914024--10/30/2009--SHAW_GROUP

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{cost, contract, operation}

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Many of our clients as well as state and local governments activity levels and spending for our products and services and their ability to meet their payment commitments to us may be impacted by the current deterioration in the credit markets and we may be unable to recover all expenditures The nature of our contracts, particularly our fixed-price contracts, could adversely affect us. The ability of our clients to receive the applicable regulatory and environmental approvals for our projects and the timeliness of those approvals could adversely affect us. We continue to expand our business in areas where surety bonding is required, but bonding capacity is limited. Our use of the percentage-of-completion accounting method could result in a reduction or elimination of previously reported profits. The nature of our projects exposes us to potential professional liability, product liability, warranty and other claims, which may reduce our profits. We will be exposed to additional risks in our Fossil, Renewables Nuclear segment, as we begin to execute our significant nuclear backlog. These risks include greater backlog concentration in fewer projects, significantly increased requirements for letters of credit and potential cost overruns which could have a material adverse effect on our future revenues and liquidity. If the U.S. were to change its support of nuclear power or revoke or limit DOE s Loan Guarantee Program (LGP) it could have a material adverse effect on our operations. Our failure to meet contractual schedule or performance requirements could adversely affect our revenue and profitability. If our joint venture or consortium partners, subcontractors or equipment manufacturers fail to perform their contractual obligations on a project, we could be exposed to the risk of loss, and in some cases, joint and several liability to our clients, loss of reputation and additional financial performance obligations that could result in reduced profits or, in some cases, significant losses. Demand for our products and services is cyclical and vulnerable to sudden economic downturns and reductions in private industry and government spending. If general economic conditions continue to weaken, then our revenues, profits and our financial condition may rapidly deteriorate. Our government contracts may present risks to us. Actual results could differ from the estimates and assumptions that we use to prepare our financial statements. Risks related to our Investment in Westinghouse could have an adverse effect on us. If we were required to write down all or part of our goodwill and/or our intangible assets, our net earnings and net worth could be materially adversely affected. Foreign exchange risks may affect our ability to realize a profit from certain projects or to obtain projects. The limitation or the modification of the Price-Anderson Act s indemnification authority could adversely affect our business. Our environmental and infrastructure operations may subject us to potential contractual and operational costs and liabilities. We are exposed to certain risks associated with our integrated environmental solutions businesses. Environmental factors and changes in laws and regulations could increase our costs and liabilities and affect the demand for our services. We face substantial competition in each of our business segments. Political and economic conditions in foreign countries in which we operate could adversely affect us. We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws. Work stoppages and other labor problems could adversely affect us. Our failure to attract and retain qualified personnel, including key officers, could have an adverse effect on us. Risks Related to Our Liquidity and Capital Resources We may not be able to raise additional capital or obtain additional financing if needed. Non-compliance with covenants in our Credit Facility, without waiver or amendment from the lenders, could require us to post cash collateral for outstanding letters of credit and could adversely affect our ability to borrow under the Facility. Restrictive covenants in our Facility may restrict our ability to pursue our business strategies. Inability to obtain adequate surety bonding or letters of credit could reduce our ability to bid on new work which could have a material adverse effect on our future revenues and business prospects. Downgrades by rating agencies may require us to modify existing bonding facilities or obtain new bonding facilities. Because of the capital-intensive nature of our business, we are vulnerable to reductions in our liquidity. Our borrowing levels and debt service obligations could adversely affect our financial condition and impair our ability to fulfill our obligations under our Facility. Risks Related to Our Financial Reporting and Corporate Governance If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, investors could lose confidence in our financial reporting, which would harm our business and the trading price of our stock. We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed. We have in place a shareholder rights plan, and provisions in our articles of incorporation by-laws that may discourage a change of control of our company. Lawsuits and regulatory proceedings could adversely affect our business. If we are unable to enforce our intellectual property rights or if our technology becomes obsolete, our competitive position could be adversely impacted.

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914024--10/30/2009--SHAW_GROUP_INC