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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the quarterly period ended March 31, 2007.
 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.
  DELAWARE
    
    88-0106100(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)8550 Mosley Drive, Houston, Texas
    
    77075-1180(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
  þ o
  o þ o
  o þ




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Part I  Financial InformationItem 1. Condensed Consolidated Financial StatementsCondensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21Part II  Other InformationItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23Item 6. Exhibits
    
    
    24Signatures
    
    
    25Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements
 Powell Industries, Inc. and Subsidiaries
 
 Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
 March 31,
    
    
    September 30,2007
    
    
    2006(See Note A)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    3,062
    
    
    $
    10,495Accounts receivable, less allowance for doubtful accounts of $882 and
$1,044, respectively
    
    
    112,343
    
    
    
    108,002Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    55,104
    
    
    
    43,067Inventories, net
    
    
    40,899
    
    
    
    28,268Income taxes receivable
    
    
    2,674
    
    
    
    Deferred income taxes
    
    
    2,235
    
    
    
    1,270Prepaid expenses and other current assets
    
    
    4,176
    
    
    
    2,398Total Current Assets
    
    
    220,493
    
    
    
    193,500Property, plant and equipment, net
    
    
    66,769
    
    
    
    60,336Goodwill
    
    
    1,084
    
    
    
    1,084Intangible assets, net
    
    
    30,563
    
    
    
    32,263Other assets
    
    
    5,698
    
    
    
    5,495Total Assets
    
    $
    324,607
    
    
    $
    292,678Liabilities and Stockholders EquityCurrent Liabilities:Current maturities of long-term debt and capital lease obligations
    
    $
    8,311
    
    
    $
    8,510Income taxes payable
    
    
    1,803
    
    
    
    733Accounts payable
    
    
    57,313
    
    
    
    46,515Accrued salaries, bonuses and commissions
    
    
    13,006
    
    
    
    13,183Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    29,037
    
    
    
    16,752Accrued product warranty
    
    
    4,664
    
    
    
    3,443Other accrued expenses
    
    
    7,641
    
    
    
    9,476Total Current Liabilities
    
    
    121,775
    
    
    
    98,612Long-term debt and capital lease obligations, net of current maturities
    
    
    34,213
    
    
    
    33,886Deferred compensation
    
    
    1,736
    
    
    
    1,735Postretirement benefits obligation
    
    
    1,196
    
    
    
    1,146Other liabilities
    
    
    36
    
    
    
    90Total Liabilities
    
    
    158,956
    
    
    
    135,469Commitments and contingencies (Note G)Minority interest
    
    
    387
    
    
    
    278Stockholders Equity:Preferred stock, par value $.01; 5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, par value $.01; 30,000,000 shares authorized; 11,064,379 and
11,001,733 shares issued, respectively; 11,064,379 and 10,924,046 shares
outstanding, respectively
    
    
    111
    
    
    
    110Additional paid-in capital
    
    
    15,430
    
    
    
    12,776Retained earnings
    
    
    148,942
    
    
    
    144,659Treasury stock, -0- and 77,687 shares, respectively, at cost
    
    
    
    
    
    
    (525
    )Accumulated other comprehensive income
    
    
    1,509
    
    
    
    817Deferred compensation
    
    
    (728
    )
    
    
    (906
    )Total Stockholders Equity
    
    
    165,264
    
    
    
    156,931Total Liabilities and Stockholders Equity
    
    $
    324,607
    
    
    $
    292,678
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Powell Industries, Inc. and Subsidiaries
 
 Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedMarch 31, 2007
    
    
    April 30, 2006
    
    
    March 31, 2007
    
    
    April 30, 2006(See Note A)
    
    
    (See Note A)(As restated,
    
    
    
    
    
    
    (As restated,see Note J)
    
    
    
    
    
    
    see Note J)Revenues
    
    $
    141,912
    
    
    $
    98,431
    
    
    $
    264,688
    
    
    $
    182,244Cost of goods sold
    
    
    119,147
    
    
    
    78,220
    
    
    
    221,833
    
    
    
    147,660Gross profit
    
    
    22,765
    
    
    
    20,211
    
    
    
    42,855
    
    
    
    34,584Selling, general and administrative expenses
    
    
    18,452
    
    
    
    13,851
    
    
    
    34,726
    
    
    
    26,835Income before interest, income taxes and
minority interest
    
    
    4,313
    
    
    
    6,360
    
    
    
    8,129
    
    
    
    7,749Interest expense
    
    
    919
    
    
    
    326
    
    
    
    1,607
    
    
    
    661Interest income
    
    
    (120
    )
    
    
    (237
    )
    
    
    (300
    )
    
    
    (539
    )Income before income taxes and minority
interest
    
    
    3,514
    
    
    
    6,271
    
    
    
    6,822
    
    
    
    7,627Income tax provision
    
    
    1,210
    
    
    
    2,473
    
    
    
    2,430
    
    
    
    2,979Minority interest in net income (loss)
    
    
    50
    
    
    
    (3
    )
    
    
    109
    
    
    
    15Net income
    
    $
    2,254
    
    
    $
    3,801
    
    
    $
    4,283
    
    
    $
    4,633Net earnings per common share:Basic
    
    $
    0.20
    
    
    $
    0.35
    
    
    $
    0.39
    
    
    $
    0.43Diluted
    
    $
    0.20
    
    
    $
    0.34
    
    
    $
    0.39
    
    
    $
    0.42Weighted average shares:Basic
    
    
    11,033
    
    
    
    10,865
    
    
    
    10,987
    
    
    
    10,859Diluted
    
    
    11,123
    
    
    
    11,110
    
    
    
    11,090
    
    
    
    11,061
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Powell Industries, Inc. and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 Six Months EndedMarch 31, 2007
    
    
    April 30, 2006(See Note A)(As restated,see Note J)Operating Activities:Net income
    
    $
    4,283
    
    
    $
    4,633Adjustments to reconcile net income to net cash used in operating activities:Depreciation
    
    
    3,254
    
    
    
    2,921Amortization
    
    
    1,936
    
    
    
    542Amortization of unearned restricted stock
    
    
    133
    
    
    
    103Stock-based compensation
    
    
    375
    
    
    
    735Bad debt expense
    
    
    84
    
    
    
    186Loss on disposition of assets
    
    
    300
    
    
    
    43Deferred income taxes
    
    
    456
    
    
    
    72Minority interest earnings
    
    
    109
    
    
    
    14Other
    
    
    
    
    
    
    18Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (3,663
    )
    
    
    (17,758
    )Costs and estimated earnings in excess of billings on uncompleted
contracts
    
    
    (11,816
    )
    
    
    (8,113
    )Inventories
    
    
    (12,439
    )
    
    
    (4,429
    )Prepaid expenses and other current assets
    
    
    (6,036
    )
    
    
    (1,192
    )Other assets
    
    
    (122
    )
    
    
    1,002Accounts payable and income taxes payable
    
    
    11,363
    
    
    
    3,406Accrued liabilities
    
    
    (969
    )
    
    
    2,038Billings in excess of costs and estimated earnings on uncompleted
contracts
    
    
    12,137
    
    
    
    2,494Deferred compensation
    
    
    180
    
    
    
    (153
    )Other liabilities
    
    
    (5
    )
    
    
    61Net cash used in operating activities
    
    
    (440
    )
    
    
    (13,377
    )Investing Activities:Proceeds from sale of fixed assets
    
    
    155
    
    
    
    29Purchases of property, plant and equipment
    
    
    (9,678
    )
    
    
    (2,645
    )Proceeds from sale of short-term auction rate securities
    
    
    
    
    
    
    8,200Net cash provided by (used in) investing activities
    
    
    (9,523
    )
    
    
    5,584Financing Activities:Borrowings on U.S. revolving line of credit
    
    
    28,480
    
    
    
    3,265Payments on U.S. revolving line of credit
    
    
    (28,980
    )
    
    
    (3,265
    )Borrowings on UK revolving line of credit
    
    
    1,959
    
    
    
    Payments on UK revolving line of credit
    
    
    (1,177
    )
    
    
    (913
    )Payments on UK term loan
    
    
    
    
    
    
    (548
    )Proceeds from short-term financing
    
    
    
    
    
    
    897Payments on short-term financing
    
    
    (307
    )
    
    
    Payments on capital lease obligations
    
    
    (26
    )
    
    
    (54
    )Payments on tax exempt industrial development revenue bonds
    
    
    (400
    )
    
    
    Tax benefit from exercise of stock options
    
    
    575
    
    
    
    86Proceeds from exercise of stock options
    
    
    2,096
    
    
    
    176Net cash provided by (used in) financing activities
    
    
    2,220
    
    
    
    (356
    )Net decrease in cash and cash equivalents
    
    
    (7,743
    )
    
    
    (8,149
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    310
    
    
    
    494Cash and cash equivalents at beginning of period
    
    
    10,495
    
    
    
    24,844Cash and cash equivalents at end of period
    
    $
    3,062
    
    
    $
    17,189
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POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 
 Notes To Condensed Consolidated Financial Statements (Unaudited)
 A.
    
    OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESChange in Fiscal Year-EndEffective September 30, 2006, we changed our fiscal year end from October 31 to
September 30. We have not restated prior year financial statements to conform to the new
fiscal year as we do not believe the results would be materially different because our
operations and cash flows do not fluctuate on a seasonal basis and the change in fiscal year
end is only 31 days. Therefore, our consolidated operating results and cash flows for the
three and six months ended March 31, 2007 will be compared to the operating results and cash
flows for the three and six months ended April 30, 2006.OverviewWe develop, design, manufacture and service equipment and systems for the management and
control of electrical energy and other critical processes. Headquartered in Houston, Texas,
we serve the transportation, environmental, energy, industrial, and utility industries. Our
business operations are consolidated into two business segments: Electrical Power Products
and Process Control Systems. Financial information related to these business segments is
included in Note I herein.Note B contains information related to our acquisition of medium voltage switchgear and
circuit breaker product lines from General Electric in August 2006, herein referred to as
Power/Vac®. Additionally, we acquired a service company located in Louisiana in
July 2006. The operating results of both acquisitions are included in our Electrical Power
Products business segment from their respective acquisition dates.Basis of PresentationThe condensed consolidated financial statements include the accounts of Powell Industries,
Inc. and its wholly-owned subsidiaries (we, us, our, Powell, or the Company). All
significant intercompany accounts and transactions are eliminated in consolidation.The accompanying unaudited condensed consolidated financial statements have been prepared
using accounting principles generally accepted in the United States of America (GAAP) for
interim financial information in accordance with the rules of Regulation S-X of the
Securities and Exchange Commission. Accordingly, these interim financial statements do not
include all annual disclosures required by GAAP. These financial statements should be read
in conjunction with the financial statements and related footnotes included in the Companys
Amendment No. 1 to Transition Report on Form 10-K/A for the transition period ended September
30, 2006. In the opinion of management, these condensed consolidated financial statements
include all adjustments, consisting of normal recurring adjustments, that are necessary for a
fair presentation of our financial position, results of operations and cash flows. The
interim period results are not necessarily indicative of the results to be expected for the
full fiscal year.Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the condensed consolidated
financial statements and accompanying footnotes. The amounts we record for insurance claims,
warranties, legal and other contingent liabilities require judgments regarding the amount of
expenses that will ultimately be incurred. We base our estimates on historical experience
and on various other assumptions, as well as the specific circumstances surrounding these
contingent liabilities, in evaluating the amount of liability that should be recorded.
Estimates may change as new events occur, additional information becomes available, or
operating environments change. Actual results may differ from our estimates. The most
significant estimates used in our financial statements
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affect revenue and cost recognition for construction contracts, legal accruals, the allowance
for doubtful accounts, self-insurance, warranty accruals and postretirement benefit
obligations.Foreign Currency TranslationThe functional currency for our foreign subsidiaries is the local currency in which the
entity is located. The financial statements of all subsidiaries with a functional currency
other than the U.S. Dollar have been translated into U.S. Dollars in accordance with
Statement of Financial Accounting Standards No. 52, Foreign Currency Translation. All
assets and liabilities of foreign operations are translated into U.S. Dollars using
period-end exchange rates and all revenues and expenses are translated at average rates
during the respective period. The U.S. Dollar results that arise from such translation, as
well as exchange gains and losses on intercompany balances of a long-term investment nature,
are included in the cumulative currency translation adjustments in accumulated other
comprehensive income in stockholders equity.Stock-Based CompensationUnder Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based
Payment(SFAS No. 123R), we use the Black-Scholes option pricing model to estimate the
fair value of our stock options. We apply the expanded guidance under SFAS No. 123R for the
development of our assumptions used as inputs for the Black-Scholes option pricing model for
grants issued after November 1, 2005. Expected volatility is determined using historical
volatilities based on historical stock prices for a period equal to the expected term. The
expected volatility assumption is adjusted if future volatility is expected to vary from
historical experience. The expected term of options represents the period of time that
options granted are expected to be outstanding and falls between the options vesting and
contractual expiration dates. The risk-free interest rate is based on the yield at the date
of grant of a zero-coupon U.S. Treasury bond whose maturity period equals the options
expected term.Accumulated Other Comprehensive IncomeAccumulated other comprehensive income, which is included as a component of stockholders
equity net of tax, includes unrealized gains or losses on currency translation adjustments in
foreign consolidated subsidiaries.New Accounting StandardsIn July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation
No. 48, Accounting for Uncertainty in Income Taxes(FIN 48). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in the Companys financial
statements in accordance with FASB Statement No. 109, Accounting for Income Taxes.
FIN 48 also prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to
be taken in a tax return and provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and transition. The
provisions of FIN 48 are to be applied to all tax positions upon initial adoption of
this standard. Only tax positions that meet the more likely than not recognition
threshold at the effective date may be recognized or continue to be recognized upon
adoption of FIN 48. FIN 48 is effective for our fiscal year beginning October 1, 2007.
The Company is currently evaluating the impact of adopting FIN 48.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,which
defines fair value, establishes a framework for measuring fair value in accordance with
generally accepted accounting principles, and expands disclosures about fair value
measurements. SFAS No. 157 does not require any new fair value measurements, but
provides guidance on how to measure fair value by providing a fair value hierarchy used
to classify the source of the information. SFAS No. 157 is effective for our fiscal
year beginning October 1, 2008. The Company is currently evaluating the impact of
adopting SFAS No. 157.In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Benefits, an Amendment of FASB Statements No.
87, 88, 106 and 123R.SFAS No. 158 requires an employer with a defined benefit pension
plan to (1) recognize the funded status of the benefit plan in its statement of
financial position, (2) recognize as a component of other comprehensive income, net of
tax, the
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gains or losses and prior service costs or credits that arise during the period but are not
recognized as components of net periodic benefit cost pursuant to FASB Statement No. 87 or
FASB Statement No. 106, (3) measure defined benefit plan assets and obligations as of the
date of the employers fiscal year-end statement of financial position, and (4) disclose in
the notes to the financial statements additional information about certain effects on net
periodic benefit cost for the next fiscal year that arise from delayed recognition of the
gains or losses, prior service costs or credits, and transition asset or obligation. SFAS
No. 158 is required to be adopted by September 30, 2007. We do not expect the adoption of
SFAS No. 158 to have a material impact on our consolidated financial position.In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities.SFAS No. 159 permits companies to measure many
financial instruments and certain other assets and liabilities at fair value on an
instrument-by-instrument basis. The objective is to improve financial reporting by
providing companies with the opportunity to mitigate volatility in reported earnings
caused by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. We do not expect the adoption of SFAS No. 159 to
have a material impact on our consolidated financial position or results of operations.B.
    
    ACQUISITIONSLouisiana AcquisitionOn July 14, 2006, we acquired certain assets and hired the service and administrative
employees of an electrical services company in Louisiana for approximately $1.5 million. The
purchase price was paid from existing cash and short-term marketable securities. This
acquisition allows us to extend sales and service to the Eastern Gulf Coast Region. As this
acquisition was not material to the consolidated financial results or financial position of
the Company, no additional disclosure has been included in these Notes to Condensed
Consolidated Financial Statements.Acquisition of Medium Voltage Switchgear and Circuit Breaker Product Line (Power/Vac®)
from General Electric CompanyOn August 7, 2006, we purchased certain assets related to the manufacturing of American
National Standards Institute (ANSI) medium voltage switchgear and circuit breaker business
of General Electric Companys (GE) Consumer & Industrial unit located at its West
Burlington, Iowa facility for $32.0 million, not including expenses. In connection with the
acquisition, we entered into a 15 year supply agreement with GE pursuant to which GE will
purchase from the Company (subject to limited conditions for exceptions) all of its
requirements for ANSI medium voltage switchgear and circuit breakers and other related
equipment and components. We have also agreed to purchase certain of our required product
components and subassemblies from GE. In addition, GE has agreed to provide services related
to transitioning the product line from West Burlington, Iowa to the Companys facilities in
Houston, Texas. The relocation of the product line includes all related product technology
and design information, engineering, manufacturing and related activities and is estimated to
be completed during the first half of fiscal 2008. GE will continue to manufacture products
and supply them to Powell during the transition period. Following the transition period, the
new product line will be manufactured in Houston, Texas and will require between 300 and 350
employees. This acquisition has supported our strategy to expand our product offerings and
enhance our customer base. This product line is typically marketed to customers in the
distribution, commercial, industrial, and utilities sectors. The Power/Vac® product line is
being marketed primarily through the existing sales force of GE as well as our own sales
team.The $32.0 million purchase price consisted of an initial payment of $8.5 million paid at
closing from existing cash and short-term marketable securities with the remainder payable in
four installments every 10 months over 40 months from August 2006 of $5.5 million, $6.25
million, $6.25 million and $5.5 million, respectively. The deferred installments, which do
not bear interest, resulted in a discounted purchase price of approximately $28.8 million
based on an assumed discount rate of 6.6%. Approximately $1.2 million of expenses were
incurred related to the acquisition resulting in a total discounted purchase price of $30.0
million. We are also required to purchase the remaining inventory at the end of the
transition period for the carrying value of such inventory in
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sellers accounting records and have the option to purchase additional equipment after
completion of the transition and product relocation to Houston, Texas.We entered into a lease agreement for a facility in Houston, Texas, in connection with this
acquisition, which increased our manufacturing space by approximately 140,000 square feet.
The lease costs approximately $34,000 per month.The discounted purchase price (including expenses) allocation was as follows (in thousands):
 EstimatedAmount
    
    
    LifeSupply agreement
    
    $
    17,570
    
    
    15 yearsUnpatented technology
    
    
    5,300
    
    
    6 yearsNon-compete agreement
    
    
    4,010
    
    
    5 yearsTrademark
    
    
    2,650
    
    
    15 yearsEquipment, tools and dies
    
    
    400
    
    
    
    5 to 7 yearsGoodwill (tax deductible)
    
    
    88
    
    
    
    Total purchase price
    
    $
    30,018
 The amounts assigned to intangible assets were estimated by management with the assistance of
an independent valuation specialist. These assets will be amortized over their estimated
useful lives which approximate the related contractual terms of the applicable agreements.The pro forma data presented below reflects the results for the second quarter and first six
months of fiscal 2006 of Powell Industries, Inc. and the acquisition of Power/Vac®
assuming the acquisition was completed on November 1, 2005 (in thousands, except per share
data):
 Three Months
    
    Six MonthsEnded
    
    EndedApril 30, 2006
    
    April 30, 2006Pro forma revenues
    
    $
    122,845
    
    
    $
    229,186Pro forma net income
    
    $
    4,504
    
    
    $
    6,470Net earnings per common share:Pro forma:Basic
    
    $
    0.41
    
    
    $
    0.60Diluted
    
    $
    0.41
    
    
    $
    0.58As reported:Basic
    
    $
    0.35
    
    
    $
    0.43Diluted
    
    $
    0.34
    
    
    $
    0.42
 The unaudited pro forma information includes the operating results of
Power/Vac® prior to the acquisition date, adjusted to include the pro forma impact
of the following:
 1)
    
    Impact of additional interest expense related to the purchase price;2)
    
    Impact of amortization expense related to intangible assets; and3)
    
    Adjustment to the income tax provision.
 The unaudited pro forma results above do not purport to be indicative of the results that
would have been obtained if the acquisition occurred as of the beginning of the period
presented or that may be obtained in the future.
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C.
    
    EARNINGS PER SHAREThe following table sets forth the computation of basic and diluted earnings per share (in
thousands, except per share data):
 Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    April 30,
    
    
    March 31,
    
    
    April 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(As restated,
    
    
    
    
    
    
    (As restated,see Note J)
    
    
    
    
    
    
    see Note J)Numerator:Net income
    
    $
    2,254
    
    
    $
    3,801
    
    
    $
    4,283
    
    
    $
    4,633Denominator:Denominator for basic earnings
per share-weighted average shares
    
    
    11,033
    
    
    
    10,865
    
    
    
    10,987
    
    
    
    10,859Dilutive effect of stock options and restricted stock
    
    
    90
    
    
    
    245
    
    
    
    103
    
    
    
    202Denominator for diluted earnings
per share-adjusted weighted average
shares with assumed conversions
    
    
    11,123
    
    
    
    11,110
    
    
    
    11,090
    
    
    
    11,061Net earnings per share:Basic
    
    $
    0.20
    
    
    $
    0.35
    
    
    $
    0.39
    
    
    $
    0.43Diluted
    
    $
    0.20
    
    
    $
    0.34
    
    
    $
    0.39
    
    
    $
    0.42
 Excluded from the computation of diluted earnings per share were options to purchase
approximately 24,000 shares of common stock for the three and six months ended April 30,
2006. These options were excluded from the computation because the effect of the options was
not dilutive as their exercise prices were greater than the average market price of our
common stock.D.
    
    DETAIL OF SELECTED BALANCE SHEET ACCOUNTSAllowance for Doubtful AccountsActivity in our allowance for doubtful accounts receivable consists of the following (in
thousands):
 Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    April 30,
    
    
    March 31,
    
    
    April 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at beginning of period
    
    $
    1,119
    
    
    $
    665
    
    
    $
    1,044
    
    
    $
    567Adjustments to the allowance
    
    
    (143
    )
    
    
    83
    
    
    
    (84
    )
    
    
    181Deductions for uncollectible accounts
written off, net of recoveries
    
    
    (94
    )
    
    
    5
    
    
    
    (94
    )
    
    
    5Increase due to foreign currency translation
    
    
    
    
    
    
    3
    
    
    
    16
    
    
    
    3Balance at end of period
    
    $
    882
    
    
    $
    756
    
    
    $
    882
    
    
    $
    756
 Warranty AccrualActivity in our product warranty accrual consists of the following (in thousands):
 10




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    April 30,
    
    
    March 31,
    
    
    April 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at beginning of period
    
    $
    3,836
    
    
    $
    2,103
    
    
    $
    3,443
    
    
    $
    1,836Adjustments to the accrual
    
    
    1,220
    
    
    
    1,644
    
    
    
    2,204
    
    
    
    2,371Deductions for warranty charges
    
    
    (394
    )
    
    
    (436
    )
    
    
    (1,036
    )
    
    
    (896
    )Increase due to foreign currency translation
    
    
    2
    
    
    
    26
    
    
    
    53
    
    
    
    26Balance at end of period
    
    $
    4,664
    
    
    $
    3,337
    
    
    $
    4,664
    
    
    $
    3,337
 InventoriesThe components of inventories are summarized below (in thousands):
 March 31,
    
    
    September 30,2007
    
    
    2006Raw materials, parts and subassemblies
    
    $
    27,486
    
    
    $
    18,772Work-in-progress
    
    
    13,413
    
    
    
    9,496Total inventories
    
    $
    40,899
    
    
    $
    28,268
 Costs and Estimated Earnings on Uncompleted ContractsThe components of costs and estimated earnings and related amounts billed on uncompleted
contracts are summarized below (in thousands):
 March 31,
    
    
    September 30,2007
    
    
    2006Costs incurred on uncompleted contracts
    
    $
    356,198
    
    
    $
    300,247Estimated earnings
    
    
    71,974
    
    
    
    64,964428,172
    
    
    
    365,211Less: Billings to date
    
    
    402,105
    
    
    
    338,896$
    26,067
    
    
    $
    26,315Included in the accompanying balance sheets under the following captions:Costs and estimated earnings in excess of billings on uncompleted contracts
    
    $
    55,104
    
    
    $
    43,067Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    (29,037
    )
    
    
    (16,752
    )$
    26,067
    
    
    $
    26,315
 E.
    
    COMPREHENSIVE INCOMEComprehensive income is as follows (in thousands):
 Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    April 30,
    
    
    March 31,
    
    
    April 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(As restated,
    
    
    
    
    
    
    (As restated,see Note J)
    
    
    
    
    
    
    see Note J)Net income
    
    $
    2,254
    
    
    $
    3,801
    
    
    $
    4,283
    
    
    $
    4,633Other comprehensive income, net of tax
Unrealized gain (loss) on
foreign currency translation
translation
    
    
    (24
    )
    
    
    468
    
    
    
    692
    
    
    
    481Comprehensive income
    
    $
    2,230
    
    
    $
    4,269
    
    
    $
    4,975
    
    
    $
    5,114
 11




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##### Table of Contents



F.
    
    LONG-TERM DEBTLong-term debt consists of the following (in thousands):
 March 31,
    
    
    September 30,2007
    
    
    2006US Revolver
    
    $
    2,500
    
    
    $
    3,000UK Revolver
    
    
    4,514
    
    
    
    2,434UK Term Loan
    
    
    8,831
    
    
    
    9,550Deferred acquisition payable
    
    
    20,273
    
    
    
    20,273Industrial development revenue bonds
    
    
    6,000
    
    
    
    6,400Capital lease obligations
    
    
    90
    
    
    
    115Other borrowings
    
    
    316
    
    
    
    624Subtotal long-term debt and capital lease obligations
    
    
    42,524
    
    
    
    42,396Less current portion
    
    
    (8,311
    )
    
    
    (8,510
    )Total long-term debt and capital lease obligations
    
    $
    34,213
    
    
    $
    33,886
 US and UK RevolversOn August 4, 2006, we amended our existing credit agreement (Amended Credit Agreement) with
a major domestic bank and certain other financial institutions. This amendment to our credit
facility was made to expand our US borrowing capacity by $20.0 million to provide partial
funding for the acquisition of the Power/Vac® product line and to provide working
capital support for the Company. The Amended Credit Agreement expires on December 31, 2010.
Expenses associated with the issuance of the Amended Credit Agreement are classified as
deferred loan costs and totaled $576,000 and are being amortized as a non-cash charge to
interest expense over the term of the agreement.The Amended Credit Agreement provides for a 1) $42.0 million revolving credit facility (US
Revolver), 2) £4.0 million (pounds sterling) (approximately $7.9 million) revolving credit
facility (UK Revolver) and 3) £6.0 million (approximately $11.8 million) single advance
term loan (UK Term Loan). The Amended Credit Agreement contains certain covenants with
respect to minimum earnings (as defined), maximum capital expenditures, minimum tangible net
worth and restricts our ability to pay dividends. Obligations are secured by the stock of
our subsidiaries. The interest rate for amounts outstanding under the Amended Credit
Agreement is a floating rate based upon LIBOR plus a margin which can range from 0% to 1%, as
determined by the Companys consolidated leverage ratio as defined within the Amended Credit
Agreement.The US Revolver and the UK Revolver provide for the issuance of letters of credit which would
reduce the amounts which may be borrowed under the respective revolvers. The amount
available under the Amended Credit Agreement is reduced by $15.3 million for our outstanding
letters of credit at March 31, 2007. There was £2.3 million, or approximately $4.5 million,
outstanding under the UK Revolver and $2.5 million outstanding under the US Revolver as of
March 31, 2007.As of March 31, 2007, we had $24.2 million total available on the US Revolver and £1.7
million, or approximately $3.4 million, total available on the UK Revolver.UK Term LoanThe UK Term Loan provides for borrowings of £6.0 million, or approximately $11.8 million, for
our financing requirements related to the acquisition of S&I. Approximately £5.0 million, or
approximately $9.4 million, of this facility was used to finance the portion of the purchase
price of the Switchgear & Instrumentation Limited business (S&I) that was denominated in
pounds sterling. The remaining £1.0 million, or approximately $1.9 million, was utilized as
the initial working capital for S&I. Quarterly installments of £300,000, or approximately
$0.6 million, began March 31, 2006 with the final payment due on March 31, 2010. As of March
31, 2007, £4.5 million, or $8.8 million, was outstanding under the UK Term Loan. The
interest rate for amounts outstanding under the UK Term Loan is a floating rate based upon
LIBOR plus a margin which can range from 0% to 1%, as determined by the Companys
consolidated leverage ratio as defined within the Amended Credit Agreement.Deferred Acquisition PayableIn connection with the acquisition of the Power/Vac® product line, $8.5 million of
the total purchase price of $32.0 million was paid to GE at closing on August 7, 2006. The
remaining balance of the purchase price of $23.5 million, with no interest accruing, is
payable in four installments every 10 months over 40 months from the acquisition date. The
deferred installments result in a discounted payable of approximately $28.8 million at
March 31, 2007 based on an assumed discount rate of 6.6%. The current portion of this
deferred acquisition payable is approximately $5.2 million and is included in the current
portion of long-term debt.
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Tax Exempt Industrial Development Revenue BondsWe borrowed $8.0 million in October 2001 through a loan agreement funded with proceeds from
tax-exempt industrial development revenue bonds (Bonds). These Bonds were issued by the
Illinois Development Finance Authority and were used for the completion of our Northlake,
Illinois facility. Pursuant to the Bond issuance, a reimbursement agreement between the
Company and a major domestic bank required an issuance by the bank of an irrevocable
direct-pay letter of credit (Bond LC) to the Bonds trustee to guarantee payment of the
Bonds principal and interest when due. The Bond LC is subject to both early termination and
extension provisions customary to such agreements. While the Bonds mature in 2021, the
reimbursement agreement requires annual redemptions of $400,000 that commenced on October 25,
2002. A sinking fund is used for the redemption of the
Bonds. The Bonds bear interest at a floating rate determined weekly by the Bonds
remarketing agent, which was the underwriter for the Bonds and is an affiliate of the bank.
This interest rate was 3.76% per annum on March 31, 2007.We were previously engaged in an audit with the Internal Revenue Service (IRS) related to
our Bonds. The IRS has reviewed information related to these Bonds and, in the second
quarter of 2007, has decided in our favor, without penalty.Capital Leases and OtherSome machinery and equipment used in our manufacturing facilities were financed through
capital lease agreements. These capital lease agreements are collateralized by the leased
property. The capital lease obligations are at a fixed interest rate of 3%.G.
    
    COMMITMENTS AND CONTINGENCIESLetters of Credit and BondsCertain customers require us to post a bank letter of credit guarantee or performance bonds
issued by a surety. These guarantees and performance bonds assure our customers that we will
perform under terms of our contract. In the event of default, the customer may demand payment
from the bank under a letter of credit or performance by the surety under a performance bond.
To date, there have been no significant expenses related to either for the periods reported.
We were contingently liable for secured and unsecured letters of credit of $16.0 million as
of March 31, 2007 under the US Revolver. We also had performance bonds totaling approximately $87.0 million
outstanding at March 31, 2007.In March 2007, we renewed and amended our facility agreement (Facility Agreement) with a
large international bank. The Facility Agreement provides for 1) £10.0 million in bonds
(approximately $19.6 million), 2) £2.5 million of forward exchange contracts and currency
options (approximately $4.9 million), and 3) the issuance of bonds and the entering into of
forward exchange contracts and currency options. At March 31,
2007, we had outstanding a total
of £8.1 million, or approximately $15.9 million under
this Facility Agreement.ContingenciesThe Company previously entered into a construction joint venture agreement to supply,
install, and commission a Supervisory Control and Data Acquisition System (SCADA) to
monitor and control the distribution and delivery of fresh water to the City and County of
San Francisco Public Utility Commission (Commission). The project was substantially
completed and has been performing to the satisfaction of the Commission. However, various
factors outside of the control of the Company and its joint venture partner caused numerous
changes and additions to the work that in turn delayed the completion of the project. The
Commission has withheld liquidated damages and earned contract payments from the joint
venture. The Company has made claims against the Commission for various matters including
compensation for extra work and delay to the project.On May 1, 2007, the jury delivered its verdict in favor of the Company. In accordance with
court procedures, the Court is currently reviewing the jurys proposed monetary award and
several other pending motions. The jurys
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##### Table of Contents



verdict is also subject to appeal. However, based
upon the jurys verdict, we anticipate that we will be able to recover the approximately $2.1
million recorded in the consolidated balance sheet at March 31, 2007.See Note F for discussion related to our tax exempt industrial development revenue bonds.H.
    
    STOCK-BASED COMPENSATIONRefer to the Companys Amendment No. 1 to Transition Report on Form 10-K/A for the transition
period ended September 30, 2006 for a full description of the Companys existing stock-based
compensation plans.Stock OptionsStock option activity for the six months ended March 31, 2007 is as follows:
 RemainingWeighted-Average
    
    AggregateStock

    
    
    Weighted-Average
    
    Contractual Term
    
    Intrinsic ValueOptions
    
    Exercise Price
    
    (years)
    
    (in thousands)Outstanding at September 30, 2006
    
    
    732,770
    
    
    $
    17.37Granted
    
    
    
    
    
    
    Exercised
    
    
    (126,833
    )
    
    
    17.02Forfeited
    
    
    
    
    
    
    Outstanding at March 31, 2007
    
    
    605,937
    
    
    
    17.44
    
    
    
    3.43
    
    
    $
    6,612Exercisable at March 31, 2007
    
    
    326,657
    
    
    
    17.44
    
    
    
    2.38
    
    
    $
    3,565
 Additionally, 5,100 shares were issued in fiscal 2007 related to options exercised in
fiscal 2006.Restricted Stock and Restricted Stock UnitsIn September 2006, our Board of Directors adopted, and in February 2007, the Companys
stockholders approved, the 2006 Equity Compensation Plan which became retroactively effective
to September 29, 2006. Under the Plan, any employee of the Company and its subsidiaries and
consultants are eligible to participate in the Plan and receive awards. Awards can take the
form of options, stock appreciation rights, stock awards and performance unit awards. A
total of 750,000 shares of our common stock are available for issuance under this Plan.In October 2006, subject to stockholder approval of the 2006 Equity Compensation Plan, the
Company granted approximately 107,000 restricted stock units (RSUs) with a fair value of
$31.86 to certain officers and key employees. The fair value of the RSUs was based on the
closing price of the Companys common stock as reported on the Nasdaq Global Market on
February 23, 2007, which was the date stockholders approved our 2006 Equity Compensation
Plan. The actual amount of RSUs earned will be based on the level of performance achieved
relative to established goals for the three year performance cycle beginning October 1, 2006
to September 30, 2009 and range from 0% to 150% of the target RSUs granted. The vesting
period ranges from one to three years. The performance goal is based on cumulative earnings
per share over the three year performance cycle. The RSUs do not have voting
rights of common stock and the shares of common stock underlying the RSUs are not considered
issued and outstanding.As of March 31, 2007, no compensation expense related to the RSUs was recognized, as the
performance goal is not expected to be met as of the date of this report.I.
    
    BUSINESS SEGMENTSWe manage our business through operating subsidiaries, which are comprised of two reportable
business segments: Electrical Power Products and Process Control Systems. Electrical Power
Products includes equipment and systems for the distribution and control of electrical
energy. Process Control Systems consists
 14




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##### Table of Contents



principally of instrumentation, computer controls,
communications, and data management systems to control and manage critical processes.The operating results of the Louisiana acquisition and the Power/Vac® product
lines are included in our Electrical Power Products business segment from their respective
acquisition dates.The tables below reflect certain information relating to our operations by segment. All
revenues represent sales from unaffiliated customers. The accounting policies of the
segments are the same as those described in the summary of significant accounting policies.
Corporate expenses and certain assets are allocated to the operating segments primarily based
on revenues. The corporate assets are mainly cash and cash equivalents.Detailed information regarding our business segments is shown below (in thousands):
 Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    April 30,
    
    
    March 31,
    
    
    April 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(As restated,
    
    
    
    
    
    
    (As restated,see Note J)
    
    
    
    
    
    
    see Note J)Revenues:Electrical Power Products
    
    $
    136,034
    
    
    $
    91,875
    
    
    $
    253,377
    
    
    $
    168,517Process Control Systems
    
    
    5,878
    
    
    
    6,556
    
    
    
    11,311
    
    
    
    13,727Total
    
    $
    141,912
    
    
    $
    98,431
    
    
    $
    264,688
    
    
    $
    182,244Gross profit:Electrical Power Products
    
    $
    20,933
    
    
    $
    18,250
    
    
    $
    39,659
    
    
    $
    30,910Process Control Systems
    
    
    1,832
    
    
    
    1,961
    
    
    
    3,196
    
    
    
    3,674Total
    
    $
    22,765
    
    
    $
    20,211
    
    
    $
    42,855
    
    
    $
    34,584Income before income taxes and minority interest:Electrical Power Products
    
    $
    3,113
    
    
    $
    5,906
    
    
    $
    6,338
    
    
    $
    6,901Process Control Systems
    
    
    401
    
    
    
    365
    
    
    
    484
    
    
    
    726Total
    
    $
    3,514
    
    
    $
    6,271
    
    
    $
    6,822
    
    
    $
    7,627
 March 31,
    
    
    September 30,2007
    
    
    2006Identifiable tangible assets:Electrical Power Products
    
    $
    272,495
    
    
    $
    238,125Process Control Systems
    
    
    8,366
    
    
    
    8,813Corporate
    
    
    11,657
    
    
    
    11,853Total
    
    $
    292,518
    
    
    $
    258,791
 In addition, the Electrical Power Products business segment had $1,084,000 and
$1,084,000 of goodwill and $30,563,000 and $32,263,000 of intangible assets as of March 31,
2007 and September 30, 2006, respectively. Additionally, Corporate had $442,000 and $540,000
of deferred loan costs as of March 31, 2007 and September 30, 2006, respectively, which are
not included in identifiable tangible assets above.
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##### Table of Contents



J.
    
    ACCOUNTING RESTATEMENTIn April 2007, the Company concluded that certain accounting errors found at one of its
domestic divisions would require the restatement of certain of its previously issued
consolidated financial statements. These accounting errors related to certain adjusting
entries pertaining to the reconciliation process for work-in-process inventory and accounts
payable. These accounting errors were discovered by a new controller who had just joined
this division. This restatement increased cost of goods sold and reduced net income for the
periods stated below.As a result of such accounting errors, the Company has filed Amendment No. 1 to its
Transition Report on Form 10-K/A for the transition period ended September 30, 2006 and filed
Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the quarter ended December 31,
2006. In addition, the Company is in the process of amending its Quarterly Reports for each
of the 2006 fiscal quarters.Previously issued financial statements that have been impacted herein are the unaudited
Condensed Consolidated Statements of Operations for the three and six months ended April 30,
2006 and the unaudited Condensed Consolidated Statement of Cash Flows for the six months
ended April 30, 2006. Such financial statements will be restated as described in the
preceding paragraph.The effects of the restatement adjustments on the Companys unaudited Condensed Consolidated
Statements of Operations follow (in thousands):
 Three Months
    
    
    Six MonthsEnded
    
    
    EndedApril 30, 2006
    
    
    April 30, 2006Cost of goods sold:As previously reported
    
    $
    77,688
    
    
    $
    146,724Adjustments
    
    
    532
    
    
    
    936As restated
    
    $
    78,220
    
    
    $
    147,660Gross Profit:As previously reported
    
    $
    20,743
    
    
    $
    35,520Adjustments to cost of goods sold
    
    
    (532
    )
    
    
    (936
    )As restated
    
    $
    20,211
    
    
    $
    34,584Income before interest, income taxes and minority interest:As previously reported
    
    $
    6,892
    
    
    $
    8,685Adjustments to cost of goods sold
    
    
    (532
    )
    
    
    (936
    )As restated
    
    $
    6,360
    
    
    $
    7,749Income before income taxes and minority interest:As previously reported
    
    $
    6,803
    
    
    $
    8,563Adjustments to cost of goods sold
    
    
    (532
    )
    
    
    (936
    )As restated
    
    $
    6,271
    
    
    $
    7,627Net income:As previously reported
    
    $
    4,145
    
    
    $
    5,238Adjustments to cost of goods sold
    
    
    (532
    )
    
    
    (936
    )Income tax benefit
    
    
    188
    
    
    
    331As restated
    
    $
    3,801
    
    
    $
    4,633Net earnings per common share:Basic:As previously reported
    
    $
    0.38
    
    
    $
    0.48Adjustments to cost of goods sold
    
    
    (0.03
    )
    
    
    (0.05
    )As restated
    
    $
    0.35
    
    
    $
    0.43Diluted:As previously reported
    
    $
    0.37
    
    
    $
    0.47Adjustments to cost of goods sold
    
    
    (0.03
    )
    
    
    (0.05
    )As restated
    
    $
    0.34
    
    
    $
    0.42
 16




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##### Table of Contents



Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of Operations
 The following discussion of our financial condition and results of operations should be read in
conjunction with the accompanying condensed consolidated financial statements and related notes
included elsewhere in this Form 10-Q and Amendment No. 1 to Transition Report on Form 10-K/A for
the eleven months ended September 30, 2006 ( Form 10-K/A ) as filed with the Securities and
Exchange Commission. Any forward-looking statements made by or on our behalf are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned that such forward-looking statements involve risks and uncertainties in that the actual
results may differ materially from those projected in the forward-looking statements. Important
factors that could cause actual results to differ include risks set forth in Item 1A. Risk
Factors included in our Form 10-K/A .
 Overview
   ® ®
 ® ® ®
  Results of Operations
 Revenue and Gross Profit
 ® ®
 17




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##### Table of Contents



®
 ® ® ®
 Electrical Power Products
 ®
 ® ®
 ®
 ® ®
 Process Control Systems
   18




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##### Table of Contents



Consolidated Selling, General and Administrative Expenses
 ®
 ®
 Interest Income and Expense
 ®
  Provision for Income Taxes
  Net Income
 ®
 Backlog
 ®
 19




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##### Table of Contents



Liquidity and Capital Resources
  ®
   Operating Activities
  Investing Activities
  Financing Activities
  Outlook
  ® ®
  ®
 20




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##### Table of Contents



Item 3. Quantitative And Qualitative Disclosures About Market Risk
    
 Item 4. Controls And Procedures
 Restatement
   Evaluation of Disclosure Controls and Procedures
  21




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  Remediation Plan
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
  22




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  Votes Cast
    
    Votes Cast
    
    VotesNominee
    
    For
    
    Against
    
    Withheld
    
    Abstentions
    
    Non-VotesJoseph L.
Becherer
    
    
    10,458,223
    
    
    
    41,959
    
    
    
    500,597
    
    
    
    
    
    
    
    Thomas W. Powell
    
    
    10,455,615
    
    
    
    88,288
    
    
    
    456,876
    
    
    
    
    
    
    
    
  Votes Cast
    
    VotesVotes Cast For
    
    Against
    
    Withheld
    
    Abstentions
    
    Non-Votes7,310,878
    
    1,954,689
    
    374,983
    
    15,555
    
    1,344,674
 23




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##### Table of Contents



Item 6. Exhibits
 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 -
    
    Bylaws of Powell Industries, Inc. (filed as Exhibit 3.2 to our Form
8-A/A filed November 1, 2004, and incorporated herein by reference).*31.1 -
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*31.2 -
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.*32.1 -
    
    Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.*32.2 -
    
    Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith. 24




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##### Table of Contents



SIGNATURES
  
 May 24, 2007
    
    
    
    /s/ THOMAS W. POWELLDate
    
    
    
    Thomas W. PowellChairman and Chief Executive Officer(Principal Executive Officer)May 24, 2007
    
    
    
    /s/ DON R. MADISONDate
    
    
    
    Don R. MadisonExecutive Vice PresidentChief Financial and Administrative Officer(Principal Financial and Accounting Officer)
 25




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Exhibit Title3.1 -
    
    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 -
    
    Bylaws of Powell Industries, Inc. (filed as Exhibit 3.2 to our Form 8-A/A filed
November 1, 2004, and incorporated herein by reference).*31.1 -
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2 -
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1 -
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2 -
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith. 26