##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|           |  | For the fiscal year ended October 31, 2005.                                                 
|          
|OR        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|           |  | For the transition period
    from           to           .                                 

Commission File Number 001-12488


Powell Industries, Inc.


(Exact name of registrant as specified in its charter)


|                                         |  |                    
|---------------------------------------- |  | -------------------
|Delaware                                 |  | 88-0106100         
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | Identification No.)
|                                        
|8550 Mosley Drive, Houston, Texas        |  | 77075-1180         
|(Address of principal executive offices) |  | (Zip Code)         

Registrants telephone number, including area code:


(713) 944-6900


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


None


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


Common Stock, par value $.01 per share


þ o


Regulation S-K Form 10-K Form 10-K. o


Rule 12b-2).     Yes þ o


Rule 12b-2). o þ


o þ


o þ








Documents Incorporated By Reference


Form 10-K.










---



##### 










POWELL INDUSTRIES, INC.


TABLE OF CONTENTS


|                                                                                                                             |  |                                                                                                    |    |      |    | 
|---------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                                                                                                             |  |                                                                                                    |    | Page
|                                                                                                                             |  |                                                                                                    |    |     
|                                                                                                                             |  | Cautionary Statement Regarding
    Forward-Looking Statements; Risk Factors                        |    |      | 2  | 
|PART I                                                                                                                      
|Item 1.                                                                                                                      |  | Business                                                                                           |    |      | 6  | 
|Item 2.                                                                                                                      |  | Properties                                                                                         |    |      | 9  | 
|Item 3.                                                                                                                      |  | Legal Proceedings                                                                                  |    |      | 10 | 
|Item 4.                                                                                                                      |  | Submission of Matters to a Vote of Security
    Holders                                            |    |      | 10 | 
|PART II                                                                                                                     
|Item 5.                                                                                                                      |  | Market for Registrants Common Equity
    and Related Stockholder Matters                          |    |      | 11 | 
|Item 6.                                                                                                                      |  | Selected Financial Data                                                                            |    |      | 11 | 
|Item 7.                                                                                                                      |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations          |    |      | 12 | 
|Item 7A.                                                                                                                     |  | Quantitative and Qualitative Disclosures
    about Market Risk                                     |    |      | 23 | 
|Item 8.                                                                                                                      |  | Financial Statements and Supplementary
    Data                                                    |    |      | 24 | 
|Item 9.                                                                                                                      |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure           |    |      | 58 | 
|Item 9A.                                                                                                                     |  | Controls and Procedures                                                                            |    |      | 58 | 
|Item 9B.                                                                                                                     |  | Other Information                                                                                  |    |      | 59 | 
|PART III                                                                                                                    
|Item 10.                                                                                                                     |  | Directors and Executive Officers of the
    Registrant                                             |    |      | 59 | 
|Item 11.                                                                                                                     |  | Executive Compensation                                                                             |    |      | 59 | 
|Item 12.                                                                                                                     |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters |    |      | 59 | 
|Item 13.                                                                                                                     |  | Certain Relationships and Related
    Transactions                                                 |    |      | 59 | 
|Item 14.                                                                                                                     |  | Principal Accountant Fees and Services                                                             |    |      | 59 | 
|PART IV                                                                                                                     
|Item 15.                                                                                                                     |  | Exhibits and Financial Statement
    Schedules                                                     |    |      | 60 | 
|Signatures                                                                                                                   |  |                                                                                                    | 62 |     
|Non-Employee Director Restricted Stock Plan                                                                                 
|First Amendment to Credit Agreement                                                                                         
|Second Amendment to Credit Agreement                                                                                        
|Banking facilities - HSBC Bank plc, Switchgear & Instrumentation Limited and Switchgear & Instrumentation Properties Limited
|Subsidiaries of Powell Industries, Inc.                                                                                     
|Consent of Deloitte & Touche, LLP                                                                                           
|Consent of PricewaterhouseCoopers, LLP                                                                                      
|Certification of CEO pursuant to Rule 13a-14a/15d-14a                                                                       
|Certification of CFO pursuant to Rule 13a-14a/15d-14a                                                                       
|Certification of CEO Pursuant to Section 906                                                                                
|Certification of CFO Pursuant to Section 906                                                                                



1



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##### Table of Contents






CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS;


RISK FACTORS


Forward-Looking Statements


Form 10-K




Risk Factors






| |                                   
| | ----------------------------------
| | Our industry is highly competitive



2



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##### Table of Contents





| |                                                                   
| | ------------------------------------------------------------------
| | An economic downturn may lead to lower demand for our
    services





| |                                                                           
| | --------------------------------------------------------------------------
| | International and political events may adversely affect
    our operations





| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | political and economic instability;                                                                             
|
| |  | social unrest, acts of terrorism, force majeure, war or other
    armed conflict;                               
|
| |  | inflation;                                                                                                      
|
| |  | currency fluctuations, devaluations and conversion restrictions;                                                
|
| |  | governmental activities that limit or disrupt markets, restrict
    payments or limit the movement of funds; and
|
| |  | trade restrictions and economic embargoes imposed by the United
    States or other countries.                  



| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | Fluctuations in the price and supply of raw materials used
    to manufacture our products may reduce our profits





| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Our dependence upon fixed-price contracts could adversely
    affect our business





| |                                                    
| | ---------------------------------------------------
| | Our acquisition strategy involves a number of risks





| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| |  | difficulties in the integration of operations and systems;                                  
|
| |  | the termination of relationships by key personnel and customers
    of the acquired company;
|
| |  | a failure to add additional employees to handle the increased
    volume of business;       

3



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##### Table of Contents





| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | additional financial and accounting challenges and complexities
    in areas such as tax planning, treasury management and financial
    reporting;
|
| |  | risks and liabilities from our acquisitions, some of which may
    not be discovered during our due diligence;                                     
|
| |  | a disruption of our ongoing business or an inability of our
    ongoing business to receive sufficient management
    attention; and               
|
| |  | a failure to realize the cost savings or other financial
    benefits we anticipated.                                                              





| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | Our use of
    percentage-of-completion
    accounting could result in a reduction or elimination of
    previously reported profits

percentage-of percentage-of




| |                                                                                  
| | ---------------------------------------------------------------------------------
| | We may not be able to fully realize the revenue value
    reported in our backlog





| |                                                                         
| | ------------------------------------------------------------------------
| | Our operating results may vary significantly from quarter
    to quarter





| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | the timing and volume of work under new agreements;                                                           
|
| |  | general economic conditions;                                                                                  
|
| |  | the budgetary spending patterns of customers;                                                                 
|
| |  | variations in the margins of projects performed during any
    particular quarter;                            
|
| |  | losses experienced in our operations not otherwise covered by
    insurance;                                  
|
| |  | a change in the demand or production of our products and our
    services caused by severe weather conditions;
|
| |  | a change in the mix of our customers, contracts and business;                                                 

4



---



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| |   |                                                       
| | - | ------------------------------------------------------
| |  | increases in design and manufacturing costs; and      
|
| |  | ability of customers to pay their invoices owed to us.





| |                                                         
| | --------------------------------------------------------
| | We may be unsuccessful at generating internal
    growth





| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | attract new customers;                                                       
|
| |  | increase the number or size of projects performed for existing
    customers;
|
| |  | hire and retain employees; and                                               
|
| |  | increase volume utilizing our existing facilities.                           





| |                                                              
| | -------------------------------------------------------------
| | The departure of key personnel could disrupt our
    business





| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Our business requires skilled labor, and we may be unable
    to attract and retain qualified employees



5



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##### Table of Contents






PART I







|        |         
|------- | --------
|Item 1. | Business

Overview






www.powellind.com Form 10-K, Form 10-Q, Form 8-K






Electrical Power Products


engineered-to


engineered-to


6



---



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| |                      
| | ---------------------
| | Customers and Markets









| |            
| | -----------
| | Competition

engineered-to




| |        
| | -------
| | Backlog





| |                            
| | ---------------------------
| | Raw Materials and Suppliers





7



---



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| |          
| | ---------
| | Inflation





| |          
| | ---------
| | Employees





| |                         
| | ------------------------
| | Research and Development





| |                      
| | ---------------------
| | Intellectual Property



Process Control Systems






| |                      
| | ---------------------
| | Customers and Markets



8



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| |            
| | -----------
| | Competition







| |        
| | -------
| | Backlog





| |          
| | ---------
| | Employees





| |                         
| | ------------------------
| | Research and Development





| |                      
| | ---------------------
| | Intellectual Property








|        |           
|------- | ----------
|Item 2. | Properties



9



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|                           |                          |            |  |   |       |                |  |       |  |  |        |         |  |  |  |        | 
|-------------------------- | ------------------------ | ---------- |  | - | ----- | -------------- |  | ----- |  |  | ------ | ------- |  |  |  | ------ | 
|                           |                          |            |  |   |       | Approximate    | 
|                           |                          |            |  |   |       | Square Footage | 
|                           |                          | Number of  |  |   |       |                |  |      
|Location                   |                          | Facilities |  |   | Acres |                |  | Owned |  |  | Leased |        
|                           |                          |            |  |   |       |                |  |       |  |  |        |        
|Electrical Power Products: |                          |            |  |   |       |                |  |       |  |  |        |         |  |  |  |       
|                           | Houston, TX              |            |  | 2 |       |                |  | 68.2  |  |  |        | 430,600 |  |  |  |       | 
|                           | North Canton, OH         |            |  | 1 |       |                |  | 8.0   |  |  |        | 72,000  |  |  |  |       | 
|                           | Northlake, IL            |            |  | 1 |       |                |  | 10.0  |  |  |        | 103,500 |  |  |  |       | 
|                           | Bradford, United Kingdom |            |  | 1 |       |                |  | 7.9   |  |  |        | 129,200 |  |  |  |       | 
|Process Control Systems:   |                          |            |  |   |       |                |  |       |  |  |        |         |  |  |  |       
|                           | Pleasanton, CA           |            |  | 1 |       |                |  |       |  |  |        |        |  |  |  | 39,100 | 
|                           | Duluth, GA               |            |  | 1 |       |                |  |       |  |  |        |        |  |  |  | 29,700 | 



month-to







|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings










|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



10



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PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters

Price Range of Common Stock




|                  |                |      |   |       |     |  |   |       | 
|----------------- | -------------- | ---- | - | ----- | --- |  | - | ----- | 
|                  |                | High |   |       | Low | 
|                  |                |      |   |       |     | 
|Fiscal Year 2004: |                |      |   |       |     |  |   |      
|                  | First Quarter  |      | $ | 20.50 |     |  | $ | 14.50 | 
|                  | Second Quarter |      |   | 19.50 |     |  |   | 14.85 | 
|                  | Third Quarter  |      |   | 18.73 |     |  |   | 15.25 | 
|                  | Fourth Quarter |      |   | 18.21 |     |  |   | 15.87 | 
|Fiscal Year 2005: |                |      |   |       |     |  |   |      
|                  | First Quarter  |      | $ | 18.93 |     |  | $ | 15.95 | 
|                  | Second Quarter |      |   | 19.67 |     |  |   | 16.84 | 
|                  | Third Quarter  |      |   | 23.80 |     |  |   | 17.03 | 
|                  | Fourth Quarter |      |   | 23.98 |     |  |   | 19.28 | 





Dividend Policy









|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

Form 10-K.


11



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|                          |                                                                                                                      |                                       |   |         |      |  |   |         |   |  |      |         |   |      |   |         |  |  |   |         | 
|------------------------- | -------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - | ---- | - | ------- |  |  | - | ------- | 
|                          |                                                                                                                      | Years Ended October 31,               |  
|                          |                                                                                                                      |                                       |  
|                          |                                                                                                                      | 2005                                  |   |         | 2004 |  |   | 2003    |   |  | 2002 |         |   | 2001 |  
|                          |                                                                                                                      |                                       |   |         |      |  |   |         |   |  |      |         |   |      |  
|                          |                                                                                                                      | (in thousands, except per share data) |  
|Statements of Operations: |                                                                                                                      |                                       |   |         |      |  |   |         |   |  |      |         |   |      |   |         |  |  |   |        
|                          | Revenues                                                                                                             |                                       | $ | 256,645 |      |  | $ | 206,142 |   |  | $    | 253,381 |   |      | $ | 306,403 |  |  | $ | 271,243 | 
|                          | Cost of goods sold                                                                                                   |                                       |   | 212,785 |      |  |   | 170,165 |   |  |      | 204,585 |   |      |   | 238,883 |  |  |   | 214,446 | 
|                          |                                                                                                                      |                                       |   |         |      |  |   |         |   |  |      |         |   |      |  
|                          | Gross profit                                                                                                         |                                       |   | 43,860  |      |  |   | 35,977  |   |  |      | 48,796  |   |      |   | 67,520  |  |  |   | 56,797  | 
|                          | Selling, general and administrative expenses                                                                         |                                       |   | 41,846  |      |  |   | 35,357  |   |  |      | 35,339  |   |      |   | 39,031  |  |  |   | 35,007  | 
|                          | Gain on sale of land and building                                                                                    |                                       |   | 1,052   |      |  |   |        |   |  |      |        |   |      |   |        |  |  |   |        | 
|                          |                                                                                                                      |                                       |   |         |      |  |   |         |   |  |      |         |   |      |  
|                          | Income before interest, income taxes, minority interest, and
    cumulative effect of change in accounting principle |                                       |   | 3,066   |      |  |   | 620     |   |  |      | 13,457  |   |      |   | 28,489  |  |  |   | 21,790  | 
|                          | Interest expense (income), net                                                                                       |                                       |   | (386    | )    |  |   | (744    | ) |  |      | (175    | ) |      |   | 210     |  |  |   | 359     | 
|                          | Income tax provision (benefit)                                                                                       |                                       |   | 1,138   |      |  |   | (282    | ) |  |      | 6,137   |   |      |   | 10,481  |  |  |   | 7,889   | 
|                          | Minority interest                                                                                                    |                                       |   | 63      |      |  |   | (23     | ) |  |      |        |   |      |   |        |  |  |   |        | 
|                          |                                                                                                                      |                                       |   |         |      |  |   |         |   |  |      |         |   |      |  
|                          | Income from continuing operations before cumulative effect of
    change in accounting principle                     |                                       |   | 2,251   |      |  |   | 1,669   |   |  |      | 7,495   |   |      |   | 17,798  |  |  |   | 13,542  | 
|                          | Cumulative effect of change in accounting principle, net of tax                                                      |                                       |   |        |      |  |   |        |   |  |      | (510    | ) |      |   |        |  |  |   |        | 
|                          |                                                                                                                      |                                       |   |         |      |  |   |         |   |  |      |         |   |      |  
|                          | Net income                                                                                                           |                                       | $ | 2,251   |      |  | $ | 1,669   |   |  | $    | 6,985   |   |      | $ | 17,798  |  |  | $ | 13,542  | 
|                          |                                                                                                                      |                                       |   |         |      |  |   |         |   |  |      |         |   |      |  
|                          | Basic earnings per share                                                                                             |                                       | $ | 0.21    |      |  | $ | 0.16    |   |  | $    | 0.66    |   |      | $ | 1.69    |  |  | $ | 1.30    | 
|                          | Diluted earnings per share                                                                                           |                                       | $ | 0.21    |      |  | $ | 0.15    |   |  | $    | 0.65    |   |      | $ | 1.66    |  |  | $ | 1.28    | 

|                    |                                                                                |                   |   |         |      |  |   |         |  |  |      |         |  |      |   |         |  |  |   |         | 
|------------------- | ------------------------------------------------------------------------------ | ----------------- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  | ---- | - | ------- |  |  | - | ------- | 
|                    |                                                                                | As of October 31, |  
|                    |                                                                                |                   |  
|                    |                                                                                | 2005              |   |         | 2004 |  |   | 2003    |  |  | 2002 |         |  | 2001 |  
|                    |                                                                                |                   |   |         |      |  |   |         |  |  |      |         |  |      |  
|                    |                                                                                | (in thousands)    |  
|Balance Sheet Data: |                                                                                |                   |   |         |      |  |   |         |  |  |      |         |  |      |   |         |  |  |   |        
|                    | Cash and cash equivalents                                                      |                   | $ | 24,844  |      |  | $ | 8,974   |  |  | $    | 11,863  |  |      | $ | 9,362   |  |  | $ | 6,520   | 
|                    | Marketable securities                                                          |                   |   | 8,200   |      |  |   | 54,208  |  |  |      | 30,452  |  |      |   | 5,000   |  |  |   |        | 
|                    | Property, plant and equipment, net                                             |                   |   | 55,678  |      |  |   | 45,041  |  |  |      | 43,998  |  |      |   | 45,020  |  |  |   | 37,409  | 
|                    | Total assets                                                                   |                   | $ | 226,659 |      |  | $ | 196,079 |  |  | $    | 190,478 |  |      | $ | 189,708 |  |  | $ | 186,361 | 
|                    | Long-term debt and capital lease obligations, including current
    maturities |                   |   | 21,531  |      |  |   | 7,100   |  |  |      | 7,359   |  |      |   | 12,010  |  |  |   | 22,714  | 
|                    | Total stockholders equity                                                     |                   |   | 144,414 |      |  |   | 139,835 |  |  |      | 136,364 |  |      |   | 128,100 |  |  |   | 109,369 | 
|                    | Total liabilities and stockholders equity                                     |                   |   | 226,659 |      |  |   | 196,079 |  |  |      | 190,478 |  |      |   | 189,708 |  |  |   | 186,361 | 






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Form 10-K.


12



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##### Table of Contents



Overview








start-up


Results of Operations




| |                                                                         
| | ------------------------------------------------------------------------
| | Year Ended October 31, 2005, Compared to Year Ended
    October 31, 2004



| |                         
| | ------------------------
| | Revenue and Gross Profit



13



---



##### Table of Contents





| |                          
| | -------------------------
| | Electrical Power Products







| |                        
| | -----------------------
| | Process Control Systems









| |                                                          
| | ---------------------------------------------------------
| | Consolidated Selling, General and Administrative Expenses



14



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##### Table of Contents





| |                            
| | ---------------------------
| | Interest Income and Expense







| |                           
| | --------------------------
| | Provision for Income Taxes







| |    |                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | A $0.4 million benefit was recorded for the years ended
    2005 and 2004 primarily for the benefit of revised
    extraterritorial income exclusion amounts. This benefit was
    derived by calculating the extraterritorial income exclusion
    amount on a transaction by transaction basis in 2004 and 2003,
    as opposed to an aggregate basis as originally estimated;
|
| | b) | A $0.3 million valuation allowance related to capital
    losses was released in 2004. We entered into an agreement in
    2004 to sell a capital asset that will trigger enough capital
    gain to utilize the capital loss carryforward:                                                                                                                                     
|
| | c) | We reduced our income tax provision by $0.2 million in 2004
    due to acceptance by certain state taxing authorities of
    voluntary disclosure agreements in 2004; and                                                                                                                                                                                                       
|
| | d) | We increased our income tax provision by $0.3 million in
    2005 related to certain adjustments from audits of our prior
    year federal tax returns.                                                                                                                                                                                                                         



| |           
| | ----------
| | Net Income





| |        
| | -------
| | Backlog





| |                                                                           
| | --------------------------------------------------------------------------
| | Year Ended October 31, 2004, Compared with Year Ended
    October 31, 2003



| |                         
| | ------------------------
| | Revenue and Gross Profit



15



---



##### Table of Contents





| |                          
| | -------------------------
| | Electrical Power Products









| |                        
| | -----------------------
| | Process Control Systems









| |                                                          
| | ---------------------------------------------------------
| | Consolidated Selling, General and Administrative Expenses





16



---



##### Table of Contents





| |                            
| | ---------------------------
| | Interest Income and Expense







| |                           
| | --------------------------
| | Provision for Income Taxes





| |    |                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | A $0.4 million benefit was recorded primarily for the
    benefit of revised extraterritorial income exclusion amounts for
    the years ended 2002 and 2003. This benefit was derived by
    calculating the extraterritorial income exclusion amount on a
    transaction by transaction basis in 2004, as opposed to an
    aggregate basis as originally estimated,
|
| | b) | A $0.3 million valuation allowance related to capital
    losses was released in 2004. We entered into an agreement in
    2004 to sell a capital asset that will trigger enough capital
    gain to utilize the capital loss carryforward, and                                                                                                                        
|
| | c) | We reduced our income tax provision by $0.2 million in 2004
    due to acceptance by certain state taxing authorities of
    voluntary disclosure agreements.                                                                                                                                                                                                          





| |           
| | ----------
| | Net Income



Goodwill and Other
Intangible Assets.


Liquidity and Capital Resources






17



---



##### Table of Contents







| |                     
| | --------------------
| | Operating Activities





| |                     
| | --------------------
| | Investing Activities









| |                     
| | --------------------
| | Financing Activities



18



---



##### Table of Contents





| |                        
| | -----------------------
| | Contractual Obligations



|                                                |  |             |        |  |             |   |     |             |  |   |       |  |  |   |        | 
|----------------------------------------------- |  | ----------- | ------ |  | ----------- | - | --- | ----------- |  | - | ----- |  |  | - | ------ | 
|                                                |  | Long-term   |        |  | Capital     |   |     | Operating   |  |   |      
|                                                |  | Debt        |        |  | Lease       |   |     | Lease       |  |   |      
|                                                |  | Obligations |        |  | Obligations |   |     | Obligations |  |   | Total | 
|                                                |  |             |        |  |             |   |     |             |  |   |       | 
|As of October 31, 2005, payments due by period: |  |             |        |  |             |   |     |             |  |   |       |  |  |   |        | 
|Less than 1 year                                |  | $           | 3,132  |  |             | $ | 40  |             |  | $ | 1,973 |  |  | $ | 5,145  | 
|1 to 3 years                                    |  |             | 14,016 |  |             |   | 119 |             |  |   | 2,852 |  |  |   | 16,987 | 
|3 to 5 years                                    |  |             | 3,883  |  |             |   | 9   |             |  |   | 700   |  |  |   | 4,592  | 
|More than 5 years                               |  |             | 4,735  |  |             |   |    |             |  |   |      |  |  |   | 4,735  | 
|                                                |  |             |        |  |             |   |     |             |  |   |       | 
|Total long-term contractual obligations         |  | $           | 25,766 |  |             | $ | 168 |             |  | $ | 5,525 |  |  | $ | 31,459 | 
|                                                |  |             |        |  |             |   |     |             |  |   |       | 



| |                             
| | ----------------------------
| | Other Commercial Commitments



|                                               |  |           |        | 
|---------------------------------------------- |  | --------- | ------ | 
|                                               |  | Letters   |       
|                                               |  | of Credit |       
|                                               |  |           |       
|As of October 31, 2005 payments due by period: |  |           |        | 
|Less than 1 year                               |  | $         | 9,054  | 
|1 to 3 years                                   |  |           | 3,562  | 
|3 to 5 years                                   |  |           |       | 
|More than 5 years                              |  |           |       | 
|                                               |  |           |       
|Total long-term commercial obligations         |  | $         | 12,616 | 
|                                               |  |           |       



Outlook for Fiscal 2006








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Effects of Inflation






Critical Accounting Policies and Estimates






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

percentage-of Position 81-1, Accounting for Performance of Construction-Type and
Certain Production-Type Contracts, (SOP 81-1).


percentage-of percentage-of


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Revenue Recognition, Revised and Updated.




| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts





| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets





| |                                    
| | -----------------------------------
| | Accruals for Contingent Liabilities





| |                            
| | ---------------------------
| | Accounting for Income Taxes



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| |                             
| | ----------------------------
| | Foreign Currency Translation

Foreign Currency Translation.




| |                   
| | ------------------
| | Hedging Activities

Accounting for Derivative
Instruments and Hedging Activities,




New Accounting Pronouncements


Share-Based Payment Accounting for Stock Based Compensation Stock-Based
Compensation


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|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk



Interest Rate Risk




Foreign Currency Transaction Risk






Commodity Price Risk




23



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

Index to Consolidated Financial Statements


|                      |                                                                                                             |      |  |    | 
|--------------------- | ----------------------------------------------------------------------------------------------------------- | ---- |  | -- | 
|                      |                                                                                                             | Page | 
|                      |                                                                                                             |      | 
|Financial Statements: |                                                                                                             |      |  |   
|                      | Report of Independent Registered Public
    Accounting Firm                                                 |      |  | 25 | 
|                      | Report of Independent Registered Public
    Accounting Firm                                                 |      |  | 27 | 
|                      | Consolidated Balance Sheets as of
    October 31, 2005 and 2004                                             |      |  | 28 | 
|                      | Consolidated Statements of Operations for
    the Years Ended October 31, 2005, 2004 and 2003               |      |  | 29 | 
|                      | Consolidated Statements of
    Stockholders Equity for the Years Ended October 31,
    2005, 2004 and 2003 |      |  | 30 | 
|                      | Consolidated Statements of Cash Flows for
    the Years Ended October 31, 2005, 2004 and 2003               |      |  | 31 | 
|                      | Notes to Consolidated Financial
    Statements                                                              |      |  | 32 | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Consolidated financial statements




Internal control over financial reporting


Internal Control  Integrated Framework Internal Control 
Integrated Framework




25



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26



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |                        
| | -----------------------
| | (January 31, 2005 as to



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES





CONSOLIDATED BALANCE SHEETS


(In thousands, except share and per share data)


|                                                                            |                                                                                                                                                                                       |                                            |        |         |         |  |        |         |         | 
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------- | ------- |  | ------ | ------- | ------- | 
|                                                                            |                                                                                                                                                                                       | Years Ended                                |       
|                                                                            |                                                                                                                                                                                       | October 31,                                |       
|                                                                            |                                                                                                                                                                                       |                                            |       
|                                                                            |                                                                                                                                                                                       | 2005                                       |        |         | 2004    | 
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|ASSETS                                                                     
|Current Assets:                                                             |                                                                                                                                                                                       |                                            |        |         |         |  |        |        
|                                                                            | Cash and cash equivalents                                                                                                                                                             |                                            | $      | 24,844  |         |  | $      | 8,974   |        
|                                                                            | Marketable securities                                                                                                                                                                 |                                            |        | 8,200   |         |  |        | 54,208  |        
|                                                                            | Accounts receivable, less allowance for doubtful accounts of
    $567 and $617, respectively                                                                                          |                                            |        | 65,385  |         |  |        | 42,659  |        
|                                                                            | Costs and estimated earnings in excess of billings on
    uncompleted contracts                                                                                                       |                                            |        | 35,328  |         |  |        | 19,822  |        
|                                                                            | Inventories, net                                                                                                                                                                      |                                            |        | 21,616  |         |  |        | 15,332  |        
|                                                                            | Income taxes receivable                                                                                                                                                               |                                            |        | 507     |         |  |        | 1,179   |        
|                                                                            | Deferred income taxes                                                                                                                                                                 |                                            |        | 1,836   |         |  |        | 729     |        
|                                                                            | Prepaid expenses and other current assets                                                                                                                                             |                                            |        | 4,461   |         |  |        | 2,717   |        
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|                                                                            |                                                                                                                                                                                       | Total Current Assets                       |        |         | 162,177 |  |        |         | 145,620 | 
|Property, plant and equipment, net                                          |                                                                                                                                                                                       |                                            | 55,678 |         |         |  | 45,041 |        
|Goodwill                                                                    |                                                                                                                                                                                       |                                            | 203    |         |         |  | 203    |        
|Intangible assets, net                                                      |                                                                                                                                                                                       |                                            | 3,505  |         |         |  | 274    |        
|Other assets                                                                |                                                                                                                                                                                       |                                            | 5,096  |         |         |  | 4,941  |        
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|                                                                            |                                                                                                                                                                                       | Total Assets                               |        | $       | 226,659 |  |        | $       | 196,079 | 
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|                                                                           
|LIABILITIES AND STOCKHOLDERS EQUITY                                       
|Current Liabilities:                                                        |                                                                                                                                                                                       |                                            |        |         |         |  |        |        
|                                                                            | Current maturities of long-term debt and capital lease
    obligations                                                                                                                |                                            | $      | 2,095   |         |  | $      | 474     |        
|                                                                            | Income taxes payable                                                                                                                                                                  |                                            |        | 1,185   |         |  |        | 1,358   |        
|                                                                            | Accounts payable                                                                                                                                                                      |                                            |        | 22,104  |         |  |        | 14,239  |        
|                                                                            | Accrued salaries, bonuses and commissions                                                                                                                                             |                                            |        | 9,820   |         |  |        | 7,964   |        
|                                                                            | Billings in excess of costs and estimated earnings on
    uncompleted contracts                                                                                                       |                                            |        | 15,742  |         |  |        | 15,174  |        
|                                                                            | Accrued product warranty                                                                                                                                                              |                                            |        | 1,836   |         |  |        | 1,545   |        
|                                                                            | Other accrued expenses                                                                                                                                                                |                                            |        | 5,957   |         |  |        | 5,596   |        
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|                                                                            |                                                                                                                                                                                       | Total Current Liabilities                  |        |         | 58,739  |  |        |         | 46,350  | 
|Long-term debt and capital lease obligations, net of current
    maturities |                                                                                                                                                                                       |                                            | 19,436 |         |         |  | 6,626  |        
|Deferred compensation                                                       |                                                                                                                                                                                       |                                            | 1,918  |         |         |  | 1,744  |        
|Other liabilities                                                           |                                                                                                                                                                                       |                                            | 1,871  |         |         |  | 1,306  |        
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|                                                                            |                                                                                                                                                                                       | Total Liabilities                          |        |         | 81,964  |  |        |         | 56,026  | 
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|Commitments and Contingencies (Note K)                                      |                                                                                                                                                                                       |                                            |        |         |         |  |        |        
|Minority Interest                                                           |                                                                                                                                                                                       |                                            | 281    |         |         |  | 218    |        
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|Stockholders Equity:                                                       |                                                                                                                                                                                       |                                            |        |         |         |  |        |        
|                                                                            | Preferred stock, par value $.01; 5,000,000 shares
    authorized; none issued                                                                                                         |                                            |        |        |         |  |        |        |        
|                                                                            | Common stock, par value $.01; 30,000,000 shares authorized;
    11,001,733 and 10,999,733 shares issued, respectively;
    10,849,278 and 10,730,134 shares outstanding, respectively |                                            |        | 110     |         |  |        | 110     |        
|                                                                            | Additional paid-in capital                                                                                                                                                            |                                            |        | 10,252  |         |  |        | 9,433   |        
|                                                                            | Retained earnings                                                                                                                                                                     |                                            |        | 136,670 |         |  |        | 134,419 |        
|                                                                            | Treasury stock, 152,455 and 269,599 shares respectively, at
    cost                                                                                                                  |                                            |        | (1,417  | )       |  |        | (2,514  | )      
|                                                                            | Accumulated other comprehensive income (loss)                                                                                                                                         |                                            |        | (11     | )       |  |        | 54      |        
|                                                                            | Deferred compensation                                                                                                                                                                 |                                            |        | (1,190  | )       |  |        | (1,667  | )      
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|                                                                            |                                                                                                                                                                                       | Total Stockholders Equity                 |        |         | 144,414 |  |        |         | 139,835 | 
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 
|                                                                            |                                                                                                                                                                                       | Total Liabilities and Stockholders Equity |        | $       | 226,659 |  |        | $       | 196,079 | 
|                                                                            |                                                                                                                                                                                       |                                            |        |         |         | 



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)


|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        |  |   |         |        |  
|------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------- | ----------------------- | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ | -
|                                                                                                                                     |                                                     | Years Ended October 31, |        
|                                                                                                                                     |                                                     |                         |        
|                                                                                                                                     |                                                     | 2005                    |         |        | 2004 |   |         | 2003   | 
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Revenues                                                                                                                             |                                                     | $                       | 256,645 |        |      | $ | 206,142 |        |  | $ | 253,381 |       
|Cost of goods sold                                                                                                                   |                                                     |                         | 212,785 |        |      |   | 170,165 |        |  |   | 204,585 |       
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Gross profit                                                                                                                         |                                                     |                         | 43,860  |        |      |   | 35,977  |        |  |   | 48,796  |       
|Selling, general and administrative expenses                                                                                         |                                                     |                         | 41,846  |        |      |   | 35,357  |        |  |   | 35,339  |       
|Gain on sale of land and building                                                                                                    |                                                     |                         | (1,052  | )      |      |   |        |        |  |   |        |       
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Income before interest, income taxes, minority interest and
    cumulative effect of change in accounting principle                  |                                                     |                         | 3,066   |        |      |   | 620     |        |  |   | 13,457  |       
|Interest expense                                                                                                                     |                                                     |                         | 721     |        |      |   | 136     |        |  |   | 403     |       
|Interest income                                                                                                                      |                                                     |                         | (1,107  | )      |      |   | (880    | )      |  |   | (578    | )     
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Income from continuing operations before income taxes, minority
    interest and cumulative effect of change in accounting principle |                                                     |                         | 3,452   |        |      |   | 1,364   |        |  |   | 13,632  |       
|Income tax provision (benefit)                                                                                                       |                                                     |                         | 1,138   |        |      |   | (282    | )      |  |   | 6,137   |       
|Minority interest in net income (loss)                                                                                               |                                                     |                         | 63      |        |      |   | (23     | )      |  |   |        |       
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Income from continuing operations before cumulative effect of
    change in accounting principle                                     |                                                     |                         | 2,251   |        |      |   | 1,669   |        |  |   | 7,495   |       
|Cumulative effect of change in accounting principle, net of tax                                                                      |                                                     |                         |        |        |      |   |        |        |  |   | (510    | )     
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Net income                                                                                                                           |                                                     | $                       | 2,251   |        |      | $ | 1,669   |        |  | $ | 6,985   |       
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Net earnings per common share:                                                                                                       |                                                     |                         |         |        |      |   |         |        |  |   |         |       
|Basic:                                                                                                                               |                                                     |                         |         |        |      |   |         |        |  |   |         |       
|                                                                                                                                     | Earnings from continuing operations                 |                         | $       | 0.21   |      |   | $       | 0.16   |  |   | $       | 0.71   |  
|                                                                                                                                     | Cumulative effect of change in accounting principle |                         |         |       |      |   |         |       |  |   |         | (0.05  | )
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|                                                                                                                                     | Net earnings                                        |                         | $       | 0.21   |      |   | $       | 0.16   |  |   | $       | 0.66   |  
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Diluted:                                                                                                                             |                                                     |                         |         |        |      |   |         |        |  |   |         |       
|                                                                                                                                     | Earnings from continuing operations                 |                         | $       | 0.21   |      |   | $       | 0.15   |  |   | $       | 0.70   |  
|                                                                                                                                     | Cumulative effect of change in accounting principle |                         |         |       |      |   |         |       |  |   |         | (0.05  | )
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|                                                                                                                                     | Net earnings                                        |                         | $       | 0.21   |      |   | $       | 0.15   |  |   | $       | 0.65   |  
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|Weighted average shares:                                                                                                             |                                                     |                         |         |        |      |   |         |        |  |   |         |       
|                                                                                                                                     | Basic                                               |                         |         | 10,779 |      |   |         | 10,688 |  |   |         | 10,591 |  
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 
|                                                                                                                                     | Diluted                                             |                         |         | 10,928 |      |   |         | 10,774 |  |   |         | 10,681 |  
|                                                                                                                                     |                                                     |                         |         |        |      |   |         |        | 



29



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


(In thousands)


|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         |       |  
|------------------------- | ----------------------------------------------------------------- | ------------- | ----- | ----- | ------------ |  | ------ | ---------- |  | - | -------- | ----- |  | ----------- | ------------- | --- | ------ | - | ------- | -------- |  | - | ------------ | ----- |  | ----- | ---- | ---- | - | - | ------ | ---- | - | - | ------- | ----- | -
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  | Accumulated |               |     |        |   |        
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          | Other |  |             |               |     |       
|                          |                                                                   | Other         |       |       | Common Stock |  |        | Additional |  |   |          |       |  |             | Comprehensive |     |        |   |         |         
|                          |                                                                   | Comprehensive |       |       |              |  |        | Paid-In    |  |   | Retained |       |  | Treasury    |               |     | Income |   |         | Deferred |  |   |             
|                          |                                                                   | Income        |       |       | Shares       |  |        | Amount     |  |   | Capital  |       |  | Earnings    |               |     | Stock  |   |         | (Loss)   |  |   | Compensation |       |  | Total |     
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |     
|Balance, October 31, 2002 |                                                                   |               |       |       |              |  | 10,979 |            |  | $ | 110      |       |  | $           | 8,345         |     |        | $ | 125,765 |          |  | $ | (3,925       | )     |  | $     | (87  | )    |   | $ | (2,108 | )    |   | $ | 128,100 |      
|                          | Net income                                                        |               | $     | 6,985 |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         | 6,985    |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         | 6,985 |  
|                          | Amortization of deferred compensation-ESOP                        |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        | 277  |   |   |         | 277   |  
|                          | Change in value of interest rate swap, net of $49 income taxes    |               |       | 87    |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      | 87   |   |   |        |      |   |   |         | 87    |  
|                          | Change in value of marketable securities, net of $64 income taxes |               |       | (118  | )            |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      | (118 | ) |   |        |      |   |   |         | (118  | )
|                          | Exercise of stock options                                         |               |       |       |              |  |        |            |  |   |          |       |  |             |               | 131 |        |   |         |          |  |   |              | 510   |  |       |      |      |   |   |        |      |   |   |         | 641   |  
|                          | Income tax benefit from stock options exercised                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               | 119 |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         | 119   |  
|                          | Issuance of stock                                                 |               |       |       |              |  |        | 15         |  |   |          |       |  |             |               | 366 |        |   |         |          |  |   |              | 103   |  |       |      |      |   |   |        | (196 | ) |   |         | 273   |  
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |     
|Comprehensive Income      |                                                                   | $             | 6,954 |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         |      
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |     
|Balance, October 31, 2003 |                                                                   |               |       |       |              |  | 10,994 |            |  |   | 110      |       |  |             | 8,961         |     |        |   | 132,750 |          |  |   | (3,312       | )     |  |       | (118 | )    |   |   | (2,027 | )    |   |   | 136,364 |      
|                          | Net income                                                        |               | $     | 1,669 |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         | 1,669    |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         | 1,669 |  
|                          | Foreign currency translation adjustments                          |               |       | 17    |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      | 17   |   |   |        |      |   |   |         | 17    |  
|                          | Change in value of marketable securities, net of $85 income taxes |               |       | 155   |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      | 155  |   |   |        |      |   |   |         | 155   |  
|                          | Amortization of deferred compensation-ESOP                        |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        | 297  |   |   |         | 297   |  
|                          | Exercise of stock options                                         |               |       |       |              |  |        |            |  |   |          |       |  |             |               | 240 |        |   |         |          |  |   |              | 798   |  |       |      |      |   |   |        |      |   |   |         | 1,038 |  
|                          | Income tax benefit from stock options exercised                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               | 157 |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         | 157   |  
|                          | Amortization of restricted stock                                  |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        | 63   |   |   |         | 63    |  
|                          | Issuance of stock                                                 |               |       |       |              |  |        | 6          |  |   |          |       |  |             |               | 75  |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         | 75    |  
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |     
|Comprehensive Income      |                                                                   | $             | 1,841 |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         |      
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |     
|Balance, October 31, 2004 |                                                                   |               |       |       |              |  | 11,000 |            |  |   | 110      |       |  |             | 9,433         |     |        |   | 134,419 |          |  |   | (2,514       | )     |  |       | 54   |      |   |   | (1,667 | )    |   |   | 139,835 |      
|                          | Net income                                                        |               | $     | 2,251 |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         | 2,251    |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         | 2,251 |  
|                          | Foreign currency translation adjustments                          |               |       | 5     |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      | 5    |   |   |        |      |   |   |         | 5     |  
|                          | Change in value of marketable securities, net of $9 income taxes  |               |       | (26   | )            |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      | (26  | ) |   |        |      |   |   |         | (26   | )
|                          | Amortization of deferred compensation-ESOP                        |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        | 317  |   |   |         | 317   |  
|                          | Exercise of stock options                                         |               |       |       |              |  |        |            |  |   |          |       |  |             |               | 433 |        |   |         |          |  |   |              | 1,097 |  |       |      |      |   |   |        |      |   |   |         | 1,530 |  
|                          | Unrealized loss on fair value hedge                               |               |       | (44   | )            |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      | (44  | ) |   |        |      |   |   |         | (44   | )
|                          | Income tax benefit from stock options exercised                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               | 354 |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         | 354   |  
|                          | Amortization of restricted stock                                  |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        | 160  |   |   |         | 160   |  
|                          | Issuance of stock                                                 |               |       |       |              |  |        | 2          |  |   |          |       |  |             |               | 32  |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         | 32    |  
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |     
|Comprehensive Income      |                                                                   | $             | 2,186 |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |      |      |   |   |        |      |   |   |         |      
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |     
|Balance, October 31, 2005 |                                                                   |               |       |       |              |  | 11,002 |            |  | $ | 110      |       |  | $           | 10,252        |     |        | $ | 136,670 |          |  | $ | (1,417       | )     |  | $     | (11  | )    |   | $ | (1,190 | )    |   | $ | 144,414 |      
|                          |                                                                   |               |       |       |              |  |        |            |  |   |          |       |  |             |               |     |        |   |         |          |  |   |              |       |  |       |     



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |        |        |         |         |       |        |         |  
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ------------------------------------------------------------------------------- | --------------------------------------------------- | ----- | ------- | ------- | ------- | ------ | ------ | ------- | ------- | ----- | ------ | ------- | -
|                                                             |                                                                                                 | Years Ended October 31,                                         |                                                                                
|                                                             |                                                                                                 |                                                                 |                                                                                
|                                                             |                                                                                                 | 2005                                                            |                                                                                 |                                                     | 2004  |         |         | 2003    |       
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       
|Operating Activities:                                        |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |        |        |         |        
|                                                             | Net income                                                                                      |                                                                 | $                                                                               | 2,251                                               |       |         | $       | 1,669   |        |        | $       | 6,985   |      
|                                                             | Adjustments to reconcile net income to net cash provided by
    (used in) operating activities: |                                                                 |                                                                                 |                                                     |       |         |         |         |        |        |         |         |      
|                                                             |                                                                                                 | Cumulative effect of change in accounting principle, net of tax |                                                                                 |                                                     |      |         |         |         |       |        |         |         | 510   |       
|                                                             |                                                                                                 | Depreciation and amortization                                   |                                                                                 |                                                     | 5,266 |         |         |         | 4,469  |        |         |         | 5,155 |       
|                                                             |                                                                                                 | Amortization of unearned restricted stock                       |                                                                                 |                                                     | 159   |         |         |         | 64     |        |         |         | 119   |       
|                                                             |                                                                                                 | Minority interest earnings (loss)                               |                                                                                 |                                                     | 63    |         |         |         | (23    | )      |         |         |      |       
|                                                             |                                                                                                 | (Gain) loss on disposition of assets                            |                                                                                 |                                                     | (935  | )       |         |         | (184   | )      |         |         | 75    |       
|                                                             |                                                                                                 | Loss on impairment of assets                                    |                                                                                 |                                                     |      |         |         |         | 535    |        |         |         | 382   |       
|                                                             |                                                                                                 | Net realized gain on sale of available-for-sale securities      |                                                                                 |                                                     | (28   | )       |         |         |       |        |         |         |      |       
|                                                             |                                                                                                 | Tax benefit from exercise of stock options                      |                                                                                 |                                                     | 353   |         |         |         | 156    |        |         |         | 119   |       
|                                                             |                                                                                                 | Deferred income taxes                                           |                                                                                 |                                                     | (207  | )       |         |         | (1,718 | )      |         |         | 823   |       
|                                                             |                                                                                                 | Changes in operating assets and liabilities:                    |                                                                                 |                                                     |       |         |         |         |        |        |         |         |       |       
|                                                             |                                                                                                 |                                                                 | Accounts receivable, net                                                        |                                                     |       | (17,979 | )       |         |        | 2,620  |         |         |       | 24,256 |        
|                                                             |                                                                                                 |                                                                 | Costs and estimated earnings in excess of billings on
    uncompleted contracts |                                                     |       | (10,998 | )       |         |        | 12,353 |         |         |       | 654    |        
|                                                             |                                                                                                 |                                                                 | Inventories                                                                     |                                                     |       | (2,525  | )       |         |        | 2,193  |         |         |       | 1,498  |        
|                                                             |                                                                                                 |                                                                 | Prepaid expenses and other current assets                                       |                                                     |       | (37     | )       |         |        | (728   | )       |         |       | (147   | )      
|                                                             |                                                                                                 |                                                                 | Other assets                                                                    |                                                     |       | (137    | )       |         |        | 72     |         |         |       | (442   | )      
|                                                             |                                                                                                 |                                                                 | Accounts payable and income taxes payable                                       |                                                     |       | 1,722   |         |         |        | (860   | )       |         |       | 551    |        
|                                                             |                                                                                                 |                                                                 | Accrued liabilities                                                             |                                                     |       | 2,173   |         |         |        | 1,663  |         |         |       | (4,503 | )      
|                                                             |                                                                                                 |                                                                 | Billings in excess of costs and estimated earnings on
    uncompleted contracts |                                                     |       | (877    | )       |         |        | 1,958  |         |         |       | (262   | )      
|                                                             |                                                                                                 |                                                                 | Deferred compensation                                                           |                                                     |       | 506     |         |         |        | 491    |         |         |       | 364    |        
|                                                             |                                                                                                 |                                                                 | Other liabilities                                                               |                                                     |       | 41      |         |         |        | 178    |         |         |       | 568    |        
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       
|                                                             |                                                                                                 |                                                                 |                                                                                 | Net cash provided by (used in) operating activities |       |         | (21,189 | )       |        |        | 24,908  |         |       |        | 36,705  |  
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       
|Investing Activities:                                        |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |        |        |         |        
|                                                             | Proceeds from sale of fixed assets                                                              |                                                                 |                                                                                 | 879                                                 |       |         |         | 1,766   |        |        |         |        |      
|                                                             | Proceeds from maturities and sales of available-for-sale
    securities                         |                                                                 |                                                                                 | 3,817                                               |       |         |         | 2,773   |        |        |         |        |      
|                                                             | Purchases of property, plant and equipment                                                      |                                                                 |                                                                                 | (6,108                                              | )     |         |         | (6,472  | )      |        |         | (4,541  | )    
|                                                             | Purchase of additional interest in consolidated subsidiary                                      |                                                                 |                                                                                 |                                                    |       |         |         | (66     | )      |        |         |        |      
|                                                             | Proceeds from sale of short-term auction rate securities                                        |                                                                 |                                                                                 | 48,569                                              |       |         |         | 31,225  |        |        |         | 13,550  |      
|                                                             | Purchases of short-term auction rate securities                                                 |                                                                 |                                                                                 | (6,350                                              | )     |         |         | (56,585 | )      |        |         | (33,475 | )    
|                                                             | Purchases of marketable securities                                                              |                                                                 |                                                                                 |                                                    |       |         |         | (1,018  | )      |        |         | (5,763  | )    
|                                                             | Acquisition of S&I                                                                              |                                                                 |                                                                                 | (19,167                                             | )     |         |         |        |        |        |         |        |      
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       
|                                                             |                                                                                                 |                                                                 |                                                                                 | Net cash provided by (used in) investing activities |       |         | 21,640  |         |        |        | (28,377 | )       |       |        | (30,229 | )
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       
|Financing Activities:                                        |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |        |        |         |        
|                                                             | Borrowings on revolving line of credit                                                          |                                                                 |                                                                                 | 9,579                                               |       |         |         | 516     |        |        |         |        |      
|                                                             | Repayments on revolving line of credit                                                          |                                                                 |                                                                                 | (9,579                                              | )     |         |         | (516    | )      |        |         |        |      
|                                                             | Borrowings on long-term debt and capital lease obligations                                      |                                                                 |                                                                                 | 4,260                                               |       |         |         |        |        |        |         | 103     |      
|                                                             | Borrowings on term loan                                                                         |                                                                 |                                                                                 | 10,598                                              |       |         |         |        |        |        |         |        |      
|                                                             | Repayments of long-term debt and capital lease obligations                                      |                                                                 |                                                                                 | (474                                                | )     |         |         | (458    | )      |        |         | (4,754  | )    
|                                                             | Debt issuance costs                                                                             |                                                                 |                                                                                 | (501                                                | )     |         |         |        |        |        |         |        |      
|                                                             | Proceeds from issuance of stock                                                                 |                                                                 |                                                                                 |                                                    |       |         |         |        |        |        |         | 154     |      
|                                                             | Proceeds from exercise of stock options                                                         |                                                                 |                                                                                 | 1,530                                               |       |         |         | 1,038   |        |        |         | 522     |      
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       
|                                                             |                                                                                                 |                                                                 |                                                                                 | Net cash provided by (used in) financing activities |       |         | 15,413  |         |        |        | 580     |         |       |        | (3,975  | )
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       
|Net increase (decrease) in cash and cash equivalents         |                                                                                                 |                                                                 | 15,864                                                                          |                                                     |       |         | (2,889  | )       |        |        | 2,501   |        
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                 |                                                                 | 6                                                                               |                                                     |       |         |        |         |        |        |        |        
|Cash and cash equivalents at beginning of year               |                                                                                                 |                                                                 | 8,974                                                                           |                                                     |       |         | 11,863  |         |        |        | 9,362   |        
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       
|Cash and cash equivalents at end of year                     |                                                                                                 | $                                                               | 24,844                                                                          |                                                     |       | $       | 8,974   |         |        | $      | 11,863  |        
|                                                             |                                                                                                 |                                                                 |                                                                                 |                                                     |       |         |         |         |       



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                          
|-- | -------------------------
|A. | Business and Organization









|   |                                           
|-- | ------------------------------------------
|B. | Summary of Significant Accounting Policies



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





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





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



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                  
| | -------------------------------------------------
| | Supplemental Disclosures of Cash Flow Information

|                                             |                                                                                                      |                         |   |       |      |  |   |       |  |  |   |       |  
|-------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ----------------------- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | -
|                                             |                                                                                                      | Years Ended October 31, |  
|                                             |                                                                                                      |                         |  
|                                             |                                                                                                      | 2005                    |   |       | 2004 |  |   | 2003  | 
|                                             |                                                                                                      |                         |   |       |      |  |   |       | 
|Cash paid (received) during the period for:  |                                                                                                      |                         |   |       |      |  |   |       |  |  |   |      
|                                             | Interest                                                                                             |                         | $ | 567   |      |  | $ | 134   |  |  | $ | 423   |  
|                                             | Income taxes                                                                                         |                         |   | (267  | )    |  |   | 1,930 |  |  |   | 5,252 |  
|Non-cash investing and financing activities: |                                                                                                      |                         |   |       |      |  |   |       |  |  |   |      
|                                             | Change in fair value of interest rate swap, net of $0, $0 and
    $49 income taxes, respectively     |                         |   |      |      |  |   |      |  |  |   | 87    |  
|                                             | Change in fair value of marketable securities, net of $9, $85
    and $64 income taxes, respectively |                         |   | 26    |      |  |   | 207   |  |  |   | (118  | )
|                                             | Issuance of common stock for deferred directors fees                                                |                         |   | 15    |      |  |   | 75    |  |  |   |      |  
|                                             | Assets acquired under capital lease obligations                                                      |                         |   |      |      |  |   | 200   |  |  |   |      |  
|                                             | Unrealized loss on forward contracts                                                                 |                         |   | (44   | )    |  |   |      |  |  |   |      |  
|                                             | Unrealized foreign currency gain/(loss)                                                              |                         |   | 4     |      |  |   |      |  |  |   |      |  
|                                             | Accrued property, plant and equipment additions                                                      |                         |   | 156   |      |  |   |      |  |  |   |      |  
|                                             | Note receivable from sale of property                                                                |                         |   | 1,350 |      |  |   |      |  |  |   |      |  
|                                             | Receivable for options exercised                                                                     |                         | $ | 17    |      |  | $ |      |  |  | $ |      |  



| |                      
| | ---------------------
| | Marketable Securities

available-for




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





| |                                    
| | -----------------------------------
| | Accounts Receivable and Market Risk



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                                                
| | -------------------------------------------------------------------------------
| | Costs and Estimated Earnings in Excess of Billings on
    Uncompleted Contracts

percentage-of








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

first-in,




| |                              
| | -----------------------------
| | Property, Plant and Equipment







| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                  
| | -----------------
| | Intangible Assets

Goodwill and Other
Intangible Assets.




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





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

percentage-of Position 81-1, Accounting for Performance of Construction-Type and
Certain Production-Type Contracts, (SOP 81-1).


percentage-of percentage-of


Revenue Recognition, Revised and Updated.


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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |           
| | ----------
| | Warranties





| |                                 
| | --------------------------------
| | Research and Development Expense





| |                             
| | ----------------------------
| | Foreign Currency Translation

Foreign
Currency Translation.




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

Accounting for Stock-Based Compensation, Accounting for Stock Issued to
Employees.


Stock-Based Employee Compensation


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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                                                                                  |             |                         |       |      |      |   |       |      |  |   |       |      | 
|------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ----------------------- | ----- | ---- | ---- | - | ----- | ---- |  | - | ----- | ---- | 
|                                                                                                                                                  |             | Years Ended October 31, |      
|                                                                                                                                                  |             |                         |      
|                                                                                                                                                  |             | 2005                    |       |      | 2004 |   |       | 2003 | 
|                                                                                                                                                  |             |                         |       |      |      |   |       |      | 
|Net income, as reported                                                                                                                           |             | $                       | 2,251 |      |      | $ | 1,669 |      |  | $ | 6,985 |     
|Less: Total stock-based employee compensation expense determined
    under fair value based method for all awards, net of related tax
    effects |             |                         | (792  | )    |      |   | (802  | )    |  |   | (745  | )   
|                                                                                                                                                  |             |                         |       |      |      |   |       |      | 
|Pro forma net income                                                                                                                              |             | $                       | 1,459 |      |      | $ | 867   |      |  | $ | 6,240 |     
|                                                                                                                                                  |             |                         |       |      |      |   |       |      | 
|Basic earnings per share:                                                                                                                         |             |                         |       |      |      |   |       |      |  |   |       |     
|                                                                                                                                                  | As reported |                         | $     | 0.21 |      |   | $     | 0.16 |  |   | $     | 0.66 | 
|                                                                                                                                                  | Pro forma   |                         | $     | 0.14 |      |   | $     | 0.08 |  |   | $     | 0.59 | 
|Diluted earnings per share:                                                                                                                       |             |                         |       |      |      |   |       |      |  |   |       |     
|                                                                                                                                                  | As reported |                         | $     | 0.21 |      |   | $     | 0.15 |  |   | $     | 0.65 | 
|                                                                                                                                                  | Pro forma   |                         | $     | 0.13 |      |   | $     | 0.08 |  |   | $     | 0.58 | 





|                                |  |                         |          |  |      |  |          |      |  |  |          | 
|------------------------------- |  | ----------------------- | -------- |  | ---- |  | -------- | ---- |  |  | -------- | 
|                                |  | Years Ended October 31, |         
|                                |  |                         |         
|                                |  | 2005                    |          |  | 2004 |  |          | 2003 | 
|                                |  |                         |          |  |      |  |          |      | 
|Expected life of options        |  |                         | 7  years |  |      |  | 7  years |      |  |  | 7  years | 
|Risk-free interest rate         |  |                         | 3.82%    |  |      |  | 4.03%    |      |  |  | 3.98%    | 
|Expected dividend yield         |  |                         | 0.00%    |  |      |  | 0.00%    |      |  |  | 0.00%    | 
|Expected stock price volatility |  |                         | 50.00%   |  |      |  | 37.28%   |      |  |  | 38.51%   | 



| |                   
| | ------------------
| | Hedging Activities

Accounting for Derivative
Instruments and Hedging Activities,




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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                     
| | --------------------
| | Comprehensive Income





|                                                                       |                                               |             |     |     |      |   |     |     | 
|---------------------------------------------------------------------- | --------------------------------------------- | ----------- | --- | --- | ---- | - | --- | --- | 
|                                                                       |                                               | October 31, |    
|                                                                       |                                               |             |    
|                                                                       |                                               | 2005        |     |     | 2004 |  
|                                                                       |                                               |             |     |     |      |  
|Unrealized holding gains arising during period                         |                                               | $           | 2   |     |      | $ | 189 |    
|Less: Reclassification adjustment for gains included in net
    income |                                               |             | (28 | )   |      |   | (34 | )  
|                                                                       |                                               |             |     |     |      |  
|                                                                       | Net unrealized gains on marketable securities |             | $   | (26 | )    |   | $   | 155 | 
|                                                                       |                                               |             |     |     |      |  



| |                  
| | -----------------
| | Reclassifications







| |                         
| | ------------------------
| | New Accounting Standards

Position 109-1, Accounting
for Income Taxes (FSP 109-1). FSP 109-1,


Inventory Costs, Inventories,


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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Share-Based Payment, Stock-Based Employee Compensation


Exchanges of Nonmonetary Assets, an Amendment of APB
Opinion No. 29, Accounting for Nonmonetary
Transactions


Accounting for Conditional Asset Retirement
Obligations Accounting for Asset Retirement Obligations.


Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes
in Interim Financial Statements.




|   |            
|-- | -----------
|C. | Acquisition



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                   |                      |   |        |        | 
|-------------------------------------------------- | -------------------- | - | ------ | ------ | 
|Accounts receivable                                |                      | $ | 4,730  |       
|Costs and estimated earnings in excess of billings |                      |   | 4,492  |       
|Inventories                                        |                      |   | 3,745  |       
|Prepaid expenses and other current assets          |                      |   | 379    |       
|Property, plant and equipment                      |                      |   | 9,542  |       
|Intangible assets                                  |                      |   | 3,846  |       
|Accounts payable                                   |                      |   | (5,793 | )     
|Billings in excess of costs and estimated earnings |                      |   | (1,440 | )     
|Other accrued expenses                             |                      |   | (334   | )     
|                                                   |                      |   |       
|                                                   | Total purchase price |   | $      | 19,167 | 
|                                                   |                      |   |       





|                      |       |        |       |           |      |  |          |  | 
|--------------------- | ----- | ------ | ----- | --------- | ---- |  | -------- |  | 
|                      |       |        |       | Estimated |     
|                      |       | Amount |       |           | Life | 
|                      |       |        |       |           |      | 
|Unpatented technology |       | $      | 2,175 |           |      |  | 6 years  | 
|Tradenames            |       |        | 1,025 |           |      |  | 10 years | 
|Backlog               |       |        | 646   |           |      |  | 6 months | 
|                      |       |        |       |           |      | 
|                      | Total |        | $     | 3,846     |      |  |          |  | 
|                      |       |        |       |           |      | 



|                               |         |                         |         |      |      |   |         |      | 
|------------------------------ | ------- | ----------------------- | ------- | ---- | ---- | - | ------- | ---- | 
|                               |         | Years Ended October 31, |        
|                               |         |                         |        
|                               |         | 2005                    |         |      | 2004 |  
|                               |         |                         |         |      |      |  
|Revenues                       |         | $                       | 297,007 |      |      | $ | 287,143 |     
|Net income                     |         | $                       | 2,105   |      |      | $ | 4,133   |     
|Net earnings per common share: |         |                         |         |      |      |   |         |     
|                               | Basic   |                         | $       | 0.20 |      |   | $       | 0.39 | 
|                               | Diluted |                         | $       | 0.19 |      |   | $       | 0.38 | 

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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |    |                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1) | Impact of additional interest expense related to the portion of
    the purchase price financed with the Term Loan and lower
    interest income as a result of the sale of available-for-sale
    securities used to fund the remainder of the purchase price;
|
| | 2) | Elimination of the operating results of certain businesses of
    S&I which were not acquired;                                                                                                                                                                 
|
| | 3) | Elimination of lease expense and recording of additional
    depreciation expense related to assets which were previously
    leased from S&Is previous parent;                                                                                               
|
| | 4) | Impact of amortization expense related to intangible assets;                                                                                                                                                                                                   
|
| | 5) | Adjustment to the income tax provision to reflect the statutory
    rate in the United Kingdom.                                                                                                                                                                



percentage-of percentage-of SOP 81-1, Accounting for Performance of Construction-Type and
Certain Production-Type Contracts.




|   |                         
|-- | ------------------------
|D. | Stock-Based Compensation







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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                |           |               |         |          |                |   |       |       | 
|------------------------------- | --------- | ------------- | ------- | -------- | -------------- | - | ----- | ----- | 
|                                |           |               |         | Weighted |               
|                                |           |               |         | Average  |               
|                                |           | Stock Options |         |          | Exercise Price |  
|                                |           |               |         |          |                |  
|Outstanding at October 31, 2002 |           |               | 720,173 |          |                | $ | 14.82 |      
|                                | Granted   |               |         | 320,700  |                |   |       | 15.10 | 
|                                | Exercised |               |         | (53,510  | )              |   |       | 12.02 | 
|                                | Forfeited |               |         | (600     | )              |   |       | 15.81 | 
|                                |           |               |         |          |                |  
|Outstanding at October 31, 2003 |           |               | 986,763 |          |                |   | 15.06 |      
|                                | Granted   |               |         | 27,000   |                |   |       | 16.38 | 
|                                | Exercised |               |         | (82,986  | )              |   |       | 12.47 | 
|                                | Forfeited |               |         | (103,384 | )              |   |       | 15.91 | 
|                                |           |               |         |          |                |  
|Outstanding at October 31, 2004 |           |               | 827,393 |          |                |   | 15.26 |      
|                                | Granted   |               |         | 275,000  |                |   |       | 18.42 | 
|                                | Exercised |               |         | (116,503 | )              |   |       | 13.28 | 
|                                | Forfeited |               |         | (78,100  | )              |   |       | 16.50 | 
|                                |           |               |         |          |                |  
|Outstanding at October 31, 2005 |           |               | 907,790 |          |                | $ | 16.37 |      
|                                |           |               |         |          |                |  

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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|              |  |             |             |  |                  |  |           |          |  |   |             |  |  |          |         |  |  |   |       | 
|------------- |  | ----------- | ----------- |  | ---------------- |  | --------- | -------- |  | - | ----------- |  |  | -------- | ------- |  |  | - | ----- | 
|Outstanding   |  |             | Exercisable | 
|              |  |             |             | 
|              |  | Weighted    |             |  | Number           |  |           | Weighted | 
|Range of      |  | Number      |             |  | Weighted Average |  |           | Average  |  |   | Exercisable |  |  | Average  |        
|Exercise      |  | Outstanding |             |  | Remaining        |  |           | Exercise |  |   | at          |  |  | Exercise |        
|Prices        |  | at 10/31/05 |             |  | Contractual Life |  |           | Price    |  |   | 10/31/05    |  |  | Price    |        
|              |  |             |             |  |                  |  |           |          |  |   |             |  |  |          |        
|$8.44-$8.50   |  |             | 100,920     |  |                  |  | 0.9 years |          |  | $ | 8.50        |  |  |          | 100,920 |  |  | $ | 8.50  | 
|13.06-15.10   |  |             | 242,983     |  |                  |  | 4.6       |          |  |   | 15.09       |  |  |          | 92,263  |  |  |   | 15.08 | 
|16.30-18.44   |  |             | 539,887     |  |                  |  | 4.8       |          |  |   | 18.07       |  |  |          | 202,287 |  |  |   | 17.75 | 
|23.48-27.10   |  |             | 24,000      |  |                  |  | 3.3       |          |  |   | 23.91       |  |  |          | 22,000  |  |  |   | 23.92 | 
|              |  |             |             |  |                  |  |           |          |  |   |             |  |  |          |        
|Total Options |  |             | 907,790     |  |                  |  | 4.3       |          |  |   | 16.37       |  |  |          | 417,470 |  |  |   | 15.25 | 
|              |  |             |             |  |                  |  |           |          |  |   |             |  |  |          |        





|   |                   
|-- | ------------------
|E. | Earnings Per Share



|                            |                                                                                                          |                         |   |        |      |  |   |        |  |  |   |        |  
|--------------------------- | -------------------------------------------------------------------------------------------------------- | ----------------------- | - | ------ | ---- |  | - | ------ |  |  | - | ------ | -
|                            |                                                                                                          | Years Ended October 31, |  
|                            |                                                                                                          |                         |  
|                            |                                                                                                          | 2005                    |   |        | 2004 |  |   | 2003   | 
|                            |                                                                                                          |                         |   |        |      |  |   |        | 
|Numerator:                  |                                                                                                          |                         |   |        |      |  |   |        |  |  |   |       
|                            | Income from continuing operations                                                                        |                         | $ | 2,251  |      |  | $ | 1,669  |  |  | $ | 7,495  |  
|                            | Cumulative effect of change in accounting principle, net of tax                                          |                         |   |       |      |  |   |       |  |  |   | (510   | )
|                            |                                                                                                          |                         |   |        |      |  |   |        | 
|                            | Net income                                                                                               |                         | $ | 2,251  |      |  | $ | 1,669  |  |  | $ | 6,985  |  
|                            |                                                                                                          |                         |   |        |      |  |   |        | 
|Denominator:                |                                                                                                          |                         |   |        |      |  |   |        |  |  |   |       
|                            | Denominator for basic earnings per share-weighted average shares                                         |                         |   | 10,779 |      |  |   | 10,688 |  |  |   | 10,591 |  
|                            | Dilutive effect of stock options                                                                         |                         |   | 149    |      |  |   | 86     |  |  |   | 90     |  
|                            |                                                                                                          |                         |   |        |      |  |   |        | 
|                            | Denominator for diluted earnings per share-adjusted weighted
    average shares with assumed conversions |                         |   | 10,928 |      |  |   | 10,774 |  |  |   | 10,681 |  
|                            |                                                                                                          |                         |   |        |      |  |   |        | 
|Basic earnings per share:   |                                                                                                          |                         |   |        |      |  |   |        |  |  |   |       
|                            | Earnings from continuing operations                                                                      |                         | $ | 0.21   |      |  | $ | 0.16   |  |  | $ | 0.71   |  
|                            | Cumulative effect of change in accounting principle                                                      |                         |   |       |      |  |   |       |  |  |   | (0.05  | )
|                            |                                                                                                          |                         |   |        |      |  |   |        | 
|                            | Net earnings                                                                                             |                         | $ | 0.21   |      |  | $ | 0.16   |  |  | $ | 0.66   |  
|                            |                                                                                                          |                         |   |        |      |  |   |        | 
|Diluted earnings per share: |                                                                                                          |                         |   |        |      |  |   |        |  |  |   |       
|                            | Earnings from continuing operations                                                                      |                         | $ | 0.21   |      |  | $ | 0.15   |  |  | $ | 0.70   |  
|                            | Cumulative effect of change in accounting principle                                                      |                         |   |       |      |  |   |       |  |  |   | (0.05  | )
|                            |                                                                                                          |                         |   |        |      |  |   |        | 
|                            | Net earnings                                                                                             |                         | $ | 0.21   |      |  | $ | 0.15   |  |  | $ | 0.65   |  
|                            |                                                                                                          |                         |   |        |      |  |   |        | 



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                          
|-- | -----------------------------------------
|F. | Detail of Selected Balance Sheet Accounts



|                                                                         |  |             |     |   |      |   |       |  
|------------------------------------------------------------------------ |  | ----------- | --- | - | ---- | - | ----- | -
|                                                                         |  | October 31, |    
|                                                                         |  |             |    
|                                                                         |  | 2005        |     |   | 2004 |  
|                                                                         |  |             |     |   |      |  
|Balance at beginning of period                                           |  | $           | 617 |   |      | $ | 1,283 |  
|Adjustments to the allowance                                             |  |             | 9   |   |      |   | (498  | )
|Deductions for uncollectible accounts written off, net of
    recoveries |  |             | (59 | ) |      |   | (168  | )
|                                                                         |  |             |     |   |      |  
|Balance at end of period                                                 |  | $           | 567 |   |      | $ | 617   |  
|                                                                         |  |             |     |   |      |  



|                                |  |             |        |   |      |   |        |  
|------------------------------- |  | ----------- | ------ | - | ---- | - | ------ | -
|                                |  | October 31, |       
|                                |  |             |       
|                                |  | 2005        |        |   | 2004 |  
|                                |  |             |        |   |      |  
|Balance at beginning of period  |  | $           | 1,545  |   |      | $ | 1,929  |  
|Additions to the accrual        |  |             | 1,787  |   |      |   | 1,387  |  
|Deductions for warranty charges |  |             | (1,496 | ) |      |   | (1,771 | )
|                                |  |             |        |   |      |  
|Balance at end of period        |  | $           | 1,836  |   |      | $ | 1,545  |  
|                                |  |             |        |   |      |  



|                                       |                   |             |        |        |      |   |       |        | 
|-------------------------------------- | ----------------- | ----------- | ------ | ------ | ---- | - | ----- | ------ | 
|                                       |                   | October 31, |       
|                                       |                   |             |       
|                                       |                   | 2005        |        |        | 2004 |  
|                                       |                   |             |        |        |      |  
|Raw materials, parts and subassemblies |                   | $           | 12,794 |        |      | $ | 9,167 |       
|Work-in-progress                       |                   |             | 8,822  |        |      |   | 6,165 |       
|                                       |                   |             |        |        |      |  
|                                       | Total inventories |             | $      | 21,616 |      |   | $     | 15,332 | 
|                                       |                   |             |        |        |      |  



|                                                                                |  |             |         |   |      |   |         |  
|------------------------------------------------------------------------------- |  | ----------- | ------- | - | ---- | - | ------- | -
|                                                                                |  | October 31, |        
|                                                                                |  |             |        
|                                                                                |  | 2005        |         |   | 2004 |  
|                                                                                |  |             |         |   |      |  
|Costs incurred on uncompleted contracts                                         |  | $           | 293,741 |   |      | $ | 271,442 |  
|Estimated earnings                                                              |  |             | 55,360  |   |      |   | 49,691  |  
|                                                                                |  |             |         |   |      |  
|                                                                                |  |             | 349,101 |   |      |   | 321,133 |  
|Less: Billings to date                                                          |  |             | 329,515 |   |      |   | 316,485 |  
|                                                                                |  |             |         |   |      |  
|                                                                                |  | $           | 19,586  |   |      | $ | 4,648   |  
|                                                                                |  |             |         |   |      |  
|Included in accompanying balance sheets under the following
    captions:       |  |             |         |   |      |   |         |  
|Costs and estimated earnings in excess of billings on
    uncompleted contracts |  | $           | 35,328  |   |      | $ | 19,822  |  
|Billings in excess of costs and estimated earnings on
    uncompleted contracts |  |             | (15,742 | ) |      |   | (15,174 | )
|                                                                                |  |             |         |   |      |  
|                                                                                |  | $           | 19,586  |   |      | $ | 4,648   |  
|                                                                                |  |             |         |   |      |  

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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |                                          |             |         |        |          |   |         |             |  |  |            |  | 
|------------------------------ | ---------------------------------------- | ----------- | ------- | ------ | -------- | - | ------- | ----------- |  |  | ---------- |  | 
|                               |                                          | October 31, |         |        |         
|                               |                                          |             |         |        | Range of |  
|                               |                                          | 2005        |         |        | 2004     |   |         | Asset Lives | 
|                               |                                          |             |         |        |          |   |         |             | 
|Land                           |                                          | $           | 7,559   |        |          | $ | 4,720   |             |  |  |           | 
|Buildings and improvements     |                                          |             | 43,189  |        |          |   | 39,629  |             |  |  | 3-39 Years | 
|Machinery and equipment        |                                          |             | 34,946  |        |          |   | 29,804  |             |  |  | 3-15 Years | 
|Furniture and fixtures         |                                          |             | 2,135   |        |          |   | 2,752   |             |  |  | 3-10 Years | 
|Construction in process        |                                          |             | 2,980   |        |          |   | 5,336   |             |  |  |           | 
|                               |                                          |             |         |        |          |   |         |             | 
|                               |                                          |             | 90,809  |        |          |   | 82,241  |             |  |  |            | 
|Less: Accumulated depreciation |                                          |             | (35,131 | )      |          |   | (37,200 | )           |  |  |            | 
|                               |                                          |             |         |        |          |   |         |             | 
|                               | Total property, plant and equipment, net |             | $       | 55,678 |          |   | $       | 45,041      |  |  |            |  | 
|                               |                                          |             |         |        |          |   |         |             | 





|   |                       
|-- | ----------------------
|G. | Employee Benefit Plans







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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                           |                                               |             |   |       |      |  |   |       |   |  |   |       |  
|---------------------------------------------------------- | --------------------------------------------- | ----------- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                           |                                               | October 31, |  
|                                                           |                                               |             |  
|                                                           |                                               | 2005        |   |       | 2004 |  |   | 2003  |  
|                                                           |                                               |             |   |       |      |  |   |       |  
|Components of net periodic postretirement benefit expense: |                                               |             |   |       |      |  |   |       |   |  |   |      
|                                                           | Service cost                                  |             | $ | 75    |      |  | $ | 75    |   |  | $ | 92    |  
|                                                           | Interest cost                                 |             |   | 69    |      |  |   | 73    |   |  |   | 106   |  
|                                                           | Prior service cost                            |             |   | 106   |      |  |   | 108   |   |  |   | 121   |  
|                                                           | Net (gain) loss recognized                    |             |   | (33   | )    |  |   | (26   | ) |  |   | (3    | )
|                                                           |                                               |             |   |       |      |  |   |       |  
|                                                           | Net periodic postretirement benefit expense   |             | $ | 217   |      |  | $ | 230   |   |  | $ | 316   |  
|                                                           |                                               |             |   |       |      |  |   |       |  
|Funded Status:                                             |                                               |             |   |       |      |  |   |       |   |  |   |      
|                                                           | Retirees                                      |             | $ | 88    |      |  | $ | 94    |   |  | $ | 166   |  
|                                                           | Fully eligible active participants            |             |   | 277   |      |  |   | 507   |   |  |   | 659   |  
|                                                           | Other actual participants                     |             |   | 447   |      |  |   | 754   |   |  |   | 898   |  
|                                                           |                                               |             |   |       |      |  |   |       |  
|                                                           | Accumulated postretirement benefit obligation |             |   | 812   |      |  |   | 1,355 |   |  |   | 1,723 |  
|Less unrecognized balances:                                |                                               |             |   |       |      |  |   |       |   |  |   |      
|                                                           | Prior service cost                            |             |   | 716   |      |  |   | 822   |   |  |   | 1,066 |  
|                                                           | Net actuarial (gain) loss                     |             |   | (977  | )    |  |   | (544  | ) |  |   | (149  | )
|                                                           |                                               |             |   |       |      |  |   |       |  
|                                                           | Net amount recognized                         |             | $ | 1,073 |      |  | $ | 1,077 |   |  | $ | 806   |  
|                                                           |                                               |             |   |       |      |  |   |       |  
|Changes in accumulated postretirement benefit obligation:  |                                               |             |   |       |      |  |   |       |   |  |   |      
|                                                           | Balance at beginning of year                  |             | $ | 1,355 |      |  | $ | 1,723 |   |  | $ | 602   |  
|                                                           | Service cost                                  |             |   | 75    |      |  |   | 75    |   |  |   | 92    |  
|                                                           | Interest cost                                 |             |   | 69    |      |  |   | 73    |   |  |   | 106   |  
|                                                           | Loss due to plan change                       |             |   |      |      |  |   |      |   |  |   | 1,058 |  
|                                                           | Actuarial (gain) loss                         |             |   | (661  | )    |  |   | (316  | ) |  |   | (95   | )
|                                                           | Curtailment (gain)                            |             |   |      |      |  |   | (150  | ) |  |   |      |  
|                                                           | Benefits paid                                 |             |   | (26   | )    |  |   | (50   | ) |  |   | (40   | )
|                                                           |                                               |             |   |       |      |  |   |       |  
|                                                           | Balance at end of year                        |             | $ | 812   |      |  | $ | 1,355 |   |  | $ | 1,723 |  
|                                                           |                                               |             |   |       |      |  |   |       |  
|                                                           | Fair value of plan assets                     |             |   |      |      |  |   |      |   |  |   |      |  
|                                                           |                                               |             |   |       |      |  |   |       |  
|Weighted average assumptions:                              |                                               |             |   |       |      |  |   |       |   |  |   |      
|                                                           | Discount rate                                 |             |   | 5.5   | %    |  |   | 5.8   | % |  |   | 6.0   | %



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                  |  |                  |     | 
|----------------- |  | ---------------- | --- | 
|Years Ending      |  | Expected Benefit |    
|October 31,       |  | Payments         |    
|                  |  |                  |    
|2006              |  | $                | 47  | 
|2007              |  |                  | 51  | 
|2008              |  |                  | 66  | 
|2009              |  |                  | 75  | 
|2010              |  |                  | 90  | 
|2011 through 2015 |  |                  | 465 | 

Employers Accounting for Postretirement Benefits Other
Than Pensions,




|   |               
|-- | --------------
|H. | Long-Term Debt



|                                                                                                                  |                                                    |             |        |        |      |   |       |       | 
|----------------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ----------- | ------ | ------ | ---- | - | ----- | ----- | 
|                                                                                                                  |                                                    | October 31, |       
|                                                                                                                  |                                                    |             |       
|                                                                                                                  |                                                    | 2005        |        |        | 2004 |  
|                                                                                                                  |                                                    |             |        |        |      |  
|Industrial development revenue bonds, maturing in October 2021,
    with annual sinking fund payments of $400,000 |                                                    | $           | 6,400  |        |      | $ | 6,800 |      
|UK Term Loan                                                                                                      |                                                    |             | 10,646 |        |      |   |      |      
|Revolving lines of credit                                                                                         |                                                    |             | 4,259  |        |      |   |      |      
|Capital lease obligations                                                                                         |                                                    |             | 168    |        |      |   | 223   |      
|Other borrowings                                                                                                  |                                                    |             | 58     |        |      |   | 77    |      
|                                                                                                                  |                                                    |             |        |        |      |  
|Subtotal long-term debt and capital lease obligations                                                             |                                                    |             | 21,531 |        |      |   | 7,100 |      
|Less current portion                                                                                              |                                                    |             | (2,095 | )      |      |   | (474  | )    
|                                                                                                                  |                                                    |             |        |        |      |  
|                                                                                                                  | Total long-term debt and capital lease obligations |             | $      | 19,436 |      |   | $     | 6,626 | 
|                                                                                                                  |                                                    |             |        |        |      |  



| |               
| | --------------
| | Long-Term Debt





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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|            |                                 |                 |       |        |         |   |    |       |  |   |       |        | 
|----------- | ------------------------------- | --------------- | ----- | ------ | ------- | - | -- | ----- |  | - | ----- | ------ | 
|Year Ending |                                 | Long-Term       |       |        | Capital |   |    |      
|October 31, |                                 | Debt Maturities |       |        | Leases  |   |    | Total | 
|            |                                 |                 |       |        |         |   |    |       | 
|2006        |                                 | $               | 2,055 |        |         | $ | 40 |       |  | $ | 2,095 |       
|2007        |                                 |                 | 2,529 |        |         |   | 59 |       |  |   | 2,588 |       
|2008        |                                 |                 | 6,788 |        |         |   | 52 |       |  |   | 6,840 |       
|2009        |                                 |                 | 2,529 |        |         |   | 17 |       |  |   | 2,546 |       
|2010        |                                 |                 | 2,529 |        |         |   |   |       |  |   | 2,529 |       
|Thereafter  |                                 |                 | 4,933 |        |         |   |   |       |  |   | 4,933 |       
|            |                                 |                 |       |        |         |   |    |       | 
|            | Total long-term debt maturities |                 | $     | 21,363 |         |   | $  | 168   |  |   | $     | 21,531 | 
|            |                                 |                 |       |        |         |   |    |       | 



|   |             
|-- | ------------
|I. | Income Taxes



|                                  |                                                      |                                       |   |        |       |  |   |        |       | 
|--------------------------------- | ---------------------------------------------------- | ------------------------------------- | - | ------ | ----- |  | - | ------ | ----- | 
|                                  |                                                      | October 31,                           |  
|                                  |                                                      |                                       |  
|                                  |                                                      | 2005                                  |   |        | 2004  | 
|                                  |                                                      |                                       |   |        |       | 
|Current deferred income taxes:    |                                                      |                                       |   |        |       |  |   |       
|                                  | Gross assets                                         |                                       | $ | 3,931  |       |  | $ | 3,289  |      
|                                  | Gross liabilities                                    |                                       |   | (2,095 | )     |  |   | (2,560 | )    
|                                  |                                                      |                                       |   |        |       | 
|                                  |                                                      | Net current deferred income tax asset |   |        | 1,836 |  |   |        | 729   | 
|                                  |                                                      |                                       |   |        |       | 
|Noncurrent deferred income taxes: |                                                      |                                       |   |        |       |  |   |       
|                                  | Gross assets                                         |                                       |   | 2,240  |       |  |   | 1,757  |      
|                                  | Gross liabilities                                    |                                       |   | (2,670 | )     |  |   | (1,145 | )    
|                                  |                                                      |                                       |   |        |       | 
|                                  | Net noncurrent deferred income tax asset (liability) |                                       |   | (430   | )     |  |   | 612    |      
|                                  |                                                      |                                       |   |        |       | 
|                                  |                                                      | Net deferred income tax asset         |   | $      | 1,406 |  |   | $      | 1,341 | 
|                                  |                                                      |                                       |   |        |       | 



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                      |                               |             |        |       |      |   |        |       | 
|------------------------------------- | ----------------------------- | ----------- | ------ | ----- | ---- | - | ------ | ----- | 
|                                      |                               | October 31, |       
|                                      |                               |             |       
|                                      |                               | 2005        |        |       | 2004 |  
|                                      |                               |             |        |       |      |  
|Allowance for doubtful accounts       |                               | $           | 217    |       |      | $ | 232    |      
|Reserve for accrued employee benefits |                               |             | 1,388  |       |      |   | 881    |      
|Warranty reserves                     |                               |             | 608    |       |      |   | 581    |      
|Uncompleted long-term contracts       |                               |             | (1,851 | )     |      |   | (2,560 | )    
|Depreciation and amortization         |                               |             | (1,574 | )     |      |   | (441   | )    
|Deferred compensation                 |                               |             | 781    |       |      |   | 656    |      
|Postretirement benefits liability     |                               |             | 473    |       |      |   | 354    |      
|Accrued legal                         |                               |             | 382    |       |      |   | 357    |      
|Uniform capitalization and inventory  |                               |             | 1,389  |       |      |   | 1,114  |      
|Software development costs            |                               |             | (535   | )     |      |   | (494   | )    
|Deferred rent                         |                               |             |       |       |      |   | 167    |      
|Other                                 |                               |             | 128    |       |      |   | 494    |      
|                                      |                               |             |        |       |      |  
|                                      | Net deferred income tax asset |             | $      | 1,406 |      |   | $      | 1,341 | 
|                                      |                               |             |        |       |      |  



|         |         |                            |      |     |       |  |        |       |      |   |     |       |       | 
|-------- | ------- | -------------------------- | ---- | --- | ----- |  | ------ | ----- | ---- | - | --- | ----- | ----- | 
|         |         | Years Ended October 31,    |     
|         |         |                            |     
|         |         | 2005                       |      |     | 2004  |  |        | 2003  |     
|         |         |                            |      |     |       |  |        |       |     
|Current: |         |                            |      |     |       |  |        |       |      |   |     |      
|         | Federal |                            | $    | 506 |       |  | $      | 1,318 |      |   | $   | 3,527 |      
|         | State   |                            |      | 43  |       |  |        | 186   |      |   |     | 1,970 |      
|         | Foreign |                            |      | 713 |       |  |        |      |      |   |     |      |      
|Deferred |         |                            | (124 | )   |       |  | (1,786 | )     |      |   | 640 |      
|         |         |                            |      |     |       |  |        |       |     
|         |         | Total income tax provision |      | $   | 1,138 |  |        | $     | (282 | ) |     | $     | 6,137 | 
|         |         |                            |      |     |       |  |        |       |     



|                                            |  |                         |     |   |      |  |     |      |  |  |    |  
|------------------------------------------- |  | ----------------------- | --- | - | ---- |  | --- | ---- |  |  | -- | -
|                                            |  | Years Ended October 31, |    
|                                            |  |                         |    
|                                            |  | 2005                    |     |   | 2004 |  |     | 2003 | 
|                                            |  |                         |     |   |      |  |     |      | 
|Statutory rate                              |  |                         | 34  | % |      |  | 34  | %    |  |  | 34 | %
|Revised state tax exposure                  |  |                         | 1   |   |      |  | (15 | )    |  |  |   |  
|State income taxes, net of federal benefit  |  |                         | 3   |   |      |  | 5   |      |  |  | 10 |  
|Release of capital loss valuation allowance |  |                         |    |   |      |  | (20 | )    |  |  |   |  
|Federal extraterritorial income exclusion   |  |                         | (12 | ) |      |  | (27 | )    |  |  |   |  
|Non-taxable interest income                 |  |                         | (7  | ) |      |  | (8  | )    |  |  |   |  
|Other permanent tax items                   |  |                         | 15  |   |      |  | 8   |      |  |  |   |  
|Other                                       |  |                         | (1  | ) |      |  | 2   |      |  |  | 1  |  
|                                            |  |                         |     |   |      |  |     |      | 
|Effective rate                              |  |                         | 33  | % |      |  | (21 | )%   |  |  | 45 | %
|                                            |  |                         |     |   |      |  |     |      | 

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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |    |                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | A $0.4 million benefit was recorded for the years ended
    2005 and 2004 primarily for the benefit of revised
    extraterritorial income exclusion amounts. This benefit was
    derived by calculating the extraterritorial income exclusion
    amount on a transaction by transaction basis in 2004 and 2003,
    as opposed to an aggregate basis as originally estimated;
|
| | b) | A $0.3 million valuation allowance related to capital
    losses was released in 2004. We entered into an agreement in
    2004 to sell a capital asset that will trigger enough capital
    gain to utilize the capital loss carryforward;                                                                                                                                     
|
| | c) | We reduced our income tax provision by $0.2 million in 2004
    due to acceptance by certain state taxing authorities of
    voluntary disclosure agreements; and                                                                                                                                                                                                               
|
| | d) | We increased our income tax provision by $0.3 million in
    2005 related to certain adjustments from audits of our prior
    year federal tax returns.                                                                                                                                                                                                                         





|   |                                     
|-- | ------------------------------------
|J. | Goodwill and Other Intangible Assets

Goodwill and Other Intangible
Assets.




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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                           |                                            |                  |     |       |                  |   |     |            |  |   |              |     |  |   |     |     | 
|------------------------------------------ | ------------------------------------------ | ---------------- | --- | ----- | ---------------- | - | --- | ---------- |  | - | ------------ | --- |  | - | --- | --- | 
|                                           |                                            | October 31, 2005 |     |       | October 31, 2004 |  
|                                           |                                            |                  |     |       |                  |  
|                                           |                                            | Historical       |     |       | Accumulated      |   |     | Historical |  |   | Accumulated  |    
|                                           |                                            | Cost             |     |       | Amortization     |   |     | Cost       |  |   | Amortization |    
|                                           |                                            |                  |     |       |                  |   |     |            |  |   |              |    
|Goodwill not subject to amortization       |                                            | $                | 384 |       |                  | $ | 181 |            |  | $ | 384          |     |  | $ | 181 |    
|Intangible assets subject to amortization: |                                            |                  |     |       |                  |   |     |            |  |   |              |     |  |   |     |    
|                                           | Patents and Trademarks                     |                  |     | 830   |                  |   |     | 613        |  |   |              | 837 |  |   |     | 563 | 
|                                           | Tradenames and unpatented technology  S&I |                  |     | 3,212 |                  |   |     | 139        |  |   |              |    |  |   |     |    | 
|                                           | Backlog  S&I                              |                  |     | 654   |                  |   |     | 439        |  |   |              |    |  |   |     |    | 
|Deferred loan costs                        |                                            |                  | 734 |       |                  |   | 102 |            |  |   | 233          |     |  |   | 35  |    





|   |                              
|-- | -----------------------------
|K. | Commitments and Contingencies



| |               
| | --------------
| | Long-Term Debt





| |       
| | ------
| | Leases



|                        |  |           |       | 
|----------------------- |  | --------- | ----- | 
|Years Ending            |  | Operating |      
|October 31,             |  | Leases    |      
|                        |  |           |      
|2006                    |  | $         | 1,973 | 
|2007                    |  |           | 1,632 | 
|2008                    |  |           | 1,220 | 
|2009                    |  |           | 684   | 
|2010                    |  |           | 16    | 
|Thereafter              |  |           |      | 
|                        |  |           |      
|Total lease commitments |  | $         | 5,525 | 
|                        |  |           |      



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | Letters of Credit and Bonds





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





| |                    
| | -------------------
| | Other Contingencies









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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                  
|-- | -----------------
|L. | Business Segments









|                                                                                                                          |                           |                         |   |         |      |  |   |         |   |  |   |         | 
|------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ----------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | 
|                                                                                                                          |                           | Years Ended October 31, |  
|                                                                                                                          |                           |                         |  
|                                                                                                                          |                           | 2005                    |   |         | 2004 |  |   | 2003    |  
|                                                                                                                          |                           |                         |   |         |      |  |   |         |  
|Revenues:                                                                                                                 |                           |                         |   |         |      |  |   |         |   |  |   |        
|                                                                                                                          | Electrical Power Products |                         | $ | 220,123 |      |  | $ | 173,456 |   |  | $ | 227,012 | 
|                                                                                                                          | Process Control Systems   |                         |   | 36,522  |      |  |   | 32,686  |   |  |   | 26,369  | 
|                                                                                                                          |                           |                         |   |         |      |  |   |         |  
|                                                                                                                          | Total                     |                         | $ | 256,645 |      |  | $ | 206,142 |   |  | $ | 253,381 | 
|                                                                                                                          |                           |                         |   |         |      |  |   |         |  
|Gross profit:                                                                                                             |                           |                         |   |         |      |  |   |         |   |  |   |        
|                                                                                                                          | Electrical Power Products |                         | $ | 33,361  |      |  | $ | 29,122  |   |  | $ | 42,609  | 
|                                                                                                                          | Process Control Systems   |                         |   | 10,499  |      |  |   | 6,855   |   |  |   | 6,187   | 
|                                                                                                                          |                           |                         |   |         |      |  |   |         |  
|                                                                                                                          | Total                     |                         | $ | 43,860  |      |  | $ | 35,977  |   |  | $ | 48,796  | 
|                                                                                                                          |                           |                         |   |         |      |  |   |         |  
|Income (loss) from continuing operations before income taxes and
    cumulative effect of change in accounting principle: |                           |                         |   |         |      |  |   |         |   |  |   |        
|                                                                                                                          | Electrical Power Products |                         | $ | (438    | )    |  | $ | (87     | ) |  | $ | 12,491  | 
|                                                                                                                          | Process Control Systems   |                         |   | 3,890   |      |  |   | 1,451   |   |  |   | 1,141   | 
|                                                                                                                          |                           |                         |   |         |      |  |   |         |  
|                                                                                                                          | Total                     |                         | $ | 3,452   |      |  | $ | 1,364   |   |  | $ | 13,632  | 
|                                                                                                                          |                           |                         |   |         |      |  |   |         |  

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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                              |                           |                         |   |         |         |  |   |         |         | 
|----------------------------- | ------------------------- | ----------------------- | - | ------- | ------- |  | - | ------- | ------- | 
|                              |                           | Years Ended October 31, |  
|                              |                           |                         |  
|                              |                           | 2005                    |   |         | 2004    | 
|                              |                           |                         |   |         |         | 
|Identifiable tangible assets: |                           |                         |   |         |         |  |   |        
|                              | Electrical Power Products |                         | $ | 172,544 |         |  | $ | 114,374 |        
|                              | Process Control Systems   |                         |   | 10,762  |         |  |   | 11,889  |        
|                              | Corporate                 |                         |   | 39,013  |         |  |   | 69,140  |        
|                              |                           |                         |   |         |         | 
|                              |                           | Total                   |   | $       | 222,319 |  |   | $       | 195,403 | 
|                              |                           |                         |   |         |         | 





| |                       
| | ----------------------
| | Geographic Information



|                                                  |                |                         |         |         |      |   |         |         |  |   |         |         | 
|------------------------------------------------- | -------------- | ----------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                  |                | Years Ended October 31, |        
|                                                  |                |                         |        
|                                                  |                | 2005                    |         |         | 2004 |   |         | 2003    | 
|                                                  |                |                         |         |         |      |   |         |         | 
|Europe (including former Soviet Union)            |                | $                       | 6,346   |         |      | $ | 402     |         |  | $ | 843     |        
|Far East                                          |                |                         | 18,729  |         |      |   | 5,550   |         |  |   | 13,120  |        
|Middle East and Africa                            |                |                         | 10,103  |         |      |   | 12,384  |         |  |   | 5,255   |        
|North, Central and South America (excluding U.S.) |                |                         | 29,762  |         |      |   | 10,675  |         |  |   | 20,581  |        
|United States                                     |                |                         | 191,705 |         |      |   | 177,131 |         |  |   | 213,582 |        
|                                                  |                |                         |         |         |      |   |         |         | 
|                                                  | Total revenues |                         | $       | 256,645 |      |   | $       | 206,142 |  |   | $       | 253,381 | 
|                                                  |                |                         |         |         |      |   |         |         | 



|                   |                |             |   |        |        |  |   |        |        | 
|------------------ | -------------- | ----------- | - | ------ | ------ |  | - | ------ | ------ | 
|                   |                | Years Ended |  
|                   |                | October 31, |  
|                   |                |             |  
|                   |                | 2005        |   |        | 2004   | 
|                   |                |             |   |        |        | 
|Long-lived assets: |                |             |   |        |        |  |   |       
|                   | United States  |             | $ | 46,695 |        |  | $ | 45,012 |       
|                   | United Kingdom |             |   | 8,950  |        |  |   |       |       
|                   | Other          |             |   | 33     |        |  |   | 29     |       
|                   |                |             |   |        |        | 
|                   |                | Total       |   | $      | 55,678 |  |   | $      | 45,041 | 
|                   |                |             |   |        |        | 





|   |                            
|-- | ---------------------------
|M. | Consolidation of Operations



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POWELL INDUSTRIES, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|   |                                            
|-- | -------------------------------------------
|N. | Quarterly Results of Operations (unaudited)



|                                  |  |               |        |   |        |   |        |       |  |   |            |  |  |      |        |  |  |   |         | 
|--------------------------------- |  | ------------- | ------ | - | ------ | - | ------ | ----- |  | - | ---------- |  |  | ---- | ------ |  |  | - | ------- | 
|                                  |  | 2005 Quarters |       
|                                  |  |               |       
|                                  |  | First         |        |   | Second |   |        | Third |  |   | Fourth (A) |  |  | 2005 |       
|                                  |  |               |        |   |        |   |        |       |  |   |            |  |  |      |       
|Revenues                          |  | $             | 47,689 |   |        | $ | 58,914 |       |  | $ | 66,915     |  |  | $    | 83,127 |  |  | $ | 256,645 | 
|Gross profit                      |  |               | 6,959  |   |        |   | 8,442  |       |  |   | 12,561     |  |  |      | 15,898 |  |  |   | 43,860  | 
|Net income (loss)                 |  |               | (1,426 | ) |        |   | (295   | )     |  |   | 2,132      |  |  |      | 1,840  |  |  |   | 2,251   | 
|Basic earnings (loss) per share   |  |               | (0.13  | ) |        |   | (0.03  | )     |  |   | 0.20       |  |  |      | 0.17   |  |  |   | 0.21    | 
|Diluted earnings (loss) per share |  |               | (0.13  | ) |        |   | (0.03  | )     |  |   | 0.19       |  |  |      | 0.17   |  |  |   | 0.21    | 

|                                  |  |               |        |  |        |   |        |       |  |   |        |  |  |      |        |   |  |   |         | 
|--------------------------------- |  | ------------- | ------ |  | ------ | - | ------ | ----- |  | - | ------ |  |  | ---- | ------ | - |  | - | ------- | 
|                                  |  | 2004 Quarters |       
|                                  |  |               |       
|                                  |  | First         |        |  | Second |   |        | Third |  |   | Fourth |  |  | 2004 |       
|                                  |  |               |        |  |        |   |        |       |  |   |        |  |  |      |       
|Revenues                          |  | $             | 53,227 |  |        | $ | 51,476 |       |  | $ | 52,805 |  |  | $    | 48,634 |   |  | $ | 206,142 | 
|Gross profit                      |  |               | 9,555  |  |        |   | 8,619  |       |  |   | 9,317  |  |  |      | 8,486  |   |  |   | 35,977  | 
|Net income (loss)                 |  |               | 747    |  |        |   | 360    |       |  |   | 737    |  |  |      | (175   | ) |  |   | 1,669   | 
|Basic earnings (loss) per share   |  |               | 0.07   |  |        |   | 0.03   |       |  |   | 0.07   |  |  |      | (0.02  | ) |  |   | 0.16    | 
|Diluted earnings (loss) per share |  |               | 0.07   |  |        |   | 0.03   |       |  |   | 0.07   |  |  |      | (0.02  | ) |  |   | 0.15    | 






|    |  |                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------
|(A) |  | Net income includes a gain of approximately $1.1 million
    (pre-tax) related to the sale of a facility.

year-to




|   |                 
|-- | ----------------
|O. | Subsequent Event

Form 10-K


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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure





Regulation S-K.


Form 8-K


Regulation S-K.







|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



| |                                                 
| | ------------------------------------------------
| | Evaluation of Disclosure Controls and Procedures



Rules 13a-15(e) 15d-15(e)




| |                                                                     
| | --------------------------------------------------------------------
| | Managements Report on Internal Control Over
    Financial Reporting

Rule 13a-15(f)


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|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|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








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules



| |    |                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | Financial Statements. Reference is made to the Index to
    Consolidated Financial Statements at Item 8 of this report.                                                                                       
|
| | 2. | Financial Statement Schedule. All 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.                                                                                                                                                                                                     

|       |        |  |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                
|------ | ------ |  |  | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |        |  |  | Description of Exhibits
|       |        |  |  |                        
|       | 2.1    |  |  |                        |  | Agreement for the sale and purchase of certain assets and the
    assumption of certain liabilities of Switchgear &
    Instrumentation Limited, dated July 4, 2005 (filed as
    Exhibit 2.1 to our Form 8-K filed July 6, 2005,
    and incorporated herein by reference).                                                                                                                   
|       | 2.2    |  |  |                        |  | Agreement for the sale of freehold land at Ripley Road,
    Bradford, dated July 4, 2005 (filed as Exhibit 2.2 to
    our Form 8-K filed July 6, 2005, and incorporated
    herein by reference).                                                                                                                                                                                              
|       | 3.1    |  |  |                        |  | Certificate of Incorporation of Powell Industries, Inc. filed
    with the Secretary of State of the State of Delaware on
    February 11, 2004 (filed as Exhibit 3.1 to our
    Form 8-A/A filed November 1, 2004, and incorporated
    herein by reference).                                                                                                                                 
|       | 3.2    |  |  |                        |  | By-laws of Powell Industries, Inc. (filed as Exhibit 3.2 to
    our Form 8-A/A filed November 1, 2004, and
    incorporated herein by reference).                                                                                                                                                                                                                                              
|       | 10.1   |  |  |                        |  | Powell Industries, Inc., Incentive Compensation Plan (filed as
    Exhibit 10.1 to our Form 10-K for the fiscal year
    ended October 31, 2003, and incorporated herein by
    reference).                                                                                                                                                                                                    
|       | 10.2   |  |  |                        |  | Description of Supplemental Executive Benefit Plan (filed as
    Exhibit 10 to our Form 10-K for the fiscal year ended
    October 31, 1984, and incorporated herein by reference).                                                                                                                                                                                                            
|       | 10.3   |  |  |                        |  | 1992 Powell Industries, Inc. Stock Option Plan (filed as an
    exhibit to our preliminary proxy statement dated
    January 24, 1992, and incorporated herein by reference).                                                                                                                                                                                                                  
|       | 10.4   |  |  |                        |  | Amendment to 1992 Powell Industries, Inc. Stock Option Plan
    (filed as Exhibit 10.8 to our Form 10-Q for the
    quarter ended April 30, 1996, and incorporated herein by
    reference).                                                                                                                                                                                                   
|       | 10.5   |  |  |                        |  | Amendment to 1992 Powell Industries, Inc. Stock Option Plan (the
    cover of the 1992 Powell Industries, Inc. Stock Option Plan has
    been noted to reflect the increase in the number of shares
    authorized for issuance under the Plan from 2,100,000 to
    2,700,000, which increase was approved by the stockholders of
    the Company at the 2005 Annual Meeting of Stockholders).
|       | 10.6   |  |  |                        |  | Powell Industries, Inc. Directors Fees Program (filed as
    Exhibit 10.7 to our Form 10-K for the fiscal year
    ended October 31, 1992, and incorporated herein by
    reference).                                                                                                                                                                                                         
|       | 10.7   |  |  |                        |  | Powell Industries, Inc. Executive Severance Protection Plan
    (filed as Exhibit 10.7 to our Form 10-K for the fiscal
    year ended October 31, 2002, and incorporated herein by
    reference).                                                                                                                                                                                             
|       | 10.8   |  |  |                        |  | Powell Industries, Inc. Non-Employee Directors Stock Option Plan
    (filed as Exhibit 10.9 to our Form 10-K for the fiscal
    year ended October 31, 2002, and incorporated herein by
    reference).                                                                                                                                                                                        
|       | 10.9   |  |  |                        |  | Powell Industries, Inc. Deferred Compensation Plan (filed as
    Exhibit 10.9 to our Form 10-K for the fiscal year
    ended October 31, 2002, and incorporated herein by
    reference).                                                                                                                                                                                                      
|       | *10.10 |  |  |                        |  | Powell Industries, Inc. Non-Employee Director Restricted Stock
    Plan.                                                                                                                                                                                                                                                                                                                       

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|       |        |  |  |                         |  |                                                                                                                                                                                                                                                                                                                                   
|------ | ------ |  |  | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |        |  |  | Description of Exhibits
|       |        |  |  |                        
|       | 10.11  |  |  |                        |  | Amended Loan Agreement dated October 29, 2004, between
    Powell Industries, Inc. and Bank of America, N.A. (filed as
    Exhibit 10.10 to our Form 10-K for the fiscal year
    ended October 31, 2004, and incorporated herein by
    reference).                                                                              
|       | 10.12  |  |  |                        |  | Credit and Reimbursement Agreement dated April 15, 2004,
    between Powell Industries, Inc. and Bank of America, N.A. (filed
    as Exhibit 10.11 to our Form 10-K for the fiscal year
    ended October 31, 2004, and incorporated herein by
    reference).                                                                    
|       | 10.13  |  |  |                        |  | Credit Agreement dated as of June 29, 2005 among Powell
    Industries, Inc.; Inhoco 3210 Limited and Switchgear &
    Instrumentation Properties Limited; and Bank of America and the
    other lenders parties thereto (filed as Exhibit 10.1 to our
    Form 8-K filed July 6, 2005, and incorporated herein
    by reference.)
|       | *10.14 |  |  |                        |  | First Amendment to Credit Agreement dated November 7, 2005
    among Powell Industries, Inc.; Inhoco 3210 Limited (n/k/a
    Switchgear & Instrumentation Limited);
    Switchgear & Instrumentation Properties Limited; Bank
    of America, N.A.; and the other lenders parties thereto.                                        
|       | *10.15 |  |  |                        |  | Second Amendment to Credit Agreement dated January 11, 2006
    among Powell Industries, Inc., Switchgear &
    Instrumentation Limited, Switchgear & Instrumentation
    Properties Limited, Bank of America, N.A., and the other lenders
    parties thereto.                                                                   
|       | *10.16 |  |  |                        |  | Banking facilities between HSBC Bank plc and
    Switchgear & Instrumentation Limited and
    Switchgear & Instrumentation Properties Limited dated
    September 12, 2005.                                                                                                                                                       
|       | *21.1  |  |  |                        |  | Subsidiaries of Powell Industries, Inc.                                                                                                                                                                                                                                                                                           
|       | *23.1  |  |  |                        |  | Consent of Deloitte & Touche, LLP                                                                                                                                                                                                                                                                                                 
|       | *23.2  |  |  |                        |  | Consent of PricewaterhouseCoopers, LLP                                                                                                                                                                                                                                                                                            
|       | *31.1  |  |  |                        |  | Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)/15d-14(a).                                                                                                                                                                                                                                                
|       | *31.2  |  |  |                        |  | Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a).                                                                                                                                                                                                                                                
|       | *32.1  |  |  |                        |  | Certification of Chief Executive Officer Pursuant to
    Section 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                
|       | *32.2  |  |  |                        |  | Certification of Chief Financial Officer Pursuant to
    Section 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                






|  |               
|- | --------------
|* | Filed herewith

61



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##### Table of Contents






SIGNATURES






| |                        
| | -----------------------
| | Powell Industries, Inc.



| |    |                     
| | -- | --------------------
| | By | /s/ Thomas W. Powell

| |                                      
| | -------------------------------------
| |                                      
| | Thomas W. Powell                     
| | President and Chief Executive Officer
| | (Principal Executive Officer)        



| |    |                   
| | -- | ------------------
| | By | /s/ Don R. Madison

| |                                             
| | --------------------------------------------
| |                                             
| | Don R. Madison                              
| | Vice President and Chief Financial Officer  
| | (Principal Financial and Accounting Officer)



|                                                   |  |                       |  | 
|-------------------------------------------------- |  | --------------------- |  | 
|Signature                                          |  | Title                
|                                                   |  |                      
|                                                  
|/s/ Thomas W. PowellThomas W. Powell               |  | Chairman of the Board
|                                                  
|/s/ Joseph L. BechererJoseph L. Becherer           |  | Director             
|                                                  
|/s/ Eugene L. ButlerEugene L. Butler               |  | Director             
|                                                  
|/s/ James F. ClarkJames F. Clark                   |  | Director             
|                                                  
|/s/ Stephen W. Seale,
    Jr.Stephen W. Seale, Jr. |  | Director             
|                                                  
|/s/ Robert C. TranchonRobert C. Tranchon           |  | Director             
|                                                  
|/s/ Ronald J. WolnyRonald J. Wolny                 |  | Director             



62



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##### Table of Contents



EXHIBIT INDEX


|       |        |  |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                
|------ | ------ |  |  | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |        |  |  | Description of Exhibits
|       |        |  |  |                        
|       | 2.1    |  |  |                        |  | Agreement for the sale and purchase of certain assets and the
    assumption of certain liabilities of Switchgear &
    Instrumentation Limited, dated July 4, 2005 (filed as
    Exhibit 2.1 to our Form 8-K filed July 6, 2005,
    and incorporated herein by reference).                                                                                                                   
|       | 2.2    |  |  |                        |  | Agreement for the sale of freehold land at Ripley Road,
    Bradford, dated July 4, 2005 (filed as Exhibit 2.2 to
    our Form 8-K filed July 6, 2005, and incorporated
    herein by reference).                                                                                                                                                                                              
|       | 3.1    |  |  |                        |  | Certificate of Incorporation of Powell Industries, Inc. filed
    with the Secretary of State of the State of Delaware on
    February 11, 2004 (filed as Exhibit 3.1 to our
    Form 8-A/A filed November 1, 2004, and incorporated
    herein by reference).                                                                                                                                 
|       | 3.2    |  |  |                        |  | By-laws of Powell Industries, Inc. (filed as Exhibit 3.2 to
    our Form 8-A/A filed November 1, 2004, and
    incorporated herein by reference).                                                                                                                                                                                                                                              
|       | 10.1   |  |  |                        |  | Powell Industries, Inc., Incentive Compensation Plan (filed as
    Exhibit 10.1 to our Form 10-K for the fiscal year
    ended October 31, 2003, and incorporated herein by
    reference).                                                                                                                                                                                                    
|       | 10.2   |  |  |                        |  | Description of Supplemental Executive Benefit Plan (filed as
    Exhibit 10 to our Form 10-K for the fiscal year ended
    October 31, 1984, and incorporated herein by reference).                                                                                                                                                                                                            
|       | 10.3   |  |  |                        |  | 1992 Powell Industries, Inc. Stock Option Plan (filed as an
    exhibit to our preliminary proxy statement dated
    January 24, 1992, and incorporated herein by reference).                                                                                                                                                                                                                  
|       | 10.4   |  |  |                        |  | Amendment to 1992 Powell Industries, Inc. Stock Option Plan
    (filed as Exhibit 10.8 to our Form 10-Q for the
    quarter ended April 30, 1996, and incorporated herein by
    reference).                                                                                                                                                                                                   
|       | 10.5   |  |  |                        |  | Amendment to 1992 Powell Industries, Inc. Stock Option Plan (the
    cover of the 1992 Powell Industries, Inc. Stock Option Plan has
    been noted to reflect the increase in the number of shares
    authorized for issuance under the Plan from 2,100,000 to
    2,700,000, which increase was approved by the stockholders of
    the Company at the 2005 Annual Meeting of Stockholders).
|       | 10.6   |  |  |                        |  | Powell Industries, Inc. Directors Fees Program (filed as
    Exhibit 10.7 to our Form 10-K for the fiscal year
    ended October 31, 1992, and incorporated herein by
    reference).                                                                                                                                                                                                         
|       | 10.7   |  |  |                        |  | Powell Industries, Inc. Executive Severance Protection Plan
    (filed as Exhibit 10.7 to our Form 10-K for the fiscal
    year ended October 31, 2002, and incorporated herein by
    reference).                                                                                                                                                                                             
|       | 10.8   |  |  |                        |  | Powell Industries, Inc. Non-Employee Directors Stock Option Plan
    (filed as Exhibit 10.9 to our Form 10-K for the fiscal
    year ended October 31, 2002, and incorporated herein by
    reference).                                                                                                                                                                                        
|       | 10.9   |  |  |                        |  | Powell Industries, Inc. Deferred Compensation Plan (filed as
    Exhibit 10.9 to our Form 10-K for the fiscal year
    ended October 31, 2002, and incorporated herein by
    reference).                                                                                                                                                                                                      
|       | *10.10 |  |  |                        |  | Powell Industries, Inc. Non-Employee Director Restricted Stock
    Plan.                                                                                                                                                                                                                                                                                                                       
|       | 10.11  |  |  |                        |  | Amended Loan Agreement dated October 29, 2004, between
    Powell Industries, Inc. and Bank of America, N.A. (filed as
    Exhibit 10.10 to our Form 10-K for the fiscal year
    ended October 31, 2004, and incorporated herein by
    reference).                                                                                                                                           
|       | 10.12  |  |  |                        |  | Credit and Reimbursement Agreement dated April 15, 2004,
    between Powell Industries, Inc. and Bank of America, N.A. (filed
    as Exhibit 10.11 to our Form 10-K for the fiscal year
    ended October 31, 2004, and incorporated herein by
    reference).                                                                                                                                 
|       | 10.13  |  |  |                        |  | Credit Agreement dated as of June 29, 2005 among Powell
    Industries, Inc.; Inhoco 3210 Limited and Switchgear &
    Instrumentation Properties Limited; and Bank of America and the
    other lenders parties thereto (filed as Exhibit 10.1 to our
    Form 8-K filed July 6, 2005, and incorporated herein
    by reference.)                                                             



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##### Table of Contents



|       |        |  |  |                         |  |                                                                                                                                                                                                                                                                                           
|------ | ------ |  |  | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |        |  |  | Description of Exhibits
|       |        |  |  |                        
|       | *10.14 |  |  |                        |  | First Amendment to Credit Agreement dated November 7, 2005
    among Powell Industries, Inc.; Inhoco 3210 Limited (n/k/a
    Switchgear & Instrumentation Limited);
    Switchgear & Instrumentation Properties Limited; Bank
    of America, N.A.; and the other lenders parties thereto.
|       | *10.15 |  |  |                        |  | Second Amendment to Credit Agreement dated January 11, 2006
    among Powell Industries, Inc., Switchgear &
    Instrumentation Limited, Switchgear & Instrumentation
    Properties Limited, Bank of America, N.A., and the other lenders
    parties thereto.                           
|       | *10.16 |  |  |                        |  | Banking facilities between HSBC Bank plc and
    Switchgear & Instrumentation Limited and
    Switchgear & Instrumentation Properties Limited dated
    September 12, 2005.                                                                                                               
|       | *21.1  |  |  |                        |  | Subsidiaries of Powell Industries, Inc.                                                                                                                                                                                                                                                   
|       | *23.1  |  |  |                        |  | Consent of Deloitte & Touche, LLP                                                                                                                                                                                                                                                         
|       | *23.2  |  |  |                        |  | Consent of PricewaterhouseCoopers, LLP                                                                                                                                                                                                                                                    
|       | *31.1  |  |  |                        |  | Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)/15d-14(a).                                                                                                                                                                                                        
|       | *31.2  |  |  |                        |  | Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a).                                                                                                                                                                                                        
|       | *32.1  |  |  |                        |  | Certification of Chief Executive Officer Pursuant to
    Section 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                        
|       | *32.2  |  |  |                        |  | Certification of Chief Financial Officer Pursuant to
    Section 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                        






|  |               
|- | --------------
|* | Filed herewith