9263--3/15/2010--BAKER_MICHAEL

related topics

{regulation, government, change}

{cost, contract, operation}

{financial, litigation, operation}

{loss, insurance, financial}

{operation, international, foreign}

{tax, income, asset}

{debt, indebtedness, cash}

{competitive, industry, competition}

{regulation, change, law}

If we are unable to accurately estimate and control our contract costs, then we may incur losses on our contracts, which could decrease our operating margins and significantly reduce or eliminate our profits. Due to the nature of the work we perform to complete our contracts, we are subject to potential liability claims and contract disputes. If we miss a required performance standard, fail to timely complete, or otherwise fail to adequately perform on a project, then we may incur a loss on that project, which may reduce or eliminate our overall profitability. We are subject to procurement laws and regulations associated with our government contracts. If we do not comply with these laws and regulations, we may be prohibited from completing our existing government contracts or suspended from government contracting and subcontracting for some period of time or debarred. We are subject to routine U.S. federal, state and local government audits related to our government contracts. If audit findings are unfavorable, we could experience a reduction in our profitability. Our inability to continue to win or renew government contracts could result in material reductions in our revenues and profits. Our involvement in partnerships, joint ventures, and use of subcontractors exposes us to additional legal and market reputation damages. Employee, partner, joint venture, or subcontractor misconduct or our overall failure to comply with laws or regulations could weaken our ability to win contracts, which could result in reduced revenues and profits. Our profits and revenues could suffer if we are involved in legal proceedings, investigations and disputes. We are engaged in highly competitive markets that pose challenges to continued revenue growth. Our international business operations are subject to unique risks and challenges that create increased uncertainty in these markets. Our goodwill or other intangible assets could become impaired and result in a material reduction in our profits. We use percentage-of-completion accounting methods for many of our projects. This method may result in volatility in stated revenues and profits. Our government contracts may give the government the right to modify, delay, curtail or terminate our contracts at their convenience at any time prior to their completion. Therefore, our backlog is subject to unexpected adjustments, delays and cancellations. We are not insured for a significant portion of our claims exposure, which could materially and adversely affect our operating income and profitability. Foreign governmental regulations could adversely affect our business. Our inability to achieve the Credit Agreement s financial covenants, after a cure period, amend/replace the commitment beyond 2011 or the inability of one or more financial institutions in the consortium to meet its commitment under our Credit Agreement could impact our liquidity for working capital needs or our growth strategy.

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9263--3/15/2010--BAKER_MICHAEL_CORP