6,553
Total revenue	523,333			22,193			—			—			545,526
Cost of revenue:
Light building products	222,275			15,564									237,839
Heavy construction materials	157,504												157,504
Energy technology	3,067												3,067
Total cost of revenue	382,846			15,564			—			—			398,410
Gross profit	140,487			6,629			—			—			147,116
Operating expenses:
Amortization	15,394			674									16,068
Selling, general and administrative	77,248			2,804			17,196						97,248
Total operating expenses	92,642			3,478			17,196			—			113,316
Operating income (loss)	47,845			3,151			(17,196		)	—			33,800
Other income (expense):
Net interest expense	(292		)	(2		)	(34,117		)				(34,411		)
Equity in earnings of subsidiaries							38,671			(38,671		)	—
Other, net	99			(155		)							(56		)
Total other income (expense), net	(193		)	(157		)	4,554			(38,671		)	(34,467		)
Income (loss) from continuing operations before income taxes	47,652			2,994			(12,642		)	(38,671		)	(667		)
Income tax benefit (provision)	(10,600		)	(650		)	11,400						150
Income (loss) from continuing operations	37,052			2,344			(1,242		)	(38,671		)	(517		)
Loss from discontinued operations, net of income taxes	(106		)										(106		)
Net income (loss)	36,946			2,344			(1,242		)	(38,671		)	(623		)
Net income attributable to non-controlling interest				(619		)							(619		)
Net income (loss) attributable to Headwaters Incorporated	$	36,946		$	1,725		$	(1,242	)	$	(38,671	)	$	(1,242	)

Schedule of condensed consolidating statement of cash flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended June 30, 2013

	Guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Company			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	35,336		$	(3,116	)	$	(35,336	)	$	(3,116	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	39,222			210						39,432
Interest expense related to amortization of debt issue costs and debt discount				4,999						4,999
Stock-based compensation	588			679						1,267
Deferred income taxes	223									223
Net gain on disposition of property, plant and equipment	(726		)							(726		)
Gain on sale of discontinued operations, net of income taxes	(2,158		)							(2,158		)
Gain on convertible debt repayment				(35		)				(35		)
Equity in earnings of subsidiaries				(35,336		)	35,336			0
Decrease in trade receivables	1,066									1,066
Increase in inventories	(2,931		)							(2,931		)
Decrease in accounts payable and accrued liabilities	(14,642		)	(11,106		)				(25,748		)
Other changes in operating assets and liabilities, net	(9,694		)	5,291						(4,403		)
Net cash provided by (used in) operating activities	46,284			(38,414		)	—			7,870
Cash flows from investing activities:
Payment for acquisition	(43,250		)							(43,250		)
Purchase of property, plant and equipment	(19,942		)	(1,604		)				(21,546		)
Proceeds from disposition of property, plant and equipment	855									855
Proceeds from sale of discontinued operations	4,813									4,813
Net decrease (increase) in long-term receivables and deposits	(1,413		)	719						(694		)
Net change in other assets	(385		)	(45		)				(430		)
Net cash used in investing activities	(59,322		)	(930		)	—			(60,252		)
Cash flows from financing activities:
Net proceeds from issuance of common stock				77,957						77,957
Payments on long-term debt				(39,476		)				(39,476		)
Employee stock purchases	438			171						609
Net cash provided by financing activities	438			38,652			—			39,090
Net decrease in cash and cash equivalents	(12,600		)	(692		)	—			(13,292		)
Cash and cash equivalents, beginning of period	44,111			9,671						53,782
Cash and cash equivalents, end of period	$	31,511		$	8,979		$	—		$	40,490

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended June 30, 2014

				Non-
	Guarantor			guarantor			Parent						Headwaters
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	36,946		$	2,344		$	(1,242	)	$	(38,671	)	$	(623	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	39,130			1,388			196						40,714
Interest expense related to amortization of debt issue costs and debt discount							1,699						1,699
Stock-based compensation	618						958						1,576
Deferred income taxes	429												429
Net loss (gain) on disposition of property, plant and equipment	(135		)	5			46						(84		)
Gain on sale of discontinued operations, net of income taxes	(3,032		)										(3,032		)
Asset impairments	1,466												1,466
Net loss of unconsolidated joint ventures				286									286
Equity in earnings of subsidiaries							(38,671		)	38,671			0
Decrease in trade receivables	2,609			922									3,531
Decrease (increase) in inventories	(9,521		)	882									(8,639		)
Increase (decrease) in accounts payable and accrued liabilities	(26,725		)	1,240			(1,731		)				(27,216		)
Other changes in operating assets and liabilities, net	5,258			529			(10,697		)				(4,910		)
Net cash provided by (used in) operating activities	47,043			7,596			(49,442		)	—			5,197
Cash flows from investing activities:
Payments for acquisitions	(3,100		)				(85,479		)				(88,579		)
Payments for investments in unconsolidated joint ventures				(1,450		)							(1,450		)
Purchase of property, plant and equipment	(22,163		)	(685		)	(2,519		)				(25,367		)
Proceeds from disposition of property, plant and equipment	864												864
Proceeds from sale of discontinued operations	4,666												4,666
Net decrease in long-term receivables and deposits	7,373						300						7,673
Net change in other assets	(2,864		)	(318		)	306						(2,876		)
Net cash used in investing activities	(15,224		)	(2,453		)	(87,392		)	—			(105,069		)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt							146,200						146,200
Payments on long-term debt							(7,792		)				(7,792		)
Employee stock purchases	465						147						612
Net cash provided by financing activities	465			—			138,555			—			139,020
Net increase in cash and cash equivalents	32,284			5,143			1,721			—			39,148
Cash and cash equivalents, beginning of period	70,713			34			4,569						75,316
Cash and cash equivalents, end of period	$	102,997		$	5,177		$	6,290		$	—		$	114,464