##### 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, 2009
 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
  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
 o 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, 2009
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
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 4.
Submission of Matters to a Vote of Security Holders
    
    
    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)
 December 31,
    
    
    June 30,2009
    
    
    2009(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    32,866
    
    
    $
    43,820Accounts receivable from customers, net
    
    
    64,624
    
    
    
    57,766Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    53,225
    
    
    
    46,674Inventories
    
    
    7,403
    
    
    
    7,718Prepaid expenses and other
    
    
    5,338
    
    
    
    5,481Assets held for sale
    
    
    5,361
    
    
    
    825Deferred income taxes
    
    
    11,989
    
    
    
    13,649Total current assets
    
    
    180,806
    
    
    
    175,933Property and equipment, net
    
    
    199,415
    
    
    
    222,539Goodwill
    
    
    106,239
    
    
    
    106,865Other intangibles, net
    
    
    38,710
    
    
    
    40,139Deferred loan costs, net
    
    
    3,999
    
    
    
    2,028Other assets
    
    
    1,898
    
    
    
    1,465Total assets
    
    $
    531,067
    
    
    $
    548,969LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    14,052
    
    
    $
    13,231Accrued compensation
    
    
    20,148
    
    
    
    23,002Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    4,062
    
    
    
    5,176Accrued expenses and other
    
    
    6,604
    
    
    
    8,301Current portion of deferred compensation
    
    
    
    
    
    
    1,402Current portion of insurance and claim accruals
    
    
    25,056
    
    
    
    26,442Total current liabilities
    
    
    69,922
    
    
    
    77,554Long-term debt
    
    
    140,500
    
    
    
    140,500Insurance and claim accruals, net of current portion
    
    
    7,506
    
    
    
    7,335Deferred compensation, net of current portion
    
    
    5,703
    
    
    
    5,563Deferred income taxes
    
    
    51,407
    
    
    
    57,251Other liabilities
    
    
    3,144
    
    
    
    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; 33,509
and 33,462 shares issued and outstanding at December 31, 2009 and
June 30, 2009, respectively
    
    
    6,427
    
    
    
    6,427Additional paid-in capital
    
    
    155,254
    
    
    
    153,035Accumulated other comprehensive loss, net of taxes
    
    
    
    
    
    
    (1,109
    )Retained earnings
    
    
    91,204
    
    
    
    98,612Total stockholders equity
    
    
    252,885
    
    
    
    256,965Total liabilities and stockholders equity
    
    $
    531,067
    
    
    $
    548,969
   1




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PIKE ELECTRIC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 (In thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    135,198
    
    
    $
    144,586
    
    
    $
    262,418
    
    
    $
    330,093Cost of operations
    
    
    118,262
    
    
    
    126,150
    
    
    
    233,787
    
    
    
    266,696Gross profit
    
    
    16,936
    
    
    
    18,436
    
    
    
    28,631
    
    
    
    63,397General and administrative expenses
    
    
    13,131
    
    
    
    11,169
    
    
    
    26,254
    
    
    
    24,470Loss on sale and impairment of property
and equipment
    
    
    301
    
    
    
    612
    
    
    
    962
    
    
    
    854Restructuring expenses
    
    
    8,924
    
    
    
    
    
    
    
    8,924
    
    
    
    (Loss) income from operations
    
    
    (5,420
    )
    
    
    6,655
    
    
    
    (7,509
    )
    
    
    38,073Other expense (income):Interest expense
    
    
    2,273
    
    
    
    2,730
    
    
    
    4,644
    
    
    
    5,066Other, net
    
    
    (78
    )
    
    
    (301
    )
    
    
    (179
    )
    
    
    (508
    )Total other expense
    
    
    2,195
    
    
    
    2,429
    
    
    
    4,465
    
    
    
    4,558(Loss) income before income taxes
    
    
    (7,615
    )
    
    
    4,226
    
    
    
    (11,974
    )
    
    
    33,515Income tax (benefit) expense
    
    
    (2,912
    )
    
    
    1,655
    
    
    
    (4,566
    )
    
    
    12,675Net (loss) income
    
    $
    (4,703
    )
    
    $
    2,571
    
    
    $
    (7,408
    )
    
    $
    20,840(Loss) earnings per share:Basic
    
    $
    (0.14
    )
    
    $
    0.08
    
    
    $
    (0.22
    )
    
    $
    0.63Diluted
    
    $
    (0.14
    )
    
    $
    0.08
    
    
    $
    (0.22
    )
    
    $
    0.62Shares used in computing (loss)
earnings per share:Basic
    
    
    33,134
    
    
    
    33,012
    
    
    
    33,106
    
    
    
    32,999Diluted
    
    
    33,134
    
    
    
    33,699
    
    
    
    33,106
    
    
    
    33,747
   2




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PIKE ELECTRIC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 Six Months EndedDecember 31,2009
    
    
    2008Cash flows from operating activities:Net (loss) income
    
    $
    (7,408
    )
    
    $
    20,840Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:Depreciation and amortization
    
    
    18,298
    
    
    
    18,820Non-cash interest expense
    
    
    961
    
    
    
    767Deferred income taxes
    
    
    (4,896
    )
    
    
    (1,283
    )Loss on sale and impairment of property and equipment
    
    
    962
    
    
    
    854Restructuring expenses, non-cash
    
    
    7,899
    
    
    
    Equity compensation expense
    
    
    2,306
    
    
    
    1,497Excess tax expense (benefit) from stock-based compensation
    
    
    43
    
    
    
    (168
    )Changes in operating assets and liabilities:Accounts receivable and costs and estimated earnings in
excess
of billings on uncompleted contracts
    
    
    (13,409
    )
    
    
    (11,388
    )Inventories, prepaid expenses and other
    
    
    610
    
    
    
    (1,989
    )Insurance and claim accruals
    
    
    (1,215
    )
    
    
    469Accounts payable and other
    
    
    (3,722
    )
    
    
    (1,648
    )Deferred compensation
    
    
    (1,402
    )
    
    
    (3,710
    )Net cash (used in) provided by operating activities
    
    
    (973
    )
    
    
    23,061Cash flows from investing activities:Purchases of property and equipment
    
    
    (9,337
    )
    
    
    (10,432
    )Business acquisitions, net
    
    
    
    
    
    
    (22,635
    )Net proceeds from sale of property and equipment
    
    
    2,235
    
    
    
    3,649Net cash used in investing activities
    
    
    (7,102
    )
    
    
    (29,418
    )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
    
    
    (44
    )
    
    
    423Excess tax (expense) benefit from stock-based compensation
    
    
    (43
    )
    
    
    168Deferred loan costs
    
    
    (2,792
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (2,879
    )
    
    
    591Net decrease in cash and cash equivalents
    
    
    (10,954
    )
    
    
    (5,766
    )Cash and cash equivalents beginning of year
    
    
    43,820
    
    
    
    11,357Cash and cash equivalents end of period
    
    $
    32,866
    
    
    $
    5,591
   3




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PIKE ELECTRIC CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and six months ended December 31, 2009 and 2008
 (In thousands, except per share amounts)
 1. Basis of Presentation
  2. Business
    Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Core services
    
    $
    117,230
    
    
    
    86.7
    %
    
    $
    133,695
    
    
    
    92.5
    %
    
    $
    241,944
    
    
    
    92.2
    %
    
    $
    241,532
    
    
    
    73.2
    %Storm restoration
services
    
    
    17,968
    
    
    
    13.3
    %
    
    
    10,891
    
    
    
    7.5
    %
    
    
    20,474
    
    
    
    7.8
    %
    
    
    88,561
    
    
    
    26.8
    %Total
    
    $
    135,198
    
    
    
    100.0
    %
    
    $
    144,586
    
    
    
    100.0
    %
    
    $
    262,418
    
    
    
    100.0
    %
    
    $
    330,093
    
    
    
    100.0
    %
 3. Acquisition of Energy Delivery Services
   4




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##### Table of Contents



Six months endedDecember 31,2009
    
    
    2008Revenues
    
    $
    262,418
    
    
    $
    348,141Net (loss) income
    
    $
    (7,408
    )
    
    $
    20,351Basic (loss) earnings per common share
    
    $
    (0.22
    )
    
    $
    0.62Diluted (loss) earnings per common share
    
    $
    (0.22
    )
    
    $
    0.60
 4. Restructuring Expenses
   One-TimeEmployeeTermination
    
    
    Fixed AssetDescription
    
    Benefits
    
    
    Writedowns
    
    
    TotalAccrued restructuring balance as of
September 30, 2009
    
    $
    
    
    
    $
    
    
    
    $
    Costs incurred and charged to expense
    
    
    1,025
    
    
    
    7,899
    
    
    
    8,924Cash payments
    
    
    (166
    )
    
    
    
    
    
    
    (166
    )Non-cash settlement
    
    
    
    
    
    
    (7,899
    )
    
    
    (7,899
    )Accrued restructuring balance as of
December 31, 2009
    
    $
    859
    
    
    $
    
    
    
    $
    859
    5




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5. Credit Facility
      6. Stock-Based Compensation
 .
 7. Property and Equipment
   6




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8. (Loss) Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Basic:Net (loss) income
    
    $
    (4,703
    )
    
    $
    2,571
    
    
    $
    (7,408
    )
    
    $
    20,840Weighted average common shares
    
    
    33,134
    
    
    
    33,012
    
    
    
    33,106
    
    
    
    32,999Basic (loss) earnings per share
    
    $
    (0.14
    )
    
    $
    0.08
    
    
    $
    (0.22
    )
    
    $
    0.63Diluted:Net (loss) income
    
    $
    (4,703
    )
    
    $
    2,571
    
    
    $
    (7,408
    )
    
    $
    20,840Weighted average common shares
    
    
    33,134
    
    
    
    33,012
    
    
    
    33,106
    
    
    
    32,999Potential common stock arising from stock
options and restricted stock
    
    
    
    
    
    
    687
    
    
    
    
    
    
    
    748Weighted average common shares  diluted
    
    
    33,134
    
    
    
    33,699
    
    
    
    33,106
    
    
    
    33,747Diluted (loss) earnings per share
    
    $
    (0.14
    )
    
    $
    0.08
    
    
    $
    (0.22
    )
    
    $
    0.62
  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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December 31,Description
    
    2009
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Diesel fuel swap agreements
    
    $
    381
    
    
    $
    
    
    
    $
    381
    
    
    $
    Total
    
    $
    381
    
    
    $
    
    
    
    $
    381
    
    
    $
   10. Income Taxes
  11. Derivative Instruments and Hedging Activities
   Interest Rate Risk
   8




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Diesel Fuel Risk
   Balance Sheet and Statement of Operations Information
  Asset Derivatives
    
    
    Liability DerivativesFair Value
    
    
    Fair Value
    
    
    Fair Value
    
    
    Fair Valueat Dec. 31,
    
    
    at June 30,
    
    
    at Dec. 31,
    
    
    at June 30,Balance Sheet Location
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Derivatives designated as hedging
instruments under U.S. GAAP:Interest rate swaps
    
    Accrued expenses and other
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,821Total derivatives designated as
hedging instruments under SFAS 133
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,821Derivatives not designated as hedging
instruments under U.S. GAAP:Diesel fuel swaps (gross) (1)
    
    Prepaid expenses and other
    
    
    $
    384
    
    
    $
    
    
    
    $
    3
    
    
    $
    Diesel fuel swaps (gross) (1)
    
    Accrued expenses and other
    
    
    
    
    
    
    
    259
    
    
    
    
    
    
    
    572Total derivatives not designated as
hedging instruments under SFAS 133
    
    
    
    
    
    $
    384
    
    
    $
    259
    
    
    $
    3
    
    
    $
    572Total derivatives
    
    
    
    
    
    $
    384
    
    
    $
    259
    
    
    $
    3
    
    
    $
    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
    
    
    Location of Loss
    
    Reclassified fromRecognized in OCI
    
    
    Reclassified from
    
    Accumulated OCI intoFor the Three Months Ended
    
    (Effective Portion)
    
    
    Accumulated OCI into
    
    EarningsDecember 31,
    
    2009
    
    
    2008
    
    
    Earnings
    
    2009
    
    
    2008Interest rate swaps
    
    $
    
    
    
    $
    1,279
    
    
    Interest expense
    
    $
    (494
    )
    
    $
    (216
    )Totals
    
    $
    
    
    
    $
    1,279
    
    
    
    
    $
    (494
    )
    
    $
    (216
    )For the Six Months Ended
December 31,
    
    2009
    
    
    2008
    
    
    
    
    2009
    
    
    2008Interest rate swaps
    
    $
    
    
    
    $
    1,140
    
    
    Interest expense
    
    $
    (1,068
    )
    
    $
    (446
    )Totals
    
    $
    
    
    
    $
    1,140
    
    
    
    
    $
    (1,068
    )
    
    $
    (446
    )
 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 EarningsDecember 31,
    
    in Earnings
    
    2009
    
    
    2008Diesel fuel swaps
    
    Cost of operations
    
    $
    199
    
    
    $
    (812
    )Total
    
    
    
    $
    199
    
    
    $
    (812
    )For the Six Months Ended
December 31,
    
    
    
    2009
    
    
    2008Diesel fuel swaps
    
    Cost of operations
    
    $
    423
    
    
    $
    (971
    )Total
    
    
    
    $
    423
    
    
    $
    (971
    )
  12. Comprehensive (Loss) Income
  For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Net (loss) income
    
    $
    (4,703
    )
    
    $
    2,571
    
    
    $
    (7,408
    )
    
    $
    20,840Change in fair value of
interest rate cash flow
hedges, net of income taxes
of $342 and $89, respectively
    
    
    576
    
    
    
    (1,279
    )
    
    
    1,109
    
    
    
    (1,140
    )Comprehensive (loss) income
    
    $
    (4,127
    )
    
    $
    1,292
    
    
    $
    (6,299
    )
    
    $
    19,700
  10




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13. Recent Accounting Pronouncements
 FASB Accounting Standards Codification
  Accounting for Business Combinations
  Determination of the Useful Life of Intangible Assets
  Measuring Liabilities at Fair Value
   11




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14. Commitments and Contingencies
 Legal Proceedings
  Performance Bonds and Parent Guarantees
  Indemnities
  15. Subsequent Events
   12




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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.
  13




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Service
    
    DescriptionRenewables
    
    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.
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Core services
    
    $
    117.2
    
    
    
    86.7
    %
    
    $
    133.7
    
    
    
    92.5
    %
    
    $
    241.9
    
    
    
    92.2
    %
    
    $
    241.5
    
    
    
    73.2
    %Storm restoration services
    
    
    18.0
    
    
    
    13.3
    %
    
    
    10.9
    
    
    
    7.5
    %
    
    
    20.5
    
    
    
    7.8
    %
    
    
    88.6
    
    
    
    26.8
    %Total
    
    $
    135.2
    
    
    
    100.0
    %
    
    $
    144.6
    
    
    
    100.0
    %
    
    $
    262.4
    
    
    
    100.0
    %
    
    $
    330.1
    
    
    
    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.
  14




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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 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 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, given current market conditions we have decided instead to dispose of a
large portion of this equipment, resulting in an impairment charge being recorded in the
second quarter of fiscal 2010. 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
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Core services
    
    
    86.7
    %
    
    
    92.5
    %
    
    
    92.2
    %
    
    
    73.2
    %Storm restoration services
    
    
    13.3
    %
    
    
    7.5
    %
    
    
    7.8
    %
    
    
    26.8
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of operations
    
    
    87.5
    %
    
    
    87.2
    %
    
    
    89.1
    %
    
    
    80.8
    %Gross profit
    
    
    12.5
    %
    
    
    12.8
    %
    
    
    10.9
    %
    
    
    19.2
    %General and administrative expenses
    
    
    9.7
    %
    
    
    7.7
    %
    
    
    10.0
    %
    
    
    7.4
    %Loss on sale of property and equipment
    
    
    0.2
    %
    
    
    0.5
    %
    
    
    0.4
    %
    
    
    0.3
    %Restructuring expense
    
    
    6.6
    %
    
    
    0.0
    %
    
    
    3.4
    %
    
    
    0.0
    %(Loss) income from operations
    
    
    -4.0
    %
    
    
    4.6
    %
    
    
    -2.9
    %
    
    
    11.5
    %Interest expense and other, net
    
    
    1.6
    %
    
    
    1.7
    %
    
    
    1.7
    %
    
    
    1.4
    %(Loss) income before income taxes
    
    
    -5.6
    %
    
    
    2.9
    %
    
    
    -4.6
    %
    
    
    10.1
    %Income tax (benefit) expense
    
    
    -2.1
    %
    
    
    1.1
    %
    
    
    -1.8
    %
    
    
    3.8
    %Net (loss) income
    
    
    -3.5
    %
    
    
    1.8
    %
    
    
    -2.8
    %
    
    
    6.3
    %
  15




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Three Months Ended December 31, 2009 Compared to Three Months Ended December 31, 2008
 Revenues.
   Three Months EndedDecember 31,Category of Core Revenue
    
    2009
    
    
    2008
    
    

% ChangeOverhead distribution and other
    
    $
    63.1
    
    
    $
    78.2
    
    
    
    -19.3
    %Underground distribution
    
    
    15.3
    
    
    
    26.0
    
    
    
    -41.1
    %Transmission
    
    
    17.3
    
    
    
    14.6
    
    
    
    18.5
    %Engineering and substation
    
    
    21.5
    
    
    
    14.9
    
    
    
    44.2
    %Total
    
    $
    117.2
    
    
    $
    133.7
    
    
    
    -12.3
    %
    16




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##### Table of Contents



Gross Profit.
 
    
    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. Idle equipment and overhead costs are in the process of being realigned with our
current revenue levels (see restructuring expense discussion below).
 
    
    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 $8.7
million in material procurement revenues for the quarter ended December 31, 2009 compared
to approximately $2.8 million for the same period in the prior year.
 
    
    Environmental matter.We recognized $1.8 million of costs for the three months ended
December 31, 2009 related to the cleanup of certain petroleum-related products on an owned
property in Marietta, Georgia. Although the contamination was only
recently discovered, 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,
and based on the physical investigation and technical data received to date do not expect
to recognize further expense related to this matter.
  
    
    A higher 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 fuel expense as a percentage of revenue. Fuel expense decreased to 3.9% of total
revenues for the three months ended December 31, 2009 compared to 5.9% for the same period
in the prior year. Fuel pricing was favorable for the three months ended December 31, 2009
compared to the same period in the prior year. Also, for the three months ended December
31, 2008, we incurred a $1.3 million non-cash, mark-to-market charge related to our diesel
fuel swaps as well as $0.4 million in swap cash settlement charges. In comparison, we
recorded a $0.2 million non-cash, mark-to-market credit related to our diesel fuel swaps
and had virtually neutral cash settlements for the three months ended December 31, 2009.
 General and Administrative Expenses.
 Loss on Sale and Impairment of Property and Equipment .
 Restructuring Expenses.
  17




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Interest Expense and Other, Net.
 Income Tax Benefit or Expense.
 Six Months Ended December 31, 2009 Compared to Six Months Ended December 31, 2008
 Revenues.
   Six Months EndedDecember 31,Category of Core Revenue
    
    2009
    
    
    2008
    
    

% ChangeOverhead distribution and other
    
    $
    133.9
    
    
    $
    148.5
    
    
    
    -9.9
    %Underground distribution
    
    
    32.3
    
    
    
    53.3
    
    
    
    -39.4
    %Transmission
    
    
    35.4
    
    
    
    21.5
    
    
    
    64.8
    %Engineering and substation
    
    
    40.4
    
    
    
    18.2
    
    
    
    121.5
    %Total
    
    $
    241.9
    
    
    $
    241.5
    
    
    
    0.2
    %
  18




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##### Table of Contents



Gross Profit.
 
    
    A significantly 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.
 
    
    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. Idle equipment
and overhead costs are in the process of being realigned with our current revenue levels
(see restructuring expense discussion below).
 
    
    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 $13.6
million in material procurement for the six months ended December
31, 2009 compared to approximately $3.2 million for the same period in the prior year.
 
    
    Environmental matter.We recognized $1.8 million of costs for the three months ended
December 31, 2009 related to the cleanup of certain petroleum-related products on an owned
property in Marietta, Georgia. Although the contamination was only recently discovered, 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,
and based on the physical investigation and technical data received to date do not expect
to recognize further expense related to this matter.
  
    
    Lower fuel expense as a percentage of revenue. Fuel expense decreased to 4.1% of total
revenues for the six months ended December 31, 2009 compared to 6.1% for the same period in
the prior year as fuel costs have moderated significantly since the record highs reached
during the summer of 2008.
 General and Administrative Expenses.
 Loss on Sale and Impairment of Property and Equipment .
 Restructuring Expenses.
   19




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##### Table of Contents



Interest Expense and Other, Net.
 Income Tax Benefit or Expense.
 Liquidity and Capital Resources
      20




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##### Table of Contents



Changes in Cash Flows:
 Six Months EndedDecember 31,2009
    
    
    2008(In millions)Net cash (used in) provided by operating activities
    
    $
    (1.0
    )
    
    $
    23.1Net cash used in investing activities
    
    $
    (7.1
    )
    
    $
    (29.4
    )Net cash (used in) provided by financing activities
    
    $
    (2.9
    )
    
    $
    0.6
    Senior Credit Facility
    21




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##### Table of Contents



Concentration of Credit Risk
  Legal Proceedings
  Off-Balance Sheet Arrangements
  Letters of Credit
   22




---



##### Table of Contents



Performance Bonds and Parent Guarantees
   Seasonality; Fluctuations of Results
  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 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 smart-grid technology implementation, the demand for renewable energy
solutions and the anticipated energy infrastructure stimulus plan will continue to
highlight the needs for our services;
 
    
    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;
  23




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##### Table of Contents




    
    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 Marietta, Georgia occurred before
we purchased the property but was only recently discovered and that we will incur no
further expense related to this matter;
 
    
    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 $16.4
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 December 31, 2009
will be sold over the next twelve months.
   
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   24




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##### Table of Contents



Internal Control over Financial Reporting
  Design and Operation of Control Systems
  
 PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
   25




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##### Table of Contents



Item 4.
    
    Submission of Matters to a Vote of Security Holders
   Nominee
    
    Votes For
    
    
    Votes WithheldJ. Eric Pike
    
    
    31,427,752
    
    
    
    462,969Charles W. Bayless
    
    
    26,925,038
    
    
    
    4,965,683Adam B. Godfrey
    
    
    31,486,212
    
    
    
    404,509James R. Helvey, III
    
    
    26,923,633
    
    
    
    4,967,088Robert D. Lindsay
    
    
    31,488,883
    
    
    
    401,838Daniel J. Sullivan
    
    
    26,916,104
    
    
    
    4,974,617Louis F. Terhar
    
    
    26,921,754
    
    
    
    4,968,967
  Votes For
    
    Votes Against
    
    Abstained
    
    Broker Non-Votes31,845,636
    
    37,576
    
    7,509
    
    None
 
 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: February 8, 2010
    By:
    /s/ J. Eric PikeJ. Eric PikeChairman, Chief Executive Officer and PresidentDate: February 8, 2010
    By:
    /s/ Anthony K. SlaterAnthony K. SlaterExecutive Vice President and Chief Financial Officer  27