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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 September 30, 2009

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. (Check one):



|                           |  |                      |  |                          |  |                             
|-------------------------- |  | -------------------- |  | ------------------------ |  | ----------------------------
|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 38,771,398 shares of the Registrants Common Stock outstanding at November 3, 2009.









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##### 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 September 30, 2009 (unaudited) and December 31, 2008                                                  |  | 3 
|           |  |                                                                                                                                     
|           |  | Consolidated Statements of Earnings for the three- and nine-month periods ended September 30, 2009 andSeptember 30, 2008 (unaudited) |  | 4 
|           |  |                                                                                                                                     
|           |  | Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2009 and September 30, 2008 (unaudited)         |  | 5 
|           |  |                                                                                                                                     
|           |  | Notes to Consolidated Financial Statements                                                                                           |  | 6 
|           |  |                                                                                                                                     
|Item 2     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                |  | 23
|           |  |                                                                                                                                     
|Item 3     |  | Quantitative and Qualitative Disclosures About Market Risk                                                                           |  | 36
|           |  |                                                                                                                                     
|Item 4     |  | Controls and Procedures                                                                                                              |  | 36
|           |  |                                                                                                                                     
|PART II    |  | OTHER INFORMATION                                                                                                                    |  |   
|           |  |                                                                                                                                     
|Item 1     |  | Legal Proceedings                                                                                                                    |  | 37
|           |  |                                                                                                                                     
|Item 1A    |  | Risk Factors                                                                                                                         |  | 38
|           |  |                                                                                                                                     
|Item 2     |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                          |  | 38
|           |  |                                                                                                                                     
|Item 3     |  | Defaults Upon Senior Securities                                                                                                      |  | 38
|           |  |                                                                                                                                     
|Item 4     |  | Submission of Matters to a Vote of Security Holders                                                                                  |  | 38
|           |  |                                                                                                                                     
|Item 5     |  | Other Information                                                                                                                    |  | 38
|           |  |                                                                                                                                     
|Item 6     |  | Exhibits                                                                                                                             |  | 38
|           |  |                                                                                                                                     
|Signatures |  |                                                                                                                                      |  | 39



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|Item 1. | Financial Statements and Supplementary Data
|------- | -------------------------------------------

HILL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)



|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ------------------ | - | ------- | -
|                                                                                                                                                                       |  | September 30,2009 |         |   | December 31,2008   |  
|                                                                                                                                                                       |  | (unaudited)       |         |   | (Revised - Note 2) |  
|Assets                                                                                                                                                                 |  |                   |         |   |                    |   |         |  
|Cash and cash equivalents                                                                                                                                              |  | $                 | 29,586  |   |                    | $ | 20,430  |  
|Cash - restricted                                                                                                                                                      |  |                   | 2,685   |   |                    |   | 2,613   |  
|Accounts receivable, less allowance for doubtful accounts of $8,209 and $5,999                                                                                         |  |                   | 141,051 |   |                    |   | 118,124 |  
|Accounts receivable - affiliate                                                                                                                                        |  |                   | 5,035   |   |                    |   | 9,136   |  
|Prepaid expenses and other current assets                                                                                                                              |  |                   | 10,369  |   |                    |   | 10,043  |  
|Income taxes receivable                                                                                                                                                |  |                   | 581     |   |                    |   | 578     |  
|Deferred tax asset                                                                                                                                                     |  |                   | 1,705   |   |                    |   | 568     |  
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|Total current assets                                                                                                                                                   |  |                   | 191,012 |   |                    |   | 161,492 |  
|Property and equipment, net                                                                                                                                            |  |                   | 11,355  |   |                    |   | 11,776  |  
|Cash - restricted, net of current portion                                                                                                                              |  |                   | 2,284   |   |                    |   | 1,933   |  
|Retainage receivable, less allowance for doubtful accounts of $38 and $38                                                                                              |  |                   | 1,472   |   |                    |   | 915     |  
|Acquired intangibles, net                                                                                                                                              |  |                   | 17,825  |   |                    |   | 19,774  |  
|Goodwill                                                                                                                                                               |  |                   | 43,271  |   |                    |   | 41,290  |  
|Investments                                                                                                                                                            |  |                   | 13,627  |   |                    |   | 11,854  |  
|Deferred tax asset                                                                                                                                                     |  |                   | 3,649   |   |                    |   |        |  
|Other assets                                                                                                                                                           |  |                   | 7,873   |   |                    |   | 5,007   |  
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|Total assets                                                                                                                                                           |  | $                 | 292,368 |   |                    | $ | 254,041 |  
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|Liabilities and Stockholders Equity                                                                                                                                   |  |                   |         |   |                    |   |         |  
|Due to bank                                                                                                                                                            |  | $                 | 2,812   |   |                    | $ | 2,906   |  
|Current maturities of notes payable                                                                                                                                    |  |                   | 443     |   |                    |   | 1,344   |  
|Accounts payable and accrued expenses                                                                                                                                  |  |                   | 56,272  |   |                    |   | 49,606  |  
|Income taxes payable                                                                                                                                                   |  |                   | 1,335   |   |                    |   | 2,607   |  
|Deferred revenue                                                                                                                                                       |  |                   | 17,687  |   |                    |   | 16,617  |  
|Other current liabilities                                                                                                                                              |  |                   | 6,170   |   |                    |   | 7,483   |  
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|Total current liabilities                                                                                                                                              |  |                   | 84,719  |   |                    |   | 80,563  |  
|Notes payable, net of current maturities                                                                                                                               |  |                   | 32,830  |   |                    |   | 14,637  |  
|Retainage payable                                                                                                                                                      |  |                   | 2,050   |   |                    |   | 1,359   |  
|Deferred tax liabilities                                                                                                                                               |  |                   | 11,048  |   |                    |   | 4,569   |  
|Deferred revenue                                                                                                                                                       |  |                   | 2,448   |   |                    |   | 3,559   |  
|Other liabilities                                                                                                                                                      |  |                   | 9,364   |   |                    |   | 10,338  |  
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|Total liabilities                                                                                                                                                      |  |                   | 142,459 |   |                    |   | 115,025 |  
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|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, 43,022,530 shares and 41,715,185 shares issued at
September 30, 2009 and December 31, 2008, respectively |  |                   | 4       |   |                    |   | 4       |  
|Additional paid-in capital                                                                                                                                             |  |                   | 117,267 |   |                    |   | 114,555 |  
|Retained earnings                                                                                                                                                      |  |                   | 60,867  |   |                    |   | 45,957  |  
|Noncontrolling interests                                                                                                                                               |  |                   | 3,999   |   |                    |   | 3,510   |  
|Accumulated other comprehensive loss                                                                                                                                   |  |                   | (13,791 | ) |                    |   | (15,744 | )
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|                                                                                                                                                                       |  |                   | 168,346 |   |                    |   | 148,282 |  
|Less treasury stock of 4,251,454 shares and 1,764,111 shares at September 30, 2009 and December 31, 2008, respectively,
at cost                                        |  |                   | (18,437 | ) |                    |   | (9,266  | )
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|Total stockholders equity                                                                                                                                             |  |                   | 149,909 |   |                    |   | 139,016 |  
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  
|Total liabilities and stockholders equity                                                                                                                             |  | $                 | 292,368 |   |                    | $ | 254,041 |  
|                                                                                                                                                                       |  |                   |         |   |                    |   |         |  

See accompanying notes to consolidated financial statements.



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HILL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)



|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------ | ------- | - | ------------------ | - | ------ | ------------------ |  | - | ------------------ | - |  | - | ------- | -
|                                                             |  | Three Months Ended |         |   | Nine Months Ended  |  
|                                                             |  | September 30, 2009 |         |   | September 30, 2008 |   |        | September 30, 2009 |  |   | September 30, 2008 |  
|                                                             |  |                    |         |   | (Revised - Note 2) |   |        |                    |  |   | (Revised - Note 2) |  
|Consulting fee revenue                                       |  | $                  | 86,697  |   |                    | $ | 87,274 |                    |  | $ | 270,388            |   |  | $ | 238,702 |  
|Reimbursable expenses                                        |  |                    | 16,498  |   |                    |   | 10,826 |                    |  |   | 41,085             |   |  |   | 37,171  |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Total revenue                                                |  |                    | 103,195 |   |                    |   | 98,100 |                    |  |   | 311,473            |   |  |   | 275,873 |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Cost of services                                             |  |                    | 50,924  |   |                    |   | 48,982 |                    |  |   | 155,868            |   |  |   | 131,318 |  
|Reimbursable expenses                                        |  |                    | 16,498  |   |                    |   | 10,826 |                    |  |   | 41,085             |   |  |   | 37,171  |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Total direct expenses                                        |  |                    | 67,422  |   |                    |   | 59,808 |                    |  |   | 196,953            |   |  |   | 168,489 |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Gross profit                                                 |  |                    | 35,773  |   |                    |   | 38,292 |                    |  |   | 114,520            |   |  |   | 107,384 |  
|Selling, general and administrative expenses                 |  |                    | 31,536  |   |                    |   | 32,609 |                    |  |   | 102,907            |   |  |   | 91,953  |  
|Equity in earnings of affiliates                             |  |                    | (3,931  | ) |                    |   | (1,563 | )                  |  |   | (7,390             | ) |  |   | (2,994  | )
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Operating profit                                             |  |                    | 8,168   |   |                    |   | 7,246  |                    |  |   | 19,003             |   |  |   | 18,425  |  
|Interest expense (income), net                               |  |                    | 511     |   |                    |   | 32     |                    |  |   | 1,043              |   |  |   | (317    | )
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Earnings before provision for income taxes                   |  |                    | 7,657   |   |                    |   | 7,214  |                    |  |   | 17,960             |   |  |   | 18,742  |  
|Provision for income taxes                                   |  |                    | 1,636   |   |                    |   | 1,829  |                    |  |   | 2,370              |   |  |   | 2,098   |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Consolidated net earnings                                    |  |                    | 6,021   |   |                    |   | 5,385  |                    |  |   | 15,590             |   |  |   | 16,644  |  
|Less: net earnings - noncontrolling interests                |  |                    | 189     |   |                    |   | 178    |                    |  |   | 680                |   |  |   | 846     |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Net earnings attributable to Hill International, Inc.        |  | $                  | 5,832   |   |                    | $ | 5,207  |                    |  | $ | 14,910             |   |  | $ | 15,798  |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Basic earnings per common share - Hill International, Inc.   |  | $                  | 0.15    |   |                    | $ | 0.13   |                    |  | $ | 0.37               |   |  | $ | 0.39    |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Basic weighted average common shares outstanding             |  |                    | 38,839  |   |                    |   | 40,997 |                    |  |   | 39,911             |   |  |   | 40,866  |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Diluted earnings per common share - Hill International, Inc. |  | $                  | 0.15    |   |                    | $ | 0.13   |                    |  | $ | 0.37               |   |  | $ | 0.38    |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  
|Diluted weighted average common shares outstanding           |  |                    | 39,466  |   |                    |   | 41,472 |                    |  |   | 40,292             |   |  |   | 41,282  |  
|                                                             |  |                    |         |   |                    |   |        |                    |  |   |                    |   |  |   |         |  

See accompanying notes to consolidated financial statements.



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HILL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)



|                                                                                    |  |                   |         |   |                   |   |         |  
|----------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                    |  | Nine Months Ended |        
|                                                                                    |  | September 30,2009 |         |   | September 30,2008 |  
|Cash flows from operating activities:                                               |  |                   |         |   |                   |   |         |  
|Consolidated net earnings                                                           |  | $                 | 15,590  |   |                   | $ | 16,644  |  
|Adjustments to reconcile net earnings to net cash provided by operating activities: |  |                   |         |   |                   |   |         |  
|Depreciation and amortization                                                       |  |                   | 5,414   |   |                   |   | 4,248   |  
|Equity in earnings of affiliates                                                    |  |                   | (7,390  | ) |                   |   | (2,994  | )
|Provision for bad debts                                                             |  |                   | 3,121   |   |                   |   | 830     |  
|Deferred tax provision                                                              |  |                   | 1,218   |   |                   |   | 1,659   |  
|Stock based compensation                                                            |  |                   | 1,757   |   |                   |   | 2,151   |  
|Changes in operating assets and liabilities, net of acquisitions:                   |  |                   |         |   |                   |   |         |  
|Accounts receivable                                                                 |  |                   | (22,888 | ) |                   |   | (11,546 | )
|Accounts receivable - affiliate                                                     |  |                   | 4,101   |   |                   |   | 130     |  
|Prepaid expenses and other current assets                                           |  |                   | (1,404  | ) |                   |   | (2,118  | )
|Income taxes receivable                                                             |  |                   | (2      | ) |                   |   | (43     | )
|Retainage receivable                                                                |  |                   | (557    | ) |                   |   | (505    | )
|Other assets                                                                        |  |                   | 615     |   |                   |   | (3,413  | )
|Accounts payable and accrued expenses                                               |  |                   | 5,220   |   |                   |   | (1,724  | )
|Income taxes payable                                                                |  |                   | (1,457  | ) |                   |   | (2,624  | )
|Deferred revenue                                                                    |  |                   | (1,027  | ) |                   |   | (1,852  | )
|Other current liabilities                                                           |  |                   | (345    | ) |                   |   | 3,500   |  
|Retainage payable                                                                   |  |                   | 665     |   |                   |   | 367     |  
|Other liabilities                                                                   |  |                   | (1,161  | ) |                   |   | (309    | )
|                                                                                    |  |                   |         |   |                   |   |         |  
|Net cash flow provided by operating activities                                      |  |                   | 1,470   |   |                   |   | 2,401   |  
|                                                                                    |  |                   |         |   |                   |   |         |  
|Cash flows from investing activities:                                               |  |                   |         |   |                   |   |         |  
|Purchase of businesses, net of cash acquired                                        |  |                   |        |   |                   |   | (36,450 | )
|Distributions from affiliate                                                        |  |                   | 6,300   |   |                   |   | 1,700   |  
|Contributions in affiliate                                                          |  |                   | (312    | ) |                   |   |        |  
|Payments for purchase of property and equipment                                     |  |                   | (2,245  | ) |                   |   | (6,177  | )
|                                                                                    |  |                   |         |   |                   |   |         |  
|Net cash flow provided by (used in) investing activities                            |  |                   | 3,743   |   |                   |   | (40,927 | )
|                                                                                    |  |                   |         |   |                   |   |         |  
|Cash flows from financing activities:                                               |  |                   |         |   |                   |   |         |  
|Due to bank                                                                         |  |                   | (180    | ) |                   |   | (875    | )
|Payments on notes payable                                                           |  |                   | (1,220  | ) |                   |   | (860    | )
|Net borrowings on revolving loans                                                   |  |                   | 18,484  |   |                   |   | 5,270   |  
|Deferred loan costs                                                                 |  |                   | (1,741  | ) |                   |   |        |  
|Proceeds from exercise of stock options and warrants                                |  |                   |        |   |                   |   | 560     |  
|Proceeds from stock issued under employee stock purchase plan                       |  |                   | 384     |   |                   |   |        |  
|Purchase of treasury stock under stock repurchase program                           |  |                   | (9,171  | ) |                   |   |        |  
|                                                                                    |  |                   |         |   |                   |   |         |  
|Net cash flow provided by financing activities                                      |  |                   | 6,556   |   |                   |   | 4,095   |  
|                                                                                    |  |                   |         |   |                   |   |         |  
|Effect of exchange rate changes on cash                                             |  |                   | (2,613  | ) |                   |   | (5,456  | )
|                                                                                    |  |                   |         |   |                   |   |         |  
|Net increase (decrease) in cash and cash equivalents                                |  |                   | 9,156   |   |                   |   | (39,887 | )
|Cash and cash equivalents  beginning of period                                     |  |                   | 20,430  |   |                   |   | 66,128  |  
|                                                                                    |  |                   |         |   |                   |   |         |  
|Cash and cash equivalents  end of period                                           |  | $                 | 29,586  |   |                   | $ | 26,241  |  
|                                                                                    |  |                   |         |   |                   |   |         |  

See accompanying notes to consolidated financial statements.



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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, 2008.

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.

In June 2009, the Financial
Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (the ASC). The ASC has become the single source of non-governmental GAAP recognized by the FASB in the preparation of financial statements.
The ASC does not supersede the rules or regulations of the Securities and Exchange Commission (SEC), therefore, the rules and interpretive releases of the SEC continue to be additional sources of GAAP for the Company. The Company adopted
the ASC as of July 1, 2009. The ASC does not change GAAP and did not have an effect on the Companys financial position, results of operations or cash flows.



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New Accounting Pronouncements

On January 1, 2009, the Company adopted a new accounting standard issued by the FASB that establishes accounting and reporting standards for noncontrolling interests in a subsidiary in consolidated
financial statements. In accordance with this new standard, the Company has provided a new presentation on the face of the consolidated financial statements to separately classify noncontrolling interests within the equity section of the
consolidated balance sheets and to separately report the amounts attributable to controlling and noncontrolling interests in the consolidated statements of operations for all periods presented. The adoption of this standard did not impact earnings
per share attributable to the Companys common stockholders.

On June 30, 2009, the Company adopted a new accounting standard issued
by the FASB that requires the Company to evaluate subsequent events through the date the consolidated financial statements are filed with the Securities and Exchange Commission.

On January 1, 2009, the Company adopted a new accounting standard issued by the FASB related to accounting for business combinations using the acquisition method of accounting (previously referred to
as the purchase method). Among the significant changes, this standard requires a redefining of the measurement date of a business combination, expensing direct transaction costs as incurred, and recording a liability for contingent consideration at
the measurement date with subsequent re-measurements recorded in the results of operations. This standard also requires costs for business restructuring and exit activities related to the acquired company to be included in the post-combination
financial results of operations and also provides new guidance for the recognition and measurement of contingent assets and liabilities in a business combination. In addition, this standard requires several new disclosures, including the reasons for
the business combination, the factors that contribute to the recognition of goodwill, the amount of acquisition related third-party expenses incurred, the nature and amount of contingent consideration, and a discussion of pre-existing relationships
between the parties. The application of this standard is likely to have a significant impact on how the Company allocates the purchase price of prospective business combinations, including the recognition and measurement of assets acquired and
liabilities assumed and the expensing of direct transaction costs and costs to integrate the acquired business.

In June 2009, the FASB
issued a new accounting standard that is to be applied to financial asset transfers on or after the effective date, which is January 1, 2010 for the Companys financial statements. The standard limits the circumstances in which a financial
asset may be de-recognized when the transferor has not transferred the entire financial asset or has continuing involvement with the transferred asset. The concept of a qualifying special-purpose entity, which had previously facilitated sale
accounting for certain asset transfers, has been eliminated. The Company expects that adoption of this accounting standard will not have a material effect on its financial position or results of operations.

In June 2009, FASB amended an accounting standard which deals with accounting for variable interest entities. The amendment is effective for reporting
periods beginning after November 15, 2009. The amendment changes the process for how an enterprise determines which party consolidates a variable interest entity (VIE) to a primarily qualitative analysis. The amendment defines
the party that consolidates the VIE (the primary beneficiary) as the party with (1) the power to direct activities of the VIE that most significantly affect the VIEs economic performance and (2) the obligation to absorb losses of the
VIE or the right to receive benefits from the VIE. Upon adoption of the amendment, reporting enterprises must reconsider their conclusions on whether an entity should be consolidated and should a change result, the effect on net assets will be
recorded as a cumulative effect adjustment to retained earnings. The Company expects that adoption of this amendment will not have a material effect on its financial position or results of operations.



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##### Table of Contents

Note 3 - Comprehensive Earnings

The following table summarizes the Companys comprehensive earnings:



|                                                    |  |                    |       |   |                   |   |        |                   |  |                   |        |  |   |        |  
|--------------------------------------------------- |  | ------------------ | ----- | - | ----------------- | - | ------ | ----------------- |  | ----------------- | ------ |  | - | ------ | -
|                                                    |  | Three months ended |       |   | Nine months ended |  
|(in thousands)                                      |  | September 30,2009  |       |   | September 30,2008 |   |        | September 30,2009 |  | September 30,2008 |       
|Net earnings  Hill International, Inc.             |  | $                  | 5,832 |   |                   | $ | 5,207  |                   |  | $                 | 14,910 |  | $ | 15,798 |  
|Foreign currency translation adjustment, net of tax |  |                    | 16    |   |                   |   | (6,485 | )                 |  |                   | 1,740  |  |   | (5,068 | )
|Other, net of tax                                   |  |                    | (196  | ) |                   |   |       |                   |  |                   | 213    |  |   |       |  
|                                                    |  |                    |       |   |                   |   |        |                   |  |                   |        |  |   |        |  
|Comprehensive earnings                              |  | $                  | 5,652 |   |                   | $ | (1,278 | )                 |  | $                 | 16,863 |  | $ | 10,730 |  
|                                                    |  |                    |       |   |                   |   |        |                   |  |                   |        |  |   |        |  

Note 4 - Accounts Receivable

The components of accounts receivable are as follows:



|                                |  |                    |         |   |                   |   |         |  
|------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|(in thousands)                  |  | September 30, 2009 |         |   | December 31, 2008 |  
|Billed                          |  | $                  | 124,626 |   |                   | $ | 98,558  |  
|Retainage, current portion      |  |                    | 3,107   |   |                   |   | 4,696   |  
|Unbilled                        |  |                    | 21,527  |   |                   |   | 20,869  |  
|                                |  |                    |         |   |                   |   |         |  
|                                |  |                    | 149,260 |   |                   |   | 124,123 |  
|Allowance for doubtful accounts |  |                    | (8,209  | ) |                   |   | (5,999  | )
|                                |  |                    |         |   |                   |   |         |  
|                                |  | $                  | 141,051 |   |                   | $ | 118,124 |  
|                                |  |                    |         |   |                   |   |         |  

Note 5 - Intangible Assets

The following table summarizes the Companys acquired intangible assets as of September 30, 2009 and December 31, 2008:



|                        |  |                     |        |                         |   |                     |  |                         |        |  |   |      
|----------------------- |  | ------------------- | ------ | ----------------------- | - | ------------------- |  | ----------------------- | ------ |  | - | -----
|                        |  | September 30, 2009  |        | December 31, 2008      
|(in thousands)          |  | GrossCarryingAmount |        | AccumulatedAmortization |   | GrossCarryingAmount |  | AccumulatedAmortization
|Contract rights         |  | $                   | 7,804  |                         | $ | 4,598               |  | $                       | 7,628  |  | $ | 3,462
|Client relationships    |  |                     | 18,078 |                         |   | 4,084               |  |                         | 17,210 |  |   | 2,401
|Trade names             |  |                     | 1,354  |                         |   | 732                 |  |                         | 1,200  |  |   | 409  
|Covenant not to compete |  |                     | 18     |                         |   | 15                  |  |                         | 18     |  |   | 10   
|                        |  |                     |        |                         |   |                     |  |                         |        |  |   |      
|Total                   |  | $                   | 27,254 |                         | $ | 9,429               |  | $                       | 26,056 |  | $ | 6,282
|                        |  |                     |        |                         |   |                     |  |                         |        |  |   |      
|Intangible assets, net  |  | $                   | 17,825 |                         |   |                     |  | $                       | 19,774 |  |   |      
|                        |  |                     |        |                         |   |                     |  |                         |        |  |   |      



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##### Table of Contents

Amortization expense related to intangible assets totaled $914,000 and $737,000 for the three months ended
September 30, 2009 and 2008, respectively, and totaled $2,589,000 and $1,967,000 for the nine months ended September 30, 2009 and 2008, 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)               
|2009 (remaining 3 months) |  | $                             | 867  
|2010                      |  |                               | 3,438
|2011                      |  |                               | 3,334
|2012                      |  |                               | 2,479
|2013                      |  |                               | 2,033

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.

The following table summarizes the changes in the Companys carrying value of goodwill during 2009 (in thousands):



|                    |  |                            |        |             |   |     |                        |  |                             |       |  |   |       
|------------------- |  | -------------------------- | ------ | ----------- | - | --- | ---------------------- |  | --------------------------- | ----- |  | - | ------
|Segment             |  | Balance atDecember 31,2008 |        | Adjustments |   |     | TranslationAdjustments |  | Balance atSeptember 30,2009
|Project Management  |  | $                          | 22,654 |             | $ | (34 | )                      |  | $                           | 559   |  | $ | 23,179
|Construction Claims |  |                            | 18,636 |             |   | (50 | )                      |  |                             | 1,506 |  |   | 20,092
|                    |  |                            |        |             |   |     |                        |  |                             |       |  |   |       
|Total               |  | $                          | 41,290 |             | $ | (84 | )                      |  | $                           | 2,065 |  | $ | 43,271
|                    |  |                            |        |             |   |     |                        |  |                             |       |  |   |       

Note 7 - Accounts Payable and Accrued Expenses

Below are the components of accounts payable and accrued expenses:



|                                                |  |                    |        |                   |   |       
|----------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------
|(in thousands)                                  |  | September 30, 2009 |        | December 31, 2008
|Accounts payable                                |  | $                  | 18,638 |                   | $ | 17,067
|Accrued payroll                                 |  |                    | 20,299 |                   |   | 18,088
|Accrued subcontractor fees                      |  |                    | 6,960  |                   |   | 4,193 
|Accrued legal and professional cost             |  |                    | 8,455  |                   |   | 6,552 
|Accrued earnout related to Euromost acquisition |  |                    |       |                   |   | 1,526 
|Other accrued expenses                          |  |                    | 1,920  |                   |   | 2,180 
|                                                |  |                    |        |                   |   |       
|                                                |  | $                  | 56,272 |                   | $ | 49,606
|                                                |  |                    |        |                   |   |       



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##### Table of Contents

Note 8 - Notes Payable

Outstanding debt obligations are as follows:



|                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                    |        |                   |   |       
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------
|(in thousands)                                                                                                                                                                                                                                                                                                                                                                                                          |  | September 30, 2009 |        | December 31, 2008
|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 at September 30, 2009 was 3.9% (For more information see below).                                                                                                                                                                                                            |  | $                  | 32,700 |                   | $ | 14,500
|Note payable, paid February 1, 2009, for the Pickavance acquisition with an original issue discount of $231,000 at an
imputed interest rate of 8.0%.                                                                                                                                                                                                                                                                    |  |                    |       |                   |   | 407   
|Revolving credit loan payable to Barclays Bank PLC up to £500,000 (approximately $798,000 and $723,000 at
September 30, 2009 and December 31, 2008, respectively), with interest at 2.00% plus The Bank of England rate of 0.50% (or 2.50%) at both September 30, 2009 and December 31, 2008, collateralized by cross guarantees of various
United Kingdom companies. The loan has an expiration date of March 6, 2010. |  |                    | 410    |                   |   | 106   
|Note payable in connection with the Euromost acquisition, non-interest bearing, paid June 17, 2009.                                                                                                                                                                                                                                                                                                                     |  |                    |       |                   |   | 707   
|Other                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                    | 163    |                   |   | 261   
|                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                    |        |                   |   |       
|                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                    | 33,273 |                   |   | 15,981
|Less current maturities                                                                                                                                                                                                                                                                                                                                                                                                 |  |                    | 443    |                   |   | 1,344 
|                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                    |        |                   |   |       
|Notes payable, net of current maturities                                                                                                                                                                                                                                                                                                                                                                                |  | $                  | 32,830 |                   | $ | 14,637
|                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                    |        |                   |   |       

On June 30, 2009, the Company replaced the $60,000,000 credit facility that it entered into in
2008 with Bank of America, N.A. with a new credit facility providing the ability to borrow up to $100,000,000. The new credit facility has been made pursuant to the terms of a new 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. 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.



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##### Table of Contents

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 financial 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 September 30, 2009, the Company was in compliance with all of
the loan covenants.

As of September 30, 2009, the Company had $7,451,000 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 September 30, 2009 was $34,479,000.

The Company also maintains a credit facility with a bank in the Middle East for AED 11,500,000 (approximately $3,131,000 at both
September 30, 2009 and December 31, 2008) collateralized by certain overseas receivables. The interest rate on that facility is the three-month Emirates InterBank Offer Rate (EIBOR), which at September 30, 2009 was 2.16%,
plus 2.0% (or 4.16%) and at December 31, 2008 was 4.33%, plus 2.0% (or 6.33%). At both September 30, 2009 and December 31, 2008, there were no outstanding borrowings under this facility. This facility expires on December 24,
2009.

The Company also maintains a revolving credit loan payable with a European bank up to 1,000,000 (approximately $1,459,000 and
$1,414,000 at September 30, 2009 and December 31, 2008, respectively), with interest rates at 2.50% plus the Banks prime rate of 6.50% (or 9.00%) at September 30, 2009 and 2.50% plus the Banks prime rate of 8.00% (or
10.50%) at December 31, 2008, collateralized by certain assets of the Company. At September 30, 2009 and December 31, 2008, there were no outstanding borrowings under this facility which expires on April 30, 2010.

The Company also maintains an unsecured credit facility with a bank in Spain for 750,000 (approximately $1,091,000 and $1,061,000 at
September 30, 2009 and December 31, 2008 respectively). The interest rate on that facility is the three month EURIBOR rate which at September 30, 2009 was 1.50%, plus 0.75% (or 2.25%) and at December 31, 2008 was 3.68%, plus
0.75% (or 4.43%). At September 30, 2009 and December 31, 2008, there were no outstanding borrowings under this facility which expires on December 18, 2009.



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##### Table of Contents

Note 9 - Supplemental Cash Flow Information

The following table provides additional cash flow information:



|                             |  |                    |       |                    |   |      
|---------------------------- |  | ------------------ | ----- | ------------------ | - | -----
|                             |  | Nine months ended 
|In thousands                 |  | September 30, 2009 |       | September 30, 2008
|Interest paid                |  | $                  | 1,435 |                    | $ | 283  
|Income taxes (refunded) paid |  | $                  | 2,040 |                    | $ | 4,925

Effective July 31, 2009, the Company issued 60,268 shares of its common stock in final
settlement of the contingent consideration, initially estimated at $1,000,000, for the acquisition of PCI Group, LLC. Per the acquisition agreement, the shares were valued using $15.77 per share, the closing price on July 28, 2008, or a total
of approximately $950,000. Upon issuance, the Company increased additional paid-in capital by $950,000, reduced goodwill by $50,000 and eliminated the estimate of $1,000,000 originally reflected in accrued expenses.

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 September 30, 2009 and December 31,
2008, the Company reported receivables totaling $1,326,000 and $7,654,000, 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 September 30, 2009 and 2008 was $7,682,000
and $7,417,000, respectively, and for the nine-month periods ended September 30, 2009 and 2008 was $28,766,000 and $20,911,000, 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
September 30, 2009 and December 31, 2008, the Company reported receivables totaling $2,318,000 and $1,482,000, 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 September 30, 2009 and 2008 was $786,000 and $906,000, respectively and for the nine-month periods ended September 30, 2009 and 2008 was $2,737,000 and $1,368,000, respectively.



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##### Table of Contents

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



|                   |  |                    |       |                    |   |                    |  |   |                    |   |  |   |      
|------------------ |  | ------------------ | ----- | ------------------ | - | ------------------ |  | - | ------------------ | - |  | - | -----
|                   |  | Three Months Ended |       | Nine Months Ended 
|                   |  | September 30, 2009 |       | September 30, 2008 |   | September 30, 2009 |  |   | September 30, 2008
|In thousands:      |  |                    |       |                    |   |                    |  |   |                    |   |  |   |      
|Stanley Baker Hill |  | $                  | 3,585 |                    | $ | 700                |  | $ | 6,445              |   |  | $ | 2,131
|Hill TMG           |  | $                  | 339   |                    |   | 863                |  |   | 947                |   |  |   | 863  
|Other              |  | $                  | 7     |                    |   |                   |  |   | (2                 | ) |  |   |     
|                   |  |                    |       |                    |   |                    |  |   |                    |   |  |   |      
|Total              |  | $                  | 3,931 |                    | $ | 1,563              |  | $ | 7,390              |   |  | $ | 2,994
|                   |  |                    |       |                    |   |                    |  |   |                    |   |  |   |      

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 626,557 shares and 475,828 shares for the three-month
periods ended September 30, 2009 and 2008, respectively, and 381,062 shares and 415,520 shares for the nine-month periods ended September 30, 2009 and 2008, respectively. Certain stock options were excluded from the 2009 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 891,500 shares for the three-month period ended September 30, 2009, and 808,273
shares for the nine-month period ended September 30, 2009. The 1,000,000 common shares, which were issued in April 2009 in connection with the 2008 earn-out provision of the merger agreement with Arpeggio, have been included, effective
January 1, 2009, in both the basic and diluted weighted average shares for the three- and nine-month periods ended September 30, 2009.

Note 12 - Share-Based Compensation

At September 30, 2009, the Company had 2,012,395 options outstanding with a weighted
average exercise price of $5.16. During the nine-month period ended September 30, 2009, the Company granted 855,000 options which vest over a five-year period, 200,000 options which vest over a four year-period and 104,895 options which vested
immediately. The options have a weighted average exercise price of $2.65 and a weighted-average contractual life of 4.65 years. The aggregate fair value of the options was $1,248,000 calculated using the Black-Scholes valuation model. The weighted
average assumptions used to calculate fair value were: expected life  4.65 years; volatility  48.2% and risk free interest rate  1.85%. During the first nine months of 2009, options for 127,000 shares with a weighted average
exercise price of $8.12 were forfeited.

During the nine-month period ended September 30, 2009, the Company issued 66,000 shares of
restricted common stock to certain of its officers under the Companys 2007 Restricted Stock Grant Plan.

During the nine-month period
ended September 30, 2009, the Company issued 66,410 shares of common stock to certain directors under the Companys 2009 Non-Employee Director Stock Grant Plan.

During the nine-month period ended September 30, 2009, employees purchased 114,667 common shares, for an aggregate purchase price of $338,000, pursuant to the Companys 2008 Employee Stock
Purchase Plan.



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##### Table of Contents

The Company recognized share-based compensation expense in selling, general and administrative expenses in
the consolidated statement of earnings totaling $433,000 and $602,000 for the three-month periods ended September 30, 2009 and 2008, respectively, and $1,757,000 and $2,151,000 for the nine-month periods ended September 30, 2009 and 2008,
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 months. During 2009, the Company purchased a total of 2,487,343 shares at a cost of approximately $9,171,000, including 1,000,000 shares purchased from the Companys Chairman and Chief Executive Officer for $4,300,000. The
transaction with the Companys Chairman and Chief Executive Officer was authorized by the Board of Directors on June 30, 2009 and was based on the closing price of the Companys common stock on that date. To date, the Company has
purchased 3,652,172 shares of its common stock for an aggregate purchase price of $15,108,000, or $4.14 per share under this program. 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.

Effective July 31, 2009, the Company issued 60,268 shares of its
common stock in final settlement of the contingent consideration, initially estimated at $1,000,000, for the acquisition of PCI Group, LLC. Per the acquisition agreement, the shares were valued using $15.77 per share, the closing price on
July 28, 2008, or a total of approximately $950,000. Upon issuance, the Company increased additional paid-in capital by $950,000, reduced goodwill by $50,000 and eliminated the estimate of $1,000,000 originally reflected in accrued expenses.

Note 14 - Income Taxes

During the three-month period ending September 30, 2009, the Company recognized an increase in the reserves for uncertain tax positions of $787,000 and a $1,096,000 benefit resulting from adjustments to agree the 2008 book amount to
the actual amounts per the tax returns, primarily related to foreign subsidiaries. During the nine-month periods ended September 30, 2009 and 2008, the Company recognized income tax benefits of $1,807,000 and $2,506,000, 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. Also, during the nine-month period ended September 30, 2009, the Company recognized
an increase in the reserves for uncertain tax positions of $721,000, primarily related to foreign subsidiaries.



14



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##### Table of Contents

The following table indicates the changes to the Companys uncertain tax positions for the three- and
nine-month periods ended September 30, 2009, including interest and penalties:



|                                                                     |  |                                      |       |                                     |   |        |  
|-------------------------------------------------------------------- |  | ------------------------------------ | ----- | ----------------------------------- | - | ------ | -
|(in thousands                                                        |  | Three months endedSeptember 30, 2009 |       | Nine months endedSeptember 30, 2009 |  
|Balance, beginning of period                                         |  | $                                    | 1,522 |                                     | $ | 3,395  |  
|Increase as a result of tax positions taken during 2009              |  |                                      | 721   |                                     |   | 721    |  
|Increase (decrease) as a result of tax positions taken prior to 2009 |  |                                      | 66    |                                     |   | (336   | )
|Decrease due to the expiration of the statute of limitations         |  |                                      |      |                                     |   | (1,471 | )
|                                                                     |  |                                      |       |                                     |   |        |  
|Balance, September 30, 2009                                          |  | $                                    | 2,309 |                                     | $ | 2,309  |  
|                                                                     |  |                                      |       |                                     |   |        |  

The Companys policy is to record income tax related interest and penalties in income tax
expense. At September 30, 2009, potential interest and penalties related to uncertain tax positions amounting to $1,038,000 was included in the balance above. The balance is included in Other liabilities in the consolidated balance
sheet at September 30, 2009.

The Companys income tax expense for the nine-month period ended September 30, 2008 was adversely
affected by a modification to the cash-to-accrual adjustment which was required when the Company became a publicly-held entity in 2006. The net adjustment was $1,300,000.

The effective income tax rates for the three-month periods ended September 30, 2009 and 2008 were 21.4% and 25.4%, respectively, and the effective income tax rates for the nine-month periods ended
September 30, 2009 and 2008 were 13.2% and 11.2%, respectively. Excluding the effect of the reserve adjustment, the provision to return adjustment and the cash-to-accrual adjustment, the effective income tax rate would have been 25.4% and 24.9%
for the three-month periods ended September 30, 2009 and 2008 respectively, and 25.4% and 16.9% respectively, for the nine-month periods ended September 30, 2009 and 2008.

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.



15



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##### Table of Contents

The following tables reflect the required disclosures for the Companys reportable segments for the
three- and nine-month periods ended September 30, 2009 and 2008 (in thousands):

Three Months Ended:

Consulting Fee Revenue:



|                    |  |                    |        |  |                    |   |  |   |        |  |       |  
|------------------- |  | ------------------ | ------ |  | ------------------ | - |  | - | ------ |  | ----- | -
|                    |  | Three months ended |       
|                    |  | September 30, 2009 |        |  | September 30, 2008 |  
|Project Management  |  | $                  | 65,255 |  | 75.3               | % |  | $ | 64,776 |  | 74.2  | %
|Construction Claims |  |                    | 21,442 |  | 24.7               | % |  |   | 22,498 |  | 25.8  | %
|                    |  |                    |        |  |                    |   |  |   |        |  |       |  
|Total               |  | $                  | 86,697 |  | 100.0              | % |  | $ | 87,274 |  | 100.0 | %
|                    |  |                    |        |  |                    |   |  |   |        |  |       |  

Total Revenue:



|                    |  |                    |         |  |                    |   |  |   |        |  |       |  
|------------------- |  | ------------------ | ------- |  | ------------------ | - |  | - | ------ |  | ----- | -
|                    |  | Three months ended |        
|                    |  | September 30, 2009 |         |  | September 30, 2008 |  
|Project Management  |  | $                  | 81,092  |  | 78.6               | % |  | $ | 74,430 |  | 75.9  | %
|Construction Claims |  |                    | 22,103  |  | 21.4               | % |  |   | 23,670 |  | 24.1  | %
|                    |  |                    |         |  |                    |   |  |   |        |  |       |  
|Total               |  | $                  | 103,195 |  | 100.0              | % |  | $ | 98,100 |  | 100.0 | %
|                    |  |                    |         |  |                    |   |  |   |        |  |       |  

Operating Profit:



|                                                           |  |                    |        |   |                   |   |        |  
|---------------------------------------------------------- |  | ------------------ | ------ | - | ----------------- | - | ------ | -
|                                                           |  | Three months ended |       
|                                                           |  | September 30,2009  |        |   | September 30,2008 |  
|Project Management before equity in earnings of affiliates |  | $                  | 8,165  |   |                   | $ | 9,238  |  
|Equity in earnings of affiliates                           |  |                    | 3,931  |   |                   |   | 1,563  |  
|                                                           |  |                    |        |   |                   |   |        |  
|Total Project Management                                   |  |                    | 12,096 |   |                   |   | 10,801 |  
|Construction Claims                                        |  |                    | 1,780  |   |                   |   | 2,517  |  
|Corporate Expenses                                         |  |                    | (5,708 | ) |                   |   | (6,072 | )
|                                                           |  |                    |        |   |                   |   |        |  
|Total                                                      |  | $                  | 8,168  |   |                   | $ | 7,246  |  
|                                                           |  |                    |        |   |                   |   |        |  



16



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Depreciation and Amortization Expense:



|                    |  |                    |       |                   |   |      
|------------------- |  | ------------------ | ----- | ----------------- | - | -----
|                    |  | Three months ended
|                    |  | September 30,2009  |       | September 30,2008
|Project Management  |  | $                  | 1,085 |                   | $ | 841  
|Construction Claims |  |                    | 579   |                   |   | 529  
|                    |  |                    |       |                   |   |      
|Subtotal segments   |  |                    | 1,664 |                   |   | 1,370
|Corporate           |  |                    | 236   |                   |   | 195  
|                    |  |                    |       |                   |   |      
|Total               |  | $                  | 1,900 |                   | $ | 1,565
|                    |  |                    |       |                   |   |      

Consulting Fee Revenue by Geographic Region:



|             |  |                    |        |  |                    |   |  |   |        |  |       |  
|------------ |  | ------------------ | ------ |  | ------------------ | - |  | - | ------ |  | ----- | -
|             |  | Three months ended |       
|             |  | September 30, 2009 |        |  | September 30, 2008 |  
|Americas     |  | $                  | 17,743 |  | 20.5               | % |  | $ | 19,878 |  | 22.8  | %
|Europe       |  |                    | 24,600 |  | 28.4               | % |  |   | 30,895 |  | 35.4  | %
|Middle East  |  |                    | 30,982 |  | 35.7               | % |  |   | 28,203 |  | 32.3  | %
|North Africa |  |                    | 11,799 |  | 13.6               | % |  |   | 6,339  |  | 7.3   | %
|Asia/Pacific |  |                    | 1,573  |  | 1.8                | % |  |   | 1,959  |  | 2.2   | %
|             |  |                    |        |  |                    |   |  |   |        |  |       |  
|Total        |  | $                  | 86,697 |  | 100.0              | % |  | $ | 87,274 |  | 100.0 | %
|             |  |                    |        |  |                    |   |  |   |        |  |       |  

Total Revenue by Geographic Region:



|             |  |                    |         |  |                    |   |  |   |        |  |       |  
|------------ |  | ------------------ | ------- |  | ------------------ | - |  | - | ------ |  | ----- | -
|             |  | Three months ended |        
|             |  | September 30, 2009 |         |  | September 30, 2008 |  
|Americas     |  | $                  | 31,987  |  | 31.0               | % |  | $ | 29,153 |  | 29.7  | %
|Europe       |  |                    | 25,715  |  | 24.9               | % |  |   | 32,038 |  | 32.7  | %
|Middle East  |  |                    | 31,920  |  | 30.9               | % |  |   | 28,390 |  | 28.9  | %
|North Africa |  |                    | 11,925  |  | 11.6               | % |  |   | 6,535  |  | 6.7   | %
|Asia/Pacific |  |                    | 1,648   |  | 1.6                | % |  |   | 1,984  |  | 2.0   | %
|             |  |                    |         |  |                    |   |  |   |        |  |       |  
|Total        |  | $                  | 103,195 |  | 100.0              | % |  | $ | 98,100 |  | 100.0 | %
|             |  |                    |         |  |                    |   |  |   |        |  |       |  

Consulting Fee Revenue By Client Type:



|                                          |  |                    |        |  |                    |   |  |   |        |  |       |  
|----------------------------------------- |  | ------------------ | ------ |  | ------------------ | - |  | - | ------ |  | ----- | -
|                                          |  | Three months ended |       
|                                          |  | September 30, 2009 |        |  | September 30, 2008 |  
|U.S. federal government                   |  | $                  | 10,321 |  | 11.9               | % |  | $ | 10,471 |  | 12.0  | %
|U.S. state, local and regional government |  |                    | 8,470  |  | 9.8                | % |  |   | 9,637  |  | 11.0  | %
|Foreign government                        |  |                    | 12,559 |  | 14.5               | % |  |   | 11,155 |  | 12.8  | %
|Private sector                            |  |                    | 55,347 |  | 63.8               | % |  |   | 56,011 |  | 64.2  | %
|                                          |  |                    |        |  |                    |   |  |   |        |  |       |  
|Total                                     |  | $                  | 86,697 |  | 100.0              | % |  | $ | 87,274 |  | 100.0 | %
|                                          |  |                    |        |  |                    |   |  |   |        |  |       |  



17



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Total Revenue By Client Type:



|                                          |  |                    |         |  |                    |   |  |   |        |  |       |  
|----------------------------------------- |  | ------------------ | ------- |  | ------------------ | - |  | - | ------ |  | ----- | -
|                                          |  | Three months ended |        
|                                          |  | September 30, 2009 |         |  | September 30, 2008 |  
|U.S. federal government                   |  | $                  | 10,607  |  | 10.3               | % |  | $ | 10,807 |  | 11.0  | %
|U.S. state, local and regional government |  |                    | 22,253  |  | 21.6               | % |  |   | 17,341 |  | 17.7  | %
|Foreign government                        |  |                    | 13,247  |  | 12.8               | % |  |   | 11,364 |  | 11.6  | %
|Private sector                            |  |                    | 57,088  |  | 55.3               | % |  |   | 58,588 |  | 59.7  | %
|                                          |  |                    |         |  |                    |   |  |   |        |  |       |  
|Total                                     |  | $                  | 103,195 |  | 100.0              | % |  | $ | 98,100 |  | 100.0 | %
|                                          |  |                    |         |  |                    |   |  |   |        |  |       |  

Nine Months Ended:

Consulting Fee Revenue:



|                    |  |                    |         |  |                    |   |  |   |         |  |       |  
|------------------- |  | ------------------ | ------- |  | ------------------ | - |  | - | ------- |  | ----- | -
|                    |  | Nine months ended  |        
|                    |  | September 30, 2009 |         |  | September 30, 2008 |  
|Project Management  |  | $                  | 206,595 |  | 76.4               | % |  | $ | 173,483 |  | 72.7  | %
|Construction Claims |  |                    | 63,793  |  | 23.6               | % |  |   | 65,219  |  | 27.3  | %
|                    |  |                    |         |  |                    |   |  |   |         |  |       |  
|Total               |  | $                  | 270,388 |  | 100.0              | % |  | $ | 238,702 |  | 100.0 | %
|                    |  |                    |         |  |                    |   |  |   |         |  |       |  

Total Revenue:



|                    |  |                    |         |  |                    |   |  |   |         |  |       |  
|------------------- |  | ------------------ | ------- |  | ------------------ | - |  | - | ------- |  | ----- | -
|                    |  | Nine months ended  |        
|                    |  | September 30, 2009 |         |  | September 30, 2008 |  
|Project Management  |  | $                  | 245,613 |  | 78.9               | % |  | $ | 207,430 |  | 75.2  | %
|Construction Claims |  |                    | 65,860  |  | 21.1               | % |  |   | 68,443  |  | 24.8  | %
|                    |  |                    |         |  |                    |   |  |   |         |  |       |  
|Total               |  | $                  | 311,473 |  | 100.0              | % |  | $ | 275,873 |  | 100.0 | %
|                    |  |                    |         |  |                    |   |  |   |         |  |       |  

Operating Profit:



|                                                           |  |                    |         |   |                    |   |         |  
|---------------------------------------------------------- |  | ------------------ | ------- | - | ------------------ | - | ------- | -
|                                                           |  | Nine months ended  |        
|                                                           |  | September 30, 2009 |         |   | September 30, 2008 |  
|Project Management before equity in earnings of affiliates |  | $                  | 25,926  |   |                    | $ | 24,135  |  
|Equity in earnings of affiliates                           |  |                    | 7,390   |   |                    |   | 2,994   |  
|                                                           |  |                    |         |   |                    |   |         |  
|Total Project Management                                   |  |                    | 33,316  |   |                    |   | 27,129  |  
|Construction Claims                                        |  |                    | 4,988   |   |                    |   | 8,148   |  
|Corporate Expenses                                         |  |                    | (19,301 | ) |                    |   | (16,852 | )
|                                                           |  |                    |         |   |                    |   |         |  
|Total                                                      |  | $                  | 19,003  |   |                    | $ | 18,425  |  
|                                                           |  |                    |         |   |                    |   |         |  



18



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##### Table of Contents

Depreciation and Amortization Expense:



|                    |  |                    |       |                    |   |      
|------------------- |  | ------------------ | ----- | ------------------ | - | -----
|                    |  | Nine months ended 
|                    |  | September 30, 2009 |       | September 30, 2008
|Project Management  |  | $                  | 3,021 |                    | $ | 2,265
|Construction Claims |  |                    | 1,711 |                    |   | 1,463
|                    |  |                    |       |                    |   |      
|Subtotal segments   |  |                    | 4,732 |                    |   | 3,728
|Corporate           |  |                    | 682   |                    |   | 520  
|                    |  |                    |       |                    |   |      
|Total               |  | $                  | 5,414 |                    | $ | 4,248
|                    |  |                    |       |                    |   |      

Consulting Fee Revenue by Geographic Region:



|             |  |                    |         |  |                    |   |  |   |         |  |       |  
|------------ |  | ------------------ | ------- |  | ------------------ | - |  | - | ------- |  | ----- | -
|             |  | Nine months ended  |        
|             |  | September 30, 2009 |         |  | September 30, 2008 |  
|Americas     |  | $                  | 55,429  |  | 20.5               | % |  | $ | 57,898  |  | 24.3  | %
|Europe       |  |                    | 79,219  |  | 29.3               | % |  |   | 79,791  |  | 33.4  | %
|Middle East  |  |                    | 97,126  |  | 35.9               | % |  |   | 82,848  |  | 34.7  | %
|North Africa |  |                    | 33,236  |  | 12.3               | % |  |   | 12,740  |  | 5.3   | %
|Asia/Pacific |  |                    | 5,378   |  | 2.0                | % |  |   | 5,425   |  | 2.3   | %
|             |  |                    |         |  |                    |   |  |   |         |  |       |  
|Total        |  | $                  | 270,388 |  | 100.0              | % |  | $ | 238,702 |  | 100.0 | %
|             |  |                    |         |  |                    |   |  |   |         |  |       |  

Total Revenue by Geographic Region:



|             |  |                    |         |  |                    |   |  |   |         |  |       |  
|------------ |  | ------------------ | ------- |  | ------------------ | - |  | - | ------- |  | ----- | -
|             |  | Nine months ended  |        
|             |  | September 30, 2009 |         |  | September 30, 2008 |  
|Americas     |  | $                  | 88,620  |  | 28.5               | % |  | $ | 88,986  |  | 32.2  | %
|Europe       |  |                    | 81,952  |  | 26.3               | % |  |   | 83,572  |  | 30.3  | %
|Middle East  |  |                    | 101,353 |  | 32.5               | % |  |   | 84,557  |  | 30.7  | %
|North Africa |  |                    | 33,921  |  | 10.9               | % |  |   | 13,258  |  | 4.8   | %
|Asia/Pacific |  |                    | 5,627   |  | 1.8                | % |  |   | 5,500   |  | 2.0   | %
|             |  |                    |         |  |                    |   |  |   |         |  |       |  
|Total        |  | $                  | 311,473 |  | 100.0              | % |  | $ | 275,873 |  | 100.0 | %
|             |  |                    |         |  |                    |   |  |   |         |  |       |  



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##### Table of Contents

Consulting Fee Revenue By Client Type:



|                                          |  |                    |         |  |                    |   |  |   |         |  |       |  
|----------------------------------------- |  | ------------------ | ------- |  | ------------------ | - |  | - | ------- |  | ----- | -
|                                          |  | Nine months ended  |        
|                                          |  | September 30, 2009 |         |  | September 30, 2008 |  
|U.S. federal government                   |  | $                  | 36,206  |  | 13.4               | % |  | $ | 29,836  |  | 12.5  | %
|U.S. state, local and regional government |  |                    | 27,702  |  | 10.2               | % |  |   | 27,482  |  | 11.5  | %
|Foreign government                        |  |                    | 36,918  |  | 13.7               | % |  |   | 23,134  |  | 9.7   | %
|Private sector                            |  |                    | 169,562 |  | 62.7               | % |  |   | 158,250 |  | 66.3  | %
|                                          |  |                    |         |  |                    |   |  |   |         |  |       |  
|Total                                     |  | $                  | 270,388 |  | 100.0              | % |  | $ | 238,702 |  | 100.0 | %
|                                          |  |                    |         |  |                    |   |  |   |         |  |       |  

Total Revenue By Client Type:



|                                          |  |                    |         |  |                    |   |  |   |         |  |       |  
|----------------------------------------- |  | ------------------ | ------- |  | ------------------ | - |  | - | ------- |  | ----- | -
|                                          |  | Nine months ended  |        
|                                          |  | September 30, 2009 |         |  | September 30, 2008 |  
|U.S. federal government                   |  | $                  | 37,057  |  | 11.9               | % |  | $ | 31,245  |  | 11.3  | %
|U.S. state, local and regional government |  |                    | 59,417  |  | 19.1               | % |  |   | 55,205  |  | 20.0  | %
|Foreign government                        |  |                    | 38,229  |  | 12.3               | % |  |   | 24,826  |  | 9.0   | %
|Private sector                            |  |                    | 176,770 |  | 56.7               | % |  |   | 164,597 |  | 59.7  | %
|                                          |  |                    |         |  |                    |   |  |   |         |  |       |  
|Total                                     |  | $                  | 311,473 |  | 100.0              | % |  | $ | 275,873 |  | 100.0 | %
|                                          |  |                    |         |  |                    |   |  |   |         |  |       |  

Total Assets by Geographic Region:



|             |  |                    |         |                   |   |        
|------------ |  | ------------------ | ------- | ----------------- | - | -------
|             |  | September 30, 2009 |         | December 31, 2008
|Americas     |  | $                  | 138,501 |                   | $ | 138,189
|Europe       |  |                    | 91,653  |                   |   | 68,603 
|Middle East  |  |                    | 54,957  |                   |   | 41,798 
|North Africa |  |                    | 3,760   |                   |   | 1,876  
|Asia/Pacific |  |                    | 3,497   |                   |   | 3,575  
|             |  |                    |         |                   |   |        
|Total        |  | $                  | 292,368 |                   | $ | 254,041
|             |  |                    |         |                   |   |        

Property, Plant and Equipment, Net by Geographic Location:



|             |  |                    |        |                   |   |       
|------------ |  | ------------------ | ------ | ----------------- | - | ------
|             |  | September 30, 2009 |        | December 31, 2008
|Americas     |  | $                  | 6,205  |                   | $ | 6,437 
|Europe       |  |                    | 2,738  |                   |   | 3,046 
|Middle East  |  |                    | 1,881  |                   |   | 1,748 
|North Africa |  |                    | 251    |                   |   | 278   
|Asia/Pacific |  |                    | 280    |                   |   | 267   
|             |  |                    |        |                   |   |       
|Total        |  | $                  | 11,355 |                   | $ | 11,776
|             |  |                    |        |                   |   |       



20



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##### Table of Contents

Note 16 - Concentrations

The Company had one client that accounted for 12% of total revenue for both the three-month and nine-month periods ended September 30, 2009. The Company had one client which accounted for 10% of
total revenue for the nine-month period ended September 30, 2008. The Company had no clients that accounted for 10% or more of total revenue for the three-month period ended September 30, 2008.

The Company had one client which accounted for 10% of consulting fee revenue for the three-month period ended September 30, 2009 and one client that
accounted for 11% of consulting fee revenue for the nine-month period ended September 30, 2009. The Company had one client which accounted for 11% of consulting fee revenue for the three-month period ended September 30, 2008 and no clients
that accounted for 10% or more of consulting fee revenue during the nine-month period ending September 30, 2008.

One of the
Companys clients accounted for 19% of accounts receivable as of September 30, 2009. The Company had no clients that accounted for 10% or more of accounts receivable at December 31, 2008.

The Company has numerous contracts with U.S. federal government agencies that collectively accounted for 10% and 11% of total revenue during the three-month
periods ended September 30, 2009 and 2008, respectively, and 12% and 11% of total revenue during the nine-month periods ended September 30, 2009 and 2008, respectively.

Note 17 - Commitments and Contingencies

Litigation

On September 23, 1996, William Hughes General Contractors, Inc. (Hughes) filed a complaint in the Superior Court of New Jersey, Law
Division, Gloucester County, against the Monroe Township Board of Education, the Company and other parties, alleging breach of contract and other causes of action in connection with its performance of a construction project for Monroe Township,
seeking in excess of $3,500,000 in damages. Monroe Township, which had terminated Hughes from the construction project prior to the commencement of the litigation on the basis of Hughes performance, made a cross claim against the Company and
other parties for contribution and indemnification. Monroe Township is seeking approximately $89,000 damages from the Company, in addition to an indemnification for Hughes claims. In relation to the Hughes claims, a claim was made against the
Company by Fidelity and Deposit Company of Maryland (F&D). F&D claimed damages in the range of $425,000 to $470,000. The F&D claim was being defended by the New Jersey Professional Liability Insurance Guarantee Association
(NJPLIGA) and losses were covered up to $300,000. On September 18, 2009 the parties reached a global settlement in which the NJPLIGA agreed to pay $110,000 to Hughes and Hill agreed to pay $30,000. The Companys payment of
$30,000 is reflected in selling, general and administrative expenses in the consolidated statement of earnings for the three- and nine-month periods ended September 30, 2009.

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 & Resort (Project), seeking the sum of approximately 10,200,000 Bahraini Dinars
(approximately $27,166,000 at September 30, 2009) in damages. The Company provided project management services on the Project and Al Areen failed to pay the Company approximately 679,000 Bahraini Dinars ($1,801,000 at September 30, 2009)
for services rendered on the Project. The Company served a notice of termination on



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##### Table of Contents

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 in damages. The Company has reserved approximately $300,000 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.

Note 18 - Subsequent Events

Management performed an evaluation of the Companys activities through the time of filing this Quarterly Report on Form 10-Q on November 6,
2009 and has concluded that there are no significant subsequent events requiring recognition or disclosure in these consolidated financial statements.



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##### 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 2008 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 United States, 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 2,300 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 identified in the Companys 2008 Annual Report on Form 10-K, filed March 16, 2009 with the Securities and Exchange Commission, have not materially changed.



23



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##### 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 September 30, 2009 Compared to

Three Months Ended September 30, 2008

Results of Operations

Consulting Fee Revenue (CFR)



|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |        |   |  |      |   
|------------------- |  | ------------------ | ------ |  | ------------------ | - |  | ------ | ------ |  | ----- | - |  | - | ------ | - |  | ---- | --
|                    |  | Three months ended |       
|(in thousands)      |  | September 30, 2009 |        |  | September 30, 2008 |   |  | Change |       
|Project Management  |  | $                  | 65,255 |  | 75.3               | % |  | $      | 64,776 |  | 74.2  | % |  | $ | 479    |   |  | 0.7  | % 
|Construction Claims |  |                    | 21,442 |  | 24.7               | % |  |        | 22,498 |  | 25.8  | % |  |   | (1,056 | ) |  | (4.7 | ) 
|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |        |   |  |      |   
|Total               |  | $                  | 86,697 |  | 100.0              | % |  | $      | 87,274 |  | 100.0 | % |  | $ | (577   | ) |  | (0.7 | )%
|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |        |   |  |      |   

Hills CFR decreased 0.7% to $86,697,000 in the third quarter of 2009 from $87,274,000 in the
third quarter of 2008. This was comprised of an organic 1.5% decrease primarily from Europe offset by an increase of 0.8% from acquisitions.

During the third quarter of 2009, Hills project management CFR growth of 0.7% was all organic. The dollar increase in project management CFR consisted of a $2,063,000 increase in foreign projects and a decrease of $1,585,000 in
domestic projects. The increase in foreign project management CFR was primarily due to increases of $5,461,000 generated in North Africa and $2,033,000 in the Middle East. Growth in North Africa was primarily due to large new contracts in Libya.
Decreases in Europe (primarily due to the downturn in the economies of Spain and Poland) partially offset these increases. The decrease in domestic projects consisted primarily of New Jersey and Texas partially offset by increases in Pennsylvania
and the Southwest Region.

During the third quarter of 2009, Hills construction claims CFR decrease of 4.7% was comprised of an organic
8.0% decrease partially offset by 3.3% growth from the acquisitions of PCI Group, LLC (PCI) and Chitester Management Systems, Inc. (Chitester). The dollar change in construction claims CFR is primarily attributable to a
$1,562,000 decrease due to the change in the average exchange rate of the British pound to the U.S. dollar from an average of $1.89 during the third quarter of 2008 to $1.64 for the third quarter of 2009.



24



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##### Table of Contents

Reimbursable Expenses



|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |       |   |  |       |  
|------------------- |  | ------------------ | ------ |  | ------------------ | - |  | ------ | ------ |  | ----- | - |  | - | ----- | - |  | ----- | -
|                    |  | Three months ended |       
|(in thousands)      |  | September 30, 2009 |        |  | September 30, 2008 |   |  | Change |       
|Project Management  |  | $                  | 15,837 |  | 96.0               | % |  | $      | 9,654  |  | 89.2  | % |  | $ | 6,183 |   |  | 64.0  | %
|Construction Claims |  |                    | 661    |  | 4.0                | % |  |        | 1,172  |  | 10.8  | % |  |   | (511  | ) |  | (43.6 | )
|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |       |   |  |       |  
|Total               |  | $                  | 16,498 |  | 100.0              | % |  | $      | 10,826 |  | 100.0 | % |  | $ | 5,672 |   |  | 52.4  | %
|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |       |   |  |       |  

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 $3,085,000 in New York and $2,427,000 in Philadelphia.

Cost of Services



|                    |  |                    |        |  |                    |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |       |  |     |  
|------------------- |  | ------------------ | ------ |  | ------------------ | - | -------- | ------ | - |  | - | ------ |  | ----- | -------- |  | ---- | - |  | - | ----- |  | --- | -
|                    |  | Three months ended |       
|                    |  | September 30, 2009 |        |  | September 30, 2008 |   |          | Change |  
|(in thousands)      |  |                    |        |  |                    |   | % of CFR |        |   |  |   |        |  |       | % of CFR |  |      |   |  |   |      
|Project Management  |  | $                  | 40,356 |  | 79.2               | % |          | 61.8   | % |  | $ | 39,028 |  | 79.7  | %        |  | 60.3 | % |  | $ | 1,328 |  | 3.4 | %
|Construction Claims |  |                    | 10,568 |  | 20.8               | % |          | 49.3   | % |  |   | 9,954  |  | 20.3  | %        |  | 44.2 | % |  |   | 614   |  | 6.2 | %
|                    |  |                    |        |  |                    |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |       |  |     |  
|Total               |  | $                  | 50,924 |  | 100.0              | % |          | 58.7   | % |  | $ | 48,982 |  | 100.0 | %        |  | 56.1 | % |  | $ | 1,942 |  | 4.0 | %
|                    |  |                    |        |  |                    |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |       |  |     |  

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 labor of $271,000 and an increase of $1,057,000 in other direct costs resulting from
increased work primarily in North Africa and the Middle East partially offset by decreased work in Europe, primarily Spain and Poland.

The
increase in the cost of services for construction claims was due primarily to an increase of $825,000 in direct expenses for Europe and the Middle East partially offset by a decrease of $280,000 for BBCG, a Canadian operation sold in March 2009.

Gross Profit



|                    |  |                    |        |  |                    |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |        |   |  |       |   
|------------------- |  | ------------------ | ------ |  | ------------------ | - | -------- | ------ | - |  | - | ------ |  | ----- | -------- |  | ---- | - |  | - | ------ | - |  | ----- | --
|                    |  | Three months ended |       
|                    |  | September 30, 2009 |        |  | September 30, 2008 |   |          | Change |  
|(in thousands)      |  |                    |        |  |                    |   | % of CFR |        |   |  |   |        |  |       | % of CFR |  |      |   |  |   |        |  
|Project Management  |  | $                  | 24,899 |  | 69.6               | % |          | 38.2   | % |  | $ | 25,748 |  | 67.2  | %        |  | 39.7 | % |  | $ | (849   | ) |  | (3.3  | )%
|Construction Claims |  |                    | 10,874 |  | 30.4               | % |          | 50.7   | % |  |   | 12,544 |  | 32.8  | %        |  | 55.8 | % |  |   | (1,670 | ) |  | (13.3 | ) 
|                    |  |                    |        |  |                    |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |        |   |  |       |   
|Total               |  | $                  | 35,773 |  | 100.0              | % |          | 41.3   | % |  | $ | 38,292 |  | 100.0 | %        |  | 43.9 | % |  | $ | (2,519 | ) |  | (6.6  | )%
|                    |  |                    |        |  |                    |   |          |        |   |  |   |        |  |       |          |  |      |   |  |   |        |   |  |       |   



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##### Table of Contents

The decrease in project management gross profit included decreases of $1,451,000 from domestic operations
and $1,191,000 from Poland, primarily due to decreased CFR, offset by an increase of $2,459,000 in North Africa.

The decrease in construction
claims gross profit of $1,670,000 included a decrease of $1,755,000 in the United Kingdom and Asia/Pacific primarily due to decreased CFR and the decrease in the British pound to the U.S. dollar from the third quarter of 2008 to the third quarter of
2009.

Selling, General and Administrative

(SG&A) Expenses



|               |  |                    |        |          |                    |   |  |        |          |  |      |   |  |   |        |   |  |      |   
|-------------- |  | ------------------ | ------ | -------- | ------------------ | - |  | ------ | -------- |  | ---- | - |  | - | ------ | - |  | ---- | --
|               |  | Three months ended |       
|               |  | September 30, 2009 |        |          | September 30, 2008 |   |  | Change |         
|(in thousands) |  |                    |        | % of CFR |                    |   |  |        | % of CFR |  |      |   |  |   |        |  
|SG&A Expenses  |  | $                  | 31,536 |          | 36.4               | % |  | $      | 32,609   |  | 37.4 | % |  | $ | (1,073 | ) |  | (3.3 | )%
|               |  |                    |        |          |                    |   |  |        |          |  |      |   |  |   |        |   |  |      |   

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



| |  |  | An increase in indirect labor expense of $858,000 including an increase of $438,000 in North Africa in connection with its growth and $426,000 in
corporate primarily for increases in executive compensation.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An increase of $772,000 for bad debt expense primarily from the Middle East and Europe.
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | A decrease in administrative and business development travel expense of $864,000 and a decrease in office supplies and computer related expenses of
$342,000 due to cost reduction efforts.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A decrease of $777,000 in professional services including legal and accounting as a result of cost cutting efforts initiated in 2009.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A gain of $400,000 from the sale of a domestic operations contract from a subsidiary company.
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | A decrease in unapplied labor of $208,000 primarily in Poland, Asia/Pacific and Texas due to staff reductions caused by lower CFR.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------

Equity in Earnings of Affiliates

Our share of the earnings of affiliates increased $2,368,000 from $1,563,000 in the third quarter of 2008 to $3,931,000 in the third quarter of 2009, primarily due to increased work in Iraq by SBH and the
completion of several fixed-price task orders.

Our share of the earnings of SBH increased $2,885,000 from $700,000 in the third quarter of
2008 to $3,585,000 in the third quarter of 2009.

Our share of the earnings of Hill TMG was $339,000 in the third quarter of 2009 compared
with $863,000 in the third quarter of 2008, a decrease of $524,000.

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



26



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##### Table of Contents

facilities in Iraq with the U.S. Army Corps of Engineers. At September 30, 2009, the existing task orders under the contract extend until late 2010, but those task orders have a lower run
rate than was experienced in 2009.

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.

Operating Profit

Operating profit increased $922,000, or 12.7%, to $8,168,000 in the third
quarter of 2009, from a profit of $7,246,000 in the same period of 2008, principally due to increased equity in earnings of affiliates and lower SG&A expenses, partially offset by a decrease in CFR. In addition, the lower valuation of the
British pound and the Euro versus the U.S. dollar decreased our operating profit in the third quarter of 2009 by approximately $221,000 from the same period of 2008.

Interest Expense, net

Net interest expense increased $479,000 to $511,000 in the
three-month period ended September 30, 2009 as compared with a net interest expense of $32,000 in the three-month period ended September 30, 2008, primarily due to increased borrowing under the Companys senior credit facility.

Income Taxes

For the
three-month periods ended September 30, 2009 and 2008, we recognized net tax expense of $1,636,000 and $1,829,000, respectively. The Companys income tax expense for the three-month period ended September 30, 2009 included $787,000
related to increases in the reserves for uncertain tax positions and a $1,096,000 benefit resulting from adjustments to agree the 2008 book amount to the actual amounts per the tax returns.

The effective income tax rates for the three-month periods ended September 30, 2009 and 2008 were 21.4% and 25.4%, respectively. Excluding the
effect of the reserve increase and the provision to return adjustment, the effective income tax expense rate would have been 25.4% and 24.9% for the three-month periods ended September 30, 2009 and 2008, respectively.

Net Earnings

Our net earnings attributable
to Hill International, Inc. for the third quarter of 2009 were $5,832,000, or $0.15 per diluted common share based upon 38,839,000 diluted common shares outstanding, as compared to net earnings for the third quarter of 2008 of $5,207,000, or $0.13
per diluted common share based upon 40,997,000 diluted common shares outstanding. Net earnings were favorably affected by significantly higher equity in earnings of affiliates, and lower SG&A expenses, partially offset by lower CFR, the decrease
in gross profit percentages, and the impact of exchange rates as the U.S. dollar strengthened (compared to the same period in 2008) against the British pound and the Euro.



27



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##### Table of Contents

Nine Months Ended September 30, 2009 Compared to

Nine Months Ended September 30, 2008

Results of Operations

Consulting Fee Revenue (CFR)



|                    |  |                    |         |  |                    |   |  |        |         |  |       |   |  |   |        |   |  |      |  
|------------------- |  | ------------------ | ------- |  | ------------------ | - |  | ------ | ------- |  | ----- | - |  | - | ------ | - |  | ---- | -
|                    |  | Nine months ended  |        
|(in thousands)      |  | September 30, 2009 |         |  | September 30, 2008 |   |  | Change |        
|Project Management  |  | $                  | 206,595 |  | 76.4               | % |  | $      | 173,483 |  | 72.7  | % |  | $ | 33,112 |   |  | 19.1 | %
|Construction Claims |  |                    | 63,793  |  | 23.6               | % |  |        | 65,219  |  | 27.3  |   |  |   | (1,426 | ) |  | (2.2 | )
|                    |  |                    |         |  |                    |   |  |        |         |  |       |   |  |   |        |   |  |      |  
|Total               |  | $                  | 270,388 |  | 100.0              | % |  | $      | 238,702 |  | 100.0 | % |  | $ | 31,686 |   |  | 13.3 | %
|                    |  |                    |         |  |                    |   |  |        |         |  |       |   |  |   |        |   |  |      |  

Hills CFR grew 13.3% to $270,388,000 for the nine months ended September 30, 2009 from
$238,702,000 for the nine months ended September 30, 2008. This was comprised of 9.2% organic growth, primarily from the Middle East and North Africa, and 4.1% from acquisitions.

During the nine months ended September 30, 2009, Hills project management CFR growth of 19.1% was comprised of 15.1% organic growth and 4.0% growth from acquisitions. The dollar increase in
project management CFR consisted of a $36,437,000 increase in foreign projects and a decrease of $3,325,000 in domestic projects. The increase in foreign project management CFR was primarily due to a $20,496,000 increase generated in North Africa
and $13,278,000 in the Middle East. Growth in North Africa was primarily due to two large contracts in Libya. Growth in our CFR in the Middle East has been strong primarily due to our involvement with the Iraq reconstruction efforts funded by the
United States government and new work in Qatar. The decrease in domestic project management CFR revenue was primarily due to decreased work in the Texas and New Jersey regions, partially offset by increased work in the Southwest region.

During the nine months ended September 30, 2009, Hills construction claims CFR decrease of 2.2% was comprised of an organic 6.3% decrease
partially offset by 4.1% growth from the acquisitions of PCI and Chitester. The dollar decrease in construction claims CFR is primarily attributable to a decrease in foreign construction claims CFR of $2,281,000 driven primarily by decreased work in
the UK and an increase in domestic construction claims CFR of $855,000 due primarily to PCI and Chitester which were acquired during the third and fourth quarters of 2008, respectively. The CFR for the UK was negatively impacted by $8,051,000 due to
the decrease in the exchange rate of the British pound to the U.S. dollar from 2008 to 2009.

Reimbursable Expenses



|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |        |   |  |       |  
|------------------- |  | ------------------ | ------ |  | ------------------ | - |  | ------ | ------ |  | ----- | - |  | - | ------ | - |  | ----- | -
|                    |  | Nine months ended  |       
|(in thousands)      |  | September 30, 2009 |        |  | September 30, 2008 |   |  | Change |       
|Project Management  |  | $                  | 39,017 |  | 95.0               | % |  | $      | 33,947 |  | 91.3  | % |  | $ | 5,070  |   |  | 14.9  | %
|Construction Claims |  |                    | 2,068  |  | 5.0                | % |  |        | 3,224  |  | 8.7   | % |  |   | (1,156 | ) |  | (35.9 | )
|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |        |   |  |       |  
|Total               |  | $                  | 41,085 |  | 100.0              | % |  | $      | 37,171 |  | 100.0 | % |  | $ | 3,914  |   |  | 10.5  | %
|                    |  |                    |        |  |                    |   |  |        |        |  |       |   |  |   |        |   |  |       |  

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 $2,454,000 in Pennsylvania and $2,586,000 in the Middle East.



28



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##### Table of Contents

Cost of Services



|                    |  |                    |         |  |       |   |  |                    |   |  |      |         |  |        |   |  |      |   |  |   |        |  |      |  
|------------------- |  | ------------------ | ------- |  | ----- | - |  | ------------------ | - |  | ---- | ------- |  | ------ | - |  | ---- | - |  | - | ------ |  | ---- | -
|                    |  | Nine months ended  |        
|                    |  | September 30, 2009 |         |  | % of  |   |  | September 30, 2008 |   |  | % of |         |  | Change |  
|(in thousands)      |  |                    |         |  | CFR   |   |  |                    |   |  | CFR  |         |  |        |  
|Project Management  |  | $                  | 125,543 |  | 80.5  | % |  | 60.8               | % |  | $    | 103,753 |  | 79.0   | % |  | 59.8 | % |  | $ | 21,790 |  | 21.0 | %
|Construction Claims |  |                    | 30,325  |  | 19.5  | % |  | 47.5               | % |  |      | 27,565  |  | 21.0   | % |  | 42.3 | % |  |   | 2,760  |  | 10.0 | %
|                    |  |                    |         |  |       |   |  |                    |   |  |      |         |  |        |   |  |      |   |  |   |        |  |      |  
|Total               |  | $                  | 155,868 |  | 100.0 | % |  | 57.6               | % |  | $    | 131,318 |  | 100.0  | % |  | 55.0 | % |  | $ | 24,550 |  | 18.7 | %
|                    |  |                    |         |  |       |   |  |                    |   |  |      |         |  |        |   |  |      |   |  |   |        |  |      |  

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 labor of $13,635,000 required to produce the higher volume of CFR and an increase in other
direct costs of $8,155,000 due to increased work primarily in North Africa.

The increase in the cost of services for construction claims was
due primarily to an increase in direct labor of $1,262,000 in the Middle East due to increases in the average salary cost in the latter part of 2008.

Gross Profit



|                    |  |                    |         |  |       |   |     |                    |   |  |      |         |  |        |     |  |      |   |  |   |        |   |  |       |  
|------------------- |  | ------------------ | ------- |  | ----- | - | --- | ------------------ | - |  | ---- | ------- |  | ------ | --- |  | ---- | - |  | - | ------ | - |  | ----- | -
|                    |  | Nine months ended  |        
|                    |  | September 30, 2009 |         |  | % of  |   |     | September 30, 2008 |   |  | % of |         |  | Change |    
|(in thousands)      |  |                    |         |  |       |   | CFR |                    |   |  |      |         |  |        | CFR |  |      |   |  |   |        |  
|Project Management  |  | $                  | 81,052  |  | 70.8  | % |     | 39.2               | % |  | $    | 69,730  |  | 64.9   | %   |  | 40.2 | % |  | $ | 11,322 |   |  | 16.2  | %
|Construction Claims |  | $                  | 33,468  |  | 29.2  | % |     | 52.5               | % |  |      | 37,654  |  | 35.1   | %   |  | 57.7 | % |  |   | (4,186 | ) |  | (11.1 | )
|                    |  |                    |         |  |       |   |     |                    |   |  |      |         |  |        |     |  |      |   |  |   |        |   |  |       |  
|Total               |  | $                  | 114,520 |  | 100.0 | % |     | 42.4               | % |  | $    | 107,384 |  | 100.0  | %   |  | 45.0 | % |  | $ | 7,136  |   |  | 6.6   | %
|                    |  |                    |         |  |       |   |     |                    |   |  |      |         |  |        |     |  |      |   |  |   |        |   |  |       |  

The increase in project management gross profit included $13,724,000 from foreign project management
of which $9,330,000 is attributable to increases in the Middle East, Europe and North Africa due to the increased CFR discussed above which was partially offset by a devaluation of the Euro.

The decrease in construction claims gross profit of $4,186,000 included a decrease of $3,374,000 in the United Kingdom primarily due to the impact of a
decrease of approximately 21% in the average British pound to U.S. dollar exchange rate from the first nine months of 2008 to the first nine months of 2009.

The decrease in the construction claims gross profit as a percentage of CFR is due primarily to decreases in the Middle East and in the United Kingdom. In the Middle East, average salary costs for new
hires in the latter part of 2008 were higher than the existing staff causing lower margins. In the United Kingdom, the use of outside experts on a large project was billed at margins significantly lower than internal staff.



29



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##### Table of Contents

Selling, General and Administrative

(SG&A) Expenses



|               |  |                    |         |         |                    |   |  |        |         |  |      |   |  |   |        |  |      |  
|-------------- |  | ------------------ | ------- | ------- | ------------------ | - |  | ------ | ------- |  | ---- | - |  | - | ------ |  | ---- | -
|               |  | Nine months ended  |        
|               |  | September 30, 2009 |         |         | September 30, 2008 |   |  | Change |        
|(in thousands) |  |                    |         | % ofCFR |                    |   |  |        | % ofCFR |  |      |   |  |   |       
|SG&A Expenses  |  | $                  | 102,907 |         | 38.1               | % |  | $      | 91,953  |  | 38.5 | % |  | $ | 10,954 |  | 11.9 | %
|               |  |                    |         |         |                    |   |  |        |         |  |      |   |  |   |        |  |      |  

The increase in SG&A expenses is partially attributable to an increase of $2,527,000 from the
2008 Gerens, Euromost, PCI and Chitester acquisitions. The significant components of the change are as follows:



| |  |  | An increase in unapplied labor of $3,758,000 including $1,056,000 for Euromost, Chitester and PCI. Unapplied labor represents the labor cost of
operating staff for time charged to business development, administration, vacation, holiday and other non-billable tasks. This increase was primarily due to the increased staff required to support the increase in revenue in the Middle East and North
Africa and an increase in the U.S. project management operations due to a decrease in labor utilization especially in offices in the western U.S. and New Jersey.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in indirect labor expense of $4,713,000 supporting the increase in revenue as well as the build-up of corporate staffing in connection with
Hills recent growth. The increase also includes $1,834,000 for Gerens, Euromost, PCI and Chitester.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An increase of $2,282,000 for bad debt expense including increases in the Middle East and North Africa of $1,659,000.
| | - |  | ---------------------------------------------------------------------------------------------------------------------

Equity in Earnings of Affiliates

Our share
of the earnings of affiliates increased $4,396,000 from $2,994,000 in the nine-month period ended September 30, 2008 to $7,390,000 in the nine-month period ended September 30, 2009, primarily due to the increased work in Iraq by SBH and
the completion of several fixed-price task orders.

Our share of the earnings of SBH increased $4,313,000, from $2,131,000 in the nine-month
period ended September 30, 2008 to $6,445,000 in the nine-month period ended September 30, 2009.

Our share of the earnings of Hill
TMG was $945,000 in the nine-month period ended September 30, 2009 compared to $863,000 for the same period in 2008.

Operating Profit

Operating profit increased $578,000, or 3.1%, to $19,003,000 during the nine months ended September 30, 2009, from a profit of
$18,425,000 in the same period of 2008, principally due to increased CFR and equity in earnings of affiliates partially offset by increased SG&A expenses. In addition, the lower valuation of the British pound and the Euro versus the U.S. dollar
decreased our operating profit by approximately $2,000,000.

Interest Expense (Income), net

Net interest expense increased $1,360,000 to $1,043,000 in the nine-month period ended September 30, 2009 as compared with a net interest income of
$317,000 in the nine-month period ended September 30, 2008, primarily due to increased borrowing under the Companys senior credit facility.



30



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##### Table of Contents

Income Taxes

For the nine-month periods ended September 30, 2009 and 2008, the Company recognized net tax expense of $2,370,000 and $2,098,000, respectively. Income tax expense for the nine-month periods ended
September 30, 2009 and 2008 were net of tax benefits of $1,807,000 and $2,506,000, respectively, principally 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. For the nine-month period ended September 30, 2009, income tax expense also included $721,000 related to increases in the reserves for uncertain tax positions and a $1,096,000
benefit resulting from adjustments to agree the 2008 book amount to the actual amounts per the tax returns. The Companys income tax expense for the nine-month period ended September 30, 2008 was adversely affected by a modification to the
cash-to-accrual adjustment which was required when the Company became a publicly held entity in 2006. The net adjustment was $1,300,000.

The
effective income tax rates for the nine-month periods ended September 30, 2009 and 2008 were 13.2% and 11.2%, respectively. Excluding the effect of the reserve adjustment, the provision to return adjustment and the cash-to-accrual
adjustment, the effective income tax expense rate would have been 25.4% and 16.9% for the nine-month periods ended September 30, 2009 and 2008, respectively. This increase was caused by a shift of earnings to higher taxed jurisdictions.

Net Earnings

Our net
earnings attributable to Hill International, Inc. for the nine-month period ended September 30, 2009 were $14,910,000, or $0.37 per diluted common share based upon 40,292,000 diluted common shares outstanding, as compared to net earnings for
the nine-month period ended September 30, 2008 of $15,798,000, or $0.38 per diluted common share based upon 41,282,000 diluted common shares outstanding. Net earnings were adversely affected due to the decrease in gross profit percentages,
higher SG&A expenses and the impact of exchange rates as the U.S. dollar strengthened (compared to the same period in 2008) 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 credit facilities.

Credit Facilities

On June 30, 2009, we replaced our $60,000,000 credit facility that we entered into in 2008 with Bank of America, N.A. with a new credit facility
providing the ability to borrow up to $100,000,000. The new credit facility has been made pursuant to the terms of a new 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. 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.



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The Credit Agreement provides for Base Rate loans and Eurodollar Rate loans. Base Rate loans will 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 will 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 September 30, 2009, the Company had $7,451,000 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 September 30, 2009 was $34,479,000.

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



| |  |  | A credit facility with a bank in the Middle East for AED 11,500,000 (approximately $3,131,000 at September 30, 2009) collateralized by certain
overseas receivables. The interest rate on that facility is the three-month Emirates InterBank Offer Rate (EIBOR), which at September 30, 2009 was 2.16%, plus 2.0% (or 4.16%). At September 30, 2009, there were no outstanding
borrowings under this facility. This facility expires on December 24, 2009.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A credit facility with a European bank for 1,000,000 (approximately $1,459,000 at September 30, 2009) secured by certain assets of the
Company. The interest rate on this facility is bank prime, which at September 30, 2009 was 6.50%, plus 2.50% (or 9.0%). At September 30, 2009, there were no outstanding borrowings under this facility which expires on April 30, 2010.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company also maintains an unsecured credit facility with a bank in Spain for 750,000 (approximately $1,091,000 at September 30, 2009).
The interest rate on that facility is the three month EURIBOR rate which at September 30, 2009 was 1.50%, plus 0.75% (or 2.25%). At September 30, 2009, there were no outstanding borrowings under this facility which expires on
December 18, 2009.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company also maintains a revolving credit loan payable to Barclays Bank PLC up to £500,000 (approximately $798,000 at September 30,
2009), with an interest rate at 2.00% plus the Bank of England rate of 0.50% (or 2.50%) at September 30, 2009, collateralized by cross guarantees of various United Kingdom companies. The loan has an expiration date of March 6, 2010.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Additional Capital Requirements

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



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Sources of Additional Capital

At September 30, 2009, our cash and cash equivalents amounted to approximately $29,586,000. 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 Nine Months Ended September 30, 2009

For the nine months ended September 30, 2009, our cash increased by $9,156,000 to $29,586,000. Cash provided by operations was
$1,470,000, cash provided by investing activities was $3,743,000 and cash provided by financing activities was $6,556,000. We also experienced a decrease in cash of $2,613,000 from the effect of foreign currency exchange rate fluctuations.

Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2009 was $1,470,000. Cash provided by operations as a result of consolidated net earnings of $15,590,000 for the period adjusted by non-cash items
included in net income and working capital changes such as:



| |  |  | Depreciation and amortization of $5,414,000;
| | - |  | --------------------------------------------



| |  |  | Bad debt expense of $3,121,000;
| | - |  | -------------------------------



| |  |  | Equity in earnings of affiliates of ($7,390,000);
| | - |  | -------------------------------------------------



| |  |  | A deferred tax provision of $1,218,000;
| | - |  | ---------------------------------------



| |  |  | Stock based compensation expense of $1,757,000.
| | - |  | -----------------------------------------------

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



| |  |  | A decrease in accounts receivable - affiliates of $4,101,000 due to the timing of collections from SBH and Hill TMG;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in accounts payable and accrued expenses of $5,220,000 primarily due to the growth of the business.
| | - |  | ---------------------------------------------------------------------------------------------------------------

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



| |  |  | An increase in accounts receivable of $22,888,000 due to slow downs and delays in payments principally from North Africa and the Middle East;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in prepaid expenses and other current assets of $1,404,000 due to the timing of payments for various selling, general and administrative
expenses;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A decrease in deferred revenue of $1,027,000, principally due to the timing of advance payments on projects overseas.
| | - |  | ---------------------------------------------------------------------------------------------------------------------

Investing Activities

Net cash
provided by investing activities was $3,743,000. We spent $2,245,000 to purchase computers, office equipment, furniture and fixtures and we also received $6,300,000 as distributions from SBH.



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Financing Activities

Net cash provided by financing activities was $6,556,000. We received $18,484,000 in net borrowings under our credit facilities, and we incurred $1,741,000 in costs associated with the amended loan
facility. We received $384,000 from the sale of common stock pursuant to our 2008 Employee Stock Purchase Plan. We repurchased approximately 1,487,000 shares of our common stock through open market purchases amounting to $4,871,000 under our stock
repurchase program. We purchased an additional 1,000,000 shares from our Chairman and Chief Executive Officer for $4,300,000 through a private transaction effective June 30, 2009. That transaction was settled on July 1, 2009. We made
payments on notes payable amounting to $1,220,000. Due to bank decreased $180,000 due to the timing of certain payments which were disbursed but not immediately funded by the bank.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board
(FASB) issued the FASB Accounting Standards Codification (the ASC). The ASC has become the single source of non-governmental accounting principles generally accepted in the United States (GAAP) recognized by the
FASB in the preparation of financial statements. The ASC does not supersede the rules or regulations of the Securities and Exchange Commission (SEC), therefore, the rules and interpretive releases of the SEC continue to be additional
sources of GAAP for the Company. The Company adopted the ASC as of July 1, 2009. The ASC does not change GAAP and did not have an effect on the Companys financial position, results of operations or cash flows.

On January 1, 2009, the Company adopted a new accounting standard issued by the Financial Accounting Standards Board (FASB) that
establishes accounting and reporting standards for noncontrolling interests in a subsidiary in consolidated financial statements. In accordance with this new standard, the Company has provided a new presentation on the face of the consolidated
financial statements to separately classify noncontrolling interests within the equity section of the consolidated balance sheets and to separately report the amounts attributable to controlling and noncontrolling interests in the consolidated
statements of operations for all periods presented. The adoption of this standard did not impact earnings per share attributable to the Companys common stockholders.

On January 1, 2009, the Company adopted a new accounting standard issued by the FASB related to accounting for business combinations using the acquisition method of accounting (previously referred to
as the purchase method). Among the significant changes, this standard requires a redefining of the measurement date of a business combination, expensing direct transaction costs as incurred, and recording a liability for contingent consideration at
the measurement date with subsequent re-measurements recorded in the results of operations. This standard also requires costs for business restructuring and exit activities related to the acquired company to be included in the post-combination
financial results of operations and also provides new guidance for the recognition and measurement of contingent assets and liabilities in a business combination. In addition, this standard requires several new disclosures, including the reasons for
the business combination, the factors that contribute to the recognition of goodwill, the amount of acquisition related third-party expenses incurred, the nature and amount of contingent consideration, and a discussion of pre-existing relationships
between the parties. The application of this standard is likely to have a significant impact on how the Company allocates the purchase price of prospective business combinations, including the recognition and measurement of assets acquired and
liabilities assumed and the expensing of direct transaction costs and costs to integrate the acquired business.

On June 30, 2009, the
Company adopted a new accounting standard issued by the FASB that requires the Company to evaluate subsequent events through the date the consolidated financial statements are filed with the Securities and Exchange Commission.



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In June 2009, FASB issued a new accounting standard that is to be applied to financial asset transfers
on or after the effective date, which is January 1, 2010 for the Companys financial statements. The standard limits the circumstances in which a financial asset may be de-recognized when the transferor has not transferred the entire
financial asset or has continuing involvement with the transferred asset. The concept of a qualifying special-purpose entity, which had previously facilitated sale accounting for certain asset transfers, has been eliminated. The Company expects that
adoption of this accounting standard will not have a material effect on its financial position or results of operations.

In June 2009,
FASB amended an accounting standard which deals with accounting for variable interest entities. The amendment is effective for reporting periods beginning after November 15, 2009. The amendment changes the process for how an enterprise
determines which party consolidates a variable interest entity (VIE) to a primarily qualitative analysis. The amendment defines the party that consolidates the VIE (the primary beneficiary) as the party with (1) the power to
direct activities of the VIE that most significantly affect the VIEs economic performance and (2) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Upon adoption of the amendment, reporting
enterprises must reconsider their conclusions on whether an entity should be consolidated and should a change result, the effect on net assets will be recorded as a cumulative effect adjustment to retained earnings. The Company expects that adoption
of this amendment will not have a material effect on its financial position or results of operations.

Quarterly Fluctuations

Our operating results vary from period to period as a result of the timing of projects and the growth of our business. 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 $597,000,000 at September 30, 2009 compared to $611,000,000 at June 30, 2009. We estimate
that approximately $276,000,000, or 46.2%, of the backlog at September 30, 2009 will be recognized during the twelve months subsequent to September 30, 2009.

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



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authorized. As of September 30, 2009, approximately $466,000,000, or 78.1%, of our backlog was in category 1 and approximately $131,000,000, or 21.9%, 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.



|                          |   |               |         |  |                  |   |  |   |         |  |       |  
|------------------------- | - | ------------- | ------- |  | ---------------- | - |  | - | ------- |  | ----- | -
|In thousands              |   | Total Backlog |         |  | 12 Month Backlog |  
|                          | $ |               | %       |  |                  | $ |  | % |        
|As of September 30, 2009: |   |               |         |  |                  |   |  |   |         |  |       |  
|Project Management        |   | $             | 563,000 |  | 94.3             | % |  | $ | 245,000 |  | 88.8  | %
|Construction Claims       |   |               | 34,000  |  | 5.7              |   |  |   | 31,000  |  | 11.2  |  
|                          |   |               |         |  |                  |   |  |   |         |  |       |  
|Total                     |   | $             | 597,000 |  | 100.0            | % |  | $ | 276,000 |  | 100.0 | %
|                          |   |               |         |  |                  |   |  |   |         |  |       |  
|As of June 30, 2009:      |   |               |         |  |                  |   |  |   |         |  |       |  
|Project Management        |   | $             | 579,000 |  | 94.8             | % |  | $ | 251,000 |  | 90.2  | %
|Construction Claims       |   |               | 32,000  |  | 5.2              |   |  |   | 28,000  |  | 9.8   |  
|                          |   |               |         |  |                  |   |  |   |         |  |       |  
|Total                     |   | $             | 611,000 |  | 100.0            | % |  | $ | 279,000 |  | 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, 2008 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, 2008.



|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 September 30, 2009, our disclosure controls and procedures
were effective. During the third quarter ended September 30, 2009, 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.



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##### Table of Contents

Part IIOther Information



|Item 1. | Legal Proceedings
|------- | -----------------

Litigation

On September 23, 1996, William Hughes General Contractors, Inc. (Hughes) filed a complaint in the Superior Court of New
Jersey, Law Division, Gloucester County, against the Monroe Township Board of Education, the Company and other parties, alleging breach of contract and other causes of action in connection with its performance of a construction project for Monroe
Township, seeking in excess of $3,500,000 in damages. Monroe Township, which had terminated Hughes from the construction project prior to the commencement of the litigation on the basis of Hughes performance, made a cross claim against the
Company and other parties for contribution and indemnification. Monroe Township is seeking approximately $89,000 damages from the Company, in addition to an indemnification for Hughes claims. In relation to the Hughes claims, a claim was made
against the Company by Fidelity and Deposit Company of Maryland (F&D). F&D claimed damages in the range of $425,000 to $470,000. The F&D claim was being defended by the New Jersey Professional Liability Insurance Guarantee
Association (NJPLIGA) and losses were covered up to $300,000. On September 18, 2009 the parties reached a global settlement in which the NJPLIGA agreed to pay $110,000 to Hughes and Hill agreed to pay $30,000. The Companys
payment of $30,000 is reflected in selling, general and administrative expenses in the consolidated statement of earnings for the three- and nine-month periods ended September 30, 2009.

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 & Resort (Project), seeking
the sum of approximately 10,200,000 Bahraini Dinars (approximately $27,166,000 at September 30, 2009) in damages. The Company provided project management services on the Project and Al Areen failed to pay the Company approximately 679,000
Bahraini Dinars (approximately $1,801,000 at September 30, 2009) for services rendered on the Project. The Company served a 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 in damages. The Company has reserved $300,000 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. In the opinion of management, after consultation with legal counsel, 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.



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##### Table of Contents

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

There has 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, 2008.



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

None.



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

None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None.



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

None.



|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.



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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: November 6, 2009 |  |  |  | By:                      |  | /s/ Irvin E. Richter
|                        |  |  |  |                          |  |                      |  | Irvin E. Richter                                                                 
|                        |  |  |  |                          |  |                      |  | Chairman and Chief Executive Officer (Principal Executive Officer)               
|                        |  |  | 
|Dated: November 6, 2009 |  |  |  | By:                      |  | /s/ John Fanelli III
|                        |  |  |  |                          |  |                      |  | John Fanelli III                                                                 
|                        |  |  |  |                          |  |                      |  | Senior Vice President and Chief Financial Officer (Principal Financial Officer)  
|                        |  |  | 
|Dated: November 6, 2009 |  |  |  | By:                      |  | /s/ Ronald F. Emma  
|                        |  |  |  |                          |  |                      |  | Ronald F. Emma                                                                   
|                        |  |  |  |                          |  |                      |  | Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)



39