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," "intends," 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 2007 Form 10-K. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of 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.

Arpeggio Acquisition Corporation ("Arpeggio") was incorporated in Delaware in 2004 as a specified purpose acquisition corporation. On September 28, 2006, Arpeggio merged with Hill International, Inc. ("Old Hill"), a Delaware corporation, and Arpeggio was the surviving entity of the merger. Old Hill was founded in 1976 by our current Chairman and Chief Executive Officer, Irvin E. Richter. The merger was accounted for as a reverse acquisition under U.S. generally accepted accounting principles pursuant to which Old Hill was considered to be the acquiring entity and Arpeggio was the acquired company for accounting purposes, accompanied by a recapitalization of Old Hill. Following the merger, Arpeggio changed its name to Hill International, Inc. In this report, the terms "Company," "we," "us," "our" or "Hill" refer to Hill International, Inc.

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 believe 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 2,100 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 2007 Annual Report on Form 10-K filed March 25, 2008 with the Securities and Exchange Commission have not materially changed.

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, 2008 Compared to

                     Three Months Ended September 30, 2007

Results of Operations

Consulting Fee Revenue ("CFR")



                                                 Three months ended
                          September 30, 2008        September 30, 2007           Change
   (in thousands)             $            %            $            %          $        %
   Project Management    $     64,776     74.2 %   $     35,026     68.1 %   $ 29,750   84.9 %
   Construction Claims         22,498     25.8 %         16,438     31.9 %      6,060   36.9 %

   Total                 $     87,274    100.0 %   $     51,464    100.0 %   $ 35,810   69.6 %

The increase in project management CFR consists of a $29,038,000 increase in foreign projects and a $712,000 increase in domestic projects. The increase in foreign project management CFR was due to a $12,465,000 increase generated in the Middle East and $16,573,000 in Europe. Growth in our CFR in the Middle East has been strong because there has been a significant increase in construction activity in a number of the countries in the Middle East/North Africa region (including the United Arab Emirates, Qatar, Saudi Arabia and Libya) where we do business. In addition, our involvement with the Iraq reconstruction efforts funded by the United States government has led to additional work for us. Growth in Europe is mainly due to the acquisition of Gerens (effective February 2008), Shreeves (effective January 2008) and Euromost (effective May 2008) generating CFR in the third quarter of $13,129,000. The increase in domestic project management CFR revenue of $712,000 was primarily due to increases of $411,000 in Washington D.C. and $546,000 in New York where several new projects began partially offset by a decrease of $267,000 in our western U.S. offices.

The increase in construction claims CFR is primarily attributable to foreign construction claims CFR including a $2,578,000 increase in the Middle East and $2,355,000 generated in the United Kingdom due to new work and expansion of existing work. In addition, PCI Group, LLC ("PCI") which was acquired on July 31, 2008 earned $502,000 in fees during the third quarter of 2008.

Reimbursable Expenses



                                                  Three months ended
                         September 30, 2008        September 30, 2007             Change
  (in thousands)             $            %            $            %          $           %
  Project Management    $      9,654     89.2 %   $     16,722     80.7 %   $ (7,068 )   -42.3 %
  Construction Claims          1,172     10.8 %          3,991     19.3 %     (2,819 )   -70.6 %

  Total                 $     10,826    100.0 %   $     20,713    100.0 %   $ (9,887 )   -47.7 %

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 statement of earnings. The decrease in project management reimbursable expenses was due to lower use of subcontractors overseas in Europe and the Middle East. We use subcontractors for a variety of reasons, such as providing at-risk construction services on contracts where such work is required by a client (generally known as "CM/Build" contracts) since we do not provide such services. The New York projects are principally CM/Build contracts which require more subcontracting work. The decrease in construction claims reimbursable expenses is due to the decreased use of subcontractors overseas primarily in Europe.

Cost of Services



                                                                           Three months ended
                                       September 30, 2008       % of CFR      September 30, 2007       % of CFR         Change
(in thousands)                             $            %                         $            %                       $        %
Project Management                    $     39,028     79.7 %       60.3 %   $     19,522     72.7 %       55.7 %   $ 19,506   99.9 %
Construction Claims                   $      9,954     20.3 %       44.2 %          7,345     27.3 %       44.7 %      2,609   35.5 %

Total                                 $     48,982    100.0 %       56.1 %   $     26,867    100.0 %       52.2 %   $ 22,115   82.3 %

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 $12,071,000 required to produce the higher volume of CFR. Of this amount, $4,881,000 is attributable to the acquisition of Gerens. In addition, increases in direct (non-labor) expense included $2,189,000 on new work in North Africa and $1,326,000 at Gerens.

The increase in cost of services for construction claims was due to an increase of $1,049,000 in the United Kingdom and $1,206,000 in the Middle East required to support the increase in CFR.

Gross Profit



                                                                           Three months ended
                                       September 30, 2008       % of CFR      September 30, 2007       % of CFR         Change
(in thousands)                             $            %                         $            %                       $        %
Project Management                    $     25,748     67.2 %       39.7 %   $     15,504     63.0 %       44.3 %   $ 10,244   66.1 %
Construction Claims                   $     12,544     32.8 %       55.8 %          9,093     37.0 %       55.3 %      3,451   37.9 %

Total                                 $     38,292    100.0 %       43.9 %   $     24,597    100.0 %       47.8 %   $ 13,695   55.7 %

The increase in project management gross profit included $9,804,000 from foreign project management of which $4,592,000 is attributable to the acquisition of Gerens, Shreeves and Euromost and $2,703,000 is due to new work in North Africa. The decrease in project management gross profit as a percentage of CFR is principally due to Gerens, which has a gross profit percentage of 28%, and lower average margins on Middle East work where some higher margin projects came to an end in early 2008.

The increase in construction claims gross profit included $1,372,000 in the Middle East and $1,306,000 in the United Kingdom primarily due to new work and expansion of existing work. The increase in construction claims gross profit as a percentage of CFR is due to billing rate increases in the Middle East and Europe.

Selling, General and Administrative

("SG&A") Expenses

Three months ended September 30, 2008 September 30, 2007 Change (in thousands) $ % of CFR $ % of CFR $ % SG&A Expenses $ 32,609 37.4 % $ 20,335 39.5 % $ 12,274 60.4 %

The increase in SG&A expenses is partially attributable to an increase of $4,208,000 from the 2008 Gerens, Shreeves and Euromost acquisitions. The significant components of the change are as follows:

• An increase in unapplied and indirect labor expense of $6,904,000 due to increases in staff required to produce and support the increase in revenue as well as the build-up of corporate staffing in connection with Hill's recent and anticipated growth. This increase includes $2,178,000 for Gerens, Shreeves and Euromost.

• An increase in non-cash stock-based compensation expense of $447,000 principally due to the expense amounting to approximately $275,000 booked upon stockholder approval of the 2007 Restricted Stock Grant Plan in the second quarter of 2008.

• An increase of $821,000 in administrative travel expense related to corporate executive and business development travel in support of the Company's strategic growth initiatives.

• An increase of $1,063,000 in rent expense primarily due to a $427,000 increase due to Gerens, Shreeves and Euromost.

• An increase of $335,000 in amortization expense. Increases of $35,000 due to the Gerens acquisition, $41,000 due to the Shreeves acquisition and $324,000 due to the Euromost acquisition.

• An increase in legal fees of $726,000 included $241,000 for Gerens, Shreeves and Euromost, an increase of $100,000 for international legal and tax matters and an increase of $60,000 for general corporate legal consulting.

• An increase in accounting fees of $426,000 due to statutory, Sarbanes Oxley and internal audit work for our expanded and growing operations.

Equity in Earnings of Affiliates

Our share of the earnings of an affiliates increased $688,000, from $875,000 in the three-month period ended September 30, 2007 to $1,563,000 in the three-month period ended September 30, 2008 primarily due to the formation of Hill TMG.

Our share of the earnings of an affiliate, Stanley Baker Hill, LLC ("SBH"), decreased $175,000, from $875,000 in the three-month period ended September 30, 2007 to $700,000 in the three-month period ended September 30, 2008.

Our share of the earnings of an affiliate, Hill TMG, was $863,000 in the three-month period ended September 30, 2008.

SBH is a joint venture between Stanley Consultants, Inc. ("Stanley"), Michael Baker, Jr., Inc. ("Baker") and us. Stanley, Baker and we each own an equal one-third interest in SBH. SBH has a contract for an indefinite delivery and indefinite quantity for construction management and general architect-engineer services for facilities in Iraq with the U.S. Army Corps of Engineers.

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 $2,109,000, or 41.1% to $7,246,000 from $5,137,000 in the three-month period ended September 30, 2008 principally due to higher CFR and gross profit, partially offset by higher SG&A expenses principally resulting from our overall growth.

Interest Expense, net

Net interest expense decreased $185,000 to $32,000 in the three-month period ended September 30, 2008 as compared with a net interest expense of $217,000 in the three-month period ended September 30, 2007, primarily due to decreased borrowing on the company's senior credit facility.

Income Taxes

For the three-month period ended September 30, 2008, we incurred an income tax expense of $1,829,000 compared to an expense of $1,059,000 for the three-month period ended September 30, 2007.

The effective income tax expense rates for the three-month periods ended September 30, 2008 and 2007 were 26.0% and 21.8%, respectively.

Net Earnings

Our net earnings for the three-month period ended September 30, 2008 were $5,207,000, or $0.13 per diluted common share based upon 41.5 million diluted common shares outstanding, as compared to net earnings for the three-month period ended September 30, 2007 of $3,800,000, or $0.13 per diluted common share based upon 29.6 million diluted common shares outstanding. The diluted earnings per share for 2008 were unfavorably impacted by a significant increase in diluted shares outstanding as a result of the exercise of substantially all of the Company's warrants in late 2007. Net earnings for the three-month period ended September 30, 2008 improved by $1,407,000 or 37%, which was principally due to an increase in CFR, an increase in gross profit partially offset by higher SG&A expenses as a result of our overall growth, an increase in non-cash stock-based compensation expense and the income tax charge related to the 2006 cash-to-accrual adjustment.

                Nine Months Ended September 30, 2008 Compared to

                      Nine Months Ended September 30, 2007

Results of Operations

Consulting Fee Revenue ("CFR")



                                                  Nine months ended
                          September 30, 2008        September 30, 2007           Change
   (in thousands)             $            %            $            %          $        %
   Project Management    $    173,483     72.7 %   $     95,002     65.8 %   $ 78,481   82.6 %
   Construction Claims         65,219     27.3 %         49,448     34.2 %     15,771   31.9 %

   Total                 $    238,702    100.0 %   $    144,450    100.0 %   $ 94,252   65.2 %

The increase in project management CFR consists of a $72,452,000 increase in foreign projects and a $6,029,000 increase in domestic projects. The increase in foreign project management CFR was due to a $35,976,000 increase generated in the Middle East and $36,476,000 in Europe. Growth in our CFR in the Middle East has been strong because there has been a significant increase in construction activity in a number of the countries in the Middle East/North Africa region (including the United Arab Emirates, Qatar, Saudi Arabia and Libya) where we do business. In addition, our involvement with the Iraq reconstruction efforts funded by the United States government has led to additional work for us. Growth in Europe is mainly due to the acquisitions of Gerens, Shreeves and Euromost generating CFR of $31,097,000. The increase in domestic project management CFR revenue of $6,029,000 was primarily due to an increase of $4,325,000 for KJM (acquired May 2007) combined with increases of $1,051,000 in New York and $821,000 in Washington D.C. where several new projects began.

The increase in construction claims CFR is primarily attributable to foreign construction claims CFR. The increase mainly consists of a $7,605,000 increase in the Middle East and a $6,915,000 generated in the United Kingdom, primarily due to new work and expansion of existing work.

Reimbursable Expenses



                                                   Nine months ended
                         September 30, 2008        September 30, 2007             Change
  ( in thousands)            $            %            $            %           $           %
  Project Management    $     33,947     91.3 %   $     49,121     82.4 %   $ (15,174 )   -30.9 %
  Construction Claims          3,224      8.7 %         10,481     17.6 %      (7,257 )   -69.2 %

  Total                 $     37,171    100.0 %   $     59,602    100.0 %   $ (22,431 )   -37.6 %

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 statement of earnings. The decrease in project management reimbursable expenses was partially due to a $5,736,000 decrease in reimbursable subcontractors' fees in New York combined with lower use of subcontractors overseas in Europe and the Middle East amounting to a decrease of $7,074,000. We use subcontractors for a variety of reasons, such as providing at-risk construction services on contracts where such work is required by a client (generally known as "CM/Build" contracts) since we do not provide such services. The New York projects are principally CM/Build contracts which require more subcontracting work. The decrease in construction claims reimbursable expenses is due to the decreased use of subcontractors overseas primarily in Europe.

Cost of Services



                                                                         Nine months ended
                                    September 30, 2008       % of CFR      September 30, 2007       % of CFR         Change
(in thousands)                          $            %                         $            %                       $        %
Project Management                 $    103,752     79.0 %       59.8 %   $     54,115     70.8 %       57.0 %   $ 49,637   91.7 %
Construction Claims                      27,566     21.0 %       42.3 %         22,271     29.2 %       45.0 %      5,295   23.8 %

Total                              $    131,318    100.0 %       55.0 %   $     76,386    100.0 %       52.9 %   $ 54,932   71.9 %

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 $32,876,000 required to produce the higher volume of CFR. Of this amount, $15,295,000 is attributable to the acquisition of Gerens, Shreeves and Euromost. In addition, direct (non-labor) expenses amounting to $3,851,000 were incurred by Gerens, Shreeves, and Euromost, $4,674,000 for new work in North Africa and $4,242,000 for new work in the Middle East.

The increase in the cost of services for construction claims was due primarily to an increase of $5,607,000 in the United Kingdom and the Middle East in line with an increase of $14,581,000 in CFR.

Gross Profit



                                                                         Nine months ended
                                    September 30, 2008       % of CFR      September 30, 2007       % of CFR         Change
(in thousands)                          $            %                         $            %                       $        %
Project Management                 $     69,730     64.9 %       40.2 %   $     40,887     60.1 %       43.0 %   $ 28,843   70.5 %
Construction Claims                      37,654     35.1 %       57.7 %         27,177     39.9 %       55.0 %     10,477   38.6 %

Total                              $    107,384    100.0 %       45.0 %   $     68,064    100.0 %       47.1 %   $ 39,320   57.8 %

The increase in project management gross profit included $26,358,000 from foreign project management in which $11,951,000 is attributable to the acquisition of Gerens, Shreeves and Euromost. In addition, increases in Middle East, Iraq and North Africa amounted to $13,851,000 due to the increased CFR discussed above. The decrease in project management gross profit as a percentage of CFR is due to Gerens which has a gross profit percentage of 34% and lower average margins on Middle East and Europe work where some higher margin projects came to an end in early 2008.

The increase in construction claims gross profit of $10,477,000 included $8,904,000 in the Middle East and United Kingdom primarily due to increased work and expansion of existing work. The increase in construction claims gross profit as a percentage of CFR is due to billing rate increases in the Middle East and Europe.

Selling, General and Administrative

("SG&A") Expenses

Nine months ended September 30, 2008 September 30, 2007 Change (in thousands) $ % of CFR $ % of CFR $ % SG&A Expenses $ 91,953 38.5 % $ 56,875 39.4 % $ 35,078 61.7 %

The increase in SG&A expenses is partially attributable to an increase of $9,944,000 from the 2008 Gerens, Shreeves and Euromost acquisitions. The significant components of the change are as follows:

• An increase in unapplied and indirect labor expense of $19,815,000 due to increases in staff required to produce and support the increase in revenue as well as the build-up of corporate staffing in connection with Hill's recent and anticipated growth. This increase includes $4,586,000 for Gerens, Shreeves and Euromost.

• An increase in non-cash stock-based compensation expense of $2,049,000 due primarily to the expense of approximately $1,740,000 booked upon stockholder approval of the 2007 Restricted Stock Grant Plan in the second quarter of 2008.

• An increase of $2,234,000 in administrative travel expense related to corporate executive and business development travel in support of the Company's strategic growth initiatives.

• An increase of $2,397,000 in rent expense primarily due to increases of $850,000 at Gerens, Shreeves and Euromost (acquired in 2008), $332,000 for KJM (acquired May 2007) and $342,000 for expanded offices in the Middle East.

• An increase of $1,075,000 in amortization expense due primarily to $313,000 due to the Gerens acquisition, $126,000 due to the Shreeves acquisition and $435,000 due to the Euromost acquisition.

• An increase in legal fees of $1,182,000 included $315,000 for Gerens, Shreeves and Euromost, an increase of $290,000 for international legal and tax matters and an increase of $236,000 for general corporate legal consulting.

• An increase of $382,000 for accounting fees due to statutory, Sarbanes . . .