##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission File Number: 001-33961

HILL INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-0953973                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|303 Lippincott Centre, Marlton, NJ                             |  | 08053                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: (856) 810-6200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by a check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                           |  |                      |  |                          |  |                             
|-------------------------- |  | -------------------- |  | ------------------------ |  | ----------------------------
|Large Accelerated Filer   ̈ |  | Accelerated Filer  x |  | Non-Accelerated Filer   ̈ |  | Smaller Reporting Company   ̈

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange
Act.    Yes   ̈    No  x

There were 40,366,945 shares of the Registrants Common Stock outstanding at April 30, 2010.









---

##### Table of Contents

HILL INTERNATIONAL, INC. AND SUBSIDIARIES

Index to Form 10-Q



|           |  |                                                                                                             |  |   
|---------- |  | ----------------------------------------------------------------------------------------------------------- |  | --
|PART I     |  | FINANCIAL INFORMATION                                                                                       |  |   
|           |  |                                                                                                            
|Item 1     |  | Financial Statements                                                                                        |  |   
|           |  |                                                                                                            
|           |  | Consolidated Balance Sheets at March 31, 2010 (unaudited) and December 31, 2009                             |  | 3 
|           |  |                                                                                                            
|           |  | Consolidated Statements of Earnings for the three-month periods ended March 31, 2010 and 2009 (unaudited)   |  | 4 
|           |  |                                                                                                            
|           |  | Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2010 and 2009 (unaudited) |  | 5 
|           |  |                                                                                                            
|           |  | Notes to Consolidated Financial Statements                                                                  |  | 6 
|           |  |                                                                                                            
|Item 2     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                       |  | 20
|           |  |                                                                                                            
|Item 3     |  | Quantitative and Qualitative Disclosures About Market Risk                                                  |  | 29
|           |  |                                                                                                            
|Item 4     |  | Controls and Procedures                                                                                     |  | 29
|           |  |                                                                                                            
|PART II    |  | OTHER INFORMATION                                                                                           |  |   
|           |  |                                                                                                            
|Item 1     |  | Legal Proceedings                                                                                           |  | 30
|           |  |                                                                                                            
|Item 1A    |  | Risk Factors                                                                                                |  | 30
|           |  |                                                                                                            
|Item 2     |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                 |  | 30
|           |  |                                                                                                            
|Item 3     |  | Defaults Upon Senior Securities                                                                             |  | 30
|           |  |                                                                                                            
|Item 4     |  | (Removed and Reserved)                                                                                      |  | 30
|           |  |                                                                                                            
|Item 5     |  | Other Information                                                                                           |  | 30
|           |  |                                                                                                            
|Item 6     |  | Exhibits                                                                                                    |  | 31
|           |  |                                                                                                            
|Signatures |  |                                                                                                             |  | 32



2



---

##### Table of Contents

|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

HILL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)



|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                                   |  | March 31,2010 |         |   | December 31,2009 |  
|                                                                                                                                                                   |  | (unaudited)   |         |   |                  |  
|Assets                                                                                                                                                             |  |               |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                                          |  | $             | 30,089  |   |                  | $ | 30,923  |  
|Cash - restricted                                                                                                                                                  |  |               | 3,033   |   |                  |   | 2,690   |  
|Accounts receivable, less allowance for doubtful accounts of $9,393 and $9,780                                                                                     |  |               | 131,765 |   |                  |   | 130,900 |  
|Accounts receivable - affiliate                                                                                                                                    |  |               | 4,762   |   |                  |   | 7,163   |  
|Prepaid expenses and other current assets                                                                                                                          |  |               | 12,005  |   |                  |   | 10,146  |  
|Income taxes receivable                                                                                                                                            |  |               | 941     |   |                  |   | 902     |  
|Deferred tax asset                                                                                                                                                 |  |               | 899     |   |                  |   | 878     |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total current assets                                                                                                                                               |  |               | 183,494 |   |                  |   | 183,602 |  
|Property and equipment, net                                                                                                                                        |  |               | 11,448  |   |                  |   | 11,576  |  
|Cash - restricted, net of current portion                                                                                                                          |  |               | 1,768   |   |                  |   | 1,711   |  
|Retainage receivable, less allowance for doubtful accounts of $38 and $38                                                                                          |  |               | 1,958   |   |                  |   | 1,774   |  
|Acquired intangibles, net                                                                                                                                          |  |               | 20,186  |   |                  |   | 21,885  |  
|Goodwill                                                                                                                                                           |  |               | 44,309  |   |                  |   | 46,025  |  
|Investments                                                                                                                                                        |  |               | 12,525  |   |                  |   | 13,196  |  
|Deferred tax asset                                                                                                                                                 |  |               | 4,215   |   |                  |   | 4,162   |  
|Other assets                                                                                                                                                       |  |               | 9,120   |   |                  |   | 7,608   |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total assets                                                                                                                                                       |  | $             | 289,023 |   |                  | $ | 291,539 |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Liabilities and Stockholders Equity                                                                                                                               |  |               |         |   |                  |   |         |  
|Due to bank                                                                                                                                                        |  | $             | 2,230   |   |                  | $ | 1,449   |  
|Current maturities of notes payable                                                                                                                                |  |               | 96      |   |                  |   | 1,972   |  
|Accounts payable and accrued expenses                                                                                                                              |  |               | 52,402  |   |                  |   | 53,158  |  
|Income taxes payable                                                                                                                                               |  |               | 3,353   |   |                  |   | 4,722   |  
|Deferred revenue                                                                                                                                                   |  |               | 11,375  |   |                  |   | 15,401  |  
|Deferred income taxes current                                                                                                                                      |  |               | 437     |   |                  |   | 432     |  
|Other current liabilities                                                                                                                                          |  |               | 5,116   |   |                  |   | 5,523   |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total current liabilities                                                                                                                                          |  |               | 75,009  |   |                  |   | 82,657  |  
|Notes payable, net of current maturities                                                                                                                           |  |               | 32,812  |   |                  |   | 24,823  |  
|Retainage payable                                                                                                                                                  |  |               | 2,903   |   |                  |   | 2,684   |  
|Deferred tax liabilities                                                                                                                                           |  |               | 7,777   |   |                  |   | 8,728   |  
|Deferred revenue                                                                                                                                                   |  |               | 2,383   |   |                  |   | 2,537   |  
|Other liabilities                                                                                                                                                  |  |               | 9,079   |   |                  |   | 10,470  |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total liabilities                                                                                                                                                  |  |               | 129,963 |   |                  |   | 131,899 |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Commitments and contingencies                                                                                                                                      |  |               |         |   |                  |   |         |  
|Stockholders equity:                                                                                                                                              |  |               |         |   |                  |   |         |  
|Preferred stock, $.0001 par value; 1,000,000 shares authorized, none issued                                                                                        |  |               |        |   |                  |   |        |  
|Common stock, $.0001 par value; 75,000,000 shares authorized, 44,612,422 shares and 43,530,113 shares issued at March 31,
2010 and December 31, 2009, respectively |  |               | 4       |   |                  |   | 4       |  
|Additional paid-in capital                                                                                                                                         |  |               | 121,815 |   |                  |   | 121,230 |  
|Retained earnings                                                                                                                                                  |  |               | 67,884  |   |                  |   | 65,427  |  
|Accumulated other comprehensive loss                                                                                                                               |  |               | (16,141 | ) |                  |   | (12,588 | )
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|                                                                                                                                                                   |  |               | 173,562 |   |                  |   | 174,073 |  
|Less treasury stock of 4,251,854 shares at both March 31, 2010 and December 31, 2009, at cost                                                                      |  |               | (18,438 | ) |                  |   | (18,438 | )
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Hill International , Inc. share of equity                                                                                                                          |  |               | 155,124 |   |                  |   | 155,635 |  
|Noncontrolling interests                                                                                                                                           |  |               | 3,936   |   |                  |   | 4,005   |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total equity                                                                                                                                                       |  |               | 159,060 |   |                  |   | 159,640 |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  
|Total liabilities and stockholders equity                                                                                                                         |  | $             | 289,023 |   |                  | $ | 291,539 |  
|                                                                                                                                                                   |  |               |         |   |                  |   |         |  

See accompanying notes to consolidated financial statements.



3



---

##### Table of Contents

HILL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)



|                                                             |  |                              |         |   |                    |   |         |  
|------------------------------------------------------------ |  | ---------------------------- | ------- | - | ------------------ | - | ------- | -
|                                                             |  | Three Months Ended March 31, |        
|                                                             |  | 2010                         |         |   | 2009               |  
|                                                             |  |                              |         |   | (Revised - Note 2) |  
|Consulting fee revenue                                       |  | $                            | 91,936  |   |                    | $ | 92,148  |  
|Reimbursable expenses                                        |  |                              | 12,536  |   |                    |   | 11,786  |  
|                                                             |  |                              |         |   |                    |   |         |  
|Total revenue                                                |  |                              | 104,472 |   |                    |   | 103,934 |  
|                                                             |  |                              |         |   |                    |   |         |  
|Cost of services                                             |  |                              | 53,113  |   |                    |   | 52,892  |  
|Reimbursable expenses                                        |  |                              | 12,536  |   |                    |   | 11,786  |  
|                                                             |  |                              |         |   |                    |   |         |  
|Total direct expenses                                        |  |                              | 65,649  |   |                    |   | 64,678  |  
|                                                             |  |                              |         |   |                    |   |         |  
|Gross profit                                                 |  |                              | 38,823  |   |                    |   | 39,256  |  
|Selling, general and administrative expenses                 |  |                              | 36,945  |   |                    |   | 36,096  |  
|Equity in earnings of affiliates                             |  |                              | (821    | ) |                    |   | (1,181  | )
|                                                             |  |                              |         |   |                    |   |         |  
|Operating profit                                             |  |                              | 2,699   |   |                    |   | 4,341   |  
|Interest expense (income), net                               |  |                              | 545     |   |                    |   | 213     |  
|                                                             |  |                              |         |   |                    |   |         |  
|Earnings before provision for income taxes                   |  |                              | 2,154   |   |                    |   | 4,128   |  
|Benefit from income taxes                                    |  |                              | (469    | ) |                    |   | (426    | )
|                                                             |  |                              |         |   |                    |   |         |  
|Consolidated net earnings                                    |  |                              | 2,623   |   |                    |   | 4,554   |  
|Less: net earnings - noncontrolling interests                |  |                              | 166     |   |                    |   | 151     |  
|                                                             |  |                              |         |   |                    |   |         |  
|Net earnings attributable to Hill International, Inc.        |  | $                            | 2,457   |   |                    | $ | 4,403   |  
|                                                             |  |                              |         |   |                    |   |         |  
|Basic earnings per common share - Hill International, Inc.   |  | $                            | 0.06    |   |                    | $ | 0.11    |  
|                                                             |  |                              |         |   |                    |   |         |  
|Basic weighted average common shares outstanding             |  |                              | 40,313  |   |                    |   | 40,997  |  
|                                                             |  |                              |         |   |                    |   |         |  
|Diluted earnings per common share - Hill International, Inc. |  | $                            | 0.06    |   |                    | $ | 0.11    |  
|                                                             |  |                              |         |   |                    |   |         |  
|Diluted weighted average common shares outstanding           |  |                              | 40,922  |   |                    |   | 41,119  |  
|                                                             |  |                              |         |   |                    |   |         |  

See accompanying notes to consolidated financial statements.



4



---

##### Table of Contents

HILL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)



|                                                                                |  |                              |        |   |      |   |        |  
|------------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                |  | Three Months Ended March 31, |       
|                                                                                |  | 2010                         |        |   | 2009 |  
|Cash flows from operating activities:                                           |  |                              |        |   |      |   |        |  
|Consolidated net earnings                                                       |  | $                            | 2,623  |   |      | $ | 4,554  |  
|Adjustments to reconcile net earnings to net cash used in operating activities: |  |                              |        |   |      |   |        |  
|Depreciation and amortization                                                   |  |                              | 2,194  |   |      |   | 1,727  |  
|Equity in earnings of affiliates                                                |  |                              | (821   | ) |      |   | (1,181 | )
|Provision for bad debts                                                         |  |                              | 324    |   |      |   | 842    |  
|Deferred tax provision                                                          |  |                              | (1,072 | ) |      |   | (289   | )
|Stock based compensation                                                        |  |                              | 428    |   |      |   | 465    |  
|Changes in operating assets and liabilities, net of acquisitions:               |  |                              |        |   |      |   |        |  
|Accounts receivable                                                             |  |                              | (6,137 | ) |      |   | (6,294 | )
|Accounts receivable - affiliate                                                 |  |                              | 2,401  |   |      |   | 3,345  |  
|Prepaid expenses and other current assets                                       |  |                              | (2,380 | ) |      |   | (984   | )
|Income taxes receivable                                                         |  |                              | (59    | ) |      |   |       |  
|Retainage receivable                                                            |  |                              | (184   | ) |      |   | (88    | )
|Other assets                                                                    |  |                              | (1,738 | ) |      |   | (783   | )
|Accounts payable and accrued expenses                                           |  |                              | 1,259  |   |      |   | (3,398 | )
|Income taxes payable                                                            |  |                              | (719   | ) |      |   | (544   | )
|Deferred revenue                                                                |  |                              | (3,865 | ) |      |   | (3,691 | )
|Other current liabilities                                                       |  |                              | (357   | ) |      |   | (369   | )
|Retainage payable                                                               |  |                              | 219    |   |      |   | 281    |  
|Other liabilities                                                               |  |                              | (1,104 | ) |      |   | (726   | )
|                                                                                |  |                              |        |   |      |   |        |  
|Net cash flow used in operating activities                                      |  |                              | (8,988 | ) |      |   | (7,133 | )
|                                                                                |  |                              |        |   |      |   |        |  
|Cash flows from investing activities:                                           |  |                              |        |   |      |   |        |  
|Distributions from affiliate                                                    |  |                              | 750    |   |      |   | 1,307  |  
|Payments for purchase of property and equipment                                 |  |                              | (1,136 | ) |      |   | (272   | )
|Purchase of additional interest in subsidiary                                   |  |                              | (168   | ) |      |   |       |  
|                                                                                |  |                              |        |   |      |   |        |  
|Net cash flow (used in) provided by investing activities                        |  |                              | (554   | ) |      |   | 1,035  |  
|                                                                                |  |                              |        |   |      |   |        |  
|Cash flows from financing activities:                                           |  |                              |        |   |      |   |        |  
|Due to bank                                                                     |  |                              | 893    |   |      |   | (421   | )
|Payments on notes payable                                                       |  |                              | (1,881 | ) |      |   | (430   | )
|Net borrowings on revolving loans                                               |  |                              | 8,000  |   |      |   | 9,816  |  
|Proceeds from stock issued under employee stock purchase plan                   |  |                              | 97     |   |      |   | 234    |  
|Purchase of treasury stock under stock repurchase program                       |  |                              |       |   |      |   | (3,439 | )
|                                                                                |  |                              |        |   |      |   |        |  
|Net cash flow provided by financing activities                                  |  |                              | 7,109  |   |      |   | 5,760  |  
|                                                                                |  |                              |        |   |      |   |        |  
|Effect of exchange rate changes on cash                                         |  |                              | 1,599  |   |      |   | (1,517 | )
|                                                                                |  |                              |        |   |      |   |        |  
|Net decrease in cash and cash equivalents                                       |  |                              | (834   | ) |      |   | (1,855 | )
|Cash and cash equivalents  beginning of period                                 |  |                              | 30,923 |   |      |   | 20,430 |  
|                                                                                |  |                              |        |   |      |   |        |  
|Cash and cash equivalents  end of period                                       |  | $                            | 30,089 |   |      | $ | 18,575 |  
|                                                                                |  |                              |        |   |      |   |        |  

See accompanying notes to consolidated financial statements.



5



---

##### Table of Contents

HILL INTERNATIONAL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 -
The Company

Hill International, Inc. (Hill or the Company) is a construction consulting firm headquartered in
Marlton, New Jersey that provides both fee-based project management and construction claims consulting services to clients worldwide. Hills clients include the U.S. federal government, U.S. state and local governments, foreign governments, and
the private sector. Hills business was established in 1976 as a closely held corporation. On June 28, 2006, the closely held Hill (Old Hill) merged with and into Arpeggio Acquisition Corp. (Arpeggio), a specified
purpose acquisition company, at which time Arpeggio changed its name to Hill International, Inc. The Company is organized into two key operating divisions: the Project Management Group and the Construction Claims Group.

Note 2 - Basis of Presentation

The
accompanying unaudited interim consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States and the interim financial statement rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (GAAP) for complete financial statements. In the opinion of management, these
statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements. The consolidated financial statements should be read in conjunction with the
consolidated financial statements and accompanying notes included in the Companys Annual Report on Form 10-K for the year ended December 31, 2009.

The consolidated financial statements include the accounts of Hill and its wholly- and majority-owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The interim operating results are not necessarily indicative of the results for a full year.

During 2009, the Company began charging a portion of depreciation and amortization expense, which had previously been reflected in selling, general and
administrative expenses, to cost of services. As a result, the consolidated statements of earnings for the three months ended March 31, 2009 have been revised to increase cost of services and decrease selling, general and administrative
expenses by $204,000 and gross profit also declined by the same amount in that period. There was no effect on operating profit or consolidated net earnings in those years.

New Accounting Pronouncements

Effective January 1, 2010, the Company adopted a new standard pertaining to the consolidation of variable interest entities that requires an analysis
to determine whether a variable interest gives the entity a controlling



6



---

##### Table of Contents

financial interest in a variable interest entity. This standard also requires an ongoing reassessment of the primary beneficiary of the variable interest entity and eliminates the quantitative
approach previously required for determining whether an entity is the primary beneficiary. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

Effective January 1, 2010, the Company also adopted a new standard pertaining to accounting for transfers of financial assets that removes the
concept of a qualifying special-purpose entity from accounting for transfers and servicing of financial assets and extinguishment of liabilities. This standard also clarifies the requirements for transfers of financial assets that are eligible for
sale accounting. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

Note 3 - Comprehensive Earnings

The
following table summarizes the Companys comprehensive earnings:



|                                                                       |  |                              |        |   |      |   |       |  
|---------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ----- | -
|                                                                       |  | Three months ended March 31, |       
|                                                                       |  | 2010                         |        |   | 2009 |  
|Consolidated net earnings                                              |  | $                            | 2,623  |   |      | $ | 4,554 |  
|Foreign currency translation, net of tax                               |  |                              | (3,534 | ) |      |   | 3,093 |  
|Other, net                                                             |  |                              | (88    | ) |      |   | (316  | )
|                                                                       |  |                              |        |   |      |   |       |  
|Comprehensive earnings                                                 |  |                              | (999   | ) |      |   | 7,331 |  
|Comprehensive income (loss) attributable to noncontrolling interests   |  |                              | 97     |   |      |   | (272  | )
|                                                                       |  |                              |        |   |      |   |       |  
|Comprehensive (loss) earnings attributable to Hill International, Inc. |  | $                            | (1,096 | ) |      | $ | 7,603 |  
|                                                                       |  |                              |        |   |      |   |       |  

Note 4 - Accounts Receivable

The components of accounts receivable are as follows:



|                                |  |                |         |   |                   |   |         |  
|------------------------------- |  | -------------- | ------- | - | ----------------- | - | ------- | -
|(in thousands)                  |  | March 31, 2010 |         |   | December 31, 2009 |  
|Billed                          |  | $              | 122,313 |   |                   | $ | 122,657 |  
|Retainage, current portion      |  |                | 1,871   |   |                   |   | 2,181   |  
|Unbilled                        |  |                | 16,974  |   |                   |   | 15,842  |  
|                                |  |                |         |   |                   |   |         |  
|                                |  |                | 141,158 |   |                   |   | 140,680 |  
|Allowance for doubtful accounts |  |                | (9,393  | ) |                   |   | (9,780  | )
|                                |  |                |         |   |                   |   |         |  
|                                |  | $              | 131,765 |   |                   | $ | 130,900 |  
|                                |  |                |         |   |                   |   |         |  



7



---

##### Table of Contents

Note 5 - Intangible Assets

The following table summarizes the Companys acquired intangible assets:



|                        |  |                     |        |                         |   |                     |  |                         |        |  |   |       
|----------------------- |  | ------------------- | ------ | ----------------------- | - | ------------------- |  | ----------------------- | ------ |  | - | ------
|                        |  | March 31, 2010      |        | December 31, 2009      
|(in thousands)          |  | GrossCarryingAmount |        | AccumulatedAmortization |   | GrossCarryingAmount |  | AccumulatedAmortization
|Contract rights         |  | $                   | 9,511  |                         | $ | 5,465               |  | $                       | 9,668  |  | $ | 4,951 
|Client relationships    |  |                     | 20,415 |                         |   | 4,988               |  |                         | 21,002 |  |   | 4,610 
|Trade names             |  |                     | 1,462  |                         |   | 750                 |  |                         | 1,499  |  |   | 725   
|Covenant not to compete |  |                     | 18     |                         |   | 17                  |  |                         | 18     |  |   | 16    
|                        |  |                     |        |                         |   |                     |  |                         |        |  |   |       
|Total                   |  | $                   | 31,406 |                         | $ | 11,220              |  | $                       | 32,187 |  | $ | 10,302
|                        |  |                     |        |                         |   |                     |  |                         |        |  |   |       
|Intangible assets, net  |  | $                   | 20,186 |                         |   |                     |  | $                       | 21,885 |  |   |       
|                        |  |                     |        |                         |   |                     |  |                         |        |  |   |       

Amortization expense related to intangible assets totaled $1,166,000 and $824,000 for the three months ended
March 31, 2010 and 2009, respectively. The following table presents the estimated amortization expense based on our present intangible assets for the next five years:



|                          |  |                               |      
|------------------------- |  | ----------------------------- | -----
|Year ending December 31,  |  | Estimated amortizationexpense
|                          |  | (in thousands)               
|2010 (remaining 9 months) |  | $                             | 3,417
|2011                      |  |                               | 4,506
|2012                      |  |                               | 2,395
|2013                      |  |                               | 2,276
|2014                      |  |                               | 2,276

Note 6 - Goodwill

The Company performs its annual goodwill impairment testing, by reporting unit, in the third quarter, or more frequently if events or changes in
circumstances indicate that goodwill may be impaired. Application of the goodwill impairment test requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of
growth for the businesses, the useful life over which cash flows will occur, and determination of the Companys weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value
and/or conclusions on goodwill impairment for each reporting unit. The Company performed its annual impairment test effective July 1, 2009 and noted no impairment for either of its reporting units.



8



---

##### Table of Contents

The following table summarizes the changes in the Companys carrying value of goodwill during 2010 (in
thousands):



|                    |  |                            |        |             |   |                        |  |   |                         |   |  |   |       
|------------------- |  | -------------------------- | ------ | ----------- | - | ---------------------- |  | - | ----------------------- | - |  | - | ------
|Segment             |  | Balance atDecember 31,2009 |        | Adjustments |   | TranslationAdjustments |  |   | Balance atMarch 31,2010
|Project Management  |  | $                          | 25,829 |             | $ |                       |  | $ | (759                    | ) |  | $ | 25,070
|Construction Claims |  |                            | 20,196 |             |   |                       |  |   | (957                    | ) |  |   | 19,239
|                    |  |                            |        |             |   |                        |  |   |                         |   |  |   |       
|Total               |  | $                          | 46,025 |             | $ |                       |  | $ | (1,716                  | ) |  | $ | 44,309
|                    |  |                            |        |             |   |                        |  |   |                         |   |  |   |       

Note 7 - Accounts Payable and Accrued Expenses

Below are the components of accounts payable and accrued expenses:



|                                    |  |                |        |                   |   |       
|----------------------------------- |  | -------------- | ------ | ----------------- | - | ------
|(in thousands)                      |  | March 31, 2010 |        | December 31, 2009
|Accounts payable                    |  | $              | 15,220 |                   | $ | 16,597
|Accrued payroll                     |  |                | 19,782 |                   |   | 20,042
|Accrued subcontractor fees          |  |                | 5,440  |                   |   | 4,806 
|Accrued legal and professional cost |  |                | 8,826  |                   |   | 9,035 
|Other accrued expenses              |  |                | 3,134  |                   |   | 2,678 
|                                    |  |                |        |                   |   |       
|                                    |  | $              | 52,402 |                   | $ | 53,158
|                                    |  |                |        |                   |   |       



9



---

##### Table of Contents

Note 8 - Notes Payable

Outstanding debt obligations are as follows:



|                                                                                                                                                                                                                                                                               |  |                |        |                   |   |       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------ | ----------------- | - | ------
|(in thousands)                                                                                                                                                                                                                                                                 |  | March 31, 2010 |        | December 31, 2009
|Revolving credit loan payable to a bank group led by Bank of America, N.A. up to $100,000,000. The weighted average rate for all
borrowings was 3.75% and 3.45% and March 31, 2010 and December 31, 2009, respectively. For more information see below).                       |  | $              | 32,800 |                   | $ | 24,800
|Revolving credit loan payable acquired in the acquisition of Boyken to Bank of America, N.A. up to $1,250,000, with interest at
2.25% plus the 1 month LIBOR rate of 0.23% (or 2.48%) at December 31, 2009. The loan was paid off by the Company on January 5, 2010.           |  |                |       |                   |   | 850   
|Revolving credit loan payable acquired in the acquisition of TRS to Bay Commercial Bank up to $1,000,000, with interest at 0.75%
plus the prime rate of 3.25% (or 4.00%) but no less than 6.00% at December 31, 2009. The loan was paid off by the Company on January 8, 2010. |  |                |       |                   |   | 870   
|Other                                                                                                                                                                                                                                                                          |  |                | 108    |                   |   | 275   
|                                                                                                                                                                                                                                                                               |  |                |        |                   |   |       
|                                                                                                                                                                                                                                                                               |  |                | 32,908 |                   |   | 26,795
|Less current maturities                                                                                                                                                                                                                                                        |  |                | 96     |                   |   | 1,972 
|                                                                                                                                                                                                                                                                               |  |                |        |                   |   |       
|Notes payable, net of current maturities                                                                                                                                                                                                                                       |  | $              | 32,812 |                   | $ | 24,823
|                                                                                                                                                                                                                                                                               |  |                |        |                   |   |       

The Company has a credit agreement (the Credit Agreement),
dated as of June 30, 2009 among the Company, Bank of America, N.A., Capital One, N.A., The PrivateBank and Trust Company and PNC Bank N.A., which provides for borrowings of up to $100,000,000. The Credit Agreement also provides for a letter of
credit sub-facility of up to $30,000,000. Obligations under the Credit Agreement are collateralized by all of the Companys assets, including, without limitation, accounts receivable, equipment, securities, financial assets and the proceeds of
the foregoing, as well as by a pledge of 65% of the outstanding capital stock of its wholly owned subsidiary, Hill International S.A. The Credit Agreement expires on June 30, 2012. The Company incurred costs of approximately $1,741,000 in
connection with establishing the new credit facility. Such costs have been deferred and are being amortized to interest expense over the life of the loan.

The Credit Agreement provides for Base Rate loans and Eurodollar Rate loans. Base Rate loans bear interest at a fluctuating rate per annum equal to the
sum of (a) the highest of (i) the Federal Funds Rate plus 0.5%, (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its prime rate and (iii) the Eurodollar
Rate plus 1.00%, plus (b) an Applicable Rate which may vary between 1.75% and 2.50% depending on the Companys consolidated leverage ratio at the time of the borrowing. Eurodollar Rate loans bear interest at a rate per annum equal to the
British Bankers Association LIBOR Rate plus an Applicable Rate which may vary between 2.75% and 3.50% depending on the Companys consolidated leverage ratio at the time of the borrowing.



10



---

##### Table of Contents

The Credit Agreement contains covenants and certain restrictions on the incurrence of debt, on the making of
investments, on the payment of dividends, on transactions with affiliates and other affirmative and negative covenants and events of default customary for facilities of its type. It also requires the Company to meet certain financial tests at any
time that borrowings are outstanding under the facility including minimum consolidated net worth of $100,000,000 plus 50% of consolidated net earnings attributable to Hill International, Inc. for each quarter after June 30, 2009, consolidated
leverage ratio not to exceed 2.50 to 1.00, a minimum consolidated fixed charge coverage ratio of 2.00 to 1.00 and a minimum ratio of consolidated billed and unbilled accounts receivable to consolidated senior indebtedness of 2.00 to 1.00. At
March 31, 2010, the Company was in compliance with all of the loan covenants.

As of March 31, 2010, the Company had $7,242,000 in
outstanding letters of credit which reduced availability under the credit facility. Due to the limitations of the ratio of the Companys consolidated billed and unbilled accounts receivable to consolidated senior indebtedness, total remaining
availability at March 31, 2010 was $34,663,000.

The Company has a revolving credit facility with Barclays Bank PLC which provides for
borrowings of up to £500,000 (approximately $754,000 and $804,000 at March 31, 2010 and December 31, 2009, respectively), with interest at 2.00% plus The Bank of England rate of 0.50% (or 2.50%) at both March 31, 2010 and
December 31, 2009, collateralized by cross guarantees of various United Kingdom companies. There were no outstanding borrowings at March 31, 2010 or December 31, 2009. The loan has an indeterminate term and is subject to annual review
by the bank.

The Company maintains a credit facility with a bank in the Middle East for 11,500,000 AED (approximately $3,131,000 at both
March 31, 2010 and December 31, 2009) collateralized by certain overseas receivables. The interest rate on this facility is 3.0% plus the one-month Emirates InterBank Offer Rate (EIBOR), which was 1.78% (or 4.78%) at
March 31, 2010, but no less than 5.50%. The facility also allows for up to 150,000,000 AED (approximately $40,836,000) in Letters of Guarantee of which 62,233,000 AED (approximately $16,942,000) was utilized at March 31, 2010. This
facility expires on August 27, 2010.

The Company maintains a revolving credit facility with a European bank up to 1,000,000
(approximately $1,343,000 and $1,434,000 at March 31, 2010 and December 31, 2009, respectively), with interest rates at 2.50% plus the Banks prime rate of 6.00% (or 8.50%) at March 31, 2010 and 2.50% plus the Banks prime
rate of 6.25% (or 8.75%) at December 31, 2009, collateralized by certain assets of the Company. At March 30, 2010 and December 31, 2009, there were no outstanding borrowings under this facility which expires on April 30, 2011.

The Company maintains an unsecured credit facility with a bank in Spain for 750,000 (approximately $1,007,000 and $1,076,000 at
March 31, 2010 and December 31, 2009 respectively). The interest rate on that facility is the three month EURIBOR rate which at March 31, 2010 was 0.63%, plus 1.75% (or 2.38%) and at December 31, 2009 was 0.71%, plus 1.75% (or
2.46%) but no less than 4.00%. At March 31, 2010 and December 31, 2009, there were no outstanding borrowings under this facility which expires on December 24, 2011.

The Company maintained another credit facility with another European bank that allowed for 373,000 (approximately $501,000) of bank guarantees at
March 31, 2010 and 2,000,000 (approximately $2,868,000 at December 31, 2009) of bank guarantees of which 373,000 (approximately $501,000 at March 31, 2010 and $535,000 at December 31, 2009) was utilized at both
March 31, 2010 and December 31, 2009. The facility had an expiration date of March 31, 2010. The Company did not renew this facility.



11



---

##### Table of Contents

Note 9 - Supplemental Cash Flow Information

The following table provides additional cash flow information:



|                             |  |                              |       |      |   |      |  
|---------------------------- |  | ---------------------------- | ----- | ---- | - | ---- | -
|                             |  | Three months ended March 31, |      
|(in thousands)               |  | 2010                         |       | 2009 |  
|Interest paid                |  | $                            | 325   |      | $ | 335  |  
|                             |  |                              |       |      |   |      |  
|Income taxes paid (refunded) |  | $                            | 1,560 |      | $ | (436 | )
|                             |  |                              |       |      |   |      |  

Note 10 - Equity in Earnings of Affiliates

Equity in earnings of affiliates primarily reflects the Companys ownership of 33.33% of the members equity of Stanley Baker Hill, LLC
(SBH) and its ownership of 50.00% of the members equity of Hill TMG.

Stanley Baker Hill, LLC

SBH is a joint venture formed in February 2004 between Stanley Consultants, Inc., Michael Baker, Jr. Inc. and Hill. SBH has a contract for an indefinite
delivery and indefinite quantity for construction management and general architect-engineer services for facilities in Iraq with the U.S. Army Corps of Engineers.

At March 31, 2010 and December 31, 2009, the Company reported receivables totaling $1,335,000 and $3,534,000, respectively, from SBH for work
performed by the Company as a subcontractor to SBH. Such amounts were payable in accordance with the subcontract agreement between the Company and SBH.

Revenue from SBH pursuant to such subcontract agreement for the three-month periods March 31, 2010 and 2009 was $4,808,000 and $11,590,000,
respectively.

Hill TMG

Hill TMG is a joint venture formed in May 2008 between Talaat Moustafa Group Holding Co. (TMG) and Hill. Hill TMG is managing the construction
of several of TMGs largest developments in Egypt and elsewhere in the Middle East.

At March 31, 2010 and December 31, 2009,
the Company reported receivables totaling $2,329,000 and $2,215,000, respectively for work performed by the Company as a subcontractor to Hill TMG. Such amounts are payable in accordance with the subcontract agreement between the Company and Hill
TMG.

Revenue from Hill TMG pursuant to such subcontract agreement for the three-month periods ended March 31, 2010 and 2009 was $533,000
and $628,000, respectively.



12



---

##### Table of Contents

The following table summarizes the Companys equity in earnings from affiliates:

|                   |  |                              |     |      |   |      
|------------------ |  | ---------------------------- | --- | ---- | - | -----
|                   |  | Three Months Ended March 31,
|                   |  | 2010                         |     | 2009
|(In thousands)     |  |                              |     |      |   |      
|Stanley Baker Hill |  | $                            | 667 |      | $ | 1,107
|Hill TMG           |  | $                            | 154 |      |   | 74   
|                   |  |                              |     |      |   |      
|Total              |  | $                            | 821 |      | $ | 1,181
|                   |  |                              |     |      |   |      

Note 11 - Earnings per Share

Basic earnings per common share have been computed using the weighted-average number of shares of common stock outstanding during the period. Diluted
earnings per common share incorporate the incremental shares issuable upon the assumed exercise of stock options, warrants and unit purchase options, if dilutive. Dilutive shares were 608,861 shares and 121,877 shares for the three-month
periods ended March 31, 2010 and 2009, respectively. Certain stock options were excluded from the calculation of diluted earnings per common share because their effect was antidilutive. The total number of such shares excluded from diluted
earnings per common share was 434,095 and 1,038,500 shares for the three-month periods ended March 31, 2010 and 2009, respectively. The 1,000,000 common shares, which were issued in April 2010 in connection with the 2009 earn-out provision of
the merger agreement with Arpeggio, have been included, effective January 1, 2010, in both the basic and diluted weighted average shares for the three-month period ended March 31, 2010.

Note 12 - Share-Based Compensation

At
March 31, 2010, the Company had 2,645,395 options outstanding with a weighted average exercise price of $4.55. During the three-month period ended March 31, 2010, the Company granted 295,000 options which vest over a five-year period and
320,000 options which vest over a four year-period. The options have a weighted average exercise price of $6.11 and a weighted-average contractual life of 5.96 years. The aggregate fair value of the options was $1,429,000 calculated using the
Black-Scholes valuation model. The weighted average assumptions used to calculate fair value were: expected life  4.35 years; volatility  48.5% and risk free interest rate  2.30%. During the first three months of 2010, options for
2,000 shares with a weighted average exercise price of $2.45 were exercised, options for 3,000 shares with a weighted average exercise price of $7.67 were forfeited and options for 4,000 shares with a weighted average exercise price of $7.62 lapsed.

During the three-month period ended March 31, 2010, the Company issued 63,000 shares of restricted common stock to certain of its
officers under the Companys 2007 Restricted Stock Grant Plan.

During the three-month period ended March 31, 2010, employees
purchased 17,309 common shares, for an aggregate purchase price of $82,000, pursuant to the Companys 2008 Employee Stock Purchase Plan.

The Company recognized share-based compensation expense in selling, general and administrative expenses in the consolidated statement of earnings
totaling $428,000 and $465,000 for the three-month periods ended March 31, 2010 and 2009, respectively.

Note 13 - Stockholders
Equity

On November 10, 2008, the Board of Directors approved a stock repurchase program whereby the Company may purchase shares of
its common stock up to a total purchase price of $20,000,000 over the subsequent 12



13



---

##### Table of Contents

months. On August 4, 2009, the Board of Directors amended the stock repurchase program to increase the authorized amount to $40,000,000 and extend the program to December 31, 2010.
Through March 31, 2010, the Company has purchased 3,652,572 shares of its common stock for an aggregate purchase price of $15,110,000, or $4.14 per share under this program.

The following table summarizes the changes in stockholders equity during the three months ended March 31, 2010:



|                                                 |  |       |         |   |                                      |   |         |                         |  |   |       |  
|------------------------------------------------ |  | ----- | ------- | - | ------------------------------------ | - | ------- | ----------------------- |  | - | ----- | -
|                                                 |  | Total |         |   | Hill International,Inc. stockholders |   |         | Noncontrollinginterests | 
|Stockholders equity, December 31, 2009          |  | $     | 159,640 |   |                                      | $ | 155,635 |                         |  | $ | 4,005 |  
|Net income                                       |  |       | 2,623   |   |                                      |   | 2,457   |                         |  |   | 166   |  
|Other comprehensive (loss) income                |  |       | (3,622  | ) |                                      |   | (3,553  | )                       |  |   | (69   | )
|                                                 |  |       |         |   |                                      |   |         |                         |  |   |       |  
|Comprehensive (loss) income                      |  |       | (999    | ) |                                      |   | (1,096  | )                       |  |   | 97    |  
|                                                 |  |       |         |   |                                      |   |         |                         |  |   |       |  
|Additional paid in capital                       |  |       | 585     |   |                                      |   | 585     |                         |  |   |       |  
|Acquisition of additional interest in subsidiary |  |       | (166    | ) |                                      |   |        |                         |  |   | (166  | )
|                                                 |  |       |         |   |                                      |   |         |                         |  |   |       |  
|Stockholders equity, March 31, 2010             |  | $     | 159,060 |   |                                      | $ | 155,124 |                         |  | $ | 3,936 |  
|                                                 |  |       |         |   |                                      |   |         |                         |  |   |       |  

Note 14 - Income Taxes

During the three-month periods ended March 31, 2010 and 2009, the Company recognized income tax benefits of $761,000 and $1,471,000, respectively,
due to the expiration of the statute of limitations upon the filing of certain income tax returns resulting in a reduction in the reserves for uncertain tax positions.

The following table indicates the changes to the Companys uncertain tax positions for the three-month periods ended March 31, 2010 and 2009,
including interest and penalties:



|                                                       |  |                              |       |   |      |   |        |  
|------------------------------------------------------ |  | ---------------------------- | ----- | - | ---- | - | ------ | -
|                                                       |  | Three Months Ended March 31, |      
|(in thousands)                                         |  | 2010                         |       |   | 2009 |  
|Balance, beginning of period                           |  | $                            | 2,575 |   |      | $ | 3,395  |  
|Reductions due to expiration of statute of limitations |  |                              | (761  | ) |      |   | (1,471 | )
|Reduction due to interest recalculation                |  |                              |      |   |      |   | (260   | )
|Increase due to additional interest                    |  |                              | 11    |   |      |   |       |  
|                                                       |  |                              |       |   |      |   |        |  
|Balance, end of period                                 |  | $                            | 1,825 |   |      | $ | 1,664  |  
|                                                       |  |                              |       |   |      |   |        |  

The Companys policy is to record income tax related interest and penalties in income tax expense. At March 31,
2010, potential interest and penalties related to uncertain tax positions amounting to $385,000 was included in the balance above. The balance is included in Other liabilities in the consolidated balance sheet at March 31, 2010.



14



---

##### Table of Contents

The effective income tax (benefit) expense rates for the three-month periods ended March 31, 2010 and
2009 were (21.8%) and (10.3%), respectively. Excluding the effect of the reserve reductions above, the effective income tax rate would have been 10.0% and 31.0% for the three-month periods ended March 31, 2010 and 2009, respectively.

Note 15 - Business Segment Information

The Companys business segments reflect how executive management makes resource decisions and assesses its performance. The Company bases these
decisions on the type of services provided (Project Management and Construction Claims services) and secondarily by their geography (Americas, Europe, the Middle East, North Africa and Asia/Pacific).

The Project Management business segment provides extensive construction and project management services to construction owners worldwide. Such services
include program management, project management, construction management, project management oversight, staff augmentation, management consulting, and estimating and cost management services.

The Construction Claims business segment provides such services as claims consulting, litigation support, expert witness testimony, cost and damages
assessment, delay and disruption analysis, lender advisory, and adjudication services to clients worldwide.

The Company evaluates the
performance of its segments primarily on operating profit before corporate overhead allocations and income taxes.

The following tables
reflect the required disclosures for the Companys reportable segments (in thousands):

Consulting Fee Revenue:



|                    |  |                              |        |  |       |   |  |   |        |  |       |  
|------------------- |  | ---------------------------- | ------ |  | ----- | - |  | - | ------ |  | ----- | -
|                    |  | Three months ended March 31, |       
|                    |  | 2010                         |        |  | 2009  |  
|Project Management  |  | $                            | 67,329 |  | 73.2  | % |  | $ | 69,700 |  | 75.6  | %
|Construction Claims |  |                              | 24,607 |  | 26.8  | % |  |   | 22,448 |  | 24.4  | %
|                    |  |                              |        |  |       |   |  |   |        |  |       |  
|Total               |  | $                            | 91,936 |  | 100.0 | % |  | $ | 92,148 |  | 100.0 | %
|                    |  |                              |        |  |       |   |  |   |        |  |       |  



15



---

##### Table of Contents

Total Revenue:



|                    |  |                              |         |  |       |   |  |   |         |  |       |  
|------------------- |  | ---------------------------- | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|                    |  | Three months ended March 31, |        
|                    |  | 2010                         |         |  | 2009  |  
|Project Management  |  | $                            | 79,091  |  | 75.7  | % |  | $ | 80,769  |  | 77.7  | %
|Construction Claims |  |                              | 25,381  |  | 24.3  | % |  |   | 23,165  |  | 22.3  | %
|                    |  |                              |         |  |       |   |  |   |         |  |       |  
|Total               |  | $                            | 104,472 |  | 100.0 | % |  | $ | 103,934 |  | 100.0 | %
|                    |  |                              |         |  |       |   |  |   |         |  |       |  

Operating Profit:



|                                                           |  |                              |        |   |      |   |        |  
|---------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                           |  | Three months ended March 31, |       
|                                                           |  | 2010                         |        |   | 2009 |  
|Project Management before equity in earnings of affiliates |  | $                            | 4,306  |   |      | $ | 7,953  |  
|Equity in earnings of affiliates                           |  |                              | 821    |   |      |   | 1,181  |  
|                                                           |  |                              |        |   |      |   |        |  
|                                                           |  |                              | 5,127  |   |      |   | 9,134  |  
|Construction Claims                                        |  |                              | 4,221  |   |      |   | 2,323  |  
|Corporate Expenses                                         |  |                              | (6,649 | ) |      |   | (7,116 | )
|                                                           |  |                              |        |   |      |   |        |  
|Total                                                      |  | $                            | 2,699  |   |      | $ | 4,341  |  
|                                                           |  |                              |        |   |      |   |        |  

Depreciation and Amortization Expense:



|                    |  |                              |       |      |   |      
|------------------- |  | ---------------------------- | ----- | ---- | - | -----
|                    |  | Three months ended March 31,
|                    |  | 2010                         |       | 2009
|Project Management  |  | $                            | 1,379 |      | $ | 953  
|Construction Claims |  |                              | 538   |      |   | 550  
|                    |  |                              |       |      |   |      
|Subtotal segments   |  |                              | 1,917 |      |   | 1,503
|Corporate           |  |                              | 277   |      |   | 224  
|                    |  |                              |       |      |   |      
|Total               |  | $                            | 2,194 |      | $ | 1,727
|                    |  |                              |       |      |   |      



16



---

##### Table of Contents

Consulting Fee Revenue by Geographic Region:



|             |  |                              |        |  |       |   |  |   |        |  |       |  
|------------ |  | ---------------------------- | ------ |  | ----- | - |  | - | ------ |  | ----- | -
|             |  | Three months ended March 31, |       
|             |  | 2010                         |        |  | 2009  |  
|Americas     |  | $                            | 23,273 |  | 25.3  | % |  | $ | 19,235 |  | 20.8  | %
|Europe       |  |                              | 27,204 |  | 29.6  | % |  |   | 27,108 |  | 29.4  | %
|Middle East  |  |                              | 26,295 |  | 28.6  | % |  |   | 34,421 |  | 37.4  | %
|North Africa |  |                              | 13,857 |  | 15.1  | % |  |   | 8,933  |  | 9.7   | %
|Asia/Pacific |  |                              | 1,307  |  | 1.4   | % |  |   | 2,451  |  | 2.7   | %
|             |  |                              |        |  |       |   |  |   |        |  |       |  
|Total        |  | $                            | 91,936 |  | 100.0 | % |  | $ | 92,148 |  | 100.0 | %
|             |  |                              |        |  |       |   |  |   |        |  |       |  
|U.S.         |  | $                            | 22,737 |  | 24.7  | % |  | $ | 18,351 |  | 19.9  | %
|Non -U.S.    |  |                              | 69,199 |  | 75.3  | % |  |   | 73,797 |  | 80.1  | %
|             |  |                              |        |  |       |   |  |   |        |  |       |  
|Total        |  | $                            | 91,936 |  | 100.0 | % |  | $ | 92,148 |  | 100.0 | %
|             |  |                              |        |  |       |   |  |   |        |  |       |  

Total Revenue by Geographic Region:



|             |  |                              |         |  |       |   |  |   |         |  |       |  
|------------ |  | ---------------------------- | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|             |  | Three months ended March 31, |        
|             |  | 2010                         |         |  | 2009  |  
|Americas     |  | $                            | 33,105  |  | 31.7  | % |  | $ | 29,435  |  | 28.3  | %
|Europe       |  |                              | 28,621  |  | 27.4  | % |  |   | 27,935  |  | 26.9  | %
|Middle East  |  |                              | 27,495  |  | 26.3  | % |  |   | 34,868  |  | 33.5  | %
|North Africa |  |                              | 13,921  |  | 13.3  | % |  |   | 9,138   |  | 8.8   | %
|Asia/Pacific |  |                              | 1,330   |  | 1.3   | % |  |   | 2,558   |  | 2.5   | %
|             |  |                              |         |  |       |   |  |   |         |  |       |  
|Total        |  | $                            | 104,472 |  | 100.0 | % |  | $ | 103,934 |  | 100.0 | %
|             |  |                              |         |  |       |   |  |   |         |  |       |  
|U.S.         |  | $                            | 32,569  |  | 31.2  | % |  | $ | 28,535  |  | 27.5  | %
|Non -U.S.    |  |                              | 71,903  |  | 68.8  | % |  |   | 75,399  |  | 72.5  | %
|             |  |                              |         |  |       |   |  |   |         |  |       |  
|Total        |  | $                            | 104,472 |  | 100.0 | % |  | $ | 103,934 |  | 100.0 | %
|             |  |                              |         |  |       |   |  |   |         |  |       |  

During a review of the Companys client information system in the fourth quarter of 2009, management questioned the
classification of certain clients. Upon further investigation, it was determined that a particular foreign client, who had been initially identified as private sector, was actually a foreign government-backed entity. Accordingly, the Company has
revised its allocation of revenues in the following two tables. The amounts for 2009 have been changed to conform to the new presentation.



17



---

##### Table of Contents

Consulting Fee Revenue By Client Type:



|                                          |  |                              |        |  |       |   |  |   |        |  |       |  
|----------------------------------------- |  | ---------------------------- | ------ |  | ----- | - |  | - | ------ |  | ----- | -
|                                          |  | Three months ended March 31, |       
|                                          |  | 2010                         |        |  | 2009  |  
|U.S. federal government                   |  | $                            | 7,530  |  | 8.2   | % |  | $ | 14,095 |  | 15.3  | %
|U.S. state, local and regional government |  |                              | 11,066 |  | 12.0  | % |  |   | 10,003 |  | 10.9  | %
|Foreign government                        |  |                              | 26,151 |  | 28.5  | % |  |   | 21,941 |  | 23.8  | %
|Private sector                            |  |                              | 47,189 |  | 51.3  | % |  |   | 46,109 |  | 50.0  | %
|                                          |  |                              |        |  |       |   |  |   |        |  |       |  
|Total                                     |  | $                            | 91,936 |  | 100.0 | % |  | $ | 92,148 |  | 100.0 | %
|                                          |  |                              |        |  |       |   |  |   |        |  |       |  

Total Revenue By Client Type:



|                                          |  |                              |         |  |       |   |  |   |         |  |       |  
|----------------------------------------- |  | ---------------------------- | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|                                          |  | Three months ended March 31, |        
|                                          |  | 2010                         |         |  | 2009  |  
|U.S. federal government                   |  | $                            | 7,803   |  | 7.5   | % |  | $ | 14,437  |  | 13.9  | %
|U.S. state, local and regional government |  |                              | 19,437  |  | 18.6  | % |  |   | 15,395  |  | 14.8  | %
|Foreign government                        |  |                              | 26,740  |  | 25.6  | % |  |   | 22,305  |  | 21.5  | %
|Private sector                            |  |                              | 50,492  |  | 48.3  | % |  |   | 51,797  |  | 49.8  | %
|                                          |  |                              |         |  |       |   |  |   |         |  |       |  
|Total                                     |  | $                            | 104,472 |  | 100.0 | % |  | $ | 103,934 |  | 100.0 | %
|                                          |  |                              |         |  |       |   |  |   |         |  |       |  

Property, Plant and Equipment, Net by Geographic Location:



|             |  |                |        |                   |   |       
|------------ |  | -------------- | ------ | ----------------- | - | ------
|             |  | March 31, 2010 |        | December 31, 2009
|Americas     |  | $              | 6,786  |                   | $ | 6,611 
|Europe       |  |                | 2,376  |                   |   | 2,628 
|Middle East  |  |                | 1,823  |                   |   | 1,852 
|North Africa |  |                | 229    |                   |   | 232   
|Asia Pacific |  |                | 234    |                   |   | 253   
|             |  |                |        |                   |   |       
|Total        |  | $              | 11,448 |                   | $ | 11,576
|             |  |                |        |                   |   |       
|U.S.         |  | $              | 6,754  |                   | $ | 6,611 
|Non -U.S.    |  |                | 4,694  |                   |   | 4,965 
|             |  |                |        |                   |   |       
|Total        |  | $              | 11,448 |                   | $ | 11,576
|             |  |                |        |                   |   |       



18



---

##### Table of Contents

Note 16 - Concentrations

The Company had one client that accounted for 12% of total revenue for the three-month period ended March 31, 2010 and one client that accounted for
11% of total revenue for the three-month period ended March 31, 2009.

The Company had one client that accounted for 14% of consulting
fee revenue for the three-month period ended March 31, 2010 and one client that accounted for 13% of consulting fee revenue for the three-month period ended March 31, 2009.

One client accounted for 18% of accounts receivable as of March 31, 2010.

The Company has numerous contracts with U.S. federal government agencies that collectively accounted for 8% and 14% of total revenue during the
three-month periods ended March 31, 2010 and 2009, respectively.

Note 17 - Commitments and Contingencies

Litigation

On July 16, 2009, Al
Areen Desert Resort Holding Company (Al Areen) filed a complaint with the Ministry of Justice & Islamic Affairs in the Kingdom of Bahrain against the Company alleging breach of contract and other causes of action in connection
with its performance of a construction project known as Al Areen Desert Spa and Resort (the Project), seeking the sum of approximately 10,200,000 Bahraini Dinars (approximately $27,052,000 at March 31, 2010) in damages. The Company
provided project management services on the Project and Al Areen failed to pay the Company 679,000 Bahraini Dinars (approximately $1,801,000 at March 31, 2010) for services rendered on the Project. The Company served notice of termination on
April 28, 2009. On September 26, 2009, the Company filed a Request for Arbitration with the International Chamber of Commerce, International Court of Arbitration, seeking the sum of 679,000 Bahraini Dinars. The Company has reserved
approximately $531,000 against the receivable; however, the Company believes that Al Areens claim is without merit and, based on the Companys current understanding and evaluation of the relevant facts and circumstances, no accrual has
been made because the Company considers the chance of loss to be remote.

General Litigation

From time to time, the Company is a defendant or plaintiff in various legal actions which arise in the normal course of business. As such the Company is
required to assess the likelihood of any adverse outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of the provision required for these commitments and contingencies, if any, which would be
charged to earnings, is made after careful analysis of each matter. The provision may change in the future due to new developments or changes in circumstances. Changes in the provision could increase or decrease the Companys earnings in the
period the changes are made. It is the opinion of management, after consultation with legal counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Companys financial condition, results of
operations or cash flows.



19



---

##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

We make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We use forward-looking words such as
may, expect, anticipate, contemplate, believe, estimate, intend, and continue or similar words. You should read statements that contain these words
carefully because they discuss future expectations, contain projections of future results of operations or financial condition or state other forward-looking information. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. Examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by us in such forward-looking statements include those described in
Part I, Item 1A Risk Factors of our 2009 Form 10-K. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements included herein
attributable to us are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligations to update these
forward-looking statements.

We provide fee-based project management and construction claims services to clients
worldwide, but primarily in the Americas, Europe, the Middle East, North Africa and Asia/Pacific. Our clients include the United States and other national governments and their agencies, state and local governments and their agencies, and the
private sector. Hill is organized into two key operating segments: the Project Management Group and the Construction Claims Group.

We are one of the leading firms in the world in both the project management and construction claims consulting businesses. We are a
global company with approximately 2,400 employees operating from 80 offices in more than 30 countries.

We derive our revenues
from fees for professional services. As a service company we are labor intensive rather than capital intensive. Our revenue is driven by our ability to attract and retain qualified and productive employees, identify business opportunities, secure
new and renew existing client contracts, provide outstanding services to our clients and execute projects successfully. Our income from operations is derived from our ability to generate revenue and collect cash under our contracts in excess of
direct labor and other direct costs of executing the projects, subcontractors and other reimbursable costs and selling, general and administrative costs.

In addition, we believe there are high barriers to entry for new competitors, especially in the project management market. We compete for
business based on reputation and past experience, including client requirements for substantial similar project and claims work. We have developed significant long-standing relationships which bring us repeat business and would be very difficult to
replicate. We have an excellent reputation for developing and rewarding employees, which allows us to attract and retain superior professionals.

Critical Accounting Policies

The
Companys interim financial statements were prepared in accordance with generally accepted accounting principles, which require management to make subjective decisions, assessments and estimates about the effect of matters that are inherently
uncertain. As the number of variables and assumptions affecting the judgment increases, such judgments become even more subjective. While management believes its assumptions are reasonable and appropriate, actual results may be materially different
than estimated. The critical accounting estimates and assumptions have not materially changed from those identified in the Companys 2009 Annual Report on Form 10-K filed March 12, 2010 with the Securities and Exchange Commission.



20



---

##### Table of Contents

We operate through two segments: the Project Management Group and the Construction Claims Group.
Reimbursable expenses are reflected in equal amounts in both total revenue and total direct expenses. Because these revenues/costs are subject to significant fluctuation from year to year, we measure the performance of many of our key operating
metrics as a percentage of consulting fee revenue (CFR), as we believe that this is a better and more consistent measure of operating performance than total revenue.

Three Months Ended March 31, 2010 Compared to

Three Months Ended March 31, 2009

Results of Operations

Consulting Fee
Revenue (CFR)



|                    |  |                              |        |  |       |   |  |        |        |  |       |   |  |   |        |   |  |      |   
|------------------- |  | ---------------------------- | ------ |  | ----- | - |  | ------ | ------ |  | ----- | - |  | - | ------ | - |  | ---- | --
|                    |  | Three months ended March 31, |        |  |       |   |  |        |       
|(in thousands)      |  | 2010                         |        |  | 2009  |   |  | Change |       
|Project Management  |  | $                            | 67,329 |  | 73.2  | % |  | $      | 69,700 |  | 75.6  | % |  | $ | (2,371 | ) |  | (3.4 | %)
|Construction Claims |  |                              | 24,607 |  | 26.8  | % |  |        | 22,448 |  | 24.4  | % |  |   | 2,159  |   |  | 9.6  | % 
|                    |  |                              |        |  |       |   |  |        |        |  |       |   |  |   |        |   |  |      |   
|Total               |  | $                            | 91,936 |  | 100.0 | % |  | $      | 92,148 |  | 100.0 | % |  | $ | (212   | ) |  | (0.2 | %)
|                    |  |                              |        |  |       |   |  |        |        |  |       |   |  |   |        |   |  |      |   

Hills CFR decreased 0.2% to $91,936,000 in the first quarter of 2010 from $92,148,000 in the first quarter
of 2009. This was comprised of an organic 3.5% decrease partially offset by an increase of 3.3% from acquisitions. The organic decrease is primarily due to a decrease in the Middle East, partially offset by an increase in North Africa.

During the first quarter of 2010, Hills project management CFR decrease of 3.4% included an organic decrease of 7.8% primarily in the Middle East
partially offset by a 4.4% increase due to the acquisitions of Boyken International, Inc. (Boyken) and TRS Consultants, Inc. (TRS). The dollar decrease in project management CFR consisted of a $6,483,000 decrease in foreign
projects and an increase of $4,109,000 in domestic projects. The decrease in foreign project management CFR was primarily due to decreases of $6,782,000 in Iraq, where the Iraq Reconstruction Program began to wind down, and $2,561,000 in the rest of
the Middle East where work in Dubai decreased due to poor economic conditions. This was partially offset by an increase of $4,924,000 in North Africa due to expansions of contracts in Libya. The increase in domestic projects consisted primarily of
the acquisitions of Boyken and TRS, along with increases in the New York and the Southwest regions.

During the first quarter of 2010,
Hills construction claims CFR increase of 9.6% was all organic. The primary increase in construction claims took place in the Middle East where some large projects started in late 2009 and early 2010 and in the United Kingdom where a
$2,000,000 contingency fee was recognized due to the successful resolution of one clients significant claim. This was partially offset by a decrease in Asia/Pacific.



21



---

##### Table of Contents

Reimbursable Expenses



|                    |  |                              |        |  |       |   |  |        |        |  |       |   |  |   |     |  |     |  
|------------------- |  | ---------------------------- | ------ |  | ----- | - |  | ------ | ------ |  | ----- | - |  | - | --- |  | --- | -
|                    |  | Three months ended March 31, |        |  |       |   |  |       
|(in thousands)      |  | 2010                         |        |  | 2009  |   |  | Change |       
|Project Management  |  | $                            | 11,763 |  | 93.8  | % |  | $      | 11,069 |  | 93.9  | % |  | $ | 694 |  | 6.3 | %
|Construction Claims |  |                              | 773    |  | 6.2   | % |  |        | 717    |  | 6.1   | % |  |   | 56  |  | 7.8 | %
|                    |  |                              |        |  |       |   |  |        |        |  |       |   |  |   |     |  |     |  
|Total               |  | $                            | 12,536 |  | 100.0 | % |  | $      | 11,786 |  | 100.0 | % |  | $ | 750 |  | 6.4 | %
|                    |  |                              |        |  |       |   |  |        |        |  |       |   |  |   |     |  |     |  

Reimbursable expenses consist of amounts paid to subcontractors and other third parties and travel and other
job-related expenses that are contractually reimbursable from clients. These items are reflected as separate line items in both our revenue and cost of services captions in our consolidated statements of earnings. The increase in project management
reimbursable expenses was due primarily to increased use of subcontractors of $635,000 in the Southwest Region, $741,000 in Europe, and $786,000 in the Middle East, partially offset by decreases of $917,000 in New York and $460,000 in Pennsylvania.

Cost of Services



|                    |  |                              |        |  |       |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |      |   |  |      |   
|------------------- |  | ---------------------------- | ------ |  | ----- | - | -------- | ------ | - |  | - | ------ |  | ----- | -------- |  | ---- | - |  | - | ---- | - |  | ---- | --
|                    |  | Three months ended March 31, |        |  |       |   |          |        |  
|                    |  | 2010                         |        |  | 2009  |   |          | Change |  
|(in thousands)      |  |                              |        |  |       |   | % of CFR |        |   |  |   |        |  |       | % of CFR |  |      |   |  |   |      |  
|Project Management  |  | $                            | 42,983 |  | 80.9  | % |          | 63.8   | % |  | $ | 42,430 |  | 80.2  | %        |  | 60.9 | % |  | $ | 553  |   |  | 1.3  | % 
|Construction Claims |  |                              | 10,130 |  | 19.1  | % |          | 41.2   | % |  |   | 10,462 |  | 19.8  | %        |  | 46.6 | % |  |   | (332 | ) |  | (3.2 | %)
|                    |  |                              |        |  |       |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |      |   |  |      |   
|Total               |  | $                            | 53,113 |  | 100.0 | % |          | 57.8   | % |  | $ | 52,892 |  | 100.0 | %        |  | 57.4 | % |  | $ | 221  |   |  | 0.4  | % 
|                    |  |                              |        |  |       |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |      |   |  |      |   

Cost of services consists of labor expenses for time charged directly to contracts and non-reimbursable job
related travel and out-of-pocket expenses. The increase in project management cost of services is primarily due to an increase in direct costs of $2,477,000 primarily in North Africa along with an increase in work in that area and a decrease of
$1,925,000 in direct labor primarily in Iraq due to the anticipated decrease in work volume.

The decrease in the cost of services for
construction claims was due primarily to a decrease of $366,000 in direct labor for Asia/Pacific.

Gross Profit



|                    |  |                              |        |  |       |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |        |   |  |       |   
|------------------- |  | ---------------------------- | ------ |  | ----- | - | -------- | ------ | - |  | - | ------ |  | ----- | -------- |  | ---- | - |  | - | ------ | - |  | ----- | --
|                    |  | Three months ended March 31, |        |  |       |   |          |        |  
|                    |  | 2010                         |        |  | 2009  |   |          | Change |  
|(in thousands)      |  |                              |        |  |       |   | % of CFR |        |   |  |   |        |  |       | % of CFR |  |      |   |  |   |        |  
|Project Management  |  | $                            | 24,346 |  | 62.7  | % |          | 36.2   | % |  | $ | 27,270 |  | 69.5  | %        |  | 39.1 | % |  | $ | (2,924 | ) |  | (10.7 | %)
|Construction Claims |  |                              | 14,477 |  | 37.3  | % |          | 58.8   | % |  |   | 11,986 |  | 30.5  | %        |  | 53.4 | % |  |   | 2,491  |   |  | 20.8  | % 
|                    |  |                              |        |  |       |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |        |   |  |       |   
|Total               |  | $                            | 38,823 |  | 100.0 | % |          | 42.2   | % |  | $ | 39,256 |  | 100.0 | %        |  | 42.6 | % |  | $ | (433   | ) |  | (1.1  | %)
|                    |  |                              |        |  |       |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |        |   |  |       |   

The decrease in project management gross profit included decreases of $4,595,000 from foreign operations,
partially offset by increases of $1,631,000 in domestic operations. The decrease in foreign operations included decreases of $2,228,000 in Iraq, $2,142,000 in the Middle East, $809,000 in Poland and $983,000 in the United Kingdom all driven by
decreased CFR and partially offset by an increase of $1,335,000 in North Africa. The increase in domestic operations included $1,448,000 for Boyken and TRS.



22



---

##### Table of Contents

The increase in construction claims gross profit of $2,491,000 included increases of $2,400,000 in the
United Kingdom, primarily due to the contingency fee noted above, and $824,000 in the Middle East, partially offset by a decrease in Asia/Pacific.

Selling, General and Administrative

(SG&A) Expenses



|               |  |                              |        |          |      |   |  |        |          |  |      |   |  |   |     |  |     |  
|-------------- |  | ---------------------------- | ------ | -------- | ---- | - |  | ------ | -------- |  | ---- | - |  | - | --- |  | --- | -
|               |  | Three months ended March 31, |        |          |      |   |  |       
|               |  | 2010                         |        |          | 2009 |   |  | Change |         
|(in thousands) |  |                              |        | % of CFR |      |   |  |        | % of CFR |  |      |   |  |   |    
|SG&A Expenses  |  | $                            | 36,945 |          | 40.2 | % |  | $      | 36,096   |  | 39.2 | % |  | $ | 849 |  | 2.4 | %
|               |  |                              |        |          |      |   |  |        |          |  |      |   |  |   |     |  |     |  

The increase in SG&A of $849,000 included an increase of $1,487,000 from Boyken and TRS partially offset by a
decrease of $638,000 from the remaining operations.

The significant components of the change in SG&A are as follows:



| |  |  | An increase in unapplied and indirect labor expense of $1,361,000 primarily due to $1,019,000 from Boyken and TRS.
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in amortization expense of $342,000 primarily due to $213,000 for Boyken and TRS and an increase of $98,000 for Gerens due to the December
2009 purchase of an additional 4% interest in that company.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A decrease of $518,000 for bad debt expense primarily from the Middle East and North Africa where several accounts were reserved during 2009.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A decrease of $302,000 in professional services including legal and accounting as a result of cost cutting efforts initiated in 2009.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------

Equity in Earnings of Affiliates

Our share of the earnings of affiliates decreased $360,000 from $1,181,000 in the first quarter of 2009 to $821,000 in the first quarter of 2010,
primarily due to decreased work in Iraq by SBH and the completion of several fixed-price task orders.

Our share of the earnings of SBH
decreased $440,000 from $1,107,000 in the first quarter of 2009 to $667,000 in the first quarter of 2010. SBH is a joint venture between Stanley Consultants, Inc. (Stanley), Michael Baker, Jr., Inc. (Baker) and us. Stanley,
Baker and we each own an equal one-third interest in SBH. SBH has a contract for an indefinite delivery and indefinite quantity for construction management and general architect-engineer services for facilities in Iraq with the U.S. Army Corps of
Engineers. Existing task orders under the contract extend until September 2010, but those task orders had a lower run rate during the first quarter of 2010 than was experienced in the same period of 2009.

Our share of the earnings of Hill TMG was $154,000 in the first quarter of 2010 compared with $74,000 in the first quarter of 2009, an increase of
$80,000. Hill TMG is a joint venture formed in May 2008 between Talaat Moustafa Group Holding Co. (TMG) and Hill. Hill TMG is managing the construction of several of TMGs largest developments in Egypt and elsewhere in the Middle
East.



23



---

##### Table of Contents

Operating Profit



|                                                           |  |                              |        |   |          |      |   |        |   |        |          |  |      |   |  |   |        |   |  |       |   
|---------------------------------------------------------- |  | ---------------------------- | ------ | - | -------- | ---- | - | ------ | - | ------ | -------- |  | ---- | - |  | - | ------ | - |  | ----- | --
|                                                           |  | Three months ended March 31, |        |   |          |      |   |        |  
|                                                           |  | 2010                         |        |   | 2009     |      |   | Change |  
|(in thousands)                                             |  |                              |        |   | % of CFR |      |   |        |   |        | % of CFR |  |      |   |  |   |        |  
|Project Management before equity in earnings of affiliates |  | $                            | 4,306  |   |          | 6.4  | % |        | $ | 7,953  |          |  | 11.4 | % |  | $ | (3,647 | ) |  | (45.9 | %)
|Equity in earnings of affiliates                           |  |                              | 821    |   |          | 1.2  | % |        |   | 1,181  |          |  | 1.7  | % |  |   | (360   | ) |  | (30.5 | %)
|                                                           |  |                              |        |   |          |      |   |        |   |        |          |  |      |   |  |   |        |   |  |       |   
|Total Projects                                             |  |                              | 5,127  |   |          | 7.6  | % |        |   | 9,134  |          |  | 13.1 | % |  |   | (4,007 | ) |  | (43.9 | %)
|Construction Claims                                        |  |                              | 4,221  |   |          | 17.2 | % |        |   | 2,324  |          |  | 10.4 | % |  |   | 1,897  |   |  | 81.6  | % 
|Corporate                                                  |  |                              | (6,649 | ) |          |      |   |        |   | (7,117 | )        |  |      |   |  |   | 468    |   |  | (6.6  | %)
|                                                           |  |                              |        |   |          |      |   |        |   |        |          |  |      |   |  |   |        |   |  |       |   
|Total                                                      |  | $                            | 2,699  |   |          | 2.9  | % |        | $ | 4,341  |          |  | 4.7  | % |  | $ | (1,642 | ) |  | (37.8 | %)
|                                                           |  |                              |        |   |          |      |   |        |   |        |          |  |      |   |  |   |        |   |  |       |   

Operating profit decreased $1,642,000 or 37.8%, to $2,699,000 in the first quarter of 2010, from $4,341,000 in the
same period of 2009.

The decrease in project management operating profit primarily included decreases of $2,723,000 in Iraq and $1,044,000 in
the Middle East in line with the decreases in CFR and equity in earnings of affiliates discussed above.

The increase in construction claims
operating profit included increases in the United Kingdom and Middle East, offset by decreases in Europe and Asia/Pacific.

The decrease in
Corporate expenses primarily consisted of reduced professional fees for legal and accounting services and information technology expenses due to cost-cutting efforts.

Interest Expense, net

Net interest
expense increased $332,000 to $545,000 in the three-month period ended March 31, 2010 as compared with $213,000 in the three-month period ended March 31, 2009, primarily due to increased borrowings.

Income Taxes

For the three-month
periods ended March 31, 2010 and 2009, we recognized net tax benefits of $469,000 and $426,000, respectively, principally relating to tax benefits of $761,000 and $1,471,000, respectively, arising from the expiration of the statute of
limitations upon the filing of certain income tax returns. The Company recognized the tax benefits as a reduction in the reserves for uncertain tax positions.

The effective income tax (benefit) expense rates for the three-month periods ended March 31, 2010 and 2009 were (21.8%) and (10.3%),
respectively. Excluding the effect of the reserve reduction noted above, the effective income tax expense rate would have been 10.0% and 31.0% for the three-month periods ended March 31, 2010 and 2009, respectively. The difference between 2010
and 2009 was related principally to the tax benefit of the U.S. net operating loss at a 41.5% income tax rate.



24



---

##### Table of Contents

Net Earnings

Net earnings attributable to Hill International, Inc. for the first quarter of 2010 were $2,457,000, or $0.06 per diluted common share based upon
40,922,000 diluted common shares outstanding, as compared to net earnings for the first quarter of 2009 of $4,403,000, or $0.11 per diluted common share based upon 41,119,000 diluted common shares outstanding. Net earnings were unfavorably affected
by lower CFR, the decrease in gross profit percentages, lower equity in earnings of affiliates and the impact of exchange rates as the U.S. dollar strengthened (compared to the same period in 2009) against the British pound and the Euro.

Liquidity and Capital Resources

The Company has historically funded its business activities with cash flow from operations and borrowings under various credit facilities.

Credit Facilities

The Company has a
credit agreement (the Credit Agreement), dated as of June 30, 2009, among us, Bank of America, N.A., Capital One, N.A., The PrivateBank and Trust Company, and PNC Bank N.A., which provides for borrowings of up to $100,000,000. The
Credit Agreement also provides for a letter of credit sub-facility of up to $30,000,000. Obligations under the Credit Agreement are collateralized by all of the Companys assets, including, without limitation, accounts receivable, equipment,
securities, financial assets and the proceeds of the foregoing, as well as by a pledge of 65% of the outstanding capital stock of our wholly owned subsidiary, Hill International S.A. The Credit Agreement expires on June 30, 2012.

The Credit Agreement provides for Base Rate loans and Eurodollar Rate loans. Base Rate loans bear interest at a fluctuating rate per annum equal to the
sum of (a) the highest of (i) the Federal Funds Rate plus 0.5%, (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its prime rate and (iii) the Eurodollar
Rate plus 1.00%, plus (b) an Applicable Rate which may vary between 1.75% and 2.50% depending on the Companys consolidated leverage ratio at the time of the borrowing. Eurodollar Rate loans bear interest at a rate per annum equal to the
British Bankers Association LIBOR Rate plus an Applicable Rate which may vary between 2.75% and 3.50% depending on the Companys consolidated leverage ratio at the time of the borrowing.

The Credit Agreement contains covenants regarding the Companys consolidated net worth, consolidated leverage ratio, consolidated fixed charge
coverage ratio and the ratio of consolidated billed and unbilled accounts receivable to consolidated senior indebtedness, as well as other covenants and certain restrictions on the incurrence of debt, on the making of investments, on the payment of
dividends, on transactions with affiliates and other affirmative and negative covenants and events of default customary for facilities of its type.

At March 31, 2010, the Company had $7,242,000 in outstanding letters of credit which reduced availability under the credit facility. Due to the
limitations of the ratio of the Companys consolidated billed and unbilled accounts receivable to consolidated senior indebtedness, total remaining availability at March 31, 2010 was $34,663,000.

We currently have four additional credit facilities with international financial institutions as follows:

The Company has a revolving credit facility with Barclays Bank PLC which provides for borrowings of up to £500,000 (approximately $754,000 at
March 31, 2010), with interest at 2.00% plus The Bank of England rate of 0.50% (or 2.50%) at March 31, 2010, collateralized by cross guarantees of various United Kingdom companies. There were no outstanding borrowings at March 31,
2010. The loan has an indeterminate term and is subject to annual review by the bank.



25



---

##### Table of Contents

The Company maintains a credit facility with a bank in the Middle East for 11,500,000 AED (approximately
$3,131,000 at March 31, 2010) collateralized by certain overseas receivables. The interest rate on this facility is 3.0% plus the one-month Emirates InterBank Offer Rate (EIBOR), which was 1.78% (or 4.78%) at March 31, 2010,
but no less than 5.50%. The facility also allows for up to 150,000,000 AED (approximately $40,836,000) in Letters of Guarantee of which 62,233,000 AED (approximately $16,942,000) was utilized at March 31, 2010. This facility expires on
August 27, 2010.

The Company maintains a revolving credit facility with a European bank for up to 1,000,000 (approximately
$1,343,000 at March 31, 2010) with interest rates at 2.50% plus the Banks prime rate of 6.00% (or 8.50%) at March 31, 2010 collateralized by certain assets of the Company. At March 31, 2010 there were no outstanding borrowings
under this facility which expires on April 30, 2011.

The Company maintains an unsecured credit facility with a bank in Spain for
750,000 (approximately $1,007,000 March 31, 2010). The interest rate on that facility is the three month EURIBOR rate which at March 31, 2010 was 0.63%, plus 1.75% (or 2.38%) but no less than 4.00%. At March 31, 2010, there were
no outstanding borrowings under this facility which expires on December 24, 2011.

The Company maintained another credit facility with
another European bank that allowed for 373,000 (approximately $501,000) of bank guarantees at March 31, 2010 and was fully utilized at March 31, 2010. The facility had an expiration date of March 31, 2010. The Company did not
renew this facility.

Additional Capital Requirements

We experience lags between our receipt of fees from our clients and our payment of our costs. In order to continue our growth, we maintain the credit
arrangements noted above. However, we may seek additional debt financing beyond these amounts.

Sources of Additional Capital

At March 31, 2010, our cash and cash equivalents amounted to approximately $30,089,000. We cannot provide any assurance that
additional sources of financing will be available, or if available, that the financing will be on terms acceptable to us.

Cash Flow
Activity During the Three Months Ended March 31, 2010

For the three months ended March 31, 2010, our cash and cash equivalents
decreased by $834,000 to $30,089,000. Cash used in operations was $8,988,000, cash used in investing activities was $554,000 and cash provided by financing activities was $7,109,000. We also experienced an increase in cash of $1,599,000 from the
effect of foreign currency exchange rate fluctuations.

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2010 was $8,988,000. Cash provided by operations is attributable to
consolidated net earnings of $2,623,000 for the period adjusted by non-cash items included in net income and working capital changes such as:



| |  |  | Depreciation and amortization of $2,194,000;
| | - |  | --------------------------------------------



26



---

##### Table of Contents

| |  |  | Bad debt expense of $324,000;
| | - |  | -----------------------------



| |  |  | Equity in earnings of affiliates of ($821,000);
| | - |  | -----------------------------------------------



| |  |  | A deferred tax provision of ($1,072,000);
| | - |  | -----------------------------------------



| |  |  | Stock based compensation expense of $428,000.
| | - |  | ---------------------------------------------

Working capital changes which increased cash provided from operations included the following:



| |  |  | A decrease in accounts receivable - affiliates of $2,401,000 due to the timing of collections from SBH and Hill TMG;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in accounts payable and accrued expenses of $1,259,000.
| | - |  | -------------------------------------------------------------------

Working capital changes which decreased cash provided from operations included the following:



| |  |  | An increase in accounts receivable of $6,137,000 due to delays in payments from North Africa and the Middle East;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | An increase in prepaid expenses and other current assets of $2,380,000 due to the timing of payments for various selling, general and administrative
expenses;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A decrease in deferred revenue of $3,865,000, principally due to the timing of advance payments on projects overseas.
| | - |  | ---------------------------------------------------------------------------------------------------------------------

Investing Activities

Net cash used in investing activities was $554,000. We spent $1,136,000 to purchase computers, office equipment, furniture and fixtures. We also purchased
for $168,000 an additional interest from a minority shareholder of one of our subsidiaries. We received $750,000 in distributions from SBH.

Financing Activities

Net cash provided by financing activities was $7,109,000. We received $8,000,000 in net borrowings under our credit facilities. We made payments on notes
payable amounting to $1,881,000. Due to bank increased $893,000 due to the timing of certain payments which were disbursed but not immediately funded by the bank. We received proceeds amounting to $97,000 from the sale of our common stock through
our 2006 Employee Stock Purchase Plan.

Recent Accounting Pronouncements

Effective January 1, 2010, we adopted a new standard pertaining to the consolidation of variable interest entities that requires an analysis to
determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This standard also requires an ongoing reassessment of the primary beneficiary of the variable interest entity and eliminates the
quantitative approach previously required for determining whether an entity is the primary beneficiary. The adoption of this standard did not have a material impact on our consolidated financial statements.

Effective January 1, 2010 we also adopted a new standard pertaining to accounting for transfers of financial assets that removes the concept of a
qualifying special-purpose entity from accounting for transfers and servicing of financial assets and extinguishment of liabilities. This standard also clarifies the requirements for transfers of financial assets that are eligible for sale
accounting. The adoption of this standard did not have a material impact on our consolidated financial statements.



27



---

##### Table of Contents

Quarterly Fluctuations

Our operating results vary from period to period as a result of the timing of projects and assignments. We do not believe that our business is seasonal.

Backlog

We believe a strong
indicator of our future performance is our backlog of uncompleted projects under contract or awarded. Our backlog represents managements estimate of the amount of contracts and awards in hand that we expect to result in future consulting fees.
Project management backlog is evaluated by management, on a project-by-project basis and is reported for each period shown based upon the binding nature of the underlying contract, commitment or letter of intent, and other factors, including the
economic, financial and regulatory viability of the project and the likelihood of the contract being extended, renewed or cancelled. Construction claims backlog is based largely on managements estimates of future revenue based on known
construction claims assignments and historical results for new work. Because a significant number of construction claims may be awarded and completed within the same period, our actual construction claims revenue has historically exceeded backlog by
a significant amount.

Our backlog is important to us in anticipating and planning for our operational needs. Backlog is not a measure defined
in generally accepted accounting principles, and our methodology for determining backlog may not be comparable to the methodology used by other companies in determining their backlog.

Our backlog was approximately $550,000,000 at March 31, 2010 compared to $620,000,000 at December 31, 2009. We estimate that approximately
$240,000,000, or 43.6%, of the backlog at March 31, 2010 will be recognized during the twelve months subsequent to March 31, 2010.

The schedule below includes backlog under two categories: (1) contracts for which work authorizations have been or are expected to be received on a
time and material basis, fixed-price basis and not-to-exceed projects that are well defined and (2) contracts awarded to the Company where some or all of the work has not yet been authorized. As of March 31, 2010, approximately
$416,000,000, or 75.6%, of our backlog was in category 1 and approximately $134,000,000, or 24.4%, of our backlog was in category 2. We do not track whether the contracts and awards included in our backlog are fully funded, incrementally funded, or
unfunded.

Included in category 2 of our backlog is the maximum amount of all indefinite delivery/indefinite quantity (ID/IQ), or
task order contracts, or a lesser amount if we do not reasonably expect task orders to be issued for the maximum amount of such contracts. Also included in category 2 of our backlog is the amount of anticipated revenues in option years beyond the
base term of our contracts if we reasonably expect our clients to exercise such option years. Although backlog reflects business that we consider to be firm, cancellations or scope adjustments may occur. Further, substantially all of our contracts
with our clients may be terminated at will, in which case the client would only be obligated to us for services provided through the termination date. Historically, the impact of terminations and modifications on our realization of revenues from our
backlog has not been significant, however, there can be no assurance that such changes will not be significant in the future. Furthermore, reductions of our backlog as a result of contract terminations and modifications may be offset by additions to
the backlog.

We adjust backlog to reflect project cancellations, deferrals and revisions in scope and cost (both upward and downward) known
at the reporting date. Future contract modifications or cancellations, however, may increase or reduce backlog and future revenue.



28



---

##### Table of Contents

|                         |  |               |         |   |                  |   |   |   |         |  |       |  
|------------------------ |  | ------------- | ------- | - | ---------------- | - | - | - | ------- |  | ----- | -
|                         |  | Total Backlog |         |   | 12 Month Backlog |  
|In thousands             |  | $             |         | % |                  |   | $ |   | %       | 
|As of March 31, 2010:    |  |               |         |   |                  |   |   |   |         |  |       |  
|Project Management       |  | $             | 518,000 |   | 94.2             | % |   | $ | 210,000 |  | 87.5  | %
|Construction Claims      |  |               | 32,000  |   | 5.8              |   |   |   | 30,000  |  | 12.5  |  
|                         |  |               |         |   |                  |   |   |   |         |  |       |  
|Total                    |  | $             | 550,000 |   | 100.0            | % |   | $ | 240,000 |  | 100.0 | %
|                         |  |               |         |   |                  |   |   |   |         |  |       |  
|As of December 31, 2009: |  |               |         |   |                  |   |   |   |         |  |       |  
|Project Management       |  | $             | 583,000 |   | 94.0             | % |   | $ | 249,000 |  | 88.3  | %
|Construction Claims      |  |               | 37,000  |   | 6.0              |   |   |   | 33,000  |  | 11.7  |  
|                         |  |               |         |   |                  |   |   |   |         |  |       |  
|Total                    |  | $             | 620,000 |   | 100.0            | % |   | $ | 282,000 |  | 100.0 | %
|                         |  |               |         |   |                  |   |   |   |         |  |       |  



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Refer to the Companys Annual Report on Form 10-K for the year ended December 31, 2009 for a complete discussion of the Companys market
risk. There have been no material changes to the market risk information included in the Companys Annual Report on Form 10-K for the year December 31, 2009.



|Item 4. | Controls and Procedures
|------- | -----------------------

An evaluation
was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the
end of the period covered by this quarterly report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of March 31, 2010, our disclosure controls and procedures were
effective. During the quarter ended March 31, 2010, there were no changes in our internal control over financial reporting that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.



29



---

##### Table of Contents

Part IIOther Information



|Item 1. | 
|------- | 

Litigation

On July 16, 2009, Al Areen Desert Resort Holding Company (Al Areen) filed a complaint with the Ministry of Justice & Islamic
Affairs in the Kingdom of Bahrain against the Company alleging breach of contract and other causes of action in connection with its performance of a construction project known as Al Areen Desert Spa and Resort (the Project), seeking the
sum of approximately 10,200,000 Bahraini Dinars (approximately $27,052,000 at March 31, 2010) in damages. The Company provided project management services on the Project and Al Areen failed to pay the Company 679,000 Bahraini Dinars (approximately
$1,801,000 at March 31, 2010) for services rendered on the Project. The Company served notice of termination on April 28, 2009. On September 26, 2009, the Company filed a Request for Arbitration with the International Chamber of Commerce,
International Court of Arbitration, seeking the sum of 679,000 Bahraini Dinars. The Company has reserved approximately $531,000 against the receivable; however, the Company believes that Al Areens claim is without merit and, based on the
Companys current understanding and evaluation of the relevant facts and circumstances, no accrual has been made because the Company considers the chance of loss to be remote.

General Litigation

From time to time,
the Company is a defendant or plaintiff in various legal actions which arise in the normal course of business. As such the Company is required to assess the likelihood of any adverse outcomes to these matters as well as potential ranges of probable
losses. A determination of the amount of the provision required for these commitments and contingencies, if any, which would be charged to earnings, is made after careful analysis of each matter. The provision may change in the future due to new
developments or changes in circumstances. Changes in the provision could increase or decrease the Companys earnings in the period the changes are made. It is the opinion of management, after consultation with legal counsel, that the ultimate
resolution of these matters will not have a material adverse effect on the Companys financial condition, results of operations or cash flows.



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material
changes pertaining to risk factors discussed in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2009.



|Item 2. | Unregistered Sales of Equity Securities and Use of Funds
|------- | --------------------------------------------------------

None.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | (Removed and Reserved)
|------- | ----------------------



|Item 5. | Other Information
|------- | -----------------

None.



30



---

##### Table of Contents

|Item 6. | Exhibits
|------- | --------

|     |  |                                                                                                                                                                                                 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.1 |  | Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                
|     | 
|31.2 |  | Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                
|     | 
|32.1 |  | Certification of Irvin E. Richter, Chief Executive Officer of Hill International, Inc., pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|     | 
|32.2 |  | Certification of John Fanelli III, Chief Financial Officer of Hill International, Inc., pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.



31



---

##### Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



|                   |  |  |  |                          |  |                      |  |                                                                                  
|------------------ |  |  |  | ------------------------ |  | -------------------- |  | ---------------------------------------------------------------------------------
|                   |  |  |  | Hill International, Inc.
|                   |  |  | 
|Dated: May 7, 2010 |  |  |  | By:                      |  | /s/ Irvin E. Richter
|                   |  |  |  |                          |  |                      |  | Irvin E. Richter                                                                 
|                   |  |  |  |                          |  |                      |  | Chairman and Chief Executive Officer
(Principal Executive Officer)               
|                   |  |  | 
|Dated: May 7, 2010 |  |  |  | By:                      |  | /s/ John Fanelli III
|                   |  |  |  |                          |  |                      |  | John Fanelli III                                                                 
|                   |  |  |  |                          |  |                      |  | Senior Vice President and
Chief Financial Officer (Principal Financial
Officer)  
|                   |  |  | 
|Dated: May 7, 2010 |  |  |  | By:                      |  | /s/ Ronald F. Emma  
|                   |  |  |  |                          |  |                      |  | Ronald F. Emma                                                                   
|                   |  |  |  |                          |  |                      |  | Senior Vice President and
Chief Accounting Officer (Principal Accounting
Officer)



32