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                                                                    EXHIBIT 99.1

                   FACTORS AFFECTING FUTURE FINANCIAL RESULTS

This Form 10-Q, our Annual Report to Shareholders, any other Form 10-Q, any Form
10-K or Form 8-K or any other written or oral statements made by or on our
behalf, include forward-looking statements that reflect our current views with
respect to future events and financial performance. The forward-looking
statements are subject to certain risks and uncertainties, including those
discussed below, that could cause our actual results to differ materially from
our historical results or anticipated results. If any of the matters included in
the following risks and uncertainties were to occur, our business, financial
condition, results of operations, cash flows or prospects could be materially
adversely affected. In such case, the trading price of our common stock could
decline.

In addition, the risks and uncertainties described below are not the only ones
facing our company. Additional risks not presently known to us or that we
currently deem immaterial may also adversely affect our business and operations.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.

                   RISKS THAT RELATE TO OUR FINANCIAL RESULTS

THE CURRENT ECONOMIC DOWNTURN HAS CAUSED, AND FUTURE ECONOMIC DOWNTURNS MAY
CAUSE, OUR REVENUE TO DECLINE.

Our revenue declined during fiscal year 2002, and we had a net loss of
approximately $26.9 million. During the first and second quarters of fiscal year
2003, our revenue increased, primarily as a result of acquisitions and other
transactions, and we had net income of approximately $15.2 million and $16.5
million, respectively. We continue to operate in a challenging economic
environment in the United States and abroad. As a result of the difficult
economic environment, some clients have cancelled, reduced or deferred
expenditures for consulting and technology services. In addition, due to
increased competition for engagements, we have also experienced pricing pressure
which has eroded our revenue. We have implemented cost-management programs to
manage our expenses as a percentage of revenue. However, current and future
cost-management initiatives may not be sufficient to maintain our margins if the
current challenging economic environment continues for several quarters.

Our results of operations are affected by the level of business activity of our
clients, which in turn is affected by economic conditions. Except as discussed
above, we cannot predict the impact that the current global economic downturn
will have on our future revenue, nor can we predict when economic conditions
will improve. During an economic downturn, our clients and potential clients
often cancel, reduce or defer existing contracts and delay entering into new
engagements. In general, companies also reduce the amount of spending on
information technology products and services during difficult economic times,
resulting in limited implementations of new technology and smaller engagements.
Because there are fewer engagements in a downturn, competition usually increases
and fees generally decline as competitors, particularly companies with
significant financial resources, decrease rates to maintain or increase their
market share in our industry. Our gross margin, which is the difference between
our revenue and our costs of service, also may decline in an economic downturn
due to lower utilization of our professionals, which means fewer billable hours
per employee, and pressure on the rates we charge. A decline in gross margin
typically causes our profitability to decline.

THERE WILL NOT BE A CONSISTENT PATTERN IN OUR FINANCIAL RESULTS FROM QUARTER TO
QUARTER, WHICH MAY RESULT IN INCREASED VOLATILITY OF OUR STOCK PRICE.

Our quarterly revenue and profitability have varied in the past and are likely
to vary significantly from quarter to quarter, making them difficult to predict.
This may lead to volatility in our share price. We are a professional services
organization. A major portion of our revenue is based on the number of hours
billed by our professionals and their hourly billing rates. Companies like ours
experience variations in profits during the year. There are many reasons for
these variations, but they can generally be attributed to the fact that our
business is dependent on the decisions and actions of our clients. For example,
a client could delay or cancel a project because the client's business is
experiencing financial problems. When this happens, it could reduce, eliminate
or delay our expected revenue, and we could lose the money that we have spent to
obtain or staff the project. Also, the mix of client projects, the personnel
required and their billing rates will affect results in our business in a
meaningful way. Typically, client service hours are adversely affected during
the first half of our fiscal year (July - December) due to the large number of
vacation days and holidays during this period. The demand for our services is
also significantly affected by general domestic and international economic and
political conditions. When economic activity slows down, as is currently the
case in the United States and many other parts of the world, our clients are
more likely to decrease their technology budgets and to delay or cancel
consulting contracts.

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In addition, when companies face eroding revenue and funding difficulties, they
may reduce their spending on consulting services. While our revenue thus may be
adversely affected by an economic downturn, our costs (especially staffing
costs) may not decrease as quickly. In addition, other factors that could cause
variations in our quarterly financial results are:

          -    our ability to transition employees quickly from completed
               projects to new engagements;

          -    the introduction of new products or services by us or our
               competitors;

          -    changes in our pricing policies or those of our competitors; and

          -    our ability to manage costs, including personnel costs and
               support services costs.

OUR PROFITABILITY WILL SUFFER IF WE ARE NOT ABLE TO MAINTAIN OUR PRICES AND
UTILIZATION RATES AND CONTROL OUR COSTS.

Our profit margin, and therefore our profitability, is largely a function of the
rates we are able to charge for our services and the utilization rate, or
chargeability, of our professionals. Accordingly, if we are not able to maintain
the rates we charge for our services or an appropriate utilization rate for our
professionals, we will not be able to sustain our profit margin and our
profitability will suffer. The rates we are able to charge for our services are
affected by a number of factors, including:

          -    our clients' perception of our ability to add value through our
               services;

          -    competition;

          -    introduction of new services or products by us or our
               competitors;

          -    pricing policies of our competitors; and

          -    general economic conditions.

Our utilization rates are also affected by a number of factors, including:

          -    seasonal trends, primarily as a result of our hiring cycle and
               holiday and summer vacations;

          -    our ability to transition employees from completed projects to
               new engagements;

          -    our ability to forecast demand for our services and thereby
               maintain an appropriately balanced and sized workforce; and

          -    our ability to manage attrition.

Our profitability is also a function of our ability to control our costs and
improve our efficiency. As we increase the number of our professionals and
execute our strategy for growth, we may not be able to manage a significantly
larger and more diverse workforce, control our costs or improve our efficiency.

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WE MAY HAVE DIFFICULTY INTEGRATING OR MANAGING THOSE BUSINESSES WE HAVE ACQUIRED
OR MAY ACQUIRE IN THE FUTURE, WHICH MAY HAVE A MATERIAL ADVERSE IMPACT ON OUR
FINANCIAL RESULTS OR REPUTATION IN THE MARKETPLACE.

In recent years, we have acquired consulting businesses or market rights from
the member firms of KPMG International in Argentina, Australia, Brazil, Canada,
Colombia, Costa Rica, Finland, Guatemala, Hong Kong, Ireland, Japan, Malaysia,
Mexico, the Netherlands Antilles, New Zealand, Nicaragua, Peru, Singapore, South
Korea, Taiwan and Venezuela. On May 7, 2002, the Company executed a letter of
intent with respect to certain independent business consulting practices
affiliated with Andersen Societe Cooperative Worldwide ("Andersen BC
Practices"). Since May 7, 2002, the Company acquired all or parts of the assets
of the Andersen BC Practices located in Australia, Hong Kong, China, Singapore,
South Korea, Switzerland, Peru, Japan, Norway, Finland, Sweden, France and
Spain. The Company has also hired professionals and staff members of Andersen BC
Practices located in the U.S. and Brazil. Further, the Company has acquired the
Ernst & Young business consulting practice in Brazil. On August 22, 2002, we
acquired BearingPoint GmbH (formerly KPMG Consulting AG). BearingPoint GmbH's
operations consist primarily of the German, Swiss and Austrian consulting
practices of KPMG DTG. We may acquire additional consulting businesses in the
future as part of our growth strategy.

In connection with the acquisitions of BearingPoint GmbH and certain European
Andersen BC Practices, we are in the process of finalizing plans of
restructuring to balance resources with market demand for services, including
specifically, identifying excess resources, and finalizing the cost of the
actions with appropriate regulatory bodies. We also plan to exit redundant
office facilities and consolidate staff in selected facilities. The plans are
expected to be finalized in the quarter ending March 31, 2003 and fully
implemented by the end of the fiscal year, subject to regulatory approvals.

In addition, each of these acquisitions involves the integration of separate
companies that have previously operated independently and have different
corporate cultures. Because we do not have significant acquisition experience,
we may not succeed at integrating or managing acquired businesses or in managing
the larger company that results from these acquisitions. The process of
combining such companies may be disruptive to their business and our business
and could have an adverse impact on the reputation of our company as a result of
the following difficulties, among others:

          -    loss of key clients or employees;

          -    inconsistencies in standards, controls, procedures and policies
               among the companies being combined, making it more difficult to
               implement and harmonize company-wide financial, accounting,
               billing, information and other systems;

          -    coordination of geographically diverse organizations; and

          -    diversion of management's attention from the day-to-day business
               of our company.

In addition, we may not be able to ensure that the new personnel we hired from
Arthur Andersen LLP's United States business consulting practices will be
utilized at maximum rates on a timely basis as we did not acquire any customer
contracts in connection with that group hire. We may also have difficulty
retaining the personnel that join us in connection with the acquisitions and
group hires.

If we are unable to integrate our acquisitions and/or group hires in a timely
manner, or at all, or if we experience difficulty integrating or managing the
acquired businesses, assets or personnel, we may not achieve the desired levels
of synergies in connection with the recent transactions. Also, the costs of
achieving those synergies may be greater than we anticipate. If we fail to
achieve the desired levels of synergies, or if the costs of achieving them,
including the cost of the above restructuring plans, are substantially greater
than we anticipate, our business, financial condition and results of operations
may be adversely affected.

Difficulties with integration or management may also affect client satisfaction
or create problems with the quality of client service, which could have an
adverse impact on the reputation of our company.

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OUR PROFITABILITY MAY DECLINE DUE TO FINANCIAL AND OPERATIONAL RISKS INHERENT IN
WORLDWIDE OPERATIONS.

In fiscal year 2002, approximately 92% of our revenue was attributable to
activities in North America. As a result of our recent acquisitions and other
transactions and group hires, and as we further expand globally, we expect that
the percentage of our revenue from our international operations will grow
significantly. During the second quarter of fiscal year 2003, approximately
66.5% of our revenue were attributable to activities in North America.

As a result, we face a number of financial and operational risks that may hinder
our ability to improve profitability, including:

          -    the lack of local recognition of the new brand that we have
               adopted, which will cause us to spend significant amounts of time
               and money to build a new identity;

          -    the costs of integrating and managing global operations,
               particularly those in Europe;

          -    difficulties relating to managing our business internationally;

          -    operating losses incurred in certain countries as we develop and
               expand our international service delivery capabilities, and the
               non-deductibility of those losses for tax purposes;

          -    restrictions on the repatriation of earnings;

          -    difficulties in collecting payments in some countries;

          -    restrictions on the movement of cash and other assets;

          -    differences in, and uncertainties arising from, local business
               culture and practices;

          -    multiple, and sometimes conflicting, laws and regulations,
               including tax laws;

          -    the absence in some jurisdictions of effective laws to protect
               our intellectual property rights;

          -    political, social and economic instability;

          -    international political and trade tensions;

          -    price controls or restrictions on exchanges of foreign
               currencies;

          -    currency exchange fluctuations;

          -    restriction on the import and export of certain technologies;

          -    changes in import or export duties and quotas;

          -    introduction of tariff or non-tariff barriers; and

          -    restrictions on employment policies.

If any of these risks materialize, there could be a material adverse effect on
our Company's operating results. In the past, we have incurred costs or
experienced disruptions due to certain of the factors described above, and we
expect to do so in the future.

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OUR INTERNATIONAL OPERATIONS AND ACQUISITIONS INVOLVE THE USE OF FOREIGN
CURRENCIES, WHICH SUBJECTS US TO FOREIGN EXCHANGE RATE FLUCTUATIONS AND OTHER
CURRENCY RISKS.

The revenue and expenses of our international operations generally are
denominated in local currencies, which subjects us to exchange rate fluctuations
between such local currencies and the United States dollar. These exchange rate
fluctuations subject us to currency translation risk with respect to the
reported results of our international operations and the cost of potential
acquisitions, as well as to other risks sometimes associated with international
operations. We are also subject to currency risk when our service contracts are
denominated in a currency different than the currency in which we incur expenses
related to such contracts. There can be no assurance that we will not experience
fluctuations in financial results from our operations outside of the United
States, and there can be no assurance we will be able, contractually or
otherwise, to reduce the currency risks associated with our international
operations. At the present time, we do not use derivative financial instruments
to manage or control foreign currency risk because most of our revenue and
related expenses are in the same functional currencies. However, we cannot
assure you that we will not use such financial instruments in the future or that
any such use will be successful in managing or controlling foreign currency
risks.

OUR GROWTH IS DEPENDENT IN PART ON OUR ABILITY TO MAKE ACQUISITIONS, AND WE RISK
OVERPAYING FOR ACQUIRED BUSINESSES.

Our growth strategy is dependent in part upon our ability to provide consulting
services worldwide, including our ability to develop a presence throughout
Europe. Since May 7, 2002, the Company has acquired all or parts of the assets
of the Andersen BC Practices located in France, Spain, Switzerland, Norway,
Finland and Sweden. On August 22, 2002, we acquired KPMG Consulting AG, which
has consulting practices in Germany, Switzerland and Austria. Previously, we had
acquired the consulting practice of the KPMG International member firm in
Ireland. While we have significantly expanded our consulting practice in Europe,
we cannot assure you that we will reach agreements to acquire consulting
practices in any of the other countries in Europe, including the United Kingdom,
Italy or the Netherlands, or that the terms and conditions of any agreements
will be favorable to us.

We may explore other international expansion opportunities, but we cannot assure
you that we will be able to reach an agreement to acquire any specific practice
or that any agreement we do reach will be on terms favorable to us. We will also
continue to evaluate from time to time, on a selective basis, other strategic
acquisitions if they will help us obtain well-trained, high-quality
professionals, new service offerings, additional industry expertise, a broader
client base or an expanded geographic presence. We cannot assure you that we
will be successful in identifying candidates or consummating acquisitions on
terms that are acceptable or favorable to us. In addition, there can be no
assurance that financing for acquisitions will be available on terms that are
acceptable or favorable to us, if at all. We may issue shares of our common
stock as part of the purchase price for some or all of these acquisitions.
Future issuances of our common stock in connection with acquisitions also may
dilute our earnings per share.

WE COULD FACE EXPOSURE TO LIABILITIES IN CONNECTION WITH OUR RECENT GROUP HIRES
AND RECENTLY CLOSED ACQUISITIONS AND OTHER TRANSACTIONS.

Creditors of Arthur Andersen LLP and other parties, including those representing
the interests of shareholders of entities audited by Arthur Andersen LLP, may
bring claims in the United States or elsewhere against us and others (and in one
instance a retired partner of Arthur Andersen LLP has brought a claim against us
and others) seeking recoveries for liabilities of Arthur Andersen LLP under
various legal theories, including, but not limited to, successor liability and
fraudulent conveyance. We do not believe that our acquisitions of Andersen BC
Practices and the group hires give rise to any liability for us under a theory
of successor liability, fraudulent conveyance or any other theories of liability
of which we are aware. Thus, we do not believe that the acquisitions and the
group hires expose us to potential liabilities associated with Arthur Andersen
LLP's legal difficulties, particularly claims against it arising from its prior
audit work or other services provided to Enron Corporation, Worldcom, Inc. and
other companies. Nevertheless, we cannot assure you that should persons or
entities with claims against Arthur Andersen LLP seek to hold us liable under
one or more legal theories, we will be able to successfully avoid liability for
such claims. If a court were to find us liable for liabilities of Arthur
Andersen LLP arising from such claims, our financial condition and operations
could be materially and adversely affected. In addition, litigation of this
nature could divert management time and attention, and we could incur
substantial defense costs.

In connection with other acquisitions, we are assuming some liabilities,
depending on the structure of the transaction, some of which are subject to
indemnities by the former owners of the businesses we are acquiring.
Accordingly, we may be exposed to liabilities relating to these acquisitions for
which the indemnity will not be sufficient.

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OUR LEVERAGE MAY AFFECT OUR BUSINESS AND MAY RESTRICT OUR OPERATING FLEXIBILITY.
IN ADDITION, WE MAY NOT BE ABLE TO REFINANCE OUR DEBT OR TO DO SO ON FAVORABLE
TERMS.

On May 29, 2002, we entered into a new revolving credit facility agreement with
an aggregate principal balance not to exceed $250 million. This credit facility
replaces our previous revolving credit facility and a line of credit facility.
We also have a facility pursuant to a receivables purchase agreement with an
issuer of receivables-backed commercial paper up to $150 million. We borrow
under the revolving credit facility and the receivables facility from time to
time. In November 2002, we completed a private placement of $220 million in
aggregate principal of Senior Notes. Subject to certain restrictions set forth
in the revolving credit facilities and the Senior Notes, including the
requirement that we meet certain financial tests, we may incur additional
indebtedness in the future, including indebtedness incurred to finance, or which
is assumed in connection with, acquisitions. However, our indebtedness under the
revolving credit facilities must rank at least equal to any additional new
indebtedness. Our receivables facility also requires us to meet certain
financial tests, which could limit our ability to incur additional indebtedness.
We may in the future renegotiate or refinance our credit facilities with
agreements that have different or more stringent terms. The level of our
indebtedness could:

          -    limit cash flow available for general corporate purposes, such as
               acquisitions and capital expenditures, due to the ongoing cash
               flow requirements for debt service;

          -    limit our ability to obtain, or obtain on favorable terms,
               additional debt financing in the future for working capital,
               capital expenditures or acquisitions;

          -    limit our flexibility in reacting to competitive and other
               changes in our industry and economic conditions generally;

          -    expose us to a risk that a substantial decrease in net operating
               cash flows due to economic developments or adverse developments
               in our business could make it difficult to meet debt service
               requirements; and

          -    expose us to risks inherent in interest rate fluctuations because
               borrowings may be at variable rates of interest, which could
               result in high interest expense in the event of increases in
               interest rates.

Our ability to make scheduled payments of principal of, to pay interest on, or
to refinance our indebtedness and to satisfy our other debt obligations will
depend upon our future operating performance, which may be affected by general
economic, financial, competitive, regulatory, business and other factors beyond
our control, including those discussed herein. In addition, there can be no
assurance that future borrowings or equity financing will be available for the
payment or refinancing of any indebtedness we may have in the future. If we are
unable to service our indebtedness, whether in the ordinary course of business
or upon acceleration of such indebtedness, we may be forced to pursue one or
more alternative strategies, such as restructuring or refinancing our
indebtedness, selling assets, reducing or delaying capital expenditures or
seeking additional equity capital. There can be no assurances that any of these
strategies could be effected on satisfactory terms, if at all.

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WE MAY NOT BE ABLE TO FINANCE FUTURE NEEDS OR ADAPT OUR BUSINESS PLAN TO CHANGES
IN ECONOMIC OR BUSINESS CONDITIONS BECAUSE OF RESTRICTIONS IMPOSED ON US BY OUR
CREDIT FACILITIES AND THE SENIOR NOTES, AND IF WE VIOLATE THESE LIMITATIONS WE
WILL BE IN DEFAULT ON THESE FACILITIES AND THE SENIOR NOTES.

Our credit facility, the receivables facility and the Senior Notes contain a
number of significant covenants that, among other things, will restrict our
ability to dispose of assets, incur additional indebtedness, incur liens on
property or assets, repay other indebtedness, pay dividends, enter into certain
investments, transactions or capital expenditures, repurchase or redeem capital
stock, engage in mergers, acquisitions or consolidations, or engage in certain
transactions with affiliates and otherwise restrict corporate activities. Such
restrictions could adversely affect our ability to operate our business, finance
our future operations or capital needs or engage in or take advantage of other
business activities or opportunities that may be in our interest or arise. In
addition, our credit facility, the receivables facility and the Senior Notes
also require us to maintain specified financial ratios and tests, including
certain net worth, leverage ratios, fixed charge coverage ratio, certain net
income ratios, and certain debt-to-debt plus net worth ratios. Other agreements
governing our indebtedness may also contain such affirmative and negative
covenants and financial ratios and tests. Our ability to comply with such
covenants, ratios and tests may be affected by events beyond our control.

A breach of any of these covenants, an inability to comply with the required
financial ratios and tests or our failure to pay principal and interest when due
could result in a default under the credit facility, the receivables facility,
the Senior Notes and other agreements, as applicable. In the event of any such
default, the lenders under these facilities could elect to declare all
borrowings outstanding under these facilities, together with accrued interest
and other fees, to be due and payable. In addition, any default under these
facilities or agreements governing our other indebtedness could lead to an
acceleration of debt under other debt instruments that contain
cross-acceleration or cross-default provisions. Our credit facilities and
receivables facility contain cross-default provisions to each other and to other
debt. If we were unable to repay any such borrowings when due, the lenders could
proceed against their collateral. If the indebtedness under these facilities
were to be accelerated, our assets may not be sufficient to repay amounts due on
other debt securities, if any, then outstanding.

                 RISKS THAT RELATE TO THE NATURE OF OUR BUSINESS

WE CHANGED OUR NAME AND OUR EXISTING AND POTENTIAL CLIENTS, INDUSTRY VENDORS,
RECRUITING CANDIDATES AND INVESTORS MAY NOT RECOGNIZE OUR NEW BRAND, WHICH MAY
CAUSE OUR REVENUE AND PROFITABILITY TO DECLINE.

On October 2, 2002, we began marketing our business under the new name
BearingPoint, Inc. Because we have previously marketed our business under the
KPMG Consulting name, our existing and potential clients, industry vendors and
investors generally may not recognize our new brand. Our name change also may
cause difficulties in recruiting qualified personnel. We cannot predict the
impact of the change in trademarks and trade names on our business. We expect to
incur approximately $28 million to $30 million of marketing expenses by the end
of fiscal year 2003 to build a new brand identity. If we fail to build a strong
new brand recognition, our revenue and profitability may decline.

OUR ABILITY TO RETAIN OUR MANAGING DIRECTORS IS CRITICAL TO THE SUCCESS OF OUR
BUSINESS.

The retention of our managing directors is particularly important to our future
success. The cumulative annual rate of turnover among our United States-based
managing directors was 4.7%, 8.4%, 10.8% and 3.1% for fiscal years 1999, 2000,
2001 and 2002, respectively, and 3.1% for the second quarter of fiscal year 2003
excluding any involuntary terminations and terminations as a result of
reductions in our workforce. While the turnover rate has recently decreased,
this was partially a result of the general economic slowdown in the United
States and abroad. The turnover rate could return to the historically higher
levels experienced in prior years when there is an economic recovery. In
addition, as a result of our change from a partnership to a corporate structure
and the creation of stock option programs and other corporate employee benefits,
our managing directors have accepted cash compensation that is less than the
payments they received as consulting partners of KPMG LLP, and in some cases
these reductions have been material. We cannot assure you that the substitution
of cash compensation, equity-based incentives and other employee benefits in
lieu of partnership profit distributed to consulting partners of KPMG LLP will
be sufficient to retain these individuals. In addition, there is no guarantee
that the non-competition agreements we have entered into with our managing
directors and other senior professionals are sufficiently broad to prevent our
consultants from leaving us for our competitors or that such agreements would be
upheld by an arbitrator or a court if we were to seek to enforce our rights
under these agreements. Similar considerations may apply with respect to
managing directors who have joined us from other consulting practices as a
result of our acquisitions or group hires.

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OUR SUCCESS IS LARGELY DEPENDENT ON OUR ABILITY TO HIRE AND RETAIN TALENTED
PEOPLE IN AN INDUSTRY THAT PERIODICALLY EXPERIENCES A SHORTAGE OF SKILLED
PROFESSIONALS AND A HIGH RATE OF EMPLOYEE TURNOVER.

Our business involves the delivery of professional services and is highly
labor-intensive. Our success depends largely on our general ability to attract,
develop, motivate and retain highly skilled professionals. The loss of some or a
significant number of our professionals or the inability to attract, hire,
develop, train and retain additional skilled personnel could have a serious
negative effect on us, including our ability to obtain and successfully complete
important engagements and thus maintain or increase our revenue. The cumulative
annual rate of turnover among our United States-based professional consultants
was 19.5%, 23.3%, 22.6% and 12.9% for fiscal years 1999, 2000, 2001 and 2002,
respectively, and 14.5% for the second quarter of fiscal year 2003 excluding any
involuntary terminations and terminations as a result of reductions in our
workforce. While the turnover rate has decreased since early 2001, this was
partially a result of the general economic slowdown in the United States and
abroad. The turnover rate could return to the higher levels experienced in the
last few years when there is an economic recovery. In a strong economy,
qualified consultants often are in great demand. In addition, certain of our
alliance agreements, such as with SAP America, Inc., Cisco Systems, Inc. and
Qwest Communications International, Inc., prohibit us from soliciting their
employees or their affiliates' employees. These circumstances have required us
in a strong economy to increase the compensation we pay our professionals at a
rate higher than the general inflation rate. Even so, we cannot assure that we
will be successful in attracting and retaining the skilled professionals we
require to conduct and expand our operations successfully when there is an
economic recovery.

WE DEPEND ON CONTRACTS WITH U.S. FEDERAL GOVERNMENT AGENCIES, PARTICULARLY
CLIENTS WITHIN THE DEPARTMENT OF DEFENSE, FOR A SIGNIFICANT PORTION OF OUR
REVENUE, AND IF OUR RELATIONSHIPS WITH THESE AGENCIES WERE HARMED OR IF THE
SPENDING POLICIES OR BUDGET PRIORITIES OF THE FEDERAL GOVERNMENT CHANGED, WE
COULD LOSE SIGNIFICANT REVENUE.

Contracts funded by U.S. federal government agencies accounted for 12.8%, 16.9%
and 25.6% of our revenue for fiscal 2000, 2001 and 2002, respectively. Contracts
funded by clients within the Department of Defense accounted for 6.7%, 8.6% and
12.8% of our revenue for the same periods. We believe that federal government
contracts will continue to be a source of a significant amount of our revenue
for the foreseeable future. For this reasons, any issue that compromises our
relationship with agencies of the federal government in general, or within the
Department of Defense in particular, would cause serious harm to our business.
Among the key factors in maintaining our relationships with federal government
agencies and departments are our performance on individual contracts and
delivery orders, the strength of our professional reputation, the relationships
of our key executives with client personnel and our compliance with complex
procurement laws and regulations related to the formation, administration and
performance of federal government contracts. In addition, our failure to obtain
and maintain necessary security clearances may limit our ability to perform
classified work for government clients, which could cause us to lose business.
Security breaches in sensitive government systems we have developed also could
damage our reputation and eligibility for additional work and expose us to
significant losses. To the extent that our performance does not meet client
expectations, or our reputation or relationships with one or more key clients
are impaired, our revenue and operating results could be materially harmed.

Changes in federal government fiscal or spending policies could directly affect
our financial performance. Among the factors that could harm our federal
government contracting business are:

          -    curtailment of the federal government's use of consulting and
               technology services firms;

          -    a significant decline in spending by the federal government, in
               general, or by specific departments or agencies in particular;

          -    the adoption of new laws or regulations that affect companies
               that provide services to the federal government;

          -    delays in the payment of our invoices by government payment
               offices;

          -    federal governmental shutdowns, such as the shutdown that
               occurred during the government's 1996 fiscal year, and other
               potential delays in the government appropriations process; and

          -    general economic and political conditions.

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These or other factors could cause federal government agencies and departments
to reduce their purchases under contracts, to exercise their right to terminate
contracts in whole or in part, to issue temporary stop work orders, or not to
exercise options to renew contracts, any of which could cause us to lose
revenue. We have substantial contracts in place with many federal departments
and agencies, and our continued performance under these contracts, or award of
additional contracts from these agencies, could be materially harmed by federal
government spending reductions or budget cutbacks at these departments or
agencies.

UNFAVORABLE GOVERNMENT AUDIT RESULTS COULD FORCE US TO ADJUST PREVIOUSLY
REPORTED OPERATING RESULTS AND COULD SUBJECT US TO A VARIETY OF PENALTIES AND
SANCTIONS.

The federal government audits and reviews our performance on contracts, pricing
practices, cost structure, and compliance with applicable laws, regulations, and
standards. Like most large government contractors, our contracts are audited and
reviewed on a continual basis by federal agencies, including the Defense
Contract Audit Agency. An audit of our work, including an audit of work
performed by companies we have acquired or may acquire, or subcontractors we
have hired or may hire, could result in a substantial adjustment to our
previously reported operating results. For example, any costs which were
originally reimbursed could subsequently be disallowed. In this case, cash we
have already collected may have to be refunded and operating margins may be
reduced.

If a government audit, review or investigation uncovers improper or illegal
activities, we may be subject to civil and criminal penalties and administrative
sanctions, including termination of contracts, reimbursement of payments
received, payment of certain government costs, forfeiture of profits, suspension
of payments, fines, and suspension or debarment from doing business with U.S.
federal government agencies. These consequences could lead to a material
reduction in our revenue. In addition, we could suffer serious harm to our
reputation if allegations of impropriety were made against us, whether or not
true. Although audits have been completed on our incurred contract costs through
fiscal 1999, audits for costs incurred or work performed after fiscal 1999 have
not yet been completed. In addition, non-audit reviews by the government may
still be conducted on all our government contracts.

If we were suspended or debarred from contracting with the federal government
generally, or any specific agency, if our reputation or relationship with
government agencies were impaired, or if the government otherwise ceased doing
business with us or significantly decreased the amount of business it does with
us, our revenue and operating results could be materially harmed.

FEDERAL GOVERNMENT CONTRACTS CONTAIN PROVISIONS GIVING GOVERNMENT CLIENTS A
VARIETY OF RIGHTS THAT ARE UNFAVORABLE TO US, INCLUDING THE ABILITY TO TERMINATE
A CONTRACT AT ANY TIME FOR CONVENIENCE.

Federal government contracts contain provisions and are subject to laws and
regulations that provide government clients with rights and remedies not
typically found in commercial contracts. These rights and remedies allow
government clients, among other things, to:

          -    terminate existing contracts, with short notice, for convenience,
               as well as for default;

          -    reduce or modify contracts or subcontracts;

          -    terminate our facility security clearances and thereby prevent us
               from receiving classified contracts;

          -    cancel multi-year contracts and related orders if funds for
               contract performance for any subsequent year become unavailable;

          -    decline to exercise an option to renew a multi-year contract;

          -    claim rights in products, systems, and technology produced by us;

          -    prohibit future procurement awards with a particular agency due
               to a finding of organizational conflict of interest based upon
               prior related work performed for the agency that would give a
               contractor an unfair advantage over competing contractors;

                                        9

<PAGE>

          -    subject the award of contracts to protest by competitors, which
               may require the contracting federal agency or department to
               suspend our performance pending the outcome of the protest and
               may also result in a requirement to resubmit bids for the
               contract or in the termination, reduction, or modification of the
               awarded contract; and

          -    suspend or debar us from doing business with the federal
               government or with a particular governmental agency.

If a government client terminates one of our contracts for convenience, we may
recover, at most, only our incurred or committed costs, settlement expenses, and
profit on work completed prior to the termination. If a federal government
client were to unexpectedly terminate, cancel, or decline to exercise an option
to renew with respect to one or more of our significant contracts or suspend or
debar us from doing business with government agencies, our revenue and operating
results could be materially harmed.

LOSS OF OUR GENERAL SERVICES ADMINISTRATION ("GSA") SCHEDULE CONTRACTS OR OUR
POSITION AS A PRIME CONTRACTOR ON ONE OR MORE GWACS OR OTHER MULTIPLE-AWARD
CONTRACTS WOULD IMPAIR OUR ABILITY TO WIN NEW BUSINESS.

We believe that a key element of our success in the public services sector is
our position, as of June 30, 2002, as the holder of three GSA schedule
contracts, and as a prime or sub contractor under approximately 10
Government-wide Acquisition Contracts ("GWACs") with approximately 250 related
delivery orders and more than 250 indefinite delivery/indefinite quantity
contracts. For the fiscal year ended June 30, 2002, revenue from GSA schedule
contracts, GWACs and other indefinite delivery/indefinite quantity contracts
accounted for approximately 11.8% of our companywide revenue. As these types of
contracts have increased in importance in the last several years, we believe our
position as a prime or sub contractor on these contracts has become increasingly
important to our ability to sell our services to federal government clients. If
we were to lose our position on one or more of these contracts, we could lose
revenue and our operating results could be materially harmed.

GSA schedule contracts, GWACs and other indefinite delivery/indefinite quantity
contracts typically have a one- or two-year initial term with multiple options
that are exercisable by our government clients to extend the contract for one or
more years. Although there are options to extend these contracts for a number of
years, we cannot assure you that our clients will exercise these options.

WE MAY FACE LEGAL LIABILITIES AND DAMAGE TO OUR PROFESSIONAL REPUTATION FROM
CLAIMS MADE AGAINST OUR WORK.

Many of our engagements involve projects that are critical to the operations of
our clients' businesses. If we fail to meet our contractual obligations, we
could be subject to legal liability, which could adversely affect our business,
operating results and financial condition. The provisions we typically include
in our contracts which are designed to limit our exposure to legal claims
relating to our services and the applications we develop may not protect us or
may not be enforceable under some circumstances or under the laws of some
jurisdictions. We have experienced liability claims in the past that have
resulted in litigation expenses and payments for settlements. It is likely,
because of the nature of our business, that we will be sued in the future.
Moreover, as a consulting firm, we depend to a large extent on our relationships
with our clients and our reputation for high caliber professional services and
integrity to retain and attract clients and employees. As a result, claims made
against our work may be more damaging in our industry than in other businesses.

THE INTERNET AND SYSTEMS INTEGRATION CONSULTING MARKETS ARE HIGHLY COMPETITIVE,
AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.

The Internet and systems integration consulting markets in which we operate
include a large number of participants and are highly competitive. Based on
revenue and the number of consultants we have, we are smaller than some of our
competitors. In particular, these larger competitors may have the ability to
deploy a large number of professionals more quickly in response to an urgent
client need, thereby giving them a competitive advantage over us. Our primary
competitors come from a variety of market segments, including other information
technology service providers, large accounting, consulting and other
professional service firms, packaged software vendors and service groups of
computer equipment companies.

                                       10

<PAGE>

Our marketplace is experiencing rapid changes in its competitive landscape. For
instance, three of the former "Big 5" accounting and consulting firms sold their
consulting businesses, the former consulting practice of a former "Big 5"
accounting firm completed its initial public offering in the summer of 2001 and
another former "Big 5" accounting firm separated its consulting practice into an
independent limited partnership. These changes in our marketplace may create
potentially larger and better capitalized competitors with enhanced abilities to
attract and retain their professionals. We also compete with our clients'
internal resources, particularly where these resources represent a fixed cost to
the client. The competitive nature of our industry may impose additional pricing
pressures on us.

Our ability to compete also depends in part on several factors beyond our
control, including the ability of our competitors to hire, retain and motivate
skilled professionals, the price at which others offer comparable services and
our competitors' responsiveness. There is a significant risk that this severe
competition will adversely affect our financial results in the future.

THE LOSS OF OUR SIGNIFICANT JOINT MARKETING RELATIONSHIPS COULD REDUCE OUR
REVENUE AND GROWTH PROSPECTS.

We have significant joint marketing relationships with Cisco Systems, Inc.,
Oracle Corporation, PeopleSoft, Inc., Microsoft Corporation, SAP and Siebel
Systems, Inc. These relationships enable us to increase revenue by providing us
additional marketing exposure, expanding our sales coverage, increasing the
training of our professionals, and developing and co-branding service offerings
that respond to customer demand. The loss of one or more of these relationships
could adversely affect our business by decreasing our revenue and growth
prospects. Mergers, acquisitions and other business combinations involving one
or more of these entities could result in changes in the degree to which they
will cooperate with us in joint marketing and product development. In addition,
if we engage in certain mergers, acquisitions and other business combinations,
these entities could terminate these joint marketing and product development
relationships. Moreover, because most of our significant joint marketing
relationships are nonexclusive, if our competitors are more successful in
building leading-edge products and services, these entities may form closer or
preferred arrangements with other consulting organizations.

WE MAY LOSE MONEY IF WE DO NOT ACCURATELY ESTIMATE THE COST OF A LARGE
ENGAGEMENT WHICH IS CONDUCTED ON A FIXED-PRICE BASIS.

A significant percentage of our engagements in our public services industry
group is performed on a fixed-price or fixed-time basis. During fiscal years
1999, 2000, 2001 and 2002, our public services segment revenue represented 30%,
32%, 31% and 41%, respectively, of our company's total revenue. While we do not
track the percentage of our engagements which are performed on a fixed-price or
fixed-time basis, we believe that only a small percentage of our other
engagements are performed on this basis. In addition, some of our engagements
obligate us to provide ongoing maintenance and other supporting or ancillary
services on a fixed-price basis or with limitations on our ability to increase
prices. Billing for fixed-time engagements is made in accordance with the
engagement terms agreed to with our client. Revenue are recognized based upon
professional costs incurred as a percentage of estimated total percentage costs
of the respective contract, and unbilled revenue represent revenue for services
performed that have not been billed. When making proposals for these types of
engagements, we rely on our estimates of costs and timing for completing the
projects. These estimates reflect our best judgment regarding the efficiencies
of our methodologies and professionals as we plan to apply them to the projects.
Any increased or unexpected costs or unanticipated delays in connection with the
performance of fixed-price or fixed-time contracts, including delays caused by
factors outside our control, could make these contracts less profitable or
unprofitable.

IF WE ARE NOT ABLE TO KEEP UP WITH RAPID CHANGES IN TECHNOLOGY OR MAINTAIN
STRONG RELATIONSHIPS WITH SOFTWARE PROVIDERS, OUR BUSINESS COULD SUFFER.

Our market is characterized by rapidly changing technologies, such as the
evolution of the Internet, frequent new product and service introductions and
evolving industry standards. If we cannot keep pace with these changes, our
business could suffer.

Our success will depend, in part, on our ability to develop service offerings
that keep pace with rapid and continuing changes in technology, evolving
industry standards and changing client preferences. Our success will also depend
on our ability to develop and implement ideas for the successful application of
existing and new technologies. We may not be successful in addressing these
developments on a timely basis or our ideas may not be successful in the
marketplace. Also, products and technologies developed by our competitors may
make our services or product offerings less competitive or obsolete.

We generate a significant portion of our revenue from projects to implement
software developed by others, including Oracle Corporation, PeopleSoft, Inc.,
Siebel Systems, Inc. and SAP. Our future success in the software implementation
business depends on the continuing viability of these companies and their
ability to maintain market leadership. We cannot assure you that we will be able
to maintain a good relationship with these companies or that they will maintain
their leadership positions in the software market.

                                       11

<PAGE>

OUR BUSINESS WILL BE NEGATIVELY AFFECTED IF GROWTH OF THE USE OF THE INTERNET
DECLINES.

Our business is dependent upon continued growth of the use of the Internet by
our clients, prospective clients and their customers and suppliers. Growth of
use of the Internet has been and may continue to be slowed or delayed as a
result of a decline in general economic or business conditions. In addition, the
adoption of the Internet for commerce and communications, particularly by those
individuals and companies that have historically relied upon alternative means
of commerce and communication, generally requires an understanding and
acceptance of a new way of conducting business and exchanging information. In
particular, companies that have already invested substantial resources in other
means of conducting commerce and exchanging information may be particularly
reluctant or slow to adopt a new, Internet-based strategy that may make their
existing personnel and infrastructure obsolete, especially during a decline in
general economic or business conditions. Capacity constraints caused by growth
in Internet usage may, unless resolved, impede further growth in Internet use.
If the number of Internet users does not increase and commerce over the Internet
does not become more accepted and widespread, demand for our consulting services
may decrease and, as a result, our revenue could decline. The factors that may
affect Internet usage or electronic commerce adoption include:

          -    actual or perceived lack of security and privacy of information;

          -    lack of access or ease of use;

          -    congestion of traffic or other usage delays on the Internet;

          -    inconsistent quality of service or lack of availability of
               cost-effective high speed service;

          -    increases in access costs to the Internet;

          -    excessive governmental regulation;

          -    uncertainty regarding intellectual property ownership;

          -    reluctance to adopt new business methods;

          -    costs associated with the obsolescence of existing
               infrastructure; and

          -    impact of any taxes which may be imposed on transactions using
               the Internet.

OUR BUSINESS MAY BE HARMED BY EXISTING OR INCREASED UNITED STATES AND FOREIGN
GOVERNMENT REGULATION OF THE INTERNET.

In the United States and abroad, governments have passed legislation relating to
the Internet. Because these laws are still being implemented, we are not certain
how our business will be affected by them. We may be indirectly affected by this
legislation to the extent it impacts our clients and potential clients. In
addition, United States and foreign governmental bodies are considering, and may
consider in the future, other legislative proposals that would regulate the
Internet. We cannot predict if or how any future legislation would impact our
business.

OUR CONTRACTS CAN BE TERMINATED BY OUR CLIENTS WITH SHORT NOTICE.

Our clients typically retain us on a non-exclusive, engagement-by- engagement
basis, rather than under exclusive long-term contracts. Most of our consulting
engagements are less than 12 months in duration. We estimate that the majority
of our contracts can be terminated by our clients with short notice and without
significant penalty. The advance notice of termination required for contracts of
shorter duration and lower revenue is typically 30 days. Longer-term, larger and
more complex contracts may require a longer notice period for termination and
may include an early termination charge to be paid to us. Additionally, large
client projects involve multiple engagements or stages, and there is a risk that
a client may choose not to retain us for additional stages of a project or that
a client will cancel or delay additional planned engagements. These
terminations, cancellations or delays could result from factors unrelated to our
work product or the progress of the project, but could be related to business or
financial conditions of the client or the economy generally. When contracts are
terminated, we lose the associated revenue and we may not be able to eliminate
associated costs in a timely manner.

                                       12

<PAGE>

WE CURRENTLY HAVE ONLY A LIMITED ABILITY TO PROTECT OUR IMPORTANT INTELLECTUAL
PROPERTY RIGHTS.

We do not have any patents in the United States or any other jurisdiction to
protect our products or methods of doing business. Existing laws in the United
States offer limited protection for our business, and the laws of some countries
in which we provide services may not protect our intellectual property rights
even to the same limited extent as the laws of the United States. The provisions
in our agreements with clients which protect us against the unauthorized use,
transfer and disclosure of our intellectual property and proprietary information
may not be enforceable under the laws of some jurisdictions. In addition, we are
sometimes required to negotiate limits on these provisions in our contracts.

Our business includes the development of customized software modules in
connection with specific client engagements, particularly in our systems
integration business. We frequently assign to clients the copyright and other
intellectual property rights in some aspects of the software and documentation
developed for these clients. Although our contracts with our clients may provide
that we also retain rights to our intellectual property, it is possible that
clients will assert rights to, and seek to limit our use of, this intellectual
property.

There can be no assurance that the steps we take will be adequate to deter
misappropriation of proprietary information or that we will be able to detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights.

OUR SERVICES MAY INFRINGE UPON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.

We cannot be sure that our services do not infringe on the intellectual property
rights of others, and we may have infringement claims asserted against us. These
claims may harm our reputation, cost us money and prevent us from offering some
services. In some contracts, we may agree to indemnify our clients for certain
expenses or liabilities resulting from claimed infringements of the intellectual
property rights of third parties. In some instances, the amount of these
indemnities may be greater than the revenue we receive from the client. Any
claims or litigation in this area, whether we ultimately win or lose, could be
time-consuming, may injure our reputation, may result in costly delays or may
require us to enter into royalty or licensing arrangements.

              RISKS RELATED TO YOUR OWNERSHIP OF OUR COMMON STOCK

THE PRICE OF OUR COMMON STOCK MAY DECLINE BECAUSE OF THE LARGE NUMBER OF OTHER
SHARES AVAILABLE FOR SALE IN THE FUTURE.

Sales of a substantial number of shares of our common stock, or the perception
that such sales could occur, could adversely affect the market price of our
common stock.

On August 22, 2002, we issued approximately 30.5 million shares of our common
stock in connection with our acquisition of BearingPoint GmbH (formerly KPMG
Consulting AG). We registered these shares for resale under the United States
securities laws and the registration statement became effective in October 2002.
As a result, all of these shares may be sold in the public market.

In addition, the assurance and tax partners of the KPMG International member
firms in Ireland, the Netherlands Antilles, Brazil, Argentina and Japan were
issued 1.37 million shares, which must be divested within five years after the
closing of our initial public offering. An additional 0.47 million shares that
were issued to the former consulting partners of these KPMG International member
firms are subject to contractual transfer restrictions that expire as to
one-fourth of the shares on August 7, 2002 and each succeeding anniversary. Our
managing directors, who received their shares (founders shares) when we
separated from KPMG LLP, and Cisco are subject to contractual limitations on
resale. These limitations are described in the table below. Cisco is entitled to
a total of six demands for registration and in addition has the right to
piggyback registration rights if we propose to register our shares under the
Securities Act. Such rights can be exercised beginning January 31, 2003. As of
January 31, 2003, there were a total of approximately 189.5 million shares of
our common stock outstanding.

The table below sets forth with respect to our managing directors who received
founders shares and Cisco, the number of shares of our common stock these
stockholders held as of February 7, 2001 that are subject to contractual
transfer restrictions, the percentage of our total number of outstanding shares
as of August 31, 2002 that such number represents and the nature of the
contractual transfer restrictions. These restrictions are in addition to any
restrictions contained under applicable law.

                                       13

<PAGE>

<TABLE>
<CAPTION>
                                     Number            Percent
         Holder                        of              of Total                   Contractual Transfer
                                     Shares          Outstanding                      Restrictions
                                     ------          -----------                      ------------
<S>                               <C>                <C>                 <C>
Our Managing Directors             5.14 million             2.2%         Restrictions on 40% of the total shares
who hold founders shares                                                 owned expired on August 7, 2001 and restrictions
                                                                         on one-fourth of the remaining shares will expire
                                                                         on each succeeding anniversary.

Cisco Systems, Inc.               15.44 million             6.5%         Cisco may sell its shares beginning January 31, 2003,
                                                                         subject to registration of  the shares or an applicable
                                                                         exemption from registration.
</TABLE>

As of December 31, 2002, options to purchase approximately 48.7 million shares
of common stock were outstanding with exercise prices ranging from $5.32 to
$55.50, and approximately 14.3 million additional shares of our common stock
were available in connection with future grants or awards under our long-term
incentive plan. Our employee stock purchase plan also had approximately 7.4
million shares available for sale as of December 31, 2002. In addition, we may
issue additional shares in connection with any acquisitions we make. Any such
additional shares could also have a dilutive effect on our earnings per share.

THERE ARE SIGNIFICANT LIMITATIONS ON THE ABILITY OF ANY PERSON OR COMPANY TO BUY
OUR COMPANY WITHOUT THE APPROVAL OF OUR BOARD OF DIRECTORS, WHICH MAY DECREASE
THE PRICE OF OUR COMMON STOCK.

Our certificate of incorporation and bylaws each contain provisions that may
make the acquisition of our company more difficult without the approval of our
board of directors. These provisions of our certificate of incorporation and our
bylaws include the following, among others:

          -    our board of directors is classified into three classes, each of
               which, after an initial transition period, will serve for
               staggered three-year terms;

          -    a director may be removed by our stockholders only for cause and
               then only by the affirmative vote of two-thirds of the
               outstanding voting power of stock entitled to vote generally in
               the election of directors;

          -    only our board of directors or the chairman of our board of
               directors may call special meetings of our stockholders;

          -    our stockholders may take action only at a meeting of our
               stockholders and not by written consent;

          -    our stockholders must comply with advance notice procedures in
               order to nominate candidates for election to our board of
               directors or to place stockholders' proposals on the agenda for
               consideration at meetings of the stockholders;

          -    our board may consider the impact of any proposed change of
               control transaction on constituencies other than our stockholders
               in determining what is in the best interest of our company and
               our stockholders;

          -    business combinations involving one or more persons that own or
               intend to own at least 15% of our voting stock must be approved
               by the affirmative vote of at least a majority of our voting
               stock, excluding that held by these persons, or by our board of
               directors, excluding directors affiliated with these persons, or
               the consideration paid in the business combination must generally
               be the highest price paid by these persons to acquire our voting
               stock;

                                       14

<PAGE>

          -    if stockholder approval is required by applicable law, any
               mergers, consolidations and sales of all or substantially all of
               our assets must be approved by the affirmative vote of at least
               two-thirds of our voting stock; and

          -    our stockholders may amend or repeal any of the foregoing
               provisions of our certificate of incorporation or our bylaws only
               by a vote of two-thirds of the outstanding voting power of the
               stock entitled to vote generally in the election of directors.

In addition, we have a stockholders' rights plan designed to make it more costly
and thus more difficult to gain control of us without the consent of our board
of directors.

RISKS THAT RELATE TO OUR RELATIONSHIP WITH KPMG LLP AND ITS RELATED ENTITIES

THE AGREEMENTS RELATING TO OUR SEPARATION FROM KPMG LLP WERE NOT NEGOTIATED ON
AN ARM'S-LENGTH BASIS, AND THERE IS NO ASSURANCE THAT THESE AGREEMENTS ARE ON
TERMS COMPARABLE TO THOSE THAT COULD HAVE BEEN OBTAINED FROM UNAFFILIATED THIRD
PARTIES.

As part of our separation from KPMG LLP in January 2000, we entered into a
separation agreement which governed the transfer of the assets and liabilities
relating to our business and contained indemnification provisions between us and
KPMG LLP. We have also entered into a non-competition agreement with KPMG LLP
that specifies which services will be offered by us and which by KPMG LLP. These
agreements were not the result of arm's-length negotiations, and therefore we
cannot assure you that their terms are comparable to the terms we could have
obtained from unaffiliated third parties.

Under our transition services agreement, KPMG LLP will provide us with basic
administrative, clerical and processing services in areas such as accounting
support, technology support, human resources, employee benefits and office space
support. The fees we pay for many of these services are based on the total costs
of providing these services on a centralized basis to both our company and KPMG
LLP. We are assessed an allocated portion of these costs, generally based on the
relative headcount, usage and other factors of our company and KPMG LLP.
However, because these agreements were negotiated in the context of a
"parent-subsidiary" relationship and were not the result of arm's-length
negotiations, we may pay more or less for such services and receive better or
worse service than if we had purchased such services from third party providers.

THE TERMINATION OF SERVICES PROVIDED UNDER THE TRANSITION SERVICES AGREEMENT
WITH KPMG LLP COULD INVOLVE SIGNIFICANT EXPENSE WHICH COULD ADVERSELY AFFECT OUR
FINANCIAL RESULTS.

Under the transition services agreement with KPMG LLP, we contracted to receive
certain infrastructure support services from KPMG LLP until we completed the
build-out of our own infrastructure (which terminates no later than February 8,
2004 for non-technology services and February 8, 2005 for technology-related
services). As the Company terminates services, the Company may be obligated to
pay KPMG LLP termination costs, as defined in the transition services agreement,
incurred as a result of KPMG LLP winding down and terminating such services. The
Company continues to receive from KPMG LLP services relating to information
technology (such as telecommunications and user services), financial systems,
occupancy and office support services in facilities used by both the Company and
KPMG LLP, and financing of capital assets used in the provisioning of transition
services. The Company has given notice to KPMG LLP of its intent to terminate
certain services in fiscal 2003 for which the amount of termination costs have
either not been determined by KPMG LLP or not agreed upon by the parties.
Effective October 1, 2002, the Company and KPMG LLP entered into an outsourcing
services agreement under which KPMG LLP provides certain services relating to
office space that were previously provided under the transition services
agreement. In July 2002, the Company paid KPMG LLP $30.8 million representing
the unamortized costs of leasehold improvements purchased by KPMG LLP and used
exclusively by the Company. Based on information currently available, the
Company anticipates paying KPMG LLP approximately $40 million to $60 million for
the sale and transfer of additional capital assets (such as computer equipment,
furniture and leasehold improvements) currently used by the Company through the
transition services agreement (for which usage charges are included in the
monthly costs under the agreement).

The amount of termination costs that the Company will pay to KPMG LLP depends
upon the timing of service terminations, the ability of the parties to work
together to minimize the costs, and the amount of payments required under
existing contracts with third parties for services provided to the Company by
KPMG LLP and which can continue to be obtained directly by the Company
thereafter. Accordingly, the amount of termination costs that the Company will
pay to KPMG LLP in the future cannot be reasonably estimated at this time. The
Company believes that the amount of termination costs yet to be assessed will
not have

                                       15

<PAGE>

a material adverse effect on the Company's consolidated financial position, cash
flows, or liquidity. Whether such amounts could have a material effect on the
results of operations in a particular period or quarter cannot be determined at
this time.

THE NON-COMPETITION AGREEMENT WITH KPMG LLP PROHIBITS US FROM PROVIDING CERTAIN
SERVICES AND MAY LIMIT OUR ABILITY TO EFFECTIVELY MOVE INTO CERTAIN NEW SERVICES
IN THE FUTURE.

Our non-competition agreement with KPMG LLP prohibits us from offering tax or
assurance services, including attestation and verification services, and defined
consulting services which were historically and will continue to be provided by
KPMG LLP's tax and assurance practices. This prohibition may limit our ability
to serve our clients.

If both we and KPMG LLP desire to provide a new type of service or if we cannot
agree with KPMG LLP as to who has the right to provide an existing service, the
non-competition agreement provides a framework for resolving such disputes.
However, if this process fails to resolve any such dispute in a timely and
efficient manner, we may lose the opportunity to enter into a new market or
pursue sales leads on a timely basis. In addition, ongoing disputes with KPMG
LLP as to who can provide a type of existing or new service may result in both
us and KPMG LLP bidding on similar work which, in turn, may damage our
reputation in the marketplace.

RISKS THAT RELATE TO OUR RELATIONSHIP WITH CISCO

THE PROVISIONS OF OUR INVESTOR RIGHTS AGREEMENT WITH CISCO WHICH PROHIBIT US
FROM ENTERING INTO A MERGER OR SIMILAR AGREEMENT WITH FOUR NAMED COMPANIES
WITHOUT CISCO'S CONSENT MAY LIMIT OUR ABILITY TO ENGAGE IN A CHANGE OF CONTROL
TRANSACTION AND REDUCE THE PRICE OF OUR COMMON STOCK.

In conjunction with Cisco's investment in our company and our alliance agreement
with Cisco, we agreed that until January 31, 2005, we will not enter into an
agreement with Lucent Technologies Inc., Nortel Networks Corporation, Alcatel
S.A. or Juniper Networks, or four other companies as Cisco may designate on an
annual basis, to merge, consolidate or otherwise combine with any such specified
company or to sell all or substantially all of our assets to any of them without
Cisco's consent. If any of these companies delivers to us a bona fide proposal
to acquire us or if our board of directors decides to initiate negotiations
regarding an acquisition by one of these companies, we have agreed to notify
Cisco and give Cisco an opportunity to make a superior counter proposal to us.
If we close an acquisition transaction with one of these companies, including if
we do so after Cisco has failed to make a superior proposal, we have agreed to:

          -    pay Cisco cash in an amount equal to our revenue for the
               preceding 12 months;

          -    repurchase, at Cisco's request, any of our equity securities then
               held by Cisco at the greater of fair market value or original
               issue price; and

          -    repurchase, at Cisco's request, any of our debt securities then
               held by Cisco at their face amount.

Our obligation to make payments to Cisco if we enter into a transaction with
Lucent Technologies, Inc., Nortel Networks Corporation, Alcatel S.A. or Juniper
Networks also may have significant anti-takeover effects with respect to those
companies and could depress the price of our common stock. Accordingly, the
effect of these provisions is to reduce substantially, or even entirely
eliminate, the possibility of us entering into a merger or other change of
control transaction with one of these companies. To the extent that any of these
companies were or were perceived as possible acquirors of our company, these
provisions may depress the price of our common stock.

OUR ALLIANCE AGREEMENT WITH CISCO MAY REQUIRE US TO MAKE INVESTMENTS IN
PERSONNEL AND EQUIPMENT EVEN IF WE DO NOT GENERATE SUFFICIENT CORRESPONDING
REVENUE FOR US, WHICH MAY DECREASE OUR NET INCOME.

Under our amended alliance agreement with Cisco, we have agreed to maintain the
level of competence of our staff already trained on Cisco products and
technologies as of July 1, 2001. When we are developing a joint solution with
Cisco, we also have agreed to train at least the number of persons on the
design, planning and implementation management of the technologies associated
with the solution as are necessary to achieve the purpose of the solution. In
addition, we have committed to staffing and operating at least one solution
center for every joint solution developed under the alliance agreement. The
solution centers provide clients advanced technology equipment to develop,
demonstrate and provide training on our service offerings using Cisco hardware.
The alliance agreement with Cisco requires us to provide this staffing and these
solution center operations even if the

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results of our operations do not justify such activities. If the anticipated
benefits of our alliance with Cisco do not materialize, or fail to materialize
in the time frame we anticipate, and we nonetheless have to hire additional
consultants or make additional investments in Cisco-related equipment, it could
adversely affect our profitability.

OUR ALLIANCE AGREEMENT WITH CISCO DOES NOT PREVENT CISCO FROM ENTERING INTO
SIMILAR AGREEMENTS WITH OUR COMPETITORS, AND ANY AGREEMENTS WITH COMPETITORS
MIGHT DIMINISH THE EFFECTIVENESS OF OUR RELATIONSHIP WITH CISCO WITHOUT REDUCING
OUR OBLIGATIONS UNDER THE ALLIANCE AGREEMENT.

As a part of our alliance agreement with Cisco, we have agreed to make
investments in personnel, training and equipment and to limitations on our
ability to jointly market with Lucent Technologies Inc., Nortel Networks
Corporation, Alcatel S.A. or Juniper Networks, or, in lieu thereof, four other
companies as Cisco may designate on an annual basis. These obligations and
restrictions will remain in place even if Cisco enters into a similar
arrangement with one of our competitors. We believe, based on published reports,
that Cisco has entered into joint marketing agreements with certain of our
competitors, including Cap Gemini Ernst & Young and PricewaterhouseCoopers LLP.
To the extent that either of these arrangements or any future arrangements
entered into by Cisco and our other competitors are similar in nature and scope
to our agreement, the effectiveness of our joint marketing efforts may be
negatively impacted and our relationship with Cisco may generate lower revenue
than we anticipate, which could adversely affect our profitability.

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