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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 REVENUES TO DECLINE.

         Our revenues declined during fiscal year 2002, and we had a net loss of
approximately $26.9 million. During the first quarter of fiscal year 2003, our
revenues increased, primarily as a result of acquisitions and other
transactions, and we had net income of approximately $15.2 million. 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 revenues. We have
implemented cost-management programs to manage our expenses as a percentage of
revenues. 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 revenues, 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

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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 revenues
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 revenues 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 revenues 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 revenues, 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.

         In addition, when companies face eroding revenues and funding
difficulties, they may reduce their spending on consulting services. While our
revenues 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.

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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.

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,

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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 KPMG
Consulting AG. KPMG Consulting AG'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 KPMG consulting AG 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 December 31, 2002 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

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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.

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

         In fiscal year 2002, approximately 92% of our revenues were
attributable to activities in North America. As a result of our recent
acquisitions and group hires, and as we further expand globally, we expect that
the percentage of our revenues from our international operations will grow
significantly. During the first quarter of fiscal year 2003, approximately 76%
of our revenues 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;

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         -        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.

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

         The revenues 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

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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.

         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.

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

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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. On August 21, 2002, we entered into an additional
$220 million revolving credit facility for the purpose of funding our
acquisition of KPMG Consulting AG. This facility matures on December 15, 2002.
Subject to certain restrictions set forth in the revolving credit facilities,
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. Our $220 million credit
facility matures on December 15, 2002. We cannot assure you that we will be able
to extend the term of this facility or obtain sufficient funds to repay the
amounts outstanding under this facility either from a replacement facility or
alternative debt or equity financing. If we are not able to repay amounts
outstanding under this facility, we could be declared in default, which could
result in a default under our other credit facilities, the receivables facility
and other agreements, as applicable.

         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.

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 IF WE VIOLATE THESE LIMITATIONS WE WILL BE IN DEFAULT ON
THESE FACILITIES.


         Our credit facilities and the receivables facility contain a number of
significant covenants that, among other things, will restrict our ability to
dispose of assets, incur additional

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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 facilities and the
receivables facility 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 failute to pay principal and interest
when due could result in a default under the credit facilities, the receivables
facility 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 REVENUES 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 $20 million to $40 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 revenues 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

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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,
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.

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 revenues. 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, excluding any involuntary terminations and terminations
as a result of reductions in our workforce. While the turnover rate has recently
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 affiliate's 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
REVENUES, AND IF OUR RELATIONSHIPS WITH THESE AGENCIES WERE HARMED OR IF THE
SPENDING POLICIES OR BUDGET

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PRIORITIES OF THE FEDERAL GOVERNMENT CHANGED, WE COULD LOSE SIGNIFICANT
REVENUES.

         Contracts funded by U.S. federal government agencies accounted for
12.8%, 16.9% and 25.6% of our revenues 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 revenues for the same periods. We
believe that federal government contracts will continue to be a source of a
significant amount of our revenues 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 revenues 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.

         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 revenues. We have

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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 revenues. 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 revenues 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;

<PAGE>

         -        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;

         -        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 revenues
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 revenues. 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

<PAGE>

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 revenues 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 revenues 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.

         Our marketplace is experiencing rapid changes in its competitive
landscape. For instance, two 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 others have indicated plans or proposals to sell their
consulting businesses or to separate and seek capital in the public or private
markets. 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

<PAGE>

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
REVENUES 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 revenues 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
revenues 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 revenues
represented 30%, 32%, 31% and 41%, respectively, of our company's total
revenues. 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. Revenues are
recognized based upon professional costs incurred as a percentage of estimated
total percentage costs of the respective contract, and unbilled revenues
represent revenues 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

<PAGE>

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 revenues 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.

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 revenues could decline.
The factors that may affect Internet usage or electronic commerce adoption
include:

<PAGE>

         -        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 revenues and we
may not be able to eliminate associated costs in a timely manner.



<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 revenues 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.

<PAGE>


         On August 22, 2002, we issued approximately 30.5 million shares of our
common stock in connection with our acquisition of KPMG Consulting AG. We have
an obligation to register these shares for resale under the United States
securities laws as soon as reasonably practicable after the acquisition. When
the registration statement becomes effective, 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 only be exercised beginning January 31, 2003.
January 31, 2003 is the earliest date that Cisco may sell its shares. As of
August 31, 2002, 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.

<TABLE>
<CAPTION>

                                  Number         Percent
           Holder                   of           of Total                Contractual Transfer
                                  Shares       Outstanding                   Restrictions
------------------------    ---------------    -----------   -----------------------------------------
<S>                         <C>                <C>           <C>
Our Managing Directors       5.14 million         2.7%       Restrictions on one-fourth of the total
who hold founders shares                                     shares owned expired on August 7, 2002 and
                                                             one-fourth will expire on each succeeding
                                                             anniversary.

Cisco Systems, Inc.         15.44 million         8.15%      Cisco generally may not sell any shares
                                                             until January 31, 2003.
</TABLE>

         As of June 30, 2002, options to purchase approximately 30.8 million
shares of common stock were outstanding with exercise prices ranging from $9.55
to $55.50, and approximately 21.1 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 6.2
million shares available for sale as of June 30, 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.

<PAGE>

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;

         -        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.

<PAGE>

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,
human resources 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. In July 2002, the

<PAGE>

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 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.

<PAGE>

         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 revenues 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
REVENUES 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 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

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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 revenues
than we anticipate, which could adversely affect our profitability.