1048268--12/15/2008--INTEGRATED_ELECTRICAL_SERVICES

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{cost, operation, labor}

{condition, economic, financial}

{debt, indebtedness, cash}

{loss, insurance, financial}

{interest, director, officer}

{tax, income, asset}

{system, service, information}

{capital, credit, financial}

{operation, natural, condition}

{regulation, change, law}

{control, financial, internal}

{personnel, key, retain}

{competitive, industry, competition}

{gas, price, oil}

{provision, law, control}

Existence of a controlling shareholder. Our controlling shareholder has announced its intention to explore alternatives for the disposition of its holdings in our Company. Availability of net operating losses may be reduced by a change in control. Downturns in the construction industry could adversely affect our business because our business is dependent on levels of new construction activity. To service our indebtedness and to fund working capital, we will require a significant amount of cash. Our ability to generate cash depends on many factors that are beyond our control. The highly competitive nature of our industry could affect our profitability by reducing our profit margins. The availability and cost of surety bonds affect our ability to enter into new contracts and our margins on those engagements. Due to seasonality and differing regional economic conditions, our results may fluctuate from period to period. The estimates we use in placing bids could be materially incorrect. The use of incorrect estimates could result in losses on a fixed price contract. These losses could be material to our business. Commodity costs may fluctuate materially and we may not be able to pass on all cost increases during the term of a contract. There is a shortage of qualified electricians. Since the majority of our work is performed by electricians, this shortage may negatively impact our business, including our ability to grow. We may experience difficulties in managing future consolidations. We may experience difficulties in managing our billings and collections. We have restrictions and covenants under our credit facility. Our reported operating results could be adversely affected as a result of goodwill impairment write-offs. The vendors who make up our supply chain may be adversely affected by the current operating environment and credit market conditions. Our operations are subject to numerous physical hazards associated with the construction of electrical systems. If an accident occurs, it could result in an adverse effect on our business. Our internal controls over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur. Internal controls over financial reporting and disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objective will be met. We have adopted tax positions that a taxing authority may view differently. If a taxing authority differs with our tax positions, our results may be adversely affected. Litigation and claims can cause unexpected losses. Latent defect claims could expand. The loss of a group or several key personnel, either at the corporate or operating level, could adversely affect our business. The loss of productivity, either at the corporate office or operating level, could adversely affect our business.

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1048268--12/15/2008--INTEGRATED_ELECTRICAL_SERVICES_INC