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    westportcorresp.htm

April 1, 2013

Mr. Martin James

Senior Assistant Chief Accountant

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:          Westport Innovations Inc.

Form 40-F for the Fiscal Year Ended December 31, 2012

Filed March 8, 2013

File No. 1-34152

Dear Mr. James:

We are writing in response to your letter dated March 15, 2013 setting forth comments regarding our Form 40-F for the fiscal year ended December 31, 2012 (the “2012 Form 40-F”) of Westport Innovations Inc. (“Westport” or the “Company”), and our subsequent telephone conversations on March 21 and 22, 2013 with the Staff.  We have set forth below our responses to the Staff’s comments.

To facilitate your consideration of Westport’s responses, we have included below the comments and have provided Westport’s responses immediately following.

Form 40-F for the Fiscal Year Ended December 31, 2012

Exhibit 99.2 Consolidated Financial Statements

1.

Given the significance of your investment in CWI for the nine months ended December 31, 2011, please amend the Form 40-F to include CWI’s separate financial statements for all the periods presented in your financial statements.  Please ensure that the financial statements as of and for the nine months ended December 31, 2011, are audited.

Response:

In response to the Staff’s comment 1, Westport intends to file an amendment to its Form 40-F for the fiscal year ended December 31, 2012 (the “2012 Form 40-F/A”) to include audited financial statements of Cummins Westport Inc. (“CWI”) as an exhibit.  CWI’s audited financial statements, which have been audited in accordance with Canadian generally accepted auditing standards, will be presented as at and for the years ended December 31, 2012 and December 31, 2011 and as at and for the years ended December 31, 2011 and December 31, 2010.

As CWI’s fiscal periods are based on the calendar year, its audited financial statements for the year ended December 31, 2011 will not be comparable with Westport’s financial statements for the nine months ended December 31, 2011 and the twelve months ended March 31, 2011.

Westport Innovations Inc.

April 1, 2013

Page 2

Note 2.  Significant Accounting Policies

Basis of Presentation, page 7

2.

We note your statement that presenting CWI under the equity method is more appropriate.  This statement suggests that your revised accounting was a choice between two acceptable methods of accounting for your interest in CWI.  Under FASB ASC 810-10, you are not permitted to consolidate CWI unless you are the primary beneficiary. Since you have determined that there is no primary beneficiary, you may not consolidate your interest in CWI and this is not a choice among acceptable accounting alternatives.  Please revise your disclosure here and on page 1 of Exhibit 99.3 to clarify.

Response:

Westport intends to revise the statement in “note 2(a). Significant account policies: Basis of presentation:” in Exhibit 99.2 and on page 1 of Exhibit 99.3 to the 2012 Form 40-F/A as follows:

“Based on the Company’s ongoing review and adoption of the applicable accounting guidance in ASU 2009-17 and related interpretations, the Company concluded that CWI should be accounted for under the equity method because CWI continues to be a VIE but there is no primary beneficiary.”

3.

Further, please amend to include all of the disclosures required by FASB ASC 250-10-50, including the effect of the correction on each financial statement line item and any per-share amounts affected for each prior period presented.

Response:

In the 2012 Form 40-F, we included the following disclosure in “note 2(a). Significant accounting policies: Basis of presentation”:

“This restatement did not affect the reported amounts of net loss attributable to the Company, loss per share or shareholders’ equity but has impacted certain amounts disclosed.  The Company’s interest in the net assets of CWI is now presented net on a single line in other long term investments on the balance sheet and the Company’s share of net earnings of CWI is reflected in income from investments accounted for by the equity method on statement of operations. The assets, liabilities, revenues and expenses of CWI previously included on the balance sheet and statement of operations on a line by line basis are summarized in note 7(b).  There was no cumulative effect from adoption of ASU 2009-17 at April 1, 2010.”

In the 2012 Form 40-F, we included the following disclosure, together with CWI’s balance sheet information as at December 31, 2012 and 2011 and CWI’s statement of operations information for the year ended December 31, 2012, the nine months ended December 31, 2011 and the year ended March 31, 2011, in “note 7(b). Long-term investments: Cummins Westport Inc.”:

“Assets, liabilities, revenue and expenses of CWI as of and for the periods presented are as follows (amounts as at December 31, 2011 and for the nine months ended December 31, 2011 and the year ended March 31, 2011 had previously been consolidated and in 2012 have been retrospectively deconsolidated as described in note 2(a)):”

In response to the Staff’s comment 3, Westport intends to include “note 26. Restatement of previously issued financial statements:” in Exhibit 99.2 to the 2012 Form 40-F/A to disclose the effect of the correction on each financial statement line item in the previously issued financial statements as at December 31, 2011 and for the nine months ended December 31, 2011 and the year ended March 31, 2011, in tabular format.

We have included the disclosure we propose to include in Exhibit 99.2 to the 2012 Form 40-F/A in Appendix A to this letter.

Suite 101 – 1750 West 75th Avenue  ::  Vancouver, B.C.  ::  Canada  V6P 6G2  ::  t: 604-718-2000  f: 604-718-2001  ::  www.westport.com

Exhibit 99.3 Management’s Discussion and Analysis

4.

In light of the company’s restatement, please explain management’s conclusion that both disclosure controls and procedures and internal control over financial reporting were nonetheless effective as of December 31, 2012.  Include a discussion of your analysis related to possible material weaknesses associated with the correction of the error in your accounting for your investment in CWI.

Response:

Management’s conclusion that both disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”) were nonetheless effective as of December 31, 2012 was due to management’s conclusion that no material weakness existed as of December 31, 2012.  Management evaluated and assessed the rebuttable position that there would be a material weakness in light of the restatement of the consolidated financial statements as at December 31, 2011 and for the nine months ended December 31, 2011 and the year ended March 31, 2011.  Management concluded that there was no material weakness because (1) the restatement did not affect the reported amounts of net loss attributable to the Company, loss per share or shareholders’ equity, (2) Westport has effective processes and controls for determining accounting over complex technical areas, (3) Westport’s ICFR were designed and operating effectively to provide reasonable assurance that a material misstatement of Westport’s financial statements would be detected or prevented in a timely basis and (4) there was no failure in the design or operation of Westport’s ICFR, and Westport would not change the ICFR in any way that would have detected or prevented this restatement.

We have included a memorandum that describes management’s evaluation and assessment of the effectiveness of DC&P and IFCR as of December 31, 2012 in Appendix B to this letter.

Please do not hesitate to contact the undersigned or Ric Leong, Westport’s Corporate Controller, at 604-718-1600 or RLeong@westport.com, if you should have any questions or concerns.

Sincerely,

/s/ William Larkin

William Larkin

Chief Financial Officer

Westport Innovations Inc.

cc:           Gary Newberry

Kate Tillan

(U.S. Securities and Exchange Commission)

Eva Davis

(Kirkland & Ellis LLP)

Anthony Lindsay

(KPMG LLP)

David R. Demers

(Westport Innovations Inc.)

Suite 101 – 1750 West 75th Avenue  ::  Vancouver, B.C.  ::  Canada  V6P 6G2  ::  t: 604-718-2000  f: 604-718-2001  ::  www.westport.com

Westport Innovations Inc.

April 1, 2013

Page 4

APPENDIX A

26. Restatement of previously issued financial statements:

The following tables present the impact to the previously issued financial statements as at December 31, 2011 and for the nine months ended December 31, 2011 and the year ended March 31, 2011 of the restatement described in note 2(a):

 Consolidated Balance Sheet

 (Expressed in thousands of United States dollars, except share and per share amounts)

Effect on Consolidated Statement of Financial

December 31, 2011

December 31, 2011

Position:

As previously

(Restated

reported

Correction

note 2(a))

Assets

Current assets:

    Cash and cash equivalents

$
70,298

$
(7,013
)

$
63,285

    Short-term investments

15,379

(11,105
)

4,274

    Accounts receivable

55,423

(4,501
)

50,922

    Loan receivable

19,409

(19,409
)

-

    Inventories

37,057

(31
)

37,026

    Prepaid expenses

6,551

(89
)

6,462

    Current portion of deferred income tax assets

6,447

(6,432
)

15

    Other current assets

2,034

-

2,034

212,598

(48,580
)

164,018

8,369

26,307

Long-term investments

17,938

Other assets

1,994

-

1,994

Property, plant and equipment

36,243

(835
)

35,408

Intangible assets

36,582

-

36,582

Deferred income tax assets

5,075

(4,142
)

933

Goodwill

55,814

-

55,814

$
356,675

$
(35,619
)

$
321,056

Liabilities and Shareholders’ Equity

Current liabilities:

    Accounts payable and accrued liabilities

$
55,807

$
(6,556
)

$
49,251

    Deferred revenue

3,146

(2,668
)

478

    Loan payable

-

19,409

19,409

    Current portion of long-term debt

20,568

-

20,568

    Current portion of warranty liability

12,978

(11,791
)

1,187

92,499

(1,606
)

90,893

Warranty liability

11,253

(8,039
)

3,214

Long-term debt

65,577

-

65,577

Deferred revenue

10,327

(7,451
)

2,876

Deferred income tax liabilities

3,446

-

3,446

Other long-term liabilities

3,104

(644
)

2,460

186,206

(17,740
)

168,466

Shareholders’ equity:

    Share capital

459,866

-

459,866

    Other equity instruments

6,112

-

6,112

    Additional paid in capital

4,499

-

4,499

    Accumulated deficit

(331,158
)

-

(331,158
)

    Accumulated other comprehensive income

13,271

-

13,271

152,590

-

152,590

Joint venture partners’ share of net assets of joint ventures

17,879

(17,879
)

-

170,469

(17,879
)

152,590

$
356,675

$
(35,619
)

$
321,056

Suite 101 – 1750 West 75th Avenue  ::  Vancouver, B.C.  ::  Canada  V6P 6G2  ::  t: 604-718-2000  f: 604-718-2001  ::  www.westport.com

Westport Innovations Inc.

April 1, 2013

Page 5

 Consolidated Statements of Operations

(Expressed in thousands of United States dollars, except share and per share amounts)

Effect on Consolidated Statements of Operations:

For the Nine months ended December 31, 2011

As previously

(Restated -

reported

Correction

note 2(a))

Product revenue

$
189,682

$
(114,518
)

$
75,164

Parts revenue

26,677

(24,326
)

2,351

Service and other revenue

10,181

-

10,181

226,540

(138,844
)

87,696

Cost of revenue and expenses:

    Cost of product and parts revenue

145,930

(78,837
)

67,093

    Research and development

43,294

(6,720
)

36,574

    General and administrative

23,534

(796
)

22,738

    Sales and marketing

24,961

(9,659
)

15,302

    Foreign exchange loss (gain)

(2,036
)

(17
)

(2,053
)

    Depreciation and amortization

6,280

(80
)

6,200

    Bank charges, interest and other

1,206

(289
)

917

243,169

(96,398
)

146,771

Loss before undernoted

(16,629
)

(42,446
)

(59,075
)

Income from investment accounted for by the equity method

1,500

12,958

14,458

Interest on long-term debt and amortization of discount

(2,998
)

-

(2,998
)

Interest and other income

958

(297
)

661

Loss before income taxes

(17,169
)

(29,785
)

(46,954
)

Income tax recovery (expense):

    Current

(19,630
)

18,602

(1,028
)

    Deferred

3,963

(1,775
)

2,188

(15,667
)

16,827

1,160

Net loss for the period

$
(32,836
)

$
(12,958
)

$
(45,794
)

Net income (loss) attributed to:

    Joint venture partners

12,958

(12,958
)

-

    The Company

(45,794
)

-

(45,794
)

Loss per share:

    Basic and diluted

$
(0.96
)

$
-

$
(0.96
)

Weighted average common shares outstanding:

    Basic and diluted

47,933,348

47,933,348

Suite 101 – 1750 West 75th Avenue  ::  Vancouver, B.C.  ::  Canada  V6P 6G2  ::  t: 604-718-2000  f: 604-718-2001  ::  www.westport.com

Westport Innovations Inc.

April 1, 2013

Page 6

Consolidated Statements of Comprehensive Income

(Expressed in thousands of United States dollars)

Effect on Consolidated Statement Comprehensive

Income (Loss):

For the Nine months ended December 31, 2011

As previously

(Restated -

reported

Correction

note 2(a))

Loss for the period

$
(32,836
)

$
(12,958
)

$
(45,794
)

Other comprehensive loss:

    Cumulative translation adjustment

(12,370
)

-

(12,370
)

Comprehensive loss

$
(45,206
)

$
(12,958
)

$
(58,164
)

Comprehensive income (loss) attributable to:

    Joint venture partners

12,958

(12,958
)

-

    The Company

(58,164
)

-

(58,164
)

Suite 101 – 1750 West 75th Avenue  ::  Vancouver, B.C.  ::  Canada  V6P 6G2  ::  t: 604-718-2000  f: 604-718-2001  ::  www.westport.com

Westport Innovations Inc.

April 1, 2013

Page 7

 Consolidated Statements of Operations

(Expressed in thousands of United States dollars, except share and per share amounts)

Effect on Consolidated Statements of Operations:

For the Year ended March 31, 2011

As previously

(Restated -

reported

Correction

note 2(a))

Product revenue

$
110,475

$
(84,612
)

$
25,863

Parts revenue

29,459

(26,675
)

2,784

Service and other revenue

8,128

-

8,128

148,062

(111,287
)

36,775

Cost of revenue and expenses:

    Cost of product and parts revenue

90,982

(66,989
)

23,993

    Research and development

34,663

(10,043
)

24,620

    General and administrative

16,211

(1,181
)

15,030

    Sales and marketing

21,660

(7,675
)

13,985

    Foreign exchange loss (gain)

3,877

(588
)

3,289

    Depreciation and amortization

3,455

(80
)

3,375

    Bank charges, interest and other

665

(219
)

446

171,513

(86,775
)

84,738

Loss before undernoted

(23,451
)

(24,512
)

(47,963
)

Income from investment accounted for by the equity method

842

7,785

8,627

Interest on long-term debt and amortization of discount

(3,323
)

-

(3,323
)

Interest and other income

1,222

(284
)

938

Loss before income taxes

(24,710
)

(17,011
)

(41,721
)

Income tax recovery (expense):

    Current

(8,886
)

8,954

68

    Deferred

(761
)

272

(489
)

(9,647
)

9,226

(421
)

Net loss for the period

$
(34,357
)

$
(7,785
)

$
(42,142
)

Net income (loss) attributed to:

    Joint venture partners

7,785

(7,785
)

-

    The Company

(42,142
)

-

(42,142
)

Loss per share:

    Basic and diluted

$
(1.00
)

$
-

$
(1.00
)

Weighted average common shares outstanding:

    Basic and diluted

42,305,889

42,305,889

Suite 101 – 1750 West 75th Avenue  ::  Vancouver, B.C.  ::  Canada  V6P 6G2  ::  t: 604-718-2000  f: 604-718-2001  ::  www.westport.com

Westport Innovations Inc.

April 1, 2013

Page 8

Consolidated Statements of Comprehensive Income

(Expressed in thousands of United States dollars)

Effect on Consolidated Statement Comprehensive

For the Year ended March 31, 2011

Income (Loss):

As previously

(Restated -

reported

Correction

note 2(a))

Loss for the period

$
(34,357
)

$
(7,785
)

$
(42,142
)

Other comprehensive income:

    Cumulative transl