1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------------- --------------------
COMMISSION FILE NUMBER 0-6050
--------------------
POWELL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0106100
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8550 MOSLEY DRIVE, HOUSTON, TEXAS 77075-1180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713)944-6900
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
Indicate by "X" whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by "X" if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
The aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $145,788,066 as of January 23, 2001. The
number of shares of the Company's Common Stock outstanding on that date was
10,321,000 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 2001 annual meeting of
stockholders to be filed not later than 120 days after October 31, 2000 are
incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
Powell Industries, Inc. ("Powell" or the "Company") was incorporated
under the laws of the State of Nevada in December 1968. The Company is the
successor to a corporation founded by William E. Powell in 1947, which merged
into the Company in 1977.
The Company sells, designs, develops, manufactures, packages and
services systems and equipment for the distribution, control and management of
electrical energy and other dynamic processes. The Company's offices are located
in Houston, Texas with plants located in Houston, Greenville and Jacinto Port,
Texas; Elyria and North Canton, Ohio; Franklin Park, Illinois; Pleasanton and
Watsonville, California; and Duluth and Norcross, Georgia. Most of the products
manufactured by the Company are made pursuant to specifications required for a
particular order.
PRODUCTS AND SYSTEMS
Powell designs, develops, manufactures, sells and services electrical
power distribution and control equipment and systems through its subsidiaries:
Powell Electrical Manufacturing Company; Powell-ESCO Company; Unibus, Inc.;
Delta-Unibus Corp.; Transdyn Controls, Inc.; and Powell Power Electronics
Company, Inc. (a subsidiary of Powell Electrical Manufacturing Company). As
applicable to the context, the "Company" is also sometimes used herein to refer
to Powell and its subsidiaries.
The principal products are switchgear and related equipment, bus duct
and process control systems. Primarily refineries, petrochemical plants,
utilities, paper mills, offshore platforms, commuter railways, vehicular
transportation and numerous other industrial, commercial and governmental
facilities utilize these products and services. A brief description of each of
the major products follows:
Switchgear and other related equipment: Switchgear is defined
as free-standing metal enclosures containing a selection of electrical
components that protect, monitor and control the flow of electricity
from its source to motors, transformers and other electrically powered
equipment as well as customized portable buildings to house switchgear
and related equipment (PCR(R)). Major electrical components include
circuit breakers, protective relays, meters, control switches, fuses,
motor control centers and both current and potential transformers.
During the fiscal years ended October 31, 2000, 1999 and 1998, sales
and service of switchgear and other related equipment accounted for
72%,71% and 77%, respectively, of consolidated revenues of the Company.
Bus Duct: Bus duct consists of insulated power conductors
housed in a metal enclosure. Individual pieces of bus duct are arranged
in whatever physical configuration may be required to distribute
electrical power to or from a generator, transformer, switching device
or other electrical apparatus. The Company can provide the
nonsegregated phase, segregated phase and isolated phase styles of bus
duct with numerous amperage and voltage ratings. Sales of bus duct
accounted for 14%, 13% and 12% of consolidated revenues for fiscal
years 2000, 1999 and 1998, respectively.
Process Control Systems: The process control systems supplied
by the Company consist principally of instrumentation, computer
control, communications, and data management systems. Demand for
process control systems has been for modernization and expansion
projects as well as new facilities that mainly serve the
transportation, environmental and utilities industries. During the
fiscal years ended October 31, 2000, 1999 and 1998, sales of process
control systems accounted for 13%, 16% and 11%, respectively, of
consolidated revenues of the Company.
See Note O of the Notes to Consolidated Financial Statements for
certain financial information regarding these product segments.
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SUPPLIERS
All of the Company's products are manufactured using components and
materials that are readily available from numerous domestic suppliers. The
Company has three principal suppliers of components and anticipates no
difficulty in obtaining its components in sufficient quantities to support its
manufacturing and assembly operations.
METHODS OF DISTRIBUTION AND CUSTOMERS
The Company's products are sold through manufacturers' representatives
and its internal sales force. The Company is not dependent on any single
customer for sales and the loss of any specific customer would not have a
material adverse effect upon the Company. No single customer or export country
accounted for more than 10% of consolidated revenues in the fiscal years ended
2000, 1999 or 1998. Export revenues were $44,421,000, $70,373,000 and
$85,448,000 in fiscal years 2000, 1999 and 1998, respectively. See Note I of the
Notes to Consolidated Financial Statements showing the geographic areas in which
these revenues were recorded.
COMPETITION
The Company is engaged in a highly competitive business which is
characterized by a small number of much larger companies that dominate the bulk
of the market and a large number of smaller companies that compete for a limited
share of such market. In the opinion of management, the competitive position of
the Company is dependent on the ability of the Company to provide quality
products to a customer's specifications, on a timely basis, at a competitive
price, utilizing state-of-the-art materials, design and production methods. Some
of the Company's principal competitors are larger and have greater capital and
management resources.
EMPLOYEES
At October 31, 2000, the Company employed 1,314 employees on a
full-time basis. Management considers its employee relations to be good.
BACKLOG
The Company's backlog of orders was $155,850,000 and $156,143,000 at
October 31, 2000 and 1999, respectively, and the percentage of its 2000 year end
backlog that it does not expect to fill in fiscal year 2001 is 19%. Orders
included in the backlog are represented by purchase orders which the Company
believes to be firm. The terms on which the Company accepts orders include a
penalty for cancellation. Historically, no material amount of orders included in
backlog has been canceled. No material portion of the Company's business is
seasonal in nature.
RESEARCH AND DEVELOPMENT
During the fiscal years ended October 31, 2000, 1999 and 1998, the
Company spent approximately $2,920,000, $3,031,000 and $2,693,000 respectively,
on research and development programs.
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ITEM 2. PROPERTIES
The following table sets forth information about the Company's
principal facilities at October 31, 2000.
Square
Footage
of
Location Acres Facilities Occupancy
-------- ----- ---------- ---------
Owned:
Franklin Park, IL 2.0 64,000 Delta-Unibus Corp. (Delta)
Greenville, TX 19.0 109,000 Powell-ESCO Company (Esco)
Houston, TX 26.2 421,000 Powell Electrical Manufacturing Co. (PEMCO)
Jacinto Port, TX 42.0 9,600 PEMCO-Offshore Division
North Canton, OH 8.0 48,000 PEMCO-North Canton Division
Elyria, OH 8.6 64,000 Unibus, Inc. (Unibus)
Leased:
Pleasanton, CA 39,100 Transdyn Controls, Inc. and Powell Power
Electronics Company, Inc. (PPECO)
Watsonville, CA 9,600 PPECO
Duluth, GA 29,700 Transdyn Controls, Inc.
Norcross, GA 19,200 Transdyn Controls, Inc.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to legal and other disputes arising in the
ordinary course of business. Management does not believe that the ultimate
outcome of these disputes will materially affect the financial position or
results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters which were submitted to a vote of security
holders through proxies, or otherwise, during the fourth quarter of the fiscal
year ended October 31, 2000.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of October 31, 2000, there were approximately 759 holders of
record of Powell Industries, Inc. common stock, which is traded on the
over-the-counter market and listed on the NASDAQ National Market System under
the symbol POWL.
Quarterly stock prices and trading volumes for the last two fiscal
years are as follows:
High Low Last Daily Volume
---- --- ---- ------------
1999
First Quarter $12.75 $8.63 $10.75 9,559
Second Quarter 11.00 8.50 8.81 9,429
Third Quarter 10.38 8.38 8.75 12,754
Fourth Quarter 9.13 7.63 7.63 14,547
2000
First Quarter $8.38 $4.63 $6.88 37,863
Second Quarter 10.50 6.88 8.91 19,527
Third Quarter 10.19 7.25 8.38 13,883
Fourth Quarter 13.31 7.88 10.94 13,400
The Company has paid no dividends on its common stock during the last
three years and anticipates that it will not do so in the foreseeable future.
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ITEM 6. SELECTED FINANCIAL DATA
The following data for fiscal years 2000, 1999, and 1998 has been
derived from consolidated financial statements audited by Arthur Andersen LLP,
which appear elsewhere in this report. The following data for fiscal years 1997
and 1996 has been derived from consolidated financial statements audited by
Arthur Andersen LLP, which do not appear in this report. The information set
forth below is not necessarily indicative of the results of future operations
and should be read in conjunction with the consolidated financial statements and
notes thereto appearing elsewhere in this Annual Report on Form 10-K.
Years Ended October 31, 2000 1999 1998 1997 1996
--------------------------- ---- ---- ----- ---- ----
Statements of operations data:
Revenues $223,019,000 $212,531,000 $212,733,000 $191,651,000 $170,123,000
Earnings from continuing operations 7,061,000 7,127,000 11,465,000 12,629,000 10,758,000
Loss from discontinued operations
(net of income taxes) --- --- (4,800,000) --- (5,998,000)
------------ ------------ ------------ ------------ ------------
Net earnings $ 7,061,000 $ 7,127,000 $ 6,665,000 $ 12,629,000 $ 4,760,000
============ ============ ============ ============ ============
Net earnings per common share:
Continuing operations
Basic: $ .68 $ .67 $ 1.08 $ 1.19 $ 1.02
Diluted: .67 .66 1.07 1.17 1.00
Discontinued operations
Basic: --- --- (.45) --- (.57)
Diluted: --- --- (.45) --- (.56)
Net earnings per common share:
Basic: .68 .67 .63 1.19 .45
Diluted: .67 .66 .62 1.17 .44
Weighted average number of common
shares outstanding 10,451,000 10,665,000 10,644,000 10,622,000 10,567,000
Weighted average number of common and
common equivalent shares outstanding 10,530,000 10,777,000 10,743,000 10,808,000 10,765,000
Balance Sheet Data:
Working capital $ 63,508,000 $ 59,782,000 $ 58,826,000 $ 51,769,000 $ 46,505,000
Total assets 137,926,000 127,531,000 127,131,000 122,867,000 99,523,000
Long-term debt 5,714,000 7,143,000 11,571,000 6,000,000 ---
Stockholders' equity 94,087,000 90,772,000 83,336,000 76,307,000 63,225,000
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements.
Any forward-looking statements made by or on behalf of the Company are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned that such forward-looking statements
involve risks and uncertainty in that actual results may differ materially from
those projected in the forward-looking statements. These risks and uncertainties
include, without limitation, the following:
o Difficulties in scheduling which could arise from the inability to
obtain materials or components in sufficient quantities as needed
for the Company's manufacturing and assembly operations,
o Difficulties in scheduling which could arise from significant
customer-directed shipment delay,
o Significant decreases in the Company's backlog,
o Unforeseen political or economic problems in countries to which
the Company exports its products,
o Unforeseen material employee relations problems,
o Problems in the quality, the design, the production methods or
pricing of its products,
o Unfavorable material litigation or claims made against the
Company, and
o Changes in general market conditions, competition and pricing.
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RESULTS OF OPERATIONS
The following table sets forth, as a percentage of revenues, certain
items from the Consolidated Statements of Operations.
YEARS ENDED OCTOBER 31,
2000 1999 1998
---- ---- -----
Revenues....................................................................... 100.0% 100.0% 100.0%
Gross profit................................................................... 18.2 18.9 22.5
Selling, general and administrative expenses................................... 13.5 13.8 14.5
Interest (income) expense, net................................................. --- .2 .1
Earnings from continuing operations............................................ 3.2 3.4 5.4
Loss from discontinued operations.............................................. --- --- (2.3)
Net earnings................................................................... 3.2 3.4 3.1
Revenues
The Company reported revenues of $223,019,000, $212,531,000 and
$212,733,000 in fiscal years 2000, 1999 and 1998, respectively. Revenues
increased 5% in fiscal year 2000 as compared to fiscal year 1999. Revenues were
higher in the switchgear products and bus duct segments in fiscal 2000, which
was partially offset by lower revenues from the process control segment.
Revenues were flat in fiscal year 1999 when compared to fiscal year 1998 due
to higher revenues from the process control and bus duct segments which was
fully offset by lower revenues from the switchgear product segment.
Export revenues were a declining but still an important component of
the Company's operations, accounting for 20%, 33% and 40% of consolidated
revenues in fiscal years 2000, 1999 and 1998, respectively. A schedule is
provided in Note I of the Notes to Consolidated Financial Statements showing the
geographic areas in which these sales were made. This schedule shows the
reduction in international revenues in 2000 to be mainly from the Middle Eastern
and African countries. Management anticipates that consolidated revenues will
increase in fiscal 2001 and that export revenues will continue to contribute
approximately 20% to 30% of consolidated revenues.
Gross profit
Gross profit, as a percentage of revenues, was 18.2%, 18.9%, and 22.5%
in fiscal years 2000, 1999 and 1998, respectively. The decrease in 2000 from
1999 was due mainly to unfavorable inventory adjustment at one of our switchgear
operations and additional costs on a major project at our process control
segment. The decrease in 1999 from 1998 was due mainly to lower switchgear
product segment prices and volumes. The Company continues to implement lean
manufacturing initiatives to respond to the competitive markets it serves.
Selling, general and administrative expenses
Selling, general and administrative expenses as a percentage of
revenues were 13.5%, 13.8%, and 14.5% for fiscal years 2000, 1999 and 1998,
respectively. The decrease in fiscal year 2000 as a percentage of revenues, was
due to controlling of expenses as revenues increased in 2000. The reduction in
1999 compared to 1998 was due mainly to lower incentives and bonus expense
payments offset somewhat by higher research and development costs.
Interest (income) expense, net
The following schedule shows the amounts of interest expense and
income:
2000 1999 1998
---- ----- ----
Interest expense......................................................... 639 $774 $558
Interest income.......................................................... (683) (413) (319)
---- ---- ----
Net interest............................................................. $(44) $361 $239
==== ==== ====
Sources of interest expense were related to bank notes in fiscal years
2000, 1999 and 1998 bearing interest at approximately 6%.
Sources of interest income were related to a note receivable and to
short-term investments of available funds at various rates between 4% and 7%.
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Income tax provision
The effective income tax rate on earnings from continuing operations
before income taxes was 35.1%, 31.8%, and 31.5% for fiscal years 2000, 1999 and
1998, respectively. The effective income tax rates are slightly above the
statutory rate for 2000 due primarily to state income taxes, but lower than the
statutory rate in 1999 and 1998 due primarily to foreign sales corporation
credits.
Earnings from continuing operations
Earnings from continuing operations recorded in fiscal year 2000 were
$7,061,000 or $.67 per diluted share. This represented a one percent decrease in
earnings compared to fiscal year 1999 earnings. The decrease was due mainly to
an unfavorable inventory adjustment at one of our switchgear operations and
additional costs on a major project at our process control segment offset by
increased volumes at the switchgear and bus duct segments. Earnings from
continuing operations recorded in fiscal year 1999 were $7,127,000 or $.66 per
diluted share, a decrease of 38% compared to earnings from continuing operations
of $11,465,000 or $1.07 per diluted share in fiscal year 1998. This decrease was
primarily due to reduced revenues and lower margins from the switchgear segment,
which was the result of lower prices.
Discontinued operations
See Note M to Notes to Consolidated Financial Statements for discussion of
the operations that were discontinued in fiscal year 1998.
Net earnings
Net earnings were $7,061,000 or $.67 per diluted share in fiscal year
2000 compared to $7,127,000 or $.66 per diluted share and $6,665,000 or $.62 per
diluted share in fiscal years 1999 and 1998, respectively. The losses from
discontinued operations, referred to in the previous paragraph, resulted in
higher net earnings in fiscal year 1999 as compared to 1998.
LIQUIDITY AND CAPITAL RESOURCES
In September 1998, the Company amended a revolving line of credit
agreement with a major domestic bank. The amendment provided for a $10,000,000
term loan and a revolving line of credit of $20,000,000. In December 1999 the
revolving line of credit was amended to reduce the line to $15,000,000 and to
extend the maturity date to February 2002. The term loan has a maturity of five
years with nineteen equal quarterly payments of $357,143 and a final payment of
the remaining principal balance on September 30, 2003. The effective interest
rate, after including an interest rate swap negotiated with the trust company of
the same domestic bank, is 5.2 percent per annum plus a .75 to 1.25 percent fee
based on financial covenants. The proceeds of the term loan were used to pay the
Settlement Agreement discussed in Note M to the Consolidated Financial
Statements and to pay down the revolving line of credit. As of October 31, 2000,
the Company had no borrowings outstanding under this revolving line of credit.
The Company's ability to satisfy its cash requirements is evaluated by
analyzing key measures of liquidity applicable to the Company. The following
table is a summary of the liquidity measures which management believes to be
significant.
2000 1999 1998
---- ---- -----
Working capital............................................................ $63,508,000 $59,782,000 $58,826,000
Current ratio.............................................................. 2.75 to 1 3.13 to 1 2.95 to 1
Debt to total capitalization............................................... .1 to 1 .1 to 1 .1 to 1
Management believes that the Company continues to maintain a strong
liquidity position. The change in working capital in fiscal 2000 compared to
1999 was only $3,726,000. However, during 2000 there were large increases in
accounts receivable and in costs and estimated earnings in excess of billings
partially offset by an increase in accounts payable. These increases resulted in
a large decrease in cash and cash equivalents. The minimal increase in working
capital at October 31, 1999, as compared to October 31, 1998 is due mainly to
large reductions in costs and estimated earnings in excess of billings, and
inventories, offset particularly by a reduction in accounts payable.
Operating cash flows of $426,000 for fiscal 2000 were significantly
lower than operating cash flow amounts in the previous year due to the build up
of accounts receivable and costs in excess of billings because of sales volume
increases in the fourth quarter of 2000. Operating cash flows were $18,505,000
in fiscal 1999. The increase in operating cash flows in fiscal year 1999
compared to fiscal 1998 was due to the decreases in costs and estimated earnings
in excess of billings, accounts receivable, and inventories which was partially
offset by decreases in accounts payable and accrued liabilities.
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Capital expenditures totaled $2,648,000 during fiscal year 2000
compared to $5,156,000 during fiscal year 1999. The major expenditures in 2000
were for the purchase of machinery and equipment. During fiscal year 1999
the majority of the capital expenditures were for the purchase of a facility in
North Canton, Ohio and for machinery and equipment. Management expects the
Company's capital expenditures program to be approximately $4,500,000 in fiscal
year 2001, primarily for additions and replacement of machinery and equipment.
The Company announced in December 1999 that authorization had been
given by the Board of Directors to repurchase up to $5,000,000 of its
outstanding common stock, subject to market conditions. Pursuant to this plan,
the Company repurchased 505,400 shares of its common stock at an aggregate cost
of approximately $4,669,000 through October 31, 2000. Repurchased shares are
added to treasury stock and are available for general corporate purposes
including issuance under the Company's employee stock option plan.
The Company's fiscal year 2000 asset management program will continue
to focus on the reduction of accounts receivable days outstanding and reduction
in inventories. Management believes that the cash and cash equivalents of
$2,114,000 at October 31, 2000, along with funds generated from operating
activities and funds available through borrowings from the revolving line of
credit will be sufficient to meet the capital requirements and operating needs
of the Company for at least the next twelve months.
EFFECTS OF INFLATION AND RECESSION
During the last three years, the Company has not experienced any
significant effects of inflation on its operations. Management continues to
evaluate the potential impact inflation could have on future growth and
minimizes the impact by including escalation clauses in long-term contracts.
Recent marketing and financial reports indicate that the current economic
conditions should remain in 2001 at approximately the same level as 2000 and the
Company does not anticipate significant increases in inflation in the immediate
future.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's financial instruments include cash and equivalents,
accounts receivable, accounts payable, debt obligations and interest rate swaps.
The book value of cash and cash equivalents, accounts receivable and accounts
payable are considered to be representative of fair value because of the short
maturity of these instruments. The Company believes that the carrying value of
its borrowings under the credit agreement approximate their fair value as they
bear interest at rates indexed to the Bank's IBOR. The Company's accounts
receivable are not concentrated in one customer or one industry and are not
viewed as an unusual credit risk. The Company had recorded an allowance for
doubtful accounts of $505,000 at October 31, 2000 and $852,000 at October 31,
1999, respectively.
The interest rate swap agreement, which is used by the Company in the
management of interest rate exposure is accounted for on the accrual basis.
Income and expense resulting from this agreement is recorded in the same
category as interest expense accrued on the related term note. Amounts to be
paid or received under the interest rate swap agreement are recognized as
adjustments to interest expense in the periods in which they occur.
At October 31, 2000 the Company had $7,143,000 in borrowings subject to
the interest rate swap at a rate of 5.20% through September 30, 2003. The 5.20%
rate is currently approximately 1.5% below market and should represent
approximately $85,000 of reduced interest expense for fiscal year 2001 assuming
the current market interest rates do not change. The approximate fair value of
the swap agreement at October 31, 2000 is $192,000. The fair value is the
estimated amount the Company would receive to terminate the contract. The
agreements require that the Company pay the counterparty at the above fixed swap
rate and require the counterparty to pay the Company interest at the 90 day
LIBOR rate. The closing 90 day LIBOR rate on October 31, 2000 was 6.76%.
In June 1998 the FASB issued SFAS No. 133 - "Accounting for Derivative
Instruments and Hedging Activities". In June 1999, the FASB issued SFAS 137,
which amended the effective adoption date of SFAS 133. This statement
establishes accounting and reporting standards for derivative instruments,
including derivative instruments embedded in other contracts, and for hedging
activities. The statement, as amended and which is to be applied prospectively,
is effective for the Company's quarter ending January 31, 2001. The Company
adopted SFAS No. 133, as amended, on November 1, 2000. Accordingly, the Company
recorded an asset of $192,000 representing the fair value of its interest rate
swap agreement which is used by the Company in the management of interest rate
exposure. The Company also realized this amount as a component of comprehensive
income.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page
----
Financial Statements:
Report of Independent Public Accountants........................................................ 10
Consolidated Balance Sheets as of October 31, 2000 and 1999..................................... 11
Consolidated Statements of Operations for the three years ended October 31, 2000................ 12
Consolidated Statements of Stockholders' Equity for the
three years ended October 31, 2000........................................................... 13
Consolidated Statements of Cash Flows for the three years ended October 31, 2000................ 14
Notes to Consolidated Financial Statements...................................................... 15-27
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Powell Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Powell
Industries, Inc. (a Nevada corporation) and subsidiaries as of October 31, 2000
and 1999, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended October
31, 2000. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Powell Industries, Inc. and subsidiaries as of October 31, 2000 and 1999, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended October 31, 2000, in conformity with
accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Houston, Texas
November 29, 2000
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POWELL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
OCTOBER 31,
-----------------------
2000 1999
---- ----
ASSETS
Current Assets:
Cash and cash equivalents................................................................... $ 2,114 $10,646
Accounts receivable, less allowance for doubtful accounts of
$505 and $852, respectively............................................................. 54,205 43,003
Costs and estimated earnings in excess of billings.......................................... 24,292 16,191
Inventories................................................................................. 17,523 15,173
Deferred income taxes....................................................................... --- 1,028
Income taxes receivable..................................................................... 1,012 ---
Prepaid expenses and other current assets................................................... 827 1,795
-------- --------
Total Current Assets.................................................................... 99,973 87,836
Property, plant and equipment, net............................................................... 31,383 33,286
Deferred income taxes............................................................................ 1,419 1,316
Other assets..................................................................................... 5,151 5,093
-------- --------
Total Assets............................................................................ $137,926 $127,531
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts and income taxes payable........................................................... $ 16,373 $ 9,911
Accrued salaries, bonuses and commissions................................................... 6,736 5,447
Accrued product warranty.................................................................... 1,316 1,335
Other accrued expenses...................................................................... 5,296 4,727
Billings in excess of costs and estimated earnings.......................................... 5,315 4,205
Current maturities of long-term debt........................................................ 1,429 2,429
-------- --------
Total Current Liabilities............................................................... 36,465 28,054
Long-term debt, net of current maturities........................................................ 5,714 7,143
Deferred compensation expense.................................................................... 1,241 1,127
Postretirement benefits liability................................................................ 419 435
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $.01; 5,000,000 shares authorized; none issued
Common stock, par value $.01; 30,000,000 shares authorized; 10,821,000 and
10,675,000 shares issued, respectively.................................................. 108 107
Additional paid-in capital.................................................................. 6,830 6,043
Retained earnings........................................................................... 94,425 87,364
Treasury stock, 505,400 shares and -0- shares respectively, at cost......................... (4,669) ---
Deferred compensation-ESOP.................................................................. (2,607) (2,742)
-------- --------
Total Stockholders' Equity.............................................................. 94,087 90,772
-------- --------
Total Liabilities and Stockholders' Equity.............................................. $137,926 $127,531
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
11
12
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED OCTOBER 31,
-------------------------------------
2000 1999 1998
---- ---- ----
Revenues $ 223,019 $ 212,531 $212,733
Cost of goods sold 182,340 172,353 164,944
---------- --------- --------
Gross profit 40,679 40,178 47,789
Selling, general & administrative expenses 29,841 29,354 30,805
---------- --------- --------
Earnings from continuing operations before
interest and income taxes 10,838 10,824 16,984
Interest expense (income), net (44) 361 239
---------- --------- --------
Earnings from continuing operations before
income taxes 10,882 10,463 16,745
Income tax provision 3,821 3,336 5,280
---------- --------- --------
Earnings from continuing operations 7,061 7,127 11,465
Loss from discontinued operations,
net of income taxes --- --- (4,800)
---------- --------- --------
Net earnings $ 7,061 $ 7,127 $ 6,665
========== ========= ========
Earnings (loss) per common share:
Continuing operations:
Basic $ .68 $ .67 $ 1.08
Diluted .67 .66 1.07
Discontinued operations:
Basic $ --- $ --- $ (.45)
Diluted --- --- (.45)
Net earnings:
Basic $ .68 $ .67 $ .63
Diluted .67 .66 .62
Weighted average number of common
shares outstanding 10,451 10,665 10,644
Weighted average number of common and common
equivalent shares outstanding 10,530 10,777 10,743
The accompanying notes are an integral part of these
consolidated financial statements.
12
13
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
COMMON STOCK ADDITIONAL DEFERRED
------------------- PAID-IN RETAINED TREASURY COMPENSATION
SHARES AMOUNT CAPITAL EARNINGS STOCK ESOP TOTAL
------ ------ ------- -------- ----- ---- -----
Balance, October 31, 1997................. 10,643 $ 106 $5,782 $73,572 $(3,153) $76,307
Net earnings........................... 6,665 6,665
Amortization of deferred
compensation-ESOP.................... 226 226
Exercise of stock options.............. 16 1 137 138
------ ------ ------ ------- -------- ------- -------
Balance, October 31, 1998................. 10,659 107 5,919 80,237 (2,927) 83,336
Net earnings........................... 7,127 7,127
Amortization of deferred
compensation-ESOP.................... 185 185
Exercise of stock options.............. 16 --- 124 124
------ ------ ------ ------- -------- ------- -------
Balance, October 31, 1999................. 10,675 107 6,043 87,364 (2,742) 90,772
Net earnings........................... 7,061 7,061
Amortization of deferred
compensation-ESOP.................... 135 135
Exercise of stock options.............. 146 1 787 788
Purchases of Treasury Stock............ (505) (4,669) (4,669)
------ ------ ------ ------- ------- ------- -------
Balance, October 31, 2000................. 10,316 $ 108 $6,830 $94,425 $(4,669) $(2,607) $94,087
====== ====== ====== ======= ======= ======== =======
The accompanying notes are an integral part of these
consolidated financial statements.
13
14
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED OCTOBER 31,
----------------------------------
2000 1999 1998
---- ---- ----
Operating Activities:
Net earnings.................................................................... $7,061 $7,127 $6,665
Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
Depreciation and amortization............................................... 4,669 4,420 4,070
Deferred income tax provision (benefit)..................................... 1,166 (802) 861
Postretirement benefits liability........................................... (16) (410) (387)
Changes in operating assets and liabilities:
Accounts receivable, net............................................... (11,202) 1,252 6,136
Costs and estimated earnings in excess of billings..................... (8,101) 8,592 (5,797)
Inventories............................................................ (2,350) 1,111 (2,681)
Prepaid expenses and other current assets.............................. 968 (354) 1,153
Other assets........................................................... (177) (364) (291)
Accounts payable and income taxes payable or receivable................ 5,450 (1,238) 571
Accrued liabilities.................................................... 1,598 (1,315) (2,491)
Billings in excess of costs and estimated earnings..................... 1,110 360 (7,111)
Deferred compensation expense.......................................... 250 126 285
------- --- ------
Net cash provided by operating activities.......................... 426 18,505 983
------- ------ ------
Investing Activities:
Purchases of property, plant and equipment...................................... (2,648) (5,156) (9,739)
------- ------ ------
Net cash used in investing activities.............................. (2,648) (5,156) (9,739)
------- ------ ------
Financing Activities:
Borrowings of long-term debt.................................................... --- 17,500 21,786
Payments of long-term debt...................................................... (2,429) (20,928) (14,785)
Payments to reaquire common stock............................................... (4,669) --- ---
Exercise of stock options....................................................... 788 124 137
------- ------- ------
Net cash provided by (used in) financing activities................ (6,310) (3,304) 7,138
------- ------- ------
Net increase (decrease) in cash and cash equivalents................................. (8,532) 10,045 (1,618)
Cash and cash equivalents at beginning of year....................................... 10,646 601 2,219
------- ------- ------
Cash and cash equivalents at end of year............................................. $ 2,114 $10,646 $ 601
======= ======= ======
Supplemental disclosures of cash flow information:
Cash paid for interest.......................................................... $ 638 $ 813 $ 502
======= ======= ======
Cash paid for income taxes...................................................... $ 3,200 $ 2,450 $2,039
======= ======= ======
The accompanying notes are an integral part of these
consolidated financial statements.
14
15
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. BUSINESS AND ORGANIZATION
Powell Industries, Inc. ("Powell" or the "Company") was incorporated
under the laws of the state of Nevada in December 1968. The Company is the
successor to a corporation founded by William E. Powell in 1947, which merged
into the Company in 1977.
Powell Industries, Inc. designs, manufactures and packages systems and
equipment for the control, distribution and management of electrical energy and
other dynamic processes. Headquartered in Houston, Powell operates five
subsidiaires and provides products and services to large industrial customers
such as oil and gas producers, refineries, petrochemical plants, pulp and paper
producers, mining operations, commuter railways and vehicular transportation
facilities, as well as public and private utilities.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Powell Industries, Inc. and its wholly-owned subsidiaries (the Company). All
material intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of less than three months to be cash equivalents.
Accounts Receivable
The Company's receivables are generally not collateralized. Management
performs ongoing credit analyses of the accounts of its customers and provides
allowances as deemed necessary. Accounts receivable at October 31, 2000 and 1999
include $5,948,000 and $5,653,000, respectively, due from customers in
accordance with applicable retainage provisions of engineering and construction
contracts, which will become billable upon completion of such contracts.
Approximately $4,203,000 of the retained amount at October 31, 2000 is expected
to be billed subsequent to October 31, 2001.
Inventories
Inventories are stated at the lower of cost (primarily first-in,
first-out method) or market and include material, labor and manufacturing
overhead.
Property, Plant and Equipment
Property, plant and equipment is stated at cost and is depreciated
using the straight-line method over the estimated useful lives of the assets.
Expenditures for repairs and maintenance are charged to expense when incurred.
Expenditures for major renewals and betterments which extend the useful lives of
existing equipment are capitalized and depreciated. Upon retirement or
disposition of property, plant and equipment, the cost and related accumulated
depreciation are removed from the accounts and any resulting gain or loss is
recognized in the statements of operations.
15
16
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Amortization of Intangibles
Included in other assets are net intangible assets totaling $1,678,000
and $1,915,000 at October 31, 2000 and 1999, respectively. Intangible assets
primarily include goodwill and patents which are amortized using the
straight-line method over periods ranging from five to twenty years. The
accumulated amortization of intangible assets totaled $1,966,000 and $1,954,000
at October 31, 2000 and 1999, respectively. Management continually evaluates
whether events or circumstances have occurred that indicate the remaining
estimated useful life of intangible assets may warrant revision or that
remaining balances may not be recoverable.
Long-Lived Assets
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," the Company evaluates the recoverability of property,
plant and equipment or other assets, if facts and circumstances indicate that
any of those assets might be impaired. If an evaluation is required, the
estimated future undiscounted cash flows associated with the asset are compared
to the asset's carrying amount to determine if an impairment of such property
has occurred. The effect of any impairment would be to expense the difference
between the fair value of such property and its carrying value.
Revenue Recognition
Revenues from product sales are recognized upon transfer of title at
the time of shipment (FOB shipping point), when all significant contractual
obligations have been satisfied, the price is fixed or determinable, and
collectability is reasonably assured. Contract revenues are recognized on a
percentage-of- completion basis primarily using labor dollars or hours incurred
to date in relation to estimated total labor dollars or hours of the contracts
to measure the stage of completion. Contract costs include all direct material
and labor costs and those indirect costs related to contract performance, such
as indirect labor, supplies and depreciation costs. Provisions for total
estimated losses on uncompleted contracts are recorded in the period in which
they become evident.
Warranties
The Company provides for estimated warranty costs at the time of sale
based upon historical rates applicable to individual product lines. In addition,
specific provisions are made when the costs of such warranties are expected to
exceed accruals.
Research and Development Expense
Research and development costs are charged to expense as incurred. Such
amounts were $2,920,000, $3,031,000, and $2,693,000 in fiscal years 2000, 1999
and 1998, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassification
Certain reclassifications of prior year amounts have been made in order
to conform with the classifications used in the current year presentation.
16
17
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Income Taxes
The Company accounts for income taxes using SFAS No. 109 "Accounting
for Income Taxes". Under SFAS No. 109, deferred income tax assets and
liabilities are computed based on the difference between the financial statement
and income tax bases of assets and liabilities using enacted tax rates. Under
this standard, the effect on deferred income taxes of a change in tax rates is
recognized in income in the period that the tax rate changes.
New Accounting Standards
In June 1998 the Financial Accounting Standards Board (FASB) issued
SFAS No. 133 - "Accounting for Derivative Instruments and Hedging Activities".
In June 1999, the FASB issued SFAS 137, which amended the effective adoption
date of SFAS 133. This statement establishes accounting and reporting standards
for derivative instruments, including derivative instruments embedded in other
contracts, and for hedging activities. The statement, as amended and which is to
be applied prospectively, is effective for the Company's quarter ending January
31, 2001. The Company adopted SFAS No. 133, as amended, on November 1, 2000.
Accordingly, the Company recorded an asset of $192,000 representing the fair
value of its interest rate swap agreement which is used by the Company in the
management of interest rate exposure. The Company also realized this amount as a
component of comprehensive income.
In December 1999, the Securities and Exchange Commission staff issued
Staff Accounting Bulletin No. 101 (SAB101). The staff has deferred the
implementation date of SAB101 until no later than the fourth quarter of fiscal
years beginning after December 15, 1999. SAB101 reflects the basic principles of
revenue recognition in existing accounting principles generally accepted in the
United States. SAB101 does not supersede any existing authoritative literature.
Management has revived the staff's views presented in SAB101 and does not
believe the adoption of SAB101 will have a material impact on the financial
position or results of operations of the Company.
C. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share date):
Years Ended October 31,
-------------------------------------
2000 1999 1998
---- ---- ----
Numerator:
Numerator for basic and diluted earnings per share-earnings from
continuing operations available to common stockholders..................... $7,061 $ 7,127 $11,465
====== ======== =======
Denominator:
Denominator for basic earnings per share-
weighted-average shares................................................. 10,451 10,665 10,644
Effect of dilutive securities-
Employee stock options.................................................. 79 112 99
------ -------- -------
Denominator for diluted earnings per share-adjusted
weighted-average shares with assumed conversions........................ 10,530 10,777 10,743
====== ====== ======
Basic earnings per share.................................................... $ .68 $ .67 $ 1.08
======= ======= =======
Diluted earnings per share.................................................. $ .67 $ .66 $ 1.07
======= ======== =======
17
18
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
D. INVENTORIES
The components of inventories are summarized below (in thousands):
October 31,
---------------------
2000 1999
---- -----
Raw materials, parts and subassemblies........................................ $11,162 $ 9,058
Work-in-process............................................................... 6,361 6,115
------- -------
Total inventories......................................................... $17,523 $15,173
======= =======
E. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized below (in thousands):
October 31,
--------------------- Range of
2000 1999 Asset Lives
---- ---- -----------
Land ....................................................... $3,193 $ 3,193 ----
Buildings and improvements.................................. 30,640 30,638 3-39 Years
Machinery and equipment..................................... 29,001 30,409 3-15 Years
Furniture and fixtures...................................... 3,690 4,464 3-10 Years
Construction in progress.................................... 1,141 1,035 ----
------- -----
67,665 69,739
Less-accumulated depreciation............................... (36,282) (36,453)
------- -------
Total property, plant and equipment, net............... $31,383 $33,286
======= =======
F. EMPLOYEE BENEFIT PLANS
The Company has a defined employee contribution 401(k) plan for
substantially all of its employees. The Company matches 50% of employee
contributions up to an employee contribution of six percent of their salary. The
Company recognized expenses of $1,098,000, $1,040,000, and $934,000 in fiscal
years 2000, 1999 and 1998, respectively, under this plan.
Two long service employees are participants in a deferred compensation
plan providing payments in accordance with a predetermined plan upon retirement
or death. The Company recognizes the cost of this plan over the projected years
of service of the participant. The Company has insured the lives of these key
employees to assist in the funding of the deferred compensation liability.
The Company has established an employee stock ownership plan (ESOP) for
the benefit of substantially all full-time employees other than employees
covered by a collective bargaining agreement to which the ESOP has not been
extended by agreement or by action of the Company. The ESOP initially purchased
793,525 shares of the Company's common stock from a major stockholder. At
October 31, 2000 and 1999 there were 679,637 and 697,712 shares in the trust
with 259,772 and 230,342 shares allocated to participants, respectively. The
funding for this plan was provided through a loan from the Company of
$4,500,000. This loan will be repaid by the ESOP over a twenty-year period with
equal payments of $424,000 per year including interest at 7 percent. The Company
recorded deferred compensation as a contra-equity account for the amount loaned
to the ESOP in the accompanying consolidated balance sheets. The Company is
required to make annual contributions to the ESOP to enable it to repay its loan
to the Company. The deferred compensation account is amortized as compensation
expense over twenty years as employees earn their shares for services rendered.
The loan agreement also provides for prepayment of the loan if the Company
elects to make any additional contributions. The compensation expense for fiscal
years 2000, 1999 and 1998 was $135,000, $185,000, and $226,000, respectively.
The receivable from the ESOP is recorded as a reduction from stockholders'
equity and the allocated and unallocated shares of the ESOP are treated as
outstanding common stock in the computation of earnings per share.
18
19
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
In November 1992, the Company established a plan for each subsidiary to
extend to retirees health benefits which are available to active employees under
the Company's existing health plans. Participants became eligible for retiree
health care benefits when they retired from active service at age 55 with ten
years of service. Generally, the health plans paid a stated percentage of
medical and dental expenses reduced for any deductible and co-payment. These
plans were unfunded. Medical coverage may be continued by the retired employee
up to age 65 at the average cost to the Company of active employees. At the age
of 65, when the employee became eligible for Medicare, the benefits provided by
the Company were to be reduced by the amount provided by Medicare and the cost
to the retired employee would be reduced to 50 percent of the average cost to
the Company of active employees.
In 1994, the Company modified its postretirement benefits to provide
retiree healthcare benefits to only current retirees and active employees who
were eligible to retire by December 31, 1999. Participants eligible for such
benefits were required to pay between 20 percent and 100 percent of the
Company's average cost of benefits based on years of service. In addition,
benefits would end upon the employee's attainment of age 65. The effect of these
modifications significantly reduced the Company's postretirement benefits cost
and accumulated benefits obligation.
In 2000, the Company again modified its postretirement benefits to
provide retiree healthcare benefits to current retirees and active employees who
were eligible to retire after December 31, 1999. The retired employee's cost of
the optional retiree coverage under the plan is based on the full COBRA cost of
that coverage, reduced by a fixed dollar amount for each additional service year
in excess of ten (10) service years.
The following table illustrates the components of net periodic benefits
expense, funded status, the change in funded status, and the change in
accumulated benefit obligation of the postretirement benefit plans (in
thousands):
October 31,
---------------------------------
2000 1999 1998
---- ---- ----
Components of net periodic postretirement benefits expense (income):
Service cost................................................................ $16 $1 $4
Interest cost............................................................... 27 25 36
Prior service cost ......................................................... (40) (318) (318)
Net (gain)/loss recognized.................................................. (14) (77) (7)
---- --- -----
Net periodic postretirment benefits expense (income)........................ $(11) $(369) $(285)
==== ===== =====
Funded Status:
Retirees.................................................................... $51 $166 $228
Fully eligible active participants.......................................... 420 234 316
Other actual participants................................................... --- --- 25
---- ---- -----
Accumulated postretirement benefits obligation.............................. 471 400 569
Less unrecognized balances:
Prior service cost.......................................................... 161 (53) (370)
Net actuarial (gain)/loss................................................... (109) 18 94
---- ---- ----
Net amount recognized..................................................... $419 $435 $845
==== ==== ====
19
20
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Changes in accumulated postretirement benefits obligation:
Balance at beginning of year................................................ $400 $569 $659
Service cost................................................................ 16 1 4
Interest cost............................................................... 27 25 36
(Gain)/Loss due to plan change.............................................. 174 ---- ----
Actuarial (gain)/loss....................................................... (141) (155) (37)
Benefits paid............................................................... (5) (40) (93)
---- ---- -----
Balance at end of year...................................................... $471 $400 $569
==== ==== ====
Fair value of plan assets................................................... $--- $--- $---
===== ==== ====
Weighted average assumptions as of October 31, 2000 (in thousands):
2000 1999
---- ----
Discount rate................................................................... 7% 6%
Expected return on plan assets.................................................. N/A N/A
Rate of compensation increase................................................... N/A N/A
The assumed health care cost trend measuring the accumulated
postretirmenet benefits obligation was 6% in both fiscal years 2000 and 1999.
The trend is expected to remain at 6% for fiscal year 2000 and later. If the
health care trend rate assumptions were increased by 1% as of October 31, 2000,
there would be no effect of this change on the accumulated postretirement
benefits obligation or net postretirement benefit cost for 2000.
G. DEBT
In September 1998, the Company amended an existing agreement for a
revolving line of credit with a major U.S. bank. The amendment provided for a
$10,000,000 term loan and a revolving line of credit of $20,000,000. In December
1999 the Company amended the agreement to reduce the line of credit to
$15,000,000. The term loan has a maturity of five years with nineteen equal
quarterly payments of $357,143 and a final payment of the remaining principal
balance on September 30, 2003. The effective interest rate, after including the
results of an interest rate swap negotiated with the trust company of the same
domestic bank, is 5.20 percent per annum plus a .75 to 1.25 percent fee based on
financial covenants. The revolving line of credit provides for the Company to
elect an interest rate on amounts borrowed of (1) the bank's prime rate less .5
percent (on the first $5,000,000) and prime rate on additional borrowings, or
(2) the bank's IBOR rate plus an additional percentage of .75% to 1.25% based on
the Company's performance. Also, a fee of .20 to .25 percent is charged on the
unused balance of the line. The agreement contains customary affirmative and
negative covenants and requirements to maintain a minimum level of tangible net
worth and profitability. As of October 31, 2000, there were no borrowings under
this line of credit. The agreement, as amended, expires on February 28, 2002.
The interest rate swap agreement, which is used by the Company in the
management of interest rate exposure, is accounted for on the accrual basis.
Income and expense resulting from this agreement is recorded in the same
category as interest expense accrued on the related term note. Amounts to be
paid or received under the interest rate swap agreement are recognized as an
adjustment to interest expense in the periods in which they occur. The notional
amount of the swap agreement is $10,000,000 and follows the same reduction
schedule as the term loan. The agreement requires that the Company pay the
counterparty at the above fixed swap rate and requires the counterparty to pay
the Company interest at the 90 day LIBOR rate. The closing 90 day LIBOR rate on
October 31, 2000 was 6.76%. The Company considers the risk of non-performance by
its swap partner to be minimal.
Long-term debt is summarized below (in thousands): October 31,
--------------------
2000 1999
---- ----
Five year term note............................................................. $7,143 $8,572
Revolving line of credit........................................................ --- ---
NatWest promissory note (see Note M below) ..................................... --- 1,000
------ -----
Total debt...................................................................... 7,143 9,572
Less-current maturities......................................................... (1,429) (2,429)
------ ------
Total long-term debt............................................................ $5,714 $7,143
====== ======
20
21
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The interest expense recorded during the year was $638,000, $774,000
and $558,000 in 2000, 1999 and 1998, respectively. The annual maturities of
long-term debt for the years 2001 through 2004 are as follows: $1,429,000,
$1,429,000, $4,285,000 and $0, respectively. See footnote N for the discussion
of the fair market value of the debt instruments.
H. INCOME TAXES
The net deferred income tax asset is comprised of the following (in thousands):
October 31,
--------------------
2000 1999
---- ----
Current deferred income taxes:
Gross assets ............................................................... $1,669 $1,804
Gross liabilities........................................................... (1,910) (776)
------ ------
Net current deferred income tax asset (liability).............................. (241) 1,028
------ ------
Noncurrent deferred income taxes
Gross assets................................................................ 1,486 1,400
Gross liabilities........................................................... (67) (84)
------ ------
Net noncurrent deferred income tax asset....................................... 1,419 1,316
------ ------
Net deferred income tax asset.................................................. $1,178 $2,344
====== ======
The tax effect of significant temporary differences representing
deferred income tax assets and liabilities are as follows (in thousands):
October 31,
-------------------
2000 1999
---- ----
Allowance for doubtful accounts................................................. $ 97 $ 189
Reserve for accrued employee benefits.......................................... 474 625
Warranty reserves............................................................... 453 855
Uncompleted long-term contracts................................................. (1,910) (776)
Depreciation and amortization................................................... 302 267
Deferred compensation........................................................... 442 445
Postretirement benefits liability............................................... 123 209
Accrued legal expenses.......................................................... 444 229
Uniform capitalization and inventory............................................ 508 512
Other........................................................................... 245 (211)
------ ------
Net deferred income tax asset............................................... $1,178 $2,344
====== ======
The components of the income tax provision consist of the following
(in thousands):
Years Ended October 31,
---------------------------------------
2000 1999 1998
---- ---- ----
Continuing Operations:
Current:
Federal.................................................. $2,445 $3,896 $4,198
State.................................................... 209 242 221
Deferred:
Federal.................................................. 1,167 (802) 861
------ ------ ------
Income tax provision-continuing operations............. 3,821 3,336 5,280
------ ------ ------
Discontinued Operations:
Current .................................................... --- --- (3,821)
Deferred.................................................... --- --- 1,371
------ ------ ------
Income tax provision-discontinued operations........... --- --- (2,450)
------ ------ ------
Total income tax provision........................... $3,821 $3,336 $2,830
====== ====== ======
21
22
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
A reconciliation of the statutory U.S. income tax rate and the effective
income tax rate, as computed on earnings from continuing operations before
income taxes reflected in each of the three years presented in the Consolidated
Statements of Operations is as follows:
Years Ended October 31,
------------------------------
2000 1999 1998
---- ---- ----
Statutory rate .................................................... 34% 34% 34%
Foreign sales corporation credits.................................. (1) (3) (3)
State income taxes, net of federal benefit......................... 2 2 1
Other.............................................................. --- (1) ---
---- ---- ----
Effective rate............................................ 35% 32% 32%
==== ==== ====
I. SIGNIFICANT SALES DATA
No single customer or export country accounted for more than 10 percent
of consolidated revenues in fiscal years 2000, 1999 and 1998.
Export sales are as follows (in thousands):
Years Ended October 31,
------------------------------------
2000 1999 1998
---- ---- ----
Europe (including former Soviet Union)............................. $734 $ 1,928 $ 500
Far East........................................................... 17,200 15,867 27,502
Middle East and Africa............................................. 7,832 31,364 31,694
North, Central and South America (excluding U. S.)................. 18,655 21,214 25,752
------ ------- ------
Total export sales................................................. $44,421 $70,373 $85,448
======= ======= =======
J. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases certain offices, facilities and equipment under
operating leases expiring at various dates through 2003. At October 31, 2000,
the minimum annual rental commitments under leases having terms in excess of one
year are as follows (in thousands):
Year Ending Operating
October 31 Leases
---------- ------
2001................................................................................. 1,408
2002................................................................................. 1,129
2003................................................................................. 533
2004................................................................................. 428
2005................................................................................. 390
Thereafter........................................................................... 603
-------
Total lease commitments.............................................................. $4,491
======
Lease expense for all operating leases, excluding leases with terms of
less than one year, was $1,325,000, $1,328,000 and $1,259,000 for fiscal years
2000, 1999 and 1998, respectively.
Letters of Credit and Bonds
The Company is contingently liable for secured and unsecured letters of
credit and performance bonds totaling approximately $2,002,878 and $133,293,863
respectively, that were outstanding at October 31, 2000.
22
23
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Litigation
The Company is a party to disputes arising in the ordinary course of
business. Management does not believe that the ultimate outcome of these
disputes will materially affect the financial position or future results of
operations of the Company.
K. STOCK OPTIONS AND GRANTS
In March 1992, the stockholders approved an amendment to a plan that
was adopted in March 1989, in which 750,000 shares of the Company's common stock
would be made available through an incentive program for certain employees of
the Company. In March 1996, the stockholders approved an amendment to increase
the maximum shares available under the plan from 750,000 shares to 1,500,000
shares of common stock. The awards available under the plan include both stock
options and stock grants and are subject to certain conditions and restrictions
as determined by the Compensation Committee of the Board of Directors. There
were no stock grants during fiscal years 2000, 1999 and 1998.
Stock options granted under the plan are non-qualified and are granted
at a price equal to the fair market value of the common stock at the date of
grant. Generally, options granted have terms of seven years from the date of
grant and will vest in increments of 20 percent per year over a five year period
on the yearly anniversary of the grant date. The plan provides for additional
stock to be awarded equal to 20 percent of all options which are exercised and
then held for a period of five years.
There were 213,864 shares available under the plan to be granted as of
October 31, 2000. Stock option activity (number of shares) for the Company
during fiscal years 2000, 1999 and 1998 was as follows:
2000 1999 1998
----------- ---------- -----------
Outstanding, beginning of year 778,635 527,560 577,060
Granted:
Stock options $8.50 per share 301,850
Stock options $8.44 per share 12,000
Exercised:
Stock options $6.25 per share (19,960) (3,300) (7,800)
Stock options $6.75 per share (95,295) (5,375) (8,100)
Stock options $8.50 per share (1,280) -0- -0-
Forfeited:
Stock options $6.25 per share -0- (14,700) (13,800)
Stock options $6.75 per share -0- (9,000) (1,800)
Stock options $15.81 per share (10,000) (18,400) (18,000)
Stock options $8.50 per share (9,370) -0- -0-
------- -------- --------
Outstanding, ranging from $6.25 to
$15.81 per share, at the end of year 654,730 778,635 527,560
======= ======= =======
The following table summarizes information about stock options
outstanding as of October 31, 2000:
Range of Number Weighted Average Weighted Number Weighted
Exercise Outstanding Remaining Average Exercisable Average
Prices at 10/31/00 Contractual Life Exercise Price at 10/31/00 Exercise Price
------ ----------- ---------------- -------------- ----------- --------------
$6.25 150,430 1.6 $ 6.25 150,430 $ 6.25
15.81 201,100 3.7 15.81 121,500 15.81
8.50 291,200 5.7 8.50 58,240 8.50
8.44 12,000 6.7 8.44 --- 8.44
------ -------- --- ------ ------- ------
$6.25-15.81 654,730 4.1 $10.23 330,170 $10.17
=========== ======= === ====== ======= ======
The weighted average fair value of options granted during fiscal 2000
was $4.26 per option.
23
24
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", in accounting for employee stock
options whereby no compensation expense is recorded related to the options
granted equal to the market value of the stock on the date of grant. If
compensation expense had been determined based on the Black-Scholes option
pricing model value at the grant date for stock option awards consistent with
the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation", the
Company's net income and earnings per share would have been as follows:
2000 1999 1998
---- ---- ----
Net income:
As reported..................................................... $7,061 $7,127 $6,665
Pro forma ...................................................... 6,585 6,807 6,370
Earnings per share:
As reported..................................................... $ .67 $ .66 $ .62
Pro forma....................................................... .63 .63 .59
The SFAS No. 123 method of accounting has not been applied to options
granted prior to October 31,1995, and the resulting pro forma compensation
expense may not be indicative of pro forma expense in future years.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
Expected life of options 7 years
Risk-free interest rate 5.99% - 6.43%
Expected dividend yield 0.00%
Expected stock price volatility 36.23% - 41.48%
L. PRODUCTION CONTRACTS
For contracts in which the percentage-of-completion method is used,
costs and estimated earnings in excess of billings are reported as a current
asset and billings in excess of costs and estimated earnings are reported as a
current liability. The components of these contracts are as follows (in
thousands):
October 31,
--------------------
2000 1999
---- ----
Costs and estimated earnings.................................................... $120,641 $ 79,723
Progress billings............................................................... (96,349) (63,532)
------- -------
Total costs and estimated earnings in excess of billings.................... $ 24,292 $ 16,191
======== ========
Progress billings............................................................... $91,766 $89,146
Costs and estimated earnings.................................................... (86,451) (84,941)
------- -------
Total billings in excess of costs and estimated earnings.................... $ 5,315 $ 4,205
======== =======
M. DISCONTINUED OPERATIONS
As previously reported on Form 8-K in September 1998, the Company
entered into a Settlement Agreement with National Westminister Bank plc
("NatWest") to settle all litigation regarding completion of a project of US
Turbine Corporation (USTC), a previously held subsidiary of the Company, at
MacDill Air Force Base (the responsibility for this project was not assumed by
Rolls-Royce in its acquisition of USTC in 1996). Under the terms of such
Settlement Agreement, the Company paid NatWest $7,000,000 at the closing
(September 10, 1998) and delivered a promissory note in the principal amount of
$1,000,000 bearing interest at the rate of 3 percent per annum, which was due on
December 31, 1999; accordingly, in 1998 the Company recorded a loss from
discontinued operations of $4,800,000 (net of income taxes) or $0.45 per diluted
share, to reflect additional expense accruals related to this settlement.
24
25
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following summarizes the results of operations and consolidated
balance sheets of the discontinued operations:
Years Ended October 31,
--------------------------------------
2000 1999 1998
---- ---- ----
Loss from operations before income taxes.............................. $ --- $ --- $(7,250)
Benefit for income taxes.............................................. --- --- 2,450
----- ------- -------
Net loss from discontinued operations................................. $ --- $ --- $(4,800)
===== ======= =======
14. Fair Value of Financial Instruments
The Company's financial instruments include cash and cash equivalents,
accounts receivable, accounts payable, debt obligations and interest rate swaps.
The book value of cash and cash equivalents, accounts receivable and accounts
payable are considered to be representative of fair value because of the short
maturity of these instruments. The Company believes that the carrying value of
its borrowings under the credit agreement approximate their fair value as they
bear interest at rates indexed to the Bank's IBOR rate.
At October 31, 2000 the Company had $7,143,000 borrowings subject to
interest rate swap at a rate of 5.20% through September 30, 2003. The
approximate fair value of the swap agreement at October 31, 2000 was $192,000.
The fair value is the amount estimated that the Company would receive to
terminate the contract.
15. Business Segments
The Company has three reportable segments: 1. Switchgear and related
equipment and service (Switchgear) for distribution, control and management of
electrical energy, 2. Bus duct products (Bus Duct) for the distribution of
electric power, and 3. Process Control Systems which consists principally of
instrumentation, computer control, communications and data management systems
for the control of dynamic processes.
The tables below reflect certain information relating to the Company's
operations by segment. Substantially all revenues represent sales from
unaffilliated customers. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies. For purposes
of this presentation, all general corporate expenses have been allocated among
operating segments based primarily on revenues. In addition, the corporate
assets are mainly cash and cash equivalents transferred to the corporate office
from the segments. Interest charges and credits to the segments from the
corporate office are based on use of funds.
25
26
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The required disclosures for the business segments are set forth below
(in thousands):
Year Ended October 31,
---------------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Switchgear $161,494 $151,475 $163,367
Bus Duct 32,213 28,016 26,203
Process Control Systems 29,312 33,040 23,163
-------- -------- --------
Total Revenues $223,019 $212,531 $212,733
======== ======== ========
Earnings from operations before income taxes:
Switchgear $ 6,039 $ 3,961 $ 9,866
Bus Duct 6,056 5,178 5,894
Process Control Systems (1,213) 1,324 985
-------- -------- --------
Total earnings from operations before income taxes $ 10,882 $ 10,463 $ 16,745
======== ======== ========
Assets:
Switchgear $100,071 $ 84,813 $ 98,842
Bus Duct 15,608 14,764 12,271
Process Control Systems 14,331 10,997 10,309
Corporate 7,916 16,957 5,709
-------- -------- --------
Total Assets $137,926 $127,531 $127,131
======== ======== ========
Depreciation and Amortization:
Switchgear $ 3,724 $ 3,435 $ 2,955
Bus Duct 611 642 662
Process Control Systems 334 343 453
-------- -------- --------
Total Depreciation and Amortization $ 4,669 $ 4,420 $ 4,070
======== ======== ========
Capital Expenditures:
Switchgear $ 2,074 $ 4,670 $ 9,323
Bus Duct 449 294 251
Process Control Systems 125 192 165
-------- -------- --------
Total Capital Expenditures $ 2,648 $ 5,156 $ 9,739
======== ======== ========
Interest Expense (Income):
Switchgear $ 862 $ 1,528 $ 1,356
Bus Duct (1,181) (782) (715)
Process Control 135 96 83
Corporate 140 (481) (485)
-------- -------- --------
Total Interest Expense (Income) $ (44) $ 361 $ 239
======== ======== ========
26
27
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
P. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The table below sets forth the unaudited consolidated operating results
by fiscal quarter for the years ended October 31, 2000 and 1999 (in thousands,
except per share data):
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
2000-
Revenues.............................................. $49,490 $56,409 $54,476 $62,644
Gross profit.......................................... 9,041 9,504 10,577 11,557
Net earnings.......................................... 1,304 1,429 1,978 2,350
Net earnings per common and common
equivalent share:
Basic........................................... .12 .14 .19 .22
Diluted......................................... .12 .14 .19 .22
1999-
Revenues.............................................. $54,134 $56,331 $51,612 $50,454
Gross profit.......................................... 10,932 10,238 9,774 9,234
Net earnings.......................................... 2,178 1,820 1,513 1,616
Net earnings per common and common
equivalent share:
Basic........................................... .20 .17 .14 .15
Diluted......................................... .20 .17 .14 .15
Q. Subsequent Events
The Company announced that Mr. J. F. Ahart has resigned effective
December 15, 2000, as the Company's Vice President, Secretary, Treasurer,
Director, and Chief Financial Officer.
Mr. Ahart's responsibilities have been assumed by Thomas W. Powell,
Chairman of the Board, President and Chief Executive Officer of the Company,
until a replacement is named.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by these items is omitted because the Company
will file, within 120 days after the end of the fiscal year ended October 31,
2000, a definitive proxy statement pursuant to Regulation 14A, which information
is herein incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
Financial Statements - See Index to Consolidated Financial Statements
at Item 8 of this report
27
28
EXHIBITS
2.1 - Asset Purchase Agreement dated as of June 20, 1996 by and between
Rolls-Royce North America, Inc. and Rolls-Royce Acquisition Corp. and
U. S. Turbine Corp. and the Company (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K dated August 8, 1996 and
incorporated herein by reference).
2.2 - First Amendment to Asset Purchase Agreement dated July 26, 1996 by
and between Rolls-Royce North America, Inc. and Rolls-Royce
Acquisition Corp. and U. S. Turbine Corp. and the Company (filed as
Exhibit 2.2 to the Company's Current Report on Form 8-K dated August
8, 1996 and incorporated herein by reference).
3.1 - Articles of Incorporation and Certificates of Amendment of Powell
Industries, Inc. dated July 20, 1987 and March 13, 1992 (filed as
Exhibit 3 to the Company's Form 10-K for the fiscal year ended
October 31, 1982, Form 10-Q for the quarter ended July 31, 1987, and
Form 10-Q for quarter ended April 30, 1992, respectively, and
incorporated herein by reference).
3.2 - By-laws of Powell Industries, Inc. (filed as Exhibit 3.2 to the
Company's Form 10-Q for the quarter ended April 30, 1995 and
incorporated herein by reference).
*10.1 - Powell Industries, Inc., Incentive Compensation Plan for 2000.
10.2 - Description of Supplemental Executive Benefit Plan (filed as
Exhibit 10 to the Company's Form 10-K for the fiscal year ended
October 31, 1984, and incorporated herein by reference).
10.3 - Credit Agreement dated August 15, 1997 between Powell Industries,
Inc. and Bank of America Texas, N. A. (filed as Exhibit 10.5 to the
Company's Form 10-Q for the quarter ended July 31, 1997 and
incorporated herein by reference.)
10.4 - Amendments dated September 16, 1998, September 25, 1998 and
October 15, 1998 to credit agreement between Powell Industries,
Inc., and Bank of America Texas, N.A, (filed as Exhibit 10.6 to
Company's Form 10-K for the fiscal year ended October 31, 1998 and
incorporated herein by reference).
10.5 - Fourth Amendment dated February 26, 1999 to credit agreement
between Powell Industries, Inc. and Bank of America Texas N.A.
(filed as Exhibit 10.6 to Company's 10-Q for quarter ended April
30, 1999 and incorporated herein by reference).
10.6 - 1992 Powell Industries, Inc. Stock Option Plan (filed as Exhibit
4.2 to the Company's registration statement on Form S-8 dated July
26, 1994 (File No. 33-81998) and incorporated herein by
reference).
10.7 - The Powell Industries, Inc. Directors' Fees Program (filed as
Exhibit 10.7 to the Company's Form 10-K for the fiscal year ended
October 31, 1992, and incorporated herein by reference).
10.8 - The Powell Industries, Inc. Executive Severance Protection Plan
(filed as Exhibit 10.7 to the Company's Form 10-Q for the quarter
ended April 30, 1996, and incorporated herein by reference).
10.9 - Amendment to Powell Industries, Inc. Stock Option Plan (filed as
Exhibit 10.8 to the Company's Form 10-Q for the quarter ended
April 30, 1996 and incorporated herein by reference).
10.10- Settlement Agreement effective September 3, 1998 by and among
National Westminister Bank, plc, Powell Industries, Inc., Powell
Energy Systems, Inc., Empire Energy Management Systems, Inc.,
Empire Cogen and Brian Travis (filed as Exhibit 10.11 to the
Company's Form 10-Q for quarter ended July 31, 1998 and
incorporated herein by reference).
10.11- Fifth Amendment dated December 31, 1999 to credit agreement
between Powell Industries, Inc. and Bank of America Texas N.A.
(Filed as Exhibit 10.12 to the Company's Form 10-K for the fiscal
year ended October 31, 1999 and incorporated herein by reference.
28
29
*21.1 - Subsidiaries of the Company.
*23.1 - Consent of Independent Public Accountants.
* Filed herewith
(b) Reports on Form 8-K.
None
29
30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
POWELL INDUSTRIES, INC.
By THOMAS W. POWELL
-------------------------
Thomas W. Powell
President and Chief Executive Officer
(Principal Executive and Financial Officer)
By ROBERT B. GREGORY
---------------------------
R. B. Gregory
Corporate Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons on behalf of the registrant in the
capacities and on the date indicated:
Signature Title
--------- ------
THOMAS W. POWELL Chairman of the Board
------------------------------------------------------------
Thomas W. Powell
JOSEPH L. BECHERER Director
--------------------------------------------------------------
Joseph L. Becherer
EUGENE L. BUTLER Director
----------------------------------------------------------------
Eugene L. Butler
BONNIE L. POWELL Director
-----------------------------------------------------------------
Bonnie L. Powell
STEPHEN W. SEALE, JR. Director
---------------------------------------------------------------
Stephen W. Seale, Jr.
LAWRENCE R. TANNER Director
------------------------------------------------------------
Lawrence R. Tanner
ROBERT C. TRANCHON Director
------------------------------------------------------------
Robert C. Tranchon
RONALD J. WOLNY Director
-----------------------------------------------------------------
Ronald J. Wolny
Date: January 28, 2001
30
31
EXHIBIT INDEX
EXHIBITS DESCRIPTION
-------- -----------
2.1 - Asset Purchase Agreement dated as of June 20, 1996 by and between
Rolls-Royce North America, Inc. and Rolls-Royce Acquisition Corp. and
U. S. Turbine Corp. and the Company (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K dated August 8, 1996 and
incorporated herein by reference).
2.2 - First Amendment to Asset Purchase Agreement dated July 26, 1996 by
and between Rolls-Royce North America, Inc. and Rolls-Royce
Acquisition Corp. and U. S. Turbine Corp. and the Company (filed as
Exhibit 2.2 to the Company's Current Report on Form 8-K dated August
8, 1996 and incorporated herein by reference).
3.1 - Articles of Incorporation and Certificates of Amendment of Powell
Industries, Inc. dated July 20, 1987 and March 13, 1992 (filed as
Exhibit 3 to the Company's Form 10-K for the fiscal year ended
October 31, 1982, Form 10-Q for the quarter ended July 31, 1987, and
Form 10-Q for quarter ended April 30, 1992, respectively, and
incorporated herein by reference).
3.2 - By-laws of Powell Industries, Inc. (filed as Exhibit 3.2 to the
Company's Form 10-Q for the quarter ended April 30, 1995 and
incorporated herein by reference).
10.1 - Powell Industries, Inc., Incentive Compensation Plan for 2000
(filed as Exhibit 10.1 to the Company's Form 10-K for the fiscal
year ended October 31, 2000 and incorporated herein by reference).
10.2 - Description of Supplemental Executive Benefit Plan (filed as
Exhibit 10 to the Company's Form 10-K for the fiscal year ended
October 31, 1984, and incorporated herein by reference).
10.3 - Credit Agreement dated August 15, 1997 between Powell Industries,
Inc. and Bank of America Texas, N. A. (filed as Exhibit 10.5 to the
Company's Form 10-Q for the quarter ended July 31, 1997 and
incorporated herein by reference.)
10.4 - Amendments dated September 16, 1998, September 25, 1998 and
October 15, 1998 to credit agreement between Powell Industries,
Inc., and Bank of America Texas, N.A, (filed as Exhibit 10.6 to
Company's Form 10-K for the fiscal year ended October 31, 1998 and
incorporated herein by reference).
10.5 - Fourth Amendment dated February 26, 1999 to credit agreement
between Powell Industries, Inc. and Bank of America Texas N.A.
(filed as Exhibit 10.6 to Company's 10-Q for quarter ended April
30, 1999 and incorporated herein by reference).
10.6 - 1992 Powell Industries, Inc. Stock Option Plan (filed as Exhibit
4.2 to the Company's registration statement on Form S-8 dated July
26, 1994 (File No. 33-81998) and incorporated herein by
reference).
10.7 - The Powell Industries, Inc. Directors' Fees Program (filed as
Exhibit 10.7 to the Company's Form 10-K for the fiscal year ended
October 31, 1992, and incorporated herein by reference).
10.8 - The Powell Industries, Inc. Executive Severance Protection Plan
(filed as Exhibit 10.7 to the Company's Form 10-Q for the quarter
ended April 30, 1996, and incorporated herein by reference).
10.9 - Amendment to Powell Industries, Inc. Stock Option Plan (filed as
Exhibit 10.8 to the Company's Form 10-Q for the quarter ended
April 30, 1996 and incorporated herein by reference).
10.10- Settlement Agreement effective September 3, 1998 by and among
National Westminister Bank, plc, Powell Industries, Inc., Powell
Energy Systems, Inc., Empire Energy Management Systems, Inc.,
Empire Cogen and Brian Travis (filed as Exhibit 10.11 to the
Company's Form 10-Q for quarter ended July 31, 1998 and
incorporated herein by reference).
10.11- Fifth Amendment dated December 31, 1999 to credit agreement
between Powell Industries, Inc. and Bank of America Texas N.A.
(Filed as Exhibit 10.12 to the Company's Form 10-K for the fiscal
year ended October 31, 1999 and incorporated herein by reference.
*21.1 - Subsidiaries of the Company.
*23.1 - Consent of Independent Public Accountants.
* Filed herewith
(b) Reports on Form 8-K.
None