##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark
One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
 COMMISSION FILE NUMBER 001-32582
 PIKE ELECTRIC CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-3112047(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 100 Pike Way, PO Box 868, Mount Airy, NC 27030  (Address of principal executive office)   (336) 789-2171  (Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 Yes o No þ




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##### 



PIKE ELECTRIC CORPORATION
FORM 10-Q
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2008
 INDEX
 Part I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Condensed consolidated balance sheets
    
    
    1Condensed consolidated statements of income
    
    
    2Condensed consolidated statements of cash flows
    
    
    3Notes to condensed consolidated financial statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    21Item 6. Exhibits
    
    
    22Signatures
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32.1




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 PIKE ELECTRIC CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except per share amounts)
 December 31,
    
    
    June 30,2008
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    5,591
    
    
    $
    11,357Accounts receivable from customers, net
    
    
    78,393
    
    
    
    62,224Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    54,344
    
    
    
    40,410Inventories
    
    
    9,715
    
    
    
    8,343Prepaid expenses and other
    
    
    5,424
    
    
    
    5,123Deferred income taxes
    
    
    14,011
    
    
    
    15,376Total current assets
    
    
    167,478
    
    
    
    142,833Property and equipment, net
    
    
    225,091
    
    
    
    229,119Goodwill
    
    
    104,387
    
    
    
    94,402Other intangibles, net
    
    
    42,372
    
    
    
    40,065Deferred loan costs, net
    
    
    2,378
    
    
    
    2,778Other assets
    
    
    1,464
    
    
    
    1,463Total assets
    
    $
    543,170
    
    
    $
    510,660LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    12,090
    
    
    $
    10,867Accrued compensation
    
    
    19,178
    
    
    
    22,157Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    6,732
    
    
    
    397Accrued expenses and other
    
    
    8,931
    
    
    
    5,018Income taxes payable
    
    
    6,331
    
    
    
    442Current portion of deferred compensation
    
    
    1,365
    
    
    
    3,666Current portion of insurance and claim accruals
    
    
    30,637
    
    
    
    28,873Total current liabilities
    
    
    85,264
    
    
    
    71,420Long-term debt
    
    
    140,500
    
    
    
    140,500Insurance and claim accruals, net of current portion
    
    
    6,694
    
    
    
    7,989Deferred compensation, net of current portion
    
    
    5,241
    
    
    
    6,283Deferred income taxes
    
    
    57,474
    
    
    
    62,416Other liabilities
    
    
    5,009
    
    
    
    1,100Commitments and contingenciesStockholders equity:Preferred stock, par value $0.001 per share; 100,000 authorized shares; no
shares issued and outstanding
    
    
    
    
    
    
    Common stock, par value $0.001 per share; 100,000 authorized shares; 33,385
and 33,183 shares issued and outstanding at December 31, 2008 and
June 30, 2008, respectively
    
    
    6,427
    
    
    
    6,427Additional paid-in capital
    
    
    150,625
    
    
    
    148,288Accumulated other comprehensive loss, net of taxes
    
    
    (1,947
    )
    
    
    (806
    )Retained earnings
    
    
    87,883
    
    
    
    67,043Total stockholders equity
    
    
    242,988
    
    
    
    220,952Total liabilities and stockholders equity
    
    $
    543,170
    
    
    $
    510,660
   1




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##### Table of Contents



PIKE ELECTRIC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
(In thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    144,586
    
    
    $
    143,116
    
    
    $
    330,093
    
    
    $
    282,852Cost of operations
    
    
    126,150
    
    
    
    118,653
    
    
    
    266,696
    
    
    
    235,110Gross profit
    
    
    18,436
    
    
    
    24,463
    
    
    
    63,397
    
    
    
    47,742General and administrative expenses
    
    
    11,169
    
    
    
    10,564
    
    
    
    24,470
    
    
    
    20,876Loss on sale and impairment of property
and equipment
    
    
    612
    
    
    
    1,939
    
    
    
    854
    
    
    
    1,984Income from operations
    
    
    6,655
    
    
    
    11,960
    
    
    
    38,073
    
    
    
    24,882Other expense (income):Interest expense
    
    
    2,730
    
    
    
    3,774
    
    
    
    5,066
    
    
    
    8,146Other, net
    
    
    (301
    )
    
    
    (64
    )
    
    
    (508
    )
    
    
    (125
    )Total other expense
    
    
    2,429
    
    
    
    3,710
    
    
    
    4,558
    
    
    
    8,021Income before income taxes
    
    
    4,226
    
    
    
    8,250
    
    
    
    33,515
    
    
    
    16,861Income tax expense
    
    
    1,655
    
    
    
    3,171
    
    
    
    12,675
    
    
    
    6,498Net income
    
    $
    2,571
    
    
    $
    5,079
    
    
    $
    20,840
    
    
    $
    10,363Earnings per share:Basic
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.63
    
    
    $
    0.32Diluted
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.62
    
    
    $
    0.31Shares used in computing earnings per share:Basic
    
    
    33,012
    
    
    
    32,833
    
    
    
    32,999
    
    
    
    32,764Diluted
    
    
    33,699
    
    
    
    33,668
    
    
    
    33,747
    
    
    
    33,677
   2




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PIKE ELECTRIC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 Six Months EndedDecember 31,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    20,840
    
    
    $
    10,363Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    18,820
    
    
    
    18,712Non-cash interest expense
    
    
    767
    
    
    
    1,620Deferred income taxes
    
    
    (1,283
    )
    
    
    (4,402
    )Loss on sale and impairment of property and equipment
    
    
    854
    
    
    
    1,984Equity compensation expense
    
    
    1,497
    
    
    
    1,312Excess tax benefit from stock-based compensation
    
    
    (168
    )
    
    
    (957
    )Changes in operating assets and liabilities:Accounts receivable and costs and estimated earnings in excess
of billings on uncompleted contracts
    
    
    (11,388
    )
    
    
    (4,984
    )Inventories, prepaid expenses and other
    
    
    (1,989
    )
    
    
    (747
    )Insurance and claim accruals
    
    
    469
    
    
    
    2,005Accounts payable and other
    
    
    (1,648
    )
    
    
    (3,975
    )Deferred compensation
    
    
    (3,710
    )
    
    
    (3,034
    )Net cash provided by operating activities
    
    
    23,061
    
    
    
    17,897Cash flows from investing activities:Purchases of property and equipment
    
    
    (10,432
    )
    
    
    (3,584
    )Business acquisitions, net
    
    
    (22,635
    )
    
    
    Net proceeds from sale of property and equipment
    
    
    3,649
    
    
    
    6,215Net cash (used in) provided by investing activities
    
    
    (29,418
    )
    
    
    2,631Cash flows from financing activities:Principal payments on long-term debt
    
    
    
    
    
    
    (24,800
    )Borrowings under revolving credit facility
    
    
    84,705
    
    
    
    10,775Repayments under revolving credit facility
    
    
    (84,705
    )
    
    
    (9,975
    )Proceeds from exercise of stock options and employee stock purchases
    
    
    423
    
    
    
    1,108Excess tax benefit from stock-based compensation
    
    
    168
    
    
    
    957Net cash provided by (used in) financing activities
    
    
    591
    
    
    
    (21,935
    )Net decrease in cash and cash equivalents
    
    
    (5,766
    )
    
    
    (1,407
    )Cash and cash equivalents beginning of year
    
    
    11,357
    
    
    
    1,467Cash and cash equivalents end of period
    
    $
    5,591
    
    
    $
    60
   3




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PIKE ELECTRIC CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and six months ended December 31, 2008 and 2007
 (In thousands, except per share amounts)
 1. Basis of Presentation
  2. Business
    Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Core services
    
    $
    133,695
    
    
    
    92.5
    %
    
    $
    123,527
    
    
    
    86.3
    %
    
    $
    241,532
    
    
    
    73.2
    %
    
    $
    258,401
    
    
    
    91.4
    %Storm restoration
services
    
    
    10,891
    
    
    
    7.5
    %
    
    
    19,589
    
    
    
    13.7
    %
    
    
    88,561
    
    
    
    26.8
    %
    
    
    24,451
    
    
    
    8.6
    %Total
    
    $
    144,586
    
    
    
    100.0
    %
    
    $
    143,116
    
    
    
    100.0
    %
    
    $
    330,093
    
    
    
    100.0
    %
    
    $
    282,852
    
    
    
    100.0
    %
 3. Energy Delivery Services Acquisition
   4




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##### Table of Contents



Current assets
    
    $
    19,227Property and equipment
    
    
    6,245Customer relationships
    
    
    3,400Non-compete agreements
    
    
    700Deferred tax asset
    
    
    1,562Goodwill
    
    
    9,985Total assets acquired
    
    
    41,119Current liabilities
    
    
    (14,484
    )Non-current liabilities
    
    
    (4,000
    )Total liabilities assumed
    
    
    (18,484
    )Net assets
    
    $
    22,635
   Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    144,586
    
    
    $
    165,332
    
    
    $
    348,141
    
    
    $
    326,411Net income
    
    $
    2,571
    
    
    $
    3,649
    
    
    $
    20,351
    
    
    $
    6,295Basic earnings per common share
    
    $
    0.08
    
    
    $
    0.11
    
    
    $
    0.62
    
    
    $
    0.19Diluted earnings per common share
    
    $
    0.08
    
    
    $
    0.11
    
    
    $
    0.60
    
    
    $
    0.19
 4. Stock-Based Compensation
   5




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5. Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Basic:Net income
    
    $
    2,571
    
    
    $
    5,079
    
    
    $
    20,840
    
    
    $
    10,363Weighted average common shares
    
    
    33,012
    
    
    
    32,833
    
    
    
    32,999
    
    
    
    32,764Basic earnings per share
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.63
    
    
    $
    0.32Diluted:Net income
    
    $
    2,571
    
    
    $
    5,079
    
    
    $
    20,840
    
    
    $
    10,363Weighted average common shares
    
    
    33,012
    
    
    
    32,833
    
    
    
    32,999
    
    
    
    32,764Potential common stock arising from stock
options and restricted stock
    
    
    687
    
    
    
    835
    
    
    
    748
    
    
    
    913Weighted average common shares  diluted
    
    
    33,699
    
    
    
    33,668
    
    
    
    33,747
    
    
    
    33,677Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.62
    
    
    $
    0.31
  6. Fair Value of Financial Instruments
 Fair Value Measurements
 Effective Date of FASB
Statement No. 157
  
    
    Level 1  Valuations based on quoted prices in active markets for
identical instruments that we are able to access. Since valuations
are based on quoted prices that are readily and regularly available in
an active market, valuation of these products does not entail a
significant degree of judgment.
    
    Level 2  Valuations based on quoted prices in active markets for
instruments that are similar, or quoted prices in markets that are not
active for identical or similar instruments, and model-derived
valuations in which all significant inputs and significant value
drivers are observable in active markets.
    
    Level 3  Valuations based on inputs that are unobservable and
significant to the overall fair value measurement.
  6




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December 31,Description
    
    2008
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest rate swap agreements
    
    $
    (3,195
    )
    
    $
    
    
    
    $
    (3,195
    )
    
    $
    Diesel fuel swap agreements
    
    
    (1,596
    )
    
    
    
    
    
    
    (1,596
    )
    
    
    Total
    
    $
    (4,791
    )
    
    $
    
    
    
    $
    (4,791
    )
    
    $
    
 7. Income Taxes
  8. Derivative Instruments, Other Comprehensive Income and Comprehensive Income
   Interest Rate Risk
    7




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##### Table of Contents



Diesel Fuel Risk
    Accumulated OCI
  For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net accumulated derivative (loss) income deferred
at beginning of period
    
    $
    (668
    )
    
    $
    43
    
    
    $
    (806
    )
    
    $
    (8
    )Deferral of net derivative loss in accumulated other
comprehensive loss
    
    
    (1,495
    )
    
    
    (203
    )
    
    
    (1,588
    )
    
    
    (160
    )Reclassification of net derivative income (loss) to
income
    
    
    216
    
    
    
    (100
    )
    
    
    447
    
    
    
    (92
    )Net accumulated derivative loss deferred at
end of period
    
    $
    (1,947
    )
    
    $
    (260
    )
    
    $
    (1,947
    )
    
    $
    (260
    )
  8




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Comprehensive
Income
  For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    2,571
    
    
    $
    5,079
    
    
    $
    20,840
    
    
    $
    10,363Change in fair value of diesel fuel cash
flow hedge, net of income taxes
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    110Change in fair valur of interest rate cash
flow hedges, net of income taxes
    
    
    (1,279
    )
    
    
    (362
    )
    
    
    1,140
    
    
    
    (362
    )Comprehensive income
    
    $
    1,292
    
    
    $
    4,776
    
    
    $
    21,980
    
    
    $
    10,111
 9. Recent Accounting Pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51
 Disclosures about Derivative Instruments and
Hedging Activities . Accounting for Derivative Instruments and Hedging Activities,
  9




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10. Commitments and Contingencies
 Litigation
  Performance Bonds
  Operating Leases
   10




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Introduction
    Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Core services
    
    $
    133.7
    
    
    
    92.5
    %
    
    $
    123.5
    
    
    
    86.3
    %
    
    $
    241.5
    
    
    
    73.2
    %
    
    $
    258.4
    
    
    
    91.4
    %Storm restoration services
    
    
    10.9
    
    
    
    7.5
    %
    
    
    19.6
    
    
    
    13.7
    %
    
    
    88.6
    
    
    
    26.8
    %
    
    
    24.5
    
    
    
    8.6
    %Total
    
    $
    144.6
    
    
    
    100.0
    %
    
    $
    143.1
    
    
    
    100.0
    %
    
    $
    330.1
    
    
    
    100.0
    %
    
    $
    282.9
    
    
    
    100.0
    %
 Critical Accounting Policies
   11




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##### Table of Contents



Operational and Other Factors
  
    
    General economic conditions may impact utility maintenance expenditures, and certain of
our customers powerline maintenance projects may be temporarily deferred. We continue to
work closely with all customers to provide a skilled, flexible work force.
 
    
    When we add new customers and arrangements, we generally experience an increase in
costs, including the costs of training and outfitting our crews and spending on equipment
and specialized tools and supplies. Once the crews and equipment are fully utilized, our
margins generally increase over the life of the arrangement.
 
    
    Industry-wide insurance costs for workmens compensation, medical and general liability
could rise at a rate faster than our revenues. We have implemented several safety
initiatives designed to reduce incident rates and corresponding insurance costs.
 
    
    There are a limited number of skilled workers who can perform our work. When we
experience increased demand in a particular market, labor costs tend to increase. We
historically have been able to obtain price increases when we renegotiate rates with our
customers to offset these cost increases.
 
    
    We own the majority of our equipment and vehicles. We maintain certain underutilized
equipment and vehicles for future growth. As utility maintenance is deferred our fixed
fleet costs will cause a decline in our gross profit percentage.
 
    
    We have a large fleet of vehicles and equipment that primarily use diesel fuel. Fuel
costs have been extremely volatile in recent years and, until the most recent quarter, at
historically high levels. We have implemented bulk purchasing in certain areas to lower
our fuel costs. We utilize diesel fuel swaps and fixed price arrangements and may enter
into additional diesel fuel derivative instruments and fixed price arrangements in the
future, depending on market conditions.
 Results of Operations
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Core services
    
    
    92.5
    %
    
    
    86.3
    %
    
    
    73.2
    %
    
    
    91.4
    %Storm restoration services
    
    
    7.5
    
    
    
    13.7
    
    
    
    26.8
    
    
    
    8.6Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of operations
    
    
    87.2
    
    
    
    82.9
    
    
    
    80.8
    
    
    
    83.1Gross profit
    
    
    12.8
    
    
    
    17.1
    
    
    
    19.2
    
    
    
    16.9General and administrative expenses
    
    
    7.7
    
    
    
    7.4
    
    
    
    7.4
    
    
    
    7.4Loss on sale of property and equipment
    
    
    0.5
    
    
    
    1.3
    
    
    
    0.3
    
    
    
    0.7Income from operations
    
    
    4.6
    
    
    
    8.4
    
    
    
    11.5
    
    
    
    8.8Interest expense and other, net
    
    
    1.7
    
    
    
    2.6
    
    
    
    1.4
    
    
    
    2.8Income before income taxes
    
    
    2.9
    
    
    
    5.8
    
    
    
    10.1
    
    
    
    6.0Income tax expense
    
    
    1.1
    
    
    
    2.3
    
    
    
    3.8
    
    
    
    2.3Net income
    
    
    1.8
    %
    
    
    3.5
    %
    
    
    6.3
    %
    
    
    3.7
    %
  12




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Three Months Ended December 31, 2008 Compared to Three Months Ended December 31, 2007
 Revenues.
     Gross Profit.
 
    
    Higher fixed equipment costs as a percent of revenue due to decreased utilization.
We own much of our equipment, and both underground and overhead distribution equipment
utilization decreased as a result of a reduction in overall utility distribution
maintenance projects in our territory. This impact was compounded by the excess leased and
special rental equipment which we assumed in the EDS transaction. The overall
worsening condition of the secondary market for used utility equipment and vehicles has also
made it difficult to sell excess equipment. If equipment utilization in the second quarter
of fiscal 2009 was at the same level as the second quarter of the prior fiscal year, our
gross profit would have been approximately $2.0 million higher.
  13




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
    
    Higher fuel expense as a percentage of revenue. Fuel expense increased to 5.9% of
total revenues in the second quarter of fiscal 2009 compared to 5.5% for the same period in
the prior year. Fuel costs have moderated but the market continues to fluctuate. The
reduction in our average fuel price this quarter compared to the prior year was more than
offset by a $1.3 million non-cash, mark-to-market adjustment from our diesel fuel swap and
$0.4 million for cash settlement charges.
 
    
    A lower mix of storm revenue.Our storm restoration services typically generate a
higher profit margin than core services. During a storm response, our storm-assigned crews
and equipment are fully utilized. In addition, the overtime typically worked on storm
events lowers the ratio of fixed costs to revenue. Storm gross profit margins can vary
greatly depending on the geographic area, customer and amount of overtime worked.
 
    
    Lower gross profit margin material procurement services. Material procurement services
offered in the EDS business generate lower gross profit margins compared to other core
services. Our engineering and substation businesses recognized approximately $5.0 million
in material procurement revenues in the quarter.
 
    
    Investment in engineering services growth. During the quarter, we added additional
engineering staff and office space. We expect to experience increased non-billable wages
and cost of the office space until these resources are fully utilized.
 
    
    EDS transition costs.During the quarter, we relocated all legacy EDS
employees to new Pike facilities. In addition to the expense associated with the moves, the
moves also negatively impacted utilization in our engineering group.
 General and Administrative Expenses.
 Interest Expense and Other, Net.
 Income Tax Expense.
 Net Income.
 Six Months Ended December 31, 2008 Compared to the Six Months Ended December 31, 2007
 Revenues.
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##### Table of Contents



Gross Profit.
 General and Administrative Expenses.
 Interest Expense and Other, Net.
 Income Tax Expense.
 Net
Income.
 Liquidity and Capital Resources
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Changes in Cash Flows:
 Six Months EndedDecember 31,2008
    
    
    2007(In millions)Net cash provided by operating activities
    
    $
    23.1
    
    
    $
    17.9Net cash (used in) provided by investing activities
    
    $
    (29.4
    )
    
    $
    2.6Net cash provided by (used in) financing activities
    
    $
    0.6
    
    
    $
    (21.9
    )
    Senior Credit Facility
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##### Table of Contents



Contractual Obligations and Other Commitments
  Off-Balance Sheet Arrangements
    Seasonality; Fluctuations of Results
  Inflation
  Recent Accounting Pronouncements
  Uncertainty of Forward-Looking Statements and Information
  
    
    our belief that the lawsuits, claims or other proceedings to which we are subject in the
ordinary course of business will not have a material adverse effect on our results of
operation or financial position;
 
    
    our belief that our cash flow from operations, available cash and cash equivalents, and
borrowings available under our senior credit facility will be adequate to meet our ordinary
course liquidity needs for the foreseeable future.
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##### Table of Contents




    
    We derive a significant portion of our revenues from a small group of customers. The
loss of or a significant decrease in services to one or more of these customers could
negatively impact our business and results of operations.
    
    Our customers often have no obligation to assign work to us, and many of our
arrangements may be terminated on short notice. As a result, we are at risk of losing
significant business on short notice.
    
    Our storm restoration services are highly volatile and unpredictable, which could result
in substantial variations in, and uncertainties regarding, the levels of our financial
results from period to period.
    
    Our business is subject to numerous hazards that could subject us to substantial
monetary and other liabilities. If accidents occur, they could materially and adversely
affect our business and results of operations.
    
    Our current insurance coverage may not be adequate, and we may not be able to obtain
insurance at acceptable rates, or at all.
    
    Fuel costs could materially and adversely affect our operating results.
    
    Demand for some of our services is cyclical and vulnerable to industry and economic
downturns, which could materially and adversely affect our business and results of
operations.
    
    Failure to maintain effective internal control over financial reporting could have a
material adverse effect on our business, operating results and stock price.
    
    To be successful, we need to attract and retain qualified personnel, and any inability
to do so would adversely affect our business.
    
    We are dependent on our senior management and other key personnel, the loss of which
could have a material adverse effect on our business.
    
    A continued deterioration in the housing market could negatively affect our revenues
from distribution work.
    
    Our industry is highly competitive and we may be unable to compete effectively, retain
our customers or win new customers, which could result in reduced profitability and loss of
market share.
    
    We may be unsuccessful at acquiring companies or at integrating companies that we may
acquire, and as a result, we may not achieve the expected benefits and our profitability
could materially suffer.
    
    We acquired substantially all of the assets of EDS on September 1, 2008, and this
acquisition could have a negative effect on our business and results of operations.
    
    We have incurred indebtedness under a senior credit facility, which may restrict our
business and operations, adversely affect our cash flow, and restrict our future access to
sufficient funding to finance desired growth.
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##### Table of Contents




    
    We are in the process of implementing various information technology systems which could
temporarily disrupt our day-to-day operations.
    
    During the ordinary course of our business, we may become subject to lawsuits or
indemnity claims, which could materially and adversely affect our business and results of
operations.
    
    Our failure to comply with or the imposition of liability under, environmental laws and
regulations could result in significant costs.
    
    Weather conditions can adversely affect our operations and, consequently, revenues.
The electric infrastructure servicing business is subject to seasonal variations, which
may cause our operating results to vary significantly from period to period and could cause
the market price of our stock to fall.
    
    Our results of operations could be adversely affected as a result of the impairment of
goodwill or other intangibles.
    
    The market price of our stock may be influenced by many factors, some of which are
beyond our control.
    
    Shares eligible for future sale may cause the market price of our common stock to drop
significantly, even if our business is doing well.
    
    The concentration of our capital stock among a relatively small group of
stockholders may limit other stockholders ability to influence corporate
matters.
    
    Anti-takeover provisions of our charter and bylaws may reduce the likelihood of any
potential change of control or unsolicited acquisition proposal that stockholders might
consider favorable.
    
    Utilities focus on power generation and concerns over credit availability may
temporarily divert attention and capital away from maintenance projects we perform.
    
    Bonding indemnification requirements may change on existing or new contracts.
    
    Our financial results are based upon estimates and assumptions that may differ from
actual results.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
  Diesel Fuel Risk
   
 Item 4. Controls and Procedures
    20




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Impairment of our or our customers ability to access the capital and credit markets could
harm our future growth and expansion opportunities
 
 Item 4. Submission of Matters to a Vote of Security Holders
   Nominee
    
    Votes For
    
    
    Votes WithheldJ. Eric Pike
    
    
    31,650,255
    
    
    
    326,183Charles W. Bayless
    
    
    31,720,862
    
    
    
    255,576Adam B. Godfrey
    
    
    31,506,141
    
    
    
    470,297James R. Helvey, III
    
    
    31,720,612
    
    
    
    255,826Robert D. Lindsay
    
    
    31,508,141
    
    
    
    468,297Daniel J. Sullivan
    
    
    31,725,462
    
    
    
    250,976Louis F. Terhar
    
    
    31,725,762
    
    
    
    250,676
  Votes For
    
    Votes Against
    
    
    Abstained
    
    
    Broker Non-Votes31,834,903
    
    
    141,335
    
    
    
    200
    
    
    None
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##### Table of Contents



Item 6. Exhibits
 Exhibit

    
    Description31.1
    
    
    Certification of Periodic Report by Chief Executive Officer
pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith)31.2
    
    
    Certification of Periodic Report by Chief Financial Officer
pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith)32.1
    
    
    Certification of Periodic Report by Chief Executive Officer and
Chief Financial Officer pursuant to U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith)
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SIGNATURES
  PIKE ELECTRIC CORPORATION
(Registrant)Date: February 9, 2009
    By:
    /s/ J. Eric PikeJ. Eric PikeChairman, Chief Executive Officer and PresidentDate: February 9, 2009
    By:
    /s/ Anthony K. SlaterAnthony K. SlaterChief Financial Officer  23