9263--6/30/2008--BAKER_MICHAEL

related topics

{regulation, government, change}

{cost, contract, operation}

{loss, insurance, financial}

{operation, international, foreign}

{tax, income, asset}

{customer, product, revenue}

{financial, litigation, operation}

{personnel, key, retain}

{competitive, industry, competition}

{regulation, change, law}

Changes and fluctuations in the government spending priorities could materially affect our future revenue and growth prospects. Unpredictable economic cycles or uncertain demand for our engineering capabilities and related services could cause our revenues to fluctuate or contribute to delays or the inability of customers to pay our fees. Our ability to recruit, train, and retain professional personnel of the highest quality is a competitive advantage. Our future inability to do so would adversely affect our competitiveness. 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 engineering and energy 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. 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, ventures, and use of subcontractors exposes us to additional legal and market reputation damages. 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.

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9263--6/30/2008--BAKER_MICHAEL_CORP