##### 









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|                                        |  |                                                                                             
|--------------------------------------- |  | --------------------------------------------------------------------------------------------
|þ                                       |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|                                       
|FOR THE FISCAL YEAR ENDED JUNE 30, 2005
|                                       
|OR                                     
|                                       
|o                                       |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934




COMMISSION FILE NUMBER 001-32582


PIKE ELECTRIC CORPORATION


(Exact name of registrant as specified in its charter)


|                         |  |                                     
|------------------------ |  | ------------------------------------
|Delaware                 |  | 20-3112047                          
|(State of incorporation) |  | (I.R.S. Employer Identification No.)

100 Pike Way, PO Box 868, Mount Airy, NC 27030


(Address of principal executive office)


(336) 789-2171


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Act:


|                               |  |                                          
|------------------------------ |  | -----------------------------------------
|Title of Each Class            |  | Name of Each Exchange on Which Registered
|                               |  |                                          
|Common Stock, par value $0.001 |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the
Act:


None


o þ


þ


o þ


o þ






DOCUMENTS INCORPORATED BY REFERENCE












---



##### 



PIKE ELECTRIC CORPORATION


Annual Report on Form 10-K for the fiscal year ended
June 30, 2005


INDEX


|         |            |  |  |                                                                                                                  |  |  |    | 
|-------- | ---------- |  |  | ---------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|         |            |  |  | Page                                                                                                             | 
|         |            |  |  |                                                                                                                  | 
|PART I  
|         | Item 1.    |  |  | Business                                                                                                         |  |  | 3  | 
|         |            |  |  | Forward Looking Statements                                                                                       |  |  | 12 | 
|         |            |  |  | Risk Factors                                                                                                     |  |  | 13 | 
|         | Item 2.    |  |  | Properties                                                                                                       |  |  | 20 | 
|         | Item 3.    |  |  | Legal Proceedings                                                                                                |  |  | 20 | 
|         | Item 4.    |  |  | Submission of Matters to a Vote of Security Holders                                                              |  |  | 20 | 
|        
|PART II 
|         | Item 5.    |  |  | Market for Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities |  |  | 21 | 
|         | Item 6.    |  |  | Selected Financial Data                                                                                          |  |  | 22 | 
|         | Item 7.    |  |  | Managements Discussion and Analysis of Financial Condition
    and Results of Operations                        |  |  | 25 | 
|         | Item 7A.   |  |  | Quantitative and Qualitative Disclosures about Market Risk                                                       |  |  | 42 | 
|         | Item 8.    |  |  | Financial Statements and Supplementary Data                                                                      |  |  | 43 | 
|         | Item 9.    |  |  | Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure                         |  |  | 72 | 
|         | Item 9A.   |  |  | Controls and Procedures                                                                                          |  |  | 72 | 
|         | Item 9B.   |  |  | Other Information                                                                                                |  |  | 72 | 
|        
|PART III
|         | Item 10.   |  |  | Directors and Executive Officers of the Registrant                                                               |  |  | 72 | 
|         | Item 11.   |  |  | Executive Compensation                                                                                           |  |  | 72 | 
|         | Item 12.   |  |  | Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters               |  |  | 72 | 
|         | Item 13.   |  |  | Certain Relationships and Related Transactions                                                                   |  |  | 72 | 
|         | Item 14.   |  |  | Principal Accountant Fees and Services                                                                           |  |  | 73 | 
|        
|PART IV 
|         | Item 15.   |  |  | Exhibits and Financial Statement Schedules                                                                       |  |  | 73 | 
|         | Signatures |  |  |                                                                                                                  |  |  | 75 | 

2



---



##### 






PART I







|        |         
|------- | --------
|ITEM 1. | BUSINESS

Overview








Red Simpson Acquisition






2004 Recapitalization




3



---



##### 



Reincorporation




Industry Overview






Industry Trends




Growth in Demand for Electricity.


Increased Outsourcing of Infrastructure Services.


4



---



##### 





Inadequacy of Current Electric Infrastructure.


History






Competitive Strengths






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Leading Pure-Play Provider of Electric Distribution and
    Transmission Infrastructure Services. We are one of the
    largest providers of services to electric utilities,
    cooperatives and municipalities. Additionally, we are one of the
    few service providers of scale in our industry that operates
    under a single, well-recognized brand over a contiguous
    geographic area.                                                                                                                             
|
| |  | Outsourced Services-Based Business Model. We provide
    vital services to electric utilities, cooperatives and
    municipalities, which have increased their reliance on
    outsourcing the maintenance and improvement of their
    distribution and transmission systems to third-party service
    providers. Over 90% of our revenues are derived under master
    service arrangements. We derive less than 5% of our revenues
    from fixed-price agreements relating to large-scale capital
    improvement projects.
|
| |  | Attractive, Contiguous End Markets. We operate in a
    contiguous geographic market that includes the southeastern and
    south central United States. Our markets have exhibited strong
    population growth and increases in electricity consumption,
    which have increased demand for our services.                                                                                                                                                                                                                    

5



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | Moreover, the contiguous nature of our service territory
    provides us with significant benefits by increasing our
    operating efficiency and our flexibility to respond to our
    customers needs.                                                                                                                                                                                                                                                                                                                                          
|
| |  | Recognized Leader in Storm Restoration Capabilities. Our
    19-state market includes the prime storm territories
    of the southeastern and south central United States. Throughout
    our market, we are a leading provider of emergency services for
    storm restoration.                                                                                                                                                                                                                                                                 
|
| |  | Long-Standing Relationships Across a High-Quality Customer
    Base. We have a diverse, well capitalized customer base that
    includes over 150 electric companies throughout our service
    territory. We employ a customer-focused philosophy that has
    resulted in long-standing customer relationships. After giving
    effect to the Red Simpson acquisition, our relationships with
    our top 15 customers average approximately 33 years.                                                                                          
|
| |  | Experienced Management Team with Demonstrated Operational
    Excellence. Our strong management has led us to operational
    excellence, as demonstrated by our continuing success in
    effectively growing our business, managing our costs,
    supervising our workforce, deploying our fleet and integrating
    Red Simpson. Members of our senior management have been with us
    for an average of approximately 19 years and most obtained
    significant operating experience prior to being promoted to
    their current positions.
|
| |  | Major Investments in Fleet and Safety. We have made
    significant investments in our business to support our continued
    growth. In addition to investing in our fleet, substantially all
    of which we own, we have invested in our employee safety and
    development programs, establishing training and safety programs
    certified by the Department of Labor.                                                                                                                                                                       

Business Strategy






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increased Penetration Within Our Existing Service
    Territory. We intend to continue to increase our penetration
    and market share within our existing service territory by
    expanding our existing customer relationships, attracting new
    customers and pursuing selective acquisitions. We believe our
    quality service, modern fleet, regional presence, storm
    restoration capabilities and strong safety record will enable us
    to develop our business with both existing and prospective
    customers as they continue to further outsource their servicing
    needs.                                                                                                                                         
|
| |  | Expand Our Service Territory. We intend to continue to
    grow our business by seeking new opportunities from our existing
    customers that have operations outside our current service
    territory, capturing new customers in other geographic markets
    and pursuing selective acquisitions. In the last several years,
    we have successfully expanded our services into Mississippi,
    Pennsylvania, Louisiana and Texas. In addition, our acquisition
    of Red Simpson enabled us to achieve our strategic objective of
    penetrating the south central market, which includes Texas and
    Louisiana. We also have been successful in acquiring new
    customers after providing storm restoration services to them.
|
| |  | Continued Focus on Distribution and Sub-500 kV
    Transmission. We will continue to focus on the maintenance,
    upgrade and extension of electric distribution and sub-500 kV
    transmission powerlines. By focusing on the distribution and
    sub-500 kV transmission sector of the industry and providing
    high quality services to our customers, we believe that we will
    be in a position to capture a significant share of the expected
    increased amount of work in this market sector.                                                                                                                                                                                                                              

6



---



##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capitalize on Favorable Long-Term Industry Trends. We
    believe that we are well positioned to benefit from expected
    long-term industry trends, which are described in more detail in
     Industry Trends above.                                                                                                                                                                                                                                
|
| |  | Continued Focus on Operating Efficiency and Customer
    Service. We intend to use the scale and scope of our
    capabilities to achieve higher levels of operating efficiency
    and productivity while further enhancing our customer service.
    Additionally, we intend to use our modern fleet, repair and
    maintenance capabilities and skilled workforce to increase our
    cost competitiveness so that we may profitably win new business.

Our Services




Powerline Services.






Storm Restoration Services.




7



---



##### 









|                              |                       |                              |  |                |             |  |  |        |  |  |  |         |  | 
|----------------------------- | --------------------- | ---------------------------- |  | -------------- | ----------- |  |  | ------ |  |  |  | ------- |  | 
|Selected Storm Mobilizations  |                      
|                              |                      
|                              |                       | Approximate                  |  |                |            
|                              |                       | Number of                    |  |                |            
|                              |                       | Employees                    |  |                | Restoration | 
|Storm                         |                       | Date                         |  |                | Mobilized   |  |  | Period | 
|                              |                       |                              |  |                |             |  |  |        | 
|Hurricanes or Tropical Storms |                       |                              |  |                |             |  |  |        |  |  |  |        
|                              | Hurricane Frances     |                              |  | September 2004 |             |  |  | 1,800  |  |  |  | 15 days | 
|                              |                       | (FL/ GA/ NC/ SC)             |  |                |             |  |  |        |  |  |  |         |  | 
|                              | Hurricane Ivan        |                              |  | September 2004 |             |  |  | 1,700  |  |  |  | 9 days  | 
|                              |                       | (AL/ FL/ GA/ MS/ SC/ NC/ VA) |  |                |             |  |  |        |  |  |  |         |  | 
|                              | Tropical Storm Jeanne |                              |  | September 2004 |             |  |  | 1,300  |  |  |  | 12 days | 
|                              |                       | (FL/ GA)                     |  |                |             |  |  |        |  |  |  |         |  | 
|                              | Hurricane Charley     |                              |  | August 2004    |             |  |  | 2,000  |  |  |  | 16 days | 
|                              |                       | (FL/ NC)                     |  |                |             |  |  |        |  |  |  |         |  | 
|                              | Hurricane Isabelle    |                              |  | September 2003 |             |  |  | 1,800  |  |  |  | 21 days | 
|                              |                       | (VA/ MD/ NC)                 |  |                |             |  |  |        |  |  |  |         |  | 
|                              | Hurricane Lily        |                              |  | October 2002   |             |  |  | 900    |  |  |  | 8 days  | 
|                              |                       | (LA)                         |  |                |             |  |  |        |  |  |  |         |  | 
|Ice Storms                    |                       |                              |  |                |             |  |  |        |  |  |  |        
|                              | Ice Storm             |                              |  | January 2005   |             |  |  | 880    |  |  |  | 11 days | 
|                              |                       | (OH)                         |  |                |             |  |  |        |  |  |  |         |  | 
|                              | Ice Storm             |                              |  | December 2004  |             |  |  | 440    |  |  |  | 9 days  | 
|                              |                       | (IN)                         |  |                |             |  |  |        |  |  |  |         |  | 
|                              | Ice Storm             |                              |  | February 2003  |             |  |  | 1,200  |  |  |  | 14 days | 
|                              |                       | (KY/ WV)                     |  |                |             |  |  |        |  |  |  |         |  | 
|                              | Ice Storm             |                              |  | February 2003  |             |  |  | 2,300  |  |  |  | 11 days | 
|                              |                       | (NC/ SC)                     |  |                |             |  |  |        |  |  |  |         |  | 

Customers




8



---



##### 







|                                                                        |  |                        |    | 
|----------------------------------------------------------------------- |  | ---------------------- | -- | 
|Selected Long-Standing Customer Relationships                           | 
|                                                                        | 
|Customer                                                                |  | Length of Relationship |   
|                                                                        |  |                        |   
|                                                                        |  | (In years)             |   
|Duke Power Company                                                      |  |                        | 59 | 
|Cobb EMC                                                                |  |                        | 48 | 
|American Electric Power Company, Inc.                                   |  |                        | 47 | 
|Snapping Shoals EMC                                                     |  |                        | 43 | 
|Greystone Power Corp.                                                   |  |                        | 42 | 
|Entergy Corporation                                                     |  |                        | 40 | 
|Dominion Virginia Power Co.                                             |  |                        | 32 | 
|Progress Energy Carolinas (formerly Carolina Power &
    Light Company) |  |                        | 32 | 
|TXU Corp.                                                               |  |                        | 30 | 
|Oglethorp Power Corp./ Georgia Transmission Corp.                       |  |                        | 24 | 



Types of Service Arrangements


de minimis




9



---



##### 



Training, Quality Assurance and Safety








Equipment








Employees






10



---



##### 



Risk Management and Insurance






Competition








| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | reputation and relationships with customers;                                                       
|
| |  | history of service execution (for example, safety record, cost
    control, timing and experience);
|
| |  | geographic presence and breadth of service offerings;                                              
|
| |  | price; and                                                                                         
|
| |  | the availability of qualified and/or licensed personnel.                                           



Government Regulation






| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | licensing requirements applicable to electricians and engineers;                             
|
| |  | building and electrical codes;                                                               
|
| |  | permitting and inspection requirements applicable to
    construction projects;              
|
| |  | regulations relating to worker safety and health, including
    those in respect of OSHA; and
|
| |  | regulations relating to environmental protection.                                            

11



---



##### 





Environmental Matters







FORWARD-LOOKING STATEMENTS








| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to retain customers and win new customers in a
    highly competitive industry;                                                                                                               
|
| |  | our ability to successfully manage and operate our business
    after giving effect to the Red Simpson acquisition; and                                                                                   
|
| |  | our beliefs about future trends in population and electricity
    consumption in our market, outsourcing to companies like our
    company and investment in electrical distribution and
    transmission.



12



---



##### 






RISK FACTORS


Forward-Looking Statements.


We derive a significant portion of our revenues from a small
group of customers. The loss of one or more of these customers
could negatively impact our business and results of
operations.




Our customers often have no obligation to assign work to us,
and many of our arrangements may be terminated on short notice.
As a result, we are at risk of losing significant business on
short notice.


We may not be able to realize the anticipated benefits of the
Red Simpson acquisition.


Our storm restoration services are highly volatile and
unpredictable, which could result in substantial variations in,
and uncertainties regarding, the levels of our financial results
from period to period.


13



---



##### 





Our business is subject to numerous hazards that could
subject us to substantial monetary and other liabilities. If
accidents occur, they could materially and adversely affect our
business and results of operations.




Our current insurance coverage may not be adequate, and we
may not be able to obtain insurance at acceptable rates, or at
all.




Record high fuel costs could materially and adversely affect
our operating results.


Demand for some of our services is cyclical and vulnerable to
industry and economic downturns, which could materially and
adversely affect our business and results of operations.


14



---



##### 





Failure to establish and maintain effective internal control
over financial reporting could have a material adverse effect on
our business, operating results and stock price.


To be successful, we need to attract and retain qualified
personnel, and any inability to do so would adversely affect our
business.


We are dependent on our senior management and other key
personnel, the loss of which could have a material adverse
effect on our business.


Our industry is highly competitive and we may be unable to
compete effectively, retain our customers or win new customers,
which could result in reduced profitability and loss of market
share.


15



---



##### 





We may be unsuccessful at acquiring companies or at
integrating companies that we may acquire, and as a result, we
may not achieve the expected benefits and our profitability
could materially suffer.


We have a substantial amount of indebtedness incurred under a
senior credit facility, which may restrict our business and
operations, adversely affect our cash flow, and restrict our
future access to sufficient funding to finance desired
growth.




16



---



##### 









During the ordinary course of our business, we may become
subject to lawsuits or indemnity claims, which could materially
and adversely affect our business and results of operations.


Our failure to comply with, or the imposition of liability
under, environmental laws and regulations could result in
significant costs.


17



---



##### 





The electric infrastructure servicing business is subject to
seasonal variations, which may cause our operating results to
vary significantly from period to period and could cause the
market price of our stock to fall.


We will incur increased costs as a result of being a public
company. As a public company, we will incur significant legal,
accounting and other expenses that we did not incur as a private
company.


Our results of operations could be adversely affected as a
result of goodwill impairments.


The market price of our stock may be influenced by many
factors, some of which are beyond our control.




| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the failure of securities analysts to continue to cover our
    common stock after our initial public offering or changes in
    financial estimates by analysts;
|
| |  | announcements by us or our competitors of significant contracts,
    acquisitions or capital commitments;                                                        
|
| |  | changes in market valuation or earnings of our competitors;                                                                                                      
|
| |  | variations in quarterly operating results;                                                                                                                       
|
| |  | availability of capital;                                                                                                                                         
|
| |  | general economic conditions;                                                                                                                                     

18



---



##### 





| |   |                                                             
| | - | ------------------------------------------------------------
| |  | terrorist acts;                                             
|
| |  | legislation;                                                
|
| |  | future sales of our common stock; and                       
|
| |  | investor perception of us and the electric utility industry.



Shares eligible for future sale may cause the market price of
our common stock to drop significantly, even if our business is
doing well.








A significant stockholder controls the direction of our
business. The concentrated ownership of our common stock will
prevent you and other stockholders from influencing significant
corporate decisions.






19



---



##### 





Anti-takeover provisions of our charter and bylaws may reduce
the likelihood of any potential change of control or unsolicited
acquisition proposal that stockholders might consider
favorable.




| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | the authority of the board to issue preferred stock with terms
    as the board may determine;
|
| |  | the absence of cumulative voting in the election of directors;                                
|
| |  | limitations on who may call special meetings of
    stockholders; and                         
|
| |  | advance notice requirements for stockholder proposals.                                        






|        |           
|------- | ----------
|ITEM 2. | PROPERTIES








|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS










|        |                                                    
|------- | ---------------------------------------------------
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



20



---



##### 






PART II







|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
    STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES.



Dividends




Recent Sales of Unregistered Securities












21



---



##### 







Use of Proceeds











|        |                                      
|------- | -------------------------------------
|ITEM 6. | SELECTED CONSOLIDATED FINANCIAL DATA.



22



---



##### 





|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |         |        |       |   |         |        |        | 
|----------------------------------------------------------------------------- | ----------------------------------------------------------- | ---------------------------------------- | ------- | ------ | ----- | - | ------- | ------ | ----- | - | ------- | ------ | ------ | ------- | ------- | ------ | ----- | - | ------- | ------ | ------ | 
|                                                                              |                                                             | Year Ended June 30,                      |        
|                                                                              |                                                             |                                          |        
|                                                                              |                                                             | 2001                                     |         |        | 2002  |   |         | 2003   |       |   | 2004    |        |        | 2005(9) |        
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|                                                                              |                                                             | (In thousands, except per share amounts) |        
|Statement of Operations Data:                                                 |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |         |        |       |   |         |       
|Revenues                                                                      |                                                             | $                                        | 287,305 |        |       | $ | 273,235 |        |       | $ | 297,514 |        |        | $       | 356,697 |        |       | $ | 679,197 |       
|Cost of operations(1)                                                         |                                                             |                                          | 241,199 |        |       |   | 225,280 |        |       |   | 247,204 |        |        |         | 300,313 |        |       |   | 585,354 |       
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|Gross profit                                                                  |                                                             |                                          | 46,106  |        |       |   | 47,955  |        |       |   | 50,310  |        |        |         | 56,384  |        |       |   | 93,843  |       
|General and administrative expenses(2)                                        |                                                             |                                          | 14,881  |        |       |   | 14,176  |        |       |   | 16,783  |        |        |         | 18,812  |        |       |   | 47,867  |       
|Recapitalization expenses(3)                                                  |                                                             |                                          |        |        |       |   | 10,893  |        |       |   | 386     |        |        |         |        |        |       |   |        |       
|(Gain) loss on sale of property and equipment                                 |                                                             |                                          | (150    | )      |       |   | (4      | )      |       |   | 539     |        |        |         | 265     |        |       |   | 585     |       
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|Income from operations                                                        |                                                             |                                          | 31,375  |        |       |   | 22,890  |        |       |   | 32,602  |        |        |         | 37,307  |        |       |   | 45,391  |       
|Other expense (income):                                                       |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |         |        |       |   |         |       
|                                                                              | Interest expense(4)                                         |                                          |         | 1,260  |       |   |         | 2,802  |       |   |         | 11,862 |        |         |         | 9,192  |       |   |         | 40,217 |       
|                                                                              | Other, net(5)                                               |                                          |         | 157    |       |   |         | (267   | )     |   |         | (46    | )      |         |         | (19    | )     |   |         | (109   | )     
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|                                                                              |                                                             | Total other expense                      |         |        | 1,417 |   |         |        | 2,535 |   |         |        | 11,816 |         |         |        | 9,173 |   |         |        | 40,108 | 
|Income before income taxes from continuing operations                         |                                                             |                                          | 29,958  |        |       |   | 20,355  |        |       |   | 20,786  |        |        |         | 28,134  |        |       |   | 5,283   |       
|Income tax expense                                                            |                                                             |                                          | 11,208  |        |       |   | 9,519   |        |       |   | 8,335   |        |        |         | 11,276  |        |       |   | 8,469   |       
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|Income (loss) from continuing operations                                      |                                                             |                                          | 18,750  |        |       |   | 10,836  |        |       |   | 12,451  |        |        |         | 16,858  |        |       |   | (3,186  | )     
|                                                                              | Income (loss) from discontinued operations, net of taxes(6) |                                          |         | 383    |       |   |         | (324   | )     |   |         | (621   | )      |         |         | (330   | )     |   |         |       |       
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|Net income (loss)                                                             |                                                             | $                                        | 19,133  |        |       | $ | 10,512  |        |       | $ | 11,830  |        |        | $       | 16,528  |        |       | $ | (3,186  | )     
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|Decrease in redemption value of mandatorily redeemable preferred
    stock(7) |                                                             |                                          |        |        |       |   |        |        |       |   | 12,071  |        |        |         |        |        |       |   |        |       
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|Net income (loss) available (attributable) to common
    stockholders         |                                                             | $                                        | 19,133  |        |       | $ | 10,512  |        |       | $ | 23,901  |        |        | $       | 16,528  |        |       | $ | (3,186  | )     
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|Basic earnings from continuing operations per common share(8):                |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |         |        |       |   |         |       
|                                                                              | Weighted average basic common shares outstanding            |                                          |         | 68,432 |       |   |         | 59,633 |       |   |         | 24,437 |        |         |         | 24,437 |       |   |         | 27,709 |       
|                                                                              | Income (loss) from continuing operations                    |                                          | $       | 0.27   |       |   | $       | 0.18   |       |   | $       | 0.51   |        |         | $       | 0.69   |       |   | $       | (0.11  | )     
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        
|Diluted earnings from continuing operations per common share(8):              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |         |        |       |   |         |       
|                                                                              | Weighted average diluted common shares outstanding          |                                          |         | 68,432 |       |   |         | 59,633 |       |   |         | 24,437 |        |         |         | 24,437 |       |   |         | 27,709 |       
|                                                                              | Income (loss) from continuing operations                    |                                          | $       | 0.27   |       |   | $       | 0.18   |       |   | $       | 0.51   |        |         | $       | 0.69   |       |   | $       | (0.11  | )     
|                                                                              |                                                             |                                          |         |        |       |   |         |        |       |   |         |        |        |         |        

23



---



##### 



|                                       |  |                |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|-------------------------------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                                       |  | As of June 30, |        
|                                       |  |                |        
|                                       |  | 2001           |         |  | 2002 |   |         | 2003 |  |   | 2004    |  |  | 2005 |        
|                                       |  |                |         |  |      |   |         |      |  |   |         |  |  |      |        
|                                       |  | (In thousands) |        
|Balance Sheet Data:                    |  |                |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Cash and cash equivalents              |  | $              | 5,578   |  |      | $ | 99      |      |  | $ | 3,637   |  |  | $    | 4,937   |  |  | $ | 3,106   | 
|Working capital                        |  |                | 41,819  |  |      |   | 36,048  |      |  |   | 41,372  |  |  |      | 41,497  |  |  |   | 60,421  | 
|Property and equipment, net            |  |                | 176,371 |  |      |   | 174,500 |      |  |   | 171,488 |  |  |      | 190,600 |  |  |   | 281,842 | 
|Total assets                           |  |                | 243,975 |  |      |   | 245,032 |      |  |   | 245,248 |  |  |      | 287,096 |  |  |   | 592,455 | 
|Total current liabilities              |  |                | 20,822  |  |      |   | 21,515  |      |  |   | 20,810  |  |  |      | 38,502  |  |  |   | 82,307  | 
|Total long-term liabilities            |  |                | 52,320  |  |      |   | 198,807 |      |  |   | 192,103 |  |  |      | 199,311 |  |  |   | 509,665 | 
|Mandatorily redeemable preferred stock |  |                |        |  |      |   | 17,500  |      |  |   | 5,429   |  |  |      | 5,810   |  |  |   |        | 
|Total stockholders equity(10)         |  |                | 170,833 |  |      |   | 7,210   |      |  |   | 32,335  |  |  |      | 49,283  |  |  |   | 483     | 






| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Cost of operations for the fiscal year ended June 30, 2005
    include $21.1 million in deferred compensation charges
    related to our acquisition of Red Simpson in July 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (2) | General and administrative expenses for the fiscal year ended
    June 30, 2005 include: (i) $4.2 million of
    compensation expense for common stock options repurchased from
    our management in connection with our 2004 recapitalization,
    (ii) $4.0 million charge for the termination of our
    management agreement with Lindsay Goldberg & Bessemer,
    and (iii) $2.6 million related to the purchase by
    members of Red Simpsons management of restricted shares of
    common stock in connection with the acquisition of Red Simpson,
    due to the acceleration of deferred compensation benefits and
    the subsequent repurchase of a portion of that restricted stock
    in the 2004 recapitalization.
|
| | (3) | Recapitalization expenses represent costs incurred in connection
    with a recapitalization that we effected in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (4) | Interest expense primarily includes interest expense related to
    outstanding debt as well as (a) a $14.0 million charge
    in fiscal 2005 for the redemption of preferred stock and
    (b) the write-off of unamortized deferred loan costs of
    $5.6 million in fiscal year 2005, resulting from the
    prepayment of debt.                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (5) | Other, net consists primarily of interest income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (6) | Income (loss) from discontinued operations, net of taxes,
    represents losses from our industrial division, which ceased
    operations during the year ended June 30, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (7) | The $12.1 million decrease in the redemption value of our
    Series A preferred stock during fiscal 2003 occurred
    because we adjusted the carrying value of the Series A
    preferred stock to $5.4 million from its original carrying
    value of $17.5 million at issuance in accordance with the
    terms of the Series A preferred stock. See
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Results of
    Operations  Year Ended June 30, 2004 Compared to
    Year Ended June 30, 2003.                                                                                                                                                                           
|
| | (8) | The per share amounts included in the selected consolidated
    financial data have been adjusted to give effect to the
    conversion of each of our common shares into 14.76 common shares
    in connection with our reincorporation in Delaware on
    July 1, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (9) | Amounts for the fiscal year ended June 30, 2005 include the
    results of operations of Red Simpson, which was acquired on
    July 1, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



|     |                                                                                                                                                                                                                                                                                                                                                    
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Total stockholders equity was effected in the fiscal year
    ended June 30, 2005 by our sale of common stock on
    July 1, 2004 of $71.0 million in connection with our
    acquisition of Red Simpson, which was offset by our
    recapitalization in December 2004, where we acquired on a
    pro-rata basis $123.3 million in common stock.

24



---



##### 








|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial
condition and results of operations should be read in
conjunction with our historical consolidated financial
statements and related notes thereto in Item 8
Financial Statements and Supplementary Data. The
discussion below contains forward-looking statements that are
based upon our current expectations and are subject to
uncertainty and changes in circumstances. Actual results may
differ materially from these expectations due to inaccurate
assumptions and known or unknown risks and uncertainties,
including those identified in Business  Risk
Factors.


Overview




Business Drivers and Measures




Industry Trends.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Growth in demand for electricity. Electricity demand is a
    direct driver of maintenance, upgrade and extension spending on
    the distribution and transmission infrastructure, and
    electricity demand has historically been a function of
    population growth and increases in electricity consumption. We
    believe that continued demand for our services will be driven in
    part by expected growth in electricity consumption and
    population in the southeastern and south central regions of the
    United States, which have grown at higher rates in recent years
    than the rest of the country.
|
| |  | Increased outsourcing of infrastructure services. There
    has been an increase in outsourcing of electrical infrastructure
    maintenance and system improvements by electric companies over
    the last decade as they have increasingly focused on their core
    competencies. We believe outsourcing enables electric companies
    to manage their labor costs more flexibly, improve the
    reliability of their systems and deploy their capital more
    efficiently, and we expect the outsourcing trend to continue.                                                                                            
|
| |  | Inadequacy of current electric infrastructure. The
    current electric infrastructure is increasingly viewed as
    inadequate, as more electricity is being transported over longer
    distances utilizing a system that was designed for limited power
    sharing among neighboring utilities. We expect spending on
    electrical transmission infrastructure to increase in order to
    cure historical underinvestment, and we expect this increase to
    drive further work for us.                                                                                                                                

Operational Factors.


25



---



##### 







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | When we add new customers and contracts, we generally experience
    an increase in start-up costs, including the costs of training
    and outfitting our crews and spending on equipment and vehicles,
    resulting in lower gross margins and higher capital expenditures
    at the beginning of a contracts term. For example, we
    added approximately 500 employees to our operating crews during
    the fiscal year ended June 30, 2005, excluding the addition
    of employees from our acquisition of Red Simpson in July 2004.
    Once the crews and equipment are fully utilized, our margins
    generally increase over the life of the contract.
|
| |  | Industry-wide insurance costs for workmens compensation,
    medical and general liability have risen in the past several
    years and are expected to continue to rise at a rate faster than
    our revenues. We have implemented several safety initiatives
    designed to reduce incident rates and corresponding insurance
    costs as well as introduced an employee safety bonus in 2005
    that has initially increased our costs.                                                                                                                                                                                                                       
|
| |  | There are a limited number of skilled workers that can perform
    our work, and during historic periods of increased demand, labor
    rates have tended to increase. We have been experiencing an
    improved economic cycle, and we are currently experiencing
    shortages of skilled personnel in certain markets. These
    shortages have caused our labor costs to increase, although we
    historically have been able to obtain increases when we
    renegotiate rates with our customers to offset these cost
    increases.                                                                                                                           
|
| |  | We expect an increase in our general and administrative expenses
    related to the cost of operating as a public company of
    $2.0 million to $3.0 million per year and additional
    implementation costs in fiscal 2007 relating to compliance with
    Section 404 of the Sarbanes-Oxley Act of 2002 of
    $1.0 million to $2.0 million.                                                                                                                                                                                                                                                                                                                      
|
| |  | Fuel costs have risen in the past several years, with
    significant increases recently, and are expected to continue to
    rise at a rate faster than our revenues. We have a large fleet
    of vehicles and equipment that primarily use diesel fuel. We
    have implemented bulk purchasing in certain areas and may seek
    other alternatives to hedge fuel costs.                                                                                                                                                                                                                                                                                          

Other Factors.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In connection with our acquisition of Red Simpson, we allocated
    a portion of the purchase price to definite-lived intangible
    assets that will be amortized over their estimated lives of 3 to
    30 years, which will result in an annual amortization
    charge of $4.9 million in fiscal 2006.                                                                                                                                                                                                                                                                            
|
| |  | In connection with our adoption of Statement of Financial
    Accounting Standards (SFAS) No. 123I,
    Share-Based Payment, as of July 1, 2005, we will be
    required to account for share-based payments, including grants
    of employee stock options, based on fair values, which means
    that we will begin to recognize compensation expenses in
    connection with employee stock options. We cannot precisely
    predict future expenses because they depend on employee stock
    options we may grant in the future. See  Recent
    Accounting Pronouncements.

Services






26



---



##### 







|                           |       |                                   |       |       |      |  |      |       |   |   |         |       |  |  |      |       |   |   |       |       |  |  |      |       |   |   |       |       |  |  |      |       |  
|-------------------------- | ----- | --------------------------------- | ----- | ----- | ---- |  | ---- | ----- | - | - | ------- | ----- |  |  | ---- | ----- | - | - | ----- | ----- |  |  | ---- | ----- | - | - | ----- | ----- |  |  | ---- | ----- | -
|                           |       | Year Ended June 30,               |      
|                           |       |                                   |      
|                           |       | 2002                              |       |       | 2003 |  |      | 2004  |   |   | 2005(1) |      
|                           |       |                                   |       |       |      |  |      |       |   |   |         |      
|                           |       | (In millions, except percentages) |      
|Powerline services         |       | $                                 | 266.2 |       |      |  | 97.4 | %     |   | $ | 250.9   |       |  |  | 84.3 | %     |   | $ | 313.7 |       |  |  | 87.9 | %     |   | $ | 530.0 |       |  |  | 78.0 | %    
|Storm restoration services |       |                                   | 7.0   |       |      |  | 2.6  |       |   |   | 46.6    |       |  |  | 15.7 |       |   |   | 43.0  |       |  |  | 12.1 |       |   |   | 149.2 |       |  |  | 22.0 |      
|                           |       |                                   |       |       |      |  |      |       |   |   |         |       |  |  |      |       |   |   |       |       |  |  |      |      
|                           | Total |                                   | $     | 273.2 |      |  |      | 100.0 | % |   | $       | 297.5 |  |  |      | 100.0 | % |   | $     | 356.7 |  |  |      | 100.0 | % |   | $     | 679.2 |  |  |      | 100.0 | %
|                           |       |                                   |       |       |      |  |      |       |   |   |         |       |  |  |      |       |   |   |       |       |  |  |      |      



|    |                                                                                                 
|--- | ------------------------------------------------------------------------------------------------
|(1) | Our revenues for the fiscal year ended June 30, 2005
    reflect our acquisition of Red Simpson.

Integration of Red Simpson




Seasonality; Fluctuations of Results




Basis of Reporting


Revenues.




27



---



##### 







Cost of Operations.


General and Administrative Expenses.


Other Expense.


Discontinued Operations.


Critical Accounting Policies and Estimates




Revenue Recognition.


28



---



##### 







Accounts Receivable.


Impairment of Long-Lived Assets. Accounting for the Impairment or Disposal of Long-Lived
Assets.


Valuation of Goodwill and Other Intangible Assets. Business Combinations Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination.


Goodwill and Other
Intangible Assets


29



---



##### 







Insurance and Claim Accruals.




Stock-Based Compensation. Accounting for Stock Issued to Employees


30



---



##### 





|                 |  |                 |           |  |          |   |      |               |  |   |           |  |  |  |   | 
|---------------- |  | --------------- | --------- |  | -------- | - | ---- | ------------- |  | - | --------- |  |  |  | - | 
|                 |  | Number of       |           |  | Exercise |   |      | Fair Value of |  |   | Intrinsic | 
|Grant Date       |  | Options Granted |           |  | Price    |   |      | Common Stock  |  |   | Value(1)  | 
|                 |  |                 |           |  |          |   |      |               |  |   |           | 
|April 18, 2002   |  |                 | 2,565,819 |  |          | $ | 3.80 |               |  | $ | 3.80      |  |  |  |  | 
|April 18, 2003   |  |                 | 253,400   |  |          | $ | 3.80 |               |  | $ | 3.80      |  |  |  |  | 
|October 21, 2004 |  |                 | 1,503,483 |  |          | $ | 6.51 |               |  | $ | 6.51      |  |  |  |  | 



|    |                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Intrinsic value reflects the amount by which the value of the
    shares as of the grant date exceeds the exercise price of the
    options.



Employee Stock Purchase Plan.


31



---



##### 





Other Events


Red Simpson Acquisition. Business Combinations.


2004 Recapitalization.


Employee Stock Purchase Plan.


Deferred Compensation in Connection with Our Acquisition of
Red Simpson.




32



---



##### 







|                                                                  |  |               |       |       |              |   |      |       |  |   |       |  
|----------------------------------------------------------------- |  | ------------- | ----- | ----- | ------------ | - | ---- | ----- |  | - | ----- | -
|                                                                  |  |               |       | Bonus |              |   |     
|                                                                  |  | Base Deferred |       |       | Deferred     |   |      |      
|                                                                  |  | Compensation  |       |       | Compensation |   |      | Total | 
|                                                                  |  |               |       |       |              |   |      |       | 
|                                                                  |  | (In millions) |      
|Amounts payable in connection with the acquisition of Red Simpson |  | $             | 26.0  |       |              | $ | 29.1 |       |  | $ | 55.1  |  
|Payments                                                          |  |               | (18.7 | )     |              |   | (4.4 | )     |  |   | (23.1 | )
|Forfeitures                                                       |  |               |      |       |              |   | (0.7 | )     |  |   | (0.7  | )
|                                                                  |  |               |       |       |              |   |      |       | 
|Face value at June 30, 2005                                       |  | $             | 7.3   |       |              | $ | 24.0 |       |  | $ | 31.3  |  
|                                                                  |  |               |       |       |              |   |      |       | 



|      |  |               |     |       |              |   |      |       |  |   |      | 
|----- |  | ------------- | --- | ----- | ------------ | - | ---- | ----- |  | - | ---- | 
|      |  |               |     | Bonus |              |   |     
|      |  | Base Deferred |     |       | Deferred     |   |      |      
|      |  | Compensation  |     |       | Compensation |   |      | Total | 
|      |  |               |     |       |              |   |      |       | 
|      |  | (In millions) |    
|2006  |  | $             | 7.4 |       |              | $ | 5.0  |       |  |   | 12.4 | 
|2007  |  |               |    |       |              |   | 7.2  |       |  |   | 7.2  | 
|2008  |  |               |    |       |              |   | 6.3  |       |  |   | 6.3  | 
|2009  |  |               |    |       |              |   | 5.4  |       |  |   | 5.4  | 
|      |  |               |     |       |              |   |      |       | 
|Total |  | $             | 7.4 |       |              | $ | 23.9 |       |  | $ | 31.3 | 
|      |  |               |     |       |              |   |      |       | 



Internal Control Over Financial Reporting at Red Simpson.




33



---



##### 







IPO Grants. Share-Based Payment.


Results of Operations




Pike Electric Corporation and Subsidiaries


Consolidated Statements of Operations


|                                                |                                        |                     |      |      |       |   |      |      |       |   |      |      |       |  
|----------------------------------------------- | -------------------------------------- | ------------------- | ---- | ---- | ----- | - | ---- | ---- | ----- | - | ---- | ---- | ----- | -
|                                                |                                        | Year Ended June 30, |     
|                                                |                                        |                     |     
|                                                |                                        | 2003                |      |      | 2004  |   |      | 2005 |      
|                                                |                                        |                     |      |      |       |   |      |      |      
|Revenues:                                       |                                        |                     |      |      |       |   |      |      |       |   |      |     
|                                                | Powerline services                     |                     |      | 84.3 | %     |   |      | 87.9 | %     |   |      | 78.0 | %    
|                                                | Storm restoration services             |                     |      | 15.7 |       |   |      | 12.1 |       |   |      | 22.0 |      
|                                                |                                        |                     |      |      |       |   |      |      |      
|                                                |                                        | Total               |      |      | 100.0 | % |      |      | 100.0 | % |      |      | 100.0 | %
|                                                |                                        |                     |      |      |       |   |      |      |      
|Cost of operations                              |                                        |                     | 83.1 |      |       |   | 84.2 |      |       |   | 86.2 |     
|Gross profit                                    |                                        |                     | 16.9 |      |       |   | 15.8 |      |       |   | 13.8 |     
|General and administrative expenses             |                                        |                     | 5.6  |      |       |   | 5.3  |      |       |   | 7.0  |     
|Other operating expense, net                    |                                        |                     | 0.3  |      |       |   |     |      |       |   | 0.1  |     
|                                                |                                        |                     |      |      |       |   |      |      |      
|Income from operations                          |                                        |                     | 11.0 | %    |       |   | 10.5 | %    |       |   | 6.7  | %   
|                                                |                                        |                     |      |      |       |   |      |      |      
|Other expense:                                  |                                        |                     |      |      |       |   |      |      |       |   |      |     
|                                                | Interest expense, net                  |                     |      | 4.0  |       |   |      | 2.6  |       |   |      | 5.9  |      
|                                                | Other nonoperating (gain) expense, net |                     |      |     |       |   |      |     |       |   |      |     |      
|                                                |                                        |                     |      |      |       |   |      |      |      
|Income tax expense                              |                                        |                     | 2.8  |      |       |   | 3.2  |      |       |   | 1.3  |     
|                                                |                                        |                     |      |      |       |   |      |      |      
|Income (loss) from continuing operations        |                                        |                     | 4.2  |      |       |   | 4.7  |      |       |   | (0.5 | )   
|                                                |                                        |                     |      |      |       |   |      |      |      
|Loss from discontinued operations, net of taxes |                                        |                     | (0.2 | )    |       |   | (0.1 | )    |       |   |     |     
|                                                |                                        |                     |      |      |       |   |      |      |      
|Net (loss) income                               |                                        |                     | 4.0  | %    |       |   | 4.6  | %    |       |   | (0.5 | )%  
|                                                |                                        |                     |      |      |       |   |      |      |      

34



---



##### 





| |                                                                  
| | -----------------------------------------------------------------
| | Year Ended June 30, 2005 Compared to Year Ended
    June 30, 2004

Revenues.






Gross Profit.


General and Administrative Expenses.


Other Expense.


35



---



##### 



Income Tax Expense.


Discontinued Operations.


Net Income (Loss).




| |                                                                  
| | -----------------------------------------------------------------
| | Year Ended June 30, 2004 Compared to Year Ended
    June 30, 2003

Revenues.


Gross Profit.


General and Administrative Expenses.


Other Expense.


Income Tax Expense.


Discontinued Operations.


36



---



##### 



Net Income.


Net Income Available to Common Stockholders.


Liquidity and Capital Resources














37



---



##### 





| |                                             
| | --------------------------------------------
| | Changes in Cash Flows: 2005 Compared to 2004

|                                                                         |  |                     |       |   |      |   |        |  
|------------------------------------------------------------------------ |  | ------------------- | ----- | - | ---- | - | ------ | -
|                                                                         |  | Year Ended June 30, |      
|                                                                         |  |                     |      
|                                                                         |  | 2004                |       |   | 2005 |  
|                                                                         |  |                     |       |   |      |  
|                                                                         |  | (In millions)       |      
|Net cash provided by operating activities from continuing
    operations |  | $                   | 31.5  |   |      | $ | 53.2   |  
|Net cash used in investing activities from continuing operations         |  | $                   | (41.8 | ) |      | $ | (241.5 | )
|Net cash provided by financing activities from continuing
    operations |  | $                   | 10.0  |   |      | $ | 186.5  |  









| |                                             
| | --------------------------------------------
| | Changes in Cash Flows: 2004 Compared to 2003

|                                                                                   |  |                     |       |   |      |   |       |  
|---------------------------------------------------------------------------------- |  | ------------------- | ----- | - | ---- | - | ----- | -
|                                                                                   |  | Year Ended June 30, |      
|                                                                                   |  |                     |      
|                                                                                   |  | 2004                |       |   | 2003 |  
|                                                                                   |  |                     |       |   |      |  
|                                                                                   |  | (In millions)       |      
|Net cash provided by operating activities from continuing
    operations           |  | $                   | 31.5  |   |      | $ | 33.9  |  
|Net cash used in investing activities from continuing operations                   |  | $                   | (41.8 | ) |      | $ | (15.1 | )
|Net cash provided by (used in) financing activities from
    continuing operations |  | $                   | 10.0  |   |      | $ | (14.3 | )

38



---



##### 











| |                     
| | --------------------
| | Capital Expenditures





| |                       
| | ----------------------
| | Senior Credit Facility





39



---



##### 







| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a minimum cash interest coverage ratio, based upon the ratio of
    consolidated EBITDA to consolidated cash interest expense, of at
    least 3.50 to 1.00; and                                          
|
| |  | a maximum leverage ratio, based upon the ratio of consolidated
    funded debt to consolidated EBITDA, of 4.75 to 1.00 through the
    quarter ending March 31, 2006, and declining ratios
    thereafter.





| |                
| | ---------------
| | Preferred Stock



Contractual Obligations and Other Commitments




|                                |       |                        |       |           |        |   |      |       |  |     |       |      |           |         |      |      |  |   |       |       | 
|------------------------------- | ----- | ---------------------- | ----- | --------- | ------ | - | ---- | ----- |  | --- | ----- | ---- | --------- | ------- | ---- | ---- |  | - | ----- | ----- | 
|                                |       | Payments Due by Period |      
|                                |       |                        |      
|                                |       |                        |       | Less Than |        |   | 1-3  |       |  | 3-5 |       |      | More Than |        
|                                |       | Total                  |       |           | 1 Year |   |      | Years |  |     | Years |      |           | 5 Years |     
|                                |       |                        |       |           |        |   |      |       |  |     |       |      |           |         |     
|                                |       | (In millions)          |      
|Long-term debt obligations(1)   |       | $                      | 408.0 |           |        | $ |     |       |  | $   | 2.5   |      |           | $       | 3.0  |      |  | $ | 402.5 |      
|Revolving Credit Facility(2)    |       |                        | 11.5  |           |        |   |     |       |  |     |      |      |           |         | 11.5 |      |  |   |      |      
|Interest payment obligations(3) |       |                        | 169.8 |           |        |   | 23.2 |       |  |     | 49.3  |      |           |         | 49.9 |      |  |   | 47.4  |      
|Operating lease obligations     |       |                        | 6.1   |           |        |   | 1.4  |       |  |     | 2.1   |      |           |         | 1.6  |      |  |   | 1.0   |      
|Purchase obligations(4)         |       |                        | 10.3  |           |        |   | 10.3 |       |  |     |      |      |           |         |     |      |  |   |      |      
|Deferred compensation(5)        |       |                        | 31.3  |           |        |   | 12.4 |       |  |     | 18.9  |      |           |         |     |      |  |   |      |      
|Employment agreements           |       |                        | 0.6   |           |        |   | 0.6  |       |  |     |      |      |           |         |     |      |  |   |      |      
|                                |       |                        |       |           |        |   |      |       |  |     |       |      |           |         |     
|                                | Total |                        | $     | 637.6     |        |   | $    | 47.9  |  |     | $     | 72.8 |           |         | $    | 66.0 |  |   | $     | 450.9 | 
|                                |       |                        |       |           |        |   |      |       |  |     |       |      |           |         |     






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes only obligations to pay principal not interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | Includes only obligation to pay principal not interest expense
    related to the Revolving portion of our Senior Credit Facility.
    Although we are contractually required to pay this amount by
    2010, we expect to pay the balance in fiscal 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(3) | Represents estimated interest payments to be made on our
    variable rate debt. All interest payments assume that principal
    payments are made as originally scheduled. Interest rates
    utilized to determine interest payments for variable rate debt
    are based upon our estimate of future interest rates. Interest
    payment obligations for the periods shown above, after giving
    effect to the reduction in interest expense due to the use of
    proceeds of our initial public offering in August 2005 to repay
    a portion of our senior credit facility, would be
    $16.4 million, $34.9 million, $35.2 million and
    $28.4 million, respectively, for a total of
    $114.9 million.
|   
|(4) | Consists of obligations to purchase trucks and other equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(5) | For a description of the deferred compensation obligation, see
     Other Events  Deferred Compensation
    in Connection with Our Acquisition of Red Simpson.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

40



---



##### 



Off-Balance Sheet Arrangements








Recent Accounting Pronouncements


Accounting
for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity.




Share-Based Payment Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees Statement of Cash Flows.






| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) A modified prospective method in which
    compensation cost is recognized beginning with the effective
    date (a) based on the requirements of
    SFAS No. 123(R) for all share-based payments granted
    after the effective date and (b) based on the requirements
    of SFAS No. 123 for all awards

41



---



##### 



| |                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | granted to employees prior to the effective date of
    SFAS No. 123(R) that remain unvested on the effective
    date.                                                                                                                                                                                                                                                                
|
| | (2) A modified retrospective method which
    includes the requirements of the modified prospective method
    described above, but also permits entities to restate based on
    the amounts previously recognized under SFAS No. 123
    for purposes of pro forma disclosures either (a) all prior
    periods presented or (b) prior interim periods of the year
    of adoption.








|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK



42



---



##### 








|        |                                             
|------- | --------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                            |  |      |    | 
|----------------------------------------------------------- |  | ---- | -- | 
|                                                            |  | Page |   
|                                                            |  |      |   
|Report of Independent Registered Public
    Accounting Firm |  |      | 44 | 
|Consolidated Balance Sheets                                 |  |      | 45 | 
|Consolidated Statements of Operations                       |  |      | 46 | 
|Consolidated Statements of
    Stockholders Equity         |  |      | 47 | 
|Consolidated Statements of Cash Flows                       |  |      | 48 | 
|Notes to Consolidated Financial
    Statements              |  |      | 49 | 

43



---



##### 






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP







44



---



##### 






PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                                                     |                                                                                                                                                                      |                            |         |         |         |  |         |         |        | 
|---------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------- | ------- |  | ------- | ------- | ------ | 
|                                                     |                                                                                                                                                                      | June 30,                   |        
|                                                     |                                                                                                                                                                      |                            |        
|                                                     |                                                                                                                                                                      | 2005                       |         |         | 2004    | 
|                                                     |                                                                                                                                                                      |                            |         |         |         | 
|                                                     |                                                                                                                                                                      | (In thousands)             |        
|ASSETS                                              
|Current assets:                                      |                                                                                                                                                                      |                            |         |         |         |  |         |        
|                                                     | Cash and cash equivalents                                                                                                                                            |                            | $       | 3,106   |         |  | $       | 4,937   |       
|                                                     | Accounts receivable, net                                                                                                                                             |                            |         | 60,690  |         |  |         | 29,297  |       
|                                                     | Work completed not billed                                                                                                                                            |                            |         | 64,568  |         |  |         | 35,801  |       
|                                                     | Inventories                                                                                                                                                          |                            |         | 7,321   |         |  |         | 6,162   |       
|                                                     | Prepaid expenses and other                                                                                                                                           |                            |         | 11,205  |         |  |         | 1,167   |       
|                                                     | Deferred income taxes                                                                                                                                                |                            |         | 4,838   |         |  |         | 2,635   |       
|                                                     |                                                                                                                                                                      |                            |         |         |         | 
|                                                     |                                                                                                                                                                      | Total current assets       |         |         | 151,728 |  |         |         | 79,999 | 
|Property and equipment, net                          |                                                                                                                                                                      |                            | 281,842 |         |         |  | 190,600 |        
|Goodwill                                             |                                                                                                                                                                      |                            | 91,826  |         |         |  | 3,000   |        
|Other intangibles, net                               |                                                                                                                                                                      |                            | 55,128  |         |         |  |        |        
|Deferred loan costs, net                             |                                                                                                                                                                      |                            | 9,879   |         |         |  | 5,583   |        
|Other assets                                         |                                                                                                                                                                      |                            | 2,052   |         |         |  | 7,914   |        
|                                                     |                                                                                                                                                                      |                            |         |         |         | 
|                                                     | Total assets                                                                                                                                                         |                            | $       | 592,455 |         |  | $       | 287,096 |       
|                                                     |                                                                                                                                                                      |                            |         |         |         | 
|                                                    
|LIABILITIES AND STOCKHOLDERS EQUITY                
|Current liabilities:                                 |                                                                                                                                                                      |                            |         |         |         |  |         |        
|                                                     | Accounts payable                                                                                                                                                     |                            | $       | 19,574  |         |  | $       | 4,741   |       
|                                                     | Accrued compensation                                                                                                                                                 |                            |         | 24,586  |         |  |         | 15,865  |       
|                                                     | Accrued expenses and other                                                                                                                                           |                            |         | 9,257   |         |  |         | 2,909   |       
|                                                     | Current portion of deferred compensation                                                                                                                             |                            |         | 12,202  |         |  |         | 100     |       
|                                                     | Current portion of insurance claim accruals                                                                                                                          |                            |         | 4,938   |         |  |         | 1,887   |       
|                                                     | Current portion of long-term debt                                                                                                                                    |                            |         | 250     |         |  |         |        |       
|                                                     | Revolving credit facility                                                                                                                                            |                            |         | 11,500  |         |  |         | 13,000  |       
|                                                     |                                                                                                                                                                      |                            |         |         |         | 
|                                                     |                                                                                                                                                                      | Total current liabilities  |         |         | 82,307  |  |         |         | 38,502 | 
|Long-term debt, net of current portion               |                                                                                                                                                                      |                            | 407,750 |         |         |  | 137,000 |        
|Insurance and claim accruals, net of current portion |                                                                                                                                                                      |                            | 13,484  |         |         |  | 5,614   |        
|Deferred compensation, net of current portion        |                                                                                                                                                                      |                            | 16,904  |         |         |  | 4,197   |        
|Deferred income taxes                                |                                                                                                                                                                      |                            | 71,467  |         |         |  | 43,980  |        
|Mandatorily redeemable preferred stock               |                                                                                                                                                                      |                            |        |         |         |  | 5,810   |        
|Other liabilities                                    |                                                                                                                                                                      |                            | 60      |         |         |  | 2,710   |        
|Commitments and contingencies                        |                                                                                                                                                                      |                            |         |         |         |  |         |        
|Stockholders equity:                                |                                                                                                                                                                      |                            |         |         |         |  |         |        
|                                                     | Common stock, par value $0.001 per share; 100,000
    authorized shares; 21,484 and 24,437 shares issued and
    outstanding at June 30, 2005 and 2004, respectively |                            |         | 6,415   |         |  |         | 1,656   |       
|                                                     | Additional paid-in capital                                                                                                                                           |                            |         | 105     |         |  |         | 928     |       
|                                                     | Unearned compensation                                                                                                                                                |                            |         | (879    | )       |  |         |        |       
|                                                     | (Accumulated deficit) retained earnings                                                                                                                              |                            |         | (5,158  | )       |  |         | 46,699  |       
|                                                     |                                                                                                                                                                      |                            |         |         |         | 
|                                                     |                                                                                                                                                                      | Total stockholders equity |         |         | 483     |  |         |         | 49,283 | 
|                                                     |                                                                                                                                                                      |                            |         |         |         | 
|                                                     | Total liabilities and stockholders equity                                                                                                                           |                            | $       | 592,455 |         |  | $       | 287,096 |       
|                                                     |                                                                                                                                                                      |                            |         |         |         | 



45



---



##### 






PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                                  |                                                                               |                       |         |        |        |   |         |        |       |   |         |        |        | 
|--------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | --------------------- | ------- | ------ | ------ | - | ------- | ------ | ----- | - | ------- | ------ | ------ | 
|                                                                                  |                                                                               | Years Ended June 30,  |        
|                                                                                  |                                                                               |                       |        
|                                                                                  |                                                                               | 2005                  |         |        | 2004   |   |         | 2003   |      
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|                                                                                  |                                                                               | (In thousands, except |        
|                                                                                  |                                                                               | per share amounts)    |        
|Revenues                                                                          |                                                                               | $                     | 679,197 |        |        | $ | 356,697 |        |       | $ | 297,514 |       
|Cost of operations                                                                |                                                                               |                       | 585,354 |        |        |   | 300,313 |        |       |   | 247,204 |       
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|                                                                                  | Gross profit                                                                  |                       |         | 93,843 |        |   |         | 56,384 |       |   |         | 50,310 |       
|General and administrative expenses                                               |                                                                               |                       | 47,867  |        |        |   | 18,812  |        |       |   | 16,783  |       
|Recapitalization expenses                                                         |                                                                               |                       |        |        |        |   |        |        |       |   | 386     |       
|Loss on sale of property and equipment                                            |                                                                               |                       | 585     |        |        |   | 265     |        |       |   | 539     |       
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|                                                                                  | Income from operations                                                        |                       |         | 45,391 |        |   |         | 37,307 |       |   |         | 32,602 |       
|Other expense (income):                                                           |                                                                               |                       |         |        |        |   |         |        |       |   |         |       
|                                                                                  | Interest expense                                                              |                       |         | 40,217 |        |   |         | 9,192  |       |   |         | 11,862 |       
|                                                                                  | Other, net                                                                    |                       |         | (109   | )      |   |         | (19    | )     |   |         | (46    | )     
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|                                                                                  |                                                                               | Total other expense   |         |        | 40,108 |   |         |        | 9,173 |   |         |        | 11,816 | 
|Income before income taxes from continuing operations                             |                                                                               |                       | 5,283   |        |        |   | 28,134  |        |       |   | 20,786  |       
|Income tax expense                                                                |                                                                               |                       | 8,469   |        |        |   | 11,276  |        |       |   | 8,335   |       
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|Income (loss) from continuing operations                                          |                                                                               |                       | (3,186  | )      |        |   | 16,858  |        |       |   | 12,451  |       
|Loss from discontinued operations, net of taxes                                   |                                                                               |                       |        |        |        |   | (330    | )      |       |   | (621    | )     
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|Net (loss) income                                                                 |                                                                               |                       | (3,186  | )      |        |   | 16,528  |        |       |   | 11,830  |       
|Decrease in redemption value of mandatorily redeemable preferred
    stock        |                                                                               |                       |        |        |        |   |        |        |       |   | 12,071  |       
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|Net (loss) income available to common stockholders                                |                                                                               | $                     | (3,186  | )      |        | $ | 16,528  |        |       | $ | 23,901  |       
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|Basic and diluted earnings (loss) per share available to common
    stockholders: |                                                                               |                       |         |        |        |   |         |        |       |   |         |       
|                                                                                  | (Loss) income from continuing operations available to common
    stockholders |                       | $       | (0.11  | )      |   | $       | 0.69   |       |   | $       | 1.00   |       
|                                                                                  | Loss from discontinued operations, net                                        |                       |         |       |        |   |         | (0.01  | )     |   |         | (0.02  | )     
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|                                                                                  | Net (loss) income available to common stockholders                            |                       | $       | (0.11  | )      |   | $       | 0.68   |       |   | $       | 0.98   |       
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      
|Weighted average basic and diluted common shares outstanding                      |                                                                               |                       | 27,709  |        |        |   | 24,437  |        |       |   | 24,437  |       
|                                                                                  |                                                                               |                       |         |        |        |   |         |        |      



46



---



##### 






PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                       |  |                |         |   |        |   |            |         |  |          |              |   |          |               |        |   |       |   |         |   |  |   |          |  
|-------------------------------------- |  | -------------- | ------- | - | ------ | - | ---------- | ------- |  | -------- | ------------ | - | -------- | ------------- | ------ | - | ----- | - | ------- | - |  | - | -------- | -
|                                       |  |                |         |   |        |   |            |         |  | Retained |              |   |         
|                                       |  | Common         |         |   |        |   | Additional |         |  | Unearned |              |   | Earnings |               |        |  
|                                       |  | Stock          |         |   | Common |   |            | Paid-In |  |          | Stock        |   |          | (Accumulated) |        |   |      
|                                       |  | Shares         |         |   | Stock  |   |            | Capital |  |          | Compensation |   |          | Deficit       |        |   | Total |  
|                                       |  |                |         |   |        |   |            |         |  |          |              |   |          |               |        |   |       |  
|                                       |  | (In thousands) |        
|Balance June 30, 2002                  |  |                | 24,437  |   |        | $ | 1,656      |         |  | $        | 88           |   |          |               |       |   |       | $ | 5,466   |   |  | $ | 7,210    |  
|Net income for year                    |  |                |        |   |        |   |           |         |  |          |             |   |          |               |       |   |       |   | 23,901  |   |  |   | 23,901   |  
|Equity compensation expense            |  |                |        |   |        |   |           |         |  |          | 420          |   |          |               |       |   |       |   |        |   |  |   | 420      |  
|Final settlement of recapitalization   |  |                |        |   |        |   |           |         |  |          |             |   |          |               |       |   |       |   | 804     |   |  |   | 804      |  
|                                       |  |                |         |   |        |   |            |         |  |          |              |   |          |               |        |   |       |  
|Balance June 30, 2003                  |  |                | 24,437  |   |        |   | 1,656      |         |  |          | 508          |   |          |               |       |   |       |   | 30,171  |   |  |   | 32,335   |  
|Net income for year                    |  |                |        |   |        |   |           |         |  |          |             |   |          |               |       |   |       |   | 16,528  |   |  |   | 16,528   |  
|Equity compensation expense            |  |                |        |   |        |   |           |         |  |          | 420          |   |          |               |       |   |       |   |        |   |  |   | 420      |  
|                                       |  |                |         |   |        |   |            |         |  |          |              |   |          |               |        |   |       |  
|Balance June 30, 2004                  |  |                | 24,437  |   |        | $ | 1,656      |         |  | $        | 928          |   |          | $             |       |   |       | $ | 46,699  |   |  | $ | 49,283   |  
|Net loss for year                      |  |                |        |   |        |   |           |         |  |          |             |   |          |               |       |   |       |   | (3,186  | ) |  |   | (3,186   | )
|Proceeds from the sale of common stock |  |                | 11,498  |   |        |   | 76,000     |         |  |          |             |   |          |               |       |   |       |   |        |   |  |   | 76,000   |  
|Purchase of common stock               |  |                | (14,758 | ) |        |   | (73,241    | )       |  |          | (1,138       | ) |          |               |       |   |       |   | (48,905 | ) |  |   | (123,284 | )
|Issuance of restricted stock           |  |                | 307     |   |        |   | 2,000      |         |  |          |             |   |          |               | (2,000 | ) |       |   |        |   |  |   |         |  
|Equity compensation expense            |  |                |        |   |        |   |           |         |  |          | 315          |   |          |               | 1,121  |   |       |   | 234     |   |  |   | 1,670    |  
|                                       |  |                |         |   |        |   |            |         |  |          |              |   |          |               |        |   |       |  
|Balance June 30, 2005                  |  |                | 21,484  |   |        | $ | 6,415      |         |  | $        | 105          |   |          | $             | (879   | ) |       | $ | (5,158  | ) |  | $ | 483      |  
|                                       |  |                |         |   |        |   |            |         |  |          |              |   |          |               |        |   |       |  



47



---



##### 






PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |         |         |        |        |         |         |        | 
|---------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | -------- | -------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | ------- | ------ | 
|                                                                 |                                                                                                                                                    | Years Ended June 30,                                                      |                                                                                   
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                   
|                                                                 |                                                                                                                                                    | 2005                                                                      |                                                                                    |                                                                          | 2004     |          |        | 2003   |        
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|                                                                 |                                                                                                                                                    | (In thousands)                                                            |                                                                                   
|Cash flows from operating activities:                            |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |         |         |        |       
|                                                                 | (Loss) income from continuing operations                                                                                                           |                                                                           | $                                                                                  | (3,186                                                                   | )        |          | $      | 16,858 |         |         | $      | 12,451 |        
|                                                                 | Adjustments to reconcile (loss) income from continuing
    operations to net cash provided by operating activities from
    continuing operations: |                                                                           |                                                                                    |                                                                          |          |          |        |        |         |         |        |        |        
|                                                                 |                                                                                                                                                    | Depreciation                                                              |                                                                                    |                                                                          | 32,604   |          |        |        | 19,457  |         |        |        | 17,625  |        
|                                                                 |                                                                                                                                                    | Recapitalization expense                                                  |                                                                                    |                                                                          |         |          |        |        |        |         |        |        | 386     |        
|                                                                 |                                                                                                                                                    | Amortization                                                              |                                                                                    |                                                                          | 5,682    |          |        |        |        |         |        |        |        |        
|                                                                 |                                                                                                                                                    | Non-cash interest expense                                                 |                                                                                    |                                                                          | 21,787   |          |        |        | 922     |         |        |        | 2,927   |        
|                                                                 |                                                                                                                                                    | Deferred income taxes                                                     |                                                                                    |                                                                          | 5,945    |          |        |        | 5,570   |         |        |        | 3,256   |        
|                                                                 |                                                                                                                                                    | Unrealized (gain) loss on investments                                     |                                                                                    |                                                                          |         |          |        |        | (465    | )       |        |        | 55      |        
|                                                                 |                                                                                                                                                    | Loss on sale of property and equipment                                    |                                                                                    |                                                                          | 585      |          |        |        | 265     |         |        |        | 540     |        
|                                                                 |                                                                                                                                                    | Equity compensation expense                                               |                                                                                    |                                                                          | 1,670    |          |        |        | 420     |         |        |        | 420     |        
|                                                                 |                                                                                                                                                    | Changes in assets and liabilities arising from continuing
    operations: |                                                                                    |                                                                          |          |          |        |        |         |         |        |        |         |        
|                                                                 |                                                                                                                                                    |                                                                           | Accounts receivable and work completed not billed                                  |                                                                          |          | (18,091  | )      |        |         | (20,488 | )      |        |         | (2,139  | )     
|                                                                 |                                                                                                                                                    |                                                                           | Inventories, prepaids and other                                                    |                                                                          |          | (6,059   | )      |        |         | 2,132   |        |        |         | 1,334   |       
|                                                                 |                                                                                                                                                    |                                                                           | Other assets                                                                       |                                                                          |          | 671      |        |        |         | 313     |        |        |         | (1,175  | )     
|                                                                 |                                                                                                                                                    |                                                                           | Insurance and claim accruals                                                       |                                                                          |          | (3,201   | )      |        |         | 1,401   |        |        |         | (3,284  | )     
|                                                                 |                                                                                                                                                    |                                                                           | Recapitalization expense                                                           |                                                                          |          |         |        |        |         |        |        |        |         | (386    | )     
|                                                                 |                                                                                                                                                    |                                                                           | Accounts payable and other                                                         |                                                                          |          | 14,590   |        |        |         | 5,075   |        |        |         | 1,868   |       
|                                                                 |                                                                                                                                                    |                                                                           | Deferred compensation                                                              |                                                                          |          | 158      |        |        |         |        |        |        |         |        |       
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    | Net cash provided by operating activities from continuing
    operations |          |          | 53,155 |        |         |         | 31,460 |        |         |         | 33,878 | 
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|Cash flows from investing activities from continuing operations: |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |         |         |        |       
|                                                                 |                                                                                                                                                    | Purchases of property and equipment                                       |                                                                                    |                                                                          | (49,988  | )        |        |        | (35,678 | )       |        |        | (21,227 | )      
|                                                                 |                                                                                                                                                    | Business acquisitions, net of cash acquired                               |                                                                                    |                                                                          | (193,928 | )        |        |        | (6,994  | )       |        |        |        |        
|                                                                 |                                                                                                                                                    | Proceeds from sale of property and equipment                              |                                                                                    |                                                                          | 2,397    |          |        |        | 901     |         |        |        | 6,096   |        
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|                                                                 |                                                                                                                                                    |                                                                           | Net cash used in investing activities from continuing operations                   |                                                                          |          | (241,519 | )      |        |         | (41,771 | )      |        |         | (15,131 | )     
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|Cash flows from financing activities from continuing operations: |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |         |         |        |       
|                                                                 |                                                                                                                                                    | Principal payments on long-term debt                                      |                                                                                    |                                                                          | (179,000 | )        |        |        | (3,000  | )       |        |        | (15,000 | )      
|                                                                 |                                                                                                                                                    | Proceeds from long-term debt                                              |                                                                                    |                                                                          | 450,000  |          |        |        |        |         |        |        |        |        
|                                                                 |                                                                                                                                                    | Proceeds (payments) from revolving credit facility, net                   |                                                                                    |                                                                          | (1,500   | )        |        |        | 13,000  |         |        |        |        |        
|                                                                 |                                                                                                                                                    | Redemption of mandatorily redeemable preferred stock                      |                                                                                    |                                                                          | (20,000  | )        |        |        |        |         |        |        |        |        
|                                                                 |                                                                                                                                                    | Repurchase of common stock                                                |                                                                                    |                                                                          | (123,284 | )        |        |        |        |         |        |        |        |        
|                                                                 |                                                                                                                                                    | Proceeds from sale of common stock                                        |                                                                                    |                                                                          | 76,000   |          |        |        |        |         |        |        | 804     |        
|                                                                 |                                                                                                                                                    | Deferred loan costs                                                       |                                                                                    |                                                                          | (12,254  | )        |        |        |        |         |        |        | (47     | )      
|                                                                 |                                                                                                                                                    | Stock issuance costs                                                      |                                                                                    |                                                                          | (3,429   | )        |        |        |        |         |        |        |        |        
|                                                                 |                                                                                                                                                    | Other                                                                     |                                                                                    |                                                                          |         |          |        |        | (15     | )       |        |        | (15     | )      
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|                                                                 |                                                                                                                                                    |                                                                           | Net cash provided by (used in) financing activities from
    continuing operations |                                                                          |          | 186,533  |        |        |         | 9,985   |        |        |         | (14,258 | )     
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|Net cash provided by (used in) discontinued operations           |                                                                                                                                                    |                                                                           |                                                                                   |                                                                          |          |          | 1,626  |        |         |         | (951   | )     
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|                                                                 |                                                                                                                                                    |                                                                           | Net increase (decrease) in cash and cash equivalents                               |                                                                          |          | (1,831   | )      |        |         | 1,300   |        |        |         | 3,538   |       
|Cash and cash equivalents beginning of year                      |                                                                                                                                                    |                                                                           | 4,937                                                                              |                                                                          |          |          | 3,637  |        |         |         | 99     |       
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        
|Cash and cash equivalents end of year                            |                                                                                                                                                    | $                                                                         | 3,106                                                                              |                                                                          |          | $        | 4,937  |        |         | $       | 3,637  |       
|                                                                 |                                                                                                                                                    |                                                                           |                                                                                    |                                                                          |          |          |        |        |        



48



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


For the years ended June 30, 2003, 2004 and 2005


(in thousands, except per share amounts)




|   |                          
|-- | -------------------------
|1. | Organization and Business



| |             
| | ------------
| | Organization









| |         
| | --------
| | Business







|                           |       |                             |         |         |      |  |      |       |   |   |         |         |  |  |      |       |   |   |         |         |  |  |      |       |  
|-------------------------- | ----- | --------------------------- | ------- | ------- | ---- |  | ---- | ----- | - | - | ------- | ------- |  |  | ---- | ----- | - | - | ------- | ------- |  |  | ---- | ----- | -
|                           |       | For the Year Ended June 30, |        
|                           |       |                             |        
|                           |       | 2005                        |         |         | 2004 |  |      | 2003  |  
|                           |       |                             |         |         |      |  |      |       |  
|Powerline services         |       | $                           | 529,924 |         |      |  | 78.0 | %     |   | $ | 313,705 |         |  |  | 87.9 | %     |   | $ | 250,944 |         |  |  | 84.3 | %    
|Storm restoration services |       |                             | 149,273 |         |      |  | 22.0 |       |   |   | 42,992  |         |  |  | 12.1 |       |   |   | 46,570  |         |  |  | 15.7 |      
|                           |       |                             |         |         |      |  |      |       |   |   |         |         |  |  |      |       |   |  
|                           | Total |                             | $       | 679,197 |      |  |      | 100.0 | % |   | $       | 356,697 |  |  |      | 100.0 | % |   | $       | 297,514 |  |  |      | 100.0 | %
|                           |       |                             |         |         |      |  |      |       |   |   |         |         |  |  |      |       |   |  

49



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                
|-- | -------------------------------
|2. | Significant Accounting Policies



| |                            
| | ---------------------------
| | Principles of Consolidation





| |                 
| | ----------------
| | Use of Estimates





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |            
| | -----------
| | Investments

Accounting for Certain
Investments in Debt and Equity Securities.






| |                    
| | -------------------
| | Revenue Recognition





50



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                    
| | -------------------
| | Accounts Receivable





| |            
| | -----------
| | Inventories





| |                       
| | ----------------------
| | Property and Equipment



Accounting for the Impairment or
Disposal of Long-Lived Assets.




| |                                            
| | -------------------------------------------
| | Valuation of Goodwill and Intangible Assets

Business Combinations Recognition of Customer
Relationship Intangible Assets Acquired in a Business
Combination.


Goodwill and Other
Intangible Assets,


51



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                             
| | ----------------------------
| | Insurance and Claim Accruals







| |                         
| | ------------------------
| | Stock-Based Compensation

Accounting
for Stock-Based Compensation  Transition and
Disclosure. Accounting for Stock-Based
Compensation Interim Financial
Reporting


Accounting for Stock
Issued to Employees


52



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(APB 25)




|                        |  |                      |         |   |      |  |         |  
|----------------------- |  | -------------------- | ------- | - | ---- |  | ------- | -
|                        |  | Years Ended June 30, |        
|                        |  |                      |        
|                        |  | 2005                 |         |   | 2003 | 
|                        |  |                      |         |   |      | 
|Dividend yield          |  |                      |        |   |      |  |        |  
|Risk-free interest rate |  |                      | 3.75    | % |      |  | 5.02    | %
|Volatility              |  |                      | 0.45    |   |      |  | 0.45    |  
|Expected life           |  |                      | 6 years |   |      |  | 6 years |  



|                                                                                                                                                  |  |                      |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                                                                                                  |  | Years Ended June 30, |       
|                                                                                                                                                  |  |                      |       
|                                                                                                                                                  |  | 2005                 |        |   | 2004 |   |        | 2003 | 
|                                                                                                                                                  |  |                      |        |   |      |   |        |      | 
|Net income (loss) available to common stockholders, as reported                                                                                   |  | $                    | (3,186 | ) |      | $ | 16,528 |      |  | $ | 23,901 |  
|Add: Stock-based employee compensation expense included in
    reported net income (loss), net of related income tax effects                      |  |                      | 2,985  |   |      |   | 420    |      |  |   | 420    |  
|Less: Stock-based employee compensation expense determined under
    fair value based method of all awards, net of related income tax
    effects |  |                      | (1,880 | ) |      |   | (1,010 | )    |  |   | (1,010 | )
|                                                                                                                                                  |  |                      |        |   |      |   |        |      | 
|Pro forma net income (loss) available to common stockholders                                                                                      |  | $                    | (2,081 | ) |      | $ | 15,938 |      |  | $ | 23,311 |  
|                                                                                                                                                  |  |                      |        |   |      |   |        |      | 
|Net income (loss) available to common stockholders per
    share  basic and diluted, as reported                                                 |  | $                    | (0.11  | ) |      | $ | 0.68   |      |  | $ | 0.98   |  
|                                                                                                                                                  |  |                      |        |   |      |   |        |      | 
|Net income (loss) available to common stockholders per
    share  basic and diluted, pro forma                                                   |  | $                    | (0.08  | ) |      | $ | 0.65   |      |  | $ | 0.95   |  
|                                                                                                                                                  |  |                      |        |   |      |   |        |      | 



| |                   
| | ------------------
| | Earnings Per Share





| |                    
| | -------------------
| | Deferred Loan Costs



53



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |             
| | ------------
| | Income Taxes

Accounting for Income
Taxes.




| |                                       
| | --------------------------------------
| | Mandatorily Redeemable Preferred Stock

Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity.






| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements

Share-Based Payment Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees Statement of Cash Flows.


54



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) A modified prospective method in which
    compensation cost is recognized beginning with the effective
    date (a) based on the requirements of
    SFAS No. 123(R) for all share-based payments granted
    after the effective date and (b) based on the requirements
    of SFAS No. 123 for all awards granted to employees
    prior to the effective date of SFAS No. 123(R) that
    remain unvested on the effective date.
|
| | (2) A modified retrospective method which
    includes the requirements of the modified prospective method
    described above, but also permits entities to restate based on
    the amounts previously recognized under SFAS No. 123
    for purposes of pro forma disclosures either (a) all prior
    periods presented or (b) prior interim periods of the year
    of adoption.                                                   



Inventory Costs


Exchanges of Nonmonetary Assets


55



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |             
|-- | ------------
|3. | Acquisitions

Business Combinations.




|                                      |  |   |         |  
|------------------------------------- |  | - | ------- | -
|Accounts receivable                   |  | $ | 35,042  |  
|Work completed not billed             |  |   | 7,027   |  
|Other current assets                  |  |   | 1,834   |  
|Property, plant & equipment           |  |   | 76,840  |  
|Goodwill                              |  |   | 88,825  |  
|Identified intangible assets          |  |   | 60,810  |  
|Other non-current assets              |  |   | 1,383   |  
|Accounts payable and accrued expenses |  |   | (15,398 | )
|Insurance payable                     |  |   | (14,121 | )
|Deferred compensation                 |  |   | (28,948 | )
|Deferred income taxes, net            |  |   | (19,366 | )
|                                      |  |   |        
|Total net assets acquired             |  | $ | 193,928 |  
|                                      |  |   |        



| |                                          
| | -----------------------------------------
| | Unaudited Pro Forma Financial Information



|                                                                  |  |               |         | 
|----------------------------------------------------------------- |  | ------------- | ------- | 
|                                                                  |  | Unaudited     |        
|                                                                  |  | Pro Forma     |        
|                                                                  |  | for the Year  |        
|                                                                  |  | Ended         |        
|                                                                  |  | June 30, 2004 |        
|                                                                  |  |               |        
|Revenues                                                          |  | $             | 552,495 | 
|Income from continuing operations                                 |  |               | 22,067  | 
|Weighted average basic and diluted common shares outstanding      |  |               | 35,644  | 
|Basic and diluted net income from continuing operations per share |  |               | 0.62    | 



56



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Business Combinations.




|   |                 
|-- | ----------------
|4. | Recapitalization





|   |                       
|-- | ----------------------
|5. | Property and Equipment



|                               |  |           |       |  |          |   |         |      |  |   |         | 
|------------------------------ |  | --------- | ----- |  | -------- | - | ------- | ---- |  | - | ------- | 
|                               |  | Estimated |       |  |         
|                               |  | Useful    |       |  | June 30, |  
|                               |  | Lives in  |       |  |          |  
|                               |  | Years     |       |  | 2005     |   |         | 2004 | 
|                               |  |           |       |  |          |   |         |      | 
|Land                           |  |           |      |  |          | $ | 3,123   |      |  | $ | 3,315   | 
|Buildings                      |  |           | 15-39 |  |          |   | 26,143  |      |  |   | 25,295  | 
|Vehicles                       |  |           | 5-12  |  |          |   | 291,967 |      |  |   | 197,852 | 
|Machinery and equipment        |  |           | 3-19  |  |          |   | 95,865  |      |  |   | 72,187  | 
|Office equipment and furniture |  |           | 3-7   |  |          |   | 5,621   |      |  |   | 5,142   | 
|                               |  |           |       |  |          |   |         |      | 
|Total                          |  |           |       |  |          |   | 422,719 |      |  |   | 303,791 | 
|Less: accumulated depreciation |  |           |       |  |          |   | 140,877 |      |  |   | 113,191 | 
|                               |  |           |       |  |          |   |         |      | 
|Property and equipment, net    |  |           |       |  |          | $ | 281,842 |      |  | $ | 190,600 | 
|                               |  |           |       |  |          |   |         |      | 

57



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                               
|-- | ------------------------------
|6. | Goodwill and Intangible Assets



|                       |                          |           |   |    |          |   |        |        |   |   |       |   | 
|---------------------- | ------------------------ | --------- | - | -- | -------- | - | ------ | ------ | - | - | ----- | - | 
|                       |                          | Estimated |   |    |         
|                       |                          | Useful    |   |    | June 30, |  
|                       |                          | Life      |   |    |          |  
|                       |                          | in Years  |   |    | 2005     |   |        | 2004   |  
|                       |                          |           |   |    |          |   |        |        |  
|Goodwill               |                          |           |  |    |          | $ | 91,826 |        |   | $ | 3,000 |  
|                       |                          |           |   |    |          |   |        |        |  
|Intangible assets:     |                          |           |   |    |          |   |        |        |   |   |       |  
|                       | Customer relationships   |           |   | 30 |          |   |        | 43,220 |   |   |       |  | 
|                       | Customer arrangements    |           |   | 3  |          |   |        | 6,990  |   |   |       |  | 
|                       | Non-compete agreements   |           |   | 9  |          |   |        | 10,600 |   |   |       |  | 
|                       | Accumulated amortization |           |   |    |          |   |        | (5,682 | ) |   |       |  | 
|                       |                          |           |   |    |          |   |        |        |  
|Intangible assets, net |                          |           |   |    |          | $ | 55,128 |        |   | $ |      |  
|                       |                          |           |   |    |          |   |        |        |  



|                    |  |        |       | 
|------------------- |  | ------ | ----- | 
|Year Ended June 30, |  | Amount |      
|                    |  |        |      
|2006                |  | $      | 4,883 | 
|2007                |  |        | 3,617 | 
|2008                |  |        | 3,731 | 
|2009                |  |        | 3,699 | 
|2010                |  |        | 3,611 | 



|   |            
|-- | -----------
|7. | Investments



|                   |  |            |   |      |      |   |            |  |  |      |       |  |  |   |       | 
|------------------ |  | ---------- | - | ---- | ---- | - | ---------- |  |  | ---- | ----- |  |  | - | ----- | 
|                   |  | June 30,   |  
|                   |  |            |  
|                   |  | 2005       |   |      | 2004 |  
|                   |  |            |   |      |      |  
|                   |  | Fair Value |   | Cost |      |   | Fair Value |  |  | Cost |      
|                   |  |            |   |      |      |   |            |  |  |      |      
|Trading securities |  | $          |  |      |      | $ |           |  |  | $    | 4,268 |  |  | $ | 4,558 | 
|                   |  |            |   |      |      |   |            |  |  |      |       | 



58



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |     
|-- | ----
|8. | Debt



|                          |  |          |         |  |      |   |         | 
|------------------------- |  | -------- | ------- |  | ---- | - | ------- | 
|                          |  | June 30, |        
|                          |  |          |        
|                          |  | 2005     |         |  | 2004 |  
|                          |  |          |         |  |      |  
|Revolving credit facility |  | $        | 11,500  |  |      | $ | 13,000  | 
|                          |  |          |         |  |      |  
|Long-term debt:           |  |          |         |  |      |   |         | 
|$170 million term loan    |  | $        |        |  |      | $ | 137,000 | 
|$300 million term loan    |  |          | 260,000 |  |      |   |        | 
|$150 million term loan    |  |          | 148,000 |  |      |   |        | 
|                          |  |          |         |  |      |  
|                          |  |          | 408,000 |  |      |   | 137,000 | 
|Less: current portion     |  |          | 250     |  |      |   |        | 
|                          |  |          |         |  |      |  
|Long term debt            |  | $        | 407,750 |  |      | $ | 137,000 | 
|                          |  |          |         |  |      |  







59



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|           |  |        |         | 
|---------- |  | ------ | ------- | 
|           |  | Amount |        
|           |  |        |        
|2006       |  |        | 250     | 
|2007       |  |        | 1,500   | 
|2008       |  |        | 1,500   | 
|2009       |  |        | 1,500   | 
|2010       |  |        | 1,500   | 
|Thereafter |  |        | 401,750 | 
|           |  |        |        
|Total      |  | $      | 408,000 | 
|           |  |        |        

Accounting for Derivatives and Hedging Activities






60



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                       
|-- | --------------------------------------
|9. | Mandatorily Redeemable Preferred Stock









61



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |             
|--- | ------------
|10. | Income Taxes



|         |       |                      |       |       |      |   |       |        |  |   |       |       | 
|-------- | ----- | -------------------- | ----- | ----- | ---- | - | ----- | ------ |  | - | ----- | ----- | 
|         |       | Years Ended June 30, |      
|         |       |                      |      
|         |       | 2005                 |       |       | 2004 |   |       | 2003   | 
|         |       |                      |       |       |      |   |       |        | 
|Current  |       | $                    | 2,551 |       |      | $ | 5,706 |        |  | $ | 5,079 |      
|Deferred |       |                      | 5,918 |       |      |   | 5,570 |        |  |   | 3,256 |      
|         |       |                      |       |       |      |   |       |        | 
|         | Total |                      | $     | 8,469 |      |   | $     | 11,276 |  |   | $     | 8,335 | 
|         |       |                      |       |       |      |   |       |        | 



|                               |                            |          |        |        |      |   |        |        | 
|------------------------------ | -------------------------- | -------- | ------ | ------ | ---- | - | ------ | ------ | 
|                               |                            | June 30, |       
|                               |                            |          |       
|                               |                            | 2005     |        |        | 2004 |  
|                               |                            |          |        |        |      |  
|Deferred tax liabilities:      |                            |          |        |        |      |   |        |       
|                               | Tax over book depreciation |          | $      | 74,528 |      |   | $      | 48,885 | 
|                               | Tax over book amortization |          |        | 14,915 |      |   |        |       | 
|                               | Other                      |          |        | 657    |      |   |        | 621    | 
|                               |                            |          |        |        |      |  
|Total deferred tax liabilities |                            |          | 90,100 |        |      |   | 49,506 |       
|                               |                            |          |        |        |      |  
|Deferred tax assets:           |                            |          |        |        |      |   |        |       
|                               | Deferred compensation      |          |        | 11,281 |      |   |        | 1,802  | 
|                               | Workers compensation       |          |        | 8,616  |      |   |        | 3,492  | 
|                               | Accrued vacation           |          |        | 2,238  |      |   |        | 1,569  | 
|                               | Recapitalization expenses  |          |        | 572    |      |   |        | 894    | 
|                               | Other                      |          |        | 764    |      |   |        | 404    | 
|                               |                            |          |        |        |      |  
|Total deferred tax assets      |                            |          | 23,471 |        |      |   | 8,161  |       
|                               |                            |          |        |        |      |  
|Net deferred tax liabilities   |                            | $        | 66,629 |        |      | $ | 41,345 |       
|                               |                            |          |        |        |      |  



|                             |  |          |        |  |      |   |        | 
|---------------------------- |  | -------- | ------ |  | ---- | - | ------ | 
|                             |  | June 30, |       
|                             |  |          |       
|                             |  | 2005     |        |  | 2004 |  
|                             |  |          |        |  |      |  
|Current assets               |  | $        | 4,838  |  |      | $ | 2,635  | 
|Non-current liabilities      |  |          | 71,467 |  |      |   | 43,980 | 
|                             |  |          |        |  |      |  
|Net deferred tax liabilities |  | $        | 66,629 |  |      | $ | 41,345 | 
|                             |  |          |        |  |      |  

62



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                           |  |                      |       |   |      |  |       |      |  |   |        |  |  |  |      |   |  |   |       |   |  |  |      |   
|------------------------------------------ |  | -------------------- | ----- | - | ---- |  | ----- | ---- |  | - | ------ |  |  |  | ---- | - |  | - | ----- | - |  |  | ---- | --
|                                           |  | Years Ended June 30, |      
|                                           |  |                      |      
|                                           |  | 2005                 |       |   | 2004 |  |       | 2003 | 
|                                           |  |                      |       |   |      |  |       |      | 
|Computed tax at federal statutory rate     |  | $                    | 1,849 |   |      |  | 35.0  | %    |  | $ | 9,847  |  |  |  | 35.0 | % |  | $ | 7,275 |   |  |  | 35.0 | % 
|State income taxes, net of federal benefit |  |                      | 875   |   |      |  | 16.6  | %    |  |   | 1,316  |  |  |  | 4.7  | % |  |   | 890   |   |  |  | 4.3  | % 
|Accretion of preferred stock               |  |                      | 4,967 |   |      |  | 94.0  | %    |  |   |       |  |  |  |     |   |  |   |      |   |  |  |     |   
|Allowance for income tax uncertainties     |  |                      | 600   |   |      |  | 11.4  | %    |  |   |       |  |  |  |     |   |  |   |      |   |  |  |     |   
|Permanent differences                      |  |                      | 312   |   |      |  | 5.9   | %    |  |   | 96     |  |  |  | 0.3  | % |  |   | 221   |   |  |  | 1.1  | % 
|Credits and other                          |  |                      | (134  | ) |      |  | (2.6  | )%   |  |   | 17     |  |  |  | 0.1  | % |  |   | (51   | ) |  |  | (0.3 | )%
|                                           |  |                      |       |   |      |  |       |      |  |   |        |  |  |  |      |   |  |  
|Net income tax expense                     |  | $                    | 8,469 |   |      |  | 160.3 | %    |  | $ | 11,276 |  |  |  | 40.1 | % |  | $ | 8,335 |   |  |  | 40.1 | % 
|                                           |  |                      |       |   |      |  |       |      |  |   |        |  |  |  |      |   |  |  





|    |                       
|--- | ----------------------
|11. | Employee Benefit Plans





|    |                     
|--- | --------------------
|12. | Stockholders Equity



| |                          
| | -------------------------
| | Earnings (Loss) Per Share



|                                                                              |  |                      |        |   |      |   |        |      |  |   |        |  
|----------------------------------------------------------------------------- |  | -------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                              |  | Years Ended June 30, |       
|                                                                              |  |                      |       
|                                                                              |  | 2005                 |        |   | 2004 |   |        | 2003 | 
|                                                                              |  |                      |        |   |      |   |        |      | 
|Income (loss) from continuing operations                                      |  | $                    | (3,186 | ) |      | $ | 16,858 |      |  | $ | 12,451 |  
|Decrease in redemption value of Preferred Stock                               |  |                      |       |   |      |   |       |      |  |   | 12,071 |  
|                                                                              |  |                      |        |   |      |   |        |      | 
|Income (loss) from continuing operations available to common
    stockholders |  |                      | (3,186 | ) |      |   | 16,858 |      |  |   | 24,522 |  
|Loss from discontinued operations, net                                        |  |                      |       |   |      |   | (330   | )    |  |   | (621   | )
|                                                                              |  |                      |        |   |      |   |        |      | 
|Net income (loss) available to common stockholders                            |  | $                    | (3,186 | ) |      | $ | 16,528 |      |  | $ | 23,901 |  
|                                                                              |  |                      |        |   |      |   |        |      | 
|Weighted average basic and diluted common shares outstanding:                 |  |                      | 27,709 |   |      |   | 24,437 |      |  |   | 24,437 |  
|                                                                              |  |                      |        |   |      |   |        |      | 



63



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |  |          |       |  |      |  |       |      |  |  |       | 
|-------------------------- |  | -------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                           |  | June 30, |      
|                           |  |          |      
|                           |  | 2005     |       |  | 2004 |  |       | 2003 | 
|                           |  |          |       |  |      |  |       |      | 
|Common stock option Plan B |  |          | 1,227 |  |      |  | 776   |      |  |  | 776   | 
|Common stock option Plan A |  |          | 1,678 |  |      |  | 1,812 |      |  |  | 1,812 | 
|                           |  |          |       |  |      |  |       |      | 
|                           |  |          | 2,905 |  |      |  | 2,588 |      |  |  | 2,588 | 
|                           |  |          |       |  |      |  |       |      | 



| |                   
| | ------------------
| | Stock Option Plans











64



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                         |             |           |     |        |             |  |       |                |   |          |            |           |  |   |      |      | 
|------------------------ | ----------- | --------- | --- | ------ | ----------- |  | ----- | -------------- | - | -------- | ---------- | --------- |  | - | ---- | ---- | 
|                         |             |           |     |        |             |  |       | Weighted       |  
|                         |             |           |     |        |             |  |       | Average        |  
|                         |             | Options   |     |        | Options     |  |       |                |   | Exercise |           
|                         |             | Available |     |        | Outstanding |  |       | Exercise Price |   |          | Price      |          
|                         |             |           |     |        |             |  |       |                |   |          |            |          
|Balance at June 30, 2002 |             |           | 149 |        |             |  | 2,566 |                |   | $        | 3.80       |           |  | $ | 3.80 |     
|                         | Exercised   |           |     |       |             |  |       |               |   |          |            |          |  |   |      |     | 
|                         | Cancelled   |           |     | 231    |             |  |       | (231           | ) |          |            | 3.80      |  |   |      | 3.80 | 
|                         | Granted     |           |     | (253   | )           |  |       | 253            |   |          |            | 3.80      |  |   |      | 3.80 | 
|                         |             |           |     |        |             |  |       |                |   |          |            |          
|Balance at June 30, 2003 |             |           | 127 |        |             |  | 2,588 |                |   |          | 3.80       |           |  |   | 3.80 |     
|                         | Exercised   |           |     |       |             |  |       |               |   |          |            |          |  |   |      |     | 
|                         | Granted     |           |     |       |             |  |       |               |   |          |            |          |  |   |      |     | 
|                         |             |           |     |        |             |  |       |                |   |          |            |          
|Balance at June 30, 2004 |             |           | 127 |        |             |  | 2,588 |                |   |          | 3.80       |           |  |   | 3.80 |     
|                         | Exercised   |           |     |       |             |  |       |               |   |          |            |          |  |   |      |     | 
|                         | Authorized  |           |     | 1,631  |             |  |       |               |   |          |            |          |  |   |      |     | 
|                         | Repurchased |           |     |       |             |  |       | (1,186         | ) |          |            | 3.80-6.51 |  |   |      | 4.80 | 
|                         | Granted     |           |     | (1,503 | )           |  |       | 1,503          |   |          |            | 6.51      |  |   |      | 6.51 | 
|                         |             |           |     |        |             |  |       |                |   |          |            |          
|Balance at June 30, 2005 |             |           | 255 |        |             |  | 2,905 |                |   | $        | 3.80-$6.51 |           |  | $ | 4.80 |     
|                         |             |           |     |        |             |  |       |                |   |          |            |          





| |                                         
| | ----------------------------------------
| | 2005 Omnibus Incentive Compensation Plan









65



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                             
| | ----------------------------
| | Employee Stock Purchase Plan





| |                                 
| | --------------------------------
| | Fair Value of Equity Instruments







| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | the price per share paid in April 2002 Recapitalization for the
    common stock in an arms length transaction;           
|
| |  | the trailing revenues, gross profit, cost structure and earnings;                                                          
|
| |  | the total amount of debt;                                                                                                  
|
| |  | the earnings before interest, taxes depreciation and
    amortization (EBITDA) from continuing operations, as
    adjusted;
|
| |  | the management team; and                                                                                                   
|
| |  | the prospects for continuing and improving the above factors.                                                              





66



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                          
| | -------------------------
| | LGB Pike Membership Units





|    |       
|--- | ------
|13. | Leases



|           |  |   |       | 
|---------- |  | - | ----- | 
|2006       |  | $ | 1,304 | 
|2007       |  |   | 867   | 
|2008       |  |   | 693   | 
|2009       |  |   | 595   | 
|2010       |  |   | 595   | 
|Thereafter |  |   | 2,065 | 
|           |  |   |      
|           |  | $ | 6,119 | 
|           |  |   |      





|    |                           
|--- | --------------------------
|14. | Deferred Compensation Plan







Using Cash Flow Information
and Present Values in Accounting Measurements.


67



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                                  |  |               |         |   |              |   |        |       |  |   |         |  
|----------------------------------------------------------------- |  | ------------- | ------- | - | ------------ | - | ------ | ----- |  | - | ------- | -
|                                                                  |  | Base          |         |   | Bonus        |   |        |      
|                                                                  |  | Deferred      |         |   | Deferred     |   |        |      
|                                                                  |  | Compensation  |         |   | Compensation |   |        | Total | 
|                                                                  |  |               |         |   |              |   |        |       | 
|                                                                  |  | (In millions) |        
|Amounts payable in connection with the acquisition of Red Simpson |  | $             | 25,989  |   |              | $ | 29,131 |       |  | $ | 55,120  |  
|Payments                                                          |  |               | (18,646 | ) |              |   | (4,419 | )     |  |   | (23,065 | )
|Forfeitures                                                       |  |               |        |   |              |   | (752   | )     |  |   | (752    | )
|                                                                  |  |               |         |   |              |   |        |       | 
|Face value at June 30, 2005                                       |  | $             | 7,343   |   |              | $ | 23,960 |       |  | $ | 31,303  |  
|                                                                  |  |               |         |   |              |   |        |       | 



|      |  |   |        | 
|----- |  | - | ------ | 
|2006  |  | $ | 12,373 | 
|2007  |  |   | 7,214  | 
|2008  |  |   | 6,292  | 
|2009  |  |   | 5,424  | 
|      |  |   |       
|Total |  | $ | 31,303 | 
|      |  |   |       





|    |                        
|--- | -----------------------
|15. | Discontinued Operations





|                                  |  |                      |       |   |      |   |        |  
|--------------------------------- |  | -------------------- | ----- | - | ---- | - | ------ | -
|                                  |  | Years Ended June 30, |      
|                                  |  |                      |      
|                                  |  | 2004                 |       |   | 2003 |  
|                                  |  |                      |       |   |      |  
|Revenue                           |  | $                    | 1,933 |   |      | $ | 8,379  |  
|                                  |  |                      |       |   |      |  
|Operating loss                    |  |                      | (544  | ) |      |   | (1,009 | )
|Income tax benefit                |  |                      | 214   |   |      |   | 388    |  
|                                  |  |                      |       |   |      |  
|Loss from discontinued operations |  | $                    | (330  | ) |      | $ | (621   | )
|                                  |  |                      |       |   |      |  

68



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                      
|--- | ---------------------
|16. | Financial Instruments



| |                              
| | -----------------------------
| | Concentrations of Credit Risk





| |                       
| | ----------------------
| | Off-Balance Sheet Risk





| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





| |            
| | -----------
| | Derivatives

Accounting for Derivatives and Hedging Activities




|    |                                          
|--- | -----------------------------------------
|17. | Related-Party Transactions and Agreements



| |                       
| | ----------------------
| | Stockholders Agreement





| |                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Restrictions on Transfer of Shares. Under the terms of
    the stockholders agreement, each stockholder agreed not to
    transfer or sell any shares of common stock unless such transfer
    or sale is pursuant to an effective registration statement or
    unless consented to by the company.

69



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corporate Governance. The stockholders agreement provides
    that the current President and Chief Executive Officer
    (CEO) will have the right to occupy one seat on the
    board of directors so long as he is the CEO and controls at
    least 1,322 shares. So long as the CEO has the right to a
    seat on the board of directors, then LGB Pike and any affiliate
    of LGB Pike agrees to vote in favor of the election of the CEO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Registration Rights. The stockholders agreement provides
    that LGB Pike and its affiliates and the other stockholders
    party to the stockholders agreement have registration rights
    with respect to its stock. LGB Pike and its affiliates have the
    right to require the Company to effect additional registration
    statements, or demand registrations. In addition to
    its rights with respect to demand registrations, each of LGB
    Pike and its affiliates and the other stockholders party to the
    stockholders agreement have piggyback registration
    rights. If the Company proposes to register any of its
    securities, other than a registration in connection with an
    employee benefit or similar plan or an exchange offer, the
    Company will be required to give each party to the stockholders
    agreement the opportunity to participate in such registration.





| |                     
| | --------------------
| | Management Agreement







|    |                              
|--- | -----------------------------
|18. | Commitments and Contingencies



| |           
| | ----------
| | Litigation





| |                  
| | -----------------
| | Performance Bonds



70



---



##### 



PIKE ELECTRIC CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                           
|--- | --------------------------
|19. | Quarterly Data  Unaudited



|             |                                       |               |   |         |              |  |   |           |   |  |          |         |   |  |   |         |  
|------------ | ------------------------------------- | ------------- | - | ------- | ------------ |  | - | --------- | - |  | -------- | ------- | - |  | - | ------- | -
|             |                                       | Quarter Ended |  
|             |                                       |               |  
|             |                                       | September 30, |   |         | December 31, |  |   | March 31, |   |  | June 30, |        
|             |                                       |               |   |         |              |  |   |           |   |  |          |        
|Fiscal 2004: |                                       |               |   |         |              |  |   |           |   |  |          |         |   |  |   |        
|             | Revenues                              |               | $ | 96,932  |              |  | $ | 76,959    |   |  | $        | 89,166  |   |  | $ | 93,640  |  
|             | Gross profit                          |               |   | 18,823  |              |  |   | 7,068     |   |  |          | 13,647  |   |  |   | 16,846  |  
|             | Net income from continuing operations |               |   | 7,254   |              |  |   | 115       |   |  |          | 3,689   |   |  |   | 5,800   |  
|             | Basic and diluted earnings per share  |               | $ | 0.30    |              |  | $ | 0.00      |   |  | $        | 0.15    |   |  | $ | 0.24    |  
|Fiscal 2005: |                                       |               |   |         |              |  |   |           |   |  |          |         |   |  |   |        
|             | Revenues                              |               | $ | 220,370 |              |  | $ | 149,404   |   |  | $        | 154,473 |   |  | $ | 154,950 |  
|             | Gross profit (loss)                   |               |   | 61,959  |              |  |   | 16,356    |   |  |          | 17,860  |   |  |   | (2,331  | )
|             | Net income (loss)                     |               |   | 24,199  |              |  |   | (1,470    | ) |  |          | (11,917 | ) |  |   | (13,998 | )
|             | Basic earnings (loss) per share       |               | $ | 0.68    |              |  | $ | (0.04     | ) |  | $        | (0.56   | ) |  | $ | (0.65   | )
|             | Diluted earnings (loss) per share     |               | $ | 0.67    |              |  | $ | (0.04     | ) |  | $        | (0.56   | ) |  | $ | (0.65   | )



71



---



##### 








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE.








|         |                         
|-------- | ------------------------
|Item 9A. | CONTROLS AND PROCEDURES.












|         |                   
|-------- | ------------------
|Item 9B. | OTHER INFORMATION.






PART III







|         |                                                    
|-------- | ---------------------------------------------------
|Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.



www.pike.com







|         |                        
|-------- | -----------------------
|Item 11. | EXECUTIVE COMPENSATION.








|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT AND RELATED STOCKHOLDER MATTERS.








|         |                                                
|-------- | -----------------------------------------------
|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.



72



---



##### 








|         |                                        
|-------- | ---------------------------------------
|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





| |                                                                       
| | ----------------------------------------------------------------------
| | (1) Consolidated Financial Statements of Pike Electric
    Corporation







| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | Consolidated Statements of Operations for each of the three
    years in the period ended June 30, 2005          
|
| | Consolidated Balance Sheets at June 30, 2005 and 2004                                                            
|
| | Consolidated Statements of Cash Flows for each of the three
    years in the period ended June 30, 2005          
|
| | Consolidated Statements of Stockholders Equity for each of
    the three years in the period ended June 30, 2005
|
| | Notes to the Consolidated Financial Statements                                                                   



| |                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) All financial statement schedules are omitted because
    they are not applicable or the required information is shown in
    the financial statements or the notes to the financial
    statements.
|
| | (3) Exhibits                                                                                                                                                                                            



| |               
| | --------------
| | See (b) below.



|        |    |             |  |                                                                                                                                                                                                                                                                                                                            
|------- | -- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 2  | .1          |  | Recapitalization and Investment Agreement, dated as of
    March 15, 2002, by and among LGB Pike LLC, LGB Acquisition
    Corp., Pike Electric, Inc., Pike Equipment and Supply Company,
    Pike Merger Sub, Inc. and certain stockholders.(1)                                                                            
|       
|        | 2  | .2          |  | Amendment Agreement and Consent, dated as of April 11,
    2002, to the Recapitalization and Investment Agreement, dated as
    of March 15, 2002, by and among LGB Pike LLC, LGB
    Acquisition Corp., Pike Electric, Inc., Pike Equipment and
    Supply Company, Pike Merger Sub, Inc. and certain
    stockholders.(1)
|       
|        | 3  | .1          |  | Certificate of Incorporation of Pike Electric Corporation.(1)                                                                                                                                                                                                                                                              
|       
|        | 3  | .3          |  | Bylaws of Pike Electric Corporation.(1)                                                                                                                                                                                                                                                                                    
|       
|        | 4  | .1          |  | Specimen Stock Certificate.(1)                                                                                                                                                                                                                                                                                             
|       
|        | 10 | .1          |  | 2005 Employee Stock Purchase Plan.(1)*                                                                                                                                                                                                                                                                                     
|       
|        | 10 | .2          |  | 2002 Stock Option Plan A.(1)*                                                                                                                                                                                                                                                                                              
|       
|        | 10 | .3          |  | 2002 Stock Option Plan B.(1)*                                                                                                                                                                                                                                                                                              
|       
|        | 10 | .4          |  | Amended and Restated Credit Agreement, dated as of July 1,
    2004, among Pike Holdings, Inc., Pike Electric, Inc. and
    the lenders party thereto.(1)                                                                                                                                                                  
|       
|        | 10 | .5          |  | First Amendment to the Amended and Restated Credit Agreement,
    dated as of December 10, 2004, among Pike Holdings, Inc.,
    Pike Electric, Inc. and the lenders party thereto.(1)                                                                                                                                      

73



---



##### 



|        |    |             |  |                                                                                                                                                                                                                                                                                        
|------- | -- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|       
|        | 10 | .6          |  | Stockholders Agreement, dated April 18, 2002, among Pike
    Holdings, Inc., LGB Pike LLC, certain rollover holders and
    certain management stockholders.(1)                                                                                                                        
|       
|        | 10 | .7          |  | Management Advisory Services Agreement, dated April 18,
    2002, between Pike Electric, Inc. and Goldberg
    Lindsay & Co. LLC.(1)                                                                                                                                                   
|       
|        | 10 | .8          |  | Amendment Agreement, dated as of July 1, 2004, to the
    Management Advisory Services Agreement, dated April 18,
    2002, between Pike Electric, Inc. and Goldberg
    Lindsay & Co. LLC.(1)                                                                                         
|       
|        | 10 | .9          |  | Amended and Restated Employment Agreement, dated as of
    July 20, 2005, between J. Eric Pike and Pike Electric
    Corporation.(1)*                                                                                                                                                  
|       
|        | 10 | .10         |  | Letter Agreement, dated as of March 15, 2002, between Joe
    B. Pike and LGB Pike LLC.(1)*                                                                                                                                                                                            
|       
|        | 10 | .11         |  | Second Amendment to the Amended and Restated Credit Agreement,
    dated as of June 27, 2005, among Pike Holdings, Inc., Pike
    Electric, Inc. and the lenders party thereto.(1)                                                                                                     
|       
|        | 10 | .12         |  | Termination Agreement, dated as of June 23, 2005, between
    Pike Electric, Inc. and Goldberg Lindsay & Co. LLC.(1)                                                                                                                                                                   
|       
|        | 10 | .13         |  | Addendum, dated June 13, 2005, to the Stockholders
    Agreement dated April 18, 2004, among Pike Holdings,
    Inc., LGB Pike LLC, certain rollover holders and certain
    management stockholders.(1)                                                                               
|       
|        | 10 | .14         |  | Arrangement with Mr. Castaneda.(1)*                                                                                                                                                                                                                                                    
|       
|        | 10 | .15         |  | 2005 Omnibus Incentive Compensation Plan.(1)*                                                                                                                                                                                                                                          
|       
|        | 10 | .16         |  | Amendment, dated July 21, 2005, to the Stockholders
    Agreement dated April 18, 2002, among Pike Electric
    Corporation as successor to Pike Holdings, Inc., LGB
    Pike II LLC as successor to LGB Pike LLC, certain rollover
    holders and certain management stockholders.(1)
|       
|        | 21 | .1          |  | List of subsidiaries of Pike Electric Corporation. (filed
    herewith)                                                                                                                                                                                                                
|       
|        | 23 | .1          |  | Consent of Ernst & Young LLP. (filed herewith)                                                                                                                                                                                                                                         
|       
|        | 31 | .1          |  | Certification of Periodic Report by Chief Executive Officer
    pursuant to Rule 13a-14(a)/15d-14a and pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith)                                                                                              
|       
|        | 31 | .2          |  | Certification of Periodic Report by Chief Financial Officer
    pursuant to Rule 13a-14(a)/15d-14a and pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith)                                                                                              
|       
|        | 32 | .1          |  | Certification of Periodic Report by Chief Executive Officer and
    Chief Financial Officer pursuant to U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 (filed herewith)                                                             





| |                
| | ---------------
| | Not applicable.






|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the corresponding exhibit to the
    Companys Registration Statement on Form S-1
    (Registration No. 333-124117)



| |   |                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Management contracts and other compensatory plans and
    arrangements required to be filed as an exhibit to this form
    pursuant to Item 15(b) of this Annual Report on
    Form 10-K

74



---



##### 






SIGNATURES






| |                          
| | -------------------------
| | PIKE ELECTRIC CORPORATION
| | (Registrant)             



| |     |                 
| | --- | ----------------
| | By: | /s/ J. Eric Pike

| |                                                
| | -----------------------------------------------
| |                                                
| | J. Eric Pike                                   
| | President, Chief Executive Officer and Director





|                                               |  |                                                 |  |                    |  | 
|---------------------------------------------- |  | ----------------------------------------------- |  | ------------------ |  | 
|Signature                                      |  | Title                                           |  | Date              
|                                               |  |                                                 |  |                   
|                                              
|/s/ J. Eric PikeJ.
    Eric Pike               |  | President, Chief Executive Officer and Director |  | September 28, 2005
|                                              
|/s/ Mark CastanedaMark
    Castaneda           |  | Chief Financial Officer, Controller             |  | September 28, 2005
|                                              
|James
    R. Helvey III                        |  | Director                                        |  | September 28, 2005
|                                              
|/s/ J. Russell TriedmanJ.
    Russell Triedman |  | Director                                        |  | September 28, 2005
|                                              
|/s/ Adam P. GodfreyAdam
    P. Godfrey         |  | Director                                        |  | September 28, 2005
|                                              
|/s/ Robert D. LindsayRobert
    D. Lindsay     |  | Director                                        |  | September 28, 2005
|                                              
|/s/ Alan E. GoldbergAlan
    E. Goldberg       |  | Director                                        |  | September 28, 2005
|                                              
|/s/ Stuart S. JanneyStuart
    S. Janney       |  | Director                                        |  | September 28, 2005

75