Headwaters 10-Q 6 Aug 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2015	Jul. 29, 2015
Document and Entity Information
Entity Registrant Name	HEADWATERS INC
Entity Central Index Key	1,003,344
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		73,875,882
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Sep. 30, 2014
Current assets:
Cash and cash equivalents	$ 99,415	$ 152,542
Trade receivables, net	119,207	119,330
Inventories	62,116	50,633
Current and deferred income taxes	11,908	11,076
Other	13,402	10,536
Total current assets	306,048	344,117
Property, plant and equipment, net	181,874	182,111
Other assets:
Goodwill	175,512	175,586
Intangible assets, net	148,276	159,863
Other	34,750	34,629
Total other assets	358,538	370,078
Total assets	846,460	896,306
Current liabilities:
Accounts payable	24,950	27,026
Accrued personnel costs	35,872	48,902
Accrued interest	5,014	18,273
Current income taxes	0	368
Other accrued liabilities	44,538	41,757
Current portion of long-term debt	4,250	0
Total current liabilities	114,624	136,326
Long-term liabilities:
Long-term debt, net	558,605	592,458
Income taxes	20,943	23,242
Other	30,182	28,586
Total long-term liabilities	609,730	644,286
Total liabilities	$ 724,354	$ 780,612
Commitments and contingencies
Redeemable non-controlling interest in consolidated subsidiary	$ 12,763	$ 13,252
Stockholders' equity:
Common stock, $0.001 par value; authorized 200,000 shares; issued and outstanding: 73,510 shares at September 30, 2014 (including 61 shares held in treasury) and 73,875 shares at June 30, 2015 (including 77 shares held in treasury)	74	74
Capital in excess of par value	726,636	723,648
Retained earnings (accumulated deficit)	(616,489)	(620,688)
Treasury stock	(878)	(592)
Total stockholders' equity	109,343	102,442
Total liabilities and stockholders' equity	$ 846,460	$ 896,306

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2015	Sep. 30, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized shares	200,000,000	200,000,000
Common stock, issued shares	73,875,000	73,510,000
Common stock, outstanding shares	73,875,000	73,510,000
Common stock, held in treasury (in shares)	77,000	61,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue:
Total revenue	$ 243,294	$ 223,399	$ 622,616	$ 545,526
Cost of revenue:
Total cost of revenue	166,532	155,727	443,026	398,410
Gross profit	76,762	67,672	179,590	147,116
Operating expenses:
Amortization	4,557	5,477	13,603	16,068
Selling, general and administrative	38,906	36,504	105,286	97,248
Total operating expenses	43,463	41,981	118,889	113,316
Operating income	33,299	25,691	60,701	33,800
Other income (expense):
Net interest expense	(8,083)	(12,121)	(56,000)	(34,411)
Other, net	122	(36)	(180)	(56)
Total other income (expense), net	(7,961)	(12,157)	(56,180)	(34,467)
Income (loss) from continuing operations before income taxes	25,338	13,534	4,521	(667)
Income tax benefit (provision)	(2,220)	(2,410)	760	150
Income (loss) from continuing operations	23,118	11,124	5,281	(517)
Loss from discontinued operations, net of income taxes	(110)	(231)	(387)	(106)
Net income (loss)	23,008	10,893	4,894	(623)
Net income attributable to non-controlling interest	(191)	(389)	(695)	(619)
Net income (loss) attributable to Headwaters Incorporated	$ 22,817	$ 10,504	$ 4,199	$ (1,242)
Basic income (loss) per share attributable to Headwaters Incorporated:
From continuing operations (in dollars per share)	$ 0.31	$ 0.14	$ 0.06	$ (0.02)
From discontinued operations (in dollars per share)	0	0	0	0
Basic income (loss) per share (in dollars per share)	0.31	0.14	0.06	(0.02)
Diluted income (loss) per share attributable to Headwaters Incorporated:
From continuing operations (in dollars per share)	0.30	0.14	0.06	(0.02)
From discontinued operations (in dollars per share)	0	0	0	0
Diluted income (loss) per share (in dollars per share)	$ 0.30	$ 0.14	$ 0.06	$ (0.02)
Building products
Revenue:
Total revenue	$ 147,830	$ 140,572	$ 371,770	$ 327,723
Cost of revenue:
Total cost of revenue	100,801	97,673	264,474	237,839
Construction materials
Revenue:
Total revenue	91,900	80,636	240,802	211,250
Cost of revenue:
Total cost of revenue	63,850	57,070	174,099	157,504
Energy Technology
Revenue:
Total revenue	3,564	2,191	10,044	6,553
Cost of revenue:
Total cost of revenue	$ 1,881	$ 984	$ 4,453	$ 3,067

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 9 months ended Jun. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Common stock	Capital in excess of par value	Retained earnings (accumulated deficit)	Treasury stock	Total
Balances at Sep. 30, 2014	$ 74	$ 723,648	$ (620,688)	$ (592)	$ 102,442
Balances (in shares) at Sep. 30, 2014	73,510
Increase (Decrease) in Stockholders' Equity
Issuance of common stock pursuant to employee stock purchase plan	$ 0	633			633
Issuance of common stock pursuant to employee stock purchase plan (in shares)	48
Issuance of restricted stock, net of cancellations	$ 0				0
Issuance of restricted stock, net of cancellations (in shares)	115
Exercise of stock appreciation rights	$ 0				0
Exercise of stock appreciation rights (in shares)	202
Stock-based compensation		2,069			2,069
Net 16 share increase in treasury stock held for deferred compensation plan obligations, at cost		286		(286)	0
Net income attributable to Headwaters Incorporated			4,199		4,199
Balances at Jun. 30, 2015	$ 74	$ 726,636	$ (616,489)	$ (878)	$ 109,343
Balances (in shares) at Jun. 30, 2015	73,875

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) shares in Thousands	9 Months Ended
	Jun. 30, 2015shares
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Increase (decrease) in treasury stock held for deferred compensation plan obligations (in shares)	16

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net income (loss)	$ 4,894	$ (623)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	39,793	40,714
Interest expense related to amortization of debt issue costs and debt discount	5,611	1,699
Stock-based compensation	2,069	1,576
Deferred income taxes	954	429
Net loss (gain) on disposition of property, plant and equipment	95	(84)
Loss (gain) on sale of discontinued operations, net of income taxes	219	(3,032)
Asset impairments	0	1,466
Net loss of unconsolidated joint ventures	247	286
Decrease in trade receivables	506	3,531
Increase in inventories	(8,927)	(8,639)
Decrease in accounts payable and accrued liabilities	(29,479)	(27,216)
Other changes in operating assets and liabilities, net	(10,788)	(4,910)
Net cash provided by (used in) operating activities	5,194	5,197
Cash flows from investing activities:
Business acquisitions	(1,200)	(88,579)
Investments in unconsolidated joint ventures	(125)	(1,450)
Purchase of property, plant and equipment	(26,524)	(25,367)
Proceeds from disposition of property, plant and equipment	716	864
Proceeds from sale of discontinued operations	0	4,666
Net decrease in long-term receivables and deposits	3,847	7,673
Net change in other assets	(423)	(2,876)
Net cash used in investing activities	(23,709)	(105,069)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt	414,675	146,200
Payments on long-term debt	(448,736)	(7,792)
Dividends paid to non-controlling interest in consolidated subsidiary	(1,184)	0
Employee stock purchases	633	612
Net cash provided by (used in) financing activities	(34,612)	139,020
Net increase (decrease) in cash and cash equivalents	(53,127)	39,148
Cash and cash equivalents, beginning of period	152,542	75,316
Cash and cash equivalents, end of period	$ 99,415	$ 114,464

Nature of Operations and Basis

Nature of Operations and Basis of Presentation	9 Months Ended
	Jun. 30, 2015
Nature of Operations and Basis of Presentation
Nature of Operations and Basis of Presentation	1. Nature of Operations and Basis of Presentation Description of Business and Organization — Headwaters Incorporated (Headwaters) is a building materials company incorporated in Delaware, providing products and services in two core business segments. The building products segment designs, manufactures, and sells a wide variety of building products, including exterior vinyl siding accessories (such as shutters, mounting blocks, and vents), manufactured architectural stone, roofing materials and concrete block. Revenues from Headwaters’ building products businesses are diversified geographically and also by end use, including new housing construction and residential repair and remodeling, as well as commercial construction. The construction materials segment is the nationwide leader in the management and marketing of coal combustion products (CCPs), including fly ash which is primarily sold directly to concrete manufacturers who use it as a mineral admixture for the partial replacement of portland cement in concrete. Headwaters’ construction materials business is comprised of a nationwide supply, storage and distribution network. Headwaters also provides services to electric utilities related to the management of CCPs. In addition to the two building materials segments described above, Headwaters also has a non-core energy technology segment which has been focused on reducing waste and increasing the value of energy-related feedstocks, primarily in the areas of low-value oil and coal. In oil, Headwaters’ heavy oil upgrading process uses a liquid catalyst precursor to generate a highly active molecular catalyst to convert low-value residual oil into higher-value distillates that can be further refined into gasoline, diesel and other products. In coal, Headwaters owned and operated coal cleaning facilities that separate ash from waste coal to provide a refined coal product that is higher in Btu value and lower in impurities than the feedstock coal. As described in Note 4, Headwaters disposed of its remaining coal cleaning facilities in January 2013 and the results of Headwaters’ coal cleaning operations have been presented as discontinued operations for all periods. Basis of Presentation — Headwaters’ fiscal year ends on September 30 and unless otherwise noted, references to years refer to Headwaters’ fiscal year rather than a calendar year. The unaudited interim condensed consolidated financial statements include the accounts of Headwaters, all of its subsidiaries and other entities in which Headwaters has a controlling interest. All significant intercompany transactions and accounts are eliminated in consolidation. Due to the seasonality of most of Headwaters’ operations and other factors, the consolidated results of operations for any particular period are not indicative of the results to be expected for a full fiscal year. During the nine months ended June 30, 2014, approximately 11% of Headwaters’ total revenue and cost of revenue was for services. During the nine months ended June 30, 2015, approximately 9% of Headwaters’ total revenue and cost of revenue was for services. Substantially all service-related revenue for both periods was in the construction materials segment. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC) for quarterly reports on Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included, which consist of normal recurring adjustments and the non-routine adjustments to account for the debt transactions described in Note 7. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Headwaters’ Annual Report on Form 10-K for the year ended September 30, 2014 (Form 10-K) and in Headwaters’ Quarterly Reports on Form 10-Q for the quarters ended December 31, 2014 and March 31, 2015. Recent Accounting Pronouncements — In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-03, Interest—Imputation of Interest (ASC Topic 835-30). This new rule was issued to simplify the presentation of debt issue costs to require that debt issue costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issue costs were not affected by the amendments in the ASU. Early adoption of ASU 2015-03 is permitted for financial statements that have not been previously issued and Headwaters elected to adopt the ASU effective as of March 31, 2015, with retrospective application to the September 30, 2014 balance sheet. The effect of the adoption of ASU 2015-03 was to reclassify debt issue costs of approximately $7.1 million as of September 30, 2014 and $10.6 million as of March 31, 2015 as a deduction from the related debt liabilities. Accordingly, other assets and total assets in the balance sheets were reduced by those amounts, and the long-term debt amounts presented in the balance sheets were reduced by the same amounts. There was no effect on net income (loss). In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC Topic 606). This new revenue standard creates a single source of revenue guidance for all companies in all industries and is more principles-based than current revenue guidance. In April 2015, the FASB issued for public comment a proposed ASU to defer the effective date of ASU 2014-09 and in July 2015, voted to approve the proposed ASU. The mandatory adoption date of ASC 606 for Headwaters is now October 1, 2018. There are two methods of adoption allowed, either a “full” retrospective adoption or a “modified” retrospective adoption. Headwaters is currently evaluating the impact of ASC 606, but at the current time does not know what impact the new standard will have on revenue recognized and other accounting decisions in future periods, if any, nor what method of adoption will be selected if the impact is material. Headwaters has reviewed other recently issued accounting standards which have not yet been adopted in order to determine their potential effect, if any, on the results of operations or financial position of Headwaters. Based on the review of these other recently issued standards, Headwaters does not currently believe that any of those accounting pronouncements will have a significant effect on its current or future financial position, results of operations, cash flows or disclosures. Reclassifications — Certain prior period amounts, including the changes described above for the accounting for debt issue costs, have been reclassified to conform to the current period’s presentation. The reclassifications had no effect on net income (loss), but the reclassification of debt issue costs did affect total assets and total liabilities.

Segment Reporting

Segment Reporting	9 Months Ended
	Jun. 30, 2015
Segment Reporting
Segment Reporting	2. Segment Reporting Headwaters currently operates three business segments: building products, construction materials and energy technology. These segments are managed and evaluated separately by management due to differences in their operations, products and services. Revenues for the building products segment consist of product sales to wholesale and retail distributors, contractors and other users of building products. Revenues for the construction materials segment consist primarily of CCP sales to ready-mix concrete businesses, with a smaller amount from services provided to coal-fueled electric generating utilities. Continuing revenues for the energy technology segment consist primarily of catalyst sales to oil refineries. As described in Note 4, Headwaters sold all of its coal cleaning facilities in fiscal 2012 and 2013 and the results of operations have been reflected as discontinued operations in the accompanying statements of operations for all periods. Intersegment sales are immaterial. The following segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. Segment performance is evaluated primarily on revenue and operating income, although other factors are also used, such as Adjusted EBITDA. Headwaters defines Adjusted EBITDA as net income plus net interest expense, income taxes, depreciation and amortization, stock-based compensation, cash-based compensation tied to stock price, goodwill and other impairments, and other non-routine adjustments that arise from time to time. Segment costs and expenses considered in deriving segment operating income (loss) include cost of revenue, amortization, and segment-specific selling, general and administrative expenses. Amounts included in the Corporate column represent expenses that are not allocated to any segment and include administrative departmental costs and general corporate overhead. Segment assets reflect those specifically attributable to individual segments and primarily include cash, accounts receivable, inventories, property, plant and equipment, goodwill and intangible assets. Certain other assets are included in the Corporate column. The net operating results of the discontinued coal cleaning business are reflected in the single line item for discontinued operations. Three Months Ended June 30, 2014 (in thousands) Building products Construction materials Energy technology Corporate Totals Segment revenue $ $ $ $ $ Depreciation and amortization $ ) $ ) $ ) $ ) $ ) Operating income (loss) $ $ $ ) $ ) $ Net interest expense ) Other income (expense), net ) Income tax provision ) Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $ Segment assets as of September 30, 2014 $ $ $ $ $ Three Months Ended June 30, 2015 (in thousands) Building products Construction materials Energy technology Corporate Totals Segment revenue $ $ $ $ $ Depreciation and amortization $ ) $ ) $ ) $ ) $ ) Operating income (loss) $ $ $ ) $ ) $ Net interest expense ) Other income (expense), net Income tax provision ) Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $ Segment assets as of June 30, 2015 $ $ $ $ $ Nine Months Ended June 30, 2014 (in thousands) Building products Construction materials Energy technology Corporate Totals Segment revenue $ $ $ $ $ Depreciation and amortization $ ) $ ) $ ) $ ) $ ) Operating income (loss) $ $ $ ) $ ) $ Net interest expense ) Other income (expense), net ) Income tax benefit Loss from continuing operations ) Loss from discontinued operations, net of income taxes ) Net loss $ ) Capital expenditures $ $ $ $ $ Nine Months Ended June 30, 2015 (in thousands) Building products Construction materials Energy technology Corporate Totals Segment revenue $ $ $ $ $ Depreciation and amortization $ ) $ ) $ ) $ ) $ ) Operating income (loss) $ $ $ ) $ ) $ Net interest expense ) Other income (expense), net ) Income tax benefit Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $

Acquisitions

Acquisitions	9 Months Ended
	Jun. 30, 2015
Acquisitions
Acquisitions	3. Acquisitions Entegra — On December 12, 2013, Headwaters acquired 80% of the equity interests of Roof Tile Acquisition, LLC, a privately-held Florida-based company in the building products industry, which sells its products primarily under the Entegra brand. Entegra’s results of operations have been included with Headwaters’ consolidated results beginning December 13, 2013. Entegra is a leading manufacturer of concrete roof tiles and accessories which are sold primarily into Florida. The acquisition of Entegra provides additional product offerings to Headwaters’ current roofing products portfolio. Headwaters believes the strategic location of Entegra’s centralized manufacturing plant in Florida, the quality of its contractor/customer relationships, and the scope of its products and services provide a competitive advantage. Many of its customers are currently customers of Headwaters, and provide Headwaters the opportunity to expand existing sales and distribution within Florida, which is one of the fastest growing states in the U.S. in terms of population. Total consideration paid for Entegra was approximately $57.5 million, all of which was cash. Direct acquisition costs, consisting primarily of fees for legal services, totaled approximately $0.4 million and were included in selling, general and administrative expense in the statement of operations for fiscal 2014. Headwaters has the right, but not the obligation, to acquire the non-controlling 20% equity interest in Entegra for a stipulated multiple of EBITDA adjusted for certain prescribed items. This call right is exercisable at any time after five years following the date of acquisition, unless certain defined events occur prior to that time, in which case the right is exercisable earlier. The non-controlling owners have the right, but not the obligation, to require Headwaters to acquire the non-controlling 20% equity interest, again for a stipulated multiple of EBITDA adjusted for certain prescribed items. This put right became exercisable in June 2015. The Entegra acquisition has been accounted for as a business combination in accordance with the requirements of ASC 805 Business Combinations. The following table sets forth the estimated fair values of assets acquired and liabilities assumed as of the acquisition date: (in thousands) Current assets $ Current liabilities ) Property, plant and equipment Intangible assets: Customer relationships (15 year life) Trade name (indefinite life) Goodwill Net assets acquired Less redeemable non-controlling interest ) Net assets attributable to Headwaters $ Entegra’s future growth attributable to new customers, geographic presence and assembled workforce are additional assets that are not separable and which contributed to recorded goodwill, most of which is tax deductible over 15 years. Gerard — On May 16, 2014, Headwaters acquired certain assets and assumed certain liabilities of the roofing products business of Metals USA Building Products, L.P., which products are sold under the Gerard and Allmet brands. Gerard’s results of operations are being reported within the building products segment and have been included with Headwaters’ consolidated results beginning May 16, 2014. Gerard is one of the largest manufacturers of stone coated metal roofing materials in the U.S. and sells niche roofing products that combine profiles resembling tile, shake, or slate with a fire proof material and a low lifetime installed cost. The acquisition of Gerard increases the number of specialty niche roofing products that Headwaters provides to its core customers and is an area of focus for Headwaters. With the addition of Gerard, Headwaters now has three product categories in niche roofing, including resin-based composite, concrete, and metal, which could increase opportunities for cross selling. Besides broadening the niche roofing product lines, Gerard also expands Headwaters geographic footprint in the roofing category. Total consideration paid for Gerard was approximately $27.6 million, all of which was cash. Direct acquisition costs, consisting primarily of fees for legal services, totaled approximately $0.3 million and were included in selling, general and administrative expense in the statement of operations for fiscal 2014. The Gerard acquisition has been accounted for as a business combination in accordance with the requirements of ASC 805 Business Combinations. The following table sets forth the estimated fair values of assets acquired and liabilities assumed as of the acquisition date. (in thousands) Current assets $ Current liabilities ) Property, plant and equipment Intangible assets: Customer relationships (15 year life) Trade name (indefinite life) Goodwill Long-term liabilities ) Net assets acquired $ Gerard’s future growth attributable to new customers, geographic presence and assembled workforce are additional assets that are not separable and which contributed to recorded goodwill, most of which is tax deductible over 15 years. Other — During the March 2014 quarter, Headwaters acquired the assets of a company in the construction materials industry located in the Northeast U.S. for initial cash consideration of approximately $3.1 million. This acquisition increased Headwaters’ supply of fly ash and bottom ash, improving its competitive position in that region. During the September 2014 quarter, Headwaters acquired the assets of another company in the construction materials industry located in the Southeast U.S. for cash consideration of approximately $7.4 million. This acquisition increased Headwaters’ supply of ash products produced by industrial boilers and has strengthened the ability to meet customers’ needs along the Gulf Coast. Investments in entities in which Headwaters has a significant influence over operating and financial decisions are accounted for using the equity method of accounting. Headwaters acquired 100% of one such equity method investee in the December 2014 quarter for a cash payment of approximately $1.2 million. As a result of Headwaters obtaining a controlling financial interest, the investee has been consolidated within the building products segment . Redeemable Non-controlling Interest in Consolidated Subsidiary — As described above, Headwaters acquired 80% of the equity interests of Entegra, and the non-controlling owners have the right to require Headwaters to acquire the non-controlling 20% equity interest. This put right is not deemed to be a freestanding financial instrument and because it is not solely within the control of Headwaters, the non-controlling interest does not qualify as permanent equity and has been reported outside the stockholders’ equity section of the balance sheet as temporary, or mezzanine, equity. The value of the non-controlling interest was affected by the lack of control as well as the estimated fair values of the put and call rights. Because there is no fixed redemption date for the put right, Headwaters compares quarterly the carrying value of the non-controlling interest to its estimated redemption value. The estimated redemption value is calculated based on the EBITDA formula described previously to determine the price that would be paid if the put right were to have been exercised at the end of the reporting period. If applicable, the carrying amount is increased, but not decreased, to the estimated redemption value. The following table summarizes the changes in carrying value of the non-controlling interest during the nine months ended June 30, 2015: (in thousands) Balance as of September 30, 2014 $ Net income attributable to non-controlling interest Dividends paid to non-controlling interest ) Balance as of June 30, 2015 $

Discontinued Operations

Discontinued Operations	9 Months Ended
	Jun. 30, 2015
Discontinued Operations
Discontinued Operations	4. Discontinued Operations In September 2011, the Board of Directors committed to a plan to sell Headwaters’ coal cleaning business, which was part of the energy technology segment. At that time the business met all of the criteria for classification as held for sale and presentation as a discontinued operation. Following the sale of all remaining coal cleaning facilities in January 2013, there are no remaining assets held for sale. The results of operations for the coal cleaning business have been presented as discontinued operations for all periods presented and certain summarized information for the discontinued business is presented in the following table: Three Months Ended June 30, Nine Months Ended June 30, (in thousands) 2014 2015 2014 2015 Revenue $ $ $ $ Loss from operations of discontinued operations before income taxes $ ) $ ) $ ) $ ) Gain (loss) on disposal ) ) Income tax provision Loss from discontinued operations, net of income taxes $ ) $ ) $ ) $ ) Headwaters sold all of its coal cleaning facilities in fiscal 2012 and 2013, and recognized estimated gains on the sales dates. Subsequent to the dates of sale, adjustments of the previously recognized estimated gains on the sales transactions have been recorded, including the reported amounts reflected in the table above. Headwaters currently expects that additional adjustments to the recognized gains and losses may be recorded in the future as certain contingencies are resolved. The loss from operations reflected in the table includes expenses for certain litigation which commenced prior to disposal of the business. For all sales transactions, a majority of the consideration is in the form of potential production royalties and deferred purchase price, which amounts are dependent upon future plant production levels over several years. Potential future production royalties and deferred purchase price on the sales transactions were not considered as being probable in the original gain calculations and are being accounted for in the periods when such amounts are received. In accordance with the terms of the asset purchase agreement for one of the sales transactions, the buyer of the coal cleaning facilities agreed to assume the lease and reclamation obligations related to certain of the facilities. Subsequent to the date of sale, the Headwaters subsidiaries which sold the facilities amended the purchase agreement to provide the buyer with additional time to make payments, as well as fulfill contractual requirements related to the assumed reclamation obligations. One of Headwaters’ subsidiaries anticipates that it will perform permit reclamation responsibilities at one site. Approximately $8.0 million was accrued in prior periods to satisfy reclamation obligations and approximately $7.7 million remains outstanding as of June 30, 2015. Certain receivables due from the buyer have also been reserved until such time as collection is more certain. Headwaters currently expects to continue to reflect as discontinued operations all activity related to the former coal cleaning business, at least until such time as the significant reclamation obligation is satisfied.

Inventories

Inventories	9 Months Ended
	Jun. 30, 2015
Inventories
Inventories	5. Inventories Inventories consisted of the following at: (in thousands) September 30, 2014 June 30, 2015 Raw materials $ $ Finished goods $ $

Intangible Assets

Intangible Assets	9 Months Ended
	Jun. 30, 2015
Intangible Assets
Intangible Assets	6. Intangible Assets The following table summarizes the gross carrying amounts and related accumulated amortization of intangible assets as of: September 30, 2014 June 30, 2015 (in thousands of dollars) Estimated useful lives Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Trade names Indefinite $ $ — $ $ — CCP contracts 15 - 20 years Customer relationships 5 - 17 years Trade names 5 - 20 years Patents and patented technologies 5 - 19 years Other 5 - 17 years $ $ $ $ Total amortization expense related to intangible assets was approximately $5.5 million and $4.6 million for the June 2014 and 2015 quarters, respectively, and approximately $16.1 million and $13.6 million for the nine months ended June 30, 2014 and 2015, respectively. The primary reason for the decrease in amortization expense from 2014 to 2015 is that certain assets have been fully amortized. Total estimated annual amortization expense for 2015 through 2020 is shown in the following table: Year ending September 30: (in thousands) 2015 $ 2016 2017 2018 2019 2020

Long-term Debt

Long-term Debt	9 Months Ended
	Jun. 30, 2015
Long-term Debt
Long-term Debt	7. Long-term Debt The total undiscounted face amount of Headwaters’ outstanding long-term debt was approximately $599.8 million as of September 30, 2014 and $575.0 million as of June 30, 2015. As of those dates, the discounted carrying value of long-term debt consisted of the following: (in thousands) September 30, 2014 June 30, 2015 Senior secured term loan, due March 2022 (face amount $425,000) $ $ 7¼% Senior notes, due January 2019 (face amount $150,000) 7-5/8% Senior secured notes, repaid in March 2015 (face amount $400,000) 8.75% Convertible senior subordinated notes, repaid in February 2015 (face amount $49,791) Carrying amount of long-term debt, net of discounts and debt issue costs Less current portion ) Long-term debt $ $ Senior Secured Term Loan — In March 2015, Headwaters entered into a new Term Loan Facility, under which a senior secured loan for $425.0 million was obtained. The loan will mature in March 2022, subject to certain exceptions described below. The Term Loan Facility requires scheduled quarterly repayments in an aggregate annual amount equal to 1.0% of the original principal amount (subject to reduction for certain permitted prepayments), with the balance due at maturity. In the event that in October 2018 Headwaters has more than $50.0 million outstanding of the 7¼% senior notes and has not received a binding commitment to refinance these notes, the maturity date of the Term Loan Facility will be October 2018. The Term Loan Facility allows Headwaters to request one or more incremental term loans and certain other types of incremental debt in an aggregate amount not to exceed $150.0 million plus an additional amount which is dependent on Headwaters’ pro forma net leverage ratio, as defined. Any additional borrowings are contingent upon the receipt of commitments by existing or additional lenders. Borrowings under the Term Loan Facility bear interest at a rate equal to, at Headwaters’ option, either (a) a base rate determined by reference to the highest of (i) the publicly announced prime rate of the administrative agent, (ii) the federal funds rate plus 0.50%, and (iii) the eurocurrency (LIBO) rate for a one-month interest period plus 1.0%, subject in all cases to a 2.0% floor; or (b) a eurocurrency (LIBO) rate determined by reference to the cost of funds for eurocurrency deposits in dollars, subject to a 1.0% floor; plus, in each case, an applicable margin of 3.5% for any eurocurrency loan and 2.5% for any alternate base rate loan. The initial interest rate on borrowings under the Term Loan Facility is 4.5%, with interest payable quarterly. Headwaters may voluntarily repay outstanding loans under the Term Loan Facility at any time without premium or penalty, other than customary breakage costs with respect to LIBO rate loans and with respect to certain repricing transactions in which new secured term loans are incurred within six months of March 24, 2015, which shall be subject to a prepayment premium of 1.0%. The Term Loan Facility requires Headwaters to prepay outstanding term loans, subject to certain exceptions, with (i) up to 50% of Headwaters’ annual excess cash flow, as defined, to the extent such excess cash flow exceeds $1.0 million, commencing with fiscal year 2016, with such required prepayment to be reduced by the amount of voluntary prepayments of term loans and certain other types of senior secured debt; (ii) 100% of the net cash proceeds of certain non-ordinary course asset sales; and (iii) 100% of the net cash proceeds of certain issuances of debt. The Term Loan Facility is secured by substantially all assets of Headwaters, except that the obligations have a second priority position with respect to the assets that secure Headwaters’ ABL Revolver, primarily consisting of certain trade receivables and inventories of Headwaters’ building products and construction materials segments. The Term Loan Facility contains customary covenants restricting the ability of Headwaters to incur additional debt and liens on assets, prepay future new subordinated debt, merge or consolidate with another company, sell all or substantially all assets, make investments and pay dividends or distributions, among other things. The Term Loan Facility contains customary events of default, including with respect to a change in control of Headwaters. Headwaters was in compliance with all covenants as of June 30, 2015. The net proceeds from the initial borrowing under the Term Loan Facility were approximately $414.7 million, after giving effect to original issue discount of approximately $2.1 million and estimated transaction costs of approximately $8.2 million. As described below, the net proceeds from the original borrowing under the Term Loan Facility were primarily used to pay the redemption price in connection with the redemption of all of the outstanding 7-5/8% senior secured notes. 7¼% Senior Notes — In December 2013, Headwaters issued $150.0 million of 7¼% senior notes for net proceeds of approximately $146.7 million. The 7¼% notes are unsecured, mature in January 2019 and bear interest at a rate of 7.25%, payable semiannually. The notes are subordinate in priority to the senior secured Term Loan Facility described above and the ABL Revolver described below, to the extent of the value of the assets securing such debt, and are senior to all other future subordinated debt. Headwaters can redeem the 7¼% notes, in whole or in part, at any time after January 15, 2016 at redemption prices that decline over time from 103.625% to 100.0%, depending on the redemption date. In addition, until January 15, 2016, Headwaters can redeem at a price of 107.25% up to 35% of the outstanding notes with the net proceeds from one or more equity offerings. Headwaters can also redeem any of the notes at any time prior to January 15, 2016 at a price equal to 100% of the principal amount plus a make-whole premium. If there is a change in control, Headwaters will be required to offer to purchase the notes from holders at a purchase price equal to 101% of the principal amount. The 7¼% notes limit Headwaters in the incurrence of additional debt and liens on assets, prepayment of subordinated debt, merging or consolidating with another company, selling all or substantially all assets, making investments and the payment of dividends or distributions, among other things. Headwaters was in compliance with all covenants as of June 30, 2015. ABL Revolver — Since entering into the ABL Revolver, Headwaters has not borrowed any funds under the arrangement and has no borrowings outstanding as of June 30, 2015. Availability under the ABL Revolver cannot exceed $70.0 million, which includes a $35.0 million sub-line for letters of credit and a $10.5 million swingline facility. Availability under the ABL Revolver is further limited by the borrowing base valuations of the assets of Headwaters’ building products and construction materials segments which secure the borrowings, currently consisting of certain trade receivables and inventories. In addition to the first lien position on these assets, the ABL Revolver lenders have a second priority position on substantially all other assets of Headwaters. As of June 30, 2015, Headwaters had secured letters of credit under the ABL Revolver of approximately $7.4 million for various purposes and had availability under the ABL Revolver of approximately $60.6 million. The ABL Revolver terminates in March 2020. There is a contingent provision for early termination at any time within three months prior to the earliest maturity date of the senior secured Term Loan Facility or the 7¼% senior notes, at which time any amounts borrowed must be repaid. Outstanding borrowings under the ABL Revolver accrue interest at Headwaters’ option, at either i) the London Interbank Offered Rate (LIBOR) plus 1.5%, 1.75% or 2.0%, depending on Headwaters’ average net excess availability under the ABL; or ii) the “Base Rate” plus 0.25%, 0.5% or 0.75%, again depending on average net excess availability. The base rate is subject to a floor equal to the highest of i) the prime rate, ii) the federal funds rate plus 0.5%, and iii) the 30-day LIBO rate plus 1.0%. Fees on the unused portion of the ABL Revolver range from 0.25% to 0.375%, depending on the amount of the credit facility which is utilized. If there would have been borrowings outstanding under the ABL Revolver as of June 30, 2015, the interest rate on those borrowings would have been approximately 1.8%. The ABL Revolver contains restrictions and covenants common to such agreements, including limitations on the incurrence of additional debt and liens on assets, prepayment of subordinated debt, merging or consolidating with another company, selling assets, making acquisitions and investments and the payment of dividends or distributions, among other things. In addition, if availability under the ABL Revolver is less than 12.5%, Headwaters is required to maintain a monthly fixed charge coverage ratio of at least 1.0x for the preceding twelve-month period. Headwaters was in compliance with all covenants as of June 30, 2015. 7-5/8% Senior Secured Notes — In 2011, Headwaters issued $400.0 million of 7-5/8% senior secured notes for net proceeds of approximately $392.8 million. In March 2015, Headwaters irrevocably deposited with the trustee of the notes an amount sufficient to pay and discharge all obligations under the notes and the related indenture, which discharge the trustee acknowledged. As a result, the indenture and all related guarantees and security interests have been discharged. This discharge resulted in a loss on extinguishment of debt of approximately $21.3 million, comprised of the early repayment premium of approximately $15.3 million, interest to the April 2015 redemption date totaling approximately $2.5 million, and accelerated amortization of unamortized debt issue costs of approximately $3.5 million. The loss on debt extinguishment is reflected as interest expense in Headwaters’ statements of operations for the nine months ended June 30, 2015. 8.75% Convertible Senior Subordinated Notes Due 2016 — In February 2015, Headwaters repurchased and canceled substantially all of the outstanding 8.75% convertible senior subordinated notes, pursuant to open market transactions. Premiums and accelerated amortization of debt discount and debt issue costs aggregating approximately $3.5 million were paid and charged to interest expense. Interest and Debt Maturities — During the June 2014 and 2015 quarters, Headwaters incurred total interest costs of approximately $12.2 million and $8.2 million, respectively, including approximately $0.5 million and $0.6 million, respectively, of non-cash interest expense. During the nine months ended June 30, 2014 and 2015, Headwaters incurred total interest costs of approximately $34.6 million and $56.5 million, respectively, including approximately $1.7 million and $5.6 million, respectively, of non-cash interest expense. As described above, approximately $24.8 million of interest expense incurred in the March 2015 quarter resulted from the early repayments of the 7-5/8% senior secured notes and the 8.75% convertible senior subordinated notes. Neither capitalized interest nor interest income was material for any period presented. The weighted-average interest rate on the face amount of outstanding long-term debt, excluding amortization of debt discount and debt issue costs, was approximately 7.6% at September 30, 2014 and 5.2% at June 30, 2015. Except for the required repayments of the Term Loan Facility of approximately $1.1 million per quarter beginning September 30, 2015, Headwaters has no debt maturities until January 2019.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	9 Months Ended
	Jun. 30, 2015
Fair Value of Financial Instruments
Fair Value of Financial Instruments	8. Fair Value of Financial Instruments Headwaters’ material financial instruments consist primarily of cash and cash equivalents, trade receivables, accounts payable and long-term debt. All of these financial instruments except some long-term debt are either carried at fair value in the consolidated balance sheets or are short-term in nature. Accordingly, the carrying values for those financial instruments as reflected in the consolidated balance sheets closely approximate their fair values. All of Headwaters’ outstanding long-term debt as of September 30, 2014 was fixed-rate. Using fair values for the debt, the aggregate fair value of Headwaters’ long-term debt as of September 30, 2014 would have been approximately $626.0 million, compared to a carrying value of $592.5 million. As of June 30, 2015, only the 7¼% senior notes have a fixed rate and the aggregate fair value of this debt as of June 30, 2015 would have been approximately $157.0 million, compared to a carrying value of $147.7 million. Fair value “Level 2” estimates for long-term debt were based primarily on price estimates from broker-dealers. The fair values for long-term debt differ from the carrying values primarily due to interest rates that differ from current market interest rates, and for the convertible senior subordinated notes that were outstanding at September 30, 2014, the difference between Headwaters’ common stock price at that date and the conversion price.

Income Taxes

Income Taxes	9 Months Ended
	Jun. 30, 2015
Income Taxes
Income Taxes	9. Income Taxes Headwaters’ estimated effective income tax rate for continuing operations for the fiscal year ending September 30, 2015, exclusive of discrete items, is currently expected to be approximately 12%. This estimated rate was used to record income taxes for the nine months ended June 30, 2015. For the nine months ended June 30, 2014, Headwaters used an estimated effective income tax rate for continuing operations of 22%. Headwaters did not recognize any tax expense or benefit for discrete items in 2014, but recognized approximately $1.3 million of tax benefit for discrete items in 2015 that did not affect the calculation of the estimated effective income tax rate for the 2015 fiscal year. The discrete items were due primarily to unrecognized state income tax benefits that were reversed due to audit periods that closed. Beginning in 2011, Headwaters has recorded a full valuation allowance on its net amortizable deferred tax assets and accordingly, did not recognize benefit for tax credit carryforwards, net operating loss (NOL) carryforwards or other deferred tax assets for any period presented, except to the extent of projected fiscal year earnings. The estimated income tax rates of 22% for fiscal 2014 and 12% for fiscal 2015 resulted primarily from the combination of recognizing benefit for deferred tax assets only to the extent of projected fiscal year earnings, plus current state income taxes in certain state jurisdictions where taxable income is expected to be generated. A valuation allowance is required when there is significant uncertainty as to the realizability of deferred tax assets. The ability to realize deferred tax assets is dependent upon Headwaters’ ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each tax jurisdiction. Headwaters has considered the following possible sources of taxable income when assessing the realization of its deferred tax assets: · future reversals of existing taxable temporary differences; · future taxable income or loss, exclusive of reversing temporary differences and carryforwards; · tax-planning strategies; and · taxable income in prior carryback years. Headwaters considered both positive and negative evidence in determining the continued need for a valuation allowance, including the following: Positive evidence: · Current forecasts indicate that Headwaters’ will generate pre-tax income and taxable income in the future. · A majority of Headwaters’ tax attributes have significant carryover periods of 20 years or more. Negative evidence: · Headwaters had a three-year cumulative loss as of September 30, 2014, and has not generated sufficient earnings year to date in fiscal 2015. · Headwaters operates in cyclical industries that are difficult to forecast. Headwaters places more weight on objectively verifiable evidence than on other types of evidence and management currently believes that available negative evidence outweighs the available positive evidence. Management has therefore determined that Headwaters does not meet the “more likely than not” threshold that NOLs, tax credits and other deferred tax assets will be realized. Accordingly, a valuation allowance is required. During the September 2015 quarter, Headwaters may emerge from a three-year cumulative loss status on a consolidated basis. Headwaters will consider this and the other factors described above in evaluating the continued need for a full, or partial, valuation allowance. All of the factors Headwaters is considering in evaluating whether and when to release all or a portion of the deferred tax asset valuation allowance involve significant judgment. For example, there are many different interpretations of “cumulative losses in recent years” which can be used. Also, significant judgment is involved in making projections of future financial and taxable income, especially because Headwaters’ financial results are significantly dependent upon industry trends, including new housing construction, repair and remodeling, and infrastructure construction. Most of the end use categories in which Headwaters sells its products and services are currently in varying states of recovery from the historic downturn experienced in recent years; however, it is not possible to accurately predict whether recovery will continue, and if it does, at what rate and for how long. Any reversal of the valuation allowance will favorably impact Headwaters’ results of operations in the period of reversal. As of June 30, 2015, Headwaters’ NOL and capital loss carryforwards totaled approximately $82.1 million (tax effected). The U.S. and state NOLs expire from 2015 to 2034. In addition, there are approximately $24.8 million of tax credit carryforwards as of June 30, 2015, which expire from 2028 to 2034. The calculation of tax liabilities involves uncertainties in the application of complex tax regulations in multiple tax jurisdictions. Headwaters currently has open tax years subject to examination by the IRS and state tax authorities for the years 2011 through 2014. Headwaters recognizes potential liabilities for anticipated tax audit issues in the U.S. and state tax jurisdictions based on estimates of whether, and the extent to which, additional taxes and interest will be due. If events occur (or do not occur) as expected and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when it is determined the liabilities are no longer required to be recorded in the consolidated financial statements. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. It is reasonably possible that approximately $5.0 million of Headwaters’ unrecognized income tax benefits will be released within the next 12 months. Most of this amount relates to state taxes and is currently expected to be released in the December 2015 quarter due to the expiration of statute of limitation time periods.

Equity Securities and Stock-Bas

Equity Securities and Stock-Based Compensation	9 Months Ended
	Jun. 30, 2015
Equity Securities and Stock-Based Compensation
Equity Securities and Stock-Based Compensation	10. Equity Securities and Stock-Based Compensation Treasury Shares Held for Deferred Compensation Obligation — In accordance with the terms of the Directors’ Deferred Compensation Plan (DDCP), non-employee directors can elect to defer certain compensation and choose from various options how the deferred compensation will be invested. One of the investment options is Headwaters common stock. When a director chooses Headwaters stock as an investment option, Headwaters purchases the common stock in accordance with the director’s request and holds the shares until such time as the deferred compensation obligation becomes payable, normally when the director retires from the Board. At such time, the shares held by Headwaters are distributed to the director in satisfaction of the obligation. Headwaters accounts for the purchase of common stock as treasury stock, at cost. The corresponding deferred compensation obligation is reflected in capital in excess of par value. Changes in the fair value of the treasury stock are not recognized. As of June 30, 2015, the treasury stock and related deferred compensation obligation had fair values of approximately $1.4 million, which was $0.5 million higher than the carrying values at cost. Stock-Based Compensation — In the December 2014 quarter, the Compensation Committee of Headwaters’ Board of Directors (the Committee) approved the grant of approximately 0.3 million stock-based awards to officers and employees. The awards were granted under terms of the 2010 Incentive Compensation Plan and vest over an approximate three-year period. Vesting is also subject to a 60-day average stock price hurdle that precludes vesting unless Headwaters’ stock price exceeds by a predetermined amount the stock price on the date of grant, which threshold was reached during the March 2015 quarter. Stock-based compensation expense was approximately $0.6 million and $0.7 million for the June 2014 and 2015 quarters, respectively, and $1.6 million and $2.1 million for the nine months ended June 30, 2014 and 2015, respectively. As of June 30, 2015, there was approximately $3.0 million of total compensation cost related to unvested awards not yet recognized, which will be recognized in future periods in accordance with applicable vesting terms. Shelf Registration — In August 2015, Headwaters filed a universal shelf registration statement with the SEC. A prospectus supplement describing the terms of any future securities to be issued is required to be filed before any offering can commence under the registration statement.

Earnings per Share

Earnings per Share	9 Months Ended
	Jun. 30, 2015
Earnings per Share
Earnings per Share	11. Earnings per Share The following table sets forth the computations of basic and diluted EPS, reflecting the amounts attributable to Headwaters and excluding the amounts attributable to the non-controlling interest in Entegra. In accordance with ASC 260, income (loss) from continuing operations for each period is used as the control number in determining whether potentially dilutive common shares should be included in the diluted earnings per share computations for those periods, even when the effect of doing so is anti-dilutive to the other per-share amounts. Three Months Ended June 30, Nine Months Ended June 30, (in thousands, except per-share amounts) 2014 2015 2014 2015 Numerator: Income (loss) from continuing operations $ $ $ ) $ Income from continuing operations attributable to non-controlling interest ) ) ) ) Adjustment of estimated redemption value of non-controlling interest ) ) Numerator for basic and diluted earnings per share from continuing operations — income (loss) from continuing operations attributable to Headwaters Incorporated ) Numerator for basic and diluted earnings per share from discontinued operations — loss from discontinued operations, net of income taxes ) ) ) ) Numerator for basic and diluted earnings per share — net income (loss) attributable to Headwaters Incorporated $ $ $ ) $ Denominator: Denominator for basic earnings per share — weighted-average shares outstanding Effect of dilutive securities — shares issuable upon exercise of options and SARs and vesting of restricted stock Denominator for diluted earnings per share — weighted-average shares outstanding after assumed exercises and vesting Basic income (loss) per share attributable to Headwaters Incorporated: From continuing operations $ $ $ ) $ From discontinued operations $ $ $ ) $ Diluted income (loss) per share attributable to Headwaters Incorporated: From continuing operations $ $ $ ) $ From discontinued operations $ $ $ ) $ Anti-dilutive securities not considered in diluted EPS calculation: Stock-settled SARs Stock options Restricted stock

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Jun. 30, 2015
Commitments and Contingencies
Commitments and Contingencies	12. Commitments and Contingencies Significant new commitments, material changes in commitments and ongoing contingencies as of June 30, 2015, not disclosed elsewhere, are as follows: Compensation Arrangements — Cash Performance Unit Awards. The Compensation Committee has approved various grants of performance unit awards to certain officers and employees, to be settled in cash, based on the achievement of certain stipulated goals, all of which are described in detail in the Form 10-K (including fiscal 2015 grants made in the December 2014 quarter). Since September 30, 2014, there have been no significant changes in Headwaters’ commitments or in the amounts accrued under these awards, except for payment in the December 2014 quarter of amounts contractually due under the terms of certain prior year awards, and the accrual of approximately $2.5 million in the June 2015 quarter under terms of the fiscal 2015 grants. As explained in the Form 10-K, the amounts accrued under the fiscal 2014 awards are subject to adjustment for cash flows generated in fiscal 2015 and 2016. Headwaters currently expects that additional amounts could be earned in the September 2015 quarter under the terms of the fiscal 2015 awards. Cash-Settled SAR Grants. In fiscal 2011, the Committee approved grants to certain employees of approximately 0.4 million cash-settled SARs, less than 0.1 million of which remain outstanding as of June 30, 2015. These SARs, which are considered liability awards, vested in annual installments through September 30, 2013 and are settled in cash upon exercise by the employee. The SARs terminate on September 30, 2015 and must be exercised on or before that date. As of June 30, 2015, approximately $0.4 million has been accrued for outstanding awards because the stock price at June 30, 2015 was above the grant-date stock price of $3.81. Changes in Headwaters’ stock price through the dates employees exercise the SARs will result in adjustments to compensation expense and will be reflected in Headwaters’ statement of operations for the September 2015 quarter. In fiscal 2012, the Committee approved grants to certain officers and employees of approximately 1.0 million cash-settled SARs, approximately 0.2 million of which remain outstanding as of June 30, 2015. These SARs have a grant-date stock price of $1.85 and otherwise have terms similar to those described above, except they could not vest until and unless the 60-day average stock price exceeded approximately 135% of the stock price on the date of grant (or $2.50), which occurred in fiscal 2012. Approximately $2.6 million has been accrued for outstanding awards as of June 30, 2015. Changes in Headwaters’ stock price through September 30, 2016, the date unexercised SARs will expire, will result in adjustment to the expected remaining liability, which adjustment (whether positive or negative) will be reflected in Headwaters’ statement of operations each quarter. Compensation expense for all cash-settled SARs was approximately $5.1 million and $2.9 million for the nine months ended June 30, 2014 and 2015, respectively. Property, Plant and Equipment — As of June 30, 2015, Headwaters was committed to spend approximately $1.5 million on capital projects that were in various stages of completion. Legal Matters — Headwaters has ongoing litigation and asserted claims which have been incurred in the normal course of business, including the specific matters discussed below. Headwaters intends to vigorously defend or resolve these matters by settlement, as appropriate. Management does not currently believe that the outcome of these matters will have a material adverse effect on Headwaters’ operations, cash flow or financial position. Headwaters incurred approximately $4.5 million and $1.7 million of expense for legal matters during the nine months ended June 30, 2014 and 2015, respectively. Except for $2.5 million in 2014, costs for outside legal counsel comprised a majority of Headwaters’ litigation-related costs for the periods presented. Headwaters currently believes the range of potential loss for all unresolved legal matters, excluding costs for outside counsel, is from $2.5 million up to the amounts sought by claimants and has recorded a liability as of June 30, 2015 of $2.5 million. The substantial claims and damages sought by claimants in excess of this amount are not currently deemed to be probable. Headwaters’ outside counsel and management currently believe that unfavorable outcomes of outstanding litigation beyond the amount accrued are neither probable nor remote. Accordingly, management cannot express an opinion as to the ultimate amount, if any, of Headwaters’ liability, nor is it possible to estimate what litigation-related costs will be in future periods. The specific matters discussed below raise difficult and complex legal and factual issues, and the resolution of these issues is subject to many uncertainties, including the facts and circumstances of each case, the jurisdiction in which each case is brought, and the future decisions of juries, judges, and arbitrators. Therefore, although management believes that the claims asserted against Headwaters in the named cases lack merit, there is a possibility of material losses in excess of the amount accrued if one or more of the cases were to be determined adversely against Headwaters for a substantial amount of the damages asserted. I t is possible that a change in the estimate of probable liability could occur, and the changes could be material. Additionally, as with any litigation, these proceedings require that Headwaters incur substantial costs, including attorneys’ fees, managerial time and other personnel resources, in pursuing resolution. EPA. In April 2012, Headwaters Resources, Inc. (HRI) filed a complaint in the United States District Court for the District of Columbia against the United States Environmental Protection Agency (EPA). The complaint alleges that the EPA failed to review, and where necessary, revise RCRA subtitle D regulations applicable to the disposal of coal ash within the timeframe required by statute. Other parties also initiated litigation against the EPA alleging the same (and other) failures of the EPA to perform its duties regarding coal ash disposal regulations. HRI’s complaint seeks certain declaratory relief with respect to EPA rulemaking at issue in the case. The District Court consolidated HRI’s case with related actions brought by other parties. In October 2013, the District Court granted summary judgment that the EPA failed to fulfill its statutory duty to review coal ash disposal regulations, among other things, ordering the EPA to propose a schedule to complete its review of coal ash disposal regulations, and, as necessary, revise the regulations. In May 2014, the District Court entered a consent decree ordering the EPA to take final action in December 2014 regarding EPA’s proposed revisions of RCRA subtitle D regulations pertaining to coal combustion residuals. In December 2014, the EPA issued a prepublication notice of a final rule to regulate the disposal of coal combustion residuals as solid (non-hazardous) waste under subtitle D of RCRA, with national minimum criteria for CCR landfills and impoundments consisting of location restrictions, design and operating criteria, groundwater monitoring and corrective action, closure requirements, post closure care, recordkeeping and reporting, and other requirements. The final rule will be effective 180 days after publication in the Federal Register, which publication occurred on April 17, 2015. It is expected that the EPA will move to terminate the consent decree in the near future which will end the case. Fentress Families Trust. VFL Technology Corporation (VFL), acquired by HRI in 2004, provides services related to fly ash management to Virginia Electric and Power Company. In February 2012, 383 plaintiffs, most of whom are residents living in the City of Chesapeake, Virginia, filed a complaint in the State of Virginia Chesapeake Circuit Court against 15 defendants, including Virginia Electric and Power Company (VEPCO), and certain other persons associated with the Battlefield Golf Course, including owners, developers, contractors, and others, including VFL and Headwaters, alleging causes of action for nuisance and negligence. The complaint alleges that fly ash used to construct the golf course was carried in the air and contaminated water exposing plaintiffs to dangerous chemicals and causing property damage. Plaintiffs’ complaint seeks injunctive relief and damages of approximately $850.0 million for removal and remediation of the fly ash and the water supply, $1.9 billion for vexation, $8.0 million and other unspecified amounts for personal injuries, and $55.0 million as damages to properties, plus prejudgment interest, attorney fees, and costs. In a related case, other plaintiffs have filed a separate lawsuit asserting the same claims against the same defendants claiming additional damages totaling approximately $307.2 million. In August 2013 the court ruled on VEPCO’s demurrer ordering that claims for personal injury or property damage based upon allegations of groundwater contamination were dismissed but that claims of nuisance and negligence based upon allegations of air-borne ash and contaminated surface water would not be dismissed. These cases are based on substantially the same alleged circumstances asserted in complaints filed by the plaintiffs in 2009 and voluntarily dismissed in 2010. Discovery is underway. HRI has filed claims for defense and indemnity with several of its insurers. In 2010, HRI filed suit in the United States District Court for the District of Utah against two insurers that denied coverage based on allegations in the 2009 Fentress complaints. The District Court ruled in the insurers’ favor, which ruling was affirmed in October 2014 by the United States Court of Appeals for the Tenth Circuit. Another insurer continues to pay for the defense of the underlying cases under a reservation of rights. The relatively novel fly ash claims of the plaintiffs together with multiple insurance policies and policy periods make insurance coverage issues complex and uncertain. Moreover, plaintiffs’ total claims exceed the potential limits of insurance available to HRI. Because resolution of the litigation is uncertain, legal counsel and management cannot express an opinion as to the ultimate amount, if any, of HRI’s liability, or the insurers’ obligation to indemnify HRI against loss, if any. Building Products Matters. There are litigation and pending and threatened claims made against certain subsidiaries within Headwaters’ building products segment, with respect to several types of exterior finish systems manufactured and sold by its subsidiaries for application by contractors on residential and commercial buildings. The plaintiffs or claimants in these matters typically allege that the structures have suffered damage from water penetration due to some alleged failure of the roofing product or wall system. The claims most often involve alleged liabilities associated with certain roofing, stucco, and architectural stone products which are produced and sold by certain subsidiaries of Headwaters. The foregoing litigation and claims typically cite damages for alleged personal injuries, property damage, economic loss, unfair business practices and punitive damages. Claims made against Headwaters and its subsidiaries generally have been paid by their insurers, subject to Headwaters’ payment of deductibles or self-insured retentions, although such insurance carriers typically have issued “reservation of rights” letters. There is no guarantee of insurance coverage or continuing coverage. These and future proceedings may result in substantial costs to Headwaters and its subsidiaries, including attorneys’ fees, managerial time and other personnel resources and costs. Adverse resolution of these proceedings could have a materially negative effect on Headwaters’ businesses, financial condition, and results of operation, and its ability to meet its financial obligations. Although Headwaters carries general and product liability insurance, subject to exclusions and self-insured retentions, Headwaters cannot assure that such insurance coverage will remain available, that Headwaters’ insurance carriers will remain viable, will accept claims or that the insured amounts will cover all claims in excess of self-insured retentions. Future rate increases may also make such insurance uneconomical for Headwaters to maintain. Because resolution of the litigation, claims, and insurance coverage is uncertain, legal counsel and management cannot express an opinion as to the ultimate amount, if any, of Headwaters’ or its subsidiaries’ liability. Construction Materials Matters . In addition, there are litigation and pending and threatened claims made against HRI, Headwaters’ construction materials segment, with respect to coal combustion products. The plaintiffs or claimants in these matters have alleged that inhalation or other exposure to fly ash is unsafe, and that HRI has failed to warn about the alleged dangers of fly ash exposure and the use of adequate protection, resulting in personal injury, contamination of land and water, and diminution in property value. The Fentress Family Trust case summarized above is an example of these types of claims. The application of relatively novel fly ash claims to insurance policies is complex and uncertain and HRI has had limited success in tendering defense of such claims to insurers, which is dependent upon the alleged facts and specific policy terms. Adverse resolution of these claims and insurance coverage disputes could have a materially negative effect on Headwaters’ businesses, financial condition, and results of operation, and its ability to meet its financial obligations. Because resolution of the litigation, claims, and insurance coverage disputes is uncertain, legal counsel and management cannot express an opinion as to the ultimate amount, if any, of HRI’s liability. Other. Headwaters and its subsidiaries are also involved in other legal proceedings that have arisen in the normal course of business. Because resolution of these proceedings is uncertain, legal counsel and management cannot express an opinion as to the ultimate amount, if any, of Headwaters’ liability.

Condensed Consolidating Financi

Condensed Consolidating Financial Information	9 Months Ended
	Jun. 30, 2015
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information	13. Condensed Consolidating Financial Information Headwaters’ borrowings under the Term Loan Facility and the 7¼% senior notes are jointly and severally, fully and unconditionally guaranteed by Headwaters Incorporated and by substantially all of Headwaters’ 100%-owned domestic subsidiaries. Separate stand-alone financial statements and disclosures for Headwaters Incorporated and each of the guarantor subsidiaries are not presented because the guarantees are full and unconditional and the guarantor subsidiaries have joint and several liability. There are no significant restrictions on the ability of Headwaters Incorporated to obtain funds from the guarantor subsidiaries nor on the ability of the guarantor subsidiaries to obtain funds from Headwaters Incorporated or other guarantor subsidiaries. Non-guaranteeing entities include subsidiaries that are not 100% owned, foreign subsidiaries and joint ventures in which Headwaters has a non-controlling ownership interest. CONDENSED CONSOLIDATING BALANCE SHEET — September 30, 2014 Guarantor Non- guarantor Parent Eliminations and Headwaters (in thousands) Subsidiaries Subsidiaries Company Reclassifications Consolidated ASSETS Current assets: Cash and cash equivalents $ $ $ $ — $ Trade receivables, net Inventories Deferred income taxes ) Other Total current assets ) Property, plant and equipment, net — Other assets: Goodwill Intangible assets, net Investments in subsidiaries ) — Intercompany accounts and notes ) — Deferred income taxes ) — Other Total other assets ) Total assets $ $ $ $ ) $ LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ $ $ $ — $ Accrued personnel costs Accrued interest Current income taxes ) Other accrued liabilities Total current liabilities ) Long-term liabilities: Long-term debt, net Income taxes ) Intercompany accounts and notes ) — Other Total long-term liabilities ) Total liabilities ) Redeemable non-controlling interest in consolidated subsidiary Stockholders’ equity: Common stock Capital in excess of par value ) Retained earnings (accumulated deficit) ) ) ) Treasury stock ) ) Total stockholders’ equity ) Total liabilities and stockholders’ equity $ $ $ $ ) $ CONDENSED CONSOLIDATING BALANCE SHEET — June 30, 2015 Guarantor Non- guarantor Parent Eliminations and Headwaters (in thousands) Subsidiaries Subsidiaries Company Reclassifications Consolidated ASSETS Current assets: Cash and cash equivalents $ $ $ $ — $ Trade receivables, net Inventories Current and deferred income taxes ) Other Total current assets ) Property, plant and equipment, net — Other assets: Goodwill Intangible assets, net Investments in subsidiaries ) — Intercompany accounts and notes ) — Deferred income taxes ) — Other ) Total other assets ) Total assets $ $ $ $ ) $ LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ $ $ $ — $ Accrued personnel costs Accrued interest Current income taxes ) — Other accrued liabilities Current portion of long-term debt Total current liabilities ) Long-term liabilities: Long-term debt, net Income taxes ) Intercompany accounts and notes ) — Other ) Total long-term liabilities ) Total liabilities ) Redeemable non-controlling interest in consolidated subsidiary Stockholders’ equity: Common stock Capital in excess of par value ) Retained earnings (accumulated deficit) ) ) ) Treasury stock ) ) Total stockholders’ equity ) ) Total liabilities and stockholders’ equity $ $ $ $ ) $ CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS Three Months Ended June 30, 2014 Guarantor Non- guarantor Parent Headwaters (in thousands) Subsidiaries Subsidiaries Company Eliminations Consolidated Revenue: Building products $ $ $ — $ — $ Construction materials Energy technology Total revenue — — Cost of revenue: Building products Construction materials Energy technology Total cost of revenue — — Gross profit — — Operating expenses: Amortization Selling, general and administrative Total operating expenses — Operating income (loss) ) — Other income (expense): Net interest expense ) ) ) ) Equity in earnings of subsidiaries ) — Other, net ) ) Total other income (expense), net ) ) ) ) Income from continuing operations before income taxes ) Income tax benefit (provision) ) ) ) Income from continuing operations ) Loss from discontinued operations, net of income taxes ) ) Net income ) Net income attributable to non-controlling interest ) ) Net income attributable to Headwaters Incorporated $ $ $ $ ) $ CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS Three Months Ended June 30, 2015 Guarantor Non- guarantor Parent Headwaters (in thousands) Subsidiaries Subsidiaries Company Eliminations Consolidated Revenue: Building products $ $ $ — $ — $ Construction materials Energy technology Total revenue — — Cost of revenue: Building products Construction materials Energy technology Total cost of revenue — — Gross profit — — Operating expenses: Amortization Selling, general and administrative Total operating expenses — Operating income (loss) ) — Other income (expense): Net interest expense ) ) ) Equity in earnings of subsidiaries ) — Other, net ) Total other income (expense), net ) ) ) Income from continuing operations before income taxes ) Income tax benefit (provision) ) ) ) Income from continuing operations ) Loss from discontinued operations, net of income taxes ) ) Net income ) Net income attributable to non-controlling interest ) ) Net income attributable to Headwaters Incorporated $ $ $ $ ) $ CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS Nine Months Ended June 30, 2014 Guarantor Non- guarantor Parent Headwaters (in thousands) Subsidiaries Subsidiaries Company Eliminations Consolidated Revenue: Building products $ $ $ — $ — $ Construction materials Energy technology Total revenue — — Cost of revenue: Building products Construction materials Energy technology Total cost of revenue — — Gross profit — — Operating expenses: Amortization Selling, general and administrative Total operating expenses — Operating income (loss) ) — Other income (expense): Net interest expense ) ) ) ) Equity in earnings of subsidiaries ) — Other, net ) ) Total other income (expense), net ) ) ) ) Income (loss) from continuing operations before income taxes ) ) ) Income tax benefit (provision) ) ) Income (loss) from continuing operations ) ) ) Loss from discontinued operations, net of income taxes ) ) Net income (loss) ) ) ) Net income attributable to non-controlling interest ) ) Net income (loss) attributable to Headwaters Incorporated $ $ $ ) $ ) $ ) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS Nine Months Ended June 30, 2015 Guarantor Non- guarantor Parent Headwaters (in thousands) Subsidiaries Subsidiaries Company Eliminations Consolidated Revenue: Building products $ $ $ — $ — $ Construction materials Energy technology Total revenue — — Cost of revenue: Building products Construction materials Energy technology Total cost of revenue — — Gross profit — — Operating expenses: Amortization Selling, general and administrative Total operating expenses — Operating income (loss) ) — Other income (expense): Net interest expense ) ) ) Equity in earnings of subsidiaries ) — Other, net ) ) ) Total other income (expense), net ) ) ) ) Income (loss) from continuing operations before income taxes ) ) Income tax benefit (provision) ) ) Income from continuing operations ) Loss from discontinued operations, net of income taxes ) ) ) Net income ) Net income attributable to non-controlling interest ) ) Net income attributable to Headwaters Incorporated $ $ $ $ ) $ 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) $ $ $ ) $ ) $ ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization Interest expense related to amortization of debt issue costs and debt discount Stock-based compensation Deferred income taxes Net loss (gain) on disposition of property, plant and equipment ) ) Gain on sale of discontinued operations, net of income taxes ) ) Asset impairments Net loss of unconsolidated joint ventures Equity in earnings of subsidiaries ) Decrease in trade receivables Decrease (increase) in inventories ) ) Increase (decrease) in accounts payable and accrued liabilities ) ) ) Other changes in operating assets and liabilities, net ) ) Net cash provided by (used in) operating activities ) — Cash flows from investing activities: Payments for acquisitions ) ) ) Payments for investments in unconsolidated joint ventures ) ) Purchase of property, plant and equipment ) ) ) ) Proceeds from disposition of property, plant and equipment Proceeds from sale of discontinued operations Net decrease in long-term receivables and deposits Net change in other assets ) ) ) Net cash used in investing activities ) ) ) — ) Cash flows from financing activities: Net proceeds from issuance of long-term debt Payments on long-term debt ) ) Employee stock purchases Net cash provided by financing activities — — Net increase in cash and cash equivalents — Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period $ $ $ $ — $ 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 $ $ $ $ ) $ Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization Interest expense related to amortization of debt issue costs and debt discount Stock-based compensation Deferred income taxes Net loss on disposition of property, plant and equipment Loss on sale of discontinued operations, net of income taxes Net loss of unconsolidated joint ventures Equity in earnings of subsidiaries ) Decrease in trade receivables Increase in inventories ) ) ) Increase (decrease) in accounts payable and accrued liabilities ) ) ) Other changes in operating assets and liabilities, net ) ) ) ) Net cash provided by (used in) operating activities ) — Cash flows from investing activities: Business acquisition ) ) Investments in unconsolidated joint venture ) ) Purchase of property, plant and equipment ) ) ) ) Proceeds from disposition of property, plant and equipment Net decrease in long-term receivables and deposits Net change in other assets ) ) Net cash used in investing activities ) ) ) — ) Cash flows from financing activities: Net proceeds from issuance of long-term debt Payments on long-term debt ) ) Dividends paid to non-controlling interest in consolidated subsidiary ) ) Employee stock purchases Intercompany transfers ) ) Net cash provided by (used in) financing activities ) ) — ) Net increase (decrease) in cash and cash equivalents ) ) — ) Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period $ $ $ $ — $

Segment Reporting (Tables)

Segment Reporting (Tables)	9 Months Ended
	Jun. 30, 2015
Segment Reporting
Schedule Of Segment Reporting	Three Months Ended June 30, 2014 (in thousands) Building products Construction materials Energy technology Corporate Totals Segment revenue $ $ $ $ $ Depreciation and amortization $ ) $ ) $ ) $ ) $ ) Operating income (loss) $ $ $ ) $ ) $ Net interest expense ) Other income (expense), net ) Income tax provision ) Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $ Segment assets as of September 30, 2014 $ $ $ $ $ Three Months Ended June 30, 2015 (in thousands) Building products Construction materials Energy technology Corporate Totals Segment revenue $ $ $ $ $ Depreciation and amortization $ ) $ ) $ ) $ ) $ ) Operating income (loss) $ $ $ ) $ ) $ Net interest expense ) Other income (expense), net Income tax provision ) Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $ Segment assets as of June 30, 2015 $ $ $ $ $ Nine Months Ended June 30, 2014 (in thousands) Building products Construction materials Energy technology Corporate Totals Segment revenue $ $ $ $ $ Depreciation and amortization $ ) $ ) $ ) $ ) $ ) Operating income (loss) $ $ $ ) $ ) $ Net interest expense ) Other income (expense), net ) Income tax benefit Loss from continuing operations ) Loss from discontinued operations, net of income taxes ) Net loss $ ) Capital expenditures $ $ $ $ $ Nine Months Ended June 30, 2015 (in thousands) Building products Construction materials Energy technology Corporate Totals Segment revenue $ $ $ $ $ Depreciation and amortization $ ) $ ) $ ) $ ) $ ) Operating income (loss) $ $ $ ) $ ) $ Net interest expense ) Other income (expense), net ) Income tax benefit Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $

Acquisitions (Tables)

Acquisitions (Tables)	9 Months Ended
	Jun. 30, 2015
Acquisitions
Schedule of activity of non-controlling interest	(in thousands) Balance as of September 30, 2014 $ Net income attributable to non-controlling interest Dividends paid to non-controlling interest ) Balance as of June 30, 2015 $
Entegra
Acquisitions
Schedule of estimated fair values of assets acquired and liabilities assumed as of the acquisition date	(in thousands) Current assets $ Current liabilities ) Property, plant and equipment Intangible assets: Customer relationships (15 year life) Trade name (indefinite life) Goodwill Net assets acquired Less redeemable non-controlling interest ) Net assets attributable to Headwaters $
Gerard
Acquisitions
Schedule of estimated fair values of assets acquired and liabilities assumed as of the acquisition date	(in thousands) Current assets $ Current liabilities ) Property, plant and equipment Intangible assets: Customer relationships (15 year life) Trade name (indefinite life) Goodwill Long-term liabilities ) Net assets acquired $

Discontinued Operations (Tables

Discontinued Operations (Tables)	9 Months Ended
	Jun. 30, 2015
Discontinued Operations
Schedule Of Information For The Discontinued Coal Cleaning Business	Three Months Ended June 30, Nine Months Ended June 30, (in thousands) 2014 2015 2014 2015 Revenue $ $ $ $ Loss from operations of discontinued operations before income taxes $ ) $ ) $ ) $ ) Gain (loss) on disposal ) ) Income tax provision Loss from discontinued operations, net of income taxes $ ) $ ) $ ) $ )

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Jun. 30, 2015
Inventories
Schedule of components of inventory	(in thousands) September 30, 2014 June 30, 2015 Raw materials $ $ Finished goods $ $

Intangible Assets (Tables)

Intangible Assets (Tables)	9 Months Ended
	Jun. 30, 2015
Intangible Assets
Schedule of gross carrying amounts and accumulated amortization of intangible assets	September 30, 2014 June 30, 2015 (in thousands of dollars) Estimated useful lives Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Trade names Indefinite $ $ — $ $ — CCP contracts 15 - 20 years Customer relationships 5 - 17 years Trade names 5 - 20 years Patents and patented technologies 5 - 19 years Other 5 - 17 years $ $ $ $
Schedule of total currently estimated annual amortization expense	Year ending September 30: (in thousands) 2015 $ 2016 2017 2018 2019 2020

Long-term Debt (Tables)

Long-term Debt (Tables)	9 Months Ended
	Jun. 30, 2015
Long-term Debt
Schedule of the discounted carrying value of long-term debt	(in thousands) September 30, 2014 June 30, 2015 Senior secured term loan, due March 2022 (face amount $425,000) $ $ 7¼% Senior notes, due January 2019 (face amount $150,000) 7-5/8% Senior secured notes, repaid in March 2015 (face amount $400,000) 8.75% Convertible senior subordinated notes, repaid in February 2015 (face amount $49,791) Carrying amount of long-term debt, net of discounts and debt issue costs Less current portion ) Long-term debt $ $

Earnings per Share (Tables)

Earnings per Share (Tables)	9 Months Ended
	Jun. 30, 2015
Earnings per Share
Schedule of computation of basic and diluted EPS	Three Months Ended June 30, Nine Months Ended June 30, (in thousands, except per-share amounts) 2014 2015 2014 2015 Numerator: Income (loss) from continuing operations $ $ $ ) $ Income from continuing operations attributable to non-controlling interest ) ) ) ) Adjustment of estimated redemption value of non-controlling interest ) ) Numerator for basic and diluted earnings per share from continuing operations — income (loss) from continuing operations attributable to Headwaters Incorporated ) Numerator for basic and diluted earnings per share from discontinued operations — loss from discontinued operations, net of income taxes ) ) ) ) Numerator for basic and diluted earnings per share — net income (loss) attributable to Headwaters Incorporated $ $ $ ) $ Denominator: Denominator for basic earnings per share — weighted-average shares outstanding Effect of dilutive securities — shares issuable upon exercise of options and SARs and vesting of restricted stock Denominator for diluted earnings per share — weighted-average shares outstanding after assumed exercises and vesting Basic income (loss) per share attributable to Headwaters Incorporated: From continuing operations $ $ $ ) $ From discontinued operations $ $ $ ) $ Diluted income (loss) per share attributable to Headwaters Incorporated: From continuing operations $ $ $ ) $ From discontinued operations $ $ $ ) $ Anti-dilutive securities not considered in diluted EPS calculation: Stock-settled SARs Stock options Restricted stock

Condensed Consolidating Finan28

Condensed Consolidating Financial Information (Tables)	9 Months Ended
	Jun. 30, 2015
Condensed Consolidating Financial Information
Schedule of condensed consolidating balance sheet	CONDENSED CONSOLIDATING BALANCE SHEET — September 30, 2014 Guarantor Non- guarantor Parent Eliminations and Headwaters (in thousands) Subsidiaries Subsidiaries Company Reclassifications Consolidated ASSETS Current assets: Cash and cash equivalents $ $ $ $ — $ Trade receivables, net Inventories Deferred income taxes ) Other Total current assets ) Property, plant and equipment, net — Other assets: Goodwill Intangible assets, net Investments in subsidiaries ) — Intercompany accounts and notes ) — Deferred income taxes ) — Other Total other assets ) Total assets $ $ $ $ ) $ LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ $ $ $ — $ Accrued personnel costs Accrued interest Current income taxes ) Other accrued liabilities Total current liabilities ) Long-term liabilities: Long-term debt, net Income taxes ) Intercompany accounts and notes ) — Other Total long-term liabilities ) Total liabilities ) Redeemable non-controlling interest in consolidated subsidiary Stockholders’ equity: Common stock Capital in excess of par value ) Retained earnings (accumulated deficit) ) ) ) Treasury stock ) ) Total stockholders’ equity ) Total liabilities and stockholders’ equity $ $ $ $ ) $ CONDENSED CONSOLIDATING BALANCE SHEET — June 30, 2015 Guarantor Non- guarantor Parent Eliminations and Headwaters (in thousands) Subsidiaries Subsidiaries Company Reclassifications Consolidated ASSETS Current assets: Cash and cash equivalents $ $ $ $ — $ Trade receivables, net Inventories Current and deferred income taxes ) Other Total current assets ) Property, plant and equipment, net — Other assets: Goodwill Intangible assets, net Investments in subsidiaries ) — Intercompany accounts and notes ) — Deferred income taxes ) — Other ) Total other assets ) Total assets $ $ $ $ ) $ LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ $ $ $ — $ Accrued personnel costs Accrued interest Current income taxes ) — Other accrued liabilities Current portion of long-term debt Total current liabilities ) Long-term liabilities: Long-term debt, net Income taxes ) Intercompany accounts and notes ) — Other ) Total long-term liabilities ) Total liabilities ) Redeemable non-controlling interest in consolidated subsidiary Stockholders’ equity: Common stock Capital in excess of par value ) Retained earnings (accumulated deficit) ) ) ) Treasury stock ) ) Total stockholders’ equity ) ) Total liabilities and stockholders’ equity $ $ $ $ ) $
Schedule of condensed consolidating statement of operations	CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS Three Months Ended June 30, 2014 Guarantor Non- guarantor Parent Headwaters (in thousands) Subsidiaries Subsidiaries Company Eliminations Consolidated Revenue: Building products $ $ $ — $ — $ Construction materials Energy technology Total revenue — — Cost of revenue: Building products Construction materials Energy technology Total cost of revenue — — Gross profit — — Operating expenses: Amortization Selling, general and administrative Total operating expenses — Operating income (loss) ) — Other income (expense): Net interest expense ) ) ) ) Equity in earnings of subsidiaries ) — Other, net ) ) Total other income (expense), net ) ) ) ) Income from continuing operations before income taxes ) Income tax benefit (provision) ) ) ) Income from continuing operations ) Loss from discontinued operations, net of income taxes ) ) Net income ) Net income attributable to non-controlling interest ) ) Net income attributable to Headwaters Incorporated $ $ $ $ ) $ CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS Three Months Ended June 30, 2015 Guarantor Non- guarantor Parent Headwaters (in thousands) Subsidiaries Subsidiaries Company Eliminations Consolidated Revenue: Building products $ $ $ — $ — $ Construction materials Energy technology Total revenue — — Cost of revenue: Building products Construction materials Energy technology Total cost of revenue — — Gross profit — — Operating expenses: Amortization Selling, general and administrative Total operating expenses — Operating income (loss) ) — Other income (expense): Net interest expense ) ) ) Equity in earnings of subsidiaries ) — Other, net ) Total other income (expense), net ) ) ) Income from continuing operations before income taxes ) Income tax benefit (provision) ) ) ) Income from continuing operations ) Loss from discontinued operations, net of income taxes ) ) Net income ) Net income attributable to non-controlling interest ) ) Net income attributable to Headwaters Incorporated $ $ $ $ ) $ CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS Nine Months Ended June 30, 2014 Guarantor Non- guarantor Parent Headwaters (in thousands) Subsidiaries Subsidiaries Company Eliminations Consolidated Revenue: Building products $ $ $ — $ — $ Construction materials Energy technology Total revenue — — Cost of revenue: Building products Construction materials Energy technology Total cost of revenue — — Gross profit — — Operating expenses: Amortization Selling, general and administrative Total operating expenses — Operating income (loss) ) — Other income (expense): Net interest expense ) ) ) ) Equity in earnings of subsidiaries ) — Other, net ) ) Total other income (expense), net ) ) ) ) Income (loss) from continuing operations before income taxes ) ) ) Income tax benefit (provision) ) ) Income (loss) from continuing operations ) ) ) Loss from discontinued operations, net of income taxes ) ) Net income (loss) ) ) ) Net income attributable to non-controlling interest ) ) Net income (loss) attributable to Headwaters Incorporated $ $ $ ) $ ) $ ) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS Nine Months Ended June 30, 2015 Guarantor Non- guarantor Parent Headwaters (in thousands) Subsidiaries Subsidiaries Company Eliminations Consolidated Revenue: Building products $ $ $ — $ — $ Construction materials Energy technology Total revenue — — Cost of revenue: Building products Construction materials Energy technology Total cost of revenue — — Gross profit — — Operating expenses: Amortization Selling, general and administrative Total operating expenses — Operating income (loss) ) — Other income (expense): Net interest expense ) ) ) Equity in earnings of subsidiaries ) — Other, net ) ) ) Total other income (expense), net ) ) ) ) Income (loss) from continuing operations before income taxes ) ) Income tax benefit (provision) ) ) Income from continuing operations ) Loss from discontinued operations, net of income taxes ) ) ) Net income ) Net income attributable to non-controlling interest ) ) Net income attributable to Headwaters Incorporated $ $ $ $ ) $
Schedule of condensed consolidating statement of cash flows	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) $ $ $ ) $ ) $ ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization Interest expense related to amortization of debt issue costs and debt discount Stock-based compensation Deferred income taxes Net loss (gain) on disposition of property, plant and equipment ) ) Gain on sale of discontinued operations, net of income taxes ) ) Asset impairments Net loss of unconsolidated joint ventures Equity in earnings of subsidiaries ) Decrease in trade receivables Decrease (increase) in inventories ) ) Increase (decrease) in accounts payable and accrued liabilities ) ) ) Other changes in operating assets and liabilities, net ) ) Net cash provided by (used in) operating activities ) — Cash flows from investing activities: Payments for acquisitions ) ) ) Payments for investments in unconsolidated joint ventures ) ) Purchase of property, plant and equipment ) ) ) ) Proceeds from disposition of property, plant and equipment Proceeds from sale of discontinued operations Net decrease in long-term receivables and deposits Net change in other assets ) ) ) Net cash used in investing activities ) ) ) — ) Cash flows from financing activities: Net proceeds from issuance of long-term debt Payments on long-term debt ) ) Employee stock purchases Net cash provided by financing activities — — Net increase in cash and cash equivalents — Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period $ $ $ $ — $ 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 $ $ $ $ ) $ Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization Interest expense related to amortization of debt issue costs and debt discount Stock-based compensation Deferred income taxes Net loss on disposition of property, plant and equipment Loss on sale of discontinued operations, net of income taxes Net loss of unconsolidated joint ventures Equity in earnings of subsidiaries ) Decrease in trade receivables Increase in inventories ) ) ) Increase (decrease) in accounts payable and accrued liabilities ) ) ) Other changes in operating assets and liabilities, net ) ) ) ) Net cash provided by (used in) operating activities ) — Cash flows from investing activities: Business acquisition ) ) Investments in unconsolidated joint venture ) ) Purchase of property, plant and equipment ) ) ) ) Proceeds from disposition of property, plant and equipment Net decrease in long-term receivables and deposits Net change in other assets ) ) Net cash used in investing activities ) ) ) — ) Cash flows from financing activities: Net proceeds from issuance of long-term debt Payments on long-term debt ) ) Dividends paid to non-controlling interest in consolidated subsidiary ) ) Employee stock purchases Intercompany transfers ) ) Net cash provided by (used in) financing activities ) ) — ) Net increase (decrease) in cash and cash equivalents ) ) — ) Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period $ $ $ $ — $

Nature of Operations and Basi29

Nature of Operations and Basis of Presentation (Details) $ in Millions	6 Months Ended	9 Months Ended		12 Months Ended
	Mar. 31, 2015USD ($)	Jun. 30, 2015item	Jun. 30, 2014	Sep. 30, 2014USD ($)
Nature of Operations and Basis of Presentation
Number of building materials segments		2
Percentage of total revenue and cost of revenue for services		9.00%	11.00%
Reclassification of debt issue costs to offset related debt liabilities | $	$ 10.6			$ 7.1

Segment Reporting (Details)

Segment Reporting (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)segment	Jun. 30, 2014USD ($)	Sep. 30, 2014USD ($)
Segment Reporting
Number of business segments | segment			3
Segment revenue	$ 243,294	$ 223,399	$ 622,616	$ 545,526
Depreciation and amortization	(13,937)	(14,254)	(39,793)	(40,714)
Operating income (loss)	33,299	25,691	60,701	33,800
Net interest expense	(8,083)	(12,121)	(56,000)	(34,411)
Other income (expense), net	122	(36)	(180)	(56)
Income tax benefit (provision)	(2,220)	(2,410)	760	150
Income (loss) from continuing operations	23,118	11,124	5,281	(517)
Loss from discontinued operations, net of income taxes	(110)	(231)	(387)	(106)
Net income (loss)	23,008	10,893	4,894	(623)
Capital expenditures	9,050	9,423	26,524	25,367
Segment assets	846,460	896,306	846,460	896,306	$ 896,306
Building products
Segment Reporting
Segment revenue	147,830	140,572	371,770	327,723
Construction materials
Segment Reporting
Segment revenue	91,900	80,636	240,802	211,250
Energy Technology
Segment Reporting
Segment revenue	3,564	2,191	10,044	6,553
Operating Segments | Building products
Segment Reporting
Segment revenue	147,830	140,572	371,770	327,723
Depreciation and amortization	(9,660)	(10,336)	(27,075)	(29,094)
Operating income (loss)	22,838	18,691	39,465	25,684
Capital expenditures	6,062	6,604	18,214	17,920
Segment assets	411,305	411,968	411,305	411,968
Operating Segments | Construction materials
Segment Reporting
Segment revenue	91,900	80,636	240,802	211,250
Depreciation and amortization	(3,774)	(3,444)	(11,309)	(10,049)
Operating income (loss)	18,427	15,019	40,090	30,180
Capital expenditures	1,521	1,968	3,895	4,530
Segment assets	342,656	325,140	342,656	325,140
Operating Segments | Energy Technology
Segment Reporting
Segment revenue	3,564	2,191	10,044	6,553
Depreciation and amortization	(345)	(408)	(1,039)	(1,375)
Operating income (loss)	(993)	(1,761)	(1,131)	(4,868)
Capital expenditures	44	93	273	398
Segment assets	25,852	22,674	25,852	22,674
Corporate, Non-Segment
Segment Reporting
Segment revenue	0	0	0	0
Depreciation and amortization	(158)	(66)	(370)	(196)
Operating income (loss)	(6,973)	(6,258)	(17,723)	(17,196)
Capital expenditures	1,423	758	4,142	2,519
Segment assets	$ 66,647	$ 136,524	$ 66,647	$ 136,524

Acquisitions (Details)

Acquisitions (Details) $ in Thousands	May. 16, 2014USD ($)	Dec. 12, 2013USD ($)	Jun. 30, 2015USD ($)item	Dec. 31, 2014USD ($)	Sep. 30, 2014USD ($)	Jun. 30, 2014USD ($)	Mar. 31, 2014USD ($)	Jun. 30, 2015USD ($)item	Jun. 30, 2014USD ($)
Acquisitions
Number of product categories in niche roofing | item			3					3
Estimated fair values of assets acquired and liabilities assumed
Goodwill			$ 175,512		$ 175,586			$ 175,512
Non-controlling interest in consolidated subsidiary
Balance				$ 13,252				13,252
Net income attributable to non-controlling interest			191			$ 389		695	$ 619
Balance			12,763		13,252			12,763
Entegra
Acquisitions
Total cash consideration of acquisition		$ 57,500
Fees for advisory, legal and other professional services					400
Estimated fair values of assets acquired and liabilities assumed
Current assets		8,261
Current liabilities		(3,422)
Property, plant and equipment		10,589
Goodwill		28,156
Net assets acquired		70,784
Less redeemable non-controlling interest		(13,252)
Net assets attributable to Headwaters		$ 57,532
Intangible assets acquired:
Noncontrolling equity interest (as a percent)		20.00%
Minimum period following the acquisition date after which remaining noncontrolling equity interest may be acquired		5 years
Period over which goodwill is expected to be deductible for tax purpose		15 years
Non-controlling interest in consolidated subsidiary
Balance				13,252				13,252
Net income attributable to non-controlling interest								695
Dividends paid to non-controlling interest								(1,184)
Balance			$ 12,763		13,252			$ 12,763
Entegra | Trade Names
Intangible assets acquired:
Indefinite lived intangible assets		$ 6,600
Entegra | Customer Relationships
Intangible assets acquired:
Finite lived intangible assets		$ 20,600
Estimated useful lives		15 years
Roof Tile Acquisition LLC
Intangible assets acquired:
Percentage of equity interests acquired		80.00%
Gerard
Acquisitions
Total cash consideration of acquisition	$ 27,600
Fees for advisory, legal and other professional services					300
Estimated fair values of assets acquired and liabilities assumed
Current assets	9,236
Current liabilities	(1,691)
Property, plant and equipment	8,314
Goodwill	7,719
Long-term liabilities	(3,906)
Net assets acquired	$ 27,572
Intangible assets acquired:
Period over which goodwill is expected to be deductible for tax purpose	15 years
Gerard | Trade Names
Intangible assets acquired:
Indefinite lived intangible assets	$ 3,900
Gerard | Customer Relationships
Intangible assets acquired:
Finite lived intangible assets	$ 4,000
Estimated useful lives	15 years
Other Business Acquisitions | Equity Method Investee
Acquisitions
Total cash consideration of acquisition				$ 1,200
Intangible assets acquired:
Percentage of equity interests acquired				100.00%
Construction materials | Other Business Acquisitions
Acquisitions
Total cash consideration of acquisition					$ 7,400		$ 3,100

Discontinued Operations (Detail

Discontinued Operations (Details)	3 Months Ended		9 Months Ended
	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)item	Jun. 30, 2014USD ($)	Jan. 31, 2013USD ($)
Discontinued operations
Income (loss) from discontinued operations, net of income taxes	$ (110,000)	$ (231,000)	$ (387,000)	$ (106,000)
Coal Cleaning Business | Discontinued Operations, Disposed of by Sale
Discontinued operations
Remaining assets held for sale					$ 0
Revenue	0	0	0	0
Loss from operations of discontinued operations before income taxes	(132,000)	(146,000)	(168,000)	(3,138,000)
Gain (loss) on disposal	22,000	(85,000)	(219,000)	3,032,000
Income tax provision	0	0	0	0
Income (loss) from discontinued operations, net of income taxes	(110,000)	$ (231,000)	(387,000)	$ (106,000)
Number of sales transactions in which the buyer agreed to assume the lease and certain reclamation obligations			$ 1
Number of reclamation obligations | item			1
Accrued liability for reclamation obligations	8,000,000		$ 8,000,000
Outstanding liability for reclamation obligations	$ 7,700,000		$ 7,700,000

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Sep. 30, 2014
Inventories
Raw materials	$ 13,742	$ 12,017
Finished goods	48,374	38,616
Inventories	$ 62,116	$ 50,633

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2014
Gross carrying amount and accumulated amortization of intangible assets
Total Gross Carrying Amount	$ 323,250		$ 323,250		$ 321,234
Accumulated Amortization	174,974		174,974		161,371
Amortization expense related to intangible assets	4,600	$ 5,500	13,600	$ 16,100
CCP Contracts
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	112,300		112,300		112,300
Accumulated Amortization	68,454		$ 68,454		64,192
CCP Contracts | Minimum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			15 years
CCP Contracts | Maximum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			20 years
Customer Relationships
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	109,320		$ 109,320		107,953
Accumulated Amortization	56,136		$ 56,136		50,355
Customer Relationships | Minimum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			5 years
Customer Relationships | Maximum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			17 years
Trade Names
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	67,220		$ 67,220		67,220
Accumulated Amortization	35,959		$ 35,959		33,394
Trade Names | Minimum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			5 years
Trade Names | Maximum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			20 years
Patents and Patented Technologies
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	14,526		$ 14,526		14,526
Accumulated Amortization	12,352		$ 12,352		11,686
Patents and Patented Technologies | Minimum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			5 years
Patents and Patented Technologies | Maximum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			19 years
Other Intangible Assets
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	4,584		$ 4,584		3,935
Accumulated Amortization	2,073		$ 2,073		1,744
Other Intangible Assets | Minimum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			5 years
Other Intangible Assets | Maximum
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives			17 years
Trade Names
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	$ 15,300		$ 15,300		$ 15,300

Intangible Assets (Details 2)

Intangible Assets (Details 2) $ in Thousands	Jun. 30, 2015USD ($)
Total currently estimated annual amortization expense
2,015	$ 18,153
2,016	17,966
2,017	17,087
2,018	17,038
2,019	16,009
2,020	$ 11,763

Long-term Debt (Details)

Long-term Debt (Details) - USD ($)	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2011
Long-term debt
Debt instrument, face amount	$ 575,000,000		$ 599,800,000
Carrying amount of long-term debt, net of discounts and debt issue costs	562,855,000		592,458,000
Less current portion	(4,250,000)		0
Long-term debt	558,605,000		592,458,000
Senior secured term loan, due March 2022
Long-term debt
Debt instrument, face amount	425,000,000	$ 425,000,000
Carrying amount of long-term debt, net of discounts and debt issue costs	415,177,000		0
7.25% Senior notes, due January 2019
Long-term debt
Debt instrument, face amount	150,000,000		150,000,000	$ 150,000,000
Carrying amount of long-term debt, net of discounts and debt issue costs	$ 147,678,000		$ 147,192,000
Interest rate on long-term debt (as a percent)	7.25%		7.25%	7.25%
Senior Secured Notes 7.625 Percent
Long-term debt
Debt instrument, face amount			$ 400,000,000		$ 400,000,000
Carrying amount of long-term debt, net of discounts and debt issue costs	$ 0		$ 396,058,000
Interest rate on long-term debt (as a percent)		7.625%	7.625%		7.625%
Convertible Senior Subordinated Notes 8.75 Percent Due 2016
Long-term debt
Debt instrument, face amount			$ 49,791,000
Carrying amount of long-term debt, net of discounts and debt issue costs	$ 0		$ 49,208,000
Interest rate on long-term debt (as a percent)		8.75%	8.75%

Long-term Debt (Details 2)

Long-term Debt (Details 2) - USD ($)	1 Months Ended	9 Months Ended
	Dec. 31, 2013	Jun. 30, 2015	Jun. 30, 2014	Mar. 31, 2015	Sep. 30, 2014
Long-term debt
Net proceeds from initial borrowing		$ 414,675,000	$ 146,200,000
Debt instrument, face amount		$ 575,000,000			$ 599,800,000
Senior secured term loan, due March 2022
Long-term debt
Percentage of original principal amount on which the aggregate amount of annual scheduled repayments is determined				1.00%
Initial interest rate		4.50%
Debt prepayment premium percentage		1.00%
Maximum percentage of annual excess cash flow required to be used for prepayment		50.00%
Annual excess cash flow threshold for required prepayment		$ 1,000,000
Percentage of net cash proceeds of non-ordinary course asset sales required to be used for prepayment		100.00%
Percentage of net cash proceeds of certain issuances of debt required to be used for prepayment		100.00%
Net proceeds from initial borrowing		$ 414,700,000
Original issue discount		2,100,000
Transaction costs		8,200,000
Debt instrument, face amount		$ 425,000,000		$ 425,000,000
Senior secured term loan, due March 2022 | Prime Rate
Long-term debt
Variable interest rate base		Prime rate
Minimum floor variable percentage under terms of the debt agreement		2.00%
Secondary variable rate margin (as a percent)		2.50%
Senior secured term loan, due March 2022 | Federal funds rate
Long-term debt
Variable interest rate base		Federal funds rate
Interest rate margin (as a percent)		0.50%
Minimum floor variable percentage under terms of the debt agreement		2.00%
Secondary variable rate margin (as a percent)		2.50%
Senior secured term loan, due March 2022 | Eurocurrency rate (LIBO)
Long-term debt
Variable interest rate base		LIBO
Minimum floor variable percentage under terms of the debt agreement		1.00%
Secondary variable rate margin (as a percent)		3.50%
Senior secured term loan, due March 2022 | Thirty Day LIBO
Long-term debt
Variable interest rate base		30-day LIBO
Interest rate margin (as a percent)		1.00%
Minimum floor variable percentage under terms of the debt agreement		2.00%
Secondary variable rate margin (as a percent)		3.50%
Incremental term loans
Long-term debt
Maximum borrowing capacity				150,000,000
7.25% Senior notes, due January 2019
Long-term debt
Maximum outstanding balance of senior notes at a specified period that may trigger early maturity of term loan				$ 50,000,000
Net proceeds from senior secured notes	$ 146,700,000
Debt instrument, face amount	$ 150,000,000	$ 150,000,000			$ 150,000,000
Interest rate on secured notes (as a percent)	7.25%	7.25%			7.25%
Purchase price of debt instrument, if there is a change in control (as a percent)		101.00%
7.25% Senior notes, due January 2019 | Debt Instrument Redemption Period Commencing after January 15, 2016 | Maximum
Long-term debt
Debt instrument redemption price (as a percent)		103.625%
7.25% Senior notes, due January 2019 | Debt Instrument Redemption Period Commencing after January 15, 2016 | Minimum
Long-term debt
Debt instrument redemption price (as a percent)		100.00%
7.25% Senior notes, due January 2019 | Debt Instrument Redemption Period on or Prior to January 15, 2016
Long-term debt
Redemption price of debt instrument if redeemed with proceeds from qualified equity offerings (as a percent)		107.25%
Debt instrument redemption price in addition to a make-whole premium (as a percent)		100.00%
7.25% Senior notes, due January 2019 | Debt Instrument Redemption Period on or Prior to January 15, 2016 | Maximum
Long-term debt
Percentage of the principal amount of the debt instrument which the entity may redeem with proceeds from qualified equity offerings		35.00%

Long-term Debt (Details 3)

Long-term Debt (Details 3) - Jun. 30, 2015 $ in Millions	USD ($)
ABL Revolver
Long-term debt
Revolving credit arrangement amount outstanding	$ 0
Maximum borrowing capacity	70
Current borrowing capacity	$ 60.6
Termination date based on the earliest maturity date of the specified long-term debt	3 months
Line of credit facility, interest rate at period end (as a percent)	1.80%
ABL Revolver | Minimum
Long-term debt
Line of credit facility unused capacity commitment fee percentage	0.25%
Specified percentage of availability below which a monthly fixed charge coverage ratio applies	12.50%
Coverage ratio	1
ABL Revolver | Maximum
Long-term debt
Line of credit facility unused capacity commitment fee percentage	0.375%
ABL Revolver | London Interbank Offered Rate (LIBOR)
Long-term debt
Variable interest rate base	LIBOR
Percentage points added to the reference rate, one	1.50%
Percentage points added to the reference rate, two	1.75%
Percentage points added to the reference rate, three	2.00%
ABL Revolver | Thirty Day LIBOR
Long-term debt
Variable interest rate base	30-day LIBO
Interest rate margin (as a percent)	1.00%
ABL Revolver | Base Rate
Long-term debt
Variable interest rate base	Base rate
Percentage points added to the reference rate, one	0.25%
Percentage points added to the reference rate, two	0.50%
Percentage points added to the reference rate, three	0.75%
ABL Revolver | Prime Rate
Long-term debt
Variable interest rate base	Prime rate
ABL Revolver | Federal funds rate
Long-term debt
Variable interest rate base	Federal funds rate
Interest rate margin (as a percent)	0.50%
Letter of Credit
Long-term debt
Maximum borrowing capacity	$ 35
Outstanding standby letters of credit	7.4
Swingline Facility
Long-term debt
Maximum borrowing capacity	$ 10.5

Long-term Debt (Details 4)

Long-term Debt (Details 4) - USD ($)	9 Months Ended	12 Months Ended
	Jun. 30, 2015	Sep. 30, 2011	Mar. 31, 2015	Sep. 30, 2014
Long-term debt
Debt instrument, face amount	$ 575,000,000			$ 599,800,000
Senior Secured Notes 7.625 Percent
Long-term debt
Interest rate on long-term debt (as a percent)		7.625%	7.625%	7.625%
Debt instrument, face amount		$ 400,000,000		$ 400,000,000
Net proceeds from senior secured notes		$ 392,800,000
Loss on extinguishment of debt	21,300,000
Early repayment premium amount	15,300,000
Early repayment of interest amount	2,500,000
Premiums and accelerated amortization of unamortized debt issue costs charged to interest expense	3,500,000
Convertible Senior Subordinated Notes 8.75 Percent Due 2016
Long-term debt
Interest rate on long-term debt (as a percent)			8.75%	8.75%
Debt instrument, face amount				$ 49,791,000
Premiums and accelerated amortization of unamortized debt issue costs charged to interest expense	$ 3,500,000

Long-term Debt (Details 5)

Long-term Debt (Details 5) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2014	Sep. 30, 2011
Long-term debt
Interest expense	$ 8,200		$ 12,200	$ 56,500	$ 34,600
Non-cash interest expense	$ 600		$ 500	$ 5,611	$ 1,699
Weighted average interest rate (as a percent)	5.20%			5.20%		7.60%
Senior Secured Notes 7.625 Percent and Convertible Senior Subordinated Notes 8.75 Percent
Long-term debt
Interest expense		$ 24,800
Senior Secured Notes 7.625 Percent
Long-term debt
Interest rate on secured notes (as a percent)		7.625%				7.625%	7.625%
Convertible Senior Subordinated Notes 8.75 Percent Due 2016
Long-term debt
Interest rate on secured notes (as a percent)		8.75%				8.75%
Senior secured term loan, due March 2022
Long-term debt
Required quarterly repayments due				$ 1,100

Fair Value of Financial Instr41

Fair Value of Financial Instruments (Details) - USD ($) $ in Millions	Jun. 30, 2015	Sep. 30, 2014	Dec. 31, 2013
Fair value of financial instruments
Long-term debt, fair value		$ 626
Long-term debt, carrying value		$ 592.5
7.25% Senior notes, due January 2019
Fair value of financial instruments
Long-term debt, fair value	$ 157
Long-term debt, carrying value	$ 147.7
Debt Instrument, Interest Rate, Stated Percentage	7.25%	7.25%	7.25%

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	9 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2014
Income tax
Estimated effective income tax rate (as a percent)	12.00%	22.00%
Income tax expense for discrete items in continuing operations	$ 1.3
Cumulative loss period			3 years
Net operating and capital loss carryforwards	82.1
Tax credit carryforwards	24.8
Unrecognized income tax benefits that may be released within next 12 months	$ 5
Minimum
Income tax
Carryover period for deferred tax attributes	20 years
Operating loss carryforwards expiration date	Sep. 30, 2015
Tax credit carryforwards, expiration date	Sep. 30, 2028
Maximum
Income tax
Operating loss carryforwards expiration date	Sep. 30, 2034
Tax credit carryforwards, expiration date	Sep. 30, 2034

Equity Securities and Stock-B43

Equity Securities and Stock-Based Compensation (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended			9 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Treasury stock and related deferred compensation obligation at fair value	$ 1,400			$ 1,400
Amount that the fair values of treasury stock and related deferred compensation obligation exceed the carrying values at cost	500			500
Stock-based compensation	700		$ 600	2,069	$ 1,576
Total compensation cost related to unvested awards not yet recognized	$ 3,000			$ 3,000
2010 Incentive Compensation Plan
Board approved share-based award grants to officers, employees, and directors (in shares)		0.3
Awards granted vesting period		3 years
Period of average stock price hurdles that precluded vesting		60 days

Earnings per Share (Details)

Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Numerator:
Income (loss) from continuing operations	$ 23,118	$ 11,124	$ 5,281	$ (517)
Net income attributable to non-controlling interest	(191)	(389)	(695)	(619)
Adjustment of estimated redemption value of non-controlling interest	0	(158)	0	(158)
Numerator for basic and diluted earnings per share from continuing operations - income (loss) from continuing operations attributable to Headwaters Incorporated	22,927	10,577	4,586	(1,294)
Numerator for basic and diluted earnings per share from discontinued operations - income (loss) from discontinued operations, net of income taxes	(110)	(231)	(387)	(106)
Numerator for basic and diluted earnings per share - net loss attributable to Headwaters Incorporated	$ 22,817	$ 10,346	$ 4,199	$ (1,400)
Denominator:
Denominator for basic earnings per share - weighted-average shares outstanding	73,658	73,206	73,553	73,131
Effect of dilutive securities - shares issuable upon exercise of options and SARs and vesting of restricted stock	2,386	1,380	2,146	0
Denominator for diluted earnings per share - weighted-average shares outstanding after assumed exercises and vesting	76,044	74,586	75,699	73,131
Basic income (loss) per share attributable to Headwaters Incorporated:
From continuing operations (in dollars per share)	$ 0.31	$ 0.14	$ 0.06	$ (0.02)
From discontinued operations (in dollars per share)	0	0	0	0
Basic income (loss) per share (in dollars per share)	0.31	0.14	0.06	(0.02)
Diluted income (loss) per share attributable to Headwaters Incorporated:
From continuing operations (in dollars per share)	0.30	0.14	0.06	(0.02)
From discontinued operations (in dollars per share)	0	0	0	0
Diluted income (loss) per share (in dollars per share)	$ 0.30	$ 0.14	$ 0.06	$ (0.02)

Earnings per Share (Details 2)

Earnings per Share (Details 2) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Stock Appreciation Rights (SARs)
Earnings per Share
Anti-dilutive securities not considered in diluted EPS calculation (in shares)	160	691	1,625	3,836
Stock options
Earnings per Share
Anti-dilutive securities not considered in diluted EPS calculation (in shares)	72	377	94	530
Restricted stock
Earnings per Share
Anti-dilutive securities not considered in diluted EPS calculation (in shares)	0	0	88	253

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	9 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2012	Sep. 30, 2011
Stock Appreciation Rights (SARs)
Commitments and Contingencies
Compensation expense	$ 2.9	$ 5.1
Stock Appreciation Rights (SARs), 2011 Awards
Commitments and Contingencies
Grants approved by committee to employees for cash settled stock appreciation rights (in shares)				0.4
Ending period for expected liability adjustment	September 30, 2015
Amount accrued for awards	$ 0.4
Grant-date stock price (in dollars per share)	$ 3.81
Stock Appreciation Rights (SARS), 2012 Awards
Commitments and Contingencies
Grants approved by committee to employees for cash settled stock appreciation rights (in shares)			1
Grants approved by committee to employees for cash settled stock appreciation rights that remain outstanding (in shares)	0.2
Ending period for expected liability adjustment	September 30, 2016
Amount accrued for awards	$ 2.6
Grant-date stock price (in dollars per share)	$ 1.85
Average stock price period	60 days
Cash Performance Unit Awards, 2015 Grants
Commitments and Contingencies
Amount accrued for awards	$ 2.5
Minimum | Stock Appreciation Rights (SARS), 2012 Awards
Commitments and Contingencies
Percentage of stock price on grant date	135.00%
Threshold stock price at which SARS will vest (in dollars per share)	$ 2.50
Maximum | Stock Appreciation Rights (SARs), 2011 Awards
Commitments and Contingencies
Grants approved by committee to employees for cash settled stock appreciation rights that remain outstanding (in shares)	0.1

Commitments and Contingencies47

Commitments and Contingencies (Details 2) $ in Millions	1 Months Ended	9 Months Ended		12 Months Ended
	Feb. 29, 2012USD ($)item	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Sep. 30, 2014USD ($)	Sep. 30, 2010item
Commitments and Contingencies
Long term capital commitments on property, plant and equipment		$ 1.5
Amount accrued for potential losses				$ 2.5
Legal Matters
Commitments and Contingencies
Legal fees		1.7	$ 4.5
Total liability accrued		2.5
Legal Matters | Minimum
Commitments and Contingencies
Potential loss for unresolved matters		$ 2.5
Fentress Families Trust
Commitments and Contingencies
Number of plaintiffs | item	383
Number of defendants | item	15
Damages for removal and remediation of fly ash and water supply	$ 850
Damages for vexation	1,900
Damages for others	8
Damages for properties plus prejudgment interest, attorney fees and costs	55
Additional damages sought by other plaintiffs	$ 307.2
Number of insurers who have denied coverage | item					2

Condensed Consolidating Finan48

Condensed Consolidating Financial Information (Details)	9 Months Ended
	Jun. 30, 2015	Sep. 30, 2014	Dec. 31, 2013
Long-term debt
Ownership percentage in guarantor subsidiaries	100.00%
Maximum percentage of ownership interest below which subsidiaries are considered non-guaranteeing	100.00%
7.25% Senior notes, due January 2019
Long-term debt
Interest rate on long-term debt (as a percent)	7.25%	7.25%	7.25%

Condensed Consolidating Finan49

Condensed Consolidating Financial Information (Details 2) - USD ($) $ in Thousands	Jun. 30, 2015	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2013
Current assets:
Cash and cash equivalents	$ 99,415	$ 152,542	$ 114,464	$ 75,316
Trade receivables, net	119,207	119,330
Inventories	62,116	50,633
Current and deferred income taxes	11,908	11,076
Other	13,402	10,536
Total current assets	306,048	344,117
Property, plant and equipment, net	181,874	182,111
Other assets:
Goodwill	175,512	175,586
Intangible assets, net	148,276	159,863
Other	34,750	34,629
Total other assets	358,538	370,078
Total assets	846,460	896,306	896,306
Current liabilities:
Accounts payable	24,950	27,026
Accrued personnel costs	35,872	48,902
Accrued interest	5,014	18,273
Current income taxes	0	368
Other accrued liabilities	44,538	41,757
Current portion of long-term debt	4,250	0
Total current liabilities	114,624	136,326
Long-term liabilities:
Long-term debt, net	558,605	592,458
Income taxes	20,943	23,242
Other	30,182	28,586
Total long-term liabilities	609,730	644,286
Total liabilities	724,354	780,612
Redeemable non-controlling interest in consolidated subsidiary	12,763	13,252
Stockholders' equity:
Common stock	74	74
Capital in excess of par value	726,636	723,648
Retained earnings (accumulated deficit)	(616,489)	(620,688)
Treasury stock	(878)	(592)
Total stockholders' equity	109,343	102,442
Total liabilities and stockholders' equity	846,460	896,306
Consolidation, Eliminations
Current assets:
Current and deferred income taxes	(67,893)	(23,149)
Total current assets	(67,893)	(23,149)
Other assets:
Investments in subsidiaries	(498,272)	(406,327)
Intercompany accounts and notes	(694,101)	(637,046)
Deferred income taxes	(68,045)	(64,586)
Other	(81)
Total other assets	(1,260,499)	(1,107,959)
Total assets	(1,328,392)	(1,131,108)
Current liabilities:
Current income taxes	(67,893)	(23,149)
Total current liabilities	(67,893)	(23,149)
Long-term liabilities:
Income taxes	(68,045)	(64,586)
Intercompany accounts and notes	(694,101)	(637,046)
Other	(81)
Total long-term liabilities	(762,227)	(701,632)
Total liabilities	(830,120)	(724,781)
Stockholders' equity:
Capital in excess of par value	(542,439)	(519,127)
Retained earnings (accumulated deficit)	44,167	112,800
Total stockholders' equity	(498,272)	(406,327)
Total liabilities and stockholders' equity	(1,328,392)	(1,131,108)
Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	58,535	33,552	102,997	70,713
Trade receivables, net	113,926	113,940
Inventories	59,551	48,482
Current and deferred income taxes	9,295	15,509
Other	12,057	9,286
Total current assets	253,364	220,769
Property, plant and equipment, net	161,029	162,458
Other assets:
Goodwill	144,643	145,068
Intangible assets, net	120,668	131,150
Intercompany accounts and notes	52,614
Deferred income taxes	44,706	41,658
Other	10,869	14,388
Total other assets	373,500	332,264
Total assets	787,893	715,491
Current liabilities:
Accounts payable	23,108	25,643
Accrued personnel costs	9,885	13,483
Current income taxes	52,137	23,198
Other accrued liabilities	35,028	36,811
Total current liabilities	120,158	99,135
Long-term liabilities:
Income taxes	61,221	65,133
Intercompany accounts and notes		191,274
Other		16,167
Total long-term liabilities	61,221	272,574
Total liabilities	181,379	371,709
Stockholders' equity:
Capital in excess of par value	486,069	458,498
Retained earnings (accumulated deficit)	120,445	(114,716)
Total stockholders' equity	606,514	343,782
Total liabilities and stockholders' equity	787,893	715,491
Non-Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	4,319	5,764	5,177	34
Trade receivables, net	5,281	5,390
Inventories	2,565	2,151
Current and deferred income taxes	28,071	289
Other	86	168
Total current assets	40,322	13,762
Property, plant and equipment, net	10,346	11,674
Other assets:
Goodwill	30,869	30,518
Intangible assets, net	27,608	28,713
Other	2,227	1,381
Total other assets	60,704	60,612
Total assets	111,372	86,048
Current liabilities:
Accounts payable	1,021	956
Accrued personnel costs	354	418
Current income taxes		319
Other accrued liabilities	6,238	3,006
Total current liabilities	7,613	4,699
Long-term liabilities:
Income taxes	7,512	893
Intercompany accounts and notes	177,441	4,061
Other	14,461	774
Total long-term liabilities	199,414	5,728
Total liabilities	207,027	10,427
Redeemable non-controlling interest in consolidated subsidiary	12,763	13,252
Stockholders' equity:
Capital in excess of par value	56,194	60,453
Retained earnings (accumulated deficit)	(164,612)	1,916
Total stockholders' equity	(108,418)	62,369
Total liabilities and stockholders' equity	111,372	86,048
Parent Company
Current assets:
Cash and cash equivalents	36,561	113,226	$ 6,290	$ 4,569
Current and deferred income taxes	42,435	18,427
Other	1,259	1,082
Total current assets	80,255	132,735
Property, plant and equipment, net	10,499	7,979
Other assets:
Investments in subsidiaries	498,272	406,327
Intercompany accounts and notes	641,487	637,046
Deferred income taxes	23,339	22,928
Other	21,735	18,860
Total other assets	1,184,833	1,085,161
Total assets	1,275,587	1,225,875
Current liabilities:
Accounts payable	821	427
Accrued personnel costs	25,633	35,001
Accrued interest	5,014	18,273
Current income taxes	15,756
Other accrued liabilities	3,272	1,940
Current portion of long-term debt	4,250
Total current liabilities	54,746	55,641
Long-term liabilities:
Long-term debt, net	558,605	592,458
Income taxes	20,255	21,802
Intercompany accounts and notes	516,660	441,711
Other	15,802	11,645
Total long-term liabilities	1,111,322	1,067,616
Total liabilities	1,166,068	1,123,257
Stockholders' equity:
Common stock	74	74
Capital in excess of par value	726,812	723,824
Retained earnings (accumulated deficit)	(616,489)	(620,688)
Treasury stock	(878)	(592)
Total stockholders' equity	109,519	102,618
Total liabilities and stockholders' equity	$ 1,275,587	$ 1,225,875

Condensed Consolidating Finan50

Condensed Consolidating Financial Information (Details 3) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue:
Total revenue	$ 243,294	$ 223,399	$ 622,616	$ 545,526
Cost of revenue:
Total cost of revenue	166,532	155,727	443,026	398,410
Gross profit	76,762	67,672	179,590	147,116
Operating expenses:
Amortization	4,557	5,477	13,603	16,068
Selling, general and administrative	38,906	36,504	105,286	97,248
Total operating expenses	43,463	41,981	118,889	113,316
Operating income	33,299	25,691	60,701	33,800
Other income (expense):
Net interest expense	(8,083)	(12,121)	(56,000)	(34,411)
Equity in earnings of subsidiaries			0	0
Other, net	122	(36)	(180)	(56)
Total other income (expense), net	(7,961)	(12,157)	(56,180)	(34,467)
Income (loss) from continuing operations before income taxes	25,338	13,534	4,521	(667)
Income tax benefit (provision)	(2,220)	(2,410)	760	150
Income (loss) from continuing operations	23,118	11,124	5,281	(517)
Loss from discontinued operations, net of income taxes	(110)	(231)	(387)	(106)
Net income (loss)	23,008	10,893	4,894	(623)
Net income attributable to non-controlling interest	(191)	(389)	(695)	(619)
Net income (loss) attributable to Headwaters Incorporated	22,817	10,504	4,199	(1,242)
Building products
Revenue:
Total revenue	147,830	140,572	371,770	327,723
Cost of revenue:
Total cost of revenue	100,801	97,673	264,474	237,839
Construction materials
Revenue:
Total revenue	91,900	80,636	240,802	211,250
Cost of revenue:
Total cost of revenue	63,850	57,070	174,099	157,504
Energy Technology
Revenue:
Total revenue	3,564	2,191	10,044	6,553
Cost of revenue:
Total cost of revenue	1,881	984	4,453	3,067
Consolidation, Eliminations
Other income (expense):
Equity in earnings of subsidiaries	(34,508)	(23,446)	(68,633)	(38,671)
Total other income (expense), net	(34,508)	(23,446)	(68,633)	(38,671)
Income (loss) from continuing operations before income taxes	(34,508)	(23,446)	(68,633)	(38,671)
Income (loss) from continuing operations	(34,508)	(23,446)	(68,633)	(38,671)
Net income (loss)	(34,508)	(23,446)	(68,633)	(38,671)
Net income (loss) attributable to Headwaters Incorporated	(34,508)	(23,446)	(68,633)	(38,671)
Guarantor Subsidiaries
Revenue:
Total revenue	231,581	211,912	589,291	523,333
Cost of revenue:
Total cost of revenue	158,019	148,002	419,774	382,846
Gross profit	73,562	63,910	169,517	140,487
Operating expenses:
Amortization	4,189	5,165	12,498	15,394
Selling, general and administrative	30,296	28,837	82,734	77,248
Total operating expenses	34,485	34,002	95,232	92,642
Operating income	39,077	29,908	74,285	47,845
Other income (expense):
Net interest expense	(25)	(125)	(129)	(292)
Other, net	130	25	(12)	99
Total other income (expense), net	105	(100)	(141)	(193)
Income (loss) from continuing operations before income taxes	39,182	29,808	74,144	47,652
Income tax benefit (provision)	(5,430)	(7,250)	(8,000)	(10,600)
Income (loss) from continuing operations	33,752	22,558	66,144	37,052
Loss from discontinued operations, net of income taxes		(231)	(67)	(106)
Net income (loss)	33,752	22,327	66,077	36,946
Net income (loss) attributable to Headwaters Incorporated	33,752	22,327	66,077	36,946
Guarantor Subsidiaries | Building products
Revenue:
Total revenue	136,117	129,085	338,445	305,530
Cost of revenue:
Total cost of revenue	92,288	89,948	241,222	222,275
Guarantor Subsidiaries | Construction materials
Revenue:
Total revenue	91,900	80,636	240,802	211,250
Cost of revenue:
Total cost of revenue	63,850	57,070	174,099	157,504
Guarantor Subsidiaries | Energy Technology
Revenue:
Total revenue	3,564	2,191	10,044	6,553
Cost of revenue:
Total cost of revenue	1,881	984	4,453	3,067
Non-Guarantor Subsidiaries
Revenue:
Total revenue	11,713	11,487	33,325	22,193
Cost of revenue:
Total cost of revenue	8,513	7,725	23,252	15,564
Gross profit	3,200	3,762	10,073	6,629
Operating expenses:
Amortization	368	312	1,105	674
Selling, general and administrative	1,637	1,409	4,829	2,804
Total operating expenses	2,005	1,721	5,934	3,478
Operating income	1,195	2,041	4,139	3,151
Other income (expense):
Net interest expense		(2)		(2)
Other, net	(8)	(61)	(168)	(155)
Total other income (expense), net	(8)	(63)	(168)	(157)
Income (loss) from continuing operations before income taxes	1,187	1,978	3,971	2,994
Income tax benefit (provision)	(130)	(470)	(400)	(650)
Income (loss) from continuing operations	1,057	1,508	3,571	2,344
Loss from discontinued operations, net of income taxes	(110)		(320)
Net income (loss)	947	1,508	3,251	2,344
Net income attributable to non-controlling interest	(191)	(389)	(695)	(619)
Net income (loss) attributable to Headwaters Incorporated	756	1,119	2,556	1,725
Non-Guarantor Subsidiaries | Building products
Revenue:
Total revenue	11,713	11,487	33,325	22,193
Cost of revenue:
Total cost of revenue	8,513	7,725	23,252	15,564
Parent Company
Operating expenses:
Selling, general and administrative	6,973	6,258	17,723	17,196
Total operating expenses	6,973	6,258	17,723	17,196
Operating income	(6,973)	(6,258)	(17,723)	(17,196)
Other income (expense):
Net interest expense	(8,058)	(11,994)	(55,871)	(34,117)
Equity in earnings of subsidiaries	34,508	23,446	68,633	38,671
Total other income (expense), net	26,450	11,452	12,762	4,554
Income (loss) from continuing operations before income taxes	19,477	5,194	(4,961)	(12,642)
Income tax benefit (provision)	3,340	5,310	9,160	11,400
Income (loss) from continuing operations	22,817	10,504	4,199	(1,242)
Net income (loss)	22,817	10,504	4,199	(1,242)
Net income (loss) attributable to Headwaters Incorporated	$ 22,817	$ 10,504	$ 4,199	$ (1,242)

Condensed Consolidating Finan51

Condensed Consolidating Financial Information (Details 4) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net income (loss)	$ 23,008	$ 10,893	$ 4,894	$ (623)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			39,793	40,714
Interest expense related to amortization of debt issue costs and debt discount	600	500	5,611	1,699
Stock-based compensation	700	600	2,069	1,576
Deferred income taxes			954	429
Net loss (gain) on disposition of property, plant and equipment			95	(84)
Loss (gain) on sale of discontinued operations, net of income taxes			219	(3,032)
Asset impairments			0	1,466
Net loss of unconsolidated joint ventures			247	286
Equity in earnings of subsidiaries			0	0
Decrease in trade receivables			506	3,531
Decrease (increase) in inventories			(8,927)	(8,639)
Increase (decrease) in accounts payable and accrued liabilities			(29,479)	(27,216)
Other changes in operating assets and liabilities, net			(10,788)	(4,910)
Net cash provided by (used in) operating activities			5,194	5,197
Cash flows from investing activities:
Business acquisitions			(1,200)	(88,579)
Investments in unconsolidated joint ventures			(125)	(1,450)
Purchase of property, plant and equipment	(9,050)	(9,423)	(26,524)	(25,367)
Proceeds from disposition of property, plant and equipment			716	864
Proceeds from sale of discontinued operations			0	4,666
Net decrease in long-term receivables and deposits			3,847	7,673
Net change in other assets			(423)	(2,876)
Net cash used in investing activities			(23,709)	(105,069)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt			414,675	146,200
Payments on long-term debt			(448,736)	(7,792)
Dividends paid to non-controlling interest in consolidated subsidiary			(1,184)	0
Employee stock purchases			633	612
Intercompany transfers			0
Net cash provided by (used in) financing activities			(34,612)	139,020
Net increase (decrease) in cash and cash equivalents			(53,127)	39,148
Cash and cash equivalents, beginning of period			152,542	75,316
Cash and cash equivalents, end of period	99,415	114,464	99,415	114,464
Consolidation, Eliminations
Cash flows from operating activities:
Net income (loss)	(34,508)	(23,446)	(68,633)	(38,671)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	34,508	23,446	68,633	38,671
Guarantor Subsidiaries
Cash flows from operating activities:
Net income (loss)	33,752	22,327	66,077	36,946
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			37,270	39,130
Stock-based compensation			759	618
Deferred income taxes			591	429
Net loss (gain) on disposition of property, plant and equipment			94	(135)
Loss (gain) on sale of discontinued operations, net of income taxes			45	(3,032)
Asset impairments				1,466
Decrease in trade receivables			397	2,609
Decrease (increase) in inventories			(8,513)	(9,521)
Increase (decrease) in accounts payable and accrued liabilities			(10,650)	(26,725)
Other changes in operating assets and liabilities, net			(339)	5,258
Net cash provided by (used in) operating activities			85,731	47,043
Cash flows from investing activities:
Business acquisitions			(1,200)	(3,100)
Investments in unconsolidated joint ventures			(125)
Purchase of property, plant and equipment			(21,768)	(22,163)
Proceeds from disposition of property, plant and equipment			716	864
Proceeds from sale of discontinued operations				4,666
Net decrease in long-term receivables and deposits			2,781	7,373
Net change in other assets			(587)	(2,864)
Net cash used in investing activities			(20,183)	(15,224)
Cash flows from financing activities:
Employee stock purchases			464	465
Intercompany transfers			(41,029)
Net cash provided by (used in) financing activities			(40,565)	465
Net increase (decrease) in cash and cash equivalents			24,983	32,284
Cash and cash equivalents, beginning of period			33,552	70,713
Cash and cash equivalents, beginning of period			33,552
Cash and cash equivalents, end of period	58,535	102,997	58,535	102,997
Cash and cash equivalents, end of period	58,535		58,535
Non-Guarantor Subsidiaries
Cash flows from operating activities:
Net income (loss)	947	1,508	3,251	2,344
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			2,153	1,388
Deferred income taxes			363
Net loss (gain) on disposition of property, plant and equipment			1	5
Loss (gain) on sale of discontinued operations, net of income taxes			174
Net loss of unconsolidated joint ventures			247	286
Decrease in trade receivables			109	922
Decrease (increase) in inventories			(414)	882
Increase (decrease) in accounts payable and accrued liabilities			3,231	1,240
Other changes in operating assets and liabilities, net			(8,519)	529
Net cash provided by (used in) operating activities			596	7,596
Cash flows from investing activities:
Investments in unconsolidated joint ventures				(1,450)
Purchase of property, plant and equipment			(614)	(685)
Net change in other assets				(318)
Net cash used in investing activities			(614)	(2,453)
Cash flows from financing activities:
Dividends paid to non-controlling interest in consolidated subsidiary			(1,184)
Employee stock purchases			28
Intercompany transfers			(271)
Net cash provided by (used in) financing activities			(1,427)
Net increase (decrease) in cash and cash equivalents			(1,445)	5,143
Cash and cash equivalents, beginning of period			5,764	34
Cash and cash equivalents, end of period	4,319	5,177	4,319	5,177
Parent Company
Cash flows from operating activities:
Net income (loss)	22,817	10,504	4,199	(1,242)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			370	196
Interest expense related to amortization of debt issue costs and debt discount			5,611	1,699
Stock-based compensation			1,310	958
Net loss (gain) on disposition of property, plant and equipment				46
Equity in earnings of subsidiaries	(34,508)	(23,446)	(68,633)	(38,671)
Increase (decrease) in accounts payable and accrued liabilities			(22,060)	(1,731)
Other changes in operating assets and liabilities, net			(1,930)	(10,697)
Net cash provided by (used in) operating activities			(81,133)	(49,442)
Cash flows from investing activities:
Business acquisitions				(85,479)
Purchase of property, plant and equipment			(4,142)	(2,519)
Net decrease in long-term receivables and deposits			1,066	300
Net change in other assets			164	306
Net cash used in investing activities			(2,912)	(87,392)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt			414,675	146,200
Payments on long-term debt			(448,736)	(7,792)
Employee stock purchases			141	147
Intercompany transfers			41,300
Net cash provided by (used in) financing activities			7,380	138,555
Net increase (decrease) in cash and cash equivalents			(76,665)	1,721
Cash and cash equivalents, beginning of period			113,226	4,569
Cash and cash equivalents, end of period	$ 36,561	$ 6,290	$ 36,561	$ 6,290