Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. ENERNOC INC (1244937) 10-Q published on Aug 09, 2017 at 10:00 am
Reporting Period: Jun 29, 2017
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
The Company provides demand response solutions to grid operators and utility customers pursuant to contractual commitments over defined service delivery periods. These contracts typically include a single promise to stand ready, on a monthly basis, to deliver a set amount of curtailment (committed capacity) per month when and if called upon by the grid operator or utility. The Company has concluded this represents a series of distinct monthly services that are substantially the same, with the same pattern of transfer to the customer. Accordingly, the monthly promise to stand ready is accounted for as a single performance obligation. In order to provide this stand ready service, the Company utilizes a portfolio of C&I end-users that have the ability to curtail MW when called upon. The Company is the principal in these arrangements as it has control over the services prior to those services being transferred to the customer.
Capacity fees are paid to the Company by the grid operators and utilities for its stand ready commitment to curtail MWs and are typically based on the Company's ability to deliver the committed capacity throughout the contractual delivery period. In general, if the Company fails to curtail the contracted MW during energy or test dispatches, the MW shortfall results in a penalty that could require the Company to reduce, or in some cases refund, fees paid by the customer during the contract period. Depending on the contract, penalties are limited to the particular month in which the shortfall occurs, or they are applied retrospectively, prospectively, or both retrospectively and prospectively. Due to these penalty provisions, capacity fees represent variable consideration. Certain contracts also provide additional consideration in the form of energy fees for actual curtailment of MW during an emergency dispatch. As energy fees are only paid in the event of an emergency dispatch, these fees also represent variable consideration.
Consideration for the Company’s subscription arrangements consist of fixed, variable and usage based fees. The Company invoices a portion of the fees at the outset of the contract and then monthly or quarterly thereafter. Advance non-refundable fees, which are deemed to be fixed, are not separate performance obligations and are recognized as the performance obligation in the customer contract is satisfied. Monthly subscription fees are generally based on the number of sites and the level of services selected by the customer. These fees are subject to the execution of predefined performance criteria, resulting in variable consideration. The Company has concluded the monthly promised services generally meet the allocation of variable consideration exception criteria, which permits the variable consideration to be allocated to each distinct month as the monthly services are delivered to the customer. In addition, certain fees are unit-based, calculated on the number of transactions processed monthly. Usage based fees are deemed to be variable consideration that meet the allocation exception for variable consideration as they are specific to the month that the usage occurs. Usage based fees are fully constrained until the related usage occurs.
Between July 14, 2017 and July 18, 2017, three putative class action lawsuits were filed on behalf of the public stockholders of the Company (captioned Basch v. EnerNOC, Inc., et al., No. 1:17-cv-11305; Nelson v. EnerNOC, Inc., et al., No. 1:17-cv-11324; and Berg v. EnerNOC, Inc. et al., No. 1-17-cv-11331) in the United States District Court for the District of Massachusetts (the Court) against the Company, the members of the Company’s board of directors (the Board) and, in one case, Parent, Purchaser and Enel (collectively, the Stockholder Litigation). The complaints generally allege that the Company and the members of the Board violated Section 14 of the Exchange Act by issuing a Schedule 14D-9 that was materially misleading and omitted material facts related to the Offer and the Merger. The complaints also allege that the members of the Board and also, in one case, Parent, Purchaser and Enel, violated Section 20(a) of the Exchange Act, as controlling persons who had the ability to prevent the Schedule 14D-9 from being materially false and misleading. The complaints seek, among other things, an injunction against the consummation of the Offer and Merger, an award of damages, and an award of costs and disbursements for the actions, including reasonable attorneys’ and experts’ fees. On July 17, 2017, the plaintiff in the Basch action filed a motion for preliminary injunction, and the Court set a hearing date on that motion. On July 25, 2017, the Company filed an amendment to the Schedule 14D-9, which contained certain supplemental disclosures that were included to moot the claims alleged in the Stockholder Litigation (the “Supplemental Disclosures”). On July 26, 2017, in light of the Supplemental Disclosures, the plaintiff in the Basch action withdrew his motion for preliminary injunction and the Court vacated the preliminary injunction hearing.
as compared to the same periods in 2016. The decline in PJM and ERCOT revenues was largely due to the adoption of ASC 606. Specifically, in 2016, all PJM revenue associated with the 2015/2016 Extended program was recognized at the conclusion of the program period in May 2016. In addition, 2016 ERCOT revenues reflected four months of the 2015/2016 Winter program and four months of the 2016 Spring program, which were deferred and recognized upon program completion in January 2016 and May 2016, respectively. The recognition pattern in the current year more closely aligns with the service performance period. The decline in AEMO revenues was largely driven by a decrease in enrolled MW as compared to the same period in 2016. The decline in ISO-NE revenues was largely due to reduced participation in the forward capacity market program and having recognized previously deferred economic program revenues in 2016 with the resolution of the United States Supreme Court's January 2016 ruling in FERC v. Electric Power Supply Association (FERC 745). The declines above were partially offset by increased enrolled MW in our KPX program, increased rates in our NYISO program and immaterial increases throughout various other programs.