##### 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 MARCH 31, 2010
 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(State of incorporation)
    
    20-3112047(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
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if smaller reporting company)
    
    Smaller reporting company o
 Yes o No þ




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##### 



PIKE ELECTRIC CORPORATION
FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2010
INDEX
 Part I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Condensed consolidated balance sheets
    
    
    1Condensed consolidated statements of operations
    
    
    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
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 6. Exhibits
    
    
    26Signatures
    
    
    27Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 PIKE ELECTRIC CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except per share amounts)
 March 31,
    
    
    June 30,2010
    
    
    2009(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    51,683
    
    
    $
    43,820Accounts receivable from customers, net
    
    
    61,853
    
    
    
    57,766Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    45,188
    
    
    
    46,674Inventories
    
    
    7,078
    
    
    
    7,718Prepaid expenses and other
    
    
    5,512
    
    
    
    5,481Assets held for sale
    
    
    1,754
    
    
    
    825Deferred income taxes
    
    
    11,367
    
    
    
    13,649Total current assets
    
    
    184,435
    
    
    
    175,933Property and equipment, net
    
    
    195,942
    
    
    
    222,539Goodwill
    
    
    106,123
    
    
    
    106,865Other intangibles, net
    
    
    37,619
    
    
    
    40,139Deferred loan costs, net
    
    
    3,616
    
    
    
    2,028Other assets
    
    
    1,903
    
    
    
    1,465Total assets
    
    $
    529,638
    
    
    $
    548,969LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    15,138
    
    
    $
    13,231Accrued compensation
    
    
    21,174
    
    
    
    23,002Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    4,178
    
    
    
    5,176Accrued expenses and other
    
    
    7,293
    
    
    
    8,301Current portion of deferred compensation
    
    
    
    
    
    
    1,402Current portion of insurance and claim accruals
    
    
    24,111
    
    
    
    26,442Total current liabilities
    
    
    71,894
    
    
    
    77,554Long-term debt
    
    
    140,500
    
    
    
    140,500Insurance and claim accruals, net of current portion
    
    
    7,263
    
    
    
    7,335Deferred compensation, net of current portion
    
    
    5,773
    
    
    
    5,563Deferred income taxes
    
    
    49,168
    
    
    
    57,251Other liabilities
    
    
    2,852
    
    
    
    3,801Commitments 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; 33,530
and 33,462 shares issued and outstanding at March 31, 2010 and
June 30, 2009, respectively
    
    
    6,427
    
    
    
    6,427Additional paid-in capital
    
    
    156,587
    
    
    
    153,035Accumulated other comprehensive loss, net of taxes
    
    
    
    
    
    
    (1,109
    )Retained earnings
    
    
    89,174
    
    
    
    98,612Total stockholders equity
    
    
    252,188
    
    
    
    256,965Total liabilities and stockholders equity
    
    $
    529,638
    
    
    $
    548,969
   1




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##### Table of Contents



PIKE ELECTRIC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 (In thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    120,931
    
    
    $
    154,921
    
    
    $
    383,349
    
    
    $
    485,014Cost of operations
    
    
    110,500
    
    
    
    126,792
    
    
    
    344,287
    
    
    
    393,488Gross profit
    
    
    10,431
    
    
    
    28,129
    
    
    
    39,062
    
    
    
    91,526General and administrative expenses
    
    
    12,007
    
    
    
    12,137
    
    
    
    38,261
    
    
    
    36,607Loss on sale and impairment of property
and equipment
    
    
    240
    
    
    
    1,096
    
    
    
    1,202
    
    
    
    1,949Restructuring expenses
    
    
    59
    
    
    
    
    
    
    
    8,983
    
    
    
    (Loss) income from operations
    
    
    (1,875
    )
    
    
    14,896
    
    
    
    (9,384
    )
    
    
    52,970Other expense (income):Interest expense
    
    
    1,441
    
    
    
    2,162
    
    
    
    6,085
    
    
    
    7,228Other, net
    
    
    (49
    )
    
    
    (238
    )
    
    
    (229
    )
    
    
    (746
    )Total other expense
    
    
    1,392
    
    
    
    1,924
    
    
    
    5,856
    
    
    
    6,482(Loss) income before income taxes
    
    
    (3,267
    )
    
    
    12,972
    
    
    
    (15,240
    )
    
    
    46,488Income tax (benefit) expense
    
    
    (1,236
    )
    
    
    4,702
    
    
    
    (5,802
    )
    
    
    17,378Net (loss) income
    
    $
    (2,031
    )
    
    $
    8,270
    
    
    $
    (9,438
    )
    
    $
    29,110(Loss) earnings per share:Basic
    
    $
    (0.06
    )
    
    $
    0.25
    
    
    $
    (0.28
    )
    
    $
    0.88Diluted
    
    $
    (0.06
    )
    
    $
    0.25
    
    
    $
    (0.28
    )
    
    $
    0.86Shares used in computing (loss) earnings per share:Basic
    
    
    33,149
    
    
    
    33,036
    
    
    
    33,119
    
    
    
    33,011Diluted
    
    
    33,149
    
    
    
    33,703
    
    
    
    33,119
    
    
    
    33,733
   2




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PIKE ELECTRIC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 Nine Months EndedMarch 31,2010
    
    
    2009Cash flows from operating activities:Net (loss) income
    
    $
    (9,438
    )
    
    $
    29,110Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Depreciation and amortization
    
    
    26,860
    
    
    
    27,823Non-cash interest expense
    
    
    1,415
    
    
    
    1,116Deferred income taxes
    
    
    (6,573
    )
    
    
    (2,845
    )Loss on sale and impairment of property and equipment
    
    
    1,202
    
    
    
    1,949Restructuring expenses, non-cash
    
    
    7,958
    
    
    
    Equity compensation expense
    
    
    3,514
    
    
    
    2,520Excess tax expense (benefit) from stock-based compensation
    
    
    43
    
    
    
    (198
    )Changes in operating assets and liabilities:Accounts receivable and costs and estimated earnings in excess
of billings on uncompleted contracts
    
    
    (2,601
    )
    
    
    2,961Inventories, prepaid expenses and other
    
    
    2,452
    
    
    
    (1,717
    )Insurance and claim accruals
    
    
    (2,403
    )
    
    
    591Accounts payable and other
    
    
    (2,623
    )
    
    
    (5,603
    )Deferred compensation
    
    
    (1,402
    )
    
    
    (3,710
    )Net cash provided by operating activities
    
    
    18,404
    
    
    
    51,997Cash flows from investing activities:Purchases of property and equipment
    
    
    (13,628
    )
    
    
    (21,270
    )Business acquisitions, net
    
    
    
    
    
    
    (22,632
    )Net proceeds from sale of property and equipment
    
    
    5,840
    
    
    
    5,247Net cash used in investing activities
    
    
    (7,788
    )
    
    
    (38,655
    )Cash flows from financing activities:Borrowings under revolving credit facility
    
    
    
    
    
    
    84,705Repayments under revolving credit facility
    
    
    
    
    
    
    (84,705
    )Stock option and employee stock purchase activity, net
    
    
    82
    
    
    
    675Excess tax (expense) benefit from stock-based compensation
    
    
    (43
    )
    
    
    198Deferred loan costs
    
    
    (2,792
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (2,753
    )
    
    
    873Net increase in cash and cash equivalents
    
    
    7,863
    
    
    
    14,215Cash and cash equivalents beginning of year
    
    
    43,820
    
    
    
    11,357Cash and cash equivalents end of period
    
    $
    51,683
    
    
    $
    25,572
   3




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PIKE ELECTRIC CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and nine months ended March 31, 2010 and 2009
 (In thousands, except per share amounts)
 1. Basis of Presentation
  2. Business
    Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Core services
    
    $
    98,643
    
    
    
    81.6
    %
    
    $
    100,681
    
    
    
    65.0
    %
    
    $
    340,587
    
    
    
    88.8
    %
    
    $
    342,212
    
    
    
    70.6
    %Storm restoration
services
    
    
    22,288
    
    
    
    18.4
    %
    
    
    54,240
    
    
    
    35.0
    %
    
    
    42,762
    
    
    
    11.2
    %
    
    
    142,802
    
    
    
    29.4
    %Total
    
    $
    120,931
    
    
    
    100.0
    %
    
    $
    154,921
    
    
    
    100.0
    %
    
    $
    383,349
    
    
    
    100.0
    %
    
    $
    485,014
    
    
    
    100.0
    %
 3. Acquisition of Energy Delivery Services
   4




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Nine Months EndedMarch 31,2010
    
    
    2009Revenues
    
    $
    383,349
    
    
    $
    503,061Net (loss) income
    
    $
    (9,438
    )
    
    $
    28,621Basic (loss) earnings per common share
    
    $
    (0.28
    )
    
    $
    0.87Diluted (loss) earnings per common share
    
    $
    (0.28
    )
    
    $
    0.85
 4. Restructuring Expenses
   One-TimeEmployeeTermination
    
    
    Fixed AssetDescription
    
    Benefits
    
    
    Writedowns
    
    
    TotalAccrued restructuring balance as of
June 30, 2009
    
    $
    
    
    
    $
    
    
    
    $
    Costs incurred and charged to expense
    
    
    1,025
    
    
    
    7,958
    
    
    
    8,983Cash payments
    
    
    (725
    )
    
    
    
    
    
    
    (725
    )Non-cash settlement
    
    
    
    
    
    
    (7,958
    )
    
    
    (7,958
    )Accrued restructuring balance as of
March 31, 2010
    
    $
    300
    
    
    $
    
    
    
    $
    300
   5




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5. Credit Facility
      6. Stock-Based Compensation
   6




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7. Property and Equipment
  8. (Loss) Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic:Net (loss) income
    
    $
    (2,031
    )
    
    $
    8,270
    
    
    $
    (9,438
    )
    
    $
    29,110Weighted average common shares
    
    
    33,149
    
    
    
    33,036
    
    
    
    33,119
    
    
    
    33,011Basic (loss) earnings per share
    
    $
    (0.06
    )
    
    $
    0.25
    
    
    $
    (0.28
    )
    
    $
    0.88Diluted:Net (loss) income
    
    $
    (2,031
    )
    
    $
    8,270
    
    
    $
    (9,438
    )
    
    $
    29,110Weighted average common shares
    
    
    33,149
    
    
    
    33,036
    
    
    
    33,119
    
    
    
    33,011Potential common stock arising from stock
options and restricted stock
    
    
    
    
    
    
    667
    
    
    
    
    
    
    
    722Weighted average common shares  diluted
    
    
    33,149
    
    
    
    33,703
    
    
    
    33,119
    
    
    
    33,733Diluted (loss) earnings per share
    
    $
    (0.06
    )
    
    $
    0.25
    
    
    $
    (0.28
    )
    
    $
    0.86
  9. Fair Value
   
    
    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.
  7




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March 31,Description
    
    2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Diesel fuel swap agreements
    
    $
    614
    
    
    $
    
    
    
    $
    614
    
    
    $
    Total
    
    $
    614
    
    
    $
    
    
    
    $
    614
    
    
    $
    
   10. Income Taxes
  11. Derivative Instruments and Hedging Activities
    8




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Interest Rate Risk
   Diesel Fuel Risk
   Balance Sheet and Statement of Operations Information
  Asset Derivatives
    
    
    Liability DerivativesFair Value
    
    
    Fair Value
    
    
    Fair Value
    
    
    Fair Valueat Mar. 31,
    
    
    at June 30,
    
    
    at Mar. 31,
    
    
    at June 30,Balance Sheet Location
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Derivatives designated as hedging
instruments under U.S. GAAP:Interest rate swaps
    
    Accrued expenses and other
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,821Total derivatives designated as
hedging instruments under U.S. GAAP
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,821Derivatives not designated as hedging
instruments under U.S. GAAP:Diesel fuel swaps (gross) (1)
    
    Prepaid expenses and other
    
    $
    616
    
    
    $
    
    
    
    $
    2
    
    
    $
    Diesel fuel swaps (gross) (1)
    
    Accrued expenses and other
    
    
    
    
    
    
    259
    
    
    
    
    
    
    
    572Total derivatives not designated as
hedging instruments under U.S. GAAP
    
    
    
    $
    616
    
    
    $
    259
    
    
    $
    2
    
    
    $
    572Total derivatives
    
    
    
    $
    616
    
    
    $
    259
    
    
    $
    2
    
    
    $
    2,393
 (1)
    
    The fair values of asset and liability derivatives with the same counterparty are
netted on the balance sheet.  9




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Derivatives designated as cash flow hedging instruments under U.S. GAAP:
 Amount of LossAmount of Gain (Loss)
    
    
    Location of Loss
    
    
    Reclassified fromRecognized in OCI
    
    
    Reclassified from
    
    
    Accumulated OCI intoFor the Three Months Ended
    
    (Effective Portion)
    
    
    Accumulated OCI into
    
    
    EarningsMarch 31,
    
    2010
    
    
    2009
    
    
    Earnings
    
    
    2010
    
    
    2009Interest rate swaps
    
    $
    
    
    
    $
    388
    
    
    Interest expense
    
    $
    
    
    
    $
    (529
    )Totals
    
    $
    
    
    
    $
    388
    
    
    
    
    
    
    $
    
    
    
    $
    (529
    )For the Nine Months EndedMarch 31,
    
    2010
    
    
    2009
    
    
    
    
    
    
    2010
    
    
    2009Interest rate swaps
    
    $
    1,109
    
    
    $
    (753
    )
    
    Interest expense
    
    $
    (1,068
    )
    
    $
    (976
    )Totals
    
    $
    1,109
    
    
    $
    (753
    )
    
    
    
    
    
    $
    (1,068
    )
    
    $
    (976
    )
 Derivatives not designated as cash flow hedging instruments under U.S. GAAP:
 Location of Gain
    
    
    Amount of Gain (Loss)For the Three Months Ended
    
    (Loss) Recognized
    
    
    Recognized in EarningsMarch 31,
    
    in Earnings
    
    
    2010
    
    
    2009Diesel fuel swaps
    
    Cost of operations
    
    $
    142
    
    
    $
    247Total
    
    
    
    
    
    $
    142
    
    
    $
    247For the Nine Months EndedMarch 31,
    
    
    
    
    
    2010
    
    
    2009Diesel fuel swaps
    
    Cost of operations
    
    $
    565
    
    
    $
    (725
    )Total
    
    
    
    
    
    $
    565
    
    
    $
    (725
    )
   10




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12. Comprehensive (Loss) Income
  For the Three Months EndedMarch 31,2010
    
    
    2009Net (loss) income
    
    $
    (2,031
    )
    
    $
    8,270Change in fair value of interest rate cash low hedges,
net of income taxes of $249
    
    
    
    
    
    
    388Comprehensive (loss) income
    
    $
    (2,031
    )
    
    $
    8,658
 For the Nine Months EndedMarch 31,2010
    
    
    2009Net (loss) income
    
    $
    (9,438
    )
    
    $
    29,110Change in fair value of interest rate cash low hedges,
net of income taxes of $711 and ($482), respectively
    
    
    1,109
    
    
    
    (753
    )Comprehensive (loss) income
    
    $
    (8,329
    )
    
    $
    28,357
 13. Recent Accounting Pronouncements
 FASB Accounting Standards Codification
  Accounting for Business Combinations
   11




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Determination of the Useful Life of Intangible Assets
  Measuring Liabilities at Fair Value
  Disclosures for Fair Value Measurements
   14. Commitments and Contingencies
 Legal Proceedings
   12




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Performance Bonds and Parent Guarantees
  Indemnities
   13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Introduction
    Service
    
    DescriptionPlanning & Siting
    
    Our planning and siting process
leverages technology and the
collection of environmental,
cultural, land use and scientific
data to facilitate successful
right-of-way negotiations and
permitting for powerlines,
substations, pipelines and renewable
energy installations.Engineering & Design
    
    We provide design, engineering,
procurement and construction
(EPC), owner engineer, project
management, multi-entity
coordination, grid integration,
balance-of-plant and Thermal Rate
solutions for individual or turn-key
powerline, substation and renewable
energy projects.Construction
    
    We provide overhead and underground
powerline construction, upgrade and
extension services (predominately
single-pole and H-frame wood,
concrete or steel poles) for
distribution networks and
transmission lines with voltages up
to 345kV (kV), energized
maintenance work for voltages up to
500kV and substation construction
and service. 
Overhead services consist of
construction, repair and maintenance
of wire and components in energized
overhead electric distribution and
transmission systems.
Underground services range from
simple residential installations,
directional boring, duct bank and
manhole installation, to the
construction of complete underground
distribution facilities. 
Substation services include
construction or new substations,
existing substation upgrades, relay
testing, commissioning, emergency
outage response and Smart Grid
component installation.Renewables
    
    We provide a total energy solution
platform, including preliminary
studies, planning, siting and
permitting, engineering and design,
construction, procurement and grid
interconnection.Storm Restoration Services
    
    Storm restoration involves the
repair or reconstruction of any part
of a distribution or sub-500 kV
transmission network, including
substations, power lines, utility
poles or other components, damaged
during snow, ice or wind storms,
flash floods, hurricanes, tornadoes
or other natural disasters. We are a
recognized leader in storm
restoration, due to our ability to
rapidly mobilize thousands of
existing employees and equipment
within 24 hours, while maintaining a
functional force for unaffected
customers.
  14




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Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Core services
    
    $
    98.6
    
    
    
    81.6
    %
    
    $
    100.7
    
    
    
    65.0
    %
    
    $
    340.6
    
    
    
    88.8
    %
    
    $
    342.2
    
    
    
    70.6
    %Storm restoration services
    
    
    22.3
    
    
    
    18.4
    %
    
    
    54.2
    
    
    
    35.0
    %
    
    
    42.7
    
    
    
    11.2
    %
    
    
    142.8
    
    
    
    29.4
    %Total
    
    $
    120.9
    
    
    
    100.0
    %
    
    $
    154.9
    
    
    
    100.0
    %
    
    $
    383.3
    
    
    
    100.0
    %
    
    $
    485.0
    
    
    
    100.0
    %
 Critical Accounting Policies
  Operational and Other Factors
  
    
    General economic conditions and unsuccessful public utility rate cases may impact
utility maintenance expenditures going forward, and certain of our customers powerline
maintenance projects may be temporarily deferred. We have experienced a reduction of
utility distribution maintenance spending over the past two years and this reduction has
materially impacted our distribution revenues and profit margins.
    
    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.
  15




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##### Table of Contents




    
    Industry-wide costs for workers compensation, medical and general liability insurance
could rise at a rate faster than our revenues.
    
    We own the vast majority of our equipment and vehicles. Due to decreased demand for
our distribution services in recent periods, the percentage of underutilized equipment has
increased. We had intended on retaining most of the underutilized equipment for future
needs. However, during our fiscal second quarter, given current market conditions we
decided instead to dispose of a large portion of this equipment, resulting in an impairment
charge. See Restructuring Expenses discussion below. We intend to retain a portion of
the underutilized equipment to provide for flexibility in fleet management and for future
growth. However, if demand for our distribution services continues to decline, we may face
additional fixed asset impairment charges.
    
    We have a large fleet of vehicles and equipment that primarily use diesel fuel. Fuel
costs have been extremely volatile in recent years. We have implemented bulk purchasing in
certain areas to lower our fuel costs. We utilize diesel fuel swaps and fixed-price
arrangements and plan to enter into additional diesel fuel derivative instruments and
fixed-price arrangements in the future.
 Results of Operations
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Core services
    
    
    81.6
    %
    
    
    65.0
    %
    
    
    88.8
    %
    
    
    70.6
    %Storm restoration services
    
    
    18.4
    %
    
    
    35.0
    %
    
    
    11.2
    %
    
    
    29.4
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of operations
    
    
    91.4
    %
    
    
    81.8
    %
    
    
    89.8
    %
    
    
    81.1
    %Gross profit
    
    
    8.6
    %
    
    
    18.2
    %
    
    
    10.2
    %
    
    
    18.9
    %General and administrative expenses
    
    
    9.9
    %
    
    
    7.8
    %
    
    
    10.0
    %
    
    
    7.5
    %Loss on sale of property and equipment
    
    
    0.2
    %
    
    
    0.8
    %
    
    
    0.3
    %
    
    
    0.4
    %Restructuring expense
    
    
    0.1
    %
    
    
    0.0
    %
    
    
    2.3
    %
    
    
    0.0
    %(Loss) income from operations
    
    
    -1.6
    %
    
    
    9.6
    %
    
    
    -2.4
    %
    
    
    11.0
    %Interest expense and other, net
    
    
    1.1
    %
    
    
    1.2
    %
    
    
    1.6
    %
    
    
    1.4
    %(Loss) income before income taxes
    
    
    -2.7
    %
    
    
    8.4
    %
    
    
    -4.0
    %
    
    
    9.6
    %Income tax (benefit) expense
    
    
    -1.0
    %
    
    
    3.0
    %
    
    
    -1.5
    %
    
    
    3.6
    %Net (loss) income
    
    
    -1.7
    %
    
    
    5.4
    %
    
    
    -2.5
    %
    
    
    6.0
    %
  16




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Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009
 Revenues.
   Three Months EndedMarch 31,Category of Core Revenue
    
    2010
    
    
    2009
    
    
    % ChangeOverhead distribution and other
    
    $
    51.2
    
    
    $
    52.3
    
    
    
    -2.1
    %Underground distribution
    
    
    14.6
    
    
    
    17.4
    
    
    
    -16.1
    %Transmission
    
    
    16.3
    
    
    
    14.0
    
    
    
    16.2
    %Engineering and substation
    
    
    16.5
    
    
    
    17.0
    
    
    
    -2.8
    %Total
    
    $
    98.6
    
    
    $
    100.7
    
    
    
    -2.0
    %
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##### Table of Contents



Gross Profit.
 
    
    A significantly lower mix of storm revenue for the current quarter.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.
    
    Distribution margins. Due to the decline in overall distribution demand, we
experienced compressed margins during the quarter due to the following: (i) increased
level of idle equipment, (ii) decreased distribution productivity due to the types of
projects being outsourced by our customers, (iii) higher average wage rates as we have
retained our most experienced workers and (iv) increased overhead as a percentage of
revenue. Major steps were taken as part of our restructuring during our fiscal second
quarter to better align our costs with revenue expectations. However, because of the
continued reduction of distribution revenues and intense competition, our distribution
margins remain under significant pressure.
    
    Crew start-up costs.Toward the end of our third fiscal quarter, we had additions to
our transmission and distribution headcount, which resulted in new crews and caused us to
absorb costs related to: the release of certain tools and supplies from inventory, the
acquisition of certain new tools, and additional specialized rental equipment.
    
    Environmental matter.We recognized an additional $1.5 million of costs during the
three months ended March 31, 2010 related to the cleanup of certain petroleum-related
products on an owned property in Georgia. We believe the contamination occurred
before we purchased the property. We have committed the necessary resources to remediate
this contamination in a timely and appropriate manner. We continue to work with
appropriate regulatory agencies and other interested parties to remediate the site.
    
    Higher fuel expense as a percentage of revenue. Fuel expense increased to 4.5% of
total revenues for the three months ended March 31, 2010 compared to 3.7% for the same
period in the prior year. Average fuel prices were approximately $0.60 per gallon higher
for the three months ended March 31, 2010 compared to the same period in the prior year.
These costs were partially offset by a $0.2 million positive impact from diesel fuel swaps
for the three months ended March 31, 2010 compared to a $0.2 million negative impact for
the same period of the prior year.
    
    Utilization.During the three months ended March 31, 2010, we experienced increased
snow and extremely wet weather conditions in our service territory. Because of these
weather conditions, we experienced additional non-productive paid time compared to the same
period of the prior year. In addition, because of the difficult weather conditions, we
experienced periods of lower productivity (while working) than in the prior year.
 General and Administrative Expenses.
 Loss on Sale and Impairment of Property and Equipment .
 Interest Expense and Other, Net.
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Income Tax Benefit or Expense.
 Nine Months Ended March 31, 2010 Compared to Nine Months Ended March 31, 2009
 Revenues.
   Nine Months EndedMarch 31,Category of Core Revenue
    
    2010
    
    
    2009
    
    
    % ChangeOverhead distribution and other
    
    $
    185.1
    
    
    $
    200.8
    
    
    
    -7.8
    %Underground distribution
    
    
    46.9
    
    
    
    70.7
    
    
    
    -33.7
    %Transmission
    
    
    51.7
    
    
    
    35.5
    
    
    
    45.6
    %Engineering and substation
    
    
    56.9
    
    
    
    35.2
    
    
    
    61.5
    %Total
    
    $
    340.6
    
    
    $
    342.2
    
    
    
    -0.5
    %
 Gross Profit.
 
    
    A significantly lower mix of storm revenue for the current year.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.
    
    Distribution margins. Due to the decline in overall distribution demand, we
experienced compressed margins due to the following: (i) increased level of idle
equipment, (ii) decreased distribution productivity due to the types of projects being
outsourced by our customers, (iii) higher average wage rates as we have retained our most
experienced workers and (iv) increased overhead as a percentage of revenue. Major steps
were taken as part of our restructuring during our fiscal second quarter to better align our
costs with revenue expectations. However, because of the continued reduction of
distribution revenues and intense competition, our distribution margins remain under
significant pressure.
    
    Lower gross profit margin material procurement services. Material procurement services
offered primarily in the engineering, substation and transmission businesses generate lower
gross profit margins compared to other core services. We recognized approximately $17.4
million in material procurement revenues for the nine months ended March 31, 2010 compared
to approximately $7.3 million for the same period in the prior year.
    
    Environmental matter.We recognized $3.2 million of costs for the nine months ended
March 31, 2010 related to the cleanup of certain petroleum-related products on an owned
property in Georgia. We believe the contamination occurred before we purchased
the property. We have committed the necessary resources to remediate this contamination in
a timely and appropriate manner. We continue to work with appropriate regulatory agencies
and other interested parties to remediate the site.
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##### Table of Contents



General and Administrative Expenses.
 Loss on Sale and Impairment of Property and Equipment .
 Restructuring Expenses.
    Interest Expense and Other, Net.
 Income Tax Benefit or Expense.
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Liquidity and Capital Resources
     Changes in Cash Flows:
 Nine Months EndedMarch 31,2010
    
    
    2009(In millions)Net cash provided by operating activities
    
    $
    18.4
    
    
    $
    52.0Net cash used in investing activities
    
    $
    (7.8
    )
    
    $
    (38.7
    )Net cash (used in) provided by financing activities
    
    $
    (2.7
    )
    
    $
    0.9
      21




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##### Table of Contents



Senior Credit Facility
     Concentration of Credit Risk
  Legal Proceedings
   22




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##### Table of Contents



Off-Balance Sheet Arrangements
  Letters of Credit
  Performance Bonds and Parent Guarantees
   Seasonality; Fluctuations of Results
  Recent Accounting Pronouncements
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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 a significant amount of pent-up demand is building and power system
reliability is being challenged and that we remain well positioned to benefit from a
reacceleration in maintenance spending, which will remain dependent to a large extent on
the health of the economy;
    
    our belief that we maintain substantially all of cash investments in high credit quality
financial institutions;
    
    our belief that our cash investment policies are conservative and that we maintain a
diverse portfolio of high-quality cash investments;
    
    our expectation that current volatility in the capital markets will not have a material
impact on the principal amounts of our cash investments;
    
    our belief that our cash flow from operations, available cash and cash equivalents, and
borrowings available under our credit facility will be adequate to meet our ordinary course
liquidity needs for the foreseeable future;
    
    our belief that it is unlikely that any material claims will be made under a letter of
credit in the foreseeable future;
    
    our belief that it is unlikely that we will have to fund significant claims under our
surety arrangements in the foreseeable future;
    
    our belief that contamination at our owned property in Georgia occurred before
we purchased the property and that we have committed the necessary resources to remediate
the contamination in a timely and appropriate manner;
    
    our expectation that certain recent accounting pronouncements will have no material
effect on our consolidated financial statements;
    
    our expectation that our restructuring measures will result in annual savings of $15.2
million;
    
    our expectation that substantially all termination benefits associated with our
headcount reductions will be paid by June 30, 2010; and
    
    our expectation that substantially all the assets held for sale at March 31, 2010 will
be sold over the next six months.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Internal Control over Financial Reporting
  Design and Operation of Control Systems
   25




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits
 Exhibit
    
    Description3.1
    
    
    Certificate of Incorporation of Pike Electric Corporation
(Incorporated by reference to Exhibit 3.1 on our Registration
Statement on Form S-1/A filed July 11, 2005)3.2
    
    
    Amended and Restated Bylaws of Pike Electric Corporation, as of
April 30, 2009 (Incorporated by reference to Exhibit 3.1 on our
Form 8-K filed May 5, 2009)31.1
    
    
    Certification of Periodic Report by Chief Executive Officer
pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith)31.2
    
    
    Certification of Periodic Report by Chief Financial Officer
pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith)32.1
    
    
    Certification of Periodic Report by Chief Executive Officer and
Chief Financial Officer pursuant to U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith)
  26




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##### Table of Contents



SIGNATURES
  PIKE ELECTRIC CORPORATION
(Registrant)Date: May 10, 2010
    By:
    /s/ J. Eric PikeJ. Eric PikeChairman, Chief Executive Officer and PresidentDate: May 10, 2010
    By:
    /s/ Anthony K. SlaterAnthony K. SlaterExecutive Vice President and Chief Financial Officer  27