##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-12488
 Powell Industries, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    88-0106100(I.R.S. Employer
Identification No.)8550 Mosley Drive, 
Houston, Texas(Address of principal executive offices)
    
    77075-1180(Zip Code)
 Registrants telephone number, including area code:
 (713) 944-6900
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PagePart I  Financial Information
    
    3Item 1. Condensed Consolidated Financial Statements
    
    3Condensed Consolidated Balance Sheets
    
    3Condensed Consolidated Statements of Operations
    
    4Condensed Consolidated Statements of Cash Flows
    
    5Notes to Condensed Consolidated Financial Statements
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    28Item 4. Controls and Procedures
    
    29Part II  Other Information
    
    29Item 1. Legal Proceedings
    
    29Item 1A. Risk Factors
    
    30Item 6. Exhibits
    
    30Signatures
    
    31EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Condensed Consolidated Financial Statements
 POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets  (In thousands, except share and per share data)
 June 30,
    
    
    September 30,2009
    
    
    2008(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    89,441
    
    
    $
    10,134Accounts receivable, less allowance for doubtful accounts of $1,710 and $1,180, respectively
    
    
    116,156
    
    
    
    132,446Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    55,539
    
    
    
    82,574Inventories, net
    
    
    54,512
    
    
    
    72,679Income taxes receivable
    
    
    181
    
    
    
    149Deferred income taxes
    
    
    3,311
    
    
    
    1,518Prepaid expenses and other current assets
    
    
    6,553
    
    
    
    3,935Total Current Assets
    
    
    325,693
    
    
    
    303,435Property, plant and equipment, net
    
    
    61,576
    
    
    
    61,546Goodwill
    
    
    1,084
    
    
    
    1,084Intangible assets, net
    
    
    22,216
    
    
    
    25,014Other assets
    
    
    6,094
    
    
    
    6,555Total Assets
    
    $
    416,663
    
    
    $
    397,634LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt and capital lease obligations
    
    $
    6,674
    
    
    $
    7,814Income taxes payable
    
    
    13,087
    
    
    
    7,223Accounts payable
    
    
    56,680
    
    
    
    54,168Accrued salaries, bonuses and commissions
    
    
    22,338
    
    
    
    26,361Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    51,988
    
    
    
    39,336Accrued product warranty
    
    
    6,604
    
    
    
    6,793Other accrued expenses
    
    
    9,867
    
    
    
    11,041Total Current Liabilities
    
    
    167,238
    
    
    
    152,736Long-term debt and capital lease obligations, net of current maturities
    
    
    8,269
    
    
    
    33,944Deferred compensation
    
    
    2,580
    
    
    
    2,821Postretirement benefit obligation
    
    
    882
    
    
    
    807Other liabilities
    
    
    212
    
    
    
    204Total Liabilities
    
    
    179,181
    
    
    
    190,512Commitments and Contingencies (Note G)Minority Interest
    
    
    487
    
    
    
    248Stockholders Equity:Preferred stock, par value $.01; 5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, par value $.01; 30,000,000 shares authorized; 11,460,460 and 11,403,687
shares issued, respectively; 11,460,460 and 11,403,687 shares outstanding, respectively
    
    
    114
    
    
    
    114Additional paid-in capital
    
    
    29,240
    
    
    
    26,921Retained earnings
    
    
    210,087
    
    
    
    180,244Accumulated other comprehensive income (loss)
    
    
    (1,715
    )
    
    
    335Deferred compensation
    
    
    (731
    )
    
    
    (740
    )Total Stockholders Equity
    
    
    236,995
    
    
    
    206,874Total Liabilities and Stockholders Equity
    
    $
    416,663
    
    
    $
    397,634
  3




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##### Table of Contents



POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Operations (Unaudited)  (In thousands, except per share data)
 Three Months Ended
    
    
    Nine Months EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008Revenues
    
    $
    165,942
    
    
    $
    164,123
    
    
    $
    500,530
    
    
    $
    471,577Cost of goods sold
    
    
    124,835
    
    
    
    129,121
    
    
    
    391,077
    
    
    
    379,188Gross profit
    
    
    41,107
    
    
    
    35,002
    
    
    
    109,453
    
    
    
    92,389Selling, general and administrative expenses
    
    
    20,378
    
    
    
    21,774
    
    
    
    62,262
    
    
    
    62,846Income before interest, income taxes and minority interest
    
    
    20,729
    
    
    
    13,228
    
    
    
    47,191
    
    
    
    29,543Interest expense
    
    
    196
    
    
    
    697
    
    
    
    930
    
    
    
    2,333Interest income
    
    
    (33
    )
    
    
    (59
    )
    
    
    (93
    )
    
    
    (260
    )Income before income taxes and minority interest
    
    
    20,566
    
    
    
    12,590
    
    
    
    46,354
    
    
    
    27,470Income tax provision
    
    
    7,219
    
    
    
    4,753
    
    
    
    16,271
    
    
    
    10,118Minority interest
    
    
    209
    
    
    
    (56
    )
    
    
    240
    
    
    
    (156
    )Net income
    
    $
    13,138
    
    
    $
    7,893
    
    
    $
    29,843
    
    
    $
    17,508Net earnings per common share:Basic
    
    $
    1.15
    
    
    $
    0.70
    
    
    $
    2.61
    
    
    $
    1.56Diluted
    
    $
    1.14
    
    
    $
    0.69
    
    
    $
    2.59
    
    
    $
    1.53Weighted average shares:Basic
    
    
    11,420
    
    
    
    11,310
    
    
    
    11,416
    
    
    
    11,233Diluted
    
    
    11,521
    
    
    
    11,470
    
    
    
    11,501
    
    
    
    11,416
  4




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POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)  (In thousands)
 Nine Months EndedJune 30, 2009
    
    
    June 30, 2008Operating Activities:Net income
    
    $
    29,843
    
    
    $
    17,508Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation
    
    
    5,580
    
    
    
    6,095Amortization
    
    
    2,624
    
    
    
    2,840Stock-based compensation
    
    
    1,849
    
    
    
    2,456Minority interest
    
    
    240
    
    
    
    (156
    )Loss on disposition of assets
    
    
    8
    
    
    
    11Bad debt expense
    
    
    1,172
    
    
    
    527Deferred income taxes
    
    
    (1,411
    )
    
    
    1,928Changes in operating assets and liabilities:Accounts receivable, net
    
    
    13,765
    
    
    
    (25,469
    )Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    26,640
    
    
    
    (14,577
    )Inventories
    
    
    17,768
    
    
    
    (23,940
    )Prepaid expenses and other current assets
    
    
    (2,659
    )
    
    
    1,182Other assets
    
    
    77
    
    
    
    (54
    )Accounts payable and income taxes payable
    
    
    8,933
    
    
    
    (340
    )Accrued liabilities
    
    
    (5,141
    )
    
    
    9,876Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    12,932
    
    
    
    17,152Deferred compensation
    
    
    (82
    )
    
    
    160Other liabilities
    
    
    82
    
    
    
    98Net cash provided by (used in) operating activities
    
    
    112,220
    
    
    
    (4,703
    )Investing Activities:Proceeds from sale of fixed assets
    
    
    15
    
    
    
    Purchases of property, plant and equipment
    
    
    (6,412
    )
    
    
    (1,969
    )Net cash used in investing activities
    
    
    (6,397
    )
    
    
    (1,969
    )Financing Activities:Borrowings on US revolving line of credit
    
    
    50,953
    
    
    
    155,413Payments on US revolving line of credit
    
    
    (69,953
    )
    
    
    (143,113
    )Payments on UK revolving line of credit
    
    
    
    
    
    
    (1,596
    )Payments on UK term loan
    
    
    (1,356
    )
    
    
    (1,810
    )Payments on industrial development revenue bonds
    
    
    (400
    )
    
    
    (400
    )Payments on deferred acquisition payable
    
    
    (5,220
    )
    
    
    (5,563
    )Proceeds from exercise of stock options
    
    
    213
    
    
    
    3,963Tax benefit from exercise of stock options
    
    
    107
    
    
    
    1,401Payments on short-term and other financing
    
    
    (13
    )
    
    
    (39
    )Net cash (used in) provided by financing activities
    
    
    (25,669
    )
    
    
    8,256Net increase in cash and cash equivalents
    
    
    80,154
    
    
    
    1,584Effect of exchange rate changes on cash and cash equivalents
    
    
    (847
    )
    
    
    (6
    )Cash and cash equivalents at beginning of period
    
    
    10,134
    
    
    
    5,257Cash and cash equivalents at end of period
    
    $
    89,441
    
    
    $
    6,835
  5




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##### Table of Contents



POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 A.
    
    OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Overview
   Basis of Presentation
    Use of Estimates
  6




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Fair Value Measurements
 Fair Value Measurements Application of FASB Statement No. 157 to FASB Statement No. 13 and Other
Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification
or Measurement under Statement 13 Effective Date of FASB Statement
No. 157 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Foreign Currency Translation
 Foreign
Currency Translation
 Derivative Financial Instruments
   7




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Disclosures about Derivative Instruments and
Hedging Activities  an
amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging
Activities
   Accumulated Other Comprehensive Income (Loss)
  Income Taxes
  Accounting for Uncertainty in
Income Taxes  an Interpretation of FASB Statement No. 109
     8




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New Accounting Standards
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements an amendment of Accounting Research Bulletin 51
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities Earnings per
Share
 Determining the Fair Value of a Financial Asset
in a Market That is Not Active Accounting Change and Error
Corrections
 Equity Method Investment Considerations
 Employers Disclosures about Postretirement
Benefit Plan Assets Employers
Disclosures about Pensions and Other Postretirement Benefits
 9




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Amendments to the Impairment Guidance of
EITF Issue No. 99-20
 Interim Disclosures about Fair Value of Financial Instruments, Disclosures about Fair Value of Financial Instruments, Interim Financial Reporting
 Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies Accounting for Contingencies Reasonable Estimation of the Amount
of a Loss
 Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly
 Subsequent Events
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162 FASB
 10




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Accounting Standards Codification
 B.
    
    EARNINGS PER SHARE
  Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Net income
    
    $
    13,138
    
    
    $
    7,893
    
    
    $
    29,843
    
    
    $
    17,508Denominator:Denominator for basic earnings per share-weighted average shares
    
    
    11,420
    
    
    
    11,310
    
    
    
    11,416
    
    
    
    11,233Dilutive effect of stock options and restricted stock
    
    
    101
    
    
    
    160
    
    
    
    85
    
    
    
    183Denominator for diluted earnings per share-adjusted weighted
average shares with assumed conversions
    
    
    11,521
    
    
    
    11,470
    
    
    
    11,501
    
    
    
    11,416Net earnings per share:Basic
    
    $
    1.15
    
    
    $
    0.70
    
    
    $
    2.61
    
    
    $
    1.56Diluted
    
    $
    1.14
    
    
    $
    0.69
    
    
    $
    2.59
    
    
    $
    1.53
  C.
    
    FAIR VALUE MEASUREMENTS
 Overview
and Summary of Significant Accounting Policies
      11




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Fair Value Measurements Using InputsConsidered as
    
    
    Fair Value atLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    June 30, 2009AssetsCash equivalents
    
    $
    50,058
    
    
    $
    
    
    
    $
    
    
    
    $
    50,058Foreign currency forward contracts
    
    
    
    
    
    $
    62
    
    
    $
    
    
    
    
    62Total
    
    $
    50,058
    
    
    $
    62
    
    
    $
    
    
    
    $
    50,120LiabilitiesForeign currency forward contracts
    
    $
    
    
    
    $
    469
    
    
    $
    
    
    
    $
    469Total
    
    $
    
    
    
    $
    469
    
    
    $
    
    
    
    $
    469
   D.
    
    DETAIL OF SELECTED BALANCE SHEET ACCOUNTS
 Allowance for Doubtful Accounts
  Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Balance at beginning of period
    
    $
    1,609
    
    
    $
    1,035
    
    
    $
    1,180
    
    
    $
    1,739Accrued bad debt expense
    
    
    84
    
    
    
    90
    
    
    
    1,172
    
    
    
    526Deductions for uncollectible accounts written off, net of recoveries
    
    
    (66
    )
    
    
    97
    
    
    
    (632
    )
    
    
    (1,036
    )Decrease due to foreign currency translation
    
    
    83
    
    
    
    
    
    
    
    (10
    )
    
    
    (7
    )Balance at end of period
    
    $
    1,710
    
    
    $
    1,222
    
    
    $
    1,710
    
    
    $
    1,222
 Warranty Accrual
  Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Balance at beginning of period
    
    $
    6,336
    
    
    $
    6,866
    
    
    $
    6,793
    
    
    $
    5,787Accrued warranty expense
    
    
    918
    
    
    
    1,710
    
    
    
    3,029
    
    
    
    4,135Deductions for warranty charges
    
    
    (785
    )
    
    
    (1,099
    )
    
    
    (2,993
    )
    
    
    (2,406
    )Decrease due to foreign currency translation
    
    
    135
    
    
    
    3
    
    
    
    (225
    )
    
    
    (36
    )Balance at end of period
    
    $
    6,604
    
    
    $
    7,480
    
    
    $
    6,604
    
    
    $
    7,480
 12




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Inventories
  June 30,
    
    
    September 30,2009
    
    
    2008Raw materials, parts and subassemblies
    
    $
    40,627
    
    
    $
    57,742Work-in-progress
    
    
    13,885
    
    
    
    14,937Total inventories
    
    $
    54,512
    
    
    $
    72,679
 Cost and Estimated Earnings on Uncompleted Contracts
  June 30,
    
    
    September 30,2009
    
    
    2008Costs incurred on uncompleted contracts
    
    $
    499,570
    
    
    $
    513,549Estimated earnings
    
    
    122,415
    
    
    
    120,571621,985
    
    
    
    634,120Less: Billings to date
    
    
    618,434
    
    
    
    590,882Net underbilled position
    
    $
    3,551
    
    
    $
    43,238Included in the accompanying balance sheets under the following captions:Costs and estimated earnings in excess of billings on uncompleted contracts  underbilled
    
    $
    55,539
    
    
    $
    82,574Billings in excess of costs and estimated earnings on uncompleted contracts  overbilled
    
    
    (51,988
    )
    
    
    (39,336
    )Net underbilled position
    
    $
    3,551
    
    
    $
    43,238
 E.
    
    COMPREHENSIVE INCOME
  Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    13,138
    
    
    $
    7,893
    
    
    $
    29,843
    
    
    $
    17,508Unrealized (gain) loss on foreign currency translation, net of tax
    
    
    2,333
    
    
    
    13
    
    
    
    (1,946
    )
    
    
    (473
    )Unrealized (gain) loss on derivative contracts, net of tax
    
    
    1,829
    
    
    
    
    
    
    
    (104
    )
    
    
    Comprehensive income
    
    $
    17,300
    
    
    $
    7,906
    
    
    $
    27,793
    
    
    $
    17,035
 F.
    
    LONG-TERM DEBT
  June 30,
    
    
    September 30,2009
    
    
    2008US Revolver
    
    $
    
    
    
    $
    19,000UK Revolver
    
    
    2,478
    
    
    
    2,726UK Term Loan
    
    
    2,973
    
    
    
    4,907Deferred acquisition payable
    
    
    4,292
    
    
    
    9,512Industrial development revenue bonds
    
    
    5,200
    
    
    
    5,600Capital lease obligations
    
    
    
    
    
    
    13Subtotal long-term debt and capital lease obligations
    
    
    14,943
    
    
    
    41,758Less current portion
    
    
    (6,674
    )
    
    
    (7,814
    )Total long-term debt and capital lease obligations
    
    $
    8,269
    
    
    $
    33,944
 US and UK Revolvers
  13




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Minimum Tangible Net Worth
 Minimum Fixed Charge Coverage Ratio
 Maximum Leverage Ratio
  14




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UK Term Loan
  Deferred Acquisition Payable
 ®
 Industrial Development Revenue Bonds
  G.
    
    COMMITMENTS AND CONTINGENCIES
 Letters of Credit and Bonds
    15




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Litigation
  Other Contingencies
   H.
    
    STOCK-BASED COMPENSATION
  Restricted Stock Units
   16




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Stock Options
  RemainingWeighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateStock
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Term (Years)
    
    
    Value(In thousands)Outstanding at September 30, 2008
    
    
    267,300
    
    
    $
    17.14Granted
    
    
    
    
    
    
    Exercised
    
    
    (12,300
    )
    
    
    17.26Forfeited / Cancelled
    
    
    
    
    
    
    Outstanding at June 30, 2009
    
    
    255,000
    
    
    $
    17.13
    
    
    
    2.21
    
    
    $
    4,369Exercisable at June 30, 2009
    
    
    216,000
    
    
    $
    16.90
    
    
    
    2.06
    
    
    $
    3,650
 I.
    
    DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES
 Accounting for Certain Derivatives and
Certain Hedging Activities
 Hedging  General: Assessing Hedge Effectiveness of Fair Value and Cash Flow
Hedges Period-by-Period or Cumulatively under a Dollar-Offset Approach
   Asset Derivatives
    
    
    Liability DerivativesFair
    
    
    
    
    FairBalance Sheet Location
    
    Value
    
    
    Balance Sheet  Location
    
    Value(in thousands)Derivatives designated as
hedging instruments under FAS
133:Foreign exchange forwards
    
    Prepaid expenses and other 
current assets
    
    $
    62
    
    
    Other accrued expenses
    
    $
    469Foreign exchange forwards
    
    Deferred income taxes
    
    
    56
    
    
    Other liabilities
    
    
    Total derivatives
    
    
    
    $
    118
    
    
    
    
    $
    469
 17




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Amount of Gain (Loss)Amount of Gain (Loss)
    
    
    
    
    
    
    Reclassified fromRecognized in Other
    
    
    
    
    
    
    Accumulated OtherComprehensive Income on
    
    
    
    
    
    
    Comprehensive IncomeDerivatives(1)
    
    
    
    
    
    
    into Income(1)Three
    
    
    
    
    
    
    
    
    
    
    Three
    
    
    NineMonths
    
    
    Nine Months
    
    
    Location of Gain (Loss)
    
    
    Months
    
    
    MonthsEnded
    
    
    Ended
    
    
    Reclassified from Accumulated
    
    
    Ended
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    Other comprehensive Income
    
    
    June 30,
    
    
    June 30,Derivatives designated under FAS 133
    
    2009
    
    
    2009
    
    
    into Income
    
    
    2009
    
    
    2009( in thousands)
    
    
    
    
    
    
    (in thousands)Derivatives designated as cash
flow hedges:Foreign exchange forwards
    
    $
    2,818
    
    
    $
    (160
    )
    
    Other income (expense)
    
    $
    60
    
    
    $
    68Total designated cash flow hedges
    
    $
    2,818
    
    
    $
    (160
    )
    
    
    
    
    
    $
    60
    
    
    $
    68
 
 (1)
    
    For the three and nine month periods ended June 30, 2009, the Company recorded in other
(income) expense an immaterial amount of ineffectiveness from cash flow hedges.  Cash Flow Hedges
      18




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##### Table of Contents



Credit Risk
  J.
    
    BUSINESS SEGMENTS
    Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Electrical Power Products
    
    $
    156,077
    
    
    $
    156,516
    
    
    $
    478,278
    
    
    $
    451,699Process Control Systems
    
    
    9,865
    
    
    
    7,607
    
    
    
    22,252
    
    
    
    19,878Total
    
    $
    165,942
    
    
    $
    164,123
    
    
    $
    500,530
    
    
    $
    471,577Gross profit:Electrical Power Products
    
    $
    36,038
    
    
    $
    32,044
    
    
    $
    100,170
    
    
    $
    85,346Process Control Systems
    
    
    5,069
    
    
    
    2,958
    
    
    
    9,283
    
    
    
    7,043Total
    
    $
    41,107
    
    
    $
    35,002
    
    
    $
    109,453
    
    
    $
    92,389Income before income taxes and minority interest:Electrical Power Products
    
    $
    17,731
    
    
    $
    11,244
    
    
    $
    42,993
    
    
    $
    25,283Process Control Systems
    
    
    2,835
    
    
    
    1,346
    
    
    
    3,361
    
    
    
    2,187Total
    
    $
    20,566
    
    
    $
    12,590
    
    
    $
    46,354
    
    
    $
    27,470
 19




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##### Table of Contents



June 30, 2009
    
    
    September 30, 2008Identifiable tangible assets:Electrical Power Products
    
    $
    279,589
    
    
    $
    342,105Process Control Systems
    
    
    6,631
    
    
    
    8,734Corporate
    
    
    106,955
    
    
    
    20,507Total
    
    $
    393,175
    
    
    $
    371,346
   K.
    
    SUBSEQUENT EVENTS
  
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our financial condition and results of operations should
be read in conjunction with the accompanying condensed consolidated financial statements and
related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report
on Form 10-K for the year ended September 30, 2008, which was filed with the Securities and
Exchange Commission on December 10, 2008 and is available on the SECs website at www.sec.gov.
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
    
    
    The current worldwide financial crisis and economic downturn may likely affect our
customer base and suppliers, and could materially affect our backlog and profits.
    
    The U.S. governments plans to address the financial crisis may not be effective at
maintaining financial stability or at increasing the availability of credit.
 20




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##### Table of Contents




    
    Our industry is highly competitive.
    
    International and political events may adversely affect our operations.
    
    Fluctuations in the price and supply of raw materials used to manufacture our products
may reduce our profits.
    
    Our use of percentage-of-completion accounting could result in a reduction or elimination
of previously reported profits.
    
    Our dependence upon fixed-price contracts could result in reduced profits or, in some
cases, losses, if costs increase above our estimates.
    
    Our acquisition strategy involves a number of risks.
    
    We may not be able to fully realize the revenue value reported in our backlog.
    
    Our operating results may vary significantly from quarter to quarter.
    
    We may be unsuccessful at generating internal growth.
    
    The departure of key personnel could disrupt our business.
    
    Our business requires skilled labor, and we may be unable to attract and retain qualified
employees.
    
    Failure to successfully comply with Section 404 of the Sarbanes-Oxley Act of 2002 could
negatively impact our business.
    
    Actual and potential claims, lawsuits and proceedings could ultimately reduce our
profitability and liquidity and weaken our financial condition.
    
    We carry insurance against many potential liabilities, and our risk management program
may leave us exposed to unidentified or unanticipated risks.
    
    Technological innovations by competitors may make existing products and production
methods obsolete.
    
    Catastrophic events could disrupt our business.
  Overview
  21




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##### Table of Contents



Results of Operations
 Revenue and Gross Profit
   Electrical Power Products
     22




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##### Table of Contents



Process Control Systems
    Consolidated Selling, General and Administrative Expenses
   Interest Expense and Income
   Provision for Income Taxes
   23




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##### Table of Contents



Net Income
  Backlog
  Liquidity and Capital Resources
    Operating Activities
  Investing Activities
  24




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##### Table of Contents



Financing Activities
  New Accounting Standards
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements an amendment of Accounting Research Bulletin 51
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities Earnings per
Share
 Determining the Fair Value of a Financial Asset
in a Market That is Not Active Accounting Change and Error
Corrections
 Equity Method Investment Considerations
 25




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##### Table of Contents



Employers Disclosures about Postretirement
Benefit Plan Assets Employers
Disclosures about Pensions and Other Postretirement Benefits
 Amendments to the Impairment Guidance of
EITF Issue No. 99-20
 Interim Disclosures about Fair Value of Financial Instruments, Disclosures about Fair Value of Financial Instruments, Interim Financial Reporting
 Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies Accounting for Contingencies Reasonable Estimation of the Amount
of a Loss
 Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly
 Subsequent Events
 26




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##### Table of Contents



The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162 FASB Accounting Standards Codification
 Critical Accounting Policies
   Outlook for Fiscal 2009
  ®
   27




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
  Foreign Currency Transaction Risk
   Commodity Price Risk
  Market Risk
  28




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##### Table of Contents



Item 4.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Internal Control over Financial Reporting
  Design and Operation of Control Systems
  
 PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  29




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##### Table of Contents



Item 1A.
    
    Risk Factors
  
 Item 6.
    
    Exhibits
 Number
    
    
    
    Description of Exhibits3.1
    
    
    
    Certificate of Incorporation of Powell Industries, Inc. filed with the Secretary
of State of the State of Delaware on February 11, 2004 (filed as Exhibit 3.1 to
our Form 8-A/A filed November 1, 2004, and incorporated herein by reference).3.2
    
    
    
    By-laws of Powell Industries, Inc. (filed as Exhibit 3.2 to our Form 8-A/A filed
November 1, 2004, and incorporated herein by reference).*31.1
    
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*31.2
    
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*32.1
    
    
    
    Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    
    
    Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 30




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##### Table of Contents



SIGNATURES
  POWELL INDUSTRIES, INC.
     (Registrant)August 4, 2009
    By:
    /s/ Patrick L. McDonaldDate
    
    Patrick L. McDonaldPresident and Chief Executive Officer
(Principal Executive Officer)August 4, 2009
    By:
    /s/ Don R. MadisonDate
    
    Don R. MadisonExecutive Vice President
Chief Financial and Administrative Officer
(Principal Financial and Accounting Officer) 31




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    
    
    Exhibit Title3.1
    
    
    
    Certificate of Incorporation of Powell Industries, Inc. filed with the Secretary of
State of the State of Delaware on February 11, 2004 (filed as Exhibit 3.1 to our Form
8-A/A filed November 1, 2004, and incorporated herein by reference).3.2
    
    
    
    By-laws of Powell Industries, Inc. (filed as Exhibit 3.2 to our Form 8-A/A filed
November 1, 2004, and incorporated herein by reference).*31.1
    
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*31.2
    
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*32.1
    
    
    
    Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    
    
    Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 32