**Exhibit 99.1** **ITEM 3. ****LEGAL    PROCEEDINGS** ***Overview***     We currently are a party to a number of disputes that involve or    may involve litigation or other legal or regulatory proceedings.    Generally, there are three types of legal proceedings to which    we have been made a party:      •        Claims and investigations arising from our continuing inability    to timely file periodic reports under the Exchange Act, and the    restatement of our financial statements for certain prior    periods to correct accounting errors and departures from    generally accepted accounting principles for those years    (“SEC Reporting Matters”);      •        Claims and investigations being conducted by agencies or    officers of the U.S. Federal government and arising in    connection with our provision of services under contracts with    agencies of the U.S. Federal government (“Government    Contracting Matters”); and      •        Claims made in the ordinary course of business by clients    seeking damages for alleged breaches of contract or failure of    performance, by current or former employees seeking damages for    alleged acts of wrongful termination or discrimination, and by    creditors or other vendors alleging defaults in payment or    performance (“Other Matters”).     We currently maintain insurance in types and amounts customary    in our industry, including coverage for professional liability,    general liability and management and director liability. Based    on management’s current assessment and insurance coverages    believed to be available, we believe that the Company’s    financial statements include adequate provision for estimated    losses that are likely to be incurred with regard to all matters    of the types described above. ***SEC    Reporting Matters*** *2005 Class Action Suits.* In and after April 2005,    various separate complaints were filed in the U.S. District    Court for the Eastern District of Virginia, alleging that the    Company and certain of its current and former officers and    directors violated Section 10(b) of the Exchange Act,    Rule 10b-5    promulgated thereunder and Section 20(a) of the Exchange    Act by, among other things, making materially misleading    statements between August 14, 2003 and April 20, 2005    with respect to our financial results in our SEC filings and    press releases. On January 17, 2006, the court certified a    class, appointed class counsel and appointed a class    representative. The plaintiffs filed an amended complaint on    March 10, 2006 and the defendants, including the Company,    subsequently filed a motion to dismiss that complaint, which was    fully briefed and heard on May 5, 2006. We were awaiting a    ruling when, on March 23, 2007, the court stayed the case,    pending the U.S. Supreme Court’s decision in the case    of *Makor Issues & Rights, Ltd v. Tellabs*,    argued before the Supreme Court on March 28, 2007. On    June 21, 2007, the Supreme Court issued its opinion in the    *Tellabs* case, holding that to plead a strong inference of    a defendant’s fraudulent intent under the applicable    federal securities laws, a plaintiff must demonstrate that such    an inference is not merely reasonable, but cogent and at least    as compelling as any opposing inference of non-fraudulent    intent. The Supreme Court decision is expected to significantly    inform the court’s decision regarding the complaint and our    motion to dismiss the complaint. It is not possible to predict    with certainty whether or not we will ultimately be successful    in this matter or, if not, what the impact might be. *2005 Shareholder’s Derivative Demand.* On    May 21, 2005, we received a letter from counsel    representing one of our shareholders requesting that we initiate    a lawsuit against our Board of Directors and certain present and    former officers of the Company, alleging breaches of the    officers’ and directors’ duties of care and loyalty to    the Company relating to the events disclosed in our report filed    on    Form 8-K,    dated April 20, 2005. On January 21, 2006, the    shareholder filed a derivative complaint in the Circuit Court of    Fairfax County, Virginia, that was not served on the Company    until March 2006. The shareholder’s complaint alleged that    his demand

 
    was not acted upon and alleged the breach of fiduciary duty    claims previously stated in his demand. The complaint also    included a non-derivative claim seeking the scheduling of an    annual meeting in 2006. On May 18, 2006, following an    extensive audit committee investigation, our Board of Directors    responded to the shareholder’s demand by declining at that    time to file a suit alleging the claims asserted in the    shareholder’s demand. The shareholder did not amend the    complaint to reflect the refusal of his demand. We filed    demurrers on August 11, 2006, which effectively sought to    dismiss the matter related to the fiduciary duty claims. On    November 3, 2006, the court granted the demurrers and    dismissed the fiduciary claims, with leave to file amended    claims. As a result of our annual meeting of stockholders held    on December 14, 2006, the claim seeking the scheduling of    an annual meeting became moot. On January 3, 2007, the    plaintiff filed an amended derivative complaint re-asserting the    previously dismissed derivative claims and alleging that the    Board’s refusal of his demand was not in good faith. The    Company’s renewed motion to dismiss all remaining claims    was heard on March 23, 2007 and no ruling has yet been    entered. *SEC Investigation.* On April 13, 2005, pursuant to    the same matter number as its inquiry concerning our restatement    of certain financial statements issued in 2003, the staff of the    SEC’s Division of Enforcement requested information and    documents relating to our March 18, 2005    Form 8-K.    On September 7, 2005, we announced that the staff had    issued a formal order of investigation in this matter. We    subsequently have received subpoenas from the staff seeking    production of documents and information, including certain    information and documents related to an investigation conducted    by our Audit Committee. We continue to provide information and    documents to the SEC as requested. The investigation is ongoing    and the SEC is in the process of taking the testimony of a    number of our current and former employees, as well as one of    our former directors.     In connection with the investigation by our Audit Committee, we    became aware of incidents of possible non-compliance with the    Foreign Corrupt Practices Act and our internal controls in    connection with certain of our operations in China and    voluntarily reported these matters to the SEC and    U.S. Department of Justice in November 2005. Both the SEC    and the Department of Justice are investigating these matters in    connection with the formal investigation described above. On    March 27, 2006, we received a subpoena from the SEC    regarding information related to these matters. ***Government    Contracting Matters*** *California Subpoenas.* In December 2004, we were served    with a subpoena by the Grand Jury for the United States District    Court for the Central District of California. The subpoena    sought records relating to twelve contracts between the Company    and the U.S. Federal government, including two General    Service Administration (“GSA”) schedules, as well as    other documents and records relating to our U.S. Federal    government work. We have produced documents in accordance with    an agreement with the Assistant U.S. Attorney. The focus of    the review is upon our billing and time/expense practices, as    well as alliance agreements where referral or commission    payments were permitted. In July 2005, we received a subpoena by    the U.S. Army related to Department of Defense contracts.    We subsequently were served with several subpoenas issued by the    inspectors general of the GSA and the Department of Defense.    These subpoenas are largely duplicative of the grand jury    subpoena. In December 2006, the Company’s counsel was    informally informed by the Assistant U.S. Attorney involved    in this matter that the government has declined to pursue any    criminal proceedings arising out of this matter. The government    continues to pursue the investigation on the civil side. We    continue to cooperate fully and have produced substantial    amounts of documents and other information. At this time, we    cannot predict the outcome of the investigation. *Core Financial Logistics System.* There is an ongoing    investigation of the Core Financial Logistics System    (“CoreFLS”) project by the Inspector General’s    Office of the Department of Veterans Affairs and by the    Assistant U.S. Attorney for the Central District of    Florida. To date, we have been issued three subpoenas, in June    2004, December 2004 and May 2006, seeking the production of    documents relating to the CoreFLS project. We are cooperating    with the investigation and have produced documents in response    to the subpoenas. To date, there have been no specific    allegations of criminal or fraudulent conduct on our part or any

 
    contractual claims filed against us by the Veterans    Administration in connection with the project. We continue to    believe we have complied with all of our obligations under the    CoreFLS contract. We cannot, however, predict the outcome of the    inquiry. ***Other    Matters*** *Peregrine Litigation.* We were named as a defendant in    several civil lawsuits regarding certain software resale    transactions with Peregrine Systems, Inc. during the period 1999    and 2001, in which purchasers and other individuals who acquired    Peregrine stock alleged that we participated in or aided and    abetted a fraudulent scheme by Peregrine to inflate    Peregrine’s stock price, and we were also sued by a trustee    succeeding the interests of Peregrine for the same conduct. In    December 2005, we executed conditional settlement agreements    whereby we were released from liability in these matters and in    all claims for indemnity by KPMG, our former parent, in each of    these cases. We issued settlement payments of approximately    $36.9 million with respect to these matters in September    2006. In addition, on January 5, 2006, we finalized an    agreement with KPMG, providing conditional mutual releases to    each other from fee advancement and indemnification claims with    respect to these matters, with no settlement payment or other    exchange of monies between the parties.     We did not settle the *In re Peregrine Systems, Inc.    Securities Litigation* and on January 19, 2005, the    matter was dismissed by the trial court as it relates to us. The    plaintiffs have appealed the dismissal and briefing of the    appeal has been completed. To the extent that any judgment is    entered in favor of the plaintiffs against KPMG, KPMG has    notified us that it will seek indemnification for any such sums.    The Company disputes KPMG’s entitlement to any such    indemnification.     On November 16, 2004, Larry Rodda, a former employee, pled    guilty to one count of criminal conspiracy in connection with    the Peregrine software resale transactions that continue to be    the subject of the government inquiries. Mr. Rodda also was    named in a civil suit brought by the SEC. We were not named in    the indictment or civil suit, and are cooperating with the    government investigations. *Series B Debenture Suit.* On September 8, 2005,    certain holders of our 2.75% Series B Convertible    Subordinated Debentures (the “Series B    Debentures”) provided a purported Notice of Default to us    based upon our failure to timely file certain of our SEC    periodic reports due in 2005. Thereafter, these holders asserted    that as a result, the principal amount of the Series B    Debentures, accrued and unpaid interest and unpaid damages were    due and payable immediately.     The indenture trustee for the Series B Debentures then    brought suit against us and, on September 19, 2006, the    Supreme Court of New York ruled on motion that we were in    default under the indenture for the Series B Debentures and    ordered that the amount of damages be determined subsequently at    trial. We believed the ruling to be in error and on    September 25, 2006, appealed the court’s ruling and    moved for summary judgment on the matter of determination of    damages.     After further negotiations, we and the relevant holders of our    Series B Debentures entered into a First Supplemental    Indenture (the “First Supplemental Indenture”) with    The Bank of New York, as trustee, which amends the subordinated    indenture governing our 2.50% Series A Convertible    Subordinated Debentures due 2024 (the “Series A    Debentures”) and the Series B Debentures.    Concurrently, we and the relevant holders of our Series B    Debentures lawsuit agreed to discontinue the lawsuit.     The First Supplemental Indenture modifies the debentures to    include: (i) a waiver of our SEC reporting requirements    under the subordinated indenture through October 31, 2008,    (ii) the interest rate payable on all Series A    Debentures from 3.00% per annum to 3.10% per annum until    December 23, 2011, and (iii) adjustment of the    interest rate payable on all Series B Debentures from 3.25%    per annum to 4.10% per annum until December 23, 2014.

 
    In order to address any possibility of a claim of cross-default,    on November 2, 2006, we entered into a First Supplemental    Indenture with The Bank of New York, as trustee, which amends    the indenture governing our 5.0% Convertible Senior    Subordinated Debentures due 2025. The supplemental indenture    includes a waiver of our SEC reporting requirements through    October 31, 2007 and provides for further extension through    October 31, 2008 upon our payment of an additional fee of    0.25% of the principal amount of the debentures. We paid to    certain consenting holders of these debentures a consent fee    equal to 1.00% of the outstanding principal amount of the    debentures. In addition, on November 9, 2006, we entered    into an agreement with the holders of our 0.50% Convertible    Senior Subordinated Debentures due July 2010, pursuant to which    we paid a consent fee equal to 1.00% of the outstanding    principal amount of the debentures, in accordance with the terms    of the purchase agreement governing the issuance of these    debentures.