UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008.
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-31451
 
 BEARINGPOINT, INC.
 (Exact name of registrant as specified in its charter)
 
 DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    22-3680505
(IRS Employer
Identification No.)1676 International Drive, McLean, VA
(Address of principal executive offices)
    
    22102
(Zip Code)
 (703) 747-3000
(Registrants telephone number, including area code)
 
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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BEARINGPOINT, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2008
 TABLE OF CONTENTS
 PagePART IFINANCIAL INFORMATIONItem 1: Financial Statements (unaudited)
    
    
    3Consolidated Statements of Operations for the Three Months Ended March 31, 2008 and 2007
    
    
    3Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007
    
    
    4Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3: Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4: Controls and Procedures
    
    
    28PART IIOTHER INFORMATION
    
    
    29Item 1: Legal Proceedings
    
    
    29Item 1A: Risk Factors
    
    
    29Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3: Defaults Upon Senior Securities
    
    
    30Item 4: Submission of Matters to a Vote of Security Holders
    
    
    30Item 5: Other Information
    
    
    30Item 6: Exhibits
    
    
    31
  2




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##### 



PART I, ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
 BEARINGPOINT, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share amounts)
 (unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007Revenue
    
    $
    830,020
    
    
    $
    866,252Costs of service:Professional compensation
    
    
    453,697
    
    
    
    474,609Other direct contract expenses
    
    
    158,277
    
    
    
    195,877Lease and facilities restructuring credits
    
    
    (6,052
    )
    
    
    (4,887
    )Other costs of service
    
    
    71,359
    
    
    
    68,593Total costs of service
    
    
    677,281
    
    
    
    734,192Gross profit
    
    
    152,739
    
    
    
    132,060Selling, general and administrative expenses
    
    
    142,749
    
    
    
    177,244Operating income (loss)
    
    
    9,990
    
    
    
    (45,184
    )Interest income
    
    
    2,513
    
    
    
    1,752Interest expense
    
    
    (16,069
    )
    
    
    (10,869
    )Other (expense) income, net
    
    
    (2,331
    )
    
    
    95Loss before taxes
    
    
    (5,897
    )
    
    
    (54,206
    )Income tax expense
    
    
    17,292
    
    
    
    7,500Net loss
    
    $
    (23,189
    )
    
    $
    (61,706
    )Loss per share  basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.29
    )Weighted average shares  basic and diluted
    
    
    222,351,767
    
    
    
    214,372,953
  3




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##### 



BEARINGPOINT, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share amounts)
 March 31,2008
    
    
    December 31,(unaudited)
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    409,460
    
    
    $
    466,815Restricted cash
    
    
    3,943
    
    
    
    1,703Accounts receivable, net of allowances of $6,035 at March
31, 2008 and $5,980 at December 31, 2007
    
    
    362,882
    
    
    
    356,178Unbilled revenue
    
    
    348,707
    
    
    
    319,132Income tax receivable
    
    
    12,846
    
    
    
    8,869Deferred income taxes
    
    
    14,322
    
    
    
    11,521Prepaid expenses
    
    
    33,628
    
    
    
    36,500Other current assets
    
    
    43,931
    
    
    
    38,122Total current assets
    
    
    1,229,719
    
    
    
    1,238,840Property and equipment, net
    
    
    111,305
    
    
    
    113,771Goodwill
    
    
    528,230
    
    
    
    494,656Deferred income taxes, less current portion
    
    
    17,988
    
    
    
    25,179Other assets
    
    
    117,796
    
    
    
    108,958Total assets
    
    $
    2,005,038
    
    
    $
    1,981,404LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of notes payable
    
    $
    5,310
    
    
    $
    3,700Accounts payable
    
    
    202,041
    
    
    
    215,999Accrued payroll and employee benefits
    
    
    379,276
    
    
    
    368,208Deferred revenue
    
    
    97,446
    
    
    
    115,961Income tax payable
    
    
    41,095
    
    
    
    58,304Current portion of accrued lease and facilities charges
    
    
    17,326
    
    
    
    17,618Deferred income taxes
    
    
    13,336
    
    
    
    15,022Accrued legal settlements
    
    
    23,860
    
    
    
    8,716Other current liabilities
    
    
    110,007
    
    
    
    108,364Total current liabilities
    
    
    889,697
    
    
    
    911,892Notes payable, less current portion
    
    
    971,899
    
    
    
    970,943Accrued employee benefits
    
    
    129,020
    
    
    
    118,235Accrued lease and facilities charges, less current portion
    
    
    37,933
    
    
    
    48,066Deferred income taxes, less current portion
    
    
    11,922
    
    
    
    9,581Income tax reserve
    
    
    248,334
    
    
    
    242,308Other liabilities
    
    
    148,041
    
    
    
    149,668Total liabilities
    
    
    2,436,846
    
    
    
    2,450,693Commitments and contingencies (note 8)Stockholders deficit:Preferred stock, $.01 par value 10,000,000 shares authorized
    
    
    
    
    
    
    Common stock, $.01 par value 1,000,000,000 shares
authorized, 222,707,204 shares issued and 217,907,212
shares outstanding on March 31, 2008 and 219,890,126 shares
issued and 215,156,077 shares outstanding on December 31,
2007
    
    
    2,214
    
    
    
    2,186Additional paid-in capital
    
    
    1,459,650
    
    
    
    1,438,369Accumulated deficit
    
    
    (2,203,767
    )
    
    
    (2,180,578
    )Accumulated other comprehensive income
    
    
    348,334
    
    
    
    308,857Treasury
stock, at cost (4,799,992 shares on March 31, 2008 and
4,734,049 shares on December 31, 2007)
    
    
    (38,239
    )
    
    
    (38,123
    )Total stockholders deficit
    
    
    (431,808
    )
    
    
    (469,289
    )Total liabilities and stockholders deficit
    
    $
    2,005,038
    
    
    $
    1,981,404
  4




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##### 



BEARINGPOINT, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (23,189
    )
    
    $
    (61,706
    )Adjustments to reconcile net loss to net cash used in
operating activities:Provision for deferred income taxes
    
    
    5,214
    
    
    
    7,127(Benefit) provision for doubtful accounts
    
    
    (1,000
    )
    
    
    1,352Stock-based compensation
    
    
    21,309
    
    
    
    16,230Depreciation and amortization of property and equipment
    
    
    12,426
    
    
    
    17,896Lease and facilities restructuring credits
    
    
    (6,052
    )
    
    
    (4,887
    )(Gain) loss on disposal and impairment of assets
    
    
    (23
    )
    
    
    106Amortization of debt issuance costs and debt accretion
    
    
    2,993
    
    
    
    2,844Other
    
    
    3,342
    
    
    
    (518
    )Changes in assets and liabilities:Accounts receivable
    
    
    5,753
    
    
    
    20,285Unbilled revenue
    
    
    (24,715
    )
    
    
    (89,713
    )Income tax receivable, prepaid expenses and other
current assets
    
    
    (4,682
    )
    
    
    33,711Other assets
    
    
    (8,484
    )
    
    
    (7,657
    )Accounts payable
    
    
    (17,140
    )
    
    
    (43,781
    )Income tax
payable, accrued legal settlements and other current liabilities
    
    
    (10,596
    )
    
    
    (56,802
    )Accrued payroll and employee benefits
    
    
    1,396
    
    
    
    37,854Deferred revenue
    
    
    (18,687
    )
    
    
    (10,849
    )Income tax reserve and other liabilities
    
    
    (93
    )
    
    
    1,662Net cash used in operating activities
    
    
    (62,228
    )
    
    
    (136,846
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (8,428
    )
    
    
    (12,319
    )Increase in restricted cash
    
    
    (2,239
    )
    
    
    (191
    )Net cash used in investing activities
    
    
    (10,667
    )
    
    
    (12,510
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    1
    
    
    
    Treasury stock through net share delivery
    
    
    (92
    )
    
    
    Net proceeds from issuance of notes payable
    
    
    2,141
    
    
    
    Repayments of notes payable
    
    
    (750
    )
    
    
    (360
    )Increase in book overdrafts
    
    
    884
    
    
    
    4,191Net cash provided by financing activities
    
    
    2,184
    
    
    
    3,831Effect of exchange rate changes on cash and cash equivalents
    
    
    13,356
    
    
    
    1,433Net decrease in cash and cash equivalents
    
    
    (57,355
    )
    
    
    (144,092
    )Cash and cash equivalents  beginning of period
    
    
    466,815
    
    
    
    389,571Cash and cash equivalents  end of period
    
    $
    409,460
    
    
    $
    245,479
  5




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##### 



BEARINGPOINT, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Note 1. Basis of Presentation
   Note 2. Recently Issued Accounting Pronouncements
  Note 3. Stock-Based Compensation
  Three Months EndedMarch 31,2008
    
    
    2007Stock options
    
    $
    288
    
    
    $
    2,418RSUs
    
    
    4,129
    
    
    
    5,416PSUs
    
    
    16,640
    
    
    
    7,219ESPP and BE an Owner
    
    
    128
    
    
    
    1,177Restricted stock awards
    
    
    124
    
    
    
    Total
    
    $
    21,309
    
    
    $
    16,230
 6




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##### 



BEARINGPOINT, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
 Stock Options
  Restricted Stock Awards
  Restricted Stock Units and Performance Share Units
  RSUs (1)
    
    
    PSUs (2)Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageGrant
    
    
    
    
    
    
    GrantDate Fair
    
    
    
    
    
    
    Date FairUnits
    
    
    Value
    
    
    Units
    
    
    ValueNonvested at December 31, 2007
    
    
    6,428,764
    
    
    $
    8.14
    
    
    
    18,104,846
    
    
    $
    12.53Granted
    
    
    1,330,027
    
    
    $
    2.70
    
    
    
    Vested
    
    
    (1,575,413
    )
    
    $
    8.39
    
    
    
    Forfeited
    
    
    (428,697
    )
    
    $
    7.86
    
    
    
    (1,454,795
    )
    
    $
    12.29Nonvested at March 31, 2008
    
    
    5,754,681
    
    
    $
    6.83
    
    
    
    16,650,051
    
    
    $
    12.55Vested at March 31, 2008
    
    
    4,540,919
    
    
    
    
    
    
    
    Outstanding at March 31, 2008
    
    
    10,295,600
    
    
    
    
    
    
    
    16,650,051
 
 (1)
    
    Approximately 41,883 RSUs (net of forfeitures) and 47,153 RSUs (net of forfeitures) have been
excluded from the December 31, 2007 and March 31, 2008 nonvested balances, respectively,
because they were awarded to recipients in countries where local laws require a cash
settlement. Similarly, approximately 27,537 RSUs (net of forfeitures) and 74,690 RSUs (net of
forfeitures) have been excluded from the March 31, 2008 vested and outstanding balances,
respectively.(2)
    
    Approximately 54,348 PSUs (net of forfeitures) have been excluded from the December 31, 2007
and March 31, 2008 nonvested balances, because they were awarded to recipients in countries
where local laws require a cash settlement. Similarly, approximately 54,348 PSUs (net of
forfeitures) have been excluded from the March 31, 2008 outstanding balance. Note 4. Loss per Share
  Three Months EndedMarch 31,2008
    
    
    2007Common shares outstanding
    
    
    216,007,040
    
    
    
    201,296,820Vested RSUs
    
    
    6,344,727
    
    
    
    13,076,133222,351,767
    
    
    
    214,372,953
 7




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BEARINGPOINT, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
   Three Months Ended March 31,2008
    
    
    2007Employee stock options
    
    
    30,893,518
    
    
    
    35,421,101Employee stock purchase plan
    
    
    1,370,783
    
    
    
    4,128,137Unvested restricted stock units
    
    
    6,067,333
    
    
    
    8,568,592Performance
share units(1)
    
    
    43,318,610
    
    
    
    18,773,081$250,000 2.50% Series A Convertible Subordinated Debentures due 2024
    
    
    23,810,200
    
    
    
    23,810,200$200,000 2.75% Series B Convertible Subordinated Debentures due 2024
    
    
    19,048,160
    
    
    
    19,048,160$200,000 5.00% Convertible Senior Subordinated Debentures due 2025
    
    
    30,303,020
    
    
    
    30,303,020$40,000 0.50% Convertible Senior Subordinated Debentures due 2025
    
    
    5,925,926
    
    
    
    5,925,926Warrants issued in connection with the July 2005 Convertible Debentures
    
    
    3,500,000
    
    
    
    3,500,000Softline acquisition obligation
    
    
    
    
    
    
    753,833164,237,550
    
    
    
    150,232,050
 
 (1)
    
    As of the end of the reporting period, the performance conditions described
further in Note 13, Stock-Based Compensation,
included in the 2007 Form
10-K, have not been met; however, the above shares represent the maximum
settlement of shares under this program. Note 5. Comprehensive Income (Loss)
  Three Months EndedMarch 31,2008
    
    
    2007Net loss
    
    $
    (23,189
    )
    
    $
    (61,706
    )Pension prior service cost, net of tax of $22
    
    
    297
    
    
    
    Pension net actuarial gain, net of tax of $2
    
    
    (7
    )
    
    
    Foreign currency translation adjustment
    
    
    39,187
    
    
    
    4,748Comprehensive income (loss)
    
    $
    16,288
    
    
    $
    (56,958
    )
 Note 6. Goodwill
  8




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BEARINGPOINT, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
 Note 7. Lease and Facilities Restructuring Activities
   TotalBalance at December 31, 2007
    
    $
    65,684New charges
    
    
    Adjustment to the provision
    
    
    (6,052
    )Payments and other utilization
    
    
    (5,490
    )Other(1)
    
    
    1,117Balance at March 31, 2008
    
    $
    55,259
  (1)
    
    Other changes in the restructuring accrual consist primarily of foreign currency translation
adjustments.  Note 8. Commitments and Contingencies
  
    
    Claims and investigations arising from its inability to timely file periodic reports
under the Securities Exchange Act of 1934, as amended (the Exchange Act), and the
restatement of its financial statements for certain prior periods to correct accounting
errors and departures from generally accepted accounting principles for those years (SEC
Reporting Matters);
    
    Claims and investigations being conducted by agencies or officers of the U.S. Federal
government and arising in connection with its provision of services under contracts with
agencies of the U.S. Federal government (Government Contracting Matters); and
    
    Claims made in the ordinary course of business by clients seeking damages for alleged
breaches of contract or failure of performance, by current or former employees seeking
damages for alleged acts of wrongful termination or discrimination, and by creditors or
other vendors alleging defaults in payment or performance (Other Matters).
  9




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BEARINGPOINT, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
  SEC Reporting Matters
 2005 Class Action Suits
 Makor Issues & Rights, Ltd v. Tellabs, Tellabs Tellabs
 2005 Shareholders Derivative Demand
  10




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BEARINGPOINT, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
 SEC Investigation
   Government Contracting Matters
  Other Commitments
   11




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BEARINGPOINT, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
   Note 9. Pension and Postretirement Benefits
  Three Months EndedMarch 31,2008
    
    
    2007Components of net periodic pension cost:Service cost
    
    $
    1,590
    
    
    $
    1,589Interest cost
    
    
    1,502
    
    
    
    1,165Expected return on plan assets
    
    
    (339
    )
    
    
    (243
    )Amortization of (gain) loss
    
    
    (5
    )
    
    
    95Amortization of prior service cost
    
    
    200
    
    
    
    163Net periodic pension cost
    
    $
    2,948
    
    
    $
    2,769Components of net periodic postretirement medical cost:Service cost
    
    $
    631
    
    
    $
    618Interest cost
    
    
    235
    
    
    
    217Amortization of losses
    
    
    
    
    
    
    13Amortization of prior service cost
    
    
    119
    
    
    
    119Net periodic postretirement medical cost
    
    $
    985
    
    
    $
    967
 Note 10. Income Taxes
  12




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##### 



BEARINGPOINT, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
   Note 11. Fair Value Measurements
     13




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##### 



BEARINGPOINT, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
  Assets and Liabilities Measured at Fair Value on a Recurring Basis
 Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    SignificantTotal Fair Value
    
    
    for Identical
    
    
    Observable
    
    
    Unobservableof Asset or
    
    
    Assets
    
    
    Input
    
    
    InputsLiability
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash and Cash Equivalents
    
    $
    129,205
    
    
    $
    129,205
    
    
    $
    
    
    
    $
    Other
Current Assets(1)
    
    
    5,839
    
    
    
    5,839
    
    
    
    
    
    
    
    Other Assets
    
    
    474
    
    
    
    224
    
    
    
    
    
    
    
    250
    (2)Total Assets
    
    $
    135,518
    
    
    $
    135,268
    
    
    $
    
    
    
    $
    250Other
Current Liabilities(1)
    
    $
    5,839
    
    
    $
    5,839Total Liabilities
    
    $
    5,839
    
    
    $
    5,839
 
 (1)
    
    The Company has assets held in a Rabbi Trust, which generally include actively traded mutual
funds and money market accounts.(2)
    
    The Company carries a cost-basis investment in a privately-held company. There has been no
change in valuation for this investment during the period. Note 12. Segment Reporting
  Three Months EndedMarch 31,2008
    
    
    2007Operating
    
    
    
    
    
    
    OperatingRevenue
    
    
    Income (Loss)
    
    
    Revenue
    
    
    Income (Loss)Public Services
    
    $
    340,098
    
    
    $
    67,956
    
    
    $
    361,693
    
    
    $
    64,960Commercial Services
    
    
    112,431
    
    
    
    14,077
    
    
    
    136,282
    
    
    
    20,827Financial Services
    
    
    49,384
    
    
    
    1,223
    
    
    
    72,205
    
    
    
    3,898EMEA
    
    
    210,634
    
    
    
    34,717
    
    
    
    188,805
    
    
    
    36,029Asia Pacific
    
    
    89,266
    
    
    
    21,831
    
    
    
    83,155
    
    
    
    11,541Latin America
    
    
    27,692
    
    
    
    3,708
    
    
    
    22,266
    
    
    
    (4,255
    )Corporate/Other
    
    
    515
    
    
    
    (133,522
    )
    
    
    1,846
    
    
    
    (178,184
    )Total
    
    $
    830,020
    
    
    $
    9,990
    
    
    $
    866,252
    
    
    $
    (45,184
    )
 14




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##### 



PART I, ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 The following Managements Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) should be read in conjunction with the interim Consolidated Financial
Statements and the Notes to the Consolidated Financial Statements included elsewhere in this
Quarterly Report.
 Disclosure Regarding Forward-Looking Statements
  
    
    Our business may be adversely impacted as a result of changes in demand, both globally
and in individual market segments, for our consulting and systems integration services.
    
    Our operating results will suffer if we are not able to maintain our billing and
utilization rates or control our costs.
    
    If we are unable to timely and properly implement and operate our new financial reporting
system, we may be unable to timely file our SEC periodic reports or conclude that our
internal control over financial reporting is effective, either of which could have a
material adverse effect on our business, financial condition or results of operation.
    
    We continue to incur selling, general and administrative (SG&A) expenses as a
percentage of revenue at levels significantly higher than those of our competitors. If we
are unable to significantly reduce SG&A expenses as a percentage of revenue over the near
term, our ability to achieve our goals in net income and profitability will remain in
jeopardy.
    
    The systems integration consulting markets are highly competitive, and we may not be able
to compete effectively if we are not able to maintain our billing rates or control our costs
related to these engagements.
    
    Contracting with the U.S. Federal government is inherently risky and exposes us to risks
that may materially and adversely affect our business.
    
    Our ability to attract, retain and motivate our managing directors and other key
employees is critical to the success of our business. We continue to experience sustained,
higher-than-industry average levels of voluntary turnover among our workforce, which has
impacted our ability to grow our business.
    
    Our contracts can be terminated by our clients with short notice, or our clients may
cancel or delay projects.
    
    If we are not able to keep up with rapid changes in technology or maintain strong
relationships with software providers, our business could suffer.
    
    Loss of our joint marketing relationships could reduce our revenue and growth prospects.
    
    We are not likely to be able to significantly grow our business through mergers and
acquisitions in the near term.
 15




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##### 




    
    There will not be a consistent pattern in our financial results from quarter to quarter,
which may result in increased volatility of our stock price.
    
    Our performance may be negatively affected due to financial, regulatory and operational
risks inherent in worldwide operations.
    
    We may bear the risk of cost overruns relating to our services, thereby adversely
affecting our performance.
    
    We may face legal liabilities and damage to our professional reputation from claims made
against our work.
    
    Our services may infringe upon the intellectual property rights of others.
    
    We have only a limited ability to protect our intellectual property rights, which are
important to our success.
    
    Our current cash resources might not be sufficient to meet our expected cash needs over time.
Beginning in early 2009, we will begin to become subject to significant required payments under our
$500.0 million credit facility, dated as of May 18, 2007 and as amended on June 1, 2007 (the 2007
Credit Facility), and we will be obligated to repurchase $200.0 million of our debentures as early
as April 2009. Our cash balances, together with cash generated from operating activities and
borrowings previously made under our 2007 Credit Facility, may not be sufficient to provide
adequate funds for our anticipated internal growth, operating needs and debt service obligations.
If we cannot consistently generate sufficient positive cash flows from operating activities to fund
these required payments and service our indebtedness, our business, financial condition and results
of operations could be materially and adversely affected. In addition, given the current state of
turmoil in global credit markets and our current financial condition, we do not believe alternative
sources of liquidity are available to us at this time.
    
    Our 2007 Credit Facility imposes a number of restrictions on the way in which we operate
our business and may negatively affect our ability to finance future needs, or do so on
favorable terms. If we violate these restrictions, we will be in default under the 2007
Credit Facility, which may cross-default to our other indebtedness.
    
    We may be unable to obtain new surety bonds, letters of credit or bank guarantees in
support of client engagements on acceptable terms.
    
    Downgrades of our credit ratings may increase our borrowing costs and materially and
adversely affect our business, financial condition or results of operation.
    
    Our leverage may adversely affect our business and financial performance and may restrict
our operating flexibility.
    
    The holders of our debentures have the right, at their option, to require us to purchase
some or all of their debentures upon certain dates or upon the occurrence of certain
designated events, which could have a material adverse effect on our liquidity.
    
    Our failure to timely file certain periodic reports with the SEC poses significant risks
to our business, each of which could materially and adversely affect our financial condition
and results of operation.
    
    In 2004, we identified material weaknesses in our internal control over financial
reporting, the remediation of which continues to materially and adversely affect our
business and financial condition, and as of December 31, 2007, certain material weaknesses
remained.
    
    The price of our common stock may decline due to the number of shares that may be
available for sale in the future.
    
    There are significant limitations on the ability of any person or company to acquire the
Company without the approval of our Board of Directors.
  16




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##### 



Overview
  Economic and Industry Factors
    Revenue and Income Drivers
   17




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##### 



Key Performance Indicators
  
    
    Bookings.We believe that information regarding our new contract bookings provides useful
trend information regarding how the volume of our new business changes over time. Comparing
the amount of new contract bookings and revenue provides us with an additional measure of
the short-term sustainability of revenue growth. Information regarding our new bookings
should not be compared to, or substituted for, an analysis of our revenue over time. There
are no third-party standards or requirements governing the calculation of bookings. New
contract bookings are recorded using then existing currency exchange rates and are not
subsequently adjusted for currency fluctuations. These amounts represent our estimate at
contract signing of the net revenue expected over the term of that contract and involve
estimates and judgments regarding new contracts as well as renewals, extensions and
additions to existing contracts. Subsequent cancellations, extensions and other matters may
affect the amount of bookings previously reported; however, we do not revise previously
reported bookings. Bookings do not include potential revenue that could be earned from a
client relationship as a result of future expansion of service offerings to that client, nor
does it reflect option years under contracts that are subject to client discretion. We do
not record unfunded U.S. Federal contracts as new contract bookings while appropriation
approvals remain pending as there can be no assurances that these approvals will be
forthcoming in the near future, if at all. Consequently, there can be significant
differences between the time of contract signing and new contract booking recognition. Our
level of bookings provides an indication of how our business is performing: a positive
variance between bookings and revenue is indicative of business momentum, a negative
variance is indicative of a business downturn. Nonetheless, we do not characterize our
bookings, or our engagement contracts associated with new bookings, as backlog because our
engagements generally can be cancelled or terminated on short notice or without notice.
    
    Revenue Growth.Unlike bookings, which provide only a general sense of future
expectations, period-over-period comparisons of revenue provide a meaningful depiction of
how successful we have been in growing our business over time.We believe that it is also useful to monitor net revenue, as well as revenue growth. Net
revenue represents the actual amount paid by our clients for the services we provide, as
opposed to services provided by others and ancillary costs and expenses. Net revenue is a
non-GAAP financial measure. The most directly comparable financial measure in accordance with
GAAP is revenue. Net revenue is derived by reducing the components of revenue that consist of
other direct contract expenses, which are costs that are directly attributable to client
engagements. These costs include items such as computer hardware and software, travel expenses
for professional personnel and costs associated with subcontractors.
    
    Gross Margin (gross profit as a percentage of revenue).Gross margin is a meaningful tool
for monitoring our ability to control our costs of service. Analysis of the various cost
elements, including professional compensation expense, effects of foreign exchange rate
changes and the use of subcontractors, as a percentage of revenue over time can provide
additional information as to the key challenges we are facing in our business. The cost of
subcontractors is generally more expensive than the cost of our own workforce and can
negatively impact our gross profit. While the use of subcontractors can help us to win
larger, more complex deals, and also may be mandated by our clients, we focus on limiting
the use of subcontractors whenever possible in order to minimize our costs. We also utilize
certain adjusted gross margin metrics in connection with the vesting and settlement of
certain employee incentive awards. For a discussion of these metrics, see Item 11,
Executive Compensation  Compensation Discussion and Analysis, included in our 2007 Form
10-K.
 18




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##### 



We also monitor contribution margin to better review the profitability of our respective
operating segments. Contribution margin is a non-GAAP financial measure. The most directly
comparable financial measure in accordance with GAAP is gross margin. Contribution margin is
calculated by subtracting, from net revenue, professional compensation, other costs of
service, SG&A and certain other allocations, and then dividing by net revenue.
    
    Utilization.Utilization represents the percentage of time our consultants are performing
work, and is defined as total hours charged to client engagements or to non-chargeable
client-relationship projects divided by total available hours for any specific time period,
net of holiday and paid vacation hours.
    
    Days Sales Outstanding (DSO).DSO is an operational metric that approximates the amount
of earned revenue that remains unpaid by clients at a given time. DSOs are derived by
dividing the sum of our outstanding accounts receivable and unbilled revenue, less deferred
revenue, by our average net revenue per day. Average net revenue per day is determined by
dividing total net revenue for the most recently ended trailing twelve-month period by 365.
    
    Free Cash Flow.Free cash flow is calculated by subtracting purchases of property and
equipment from cash provided by operating activities. We believe free cash flow is a useful
measure because it allows better understanding and assessment of our ability to meet debt
service requirements and the amount of recurring cash generated from operations after
expenditures for fixed assets. Free cash flow does not represent our residual cash flow
available for discretionary expenditures as it excludes certain mandatory expenditures such
as repayment of maturing debt. We use free cash flow as a measure of recurring operating
cash flow. Free cash flow is a non-GAAP financial measure. The most directly comparable
financial measure calculated in accordance with GAAP is net cash provided by operating
activities.
    
    Attrition.Attrition, or voluntary total employee turnover, is calculated by dividing the
number of our employees who have chosen to leave the Company within a certain period by the
total average number of all employees during that same period. Our attrition statistic
covers all of our employees, which we believe provides metrics that are more compatible
with, and comparable to, those of our competitors.
  First Quarter of 2008 Highlights
  
    
    New contract bookings for the three months ended March 31, 2008 were approximately $745.4
million, an increase of $35.9 million, or 5.1%, over new contract bookings of $709.5 million
for the three months ended March 31, 2007. Increases in new contract bookings in our Public
Services, EMEA and Asia Pacific operating segments outpaced declines in new contract
bookings in our other North America and Latin America operating segments. Approximately half
of our new bookings growth was derived from our international operating segments.
    
    Our revenue for the first quarter of 2008 was $830.0 million, a decrease of $36.2
million, or 4.2%, from revenue for the first quarter of 2007 of $866.3 million. Revenue
increases in EMEA, Asia Pacific and Latin America, resulting primarily from the favorable
impact of strengthening foreign currencies against the U.S. dollar, were more than offset by
revenue declines in our North America operating segments. The strengthening of various
foreign currencies against the U.S. dollar accounted for a $40.4 million contribution to
revenue in the first quarter of 2008.
    
    Our gross profit for the first quarter of 2008 was $152.7 million, an increase of $20.7
million, or 15.7%, over gross profit for the first quarter of 2007 of $132.1 million. Gross
profit as a percentage of revenue increased to 18.4% during the first quarter of 2008 from
15.2% during the first quarter of 2007. Significant reductions in other direct contract
expenses and professional compensation more than offset decreases in revenue.
    
    We incurred SG&A expenses of $142.7 million in the first quarter of 2008, representing a
decrease of $34.5 million, or 19.5%, from SG&A expenses of $177.2 million in the first
quarter of 2007. The decrease was primarily due to the year over year
 19




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##### 



reduction in the use of, and costs associated with, external service providers involved in our
financial close and internal control remediation processes. Also contributing to the decrease
were reductions in marketing, travel expenses and compensation costs.
    
    During the first quarter of 2008, we realized a net loss of $23.2 million, or a loss of
$0.10 per share, representing an improvement of $38.5 million over a net loss of $61.7
million, or a loss of $0.29 per share, during the first quarter of 2007. This change in net
loss was primarily attributable to:
 
    
    an increase in gross profit of $20.7 million;
    
    a decrease in SG&A expenses of $34.5 million;
    
    a combined increase in interest income, interest expense and other expense of
$6.9 million; and
    
    an increase in income tax expense of $9.8 million in the first quarter of
2008.
 
    
    Utilization for the first quarter of 2008 was 77.8%, an increase of 120 basis points over
the first quarter of 2007.
    
    As of March 31, 2008, our DSOs stood at 85 days, representing a decrease of 6 days, or
6.6%, from our DSOs at March 31, 2007. Nonetheless, in line with the historical patterns of
our business, DSOs as of March 31, 2008 were incrementally higher than DSOs as of December
31, 2007 by 8 days.
    
    Free cash flow for the first quarters of 2008 and 2007 was ($70.7) million and ($149.2)
million, respectively. Net cash used in operating activities in the first quarters of 2008
and 2007 was ($62.2) million and ($136.8) million, respectively. Purchases of property and
equipment in the first quarters of 2008 and 2007 were $8.4 million and $12.3 million,
respectively. The year-over-year change in free cash flow for the first quarter of 2008 was
primarily attributable to positive improvement in our operating income.
 
    
    Significant contributors to net cash used in operating activities
in the first quarter of 2008 included lower cash available from accounts
receivable collections of $37.6 million due to increased DSOs, the payment of
taxes for certain of our profitable operating entities of $35.6 million and
severance payments related to managed reductions in our workforce of
$12.6
million, partially offset by a favorable impact of $13.4 million due to the
strengthening of foreign currencies against the U.S. Dollar.
 
    
    In March 2008, we hired David R. Hunter as our Chief Operating Officer.
    
    As of March 31, 2008, we had approximately 16,400 full-time employees, including
approximately 13,800 consulting professionals. This represented a decrease in billable
headcount of approximately 4.2% from our headcount as of December 31, 2007.
    
    Our voluntary, annualized attrition rate for the first quarter of 2008 was 26.3%,
compared to 23.7% for the first quarter of 2007. The highly competitive industry in which we
operate and our financial position continues to make it particularly critical and
challenging for us to attract and retain experienced personnel.
 Segments
   20




---



##### 



Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Revenue.
 Percent
    
    
    PercentThree Months Ended
    
    
    
    
    
    
    Increase
    
    
    IncreaseMarch 31,
    
    
    
    
    
    
    (Decrease)
    
    
    (Decrease)2008
    
    
    2007
    
    
    US$ Change
    
    
    US$
    
    
    Local CurrencyRevenuePublic Services
    
    $
    340,098
    
    
    $
    361,693
    
    
    
    (21,595
    )
    
    
    (6.0
    %)
    
    
    (6.0
    %)Commercial Services
    
    
    112,431
    
    
    
    136,282
    
    
    
    (23,851
    )
    
    
    (17.5
    %)
    
    
    (17.5
    %)Financial Services
    
    
    49,384
    
    
    
    72,205
    
    
    
    (22,821
    )
    
    
    (31.6
    %)
    
    
    (31.6
    %)EMEA
    
    
    210,634
    
    
    
    188,805
    
    
    
    21,829
    
    
    
    11.6
    %
    
    
    (1.6
    %)Asia Pacific
    
    
    89,266
    
    
    
    83,155
    
    
    
    6,111
    
    
    
    7.3
    %
    
    
    (3.9
    %)Latin America
    
    
    27,692
    
    
    
    22,266
    
    
    
    5,426
    
    
    
    24.4
    %
    
    
    7.2
    %Corporate/Other
    
    
    515
    
    
    
    1,846
    
    
    
    (1,331
    )
    
    
    (72.1
    %)
    
    
    n/mTotal
    
    $
    830,020
    
    
    $
    866,252
    
    
    
    (36,232
    )
    
    
    (4.2
    %)
    
    
    (8.9
    %)
 
 n/m = not meaningful 
    
    Public Servicesrevenue decreased in the first quarter of 2008 primarily as a result of a
significant decrease in the use of subcontractors. Subcontractor costs are included in other
direct contract expenses and are typically charged directly to our clients and included in
gross revenue. Partially offsetting the decline was the recognition of $7.7 million in
revenue relating to work performed in earlier periods. Increases in the Defense, Civilian
and Emerging Markets sectors were offset by revenue declines in SLED and Healthcare, due in
part to the completion and winding down of several large contracts during 2007 which were
not replaced by comparably sized contracts.
    
    Commercial Servicesrevenue decreased in the first quarter of 2008 due to significant
revenue decreases in our Products and Communications & Media sectors. Products revenue was
affected by shifts to lower priced staffing and reduced work levels in connection with the
winding down of projects with two significant clients. Communications and Media revenue
continued to be affected by reduced demand for our services driven in part by consolidation
within the communications industry. Revenue in our Life Sciences and Energy sectors showed
respectable percentage increases from new projects and further extensions of existing work.
    
    Financial Servicesrevenue declined in the first quarter of 2008 primarily due to revenue
decreases in our Global Markets, Banking and Services Industry sectors. The revenue
decreases were attributable to difficulties in replacing recently completed engagements, as
many of our clients deferred new initiatives in response to recently reported industry-wide
losses and asset write-downs.
    
    EMEArevenue increased in the first quarter of 2008 solely as a result of the favorable
impact of the strengthening of foreign currencies, specifically the Euro, against the U.S.
dollar. The currency impact further enhanced revenue growth in Germany and Russia where
demand for our services is increasing and dampened the effects of declining revenue in
Spain, the United Kingdom, Ireland, Sweden and Norway. Revenue decreased in Spain as a
result of our strategic decision to reduce our activities in this country.
    
    Asia Pacificrevenue increased in the first quarter of 2008, solely as a result of the
favorable impact of the strengthening of foreign currencies against the U.S. dollar.
Revenue in Japan continued to grow from systems implementation contracts and projects
involving compliance with Japans Financial Instruments and Exchange Law, but continued to
be offset by lower revenue in Australia and New Zealand resulting from the winding down or
completion of several significant client engagements as well as the loss of key personnel in
Australia.
 21




---



##### 




    
    Latin Americarevenue increased in the first quarter of 2008, primarily as a result of
the favorable impact of the strengthening of the Brazilian Real against the U.S. dollar and
revenue increases in Brazil related to new client engagements.
    
    Corporate/Other: Our Corporate/Other segment does not contribute significantly to our
revenue.
 Gross Profit .
 
    
    Professional compensation expense decreased as a percentage of revenue to 54.7% for the
first quarter of 2008, compared to 54.8% for the first quarter of 2007. We experienced a net
decrease in professional compensation expense of $20.9 million, or 4.4%, to $453.7 million
for the first quarter of 2008 from $474.6 million for the first quarter of 2007. The
decrease in professional compensation expense was primarily
due to lower bonuses and a reduction in our billable staff, partially offset by increases in
stock-based compensation expense. The Company expects to reverse approximately $17.4 million
of liabilities associated with global tax equalizations in the quarter ending June 30, 2008
as a result of settlements for less than previously estimated liabilities and record the
resulting benefit to professional compensation.
    
    Other direct contract expenses decreased as a percentage of revenue to 19.1% for the
first quarter of 2008, compared to 22.6% for the first quarter of 2007. We experienced a net
decrease in other direct contract expenses of $37.6 million, or 19.2%, to $158.3 million for
the first quarter of 2008 from $195.9 million for the first quarter of 2007. The decrease was driven primarily by reduced subcontractor expenses as a
result of slower demand and increased focus on utilizing internal resources.
    
    Other costs of service as a percentage of revenue increased to 8.6% for the first quarter
of 2008 from 7.9% for the first quarter of 2007. We experienced a net increase in other
costs of service of $2.8 million, or 4.0%, to $71.4 million for the first quarter of 2008
from $68.6 million for the first quarter of 2007. The increase was primarily due to an
increase in non-billable employees over the prior year, due in part to the redeployment of
existing employees from client facing roles to practice support roles, which resulted in
related salaries and expenses now being reflected in other costs of service rather than
professional compensation expense. Offsetting this increase were decreases in occupancy and
recruiting costs.
    
    In the first quarter of 2008 we recorded, within the Corporate/Other operating segment, a
restructuring credit of $6.1 million related to lease, facilities and other exit activities,
compared with a credit of $4.9 million in the first quarter of 2007. These credits represent
a net reduction of accruals, primarily attributable to the change in sublease income
assumptions associated with vacated leased facilities.
 22




---



##### 



Gross Profit by Segment.
 Percent
    
    
    PercentThree Months Ended
    
    
    
    
    
    
    Increase
    
    
    IncreaseMarch 31,
    
    
    
    
    
    
    (Decrease)
    
    
    (Decrease)2008
    
    
    2007
    
    
    US$ Change
    
    
    US$
    
    
    Local CurrencyGross ProfitPublic Services
    
    $
    76,071
    
    
    $
    71,005
    
    
    
    5,066
    
    
    
    7.1
    %
    
    
    7.1
    %Commercial Services
    
    
    19,322
    
    
    
    25,980
    
    
    
    (6,658
    )
    
    
    (25.6
    %)
    
    
    (25.6
    %)Financial Services
    
    
    5,736
    
    
    
    8,265
    
    
    
    (2,529
    )
    
    
    (30.6
    %)
    
    
    (30.6
    %)EMEA
    
    
    40,065
    
    
    
    41,869
    
    
    
    (1,804
    )
    
    
    (4.3
    %)
    
    
    (14.8
    %)Asia Pacific
    
    
    24,918
    
    
    
    13,996
    
    
    
    10,922
    
    
    
    78.0
    %
    
    
    60.4
    %Latin America
    
    
    4,656
    
    
    
    (2,786
    )
    
    
    7,442
    
    
    
    267.1
    %
    
    
    243.8
    %Corporate/Other
    
    
    (18,029
    )
    
    
    (26,269
    )
    
    
    8,240
    
    
    
    31.4
    %
    
    
    n/mTotal
    
    $
    152,739
    
    
    $
    132,060
    
    
    
    20,679
    
    
    
    15.7
    %
    
    
    9.7
    %
 Three Months EndedMarch 31,2008
    
    
    2007Gross Profit as a % of revenuePublic Services
    
    
    22.4
    %
    
    
    19.6
    %Commercial Services
    
    
    17.2
    %
    
    
    19.1
    %Financial Services
    
    
    11.6
    %
    
    
    11.4
    %EMEA
    
    
    19.0
    %
    
    
    22.2
    %Asia Pacific
    
    
    27.9
    %
    
    
    16.8
    %Latin America
    
    
    16.8
    %
    
    
    (12.5
    %)Corporate/Other
    
    
    n/m
    
    
    
    n/mTotal
    
    
    18.4
    %
    
    
    15.2
    %
 
 n/m = not meaningful  
    
    Public Servicesgross profit increased in the first quarter of 2008 due to the
recognition of $7.7 million in revenue relating to work performed in earlier periods, as
well as lower subcontractor expenses.
    
    Commercial Servicesgross profit decreased in the first quarter of 2008 as reductions in
professional compensation and other direct contract expenses did not keep pace with revenue
declines. The reductions in professional compensation were due to the effects of continuing
headcount reductions, including reductions among additional internal personnel allocated to
this segment. The reductions in other direct contract expenses were due to reduced use of
subcontractors. Partially offsetting the decline in gross profit was the reversal of a
prior loss accrual associated with a contract that was subject to early termination.
    
    Financial Servicesgross profit declined in the first quarter of 2008 as revenue decreases outpaced significant decreases in professional compensation resulting from reduced headcount.
    
    EMEAgross profit decreased slightly in the first quarter of 2008 despite the favorable
impact of the strengthening of foreign currencies, specifically the Euro, against the U.S.
dollar. Revenue increases were offset by higher professional compensation and other direct
contract expenses.
    
    Asia Pacificgross profit increased significantly in the first quarter of 2008. Positive
growth in gross profit in the region was realized primarily from decreases in professional
compensation, contract loss reserves and other direct contract expenses as a result of
decreased subcontractor usage in Japan, as well as the favorable impact of foreign
currencies.
 23




---



##### 




    
    Latin Americagross profit significantly increased in the first quarter of 2008 due to
revenue growth and decreases in professional compensation, other direct contract expenses
and contract loss reserves as a result of operational improvements made in the region during
2007.
    
    Corporate/Otherconsists primarily of rent expense and other facilities related charges,
which decreased in the first quarter of 2008 primarily due to the cost savings realized from
office space reduction efforts taken to-date and increased estimates of sublease income
related to vacated office space.
 Selling, General and Administrative Expenses .
 Interest Income.
 Interest Expense.
 Income Tax Expense .
 Net Loss .
 Liquidity and Capital Resources
  Three Months EndedMarch 31,2007 to 20082008
    
    
    2007
    
    
    ChangeNet cash provided by (used in):Operating activities
    
    $
    (62,228
    )
    
    $
    (136,846
    )
    
    $
    74,618Investing activities
    
    
    (10,667
    )
    
    
    (12,510
    )
    
    
    1,843Financing activities
    
    
    2,184
    
    
    
    3,831
    
    
    
    (1,647
    )Effect of exchange rate
changes on cash and cash
equivalents
    
    
    13,356
    
    
    
    1,433
    
    
    
    11,923Net decrease in cash and cash
equivalents
    
    $
    (57,355
    )
    
    $
    (144,092
    )
    
    $
    86,737
 Operating Activities.
 24




---



##### 



Investing Activities.
 Financing Activities.
 Additional Cash Flow Information
        25




---



##### 



2007 Credit Facility  Prepayments
   Repurchase of Debentures at the Option of the Holders
  voluntary or optional
  Off Balance Sheet Arrangements
  26




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##### 



Recently Issued Accounting Pronouncements
  
 PART I, ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  27




---



##### 



PART I, ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
    Changes in Internal Control over Financial Reporting
   28




---



##### 



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Overview
  
    
    Claims and investigations arising from our continuing inability to timely file periodic
reports under the Exchange Act, and the restatement of our financial statements for certain
prior periods to correct accounting errors and departures from generally accepted accounting
principles for those years (SEC Reporting Matters);
    
    Claims and investigations being conducted by agencies or officers of the U.S. Federal
government and arising in connection with our provision of services under contracts with
agencies of the U.S. Federal government (Government Contracting Matters); and
    
    Claims made in the ordinary course of business by clients seeking damages for alleged
breaches of contract or failure of performance, by current or former employees seeking
damages for alleged acts of wrongful termination or discrimination, and by creditors or
other vendors alleging defaults in payment or performance (Other Matters).
   SEC Reporting Matters
 2005 Shareholders Derivative Demand
 
 ITEM 1A. RISK FACTORS
  29




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##### 



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  ApproximateDollar Value ofTotal Number of
    
    
    Shares that MayShares Purchased
    
    
    Yet Be Purchasedas Part of
    
    
    Under PubliclyPublicly
    
    
    Announced PlansTotal Number of
    
    
    Average Price
    
    
    Announced Plans
    
    
    or ProgramsPeriod
    
    Shares Purchased
    
    
    per Share
    
    

or Programs (1)
    
    

($ in millions) (1)March 1, 2008 March 31, 2008
    
    
    55,521(2)
    
    
    $
    1.65
    
    
    
    
    
    
    $
    64.3
 
 (1)
    
    In July 2001, our Board authorized us to repurchase up to $100.0 million of our common stock. Any
shares so repurchased are held as treasury shares. During the quarter ended March 31, 2008, there were
no open market purchases by the Company of our common stock.(2)
    
    In March 2008, as permitted under the LTIP, we acquired an aggregate of 55,521 shares of our common
stock for an aggregate price of $91,610 in connection with share withholding for payroll tax
obligations due from employees and former employees for the issuance of shares of common stock upon
settlement of RSUs. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
 Appointment of Principal Officer
  3
  Employment Agreement
 
    
    Compensation. Ms. Kamericks compensation is composed of the following:
 o
    
    Ms. Kamericks annualized base salary will be $600,000 and her annual
performance bonus target will be 100% of her annual base salary for the year for which
the performance bonus is being awarded, subject to the achievement of her performance
objectives.o
    
    Effective as of May 13, 2008, Ms. Kamerick will receive a grant of restricted
stock units valued at $750,000 pursuant to our 2000 Long-Term Incentive Plan (the
LTIP), subject to the following terms and conditions:
 §
    
    The restricted stock units will vest in equal 25% increments on each of the next
four anniversary dates of such grant date, provided that Ms. Kamericks employment
has not terminated prior to such date.§
    
    All of the restricted stock units will vest upon the termination of Ms.
Kamericks employment due to her death, disability or retirement.§
    
    All of the unvested restricted stock units will vest as of the date of any
Change in Control (as defined in the LTIP), provided that Ms. Kamericks employment
has not terminated prior to such date.
 
    
    Benefits/Long-Term Incentives. Ms. Kamerick will be entitled to participate in all
employee benefit (including long-term incentive), fringe and perquisite plans, practices,
programs, policies and arrangements generally provided to our executives at a level
commensurate with her position.
    
    Severance. Upon termination of Ms. Kamericks employment without cause, other than after
a Change in Control, and in lieu of any amounts payable under Ms. Kamericks Managing
Director Agreement, we will pay to Ms. Kamerick, within 30 days after our receipt of a
fully executed release, a lump sum cash amount equal to one years compensation (based on salary plus
potential bonus).
    
    Indemnification. We have agreed to indemnify Ms. Kamerick with respect to her activities
on our behalf to the fullest extent permitted by law and our Certificate of Incorporation.
 Managing Director Agreement
 Special Termination Agreement
 Departure of Principal Officer
  
    
    Lump Sum Payment. Ms. Ethell will receive a payment in the amount of $1,740,000 to be
paid in a lump sum on or about February 1, 2009.
    
    Restricted Stock Units. On July 1, 2008, Ms. Ethell will vest in restricted stock units
otherwise scheduled to vest on July 1, 2009 and shall therefore, as of July 31, 2008, be
vested in all 386,000 restricted stock units granted in Ms. Ethells two restricted stock
unit agreements.
    
    Stock Options. On July 1, 2008, Ms. Ethell will vest in stock options otherwise
scheduled to vest on July 1, 2009 pursuant to the BearingPoint Stock Option Agreement and
the terms of Ms. Ethells September 19, 2006 Award Notice.
    
    Change of Control Payment. If we experience a change of control prior to January 31,
2009, we have agreed to make a lump sum payment of $1,400,000 to Ms. Ethell.
    
    Release of Claims. In consideration of the above listed payments and actions, Ms.
Ethell has agreed to release us of all claims (other than those limited types of claims
expressly set forth in the agreement) related to her employment, including amounts
potentially owed to Ms. Ethell pursuant to her existing employment arrangements.
 30




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ITEM 6. EXHIBITS
 ExhibitNo.
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation, dated as of February 7, 2001,
which is incorporated herein by reference to Exhibit 3.1 from the Companys Form
10-Q for the quarter ending March 31, 2001.3.2
    
    Amended and Restated Bylaws, amended and restated as of August 2, 2007, which is
incorporated herein by reference to Exhibit 3.1 from the Companys Form 8-K
filed with the SEC on August 8, 2007.3.3
    
    Certificate of Ownership and Merger merging Bones Holding into the Company,
dated October 2, 2002, which is incorporated herein by reference to Exhibit 3.3
from the Companys Form 10-Q for the quarter ended September 30, 2002.4.1
    
    Rights Agreement, dated as of October 2, 2001, between the Company and
Computershare Trust Company, N.A. (formerly EquiServe Trust Company, N.A.),
which is incorporated herein by reference to Exhibit 1.1 from the Companys
Registration Statement on Form 8-A dated October 3, 2001.4.2
    
    Certificate of Designation of Series A Junior Participating Preferred Stock,
which is incorporated herein by reference to Exhibit 1.2 from the Companys
Registration Statement on Form 8-A dated October 3, 2001.4.3
    
    First Amendment to the Rights Agreement between the Company and Computershare
Trust Company, N.A. (formerly EquiServe Trust Company, N.A.), which is
incorporated herein by reference to Exhibit 99.1 from the Companys Form 8-K
filed with the SEC on September 6, 2002.4.4
    
    Second Amendment to the Rights Agreement, dated as of October 27, 2007, between
the Company and Computershare Trust Company, N.A. (formerly EquiServe Trust
Company, N.A.), which is incorporated herein by reference to Exhibit 4.4 from
the Companys Form 10-Q for the quarter ended June 30, 2007.10.1*
    
    Employment Letter, effective as of March 17, 2008, between the Company and David
Hunter.10.2*
    
    Managing Director Agreement, effective as of March 17, 2008, between the Company
and David Hunter.10.3*
    
    Special Termination Agreement, effective as of March 17, 2008, between the
Company and David Hunter.10.4*
    
    Stock Option Agreement, dated March 17, 2008, between the Company and David
Hunter.10.5*
    
    Employment Letter dated April 24, 2008, effective as of May 13, 2008,
between the Company and Eileen A. Kamerick.10.6*
    
    Supplemental Employment Letter dated May 12, 2008, between the Company and
Eileen A. Kamerick.10.7*
    
    Special Termination Agreement, effective as of May 13, 2008, between the
Company and Eileen A. Kamerick.10.8*
    
    Form of Restricted Stock Unit Agreement (including for Eileen A. Kamerick).31.1*
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a).31.2*
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a).32.1*
    
    Certification of Chief Executive Officer pursuant to Section 1350.32.2*
    
    Certification of Chief Financial Officer pursuant to Section 1350.
 
 *
    
    Filed herewith. 31




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SIGNATURES
  BearingPoint, Inc.DATE: May 12, 2008
    By:
    /s/ Judy A. EthellJudy A. EthellChief Financial Officer