906192--8/25/2006--SRA_INTERNATIONAL

related topics

{regulation, government, change}

{stock, price, operating}

{system, service, information}

{property, intellectual, protect}

{cost, operation, labor}

{customer, product, revenue}

{competitive, industry, competition}

{provision, law, control}

{gas, price, oil}

{operation, natural, condition}

{cost, contract, operation}

{personnel, key, retain}

{acquisition, growth, future}

{regulation, change, law}

Risks Related To Our Business We depend on contracts with U.S. federal government agencies for substantially all of our revenue, and if our relationships with these agencies were harmed, our business would be threatened. We face intense competition from many competitors that have greater resources than we do, which could result in price reductions, reduced profitability, and loss of market share. We derive significant revenue from contracts awarded through a competitive bidding process, which can impose substantial costs upon us, and we will lose revenue if we fail to compete effectively. Loss of our General Services Administration, or GSA, schedule contracts or our position as a prime contractor on one or more of our government-wide acquisition contracts, or GWACs, or our other multiple-award contracts would impair our ability to win new business. If subcontractors on our prime contracts are able to secure positions as prime contractors, we may lose revenue. If our subcontractors fail to perform their contractual obligations, our performance and reputation as a prime contractor and our ability to obtain future business could suffer. Our quarterly operating results may fluctuate significantly as a result of factors outside of our control, which could cause the market price of our class A common stock to decline. If we fail to attract and retain skilled employees, we might not be able to staff recently awarded engagements and sustain our profit margins and revenue growth. We may lose revenue and our cash flow and profitability could be negatively affected if expenditures are incurred prior to final receipt of a contract or contract funding modification. We may lose money on some contracts if we underestimate the resources we need to perform under the contract. We may lose money or incur financial penalties if we agree to provide services under a performance-based contract arrangement. Contracts with state and local governments, other governments, international entities, or other organizations with special standing, could impose substantial additional liability and costs upon us. We may not be successful in identifying acquisition candidates and, if we undertake acquisitions, they could be expensive, increase our costs or liabilities, or disrupt our business. Additionally, if we are unable to successfully integrate companies we acquire, our revenue and operating results may be impaired. Unfavorable government audit results could force us to adjust previously reported operating results and could subject us to a variety of penalties and sanctions. If we experience systems, service, or product failure, our reputation could be harmed and our clients could assert claims against us for damages or refunds. Our business commitments require our employees to travel to potentially dangerous places, which may result in injury to our employees. Our employees may engage in misconduct or other improper activities, which could harm our business. Our failure to obtain and maintain necessary security clearances may limit our ability to perform classified work for government clients, which could cause us to lose business. Security breaches in sensitive government systems could result in loss of clients and negative publicity. We depend on our intellectual property and our failure to protect it could enable competitors to market products and services with similar features that may reduce demand for our products. We may be harmed by intellectual property infringement claims. Activation of military and National Guard reserves could significantly reduce our revenue and profits. Risks Related To Our Industry A reduction in the U.S. defense budget could result in a substantial decrease in our revenue. A reduction in U.S. civil government agency budgets, including a reduction caused by the diversion of funding to support the war against terrorism, the reconstruction of Iraq, or natural disaster recovery, could result in a substantial decrease in our revenue. Changes in the spending policies or budget priorities of the federal government could cause us to lose revenue. The failure by Congress to approve budgets on a timely basis for the federal agencies we support could delay or reduce spending and cause us to lose revenue. The Office of Management and Budget process for ensuring government agencies properly support capital planning initiatives, including information technology investments, could reduce or delay federal information technology spending and cause us to lose revenue. Federal government contracts contain provisions giving government clients a variety of rights that are unfavorable to us, including the ability to terminate a contract at any time for convenience. Our failure to comply with complex procurement laws and regulations could cause us to lose business and subject us to a variety of penalties. Other Risks Related To Our Stock A public market for our class A common stock has existed only for a limited period of time, and our stock price is volatile and could decline. Our chairman, whose interests may not be aligned with yours, controls our company, which could result in actions of which you or other stockholders do not approve. Provisions of our charter documents and Delaware law may inhibit potential acquisition bids that you and other stockholders may consider favorable, and the market price of our class A common stock may be lower as a result.

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906192--8/25/2006--SRA_INTERNATIONAL_INC