##### 



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 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 JUNE 30, 2005.
 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
    
    22-3680505(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer
Identification No.)
 1676 International Drive, McLean, VA
    
    22102(Address of principal executive offices)
    
    (Zip Code)
 (703) 747-3000
 (Registrants telephone number, including area code)
 
  o þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
 o þ




---



##### 



BEARINGPOINT, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2005
 EXPLANATORY NOTE
    i




---



##### 



BEARINGPOINT, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2005
 TABLE OF CONTENTS
 PagePART IFINANCIAL INFORMATIONItem 1:
    
    Financial Statements (unaudited)
    
    1Consolidated Condensed Statements of Operations for the Three and Six Months Ended June 30,
2005 and 2004
    
    1Consolidated Condensed Balance Sheets as of June 30, 2005 and December 31, 2004
    
    2Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004
    
    3Notes to Consolidated Condensed Financial Statements
    
    4Item 2:
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    29Item 3:
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    44Item 4:
    
    Controls and Procedures
    
    44PART IIOTHER INFORMATIONItem 1:
    
    Legal Proceedings
    
    47Item 1A:
    
    Risk Factors
    
    47Item 2:
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    47Item 3:
    
    Defaults Upon Senior Securities
    
    47Item 4:
    
    Submission of Matters to a Vote of Security Holders
    
    47Item 5:
    
    Other Information
    
    47Item 6:
    
    Exhibits
    
    47SIGNATURES
    
    50
 ii




---



##### 



PART I, ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
 BEARINGPOINT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenue
    
    $
    895,245
    
    
    $
    875,387
    
    
    $
    1,766,578
    
    
    $
    1,763,990Costs of service:Professional compensation
    
    
    406,344
    
    
    
    371,746
    
    
    
    882,918
    
    
    
    750,186Other direct contract expenses
    
    
    247,139
    
    
    
    254,737
    
    
    
    530,981
    
    
    
    548,979Lease and facilities restructuring charge
    
    
    
    
    
    
    8,364
    
    
    
    19,605
    
    
    
    11,699Other costs of service
    
    
    64,459
    
    
    
    55,080
    
    
    
    130,821
    
    
    
    124,812Total costs of service
    
    
    717,942
    
    
    
    689,927
    
    
    
    1,564,325
    
    
    
    1,435,676Gross profit
    
    
    177,303
    
    
    
    185,460
    
    
    
    202,253
    
    
    
    328,314Amortization of purchased intangible assets
    
    
    566
    
    
    
    1,003
    
    
    
    1,132
    
    
    
    2,098Selling, general and administrative expenses
    
    
    164,360
    
    
    
    167,853
    
    
    
    327,801
    
    
    
    318,490Operating income (loss)
    
    
    12,377
    
    
    
    16,604
    
    
    
    (126,680
    )
    
    
    7,726Interest income
    
    
    1,682
    
    
    
    87
    
    
    
    3,033
    
    
    
    292Interest expense
    
    
    (8,834
    )
    
    
    (4,033
    )
    
    
    (16,890
    )
    
    
    (8,442
    )Other expense, net
    
    
    (5,270
    )
    
    
    (2,392
    )
    
    
    (10,353
    )
    
    
    (4,418
    )Income (loss) before taxes
    
    
    (45
    )
    
    
    10,266
    
    
    
    (150,890
    )
    
    
    (4,842
    )Income tax expense
    
    
    4,841
    
    
    
    32,684
    
    
    
    86,554
    
    
    
    34,586Net loss
    
    $
    (4,886
    )
    
    $
    (22,418
    )
    
    $
    (237,444
    )
    
    $
    (39,428
    )Loss per share  basic and diluted
    
    $
    (0.02
    )
    
    $
    (0.11
    )
    
    $
    (1.18
    )
    
    $
    (0.20
    )Weighted average shares  basic
    
    
    201,235,807
    
    
    
    196,016,196
    
    
    
    200,799,624
    
    
    
    195,633,359Weighted average shares  diluted
    
    
    201,235,807
    
    
    
    196,016,196
    
    
    
    200,799,624
    
    
    
    195,633,359
  1




---



##### 



BEARINGPOINT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
 June 30,
    
    
    December 31,2005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    278,362
    
    
    $
    244,810Restricted cash
    
    
    113,891
    
    
    
    21,053Accounts receivable, net of allowances of $6,402 at
June 30, 2005 and $11,296 at December 31, 2004
    
    
    413,386
    
    
    
    400,285Unbilled revenue
    
    
    437,679
    
    
    
    381,681Income tax receivable
    
    
    25,822
    
    
    
    50,518Deferred income taxes
    
    
    19,930
    
    
    
    59,566Prepaid expenses
    
    
    48,885
    
    
    
    31,196Other current assets
    
    
    25,045
    
    
    
    33,038Total current assets
    
    
    1,363,000
    
    
    
    1,222,147Property and equipment, net
    
    
    181,879
    
    
    
    203,403Goodwill
    
    
    604,865
    
    
    
    656,877Other intangible assets, net
    
    
    2,678
    
    
    
    3,810Deferred income taxes, less current portion
    
    
    12,952
    
    
    
    20,522Other assets
    
    
    82,236
    
    
    
    75,948Total assets
    
    $
    2,247,610
    
    
    $
    2,182,707LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of notes payable
    
    $
    17,182
    
    
    $
    17,558Accounts payable
    
    
    264,325
    
    
    
    306,325Accrued payroll and employee benefits
    
    
    265,022
    
    
    
    269,876Deferred revenue
    
    
    119,392
    
    
    
    107,308Income tax payable
    
    
    18,682
    
    
    
    33,927Current portion of accrued lease and facilities charge
    
    
    14,727
    
    
    
    22,956Deferred income taxes
    
    
    12,170
    
    
    
    16,750Other current liabilities
    
    
    279,550
    
    
    
    134,744Total current liabilities
    
    
    991,050
    
    
    
    909,444Notes payable, less current portion
    
    
    651,619
    
    
    
    405,668Accrued employee benefits
    
    
    79,981
    
    
    
    84,631Accrued lease and facilities charge, less current portion
    
    
    35,543
    
    
    
    27,386Deferred income taxes, less current portion
    
    
    25,518
    
    
    
    6,810Other liabilities
    
    
    102,693
    
    
    
    124,070Total liabilities
    
    
    1,886,404
    
    
    
    1,558,009Commitments and contingencies (note 10)Stockholders equity:Preferred stock, $.01 par value 10,000,000 shares authorized
    
    
    
    
    
    
    Common stock, $.01 par value 1,000,000,000 shares authorized,
205,346,543 shares issued and 201,534,293 shares outstanding
on June 30, 2005 and 203,132,716 shares issued and
199,320,466 shares outstanding on December 31, 2004
    
    
    2,044
    
    
    
    2,022Additional paid-in capital
    
    
    1,163,583
    
    
    
    1,143,059Accumulated deficit
    
    
    (1,000,000
    )
    
    
    (762,556
    )Notes receivable from stockholders
    
    
    (7,576
    )
    
    
    (8,055
    )Accumulated other comprehensive income
    
    
    238,882
    
    
    
    285,955Treasury stock, at cost (3,812,250 shares)
    
    
    (35,727
    )
    
    
    (35,727
    )Total stockholders equity
    
    
    361,206
    
    
    
    624,698Total liabilities and stockholders equity
    
    $
    2,247,610
    
    
    $
    2,182,707
  2




---



##### 



BEARINGPOINT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Six Months EndedJune 30,2005
    
    
    2004Cash flows from operating activities:Net loss
    
    $
    (237,444
    )
    
    $
    (39,428
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Deferred income taxes
    
    
    60,938
    
    
    
    (21,641
    )Provision for doubtful accounts
    
    
    174
    
    
    
    3,358Stock-based compensation
    
    
    5,134
    
    
    
    4,962Depreciation and amortization of property and equipment
    
    
    35,808
    
    
    
    40,679Amortization of purchased intangible assets
    
    
    1,133
    
    
    
    2,098Lease and facilities restructuring charge
    
    
    19,605
    
    
    
    11,699Amortization of debt issuance costs
    
    
    8,604
    
    
    
    826Other
    
    
    8,895
    
    
    
    2,596Changes in assets and liabilities:Accounts receivable
    
    
    (26,919
    )
    
    
    22,303Unbilled revenue
    
    
    (61,546
    )
    
    
    (187,782
    )Income tax receivable, prepaid expenses and other
current assets
    
    
    14,112
    
    
    
    (11,301
    )Other assets
    
    
    (8,270
    )
    
    
    (10,534
    )Accrued payroll and employee benefits
    
    
    896
    
    
    
    10,361Accounts payable and other current liabilities
    
    
    103,906
    
    
    
    192,123Other liabilities
    
    
    (23,618
    )
    
    
    3,631Net cash provided by (used in) operating activities
    
    
    (98,592
    )
    
    
    23,950Cash flows from investing activities:Purchases of property and equipment
    
    
    (18,411
    )
    
    
    (37,133
    )Increase in restricted cash
    
    
    (92,838
    )
    
    
    Net cash used in investing activities
    
    
    (111,249
    )
    
    
    (37,133
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    14,897
    
    
    
    13,365Proceeds from issuance of notes payable
    
    
    244,253
    
    
    
    352,680Repayment of notes payable
    
    
    (5,765
    )
    
    
    (323,255
    )Decrease in book overdrafts
    
    
    (1,479
    )
    
    
    (13,964
    )Payments on notes receivable from stockholders
    
    
    
    
    
    
    102Net cash provided by financing activities
    
    
    251,906
    
    
    
    28,928Effect of exchange rate changes on cash and cash equivalents
    
    
    (8,513
    )
    
    
    (2,105
    )Net increase in cash and cash equivalents
    
    
    33,552
    
    
    
    13,640Cash and cash equivalents  beginning of period
    
    
    244,810
    
    
    
    122,475Cash and cash equivalents  end of period
    
    $
    278,362
    
    
    $
    136,115
  3




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial Statements
 Note 1. Basis of Presentation and Liquidity
 Basis of Presentation
    Liquidity
  
    
    The Company has experienced significant recurring net losses. At June 30, 2005,
the Company had an accumulated deficit of $1,000,000.
    
    The Companys business has not generated positive cash from operating
activities in some recent periods during fiscal 2005 and 2004.
    
    Due to the material weaknesses in its internal controls, the Company continues
to experience significant delays in completing its consolidated financial
statements and filing periodic reports with the SEC on a timely basis.
Accordingly, the Company continues to devote substantial additional internal and
external resources, and experience higher than expected fees for audit services.
 4




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 
    
    In the first quarter of 2005, the Company incurred losses of $113,257
under a significant contract with Hawaiian Telcom Communications, Inc.,
which consequently will result in significantly less cash from operating
activities in future years.
    
    The Company currently is a party to a number of disputes which involve or may
involve litigation or other legal or regulatory proceedings. See Note 10,
Commitments and Contingencies.
   Note 2. Stock-Based Compensation and Employee Stock Purchase Plan
   5




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 Stock Price
    
    Risk-Free
    
    
    
    
    
    ExpectedExpected
    
    Interest
    
    Expected
    
    DividendVolatility
    
    Rate
    
    Life
    
    YieldThree months ended June 30, 2005
    
    
    50.70
    %
    
    
    3.93
    %
    
    
    6
    
    
    Three months ended June 30, 2004
    
    
    64.27
    %
    
    
    3.95
    %
    
    
    6
    
    
    Six months ended June 30, 2005
    
    
    51.27
    %
    
    
    3.96
    %
    
    
    6
    
    
    Six months ended June 30, 2004
    
    
    65.29
    %
    
    
    3.61
    %
    
    
    6
    
    
    
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss
    
    $
    (4,886
    )
    
    $
    (22,418
    )
    
    $
    (237,444
    )
    
    $
    (39,428
    )Add back:Total stock-based compensation expense recorded
under intrinsic value method for all stock
awards, net of tax effects
    
    
    3,414
    
    
    
    945
    
    
    
    5,134
    
    
    
    2,935Deduct:Total stock-based compensation expense recorded
under fair value method for all stock
awards, net of tax effects
    
    
    (26,029
    )
    
    
    (22,718
    )
    
    
    (51,144
    )
    
    
    (47,876
    )Pro forma net loss
    
    $
    (27,501
    )
    
    $
    (44,191
    )
    
    $
    (283,454
    )
    
    $
    (84,369
    )Loss per share:Basic and diluted  as reported
    
    $
    (0.02
    )
    
    $
    (0.11
    )
    
    $
    (1.18
    )
    
    $
    (0.20
    )Basic and diluted  pro forma
    
    $
    (0.14
    )
    
    $
    (0.23
    )
    
    $
    (1.41
    )
    
    $
    (0.43
    )
  6




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
       7




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
  Note 3. Notes Payable
  June 30,
    
    
    December 31,2005
    
    
    2004Current portion:Yen-denominated term loan (January 31, 2003)
    
    $
    5,994
    
    
    $
    6,509Yen-denominated term loan (June 30, 2003)
    
    
    2,997
    
    
    
    3,254Yen-denominated line of credit
    
    
    7,221
    
    
    
    7,795Other
    
    
    970
    
    
    
    Total current portion
    
    
    17,182
    
    
    
    17,558Long-term portion:Series A and Series B Convertible Debentures
    
    
    450,000
    
    
    
    400,000April 2005 Convertible Debentures
    
    
    200,000
    
    
    
    Yen-denominated term loan (January 31, 2003)
    
    
    
    
    
    
    3,215Yen-denominated term loan (June 30, 2003)
    
    
    
    
    
    
    1,609Other
    
    
    1,619
    
    
    
    844Total long-term portion
    
    
    651,619
    
    
    
    405,668Total notes payable
    
    $
    668,801
    
    
    $
    423,226
 Series A and Series B Convertible Subordinated Debentures
    8




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
        9




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 April 2005 Convertible Senior Subordinated Debentures
        July 2005 Convertible Senior Debentures
  10




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
          11




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
  2005 Credit Facility
       
    
    The financial covenants include: (i) a minimum U.S. cash collections
requirement of $125,000 monthly and $420,000 by the Company on a rolling three-month
basis, (ii) a minimum trailing twelve-month EBITDA covenant which increases quarterly
from $107,600 (for the quarter ending September 30, 2005) to $333,800 (for the quarter
ending March 31, 2009 and thereafter) as of the end of the applicable quarter, (iii) a
maximum leverage ratio which decreases from 7.7 to 1 (for the quarter ending September
30, 2005) to 2.4 to 1 (for the quarter ending March 31, 2009 and thereafter) as of the
end of the applicable quarter and (iv) a maximum trailing
twelve-month capital expenditures covenant which starts at $111,300 for the quarter ending
September 30, 2005
 12




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 and fluctuates thereafter, including reducing to $89,700 a year
thereafter and ultimately remaining fixed at $94,100, starting with the quarter ending
December 31, 2006.
  
    
    The affirmative covenants include:
  
    
    the Companys 2005 Form 10-K by November 30, 2006,
which was filed on November 22, 2006;
    
    the Forms 10-Q for the quarters ended March 31, June 30, and September
30, 2005 by the earlier of two months after the date the Company files the 2005 Form
10-K and January 31, 2007, which were filed on the date hereof;
    
    the Forms 10-Q for the quarters ended March 31 and June 30, 2006 by February 28, 2007; and
    
    the Form 10-Q for the quarter ended September 30, 2006 by March 31, 2007; and
   
    
    The negative covenants restrict certain of the Companys corporate
activities, including, among other things, its ability to make acquisitions or
investments, make capital expenditures, repay other indebtedness, merge or consolidate
with other entities, dispose of assets, incur additional indebtedness, pay dividends,
create liens, make investments (including limitations on loans to its foreign
subsidiaries) settle litigation and engage in certain transactions with affiliates.
    
    The events of default include, among others, defaults based on: certain
bankruptcy and insolvency events; nonpayment; cross-defaults to other debt; payments in
respect of judgments against the Company in excess of $18,000; breach of specified
covenants; change of control; termination of trading of Company stock; material
inaccuracy of representations and warranties; failure to timely deliver audited financial
statements; inaccuracy of the borrowing base; the prohibition or restraint on the Company
or any loan party from conducting its business in any manner that has or could reasonably
be expected to result in a material adverse effect because of any ruling, decision or
order of a court or governmental authority; an indictment, conviction or the commencement
of criminal proceedings of or against the Company or any subsidiary pursuant to which (a)
either damages or penalties could be in excess of $5,000 or (b) such indictment could
reasonably be expected to result in a material adverse effect.
   13




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
  Yen-Denominated Term Loans and Line of Credit
    Discontinued Credit Facilities
    14




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 Early Extinguishment of Senior Notes
  Note 4. Earnings (Loss) Per Share
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss
    
    $
    (4,886
    )
    
    $
    (22,418
    )
    
    $
    (237,444
    )
    
    $
    (39,428
    )Weighted average shares outstanding  basic and diluted
    
    
    201,235,807
    
    
    
    196,016,196
    
    
    
    200,799,624
    
    
    
    195,633,359Loss per share  basic and diluted
    
    $
    (0.02
    )
    
    $
    (0.11
    )
    
    $
    (1.18
    )
    
    $
    (0.20
    )
 Note 5. Comprehensive Loss
  15




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss
    
    $
    (4,886
    )
    
    $
    (22,418
    )
    
    $
    (237,444
    )
    
    $
    (39,428
    )Foreign currency translation adjustment, net of tax (a)
    
    
    (26,392
    )
    
    
    (13,976
    )
    
    
    (47,073
    )
    
    
    (30,883
    )Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )Unrealized loss of derivative instruments, net of tax
    
    
    
    
    
    
    (39
    )
    
    
    
    
    
    
    (78
    )Comprehensive loss
    
    $
    (31,278
    )
    
    $
    (36,433
    )
    
    $
    (284,517
    )
    
    $
    (70,452
    )
 
 (a)
    
    Movement in the foreign currency translation adjustment is primarily due to exchange-rate
fluctuations of the Euro and Japanese Yen against the U.S. dollar. Note 6. Segment Reporting
  16




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 Three Months EndedJune 30,2005
    
    
    2004Operating
    
    
    
    
    
    
    OperatingRevenue
    
    
    Income (Loss)
    
    
    Revenue
    
    
    Income (Loss)Public Services
    
    $
    346,337
    
    
    $
    70,327
    
    
    $
    356,403
    
    
    $
    87,623Commercial Services
    
    
    177,177
    
    
    
    23,878
    
    
    
    171,310
    
    
    
    26,097Financial Services
    
    
    87,818
    
    
    
    21,459
    
    
    
    75,172
    
    
    
    19,272EMEA
    
    
    181,031
    
    
    
    26,596
    
    
    
    163,047
    
    
    
    26,542Asia Pacific
    
    
    80,264
    
    
    
    12,693
    
    
    
    84,765
    
    
    
    7,398Latin America
    
    
    22,145
    
    
    
    3,273
    
    
    
    20,701
    
    
    
    4,019Corporate/Other (1)
    
    
    473
    
    
    
    (145,849
    )
    
    
    3,989
    
    
    
    (154,347
    )Total
    
    $
    895,245
    
    
    $
    12,377
    
    
    $
    875,387
    
    
    $
    16,604
 Six Months EndedJune 30,2005
    
    
    2004Operating
    
    
    
    
    
    
    OperatingRevenue
    
    
    Income (Loss)
    
    
    Revenue
    
    
    Income (Loss)Public Services
    
    $
    678,438
    
    
    $
    139,095
    
    
    $
    735,290
    
    
    $
    173,723Commercial Services
    
    
    349,964
    
    
    
    (64,619
    )
    
    
    349,077
    
    
    
    48,825Financial Services
    
    
    178,517
    
    
    
    41,779
    
    
    
    142,604
    
    
    
    29,130EMEA
    
    
    352,571
    
    
    
    47,291
    
    
    
    316,981
    
    
    
    37,942Asia Pacific
    
    
    163,975
    
    
    
    24,923
    
    
    
    172,320
    
    
    
    17,281Latin America
    
    
    42,178
    
    
    
    7,085
    
    
    
    41,516
    
    
    
    6,610Corporate/Other (1)
    
    
    935
    
    
    
    (322,234
    )
    
    
    6,202
    
    
    
    (305,785
    )Total
    
    $
    1,766,578
    
    
    $
    (126,680
    )
    
    $
    1,763,990
    
    
    $
    7,726
 
 (1)
    
    Corporate/Other operating loss is principally due to infrastructure and shared services
costs, such as facilities, information systems, finance and accounting, human resources,
legal, and marketing. Note 7. Transactions with KPMG LLP
  Infrastructure Services.
 17




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
     Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Occupancy costs
    
    $
    5
    
    
    $
    5,919
    
    
    $
    2,749
    
    
    $
    12,086Other infrastructure service costs
    
    
    116
    
    
    
    13,446
    
    
    
    3,809
    
    
    
    27,357Total
    
    $
    121
    
    
    $
    19,365
    
    
    $
    6,558
    
    
    $
    39,443Amounts included in:Other costs of service
    
    $
    5
    
    
    $
    5,919
    
    
    $
    2,749
    
    
    $
    12,086Selling, general and
administrative
expenses
    
    
    116
    
    
    
    13,446
    
    
    
    3,809
    
    
    
    27,357Total
    
    $
    121
    
    
    $
    19,365
    
    
    $
    6,558
    
    
    $
    39,443
 Note 8. Goodwill and Other Intangible Assets
  Balance
    
    
    
    
    
    
    
    
    
    
    BalanceDecember 31,
    
    
    
    
    
    
    
    
    
    
    June 30,2004
    
    
    Additions
    
    
    Other (a)
    
    
    2005Public Services
    
    $
    23,581
    
    
    $
    
    
    
    $
    
    
    
    $
    23,581Commercial Services
    
    
    64,188
    
    
    
    
    
    
    
    
    
    
    
    64,188Financial Services
    
    
    9,210
    
    
    
    
    
    
    
    
    
    
    
    9,210EMEA
    
    
    485,401
    
    
    
    
    
    
    
    (49,607
    )
    
    
    435,794Asia Pacific
    
    
    73,459
    
    
    
    
    
    
    
    (2,450
    )
    
    
    71,009Latin America
    
    
    836
    
    
    
    
    
    
    
    45
    
    
    
    881Corporate/Other
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    202Total
    
    $
    656,877
    
    
    $
    
    
    
    $
    (52,012
    )
    
    $
    604,865
 
 (a)
    
    Other changes in goodwill consist of foreign currency translation adjustments.  18




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
    June 30,
    
    
    December 31,2005
    
    
    2004Other intangible assets:Backlog, customer contracts and related customer relationships
    
    $
    1,307
    
    
    $
    1,306Market rights
    
    
    10,297
    
    
    
    10,297Total other intangibles
    
    
    11,604
    
    
    
    11,603Accumulated amortization:Backlog, customer contracts and related customer relationships
    
    
    (1,203
    )
    
    
    (1,100
    )Market rights
    
    
    (7,723
    )
    
    
    (6,693
    )Total accumulated amortization
    
    
    (8,926
    )
    
    
    (7,793
    )Other intangible assets, net
    
    $
    2,678
    
    
    $
    3,810
  Note 9. Restructuring Activities
  19




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
    Lease andSeverance
    
    
    Facilities
    
    
    TotalBalance at December 31, 2004
    
    $
    532
    
    
    $
    50,342
    
    
    $
    50,874Current period charges
    
    
    
    
    
    
    19,605
    
    
    
    19,605Payments
    
    
    
    
    
    
    (19,328
    )
    
    
    (19,328
    )Other (a)
    
    
    (197
    )
    
    
    (349
    )
    
    
    (546
    )Balance at June 30, 2005
    
    $
    335
    
    
    $
    50,270
    
    
    $
    50,605
 
 (a)
    
    Other changes in the restructuring accrual consist primarily of foreign currency
translation and other adjustments.  Note 10. Commitments and Contingencies
  
    
    Claims and investigations arising from its continuing 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 and by current or former
employees seeking damages for alleged acts of wrongful termination or discrimination
(Other Matters).
   SEC Reporting Matters
 2003 Class Action Suits
  20




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
  2005 Class Action Suits
  2005 Shareholders Derivative Demand
  Series B Debenture Suit
    21




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
   SEC Investigation
   Government Contracting Matters
 Government Contracts
  Grand Jury Subpoena  California
  22




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
  Travel Rebate Investigation
  Department of Interior
  USAID Contract
  Core Financial Logistics System
  23




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 General Services Administration Audit
   Other Matters
 Peregrine Litigation
 Ariko v. Moores Allocco v. Gardner Bains v. Moores Peregrine Litigation Trust v. KPMG LLP In re Peregrine Systems, Inc. Securities Litigation
 Allocco, Ariko, Bains Peregrine Litigation Trust Allocco, Ariko, Bains the Peregrine Litigation Trust Allocco Peregrine
Litigation Trust
 In re Peregrine Systems, Inc. Securities Litigation In re Peregrine Systems, Inc. Securities Litigation
  24




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 Hawaiian Telcom Communications, Inc.
  Telecommunication Company
  Michael Donahue
  Canon Australia
  25




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 Transition Services Provided By KPMG LLP
    Other Commitments
   26




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
 Note 11. Pension and Postretirement Benefits
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Components of net periodic pension cost:Service cost
    
    $
    1,591
    
    
    $
    1,429
    
    
    $
    3,182
    
    
    $
    2,859Interest cost
    
    
    1,042
    
    
    
    1,050
    
    
    
    2,084
    
    
    
    2,101Expected return on plan assets
    
    
    (293
    )
    
    
    (258
    )
    
    
    (586
    )
    
    
    (516
    )Amortization of loss
    
    
    4
    
    
    
    3
    
    
    
    8
    
    
    
    6Amortization of prior service cost
    
    
    194
    
    
    
    192
    
    
    
    388
    
    
    
    384Curtailment
    
    
    (208
    )
    
    
    
    
    
    
    (416
    )
    
    
    Settlement
    
    
    (58
    )
    
    
    
    
    
    
    (116
    )
    
    
    Net periodic pension cost
    
    $
    2,272
    
    
    $
    2,416
    
    
    $
    4,544
    
    
    $
    4,834Components of net periodic postretirement medical cost:Service cost
    
    $
    314
    
    
    $
    259
    
    
    $
    628
    
    
    $
    518Interest cost
    
    
    143
    
    
    
    103
    
    
    
    286
    
    
    
    205Amortization of
losses
    
    
    18
    
    
    
    
    
    
    
    36
    
    
    
    Amortization of prior service cost
    
    
    120
    
    
    
    117
    
    
    
    240
    
    
    
    234Net periodic postretirement medical cost
    
    $
    595
    
    
    $
    479
    
    
    $
    1,190
    
    
    $
    957
 Note 12. Income Taxes
   Note 13. Recently Issued Accounting Pronouncements
   27




---



##### 



BearingPoint, Inc.
Notes to Consolidated Condensed Financial
Statements  (Continued)
       * * * * *
 28




---



##### 



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 Condensed Financial
Statements and the Notes to the Consolidated Condensed Financial Statements included elsewhere in
this Quarterly Report on Form 10-Q .
 Disclosure Regarding Forward-Looking Statements
  
    
    Our continuing 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 operations.
    
    In fiscal 2004, we identified material weaknesses in our internal control over financial
reporting, which could materially and adversely affect our business and financial
condition, and as of December 31, 2005, these material weaknesses remain.
    
    We face risks related to securities litigation and regulatory actions that could
adversely affect our financial condition and business.
    
    Our business may be adversely impacted as a result of changes in demand, both globally
and in individual market segments, for 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.
    
    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.
    
    We have incurred significant operating losses under our contract with Hawaiian Telcom
Communications, Inc. and could incur significant additional losses and cash outflows in
fiscal 2006.
    
    Contracting with the 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.
    
    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 profitability may decline 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 profitability.
    
    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 near-term cash
needs, especially to fund intra-quarter operating cash requirements and non-recurring cash
requirements (e.g., to settle lawsuits).
 29




---



##### 




    
    We have been unable to issue shares of our common stock under our ESPP since February 1,
2005. The longer we are unable to issue shares of our common stock, the more likely our
ESPP participants may elect to withdraw their accumulated cash contributions from the ESPP
at rates higher than those we have historically experienced.
    
    We have limited availability under our 2005 Credit Facility to borrow additional amounts
or issue additional letters of credit, and we may not be able to refinance our debt or to
do so on favorable terms.
    
    Our 2005 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 2005
Credit Facility, which may cross-default to our other indebtedness.
    
    If our operating performance is materially and adversely affected, we may not be able to
service our indebtedness.
    
    We may be required to post collateral to support our obligations under our surety bonds,
and 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 financial condition.
    
    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.
    
    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.
    
    The termination of services provided under the transition services agreement with KPMG
LLP could involve significant expense, which could adversely affect our financial results.
  Overview
   Economic and Industry Factors
   30




---



##### 



Revenue and Income Drivers
     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.
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. 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. Although our
level of bookings provides some indication of how our business is performing, 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.
 31




---



##### 




    
    Gross Margin (gross profit as a percentage of revenue).Gross margin is a meaningful tool
for monitoring our ability to control costs. Analysis of the various cost elements,
including foreign currency translation adjustments 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 executing our business model. 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.
    
    Utilization.Utilization represents the percentage of time our consultants are performing
work that is chargeable to a client, and is defined as total hours charged to client
engagements divided by total available hours for any specific time period. In 2006, we
modified the calculation to include the available hours of employees working on
non-chargeable internal projects that had a general relationship to client matters, which
will have the effect of lowering our reported utilization figure by an insignificant amount.
We also further modified this calculation in 2006 by excluding the holiday and paid vacation
time for our employees from the available hours figure. This will have the effect of raising
the utilization rate but will make our reporting of this metric more consistent with how we
believe our industry peer group measures utilization.
    
    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 divided
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 the Companys 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. Previously, we had provided
attrition figures for our billable employees and did not take into account our
non-consultant employees. Starting in 2006, we intend to provide attrition figures for all
of our employees, which we believe provides metrics that are more compatible with, and
comparable to, those of our competitors.
  Three and Six Months Ended June 30, 2005 Highlights
  
    
    New contract bookings for the three months ended June 30, 2005 were $963.1 million,
compared to new contract bookings of $864.9 million for the three months ended June 30,
2004. New contract bookings for the six months ended June 30, 2005 were $1,657.3 million,
compared to new contract bookings of $1,571.0 million for the six months ended June 30,
2004. New contract bookings for the three months ended June 30, 2005 increased in all
three industry groups in North America, driven primarily by strong bookings in our
Commercial Services industry group, which offset decreased bookings in the Asia Pacific and
Latin America regions. For the six months ended June 30,
 32




---



##### 



2005, new contract bookings increased in all three industry groups in North America, driven
primarily by strong bookings in Financial Services and Commercial Services, which offset
decreased bookings in the EMEA, Asia Pacific and Latin America regions.
    
    Our revenue for the three months ended June 30, 2005 was $895.2 million, representing an
increase of $19.9 million, or 2.3%, over the three months ended June 30, 2004 revenue of
$875.4 million. Our revenue for the six months ended June 30, 2005 was $1,766.6 million,
representing an increase of $2.6 million, or 0.1%, over the six months ended June 30, 2004
revenue of $1,764.0 million.
    
    Our gross profit for the three months ended June 30, 2005 was $177.3 million compared
with $185.5 million for the three months ended June 30, 2004. Gross profit as a percentage
of revenue decreased to 19.8% during the three months ended June 30, 2005 from 21.2% during
the three months ended June 30, 2004. Our gross profit for the six months ended June 30,
2005 was $202.3 million compared with $328.3 million for the six months ended June 30,
2004. Gross profit as a percentage of revenue decreased to 11.4% during the three months
ended June 30, 2005 from 18.6% during the six months ended June 30, 2004. This decrease
was primarily attributable to a $113.3 million loss recognized on the HT Contract, which is
described below.
    
    We have a significant contract (the HT Contract) with Hawaiian Telcom Communications,
Inc., a telecommunications industry client, under which we were engaged to design, build
and operate various information technology systems for the client. We incurred losses of
$113.3 million under this contract in the first quarter of 2005. The HT Contract has
experienced delays in its build and deployment phases and contractual milestones have been
missed. The client has alleged that we are responsible under the HT Contract to compensate
it for certain costs and other damages incurred as a result of these delays and other
alleged failures. We believe the clients nonperformance of its responsibilities under the
HT Contract caused delays in the project and impacted our ability to perform, thereby
causing us to incur significant damages. We also believe the terms of the HT Contract limit
the clients ability to recover certain of their claimed damages. We are negotiating with
the client to resolve these issues, apportion financial responsibility for these costs and
alleged damages, and transition remaining work under the HT Contract to others, as
requested by the client. During these negotiations, we are maintaining all of our options,
including disputing the clients claims and asserting our own claims in litigation. At this
time we cannot predict the likelihood that we will be able to resolve this dispute or the
outcome of any litigation that might ensue if we are unable to resolve the dispute. Even if
resolved, we could incur substantial additional losses under the HT Contract or agree to
pay additional amounts to facilitate termination of the HT Contract. The incurrence of
additional losses or the payment of additional amounts to the client could materially and
adversely affect our profitability, results of operations or cash flow over the near term.
    
    For the three and six months ended June 30, 2005, all of the material weaknesses in our
internal control over financial reporting cited for fiscal 2004 remain. For information on
the developments and progress made in fiscal 2005, please see Item 4, Controls and
Procedures  Remediation of Material Weaknesses in Internal Control over Financial
Reporting.
    
    During the three months ended June 30, 2005, we realized a net loss of $4.9 million, or
a loss of $0.02 per share, compared to a net loss of $22.4 million, or a loss of $0.11 per
share, during the three months ended June 30, 2004. During the six months ended June 30,
2005, we realized a net loss of $237.4, or a loss of $1.18 per share, compared to a net
loss of $39.4, or a loss of $0.20 per share, during the six months ended June 30, 2004.
Included in our results for the six months ended June 30, 2005 were $113.3 million of
operating losses related to the HT Contract, a $57.3 million increase in the valuation
allowance primarily against our U.S. deferred tax assets, and $19.6 million of lease and
facilities restructuring charges.
    
    Utilization for the three months ended June 30, 2005 was 69.8%, an increase of 50 basis
points from the three months ended June 30, 2004. Utilization for the six months ended June
30, 2005 was 70.0% an increase of 200 basis points from the six months ended June 30, 2004.
    
    At June 30, 2005, our DSOs stood at 111 days, representing a decrease of 8 days, or 7%,
from our DSOs at June 30, 2004. Given our ongoing systems issues related to financial
accounting for our North American operations, we are currently unable to calculate DSOs for
dates later than December 31, 2005. We continue to focus on this metric during
2006 as we believe we are at a level that is higher than the industry average, resulting in
a suboptimal use of our cash.
    
    Free cash flow for the six months ended June 30, 2005 was ($117.0) million. Net cash
used in operating activities during the six months ended June 30, 2005 was ($98.6) million.
Purchases of property and equipment during the six months ended June 30, 2005 were ($18.4)
million. When this amount is subtracted from net cash used in operating
 33




---



##### 



activities, the result is ($117.0) million, which is free cash flow. 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 (used in) operating activities.
    
    On March 25, 2005, the Compensation Committee of our Board of Directors approved the
issuance of up to an aggregate of $165 million in restricted stock units (RSUs) under our
Long-Term Incentive Plan (the LTIP) to our current managing directors and a limited
number of key employees (the Retention RSUs), and delegated to our officers the authority
to grant these awards. During the three and six months ended June 30, 2005, we recorded
non-cash stock compensation expense of $1.5 million and $1.5 million, respectively, related
to the vesting of Retention RSUs, which significantly impacted both our gross profit and
operating income.
    
    During fiscal 2005, we completed a number of private securities offerings in an effort
to improve our overall liquidity. We issued an
additional $25.0 million aggregate principal amount of our Series A Debentures and $25.0
million aggregate principal amount of our Series B Debentures. We also issued an aggregate
principal amount of $200.0 million of our April 2005 Senior Debentures and an aggregate
principal amount of $40.0 million of our July 2005 Senior Debentures. In total, we received
approximately $280.3 million in net proceeds from all of these offerings. For additional
information regarding our debt restructuring, see Liquidity and Capital Resources and
Note 3, Notes Payable, of the Notes to Consolidated Condensed Financial Statements.
 Segments
   34




---



##### 



Three Months ended June 30, 2005 Compared to Three Months ended June 30, 2004
 Revenue.
 Three Months EndedJune 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeRevenuePublic Services
    
    $
    346,337
    
    
    $
    356,403
    
    
    $
    (10,066
    )
    
    
    (2.8
    %)Commercial Services
    
    
    177,177
    
    
    
    171,310
    
    
    
    5,867
    
    
    
    3.4
    %Financial Services
    
    
    87,818
    
    
    
    75,172
    
    
    
    12,646
    
    
    
    16.8
    %EMEA
    
    
    181,031
    
    
    
    163,047
    
    
    
    17,984
    
    
    
    11.0
    %Asia Pacific
    
    
    80,264
    
    
    
    84,765
    
    
    
    (4,501
    )
    
    
    (5.3
    %)Latin America
    
    
    22,145
    
    
    
    20,701
    
    
    
    1,444
    
    
    
    7.0
    %Corporate/Other
    
    
    473
    
    
    
    3,989
    
    
    
    (3,516
    )
    
    
    n/mTotal
    
    $
    895,245
    
    
    $
    875,387
    
    
    $
    19,858
    
    
    
    2.3
    %
 Impact of
    
    Revenue growthcurrency
    
    (decline), net offluctuations
    
    currency impact
    
    TotalRevenuePublic Services
    
    
    0.0
    %
    
    
    (2.8
    %)
    
    
    (2.8
    %)Commercial Services
    
    
    0.0
    %
    
    
    3.4
    %
    
    
    3.4
    %Financial Services
    
    
    0.0
    %
    
    
    16.8
    %
    
    
    16.8
    %EMEA
    
    
    4.8
    %
    
    
    6.2
    %
    
    
    11.0
    %Asia Pacific
    
    
    4.3
    %
    
    
    (9.6
    %)
    
    
    (5.3
    %)Latin America
    
    
    15.3
    %
    
    
    (8.3
    %)
    
    
    7.0
    %Corporate/Other
    
    
    n/m
    
    
    
    n/m
    
    
    
    n/mTotal
    
    
    1.7
    %
    
    
    0.6
    %
    
    
    2.3
    %
 
 n/m = not meaningful 
    
    Public Servicesrevenue decreased during the three months ended June 30, 2005,
primarily attributable to an expected reduction of $20.2 million in revenue derived from
our subcontractors and resales of procured materials (which we must bill our clients,
thereby increasing our revenue), which more than offset increases in headcount and
chargeable hours resulting from our expanding use of employees at lower average bill
rates.
    
    Commercial Servicesrevenue increased during the three months ended June 30, 2005,
primarily driven by revenue growth in the Transportation sector.
    
    Financial Servicesrevenue increased during the three months ended June 30, 2005,
primarily due to especially strong revenue growth in the Global Market sector. Revenue
growth was principally due to an increase in demand for our services. Our average
billing rates improved slightly quarter-over-quarter, as our ability to obtain higher
rates per hour on certain of our market offerings offset the increasing use of
lower-priced offshore personnel as a component of our overall pricing model.
    
    EMEArevenue increased during the three months ended June 30, 2005, primarily due to
combined revenue growth in France and the United Kingdom of $17.6 million, partially
offset by revenue decline in Germany. Our business in France experienced a significant
shift into systems integration work, while revenue growth in the United Kingdom was
driven by our continued expansion in that region. Revenue for Germany declined as a
result of utilization decreasing slightly as a result of continued deterioration of
market conditions which, consequently, led us to lower billable headcount.
 35




---



##### 




    
    Asia Pacificrevenue decreased during the three months ended June 30, 2005, driven
primarily by the planned
elimination of subcontractor usage in the region, which more than offset improved billing
rates achieved across the region in the three months ended June 30, 2005 due to
significantly lower revenue write-offs during the year.
    
    Latin Americarevenue increased during the three months ended June 30, 2005, primarily
as a function of the weakening of the U.S. dollar against local currencies in Latin
America (particularly the Brazilian Real). The combined impact of these foreign currency
fluctuations and modest revenue growth in Brazil offset significant declines in revenue
in most other countries in which we operate in the region.
    
    Corporate/Other: Our Corporate/Other segment does not contribute significantly to our
revenue.
 Gross Profit .
 
    
    Professional compensation expense increased as a percentage of revenue to 45.4% for the
three months ended June 30, 2005, compared to 42.5% for the three months ended June 30,
2004. We experienced a net increase in professional compensation expense of $34.6 million,
or 9.3%, to $406.3 million for the three months ended June 30, 2005 from $371.7 million
for the three months ended June 30, 2004. The increase in professional compensation
expense is primarily the result of hiring additional billable employees in response to
overall market demand for our services. Additionally, $3.1 million of this amount was
related to the vesting of Retention RSUs.
    
    Other direct contract expenses decreased as a percentage of revenue to 27.6% for the
three months ended June 30, 2005 compared to 29.1% for the three months ended June 30,
2004. We experienced a net decrease in other direct contract expenses of $7.6 million, or
3.0%, to $247.1 million for the three months ended June 30, 2005 from $254.7 million for
the three months ended June 30, 2004. The change was driven primarily by reduced
subcontractor expenses as a result of the increased use of internal resources.
    
    Other costs of service as a percentage of revenue increased to 7.2% for the three
months ended June 30, 2005 from 6.3% for the three months ended June 30, 2004. We
experienced a net increase in other costs of service of $9.4 million, or 17.0%, to $64.5
million for the three months ended June 30, 2005 from $55.1 million for the three months
ended June 30, 2004. The change was driven primarily by an increase in additional
outside services and recruiting charges.
    
    During the three months ended June 30, 2004 we recorded, within the Corporate/Other
operating segment, a charge of $8.4 million for lease and facilities restructuring costs.
These costs for the three months ended June 30, 2004 related to our previously announced
reduction in office space primarily within the North America, EMEA and Asia Pacific
regions.
 Gross Profit by Segment.
 36




---



##### 



Three Months EndedJune 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeGross ProfitPublic Services
    
    $
    79,816
    
    
    $
    100,616
    
    
    $
    (20,800
    )
    
    
    (20.7
    %)Commercial Services
    
    
    34,764
    
    
    
    38,816
    
    
    
    (4,052
    )
    
    
    (10.4
    %)Financial Services
    
    
    27,097
    
    
    
    25,016
    
    
    
    2,081
    
    
    
    8.3
    %EMEA
    
    
    34,585
    
    
    
    31,255
    
    
    
    3,330
    
    
    
    10.7
    %Asia Pacific
    
    
    15,721
    
    
    
    12,295
    
    
    
    3,426
    
    
    
    27.9
    %Latin America
    
    
    4,508
    
    
    
    4,904
    
    
    
    (396
    )
    
    
    (8.1
    %)Corporate/Other
    
    
    (19,188
    )
    
    
    (27,442
    )
    
    
    8,254
    
    
    
    n/mTotal
    
    $
    177,303
    
    
    $
    185,460
    
    
    $
    (8,157
    )
    
    
    (4.4
    %)
 Three Months EndedJune 30,2005
    
    2004Gross Profit as a % of revenuePublic Services
    
    
    23.0
    %
    
    
    28.2
    %Commercial Services
    
    
    19.6
    %
    
    
    22.7
    %Financial Services
    
    
    30.9
    %
    
    
    33.3
    %EMEA
    
    
    19.1
    %
    
    
    19.2
    %Asia Pacific
    
    
    19.6
    %
    
    
    14.5
    %Latin America
    
    
    20.4
    %
    
    
    23.7
    %Corporate/Other
    
    
    n/m
    
    
    
    n/mTotal
    
    
    19.8
    %
    
    
    21.2
    %
 
 n/m = not meaningful  
    
    Public Servicesgross profit decreased in the three months ended June 30, 2005, in
large measure due to a $20.7 million increase in compensation expense (including non-cash
compensation expense of $0.6 million relating to the vesting of Retention RSUs) and a
$10.1 million reduction in gross revenue, which on a combined basis, more than offset a
$10.5 million reduction in other direct contract expenses.
    
    Commercial Servicesgross profit decreased in the three months ended June 30, 2005, as
higher gross revenue was eroded by increases in compensation expense, including non-cash
compensation expense related to the vesting of Retention RSUs of $0.5 million.
    
    Financial Servicesgross profit increased in the three months ended June 30, 2005, as
higher revenue in the Global Market sector more than offset significant incremental
increases in compensation expense related to a substantial increase in headcount.
    
    EMEAgross profit increased in the three months ended June 30, 2005, as increases in
revenue more than offset incremental increases in compensation expense due to an increase
in headcount in France and the United Kingdom and non-cash compensation expense of $1.2 million related
to the vesting of the Retention RSUs.
    
    Asia Pacificgross profit increased in the three months ended June 30, 2005 despite a
decrease in revenue, due in large measure to significant demonstrated improvements in
cost management and realization of contract revenue.
    
    Latin Americagross profit decreased in the three months ended June 30, 2005, as
increases in compensation expense attributable to salaries/fringe benefits and non-cash
compensation expense related to Retention RSUs offset modest revenue growth in the
region.
 37




---



##### 




    
    Corporate/Otherconsists primarily of rent expense and other facilities related
charges, which increased in the three months ended June 30, 2005 primarily due to the
lease and facilities restructuring charges discussed above.
 Amortization of Purchased Intangible Assets .
 Selling, General and Administrative Expenses .
 Interest Income.
 Interest Expense.
 Other Expense, net.
 Income Tax Expense .
 Net Income (Loss) .
 38




---



##### 



Six Months ended June 30, 2005 Compared to Six Months ended June 30, 2004
 Revenue.
 Six Months EndedJune 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeRevenuePublic Services
    
    $
    678,438
    
    
    $
    735,290
    
    
    $
    (56,852
    )
    
    
    (7.7
    %)Commercial Services
    
    
    349,964
    
    
    
    349,077
    
    
    
    887
    
    
    
    0.3
    %Financial Services
    
    
    178,517
    
    
    
    142,604
    
    
    
    35,913
    
    
    
    25.2
    %EMEA
    
    
    352,571
    
    
    
    316,981
    
    
    
    35,590
    
    
    
    11.2
    %Asia Pacific
    
    
    163,975
    
    
    
    172,320
    
    
    
    (8,345
    )
    
    
    (4.8
    %)Latin America
    
    
    42,178
    
    
    
    41,516
    
    
    
    662
    
    
    
    1.6
    %Corporate/Other
    
    
    935
    
    
    
    6,202
    
    
    
    (5,267
    )
    
    
    n/mTotal
    
    $
    1,766,578
    
    
    $
    1,763,990
    
    
    $
    2,588
    
    
    
    0.1
    %
 Impact of
    
    Revenue growthcurrency
    
    (decline), net offluctuations
    
    currency impact
    
    TotalRevenuePublic Services
    
    
    0.0
    %
    
    
    (7.7
    %)
    
    
    (7.7
    %)Commercial Services
    
    
    0.0
    %
    
    
    0.3
    %
    
    
    0.3
    %Financial Services
    
    
    0.0
    %
    
    
    25.2
    %
    
    
    25.2
    %EMEA
    
    
    5.1
    %
    
    
    6.1
    %
    
    
    11.2
    %Asia Pacific
    
    
    3.6
    %
    
    
    (8.4
    %)
    
    
    (4.8
    %)Latin America
    
    
    10.2
    %
    
    
    (8.6
    %)
    
    
    1.6
    %Corporate/Other
    
    
    n/m
    
    
    
    n/m
    
    
    
    n/mTotal
    
    
    1.5
    %
    
    
    (1.4
    %)
    
    
    0.1
    %
 
 n/m = not meaningful 
    
    Public Servicesrevenue decreased during the six months ended June 30, 2005,
primarily attributable to our expanding use of employees at lower average bill rates
(despite overall headcount and engagement hours increasing) and an expected reduction of
$28.6 million in revenue derived from our subcontractors and resales of procured
materials (which we must bill our clients, thereby increasing our revenue).
    
    Commercial Servicesrevenue increased slightly during the six months ended June 30,
2005, primarily driven by revenue growth in the Transportation sector, which was
partially offset by revenue declines in the Communications & Content and Energy sectors.
    
    Financial Servicesrevenue increased during the six months ended June 30, 2005,
primarily due to revenue growth in all sectors, with especially strong growth in the
Insurance and Global Market sectors. Revenue growth was principally due to an increase
in demand for our services. Our average billing rates declined period-over-period, as we
increased our use of lower-priced offshore personnel as a component of our overall
pricing model.
    
    EMEArevenue increased during the six months ended June 30, 2005, primarily due to
combined revenue growth in France and the United Kingdom of $29.9 million. Our business
in France experienced a significant shift into systems integration work, while revenue
growth in the United Kingdom was driven by our continued expansion in that region.
 39




---



##### 




    
    Asia Pacificrevenue decreased during the six months ended June 30, 2005, driven
primarily by the planned elimination of
subcontractor usage in the region, which more than offset the improved billing rates
achieved across the region in the six months ended June 30, 2005 due to significantly
lower revenue write-offs during the year.
    
    Latin Americarevenue increased during the six months ended June 30, 2005, primarily
as a function of the weakening of the U.S. dollar against local currencies in Latin
America (particularly the Brazilian Real). The combined impact of these foreign currency
fluctuations and modest revenue growth in Brazil offset significant declines in revenue
in most other countries in which we operate in the region.
    
    Corporate/Other: Our Corporate/Other segment does not contribute significantly to our
revenue.
 Gross Profit .
 
    
    Professional compensation expense increased as a percentage of revenue to 50.0% for the
six months ended June 30, 2005, compared to 42.5% for the six months ended June 30, 2004.
We experienced a net increase in professional compensation expense of $132.7 million, or
17.7%, to $882.9 million for the six months ended June 30, 2005 from $750.2 million for
the six months ended June 30, 2004. The increase in professional compensation expense is
primarily the result of hiring additional billable employees in response to overall market
demand for our services and additional compensation cost related to the loss accrual for
the HT Contract. Additionally, $4.9 million of this amount was related to the vesting of
Retention RSUs.
    
    Other direct contract expenses decreased as a percentage of revenue to 30.1% for the six
months ended June 30, 2005 compared to 31.1% for the six months ended June 30, 2004. We
experienced a net decrease in other direct contract expenses of $18.0 million, or 3.3%, to
$531.0 million for the six months ended June 30, 2005 from $549.0 million for the six
months ended June 30, 2004. The change was driven primarily by reduced subcontractor
expenses as a result of the increased use of internal resources, partially offsetting
additional subcontractor expense accruals for the HT Contract.
    
    Other costs of service as a percentage of revenue increased to 7.4% for the six
months ended June 30, 2005 from 7.1% for the six months ended June 30, 2004. We
experienced a net increase in other costs of service of $6.0 million, or 4.8%, to $130.8
million for the six months ended June 30, 2005 from $124.8 million for the six months
ended June 30, 2004. The change was driven primarily by an increase in additional outside
services and recruiting charges.
    
    During the six months ended June 30, 2005 we recorded, within the Corporate/Other
operating segment, a charge of $19.6 million for lease and facilities restructuring costs,
compared to an $11.7 million charge for lease and facilities restructuring costs during
the six months ended June 30, 2004. These costs for the six months ended June 30, 2005
related to our previously announced reduction in office space primarily within the North
America, EMEA and Asia Pacific regions.
 Gross Profit by Segment.
 40




---



##### 



Six Months EndedJune 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeGross ProfitPublic Services
    
    $
    157,514
    
    
    $
    197,586
    
    
    $
    (40,072
    )
    
    
    (20.3
    %)Commercial Services
    
    
    (44,531
    )
    
    
    73,092
    
    
    
    (117,623
    )
    
    
    (160.9
    %)Financial Services
    
    
    53,186
    
    
    
    39,931
    
    
    
    13,255
    
    
    
    33.2
    %EMEA
    
    
    62,387
    
    
    
    46,698
    
    
    
    15,689
    
    
    
    33.6
    %Asia Pacific
    
    
    31,821
    
    
    
    27,241
    
    
    
    4,580
    
    
    
    16.8
    %Latin America
    
    
    9,205
    
    
    
    8,229
    
    
    
    976
    
    
    
    11.9
    %Corporate/Other
    
    
    (67,329
    )
    
    
    (64,463
    )
    
    
    (2,866
    )
    
    
    n/mTotal
    
    $
    202,253
    
    
    $
    328,314
    
    
    $
    (126,061
    )
    
    
    (38.4
    %)
 Six Months EndedJune 30,2005
    
    2004Gross Profit as a % of revenuePublic Services
    
    
    23.2
    %
    
    
    26.9
    %Commercial Services
    
    
    (12.7
    %)
    
    
    20.9
    %Financial Services
    
    
    29.8
    %
    
    
    28.0
    %EMEA
    
    
    17.7
    %
    
    
    14.7
    %Asia Pacific
    
    
    19.4
    %
    
    
    15.8
    %Latin America
    
    
    21.8
    %
    
    
    19.8
    %Corporate/Other
    
    
    n/m
    
    
    
    n/mTotal
    
    
    11.4
    %
    
    
    18.6
    %
 
 n/m = not meaningful  
    
    Public Servicesgross profit decreased in the six months ended June 30, 2005, in large
measure due to a $42.1 million increase in compensation expense (including non-cash
compensation expense of $0.6 million relating to the vesting of Retention RSUs) and the
previously described $56.9 million reduction in gross revenue, which on a combined basis,
more than offset significant reductions of $60.0 million in other direct contract
expenses.
    
    Commercial Servicesgross profit decreased in the six months ended June 30, 2005, as
slightly higher gross revenue was eroded by significant cost overruns and loss accruals,
most notably $113.3 million on the previously described HT Contract. These cost overruns
drove the increase in compensation expense along with increases in subcontractor expense
accruals and hardware and software purchases that collectively increased our other direct
contract expenses by $49.0 million, which are substantially not recoverable.
Additionally, compensation expense increased due to non-cash compensation expense
relating to the vesting of Retention RSUs of $0.7 million, also contributed to the
decrease in gross profit.
    
    Financial Servicesgross profit increased in the six months ended June 30, 2005, as
higher revenue across all sectors more than offset significant incremental increases in
compensation expense related to a substantial increase in headcount.
    
    EMEAgross profit increased in the six months ended June 30, 2005, as increases in
revenue more than offset incremental increases in compensation expense due to a
substantial increase in headcount in both France and the United Kingdom and non-cash
compensation expense relating to vesting of Retention RSUs.
    
    Asia Pacificgross profit increased in the six months ended June 30, 2005 despite a
decrease in revenue, due in large measure to significant demonstrated improvements in
cost management and realization of contract revenue.
 41




---



##### 




    
    Latin Americagross profit increased in the six months ended June 30, 2005, as cost of
services slightly declined with the modest revenue growth in the region.
    
    Corporate/Otherconsists primarily of rent expense and other facilities related
charges, which increased in the six months ended June 30, 2005 primarily due to the lease
and facilities restructuring charges discussed above.
 Amortization of Purchased Intangible Assets .
 Selling, General and Administrative Expenses .
 Interest Income.
 Interest Expense.
 Other Expense, net.
 Income Tax Expense .
 Net Income (Loss) .
 Liquidity and Capital Resources
  Six Months EndedJune 30,2005 to 20042005
    
    
    2004
    
    
    ChangeNet cash provided by (used in):Operating activities
    
    $
    (98,592
    )
    
    $
    23,950
    
    
    $
    (122,542
    )Investing activities
    
    
    (111,249
    )
    
    
    (37,133
    )
    
    
    (74,116
    )Financing activities
    
    
    251,906
    
    
    
    28,928
    
    
    
    222,978Effect of exchange rate changes on cash and cash equivalents
    
    
    (8,513
    )
    
    
    (2,105
    )
    
    
    (6,408
    )Net increase in cash and cash equivalents
    
    $
    33,552
    
    
    $
    13,640
    
    
    $
    19,912
 Operating Activities.
 42




---



##### 



Investing Activities.
 Financing Activities.
   Recently Issued Accounting Pronouncements
   43




---



##### 



PART I, ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  PART I, ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  44




---



##### 



Remediation of Material Weaknesses in Internal Control over Financial Reporting
  
 
 
 45




---



##### 




 
 
 
 
 
 
 
 
 46




---



##### 



Changes in Internal Control over Financial Reporting
  PART II. OTHER INFORMATION
 ITEM 1. LEGAL PROCEEDINGS
  ITEM 1A: RISK FACTORS
  ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Sales of Securities Not Registered Under the Securities Act
  Issuer Purchases of Equity Securities
  ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  ITEM 5. OTHER INFORMATION
   ITEM 6. EXHIBITS
 a)
    
    Exhibits
 47




---



##### 



Exhibit No.
    
    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 May 5, 2004, which is
incorporated herein by reference to Exhibit 3.1 from the Companys Form 10-Q for
the quarter ending March 31, 2004.3.3
    
    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 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
    
    Amendment No. 1 to the Rights Agreement between the Company and EquiServe Trust
Company, N.A., which is incorporated herein by reference to Exhibit 99.1 from
the Companys Form 8-K filed on September 6, 2002.10.1
    
    Amendment No. 2 to Amended and Restated 401(k) Plan dated June 24, 2005, which
is incorporated by reference to Exhibit 10.24 from the Companys Form 10-K for
the year ended December 31, 2004.10.2
    
    Amendment No. 1 to Security Agreement, dated as of April 26, 2005, among the
Company, the Guarantors and Bank of America, N.A., as Administrative Agent,
which is incorporated by reference to Exhibit 10.49 from the Companys Form 10-K
for the year ended December 31, 2004.10.3
    
    Amendment No. 1 to Guaranty Agreement, dated as of April 26, 2005, among the
Company, the Guarantors and Bank of America, N.A., as Administrative Agent,
which is incorporated by reference to Exhibit 10.51 from the Companys Form 10-K
for the year ended December 31, 2004.10.4
    
    Letter of Credit Cash Collateral Agreement, dated as of April 26, 2005, by and
among BearingPoint, Inc., the Administrative Agent and each of Bank of America,
N.A. and JPMorgan Chase Bank, N.A., which is incorporated by
reference to Exhibit 10.52 from the Companys Form 10-K for the year ended December 31, 2004.10.5
    
    Form of 5.00% Convertible Senior Subordinated Debentures due 2025, which is
incorporated by reference to Exhibit 10.71 from the
Companys Form 10-K for the year ended December 31, 2004.10.6
    
    Form of Securities Purchase Agreement, dated April 21, 2005, among the Company
and the purchasers named therein, which is incorporated by reference
to Exhibit 10.72 from the Companys Form 10-K for the year ended December 31, 2004.10.7
    
    Indenture, dated as of April 27, 2005, by and between the Company and the Bank
of New York, as trustee, which is incorporated by reference to
Exhibit 99.2 from the Companys Form 8-K filed on March 10, 2006.10.8
    
    Registration Rights Agreement, dated April 27, 2005, between the Company and the
placement agents, which is incorporated by reference to
Exhibit 10.74 from the Companys Form 10-K for the year ended December 31, 2004.10.9
    
    Independent Contractor Letter Agreement, dated May 24, 2005 between the Company
and Joseph Corbett, which is incorporated by reference to
Exhibit 10.85 from the Companys Form 10-K for the year ended December 31, 2004.31.1
    
    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.
 48




---



##### 



Exhibit No.
    
    Description32.2
    
    Certification of Chief Financial Officer pursuant to Section 1350.99.1
    
    Legal Proceedings section of the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2005.99.2
    
    Risk Factors section of the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2005.99.3
    
    Market for the Registrants Common Stock, Related Stockholder Matters and
Issuer Purchases of Equity SecuritiesSales of Securities Not Registered under
the Securities Act section of the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2005.
 49




---



##### 



SIGNATURES
  BearingPoint, Inc.DATE: January 17, 2007
    
    By:
    
    /s/ Judy A. EthellJudy A. EthellChief Financial Officer
 50




---



##### 



Exhibit Index
 3.1
    
    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 May 5, 2004, which is
incorporated herein by reference to Exhibit 3.1 from the Companys Form 10-Q for
the quarter ending March 31, 2004.3.3
    
    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 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
    
    Amendment No. 1 to the Rights Agreement between the Company and EquiServe Trust
Company, N.A., which is incorporated herein by reference to Exhibit 99.1 from
the Companys Form 8-K filed on September 6, 2002.10.1
    
    Amendment No. 2 to Amended and Restated 401(k) Plan dated June 24, 2005, which
is incorporated by reference to Exhibit 10.24 from the Companys Form 10-K for
the year ended December 31, 2004.10.2
    
    Amendment No. 1 to Security Agreement, dated as of April 26, 2005, among the
Company, the Guarantors and Bank of America, N.A., as Administrative Agent,
which is incorporated by reference to Exhibit 10.49 from the Companys Form 10-K
for the year ended December 31, 2004.10.3
    
    Amendment No. 1 to Guaranty Agreement, dated as of April 26, 2005, among the
Company, the Guarantors and Bank of America, N.A., as Administrative Agent,
which is incorporated by reference to Exhibit 10.51 from the Companys Form 10-K
for the year ended December 31, 2004.10.4
    
    Letter of Credit Cash Collateral Agreement, dated as of April 26, 2005, by and
among BearingPoint, Inc., the Administrative Agent and each of Bank of America,
N.A. and JPMorgan Chase Bank, N.A., which is incorporated by reference to
Exhibit 10.52 from the Companys Form 10-K for the year ended December 31, 2004.10.5
    
    Form of 5.00% Convertible Senior Subordinated Debentures due 2025, which is
incorporated by reference to Exhibit 10.71 from the Companys Form 10-K for the
year ended December 31, 2004.10.6
    
    Form of Securities Purchase Agreement, dated April 21, 2005, among the Company
and the purchasers named therein, which is incorporated by reference to Exhibit
10.72 from the Companys Form 10-K for the year ended December 31, 2004.10.7
    
    Indenture, dated as of April 27, 2005, by and between the Company and the Bank
of New York, as trustee, which is incorporated by reference to Exhibit 99.2 from
the Companys Form 8-K filed on March 10, 2006.10.8
    
    Registration Rights Agreement, dated April 27, 2005, between the Company and the
placement agents, which is incorporated by reference to Exhibit 10.74 from the
Companys Form 10-K for the year ended December 31, 2004.10.9
    
    Independent Contractor Letter Agreement, dated May 24, 2005 between the Company
and Joseph Corbett, which is incorporated by reference to Exhibit 10.85 from the
Companys Form 10-K for the year ended December 31, 2004.31.1
    
    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.
 51




---



##### 



99.1
    
    Legal Proceedings section of the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2005.99.2
    
    Risk Factors section of the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2005.99.3
    
    Market for the Registrants Common Stock, Related Stockholder Matters and
Issuer Purchases of Equity SecuritiesSales of Securities Not Registered under
the Securities Act section of the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2005.
 52