866273--8/4/2006--MATRIX_SERVICE

related topics

{cost, contract, operation}

{cost, operation, labor}

{stock, price, share}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{condition, economic, financial}

{loss, insurance, financial}

{personnel, key, retain}

{financial, litigation, operation}

{tax, income, asset}

{product, liability, claim}

{acquisition, growth, future}

{operation, natural, condition}

{competitive, industry, competition}

An inability to attract and retain qualified personnel, and in particular, project managers and skilled craft workers, could impact our ability to perform on our contracts, which could harm our business and impair our future revenues and profitability. Unsatisfactory safety performance can affect customer relationships, result in higher operating costs, negatively impact employee morale and result in high employee turnover. Work stoppages and other labor problems could adversely affect us. Demand for our products and services is cyclical and is vulnerable to downturns in the industries and markets which we serve as well as conditions in the general economy. We face substantial competition in each of our business segments, which may have a material adverse effect on our business by reducing our ability to increase or maintain profitability. Our results of operations depend upon the award of new contracts and the timing of those awards. The loss of one or more of our significant customers could adversely affect us. The terms of our contracts could expose us to absorbing unforeseen costs and costs not within our control, which may not be recoverable and could adversely affect our results of operations and financial condition. We may encounter difficulties during the course of performing our contracts that may result in additional costs to us and in a reduction in our revenues and earnings that could have an adverse effect upon our financial condition and results of operations. Our use of percentage-of-completion accounting for fixed-price contracts and our reporting of profits for cost-plus contracts prior to contract completion could result in a reduction or elimination of previously reported profits. We may incur significant costs in providing services in excess of original project scope without having an approved change order. We are involved and are likely to continue to be involved in legal proceedings, which will increase our costs and, if adversely determined, could have a material effect on our financial condition and results of operations. Actual results could differ from the estimates and assumptions that we use to prepare our financial statements. We are susceptible to adverse weather conditions in our regions of operation, which may harm our business and financial results. Our projects expose us to potential professional liability, product liability, warranty and other claims, which could be expensive, damage our reputation and harm our business. We may not be able to obtain or maintain adequate insurance to cover these claims. There are integration and consolidation risks associated with our growth strategy. Future acquisitions may also result in significant transaction expenses, unexpected liabilities and risks associated with entering new markets, and we may be unable to profitably operate our business. Earnings for the future periods may be affected by impairment charges. Debt agreements impose restrictions that may limit business alternatives. Future events could negatively affect our liquidity position. If we fail to comply with our obligations under two registration rights agreements among us and the holders of our convertible notes and the purchasers of common stock in our equity private placement, we may be required to pay damages to the security holders. Our failure to comply with our obligations under the registration rights agreement for the convertible notes may also constitute an event of default under the convertible notes. Our common stock, which is listed on the NASDAQ Global Market, has from time-to-time experienced significant price and volume fluctuations. These fluctuations are likely to continue in the future, and our stockholders may not be able to resell their shares of common stock or other securities whose price is related to that of our common stock at or above the purchase price paid. Future sales of our common stock may depress our stock price. We may issue additional equity securities, which would lead to dilution of our issued and outstanding stock. Environmental factors and changes in laws and regulations could increase our costs and liabilities. Changes in environmental laws and regulations or a reduced level of enforcement of existing laws and regulations could adversely affect the demand for our services and our results of operations.

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866273--8/4/2006--MATRIX_SERVICE_CO