1143363--3/15/2006--SI_INTERNATIONAL

related topics

{regulation, government, change}

{acquisition, growth, future}

{personnel, key, retain}

{operation, international, foreign}

{cost, contract, operation}

{stock, price, share}

{customer, product, revenue}

{competitive, industry, competition}

{provision, law, control}

{debt, indebtedness, cash}

{property, intellectual, protect}

{system, service, information}

{tax, income, asset}

Risks Related to Our Industry We depend on contracts with the Federal Government for most of our revenue, and our business would be seriously harmed if the government ceased doing business with us or significantly decreased the amount of business it does with us. Our business could be adversely affected by changes in budgetary priorities of the Federal Government. Our contracts with the Federal Government may be terminated or adversely modified prior to completion, which could adversely affect our business. If we fail to establish and maintain important relationships with government entities and agencies, our ability to successfully bid for new business may be adversely affected. We derive significant revenue from contracts and task orders awarded through a competitive acquisition process. If we are unable to win new awards or successfully compete for renewal contracts, our business and prospects may be adversely affected. Our business may suffer if our facilities or our employees are unable to obtain or retain the security clearances or other qualifications needed to perform services for our clients. We must comply with a variety of laws, regulations and procedures and our failure to comply could harm our operating results. The Federal Government may revise its procurement or other practices in a manner adverse to us. Our contracts and administrative processes and systems are subject to audits and cost adjustments by the Federal Government, which could reduce our revenue, disrupt our business or otherwise adversely affect our results of operations. Failure to maintain strong relationships with other government contractors could result in a decline in our revenue. The calculation of our backlog is subject to numerous uncertainties, and we may not receive the full amounts of revenue estimated under the contracts included in our backlog, which could reduce our revenue in future periods. Loss of our GSA contracts or GWACs would impair our ability to attract new business. If subcontractors on our prime contracts are able to secure positions as prime contractors, we may lose revenue. Risks Associated with International Operations Our international business exposes us to additional risks including exchange rate fluctuations, foreign tax and legal regulations and political or economic instability that could materially adversely affect our operating results. Risks Related to Our Business We may lose money or generate less than anticipated profits if we do not accurately estimate the cost of our performance under fixed price or time and materials contracts. Our margins and operating results may suffer if cost reimbursable contracts increase as a percentage of our total government contracts. Our markets are highly competitive, and many of the companies we compete against have substantially greater resources. Our failure to attract and retain qualified employees, including our executive and senior management team, may adversely affect our business. We may be affected by intellectual property infringement claims. A substantial majority of our historical growth has been due to acquisitions and we may have difficulty identifying and executing future acquisitions on favorable terms, which may adversely affect our results of operations and stock price. We may have difficulty integrating the operations of any companies we acquire, which may adversely affect our results of operations. If we are unable to manage our growth, our business may be adversely affected. Systems failures may disrupt our business and have an adverse effect on our results of operations. If our subcontractors fail to perform their contractual obligations, our performance as a prime contractor and our ability to obtain future business could be materially and adversely impacted. Our indebtedness and debt service obligations may increase substantially and we will be subject to restriction under debt instruments. Risks Related to Our Common Stock Provisions of our charter and bylaws and Delaware law make a takeover of our company more difficult. Future sales of shares of our common stock and the resulting dilution that would occur with such sales could cause the market price of our common stock to decline.

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1143363--3/15/2006--SI_INTERNATIONAL_INC