10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2013

OR

o TRANSITION 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.)

3240 S. Central Avenue, Cicero, IL 60804

(Address of principal executive offices)

(708) 780-4800

(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 o
Non-accelerated filer o	Smaller reporting company x
(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 24, 2013: 14,587,958.

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 Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	30
Signatures		31

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,
	2013			2012
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	22,826		$	516
Short-term investments	867			—
Restricted cash	331			330
Accounts receivable, net of allowance for doubtful accounts of $179 and $453 as of September 30, 2013 and December 31, 2012, respectively	21,927			20,039
Inventories, net	32,625			21,988
Prepaid expenses and other current assets	2,532			3,836
Assets held for sale	2,152			8,042
Total current assets	83,260			54,751
Property and equipment, net	72,761			79,889
Intangible assets, net	6,014			7,454
Other assets	2,194			816
TOTAL ASSETS	$	164,229		$	142,910
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Lines of credit and notes payable	$	—		$	955
Current maturities of long-term debt	342			352
Current portions of capital lease obligations	1,308			2,217
Accounts payable	29,063			16,377
Accrued liabilities	6,961			6,012
Customer deposits	21,482			4,063
Liabilities held for sale	—			3,860
Total current liabilities	59,156			33,836
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	2,757			2,956
Long-term capital lease obligations, net of current portions	1,431			641
Other	3,342			2,169
Total long-term liabilities	7,530			5,766
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; 14,563,228 and 14,197,792 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively	15			14
Additional paid-in capital	375,542			373,605
Accumulated deficit	(278,014		)	(270,311		)
Total stockholders’ equity	97,543			103,308
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	164,229		$	142,910

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,
	2013			2012			2013			2012
Revenues	$	62,436		$	55,045		$	159,463		$	165,799
Cost of sales	56,783			52,097			147,399			158,155
Restructuring	1,097			233			2,758			1,038
Gross profit	4,556			2,715			9,306			6,606
OPERATING EXPENSES:
Selling, general and administrative	5,247			5,197			15,788			16,658
Intangible amortization	111			664			1,441			1,094
Regulatory settlement	1,500			—			1,500			—
Restructuring	79			381			787			481
Total operating expenses	6,937			6,242			19,516			18,233
Operating loss	(2,381		)	(3,527		)	(10,210		)	(11,627		)
OTHER INCOME (EXPENSE) , net:
Interest expense, net	(177		)	(553		)	(795		)	(1,053		)
Other, net	(4		)	148			511			758
Restructuring	(1		)	(15		)	2,965			(86		)
Total other income (expense), net	(182		)	(420		)	2,681			(381		)
Net loss from continuing operations before provision for income taxes	(2,563		)	(3,947		)	(7,529		)	(12,008		)
Provision (benefit) for income taxes	28			(9		)	64			21
LOSS FROM CONTINUING OPERATIONS	(2,591		)	(3,938		)	(7,593		)	(12,029		)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX	100			—			(110		)	—
NET LOSS	$	(2,491	)	$	(3,938	)	$	(7,703	)	$	(12,029	)
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
Loss from continuing operations	$	(0.18	)	$	(0.28	)	$	(0.53	)	$	(0.86	)
Loss from discontinued operations	0.01			—			(0.01		)	—
Net loss	$	(0.17	)	$	(0.28	)	$	(0.53	)	$	(0.86	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted	14,525			14,093			14,405			14,022

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 STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)

	Common Stock
	Shares Issued and Outstanding	Issued Amount			Additional Paid-in Capital		Accumulated Deficit			Total
BALANCE, December 31, 2011	13,977,920	$	140		$	370,123	$	(252,404	)	$	117,859
Stock issued for restricted stock	38,667	—			—		—			—
Stock issued under defined contribution 401(k) retirement savings plan	181,205	—			523		—			523
Reclass between APIC and CS due to 10-1 Split		(126		)	126					—
Share-based compensation	—	—			2,833		—			2,833
Net loss	—	—			—		(17,907		)	(17,907		)
BALANCE, December 31, 2012	14,197,792	$	14		$	373,605	$	(270,311	)	$	103,308
Stock issued for restricted stock	222,011	1			—		—			1
Stock issued under defined contribution 401(k) retirement savings plan	143,425	—			499		—			499
Share-based compensation	—	—			1,438		—			1,438
Net loss	—	—			—		(7,703		)	(7,703		)
BALANCE, September 30, 2013	14,563,228	$	15		$	375,542	$	(278,014	)	$	97,543

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,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(7,703	)	$	(12,029	)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense	11,412			12,227
Impairment charges	288			—
Stock-based compensation	1,438			2,079
Allowance for doubtful accounts	(274		)	158
Common stock issued under defined contribution 401(k) plan	499			345
(Gain) loss on disposal of assets	(3,576		)	220
Changes in operating assets and liabilities:
Accounts receivable	(1,613		)	(3,318		)
Inventories	(10,637		)	(5,672		)
Prepaid expenses and other current assets	1,228			1,078
Accounts payable	12,337			(3,175		)
Accrued liabilities	1,054			(110		)
Customer deposits	17,419			(13,411		)
Other non-current assets and liabilities	(365		)	1,319
Net cash provided by (used in) operating activities	21,507			(20,289		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of logistics business and related note receivable	250			375
Purchases of available for sale securities	(867		)	—
Purchases of property and equipment	(5,967		)	(3,300		)
Proceeds from disposals of property and equipment	12,533			106
(Increase) decrease in restricted cash	(1		)	546
Net cash provided by (used in) investing activities	5,948			(2,273		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on lines of credit and notes payable	(80,233		)	(24,190		)
Proceeds from lines of credit and notes payable	75,208			36,908
Proceeds from sale-leaseback transactions	—			1,000
Payments for debt issuance costs	—			(630		)
Principal payments on capital leases	(120		)	(1,145		)
Net cash (used in) provided by financing activities	(5,145		)	11,943
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	22,310			(10,619		)
CASH AND CASH EQUIVALENTS, beginning of the period	516			13,340
CASH AND CASH EQUIVALENTS, end of the period	$	22,826		$	2,721
Supplemental cash flow information:
Interest paid	$	672		$	854
Income taxes paid	$	19		$	25
Non-cash investing and financing activities:
Issuance of restricted stock grants	$	1,025		$	1,307

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, 2013 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2013. The December 31, 2012 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, 2012.

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, “Subsidiaries”). All intercompany transactions and balances have been eliminated.

There have been no material changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2013 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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 Cicero, Illinois, and its 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 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 2013, 67% of the Company’s revenue was derived from sales associated with new wind turbine installations, versus 64% for the same period of 2012.

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.

Liquidity

The Company had cash and cash equivalents and short-term investments that totaled $23,693 as of September 30, 2013, up significantly from $516 as of December 31, 2012. The Company’s improved cash position is primarily the result of (i) the sale of its idle wind tower manufacturing facility in Brandon, South Dakota (the “Brandon Facility”), which occurred in April 2013 and generated approximately $8,000 in net proceeds after closing costs and repayment of the associated mortgage balance, and (ii) the receipt of customer deposits used mainly to fund raw material steel purchases associated with tower orders. During the third quarter of 2012, the Company entered into a three-year $20,000 credit agreement with AloStar Bank of Commerce (“AloStar”). Pursuant to this agreement, AloStar will advance funds, as requested, against the Company’s borrowing base, which consists of approximately 85% of eligible receivables and approximately 50% of eligible inventory. Under this borrowing structure, borrowings are continuous and all cash proceeds received by the Company and its Subsidiaries are automatically applied to the outstanding borrowed balance. At September 30, 2013, the AloStar line of credit was undrawn and the Company had the ability to borrow up to $15,480 thereunder.

The Company 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 of credit, and cash to be generated from operations 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, as of September 30, 2013, the Company is obligated to make principal payments on outstanding debt totaling $342 during the next twelve months. If assumptions regarding the Company’s production, sales and subsequent

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collections from several of the Company’s large customers, as well as customer advances and revenues generated from new customer orders, are not materially consistent with management’s expectations, the Company may in the future encounter cash flow and liquidity issues. If the Company cannot make scheduled payments on its debt, or comply with applicable covenants, it may lose operational flexibility or have to delay planned investments. 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, that it will be able to comply with applicable loan covenants 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.

Please refer to Note 17, “Restructuring” of these condensed consolidated financial statements for a discussion of the restructuring plan which the Company initiated in the third quarter of 2011. To date, the Company has incurred $8,500 of net costs in conjunction with its restructuring plan. Including costs incurred to date, the Company expects that a total of approximately $13,300 of net costs will be incurred to implement this restructuring plan. Of the total projected expenses, the Company anticipates that approximately $5,400 will be non-cash expenditures.

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, 2013 and 2012, as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Basic earnings per share calculation:
Net loss	$	(2,491	)	$	(3,938	)	$	(7,703	)	$	(12,029	)
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Basic net loss per share	$	(0.17	)	$	(0.28	)	$	(0.53	)	$	(0.86	)
Diluted earnings per share calculation:
Net loss	$	(2,491	)	$	(3,938	)	$	(7,703	)	$	(12,029	)
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Common stock equivalents:
Stock options and unvested restricted stock units (1)	—			—			—			—
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Diluted net loss per share	$	(0.17	)	$	(0.28	)	$	(0.53	)	$	(0.86	)

(1)Stock options and unvested restricted stock units granted and outstanding of 974,296 and 1,064,525 as of September 30, 2013 and 2012, 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.

NOTE 3 — DISCONTINUED OPERATIONS

In December 2010, the Company’s Board of Directors approved a plan to divest the Company’s wholly-owned subsidiary Badger Transport, Inc. (“Badger”), which formerly comprised the Company’s Logistics segment. In March 2011, the Company completed the sale of Badger to BTI Logistics, LLC. As a component of the proceeds from the sale, the Company received a $1,500 secured promissory note payable from the purchaser. During the first quarter of 2013, the Company recorded a $210 discontinued operations charge to adjust the net balance of the Company’s note receivable down to the $150 estimated value of the Company’s security interest. During the third quarter of 2013, the Company received a payment under the note in excess of the $150 net receivable recorded, and recorded a discontinued operations gain of $100 to reflect the additional amount received. There is a balance of $860 outstanding on the note receivable, all of which is considered past due. As a result of the uncertainty related to any future expected payments from the purchaser, the note is fully reserved for at September 30, 2013.

NOTE 4 — CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

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. Marketable investments with original maturities between three and twelve months are recorded as short-term investments. The Company’s treasury policy is to invest excess cash in money market funds or other investments, which are generally of a short-term

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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, 2013 and December 31, 2012, cash and cash equivalents totaled $22,826 and $516, respectively, and short-term investments totaled $867 and $0, respectively. The components of cash and cash equivalents and short-term investments as of September 30, 2013 and December 31, 2012 are summarized as follows:

	September 30,		December 31,
	2013		2012
Cash and cash equivalents:
Cash	$	14,640	$	464
Municipal bonds	8,186		52
Total cash and cash equivalents	22,826		516
Short-term investments (available-for-sale):
Municipal bonds	867		—
Total cash and cash equivalents and short-term investments	23,693		516

NOTE 5 — INVENTORIES

The components of inventories as of September 30, 2013 and December 31, 2012 are summarized as follows:

	September 30,			December 31,
	2013			2012
Raw materials	$	18,220		$	8,697
Work-in-process	11,461			9,505
Finished goods	4,642			4,558
	34,323			22,760
Less: Reserve for excess and obsolete inventory	(1,698		)	(772		)
Net inventories	$	32,625		$	21,988

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 10 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 first three quarters of 2013, 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 was in excess of the carrying amount of the intangible assets, and no impairment to these assets was indicated as of September 30, 2013.

As of September 30, 2013 and December 31, 2012, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

	September 30, 2013								December 31, 2012
								Weighted								Weighted
						Net		Average						Net		Average
	Cost		Accumulated			Book		Amortization	Cost		Accumulated			Book		Amortization
	Basis		Amortization			Value		Period	Basis		Amortization			Value		Period
Intangible assets:
Customer relationships	$	3,979	$	(3,584	)	$	395	7.2	$	3,979	$	(2,444	)	$	1,535	7.2
Trade names	7,999		(2,380		)	5,619		20.0	7,999		(2,080		)	5,919		20.0
Intangible assets	$	11,978	$	(5,964	)	$	6,014	15.8	$	11,978	$	(4,524	)	$	7,454	15.8

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As of September 30, 2013, estimated future amortization expense is as follows:

2013	$	111
2014	444
2015	444
2016	444
2017	444
2018 and thereafter	4,127
Total	$	6,014

NOTE 7 — ACCRUED LIABILITIES

Accrued liabilities as of September 30, 2013 and December 31, 2012 consisted of the following:

	September 30,		December 31,
	2013		2012
Accrued payroll and benefits	$	3,821	$	2,913
Accrued property taxes	458		367
Income taxes payable	488		443
Accrued professional fees	199		526
Accrued warranty liability	675		707
Accrued regulatory settlement	500		—
Accrued environmental reserve	242		352
Accrued other	578		704
Total accrued liabilities	$	6,961	$	6,012

NOTE 8 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of September 30, 2013 and December 31, 2012 consisted of the following:

	September 30,			December 31,
	2013			2012
Lines of credit	$	—		$	955
Term loans and notes payable	3,099			3,308
Less: Current portion	(342		)	(1,307		)
Long-term debt, net of current maturities	$	2,757		$	2,956

Credit Facilities

AloStar Credit Facility

On August 23, 2012, the Company and its Subsidiaries entered into a Loan and Security Agreement (the “Loan Agreement”) with AloStar, providing the Company and its 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 when requested against a borrowing base consisting of approximately 85% of the face value of eligible receivables of the Company and its Subsidiaries and approximately 50% of the book value of eligible inventory of the Company and its Subsidiaries. Borrowings under the Credit Facility bear interest at a per annum rate equal to the one-month London Interbank Offered Rate 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 its Subsidiaries. It also contains a requirement that the Company, on a consolidated basis, maintain a minimum monthly fixed charge coverage ratio and

8

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. As of September 30, 2013, the Loan Agreement was amended to: (i) redefine certain exclusions to the fixed charge coverage ratio, (ii) exclude the periodic non-cash portion of the environmental regulatory settlement charges from the adjusted EBITDA calculation and (iii) increase the capital expenditure limit for 2013.

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 Company’s Subsidiaries and (ii) a first priority security interest in all of the equipment of Brad Foote.

As of September 30, 2013, there was no outstanding indebtedness under the Credit Facility. The Company had the ability to borrow up to $15,480 as of September 30, 2013, and the per annum interest rate would have been 5.25%. The Company was in compliance with all applicable covenants under the Loan Agreement as of September 30, 2013.

Great Western Bank Loan

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 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 was 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 agreed to subordinate all intercompany debt with Broadwind Towers to the GWB Term Loan. The documents evidencing and securing the GWB Term Loan contained representations, warranties and covenants customary for a term financing arrangement and contained no financial covenants.

The Brandon Facility was sold in April 2013 and the GWB Term Loan was repaid in its entirety with a portion of the proceeds.

Other

Included in Long Term Debt, Net of Current Maturities is $2,600 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. For the Company’s municipal bonds, we noted that although quoted prices are available and used to value said assets, they are traded less frequently.

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. The Company used market negotiations to value its Gearing assets.  The Company used real estate appraisals to value the Clintonville, WI facility.

The following table represents the fair values of the Company’s financial assets as of September 30 2013 and December 31, 2012:

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	September 30, 2013
	Level 1		Level 2		Level 3		Total
Assets measured on a recurring basis:
Municipal bonds	$	—	$	9,053	$	—	$	9,053
Assets measured on a nonrecurring basis:
Gearing equipment	—		—		1,331		1,331
Clintonville, WI facility	—		—		821		821
Total assets at fair value	$	—	$	9,053	$	2,152	$	11,205

	December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets measured on a recurring basis:
Municipal bonds	$	—	$	52	$	—	$	52
Total assets at fair value	$	—	$	52	$	—	$	52

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, 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. To the extent projections used in the Company’s evaluations are not achieved, there may be a negative effect on the valuation of these assets.

Due to the Company’s operating losses in each of the first three quarters of 2013 combined with its history of continued operating losses, the Company continues to evaluate the recoverability of certain of its identifiable intangible assets and certain property and equipment assets. Based upon the Company’s September 30, 2013 assessment, the recoverable amount of undiscounted cash flows based upon the Company’s most recent projections exceeded the carrying amount of invested capital by 120% and 56% for the Gearing and Services segments, respectively, and no impairment to these assets was indicated.

During the first half of 2013, the Company took a $288 charge to adjust the carrying value of its Clintonville, Wisconsin facility assets to fair value, and reclassified the resulting $790 carrying value from property and equipment to Assets Held for Sale. This treatment was due to management’s decision to list the property for sale as a result of its determination that the property was no longer required in its operations. Additionally, the Company took a $345 charge to adjust the carrying value of certain Gearing equipment to fair value, and reclassified the resulting $1,400 carrying value to Assets Held for Sale as a result of the decision to sell this equipment.

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, 2013, the Company had no net deferred income taxes due to the full recorded valuation allowance. During the three months ended September 30, 2013, the Company recorded a provision for income taxes of $28 compared to a benefit for income taxes of $9 during the three months ended September 30, 2012. During the nine months ended September 30, 2013, the Company recorded a provision for income taxes of $64, compared to a provision for income taxes of $21 during the nine months ended September 30, 2012.

The Company files income tax returns in U.S. federal and state jurisdictions. As of September 30, 2013, 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, 2012, the Company had net operating loss carryforwards of $153,629 expiring in various years through 2032.

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It is reasonably possible that unrecognized tax benefits will decrease by up to approximately $285 as a result of the expiration of the applicable statute of limitations within the next 12 months. In addition, 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 (“NOL”) 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 NOL 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 on NOL carryforwards and built-in losses available for utilization. To the extent the Company’s use of NOL 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 be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.

The Company announced on February 13, 2013, that its Board of Directors had adopted a Stockholder Rights Plan (the “Rights Plan”) designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under IRC Section 382. The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board of Directors declared a non-taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $14.00 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Company’s Board of Directors would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares. The Rights Plan was subsequently approved by the Company’s stockholders at the Company’s 2013 Annual Meeting of Stockholders.

As of September 30, 2013, the Company has $484 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 $198 as of September 30, 2013. As of December 31, 2012, the Company had unrecognized tax benefits of $454, of which $168 represented accrued interest and penalties.

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.

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 depends to a large degree. As of September 30, 2013, the Company had reserved 96,247 shares for issuance upon the exercise of stock options outstanding and 92,209 shares for issuance upon the vesting of restricted stock unit (“RSU”) awards outstanding. As of September 30, 2013, 203,408 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

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September 30, 2013, the Company had reserved 138,590 shares for issuance upon the exercise of stock options outstanding and 647,250 shares for issuance upon the vesting of RSU awards outstanding. As of September 30, 2013, 111,053 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, 2013 under the Equity Incentive Plans, as follows:

	Options		Weighted Average Exercise Price
Outstanding as of December 31, 2012	286,455		$	26.80
Granted	—		$	—
Exercised	—		$	—
Forfeited	(37,579	)	$	15.94
Expired	(14,039	)	$	103.43
Outstanding as of September 30, 2013	234,837		$	23.96
Exercisable as of September 30, 2013	100,031		$	45.96

The following table summarizes RSU activity during the nine months ended September 30, 2013 under the Equity Incentive Plans, as follows:

	Number of RSU’s		Weighted Average Grant-Date Fair Value Per RSU
Outstanding as of December 31, 2012	761,662		$	6.01
Granted	463,218		$	3.68
Vested	(280,624	)	$	6.76
Forfeited	(204,797	)	$	4.50
Outstanding as of September 30, 2013	739,459		$	4.66

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. There were no stock options granted during the nine months ended September 30, 2013.

The Company utilized a forfeiture rate of 25% during the nine months ended September 30, 2013 and 2012 for estimating the forfeitures of stock compensation 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, 2013 and 2012, as follows:

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	Nine Months Ended September 30,
	2013		2012
Share-based compensation expense:
Selling, general and administrative	$	1,438	$	2,079
Income tax benefit (1)	—		—
Net effect of share-based compensation expense on net loss	$	1,438	$	2,079
Reduction in earnings per share:
Basic and diluted earnings per share (2)	$	0.10	$	0.15

(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, 2013 and 2012. 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, 2013 and 2012 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, 2013, 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 $2,879 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 (the “USDC”) against the Company and certain of its current or former officers and directors. The lawsuit was purportedly brought on behalf of purchasers of the Company’s common stock between March 17, 2009 and August 9, 2010. A lead plaintiff was appointed and an amended complaint was filed on September 13, 2011. The amended complaint named as additional defendants certain of the Company’s current and former directors, certain Tontine entities, and Jeffrey Gendell, a principal of Tontine. The complaint sought 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 “Offering”). The plaintiffs alleged 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 GAAP 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 relied 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 USDC granted in part and denied in part the Company’s motion. The USDC 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 USDC dismissed all claims with prejudice against the named Tontine entities and Mr. Gendell. The USDC 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. The plaintiffs’ class certification was filed on June 22, 2012, and the parties agreed to a briefing schedule. The parties participated in a mediation session on August 20, 2012, and reached agreement on a settlement of the matter in the amount of $3,915, which is payable by the Company’s insurance carrier. The USDC granted final approval of the settlement on June 27, 2013.

Between February 15, 2011 and March 30, 2011, three putative shareholder derivative lawsuits were filed in the USDC 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 Offering. One of the lawsuits also alleged 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 USDC were subsequently consolidated, and on May 15, 2012, the USDC granted the defendants’ motion to dismiss the consolidated cases and also entered an order dismissing the third case. The Company received a request from the Tontine defendants for indemnification in the derivative suits and

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the class action lawsuit 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.  The Company subsequently entered into an agreement with Tontine providing, among other things, for a settlement of these indemnification claims and related matters for a payment of $495. Because of the preliminary nature of these matters, the Company is not able to estimate a loss or range of loss, if any, that may be incurred in connection with these matters 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, which most likely arose out of a whistleblower complaint that the SEC received related to revenue recognition, cost accounting and intangible and fixed asset valuations at Brad Foote. The Company has been in regular contact with the SEC, and in its communications the SEC has clarified or supplemented its requests. The Company has produced documents responsive to such requests and completed the process of responding to the subpoena for documents. Following the issuance of subpoenas for testimony, the SEC has deposed certain current and former Brad Foote and Company employees. 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. 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. All pending reimbursement requests from Tontine related to the SEC inquiry were resolved in the above-referenced settlement.

Environmental

The Company is aware of an investigation commenced by the United States Attorney’s Office, Northern District of Illinois (“USAO”), for potential violation of federal environmental laws. On February 15, 2011, pursuant to a search warrant, officials from the United States Environmental Protection Agency (“USEPA”) entered and conducted a search of a Brad Foote facility in Cicero, Illinois (the “Cicero Avenue Facility”) 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 a grand jury subpoena requesting testimony and the production of certain documents relating to the Cicero Avenue 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 Cicero Avenue Facility’s employees, environmental and manufacturing processes, and disposal practices. On April 5, 2012, the Company received a letter from the USAO requesting the production of certain financial records from 2008 to the present. The Company has completed its response to the subpoenas and to the USAO’s request. The Company has also voluntarily instituted corrective measures at the Cicero Avenue Facility, including changes to its wastewater disposal practices. On September 24, 2013, the USAO commenced a criminal action in the USDC based on this investigation. Brad Foote has agreed to enter into a plea agreement with the USAO (the “Plea Agreement”) with regard to this criminal action, pursuant to which Brad Foote would plead guilty to one count of knowingly violating the Clean Water Act, Title 33, United States Code, Section 1319(c)(2)(A) and pay a $1,500 fine (payable in three installments of $500 within three years of the date of sentencing). The Plea Agreement is subject to the approval of the USDC.

Other

The Company is also a party to additional claims and legal proceedings arising in the ordinary course of business, none of which is deemed to be individually significant at this time. 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.

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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 wind 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.

Gearing

The Company engineers, builds and remanufactures precision gears and gearing systems for oil and gas, wind, mining, steel 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 MW 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 Abilene, Texas gearbox service facility (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” comprises adjustments to reconcile segment results to consolidated results.

Summary financial information by reportable segment for the three and nine months ended September 30, 2013 and 2012 is as follows:

For the Three Months Ended September 30, 2013:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	48,594	$	10,138		$	3,704		$	—		$	—		$	62,436
Intersegment revenues (1)	64		251			—			—			(315		)	—
Operating profit (loss)	6,723		(5,653		)	(1,276		)	(2,197		)	22			(2,381		)
Depreciation and amortization	941		2,014			409			15			—			3,379
Capital expenditures	750		2,459			7			22			—			3,238

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

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For the Nine Months Ended September 30, 2013:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	116,127	$	28,098		$	15,238		$	—		$	—		$	159,463
Intersegment revenues (1)	67		3,456			15			—			(3,538		)	—
Operating profit (loss)	12,828		(12,394		)	(3,239		)	(7,386		)	(19		)	(10,210		)
Depreciation and amortization	2,841		7,469			1,064			38			—			11,412
Capital expenditures	1,235		4,114			240			378			—			5,967

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

	Total Assets as of
	September 30,			December 31,
Segments:	2013			2012
Towers and Weldments	$	51,054		$	50,801
Gearing	70,561			71,371
Services	15,906			13,976
Assets held for sale	2,152			8,042
Corporate	303,401			308,336
Eliminations	(278,845		)	(309,616		)
	$	164,229		$	142,910

(1)Intersegment revenues generally include a 10% markup over costs and primarily consist of sales from Gearing to Services. Sales from Gearing to Services totaled $3,456 and $1,096 for the nine months ended September 30, 2013 and 2012, respectively.

NOTE 15 — COMMITMENTS AND CONTINGENCIES

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, during the third quarter of 2012, the Company identified a $352 liability associated with the planned sale of the Cicero Avenue Facility. The liability is associated with environmental remediation costs that were identified while preparing the site for sale. During the third quarter, the Company applied for entry into the Illinois Environmental Protection Agency voluntary site remediation program. The Company intends to submit its environmental sampling data, as well as its remedial objectives plan, during the fourth quarter. The Company will continue to reevaluate its reserve balance associated with this matter as it gathers additional information. As of September 30, 2013, the accrual balance remaining is $242.

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

16

amounts paid to customers under warranty provisions. As of September 30, 2013 and 2012, estimated product warranty liability was $675 and $751, 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, 2013 and 2012 were as follows:

	For the Nine Months Ended September 30,
	2013			2012
Balance, beginning of period	$	707		$	983
Reduction of warranty reserve	(25		)	(133		)
Warranty claims	(7		)	(99		)
Balance, end of period	$	675		$	751

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 collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due 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 collectability 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, 2013 and 2012 consists of the following:

	For the Nine Months Ended September 30,
	2013			2012
Balance at beginning of period	$	453		$	438
Bad debt expense	(38		)	200
Write-offs	(236		)	(123		)
Balance at end of period	$	179		$	515

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 and dependent on actual losses sustained by the customer. The Company does not believe that potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of September 30, 2013.

Workers’ Compensation Reserves

At the beginning of the third quarter of 2013, the Company began to self-insure for its workers’ compensation liabilities, including reserves for self-retained losses. Historical loss experience combined with actuarial evaluation methods and the application of risk transfer programs are used to determine required workers’ compensation reserves. The Company takes into account claims incurred but not reported when determining its workers’ compensation reserves. Although the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred, 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.

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Other

As of September 30, 2013, approximately 19% 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 2017, respectively.

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 tax 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, including a loan origination payment of $320, has been included as other assets in the Company’s condensed consolidated balance sheet as of September 30, 2013. The NMTC Transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Capital One’s interest in the third quarter of 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 expects that Capital One will exercise the put option 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. In making this determination, 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 $2,600 is included in Long Term Debt, Net of Current Maturities in the condensed consolidated balance sheet as of September 30, 2013. Incremental costs to maintain the transaction structure during the compliance period will be recognized as they are incurred.

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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 began 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. 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 reclassified the Brandon Facility property and equipment to Assets Held for Sale and the related indebtedness to Liabilities Held for Sale. In April 2013 the Company completed the sale of the Brandon Facility, generating approximately $8,000 in net proceeds after closing costs and the repayment of the mortgage on the Brandon Facility. Including the sale of the Brandon Facility, the Company has so far closed or reduced its leased presence at six facilities and achieved a reduction of approximately 400,000 square feet. During 2013, the Company determined that its Clintonville, Wisconsin was no longer required in its operations and reclassified the property and equipment associated with this facility, as well as certain Gearing equipment, to Assets Held for Sale. The most significant remaining reduction relates to the anticipated closure and disposition of the Cicero Avenue Facility. The Company believes its 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.

In the third quarter of 2012, the Company identified a $352 liability associated with the planned sale of the Cicero Avenue Facility. 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, and as of September 30, 2013 the accrual balance remaining is $242.

Additional restructuring plans were approved in the fourth quarter of 2011. Including costs incurred to date, the Company expects that a total of approximately $13,300 of net costs will be incurred to implement this restructuring initiative. To date, the Company has incurred approximately $8,500, or 64% of the total expected restructuring costs. Of the total projected costs, the Company anticipates that a total of approximately $5,400 will consist of non-cash charges. Restructuring costs incurred to date include $900 of involuntary terminations and $1,500 of accelerated depreciation of the Cicero Avenue Facility. The table below details the Company’s total net restructuring charges incurred to date and the total net expected restructuring charges as of September 30, 2013:

	2011		2012		Q1 ‘13			Q2 ‘13			Q3 ‘13		Total			Total
	Actual		Actual		Actual			Actual			Actual		Incurred			Projected
Capital expenditures:
Gearing	$	5	$	2,072	$	359		$	817		$	514	$	3,767		$	5,007
Corporate	—		524		277			—			—		801			801
Total capital expenditures	5		2,596		636			817			514		4,568			5,808
Cash expenses:
Cost of sales:
Gearing	131		308		157			886			840		2,322			3,295
Services	—		225		119			115			—		459			459
Total cost of sales	131		533		276			1,001			840		2,781			3,754
Selling, general, and administrative expenses:
Towers	—		130		78			37			50		295			295
Gearing	35		520		65			67			28		715			715
Services	—		40		—			—			—		40			40
Corporate	406		49		458			3			1		917			917
Total selling, general and administrative expenses	441		739		601			107			79		1,967			1,967
Other - Towers and Weldments gain on Brandon Facility:	—		—		—			(3,586		)	1		(3,585		)	(3,585		)
Non-cash expenses:
Towers	—		—		290			—			—		290			290
Gearing	247		1,166		179			550			257		2,399			4,989
Services	—		58		(15		)	—			—		43			43
Corporate	50		—		—			—			—		50			50
Total non-cash expenses	297		1,224		454			550			257		2,782			5,372
Grand total	$	874	$	5,092	$	1,967		$	(1,111	)	$	1,691	$	8,513		$	13,316

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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, 2012. 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

Although we have significantly expanded our weldments revenues, our Towers and Weldments segment is still largely linked to new wind installations. Wind tower demand was strong through most of 2012, but weakened in the last quarter of the year as the market reacted to the scheduled expiration of the federal production tax credit (“PTC”) supporting the U.S. wind industry. Due to the scheduled expiration of the PTC and a federal trade case affecting imports of wind towers from certain Asian countries, 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. New supporting legislation was approved in early 2013 that extended the PTC for new wind projects that start construction in calendar year 2013 and are completed by the end of 2015. This has generated significant demand for wind tower production, although actual wind farm construction and installation activity has been very weak in the first three quarters of 2013. With the new tax credit legislation in place, we received follow-on tower orders from two large turbine manufacturers. As a result, this segment continues to experience year-over-year growth in revenue and profitability, as well as increased order intake. At September 30, 2013, we had $141 million in towers backlog of which $43 million is scheduled for shipment in 2013.

In our Gearing segment, while we still have significant sales to support the installed base of wind turbines, we have diversified into industrial products for oil and gas, mining and rail customers. Sales to support the natural gas and mining industry softened in 2013. Consequently, we have experienced reduced orders and revenues from large customers in our Gearing segment for the year-to-date, although our order intake has recovered somewhat in the most recent quarter. In addition, our Gearing business continues to experience production delays and inefficiencies attributable to our plant consolidation and our transition to increased volumes of complex gearbox production.

In our Services segment, the low level of wind farm construction and installations in 2013 negatively affected our Services segment revenue, both directly and indirectly, as wind farm operators have increasingly performed non-routine maintenance projects themselves.

During 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.

In 2011, we concluded that our manufacturing footprint and fixed cost base were too large and expensive for our medium-term needs. We are executing a plan to reduce our facility footprint by approximately 40% through the sale and/or closure of facilities comprising a total of approximately 600,000 square feet. In April 2013, we completed the sale of our idle 146,000 square foot Brandon, South Dakota tower manufacturing facility (the “Brandon Facility”), generating approximately $8,000 in net proceeds after closing costs and the repayment of the mortgage on the Brandon Facility. To date, we have closed or reduced our leased presence at six facilities and achieved a reduction of approximately 400,000 square feet. The most significant remaining reduction relates to the anticipated closure and disposition of one of our Cicero, Illinois gearing facilities. 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. These factors have required management to reassess its estimates of the fair value of some of our assets.

We expect to incur net restructuring costs associated with the restructuring plan totaling an estimated $13,300, of which $8,500 (or 64%) has been incurred through September 30, 2013. Costs are expected to include approximately $5,800 in capital expenditures and $7,500 in net expenses, of which approximately $5,400 is anticipated to be non-cash expenses and $2,100 is anticipated to be cash expenses. We anticipate annual savings going forward of approximately $6,000 related to the restructuring.

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2013, Compared to Three Months Ended September 30, 2012

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, 2013, compared to the three months ended September 30, 2012.

	Three Months Ended September 30,										2013 vs. 2012
	2013			% of Total Revenue		2012			% of Total Revenue		$ Change			% Change
Revenues	$	62,436		100.0	%	$	55,045		100.0	%	$	7,391		13.4	%
Cost of sales	56,783			90.9	%	52,097			94.6	%	4,686			9.0	%
Restructuring	1,097			1.8	%	233			0.4	%	864			370.8	%
Gross profit	4,556			7.3	%	2,715			5.0	%	1,841			67.8	%
Operating expenses
Selling, general and administrative expenses	5,247			8.4	%	5,197			9.4	%	50			1.0	%
Intangible amortization	111			0.2	%	664			1.2	%	(553		)	-83.3	%
Regulatory settlement	1,500			2.4	%	—			0.0	%	1,500			#DIV/0!
Restructuring	79			0.1	%	381			0.7	%	(302		)	-79.3	%
Total operating expenses	6,937			11.1	%	6,242			11.3	%	695			11.1	%
Operating loss	(2,381		)	-3.8	%	(3,527		)	-6.3	%	1,146			32.5	%
Other income (expense)
Interest expense, net	(177		)	-0.3	%	(553		)	-1.0	%	376			68.0	%
Other, net	(4		)	0.0	%	148			0.3	%	(152		)	-102.7	%
Restructuring	(1		)	0.0	%	(15		)	0.0	%	14			93.3	%
Total other income (expense), net	(182		)	-0.3	%	(420		)	-0.7	%	238			56.7	%
Net loss from continuing operations before provision for income taxes	(2,563		)	-4.1	%	(3,947		)	-7.0	%	1,384			35.1	%
Provision (benefit) for income taxes	28			0.0	%	(9		)	0.0	%	37			411.1	%
Loss from continuing operations	(2,591		)	-4.1	%	(3,938		)	-7.0	%	1,347			34.2	%
Loss from discontinued operations, net of tax	100			0.2	%	—			0.0	%	100			#DIV/0!
Net loss	$	(2,491	)	-3.9	%	$	(3,938	)	-7.0	%	$	1,447		36.7	%

Consolidated

Revenues increased by $7,391, from $55,045 during the three months ended September 30, 2012, to $62,436 during the three months ended September 30, 2013. We experienced a significant increase in Towers and Weldments revenue, partially offset by decreases in our Gearing and Services business segments. Towers and Weldments revenues increased 30% while tower sections sold only increased by 18% in the current year period because we produced a larger number of smaller sections in the prior year period. Weldments revenue decreased 29% over the prior year quarter due to a downturn in customer demand related to the mining industry. Gearing segment revenues decreased by 8% due to decreased mining related sales due to a decline in industrial demand as compared to the prior year quarter, as well as a lower order intake during the first half of the year. Services segment revenues decreased by 46% as a result of lower gearbox sales and lower construction and field service activity compared to the prior year quarter.

Gross profit increased by $1,841, from $2,715 during the three months ended September 30, 2012, to $4,556 during the three months ended September 30, 2013. The increase in gross profit was attributable to increased Towers and Weldments volumes and margins on the current mix of towers, partially offset by lower margins and lower volumes in Gearing and Services. As a result, our total gross margin increased from 5.0% during the three months ended September 30, 2012, to 7.3% during the three months ended September 30, 2013. Gross profit margin, excluding restructuring charges, increased 69% to 9.1% in the current year period from 5.4% in the prior year quarter.

Selling, general and administrative expenses increased by $50, from $5,197 during the three months ended September 30, 2012, to $5,247 during the three months ended September 30, 2013. The increase was primarily attributable to higher legal and professional expenses, partially offset by lower employee compensation expenses. Selling, general and administrative expenses as a percentage of sales decreased from 9.4% in the prior year quarter to 8.4% in the current year quarter.

Intangible amortization expense decreased from $664 during the three months ended September 30, 2012, to $111 during the three months ended September 30, 2013. The decrease was attributable to the accelerated amortization of a portion of our customer relationship intangible assets over a one-year period, starting in July 2012 and ending with full amortization as of June 30, 2013.

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Restructuring operating expenses decreased from $381 during the three months ended September 30, 2012, to $79 during the three months ended September 30, 2013. We also recorded a $1,500 regulatory settlement charge in the current year third quarter in conjunction with entering into a plea agreement with the United States Attorney’s Office related to an existing environmental investigation from prior years (the “Plea Agreement”).

Net loss decreased from $3,938 during the three months ended September 30, 2012, to $2,491 during the three months ended September 30, 2013, as a result of the factors described above, and a $100 gain on discontinued operations.

Towers and Weldments Segment

The following table summarizes the Towers and Weldments segment operating results for the three months ended September 30, 2013 and 2012:

	Three Months Ended
	September 30,
	2013			2012
Revenues	$	48,658		$	37,423
Operating income	6,723			1,740
Operating margin	13.8		%	4.6		%

Towers and Weldments revenues increased by $11,235, from $37,423 during the three months ended September 30, 2012, to $48,658 during the three months ended September 30, 2013. Towers and Weldments revenues increased 30% due to increased customer demand and better operational throughput in our production facilities. Weldments revenue for large industrial customers decreased 29% as compared to the prior year period, due to a downturn in customer demand related to the weak mining industry; we expect continued weakness in this section in the near to mid-term.

Towers and Weldments segment operating income increased by $4,983, from $1,740 during the three months ended September 30, 2012, to $6,723 during the three months ended September 30, 2013. The significant increase in operating income was attributable to increased volumes and margins on the current mix of towers which includes less variability in tower designs than in the prior year quarter, the resultant increase in labor productivity in the current quarter, and the reduction of production inefficiencies experienced in the prior year quarter. Operating margin increased from 4.6% during the three months ended September 30, 2012, to 13.8% during the three months ended September 30, 2013.

Gearing Segment

The following table summarizes the Gearing segment operating results for the three months ended September 30, 2013 and 2012:

	Three Months Ended
	September 30,
	2013			2012
Revenues	$	10,389		$	11,256
Operating loss	(5,653		)	(2,637		)
Operating margin	-54.4		%	-23.4		%

Gearing segment revenues decreased by $867, from $11,256 during the three months ended September 30, 2012, to $10,389 during the three months ended September 30, 2013. The 8% decrease in total revenues was due to decreased mining related sales due to a decline in industrial demand, as compared to the prior year quarter.

Gearing segment operating loss increased by $3,016, from $2,637 during the three months ended September 30, 2012, to $5,653 during the three months ended September 30, 2013. The increase in operating loss was due to lower sales and production volumes, an unfavorable product mix, increased restructuring expenses, as well as a $1,500 regulatory settlement charge recorded in conjunction with entering into the Plea Agreement. These factors were partially offset by lower depreciation and amortization. As a result of the factors described above, operating margin deteriorated from (23.4%) during the three months ended September 30, 2012, to (54.4%) during the three months ended September 30, 2013.

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Services Segment

The following table summarizes the Services segment operating results for the three months ended September 30, 2013 and 2012:

	Three Months Ended
	September 30,
	2013			2012
Revenues	$	3,704		$	6,899
Operating loss	(1,276		)	(570		)
Operating margin	-34.4		%	-8.3		%

Services segment revenues decreased by $3,195, from $6,899 during the three months ended September 30, 2012, to $3,704 during the three months ended September 30, 2013. The 46% decrease in revenue was a result of lower gearbox sales, and lower construction and field service activity, compared to the prior year quarter. The low level of wind farm construction and installations in the third quarter of 2013 negatively affected our Services revenue, both directly and indirectly, as wind farm operators have increasingly performed non-routine maintenance projects themselves.

Services segment operating loss increased by $706, from $570 during the three months ended September 30, 2012, to $1,276 during the three months ended September 30, 2013. The decline was due to a charge of $238 related to a provision for obsolete inventory as well as lower revenues, partly offset by lower operating expenses as we reduced headcount in reaction to lower levels of activity. Operating margin declined from (8.3%) during the three months ended September 30, 2012, to (34.4%) during the three months ended September 30, 2013.

Corporate and Other

Corporate and Other expenses increased by $115, from $2,060 during the three months ended September 30, 2012, to $2,175 during the three months ended September 30, 2013. The increase in expense was primarily attributable to increased legal expense of $324, partially offset by lower employee compensation costs of $162.

Nine Months Ended September 30, 2013, Compared to Nine Months Ended September 30, 2012

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, 2013, compared to the nine months ended September 30, 2012.

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	Nine Months Ended September 30,										2013 vs. 2012
	2013			% of Total Revenue		2012			% of Total Revenue		$ Change			% Change
Revenues	$	159,463		100.0	%	$	165,799		100.0	%	$	(6,336	)	-3.8	%
Cost of sales	147,399			92.4	%	158,155			95.4	%	(10,756		)	-6.8	%
Restructuring	2,758			1.7	%	1,038			0.6	%	1,720			165.7	%
Gross profit	9,306			5.9	%	6,606			4.0	%	2,700			40.9	%
Operating expenses
Selling, general and administrative expenses	15,788			9.9	%	16,658			10.0	%	(870		)	-5.2	%
Intangible amortization	1,441			0.9	%	1,094			0.7	%	347			31.7	%
Regulatory settlement	1,500			0.9	%	—			0.0	%	1,500			#DIV/0!
Restructuring	787			0.5	%	481			0.3	%	306			63.6	%
Total operating expenses	19,516			12.2	%	18,233			11.0	%	1,283			7.0	%
Operating loss	(10,210		)	-6.3	%	(11,627		)	-7.0	%	1,417			12.2	%
Other income (expense)
Interest expense, net	(795		)	-0.5	%	(1,053		)	-0.6	%	258			24.5	%
Other, net	511			0.3	%	758			0.5	%	(247		)	-32.6	%
Restructuring	2,965			1.9	%	(86		)	-0.1	%	3,051			3547.7	%
Total other income (expense), net	2,681			1.7	%	(381		)	-0.2	%	3,062			803.7	%
Net loss from continuing operations before provision for income taxes	(7,529		)	-4.6	%	(12,008		)	-7.2	%	4,479			37.3	%
Provision for income taxes	64			0.1	%	21			0.0	%	43			204.8	%
Loss from continuing operations	(7,593		)	-4.7	%	(12,029		)	-7.2	%	4,436			36.9	%
Loss from discontinued operations, net of tax	(110		)	-0.1	%	—			0.0	%	(110		)	N/A
Net loss	$	(7,703	)	-4.8	%	$	(12,029	)	-7.2	%	$	4,326		36.0	%

Consolidated

Revenues decreased by $6,336, from $165,799 during the nine months ended September 30, 2012, to $159,463 during the nine months ended September 30, 2013. We experienced a revenue decline of 24% in our Gearing business segment due to production delays and decreased industrial demand, as compared to the prior year period. We experienced a 6% increase in Towers and Weldments revenue in spite of a reduction of $4,448 attributable to fabrication-only towers sold in the current year period when compared with no fabrication-only towers sold in the prior year period. In our Services business segment, we experienced a decrease in revenue in the current year period compared to the prior year period due to sharp declines in construction activity, partially offset by a one-time industrial project performed by the Gearbox Facility in the first half of 2013.

Gross profit increased by $2,700, from $6,606 during the nine months ended September 30, 2012, to $9,306 during the nine months ended September 30, 2013. The increase in gross profit was attributable to increased Towers and Weldments volumes and margins on the current mix of towers, partially offset by lower margins and lower volumes in Gearing and Services for the period ended September 30, 2013 as compared to the period ended September 30, 2012. As a result, our gross margin increased from 4.0% during the nine months ended September 30, 2012, to 5.9% during the nine months ended September 30, 2013. Gross profit margin excluding restructuring charges increased to 7.6% in the current year period, from 4.6% in the prior year period.

Selling, general and administrative expenses decreased by $870, from $16,658 during the nine months ended September 30, 2012, to $15,788 during the nine months ended September 30, 2013. The decrease was primarily attributable to lower employee costs of $382, lower legal expenses of $234, lower facility costs of $220, lower bad debt of $131, partially offset by a variety of other net items. Selling, general and administrative expenses as a percentage of sales decreased slightly from 10.0% in the prior year period to 9.9% in the current year period.

Intangible amortization expense increased from $1,094 during the nine months ended September 30, 2012, to $1,441 during the nine months ended September 30, 2013. The increase was attributable to the accelerated amortization of a portion of our customer relationship intangible assets over a one-year period, starting in July 2012 and ending with full amortization as of June 30, 2013. Restructuring expenses increased from $481 during the nine months ended September 30, 2012, to $787 during the nine months ended September 30, 2013. We recorded a $1,500 charge in the third quarter 2013 for an expected regulatory settlement associated with the Plea Agreement.

Net loss improved from $12,029 during the nine months ended September 30, 2012, to $7,703 during the nine months ended September 30, 2013, as a result of the factors described above and a $3,586 gain on the sale of the Brandon Facility.

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Towers and Weldments Segment

The following table summarizes the Towers and Weldments segment operating results for the nine months ended September 30, 2013 and 2012:

	Nine Months Ended
	September 30,
	2013			2012
Revenues	$	116,194		$	109,587
Operating income	12,828			3,306
Operating margin	11.0		%	3.0		%

Towers and Weldments revenues increased by $6,607, from $109,587 during the nine months ended September 30, 2012, to $116,194 during the nine months ended September 30, 2013. We experienced somewhat lower volume in the beginning of the current year period, due to the need to ramp up from very low levels of production at the end of 2012. Towers and Weldments revenues increased 6%, while tower sections sold decreased by 3% in the current year period largely because we produced a larger number of smaller sections in the prior year period. In addition, we produced fabrication-only towers in the current year period and none in the prior year period, and consequently our current year period revenue and direct materials were $4,448 lower than if we had sold these units on a complete-tower basis. Weldments revenue for large industrial customers increased 31% as compared to the prior year period, consistent with our strategic focus on diversifying our end-markets; however, our most recent quarter showed our first period-over-period weldments decline due to a downturn in the mining industry.

Towers and Weldments segment operating income increased by $9,522, from $3,306 during the nine months ended September 30, 2012, to $12,828 during the nine months ended September 30, 2013. The increase in operating income was attributable to increased volumes and margins on the current mix of towers which includes less variability in tower designs than in the prior year period, the reduction of production inefficiencies experienced in the prior year period and the expansion of weldments revenue. Operating margin increased from 3.0% during the nine months ended September 30, 2012, to 11.0% during the nine months ended September 30, 2013.

Gearing Segment

The following table summarizes the Gearing segment operating results for the nine months ended September 30, 2013 and 2012:

	Nine Months Ended
	September 30,
	2013			2012
Revenues	$	31,554		$	41,352
Operating loss	(12,394		)	(5,390		)
Operating margin	-39.3		%	-13.0		%

Gearing segment revenues decreased by $9,798, from $41,352 during the nine months ended September 30, 2012, to $31,554 during the nine months ended September 30, 2013. The 24% decrease in total revenues was due to production delays attributable to our plant consolidation and the transition to increased volumes of complex gearbox production, and decreased mining and natural gas related sales due to a decline in industrial demand, as compared to the prior year period.

Gearing segment operating loss increased by $7,004, from $5,390 during the nine months ended September 30, 2012, to $12,394 during the nine months ended September 30, 2013. The increase in operating loss was due to lower sales and production volumes, an unfavorable product mix, increased restructuring expenses, and a $1,500 regulatory settlement associated with the Plea Agreement, partially offset by lower depreciation and lower employee compensation expense. As a result of the factors described above, operating margin deteriorated from (13.0%) during the nine months ended September 30, 2012, to (39.3%) during the nine months ended September 30, 2013.

Services Segment

The following table summarizes the Services segment operating results for the nine months ended September 30, 2013 and 2012:

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	Nine Months Ended
	September 30,
	2013			2012
Revenues	$	15,253		$	16,037
Operating loss	(3,239		)	(3,331		)
Operating margin	-21.2		%	-20.8		%

Services segment revenues decreased by $784, from $16,037 during the nine months ended September 30, 2012, to $15,253 during the nine months ended September 30, 2013. The 5% decrease in revenue was primarily the result of greatly decreased construction activity, partially offset by a one-time industrial project performed in the first half of 2013 at the Gearbox Facility. The low level of wind farm construction and installations in 2013 negatively affected our Services revenue, both directly and indirectly, as wind farm operators have performed non-routine maintenance projects themselves.

Services segment operating loss improved by $92, from $3,331 during the nine months ended September 30, 2012, to $3,239 during the nine months ended September 30, 2013. The slight improvement reflects higher margins in the first half of the year due to the one-time industrial project, and lower margins in the third quarter offset by lower operating expenses due to a reduction in headcount in response to the downturn in activity experienced in the current year period. Operating margin deteriorated from (20.8%) during the nine months ended September 30, 2012, to (21.2%) during the nine months ended September 30, 2013.

Corporate and Other

Corporate and Other expenses increased by $1,193, from $6,212 during the nine months ended September 30, 2012, to $7,405 during the nine months ended September 30, 2013. The increase in expense was primarily attributable to increased restructuring expense of $451, increased employee compensation costs of $106, increased professional fees of $240, and increased legal expenses of $178.

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, 2013 and 2012. 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 accounting principles generally accepted in the United States (“GAAP”). We believe that Adjusted EBITDA is particularly meaningful due principally to the role acquisitions have played in our development and because of the significant restructuring activity underway since 2011. Historically, our growth through acquisitions has resulted in 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, 2013 and 2012, as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
	(unaudited)						(unaudited)
Operating loss	$	(2,381	)	$	(3,527	)	$	(10,210	)	$	(11,627	)
Depreciation and amortization	3,178			4,195			10,826			11,590
Restructuring	1,176			614			3,545			1,519
Other income	(4		)	148			511			758
Share-based compensation and other stock payments	645			982			1,970			2,619
Adjusted EBITDA	$	2,614		$	2,412		$	6,642		$	4,859

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, workers

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compensation expense 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, 2012 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.

Due to the Gearing segment’s operating losses in each of the first three quarters of 2013 combined with its history of continued operating losses, we continue to evaluate the recoverability of certain of our intangible assets associated with the Gearing segment. Based upon our September 30, 2013 assessment, the recoverable amount was in excess of the carrying amount of the related assets by 120%, and no impairment to these assets was indicated. To the extent the projections used in our analysis are not achieved, there may be a negative effect on the valuation of these assets.

Long-Lived Assets

We review property and equipment and other long-lived assets for impairment whenever events or circumstances indicate that their 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 assets. 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 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.

Due to the Gearing and Services segments’ operating losses in each of the first three quarters of 2013 combined with their history of continued operating losses, we continue to evaluate the recoverability of certain of the long-lived assets associated with the Services and Gearing segments. Based upon our September 30, 2013 assessment, the recoverable amount of undiscounted cash flows based upon our most recent projections exceeded the carrying amount of invested capital by 120% and 56% for the Gearing and Services segments, respectively, and no impairment to these assets was indicated. To the extent projections used in our evaluations are not achieved, there may be a negative effect on the valuation of these assets.

During the first half of 2013, we took a $288 charge to adjust the carrying value of our Clintonville, Wisconsin facility assets to fair value, and reclassified the resulting $790 carrying value from property and equipment to Assets Held for Sale. This treatment was due to our decision to list the property for sale as a result of our determination that the property was no longer required in our operations. Additionally, we took a $345 charge to adjust the carrying value of certain Gearing equipment to fair value, and reclassified the resulting $1,400 carrying value to Assets Held for Sale as a result of a decision to sell this equipment.

Workers’ Compensation Reserves

At the beginning of the third quarter of 2013, we began to self-insure for our workers’ compensation liabilities that include reserves for self-retained losses. Historical loss experience combined with actuarial evaluation methods and the application of risk transfer programs are used to determine required workers’ compensation reserves. We take into account claims incurred but not reported when determining our workers’ compensation reserves. Workers’ compensation reserves are included in accrued liabilities. While we believe that we have adequately reserved for these claims, the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred.

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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 of 2012, we entered into a 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. Under this 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. At September 30, 2013, the AloStar facility was undrawn and we were in compliance with all applicable covenants.

As of September 30, 2013, cash and cash equivalents and short-term investments totaled $23,693, an increase of $5,826 from June 30, 2013. Debt and capital leases totaled $5,838 at September 30, 2013, and we had the ability to borrow up to $15,480 under the AloStar facility. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, working capital needs, capital expenditures and lease commitments through at least the next 12 months primarily with current cash on hand and cash generated by operations.

While we believe that we will continue to have sufficient cash flows to operate our businesses and meet our financial obligations and debt covenants, there can be no assurances that our operations will generate sufficient cash, that we will be able to comply with applicable loan covenants 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, 2013, net cash provided by operating activities totaled $21,507, compared to net cash used in operating activities of $20,289 during the nine months ended September 30, 2012. The increase in net cash provided by operating activities was primarily attributable to higher receipts of customer deposits associated primarily with tower orders which were used to fund raw material steel purchases.

Investing Cash Flows

During the nine months ended September 30, 2013, net cash provided by investing activities totaled $5,948, compared to net cash used in investing activities of $2,273 during the nine months ended September 30, 2012. The increase in net cash provided by investing activities as compared to the prior year period was primarily attributable to the sale of the Brandon Facility, which resulted in gross proceeds of approximately $12,000.

Financing Cash Flows

During the nine months ended September 30, 2013, net cash used in financing activities totaled $5,145, compared to net cash provided by financing activities of $11,943 during the nine months ended September 30, 2012. The increase in net cash used in financing activities as compared to the prior year period was primarily attributable to increased net payments on outstanding debt including the elimination of our AloStar line of credit balance, and the extinguishment of our Brandon Facility mortgage.

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, 2012. 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

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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, 2012, 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; (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 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 industries in which we compete, including the wind energy industry and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards; (v) our expectations with respect to our customer relationships and efforts to diversify our customer base and sector focus and leverage customer relationships across business units; (vi) our ability to realize revenue from customer orders and backlog; (vii) 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; (viii) our beliefs and expectations relating to the economy and the potential impact it may have on our business, including our customers; (ix) our beliefs regarding the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (x) our expectations relating to the impact of pending securities litigation, the inquiry by the U.S. Securities and Exchange Commission (“SEC”), and environmental compliance matters; and (xi) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code. 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, 2013. 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, 2012.

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 SEC’s rules and forms. This 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, management identified a material weakness in our internal control over financial reporting related to the revenue recognition process in our Towers and Weldments Segment, specifically related to management’s requisite knowledge on the application of the revenue recognition accounting guidance to a purchase order from one of our customers. There was no related impact to our results of operations for any period. As a result of this material weakness, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective.

Subsequent to the discovery of the material weakness, we are in the process of changing our internal control process and procedures and the contractual terms with this customer. We began remediating the material weakness in the third quarter by initiating detailed customer contract reviews and having relevant personnel participate in accounting training classes including SEC reporting and revenue recognition content.

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.

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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, 2012.

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.
October 31, 2013	By:	/s/ Peter C. Duprey
		Peter C. Duprey
		President and Chief Executive Officer
		(Principal Executive Officer)
October 31, 2013	By:	/s/ Stephanie K. Kushner
		Stephanie K. Kushner
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

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EXHIBIT INDEX

BROADWIND ENERGY, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2013

Exhibit Number	Exhibit
10.1	Second Amendment to Loan and Security Agreement dated as of August 23, 2012, by and among the Company, the Subsidiaries and AloStar Bank of Commerce*
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

EXECUTION VERSION

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of September 30, 2013, among BROADWIND ENERGY, INC., a Delaware corporation (“Parent”), BRAD FOOTE GEAR WORKS, INC., an Illinois corporation (“Brad Foote”), BROADWIND SERVICES, LLC, a Delaware limited liability company (“Broadwind Services”), BROADWIND TOWERS, INC., a Wisconsin corporation (“Broadwind Towers” and, together with Parent, Brad Foote and Broadwind Services, each a “Borrower” and collectively the “Borrowers”), 1309 South Cicero Avenue, LLC, a Delaware limited liability company (“South Cicero”), 5100 Neville Road, LLC, a Delaware limited liability company (“Neville” and, together with South Cicero, each a “Guarantor” and collectively the “Guarantors”), and ALOSTAR BANK OF COMMERCE, a state banking institution incorporated or otherwise organized under the laws of the State of Alabama (the “Lender”).

W I T N E S S E T H:

WHEREAS, the Borrowers and the Lender are parties to that certain Loan and Security Agreement dated as of August 23, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”; capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Loan Agreement), pursuant to which the Lender has agreed to make the Commitments available to the Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, the Borrowers have requested that the Lender agree to amend certain terms and conditions of the Loan Agreement; and

WHEREAS, subject to the satisfaction of the conditions set forth herein, the Lender is willing to amend the Loan Agreement as set forth herein.

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Amendments to the Loan Agreement.  Subject to the satisfaction of the conditions to effectiveness referred to in Section 3 hereof, the Loan Agreement is hereby amended as follows:

1.1.Section 1.1 (Defined Terms) of the Loan Agreement is hereby amended by inserting the following definitions of “EPA Expense” and “EPA Fine” in the appropriate alphabetical order:

“EPA Expense” means an amount equal to (a) the amount actually included as an expense in determining net income, minus (b) the amount actually paid in cash, in each case, solely in connection with the assessment and repayment of the EPA Fine for such period; provided, that, upon the Borrower paying the full amount of the EPA Fine, such amount shall reduce to $0.

“EPA Fine” means the fine of $1,500,000 to be assessed against Brad Foote Gear Works, Inc. for violation of the Clean Water Act, Title 33, United States Code, Section 1319(c)(2)(A), to be paid over a term of three (3) years, pursuant to that certain Plea Agreement to be entered into in Case No. 1:13-cr-00760-1 in the United States District Court for the Northern District of Illinois,subject to court approval.

1.2.Clause (c) of Item 16 (Financial Covenants) of the Terms Schedule is hereby amended and restated in its entirety as follows:

“(c)Capital Expenditures.  Parent and its Subsidiaries shall not during any Fiscal Year make Capital Expenditures in an amount exceeding (a) $8,000,000 for Fiscal Year 2013 and (b) $4,000,000 for each Fiscal Year thereafter.”

1.3.Item 16 (Financial Covenants) of the Terms Schedule is hereby amended and modified by amending and restating the definitions of “EBITDA” and “Fixed Charge Coverage Ratio” in their entirety and inserting the following in lieu thereof:

“EBITDA” means, for any period, determined on a consolidated basis for Parent and its consolidated Subsidiaries, net income, calculated before interest expense, provision for income taxes, depreciation and amortization expense, approved cash restructuring expense as described in Parent’s most recent 10Q or 10K, as the case may be, stock compensation expense, gains or losses arising from the sale of capital assets, gains arising from the write-up of assets, any extraordinary gains, and, during the twelve month period commencing on the initial date the EPA Fine is included as an expense in determining net income, the EPA Expense (in each case, to the extent included in determining net income).

“Fixed Charge Coverage Ratio” means, for any period, the quotient obtained by dividing (a) the difference between (i) EBITDA for such period, minus, (ii) the sum of (A) all unfinanced Capital Expenditures made in such period (other than an amount not in excess of $8,000,000 for each period ending on or prior to March 31, 2014) and (B) any Distributions paid by Parent in such period, and (C) cash Taxes paid by Parent in such period (without benefit of any refund), divided by (b) the sum of (i) the current portion of scheduled principal amortization on Debt for Money Borrowed plus (ii) cash interest payments paid by Borrower in such period.”

2.No Other Amendments or Waivers.  The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Lender under the Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Loan Agreement or any of the other Loan Documents.  Except for the amendment and waiver set forth above, the text of the Loan Agreement and all other Loan Documents shall remain unchanged and in full force and effect and each Borrower and each Guarantor hereby ratifies and confirms its obligations thereunder.  This Amendment shall not constitute a modification of the Loan Agreement or any of the other Loan Documents or a course of dealing with the Lender at variance with the Loan Agreement or the other Loan Documents such as to require further notice by the Lender to require strict compliance with the terms of the

2

Loan Agreement and the other Loan Documents in the future, except as expressly set forth herein.  Each Borrower and each Guarantor acknowledges and expressly agrees that the Lender reserves the right to, and does in fact, require strict compliance with all terms and provisions of the Loan Agreement and the other Loan Documents, as amended herein.  No Borrower or Guarantor has knowledge of any challenge to the Lender’s claims arising under the Loan Documents, or to the effectiveness of the Loan Documents.

3.Conditions Precedent to Effectiveness.  This Amendment shall be effective as of the date first written above upon the satisfaction of each of the following conditions precedent in a manner acceptable to the Lender in its sole and absolute discretion:

3.1.the Lender shall have received this Amendment, duly executed by each Borrower and each Guarantor, and the same shall be in full force and effect; and

3.2.no Default or Event of Default shall exist under the Loan Agreement or the other Loan Documents.

4.Counterparts.  This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute one and the same agreement.  In proving this Amendment in any judicial proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought.  Any signatures delivered by a party by facsimile transmission or by electronic mail transmission shall be deemed an original signature hereto.

5.Reference to and Effect on the Loan Documents.  Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Loan Agreement, and each reference in the other Loan Documents to “the Loan Agreement”, “thereunder”, “thereof” or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as amended hereby.

6.Entire Agreement.  This Amendment and the other Loan Documents constitute the entire agreement and understanding between the parties hereto with respect to the transactions contemplated hereby and thereby and supersede all prior negotiations, understandings and agreements between such parties with respect to such transactions.

7.GOVERNING LAW.  THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

8.Loan Document.  This Amendment shall be deemed to be a Loan Document for all purposes.

[remainder of page intentionally left blank]

3

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the day and year first written above.

BORROWERS:
	BROADWIND ENERGY, INC.
	By:	/s/ Stephanie K. Kushner
	Name:	Stephanie K. Kushner
	Title:	Executive Vice President and Chief Financial Officer
	BRAD FOOTE GEAR WORKS, INC.
	By:	/s/ Stephanie K. Kushner
	Name:	Stephanie K. Kushner
	Title:	Authorized Signatory
	BROADWIND SERVICES, LLC
	By:	/s/ Stephanie K. Kushner
	Name:	Stephanie K. Kushner
	Title:	Authorized Signatory
	BROADWIND TOWERS, INC.
	By:	/s/ Stephanie K. Kushner
	Name:	Stephanie K. Kushner
	Title:	Authorized Signatory
GUARANTORS:
	1309 SOUTH CICERO AVENUE, LLC
	By:	/s/ Stephanie K. Kushner
	Name:	Stephanie K. Kushner
	Title:	Authorized Signatory

Second Amendment to Loan and Security Agreement

5100 NEVILLE ROAD, LLC
By:	/s/ Stephanie K. Kushner
Name:	Stephanie K. Kushner
Title:	Authorized Signatory

First Amendment to Loan and Security Agreement and Waiver

LENDER:	ALOSTAR BANK OF COMMERCE
	By:	/s/ Christopher K. Nairne
	Name:	Christopher K. Nairne
	Title:	Director

Second Amendment to Loan and Security Agreement

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: October 31, 2013
	/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: October 31, 2013
	/s/ STEPHANIE K. KUSHNER
	Stephanie K. Kushner
	Executive Vice President and 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 periods ended September 30, 2013, 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.

October 31, 2013
	/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 periods ended September 30, 2013, 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.

October 31, 2013
	/s/ STEPHANIE K. KUSHNER
	Stephanie K. Kushner
	Executive Vice President and 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.

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SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2013

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.

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 depends to a large degree. As of September 30, 2013, the Company had reserved 96,247 shares for issuance upon the exercise of stock options outstanding and 92,209 shares for issuance upon the vesting of restricted stock unit (“RSU”) awards outstanding. As of September 30, 2013, 203,408 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, 2013, the Company had reserved 138,590 shares for issuance upon the exercise of stock options outstanding and 647,250 shares for issuance upon the vesting of RSU awards outstanding. As of September 30, 2013, 111,053 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, 2013 under the Equity Incentive Plans, as follows:

	Options		Weighted Average Exercise Price
Outstanding as of December 31, 2012	286,455		$	26.80
Granted	—		$	—
Exercised	—		$	—
Forfeited	(37,579	)	$	15.94
Expired	(14,039	)	$	103.43
Outstanding as of September 30, 2013	234,837		$	23.96
Exercisable as of September 30, 2013	100,031		$	45.96

The following table summarizes RSU activity during the nine months ended September 30, 2013 under the Equity Incentive Plans, as follows:

	Number of RSU’s		Weighted Average Grant-Date Fair Value Per RSU
Outstanding as of December 31, 2012	761,662		$	6.01
Granted	463,218		$	3.68
Vested	(280,624	)	$	6.76
Forfeited	(204,797	)	$	4.50
Outstanding as of September 30, 2013	739,459		$	4.66

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. There were no stock options granted during the nine months ended September 30, 2013.

The Company utilized a forfeiture rate of 25% during the nine months ended September 30, 2013 and 2012 for estimating the forfeitures of stock compensation 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, 2013 and 2012, as follows:

	Nine Months Ended September 30,
	2013		2012
Share-based compensation expense:
Selling, general and administrative	$	1,438	$	2,079
Income tax benefit (1)	—		—
Net effect of share-based compensation expense on net loss	$	1,438	$	2,079
Reduction in earnings per share:
Basic and diluted earnings per share (2)	$	0.10	$	0.15

(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, 2013 and 2012. 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, 2013 and 2012 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, 2013, 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 $2,879 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.

XML

COMMITMENTS AND CONTINGENCIES (Details 3) (New Markets Tax Credit Transaction, USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Jul. 20, 2011 Broadwind Services
New Markets Tax Credit program
Gross loan from AMCREF to Broadwind Services		$ 10,000
Future tax credit that can be generated	3,900
Tax credit period	7 years
Period which facility must operate and be in compliance	7 years
Amount of tax credits for which the Company may be liable	$ 3,900

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenues	$ 62,436	$ 55,045	$ 159,463	$ 165,799
Cost of sales	56,783	52,097	147,399	158,155
Restructuring	1,097	233	2,758	1,038
Gross profit	4,556	2,715	9,306	6,606
OPERATING EXPENSES:
Selling, general and administrative	5,247	5,197	15,788	16,658
Intangible amortization	111	664	1,441	1,094
Regulatory settlement	1,500		1,500
Restructuring	79	381	787	481
Total operating expenses	6,937	6,242	19,516	18,233
Operating loss	(2,381)	(3,527)	(10,210)	(11,627)
OTHER INCOME (EXPENSE), net:
Interest expense, net	(177)	(553)	(795)	(1,053)
Other, net	(4)	148	511	758
Restructuring	(1)	(15)	2,965	(86)
Total other income (expense), net	(182)	(420)	2,681	(381)
Net loss from continuing operations before provision for income taxes	(2,563)	(3,947)	(7,529)	(12,008)
Provision (benefit) for income taxes	28	(9)	64	21
LOSS FROM CONTINUING OPERATIONS	(2,591)	(3,938)	(7,593)	(12,029)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX	100		(110)
NET LOSS	$ (2,491)	$ (3,938)	$ (7,703)	$ (12,029)
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
Loss from continuing operations (in dollars per share)	$ (0.18)	$ (0.28)	$ (0.53)	$ (0.86)
Loss from discontinued operations (in dollars per share)	$ 0.01		$ (0.01)
Net loss (in dollars per share)	$ (0.17)	$ (0.28)	$ (0.53)	$ (0.86)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted (in shares)	14,525	14,093	14,405	14,022

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CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

9 Months Ended

Sep. 30, 2013

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

NOTE 4 — CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

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. Marketable investments with original maturities between three and twelve months are recorded as short-term investments. 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, 2013 and December 31, 2012, cash and cash equivalents totaled $22,826 and $516, respectively, and short-term investments totaled $867 and $0, respectively. The components of cash and cash equivalents and short-term investments as of September 30, 2013 and December 31, 2012 are summarized as follows:

	September 30,		December 31,
	2013		2012
Cash and cash equivalents:
Cash	$	14,640	$	464
Municipal bonds	8,186		52
Total cash and cash equivalents	22,826		516
Short-term investments (available-for-sale):
Municipal bonds	867		—
Total cash and cash equivalents and short-term investments	23,693		516

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2013

EARNINGS PER SHARE

Reconciliation of basic and diluted earnings per share

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Basic earnings per share calculation:
Net loss	$	(2,491	)	$	(3,938	)	$	(7,703	)	$	(12,029	)
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Basic net loss per share	$	(0.17	)	$	(0.28	)	$	(0.53	)	$	(0.86	)
Diluted earnings per share calculation:
Net loss	$	(2,491	)	$	(3,938	)	$	(7,703	)	$	(12,029	)
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Common stock equivalents:
Stock options and unvested restricted stock units (1)	—			—			—			—
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Diluted net loss per share	$	(0.17	)	$	(0.28	)	$	(0.53	)	$	(0.86	)

(1) Stock options and unvested restricted stock units granted and outstanding of 974,296 and 1,064,525 as of September 30, 2013 and 2012, 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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LEGAL PROCEEDINGS

9 Months Ended

Sep. 30, 2013

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 (the “USDC”) against the Company and certain of its current or former officers and directors. The lawsuit was purportedly brought on behalf of purchasers of the Company’s common stock between March 17, 2009 and August 9, 2010. A lead plaintiff was appointed and an amended complaint was filed on September 13, 2011. The amended complaint named as additional defendants certain of the Company’s current and former directors, certain Tontine entities, and Jeffrey Gendell, a principal of Tontine. The complaint sought 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 “Offering”). The plaintiffs alleged 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 GAAP 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 relied 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 USDC granted in part and denied in part the Company’s motion. The USDC 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 USDC dismissed all claims with prejudice against the named Tontine entities and Mr. Gendell. The USDC 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. The plaintiffs’ class certification was filed on June 22, 2012, and the parties agreed to a briefing schedule. The parties participated in a mediation session on August 20, 2012, and reached agreement on a settlement of the matter in the amount of $3,915, which is payable by the Company’s insurance carrier. The USDC granted final approval of the settlement on June 27, 2013.

Between February 15, 2011 and March 30, 2011, three putative shareholder derivative lawsuits were filed in the USDC 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 Offering. One of the lawsuits also alleged 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 USDC were subsequently consolidated, and on May 15, 2012, the USDC granted the defendants’ motion to dismiss the consolidated cases and also entered an order dismissing the third case. The Company received a request from the Tontine defendants for indemnification in the derivative suits and the class action lawsuit 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.  The Company subsequently entered into an agreement with Tontine providing, among other things, for a settlement of these indemnification claims and related matters for a payment of $495. Because of the preliminary nature of these matters, the Company is not able to estimate a loss or range of loss, if any, that may be incurred in connection with these matters 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, which most likely arose out of a whistleblower complaint that the SEC received related to revenue recognition, cost accounting and intangible and fixed asset valuations at Brad Foote. The Company has been in regular contact with the SEC, and in its communications the SEC has clarified or supplemented its requests. The Company has produced documents responsive to such requests and completed the process of responding to the subpoena for documents. Following the issuance of subpoenas for testimony, the SEC has deposed certain current and former Brad Foote and Company employees. 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. 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. All pending reimbursement requests from Tontine related to the SEC inquiry were resolved in the above-referenced settlement.

Environmental

The Company is aware of an investigation commenced by the United States Attorney’s Office, Northern District of Illinois (“USAO”), for potential violation of federal environmental laws. On February 15, 2011, pursuant to a search warrant, officials from the United States Environmental Protection Agency (“USEPA”) entered and conducted a search of a Brad Foote facility in Cicero, Illinois (the “Cicero Avenue Facility”) 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 a grand jury subpoena requesting testimony and the production of certain documents relating to the Cicero Avenue 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 Cicero Avenue Facility’s employees, environmental and manufacturing processes, and disposal practices. On April 5, 2012, the Company received a letter from the USAO requesting the production of certain financial records from 2008 to the present. The Company has completed its response to the subpoenas and to the USAO’s request. The Company has also voluntarily instituted corrective measures at the Cicero Avenue Facility, including changes to its wastewater disposal practices. On September 24, 2013, the USAO commenced a criminal action in the USDC based on this investigation. Brad Foote has agreed to enter into a plea agreement with the USAO (the “Plea Agreement”) with regard to this criminal action, pursuant to which Brad Foote would plead guilty to one count of knowingly violating the Clean Water Act, Title 33, United States Code, Section 1319(c)(2)(A) and pay a $1,500 fine (payable in three installments of $500 within three years of the date of sentencing). The Plea Agreement is subject to the approval of the USDC.

Other

The Company is also a party to additional claims and legal proceedings arising in the ordinary course of business, none of which is deemed to be individually significant at this time. 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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SHARE-BASED COMPENSATION (Details 3) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Summary of share-based compensation expense
Net effect of share-based compensation expense on net loss	$ 1,438	$ 2,079
Reduction in earnings per share:
Basic and diluted earnings per share (in dollars per share)	$ 0.10	$ 0.15
Pre-tax compensation expense for all unvested share-based awards	2,879
Selling, general and administrative
Summary of share-based compensation expense
Share-based compensation expense	$ 1,438	$ 2,079

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CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Short-term investments	$ 867	$ 0
Cash and cash equivalents and short-term investments
Total cash and cash equivalents	22,826	516	2,721	13,340
Short-term investments (available-for-sale)	867	0
Total cash and cash equivalents and short-term investments	23,693	516
Cash
Cash and cash equivalents and short-term investments
Total cash and cash equivalents	14,640	464
Municipal bonds
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Short-term investments	867
Cash and cash equivalents and short-term investments
Total cash and cash equivalents	8,186	52
Short-term investments (available-for-sale)	$ 867

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2013

INTANGIBLE ASSETS

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

	September 30, 2013								December 31, 2012
								Weighted								Weighted
						Net		Average						Net		Average
	Cost		Accumulated			Book		Amortization	Cost		Accumulated			Book		Amortization
	Basis		Amortization			Value		Period	Basis		Amortization			Value		Period
Intangible assets:
Customer relationships	$	3,979	$	(3,584	)	$	395	7.2	$	3,979	$	(2,444	)	$	1,535	7.2
Trade names	7,999		(2,380		)	5,619		20.0	7,999		(2,080		)	5,919		20.0
Intangible assets	$	11,978	$	(5,964	)	$	6,014	15.8	$	11,978	$	(4,524	)	$	7,454	15.8

Schedule of estimated future amortization expense

As of September 30, 2013, estimated future amortization expense is as follows:

2013	$	111
2014	444
2015	444
2016	444
2017	444
2018 and thereafter	4,127
Total	$	6,014

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INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2013

INVENTORIES

Schedule of the components of inventories

	September 30,			December 31,
	2013			2012
Raw materials	$	18,220		$	8,697
Work-in-process	11,461			9,505
Finished goods	4,642			4,558
	34,323			22,760
Less: Reserve for excess and obsolete inventory	(1,698		)	(772		)
Net inventories	$	32,625		$	21,988

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SHARE-BASED COMPENSATION (Details) (USD $)	9 Months Ended
	Sep. 30, 2013
2007 EIP
SHARE-BASED COMPENSATION
Number of shares of common stock reserved for grants	691,051
Common stock issued under share-based compensation plan	203,408
2012 EIP
SHARE-BASED COMPENSATION
Number of shares of common stock reserved for grants	1,200,000
Common stock issued under share-based compensation plan	111,053
Stock Options
SHARE-BASED COMPENSATION
Expiration term	10 years
Summary of the stock option activity
Outstanding at the beginning of the period (in shares)	286,455
Forfeited (in shares)	(37,579)
Expired (in shares)	(14,039)
Outstanding at the end of the period (in shares)	234,837
Exercisable (in shares)	100,031
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 26.80
Forfeited (in dollars per share)	$ 15.94
Expired (in dollars per share)	$ 103.43
Outstanding at the end of the period (in dollars per share)	$ 23.96
Exercisable (in dollars per share)	$ 45.96
Stock Options | 2007 EIP
SHARE-BASED COMPENSATION
Number of shares reserved	96,247
Stock Options | 2012 EIP
SHARE-BASED COMPENSATION
Number of shares reserved	138,590
Stock Options | Minimum
SHARE-BASED COMPENSATION
Vesting term	1 year
Stock Options | Maximum
SHARE-BASED COMPENSATION
Vesting term	5 years
Restricted stock unit (RSU) | 2007 EIP
SHARE-BASED COMPENSATION
Number of shares reserved	92,209
Restricted stock unit (RSU) | 2012 EIP
SHARE-BASED COMPENSATION
Number of shares reserved	647,250
Restricted stock unit (RSU) | Minimum
SHARE-BASED COMPENSATION
Vesting term	1 year
Restricted stock unit (RSU) | Maximum
SHARE-BASED COMPENSATION
Vesting term	5 years

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RESTRUCTURING (Tables)

9 Months Ended

Sep. 30, 2013

RESTRUCTURING

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

	2011		2012		Q1 ‘13			Q2 ‘13			Q3 ‘13		Total			Total
	Actual		Actual		Actual			Actual			Actual		Incurred			Projected
Capital expenditures:
Gearing	$	5	$	2,072	$	359		$	817		$	514	$	3,767		$	5,007
Corporate	—		524		277			—			—		801			801
Total capital expenditures	5		2,596		636			817			514		4,568			5,808
Cash expenses:
Cost of sales:
Gearing	131		308		157			886			840		2,322			3,295
Services	—		225		119			115			—		459			459
Total cost of sales	131		533		276			1,001			840		2,781			3,754
Selling, general, and administrative expenses:
Towers	—		130		78			37			50		295			295
Gearing	35		520		65			67			28		715			715
Services	—		40		—			—			—		40			40
Corporate	406		49		458			3			1		917			917
Total selling, general and administrative expenses	441		739		601			107			79		1,967			1,967
Other - Towers and Weldments gain on Brandon Facility:	—		—		—			(3,586		)	1		(3,585		)	(3,585		)
Non-cash expenses:
Towers	—		—		290			—			—		290			290
Gearing	247		1,166		179			550			257		2,399			4,989
Services	—		58		(15		)	—			—		43			43
Corporate	50		—		—			—			—		50			50
Total non-cash expenses	297		1,224		454			550			257		2,782			5,372
Grand total	$	874	$	5,092	$	1,967		$	(1,111	)	$	1,691	$	8,513		$	13,316

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INTANGIBLE ASSETS (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
INTANGIBLE ASSETS
Weighted Average Amortization Period	15 years 9 months 18 days	15 years 9 months 18 days
Impairment of assets	$ 0
Cost Basis	11,978	11,978
Accumulated Amortization	(5,964)	(4,524)
Net Book Value	6,014	7,454
Estimated future amortization expense
2013	111
2014	444
2015	444
2016	444
2017	444
2018 and thereafter	4,127
Net Book Value	6,014	7,454
Minimum
INTANGIBLE ASSETS
Weighted Average Amortization Period	10 years
Maximum
INTANGIBLE ASSETS
Weighted Average Amortization Period	20 years
Customer relationships
INTANGIBLE ASSETS
Weighted Average Amortization Period	7 years 2 months 12 days	7 years 2 months 12 days
Cost Basis	3,979	3,979
Accumulated Amortization	(3,584)	(2,444)
Net Book Value	395	1,535
Estimated future amortization expense
Net Book Value	395	1,535
Trade names
INTANGIBLE ASSETS
Weighted Average Amortization Period	20 years	20 years
Cost Basis	7,999	7,999
Accumulated Amortization	(2,380)	(2,080)
Net Book Value	5,619	5,919
Estimated future amortization expense
Net Book Value	$ 5,619	$ 5,919

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LEGAL PROCEEDINGS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended	0 Months Ended	1 Months Ended			1 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 24, 2013 Potential violation of federal environmental laws item	Feb. 28, 2011 Potential violation of federal environmental laws item	Feb. 28, 2011 Putative class action item	Aug. 20, 2012 Putative class action	Mar. 30, 2011 Putative shareholder derivative lawsuits item	Sep. 30, 2013 Putative shareholder derivative lawsuits	Sep. 30, 2013 SEC Inquiry
LEGAL PROCEEDINGS
Number of alleged confidential informants					6
Settlement amount payable						$ 3,915		$ 495
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
Estimated loss due to legal matter									0
Number of facilities where search was conducted				1
Amount of fine	1,500	1,500	1,500
Number of installments over which fine is payable			3
Fine payable under each installment			$ 500
Period over which fine is payable			3 years

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SHARE-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2013

SHARE-BASED COMPENSATION

Schedule of stock option activity

	Options		Weighted Average Exercise Price
Outstanding as of December 31, 2012	286,455		$	26.80
Granted	—		$	—
Exercised	—		$	—
Forfeited	(37,579	)	$	15.94
Expired	(14,039	)	$	103.43
Outstanding as of September 30, 2013	234,837		$	23.96
Exercisable as of September 30, 2013	100,031		$	45.96

Schedule of RSU activity

	Number of RSU’s		Weighted Average Grant-Date Fair Value Per RSU
Outstanding as of December 31, 2012	761,662		$	6.01
Granted	463,218		$	3.68
Vested	(280,624	)	$	6.76
Forfeited	(204,797	)	$	4.50
Outstanding as of September 30, 2013	739,459		$	4.66

Schedule of share-based compensation expense

	Nine Months Ended September 30,
	2013		2012
Share-based compensation expense:
Selling, general and administrative	$	1,438	$	2,079
Income tax benefit (1)	—		—
Net effect of share-based compensation expense on net loss	$	1,438	$	2,079
Reduction in earnings per share:
Basic and diluted earnings per share (2)	$	0.10	$	0.15

(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, 2013 and 2012. 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, 2013 and 2012 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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FAIR VALUE MEASUREMENTS (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		9 Months Ended											6 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Gearing	Sep. 30, 2013 Services	Sep. 30, 2013 Level 2	Sep. 30, 2013 Level 3	Sep. 30, 2013 Total	Dec. 31, 2012 Recurring Level 2	Sep. 30, 2013 Recurring Level 2 Municipal bonds	Dec. 31, 2012 Recurring Level 2 Municipal bonds	Dec. 31, 2012 Recurring Total	Sep. 30, 2013 Recurring Total Municipal bonds	Dec. 31, 2012 Recurring Total Municipal bonds	Jun. 30, 2013 Nonrecurring Gearing equipment	Jun. 30, 2013 Nonrecurring Clintonville, WI facility	Sep. 30, 2013 Nonrecurring Level 3 Gearing equipment	Sep. 30, 2013 Nonrecurring Level 3 Clintonville, WI facility	Sep. 30, 2013 Nonrecurring Total Gearing equipment	Sep. 30, 2013 Nonrecurring Total Clintonville, WI facility
FAIR VALUE MEASUREMENTS
Municipal bonds	$ 23,693	$ 516							$ 9,053	$ 52		$ 9,053	$ 52
Property plant and equipment at fair value																1,331	821	1,331	821
Total assets at fair value					9,053	2,152	11,205	52			52
Percentage of recoverable amount exceed the invested capital for Gearing segment			120.00%	56.00%
Impairment to identifiable intangible assets	0
Impairment to property and equipment assets	0
Impairment charge recorded to reduce the carrying value of assets to fair value	288													345	288
Reclassification of property and equipment to assets held for sale														$ 1,400	$ 790

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CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2013

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Summary of components of cash and cash equivalents and short-term investments

	September 30,		December 31,
	2013		2012
Cash and cash equivalents:
Cash	$	14,640	$	464
Municipal bonds	8,186		52
Total cash and cash equivalents	22,826		516
Short-term investments (available-for-sale):
Municipal bonds	867		—
Total cash and cash equivalents and short-term investments	23,693		516

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (7,703)	$ (12,029)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense	11,412	12,227
Impairment charges	288
Stock-based compensation	1,438	2,079
Allowance for doubtful accounts	(274)	158
Common stock issued under defined contribution 401(k) plan	499	345
(Gain) loss on disposal of assets	(3,576)	220
Changes in operating assets and liabilities:
Accounts receivable	(1,613)	(3,318)
Inventories	(10,637)	(5,672)
Prepaid expenses and other current assets	1,228	1,078
Accounts payable	12,337	(3,175)
Accrued liabilities	1,054	(110)
Customer deposits	17,419	(13,411)
Other non-current assets and liabilities	(365)	1,319
Net cash provided by (used in) operating activities	21,507	(20,289)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of logistics business and related note receivable	250	375
Purchases of available for sale securities	(867)
Purchases of property and equipment	(5,967)	(3,300)
Proceeds from disposals of property and equipment	12,533	106
(Increase) decrease in restricted cash	(1)	546
Net cash provided by (used in) investing activities	5,948	(2,273)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on lines of credit and notes payable	(80,233)	(24,190)
Proceeds from lines of credit and notes payable	75,208	36,908
Proceeds from sale-leaseback transactions		1,000
Payments for debt issuance costs		(630)
Principal payments on capital leases	(120)	(1,145)
Net Cash Provided by (Used in) Financing Activities	(5,145)	11,943
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	22,310	(10,619)
CASH AND CASH EQUIVALENTS, beginning of the period	516	13,340
CASH AND CASH EQUIVALENTS, end of the period	22,826	2,721
Supplemental cash flow information:
Interest paid	672	854
Income taxes paid	19	25
Non-cash investing and financing activities:
Issuance of restricted stock grants	$ 1,025	$ 1,307

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2013

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, 2013 and 2012, as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Basic earnings per share calculation:
Net loss	$	(2,491	)	$	(3,938	)	$	(7,703	)	$	(12,029	)
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Basic net loss per share	$	(0.17	)	$	(0.28	)	$	(0.53	)	$	(0.86	)
Diluted earnings per share calculation:
Net loss	$	(2,491	)	$	(3,938	)	$	(7,703	)	$	(12,029	)
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Common stock equivalents:
Stock options and unvested restricted stock units (1)	—			—			—			—
Weighted average number of common shares outstanding	14,524,522			14,093,122			14,405,498			14,021,563
Diluted net loss per share	$	(0.17	)	$	(0.28	)	$	(0.53	)	$	(0.86	)

(1) Stock options and unvested restricted stock units granted and outstanding of 974,296 and 1,064,525 as of September 30, 2013 and 2012, 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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INVENTORIES

9 Months Ended

Sep. 30, 2013

INVENTORIES

INVENTORIES

NOTE 5 — INVENTORIES

The components of inventories as of September 30, 2013 and December 31, 2012 are summarized as follows:

	September 30,			December 31,
	2013			2012
Raw materials	$	18,220		$	8,697
Work-in-process	11,461			9,505
Finished goods	4,642			4,558
	34,323			22,760
Less: Reserve for excess and obsolete inventory	(1,698		)	(772		)
Net inventories	$	32,625		$	21,988

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DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2013

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 3 — DISCONTINUED OPERATIONS

In December 2010, the Company’s Board of Directors approved a plan to divest the Company’s wholly-owned subsidiary Badger Transport, Inc. (“Badger”), which formerly comprised the Company’s Logistics segment. In March 2011, the Company completed the sale of Badger to BTI Logistics, LLC. As a component of the proceeds from the sale, the Company received a $1,500 secured promissory note payable from the purchaser. During the first quarter of 2013, the Company recorded a $210 discontinued operations charge to adjust the net balance of the Company’s note receivable down to the $150 estimated value of the Company’s security interest. During the third quarter of 2013, the Company received a payment under the note in excess of the $150 net receivable recorded, and recorded a discontinued operations gain of $100 to reflect the additional amount received. There is a balance of $860 outstanding on the note receivable, all of which is considered past due. As a result of the uncertainty related to any future expected payments from the purchaser, the note is fully reserved for at September 30, 2013.

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ACCRUED LIABILITIES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
ACCRUED LIABILITIES
Accrued payroll and benefits	$ 3,821	$ 2,913
Accrued property taxes	458	367
Income taxes payable	488	443
Accrued professional fees	199	526
Accrued warranty liability	675	707	751	983
Accrued regulatory settlement	500
Accrued environmental reserve	242	352
Accrued other	578	704
Total accrued liabilities	$ 6,961	$ 6,012

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ACCRUED LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2013

ACCRUED LIABILITIES

Schedule of accrued liabilities

	September 30,		December 31,
	2013		2012
Accrued payroll and benefits	$	3,821	$	2,913
Accrued property taxes	458		367
Income taxes payable	488		443
Accrued professional fees	199		526
Accrued warranty liability	675		707
Accrued regulatory settlement	500		—
Accrued environmental reserve	242		352
Accrued other	578		704
Total accrued liabilities	$	6,961	$	6,012

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2013

SEGMENT REPORTING

Schedule of financial information by reportable segment

For the Three Months Ended September 30, 2013:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	48,594	$	10,138		$	3,704		$	—		$	—		$	62,436
Intersegment revenues (1)	64		251			—			—			(315		)	—
Operating profit (loss)	6,723		(5,653		)	(1,276		)	(2,197		)	22			(2,381		)
Depreciation and amortization	941		2,014			409			15			—			3,379
Capital expenditures	750		2,459			7			22			—			3,238

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 Nine Months Ended September 30, 2013:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	116,127	$	28,098		$	15,238		$	—		$	—		$	159,463
Intersegment revenues (1)	67		3,456			15			—			(3,538		)	—
Operating profit (loss)	12,828		(12,394		)	(3,239		)	(7,386		)	(19		)	(10,210		)
Depreciation and amortization	2,841		7,469			1,064			38			—			11,412
Capital expenditures	1,235		4,114			240			378			—			5,967

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

	Total Assets as of
	September 30,			December 31,
Segments:	2013			2012
Towers and Weldments	$	51,054		$	50,801
Gearing	70,561			71,371
Services	15,906			13,976
Assets held for sale	2,152			8,042
Corporate	303,401			308,336
Eliminations	(278,845		)	(309,616		)
	$	164,229		$	142,910

(1) Intersegment revenues generally include a 10% markup over costs and primarily consist of sales from Gearing to Services. Sales from Gearing to Services totaled $3,456 and $1,096 for the nine months ended September 30, 2013 and 2012, respectively.

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DISCONTINUED OPERATIONS (Details) (Badger, USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended
	Mar. 31, 2011	Sep. 30, 2013	Mar. 31, 2013
Badger
DISCONTINUED OPERATIONS
Noncash proceeds from sale in the form of a secured promissory note	$ 1,500
Discontinued operations charge			210
Secured promissory note receivable, net			150
Secured promissory note receivable outstanding		860
Gain on discontinued operations		100
Secured promissory note receivable past due		$ 860

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RESTRUCTURING (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended		3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended	33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	3 Months Ended	9 Months Ended	33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended	33 Months Ended	9 Months Ended	12 Months Ended	33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	3 Months Ended		9 Months Ended	12 Months Ended	33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended	33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	9 Months Ended	12 Months Ended	33 Months Ended	3 Months Ended			9 Months Ended	12 Months Ended		33 Months Ended	3 Months Ended		9 Months Ended	33 Months Ended	1 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Sep. 30, 2013 sqft	Dec. 31, 2012	Dec. 31, 2011	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 Capital Expenditures:	Jun. 30, 2013 Capital Expenditures:	Mar. 31, 2013 Capital Expenditures:	Sep. 30, 2013 Capital Expenditures:	Dec. 31, 2012 Capital Expenditures:	Dec. 31, 2011 Capital Expenditures:	Sep. 30, 2013 Capital Expenditures:	Sep. 30, 2013 Capital Expenditures: Gearing	Jun. 30, 2013 Capital Expenditures: Gearing	Mar. 31, 2013 Capital Expenditures: Gearing	Sep. 30, 2013 Capital Expenditures: Gearing	Dec. 31, 2012 Capital Expenditures: Gearing	Dec. 31, 2011 Capital Expenditures: Gearing	Sep. 30, 2013 Capital Expenditures: Gearing	Mar. 31, 2013 Capital Expenditures: Corporate	Sep. 30, 2013 Capital Expenditures: Corporate	Dec. 31, 2012 Capital Expenditures: Corporate	Sep. 30, 2013 Capital Expenditures: Corporate	Sep. 30, 2013 Non-Cash Expense:	Jun. 30, 2013 Non-Cash Expense:	Mar. 31, 2013 Non-Cash Expense:	Sep. 30, 2013 Non-Cash Expense:	Dec. 31, 2012 Non-Cash Expense:	Dec. 31, 2011 Non-Cash Expense:	Sep. 30, 2013 Non-Cash Expense:	Mar. 31, 2013 Non-Cash Expense: Towers	Sep. 30, 2013 Non-Cash Expense: Towers	Sep. 30, 2013 Non-Cash Expense: Towers	Sep. 30, 2013 Non-Cash Expense: Gearing	Jun. 30, 2013 Non-Cash Expense: Gearing	Mar. 31, 2013 Non-Cash Expense: Gearing	Sep. 30, 2013 Non-Cash Expense: Gearing	Dec. 31, 2012 Non-Cash Expense: Gearing	Dec. 31, 2011 Non-Cash Expense: Gearing	Sep. 30, 2013 Non-Cash Expense: Gearing	Mar. 31, 2013 Non-Cash Expense: Services	Sep. 30, 2013 Non-Cash Expense: Services	Dec. 31, 2012 Non-Cash Expense: Services	Sep. 30, 2013 Non-Cash Expense: Services	Sep. 30, 2013 Non-Cash Expense: Corporate	Dec. 31, 2011 Non-Cash Expense: Corporate	Sep. 30, 2013 Non-Cash Expense: Corporate	Sep. 30, 2013 Cost of sales: Cash Expense:	Jun. 30, 2013 Cost of sales: Cash Expense:	Mar. 31, 2013 Cost of sales: Cash Expense:	Sep. 30, 2013 Cost of sales: Cash Expense:	Dec. 31, 2012 Cost of sales: Cash Expense:	Dec. 31, 2011 Cost of sales: Cash Expense:	Sep. 30, 2013 Cost of sales: Cash Expense:	Sep. 30, 2013 Cost of sales: Cash Expense: Gearing	Jun. 30, 2013 Cost of sales: Cash Expense: Gearing	Mar. 31, 2013 Cost of sales: Cash Expense: Gearing	Sep. 30, 2013 Cost of sales: Cash Expense: Gearing	Dec. 31, 2012 Cost of sales: Cash Expense: Gearing	Dec. 31, 2011 Cost of sales: Cash Expense: Gearing	Sep. 30, 2013 Cost of sales: Cash Expense: Gearing	Jun. 30, 2013 Cost of sales: Cash Expense: Services	Mar. 31, 2013 Cost of sales: Cash Expense: Services	Sep. 30, 2013 Cost of sales: Cash Expense: Services	Dec. 31, 2012 Cost of sales: Cash Expense: Services	Sep. 30, 2013 Cost of sales: Cash Expense: Services	Sep. 30, 2013 Selling, general and administrative Cash Expense:	Jun. 30, 2013 Selling, general and administrative Cash Expense:	Mar. 31, 2013 Selling, general and administrative Cash Expense:	Sep. 30, 2013 Selling, general and administrative Cash Expense:	Dec. 31, 2012 Selling, general and administrative Cash Expense:	Dec. 31, 2011 Selling, general and administrative Cash Expense:	Sep. 30, 2013 Selling, general and administrative Cash Expense:	Sep. 30, 2013 Selling, general and administrative Cash Expense: Towers	Jun. 30, 2013 Selling, general and administrative Cash Expense: Towers	Mar. 31, 2013 Selling, general and administrative Cash Expense: Towers	Sep. 30, 2013 Selling, general and administrative Cash Expense: Towers	Dec. 31, 2012 Selling, general and administrative Cash Expense: Towers	Sep. 30, 2013 Selling, general and administrative Cash Expense: Towers	Sep. 30, 2013 Selling, general and administrative Cash Expense: Gearing	Jun. 30, 2013 Selling, general and administrative Cash Expense: Gearing	Mar. 31, 2013 Selling, general and administrative Cash Expense: Gearing	Sep. 30, 2013 Selling, general and administrative Cash Expense: Gearing	Dec. 31, 2012 Selling, general and administrative Cash Expense: Gearing	Dec. 31, 2011 Selling, general and administrative Cash Expense: Gearing	Sep. 30, 2013 Selling, general and administrative Cash Expense: Gearing	Sep. 30, 2013 Selling, general and administrative Cash Expense: Services	Dec. 31, 2012 Selling, general and administrative Cash Expense: Services	Sep. 30, 2013 Selling, general and administrative Cash Expense: Services	Sep. 30, 2013 Selling, general and administrative Cash Expense: Corporate	Jun. 30, 2013 Selling, general and administrative Cash Expense: Corporate	Mar. 31, 2013 Selling, general and administrative Cash Expense: Corporate	Sep. 30, 2013 Selling, general and administrative Cash Expense: Corporate	Dec. 31, 2012 Selling, general and administrative Cash Expense: Corporate	Dec. 31, 2011 Selling, general and administrative Cash Expense: Corporate	Sep. 30, 2013 Selling, general and administrative Cash Expense: Corporate	Sep. 30, 2013 Other - Towers expected gain on Brandon Facility: Cash Expense:	Jun. 30, 2013 Other - Towers expected gain on Brandon Facility: Cash Expense:	Sep. 30, 2013 Other - Towers expected gain on Brandon Facility: Cash Expense:	Sep. 30, 2013 Other - Towers expected gain on Brandon Facility: Cash Expense:	Apr. 30, 2013 Brandon Facility item sqft
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
Increase in liquidity as a result of the sale of manufacturing facility																																																																																																								$ 8,000
Number of facilities for which agreement has been reached to close or reduce leased presence																																																																																																								6
Area of facilities for which agreement has been reached to close or reduce leased presence																																																																																																								400,000
Liability associated with environmental remediation costs	242			242			242	352
Restructuring charges incurred	1,691	(1,111)	1,967		5,092	874	8,513		514	817	636		2,596	5	4,568	514	817	359		2,072	5	3,767	277		524	801	257	550	454		1,224	297	2,782	290		290	257	550	179		1,166	247	2,399	(15)		58	43		50	50	840	1,001	276		533	131	2,781	840	886	157		308	131	2,322	115	119		225	459	79	107	601		739	441	1,967	50	37	78		130	295	28	67	65		520	35	715		40	40	1	3	458		49	406	917	1	(3,586)		(3,585)
Expected cost to be incurred to implement the restructuring plan				13,316								5,808							5,007					801						5,372					290					4,989					43			50						3,754							3,295						459						1,967							295						715				40						917						(3,585)
Restructuring charges incurred (as a percent)							64.00%
Involuntary terminations costs							900
Accelerated depreciation of the Cicero Avenue Facility							$ 1,500

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SEGMENT REPORTING (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
SEGMENT REPORTING
Revenues from external customers	$ 62,436	$ 55,045	$ 159,463	$ 165,799
Operating profit (loss)	(2,381)	(3,527)	(10,210)	(11,627)
Depreciation and Amortization	3,379	4,367	11,412	12,227
Capital Expenditures	3,238	1,135	5,967	3,300
Total Assets	164,229		164,229		142,910
Markup over costs (as a percent)	10.00%		10.00%
Tower and Weldments
SEGMENT REPORTING
Number of facilities	2		2
Revenues from external customers	48,594	37,423	116,127	109,587
Intersegment revenues	64		67
Operating profit (loss)	6,723	1,740	12,828	3,306
Depreciation and Amortization	941	942	2,841	2,722
Capital Expenditures	750	127	1,235	540
Total Assets	51,054		51,054		50,801
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	10,138	10,778	28,098	40,256
Intersegment revenues	251	478	3,456	1,096
Operating profit (loss)	(5,653)	(2,637)	(12,394)	(5,390)
Depreciation and Amortization	2,014	2,995	7,469	8,217
Capital Expenditures	2,459	893	4,114	1,657
Total Assets	70,561		70,561		71,371
Services
SEGMENT REPORTING
Revenues from external customers	3,704	6,844	15,238	15,956
Intersegment revenues		55	15	81
Operating profit (loss)	(1,276)	(570)	(3,239)	(3,331)
Depreciation and Amortization	409	413	1,064	1,237
Capital Expenditures	7	44	240	944
Total Assets	15,906		15,906		13,976
Corporate
SEGMENT REPORTING
Operating profit (loss)	(2,197)	(2,048)	(7,386)	(6,224)
Depreciation and Amortization	15	17	38	51
Capital Expenditures	22	71	378	159
Total Assets	303,401		303,401		308,336
Eliminations
SEGMENT REPORTING
Intersegment revenues	(315)	(533)	(3,538)	(1,177)
Operating profit (loss)	22	(12)	(19)	12
Total Assets	(278,845)		(278,845)		(309,616)
Assets held for sale
SEGMENT REPORTING
Total Assets	$ 2,152		$ 2,152		$ 8,042

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INCOME TAXES (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified			0 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Feb. 13, 2013 Series A Junior Participating Preferred Stock item	Feb. 13, 2013 Series A Junior Participating Preferred Stock Minimum	Feb. 13, 2013 Series A Junior Participating Preferred Stock Maximum
Rights Plan
Beneficial ownership percentage of any person or group, together with its affiliates and associates					4.90%
Number of rights for each outstanding share of common stock			1
Number of preferred share purchase rights for each outstanding share of the company's common stock			0.001
Exercise price (in dollars per right)			$ 14.00
Threshold percentage of beneficial ownership for significant dilution of ownership interest				4.90%
Current beneficial ownership percentage that will not trigger the preferred share purchase rights unless they acquire additional shares				4.90%
Unrecognized tax benefits	$ 484	$ 454
Accrued interest or penalties related to uncertain tax positions recognized	$ 198	$ 168

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 179	$ 453
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	14,563,228	14,197,792
Common stock, shares outstanding	14,563,228	14,197,792

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DEBT AND CREDIT AGREEMENTS

9 Months Ended

Sep. 30, 2013

DEBT AND CREDIT AGREEMENTS

DEBT AND CREDIT AGREEMENTS

NOTE 8 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of September 30, 2013 and December 31, 2012 consisted of the following:

	September 30,			December 31,
	2013			2012
Lines of credit	$	—		$	955
Term loans and notes payable	3,099			3,308
Less: Current portion	(342		)	(1,307		)
Long-term debt, net of current maturities	$	2,757		$	2,956

Credit Facilities

AloStar Credit Facility

On August 23, 2012, the Company and its Subsidiaries entered into a Loan and Security Agreement (the “Loan Agreement”) with AloStar, providing the Company and its 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 when requested against a borrowing base consisting of approximately 85% of the face value of eligible receivables of the Company and its Subsidiaries and approximately 50% of the book value of eligible inventory of the Company and its Subsidiaries. Borrowings under the Credit Facility bear interest at a per annum rate equal to the one-month London Interbank Offered Rate 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 its 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. As of September 30, 2013, the Loan Agreement was amended to: (i) redefine certain exclusions to the fixed charge coverage ratio, (ii) exclude the periodic non-cash portion of the environmental regulatory settlement charges from the adjusted EBITDA calculation and (iii) increase the capital expenditure limit for 2013.

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 Company’s Subsidiaries and (ii) a first priority security interest in all of the equipment of Brad Foote.

As of September 30, 2013, there was no outstanding indebtedness under the Credit Facility. The Company had the ability to borrow up to $15,480 as of September 30, 2013, and the per annum interest rate would have been 5.25%. The Company was in compliance with all applicable covenants under the Loan Agreement as of September 30, 2013.

Great Western Bank Loan

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 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 was 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 agreed to subordinate all intercompany debt with Broadwind Towers to the GWB Term Loan. The documents evidencing and securing the GWB Term Loan contained representations, warranties and covenants customary for a term financing arrangement and contained no financial covenants.

The Brandon Facility was sold in April 2013 and the GWB Term Loan was repaid in its entirety with a portion of the proceeds.

Other

Included in Long Term Debt, Net of Current Maturities is $2,600 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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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Balance at Dec. 31, 2011	$ 117,859	$ 140	$ 370,123	$ (252,404)
Balance (in shares) at Dec. 31, 2011		13,977,920
Increase (Decrease) in Stockholders' Equity
Stock issued for restricted stock (in shares)		38,667
Stock issued under defined contribution 401(k) retirement savings plan	523		523
Stock issued under defined contribution 401(k) retirement savings plan (in shares)		181,205
Reclass between APIC and CS due to 10-1 Split		(126)	126
Share-based compensation	2,833		2,833
Net loss	(17,907)			(17,907)
Balance at Dec. 31, 2012	103,308	14	373,605	(270,311)
Balance (in shares) at Dec. 31, 2012	14,197,792	14,197,792
Increase (Decrease) in Stockholders' Equity
Stock issued for restricted stock	1	1
Stock issued for restricted stock (in shares)		222,011
Stock issued under defined contribution 401(k) retirement savings plan	(499)		499
Stock issued under defined contribution 401(k) retirement savings plan (in shares)		143,425
Share-based compensation	1,438		1,438
Net loss	(7,703)			(7,703)
Balance at Sep. 30, 2013	$ 97,543	$ 15	$ 375,542	$ (278,014)
Balance (in shares) at Sep. 30, 2013	14,563,228	14,563,228

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
CURRENT ASSETS:
Cash and cash equivalents	$ 22,826	$ 516
Short-term investments	867	0
Restricted cash	331	330
Accounts receivable, net of allowance for doubtful accounts of $179 and $453 as of September 30, 2013 and December 31, 2012, respectively	21,927	20,039
Inventories, net	32,625	21,988
Prepaid expenses and other current assets	2,532	3,836
Assets held for sale	2,152	8,042
Total current assets	83,260	54,751
Property and equipment, net	72,761	79,889
Intangible assets, net	6,014	7,454
Other assets	2,194	816
TOTAL ASSETS	164,229	142,910
CURRENT LIABILITIES:
Lines of credit and notes payable		955
Current maturities of long-term debt	342	352
Current portions of capital lease obligations	1,308	2,217
Accounts payable	29,063	16,377
Accrued liabilities	6,961	6,012
Customer deposits	21,482	4,063
Liabilities held for sale		3,860
Total current liabilities	59,156	33,836
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	2,757	2,956
Long-term capital lease obligations, net of current portions	1,431	641
Other	3,342	2,169
Total long-term liabilities	7,530	5,766
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; 14,563,228 and 14,197,792 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively	15	14
Additional paid-in capital	375,542	373,605
Accumulated deficit	(278,014)	(270,311)
Total stockholders' equity	97,543	103,308
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 164,229	$ 142,910

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Environmental Compliance and Remediation Liabilities
Liability associated with environmental remediation costs	$ 242	$ 352
Changes in the carrying amount of the total product warranty liability
Balance, beginning of period	707	983
Reduction of warranty reserve	(25)	(133)
Warranty claims	(7)	(99)
Balance, end of period	675	751
Activity in the accounts receivable allowance from continuing operations
Balance at beginning of year	453	438
Bad debt expense	(38)	200
Write-offs	(236)	(123)
Balance at end of year	179	515
Liquidated Damages
Liquidated damages	$ 0
Minimum
Warranty Liability
Term of warranty	1 year
Maximum
Warranty Liability
Term of warranty	7 years

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DEBT AND CREDIT AGREEMENTS (Tables)

9 Months Ended

Sep. 30, 2013

DEBT AND CREDIT AGREEMENTS

Schedule of outstanding debt balances

	September 30,			December 31,
	2013			2012
Lines of credit	$	—		$	955
Term loans and notes payable	3,099			3,308
Less: Current portion	(342		)	(1,307		)
Long-term debt, net of current maturities	$	2,757		$	2,956

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RESTRUCTURING

9 Months Ended

Sep. 30, 2013

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 began 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. 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 reclassified the Brandon Facility property and equipment to Assets Held for Sale and the related indebtedness to Liabilities Held for Sale. In April 2013 the Company completed the sale of the Brandon Facility, generating approximately $8,000 in net proceeds after closing costs and the repayment of the mortgage on the Brandon Facility. Including the sale of the Brandon Facility, the Company has so far closed or reduced its leased presence at six facilities and achieved a reduction of approximately 400,000 square feet. During 2013, the Company determined that its Clintonville, Wisconsin was no longer required in its operations and reclassified the property and equipment associated with this facility, as well as certain Gearing equipment, to Assets Held for Sale. The most significant remaining reduction relates to the anticipated closure and disposition of the Cicero Avenue Facility. The Company believes its 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.

In the third quarter of 2012, the Company identified a $352 liability associated with the planned sale of the Cicero Avenue Facility. 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, and as of September 30, 2013 the accrual balance remaining is $242.

Additional restructuring plans were approved in the fourth quarter of 2011. Including costs incurred to date, the Company expects that a total of approximately $13,300 of net costs will be incurred to implement this restructuring initiative. To date, the Company has incurred approximately $8,500, or 64% of the total expected restructuring costs. Of the total projected costs, the Company anticipates that a total of approximately $5,400 will consist of non-cash charges. Restructuring costs incurred to date include $900 of involuntary terminations and $1,500 of accelerated depreciation of the Cicero Avenue Facility. The table below details the Company’s total net restructuring charges incurred to date and the total net expected restructuring charges as of September 30, 2013:

	2011		2012		Q1 ‘13			Q2 ‘13			Q3 ‘13		Total			Total
	Actual		Actual		Actual			Actual			Actual		Incurred			Projected
Capital expenditures:
Gearing	$	5	$	2,072	$	359		$	817		$	514	$	3,767		$	5,007
Corporate	—		524		277			—			—		801			801
Total capital expenditures	5		2,596		636			817			514		4,568			5,808
Cash expenses:
Cost of sales:
Gearing	131		308		157			886			840		2,322			3,295
Services	—		225		119			115			—		459			459
Total cost of sales	131		533		276			1,001			840		2,781			3,754
Selling, general, and administrative expenses:
Towers	—		130		78			37			50		295			295
Gearing	35		520		65			67			28		715			715
Services	—		40		—			—			—		40			40
Corporate	406		49		458			3			1		917			917
Total selling, general and administrative expenses	441		739		601			107			79		1,967			1,967
Other - Towers and Weldments gain on Brandon Facility:	—		—		—			(3,586		)	1		(3,585		)	(3,585		)
Non-cash expenses:
Towers	—		—		290			—			—		290			290
Gearing	247		1,166		179			550			257		2,399			4,989
Services	—		58		(15		)	—			—		43			43
Corporate	50		—		—			—			—		50			50
Total non-cash expenses	297		1,224		454			550			257		2,782			5,372
Grand total	$	874	$	5,092	$	1,967		$	(1,111	)	$	1,691	$	8,513		$	13,316

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INCOME TAXES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
INCOME TAXES
Deferred income taxes due, net	$ 0		$ 0
Provision (benefit) for income taxes	28	(9)	64	21
Net operating loss carryforwards					153,629
Expiration of the statute of limitations
Income Taxes
Decrease in unrecognized tax benefits as a result of the expiration of the statute of limitations within the next 12 months	$ 285		$ 285

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NEW MARKETS TAX CREDIT TRANSACTION (Details) (USD $) In Thousands, unless otherwise specified			0 Months Ended	9 Months Ended	0 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Jul. 20, 2011 New Markets Tax Credit Transaction	Sep. 30, 2013 New Markets Tax Credit Transaction item	Jul. 20, 2011 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%
Maximum 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%
Loan origination payment				320
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
Amortization period for prepaid expenses for the NMTC arrangement				7 years
Net amount outstanding	$ 2,757	$ 2,956		$ 2,600

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INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
INVENTORIES
Raw materials	$ 18,220	$ 8,697
Work-in-process	11,461	9,505
Finished goods	4,642	4,558
Gross inventories	34,323	22,760
Less: Reserve for excess and obsolete inventory	(1,698)	(772)
Net inventories	$ 32,625	$ 21,988

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BASIS OF PRESENTATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended		12 Months Ended		33 Months Ended		0 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	Sep. 30, 2013	Apr. 30, 2013 Brandon Facility	Aug. 23, 2012 Credit facility	Sep. 30, 2013 Credit facility
Description of Business
Revenue as a percentage of sales associated with new wind turbine installations				67.00%	64.00%
BASIS OF PRESENTATION
Cash and cash equivalents	$ 22,826			$ 22,826	$ 2,721	$ 516	$ 13,340	$ 22,826
Increase in liquidity as a result of the sale of manufacturing facility									8,000
Line of credit facilities, term of credit agreements										3 years
Maximum borrowing capacity										20,000
Maximum borrowing capacity of the face value of eligible receivables (as a percent)										85.00%
Maximum percentage of book value of inventories that may be financed										50.00%
Current borrowing capacity											15,480
Liquidity
Cash and cash equivalents and short-term investments	23,693			23,693		516		23,693
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	342			342				342
Restructuring charges incurred	1,691	(1,111)	1,967			5,092	874	8,513
Expected cost to be incurred to implement the restructuring plan				13,316
Non-cash expenditure expected to be incurred				$ 5,400

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EARNINGS PER SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Basic earnings per share calculation:
Net loss	$ (2,491)	$ (3,938)	$ (7,703)	$ (12,029)	$ (17,907)
Weighted average number of common shares outstanding	14,524,522	14,093,122	14,405,498	14,021,563
Basic net loss per share (in dollars per share)	$ (0.17)	$ (0.28)	$ (0.53)	$ (0.86)
Diluted earnings per share calculation:
Net loss	$ (2,491)	$ (3,938)	$ (7,703)	$ (12,029)	$ (17,907)
Weighted average number of common shares outstanding	14,524,522	14,093,122	14,405,498	14,021,563
Weighted average number of common shares outstanding	14,524,522	14,093,122	14,405,498	14,021,563
Diluted net loss per share (in dollars per share)	$ (0.17)	$ (0.28)	$ (0.53)	$ (0.86)
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)			974,296	1,064,525

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ACCRUED LIABILITIES

9 Months Ended

Sep. 30, 2013

ACCRUED LIABILITIES

ACCRUED LIABILITIES

NOTE 7 — ACCRUED LIABILITIES

Accrued liabilities as of September 30, 2013 and December 31, 2012 consisted of the following:

	September 30,		December 31,
	2013		2012
Accrued payroll and benefits	$	3,821	$	2,913
Accrued property taxes	458		367
Income taxes payable	488		443
Accrued professional fees	199		526
Accrued warranty liability	675		707
Accrued regulatory settlement	500		—
Accrued environmental reserve	242		352
Accrued other	578		704
Total accrued liabilities	$	6,961	$	6,012

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2013

FAIR VALUE MEASUREMENTS

Schedule of the fair values of the Company's financial assets

	September 30, 2013
	Level 1		Level 2		Level 3		Total
Assets measured on a recurring basis:
Municipal bonds	$	—	$	9,053	$	—	$	9,053
Assets measured on a nonrecurring basis:
Gearing equipment	—		—		1,331		1,331
Clintonville, WI facility	—		—		821		821
Total assets at fair value	$	—	$	9,053	$	2,152	$	11,205

	December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets measured on a recurring basis:
Municipal bonds	$	—	$	52	$	—	$	52
Total assets at fair value	$	—	$	52	$	—	$	52

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DEBT AND CREDIT AGREEMENTS (Details) (USD $) In Thousands, unless otherwise specified						0 Months Ended	9 Months Ended					9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 New Markets Tax Credit Transaction	Sep. 30, 2013 Term loans and notes payable	Dec. 31, 2012 Term loans and notes payable	Aug. 23, 2012 Credit facility	Sep. 30, 2013 Credit facility	Dec. 31, 2012 Credit facility	Aug. 23, 2012 Credit facility Minimum	Apr. 05, 2010 Great Western Bank, construction loan	Apr. 28, 2009 Great Western Bank, construction loan	Sep. 30, 2013 Great Western Bank, Term Loan item
Credit Facilities
Long-term debt, gross				$ 3,099	$ 3,308			$ 955
Less-Current portion	(342)	(1,307)
Long-term debt, net of current maturities	2,757	2,956	2,600
Maximum borrowing capacity						20,000				6,500	10,000
Line of credit facilities, term of credit agreements						3 years
Maximum borrowing capacity of the face value of eligible receivables (as a percent)						85.00%
Maximum percentage of book value of inventories that may be financed						50.00%
Variable rate basis						one month LIBOR
Interest rate margin (as a percent)						4.25%
Interest rate (as a percent)									5.25%	8.50%
Annual unused line fee (as a percent)						0.50%
Outstanding indebtedness under the Credit Facility							0
Current borrowing capacity							$ 15,480
Interest rate (as a percent)							5.25%
Number of financial covenants												0

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INCOME TAXES

9 Months Ended

Sep. 30, 2013

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, 2013, the Company had no net deferred income taxes due to the full recorded valuation allowance. During the three months ended September 30, 2013, the Company recorded a provision for income taxes of $28 compared to a benefit for income taxes of $9 during the three months ended September 30, 2012. During the nine months ended September 30, 2013, the Company recorded a provision for income taxes of $64, compared to a provision for income taxes of $21 during the nine months ended September 30, 2012.

The Company files income tax returns in U.S. federal and state jurisdictions. As of September 30, 2013, 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, 2012, the Company had net operating loss carryforwards of $153,629 expiring in various years through 2032.

It is reasonably possible that unrecognized tax benefits will decrease by up to approximately $285 as a result of the expiration of the applicable statute of limitations within the next 12 months. In addition, 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 (“NOL”) 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 NOL 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 on NOL carryforwards and built-in losses available for utilization. To the extent the Company’s use of NOL 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 be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.

The Company announced on February 13, 2013, that its Board of Directors had adopted a Stockholder Rights Plan (the “Rights Plan”) designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under IRC Section 382. The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board of Directors declared a non-taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $14.00 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Company’s Board of Directors would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares. The Rights Plan was subsequently approved by the Company’s stockholders at the Company’s 2013 Annual Meeting of Stockholders.

As of September 30, 2013, the Company has $484 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 $198 as of September 30, 2013. As of December 31, 2012, the Company had unrecognized tax benefits of $454, of which $168 represented accrued interest and penalties.

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2013

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 10 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 first three quarters of 2013, 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 was in excess of the carrying amount of the intangible assets, and no impairment to these assets was indicated as of September 30, 2013.

As of September 30, 2013 and December 31, 2012, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

	September 30, 2013								December 31, 2012
								Weighted								Weighted
						Net		Average						Net		Average
	Cost		Accumulated			Book		Amortization	Cost		Accumulated			Book		Amortization
	Basis		Amortization			Value		Period	Basis		Amortization			Value		Period
Intangible assets:
Customer relationships	$	3,979	$	(3,584	)	$	395	7.2	$	3,979	$	(2,444	)	$	1,535	7.2
Trade names	7,999		(2,380		)	5,619		20.0	7,999		(2,080		)	5,919		20.0
Intangible assets	$	11,978	$	(5,964	)	$	6,014	15.8	$	11,978	$	(4,524	)	$	7,454	15.8

As of September 30, 2013, estimated future amortization expense is as follows:

2013	$	111
2014	444
2015	444
2016	444
2017	444
2018 and thereafter	4,127
Total	$	6,014

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2013

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, 2013 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2013. The December 31, 2012 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, 2012.

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, “Subsidiaries”). All intercompany transactions and balances have been eliminated.

There have been no material changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2013 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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 Cicero, Illinois, and its 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 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 2013, 67% of the Company’s revenue was derived from sales associated with new wind turbine installations, versus 64% for the same period of 2012.

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.

Liquidity

The Company had cash and cash equivalents and short-term investments that totaled $23,693 as of September 30, 2013, up significantly from $516 as of December 31, 2012. The Company’s improved cash position is primarily the result of (i) the sale of its idle wind tower manufacturing facility in Brandon, South Dakota (the “Brandon Facility”), which occurred in April 2013 and generated approximately $8,000 in net proceeds after closing costs and repayment of the associated mortgage balance, and (ii) the receipt of customer deposits used mainly to fund raw material steel purchases associated with tower orders. During the third quarter of 2012, the Company entered into a three-year $20,000 credit agreement with AloStar Bank of Commerce (“AloStar”). Pursuant to this agreement, AloStar will advance funds, as requested, against the Company’s borrowing base, which consists of approximately 85% of eligible receivables and approximately 50% of eligible inventory. Under this borrowing structure, borrowings are continuous and all cash proceeds received by the Company and its Subsidiaries are automatically applied to the outstanding borrowed balance. At September 30, 2013, the AloStar line of credit was undrawn and the Company had the ability to borrow up to $15,480 thereunder.

The Company 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 of credit, and cash to be generated from operations 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, as of September 30, 2013, the Company is obligated to make principal payments on outstanding debt totaling $342 during the next twelve months. If assumptions regarding the Company’s production, sales and subsequent collections from several of the Company’s large customers, as well as customer advances and revenues generated from new customer orders, are not materially consistent with management’s expectations, the Company may in the future encounter cash flow and liquidity issues. If the Company cannot make scheduled payments on its debt, or comply with applicable covenants, it may lose operational flexibility or have to delay planned investments. 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, that it will be able to comply with applicable loan covenants 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.

Please refer to Note 17, “Restructuring” of these condensed consolidated financial statements for a discussion of the restructuring plan which the Company initiated in the third quarter of 2011. To date, the Company has incurred $8,500 of net costs in conjunction with its restructuring plan. Including costs incurred to date, the Company expects that a total of approximately $13,300 of net costs will be incurred to implement this restructuring plan. Of the total projected expenses, the Company anticipates that approximately $5,400 will be non-cash expenditures.

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COMMITMENTS AND CONTINGENCIES (Details 2) (Total Company Employees, Coverage under collective bargaining agreements)	9 Months Ended
	Sep. 30, 2013 agrement
Total Company Employees | Coverage under collective bargaining agreements
Collective bargaining agreements
Percentage of company's employees covered	19.00%
Number of agreements	2

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SHARE-BASED COMPENSATION (Details 2) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Stock Options
Weighted Average Grant-Date Fair Value Per RSU
Forfeiture rate (as percent)	25.00%	25.00%
RSU
Summary of the restricted stock unit activity
Outstanding at the beginning of the period (in shares)	761,662
Granted (in shares)	463,218
Vested (in shares)	(280,624)
Forfeited (in shares)	(204,797)
Outstanding at the end of the period (in shares)	739,459
Weighted Average Grant-Date Fair Value Per RSU
Outstanding at the beginning of the period (in dollars per share)	$ 6.01
Granted (in dollars per share)	$ 3.68
Vested (in dollars per share)	$ 6.76
Forfeited (in dollars per share)	$ 4.50
Outstanding at the end of the period (in dollars per share)	$ 4.66

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2013

COMMITMENTS AND CONTINGENCIES

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

	For the Nine Months Ended September 30,
	2013			2012
Balance, beginning of period	$	707		$	983
Reduction of warranty reserve	(25		)	(133		)
Warranty claims	(7		)	(99		)
Balance, end of period	$	675		$	751

Schedule of the activity in the accounts receivable allowance liability

	For the Nine Months Ended September 30,
	2013			2012
Balance at beginning of period	$	453		$	438
Bad debt expense	(38		)	200
Write-offs	(236		)	(123		)
Balance at end of period	$	179		$	515

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2013

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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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2013

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. For the Company’s municipal bonds, we noted that although quoted prices are available and used to value said assets, they are traded less frequently.

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. The Company used market negotiations to value its Gearing assets.  The Company used real estate appraisals to value the Clintonville, WI facility.

The following table represents the fair values of the Company’s financial assets as of September 30 2013 and December 31, 2012:

	September 30, 2013
	Level 1		Level 2		Level 3		Total
Assets measured on a recurring basis:
Municipal bonds	$	—	$	9,053	$	—	$	9,053
Assets measured on a nonrecurring basis:
Gearing equipment	—		—		1,331		1,331
Clintonville, WI facility	—		—		821		821
Total assets at fair value	$	—	$	9,053	$	2,152	$	11,205

	December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets measured on a recurring basis:
Municipal bonds	$	—	$	52	$	—	$	52
Total assets at fair value	$	—	$	52	$	—	$	52

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, 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. To the extent projections used in the Company’s evaluations are not achieved, there may be a negative effect on the valuation of these assets.

Due to the Company’s operating losses in each of the first three quarters of 2013 combined with its history of continued operating losses, the Company continues to evaluate the recoverability of certain of its identifiable intangible assets and certain property and equipment assets. Based upon the Company’s September 30, 2013 assessment, the recoverable amount of undiscounted cash flows based upon the Company’s most recent projections exceeded the carrying amount of invested capital by 120% and 56% for the Gearing and Services segments, respectively, and no impairment to these assets was indicated.

During the first half of 2013, the Company took a $288 charge to adjust the carrying value of its Clintonville, Wisconsin facility assets to fair value, and reclassified the resulting $790 carrying value from property and equipment to Assets Held for Sale. This treatment was due to management’s decision to list the property for sale as a result of its determination that the property was no longer required in its operations. Additionally, the Company took a $345 charge to adjust the carrying value of certain Gearing equipment to fair value, and reclassified the resulting $1,400 carrying value to Assets Held for Sale as a result of the decision to sell this equipment.

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NEW MARKETS TAX CREDIT TRANSACTION

9 Months Ended

Sep. 30, 2013

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, including a loan origination payment of $320, has been included as other assets in the Company’s condensed consolidated balance sheet as of September 30, 2013. The NMTC Transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Capital One’s interest in the third quarter of 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 expects that Capital One will exercise the put option 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. In making this determination, 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 $2,600 is included in Long Term Debt, Net of Current Maturities in the condensed consolidated balance sheet as of September 30, 2013. Incremental costs to maintain the transaction structure during the compliance period will be recognized as they are incurred.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2013

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 wind 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.

Gearing

The Company engineers, builds and remanufactures precision gears and gearing systems for oil and gas, wind, mining, steel 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 MW 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 Abilene, Texas gearbox service facility (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” comprises adjustments to reconcile segment results to consolidated results.

Summary financial information by reportable segment for the three and nine months ended September 30, 2013 and 2012 is as follows:

For the Three Months Ended September 30, 2013:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	48,594	$	10,138		$	3,704		$	—		$	—		$	62,436
Intersegment revenues (1)	64		251			—			—			(315		)	—
Operating profit (loss)	6,723		(5,653		)	(1,276		)	(2,197		)	22			(2,381		)
Depreciation and amortization	941		2,014			409			15			—			3,379
Capital expenditures	750		2,459			7			22			—			3,238

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 Nine Months Ended September 30, 2013:	Towers and Weldments		Gearing			Services			Corporate			Eliminations			Consolidated
Revenues from external customers	$	116,127	$	28,098		$	15,238		$	—		$	—		$	159,463
Intersegment revenues (1)	67		3,456			15			—			(3,538		)	—
Operating profit (loss)	12,828		(12,394		)	(3,239		)	(7,386		)	(19		)	(10,210		)
Depreciation and amortization	2,841		7,469			1,064			38			—			11,412
Capital expenditures	1,235		4,114			240			378			—			5,967

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

	Total Assets as of
	September 30,			December 31,
Segments:	2013			2012
Towers and Weldments	$	51,054		$	50,801
Gearing	70,561			71,371
Services	15,906			13,976
Assets held for sale	2,152			8,042
Corporate	303,401			308,336
Eliminations	(278,845		)	(309,616		)
	$	164,229		$	142,910

(1) Intersegment revenues generally include a 10% markup over costs and primarily consist of sales from Gearing to Services. Sales from Gearing to Services totaled $3,456 and $1,096 for the nine months ended September 30, 2013 and 2012, respectively.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 24, 2013
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, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,587,958
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2013

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 15 — COMMITMENTS AND CONTINGENCIES

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, during the third quarter of 2012, the Company identified a $352 liability associated with the planned sale of the Cicero Avenue Facility. The liability is associated with environmental remediation costs that were identified while preparing the site for sale. During the third quarter, the Company applied for entry into the Illinois Environmental Protection Agency voluntary site remediation program. The Company intends to submit its environmental sampling data, as well as its remedial objectives plan, during the fourth quarter. The Company will continue to reevaluate its reserve balance associated with this matter as it gathers additional information. As of September 30, 2013, the accrual balance remaining is $242.

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, 2013 and 2012, estimated product warranty liability was $675 and $751, 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, 2013 and 2012 were as follows:

	For the Nine Months Ended September 30,
	2013			2012
Balance, beginning of period	$	707		$	983
Reduction of warranty reserve	(25		)	(133		)
Warranty claims	(7		)	(99		)
Balance, end of period	$	675		$	751

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 collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due 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 collectability 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, 2013 and 2012 consists of the following:

	For the Nine Months Ended September 30,
	2013			2012
Balance at beginning of period	$	453		$	438
Bad debt expense	(38		)	200
Write-offs	(236		)	(123		)
Balance at end of period	$	179		$	515

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 and dependent on actual losses sustained by the customer. The Company does not believe that potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of September 30, 2013.

Workers’ Compensation Reserves

At the beginning of the third quarter of 2013, the Company began to self-insure for its workers’ compensation liabilities, including reserves for self-retained losses. Historical loss experience combined with actuarial evaluation methods and the application of risk transfer programs are used to determine required workers’ compensation reserves. The Company takes into account claims incurred but not reported when determining its workers’ compensation reserves. Although the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred, 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, 2013, approximately 19% 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 2017, respectively.

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 tax credit recaptures will be required in connection with the NMTC Transaction.