1
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                    FORM 10-Q


(Mark one)

[X]   Quarterly Report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the quarterly period ended July 31, 1999. 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 incorporation or organization)         (I.R.S. Employer 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
                                                    --------------

         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
                                                     ---        ---


Common Stock, par value $.01 per share; 10,675,000 shares outstanding on
September 10, 1999.

   2


                    Powell Industries, Inc. and Subsidiaries



Part I - Financial Information

                                                                                               
      Item 1.      Condensed Consolidated Financial Statements.........................................3-9

      Item 2.      Management's Discussion and Analysis of
                      Financial Condition and Quarterly
                      Results of Operations..........................................................10-13

      Item 3.      Quantitative and Qualitative Disclosure about Market Risk............................13

Part II - Other Information and Signatures...........................................................14-16




                                       2
   3


                    POWELL INDUSTRIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)



                                                                                       JULY 31,          OCTOBER 31,
                                                                                         1999                1998
                                                                                    ------------      --------------
ASSETS                                                                                (UNAUDITED)
                                                                                                

Current Assets:
     Cash and cash equivalents..................................................    $      5,381      $        601
     Accounts receivable, less allowance for doubtful accounts of
         $883 and $761,  respectively...........................................          43,105            44,255
     Costs and estimated earnings in excess of billings.........................          20,199            24,783
     Inventories................................................................          15,930            16,284
     Deferred income taxes......................................................             581               709
     Income taxes receivable....................................................              --               945
     Prepaid expenses and other current assets..................................           2,310             1,441
                                                                                    ------------      ------------

         Total Current Assets...................................................          87,506            89,018

Property, plant and equipment, net..............................................          33,665            32,311
Deferred income taxes...........................................................           1,115               833
Other assets....................................................................           5,141             4,969
                                                                                    ------------      ------------
         Total Assets...........................................................    $    127,427      $    127,131
                                                                                    ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Current maturities of long-term debt.......................................    $      2,429      $      1,429
     Accounts and income taxes payable..........................................          10,726            12,094
     Accrued salaries, bonuses and commissions..................................           5,532             6,784
     Accrued product warranty...................................................           1,462             1,388
     Other accrued expenses.....................................................           4,690             4,652
     Billings in excess of costs and estimated earnings.........................           4,107             3,845
                                                                                    ------------      ------------

         Total Current Liabilities                                                        28,946            30,192

Long-term debt, net of current maturities.......................................           7,500            11,571
Deferred compensation expense...................................................           1,164             1,187
Postretirement benefits liability...............................................             716               845
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; 10,671,000 and
     10,659,000
         shares issued and outstanding..........................................             107               107
     Additional paid-in capital.................................................           6,013             5,919
     Retained earnings..........................................................          85,745            80,237
     Deferred compensation-ESOP.................................................          (2,764)           (2,927)
                                                                                    ------------      ------------

         Total Stockholders' Equity.............................................          89,101            83,336
                                                                                    ------------      ------------

         Total Liabilities and Stockholders' Equity.............................    $    127,427      $    127,131
                                                                                    ============      ============


         The accompanying notes are an integral part of these condensed
                      consolidated financial statements.


                                       3
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                    POWELL INDUSTRIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)



                                                                             THREE MONTHS ENDED JULY 31,
                                                                                  1999         1998
                                                                                -------     --------
                                                                                      
Revenues...................................................................    $ 51,612     $ 56,258

Cost of goods sold.........................................................      41,838       43,888
                                                                               --------     --------

Gross profit...............................................................       9,774       12,370

Selling, general and administrative expenses...............................       7,507        7,847
                                                                               --------     --------

Earnings from continuing operations before interest and income taxes.......       2,267        4,523

Interest expense, net......................................................         136           59
                                                                               --------     --------

Earnings from continuing operations before income taxes....................       2,131        4,464

Income tax provision.......................................................         618        1,271
                                                                               --------     --------

Earnings from continuing operations.........................................      1,513        3,193

Loss from discontinued operations, net of income taxes......................          --       (4,700)
                                                                               --------     --------

Net earnings................................................................   $  1,513     $ (1,507)
                                                                               ========     ========

Earnings (loss) per common share:

     Continuing operations:
        Basic................................................................  $    .14     $    .30
        Diluted..............................................................       .14          .30

     Discontinued operations:
        Basic................................................................  $     --     $   (.44)
        Diluted..............................................................        --         (.44)

     Net earnings:
        Basic................................................................  $    .14     $   (.14)
        Diluted..............................................................       .14         (.14)

Weighted average number of common shares outstanding.........................    10,664       10,643
                                                                               ========     ========

Weighted average number of common and common equivalent shares outstanding...    10,769       10,745
                                                                               ========     ========



         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                       4
   5





                    POWELL INDUSTRIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)




                                                                               NINE MONTHS ENDED JULY 31,
                                                                                  1999           1998
                                                                                --------     -----------
                                                                                       
Revenues.....................................................................  $ 162,077     $ 156,596

Cost of goods sold...........................................................    131,133       121,315
                                                                               ---------     ---------

Gross profit.................................................................     30,944        35,281

Selling, general and administrative expenses.................................     22,516        22,310
                                                                               ---------     ---------

Earnings from continuing operations before interest and income taxes.........      8,428        12,971

Interest expense, net........................................................        409           112
                                                                               ---------     ---------

Earnings from continuing operations before income taxes......................      8,019        12,859

Income tax provision.........................................................      2,509         3,954
                                                                               ---------     ---------

Earnings from continuing operations..........................................      5,510         8,905

Loss from discontinued operations, net of income taxes.......................         --        (4,700)
                                                                               ---------     ---------

Net earnings.................................................................  $   5,510     $   4,205
                                                                               =========     =========

Net earnings per common share:

     Continuing operations:
         Basic...............................................................  $     .52     $     .84
         Diluted.............................................................        .51           .83

     Discontinued operations:
         Basic...............................................................  $      --     $    (.44)
         Diluted.............................................................         --          (.44)

     Net earnings:
         Basic...............................................................  $     .52     $     .40
         Diluted.............................................................        .51           .39

Weighted average number of common shares outstanding.........................     10,661        10,642
                                                                               =========     =========

Weighted average number of common and common equivalent shares outstanding...     10,771        10,750
                                                                               =========     =========



         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                       5
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                    POWELL INDUSTRIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)




                                                                                 NINE MONTHS ENDED JULY 31,
                                                                                    1999          1998
                                                                                    ----          ----
                                                                                         
Operating Activities:
     Net earnings............................................................... $  5,510      $  4,205
     Adjustments to reconcile net earnings to net cash provided by (used in)
       operating activities:
         Depreciation and amortization..........................................    3,252         2,992
         Deferred income tax benefit............................................     (154)         (367)
         Postretirement benefits liability......................................     (129)         (219)
         Changes in operating assets and liabilities:
              Accounts receivable...............................................    1,150         1,220
              Costs and estimated earnings in excess of billings................    4,584         4,632
              Inventories.......................................................      354        (4,752)
              Prepaid expenses and other current assets.........................     (869)          160
              Other assets......................................................     (789)            0
              Accounts payable and income taxes payable or receivable...........     (231)         (194)
              Accrued liabilities...............................................   (1,332)          608
              Billings in excess of costs and estimated earnings................      262        (5,388)
              Deferred compensation expense.....................................      139           169
              Changes in net assets of discontinued operations..................       --         4,700
                                                                                 --------      --------
Net cash provided by operating activities.......................................   11,747         7,766
                                                                                 --------      --------
Investing Activities:
     Purchases of property, plant and equipment................................    (3,990)       (6,628)
                                                                                 --------      --------
Net cash used in investing activities..........................................    (3,990)       (6,628)
                                                                                 --------      --------
Financing Activities:
     Borrowings of long-term debt..............................................    19,000        17,800
     Repayment of long term debt...............................................   (22,071)      (20,300)
     Exercise of stock options.................................................        94            69
                                                                                 --------      --------
Net cash used in financing activities..........................................    (2,977)       (2,431)
                                                                                 --------      --------
Net increase (decrease) in cash and cash equivalents...........................     4,780        (1,613)
Cash and cash equivalents at beginning of period...............................       601         2,219
                                                                                 --------      --------

Cash and cash equivalents at end of period.....................................  $  5,381      $    606
                                                                                 ========      ========

Supplemental disclosure of cash flow information (in thousands):

     Cash paid during the quarter for:
         Interest..............................................................  $    570      $    297
                                                                                 ========      ========

         Income taxes..........................................................  $     --      $  1,000
                                                                                 ========      ========



  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       6
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Part I
     Item 1



                    POWELL INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



A.   BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
     been prepared in accordance with the instructions to Form 10-Q and, in the
     opinion of management, reflect all adjustments which are of a normal
     recurring nature necessary for a fair presentation of financial position,
     results of operations, and cash flows. These financial statements should be
     read in conjunction with the financial statements and notes thereto
     included in the Company's October 31, 1998 annual report on Form 10-K.

     SFAS No. 130, "Reporting Comprehensive Income", was issued in June 1997.
     SFAS No. 130 requires the presentation of comprehensive income in an
     entity's financial statements. Comprehensive income represents all changes
     in equity of an entity during the reporting period, including net income
     and charges directly to equity which are excluded from net income. The
     Company adopted SFAS No. 130 during fiscal year ended October 31, 1998. The
     adoption had no effect on the Company's consolidated financial position or
     results of operations.


B.   INVENTORY



                                                                                    July 31,         October 31,
                                                                                      1999              1998
                                                                                      ----              ----
                                                                                   (unaudited)
                                                                                                 
     The components of inventory are summarized below (in thousands):
     Raw materials and subassemblies............................................    $  9,334          $  9,795
     Work-in-process............................................................       6,596             6,489
                                                                                    --------          --------

     Total inventories..........................................................    $ 15,930          $ 16,284
                                                                                    ========          ========



C.   PROPERTY, PLANT AND EQUIPMENT



                                                                                    July 31,         October 31,
                                                                                      1999              1999
                                                                                      ----              ----
                                                                                   (unaudited)
                                                                                              
     Property, plant and equipment is summarized below (in thousands):
     Land.......................................................................    $ 3,193          $ 2,720
     Buildings and improvements.................................................     30,588           27,478
     Machinery and equipment....................................................     29,289           28,149
     Furniture & fixtures.......................................................      4,392            4,039
     Construction in process....................................................      2,278            3,364
                                                                                    -------          -------
                                                                                     69,740           65,750
     Less-accumulated depreciation..............................................    (36,075)         (33,439)
                                                                                    -------          -------

     Total property, plant and equipment, net...................................    $33,665          $32,311
                                                                                    =======          =======



                                       7
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Part I
     Item 1

D.   PRODUCTION CONTRACTS

     For contracts for which the percentage-of-completion method is used, costs
     and estimated earnings in excess of billings are shown as a current asset
     and billings in excess of costs and estimated earnings are shown as a
     current liability. The components of these contracts are as follows (in
     thousands):



                                                                                    July 31,       October 31,
                                                                                      1999            1998
                                                                                      ----            ----
                                                                                   (unaudited)


                                                                                              
     Costs and estimated earnings...............................................    $ 86,695        $ 114,127
     Progress billings..........................................................     (66,496)         (89,344)
                                                                                    --------        ---------
     Total costs and estimated earnings in excess of billings...................    $ 20,199        $  24,783
                                                                                    ========        =========

     Progress billings..........................................................    $ 99,969        $  67,471
     Costs and estimated earnings...............................................     (95,862)         (63,626)
                                                                                    --------        ---------
     Total billings in excess of costs and estimated earnings...................    $  3,834        $   3,845
                                                                                    ========        =========



E.   EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted
     earnings per share (in thousands, except share and per share data):



                                                                      Three Months Ended July 31,        Nine Months Ended July 31,
                                                                        1999              1998             1999            1998
                                                                        ----              ----             ----            ----
                                                                              (unaudited)                        (unaudited)

                                                                                                                
    Numerator:
         Numerator for basic and diluted earnings per
          share-earnings from continuing operations
           available to common stockholders.....................         $ 1,513           $3,197           $5,510          $8,905
                                                                         =======           ======           ======          ======

     Denominator:
         Denominator for basic earnings per share-
          weighted average shares...............................          10,664           10,643           10,661          10,642

         Effect of dilutive securities-employee stock options...             105              102              110             108
                                                                         -------           ------           ------          ------

         Denominator for diluted earnings per share-adjusted
         weighted-average shares with assumed
           conversions..........................................          10,769           10,745           10,771          10,750
                                                                         =======           ======           ======          ======

     Basic earning per share....................................         $   .14           $  .30           $  .52          $  .84
                                                                         =======           ======           ======          ======
     Diluted earnings per share.................................         $   .14           $  .30           $  .51          $  .83
                                                                         =======           ======           ======          ======



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Part I
     Item 1


F.   BUSINESS SEGMENTS (unaudited)

     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 distribution of
     electric power. 3. Process Control Systems which consists principally of
     instrumentation, computer control, communications and data management
     systems for the control of dynamic processes. The accounting policies used
     for the reportable segments are the same as those used for the consolidated
     financial statements.

     The required disclosures for the business segments are set forth below (in
thousands):



                                                                       Three Months Ended July 31,       Nine Months Ended July 31,
                                                                         1999              1998            1999             1998
                                                                         ----              ----            ----             ----
                                                                               (unaudited)                       (unaudited)
                                                                                                            
      Revenues:
         Switchgear.............................................       $32,862          $41,253         $110,071        $112,588
         Bus Duct...............................................         7,067            6,654           20,823          19,336
         Process Control Systems................................         8,069            5,300           22,876          16,492
                                                                       -------          -------         --------        --------
              Sub-total.........................................        47,998           53,207          153,770         148,416
         Other..................................................         4,105            3,324           11,051          10,580
         Intercompany Eliminations..............................          (492)            (273)          (2,744)         (2,400)
                                                                       -------          -------         --------        --------

      Total Revenues............................................       $51,611          $56,258         $162,077        $156,596
                                                                       =======          =======         ========        ========

      Earnings from continuing operations before income taxes:
         Switchgear.............................................       $ 1,601          $ 4,617         $  6,652        $ 11,383
         Bus Duct...............................................         1,367            1,665            3,841           4,325
         Process Control Systems................................           273              171              822             413
                                                                       -------          -------         --------        --------
              Sub-total.........................................         3,241            6,453           11,315          16,121
         Other..................................................        (1,111)          (1,990)          (3,296)         (3,262)
                                                                       -------          -------         --------        --------

      Total earnings from continuing operations
         before income taxes....................................       $ 2,130          $ 4,463         $  8,019        $ 12,859
                                                                       =======          =======         ========        ========




                                                                                 July 31,             October 31,
                                                                                   1999                  1998
                                                                                   ----                  ----
                                                                               (Unaudited)
                                                                                                 
      Assets
         Switchgear........................................................      $ 77,743              $ 90,603
         Bus Duct..........................................................        13,148                12,271
         Process Control Systems...........................................        12,713                10,309
                                                                                 --------              --------
             Sub-total.....................................................       103,604               113,183
         Corporate and Other...............................................        23,824                13,948
                                                                                 --------              --------
         Total Assets......................................................      $127,428              $127,131
                                                                                 ========              ========



                                       9
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Part I
  Item 2

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND QUARTERLY RESULTS
                                  OF OPERATIONS


RESULTS OF OPERATIONS

The following table sets forth, as a percentage of revenues, certain items from
the Condensed Consolidated Statements of Operations.



                                                            July 31, 1999                   July 31, 1998
                                                    ---------------------------    -----------------------------
                                                    three months    nine months     three months     nine months
                                                        ended          ended            ended           ended
                                                    ------------    -----------     ------------     -----------
                                                                                           
Revenues                                             100.0%           100.0%         100.0%            100.0%
Gross Profit                                          18.9             19.1           22.0              22.5
Selling, general and administrative expenses          14.5             13.9           13.9              14.2
Interest expense, net                                   .3               .3             .1                .1
Earnings from operations before income taxes           4.1              4.9            8.0               8.2
Earnings from continuing operations                    2.9              3.4            5.7               5.7
Loss from discontinued operations, net of
   income taxes                                         --               --           (8.4)             (3.0)
Net Earnings                                           2.9              3.4           (2.7)              2.7



Revenues for the quarter ended July 31, 1999, were down 8.3 percent to
$51,612,000 from $56,258,000 in the third quarter of last year. Revenues for the
nine months ended July 31, 1999 were up 3.5 percent to $162,077,000 from
$156,596,000. The increases in revenues for the nine month period were in the
domestic markets. The sales decreases for the quarter were due to unfavorable
market conditions in the Switchgear business segment. Export revenues continued
to be an important component of the Company's operations, accounting for
$56,597,000 for the nine months ending July 31, 1999 compared to $64,414,000 for
the same period of 1998.

Gross profit, as a percentage of revenues, was 18.9 percent and 22.0 percent for
the quarters ended July 31, 1999 and 1998, respectively. The lower percentages
in 1999 were mainly due to the decline in performance of the Switchgear business
segment and lower prices, and changes in product mix to lower gross margin
products.

Selling, general and administrative expenses as a percentage of revenues were
14.5 percent and 13.9 percent for the quarters ended July 31, 1999 and 1998,
respectively. The increase in percentages reflects the decreased volume of
revenues.

Interest expense, net The following schedule shows the amounts for interest
expense and income:




                                                        July 31, 1999                      July 31, 1998
                                                Three months    nine months      three months       nine months
                                                   ended           ended             ended              ended
                                                ------------    -----------      ------------       -----------
                                                                                        
         Expense                                $214,000        $643,000          $136,000          $359,000
         Income                                  (78,000)       (234,000)          (77,000)         (247,000)
                                                --------        --------          --------          --------
         Net                                    $136,000        $409,000          $ 59,000          $112,000
                                                ========        ========          ========          ========



Sources of interest expense in fiscal year 1999 and 1998 were primarily related
to bank notes payable at rates between 6 and 8%.

Sources of the interest income were related to notes receivable and short-term
investment of available funds at various rates between 4 and 7%.


                                       10
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Income tax provision The effective tax rates on continuing operations earnings
were 29.0 percent and 28.5 percent for the quarters ended July 31, 1999 and
1998, respectively. The effective tax rates in both years have benefited for
foreign sale corporation credits. These effective tax rates have benefited from
timing differences and should finish the year at approximately 31 percent, which
is more consistent with prime years.

Earnings from continuing operations were $1,513,000 or $.14 per diluted share
for the third quarter of fiscal 1999, a decrease from $3,193,000 or $.30 per
diluted share for the same period last year. The decrease was mainly due to
lower gross margins in the Switchgear and Bus Duct business segments.

Backlog The order backlog at July 31, 1999 was $148.9 million, compared to
$143.4 million at October 31, 1998.

LIQUIDITY AND CAPITAL RESOURCES

In September 1998, the Company amended an existing revolving line of credit
agreement with a major domestic bank. The agreement provided for a $10,000,000
term loan and a revolving line of credit of $15,000,000. In February 1999 the
agreement was amended to increase the revolving line of credit to $20,000,000.
The Company had no borrowings outstanding under this line on July 31, 1999 and
was in compliance with all financial covenants of the agreement.

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 measures which are significant to management:



                                                                  July 31,         October 31,
                                                                    1999               1998
                                                                    ----               ----
                                                                             
      Working Capital                                           $58,561,000        $58,826,000
      Current Ratio                                               3.02 to 1          2.95 to 1
      Long-term Debt to Capitalization                              .1 to 1            .1 to 1



Management believes that the Company continues to maintain a strong liquidity
position. Working capital at July 31, 1999 changed very little as compared to
October 31, 1998. However, the increase in funds from the reductions in accounts
receivables, costs and estimated earnings in excess of billings and inventories
were used to pay down debt and to increase cash equivalents

The Company's fiscal 1999 asset management program will continue to focus on the
collection of receivables and reduction in inventories. The Company plans to
satisfy its fiscal 1999 capital requirements and operating needs primarily with
funds available in cash and cash equivalents of $5,381,000, funds generated from
operating activities and funds available under its existing revolving credit
line.

The previous discussion should be read in conjunction with the consolidated
financial statements.

Year 2000 Readiness
The Year 2000 readiness issue results from the historical use in computer
software programs and operating systems of a two digit number to represent the
year. Certain software and hardware may fail to properly function when
confronted with dates that contain "00" as a two digit year. New information
about the nuances of the problem seems to become available on almost a daily
basis and that is likely to continue as companies around the world focus
increased attention and resources on finding solutions to the problem's many
manifestations.

To address the potential risk for disruption of operations, each subsidiary of
the Company has developed a compliance plan. The Company has substantially
completed a comprehensive initial assessment of the readiness of its internal
systems and manufacturing systems. Many of the readiness issues identified in
internal systems during the course of the initial assessment have already been
addressed. Numerous tests have been conducted to confirm the effectiveness of
applied solutions. Additional testing will occur throughout 1999. While the
Company's initial assessment is substantially complete, the Company intends to
continue to update the assessment of its state of readiness based upon new
information that may become available from third party vendors, suppliers and
manufacturers in the months to come.

All components originally manufactured by the Company are inherently compliant
in that the components do not manipulate, process, store or record date-related
information. However, a few subsidiaries, including the Company's largest
subsidiary, Powell Electrical Manufacturing Company, sell engineered systems
that include potentially noncompliant components manufactured by third parties.
The Company is pursuing a plan to evaluate the compliance status of all
components manufactured by third parties and will pass through to its


                                       11
   12


customers any compliance warranties provided by the components' manufacturers.
The Company will continue to strongly recommend to its customers that each of
them make an independent evaluation of the readiness of manufactured products
that include potentially noncompliant components.

The Transdyn Controls, Inc. subsidiary is a systems integrator of primarily
third party products. As an integrator, Transdyn must rely on the readiness
information provided by the providers of those third party products. Microsoft
is the primary provider of software Transdyn utilizes in its integrated systems.
Based on currently available information, Transdyn believes that the versions of
third party products currently integrated into systems it develops are either
compliant or will be compliant upon application of readily available patches.
Earlier versions of third party products integrated in systems delivered by
Transdyn in the past are known to be noncompliant, and Transdyn will continue to
work to identify and notify affected customers. Transdyn is offering its
services to affected customers to assist in the testing, retrofit or upgrade
process.

The costs to the Company to achieve Year 2000 readiness are believed to be
approximately $500,000 to $600,000. Most tasks associated with compliance plan
implementation have been or will be completed by internal employees. Certain
tasks will be performed by external solution providers; however, reliance on
external resources will not be significant.

The most likely worst case Year 2000 scenario for the Company includes the
following possibilities:

o    A limited number of components manufactured by third parties will fail in
     some respect despite the manufacturers' assurances that such components are
     compliant. To the extent that this occurs and the Company is obligated to
     do so under contractual warranties, the Company will make replacement
     components available to customers. Otherwise, the Company will facilitate
     the identification of viable compliant components and replacement of the
     noncompliant components.

o    A limited number of customers who were notified of possible compliance
     issues associated with older equipment will fail to timely address the
     issue and will seek assistance from the Company after roll-over. To the
     extent sufficient and appropriate resources are available, the Company will
     facilitate component replacement or upgrades.

o    Some customers may suffer failures that cause those customers to delay
     placing additional orders of new equipment during the first quarter of 2000
     or to delay payment for previously ordered products. The Company plans to
     position itself to adjust to any temporary reduction of new orders and to
     withstand short term cash flow issues.

o    One or more physical facilities may suffer some degree of infrastructure
     failure, due in part to the number of geographic locations of the various
     subsidiaries. The Company plans to carefully manage its contractual
     obligations to customers during the first month of 2000 so as to minimize
     the effect any infrastructure failure might have on its ability to satisfy
     those obligations. At this time, the Company does not intend to invest in
     alternative sources of water, power or telecommunications. The Company will
     prepare further contingency plans to deal with potential infrastructure
     failure if and when additional information becomes available from current
     providers as to their state of readiness.

While other scenarios are possible given the interdependent nature of all
businesses, the Company believes that the foregoing elements, individually or
any combination of one or more other element, represent the most likely worst
case scenario.


                                       12
   13



Part I
     Item 3

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 equivalents, accounts receivable and payable and short-term
debt 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 IBOR. The Company's accounts receivables are
not concentrated in one customer or industry and are not viewed as an unusual
credit risks. The Company had recorded an allowance for doubtful accounts of
$883,000 at July 31, 1999 and $761,000 at October 31, 1998, respectively.

The Company has an interest rate swap agreement, which is used by the Company in
the management of interest rate exposure, and 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 expense in the periods in which they accrue. At April 30, 1999 the
Company had $8,929,000 of borrowings subject to the interest rate swap at a rate
of 5.20% through September 30, 2003. The agreements require 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 July 31, 1999 was 5.31%.


Any forward looking statements in the preceding paragraphs of this Form 10-Q are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors 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, difficulties which could arise in obtaining
materials or components in sufficient quantities as needed for the Company's
manufacturing and assembly operations, unforeseen political or economic problems
in countries to which the Company exports its products in relation to the
Company's principal competitors, any significant decrease in the Company's
backlog of orders, any material employee relations problems, or any material
litigation or claims made against the Company, as well as general market
conditions, competition and pricing.


                                       13
   14



Part II


                                OTHER INFORMATION

     ITEM 1.      Legal Proceedings
                  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 of results of operations of the Company.

     ITEM 2.      Changes in Securities and Use of Proceeds
                  None

     ITEM 3.      Defaults Upon Senior Securities
                  Not applicable

     ITEM 4.      Submission of Matters to a Vote of Security Holders
                  None

     ITEM 5.      Other Information
                  None

     ITEM 6.      Exhibits and Reports on Form 8-K
                  a. Exhibits

                  27.0   Financial Data Schedule

                  b. Reports on Form 8-K
                  None


                                       14
   15


                                   SIGNATURES


Pursuant to the requirements 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.
Registrant



September  13, 1999          /s/  THOMAS W. POWELL
- -------------------          -----------------------------------
Date                         Thomas  W. Powell
                             President and Chief Executive Officer
                             (Principal Executive Officer)




September 13, 1999           /s/  J. F. AHART
- -------------------          -----------------------------------
Date                         J.F. Ahart
                             Vice President,
                             Secretary-Treasurer
                             Chief Financial Officer
                             (Principal Financial and Accounting Officer)



   16


                                 EXHIBIT INDEX




                   

EXHIBIT NO.           DESCRIPTION
- -----------           -----------
   27                 Financial Data Schedule