10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2013

or

¨ 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: 001-33059

 ________________________________

FUEL TECH, INC.

(Exact name of registrant as specified in its charter)

  ________________________________

Delaware	20-5657551
(State or other jurisdiction of incorporation of organization)	(I.R.S. Employer Identification Number)

Fuel Tech, Inc.

27601 Bella Vista Parkway

Warrenville, IL 60555-1617

630-845-4500

www.ftek.com

(Address and telephone number of principal executive offices)

  ________________________________

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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  ¨

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 definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	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  ¨    No  x

On August 7, 2013 there were outstanding 22,374,873 shares of Common Stock, par value $0.01 per share, of the registrant.

FUEL TECH, INC.

Form 10-Q for the three-month period ended June 30, 2013

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	1
	Consolidated Statements of Operations for the Three- and Six-Month Periods Ended June 30, 2013 and 2012	2
	Consolidated Statements of Comprehensive Income for the Three- and Six-Month Periods Ended June 30, 2013 and 2012	3
	Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2013 and 2012	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 6.	Exhibits	20
SIGNATURES		21

PART I.        FINANCIAL INFORMATION

Item 1.        Financial Statements

FUEL TECH, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)

	June 30, 2013			December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	23,113		$	24,453
Marketable securities	24			44
Accounts receivable, net of allowance for doubtful accounts of $610 and $460, respectively	41,418			30,169
Inventories	719			513
Prepaid expenses and other current assets	1,716			3,956
Prepaid income taxes	1,182			156
Deferred income taxes	635			573
Total current assets	68,807			59,864
Property and equipment, net of accumulated depreciation of $18,978 and $19,421, respectively	13,811			13,749
Goodwill	21,051			21,051
Other intangible assets, net of accumulated amortization of $4,692 and $4,270, respectively	4,574			4,838
Deferred income taxes	2,457			3,688
Other assets	2,372			2,707
Total assets	$	113,072		$	105,897
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt	807			—
Accounts payable	13,026			12,828
Accrued liabilities:
Employee compensation	3,184			3,175
Other accrued liabilities	9,881			4,943
Total current liabilities	26,898			20,946
Other liabilities	701			715
Total liabilities	27,599			21,661
Shareholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 22,472,238 and 22,111,675 shares issued, and 22,374,873 and 22,102,549 outstanding	225			221
Additional paid-in capital	133,602			133,498
Accumulated deficit	(47,913		)	(49,128		)
Accumulated other comprehensive loss	(127		)	(392		)
Nil coupon perpetual loan notes	76			76
Treasury stock, 97,365 and 9,126 shares in 2013 and 2012, respectively, at cost	(390		)	(39		)
Total shareholders’ equity	85,473			84,236
Total liabilities and shareholders’ equity	$	113,072		$	105,897

See notes to consolidated financial statements.

1

FUEL TECH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except share and per-share data)

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2013			2012			2013			2012
Revenues	$	29,092		$	20,911		$	51,576		$	46,123
Costs and expenses:
Cost of sales	17,227			11,880			30,279			25,100
Selling, general and administrative	9,307			7,874			17,765			16,868
Research and development	430			969			1,363			1,475
	26,964			20,723			49,407			43,443
Operating income	2,128			188			2,169			2,680
Interest expense	(10		)	(49		)	(10		)	(74		)
Interest income	14			40			29			40
Other expense	(129		)	(72		)	(209		)	(51		)
Income before income taxes	2,003			107			1,979			2,595
Income tax expense	(767		)	(39		)	(764		)	(984		)
Net income	$	1,236		$	68		$	1,215		$	1,611
Net income per common share:
Basic	$	0.06		$	0.00		$	0.05		$	0.07
Diluted	$	0.05		$	0.00		$	0.05		$	0.07
Weighted-average number of common shares outstanding:
Basic	22,197,000			23,107,000			22,155,000			23,349,000
Diluted	23,295,000			23,984,000			23,133,000			24,122,000

See notes to consolidated financial statements.

2

FUEL TECH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2013			2012			2013			2012
Net income	$	1,236		$	68		$	1,215		$	1,611
Other comprehensive income:
Foreign currency translation adjustments	540			70			277			104
Unrealized losses from marketable securities, net of tax	(12		)	(26		)	(12		)	(11		)
Total other comprehensive income	528			44			265			93
Comprehensive income	$	1,764		$	112		$	1,480		$	1,704

See notes to consolidated financial statements.

3

FUEL TECH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Six Months Ended   June 30,
	2013			2012
Operating Activities
Net income	$	1,215		$	1,611
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation	1,105			1,091
Amortization	422			451
Bad debt expense (recovery)	152			(6		)
Deferred income taxes	613			(89		)
Stock based compensation	665			372
Changes in operating assets and liabilities:
Accounts receivable	(11,084		)	8,606
Inventories	(202		)	(80		)
Prepaid expenses, other current assets and other noncurrent assets	2,584			869
Accounts payable	221			(4,017		)
Accrued liabilities and other noncurrent liabilities	3,817			(3,508		)
Net cash (used in) provided by operating activities	(492		)	5,300
Investing Activities
Purchases of property, equipment and patents	(1,326		)	(1,726		)
Net cash (used in) investing activities	(1,326		)	(1,726		)
Financing Activities
Payments to repurchase common stock	—			(7,179		)
Proceeds from short-term borrowings	799			—
Acquisition of treasury stock	(351		)	—
Net cash provided by (used in) financing activities	448			(7,179		)
Effect of exchange rate fluctuations on cash	30			101
Net decrease in cash and cash equivalents	(1,340		)	(3,504		)
Cash and cash equivalents at beginning of period	24,453			28,229
Cash and cash equivalents at end of period	$	23,113		$	24,725

See notes to consolidated financial statements.

4

FUEL TECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2013

(Unaudited)

(in thousands, except share and per-share data)

Note A:        Nature of Business

Fuel Tech, Inc. (Fuel Tech or the Company or “we”, “us”, or “our”) is a fully integrated company that uses a suite of advanced technologies to provide boiler optimization, efficiency improvement and air pollution reduction and control solutions to utility and industrial customers worldwide. Originally incorporated in 1987 under the laws of the Netherlands Antilles as Fuel-Tech N.V., Fuel Tech became domesticated in the United States on September 30, 2006, and continues as a Delaware corporation with its corporate headquarters at 27601 Bella Vista Parkway, Warrenville, Illinois, 60555-1617. Fuel Tech maintains an Internet website at www.ftek.com. Fuel Tech’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as amended (Exchange Act), are made available through our website as soon as reasonably practical after electronically filed or furnished to the Securities and Exchange Commission. Also available on Fuel Tech’s website are the Company’s Corporate Governance Guidelines and Code of Ethics and Business Conduct, as well as the charters of the Audit, Compensation, and Nominating and Corporate Governance committees of the Board of Directors. All of these documents are available in print without charge to stockholders who request them. Information on our website is not incorporated into this report.

Fuel Tech’s special focus is the worldwide marketing of its nitrogen oxide (NOx) reduction and FUEL CHEM^® processes. The Air Pollution Control (APC) technology segment reduces NOx emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources by utilizing combustion optimization techniques and Low NOx and Ultra Low NOx Burners; Over-Fire Air systems, NOxOUT^® and HERT™ High Energy Reagent Technology™ SNCR systems; systems that incorporate ASCR™ (Advanced Selective Catalytic Reduction) technologies including NOxOUT-CASCADE^®, ULTRA™ and NOxOUT-SCR^® processes, Ammonia Injection Grid (AIG) and Graduated Straightening Grid (GSG™). The FUEL CHEM^® technology segment improves the efficiency, reliability and environmental status of combustion units by controlling slagging, fouling and corrosion, as well as the formation of sulfur trioxide, ammonium bisulfate, particulate matter (PM2.5), carbon dioxide, NOx and unburned carbon in fly ash through the addition of chemicals into the fuel or via TIFI^® Targeted In-Furnace Injection™ programs. Fuel Tech has other technologies, both commercially available and in the development stage, all of which are related to APC and FUEL CHEM technology segments or are similar in their technological base. We have expended significant resources in the research and development of new technologies in building our proprietary portfolio of air pollution control, fuel and boiler treatment chemicals, computer modeling and advanced visualization technologies. Fuel Tech’s business is materially dependent on the continued existence and enforcement of worldwide air quality regulations.

Note B:        Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the balance sheet and results of operations for the periods covered have been included and all significant intercompany transactions and balances have been eliminated.

The balance sheet at December 31, 2012 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in Fuel Tech’s Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission.

Note C:        Revenue Recognition Policy

Revenues from the sales of chemical products are recorded when title transfers, either at the point of shipment or at the point of destination, depending on the contract with the customer.

Fuel Tech uses the percentage of completion method of accounting for equipment construction and license contracts that are sold within the Air Pollution Control technology segment. Under the percentage of completion method, revenues are recognized as work is performed based on the relationship between actual construction costs incurred and total estimated costs at completion. Construction costs include all direct costs such as materials, labor, and subcontracting costs, and indirect costs allocable to the particular contract such as indirect labor, tools and equipment, and supplies. Revisions in completion estimates and contract values are made in the period in which the facts giving rise to the revisions become known and can influence the timing of when revenues are recognized under the percentage of completion method of accounting. Such revisions have historically not had a material effect on the amount of revenue recognized. The completed contract method is used for certain contracts when reasonably dependable

5

estimates of the percentage of completion cannot be made. When the completed contract method is used, revenue and costs are deferred until the contract is substantially complete, which usually occurs upon customer acceptance of the installed product. Provisions are made for estimated losses on uncompleted contracts in the period in which such losses are determined. As of June 30, 2013, and December 31, 2012, the Company had two contracts in progress that were identified as a loss contracts and a provision for loss in the amounts of $4 and $57, respectively, were recorded in other accrued liabilities on the consolidated balance sheet.

Fuel Tech’s APC contracts are typically eight to sixteen months in length. A typical contract will have three or four critical operational measurements that, when achieved, serve as the basis for us to invoice the customer via progress billings. At a minimum, these measurements will include the generation of engineering drawings, the shipment of equipment and the completion of a system performance test.

As part of most of its contractual APC project agreements, Fuel Tech will agree to customer-specific acceptance criteria that relate to the operational performance of the system that is being sold. These criteria are determined based on mathematical modeling that is performed by Fuel Tech personnel, which is based on operational inputs that are provided by the customer. The customer will warrant that these operational inputs are accurate as they are specified in the binding contractual agreement. Further, the customer is solely responsible for the accuracy of the operating condition information; typically all performance guarantees and equipment warranties granted by us are voidable if the operating condition information is inaccurate or is not met.

Accounts receivable includes unbilled receivables, representing revenues recognized in excess of billings on uncompleted contracts under the percentage of completion method of accounting. At June 30, 2013 and December 31, 2012, unbilled receivables were approximately $18,142 and $15,661, respectively, and are included in accounts receivable on the consolidated balance sheets. Billings in excess of costs and estimated earnings on uncompleted contracts were $3,804 and $1,703, at June 30, 2013 and December 31, 2012, respectively. Such amounts are included in other accrued liabilities on the consolidated balance sheets.

Fuel Tech has installed over 700 units with APC technology and normally provides performance guarantees to our customers based on the operating conditions for the project. As part of the project implementation process, we perform system start-up and optimization services that effectively serve as a test of actual project performance. We believe that this test, combined with the accuracy of the modeling that is performed, enables revenue to be recognized prior to the receipt of formal customer acceptance.

Note D:        Cost of Sales

Cost of sales includes all internal and external engineering costs, equipment and chemical charges, inbound and outbound freight expenses, internal and site transfer costs, installation charges, purchasing and receiving costs, inspection costs, warehousing costs, project personnel travel expenses and other direct and indirect expenses specifically identified as project- or product line-related, as appropriate (e.g., test equipment depreciation and certain insurance expenses). Certain depreciation and amortization expenses related to tangible and intangible assets, respectively, are also allocated to cost of sales.

Note E:        Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily include the following categories except where an allocation to the cost of sales line item is warranted due to the project- or product-line nature of a portion of the expense category: salaries and wages, employee benefits, non-project travel, insurance, legal, rent, accounting and auditing, recruiting, telephony, employee training, Board of Directors’ fees, auto rental, office supplies, dues and subscriptions, utilities, real estate taxes, commissions and bonuses, marketing materials, postage and business taxes. Departments comprising the selling, general and administrative line item primarily include the functions of executive management, finance and accounting, investor relations, regulatory affairs, marketing, business development, information technology, human resources, sales, legal and general administration.

Note F:        Available-for-Sale Marketable Securities

At the time of purchase, marketable securities are classified as available-for-sale as management has the intent and ability to hold such securities for an indefinite period of time, but not necessarily to maturity. Any decision to sell available-for-sale securities would be based on various factors, including, but not limited to asset/liability management strategies, changes in interest rates or prepayment risks, and liquidity needs. Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related deferred income taxes, recorded in equity as a separate component of other comprehensive income (OCI). Our marketable securities consist of a single equity investment with a fair value of $24 and $44 and no cost basis at June 30, 2013 and December 31, 2012.

Purchases and sales of securities are recognized on a trade date basis. Realized securities gains or losses are reported in other income/(expense) in the Consolidated Statements of Operations. The cost of securities sold is based on the specific identification method. On a quarterly basis, we make an assessment to determine if there have been any events or circumstances to indicate whether a security with an unrealized loss is impaired on an other-than-temporary (OTTI) basis. This determination requires significant judgment. OTTI is considered to have occurred (1) if management intends to sell the security; (2) if it is more likely than not we will be required to sell the security before recovery of its amortized cost basis; or (3)the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis. The credit-related OTTI, represented by the expected loss in principal, is recognized in non-interest income, while noncredit-related OTTI is recognized in OCI. For securities which we do

6

expect to sell, all OTTI is recognized in earnings. Presentation of OTTI is made in the income statement on a gross basis with a reduction for the amount of OTTI recognized in OCI. Once an other-than-temporary impairment is recorded, when future cash flows can be reasonably estimated, future cash flows are re-allocated between interest and principal cash flows to provide for a level-yield on the security. We have not experienced any other-than-temporary impairments during the periods ended June 30, 2013 and 2012.

Note G:        Accumulated Other Comprehensive (Loss) Income

The changes in accumulated other comprehensive (loss) income by component were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Foreign currency translation
Balance at beginning of period	$	(682	)	$	379		$	(419	)	$	345
Other comprehensive income (loss):
Foreign currency translation adjustments (1)	540			70			277			104
Balance at end of period	$	(142	)	$	449		$	(142	)	$	449
Available-for-sale marketable securities
Balance at beginning of period	$	27		$	51		$	27		$	36
Other comprehensive income:
Net unrealized holding gain (2)	(20		)	(41		)	(20		)	(17		)
Deferred income taxes (2)	8			15			8			6
Total other comprehensive income	(12		)	(26		)	(12		)	(11		)
Balance at end of period	$	15		$	25		$	15		$	25
Total accumulated other comprehensive (loss) income	$	(127	)	$	474		$	(127	)	$	474

(1) In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.

(2) In all periods presented, there were no realized holding gains or losses and therefore no amounts were reclassified to earnings.

Note H:        Treasury Stock

Common stock held in treasury totaled 97,365 and 9,126 with a cost of $390 and $39 at June 30, 2013 and December 31, 2012, respectively. These shares were withheld from employees to settle personal tax withholding obligations that arose as a result of restricted stock units that vested during the first and second quarter of 2013 and fourth quarter of 2012.

Note I:        Earnings per Share Data

Basic earnings per share excludes the dilutive effects of stock options, restricted stock units (RSUs), and the nil coupon non-redeemable convertible unsecured loan notes. Diluted earnings per share includes the dilutive effect of stock options, restricted stock units, and of the nil coupon non-redeemable convertible unsecured loan notes. The following table sets forth the weighted-average shares used in calculating the earnings per share for the three-month periods ended June 30, 2013 and 2012.

	Three Months Ended   June 30,		Six Months Ended   June 30,
	2013	2012	2013	2012
Basic weighted-average shares	22,197,000	23,107,000	22,155,000	23,349,000
Conversion of unsecured loan notes	7,000	7,000	7,000	7,000
Unvested options and RSUs	1,091,000	870,000	971,000	766,000
Diluted weighted-average shares	23,295,000	23,984,000	23,133,000	24,122,000

Fuel Tech had 1,658,000 and 1,547,000 weighted average stock awards outstanding at June 30, 2013 and 2012, respectively, that were not dilutive for the purposes of inclusion in the calculation of diluted earnings per share but could potentially become dilutive in future periods.

Note J:        Stock-Based Compensation

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Fuel Tech has a stock-based employee compensation plan, referred to as the Fuel Tech, Inc. Incentive Plan (Incentive Plan), under which awards may be granted to participants in the form of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance awards, bonuses or other forms of share-based or non-share-based awards or combinations thereof. Participants in the Incentive Plan may be Fuel Tech’s directors, officers, employees, consultants or advisors (except consultants or advisors in capital-raising transactions) as the directors determine are key to the success of Fuel Tech’s business. The amount of shares that may be issued or reserved for awards to participants under a 2004 amendment to the Incentive Plan is 12.5% of outstanding shares calculated on a diluted basis. At June 30, 2013, Fuel Tech had approximately 392,000 equity awards available for issuance under the Incentive Plan.

Stock-based compensation is included in selling, general, and administrative costs in our Consolidated Statements of Operations. The components of stock-based compensation for the three- and six- month periods ended June 30, 2013 and 2012 were as follows:

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2013			2012			2013			2012
Stock options and restricted stock units	$	336		$	147		$	665		$	341
Deferred directors fees	—			15			—			31
Total stock-based compensation expense	336			162			665			372
Tax benefit of stock-based compensation expense	(122		)	(57		)	(242		)	(129		)
After-tax effect of stock-based compensation	$	214		$	105		$	423		$	243

As of June 30, 2013, there was $3,528 of total unrecognized compensation cost related to all non-vested share-based compensation arrangements granted under the Incentive Plan.

Stock Options

Stock options granted to employees under the Incentive Plan have a 10-year life and they vest as follows: 50% after the second anniversary of the award date, 25% after the third anniversary, and the final 25% after the fourth anniversary of the award date. Fuel Tech calculates stock compensation expense for employee option awards based on the grant date fair value of the award, less expected annual forfeitures, and recognizes expense on a straight-line basis over the four-year service period of the award. Stock options granted to members of our board of directors vest immediately. Stock compensation for these awards is based on the grant date fair value of the award and is recognized in expense immediately.

Fuel Tech uses the Black-Scholes option pricing model to estimate the grant date fair value of employee stock options. The principal variable assumptions utilized in valuing options and the methodology for estimating such model inputs include: (1) risk-free interest rate – an estimate based on the yield of zero–coupon treasury securities with a maturity equal to the expected life of the option; (2) expected volatility – an estimate based on the historical volatility of Fuel Tech’s Common Stock for a period equal to the expected life of the option; and (3) expected life of the option – an estimate based on historical experience including the effect of employee terminations.

Based on the results of the model, the weighted-average fair value of the stock options granted during the six-month period ended June 30, 2013 was $1.79 per option using the following assumptions:

Expected dividend yield	0.0%
Risk-free interest rate	1.01%
Expected volatility	55.2%
Expected life of option	4.7 years

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Stock option activity for Fuel Tech’s Incentive Plan for the six months ended June 30, 2013 was as follows:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on January 1, 2013	1,914,000		$	11.38
Granted	80,000		3.85
Exercised	—		—
Expired or forfeited	(67,000	)	6.05
Outstanding on June 30, 2013	1,927,000		$	11.25	4.0 years	$	17
Exercisable on June 30, 2013	1,897,000		$	11.31	4.0 years	$	17

Non-vested stock option activity for the six months ended June 30, 2013 was as follows:

	Non-Vested Stock Options Outstanding		Weighted-Average Grant Date Fair Value
Outstanding on January 1, 2013	80,500		$	5.35
Granted	80,000		1.79
Vested	(128,000	)	3.34
Forfeited	(2,500	)	5.98
Outstanding on June 30, 2013	30,000		$	4.36

As of June 30, 2013, there was $45 of total unrecognized compensation cost related to non-vested stock options granted under the Incentive Plan. That cost is expected to be recognized over a weighted average period of 1.0 year.

Restricted Stock Units

Restricted stock units (RSUs) granted to employees vest over time based on continued service (typically vesting over a period between one to three years in equal installments). Such time-vested RSUs are valued at the date of grant using the intrinsic value method. Compensation cost, adjusted for estimated forfeitures, is amortized on a straight-line basis over the requisite service period.

In addition to the time vested RSUs described above, commencing in 2011, on an annual basis the Company entered into performance-based RSU agreements (the Agreements) with each of the Company’s President/Chief Executive Officer, Treasurer/Chief Financial Officer, Executive Vice President of Marketing & Sales, and Executive Vice President of Worldwide Operations. Commencing in 2013, the Company’s Senior Vice President, General Counsel, and Secretary also entered into an agreement. The Agreements provide each participating executive the opportunity to earn three types of awards with each award type specifying a targeted number of RSUs that may be granted to each executive based on either the individual performance of the executive or the Company’s relative performance compared to a peer group, as determined by the award type. The Compensation Committee of our Board of Directors (the Committee) determines the extent to which, if any, RSUs will be granted based on the achievement of the applicable performance criteria specified in the Agreement. This determination will be made following the completion of the applicable performance period (each a Determination Date). Such performance based awards include the following:

• The first type of award is based on individual performance during the respective calendar year as determined by the Committee based on performance criteria specified in the Agreement. These awards will vest over a three year period beginning on the Determination Date. We estimated the fair value of these performance-based RSU awards on the date of the Agreement using the trading price of the Company’s stock on the date of determination and our estimate of the probability that the specified performance criteria will be met. The fair value measurement and probability estimate will be re-measured each reporting date until the Determination Date, at which time the final award amount will be known. For these job performance-based awards, we amortize compensation costs over the requisite service period, adjusted for estimated forfeitures, for each separately vesting tranche of the award.

• The second type of RSU award contains a targeted number of RSUs to be granted based on the Company’s revenue growth relative to a specified peer group during a period of two calendar years. These awards vest 67% on the second anniversary of the Agreement date and 33% on the third anniversary of the Agreement date. We estimated the fair value of these performance-based RSU awards on the Agreement date using the trading price of the Company’s stock on the date of determination and our estimate of the probability that the specified performance criteria will be met. For these revenue

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growth performance-based awards, we amortize compensation costs over the requisite service period, adjusted for estimated forfeitures, for each separately vesting tranche of the award.

• The third type of RSU award contains a targeted number of RSUs to be granted based on the total shareholder return (TSR) of the Company’s common stock relative to a specified peer group during a period of two calendar years. These awards vest 67% on the second anniversary of the Agreement date and 33% on the third anniversary of the Agreement date. We estimated the fair value of these market-based RSU awards on the Agreement date using a Monte Carlo valuation methodology and amortize the fair value over the requisite service period for each separately vesting tranche of the award. The principal variable assumptions utilized in valuing these RSUs under this valuation methodology include the risk-free interest rate, stock volatility, and correlations between our stock price and the stock prices of a peer group of companies.

At June 30, 2013, there is $3,483 of unrecognized compensation costs related to restricted stock unit awards to be recognized over a weighted average period of 2.4 years.

A summary of restricted stock unit activity for the six-month period ended June 30, 2013 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Unvested restricted stock units at December 31, 2012	752,024		$	6.22
Granted	476,000		4.77
Forfeited	(45,654	)	7.57
Vested	(360,563	)	5.36
Unvested restricted stock units at June 30, 2013	821,807		$	5.68

Deferred Directors Fees

In addition to the Incentive Plan, Fuel Tech has a Deferred Compensation Plan for Directors (Deferred Plan). Under the terms of the Deferred Plan, Directors can elect to defer Directors’ fees for shares of Fuel Tech Common Stock that are issuable at a future date as defined in the agreement. In accordance with ASC 718, Fuel Tech accounts for these awards as equity awards. In the three-month periods ended June 30, 2013 and 2012, Fuel Tech recorded $0 and $31, respectively, of stock-based compensation expense under the Deferred Plan.

Note K:        Debt

On June 30, 2013, Fuel Tech amended its existing revolving credit facility (the Facility) with JPMorgan Chase Bank, N.A (JPM Chase) to extend the maturity date through June 30, 2015. The total borrowing base of the facility is $15,000 and contains a provision to increase the facility up to a total principal amount of $25,000 upon approval from JPM Chase. The Facility is unsecured, bears interest at a rate of LIBOR plus a spread range of 250 basis points to 375 basis points, as determined by a formula related to the Company’s leverage ratio, and has the Company’s Italian subsidiary, Fuel Tech S.r.l., as a guarantor. Fuel Tech can use this Facility for cash advances and standby letters of credit. As of June 30, 2013 and December 31, 2012, there were no outstanding borrowings on the credit facility.

The Facility contains several debt covenants with which the Company must comply on a quarterly or annual basis, including a maximum Funded Debt to EBITDA Ratio (or “Leverage Ratio”, as defined in the Facility) of 2.0:1.0 based on the four trailing quarterly periods. Maximum funded debt is defined as all borrowed funds, outstanding standby letters of credit and bank guarantees. EBITDA includes after tax earnings with add backs for interest expense, income taxes, depreciation and amortization, and stock-based compensation expenses. In addition, the Facility covenants include an annual capital expenditure limit of $10,000 and a minimum tangible net worth of $55,000, adjusted upward for 50% of net income generated and 100% of all capital issuances. At June 30, 2013, the Company was in compliance with all financial covenants specified by the Facility.

At June 30, 2013 and December 31, 2012, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $6,952 and $7,432, respectively, on its domestic credit facility in connection with contracts in process. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments. At June 30, 2013 and December 31, 2012, there were no cash borrowings under the domestic revolving credit facility and approximately $8,048 and $7,568, respectively, was available for future borrowings. The Company pays a commitment fee of 0.25% per year on the unused portion of the revolving credit facility.

On June 28, 2013, Beijing Fuel Tech Environmental Technologies Company, Ltd. (Beijing Fuel Tech), a wholly-owned subsidiary of Fuel Tech, entered into a new revolving credit facility (the China Facility) agreement with JPM Chase for RMB 35 million (approximately $5,655), which expires on June 27, 2014. This new credit facility replaced the previous RMB 35 million facility that expired on June 28, 2013. The facility is unsecured, bears interest at a rate of 125% of the People’s Bank of China (PBOC) Base Rate, and is guaranteed by Fuel Tech. Beijing Fuel Tech can use this facility for cash advances and bank guarantees. As of

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June 30, 2013 and December 31, 2012, Beijing Fuel Tech has borrowings outstanding in the amount of $807 and $0, respectively. These borrowings were subject to interest rates of approximately 7.0% at June 30, 2013 and December 31, 2012, respectively.

At June 30, 2013 and December 31, 2012, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $1,101 and $1,112, respectively, on its Beijing Fuel Tech revolving credit facility in connection with contracts in process. At June 30, 2013 and December 31, 2012, approximately $3,747 and $4,429 was available for future borrowings.

In the event of default on either the domestic facility or the China facility, the cross default feature in each allows the lending bank to accelerate the payments of any amounts outstanding and may, under certain circumstances, allow the bank to cancel the facility. If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy the payment due, may require the Company to obtain alternate financing to satisfy the accelerated payment.

Interest payments in the amount of $10 and $74 were made during the six-month periods ended June 30, 2013 and 2012.

Note L:        Business Segment and Geographic Disclosures

Fuel Tech segregates its financial results into two reportable segments representing two broad technology segments as follows:

• The Air Pollution Control technology segment includes technologies to reduce NOx emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources. These include Low and Ultra Low NOx Burners (LNB and ULNB), Over-Fire Air (OFA) systems, NOxOUT^® and HERT™ Selective Non-Catalytic Reduction (SNCR) systems, and Advanced Selective Catalytic Reduction (ASCR™) systems. The ASCR system includes ULNB, OFA, and SNCR components, along with a downsized SCR catalyst, Ammonia Injection Grid (AIG), and Graduated Straightening Grid (GSG™) systems to provide high NOx reductions at significantly lower capital and operating costs than conventional SCR systems. The NOxOUT CASCADE^® and NOxOUT-SCR^® processes are basic types of ASCR systems, using just SNCR and SCR catalyst components. ULTRA™ technology creates ammonia at a plant site using safe urea for use with any SCR application. Flue Gas Conditioning systems are chemical injection systems offered in markets outside the U.S. and Canada to enhance electrostatic precipitator and fabric filter performance in controlling particulate emissions.

• The FUEL CHEM^® technology segment, which uses chemical processes in combination with advanced Computational Fluid Dynamics (CFD) and Chemical Kinetics Modeling (CKM) boiler modeling, for the control of slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in furnaces and boilers through the addition of chemicals into the furnace using TIFI^® Targeted In-Furnace Injection™ technology.

The “Other” classification includes those profit and loss items not allocated by Fuel Tech to each reportable segment. Further, there are no intersegment sales that require elimination.

Fuel Tech evaluates performance and allocates resources based on reviewing gross margin by reportable segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (Note 1 in our annual report on Form 10-K). Fuel Tech does not review assets by reportable segment, but rather, in aggregate for Fuel Tech as a whole.

Information about reporting segment net sales and gross margin are provided below:

Three months ended June 30, 2013	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	20,239		$	8,853		$	—		$	29,092
Cost of sales	(13,083		)	(4,144		)	—			(17,227		)
Gross margin	7,156			4,709			—			11,865
Selling, general and administrative	—			—			(9,307		)	(9,307		)
Research and development	—			—			(430		)	(430		)
Operating income	$	7,156		$	4,709		$	(9,737	)	$	2,128

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Three months ended June 30, 2012	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	12,818		$	8,093		$	—		$	20,911
Cost of sales	(7,951		)	(3,929		)	—			(11,880		)
Gross margin	4,867			4,164			—			9,031
Selling, general and administrative	—			—			(7,874		)	(7,874		)
Research and development	—			—			(969		)	(969		)
Operating income	$	4,867		$	4,164		$	(8,843	)	$	188

Six months ended June 30, 2013	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	33,186		$	18,390		$	—		$	51,576
Cost of sales	(21,666		)	(8,613		)	—			(30,279		)
Gross margin	11,520			9,777			—			21,297
Selling, general and administrative	—			—			(17,765		)	(17,765		)
Research and development	—			—			(1,363		)	(1,363		)
Operating income	$	11,520		$	9,777		$	(19,128	)	$	2,169

Six months ended June 30, 2012	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	28,532		$	17,591		$	—		$	46,123
Cost of sales	(16,702		)	(8,398		)	—			(25,100		)
Gross margin	11,830			9,193			—			21,023
Selling, general and administrative	—			—			(16,868		)	(16,868		)
Research and development	—			—			(1,475		)	(1,475		)
Operating income	$	11,830		$	9,193		$	(18,343	)	$	2,680

Information concerning Fuel Tech’s operations by geographic area is provided below. Revenues are attributed to countries based on the location of the customer. Assets are those directly associated with operations of the geographic area.

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2013		2012		2013		2012
Revenues:
United States	$	17,244	$	17,966	$	30,110	$	40,910
Foreign	11,848		2,945		21,466		5,213
	$	29,092	$	20,911	$	51,576	$	46,123

	June 30, 2013		December 31, 2012
Assets:
United States	$	92,860	$	86,466
Foreign	20,212		19,431
	$	113,072	$	105,897

Note M:        Contingencies

Fuel Tech issues a standard product warranty with the sale of its products to customers. Our recognition of warranty liability is based primarily on analyses of warranty claims experienced in the preceding years as the nature of our historical product sales for which we offer a warranty are substantially unchanged. This approach provides an aggregate warranty accrual that is historically aligned with actual warranty claims experienced.

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Changes in the warranty liability for the six months June 30, 2013, and 2012, are summarized below:

	Six Months Ended   June 30,
	2013			2012
Aggregate product warranty liability at beginning of period	$	776		$	313
Net aggregate expense related to product warranties	98			415
Aggregate reductions for payments	(72		)	(213		)
Aggregate product warranty liability at end of period	$	802		$	515

Note N:        Income Taxes

The Company’s effective tax rate of 39.0% and 38.0% for the six-month periods ended June 30, 2013 and 2012, respectively, differs from the statutory federal tax rate of 34% due primarily to state taxes, non-deductible stock-based compensation, differences between U.S. and foreign tax rates, foreign losses incurred with no related tax benefit, changes in state rates, and non-deductible meals and entertainment expenses.

Fuel Tech had unrecognized tax benefits as of December 31, 2012 in the amount of $42, all of which, if ultimately recognized, will reduce Fuel Tech's annual effective tax rate. There have been no material changes in unrecognized tax benefits during the three- and six- month periods ended June 30, 2013.

Note O:        Goodwill and Other Intangibles

Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. Fuel Tech has two reporting units which are reported in the FUEL CHEM^® technology segment and the APC technology segment. At June 30, 2013 and December 31, 2012, goodwill allocated to the FUEL CHEM technology segment was $1,723 while goodwill allocated to the APC technology segment was $19,328.

Goodwill is allocated to each of our reporting units after considering the nature of the net assets giving rise to the goodwill and how each reporting unit would enjoy the benefits and synergies of the net assets acquired. Our last fair value measurement test, performed annually as of October 1, revealed no indications of impairment. There were no indications of goodwill impairment in the six-month periods ended June 30, 2013 and 2012.

Fuel Tech reviews other intangible assets, which include customer lists and relationships, covenants not to compete, patent assets, tradenames, and acquired technologies, for impairment on a recurring basis or when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event that impairment indicators exist, a further analysis is performed and if the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. Management considers historical experience and all available information at the time the estimates of future cash flows are made, however, the actual cash values that could be realized may differ from those that are estimated. There were no indications of intangible asset impairment in the three- and six-month periods ended June 30, 2013 and 2012.

Note P:        Fair Value

The Company applies authoritative accounting guidance for fair value measurements of financial and nonfinancial assets and liabilities. This guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis and clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the standard establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 – Observable inputs to the valuation methodology such as quoted prices in active markets for identical assets or liabilities

• Level 2 – Inputs to the valuation methodology including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets of liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means

• Level 3 – Significant unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own estimates and assumptions or those expected to be used by market participants. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, option pricing models, and other commonly used valuation techniques

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The fair value of our marketable securities was $24 and $44 at June 30, 2013 and December 31, 2012, respectively, and was determined using quoted prices in active markets for identical assets (Level 1 fair value measurements). Transfers between levels of the fair value hierarchy are recognized based on the actual date of the event or change in circumstances that caused the transfer. We had no assets or liabilities that were valued using level 2 or level 3 inputs and therefore there were no transfers between levels of the fair value hierarchy during the six-month periods ended June 30, 2013.

The carrying amount of our short-term debt and revolving line of credit approximates fair value due to its short-term nature and because the amounts outstanding accrue interest at variable market-based rates.

Note Q:        Recently Added and Pending Accounting Pronouncements

In February 2013, the FASB issued changes to the reporting of amounts reclassified out of accumulated other comprehensive income. These changes require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. These requirements are to be applied to each component of accumulated other comprehensive income. These changes were adopted by Fuel Tech on January 1, 2013 and did not have an impact on the Consolidated Financial Statements other than the additional disclosure requirements.

In February 2013, the FASB issued changes to the accounting for obligations resulting from joint and several liability arrangements. These changes require an entity to measure such obligations for which the total amount of the obligation is fixed at the reporting date as the sum of (i) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors, and (ii) any additional amount the reporting entity expects to pay on behalf of its co-obligors. An entity will also be required to disclose the nature and amount of the obligation as well as other information about those obligations. Examples of obligations subject to these requirements are debt arrangements and settled litigation and judicial rulings. These changes become effective for Fuel Tech on January 1, 2014. Management has determined that the adoption of these changes will not have an impact on the Consolidated Financial Statements, as Fuel Tech does not currently have any such arrangements.

In March 2013, the FASB issued changes to a parent entity's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. A parent entity is required to release any related cumulative foreign currency translation adjustment from accumulated other comprehensive income into net income in the following circumstances: (i) a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided; (ii) a partial sale of an equity method investment that is a foreign entity; (iii) a partial sale of an equity method investment that is not a foreign entity whereby the partial sale represents a complete or substantially complete liquidation of the foreign entity that held the equity method investment; and (iv) the sale of an investment in a foreign entity. These changes become effective for Fuel Tech on January 1, 2014. Management has determined that the adoption of these changes will need to be considered in the Consolidated Financial Statements in the event Fuel Tech initiates any of the transactions described above.

Note R:        Share Repurchase Program

In August 2011, Fuel Tech’s Board of Directors authorized the repurchase of up to $6 million of its outstanding common shares through December 31, 2012. This initial program was completed in the quarter ended March 31, 2012. In May 2012, the Board of Directors authorized a second repurchase program allowing the Company to repurchase up to an additional $6 million of its outstanding common shares through June 30, 2013 and this repurchase program was completed in September 2012. The share repurchase programs were funded through the Company’s existing cash on hand. Purchases made pursuant to the programs are made in the open market. The timing, manner, price and amount of any repurchases are determined by the Company in its discretion and are subject to economic and market conditions, stock price, applicable legal requirements, and other factors.

During the course of the share repurchase programs, Fuel Tech repurchased an aggregate of 2,306,590 common shares for a total cost of approximately $12,000 including commissions of approximately $76. These acquired shares have been retired and are no longer shown as issued or outstanding shares.

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The following table summarizes our share repurchase programs since their inception:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Cost		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
Phase One Program
August 25, 2011 through September 30, 2011	571,554	$	5.89	$	3,367	$	2,633
October 1, 2011 through December 31, 2011	130,160	5.71		744		1,889
January 1, 2012 through March 31, 2012	334,636	5.64		1,889		—
Phase Two Program
April 1, 2012 through June 30, 2012	1,124,797	4.70		5,290		710
July 1, 2012 through September 30, 2012	145,443	4.88		710		—
Total	2,306,590	$	5.20	$	12,000	$	—

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FUEL TECH, INC.

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

Results of Operations

Revenues for the three months ended June 30, 2013 and 2012 were $29,092 and $20,911, respectively, representing an increase of 39% versus the same period last year. Revenues for the six months ended June 30, 2013 increased 12% to $51,576 from $46,123 for the six months ended June 30, 2012.

The Air Pollution Control (APC) technology segment generated revenues of $20,239 and $33,186 for the three- and six-months ended June 30, 2013, respectively, an increase of $7,421 or 58%, and $4,654 or 16%, from the prior year periods reflecting work progress on international and domestic construction project bookings, particularly from a large project in Chile.

Consolidated APC backlog at June 30, 2013 was $45,135 versus backlog at June 30, 2012 of $20,100. Our current backlog consists of US domestic projects totaling $15,763 and international projects totaling $29,372.

The FUEL CHEM^® technology segment generated revenues of $8,853 and $18,390 for the three- and six-months ended June 30, 2013, respectively, an increase of $760, or 9%, and $799, or 5%, versus the respective prior year periods. The increase is due to a higher level of shipping activity at a few key existing customer accounts. However, the overall FUEL CHEM technology segment is still affected by the soft electric demand market and fuel switching as a result of low natural gas prices, which have led to unscheduled outages and coal combustion units operating at less than full capacity.

Consolidated gross margin percentage for the three-month periods ended June 30, 2013 and 2012 were 41% and 43%, respectively. For the three-month period, the gross margin percentage for the APC technology segment decreased to 35% from 38% in the comparable prior-year period, primarily due to an increase in the volume of lower margin foreign projects. For the FUEL CHEM technology segment, the gross margin percentage increased to 53% from 51% in the comparable prior-year quarter due to a higher margin mix of customer orders and the non-recurring sale of lower margin installation work that was recognized in the first two quarters of 2012, which diluted the margin percentage for those periods.

Consolidated gross margin percentage for the six months ended June 30, 2013 and 2012 was 41% and 46%, respectively. The gross margin percentage for the APC technology segment decreased to 35% from 41% due to an increase in lower margin foreign projects as described above. For the FUEL CHEM technology segment, the gross margin percentage increased slightly to 53% from 52% due to the margin mix of customer shipments, including the aforementioned non-recurring sale of low margin installation work recognized in the first half of 2012

Selling, general and administrative expenses (SG&A) for the three-month periods ended June 30, 2013 and 2012 were $9,307 and $7,874, respectively. This represents a six point decrease in SG&A as a percentage of revenues to 32% from 38%. On a total dollar basis SG&A increased $1,433 for the quarter versus the prior year, which was the result of increases in employee related costs of $240, outside service fees of $534, stock compensation of $174, and administrative costs associated with our foreign operations of $519, which were partially offset by a decrease in bonuses and commissions of $65 and professional fees of $102. SG&A for the six-month periods ended June 30, 2013 and 2012 were $17,765 and $16,868, respectively, which represents a two point decrease as a percentage of revenues to 34% from 37%. The increase of $897 on a total dollar basis was primarily related to increases in employee related costs of $158, outside service fees of $586, stock compensation of $324, travel costs of $137, and administrative costs related to our foreign subsidiaries of $703, partially offset by a decrease in bonuses and commissions of $492 and professional fees of $712.

Research and development expenses for the three- and six-month periods ended June 30, 2013 were $430 and $1,363, respectively, compared to $969 and $1,475, in the same prior-year periods. The Company plans to continue focusing on increased R&D efforts in the pursuit of commercial applications for its technologies outside of its traditional markets, and in the development and analysis of new technologies that could represent incremental market opportunities.

Interest expense for the three- and six-month periods ended June 30, 2013 and 2012 were $10 and $10, and $49 and $74, respectively, and related to borrowings under the Beijing Fuel Tech Facility.

Income tax expense for the three- and six- months ended ended June 30, 2013 and 2012 were $767 and $764, and $39 and $984, respectively, and reflective of the Company's net income for the respective quarters. The Company is projecting a consolidated effective tax rate of 38% for 2013.

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Liquidity and Sources of Capital

At June 30, 2013, Fuel Tech had cash and cash equivalents and short-term investments on hand of $23,137 and working capital of $41,909 versus $24,497 and $38,918 at December 31, 2012, respectively.

Operating activities used cash of $492 during the six-month period ended June 30, 2013. This decrease in cash from operations was primarily due to an increase in the outstanding accounts receivable balance of $11,084 and inventories of $202, offset by cash generated by our net income of $1,215 plus non-cash expenses of $2,957, a decrease in prepaid and other current assets of $2,584, and an increase in the outstanding payable and accrued expense balances of $4,038.

Investing activities used cash of $1,326 during the six-month period ended June 30, 2013 due to purchases of equipment and patents.

Financing activities generated cash of $448 as a result of proceeds borrowed under our Beijing Fuel Tech credit facility in the amount of $799, offset by cash used of $351 for the acquisition of common shares held in treasury that were withheld from employees for taxes due upon lapsing of restricted stock units.

On June 30, 2013, Fuel Tech amended its existing revolving credit facility (the Facility) with JPMorgan Chase Bank, N.A (JPM Chase) to extend the maturity date through June 30, 2015. The total borrowing base of the facility is $15,000 and contains a provision to increase the facility up to a total principal amount of $25,000 upon approval from JPM Chase. The Facility is unsecured, bears interest at a rate of LIBOR plus a spread range of 250 basis points to 375 basis points, as determined by a formula related to the Company’s leverage ratio, and has the Company’s Italian subsidiary, Fuel Tech S.r.l., as a guarantor. Fuel Tech can use this Facility for cash advances and standby letters of credit. As of June 30, 2013 and December 31, 2012, there were no outstanding borrowings on the credit facility.

The Facility contains several debt covenants with which the Company must comply on a quarterly or annual basis, including a maximum Funded Debt to EBITDA Ratio (or “Leverage Ratio”, as defined in the Facility) of 2.0:1.0 based on the four trailing quarterly periods. Maximum funded debt is defined as all borrowed funds, outstanding standby letters of credit and bank guarantees. EBITDA includes after tax earnings with add backs for interest expense, income taxes, depreciation and amortization, and stock-based compensation expenses. In addition, the Facility covenants include an annual capital expenditure limit of $10,000 and a minimum tangible net worth of $55,000, adjusted upward for 50% of net income generated and 100% of all capital issuances. At June 30, 2013, the Company was in compliance with all financial covenants specified by the Facility.

At June 30, 2013 and December 31, 2012, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $6,952 and $7,432, respectively, on its domestic credit facility in connection with contracts in process. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments. At June 30, 2013 and December 31, 2012, there were no cash borrowings under the domestic revolving credit facility and approximately $8,048 and $7,568, respectively, was available for future borrowings. The Company pays a commitment fee of 0.25% per year on the unused portion of the revolving credit facility.

On June 28, 2013, Beijing Fuel Tech Environmental Technologies Company, Ltd. (Beijing Fuel Tech), a wholly-owned subsidiary of Fuel Tech, entered into a new revolving credit facility (the China Facility) agreement with JPM Chase for RMB 35 million (approximately $5,655), which expires on June 27, 2014. This new credit facility replaced the previous RMB 35 million facility that expired on June 28, 2013. The facility is unsecured, bears interest at a rate of 125% of the People’s Bank of China (PBOC) Base Rate, and is guaranteed by Fuel Tech. Beijing Fuel Tech can use this facility for cash advances and bank guarantees. As of June 30, 2013 and December 31, 2012, Beijing Fuel Tech has borrowings outstanding in the amount of $807 and $0, respectively. These borrowings were subject to interest rates of approximately 7.0% at June 30, 2013 and December 31, 2012, respectively.

At June 30, 2013 and December 31, 2012, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $1,101 and $1,112, respectively, on its Beijing Fuel Tech revolving credit facility in connection with contracts in process. At June 30, 2013 and December 31, 2012, approximately $3,747 and $4,429 was available for future borrowings.

In the event of default on either the domestic facility or the China facility, the cross default feature in each allows the lending bank to accelerate the payments of any amounts outstanding and may, under certain circumstances, allow the bank to cancel the facility. If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy the payment due, may require the Company to obtain alternate financing to satisfy the accelerated payment.

In the opinion of management, Fuel Tech’s expected near-term revenue growth will be driven by the timing of penetration of the utility marketplace via utilization of its TIFI technology, by utility and industrial entities’ adherence to the NOx reduction requirements of the various domestic environmental regulations, and by the expansion of both business segments in non-U.S. geographies. Fuel Tech expects its liquidity requirements to be met by the operating results generated from these activities.

17

Contingencies and Contractual Obligations

Fuel Tech issues a standard product warranty with the sale of its products to customers as discussed in Note M. The warranty liability balance during the six-months ended June 30, 2013 increased by approximately $26.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as defined in Section 21E of the Securities Exchange Act of 1934, as amended, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and reflect Fuel Tech’s current expectations regarding future growth, results of operations, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. Fuel Tech has tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “plan,” “expect,” “estimate,” “intend,” “will,” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to Fuel Tech and are subject to various risks, uncertainties, and other factors, including, but not limited to, those discussed in Fuel Tech’s Annual Report on Form 10-K for the year ended December 31, 2012 in Item 1A under the caption “Risk Factors,” which could cause Fuel Tech’s 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. Fuel Tech undertakes 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. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in Fuel Tech’s filings with the Securities and Exchange Commission.

Item 3.        Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk Management

Fuel Tech’s earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates. We do not enter into foreign currency forward contracts nor into foreign currency option contracts to manage this risk due to the immaterial nature of the transactions involved.

Fuel Tech is also exposed to changes in interest rates primarily due to its debt facilities (refer to Note K to the consolidated financial statements). A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not have a materially adverse effect on interest expense during the upcoming year ended December 31, 2013.

Item 4.        Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Fuel Tech maintains disclosure controls and procedures and internal controls designed to ensure (a) that information required to be disclosed in Fuel Tech’s filings under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) that such information is accumulated and communicated to management, including the principal executive and financial officer, as appropriate to allow timely decisions regarding required disclosure. Fuel Tech’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a – 15(e) and 15d -15(e) of the Exchange Act, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

18

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

We are from time to time involved in litigation incidental to our business. We are not currently involved in any litigation in which we believe an adverse outcome would have a material effect on our business, financial conditions, results of operations, or prospects.

Item 1A.        Risk Factors

The risk factors included in our Annual Report on Form 10-K for fiscal year ended December 31, 2012 have not materially changed.

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

In August 2011, Fuel Tech’s Board of Directors authorized the repurchase of up to $6 million of its outstanding common shares through December 31, 2012. This initial program was completed in the quarter ended June 30, 2012. In May 2012, the Board of Directors authorized a second repurchase program allowing the Company to repurchase up to an additional $6 million of its outstanding common shares through June 30, 2013 and this repurchase program was completed in September 2012. The share repurchase programs were funded through the Company’s existing cash on hand. Purchases made pursuant to the programs are made in the open market. The timing, manner, price and amount of any repurchases are determined by the Company in its discretion and are subject to economic and market conditions, stock price, applicable legal requirements, and other factors.

During the course of the share repurchase programs, Fuel Tech repurchased an aggregate of 2,306,590 common shares for a total cost of approximately $12,000 including commissions of approximately $76. These acquired shares have been retired and are no longer shown as issued or outstanding shares.

The following table summarizes our share repurchase programs since their inception:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Cost		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
Phase One Program
August 25, 2011 through September 30, 2011	571,554	$	5.89	$	3,367	$	2,633
October 1, 2011 through December 31, 2011	130,160	5.71		744		1,889
January 1, 2012 through March 31, 2012	334,636	5.64		1,889		—
Phase Two Program
April 1, 2012 through June 30, 2012	1,124,797	4.70		5,290		710
July 1, 2012 through September 30, 2012	145,443	4.88		710		—
Total	2,306,590	$	5.20	$	12,000	$	—

19

Item 6.        Exhibits

a.	Exhibits (all filed herewith)
	4.1	Fourth Amendment to Credit Agreement, dated as of June 30, 2013, between JPMorgan Chase Bank, N.A. and Fuel Tech, Inc.
	31.1	Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	31.2	Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	32	Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002
	101.1	INSXBRL Instance Document
	101.2	SCHXBRL Taxonomy Extension Schema Document
	101.3	CALXBRL Taxonomy Extension Calculation Linkbase Document
	101.4	DEFXBRL Taxonomy Extension Definition Linkbase Document
	101.5	LABXBRL Taxonomy Extension Label Linkbase Document
	101.6	PREXBRL Taxonomy Extension Prevention Linkbase Document

20

FUEL TECH, INC.

Signatures

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

Date: August 7, 2013	By:	/s/ Douglas G. Bailey
		Douglas G. Bailey
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: August 7, 2013	By:	/s/ David S. Collins
		David S. Collins
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

21

EX-4.1

JPMORGAN CHASE BANK, N.A.

Fourth amendment to credit agreement

THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of June 30, 2013 and is by and between FUEL TECH INC., a Delaware corporation (the “Borrower”),the Loan Parties party hereto, and JPMORGAN CHASE BANK, N.A., a national banking association (“Lender”).

WHEREAS, Lender and the Loan Parties are parties to a Credit Agreement dated as of June 30, 2009 (as amended from time to time, the “Credit Agreement”). The Credit Agreement evidences certain credit facilities pursuant to which the Lender has made certain revolving loans to the Loan Parties on the terms and conditions set forth therein. The Loan Parties' obligations under the Credit Agreement are further evidenced by that certain Promissory Note executed by Borrower in the original principal amount of $25,000,000.00 dated June 30, 2009 (the “Note”); and

WHEREAS, pursuant to the First Amendment to Credit Agreement dated October 5, 2009, the parties corrected a scrivener's error which had occurred in Section 6.14 (b) (“Leverage Ratio”) of the Credit Agreement;

WHEREAS, pursuant to the Second Amendment to the Credit Agreement dated November 4, 2009, the Lender waived a default of the covenant set forth in Section 6.14(a) of the Agreement, amended the Minimum Net Income covenant, amended the Leverage Ratio, and amended the definitions of “Permitted Acquisitions” and “Applicable Rate”;

WHEREAS, pursuant to the Third Amendment to the Credit Agreement dated June 30, 2011, the Lender renewed and reduced the revolving credit facility evidenced by the Note and adjust the Tangible Net Worth Covenant;

WHEREAS, the Borrower has now requested that Lender extend the maturity date of the revolving credit facility evidenced by the Note to June 30, 2015 and the Lender is willing to do so but only on the terms and subject to the conditions herein set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows:

1.The parties acknowledge the accuracy of the foregoing recitals. All capitalized terms used herein without specific definitions should be accorded the meanings set forth for such terms in the Credit Agreement.

2.From and after the date hereof, the definition of “Maturity Date” shall be amended to hereafter provide as follows:

“Maturity Date” means June 30, 2015 or any earlier date on which the Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.”

3.From and after the date hereof, Section 6.14(b) of the Credit Agreement shall be amended to hereafter provide as follows:

“(b)Leverage Ratio. The Borrower will not permit the Leverage Ratio, determined for any period of four consecutive fiscal quarters ending on June 30, 2013 and each quarter-end thereafter, to be greater than 2.0:1.0."

4.From and after the date hereof, Section 6.14(c) of the Credit Agreement shall be amended to hereafter provide as follows:

“(c)Minimum Tangible Net Worth. Borrower's Tangible Net Worth shall not at any time be less than the Minimum Tangible Net Worth; "Minimum Tangible Net Worth" is defined for purposes of this Subsection as $55,000,000.00 as of December 31, 2012 and adjusted on the last day of each Fiscal Year of Borrower (starting with December 31, 2013) by adding an amount equal to fifty percent (50%) of Borrower's Net Income (but without reduction for any net loss) for the Fiscal Year then ended as reflected on Borrower's audited year-end financial statement plus 100% of all capital contributed through the issuance of Equity Interests in the Borrower during such period; and "Tangible Net Worth" being defined for purposes of this Subsection as Borrower's consolidated shareholders' equity (including retained earnings) less the net book value of all Intangible Assets plus the amount of any LIFO reserve plus the amount of any debt subordinated to Lender, all as determined under GAAP applied on a basis consistent with the financial statement for the most recent fiscal year. "Intangible Assets" shall mean goodwill, patents, trademarks, customer lists and other items that are categorized as intangible assets in accordance with GAAP.”

5.The obligation of the Lender to amend the Agreement as herein above set forth and the effectiveness of this Amendment, is subject to satisfaction of the following conditions precedent:

(a) Lender, Borrower and Loan Parties shall have executed this Amendment;

(b) Borrower shall be in good standing in the State of Illinois; and

(c) Borrower shall pay all costs and fees incurred by Lender in connection with the preparation and performance of this Amendment.

6.This Amendment shall be binding upon and inure to the benefit of the successors and assigns of the Borrower, Loan Parties and the Lender.

7.Except as expressly amended hereby, the Credit Agreement shall remain in full force and effect. The Credit Agreement and all rights and powers created thereby are in all respects ratified and confirmed.

8.This Amendment has been duly authorized, executed and delivered on behalf of the Borrower and Loan Parties pursuant to all requisite corporate authority, and the Credit Agreement as amended hereby constitutes the legal, valid and binding obligation of the Borrower and Loan Parties, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditor's rights.

9.Borrower hereby certifies, represents and warrants to Lender that all certifications, representations and warranties made by Borrower to Lender in or in connection with the Credit Agreement were true in all material respects as of the date of the Credit Agreement and are true in all material respects on and as of the date hereof as if made on and as of the date hereof.

10.Borrower hereby acknowledges and agrees that Borrower has no defense, offset or counterclaim to the payment of principal, interest, fees or other liabilities owing under the Credit Agreement and hereby waive and relinquishes any such defense, offset or counterclaim and Borrower hereby releases Lender and its respective officers, directors, agents, affiliates, successors and assigns from any claim, demand or cause of action, known or unknown, contingent or liquidated, which may exist or hereafter be known to exist relating to any matter prior to the date hereof.

11.Except as otherwise specified herein, this Amendment embodies the entire agreement and understanding between Lender and Borrower with respect to the subject matter hereof and supersedes all prior agreements, consents and understandings relating to such subject matter.

12.This Amendment may be signed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

13.This Amendment is governed and controlled by the laws of the state of Illinois.

[Signature Page to Follow]

IN WITNESS WHEREOF, this Amendment has been duly executed as of the date and year specified at the beginning hereof.

BORROWER:

FUEL TECH, INC.,

a Delaware corporation

By:________________________________________

Name:_____________________________________

Title:_______________________________________

FUEL TECH S.r.l.,

organized under the laws of the Italian Republic

By:________________________________________

Name:_____________________________________

Title:_______________________________________

LENDER:

JPMORGAN CHASE BANK, N.A.

a national association

By:________________________________________

Name:_____________________________________

Title:_______________________________________

EX-31.1

Exhibit 31.1

I, Douglas G. Bailey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fuel Tech, 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 officers 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 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 officers 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 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: August 7, 2013	By:	/s/ Douglas G. Bailey
		Douglas G. Bailey
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, David S. Collins, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fuel Tech, 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 officers 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 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 officers 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 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: August 7, 2013	By:	/s/ David S. Collins
		David S. Collins
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-32

Exhibit 32

The undersigned in their capacities as Chief Executive Officer and Principal Financial Officer of the Registrant do hereby certify that:

(i) this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of, and for, the periods presented in the report.

Date: August 7, 2013	By:	/s/ Douglas G. Bailey
		Douglas G. Bailey
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: August 7, 2013	By:	/s/ David S. Collins
		David S. Collins
		President and Chief Executive Officer
		(Principal Executive Officer)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (the “Act”) this certification accompanies the Report and shall not, except to the extent required by the Act, be deemed filed by the Registrant 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, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Fuel Tech, Inc. and will be retained by Fuel Tech, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Debt

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Debt

Debt

On June 30, 2013, Fuel Tech amended its existing revolving credit facility (the Facility) with JPMorgan Chase Bank, N.A (JPM Chase) to extend the maturity date through June 30, 2015. The total borrowing base of the facility is $15,000 and contains a provision to increase the facility up to a total principal amount of $25,000 upon approval from JPM Chase. The Facility is unsecured, bears interest at a rate of LIBOR plus a spread range of 250 basis points to 375 basis points, as determined by a formula related to the Company’s leverage ratio, and has the Company’s Italian subsidiary, Fuel Tech S.r.l., as a guarantor. Fuel Tech can use this Facility for cash advances and standby letters of credit. As of June 30, 2013 and December 31, 2012, there were no outstanding borrowings on the credit facility.

The Facility contains several debt covenants with which the Company must comply on a quarterly or annual basis, including a maximum Funded Debt to EBITDA Ratio (or “Leverage Ratio”, as defined in the Facility) of 2.0:1.0 based on the four trailing quarterly periods. Maximum funded debt is defined as all borrowed funds, outstanding standby letters of credit and bank guarantees. EBITDA includes after tax earnings with add backs for interest expense, income taxes, depreciation and amortization, and stock-based compensation expenses. In addition, the Facility covenants include an annual capital expenditure limit of $10,000 and a minimum tangible net worth of $55,000, adjusted upward for 50% of net income generated and 100% of all capital issuances. At June 30, 2013, the Company was in compliance with all financial covenants specified by the Facility.

At June 30, 2013 and December 31, 2012, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $6,952 and $7,432, respectively, on its domestic credit facility in connection with contracts in process. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments. At June 30, 2013 and December 31, 2012, there were no cash borrowings under the domestic revolving credit facility and approximately $8,048 and $7,568, respectively, was available for future borrowings. The Company pays a commitment fee of 0.25% per year on the unused portion of the revolving credit facility.

On June 28, 2013, Beijing Fuel Tech Environmental Technologies Company, Ltd. (Beijing Fuel Tech), a wholly-owned subsidiary of Fuel Tech, entered into a new revolving credit facility (the China Facility) agreement with JPM Chase for RMB 35 million (approximately $5,655), which expires on June 27, 2014. This new credit facility replaced the previous RMB 35 million facility that expired on June 28, 2013. The facility is unsecured, bears interest at a rate of 125% of the People’s Bank of China (PBOC) Base Rate, and is guaranteed by Fuel Tech. Beijing Fuel Tech can use this facility for cash advances and bank guarantees. As of June 30, 2013 and December 31, 2012, Beijing Fuel Tech has borrowings outstanding in the amount of $807 and $0, respectively. These borrowings were subject to interest rates of approximately 7.0% at June 30, 2013 and December 31, 2012, respectively.

At June 30, 2013 and December 31, 2012, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $1,101 and $1,112, respectively, on its Beijing Fuel Tech revolving credit facility in connection with contracts in process. At June 30, 2013 and December 31, 2012, approximately $3,747 and $4,429 was available for future borrowings.

In the event of default on either the domestic facility or the China facility, the cross default feature in each allows the lending bank to accelerate the payments of any amounts outstanding and may, under certain circumstances, allow the bank to cancel the facility. If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy the payment due, may require the Company to obtain alternate financing to satisfy the accelerated payment.

Interest payments in the amount of $10 and $74 were made during the six-month periods ended June 30, 2013 and 2012.

XML

Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Income Tax Disclosure [Abstract]
Effective Income Tax Rate (as a percent)	39.00%	38.00%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate (as a percent)	34.00%	34.00%
Unrecognized Tax Benefits (in Dollars)	$ 42

XML

Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Revenues	$ 29,092	$ 20,911	$ 51,576	$ 46,123
Costs and expenses:
Cost of sales	17,227	11,880	30,279	25,100
Selling, general and administrative	9,307	7,874	17,765	16,868
Research and development	430	969	1,363	1,475
Costs and Expenses	26,964	20,723	49,407	43,443
Operating income	2,128	188	2,169	2,680
Interest expense	(10)	(49)	(10)	(74)
Interest income	14	40	29	40
Other expense	(129)	(72)	(209)	(51)
Income before income taxes	2,003	107	1,979	2,595
Income tax expense	(767)	(39)	(764)	(984)
Net income	$ 1,236	$ 68	$ 1,215	$ 1,611
Net income per common share:
Basic (in Dollars per share)	$ 0.06	$ 0.00	$ 0.05	$ 0.07
Diluted (in Dollars per share)	$ 0.05	$ 0.00	$ 0.05	$ 0.07
Weighted-average number of common shares outstanding:
Basic (in Shares)	22,197,000	23,107,000	22,155,000	23,349,000
Diluted (in Shares)	23,295,000	23,984,000	23,133,000	24,122,000

XML

Cost of Sales

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Cost of Sales

Cost of Sales

Cost of sales includes all internal and external engineering costs, equipment and chemical charges, inbound and outbound freight expenses, internal and site transfer costs, installation charges, purchasing and receiving costs, inspection costs, warehousing costs, project personnel travel expenses and other direct and indirect expenses specifically identified as project- or product line-related, as appropriate (e.g., test equipment depreciation and certain insurance expenses). Certain depreciation and amortization expenses related to tangible and intangible assets, respectively, are also allocated to cost of sales.

XML

Share Repurchase Program (Common Shares [Member])

6 Months Ended

Jun. 30, 2013

Common Shares [Member]

Class of Stock [Line Items]

Share Repurchase Program

Share Repurchase Program

In August 2011, Fuel Tech’s Board of Directors authorized the repurchase of up to $6 million of its outstanding common shares through December 31, 2012. This initial program was completed in the quarter ended March 31, 2012. In May 2012, the Board of Directors authorized a second repurchase program allowing the Company to repurchase up to an additional $6 million of its outstanding common shares through June 30, 2013 and this repurchase program was completed in September 2012. The share repurchase programs were funded through the Company’s existing cash on hand. Purchases made pursuant to the programs are made in the open market. The timing, manner, price and amount of any repurchases are determined by the Company in its discretion and are subject to economic and market conditions, stock price, applicable legal requirements, and other factors.

During the course of the share repurchase programs, Fuel Tech repurchased an aggregate of 2,306,590 common shares for a total cost of approximately $12,000 including commissions of approximately $76. These acquired shares have been retired and are no longer shown as issued or outstanding shares.

The following table summarizes our share repurchase programs since their inception:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Cost		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
Phase One Program
August 25, 2011 through September 30, 2011	571,554	$	5.89	$	3,367	$	2,633
October 1, 2011 through December 31, 2011	130,160	5.71		744		1,889
January 1, 2012 through March 31, 2012	334,636	5.64		1,889		—
Phase Two Program
April 1, 2012 through June 30, 2012	1,124,797	4.70		5,290		710
July 1, 2012 through September 30, 2012	145,443	4.88		710		—
Total	2,306,590	$	5.20	$	12,000	$	—

XML

Share Repurchase Program (Detail) - Share Repurchase Programs (USD $)	1 Months Ended		13 Months Ended	14 Months Ended	1 Months Ended	3 Months Ended
	May 31, 2012	Aug. 31, 2011	Sep. 30, 2012	Sep. 30, 2012	Sep. 30, 2011 August 25 2011 Through September 30 2011 [Member]	Dec. 31, 2011 October 1 2011 Through December 31 2011 [Member]	Mar. 31, 2012 January 1 2012 Through March 31 2012 [Member]	Jun. 30, 2012 April 1 2012 Through June 30 2012 [Member]	Sep. 30, 2012 July 1 2012 through September 30 2012 [Member]
Stock repurchase program, authorized amount	$ 6,000,000	$ 6,000,000
Stock repurchase program, commission on repurchase of shares			76,000
Total Number of Shares Purchased			2,306,590	2,306,590	571,554	130,160	334,636	1,124,797	145,443
Average Price Paid Per Share (in Dollars per share)			$ 5.20		$ 5.89	$ 5.71	$ 5.64	$ 4.70	$ 4.88
Total Cost			12,000,000		3,367,000	744,000	1,889,000	5,290,000	710,000
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program					$ 2,633,000	$ 1,889,000		$ 710,000

XML

Business Segment and Geographic Disclosures

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Business Segment and Geographic Disclosures

Business Segment and Geographic Disclosures

Fuel Tech segregates its financial results into two reportable segments representing two broad technology segments as follows:

• The Air Pollution Control technology segment includes technologies to reduce NOx emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources. These include Low and Ultra Low NOx Burners (LNB and ULNB), Over-Fire Air (OFA) systems, NOxOUT^® and HERT™ Selective Non-Catalytic Reduction (SNCR) systems, and Advanced Selective Catalytic Reduction (ASCR™) systems. The ASCR system includes ULNB, OFA, and SNCR components, along with a downsized SCR catalyst, Ammonia Injection Grid (AIG), and Graduated Straightening Grid (GSG™) systems to provide high NOx reductions at significantly lower capital and operating costs than conventional SCR systems. The NOxOUT CASCADE^® and NOxOUT-SCR^® processes are basic types of ASCR systems, using just SNCR and SCR catalyst components. ULTRA™ technology creates ammonia at a plant site using safe urea for use with any SCR application. Flue Gas Conditioning systems are chemical injection systems offered in markets outside the U.S. and Canada to enhance electrostatic precipitator and fabric filter performance in controlling particulate emissions.

• The FUEL CHEM^® technology segment, which uses chemical processes in combination with advanced Computational Fluid Dynamics (CFD) and Chemical Kinetics Modeling (CKM) boiler modeling, for the control of slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in furnaces and boilers through the addition of chemicals into the furnace using TIFI^® Targeted In-Furnace Injection™ technology.

The “Other” classification includes those profit and loss items not allocated by Fuel Tech to each reportable segment. Further, there are no intersegment sales that require elimination.

Fuel Tech evaluates performance and allocates resources based on reviewing gross margin by reportable segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (Note 1 in our annual report on Form 10-K). Fuel Tech does not review assets by reportable segment, but rather, in aggregate for Fuel Tech as a whole.

Information about reporting segment net sales and gross margin are provided below:

Three months ended June 30, 2013	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	20,239		$	8,853		$	—		$	29,092
Cost of sales	(13,083		)	(4,144		)	—			(17,227		)
Gross margin	7,156			4,709			—			11,865
Selling, general and administrative	—			—			(9,307		)	(9,307		)
Research and development	—			—			(430		)	(430		)
Operating income	$	7,156		$	4,709		$	(9,737	)	$	2,128

Three months ended June 30, 2012	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	12,818		$	8,093		$	—		$	20,911
Cost of sales	(7,951		)	(3,929		)	—			(11,880		)
Gross margin	4,867			4,164			—			9,031
Selling, general and administrative	—			—			(7,874		)	(7,874		)
Research and development	—			—			(969		)	(969		)
Operating income	$	4,867		$	4,164		$	(8,843	)	$	188

Six months ended June 30, 2013	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	33,186		$	18,390		$	—		$	51,576
Cost of sales	(21,666		)	(8,613		)	—			(30,279		)
Gross margin	11,520			9,777			—			21,297
Selling, general and administrative	—			—			(17,765		)	(17,765		)
Research and development	—			—			(1,363		)	(1,363		)
Operating income	$	11,520		$	9,777		$	(19,128	)	$	2,169

Six months ended June 30, 2012	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	28,532		$	17,591		$	—		$	46,123
Cost of sales	(16,702		)	(8,398		)	—			(25,100		)
Gross margin	11,830			9,193			—			21,023
Selling, general and administrative	—			—			(16,868		)	(16,868		)
Research and development	—			—			(1,475		)	(1,475		)
Operating income	$	11,830		$	9,193		$	(18,343	)	$	2,680

Information concerning Fuel Tech’s operations by geographic area is provided below. Revenues are attributed to countries based on the location of the customer. Assets are those directly associated with operations of the geographic area.

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2013		2012		2013		2012
Revenues:
United States	$	17,244	$	17,966	$	30,110	$	40,910
Foreign	11,848		2,945		21,466		5,213
	$	29,092	$	20,911	$	51,576	$	46,123

	June 30, 2013		December 31, 2012
Assets:
United States	$	92,860	$	86,466
Foreign	20,212		19,431
	$	113,072	$	105,897

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Business Segment and Geographic Disclosures (Detail)	6 Months Ended
	Jun. 30, 2013 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Treasury Stock (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Equity [Abstract]
Treasury stock (in Shares)	97,365	9,126
Cost of common stock held in treasury	$ 390	$ 39

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Selling, General and Administrative Expenses (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Selling, General and Administrative Expenses, Policy

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily include the following categories except where an allocation to the cost of sales line item is warranted due to the project- or product-line nature of a portion of the expense category: salaries and wages, employee benefits, non-project travel, insurance, legal, rent, accounting and auditing, recruiting, telephony, employee training, Board of Directors’ fees, auto rental, office supplies, dues and subscriptions, utilities, real estate taxes, commissions and bonuses, marketing materials, postage and business taxes. Departments comprising the selling, general and administrative line item primarily include the functions of executive management, finance and accounting, investor relations, regulatory affairs, marketing, business development, information technology, human resources, sales, legal and general administration.

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Cost of Sales (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Cost of Sales, Policy

Cost of Sales

Cost of sales includes all internal and external engineering costs, equipment and chemical charges, inbound and outbound freight expenses, internal and site transfer costs, installation charges, purchasing and receiving costs, inspection costs, warehousing costs, project personnel travel expenses and other direct and indirect expenses specifically identified as project- or product line-related, as appropriate (e.g., test equipment depreciation and certain insurance expenses). Certain depreciation and amortization expenses related to tangible and intangible assets, respectively, are also allocated to cost of sales.

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Stock-Based Compensation (Detail) - Restricted Stock Unit Activity (USD $)	6 Months Ended
	Jun. 30, 2013
Shares (in shares)
Beginning balance	752,024
Forfeited	(45,654)
Vested	(360,563)
Ending balance	821,807
Weighted Average Grant Date Fair Value (in Dollars per share)
Beginning balance	$ 6.22
Forfeited	$ 7.57
Vested	$ 5.36
Ending balance	$ 5.68
Restricted Stock [Member]
Shares (in shares)
Granted	476,000
Weighted Average Grant Date Fair Value (in Dollars per share)
Granted	$ 4.77

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Share Repurchase Program (Tables)

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Schedule of Share Repurchase Programs

The following table summarizes our share repurchase programs since their inception:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Cost		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
Phase One Program
August 25, 2011 through September 30, 2011	571,554	$	5.89	$	3,367	$	2,633
October 1, 2011 through December 31, 2011	130,160	5.71		744		1,889
January 1, 2012 through March 31, 2012	334,636	5.64		1,889		—
Phase Two Program
April 1, 2012 through June 30, 2012	1,124,797	4.70		5,290		710
July 1, 2012 through September 30, 2012	145,443	4.88		710		—
Total	2,306,590	$	5.20	$	12,000	$	—

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Earnings per Share Data (Detail) - Basic Earnings Per Share	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Basic weighted-average shares	22,197,000	23,107,000	22,155,000	23,349,000
Conversion of unsecured loan notes	7,000	7,000	7,000	7,000
Unvested options and RSUs	1,091,000	870,000	971,000	766,000
Diluted weighted-average shares	23,295,000	23,984,000	23,133,000	24,122,000

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Business Segment and Geographic Disclosures (Detail) - Reporting Segment Net Sales and Gross Margin (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenues from external customers	$ 29,092	$ 20,911	$ 51,576	$ 46,123
Cost of sales	(17,227)	(11,880)	(30,279)	(25,100)
Gross margin	11,865	9,031	21,297	21,023
Selling, general and administrative	(9,307)	(7,874)	(17,765)	(16,868)
Research and development	(430)	(969)	(1,363)	(1,475)
Operating income	2,128	188	2,169	2,680
Air Pollution Control Segment [Member]
Revenues from external customers	20,239	12,818	33,186	28,532
Cost of sales	(13,083)	(7,951)	(21,666)	(16,702)
Gross margin	7,156	4,867	11,520	11,830
Selling, general and administrative	0	0	0	0
Research and development	0	0	0	0
Operating income	7,156	4,867	11,520	11,830
Fuel Chem Segment [Member]
Revenues from external customers	8,853	8,093	18,390	17,591
Cost of sales	(4,144)	(3,929)	(8,613)	(8,398)
Gross margin	4,709	4,164	9,777	9,193
Selling, general and administrative	0	0	0	0
Research and development	0	0	0	0
Operating income	4,709	4,164	9,777	9,193
Other Segments [Member]
Revenues from external customers	0	0	0	0
Cost of sales	0	0	0	0
Gross margin	0	0	0	0
Selling, general and administrative	(9,307)	(7,874)	(17,765)	(16,868)
Research and development	(430)	(969)	(1,363)	(1,475)
Operating income	$ (9,737)	$ (8,843)	$ (19,128)	$ (18,343)

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

Based on the results of the model, the weighted-average fair value of the stock options granted during the six-month period ended June 30, 2013 was $1.79 per option using the following assumptions:

Expected dividend yield	0.0%
Risk-free interest rate	1.01%
Expected volatility	55.2%
Expected life of option	4.7 years

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

The components of stock-based compensation for the three- and six- month periods ended June 30, 2013 and 2012 were as follows:

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2013			2012			2013			2012
Stock options and restricted stock units	$	336		$	147		$	665		$	341
Deferred directors fees	—			15			—			31
Total stock-based compensation expense	336			162			665			372
Tax benefit of stock-based compensation expense	(122		)	(57		)	(242		)	(129		)
After-tax effect of stock-based compensation	$	214		$	105		$	423		$	243

Schedule of Share-based Compensation, Stock Options, Activity

Stock option activity for Fuel Tech’s Incentive Plan for the six months ended June 30, 2013 was as follows:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on January 1, 2013	1,914,000		$	11.38
Granted	80,000		3.85
Exercised	—		—
Expired or forfeited	(67,000	)	6.05
Outstanding on June 30, 2013	1,927,000		$	11.25	4.0 years	$	17
Exercisable on June 30, 2013	1,897,000		$	11.31	4.0 years	$	17

Schedule of Nonvested Share Activity

Non-vested stock option activity for the six months ended June 30, 2013 was as follows:

	Non-Vested Stock Options Outstanding		Weighted-Average Grant Date Fair Value
Outstanding on January 1, 2013	80,500		$	5.35
Granted	80,000		1.79
Vested	(128,000	)	3.34
Forfeited	(2,500	)	5.98
Outstanding on June 30, 2013	30,000		$	4.36

Schedule of Nonvested Restricted Stock Units Activity

A summary of restricted stock unit activity for the six-month period ended June 30, 2013 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Unvested restricted stock units at December 31, 2012	752,024		$	6.22
Granted	476,000		4.77
Forfeited	(45,654	)	7.57
Vested	(360,563	)	5.36
Unvested restricted stock units at June 30, 2013	821,807		$	5.68

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Stock-Based Compensation Stock-Based Compensation (Detail) - Weighted-Average Assumptions (Details) (Stock Options [Member])	6 Months Ended
	Jun. 30, 2013
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield (as a percent)	0.00%
Risk-free interest rate (as a percent)	1.01%
Expected volatility (as a percent)	55.20%
Expected life of option (in years)	4 years 8 months 12 days

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Revenue Recognition Policy (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Revenue Recognition, Policy

Revenues from the sales of chemical products are recorded when title transfers, either at the point of shipment or at the point of destination, depending on the contract with the customer.

Fuel Tech uses the percentage of completion method of accounting for equipment construction and license contracts that are sold within the Air Pollution Control technology segment. Under the percentage of completion method, revenues are recognized as work is performed based on the relationship between actual construction costs incurred and total estimated costs at completion. Construction costs include all direct costs such as materials, labor, and subcontracting costs, and indirect costs allocable to the particular contract such as indirect labor, tools and equipment, and supplies. Revisions in completion estimates and contract values are made in the period in which the facts giving rise to the revisions become known and can influence the timing of when revenues are recognized under the percentage of completion method of accounting. Such revisions have historically not had a material effect on the amount of revenue recognized. The completed contract method is used for certain contracts when reasonably dependable estimates of the percentage of completion cannot be made. When the completed contract method is used, revenue and costs are deferred until the contract is substantially complete, which usually occurs upon customer acceptance of the installed product. Provisions are made for estimated losses on uncompleted contracts in the period in which such losses are determined.

A typical contract will have three or four critical operational measurements that, when achieved, serve as the basis for us to invoice the customer via progress billings. At a minimum, these measurements will include the generation of engineering drawings, the shipment of equipment and the completion of a system performance test.

As part of most of its contractual APC project agreements, Fuel Tech will agree to customer-specific acceptance criteria that relate to the operational performance of the system that is being sold. These criteria are determined based on mathematical modeling that is performed by Fuel Tech personnel, which is based on operational inputs that are provided by the customer. The customer will warrant that these operational inputs are accurate as they are specified in the binding contractual agreement. Further, the customer is solely responsible for the accuracy of the operating condition information; typically all performance guarantees and equipment warranties granted by us are voidable if the operating condition information is inaccurate or is not met.

Accounts receivable includes unbilled receivables, representing revenues recognized in excess of billings on uncompleted contracts under the percentage of completion method of accounting.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating Activities
Net income	$ 1,215	$ 1,611
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation	1,105	1,091
Amortization	422	451
Bad debt expense (recovery)	152	(6)
Deferred income taxes	613	(89)
Stock based compensation	665	372
Changes in operating assets and liabilities:
Accounts receivable	(11,084)	8,606
Inventories	(202)	(80)
Prepaid expenses, other current assets and other noncurrent assets	2,584	869
Accounts payable	221	(4,017)
Accrued liabilities and other noncurrent liabilities	3,817	(3,508)
Net cash (used in) provided by operating activities	(492)	5,300
Investing Activities
Purchases of property, equipment and patents	(1,326)	(1,726)
Net cash (used in) investing activities	(1,326)	(1,726)
Financing Activities
Payments to repurchase common stock	0	(7,179)
Proceeds from short-term borrowings	799	0
Acquisition of treasury stock	(351)	0
Net cash provided by (used in) financing activities	448	(7,179)
Effect of exchange rate fluctuations on cash	30	101
Net decrease in cash and cash equivalents	(1,340)	(3,504)
Cash and cash equivalents at beginning of period	24,453	28,229
Cash and cash equivalents at end of period	$ 23,113	$ 24,725

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Basis of Presentation

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the balance sheet and results of operations for the periods covered have been included and all significant intercompany transactions and balances have been eliminated.

The balance sheet at December 31, 2012 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in Fuel Tech’s Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission.

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Selling, General and Administrative Expenses

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily include the following categories except where an allocation to the cost of sales line item is warranted due to the project- or product-line nature of a portion of the expense category: salaries and wages, employee benefits, non-project travel, insurance, legal, rent, accounting and auditing, recruiting, telephony, employee training, Board of Directors’ fees, auto rental, office supplies, dues and subscriptions, utilities, real estate taxes, commissions and bonuses, marketing materials, postage and business taxes. Departments comprising the selling, general and administrative line item primarily include the functions of executive management, finance and accounting, investor relations, regulatory affairs, marketing, business development, information technology, human resources, sales, legal and general administration

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Revenue Recognition Policy

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Revenue Recognition Policy

Revenue Recognition Policy

Revenues from the sales of chemical products are recorded when title transfers, either at the point of shipment or at the point of destination, depending on the contract with the customer.

Fuel Tech uses the percentage of completion method of accounting for equipment construction and license contracts that are sold within the Air Pollution Control technology segment. Under the percentage of completion method, revenues are recognized as work is performed based on the relationship between actual construction costs incurred and total estimated costs at completion. Construction costs include all direct costs such as materials, labor, and subcontracting costs, and indirect costs allocable to the particular contract such as indirect labor, tools and equipment, and supplies. Revisions in completion estimates and contract values are made in the period in which the facts giving rise to the revisions become known and can influence the timing of when revenues are recognized under the percentage of completion method of accounting. Such revisions have historically not had a material effect on the amount of revenue recognized. The completed contract method is used for certain contracts when reasonably dependable estimates of the percentage of completion cannot be made. When the completed contract method is used, revenue and costs are deferred until the contract is substantially complete, which usually occurs upon customer acceptance of the installed product. Provisions are made for estimated losses on uncompleted contracts in the period in which such losses are determined. As of June 30, 2013, and December 31, 2012, the Company had two contracts in progress that were identified as a loss contracts and a provision for loss in the amounts of $4 and $57, respectively, were recorded in other accrued liabilities on the consolidated balance sheet.

Fuel Tech’s APC contracts are typically eight to sixteen months in length. A typical contract will have three or four critical operational measurements that, when achieved, serve as the basis for us to invoice the customer via progress billings. At a minimum, these measurements will include the generation of engineering drawings, the shipment of equipment and the completion of a system performance test.

As part of most of its contractual APC project agreements, Fuel Tech will agree to customer-specific acceptance criteria that relate to the operational performance of the system that is being sold. These criteria are determined based on mathematical modeling that is performed by Fuel Tech personnel, which is based on operational inputs that are provided by the customer. The customer will warrant that these operational inputs are accurate as they are specified in the binding contractual agreement. Further, the customer is solely responsible for the accuracy of the operating condition information; typically all performance guarantees and equipment warranties granted by us are voidable if the operating condition information is inaccurate or is not met.

Accounts receivable includes unbilled receivables, representing revenues recognized in excess of billings on uncompleted contracts under the percentage of completion method of accounting. At June 30, 2013 and December 31, 2012, unbilled receivables were approximately $18,142 and $15,661, respectively, and are included in accounts receivable on the consolidated balance sheets. Billings in excess of costs and estimated earnings on uncompleted contracts were $3,804 and $1,703, at June 30, 2013 and December 31, 2012, respectively. Such amounts are included in other accrued liabilities on the consolidated balance sheets.

Fuel Tech has installed over 700 units with APC technology and normally provides performance guarantees to our customers based on the operating conditions for the project. As part of the project implementation process, we perform system start-up and optimization services that effectively serve as a test of actual project performance. We believe that this test, combined with the accuracy of the modeling that is performed, enables revenue to be recognized prior to the receipt of formal customer acceptance.

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Stock-Based Compensation (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Percentage of shares that may be issued or reserve for awards to participants as a percentage of outstanding shares calculated on a diluted basis			12.50%
Number of shares available for grant	392		392
Unrecognized compensation cost	$ 3,528		$ 3,528
Award vesting period			10 years
Unrecognized compensation cost, period of recognition			1 year
Share-based compensation expense	336	162	665	372
Award service period (in years)			4 years
Second Anniversary of Award Date [Member]
Percent of options vesting	50.00%		50.00%
Third Anniversary of Award Date [Member]
Percent of options vesting	25.00%		25.00%
Fourth Anniversary of Award Date [Member]
Percent of options vesting	25.00%		25.00%
Minimum [Member]
Award vesting period			1 year
Maximum [Member]
Award vesting period			3 years
Stock Options [Member]
Fair value of options granted during the year (in Dollars per Share)			$ 1.79
Non-Vested Stock Options [Member]
Unrecognized compensation cost	45		45
Restricted Stock Units (RSUs) [Member]
Unrecognized compensation cost	3,483		3,483
Award vesting period			3 years
Unrecognized compensation cost, period of recognition			2 years 4 months 24 days
Restricted Stock Units (RSUs) [Member] | Second Anniversary of Award Date [Member]
Percentage of restricted stock units vesting			67.00%
Restricted Stock Units (RSUs) [Member] | Third Anniversary of Award Date [Member]
Percentage of restricted stock units vesting			33.00%
Restricted Stock Units TSR [Member] | Second Anniversary of Award Date [Member]
Percentage of restricted stock units vesting			67.00%
Restricted Stock Units TSR [Member] | Third Anniversary of Award Date [Member]
Percentage of restricted stock units vesting			33.00%
Deferred Directors Fees [Member]
Share-based compensation expense			$ 0	$ 31

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Available-for-Sale Marketable Securities (Policies)

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Marketable Securities, Available-for-sale Securities, Policy

Available-for-Sale Marketable Securities

At the time of purchase, marketable securities are classified as available-for-sale as management has the intent and ability to hold such securities for an indefinite period of time, but not necessarily to maturity. Any decision to sell available-for-sale securities would be based on various factors, including, but not limited to asset/liability management strategies, changes in interest rates or prepayment risks, and liquidity needs. Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related deferred income taxes, recorded in equity as a separate component of other comprehensive income (OCI). Our marketable securities consist of a single equity investment with a fair value of $24 and $44 and no cost basis at June 30, 2013 and December 31, 2012.

Purchases and sales of securities are recognized on a trade date basis. Realized securities gains or losses are reported in other income/(expense) in the Consolidated Statements of Operations. The cost of securities sold is based on the specific identification method. On a quarterly basis, we make an assessment to determine if there have been any events or circumstances to indicate whether a security with an unrealized loss is impaired on an other-than-temporary (OTTI) basis. This determination requires significant judgment. OTTI is considered to have occurred (1) if management intends to sell the security; (2) if it is more likely than not we will be required to sell the security before recovery of its amortized cost basis; or (3)the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis. The credit-related OTTI, represented by the expected loss in principal, is recognized in non-interest income, while noncredit-related OTTI is recognized in OCI. For securities which we do expect to sell, all OTTI is recognized in earnings. Presentation of OTTI is made in the income statement on a gross basis with a reduction for the amount of OTTI recognized in OCI. Once an other-than-temporary impairment is recorded, when future cash flows can be reasonably estimated, future cash flows are re-allocated between interest and principal cash flows to provide for a level-yield on the security. We have not experienced any other-than-temporary impairments during the periods ended June 30, 2013 and 2012.

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Business Segment and Geographic Disclosures (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Information about reporting segment net sales and gross margin are provided below:

Three months ended June 30, 2013	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	20,239		$	8,853		$	—		$	29,092
Cost of sales	(13,083		)	(4,144		)	—			(17,227		)
Gross margin	7,156			4,709			—			11,865
Selling, general and administrative	—			—			(9,307		)	(9,307		)
Research and development	—			—			(430		)	(430		)
Operating income	$	7,156		$	4,709		$	(9,737	)	$	2,128

Three months ended June 30, 2012	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	12,818		$	8,093		$	—		$	20,911
Cost of sales	(7,951		)	(3,929		)	—			(11,880		)
Gross margin	4,867			4,164			—			9,031
Selling, general and administrative	—			—			(7,874		)	(7,874		)
Research and development	—			—			(969		)	(969		)
Operating income	$	4,867		$	4,164		$	(8,843	)	$	188

Six months ended June 30, 2013	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	33,186		$	18,390		$	—		$	51,576
Cost of sales	(21,666		)	(8,613		)	—			(30,279		)
Gross margin	11,520			9,777			—			21,297
Selling, general and administrative	—			—			(17,765		)	(17,765		)
Research and development	—			—			(1,363		)	(1,363		)
Operating income	$	11,520		$	9,777		$	(19,128	)	$	2,169

Six months ended June 30, 2012	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	28,532		$	17,591		$	—		$	46,123
Cost of sales	(16,702		)	(8,398		)	—			(25,100		)
Gross margin	11,830			9,193			—			21,023
Selling, general and administrative	—			—			(16,868		)	(16,868		)
Research and development	—			—			(1,475		)	(1,475		)
Operating income	$	11,830		$	9,193		$	(18,343	)	$	2,680

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area

Information concerning Fuel Tech’s operations by geographic area is provided below. Revenues are attributed to countries based on the location of the customer. Assets are those directly associated with operations of the geographic area.

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2013		2012		2013		2012
Revenues:
United States	$	17,244	$	17,966	$	30,110	$	40,910
Foreign	11,848		2,945		21,466		5,213
	$	29,092	$	20,911	$	51,576	$	46,123

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country

	June 30, 2013		December 31, 2012
Assets:
United States	$	92,860	$	86,466
Foreign	20,212		19,431
	$	113,072	$	105,897

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Accumulated Other Comprehensive (Loss) Income (Detail) - Accumulated Other Comprehensive (Loss) Income by Component (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012		Dec. 31, 2012
Foreign currency translation
Balance at beginning of period	$ (682)		$ 379		$ (419)		$ 345
Other comprehensive income (loss):
Foreign currency translation adjustments	540	[1]	70	[1]	277	[1]	104	[1]
Balance at end of period	(142)		449		(142)		449
Available-for-sale marketable securities
Balance at beginning of period	27		51		27		36
Other comprehensive income:
Net unrealized holding gain	(20)	[2]	(41)	[2]	(20)	[2]	(17)	[2]
Deferred income taxes	8	[2]	15	[2]	8	[2]	6	[2]
Total other comprehensive income	(12)		(26)		(12)		(11)
Balance at end of period	15		25		15		25
Total accumulated other comprehensive (loss) income	$ (127)		$ 474		$ (127)		$ 474		$ (392)

[1] In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.

[2] In all periods presented, there were no realized holding gains or losses and therefore no amounts were reclassified to earnings.

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Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value Disclosures [Abstract]
Marketable securities	$ 24	$ 44

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Business Segment and Geographic Disclosures (Detail) - Operations by Geographic Area (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenues:
Revenues	$ 29,092	$ 20,911	$ 51,576	$ 46,123
United States [Member]
Revenues:
Revenues	17,244	17,966	30,110	40,910
Foreign [Member]
Revenues:
Revenues	$ 11,848	$ 2,945	$ 21,466	$ 5,213

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Stock-Based Compensation (Detail) - Non-vested Stock Option Activity (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013 Non-Vested Stock Options [Member]	Dec. 31, 2012 Beginning of Period [Member] Non-Vested Stock Options [Member]	Jun. 30, 2013 End of Period [Member] Non-Vested Stock Options [Member]
Non-Vested Stock Options Outstanding (in shares)
Beginning balance	752,024		80,500	30,000
Granted		80,000
Vested	(360,563)	(128,000)
Forfeited	(45,654)	(2,500)
Ending balance	821,807		80,500	30,000
Weighted Average Grant Date Fair Value (in dollars per share)
Beginning balance	$ 6.22		$ 5.35	$ 4.36
Granted		$ 1.79
Vested	$ 5.36	$ 3.34
Forfeited	$ 7.57	$ 5.98
Ending balance	$ 5.68		$ 5.35	$ 4.36

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Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 610	$ 460
Accumulated depreciation	18,978	19,421
Accumulated amortization	$ 4,692	$ 4,270
Common stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in Shares)	40,000,000	40,000,000
Common stock, shares issued (in Shares)	22,472,381	22,111,675
Common stock outstanding (in Shares)	22,374,873	22,102,549
Treasury stock (in Shares)	97,365	9,126

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Treasury Stock

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Treasury Stock

Treasury Stock

Common stock held in treasury totaled 97,365 and 9,126 with a cost of $390 and $39 at June 30, 2013 and December 31, 2012, respectively. These shares were withheld from employees to settle personal tax withholding obligations that arose as a result of restricted stock units that vested during the first and second quarter of 2013 and fourth quarter of 2012.

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Consolidated Statements of Comprehensive (Loss) Income (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Statement of Other Comprehensive Income [Abstract]
Net income	$ 1,236		$ 68		$ 1,215		$ 1,611
Other comprehensive income:
Foreign currency translation adjustments	540	[1]	70	[1]	277	[1]	104	[1]
Unrealized losses from marketable securities, net of tax	(12)		(26)		(12)		(11)
Total other comprehensive income	528		44		265		93
Comprehensive income	$ 1,764		$ 112		$ 1,480		$ 1,704

[1] In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 23,113	$ 24,453
Marketable securities	24	44
Accounts receivable, net of allowance for doubtful accounts of $610 and $460, respectively	41,418	30,169
Inventories	719	513
Prepaid expenses and other current assets	1,716	3,956
Prepaid income taxes	1,182	156
Deferred income taxes	635	573
Total current assets	68,807	59,864
Property and equipment, net of accumulated depreciation of $18,978 and $19,421, respectively	13,811	13,749
Goodwill	21,051	21,051
Other intangible assets, net of accumulated amortization of $4,692 and $4,270, respectively	4,574	4,838
Deferred income taxes	2,457	3,688
Other assets	2,372	2,707
Total assets	113,072	105,897
Current liabilities:
Short-term debt	807	0
Accounts payable	13,026	12,828
Accrued liabilities:
Employee compensation	3,184	3,175
Other accrued liabilities	9,881	4,943
Total current liabilities	26,898	20,946
Other liabilities	701	715
Total liabilities	27,599	21,661
Shareholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 22,472,238 and 22,111,675 shares issued, and 22,374,873 and 22,102,549 outstanding	225	221
Additional paid-in capital	133,602	133,498
Accumulated deficit	(47,913)	(49,128)
Accumulated other comprehensive loss	(127)	(392)
Nil coupon perpetual loan notes	76	76
Treasury stock, 97,365 and 9,126 shares in 2013 and 2012, respectively, at cost	(390)	(39)
Total shareholders’ equity	85,473	84,236
Total liabilities and shareholders’ equity	$ 113,072	$ 105,897

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Business Segment and Geographic Disclosures (Detail) - Assets by Geographic Area (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets
Long-Lived Assets	$ 113,072	$ 105,897
United States [Member]
Assets
Assets	92,860	86,466
Foreign [Member]
Assets
Assets	$ 20,212	$ 19,431

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Accumulated Other Comprehensive (Loss) Income (Tables)

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive (loss) income by component were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Foreign currency translation
Balance at beginning of period	$	(682	)	$	379		$	(419	)	$	345
Other comprehensive income (loss):
Foreign currency translation adjustments (1)	540			70			277			104
Balance at end of period	$	(142	)	$	449		$	(142	)	$	449
Available-for-sale marketable securities
Balance at beginning of period	$	27		$	51		$	27		$	36
Other comprehensive income:
Net unrealized holding gain (2)	(20		)	(41		)	(20		)	(17		)
Deferred income taxes (2)	8			15			8			6
Total other comprehensive income	(12		)	(26		)	(12		)	(11		)
Balance at end of period	$	15		$	25		$	15		$	25
Total accumulated other comprehensive (loss) income	$	(127	)	$	474		$	(127	)	$	474

(1) In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.

(2) In all periods presented, there were no realized holding gains or losses and therefore no amounts were reclassified to earnings.

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Recently Adopted and Pending Accounting Pronouncements

6 Months Ended

Jun. 30, 2013

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recently Added and Pending Accounting Pronouncements

Recently Added and Pending Accounting Pronouncements

In February 2013, the FASB issued changes to the reporting of amounts reclassified out of accumulated other comprehensive income. These changes require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. These requirements are to be applied to each component of accumulated other comprehensive income. These changes were adopted by Fuel Tech on January 1, 2013 and did not have an impact on the Consolidated Financial Statements other than the additional disclosure requirements.

In February 2013, the FASB issued changes to the accounting for obligations resulting from joint and several liability arrangements. These changes require an entity to measure such obligations for which the total amount of the obligation is fixed at the reporting date as the sum of (i) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors, and (ii) any additional amount the reporting entity expects to pay on behalf of its co-obligors. An entity will also be required to disclose the nature and amount of the obligation as well as other information about those obligations. Examples of obligations subject to these requirements are debt arrangements and settled litigation and judicial rulings. These changes become effective for Fuel Tech on January 1, 2014. Management has determined that the adoption of these changes will not have an impact on the Consolidated Financial Statements, as Fuel Tech does not currently have any such arrangements.

In March 2013, the FASB issued changes to a parent entity's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. A parent entity is required to release any related cumulative foreign currency translation adjustment from accumulated other comprehensive income into net income in the following circumstances: (i) a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided; (ii) a partial sale of an equity method investment that is a foreign entity; (iii) a partial sale of an equity method investment that is not a foreign entity whereby the partial sale represents a complete or substantially complete liquidation of the foreign entity that held the equity method investment; and (iv) the sale of an investment in a foreign entity. These changes become effective for Fuel Tech on January 1, 2014. Management has determined that the adoption of these changes will need to be considered in the Consolidated Financial Statements in the event Fuel Tech initiates any of the transactions described above.

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Stock-Based Compensation (Detail) - Stock Option Activity (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Number of Options (in shares):
Beginning balance	1,914,000
Granted	80,000
Exercised	0
Expired or forfeited	(67,000)
Ending balance	1,927,000
Exercisable on March 31, 2013 (in shares)	1,897,000
Weighted-Average Exercise Price (in dollars per share):
Beginning balance	$ 11.38
Granted	$ 3.85
Exercised	$ 0.00
Expired or forfeited	$ 6.05
Ending balance	$ 11.25
Exercisable on March 31, 2013 (in Dollars per share)	$ 11.31
Outstanding, Weighted Average Remaining Contractual Term	4 years
Exercisable, Weighted Average Remaining Contractual Term	4 years
Outstanding, Aggregate Intrinsic Value	$ 17
Exercisable, Aggregate Intrinsic Value	$ 17

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Goodwill and Other Intangibles (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013 reporting_unit	Dec. 31, 2012
Number of reporting units	2
Goodwill	$ 21,051	$ 21,051
Fuel Chem Technology Segment [Member]
Goodwill	1,723	1,723
APC Technology Segment [Member]
Goodwill	$ 19,328	$ 19,328

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Earnings per Share Data (Detail) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share	1,658	1,547

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Revenue Recognition Policy (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013 unit contract	Dec. 31, 2012 contract
Number of contracts in progress that were identified as a loss contract (in contracts)	2	2
Loss on contract termination	$ 4	$ 57
Unbilled receivables, current	18,142	15,661
Billings in excess of cost, current	$ 3,804	$ 1,703
Number of units with APC technology (in units)	700
Minimum [Member]
Contract term (in months)	8 months
Critical operational measurements (in measurements)	3
Maximum [Member]
Contract term (in months)	16 months
Critical operational measurements (in measurements)	4

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Available-for-Sale Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
Marketable securities, fair value	$ 24	$ 44
Marketable securities, cost	$ 0	$ 0

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Accumulated Other Comprehensive (Loss) Income

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive (Loss) Income

Accumulated Other Comprehensive (Loss) Income

The changes in accumulated other comprehensive (loss) income by component were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Foreign currency translation
Balance at beginning of period	$	(682	)	$	379		$	(419	)	$	345
Other comprehensive income (loss):
Foreign currency translation adjustments (1)	540			70			277			104
Balance at end of period	$	(142	)	$	449		$	(142	)	$	449
Available-for-sale marketable securities
Balance at beginning of period	$	27		$	51		$	27		$	36
Other comprehensive income:
Net unrealized holding gain (2)	(20		)	(41		)	(20		)	(17		)
Deferred income taxes (2)	8			15			8			6
Total other comprehensive income	(12		)	(26		)	(12		)	(11		)
Balance at end of period	$	15		$	25		$	15		$	25
Total accumulated other comprehensive (loss) income	$	(127	)	$	474		$	(127	)	$	474

(1) In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.

(2) In all periods presented, there were no realized holding gains or losses and therefore no amounts were reclassified to earnings.

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Earnings per Share Data (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the weighted-average shares used in calculating the earnings per share for the three-month periods ended June 30, 2013 and 2012.

	Three Months Ended   June 30,		Six Months Ended   June 30,
	2013	2012	2013	2012
Basic weighted-average shares	22,197,000	23,107,000	22,155,000	23,349,000
Conversion of unsecured loan notes	7,000	7,000	7,000	7,000
Unvested options and RSUs	1,091,000	870,000	971,000	766,000
Diluted weighted-average shares	23,295,000	23,984,000	23,133,000	24,122,000

Fuel Tech had 1,658,000 and 1,547,000 weighted average stock awards outstanding at June 30, 2013 and 2012, respectively, that were not dilutive for the purposes of inclusion in the calculation of diluted earnings per share but could potentially become dilutive in future periods.

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Stock-Based Compensation (Detail) - Stock-Based Compensation (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Total stock-based compensation expense	$ 336	$ 162	$ 665	$ 372
Tax benefit of stock-based compensation expense	(122)	(57)	(242)	(129)
After-tax effect of stock-based compensation	214	105	423	243
Stock Options and Restricted Stock Units [Member]
Total stock-based compensation expense	336	147	665	341
Deferred Directors Fees [Member]
Total stock-based compensation expense		$ 15		$ 31

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Stock-Based Compensation

Fuel Tech has a stock-based employee compensation plan, referred to as the Fuel Tech, Inc. Incentive Plan (Incentive Plan), under which awards may be granted to participants in the form of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance awards, bonuses or other forms of share-based or non-share-based awards or combinations thereof. Participants in the Incentive Plan may be Fuel Tech’s directors, officers, employees, consultants or advisors (except consultants or advisors in capital-raising transactions) as the directors determine are key to the success of Fuel Tech’s business. The amount of shares that may be issued or reserved for awards to participants under a 2004 amendment to the Incentive Plan is 12.5% of outstanding shares calculated on a diluted basis. At June 30, 2013, Fuel Tech had approximately 392,000 equity awards available for issuance under the Incentive Plan.

Stock-based compensation is included in selling, general, and administrative costs in our Consolidated Statements of Operations. The components of stock-based compensation for the three- and six- month periods ended June 30, 2013 and 2012 were as follows:

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2013			2012			2013			2012
Stock options and restricted stock units	$	336		$	147		$	665		$	341
Deferred directors fees	—			15			—			31
Total stock-based compensation expense	336			162			665			372
Tax benefit of stock-based compensation expense	(122		)	(57		)	(242		)	(129		)
After-tax effect of stock-based compensation	$	214		$	105		$	423		$	243

As of June 30, 2013, there was $3,528 of total unrecognized compensation cost related to all non-vested share-based compensation arrangements granted under the Incentive Plan.

Stock Options

Stock options granted to employees under the Incentive Plan have a 10-year life and they vest as follows: 50% after the second anniversary of the award date, 25% after the third anniversary, and the final 25% after the fourth anniversary of the award date. Fuel Tech calculates stock compensation expense for employee option awards based on the grant date fair value of the award, less expected annual forfeitures, and recognizes expense on a straight-line basis over the four-year service period of the award. Stock options granted to members of our board of directors vest immediately. Stock compensation for these awards is based on the grant date fair value of the award and is recognized in expense immediately.

Fuel Tech uses the Black-Scholes option pricing model to estimate the grant date fair value of employee stock options. The principal variable assumptions utilized in valuing options and the methodology for estimating such model inputs include: (1) risk-free interest rate – an estimate based on the yield of zero–coupon treasury securities with a maturity equal to the expected life of the option; (2) expected volatility – an estimate based on the historical volatility of Fuel Tech’s Common Stock for a period equal to the expected life of the option; and (3) expected life of the option – an estimate based on historical experience including the effect of employee terminations.

Based on the results of the model, the weighted-average fair value of the stock options granted during the six-month period ended June 30, 2013 was $1.79 per option using the following assumptions:

Expected dividend yield	0.0%
Risk-free interest rate	1.01%
Expected volatility	55.2%
Expected life of option	4.7 years

Stock option activity for Fuel Tech’s Incentive Plan for the six months ended June 30, 2013 was as follows:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on January 1, 2013	1,914,000		$	11.38
Granted	80,000		3.85
Exercised	—		—
Expired or forfeited	(67,000	)	6.05
Outstanding on June 30, 2013	1,927,000		$	11.25	4.0 years	$	17
Exercisable on June 30, 2013	1,897,000		$	11.31	4.0 years	$	17

Non-vested stock option activity for the six months ended June 30, 2013 was as follows:

	Non-Vested Stock Options Outstanding		Weighted-Average Grant Date Fair Value
Outstanding on January 1, 2013	80,500		$	5.35
Granted	80,000		1.79
Vested	(128,000	)	3.34
Forfeited	(2,500	)	5.98
Outstanding on June 30, 2013	30,000		$	4.36

As of June 30, 2013, there was $45 of total unrecognized compensation cost related to non-vested stock options granted under the Incentive Plan. That cost is expected to be recognized over a weighted average period of 1.0 year.

Restricted Stock Units

Restricted stock units (RSUs) granted to employees vest over time based on continued service (typically vesting over a period between one to three years in equal installments). Such time-vested RSUs are valued at the date of grant using the intrinsic value method. Compensation cost, adjusted for estimated forfeitures, is amortized on a straight-line basis over the requisite service period.

In addition to the time vested RSUs described above, commencing in 2011, on an annual basis the Company entered into performance-based RSU agreements (the Agreements) with each of the Company’s President/Chief Executive Officer, Treasurer/Chief Financial Officer, Executive Vice President of Marketing & Sales, and Executive Vice President of Worldwide Operations. Commencing in 2013, the Company’s Senior Vice President, General Counsel, and Secretary also entered into an agreement. The Agreements provide each participating executive the opportunity to earn three types of awards with each award type specifying a targeted number of RSUs that may be granted to each executive based on either the individual performance of the executive or the Company’s relative performance compared to a peer group, as determined by the award type. The Compensation Committee of our Board of Directors (the Committee) determines the extent to which, if any, RSUs will be granted based on the achievement of the applicable performance criteria specified in the Agreement. This determination will be made following the completion of the applicable performance period (each a Determination Date). Such performance based awards include the following:

• The first type of award is based on individual performance during the respective calendar year as determined by the Committee based on performance criteria specified in the Agreement. These awards will vest over a three year period beginning on the Determination Date. We estimated the fair value of these performance-based RSU awards on the date of the Agreement using the trading price of the Company’s stock on the date of determination and our estimate of the probability that the specified performance criteria will be met. The fair value measurement and probability estimate will be re-measured each reporting date until the Determination Date, at which time the final award amount will be known. For these job performance-based awards, we amortize compensation costs over the requisite service period, adjusted for estimated forfeitures, for each separately vesting tranche of the award.

• The second type of RSU award contains a targeted number of RSUs to be granted based on the Company’s revenue growth relative to a specified peer group during a period of two calendar years. These awards vest 67% on the second anniversary of the Agreement date and 33% on the third anniversary of the Agreement date. We estimated the fair value of these performance-based RSU awards on the Agreement date using the trading price of the Company’s stock on the date of determination and our estimate of the probability that the specified performance criteria will be met. For these revenue growth performance-based awards, we amortize compensation costs over the requisite service period, adjusted for estimated forfeitures, for each separately vesting tranche of the award.

• The third type of RSU award contains a targeted number of RSUs to be granted based on the total shareholder return (TSR) of the Company’s common stock relative to a specified peer group during a period of two calendar years. These awards vest 67% on the second anniversary of the Agreement date and 33% on the third anniversary of the Agreement date. We estimated the fair value of these market-based RSU awards on the Agreement date using a Monte Carlo valuation methodology and amortize the fair value over the requisite service period for each separately vesting tranche of the award. The principal variable assumptions utilized in valuing these RSUs under this valuation methodology include the risk-free interest rate, stock volatility, and correlations between our stock price and the stock prices of a peer group of companies.

At June 30, 2013, there is $3,483 of unrecognized compensation costs related to restricted stock unit awards to be recognized over a weighted average period of 2.4 years.

A summary of restricted stock unit activity for the six-month period ended June 30, 2013 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Unvested restricted stock units at December 31, 2012	752,024		$	6.22
Granted	476,000		4.77
Forfeited	(45,654	)	7.57
Vested	(360,563	)	5.36
Unvested restricted stock units at June 30, 2013	821,807		$	5.68

Deferred Directors Fees

In addition to the Incentive Plan, Fuel Tech has a Deferred Compensation Plan for Directors (Deferred Plan). Under the terms of the Deferred Plan, Directors can elect to defer Directors’ fees for shares of Fuel Tech Common Stock that are issuable at a future date as defined in the agreement. In accordance with ASC 718, Fuel Tech accounts for these awards as equity awards. In the three-month periods ended June 30, 2013 and 2012, Fuel Tech recorded $0 and $31, respectively, of stock-based compensation expense under the Deferred Plan.

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Available-for-Sale Marketable Securities

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Available-for-Sale Marketable Securities

Available-for-Sale Marketable Securities

At the time of purchase, marketable securities are classified as available-for-sale as management has the intent and ability to hold such securities for an indefinite period of time, but not necessarily to maturity. Any decision to sell available-for-sale securities would be based on various factors, including, but not limited to asset/liability management strategies, changes in interest rates or prepayment risks, and liquidity needs. Available-for-sale securities are carried at fair value with unrealized gains and losses, net of related deferred income taxes, recorded in equity as a separate component of other comprehensive income (OCI). Our marketable securities consist of a single equity investment with a fair value of $24 and $44 and no cost basis at June 30, 2013 and December 31, 2012.

Purchases and sales of securities are recognized on a trade date basis. Realized securities gains or losses are reported in other income/(expense) in the Consolidated Statements of Operations. The cost of securities sold is based on the specific identification method. On a quarterly basis, we make an assessment to determine if there have been any events or circumstances to indicate whether a security with an unrealized loss is impaired on an other-than-temporary (OTTI) basis. This determination requires significant judgment. OTTI is considered to have occurred (1) if management intends to sell the security; (2) if it is more likely than not we will be required to sell the security before recovery of its amortized cost basis; or (3)the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis. The credit-related OTTI, represented by the expected loss in principal, is recognized in non-interest income, while noncredit-related OTTI is recognized in OCI. For securities which we do expect to sell, all OTTI is recognized in earnings. Presentation of OTTI is made in the income statement on a gross basis with a reduction for the amount of OTTI recognized in OCI. Once an other-than-temporary impairment is recorded, when future cash flows can be reasonably estimated, future cash flows are re-allocated between interest and principal cash flows to provide for a level-yield on the security. We have not experienced any other-than-temporary impairments during the periods ended June 30, 2013 and 2012.

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Nature of Business

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business

Nature of Business

Fuel Tech, Inc. (Fuel Tech or the Company or “we”, “us”, or “our”) is a fully integrated company that uses a suite of advanced technologies to provide boiler optimization, efficiency improvement and air pollution reduction and control solutions to utility and industrial customers worldwide. Originally incorporated in 1987 under the laws of the Netherlands Antilles as Fuel-Tech N.V., Fuel Tech became domesticated in the United States on September 30, 2006, and continues as a Delaware corporation with its corporate headquarters at 27601 Bella Vista Parkway, Warrenville, Illinois, 60555-1617. Fuel Tech maintains an Internet website at www.ftek.com. Fuel Tech’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as amended (Exchange Act), are made available through our website as soon as reasonably practical after electronically filed or furnished to the Securities and Exchange Commission. Also available on Fuel Tech’s website are the Company’s Corporate Governance Guidelines and Code of Ethics and Business Conduct, as well as the charters of the Audit, Compensation, and Nominating and Corporate Governance committees of the Board of Directors. All of these documents are available in print without charge to stockholders who request them. Information on our website is not incorporated into this report.

Fuel Tech’s special focus is the worldwide marketing of its nitrogen oxide (NOx) reduction and FUEL CHEM^® processes. The Air Pollution Control (APC) technology segment reduces NOx emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources by utilizing combustion optimization techniques and Low NOx and Ultra Low NOx Burners; Over-Fire Air systems, NOxOUT^® and HERT™ High Energy Reagent Technology™ SNCR systems; systems that incorporate ASCR™ (Advanced Selective Catalytic Reduction) technologies including NOxOUT-CASCADE^®, ULTRA™ and NOxOUT-SCR^® processes, Ammonia Injection Grid (AIG) and Graduated Straightening Grid (GSG™). The FUEL CHEM^® technology segment improves the efficiency, reliability and environmental status of combustion units by controlling slagging, fouling and corrosion, as well as the formation of sulfur trioxide, ammonium bisulfate, particulate matter (PM2.5), carbon dioxide, NOx and unburned carbon in fly ash through the addition of chemicals into the fuel or via TIFI^® Targeted In-Furnace Injection™ programs. Fuel Tech has other technologies, both commercially available and in the development stage, all of which are related to APC and FUEL CHEM technology segments or are similar in their technological base. We have expended significant resources in the research and development of new technologies in building our proprietary portfolio of air pollution control, fuel and boiler treatment chemicals, computer modeling and advanced visualization technologies. Fuel Tech’s business is materially dependent on the continued existence and enforcement of worldwide air quality regulations.

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Contingencies (Detail) - Warranty Liability (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Change in Warranty Liability
Aggregate product warranty liability at beginning of period	$ 776	$ 313
Net aggregate expense related to product warranties	98	415
Aggregate reductions for payments	(72)	(213)
Aggregate product warranty liability at end of period	$ 802	$ 515

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Debt (Detail)	6 Months Ended		6 Months Ended		6 Months Ended
	Jun. 30, 2013 USD ($) quarter	Dec. 31, 2012 USD ($)	Jun. 30, 2013 Domestic Line of Credit [Member] USD ($)	Dec. 31, 2012 Domestic Line of Credit [Member] USD ($)	Jun. 30, 2013 China Facility [Member] USD ($)	Jun. 30, 2012 China Facility [Member] USD ($)	Dec. 31, 2012 China Facility [Member] USD ($)	Jun. 29, 2012 China Facility [Member] USD ($)	Jun. 29, 2012 China Facility [Member] CNY	Jun. 30, 2013 Standby Letters of Credit [Member] USD ($)	Dec. 31, 2012 Standby Letters of Credit [Member] USD ($)	Jun. 30, 2011 Amount Available for Increase Upon Approval of Lender [Member] USD ($)	Jun. 30, 2011 Amended Amount [Member] USD ($)	Jun. 30, 2011 Minimum [Member]	Jun. 30, 2011 Maximum [Member]	Jun. 29, 2012 People's Bank of China Base Rate [Member] China Facility [Member]
Line of credit, maximum borrowing capacity								$ 5,655,000	35,000,000			$ 25,000,000	$ 15,000,000
Basis spread on variable rate (as percent)														2.50%	3.75%	125.00%
Line of credit, amount outstanding	0	0			807,000		0
Maximum funded deb to EBITA ratio , debt	2.0
Maximum funded to debt to EBITDA ratio, EBITDA	1.0
Number of Quarters (in quarters)	4
Annual capital expenditure limit	10,000,000
Minimum tangible net worth	55,000,000
Percentage of net income	50.00%
Percentage of capital issuances	100.00%
Letters of credit, amount outstanding			6,952,000	7,432,000	0		0			1,101,000	1,112,000
Line of Credit Facility, Interest Rate at Period End (as a percent)					7.00%
Line of credit, remaining borrowing capacity			8,048,000	7,568,000						3,747,000	4,429,000
Line of credit, commitment fee percentage			0.25%
Interest Paid					$ 10,000	$ 74,000

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Contingencies (Tables)

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of Product Warranty Liability

Changes in the warranty liability for the six months June 30, 2013, and 2012, are summarized below:

	Six Months Ended   June 30,
	2013			2012
Aggregate product warranty liability at beginning of period	$	776		$	313
Net aggregate expense related to product warranties	98			415
Aggregate reductions for payments	(72		)	(213		)
Aggregate product warranty liability at end of period	$	802		$	515

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Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

Fuel Tech issues a standard product warranty with the sale of its products to customers. Our recognition of warranty liability is based primarily on analyses of warranty claims experienced in the preceding years as the nature of our historical product sales for which we offer a warranty are substantially unchanged. This approach provides an aggregate warranty accrual that is historically aligned with actual warranty claims experienced.

Changes in the warranty liability for the six months June 30, 2013, and 2012, are summarized below:

	Six Months Ended   June 30,
	2013			2012
Aggregate product warranty liability at beginning of period	$	776		$	313
Net aggregate expense related to product warranties	98			415
Aggregate reductions for payments	(72		)	(213		)
Aggregate product warranty liability at end of period	$	802		$	515

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Earnings per Share Data

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings per Share Data

Earnings per Share Data

Basic earnings per share excludes the dilutive effects of stock options, restricted stock units (RSUs), and the nil coupon non-redeemable convertible unsecured loan notes. Diluted earnings per share includes the dilutive effect of stock options, restricted stock units, and of the nil coupon non-redeemable convertible unsecured loan notes. The following table sets forth the weighted-average shares used in calculating the earnings per share for the three-month periods ended June 30, 2013 and 2012.

	Three Months Ended   June 30,		Six Months Ended   June 30,
	2013	2012	2013	2012
Basic weighted-average shares	22,197,000	23,107,000	22,155,000	23,349,000
Conversion of unsecured loan notes	7,000	7,000	7,000	7,000
Unvested options and RSUs	1,091,000	870,000	971,000	766,000
Diluted weighted-average shares	23,295,000	23,984,000	23,133,000	24,122,000

Fuel Tech had 1,658,000 and 1,547,000 weighted average stock awards outstanding at June 30, 2013 and 2012, respectively, that were not dilutive for the purposes of inclusion in the calculation of diluted earnings per share but could potentially become dilutive in future periods.

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Fair Value

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

The Company applies authoritative accounting guidance for fair value measurements of financial and nonfinancial assets and liabilities. This guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis and clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the standard establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 – Observable inputs to the valuation methodology such as quoted prices in active markets for identical assets or liabilities

• Level 2 – Inputs to the valuation methodology including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets of liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means

• Level 3 – Significant unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own estimates and assumptions or those expected to be used by market participants. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, option pricing models, and other commonly used valuation techniques

The fair value of our marketable securities was $24 and $44 at June 30, 2013 and December 31, 2012, respectively, and was determined using quoted prices in active markets for identical assets (Level 1 fair value measurements). Transfers between levels of the fair value hierarchy are recognized based on the actual date of the event or change in circumstances that caused the transfer. We had no assets or liabilities that were valued using level 2 or level 3 inputs and therefore there were no transfers between levels of the fair value hierarchy during the six-month periods ended June 30, 2013.

The carrying amount of our short-term debt and revolving line of credit approximates fair value due to its short-term nature and because the amounts outstanding accrue interest at variable market-based rates.

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate of 39.0% and 38.0% for the six-month periods ended June 30, 2013 and 2012, respectively, differs from the statutory federal tax rate of 34% due primarily to state taxes, non-deductible stock-based compensation, differences between U.S. and foreign tax rates, foreign losses incurred with no related tax benefit, changes in state rates, and non-deductible meals and entertainment expenses.

Fuel Tech had unrecognized tax benefits as of December 31, 2012 in the amount of $42, all of which, if ultimately recognized, will reduce Fuel Tech's annual effective tax rate. There have been no material changes in unrecognized tax benefits during the three- and six- month periods ended June 30, 2013.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 07, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	FUEL TECH, INC.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		22,374,873
Amendment Flag	false
Entity Central Index Key	0000846913
Entity Filer Category	Accelerated Filer
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus (Q1,Q2,Q3,FY)	Q2

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Goodwill and Other Intangibles

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

Goodwill and Other Intangibles

Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. Fuel Tech has two reporting units which are reported in the FUEL CHEM^® technology segment and the APC technology segment. At June 30, 2013 and December 31, 2012, goodwill allocated to the FUEL CHEM technology segment was $1,723 while goodwill allocated to the APC technology segment was $19,328.

Goodwill is allocated to each of our reporting units after considering the nature of the net assets giving rise to the goodwill and how each reporting unit would enjoy the benefits and synergies of the net assets acquired. Our last fair value measurement test, performed annually as of October 1, revealed no indications of impairment. There were no indications of goodwill impairment in the six-month periods ended June 30, 2013 and 2012.

Fuel Tech reviews other intangible assets, which include customer lists and relationships, covenants not to compete, patent assets, tradenames, and acquired technologies, for impairment on a recurring basis or when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event that impairment indicators exist, a further analysis is performed and if the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. Management considers historical experience and all available information at the time the estimates of future cash flows are made, however, the actual cash values that could be realized may differ from those that are estimated. There were no indications of intangible asset impairment in the three- and six-month periods ended June 30, 2013 and 2012.