SEC Company Response from FUELCELL ENERGY INC (FCEL, FCELB) (CIK 0000886128) (FCEL) — Aug 23, 2016
FUELCELL ENERGY INC (FCEL, FCELB) (CIK 0000886128)
Date: Aug. 23, 2016 · CIK: 0000886128 · Accession: 0001193125-16-688381
AI Filing Summary & Sentiment
Referenced dates: August 16, 2016
Letter
United States Securities and Exchange Commission FuelCell Energy, Inc. Form 10-K for the Fiscal Year Ended October 31, 2015 Filed January 8, 2016 File No. 1-14204
Re:
Dear Mr. James:
This correspondence is in response to your letter dated August 16, 2016, to Michael Bishop, Senior Vice-President and Chief Financial Officer of FuelCell Energy, Inc. (“FuelCell”, “FCE” or the “Company”). For the Staff’s reference, we have included, in this response letter, the original Staff comment in italics which is followed by FuelCell’s response.
Form 10-K for the fiscal year ended October 31, 2015
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Product Sales, page
1. We note the disclosure that revenues declined due to decreased sales of fuel cell kits to POSCO and power plant revenue partially offset by an increase in engineering and construction services. In future filings please also disclose the underlying reasons for items that impact revenue. For example, explain why POSCO purchased fewer fuel cell kits in fiscal year 2015 compared to fiscal year 2014. Refer to Item 303 of Regulation S-K and Section III.B.1. of SEC Release 33–8350. We further note, in this regard, public statements by management, such as in earnings calls, that you are transitioning away from selling kits to POSCO in favor of a royalty-based arrangement. If this change will materially impact your business or results of operations, please note your disclosure obligations pursuant to Item 303(a)(3)(ii) of Regulation S-K.
FuelCell Energy, Inc.
phone
203 825.6000
3 Great Pasture Road
fax
203 825.6100
Danbury, CT 06813-1305
www.fuelcellenergy.com
Mr. James
Securities and Exchange Commission
August 23, 2016
Page 2
FuelCell Response:
We acknowledge the regulations and guidance identified by the Staff and the Company understands its responsibility to provide disclosure on known trends and uncertainties impacting our financial statements.
The Staff has highlighted elements relating to our business relationship with POSCO Energy for disclosure considerations. As further background, the Company has disclosed the transition of the relationship with its partner, POSCO Energy, in multiple filings since 2012. The Company entered into an expanded cell license agreement in 2012 which enabled POSCO to manufacture cell technology in Korea, and POSCO built a planned factory which is now on line. For instance, the Company included disclosure to this end in Item 1 Business of the Form 10-K that the multi-year kit order with POSCO concludes at the end of 2016. Both the multi-year kit order and license agreement have been filed as material agreements as exhibits 10.72 and 10.73 of the Form 10-K.
As requested by the Staff, the Company plans to expand its disclosure in the Management Discussion and Analysis (MD&A), Results of Operations Section in future filings to address the underlying reasons for items impacting revenue in accordance with Item 303 of Regulation S-K and Section III.B.1. of SEC Release 33–8350, disclosure within the MD&A. In particular, we anticipate that this disclosure will discuss the transition of the South Korean business from kit sales to a royalty based model along with other important business trends, such as management’s plans for megawatt and multi-megawatt turnkey projects in the United States and Europe. In all events, we will plan to disclose the impact of these trends on our revenues, income and financial statements.
The Company believes that it has addressed the Staff’s comments. FuelCell acknowledges the following:
•
The Company is responsible for the adequacy and accuracy of the disclosure in the filing;
•
Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
•
The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Sincerely,
/s/ Michael S. Bishop
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CORRESP 1 filename1.htm Correspondence August 23, 2016 Mr. Martin James Senior Assistant Chief Accountant United States Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: FuelCell Energy, Inc. Form 10-K for the Fiscal Year Ended October 31, 2015 Filed January 8, 2016 File No. 1-14204 Dear Mr. James: This correspondence is in response to your letter dated August 16, 2016, to Michael Bishop, Senior Vice-President and Chief Financial Officer of FuelCell Energy, Inc. (“FuelCell”, “FCE” or the “Company”). For the Staff’s reference, we have included, in this response letter, the original Staff comment in italics which is followed by FuelCell’s response. Form 10-K for the fiscal year ended October 31, 2015 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Product Sales, page 47 1. We note the disclosure that revenues declined due to decreased sales of fuel cell kits to POSCO and power plant revenue partially offset by an increase in engineering and construction services. In future filings please also disclose the underlying reasons for items that impact revenue. For example, explain why POSCO purchased fewer fuel cell kits in fiscal year 2015 compared to fiscal year 2014. Refer to Item 303 of Regulation S-K and Section III.B.1. of SEC Release 33–8350. We further note, in this regard, public statements by management, such as in earnings calls, that you are transitioning away from selling kits to POSCO in favor of a royalty-based arrangement. If this change will materially impact your business or results of operations, please note your disclosure obligations pursuant to Item 303(a)(3)(ii) of Regulation S-K. FuelCell Energy, Inc. phone 203 825.6000 3 Great Pasture Road fax 203 825.6100 Danbury, CT 06813-1305 www.fuelcellenergy.com Mr. James Securities and Exchange Commission August 23, 2016 Page 2 FuelCell Response: We acknowledge the regulations and guidance identified by the Staff and the Company understands its responsibility to provide disclosure on known trends and uncertainties impacting our financial statements. The Staff has highlighted elements relating to our business relationship with POSCO Energy for disclosure considerations. As further background, the Company has disclosed the transition of the relationship with its partner, POSCO Energy, in multiple filings since 2012. The Company entered into an expanded cell license agreement in 2012 which enabled POSCO to manufacture cell technology in Korea, and POSCO built a planned factory which is now on line. For instance, the Company included disclosure to this end in Item 1 Business of the Form 10-K that the multi-year kit order with POSCO concludes at the end of 2016. Both the multi-year kit order and license agreement have been filed as material agreements as exhibits 10.72 and 10.73 of the Form 10-K. As requested by the Staff, the Company plans to expand its disclosure in the Management Discussion and Analysis (MD&A), Results of Operations Section in future filings to address the underlying reasons for items impacting revenue in accordance with Item 303 of Regulation S-K and Section III.B.1. of SEC Release 33–8350, disclosure within the MD&A. In particular, we anticipate that this disclosure will discuss the transition of the South Korean business from kit sales to a royalty based model along with other important business trends, such as management’s plans for megawatt and multi-megawatt turnkey projects in the United States and Europe. In all events, we will plan to disclose the impact of these trends on our revenues, income and financial statements. The Company believes that it has addressed the Staff’s comments. FuelCell acknowledges the following: • The Company is responsible for the adequacy and accuracy of the disclosure in the filing; • Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and • The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. Sincerely, /s/ Michael S. Bishop Michael S. Bishop Sr. Vice President & CFO cc: Arthur A. Bottone, President & CEO, FuelCell Energy, Inc. Richard Krantz, Partner, Robinson & Cole