Form 6-K WESTPORT INNOVATIONS For: May 07

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May 8, 2015 6:05 AM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March, 2015

Commission File Number: 001-34152

WESTPORT INNOVATIONS INC.

(Translation of registrant's name into English)

1750 West 75th Avenue, Suite 101, Vancouver, British Columbia, Canada, V6P 6G2

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

£ Form 20-F S Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes £ No S

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________

EXHIBIT INDEX

Exhibit		Description
99.1		MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE PERIOD ENDED March 31, 2015
99.2		CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED March 31, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Westport Innovations Inc.
	(Registrant)

Date: May 7, 2015	By:	/s/ Ashoka Achuthan
		Ashoka Achuthan Chief Financial Officer

Exhibit 99.1

BASIS OF PRESENTATION

This Management’s Discussion and Analysis (“MD&A”) for Westport Innovations Inc. (“Westport”, the “Company”, “we”, “us”, “our”) for the three months ended March 31, 2015 provides an update to our annual MD&A dated March 9, 2015 for the fiscal year ended December 31, 2014. This information is intended to assist readers in analyzing our financial results and should be read in conjunction with the audited consolidated financial statements, including the accompanying notes, for the fiscal year ended December 31, 2014. Our interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s reporting currency is the U.S. dollar. This MD&A is dated May 7, 2015.

Additional information relating to Westport, including our Annual Information Form (“AIF”) and Form 40-F, is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. All financial information, including tabular amounts, is reported in millions of U.S. dollars unless otherwise noted.

FORWARD LOOKING STATEMENTS

This MD&A contains forward-looking statements that are based on the beliefs of management and reflects our current expectations as contemplated under the safe harbor provisions of Section 21E of the United States Securities Act of 1934, as amended. Such statements include but are not limited to statements regarding the orders or demand for our products, our investments, cash and capital requirements, the intentions of partners and potential customers, the performance of our products, our future market opportunities, availability of funding and funding requirements, our estimates and assumptions used in our accounting policies, our accruals, including warranty accruals, our financial condition, timing of when we will adopt or meet certain accounting and regulatory standards and the alignment of our business segments. These statements are neither promises nor guarantees but involve known and unknown risks and uncertainties that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed in or implied by these forward looking statements. These risks include risks related to revenue growth, operating results, liquidity, industry and products, general economy, conditions of the capital and debt markets, government or accounting policies and regulations, technology innovations, as well as other factors discussed below and elsewhere in this report, including the risk factors contained in the Company’s most recent AIF filed on SEDAR at www.sedar.com.

The forward-looking statements contained in this MD&A are based upon a number of material factors and assumptions which include, without limitation, market acceptance of our products, product development delays in contractual commitments, the ability to attract and retain business partners, competition from other technologies, price differential between natural gas and liquefied petroleum gas, unforeseen claims, exposure to factors beyond our control as well as the additional factors referenced in our AIF. Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date they were made. We disclaim any obligation to publicly update or revise such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth in the forward looking statements except as required by applicable legislation.

The forward looking statements contained in this document speak only as of the date of this MD&A. Except as required by applicable legislation, Westport does not undertake any obligation to release publicly any revisions to these forward looking statements to reflect events or circumstances after this MD&A, including the occurrence of unanticipated events. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.

BUSINESS OVERVIEW

We are a leading provider of high-performance, low-emission engine and fuel system technologies utilizing gaseous fuels. Our technology and products enable light- (less than 5.9 litre), medium- (5.9 to 10 litre), heavy-duty- (10 to 16 litre) and high-horsepower- (greater than 16 litre) petroleum-based fuel engines and vehicles to use primarily natural gas, giving users a cleaner and generally less expensive alternative fuel based on a more abundant natural resource. Through our partnerships and direct sales efforts, we sell natural gas and propane engines, fuel systems, and components to customers in more than 79 countries. We currently have strategic relationships with three of the world's top four engine producers and supply or have strategic relationships with six of the world's top ten truck producers, as well as seven of the world's top ten automotive manufacturers. Our strategic relationships with OEMs provide us with access to their manufacturing capacity, supply chain and global distribution networks without incurring the considerable investment associated with these assets. We commercialize our technology in markets where demand for clean, low emission engines is prevalent.

Since our founding in 1995, we have invested over $700 million towards the research, development and commercialization of our proprietary technologies and related products. Conversely, our research and development efforts and investments have resulted in a substantial patent portfolio that serves as the foundation for our differentiated technology offerings and competitive advantage. Our technologies and related products enable combustion engines to use gaseous fuels, such as natural gas, propane, renewable natural gas (“RNG”) or hydrogen. The substitution of natural gas for petroleum-based fuel drives a reduction in harmful combustion emissions, such as particulate matter and greenhouse gases, in addition to providing a relatively inexpensive alternative fuel from a more plentiful natural resource.

The principle focus of the operating business units are summarized below:

Operating Business Units

Westport Operations:

During the first quarter of 2015, Westport realigned the structure of the Company's internal organization. The change was previously discussed in Westport’s fourth quarter news release dated March 9, 2015. The realignment combines, our historical operating segments, Westport Applied Technologies, Westport On-Road Systems and Westport Off-Road Systems into a single operating segment, Westport Operations. This change reflects the manner in which operating decisions and assessing business performance is currently managed by the Chief Operating Decision Makers (the CEO and the COO “CODMs”). As Westport narrows its focus within certain business units, including its investments in joint ventures, and defers certain products and related programs, the CODMs manage the combined businesses as a whole. Therefore, the Westport Operations segment provides more meaningful information to users of Westport’s financial statements. Prior-period amounts have been adjusted retrospectively to reflect these operating segment changes.

Westport Operations designs, manufactures and sells compressed natural gas ("CNG"), liquefied natural gas ("LNG"), and liquefied petroleum gas ("LPG") components and systems to over 20 global OEMs, including Fiat, Volkswagen, Tata Motors, the GAZ Group, Chrysler, General Motors, Ford Motor Company ("Ford"), PACCAR Inc., Volvo Car Group, Hyundai and Kia and to aftermarket customers in over 79 countries. Sales from Westport's wholly-owned Italian subsidiaries, OMVL S.p.A. ("OMVL") and Emer S.p.A ("EMER"), including Emer's wholly-owned subsidiary Valtek S.p.A., Westport's Australian operations, and, recently acquired Netherlands based Prins Autogassystemen Holding B.V. ("Prins") are made either directly to OEMs or through one of their many global distributors. Westport Operations has a strong customer base in Europe and North America and is growing in Asia, South America, and Africa.

Westport supports customers with vehicle conversions through the Ford Qualified Vehicle Modifier ("QVM") program with products in the Ford line, including transit, cargo shuttle and taxi vehicles. Sold under the Westport WiNG™ Power System brand, product offerings include the Ford Transit Van dedicated, F-250/F-350 bi-fuel (CNG and gasoline) and dedicated, F-450 to F-650, F-59 dedicated, E-450 dedicated and Transit Connect bi-fuel vehicle models. Westport also provides aftermarket conversion products, alternative fuel systems and application engineering.

Other products include Volvo Car bi-fuel systems (CNG and gasoline) for the V60 and V70 bi-fuel wagon; Westport JumpStart^TM mobile fuel services; Westport iCE PACK^TM for spark-ignited ("SI") engines, LNG tender products for the rail market and Westport^TMindustrial engines sold to Clark Material Handling and Cummins Western Canada for forklift and oilfield applications.

Corporate and Technology Investments Business Unit

The Corporate and Technology Investments business unit ("Corporate and Technology Investments") is responsible for investments in new research and development programs and revenues and expenses related to development programs with OEMs, corporate oversight and general administrative duties. Corporate and Technology Investments focuses on long-term product development and future return on investments. Once a product is launched, the revenue will be recognized under Westport Operations.

Cummins Westport Inc. Joint Venture

Cummins Westport Inc. (“CWI”), our 50:50 joint venture with Cummins, Inc., (“Cummins”), serves the medium- to heavy-duty engine markets. CWI engines are offered by many OEMs for use in transit, school and shuttle buses, conventional trucks and tractors, and refuse collection trucks, as well as specialty vehicles such as short-haul port drayage trucks and street sweepers. The fuel for CWI engines is typically carried on the vehicles as CNG or LNG. CWI engines are produced at certain of Cummins' plants, allowing CWI to leverage Cummins' manufacturing footprint without incurring additional capital costs. CWI also utilizes Cummins' supply chain, back office systems and distribution and sales networks. CWI is the leading supplier of natural gas engines to the North American medium- and heavy-duty truck and transit bus industries.

Weichai Westport Inc. Joint Venture

Weichai Westport Inc. (“WWI”) is a joint venture between Westport (35% interest), Weichai Holding Group Co. Ltd. (40% interest) ("Weichai") and Hong Kong Peterson (CNG) Equipment Ltd. ("Hong Kong Peterson") (25% interest) focusing on the Chinese market. WWI develops, manufactures, and sells advanced, alternative fuel engines and parts that are widely used in city bus, coach, and heavy-duty truck applications in China or exported to other regions globally.

GENERAL DEVELOPMENTS

On March 11, 2015, Westport announced the introduction of its new combustion technology in Volvo Car Company's new Drive-E powertrain bi-fuel engine that will offer customers a competitive, high performance, and low emissions product at OEM standards. Volvo Cars is the first OEM to feature the new Westport system. It will be used on Volvo's new two-litre, direct injection, four-cylinder Drive-E powertrain family, which will be available on the Volvo V60 and V70 2016 models. Westport has already seen strong interest and orders for the 2016 models. The start of production and vehicle shipment is expected to be in early Q3 2015.

On January 8, 2015, the Company announced it received certification from the Environmental Protection Agency ("EPA") for its 2015 Ford Transit Van. As Ford’s largest qualified QVM, Westport is offering the 2015 Ford Transit Van as a dedicated compressed natural gas Westport WiNG™ Power System vehicle. Westport expects California Air Resources Board ("CARB") certification in early 2015.

SELECTED FINANCIAL INFORMATION

The following table sets forth a summary of our financial results for the three months ended March 31, 2015, and March 31, 2014:

Selected Consolidated Statements of Operations Data

	Three months ended March 31,
	2015			2014
(expressed in millions of United States dollars, except for per share amounts and shares outstanding)
Total revenue	$	28.0		$	39.9
Gross margin (1)		5.4			12.3
GM %		19.3	%		30.8	%
Net loss		(17.2	)		(23.9	)
Net loss per share – basic and fully diluted (2)		(0.27	)		(0.38	)
Weighted average shares outstanding		63,838,842			62,899,687

(1)

Gross margin is calculated as revenue less cost of product revenue.

The Company’s gross margin may not be comparable to those of other entities because some entities include depreciation and amortization related to products sold in cost of sales.

Gross margin as defined above applies to the discussion of gross margin throughout the MD&A.

(For the three months ended March 31, 2015 and 2014, depreciation and amortization is excluded from the calculation of gross margin).

(2)

Fully diluted loss per share is the same as basic loss per share as the effect of conversion of stock options, restricted share units and performance share units would be anti-dilutive.

The following table sets forth a summary of our financial position as at March 31, 2015 and December 31, 2014:

Selected Balance Sheet Data

	March 31, 2015		December 31, 2014

Cash and short-term investments	$	71.3	$	94.0
Total assets		291.2		337.7
Long-term debt		71.0		78.5

SELECTED FINANCIAL INFORMATION (continued):

The following tables set forth a summary of the financial results of our joint ventures for the three months ended March 31, 2015, and March 31, 2014:

Selected CWI Statements of Operations Data

	Three months ended March 31,
	2015			2014

Total revenue	$	73.0		$	80.1
Gross margin		26.6			7.6
GM %		36.4	%		9.5	%
Income before income taxes		14.8			(2.3	)
Income attributable to the Company		5.9			(0.8	)

Selected WWI Statements of Operations Data

	Three months ended March 31,
	2015			2014

Total revenue	$	55.9		$	113.4
Gross margin		5.7			6.3
GM %		10.2	%		5.6	%
Income before income taxes		1.0			1.7
Income attributable to the Company		0.3			0.5

RESULTS FROM OPERATIONS

Revenue

Total segments revenues for the three months ended, including 100% of CWI and WWI revenue, decreased $76.5 million, or 33% from $233.4 million in 2014 to $156.9 million in 2015.

The following table summarizes revenues by segment for the three months ended March 31, 2015 compared to the three months ended March 31, 2014:

	Three months ended March 31,				Change
	2015		2014		$			%
Westport Operations	$	27.4	$	38.9	$	(11.5	)		(30	)%
Corporate and Technology Investments		0.6		1.0		(0.4	)		(40	)%
CWI		73.0		80.1		(7.1	)		(9	)%
WWI		55.9		113.4		(57.5	)		(51	)%
Total segment revenues	$	156.9	$	233.4	$	(76.5	)		(33	)%
Less: Equity investees' revenues		128.9		193.5		(64.6	)		(33	)%
Total consolidated revenues	$	28.0	$	39.9	$	(11.9	)		(30	)%

Westport Operations revenue for the three months ended March 31, 2015 decreased $11.5 million, or 30% to $27.4 million from $38.9 million for the three months ended March 31, 2014. Westport Operations has been impacted significantly by the decline in the price of oil and the strengthening of the US dollar. Revenue from European operations, excluding recent acquisitions, increased from €14.9 million to €15.7 million. This was offset by decreases in Westport's Ford qualified vehicle modifier ("QVM") business of $5.0 million, and a further decrease of $4.6 million in revenue was driven by unfavourable impacts of foreign currency translation from the Euro to the US dollar equivalent.

Corporate and Technology Investments revenue for the three months ended March 31, 2015 decreased $0.4 million, or 40% from $1.0 million to $0.6 million. The decrease in revenue is driven by a reduction in the activity of development agreements. All costs associated with our development agreements were recorded as research and development expenses in the period incurred in the consolidated statement of operations.

CWI revenue for the three months ended March 31, 2015 decreased $7.1 million, or 9% from $80.1 million to $73.0 million. CWI product revenue for the three months ended March 31, 2015 decreased $5.5 million, or 8%, to $61.0 million on sales of 2,278 units compared to $66.5 million and 2,480 units for the three months ended March 31, 2014, which was primarily attributed to a delay for a shipment to an Asian customer. CWI parts revenue for the three months ended March 31, 2015 decreased $1.6 million to $12.0 million compared with $13.6 million for the three months ended March 31, 2014 which was primarily attributed to changes in product mix.

WWI revenue for the three months ended March 31, 2015 decreased $57.5 million, or 51%, from $113.4 million to $55.9 million. WWI shipped 4,385 units in 2015 compared with 9,127 units for the three months ended March 31, 2014.

Gross Margin

Total segments gross margin for the three months ended, including 100% share of CWI and WWI increased $11.5 million from $26.2 million in 2014 to $37.7 million in 2015.

The following table presents gross margin by segment for the three months ended March 31, 2015 compared to the three months ended March 31, 2014:

	Three months					Three months
	ended March 31,		% of			ended March 31,		% of			Change
	2015		Revenue			2014		Revenue			$			%
Westport Operations	$	4.8		17.5	%	$	11.3		29.0	%	$	(6.5	)		(58	)%
Corporate and Technology Investments		0.6		100.0	%		1.0		100.0	%		(0.4	)		(40	)%
CWI		26.6		36.4	%		7.6		9.5	%		19.0			250	%
WWI		5.7		10.2	%		6.3		5.6	%		(0.6	)		(10	)%
Total segment gross margin	$	37.7		24.0	%	$	26.2		11.2	%	$	11.5			44	%
Less: Equity investees' gross margin		32.3		25.1	%		13.9		7.2	%		18.4			132	%
Total consolidated gross margin	$	5.4		19.3	%	$	12.3		30.8	%	$	(6.9	)		(56	)%

Westport Operations gross margin decreased $6.5 million to $4.8 million, or 17.5% of revenue, for the three months ended March 31, 2015 compared to $11.3 million, or 29.0% of revenue for the three months ended March 31, 2014. The decrease in gross margin percentage is due to inventory obsolescence charges of $2.0 million. Gross margin would have been 24.9% of revenue without the obsolescence charges. Gross margin also decreased due to a change in product mix and weaknesses in most markets as a result of the continued low price of oil.

CWI gross margin increased $19.0 million to $26.6 million, or 36.4% of revenue, from $7.6 million or 9.5% of revenue. CWI product margin and product gross margin percentage for the three months ended March 31, 2015 were $22.5 million and 36.8%, respectively, compared to $2.7 million and 4.0%, respectively, for the three months ended March 31, 2014. This increase in CWI gross margin percentage was due to favourable decreases of $19.4 million in net warranty adjustments and net extended coverage claims compared to the three months ended March 31, 2014. Reliability of the ISL G engine has continued to improve as a result of both hardware and calibration changes. CWI parts gross margin percentage was 34.1% for the three months ended March 31, 2015 compared to 36.3% for the three months ended March 31, 2014. The decrease in parts gross margin is primarily due to a change in product mix.

WWI gross margin decreased $0.6 million to $5.7 million, or 10.2% of revenue, from 6.3 million or 5.6% of revenue. The decrease in gross margin relates to a decrease in the number of the engines sold. Gross margin as percentage of revenue increased 4.6% as a result of changes in product mix and product pricing.

Research and Development

The following table presents details of research and development (“R&D”) expense by segment for the three months ended March 31, 2015 compared to three months ended March 31, 2014:

	Three months ended March 31,				Change
	2015		2014		$			%
Westport Operations	$	3.3	$	6.5	$	(3.2	)		(49	)%
Corporate and Technology Investments		10.1		14.5		(4.4	)		(30	)%
Total research and development	$	13.4	$	21.0	$	(7.6	)		(36	)%

Westport Operations research and development expenses decreased $3.2 million from $6.5 million to $3.3 million driven by reduction in program expenses, decreased headcount, and favourable impacts of foreign currency translation from the Euro and the Canadian to the US dollar equivalent.

Corporate and Technology Investments research and development expenses decreased $4.4 million from $14.5 million to $10.1 million driven by reduction in program expenses and prioritizing of investment programs, decreased headcount and favourable impacts of foreign currency translation from the Canadian to the US dollar equivalent.

Selling, General and Administrative

The following table presents details of Selling, General and Administrative (“SG&A”) expense by segment for the three months ended March 31, 2015 compared to the three months ended March 31, 2014:

	Three months ended March 31,				Change
	2015		2014		$			%
Westport Operations	$	5.4	$	7.5	$	(2.1	)		(28	)%
Corporate and Technology Investments		7.4		10.8		(3.4	)		(31	)%
Total selling, general and administrative	$	12.8	$	18.3	$	(5.5	)		(30	)%

Westport Operations SG&A expenses decreased $2.1 million due to decreased headcount and favourable impacts of foreign currency translation from the Euro and the Canadian to the US dollar equivalent.

Corporate and Technology Investments SG&A expenses decreased $3.4 million due to decreased headcount and favourable impacts of foreign currency translation from the Canadian to the US dollar equivalent.

Foreign exchange gains and losses reflected net realized gains and losses on foreign currency transactions and the net unrealized gains and losses on our net U.S. dollar denominated monetary assets and liabilities in our Canadian operations that were mainly composed of cash and cash equivalents, short-term investments, accounts receivable and accounts payable. In addition, the Company has foreign exchange exposure on Euro denominated monetary assets and liabilities where the functional currency of the subsidiary is not the Euro. For the three months ended March 31, 2015, we recognized a net foreign exchange gain of $2.9 million with the decline in the Canadian dollar relative to the U.S. dollar. A majority of the foreign exchange gain for the three months ended March 31, 2015 is unrealized. For the three months ended March 31, 2014, we recognized a net foreign exchange gain of $8.9 million with the movement in the Canadian dollar relative to the U.S. dollar.

Depreciation and amortization for the three months ended March 31, 2015 was $3.5 million compared to $4.3 million for the three months ended March 31, 2014. The decrease primarily relates to favourable impacts of foreign currency translation from the Euro and the Canadian to the US dollar equivalent.

Income from investments accounted for by the equity method primarily relates to our 50% interest in CWI and our 35% interest in WWI and our increase in equity income results primarily from higher revenues and gross margins for CWI in the current year compared to the prior period.

	Three months ended March 31,
	2015		2014
CWI - 50% interest (1)	$	5.9	$	(0.8	)
WWI - 35% interest		0.3		0.5
Other		0.1		(0.1	)
Income from investment accounted for by the equity method	$	6.3	$	(0.4	)

(1) During the first quarter of 2015, the Company identified adjustments in CWI's estimated 2014 financial statement results, which primarily related to warranty accrual. The identified adjustments resulted in a cumulative $1.2 million understatement of the Company’s income from investments accounted for by the equity method for the year ended December 31, 2014. The Company corrected the amounts related to CWI in the first quarter of 2015, which had the net effect of increasing income from investments accounted for by the equity method by $1.2 million for the three months ended March 31, 2015. The Company did not believe this adjustment was material to its consolidated financial statements for the years ended December 31, 2014 and, therefore, did not restate any prior period amounts. The Company does not believe the adjustment is material to the three months ended March 31, 2015 consolidated interim financial statements.

Interest on long-term debt and amortization of discount expense primarily relates to our interest expense on CDN$ and Euro denominated debentures.

	Three months ended March 31,
	2015		2014
Canadian debentures - 9% per annum	$	1.0	$	0.7
Senior financing facilities		0.3		0.3
Amortization of discount and non cash interest expense		0.2		0.1
Total Interest on long-term debt	$	1.5	$	1.1

Interest on long-term debt for the three months ended March 31, 2015 of $1.5 million increased compared to the three months ended March 31, 2014 due to additional interest from senior financing facilities as a result of increased long term debt as of March 31, 2015 compared to March 31, 2014.

Income tax expense for the three months ended March 31, 2015 was $0.5 million compared to an income tax expense of $0.1 million for the three months ended March 31, 2014.

The increase for the three months ended March 31, 2015 primarily relates to higher distributable earnings from our investment in CWI.

CAPITAL REQUIREMENTS, RESOURCES AND LIQUIDITY

As at March 31, 2015, our cash, cash equivalents and short-term investment position was $71.3 million, a decrease of $22.7 million from $94.0 million at December 31, 2014. Cash and cash equivalents consist of guaranteed investment certificates, term deposits and bankers acceptances with maturities of 90 days or less when acquired. Short-term investments consist of investment grade bankers’ acceptances, term deposits and commercial paper. We invest primarily in short-term paper issued by Schedule 1 Canadian banks, R1 high rated corporations and governments.

The Company has sustained net losses over the past several years and as at March 31, 2015 have an accumulated a deficit of $782.2 million. The Company’s ability to continue as a going concern is dependent on its available cash, its ability to find new sources of financing or raise cash through the sale of assets while in pursuit of operating profitability. For the year ended December 31, 2014, the Company has taken immediate actions to right-size the business structure and reduce expenses through activities including staff reductions and deferral of non-core development programs. As a result of these actions research and development, sales and general and administrative expenses have decreased $13.0 million from $39.3 million recorded in the three months ended March 31, 2014 to $26.3 million recorded in the three months ended March 31, 2015. Management believes these factors will contribute toward achieving profitability, though further expense reductions may be required. However, there can be no assurance that the Company will be successful in achieving its objectives. Management believes that the cash balances available as of March 31, 2015, combined with cost cutting measures in place and its ability to find new sources of financing or raise cash through the sale of assets subsequent to the balance sheet date, provides sufficient funds for the Company to meet its obligations beyond the next 12 months. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Our plan is to use our current cash, cash equivalents and short-term investments, our share of CWI dividends (typically declared and paid quarterly) and borrowings under our credit facility to fund our committed milestones and obligations for our current programs. We will also continue to seek third party and government funding on commercially acceptable terms to offset costs of our investments; however, there are no guarantees that we will be successful in obtaining third party funding on acceptable terms or at all.

For the three months ended March 31, 2015, our cash used in operations was $22.5 million. Changes in non-cash working capital resulted in a use of $6.0 million. The $6.0 million change in working capital was impacted by a decrease in accounts receivable of $2.2 million as a result of increased rates of collection, offset by a decrease in accounts payable and accrued liabilities of $5.3 million. Cash used in investing activities included the purchase of fixed assets of $1.0 million, offset by $7.0 million in dividends received from joint ventures. Cash used in financing activities included principal payments of long term debt of $2.0 million offset by issuance on long term debenture notes of $1.9 million which was primarily from our European subsidiaries.

Westport’s capital requirements will vary depending on a number of factors, including the timing and size of orders for our LNG systems, our ability to successfully launch products on time, our supply chain and manufacturing requirements, our success in executing our business plan, relationships with current and potential strategic partners, commercial sales and margins, product reliability, progress on research and development activities, capital expenditures and working capital requirements. We also continue to review investment and acquisition opportunities on a regular basis for technologies, businesses and markets that would complement our own products or assist us in our commercialization plans. Significant new orders, expanded engine programs, acquisitions or investments could require additional funding. If such additional funding is not available to us, if expected orders do not materialize or are delayed, or if we have significant overspending in our programs, we may be required to delay, reduce or eliminate certain research and development activities, reduce or cancel inventory orders, and possibly forego new program, acquisition or investment opportunities. Any of those circumstances could potentially result in a delay of the commercialization of our products in development and could have an adverse effect on our business, results of operations, liquidity and financial condition.

This “Capital Requirements, Resources and Liquidity” section contains certain forward looking statements. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. Readers are encouraged to read the “Forward Looking Statements” and “Basis of Presentation” sections of this MD&A, which discusses forward-looking statements and the “Business Risks and Uncertainties” section of this MD&A and of our AIF.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

	Carrying amount		Contractual cash flows		< 1 year		1 - 3 years		4-5 years		> 5 years
Accounts payable and accrued liabilities	$	44.8	$	44.8	$	44.8	$	—	$	—	$	—
Subordinated debentures (1)		42.7		52.4		3.9		3.9		44.6		—
Senior financing (2)		12.3		13.0		5.8		5.5		0.7		1.0
Senior revolving financing (3)		10.8		11.3		0.3		11.1		—		—
Other bank financing		4.0		4.5		2.1		0.4		0.1		1.8
Capital lease obligations		1.1		1.2		0.5		0.6		0.1		—
Operating lease commitments (4)		—		53.1		4.6		9.9		8.1		30.4
	$	115.7	$	180.3	$	62.0	$	31.4	$	53.6	$	33.2

Contractual cash flows include both expected interest and principal repayments

(1) The subordinated debenture notes are unsecured and subordinated to senior indebtedness, mature on September 15, 2017, and bear interest at 9% per annum, payable in cash semi-annually in arrears on March 15 and September 15 of each year during the term.

(2) Senior financing comprises the EMER senior financing agreement ("Emer senior financing"), the Prins Autogassystemen Holding B.V ("Prins") senior financing agreement ("Prins senior financing"), and the Prins senior mortgage loan ("Prins senior mortgage loan"). The senior financing agreements bear interest at 3 or 6-month Euribor plus a fixed percentage ranging from 1% to 3.5%.

(3) The senior revolving financing facility relates to EMER and bears interest at 6-month Euribor plus 2.5%. Interest is paid semi-annually.

The principal repayment schedule of the subordinated debenture notes, senior financing agreements, and senior revolving financing are as follows for the period ended March 31, 2015.

	Subordinated debenture notes		Emer Senior Financing		Prins Senior Financing		Prins Senior Mortgage Loan		Senior revolving financing		Total
2015	$	—	$	3.8	$	1.5	$	0.3	$	—	$	5.6
2016		—		1.9		1.8		0.3		5.4		9.4
2017		42.7		1.0		—		0.3		5.4		49.4
2018		—		—		—		0.3		—		0.3
2019 and thereafter		—		—		—		1.1		—		1.1
	$	42.7	$	6.7	$	3.3	$	2.3	$	10.8	$	65.8

(4) Capital lease obligations relate primarily to office equipment and machinery, have initial terms of three to five years and have interest rates ranging from 3.07% to 7.32% Operating lease commitments represent our future minimum lease payments under leases related primarily to our operating premises and office equipment.

SHARES OUTSTANDING

For the three months ended March 31, 2015, and March 31, 2014, the weighted average number of shares used in calculating the loss per share was 63,838,842, and 62,899,687, respectively. During the three months ended March 31, 2015, we granted zero RSUs and PSUs (together the “Share Units”). The Common Shares, and Share Units outstanding and exercisable as at the following dates are shown below:

March 31, 2015

May 5, 2015

Number

Weighted
average
exercise price

Number

Weighted
average
exercise price

Common Shares outstanding

64,104,656

64,118,871

Share Units⁽¹⁾

Outstanding⁽²⁾

5,039,012

N/A

5,024,797

N/A

Exercisable

142,166

N/A

142,166

N/A

(weighted average exercise prices are presented in Canadian dollars)

(1) As at March 31, 2015, excludes 49,420 (May 5, 2015 - 49,420) of phantom share units, which when vested, are exercisable in exchange for a cash payment and do not result in the issuance of common shares.

(2) As at March 31, 2015, includes 1,218,330 (May 5, 2015 - 1,218,330) PSUs with payout levels ranging between 0% and 200% upon achieving the required performance criteria over the measurement period. None of these PSUs are currently known to be issuable based on the prior achievement of the required 200% conversion ratio as at the date hereof, however such awards have not yet vested.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our interim consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements. The Company’s accounting policies are described in Note 2 of our fiscal year ended December 31, 2014 annual consolidated financial statements. There have been no changes in accounting policies applied to the March 31, 2015 financial statements. We have identified several policies as critical to the measurement of our business operations and in understanding our results of operations. These policies, which require the use of judgment, estimates and assumptions in determining their reported amounts, include our accounting of CWI as a variable interest entity, warranty liability, revenue recognition, inventories, property, equipment, furniture and leasehold improvements, stock-based compensation, goodwill and intangible assets. The application of these and other accounting policies are described in Note 2 of our fiscal year ended December 31, 2014 annual consolidated financial statements and our 2014 Annual Management and Discussion Analysis. Actual amounts may vary significantly from estimates used.

NEW ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

(a)

New accounting pronouncements:

Revenue:

In May 2014, Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue From Contracts With Customers (“Topic 606”). Topic 606 removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, provides more useful information to users of financial statements through improved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The guidance in this update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, this update supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts. Topic 606 is effective for public entities with reporting periods beginning after December 15, 2016. On April 29^th, 2015, the FASB proposed deferring the standard to be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption would be permitted as of the original effective date in ASU 2014-09 (i.e., annual reporting periods beginning after December 15, 2016, including interim reporting periods within the annual periods). The Company has not yet evaluated the impact of the adoption of this new standard.

Going Concern:

In August 2014, the FASB issued ASU 2014-15 “Presentation of Financial Statements - Going Concern,” outlining management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern, along with the required disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016 with early adoption permitted. The Company does not anticipate a material impact to the Company’s financial statements as a result of this change.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

During the three months ended March 31, 2015, there were no changes to our internal control over financial reporting that materially affected or are reasonably likely to materially affect, our internal controls over financial reporting.

SUMMARY OF QUARTERLY RESULTS AND DISCUSSION OF THE QUARTER ENDED MARCH 31, 2015

Our revenues and operating results can vary significantly from quarter to quarter depending on the timing of product deliveries, product mix, product launch dates, research and development project cycles, timing of related government funding, impairment charges, stock-based compensation awards and foreign exchange impacts. Net loss has and can vary significantly from one quarter to another depending on operating results, gains and losses from investing activities, recognition of tax benefits and other similar events.

The following table provides summary unaudited consolidated financial data for our last eight quarters:

Selected Consolidated Quarterly Operations Data

Three months ended	30- Jun-13			30- Sep-13			31- Dec-13			31- Mar-14			30- Jun-14			30- Sep-14			31- Dec-14			31- Mar-15
(expressed in millions of United States dollars except for per share amounts)
Product revenue (1)	$	32.5		$	33.0		$	41.4		$	34.8		$	31.8		$	24.0		$	27.4		$	27.0
Service and other revenue		2.4			13.5			11.2			5.1			6.1			1.4			—			1.0
Total revenue		34.9			46.5			52.6			39.9			37.9			25.4			27.4			28.0
Cost of product and parts revenue		26.6			30.5			69.6			27.6			24.3			17.3			28.7			22.6
Gross margin	$	8.3		$	16.0		$	(17.0	)	$	12.3		$	13.6		$	8.1		$	(1.3	)	$	5.4
Gross margin percentage		23.8	%		34.4	%		(32.3	)%		30.8	%		35.9	%		31.9	%		(4.7	)%		19.3	%
Net loss for the period	$	(33.9	)	$	(30.2	)	$	(89.5	)	$	(23.9	)	$	(35.4	)	$	(25.5	)	$	(64.8	)	$	(17.2	)
EBITDA (2)		(28.5	)		(24.5	)		(84.2	)		(18.8	)		(28.8	)		(20.8	)		(57.5	)		(11.7	)
Adjusted EBITDA (3)		(27.8	)		(19.5	)		(23.2	)		(22.1	)		(16.9	)		(22.0	)		(23.0	)		(9.2	)
Loss per share
Basic and Diluted		(0.6	)		(0.5	)		(1.4	)		(0.4	)		(0.6	)		(0.4	)		(1.0	)		(0.3	)
Income from unconsolidated joint ventures:
CWI net income attributable to the Company		3.3			2.5			2.8			(0.8	)		0.4			0.9			7.6			5.9
WWI net income attributable to the Company	$	1.3		$	1.3		$	0.7		$	0.5		$	0.7		$	1.2		$	3.6		$	0.3

(1) In 2014, the Company combined the parts revenue with product revenue into a single line item. This has been reflected in the consolidated statement of operations and comprehensive loss for all periods presented.

(2) The term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have a standardized meaning according to U.S. GAAP. See non-GAAP measures for more information.

(3) The term Adjusted EBITDA is not defined under U.S. GAAP and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Westport defines Adjusted EBITDA as EBITA adjusted for amortization of stock-based compensation, unrealized foreign exchange gain or loss, and non-cash and other unusual adjustments. See non-GAAP measures for more information.

Non-GAAP Measures

We use certain non-GAAP measures to assist in assessing our financial performance. Non-GAAP measures do not have any standardized meaning prescribed in U.S. GAAP and are therefore unlikely to be comparable to similar measures presented by other companies.

EBITDA

The term EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-GAAP financial measure. The Company defines EBITDA as loss before income taxes adjusted for interest expense (net) and depreciation and amortization.

Management believes that EBITDA is an important indicator commonly reported and widely used by investors and analysts as an indicator of the Company’s operating performance and ability. The intent is to provide additional useful information to investors and analysts and such measures do not have any standardized meaning under U.S. GAAP. These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP. Other issuers may define EBITDA differently.

Three months ended	30-Jun-13			30-Sep-13			31-Dec-13			31-Mar-14			30-Jun-14			30-Sep-14			31-Dec-14			31-Mar-15
Loss before income taxes	$	(33.6	)	$	(29.9	)	$	(89.5	)	$	(23.9	)	$	(35.1	)	$	(26.2	)	$	(65.1	)	$	(16.7	)
Interest Expense, net (1)		1.3			1.1			0.7			0.8			1.7			0.7			2.5			1.4
Depreciation		3.8			4.3			4.6			4.3			4.6			4.7			5.1			3.6
EBITDA	$	(28.5	)	$	(24.5	)	$	(84.2	)	$	(18.8	)	$	(28.8	)	$	(20.8	)	$	(57.5	)	$	(11.7	)

(1) Interest expense, net is defined as the aggregate of bank charges, interest, and other, interest on long term-debt and amortization of discount, and interest and other income.

EBITDA increased $45.8 million in the three month period ended March 31, 2015 to a loss of $11.7 million from a loss of $57.5 million for the three month period ended December 31, 2014 primarily as a result of no impairments related to long lived asset, intangible and goodwill and no provision for inventory purchase commitments recorded in the current quarter (Q4 2014 - $33.6 million), reduced research and development, general and administrative and sales and marketing expenses of $8.8 million due to staff reductions and deferral of non-core development programs, and an increase in gross margin of $6.7 million.

Non-GAAP Measures continued:

Adjusted EBITDA

The term Adjusted EBITDA is not defined under U.S. GAAP and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP.

Adjusted EBITDA is used by management to review operational progress of its business units and investment programs over successive periods and as a long-term indicator of operational performance since it ties closely to the unit’s ability to generate sustained cash flows.

Westport defines Adjusted EBITDA as EBITDA adjusted for stock-based compensation, unrealized foreign exchange gain or loss, and non-cash and other unusual adjustments. Adjusted EBITDA has limitations as an analytical tool, and when assessing Westport’s operating performance, investors should not consider Adjusted EBITDA in isolation, or as a substitute for net loss or other consolidated statement of operations data prepared in accordance with U.S. GAAP. Among other things, Adjusted EBITDA does not reflect Westport’s actual cash expenditures. Other companies may calculate similar measures differently than Westport, limiting their usefulness as comparative tools. Westport compensates for these limitations by relying primarily on its U.S. GAAP results.

Three months ended	30-Jun-13			30-Sep-13			31-Dec-13			31-Mar-14			30-Jun-14			30-Sep-14			31-Dec-14			31-Mar-15
EBITDA	$	(28.5	)	$	(24.5	)	$	(84.2	)	$	(18.8	)	$	(28.8	)	$	(20.8	)	$	(57.5	)	$	(11.7	)
Stock based compensation		4.1			3.7			3.3			4.7			3.3			1.0			—			3.4
Unrealized foreign exchange (gain) loss		(3.4	)		1.3			(10.1	)		(8.9	)		8.6			(2.2	)		(0.9	)		(2.9	)
Non-cash and other unusual adjustments (2)		—			—			67.8			0.9			—			—			35.4			2.0
	$	(27.8	)	$	(19.5	)	$	(23.2	)	$	(22.1	)	$	(16.9	)	$	(22.0	)	$	(23.0	)	$	(9.2	)

(2) Non-cash and other unusual adjustments include impairment of long lived assets, provision for inventory purchase commitments, intangible impairment, goodwill impairment, and one time inventory obsolescence charges. The three month ended December 31, 2013 figure included other unusual adjustments related to the discontinuation of the first generation of Westport HPDI systems.

Adjusted EBITDA increased $13.8 million in the three month period ended March 31, 2015 to a loss of $9.2 million from a loss of $23.0 million for the three month period ended December 31, 2014 primarily as a result reduced research and development, general and administrative and sales and marketing expenses of $8.8 million due to staff reductions and deferral of non-core development programs and an increase in gross margin of $6.7 million.

RELATED PARTY TRANSACTIONS

As part of our joint venture agreement, we engage in transactions with CWI.

As at March 31, 2015, net amounts due from CWI total $0.2 million (December 31, 2014 - 2.5 million). Amounts receivable relate to costs incurred by the Company on behalf of CWI. The amounts are generally reimbursed by CWI to the Company in the month following the month in which the payable is incurred. Cost reimbursements from CWI consisted of the following:

	Three months ended March 31,
	2015		2014
Research and development	$	—	$	—
General and administrative		0.1		0.4
Sales and marketing		1.4		1.3
	$	1.6	$	1.7

All material transactions between the Company and CWI have been eliminated on application of equity accounting.

BUSINESS RISKS AND UNCERTAINTIES

An investment in our business involves risk and readers should carefully consider the risks described in our AIF and other filings on www.sedar.com and www.sec.gov. Our ability to generate revenue and profit from our technologies is dependent on a number of factors, and the risks discussed in our AIF, if they were to occur, could have a material impact on our business, financial condition, liquidity, results of operation or prospects. While we have attempted to identify the primary known risks that are material to our business, the risks and uncertainties discussed in our AIF may not be the only ones we face. Additional risks and uncertainties, including those that we do not know about now or that we currently believe are immaterial may also adversely affect our business, financial condition, liquidity, results of operation or prospects. A full discussion of the risks impacting our business is contained in the AIF for the three months ended March 31, 2015 under the heading “Risk Factors” and is available on SEDAR at www.sedar.com.

Exhibit 99.2

Condensed Consolidated Financial Statements (unaudited)

(Expressed in thousands of United States dollars)

WESTPORT INNOVATIONS INC.

For the three months ended March 31, 2015 and 2014

WESTPORT INNOVATIONS INC.

Condensed Consolidated Balance Sheets (unaudited)

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

	March 31, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	70,611		$	93,282
Short-term investments		707			723
Accounts receivable (note 3)		41,126			46,849
Inventories (note 4)		38,554			41,824
Prepaid expenses		5,597			4,641
Current portion of deferred income tax assets		2,987			3,556
		159,582			190,875
Long-term investments (note 5)		30,869			33,324
Other assets		3,173			3,819
Property, plant and equipment (note 7)		52,418			58,134
Intangible assets (note 8)		24,238			27,920
Deferred income tax assets		198			271
Goodwill (note 9)		20,756			23,352
		291,234			337,695
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (note 10)		44,774			55,502
Current portion of deferred revenue		1,929			1,782
Current portion of deferred income tax liabilities		251			398
Current portion of long-term debt (note 11)		18,630			18,955
Current portion of warranty liability (note 12)		8,681			9,696
		74,265			86,333
Warranty liability (note 12)		12,185			13,413
Long-term debt (note 11)		52,329			59,587
Deferred revenue		3,040			3,795
Deferred income tax liabilities		4,240			4,954
Other long-term liabilities		1,311			1,605
		147,370			169,687
Shareholders’ equity:
Share capital (note 13):
Authorized:
Unlimited common shares, no par value
Unlimited preferred shares in series, no par value
Issued:
64,104,656 (2014 - 63,480,722) common shares		935,249			930,857
Other equity instruments		7,784			7,767
Additional paid in capital		9,837			9,837
Accumulated deficit		(782,164	)		(764,960	)
Accumulated other comprehensive income		(26,842	)		(15,493	)
		143,864			168,008
Commitments and contingencies (note 15)
	$	291,234		$	337,695

See accompanying notes to the condensed consolidated financial statements.

Approved on behalf of the Board:

“Douglas R. King”

Director

“Jill Bodkin”

Director

WESTPORT INNOVATIONS INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

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

	Three months ended March 31,
	2015			2014
Product revenue	$	26,977		$	34,782
Service and other revenue		1,045			5,146
		28,022			39,928
Cost of revenue and expenses:
Cost of product revenue		22,598			27,656
Research and development		13,476			21,004
General and administrative		8,391			11,177
Sales and marketing		4,457			7,076
Foreign exchange (gain)		(2,875	)		(8,931	)
Depreciation and amortization		3,547			4,331
Bank charges, interest and other		68			107
Intangible impairment		—			325
		49,662			62,745
Loss from operations		(21,640	)		(22,817	)
Income from investments accounted for by the equity method		6,312			(356	)
Interest on long-term debt and amortization of discount		(1,472	)		(1,101	)
Interest and other income		69			431
Loss before income taxes		(16,731	)		(23,843	)
Income tax expense		473			23
Net loss for the period	$	(17,204	)	$	(23,866	)
Other comprehensive (loss):
Cumulative translation adjustment		(11,349	)		(11,393	)
Comprehensive loss	$	(28,553	)	$	(35,259	)
Loss per share:
Basic and diluted	$	(0.27	)	$	(0.38	)
Weighted average common shares outstanding:
Basic and diluted		63,838,842			62,899,687

See accompanying notes to the condensed consolidated financial statements.

WESTPORT INNOVATIONS INC.

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)

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

Three months ended March 31, 2015 and March 31, 2014

	Common							Additional						Accumulated other			Total
	shares				Other equity			paid in			Accumulated			comprehensive			shareholders'
	outstanding		Share capital		instruments			capital			deficit			income			equity
December 31, 2013		62,733,762		916,497		13,834			8,205			(615,342	)		(292	)		322,902
Issue of common shares on exercise of stock options		3,358		34		—			(12	)		—			—			22
Issue of common shares on exercise of share units		146,224		3,671		(3,671	)		—			—			—			—
Stock-based compensation		—				4,079			437			—			—			4,516
Net loss for the year		—		—		—			—			(23,866	)		—			(23,866	)
Other comprehensive loss		—		—		—			—			—			(11,393	)		(11,393	)
March 31, 2014		62,883,344		920,202		14,242			8,630			(639,208	)		(11,685	)		292,181

December 31, 2014		63,480,722		930,857		7,767			9,837			(764,960	)		(15,493	)		168,008
Issue of common shares on exercise of share units		298,861		3,230		(3,230	)		—			—			—			—
Issue of common shares in connection with acquisition		325,073		1,162		—			—			—			—			1,162
Stock-based compensation		—		—		3,247			—			—			—			3,247
Net loss for the year		—		—		—			—			(17,204	)		—			(17,204	)
Other comprehensive loss		—		—		—			—			—			(11,349	)		(11,349	)
March 31, 2015		64,104,656		935,249		7,784			9,837			(782,164	)		(26,842	)		143,864

See accompanying notes to the condensed consolidated financial statements.

Westport Innovations Inc.

Consolidated Statements of Cash Flows (unaudited)

(Expressed in thousands of United States dollars)

	Three months ended March 31,
	2015			2014
Cash flows from operating activities:
Loss for the period	$	(17,204	)	$	(23,866	)
Items not involving cash:
Depreciation and amortization		3,547			4,331
Stock-based compensation expense		3,247			4,733
Unrealized foreign exchange gain		(2,875	)		(8,931	)
Deferred income tax (recovery) expense		307			(269	)
(Income) loss from investments accounted for by the equity method		(6,312	)		356
Amortization of long-term debt		396			377
Intangible asset impairment		—			325
Inventory write-downs to net realizable value		1,995			—
Change in fair value of derivative liability and bad debt expense		350			536
Changes in non-cash operating working capital:
Accounts receivable		2,245			7,266
Inventories		(1,121	)		3,238
Prepaid expenses		(1,055	)		(2,445	)
Accounts payable and accrued liabilities		(5,333	)		(6,056	)
Deferred revenue		(156	)		(1,968	)
Warranty liability		(543	)		(720	)
		(22,512	)		(23,093	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(978	)		(3,277	)
Maturity (purchase) of short-term investments, net		—			1,911
Dividends received from joint ventures		6,987			2,626
		6,009			(1,366	)
Cash flows from financing activities:
Repayment of long term facilities		(2,037	)		(777	)
Proceeds from stock options exercised		—			22
Issuance of long term debenture notes		1,873			—
		(164	)		(755	)
Effect of foreign exchange on cash and cash equivalents		(6,004	)		(1,038	)
(Decrease) increase in cash and cash equivalents		(22,671	)		(23,626	)
Cash and cash equivalents, beginning of period		93,282			178,513
Cash and cash equivalents, end of period	$	70,611		$	154,887

See accompanying notes to the condensed consolidated financial statements.

Westport Innovations Inc.

Condensed Consolidated Statements of Cash Flows (continued) (unaudited)

(Expressed in thousands of United States dollars)

	Three months ended March 31,
	2015		2014
Supplementary information:
Interest paid	$	2,206	$	1,774
Taxes paid, net of refunds		473		143
Non-cash transactions:
Shares issued on exercise of performance share units		3,230		3,671

See accompanying notes to the condensed consolidated financial statements.

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Basis of preparation:

The unaudited condensed consolidated balance sheet as at March 31, 2015, and the unaudited condensed consolidated statements of operations and comprehensive loss, shareholders’ equity and cash flows for the three months ended March 31, 2015 and 2014 have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

These unaudited interim condensed consolidated financial statements do not include all note disclosures required on an annual basis, and therefore, should be read in conjunction with the annual audited consolidated financial statements for the fiscal year ended December 31, 2014 filed with the appropriate securities regulatory authorities.

In the opinion of management, all adjustments, which include reclassifications and normal recurring adjustments necessary to present fairly the condensed consolidated balance sheet, condensed consolidated results of operations and comprehensive loss, condensed consolidated statements of shareholders' equity and condensed consolidated cash flows as at March 31, 2015 and for all periods presented, have been recorded. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results for Westport Innovations Inc.’s (“the Company”) full year.

The Company’s reporting currency for its consolidated financial statement presentation is the United States dollar. The functional currencies of the Company’s operations and subsidiaries include the following: United States, Canadian and Australian dollar, Euro, Chinese Renminbi (RMB), and Swedish Krona. The Company translates assets and liabilities of non-US dollar functional currency operations using the period end exchange rates, shareholders’ equity balances using the weighted average of historical exchange rates, and revenues and expenses using the monthly average rate for the period with the resulting exchange differences recognized in other comprehensive income.

Except as otherwise noted, all amounts in these financial statements are presented in U.S. dollars. For the periods presented, the Company used the following exchange rates:

	Period end exchange rate as at:				Average for the period ended:
	March 31, 2015		December 31, 2014		March 31, 2015		March 31, 2014
Canadian dollar		0.79		0.86		0.81		0.91
Australian dollar		0.76		0.82		0.79		0.90
Euro		1.08		1.21		1.12		1.37
RMB		0.16		0.16		0.16		0.16
Swedish Krona		0.12		0.13		0.12		0.15

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Accounting Changes

(a)

New accounting pronouncements:

Revenue:

In May 2014, Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue From Contracts With Customers (“Topic 606”). Topic 606 removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, provides more useful information to users of financial statements through improved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The guidance in this update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, this update supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts. Topic 606 is effective for public entities with reporting periods beginning after December 15, 2016. On April 29^th, 2015, the FASB proposed deferring the standard to be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption would be permitted as of the original effective date in ASU 2014-09 (i.e., annual reporting periods beginning after December 15, 2016, including interim reporting periods within the annual periods). There is no assurance that the FASB will bring such proposed deferral into effect. The Company has not yet evaluated the impact of the adoption of this new standard.

Going Concern:

In August 2014, the FASB issued ASU 2014-15. Presentation of Financial Statements - Going Concern outlining management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern, along with the required disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016 with early adoption permitted. The Company does not anticipate a material impact to the Company’s financial statements as a result of this change.

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Accounts Receivable:

	March 31, 2015			December 31, 2014
Customer trade receivable	$	39,065		$	43,256
Due from joint venture (note 14)		212			2,538
Other receivables		3,908			3,307
Income tax receivable		428			499
Allowance for doubtful accounts		(2,487	)		(2,751	)
	$	41,126		$	46,849

Inventories:

	March 31, 2015		December 31, 2014
Purchased parts	$	25,734	$	28,227
Work-in-process		6,745		4,879
Finished goods		6,075		8,718
	$	38,554	$	41,824

During the three months ended March 31, 2015, the Company recorded write-downs to net realizable value of approximately $1,995 (three months ended March 31, 2014 - $0).

Long-term investments:

	March 31, 2015		December 31, 2014
Weichai Westport Inc. (a)	$	17,536	$	18,791
Cummins Westport Inc. (b)		11,971		13,196
Other equity accounted for investees		1,362		1,337
	$	30,869	$	33,324

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Long-term investments (continued):

(a) Weichai Westport Inc.:

The Company has a 35% equity interest in Weichai Westport Inc. (“WWI”), a joint venture with Weichai Holding Group Co. Ltd. and Hong Kong Peterson (CNG) Equipment Ltd. For the three months ended March 31, 2015, the Company recognized its share of WWI’s income of $304 (March 31, 2014 - $509), as income from investment accounted for by the equity method.

Assets, liabilities, revenue and expenses of WWI as of and for the periods presented are as follows:

	March 31, 2015		December 31, 2014
Current assets:
Cash and cash equivalents	$	7,080	$	11,734
Accounts receivable		97,128		72,121
Inventory		67,075		83,594
Other current assets		2,460		1,249
Long-term assets
Property, plant and equipment		5,592		5,736
Deferred income tax assets		7,781		7,781
Total assets	$	187,116	$	182,215
Current liabilities:
Accounts payable and accrued liabilities	$	109,284	$	128,838
Total liabilities	$	109,284	$	128,838

	Three months ended March 31,
	2015		2014
Product revenue	$	55,878	$	113,359
Cost of revenue and expenses:
Cost of product revenue		50,187		107,050
Operating expenses		4,671		4,598
		54,858		111,648
Income before income taxes		1,020		1,711
Income tax expense		151		258
Income for the period	$	869	$	1,453

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Long-term investments (continued):

(b) Cummins Westport Inc.:

The Company and Cummins Inc. (“Cummins”) each own 50% of the common shares of CWI. For the three months ended March 31, 2015, the Company recognized its share of CWI’s income of $5,945 (three months ended March 31, 2014 - loss of $835), as income from investment accounted for by the equity method. During the first quarter of 2015, the Company identified adjustments in CWI's estimated 2014 financial statement results, which primarily related to warranty accrual. The identified adjustments resulted in a cumulative $1,184 understatement of the Company’s income from investments accounted for by the equity method for the year ended December 31, 2014. The Company corrected the amounts related to CWI in the first quarter of 2015, which had the net effect of increasing income from investments accounted for by the equity method by $1,184 for the three months ended March 31, 2015. The Company did not believe this adjustment was material to its consolidated financial statements for the year ended December 31, 2014 and, therefore, did not restate any prior period amounts. The Company does not believe the adjustment is material to the three months ended March 31, 2015 consolidated interim financial statements.

Assets, liabilities, revenue and expenses of CWI are as follows:

	March 31, 2015		December 31, 2014 (1)
Current assets:
Cash and short-term investments	$	112,796	$	107,415
Accounts receivable		1,602		11,846
Current portion of deferred income tax assets		21,049		21,507
Other current assets		87		116
Long-term assets:
Property, plant and equipment		1,353		1,294
Deferred income tax assets		28,849		28,851
Total assets	$	165,736	$	171,029
Current liabilities:
Current portion of warranty liability	$	46,057	$	48,422
Current portion of deferred revenue		9,235		8,029
Accounts payable and accrued liabilities		8,798		8,297
		64,090		64,748
Long-term liabilities:
Warranty liability		38,330		40,882
Deferred revenue		36,714		34,345
Other long-term liabilities		2,771		2,771
		77,815		77,998
Total liabilities	$	141,905	$	142,746

(1) The Company has adjusted the December 31, 2014 information, as previously presented in our 2014 Annual Financial Statement Notes, to reflect the finalized audited financial information of CWI.

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Long-term investments (continued):

(b)

Cummins Westport Inc. (continued):

	Three months ended March 31,
	2015		2014
Product revenue	$	60,988	$	66,450
Parts revenue		12,012		13,619
		73,000		80,069
Cost of revenue and expenses:
Cost of product and parts revenue		46,440		72,451
Research and development		6,570		4,754
General and administrative		222		274
Sales and marketing		4,951		4,681
Foreign exchange loss		30		11
Bank charges, interest and other		168		223
		58,381		82,394
Income from operations		14,619		(2,325	)
Interest and investment income		145		68
Income before income taxes		14,764		(2,257	)

Income tax expense (recovery):		5,243		(588	)
Income (loss) for the period	$	9,521	$	(1,669	)

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Variable interest entities:

Cummins and Westport each own 50% of the common shares of CWI and have equal representation on the Board of Directors. No one shareholder has the unilateral power to govern CWI. The Board of Directors has power over the operating decisions and to direct other activities of CWI that most significantly impact CWI’s economic performance as set forth in the governing documents. As decision-making at the Board of Directors’ level requires unanimous approval, this power is shared.

Prior to February 20, 2012, the Company and Cummins shared equally in the profits and losses of CWI. Under the new Joint Venture Agreement, profits and losses are shared equally up to an established revenue baseline, and then any excess profits will be allocated 75% to the Company and 25% to Cummins. The Company has not historically provided and does not intend to provide financial or other support to CWI that the Company is not contractually required to provide.

The carrying amount and maximum exposure to losses relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary, and which have not been consolidated, were as follows:

	Balance at March 31, 2015				Balance at December 31, 2014
	Carrying amount		Maximum exposure to loss		Carrying amount		Maximum exposure to loss
Equity method investment	$	11,971	$	11,971	$	13,196	$	13,196
Accounts receivable		212		212		2,538		2,538

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Property, plant and equipment:

			Accumulated		Net book
March 31, 2015	Cost		depreciation		value
Land and buildings	$	2,680	$	44	$	2,636
Computer equipment and software		8,643		6,861		1,782
Furniture and fixtures		5,740		1,823		3,917
Machinery and equipment		76,334		34,679		41,655
Leasehold improvements		11,673		9,245		2,428
	$	105,070	$	52,652	$	52,418

			Accumulated		Net book
December 31, 2014	Cost		depreciation		value
Land and buildings	$	3,015	$	—	$	3,015
Computer equipment and software		9,277		7,063		2,214
Furniture and fixtures		6,194		1,798		4,396
Machinery and equipment		81,933		36,135		45,798
Leasehold improvements		12,460		9,749		2,711
	$	112,879	$	54,745	$	58,134

8. Intangible Assets:

			Accumulated		Net book
March 31, 2015	Cost		amortization		value
Patents and trademarks	$	16,897	$	3,456	$	13,441
Technology		4,797		2,262		2,535
Customer contracts		11,956		3,862		8,094
Other intangibles		246		78		168
Total	$	33,896	$	9,658	$	24,238

			Accumulated		Net book
December 31, 2014	Cost		amortization		value
Patents and trademarks	$	18,425	$	3,445	$	14,980
Technology		6,449		3,142		3,307
Customer contracts		13,762		4,163		9,599
Other intangibles		62		28		34
Total	$	38,698	$	10,778	$	27,920

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Goodwill:

A continuity of goodwill is as follows:

	March 31, 2015			December 31, 2014
Balance, beginning of period:	$	23,352		$	41,500
Acquisition of Prins		—			3,221
Impairment losses		—			(18,543	)
Impact of foreign exchange changes		(2,596	)		(2,826	)
Balance, end of period	$	20,756		$	23,352

10.

Accounts payable and accrued liabilities:

	March 31, 2015		December 31, 2014
Trade accounts payable	$	36,696	$	41,796
Accrued payroll		2,278		5,270
Accrued interest		172		1,237
Income taxes payable		537		580
Other payables		5,091		6,619
	$	44,774	$	55,502

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

11.

Long-term debt:

	March 31, 2015			December 31, 2014
Subordinated debenture notes (1)	$	42,657		$	46,491
Senior financing (2)		12,349			15,910
Senior revolving financing (3)		10,756			12,101
Other bank financing		4,069			2,646
Capital lease obligations		1,128			1,394
		70,959			78,542
Current portion		(18,630	)		(18,955	)
	$	52,329		$	59,587

(2) Senior financing comprises the Emer S.p.A ("Emer") senior financing agreement ("Emer senior financing"), the Prins Autogassystemen Holding B.V ("Prins") senior financing agreement ("Prins senior financing"), and the Prins senior mortgage loan ("Prins senior mortgage loan"). The senior financing agreements bear interest at 3 or 6-month Euribor plus a fixed percentage ranging from 1% to 3.5%.

(3) The senior revolving financing facility relates to EMER and bears interest at 6-month Euribor plus 2.5%. Interest is paid semi-annually.

The principal repayment schedule of the subordinated debenture notes, senior financing agreements, and senior revolving financing are as follows for the period ended March 31, 2015 are as follows:

	Subordinated debenture notes		Emer Senior Financing		Prins Senior Financing		Prins Senior Mortgage Loan		Senior revolving financing		Total
2015	$	—	$	3,783	$	1,461	$	325	$	—	$	5,569
2016		—		1,907		1,785		325		5,378		9,395
2017		42,657		1,007		—		325		5,378		49,367
2018		—		—		—		325		—		325
2019 and thereafter		—		—		—		1,106		—		1,106
	$	42,657	$	6,697	$	3,246	$	2,406	$	10,756	$	65,762

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

12.

Warranty liability:

A continuity of the warranty liability is as follows:

	Three months ended March 31,
	2015			2014
Balance, beginning of period	$	23,109		$	28,845
Warranty claims		(3,187	)		(2,683	)
Warranty accruals		179			790
Impact of foreign exchange changes		765			301
Balance, end of period	$	20,866		$	27,253
Less: Current portion		(8,681	)		(9,393	)
Long-term portion	$	12,185		$	17,860

13.

Share Capital, stock options and other stock-based plans

During the three months ended March 31, 2015, the Company issued 623,934 common shares, net of cancellations, upon exercises of share units and in connection with earn out payments stipulated by the total purchase price to acquire AFV (three months ended March 31, 2014 – 149,582). The Company issues shares from treasury to satisfy stock option and share unit exercises.

(a)

Share units:

The value assigned to issued Units and the amounts accrued are recorded as other equity instruments. As Units are exercised or vest and the underlying shares are issued from treasury of the Company, the value is reclassified to share capital.

During the three months ended March 31, 2015, the Company recognized $3,247 (three months ended March 31, 2014 - $4,236) of stock-based compensation associated with the Westport Omnibus Plan and the former Amended and Restated Unit Plan.

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

13.

Share capital, stock options and other stock-based plans (continued):

A continuity of the Units issued under the Westport Omnibus Plan and the former Amended and Restated Unit Plan as of March 31, 2015, and March 31, 2014 are as follows:

	Three months ended March 31, 2015					Three months ended March 31, 2014
	Number of units			Weighted average grant date fair value (CDN $)		Number of units			Weighted average grant date fair value (CDN $)
Outstanding, beginning of period		5,337,873		$	10.27		1,200,591		$	23.68
Granted		—			—		786,192			20.93
Exercised/Vested		(298,861	)		13.57		(146,224	)		27.88
Forfeited/expired		—					(24,864	)		30.36
Outstanding, end of period		5,039,012		$	9.00		1,815,695		$	22.06
Units outstanding and exercisable, end of period		142,166		$	11.67		217,624		$	11.22

As at March 31, 2015, $27,072 of compensation cost related to Units awards has yet to be recognized in results from operations and will be recognized over a weighted average period of 2.19 years.

(b)

Aggregate intrinsic values:

The aggregate intrinsic value of the Company’s stock option awards and share units at March 31, 2015 are as follows:

	March 31, 2015
	CDN$
Share units:
Outstanding	$	24,980
Exercisable		724

(c)

Stock-based compensation:

Stock-based compensation associated with the Unit plans and the stock option plan is included in operating expenses as follows:

	Three months ended March 31,
	2015		2014
Research and development	$	484	$	410
General and administrative		2,257		3,207
Sales and marketing		506		1,116
	$	3,247	$	4,733

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

14.

Related party transactions:

Pursuant to the amended and restated JVA, Westport engages in transactions with CWI.

As at March 31, 2015, net amounts due from CWI total $212 (2014 - $2,538). Amounts receivable relate to costs incurred by Westport on behalf of CWI. The amounts are generally reimbursed by CWI to Westport in the month following the month in which the payable is incurred. Cost reimbursements from CWI consisted of the following:

	Three months ended March 31,
	2015		2014
Research and development	$	18	$	2
General and administrative		148		430
Sales and marketing		1,449		1,276
	$	1,615	$	1,708

15.

Commitments

(a)

Contractual Commitments

Operating lease commitments represent our future minimum lease payments under leases related primarily to our operating premises and office equipment:

2015	$	4,583
2016		5,409
2017		4,460
2018		4,395
2019		3,741
Thereafter		30,469

	$	53,057

The Company is a party to a variety of agreements in the ordinary course of business under which it is obligated to indemnify a third party with respect to certain matters. Typically, these obligations arise as a result of contracts for sale of the Company’s product to customers where the Company provides indemnification against losses arising from matters such as product liabilities. The potential impact on the Company’s financial results is not subject to reasonable estimation because considerable uncertainty exists as to whether claims will be made and the final outcome of potential claims. To date, the Company has not incurred significant costs related to these types of indemnifications.

The Company is engaged in certain legal actions in the ordinary course or business and believes that the ultimate outcome of these actions will not have a material adverse effect on our operating results, liquidity or financial position.

(b) Purchase Commitments

The Company purchases components from a variety of suppliers and contract manufacturers. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, the Company enters into agreements with suppliers and contract manufacturers. A portion of our reported estimated purchase commitments arising from these agreements are firm, noncancelable, and unconditional commitments. The Company may be subject to penalties, and may lose important suppliers, if it is unable to meet its purchase commitments.

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

16.

Segmented information:

During the first quarter of 2015, Westport realigned the structure of the company's internal organization. The realignment combines, our historical operating segments, Westport Applied Technologies, Westport On-Road Systems and Westport Off-Road Systems into a single operating segment, Westport Operations. This change reflects the manner in which operating decisions and assessing business performance is currently managed by the Chief Operating Decision Makers (the CEO and the COO “CODMs”). As Westport narrows its focus within certain business units, including its investments in joint ventures, and defers certain products and related programs, the CODMs manage the combined businesses as a whole. Therefore, the Westport Operations segment provides more meaningful information to users of Westport’s financial statements. Prior-period amounts have been adjusted retrospectively to reflect these operating segment changes.

The financial information for the Company’s business segments evaluated by the CODMs includes the results of the CWI and WWI as if it were consolidated, which is consistent with the way Westport manages its business segments. As CWI and WWI are accounted for under the equity method of accounting, an adjustment is reflected in the tables below to reconcile the segment measures to the Company’s consolidated measures.

The Company’s business operates in four operating segments:

- Westport Operations designs manufactures and sells compressed natural gas, liquefied natural gas, and liquefied petroleum gas components and systems to over 20 global OEMs, and to aftermarket customers in over 60 countries.

- Corporate and Technology Investments, which includes corporate costs such as research and development, general and administrative, marketing, interest and other charges, foreign exchange and depreciation that cannot be attributed to a particular segment and are incurred by all segments;

- CWI which serves the medium- to heavy-duty engine markets with spark ignited natural gas engines. The fuel for CWI engines is typically carried on vehicles as compressed natural gas or liquefied natural gas; and

- WWI develops, manufactures, and sells advanced, alternative fuel engines and parts that are widely used in city bus, coach, and heavy-duty truck applications in China or exported to other regions globally.

The accounting policies for the reportable segments are consistent with those described in the Company's annual consolidated financial statements for the year ended December 31, 2014. The CODM evaluates segment performance based on gross margin and on the net operating income (loss), which is before income taxes and does not include depreciation and amortization, impairment charges, foreign exchange gains and losses, bank charges, interest and other expenses, interest and other income, and gain on sale of long-term investments.

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

16.

Segmented information (continued):

	Three months ended March 31,
	2015			2014
Revenue:
Westport Operations	$	27,452		$	38,965
Corporate and technology investments		571			963
CWI		73,000			80,068
WWI		55,878			113,359
Total segment revenues		156,901			233,355
Less: equity investees' revenue		(128,878	)		(193,427	)
Total consolidated revenues	$	28,023		$	39,928
Net consolidated operating income (loss) excluding depreciation and amortization, losses on impairments, write-downs and disposals, foreign exchange loss (gain), bank charges and other:
Westport Operations	$	(3,898	)	$	(2,621	)
Corporate and technology investments		(17,002	)		(24,364	)
CWI		14,817			(2,034	)
WWI		1,020			1,711
Total segment operating loss		(5,063	)		(27,308	)
Less: equity investees’ operating income		(15,837	)		323
Net consolidated operating loss excluding depreciation and amortization, losses on impairments, write-downs and disposals, foreign exchange (gain) loss, bank charges and other:		(20,900	)		(26,985	)
Depreciation and amortization:
Westport Operations		1,713			3,151
Corporate and technology investments		1,834			1,180

Losses on impairments, write-downs and disposals
Westport Operations		—			325
		3,547			4,656
Net consolidated operating loss before foreign exchange (gain) loss, bank charges and other		(24,447	)		(31,641	)
Foreign exchange (gain) loss, bank charges and other		(2,807	)		(8,824	)
Loss before undernoted		(21,640	)		(22,817	)
Interest on long-term debt and other income (expenses), net		(1,403	)		(670	)
Income from investment accounted for by the equity method		6,312			(356	)
Loss before income taxes	$	(16,731	)	$	(23,843	)

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

16.

Segmented information (continued):

	Three months ended March 31,
	2015		2014
Total additions to long-lived assets excluding business combinations:
Westport Operations	$	581	$	2,812
Corporate and technology investments		397		465
	$	978	$	3,277

It is impracticable for the Company to provide geographical revenue information by individual countries; however, it is practicable to provide it by geographical regions. Product and service and other revenues are attributable to geographical regions based on location of the Company’s customers and presented as a percentage of the Company’s product and service revenues are as follows:

% of total product revenue and service and other revenue
	Three months ended March 31,
	2015		2014
Americas (including United States)		41		47
Asia (including China)		11		10
Other (including Italy)		48		43

The Company’s revenue earned from Canadian customers is not significant and has been included in revenue from sales in the Americas.

As at March 31, 2015, total goodwill of $20,756 (December 31, 2014 - $23,352) was allocated to Westport Operations.

As at March 31, 2015, long-term investments of $30,431 (December 31, 2014 - $32,898) was allocated to the Corporate segment and $438 (December 31, 2014 - $426) was allocated to Westport Operations.

Total assets are allocated as follows:

	March 31, 2015		December 31, 2014
Westport Operations	$	200,070	$	219,261
Corporate and technology investments		91,164		118,434
CWI		165,736		171,029
WWI		187,116		182,215
		644,086		690,939
Less: equity investees’ total assets		352,852		353,244
Total consolidated assets	$	291,234	$	337,695

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

16.

Segmented information (continued):

The Company’s long-lived assets consist of property, plant and equipment, intangible assets and goodwill.

Long-lived assets information by geographic area:

	March 31, 2015		December 31, 2014
Italy	$	46,545	$	53,319
Netherlands		8,564		9,944
Canada		22,378		25,083
United States		19,469		20,320
Sweden		148		208
China		6,163		6,329
Australia		1,090		1,233
		104,357		116,436
Less: equity investees’ long-lived assets		6,945		7,030
Total consolidated long-lived assets	$	97,412	$	109,406

17.

Financial Instruments

(a)

Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are due. The Company has sustained losses and negative cash flows from operations since inception. At March 31, 2015, the Company has $71,318 of cash, cash equivalents and short-term investments.

The following are the contractual maturities of financial obligations as at March 31, 2015:

	Carrying amount		Contractual cash flows		< 1 year		1-3 years		4-5 years		>5 years
Accounts payable and accrued liabilities	$	44,774	$	44,774	$	44,774	$	—	$	—	$	—
Unsecured subordinated debentures (1)		42,657		52,440		3,925		3,925		44,590		—
Senior financing (1)		12,349		12,955		5,767		5,533		675		981
Senior revolving financing (1)		10,756		11,362		281		11,081		—		—
Other bank financing		4,069		4,466		2,120		430		121		1,796
Capital lease obligations		1,128		1,212		517		574		121		—
Operating lease commitments		—		53,057		4,583		9,868		8,137		30,469
	$	115,733	$	180,266	$	61,967	$	31,411	$	53,644	$	33,246

(1) Includes interest at rates disclosed in note 11.

Westport Innovations Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

17.

Financial instruments (continued):

(b)

Fair value of financial instruments:

The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and loan payable approximate their fair values due to the short-term period to maturity of these instruments.

The Company’s short-term investments are recorded at fair value. The long-term investment represents our interests in the CWI, WWI and other equity accounted for investees, which are accounted for using the equity method.

The carrying value reported in the balance sheets for obligations under capital lease, which is based upon discounted cash flows, approximates its fair value.

The carrying value reported in the balance sheet for the unsecured subordinated debenture notes (note 11) approximates its fair value, based on market rates of interest for similar indebtedness. Additionally, the interest rate on the notes approximates the interest rate being demanded in the market for debt with similar terms and conditions.

The carrying value reported in the balance sheet for senior financing agreements (note 11) approximates their fair values as at March 31, 2015, as the interest rates on the debt is floating and therefore approximates the market rates of interest. The Company’s credit spread also has not substantially changed from the premiums currently paid.

The Company categorizes its fair value measurements for items measured at fair value on a recurring basis into three categories as follows:

	Level 1 –	Unadjusted quoted prices in active markets for identical assets or liabilities.

	Level 2 –	Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

	Level 3 –	Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When available, the Company uses quoted market prices to determine fair value and classify such items in Level 1. When necessary, Level 2 valuations are performed based on quoted market prices for similar instruments in active markets and/or model–derived valuations with inputs that are observable in active markets. Level 3 valuations are undertaken in the absence of reliable Level 1 or Level 2 information.

As at March 31, 2015, cash and cash equivalents and short-term investments are measured at fair value on a recurring basis and are included in Level 1.

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