10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                  

Commission file number 0-31313

BROADWIND ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware	88-0409160
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

47 East Chicago Avenue, Suite 332, Naperville, IL 60540

(Address of principal executive offices)

(630) 637-0315

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

Number of shares of registrant’s common stock, par value $0.001, outstanding as of October 31, 2012: 14,110,127.

BROADWIND ENERGY, INC. AND SUBSIDIARIES

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Cash Flows	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	29
Signatures		30

PART I.       FINANCIAL INFORMATION

Item 1.   Financial Statements

BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	September 30,			December 31,
	2012			2011
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,721		$	13,340
Restricted cash	330			876
Accounts receivable, net of allowance for doubtful accounts of $515 and $438 as of September 30, 2012 and December 31, 2011, respectively	28,471			25,311
Inventories, net	29,027			23,355
Prepaid expenses and other current assets	3,219			4,033
Assets held for sale	8,044			8,052
Total current assets	71,812			74,967
Property and equipment, net	81,299			87,766
Intangible assets, net	8,119			9,214
Other assets	654			944
TOTAL ASSETS	$	161,884		$	172,891
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Lines of credit and notes payable	$	17,585		$	1,566
Current maturities of long-term debt	349			636
Current portions of capital lease obligations	2,242			965
Accounts payable	14,338			17,358
Accrued liabilities	5,627			5,749
Customer deposits	3,908			17,328
Liabilities held for sale	4,083			4,833
Total current liabilities	48,132			48,435
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	2,781			4,797
Long-term capital lease obligations, net of current portions	1,116			975
Other	1,601			825
Total long-term liabilities	5,498			6,597
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding	—			—
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,110,127 and 13,977,920 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively	14			140
Additional paid-in capital	372,673			370,123
Accumulated deficit	(264,433		)	(252,404		)
Total stockholders’ equity	108,254			117,859
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	161,884		$	172,891

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues	$	55,045		$	47,899		$	165,799		$	130,761
Cost of sales	52,097			47,098			158,155			124,449
Restructuring	233			89			1,038			89
Gross profit	2,715			712			6,606			6,223
OPERATING EXPENSES:
Selling, general and administrative	5,197			6,442			16,658			19,807
Intangible amortization	664			214			1,094			644
Restructuring	381			300			481			300
Total operating expenses	6,242			6,956			18,233			20,751
Operating loss	(3,527		)	(6,244		)	(11,627		)	(14,528		)
OTHER (EXPENSE) INCOME, net:
Interest expense, net	(553		)	(276		)	(1,053		)	(845		)
Other, net	148			127			758			559
Restructuring	(15		)	(202		)	(86		)	(202		)
Total other (expense) income, net	(420		)	(351		)	(381		)	(488		)
Net loss from continuing operations before provision for income taxes	(3,947		)	(6,595		)	(12,008		)	(15,016		)
(Benefit) provision for income taxes	(9		)	(9		)	21			24
LOSS FROM CONTINUING OPERATIONS	(3,938		)	(6,586		)	(12,029		)	(15,040		)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX	—			—			—			(1,184		)
NET LOSS	$	(3,938	)	$	(6,586	)	$	(12,029	)	$	(16,224	)
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
Loss from continuing operations	$	(0.28	)	$	(0.60	)	$	(0.86	)	$	(1.39	)
Loss from discontinued operations	—			—			—			(0.11		)
Net loss	$	(0.28	)	$	(0.60	)	$	(0.86	)	$	(1.50	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted	14,093			11,037			14,022			10,822

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Nine Months Ended September 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(12,029	)	$	(16,224	)
Loss from discontinued operations	—			1,184
Loss from continuing operations	(12,029		)	(15,040		)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense	12,227			10,910
Stock-based compensation	2,079			1,395
Allowance for doubtful accounts	158			542
Common stock issued under defined contribution 401(k) plan	345			150
Loss on disposal of assets	220			390
Changes in operating assets and liabilities:
Accounts receivable	(3,318		)	(2,586		)
Inventories	(5,672		)	(13,544		)
Prepaid expenses and other current assets	1,078			(411		)
Accounts payable	(3,175		)	806
Accrued liabilities	(110		)	(1,112		)
Customer deposits	(13,411		)	6,822
Other non-current assets and liabilities	1,319			186
Net cash used in operating activities of continuing operations	(20,289		)	(11,492		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of logistics business	375			761
Purchases of property and equipment	(3,300		)	(4,134		)
Proceeds from disposals of property and equipment	106			1,850
Decrease in restricted cash	546			(1,276		)
Net cash used in investing activities of continuing operations	(2,273		)	(2,799		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of stock	—			11,739
Payments on lines of credit and notes payable	(24,190		)	(1,055		)
Proceeds from lines of credit and notes payable	36,908			2,307
Proceeds from sale-leaseback transactions	1,000			—
Payments for debt issuance costs	(630		)	—
Principal payments on capital leases	(1,145		)	(674		)
Net cash provided by financing activities of continuing operations	11,943			12,317
DISCONTINUED OPERATIONS:
Operating cash flows	—			(829		)
Financing cash flows	—			(83		)
Net cash used in discontinued operations	—			(912		)
Add: Cash balance of discontinued operations, beginning of period	—			530
NET DECREASE IN CASH AND CASH EQUIVALENTS	(10,619		)	(2,356		)
CASH AND CASH EQUIVALENTS, beginning of the period	13,340			15,331
CASH AND CASH EQUIVALENTS, end of the period	$	2,721		$	12,975
Supplemental cash flow information:
Interest paid, net of capitalized interest	$	854		$	757
Income taxes paid	$	25		$	34
Non-cash investing and financing activities:
Issuance of restricted stock grants	$	1,307		$	633
Common stock issued under defined contribution 401(k) plan	$	345		$	150

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands, except share and per share data)

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2012. The December 31, 2011 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the condensed consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind Energy, Inc. and its wholly-owned subsidiaries Broadwind Towers, Inc. (“Broadwind Towers”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Services, LLC (“Broadwind Services”) (collectively, the “Subsidiaries”). All intercompany transactions and balances have been eliminated. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

There have been no material changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2012 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Company Description

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Broadwind,” and the “Company” refer to Broadwind Energy, Inc., a Delaware corporation headquartered in Naperville, Illinois, and the Subsidiaries.

Broadwind provides technologically advanced high-value products and services to energy, mining and infrastructure sector customers, primarily in the U.S. The Company’s most significant presence is within the U.S. wind industry, although it has increasingly diversified into other industrial markets in order to improve its capacity utilization and reduce its exposure to uncertainty related to favorable governmental policies currently supporting the U.S. wind industry. For the first nine months of 2012, the Company’s revenue was derived 64% from sales associated with new wind turbine installations, down from 73% for the same period of 2011.

The Company’s product and service portfolio provides its wind energy customers, including wind turbine manufacturers, wind farm developers and wind farm operators, with access to a broad array of component and service offerings. Outside of the wind market, the Company provides precision gearing and specialty weldments to a broad range of industrial customers for oil and gas, mining and other industrial applications.

Reverse Stock Split

On August 22, 2012, the Company filed an Amendment to its Certificate of Incorporation to effect a reverse split of its common stock with a ratio of one post-split share for every ten shares issued and outstanding. As a result of the reverse stock split, the number of authorized shares of the Company’s common stock automatically decreased to 30 million shares, without any change in the par value of such shares. All references in these financial statements and notes to the  number of shares, price per share and weighted average number of shares outstanding of the Company’s common stock prior to the reverse stock split have been adjusted to reflect the reverse stock split on a retroactive basis unless otherwise noted.

Liquidity

During the third quarter of 2012, the Company established a new three-year $20,000 credit agreement with AloStar Bank of Commerce (“AloStar”). Pursuant to this agreement, AloStar will advance funds against the Company’s borrowing base, which consists of approximately 85% of eligible receivables and approximately 50% of eligible inventory. Proceeds from the transaction were used to repay certain outstanding indebtedness, including the outstanding debt associated with the Wells Fargo AP Agreements

4

(hereinafter defined). Under this new recapitalized borrowing structure, borrowings are continuous and all cash proceeds received by the Company and the Subsidiaries are automatically applied to the outstanding borrowed balance. As a result of this structure, the Company anticipates that cash balances will remain at a minimum while there are outstanding borrowed amounts on the line of credit.

The Company has a limited history of operations and has incurred operating losses since inception, partly due to large non-cash charges attributable to significant capital expenditures and acquisition outlays during 2007 and 2008. The Company anticipates that current cash resources, amounts available on the AloStar line, and cash to be generated from operations over the next twelve months will be adequate to meet the Company’s liquidity needs for at least the next twelve months. As discussed further in Note 8, “Debt and Credit Agreements” of these condensed consolidated financial statements, the Company is obligated to make principal payments on outstanding debt totaling $349 during the next twelve months, has $4,083 of indebtedness associated with its Liabilities Held for Sale and is obligated to make purchases totaling $341 during the same period under the purchase commitments described in Note 15, “Commitments and Contingencies” of these condensed consolidated financial statements. The Company also has a $17,585 balance on its three-year AloStar line of credit. If assumptions regarding the Company’s restructuring efforts, production, sales and subsequent collections from several of the Company’s large customers, as well as revenues generated from new customer orders, are not materially consistent with management’s expectations, the Company may encounter cash flow and liquidity issues. Additional funding may not be available when needed or on terms acceptable to the Company, which could affect its overall operations. If the Company cannot make scheduled payments on our debt, or comply with applicable covenants, it will be in default and, as a result, among other things, its debt holders could declare all outstanding principal and interest to be due and payable. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, will likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash flows to operate its businesses and to meet its financial obligations and debt covenants, there can be no assurances that its operations will generate sufficient cash or that credit facilities will be available in an amount sufficient to enable the Company to pay its indebtedness or to fund its other liquidity needs.

In addition, please refer to Note 17, “Restructuring” of these condensed consolidated financial statements for a discussion of the Company’s restructuring plan which the Company initiated in the third quarter of 2011. To date, the Company has incurred $3,708 of costs in conjunction with its restructuring plan. Including costs incurred to date, the Company expects that a total of approximately $13,468 of costs will be incurred to implement this restructuring plan. Of the total projected expenses, the Company anticipates that approximately $3,406 will be non-cash expenditures. The Company anticipates that the remaining cash expenditures will be funded substantially by net proceeds from asset sales of approximately $7,200. The Company anticipates cash flow savings of approximately $5,500 annually from the restructuring efforts.

NOTE 2 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, 2012 and 2011, as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Basic earnings per share calculation:
Net loss to common stockholders	$	(3,938	)	$	(6,586	)	$	(12,029	)	$	(16,224	)
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Basic net loss per share	$	(0.28	)	$	(0.60	)	$	(0.86	)	$	(1.50	)
Diluted earnings per share calculation:
Net loss to common stockholders	$	(3,938	)	$	(6,586	)	$	(12,029	)	$	(16,224	)
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Common stock equivalents:
Stock options and unvested restricted stock units (1)	—			—			—			—
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Diluted net loss per share	$	(0.28	)	$	(0.60	)	$	(0.86	)	$	(1.50	)

(1)Stock options and unvested restricted stock units granted and outstanding of 1,064,525 and 292,926 as of September 30, 2012 and 2011, respectively, are excluded from the computation of diluted earnings per share due to the anti-dilutive effect as a result of the Company’s net loss for these respective periods.

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NOTE 3 — DISCONTINUED OPERATIONS

In March 2011, the Company completed the divestiture of its logistics business, through the sale of its wholly-owned subsidiary Badger Transport, Inc. (“Badger”) to BTI Logistics, LLC (“BTI Logistics”). Proceeds from the sale included approximately $800 in cash, a $1,500 secured promissory note payable in quarterly installments of $125 beginning September 30, 2011, and 10,000 shares of Broadwind common stock held by the buyer. The purchase price was subject to final working capital adjustments and certain contingencies and indemnifications. In addition, BTI Logistics assumed approximately $2,600 of debt and capital leases, plus approximately $1,600 of operating lease obligations.

Results for Badger, which are reflected as discontinued operations in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2012 and 2011, were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Revenues	$	—	$	—	$	—	$	435
Loss before benefit for income taxes	—		—		—		(1,182		)
Income tax provision (benefit)	—		—		—		2
Loss from discontinued operations	$	—	$	—	$	—	$	(1,184	)

NOTE 4 — CASH AND CASH EQUIVALENTS

Cash and cash equivalents typically comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short-term government bonds, Treasury bills, marketable securities and commercial paper. The Company’s treasury policy is to invest excess cash in money market funds or other investments, which are generally of a short-term duration based upon operating requirements. Income earned on these investments is recorded to interest income in the Company’s condensed consolidated statements of operations. As of September 30, 2012 and December 31, 2011, cash and cash equivalents totaled $2,721 and $13,340, respectively.

Cash and cash equivalents consisted of the following as of September 30, 2012 and December 31, 2011:

	September 30,		December 31,
	2012		2011
Cash and cash equivalents:
Cash	$	2,721	$	11,127
Certificates of deposits	—		707
Municipal bonds	—		1,506
Total cash and cash equivalents	2,721		13,340

NOTE 5 — INVENTORIES

The components of inventories as of September 30, 2012 and December 31, 2011 are summarized as follows:

	September 30,			December 31,
	2012			2011
Raw materials	$	13,829		$	11,943
Work-in-process	10,617			7,437
Finished goods	5,395			4,921
	29,841			24,301
Less: Reserve for excess and obsolete inventory	(814		)	(946		)
Net inventories	$	29,027		$	23,355

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NOTE 6 — INTANGIBLE ASSETS

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed during 2007. Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from 8 to 20 years. The Company tests intangible assets for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable. During the third quarter of 2012, the Company identified triggering events associated with the Company’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its identifiable intangible assets. Based upon the Company’s assessment, the recoverable amount and the fair value were substantially in excess of the carrying amount of the intangible assets, and no impairment to these assets was indicated as of September 30, 2012. During the second quarter of 2012, the Company concluded that it was appropriate to shorten the useful life associated with a $2,216 portion of the customer relationships intangible assets and amortize it over one year, instead of over the remaining five years as previously assigned to this portion of the intangible assets.

As of September 30, 2012 and December 31, 2011, the cost basis, accumulated amortization, impairment charge and net book value of intangible assets were as follows:

	September 30, 2012									December 31, 2011
								Net									Net
	Cost		Accumulated			Impairment		Book		Cost		Accumulated			Impairment		Book
	Basis		Amortization			Charge		Value		Basis		Amortization			Charge		Value
Intangible assets:
Customer relationships	$	3,979	$	(1,878	)	$	—	$	2,101	$	3,979	$	(1,084	)	$	—	$	2,895
Trade names	7,999		(1,981		)	—		6,018		7,999		(1,680		)	—		6,319
Intangible assets	$	11,978	$	(3,859	)	$	—	$	8,119	$	11,978	$	(2,764	)	$	—	$	9,214

NOTE 7 — ACCRUED LIABILITIES

Accrued liabilities as of September 30, 2012 and December 31, 2011 consisted of the following:

	September 30,		December 31,
	2012		2011
Accrued payroll and benefits	$	1,962	$	2,762
Accrued property taxes	544		250
Income taxes payable	388		386
Accrued professional fees	1,087		433
Accrued warranty liability	751		983
Accrued other	895		935
Total accrued liabilities	$	5,627	$	5,749

NOTE 8 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of September 30, 2012 and December 31, 2011 consisted of the following:

	September 30,			December 31,
	2012			2011
Lines of credit	$	17,585		$	—
Term loans and notes payable	3,130			6,999
	20,715			6,999
Less: Current maturities	(17,934		)	(2,202		)
Long-term debt, net of current maturities	$	2,781		$	4,797

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Credit Facilities

AloStar Credit Facility

On August 23, 2012, the Company and the Subsidiaries entered into a Loan and Security Agreement (the “Loan Agreement”) with AloStar, providing the Company and the Subsidiaries with a new $20,000 secured credit facility (the “Credit Facility”). The Credit Facility is a secured three-year asset-based revolving credit facility, pursuant to which AloStar will advance funds against a borrowing base consisting of approximately 85% of the face value of eligible receivables of the Company and the Subsidiaries and approximately 50% of the book value of eligible inventory of the Company and the Subsidiaries. Borrowings under the Credit Facility bear interest at a per annum rate equal to the one-month London Interbank Offered Rate (“LIBOR”) plus a margin of 4.25%, with a minimum interest rate of 5.25% per annum. The Company must also pay an unused facility fee to AloStar equal to 0.50% per annum on the unused portion of the Credit Facility along with other standard fees. The initial term of the Loan Agreement ends on August 23, 2015.

The Loan Agreement contains customary representations and warranties applicable to the Company and the Subsidiaries. It also contains a requirement that the Company, on a consolidated basis, maintain a minimum monthly fixed charge coverage ratio and minimum monthly earnings before interest, taxes, depreciation, amortization, restructuring and share-based payments (“Adjusted EBITDA”), along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications.

The obligations under the Loan Agreement are secured by, subject to certain exclusions, (i) a first priority security interest in all of the accounts, inventory, chattel paper, payment intangibles, cash and cash equivalents and other working capital assets and stock or other equity interests in the Subsidiaries and (ii) a first priority security interest in all of the equipment of Brad Foote.

As described in greater detail below, the Company  used the initial proceeds from the Credit Facility to:  (i) repay all outstanding obligations under the Wells Fargo credit facility established pursuant to the AP Agreements; (ii) repay all outstanding obligations under the ICB Notes; (iii) repay all outstanding obligations under the Company’s Second Amended and Restated Promissory Note to J. Cameron Drecoll dated July 17, 2012 in the original principal amount of approximately $1,453; and (iv) pay fees and expenses associated with these transactions.  The Company will use future proceeds from the Credit Facility to finance its ongoing general corporate needs.

As of September 30, 2012, the total outstanding indebtedness under the Credit Facility was $17,585, the Company had the ability to borrow up to an additional $2,415 and the per annum interest rate was 5.25%. The Company was in compliance with all covenants under the documents evidencing and securing the Credit Facility as of September 30, 2012.

Great Western Bank Loans

On April 28, 2009, Broadwind Towers entered into a Construction Loan Agreement with Great Western Bank (“GWB”), pursuant to which GWB agreed to provide up to $10,000 in financing (the “GWB Construction Loan”) to fund construction of Broadwind Towers’ wind tower manufacturing facility in Brandon, South Dakota (the “Brandon Facility”). Pursuant to a Change in Terms Agreement dated April 5, 2010 between GWB and Broadwind Towers, the GWB Construction Loan was converted to a term loan (the “GWB Term Loan”) providing for monthly payments of principal plus interest, extending the maturity date to November 5, 2016, reducing the principal amount to $6,500, and changing the per annum interest rate to 8.5%.

The GWB Term Loan is secured by a first mortgage on the Brandon Facility and all fixtures and proceeds relating thereto, pursuant to a Mortgage and a Commercial Security Agreement, each between Broadwind Towers and GWB, and by a Commercial Guaranty from the Company. In addition, the Company has agreed to subordinate all intercompany debt with Broadwind Towers to the GWB Term Loan. The documents evidencing and securing the GWB Term Loan contain representations, warranties and covenants that are customary for a term financing arrangement and contain no financial covenants. As of September 30, 2012, the total outstanding indebtedness under the GWB Term Loan was $4,083, which is recorded as Liabilities Held for Sale within the condensed consolidated balance sheet in light of the Company having initiated a process to sell the Brandon Facility. The Company was also in compliance with all covenants associated with GWB Term Loan as of September 30, 2012.

Wells Fargo Account Purchase Agreements

On September 29, 2010, the Company, the Subsidiaries and Badger entered into account purchase agreements (the “AP Agreements”) with Wells Fargo Business Credit, a division of Wells Fargo Bank, N.A. (“Wells Fargo”). Under the terms of the AP Agreements, when requested by the Company, Wells Fargo would advance to the Subsidiaries approximately 80% of the face value of eligible receivables arising from sales of the Subsidiaries’ products and services. The aggregate facility limit of the AP Agreements was $10,000. For Wells Fargo’s services under the AP Agreements, the Subsidiaries agreed to pay Wells Fargo (i) a floating discount

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fee of the then-prevailing LIBOR plus 3.75% per annum on the sum of the outstanding financed accounts, (ii) an annual facility fee of 1% of the aggregate facility limit, and (iii) an annual unused line fee of 0.042% on the portion of the credit facility which was unused. The initial term of the AP Agreements was scheduled to end on September 29, 2013, with an early termination fee of up to 2% of the aggregate facility limit applicable if the AP Agreements were terminated prior to that date.

On August 23, 2012, in connection with consummation of the Credit Facility as described above, the Subsidiaries used proceeds of the Credit Facility to repay all outstanding obligations under the credit facility established pursuant to the AP Agreements.  In connection with this repayment, which included a $200 termination fee, the AP agreements were terminated.

Investors Community Bank Loans

On April 7, 2008, one of the Company’s former wholly-owned subsidiaries which was subsequently merged into Broadwind Towers executed four promissory notes with Investors Community Bank (“ICB”) in the aggregate principal amount of approximately $3,781. Three of these notes were term notes, with initial principal balances totaling $2,049, bearing interest at fixed rates ranging from 5.65% to 6.85% per annum, with maturities ranging from October 2012 to April 2013 (collectively, the “ICB Notes”). The fourth note was a line of credit note, which has been repaid in full.

On August 23, 2012, in connection with consummation of the Credit Facility as described above, the Company used proceeds of the Credit Facility to repay all outstanding obligations under the ICB Notes. Upon such repayment, the ICB Notes were cancelled and the mortgage securing the ICB Loans was released.

Selling Shareholder Notes

On May 26, 2009, the Company entered into a settlement agreement (the “Settlement Agreement”) with the three former owners of Brad Foote, including J. Cameron Drecoll, who served as the Company’s Chief Executive Officer and a member of its Board of Directors until December 1, 2010. The Settlement Agreement related to the post-closing escrow established in connection with the Company’s acquisition of Brad Foote. Under the terms of the Settlement Agreement, among other terms, the Company issued three promissory notes to the former owners in the aggregate principal amount of $3,000, bearing interest at a rate of 7% per annum and maturing on May 29, 2012.

The notes issued to the former owners other than Mr. Drecoll, each with an original principal amount of $340, were repaid upon maturity in May 2012. Mr. Drecoll’s note, with an original principal amount of $2,320, was amended on July 1, 2011, to (i) change the maturity date to January 10, 2014, (ii) increase the interest rate to 9% per annum, and (iii) amend the repayment schedule to amortize the principal amount outstanding over the remaining term of the note, beginning with payments commencing in the fourth quarter of 2011. Under the terms of the amendment, the Company reduced the principal amount outstanding under the note to $1,677. On July 17, 2012, the note was further amended to provide for payment of the remaining balance in two equal installments on October 10, 2012 and January 10, 2013, or sooner if the Company’s cash balance and credit availability met certain thresholds. On August 23, 2012, in connection with the consummation of the Credit Facility as described above, the Company used proceeds of the Credit Facility to repay all outstanding obligations under Mr. Drecoll’s note. Upon such repayment, the note was cancelled.

Other

Included in Long Term Debt, Net of Current Maturities is $2,280 associated with the New Markets Tax Credit transaction described further in Note 16, “New Markets Tax Credit Transaction” of these condensed consolidated financial statements.

NOTE 9 — FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

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Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and customer deposits approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.

Assets measured at fair value on a nonrecurring basis

The fair value measurement approach for long-lived assets utilizes a number of significant unobservable inputs or Level 3 assumptions. These assumptions include, among others, projections of the Company’s future operating results, the implied fair value of these assets using an income approach by preparing a discounted cash flow analysis and a market-based approach based on the Company’s market capitalization, and other subjective assumptions. During the third quarter of 2012, the Company identified triggering events associated with the Company’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its identifiable intangible assets and certain property and equipment assets. Based upon the Company’s assessment, no additional impairment to these assets was identified as of September 30, 2012.

NOTE 10 — INCOME TAXES

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of September 30, 2012, the Company had no net deferred income taxes due to the full recorded valuation allowance. During the three months ended September 30, 2011 and 2012, the Company recorded a benefit for income taxes of $9 from continuing operations. During the nine months ended September 30, 2012, the Company recorded a provision for income taxes of $21 from continuing operations compared to a provision for income taxes of $24 from continuing operations during the nine months ended September 30, 2011.

The Company files income tax returns in U.S. federal and state jurisdictions. As of September 2012, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2011, the Company had net operating loss carryforwards of $136,189 expiring in various years through 2031.

The Company does not anticipate there will be a material change in the total amount of unrecognized tax benefits within the next twelve months. However, Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of net operating loss carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize net operating loss carryforwards and built-in losses may be limited, under this section or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section 382, the Company has determined that aggregate changes in stock ownership have triggered an annual limitation of net operating loss carryforwards and built-in losses available for utilization. To the extent the Company’s use of net operating loss carryforwards and associated built-in losses is significantly limited in the future due to additional changes in stock ownership, the Company’s income could be subject to U.S. corporate income tax earlier than it would if the Company were able to use net operating loss carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.

As of September 30, 2012, the Company has $445 of unrecognized tax benefits, all of which would have a favorable impact on income tax expense. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company has accrued interest and penalties of $159 as of September 30, 2012. As of December 31, 2011, the Company had unrecognized tax benefits of $417, of which $131 represented accrued interest and penalties.

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NOTE 11 — SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plans

2007 Equity Incentive Plan

The Company has granted  incentive stock options and other equity awards pursuant to the Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan (the “2007 EIP”), which was approved by the Company’s Board of Directors in October 2007 and by the Company’s stockholders in June 2008. The 2007 EIP has been amended periodically since its original approval. Specifically, (i) the 2007 EIP was amended by the Company’s stockholders in June 2009 to increase the number of shares of common stock authorized for issuance under the 2007 EIP, (ii) the 2007 EIP was further amended and restated in March 2011 by the Company’s Board of Directors to limit share recycling under the 2007 EIP, to include a minimum vesting period for time-vesting restricted stock awards and restricted stock units (“RSU’s”) and to add a clawback provision, and (iii) the 2007 EIP was further amended at the Company’s Annual Meeting of Stockholders on May 4, 2012 to increase the number of shares of common stock authorized for issuance under the 2007 EIP to provide sufficient authorized shares to settle certain awards granted in December 2011.

The 2007 EIP reserved 691,051 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates depend to a large degree. As of September 30, 2012, the Company had reserved 122,358 shares for issuance upon the exercise of stock options outstanding and 417,223 shares for issuance upon the vesting of RSU awards outstanding. As of September 30, 2012, 85,099 shares of common stock reserved for stock options and RSU awards under the 2007 EIP have been issued in the form of common stock.

2012 Equity Incentive Plan

On March 8, 2012, the Company’s Board of Directors approved the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “2012 EIP;” together with the 2007 EIP, the “Equity Incentive Plans”), and at the Company’s Annual Meeting of Stockholders on May 4, 2012, the Company’s stockholders approved the adoption of the 2012 EIP. The purposes of the 2012 EIP are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2012 EIP by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors, and independent contractors; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the 2012 EIP, the Company may grant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of IRC Section 422); (iii) stock appreciation rights; (iv) restricted stock and RSU’s; and (v) performance awards.

The 2012 EIP reserves 1,200,000 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of September 30, 2012, the Company had reserved 164,997 shares for issuance upon the exercise of stock options outstanding, 359,947 shares for issuance upon the vesting of RSU awards outstanding, and 675,056 additional shares for future awards under the 2012 EIP. As of September 30, 2012, no shares of common stock reserved for stock options and RSU awards under the 2012 EIP have been issued in the form of common stock.

Stock Options.  The exercise price of stock options granted under the Equity Incentive Plans is equal to the closing price of the Company’s common stock on the date of grant. Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. Additionally, stock options expire ten years after the date of grant. The fair value of stock options granted is expensed ratably over their vesting term.

Restricted Stock Units.  The granting of RSU’s is provided for under the Equity Incentive Plans. RSU’s generally vest on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. The fair value of each RSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the vesting term of the RSU award.

The following table summarizes stock option activity during the nine months ended September 30, 2012 under the Equity Incentive Plans, as follows:

	Options		Weighted Average Exercise Price
Outstanding as of December 31, 2011	127,505		$	60.07
Granted	164,997		$	3.39
Exercised	—		$	—
Forfeited	(5,147	)	$	89.11
Expired	—		$	—
Outstanding as of September 30, 2012	287,355		$	27.01
			$	—
Exercisable as of September 30, 2012	57,602		$	86.18

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The following table summarizes RSU activity during the nine months ended September 30, 2012 under the Equity Incentive Plans, as follows:

	Number of RSU’s		Weighted Average Grant-Date Fair Value Per RSU
Outstanding as of December 31, 2011	364,600		$	13.16
Granted	500,996		$	4.28
Vested	(44,516	)	$	20.41
Forfeited	(43,910	)	$	12.55
Outstanding as of September 30, 2012	777,170		$	7.04

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. The weighted average fair value per share of stock option awards granted during the nine months ended September 30, 2012 and 2011, and the assumptions used to value these stock options, are as follows:

	Nine Months Ended September 30,
	2012			2011
Dividend yield	—			—
Risk-free interest rate	1.1		%	2.6		%
Weighted average volatility	99.98		%	96.09		%
Expected life (in years)	6.3			6.3
Weighted average grant date fair value per share of options granted	$	2.70		$	10.70

Dividend yield is zero as the Company currently does not pay a dividend.

Risk-free rate is based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life of the award.

During the nine months ended September 30, 2011 and 2012, the Company utilized a standard volatility assumption of 99.98% and 96.09%, respectively, for estimating the fair value of stock options awarded based on comparable volatility averages for the energy related sector.

The expected life of each stock option award granted is derived using the “simplified method” for estimating the expected term of a “vanilla-option” in accordance with Staff Accounting Bulletin (“SAB”) No. 107, “Share-Based Payment,” as amended by SAB No. 110, “Share-Based Payment.” The fair value of each unit of restricted stock is equal to the fair market value of the Company’s common stock as of the date of grant.

The Company utilized a forfeiture rate of 25% during the nine months ended September 30, 2012 and 2011 for estimating the forfeitures of stock options granted.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2012 and 2011, as follows:

	Nine Months Ended September 30,
	2012		2011
Share-based compensation expense:
Selling, general and administrative	$	2,079	$	1,395
Income tax benefit (1)	—		—
Net effect of share-based compensation expense on net loss	$	2,079	$	1,395
Reduction in earnings per share:
Basic and diluted earnings per share (2)	$	0.15	$	0.13

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(1) Income tax benefit is not illustrated because the Company is currently operating at a loss and an actual income tax benefit was not realized for the nine months ended September 30, 2012 and 2011. The result of the loss situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance.

(2) Diluted earnings per share for the nine months ended September 30, 2012 and 2011 does not include common stock equivalents due to their anti-dilutive nature as a result of the Company’s net losses for these respective periods. Accordingly, basic earnings per share and diluted earnings per share are identical for all periods presented.

As of September 30, 2012, the Company estimates that pre-tax compensation expense for all unvested share-based awards, including both stock options and RSU’s, in the amount of approximately $3,461 will be recognized through 2016. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted stock by issuing new shares of common stock.

NOTE 12 — LEGAL PROCEEDINGS

Shareholder Lawsuits

On February 11, 2011, a putative class action was filed in the United States District Court for the Northern District of Illinois, Eastern Division, against the Company and certain of its current or former officers and directors. The lawsuit is purportedly brought on behalf of purchasers of the Company’s common stock between March 17, 2009 and August 9, 2010. A lead plaintiff has been appointed and an amended complaint was filed on September 13, 2011. The amended complaint names as additional defendants certain of the Company’s current and former directors, certain Tontine entities, and Jeffrey Gendell, a principal of Tontine. The complaint seeks to allege that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, and/or Section 20(a) of the Exchange Act by issuing or causing to be issued a series of allegedly false and/or misleading statements concerning the Company’s financial results, operations, and prospects, including with respect to the January 2010 secondary public offering of the Company’s common stock. The plaintiffs allege that the Company’s statements were false and misleading because, among other things, the Company’s reported financial results during the class period allegedly violated generally accepted accounting principles because they failed to reflect the impairment of goodwill and other intangible assets, and the Company allegedly failed to disclose known trends and other information regarding certain customer relationships at Brad Foote. In support of their claims, the plaintiffs rely in part upon six alleged confidential informants, all of whom are alleged to be former employees of the Company. On November 18, 2011, the Company filed a motion to dismiss.  On April 19, 2012, the Court granted in part and denied in part the Company’s motion. The Court dismissed all claims with prejudice against each of the named current and former officers except for J. Cameron Drecoll and held that the plaintiffs had failed to state a claim for any alleged misstatements made after March 19, 2010. In addition, the Court dismissed all claims with prejudice against the named Tontine entities and Mr. Gendell. The Court denied the motion with respect to certain of the claims asserted against the Company and Mr. Drecoll. The Company filed its answer and affirmative defenses on May 21, 2012. On June 22, 2012, plaintiffs filed a motion for class certification which is not yet fully briefed. The Company intends to vigorously defend the remaining claims asserted against it. Between February 15, 2011 and March 30, 2011, three putative shareholder derivative lawsuits were filed in the United States District Court for the Northern District of Illinois, Eastern Division against certain of the Company’s current and former officers and directors, and certain Tontine entities, seeking to challenge alleged breaches of fiduciary duty, waste of corporate assets, and unjust enrichment, including in connection with the January 2010 secondary public offering of the Company’s common stock. One of the lawsuits also alleges that certain directors violated Section 14(a) of the Exchange Act in connection with the Company’s Proxy Statement for its 2010 Annual Meeting of Stockholders. Two of the matters pending in the federal court were subsequently consolidated, and on May 15, 2012, the Court granted defendants’ motion to dismiss the consolidated cases and also entered an order dismissing the third case. The Company has received a request from the Tontine defendants for indemnification in the derivative suits and the class action lawsuit and may receive additional requests for indemnification from Tontine and/or Mr. Gendell pursuant to various agreements related to shares owned by Tontine. The Company maintains directors and officers liability insurance; however, the costs of indemnification for Mr. Gendell and/or Tontine would not be covered by any Company insurance policy. Because of the preliminary nature of these lawsuits, the Company is not able to estimate a loss or range of loss, if any, that may be incurred in connection with this matter at this time.

SEC Inquiry

In August 2011, the Company received a subpoena from the United States Securities and Exchange Commission (“SEC”) seeking documents and other records related to certain accounting practices at Brad Foote. The subpoena was issued in connection with an informal inquiry that the Company received from the SEC in November 2010 arising out of a whistleblower complaint received by the SEC related to revenue recognition, cost accounting and intangible and fixed asset valuations at Brad Foote. The Company has been providing information to the SEC in response to the informal inquiry and subpoena. The Company cannot currently predict the outcome of this investigation. The Company does not believe that the resolution of this matter will have a

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material adverse effect on the Company’s consolidated financial position or results of operations. The Company has received a request from Tontine for indemnification of expenses incurred in connection with an SEC subpoena and may receive additional requests for indemnification from Tontine and/or Mr. Gendell pursuant to various agreements related to shares owned by Tontine. No estimate regarding the loss or range of loss, if any, that may be incurred in connection with this matter is possible at this time.

Environmental

The Company is aware of a grand jury investigation commenced by the United States Attorney’s Office, Northern District of Illinois, for potential violation of federal environmental laws. On February 15, 2011, pursuant to a search warrant, officials from the United States Environmental Protection Agency entered and conducted a search of one of Brad Foote’s facilities in Cicero, Illinois, in connection with the alleged improper disposal of industrial wastewater to the sewer. Also on or about February 15, 2011, in connection with the same matter, the Company received two grand jury subpoenas requesting testimony and the production of certain documents relating to the Brad Foote facility’s past compliance with certain environmental laws and regulations relating to the generation, discharge and disposal of wastewater from certain of its processes between 2004 and the present. On or about February 23, 2011, the Company received another grand jury subpoena relating to the same investigation, requesting testimony and the production of certain other documents relating to certain of the Brad Foote facility’s employees, environmental and manufacturing processes, and disposal practices. The Company has produced e-mails, reports and correspondence as requested, and completed its response to these subpoenas on August 17, 2011.  The Company does not currently have information as to when the investigation may be concluded, and is also conducting an internal investigation of any possible non-compliance. The Company has also voluntarily instituted corrective measures at the Brad Foote facility, including changes to its wastewater disposal practices.  At this time, the Company has been advised that Brad Foote is a target of the investigation, but no fines or penalties have been suggested.  There can be no assurances that the conclusion of the investigation will not result in a determination that applicable environmental, health and safety laws and regulations were violated at the Brad Foote facility. Any violations found, or any criminal or civil fines, penalties and/or other sanctions imposed could be substantial and materially and adversely affect the Company. The Company had recorded a liability of $675 at December 31, 2010, which represented the low end of its estimate of remediation-related costs and expenses; as of September 30, 2012, those initial costs have been incurred, and additional costs have been expensed as incurred. No additional remediation related expenses are anticipated or have been accrued; however, the outcome of the investigation, the liability in connection therewith, and the impact to the Company’s operations cannot be predicted at this time. The Company does not believe that the resolution of this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations. No estimate regarding the loss or range of loss, if any, that may be incurred in connection with this matter is possible at this time.

Other

The Company is also a party to additional claims and legal proceedings arising in the ordinary course of business. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial position or liquidity. It is possible that if one or more of the matters described above were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s cash flows in the periods the Company would be required to pay such liability.

NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, the Company has not identified any new standards that it believes merit further discussion. The Company believes that none of the new standards will have a significant impact on its condensed consolidated financial statements.

NOTE 14 — SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products and services offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker. The Company’s segments and their product and service offerings are summarized below:

Towers and Weldments

The Company manufactures towers for wind turbines, specifically the large and heavier wind towers that are designed for 2 megawatt (“MW”) and larger wind turbines. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated

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in close proximity to the primary U.S. domestic energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of approximately 500 towers, sufficient to support turbines generating more than 1,200 MW of power. This product segment also encompasses the manufacture of specialty fabrications and specialty weldments for mining and other industrial customers. Consistent with the Company’s diversification strategy, during 2012 a portion of the Company’s tower capacity has been shifted to support the growing demand for specialty weldments.

Gearing

The Company engineers, builds and remanufactures precision gears and gearing systems for oil and gas, wind, mining and other industrial applications. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.

Services

The Company offers a comprehensive range of services, primarily to wind farm developers and operators. The Company specializes in non-routine maintenance services for both kilowatt and megawatt turbines. The Company also offers comprehensive field services to the wind industry. The Company is increasingly focusing its efforts on the identification and/or development of product and service offerings which will improve the reliability and efficiency of wind turbines, and therefore enhance the economic benefits to its customers. The Company provides wind services across the U.S., with primary service locations in South Dakota and Texas. In February 2011, the Company put into operation its dedicated drivetrain service center in Abilene, Texas (the “Gearbox Facility”), which is focused on servicing the growing installed base of MW wind turbines as they come off warranty and, to a limited extent, industrial gearboxes requiring precision repair and testing.

Corporate and Eliminations

“Corporate” includes the assets and selling, general and administrative expenses of the Company’s corporate office. “Eliminations” is comprised of adjustments to reconcile segment results to consolidated results.

Summary financial information by reportable segment for the three and nine months ended September 30, 2012 and 2011 was as follows:

For the Three Months Ended September 30, 2012:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	37,423	$	10,778		$	6,844		$	—		$	—		$	55,045
Intersegment revenues (1)	—		478			55			—			(533		)	—
Operating profit (loss)	1,740		(2,637		)	(570		)	(2,048		)	(12		)	(3,527		)
Depreciation and amortization	942		2,995			413			17			—			4,367
Capital expenditures	127		893			44			71			—			1,135

For the Three Months Ended September 30, 2011:	Towers and Weldments			Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	29,627		$	11,657		$	6,615		$	—		$	—		$	47,899
Intersegment revenues (1)	57			977			—						(1,034		)	—
Operating profit (loss)	(35		)	(3,281		)	(413		)	(2,489		)	(26		)	(6,244		)
Depreciation and amortization	872			2,469			263			43			—			3,647
Capital expenditures	178			268			822			16			—			1,284

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For the Nine Months Ended September 30, 2012:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	109,587	$	40,256		$	15,956		$	—		$	—		$	165,799
Intersegment revenues (1)	—		1,096			81			—			(1,177		)	—
Operating profit (loss)	3,306		(5,390		)	(3,331		)	(6,224		)	12			(11,627		)
Depreciation and amortization	2,722		8,217			1,237			51			—			12,227
Capital expenditures	540		1,657			944			159			—			3,300

For the Nine Months Ended September 30, 2011:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	82,292	$	37,694		$	10,775		$	—		$	—		$	130,761
Intersegment revenues (1)	58		1,002			35			—			(1,095		)	—
Operating profit (loss)	5,159		(8,523		)	(3,862		)	(7,275		)	(27		)	(14,528		)
Depreciation and amortization	2,638		7,497			645			130			—			10,910
Capital expenditures	367		(30		)	3,743			54			—			4,134

	Total Assets as of
	September 30,			December 31,
Segments:	2012			2011
Towers and Weldments	$	65,657		$	68,185
Gearing	78,218			80,642
Services	14,975			15,752
Assets held for sale	8,044			8,052
Corporate	328,019			317,413
Eliminations	(333,029		)	(317,153		)
	$	161,884		$	172,891

(1)Intersegment revenues generally include a 10% markup over costs and primarily consist of sales from Gearing to Services. Gearing sales to Services totaled $1,096 and $1,002 for the nine months ended September 30, 2012 and 2011, respectively.

NOTE 15 — COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company completed construction of the Brandon Facility in the first quarter of 2010, but has not commenced production at this facility. During 2010 the Company concluded that it would be difficult or impossible to operate the Brandon Facility in a profitable or cost-effective manner in light of the expected mid-term demand for wind towers. In connection with this determination, during the fourth quarter of 2010, the Company recorded an impairment charge of $13,326 to reduce the carrying value of the Brandon Facility assets to fair value which approximates its carrying value of $8,000. The Company currently has purchase commitments totaling approximately $341 outstanding related to the Brandon Facility. In the third quarter of 2011, the Company initiated a process to sell the Brandon Facility and reclassified the Brandon Facility, and the related indebtedness, to Assets Held for Sale and Liabilities Held for Sale, respectively (see Note 17, “Restructuring” of these financial statements).

Environmental Compliance and Remediation Liabilities

The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws can also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners, operators and/or users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites.

In connection with the Company’s ongoing restructuring initiatives, the Company identified a $352 liability associated with the planned sale of one of its Cicero, Illinois manufacturing facilities. The liability is associated with environmental remediation costs that were identified while preparing the site for sale.

16

Warranty Liability

The Company provides warranty terms that range from one to seven years for various products and services supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty provisions. As of September 30, 2012 and 2011, estimated product warranty liability was $751 and $863, respectively, and is recorded within accrued liabilities in the Company’s condensed consolidated balance sheets.

The changes in the carrying amount of the Company’s total product warranty liability for the nine months ended September 30, 2012 and 2011 were as follows:

	For the nine months ended September 30,
	2012			2011
Balance, beginning of period	$	983		$	1,071
Warranty expense	(133		)	21
Warranty claims	(99		)	(229		)
Balance, end of period	$	751		$	863

Allowance for Doubtful Accounts

Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the realizability of its accounts receivable. These factors include individual customer circumstances, history with the Company and other relevant criteria.

The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the realizability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the nine months ended September 30, 2012 and 2011 consists of the following:

	For the nine months ended September 30,
	2012			2011
Balance at beginning of period	$	438		$	489
Bad debt expense	200			532
Write-offs	(123		)	(3		)
Balance at end of period	$	515		$	1,018

Collateral

In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations.

Liquidated Damages

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question. As a result of production delays experienced, as of September 30, 2012 the Company has accrued $213 related to potential liquidated damages. The Company does not believe that any additional potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations.

Other

As of September 30, 2012, approximately 22% of the Company’s employees were covered by two collective bargaining agreements with United Steelworkers local unions in Cicero, Illinois and Neville Island, Pennsylvania, which are scheduled to remain

17

in effect through February 2014 and October 2012, respectively. In October of 2012, the Company reached preliminary agreement on a new collective bargaining agreement with its employees in Neville Island, Pennsylvania. The revised agreement is pending review and signature by a representative of the United Steelworkers of America. The Company considers its union and employee relations to be satisfactory.

The sale price from the sale of the Company’s Badger subsidiary to BTI Logistics is subject to certain contingencies and indemnifications.

On July 20, 2011, the Company executed a strategic financing transaction (the “NMTC Transaction”) involving the following third parties: AMCREF Fund VII, LLC (“AMCREF”), a registered community development entity; COCRF Investor VIII, LLC (“COCRF”); and Capital One, National Association (“Capital One”). The NMTC Transaction allows the Company to receive below market interest rate funds through the federal New Markets Tax Credit (“NMTC”) program, see Note 16, “New Markets Tax Credit Transaction” of these condensed consolidated financial statements. Pursuant to the NMTC Transaction, the gross loan and investment in the Gearbox Facility of $10,000 will generate $3,900 in tax credits over a period of seven years, which the NMTC Transaction makes available to Capital One. The Gearbox Facility must operate and be in compliance with the terms and conditions of the NMTC Transaction during the seven year compliance period, or the Company may be liable for the recapture of $3,900 in tax credits to which Capital One is otherwise entitled. The Company does not anticipate any credit recaptures will be required in connection with the NMTC Transaction.

NOTE 16 — NEW MARKETS TAX CREDIT TRANSACTION

On July 20, 2011, the Company received $2,280 in proceeds via the NMTC Transaction. The NMTC Transaction qualifies under the NMTC program and included a gross loan from AMCREF to Broadwind Services in the principal amount of $10,000, with a term of fifteen years and interest payable at the rate of 1.4% per annum, largely offset by a gross loan in the principal amount of $7,720 from the Company to COCRF, with a term of fifteen years and interest payable at the rate of 2.5% per annum.

The NMTC regulations permit taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities. The NMTC Transaction could generate $3,900 in tax credits, which the Company has made available under the structure by passing them through to Capital One. The proceeds have been applied to the Company’s investment in the Gearbox Facility assets and operating costs, as permitted under the NMTC program.

The Gearbox Facility must operate and be in compliance with various regulations and restrictions for seven years to comply with the terms of the NMTC Transaction, or the Company may be liable under its indemnification agreement with Capital One for the recapture of tax credits. In the event the Company does not comply with these regulations and restrictions, the NMTC program tax credits may be subject to 100% recapture for a period of seven years as provided in the IRC. The Company does not anticipate that any tax credit recapture events will occur or that it will be required to make any payments to Capital One under the indemnification agreement.

The Capital One contribution has been included in the Company’s condensed consolidated balance sheet at September 30, 2012. The NMTC Transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Capital One’s interest in 2018. Capital One may exercise an option to put its investment and receive $130 from the Company. If Capital One does not exercise its put option, the Company can exercise a call option at the then fair market value of the call. The Company believes that Capital One will exercise the put option in 2018 at the end of the tax credit recapture period. The Capital One contribution other than the amount allocated to the put obligation will be recognized as income only after the put/call is exercised and when Capital One has no ongoing interest. However, there is no legal obligation for Capital One to exercise the put, and the Company has attributed only an insignificant value to the put option included in this transaction structure.

The Company has determined that two pass-through financing entities created under this transaction structure are variable interest entities (“VIE’s”). The ongoing activities of the VIE’s—collecting and remitting interest and fees and complying with NMTC program requirements—were considered in the initial design of the NMTC Transaction and are not expected to significantly affect economic performance throughout the life of the VIE’s. Management also considered the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees under the transaction structure, Capital One’s lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the VIE’s. The Company has concluded that it is required to consolidate the VIE’s because the Company has both (i) the power to direct those matters that most significantly impact the activities of each VIE and (ii) the obligation to absorb losses or the right to receive benefits of each VIE.

The $262 of issue costs paid to third parties in connection with the NMTC Transaction are recorded as prepaid expenses, and are being amortized over the expected seven year term of the NMTC arrangement. Capital One’s net contribution of $2,280 is

18

included in Long Term Debt, Net of Current Maturities in the condensed consolidated balance sheet. Incremental costs to maintain the transaction structure during the compliance period will be recognized as they are incurred.

NOTE 17 — RESTRUCTURING

During the third quarter of 2011, the Company conducted a review of its business strategies and product plans based on the outlook for the economy at large, the forecast for the industries it serves, and its business environment. The Company concluded that its manufacturing footprint and fixed cost base were too large and expensive for its medium-term needs and has begun restructuring its facility capacity and its management structure to consolidate and increase the efficiencies of its operations.

The Company is executing a plan to reduce its facility footprint by approximately 40% through the sale and/or closure through the end of 2014 of facilities comprising a total of approximately 600,000 square feet. The Company believes the remaining locations will be sufficient to support its Towers and Weldments, Gearing, Services and general corporate and administrative activities, while allowing for growth for the next several years.

As part of this plan, in the third quarter of 2011, the Company determined that the Brandon Facility should be sold, and as a result the Company has reclassified the Brandon Facility land, building and fixtures valued at $8,000 from Property and Equipment to Assets Held for Sale. In addition, the related indebtedness associated with the Brandon Facility of $4,583 was reclassified in the third quarter of 2011 from Long-Term Debt Net of Current Maturities and Current Maturities of Long-Term Debt to Liabilities Held for Sale. Although the Company has experienced delays in attempting to sell the Brandon Facility as a result of the depressed commercial real estate market, the Company still expects that this sale will be completed in the next twelve months. The Company had previously recorded an impairment charge of $13,326 in the fourth quarter of 2010 to bring these assets to fair value; no further impairment charges were recorded.

In the third quarter of 2012, the Company identified a $352 liability associated with the planned sale of one of its Cicero, Illinois manufacturing facilities. The liability is associated with environmental remediation costs that were identified while preparing the site for sale. The expenses associated with this liability have been recorded as a restructuring charge.

Additional restructuring plans were approved in the fourth quarter of 2011. To date, the Company has incurred $3,708 of costs in conjunction with its restructuring plan. Including costs incurred to date, the Company expects that a total of approximately $13,468 of costs will be incurred to implement this restructuring plan. Of the total projected expenses, the Company anticipates that a total of approximately $3,406 will consist of non-cash expenditures. The Company expects the remaining cash expenditures will be funded substantially by net proceeds from asset sales of approximately $7,200. The table below details the Company’s total restructuring charges incurred to date and the total expected restructuring charges as of September 30, 2012:

	2011		Q1 ‘12		Q2 ‘12		Q3 ‘12			Total		Total
	Actual		Actual		Actual		Actual			Incurred		Projected
Capital expenditures:
Gearing	$	5	$	262	$	644	$	254		$	1,165	$	4,816
Other	—		—		—		71			71		600
Total capital expenditures	5		262		644		325			1,236		5,416
Cash expenses:
Cost of sales:
Gearing	131		89		236		(41		)	415		2,794
Services	—		6		—		100			106		406
Total cost of sales	131		95		236		59			521		3,200
Selling, general, and administrative expenses:
Gearing	35		25		25		380			465		490
Services	—		40		—		—			40		40
Corporate	406		10		—		—			416		916
Total selling, general and administrative expenses	441		75		25		380			921		1,446
Non-cash expenses:
Gearing	247		294		251		188			980		3,356
Corporate	50		—		—		—			50		50
Total non-cash expenses	297		294		251		188			1,030		3,406
Grand total	$	874	$	726	$	1,156	$	952		$	3,708	$	13,468

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto in Item 1, “Financial Statements,” of this Quarterly Report and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2011. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2.  Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties.

(Dollars are presented in thousands except per share data or unless otherwise stated)

OUR BUSINESS

Third Quarter Overview

During the third quarter of 2012, industrial demand softened and we experienced reduced orders and revenues from large customers in our Gearing segment. Although 2012 wind energy demand is strong, the outlook is expected to weaken considerably in 2013 as the market reacts to the scheduled expiration of the Production Tax Credit that supports the U.S. wind industry. Any new supporting legislation is not expected to be enacted until after the upcoming U.S. federal elections, and there would likely be some lag in receiving new component orders as developers re-start their investment process. The structure and duration of any possible new supporting legislation is highly uncertain. Due to the pending expiration of the Production Tax Credit and a wind tower trade case, a number of competitors, both foreign and domestic, have exited the market or repurposed some of their wind tower production assets. This has improved the near-term balance between supply and demand in the U.S. wind tower industry.

Beginning in October 2010, we focused on diversifying our revenue stream, and for the first nine months of 2012, only 64% of our sales were associated with products produced to support new U.S. wind energy installations. The Towers business in particular is largely linked to new wind installations, and in our fourth quarter of 2012 we are scheduled to produce towers at a lower level than experienced earlier in the year. In October 2012 we announced that we were awarded tower orders totaling approximately $37 million from two U.S. wind turbine manufacturers, for manufacture beginning in late 2012 and extending into 2013.

In light of these factors, we cannot provide assurances that improved market conditions within the wind industry will occur over the long-term, or that we will be able to capitalize on opportunities for growth. In addition, a continued or prolonged economic slowdown in the wind industry, industrial markets, or other unfavorable market factors, could result in further revisions to our expectations with respect to future financial results and cash flows.  These factors have required management to reassess its estimates of the fair value of some of our reportable segments and could result in further review of our intangible assets and fixed assets, although no additional impairment to the carrying value of these assets was indicated by our third quarter 2012 testing.

During the third quarter of 2011, we conducted a review of our business strategies and product plans given the outlook for the economy at large, the forecast for the industries we serve, and our own business environment. As a result, we have been executing a restructuring plan to rationalize our facility capacity and our management structure, and to consolidate and increase the efficiencies of our operations. We have concluded that our wind manufacturing footprint and fixed cost base is too large and expensive for our medium-term needs. We are executing a plan to reduce our facility footprint by nearly 40% through the sale and/or closure of facilities comprising a total of approximately 600,000 square feet. We believe our restructuring and consolidation plans will be completed by the end of 2014. We believe the remaining locations will be sufficient to support our Towers and Weldments, Gearing, Services and general corporate and administrative activities while allowing for growth for the next several years.

To date, we have incurred $3,708 of costs in conjunction with our restructuring plan. Including costs incurred to date, we expect to incur restructuring costs associated with the consolidation totaling an estimated $13,468. Costs are expected to include approximately $5,416 in capital expenditures and $8,052 in expenses, of which approximately $3,406 is anticipated to be non-cash expenses and approximately $4,646 is anticipated to be cash expenses. Net proceeds from associated asset sales, estimated to be approximately $7,200, will be used to fund cash costs. We anticipate annual cost savings of approximately $5,500 related to the restructuring.

20

RESULTS OF OPERATIONS

Three Months Ended September 30, 2012, Compared to Three Months Ended September 30, 2011

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the three months ended September 30, 2012, compared to the three months ended September 30, 2011.

	Three Months Ended September 30,										2012 vs. 2011
	2012			% of Total Revenue		2011			% of Total Revenue		$ Change			% Change
Revenues	$	55,045		100.0	%	$	47,899		100.0	%	$	7,146		14.9	%
Cost of sales	52,097			94.6	%	47,098			98.3	%	4,999			10.6	%
Restructuring	233			0.4	%	89			0.2	%	144			161.8	%
Gross profit	2,715			5.0	%	712			1.5	%	2,003			281.3	%
Operating expenses
Selling, general and administrative expenses	5,197			9.4	%	6,442			13.4	%	(1,245		)	-19.3	%
Intangible amortization	664			1.2	%	214			0.4	%	450			210.3	%
Restructuring	381			0.7	%	300			0.6	%	81			27.0	%
Total operating expenses	6,242			11.3	%	6,956			14.4	%	(714		)	-10.3	%
Operating loss	(3,527		)	-6.3	%	(6,244		)	-12.9	%	2,717			43.5	%
Other (expense) income
Interest expense, net	(553		)	-1.1	%	(276		)	-0.6	%	(277		)	-100.4	%
Other, net	148			0.2	%	127			0.3	%	21			16.5	%
Restructuring	(15		)	0.0	%	(202		)	-0.4	%	187			92.6	%
Total other (expense) income, net	(420		)	-0.9	%	(351		)	-0.7	%	(69		)	-19.7	%
Net loss from continuing operations before provision for income taxes	(3,947		)	-7.2	%	(6,595		)	-13.6	%	2,648			40.2	%
Benefit for income taxes	(9		)	0.0	%	(9		)	0.0	%	—			N/A
Loss from continuing operations	(3,938		)	-7.2	%	(6,586		)	-13.6	%	2,648			40.2	%
Loss from discontinued operations, net of tax	—			0.0	%	—			0.0	%	—			N/A
Net loss	$	(3,938	)	-7.2	%	$	(6,586	)	-13.6	%	$	2,648		40.2	%

Consolidated

Revenues increased by $7,146, from $47,899 during the three months ended September 30, 2011, to $55,045 during the three months ended September 30, 2012. We experienced increased revenue in our Towers and Weldments and Services business segments, but we experienced a decline in revenue in our Gearing business segment. Towers and Weldments revenues increased 26%, despite only a 7% increase in the volume of wind tower sections sold in the third quarter of 2012 compared to 2011. In the current year we produced and sold larger tower sections which are more costly and priced higher than those of the prior year period. Fabrication-only sections had no significant impact on this comparison; there were no fabrication-only tower sections in the current period and very few, representing only 5% of volume, in the prior year. Our Services segment revenues increased 4% in the third quarter of 2012 compared to 2011. Our Gearing segment revenues declined 11% as certain large customers reduced orders due to softness in natural gas and mining markets.

Gross profit increased by $2,003, from $712 during the three months ended September 30, 2011, to $2,715 during the three months ended September 30, 2012. The increase in gross profit was primarily attributable to higher revenues in Towers and Weldments, with improved productivity and facility utilization, and improved margins in Services, partially offset by lower volumes and higher restructuring costs at Gearing, as compared to the same period in the prior year. As a result, our gross margin increased from 1.5% during the three months ended September 30, 2011, to 5.0% during the three months ended September 30, 2012. Gross profit excluding restructuring charges increased by $2,147, and the resulting gross margin percentage would have been 5.4% in the absence of those restructuring charges.

Selling, general and administrative expenses decreased by $1,245, from $6,442 during the three months ended September 30, 2011, to $5,197 during the three months ended September 30, 2012. The decrease was attributable to lower professional expenses, reduced bad debt expense, and lower employee compensation expenses resulting from general cost containment efforts. Operating expenses as a percentage of sales decreased sharply, from 14% in the prior year quarter to 11% in the current year quarter.

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Intangible amortization expense increased from $214 during the three months ended September 30, 2011, to $664 during the three months ended September 30, 2012. The increase was attributable to accelerating the amortization of a portion of the customer relationship intangible assets.

Net loss decreased from $6,586 during the three months ended September 30, 2011, to $3,938 during the three months ended September 30, 2012, primarily as a result of the factors described above.

Towers and Weldments Segment

The following table summarizes the Towers and Weldments segment operating results for the three months ended September 30, 2012 and 2011:

	Three Months Ended
	September 30,
	2012			2011
Revenues	$	37,423		$	29,684
Operating income	1,740			(35		)
Operating margin	4.6		%	-0.1		%

Towers and Weldments revenues increased by $7,739, from $29,684 during the three months ended September 30, 2011, to $37,423 during the three months ended September 30, 2012. Towers and Weldments revenues increased 26%, megawatts (MW) sold increased 54%, and towers increased 41%, with only a 7% increase in the volume of wind tower sections sold in the third quarter of 2012 compared to 2011. In the current year we produced and sold larger towers with fewer sections, which produce more MW, are more costly and are priced higher than those of the prior year period. Fabrication-only sections had no significant impact on this comparison; there were no fabrication-only tower sections in the current period and very few, representing only 5% of volume, in the prior year. At $2,868, weldments revenue for large industrial customers increased 270% as compared to the prior year period, consistent with the Company’s strategic focus on diversifying its end markets.

Towers and Weldments segment operating income increased by $1,775, from a loss of $35 during the three months ended September 30, 2011, to income of $1,740 during the three months ended September 30, 2012. The increase in operating income was attributable to manufacturing a higher margin mix of towers, the expansion of weldments revenue and lower operating expenses. Operating margin increased from (0.1%) during the three months ended September 30, 2011, to 4.6% during the three months ended September 30, 2012.

Gearing Segment

The following table summarizes the Gearing segment operating results for the three months ended September 30, 2012 and 2011:

	Three Months Ended
	September 30,
	2012			2011
Revenues	$	11,256		$	12,634
Operating loss	(2,637		)	(3,281		)
Operating margin	-23.4		%	-26.0		%

Gearing segment revenues decreased by $1,378, from $12,634 during the three months ended September 30, 2011, to $11,256 during the three months ended September 30, 2012. The 11% decrease in total revenues was attributable to a $2,200 decrease in wind gearing sales in the current quarter, partially offset by an 8% increase in industrial sales as compared to the prior year quarter.

Gearing segment operating loss decreased by $644, from $3,281 during the three months ended September 30, 2011, to $2,637 during the three months ended September 30, 2012. The decrease in operating loss was primarily due to lower operating expenses and higher contribution margins, partially offset by increased restructuring costs and the margin impact of the 11% decrease in sales volume. As a result of the factors described above, operating margin improved from (26.0%) during the three months ended September 30, 2011, to (23.4%) during the three months ended September 30, 2012.

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Services Segment

The following table summarizes the Services segment operating results for the three months ended September 30, 2012 and 2011:

	Three Months Ended
	September 30,
	2012			2011
Revenues	$	6,899		$	6,615
Operating loss	(570		)	(413		)
Operating margin	-8.3		%	-6.2		%

Services segment revenues increased by $284, from $6,615 during the three months ended September 30, 2011, to $6,899 during the three months ended September 30, 2012. The increase in revenue was primarily the result of increased revenue from our drivetrain service center, partially offset by lower blade maintenance and repair activity compared to the prior year quarter.

Services segment operating loss worsened by $157, from $413 during the three months ended September 30, 2011, to $570 during the three months ended September 30, 2012. Increased margins were offset by a one-time legal settlement expense of $233 and increased non-cash charges in the current year period. Operating margin declined from (6.2%) during the three months ended September 30, 2011, to (8.3%) during the three months ended September 30, 2012.

Corporate and Other

Corporate and Other expenses decreased by $441, from $2,489 during the three months ended September 30, 2011, to $2,048 during the three months ended September 30, 2012. The reduction in expense was primarily attributable to lower professional expenses and lower employee compensation costs as part of our general cost containment efforts.

Nine Months Ended September 30, 2012, Compared to Nine Months Ended September 30, 2011

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the nine months ended September 30, 2012, compared to the nine months ended September 30, 2011.

	Nine Months Ended September 30,										2012 vs. 2011
	2012			% of Total Revenue		2011			% of Total Revenue		$ Change			% Change
Revenues	$	165,799		100.0	%	$	130,761		100.0	%	$	35,038		26.8	%
Cost of sales	158,155			95.4	%	124,449			95.2	%	33,706			27.1	%
Restructuring	1,038			0.6	%	89			0.1	%	949			1066.3	%
Gross profit	6,606			4.0	%	6,223			4.7	%	383			6.2	%
Operating expenses
Selling, general and administrative expenses	16,658			10.0	%	19,807			15.1	%	(3,149		)	-15.9	%
Intangible amortization	1,094			0.7	%	644			0.5	%	450			69.9	%
Restructuring	481			0.3	%	300			0.2	%	181			60.3	%
Total operating expenses	18,233			11.0	%	20,751			15.8	%	(2,518		)	-12.1	%
Operating loss	(11,627		)	-7.0	%	(14,528		)	-11.1	%	2,901			20.0	%
Other (expense) income
Interest expense, net	(1,053		)	-0.6	%	(845		)	-0.6	%	(208		)	-24.6	%
Other, net	758			0.4	%	559			0.4	%	199			35.6	%
Restructuring	(86		)	-0.1	%	(202		)	-0.2	%	116			57.4	%
Total other (expense) income, net	(381		)	-0.3	%	(488		)	-0.4	%	107			21.9	%
Net loss from continuing operations before provision for income taxes	(12,008		)	-7.3	%	(15,016		)	-11.5	%	3,008			20.0	%
Provision for income taxes	21			0.0	%	24			0.0	%	(3		)	-12.5	%
Loss from continuing operations	(12,029		)	-7.3	%	(15,040		)	-11.5	%	3,011			20.0	%
Loss from discontinued operations, net of tax	—			0.0	%	(1,184		)	-0.9	%	1,184			100.0	%
Net loss	$	(12,029	)	-7.3	%	$	(16,224	)	-12.4	%	$	4,195		25.9	%

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Consolidated

Revenues increased from $130,761 during the nine months ended September 30, 2011, to $165,799 during the nine months ended September 30, 2012. This 27% increase was attributable to higher revenue in each of our business segments, notably Towers and Weldments. In our Gearing segment, we have experienced sales increases to our industrial customers, which to-date exceed the impact of reduced sales for gearing into new wind turbines. The 33% increase in revenue for our Towers and Weldments segment occurred despite a 7% decrease in the volume of wind tower sections sold in the nine months of 2012 compared to 2011. In the current year a significant amount of steel cost was included in all of our tower sales, while in the prior year period, fabrication-only tower sections, which do not include the price of steel content, represented 34% of our volume. Our Services segment revenues increased 48% in the nine months of 2012 compared to 2011.

Gross profit increased $383, from $6,223 during the nine months ended September 30, 2011, to $6,606 during the nine months ended September 30, 2012. The increase in gross profit was primarily attributable to increased margins at Gearing and Services, partially offset by a decline in Towers and Weldments gross profit due to a lower margin sales mix of towers in the current period and additional restructuring costs as compared to the same period in the prior year. Our total gross margin decreased from 4.7% during the nine months ended September 30, 2011, to 4.0% during the nine months ended September 30, 2012. Gross profit excluding restructuring charges increased by $1,332, and the resulting gross margin percentage would have been 4.6% in the absence of those restructuring charges.

Selling, general and administrative expenses decreased by $3,149, from $19,807 during the nine months ended September 30, 2011, to $16,658 during the nine months ended September 30, 2012. The decrease was primarily attributable to reductions in employee compensation expense, professional fees, bad debt expense, and selling expenses as part of general cost containment efforts. Operating expenses as a percentage of sales decreased from 16% in the prior year period to 11% in the current year.

Intangible amortization expense increased from $644 during the nine months ended September 30, 2011, to $1,094 during the nine months ended September 30, 2012. The increase was attributable to the acceleration of amortization of the intangible asset related to one customer contract.

Net loss decreased from $16,224 during the nine months ended September 30, 2011, to $12,029 during the nine months ended September 30, 2012, primarily as a result of the factors described above.

Towers and Weldments Segment

The following table summarizes the Towers and Weldments segment operating results for the nine months ended September 30, 2012 and 2011:

	Nine Months Ended
	September 30,
	2012			2011
Revenues	$	109,587		$	82,350
Operating income	3,306			5,159
Operating margin	3.0		%	6.3		%

Towers and Weldments segment revenues increased by $27,237, from $82,350 during the nine months ended September 30, 2011, to $109,587 during the nine months ended September 30, 2012. Towers and Weldments revenues increased 33%, MW sold increased 4%, with a 7% decrease in the volume of wind tower sections sold in the first nine months of 2012 compared to 2011. In the current year period we produced and sold larger tower sections which produce more MW, are more costly and are priced higher than those of the prior year period. However, the 33% increase in revenues is also partially due to a heavy mix of fabrication-only tower sections in the first six months of the prior year period. In the current year significant steel costs were included in all of our towers sales, while in the prior year period, fabrication-only tower sections represented 34% of our volume. We estimate that the impact of the reduced share of fabrication-only tower sections accounted for approximately $22,035 of the increase in Towers and Weldment revenues from the prior year period.

Towers and Weldments segment operating income decreased by $1,853, from $5,159 during the nine months ended September 30, 2011, to $3,306 during the nine months ended September 30, 2012. The decrease in operating income was primarily attributable to a lower margin mix of tower sales, the decrease in wind tower sections manufactured, and operating inefficiencies related to new tower and weldments design production start-up in the current year period. Operating margin decreased from 6.3% during the nine months ended September 30, 2011, to 3.0% during the nine months ended September 30, 2012.

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Gearing Segment

The following table summarizes the Gearing segment operating results for the nine months ended September 30, 2012 and 2011:

	Nine Months Ended
	September 30,
	2012			2011
Revenues	$	41,352		$	38,696
Operating loss	(5,390		)	(8,523		)
Operating margin	-13.0		%	-22.0		%

Gearing segment revenues increased by $2,656, from $38,696 during the nine months ended September 30, 2011, to $41,352 during the nine months ended September 30, 2012. The 7% increase in total revenues was attributable to a 43% increase in industrial sales, partially offset by a 41% decrease in wind gearing sales as compared to the prior year period. Gearing sales related to new wind installations was 12% in the nine months ended September 30, 2012.

Gearing segment operating loss decreased by $3,133, from $8,523 during the nine months ended September 30, 2011, to $5,390 during the nine months ended September 30, 2012. The decrease in operating loss was primarily due to the 7% increase in sales volume and associated increases in margins, lower employee compensation expenses and legal expenses, partially offset by higher restructuring expenses of $1,272. As a result of the factors described above, operating margin improved from (22.0%) during the nine months ended September 30, 2011, to (13.0%) during the nine months ended September 30, 2012.

Services Segment

The following table summarizes the Services segment operating results for the nine months ended September 30, 2012 and 2011:

	Nine Months Ended
	September 30,
	2012			2011
Revenues	$	16,037		$	10,810
Operating loss	(3,331		)	(3,862		)
Operating margin	-20.8		%	-35.7		%

Services segment revenues increased by $5,227, from $10,810 during the nine months ended September 30, 2011, to $16,037 during the nine months ended September 30, 2012. The increase in revenue was primarily the result of increased field service and blade maintenance and repair activity, as well as additional revenue derived from our drivetrain service center.

Services segment operating loss decreased by $531, from $3,862 during the nine months ended September 30, 2011, to $3,331 during the nine months ended September 30, 2012. Increased contribution margins were partially offset by higher operating expenses including a one-time legal settlement expense of $233 and increased non-cash charges in the current year period. Because of the increased revenue base, operating margin improved from (35.7%) during the nine months ended September 30, 2011, to (20.8%) during the nine months ended September 30, 2012.

Corporate and Other

Corporate and Other expenses decreased by $1,051, from $7,275 during the nine months ended September 30, 2011, to $6,224 during the nine months ended September 30, 2012. The reduction in expense was primarily attributable to lower professional expenses and lower employee compensation costs as part of our general cost containment efforts.

SELECTED FINANCIAL DATA

The following non-GAAP financial measure presented below relates to earnings before interest, taxes, depreciation, amortization, restructuring and share-based payments (“Adjusted EBITDA”) and is presented for illustrative purposes as an accompaniment to our unaudited financial results of operations for the three and nine months ended September 30, 2012 and 2011. Adjusted EBITDA should not be considered an alternative to, nor is there any implication that it is more meaningful than, any measure of performance or liquidity promulgated under GAAP. We believe that Adjusted EBITDA is particularly meaningful due principally to the role acquisitions have played in our development. Historically, our growth through acquisitions has resulted in

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significant non-cash depreciation and amortization expense, which was primarily attributable to a significant portion of the purchase price of our acquired businesses being allocated to depreciable fixed assets and definite-lived intangible assets. The following Adjusted EBITDA calculation is derived from our unaudited condensed consolidated financial results for the three and nine months ended September 30, 2012 and 2011, as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
	(unaudited)						(unaudited)
Loss from continuing operations	$	(3,938	)	$	(6,586	)	$	(12,029	)	$	(15,040	)
Provision for income taxes	(9		)	(9		)	21			24
Interest expense, net	553			276			1,053			845
Depreciation and amortization	4,195			3,647			11,590			10,910
Restructuring	629			591			1,605			591
Share-based compensation and other stock payments	982			565			2,619			1,513
Adjusted EBITDA	$	2,412		$	(1,516	)	$	4,859		$	(1,157	)

SUMMARY OF CRITICAL ACCOUNTING POLICIES

We have identified significant accounting policies that, as a result of the judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved could result in material changes to our financial condition or results of operations under different conditions or using different assumptions.  Our most critical accounting policies are related to the following areas: revenue recognition, warranty liability, inventories, intangible assets, long-lived assets and income taxes. Details regarding our application of these policies and the related estimates are described fully in our Annual Report on Form 10-K for the year ended December 31, 2011 and are supplemented by the following additional disclosure regarding our assessment of Intangible Assets and Long-Lived Assets.

Intangible Assets

We review intangible assets for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. If such events or changes in circumstances occur, we will recognize an impairment loss if the undiscounted future cash flows expected to be generated by the assets are less than the carrying value of the related asset. The impairment loss would adjust the asset to its fair value.

In evaluating the recoverability of intangible assets, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such assets. If our fair value estimates or related assumptions change in the future, we may be required to record impairment charges related to intangible assets. Asset recoverability is first measured by comparing the assets’ carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired. If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets exceeds the fair value.

During the third quarter of 2012, we identified a triggering event associated with the Gearing segment current period operating loss combined with its history of continued operating losses. As a result, we evaluated the recoverability of certain of our intangible assets associated with our Gearing segment. Based upon our assessment, the recoverable amount and the fair value were in excess of the carrying amount of the related assets by 31%, and no impairment to these assets was indicated as of September 30, 2012. To the extent the projections used in our analysis are not achieved, there may be a negative effect on the valuation of these assets.

During the second quarter of 2012, the Company concluded that it was appropriate to shorten the useful life associated with a $2,216 portion of the customer relationships intangible assets and amortize it over one year, instead of over the remaining five years as previously assigned to this portion of the intangible assets.

Long-Lived Assets

We review property and equipment and other long-lived assets for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. If such events or changes in circumstances occur, we will recognize an impairment loss if the undiscounted future cash flows expected to be generated by the assets are less than the carrying value of the related asset. The impairment loss would adjust the asset to its fair value.

In evaluating the recoverability of long-lived assets, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such assets. If our fair value estimates or related assumptions change in the future, we may

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be required to record impairment charges related to property and equipment and other long-lived assets. Asset recoverability is first measured by comparing the assets’ carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired. If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets exceeds the fair value.

During the third quarter of 2012, the Company identified triggering events associated with the Services and Gearing segments current period operating losses combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its long-lived assets associated with our Services and Gearing segments. Based upon the Company’s assessment, the recoverable amount of undiscounted cash flows based upon our most recent projections exceeded the carrying amount of invested capital by 40% and 31% for the Services & Gearing segments respectively, and no impairment to these assets was indicated as of September 30, 2012. The fair value of the carrying amount of the invested capital was estimated by calculating the present value of these future cash flows. The fair value of the carrying amount of the invested capital approximated its carrying value as of September 30, 2012. The Services segment is growing rapidly, and has gained significant traction in the second half of 2011 and the year to date 2012. The business is expected to continue its revenue growth with improvement in profitability as we match the fixed operations costs with the scale of the business. To the extent these projections are not achieved, there may be a negative effect on the valuation of these assets.

Recent Accounting Pronouncements

We review new accounting standards as issued. Although some of the accounting standards issued or effective after the end of our previous fiscal year may be applicable to us we believe that none of the new standards will have a significant impact on our condensed consolidated financial statements.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

During the third quarter, we established a new three-year $20,000 revolving credit agreement with AloStar Bank of Commerce (“AloStar”). In connection with this agreement, AloStar will advance funds against our borrowing base, which consists of approximately 85% of eligible receivables and approximately 50% of eligible inventory. Proceeds from the transaction were used to repay certain outstanding indebtedness, including repayment of the outstanding debt associated with the Wells Fargo account purchase agreements. Under this new recapitalized borrowing structure, borrowings are continuous and all cash receipts are automatically applied to the outstanding borrowed balance. As a result of this structure, we anticipate that cash balances will remain at a minimum at all times when there are amounts outstanding under the credit line.

As of September 30, 2012, total cash assets equaled $3,051. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, working capital needs, capital expenditures and debt and lease commitments through at least the next 12 months primarily with current cash on hand and cash generated by operations.

Our ability to meet financial debt covenants on our debt and other financial obligations will depend on our future financial and operating performance. If we cannot make scheduled payments on our debt, or comply with applicable covenants, we will be in default and, as a result, among other things, our debt holders could declare all outstanding principal and interest to be due and payable. As of September 30, 2012, we were in compliance with all of our debt covenants.  While we believe that we will continue to have sufficient cash flows to operate our businesses and meet our financial debt covenants, there can be no assurances that our operations will generate sufficient cash or that credit facilities will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.

Sources and Uses of Cash

Operating Cash Flows

During the nine months ended September 30, 2012 and 2011, net cash used in operating activities totaled $20,289 and $11,492, respectively. The increase in net cash used in operating activities was primarily attributable to the current period application of customer deposits in conjunction with tower order completions, partially offset by a decrease in the inventory build within our Towers and Weldments business.

Investing Cash Flows

During the nine months ended September 30, 2012 and 2011, net cash used in investing activities totaled $2,273 and $2,799, respectively. The decrease in net cash used in investing activities as compared to the prior year period was primarily attributable to decreased capital expenditures, specifically related to the completion of construction of our drivetrain service center in Abilene, Texas during the prior year.

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Financing Cash Flows

During the nine months ended September 30, 2012 and 2011, net cash provided by financing activities totaled $11,943 and $12,317, respectively. The slight decrease in net cash provided by financing activities as compared to the prior year period was due to the absence of $11,739 of proceeds related to the equity offering of common stock in September 2011, partially offset by borrowings on our AloStar line of credit in the current year.

Contractual Obligations

As of September 30, 2012, we had $341 in purchase commitments representing the remaining payments due on equipment purchase contracts related to the construction of our wind tower manufacturing facility in Brandon, South Dakota, which we have classified as Held for Sale.

Cautionary Note Regarding Forward-Looking Statements

The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2011. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Item 2, contain “forward-looking statements”— that is, statements related to future, not past, events—as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. Forward-looking statements include any statement that does not directly relate to a current or historical fact. We have tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors, including, but not limited to, those discussed in Item 1A “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2011, that could cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects, and opportunities to differ materially from those expressed in, or implied by, these statements. Our forward-looking statements may include or relate to the following: (i) our plans to continue to grow our business through organic growth and integration of previous and future acquisitions; (ii) our beliefs with respect to the sufficiency of our liquidity and our plans to evaluate alternate sources of funding if necessary; (iii) our plans and assumptions, including estimated costs, environmental remediation activities. and saving opportunities, regarding our ongoing restructuring efforts designed to improve our financial performance; (iv) our expectations relating to state, local and federal regulatory frameworks affecting the wind energy industry, including the extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards; (v) our expectations relating to construction of new facilities, expansion and/or restructuring of existing facilities and sufficiency of our existing capacity to meet the demands of our customers and support expectations regarding our growth; (vi) our plans with respect to the use of proceeds from financing activities and our ability to operate our business efficiently, manage capital expenditures and costs effectively, and generate cash flow; (vii) our beliefs and expectations relating to the economy and the potential impact it may have on our business, including our customers; (viii) our beliefs regarding the state of the wind energy market and other energy and industrial markets generally (ix) the planned production schedule at our Towers and Weldments segment and our expectations regarding future inventory levels and working capital requirements; and (x) our expectations relating to the impact of pending litigation as well as environmental compliance matters. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason.

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the nine months ended September 30, 2012. For a discussion of our exposure to market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk,” contained in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4.       Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. This

28

information is also accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent fiscal quarter reported on herein. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There was no change in our internal control over financial reporting during the nine months ended September 30, 2012 that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.

PART II.   OTHER INFORMATION

Item 1.Legal Proceedings

The information required by this item is incorporated herein by reference to Note 12, “Legal Proceedings” in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A.Risk Factors

There are no material changes to our risk factors as previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.Defaults Upon Senior Securities

None

Item 4.Mine Safety Disclosures

Not Applicable

Item 5.Other Information

None

Item 6.Exhibits

The exhibits listed on the Exhibit Index following the signature page are filed as part of this Quarterly Report.

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SIGNATURES

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

	BROADWIND ENERGY, INC.
November 7, 2012	By:	/s/ Peter C. Duprey
		Peter C. Duprey
		President and Chief Executive Officer
		(Principal Executive Officer)
November 7, 2012	By:	/s/ Stephanie K. Kushner
		Stephanie K. Kushner
		Chief Financial Officer
		(Principal Financial Officer)

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EXHIBIT INDEX

BROADWIND ENERGY, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2012

Exhibit Number	Exhibit
10.1	Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan*
10.2	Broadwind Energy, Inc. 2012 Equity Incentive Plan*
31.1	Rule 13a-14(a) Certification of Chief Executive Officer*
31.2	Rule 13a-14(a) Certification of Chief Financial Officer*
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer*
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer*

*Filed herewith.

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EX-10.1

Exhibit 10.1

AMENDED AND RESTATED

BROADWIND ENERGY, INC.

2007 EQUITY INCENTIVE PLAN

(effective as of March 25, 2011)

SECTION 1

DEFINITIONS

As used herein, the following terms have the meanings indicated below:

(a)           “Administrator” means the Board, or one (1) or more Committees appointed by the Board from time to time to administer the Plan, as the case may be.

(b)           “Affiliate” means a Parent or Subsidiary of the Company.

(c)           “Award” means any grant of an Option, Restricted Stock Award, Restricted Stock Unit Award, Stock Appreciation Right or Performance Award.

(d)           “Board” means the board of directors of the Company.

(e)           “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(f)            “Committee” means a committee of two (2) or more directors who shall be appointed by and serve at the pleasure of the Board. Each of the members of the Committee shall be an “outside director” under Code Section 162(m) and, to the extent necessary for compliance with Rule 16b-3, a “non-employee director” under Rule 16b-3.

(g)           “Company” means Broadwind Energy, Inc., a Delaware corporation.

(h)           “Deferred Compensation” means a “deferral of compensation” as defined under Code Section 409A.

(i)            “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

(j)            “Fair Market Value” as of any date means (i) if such stock is listed on the Nasdaq Global Market, Nasdaq Capital Market, or an established stock exchange, the price of such stock at the close of the regular trading session of such market or exchange on such date, as reported by The Wall Street Journal or a comparable reporting service, or, if no sale of such stock shall have occurred on such date, on the next date on which there is a sale of stock; (ii) if such stock is not so listed on the Nasdaq Global Market, Nasdaq Capital Market, or an established stock exchange, the average of the closing “bid” and “asked” prices quoted by the OTC Bulletin Board, the National Quotation Bureau, or any comparable reporting service on such date or, if there are no quoted “bid” and “asked” prices on such date, on the next date for which there are such quotes; or (iii) if such stock is not publicly traded as of such date, the per share value as determined by the Board, or the Committee, in its sole discretion by applying principles of valuation with respect to Common Stock.

(k)           “ISO Option Agreement” has the meaning set forth in Section 9 hereof.

(l)            “NSO Option Agreement” has the meaning set forth in Section 10 hereof.

(m)          “Option” means an incentive stock option or nonqualified stock option granted pursuant to the Plan.

(n)           “Parent” means any corporation that owns, directly or indirectly in an unbroken chain, fifty percent (50%) or more of the total voting power of the Company’s outstanding stock.

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(o)           “Participant” means (i) a key employee or officer of the Company or any Affiliate to whom an incentive stock option has been granted pursuant to Section 9 hereof; (ii) a consultant or advisor to, or director, key employee or officer, of the Company or any Affiliate to whom a nonqualified stock option has been granted pursuant to Section 10 hereof; (iii) a consultant or advisor to, or director, key employee or officer, of the Company or any Affiliate to whom a Restricted Stock Award or Restricted Stock Unit Award has been granted pursuant to Section 11 hereof; (iv) a consultant or advisor to, or director, key employee or officer, of the Company or any Affiliate to whom a Performance Award has been granted pursuant to Section 12 hereof; or (v) a consultant or advisor to, or director, key employee or officer, of the Company or any Affiliate to whom a Stock Appreciation Right has been granted pursuant to Section 13 hereof.

(p)           “Performance Award” means any Performance Shares or Performance Units granted pursuant to Section 12 hereof.

(q)           “Performance Award Agreement” has the meaning set forth in Section 12 hereof.

(r)            “Performance Objective(s)” means one (1) or more performance objectives established by the Administrator, in its sole discretion, for Awards. Performance Objectives may include, but shall not be limited to, any one (1), or a combination of, (i) revenue, (ii) net income, (iii) earnings per share, (iv) return on equity, (v) return on assets, (vi) increase in revenue, (vii) increase in share price or earnings, (viii) return on investment, or (ix) increase in market share, in all cases including, if selected by the Administrator, threshold, target and maximum levels.

(s)            “Performance Period” means the period, established at the time any Performance Award is granted or at any time thereafter, during which any Performance Objectives specified by the Administrator with respect to such Performance Award are to be measured.

(t)            “Performance Share” means any grant pursuant to Section 12 hereof of an Award, which value, if any, shall be paid to a Participant by delivery of shares of Common Stock of the Company upon achievement of such Performance Objectives during the Performance Period as the Administrator shall establish at the time of such grant or thereafter.

(u)           “Performance Unit” means any grant pursuant to Section 12 hereof of an Award, which value, if any, shall be paid to a Participant by delivery of cash upon achievement of such Performance Objectives during the Performance Period as the Administrator shall establish at the time of such grant or thereafter.

(v)           “Plan” means the Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan, as amended from time to time.

(w)          “Policy” has the meaning set forth in Section 20 hereof.

(x)           “Restricted Stock Agreement” has the meaning set forth in Section 11 hereof.

(y)           “Restricted Stock Award” means any grant of restricted shares of Stock pursuant to Section 11 hereof.

(z)           “Restricted Stock Unit Agreement” has the meaning set forth in Section 11 hereof.

(aa)         “Restricted Stock Unit Award” means any grant of restricted stock units pursuant to Section 11 hereof.

(bb)         “Rule 16b-3” means Rule 16b-3 of the Exchange Act.

(cc)         “Securities Act” means the Securities Act of 1933, as amended from time to time.

(dd)         “Stock” or “Common Stock” means the common stock, $0.001 par value of the Company, reserved for Awards.

2

(ee)         “Stock Appreciation Right” means a grant pursuant to Section 13 hereof.

(ff)          “Stock Appreciation Right Agreement” has the meaning set forth in Section 13 hereof.

(gg)         “Subsidiary” means any corporation of which fifty percent (50%) or more of the total voting power of the outstanding Stock is owned, directly or indirectly in an unbroken chain, by the Company.

SECTION 2

PURPOSE

The purpose of the Plan is to promote the success of the Company and its Affiliates by facilitating the employment and retention of competent personnel and by furnishing incentive to officers, directors, employees, consultants, and advisors upon whose efforts the success of the Company and its Affiliates will depend to a large degree.

It is the intention of the Company to carry out the Plan through the granting of Options that will qualify as “incentive stock options” under the provisions of Code Section 422, pursuant to Section 9 hereof; through the granting of “nonqualified stock options” pursuant to Section 10 hereof; through the granting of Restricted Stock Awards or Restricted Stock Unit Awards pursuant to Section 11 hereof; through the granting of Performance Awards pursuant to Section 12 hereof; and through the granting of Stock Appreciation Rights pursuant to Section 13 hereof. Adoption of the Plan shall be and is expressly subject to the condition of approval by the stockholders of the Company within twelve (12) months before or after the adoption of the Plan by the Board. Any incentive stock options granted after adoption of the Plan by the Board shall be treated as nonqualified stock options if stockholder approval is not obtained within such twelve (12)-month period.

SECTION 3

EFFECTIVE DATE OF PLAN

The Plan shall be effective as of the date of adoption by the Board, subject to approval by the stockholders of the Company as required in Section 2 hereof.

SECTION 4

ADMINISTRATION

The Plan shall be administered by the Administrator. Except as otherwise provided herein, the Administrator shall have all of the powers vested in it under the provisions of the Plan, including but not limited to exclusive authority to determine, in its sole discretion, whether an Award shall be granted; the individuals to whom, and the time or times at which, Awards shall be granted; the number of shares subject to each Award; the option price, if any; and the performance criteria, if any, and any other terms and conditions of each Award. The Administrator shall have full power and authority to administer and interpret the Plan, to make and amend rules, regulations and guidelines for administering the Plan, to prescribe the form and conditions of the respective agreements evidencing each Award (that may vary from Participant to Participant), and to make all other determinations necessary or advisable for the administration of the Plan. The Administrator’s interpretation of the Plan, and all actions taken and determinations made by the Administrator pursuant to the power vested in it hereunder, shall be conclusive and binding on all parties concerned.

No member of the Board or the Committee shall be liable for any action taken or determination made in good faith in connection with the administration of the Plan. In the event the Board appoints a Committee as provided hereunder, any action of the Committee with respect to the administration of the Plan shall be taken pursuant to a majority vote of the Committee members or pursuant to the written resolution of all Committee members.

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SECTION 5

PARTICIPANTS

The Administrator shall from time to time, at its discretion and without approval of the stockholders, designate those employees, officers, directors, consultants, and advisors of the Company or of any Affiliate to whom Awards shall be granted; provided, however, that consultants or advisors shall not be eligible to receive Awards unless such consultant or advisor renders bona fide services to the Company or any Affiliate and such services are not in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities. The Administrator may grant additional Awards to some or all Participants then holding Awards, or may grant Awards solely or partially to new Participants. In designating Participants, the Administrator shall also determine the number of shares to be optioned or awarded to each such Participant and the performance criteria applicable to each Performance Award. The Administrator may from time to time designate individuals as being ineligible to participate in the Plan.

SECTION 6

STOCK

The shares to be issued under the Plan shall consist of authorized but unissued shares of Common Stock. Six hundred and ninety-one thousand and fifty-one (691,051) shares of Common Stock shall be reserved and available for Awards; provided, however, that the total number of shares reserved for Awards shall be subject to adjustment as provided in Section 14 hereof; and provided, further, that all shares reserved and available under the Plan shall constitute the maximum aggregate number of shares of Stock that may be issued through incentive stock options. Subject to adjustment as provided in Section 14 hereof, the maximum number of shares of Stock with respect to which Options or Stock Appreciation Rights may be granted during a Performance Period to any Participant is fifty thousand (50,000), to the extent such Options or Stock Appreciation Rights are intended to be “performance-based compensation” as defined under Code Section 162(m). The shares of Stock underlying any Awards that are forfeited, canceled, reacquired by the Company, satisfied without the issuance of Stock or otherwise terminated shall not be deemed to have been delivered and shall be added back to the shares of Stock available for Awards; provided, however, that any shares (i) tendered to pay the exercise price of an Award or (ii) withheld for taxes by the Company or an Affiliate shall not be available for future Awards.

SECTION 7

DURATION OF PLAN

Incentive stock options may be granted pursuant to the Plan from time to time during a period of ten (10) years from the effective date as described in Section 3 hereof. Awards other than incentive stock options may be granted pursuant to the Plan from time to time after the effective date of the Plan and until the Plan is discontinued or terminated by the Administrator.

SECTION 8

PAYMENT

Participants may pay for shares upon exercise of Options through a net exercise, or with cash, personal check, certified check or, if approved by the Administrator in its sole discretion, previously-owned shares of Common Stock, or any combination thereof, or such other method as may be determined by the Administrator from time to time. Any Stock so tendered as part of such payment shall be valued at such Stock’s then Fair Market Value. The Administrator may, in its sole discretion, limit the forms of payment available to the Participant and may exercise such discretion any time prior to the termination of the Option granted to the Participant or upon any exercise of the Option by the Participant.

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With respect to payment in the form of Common Stock, the Administrator may require advance approval or adopt such rules as it deems necessary to assure compliance with Rule 16b-3, if applicable.

SECTION 9

TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS

Each incentive stock option granted pursuant to this Section 9 shall be evidenced by a written incentive stock option agreement (the “ISO Option Agreement”). The ISO Option Agreement shall be in such form as may be approved from time to time by the Administrator and may vary from Participant to Participant; provided, however, that each Participant and each ISO Option Agreement shall comply with and be subject to the following terms and conditions:

(a)  Number of Shares and Option Price.  The ISO Option Agreement shall state the total number of shares covered by the incentive stock option. Except as permitted by Code Section 424(a), the option price per share shall not be less than one hundred percent (100%) of the per share Fair Market Value of the Common Stock on the date the Administrator grants the Option; provided, however, that if a Participant owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of its Parent or any Subsidiary, the option price per share of an incentive stock option granted to such Participant shall not be less than one hundred ten percent (110%) of the per share Fair Market Value of Common Stock on the date of the grant of the Option. The Administrator shall have full authority and discretion in establishing the option price and shall be fully protected in so doing.

(b)  Term and Exercisability of Incentive Stock Option.  The term during which any incentive stock option granted under the Plan may be exercised shall be established in each case by the Administrator. Except as permitted by Code Section 424(a), in no event shall any incentive stock option be exercisable during a term of more than ten (10) years after the date on which it is granted; provided, however, that if a Participant owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of its Parent or any Subsidiary, the incentive stock option granted to such Participant shall be exercisable during a term of not more than five (5) years after the date on which it is granted.

The ISO Option Agreement shall state when the incentive stock option becomes exercisable and shall also state the maximum term during which the Option may be exercised. In the event an incentive stock option is exercisable immediately, the manner of exercise of the Option in the event it is not exercised in full immediately shall be specified in the ISO Option Agreement. The Administrator may accelerate the exercisability of any incentive stock option granted hereunder that is not immediately exercisable as of the date of grant.

(c)  Nontransferability.  No incentive stock option shall be transferable, in whole or in part, by the Participant other than by will or by the laws of descent and distribution. During the Participant’s lifetime, the incentive stock option may be exercised only by the Participant. If the Participant shall attempt any transfer of any incentive stock option granted under the Plan during the Participant’s lifetime, such transfer shall be void and the incentive stock option, to the extent not fully exercised, shall terminate.

(d)  No Rights as Stockholder.  A Participant (or the Participant’s successor or successors) shall have no rights as a stockholder with respect to any shares covered by an incentive stock option until the date the Participant is recorded on the stock transfer books of the Company as the owner of the Stock. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other rights for which the record date is prior to the date such transfer is actually recorded (except as otherwise provided in Section 14 hereof).

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(e)  Withholding.  The Company or its Affiliate shall be entitled to withhold and deduct from future wages of the Participant all legally required amounts necessary to satisfy any and all withholding and employment-related taxes attributable to the Participant’s exercise of an incentive stock option or a “disqualifying disposition” of shares acquired through the exercise of an incentive stock option as defined in Code Section 421(b). In the event the Participant is required under the ISO Option Agreement to pay the Company, or make arrangements satisfactory to the Company respecting payment of, such withholding or employment-related taxes, the Administrator may, in its discretion and pursuant to such rules as it may adopt, require the Participant to satisfy such obligation, in whole or in part, by delivering shares of Common Stock (by actual delivery or via attestation) or by electing to have the Company withhold Common Stock otherwise issuable to the Participant as a result of the exercise of the incentive stock option. Such shares shall have a Fair Market Value equal to the minimum required tax withholding, based on the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to the supplemental income resulting from such exercise. In no event may the Company or any Affiliate withhold shares having a Fair Market Value in excess of such statutory minimum required tax withholding. The Participant’s election to deliver shares or to have shares withheld for this purpose shall be made on or before the date the incentive stock option is exercised or, if later, the date that the amount of tax to be withheld is determined under applicable tax law. Such election shall be approved by the Administrator and otherwise comply with such rules as the Administrator may adopt to assure compliance with Rule 16b-3, if applicable.

(f)  Other Provisions.  The ISO Option Agreement authorized under this Section 9 shall contain such other provisions as the Administrator shall deem advisable. Any such ISO Option Agreement shall contain such limitations and restrictions upon the exercise of the Option as shall be necessary to ensure that such Option will be considered an “incentive stock option” as defined in Code Section 422 or to conform to any change therein.

SECTION 10

TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS

Each nonqualified stock option granted pursuant to this Section 10 shall be evidenced by a written nonqualified stock option agreement (the “NSO Option Agreement”). The NSO Option Agreement shall be in such form as may be approved from time to time by the Administrator and may vary from Participant to Participant; provided, however, that each Participant and each NSO Option Agreement shall comply with and be subject to the following terms and conditions:

(a)  Number of Shares and Option Price.  The NSO Option Agreement shall state the total number of shares covered by the nonqualified stock option. Unless otherwise determined by the Administrator, the option price per share shall be one hundred percent (100%) of the per share Fair Market Value of Common Stock on the date the Administrator grants the Option.

(b)  Term and Exercisability of Nonqualified Stock Option.  The term during which any nonqualified stock option granted under the Plan may be exercised shall be established in each case by the Administrator; provided, however, that in no event shall any nonqualified stock option be exercisable during a term of more than ten (10) years after the date on which it is granted. The NSO Option Agreement shall state when the nonqualified stock option becomes exercisable and shall also state the maximum term during which the Option may be exercised. In the event a nonqualified stock option is exercisable immediately, the manner of exercise of the Option in the event it is not exercised in full immediately shall be specified in the NSO Option Agreement. The Administrator may accelerate the exercisability of any nonqualified stock option granted hereunder that is not immediately exercisable as of the date of grant.

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(c)  Transferability.  A nonqualified stock option shall be transferable, in whole or in part, by the Participant by will or by the laws of descent and distribution. In addition, the Administrator may, in its sole discretion, permit the Participant to transfer any or all nonqualified stock options to any member of the Participant’s “immediate family” as such term is defined in Rule 16a-1(e) of the Exchange Act, or to one (1) or more trusts whose beneficiaries are members of such Participant’s “immediate family” or partnerships in which such family members are the only partners; provided, however, that the Participant shall not receive any consideration for the transfer and such transferred nonqualified stock option shall continue to be subject to the same terms and conditions as were applicable to such nonqualified stock option immediately prior to its transfer.

(d)  No Rights as Stockholder.  A Participant (or the Participant’s successor or successors) shall have no rights as a stockholder with respect to any shares covered by a nonqualified stock option until the date the Participant is recorded on the stock transfer books of the Company as the owner of the Stock. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other rights for which the record date is prior to the date such transfer is actually recorded (except as otherwise provided in Section 14 hereof).

(e)  Withholding.  The Company or its Affiliate shall be entitled to withhold and deduct from future wages of the Participant all legally required amounts necessary to satisfy any and all withholding and employment-related taxes attributable to the Participant’s exercise of a nonqualified stock option. In the event the Participant is required under the NSO Option Agreement to pay the Company, or make arrangements satisfactory to the Company respecting payment of, such withholding or employment-related taxes, the Administrator may, in its discretion and pursuant to such rules as it may adopt, require the Participant to satisfy such obligation, in whole or in part, by delivering shares of Common Stock (by actual delivery or via attestation) or by electing to have the Company withhold Common Stock otherwise issuable to the Participant as a result of the exercise of the nonqualified stock option. Such shares shall have a Fair Market Value equal to the minimum required tax withholding, based on the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to the supplemental income resulting from such exercise. In no event may the Company or any Affiliate withhold shares having a Fair Market Value in excess of such statutory minimum required tax withholding. The Participant’s election to deliver shares or to have shares withheld for this purpose shall be made on or before the date the nonqualified stock option is exercised or, if later, the date that the amount of tax to be withheld is determined under applicable tax law. Such election shall be approved by the Administrator and otherwise comply with such rules as the Administrator may adopt to assure compliance with Rule 16b-3, if applicable.

(f)  Other Provisions.  The NSO Option Agreement authorized under this Section 10 shall contain such other provisions as the Administrator shall deem advisable.

SECTION 11

RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNIT AWARDS

Each Restricted Stock Award or Restricted Stock Unit Award shall be evidenced by a written restricted stock or restricted stock unit agreement (the “Restricted Stock Agreement” or “Restricted Stock Unit Agreement,” as the case may be). The Restricted Stock Agreement or Restricted Stock Unit Agreement shall be in such form as may be approved from time to time by the Administrator and may vary from Participant to Participant; provided, however, that each Participant and each Restricted Stock

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Agreement or Restricted Stock Unit Agreement shall comply with and be subject to the following terms and conditions:

(a)  Number of Shares.  The Restricted Stock Agreement or Restricted Stock Unit Agreement shall state the total number of shares of Stock covered by the Restricted Stock Award or Restricted Stock Unit Award.

(b)  Risks of Forfeiture.  The Restricted Stock Agreement or Restricted Stock Unit Agreement shall set forth the risks of forfeiture or vesting conditions, if any, including risks of forfeiture or vesting conditions based on Performance Objectives, that shall apply to the shares of Stock covered by the Restricted Stock Award or Restricted Stock Unit Award, and shall specify the manner in which such risks of forfeiture shall lapse or vesting conditions shall vest; provided, however, that if the right to become vested in a Restricted Stock Award or Restricted Stock Unit Award is conditioned on the completion of a specified period of service with the Company or its Affiliates, without achievement of Performance Objectives or other performance measures (whether or not related to the Performance Objectives) being required as a condition of vesting, and without it being granted in lieu of, or in exchange for, other compensation, then the required period of service for full vesting shall not be less than three (3) years unless the applicable Award is granted in substitution for stock or stock-based awards held by an employee of another corporation who concurrently becomes an employee of the Company or an Affiliate as the result of a merger or consolidation of the employing corporation with the Company or an Affiliate or the acquisition by the Company or an Affiliate of property or stock of the employing corporation (subject to acceleration of vesting, to the extent permitted by the Committee, in the event of death, disability, retirement, or involuntary termination or due to a Change in Control); provided, further, that the required period of service for full vesting with respect to stock awards granted to Directors shall not be less than one (1) year (subject to acceleration in such similar events as may be applied to employees). The Administrator may, in its sole discretion and to the extent permitted by applicable tax and securities laws and regulations, accelerate the date on which the risks of forfeiture shall lapse or vesting conditions shall vest, but only with respect to those shares of Stock that are restricted as of the effective date of the acceleration.

(c)  Issuance of Shares; Rights as Stockholder.

(i)            With respect to a Restricted Stock Award, the Company shall cause to be issued a stock certificate representing such shares of Stock in the Participant’s name, and shall deliver such certificate to the Participant; provided, however, that the Company shall place a legend on such certificate describing the risks of forfeiture and other transfer restrictions set forth in the Participant’s Restricted Stock Agreement and providing for the cancellation and return of such certificate if the shares of Stock subject to the Restricted Stock Award are forfeited. Until the risks of forfeiture have lapsed or the shares subject to such Restricted Stock Award have been forfeited, the Participant shall be entitled to vote the shares of Stock represented by such stock certificate and shall receive all dividends attributable to such shares, but the Participant shall not have any other rights as a stockholder with respect to such shares.

(ii)           With respect to a Restricted Stock Unit Award, as the vesting conditions on the Restricted Stock Units are satisfied, the Administrator shall cause to be issued one (1) or more stock certificates in the Participant’s name and shall deliver such certificates to the Participant in satisfaction of such Restricted Stock Units. A Participant (or the Participant’s successor or successors) shall have no rights as a stockholder with respect to any shares covered by a Restricted Stock Unit Award until the date the Participant is recorded on the stock transfer books of the Company as the owner of the Stock. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property),

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distributions or other rights for which the record date is prior to the date such transfer is actually recorded (except as otherwise provided in Section 14 hereof).

(d)  Withholding Taxes.  The Company or its Affiliate shall be entitled to withhold and deduct from future wages of the Participant all legally required amounts necessary to satisfy any and all withholding and employment-related taxes attributable to the Participant’s Restricted Stock Award or Restricted Stock Unit Award. In the event the Participant is required under the Restricted Stock Agreement or Restricted Stock Unit Agreement to pay the Company or its Affiliate, or make arrangements satisfactory to the Company or its Affiliate respecting payment of, such withholding or employment-related taxes, the Administrator may, in its discretion and pursuant to such rules as it may adopt, permit the Participant to satisfy such obligations, in whole or in part, by delivering shares of Common Stock (by actual delivery or via attestation), including shares of Stock received pursuant to the Restricted Stock Award or Restricted Stock Unit Award on which the risks of forfeiture have lapsed. Such shares shall have a Fair Market Value equal to the minimum required tax withholding, based on the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to the supplemental income resulting from the lapsing of the risks of forfeiture on such Restricted Stock or Restricted Stock Unit. In no event may the Participant deliver shares having a Fair Market Value in excess of such statutory minimum required tax withholding. The Participant’s election to deliver shares of Common Stock for this purpose shall be made on or before the date that the amount of tax to be withheld is determined under applicable tax law. Such election shall be approved by the Administrator and otherwise comply with such rules as the Administrator may adopt to assure compliance with Rule 16b-3, if applicable.

(e)  Nontransferability.  No Restricted Stock Award or Restricted Stock Unit Award shall be transferable, in whole or in part, by the Participant, other than by will or by the laws of descent and distribution, prior to the date the risks of forfeiture described in the Restricted Stock Agreement or Restricted Stock Unit Agreement have lapsed. If the Participant shall attempt any transfer of any Restricted Stock Award or Restricted Stock Unit Award prior to such date, such transfer shall be void and the Restricted Stock Award or Restricted Stock Unit Award shall terminate.

(f)  Other Provisions.  The Restricted Stock Agreement or Restricted Stock Unit Agreement authorized under this Section 11 shall contain such other provisions as the Administrator shall deem advisable.

SECTION 12

PERFORMANCE AWARDS

Each Performance Award shall be evidenced by a written performance award agreement (the “Performance Award Agreement”). The Performance Award Agreement shall be in such form as may be approved from time to time by the Administrator and may vary from Participant to Participant; provided, however, that each Participant and each Performance Award Agreement shall comply with and be subject to the following terms and conditions:

(a)  Awards.  Performance Awards in the form of Performance Units or Performance Shares may be granted to any Participant in the Plan. Performance Units shall consist of monetary awards that may be earned or become vested in whole or in part if the Company or the Participant achieves certain Performance Objectives established by the Administrator over a specified Performance Period. Performance Shares shall consist of shares of Stock or other Awards denominated in shares of Stock that may be earned or become vested in whole or in part if the Company or the Participant achieves certain Performance Objectives established by the Administrator over a specified Performance Period.

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(b)  Performance Objectives, Performance Period and Payment.  The Performance Award Agreement shall set forth:

(i)            the number of Performance Units or Performance Shares subject to the Performance Award, and the dollar value of each Performance Unit;

(ii)           one (1) or more Performance Objectives established by the Administrator;

(iii)          the Performance Period over which Performance Units or Performance Shares may be earned or may become vested;

(iv)          the extent to which partial achievement of the Performance Objectives may result in a payment or vesting of the Performance Award, as determined by the Administrator; and

(v)           the date upon which payment of Performance Units will be made or Performance Shares will be issued, as the case may be, and the extent to which such payment or the receipt of such Performance Shares may be deferred.

(c)  Withholding Taxes.  The Company or its Affiliates shall be entitled to withhold and deduct from future wages of the Participant all legally required amounts necessary to satisfy any and all withholding and employment- related taxes attributable to the Participant’s Performance Award. In the event the Participant is required under the Performance Award Agreement to pay the Company or its Affiliates, or make arrangements satisfactory to the Company or its Affiliates respecting payment of, such withholding or employment-related taxes, the Administrator may, in its discretion and pursuant to such rules as it may adopt, require the Participant to satisfy such obligations, in whole or in part, by delivering shares of Common Stock (by actual delivery or via attestation) or by electing to have the Company withhold shares of Common Stock otherwise issuable to the Participant as a result of the grant of Performance Shares. Such shares shall have a Fair Market Value equal to the minimum required tax withholding, based on the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes. In no event may the Participant deliver shares having a Fair Market Value in excess of such statutory minimum required tax withholding. The Participant’s election to deliver shares or to have shares withheld for this purpose shall be made on or before the date that the amount of tax to be withheld is determined under applicable tax law. Such election shall be approved by the Administrator and otherwise comply with such rules as the Administrator may adopt to assure compliance with Rule 16b-3, if applicable.

(d)  Nontransferability.  No Performance Award shall be transferable, in whole or in part, by the Participant, other than by will or by the laws of descent and distribution. If the Participant shall attempt any transfer of any Performance Award, such transfer shall be void and the Performance Award shall terminate.

(e)  No Rights as Stockholder.  A Participant (or the Participant’s successor or successors) shall have no rights as a stockholder with respect to any shares covered by a Performance Award until the date Participant is recorded on the stock transfer books of the Company as the owners of the shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other rights for which the record date is prior to the date such transfer is actually recorded (except as otherwise provided in Section 14 hereof).

(f)  Other Provisions.  The Performance Award Agreement authorized under this Section 12 shall contain such other provisions as the Administrator shall deem advisable.

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SECTION 13

STOCK APPRECIATION RIGHTS

Each Stock Appreciation Right shall be evidenced by a written stock appreciation right agreement (the “Stock Appreciation Right Agreement”). The Stock Appreciation Right Agreement shall be in such form as may be approved from time to time by the Administrator and may vary from Participant to Participant; provided, however, that each Participant and each Stock Appreciation Right Agreement shall comply with and be subject to the following terms and conditions:

(a)  Awards.  A Stock Appreciation Right shall entitle the Participant to receive, upon exercise, cash in an amount equal to the excess of (i) the Fair Market Value of a specified number of shares of Stock on the date of such exercise, over (ii) a specified exercise price. Unless otherwise determined by the Administrator, the specified exercise price shall not be less than 100% of the Fair Market Value of such shares of Stock on the date of grant of the Stock Appreciation Right. A Stock Appreciation Right may be granted independent of or in tandem with a previously or contemporaneously granted Option.

(b)  Term and Exercisability.  The term during which any Stock Appreciation Right may be exercised shall be established in each case by the Administrator; provided, however, that in no event shall any Stock Appreciation Right be exercisable during a term of more than ten (10) years after the date on which it is granted. The Stock Appreciation Right Agreement shall state when the Stock Appreciation Right becomes exercisable and shall also state the maximum term during which such Stock Appreciation Right may be exercised. In the event a Stock Appreciation Right is exercisable immediately, the manner of exercise of such Stock Appreciation Right in the event it is not exercised in full immediately shall be specified in the Stock Appreciation Right Agreement. The Administrator may accelerate the exercisability of any Stock Appreciation Right granted hereunder that is not immediately exercisable as of the date of grant.

(c)  Withholding Taxes.  The Company or its Affiliate shall be entitled to withhold and deduct from future wages of the Participant all legally required amounts necessary to satisfy any and all withholding and employment-related taxes attributable to the Participant’s Stock Appreciation Right. In the event the Participant is required under the Stock Appreciation Right to pay the Company or its Affiliate, or make arrangements satisfactory to the Company or its Affiliate respecting payment of, such withholding or employment-related taxes, the Administrator may, in its discretion and pursuant to such rules as it may adopt, permit the Participant to satisfy such obligations, in whole or in part, by delivering shares of Common Stock or by electing to have the Company withhold Common Stock issuable to Participant as a result of the exercise of the Stock Appreciation Right. Such shares shall have a Fair Market Value equal to the minimum required tax withholding, based on the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes. In no event may the Participant deliver shares having a Fair Market Value in excess of such statutory minimum required tax withholding. The Participant’s election to deliver shares of Common Stock for this purpose shall be made on or before the date that the amount of tax to be withheld is determined under applicable tax law. Such election shall be approved by the Administrator and otherwise comply with such rules as the Administrator may adopt to assure compliance with Rule 16b-3, if applicable.

(d)  Nontransferability.  No Stock Appreciation Right shall be transferable, in whole or in part, by the Participant, other than by will or by the laws of descent and distribution. If the Participant shall attempt any transfer of any Stock Appreciation Right, such transfer shall be void and the Stock Appreciation Right shall terminate.

(e)  No Rights as Stockholder.  A Participant (or the Participant’s successor or successors) shall have no rights as a stockholder with respect to any shares covered by a Stock Appreciation Right until the date of the issuance of a stock certificate evidencing such shares. No adjustment

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shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other rights for which the record date is prior to the date such stock certificate is actually issued (except as otherwise provided in Section 14 hereof).

(f)  Other Provisions.  The Stock Appreciation Right Agreement authorized under this Section 13 shall contain such other provisions as the Administrator shall deem advisable, including but not limited to any restrictions on the exercise of the Stock Appreciation Right that may be necessary to comply with Rule 16b-3.

SECTION 14

RECAPITALIZATION, SALE, MERGER, EXCHANGE OR LIQUIDATION

In the event of an increase or decrease in the number of shares of Common Stock resulting from a stock dividend, stock split, reverse split, combination or reclassification of Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company, the Administrator shall adjust the number of shares of Stock reserved under Section 6 hereof, the number of shares of Stock covered by each outstanding Award, and, if applicable, the price per share thereof to reflect such change. Additional shares that may become covered by the Award pursuant to such adjustment shall be subject to the same restrictions as are applicable to the shares with respect to which the adjustment relates.

Unless otherwise provided in the agreement evidencing an Award, in the event of an acquisition of the Company through: the sale of substantially all of the Company’s assets and the consequent discontinuance of its business; an acquisition of fifty percent (50%) or more of the total combined voting power of all classes of securities of the Company; or a merger, consolidation, exchange, reorganization, reclassification, extraordinary dividend, divestiture (including a spin-off), liquidation, recapitalization, stock split, stock dividend or otherwise (collectively referred to as a “Transaction”), the Administrator may provide for one (1) or more of the following:

(a)           the equitable acceleration of the exercisability of any outstanding Options or Stock Appreciation Rights, the vesting and payment of any Performance Awards, or the lapsing of the risks of forfeiture on any Restricted Stock Awards or Restricted Stock Unit Awards;

(b)           the complete termination of the Plan, the cancellation of outstanding Options or Stock Appreciation Rights not exercised prior to a date specified by the Board (which date shall give Participants a reasonable period of time in which to exercise such Option or Stock Appreciation Right prior to the effectiveness of such Transaction), the cancellation of any Performance Award and the cancellation of any Restricted Stock Awards or Restricted Stock Unit Awards for which the risks of forfeiture have not lapsed;

(c)           that Participants holding outstanding Options and Stock Appreciation Rights shall receive, with respect to each share of Stock subject to such Option or Stock Appreciation Right, as of the effective date of any such Transaction, cash in an amount equal to the excess of the Fair Market Value of such Stock on the date immediately preceding the effective date of such Transaction over the price per share of such Options or Stock Appreciation Rights; provided that the Board may, in lieu of such cash payment, distribute to such Participants shares of Common Stock or shares of stock of any corporation succeeding the Company by reason of such Transaction, such shares having a value equal to the cash payment herein;

(d)           that Participants holding outstanding Restricted Stock Awards, Restricted Stock Unit Awards and Performance Share Awards shall receive, with respect to each share of Stock subject to such Awards, as of the effective date of any such Transaction, cash in an amount equal to the Fair Market Value of such Stock on the date immediately preceding the effective date of such Transaction; provided that the Board may, in lieu of such cash payment, distribute to such

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Participants shares of Common Stock or shares of stock of any corporation succeeding the Company by reason of such Transaction, such shares having a value equal to the cash payment herein;

(e)           the continuance of the Plan with respect to the exercise of Options or Stock Appreciation Rights that were outstanding as of the date of adoption by the Board of such plan for such Transaction and the right to exercise such Options and Stock Appreciation Rights as to an equivalent number of shares of stock of the corporation succeeding the Company by reason of such Transaction;

(f)            the continuance of the Plan with respect to Restricted Stock Awards and Restricted Stock Unit Awards for which the risks of forfeiture have not lapsed as of the date of adoption by the Board of such plan for such Transaction and the right to receive an equivalent number of shares of stock of the corporation succeeding the Company by reason of such Transaction; and

(g)           the continuance of the Plan with respect to Performance Awards and, to the extent applicable, the right to receive an equivalent number of shares of stock of the corporation succeeding the Company by reason for such Transaction.

The Administrator may condition any acceleration of exercisability or other right to which the Participant is not entitled upon any additional agreements from the Participant, including but not limited to the Participant agreeing to additional restrictive covenants (e.g., confidentiality, non-competition, non-solicitation, non-circumvention, etc.) and the Participant agreeing to continue to perform services for the Company, a successor or purchaser of all or any portion of the Company’s business or related assets for substantially the same base salary for a period of up to six (6) months.

The Administrator may restrict the rights of or the applicability of this Section 14 to the extent necessary to comply with Section 16(b) of the Exchange Act, the Code or any other applicable law or regulation. The grant of an Award shall not limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, exchange or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

SECTION 15

INVESTMENT PURPOSE

No shares of Stock shall be issued pursuant to the Plan unless and until there has been compliance, in the opinion of Company’s counsel, with all applicable legal requirements, including but not limited to those relating to securities laws and stock exchange listing requirements. As a condition to the issuance of Stock to the Participant, the Administrator may require the Participant to (i) represent that the shares of Stock are being acquired for investment and not resale and to make such other representations as the Administrator shall deem necessary or appropriate to qualify the issuance of the shares as exempt from the Securities Act and any other applicable securities laws, and (ii) represent that the Participant shall not dispose of the shares of Stock in violation of the Securities Act or any other applicable securities laws.

The Participant’s acceptance of an Option constitutes acknowledgment of and consent to the following, without further consideration or action:

(a)           In the event the Company advises the Participant that it plans an underwritten public offering of its Common Stock in compliance with the Securities Act, and the underwriter(s) seek to impose restrictions under which certain stockholders may not sell or contract to sell or grant any option to buy or otherwise dispose of part or all of their stock purchase rights of the Common Stock underlying Awards, the Participant shall not, for a period not to exceed one hundred eighty (180) days from the prospectus, sell or contract to sell or grant an option to buy or otherwise

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dispose of any Option granted to the Participant or any of the underlying shares of Common Stock without the prior written consent of the underwriter(s) or its representative(s).

(b)           In the event the Company makes any public offering of its securities and determines in its sole discretion that it is necessary to reduce the number of issued but unexercised stock purchase rights so as to comply with any state’s securities or Blue Sky law limitations with respect thereto, the Board shall have the right (i) to accelerate the exercisability of any Option and the date on which such Option must be exercised, provided that the Company gives the Participant prior written notice of such acceleration, and (ii) to cancel any Options or portions thereof which the Participant does not exercise prior to or contemporaneously with such public offering.

(c)           In the event of a Transaction, the Participant shall comply with Rule 145 of the Securities Act and any other restrictions imposed under other applicable legal or accounting principles if the Participant is an “affiliate” (as defined in such applicable legal and accounting principles) at the time of the Transaction, and the Participant shall execute any documents necessary to ensure compliance with such rules.

The Company reserves the right to place a legend on any stock certificate issued in connection with an Award to assure compliance with this Section 15.

SECTION 16

AMENDMENT OF THE PLAN

The Administrator may from time to time, insofar as permitted by law, suspend or discontinue the Plan or revise or amend it in any respect; provided, however, that no such revision or amendment, except as is authorized in Section 14 hereof, shall impair the terms and conditions of any Award that is outstanding on the date of such revision or amendment to the material detriment of the Participant without the consent of the Participant. Notwithstanding the foregoing, no such revision or amendment shall (i) materially increase the number of shares subject to the Plan except as provided in Section 14 hereof, (ii) change the designation of the class of employees eligible to receive Awards, (iii) decrease the price at which Options may be granted, or (iv) materially increase the benefits accruing to Participants without the approval of the stockholders of the Company if such approval is required for compliance with the requirements of any applicable law or regulation. Furthermore, the Plan may not, without the approval of the stockholders, be amended in any manner that will cause incentive stock options to fail to meet the requirements of Code Section 422.

SECTION 17

NO OBLIGATION TO EXERCISE OPTION

The granting of an Option shall impose no obligation upon the Participant to exercise such Option.

SECTION 18

NO CONTRACTUAL RIGHT TO EMPLOYMENT OR FUTURE AWARDS

The Plan does not constitute a contract of employment, and selection as a Participant shall not give any participating employee the right to be retained in the employ of the Company or any Affiliate or any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. No individual shall have the right to be selected to receive an Award, or, having been so selected, to receive a future Award.

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SECTION 19

SECTION 409A

(a)           It is the intention of the Company that the Plan and all Awards comply with or are exempt from the requirements of Code Section 409A and the Plan shall be administered and interpreted in accordance with such intent. The Company does not guarantee that the Awards, payments or benefits that may be made or provided under the Plan will satisfy all applicable provisions of Code Section 409A or any other section of the Code. Payments made to a Participant in error shall be returned to the Company and shall not create a legally binding right to such payments.

(b)           If any Award would be considered Deferred Compensation, the Administrator reserves the absolute right to unilaterally amend the Plan or the Award, without the consent of the Participant, to avoid the application of, or to maintain compliance with, Code Section 409A. Any amendment by the Administrator to the Plan or an Award pursuant to this Section 19(b) shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A. A Participant’s acceptance of an Award constitutes acknowledgement of and consent to such rights of the Administrator, without further consideration or action.

(c)           In the event that an Award constitutes Deferred Compensation, and the settlement of, or distribution of benefits under such Award is to be triggered by a Transaction, then such settlement or distribution shall be subject to the event constituting the Transaction also constituting a “change in the ownership” or “change in the effective control” of the Company, as permitted under Code Section 409A.

SECTION 20

CLAWBACK POLICY

Any Award, amount or benefit received under the Plan shall be subject to potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of any applicable Company clawback policy, as it may be amended from time to time (the “Policy”) or any applicable law. A Participant’s receipt of an Award constitutes the Participant’s acknowledgment of and consent to the Company’s application, implementation and enforcement of (i) the Policy or any similar policy established by the Company that may apply to the Participant and (ii) any provision of applicable law relating to cancellation, rescission, payback or recoupment of compensation, as well as the Participant’s express agreement that the Company may take such actions as are necessary to effectuate the Policy, any similar policy (as applicable to the Participant) or applicable law without further consideration or action.

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EX-10.2

Exhibit 10.2

BROADWIND ENERGY, INC.

2012 EQUITY INCENTIVE PLAN

I. INTRODUCTION

1.1  Purposes.  The purposes of the Broadwind Energy, Inc. 2012 Equity Incentive Plan (this “Plan”) are (i) to align the interests of the Company’s stockholders and the recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company’s growth and success, (ii) to advance the interests of the Company by attracting and retaining officers, other employees, Non-Employee Directors and independent contractors and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders.

1.2  Certain Definitions.

“Agreement” shall mean the written or electronic agreement evidencing an award hereunder between the Company and the recipient of such award.

“Board” shall mean the Board of Directors of the Company.

“Change in Control” shall mean a transaction in which the Company is a party to a reorganization, merger, consolidation or sale or other disposition of substantially all of the Company’s assets (determined on a consolidated basis), or if any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) shall acquire beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Committee” shall mean the Committee designated by the Board, consisting of two or more members of the Board, each of whom may be (i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act, (ii) an “outside director” within the meaning of Section 162(m) of the Code and (iii) “independent” within the meaning of the rules of the Nasdaq Stock Market or, if the Common Stock is not listed on the Nasdaq Stock Market, within the meaning of the rules of the principal stock exchange on which the Common Stock is then traded.

“Common Stock” shall mean the common stock, par value $0.001 per share, of the Company, and all rights appurtenant thereto.

“Company” shall mean Broadwind Energy, Inc., a Delaware corporation, or any successor thereto.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Fair Market Value” shall mean the closing transaction price of a share of Common Stock as reported on the Nasdaq Stock Market on the date as of which such value is being determined or, if the Common Stock is not listed on the Nasdaq Stock Market, the closing transaction price of a share of Common Stock on the principal national stock exchange on which the Common Stock is traded on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if the Common Stock is not listed on a national stock exchange or if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee in good faith and in accordance with Section 409A of the Code.

“Free-Standing SAR” shall mean an SAR which is not granted in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise, shares of Common Stock (which

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may be Restricted Stock) with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised.

“Incentive Stock Option” shall mean an option to purchase shares of Common Stock that meets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option.

“Non-Employee Director” shall mean any director of the Company who is not an officer or employee of the Company or any Subsidiary.

“Nonqualified Stock Option” shall mean an option to purchase shares of Common Stock which is not an Incentive Stock Option.

“Performance Awards” shall mean a right to receive an amount of cash, shares of Common Stock, or a combination of both, contingent upon the attainment of specified Performance Measures within a specified Performance Period.

“Performance Measures” shall mean the criteria and objectives, established by the Committee, which shall be satisfied or met (i) as a condition to the grant or exercisability of all or a portion of an option or SAR or (ii) during the applicable Restriction Period or Performance Period as a condition to the vesting of the holder’s interest in the shares of Common Stock subject to an award or the holder’s receipt of the shares of Common Stock or payment with respect to an award, as applicable. To the extent necessary for an award to be qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder, such criteria and objectives shall be one or more of the following corporate-wide or subsidiary, division, operating unit or individual measures, stated in either absolute terms or relative terms, such as rates of growth or improvement: the attainment by a share of Common Stock of a specified Fair Market Value for a specified period of time, earnings per share, return to stockholders (including dividends), return on assets, return on equity, earnings of the Company before or after taxes and/or interest, EBITDA, revenues, market share, cash flow or cost reduction goals, interest expense after taxes, return on investment, return on investment capital, economic value created, gross margin, operating margin, net income before or after taxes, pretax earnings before interest, depreciation and amortization, pretax operating earnings after interest expense and before incentives and/or extraordinary or special items, operating earnings, net cash provided by operations, and strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, customer satisfaction, reductions in errors and omissions, reductions in lost business, management of employment practices and employee benefits, supervision of litigation and information technology, quality and quality audit scores, productivity, efficiency, and goals relating to acquisitions or divestitures, or any combination of the foregoing. In the sole discretion of the Committee, but subject to Section 162(m) of the Code, the Committee may amend or adjust the Performance Measures or other terms and conditions of an outstanding award in recognition of unusual, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles.

“Performance Option” shall mean an Incentive Stock Option or Nonqualified Stock Option, the grant of which or the exercisability of all or a portion of which is contingent upon the attainment of specified Performance Measures within a specified Performance Period.

“Performance Period” shall mean any period of not less than twelve months designated by the Committee during which (i) the Performance Measures applicable to an award shall be measured and (ii) the conditions to vesting applicable to an award shall remain in effect; provided, however, that the twelve-month performance period shall not apply to (i) awards granted in lieu of salary, (ii) awards made in payment of any earned incentive compensation, (iii) a termination due to death, disability or retirement, (iv) upon a Change in Control, (v) Substitute Awards, (vi) awards to newly hired officers or other employees, or (vii) awards granted under this Plan with respect to the number of shares of

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Common Stock which, in the aggregate, does not exceed ten percent (10%) of the total number of shares available for awards under this Plan.

“Prior Plan” shall mean the Broadwind Energy, Inc. 2007 Equity Incentive Plan and each other plan previously maintained by the Company under which equity awards remain outstanding as of the effective date of this Plan.

“Restricted Stock” shall mean shares of Common Stock which are subject to a Restriction Period and which may, in addition thereto, be subject to the attainment of specified Performance Measures within a specified Performance Period.

“Restricted Stock Award” shall mean an award of Restricted Stock under this Plan.

“Restricted Stock Unit” shall mean a right to receive one share of Common Stock or, in lieu thereof, the Fair Market Value of such share of Common Stock in cash, which shall be contingent upon the expiration of a specified Restriction Period and which may, in addition thereto, be contingent upon the attainment of specified Performance Measures within a specified Performance Period.

“Restricted Stock Unit Award” shall mean an award of Restricted Stock Units under this Plan.

“Restriction Period” shall mean any period of not less than thirty-six months, with vesting no more rapidly than ratably on each of the first three anniversaries of the date of the grant, designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award, or (ii) the conditions to vesting applicable to a Restricted Stock Unit Award shall remain in effect; provided, however, that the thirty-six month vesting period shall not apply to (i) awards granted in lieu of salary, (ii) awards made in payment of any earned incentive compensation, (iii) a termination due to death, disability or retirement, (iv) upon a Change in Control, (v) Substitute Awards, (vi) awards to newly hired officers or other employees, or (vii) awards granted under this Plan with respect to the number of shares of Common Stock which, in the aggregate, does not exceed ten percent (10%) of the total number of shares available for awards under this Plan.

“SAR” shall mean a stock appreciation right which may be a Free-Standing SAR or a Tandem SAR.

“Stock Award” shall mean a Restricted Stock Award or a Restricted Stock Unit Award.

“Subsidiary” shall mean any corporation, limited liability company, partnership, joint venture or similar entity in which the Company owns, directly or indirectly, an equity interest possessing more than 50% of the combined voting power of the total outstanding equity interests of such entity.

“Substitute Award” shall mean an award granted under this Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, including a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an option or SAR.

“Tandem SAR” shall mean an SAR which is granted in tandem with, or by reference to, an option (including a Nonqualified Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender or cancellation of all or a portion of such option, shares of Common Stock (which may be Restricted Stock) with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of shares of Common Stock subject to such option, or portion thereof, which is surrendered.

“Tax Date” shall have the meaning set forth in Section 5.5.

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“Ten Percent Holder” shall have the meaning set forth in Section 2.1(a).

1.3  Administration.  This Plan shall be administered by the Committee. Any one or a combination of the following awards may be made under this Plan to eligible persons: (i) options to purchase shares of Common Stock in the form of Incentive Stock Options or Nonqualified Stock Options (which may include Performance Options), (ii) SARs in the form of Tandem SARs or Free-Standing SARs, (iii) Stock Awards in the form of Restricted Stock or Restricted Stock Units, and (iv) Performance Awards. The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons and, if applicable, the number of shares of Common Stock, the number of SARs, the number of Restricted Stock Units, and the dollar value subject to such an award, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. The Committee may, in its sole discretion and for any reason at any time, subject to the requirements of Section 162(m) of the Code and regulations thereunder in the case of an award intended to be qualified performance-based compensation, take action such that (i) any or all outstanding options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable to any outstanding Restricted Stock or Restricted Stock Units shall lapse, (iii) all or a portion of the Performance Period applicable to any outstanding Restricted Stock, Restricted Stock Units or Performance Awards shall lapse and (iv) the Performance Measures (if any) applicable to any outstanding award shall be deemed to be satisfied at the target, maximum or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be conclusive and binding on all parties.

The Committee may delegate some or all of its power and authority hereunder to the Board or, subject to applicable law, to the Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, however, that (i) the Committee may not delegate its power and authority to the Board or the Chief Executive Officer or other executive officer of the Company with regard to the grant of an award to any person who is a “covered employee” within the meaning of Section 162(m) of the Code or who, in the Committee’s judgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding and (ii) the Committee may not delegate its power and authority to the Chief Executive Officer or other executive officer of the Company with regard to the selection for participation in this Plan of an officer, director or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer, director or other person.

No member of the Board or Committee, and neither the Chief Executive Officer nor any other executive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of the Board and the Committee and the Chief Executive Officer or other executive officer shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law (except as otherwise may be provided in the Company’s Certificate of Incorporation and/or By-laws) and under any directors’ and officers’ liability insurance that may be in effect from time to time.

1.4  Eligibility.  Participants in this Plan shall consist of such employees, officers, Non-Employee Directors, and independent contractors, and persons expected to become employees, officers, Non-Employee Directors, and independent contractors, of the Company and its Subsidiaries as the Committee in its sole discretion may select from time to time. The Committee’s selection of a person

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to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Except as provided otherwise in an Agreement, for purposes of this Plan, references to employment by the Company shall also mean employment by a Subsidiary, and references to employment shall include service as a Non-Employee Director or independent contractor. The Company may determine, in its sole discretion, whether a participant is deemed to be employed during a leave of absence.

1.5  Shares Available.  Subject to adjustment as provided in Section 5.7 and to all other limits set forth in this Section 1.5, 1,200,000 shares of Common Stock shall be available for all awards under this Plan, of which no more than 1,200,000 shares of Common Stock in the aggregate may be issued under the Plan in connection with Incentive Stock Options. The number of shares of Common Stock available under the Plan shall be reduced by (i) the sum of the aggregate number of shares of Common Stock under this Plan which become subject to outstanding options, outstanding Free-Standing SARs and outstanding Stock Awards and delivered upon the settlement of Performance Awards, and (ii) the number of shares of Common Stock subject to awards granted under the Prior Plan on or after January 1, 2012, except for certain Restricted Stock Units awarded to certain senior executives on December 20, 2011 not to exceed 141,051 shares of Common Stock in the aggregate. If the Plan is approved by the shareholders of the Company, no further awards shall be granted under the Prior Plan.

To the extent that shares of Common Stock subject to an outstanding option, SAR, Stock Award or Performance Award granted under the Plan or the Prior Plan are not issued or delivered by reason of (i) the expiration, termination, cancellation or forfeiture of such award (excluding shares subject to an option cancelled upon settlement in shares of a related Tandem SAR or shares subject to a Tandem SAR cancelled upon exercise of a related option) or (ii) the settlement of such award in cash, then such shares of Common Stock shall again be available under this Plan; provided, however, that shares of Common Stock subject to an award under this Plan shall not again be available under this Plan if such shares are (x) shares that were subject to a stock- settled SAR and were not issued or delivered upon the net settlement of such SAR, (y) shares delivered to or withheld by the Company to pay the exercise price or the withholding taxes related to an outstanding award and (z) shares repurchased by the Company on the open market with the proceeds of an option exercise. The number of shares that again become available pursuant to this paragraph shall be equal to the number of shares of Common Stock subject to an option, Free-Standing SAR, Stock Award, or Performance Award described herein.

The number of shares of Common Stock available for awards under this Plan shall not be reduced by (i) the number of shares of Common Stock subject to Substitute Awards or (ii) available shares under a stockholder approved plan of a company or other entity which was a party to a corporate transaction with the Company (as appropriately adjusted to reflect such corporate transaction) which become subject to awards granted under this Plan (subject to applicable stock exchange requirements).

Shares of Common Stock to be delivered under this Plan shall be made available from authorized and unissued shares of Common Stock, or authorized and issued shares of Common Stock reacquired and held as treasury shares or otherwise or a combination thereof.

To the extent necessary for an award to be qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder (i) the maximum number of shares of Common Stock with respect to which options or SARs or a combination thereof may be granted during any fiscal year of the Company to any person shall be 300,000, subject to adjustment as provided in Section 5.7; (ii) the maximum number of shares of Common Stock with respect to which Stock Awards subject to Performance Measures or Performance Awards denominated in Common Stock may be granted during any fiscal year of the Company to any person shall be 300,000, subject to adjustment as provided in Section 5.7, and (iii) the maximum amount that may be payable with respect to Performance Awards denominated in cash granted during any fiscal year of the Company to any person shall be $5,000,000.

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II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

2.1  Stock Options.  The Committee may, in its discretion, grant options to purchase shares of Common Stock to such eligible persons as may be selected by the Committee. Each option, or portion thereof, that is not an Incentive Stock Option, shall be a Nonqualified Stock Option. To the extent that the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the Company, or any parent or Subsidiary) exceeds the amount (currently $100,000) established by the Code, such options shall constitute Nonqualified Stock Options.

Options may be granted in addition to, or in lieu of, any other compensation payable to officers, other employees, Non-Employee Directors, and independent contractors, and in all cases shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a)  Number of Shares and Purchase Price.  The number of shares of Common Stock subject to an option and the purchase price per share of Common Stock purchasable upon exercise of the option shall be determined by the Committee; provided, however, that the purchase price per share of Common Stock purchasable upon exercise of an option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option; provided further, that if an Incentive Stock Option shall be granted to any person who, at the time such option is granted, owns capital stock possessing more than 10 percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or Subsidiary) (a “Ten Percent Holder”), the purchase price per share of Common Stock shall not be less than the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.

Notwithstanding the foregoing, in the case of an option that is a Substitute Award, the exercise price per share of the shares subject to such option may be less than 100% of the Fair Market Value per share on the date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor company or other entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares.

(b)  Option Period and Exercisability.  The period during which an option may be exercised shall be determined by the Committee; provided, however, that no option shall be exercised later than 10 years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant. The Committee may, in its discretion, determine that an option is to be granted as a Performance Option and may establish an applicable Performance Period and Performance Measures which shall be satisfied or met as a condition to the grant of such option or to the exercisability of all or a portion of such option. The Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised only with respect to whole shares of Common Stock.

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(c)  Method of Exercise.  An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanying such notice with payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of shares of Common Stock having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, (D) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Company any Tandem SARs which are cancelled by reason of the exercise of the option and (iii) by executing such documents as the Company may reasonably request. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No shares of Common Stock shall be issued and no certificate representing Common Stock shall be delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company’s satisfaction).

2.2  Stock Appreciation Rights.  The Committee may, in its discretion, grant SARs to such eligible persons as may be selected by the Committee. The Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR.

SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a)  Number of SARs and Base Price.  The number of SARs subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per share of Common Stock of the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however, that such base price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such SAR.

(b)  Exercise Period and Exercisability.  The period for the exercise of an SAR shall be determined by the Committee; provided, however, that no SAR shall be exercised later than 10 years after its grant date; and provided further, that no Tandem SAR shall be exercised later than the expiration, cancellation, forfeiture or other termination of the related option. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free-Standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c), or such shares shall be transferred to the holder in book entry form with restrictions on the shares duly noted, and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the exercise of an SAR, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR.

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(c)  Method of Exercise.  A Tandem SAR may be exercised (i) by giving written notice to the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Company any options which are cancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents as the Company may reasonably request. A Free-Standing SAR may be exercised (A) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (B) by executing such documents as the Company may reasonably request.

2.3  Termination of Employment or Service.  All of the terms relating to the exercise, cancellation or other disposition of an option or SAR upon a termination of employment or service with the Company of the holder of such option or SAR, as the case may be, whether by reason of disability, retirement, death or any other reason, shall be determined by the Committee and set forth in the applicable award Agreement.

2.4  No Repricing.  Subject to Section 5.7, the Committee shall not without the approval of the stockholders of the Company, (i) reduce the exercise price or base price of any previously granted option or SAR, (ii) cancel any previously granted option or SAR in exchange for another option or SAR with a lower exercise price or base price or (iii) cancel any previously granted option or SAR in exchange for cash or another award if the exercise price of such option or the base price of such SAR exceeds the Fair Market Value of a share of Common Stock on the date of such cancellation, in each case other than in connection with a corporate transaction including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares.

III. STOCK AWARDS

3.1  Stock Awards.  The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify whether the Stock Award is a Restricted Stock Award or a Restricted Stock Unit Award.

3.2  Terms of Restricted Stock Awards.  Restricted Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)  Number of Shares and Other Terms.  The number of shares of Common Stock subject to a Restricted Stock Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Award shall be determined by the Committee.

(b)  Vesting and Forfeiture.  The Agreement relating to a Restricted Stock Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award (i) if the holder of such award remains continuously in the employment of the Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such award (x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance Period.

(c)  Stock Issuance.  During the Restriction Period, the shares of Restricted Stock shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing a Restricted Stock Award shall be registered in the holder’s name and may bear a legend, in addition to any legend which may be required pursuant to Section 5.6, indicating that the ownership of the shares of Common Stock represented by such

8

certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock Award. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicable Performance Measures), subject to the Company’s right to require payment of any taxes in accordance with Section 5.5, the restrictions shall be removed from the requisite number of any shares of Common Stock that are held in book entry form, and all certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award.

(d)  Rights with Respect to Restricted Stock Awards.  Unless otherwise set forth in the Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of a Restricted Stock Award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that (i) a distribution with respect to shares of Common Stock, other than a regular cash dividend, and (ii) a regular cash dividend with respect to shares of Common Stock that are subject to performance-based vesting conditions, in each case shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.

3.3  Terms of Restricted Stock Unit Awards.  Restricted Stock Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)  Number of Shares and Other Terms.  The number of shares of Common Stock subject to a Restricted Stock Unit Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Unit Award shall be determined by the Committee.

(b)  Vesting and Forfeiture.  The Agreement relating to a Restricted Stock Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Restricted Stock Unit Award (i) if the holder of such award remains continuously in the employment of the Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such award (x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance Period.

(c)  Settlement of Vested Restricted Stock Unit Awards.  The Agreement relating to a Restricted Stock Unit Award shall specify (i) whether such award may be settled in shares of Common Stock or cash or a combination thereof and (ii) whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on, or the deemed reinvestment of, any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. Any dividend equivalents with respect to Restricted Stock Units that are subject to performance-based vesting conditions shall be subject to the same restrictions as such Restricted Stock Units. Prior to the settlement of a Restricted Stock Unit Award, the holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award.

9

3.4  Termination of Employment or Service.  All of the terms relating to the satisfaction of Performance Measures and the termination of the Restriction Period or Performance Period relating to a Stock Award, or any forfeiture and cancellation of such award upon a termination of employment or service with the Company of the holder of such award, whether by reason of disability, retirement, death or any other reason, shall be determined by the Committee and set forth in the applicable award Agreement.

IV. PERFORMANCE AWARDS

4.1  Performance Awards.  The Committee may, in its discretion, grant Performance Awards to such eligible persons as may be selected by the Committee. Performance Awards may be granted in the form of annual incentive awards or long-term incentive awards.

4.2  Terms of Performance Awards.  Performance Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)  Value of Performance Awards and Performance Measures.  The method of determining the value of the Performance Award and the Performance Measures and Performance Period applicable to a Performance Award shall be determined by the Committee.

(b)  Vesting and Forfeiture.  The Agreement relating to a Performance Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Performance Award if the specified Performance Measures are satisfied or met during the specified Performance Period and for the forfeiture of such award if the specified Performance Measures are not satisfied or met during the specified Performance Period.

(c)  Settlement of Vested Performance Awards.  The Agreement relating to a Performance Award shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. If a Performance Award is settled in shares of Restricted Stock, such shares of Restricted Stock shall be issued to the holder in book entry form or a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights as a stockholder of the Company as determined pursuant to Section 3.2(d). Any dividends or dividend equivalents with respect to a Performance Award that is subject to performance-based vesting conditions shall be subject to the same restrictions as such Performance Award. Prior to the settlement of a Performance Award in shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Company.

4.3  Termination of Employment or Service.  All of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Award, or any forfeiture and cancellation of such award upon a termination of employment or service with the Company of the holder of such award, whether by reason of disability, retirement, death or any other reason, shall be determined by the Committee and set forth in the applicable award Agreement.

V. GENERAL

5.1  Effective Date and Term of Plan.  This Plan shall be submitted to the stockholders of the Company for approval at the Company’s 2012 annual meeting of stockholders and, if so approved, the Plan shall become effective as of the date on which the Plan was approved by the Board. This Plan shall terminate as of the first annual meeting of the Company’s stockholders to occur on or after the tenth anniversary of its effective date, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination.

10

Awards hereunder may be made at any time prior to the termination of this Plan, provided that no Incentive Stock Option may be granted later than 10 years after the effective date of this Plan. In the event that this Plan is not approved by the stockholders of the Company, this Plan and any awards hereunder shall be void and of no force or effect.

5.2  Amendments.  The Board may amend this Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) of the Code and any rule of the Nasdaq Stock Market, or any other stock exchange on which shares of Common Stock are traded; provided, however, that no amendment may impair the rights of a holder of an outstanding award without the consent of such holder.

5.3  Agreement.  Each award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions applicable to such award. No award shall be valid until an Agreement is executed by the Company and, to the extent required by the Company, either executed by the recipient or accepted by the recipient by electronic means approved by the Company within the time period specified by the Company. Upon such execution or execution and electronic acceptance, and delivery of the Agreement to the Company, such award shall be effective as of the effective date set forth in the Agreement.

5.4  Non-Transferability.  No award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company or, to the extent expressly permitted in the Agreement relating to such award, to the holder’s family members, a trust or entity established by the holder for estate planning purposes or a charitable organization designated by the holder, in each case without consideration. Except to the extent permitted by the foregoing sentence or the Agreement relating to an award, each award may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legal representative or similar person. Except as permitted by the second preceding sentence, no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any award, such award and all rights thereunder shall immediately become null and void.

5.5  Tax Withholding.  The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. An Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “Tax Date”), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, in either case equal to the amount necessary to satisfy any such obligation, (D) in the case of the exercise of an option, a cash payment by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the award. Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Any fraction of a share of Common Stock which would be

11

required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.

5.6  Restrictions on Shares.  Each award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares thereunder, such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.

5.7  Adjustment.  In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of securities available under this Plan, the number and class of securities subject to each outstanding option or SAR and the purchase price or base price per share, the terms of each outstanding Restricted Stock Award and Restricted Stock Unit Award, including the number and class of securities subject thereto, the terms of each outstanding Performance Award, the maximum number of securities with respect to which options or SARs may be granted during any fiscal year of the Company to any one grantee, the maximum number of shares of Common Stock that may be awarded during any fiscal year of the Company to any one grantee pursuant to a Stock Award that is subject to Performance Measures or a Performance Award shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price and in accordance with Section 409A of the Code. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would result in a fractional security being (a) available under this Plan, such fractional security shall be disregarded, or (b) subject to an award under this Plan, the Company shall pay the holder of such award, in connection with the first vesting, exercise or settlement of such award, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date over (B) the exercise or base price, if any, of such award.

5.8  Change in Control.  If the Company shall be a party to Change in Control, the Board (as constituted prior to the Change in Control) may, in its discretion:

(a)           require that (A) some or all outstanding options and SARs shall immediately become exercisable in full or in part, (B) the Restriction Period applicable to some or all outstanding Restricted Stock Awards and Restricted Stock Unit Awards shall lapse in full or in part, (C) the Performance Period applicable to some or all outstanding awards shall lapse in full or in part, and (D) the Performance Measures applicable to some or all outstanding awards shall be deemed to be satisfied at the target, maximum or any other level;

12

(b)           require that shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, be substituted for some or all of the shares of Common Stock subject to an outstanding award, with an appropriate and equitable adjustment to such award as determined by the Board in accordance with Section 5.7; and/or

(c)           require outstanding awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (i) a cash payment in an amount equal to (A) in the case of an option or an SAR, the number of shares of Common Stock then subject to the portion of such option or SAR surrendered, to the extent such option or SAR is then exercisable or becomes exercisable pursuant to this Plan or an award Agreement or another agreement, multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock as of the date of the Change in Control, over the exercise price or base price per share of Common Stock subject to such option or SAR, (B) in the case of a Stock Award or a Performance Award denominated in shares of Common Stock, the number of shares of Common Stock then subject to the portion of such award surrendered, to the extent the Restriction Period and Performance Period, if any, on such Stock Award or Performance Award have lapsed or will lapse pursuant to this Plan or an award Agreement or another agreement and to the extent that the Performance Measures, if any, have been satisfied or are deemed satisfied pursuant to this Plan or an award Agreement or another agreement, multiplied by the Fair Market Value of a share of Common Stock as of the date of the Change in Control, and (C) in the case of a Performance Award denominated in cash, the value of the Performance Award then subject to the portion of such award surrendered, to the extent the Performance Period applicable so such award has lapsed or will lapse pursuant to this Plan or an award Agreement or another agreement and to the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to this Plan or an award Agreement or another agreement; (ii) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (i) above; or (iii) a combination of the payment of cash pursuant to clause (i) above and the issuance of shares pursuant to clause (ii) above.

5.9  Deferrals.  The Committee may determine that the delivery of shares of Common Stock or the payment of cash, or a combination thereof, upon the settlement of all or a portion of any award made hereunder shall be deferred, or the Committee may, in its sole discretion, approve deferral elections made by holders of awards. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, subject to the requirements of Section 409A of the Code.

5.10  No Right of Participation, Employment or Service.  Unless otherwise set forth in an employment agreement, no person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by or service with the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment of any person at any time without liability hereunder.

5.11  Rights as Stockholder.  No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security.

5.12  Designation of Beneficiary.  To the extent permitted by the Committee, a holder of an award may file with the Company a written designation of one or more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death or incapacity. To the

13

extent an outstanding option or SAR granted hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to exercise such option or SAR pursuant to procedures prescribed by the Company. Each beneficiary designation shall become effective only when filed in writing with the Company during the holder’s lifetime on a form prescribed by the Company. The spouse of a married holder domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Company of a new beneficiary designation shall cancel all previously filed beneficiary designations. If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding award held by such holder, to the extent vested or exercisable, shall be payable to or may be exercised by such holder’s executor, administrator, legal representative or similar person.

5.13  Governing Law.  This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

5.14  Foreign Employees.  Without amending this Plan, the Committee may grant awards to eligible persons who are foreign nationals and/or reside outside of the U.S. on such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Subsidiaries operates or has employees.

5.15  Clawback Policy.  Any award, amount or benefit received under the Plan shall be subject to potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of any applicable Company clawback policy, as it may be amended from time to time (the “Policy”) or any applicable law. A participant’s receipt of an award constitutes the participant’s acknowledgment of and consent to the Company’s application, implementation and enforcement of (i) the Policy or any similar policy established by the Company that may apply to the participant and (ii) any provision of applicable law relating to cancellation, rescission, payback or recoupment of compensation, as well as the participant’s express agreement that the Company may take such actions as are necessary to effectuate the policy, any similar policy (as applicable to the participant) or applicable law without further consideration or action.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Peter C. Duprey, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Broadwind Energy, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the registrant and we have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2012
	/s/ PETER C. DUPREY
	Peter C. Duprey
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Stephanie K. Kushner, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Broadwind Energy, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the registrant and we have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2012
	/s/ STEPHANIE K. KUSHNER
	Stephanie K. Kushner
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Broadwind Energy, Inc. (the “Company”) for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter C. Duprey, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i)            the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 7, 2012
	/s/ PETER C. DUPREY
	Peter C. Duprey
	President and Chief Executive Officer
	(Principal Executive Officer)

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Broadwind Energy, Inc. (the “Company”) for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephanie K. Kushner, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i)            the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 7, 2012
	/s/ STEPHANIE K. KUSHNER
	Stephanie K. Kushner
	Chief Financial Officer
	(Principal Financial Officer)

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

INTANGIBLE ASSETS (Details) (USD $) In Thousands, unless otherwise specified			9 Months Ended		3 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Minimum	Sep. 30, 2012 Maximum	Jun. 30, 2012 Customer relationships	Sep. 30, 2012 Customer relationships	Dec. 31, 2011 Customer relationships	Sep. 30, 2012 Trade names	Dec. 31, 2011 Trade names
INTANGIBLE ASSETS
Estimated useful life			8 years	20 years	5 years
Cost Basis	$ 11,978	$ 11,978				$ 3,979	$ 3,979	$ 7,999	$ 7,999
Accumulated Amortization	(3,859)	(2,764)				(1,878)	(1,084)	(1,981)	(1,680)
Net Book Value	8,119	9,214				2,101	2,895	6,018	6,319
Intangible assets with shortened life					$ 2,216
Estimated useful life, portion of Net Book Value					1 year
Previous useful life					5 years

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COMMITMENTS AND CONTINGENCIES (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Changes in the carrying amount of the Company's total product warranty liability
Balance, beginning of period	$ 983	$ 1,071
Warranty expense	(133)	21
Warranty claims	(99)	(229)
Balance at end of period	751	863
Activity in the accounts receivable allowance liability
Balance at beginning of year	438	489
Bad debt expense	200	532
Write-offs	(123)	(3)
Balance at end of period	515	1,018
Liquidated Damages
Accrued potential liquidated damages	$ 213
Minimum
Warranty Liability
Term of warranty	1 year
Maximum
Warranty Liability
Term of warranty	7 years

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SEGMENT REPORTING (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
SEGMENT REPORTING
Revenues from external customers	$ 55,045	$ 47,899	$ 165,799	$ 130,761
Operating profit (loss)	(3,527)	(6,244)	(11,627)	(14,528)
Depreciation and amortization	4,367	3,647	12,227	10,910
Capital expenditures	1,135	1,284	3,300	4,134
Total Assets	161,884		161,884		172,891
Markup over costs (as a percent)	10.00%		10.00%
Tower and Weldments
SEGMENT REPORTING
Number of facilities	2		2
Revenues from external customers	37,423	29,627	109,587	82,292
Intersegment revenues		57		58
Operating profit (loss)	1,740	(35)	3,306	5,159
Depreciation and amortization	942	872	2,722	2,638
Capital expenditures	127	178	540	367
Total Assets	65,657		65,657		68,185
Tower and Weldments | Minimum
SEGMENT REPORTING
Typical capacity of wind turbines for which towers are manufactured (in megawatts)			2
Tower and Weldments | Maximum
SEGMENT REPORTING
Annual tower production capacity (in towers)			500
Power generating capacity of turbines that towers produced annually can support (in megawatts)			1,200
Gearing
SEGMENT REPORTING
Revenues from external customers	10,778	11,657	40,256	37,694
Intersegment revenues	478	977	1,096	1,002
Operating profit (loss)	(2,637)	(3,281)	(5,390)	(8,523)
Depreciation and amortization	2,995	2,469	8,217	7,497
Capital expenditures	893	268	1,657	(30)
Total Assets	78,218		78,218		80,642
Services
SEGMENT REPORTING
Revenues from external customers	6,844	6,615	15,956	10,775
Intersegment revenues	55		81	35
Operating profit (loss)	(570)	(413)	(3,331)	(3,862)
Depreciation and amortization	413	263	1,237	645
Capital expenditures	44	822	944	3,743
Total Assets	14,975		14,975		15,752
Assets held for sale
SEGMENT REPORTING
Total Assets	8,044		8,044		8,052
Corporate
SEGMENT REPORTING
Operating profit (loss)	(2,048)	(2,489)	(6,224)	(7,275)
Depreciation and amortization	17	43	51	130
Capital expenditures	71	16	159	54
Total Assets	328,019		328,019		317,413
Eliminations
SEGMENT REPORTING
Intersegment revenues	(533)	(1,034)	(1,177)	(1,095)
Operating profit (loss)	(12)	(26)	12	(27)
Total Assets	$ (333,029)		$ (333,029)		$ (317,153)

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RESTRUCTURING (Tables)

9 Months Ended

Sep. 30, 2012

RESTRUCTURING

Schedule of total restructuring charges incurred to date and the total expected restructuring charges

	2011		Q1 ‘12		Q2 ‘12		Q3 ‘12			Total		Total
	Actual		Actual		Actual		Actual			Incurred		Projected
Capital expenditures:
Gearing	$	5	$	262	$	644	$	254		$	1,165	$	4,816
Other	—		—		—		71			71		600
Total capital expenditures	5		262		644		325			1,236		5,416
Cash expenses:
Cost of sales:
Gearing	131		89		236		(41		)	415		2,794
Services	—		6		—		100			106		406
Total cost of sales	131		95		236		59			521		3,200
Selling, general, and administrative expenses:
Gearing	35		25		25		380			465		490
Services	—		40		—		—			40		40
Corporate	406		10		—		—			416		916
Total selling, general and administrative expenses	441		75		25		380			921		1,446
Non-cash expenses:
Gearing	247		294		251		188			980		3,356
Corporate	50		—		—		—			50		50
Total non-cash expenses	297		294		251		188			1,030		3,406
Grand total	$	874	$	726	$	1,156	$	952		$	3,708	$	13,468

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CASH AND CASH EQUIVALENTS (Tables)

9 Months Ended

Sep. 30, 2012

CASH AND CASH EQUIVALENTS

Schedule of cash and cash equivalents

	September 30,		December 31,
	2012		2011
Cash and cash equivalents:
Cash	$	2,721	$	11,127
Certificates of deposits	—		707
Municipal bonds	—		1,506
Total cash and cash equivalents	2,721		13,340

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COMMITMENTS AND CONTINGENCIES (Details 4) (New Markets Tax Credit Transaction, USD $) In Thousands, unless otherwise specified	1 Months Ended	9 Months Ended
	Jul. 31, 2011	Sep. 30, 2012
New Markets Tax Credit program
Future tax credit that can be generated		$ 3,900
Tax credit period	7 years
Amount of tax credits for which the Company may be liable		3,900
Period which facility must operate and be in compliance	7 years
Broadwind Services
New Markets Tax Credit program
Gross loan from AMCREF to Broadwind Services		$ 10,000

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INCOME TAXES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
INCOME TAXES
Provision (benefit) for income taxes from continuing operations	$ (9)	$ (9)	$ 21	$ 24
Net operating loss carryforwards					136,189
Unrecognized tax benefits	445		445		417
Accrued interest or penalties related to uncertain tax positions recognized	$ 159		$ 159		$ 131

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CASH AND CASH EQUIVALENTS (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash and cash equivalents	$ 2,721	$ 13,340	$ 12,975	$ 15,331
Cash
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash and cash equivalents	2,721	11,127
Certificates of deposits
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash and cash equivalents		707
Municipal bonds
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash and cash equivalents		$ 1,506

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RESTRUCTURING (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended	9 Months Ended	21 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended		9 Months Ended	21 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	21 Months Ended	3 Months Ended	9 Months Ended	21 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended	21 Months Ended	9 Months Ended	3 Months Ended
	Sep. 30, 2012 item	Jun. 30, 2012	Mar. 31, 2012	Sep. 30, 2012 sqft item	Dec. 31, 2011	Sep. 30, 2012 item	Sep. 30, 2012 Non-Cash Expense-Other Income (Loss)	Jun. 30, 2012 Non-Cash Expense-Other Income (Loss)	Mar. 31, 2012 Non-Cash Expense-Other Income (Loss)	Sep. 30, 2012 Non-Cash Expense-Other Income (Loss)	Dec. 31, 2011 Non-Cash Expense-Other Income (Loss)	Sep. 30, 2012 Non-Cash Expense-Other Income (Loss)	Sep. 30, 2012 Non-Cash Expense-Other Income (Loss) Gearing	Jun. 30, 2012 Non-Cash Expense-Other Income (Loss) Gearing	Mar. 31, 2012 Non-Cash Expense-Other Income (Loss) Gearing	Sep. 30, 2012 Non-Cash Expense-Other Income (Loss) Gearing	Dec. 31, 2011 Non-Cash Expense-Other Income (Loss) Gearing	Sep. 30, 2012 Non-Cash Expense-Other Income (Loss) Gearing	Sep. 30, 2012 Non-Cash Expense-Other Income (Loss) Corporate	Dec. 31, 2011 Non-Cash Expense-Other Income (Loss) Corporate	Sep. 30, 2012 Non-Cash Expense-Other Income (Loss) Corporate	Sep. 30, 2012 Capital Expenditures	Jun. 30, 2012 Capital Expenditures	Mar. 31, 2012 Capital Expenditures	Sep. 30, 2012 Capital Expenditures	Dec. 31, 2011 Capital Expenditures	Sep. 30, 2012 Capital Expenditures	Sep. 30, 2012 Capital Expenditures Gearing	Jun. 30, 2012 Capital Expenditures Gearing	Mar. 31, 2012 Capital Expenditures Gearing	Sep. 30, 2012 Capital Expenditures Gearing	Dec. 31, 2011 Capital Expenditures Gearing	Sep. 30, 2012 Capital Expenditures Gearing	Sep. 30, 2012 Capital Expenditures Other	Sep. 30, 2012 Capital Expenditures Other	Sep. 30, 2012 Capital Expenditures Other	Sep. 30, 2012 Cost of sales Cash Expense	Jun. 30, 2012 Cost of sales Cash Expense	Mar. 31, 2012 Cost of sales Cash Expense	Sep. 30, 2012 Cost of sales Cash Expense	Dec. 31, 2011 Cost of sales Cash Expense	Sep. 30, 2012 Cost of sales Cash Expense	Sep. 30, 2012 Cost of sales Cash Expense Gearing	Jun. 30, 2012 Cost of sales Cash Expense Gearing	Mar. 31, 2012 Cost of sales Cash Expense Gearing	Sep. 30, 2012 Cost of sales Cash Expense Gearing	Dec. 31, 2011 Cost of sales Cash Expense Gearing	Sep. 30, 2012 Cost of sales Cash Expense Gearing	Sep. 30, 2012 Cost of sales Cash Expense Services	Mar. 31, 2012 Cost of sales Cash Expense Services	Sep. 30, 2012 Cost of sales Cash Expense Services	Sep. 30, 2012 Cost of sales Cash Expense Services	Sep. 30, 2012 Selling, general and administrative Cash Expense	Jun. 30, 2012 Selling, general and administrative Cash Expense	Mar. 31, 2012 Selling, general and administrative Cash Expense	Sep. 30, 2012 Selling, general and administrative Cash Expense	Dec. 31, 2011 Selling, general and administrative Cash Expense	Sep. 30, 2012 Selling, general and administrative Cash Expense	Sep. 30, 2012 Selling, general and administrative Cash Expense Gearing	Jun. 30, 2012 Selling, general and administrative Cash Expense Gearing	Mar. 31, 2012 Selling, general and administrative Cash Expense Gearing	Sep. 30, 2012 Selling, general and administrative Cash Expense Gearing	Dec. 31, 2011 Selling, general and administrative Cash Expense Gearing	Sep. 30, 2012 Selling, general and administrative Cash Expense Gearing	Mar. 31, 2012 Selling, general and administrative Cash Expense Services	Sep. 30, 2012 Selling, general and administrative Cash Expense Services	Sep. 30, 2012 Selling, general and administrative Cash Expense Services	Mar. 31, 2012 Selling, general and administrative Cash Expense Corporate	Sep. 30, 2012 Selling, general and administrative Cash Expense Corporate	Dec. 31, 2011 Selling, general and administrative Cash Expense Corporate	Sep. 30, 2012 Selling, general and administrative Cash Expense Corporate	Sep. 30, 2012 Minimum	Sep. 30, 2011 Brandon Facility	Dec. 31, 2010 Brandon Facility
RESTRUCTURING
Percentage of facility footprint planned to be reduced through the sale and/or closure																																																																								40.00%
Area of facilities planned to be reduced through the sale and/or closure (in square feet)				600,000
Reclassification of land, building and fixtures from property and equipment to assets held for sale																																																																									$ 8,000
Reclassification of indebtedness from Long-Term Debt Net of Current Maturities and Current Maturities of Long-Term Debt to Liabilities Held for Sale																																																																									4,583
Impairment charge recorded to reduce the carrying value of assets to fair value																																																																										13,326
Liability associated with environmental remediation costs	352			352		352
Number of Cicero, IL Manufacturing Facilities planned for sale	1			1		1
Restructuring charges incurred	952	1,156	726		874	3,708	188	251	294		297	1,030	188	251	294		247	980		50	50	325	644	262		5	1,236	254	644	262		5	1,165	71		71	59	236	95		131	521	(41)	236	89		131	415	100	6		106	380	25	75		441	921	380	25	25		35	465	40		40	10		406	416
Expected cost to be incurred to implement the restructuring plan				13,468						3,406						3,356			50						5,416						4,816				600					3,200						2,794					406					1,446						490				40			916
Anticipated net proceeds from asset sales				$ 7,200

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 30, 2012 item	Dec. 31, 2011	Dec. 31, 2010 Brandon Facility	Sep. 30, 2012 Brandon Facility
Purchase Commitments
Impairment charge recorded to reduce the carrying value of assets to estimated fair value			$ 13,326
Carrying value of assets	161,884	172,891	8,000
Purchase commitments outstanding	341			341
Environmental Compliance and Remediation Liabilities
Liability associated with environmental remediation costs	$ 352
Number of manufacturing facilities planned for sale	1

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CASH AND CASH EQUIVALENTS

9 Months Ended

Sep. 30, 2012

CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

NOTE 4 — CASH AND CASH EQUIVALENTS

Cash and cash equivalents typically comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short-term government bonds, Treasury bills, marketable securities and commercial paper. The Company’s treasury policy is to invest excess cash in money market funds or other investments, which are generally of a short-term duration based upon operating requirements. Income earned on these investments is recorded to interest income in the Company’s condensed consolidated statements of operations. As of September 30, 2012 and December 31, 2011, cash and cash equivalents totaled $2,721 and $13,340, respectively.

Cash and cash equivalents consisted of the following as of September 30, 2012 and December 31, 2011:

	September 30,		December 31,
	2012		2011
Cash and cash equivalents:
Cash	$	2,721	$	11,127
Certificates of deposits	—		707
Municipal bonds	—		1,506
Total cash and cash equivalents	2,721		13,340

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SHARE-BASED COMPENSATION (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
2007 EIP
SHARE-BASED COMPENSATION
Number of shares of common stock reserved for grants	691,051
Common stock issued under share-based compensation plan	85,099
2012 EIP
SHARE-BASED COMPENSATION
Number of shares of common stock reserved for grants	1,200,000
Number of shares reserved	675,056
Stock Options
SHARE-BASED COMPENSATION
Expiration term	10 years
Summary of the stock option activity
Outstanding at the beginning of the period (in shares)	127,505
Granted (in shares)	164,997
Forfeited (in shares)	(5,147)
Outstanding at the end of the period (in shares)	287,355
Exercisable (in shares)	57,602
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 60.07
Granted (in dollars per share)	$ 3.39
Forfeited (in dollars per share)	$ 89.11
Outstanding at the end of the period (in dollars per share)	$ 27.01
Exercisable (in dollars per share)	$ 86.18
Weighted average fair value per share and assumptions used
Risk-free interest rate (as a percent)	1.10%	2.60%
Weighted average volatility (as a percent)	99.98%	96.09%
Expected life (in years)	6 years 3 months 18 days	6 years 3 months 18 days
Weighted average grant date fair value per share of options granted (in dollars per share)	$ 2.70	$ 10.70
Forfeiture rate for estimating the forfeitures (as a percent)	25.00%	25.00%
Stock Options | Minimum
SHARE-BASED COMPENSATION
Vesting term	1 year
Stock Options | Maximum
SHARE-BASED COMPENSATION
Vesting term	5 years
Stock Options | 2007 EIP
SHARE-BASED COMPENSATION
Number of shares reserved	122,358
Stock Options | 2012 EIP
SHARE-BASED COMPENSATION
Number of shares reserved	164,997
RSU
Summary of the restricted stock unit activity
Outstanding at the beginning of the period (in shares)	364,600
Granted (in shares)	500,996
Vested (in shares)	(44,516)
Forfeited (in shares)	(43,910)
Outstanding at the end of the period (in shares)	777,170
Weighted Average Grant-Date Fair Value Per Unit
Outstanding at the beginning of the period (in dollars per share)	$ 13.16
Granted (in dollars per share)	$ 4.28
Vested (in dollars per share)	$ 20.41
Forfeited (in dollars per share)	$ 12.55
Outstanding at the end of the period (in dollars per share)	$ 7.04
RSU | Minimum
SHARE-BASED COMPENSATION
Vesting term	1 year
RSU | Maximum
SHARE-BASED COMPENSATION
Vesting term	5 years
RSU | 2007 EIP
SHARE-BASED COMPENSATION
Number of shares reserved	417,223
RSU | 2012 EIP
SHARE-BASED COMPENSATION
Number of shares reserved	359,947

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DEBT AND CREDIT AGREEMENTS (Tables)

9 Months Ended

Sep. 30, 2012

DEBT AND CREDIT AGREEMENTS

Schedule of outstanding debt balances

	September 30,			December 31,
	2012			2011
Lines of credit	$	17,585		$	—
Term loans and notes payable	3,130			6,999
	20,715			6,999
Less: Current maturities	(17,934		)	(2,202		)
Long-term debt, net of current maturities	$	2,781		$	4,797

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ACCRUED LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2012

ACCRUED LIABILITIES

Schedule of accrued liabilities

	September 30,		December 31,
	2012		2011
Accrued payroll and benefits	$	1,962	$	2,762
Accrued property taxes	544		250
Income taxes payable	388		386
Accrued professional fees	1,087		433
Accrued warranty liability	751		983
Accrued other	895		935
Total accrued liabilities	$	5,627	$	5,749

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SHARE-BASED COMPENSATION (Details 2) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Summary of share-based compensation expense
Net effect of share-based compensation expense on net loss	$ 2,079	$ 1,395
Reduction in earnings per share:
Basic and diluted earnings per share (in dollars per share)	$ 0.15	$ 0.13
Pre-tax compensation expense for all unvested share-based awards	3,461
Selling, general and administrative
Summary of share-based compensation expense
Share-based compensation expense	$ 2,079	$ 1,395

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SHARE-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2012

SHARE-BASED COMPENSATION

Schedule of stock option activity

	Options		Weighted Average Exercise Price
Outstanding as of December 31, 2011	127,505		$	60.07
Granted	164,997		$	3.39
Exercised	—		$	—
Forfeited	(5,147	)	$	89.11
Expired	—		$	—
Outstanding as of September 30, 2012	287,355		$	27.01
			$	—
Exercisable as of September 30, 2012	57,602		$	86.18

Schedule of RSU activity

	Number of RSU’s		Weighted Average Grant-Date Fair Value Per RSU
Outstanding as of December 31, 2011	364,600		$	13.16
Granted	500,996		$	4.28
Vested	(44,516	)	$	20.41
Forfeited	(43,910	)	$	12.55
Outstanding as of September 30, 2012	777,170		$	7.04

Schedule of weighted average fair value per share of stock option awards granted and assumptions used to value the stock options

	Nine Months Ended September 30,
	2012			2011
Dividend yield	—			—
Risk-free interest rate	1.1		%	2.6		%
Weighted average volatility	99.98		%	96.09		%
Expected life (in years)	6.3			6.3
Weighted average grant date fair value per share of options granted	$	2.70		$	10.70

Schedule of share-based compensation expense

	Nine Months Ended September 30,
	2012		2011
Share-based compensation expense:
Selling, general and administrative	$	2,079	$	1,395
Income tax benefit (1)	—		—
Net effect of share-based compensation expense on net loss	$	2,079	$	1,395
Reduction in earnings per share:
Basic and diluted earnings per share (2)	$	0.15	$	0.13

(1) Income tax benefit is not illustrated because the Company is currently operating at a loss and an actual income tax benefit was not realized for the nine months ended September 30, 2012 and 2011. The result of the loss situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance.

(2) Diluted earnings per share for the nine months ended September 30, 2012 and 2011 does not include common stock equivalents due to their anti-dilutive nature as a result of the Company’s net losses for these respective periods. Accordingly, basic earnings per share and diluted earnings per share are identical for all periods presented.

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2012

SEGMENT REPORTING

Schedule of financial information by reportable segment

For the Three Months Ended September 30, 2012:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	37,423	$	10,778		$	6,844		$	—		$	—		$	55,045
Intersegment revenues (1)	—		478			55			—			(533		)	—
Operating profit (loss)	1,740		(2,637		)	(570		)	(2,048		)	(12		)	(3,527		)
Depreciation and amortization	942		2,995			413			17			—			4,367
Capital expenditures	127		893			44			71			—			1,135

For the Three Months Ended September 30, 2011:	Towers and Weldments			Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	29,627		$	11,657		$	6,615		$	—		$	—		$	47,899
Intersegment revenues (1)	57			977			—						(1,034		)	—
Operating profit (loss)	(35		)	(3,281		)	(413		)	(2,489		)	(26		)	(6,244		)
Depreciation and amortization	872			2,469			263			43			—			3,647
Capital expenditures	178			268			822			16			—			1,284

For the Nine Months Ended September 30, 2012:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	109,587	$	40,256		$	15,956		$	—		$	—		$	165,799
Intersegment revenues (1)	—		1,096			81			—			(1,177		)	—
Operating profit (loss)	3,306		(5,390		)	(3,331		)	(6,224		)	12			(11,627		)
Depreciation and amortization	2,722		8,217			1,237			51			—			12,227
Capital expenditures	540		1,657			944			159			—			3,300

For the Nine Months Ended September 30, 2011:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	82,292	$	37,694		$	10,775		$	—		$	—		$	130,761
Intersegment revenues (1)	58		1,002			35			—			(1,095		)	—
Operating profit (loss)	5,159		(8,523		)	(3,862		)	(7,275		)	(27		)	(14,528		)
Depreciation and amortization	2,638		7,497			645			130			—			10,910
Capital expenditures	367		(30		)	3,743			54			—			4,134

	Total Assets as of
	September 30,			December 31,
Segments:	2012			2011
Towers and Weldments	$	65,657		$	68,185
Gearing	78,218			80,642
Services	14,975			15,752
Assets held for sale	8,044			8,052
Corporate	328,019			317,413
Eliminations	(333,029		)	(317,153		)
	$	161,884		$	172,891

(1)Intersegment revenues generally include a 10% markup over costs and primarily consist of sales from Gearing to Services. Gearing sales to Services totaled $1,096 and $1,002 for the nine months ended September 30, 2012 and 2011, respectively.

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DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2012

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 3 — DISCONTINUED OPERATIONS

In March 2011, the Company completed the divestiture of its logistics business, through the sale of its wholly-owned subsidiary Badger Transport, Inc. (“Badger”) to BTI Logistics, LLC (“BTI Logistics”). Proceeds from the sale included approximately $800 in cash, a $1,500 secured promissory note payable in quarterly installments of $125 beginning September 30, 2011, and 10,000 shares of Broadwind common stock held by the buyer. The purchase price was subject to final working capital adjustments and certain contingencies and indemnifications. In addition, BTI Logistics assumed approximately $2,600 of debt and capital leases, plus approximately $1,600 of operating lease obligations.

Results for Badger, which are reflected as discontinued operations in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2012 and 2011, were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Revenues	$	—	$	—	$	—	$	435
Loss before benefit for income taxes	—		—		—		(1,182		)
Income tax provision (benefit)	—		—		—		2
Loss from discontinued operations	$	—	$	—	$	—	$	(1,184	)

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES

Schedule of changes in the carrying amount of the total product warranty liability

	For the nine months ended September 30,
	2012			2011
Balance, beginning of period	$	983		$	1,071
Warranty expense	(133		)	21
Warranty claims	(99		)	(229		)
Balance, end of period	$	751		$	863

Schedule of the activity in the accounts receivable allowance liability

	For the nine months ended September 30,
	2012			2011
Balance at beginning of period	$	438		$	489
Bad debt expense	200			532
Write-offs	(123		)	(3		)
Balance at end of period	$	515		$	1,018

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ACCRUED LIABILITIES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
ACCRUED LIABILITIES
Accrued payroll and benefits	$ 1,962	$ 2,762
Accrued property taxes	544	250
Income taxes payable	388	386
Accrued professional fees	1,087	433
Accrued warranty liability	751	983	863	1,071
Accrued other	895	935
Total accrued liabilities	$ 5,627	$ 5,749

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
CURRENT ASSETS:
Cash and cash equivalents	$ 2,721	$ 13,340
Restricted cash	330	876
Accounts receivable, net of allowance for doubtful accounts of $515 and $438 as of September 30, 2012 and December 31, 2011, respectively	28,471	25,311
Inventories, net	29,027	23,355
Prepaid expenses and other current assets	3,219	4,033
Assets held for sale	8,044	8,052
Total current assets	71,812	74,967
Property and equipment, net	81,299	87,766
Intangible assets, net	8,119	9,214
Other assets	654	944
TOTAL ASSETS	161,884	172,891
CURRENT LIABILITIES:
Lines of credit and notes payable	17,585	1,566
Current maturities of long-term debt	349	636
Current portions of capital lease obligations	2,242	965
Accounts payable	14,338	17,358
Accrued liabilities	5,627	5,749
Customer deposits	3,908	17,328
Liabilities held for sale	4,083	4,833
Total current liabilities	48,132	48,435
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	2,781	4,797
Long-term capital lease obligations, net of current portions	1,116	975
Other	1,601	825
Total long-term liabilities	5,498	6,597
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,110,127 and 13,977,920 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively	14	140
Additional paid-in capital	372,673	370,123
Accumulated deficit	(264,433)	(252,404)
Total stockholders' equity	108,254	117,859
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 161,884	$ 172,891

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LEGAL PROCEEDINGS (Details) (USD $) In Thousands, unless otherwise specified		1 Months Ended		1 Months Ended
	Sep. 30, 2012	Feb. 28, 2011 Potential violation of federal environmental laws item	Dec. 31, 2010 Potential violation of federal environmental laws	Feb. 28, 2011 Putative class action item	Mar. 30, 2011 Putative shareholder derivative lawsuits item
LEGAL PROCEEDINGS
Number of alleged confidential informants				6
Number of lawsuits					3
Number of lawsuits alleging violation of Section 14(a) of the Exchange Act in connection with proxy statement					1
Number of federal derivative lawsuits consolidated					2
Number of facilities where search was conducted		1
Number of grand jury subpoenas received		2
Estimate of remediation-related costs and expenses	$ 352		$ 675

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2012

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2012. The December 31, 2011 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the condensed consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind Energy, Inc. and its wholly-owned subsidiaries Broadwind Towers, Inc. (“Broadwind Towers”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Services, LLC (“Broadwind Services”) (collectively, the “Subsidiaries”). All intercompany transactions and balances have been eliminated. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

There have been no material changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2012 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Company Description

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Broadwind,” and the “Company” refer to Broadwind Energy, Inc., a Delaware corporation headquartered in Naperville, Illinois, and the Subsidiaries.

Broadwind provides technologically advanced high-value products and services to energy, mining and infrastructure sector customers, primarily in the U.S. The Company’s most significant presence is within the U.S. wind industry, although it has increasingly diversified into other industrial markets in order to improve its capacity utilization and reduce its exposure to uncertainty related to favorable governmental policies currently supporting the U.S. wind industry. For the first nine months of 2012, the Company’s revenue was derived 64% from sales associated with new wind turbine installations, down from 73% for the same period of 2011.

The Company’s product and service portfolio provides its wind energy customers, including wind turbine manufacturers, wind farm developers and wind farm operators, with access to a broad array of component and service offerings. Outside of the wind market, the Company provides precision gearing and specialty weldments to a broad range of industrial customers for oil and gas, mining and other industrial applications.

Reverse Stock Split

On August 22, 2012, the Company filed an Amendment to its Certificate of Incorporation to effect a reverse split of its common stock with a ratio of one post-split share for every ten shares issued and outstanding. As a result of the reverse stock split, the number of authorized shares of the Company’s common stock automatically decreased to 30 million shares, without any change in the par value of such shares. All references in these financial statements and notes to the  number of shares, price per share and weighted average number of shares outstanding of the Company’s common stock prior to the reverse stock split have been adjusted to reflect the reverse stock split on a retroactive basis unless otherwise noted.

Liquidity

During the third quarter of 2012, the Company established a new three-year $20,000 credit agreement with AloStar Bank of Commerce (“AloStar”). Pursuant to this agreement, AloStar will advance funds against the Company’s borrowing base, which consists of approximately 85% of eligible receivables and approximately 50% of eligible inventory. Proceeds from the transaction were used to repay certain outstanding indebtedness, including the outstanding debt associated with the Wells Fargo AP Agreements (hereinafter defined). Under this new recapitalized borrowing structure, borrowings are continuous and all cash proceeds received by the Company and the Subsidiaries are automatically applied to the outstanding borrowed balance. As a result of this structure, the Company anticipates that cash balances will remain at a minimum while there are outstanding borrowed amounts on the line of credit.

The Company has a limited history of operations and has incurred operating losses since inception, partly due to large non-cash charges attributable to significant capital expenditures and acquisition outlays during 2007 and 2008. The Company anticipates that current cash resources, amounts available on the AloStar line, and cash to be generated from operations over the next twelve months will be adequate to meet the Company’s liquidity needs for at least the next twelve months. As discussed further in Note 8, “Debt and Credit Agreements” of these condensed consolidated financial statements, the Company is obligated to make principal payments on outstanding debt totaling $349 during the next twelve months, has $4,083 of indebtedness associated with its Liabilities Held for Sale and is obligated to make purchases totaling $341 during the same period under the purchase commitments described in Note 15, “Commitments and Contingencies” of these condensed consolidated financial statements. The Company also has a $17,585 balance on its three-year AloStar line of credit. If assumptions regarding the Company’s restructuring efforts, production, sales and subsequent collections from several of the Company’s large customers, as well as revenues generated from new customer orders, are not materially consistent with management’s expectations, the Company may encounter cash flow and liquidity issues. Additional funding may not be available when needed or on terms acceptable to the Company, which could affect its overall operations. If the Company cannot make scheduled payments on our debt, or comply with applicable covenants, it will be in default and, as a result, among other things, its debt holders could declare all outstanding principal and interest to be due and payable. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, will likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash flows to operate its businesses and to meet its financial obligations and debt covenants, there can be no assurances that its operations will generate sufficient cash or that credit facilities will be available in an amount sufficient to enable the Company to pay its indebtedness or to fund its other liquidity needs.

In addition, please refer to Note 17, “Restructuring” of these condensed consolidated financial statements for a discussion of the Company’s restructuring plan which the Company initiated in the third quarter of 2011. To date, the Company has incurred $3,708 of costs in conjunction with its restructuring plan. Including costs incurred to date, the Company expects that a total of approximately $13,468 of costs will be incurred to implement this restructuring plan. Of the total projected expenses, the Company anticipates that approximately $3,406 will be non-cash expenditures. The Company anticipates that the remaining cash expenditures will be funded substantially by net proceeds from asset sales of approximately $7,200. The Company anticipates cash flow savings of approximately $5,500 annually from the restructuring efforts.

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EARNINGS PER SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Basic earnings per share calculation:
Net loss to common stockholders	$ (3,938)	$ (6,586)	$ (12,029)	$ (16,224)
Weighted average number of common shares outstanding	14,093,122	11,036,949	14,021,563	10,822,221
Basic net loss per share (in dollars per share)	$ (0.28)	$ (0.60)	$ (0.86)	$ (1.50)
Diluted earnings per share calculation:
Net loss to common stockholders	$ (3,938)	$ (6,586)	$ (12,029)	$ (16,224)
Weighted average number of common shares outstanding	14,093,122	11,036,949	14,021,563	10,822,221
Weighted average number of common shares outstanding	14,093,122	11,036,949	14,021,563	10,822,221
Diluted net loss per share (in dollars per share)	$ (0.28)	$ (0.60)	$ (0.86)	$ (1.50)
Stock options and unvested restricted stock units granted and outstanding excluded from the computation of diluted earnings per share, due to the anti-dilutive effect (in shares)			1,064,525	292,926

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RESTRUCTURING

9 Months Ended

Sep. 30, 2012

RESTRUCTURING

RESTRUCTURING

NOTE 17 — RESTRUCTURING

During the third quarter of 2011, the Company conducted a review of its business strategies and product plans based on the outlook for the economy at large, the forecast for the industries it serves, and its business environment. The Company concluded that its manufacturing footprint and fixed cost base were too large and expensive for its medium-term needs and has begun restructuring its facility capacity and its management structure to consolidate and increase the efficiencies of its operations.

The Company is executing a plan to reduce its facility footprint by approximately 40% through the sale and/or closure through the end of 2014 of facilities comprising a total of approximately 600,000 square feet. The Company believes the remaining locations will be sufficient to support its Towers and Weldments, Gearing, Services and general corporate and administrative activities, while allowing for growth for the next several years.

As part of this plan, in the third quarter of 2011, the Company determined that the Brandon Facility should be sold, and as a result the Company has reclassified the Brandon Facility land, building and fixtures valued at $8,000 from Property and Equipment to Assets Held for Sale. In addition, the related indebtedness associated with the Brandon Facility of $4,583 was reclassified in the third quarter of 2011 from Long-Term Debt Net of Current Maturities and Current Maturities of Long-Term Debt to Liabilities Held for Sale. Although the Company has experienced delays in attempting to sell the Brandon Facility as a result of the depressed commercial real estate market, the Company still expects that this sale will be completed in the next twelve months. The Company had previously recorded an impairment charge of $13,326 in the fourth quarter of 2010 to bring these assets to fair value; no further impairment charges were recorded.

In the third quarter of 2012, the Company identified a $352 liability associated with the planned sale of one of its Cicero, Illinois manufacturing facilities. The liability is associated with environmental remediation costs that were identified while preparing the site for sale. The expenses associated with this liability have been recorded as a restructuring charge.

Additional restructuring plans were approved in the fourth quarter of 2011. To date, the Company has incurred $3,708 of costs in conjunction with its restructuring plan. Including costs incurred to date, the Company expects that a total of approximately $13,468 of costs will be incurred to implement this restructuring plan. Of the total projected expenses, the Company anticipates that a total of approximately $3,406 will consist of non-cash expenditures. The Company expects the remaining cash expenditures will be funded substantially by net proceeds from asset sales of approximately $7,200. The table below details the Company’s total restructuring charges incurred to date and the total expected restructuring charges as of September 30, 2012:

	2011		Q1 ‘12		Q2 ‘12		Q3 ‘12			Total		Total
	Actual		Actual		Actual		Actual			Incurred		Projected
Capital expenditures:
Gearing	$	5	$	262	$	644	$	254		$	1,165	$	4,816
Other	—		—		—		71			71		600
Total capital expenditures	5		262		644		325			1,236		5,416
Cash expenses:
Cost of sales:
Gearing	131		89		236		(41		)	415		2,794
Services	—		6		—		100			106		406
Total cost of sales	131		95		236		59			521		3,200
Selling, general, and administrative expenses:
Gearing	35		25		25		380			465		490
Services	—		40		—		—			40		40
Corporate	406		10		—		—			416		916
Total selling, general and administrative expenses	441		75		25		380			921		1,446
Non-cash expenses:
Gearing	247		294		251		188			980		3,356
Corporate	50		—		—		—			50		50
Total non-cash expenses	297		294		251		188			1,030		3,406
Grand total	$	874	$	726	$	1,156	$	952		$	3,708	$	13,468

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DISCONTINUED OPERATIONS (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended		1 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2011 Badger	Sep. 30, 2011 Badger	Sep. 30, 2011 Badger
DISCONTINUED OPERATIONS
Proceeds from sale in cash	$ 375	$ 761	$ 800
Noncash proceeds from sale in the form of a secured promissory note			1,500
Promissory note, quarterly installment amount				125
Noncash proceeds from sale in the form of shares of Broadwind common stock			10,000
Noncash proceeds from sale in the form of debt and capital leases assumed by BTI Logistics			2,600
Noncash proceeds from sale in the form of operating lease obligations assumed by BTI Logistics			1,600
Results of operations, which are reflected as discontinued operations
Revenues					435
Loss before benefit for income taxes					(1,182)
Income tax provision (benefit)					2
Loss from discontinued operations		$ (1,184)			$ (1,184)

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DISCONTINUED OPERATIONS (Tables)

9 Months Ended

Sep. 30, 2012

DISCONTINUED OPERATIONS

Results which are reflected as discontinued operations in the Company's consolidated statements of income

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Revenues	$	—	$	—	$	—	$	435
Loss before benefit for income taxes	—		—		—		(1,182		)
Income tax provision (benefit)	—		—		—		2
Loss from discontinued operations	$	—	$	—	$	—	$	(1,184	)

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2012

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 2 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, 2012 and 2011, as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Basic earnings per share calculation:
Net loss to common stockholders	$	(3,938	)	$	(6,586	)	$	(12,029	)	$	(16,224	)
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Basic net loss per share	$	(0.28	)	$	(0.60	)	$	(0.86	)	$	(1.50	)
Diluted earnings per share calculation:
Net loss to common stockholders	$	(3,938	)	$	(6,586	)	$	(12,029	)	$	(16,224	)
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Common stock equivalents:
Stock options and unvested restricted stock units (1)	—			—			—			—
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Diluted net loss per share	$	(0.28	)	$	(0.60	)	$	(0.86	)	$	(1.50	)

(1)Stock options and unvested restricted stock units granted and outstanding of 1,064,525 and 292,926 as of September 30, 2012 and 2011, respectively, are excluded from the computation of diluted earnings per share due to the anti-dilutive effect as a result of the Company’s net loss for these respective periods.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 515	$ 438
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	14,110,127	13,977,920
Common stock, shares outstanding	14,110,127	13,977,920

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LEGAL PROCEEDINGS

9 Months Ended

Sep. 30, 2012

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

NOTE 12 — LEGAL PROCEEDINGS

Shareholder Lawsuits

On February 11, 2011, a putative class action was filed in the United States District Court for the Northern District of Illinois, Eastern Division, against the Company and certain of its current or former officers and directors. The lawsuit is purportedly brought on behalf of purchasers of the Company’s common stock between March 17, 2009 and August 9, 2010. A lead plaintiff has been appointed and an amended complaint was filed on September 13, 2011. The amended complaint names as additional defendants certain of the Company’s current and former directors, certain Tontine entities, and Jeffrey Gendell, a principal of Tontine. The complaint seeks to allege that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, and/or Section 20(a) of the Exchange Act by issuing or causing to be issued a series of allegedly false and/or misleading statements concerning the Company’s financial results, operations, and prospects, including with respect to the January 2010 secondary public offering of the Company’s common stock. The plaintiffs allege that the Company’s statements were false and misleading because, among other things, the Company’s reported financial results during the class period allegedly violated generally accepted accounting principles because they failed to reflect the impairment of goodwill and other intangible assets, and the Company allegedly failed to disclose known trends and other information regarding certain customer relationships at Brad Foote. In support of their claims, the plaintiffs rely in part upon six alleged confidential informants, all of whom are alleged to be former employees of the Company. On November 18, 2011, the Company filed a motion to dismiss.  On April 19, 2012, the Court granted in part and denied in part the Company’s motion. The Court dismissed all claims with prejudice against each of the named current and former officers except for J. Cameron Drecoll and held that the plaintiffs had failed to state a claim for any alleged misstatements made after March 19, 2010. In addition, the Court dismissed all claims with prejudice against the named Tontine entities and Mr. Gendell. The Court denied the motion with respect to certain of the claims asserted against the Company and Mr. Drecoll. The Company filed its answer and affirmative defenses on May 21, 2012. On June 22, 2012, plaintiffs filed a motion for class certification which is not yet fully briefed. The Company intends to vigorously defend the remaining claims asserted against it. Between February 15, 2011 and March 30, 2011, three putative shareholder derivative lawsuits were filed in the United States District Court for the Northern District of Illinois, Eastern Division against certain of the Company’s current and former officers and directors, and certain Tontine entities, seeking to challenge alleged breaches of fiduciary duty, waste of corporate assets, and unjust enrichment, including in connection with the January 2010 secondary public offering of the Company’s common stock. One of the lawsuits also alleges that certain directors violated Section 14(a) of the Exchange Act in connection with the Company’s Proxy Statement for its 2010 Annual Meeting of Stockholders. Two of the matters pending in the federal court were subsequently consolidated, and on May 15, 2012, the Court granted defendants’ motion to dismiss the consolidated cases and also entered an order dismissing the third case. The Company has received a request from the Tontine defendants for indemnification in the derivative suits and the class action lawsuit and may receive additional requests for indemnification from Tontine and/or Mr. Gendell pursuant to various agreements related to shares owned by Tontine. The Company maintains directors and officers liability insurance; however, the costs of indemnification for Mr. Gendell and/or Tontine would not be covered by any Company insurance policy. Because of the preliminary nature of these lawsuits, the Company is not able to estimate a loss or range of loss, if any, that may be incurred in connection with this matter at this time.

SEC Inquiry

In August 2011, the Company received a subpoena from the United States Securities and Exchange Commission (“SEC”) seeking documents and other records related to certain accounting practices at Brad Foote. The subpoena was issued in connection with an informal inquiry that the Company received from the SEC in November 2010 arising out of a whistleblower complaint received by the SEC related to revenue recognition, cost accounting and intangible and fixed asset valuations at Brad Foote. The Company has been providing information to the SEC in response to the informal inquiry and subpoena. The Company cannot currently predict the outcome of this investigation. The Company does not believe that the resolution of this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations. The Company has received a request from Tontine for indemnification of expenses incurred in connection with an SEC subpoena and may receive additional requests for indemnification from Tontine and/or Mr. Gendell pursuant to various agreements related to shares owned by Tontine. No estimate regarding the loss or range of loss, if any, that may be incurred in connection with this matter is possible at this time.

Environmental

The Company is aware of a grand jury investigation commenced by the United States Attorney’s Office, Northern District of Illinois, for potential violation of federal environmental laws. On February 15, 2011, pursuant to a search warrant, officials from the United States Environmental Protection Agency entered and conducted a search of one of Brad Foote’s facilities in Cicero, Illinois, in connection with the alleged improper disposal of industrial wastewater to the sewer. Also on or about February 15, 2011, in connection with the same matter, the Company received two grand jury subpoenas requesting testimony and the production of certain documents relating to the Brad Foote facility’s past compliance with certain environmental laws and regulations relating to the generation, discharge and disposal of wastewater from certain of its processes between 2004 and the present. On or about February 23, 2011, the Company received another grand jury subpoena relating to the same investigation, requesting testimony and the production of certain other documents relating to certain of the Brad Foote facility’s employees, environmental and manufacturing processes, and disposal practices. The Company has produced e-mails, reports and correspondence as requested, and completed its response to these subpoenas on August 17, 2011.  The Company does not currently have information as to when the investigation may be concluded, and is also conducting an internal investigation of any possible non-compliance. The Company has also voluntarily instituted corrective measures at the Brad Foote facility, including changes to its wastewater disposal practices.  At this time, the Company has been advised that Brad Foote is a target of the investigation, but no fines or penalties have been suggested.  There can be no assurances that the conclusion of the investigation will not result in a determination that applicable environmental, health and safety laws and regulations were violated at the Brad Foote facility. Any violations found, or any criminal or civil fines, penalties and/or other sanctions imposed could be substantial and materially and adversely affect the Company. The Company had recorded a liability of $675 at December 31, 2010, which represented the low end of its estimate of remediation-related costs and expenses; as of September 30, 2012, those initial costs have been incurred, and additional costs have been expensed as incurred. No additional remediation related expenses are anticipated or have been accrued; however, the outcome of the investigation, the liability in connection therewith, and the impact to the Company’s operations cannot be predicted at this time. The Company does not believe that the resolution of this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations. No estimate regarding the loss or range of loss, if any, that may be incurred in connection with this matter is possible at this time.

Other

The Company is also a party to additional claims and legal proceedings arising in the ordinary course of business. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial position or liquidity. It is possible that if one or more of the matters described above were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s cash flows in the periods the Company would be required to pay such liability.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 31, 2012
Document and Entity Information
Entity Registrant Name	BROADWIND ENERGY, INC.
Entity Central Index Key	0001120370
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,110,127
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2012

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, the Company has not identified any new standards that it believes merit further discussion. The Company believes that none of the new standards will have a significant impact on its condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues	$ 55,045	$ 47,899	$ 165,799	$ 130,761
Cost of sales	52,097	47,098	158,155	124,449
Restructuring	233	89	1,038	89
Gross profit	2,715	712	6,606	6,223
OPERATING EXPENSES:
Selling, general and administrative	5,197	6,442	16,658	19,807
Intangible amortization	664	214	1,094	644
Restructuring	381	300	481	300
Total operating expenses	6,242	6,956	18,233	20,751
Operating loss	(3,527)	(6,244)	(11,627)	(14,528)
OTHER (EXPENSE) INCOME, net:
Interest expense, net	(553)	(276)	(1,053)	(845)
Other, net	148	127	758	559
Restructuring	(15)	(202)	(86)	(202)
Total other (expense) income, net	(420)	(351)	(381)	(488)
Net loss from continuing operations before provision for income taxes	(3,947)	(6,595)	(12,008)	(15,016)
(Benefit) provision for income taxes	(9)	(9)	21	24
LOSS FROM CONTINUING OPERATIONS	(3,938)	(6,586)	(12,029)	(15,040)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX				(1,184)
NET LOSS	$ (3,938)	$ (6,586)	$ (12,029)	$ (16,224)
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
Loss from continuing operations (in dollars per share)	$ (0.28)	$ (0.60)	$ (0.86)	$ (1.39)
Loss from discontinued operations (in dollars per share)				$ (0.11)
Net loss (in dollars per share)	$ (0.28)	$ (0.60)	$ (0.86)	$ (1.50)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted (in shares)	14,093	11,037	14,022	10,822

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ACCRUED LIABILITIES

9 Months Ended

Sep. 30, 2012

ACCRUED LIABILITIES

ACCRUED LIABILITIES

NOTE 7 — ACCRUED LIABILITIES

Accrued liabilities as of September 30, 2012 and December 31, 2011 consisted of the following:

	September 30,		December 31,
	2012		2011
Accrued payroll and benefits	$	1,962	$	2,762
Accrued property taxes	544		250
Income taxes payable	388		386
Accrued professional fees	1,087		433
Accrued warranty liability	751		983
Accrued other	895		935
Total accrued liabilities	$	5,627	$	5,749

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2012

INTANGIBLE ASSETS

INTANGIBLE ASSETS

NOTE 6 — INTANGIBLE ASSETS

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed during 2007. Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from 8 to 20 years. The Company tests intangible assets for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable. During the third quarter of 2012, the Company identified triggering events associated with the Company’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its identifiable intangible assets. Based upon the Company’s assessment, the recoverable amount and the fair value were substantially in excess of the carrying amount of the intangible assets, and no impairment to these assets was indicated as of September 30, 2012. During the second quarter of 2012, the Company concluded that it was appropriate to shorten the useful life associated with a $2,216 portion of the customer relationships intangible assets and amortize it over one year, instead of over the remaining five years as previously assigned to this portion of the intangible assets.

As of September 30, 2012 and December 31, 2011, the cost basis, accumulated amortization, impairment charge and net book value of intangible assets were as follows:

	September 30, 2012									December 31, 2011
								Net									Net
	Cost		Accumulated			Impairment		Book		Cost		Accumulated			Impairment		Book
	Basis		Amortization			Charge		Value		Basis		Amortization			Charge		Value
Intangible assets:
Customer relationships	$	3,979	$	(1,878	)	$	—	$	2,101	$	3,979	$	(1,084	)	$	—	$	2,895
Trade names	7,999		(1,981		)	—		6,018		7,999		(1,680		)	—		6,319
Intangible assets	$	11,978	$	(3,859	)	$	—	$	8,119	$	11,978	$	(2,764	)	$	—	$	9,214

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2012

EARNINGS PER SHARE

Reconciliation of basic and diluted earnings per share

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Basic earnings per share calculation:
Net loss to common stockholders	$	(3,938	)	$	(6,586	)	$	(12,029	)	$	(16,224	)
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Basic net loss per share	$	(0.28	)	$	(0.60	)	$	(0.86	)	$	(1.50	)
Diluted earnings per share calculation:
Net loss to common stockholders	$	(3,938	)	$	(6,586	)	$	(12,029	)	$	(16,224	)
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Common stock equivalents:
Stock options and unvested restricted stock units (1)	—			—			—			—
Weighted average number of common shares outstanding	14,093,122			11,036,949			14,021,563			10,822,221
Diluted net loss per share	$	(0.28	)	$	(0.60	)	$	(0.86	)	$	(1.50	)

(1)Stock options and unvested restricted stock units granted and outstanding of 1,064,525 and 292,926 as of September 30, 2012 and 2011, respectively, are excluded from the computation of diluted earnings per share due to the anti-dilutive effect as a result of the Company’s net loss for these respective periods.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2012

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 14 — SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products and services offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker. The Company’s segments and their product and service offerings are summarized below:

Towers and Weldments

The Company manufactures towers for wind turbines, specifically the large and heavier wind towers that are designed for 2 megawatt (“MW”) and larger wind turbines. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of approximately 500 towers, sufficient to support turbines generating more than 1,200 MW of power. This product segment also encompasses the manufacture of specialty fabrications and specialty weldments for mining and other industrial customers. Consistent with the Company’s diversification strategy, during 2012 a portion of the Company’s tower capacity has been shifted to support the growing demand for specialty weldments.

Gearing

The Company engineers, builds and remanufactures precision gears and gearing systems for oil and gas, wind, mining and other industrial applications. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.

Services

The Company offers a comprehensive range of services, primarily to wind farm developers and operators. The Company specializes in non-routine maintenance services for both kilowatt and megawatt turbines. The Company also offers comprehensive field services to the wind industry. The Company is increasingly focusing its efforts on the identification and/or development of product and service offerings which will improve the reliability and efficiency of wind turbines, and therefore enhance the economic benefits to its customers. The Company provides wind services across the U.S., with primary service locations in South Dakota and Texas. In February 2011, the Company put into operation its dedicated drivetrain service center in Abilene, Texas (the “Gearbox Facility”), which is focused on servicing the growing installed base of MW wind turbines as they come off warranty and, to a limited extent, industrial gearboxes requiring precision repair and testing.

Corporate and Eliminations

“Corporate” includes the assets and selling, general and administrative expenses of the Company’s corporate office. “Eliminations” is comprised of adjustments to reconcile segment results to consolidated results.

Summary financial information by reportable segment for the three and nine months ended September 30, 2012 and 2011 was as follows:

For the Three Months Ended September 30, 2012:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	37,423	$	10,778		$	6,844		$	—		$	—		$	55,045
Intersegment revenues (1)	—		478			55			—			(533		)	—
Operating profit (loss)	1,740		(2,637		)	(570		)	(2,048		)	(12		)	(3,527		)
Depreciation and amortization	942		2,995			413			17			—			4,367
Capital expenditures	127		893			44			71			—			1,135

For the Three Months Ended September 30, 2011:	Towers and Weldments			Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	29,627		$	11,657		$	6,615		$	—		$	—		$	47,899
Intersegment revenues (1)	57			977			—						(1,034		)	—
Operating profit (loss)	(35		)	(3,281		)	(413		)	(2,489		)	(26		)	(6,244		)
Depreciation and amortization	872			2,469			263			43			—			3,647
Capital expenditures	178			268			822			16			—			1,284

For the Nine Months Ended September 30, 2012:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	109,587	$	40,256		$	15,956		$	—		$	—		$	165,799
Intersegment revenues (1)	—		1,096			81			—			(1,177		)	—
Operating profit (loss)	3,306		(5,390		)	(3,331		)	(6,224		)	12			(11,627		)
Depreciation and amortization	2,722		8,217			1,237			51			—			12,227
Capital expenditures	540		1,657			944			159			—			3,300

For the Nine Months Ended September 30, 2011:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	82,292	$	37,694		$	10,775		$	—		$	—		$	130,761
Intersegment revenues (1)	58		1,002			35			—			(1,095		)	—
Operating profit (loss)	5,159		(8,523		)	(3,862		)	(7,275		)	(27		)	(14,528		)
Depreciation and amortization	2,638		7,497			645			130			—			10,910
Capital expenditures	367		(30		)	3,743			54			—			4,134

	Total Assets as of
	September 30,			December 31,
Segments:	2012			2011
Towers and Weldments	$	65,657		$	68,185
Gearing	78,218			80,642
Services	14,975			15,752
Assets held for sale	8,044			8,052
Corporate	328,019			317,413
Eliminations	(333,029		)	(317,153		)
	$	161,884		$	172,891

(1)Intersegment revenues generally include a 10% markup over costs and primarily consist of sales from Gearing to Services. Gearing sales to Services totaled $1,096 and $1,002 for the nine months ended September 30, 2012 and 2011, respectively.

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INCOME TAXES

9 Months Ended

Sep. 30, 2012

INCOME TAXES

INCOME TAXES

NOTE 10 — INCOME TAXES

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of September 30, 2012, the Company had no net deferred income taxes due to the full recorded valuation allowance. During the three months ended September 30, 2011 and 2012, the Company recorded a benefit for income taxes of $9 from continuing operations. During the nine months ended September 30, 2012, the Company recorded a provision for income taxes of $21 from continuing operations compared to a provision for income taxes of $24 from continuing operations during the nine months ended September 30, 2011.

The Company files income tax returns in U.S. federal and state jurisdictions. As of September 2012, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2011, the Company had net operating loss carryforwards of $136,189 expiring in various years through 2031.

The Company does not anticipate there will be a material change in the total amount of unrecognized tax benefits within the next twelve months. However, Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of net operating loss carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize net operating loss carryforwards and built-in losses may be limited, under this section or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section 382, the Company has determined that aggregate changes in stock ownership have triggered an annual limitation of net operating loss carryforwards and built-in losses available for utilization. To the extent the Company’s use of net operating loss carryforwards and associated built-in losses is significantly limited in the future due to additional changes in stock ownership, the Company’s income could be subject to U.S. corporate income tax earlier than it would if the Company were able to use net operating loss carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.

As of September 30, 2012, the Company has $445 of unrecognized tax benefits, all of which would have a favorable impact on income tax expense. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company has accrued interest and penalties of $159 as of September 30, 2012. As of December 31, 2011, the Company had unrecognized tax benefits of $417, of which $131 represented accrued interest and penalties.

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DEBT AND CREDIT AGREEMENTS

9 Months Ended

Sep. 30, 2012

DEBT AND CREDIT AGREEMENTS

DEBT AND CREDIT AGREEMENTS

NOTE 8 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of September 30, 2012 and December 31, 2011 consisted of the following:

	September 30,			December 31,
	2012			2011
Lines of credit	$	17,585		$	—
Term loans and notes payable	3,130			6,999
	20,715			6,999
Less: Current maturities	(17,934		)	(2,202		)
Long-term debt, net of current maturities	$	2,781		$	4,797

Credit Facilities

AloStar Credit Facility

On August 23, 2012, the Company and the Subsidiaries entered into a Loan and Security Agreement (the “Loan Agreement”) with AloStar, providing the Company and the Subsidiaries with a new $20,000 secured credit facility (the “Credit Facility”). The Credit Facility is a secured three-year asset-based revolving credit facility, pursuant to which AloStar will advance funds against a borrowing base consisting of approximately 85% of the face value of eligible receivables of the Company and the Subsidiaries and approximately 50% of the book value of eligible inventory of the Company and the Subsidiaries. Borrowings under the Credit Facility bear interest at a per annum rate equal to the one-month London Interbank Offered Rate (“LIBOR”) plus a margin of 4.25%, with a minimum interest rate of 5.25% per annum. The Company must also pay an unused facility fee to AloStar equal to 0.50% per annum on the unused portion of the Credit Facility along with other standard fees. The initial term of the Loan Agreement ends on August 23, 2015.

The Loan Agreement contains customary representations and warranties applicable to the Company and the Subsidiaries. It also contains a requirement that the Company, on a consolidated basis, maintain a minimum monthly fixed charge coverage ratio and minimum monthly earnings before interest, taxes, depreciation, amortization, restructuring and share-based payments (“Adjusted EBITDA”), along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications.

The obligations under the Loan Agreement are secured by, subject to certain exclusions, (i) a first priority security interest in all of the accounts, inventory, chattel paper, payment intangibles, cash and cash equivalents and other working capital assets and stock or other equity interests in the Subsidiaries and (ii) a first priority security interest in all of the equipment of Brad Foote.

As described in greater detail below, the Company  used the initial proceeds from the Credit Facility to:  (i) repay all outstanding obligations under the Wells Fargo credit facility established pursuant to the AP Agreements; (ii) repay all outstanding obligations under the ICB Notes; (iii) repay all outstanding obligations under the Company’s Second Amended and Restated Promissory Note to J. Cameron Drecoll dated July 17, 2012 in the original principal amount of approximately $1,453; and (iv) pay fees and expenses associated with these transactions.  The Company will use future proceeds from the Credit Facility to finance its ongoing general corporate needs.

As of September 30, 2012, the total outstanding indebtedness under the Credit Facility was $17,585, the Company had the ability to borrow up to an additional $2,415 and the per annum interest rate was 5.25%. The Company was in compliance with all covenants under the documents evidencing and securing the Credit Facility as of September 30, 2012.

Great Western Bank Loans

On April 28, 2009, Broadwind Towers entered into a Construction Loan Agreement with Great Western Bank (“GWB”), pursuant to which GWB agreed to provide up to $10,000 in financing (the “GWB Construction Loan”) to fund construction of Broadwind Towers’ wind tower manufacturing facility in Brandon, South Dakota (the “Brandon Facility”). Pursuant to a Change in Terms Agreement dated April 5, 2010 between GWB and Broadwind Towers, the GWB Construction Loan was converted to a term loan (the “GWB Term Loan”) providing for monthly payments of principal plus interest, extending the maturity date to November 5, 2016, reducing the principal amount to $6,500, and changing the per annum interest rate to 8.5%.

The GWB Term Loan is secured by a first mortgage on the Brandon Facility and all fixtures and proceeds relating thereto, pursuant to a Mortgage and a Commercial Security Agreement, each between Broadwind Towers and GWB, and by a Commercial Guaranty from the Company. In addition, the Company has agreed to subordinate all intercompany debt with Broadwind Towers to the GWB Term Loan. The documents evidencing and securing the GWB Term Loan contain representations, warranties and covenants that are customary for a term financing arrangement and contain no financial covenants. As of September 30, 2012, the total outstanding indebtedness under the GWB Term Loan was $4,083, which is recorded as Liabilities Held for Sale within the condensed consolidated balance sheet in light of the Company having initiated a process to sell the Brandon Facility. The Company was also in compliance with all covenants associated with GWB Term Loan as of September 30, 2012.

Wells Fargo Account Purchase Agreements

On September 29, 2010, the Company, the Subsidiaries and Badger entered into account purchase agreements (the “AP Agreements”) with Wells Fargo Business Credit, a division of Wells Fargo Bank, N.A. (“Wells Fargo”). Under the terms of the AP Agreements, when requested by the Company, Wells Fargo would advance to the Subsidiaries approximately 80% of the face value of eligible receivables arising from sales of the Subsidiaries’ products and services. The aggregate facility limit of the AP Agreements was $10,000. For Wells Fargo’s services under the AP Agreements, the Subsidiaries agreed to pay Wells Fargo (i) a floating discount fee of the then-prevailing LIBOR plus 3.75% per annum on the sum of the outstanding financed accounts, (ii) an annual facility fee of 1% of the aggregate facility limit, and (iii) an annual unused line fee of 0.042% on the portion of the credit facility which was unused. The initial term of the AP Agreements was scheduled to end on September 29, 2013, with an early termination fee of up to 2% of the aggregate facility limit applicable if the AP Agreements were terminated prior to that date.

On August 23, 2012, in connection with consummation of the Credit Facility as described above, the Subsidiaries used proceeds of the Credit Facility to repay all outstanding obligations under the credit facility established pursuant to the AP Agreements.  In connection with this repayment, which included a $200 termination fee, the AP agreements were terminated.

Investors Community Bank Loans

On April 7, 2008, one of the Company’s former wholly-owned subsidiaries which was subsequently merged into Broadwind Towers executed four promissory notes with Investors Community Bank (“ICB”) in the aggregate principal amount of approximately $3,781. Three of these notes were term notes, with initial principal balances totaling $2,049, bearing interest at fixed rates ranging from 5.65% to 6.85% per annum, with maturities ranging from October 2012 to April 2013 (collectively, the “ICB Notes”). The fourth note was a line of credit note, which has been repaid in full.

On August 23, 2012, in connection with consummation of the Credit Facility as described above, the Company used proceeds of the Credit Facility to repay all outstanding obligations under the ICB Notes. Upon such repayment, the ICB Notes were cancelled and the mortgage securing the ICB Loans was released.

Selling Shareholder Notes

On May 26, 2009, the Company entered into a settlement agreement (the “Settlement Agreement”) with the three former owners of Brad Foote, including J. Cameron Drecoll, who served as the Company’s Chief Executive Officer and a member of its Board of Directors until December 1, 2010. The Settlement Agreement related to the post-closing escrow established in connection with the Company’s acquisition of Brad Foote. Under the terms of the Settlement Agreement, among other terms, the Company issued three promissory notes to the former owners in the aggregate principal amount of $3,000, bearing interest at a rate of 7% per annum and maturing on May 29, 2012.

The notes issued to the former owners other than Mr. Drecoll, each with an original principal amount of $340, were repaid upon maturity in May 2012. Mr. Drecoll’s note, with an original principal amount of $2,320, was amended on July 1, 2011, to (i) change the maturity date to January 10, 2014, (ii) increase the interest rate to 9% per annum, and (iii) amend the repayment schedule to amortize the principal amount outstanding over the remaining term of the note, beginning with payments commencing in the fourth quarter of 2011. Under the terms of the amendment, the Company reduced the principal amount outstanding under the note to $1,677. On July 17, 2012, the note was further amended to provide for payment of the remaining balance in two equal installments on October 10, 2012 and January 10, 2013, or sooner if the Company’s cash balance and credit availability met certain thresholds. On August 23, 2012, in connection with the consummation of the Credit Facility as described above, the Company used proceeds of the Credit Facility to repay all outstanding obligations under Mr. Drecoll’s note. Upon such repayment, the note was cancelled.

Other

Included in Long Term Debt, Net of Current Maturities is $2,280 associated with the New Markets Tax Credit transaction described further in Note 16, “New Markets Tax Credit Transaction” of these condensed consolidated financial statements.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2012

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 9 — FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and customer deposits approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.

Assets measured at fair value on a nonrecurring basis

The fair value measurement approach for long-lived assets utilizes a number of significant unobservable inputs or Level 3 assumptions. These assumptions include, among others, projections of the Company’s future operating results, the implied fair value of these assets using an income approach by preparing a discounted cash flow analysis and a market-based approach based on the Company’s market capitalization, and other subjective assumptions. During the third quarter of 2012, the Company identified triggering events associated with the Company’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its identifiable intangible assets and certain property and equipment assets. Based upon the Company’s assessment, no additional impairment to these assets was identified as of September 30, 2012.

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SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2012

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

NOTE 11 — SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plans

2007 Equity Incentive Plan

The Company has granted  incentive stock options and other equity awards pursuant to the Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan (the “2007 EIP”), which was approved by the Company’s Board of Directors in October 2007 and by the Company’s stockholders in June 2008. The 2007 EIP has been amended periodically since its original approval. Specifically, (i) the 2007 EIP was amended by the Company’s stockholders in June 2009 to increase the number of shares of common stock authorized for issuance under the 2007 EIP, (ii) the 2007 EIP was further amended and restated in March 2011 by the Company’s Board of Directors to limit share recycling under the 2007 EIP, to include a minimum vesting period for time-vesting restricted stock awards and restricted stock units (“RSU’s”) and to add a clawback provision, and (iii) the 2007 EIP was further amended at the Company’s Annual Meeting of Stockholders on May 4, 2012 to increase the number of shares of common stock authorized for issuance under the 2007 EIP to provide sufficient authorized shares to settle certain awards granted in December 2011.

The 2007 EIP reserved 691,051 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates depend to a large degree. As of September 30, 2012, the Company had reserved 122,358 shares for issuance upon the exercise of stock options outstanding and 417,223 shares for issuance upon the vesting of RSU awards outstanding. As of September 30, 2012, 85,099 shares of common stock reserved for stock options and RSU awards under the 2007 EIP have been issued in the form of common stock.

2012 Equity Incentive Plan

On March 8, 2012, the Company’s Board of Directors approved the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “2012 EIP;” together with the 2007 EIP, the “Equity Incentive Plans”), and at the Company’s Annual Meeting of Stockholders on May 4, 2012, the Company’s stockholders approved the adoption of the 2012 EIP. The purposes of the 2012 EIP are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2012 EIP by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors, and independent contractors; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the 2012 EIP, the Company may grant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of IRC Section 422); (iii) stock appreciation rights; (iv) restricted stock and RSU’s; and (v) performance awards.

The 2012 EIP reserves 1,200,000 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of September 30, 2012, the Company had reserved 164,997 shares for issuance upon the exercise of stock options outstanding, 359,947 shares for issuance upon the vesting of RSU awards outstanding, and 675,056 additional shares for future awards under the 2012 EIP. As of September 30, 2012, no shares of common stock reserved for stock options and RSU awards under the 2012 EIP have been issued in the form of common stock.

Stock Options.  The exercise price of stock options granted under the Equity Incentive Plans is equal to the closing price of the Company’s common stock on the date of grant. Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. Additionally, stock options expire ten years after the date of grant. The fair value of stock options granted is expensed ratably over their vesting term.

Restricted Stock Units.  The granting of RSU’s is provided for under the Equity Incentive Plans. RSU’s generally vest on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. The fair value of each RSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the vesting term of the RSU award.

The following table summarizes stock option activity during the nine months ended September 30, 2012 under the Equity Incentive Plans, as follows:

	Options		Weighted Average Exercise Price
Outstanding as of December 31, 2011	127,505		$	60.07
Granted	164,997		$	3.39
Exercised	—		$	—
Forfeited	(5,147	)	$	89.11
Expired	—		$	—
Outstanding as of September 30, 2012	287,355		$	27.01
			$	—
Exercisable as of September 30, 2012	57,602		$	86.18

The following table summarizes RSU activity during the nine months ended September 30, 2012 under the Equity Incentive Plans, as follows:

	Number of RSU’s		Weighted Average Grant-Date Fair Value Per RSU
Outstanding as of December 31, 2011	364,600		$	13.16
Granted	500,996		$	4.28
Vested	(44,516	)	$	20.41
Forfeited	(43,910	)	$	12.55
Outstanding as of September 30, 2012	777,170		$	7.04

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. The weighted average fair value per share of stock option awards granted during the nine months ended September 30, 2012 and 2011, and the assumptions used to value these stock options, are as follows:

	Nine Months Ended September 30,
	2012			2011
Dividend yield	—			—
Risk-free interest rate	1.1		%	2.6		%
Weighted average volatility	99.98		%	96.09		%
Expected life (in years)	6.3			6.3
Weighted average grant date fair value per share of options granted	$	2.70		$	10.70

Dividend yield is zero as the Company currently does not pay a dividend.

Risk-free rate is based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life of the award.

During the nine months ended September 30, 2011 and 2012, the Company utilized a standard volatility assumption of 99.98% and 96.09%, respectively, for estimating the fair value of stock options awarded based on comparable volatility averages for the energy related sector.

The expected life of each stock option award granted is derived using the “simplified method” for estimating the expected term of a “vanilla-option” in accordance with Staff Accounting Bulletin (“SAB”) No. 107, “Share-Based Payment,” as amended by SAB No. 110, “Share-Based Payment.” The fair value of each unit of restricted stock is equal to the fair market value of the Company’s common stock as of the date of grant.

The Company utilized a forfeiture rate of 25% during the nine months ended September 30, 2012 and 2011 for estimating the forfeitures of stock options granted.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2012 and 2011, as follows:

	Nine Months Ended September 30,
	2012		2011
Share-based compensation expense:
Selling, general and administrative	$	2,079	$	1,395
Income tax benefit (1)	—		—
Net effect of share-based compensation expense on net loss	$	2,079	$	1,395
Reduction in earnings per share:
Basic and diluted earnings per share (2)	$	0.15	$	0.13

(1) Income tax benefit is not illustrated because the Company is currently operating at a loss and an actual income tax benefit was not realized for the nine months ended September 30, 2012 and 2011. The result of the loss situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance.

(2) Diluted earnings per share for the nine months ended September 30, 2012 and 2011 does not include common stock equivalents due to their anti-dilutive nature as a result of the Company’s net losses for these respective periods. Accordingly, basic earnings per share and diluted earnings per share are identical for all periods presented.

As of September 30, 2012, the Company estimates that pre-tax compensation expense for all unvested share-based awards, including both stock options and RSU’s, in the amount of approximately $3,461 will be recognized through 2016. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted stock by issuing new shares of common stock.

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BASIS OF PRESENTATION (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended			9 Months Ended		12 Months Ended	21 Months Ended	0 Months Ended		0 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012	Aug. 23, 2012 Credit facility	Sep. 30, 2012 Credit facility	Aug. 22, 2012 Common stock
BASIS OF PRESENTATION
Revenue as a percentage of sales associated with new wind turbine installations				64.00%	73.00%
Minimum period for which liquidity needs will be met from current cash resources and cash to be generated from operations over the next twelve months				12 months
Obligation to make principal payments on outstanding debt during the next twelve months	$ 349			$ 349			$ 349
Indebtedness associated with liabilities held for sale	4,083			4,083			4,083
Outstanding indebtedness under the Credit Facility									17,585
Obligation to make purchase commitments				341
Restructuring costs to-date	952	1,156	726			874	3,708
Expected cost to be incurred to implement the restructuring plan				13,468
Non-cash expenditure expected to be incurred				3,406
Anticipated net proceeds from asset sales				7,200
Anticipated annual cash flow savings from restructuring efforts				5,500
BASIS OF PRESENTATION
Reverse stock split ratio										0.1
Number of shares authorized	30,000,000			30,000,000		30,000,000	30,000,000			30,000,000
Line of credit facilities, term of credit agreements								3 years
Maximum borrowing capacity								$ 20,000
Maximum percentage of face value of receivables that may be financed								85.00%
Maximum percentage of book value of inventories that may be financed								50.00%

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NEW MARKETS TAX CREDIT TRANSACTION (Details) (USD $) In Thousands, unless otherwise specified			1 Months Ended	9 Months Ended		1 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Jul. 31, 2011 New Markets Tax Credit Transaction	Sep. 30, 2012 New Markets Tax Credit Transaction item	Jul. 20, 2011 New Markets Tax Credit Transaction	Jul. 31, 2011 Broadwind Services New Markets Tax Credit Transaction	Sep. 30, 2012 Broadwind Services New Markets Tax Credit Transaction
New Markets Tax Credit Transaction
Proceeds from transaction			$ 2,280
Principal amount							10,000
Debt term						15 years
Receivable term			15 years
Potential tax credit that can be generated under the NMTC transaction				3,900
Interest rate (as a percent)							1.40%
Gross loan in the principal amount from the Company to COCRF Investor VIII, LLC				7,720
Interest rate (as a percent)				2.50%
Percentage of a qualified investment available as credit against federal income taxes				39.00%
Period which facility must operate and be in compliance			7 years
Percentage of recapture to which the tax credits are subject				100.00%
Company's obligation if Capital One exercises its option to put its investment				130
Number of pass-through financing entities created under the structure that are deemed variable interest entities				2
Issue costs paid to third parties recorded as prepaid expenses					262
Net amount outstanding	$ 2,781	$ 4,797		$ 2,280

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NEW MARKETS TAX CREDIT TRANSACTION

9 Months Ended

Sep. 30, 2012

NEW MARKETS TAX CREDIT TRANSACTION

NEW MARKETS TAX CREDIT TRANSACTION

NOTE 16 — NEW MARKETS TAX CREDIT TRANSACTION

On July 20, 2011, the Company received $2,280 in proceeds via the NMTC Transaction. The NMTC Transaction qualifies under the NMTC program and included a gross loan from AMCREF to Broadwind Services in the principal amount of $10,000, with a term of fifteen years and interest payable at the rate of 1.4% per annum, largely offset by a gross loan in the principal amount of $7,720 from the Company to COCRF, with a term of fifteen years and interest payable at the rate of 2.5% per annum.

The NMTC regulations permit taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities. The NMTC Transaction could generate $3,900 in tax credits, which the Company has made available under the structure by passing them through to Capital One. The proceeds have been applied to the Company’s investment in the Gearbox Facility assets and operating costs, as permitted under the NMTC program.

The Gearbox Facility must operate and be in compliance with various regulations and restrictions for seven years to comply with the terms of the NMTC Transaction, or the Company may be liable under its indemnification agreement with Capital One for the recapture of tax credits. In the event the Company does not comply with these regulations and restrictions, the NMTC program tax credits may be subject to 100% recapture for a period of seven years as provided in the IRC. The Company does not anticipate that any tax credit recapture events will occur or that it will be required to make any payments to Capital One under the indemnification agreement.

The Capital One contribution has been included in the Company’s condensed consolidated balance sheet at September 30, 2012. The NMTC Transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Capital One’s interest in 2018. Capital One may exercise an option to put its investment and receive $130 from the Company. If Capital One does not exercise its put option, the Company can exercise a call option at the then fair market value of the call. The Company believes that Capital One will exercise the put option in 2018 at the end of the tax credit recapture period. The Capital One contribution other than the amount allocated to the put obligation will be recognized as income only after the put/call is exercised and when Capital One has no ongoing interest. However, there is no legal obligation for Capital One to exercise the put, and the Company has attributed only an insignificant value to the put option included in this transaction structure.

The Company has determined that two pass-through financing entities created under this transaction structure are variable interest entities (“VIE’s”). The ongoing activities of the VIE’s—collecting and remitting interest and fees and complying with NMTC program requirements—were considered in the initial design of the NMTC Transaction and are not expected to significantly affect economic performance throughout the life of the VIE’s. Management also considered the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees under the transaction structure, Capital One’s lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the VIE’s. The Company has concluded that it is required to consolidate the VIE’s because the Company has both (i) the power to direct those matters that most significantly impact the activities of each VIE and (ii) the obligation to absorb losses or the right to receive benefits of each VIE.

The $262 of issue costs paid to third parties in connection with the NMTC Transaction are recorded as prepaid expenses, and are being amortized over the expected seven year term of the NMTC arrangement. Capital One’s net contribution of $2,280 is included in Long Term Debt, Net of Current Maturities in the condensed consolidated balance sheet. Incremental costs to maintain the transaction structure during the compliance period will be recognized as they are incurred.

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INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2012

INVENTORIES

Schedule of the components of inventories

	September 30,			December 31,
	2012			2011
Raw materials	$	13,829		$	11,943
Work-in-process	10,617			7,437
Finished goods	5,395			4,921
	29,841			24,301
Less: Reserve for excess and obsolete inventory	(814		)	(946		)
Net inventories	$	29,027		$	23,355

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COMMITMENTS AND CONTINGENCIES (Details 3) (Total Company Employees, Coverage under collective bargaining agreements)	9 Months Ended
	Sep. 30, 2012 agrement
Total Company Employees | Coverage under collective bargaining agreements
Collective bargaining agreements
Percentage of company's employees covered	22.00%
Number of agreements	2

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DEBT AND CREDIT AGREEMENTS (Details) (USD $) In Thousands, unless otherwise specified				0 Months Ended	9 Months Ended							0 Months Ended	9 Months Ended		1 Months Ended		1 Months Ended				1 Months Ended	3 Months Ended	1 Months Ended		1 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 New Markets Tax Credit Transaction	Aug. 23, 2012 Credit facility	Sep. 30, 2012 Credit facility	Aug. 23, 2012 Credit facility Minimum	Sep. 30, 2012 Term loans and notes payable	Dec. 31, 2011 Term loans and notes payable	Sep. 30, 2012 Great Western Bank, construction loan	Apr. 05, 2010 Great Western Bank, construction loan	Apr. 28, 2009 Great Western Bank, construction loan	Aug. 23, 2012 AP Agreements	Sep. 30, 2012 AP Agreements	Sep. 30, 2012 AP Agreements Maximum	Apr. 30, 2008 ICB Notes item	Apr. 07, 2008 ICB Notes	Apr. 30, 2008 Term notes note	Apr. 07, 2008 Term notes	Apr. 07, 2008 Term notes Minimum	Apr. 07, 2008 Term notes Maximum	May 31, 2009 Selling Shareholder Notes item	Sep. 30, 2012 Selling Shareholder Notes	May 31, 2009 Selling Shareholder Notes Former owners, excluding the former Chief Executive Officer	May 26, 2009 Selling Shareholder Notes Former owners, excluding the former Chief Executive Officer	May 31, 2009 Selling Shareholder Notes Former Chief Executive Officer	Sep. 30, 2012 Selling Shareholder Notes Former Chief Executive Officer	Jul. 17, 2012 Selling Shareholder Notes Former Chief Executive Officer item	Jul. 02, 2011 Selling Shareholder Notes Former Chief Executive Officer
Credit Facilities
Line of credit facilities, term of credit agreements				3 years
Maximum percentage of book value of inventories that may be financed				50.00%
Number of promissory notes															4		3				3
Aggregate principal amount																$ 3,781		$ 2,049
Promissory note repayment made with proceeds from credit facility																						1,453
Principal amount of debt issued																					3,000		340		2,320
Interest rate (as a percent)						5.25%				8.50%									5.65%	6.85%				7.00%				9.00%
Variable rate basis				London Interbank Offered Rate									London Interbank Offered Rate
Interest rate margin (as a percent)				4.25%									3.75%
Outstanding indebtedness under the Credit Facility					17,585
Additional ability to borrow up					2,415
Interest rate (as a percent)					5.25%
Amount outstanding									4,083																	1,677
Maximum percentage of face value of receivables that may be financed				85.00%									80.00%
Maximum borrowing capacity				20,000						6,500	10,000		10,000
Annual facility fee (as a percent)													1.00%
Annual unused line fee (as a percent)				0.50%									0.042%
Early termination fee (as a percent)														2.00%
Termination fees												200
Long-term debt, gross	20,715	6,999			17,585		3,130	6,999
Less: Current maturities	(17,934)	(2,202)
Long-term debt, net of current maturities	$ 2,781	$ 4,797	$ 2,280
Number of installments																											2

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (12,029)	$ (16,224)
Loss from discontinued operations		1,184
Loss from continuing operations	(12,029)	(15,040)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense	12,227	10,910
Stock-based compensation	2,079	1,395
Allowance for doubtful accounts	158	542
Common stock issued under defined contribution 401(k) plan	345	150
Loss on disposal of assets	220	390
Changes in operating assets and liabilities:
Accounts receivable	(3,318)	(2,586)
Inventories	(5,672)	(13,544)
Prepaid expenses and other current assets	1,078	(411)
Accounts payable	(3,175)	806
Accrued liabilities	(110)	(1,112)
Customer deposits	(13,411)	6,822
Other non-current assets and liabilities	1,319	186
Net cash used in operating activities of continuing operations	(20,289)	(11,492)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of logistics business	375	761
Purchases of property and equipment	(3,300)	(4,134)
Proceeds from disposals of property and equipment	106	1,850
Decrease in restricted cash	546	(1,276)
Net cash used in investing activities of continuing operations	(2,273)	(2,799)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of stock		11,739
Payments on lines of credit and notes payable	(24,190)	(1,055)
Proceeds from lines of credit and notes payable	36,908	2,307
Proceeds from sale-leaseback transactions	1,000
Payments for debt issuance costs	(630)
Principal payments on capital leases	(1,145)	(674)
Net cash used in financing activities of continuing operations	11,943	12,317
DISCONTINUED OPERATIONS:
Operating cash flows		(829)
Financing cash flows		(83)
Net cash used in discontinued operations		(912)
Add: Cash balance of discontinued operations, beginning of period		530
NET DECREASE IN CASH AND CASH EQUIVALENTS	(10,619)	(2,356)
CASH AND CASH EQUIVALENTS, beginning of the period	13,340	15,331
CASH AND CASH EQUIVALENTS, end of the period	2,721	12,975
Supplemental cash flow information:
Interest paid, net of capitalized interest	854	757
Income taxes paid	25	34
Non-cash investing and financing activities:
Issuance of restricted stock grants	1,307	633
Common stock issued under defined contribution 401(k) plan	$ 345	$ 150

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INVENTORIES

9 Months Ended

Sep. 30, 2012

INVENTORIES

INVENTORIES

NOTE 5 — INVENTORIES

The components of inventories as of September 30, 2012 and December 31, 2011 are summarized as follows:

	September 30,			December 31,
	2012			2011
Raw materials	$	13,829		$	11,943
Work-in-process	10,617			7,437
Finished goods	5,395			4,921
	29,841			24,301
Less: Reserve for excess and obsolete inventory	(814		)	(946		)
Net inventories	$	29,027		$	23,355

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2012

INTANGIBLE ASSETS

Schedule of the cost basis, accumulated amortization, impairment charge and net book value of intangible assets

	September 30, 2012									December 31, 2011
								Net									Net
	Cost		Accumulated			Impairment		Book		Cost		Accumulated			Impairment		Book
	Basis		Amortization			Charge		Value		Basis		Amortization			Charge		Value
Intangible assets:
Customer relationships	$	3,979	$	(1,878	)	$	—	$	2,101	$	3,979	$	(1,084	)	$	—	$	2,895
Trade names	7,999		(1,981		)	—		6,018		7,999		(1,680		)	—		6,319
Intangible assets	$	11,978	$	(3,859	)	$	—	$	8,119	$	11,978	$	(2,764	)	$	—	$	9,214

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INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
INVENTORIES
Raw materials	$ 13,829	$ 11,943
Work-in-process	10,617	7,437
Finished goods	5,395	4,921
Gross inventories	29,841	24,301
Less: Reserve for excess and obsolete inventory	(814)	(946)
Net inventories	$ 29,027	$ 23,355

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 15 — COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company completed construction of the Brandon Facility in the first quarter of 2010, but has not commenced production at this facility. During 2010 the Company concluded that it would be difficult or impossible to operate the Brandon Facility in a profitable or cost-effective manner in light of the expected mid-term demand for wind towers. In connection with this determination, during the fourth quarter of 2010, the Company recorded an impairment charge of $13,326 to reduce the carrying value of the Brandon Facility assets to fair value which approximates its carrying value of $8,000. The Company currently has purchase commitments totaling approximately $341 outstanding related to the Brandon Facility. In the third quarter of 2011, the Company initiated a process to sell the Brandon Facility and reclassified the Brandon Facility, and the related indebtedness, to Assets Held for Sale and Liabilities Held for Sale, respectively (see Note 17, “Restructuring” of these financial statements).

Environmental Compliance and Remediation Liabilities

The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws can also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners, operators and/or users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites.

In connection with the Company’s ongoing restructuring initiatives, the Company identified a $352 liability associated with the planned sale of one of its Cicero, Illinois manufacturing facilities. The liability is associated with environmental remediation costs that were identified while preparing the site for sale.

Warranty Liability

The Company provides warranty terms that range from one to seven years for various products and services supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty provisions. As of September 30, 2012 and 2011, estimated product warranty liability was $751 and $863, respectively, and is recorded within accrued liabilities in the Company’s condensed consolidated balance sheets.

The changes in the carrying amount of the Company’s total product warranty liability for the nine months ended September 30, 2012 and 2011 were as follows:

	For the nine months ended September 30,
	2012			2011
Balance, beginning of period	$	983		$	1,071
Warranty expense	(133		)	21
Warranty claims	(99		)	(229		)
Balance, end of period	$	751		$	863

Allowance for Doubtful Accounts

Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the realizability of its accounts receivable. These factors include individual customer circumstances, history with the Company and other relevant criteria.

The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the realizability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the nine months ended September 30, 2012 and 2011 consists of the following:

	For the nine months ended September 30,
	2012			2011
Balance at beginning of period	$	438		$	489
Bad debt expense	200			532
Write-offs	(123		)	(3		)
Balance at end of period	$	515		$	1,018

Collateral

In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations.

Liquidated Damages

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question. As a result of production delays experienced, as of September 30, 2012 the Company has accrued $213 related to potential liquidated damages. The Company does not believe that any additional potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations.

Other

As of September 30, 2012, approximately 22% of the Company’s employees were covered by two collective bargaining agreements with United Steelworkers local unions in Cicero, Illinois and Neville Island, Pennsylvania, which are scheduled to remain in effect through February 2014 and October 2012, respectively. In October of 2012, the Company reached preliminary agreement on a new collective bargaining agreement with its employees in Neville Island, Pennsylvania. The revised agreement is pending review and signature by a representative of the United Steelworkers of America. The Company considers its union and employee relations to be satisfactory.

The sale price from the sale of the Company’s Badger subsidiary to BTI Logistics is subject to certain contingencies and indemnifications.

On July 20, 2011, the Company executed a strategic financing transaction (the “NMTC Transaction”) involving the following third parties: AMCREF Fund VII, LLC (“AMCREF”), a registered community development entity; COCRF Investor VIII, LLC (“COCRF”); and Capital One, National Association (“Capital One”). The NMTC Transaction allows the Company to receive below market interest rate funds through the federal New Markets Tax Credit (“NMTC”) program, see Note 16, “New Markets Tax Credit Transaction” of these condensed consolidated financial statements. Pursuant to the NMTC Transaction, the gross loan and investment in the Gearbox Facility of $10,000 will generate $3,900 in tax credits over a period of seven years, which the NMTC Transaction makes available to Capital One. The Gearbox Facility must operate and be in compliance with the terms and conditions of the NMTC Transaction during the seven year compliance period, or the Company may be liable for the recapture of $3,900 in tax credits to which Capital One is otherwise entitled. The Company does not anticipate any credit recaptures will be required in connection with the NMTC Transaction.