Headwaters 10-Q 4 Feb 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2015	Jan. 29, 2016
Document and Entity Information
Entity Registrant Name	HEADWATERS INC
Entity Central Index Key	1,003,344
Document Type	10-Q
Document Period End Date	Dec. 31, 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		74,026,245
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Current assets:
Cash and cash equivalents	$ 115,636	$ 142,597
Trade receivables, net	93,399	134,384
Inventories	61,331	55,074
Current income taxes	945	329
Other	7,130	11,827
Total current assets	278,441	344,211
Property, plant and equipment, net	186,231	185,718
Other assets:
Goodwill	225,022	178,199
Intangible assets, net	141,175	143,718
Deferred income taxes	86,418	92,852
Other	40,401	34,321
Total other assets	493,016	449,090
Total assets	957,688	979,019
Current liabilities:
Accounts payable	17,958	25,306
Accrued personnel costs	30,724	52,544
Accrued interest	5,017	2,295
Other accrued liabilities	43,401	49,486
Current portion of long-term debt	4,250	4,250
Total current liabilities	101,350	133,881
Long-term liabilities:
Long-term debt, net	557,555	558,080
Income taxes	2,031	6,590
Other	32,974	30,186
Total long-term liabilities	592,560	594,856
Total liabilities	$ 693,910	$ 728,737
Commitments and contingencies
Redeemable non-controlling interest in consolidated subsidiary	$ 12,372	$ 12,431
Stockholders' equity:
Common stock, $0.001 par value; authorized 200,000 shares; issued and outstanding: 73,896 shares at September 30, 2015 (including 83 shares held in treasury) and 74,026 shares at December 31, 2015 (including 90 shares held in treasury)	74	74
Capital in excess of par value	729,919	728,667
Retained earnings (accumulated deficit)	(477,464)	(489,889)
Treasury stock	(1,123)	(1,001)
Total stockholders' equity	251,406	237,851
Total liabilities and stockholders' equity	$ 957,688	$ 979,019

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Dec. 31, 2015	Sep. 30, 2015
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized shares	200,000	200,000
Common stock, issued shares	74,026	73,896
Common stock, outstanding shares	74,026	73,896
Common stock, held in treasury (in shares)	90	83

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Revenue:
Total revenue	$ 218,418	$ 199,597
Cost of revenue:
Total cost of revenue	154,147	143,910
Gross profit	64,271	55,687
Operating expenses:
Selling, general and administrative	34,882	32,029
Amortization	4,566	4,486
Total operating expenses	39,448	36,515
Operating income	24,823	19,172
Other income (expense):
Net interest expense	(8,217)	(11,952)
Other, net	(69)	(269)
Total other income (expense), net	(8,286)	(12,221)
Income from continuing operations before income taxes	16,537	6,951
Income tax benefit (provision)	(3,600)	200
Income from continuing operations	12,937	7,151
Loss from discontinued operations, net of income taxes	(216)	(67)
Net income	12,721	7,084
Net income attributable to non-controlling interest	(296)	(245)
Net income attributable to Headwaters Incorporated	$ 12,425	$ 6,839
Basic and diluted income per share attributable to Headwaters Incorporated:
From continuing operations (in dollars per share)	$ 0.17	$ 0.09
From discontinued operations (in dollars per share)	0	0
Basic and diluted income (loss) per share (in dollars per share)	$ 0.17	$ 0.09
Building products
Revenue:
Total revenue	$ 131,845	$ 117,534
Cost of revenue:
Total cost of revenue	93,159	84,192
Construction materials
Revenue:
Total revenue	85,998	81,404
Cost of revenue:
Total cost of revenue	60,670	59,511
Energy technology
Revenue:
Total revenue	575	659
Cost of revenue:
Total cost of revenue	$ 318	$ 207

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 3 months ended Dec. 31, 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, 2015	$ 74	$ 728,667	$ (489,889)	$ (1,001)	$ 237,851
Balances (in shares) at Sep. 30, 2015	73,896
Increase (Decrease) in Stockholders' Equity
Issuance of common stock pursuant to employee stock purchase plan	$ 0	374			374
Issuance of common stock pursuant to employee stock purchase plan (in shares)	23
Issuance of restricted stock, net of cancellations	$ 0				0
Issuance of restricted stock, net of cancellations (in shares)	90
Exercise of stock appreciation rights	$ 0				0
Exercise of stock appreciation rights (in shares)	17
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock		48			48
Stock-based compensation		708			708
Net 7 share increase in treasury stock held for deferred compensation plan obligations, at cost		122		(122)	0
Net income attributable to Headwaters Incorporated			12,425		12,425
Balances at Dec. 31, 2015	$ 74	$ 729,919	$ (477,464)	$ (1,123)	$ 251,406
Balances (in shares) at Dec. 31, 2015	74,026

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) shares in Thousands	3 Months Ended
	Dec. 31, 2015shares
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Increase in treasury stock held for deferred compensation plan obligations (in shares)	7

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net income	$ 12,721	$ 7,084
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,782	12,910
Interest expense related to amortization of debt issue costs and debt discount	567	525
Stock-based compensation	708	619
Deferred income taxes	6,482	0
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock	(64)	0
Net loss (gain) on disposition of property, plant and equipment	(47)	107
Loss on sale of discontinued operations, net of income taxes	8	45
Net loss of unconsolidated joint ventures	13	221
Decrease in trade receivables	43,521	33,737
Increase in inventories	(1,259)	(4,815)
Decrease in accounts payable and accrued liabilities	(34,434)	(40,436)
Other changes in operating assets and liabilities, net	(431)	(1,849)
Net cash provided by (used in) operating activities	41,567	8,148
Cash flows from investing activities:
Business acquisitions	(57,301)	(1,200)
Investments in unconsolidated joint ventures	0	(125)
Purchase of property, plant and equipment	(7,685)	(8,771)
Proceeds from disposition of property, plant and equipment	95	325
Net decrease (increase) in long-term receivables and deposits	(1,301)	940
Net change in other assets	(1,357)	125
Net cash provided by (used in) investing activities	(67,549)	(8,706)
Cash flows from financing activities:
Payments on long-term debt	(1,062)	0
Dividends paid to non-controlling interest in consolidated subsidiary	(355)	(521)
Employee stock purchases	374	315
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock	64	0
Net cash provided by (used in) financing activities	(979)	(206)
Net increase (decrease) in cash and cash equivalents	(26,961)	(764)
Cash and cash equivalents, beginning of period	142,597	152,542
Cash and cash equivalents, end of period	$ 115,636	$ 151,778

Nature of Operations and Basis

Nature of Operations and Basis of Presentation	3 Months Ended
	Dec. 31, 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 primarily is 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 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 three months ended December 31, 2014, approximately 10% of Headwaters’ total revenue and cost of revenue was for services. During the three months ended December 31, 2015, approximately 8% 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. 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, 2015 (Form 10-K). Recent Accounting Pronouncements — In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes (ASC Topic 740). This new rule was issued to simplify the presentation of deferred income taxes to require that all deferred income tax assets and liabilities be classified as noncurrent in the balance sheet. Early application of ASU 2015-17 is permitted and Headwaters elected to adopt the ASU effective as of December 31, 2015, with retrospective application to the September 30, 2015 balance sheet. The effect of the adoption of ASU 2015-17 was to reclassify net deferred income tax assets of approximately $23.4 million as of September 30, 2015 as noncurrent instead of current. Accordingly, total current assets in the September 30, 2015 balance sheet were reduced by that amount, and total other assets were increased by the same amount. There was no effect on total assets or on net income. 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 August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09. 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 deferred income taxes, have been reclassified to conform to the current period’s presentation. The reclassifications had no effect on net income or on total assets.

Segment Reporting

Segment Reporting	3 Months Ended
	Dec. 31, 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 2012 and 2013 and the results of operations have been reflected as discontinued operations in the accompanying statements of income 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, a non-GAAP financial measure. 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 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 December 31, 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 Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $ Segment assets as of September 30, 2015 $ $ $ $ $ Three Months Ended December 31, 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 expense ) Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $ Segment assets as of December 31, 2015 $ $ $ $ $

Acquisitions

Acquisitions	3 Months Ended
	Dec. 31, 2015
Acquisitions
Acquisitions	3. Acquisitions Roofing Businesses — On November 13, 2015, Headwaters acquired 100% of the equity interests in several related companies, together which comprise a stone-coated metal roofing business located in California known as Metro Roof Products. On December 3, 2015, Headwaters acquired certain assets and assumed certain liabilities of Enviroshake Inc., a Canadian company that manufactures and sells composite roofing products, primarily in the U.S. and Canada. These acquisitions are expected to expand Headwaters’ presence in the niche roofing products sector. Combined consideration paid for the two acquisitions, net of cash acquired, was approximately $57.3 million, which amount is subject to adjustment for the final calculations of acquisition-date working capital, which calculations are currently expected to be finalized in the March 2016 quarter. Direct acquisition costs were not material. Results of operations are being reported within the building products segment and have been included with Headwaters’ consolidated results beginning November 13, 2015 and December 3, 2015, respectively. Metro is a manufacturer of stone-coated metal roofing materials in the U.S., selling products with an aesthetic resemblance to tile, shake, slate, or asphalt, but which offer the strength and durability of steel. Metro sells to both distributors and contractors. Enviroshake engineers composite roofing products that replicate the look of cedar shake, cedar shingle and slate and uses a direct distribution model to market and sell its products to customers. The acquisitions of Metro and Enviroshake increase the number of specialty niche roofing products that Headwaters provides to its core customers and is an area of continuing focus for Headwaters. The roofing acquisitions have been accounted for as business combinations in accordance with the requirements of ASC 805 Business Combinations. The following table sets forth the combined estimated fair values of assets acquired and liabilities assumed for both acquisitions as of the acquisition dates, using available information and assumptions Headwaters deems to be reasonable at the current time. Headwaters is in the process of finalizing all of the estimated amounts shown below, including the third-party valuations of the fair values of the acquired intangible assets; therefore, the provisional measurements shown in the table are subject to change. (in thousands) Current assets $ Current liabilities ) Property, plant and equipment Goodwill and intangible assets Net assets acquired $ The process of identifying and valuing the intangible assets that were acquired is in the early stages and all intangible assets have been included with goodwill in the December 31, 2015 balance sheet and in the above table. When those intangible assets have been identified and valued, and estimated useful lives are determined, amortization of the intangible assets will be adjusted effective as of the acquisition dates. Most of the goodwill is expected to be tax deductible over a 15-year period. Combined Financial Information — No revenue or earnings from the acquired businesses are included in Headwaters’ statements of income for the December 2014 quarter. The actual revenue and earnings (loss) from the acquired businesses included in Headwaters’ statement of income for the December 2015 quarter were approximately $2.0 million and $(0.4) million, respectively. The following unaudited information presents the pro forma consolidated revenue and net income for Headwaters for the quarters ended December 31, 2014 and 2015 as if the acquisitions had been included in Headwaters’ consolidated results of operations beginning October 1, 2014. Three months ended December 31, Unaudited (in thousands) 2014 2015 Pro forma revenue $ $ Pro forma net income $ $ The above unaudited pro forma results have been calculated by combining the historical results of Headwaters and the acquired businesses as if both acquisitions had occurred as of the beginning of the fiscal year prior to the acquisition dates, and then adjusting the income tax provisions as if they had been calculated on the resulting, combined results. The pro forma results do not include any estimates for intangible asset amortization and therefore will change when the final intangible asset values and useful lives have been determined. The pro forma results reflect elimination of the following expenses that were incurred in the December 2015 quarter (since for purposes of the pro forma presentation they have been reflected in 2014 instead of in 2015): $0.2 million of direct acquisition costs and $0.3 million of nonrecurring expense related to the fair value adjustment to acquisition-date inventories. For all periods presented, historical depreciation and amortization expense of the acquired companies was adjusted to reflect the acquisition date fair value amounts of the related tangible assets. No other material pro forma adjustments were deemed necessary, either to conform the acquisitions to Headwaters’ accounting policies or for any other situation. The pro forma information is not necessarily indicative of the results that would have been achieved had the transactions occurred on the date indicated or that may be achieved in the future. Other — Subsequent to December 31, 2015, Headwaters completed the acquisition of a small decking and railing company which provides an opportunity to expand distribution to existing customers, develop additional decking related products, and increase Headwaters’ product and manufacturing expertise. Non-controlling Interest in Consolidated Subsidiary — In fiscal 2014, 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 a prescribed EBITDA formula 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 activity of the non-controlling interest during the December 2015 quarter: (in thousands) Balance as of September 30, 2015 $ Net income attributable to non-controlling interest Dividends paid to non-controlling interest ) Balance as of December 31, 2015 $

Discontinued Operations

Discontinued Operations	3 Months Ended
	Dec. 31, 2015
Discontinued Operations
Discontinued Operations	4. Discontinued Operations In 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 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 shown in the following table: Three Months Ended December 31, (in thousands) 2014 2015 Revenue $ $ Loss from operations of discontinued operations before income taxes $ ) $ ) Loss on disposal ) ) Income tax benefit Loss from discontinued operations, net of income taxes $ ) $ ) Headwaters sold all of its coal cleaning facilities in 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 represents primarily expenses for certain litigation which commenced prior to disposal of the business. For all sales transactions, a majority of the consideration was in the form of potential production royalties and deferred purchase price, which amounts are dependent upon future plant production levels. 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 is currently performing permit reclamation responsibilities at one site. As of September 30, 2015 and December 31, 2015, approximately $7.4 million and $7.2 million, respectively, was accrued for this reclamation liability. 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	3 Months Ended
	Dec. 31, 2015
Inventories
Inventories	5. Inventories Inventories consisted of the following at: (in thousands) September 30, 2015 December 31, 2015 Raw materials $ $ Finished goods $ $

Intangible Assets

Intangible Assets	3 Months Ended
	Dec. 31, 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, 2015 December 31, 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 $ $ $ $ The above table does not include any amounts for the intangible assets acquired in the December 2015 quarter because the process of identifying and valuing those assets is in the early stages. Total amortization expense related to intangible assets was approximately $4.5 million and $4.6 million for the December 2014 and 2015 quarters, respectively. Total estimated annual amortization expense for 2016 through 2021 is shown in the following table; however, the amounts will change once the intangible assets for the recent acquisitions are identified and valued. Year ending September 30: (in thousands) 2016 $ 2017 2018 2019 2020 2021

Long-term Debt

Long-term Debt	3 Months Ended
	Dec. 31, 2015
Long-term Debt
Long-term Debt	7. Long-term Debt The total undiscounted face amount of Headwaters’ outstanding long-term debt was approximately $573.9 million as of September 30, 2015 and $572.9 million as of December 31, 2015. As of those dates, the discounted carrying value of long-term debt consisted of the following: (in thousands) September 30, 2015 December 31, 2015 Senior secured term loan, due March 2022 (face amount $422,875) $ $ 7¼% Senior notes, due January 2019 (face amount $150,000) 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 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 those 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. Interest is payable quarterly, and as of December 31, 2015, the interest rate on borrowings under the Term Loan Facility was 4.5%. 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, 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 December 31, 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 transaction costs of approximately $8.2 million. The net proceeds from the original borrowing under the Term Loan Facility were primarily used to pay the redemption price for 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 redemption prices that decline over time from 103.625% to 100.0%, depending on the redemption date. 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 December 31, 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 December 31, 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 December 31, 2015, Headwaters had secured letters of credit under the ABL Revolver of approximately $8.8 million for various purposes and had availability under the ABL Revolver of approximately $59.2 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 December 31, 2015, the interest rate on those borrowings would have been approximately 2.1%. 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 December 31, 2015. Interest and Debt Maturities — During the December 2014 and 2015 quarters, Headwaters incurred total interest costs of approximately $12.1 million and $8.4 million, respectively, including approximately $0.5 million and $0.6 million, respectively, of non-cash interest expense. 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 5.2% at September 30, 2015 and December 31, 2015. Except for the required repayments of the Term Loan Facility of approximately $1.1 million per quarter, Headwaters has no debt maturities until January 2019. Pursuant to open market transactions subsequent to December 31, 2015, Headwaters repurchased and cancelled approximately $3.8 million of the 7¼% senior notes.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	3 Months Ended
	Dec. 31, 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. As of September 30, 2015 and December 31, 2015, only the 7¼% senior notes have a fixed rate and the aggregate fair value of this debt as of September 30, 2015 would have been approximately $156.4 million, compared to a carrying value of $147.8 million. As of December 31, 2015, the aggregate fair value of this debt would have been approximately $155.0 million, compared to a carrying value of $148.0 million. Fair value “Level 2” estimates for long-term debt were based primarily on price estimates from broker-dealers.

Income Taxes

Income Taxes	3 Months Ended
	Dec. 31, 2015
Income Taxes
Income Taxes	9. Income Taxes Headwaters’ estimated effective income tax rate for continuing operations for the fiscal year ending September 30, 2016, exclusive of discrete items, is currently expected to be approximately 39%. This estimated rate was used to record income taxes for the December 2015 quarter. For the December 2014 quarter, Headwaters used an estimated effective income tax rate for continuing operations of 10%. Headwaters also recognized tax benefit for discrete items of $0.9 million in the December 2014 quarter and $2.9 million in the December 2015 quarter which did not affect the calculation of the estimated effective income tax rates for the respective fiscal years. The discrete items were due primarily to unrecognized state income tax benefits that were reversed due to audit periods that closed. Beginning in 2011 and until September 2015, Headwaters 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 the December 2014 quarter. The estimated income tax rate of 10% 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 was expected to be generated. As of December 31, 2015, Headwaters’ U.S. and state NOL and capital loss carryforwards totaled approximately $61.3 million (tax effected). The NOLs expire from 2016 to 2035. In addition, there are approximately $25.0 million of tax credit carryforwards as of December 31, 2015, which expire from 2028 to 2033. 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 2012 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 the amount of Headwaters’ unrecognized income tax benefits could change significantly within the next 12 months. These changes could be the result of Headwaters’ ongoing tax audits, the settlement of outstanding audit issues or the lapse of tax statutes of limitation. However, due to the issues being examined, at the current time, an estimate of the range of reasonably possible outcomes cannot be made, beyond amounts currently accrued.

Equity Securities and Stock-Bas

Equity Securities and Stock-Based Compensation	3 Months Ended
	Dec. 31, 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 December 31, 2015, the treasury stock and related deferred compensation obligation had fair values of approximately $1.5 million, which was $0.4 million higher than the carrying values at cost. Stock-Based Compensation — In the December 2015 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 the stockholder-approved 2010 Incentive Compensation Plan, and vest over an approximate three-year period. Vesting is also subject to achievement of a 12-month Adjusted EBITDA target equal to the sum of capital expenditures plus 1.5 times cash interest expense, measured at each quarter end beginning September 30, 2016 through the final vest date of September 30, 2018. Stock-based compensation expense was approximately $0.6 million and $0.7 million for the December 2014 and 2015 quarters, respectively. As of December 31, 2015, there was approximately $4.9 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	3 Months Ended
	Dec. 31, 2015
Earnings per Share
Earnings per Share	11. Earnings per Share The following table sets forth the computations of basic and diluted EPS for the years indicated, reflecting the amounts attributable to Headwaters and excluding the amounts attributable to the non-controlling interest in Entegra. In accordance with ASC 260, income 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 December 31, (in thousands, except per-share amounts) 2014 2015 Numerator: Income 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 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 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 and diluted income 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

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Dec. 31, 2015
Commitments and Contingencies
Commitments and Contingencies	12. Commitments and Contingencies Significant new commitments, material changes in commitments and ongoing contingencies as of December 31, 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 2016 grants made in the December 2015 quarter. Headwaters currently expects that amounts could be earned in fiscal 2016 under the terms of the fiscal 2016 awards. Also, 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 2016 and the amounts accrued under the fiscal 2015 awards are subject to adjustment for cash flows generated in fiscal 2016 and 2017. Cash-Settled SAR Grants. In 2012, the Committee approved grants to certain officers and employees of approximately 1.0 million cash-settled SARs, approximately 0.1 million of which remain outstanding as of December 31, 2015. These SARs, which are considered liability awards, vested in annual installments through September 30, 2014 and are settled in cash upon exercise by the employee. As of December 31, 2015, approximately $1.4 million has been accrued for outstanding awards because the stock price at that date was above the grant-date stock price of $1.85. Changes in Headwaters’ stock price (whether positive or negative) through the dates employees exercise the SARs will result in adjustments to compensation expense and will be reflected in Headwaters’ statement of income each quarter in fiscal 2016, until the SARs are exercised or expire on September 30, 2016. Compensation expense (benefit) for all cash-settled SARs was approximately $1.3 million and $(0.2) million for the three months ended December 31, 2014 and 2015, respectively. Property, Plant and Equipment — As of December 31, 2015, Headwaters was committed to spend approximately $6.9 million on capital projects that were in various stages of completion. Legal Matters — Headwaters has ongoing litigation and asserted claims which have been incurred during 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 $0.5 million of expense for legal matters during each of the quarters ended December 31, 2014 and December 31, 2015. Costs for outside legal counsel comprised a majority of Headwaters’ litigation-related costs in 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 December 31, 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. 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 (VEPCO). 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 VEPCO and related companies, 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. CPM. In August 2015, CPM Virginia, LLC (CPM) the Battlefield Golf Course developer, filed a complaint in the State of Virginia Richmond Circuit Court against VEPCO, VFL, and Headwaters related to construction of the golf course described in the Fentress Families Trust case. The complaint alleges breach of contract, fraud, misrepresentation, estoppel, nuisance, breach of warranties, negligence, and interference with prospective business advantage. CPM’s complaint seeks $840 million in compensatory damages plus attorney fees and costs. In September 2015, CPM filed a separate complaint in the State of Virginia Chesapeake Circuit Court against VFL and Headwaters also related to construction of the golf course described in the Fentress Families Trust case, alleging breach of contract and seeking declaratory judgment and compensatory damages in the amount of $0.5 million plus attorney fees and costs. CPM alleges that HRI should indemnify CPM for past and future expenses incurred in defending against the Fentress complaints. VFL and Headwaters have not been served with either of the CPM complaints and have only recently learned that they were filed in 2015. Because resolution of the CPM litigation is uncertain, legal counsel and management cannot express an opinion as to the ultimate amount, if any, of VFL or Headwaters’ liability, or the insurers’ obligation to indemnify VFL and Headwaters against loss, if any. Clary. In August 2014, 77 plaintiffs filed suit in the State of West Virginia Circuit Court of Mason County against four defendants, including American Electric Power Co., Inc., Ohio Power Company and an individual. Plaintiffs claim injury resulting from exposure to coal combustion waste from the Gavin Power Plant in Cheshire, Ohio while working as employees of contractors in the Gavin landfill. Plaintiffs claim wrongful death, failure to warn and protect, negligence per se, negligence, negligent infliction of emotional distress, heightened duty, strict liability, battery, fraud, fraudulent concealment, misrepresentation and related causes of action, seeking unspecified damages for medical monitoring and other costs, loss of consortium, lost wages, personal injuries, and punitive damages. In September 2015, the Ohio Power Company filed a third-party complaint against Headwaters and two other entities who were contractors to Ohio Power Company. Ohio Power Company claims that the third-party defendant contractors operated the Gavin landfill and that plaintiffs are former employees or family members of the third-party defendants. Ohio Power Company denies the plaintiffs’ allegations, but states that Headwaters and the other third-party defendants are required to indemnify Ohio Power and provide contribution to the extent that Ohio Power is found liable to plaintiffs, including interest, attorney fees, and costs. The case is stayed while issues about the proper venue for the litigation are resolved. Because resolution of the litigation is uncertain, legal counsel and management cannot express an opinion as to the ultimate amount, if any, of Headwaters’ liability, or whether insurers have an obligation to indemnify Headwaters 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 attorney 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 within 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 and Clary cases summarized above are examples 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. Discontinued Coal Cleaning Operations. The following litigation relates to the discontinued coal cleaning business: RLF Chinook Properties. In September 2015, RLF Chinook Properties, LLC filed suit in the State of Indiana Circuit Court of Clay against Covol Fuels No. 2, LLC, Headwaters Energy Services Corp., other Covol companies (collectively, “Covol”), as well as BRC Chinook, LLC and other BRC affiliates (collectively, “BRC”). Covol entered into a coal recovery agreement with plaintiff in 2007 with respect to coal at the RLF Chinook site. Covol assigned the coal recovery agreement to BRC in 2013. Plaintiff alleges that BRC has failed to fulfill certain obligations under the coal recovery agreement, including failure to submit reclamation plans to State of Indiana for approval and to restore and reclaim the site per the approved plan. Plaintiff alleges that Covol is liable for the claimed breaches under the coal recovery agreement, and seeks unspecified damages, together with attorney fees and costs. Covol has answered the complaint denying the allegations. Because resolution of the litigation is uncertain, legal counsel and management cannot express an opinion as to the ultimate amount, if any, of Covol’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	3 Months Ended
	Dec. 31, 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, 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 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 BALANCE SHEET — December 31, 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 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 INCOME Three Months Ended December 31, 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: Selling, general and administrative Amortization 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 INCOME Three Months Ended December 31, 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: Selling, general and administrative Amortization 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 CASH FLOWS Three Months Ended December 31, 2014 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 Net loss (gain) 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 ) ) ) 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 (increase) in long-term receivables and deposits ) Net change in other assets ) Net cash provided by (used in) investing activities ) ) — ) Cash flows from financing activities: 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 $ $ $ $ — $ CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended December 31, 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 Tax benefit from exercise of stock appreciation rights and vesting of restricted stock ) ) ) Net loss (gain) 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 ) ) ) 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 acquisitions ) ) ) 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: Payments on long-term debt ) ) Dividends paid to non-controlling interest in consolidated subsidiary ) ) Employee stock purchases Tax benefit from exercise of stock appreciation rights and vesting of restricted stock 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)	3 Months Ended
	Dec. 31, 2015
Segment Reporting
Schedule of Segment Reporting	Three Months Ended December 31, 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 Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $ Segment assets as of September 30, 2015 $ $ $ $ $ Three Months Ended December 31, 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 expense ) Income from continuing operations Loss from discontinued operations, net of income taxes ) Net income $ Capital expenditures $ $ $ $ $ Segment assets as of December 31, 2015 $ $ $ $ $

Acquisitions (Tables)

Acquisitions (Tables)	3 Months Ended
	Dec. 31, 2015
Acquisitions
Schedule of pro forma consolidated revenue and net income	Three months ended December 31, Unaudited (in thousands) 2014 2015 Pro forma revenue $ $ Pro forma net income $ $
Schedule of activity of non-controlling interest	(in thousands) Balance as of September 30, 2015 $ Net income attributable to non-controlling interest Dividends paid to non-controlling interest ) Balance as of December 31, 2015 $
Roofing Businesses
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 Goodwill and intangible assets Net assets acquired $

Discontinued Operations (Tables

Discontinued Operations (Tables)	3 Months Ended
	Dec. 31, 2015
Discontinued Operations
Schedule of information for the discontinued coal cleaning business	Three Months Ended December 31, (in thousands) 2014 2015 Revenue $ $ Loss from operations of discontinued operations before income taxes $ ) $ ) Loss on disposal ) ) Income tax benefit Loss from discontinued operations, net of income taxes $ ) $ )

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Dec. 31, 2015
Inventories
Schedule of components of inventory	(in thousands) September 30, 2015 December 31, 2015 Raw materials $ $ Finished goods $ $

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Dec. 31, 2015
Intangible Assets
Schedule of gross carrying amounts and accumulated amortization of intangible assets	September 30, 2015 December 31, 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) 2016 $ 2017 2018 2019 2020 2021

Long-term Debt (Tables)

Long-term Debt (Tables)	3 Months Ended
	Dec. 31, 2015
Long-term Debt
Schedule of the discounted carrying value of long-term debt	(in thousands) September 30, 2015 December 31, 2015 Senior secured term loan, due March 2022 (face amount $422,875) $ $ 7¼% Senior notes, due January 2019 (face amount $150,000) 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)	3 Months Ended
	Dec. 31, 2015
Earnings per Share
Schedule of computation of basic and diluted EPS	Three Months Ended December 31, (in thousands, except per-share amounts) 2014 2015 Numerator: Income 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 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 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 and diluted income 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

Condensed Consolidating Finan28

Condensed Consolidating Financial Information (Tables)	3 Months Ended
	Dec. 31, 2015
Condensed Consolidating Financial Information
Schedule of condensed consolidating balance sheet	CONDENSED CONSOLIDATING BALANCE SHEET — September 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 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 BALANCE SHEET — December 31, 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 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 Income	CONDENSED CONSOLIDATING STATEMENT OF INCOME Three Months Ended December 31, 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: Selling, general and administrative Amortization 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 INCOME Three Months Ended December 31, 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: Selling, general and administrative Amortization 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 $ $ $ $ ) $
Schedule of condensed consolidating statement of cash flows	CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended December 31, 2014 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 Net loss (gain) 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 ) ) ) 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 (increase) in long-term receivables and deposits ) Net change in other assets ) Net cash provided by (used in) investing activities ) ) — ) Cash flows from financing activities: 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 $ $ $ $ — $ CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended December 31, 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 Tax benefit from exercise of stock appreciation rights and vesting of restricted stock ) ) ) Net loss (gain) 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 ) ) ) 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 acquisitions ) ) ) 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: Payments on long-term debt ) ) Dividends paid to non-controlling interest in consolidated subsidiary ) ) Employee stock purchases Tax benefit from exercise of stock appreciation rights and vesting of restricted stock 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 Thousands	3 Months Ended
	Dec. 31, 2015USD ($)item	Dec. 31, 2014	Sep. 30, 2015USD ($)
Adoption of recently issued accounting standards
Deferred income taxes	$ 86,418		$ 92,852
Nature of operations and basis of presentation
Number of building materials segments | item	2
Percentage of total revenue and cost of revenue for services	8.00%	10.00%
Accounting Standards Update 2015-17 | New Accounting Pronouncement, Early Adoption Effect
Adoption of recently issued accounting standards
Current and deferred income taxes			(23,400)
Deferred income taxes			$ 23,400

Segment Reporting (Details)

Segment Reporting (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2015USD ($)segment	Dec. 31, 2014USD ($)	Sep. 30, 2015USD ($)
Segment Reporting
Number of business segments | segment	3
Segment revenue	$ 218,418	$ 199,597
Depreciation and amortization	(13,782)	(12,910)
Operating income (loss)	24,823	19,172
Net interest expense	(8,217)	(11,952)
Other income (expense), net	(69)	(269)
Income tax benefit (expense)	(3,600)	200
Income from continuing operations	12,937	7,151
Loss from discontinued operations, net of income taxes	(216)	(67)
Net income	12,721	7,084
Capital expenditures	7,685	8,771
Segment assets	957,688	979,019	$ 979,019
Building products
Segment Reporting
Segment revenue	131,845	117,534
Construction materials
Segment Reporting
Segment revenue	85,998	81,404
Energy technology
Segment Reporting
Segment revenue	575	659
Operating Segments | Building products
Segment Reporting
Segment revenue	131,845	117,534
Depreciation and amortization	(9,466)	(8,713)
Operating income (loss)	15,085	11,948
Capital expenditures	6,004	6,021
Segment assets	451,305	412,867
Operating Segments | Construction materials
Segment Reporting
Segment revenue	85,998	81,404
Depreciation and amortization	(3,834)	(3,736)
Operating income (loss)	16,953	13,488
Capital expenditures	779	1,348
Segment assets	271,350	294,057
Operating Segments | Energy technology
Segment Reporting
Segment revenue	575	659
Depreciation and amortization	(323)	(353)
Operating income (loss)	(1,721)	(1,611)
Capital expenditures	0	168
Segment assets	39,298	45,671
Corporate, Non-Segment
Segment Reporting
Segment revenue	0	0
Depreciation and amortization	(159)	(108)
Operating income (loss)	(5,494)	(4,653)
Capital expenditures	902	1,234
Segment assets	$ 195,735	$ 226,424

Acquisitions (Details)

Acquisitions (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2015USD ($)item	Dec. 31, 2014USD ($)	Nov. 13, 2015	Sep. 30, 2014
Acquisitions
Consideration paid net of cash acquired	$ 57,301	$ 1,200
Estimated fair values of assets acquired and liabilities assumed
Revenue	218,418	199,597
Net income (loss)	12,721	7,084
Non-controlling interest in consolidated subsidiary
Balance	12,431
Net income attributable to non-controlling interest	296	245
Balance	12,372
Entegra
Acquisitions
Percentage of equity interests acquired				80.00%
Pro forma consolidated revenue and net income (loss)
Noncontrolling equity interest (as a percent)				20.00%
Non-controlling interest in consolidated subsidiary
Balance	12,431
Net income attributable to non-controlling interest	296
Dividends paid to non-controlling interest	(355)
Balance	$ 12,372
Roofing Businesses
Acquisitions
Number of acquisitions aggregated | item	2
Consideration paid net of cash acquired	$ 57,300
Estimated fair values of assets acquired and liabilities assumed
Current assets	8,113
Current liabilities	(910)
Property, plant and equipment	1,411
Goodwill and intangible assets	48,687
Net assets acquired	$ 57,301
Period over which goodwill is expected to be deductible for tax purpose	15 years
Revenue	$ 2,000	0
Net income (loss)	(400)	0
Pro forma consolidated revenue and net income (loss)
Pro forma revenue	221,318	205,267
Pro forma net income	13,505	$ 7,494
Roofing Businesses | Acquisition-related Costs
Pro forma consolidated revenue and net income (loss)
Fees for advisory, legal and other professional services	200
Roofing Businesses | Fair Value Adjustment to Inventory
Pro forma consolidated revenue and net income (loss)
Nonrecurring expense related to the fair value adjustment to acquisition-date inventory	$ 300
Metro Roof Products
Acquisitions
Percentage of equity interests acquired			100.00%

Discontinued Operations (Detail

Discontinued Operations (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2015USD ($)item	Dec. 31, 2014USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2013USD ($)
Discontinued operations
Loss from discontinued operations, net of income taxes	$ (216)	$ (67)
Coal Cleaning Business | Discontinued Operations, Disposed of by Sale
Discontinued operations
Remaining assets held for sale				$ 0
Revenue	0	0
Loss from operations of discontinued operations before income taxes	(338)	(22)
Loss on disposal	(8)	(45)
Income tax benefit	130	0
Loss from discontinued operations, net of income taxes	$ (216)	$ (67)
Number of sales transactions in which the buyer agreed to assume the lease and certain reclamation obligations | item	1
Number of reclamation obligations | item	1
Accrued liability for reclamation obligations	$ 7,200		$ 7,400

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Inventories
Raw materials	$ 15,893	$ 12,831
Finished goods	45,438	42,243
Inventories	$ 61,331	$ 55,074

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015
Gross carrying amount and accumulated amortization of intangible assets
Total Gross Carrying Amount	$ 324,198		$ 322,749
Accumulated Amortization	183,023		179,031
Amortization expense related to intangible assets	4,600	$ 4,500
Trade Names
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	16,090		15,300
CCP Contracts
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	112,300		112,300
Accumulated Amortization	71,296		69,875
Customer Relationships
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	110,242		109,078
Accumulated Amortization	59,735		57,844
Trade Names
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	66,960		66,960
Accumulated Amortization	37,393		36,554
Patents and Patented Technologies
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	14,021		14,526
Accumulated Amortization	12,304		12,574
Other Intangible Assets
Gross carrying amount and accumulated amortization of intangible assets
Gross Carrying Amount	4,585		4,585
Accumulated Amortization	$ 2,295		$ 2,184
Minimum | CCP Contracts
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	15 years
Minimum | Customer Relationships
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	5 years
Minimum | Trade Names
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	5 years
Minimum | Patents and Patented Technologies
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	5 years
Minimum | Other Intangible Assets
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	5 years
Maximum | CCP Contracts
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	20 years
Maximum | Customer Relationships
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	17 years
Maximum | Trade Names
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	20 years
Maximum | Patents and Patented Technologies
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	19 years
Maximum | Other Intangible Assets
Gross carrying amount and accumulated amortization of intangible assets
Estimated useful lives	17 years

Intangible Assets - Future Annu

Intangible Assets - Future Annual Amortization (Details) $ in Thousands	Dec. 31, 2015USD ($)
Total currently estimated annual amortization expense
2,016	$ 18,077
2,017	17,188
2,018	17,143
2,019	16,121
2,020	11,874
2,021	$ 11,813

Long-term Debt (Details)

Long-term Debt (Details) - USD ($)	Dec. 31, 2015	Sep. 30, 2015	Mar. 31, 2015	Dec. 31, 2013
Long-term debt
Debt instrument, face amount	$ 572,900,000	$ 573,900,000
Carrying amount of long-term debt, net of discounts and debt issue costs	561,805,000	562,330,000
Less current portion	(4,250,000)	(4,250,000)
Long-term debt	557,555,000	558,080,000
Senior secured term loan, due March 2022
Long-term debt
Debt instrument, face amount	422,875,000	422,875,000	$ 425,000,000
Carrying amount of long-term debt, net of discounts and debt issue costs	413,803,000	414,490,000
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	$ 148,002,000	$ 147,840,000
Interest rate on long-term debt (as a percent)	7.25%	7.25%		7.25%

Long-term Debt - Senior Secured

Long-term Debt - Senior Secured Term Loan (Details) - USD ($)	1 Months Ended	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Sep. 30, 2015	Mar. 31, 2015
Long-term debt
Debt instrument, face amount		$ 572,900,000	$ 573,900,000
Senior secured term loan, due March 2022
Long-term debt
Debt instrument, face amount		$ 422,875,000	422,875,000	$ 425,000,000
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
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
Debt instrument, face amount	$ 150,000,000	$ 150,000,000	$ 150,000,000
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
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%
Senior Secured Notes 7.625 Percent
Long-term debt
Interest rate on secured notes (as a percent)		7.625%

Long-term Debt - ABL Revolver (

Long-term Debt - ABL Revolver (Details) $ in Millions	3 Months Ended
	Dec. 31, 2015USD ($)
ABL Revolver
Long-term debt
Revolving credit arrangement amount outstanding	$ 0
Maximum borrowing capacity	70
Current borrowing capacity	$ 59.2
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)	2.10%
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	8.8
Swingline Facility
Long-term debt
Maximum borrowing capacity	$ 10.5

Long-term Debt - Interest and D

Long-term Debt - Interest and Debt Maturities (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Feb. 03, 2016	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015	Dec. 31, 2013
Long-term debt
Interest expense		$ 8,400	$ 12,100
Non-cash interest expense		$ 567	$ 525
Weighted average interest rate (as a percent)		5.20%		5.20%
Senior secured term loan, due March 2022
Long-term debt
Required quarterly repayments due		$ 1,100
7.25% Senior notes, due January 2019
Long-term debt
Interest rate on secured notes (as a percent)		7.25%		7.25%	7.25%
Repurchase and cancellation of senior notes	$ 3,800

Fair Value of Financial Instr40

Fair Value of Financial Instruments (Details) - 7.25% Senior notes, due January 2019 - USD ($) $ in Millions	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2013
Fair value of financial instruments
Debt Instrument, Interest Rate, Stated Percentage	7.25%	7.25%	7.25%
Long-term debt, fair value	$ 155	$ 156.4
Long-term debt, carrying value	$ 148	$ 147.8

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015
Income tax
Estimated effective income tax rate (as a percent)	39.00%	10.00%	10.00%
Net operating and capital loss carryforwards	$ 61.3
Tax credit carryforwards	25
Income tax benefit for discrete items	$ 2.9	$ 0.9
Minimum
Income tax
Operating loss carryforwards expiration date	Sep. 30, 2016
Tax credit carryforwards, expiration date	Sep. 30, 2028
Maximum
Income tax
Operating loss carryforwards expiration date	Sep. 30, 2035
Tax credit carryforwards, expiration date	Sep. 30, 2033

Equity Securities and Stock-B42

Equity Securities and Stock-Based Compensation (Details) $ in Thousands, shares in Millions	3 Months Ended
	Dec. 31, 2015USD ($)shares	Dec. 31, 2014USD ($)
Treasury stock and related deferred compensation obligation at fair value	$ 1,500
Amount that the fair values of treasury stock and related deferred compensation obligation exceed the carrying values at cost	400
Stock-based compensation	708	$ 619
Total compensation cost related to unvested awards not yet recognized	$ 4,900
2010 Incentive Compensation Plan
Board approved share-based award grants to officers, employees, and directors (in shares) | shares	0.3
Awards granted vesting period	3 years
Factor applied to cash interest expense in the calculation of the 12-month adjusted EBITDA target for determination of vesting	1.5

Earnings per Share (Details)

Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Numerator:
Income from continuing operations	$ 12,937	$ 7,151
Income from continuing operations attributable to non-controlling interest	(296)	(245)
Adjustment of estimated redemption value of non-controlling interest	0	(276)
Numerator for basic and diluted earnings per share from continuing operations - income from continuing operations attributable to Headwaters Incorporated	12,641	6,630
Numerator for basic and diluted earnings per share from discontinued operations - loss from discontinued operations, net of income taxes	(216)	(67)
Numerator for basic and diluted earnings per share - net income attributable to Headwaters Incorporated	$ 12,425	$ 6,563
Denominator:
Denominator for basic earnings per share - weighted-average shares outstanding	73,789	73,448
Effect of dilutive securities - shares issuable upon exercise of options and SARs and vesting of restricted stock	1,576	1,880
Denominator for diluted earnings per share - weighted-average shares outstanding after assumed exercises and vesting	75,365	75,328
Basic and diluted income per share attributable to Headwaters Incorporated:
From continuing operations (in dollars per share)	$ 0.17	$ 0.09
From discontinued operations (in dollars per share)	0	0
Basic and diluted income (loss) per share (in dollars per share)	$ 0.17	$ 0.09

Earnings per Share - Anti-dilut

Earnings per Share - Anti-dilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Stock Appreciation Rights (SARs)
Earnings per Share
Anti-dilutive securities not considered in diluted EPS calculation (in shares)	329	905
Stock options
Earnings per Share
Anti-dilutive securities not considered in diluted EPS calculation (in shares)	72	105

Commitments and Contingencies -

Commitments and Contingencies - SARS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2012
Stock Appreciation Rights (SARs)
Commitments and Contingencies
Compensation expense		$ 1.3
Compensation benefit	$ 0.2
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)	0.1
Amount accrued for awards	$ 1.4
Grant-date stock price (in dollars per share)	$ 1.85

Commitments and Contingencies46

Commitments and Contingencies - Legal Matters (Details) $ in Millions	1 Months Ended				3 Months Ended		12 Months Ended
	Sep. 30, 2015USD ($)item	Aug. 31, 2015USD ($)	Apr. 30, 2014item	Feb. 29, 2012USD ($)item	Dec. 31, 2015USD ($)	Dec. 31, 2014USD ($)	Sep. 30, 2010item
Commitments and Contingencies
Long term capital commitments on property, plant and equipment					$ 6.9
Legal Matters
Commitments and Contingencies
Legal fees					0.5	$ 0.5
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
CPM Virginia LLC
Commitments and Contingencies
Loss contingency damages sought value	$ 0.5	$ 840
Clary
Commitments and Contingencies
Number of plaintiffs | item			77
Number of defendants | item			4
Ohio Power Company
Commitments and Contingencies
Number of defendants | item	2

Condensed Consolidating Finan47

Condensed Consolidating Financial Information (Details)	3 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	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 Finan48

Condensed Consolidating Financial Information - Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Current assets:
Cash and cash equivalents	$ 115,636	$ 142,597	$ 151,778	$ 152,542
Trade receivables, net	93,399	134,384
Inventories	61,331	55,074
Current income taxes	945	329
Other	7,130	11,827
Total current assets	278,441	344,211
Property, plant and equipment, net	186,231	185,718
Other assets:
Goodwill	225,022	178,199
Intangible assets, net	141,175	143,718
Deferred income taxes	86,418	92,852
Other	40,401	34,321
Total other assets	493,016	449,090
Total assets	957,688	979,019	979,019
Current liabilities:
Accounts payable	17,958	25,306
Accrued personnel costs	30,724	52,544
Accrued interest	5,017	2,295
Other accrued liabilities	43,401	49,486
Current portion of long-term debt	4,250	4,250
Total current liabilities	101,350	133,881
Long-term liabilities:
Long-term debt, net	557,555	558,080
Income taxes	2,031	6,590
Other	32,974	30,186
Total long-term liabilities	592,560	594,856
Total liabilities	693,910	728,737
Redeemable non-controlling interest in consolidated subsidiary	12,372	12,431
Stockholders' equity:
Common stock	74	74
Capital in excess of par value	729,919	728,667
Retained earnings (accumulated deficit)	(477,464)	(489,889)
Treasury stock	(1,123)	(1,001)
Total stockholders' equity	251,406	237,851
Total liabilities and stockholders' equity	957,688	979,019
Consolidation, Eliminations
Current assets:
Current income taxes	(152,691)	(142,976)
Total current assets	(152,691)	(142,976)
Other assets:
Investments in subsidiaries	(446,163)	(428,708)
Intercompany accounts and notes	(718,319)	(694,839)
Deferred income taxes	(13,061)	(12,115)
Total other assets	(1,177,543)	(1,135,662)
Total assets	(1,330,234)	(1,278,638)
Current liabilities:
Current income taxes	(152,691)	(142,976)
Total current liabilities	(152,691)	(142,976)
Long-term liabilities:
Income taxes	(13,061)	(12,115)
Intercompany accounts and notes	(718,319)	(694,839)
Total long-term liabilities	(731,380)	(706,954)
Total liabilities	(884,071)	(849,930)
Stockholders' equity:
Capital in excess of par value	(539,544)	(540,715)
Retained earnings (accumulated deficit)	93,381	112,007
Total stockholders' equity	(446,163)	(428,708)
Total liabilities and stockholders' equity	(1,330,234)	(1,278,638)
Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	28,363	25,819	42,862	33,552
Trade receivables, net	88,091	129,095
Inventories	58,217	52,699
Other	6,624	10,666
Total current assets	181,295	218,279
Property, plant and equipment, net	164,008	164,413
Other assets:
Goodwill	172,321	147,330
Intangible assets, net	114,304	116,479
Investments in subsidiaries	52,949	55,844
Intercompany accounts and notes	81,273	57,793
Other	12,488	11,243
Total other assets	433,335	388,689
Total assets	778,638	771,381
Current liabilities:
Accounts payable	16,511	23,619
Accrued personnel costs	8,369	14,542
Current income taxes	146,843	137,502
Other accrued liabilities	33,059	39,604
Total current liabilities	204,782	215,267
Long-term liabilities:
Income taxes	15,092	15,091
Other	1,134	1,481
Total long-term liabilities	16,226	16,572
Total liabilities	221,008	231,839
Stockholders' equity:
Capital in excess of par value	486,070	486,069
Retained earnings (accumulated deficit)	71,560	53,473
Total stockholders' equity	557,630	539,542
Total liabilities and stockholders' equity	778,638	771,381
Non-Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	3,715	3,577	4,752	5,764
Trade receivables, net	5,308	5,289
Inventories	3,114	2,375
Other	164	144
Total current assets	12,301	11,385
Property, plant and equipment, net	10,118	9,978
Other assets:
Goodwill	52,701	30,869
Intangible assets, net	26,871	27,239
Deferred income taxes	25,205	25,204
Other	2,328	2,291
Total other assets	107,105	85,603
Total assets	129,524	106,966
Current liabilities:
Accounts payable	987	1,114
Accrued personnel costs	306	501
Current income taxes	5,848	5,474
Other accrued liabilities	6,391	6,380
Total current liabilities	13,532	13,469
Long-term liabilities:
Intercompany accounts and notes	201,659	178,179
Other	13,604	13,897
Total long-term liabilities	215,263	192,076
Total liabilities	228,795	205,545
Redeemable non-controlling interest in consolidated subsidiary	12,372	12,431
Stockholders' equity:
Capital in excess of par value	53,298	54,470
Retained earnings (accumulated deficit)	(164,941)	(165,480)
Total stockholders' equity	(111,643)	(111,010)
Total liabilities and stockholders' equity	129,524	106,966
Parent Company
Current assets:
Cash and cash equivalents	83,558	113,201	$ 104,164	$ 113,226
Current income taxes	153,636	143,305
Other	342	1,017
Total current assets	237,536	257,523
Property, plant and equipment, net	12,105	11,327
Other assets:
Investments in subsidiaries	393,214	372,864
Intercompany accounts and notes	637,046	637,046
Deferred income taxes	74,274	79,763
Other	25,585	20,787
Total other assets	1,130,119	1,110,460
Total assets	1,379,760	1,379,310
Current liabilities:
Accounts payable	460	573
Accrued personnel costs	22,049	37,501
Accrued interest	5,017	2,295
Other accrued liabilities	3,951	3,502
Current portion of long-term debt	4,250	4,250
Total current liabilities	35,727	48,121
Long-term liabilities:
Long-term debt, net	557,555	558,080
Income taxes		3,614
Intercompany accounts and notes	516,660	516,660
Other	18,236	14,808
Total long-term liabilities	1,092,451	1,093,162
Total liabilities	1,128,178	1,141,283
Stockholders' equity:
Common stock	74	74
Capital in excess of par value	730,095	728,843
Retained earnings (accumulated deficit)	(477,464)	(489,889)
Treasury stock	(1,123)	(1,001)
Total stockholders' equity	251,582	238,027
Total liabilities and stockholders' equity	$ 1,379,760	$ 1,379,310

Condensed Consolidating Finan49

Condensed Consolidating Financial Information - Statements of Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Revenue:
Revenue	$ 218,418	$ 199,597
Cost of revenue:
Total cost of revenue	154,147	143,910
Gross profit	64,271	55,687
Operating expenses:
Selling, general and administrative	34,882	32,029
Amortization	4,566	4,486
Total operating expenses	39,448	36,515
Operating income (loss)	24,823	19,172
Other income (expense):
Net interest expense	(8,217)	(11,952)
Equity in earnings of subsidiaries	0	0
Other, net	(69)	(269)
Total other income (expense), net	(8,286)	(12,221)
Income from continuing operations before income taxes	16,537	6,951
Income tax benefit (provision)	(3,600)	200
Income from continuing operations	12,937	7,151
Loss from discontinued operations, net of income taxes	(216)	(67)
Net income	12,721	7,084
Net income attributable to non-controlling interest	(296)	(245)
Net income attributable to Headwaters Incorporated	12,425	6,839
Building products
Revenue:
Revenue	131,845	117,534
Cost of revenue:
Total cost of revenue	93,159	84,192
Construction materials
Revenue:
Revenue	85,998	81,404
Cost of revenue:
Total cost of revenue	60,670	59,511
Energy technology
Revenue:
Revenue	575	659
Cost of revenue:
Total cost of revenue	318	207
Consolidation, Eliminations
Other income (expense):
Equity in earnings of subsidiaries	(18,626)	(21,800)
Total other income (expense), net	(18,626)	(21,800)
Income from continuing operations before income taxes	(18,626)	(21,800)
Income from continuing operations	(18,626)	(21,800)
Net income	(18,626)	(21,800)
Net income attributable to Headwaters Incorporated	(18,626)	(21,800)
Guarantor Subsidiaries
Revenue:
Revenue	206,218	188,456
Cost of revenue:
Total cost of revenue	145,582	136,236
Gross profit	60,636	52,220
Operating expenses:
Selling, general and administrative	27,694	25,802
Amortization	4,198	4,118
Total operating expenses	31,892	29,920
Operating income (loss)	28,744	22,300
Other income (expense):
Net interest expense	(100)	(44)
Other, net	(43)	(80)
Total other income (expense), net	(143)	(124)
Income from continuing operations before income taxes	28,601	22,176
Income tax benefit (provision)	(10,410)	(1,270)
Income from continuing operations	18,191	20,906
Loss from discontinued operations, net of income taxes		(67)
Net income	18,191	20,839
Net income attributable to Headwaters Incorporated	18,191	20,839
Guarantor Subsidiaries | Building products
Revenue:
Revenue	119,645	106,393
Cost of revenue:
Total cost of revenue	84,594	76,518
Guarantor Subsidiaries | Construction materials
Revenue:
Revenue	85,998	81,404
Cost of revenue:
Total cost of revenue	60,670	59,511
Guarantor Subsidiaries | Energy technology
Revenue:
Revenue	575	659
Cost of revenue:
Total cost of revenue	318	207
Non-Guarantor Subsidiaries
Revenue:
Revenue	12,200	11,141
Cost of revenue:
Total cost of revenue	8,565	7,674
Gross profit	3,635	3,467
Operating expenses:
Selling, general and administrative	1,694	1,574
Amortization	368	368
Total operating expenses	2,062	1,942
Operating income (loss)	1,573	1,525
Other income (expense):
Other, net	(26)	(189)
Total other income (expense), net	(26)	(189)
Income from continuing operations before income taxes	1,547	1,336
Income tax benefit (provision)	(600)	(130)
Income from continuing operations	947	1,206
Loss from discontinued operations, net of income taxes	(216)
Net income	731	1,206
Net income attributable to non-controlling interest	(296)	(245)
Net income attributable to Headwaters Incorporated	435	961
Non-Guarantor Subsidiaries | Building products
Revenue:
Revenue	12,200	11,141
Cost of revenue:
Total cost of revenue	8,565	7,674
Parent Company
Operating expenses:
Selling, general and administrative	5,494	4,653
Total operating expenses	5,494	4,653
Operating income (loss)	(5,494)	(4,653)
Other income (expense):
Net interest expense	(8,117)	(11,908)
Equity in earnings of subsidiaries	18,626	21,800
Total other income (expense), net	10,509	9,892
Income from continuing operations before income taxes	5,015	5,239
Income tax benefit (provision)	7,410	1,600
Income from continuing operations	12,425	6,839
Net income	12,425	6,839
Net income attributable to Headwaters Incorporated	$ 12,425	$ 6,839

Condensed Consolidating Finan50

Condensed Consolidating Financial Information - Statements of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net income	$ 12,721	$ 7,084
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	13,782	12,910
Interest expense related to amortization of debt issue costs and debt discount	567	525
Stock-based compensation	708	619
Deferred income taxes	6,482	0
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock	(64)	0
Net loss (gain) on disposition of property, plant and equipment	(47)	107
Loss on sale of discontinued operations, net of income taxes	8	45
Net loss of unconsolidated joint ventures	13	221
Equity in earnings of subsidiaries	0	0
Decrease in trade receivables	43,521	33,737
Increase in inventories	(1,259)	(4,815)
Decrease in accounts payable and accrued liabilities	(34,434)	(40,436)
Other changes in operating assets and liabilities, net	(431)	(1,849)
Net cash provided by (used in) operating activities	41,567	8,148
Cash flows from investing activities:
Business acquisitions	(57,301)	(1,200)
Investments in unconsolidated joint ventures	0	(125)
Purchase of property, plant and equipment	(7,685)	(8,771)
Proceeds from disposition of property, plant and equipment	95	325
Net decrease (increase) in long-term receivables and deposits	(1,301)	940
Net change in other assets	(1,357)	125
Net cash provided by (used in) investing activities	(67,549)	(8,706)
Cash flows from financing activities:
Payments on long-term debt	(1,062)	0
Dividends paid to non-controlling interest in consolidated subsidiary	(355)	(521)
Employee stock purchases	374	315
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock	64	0
Intercompany transfers	0	0
Net cash provided by (used in) financing activities	(979)	(206)
Net increase (decrease) in cash and cash equivalents	(26,961)	(764)
Cash and cash equivalents, beginning of period	142,597	152,542
Cash and cash equivalents, end of period	115,636	151,778
Consolidation, Eliminations
Cash flows from operating activities:
Net income	(18,626)	(21,800)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	18,626	21,800
Guarantor Subsidiaries
Cash flows from operating activities:
Net income	18,191	20,839
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	12,877	12,089
Stock-based compensation	259	238
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock	(63)
Net loss (gain) on disposition of property, plant and equipment	(49)	116
Loss on sale of discontinued operations, net of income taxes		45
Decrease in trade receivables	43,227	33,641
Increase in inventories	(889)	(4,683)
Decrease in accounts payable and accrued liabilities	(20,444)	(21,230)
Other changes in operating assets and liabilities, net	2,153	(358)
Net cash provided by (used in) operating activities	55,262	40,697
Cash flows from investing activities:
Business acquisitions	(34,602)	(1,200)
Investments in unconsolidated joint ventures		(125)
Purchase of property, plant and equipment	(6,727)	(7,403)
Proceeds from disposition of property, plant and equipment	107	315
Net decrease (increase) in long-term receivables and deposits	(1,178)	(136)
Net change in other assets	(78)	(89)
Net cash provided by (used in) investing activities	(42,478)	(8,638)
Cash flows from financing activities:
Employee stock purchases	275	235
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock	63
Intercompany transfers	(10,578)	(22,984)
Net cash provided by (used in) financing activities	(10,240)	(22,749)
Net increase (decrease) in cash and cash equivalents	2,544	9,310
Cash and cash equivalents, beginning of period	25,819	33,552
Cash and cash equivalents, end of period	28,363	42,862
Non-Guarantor Subsidiaries
Cash flows from operating activities:
Net income	731	1,206
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	746	713
Net loss (gain) on disposition of property, plant and equipment	2	(9)
Loss on sale of discontinued operations, net of income taxes	8
Net loss of unconsolidated joint ventures	13	221
Decrease in trade receivables	294	96
Increase in inventories	(370)	(132)
Decrease in accounts payable and accrued liabilities	(735)	(423)
Other changes in operating assets and liabilities, net	197	100
Net cash provided by (used in) operating activities	886	1,772
Cash flows from investing activities:
Business acquisitions	(22,699)
Purchase of property, plant and equipment	(56)	(134)
Proceeds from disposition of property, plant and equipment	(12)	10
Net change in other assets	(38)
Net cash provided by (used in) investing activities	(22,805)	(124)
Cash flows from financing activities:
Dividends paid to non-controlling interest in consolidated subsidiary	(355)	(521)
Employee stock purchases	11	7
Intercompany transfers	22,401	(2,146)
Net cash provided by (used in) financing activities	22,057	(2,660)
Net increase (decrease) in cash and cash equivalents	138	(1,012)
Cash and cash equivalents, beginning of period	3,577	5,764
Cash and cash equivalents, end of period	3,715	4,752
Parent Company
Cash flows from operating activities:
Net income	12,425	6,839
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	159	108
Interest expense related to amortization of debt issue costs and debt discount	567	525
Stock-based compensation	449	381
Deferred income taxes	6,482
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock	(1)
Equity in earnings of subsidiaries	(18,626)	(21,800)
Decrease in accounts payable and accrued liabilities	(13,255)	(18,783)
Other changes in operating assets and liabilities, net	(2,781)	(1,591)
Net cash provided by (used in) operating activities	(14,581)	(34,321)
Cash flows from investing activities:
Purchase of property, plant and equipment	(902)	(1,234)
Net decrease (increase) in long-term receivables and deposits	(123)	1,076
Net change in other assets	(1,241)	214
Net cash provided by (used in) investing activities	(2,266)	56
Cash flows from financing activities:
Payments on long-term debt	(1,062)
Employee stock purchases	88	73
Tax benefit from exercise of stock appreciation rights and vesting of restricted stock	1
Intercompany transfers	(11,823)	25,130
Net cash provided by (used in) financing activities	(12,796)	25,203
Net increase (decrease) in cash and cash equivalents	(29,643)	(9,062)
Cash and cash equivalents, beginning of period	113,201	113,226
Cash and cash equivalents, end of period	$ 83,558	$ 104,164